Cogent(US:CCOI)2022-02-24 17:41Financial Data and Key Metrics Changes - For full year 2021, the company's revenues increased by 3.8% year-over-year to $589.8 million, while fourth quarter revenues slightly declined to $147.2 million primarily due to foreign exchange impacts and USF tax reductions [8][12] - Non-GAAP gross profit increased by 4.5% to $366 million, with a gross margin improvement of 50 basis points to 62.1% [11] - EBITDA increased by 6.5% year-over-year to $227.9 million, with an EBITDA margin for the full year increasing by 90 basis points to 38.6% [11] Business Line Data and Key Metrics Changes - Corporate business revenues declined by 7.4% year-over-year and 2.5% sequentially, representing 59% of total revenues [26] - NetCentric business, which accounts for 41% of revenues, grew by 25.3% year-over-year and 2.6% sequentially, benefiting from increased demand for streaming services [31][27] - The number of corporate customer connections decreased by 3.7% year-over-year, while NetCentric customer connections increased by 13.9% [32][36] Market Data and Key Metrics Changes - The company experienced a 7% sequential growth in network traffic, with a year-over-year increase of 17% [7] - The average price per megabit for installed customers decreased by 19.5% year-over-year, reflecting competitive pricing pressures [40] - The corporate business is highly correlated with vacancy rates in commercial real estate, with an 84% correlation noted [94] Company Strategy and Development Direction - The company aims for long-term EBITDA margin expansion of 200 basis points per year and a constant currency revenue growth rate of approximately 10% [25] - The focus is on enhancing the corporate business as employees return to offices, with expectations of regaining historical growth rates [71][80] - The company plans to continue increasing its dividend, reflecting confidence in future cash flow and growth [15][82] Management's Comments on Operating Environment and Future Outlook - Management noted that the corporate business remains below historical averages due to the pandemic, but signs of improvement are evident with increased leasing activity [5][21] - The company is optimistic about returning to positive growth in 2022 as the corporate environment stabilizes [96] - Management acknowledged the impact of COVID-19 on operations but expressed confidence in the ability to adapt and grow [20][100] Other Important Information - The company returned $39.6 million to shareholders through dividends in the fourth quarter, with a total of $150.3 million for the year [12] - Cash at year-end was $328.6 million, providing a cushion for future investments and shareholder returns [59] - The company has a diverse customer base, with the top 25 customers representing less than 6% of total revenues [54] Q&A Session Summary Question: Are you seeing any cannibalization within larger ports? - Management indicated that there is no significant cannibalization occurring as customers upgrade to larger ports, with a trend towards higher capacity services [86][90] Question: Can you elaborate on customer interest in return-to-office? - Management noted a correlation between vacancy rates and customer losses, with improved leasing activity in markets like San Francisco and New York expected to drive corporate growth [94][95] Question: What is the outlook on leverage and dividend policy? - Management expressed comfort with being slightly above target leverage levels, anticipating growth in free cash flow and revenue, while continuing to return capital to shareholders [99][100]