Cogent Communications Reports Second Quarter 2024 Results and Increases its Regular Quarterly Dividend on its Common Stock
Cogent Communications (NASDAQ: CCOI) reported Q2 2024 results, highlighting service revenue of $260.4 million, an 8.6% increase YoY but a 2.2% decrease QoQ. The company's EBITDA margin improved to 10.4%, and Non-GAAP gross margin rose to 40.2%.
Key actions included issuing $206 million in 7.9% IPV4 Securitized Notes and $300 million in 7.0% Unsecured Notes. They also repurchased 153,322 shares for $8 million and increased their dividend to $0.985 per share.
On-net revenue grew by 1.5% QoQ and 10.3% YoY to $140.6 million, while off-net revenue declined by 5.7% QoQ but increased by 9.3% YoY. Wavelength revenue surged by 128.7% YoY.
GAAP gross profit decreased by 39.3% YoY but improved by 14.8% QoQ. The company faced challenges with reduced net cash from operations and rising costs related to the Sprint acquisition.
Overall, Cogent's financial health shows mixed results, balancing revenue growth with operational costs and strategic investments.
Cogent Communications (NASDAQ: CCOI) ha riportato i risultati del Q2 2024, evidenziando un fatturato da servizi di 260,4 milioni di dollari, con un incremento dell'8,6% rispetto all'anno precedente ma una diminuzione del 2,2% rispetto al trimestre precedente. Il margine EBITDA dell'azienda è migliorato al 10,4%, e il margine lordo Non-GAAP è salito al 40,2%.
Le azioni chiave hanno incluso l'emissione di 206 milioni di dollari in Note Securitized IPV4 al 7,9% e 300 milioni di dollari in Note Non Garantite al 7,0%. Hanno anche riacquistato 153.322 azioni per 8 milioni di dollari e aumentato il loro dividendo a 0,985 dollari per azione.
Il fatturato on-net è cresciuto dell'1,5% rispetto al trimestre precedente e del 10,3% rispetto all'anno precedente, raggiungendo 140,6 milioni di dollari, mentre il fatturato off-net è diminuito del 5,7% QoQ ma è aumentato del 9,3% YoY. Il fatturato Wavelength è aumentato del 128,7% rispetto all'anno precedente.
Il profitto lordo GAAP è diminuito del 39,3% rispetto all'anno precedente ma è migliorato del 14,8% rispetto al trimestre precedente. L'azienda ha affrontato sfide relative a una diminuzione del cash flow netto dalle operazioni e all'aumento dei costi legati all'acquisizione di Sprint.
In generale, la salute finanziaria di Cogent mostra risultati misti, bilanciando la crescita dei ricavi con i costi operativi e gli investimenti strategici.
Cogent Communications (NASDAQ: CCOI) reportó los resultados del Q2 2024, destacando unos ingresos por servicios de 260,4 millones de dólares, un aumento del 8,6% interanual, pero una caída del 2,2% intertrimestral. El margen EBITDA de la compañía mejoró al 10,4%, y el margen bruto No-GAAP subió al 40,2%.
Acciones clave incluyeron la emisión de 206 millones de dólares en Notas Securitizadas IPV4 al 7,9% y 300 millones de dólares en Notas No Garantizadas al 7,0%. También recompraron 153,322 acciones por 8 millones de dólares y aumentaron su dividendo a 0,985 dólares por acción.
Los ingresos on-net crecieron un 1,5% intertrimestral y un 10,3% interanual, alcanzando los 140,6 millones de dólares, mientras que los ingresos off-net cayeron un 5,7% intertrimestral pero aumentaron un 9,3% interanual. Los ingresos por longitudes de onda se dispararon un 128,7% interanual.
El beneficio bruto GAAP disminuyó un 39,3% interanual pero mejoró un 14,8% intertrimestral. La compañía enfrentó desafíos con una reducción en el flujo de caja neto de las operaciones y un aumento de los costos relacionados con la adquisición de Sprint.
En general, la salud financiera de Cogent muestra resultados mixtos, equilibrando el crecimiento de ingresos con los costos operativos y las inversiones estratégicas.
코젠 커뮤니케이션즈 (NASDAQ: CCOI)는 2024년 2분기 실적을 보고하며 서비스 매출이 2억 6040만 달러로, 전년 대비 8.6% 증가했지만 전분기 대비 2.2% 감소했다고 밝혔다. EBITDA 마진은 10.4%로 개선되었으며 비-GAAP 총 마진은 40.2%로 상승했습니다.
주요 조치로는 7.9% IPV4 담보채권 2억 6000만 달러 및 7.0% 비담보채권 3억 달러 발행이 포함되었습니다. 또한 8백만 달러에 153,322주를 재매입하였고, 주당 배당금을 0.985달러로 인상했습니다.
온넷 수익은 전분기 대비 1.5%, 전년 대비 10.3% 증가하여 1억 4060만 달러를 기록했으며, 오프넷 수익은 전분기 대비 5.7% 감소했지만 전년 대비 9.3% 증가했습니다. 웨이브렝스 수익은 전년 대비 128.7% 급증했습니다.
GAAP 총 이익은 전년 대비 39.3% 감소했지만 전분기 대비 14.8% 개선되었습니다. 회사는 스프린트 인수와 관련하여 운영 현금 흐름 감소 및 비용 상승이라는 어려움에 직면했습니다.
