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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of Earliest Event Reported): February 27, 2025

 

Cogent Communications Holdings, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware   000-51829   46-5706863

(State or other jurisdiction of
incorporation)

  (Commission File Number)   (I.R.S. Employer
Identification No.)

 

2450 N St NW,
Washington, D.C.
  20037
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code: 202-295-4200

 

                         Not Applicable                         

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class Trading Symbol Name of Each Exchange on which Registered
Common Stock, par value $0.001 per share CCOI NASDAQ Global Select Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company   ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

 

 

Item 2.02 Results of Operations and Financial Condition.

 

On February 27, 2025, Cogent Communications Holdings, Inc. issued a press release summarizing its financial results for the fourth quarter of 2024 and the full year of 2024. The Company will hold a conference call regarding its financial results at 8:30 a.m. ET on February 27, 2025, which will be simultaneously broadcast on a link available through the Company’s website at www.cogentco.com. The press release is furnished as Exhibit 99.1 to this current report on Form 8-K.

 

The information in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits:

 

Exhibit 
Number
  Description
     
99.1   Press Release of Cogent Communications Holdings, Inc. dated February 27, 2025. (filed herewith).
104   Cover Page Data File (the cover page XBRL tags are embedded within the iXBRL document).

 

 


 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  Cogent Communications Holdings, Inc.
   
   
February 27, 2025 By: /s/ David Schaeffer
    Name: David Schaeffer
    Title:  President and Chief Executive Officer

 

 

 

EX-99.1 2 tm257465d1_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

  FOR IMMEDIATE RELEASE

 

Cogent Contacts:
For Public Relations: For Investor Relations:
Jocelyn Johnson John Chang
+ 1 (202) 295-4299 + 1 (202) 295-4212
jajohnson@cogentco.com investor.relations@cogentco.com

 

Cogent Communications Reports Fourth Quarter and Full Year 2024 Results and Increases its Regular Quarterly Dividend on its Common Stock

 

Financial and Business Highlights

 

· Service revenue was $252.3 million for Q4 2024 and was $257.2 million for Q3 2024.
· Service revenue was $1.0 billion for full year 2024 and was $940.9 million for full year 2023.
o Wavelength revenue increased by 31.8%, sequentially, and was $7.0 million for Q4 2024 and was $5.3 million for Q3 2024.
o Revenue from leasing IPv4 addresses increased by 11.8%, sequentially, and was $12.6 million for Q4 2024 and was $11.2 million for Q3 2024.
· EBITDA increased by 16.7% to $41.9 million for Q4 2024 from Q3 2024.
o EBITDA margin was 16.6% for Q4 2024 and was 13.9% for Q3 2024.
o Net cash provided by operating activities was $14.5 million for Q4 2024. Net cash used in operating activities was $48.7 million for Q4 2023 and was $20.2 million for Q3 2024.
· EBITDA, as adjusted, increased by 9.8% to $66.9 million for Q4 2024 from Q3 2024.
o EBITDA, as adjusted, margin was 26.5% for Q4 2024 and was 23.7% for Q3 2024.
· EBITDA, as adjusted, was $348.4 million for full year 2024 and was $352.5 million for full year 2023.
o EBITDA, as adjusted, margin was 33.6% for full year 2024 and was 37.5% for full year 2023.
· Cogent received a US federal income tax refund of $24.2 million in 2024 for 2023 US federal income taxes paid and owed no US federal income taxes for full year 2023.
o Cogent does not expect a US federal income tax liability for full year 2024.
· Cogent approved an increase of $0.01 per share to its regular quarterly dividend for a total of $1.005 per share for Q1 2025 as compared to $0.995 per share for Q4 2024 – Cogent’s fiftieth consecutive quarterly dividend increase.

 

[WASHINGTON, D.C. February 27, 2025] Cogent Communications Holdings, Inc. (NASDAQ: CCOI) (“Cogent”) today announced service revenue of $252.3 million for the three months ended December 31, 2024, a decrease of 1.9% from the three months ended September 30, 2024 and a decrease of 7.3% from the three months ended December 31, 2023. On the closing date of the Sprint acquisition, Cogent and T-Mobile entered into a commercial agreement (the “Commercial Agreement”), for colocation and connectivity services. Revenue under the Commercial Agreement, primarily classified as on-net revenue and net-centric revenue, was $1.5 million for the three months ended December 31, 2024, $4.1 million for the three months ended September 30, 2024, $8.6 million for the three months ended December 31, 2023, $23.9 million for the year ended December 31, 2023 and $14.7 million for the year ended December 31, 2024. Service revenue was $1,036.1 million for the year ended December 31, 2024, an increase of 10.1% from the year ended December 31, 2023.

 

Page 1 of 23


 

Foreign exchange rates negatively impacted service revenue growth from the three months ended September 30, 2024 to the three months ended December 31, 2024 by $1.0 million, negatively impacted service revenue growth from the three months ended December 31, 2023 to the three months ended December 31, 2024 by $0.4 million and negatively impacted service revenue growth from the year ended December 31, 2023 to the year ended December 31, 2024 by $0.3 million. On a constant currency basis, service revenue decreased by 1.5% from the three months ended September 30, 2024 to the three months ended December 31, 2024, decreased by 7.1% for the three months ended December 31, 2023 to the three months ended December 31, 2024 and increased by 10.1% for the year ended December 31, 2023 to the year ended December 31, 2024.

 

On-net service is provided to customers located in buildings that are physically connected to Cogent’s network by Cogent facilities. On-net revenue was $128.8 million for the three months ended December 31, 2024, a decrease of 5.7% from the three months ended September 30, 2024 and a decrease of 6.7% from the three months ended December 31, 2023. On-net revenue was $544.6 million for the year ended December 31, 2024; an increase of 6.2% over the year ended December 31, 2023.

 

Off-net customers are located in buildings directly connected to Cogent’s network using other carriers’ facilities and services to provide the last mile portion of the link from the customers’ premises to Cogent’s network. Off-net revenue was $113.2 million for the three months ended December 31, 2024, an increase of 1.7% from the three months ended September 30, 2024 and a decrease of 8.5% from the three months ended December 31, 2023. Off-net revenue was $454.1 million for the year ended December 31, 2024; an increase of 15.4% over the year ended December 31, 2023.

 

Page 2 of 23


 

Wavelength revenue was $7.0 million for the three months ended December 31, 2024, an increase of 31.8% from the three months ended September 30, 2024 and an increase of 124.1% from the three months ended December 31, 2023. Wavelength revenue was $19.2 million for the year ended December 31, 2024; an increase of 239.6% over the year ended December 31, 2023.

 

Non-core services are legacy services, which Cogent acquired and continues to support but does not actively sell. Non-core revenue was $3.4 million for the three months ended December 31, 2024, $4.1 million for the three months ended September 30, 2024 and was $7.3 million for the three months ended December 31, 2023. Non-core revenue was $18.2 million for the year ended December 31, 2024; a decrease of 37.0% over the year ended December 31, 2023.

 

GAAP gross profit is defined as total service revenue less network operations expense, depreciation and amortization and equity-based compensation included in network operations expense. GAAP gross margin is defined as GAAP gross profit divided by total service revenue. GAAP gross profit increased by 0.3% from the three months ended December 31, 2023 to $29.8 million for the three months ended December 31, 2024 and increased by 203.4% from the three months ended September 30, 2024. GAAP gross profit decreased by 41.5% from the year ended December 31, 2023 to $96.3 million for the year ended December 31, 2024.

 

GAAP gross margin was 11.8% for the three months ended December 31, 2024, 3.8% for the three months ended September 30, 2024, 10.9% for the three months ended December 31, 2023, 17.5% for the year ended December 31, 2023 and 9.3% for the year ended December 31, 2024.

 

Non-GAAP gross profit represents service revenue less network operations expense, excluding equity-based compensation and amounts shown separately (depreciation and amortization expense). Non-GAAP gross margin is defined as Non-GAAP gross profit divided by total service revenue. Non-GAAP gross profit decreased by 0.3% from the three months ended December 31, 2023 to $97.6 million for the three months ended December 31, 2024 and increased by 1.5% from the three months ended September 30, 2024. Non-GAAP gross profit decreased by 0.5% from the year ended December 31, 2023 to $395.9 million for the year ended December 31, 2024.

 

Page 3 of 23


 

Non-GAAP gross margin was 38.7% for the three months ended December 31, 2024, 37.4% for the three months ended September 30, 2024, 36.0% for the three months ended December 31, 2023, 42.3% for the year ended December 31, 2023 and 38.2% for the year ended December 31, 2024.

 

Net cash provided by operating activities was $14.5 million for the three months ended December 31, 2024. Net cash used in operating activities was $20.2 million for the three months ended September 30, 2024 and was $48.7 million for the three months ended December 31, 2023. Net cash provided by operating activities was $17.3 million for the year ended December 31, 2023 and net cash used in operating activities was $8.6 million for the year ended December 31, 2024.

Total Sprint acquisition costs were $17.0 million for the three months ended December 31, 2023, $18.5 million for the year ended December 31, 2023 and $21.4 million for the year ended December 31, 2024.

