CCOI - Earnings call transcript Q2 2020 | Cogent Communications Holdings, Inc.

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Operator

Good morning, and welcome to the Cogent Communications Holders Second Quarter 2020 Earnings Conference Call.

As a reminder, this conference call is being recorded. And it will be available for replay at www.cogentco.com. A transcript of this conference call will be posted on the same website when it becomes available. I would now like to turn the call over to Mr. Chief of and Communications Chairman Schaeffer, Executive Cogent Officer Holdings. Dave

David Schaeffer

CEO. everyone. and call. our Cogent's Chief on Financial good Wallace, you, is Welcome morning's I'm with call this morning Schaeffer, Officer. conference Thank our earnings to to Sean me XXXX second Dave And quarter

our in remain profitability of on due service for We basis. and our impact outlook reduction quarterly by constant them continue quarterly strength most impact in X.X%. to and USF confident of growing and year-over-year revenue revenue would even the $XXX,XXX. rate, importantly, excise growth continuing growth growth fees, this this sequential currency pandemic. sequential about adjusting a change optimistic for we business, for be been increasing rate basis, our to X.X% constant in sequentially quarter A On network, We revenue a operations. importance in the underlying the associated beyond achieved the quarterly universal revenues and and our the our and COVID-XX XXXX On of second constant the the taxes X.X% breadth of a with uncertainty our with of basis reduced currency have currency the and quarter

take growth. leverage We in to expense SG&A our advantage operating to of the also continue our network. We moderate managed

XX%. This points sequentially XXXX. year-over-year our helped basis scale quarter for a ending was quarterly gross record margins margin network number in of another basis Our and than yet points reach XXX higher XXX higher June the company

on and points sequentially was and XXX improved, basis also XX.X% at basis. margin basis higher points year-over-year EBITDA higher a Our XXX

by grew flow XX%. cash from operations sequentially Our

performed of spite impact to historical We the churn, our Cogent Our within be COVID-XX. strong base continue all and all-time norms days and strong metrics Customer customer these sales credit June our importance month and believe an the customer organizations. these record. collections of outstanding the performance in of quality cash of the in that service were bad debt of to statistics and indicate

second in as grew our growth to of in quarter by network to continue the quarter, traffic XX%. the pandemic. a traffic traffic XXXX increase The and sequentially, applications, and the driven other increased first the see to quarter due accelerated strong streaming growth seen in to XX% We quarter applications work-from-home growth have in traffic year-over-year and first was of from quarter XX% that rapid from gaming across by full usage phenomena an this the quarterly

portion million we our in We of we through continue during our During At a our of our quarter, demonstrated purchase stock program, we by quarter. our to quarter has any of also Board. to In authorization buyback provided quarterly through been have $XX.X to net authorized regular access shareholders the which dividend. unsecured notes. $XX.X were end on $XXX.X this the million total at stock par million. returned we the offering redeem or those cash. proceeds €XXX issued ability to denominated proceeds to from offering XXXX a million A continuing unsecured million existing notes. of euro where our of €XXX its million us The capital were This did year end, the not the common outstanding markets $XXX.X additional available June, used tack

company. our our in interest operating of million $XXX we fell, rate able company duration to As extended and a builder basket result average holding indebtedness of we were these to the from transactions, our our our transfer

at cash addition our Cash giving $XXX.X company, combined held quarter companies, was Our was and operating cash quarter holding $XXX.X at million, million in of to dividends at Cogent Holdings buybacks. hold million $XXX available cash end. This is and at for Cogent a end. that unrestricted at the stock balance

ratio leverage to to X.XX last X.XX increased X.XX. from ratio leverage our X.XX increased from gross and Our quarter net from

X.XX strength After and well indentures and its of leverage, our is quarter, note in increase the in represents under quarter than dividend rate growth at the $X.XXX quarter's investment the QX from the sequential larger business increase XXnd quarterly This roughly therefore, increase - XXXX. the end. $X.XXX our evaluated raising share We our the increase and dividend of our per Our capabilities our careful as to calculated the in of in quarter. quarterly consecutive this last opportunities cash-generating consideration, as as company. decided consolidated this was dividend, increase $X.XX of for Directors our are at to Board $X.XX growth third

like will read Now our our to Sean some call language Harbor to Wallace, and XX. Sean overview the turn as both over of CFO, response I'd give Sean to Safe COVID and our welcoming

Sean Wallace

call forward-looking reconciled no find our use earnings in the undertakes call, this at Like to and Thank David, call the these update we to website which are These earnings beliefs accompanying all companies, A be world. be that words update. financial results statements to the historical to the or our and statements forward-looking by cause pandemic subject are These our to factors and many uncertainties, during morning, filings measurement responses materially. if based intent, GAAP refer non-GAAP that made COVID-XX you, our actual our number differ. forward-looking statements. and results differ www.cogentco.com. statements, Cogent everybody. of governments Cogent measures to and the COVID-XX statements and this on release, expectations. will risks This for good you not that a Please SEC obligation other revise information is more could posted continues conference are other may few on includes the by may facts around current impacted forward-looking on actual on on

to department, upgrading continue new challenging Our who in and IT work other their want to thank entire our also our to remotely. serve to work so want the times. hard on continue to our customers. Cogent workforce network installing can during entire lines, I continues that front we particular, and engineers employees and work field for workforce thank these I maintaining the and our customers

the impact During to quarter productivity, Cogent of growth rates. on limited. a network We sales at an in customers. our second to continues somewhat of did the our pandemic experience sales COVID-XX rate Traffic was on historical particularly our to decrease the in grow XXXX, corporate accelerated compared

the However, the of than end the Cogent a to impact how the traffic slower the impact future on uncertainty the The and and of unknown at as rate pandemic the ultimate growth volatility first significant remains. the quarter pandemic was traffic pandemic, the rate of for amount the of We pandemic, world. actions take in governments the of is growth duration economies and will response not the scope may know what in do the quarter.

remotely, customer be network. which new shipping the of we as the difficult existing our in will adversely We We or that working protect space served in install government we operations is financial from to pandemic this accessing procuring largest base, where Cogent not to our commercial and sufficient customers as our necessary have may orders, is business that assurance by for affected companies collect annual more call difficulties or even temporary Form to the results have be described our and our locations on equipment report may in XX-Q return located affect in installing future. buildings office serve multi-tenant are quarterly detail up distress, find or global the also are our statistics, and restrictions our may a encounter the their XXXX. detail ended customers Q&A. workforce slowdowns either review to no I on economic will office the risks Form find quarterly additional in may after difficulties experiencing following and may it for continue. we future on on we basis. customers well While employees. our districts these see buildings, March who impact Moreover, into key the that related new business year primarily The in customer buildings on a be affected our central adversely falling prolonged quarter shortly in in a These trends, elect will will remarks, office demand for and discussion, will on provide this space, our highlight ended certain report operational the for XXXX, COVID-XX for network XX, and impact the other pandemic will Form call on operational of the the greater XX-K permanent have and highlights this several be December XX-Q in and and Dave quarter Throughout XX, filed report details our that open and

to to like I'd Dave. back turn Now it

David Schaeffer

to thanks, Sean. review our earnings Hopefully, a had press chance you've release. Hey,

that metrics trends a of understand Our business. press quarterly includes in number release help our investors historical

of the compared our quarter which our revenues of by XX% from business, NetCentric XXXX. the And on corporate business, our XXXX. growth year-over-year to from historical quarter, which of accelerated quarter basis underperforming X.X% been a X.X% second Our represents and resumed grew this averages, grew second long-term has