전반적으로 코젠의 재무 건강은 수익 성장과 운영 비용, 전략적 투자 간의 균형을 이루며 혼합된 결과를 보여줍니다.
Cogent Communications (NASDAQ: CCOI) a publié les résultats du 2ème trimestre 2024, mettant en avant un chiffre d'affaires des services de 260,4 millions de dollars, en hausse de 8,6 % par rapport à l'année précédente, mais en baisse de 2,2 % par rapport au trimestre précédent. La marge EBITDA de l'entreprise s'est améliorée à 10,4 %, et la marge brute Non-GAAP a augmenté à 40,2 %.
Les actions clés comprenaient l'émission de 206 millions de dollars en Obligations Securisées IPV4 à 7,9 % et de 300 millions de dollars en Obligations Non Securisées à 7,0 %. Ils ont également racheté 153 322 actions pour 8 millions de dollars et augmenté leur dividende à 0,985 dollar par action.
Les revenus on-net ont augmenté de 1,5 % par rapport au trimestre précédent et de 10,3 % par rapport à l'année précédente, atteignant 140,6 millions de dollars, tandis que les revenus off-net ont diminué de 5,7 % par rapport au trimestre précédent, mais ont augmenté de 9,3 % par rapport à l'année précédente. Les revenus par longueur d'onde ont explosé de 128,7 % par rapport à l'année précédente.
Le bénéfice brut GAAP a diminué de 39,3 % par rapport à l'année précédente mais s'est amélioré de 14,8 % par rapport au trimestre précédent. L'entreprise a rencontré des défis liés à une réduction des liquidités nettes des opérations et à l'augmentation des coûts liés à l'acquisition de Sprint.
Dans l'ensemble, la santé financière de Cogent montre des résultats mitigés, équilibrant la croissance des revenus avec les coûts opérationnels et les investissements stratégiques.
Cogent Communications (NASDAQ: CCOI) veröffentlichte die Ergebnisse für Q2 2024 und hob einen Serviceumsatz von 260,4 Millionen US-Dollar hervor, was einem Anstieg von 8,6 % im Jahresvergleich, jedoch einem Rückgang von 2,2 % im Quartalsvergleich entspricht. Die EBITDA-Marge des Unternehmens verbesserte sich auf 10,4 %, und die Non-GAAP-Bruttomarge stieg auf 40,2 %.
Zu den wichtigsten Maßnahmen gehörten die Emission von 206 Millionen US-Dollar in 7,9 % IPV4 besicherten Anleihen und 300 Millionen US-Dollar in 7,0 % unbesicherten Anleihen. Außerdem wurden 153.322 Aktien für 8 Millionen US-Dollar zurückgekauft, und die Dividende wurde auf 0,985 US-Dollar pro Aktie erhöht.
Der On-Net-Umsatz wuchs im Quartalsvergleich um 1,5 % und im Jahresvergleich um 10,3 % auf 140,6 Millionen US-Dollar, während der Off-Net-Umsatz im Quartalsvergleich um 5,7 % fiel, aber im Jahresvergleich um 9,3 % stieg. Die Wellenlängenumsätze stiegen im Jahresvergleich um 128,7 %.
Der GAAP-Bruttogewinn fiel im Jahresvergleich um 39,3 %, verbesserte sich jedoch im Quartalsvergleich um 14,8 %. Das Unternehmen sah sich Herausforderungen mit einem reduzierten Nettobarzahlen aus dem Betrieb und steigenden Kosten im Zusammenhang mit der Sprint-Übernahme gegenüber.
Insgesamt zeigt die finanzielle Gesundheit von Cogent gemischte Ergebnisse und balanciert Umsatzwachstum mit Betriebskosten und strategischen Investitionen.
- Service revenue increased by 8.6% YoY to $260.4 million.
- Non-GAAP gross margin improved to 40.2% in Q2 2024.
- On-net revenue grew by 10.3% YoY.
- Wavelength revenue surged by 128.7% YoY.
- Cogent increased its regular quarterly dividend by $0.01 per share.
- Service revenue decreased by 2.2% QoQ.
- Off-net revenue decreased by 5.7% QoQ.
- GAAP gross profit decreased by 39.3% YoY.
- Net cash used in operating activities was $22.2 million for Q2 2024.
- Total customer connections decreased by 15.0% YoY.
Financial and Business Highlights
- Service revenue was
$239.8 million $260.4 million - EBITDA margin was
6.9% for Q1 2024 and10.4% for Q2 2024. - EBITDA, as adjusted for Sprint acquisition costs and cash received under the IP Transit Agreement with T-Mobile was
$115.0 million $106.2 million - Gross margin – Non-GAAP - was
36.7% for Q1 2024 and40.2% for Q2 2024.- Gross margin was
9.9% for Q1 2024 and11.6% for Q2 2024.
- Gross margin was
- Gross leverage ratio was 3.57 for Q1 2024 and was 4.06 for Q2 2024.
- Net leverage ratio was 3.17 for Q1 2024 and was 3.14 for Q2 2024.
- Cogent closed its issuance of
$206.0 million 7.9% IPV4 Securitized Notes on May 2, 2024. - Cogent closed its issuance of
$300.0 million 7.0% Unsecured Notes on June 11, 2024.