 

IP Transit Services Agreement

 

On May 1, 2023, the closing date of the Sprint acquisition, Cogent and T-Mobile USA, Inc. (“TMUSA”), a Delaware corporation and direct subsidiary of T-Mobile US, Inc., a Delaware corporation (“T-Mobile”), entered into an agreement for IP transit services (the “IP Transit Services Agreement”), pursuant to which TMUSA will pay Cogent an aggregate of $700.0 million, consisting of (i) $350.0 million paid in equal monthly installments during the first year after the closing date of the Sprint acquisition and (ii) $350.0 million paid in equal monthly installments over the subsequent 42 months. Amounts paid under the IP Transit Services Agreement were $87.5 million, $25.0 million and $25.0 million in the three months ended December 31, 2023, September 30, 2024 and December 31, 2024, respectively. Amounts paid under the IP Transit Services Agreement were $204.2 million in the year ended December 31, 2023 and $204.2 million in the year ended December 31, 2024.

 

Page 4 of 23


 

Earnings before interest, taxes, depreciation and amortization (EBITDA), was $41.9 million for the three months ended December 31, 2024, $35.9 million for the three months ended September 30, 2024 and $6.0 million for the three months ended December 31, 2023. EBITDA was $129.8 million for the year ended December 31, 2023 and $122.8 million for the year ended December 31, 2024.

 

EBITDA margin, was 16.6% for the three months ended December 31, 2024, 13.9% for the three months ended September 30, 2024 and 2.2% for the three months ended December 31, 2023. EBITDA margin was 13.8% for the year ended December 31, 2023 and 11.9% for the year ended December 31, 2024.

 

Earnings before interest, taxes, depreciation and amortization (EBITDA), as adjusted, for Sprint acquisition costs and cash paid under the IP Transit Services Agreement, was $66.9 million for the three months ended December 31, 2024, $60.9 million for the three months ended September 30, 2024 and $110.5 million for the three months ended December 31, 2023. EBITDA, as adjusted, for Sprint acquisition costs and cash paid under the IP Transit Services Agreement was $352.5 million for the year ended December 31, 2023 and $348.4 million for the year ended December 31, 2024.

 

EBITDA as adjusted, for Sprint acquisition costs and cash paid under the IP Transit Services Agreement margin, was 26.5% for the three months ended December 31, 2024, 23.7% for the three months ended September 30, 2024 and 40.6% for the three months ended December 31, 2023. EBITDA, as adjusted, for Sprint acquisition costs and cash paid under the IP Transit Services Agreement margin was 37.5% for the year ended December 31, 2023 and 33.6% for the year ended December 31, 2024.

 

Basic and diluted net (loss) per share was $(0.91) for the three months ended December 31, 2024 and was $(1.33) for the three months ended September 30, 2024. Basic net income per share was $4.23 for the three months ended December 31, 2023 and diluted net income per share was $4.17 for the three months ended December 31, 2023. Basic net income per share was $26.88 for the year ended December 31, 2023. Diluted net income per share was $26.62 for the year ended December 31, 2023. Basic and diluted net (loss) per share was $(4.28) for the year ended December 31, 2024.

 

Page 5 of 23


 

Total customer connections decreased by 10.3% from December 31, 2023 to 123,383 as of December 31, 2024 and decreased by 2.3% from September 30, 2024. On-net customer connections decreased by 0.9% from December 31, 2023 to 87,500 as of December 31, 2024 and decreased by 0.2% from September 30, 2024. Off-net customer connections decreased by 21.0% from December 31, 2023 to 28,963 as of December 31, 2024 and decreased by 10.7% from September 30, 2024. Wavelength customer connections were 1,118 as of December 31, 2024, 1,041 as of September 30, 2024 and 661 as of December 31, 2023. Non-core customer connections were 5,802 as of December 31, 2024, 5,217 as of September 30, 2024 and 11,975 as of December 31, 2023.

 

The number of on-net buildings increased by 176 from December 31, 2023 to 3,453 as of December 31, 2024 and increased by 29 from September 30, 2024.

 

Optical Wave Network

 

Acquiring the Sprint network has also allowed Cogent to construct a wavelength network using predominantly owned fiber. This enabled Cogent to expand its product offerings to include optical wavelength services. As of December 31, 2024, Cogent was offering optical wavelength services in 808 data centers in the United States, Mexico and Canada.

 

Federal Income Taxes – United States

 

Cogent received a US federal income tax refund of $24.2 million in 2024 for 2023 US federal income taxes paid and owed no US federal income taxes for full year 2023. Under current law, Cogent does not expect to incur a US federal income tax liability for full year 2024.

 

Quarterly Dividend Increase Approved

 

On February 26, 2025, Cogent’s Board approved a regular quarterly dividend of $1.005 per share payable on March 28, 2025 to shareholders of record on March 13, 2025. This first quarter 2025 regular dividend represents an increase of $0.01 per share, or 1.0%, from the fourth quarter 2024 regular dividend of $0.995 per share and an annual increase of 4.1% from the first quarter 2024 dividend of $0.965 per share.

 

Page 6 of 23


 

The payment of any future dividends and any other returns of capital will be at the discretion of the Board and may be reduced, eliminated or increased and will be dependent upon Cogent’s financial position, results of operations, available cash, cash flow, capital requirements, limitations under Cogent’s debt indentures and other factors deemed relevant by the Board.

 

Tax Treatment of 2024 Dividends

 

Cogent paid four quarterly dividends in 2024 totaling $189.4 million, or $3.92 per share. The expected tax treatment of these dividends are generally that 100.0% are treated as a return of capital and 0.0% are generally treated as dividends for United States federal income tax purposes. While the above information includes general statements about the tax classification of dividends paid on Cogent common stock, these statements do not constitute tax advice. The taxation of corporate distributions can be complex, and stockholders are encouraged to consult their tax advisers to determine what impact the above information may have on their specific tax situation.

 

Continued Impact of Changing Office Occupancy Rates on Corporate Results

 

Cogent continues to witness lower office occupancy rates overall in the buildings it serves in central business districts in North America, largely attributable to remote work policies originally instituted during the COVID-19 pandemic. Since the end of the pandemic, and despite some improvement in certain markets, Cogent continues to see office occupancy rates that do not approach pre-2020 levels. Because of the rising vacancy levels and/or lower numbers of lease initiations or renewals resulting in fewer tenants, Cogent has experienced a slowdown in new sales to its corporate customers, which has negatively impacted its corporate revenue results. This overall trend is not uniform throughout North America; Cogent has seen declining vacancy rates and increasing office occupancy rates in some cities, including in the three months ended December 31, 2024. Moreover, as the option to fully or partially work from home becomes permanently established at many companies, Cogent’s corporate customers are integrating some of the new applications that were part of the remote work environment into their everyday use, which benefits Cogent’s corporate business as these customers upgrade their Internet access infrastructure to higher capacity connections. These factors have helped mitigate the impact of lower office occupancy rates and during the three months ended December 31, 2024, Cogent continued to see these positive trends in its corporate business in some markets. If and when companies eventually return to the buildings in which Cogent operates, whether existing tenants or new tenants, Cogent believes it will present an opportunity for increased sales. However, the exact timing, path and spread of these positive trends remains uncertain, office occupancy rates in some markets may not recover, and Cogent may continue to see increased corporate customer turnover, fewer upgrades of existing corporate customer configurations and fewer new tenant opportunities, which would negatively impact Cogent’s corporate revenue growth.

 

Page 7 of 23


 

These and other risks are described in more detail in Cogent’s Annual Report on Form 10-K for the years ended December 31, 2023 and December 31, 2024 and in its Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2023, June 30, 2023, September 30, 2023, March 31, 2024, June 30, 2024 and September 30, 2024.

 

Conference Call and Website Information

 

Cogent will host a conference call with financial analysts at 8:30 a.m. (ET) on February 27, 2025 to discuss Cogent’s operating results for the fourth quarter of 2024 and full year 2024. Investors and other interested parties may access a live audio webcast of the earnings call in the “Events” section of Cogent’s website at www.cogentco.com/events. A replay of the webcast, together with the press release, will be available on the website following the earnings call. A downloadable file of Cogent’s “Summary of Financial and Operational Results” and a transcript of its conference call will also be available on Cogent’s website following the conference call. 

 

About Cogent Communications

 

Cogent Communications (NASDAQ: CCOI) is a multinational, Tier 1 facilities-based ISP. Cogent specializes in providing businesses with high-speed Internet access, Ethernet transport, optical wavelength, optical transport and colocation services. Cogent’s facilities-based, all-optical IP network backbone provides services in 264 markets globally.

 

Cogent Communications is headquartered at 2450 N Street, NW, Washington, D.C. 20037. For more information, visit www.cogentco.com. Cogent Communications can be reached in the United States at (202) 295-4200 or via email at info@cogentco.com.