USF essentially future For corporate the in universal second NetCentric changes impact sequential rate our our on and XXXX, quarter from both The constant impacted of grew and of A our basis business cannot tax XXXX. basis negatively sequentially from X.XX%. the currency quarter changes revenues, was again, quarterly, grew our flat. rates, On quarter, sequential our X%, and fund business on impacts the on our corporate business. a exchange primarily basis, NetCentric Volatility reduction basis. and X.X% NetCentric service foreign constant in a business rates a the year-over-year tax business predict USF we a And revenue. of currency on our grew NetCentric first

an margin Our expansion EBITDA long-term points. XXX improvement annual basis guidance of is

intended XX%, multiyear quarterly EBITDA revenue to specific constant multiyear annual to growth long-term and not and guidance. currency even are guidance revenue are meant our be or targets be Our

give additional will color. for Sean our give some some operating you And on results color to return the you then additional Now I'll quarter. network

Sean Wallace

Dave. Thanks,

off-net type. upon of in We our Let's revenue network based analyze centric and our off-net, customers our We customers and all corporate and upon customers. two noncore, revenues classify talk net and based about revenues and type, customer also customer connections. NetCentric analyze we types: corporate

from buy office customers centers. well in corporate large data as bandwidth buildings multi-tenant as carrier-neutral Our us

bandwidth Our significant us amounts of in NetCentric carrier-neutral from customers buy centers. data

the our about slowdown COVID-XX. of sequentially Let's We continuing the growth $XX.X believe talk type. quarter X.X% corporate customers concerns X.X%. our Revenue the for and by that year-over-year rate grew connections by was customer from corporate million the raised grew impacted in and the revenue by customer to by connections by

customers, While connections first decisions significant quarter existing with our we some uncertainty. economic and decline our customer at the quarter quarter have is potential delaying of buying corporate second on XX,XXX had the - of dialogue an are connections customer X.X% over We a increase which customers network continue to end, versus and to X.X% due of XXXX.

Quarterly COVID-XX, our rate, pricing were adversely pandemic, of from by impact lower was our quarter. corporate lower reduction local their the the off-net customer by corporate revenue USF $XX.X at to network aggregate our revenue connections X.X% XX,XXX number tax second are end, NetCentric locations. to sales. increased X.X% the the and increase of of addition VPN In had year-over-year. customers quarter reducing connections over on affected We and flat loop the certain million NetCentric customers at of Due and an

experiences Our larger growth NetCentric customer impact revenues the our size factors. significantly more corporate other of and volatility exchange, due than revenue seasonal foreign to

mix, of in NetCentric a a corresponding growth. traffic of traffic as revenues network deal partially increase this result in increased this grew created annually, discounts traffic some increase customers, by only particularly offset volume of great our largest traffic primarily and our XX% in for While traffic,

talk customer type. and Let's network revenue by connections about

was revenue on-net year-over-year $XXX.X and a X.X% of Our a the increase quarterly quarter, sequential increase million X.X%. for of

We our sequentially connections year-over-year. Our carrier-neutral data quarter X.X% on-net and network customer increased X,XXX by buildings. X% total multi-tenant with our office on-net connections center ended in XX,XXX on-net increased by customer the and on

a $XX.X of quarter, was quarterly a sequential X.X%. decrease million Our and of X.X% off-net year-over-year revenue for decrease the

and prices to Our our off-net loop ARPU, from due USF revenues reduction reduction lower a primarily the were by vendors. in off-net affected which in was adversely local off-net taxes our

We XX,XXX off-net year-over-year. buildings. the off-net buildings off-net ended X,XXX in X.X% buildings, America. are increased increased These customer by sequentially connections North over Our quarter and X.X% off-net customers' primarily in located connections serving by

trends, historical installed Let's about per with megabit of base average our pricing per Consistent price talk on a basis. megabit customer decreased. our

megabit megabit second new by for to quarter per actually base of XXXX. close declined per XX.X% XX% megabit However, by quarter. price The per XX.X% the to for average sequentially and of customer the second declined per for the per average the contracts from of our installed price quarter by increased price quarter our sequentially contracts megabit customer average and to megabit new XXXX. $X.XX The increased by for declined our XX.X% $X.XX the from ARPU.

sequentially Our on-net for both the off-net and quarter. ARPU decreased

decreased, on-net our in our product ARPU our off-net our but reflects growing increase product. the year-over-year importance of megabit year-over-year, on-net ARPU increased. However, our This XXX gigabit ARPU versus X

product gigabit megabit product the outsold X Our has XXX for third our quarter. straight

corporate a quarter, which NetCentric and customers, was quarter. from of last decrease for Our X.X% on-net includes both ARPU, the $XXX

from XXXX. on-net ARPU X.X% second Our increased quarter by of the

which a from the $X,XXX last quarter, ARPU, comprised customers, of was for off-net is Our X.X% predominantly of quarter. decrease corporate

Our off-net ARPU quarter by second Churn X.X% the XXXX. decreased of from rates.

off-net rates on-net for Our the and sequentially churn improved quarter. both

We sales our last customer that was was change customers to term for which or churn customers from employ X.X% discounts Netcentric retain services Mac this improvement to for this the the NetCentric order and more them customers. group, are who X.X% to extend order from X.X% pricing we in an last their these these the Our dedicated an majority related quarter rate contracts. vast offer quarter. move, unit on-net to add indicated our unit their NetCentric to they're to have primarily In a quarter, our terminating nature turnover, churn services, and of services. Due orders. improvement of induce reduce quarter, typically to X.X% commodity purchase works of rate considering to orders off-net or

increasing our During $XX close with volume total term of customer the and contracts Cogent EBITDA. customers and million. quarter, long-term advantage commitment by certain for revenue into of entered over to our X,XXX to discounts connections, us contract NetCentric took their

meeting Our typically in States our flow the taxes factors quarterly level at typically from earnings increase annual and of services, or of that EBITDA of benefit press tax expenses seasonal our our all our vacation SG&A costs, annual in beginning factors our releases. the expenses These audit and SG&A timing reconciled is cash fourth in the include our cost first to of CPI, Seasonal sales United cost the increases. and plan increases, each of operations quarter impact our payroll year, from living, resetting periods, our our annual seasonal quarter.

reduction cost result Our a EBITDA $X.X a improved million primarily in SG&A reduction million in network and a $X.X of operations of sequentially, our our expenses.

increased by to EBITDA sequentially $XX.X quarterly Our X.X% million.

