Financial Data and Key Metrics Changes - Total revenue for Q4 2024 was 252.3million,withfull−yearrevenuereaching1 billion, compared to 940.9millionin2023,representingayear−over−yearincreaseofapproximately6.466.9 million, with a full-year adjusted EBITDA of 348.4million,slightlydownfrom352.5 million in 2023 [6] - Adjusted EBITDA margin for Q4 2024 increased sequentially by 280 basis points to 26.5% [6] Business Line Data and Key Metrics Changes - Wavelength revenues grew sequentially by 31.8% to 19.2millionforthefullyear2024,a24012.6 million, up 11.8% sequentially and 27.2% year-over-year, totaling 44.9millionforthefullyear,a24.5113.1 million, down 10.7% year-over-year [22] - Net-centric business revenue was 93.6millionforthequarter,representinga1.945.6 million, down 12.8% year-over-year [24] Market Data and Key Metrics Changes - Network traffic was flat quarter-over-quarter but up 11% year-over-year, with a full-year growth of 16% over 2023 [8] - Off-net revenue was 113.2millionforthequarter,ayear−over−yeardecreaseof8.5128.8 million, down 6.7% year-over-year and 5.7% sequentially [26] Company Strategy and Development Direction - The company anticipates annual growth of 5% to 7% and expects adjusted EBITDA margins to expand by about 100 basis points per year [17] - The integration of Sprint assets is expected to continue yielding significant cost savings, with over 90% of targeted 220millioninannualsavingsrealized[9]−Thecompanyisfocusedonexpandingitswavelengthandopticaltransportbusiness,withasignificantbacklogofover2,700opportunities[52]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedoptimismaboutthegrowthpotentialinthenet−centricmarket,drivenbyvideotrafficandAIactivities[46]−Thecorporatesegmentisexpectedtoexperienceacouplemorequartersofnegativegrowthbeforestabilizingandbeginningtogrow[60]−Theenterprisesegmentisanticipatedtoseeadeclineintoearly2026duetothegroomingofinternationaloperations[63]OtherImportantInformation−Thecompanyendedtheyearwith227.9 million in cash and cash equivalents [11] - The quarterly dividend was increased to 1.05pershare,markingthe50thconsecutiveincrease[16]−Totalgrossdebtatyear−endwas2 billion, with a net debt of 1.8 billion [42] Q&A Session Summary Question: Update on customer verticals (corporate, enterprise, net-centric) - Management indicated that net-centric growth is expected to accelerate, while corporate growth will take a couple more quarters to stabilize due to grooming of low-margin services [58][60] Question: Additional investments needed for wavelength opportunities - Management stated that CapEx for wavelength services is minimal, with a run rate of about 100 million per year, and provisioning times have improved significantly [74][75] Question: Competitive concerns regarding wavelength services - Management acknowledged competition but emphasized their unique provisioning capabilities and extensive data center coverage as competitive advantages [91][92] Question: IPv4 price hikes and revenue opportunities - Management confirmed ongoing price increases for IPv4 addresses and expects continued growth in leasing activity [88][90] Question: Sequential decline in IPv4 revenue - Management clarified that adjustments were made to align with U.S. GAAP revenue reporting, affecting previously reported figures [102][106] Question: Wavelength backlog and customer engagement - Management noted that some backlog decline was due to customers going elsewhere, but they are confident in their ability to fulfill orders moving forward [116][117] Question: Corporate revenue decline and growth opportunities - Management reiterated that corporate revenue will decline for a few more quarters due to the grooming process but expects EBITDA expansion [122][125]
Cogent(CCOI)2025-02-27 23:08