- Cogent purchased 153,322 shares of its common stock for
$8.0 million - Cogent approved an increase of
$0.01 $0.98 5$0.97 5
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
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
Wavelength revenue was
Non-core services are legacy services, which Cogent acquired and continues to support but does not actively sell. Non-core revenue was
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 decreased by
GAAP gross margin was
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 increased by
Non-GAAP gross margin was
Net cash used in operating activities was
Total Sprint acquisition costs were
Earnings before interest, taxes, depreciation and amortization (EBITDA), as adjusted, for Sprint acquisition costs and cash paid under the IP Transit Services Agreement (discussed below) was
EBITDA as adjusted, for Sprint acquisition costs and cash paid under the IP Transit Services Agreement margin, was
Basic net (loss) income per share was
Total customer connections decreased by
The number of on-net buildings increased by 159 from June 30, 2023 to 3,386 as of June 30, 2024 and increased by 65 from March 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
Commercial Services Agreement
Additionally, 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 was
Quarterly Dividend Increase Approved
On August 7, 2024, Cogent's Board approved a regular quarterly dividend of
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.
Residual Impact of COVID-19 Pandemic on Corporate Results
Beginning with and throughout the COVID-19 pandemic, Cogent witnessed a deteriorating real estate market in and around the buildings it serves in central business districts in
These and other risks are described in more detail in Cogent's Annual Report on Form 10-K for the year ended December 31, 2023 and in its Quarterly Reports on Form 10-Q for the quarterly periods ended June 30, 2023, September 30, 2023, March 31, 2024 and June 30, 2024.
Conference Call and Website Information
Cogent will host a conference call with financial analysts at 8:30 a.m. (ET) on August 8, 2024 to discuss Cogent's operating results for the second quarter of 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, and colocation services. Cogent's facilities-based, all-optical IP network backbone provides services in 251 markets globally.
Cogent Communications is headquartered at 2450 N Street, NW,
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COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIES | ||||||
Summary of Financial and Operational Results | ||||||
Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | |
Metric ($ in 000's, except share, per | ||||||
On-Net revenue | ||||||
% Change from previous Qtr. | 1.0 % | 9.9 % | 1.1 % | 7.0 % | 0.4 % | 1.5 % |
Off-Net revenue | ||||||
% Change from previous Qtr. | 1.1 % | 173.5 % | 28.0 % | -5.3 % | -4.4 % | -5.7 % |
Wavelength revenue (1) | $- | |||||
% Change from previous Qtr. | - | - | 88.8 % | 3.9 % | 7.0 % | 9.0 % |
Non-Core revenue (2) (16) | ||||||
% Change from previous Qtr. | 3.2 % | NM | 49.9 % | -43.5 % | -16.8 % | -23.7 % |
Service revenue – total | ||||||
% Change from previous Qtr. | 1.1 % | 56.1 % | 14.9 % | -1.2 % | -2.2 % | -2.2 % |
Constant currency total revenue | 0.2 % | 55.9 % | 14.9 % | -1.1 % | -2.3 % | -2.0 % |
Constant currency total revenue | 4.0 % | 61.4 % | 82.4 % | 78.1 % | 73.1 % | 8.8 % |
Constant currency and excise tax | 0.1 % | 51.4 % | 13.4 % | -3.2 % | -2.3 % | -1.5 % |
Constant currency and excise tax | 3.7 % | 56.2 % | 75.5 % | 67.4 % | 62.4 % | 5.4 % |
Excise Taxes included in service | ||||||
% Change from previous Qtr. | 2.6 % | 163.3 % | 31.9 % | 40.3 % | 0.6 % | -6.7 % |
Corporate revenue (5) (16) | ||||||
% Change from previous Qtr. | -0.2 % | 29.6 % | 8.5 % | 5.1 % | -1.4 % | -4.3 % |
Net-centric revenue (5) (15) | ||||||
% Change from previous Qtr. | 2.7 % | 28.9 % | 8.4 % | -1.9 % | -1.3 % | -0.9 % |
Enterprise revenue (5) | - | |||||
% Change from previous Qtr. | - | NM | 45.6 % | -12.8 % | -5.7 % | 0.9 % |
Network operations expenses (4) | ||||||
% Change from previous Qtr. | 2.8 % | 134.7 % | 26.2 % | 0.6 % | -3.2 % | -7.6 % |
GAAP gross profit (6) | ||||||
% Change from previous Qtr. | -2.3 % | -28.7 % | -69.7 % | 97.0 % | -11.4 % | 14.8 % |
GAAP gross margin (6) | 45.4 % | 20.8 % | 5.5 % | 10.9 % | 9.9 % | 11.6 % |
Non-GAAP gross profit (3) (7) | ||||||
% Change from previous Qtr. | 0.0 % | 7.8 % | -0.3 % | -4.2 % | -0.3 % | 7.2 % |
Non-GAAP gross margin (3) (7) | 61.9 % | 42.8 % | 37.1 % | 36.0 % | 36.7 % | 40.2 % |
Selling, general and administrative | ||||||
% Change from previous Qtr. | 2.5 % | 100.9 % | -25.0 % | 28.6 % | -6.4 % | -7.1 % |
