Company Overview - Cogent operates a global network carrying over 20% of all internet traffic[8] - The company offers high-speed internet access to two customer bases: Corporate (60% of revenues) and Netcentric (40% of revenues)[8] - Cogent operates its network in 50 countries across 215 markets[8] Market Opportunity - Cogent wins approximately 40% of all On-Net proposals in the corporate sector[9] - The potential corporate market consists of over 92,000 MTOB tenants[9] - Cogent prices new Netcentric services at 50% of the market rate[10] Customer Segmentation - Corporate customers account for 60% of revenue and 4% of traffic, with 61% customer longevity of 4+ years and a monthly churn of 1.2%[11] - Netcentric customers account for 40% of revenue and 96% of traffic, with 45% customer longevity of 4+ years and a monthly churn of 0.9%[11] Network and Cost Advantages - Cogent's network is approximately 29% utilized, indicating substantial network capacity[17] - Cogent purchased $14 Billion of original investment for $60 Million[24] - Approximately 69% of Cogent's traffic originates and terminates on-net[22] Financial Performance - On-Net Revenue in Q3 2021 was $111.1 million, a 5.7% year-over-year increase[36] - Off-Net Revenue in Q3 2021 was $36.7 million, a 1.2% year-over-year decrease[36] - Total Revenue in Q3 2021 was $147.9 million, a 4.0% year-over-year increase[36] - EBITDA as adjusted Margin in Q3 2021 was 39.0%[36] - Cogent has returned over $1 Billion to shareholders since its 2005 public offering[38]

Financial Data and Key Metrics Changes - Cogent Communications has returned approximately $1.7 billion to investors through buybacks and dividends, with a current dividend growth rate reduced to $0.005 per share due to increased leverage from the Sprint asset integration [4][5][7] - The company anticipates deleveraging quickly, with leverage expected to peak in Q3 2025 before beginning to decline [5][6] Business Line Data and Key Metrics Changes - The Waves business has faced delays, with a target of 800 data centers wave-enabled by the end of 2024, achieving 802 by year-end [24][51] - The installed base for Waves grew by approximately 18% sequentially in Q1 2025, with a focus on improving installation timelines [26][31] Market Data and Key Metrics Changes - The company has engaged with around 150 counterparties regarding the sale of 24 data centers, with four parties progressing to contract negotiations [12][14] - The market for wavelengths is described as more diffused than initially expected, with a revised target of reaching a $500 million annualized revenue run rate by mid-2028 [51] Company Strategy and Development Direction - Cogent is focused on maximizing value through potential sales or leases of data centers, with a balanced approach to capital allocation between dividends and buybacks [8][17] - The company aims to build credibility with customers in the Waves market, with plans to increase service delivery capabilities as demand grows [29][30] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges in the Waves business but remains optimistic about achieving a $100 million annualized revenue rate by Q4 2025 [52] - The company is adapting to customer feedback and market conditions, particularly in the context of AI and its impact on demand for wavelengths [39][40] Other Important Information - The company has significant net operating losses (NOLs) in Europe, which may influence tax implications from potential sales of data centers [17] - The competitive landscape is evolving, with competitors responding to Cogent's claims of faster provisioning times [44][45] Q&A Session Summary Question: Is the current dividend growth rate a permanent change? - Management views the reduction in dividend growth as temporary during the deleveraging period, with plans to reaccelerate growth once leverage is reduced [7] Question: What is the status of data center sales? - Management confirmed ongoing discussions with multiple parties, with a focus on maximizing value through either sales or leases [12][14] Question: What are the challenges faced in the Waves business? - Management acknowledged a stale sales funnel and the need to build credibility with customers regarding installation timelines [22][26] Question: What are the updated revenue targets for the Waves business? - The company maintains a target of reaching a $500 million annualized revenue run rate by mid-2028, despite current delays [51]

