Financial and Business Highlights
- On May 1, 2023 Cogent completed
its acquisition of the U.S. long-haul fiber network (including the
non-U.S. extensions thereof) of the wireline business of Sprint
Communications and its subsidiaries ("Sprint", or the "Wireline
Business") from T-Mobile (TMUS).
- Cogent approved an increase of $0.01 per share to its regular quarterly dividend
for a total of $0.945 per share for
Q3 2023 as compared to $0.935 per
share for Q2 2023 – Cogent's forty-fourth consecutive quarterly
dividend increase.
-
- The Q3 2023 $0.945 dividend per
share represents an annual increase of 4.4% from the dividend per
share of $0.905 for Q3 2022.
- Service revenue increased from Q1 2023 to Q2 2023 by 56.1% to
$239.8 million and increased from Q2
2022 to Q2 2023 by 61.5%.
-
- Service revenue, on a constant currency basis, increased from
Q1 2023 to Q2 2023 by 55.9% and increased from Q2 2022 to Q2 2023
by 61.4%.
- Service revenue from the Wireline Business was $78.0 million from May 1,
2023 to June 30, 2023.
- The gain on bargain purchase from the Sprint acquisition was
$1.2 billion for Q2 2023.
-
- Included in the gain on bargain purchase was the discounted
present value of a $700.0 million IP
Transit Services Agreement totaling $620.4
million.
- Basic and fully diluted earnings per share for Q2 2023 were
$23.84 and $23.65, respectively.
- Net cash provided by operating activities increased by 130.7%
from Q1 2023 to $82.7 million for Q2
2023 and increased from Q2 2022 to Q2 2023 by 140.3%.
- Sprint acquisition costs were $0.7
million for Q2 2023.
- EBITDA was $24.2 million for Q2
2023
-
- EBITDA, as adjusted for Sprint acquisition costs and
$29.2 million of a cash payment
received under an IP Transit Agreement with T-Mobile for Q2 2023
was $54.1 million
- Amounts billed and amounts paid under an IP Transit Services
Agreement with T-Mobile were $58.3
million and $29.2 million in
the three months ended June 30, 2023,
respectively.
- EBITDA margin for Q2 2023 was 10.1%.
-
- EBITDA, as adjusted margin for Sprint acquisition costs and
cash received under an IP Transit Agreement with T-Mobile for Q2
2023 was 22.5%.
WASHINGTON, Aug. 10,
2023 /PRNewswire/ -- Cogent Communications Holdings,
Inc. (NASDAQ: CCOI) ("Cogent") today announced service revenue of
$239.8 million for the three months
ended June 30, 2023, an increase of
56.1% from the three months ended March 31,
2023 and an increase of 61.5% from the three months ended
June 30, 2022. Foreign exchange rates
positively impacted service revenue growth from the three months
ended March 31, 2023 to the three
months ended June 30, 2023 by
$0.4 million and positively impacted
service revenue growth from the three months ended June 30, 2022 to the three months ended
June 30, 2023 by $0.3 million. On a constant currency basis,
service revenue increased by 55.9% from the three months ended
March 31, 2023 to the three months
ended June 30, 2023 and increased by
61.4% for the three months ended June 30,
2022 to the three months ended June
30, 2023. Service revenue from the Wireline Business was
$78.0 million from May 1, 2023 (the closing date of the Sprint
acquisition) to June 30, 2023.
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 $127.7
million for the three months ended June 30, 2023; an increase of 9.9% from the three
months ended March 31, 2023 and an
increase of 14.0% from the three months ended June 30, 2022. On-net revenue from the
Wireline Business was $4.1 million
from May 1, 2023 (the closing date of
the Sprint acquisition) to June 30,
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 $102.0 million for the three months ended
June 30, 2023; an increase of 173.5%
from the three months ended March 31,
2023 and an increase of 181.1% from the three months ended
June 30, 2022. Off-net revenue
from the Wireline Business was $63.9
million from May 1, 2023 (the
closing date of the Sprint acquisition) to June 30, 2023.
In connection with the Cogent's Sprint acquisition, Cogent
expanded its offerings of optical wavelength services and optical
transport services over its fiber network. Cogent is selling these
wavelength services to its existing customers, Sprint customers and
to new customers who require dedicated optical transport
connectivity without the capital and ongoing expenses associated
with owning and operating network infrastructure. Wavelength
revenue was $1.6 million for the
three months ended June 30,
2023. Wavelength revenue from the Wireline Business was
$1.6 million from May 1, 2023 (the closing date of the Sprint
acquisition) to June 30, 2023.
Non-core services are legacy services, which Cogent acquired and
continues to support but does not actively sell. Non-core
revenue was $8.6 million for the
three months ended June 30,
2023. Non-core revenue from the Wireline Business was
$8.4 million from May 1, 2023 (the closing date of the Sprint
acquisition) to June 30, 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 decreased by
27.7% from the three months ended June 30,
2022 to $49.8 million for the
three months ended June 30, 2023 and
decreased by 28.7% from the three months ended March 31, 2023. GAAP gross margin was 20.8% for
the three months ended June 30,
2023.
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 11.4%
from the three months ended June 30,
2022 to $102.5 million for the
three months ended June 30, 2023 and
increased by 7.8% from the three months ended March 31, 2023. Non-GAAP gross margin was 42.8%
for the three months ended June 30,
2023.
Net cash provided by operating activities increased by 140.3%
from the three months ended June 30,
2022 to $82.7 million for the
three months ended June 30, 2023 and
increased by 130.7% from the three months ended March 31, 2023. Net cash provided by operating
activities from the Wireline Business was $57.9 million from May 1,
2023 (the closing date of the Sprint acquisition) to
June 30, 2023.
Earnings before interest, taxes, depreciation and amortization
(EBITDA), decreased by 58.7% from the three months ended
June 30, 2022 to $24.2 million for the three months ended
June 30, 2023 and decreased by 56.9%
from the three months ended March 31,
2023. EBITDA margin was 10.1% for the three months ended
June 30, 2023.
EBITDA, as adjusted, excluding Sprint acquisition costs of
$0.7 million and including
$29.2 million for cash paid under the
IP Transit Services Agreement (discussed below) for the three
months ended June 30, 2023 was
$54.1 million which was a decrease of
7.5% from the three months ended June 30,
2022 and a decrease of 4.2% from the three months ended
March 31, 2023. EBITDA as
adjusted margin, excluding Sprint acquisition costs and including
$29.2 million for cash paid under the
IP Transit Services Agreement, was 22.5% for the three months ended
June 30, 2023. Amounts billed
and amounts paid under the IP Transit Services Agreement were
$58.3 million and $29.2 million in the three months ended
June 30, 2023, respectively.
Basic net income per share was $23.84 for the three months ended June 30, 2023. Diluted net income per share
was $23.65 for the three months ended
June 30, 2023. Basic and diluted
income per share include the impact of the $1.2 billion bargain purchase gain from the
Sprint acquisition.
Total customer connections increased by 58.1% from June 30, 2022 to 151,430 as of June 30, 2023 and increased by 55.4% from
March 31, 2023. Total customer
connections from the Sprint acquisition were 46,212 as of
June 30, 2023. On-net customer
connections increased by 12.8% from June 30,
2022 to 92,846 as of June 30,
2023 and increased by 11.5% from March 31, 2023. On-net customer connections from
the Sprint acquisition were 2,546 as of June
30, 2023. Off-net customer connections increased by
194.5% from June 30, 2022 to 38,762
as of June 30, 2023 and increased by
181.2% from March 31, 2023. Off-net
customer connections from the Sprint acquisition were 24,243 as of
June 30, 2023. Wavelength customer
connections were 414 as of June 30,
2023. Wavelength customer connections from the Sprint
acquisition were 402 as of June 30,
2023. Non-core customer connections from the Sprint
acquisition were 19,021 as of June
30, 2023.
The number of on-net buildings increased by 132 from
June 30, 2022 to 3,227 as of
June 30, 2023 and increased by 37
from March 31, 2023. Technical
buildings acquired in the Sprint acquisition were 482
buildings.