Depreciation and amortization expense | ||||||
% Change from previous Qtr. | 6.8 % | 108.7 % | 65.2 % | -21.8 % | 4.6 % | 4.4 % |
Equity-based compensation expense | ||||||
% Change from previous Qtr. | 5.1 % | -5.0 % | 18.6 % | -9.8 % | 4.0 % | -48.7 % |
Operating income (loss) | ||||||
% Change from previous Qtr. | -11.0 % | NM | 46.1 % | 35.4 % | 13.3 % | 20.6 % |
Interest expense (9) | ||||||
% Change from previous Qtr. | -13.6 % | 50.8 % | -15.5 % | 44.3 % | -34.1 % | 68.8 % |
Non-cash change in valuation – Swap | ||||||
Gain on bargain purchase (10) | - | |||||
Net income (loss) | ||||||
Basic net income (loss) per common | ||||||
Diluted net income (loss) per common | ||||||
Weighted average common shares – | 47,037,091 | 47,137,822 | 47,227,338 | 47,353,291 | 47,416,268 | 47,511,613 |
% Change from previous Qtr. | 0.3 % | 0.2 % | 0.2 % | 0.3 % | 0.1 % | 0.2 % |
Weighted average common shares – | 47,381,226 | 47,526,207 | 47,227,338 | 48,037,841 | 47,416,268 | 47,511,613 |
% Change from previous Qtr. | 0.4 % | 0.3 % | -0.6 % | 1.7 % | -1.3 % | 0.2 % |
EBITDA (3) | ||||||
% Change from previous Qtr. | -1.9 % | -56.9 % | 80.4 % | -86.2 % | 207.0 % | 47.0 % |
EBITDA margin (3) | 36.5 % | 10.1 % | 15.8 % | 2.2 % | 6.9 % | 10.4 % |
Sprint acquisition costs (14) | ||||||
Cash payments under IP Transit | $- | |||||
EBITDA, as adjusted for Sprint | ||||||
% Change from previous Qtr. | -1.6 % | -4.2 % | 143.1 % | -15.9 % | 4.1 % | -7.7 % |
EBITDA, as adjusted for Sprint | 36.8 % | 22.5 % | 47.7 % | 40.6 % | 43.2 % | 40.8 % |
Net cash provided by (used in) | ||||||
% Change from previous Qtr. | -1.4 % | 130.7 % | -163.4 % | -7.1 % | -139.5 % | -215.4 % |
Capital expenditures | ||||||
% Change from previous Qtr. | 18.4 % | 61.4 % | -32.2 % | 71.9 % | -6.3 % | 19.3 % |
Principal payments of capital (finance) | ||||||
% Change from previous Qtr. | -61.5 % | -17.5 % | 429.7 % | -54.5 % | 23.5 % | 474.4 % |
Dividends paid (17) | ||||||
Gross Leverage Ratio (3) (11) | 5.47 | 5.63 | 4.79 | 4.07 | 3.57 | 4.06 |
Net Leverage Ratio (3) (11) | 4.46 | 4.56 | 4.24 | 3.75 | 3.17 | 3.14 |
Customer Connections – end of period | ||||||
On-Net customer connections | 83,268 | 92,846 | 88,250 | 88,291 | 87,574 | 87,387 |
% Change from previous Qtr. | 0.8 % | 11.5 % | -5.0 % | 0.0 % | -0.8 % | -0.2 % |
Off-Net customer connections | 13,785 | 38,762 | 36,923 | 36,676 | 34,579 | 32,758 |
% Change from previous Qtr. | 1.9 % | 181.2 % | -4.7 % | -0.7 % | -5.7 % | -5.3 % |
Wavelength customer connections (1) | 414 | 449 | 661 | 693 | 754 | |
% Change from previous Qtr. | - | 8.5 % | 47.2 % | 4.8 % | 8.8 % | |
Non-Core customer connections (2) (16) | 374 | 19,408 | 12,403 | 11,975 | 10,037 | 7,883 |
% Change from previous Qtr. | 3.0 % | NM | -36.1 % | -3.5 % | -16.2 % | -21.5 % |
Total customer connections (15) (16) | 97,427 | 151,430 | 138,025 | 137,603 | 132,883 | 128,782 |
% Change from previous Qtr. | 0.9 % | 55.4 % | -8.9 % | -0.3 % | -3.4 % | -3.1 % |
Corporate customer connections (5) | 44,570 | 61,284 | 55,045 | 54,493 | 51,821 | 48,690 |
% Change from previous Qtr. | -0.6 % | 37.5 % | -10.2 % | -1.0 % | -4.9 % | -6.0 % |
Net-centric customer connections (5) | 52,857 | 66,711 | 62,291 | 62,370 | 61,599 | 61,736 |
% Change from previous Qtr. | 2.3 % | 26.2 % | -6.6 % | 0.1 % | -1.2 % | 0.2 % |
Enterprise customer connections (5) | - | 23,435 | 20,689 | 20,740 | 19,463 | 18,356 |
% Change from previous Qtr. | - | NM | -11.7 % | 0.2 % | -6.2 % | -5.7 % |
On-Net Buildings – end of period | ||||||
Multi-Tenant office buildings | 1,841 | 1,844 | 1,860 | 1,862 | 1,861 | 1,864 |
Carrier neutral data center buildings | 1,294 | 1,327 | 1,337 | 1,347 | 1,382 | 1,436 |
Cogent data centers | 55 | 56 | 60 | 68 | 78 | 86 |
Total on-net buildings | 3,190 | 3,227 | 3,257 | 3,277 | 3,321 | 3,386 |
Total carrier neutral data center nodes | 1,490 | 1,526 | 1,528 | 1,558 | 1,586 | 1,602 |
Square feet – multi-tenant office | 1,001,382,577 | 1,001,491,002 | 1,006,523,795 | 1,008,006,655 | 1,009,702,653 | 1,011,171,523 |
Total Technical Buildings Owned (12) | - | 482 | 482 | 482 | 482 | 482 |
Square feet – Technical Buildings | - | 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 |
Metro route miles – Leased | 17,826 | 22,556 | 22,128 | 24,779 | 25,977 | 27,373 |
Metro fiber miles – Leased | 42,863 | 75,577 | 69,943 | 77,365 | 79,138 | 80,042 |
Intercity route miles – Owned | 2,748 | 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 |
Connected networks – AS's | 7,864 | 7,891 | 7,971 | 7,988 | 8,098 | 8,135 |
Headcount – end of period (13) | ||||||
Sales force – quota bearing (13) | 562 | 647 | 637 | 657 | 677 | 656 |
Sales force – total (13) | 714 | 841 | 833 | 847 | 871 | 851 |