Market Overview - As of mid-May 2025, the S&P 500 has turned positive year-to-date for the first time in many weeks, indicating a broad recovery across multiple sectors from previous volatility [1][2] - Despite the market improvement, ongoing trade disputes and the Trump administration's tariff policies remain a concern [2] Cogent Communications - Cogent Communications is currently trading at $50.87, with a 12-month stock price forecast of $75.75, indicating a potential upside of 48.91% based on 8 analyst ratings [5][8] - The company has seen a significant drop in share price since February, nearing a one-year low, but has strong growth potential in wavelength services, which have more than doubled in revenue over two years [6][7] - Cogent expects to capture a quarter of the North American wavelength market in the next three years, with current revenue in this category at $7.1 million [7] Regeneron Pharmaceuticals - Regeneron Pharmaceuticals is trading at $571.36, with a 12-month stock price forecast of $890.60, suggesting a potential upside of 55.87% based on 26 analyst ratings [9][10] - The company has experienced a 20% decline year-to-date and a 42% drop over the last 12 months, reaching a multi-year low [10] - Regeneron benefits from a robust pipeline and recent sales growth, achieving $14 billion in sales in 2024, up from over $13 billion the previous year [11] - The company has a low debt-to-equity ratio of 0.09 and initiated dividend payments in February 2025, enhancing its appeal to investors [13] Atlas Energy Solutions - Atlas Energy Solutions is currently priced at $13.23, with a 12-month stock price forecast of $19.81, indicating a potential upside of 49.75% based on 12 analyst ratings [14][16] - The company has faced a 42% decline year-to-date amid broader energy sector turmoil but benefits from a specialized focus with little competition [14][15] - Atlas Energy's operations in the Permian Basin provide a geographic advantage, helping to reduce costs and streamline logistics [15]

Summary of Cogent Communications Conference Call Industry Overview - The conference focused on the commercial fiber industry, particularly the impact of AI on demand and the competitive landscape within the sector [5][4]. Key Company Insights Cogent Communications (CCOI) - **Leadership**: Dave Schafer, founder and CEO, emphasized the importance of adapting to market changes driven by AI and hyperscalers [2][6]. - **Market Position**: Cogent has a diversified customer base, with hyperscalers currently representing a small but growing portion of revenue [6][7]. - **Total Addressable Market (TAM)**: The TAM for hyperscalers is estimated to be $15 billion, projected to grow to $40 billion to $50 billion in the coming years [7][8]. - **Capacity Demand**: There has been a significant increase in demand for dark fiber, with customers now seeking 400+ strand counts, indicating a long-term commitment to infrastructure [19][17]. Unity Group - **Leadership**: Kenny Gunderman, president and CEO, highlighted the importance of a diversified approach to customer segments, with a focus on long-term commitments from customers [2][6]. - **Market Dynamics**: Unity's core business is dark fiber, and they are seeing a shift from lit services to dark fiber as customers make longer-term network commitments [15][16]. Demand Insights - **AI-Driven Demand**: The demand for fiber has been significantly influenced by AI, with increased urgency in discussions around infrastructure build-out [5][8]. - **Non-AI Demand**: The overall demand for fiber remains solid, with growth expected in various segments, including fiber to the home and large enterprises [20][32]. - **Customer Segmentation**: Both companies emphasize the importance of being diversified across customer segments, with no single segment representing more than 20% of revenue [33][34]. Strategic Insights - **Business Models**: Cogent focuses on a narrow strategy targeting large office buildings and data centers, while Unity targets Tier 2 and Tier 3 markets to avoid intense competition [40][44]. - **Network Expansion**: Cogent prefers to acquire existing fiber assets rather than build new infrastructure, while Unity has engaged in significant build phases in less competitive markets [52][57]. - **Technology and Innovation**: Both companies recognize the importance of technological advancements in driving down costs and improving service delivery [66][73]. Competitive Landscape - **Market Dynamics**: The fiber market is characterized by competition among a few large players, with opportunities for insurgent companies to capture market share [70][69]. - **Pricing Pressure**: While there are concerns about price compression, both companies believe that quality of service and unique routes will remain critical competitive factors [71][74]. Conclusion - The conference highlighted the evolving landscape of the commercial fiber industry, driven by AI and changing customer demands. Both Cogent and Unity are adapting their strategies to capture growth opportunities while managing the challenges posed by competition and technological advancements.

