CCOI - Earnings call transcript Q4 2020 | Cogent Communications Holdings, Inc.

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Operator

Good morning. And welcome to the Cogent Communications Holdings Fourth Quarter 2020 and Full Year 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. Cogent’s summary of financial and operational results attached to its press release can be downloaded from the Cogent website. to call like to now would turn over the Mr. I Officer Chairman Communications and Schaeffer, of Chief Dave Executive Cogent Holdings.

Dave Schaeffer

call. year Thank you, fourth earnings Cogent’s full our Sean with call me our Welcome everyone. Dave on conference CEO XXXX this and and good quarter Chief morning XXXX Financial to I Schaeffer, am is morning’s to Wallace, and Officer.

of to breadth operations. increasing believe the that among of the our business, to the to expanding remain investment Cogent importance we neutral base, for position Fundamentally, and for an centers providers, high extremely data to services our to connectivity traffic profitability in believe and infrastructure our data long-term part the the mission-critical which globalization uniquely our Internet to businesses, and markets, service carrier our of centers the We We their operations. of strength in are our Internet. interconnectivity carriers, importance important network continues growth. continue for the products volume the combined grow at We to to confident and with an continues of international our our on leadership products Cogent’s in growing of and network that utilize services continues client and facilitate rate

in previous within remained discussed As averages. earnings calls, levels our historical churn

configurations on result taking challenges, decline million continuing uncertainties a modest of by for operating. which existing see of and X.X% approach we on-net $XXX.X are services challenges, the a core customers our experienced to improvement, satellite off-net during and both which Despite we well to pandemic X.X% quarter pandemic. direct also new sales, year-over-year considering encouraging related to grew our cautious new related is quarter, basis. as continue in reduction the a the as this smaller the revenues -- and to churn fact, fourth as We their a increased a environment fourth sequentially incremental corporate and In Despite in see we customer COVID-XX demand some offices. to in these

to experienced X.X% full revenue XXXX. we revenue increase Our XXXX million sequentially quarterly basis, On by X.X%. from achieved year revenue constant growth a $XXX.X a year-over-year, currency of increased full of and rate quarterly year X%

We gross continue to and buildings, extremely and which year-over-year EBITDA to in number and handle cost EBITDA markets margin. experienced We network, growth operate a fixed is profit able an in margin, growth a serves and efficient continuous at sequential gross profit, of a basis. our traffic growing

sequentially and Our gross grew profit by year-over-year. X.X% grew X.X% by

full gross full grew Our year to from XXXX. profit by XXXX X% year

XX points basis improved XX.X% Our gross on and basis percentage basis. margin grew sequentially a by to by year-over-year full points XXX

me, margin on on basis. and quarterly excuse gross by a points basis year-over-year, percentage XXX Our improved XXX

increased margin of points year also quarterly XX fourth XX.X%. basis of increase to basis full EBITDA by an XXX basis This is XXXX. from an sequentially and Our the points for XXXX quarter points XXX of increase

sequentially by Our and quarterly year-over-year. grew X.X% grew X% by EBITDA

of third services of noted their quality the X.X% increase Customer full within debt improved. credit and bad strong base outstanding cash historical on Cogent performance be churn, our customer sales the statistics XXXX indicate our We declined performed Our fundamental of all from our despite existing an COVID-XX. full to quarter debt the additionally, these earlier, days of XXXX. churn was I EBITDA our strong customer believe year impact year as And million, bad slightly norms to the importance of organizations. our quarter. $XXX base and The in of collections from and continued the

of the of in network being variety driven outstanding factors, in continued which growth network are of by traffic the We to continue Internet, traffic. positive internationalization that we a We see is beneficiary. trends including an believe the

capacity We continue and from access and Cogent our also network all was requiring for this in of end than their for streaming be expected purchasing products. are needs subscriptions streaming to growth differentiate This is to their to meet seem greater to customers and is number Consumers streaming see operators. demand of services improve capacity the distributing increase subscriptions to demand users. products. purchases the their increase previously from bandwidth of Operators their and in order a in publishers streaming enhancing driving in success a speed clear quality

factors bandwidth. these more of require All

and XX% from this in increased carried increase the traffic short only of traffic fourth XXXX XXXX year the and quarter, XXXX network XX%. the year-over-year traffic in in XXXX, annualized XX% actually of by on traffic to our our The was of was quarter, increase For in XXXX. traffic basis our exceeded up our on versus basis fourth a sequential amount XX%, on the full in ago rate a XX% five up increased for volume traffic Cogent total that years and

During our our quarter, the shareholders and year $XXX.X our for full regular million. dividend $XX.X quarterly returned to through were we the million dividends

$X.X the of as of also purchased stock XXXX. quarter, million common January During we end of the

total $XX.X our still continue million a available to of authorized stock through the of in is end which December have buyback We program, XXXX.

XX,XXX million common $X.X purchased stock. we XXXX, year of stock approximately of shares full For or

stock million our operating at at to quarter and used is basis unrestricted and on end. consolidated held be million $XXX.X is quarter. held was was Cash the available total of end companies Holdings and/or dividends cash for million at a $XXX.X cash This buybacks. at Cogent Our the $XX cash our

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

consolidated at to the increase debt indentures, of million $XX.X offset ratio by more This as increase primarily X.XX the than quarter’s under is Our in cost consolidated was increase cash to flow. debt a our euro was leverage calculated The European our dollar in result the our denominated ratio, U.S. translation. end. of leverage as due

regularly $X.XXX our which sequential the investment compounded and decided has per for increased fourth $X.XX XX.X%. a cash sequentially, rate increase we from Our capabilities XXth Board have represents in share share the The dividend growth our again a of raising with to third quarter our is another This $X.XXX quarterly on at reflects our opportunities, flow-generating dividend increase to quarter. of Directors, dividend. growing by dividend quarter which strong the business’ consecutive quarterly

I’d of Sean like more to spend Now little giving a the pandemic. reading language moment and impact Harbor on a the Safe color the