Total employees (13) | 1,107 | 2,020 | 1,990 | 1,947 | 1,955 | 1,901 |
Sales rep productivity – units per full | 4.0 | 9.2 | 3.6 | 3.3 | 4.0 | 3.8 |
FTE – sales reps | 539 | 567 | 621 | 620 | 627 | 632 |
(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
(5) In connection with the acquisition of the Wireline Business, Cogent classified revenue and customer connections as follows:
$12.9 million $6.5 million $20.1 million - Conversely, Cogent reclassified
$0.3 million $0.3 million $0.02 million
(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
(9) As of June 30, 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
(10) The gain on bargain purchase from the Sprint acquisition was
(In thousands) Gain on bargain purchase | |||
Fair value of net assets acquired | |||
Total net consideration to be received from Seller, net of discounts | 602,581 | ||
Gain on bargain purchase |
(11) Includes cash payments under the IP Transit Services Agreement, as discussed above, of
$29.2 million $87.5 million $87.5 million $87.5 million $66.7 million
(12) In connection with the acquisition of the Wireline Business, Cogent acquired 482 technical buildings. Thirty-four of those buildings have been converted to a Cogent Data Centers.
(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.
(14) In connection with the acquisition of the Wireline Business the Company incurred the following Sprint Acquisition Costs
$0.4 million $0.7 million $0.4 million $17.0 million $9.0 million $12.4 million
Included in Sprint acquisition costs were the following reimbursable severance
$16.2 million $4.3 million $8.0 million
(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 was
$7.3 million $8.0 million $8.6 million $3.2 million $5.9 million
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, and
- 2,117 as of June 30, 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 as of September 30, 2023, December 31, 2023, March 31, 2024, or June 30, 2024.
(17) The first quarter 2024 dividend totaling
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 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.
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.
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | |
($ in 000's) – unaudited | ||||||
Net cash provided by (used in) operating | ||||||
Changes in operating assets and liabilities | ||||||
Cash interest expense and income tax expense | 18,797 | 31,875 | 44,956 | 18,424 | 33,873 | 38,220 |
EBITDA | ||||||
PLUS: Sprint acquisition costs | ||||||
PLUS: Cash payments made to the | - | 29,167 | 87,500 | 87,500 | 87,500 | 66,667 |
EBITDA, as adjusted for Sprint | ||||||
EBITDA margin | 36.5 % | 10.1 % | 15.8 % | 2.2 % | 6.9 % | 10.4 % |
EBITDA, as adjusted for Sprint | 36.8 % | 22.5 % | 47.7 % | 40.6 % | 43.2 % | 40.8 % |
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 |
Service revenue, as reported – current | ||||||
Impact of foreign currencies on service | (1,292) | (417) | 10 | 375 | (304) | 323 |
Service revenue - as adjusted for | ||||||
Service revenue, as reported – prior | ||||||
Constant currency revenue increase | ||||||
Constant currency revenue percent | 0.2 % | 55.9 % | 14.9 % | -1.1 % | -2.3 % | -2.0 % |
(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 |
Service revenue, as reported – current | ||||||
Impact of foreign currencies on service | 1,553 | (277) | (1,768) | (1,412) | (362) | 420 |
Service revenue - as adjusted for | ||||||
Service revenue, as reported – prior | 149,175 | 148,450 | ||||
Constant currency revenue increase | 5,966 | 91,079 | ||||
Constant currency percent revenue | 4.0 % | 61.4 % | 82.4 % | 78.1 % | 73.1 % | 8.8 % |
(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 |
Service revenue, as reported – current | ||||||
Impact of foreign currencies on service | (1,292) | (417) | 10 | 375 | (304) | 323 |
Impact of excise taxes on service | (107) | (6,847) | (3,517) | (5,871) | (121) | 1,367 |
Service revenue - as adjusted for | ||||||
Service revenue, as reported – prior | ||||||
Constant currency and excise taxes | ||||||
Constant currency and excise tax | 0.1 % | 51.4 % | 13.4 % | -3.2 % | -2.3 % | -1.5 % |
(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 |
Service revenue, as reported – | ||||||
Impact of foreign currencies on | 1,553 | (277) | (1,768) | (1,412) | (362) | 420 |
Impact of excise taxes on service | (451) | (7,592) | (10,439) | (16,342) | (16,356) | (8,142) |
Service revenue - as adjusted for | ||||||
Service revenue, as reported – | ||||||
Constant currency and excise | ||||||
Constant currency and excise tax | 3.7 % | 56.2 % | 75.5 % | 67.4 % | 62.4 % | 5.4 % |
(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. |
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.
Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | |
($ in 000's) – unaudited | ||||||
Service revenue total | ||||||
Minus - Network operations expense | 83,798 | 190,013 | 260,328 | 242,355 | 239,824 | 230,203 |
GAAP Gross Profit (5) | ||||||
Plus - Equity-based compensation – | 149 | 231 | 370 | 370 | 385 | 350 |
Plus – Depreciation and amortization | ||||||
Non-GAAP Gross Profit (6) | ||||||
GAAP Gross Margin (5) | 45.4 % | 20.8 % | 5.5 % | 10.9 % | 9.9 % | 11.6 % |
Non-GAAP Gross Margin (6) | 61.9 % | 42.8 % | 37.1 % | 36.0 % | 36.7 % | 40.2 % |
(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 | As of | As of | As of | As of | As of |
Cash and cash equivalents & restricted | ||||||
Debt | ||||||
Capital (finance) leases – current portion | 19,782 | 20,114 | 63,236 | 64,594 | 64,043 | 21,253 |
Capital (finance) leases – long term | 300,600 | 311,405 | 419,941 | 419,921 | 453,473 | 405,176 |
Senior Secured 2026 Notes | 500,000 | 500,000 | 500,000 | 500,000 | 500,000 | 500,000 |
Secured IPV4 Notes | 206,000 | |||||
Senior Unsecured 2027 Notes | 450,000 | 450,000 | 450,000 | 450,000 | 450,000 | 750,000 |
Total debt | 1,270,382 | 1,281,519 | 1,433,177 | 1,434,515 | 1,467,516 | 1,882,429 |
Total net debt | 1,035,960 | 1,037,566 | 1,267,105 | 1,320,734 | 1,304,242 | 1,456,188 |
Trailing 12 months EBITDA, as adjusted | 232,169 | 227,774 | 298,984 | 352,465 | 411,001 | 463,102 |
Gross leverage ratio | 5.47 | 5.63 | 4.79 | 4.07 | 3.57 | 4.06 |
Net leverage ratio | 4.46 | 4.56 | 4.24 | 3.75 | 3.17 | 3.14 |
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.
COGENT COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIES | ||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
AS OF JUNE 30, 2024 AND DECEMBER 31, 2023 | ||||||
(IN THOUSANDS, EXCEPT SHARE DATA) | ||||||
June 30, 2024 | December 31, 2023 | |||||
(Unaudited) | ||||||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 384,419 | $ | 75,092 | ||
Restricted cash | 41,822 | 38,689 | ||||
Accounts receivable, net of allowance for credit losses of | 111,676 | 135,475 | ||||
Due from T-Mobile, IP Transit Services Agreement, current portion, net of discount of | 80,008 | 179,269 | ||||
Due from T-Mobile, Transition Services Agreement | 3,862 | 4,514 | ||||
Prepaid expenses and other current assets | 67,688 | 80,588 | ||||
Total current assets | 689,475 | 513,627 | ||||
Property and equipment: | ||||||
Property and equipment | 3,103,518 | 2,947,376 | ||||
Accumulated depreciation and amortization | (1,522,908) | (1,409,559) | ||||
Total property and equipment, net | 1,580,610 | 1,537,817 | ||||
Right-of-use leased assets | 332,065 | 361,587 | ||||
IPv4 intangible assets | 458,000 | 458,000 | ||||
Other intangible assets, net | 13,926 | 14,815 | ||||
Deposits and other assets | 26,455 | 23,438 | ||||
Due from T-Mobile, IP Transit Services Agreement, net of discount of | 222,108 | 263,750 | ||||
Due from T-Mobile, Purchase Agreement, net of discount of | 21,534 | 38,585 | ||||
Total assets | $ | 3,344,173 | $ | 3,211,619 | ||
Liabilities and stockholders' equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 38,510 | $ | 48,356 | ||
Accrued and other current liabilities | 189,131 | 120,523 | ||||
Due to T-Mobile – Transition Services Agreement | 2,286 | 66,908 | ||||
Due to T-Mobile – Purchase Agreement | — | 4,981 | ||||
Current maturities, operating lease liabilities | 61,780 | 67,962 | ||||
Finance lease obligations, current maturities | 21,253 | 64,594 | ||||
Total current liabilities | 312,960 | 373,324 | ||||
Senior secured 2026 notes, net of unamortized debt costs of | 498,809 | 498,498 | ||||
Senior unsecured 2027 notes, net of unamortized debt costs of | 739,505 | 447,088 | ||||
Secured IPv4 notes, net of debt costs of | 198,677 | — | ||||
Operating lease liabilities, net of current maturities | 309,055 | 330,095 | ||||
Finance lease obligations, net of current maturities | 405,176 | 419,921 | ||||
Deferred income tax liabilities | 406,335 | 471,498 | ||||
Other long-term liabilities | 58,133 | 61,639 | ||||
Total liabilities | 2,928,650 | 2,602,063 | ||||
Commitments and contingencies: | ||||||
Stockholders' equity: | ||||||
Common stock, | 49 | 49 | ||||
Additional paid-in capital | 610,905 | 606,755 | ||||
Accumulated other comprehensive loss | (21,141) | (14,385) | ||||
Accumulated (deficit) earnings | (174,290) | 17,137 | ||||
Total stockholders' equity | 415,523 | 609,556 | ||||
Total liabilities and stockholders' equity | $ | 3,344,173 | $ | 3,211,619 | ||
COGENT COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIES | ||||||
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||
FOR THE THREE MONTHS ENDED JUNE 30, 2024 AND JUNE 30, 2023 | ||||||
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) | ||||||
Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | |||||
(Unaudited) | (Unaudited) | |||||
Service revenue | $ | 260,443 | $ | 239,806 | ||