Gain on bargain purchase and IP Transit Services
Agreement
The estimated gain on bargain purchase from the Sprint
acquisition was $1.2 billion as shown
below. The amounts presented are provisional and are subject to
change as Cogent refines its estimates and inputs used in the
calculations of the assets acquired and liabilities assumed.
|
(In
thousands)
Gain on bargain
purchase
|
|
|
|
|
Fair value of net
assets acquired
|
|
|
$559,905
|
|
Total net consideration
to be received from Seller, net of discounts
|
|
|
595,814
|
|
Gain on bargain
purchase
|
|
|
$1,155,719
|
IP Transit Services Agreement
On 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 in equal monthly
installments during the first year after the closing date of the
Sprint acquisition and (ii) $350.0
million in equal monthly installments over the subsequent 42
months. Amounts billed and amounts paid under the IP Transit
Services Agreement were $58.3 million
and $29.2 million in the three months
ended June 30, 2023,
respectively.
Cogent accounted for the transaction as a business combination
under ASC Topic 805 Business Combinations ("ASC 805").
Cogent evaluated what elements are part of the business combination
and the consideration exchanged to complete the acquisition.
Under ASC 805, Cogent has concluded that the $700 million of payments to be made represent
consideration received from T-Mobile to complete the acquisition of
a distressed business. The $700.0
million IP Transit Services Agreement was recorded in
connection with the Sprint acquisition at its discounted present
value resulting in a discount of $79.6
million. The discounted amount totaling $620.4 million was included as a component of the
gain on bargain purchase. As a result, revenue was not recognized
under the IP Transit Services Agreement.
Quarterly Dividend Increase Approved
On August 2, 2023, Cogent's Board
approved a regular quarterly dividend of $0.945 per share payable on September 8, 2023 to shareholders of record on
August 24, 2023. This third quarter
2023 regular dividend represents an increase of $0.01 per share, or 1.1%, from the second quarter
2023 regular dividend of $0.935 per
share and an annual increase of 4.4% from the third quarter 2022
dividend of $0.905 per
share.
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
Cogent witnessed a deteriorating real estate market in and
around the buildings it serves in central business districts in
North America, largely
attributable to businesses continuing remote work policies
instituted during the COVID-19 pandemic. As a result of the rising
vacancy levels and falling lease initiations or renewals, Cogent
experienced a slowdown in new sales to its corporate customers,
which negatively impacted its corporate revenue results. More
recently, 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 became part of the remote work environment, which benefits
Cogent's corporate business as these customers upgrade their
Internet access infrastructure to higher capacity connections.
During the three months ended June 30,
2023, Cogent slowly began to see declining vacancy rates and
rising office occupancy rates, and to see positive trends in its
corporate business. If and when companies eventually return to the
buildings in which Cogent operates, Cogent believes it will present
an opportunity for increased sales. However, the exact timing and
path of these positive trends remains uncertain, 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.
These and other risks are described in more detail in Cogent's
Annual Report on Form 10-K for the year ended December 31, 2022 and in its Quarterly Reports on
Form 10-Q for the quarters ended September
30, 2022, March 31, 2023 and
June 30, 2023.
Conference Call and Website Information
Cogent will host a conference call with financial analysts at
8:30 a.m. (ET) on August 10, 2023 to discuss Cogent's operating
results for the second quarter of 2023 and expectations for full
year 2023. 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 227 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.
# # #
|
COGENT COMMUNICATIONS HOLDINGS, INC., AND
SUBSIDIARIES
|
|
Summary of Financial and Operational
Results
|
|
Q1 2022
|
Q2 2022
|
Q3 2022
|
Q4 2022
|
Q1 2023
|
Q2 2023
|
|
Metric ($ in 000's, except share
and per share data) – unaudited
|
|
|
|
|
|
|
|
On-Net revenue (1)
|
$112,634
|
$111,975
|
$113,219
|
$114,949
|
$116,143
|
$127,665
|
|
% Change from
previous Qtr.
|
1.7 %
|
-0.6 %
|
1.1 %
|
1.5 %
|
1.0 %
|
9.9 %
|
|
Off-Net revenue (2)
|
$36,387
|
$36,282
|
$36,611
|
$36,873
|
$37,283
|
$101,984
|
|
% Change from
previous Qtr.
|
0.2 %
|
-0.3 %
|
0.9 %
|
0.7 %
|
1.1 %
|
173.5 %
|
|
Wavelength revenue (3)
|
-
|
-
|
-
|
-
|
-
|
$1,585
|
|
% Change from
previous Qtr.
|
-
|
-
|
-
|
-
|
-
|
NM
|
|
Non-Core revenue (4)
|
$154
|
$193
|
$170
|
$157
|
$162
|
$8,572
|
|
% Change from
previous Qtr.
|
-0.6 %
|
25.3 %
|
-11.9 %
|
-7.6 %
|
3.2 %
|
NM
|
|
Service revenue – total
|
$149,175
|
$148,450
|
$150,000
|
$151,979
|
$153,588
|
$239,806
|
|
% Change from
previous Qtr.
|
1.3 %
|
-0.5 %
|
1.0 %
|
1.3 %
|
1.1 %
|
56.1 %
|
|
Constant currency total revenue
quarterly growth rate –
sequential quarters (5)
|
1.7 %
|
0.4 %
|
2.0 %
|
1.3 %
|
0.2 %
|
55.9 %
|
|
Constant currency total revenue
quarterly growth rate – year over
year quarters (5)
|
2.9 %
|
2.7 %
|
4.3 %
|
5.5 %
|
4.0 %
|
61.4 %
|
|
Constant currency and excise tax
impact on total revenue quarterly
growth rate – sequential quarters
(5)
|
2.1 %
|
0.6 %
|
1.6 %
|
1.3 %
|
0.1 %
|
51.4 %
|
|
Constant currency and excise tax
impact on total revenue quarterly
growth rate – year over year
quarters (5)
|
3.5 %
|
3.6 %
|
4.7 %
|
5.7 %
|
3.7 %
|
56.2 %
|
|
Excise Taxes included in service
revenue (6)
|
$3,742
|
$3,448
|
$4,118
|
$4,086
|
$4,193
|
$11,040
|
|
% Change from
previous Qtr.
|
-13.7 %
|
-7.9 %
|
19.4 %
|
-0.8 %
|
2.6 %
|
163.3 %
|
|
Corporate revenue (7)
|
$86,116
|
$85,177
|
$85,495
|
$85,783
|
$85,627
|
$110,998
|
|
% Change from
previous Qtr.
|
-0.8 %
|
-1.1 %
|
0.4 %
|
0.3 %
|
-0.2 %
|
29.6 %
|
|
Net-centric revenue (7)
|
$63,060
|
$63,274
|
$64,506
|
$66,196
|
$67,961
|
$87,582
|
|
% Change from
previous Qtr.
|
4.4 %
|
0.3 %
|
1.9 %
|
2.6 %
|
2.7 %
|
28.9 %
|
|
Enterprise revenue (7)
|
-
|
-
|
-
|
-
|
-
|
$41,227
|
|
% Change from
previous Qtr.
|
-
|
-
|
-
|
-
|
-
|
NM
|
|
Network operations expenses (6)
|
$57,305
|
$56,369
|
$57,044
|
$56,884
|
$58,489
|
$137,271
|
|
% Change from
previous Qtr.
|
1.8 %
|
-1.6 %
|
1.2 %
|
-0.3 %
|
2.8 %
|
134.7 %
|
|
GAAP gross profit (8)
|
$69,038
|
$68,865
|
$69,883
|
$71,444
|
$69,790
|
$49,793
|
|
% Change from
previous Qtr.
|
1.2 %
|
-0.3 %
|
1.5 %
|
2.2 %
|
-2.3 %
|
-28.7 %
|
|
GAAP gross margin (8)
|
46.3 %
|
46.4 %
|
46.6 %
|
47.0 %
|
45.4 %
|
20.8 %
|
|
Non-GAAP gross profit (5) (9)
|
$91,870
|
$92,081
|
$92,956
|
$95,095
|
$95,099
|
$102,535
|
|
% Change from
previous Qtr.