 

# # #

 

Page 8 of 23


 

COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIES

 

Summary of Financial and Operational Results

 

Metric ($ in 000’s, except share, per share, customer connections and network related data) – unaudited   Q1 2023     Q2 2023     Q3 2023     Q4 2023     Q1 2024     Q2 2024     Q3 2024     Q4 2024  
On-Net revenue (15) (18)   $ 116,143     $ 127,665     $ 129,031     $ 138,064     $ 138,624     $ 140,757     $ 136,485     $ 128,760  
% Change from previous Qtr.     1.0 %     9.9 %     1.1 %     7.0 %     0.4 %     1.5 %     -3.0 %     -5.7 %
Off-Net revenue   $ 37,283     $ 101,984     $ 130,560     $ 123,669     $ 118,178     $ 111,451     $ 111,291     $ 113,190  
% Change from previous Qtr.     1.1 %     173.5 %     28.0 %     -5.3 %     -4.4 %     -5.7 %     -0.1 %     1.7 %
Wavelength revenue (1)   $ -     $ 1,585     $ 2,992     $ 3,108     $ 3,327     $ 3,625     $ 5,287     $ 6,966  
% Change from previous Qtr.     -       -       88.8 %     3.9 %     7.0 %     9.0 %     45.8 %     31.8 %
Non-Core revenue (2) (16)   $ 162     $ 8,572     $ 12,846     $ 7,258     $ 6,039     $ 4,610     $ 4,139     $ 3,375  
% Change from previous Qtr.     3.2 %     NM       49.9 %     -43.5 %     -16.8 %     -23.7 %     -10.2 %     -18.5 %
Service revenue – total (18)   $ 153,588     $ 239,806     $ 275,429     $ 272,099     $ 266,168     $ 260,443     $ 257,202     $ 252,291  
% Change from previous Qtr.     1.1 %     56.1 %     14.9 %     -1.2 %     -2.2 %     -2.2 %     -1.2 %     -1.9 %
Constant currency total revenue quarterly growth rate – sequential quarters (3) (18)     0.2 %     55.9 %     14.9 %     -1.1 %     -2.3 %     -2.0 %     -1.5 %     -1.5 %
Constant currency total revenue quarterly growth rate – year over year quarters (3) (18)     4.0 %     61.4 %     82.4 %     78.1 %     73.1 %     8.8 %     -6.7 %     -7.1 %
Constant currency and excise tax impact on total revenue quarterly growth rate – sequential quarters (3) (18)     0.1 %     51.4 %     13.4 %     -3.2 %     -2.3 %     -1.5 %     -1.7 %     -2.0 %
Constant currency and excise tax impact on total revenue quarterly growth rate – year over year quarters (3) (18)     3.7 %     56.2 %     75.5 %     67.4 %     62.4 %     5.4 %     -8.6 %     -7.3 %
Excise Taxes included in service revenue (4)   $ 4,193     $ 11,040     $ 14,557     $ 20,428     $ 20,549     $ 19,182     $ 19,752     $ 20,960  
% Change from previous Qtr.     2.6 %     163.3 %     31.9 %     40.3 %     0.6 %     -6.7 %     3.0 %     6.1 %
IPv4 Revenue, included in On-Net revenue   $ 8,321     $ 8,745     $ 9,098     $ 9,878     $ 10,151     $ 10,938     $ 11,236     $ 12,560  
% Change from previous Qtr.     2.7 %     5.1 %     4.0 %     8.6 %     2.8 %     7.8 %     2.7 %     11.8 %
IPv4 Addresses Billed     9,839,870       10,465,694       10,987,884       11,438,286       12,213,414       12,813,955       12,943,590       13,033,248  
% Change from previous Qtr.     NM       6.4 %     5.0 %     4.1 %     6.8 %     4.9 %     1.0 %     0.7 %
Corporate revenue (5) (16)   $ 85,627     $ 110,998     $ 120,484     $ 126,634     $ 124,864     $ 119,557     $ 116,244     $ 113,070  
% Change from previous Qtr.     -0.2 %     29.6 %     8.5 %     5.1 %     -1.4 %     -4.3 %     -2.8 %     -2.7 %
Net-centric revenue (5) (15)   $ 67,961     $ 87,582     $ 94,936     $ 93,148     $ 91,979     $ 91,107     $ 91,873     $ 93,625  
% Change from previous Qtr.     2.7 %     28.9 %     8.4 %     -1.9 %     -1.3 %     -0.9 %     0.8 %     1.9 %
Enterprise revenue (5) (18)     -     $ 41,227     $ 60,009     $ 52,318     $ 49,325     $ 49,781     $ 49,085     $ 45,596  
% Change from previous Qtr.     -       NM       45.6 %     -12.8 %     -5.7 %     0.9 %     -1.4 %     -7.1 %
Network operations expenses (4)   $ 58,489     $ 137,271     $ 173,224     $ 174,180     $ 168,548     $ 155,817     $ 161,083     $ 154,706  
% Change from previous Qtr.     2.8 %     134.7 %     26.2 %     0.6 %     -3.2 %     -7.6 %     3.4 %     -4.0 %

 

Page 9 of 23


 

GAAP gross profit (6)   $ 69,790     $ 49,793     $ 15,101     $ 29,744     $ 26,344     $ 30,240     $ 9,835     $ 29,836  
% Change from previous Qtr.     -2.3 %     -28.7 %     -69.7 %     97.0 %     -11.4 %     14.8 %     -67.5 %     203.4 %
GAAP gross margin (6)     45.4 %     20.8 %     5.5 %     10.9 %     9.9 %     11.6 %     3.8 %     11.8 %
Non-GAAP gross profit (3) (7)   $ 95,099     $ 102,535     $ 102,205     $ 97,919     $ 97,620     $ 104,626     $ 96,119     $ 97,585  
% Change from previous Qtr.     0.0 %     7.8 %     -0.3 %     -4.2 %     -0.3 %     7.2 %     -8.1 %     1.5 %
Non-GAAP gross margin (3) (7)     61.9 %     42.8 %     37.1 %     36.0 %     36.7 %     40.2 %     37.4 %     38.7 %
Selling, general and administrative expenses (8)   $ 38,646     $ 77,640     $ 58,267     $ 74,907     $ 70,131     $ 65,130     $ 60,258     $ 55,732  
% Change from previous Qtr.     2.5 %     100.9 %     -25.0 %     28.6 %     -6.4 %     -7.1 %     -7.5 %     -7.5 %
Depreciation and amortization expense (19)   $ 25,160     $ 52,511     $ 86,734     $ 67,805     $ 70,891     $ 74,036     $ 85,815     $ 67,272  
% Change from previous Qtr.     6.8 %     108.7 %     65.2 %     -21.8 %     4.6 %     4.4 %     15.9 %     -21.6 %
Equity-based compensation expense   $ 6,581     $ 6,249     $ 7,411     $ 6,684     $ 6,950     $ 3,565     $ 7,875     $ 7,348  
% Change from previous Qtr.     5.1 %     -5.0 %     18.6 %     -9.8 %     4.0 %     -48.7 %     120.9 %     -6.7 %
Operating income (loss)   $ 24,312     $ (34,604 )   $ (50,558 )   $ (68,478 )   $ (59,389 )   $ (47,143 )   $ (57,829 )   $ (32,767 )
% Change from previous Qtr.     -11.0 %     NM       46.1 %     35.4 %     13.3 %     20.6 %     22.7 %     -43.3 %
Interest expense (9)   $ 19,005     $ 28,653     $ 24,198     $ 34,928     $ 23,010     $ 38,840     $ 32,474     $ 45,371  
% Change from previous Qtr.     -13.6 %     50.8 %     -15.5 %     44.3 %     -34.1 %     68.8 %     -16.4 %     39.7 %
Non-cash change in valuation – Swap Agreement (9)   $ (1,847 )   $ 1,305     $ 4,825     $ (17,722 )   $ 6,152     $ (9,299 )   $ (5,597 )   $ (7,632 )
Gain on bargain purchase (10)     -     $ 1,155,719     $ (3,332 )   $ 254,049     $ (5,470 )   $ 27,673     $ -     $ -  
Net income (loss)   $ 6,148     $ 1,123,863     $ (56,723 )   $ 200,153     $ (65,307 )   $ (32,338 )   $ (63,112 )   $ (43,317 )
Basic net income (loss) per common share   $ 0.13     $ 23.84     $ (1.20 )   $ 4.23     $ (1.38 )   $ (0.68 )   $ (1.33 )   $ (0.91 )
Diluted net income (loss) per common share   $ 0.13     $ 23.65     $ (1.20 )   $ 4.17     $ (1.38 )   $ (0.68 )   $ (1.33 )   $ (0.91 )
Weighted average common shares – basic     47,037,091       47,137,822       47,227,338       47,353,291       47,416,268       47,511,613       47,426,131       47,540,833  
% Change from previous Qtr.     0.3 %     0.2 %     0.2 %     0.3 %     0.1 %     0.2 %     -0.2 %     0.2 %
Weighted average common shares – diluted     47,381,226       47,526,207       47,227,338       48,037,841       47,416,268       47,511,613       47,426,131       47,540,833  
% Change from previous Qtr.     0.4 %     0.3 %     -0.6 %     1.7 %     -1.3 %     0.2 %     -0.2 %     0.2 %
EBITDA (3)   $ 56,053     $ 24,156     $ 43,587     $ 6,011     $ 18,452     $ 27,126     $ 35,861     $ 41,853  
% Change from previous Qtr.     -1.9 %     -56.9 %     80.4 %     -86.2 %     207.0 %     47.0 %     32.2 %     16.7 %
EBITDA margin (3)     36.5 %     10.1 %     15.8 %     2.2 %     6.9 %     10.4 %     13.9 %     16.6 %
Sprint acquisition costs (14)   $ 400     $ 739     $ 351     $ 17,001     $ 9,037     $ 12,370     $ -     $ -  
Cash payments under IP Transit Services Agreement (11)   $ -     $ 29,167     $ 87,500     $ 87,500     $ 87,500     $ 66,667     $ 25,000     $ 25,000  
EBITDA, as adjusted for Sprint acquisition costs and cash payments under IP Transit Services Agreement (3) (11) (14)   $ 56,453     $ 54,062     $ 131,438     $ 110,512     $ 114,989     $ 106,163     $ 60,861     $ 66,853  
% Change from previous Qtr.     -1.6 %     -4.2 %     143.1 %     -15.9 %     4.1 %     -7.7 %     -42.7 %     9.8 %
EBITDA, as adjusted for Sprint acquisition costs and cash payments under IP Transit Services Agreement, margin (3) (11) (14)     36.8 %     22.5 %     47.7 %     40.6 %     43.2 %     40.8 %     23.7 %     26.5 %
Net cash provided by (used in) operating activities   $ 35,821     $ 82,654     $ (52,433 )   $ (48,701 )   $ 19,219     $ (22,171 )   $ (20,226 )   $ 14,532  
% Change from previous Qtr.     -1.4 %     130.7 %     -163.4 %     7.1 %     139.5 %     -215.4 %     8.8 %     171.8 %
Capital expenditures   $ 23,204     $ 37,449     $ 25,373     $ 43,609     $ 40,883     $ 48,767     $ 59,244     $ 46,104  
% Change from previous Qtr.     18.4 %     61.4 %     -32.2 %     71.9 %     -6.3 %     19.3 %     21.5 %     -22.2 %
Principal payments of capital (finance) lease obligations   $ 9,450     $ 7,797     $ 41,302     $ 18,813     $ 23,235     $ 133,472     $ 4,516     $ 27,979  
% Change from previous Qtr.     -61.5 %     -17.5 %     429.7 %     -54.5 %     23.5 %     474.4 %     -96.6 %     519.6 %
Dividends paid(17)   $ 45,311     $ 44,907     $ 45,136     $ 46,362     $ 478     $ 93,304     $ 47,210     $ 48,416  

