Cogent(US:CCOI)2025-08-07 13:32Financial Data and Key Metrics Changes - The company's revenue for the quarter was $246.2 million, reflecting a sequential decline of $800,000 [12] - EBITDA as adjusted increased sequentially by 7% to $73.5 million, with an adjusted EBITDA margin increasing by 200 basis points to 29.8% [5][12] - The company completed two significant debt transactions, enhancing liquidity, including issuing $600 million of secured notes at a rate of 6.5% [4] Business Line Data and Key Metrics Changes - Wavelength revenues for the quarter were $9.1 million, a 150% increase year over year and a sequential increase of 27% [3] - IPv4 leasing revenues increased sequentially by 6.3% to $15.3 million, representing a 40.1% year-over-year increase [5] - Corporate business represented 44.3% of revenues, a decrease of 8.8% year over year, while the NetCentric business increased by 6.8% year over year [14][15] Market Data and Key Metrics Changes - The company served 3,529 on-net buildings, with on-net revenue of $132.3 million, a year-over-year decrease of 6% but a sequential increase of 2.1% [15] - Off-net revenue was $102.2 million, reflecting a year-over-year decrease of 8.3% and a sequential decrease of 4.8% [16] - Average price per megabit for the installed base decreased sequentially by 11% to $0.17 and decreased by 30% year over year [16] Company Strategy and Development Direction - The company aims to capture 25% of the highly concentrated North American wavelength market and is focused on selling high-margin on-net services [3][9] - The company is nearing the end of grooming unprofitable revenue acquired from Sprint, expecting to return to positive top-line growth in 2025 [9] - The company plans to continue improving sales force productivity and managing underperforming representatives [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to positive revenue growth each quarter, primarily driven by on-net services [44] - The company anticipates long-term average revenue growth between 6% and 8%, with EBITDA margins expected to expand by approximately 200 basis points annually [8] - Management noted that the leverage ratio is expected to decline sequentially, with a target to fall below five times over the next six quarters [56] Other Important Information - The company has a backlog of 4,687 wavelength opportunities and has connected 1,675 third-party carrier-neutral data centers [3][6] - The board authorized an additional $100 million buyback program, with a total of $106.4 million available under the buyback program [7] - The company’s capital expenditures for the quarter were $56.2 million, with expectations for a decline in capital spending in the second half of the year [20] Q&A Session Summary Question: What is the target for installed wavelengths by year-end? - Management confirmed the target of 400 to 500 circuits installed per month by year-end, emphasizing the need for quality and timely service delivery [28][30] Question: Can you provide an update on the return to top-line growth? - Management indicated that the rate of revenue decline has materially decelerated and expects to see positive revenue growth each quarter moving forward [42][44] Question: What are the sources of capital for funding dividends? - Management highlighted over $300 million in cash on the balance sheet and indicated that they do not anticipate needing material incremental borrowings to fund dividends or operations [50][56] Question: Where are most wavelength customers coming from? - Approximately 75% of wavelength customers are existing Cogent Transit customers, with 25% being new to Cogent [100] Question: What is the status of data center sales? - Management noted ongoing negotiations with multiple parties and expressed caution regarding the lack of firm deposits from bidders [78][80]