|
1.0 %
|
0.2 %
|
1.0 %
|
2.3 %
|
0.0 %
|
7.8 %
|
|
Non-GAAP gross margin (5) (9)
|
61.6 %
|
62.0 %
|
62.0 %
|
62.6 %
|
61.9 %
|
42.8 %
|
|
Selling, general and
administrative expenses (10)
|
$34,715
|
$33,624
|
$33,079
|
$37,713
|
$38,646
|
$77,640
|
|
% Change from
previous Qtr.
|
3.5 %
|
-3.1 %
|
-1.6 %
|
14.0 %
|
2.5 %
|
100.9 %
|
|
Depreciation and amortization
expense
|
$22,688
|
$23,071
|
$22,897
|
$23,563
|
$25,160
|
$52,511
|
|
% Change from
previous Qtr.
|
0.5 %
|
1.7 %
|
-0.8 %
|
2.9 %
|
6.8 %
|
108.7 %
|
|
Equity-based compensation
expense
|
$6,056
|
$5,907
|
$6,211
|
$6,264
|
$6,581
|
$6,249
|
|
% Change from
previous Qtr.
|
0.0 %
|
-2.5 %
|
5.1 %
|
0.9 %
|
5.1 %
|
-5.0 %
|
|
Operating income (loss)
|
$28,784
|
$29,566
|
$28,095
|
$27,311
|
$24,312
|
$(34,604)
|
|
% Change from
previous Qtr.
|
-20.4 %
|
2.7 %
|
-5.0 %
|
-2.8 %
|
-11.0 %
|
NM
|
|
Interest expense (11)
|
$14,168
|
$13,478
|
$17,948
|
$21,990
|
$19,005
|
$28,653
|
|
% Change from
previous Qtr.
|
3.3 %
|
-4.9 %
|
33.2 %
|
22.5 %
|
-13.6 %
|
50.8 %
|
|
Non-cash change in valuation –
Swap agreement
|
$21,271
|
$7,510
|
$16,923
|
$(2,590)
|
$(1,847)
|
$1,305
|
|
Gain on bargain purchase (12)
|
-
|
-
|
-
|
-
|
-
|
$1,155,719
|
|
Net income (loss)
|
$1,137
|
$11,164
|
$(8,007)
|
$851
|
$6,148
|
$1,123,863
|
|
Foreign exchange gains (losses)
on 2024 Euro Notes
|
$8,014
|
$23,547
|
$-
|
$-
|
$-
|
$-
|
|
Basic net income (loss) per
common share
|
$0.02
|
$0.24
|
$(0.17)
|
$0.02
|
$0.13
|
$23.84
|
|
Diluted net income (loss) per
common share
|
$0.02
|
$0.24
|
$(0.17)
|
$0.02
|
$0.13
|
$23.65
|
|
Weighted average common
shares – basic
|
46,575,848
|
46,691,142
|
46,736,742
|
46,885,512
|
47,037,091
|
47,137,822
|
|
% Change from
previous Qtr.
|
0.3 %
|
0.2 %
|
0.1 %
|
0.3 %
|
0.3 %
|
0.2 %
|
|
Weighted average common
shares – diluted
|
46,929,191
|
47,029,446
|
46,736,742
|
47,196,890
|
47,381,226
|
47,526,207
|
|
% Change from
previous Qtr.
|
-0.1 %
|
0.2 %
|
-0.6 %
|
1.0 %
|
0.4 %
|
0.3 %
|
|
EBITDA (5)
|
$57,155
|
$58,457
|
$57,873
|
$57,138
|
$56,053
|
$24,156
|
|
% Change from
previous Qtr.
|
-0.4 %
|
2.3 %
|
-1.0 %
|
-1.3 %
|
-1.9 %
|
-56.9 %
|
|
EBITDA margin (5)
|
38.3 %
|
39.4 %
|
38.6 %
|
37.6 %
|
36.5 %
|
10.1 %
|
|
Sprint acquisition costs (18)
|
$-
|
$-
|
$2,004
|
$244
|
$400
|
$739
|
|
Cash payments under IP Transit
Services Agreement (13)
|
$-
|
$-
|
$-
|
$-
|
$-
|
$29,167
|
|
EBITDA, as adjusted for Sprint
acquisition costs and cash
payments under IP Transit
Services Agreement (5) (13)
|
$57,155
|
$58,457
|
$59,877
|
$57,382
|
$56,453
|
$54,062
|
|
% Change from
previous Qtr.
|
-0.4 %
|
2.3 %
|
2.4 %
|
-4.2 %
|
-1.6 %
|
-4.2 %
|
|
EBITDA, as adjusted for Sprint
acquisition costs and cash
payments under IP Transit
Services Agreement, margin (5)
(13)
|
38.3 %
|
39.4 %
|
39.9 %
|
37.8 %
|
36.8 %
|
22.5 %
|
|
Net cash provided by operating
activities
|
$49,411
|
$34,403
|
$53,570
|
$36,323
|
$35,821
|
$82,654
|
|
% Change from
previous Qtr.
|
37.3 %
|
-30.4 %
|
55.7 %
|
-32.2 %
|
-1.4 %
|
130.7 %
|
|
Capital expenditures
|
$18,121
|
$17,288
|
$23,971
|
$19,591
|
$23,204
|
$37,449
|
|
% Change from
previous Qtr.
|
18.5 %
|
-4.6 %
|
38.7 %
|
-18.3 %
|
18.4 %
|
61.4 %
|
|
Principal payments of capital
(finance) lease obligations
|
$5,863
|
$5,236
|
$9,859
|
$24,514
|
$9,450
|
$7,797
|
|
% Change from
previous Qtr.
|
-5.9 %
|
-10.7 %
|
88.3 %
|
148.6 %
|
-61.5 %
|
-17.5 %
|
|
Dividends paid
|
$41,298
|
$41,855
|
$42,729
|
$43,975
|
$45,311
|
$44,907
|
|
Gross Leverage Ratio (5) (13)
|
4.94
|
5.22
|
5.32
|
5.39
|
5.47
|
5.63
|
|
Net Leverage Ratio (5) (13)
|
3.58
|
3.70
|
3.93
|
4.20
|
4.46
|
4.56
|
|
Customer Connections –
end of
period (14) (15)
|
|
|
|
|
|
|
|
On-Net customer connections
(14)
|
81,627
|
82,277
|
82,614
|
82,620
|
83,268
|
92,846
|
|
% Change from
previous Qtr.
|
1.1 %
|
0.8 %
|
0.4 %
|
0.0 %
|
0.8 %
|
11.5 %
|
|
Off-Net customer connections
(14)
|
12,922
|
13,160
|
13,359
|
13,531
|
13,785
|
38,762
|
|
% Change from
previous Qtr.
|
2.0 %
|
1.8 %
|
1.5 %
|
1.3 %
|
1.9 %
|
181.2 %
|
|
Wavelength customer
connections (3) (14)
|
-
|
-
|
-
|
-
|
-
|
414
|
|
% Change from previous
Qtr.
|
-
|
-
|
-
|
-
|
-
|
NM
|
|
Non-Core customer
connections (4) (14)
|
335
|
340
|
348
|
363
|
374
|
19,408
|
|
% Change from
previous Qtr.
|
0.3 %
|
1.5 %
|
2.4 %
|
4.3 %
|
3.0 %
|
NM
|
|
Total customer connections (14)
|
94,884
|
95,777
|
96,321
|
96,514
|
97,427
|
151,430
|
|
% Change from
previous Qtr.
|
1.2 %
|
0.9 %
|
0.6 %
|
0.2 %
|
0.9 %
|
55.4 %
|
|
Corporate customer connections
(14)
|
45,393
|
45,103
|
45,176
|
44,844
|
44,570
|
61,284
|
|
% Change from previous
Qtr.
|
-0.1 %
|
-0.6 %
|
0.2 %
|
-0.7 %
|
-0.6 %
|
37.5 %
|
|
Net-centric customer
connections (14)
|
49,491
|
50,674
|
51,145
|
51,670
|
52,857
|
66,711
|
|
% Change from previous
Qtr.
