Cogent Communications Holdings, Inc. (NASDAQ:CCOI) Q2 2024 Earnings Conference Call August 8, 2024 8:30 AM ET Company Participants Dave Schaeffer - Founder, Chairman, President and Chief Executive Officer Thaddeus Weed - VP, Treasurer and Chief Financial Officer Conference Call Participants Sebastiano Petti - JPMorgan Greg Williams - TD Cowen Walter Piecyk - LightShed Timothy Horan - Oppenheimer Frank Louthan - Raymond James James Schneider - Goldman Sachs Nick Del Deo - MoffettNathanson Bora Lee - RBC Capi ...

Cogent Communications Inc. (CCOI) reported mixed second-quarter 2024 results, with the bottom line surpassing the Zacks Consensus Estimate but the top line missing the same. The Washington, DC-based leading Internet service provider reported a top-line expansion year over year, driven by growth in net-centric and corporate business. However, it witnessed a decline in total customer connections during the quarter. Net Income The company reported a net loss of $32.3 million or a loss of 68 cents per share aga ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 000-51829 COGENT COMMUNICATIONS HOLDINGS, INC. (Exact Name of Registrant as Specified in Its Charter) Delaware 46-5706863 (State or Other Jurisdiction of Incorpora ...

Cogent Communications (CCOI) came out with a quarterly loss of $0.75 per share versus the Zacks Consensus Estimate of a loss of $1.31. This compares to loss of $0.13 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 42.75%. A quarter ago, it was expected that this internet service provider would post a loss of $1.10 per share when it actually produced a loss of $1.29, delivering a surprise of -17.27%. Over the last four quarter ...