Cogent Communications (CCOI) FY Conference Summary Company Overview - **Company**: Cogent Communications - **Industry**: Communications Sector - **Event Date**: May 13, 2025 Key Points Financial Performance and Growth Targets - Cogent reported mixed results for Q1, but increased long-term revenue growth target to **6% to 8%** and margin expansion target to **150 basis points** annually [5][10] - The company is nearing the end of revenue burn-off from the Sprint transaction, which had previously resulted in a **7.4%** compounded annual decline in revenues [6][8] - Historical organic revenue growth was **10.2%** over 18 years, but had decelerated to **2.1%** prior to the Sprint acquisition [7][8] - The demand for wavelengths, particularly driven by AI, is expected to enhance revenue growth [9][10] Revenue and Margin Insights - The acquisition of Sprint's network, which had a capital cost of **$20.5 billion**, is being repurposed for optical transport services [9] - The company has exceeded its margin expansion target, achieving over **300 basis points** annually since the acquisition [11] - Wavelength services are expected to have high contribution margins, with on-net services exceeding **90%** [39] Installation and Demand Challenges - The company faced challenges in installations due to customer readiness and backlog management, with a sequential growth of **18.2%** in orders but only **2.2%** in revenue [16][23] - Cogent aims to scale installations to **500 wavelengths per month**, with a current backlog of **3,443 wavelengths** [17][21] - The wavelength market is currently valued at **145,000 wavelengths**, dominated by two competitors with longer installation times [19] Market Position and Strategy - Cogent is the largest provider of internet traffic globally, carrying about **1.5 exabytes** daily, with a **25%** market share [22] - The company plans to achieve a similar market share in the wavelength business within three years [22] - The strategy includes leveraging existing customer relationships and credibility from the IP business to gain market share in wavelengths without aggressive pricing [27][28] EBITDA and Dividend Outlook - EBITDA for 2023 was projected to increase from **$260 million** to **$352 million**, with expectations for continued growth despite a headwind from T-Mobile payment reductions [36][38] - The company has returned approximately **$1.6 billion** to shareholders through dividends and buybacks, with a focus on reducing leverage before accelerating capital returns [42][45] Asset Monetization Opportunities - Cogent is exploring monetization of surplus assets, including data centers, IP address spaces, and excess fiber [46][50] - The company has identified **125 data centers** for conversion, with **1 million square feet** ready for use but not fully leased [49] - IP address spaces have potential market value between **$40 and $60** per address, with ongoing efforts to monetize these assets [50] Conclusion - Cogent Communications is positioned for growth in the wavelength market, leveraging its existing infrastructure and customer base while managing financial performance and asset monetization strategies. The company remains focused on improving installation capabilities and expanding its market share in a competitive landscape.