Operating expenses: | ||||||
Network operations (including | 156,167 | 137,502 | ||||
Selling, general, and administrative (including | 68,345 | 83,658 | ||||
Acquisition costs – Sprint Business | 12,370 | 739 | ||||
Depreciation and amortization | 74,036 | 52,511 | ||||
Total operating expenses | 310,918 | 274,410 | ||||
Gain on lease termination | 3,332 | — | ||||
Operating loss | (47,143) | (34,604) | ||||
Interest expense, including change in valuation of interest rate swap agreement | (29,541) | (29,958) | ||||
Gain on bargain purchase – Sprint Business | 27,673 | 1,155,719 | ||||
Interest income – IP Transit Services Agreement | 5,934 | 7,669 | ||||
Interest income – Purchase Agreement | 402 | 506 | ||||
Interest income and other, net | 2,484 | 200 | ||||
(Loss) income before income taxes | (40,191) | 1,099,532 | ||||
Income tax benefit | 7,853 | 24,331 | ||||
Net (loss) income | $ | (32,338) | $ | 1,123,863 | ||
Comprehensive (loss) income: | ||||||
Net (loss) income | $ | (32,338) | $ | 1,123,863 | ||
Foreign currency translation adjustment | (1,722) | 1,741 | ||||
Comprehensive (loss) income | $ | (34,060) | $ | 1,125,604 | ||
Net (loss) income per common share: | ||||||
Basic net (loss) income per common share | $ | (0.68) | $ | 23.84 | ||
Diluted net (loss) income per common share | $ | (0.68) | $ | 23.65 | ||
Dividends declared per common share | $ | 0.975 | $ | 0.935 | ||
Weighted-average common shares - basic | 47,511,613 | 47,137,822 | ||||
Weighted-average common shares - diluted | 47,511,613 | 47,526,207 | ||||
COGENT COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIES | ||||||
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||
FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND JUNE 30, 2023 | ||||||
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) | ||||||
Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |||||
(Unaudited) | (Unaudited) | |||||
Service revenue | $ | 526,613 | $ | 393,395 | ||
Operating expenses: | ||||||
Network operations (including | 324,752 | 196,140 | ||||
Selling, general, and administrative (including | 145,392 | 128,736 | ||||
Acquisition costs – Sprint Business | 21,407 | 1,139 | ||||
Depreciation and amortization | 144,930 | 77,669 | ||||
Total operating expenses | 636,481 | 403,684 | ||||
Gain on lease termination | 3,332 | — | ||||
Operating loss | (106,536) | (10,289) | ||||
Interest expense, including change in valuation interest rate swap agreement | (58,703) | (47,116) | ||||
Gain on bargain purchase – Sprint Business | 22,202 | 1,155,719 | ||||
Interest income – IP Transit Services Agreement | 13,264 | 7,669 | ||||
Interest income – Purchase Agreement | (78) | 506 | ||||
Interest income and other, net | 5,226 | 3,695 | ||||
(Loss) income before income taxes | (124,625) | 1,110,184 | ||||
Income tax benefit | 26,980 | 19,827 | ||||
Net (loss) income | $ | (97,645) | $ | 1,130,011 | ||
Comprehensive (loss) income: | ||||||
Net (loss) income | $ | (97,645) | $ | 1,130,011 | ||
Foreign currency translation adjustment | (6,756) | 3,529 | ||||
Comprehensive (loss) income | $ | (104,401) | $ | 1,133,540 | ||
Net (loss) income per common share: | ||||||
Basic net (loss) income per common share | $ | (2.06) | $ | 23.97 | ||
Diluted net (loss) income per common share | $ | (2.06) | $ | 23.79 | ||
Dividends declared per common share | $ | 1.940 | $ | 1.860 | ||
Weighted-average common shares - basic | 47,408,786 | 47,142,074 | ||||
Weighted-average common shares - diluted | 47,408,786 | 47,508,334 | ||||
COGENT COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIES | ||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
FOR THE THREE MONTHS ENDED JUNE 30, 2024 AND JUNE 30, 2023 | ||||||
(IN THOUSANDS) | ||||||
Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | |||||
(Unaudited) | (Unaudited) | |||||
Cash flows from operating activities: | ||||||
Net (loss) income | $ | (32,338) | $ | 1,123,862 | ||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||
Depreciation and amortization | 74,039 | 52,511 | ||||
Amortization of debt costs and discounts | 764 | 328 | ||||
Amortization of discounts, due from T-Mobile, IP Transit Services & Purchase Agreements | (6,336) | (8,175) | ||||
Equity-based compensation expense (net of amounts capitalized) | 3,566 | 6,249 | ||||
Gain on bargain purchase – Sprint Business | (27,673) | (1,155,719) | ||||
Gains – lease terminations and other, net | (3,332) | 7 | ||||
Deferred income taxes | (10,485) | (28,080) | ||||
Changes in operating assets and liabilities: | ||||||
Accounts receivable | (4,507) | (4,058) | ||||
Prepaid expenses and other current assets | 12,010 | (11,221) | ||||
Due to T-Mobile – Transition Services Agreement | (3,530) | 118,777 | ||||
Due from T-Mobile – Transition Services Agreement | (8,619) | (7,015) | ||||
Unfavorable lease liabilities | (1,392) | (6,469) | ||||