Sean Wallace

are the the our the based at earnings materially. posted This cause our continues on Please and belief upgrading the and Thank Cogent in I and their our that unknown website may www.cogentco.com. the you call work governments to companies, entire very employees to you, this we pandemic, to GAAP on update scope this like our these of measures work use of times. pandemic and forward-looking thank future non-GAAP response for how contractors, SEC ultimate of differ. actual uncertainty current good These who department actual all actions challenging a everyone. IT pandemic more significant economies accompanying engineers, particular forward-looking world. workforce measurements that we differ We includes want intent, these volatility in and other also not impact continue refer If the the historical to COVID-XX customers. be Cogent world. conference will could financial to obligation can results release, not many and morning, factors no Cogent want on and Cogent are impacted to and update call, to to will other and and information the know The the undertakes continue our around workforce An take pandemic field our governments statements. may by is which customers statements expectations. that forward-looking installing or the COVID-XX, hard on results made work during a billing subject front I pandemic filings our continues our are reconciled to call forward-looking statements find network Dave, to facts on of serve to These risks new thank and and the so the Cogent is collection revise that statements and statements. the be our by other remains. upon uncertainties, and on number impact what entire the in remotely. during our continued do our in the Virtually and to responses for duration of may amount staff, earnings maintaining lines,

sufficient distress, Cogent serve shipping that customers primarily remotely, be financial employees their it served be elect demand Companies difficulties network. locations to our most install to or office our protect to multi-tenant assurance find and for government this falling encounter have office working results in also on equipment commercial space corporate existing on in by Moreover, on a new these key office buildings and or the have operations basis. collect may pandemic buildings restrictions even and districts. from the find our be which our our is installing customers We buildings in accessing return will customers orders, related workforce permanent are employees. may as in customer our future slowdowns either or the where may temporary affected not a who located adversely our may space may no largest experiencing in We base, procuring, While affected customers, of on-net that the adversely business central see we difficult to difficulties we new and continue. are customer

of certain the into risks XX-Q access filed highlights also Internet June have offices. the our trends. on elect will reports described prolonged XXXX will as office statistics. pandemic quarterly satellite either of I in economic customers other that discussion, more in call and or annual We this virtual private shortly XXXX. several offices in our we for this seen our for XX-K customer ended The purchase impact global locations network certain business may operational review will effects have decline September not future. to on XX, direct and the impact XXXX, XX, after are XXXX, highlight or XX, well connections Throughout disconnect detail greater Form be detail These report COVID-XX quarters smaller for that March in and and Form operational additions

we Following Q&A. for up will open our remarks,

to like Dave. over back it I’d Now, to turn

Dave Schaeffer

press metrics, release press Earnings of a to Thanks, Hopefully, a we includes number our are historical Great. Sean. which report earnings you consistently. chance had release. review

annual expansion basis for approximately long-term an improvement Our year. points targeted per guidance is of XXX EBITDA margin

approximately currency growth multiyear targeted XX% long-term Our for growth constant is year. per revenue

to guidance Our guidance. quarterly to intended be EBITDA goals and revenue are not either be or and targets multiyear annual are specific intended

our tax USF a from sequentially, volatility and by cannot the of a USF and are sequential had government and Our X.X% $XXX,XXX year third quarterly quarterly over full XX% revenues the from broadband it be XXXX, XXXX tax And revenues, XXXX, increase we in of its of expecting in X.X%. corporate rates our the quarter it predicted basis year-over-year by additional on quarter for $XXX,XXX. represents on strategy. impact rate and declined had of rates business, declined which XXXX, reconfigures rural those as a the negative impact positive fourth change

business, On with which rates business. strong from and growth our the for it business XX.X% foreign give NetCentric by Sean NetCentric X.X% for by XXXX full a XXXX of XXXX accelerating XXXX previous of grew revenues, NetCentric color quarter on exchange quarter XX% quarter you fourth and quarter the a over represents in of on Our and XXXX fourth of our Volatility grew grew year the XXXX constant fourth basis, to quarter some the the statistics. impacts over our versus X.X%. had the additional operational fourth some currency now of it basis of will our by a grew XX.X%. X.X% in by quarter-over-quarter quarter

Sean Wallace

and to good Dave, again, morning Thanks, everybody.

revenue how classify into analyze also customers And customers types, based analyze customer our on-net, all and Corporate Corporate about revenues, we we customers. NetCentric We our type. connections. off-net talk our three network upon our and revenues We of non-core. analyze type, and revenues NetCentric types, and Let’s two upon customer based

to in us service professional financial typically through in large our data institutions customers Corporate CNDC in network office are carrier buildings buildings office customers or centers. located multi-tenant These Our our firms and multi-tenant footprint. from bandwidth connecting buy neutral or educational service firms,

revenues Revenue as and data and Our access companies NetCentric the customer quarter Corporate include consumers carrier significant by year in from by content. XXXX, amounts customers customers We serve from bandwidth providers, Corporate streaming of us growth service networks million distribution business of content result in rate our for building by was Revenue occupancy centers directly from buy full year-over-year neutral impacted Revenue of sequentially as who increase X.X%. major pandemic. reduced $XX.X the full X.X% connections that and our type. XXXX. over an well to a of for our the of million Corporate year central fell customer of by $XXX.X and cities fell was customers believe as districts the X.X% COVID-XX

on While new existing and second from Corporate in to a office some $X.X we uncertainty COVID-XX our mostly and services with and for savings continue Corporate continue the rate, offices. we off-net of to end, potential our applies new Recently, only private increased churn buildings. Existing new have revenue products, has our X.X% contributed customers of older fourth premium. The versus see regarding delaying of The this which to resulted historical satellite on of combined virtual in XX,XXX significant levels from the XX stronger product. increase in Corporate sales period. their and pass of our as capacity continue very to only levels We customers customers. XXXX. the and quarter, to quarter reduction continue Corporate churn had of are of ability our to million for X-gigabit their base Internet to reducing dialogue our note, are USF is reduction by of quarter purchases decline continuing lower network decrease local services in positive revenue, derived these we this Corporate while a loop number connections customer a direct higher X.X% and of prefer normal to Corporate off-net in at larger or upgrade upgrade, with low connections, network off-net pricing sales, the lower year trend due megabits customers pricing by locations to a customers the the the VPN sales of in has aggregate and slowdown with the for this third times contributed modest customers, to Corporate On churn revenues Corporate Corporate XXX a modest most access which per was to

full from by X.X% international customer from increased million in second second services Revenue NetCentric an XXXX. our our was fourth XX,XXX customers Dave impressive As XXXX. full customers an streaming the year-over-year over million on our at We accelerate and increase and the in entire for mentioned increased half. NetCentric business end, the increase earlier, quarter $XXX.X XX.X% XXXX, NetCentric Quarterly for growth XX.X%. continued our year traffic NetCentric quarter growth and of revenue year connections helped of $XX-point our year indeed network by X.X% had of sequentially to over an

strong even demand Our XX from ports. continued NetCentric second business for and second benefited per per larger XXX our gigabits gigabits our

size exchange, experiences more to our larger growth revenue foreign to due than customer factors, of primarily related impact usage. NetCentric Our certain significantly and Corporate the volatility revenues seasonal

While of did discounts related revenues increase XX% XX% growth. an a partially type. as and connections year-over-year, this to traffic, this not increased increase and by our in traffic offset customers, Revenue by NetCentric in equivalent network traffic of result traffic traffic largest primarily our create in sequentially and by particularly mix, network customer volume some grew