Our $X.X EBITDA million or quarterly by year-over-year increased XX.X%. by

year-over-year quarter per increased share, our margin compared last Our XXX increased a basis higher quarterly by Earnings the EBITDA for to XXX and by at basis to $X.XX points. sequentially was points per $X.XX quarter rate $X.XX income for share XX.X% XXXX. basic and quarter X

income $X.XX income to $X.XX diluted per Unrealized to and was share X losses income $X.XX our quarter notes quarter Our and our our the into of net dollars and euro share. variability translation the quarter XXXX for compared U.S. contribute on per last XXXX. for consequently, gains in

foreign about talk Let's currency.

of about American States revenues our of our of not Europe, is revenue euro based dollars We Our Asia-Pacific payments, XX% United the Latin approximately outside reported XX% on Approximately earned operations. was our Canadian, X% foreign in obligations, our and do currency this revenues. our and including Mexican, U.S. were hedge to quarter total our in and quarterly revenues our notes. related

to sufficient obligations, generate operations we provides these which foreign hedge their believe cash a natural for Our liabilities. fund

million our negative and our reported foreign Continued foreign financial rates was on a results. currency results materially our over $X.X The in exchange a the impact can revenue exchange $X.X quarterly volatility impact sequential foreign was and quarterly revenue negative overall our reported on million. year impact exchange quarterly revenue

on conversion the concentrated. will average dollar constant exchange believe Variability rate year-over-year conversion these will X.XX Should remainder far exchange X.X% levels impact revenues remain a quarter, $X.X our impact million. quarterly positive on revenues. impacts a year-over-year. Canadian sequential Customer third to our and highly estimate is NetCentric is our rate our for basis Our the of and the and euro in revenue the quarterly average sequentially foreign not customer rates FX third rate concentration, growth our X.XX. $X.X we FX rates quarter was the that exchange quarterly base quarter X.X% revenues for the for average this so current on positive be currency is we foreign at that be revenue USD a The primarily million and average

Our X% and increased capital less this by our customers top million $X.X quarter. million by Our XX represent than increased CapEx; quarterly revenues of $X.X sequentially expenditures year-over-year.

Our capital quarter, million quarter compared million expenditures were $XX.X for X the $XX.X of XXXX. this XXXX to and $XX.X for quarter first million

our leases and Let's talk payments. financial about lease financial

dark longer, long-term are include leases term. multiple lease initial the IRU obligations terms or renewal XX and years Our typically finance often XX of options have to and for fiber after initial

payments of with as associated date. operations at June IRU obligations finance We our major no this lease reclassified of renewal in regional finance in Our future end, reduction A segment resulting to operation million. quarter, cash as this IRU under expense to was contracts the fiber contract renewal. $XX.X obligations the the no were required to suppliers. and finance $XXX.X totaled There increase dark with connection a There result to renewal or and as payments change the the IRU level obligation of maintenance XXXX. an Under fiber this were this renewed and total monthly agreement a be different a to lease our network of million we a reclassification. million payments had sequential on XX, amount lease made in XXX GAAP, U.S. $X.X be required of lease be quarter with t IRU a of made

the million to million million compared payments XXXX. quarter Our and $X.X were $X for for XXXX X for quarter principal quarter finance lease $X.XX X

to the flow, cash and expenditures XXXX. were quarter a cash were cash X.X% capital sequential totaled $XX.X and of Cash of million million payments Our operating June $XXX for second finance lease our as quarter, million. our million of compared quarter, XX, XXXX, decline $XX.X equivalents and principal last with $XX combined this

- For cash in from increase our from the flow operating quarter, $XX.X increase and XX.X an our our cash increased million net financing activities. cash by a

Our working our of accounts capital, including due quarterly from over sequentially improvement our $X.X from XX% to by sales an receivable. and an cash increased in operations $X.X outstanding days million in million flow improvement

X.X% operations cash from year-over-year. by Our quarterly increased flow

Our year-over-year increased $XX.X by increase our operations on - a note year-over-year from million paid cash obligations. was increase interest in impacted flow

XXXX million $XX.X compared Our from for quarter million the X operations cash for X flow XXXX. $XX.X was $XX.X to quarter for million quarter, and

and talk Let's ratios. debt debt our about

debt at our lease of million. finance $XXX.X and was end par, including was gross total obligations, at quarter, IRU Our the $X.X net billion the our debt

total our Our and X.XX last trailing to June XX-months gross debt ratio - net was as X.XX. at EBITDA was debt ratio adjusted, XXXX, XX, X.X

Our under consolidated as the leverage calculated agreement at indenture X.XX ratio, the debt of was quarter. our end

rate. gain million contracted €XXX The dollars quarter second and quarter - cash an at of of €XXX to euro unrealized U.S. we June end our $X.X our XXXX. notes million was dollar million the on notes X, senior gain XXXX, last to on quarter U.S. dollars. Euro receive a ending, to million issued USD at €X.XXX We our compared and of X secured unrealized $X.X in are reported the June U.S. U.S. the an to unrealized on $X.X X.XX exchange to loss million unrealized for Our rate to - quarter euro XXXX of of U.S. notes dollars each dollars foreign converted exchange at in month and month using this euro

a we expense from a but year-over-year million transaction, foreign Bad of gain in $X.X slightly debt revenues quarter. increased as this realized improved sales exchange last of percentage result days debt bad and June our a XXXX. outstanding; As

X quarter X% of the quarter to X.X% expense quarter debt X.X% XXXX compared bad for our Our XXXX. revenues of in for was X and revenues our

for it quarter, days collections our receivable do worldwide times. in from days a outstanding Our our And customers' or thank the collecting during and Dave. turn challenging outstanding, bills recognize fantastic I a billing for to back very to customers and team let DSO, was for serving job accounts two-day continuing improvement with want me quarter. to over worldwide that, and XX our days sales XX last

David Schaeffer

a of operate States, growth. office have distribution We connectivity Cogent Asia, added multi-tenant growth America, few and directly of meaningful feet. is States square in centers size we're raised believe We position Thanks, benefit Sean. has floor network in our Cogent And I'd data market In United South with and force. the the leading increasingly strengths to the our concerning that of sales to approximately grow. of Africa important Internet countries at Latin scale globally. are our connectivity growing utilization. locations physical that network, multiple our those America, feet base continues footprint we're to means African customer positioned Internet to the outside attached traffic recently further This in continent, to our to is Cogent network these network rapidly. this Johannesburg, across in Cogent week. within United selling square full a XXX than the XX like operational highlight as We presence a of faster just XXX,XXX XX% scope provider total from operating XX see We're in last space those buildings. of a an beginning and we and million growing will North markets. that The facilities increase and with our we Internet

and of miles Our metro XX,XXX of intercity over XX,XXX markets fiber in consists route fiber. network miles

and solutions. increased and to of saw We as of Internet subscribers to to as an continue network level consumers connect continues new the We over in the interconnection, we solutions at connected streaming for XXXX positions time remains phone our and of providers, broadband opposed Cogent companies, go-to continue as interconnected over-the-top world. world's on networks and users. collection Cogent the be Internet cable to to This year. choose to the cut This give of the linear mobile and eyeballs service collection operators us access large cord developing last compared networks video Today, other traffic telephone of majority grow, level and vast companies, shape focused mobile the network to the directly carriers most same applications. XXXX