 

Page 10 of 23


 

Gross Leverage Ratio (3) (11)     5.47       5.63       4.79       4.07       3.57       4.06       4.94       5.72  
Net Leverage Ratio (3) (11)     4.46       4.56       4.24       3.75       3.17       3.14       4.13       5.07  
Customer Connections – end of period (15) (16)                                                                
On-Net customer connections     83,268       92,846       88,250       88,291       87,574       87,387       87,655       87,500  
% Change from previous Qtr.     0.8 %     11.5 %     -5.0 %     0.0 %     -0.8 %     -0.2 %     0.3 %     -0.2 %
Off-Net customer connections     13,785       38,762       36,923       36,676       34,579       32,758       32,420       28,963  
% Change from previous Qtr.     1.9 %     181.2 %     -4.7 %     -0.7 %     -5.7 %     -5.3 %     -1.0 %     -10.7 %
Wavelength customer connections (1)             414       449       661       693       754       1,041       1,118  
% Change from previous Qtr.             -       8.5 %     47.2 %     4.8 %     8.8 %     38.1 %     7.4 %
Non-Core customer connections (2) (16)     374       19,408       12,403       11,975       10,037       7,883       5,217       5,802  
% Change from previous Qtr.     3.0 %     NM       -36.1 %     -3.5 %     -16.2 %     -21.5 %     -33.8 %     11.2 %
Total customer connections (15) (16)     97,427       151,430       138,025       137,603       132,883       128,782       126,333       123,383  
% Change from previous Qtr.     0.9 %     55.4 %     -8.9 %     -0.3 %     -3.4 %     -3.1 %     -1.9 %     -2.3 %
Corporate customer connections (5) (16)     44,570       61,284       55,045       54,493       51,821       48,690       47,613       46,371  
% Change from previous Qtr.     -0.6 %     37.5 %     -10.2 %     -1.0 %     -4.9 %     -6.0 %     -2.2 %     -2.6 %
Net-centric customer connections (5) (15)     52,857       66,711       62,291       62,370       61,599       61,736       62,273       62,236  
% Change from previous Qtr.     2.3 %     26.2 %     -6.6 %     0.1 %     -1.2 %     0.2 %     0.9 %     -0.1 %
Enterprise customer connections (5)     -       23,435       20,689       20,740       19,463       18,356       16,447       14,776  
% Change from previous Qtr.     -       NM       -11.7 %     0.2 %     -6.2 %     -5.7 %     -10.4 %     -10.2 %
On-Net Buildings – end of period                                                                
Multi-Tenant office buildings     1,841       1,844       1,860       1,862       1,861       1,864       1,870       1,871  
Carrier neutral data center buildings     1,294       1,327       1,336       1,346       1,376       1,393       1,410       1,423  
Cogent data centers     55       56       60       68       78       86       95       104  
Edge data centers     -       -       1       1       6       43       49       55  
Total on-net buildings     3,190       3,227       3,257       3,277       3,321       3,386       3,424       3,453  
Total carrier neutral data center nodes     1,490       1,526       1,528       1,558       1,586       1,602       1,627       1,646  
Wave enabled data centers     -       -       -       265       295       516       657       808  
Square feet – multi-tenant office buildings – on-net     1,001,382,577       1,001,491,002       1,006,523,795       1,008,006,655       1,009,702,653       1,011,171,523       1,015,544,543       1,015,861,483  
Total Technical Buildings Owned (12)     -       482       482       482       482       482       482       482  
Square feet – Technical Buildings Owned (12)     -       1,603,569       1,603,569       1,603,569       1,603,569       1,603,569       1,603,569       1,603,569  
Network – end of period                                                                
Intercity route miles – Leased     61,300       72,694       72,694       72,552       76,211       75,965       77,561       79,621  
Metro route miles – Leased     17,826       22,556       22,128       24,779       25,977       27,373       28,510       29,802  
Metro fiber miles – Leased     42,863       75,577       69,943       77,365       79,138       80,042       84,476       87,678  
Intercity route miles – Owned     2,748       21,883       21,883       21,883       21,883       21,883       21,883       21,883  
Metro route miles – Owned     445       1,704       1,704       1,704       1,704       1,704       1,704       1,704  
Connected networks – AS’s     7,864       7,891       7,971       7,988       8,098       8,135       8,212       8,250  
Headcount – end of period (13)                                                                
Sales force – quota bearing (13)     562       647       637       657       677       656       655       650  
Sales force – total (13)     714       841       833       847       871       851       847       843  
Total employees (13)     1,107       2,020       1,990       1,947       1,955       1,901       1,908       1,916  
Sales rep productivity – units per full time equivalent sales rep (“FTE”) per month (15)     4.0       9.2       3.6       3.3       4.0       3.8       4.0       3.5  
FTE – sales reps     539       567       621       620       627       632       620       622  

 

Page 11 of 23


 

(1) In connection with the acquisition of the Wireline Business, Cogent began to provide optical wavelength services and optical transport services over its fiber network.

(2) Consists of legacy services of companies whose assets or businesses were acquired by Cogent.

(3) See Schedules of Non-GAAP measures below for definitions and reconciliations to GAAP measures.

(4) Network operations expense excludes equity-based compensation expense of $149, $231, $370, $370, $385, $350, $469 and $477 in the three-month periods ended March 31, 2023 through December 31, 2024 respectively. Network operations expense includes excise taxes, including Universal Service Fund fees, of $4,193, $11,040, $14,557, $20,428, $20,549, $19,182, $19,752 and $20,960 in the three-month periods ended March 31, 2023 through December 31, 2024, respectively.

(5) In connection with the acquisition of the Wireline Business, Cogent classified revenue and customer connections as follows:

 

· $12.9 million of the Wireline Business monthly recurring revenue and 17,823 customer connections as corporate revenue and corporate customer connections, respectively,
· $6.5 million of monthly recurring revenue and 5,711 customer connections as net-centric revenue and net-centric customer connections, respectively, and
· $20.1 million of monthly recurring revenue and 23,209 customer connections as enterprise revenue and enterprise customer connections, respectively.
· Conversely, Cogent reclassified $0.3 million of monthly recurring revenue and 387 customer connections of legacy Cogent monthly recurring revenue to enterprise revenue and enterprise customer connections, respectively
o $0.3 million of corporate monthly recurring revenue and 363 corporate customer connections and $0.02 million of net-centric monthly recurring revenue and 24 net-centric customer connections.

 

Page 12 of 23


 

(6) GAAP gross profit is defined as total service revenue less network operations expense, depreciation and amortization and equity-based compensation included in network operations expense. GAAP gross margin is defined as GAAP gross profit divided by total service revenue.

(7) Non-GAAP gross profit represents service revenue less network operations expense, excluding equity-based compensation and amounts shown separately (depreciation and amortization expense). Non-GAAP gross margin is defined as non-GAAP gross profit divided by total service revenue. Management believes that non-GAAP gross profit and non-GAAP gross margin are relevant measures to provide investors. Management uses them to measure the margin available to the company after network service costs, in essence a measure of the efficiency of the Company’s network.

(8) Excludes equity-based compensation expense of $6,432, $6,018, $7,041, $6,314, $6,565, $3,215, $7,406 and $6,871 in the three-month periods ended March 31, 2023 through December 31, 2024, respectively and excludes $400, $739, $351, $17,001, $9,037 and $12,370 of Sprint acquisition costs for the three-month periods ended March 31, 2023 through June 30, 2024, respectively. There were no Sprint acquisition costs for the three months ended September 30, 2024 or December 31, 2024.

(9) As of December 31, 2024, Cogent was party to an interest rate swap agreement (the “Swap Agreement”) that has the economic effect of modifying the fixed interest rate obligation associated with its Senior Secured 2026 Notes to a variable interest rate obligation based on the Secured Overnight Financing Rate (“SOFR”) so that the interest payable on the 2026 Notes effectively became variable based on overnight SOFR. Interest expense includes payments of $9,507, $11,997, $12,122 and $12,081 for the three-month periods ended June 30, 2023, December 31, 2023, June 30, 2024 and December 31, 2024, respectively related to the Swap Agreement. Under GAAP, changes in the valuation of the Swap Agreement are classified with interest expense in the condensed consolidated statements of comprehensive (loss) income.