Accounts payable, accrued liabilities, change in swap valuation and other long-term liabilities | (15,008) | 1,560 | ||||
Deposits and other assets | 670 | 97 | ||||
Net cash (used in) provided by operating activities | (22,171) | 82,654 | ||||
Cash flows from investing activities: | ||||||
Cash payments - IP Transit Services Agreement – T-Mobile | 66,667 | 29,167 | ||||
Acquisition of Sprint Business, net of | 7,989 | (14,034) | ||||
Purchases of property and equipment | (48,767) | (37,449) | ||||
Net cash provided by (used in) investing activities | 25,889 | (22,316) | ||||
Cash flows from financing activities: | ||||||
Dividends paid | (93,304) | (44,907) | ||||
Purchases of common stock | (7,968) | — | ||||
Net proceeds from issuance of senior unsecured 2027 Notes - net of discount of | 291,879 | — | ||||
Net proceeds from issuance of secured IPv4 notes – net of debt costs of | 198,420 | |||||
Proceeds from exercises of stock options | 40 | 240 | ||||
Principal payments of finance lease obligations | (18,896) | (7,797) | ||||
Settlement of finance lease – at a discount | (114,576) | — | ||||
Net cash provided by (used in) financing activities | 255,595 | (52,464) | ||||
Effect of exchange rates changes on cash | 3,654 | 1,657 | ||||
Net increase in cash, cash equivalents and restricted cash | 262,967 | 9,531 | ||||
Cash, cash equivalents and restricted cash, beginning of period | 163,274 | 234,422 | ||||
Cash, cash equivalents and restricted cash, end of period | $ | 426,241 | $ | 243,953 | ||
COGENT COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIES | ||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND JUNE 30, 2023 | ||||||
(IN THOUSANDS) | ||||||
Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |||||
(Unaudited) | (Unaudited) | |||||
Cash flows from operating activities: | ||||||
Net (loss) income | $ | (97,645) | $ | 1,130,011 | ||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||
Depreciation and amortization | 144,930 | 77,669 | ||||
Amortization of debt costs and discounts | 1,106 | 652 | ||||
Amortization of discounts, due from T-Mobile, IP Transit Services & Purchase Agreements | (13,186) | (8,175) | ||||
Equity-based compensation expense (net of amounts capitalized) | 10,516 | 12,830 | ||||
Gain on bargain purchase – Sprint Business | (22,202) | (1,155,719) | ||||
Gains – lease terminations and other, net | (3,332) | (608) | ||||
Deferred income taxes | (43,554) | (27,190) | ||||
Changes in operating assets and liabilities: | ||||||
Accounts receivable | 23,799 | (4,918) | ||||
Prepaid expenses and other current assets | 12,900 | (14,140) | ||||
Due to T-Mobile – Transition Services Agreement | (64,622) | 118,777 | ||||
Due from T-Mobile – Transition Services Agreement | (11,671) | (7,015) | ||||
Unfavorable lease liabilities | (3,843) | (6,469) | ||||
Accounts payable, accrued liabilities, change in swap valuation and other long-term liabilities | 66,541 | 2,637 | ||||
Deposits and other assets | (2,688) | 133 | ||||
Net cash (used in) provided by operating activities | (2,951) | 118,475 | ||||
Cash flows from investing activities: | ||||||
Cash payments - IP Transit Services Agreement – T-Mobile | 154,167 | 29,167 | ||||
Acquisition of Sprint Business, net of | 12,323 | (14,034) | ||||
Purchases of property and equipment | (89,650) | (60,653) | ||||
Net cash provided by (used in) investing activities | 76,840 | (45,520) | ||||
Cash flows from financing activities: | ||||||
Dividends paid | (93,782) | (90,218) | ||||
Purchases of common stock | (7,968) | — | ||||
Net proceeds from issuance of senior unsecured 2027 Notes - net of discount of | 291,879 | — | ||||
Net proceeds from issuance of secured IPv4 notes – net of debt costs of | 198,420 | |||||
Proceeds from exercises of stock options | 204 | 385 | ||||
Principal payments of finance lease obligations | (42,131) | (17,247) | ||||
Settlement of finance lease – at a discount | (114,576) | — | ||||
Net cash provided by (used in) financing activities | 232,046 | (107,080) | ||||
Effect of exchange rates changes on cash | 6,525 | 2,166 | ||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 312,460 | (31,959) | ||||
Cash, cash equivalents and restricted cash, beginning of period | 113,781 | 275,912 | ||||
Cash, cash equivalents and restricted cash, end of period | $ | 426,241 | $ | 243,953 | ||
Supplemental disclosure of non-cash financing activities: | ||||||
Fair value of equipment acquired in leases | $ | — | $ | 171 | ||
Finance lease obligations incurred | $ | 96,606 | $ | 42,639 | ||
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 year ended December 31, 2023 and our Form 10-Q for the quarterly periods ended June 30, 2023, September 30, 2023, March 31, 2024 and June 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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SOURCE Cogent Communications Holdings, Inc.
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