|
2.5 %
|
2.4 %
|
0.9 %
|
1.0 %
|
2.3 %
|
26.2 %
|
|
Enterprise customer
connections (14)
|
-
|
-
|
-
|
-
|
-
|
23,435
|
|
% Change from previous
Qtr.
|
-
|
-
|
-
|
-
|
-
|
NM
|
|
On-Net Buildings – end of
period
|
|
|
|
|
|
|
|
Multi-Tenant office buildings
|
1,824
|
1,826
|
1,832
|
1,837
|
1,841
|
1,844
|
|
Carrier neutral data center
buildings
|
1,187
|
1,216
|
1,240
|
1,264
|
1,294
|
1,327
|
|
Cogent data centers
|
54
|
53
|
54
|
54
|
55
|
56
|
|
Total on-net buildings
|
3,065
|
3,095
|
3,126
|
3,155
|
3,190
|
3,227
|
|
Total carrier neutral data center
nodes
|
1,383
|
1,409
|
1,433
|
1,458
|
1,490
|
1,526
|
|
Square feet – multi-tenant office
buildings – on-net
|
992,336,259
|
993,590,499
|
995,522,774
|
1,000,044,418
|
1,001,382,577
|
1,001,491,002
|
|
Total Technical Buildings Owned
(15)
|
-
|
-
|
-
|
-
|
-
|
482
|
|
Square feet – Technical
Buildings Owned (15)
|
-
|
-
|
-
|
-
|
-
|
1,603,569
|
|
Network – end of period
(16)
|
|
|
|
|
|
|
|
Intercity route miles – Leased
(16)
|
60,869
|
61,024
|
61,065
|
61,292
|
61,300
|
72,694
|
|
Metro route miles – Leased
(16)
|
16,614
|
16,822
|
17,477
|
17,616
|
17,826
|
22,556
|
|
Metro fiber miles – Leased (16)
|
40,113
|
40,529
|
42,212
|
42,491
|
42,863
|
75,577
|
|
Intercity route miles – Owned
(16)
|
2,748
|
2,748
|
2,748
|
2,748
|
2,748
|
21,883
|
|
Metro route miles – Owned (16)
|
445
|
445
|
445
|
445
|
445
|
1,704
|
|
Connected networks – AS's
|
7,625
|
7,685
|
7,766
|
7,792
|
7,864
|
7,891
|
|
Headcount – end of period (17)
|
|
|
|
|
|
|
|
Sales force – quota
bearing (17)
|
479
|
477
|
522
|
548
|
562
|
647
|
|
Sales force – total
(17)
|
620
|
619
|
669
|
698
|
714
|
841
|
|
Total employees
(17)
|
987
|
988
|
1,041
|
1,076
|
1,107
|
2,020
|
|
Sales rep productivity – units per
full time equivalent sales rep
("FTE") per month
|
4.7
|
4.9
|
4.6
|
3.8
|
4.0
|
9.2
|
|
FTE – sales reps
|
453
|
449
|
465
|
503
|
539
|
567
|
|
|
|
(1)
|
On-net revenue from
Sprint for the period from the closing date of the acquisition (May
1, 2023) to June 30, 2023 was $4.1 million.
|
|
(2)
|
Off-net revenue from
Sprint for the period from the closing date of the acquisition (May
1, 2023) to June 30, 2023 was $63.9 million.
|
|
(3)
|
In connection with the
Cogent's Sprint acquisition, Cogent began to provide optical
wavelength services and optical transport services over its fiber
network. Wavelength revenue from Sprint for the period from
the closing date of the acquisition (May 1, 2023) to June 30, 2023
was $1.6 million
|
|
(4)
|
Consists of legacy
services of companies whose assets or businesses were acquired by
Cogent. Non-core revenue from Sprint for the period from the
closing date of the acquisition (May 1, 2023) to June 30, 2023 was
$8.4 million.
|
|
(5)
|
See Schedules of
Non-GAAP measures below for definitions and reconciliations to GAAP
measures.
|
|
(6)
|
Network operations
expense excludes equity-based compensation expense of $144, $145,
$176, $88, $149 and $231 in the three month periods ended March 31,
2022 through June 30, 2023, respectively. Network operations
expense includes excise taxes, including Universal Service Fund
fees of $3,742, $3,448, $4,118, $4,086, $4,193 and $11,040 in the
three month periods ended March 31, 2022 through June 30, 2023,
respectively. Excise taxes related to the Wireline Business
totaled $7.0 million for the period from May 1, 2023 (the Sprint
acquisition closing date) to June 30, 2023.
|
|
(7)
|
In connection with the
Sprint acquisition, Cogent classified $12.9 million of Sprint
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 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 ($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).
|
|
(8)
|
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.
|
|
(9)
|
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.
|
|
(10)
|
Excludes equity-based
compensation expense of $5,912, $5,762, $6,035, $6,176, $6,432 and
$6,018 in the three month periods ended March 31, 2022 through June
30, 2023, respectively and excludes $2,004, $244, $400 and $739 of
Sprint acquisition costs for the three month periods ended
September 30, 2022, December 31, 2022, March 31, 2023 and June 30,
2023, respectively.
|
|
(11)
|
As of June 30, 2023,
the 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 $(1.2 million), $3.3 million and $9.5
million of interest (income) expense for the three month periods
ended June 30, 2022, December 31, 2022 and June 30, 2023,
respectively related to the Swap Agreement.
|
|
(12)
|
The estimated gain on
bargain purchase from the Sprint acquisition was $1.2 billion as
shown below. The amounts presented are provisional and are subject
to change as Cogent refines its estimates and inputs used in the
calculations of the assets acquired and liabilities
assumed.
|
|
|
(In
thousands)
Gain on bargain
purchase
|
|
|
|
|
Fair value of net
assets acquired
|
|
|
$559,905
|
|
Total net consideration
to be received from Seller, net of discounts
|
|
|
595,814
|
|
Gain on bargain
purchase
|
|
|
$1,155,719
|
|
|
|
(13)
|
Includes cash payments
under an IP Transit Services Agreement, as discussed above, of
$29.2 million for the three months ended June 30, 2023. On the
Closing Date, Cogent and TMUSA, Inc. entered into an IP Transit
Services Agreement, pursuant to which TMUSA will pay Cogent an
aggregate of $700 million, consisting of (i) $350 million in equal
monthly installments during the first year after the Closing Date
and (ii) $350 million in equal monthly installments over the
subsequent 42 months. Amounts billed and amounts paid under the IP
Transit Services Agreement were $58.3 million and $29.2 million in
the three months ended June 30, 2023, respectively.
|
|
(14)
|
Total customer
connections from the Sprint acquisition were 46,212 as of June 30,
2023. On-net customer connections from the Sprint acquisition
were 2,546 as of June 30, 2023. Off-net customer connections
from the Sprint acquisition were 24,243 as of June 30, 2023.
Wavelength customer connections from the Sprint acquisition were
402 as of June 30, 2023. Non-core customer connections from
the Sprint acquisition were 19,021 as of June 30, 2023.
