Cogent Communications (CCOI) 2025 Conference Summary Company Overview - **Company**: Cogent Communications (CCOI) - **Event**: 2025 Conference - **Date**: September 04, 2025 Key Points Industry and Business Performance - **Wavelength Business**: Cogent's new wavelength business, associated with the Sprint network, has faced challenges in installations but has a large backlog. Installations in Q2 were below expectations due to customer delivery acceptance issues, but the company remains optimistic about future growth [4][5][6] - **Revenue Growth**: Despite lower installations, the wavelength business saw a sequential revenue growth of 27% and a year-over-year growth of 149%, with an annual run rate exceeding $36 million [8] - **Long-term Targets**: The company aims to grow the wavelength business to $500 million by mid-2028, supported by a significant funnel of opportunities, including unexpected demand from AI training [9][10] Customer Dynamics - **Customer Behavior**: There have been no cancellations before installation, indicating that customers were not over-purchasing but were surprised by the service quality and delivery timelines [13] - **Market Demand**: Approximately 9,000 wavelengths per month are coming out of contract, creating new buying opportunities for Cogent as customers transition from lower to higher capacity [14] Financial Performance and Strategy - **Debt and Leverage**: Cogent's net debt to EBITDA ratio is currently around 6.6 times, which is higher than historical norms. The company plans to reduce this to five times over the next six quarters through EBITDA growth and cost savings [28][32] - **Dividend Policy**: The company has a history of returning capital to investors through dividends and share buybacks, with no current plans to change this strategy despite market pressures [35] IPv4 and Data Center Assets - **IPv4 Sales**: The market for IPv4 addresses has seen a decline in prices, with major buyers like Amazon and Microsoft currently inactive. Cogent has increased its leasing prices significantly, averaging 49 cents per address last quarter [42][43] - **Data Center Sales**: Cogent is motivated to sell its data center assets but has faced challenges with potential buyers not meeting capital requirements. The company is converting facilities to improve marketability and has received offers but requires more substantial non-refundable deposits [59][60] Market Outlook - **Execution Risks**: The company acknowledges execution risks associated with the new wavelength business and the integration of Sprint assets, but remains confident in the long-term growth potential [26] - **Revenue Neutrality**: Cogent expects to achieve revenue neutrality by Q3, with a shift towards higher-margin revenue streams [33] Additional Insights - **Operational Changes**: The company has made significant operational changes post-acquisition of Sprint, including cutting costs and purging unprofitable services, which has helped stabilize the business [21][22] - **Market Positioning**: Cogent's unique positioning in the wavelength market, built from the ground up, differentiates it from competitors and enhances its growth prospects [24] This summary encapsulates the key discussions and insights from the Cogent Communications conference, highlighting the company's strategic direction, financial performance, and market dynamics.

Group 1 - The company experienced organic growth of 10.2% annually for 15 years prior to the pandemic, which slowed to approximately 5% due to COVID-19 [2] - Margin expansion decreased from an average of 220 basis points per year to about 100 basis points per year during the pandemic [2] - As the pandemic subsided, the business began to improve, and the company took the opportunity to acquire the original Sprint Global Markets business from T-Mobile [3]

Financial Data and Key Metrics Changes - The organic business of the company grew at 10.2% annually for 15 years before slowing to about 5% per year due to COVID-19, with margin expansion decreasing from an average of 220 basis points to about 100 basis points [4] - Following the acquisition of Sprint's global markets business, the combined growth rate declined to about -2% annually, down from a previous 5% growth rate [5] - The company anticipates returning to positive top-line growth in the current quarter, with expected margin growth of about 200 basis points year over year [8] Business Line Data and Key Metrics Changes - Approximately 70% of current revenues are growing at about 5%, while about one-third of revenues are declining at 1-2% [8] - The newly established wavelength business is growing rapidly, with a sequential revenue growth rate of 27% and a year-over-year growth rate of 149% [7] - The company has reduced noncore product revenues from nearly $60 million annually at acquisition to about $15 million today [22] Market Data and Key Metrics Changes - The company has seen a shift in traffic growth, with lower growth rates in developed markets compared to less developed markets, where traffic growth has increased from 45% to 55% over three years [30] - The effective price per megabit is higher in less developed markets, which is expected to positively impact revenue as the company plans to enter markets like India [31] Company Strategy and Development Direction - The primary strategy involves repurposing the original long-distance telephone network into a wavelength transport network, which is expected to drive future growth [6] - The company is focused on divesting noncore assets to improve leverage and is motivated to grow its recurring revenue business, particularly in wavelengths and core on-net services [56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to revenue growth and achieving additional synergies from the acquisition, with integration costs expected to taper off over the next six quarters [6][12] - The company plans to return increasing amounts of cash to shareholders through dividends, buybacks, or deleveraging, with a target to reduce leverage from 6.6 times to about 5 times by 2026 [53] Other Important Information - The company has achieved $220 million in synergies from the acquisition and has revised its synergy goal upward by an additional $20 million [16] - The company has a significant backlog of wavelength services that have been installed but not yet customer accepted, with an expected run rate of $20 to $25 million by the end of the year [36][40] Q&A Session Summary Question: How much is the integration cost affecting quarterly EBITDA? - The integration costs are approximately $4 million a month, expected to taper off over the next 18 months [10][14] Question: What is the growth outlook for core services? - Core on-net services are growing in the mid-single digits, while NetCentric services have seen some deceleration to about 8% revenue growth [25] Question: How is the company addressing the decline in noncore products? - The company has significantly reduced noncore product revenues and is focusing on eliminating unprofitable products [22] Question: What is the company's approach to capital allocation? - The company is considering a shift from dividends to buybacks or deleveraging, with a commitment to return cash to shareholders [50][53] Question: What is the status of noncore asset divestitures? - The company is motivated to divest noncore assets and has six letters of intent for data centers, while being cautious about selling IPv4 assets [54][55]

