Cogent(US:CCOI)2021-08-08 16:15Financial Data and Key Metrics Changes - For Q2 2021, the company's revenue grew sequentially by 0.8% to $117.9 million, representing a year-over-year increase of 4.9% [6][10] - EBITDA increased by 2.9% sequentially and by 7.2% year-over-year, with an EBITDA margin of 38.7%, up 90 basis points from the previous quarter and year [8][45] - The company returned $37 million to shareholders through dividends, marking the 36th consecutive increase in quarterly dividends, now at $0.805 per share, a 14.2% year-over-year growth [9][71] Business Line Data and Key Metrics Changes - Corporate segment revenues declined by 1.6% sequentially and by 6.7% year-over-year, accounting for 61.2% of total revenues [20][25] - NetCentric business revenues increased by 4.8% sequentially and by 30.5% year-over-year, representing 38.8% of total revenues [21][30] - Customer connections in the corporate segment decreased by 2% sequentially and by 5.2% year-over-year, while NetCentric customer connections increased by 4.2% sequentially and by 15.7% year-over-year [29][30] Market Data and Key Metrics Changes - Approximately 25.6% of total quarterly revenues were generated outside the U.S., with 18% from Europe and 7% from other regions [46][47] - The average price per megabit for the installed base declined by 6.1% sequentially and by 24.8% year-over-year, indicating continued pricing pressure in the market [36][37] Company Strategy and Development Direction - The company aims for a long-term EBITDA margin expansion of 200 basis points per year and a constant currency revenue growth target of approximately 10% [19][70] - The focus remains on enhancing the NetCentric business, leveraging the growth in streaming subscriptions and international traffic [4][59] - The company plans to continue expanding its network, adding approximately 100 carrier-neutral data centers annually [60] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the economic outlook due to the ongoing pandemic and the emergence of the Delta variant, despite signs of improvement in the corporate segment [5][63] - There is optimism about the return of corporate customers to offices, which is expected to drive a recovery in corporate revenues [63][88] - The company remains focused on maintaining strong credit quality and operational efficiency, with improvements in customer churn and bad debt metrics [9][70] Other Important Information - The company issued $500 million in senior secured notes, which will save approximately $6.5 million in interest expenses and provide $55 million in additional liquidity [11][13] - Cash held at the end of the quarter totaled $374 million, with $148.2 million unrestricted for dividends or stock buybacks [10][53] Q&A Session Summary Question: Composition of NetCentric customer base and its impact - Management noted that the NetCentric customer base is evolving, with a significant portion of traffic remaining on the Cogent network, which is driving profitability [74][76] Question: Interest rate savings and refinancing opportunities - The difference in interest savings was attributed to incremental capital raised and plans for a fixed versus variable swap to reduce rates further [79][80] Question: Corporate customer return to office commentary - Management indicated that corporate customers remain cautious due to the Delta variant, but there is a general expectation for increased office activity post-Labor Day [81][83] Question: Corporate revenue visibility and leverage targets - Management believes corporate on-net growth will improve sequentially, but visibility on timing remains uncertain due to the pandemic [102][104] Question: Streaming services contract terms and pricing - The majority of contracts with NetCentric customers are three years, with pricing models favoring longer commitments and higher volumes [95][98]