Company Overview - Cogent operates a global network carrying approximately 25% of all internet traffic[9] - The company serves three customer bases: Corporate (45% of revenues), Netcentric (37% of revenues), and Enterprise (18% of revenues)[9] - IP Services (DIA, VPN and Transit) account for 88% of Cogent's revenue[9] Growth and Market - Cogent is experiencing rapid growth in its wave network, as evidenced by the increase in wave service locations from 22 in Q2 2023 to 883 in Q1 2025[12] - The company's addressable market is growing, with on-net MTOB SqFt increasing from 597 million in Q1 2010 to 1015 million in Q1 2025[12] - Cogent purchased over $34 billion of original investment and $700 million in cash in exchange for $60 million[38] Financial Performance - In Q1 2025, On-Net Revenue was $1408 million, Off-Net Revenue was $1114 million, Wave Revenue was $71 million, and Non-Core Revenue was $44 million[54] - Q1 2025 total revenue was $247 million, a 21% increase year-over-year and a 72% increase quarter-over-quarter[54] - Non-GAAP Gross Margin reached 446% in Q1 2025[54] - EBITDA, as adjusted for Sprint acquisition costs and cash payments under IP Transit Services Agreement, was $688 million in Q1 2025, representing a 278% margin[54] Network and Infrastructure - Cogent's network is interconnected with 8240 access networks[29, 37] - The company owns 180 data centers with 26000 server racks in 205 million square feet of floor space offering 211 MW of power[33] - Cogent has 99000+ intercity fiber route miles and 32000+ metro fiber route miles[29]

Core Viewpoint - Cogent Communications Inc. reported disappointing first-quarter 2025 results, with both revenue and net income falling short of expectations due to weakness in enterprise and corporate business [1]. Financial Performance - The company recorded a net loss of $52 million, or a loss of $1.09 per share, an improvement from a net loss of $65.3 million, or a loss of $1.38 per share, in the same quarter last year [2]. - Service revenues decreased to $247.1 million from $266.2 million year-over-year, missing the consensus estimate by $3 million [3]. - On-Net revenues fell to $129.6 million from $138.6 million, also missing estimates [3]. - Off-Net revenues decreased to $107.3 million from $118.2 million, with customer connections dropping significantly [4]. - Wavelength revenues increased to $7.1 million from $3.3 million, indicating growth in this segment [4]. - Non-core revenues declined to $3 million from $6 million year-over-year [4]. Customer Connections - Net-centric customer connections rose slightly to 61,795 from 61,599 a year ago, while enterprise customer connections decreased to 13,641 from 19,463 [5]. Profitability Metrics - GAAP gross profit increased to $33.57 million from $26.4 million, with margins improving to 13.6% from 9.9% [6]. - Operating loss narrowed to $40.3 million from $59.4 million year-over-year [6]. - EBITDA rose to $43.8 million from $18.5 million, with margins improving significantly [7]. Cash Flow and Liquidity - The company generated $36.4 million in cash from operations, up from $19.2 million in the previous year [8]. - As of March 31, 2025, Cogent had $153.8 million in cash and cash equivalents, alongside $543.9 million in finance lease obligations [8]. Dividend Information - Cogent raised its quarterly dividend by $0.005 to $1.01 per share, marking the 51st consecutive quarterly dividend increase [7].

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 for Q1 2025, detailing balance sheets, comprehensive loss, cash flows, and notes, highlighting a **$52.0 million** net loss and **$3.12 billion** in total assets [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$3.12 billion** by March 31, 2025, while total liabilities slightly increased, and stockholders' equity declined to **$142.8 million** Balance Sheet Items (In thousands) | Balance Sheet Items (In thousands) | March 31, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $422,681 | $482,101 | | **Total Assets** | **$3,120,722** | **$3,173,102** | | **Total Current Liabilities** | $283,424 | $253,336 | | **Total Liabilities** | **$2,977,878** | **$2,950,254** | | **Total Stockholders' Equity** | **$142,844** | **$222,848** | [Condensed Consolidated Statements of Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) The company reported a **net loss of $52.0 million** for Q1 2025, an improvement from the prior year, with service revenue decreasing to **$247.0 million** Income Statement Items (In thousands, except per share data) | Income Statement Items (In thousands, except per share data) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Service revenue | $247,048 | $266,168 | | Total operating