Summary of Cogent's Conference Call Company Overview - **Company**: Cogent Communications - **Industry**: Telecommunications Key Points and Arguments Revenue and EBITDA Guidance - Cogent aims for a revenue target of $1.5 billion and EBITDA of $500 million by mid-2028, following the acquisition of Sprint [3][8] - The combined revenue from Sprint and Cogent was initially over $1 billion, with Cogent contributing approximately 60% and Sprint 40% [4] - Sprint's revenue had been declining at 10.6% annually prior to the acquisition, while Cogent's revenue grew at about 7% [4] Financial Performance Post-Acquisition - Post-acquisition, Cogent experienced negative revenue growth but improved underlying EBITDA by $5 million each quarter over eight quarters [5] - A subsidy payment from T-Mobile of $700 million over 54 months has significantly boosted EBITDA, with first-year EBITDA rising from $260 million to $350 million [5][9] Revenue Growth Projections - Anticipated revenue growth of 6-8% annually, with a potential acceleration in the near term to meet long-term targets [10][11] - The legacy Cogent business is growing at about 5% year-over-year, while the acquired Sprint enterprise business is flat with lower margins [6][7] Wavelength Business - The wavelength business, which started from zero, has reached a $36 million annual run rate and is projected to grow to $500 million with a 95% contribution margin [7][8] - Cogent aims to increase its market share in the wavelength market from less than 1% to 25% over the next three years [15] Corporate Business Performance - The corporate business, driven by on-net services, has seen a decline but is stabilizing, with growth expected to return to around 5% [38][41] - The Sprint corporate business is expected to remain flat, contributing to a slight overall decline in the corporate segment [40] Pricing Strategy and Market Dynamics - Cogent typically offers a 20% discount to market rates, with transit services discounted by about 50% [28][30] - The NetCentric business has grown 7% year-over-year, driven by increased sales from smaller customers and international markets [32][34] Capital Return Strategy - Cogent has returned $2 billion to shareholders through buybacks and dividends, with a focus on increasing free cash flow [50][52] - The company is considering shifting from dividends to stock buybacks due to the current stock price dislocation [52] Asset Management - Cogent is actively looking to sell non-core assets, including data centers and excess IPv4 addresses, while focusing on growing recurring revenues [55] Market Outlook - The company is optimistic about achieving its growth targets, with a strong focus on the wavelength business and improving EBITDA margins [16][17] Additional Important Information - The integration of Sprint's network is complete, allowing for more effective sales and provisioning of wavelengths [20][21] - Customer feedback indicates a better-than-expected addressable market for wavelengths, enhancing growth prospects [24]

Cogent Communications (CCOI) Conference Summary Company Overview - **Company**: Cogent Communications (CCOI) - **Date of Conference**: August 12, 2025 - **Speaker**: Dave Schafer, CEO of Cogent Communications Key Points Company and Financial Situation - Cogent's shares have seen a significant decline recently, attributed to tax situations rather than commercial real estate concerns [3][12] - The CEO's equity position in Cogent was reduced from 23% to 0.7% during the telecom crash, but he has since rebuilt it to 11% through stock compensation [4][5] - The CEO has injected $152.34 million into his real estate portfolio, which has seen a decline in value, leading to increased loan-to-value (LTV) ratios [10] - The company has returned nearly $2 billion to shareholders, primarily through dividends and stock buybacks [13][65] Earnings and Growth - The company experienced an EBITDA miss and a decline in revenue, but the CEO emphasized that revenue decline was anticipated due to the Sprint acquisition [12][14] - Cogent has a historical compounded growth rate of over 10% for 17 years prior to the Sprint acquisition, which was a declining business [15] - The company reported a 27% sequential revenue growth in its Waves business and a 149.8% year-over-year growth [24] Competitive Landscape - Competitors like Lumen and Zayo are active in the market, but Cogent believes its network architecture provides a competitive advantage [34][35] - The company has a pricing strategy that generally offers a 20% discount compared to competitors, aiming to capture market share without destroying market pricing [46] Data Center Sales - Cogent is in the process of selling non-strategic data centers, with a targeted valuation of $10 million per megawatt [51][56] - The company has received interest from over 160 parties, with ongoing tours and negotiations [57][58] - The CEO emphasized the importance of not negotiating against themselves and the need for buyers to prove their ability to perform [53][60] Future Outlook - The company aims to grow its EBITDA and return capital to shareholders without needing to monetize non-core assets [65][66] - The CEO expressed confidence in achieving a $20 million revenue run rate for the Waves business by year-end [31][32] - The company is focused on building recurring free cash flow and is not reliant on one-time asset sales for value creation [86][87] Market Trends - The internet traffic growth has slowed to 9% year-over-year, contrasting with previous higher growth rates, attributed to market saturation and the company's significant market share [92][94] - Cogent is expanding into new markets, including India, which is expected to provide additional growth opportunities [101][102] Capital Expenditure and Strategy - The company has slowed the rate of new building additions and is focusing on optimizing existing assets [105][106] - Future capital deployment will prioritize areas with a return on invested capital (ROIC) significantly above the cost of capital [106] Additional Insights - The CEO highlighted the importance of quality in service delivery as a key competitive advantage [41][42] - The company is cautious about pricing strategies and market dynamics, particularly in the context of larger deals and RFPs [47][48] This summary encapsulates the key discussions and insights from the Cogent Communications conference, providing a comprehensive overview of the company's current status, challenges, and future strategies.

Cogent Communications (CCOI) Conference Summary Industry Overview - The discussion revolves around the telecommunications industry, specifically focusing on the wavelength services market and data center monetization opportunities. Key Points and Arguments Wavelength Services - The ramp-up of the wavelength business has been slower than expected due to three main factors: 1. Integration of the former Sprint voice network with Cogent's metro network took about a year and a half, which was slightly ahead of schedule [3][56] 2. Building a demand funnel was challenging, with a total of 10,000 expressions of interest, but only 1,000 converted to orders, and 8,000 fell out over time [4][57] 3. A strong funnel of 4,700 orders was reported, including various stages of order fulfillment [5][58] - The market is highly concentrated, with two major players dominating and a few smaller regional players [4][57] - The company has pre-enabled 938 data centers for quick provisioning of wavelength services, which is a significant improvement over traditional market practices [8][62] - The wavelength market is valued at approximately $2 billion, and Cogent aims to capture market share through unique architectural advantages [10][64] Backlog and Revenue Recognition - The backlog consists of four categories: 1. Signed contracts that have been installed but not accepted (200-300 units) [11][66] 2. Signed orders still in provisioning (a few hundred) [13][69] 3. Signed orders not yet provisioned due to customer readiness [15][71] 4. Orders with agreed terms but not yet signed [19][72] - Revenue is only recognized when customers accept the service, leading to discrepancies between installed units and recognized revenue [12][67] Financial Performance and Projections - The company aims to achieve a quarterly revenue run rate of $20 million from wavelength services by the end of the year, up from $9.1 million [21][54] - Historical growth rates indicate that Cogent has grown revenues organically at 10.2% from 2005 to 2020, with a target of 6% to 8% growth moving forward [23][24] - The enterprise business, which represents about 13% of total revenues, is declining but is expected to stabilize [39][40] - The NetCentric business, including WAVES, is currently growing in the high single digits, while excluding WAVES and IPv4 leasing, growth is in the low single digits [46][48] Data Center Monetization - The company has interacted with over 160 counterparties regarding data center monetization, with six letters of intent received [30][31] - The facilities are primarily former central offices, and the company is looking for counterparties willing to invest risk capital [29][30] - There is a potential market for small COLO facilities and portfolio-wide deals, but challenges exist due to the lack of current revenue from these facilities [36][37] Additional Important Insights - The company has faced challenges in the past, particularly with the acquisition of the Sprint Global Markets business, which initially led to a decline in revenue and margins [24][25] - The management emphasizes the need for credibility and transparency in reporting metrics to investors, especially during the early stages of wavelength deployment [22][23] - The company has a history of overcoming financial headwinds and aims to improve EBITDA sequentially through cost-cutting initiatives and ramping high-margin sales [53][54]