Enterprise customer connections from the Sprint acquisition were
23,034 as of June 30, 2023. Corporate customer connections were
17,571 as of June 30, 2023. Net-centric customer connections
were 5,607 as of June 30, 2023.
|
|
(15)
|
In connection with the
Cogent's Sprint acquisition, Cogent acquired 482 technical
buildings. One of those buildings was converted to a Cogent
Data Center.
|
|
(16)
|
Leased intercity route
miles of dark fiber include 11,376 former Sprint route miles and
61,318 Cogent route miles. Leased metro route miles of dark
fiber include 4,527 former Sprint route miles and 18,029 Cogent
route miles. Leased metro fiber miles of dark fiber include
32,346 Sprint fiber miles and 43,231 Cogent fiber miles. In
connection with the Cogent's Sprint acquisition, Cogent acquired
19,135 owned intercity route miles of dark fiber and 1,259 owned
metro route miles of dark fiber.
|
|
(17)
|
In connection with the
Cogent's Sprint acquisition Cogent hired 942 total employees,
including 75 quota bearing sales employees and 114 sales
employees.
|
|
(18)
|
In connection with the
acquisition of the Wireline Business and negotiation of the
Purchase Agreement, the Company incurred $2.2 million of
professional fees in the year ended December 31, 2022, $0.4 million
in the three months ended March 31, 2023, and $0.7 million in the
three months ended June 30, 2023.
|
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 Sprints 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 it does 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, its 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
2022
|
Q2
2022
|
Q3
2022
|
Q4
2022
|
Q1
2023
|
Q2
2023
|
|
($ in 000's) –
unaudited
|
|
|
|
|
|
|
|
Net cash provided by
operating
activities
|
$49,411
|
$34,403
|
$53,570
|
$36,323
|
$35,821
|
$82,654
|
|
Changes in operating
assets and
liabilities
|
$(6,294)
|
$5,108
|
$(13,017)
|
$4,152
|
$1,435
|
$(90,373)
|
|
Cash interest expense
and income tax
expense
|
14,038
|
18,946
|
17,320
|
16,663
|
18,797
|
31,875
|
|
EBITDA
|
$57,155
|
$58,457
|
$57,873
|
$57,138
|
$56,053
|
$24,156
|
|
PLUS: Sprint
acquisition costs
|
-
|
-
|
$2,004
|
$244
|
$400
|
$739
|
|
PLUS: Cash payments
made to the
Company under IP Transit Services
Agreement
|
-
|
-
|
-
|
-
|
-
|
29,167
|
|
EBITDA, as adjusted
for Sprint
acquisition costs and cash
payments made to the Company
under IP Transit Services
Agreement
|
$57,155
|
$58,457
|
$59,877
|
$57,382
|
$56,453
|
$56,042
|
|
EBITDA
margin
|
38.3 %
|
39.4 %
|
38.6 %
|
37.6 %
|
36.5 %
|
10.1 %
|
|
EBITDA, as adjusted
for Sprint
acquisition costs and cash
payments made to the Company
under IP Transit Services
Agreement, margin
|
38.3 %
|
39.4 %
|
39.9 %
|
37.8 %
|
36.8 %
|
22.5 %
|
Constant currency revenue is reconciled to service revenue as
reported in the tables below.
Constant currency impact on revenue changes – sequential
periods
|
($ in 000's) –
unaudited
|
Q1
2022
|
Q2
2022
|
Q3
2022
|
Q4
2022
|
Q1
2023
|
Q2
2023
|
|
Service revenue, as
reported – current
period
|
$149,175
|
$148,450
|
$150,000
|
$151,979
|
$153,588
|
$239,806
|
|
Impact of foreign
currencies on service
revenue
|
516
|
1,350
|
1,486
|
(92)
|
(1,292)
|
(417)
|
|
Service revenue - as
adjusted for
currency impact (1)
|
$149,691
|
$149,800
|
$151,486
|
$151,887
|
$152,296
|
$239,389
|
|
Service revenue, as
reported – prior
sequential period
|
$147,208
|
$149,175
|
$148,450
|
$150,000
|
$151,979
|
$153,588
|
|
Constant currency
increase
|
$2,483
|
$625
|
$3,036
|
$1,887
|
$317
|
$85,801
|
|
Constant currency
percent increase
|
1.7 %
|
0.4 %
|
2.0 %
|
1.3 %
|
0.2 %
|
55.9 %
|
|
|
|
(1)
|
Service revenue, as
adjusted for currency impact, is determined by translating the
service revenue for the current period at the average foreign
currency exchange rates for the prior sequential period. The
Company believes that disclosing quarterly sequential revenue
growth without the impact of foreign currencies on service revenue
is a useful measure of sequential revenue growth. Service revenue,
as adjusted for currency impact, is an integral part of the
internal reporting and planning system used by management as a
supplement to GAAP financial information.
|
Constant currency impact on revenue changes – prior year
periods
|
($ in 000's) –
unaudited
|
Q1
2022
|
Q2
2022
|
Q3
2022
|
Q4
2022
|
Q1
2023
|
Q2
2023
|
|
Service revenue, as
reported – current
period
|
$149,175
|
$148,450
|
$150,000
|
$151,979
|
$153,588
|
$239,806
|
|
Impact of foreign
currencies on service
revenue
|
1,914
|
3,417
|
4,246
|
3,371
|
1,553
|
(277)
|
|
Service revenue - as
adjusted for
currency impact (2)
|
$151,089
|
$151,867
|
$154,246
|
$155,350
|
$155,141
|
$239,529
|
|
Service revenue, as
reported –
prior year period
|
$146,777
|
$147,879
|
$147,927
|
147,208
|
149,175
|
148,450
|
|
Constant currency
increase
|
$4,312
|
$3,988
|
$6,319
|
8,142
|
5,966
|
91,079
|
|
Constant currency
percent increase
|
2.9 %
|
2.7 %
|
4.3 %
|
5.5 %
|
4.0 %
|
61.4 %
|
|
|
|
(2)
|
Service revenue, as
adjusted for currency impact, is determined by translating the
service revenue for the current period at the average foreign
currency exchange rates for the comparable prior year period. The
Company believes that disclosing year over year revenue growth
without the impact of foreign currencies on service revenue is a
useful measure of revenue growth. Service revenue, as adjusted for
currency impact, is an integral part of the internal reporting and
planning system used by management as a supplement to GAAP
financial information.
|
Revenue on a constant currency basis and adjusted for the
impact of excise taxes is reconciled to service revenue as reported
in the tables below.
Constant currency and excise tax impact on revenue changes –
sequential periods
|
($ in 000's) –
unaudited
|
Q1
2022
|
Q2
2022
|
Q3
2022
|
Q4
2022
|
Q1
2023
|
Q2
2023
|
|
Service revenue, as
reported –
current period
|
$149,175
|
$148,450
|
$150,000
|
$151,979
|
$153,588
|
$239,806
|
|
Impact of foreign
currencies on
service revenue
|
516
|
1,350
|
1,486
|
(92)
|
(1,292)
|
(417)
|
|
Impact of excise taxes
on service
revenue
|
594
|
294
|
(670)
|
32
|
(107)
|
(6,847)
|
|
Service revenue - as
adjusted for
currency and excise taxes impact
(3)
|
$150,285
|
$150,094
|
$150,816
|
$151,919
|
$152,189
|
$232,542
|
|
Service revenue, as
reported –
prior sequential period
|
$147,208
|
$149,175
|
$148,450
|
$150,000
|
$151,979
|
$153,588
|
|
Constant currency and
excise
taxes increase
|
$3,077
|
$919
|
$2,366
|
$1,919
|
$210
|
$78,954
|
|
Constant currency and
excise tax
percent increase
|
2.1 %
|
0.6 %
|
1.6 %
|
1.3 %
|
0.1 %
|
51.4 %
|
|
|
|
(3)
|
Service revenue, as
adjusted for currency impact and the impact of excise taxes, is
determined by translating the service revenue for the current
period at the average foreign currency exchange rates for the prior
sequential period and adjusting for the changes in excise taxes
recorded as revenue between the periods presented. The Company
believes that disclosing quarterly sequential revenue growth
without the impact of foreign currencies and excise taxes on
service revenue is a useful measure of sequential revenue growth.