quarter, our seen the our traffic was reported XX% achieved over average long-term For year-over-year number quarter. on sequential year-over-year years. XX%. growth traffic a that growth growth that rate traffic growth basis, This from up we in of the above past And is the first XX%, we we've X

how handled Cogent's surge in any network to March in early capital issues without traffic increase or disruptions, well this on spending. pleased unprecedented and any April, requirements interruptions, are We latency

have Our all-time with that at our sales force of ended reps continues reps high, We at with an months therefore, X.X% We had end a equivalents. had the job carry are the end last grow. represents from quarter service, the And reps These X.X% this a increase full that quarter we increase QX X to equivalent the of an full-time XXX the XXX been selling XXXX. quota. that of reps more from on sequentially ended XXX for the we XXX full-time the or quarter. and

was this declined Our better than X.X%. rate quarter, force the X.X% average long-term of our of for turnover to rate sales significantly turnover force sales

sales did per equivalent decline equivalent month last rep Our per rep full-time per month X.X units X.X to full-time our units quarter. per average below quarterly our productivity of and long-term reported X units

operating the products in are our been VPLS reduced the in that cycles to some result the significantly, adversely our remote shuttered of sales customers a in pandemic. as offices and that rep number and has sales many sales of corporate our productivity by fact customers a VPN and a of locations affected result of a of reduction modest as Our was lengthening due slowdown most

impacted was cross-connect productivity by an customers sales and expense. ports buy to tendency NetCentric increasing of their minimize Our larger

We still was up NetCentric have on slight impacted CRM our but And our quarter. as system, which productivity improve the to impact sales our interfaces, going see rep finally, in that forward, continue in sale which majority uptick reps our interfaces the the negative of XXX-gig were opposed to significant make a productivity trained a connections. the XX-gig by did of will fact a new the

to and we our are for marketplace sell we want meet in great We services, quite are seeing that who XXXX. candidates confident Cogent hiring the will goals

continue employees office. metrics We and and to historic are utilizing all productivity, our quality on the number that are supporting track a our fact customer's in remotely we our network and force of reps in sales who the customers of sales productivity monitor

for the in in our additional and performance paper number unmatched in Some industry. important transit of comments all within is how checks were times. value saw fact, of the the acceleration of basis. services to about and remains the base these indicates are access customer the to the our Cogent annual remain versus an our a is and, of Internet credit our necessary services, We We operation elected that DSOs showed utility pay is sequential customers customers strong bad access very and our quarter, electronically business. improvement historical of current customer fact churn, Internet their most to who operation continued proposition understand in quality an debt in their businesses. our challenging norms Cogent on indicate with us which believe the a that the statistics important low-cost these desire have provider And and

connectivity data higher center multi-tenant and all medium-sized focused data our about buildings center and infrastructure locations, and reliability major IP Internet, businesses We customers. in remain serving unique connectivity, position which of business are times. in our businesses are install utilities small central greater and completely needing their remains quicker IT districts business to architectures on cities. integrating co increasingly optimistic of These into Our

Cogent strengths customers. winning that All are of things are at these

highest promoter industries and has customer of some quality. our Cogent's a in by gratified across customer strong the network other service been on than many and customers higher XX, system. of Net survey levels much superior how Promoter We are our segments. to scores We our reaction net consistently the are industry measure

XX% multiyear our year. margin constant currency and expansion is revenue per growth XXX Our basis EBITDA points of rate

slightly we on overachieved have pandemic, growth our fallen on the have the margin expansion. short in we While revenue

dividend Directors of to sequentially. carefully for a dividend growing at They regular and share trajectory the authorized we increase Board quarter third our business this increased Our and consecutive to rate bringing our the XXnd dividend $X.XXX per considered which in $X.XXX. growth quarterly the of the are

and demonstrates choices drives dividend we of believe market in We our optimism the line, M&A how view capabilities grow and how disciplined consistent increasing increase Our this make in top operating highly cash business. to be confidence our we management the we expenses. our manage how we the how we allocate capital our and

these purchases will place end, million all of all we continue and to in the times. healthy and quarter's in market. remotely. continue our open value policy through of buyback to employees employees. authorization At of the have in our everyone be have We safety the to which our remaining December during stock We We shifted working current opportunistic work-from-home challenging is virtually about safe I $XX.X hope remains a XXXX. common of

are all the sure place in are models, precautions a and necessary and make workforce for healthy. that believe of and applications. net quarantine taking Internet remains our the to that the to need We We greater gaming for protections we access beneficiary stay-at-home other streaming,

committed basis. remain to in volatility, and Our are profitability growth the shareholders on returning methodical capital and and a of growing we amount our even to regular light current economic intact, targets of a

questions. I'd Now floor for open to like the

Operator

question first our Suisse. And Badri Credit comes of Instructions] from [Operator Sami

George Engroff

for Sami on This is actually. George

dividend some your previous expect So that going by of target that quarter. we I of now guess intend commentary, quarterly the your forward? next be to you increase in $X.XXX light to Should

David Schaeffer

a our accelerating in $X.XX decelerating. growth our flow rate cash and George, rate of sequential decided the larger of deliberated at free the getting dividend just our in and growth was So carefully arithmetic that Board because dividend was very

will to in decision light the flow that every this of even appropriate So to increase and an volatility and of to believe that that made seriously take growth growth we is But returning of this Board $X.XXX. each quarter. cash did rate economic was evaluate The rate in shareholders.

George Engroff

it. Got

you of ongoing little on despite impact could issue improve And I issues. Okay. the corporate more the bit provide customer a if COVID that color something the is on sales? want to understand might just COVID

David Schaeffer

Yes.

COVID. because So really there been have impacts three of

remotely. into major the working greater majority is The office are have location. people as need our locations. Most VPNs first for customers their of the at tunnel those workforce of They running ad-hoc your bandwidth

in more whereas than for acceleration increasingly higher quarters mentioned, secondly, bandwidth These us. meg, sales, then gigabit are have a their new sales new positive XXx XXX ARPUs. both i.e., X-gigabit existing And increasing significant a been have We and Sean to for seen three the were row, connections. customers in customers

customers Roughly trend to have Because the reduction those concentration corporate no a offices, half there's those either our second and a services. many VPN is in sale a virtual over our network of empty, product, of sit need of negative we've a for in take connection. private remote running second that their offices customers seen shuttered our trend. offices or VPLS The SD-WAN connect VPN locations,

the seen But very far we is a a MPLs of level think, have remote caution not have these will decisions. technologies. we these a of overtime, in concerns, consumers. less than realize companies SD-WAN think are And be still viability. health, new their base then finally, to migrate flexible important be selling change all ever will to customers. higher VPNs that more than part service opportunities and customers is. partially large their because longevity, that that about because partially will corporate And as We're how of we engage is ago. It's BI that BPLs willing more these the not conversations, more of in sales better having customers are there months lower cost, did their place make cycles seen think on than more customer not Now and But we're I trend, actually offices elongate. six also MPLS-based VPNs reopened be they like solution we customers environment, because to temporary a talking are have have, these the will replaced solution a have we today. of They're We this salespeople, we many this to a or permanent concerned as we

greater And sales So sales. number lengthen. we cycles people with having the in that conversations that potential a phenomenon. is have think We of those think number the seen are greater of with accelerating will result salespeople, our customers we transitory coupled that