Core Insights - Cogent Communications' international operations are crucial for assessing its financial resilience and growth prospects [1][2] - The company's ability to engage in global markets is increasingly important for its overall financial health and growth trajectory [2][3] Revenue Performance - For the quarter ended June 2025, Cogent's total revenue was $246.25 million, a decline of 5.5% year over year [4] - Africa contributed $0.15 million, representing 0.1% of total revenue, with a surprising increase of +9.29% compared to expectations [5] - Europe generated $30.55 million, accounting for 12.4% of total revenue, exceeding projections by +8.9% [6] - Oceania contributed $6.08 million, making up 2.5% of total revenue, with a surprise of +7.63% over estimates [7] Future Projections - Analysts project Cogent's revenues for the ongoing fiscal quarter to be $247.47 million, a decline of 3.8% from the previous year [8] - Expected contributions from Africa, Europe, and Oceania for the upcoming quarter are $0.14 million (0.1%), $28.54 million (11.5%), and $5.76 million (2.3%) respectively [8] - For the full year, total annual revenue is projected at $991.29 million, a decrease of 4.3% compared to last year [9] Market Dependency - Cogent's reliance on global markets for revenue presents both opportunities and risks, making the monitoring of international revenue trends essential for predicting future performance [10] - The company's local market status also plays a significant role in shaping revenue forecasts [11] Stock Performance - Over the past month, Cogent's stock has decreased by 38%, while the S&P 500 has increased by 2.7% [13] - In the last three months, the stock has declined by 39.5%, contrasting with a 13.2% increase in the S&P 500 [13]

PART I FINANCIAL INFORMATION [ITEM 1. FINANCIAL STATEMENTS](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited condensed consolidated financial statements of Cogent Communications Holdings, Inc. and its subsidiaries, including the balance sheets, statements of comprehensive loss for three and six months, and statements of cash flows, along with detailed notes explaining accounting policies, business operations, acquisitions, debt, and other financial aspects [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The condensed consolidated balance sheets show an increase in total assets and liabilities from December 31, **2024**, to June 30, **2025**, while total stockholders' equity significantly decreased | Metric | June 30, **2025** (Unaudited) (in thousands) | December 31, **2024** (in thousands) | | :-------------------------------- | :--------------------------------------- | :----------------------------------- | | Total Assets | **$3,270,531** | **$3,173,102** | | Total Liabilities | **$3,223,863** | **$2,950,254** | | Total Stockholders' Equity | **$46,668** | **$222,848** | - Cash and cash equivalents increased from **$198,486 thousand** to **$213,651 thousand**, and restricted cash significantly rose from **$29,430 thousand** to **$93,074 thousand**[11](index=11&type=chunk) - Senior secured **2026** notes were fully redeemed, decreasing from **$499,126 thousand** to **$0**, while new senior secured **2032** notes of **$597,857 thousand** were issued[11](index=11&type=chunk) [Condensed Consolidated Statements of Comprehensive Loss (Three Months Ended June 30, 2025 and June 30, 2024)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss%20(Three%20Months%20Ended%20June%2030%2C%202025%20and%20June%2030%2C%202024)) For the three months ended June 30, **2025**, the company reported a higher net loss and comprehensive loss compared to the same period in **2024**, driven by decreased service revenue, increased interest expense, and a loss on debt extinguishment, despite reduced operating expenses | Metric | Three Months Ended June 30, **2025** (in thousands) | Three Months Ended June 30, **2024** (in thousands) | Change (%) | | :------------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | :--------- | | Service revenue | **$246,247** | **$260,443** | **(5.5%)** | | Total operating expenses | **$277,706** | **$310,918** | **(10.8%)** | | Operating loss | **$(31,459)** | **$(47,143)** | **(33.2%)** | | Interest expense, including change in valuation interest rate swap agreement | **$(39,777)** | **$(29,541)** | **34.7%** | | Loss on debt extinguishment and redemption – **2026** notes | **$(5,606)** | — | NM | | Net loss | **$(57,807)** | **$(32,338)** | **78.8%** | | Basic net loss per common share | **$(1.21)** | **$(0.68)** | **77.9%** | | Dividends declared per common share | **$1.010** | **$0.975** | **3.6%** | - Acquisition costs related to Sprint were **$0** in **2025**, down from **$12,370 thousand** in **2024**, contributing to the decrease in total operating expenses[12](index=12&type=chunk) - A gain on bargain purchase of Sprint of **$27,673 thousand** was recorded in **2024**, with no such gain in **2025**[12](index=12&type=chunk) [Condensed Consolidated Statements of Comprehensive Loss (Six Months Ended June 30, 2025 and June 30, 2024)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss%20(Six%20Months%20Ended%20June%2030%2C%202025%20and%20June%2030%2C%202024)) For the six months ended June 30, **2025**, the company experienced a larger net loss and comprehensive loss compared to the prior year, primarily due to decreased service revenue, increased interest expense, and a loss on debt extinguishment, despite lower operating expenses | Metric | Six Months Ended June 30, **2025** (in thousands) | Six Months Ended June 30, **2024** (in thousands) | Change (%) | | :------------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | :--------- | | Service revenue | **$493,298** | **$526,613** | **(6.3%)** | | Total operating expenses | **$565,045** | **$636,481** | **(11.3%)** | | Operating loss | **$(71,747)** | **$(106,536)** | **(32.6%)** | | Interest expense, including change in valuation interest rate swap agreement | **$(73,971)** | **$(58,703)** | **26.0%** | | Loss on debt extinguishment and redemption – **2026** notes | **$(5,606)** | — | NM | | Net loss | **$(109,849)** | **$(97,645)** | **12.5%** | | Basic net loss per common share | **$(2.30)** | **$(2.06)** | **11.7%** | | Dividends declared per common share | **$2.015** | **$1.940** | **3.9%** | - Acquisition costs related to Sprint were **$0** in **2025**, down from **$21,407 thousand** in **2024**, contributing to the decrease in total operating expenses[13](index=13&type=chunk) - A gain on bargain purchase of Sprint of **$22,202 thousand** was recorded in **2024**, with no such gain in **2025**[13](index=13&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, **2025**, the company reported a net increase in cash, cash equivalents, and restricted cash of **$78.8 million**, a significant decrease from the **$312.5 million** increase in the prior year, primarily due to reduced cash provided by investing and financing activities | Metric | Six Months Ended June 30, **2025** (in thousands) | Six Months Ended June 30, **2024** (in thousands) | | :------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | | Net cash used in operating activities | **$(7,687)** | **$(2,951)** | | Net cash (used in) provided by investing activities | **$(64,288)** | **$76,840** | | Net cash provided by financing activities | **$136,739** | **$232,046** | | Effect of exchange rates changes on cash | **$14,045** | **$6,525** | | Net increase in cash, cash equivalents and restricted cash | **$78,809** | **$312,460** | | Cash, cash equivalents and restricted cash, end of period | **$306,725** | **$426,241** | - Cash receipts from the IP Transit Services Agreement with T-Mobile decreased significantly from **$154.2 million** in **2024** to **$50.0 million** in **2025**[15](index=15&type=chunk) - Purchases of property and equipment increased from **$89.7 million** in **2024** to **$114.3 million** in **2025**[15](index=15&type=chunk) [Notes to Interim Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Interim%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on the company's business, significant accounting policies, the Sprint acquisition, debt structure, lease obligations, income taxes, and capital allocation strategies, offering context to the condensed financial statements [1. Description of the business](index=8&type=section&id=1.