Service revenue, as adjusted for the impact of foreign currency and
excise taxes, is an integral part of the internal reporting and
planning system used by management as a supplement to GAAP
financial information.
|
Constant currency and excise tax impact on revenue changes –
prior year periods
|
($ in 000's) –
unaudited
|
Q1
2022
|
Q2
2022
|
Q3
2022
|
Q4
2022
|
Q1
2023
|
Q2
2023
|
|
Service revenue, as
reported –
current period
|
$149,175
|
$148,450
|
$150,000
|
$151,979
|
$153,588
|
$239,806
|
|
Impact of foreign
currencies on
service revenue
|
1,914
|
3,417
|
4,246
|
3,371
|
1,553
|
(277)
|
|
Impact of excise taxes
on service
revenue
|
786
|
1,363
|
695
|
250
|
(451)
|
(7,592)
|
|
Service revenue - as
adjusted for
currency and excise taxes impact
(4)
|
$151,875
|
$153,230
|
$154,941
|
$155,600
|
$154,690
|
$231,937
|
|
Service revenue, as
reported –
prior year period
|
$146,777
|
$147,879
|
$147,927
|
$147,208
|
$149,175
|
$148,450
|
|
Constant currency and
excise
taxes increase
|
$5,098
|
$5,351
|
$7,014
|
$8,392
|
$5,515
|
$83,487
|
|
Constant currency and
excise tax
percent increase
|
3.5 %
|
3.6 %
|
4.7 %
|
5.7 %
|
3.7 %
|
56.2 %
|
|
|
|
(4)
|
Service revenue, as
adjusted for currency impact and the impact of excise taxes, is
determined by translating the service revenue for the current
period at the average foreign currency exchange rates for the prior
year period and adjusting for the changes in excise taxes recorded
as revenue between the periods presented. The Company believes that
disclosing quarterly sequential revenue growth without the impact
of foreign currencies and excise taxes on service revenue is a
useful measure of sequential revenue growth. Service revenue,
as adjusted for the impact of foreign currency and excise taxes, is
an integral part of the internal reporting and planning system used
by management as a supplement to GAAP financial
information.
|
Non-GAAP gross profit and Non-GAAP gross margin
Non-GAAP gross profit and Non-GAAP gross margin are
reconciled to GAAP gross profit and GAAP gross margin in the table
below.
|
Q1
2022
|
Q2
2022
|
Q3
2022
|
Q4
2022
|
Q1
2023
|
Q2
2023
|
|
($ in 000's) –
unaudited
|
|
|
|
|
|
|
|
Service revenue
total
|
$149,175
|
$148,450
|
$150,000
|
$151,979
|
$153,588
|
$239,806
|
|
Minus - Network
operations expense
including equity-based compensation
and including depreciation and
amortization expense
|
80,137
|
79,585
|
80,117
|
80,535
|
83,798
|
190,013
|
|
GAAP Gross Profit
(1)
|
$69,038
|
$68,865
|
$69,883
|
$71,444
|
$69,790
|
$49,793
|
|
Plus -
Equity-based compensation –
network operations expense
|
144
|
145
|
176
|
88
|
149
|
231
|
|
Plus – Depreciation and
amortization
expense
|
22,688
|
23,071
|
22,897
|
$23,563
|
$25,160
|
$52,511
|
|
Non-GAAP Gross
Profit (2)
|
$91,870
|
$92,081
|
$92,956
|
$95,095
|
$95,099
|
$102,535
|
|
GAAP Gross Margin
(1)
|
46.3 %
|
46.4 %
|
46.6 %
|
47.0 %
|
45.4 %
|
20.8 %
|
|
Non-GAAP Gross
Margin (2)
|
61.6 %
|
62.0 %
|
62.0 %
|
62.6 %
|
61.9 %
|
42.8 %
|
|
|
|
(1)
|
GAAP gross profit is
defined as total service revenue less network operations expense,
depreciation and amortization and equity-based compensation
included in network operations expense. GAAP gross margin is
defined as GAAP gross profit divided by total service
revenue.
|
|
(2)
|
Non-GAAP gross profit
represents service revenue less network operations expense,
excluding equity-based compensation and amounts shown separately
(depreciation and amortization expense). Non-GAAP gross margin is
defined as non-GAAP gross profit divided by total service
revenue. Management believes that non-GAAP gross profit and
non-GAAP gross margin are relevant measures to provide to
investors, as they are measures that management uses to measure the
margin and amount available to the Company after network service
costs, in essence, these are measures of the efficiency of the
Company's network.
|
Gross and Net Leverage Ratios
Gross leverage ratio is defined as total debt divided by the
trailing last 12 months EBITDA, as adjusted for Sprint acquisition
costs and cash payments under IP Transit Services Agreement.
Net leverage ratio is defined as total net debt (total debt minus
cash and cash equivalents) divided by the trailing last 12 months
EBITDA, as adjusted for Sprint acquisition costs and cash payments
under IP Transit Services Agreement. Cogent's gross leverage
ratio and net leverage ratio are shown below.
|
($ in 000's) –
unaudited
|
As of June 30,
2023
|
As of March 31,
2023
|
|
Cash and cash
equivalents & restricted cash
|
$243,953
|
$234,422
|
|
Debt
|
|
|
|
Capital (finance)
leases – current portion
|
20,114
|
19,782
|
|
Capital (finance)
leases – long term
|
311,405
|
300,600
|
|
Senior Secured 2026
Notes
|
500,000
|
500,000
|
|
Senior Unsecured 2027
Notes
|
450,000
|
450,000
|
|
Total debt
|
1,281,519
|
1,270,382
|
|
Total net
debt
|
1,037,566
|
1,035,960
|
|
Trailing 12 months
EBITDA, as adjusted for Sprint acquisition costs and
cash payments from IP Transit Services Agreement
|
227,774
|
232,169
|
|
Gross leverage
ratio
|
5.63
|
5.47
|
|
Net leverage
ratio
|
4.56
|
4.46
|
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, 2023
AND DECEMBER 31, 2022
|
|
(IN THOUSANDS,
EXCEPT SHARE DATA)
|
|
|
|
June
30,
2023
|
|
December 31,
2022
|
|
|
(Unaudited)
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
192,366
|
|
$
|
223,783
|
|
Restricted
cash
|
|
|
51,587
|
|
|
52,129
|
|
Accounts receivable,
net of allowance for credit losses of $4,882 and $2,303,
respectively
|
|
|
89,207
|
|
|
44,123
|
|
Due from T-Mobile, IP
Transit Services Agreement, current portion, net of discount of
$32,391
|
|
|
291,160
|
|
|
—
|
|
Due from T-Mobile,
Transition Services Agreement
|
|
|
7,015
|
|
|
—
|
|
Prepaid expenses and
other current assets
|
|
|
81,854
|
|
|
45,878
|
|
Total current
assets
|
|
|
713,189
|
|
|
365,913
|
|
Property and
equipment:
|
|
|
|
|
|
|
|
Property and
equipment
|
|
|
2,856,108
|
|
|
1,714,906
|
|
Accumulated
depreciation and amortization
|
|
|
(1,248,667)
|
|
|
(1,170,476)
|
|
Total property and
equipment, net
|
|
|
1,607,441
|
|
|
544,430
|
|
Right-of-use leased
assets
|
|
|
415,602
|
|
|
81,601
|
|
Intangible assets,
net
|
|
|
56,070
|
|
|
—
|
|
Deposits and other
assets
|
|
|
22,169
|
|
|
18,238
|
|
Due from T-Mobile,
IP Transit Services Agreement, net of discount of
$39,550
|
|
|
307,732
|
|
|
—
|
|
Due from T-Mobile,
Purchase Agreement, net of discount of $16,526
|
|
|
40,534
|
|
|
—
|
|
Total assets
|
|
$
|
3,162,737
|
|
$
|
1,010,182
|
|
Liabilities and
stockholders' equity