[Financial and Business Highlights](index=1&type=section&id=Financial%20and%20Business%20Highlights) Cogent reported Q2 2024 service revenue of $260.4 million, with improved margins and strategic financial activities Q2 2024 Key Financial Highlights (in millions) | Metric | Q2 2024 | Q1 2024 | Q2 2023 | | :--- | :--- | :--- | :--- | | Service Revenue | $260.4 | $266.2 | $239.8 | | EBITDA Margin | 10.4% | 6.9% | 10.1% | | EBITDA, as adjusted | $106.2 | $115.0 | $54.1 | | Non-GAAP Gross Margin | 40.2% | 36.7% | 42.8% | | Gross Leverage Ratio | 4.06 | 3.57 | 5.63 | - Cogent approved a **$0.01 per share** increase to its quarterly dividend, reaching **$0.985 per share** for Q3 2024, marking the company's **48th consecutive quarterly dividend increase**[1](index=1&type=chunk) - The company purchased **153,322 shares** of its common stock for **$8.0 million** in Q2 2024 under its buyback program[1](index=1&type=chunk) - Cogent completed two significant debt issuances: **$206.0 million** of **7.9% IPV4 Securitized Notes** and **$300.0 million** of **7.0% Unsecured Notes**[1](index=1&type=chunk) [Q2 2024 Financial Performance](index=1&type=section&id=Q2%202024%20Financial%20Performance) Cogent's Q2 2024 service revenue reached $260.4 million, with a net loss per share, as on-net growth was offset by declines in other segments [Revenue Analysis](index=1&type=section&id=Revenue%20Analysis) Q2 2024 total service revenue was $260.4 million, showing on-net and wavelength growth despite declines in off-net and non-core revenues Q2 2024 Revenue by Service Type (in millions) | Service Type | Q2 2024 Revenue | Change from Q1 2024 | Change from Q2 2023 | | :--- | :--- | :--- | :--- | | **Total Service Revenue** | **$260.4** | **-2.2%** | **+8.6%** | | On-net | $140.6 | +1.5% | +10.3% | | Off-net | $111.5 | -5.7% | +9.3% | | Wavelength | $3.6 | +9.0% | +128.7% (vs Q1 2023) | | Non-core | $4.6 | -23.7% | -46.2% | - Foreign exchange rates negatively impacted service revenue by **$0.3 million** compared to Q1 2024 and by **$0.4 million** compared to Q2 2023[2](index=2&type=chunk) [Profitability and Earnings](index=2&type=section&id=Profitability%20and%20Earnings) Q2 2024 GAAP gross margin was 11.6%, with adjusted EBITDA at $106.2 million, resulting in a net loss of $(0.68) per share Q2 2024 Profitability Metrics | Metric | Q2 2024 | Q1 2024 | Q2 2023 | | :--- | :--- | :--- | :--- | | GAAP Gross Margin | 11.6% | 9.9% | 20.8% | | Non-GAAP Gross Margin | 40.2% | 36.7% | 42.8% | | EBITDA, as adjusted | $106.2M | $115.0M | $54.1M | | EBITDA, as adjusted, margin | 40.8% | 43.2% | 22.5% | | Net Loss per Share (Basic & Diluted) | $(0.68) | $(1.38) | $23.84 / $23.65 | - Net cash used in operating activities was **$22.2 million** for Q2 2024, a significant shift from the **$82.7 million** provided by operating activities in Q2 2023[7](index=7&type=chunk) - Total Sprint acquisition costs were **$12.4 million** for the quarter, including **$8.0 million** in severance costs reimbursed by T-Mobile[8](index=8&type=chunk) [Operational Metrics and Agreements](index=4&type=section&id=Operational%20Metrics%20and%20Agreements) Total customer connections declined to 128,782, while on-net buildings increased, and T-Mobile agreements provided significant revenue Customer Connections as of June 30, 2024 | Connection Type | Count | Change from Q1 2024 | | :--- | :--- | :--- | | Total Connections | 128,782 | -3.1% | | On-net | 87,387 | -0.2% | | Off-net | 32,758 | -5.3% | | Wavelength | 754 | +8.8% | | Non-core | 7,883 | -21.5% | - The number of on-net buildings increased by **65** from the previous quarter to a total of **3,386** as of June 30, 2024[11](index=11&type=chunk) - Under the IP Transit Services Agreement, T-Mobile paid Cogent **$66.7 million** in Q2 2024[12](index=12&type=chunk) - Revenue from the Commercial Agreement with T-Mobile increased by **86.2%** from the previous quarter to **$5.9 million**[13](index=13&type=chunk) [Summary of Financial and Operational Results](index=7&type=section&id=Summary%20of%20Financial%20and%20Operational%20Results) Quarterly results reflect the Sprint acquisition's impact, with declining off-net revenues offset by steady on-net growth and strong adjusted EBITDA Quarterly Revenue Trend (in thousands) | Quarter | On-Net Revenue | Off-Net Revenue | Wavelength Revenue | Non-Core Revenue | Total Service Revenue | | :--- | :--- | :--- | :--- | :--- | :--- | | Q2 2023 | $127,665 | $101,984 | $1,585 | $8,572 | $239,806 | | Q3 2023 | $129,031 | $130,560 | $2,992 | $12,846 | $275,429 | | Q4 2023 | $138,064 | $123,669 | $3,108 | $7,258 | $272,099 | | Q1 2024 | $138,624 | $118,178 | $3,327 | $6,039 | $266,168 | | Q2 2024 | $140,757 | $111,451 | $3,625 | $4,610 | $260,443 | Quarterly Adjusted EBITDA and Margin Trend (in thousands) | Quarter | EBITDA, as adjusted | Adjusted EBITDA Margin | | :--- | :--- | :--- | | Q2 2023 | $54,062 | 22.5% | | Q3 2023 | $131,438 | 47.7% | | Q4 2023 | $110,512 | 40.6% | | Q1 2024 | $114,989 | 43.2% | | Q2 2024 | $106,163 | 40.8% | Quarterly Customer Connections Trend | Quarter | On-Net | Off-Net | Wavelength | Non-Core | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | Q2 2023 | 92,846 | 38,762 | 414 | 19,408 | 151,430 | | Q3 2023 | 88,250 | 36,923 | 449 | 12,403 | 138,025 | | Q4 2023 | 88,291 | 36,676 | 661 | 11,975 | 137,603 | | Q1 2024 | 87,574 | 34,579 | 693 | 10,037 | 132,883 | | Q2 2024 | 87,387 | 32,758 | 754 | 7,883 | 128,782 | - The acquisition of the Wireline Business involved hiring **942 employees**, with **655** remaining with the company as of June 30, 2024[31](index=31&type=chunk)[32](index=32&type=chunk) [Consolidated Financial Statements](index=20&type=section&id=Consolidated%20Financial%20Statements) Consolidated financial statements show increased cash from new debt, higher liabilities, a net loss, and negative operating cash flow for Q2 2024 [Condensed Consolidated Balance Sheets](index=20&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2024, the balance sheet shows increased cash to $384.4 million from new debt, with total assets at $3.34 billion and liabilities at $2.93 billion Balance Sheet Summary (in thousands) | Account | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $384,419 | $75,092 | | Total current assets | $689,475 | $513,627 | | Total assets | $3,344,173 | $3,211,619 | | Total current liabilities | $312,960 | $373,324 | | Total liabilities | $2,928,650 | $2,602,063 | | Total stockholders' equity | $415,523 | $609,556 | [Condensed Consolidated Statements of Comprehensive Income](index=21&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Q2 2024 income statement shows $260.4 million in service revenue, an operating loss, and a net loss of $(0.68) per share, contrasting with prior year's acquisition gain Income Statement Summary - Three Months Ended June 30 (in thousands) | Account | 2024 | 2023 | | :--- | :--- | :--- | | Service revenue | $260,443 | $239,806 | | Total operating expenses | $310,918 | $274,410 | | Operating loss | $(47,143) | $(34,604) | | Gain on bargain purchase | $27,673 | $1,155,719 | | Net (loss) income | $(32,338) | $1,123,863 | | Diluted net (loss) income per share | $(0.68) | $23.65 | [Condensed Consolidated Statements of Cash Flows](index=23&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q2 2024 cash flows show net cash used in operations, positive investing cash from T-Mobile, and a large financing inflow from new debt Cash Flow Summary - Three Months Ended June 30 (in thousands) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(22,171) | $82,654 | | Net cash provided by (used in) investing activities | $25,889 | $(22,316) | | Net cash provided by (used in) financing activities | $255,595 | $(52,464) | | **Net increase in cash** | **$262,967** | **$9,531** | [Non-GAAP Financial Measures and Reconciliations](index=14&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) Cogent uses non-GAAP measures like Adjusted EBITDA and constant currency revenue to provide insights into operational efficiency and underlying growth trends - EBITDA, as adjusted, is a key metric that adds back Sprint acquisition costs and includes cash payments received from T-Mobile under the IP Transit Services Agreement to reflect recurring cash flows and evaluate debt servicing ability[35](index=35&type=chunk)[36](index=36&type=chunk) - Constant currency revenue calculations are provided to show revenue growth without the impact of foreign exchange rate fluctuations, offering a useful measure of underlying sequential and year-over-year growth[41](index=41&type=chunk)[42](index=42&type=chunk) - Non-GAAP gross profit, which excludes depreciation, amortization, and equity-based compensation from network operations expense, is used by management to measure network efficiency and margin after service costs[48](index=48&type=chunk) - Gross and Net Leverage Ratios are calculated using the trailing 12 months of Adjusted EBITDA, providing insight into the company's debt levels relative to its adjusted earnings[49](index=49&type=chunk) [Other Information](index=5&type=section&id=Other%20Information) The company faces mixed corporate business results due to remote work, with ongoing risks related to economic instability and Sprint integration - The company notes that the deteriorating commercial real estate market and remote work policies since the COVID-19 pandemic have negatively impacted its corporate revenue, though some positive trends in office occupancy and higher capacity connections are emerging[17](index=17&type=chunk) - Cogent will host a conference call for financial analysts on August 8, 2024, to discuss the Q2 2024 results, with a webcast available on the company's website[20](index=20&type=chunk) - The report includes a forward-looking statements disclaimer, highlighting risks such as difficulties in integrating the Sprint Wireline Business, economic instability, foreign exchange rate changes, and competition[60](index=60&type=chunk)