%20Description%20of%20the%20business) This note details **Cogent Communications'** business model as a facilities-based provider of high-speed Internet access and network services, its organizational structure, and the significant acquisition of **Sprint Communications'** U.S. long-haul fiber network, including the financial and operational implications of the transaction [Reorganization and merger](index=8&type=section&id=Reorganization%20and%20merger) On **May 15, 2014**, **Cogent Communications Group, Inc.** adopted a new holding company structure, making **Cogent Communications Holdings, Inc.** the parent company. The majority of assets and operations are now conducted by **Cogent Fiber LLC** and **Cogent Communications, LLC** - **Cogent Communications Holdings, Inc.** became the successor issuer and holding company for **Cogent Communications Group, Inc.** (now **Cogent Communications Group, LLC**) on **May 15, 2014**[16](index=16&type=chunk) - The vast majority of the Company's assets and operations are conducted by **Cogent Fiber LLC** (formerly **Sprint Communications Company LP**) and **Cogent Communications, LLC**[16](index=16&type=chunk) [Description of business](index=8&type=section&id=Description%20of%20business) **Cogent Communications** is a facilities-based provider of high-speed Internet access, private network, optical wavelength, and data center colocation services, primarily to businesses and service providers globally. It offers both on-net services through its own facilities and off-net services using other carriers' infrastructure, with a focus on packet-routed data - The Company is a facilities-based provider of low-cost, high-speed Internet access, private network services, optical wavelength and optical transport services, and data center colocation space and power, optimized for packet routed data[17](index=17&type=chunk) - Services are delivered to businesses, communications service providers, and bandwidth-intensive organizations in **57 countries** across North America, Europe, Asia, South America, Oceania, and Africa[17](index=17&type=chunk) - On-net services are provided through the Company's own network, offering speeds from **100 Mbps to 400 Gbps**, while off-net services utilize other carriers for the 'last mile' connection[18](index=18&type=chunk)[20](index=20&type=chunk) [Acquisition of Sprint Communications](index=10&type=section&id=Acquisition%20of%20Sprint%20Communications) **Cogent Infrastructure, Inc.** acquired **Sprint Communications'** U.S. long-haul fiber network (**Cogent Fiber Business**) on **May 1, 2023**, for **$1**, with significant adjustments for working capital and a **$700 million** IP Transit Services Agreement with **T-Mobile**. The transaction resulted in a **$1.4 billion** bargain purchase gain, reflecting the fair value of acquired assets exceeding liabilities and consideration [Purchase Price](index=10&type=section&id=Purchase%20Price) The acquisition of **Sprint Communications'** fiber business closed on **May 1, 2023**, with a nominal purchase price of **$1**. However, a working capital adjustment resulted in a net payment of **$61.1 million** to the seller on the closing date, with an additional **$5.0 million** paid in **April 2024** - The Transaction closed on **May 1, 2023**, with a purchase price of **$1** payable to the Seller for the Purchased Interests[25](index=25&type=chunk) - A Working Capital Adjustment, primarily for acquired cash and cash equivalents, resulted in a **$61.1 million** payment to the Seller on the Closing Date, with an additional **$5.0 million** accrued in Q3 **2023** and paid in **April 2024**[25](index=25&type=chunk) [Short-term lease payment](index=10&type=section&id=Short-term%20lease%20payment) The Purchase Agreement included a **$28.1 million** (**$19.8 million** net of discount) payment from the Seller to the Buyer for acquired short-term operating lease obligations, to be paid in four equal installments from months **55** to **58** after the Closing Date. The payment was recorded at its present value, resulting in an **$8.4 million** discount, which is amortized as interest income - A **$28.1 million** (**$19.8 million** net of discount) Short-term Lease Payment is due from the Seller to the Buyer for acquired short-term operating lease obligations[26](index=26&type=chunk) - The payment will be made in four equal installments from months **55** to **58** after the Closing Date and was recorded at its present value, resulting in an **$8.4 million** discount[26](index=26&type=chunk) - Amortization of the discount resulted in interest income of **$0.4 million** for the three months ended June 30, **2025**, and **$0.9 million** for the six months ended June 30, **2025**[26](index=26&type=chunk) [Severance reimbursements](index=10&type=section&id=Severance%20reimbursements) The Purchase Agreement stipulated that the Seller would reimburse the Buyer for qualifying severance expenses. Total reimbursements amounted to **$28.6 million**, with payments ending in the **second quarter of 2024** - The Seller reimbursed the Buyer for qualifying severance expenses, totaling **$28.6 million**[27](index=27&type=chunk) - Severance reimbursements of **$8.0 million** and **$12.3 million** were recorded for the three and six months ended June 30, **2024**, respectively, with all payments concluding in Q2 **2024**[27](index=27&type=chunk) [IP Transit Services Agreement](index=12&type=section&id=IP%20Transit%20Services%20Agreement) Under the IP Transit Services Agreement, **T-Mobile USA, Inc.** will pay the Company **$700.0 million** over **54 months**. This payment is considered consideration for the acquisition of a distressed business, not revenue, and was recorded at a discounted present value of **$620.4 million**, with the discount amortized as interest income - **T-Mobile USA, Inc.** will pay the Company an aggregate of **$700.0 million** under the IP Transit Services Agreement, with **$350.0 million** in the first year and **$350.0 million** over the subsequent **42 months**[29](index=29&type=chunk) - The **$700.0 million** payment is considered consideration for the acquisition of a distressed business, not revenue, and was recorded at a discounted present value of **$620.4 million** (net of a **$79.6 million** discount)[30](index=30&type=chunk)[40](index=40&type=chunk) - Amortization of the discount resulted in interest income of **$4.3 million** and **$9.0 million** for the three and six months ended June 30, **2025**, respectively[30](index=30&type=chunk) [Transition Services Agreement](index=12&type=section&id=Transition%20Services%20Agreement) The Transition Services Agreement (**TSA**) facilitates an orderly separation of the **Cogent Fiber Business** from **Sprint Communications**, with both parties providing interim services for up to **two years**. Amounts billed to the Company under the **TSA** decreased significantly from **$23.3 million** in H1 **2024** to **$0.4 million** in H1 **2025**, reflecting the transition progress - The **TSA** ensures an orderly transition of the **Cogent Fiber Business**, with services generally provided for up to **two years**, extendable by one year[31](index=31&type=chunk)[32](index=32&type=chunk) - Amounts billed to the Company by the Seller under the **TSA** decreased from **$6.7 million** (Q2 **2024**) to **$10 thousand** (Q2 **2025**) and from **$23.3 million** (H1 **2024**) to **$0.4 million** (H1 **2025**)[34](index=34&type=chunk) - As of June 30, **2025**, the Company owed **$9 thousand** to the Seller and the Seller owed **$0.1 million** to the Company under the **TSA**[37](index=37&type=chunk) [Other Services Provided to the Seller](index=14&type=section&id=Other%20Services%20Provided%20to%20the%20Seller) Under a Commercial Agreement, the Company provides colocation and connectivity services to **T-Mobile USA, Inc.