Cogent(CCOI)2025-05-28 14:05Financial Data and Key Metrics Changes - Cogent Communications has returned approximately $1.7 billion to investors through buybacks and dividends, with a current dividend growth rate reduced to $0.005 per share due to increased leverage from the Sprint asset integration [4][5][7] - The company anticipates deleveraging quickly, with leverage expected to peak in Q3 2025 before beginning to decline [5][6] Business Line Data and Key Metrics Changes - The Waves business has faced delays, with a target of 800 data centers wave-enabled by the end of 2024, achieving 802 by year-end [24][51] - The installed base for Waves grew by approximately 18% sequentially in Q1 2025, with a focus on improving installation timelines [26][31] Market Data and Key Metrics Changes - The company has engaged with around 150 counterparties regarding the sale of 24 data centers, with four parties progressing to contract negotiations [12][14] - The market for wavelengths is described as more diffused than initially expected, with a revised target of reaching a $500 million annualized revenue run rate by mid-2028 [51] Company Strategy and Development Direction - Cogent is focused on maximizing value through potential sales or leases of data centers, with a balanced approach to capital allocation between dividends and buybacks [8][17] - The company aims to build credibility with customers in the Waves market, with plans to increase service delivery capabilities as demand grows [29][30] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges in the Waves business but remains optimistic about achieving a $100 million annualized revenue rate by Q4 2025 [52] - The company is adapting to customer feedback and market conditions, particularly in the context of AI and its impact on demand for wavelengths [39][40] Other Important Information - The company has significant net operating losses (NOLs) in Europe, which may influence tax implications from potential sales of data centers [17] - The competitive landscape is evolving, with competitors responding to Cogent's claims of faster provisioning times [44][45] Q&A Session Summary Question: Is the current dividend growth rate a permanent change? - Management views the reduction in dividend growth as temporary during the deleveraging period, with plans to reaccelerate growth once leverage is reduced [7] Question: What is the status of data center sales? - Management confirmed ongoing discussions with multiple parties, with a focus on maximizing value through either sales or leases [12][14] Question: What are the challenges faced in the Waves business? - Management acknowledged a stale sales funnel and the need to build credibility with customers regarding installation timelines [22][26] Question: What are the updated revenue targets for the Waves business? - The company maintains a target of reaching a $500 million annualized revenue run rate by mid-2028, despite current delays [51]