Cogent(US:CCOI)2020-11-05 15:40Revenue Performance - Service revenue for the three months ended September 30, 2020, was $142.3 million, representing a 3.9% increase from $136.9 million in the same period of 2019[104] - On-net revenue increased by 5.7% to $105.1 million compared to $99.4 million in the prior year[104] - Off-net revenue slightly decreased by 0.9% to $37.1 million from $37.4 million year-over-year[104] - Service revenue increased by 4.5% to $424.2 million for the nine months ended September 30, 2020, compared to $405.9 million for the same period in 2019[124] - On-net revenue rose by 6.2% to $312.3 million, while off-net revenue remained stable at $111.5 million[124] - Revenues from corporate customers rose by 1.3% to $95.7 million, while revenues from net-centric customers increased by 9.6% to $46.6 million[109] Expenses - Network operations expenses decreased by 1.3% to $54.5 million from $55.3 million in the previous year[104] - Selling, general, and administrative expenses rose by 10.4% to $39.7 million compared to $36.0 million in the same quarter of 2019[104] - Depreciation and amortization expenses increased by 8.1% to $21.6 million from $20.0 million year-over-year[104] - Interest expense rose by 3.7% to $15.8 million compared to $15.2 million in the same period of 2019[104] - Network operations expenses increased by 0.3% to $164.3 million, driven by a 3.3% increase in customer connections[133] - Selling, General, and Administrative (SG&A) expenses rose by 8.0% to $119.2 million, attributed to increased salaries and a larger sales force[135] - Interest expense increased by 10.0% to $46.5 million, primarily due to higher finance lease obligations and the issuance of new senior unsecured notes[137] Tax and Income - Income tax benefit for the quarter was $1.6 million, compared to a provision of $5.3 million in the same quarter of 2019[104] - Income tax provision decreased by 60.0% to $4.7 million, down from $11.9 million in the prior year[139] Cash Flow and Indebtedness - As of September 30, 2020, the company had cash and cash equivalents of approximately $394.8 million, indicating a high level of liquidity[149] - For the nine months ended September 30, 2020, net cash provided by operating activities was $102.7 million, compared to $102.7 million for the same period in 2019[153] - The company experienced a net cash used in investing activities of $40.1 million for the nine months ended September 30, 2020, up from $37.1 million in 2019[154] - Principal payments under finance lease obligations increased to $19.4 million for the nine months ended September 30, 2020, compared to $7.0 million in 2019[155] - Total indebtedness at September 30, 2020, was $1.1 billion, which includes $212.9 million of finance lease obligations[157] Shareholder Returns - The company has returned over $858 million to shareholders through share repurchases and dividends since its initial public offering[141] - The company plans to continue its current dividend policy despite economic uncertainties due to the COVID-19 pandemic[145] - On November 4, 2020, the company approved a quarterly dividend of $0.73 per common share, totaling an estimated $33.5 million[163] - The company purchased 4,567 shares of its common stock for $0.3 million under the buyback program during the three and nine months ended September 30, 2020[161] Network Operations - The company operates a network connected to 2,884 buildings, including 1,783 large multi-tenant office buildings totaling 968.4 million square feet of office space[93] - The company connected 2,884 on-net buildings as of September 30, 2020, up from 2,771 in 2019, reflecting ongoing network expansion efforts[122] - The number of on-net customer connections grew by 3.3% to 76,338, and off-net connections increased by 3.0% to 11,849[112] - The average price per megabit for the installed base declined by 26.5% from the previous year, indicating significant pricing pressure in the net-centric market[111] - The average price per megabit for the installed base declined by 24.4%, impacting revenue growth from net-centric customers[130] Financial Controls and Risks - The company does not have relationships with unconsolidated entities or financial partnerships, minimizing exposure to financing, liquidity, market, or credit risks[174] - As of September 30, 2020, there have been no material changes to critical accounting policies and significant estimates since the last annual report[175] - There have been no material changes to market risk exposures as of September 30, 2020, compared to the previous annual report[176] - The company maintains effective disclosure controls and procedures, ensuring timely reporting of required information[178] - An evaluation confirmed that the company's disclosure controls and procedures were effective at the reasonable assurance level as of the end of the reporting period[179] - There has been no change in internal control over financial reporting that materially affects the company's financial reporting[180]