** Revenue from these services decreased from **$5.9 million** (Q2 **2024**) to **$1.1 million** (Q2 **2025**) and from **$9.1 million** (H1 **2024**) to **$1.8 million** (H1 **2025**) - The Company provides colocation and connectivity services to TMUSA under a Commercial Agreement[38](index=38&type=chunk) | Metric | Three Months Ended June 30, **2025** (in thousands) | Three Months Ended June 30, **2024** (in thousands) | Six Months Ended June 30, **2025** (in thousands) | Six Months Ended June 30, **2024** (in thousands) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Revenue from Commercial Agreement | **$1,100** | **$5,900** | **$1,800** | **$9,100** | - As of June 30, **2025**, TMUSA owed **$0.9 million** to the Company under the Commercial Agreement, down from **$2.6 million** at **December 31, 2024**[38](index=38&type=chunk) [Acquisition-Related Costs](index=14&type=section&id=Acquisition-Related%20Costs) The Company incurred **$13.6 million** in professional fees and other acquisition-related costs (excluding severance) since the Sprint acquisition date. No such costs were incurred in the three or six months ended June 30, **2025**, compared to **$12.4 million** and **$21.4 million** in the corresponding **2024** periods - Total acquisition-related costs (excluding severance) since the acquisition date were **$13.6 million**[39](index=39&type=chunk) | Period | Acquisition-Related Costs (in thousands) | | :-------------------------------- | :------------------------------------- | | Three months ended June 30, **2025** | **$0** | | Three months ended June 30, **2024** | **$12,400** | | Six months ended June 30, **2025** | **$0** | | Six months ended June 30, **2024** | **$21,400** | [Consideration](index=14&type=section&id=Consideration) The acquisition-date fair value of consideration received from the Sprint Transaction totaled **$602.6 million**, primarily comprising amounts due from the Seller under the IP Transit Services Agreement (**$620.4 million** net of discount) and the Purchase Agreement (**$19.7 million** net of discount), offset by working capital payments made to the Seller (**$37.5 million** net of severance reimbursements) | (In thousands) | **May 1, 2023** | | :---------------------------------------------------------------- | :---------- | | Working capital payments made to the Seller, net of severance reimbursements | **$37,532** | | Purchase Agreement payment to be received from the Seller, net of discount | **$19,723** | | Amounts due from the Seller – IP Transit Services Agreement, net of discount | **$620,390** | | Total net consideration to be received from the Seller | **$602,581** | - The IP Transit Services Agreement payments totaling **$700.0 million** were recorded at their present value, resulting in a discount of **$79.6 million**[41](index=41&type=chunk) - Cash consideration for the acquisition was **$1**[41](index=41&type=chunk) [Fair Value of Assets Acquired and Liabilities Assumed and Gain on Bargain Purchase](index=16&type=section&id=Fair%20Value%20of%20Assets%20Acquired%20and%20Liabilities%20Assumed%20and%20Gain%20on%20Bargain%20Purchase) The Company recorded a **$1.4 billion** gain on bargain purchase from the Sprint acquisition, as the fair value of identifiable assets acquired (**$1.86 billion**) significantly exceeded the liabilities assumed (**$1.04 billion**) and the net consideration received (**$602.6 million**). Adjustments were made in Q2 **2024**, increasing the gain by **$27.7 million** - The Transaction resulted in a gain on bargain purchase of **$1.4 billion**, as the fair value of identifiable assets acquired exceeded liabilities assumed and net consideration[42](index=42&type=chunk)[46](index=46&type=chunk) | (In thousands) | **May 1, 2023** | | :-------------------------- | :---------- | | Total assets acquired | **$1,862,017** | | Total liabilities assumed | **$1,035,950** | | Fair value of net assets acquired | **$826,067** | | Total net consideration received | **$602,581** | | Gain on bargain purchase | **$1,428,648** | - Measurement period adjustments in Q2 **2024** increased the gain on bargain purchase by **$27.7 million**, including additional severance reimbursements and adjustments to deferred income tax liabilities[44](index=44&type=chunk) [Acquired Property & Equipment](index=17&type=section&id=Acquired%20Property%20%26%20Equipment) The Company acquired **$965.7 million** in property and equipment, primarily the legacy Sprint network (optical fiber, related equipment, and real estate). These assets were valued using cost and market approaches, reflecting an orderly liquidation value for a distressed business, with optical fiber estimated at **$369.2 million** - The Company acquired **$965.7 million** of property and equipment, primarily the legacy Sprint network, including optical fiber, related equipment, and owned real estate[47](index=47&type=chunk) - Assets were valued using cost and market approaches, based on an orderly liquidation value for a distressed business[47](index=47&type=chunk) - The estimated fair value of the optical fiber on the Closing Date was **$369.2 million**, based on subjective estimations of replacement cost and liquidation value[48](index=48&type=chunk) [Acquired Leases](index=17&type=section&id=Acquired%20Leases) The Company acquired a portfolio of dark fiber, rights-of-way, and facilities leases, accounted for as new at acquisition but retaining the Seller's classification. Adjustments included reclassifying **$24.9 million** from right-of-use to finance lease assets and **$160.9 million** from operating to finance lease liabilities, and recording **$157.2 million** for unfavorable lease terms - The Company acquired a portfolio of dark fiber, rights-of-way, and facilities leases, accounted for as new at the acquisition date but retaining the Seller's classification[49](index=49&type=chunk) - Measurement period adjustments reclassified **$24.9 million** from right-of-use to finance lease assets and **$160.9 million** from operating to finance lease liabilities[49](index=49&type=chunk)[51](index=51&type=chunk) - An adjustment of **$157.2 million** was recorded for unfavorable market terms of the acquired leases, valued using the income approach[52](index=52&type=chunk) [Acquired Intangible Assets](index=19&type=section&id=Acquired%20Intangible%20Assets) Acquired intangible assets include **$458.0 million** in IPv4 addresses and **$16.0 million** in customer relationships. IPv4 addresses are considered indefinite-lived and not amortized, while customer relationships have a nine-year useful life, with annual amortization expense of **$1.8 million** - Intangible assets acquired include **$458.0 million** of Internet Protocol version 4 (**IPv4**) addresses and **$16.0 million** of acquired customer relationships[53](index=53&type=chunk) - **IPv4** addresses are considered to have an indefinite useful life and are not amortized, with no impairment recorded to date[54](index=54&type=chunk) - Acquired customer relationships have an estimated useful life of nine years, with amortization expense of **$0.8 million** for the six months ended June 30, **2025**, and future annual amortization of **$1.8 million**[53](index=53&type=chunk) [Acquired Asset Retirement Obligations](index=19&type=section&id=Acquired%20Asset%20Retirement%20Obligations) The Company assumed **$32.0 million** in asset retirement