(10) The gain on bargain purchase from the Sprint acquisition was $1.4 billion as shown below.

 

(In thousands)

Gain on bargain purchase

Fair value of net assets acquired   $ 826,067  
Total net consideration to be received from Seller, net of discounts     602,581  
Gain on bargain purchase   $ 1,428,648  

 

(11) Includes cash payments under the IP Transit Services Agreement, as discussed above, of

 

· $29.2 million for the three months ended June 30, 2023,
· $87.5 million for the three months ended September 30, 2023,
· $87.5 million for the three months ended December 31, 2023,
· $87.5 million for the three months ended March 31, 2024,
· $66.7 million for the three months ended June 30, 2024,
· $25.0 million for the three months ended September 30, 2024, and
· $25.0 million for the three months ended December 31, 2024.

 

(12) In connection with the acquisition of the Wireline Business, Cogent acquired 482 technical buildings. Fifty two of those buildings have been converted to a Cogent Data Center.

 

(13) In connection with the acquisition of the Wireline Business, Cogent hired 942 total employees, including 75 quota bearing sales employees and 114 sales employees.

· As of June 30, 2023, there were 888 employees remaining from the original Wireline Business employees.
· As of September 30, 2023, there were 839 employees remaining from the original Wireline Business employees.
· As of December 31, 2023, there were 758 employees remaining from the original Wireline Business employees.
· As of March 31, 2024, there were 718 employees remaining from the original Wireline Business employees.
· As of June 30, 2024, there were 655 employees remaining from the original Wireline Business employees.
· As of September 30, 2024, there were 635 employees remaining from the original Wireline Business employees.
· As of December 31, 2024, there were 624 employees remaining from the original Wireline Business employees.

 

(14) In connection with the acquisition of the Wireline Business the Company incurred the following Sprint acquisition costs:

· $0.4 million of in the three months ended March 31, 2023,
· $0.7 million in the three months ended June 30, 2023,
· $0.4 million in the three months ended September 30, 2023,
· $17.0 million in the three months ended December 31, 2023,
· $9.0 million in the three months ended March 31, 2024, and
· $12.4 million in the three months ended June 30, 2024.

 

Included in Sprint acquisition costs were the following reimbursable severance costs:

· $16.2 million of reimbursable severance costs in the three months ended December 31, 2023,
· $4.3 million of reimbursable severance costs in the three months ended March 31, 2024, and
· $8.0 million of reimbursable severance costs in the three months ended June 30, 2024.

 

Page 13 of 23


 

(15) Sales rep productivity for Q2 2023 included 9,084 net-centric customer connections from a commercial services agreement (“CSA”) with TMUSA entered into in May 2023. Net-centric revenue under the CSA (predominantly on-net revenue) was

· $7.3 million for the three months ended June 30, 2023,
· $8.0 million for the three months ended September 30, 2023,
· $8.6 million for the three months ended December 31, 2023
· $3.2 million for the three months ended March 31, 2024,
· $5.9 million for the three months ended June 30, 2024,
· $4.1 million for the three months ended September 30, 2024, and
· $1.5 million for the three months ended December 31, 2024.

 

Net-centric customer connections under the CSA were:

· 8,028 as of June 30, 2023,
· 4,661 as of September 30, 2023,
· 3,576 as of December 31, 2023,
· 2,658 as of March 31, 2024,
· 2,117 as of June 30, 2024,
· 2,053 as of September 30, 2024, and
· 1,776 as of December 31, 2024.

 

(16) As of June 30, 2023, total non-core customer connections included 8,486 Session Initiation Protocol (“SIP”) customer connections. This non-core corporate product was discontinued. There were no SIP, non-core customer connections from September 30, 2023 to December 31, 2024.

 

(17) The first quarter 2024 dividend totaling $45.8 million was declared on February 28, 2024, and paid on April 9, 2024.

 

(18) Included in on-net revenue and enterprise revenue from May 2023 to July 2024 was $1.7 million of monthly revenue from an uneconomic resale customer acquired in connection with the Wireline Business. The service was cancelled on July 31, 2024.

 

(19) On July 1, 2024, Cogent changed its estimated useful life of its owned fiber to an average of 14 years to an average of 40 years,

 

NM Not meaningful

 

 

Schedules of Non-GAAP Measures

 

EBITDA, EBITDA, as adjusted for Sprint acquisition costs and cash payments made to the Company under the IP Transit Services Agreement, EBITDA margin and EBITDA, as adjusted for Sprint acquisition costs and cash payments made to the Company under the IP Transit Services Agreement , margin

 

EBITDA represents net cash flows provided by operating activities plus changes in operating assets and liabilities, cash interest expense and cash income tax expense. Management believes the most directly comparable measure to EBITDA calculated in accordance with generally accepted accounting principles in the United States, or GAAP, is net cash provided by operating activities. The Company also believes that EBITDA is a measure frequently used by securities analysts, investors, and other interested parties in their evaluation of issuers. EBITDA, as adjusted for Sprint acquisition costs and cash payments under the IP Transit Services Agreement with T-Mobile, represents EBITDA plus costs related to the Company’s acquisition of the Wireline Business and cash payments made to the Company under the IP Transit Agreement. EBITDA margin is defined as EBITDA divided by total service revenue. EBITDA, as adjusted for Sprint acquisition costs and cash payments made to the Company under the IP Transit Agreement margin is defined as EBITDA, as adjusted for Sprint acquisition costs and cash payments made to the Company under the IP Transit Agreement, divided by total service revenue.

 

The Company believes that EBITDA, EBITDA, as adjusted for Sprint acquisition costs and cash payments made to the Company under the IP Transit Services Agreement, EBITDA margin and EBITDA as adjusted for Sprint acquisition costs and cash payments made to the Company under the IP Transit Services Agreement margin are useful measures of its ability to service debt, fund capital expenditures, pay dividends and expand its business. The company believes its EBITDA, as adjusted for Sprint acquisition costs and cash payments made to the Company under the IP Transit Services Agreement, is a useful measure because it includes recurring cash flows stemming from the IP Transit Services Agreement that are of the same type as contracted payments under commercial contracts. The measurements are an integral part of the internal reporting and planning system used by management as a supplement to GAAP financial information. EBITDA, EBITDA, as adjusted for Sprint acquisition costs and cash payments made to the Company under the IP Transit Agreement, EBITDA margin and EBITDA as adjusted for Sprint acquisition costs and cash payments made to the Company under the IP Transit Agreement margin are not recognized terms under GAAP and accordingly, should not be viewed in isolation or as a substitute for the analysis of results as reported under GAAP, but rather as a supplemental measure to GAAP. For example, these measures are not intended to reflect the Company’s free cash flow, as they do not consider certain current or future cash requirements, such as capital expenditures, contractual commitments, and changes in working capital needs, interest expenses and debt service requirements. The Company’s calculations of these measures may also differ from the calculations performed by its competitors and other companies and as such, their utility as a comparative measure is limited.

 

Page 14 of 23


 

EBITDA, and EBITDA, as adjusted for Sprint acquisition costs and cash payments made to the Company under the IP Transit Services Agreement, are reconciled to net cash provided by operating activities in the table below.

 

($ in 000’s) – unaudited   Q1
2023
    Q2
2023
    Q3
2023
    Q4
2023
    Q1
2024
    Q2
2024
    Q3
2024
    Q4
2024
   

YEAR
2023

   

YEAR
2024

 
Net cash provided by (used in) operating activities   $ 35,821     $ 82,654     $ (52,433 )   $ (48,701 )   $ 19,219     $ (22,171 )   $ (20,226 )   $ 14,532     $ 17,345     $ (8,645 )
Changes in operating assets and liabilities   $ 1,435     $ (90,373 )   $ 51,064     $ 36,288     $ (34,640 )   $ 11,077     $ 22,868     $ 27,892       (1,589 )     30,343  
Cash interest expense and income tax expense     18,797       31,875       44,956       18,424       33,873       38,220       33,219       (571 )     114,048       101,120  
EBITDA   $ 56,053     $ 24,156     $ 43,587     $ 6,011     $ 18,452     $ 27,126     $ 35,861     $ 41,853     $ 129,804     $ 122,818  
PLUS: Sprint acquisition costs   $ 400     $ 739     $ 351     $ 17,001     $ 9,037     $ 12,370     $ -     $ -     $ 18,492     $ 21,407  
PLUS: Cash payments made to the Company under IP Transit Services Agreement     -       29,167       87,500       87,500       87,500       66,667       25,000       25,000       204,167       204,167  
EBITDA, as adjusted for Sprint acquisition costs and cash payments made to the Company under IP Transit Services Agreement   $ 56,453     $ 54,062     $ 131,438     $ 110,512     $ 114,989     $ 106,163     $ 60,861     $ 66,853     $ 352,463     $ 348,392  
EBITDA margin     36.5 %     10.1 %     15.8 %     2.2 %     6.9 %     10.4 %     13.9 %     16.6 %     13.8 %     11.9 %
EBITDA, as adjusted for Sprint acquisition costs and cash payments made to the Company under IP Transit Services Agreement, margin     36.8 %     22.5 %     47.7 %     40.6 %     43.2 %     40.8 %     23.7 %     26.5 %     37.5 %     33.6 %

 

Constant currency revenue is reconciled to service revenue as reported in the tables below.