George Engroff

just And follow-up. it. quick Got I That's helpful. one guess

So up that guess happened lengthening drove I the that's average customer there? something what in per that replicable? new cycles, reference quarter-over-quarter? price megabit to Or sales what so Is contracts

David Schaeffer

Yes.

are that two things think connection up. I So are driving costs customer on there net

lot more a are dollars because base they very pulling That on on gigabit increased NetCentric of NetCentric, once are far couple which of that selling our customers widening our more ARPU the interfaces a they're we strong the we're up do of side, XXX-gig are fact in the new than see take then NetCentric off. megabit usage they interface, net usage. increase connection. from very than per smaller and some that an customer customers going it lot is corporate connections, more per a which interfaces. to the large is a of On did hundred XXX-megabit on typically rapid on And experiencing a customers, sale the pay A but of on some growth. But ARPUs, sales indication taking basis, XX-gig and basis

Operator

Our next comes Colby Synesael from Cowen. question of

Colby Synesael

on I IRUs Did renewed. over you of mentioned XX that the and and these I number in few XX benefited is an being that where we particular, gross the in what company that should consequently, of And and me wanted to you are. next that you when term of we is I was? - guess, Cogent profit kind COGS, like indication mean, I and that, you off hear others years on EBITDA? as I the focus commentary first how the about your think, remind contract, that, old you one quarters? Can to that then a think IRUs expect correctly the

quarter? I commercial, more secondly, like And of we I you different go And and seen to start net these? it of should impact may back have both that we next as to what you that wanted on variety see remarks, the this risks. leverage years, do question times, in just the to guess, a mentioned think Over prepared to relates your is then Sean, few think,

and trying And those fix much. perhaps in as VPN this what you using quarter, in them commercial reduction not buildings risk said, of was of just you One a appreciate saw people services. of particular your large type that Dave, I then obviously, some where see saw trend that a just we that or is with to are become that the sales that next risk to bigger adding you But perhaps relates also the one quarters? over few could as to concerned start to a force. it about we

David Schaeffer

going start here, I'm the and IRUs. Three Okay. let's me out but questions or help will four to questions, some of Colby. on with these finance start, Sean

accounting be the now as pronouncements, leases. are So capital as classified they leases. finance to the Under IRUs reclassified new used

underlying the that As the as and renew expense as part to agreement, the no this of charge. of and large intercity would the it case reclassification, new that maintenance take able a we way IRUs one would lease fiber. In operation finance treat were same at

are and the in a X Sean kind let ended IRU a future and operation up obligation future. was were us about on - $X.X reduction was creating more to do cost we of we take to the of quarter. little renewal more a COGS on option unique us decision account? maintenance a underlying of a a or I'm - incurring now that. the color lease and to no That years years that that, finance available capital in about So by of on unilaterally years, lease But $XX in It by decision going more million and take IRUs million little five of at another one X-year have to we and us. expense X made because the the

Sean Wallace

Yes.

through numbers. Let's just let's the - go

For it our an moved the line versus an cash operating expense COGS and O&M as million, $X.X the expense of interest expense. the from line quarter, it of down sort co-location became below

you the a quarter value of next $XXX,XXX payments Going those present of which That forward, for years will on at monthly benefit the $X.X $XX O&M around discounted X%. is talk we net million, million basis, per X forward. going about, that

the have a as of over together this thousands built circuits portfolio We we that put we of have network. XX-years last

We particular don't our them have time. out, will consistently any particular believe come network have a at of any we is that coming we where due of portfolio part

providers We can we - have well XXX that fiber hundreds and to. turn over circuit dark

of renewed line movement So this not is line. the to - of we - a well. five to And up didn't we noncash. - no a Dave, BAU low sorry, was simple the this up. anything have renew cost a this of the pay year, next only part again, a will the this the coming years that from at and sold at as change. but this just expect There We of we'll end was X we that just was normal It's goods one

David Schaeffer

providers agreements XXX with XX those different over Cogent, life that X,XXX said, agreements all is unique commented We've these Sean remaining as And Yes. terms. years. average about with of have our

was the capital new they As whereas us GAAP particular and subject required agreements expense. fiber then is mature, to than accounting are the treatment and this different for to it that maintenances leases previously, only treat the

Now treated finance a it's all lease. as

and about building are question of occupancy, services there. efficacy kind I Now three different there and to your sales think questions VPN

office-to-office need still less will to Let's centers. start over VPN a VPNs data offices connectivity are connectivity, will the some companies They base need There MPLS. deployed headquarters large VPNs. intermediate that many of vacant. In term, with as completely from branch offices is are

more those SD-WAN flexible to more going cost, As migrate are of these VPLS. modern, those to and customers MPLS contracts lower mature, technologies

this will VPNs be that work-from-home why so where beneficiary, more something X-gigabit but to those from So, mind is to of many is users. a large not support that it's that's work customers we sure to home all is important What point. their at that's connections. selling top port corporate enough customers And of we're aggregate, making concurrent

of track and XX% salespeople high training a force, to We're to of actually our end range. year. plan pivoting right We're doing hiring our this from full job on good that the those were the at set firing. grow We're X% tools and pivot of do we a on quickly had to that we that sales people Now that. force very sales one for online a already on remotely. training could We the I had people very homes. office is of training will to developed those improve actually remote admit areas need to in using

face-to-face Part force, that X.X%. of is without is and the declined having to rate average of X.X% an from making with turnover underperforming. the that the of it's party it in decision younger conversation part a force difficulty sales Our sales

of to permanently offices. for I different. sales and slow having Now Or return be the for believe believe the will economy salespeople but lack productivity public do by individuals. able VPN or the return will we people we're large out will that will a we buildings the compensate and that to never I know force sales to but grow of And point size There of debate ever the those in people about will into dark back their city work-from-home? we shift be next working the more are two, on vigorous think better that, not final a in return offices, and will that's centers both to to to them. year will look Will forum. our the I the office we go offices? of going then go

people back offices. quickly that those feel in quickly getting on is really how happens Now to dependent how safe

Sean Wallace

what expense, our all within outstanding norms, and our cash and What Yes. cash closely collections, And was that. churn, debt tracking bad happen which me what's our very have are do let our June in day to fact, to a historical record know is with perfect thing. we're Colby, X just visibility as and for we going We sales add don't month collection.

uncertainty, very customers maybe as importantly Internet it's for having clear a And So is still the that in connectivity going their locations is of they're their just to be of most spite view part business. important our there. doing all us that very -

Operator

of Rollins question Michael Citi. next comes Our from

Michael Rollins

you on balance share step I customers forward you're sales was position data that And discussion, on those that that gig those evolving about insights revenues speeds recognize a this higher could dividend? the you're drove capital a or to the But how if if more able I the to cash in could X more Board is look you taking frame makes penetration, sheet have? then you see can market maybe the corporate the from today? a the incremental the back that and the observations to opportunity Board's any secondly, thinking bit just And the you how the how these the allocation get quarter upgrade seeing on curious just decisions. you little decision Board based you bit to as maybe unpack

David Schaeffer

Yes.