obligations, primarily for restoration related to acquired leases. No obligation was recorded for optical fiber removal due to an indeterminable settlement date - The Company assumed **$32.0 million** of asset retirement obligations, primarily related to restoration obligations for acquired leases[55](index=55&type=chunk) - No asset retirement obligation was recorded for the removal of acquired optical fiber because a settlement date is indeterminable, preventing a reasonable estimation of fair value[55](index=55&type=chunk) [Reassessment of Bargain Purchase Gain](index=19&type=section&id=Reassessment%20of%20Bargain%20Purchase%20Gain) Due to the material **$1.4 billion** bargain purchase gain, the Company reassessed the recognition and measurement of acquired assets and assumed liabilities, concluding that all were appropriately recognized and valued - The Company recorded a material bargain purchase gain of **$1.4 billion** because the fair value of identifiable assets acquired exceeded the fair value of consideration transferred[56](index=56&type=chunk) - A reassessment confirmed that all acquired assets and assumed liabilities were recognized and that valuation procedures and measures were appropriate[56](index=56&type=chunk) - **Cogent Infrastructure, Inc.** acquired the U.S. long-haul fiber network of **Sprint Communications** (now **Cogent Fiber LLC**) on **May 1, 2023**, through a Membership Interest Purchase Agreement[23](index=23&type=chunk)[25](index=25&type=chunk) - The purchase price was **$1**, with a net working capital payment of **$61.1 million** to the Seller on the Closing Date, and an additional **$5.0 million** paid in **April 2024**[25](index=25&type=chunk) - The transaction was accounted for as a business combination, resulting in a gain on bargain purchase of **$1.4 billion**, as the fair value of identifiable assets acquired exceeded liabilities assumed and net consideration[42](index=42&type=chunk)[46](index=46&type=chunk)[56](index=56&type=chunk) [Basis of presentation](index=19&type=section&id=Basis%20of%20presentation) The unaudited condensed consolidated financial statements are prepared in accordance with **SEC** rules and **GAAP**, reflecting all normal recurring adjustments. Certain information is condensed or omitted, and prior year amounts have been reclassified for consistency - The unaudited condensed consolidated financial statements are prepared in accordance with **SEC** rules and **GAAP**, reflecting all normal recurring adjustments[57](index=57&type=chunk) - Certain information and footnote disclosures are condensed or omitted, and prior year amounts have been reclassified to conform to current year presentation[57](index=57&type=chunk) - The statements include all wholly owned subsidiaries, with all inter-company accounts and activity eliminated[58](index=58&type=chunk) [Use of estimates](index=21&type=section&id=Use%20of%20estimates) The preparation of financial statements requires management to make estimates and assumptions that impact reported amounts, and actual results may differ from these estimates - Management makes estimates and assumptions affecting reported asset and liability amounts, and disclosures of contingent assets and liabilities[59](index=59&type=chunk) - Actual results may differ from these estimates[59](index=59&type=chunk) [Financial instruments](index=21&type=section&id=Financial%20instruments) The carrying amounts of short-term financial instruments like cash, receivables, and payables approximate fair value. The fair values of long-term debt instruments (**2027** Notes, **2032** Notes, **IPv4** Notes) and the Swap Agreement are based on recent trading prices (Level **2** market approach) - Carrying amounts of short-term instruments (cash, receivables, payables) approximate fair value due to their short-term nature[60](index=60&type=chunk) | Financial Instrument | Fair Value as of June 30, **2025** (in millions) | | :------------------------------------------------ | :------------------------------------------- | | **7.00%** Senior Unsecured Notes due **2027** | **$450.0** | | **7.00%** Senior Unsecured Mirror Notes due **2027** | **$300.0** | | **6.50%** Senior Secured Notes due **2032** | **$591.0** | | **7.924%** Existing **IPv4** Notes | **$211.3** | | **6.646%** **IPv4** New Notes | **$175.4** | | Swap Agreement | **$13.6** | [Restricted cash and interest rate swap agreement](index=21&type=section&id=Restricted%20cash%20and%20interest%20rate%20swap%20agreement) Restricted cash increased significantly to **$93.1 million** at June 30, **2025**, primarily due to **IPv4** Notes requirements and margin for the Swap Agreement. The Swap Agreement, maturing in **February 2026**, had a net liability fair value of **$13.6 million** at June 30, **2025**, and converts a fixed interest rate obligation to a variable one - Restricted cash totaled **$93.074 million** at June 30, **2025**, including **$13.6 million** for the Swap Agreement and **$79.5 million** for **IPv4** Notes[11](index=11&type=chunk)[61](index=61&type=chunk) - The interest rate Swap Agreement, maturing in **February 2026**, had a fair value of a net liability of **$13.6 million** at June 30, **2025**, and effectively converts a fixed **3.50%** interest rate to a variable SOFR-based rate[61](index=61&type=chunk)[119](index=119&type=chunk)[120](index=120&type=chunk) - The Company made a **$13.8 million** deposit with the counterparty to the Swap Agreement, with additional deposits required if the net liability exceeds this amount[120](index=120&type=chunk) [Gross receipts taxes, universal service fund and other surcharges](index=21&type=section&id=Gross%20receipts%20taxes%2C%20universal%20service%20fund%20and%20other%20surcharges) The Company records certain excise taxes and surcharges, such as Universal Service Fund fees, on a gross basis, including them in both service revenue and network operations expense. These charges amounted to **$20.0 million** for Q2 **2025** and **$40.2 million** for H1 **2025** - The Company records certain excise taxes and surcharges (e.g., Universal Service Fund fees) on a gross basis, including them in service revenue and network operations expense[62](index=62&type=chunk) | Period | Excise Taxes and Surcharges (in thousands) | | :-------------------------------- | :--------------------------------------- | | Three months ended June 30, **2025** | **$20,000** | | Three months ended June 30, **2024** | **$19,200** | | Six months ended June 30, **2025** | **$40,200** | | Six months ended June 30, **2024** | **$39,700** | [Basic and diluted net loss per common share](index=22&type=section&id=Basic%20and%20diluted%20net%20loss%20per%20common%20share) Basic and diluted net loss per common share were **$(1.21)** for Q2 **2025** and **$(2.30)** for H1 **2025**. Due to net losses, all outstanding stock options and restricted stock were anti-dilutive and thus excluded from diluted **EPS** calculations | Metric | Three Months Ended June 30, **2025** | Six Months Ended June 30, **2025** | | :-------------------------------- | :------------------------------- | :----------------------------- | | Basic net loss per common share | **$(1.21)** | **$(2.30)** | | Diluted net loss per common share | **$(1.21)** | **$(2.30)** | | Weighted average common shares - basic | **47,592,836** | **47,804,421** | | Weighted average common shares - diluted | **47,592,836** | **47,804,421** | - Due to net losses, stock options and restricted stock were anti-dilutive and therefore excluded from the computation of diluted **EPS**[64](index=64&type=chunk)[65](index=65&type=chunk) - Unvested shares of restricted common stock totaled **1,657,168** as of June 30, **2025**[65](index=65&type=chunk) [Stockholders' Equity](index=22&type=section&id=Stockholders%27%20Equity) Total stockholders' equity decreased significantly from **$222.8 million** at **December 31, 2024**, to **$46.7 million** at June 30, **2025**, primarily due to accumulated deficit from net losses and dividends paid, partially offset by foreign currency translation adjustments and equity-based compensation | Metric | December 31, **2024** (in thousands) | June 30, **2025** (in