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
30,278
|
|
$
|
27,208
|
|
Accrued and other
current liabilities
|
|
|
117,612
|
|
|
63,889
|
|
Due to T-Mobile –
Transition Services
|
|
|
118,777
|
|
|
—
|
|
Due to T-Mobile –
Purchase Agreement
|
|
|
3,492
|
|
|
—
|
|
Current maturities,
operating lease liabilities
|
|
|
125,551
|
|
|
12,005
|
|
Finance lease
obligations, current maturities
|
|
|
20,114
|
|
|
17,182
|
|
Total current
liabilities
|
|
|
415,824
|
|
|
120,284
|
|
Senior secured 2026
notes, net of unamortized debt costs of $776 and
$905, respectively, and discount
of $1,032 and $1,203,
respectively
|
|
|
498,192
|
|
|
497,892
|
|
Senior unsecured
2027 notes, net of unamortized debt costs of $1,059
and $1,173, respectively, and
discount of $2,218 and
$2,456, respectively
|
|
|
446,723
|
|
|
446,371
|
|
Operating lease
liabilities, net of current maturities
|
|
|
455,713
|
|
|
94,587
|
|
Finance lease
obligations, net of current maturities
|
|
|
311,405
|
|
|
287,044
|
|
Deferred income tax
liabilities
|
|
|
424,507
|
|
|
|
|
Other long-term
liabilities
|
|
|
71,173
|
|
|
82,636
|
|
Total
liabilities
|
|
|
2,623,537
|
|
|
1,528,814
|
|
Commitments and
contingencies:
|
|
|
|
|
|
|
|
Stockholders' equity
(deficit):
|
|
|
|
|
|
|
|
Common stock, $0.001
par value; 75,000,000 shares authorized; 48,617,162 and 48,013,330
shares issued
and outstanding, respectively
|
|
|
49
|
|
|
48
|
|
Additional paid-in
capital
|
|
|
589,573
|
|
|
575,064
|
|
Accumulated other
comprehensive loss
|
|
|
(15,627)
|
|
|
(19,156)
|
|
Accumulated
deficit
|
|
|
(34,795)
|
|
|
(1,074,588)
|
|
Total stockholders'
equity (deficit)
|
|
|
539,200
|
|
|
(518,632)
|
|
Total liabilities
and stockholders' equity (deficit)
|
|
$
|
3,162,737
|
|
$
|
1,010,182
|
|
COGENT
COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
|
FOR THE THREE MONTHS
ENDED JUNE 30, 2023 AND JUNE 30, 2022
|
|
(IN THOUSANDS,
EXCEPT SHARE AND PER SHARE DATA)
|
|
|
|
Three Months
Ended
June
30, 2023
|
|
Three Months
Ended
June
30, 2022
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
Service
revenue
|
|
$
|
239,806
|
|
$
|
148,450
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Network operations
(including $231 and $145 of equity-based compensation expense,
respectively,
exclusive of depreciation and amortization
shown separately below)
|
|
|
137,502
|
|
|
56,514
|
|
Selling, general, and
administrative (including $6,018 and $5,762 of equity-based
compensation
expense, respectively)
|
|
|
83,658
|
|
|
39,386
|
|
Acquisition costs –
Sprint Wireline Business
|
|
|
739
|
|
|
—
|
|
Depreciation and
amortization
|
|
|
52,511
|
|
|
23,071
|
|
Total operating
expenses
|
|
|
274,410
|
|
|
118,971
|
|
Gains on lease
terminations
|
|
|
—
|
|
|
87
|
|
Operating (loss)
income
|
|
|
(34,604)
|
|
|
29,566
|
|
Interest
expense
|
|
|
(28,653)
|
|
|
(13,478)
|
|
Gain on bargain
purchase – Sprint Wireline Business
|
|
|
1,155,719
|
|
|
—
|
|
Change in valuation
– interest rate swap agreement
|
|
|
(1,305)
|
|
|
(7,510)
|
|
Unrealized foreign
exchange gain on 2024 Euro Notes
|
|
|
—
|
|
|
23,547
|
|
Loss on debt
extinguishment and redemption – 2024 Euro Notes
|
|
|
—
|
|
|
(11,885)
|
|
Interest income – IP
Transit Services Agreement
|
|
|
7,669
|
|
|
—
|
|
Interest income –
Purchase Agreement
|
|
|
506
|
|
|
—
|
|
Interest income and
other, net
|
|
|
200
|
|
|
(522)
|
|
Income before income
taxes
|
|
|
1,099,532
|
|
|
19,718
|
|
Income tax benefit
(expense)
|
|
|
24,331
|
|
|
(8,554)
|
|
Net
income
|
|
$
|
1,123,863
|
|
$
|
11,164
|
|
|
|
|
|
|
|
|
Comprehensive
income:
|
|
|
|
|
|
|
|
Net income
|
|
$
|
1,123,863
|
|
$
|
11,164
|
|
Foreign currency
translation adjustment
|
|
|
1,741
|
|
|
(7,493)
|
|
Comprehensive
income
|
|
$
|
1,125,604
|
|
$
|
3,671
|
|
|
|
|
|
|
|
|
Net income per
common share:
|
|
|
|
|
|
|
|
Basic net income per
common share
|
|
$
|
23.84
|
|
$
|
0.24
|
|
Diluted net income
per common share
|
|
$
|
23.65
|
|
$
|
0.24
|
|
Dividends declared
per common share
|
|
$
|
0.935
|
|
$
|
0.88
|
|
|
|
|
|
|
|
|
Weighted-average
common shares - basic
|
|
|
47,137,822
|
|
|
46,691,142
|
|
|
|
|
|
|
|
|
Weighted-average
common shares - diluted
|
|
|
47,526,207
|
|
|
47,029,446
|
|
COGENT
COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
|
FOR THE SIX MONTHS
ENDED JUNE 30, 2023 AND JUNE 30, 2022
|
|
(IN THOUSANDS,
EXCEPT SHARE AND PER SHARE DATA)
|
|
|
|
Six Months
Ended
June
30, 2023
|
|
Six Months
Ended
June
30, 2022
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
Service
revenue
|
|
$
|
393,395
|
|
$
|
297,622
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Network operations
(including $380 and $289 of equity-based compensation expense,
respectively,
exclusive of depreciation and amortization
shown separately below)
|
|
|
196,140
|
|
|
113,963
|
|
Selling, general, and
administrative (including $12,450 and $11,674 of equity-based
compensation
expense, respectively)
|
|
|
128,736
|
|
|
80,013
|
|
Acquisition costs –
Sprint Wireline Business
|
|
|
1,139
|
|
|
—
|
|
Depreciation and
amortization
|
|
|
77,669
|
|
|
45,762
|
|
Total operating
expenses
|
|
|
403,684
|
|
|
239,738
|
|
Gains on lease
terminations
|
|
|
—
|
|
|
460
|
|
Operating (loss)
income
|
|
|
(10,289)
|
|
|
58,344
|
|
Interest
expense
|
|
|
(47,658)
|
|
|
(27,648)
|
|
Gain on bargain
purchase – Sprint Wireline Business
|
|
|
1,155,719
|
|
|
—
|
|
Change in valuation
– interest rate swap agreement
|
|
|
542
|
|
|
(28,781)
|
|
Unrealized foreign
exchange gain on 2024 Euro Notes
|
|
|
—
|
|
|
31,561
|
|
Loss on debt
extinguishment and redemption- 2024 Euro Notes
|
|
|
—
|
|
|
(11,885)
|
|
Interest income – IP
Transit Services Agreement
|
|
|
7,669
|
|
|
—
|
|
Interest income –
Purchase Agreement
|
|
|
506
|
|
|
—
|
|
Interest income and
other, net
|
|
|
3,695
|
|
|
(195)
|
|
Income before income
taxes
|
|
|
1,110,184
|
|
|
21,396
|
|
Income tax benefit
(expense)
|
|
|
19,827
|
|
|
(9,095)
|
|
Net
income
|
|
$
|
1,130,011
|
|
$
|
12,301
|
|
|
|
|
|
|
|
|
Comprehensive income
:
|
|
|
|
|
|
|
|
Net income
|
|
$
|
1,130,011
|
|
$
|
12,301
|
|
Foreign currency
translation adjustment
|
|
|
3,529
|
|
|
(9,658)
|
|
Comprehensive
income
|
|
$
|
1,133,540
|
|
$
|
2,643
|
|
|
|
|
|
|
|
|
Net income per
common share:
|
|
|
|
|
|
|
|
Basic net income per
common share
|
|
$
|
23.97
|
|
$
|
0.26
|
|
Diluted net income
per common share
|
|
$
|
23.79
|
|
$
|
0.26
|
|
Dividends declared
per common share
|
|
$
|
1.860
|
|
$
|
1.735
|
|
|
|
|
|
|
|
|
Weighted-average
common shares - basic
|
|
|
47,142,074
|
|
|
46,705,088
|
|