expenses | $287,340 | $325,557 | | Operating loss | $(40,292) | $(59,389) | | Net loss | **$(52,042)** | **$(65,307)** | | Basic net loss per common share | **$(1.09)** | **$(1.38)** | | Diluted net loss per common share | **$(1.09)** | **$(1.38)** | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations increased to **$36.4 million** in Q1 2025, while investing activities shifted to a **$33.1 million** outflow, and financing cash use rose Cash Flow Items (In thousands) | Cash Flow Items (In thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $36,351 | $19,219 | | Net cash (used in) provided by investing activities | $(33,088) | $50,951 | | Net cash used in financing activities | $(57,015) | $(23,549) | | Net (decrease) increase in cash | **$(43,946)** | **$49,493** | [Notes to Interim Condensed Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20Interim%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, the **$1.4 billion** Sprint acquisition bargain purchase gain, the **$700 million** T-Mobile IP Transit Agreement, and various debt instruments - The acquisition of the Sprint Business on May 1, 2023, was accounted for as a business combination, resulting in a bargain purchase gain of **$1.4 billion**[21](index=21&type=chunk)[36](index=36&type=chunk)[41](index=41&type=chunk) - The **$700 million** in payments from T-Mobile under the IP Transit Services Agreement is recognized as consideration for the acquisition of a distressed business, not as service revenue under ASC 606[26](index=26&type=chunk)[27](index=27&type=chunk) - As of March 31, 2025, the company had outstanding debt including **$500.0 million** of 2026 Notes, **$450.0 million** of 2027 Notes, **$300.0 million** of 2027 Mirror Notes, and **$206.0 million** of IPv4 Notes[71](index=71&type=chunk) - Subsequent to the quarter end, on April 11, 2025, the company issued an additional **$174.4 million** of secured IPv4 notes[106](index=106&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 financial results, including a **7.2% service revenue decline**, Sprint Business integration, strategic initiatives, and liquidity management [Acquisition of Sprint Communications](index=33&type=section&id=Acquisition%20of%20Sprint%20Communications) Details the Sprint Business acquisition, including a **$1** purchase price, a **$61.1 million** working capital payment, and the **$700 million** T-Mobile IP Transit Services Agreement - The acquisition of the Sprint Business closed on May 1, 2023, for a purchase price of **$1**, plus a working capital adjustment payment of **$61.1 million** made to the seller[114](index=114&type=chunk)[115](index=115&type=chunk) - Cogent will receive an aggregate of **$700 million** from T-Mobile under an IP Transit Services Agreement, consisting of **$29.2 million** per month for the first year and **$8.3 million** per month for the subsequent 42 months[117](index=117&type=chunk) - A Transition Services Agreement (TSA) is in place for up to two years to ensure an orderly transition, with costs for services generally passed through between the parties[119](index=119&type=chunk)[120](index=120&type=chunk) [Our Strategy](index=41&type=section&id=Our%20Strategy) Strategy focuses on expanding customer base, growing wavelength services in **883 data centers**, repurposing Sprint facilities, and monetizing **38 million IPv4 addresses** - Focus on growing the corporate customer base and expanding business with larger enterprise customers acquired from Sprint[135](index=135&type=chunk)[136](index=136&type=chunk) - Expand product offerings with Wavelength (optical transport) services, now available in **883 data centers** in the US, Mexico, and Canada[142](index=142&type=chunk) - Expand the data center footprint by converting former Sprint facilities into Cogent data centers[143](index=143&type=chunk) - Increase leasing of its approximately **38 million IPv4 addresses** to monetize this asset[144](index=144&type=chunk) [Results of Operations](index=45&type=section&id=Results%20of%20Operations) Q1 2025 service revenue decreased **7.2%** to **$247.0 million** due to customer cancellations, offset by **114.0%** Wavelength revenue growth, while expenses declined Key Financial Metrics (In thousands) | Key Financial Metrics (In thousands) | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Service revenue | $247,048 | $266,168 | (7.2)% | | Network operations expenses | $137,439 | $168,933 | (18.6)% | | SG&A expenses | $73,863 | $76,696 | (3.7)% | Revenue by Connection Type (In thousands) | Revenue by Connection Type (In thousands) | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | On-net | $129,628 | $138,624 | (6.5)% | | Off-net | $107,274 | $118,178 | (9.2)% | | Wavelength | $7,119 | $3,327 | 114.0% | | Non-core | $3,027 | $6,039 | (49.9)% | - The decrease in total service revenue was primarily driven by the cancellation of low-margin and non-core customers acquired with the Sprint Business[149](index=149&type=chunk) [Liquidity and Capital Resources](index=52&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity relies on operations, cash, and T-Mobile payments; **$184.0 million** cash as of March 31, 2025, with **$174.4 million** new IPv4 notes issued post-quarter - The **$700 million** in payments from the T-Mobile IP Transit Services Agreement is intended to offset the initial negative cash flow and operating losses from the acquired Sprint Business[175](index=175&type=chunk)[176](index=176&type=chunk) - In April 2025, the company issued **$174.4 million** in new secured IPv4 notes, with net proceeds of **$170.5 million**, of which **$97.9 million** was unrestricted[178](index=178&type=chunk)[193](index=193&type=chunk) - As of March 31, 2025, the company had cash, cash equivalents, and restricted cash of **$184.0 million**[193](index=193&type=chunk) - The Board of Directors approved a quarterly dividend of **$1.01** per share, estimated at **$48.2 million**, to be paid on June 6, 2025[208](index=208&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes to market risk exposures have occurred since the 2024 Annual Report on Form 10-K filing - Management confirms no material changes to market risk exposures since the 2024 year-end 10-K filing[216](index=216&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during Q1 2025 - Management concluded that disclosure controls and procedures were effective as of the end of the reporting period[218](index=218&type=chunk) - There were no material changes to the company's internal control over financial reporting during the most recent fiscal quarter[219](index=219&type=chunk) PART II OTHER INFORMATION [Item 1. Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings not expected to materially impact financial condition or operations - The company is involved in ordinary course legal proceedings which are not expected to have a material impact on its operations[222](index=222&type=chunk) [Item 1A. Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors have occurred since the 2024 Annual Report on Form 10-K filing - Management confirms no material changes to its risk factors since the 2024 year-end 10-K filing[223](index=223&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The stock buyback program had **$22.4 million** remaining as of March 31, 2025, with **$5.0 million** in shares repurchased in April 2025 - As of March 31, 2025, **$22.4 million** remained available under the company's stock buyback program[224](index=224&type=chunk) - No common stock was repurchased during the three months ended March 31, 2025[224](index=224&type=chunk) - Subsequent to the quarter, in April 2025, the company purchased **94,856 shares** for **$5.0 million**[207](index=207&type=chunk) [Item 5. Other Information](index=45&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during Q1 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading plan during Q1 2025[225](index=225&type=chunk) [Item 6. Exhibits](index=46&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including debt agreement supplements, an amendment to the CEO's employment agreement, and certifications - The report includes several exhibits, such as supplements to debt agreements (4.1, 4.2), an amendment to the CEO's employment agreement (10.1), and required certifications (31.1, 31.2, 32.1, 32.2)[227](index=227&type=chunk)

Core Insights - Cogent Communications reported revenue of $247.05 million for Q1 2025, reflecting a year-over-year decline of 7.2% and an EPS of -$1.09, an improvement from -$1.29 a year ago [1] - The revenue fell short of the Zacks Consensus Estimate of $250.18 million by 1.25%, while the EPS was also below the consensus estimate of -$1.05 by 3.81% [1] Financial Performance Metrics - Total customer connections were 120,731, below the average estimate of 124,494 [4] - On-net customer connections were 86,781, compared to the estimate of 87,842 [4] - Off-net customer connections were 27,508, below the estimate of 30,698 [4] - Non-core customer connections were 5,120, compared to the estimate of 5,576 [4] - Total on-net buildings reached 3,500, slightly below the estimate of 3,481 [4] Revenue Breakdown - Corporate revenue was $110.69 million, down 11.4% year-over-year, and below the estimate of $111.50 million [4] - Enterprise revenue was $43.75 million, a decline of 11.3% year-over-year, compared to the estimate of $44.93 million [4] - Net-centric revenue was $92.62 million, showing a slight increase of 