thousands) | | :-------------------------- | :------------------------------- | :--------------------------- | | Total Stockholders' Equity | **$222,848** | **$46,668** | | Accumulated Deficit | **$(376,345)** | **$(584,887)** | | Accumulated Other Comprehensive Loss | **$(30,685)** | **$(1,196)** | - Net loss for the six months ended June 30, **2025**, was **$(109.8 million)**, and dividends paid were **$(98.7 million)**, contributing to the decrease in equity[66](index=66&type=chunk) - Foreign currency translation adjustment positively impacted equity by **$29.5 million** for the six months ended June 30, **2025**[66](index=66&type=chunk) [Revenue recognition](index=24&type=section&id=Revenue%20recognition) The Company recognizes revenue under **ASC 606**, recognizing installation fees over the contract term or estimated average customer life for month-to-month contracts. Termination fees are recognized upon collection - Revenue is recognized under **ASC 606**, entitling the Company to revenue for promised goods or services[68](index=68&type=chunk) - Installation fees for contracts longer than month-to-month are recognized over the contract term; for month-to-month contracts, they are recognized over the estimated average customer life[68](index=68&type=chunk) - Termination fees are recognized as they are collected[68](index=68&type=chunk) [Lessor Accounting](index=24&type=section&id=Lessor%20Accounting) The Company acts as a lessor for owned dark fiber leases (**IRUs**) acquired in the Sprint Transaction, which are accounted for as operating leases. Cash consideration, including upfront installation fees, is recognized as service revenue on a straight-line basis over the agreement term - The Company is a lessor for owned dark fiber leases (**IRUs**) acquired in the Transaction, accounted for as operating leases[70](index=70&type=chunk) - **IRUs** typically have terms of **20-25 years**, and cash consideration (including upfront installation fees) is recognized as service revenue on a straight-line basis over the term[70](index=70&type=chunk) [Leases](index=24&type=section&id=Leases) The Company applies **ASU 2016-02** for leases, electing not to recognize short-term leases and not separating lease and non-lease components. Total lease costs for the six months ended June 30, **2025**, were **$87.5 million**, with significant finance and operating lease liabilities and future minimum payments - The Company has elected not to apply **ASU 2016-02** recognition requirements to short-term leases (one year or less) and not to separate lease and non-lease components[71](index=71&type=chunk) | Lease Cost Type | Six Months Ended June 30, **2025** (in thousands) | Six Months Ended June 30, **2024** (in thousands) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | | Finance lease cost (amortization of ROU assets) | **$27,891** | **$23,768** | | Finance lease cost (interest expense) | **$23,615** | **$20,330** | | Operating lease cost | **$36,013** | **$46,967** | | Total lease costs | **$87,519** | **$91,065** | - As of June 30, **2025**, total minimum lease obligations were **$519.6 million** for operating leases and **$1,132.2 million** for finance leases, with weighted-average remaining terms of **11.3** and **17.1 years**, respectively[75](index=75&type=chunk) [Allowance for credit losses](index=26&type=section&id=Allowance%20for%20credit%20losses) The Company estimates credit losses on trade receivables based on historical data, current conditions, and forecasts, primarily monitoring collectability by reviewing delinquency status. The allowance for credit losses was **$8.39 million** at June 30, **2025**, with a net bad debt expense of **$4.7 million** for the six months ended June 30, **2025** - The Company estimates credit losses expected over the life of its trade receivables using historical information, current conditions, and forecasts, with delinquency status as the primary indicator[76](index=76&type=chunk) | Metric | June 30, **2025** (in thousands) | December 31, **2024** (in thousands) | | :-------------------------- | :------------------------------- | :------------------------------- | | Allowance for credit losses | **$8,390** | **$9,762** | | Metric | Six Months Ended June 30, **2025** (in thousands) | Six Months Ended June 30, **2024** (in thousands) | | :---------------- | :---------------------------------------------- | :---------------------------------------------- | | Net bad debt expense | **$4,702** | **$5,514** | | Bad debt recoveries | **$2,633** | **$1,125** | [Accounting Standards Not Yet Adopted](index=26&type=section&id=Accounting%20Standards%20Not%20Yet%20Adopted) The Company will not early adopt **ASU 2023-09** (Income Taxes) and **ASU 2024-03** (Expense Disaggregation Disclosures). It does not expect a material impact from **ASU 2023-09** and is evaluating the impact of **ASU 2024-03** - The Company will not early adopt **ASU 2023-09** (Income Taxes: Improvements to Income Tax Disclosures), effective for annual periods after **December 15, 2024**, and does not expect a material impact[78](index=78&type=chunk) - The Company will not early adopt **ASU 2024-03** (Expense Disaggregation Disclosures), effective for annual periods after **December 15, 2026**, and is evaluating its impact[79](index=79&type=chunk) - **Cogent Communications** is a facilities-based provider of low-cost, high-speed Internet access, private network services, optical wavelength and transport services, and data center colocation, serving businesses and service providers in **57 countries**[17](index=17&type=chunk) - The company acquired **Sprint Communications'** U.S. long-haul fiber network (now **Cogent Fiber LLC**) on **May 1, 2023**, for a purchase price of **$1**, with a net working capital payment of **$61.1 million** to the seller[23](index=23&type=chunk)[25](index=25&type=chunk) - The acquisition included a **$700.0 million** IP Transit Services Agreement with **T-Mobile**, recorded at a discounted present value of **$620.4 million**, which is considered consideration received to complete the acquisition of a distressed business, not revenue[29](index=29&type=chunk)[30](index=30&type=chunk)[40](index=40&type=chunk) [2. Property and equipment](index=26&type=section&id=2.%20Property%20and%20equipment) Depreciation and amortization expense related to property and equipment and finance leases increased to **$150.4 million** for the six months ended June 30, **2025**. The Company also recognized a **$3.3 million** gain on lease termination in June **2024** from prepaying an **IRU** finance lease | Metric | Three Months Ended June 30, **2025** (in thousands) | Three Months Ended June 30, **2024** (in thousands) | Six Months Ended June 30, **2025** (in thousands) | Six Months Ended June 30, **2024** (in thousands) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Depreciation and amortization expense | **$74,846** | **$74,065** | **$150,439** | **$144,907** | | Capitalized compensation cost | **$11,201** | **$11,232** | **$22,445** | **$22,929** | - In June **2024**, the Company prepaid an **IRU** finance lease for **$114.6 million**, resulting in a **$3.3 million** gain on lease termination[81](index=81&type=chunk) [3. Long-term debt](index=28&type=section&id=3.%20Long-term%20debt) As of June 30, **2025**, the Company had **$2.4 billion** in long-term debt, including newly issued **$600.0 million** **2032** Notes (used to redeem **2026** Notes), **$370.4 million** in **IPv4** Notes, and **$750.0 million** in **2027** Notes. The debt instruments have various maturities, interest rates, and covenants, with the Company also managing an interest rate swap agreement [Issuance of $600.0 million principal amount of 2032 Notes and redemption of the Existing Secured 2026 Notes](index=28&type=section&id=Issuance%20of%20%24600.0%20million%20principal%20amount%20of%202032%20Notes%20and%20redemption%20of%20the%20Existing%20Secured%202026%20Notes) On June 17, **2025**, Cogent issued **$600.0 million** of **6.50%** Senior Secured Notes due **2032**, using **$507.3 million** of the net proceeds to redeem the **$500.0 million** **3.50%** Senior Secured **2026** Notes, resulting in a **$5.6 million** loss on debt extinguishment. The **2032** Notes are senior secured obligations, guaranteed by Group's material domestic subsidiaries, and include various covenants and redemption provisions - On June 17, **2025**, **$600.0 million** aggregate principal amount of **6.50%** Senior Secured Notes due **2032** (**2032** Notes) were issued[82](index=82&type=chunk)[83](index=83&type=chunk) - Net proceeds of **