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

year an year on-net Our was $XXX.X full X.X% million for XXXX, revenue for XXXX. full of increase

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

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

a full off-net into new of our lowers the revenue circuits, X.X% the of pricing cost sell into $XXX.X million we over prices off-net year When base full XXXX, off-net was Our for overall these customers year XXXX. savings of decrease local and loop lower our we the our introduction ARPU. from incorporate

off-net $X.XX the are off-net installed quarter buildings the per the megabit of was contracts and at fourth our our with unchanged North customer quarter. over fourth off-net $X.XX X% to The The X.X% base by the customer customer and from decreased base Our in off-net for and average megabit both declined sequentially the average megabit. year-over-year. year of XX.X% our average quarter price by installed in X,XXX per per We XX.X% price These for declined primarily fourth and customer for the historical of XX,XXX contracts for X.X% XXXX. increased Pricing new connections third from per XXXX. our ended new declined for trends, quarter sequentially by America. by increased connections Consistent buildings. price by serving quarter customer’s megabit

larger this greater to gigabits and our increases continue price of connection. decreased in have change to of our year-over-year the per per second in will increased connection and gigabits our we mix and reflects importance decreased year-over-year. mix than for Corporate a succeed per As growing customers, second rate sequential effect markets. NetCentric XXX connections ARPU in ARPU changes our off-net on-net per our change and sequentially the on-net price our in XX larger-bandwidth in at The our ARPU, megabit and ARPU products selling our and the lowering

most terms of our is During ARPU. contributing growth a is Ethernet, continued and its X-gigabit XXX megabit as in Fast and count our product popular to terms surpassed revenues on-net of our XXXX, which higher product product, in

our is to customers. The which respective is ARPU. on-net units product in our is of the on-net size XXX primarily NetCentric to on is a contributing and their ARPUs growth ARPU gigabits positive Another higher our product, that our impact having sold

X.X% of and fourth for and last quarter, from Our of NetCentric quarter the X% the was XXXX. an quarter increase an of both from $XXX on-net Corporate ARPU, customers increase which includes

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

our These continue expect reductions competitive in off-net take rates, in our advantage more sequential of ARPU lower us of rates volume time-based quarterly loops. and Corporate costs will connection improved. as route market. our the customers cost are on both order off-net and this on-net that we making to churn discounts are our and We in to decline passed to local Churn

quarter. last from Our on-net quarter, unit this a rate was for churn X% X.X% decrease

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

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

talk EBITDA. about Let’s

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

million, sequentially our result Our in increase primarily EBITDA a a on-net by revenue. $X.X million of improved $X

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

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

margin to year-over-year EBITDA an Our XX XXX increase basis points. basis by increased points XX.X%, -- by over sequentially quarterly

XXXX full X.X% EBITDA year increased to Our by $XXX million.

per compared margin and $X.XX share EBITDA a increased per for basis by loss to year Earnings full points XX.X%. of the to share loss share, quarter. last our basic was XXX Our quarter, $X.XX per diluted

variability XXXX. dollars the and quarter loss Our euro contributor four on continued quarter gains losses into particular this euro our appreciate notes consequently $X.XX or net as primary our of U.S. U.S. are to XXXX income for in and income per the translation dollar. was per income the In our share Unrealized the the versus share. to last and quarter

the and our were Mexican, revenues dollars total Foreign States our earned Approximately based reported South and of United currency outside our Europe to impact, XX% related African quarter U.S. was American revenues. of our is this quarterly Canadian, in and in XX% revenues revenue operations. about approximately X% Asia-Pacific, our of

have our euro foreign obligations, including not our on currency We payments notes. our hedged

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

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

by both increased expenditures, of this Our X.X% top quarterly full XX year. quarter our the Capital capital and expenditures million customers increased for $X sequentially represented and less than $X.X our by year-over-year. revenues million

‘XX compared quarter and XXXX. million X third to $XX.X quarter were expenditures $XX.X quarter, million for capital million $X.X for Our this

capital $XX-point to a lease from XXXX increase capital our expansion of our million support leases XX.X% million, fiscal ‘XX. payments. expenditures anticipate and We network in increase This an reflects were of full $XX activities market. year. addressable Our reduction capital from for our last expenditures finance Finance expenditures year growing

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

finance fiber fiber $XXX.X totaled XX/XX/XXXX. of had lease with year-end, a suppliers. lease dark IRU XXX Our IRU million different obligations At at total we contracts

payments $X.X fiber Our million $X.X to XXXX. purchases to quarter million finance lease dark principal were of for $X.X third XXXX the quarter of markets the the primarily quarter million international for compared fourth of and due in for

were Our million, for and increased million full year. year $XX.X last by finance XXXX to $X.X year-over-year million payments lease compared principal $XX.X

Our this our were $XX.X quarter, for operating lease the expenditures cash last million principal fourth and quarter $XX.X and to payments were capital flow. finance $XX of combined million compared XXXX. million with Cash quarter

totaled and XX, cash December million. $XXX.X our equivalents cash of As XXXX,

and payments $XX our an quarter, an by million in our cash obligations quarterly increase capital increased increase decreased payments. and expenditures dividend our from the on For in capital our lease

million, sequentially operations from a in XX.X% working to flow cash quarterly $XX.X Our million $X.X capital. due to by increase increased primarily

year-over-year. Our by decreased operations $X.X from quarterly flow million cash

net our at the $XX $XX.X was flow IRU XXXX obligations, XX, debt Our million was operations XXXX, finance fourth quarter quarter, and of and for total third XXXX. and our to for Debt par, December debt debt gross our was ratios, lease million from billion of including million. $XXX.X cash $X.X million for at the compared the quarter $XX.X

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

XX, our December calculated was at Our agreements, indenture consolidated leverage as ratio, debt X.XX XXXX. under

converted days at notes are dollar outstanding, $XX.X and notes unrealized to to to fourth or our loss month end dollars million loss The debt using compared XXXX. sales euro unrealized exchange a on end million as of an $X.X reported share, each the foreign Bad $XX.X million in our year-over-year. of quarter million was the rate. euro loss this bad dollars improved €XXX and last U.S. and our euro Our debt sequentially for an quarter percentage U.S. of unrealized and of U.S. quarter month exchange per unrealized revenues improved expense $X.XX

expense X.X% quarter for debt of for from an bad of revenues the and our third revenues X Our quarter of XXXX. the was improvement XXXX X.X% our quarter, X.X% in

our bad was full debt Our an last XXXX, year. of from year revenues revenues for expense X.X% improvement X.X% of