|
|
|
|
|
|
|
Weighted-average
common shares - diluted
|
|
|
47,508,334
|
|
|
47,050,911
|
|
COGENT
COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
FOR THE THREE MONTHS
ENDED JUNE 30, 2023 AND JUNE 30, 2022
|
|
(IN
THOUSANDS)
|
|
|
|
Three Months
Ended
June
30, 2023
|
|
Three
Months
Ended
June
30, 2022
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net income
|
|
$
|
1,123,862
|
|
$
|
11,164
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
52,511
|
|
|
23,071
|
|
Amortization of debt
discount and premium
|
|
|
328
|
|
|
412
|
|
Amortization of
discounts, Due from T-Mobile, IP Transit Services & Purchase
Agreements
|
|
|
(8,175)
|
|
|
—
|
|
Equity-based
compensation expense (net of amounts capitalized)
|
|
|
6,249
|
|
|
5,907
|
|
Gain on bargain
purchase – Sprint Wireline Business
|
|
|
(1,155,719)
|
|
|
—
|
|
Gains – lease
transactions
|
|
|
—
|
|
|
—
|
|
Gains - equipment
transactions and other, net
|
|
|
7
|
|
|
1,155
|
|
Loss on debt
extinguishment and redemption – 2024 Euro Notes
|
|
|
—
|
|
|
11,885
|
|
Unrealized foreign
currency exchange gain on 2024 Euro Notes
|
|
|
—
|
|
|
(23,547)
|
|
Deferred income
taxes
|
|
|
(28,080)
|
|
|
3,196
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(4,058)
|
|
|
(3,605)
|
|
Prepaid expenses and
other current assets
|
|
|
(11,221)
|
|
|
(2,197)
|
|
Change in valuation –
interest rate swap agreement
|
|
|
1,305
|
|
|
7,510
|
|
Due to T-Mobile –
Transition Services Agreement
|
|
|
118,777
|
|
|
—
|
|
Due from T-Mobile –
Transition Services Agreement
|
|
|
(7,015)
|
|
|
—
|
|
Unfavorable lease
liabilities
|
|
|
(6,469)
|
|
|
—
|
|
Accounts payable,
accrued liabilities and other long-term liabilities
|
|
|
255
|
|
|
(1,809)
|
|
Deposits and other
assets
|
|
|
97
|
|
|
1,261
|
|
Net cash provided by
operating activities
|
|
|
82,654
|
|
|
34,403
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Cash payments - IP
Transit Services Agreement – T-Mobile
|
|
|
29,167
|
|
|
—
|
|
Acquisition of Sprint
Wireline Business, net of $47.1 million of cash acquired
|
|
|
(14,034)
|
|
|
—
|
|
Purchases of property
and equipment
|
|
|
(37,449)
|
|
|
(17,288)
|
|
Net cash used in
investing activities
|
|
|
(22,316)
|
|
|
(17,288)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Dividends
paid
|
|
|
(44,907)
|
|
|
(41,855)
|
|
Redemption and
extinguishment – 2024 Euro Notes
|
|
|
—
|
|
|
(375,354)
|
|
Net proceeds from
issuance of senior unsecured 2027 Notes - net of debt costs of
$1,290
|
|
|
—
|
|
|
446,010
|
|
Proceeds from exercises
of stock options
|
|
|
240
|
|
|
130
|
|
Principal payments on
installment payment agreement
|
|
|
—
|
|
|
(219)
|
|
Principal payments of
finance lease obligations
|
|
|
(7,797)
|
|
|
(5,236)
|
|
Net cash (used in)
provided by financing activities
|
|
|
(52,464)
|
|
|
23,476
|
|
Effect of exchange
rates changes on cash
|
|
|
1,657
|
|
|
(2,515)
|
|
Net increase in
cash, cash equivalents and restricted cash
|
|
|
9,531
|
|
|
38,076
|
|
Cash, cash
equivalents and restricted cash, beginning of period
|
|
|
234,422
|
|
|
311,771
|
|
Cash, cash
equivalents and restricted cash, end of period
|
|
$
|
243,953
|
|
$
|
349,847
|
|
COGENT
COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
FOR THE SIX MONTHS
ENDED JUNE 30, 2023 AND JUNE 30, 2022
|
|
(IN
THOUSANDS)
|
|
|
|
Six Months
Ended
June
30, 2023
|
|
Six
Months
Ended
June
30, 2022
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net income
|
|
$
|
1,130,011
|
|
$
|
12,301
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
77,669
|
|
|
45,762
|
|
Amortization of
debt discount and premium
|
|
|
652
|
|
|
829
|
|
Amortization of
discounts, Due from T-Mobile, IP Transit Services & Purchase
Agreements
|
|
|
(8,175)
|
|
|
—
|
|
Equity-based
compensation expense (net of amounts capitalized)
|
|
|
12,830
|
|
|
11,963
|
|
Gain on bargain
purchase – Sprint Wireline Business
|
|
|
(1,155,719)
|
|
|
—
|
|
Gains -
equipment transactions and other, net
|
|
|
(608)
|
|
|
1,308
|
|
Loss on debt
extinguishment and redemption – 2024 Euro Notes
|
|
|
—
|
|
|
11,885
|
|
Unrealized
foreign currency exchange gain on 2024 Euro Notes
|
|
|
—
|
|
|
(31,561)
|
|
Deferred income
taxes
|
|
|
(27,190)
|
|
|
3,138
|
|
Changes in
operating assets and liabilities:
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(4,918)
|
|
|
(3,529)
|
|
Prepaid expenses
and other current assets
|
|
|
(14,140)
|
|
|
(5,150)
|
|
Change in
valuation – interest rate swap agreement
|
|
|
(542)
|
|
|
28,781
|
|
Due to T-Mobile
– Transition Services Agreement
|
|
|
118,777
|
|
|
—
|
|
Due from
T-Mobile – Transition Services Agreement
|
|
|
(7,015)
|
|
|
—
|
|
Unfavorable
lease liabilities
|
|
|
(6,469)
|
|
|
—
|
|
Accounts
payable, accrued liabilities and other long-term
liabilities
|
|
|
3,179
|
|
|
8,233
|
|
Deposits and
other assets
|
|
|
133
|
|
|
(146)
|
|
Net cash
provided by operating activities
|
|
|
118,475
|
|
|
83,814
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Cash payments - IP
Transit Services Agreement – T-Mobile
|
|
|
29,167
|
|
|
—
|
|
Acquisition of Sprint
Wireline Business, net of $47.1 million of cash acquired
|
|
|
(14,034)
|
|
|
—
|
|
Purchases of property
and equipment
|
|
|
(60,653)
|
|
|
(35,409)
|
|
Net cash used in
investing activities
|
|
|
(45,520)
|
|
|
(35,409)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Dividends
paid
|
|
|
(90,218)
|
|
|
(83,153)
|
|
Redemption and
extinguishment – 2024 Euro Notes
|
|
|
—
|
|
|
(375,354)
|
|
Net proceeds from
issuance of senior unsecured 2027 Notes - net of debt costs of
$1,290
|
|
|
—
|
|
|
446,010
|
|
Proceeds from exercises
of stock options
|
|
|
385
|
|
|
334
|
|
Principal payments on
installment payment agreement
|
|
|
—
|
|
|
(790)
|
|
Principal payments of
finance lease obligations
|
|
|
(17,247)
|
|
|
(11,099)
|
|
Net cash used in
financing activities
|
|
|
(107,080)
|
|
|
(24,052)
|
|
Effect of exchange
rates changes on cash
|
|
|
2,166
|
|
|
(3,130)
|
|
Net (decrease)
increase in cash, cash equivalents and restricted
cash
|
|
|
(31,959)
|
|
|
21,223
|
|
Cash, cash
equivalents and restricted cash, beginning of period
|
|
|
275,912
|
|
|
328,624
|
|
Cash, cash
equivalents and restricted cash, end of period
|
|
$
|
243,953
|
|
$
|
349,847
|
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 that 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 failure 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, 2022 and our Form
10-Q for the quarters ended September 30,
2022, March 31, 2023 and
June 30, 2023. 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.