Financial Data and Key Metrics Changes - The company's revenue for the quarter was $246.2 million, reflecting a sequential decline of $800,000 [12] - EBITDA as adjusted increased sequentially by 7% to $73.5 million, with an adjusted EBITDA margin increasing by 200 basis points to 29.8% [5][12] - The company completed two significant debt transactions, enhancing liquidity, including issuing $600 million of secured notes at a rate of 6.5% [4] Business Line Data and Key Metrics Changes - Wavelength revenues for the quarter were $9.1 million, a 150% increase year over year and a sequential increase of 27% [3] - IPv4 leasing revenues increased sequentially by 6.3% to $15.3 million, representing a 40.1% year-over-year increase [5] - Corporate business represented 44.3% of revenues, a decrease of 8.8% year over year, while the NetCentric business increased by 6.8% year over year [14][15] Market Data and Key Metrics Changes - The company served 3,529 on-net buildings, with on-net revenue of $132.3 million, a year-over-year decrease of 6% but a sequential increase of 2.1% [15] - Off-net revenue was $102.2 million, reflecting a year-over-year decrease of 8.3% and a sequential decrease of 4.8% [16] - Average price per megabit for the installed base decreased sequentially by 11% to $0.17 and decreased by 30% year over year [16] Company Strategy and Development Direction - The company aims to capture 25% of the highly concentrated North American wavelength market and is focused on selling high-margin on-net services [3][9] - The company is nearing the end of grooming unprofitable revenue acquired from Sprint, expecting to return to positive top-line growth in 2025 [9] - The company plans to continue improving sales force productivity and managing underperforming representatives [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to positive revenue growth each quarter, primarily driven by on-net services [44] - The company anticipates long-term average revenue growth between 6% and 8%, with EBITDA margins expected to expand by approximately 200 basis points annually [8] - Management noted that the leverage ratio is expected to decline sequentially, with a target to fall below five times over the next six quarters [56] Other Important Information - The company has a backlog of 4,687 wavelength opportunities and has connected 1,675 third-party carrier-neutral data centers [3][6] - The board authorized an additional $100 million buyback program, with a total of $106.4 million available under the buyback program [7] - The company’s capital expenditures for the quarter were $56.2 million, with expectations for a decline in capital spending in the second half of the year [20] Q&A Session Summary Question: What is the target for installed wavelengths by year-end? - Management confirmed the target of 400 to 500 circuits installed per month by year-end, emphasizing the need for quality and timely service delivery [28][30] Question: Can you provide an update on the return to top-line growth? - Management indicated that the rate of revenue decline has materially decelerated and expects to see positive revenue growth each quarter moving forward [42][44] Question: What are the sources of capital for funding dividends? - Management highlighted over $300 million in cash on the balance sheet and indicated that they do not anticipate needing material incremental borrowings to fund dividends or operations [50][56] Question: Where are most wavelength customers coming from? - Approximately 75% of wavelength customers are existing Cogent Transit customers, with 25% being new to Cogent [100] Question: What is the status of data center sales? - Management noted ongoing negotiations with multiple parties and expressed caution regarding the lack of firm deposits from bidders [78][80]

Financial Data and Key Metrics Changes - The company's revenue for the quarter was $246.2 million, reflecting a sequential decline of $800,000 [12] - EBITDA increased sequentially by 11% to $48.5 million, with an adjusted EBITDA of $73.5 million, up by $4.7 million [5][12] - The adjusted EBITDA margin increased by 200 basis points sequentially to 29.8% [6][12] - SG&A expenses declined sequentially by $5.6 million, representing 25% of revenues [6] - The company completed two significant debt transactions, enhancing liquidity with $600 million of secured notes issued at a rate of 6.5% [5] Business Line Data and Key Metrics Changes - Wavelength revenues for the quarter were $9.1 million, a 150% increase year-over-year and a 27% sequential increase [4] - IPv4 leasing revenues increased sequentially by 6.3% to $15.3 million, representing a 40.1% year-over-year increase [6] - The corporate business represented 44.3% of revenues, a decrease of 8.8% year-over-year [14] - The NetCentric business represented 39.5% of revenues, increasing by 6.8% year-over-year [15] - The enterprise business represented 16.2% of revenues, a decrease of 19.9% year-over-year [15] Market Data and Key Metrics Changes - The company serves 3,529 on-net buildings, with on-net revenue of $132.3 million, a year-over-year decrease of 6% [15] - Off-net revenue was $102.2 million, a year-over-year decrease of 8.3% [16] - Average price per megabit for the installed base decreased sequentially by 11% to $0.17 [16] - Average revenue per user (ARPU) for on-net was $5.00, off-net was $12.67, and wavelength ARPU was $2.16 [17] Company Strategy and Development Direction - The company aims to capture 25% of the North American wavelength market and is focused on selling high-margin on-net services [4][9] - The company anticipates long-term average revenue growth between 6% and 8% and expects EBITDA margins to expand by approximately 200 basis points annually [8] - The company is nearing the end of grooming unprofitable revenue acquired from Sprint, expecting to return to positive top-line growth in 2025 [9] Management's Comments on Operating Environment and Future Outlook - Management noted that the sequential revenue decline improved materially to $800,000 compared to $5.2 million in the previous quarter [9] - The company expects to see positive revenue growth each quarter moving forward, primarily driven by on-net services [45] - Management expressed confidence in achieving a quarterly run rate of $20 million for wavelengths by the fourth quarter [92] Other Important Information - The company has a backlog of 4,687 wavelength opportunities and has connected 1,675 third-party carrier-neutral data centers [7][26] - The board authorized an additional $100 million buyback program, with a total of $106.4 million available under the program [7] - The company reported a bad debt expense of less than 1% of revenues for the quarter [22] Q&A Session Summary Question: What is the target for installed wavelengths by year-end? - Management confirmed the target of 400 to 500 circuits installed per month by year-end, with a current backlog of wavelengths installed but not yet billed [30][33] Question: What is the status of data center sales? - Management reported six total letters of intent for data center sales but expressed caution regarding the lack of meaningful deposits from bidders [36][78] Question: When can the company expect to return to top-line growth? - Management indicated that the rate of revenue decline has materially decelerated and expects to see positive revenue growth each quarter moving forward [43][45] Question: How does the company plan to fund dividend growth? - Management stated that with over $300 million in cash and reduced capital expenditures, there is no anticipated need for material incremental borrowings to fund dividends [51][57] Question: What is the mix of wavelength customers? - Approximately 75% of wavelength customers are existing Cogent Transit customers, with 25% being new to Cogent [99]