The upcoming report from Cogent Communications (CCOI) is expected to reveal quarterly loss of $1.02 per share, indicating a decline of 684.6% compared to the year-ago period. Analysts forecast revenues of $264.69 million, representing an increase of 10.4% year over year. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. This reflects how the analysts covering the stock have collectively reevaluated their initial estimates during this timeframe. Prior to a company's ear ...

WASHINGTON, Aug. 1, 2024 /PRNewswire/ -- Cogent Communications Holdings, Inc.("Cogent") (NASDAQ: CCOI), one of the largest Internet service providers in the world, today announced a change in the webcast information for the following conference at which Dave Schaeffer, Cogent's Chief Executive Officer, will present: The BofA SMID Cap Conference is being held virtually. Dave Schaeffer will be presenting on Tuesday, August 6th at 2:00 p.m. ET. This conference is not being webcast live. Investors and other int ...

Core Points - Cogent Communications Holdings, Inc. is one of the largest Internet service providers globally, focusing on low-cost, high-speed Internet access and private network services for bandwidth-intensive businesses [4]. Group 1: Conference Presentations - CEO Dave Schaeffer will present at multiple conferences, including the KeyBanc Capital Markets Technology Leadership Forum on August 5th, the BofA SMID Cap Conference on August 6th, the Oppenheimer Technology, Internet & Communications Conference on August 12th, and the TD Cowen Communications Infrastructure Summit on August 13th [1][2]. Group 2: Access to Presentations - Investors and interested parties can access live audio webcasts of the conference presentations through the "Events" section of Cogent's website, with replays available for 90 days post-presentation [3]. Group 3: Company Overview - Cogent operates a facilities-based, all-optical IP network, providing services in hundreds of major metropolitan markets across over 55 countries [4]. - The company is headquartered in Washington, D.C. and can be contacted via their website or phone [5].

Dial-in Numbers: 1-888-596-4144 for U.S. and Canadian callers 1-646-968-2525 for international callers Conference ID 6641307 We recommend callers dial in 15 minutes prior to the start of the call to ensure you are connected. WASHINGTON, July 17, 2024 /PRNewswire/ -- Cogent Communications Holdings, Inc. ("Cogent") (NASDAQ: CCOI) will host a conference call at 8:30 a.m. (ET) on August 8, 2024 to present Cogent's operating results for the second quarter of 2024 and answer questions. Cogent will issue a press r ...

Cogent is benefiting from increasing customer engagement in its Net-centric business. The company operates a large number of data centers and its extensive coverage enables it to serve Net-centric customers with a reliable and low-latency network. Additionally, the company is observing positive trends in its corporate business as corporate customers are seeking to upgrade existing internet infrastructure to enhance connectivity and facilitate remote work. This internet service provider is expected to post q ...