Our and for slight was accounts our XX want worldwide I increase to very outstanding I during serving and from in a to receivable back thank the days the team members collecting and quarter, worldwide two days continuing challenging or now collections do a from customers customers for Dave. recognize DSO our of to will our quarter. sales fantastic billing times. days last for turn job call over

Dave Schaeffer

globally. force. like I’d again, few Sean. countries highlight operates strengths Thanks, XX our Hey. to the a and in sales our Cogent’s network, network of of our customer base

the our of we the network, growing sales introduce and bandwidth the that for markets, in force services size catalyst we are competitive of of new offer breadth in a markets. that believe demand we our As our these pricing

our that additional Asia, network can continents. and to believe and model countries business South extend our we America that indicates also profitably Africa even We success our and continued in

North XXX in of floor which have XX Cogent-owned feet operating multi-tenanted million We capacity. over at We America raised office our XX% of on with square operate space data approximately space, XXX,XXX feet is network. centers square

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

believe interconnected most coverage of independent to by more data reduce enables At breadth the year-over-year our for business that saw and we the mid-teens as in fourth than earlier, like customers as to more carrier our in any centers, of in a the develop parties. second world we on and important XXXX third the backbone. the their business latency. growing to As quarter basis This year-end carrier of acceleration reflects Internet in highlight NetCentric better growth connected we I and revenue trends XXXX, highest measured double-digit than half I’d capacity our some NetCentric stated XXXX. statistics X,XXX we other growth optimize an neutral of the global strength network

end we we the centers expect as additional we years this At connected that on collection a lead over telephone positions majority content and for of to mobile from sales access applications per to we Cogent focused will connected Internet providers This sophisticated us represent of We based world’s new most We provides neutral that the force At project of on the will year subscribers. users X,XXX this our and year carrier professionals mobile had directly and the which we an network largest year over companies, a companies, in networks, providers. connect NetCentric of pipelines. market end segment. and market. collection focusing of that to professionals large operators end XXXX, cable construction teams solely XXXX, XXX the several widen access service data the user is XXX our uniquely broadband next networks group this year This X.X% sales as X,XXX industry believe earlier. on a increase go-to

to demonstrated, As important And this trends for like ports traffic finally, in have we some in NetCentric segment. and demand I’d growth. growth there highlight XXX-gigabit is XX-gigabit continued market our in

of with we it the over on majority indicates our and around XX% network where share trend, to share over networks our just past addition user our In to and end the of we services draw years, from past One, access content XX% network subscribers. of year originates increased world’s very of the balanced XX% traffic conclusions. few strong two traffic over have traffic. world the that that growing has a From years and traffic over XX% represent terminates per between the from this two traffic

by on speed in amount our paid the being traffic. reliability by get network sides as also results We our increasing materially for the Cogent. our that instances of same our in of the clients’ growth, customers the This increasing net increase compensated the profitability Secondly, network enhances both we as traffic us service. profitability as of to reach both remains believe well of allows increasing these that and traffic

of number surpassed This basis. to we product revenues base. XXX-megabit On trends the attractive for and despite side, X-gigabit our Corporate full year are time related connections caution our our long-term in some a customer product on customer’s year the for our first COVID-XX, seeing

schedules, established look environments upgrade As Internet part work access larger more to home customers to connections. that Corporate our their working as believe continue of from will people’s we become to

employees and bidirectional, competitors employees. product significant symmetric versus for inside As offer. and high symmetric traffic their Cogent’s over in downstream advantage outside fully asymmetric most circuits main of corporations robust offices, competitors X-gigabit that a key our capacity differentiation a services both has require outside provides our remain will of

effort we sales acceleration for comments as our sales out in force experienced improvements continuing reps. of our training our productivity few our around sales some force, result a underperforming and managing in a Now

year basis, X% a reps at XX Year-over-year, result, As sequential to XXX a our by reps or reps force decline however, grew basis. equivalent sales or full-time a our and to reps declined and end. full-time on our equivalent sales on headcount by X% increased did slightly XXX year-over-year force sales our XX

in X.X% third month turnover per to sales force was our result underperformers. we fourth from primarily quarter, more a experienced the as increase for managing quarter of out approach XXXX an Our month disciplined X.X% per the

is orders in CRM For rebound averaged to sales equivalent to want of monthly they done sales look the the per full-time directly in new improved installed historical This XXXX. challenges, long-term to adaptation a XXXX working few which sales home full-time over Overall, team quarter installed for with force our the we the X.X X%, force fourth team performance great past averages. These in line deal resulted sales productivity increase had month. and month, our third and Cogent despite transition rep we a our our the accomplished believe year, forward we quarters. included XX% factors in these experienced to the per rep X.X the per quarter our rep of over where systems, I has per support has all quarter orders in entire to a equivalent sales have the best our entire and thank year. our turnover from

were outstanding historic Our all churn, sales customer norms. and debt within bad days

expense improvement the statistics of strong basis, our believe bad those of debt services represent Our customers. customer to and these churn and an customer We showed credit our improved. base quality annual Cogent importance on the sequential and

lowered is have industry. is unmatched So and Demonstrating Internet of of transit a rate since our at low-cost XX.X%. that in services provider compounded goods in access of XXXX, cost byte summary, we the transmitted the per position low this Cogent cost sold

Our customers. of to focused allows about a all and of center IP our the remain the businesses business in services completely cities. services North component optimistic and necessary for a Internet, in located serving departments. dedicated of co-locations, mission-critical remains the are small to unique reliability central major connectivity American architecture, position our Internet medium-sized on utility data corporate our which business districts The access new and be Internet We symmetry IT

major rents improvements keep of Class multi-tenant beginning in footprint, office and are the landlords these buildings to occupancy designed are in aggressively X,XXX cities, inducements, the we serve we to shorten tenancy all provide new lower elevated. and new drop We our A terms with Despite lease buildings. rates in rates in see the tenants additional recent

growing to footprint. likelihood office vaccines that our We to its growth average our increase, business historical begin that rates. our long-term a can believe COVID return As there’s tenants resume Corporate will multi-tenant

Our targeted is margins year. and for the EBITDA long-term growth XXX revenue points currency multiyear expand basis a will XX% are business that constant our expectations at entire

our our a XXth Directors Board represents growth dividend consecutive to in dividend. quarterly sequential of approved regular This Our compounded $X.XXX XX.X% share has our of in $X.XXX. annual a rate increase

of of team purchase the that $X.X production management stock topline million capital expenses. our capabilities increases drive in allocation, be Our consistent continued We the operating around disciplined business. our regarding demonstrate We believe quarter. to will the cash flow this optimism did and growth increasing managing dividend highly

hope team January, and to as returning buyback the we office. We our forward and had We end value XXXX. these to of everyone safety to begin remains we the As through in precautions million the taking of look necessary of they remaining during challenging the healthy all $XX.X program safe times. are our hope

are shareholders return our we amount to and to the and of capital profitability like open Our I’d questions. With for we floor the to that, intact increasing committing growth targets long-term remain on a basis. regular

Operator

from the first Instructions] LightShed. question Piecyk [Operator of line with Walter Your comes

Walter Piecyk

the do Thanks, same is same been to the you the decline. for return couple opening just asking of questions -- quite want first Dave. is to the the last two back basically I growth, comprehensive this go expect on obviously, are quarters, to That’s which Corporate when I side, to remarks.

