Cogent(US:CCOI)2021-05-01 19:28Financial Data and Key Metrics Changes - Revenues grew sequentially by 2% to $146.8 million, an increase of 4.2% year-over-year [7] - Non-GAAP gross profit increased by 2.7% sequentially and 7.6% year-over-year [9] - Non-GAAP gross margin improved by 40 basis points sequentially to 62.5% and by 200 basis points year-over-year [10] - Quarterly EBITDA grew by 10.2% year-over-year, with a margin increase of 200 basis points to 37.8% [10][49] - Cash flow from operations increased sequentially by 25.4% to $47.1 million, representing the largest amount in the company's history [59] Business Line Data and Key Metrics Changes - Corporate business, representing 62.7% of revenues, declined by 5.1% year-over-year and 1.8% sequentially [25] - NetCentric business, accounting for 37.3% of revenues, grew by 24.6% year-over-year and 9.2% sequentially [26] - Corporate customer connections decreased by 1% sequentially and 3.7% year-over-year, totaling 46,719 connections [35] - NetCentric customer connections increased by 4.2% sequentially and 14.2% year-over-year, totaling 44,206 connections [36] Market Data and Key Metrics Changes - Revenue from international markets increased to approximately 25% of total quarterly revenues, up from 24% in the previous quarter [51] - The average price per megabit for the installed base declined by 6.8% sequentially and 28.1% year-over-year, while the price for new customer contracts increased to $0.20 [41] Company Strategy and Development Direction - The company aims for a long-term EBITDA margin expansion of approximately 200 basis points per year and a constant currency revenue growth rate of about 10% [24] - The focus remains on increasing corporate customer connection sizes to larger and symmetric connections, adapting to the work-from-home environment [68] - The company plans to optimize its balance sheet and take advantage of the current interest rate environment, anticipating a reduction in cash interest expense by over $10 million annually [78] Management's Comments on Operating Environment and Future Outlook - Management noted improving business conditions as COVID-19 cases decline and businesses reopen, leading to lower churn rates in the corporate segment [5] - There is cautious optimism regarding the NetCentric business, driven by increased streaming subscriptions and international demand [6][64] - Management expects continued improvement in corporate revenues as companies adapt to hybrid work models [94] Other Important Information - The Board of Directors increased the quarterly dividend to $0.78 per share, marking the 35th consecutive increase [16] - The company repurchased $115.9 million of senior secured notes due in March 2022, optimizing its capital structure [78] Q&A Session Summary Question: Were there any one-time items in the quarter, particularly within the NetCentric business? - Management confirmed there were no extraordinary items in the NetCentric business, with broad customer utilization increasing [85] Question: How should we think about the sustainability of the momentum and growth in the NetCentric business? - Management believes the growth reflects a shift from linear video to streaming video, which is expected to continue benefiting the NetCentric business [88] Question: What improvements are seen in the corporate sales funnel? - Management noted a decline in churn rates and increased activity levels in the sales force, indicating a positive trend in corporate sales [93] Question: Can the corporate business maintain flat revenue in the June quarter? - Management anticipates continued improvement, with a potential for reduced revenue decline, but visibility on achieving flat revenue is still uncertain [96] Question: Can you provide the corporate customer connection total this quarter and last? - Corporate connections totaled 46,719 this quarter, down from 47,175 last quarter, reflecting a 1% decline [111]