 

Constant currency impact on revenue changes – sequential periods

 

($ in 000’s) – unaudited  

Q1

2023

   

Q2

2023

   

Q3

2023

   

Q4

2023

   

Q1

2024

   

Q2

2024

   

Q3

2024

   

Q4

2024

   

YEAR

2023

   

YEAR

2024

 
Service revenue, as reported – current period   $ 153,588     $ 239,806     $ 275,429     $ 272,099     $ 266,168     $ 260,443     $ 257,202     $ 252,291     $ 940,922     $ 1,036,104  
Impact of foreign currencies on service revenue     (1,292 )     (417 )     10       375       (304 )     323       (620 )     1,022       (2,079 )     261  
Service revenue - as adjusted for currency impact (1)   $ 152,296     $ 239,389     $ 275,439     $ 272,474     $ 265,864     $ 260,766     $ 256,582     $ 253,313     $ 938,843     $ 1,036,365  
Service revenue, as reported – prior sequential period   $ 151,979     $ 153,588     $ 239,806     $ 275,429     $ 272,099     $ 266,168     $ 260,443     $ 257,202     $ 599,604     $ 940,922  
Constant currency revenue increase (decrease)   $ 317     $ 85,801     $ 35,633     $ (2,955 )   $ (6,235 )   $ (5,402 )   $ (3,861 )   $ (3,889 )   $ 339,239     $ 95,443  
Constant currency revenue percent increase (decrease)     0.2 %     55.9 %     14.9 %     -1.1 %     -2.3 %     -2.0 %     -1.5 %     -1.5 %     56.6 %     10.1 %

 

(1) Service revenue, as adjusted for currency impact, is determined by translating the service revenue for the current period at the average foreign currency exchange rates for the prior sequential period. The Company believes that disclosing quarterly sequential revenue growth without the impact of foreign currencies on service revenue is a useful measure of sequential revenue growth. Service revenue, as adjusted for currency impact, is an integral part of the internal reporting and planning system used by management as a supplement to GAAP financial information.

 

Constant currency impact on revenue changes – prior year periods

 

($ in 000’s) – unaudited  

Q1

2023

   

Q2

2023

   

Q3

2023

   

Q4

2023

   

Q1

2024

   

Q2

2024

   

Q3

2024

   

Q4

2024

   

YEAR

2023

   

YEAR

2024

 
Service revenue, as reported – current period   $ 153,588     $ 239,806     $ 275,429     $ 272,099     $ 266,168     $ 260,443     $ 257,202     $ 252,291     $ 940,922     $ 1,036,104  
Impact of foreign currencies on service revenue     1,553       (277 )     (1,768 )     (1,412 )     (362 )     420       (213 )     405       (2,079 )     261  
Service revenue - as adjusted for currency impact (2)   $ 155,141     $ 239,529     $ 273,661     $ 270,687     $ 265,806     $ 260,863     $ 256,989     $ 252,696     $ 938,843     $ 1,036,365  
Service revenue, as reported – prior year period     149,175       148,450     $ 150,000     $ 151,979     $ 153,588     $ 239,806     $ 275,429     $ 272,099     $ 599,604     $ 940,922  
Constant currency revenue increase     5,966       91,079     $ 123,661     $ 118,708     $ 112,218     $ 21,057     $ (18,440 )   $ (19,403 )   $ 339,239     $ 95,443  
Constant currency percent revenue increase     4.0 %     61.4 %     82.4 %     78.1 %     73.1 %     8.8 %     -6.7 %     -7.1 %     56.6 %     10.1 %

 

Page 15 of 23


 

(2) Service revenue, as adjusted for currency impact, is determined by translating the service revenue for the current period at the average foreign currency exchange rates for the comparable prior year period. The Company believes that disclosing year over year revenue growth without the impact of foreign currencies on service revenue is a useful measure of revenue growth. Service revenue, as adjusted for currency impact, is an integral part of the internal reporting and planning system used by management as a supplement to GAAP financial information.

 

Revenue on a constant currency basis and adjusted for the impact of excise taxes is reconciled to service revenue as reported in the tables below.

 

Constant currency and excise tax impact on revenue changes – sequential periods

 

($ in 000’s) – unaudited  

Q1

2023

   

Q2

2023

   

Q3

2023

   

Q4

2023

   

Q1

2024

   

Q2

2024

   

Q3

2024

   

Q4

2024

   

YEAR

2023

   

YEAR

2024

 
Service revenue, as reported – current period   $ 153,588     $ 239,806     $ 275,429     $ 272,099     $ 266,168     $ 260,443     $ 257,202     $ 252,291     $ 940,922     $ 1,036,104  
Impact of foreign currencies on service revenue     (1,292 )     (417 )     10       375       (304 )     323       (620 )     1,022       (2,079 )     261  
Impact of excise taxes on service revenue     (107 )     (6,847 )     (3,517 )     (5,871 )     (121 )     1,367       (570 )     (1,208 )     (34,824 )     (30,224 )
Service revenue - as adjusted for currency and excise taxes impact (3)   $ 152,189     $ 232,542     $ 271,922     $ 266,603     $ 265,743     $ 262,133     $ 256,012     $ 252,105     $ 904,019     $ 1,006,141  
Service revenue, as reported – prior sequential period   $ 151,979     $ 153,588     $ 239,806     $ 275,429     $ 272,099     $ 266,168     $ 260,443     $ 257,202     $ 599,604     $ 940,922  
Constant currency and excise taxes revenue increase (decrease)   $ 210     $ 78,954     $ 32,116     $ (8,826 )   $ (6,356 )   $ (4,035 )   $ (4,431 )   $ (5,097 )   $ 304,415     $ 65,219  
Constant currency and excise tax revenue percent increase (decrease)     0.1 %     51.4 %     13.4 %     -3.2 %     -2.3 %     -1.5 %     -1.7 %     -2.0 %     50.8 %     6.9 %

 

(3) Service revenue, as adjusted for currency impact and the impact of excise taxes, is determined by translating the service revenue for the current period at the average foreign currency exchange rates for the prior sequential period and adjusting for the changes in excise taxes recorded as revenue between the periods presented. The Company believes that disclosing quarterly sequential revenue growth without the impact of foreign currencies and excise taxes on service revenue is a useful measure of sequential revenue growth. Service revenue, as adjusted for the impact of foreign currency and excise taxes, is an integral part of the internal reporting and planning system used by management as a supplement to GAAP financial information.

 

Constant currency and excise tax impact on revenue changes – prior year periods

 

($ in 000’s) – unaudited  

Q1

2023

   

Q2

2023

   

Q3

2023

   

Q4

2023

   

Q1

2024

   

Q2

2024

   

Q3

2024

   

Q4

2024

   

YEAR

2023

   

YEAR

2024

 
Service revenue, as reported – current period   $ 153,588     $ 239,806     $ 275,429     $ 272,099     $ 266,168     $ 260,443     $ 257,202     $ 252,291     $ 940,922     $ 1,036,104  
Impact of foreign currencies on service revenue     1,553       (277 )     (1,768 )     (1,412 )     (362 )     420       (213 )     405       (2,079 )     261  
Impact of excise taxes on service revenue     (451 )     (7,592 )     (10,439 )     (16,342 )     (16,356 )     (8,142 )     (5,195 )     (532 )     (34,824 )     (30,224 )
Service revenue - as adjusted for currency and excise taxes impact (4)   $ 154,690     $ 231,937     $ 263,222     $ 254,345     $ 249,450     $ 252,721     $ 251,794     $ 252,164     $ 904,019     $ 1,006,141  
Service revenue, as reported – prior year period   $ 149,175     $ 148,450     $ 150,000     $ 151,979     $ 153,588     $ 239,806     $ 275,429     $ 272,099     $ 599,604     $ 940,922  
Constant currency and excise taxes revenue increase   $ 5,515     $ 83,487     $ 113,222     $ 102,366     $ 95,862     $ 12,915     $ (23,635 )   $ (19,935 )   $ 304,401     $ 65,219  
Constant currency and excise tax percent revenue increase     3.7 %     56.2 %     75.5 %     67.4 %     62.4 %     5.4 %     -8.6 %     -7.3 %     50.8 %     6.9 %

 

(4) Service revenue, as adjusted for currency impact and the impact of excise taxes, is determined by translating the service revenue for the current period at the average foreign currency exchange rates for the prior year period and adjusting for the changes in excise taxes recorded as revenue between the periods presented. The Company believes that disclosing quarterly sequential revenue growth without the impact of foreign currencies and excise taxes on service revenue is a useful measure of sequential revenue growth. Service revenue, as adjusted for the impact of foreign currency and excise taxes, is an integral part of the internal reporting and planning system used by management as a supplement to GAAP financial information.

 

Page 16 of 23


 

Non-GAAP gross profit and non-GAAP gross margin

 

Non-GAAP gross profit and non-GAAP gross margin are reconciled to GAAP gross profit and GAAP gross margin in the table below.