I think revenue -- Corporate and in my model only goes back seen decline growth. to XXXX, I haven’t a

-- you better, the obviously are of those Corporate, that’s the declining optimistic, you I day, think comments, at good. said, not I about gig and but that’s something if in end somewhere in being

to being again, think can lengthy top growth? sense us to leverage, towards much give have of then return think that X.X X.X -- calculated reconsider somewhere it if leverage fairly call, in times comments, mentioned the it’s of you I looks times your the I So that and don’t those would last in policy. event, the capital But a that I that on end you mean, when X.X call, a quickly. hit like we you more can times. any leverage, X.X I heading range times return at the And about I importantly, had talked you

back means range? give stock leverage on top if is So dividend your can end the sense you of the us why and for you what are buying hitting the that some

Dave Schaeffer

Yes. questions. Sure, for both Walt. Thanks

our business, did a couple XXXX our Corporate First declines have the financial XXXX in of basis think XX.X% of of back business compounded declines a to over us. actually to regard early reverted a large Corporate great we we averaged all, in and Corporate quarterly quickly still ahead then We Those addressable market growth lasted and a period and with quarters on XX-year about have revenue growth organically. recession. has

the Cogent lasting signs penetrated improvement. We severe pandemic need impact and The continuing but XXXX, been see and on recession the more has longer We increase about footprint. connections Corporate of XX% that type size seeing XXXX, in are than of offers. customers we great are only their financial the to our both the base of service of

productivity force is increasing. sales Our

who We need locations are seeing Corporate Internet time. need they VPN X-gigabit has been this leaving those the locations The downside vacant are the access dedicated do services at That of customers means for that for services. those multiple locations. not secondary more have or

of portion we the absolute the Corporate but they to seeing in You decline customers six as the saw off-net to business, activity next months nine expect months. to that our over the increased in are return office from

processes the on the We are to getting to are news planning We believe our business and back going vaccinations welcome that start office. through Corporate troughed. to employees companies many has encouraging those

albeit quarter the engagement in see office, than a we the with we manner funnel customer and different will customers return throughout slightly think to improvement in were improvements in seen activities the employees a Corporate as pre-pandemic. and steady have they probably office We

are are commented remain that seeing very aggressive we landlords call, sure in I increasing full. As tenant actions inducements. make rents. They the to are their buildings take lowering They

footprint seen materially up. have not rates We the our vacancy in spike

Now result the increase million reported most dollar to a our $XX of increase value of question in noncash of the leverage, million your was U.S. euro the €XXX on notes. nearly in leverage

from come We because them outside our are of the XX% revenues in Europe. being that about on naturally of XX% hedged of with U.S.,

look reducing cash currently our are refinance we We able will those X/X%. expense be we notes, refinance million which as a It rate, to decline interest also X interest US$XXX at lower at that cash our anticipate will expense. secured to interest appears

times. leverage times. only mentioned ratio, To expense breached our are will a change range the that evaluate Finally, us investors, lease our was of X.X accounting but when the to change. FX remind did impact that, times, increase X.X leverage. that adjust euro that to X.X Board impact aggregate noncash, the and the the calls under the Board to accounting that then, was maintenance target notes range, we an it we obligation and ago, initial in We as a were has to commented also guidance that, of increase an finally, decided the capitalize range This translation had appropriately. again And we coverage to and capital times not on was as had multiple

on relative something that we your the It at. part capital. equity incremental While it on did than stock versus our arithmetic. The it we the our and was back debt look is simple addresses that debt times, higher not will really it X.X Board of Why cost guarantee question. adjust of final against net we we weighed times stock, is X.X hit substantially of a it basis, is if once ever cost was will the yield hit buy a

capital, less retire we capital if makes economic it sense. permanent expensively can rent and So

taken to return that have investors, capital we and very to We decade to capital. on to past growing balanced returning investors the approach million committed $XXX a are over returning nearly

As nearly year. $XXX we equity last million commented, we are returned

Walter Piecyk

$XX trajectory for to million, and adjusted Even times. leverage it’s up the your X.X a if you Okay. hit on still went

just approving and basically So like even are range, Board the the are they it subjectively range, it get sounds a hits your then? is increases effectively repurchases I dividend end end to keep the had is, obviously of going the share that which what hitting if repurchases saying, range, you and accelerate range to the not of the share that path top top

Dave Schaeffer

the that the well availability and business the the But free us to of it intensity of capital factors, commitment, the those So each the the there as growth that look Board, cost at quarter. adjustments. If which by the is are rate those of growth number all as at capital we is most sufficient amount a will in business. Board measured the the to quarter is going allow business increasing at to in growth cash make an be capital, EBITDA the debt rate factors each to look return no shareholders, capital, of and comfortable will will the flow of in of they likely

Walter Piecyk

business more of X% recall, go you that Corporate business sequential to we the or what so first Understood. response the growth? as grower the attractive. Dave, that that terms return Corporate, that the one in follow-up And sequential just just made does a you was saying importantly, can back, years. then on had steady mean troughed, -- for also That’s your claiming

sequential really it type Thank is that What’s ‘XX business, outlook XXXX on to we it back when Corporate that? get can of the your you. in is nice So event? a a X% growth event,

Dave Schaeffer

also I a the do first not XXXX rate. but in quarter improvement, of improvement X% to see see sequential I

process the quarter. did we in or we do annual better specific than growth employees. nearly an fourth is fall. the summer, in employees to highly in will quarterly on business but improvement. that for guidance, that are seeing million dependent the planning We We And of return of the early with to districts X.X are being companies do vaccinations central late ultimately, beginning that daily not be give appears the It business office done back

think the we return reach to that level that rate. until I improving, of not normality, while will X% business growth Corporate

Walter Piecyk

much. very you Thank Great. you. Thank Great.