0.7% year-over-year, but below the estimate of $93.76 million [4] - Wavelength revenue surged to $7.12 million, a significant increase of 114% year-over-year, but below the estimate of $8.03 million [4] - Non-core service revenue was $3.03 million, a drastic decline of 49.9% year-over-year, compared to the estimate of $3.58 million [4] - On-net service revenue was $129.63 million, down 6.5% year-over-year, slightly below the estimate of $130.42 million [4] - Off-net service revenue was $107.27 million, down 9.2% year-over-year, compared to the estimate of $108.95 million [4] Stock Performance - Cogent's shares have returned -1.2% over the past month, contrasting with the Zacks S&P 500 composite's increase of 11.3% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - Revenue for the quarter was $247 million, with an adjusted EBITDA of $68.8 million, reflecting a $1.9 million increase and an adjusted EBITDA margin of 27.8%, up 130 basis points sequentially [17][18] - IPv4 leasing revenue increased sequentially by 14.8% to $14.4 million and increased 42% year over year, with average revenue per IPv4 address sold rising to $0.49, a 63% increase from the beginning of the year [8][10] - Gross margin increased by 790 basis points to 44.6%, with cost of goods sold declining from $31.6 million in the first quarter of the previous year [10] Business Line Data and Key Metrics Changes - Wavelength revenues for the quarter were $7.1 million, a 14% increase year over year, with a sequential increase of 2.2% [6] - Corporate business represented 44.9% of revenues, decreasing 11.4% year over year and 2.1% sequentially, primarily due to the grooming of low-margin off-net connections [20] - NetCentric business represented 37.5% of revenues, increasing 0.7% year over year but declining 1.1% sequentially, impacted by a decline in revenue from a commercial services agreement with T-Mobile [21] Market Data and Key Metrics Changes - On-net revenue was $129.6 million, a year-over-year decrease of 6.5% but a sequential increase of $900,000 [22] - Off-net revenue was $107.3 million, a year-over-year decrease of 9.2% and a sequential decrease of 5.2% [23] - Average price per megabit for the installed base decreased sequentially by 6% to $0.20 and decreased by 25% year over year [23] Company Strategy and Development Direction - The company aims to capture 25% of the North American wavelength market within three years and anticipates achieving a minimum of $20 million in additional cost savings through Q2 2026 [7][10] - The long-term annual revenue growth rate is adjusted to 6% to 8%, with EBITDA margin expansion targeted at 50 basis points annually [14] - The company is focused on integrating the former Sprint network and legacy Cogent network into a unified network, with plans to convert Sprint facilities into Cogent data centers [26] Management's Comments on Operating Environment and Future Outlook - Management expects to return to total top-line revenue growth by mid-Q3 2025, following the completion of the grooming of undesirable revenues from Sprint contracts [15][40] - The company acknowledges increased leverage due to recent activities but remains committed to returning capital to shareholders through dividends and buybacks [14][49] - Management expressed confidence in the wavelength business, citing a rebuilt funnel of 3,433 wavelength opportunities and a target of reaching 10,000 by year-end [7][52] Other Important Information - The company repurchased approximately 100,000 shares for about $5 million under its stock buyback program, with $17.4 million remaining available [12] - Total gross debt at par was $2 billion, with a net debt of $1.8 billion, and a gross debt to EBITDA ratio of 6.69 at quarter-end [28] Q&A Session Summary Question: Changes in competition within the Waves business - Management noted that primary competitors in the wavelength market have struggled with provisioning, giving Cogent a competitive advantage [36] Question: Update on corporate revenue trends - Management indicated that undesirable revenue from Sprint has been largely purged, and they expect corporate revenue to grow by mid-Q3 2025 [40] Question: Dividend growth and milestones for returning to growth - Management stated that the board is committed to returning capital to shareholders and will evaluate the pace of deleveraging to potentially return to dividend growth [49] Question: Wavelength ARPU trends - Management expects wavelength ARPU to stabilize around $1,900 to $2,000 as the base continues to grow [60] Question: Data center monetization timing and scale - Management is actively negotiating contracts for surplus capacity and is motivated to sell as it would aid in deleveraging [62]