 

($ in 000’s) – unaudited   Q1
2023
    Q2
2023
    Q3
2023
    Q4
2023
    Q1
2024
    Q2
2024
    Q3
2024
    Q4
2024
    YEAR
2023
    YEAR
2024
 
Service revenue total   $ 153,588     $ 239,806     $ 275,429     $ 272,099     $ 266,168     $ 260,443     $ 257,202     $ 252,291     $ 940,922     $ 1,036,104  
Minus - Network operations expense including equity-based compensation and depreciation and amortization expense     83,798       190,013       260,328       242,355       239,824       230,203       247,367       222,455       776,493       939,849  
GAAP Gross Profit (5)   $ 69,790     $ 49,793     $ 15,101     $ 29,744     $ 26,344     $ 30,240     $ 9,835     $ 29,836     $ 164,429     $ 96,255  
Plus - Equity-based compensation – network operations expense     149       231       370       370       385       350       469       477       1,120       1,681  
Plus – Depreciation and amortization expense   $ 25,160     $ 52,511     $ 86,734     $ 67,805     $ 70,891     $ 74,036     $ 85,815     $ 67,272     $ 232,208     $ 298,014  
Non-GAAP Gross Profit (6)   $ 95,099     $ 102,535     $ 102,205     $ 97,919     $ 97,620     $ 104,626     $ 96,119     $ 97,585     $ 397,757     $ 395,950  
GAAP Gross Margin (5)     45.4 %     20.8 %     5.5 %     10.9 %     9.9 %     11.6 %     3.8 %     11.8 %     17.5 %     9.3 %
Non-GAAP Gross Margin (6)     61.9 %     42.8 %     37.1 %     36.0 %     36.7 %     40.2 %     37.4 %     38.7 %     42.3 %     38.2 %

 

(5) GAAP gross profit is defined as total service revenue less network operations expense, depreciation and amortization and equity-based compensation included in network operations expense. GAAP gross margin is defined as GAAP gross profit divided by total service revenue.

 

(6) Non-GAAP gross profit represents service revenue less network operations expense, excluding equity-based compensation and amounts shown separately (depreciation and amortization expense). Non-GAAP gross margin is defined as non-GAAP gross profit divided by total service revenue. Management believes that non-GAAP gross profit and non-GAAP gross margin are relevant measures for investors, as they are measures that management uses to measure the margin and amount available to the Company after network service costs, in essence, these are measures of the efficiency of the Company’s network.

 

Gross and Net Leverage Ratios

 

Gross leverage ratio is defined as total debt divided by the trailing 12 months EBITDA, as adjusted for Sprint acquisition costs and cash payments under the IP Transit Services Agreement. Net leverage ratio is defined as total net debt (total debt minus cash and cash equivalents) divided by the last 12 months EBITDA, as adjusted for Sprint acquisition costs and cash payments under the IP Transit Services Agreement. Cogent’s gross leverage ratios and net leverage ratios are shown below.

 

($ in 000’s) – unaudited   As of
March
31, 2023
    As of
June 30,
2023
    As of
September
30, 2023
    As of
December
31, 2023
    As of
March
31, 2024
    As of
June 30,
2024
    As of
September
30, 2024
    As of
December
31, 2024
 
Cash and cash equivalents & restricted cash   $ 234,422     $ 243,953     $ 166,072     $ 113,781     $ 163,274     $ 426,241     $ 316,092     $ 227,916  
Debt                                                                
Capital (finance) leases – current portion     19,782       20,114       63,236       64,594       64,043       21,253       21,939       21,225  
Capital (finance) leases – long term     300,600       311,405       419,941       419,921       453,473       405,176       460,632       517,161  
Senior Secured 2026 Notes     500,000       500,000       500,000       500,000       500,000       500,000       500,000       500,000  
Secured IPV4 Notes                                             206,000       206,000       206,000  
Senior Unsecured 2027 Notes     450,000       450,000       450,000       450,000       450,000       750,000       750,000       750,000  
Total debt     1,270,382       1,281,519       1,433,177       1,434,515       1,467,516       1,882,429       1,938,571       1,994,386  
Total net debt     1,035,960       1,037,566       1,267,105       1,320,734       1,304,242       1,456,188       1,622,479       1,766,470  
Trailing 12 months EBITDA, as adjusted for Sprint acquisition costs and cash payments from the IP Transit Services Agreement     232,169       227,774       298,984       352,465       411,001       463,102       392,525       348,392  
Gross leverage ratio     5.47       5.63       4.79       4.07       3.57       4.06       4.94       5.72  
Net leverage ratio     4.46       4.56       4.24       3.75       3.17       3.14       4.13       5.07  

 

Cogent’s SEC filings are available online via the Investor Relations section of www.cogentco.com or on the Securities and Exchange Commission’s website at www.sec.gov.

 

Page 17 of 23


 

COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2024 AND 2023

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

    2024     2023  
Assets                
Current assets:                
Cash and cash equivalents   $ 198,486     $ 75,092  
Restricted cash     29,430       38,689  
Accounts receivable, net of allowance for credit losses of $9,762 and $3,677, respectively     96,934       135,475  
Due from T-Mobile, IP Transit Services Agreement, current portion, net of discount of $16,915 and $24,898, respectively     83,085       179,269  
Due from T-Mobile, Transition Services Agreement     62       4,514  
Prepaid expenses and other current assets     74,104       80,588  
Total current assets     482,101       513,627  
Property and equipment:                
Property and equipment     3,319,731       2,947,376  
Accumulated depreciation and amortization     (1,655,564 )     (1,409,559 )
Total property and equipment, net     1,664,167       1,537,817  
Right-of-use leased assets     324,315       361,587  
IPv4 intangible assets     458,000       458,000  
Other intangible assets, net     13,029       14,815  
Due from T-Mobile, IP Transit Services Agreement, net of discount of $12,132 and $27,916, respectively     179,534       263,750  
Due from T-Mobile, Purchase Agreement, net of discount of $5,755 and $13,725, respectively     22,360       38,585  
Deposits and other assets     29,596       23,438  
Total assets   $ 3,173,102     $ 3,211,619  
Liabilities and stockholders’ equity                
Current liabilities:                
Accounts payable   $ 39,805     $ 48,356  
Accrued and other current liabilities     134,609       120,523  
Due to T-Mobile – Transition Services Agreement     525       66,908  
Due to T-Mobile – Purchase Agreement           4,981  
Current maturities, operating lease liabilities     57,172       67,962  
Finance lease obligations, current maturities     21,225       64,594  
Total current liabilities     253,336       373,324  
Senior secured 2026 notes, net of unamortized debt costs of $375 and $645, respectively, and discount of $499 and $857, respectively     499,126       498,498  
Senior unsecured 2027 notes, net of unamortized debt costs of $2,013 and $941, respectively, and discounts of $7,053 and $1,970, respectively     740,934       447,088  
Secured IPv4 notes, net of debt costs of $6,702     199,298        
Operating lease liabilities, net of current maturities     302,004       330,095  
Finance lease obligations, net of current maturities     517,161       419,921  
Deferred income tax liabilities     398,266       471,498  
Other long-term liabilities     40,129       61,639  
Total liabilities     2,950,254       2,602,063  
Commitments and contingencies                
Stockholders’ equity:                
Common stock, $0.001 par value; 75,000,000 shares authorized; 49,034,925 and 48,608,569 shares issued and outstanding, respectively     49       49  
Additional paid-in capital     629,829       606,755  
Accumulated other comprehensive loss     (30,685 )     (14,385 )
Accumulated (deficit) earnings     (376,345 )     17,137  
Total stockholders’ equity     222,848       609,556  
Total liabilities and stockholders’ equity   $ 3,173,102     $ 3,211,619  

 

Page 18 of 23


 

COGENT COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

FOR THE THREE MONTHS ENDED DECEMBER 31, 2024 AND DECEMBER 31, 2023

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

 

    Three Months Ended     Three Months Ended  
    December 31, 2024     December 31, 2023  
      (Unaudited)       (Unaudited)  
Service revenue   $ 252,291     $ 272,099  
Operating expenses:                
Network operations (including $427 and $370 of equity-based compensation expense, respectively, exclusive of depreciation and amortization shown separately below)     155,183       174,550  
Selling, general, and administrative (including $6,871 and $6,314 of equity-based compensation expense, respectively)     62,603       81,221  
Acquisition costs – Sprint Business           17,001  
Depreciation and amortization     67,272       67,805  
Total operating expenses     285,058       340,577  
Operating loss     (32,767 )     (68,478 )
Interest expense, including change in valuation interest rate swap agreement     (37,739 )     (17,206 )
Gain on bargain purchase – Sprint Business           254,049  
Interest income – IP Transit Services Agreement     5,065       8,828  
Interest income – Purchase Agreement     417       720  
Interest income and other, net     10,014       1,797  
(Loss) income before income taxes     (55,010 )     179,710  
Income tax benefit     11,693       20,443  
Net (loss) income   $ (43,317 )   $ 200,153  
                 
Comprehensive (loss) income:                
Net (loss) income   $ (43,317 )   $ 200,153  
Foreign currency translation adjustment     (18,391 )     5,377  
Comprehensive (loss) income   $ (61,708 )   $ 205,530  
                 
Net (loss) income per common share:                
Basic net (loss) income per common share   $ (0.91 )   $ 4.23  
Diluted net (loss) income per common share   $ (0.91 )   $ 4.17  
Dividends declared per common share   $ 0.995     $ 0.955  
                 
Weighted-average common shares - basic     47,540,833       47,353,291  
                 
Weighted-average common shares - diluted     47,540,833       48,037,841  

 

Page 19 of 23


 

COGENT COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

FOR EACH OF THE THREE YEARS ENDED DECEMBER 31, 2024

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

 