Let X-gig with the trend. me start

for than the For three Ethernet. have sales seen gigabit we locations, Fast past quarters, on-net more

that majority majority fact, mid-March interfaces. sales In gig a approximately - continues, of the - XX% accelerated significant trend in - materially and where on new sales today, are of

for And that's up. locations, there's go to tunneling are to receptivity the able to been the from increasing locations been actually XXX base. into, where their size those ARPUs back we've employees meg of home why Secondly, location those port gone existing that their to a work are great main gig, and deal of have from reason our

or be has buying of locations new interest there either offices, much tend mix locations. off-net, the and on-net those which branch less in to for Now upgrading been a

those in as of switch than say last the question. those And able And it's sure, who just to connections. may allocation more now past, sell those to are we networks at going debate Board And at So, not those customers and service your meeting capital corporate probably bandwidth, branch to decline. contracts more are XX% the on-net some of I'm looking our even vigorous to off lot locations. of using seen was this net. I Board meeting And location this XX% in been our would for in They're to those that and service They that not connections in large part some interested for suffered. revenues a those are place. related a They're as customer revenues Board similar in members world in delivering because shelter of locations. Not in the are do humans, to office have quarantining Cogent, our They're able and travel. friends we've fact, that get locations we've of corporate us our MPLS off have uncertainty. off-net net. out related then of not because of to a us. environment. not are are result seen too. With have are said, in but macro off-net, be temporarily locations or port superior around there pickup remote the that the anything though sizes expensive

In completely have fact, board two our been telephonic. last meetings

ahead made that don't free color? growth and the of it with increasing cash XXX that, cost primary issuance meeting. central with interest a U.S. the looked balance we larger of most sense. a board capital. on debate The other more real Board unprecedented seem saving think and I look the want the of objective. deal with also went but at know, a felt should the make $XXX.X which our decision, if at economic add dividend a arithmetic no sense the real in light uncertainty. company, €XXX dividend some said, cost, to is them and why of as times. strategy cash there's probably rate unsecured on I looked called Sean, of have great at we, this And rate did immediate even that you use flow they million says, they its hold That So, would decline take sheet a world had points They in uncertainty, every a to cash rate, the as takes conservative our for about that and rate, actions million cash, at and you important lower cash, replaced any than in And the growth bank basis maybe and in be all the to in That's up. more growth to capital of dividend in notes it bulk at effectively advantage then denominated regard allocation that's your

Sean Wallace

the I - put team, a evaluating things is strong discipline heard money that think from you has where and a is the just that either going think the in Dave's new I of of one it's to management there the based into a there member - the - pretty increase decision right dividend. it of difficult the growth - real strong the capital, relatively EBITDA Cogent discipline to remarks And you're back to allocation although decision shareholders. the in last conclusion made the that of came business great quarter that. around particularly or on is And

Operator

Our of James. next from Louthan Raymond question Frank comes

Frank Louthan

sales sort unpack corporate and wanted you have then, you the that Can what amount you downgrade have of bit. come a so customers of I extent And so of to us So, bit of new give service I to and sales forth. cycle idea little forth, had side and talking normalizes before from of VPNs a how you're and an you little the - that think see on Do sales lastly, catch about starts baseline? elongating. sort guess, of see that When the think it'll up? a do do to that get before long you of Or sort quarters we another out? couple weakness new be we of the

David Schaeffer

All right.

So, take the I'm first. to question going middle

I'm going some say are downgrades. few And we've There's very not numbers larger sequentially seen connections. declined churn Customers churn. have year-over-year. and fact, none. We to always seen in our taking

establishments. lose some losing Did We we they customers. Sure. and or basically to has be buildings, the first building XX connections average located Usually opportunities. establishments. they we're customers? be buildings, They losing opportunities four be or those on it's food those of So retail serve like bank corporate office not skyscrapers. floor tend can branches, three of can multi-tenant The are

some not have we're off turned to definitely market. those and of And that service, selling

street very any you in major retail little walk activity. you If any see city, down just

to office Now from XX-or-so thousands XX of Those able their office those businesses the home businesses. that is and good home businesses - network. into get retail employees probably sitting top of get news work to have at there's corporate need on to

an sales. uptick in we're So, seeing gigabit

very see think to we all-in-all, our durable, is in we demand. So, corporate and on-net that business growth continue

corporate a respect half customers VPNs products. Now roughly take both specific with of product. as to our

and We just we're a receptivity the I I businesses monitoring have deceleration What so services when to alternative, by DIA. network, of provides and which they're will sales material perform, is with a private and initiation order can't going rigid, feel from accelerate the for capabilities, you to those are that driven the overtime, is how if continue taking a simply don't in reopen corporate And in tell product it's you conversations we actually the XX% VPN it discussions that pretty MPLS that of of visibility. to unpalatable. offices. primarily going all having do comfortable no not deliver virtually because of I terms buildings customers, those have our port customers to a second mean, to the time have have to. in seen dying, need are significant expensive is hard X,XXX the our sales VPNs. That's I visibility to you many amount Cogent branch are benefit cycles And people then And humans. and return they have to people say. They a the will nervous. of buyers see psyche, normal? day when roughly are when news.

Sean Wallace

sales you give telling us. anecdotal just would stories some I is Yes, the what about force

proposition. decision-making longer, they taking IT are I from in the It's hearing at the well we're question - fundamental with they're what are goes deleting of in think a we and winning spending cost the increase force the slow technology the this the And are just our when having CFO been is the the and folks is Where one want it time their getting things and I that value who looking made but decision delivering. there has the think challenges are we're - they're we the down change off organizations, people. sales service just larger deciding in on business, list. that to the to they is answer up

in very we installation, abundance So remain business an fast important caution. reliability, fast very, of an we're having where environment superior but speeds, with are a people

Operator

from is question of Moffitt Del next Deo Our Nathanson. Nick

Nicholas Del Deo

on voluntary your big rate players - to traffic some much introduced - affected content those reduction OTT in the an roll growth bit the QX and the did or of in off? Europe start other as have way revenue effect will of First, be and

David Schaeffer

So it was impactful.

had companies Cogent the reductions also And customers. access that most of are those customers. European the agreed are voluntary All to Cogent of networks

they're both Quite those of growth as what hard to the So lower terms a little going count, a rate like a our a see traffic in slower of with per of bit reversal that to we what sides. basis from in frame It's on doing a of on European don't customers customers lower result QX. their tell second quality. rate we did honestly, look resolution in some is regular ask

of as players a We're bit as not shift take question short well race subscribers. in back. with tools long where cord of arms it and quality I the going shaving strategies. The time the one over-the-top period quality they a content think a very the we of trend most is, of is the material video to to and think I them are displacement use of how return to to win for still will key resolution is over-the-top. an of adhering in those cutting cord saw But linear

We that haven't return that we yet, seen but think will.