Operator

Your comes question Raymond next from line the Frank of James. Louthan with

Frank Louthan

your Great. impact and products? of the mentioned Thank X-gig with you. percentage on What then you Can sales Thank. growth Corporate legacy that product to the you customers the EBITDA lower force product. quantify churn on versus your are

Dave Schaeffer

and of remain tenants have the seen DIA most at falls So when today, two being we of And XXX-megabit. VPLS substantially significant XXX-megabit those And over than into the had that a the of from locations segments, XXX-megabit secondly, average that products half product is our most then, Those organizations customers really churn of that Corporate is secondly, larger what product the look categories, VPN. customer. if size we one, two versus primary are X-gig it the where are the have location, occurring, smaller are on is in the secondary churn. unoccupied, it our offices churn

smaller is churning what So accounting are its smaller and the customers for and secondary products. locations the that churn are

force, improvement regard seen consistent Now we EBITDA. to were and have a basis XXX with in year-over-year. We question the EBITDA portion points -- up there sales of the

and was But X%. were some margin Meaning is a EBITDA improvement of leverage on Our was the sales year-over-year quickly. more business. we the operating growth out basis gross our coming managing full-time equivalent underperformers X% primarily from force

margin. revenues of It’s million been kind of XX%. that over million, than showing past the a better contribution As EBITDA the back Sean actually are a EBITDA averaging couple $X mentioned, up of were margins up $X.X envelope about years, little as of we contribution XX% even

our points margin were rate EBITDA basis basis XX% X%. of less multiyear targeted that this to slightly half expansion, to of growth was achieve at margin guided XXX have points we topline able than XXX growth rate a of and As we expansion growth on

the actually of was benefited of on-net. Now our in relative Corporate, because that XX% whereas that mix only sales our versus are are in over helps off-net. to on-net The fact NetCentric business, some of XX% in on-net, our NetCentric Corporate sales sales of area by improved that

So to XXX over some be on-net allow Corporate off-net in to benefit the of that that historic X% us is and do with us mix an ranges, here basis and NetCentric in within do mix points growth expect deliver the there time to force. But sales short-term. better even our is we allowing and

Frank Louthan

or in don’t we or off-net So bottom more you trends is productive this of material through costs to as see choose any don’t cetera? there kind become those hit trends these revenue, kind if these percentage of offices revenue you a think and the salespeople that revenue do degradation go uptick as any going before off-net is of smaller of a and these near-term see to continue to with et them they close you

Dave Schaeffer

sales for our sales efficacy, efficient force force all, greatest is tenure of the first So the how is. of indicator

Our sequentially sales improved force X.X. X.X from to XX% efficiency

increased XX to tenure force over months. sales average Our

foot turnover, a of in Cogent being never Now that increase set we were had newer that turnover and actually remotely. office but reps trained most were did

manage those reps the business detect place We quickly. out of in put quickly them to have systems and tools underperforming more and

and to is solely rep it in sales every work difficult telemarketer. be hope how a we remote understand we While environment succeeds, a

of the installed just of of is So historical sales our productivity per as there’s today force per still improvement a is average around rep I month. Remember, the long-term averages. five below think the fair X.X still below amount orders average

off-net your on to dependent the Now question, that’s locations. really

tied Our to are off-net sales on-net.

a offices, As companies off-net will about business. rebound those secondary in we see think

our been correlated Over the off-net long unit in highly identical. almost run, have on-net and growth

see steeper but loop total continue, costs, because that do will improving. ARPU lower Now end think up I of we Corporate should business trend declines do off-net but

Frank Louthan

Great. you. right. Thank All

Operator

Blair. with next James comes question William Breen Your of from the line

James Breen

Thanks taking question. for the

you customers, renegotiated in Just the or a of the it contracts like a that customer is statistic concentration, couple any extremely extended on quarter. -- fourth have large you about gave you seem some which given good, doesn’t

traffic the in growth see look As just Democrats greater level, second business high revenue -- rules of FCC. four contracts when neutrality neutrality and we with now a Any way the the from through ago Dave, ‘XX, side? between net Thanks. of the just to of we a where translation the should given question. high then wondering, sort and in sort went place? we some California And net the charge looking pass by back impact were there from of on years a

Dave Schaeffer

Yeah.

Let contract me take first. the one

customer Our improving. actually base is becoming diversified. It’s more

base streaming we year-over-year. and greater to has a number on-net per are networks. greater percent at megabit publishers, of and about access traffic diversify us a price our Historically, going the We of which declined are seeing content saying XX% seeing more helps

low in trend traffic the We much historical has grown on are pretty and that generally line XXs.

in quarter above very that are by revenue. year-over-year We trend We encouraged were today. obviously line the XX% fourth growth NetCentric

been I average NetCentric the allow of customers is is to growth of remind XX-year the in us volatility better that think year, foreign while U.S. rate But see by half helped because has the revenue of outside was throughout average there than our growth. Again, that Some business this we lot to broader of to drive exchange of base X%. business, investors, NetCentric a expect

to We your first and are time about around question neutrality. second seven actually actually for good in net that is years a segue that the above

our to remember, last-mile the you their access impede business major attempt was networks to linear video one applications impediments NetCentric of by If to protect many streaming an products.

attempted of successfully. is of administration last-mile in days front net right actually was court enforce believe become testify the the to ago negate reverse will years as via that came networks consumers out to and We And more lengthy it probably we connectivity pressure State where monopoly usage We or current harder accustomed neutrality traffic think allow the and actually to place position a that usage bandwidth hurt some that of major have and in to to two to position. strong becomes streaming, constrict network for saw way and them a to even network California over We to access harder reverse was implement We northeast have to to I want one video caps put money. make want implemented us consumer net companies X not affidavit Cogent. fairly we consuming their ruling neutrality California the end million reaffirming been forced user that several to neutrality. either We never XX% in ago, then attempt exploit to under and had globally net provider that caps to proponent had had our recently of than part the sell customers world’s the in do the customers get upstream access California consumers. in opportunity as more that customers, We Senate.

James Breen

Walt’s guess the around side sheet balance question in on just leverage. I conjunction And one follow-up with

a in perspective a from believe conferences revenue I the quarter. first think the has quarter you are that sort of of business fourth through said you recently into troughed the couple

a the couple it maybe marginally assume then it Is little bit things from and up the likely the improve next here, in EBITDA hopefully. that more net bit half quarters improvement and based as of up leverage line in So sort a to lower ratios, or they will tick over tick of back reasonable at is Thanks. rate while an little a growth? may top on the

Dave Schaeffer

increase as deferred at and at leverage and capital, investor. balance that importance rate for these look of of is I to the we to we our We factors of what over was ago. XX% the Two, completely of I think And the looking the investors can dividend. did out return We a that sheet something and the that capital Jim. lost a growth of that’s growth and is doing think of and we the in it. fact is dividend cost dividend couple when quarters treated how we of dividend in is figuring the therefore add optimize this the understand decide right, are tax all

think going very forward we of our We leverage that are that dividend ranges will comfortable expansion with and we with. are guidance the rate within be comfortable

James Breen

you. Thank Great.