    2024     2023     2022  
Service revenue   $ 1,036,104     $ 940,922     $ 599,604  
Operating expenses:                        
Network operations (including $1,681, $1,069 and $553 of equity-based compensation expense, respectively), exclusive of amounts shown separately     641,836       544,232       228,154  
Selling, general, and administrative (including $24,057, $25,855 and $23,886 of equity-based compensation expense, respectively)     275,781       275,318       163,021  
Acquisition costs – Sprint Business     21,407       18,492       2,248  
Depreciation and amortization     298,018       232,209       92,222  
Total operating expenses     1,237,042       1,070,251       485,645  
Gain on lease terminations and other     3,332              
Operating (loss) income     (197,606 )     (129,329 )     113,959  
Interest expense, including change in valuation – interest rate swap     (123,317 )     (93,344 )     (110,697 )
Foreign exchange gain on 2024 Notes                 31,561  
Loss on debt extinguishment and redemption – 2024 Notes                 (11,885 )
Gain on bargain purchase – Sprint Business     22,202       1,406,435        
Interest income – IP Transit Services Agreement     23,767       26,796        
Interest income – Purchase Agreement     748       1,889        
Interest income and other     14,557       7,030       3,438  
(Loss) income before income taxes     (259,649 )     1,219,477       26,376  
Income tax benefit (expense)     55,575       53,964       (21,230 )
Net (loss) income   $ (204,074 )   $ 1,273,441     $ 5,146  
                         
Comprehensive (loss) income:                        
Net (loss) income   $ (204,074 )   $ 1,273,441     $ 5,146  
Foreign currency translation adjustment     (16,300 )     4,772       (8,153 )
Comprehensive (loss) income   $ (220,374 )   $ 1,278,213     $ (3,007 )
Basic net (loss) income per common share   $ (4.28 )   $ 26.88     $ 0.11  
Diluted net (loss) income per common share   $ (4.28 )   $ 26.62     $ 0.11  
Dividends declared per common share   $ 3.920     $ 3.760     $ 3.555  
Weighted-average common shares-basic     47,627,873       47,373,361       46,875,992  
Weighted-average common shares -diluted     47,627,873       47,837,512       47,207,298  

 

Page 20 of 23


 

COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED DECEMBER 31, 2024 AND DECEMBER 31, 2023

(IN THOUSANDS)

 

    Three Months
Ended
December 31,
2024
    Three Months
Ended
December 31,
2023
 
Cash flows from operating activities:                
Net (loss) income   $ (43,317 )   $ 200,153  
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:                
Depreciation and amortization     67,272       67,805  
Amortization of debt discounts and premium     1,324       337  
Amortization of discounts, due from T-Mobile, IP Transit Services & Purchase Agreements     (5,482 )     (9,548 )
Equity-based compensation expense (net of amounts capitalized)     7,348       6,684  
Gain on bargain purchase – Sprint Business           (254,049 )
Gains—equipment transactions and other, net           489  
Deferred income taxes     15,279       (6,073 )
Changes in operating assets and liabilities:                
Accounts receivable     2,631       (47,755 )
Prepaid expenses and other current assets     (1,890 )     (6,238 )
Due to T-Mobile – Transition Services Agreement     (1,045 )     (2,721 )
Due from T-Mobile – Transition Services Agreement     (62 )     12,317  
Deposits and other assets     2,409       (1,371 )
Accounts payable, accrued liabilities and other long-term liabilities     (29,935 )     (8,731 )
Net cash provided by (used in) operating activities     14,532       (48,701 )
Cash flows from investing activities:                
Cash receipts - IP Transit Services Agreement – T-Mobile     25,000       87,500  
Severance reimbursement – T-Mobile           16,228  
Purchases of property and equipment     (46,104 )     (43,609 )
Net cash (used in) provided by investing activities     (21,104 )     60,119  
Cash flows from financing activities:                
Dividends paid     (48,416 )     (46,362 )
Principal payments of finance lease obligations     (27,979 )     (18,813 )
Proceeds from exercises of common stock options     1,252       440  
Net cash used in financing activities     (75,143 )     (64,735 )
Effect of exchange rate changes on cash     (6,461 )     1,026  
Net decrease in cash and cash equivalents & restricted cash     (88,176 )     (52,291 )
Cash and cash equivalents & restricted cash, beginning of period     316,092       166,072  
Cash and cash equivalents & restricted cash, end of period   $ 227,916     $ 113,781  

 

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COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR EACH OF THE THREE YEARS ENDED DECEMBER 31, 2024

(IN THOUSANDS)

 

    2024     2023     2022  
Cash flows from operating activities:                        
Net (loss) income   $ (204,074 )   $ 1,273,441     $ 5,146  
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:                        
Depreciation and amortization     298,018       232,209       92,222  
Amortization of debt discounts and premium     3,688       1,323       1,464  
Amortization of discounts, due from T-Mobile, IP Transit Services & Purchase Agreements     (24,515 )     (28,685 )      
Equity-based compensation expense (net of amounts capitalized)     25,738       26,924       24,439  
Gain on bargain purchase – Sprint Business     (22,202 )     (1,406,435 )      
Foreign currency exchange gain on 2024 Notes                 (31,561 )
Loss on extinguishment & redemption of 2024 notes                 11,885  
Gain – lease termination     (3,332 )            
Gains—equipment transactions and other, net           212       372  
Deferred income taxes     (51,623 )     (69,582 )     16,539  
Changes in operating assets and liabilities:                        
Accounts receivable     38,541       (51,002 )     (2,838 )
Prepaid expenses and other current assets     (5,839 )     (11,001 )     (7,427 )
Due to T-Mobile – Transition Services Agreement     (66,383 )     66,908        
Due from T-Mobile – Transition Services Agreement     4,452       (4,514 )      
Deposits and other assets     (3,966 )     (1,548 )     (282 )
Accounts payable, accrued liabilities and other long-term liabilities     2,852       (10,905 )     63,748  
Net cash (used in) provided by operating activities     (8,645 )     17,345       173,707  
Cash flows from investing activities:                        
Cash receipts - IP Transit Services Agreement – T-Mobile     204,167       204,167        
Acquisition of Sprint Business, net of $47.1 million of cash acquired in 2023     12,323       2,191        
Purchases of property and equipment     (194,998 )     (129,632 )     (78,971 )
Net cash provided by (used in) investing activities     21,492       76,726       (78,971 )
Cash flows from financing activities:                        
Net proceeds from issuance of senior unsecured 2027 Notes, net of debt costs of $1.6 million in 2024 and a discount of $6.8 million in 2024 and debt costs of $1.3 million in 2022     291,879             446,010  
Net proceeds from issuance of secured IPv4 notes – net of debt costs of $7.6 million     198,426              
Redemption and extinguishment of unsecured 2024 Notes                 (375,354 )
Dividends paid     (189,408 )     (181,716 )     (169,857 )
Purchases and retirement of common stock     (7,968 )            
Principal payments of finance lease obligations     (74,632 )     (77,362 )     (45,472 )
Settlement of a finance lease – at a discount     (114,576 )            
Principal payments of installment payment agreement                 (790 )
Proceeds from exercises of common stock options     2,204       1,227       614  
Net cash provided by (used in) financing activities     105,925       (257,851 )     (144,849 )
Effect of exchange rate changes on cash     (4,637 )     1,649       (2,599 )
Net increase (decrease) in cash and cash equivalents & restricted cash     114,135       (162,131 )     (52,712 )
Cash and cash equivalents & restricted cash, beginning of year     113,781       275,912       328,624  
Cash and cash equivalents & restricted cash, end of year     227,916       113,781       275,912  

 

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Except for historical information and discussion contained herein, statements contained in this release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to statements identified by words such as “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “targets,” “projects” and similar expressions. The statements in this release are based upon the current beliefs and expectations of Cogent’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. Numerous factors could cause or contribute to such differences, including the impact of our acquisition of the Wireline Business, including our difficulties integrating our business with the acquired Wireline Business, which may result in the combined company not operating as effectively or efficiently as expected; transition services required to support the acquired Wireline Business and the related costs continuing for a longer period than expected; transition related costs associated with the acquisition; the COVID-19 pandemic and the related government policies; future economic instability in the global economy, including the risk of economic recession, recent bank failures and liquidity concerns at certain other banks or a contraction of the capital markets, which could affect spending on Internet services and our ability to engage in financing activities; the impact of changing foreign exchange rates (in particular the Euro to USD and Canadian dollar to USD exchange rates) on the translation of our non-USD denominated revenues, expenses, assets and liabilities; legal and operational difficulties in new markets; the imposition of a requirement that we contribute to the US Universal Service Fund on the basis of our Internet revenue; changes in government policy and/or regulation, including net neutrality rules by the United States Federal Communications Commission and in the area of data protection; cyber-attacks or security breaches of our network; increasing competition leading to lower prices for our services; our ability to attract new customers and to increase and maintain the volume of traffic on our network; the ability to maintain our Internet peering arrangements and right-of-way agreements on favorable terms; our reliance on a few equipment vendors, and the potential for hardware or software problems associated with such equipment; the dependence of our network on the quality and dependability of third-party fiber and right-of-way providers; our ability to retain certain customers that comprise a significant portion of our revenue base; the management of network failures and/or disruptions; our ability to make payments on our indebtedness as they become due and outcomes in litigation, risks associated with variable interest rates under our interest rate swap agreement, and outcomes in litigation as well as other risks discussed from time to time in our filings with the Securities and Exchange Commission, including, without limitation, our Annual Report on Form 10-K for the years ended December 31, 2023 and December 31, 2024 and our Form 10-Q for the quarterly periods ended March 31, 2023, June 30, 2023, September 30, 2023, March 31, 2024, June 30, 2024 and September 30, 2024. Cogent undertakes no duty to update any forward-looking statement or any information contained in this press release or in other public disclosures at any time.

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