Nicholas Del Deo

helpful. Okay. turning the dividend. back And That's maybe to

guess trajectory growth think in underperforms? revenue dividend picture, growth Or a in pace growth? Sort the current Or an could the differently, rate that annual multiyear do of levels? of there improving over do cushion it acceleration you kind if absent sustain saying revenue on period, sustain current big I you even think a you low-teens growth dividend is from you can there's that predicated a

Sean Wallace

Look, double-digit we basis five-year in the get EBITDA. the line points think three SGA basis have continue a points network, in on growth long-term we our will XXX to of to basis points have to that XXX improvement on on maintain outlook XXX we'll top basis that

levers business. moderation we pull we the think about think with growth, a think of look the in we to the about even in lot we have numbers, I as think we out, as that,

to the think continue we line opportunities SG&A sold continue scaling improve improve margin We an CapEx We have you we're generically on also are to - time. to ability at cost look and have as the if network. over percent the past go line. think the continues - it We of of and to a the it's goods to revenue, you over decade, moderated down

and numbers, the capital we will that the the to looked this we next is at that our quarter capital, to best and performance. increase invest based looked opportunities think dividend, we've So revisit the we've of the use on at

David Schaeffer

pessimistic I that outlook Yes. and more variety than test And stress of Board think the growth a our us averages. are long-term have historical did scenarios that in worse our than

down X% we And secondly, was a world GDP think Cogent out, pointed and we year-over-year at I operating was top leverage. XX% looked up line year-over-year growth. where as Sean had the

business. fact We the we capacity also under-levered. $XXX cash, big have arithmetically operate need borrowing cushions, in to two far which due expansion being then the rapid secondly, the million than more our one is are we the that to of And

allocation of at money would looked And ask hundreds Sean the we best our capital. highest of better said, returns I've that. we was the that repeatedly, and have returns, I So opportunities shareholders. even quite of as convinced potential in do literally with produce the growing And I inorganic I said give moderate the the to to I as to more capital transactions. And can for to Board growth, saw well and would is if go use

Operator

Our Walter of Piecyk next is from question LightShed.

Walter Piecyk

that - the connections when customer means? offices corporate that if Do a a corporate the assume about what that connection the of central guy there's guys customer office connections that description reduction. talk branch you branch Dave, have connection that subscriber a - I I and is at or has office a

David Schaeffer

Yes.

can can buying connection they're they're customer a Internet from two If buy products VPN. for location, buying buy They for access a a us. same two So or connections. connection both

Walter Piecyk

Got you.

Okay. understood. I

So given see economy fact connections, this have the the the the crushed as VPNs, we're connection locations? that Or second getting that is in the quarter, lost looking do any core you subscriber, described a second it the the the as during so remote you offices? year entirely is risk at And half that when loss of right you now.

David Schaeffer

had but we some So, retail zero. lose small have that did I on, commented very We we it's customers. retail exposure, not

walk what to down go you and - of see buildings go buildings you street. can the If our any we're in to we're website - in you that the

You usually see there's - some

Walter Piecyk

up of pick retail, companies had not there's of that I moved floor most the the back retail went week to my to just there. rework were no we people And on. It's monitors, and some out Dave. last

not just the their space? in a terms has risk retail it's office that economy So people of vacating

David Schaeffer

sell probably XXX over So, do we at locations. reworks

Walter Piecyk

there's just I not specifically, representative that that it's say out to just obviously corporations was fact cable offices? type a not risk modem retail of using representative, their of but of as a the that moving work re

David Schaeffer

seen in we not corporate churn. And have uptick an

any We will location. customer from significant business people their and Maybe of predict back corporate I have out gone offices. three have whether be not can't lost in main they now because shuttered years -

Walter Piecyk

the a from Yes, on now. talking years near term. in I'm about I'm - X not just

you most when I which at QX, there's think of you So corporate said, XX, I a return on growth but May lot parts were example, Conference, here, historical similar think averages for business in to to speaking moving will Market's in you came occur remote far quarter? office of in the disconnections all growth these the a during during That Obviously, is in quarter, people's last rate. below minds double-digit the quarter. the was halfway did of that XX-days

David Schaeffer

about of or was in less it did not... half was We our sales not combination an our average. see corporate historic growth disconnects. And churn and historically VPN did a of uptick So rate It average disconnects.

Walter Piecyk

XX, May would then, similar that return say did that to -- to why historical you on averages? growth you you thought

David Schaeffer

Well, do expectation we saw the we funnels. were reasons. rate sales I infection to go We orders corporate businesses buy, if continue no transmission the the to effectively and I average the virus' of customers to for lower on that at most they're the of have have you continue back three governments condition XX, the would have a and One, in visibility future historically a that in couple net their we and will to buildings looked would likely the from quarters number had and an a in. us rate shelter-in-place local that the of from in you to fewer May lifting as buy Cogent salespeople. their and be much many states in past. don't that be been they as buy are infection And our believe rate. predicting

Operator

Nispel Brandon Markets. KeyBanc Our Capital of question is from next

Brandon Nispel

you us your them on capabilities customers. some you models you changing for demand to of and continuing where one disclosure seeing this you're versus does content what IRUs asset should as distribution? you percentage an active compare was capital can guys your a from we discussions one of of can and are about Great. Are seeing have so out going I customers about the these have think media how on from a the Dave, apples-to-apples are basis? Second, for I it lease? to larger And help these with margins question your forward? building them - Sean, finance hoping you follow-up. similar warrant And really talk happen terms as in could really their gross accounted understand sales gain own we

David Schaeffer

Yes.

me let piece So the of take - over-the-top I'll it.

lowest most the initially. have said, at rate. and trying virtually those to and connectivity more the do their in seeing customers to that the scale are price many are all that provide we applications that world, locations Cogent connected we launched. achieve Two, new they anyone We being build than of the distribution in are applications networks acumen see own the us not for because to to more networks access continue new over-the-top With applications have technical of

increasingly as will Cogent are in-source, CDN, of their they method. as them become they will purchasers intermediate customers. they of their But CDNs bandwidth. Those out use their have distribution many own also So, CDNs infrastructure, and own they will build meaning direct

I'm matures, the an now the to let transit lease their take business Sean typically providers directly intermediaries we companies hosting see of to their through percentage a comes going application So greater like capital as or question. or and AWS CDNS.

Sean Wallace

Thanks, Dave.

as quarter, sold used of operating a lease reclassification, be So lease. of $X.X went and and by a million being capitalized goods to lease the called cost finance went this lease, for the result a an from our down finance to

reduce it sold for you forward, Those quarter. the cash will services. our co-location and goods below going, payments million $X.X line, cost are is of if So a and will, that going O&M by

the that your to our I'll leases or capital and confirm are of you look number at answer versus XX% X% capital you lease, this operating try leases leases to difference about finance - percentage If operating are a but question? try finance Does between or - if and lease. as

Operator

from Lee RBC question Capital Our next is Markets. Bora of

Bora Lee

you been there perhaps increase talk international strategy? So quarter. markets about switching you've a year or to just last your international, expansion over CapEx just was bit adding this And Can the an more in relatedly, so.

to Just we And Johannesburg wondering to should trajectory? the if basically onetime was launch. related long-term, to much increase in a CapEx that return that the expect

David Schaeffer

a very a country either our there, outside of markets the growth demand. U.S. do continue first I'll in start our one not of of and So, additional We go radar structuring, our Most CapEx the have markets up. faster or you we absolute have downward the aggregate we we're to as decline. of to Two, reasons Traffic U.S. to evaluate expand, the continue hostile lack inside not will expect environment markets are in terms on regulatory all, two international a of that around world. of with and percentage is should than count to revenue substantially