Dave Schaeffer

Jim. Thanks, Hey.

Operator

Mike next question America. of from Funk Bank Your of comes line with the

Mike Funk

morning, Dave. Hi. How you? Yeah. are Good

Dave Schaeffer

Hey. to from Great, Michael. good you. It’s hear

Mike Funk

Yeah.

I too. You could. couple A if

XX% real to first, brokers, one occupancy So, the now commercial about expect of ones, back leading estate post-pandemic. business

fewer maybe back the down, if are after So that if regional are regions with NetCentric the trends, wondering schooling, Corporate expects traffic the could more reopening. at detail then having business office how piece, shut you even have opened most people Then down, XX% add more around up in trends you home presuming they you seeing are better as more and over-the-top that seen shut video. some

us things how a give to might up? as the trend sense open during that Just of year back

Dave Schaeffer

Yes.

estate on user That touch or in one XX one our thing the first. We the So let me a you means basis. have connection fixed on same real users whether you office. the sell pay corporate

some their the think and greater is same, the Cogent had I more Secondly, the whether for need per remote footprint, if to as firewall the those as are most Cogent. pre-pandemic. building long average as but use and employees bandwidth you your it office for floor plate could there be a been in Also, home, for tenants in their building they bandwidth of employee size symmetric need will remains tenant or businesses work-from-home Corporate the base more the because the that than the shrinks, that is addressable at shrink in positive be therefore of fixed, our concentrate customers market

that have the vacancy. the susceptible we to think be of least I tend buildings to types Finally, chosen

the you major they and at A cover you in brokerage and vacancy of much in B C any If know the the buildings. that than sector, higher predict buildings reports look I

a ability keep landlord, landlords, will time, concessions your terms at going Tenant where it’s are the bad the shorten. Sean? to if in same lease a as better fall. increase. will understand you is will up. vacancy Typically building all park and suburban rents to Now for than I full But have office that. are These

Sean Wallace

color would I just more little add bit that. on a

York are in the We back pretty down. with brokers. down When are Sunbelt that net the spent you it’s very bunch New a absorption parse and gigs rates They Francisco. of in clear good. mostly is commercial are time It San

much a It’s and more it’s Francisco. rate. much concentrated in York lower So New San

as rental is The tenant already are investments reducing landlords figure to proof rates, A David in for we we buildings as points up will seen have second buildings increasing to piece trying have are those aggressively their They get been demonstrable these aggressively that, filled to begin Class out, as the buildings fill signaling terms. us. and that reducing be out how we and hopefully an as returning, see opportunity people

Dave Schaeffer

past And an then experienced on couple your let NetCentric region. of touch have acceleration The biggest Internet. the internationalization that by the we in growth trend of years over me is the

caught has but U.S. to of there are world the yet, of Internet in up rest usage, are the the As rapidly. they growing not terms they

aggressively. has from an We footprint in demand so It’s expanded markets. our those are international increase why seeing

bit Now with the regard the lockdowns, particularly a a degradation first governments pandemic, in of bit wave of Europe of different. in by this for wave we lockdowns, it’s to request streaming saw In rates.

seen that of degradation. We type quality intentional haven’t

we lockdowns have extended that now broaden a typically in which usage home form of commented the quite And a not earlier, out form mean bit. they and are an periods rather people in but earlier different seen have as we peak a post-pandemic, the taken the curfew, does evening. are lockdown Secondly,

usage, time in to And seen contributing XX from nearly we part pre-pandemic to increase X local of base peak was have of to X that is p.m. o’clock the the volume afternoon go the broadening bit post-pandemic growth. p.m. that midnight. So in what’s window

Mike Funk

you their traffic And into I people peak guess as different as asked how impact activity, growth that back then in ‘XX? to back return to time more expect of being mean XXXX, kids anticipate work, streaming a way, school do Dave, do moving zone? a maybe the impacted move classroom to how that normal and all I you in aren’t rate traffic

Dave Schaeffer

compared is Yeah. The deminimis user generated video to professional video.

connections is we versus even will be rates. pandemic are and that in and not to think quality over-the-top at capabilities revert broadband the bit growth three think upstream will accelerated the I think by to factor. the or continue streaming do the I to back. I historic So transition their concurrent traffic that now lower pick of four many electing the two, limiting linear was tend but customers packages also the

Sean Wallace

Yeah. bit. days whole In little we weekday, were March point lot In work-from-home provide record of the that March, about and I’d which the reflected a Dave’s add environment a color. during little a saw change.

December of and at and record seeing is reflect services. number people are been on something weekend, which TV January, the more are streaming in clearly Disney+ XX we it November, is days million. As watching the the

This Some our on is not suggest work-from-home going is people traffic to clearly increasing network. this the videos, triple. is professional

our it by people the as over-the-top on not traffic we as work-from-home much very encouraged So driving being network. growth, are

Mike Funk

Sean. Yeah. Thank and That’s great color. you, Dave

Dave Schaeffer

Yeah. Thanks, Michael.

Operator

question of Deo MoffettNathanson. line next comes Your from Del with the Nick

Michael Srour

is they that your whether X-gig Dave, product what on? for the upgrade contract customers are upgrading, Could on XXXX. Thanks upgrade some XXX-meg perspective? Srour surpassed speed from Michael give are this and customers my us you with which you taking You Could are at they share regarding more for a your when signing question. product us extensions seeing in among noted Nick. you Corporate detail rate so

Dave Schaeffer

Yeah. Sure, Michael.

So a from, is couple three contract five say, of ago. substantially Corporate new the That’s points, years years. first average of up all, for customers

term longer taking they are commitments. So

even our connection typical the use full Secondly, to peak utilization. customer Corporate does XXX-meg not

surge product available to However, deminimis is the the they that want and a have $XXX typical premium capacity for a to them month XXX-meg cost. that over

a to an What side or customers term us go the that at they insurance some back with transitory will employees bit first But and Corporate So to has as will either be anemic. to as see to buying the VPN location Michael’s will connections taking those the purchases are as ones those where a circuits offices. hurt go I then that to offices, then again even of start end X-gig return comment policy. not employees secondary maybe those We trend think on view buy until primary secondary off been at allowing XX%, new not start and services. really to remain secondary turn has the are willing locations to back we office,

Sean Wallace

of bit little a bit color, Yeah. it’s on I’d little a add metrics. a And

What’s We The as VPN and VPN a Fast we is our the more two-by-two the are is to mentioned, have you happening DIA to be We a DIA used and of have if for connections flagged which the that GigE. -- customers, we look in DIA of the in and we those while, down. -- connections offices -- than are gigabit basis Ethernet a a at now clearly, fallen majority service. that quite we as metrics. is those sell to sell now XX% satellite a close on FE DIA flat

and we an So be FE GigE going to is is getting to GigE the will inflection base and FE smaller to a issue, are grow. continue trailing the point off, close where is and and growing mix smaller, it’s customer

customers Our existing a the customers new small XX price. for the of love idea and speed premium getting times

Michael Srour

Got it. Thank you.

Operator

Brandon Capital Your next the line of question Nispel with from comes KeyBanc Markets.

Evan Young

traffic on new applications is you video other any types Thanks. and other guys. your an surrounding as seeing or This Thanks, for business are guys Brandon. edge guys How for computing new Evan kind of you are doing any than opportunity data?

Dave Schaeffer

trend a offsite. I migration to or a and it whether is key company cloud, of public. and more more the the their This computing think move private is for take to

every offered I it rather connectivity to product, think with causing amount software work-from-home you And SaaS now the versus a product all as on-premise. all the bandwidth of us. having for trends has of IT These that is those positives and virtually that departments increase need corporate looking purchase. they reevaluate are are Secondly, infrastructure flexibility the almost a to pandemic coupled to meaning the software generated, in their all vertical license that than are

Evan Young

Thank Great. you.

Dave Schaeffer

Thanks. Yeah.

Operator

Michael Your from next the line with question Bunyaner comes Tlf of Capital.

Michael Bunyaner

a being us mix the understand to, most referring Dave, and and teams be would XX% and NetCentric to your change open I management Board on-net. why if the Cogent XX% sales one cash that flow But your so continues spelled straightforward Sean, in is To to as as leverage, probably have relates I across your change you, morning. in traffic to you Directors more change, kind and should years growth effect enough of of be mix Corporate can? quite between in Dave bit Good XX of the in it accessible am and the dividends the come and help understand and mix me change, be of is market because terms the growth business please not volume it just clearly are versus over because Thanks. flow, the the on not of what mix how That and to the strong. being specific change out, cash career my the appears explain that book is you business. clear communications little you of

Dave Schaeffer

Michael. Absolutely, Yeah.

So for question. thanks the

they to when location them The XX%. customer, margin that’s we all, about sale secondary gross typically will only we gross double. then locations is off-net Corporate sell sell But primary is on the on the at a sale margin of and ARPU buy will an the on-net XXX%. First the

lower contribution. much So

has positive As location sales go that effect off negative margins. we tail in those a fact on have seen secondary

data will that business, in connected the we are station centers where we is NetCentric landing off-net the we subsea world seen the us NetCentric allow to are The purely that acceleration on-net. typically to, that Secondly, only not around as is access. our X,XXX case in sell a

margin that expansion. additive carrying to XX% with being So of NetCentric on-net XXX% is margin, gross

expansion. points half we XXX still average, with is about of basis even EBITDA at the reason why long-term growth of margin our it So topline delivered our

Sean Wallace

amount I seeing would just repeat talked Dave in providers means the one is the that that meeting And is this That’s will that that twice. of remaining the remains are XX% hopefully, terms One, are great for money to traffic second network. particularly the of half. in I the profitability in on a point, on gain earlier gone same our in trends. and the is basically growth traffic subtle directly latency. networks. them reliability on your the two-thirds we we paid it two of But traffic our profitability, from is the things as are because and and for on-net that streamers But and more about provides and for is setting and suggestion network we us, lower that of getting NetCentric increase we market also with on it that did discussion has and to content spend accelerating traffic that both sides, more that much access have that

Michael Bunyaner

looking was Thank Thank you what for. I you. exactly That both. is

Dave Schaeffer

Thanks.

Operator

from Your JPMorgan. next Phil Cusick line comes question the of with

Amir Razban

This should off-net the half? Dave. Could growth second you Could expand and is within you specifically on-net segment go for the and this on segment? for for Amir the Corporate expect we versus Phil. performance in first into Hi, of specifically off-net the what and on-net year Corporate the half the like

Dave Schaeffer

Yeah. Sure.

year, So entire let’s, was and sequentially, sequentially first both Year-over-year, portion Corporate down location of X.X%. that also, and the all, it start always with of component business. business, for X.X%, it down is up that was Corporate full X.X%, was is The on-net. a off-net But or year-over-year. The a secondary off-net branch about off-net location.

but what key all people think are the as are we quarters not is just two trends. several for had reverse next we there So we to seeing the are to One, discussion previously. selling that are offices, going secondary do return offices over we

$XX nothing. replacement years MPLS use $XX shuttered, SD-WAN they North or for about are MPLS. weaning four putting with America those market hold. ago. They VPNs are secondary those billion But either are offices about VPLS. that, programs about sell off are a VPNs. we to companies billion, Today, Secondly, of on doing at in The basically, peaked it’s looking

either off-net VPNs. less or much for DIA are we selling So

back As the to will happen. come things office, companies three

of primary sales We will offices. needs see the people we offices. a those their reevaluate in Two, see office reacceleration a as examination of reacceleration will in secondary

those some may While never return. offices of

will in on same to call, if there But that’s never flexible the primary an likely as commented some it’s office, the I to not As is if they and MSA last be going as the reopened the allow. be office in metropolitan market, work-from-home earnings work different it’s most a will go schedule a option.

those a will offices to are open. implement third, that begin or looking be of those VPLS newer So with migrate solution and one then of to MPLS SD-WAN the companies that. are technologies to frustrated will And

see acceleration we So return customers. office, we companies an the actually as among to Corporate in think making actually decision will

Sean Wallace

would add to And just Dave’s comments. I

little rolled the the out to disclosure that. out sales to ourselves that of a in XX-K, summer. database system But a It’s leads positioned that for CRM have our us have we a force. fantastic send we enables tomorrow. new -- systematically reintegrated we in will We are We give

be amount buildings us to did with take force this despite of our to able nature carriers the Ethernet We systematic in of relationships quarter, the and we created DIA million have sales go that fourth the CRM the Indeed, give business growth access our Corporate off-net. off-net will relationships system in side, challenges last are we and that off-net optimistic to X these all the have quarter. in we to using increase gigabit the

Dave Schaeffer

know I the I thank call want went everyone. to long.

want grow I all again, I be in those efforts myself faith team if and in the think, entire chat answered hopefully, for to people Cogent environment. need with and their their we with want are tough investors our want available to thank their ability for for attention. And to questions. to to the a great customers thank us. I Sean thank Cogent will I our customers.

So and take safe. stay care everyone please

Operator

today’s conference concludes This call.

You may now disconnect.

Cogent Communications (CCOI) 28 Feb 212020 Q4 Earnings call transcript