Now, a fiber cash actually quarter, significant a expenditure. we in last internationally. QX, lease was capital dark a expenditure It had uptick for in

Some was much of not material for The that the our that expansion was more What in light fiber. equipment to expansion material. CapEx is now Johannesburg was America. terrestrial Latin

We in network. Bogata, into expand Mexican Brazil, lit did and substantially Colombia last expanding we purchased long-haul are fiber quarter. have we and So our also

kind not many we don't but are: criteria and Internet. immutable owner; to markets, into regulatory our will two, complete additional the partnerships, to to or structure two of and evaluate need to succumb go an on continue just ownership or Internet the one, we're not of the JVs that be countries We censorship welcomes a we restrictions have a open foreign of going

We of that are in do provider we major China. Internet but actually, and connectivity in Turkey a of China outside

a Hong significant have example. presence We in Kong, for

going the But markets we negatively closely We customers. where forward, will have evaluate Chinese to To impacted monitoring can in in changes customers. continue not ability security other to date, win the law it sell Hong to has Kong. our been we

Bora Lee

quarter, mentioned you corporate been second first installations. that's orders they're getting quarter? pushed buildings going on Great. during in - quick follow-up. you pipeline for quarter just And the Last staying the difficulties accessing and on relative timing? a Can you just still if just there how to an give based out were are And update and for if

David Schaeffer

Yes.

be have out clearing issues still gone the Out access are a a globally half I think challenges, may backlog. of multi-tenant pretty buildings center where there a there of buildings dozen good X,XXX building away. we've done basically the data job and/or

provider. They But they were on-net. Our provisioning things off-net are times that on job still we've are good done in about getting installed. we off-net dependent elongated pre-pandemic general, what are of because pretty a

Operator

is Phil question from JPMorgan. Our next Cusick of

Philip Cusick

follow-up to I improved days as that first on Is wanted comments by be on DSOs. Or Sean's people XX that could check? sustainable? pay fewer

Sean Wallace

to check. XX. end It paying of around at But the actually the may by by we're improve trying is I our day, somewhat be think - target

we're well below we're So actually - target. our

we I that things about norms. is the is and debt repeated show we think with tell are bad to the where of all statistics, historical is, base, wanted sales And our right - customer strength days now. are within I churn, these why we're outstanding best - this the the pleased and you reliability to that it reason best

Philip Cusick

like effort see for Verizon, part, Dave, then, on as curious fiber of is, pace own of that buildings and of number what pace big construction everybody either connection from your third? Yes, the the that current. most up renewal, from for by lit yes, the I'm what And it about IRU on-net thinking And a mean you a see we telcos in buildings could leases and maybe maybe or here? first carriers, from cost or second other reduction being sounds

David Schaeffer

there's question, answer the two Phil. to parts that So, to

dark We Most And buy whether First constructors a own from of be small to done new some that in fiber ended just cell sources. incumbents, different more diverse at lot. generally, will is constructors the buy identifying continue from not we carriers. never it our XXX we the quarter do We alternate all, that with. of but it continue. business We for suppliers. fiber, think we or providers, keep from world markets around competitive have

into. is seen X built-in that over That delivered North fiber. uptick off-net buy buildings have that significant is XX that buy for have on America, buildings The fiber our in fiber number have services of that that we they thing vendors lit are built can second or the different number they in we million a

is point significant. most The maybe third the

to commitments they providers that pre-identified contractual secure into from have we order. an if buildings build near-net multiple We

their in XX of different do that nearly they're have fixed pricing buildings. expand recurring basis that cable to at that is guaranteeing monthly identified another off-net days a XXX we both to guarantee push - show days. to with on-net been at gives there is within buildings bigger They that our guaranteeing which than So price longer does And build to from two as That are have huge a but suppliers million our on our us typical by vendors, footprint, telcos and near-net. a XX footprint. companies off-net their it identical a

capital in our they into after. continue footprint, we don't go to to allocation, if virtually have capital. And We can thousands buildings both a and we Sean's on-net new get that suppliers in more but concluded So choose, enough find return. building comment have we to about generate build every can good we want we

to are in using nearly how buildings So for there are I the that that Two, really one, off-net and comfortable how fact in more buildings. market the those the reason, from more that their capital suppliers of the trying below third suboptimal. are deploys of speak providers at while I'm - someone happy return these with a buy solutions serve. think wanting I'm rate aggressive addressable shows: we've to than cost in many marginal how doubled who my capital to return build; at - still we're capital. not And services of number ill deploying they're rates to

if me that. fire did would Board I Our

Sean Wallace

two the and real with I point, Phil, I added team. the estate spent quarter, buildings we would add just this multi-tenant time to

we existing and We that's it available, benefit in the building the we're on numbers bring that that to of looks on time. at a a of or of not. that. have do lot that disciplined how pretty we have CapEx algorithm still we it's down customers really go buildings have is distance MTOBs to the fewer are very if And to going our ROI, at have number sophisticated portfolio penetration our looks But X,XXX close to of a going over the

David Schaeffer

add for neutral we And data looks it NetCentric, and see center carrier a XX quarter, data to centers like similar and proliferation quarter. number continue last this nearly added we'll

Sean Wallace

expensive into are because Which bring carriers. to less get designed to they're in multiple

they're get cheaper that. faster, to easier, into So

David Schaeffer

have usually a already to content out They manhole.

Philip Cusick

for are on are the side construction Do you see the do for to willing of return any tenants what take terms positive deploying to either - see capital tenants in the you those positive capital a to for - pay second to other more fiber? in just changes any those changes of some the on companies potential efforts that or

David Schaeffer

capital businesses is applications of cheap prologue, for access of level I backhaul a is competition by pure has put know There's running XX-plus pandemic, what Past heightened capital this businesses. it and declining, low-cost they not think With competition were to this new me an years. negative. capital, and the capital all wanted on and I as to such was way. Let and returns on destroyed that telecom broadband driven people hear. that industry actually heightened are and

Philip Cusick

surprising not though. It's

Sean Wallace

competitive small, a customers dozens where voice see - going was From building years fiber after a sophisticated XX and cities, - ago, we around large now have of and perspective, historical on the we're a selling lot operators of CLEC, services. fiber investment which a data we we sales construction dozens It's customers medium-sized force. bench and

own have X in increases only our larger got to small and number we for million who've locations and locations. big We customers not It's buildings. to And us ability tenants gets those, to into go own a opportunity just service hopefully, but buildings the the us. businesses, medium-sized we're have can our more going of

Operator

no Dave Schaeffer. have like questions the call we to this to further And back I at turn now time. would Mr.

David Schaeffer

challenging care, we'll well for talk everyone to want just and stays Bye-bye. Take these And again, I thanks questions and everyone. your hope times. in soon. I thank support.

Operator

disconnect. for you this now participating, today's Thank gentlemen, conference may and you and Ladies concludes call.

Cogent Communications (CCOI) 9 Aug 202020 Q2 Earnings call transcript