CCOI - Earnings call transcript Q1 2021 | Cogent Communications Holdings, Inc.

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Operator

Good morning. And welcome to the Cogent Communications Holdings First Quarter 2021 Earnings Conference Call.

As a reminder this conference call in being recorded, and will be available for replay as www.cogentco.com/. A transcript of this 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.

David Schaeffer

Chief I’m Thank you quarter Schaeffer, on call. first Officer. call Chief is to Welcome With Sean Cogent’s this Dave Wallace, morning’s and good XXXX morning earnings everyone. Executive me Officer. Financial our our conference

to offices. Now, for cases our and the States United on have in to businesses a decline, reopening As a results: few begin initiated plans have comments COVID-XX number the begun of

We see our to have segment. corporate for begun climate business improving

We segment, than have for five our our that seen declining lower unit in levels elevated the churn months, sequentially in corporate saw the churn were we last for quarter levels first the XXXX. and

expected third streaming saw Our the segment quarter and sequential growth in to NetCentric greater business continues its subscriptions accelerated benefit of growth. from than the

outlook the on quarter, cautious year-over-year Despite X% pandemic these For improvements, on challenges has the that and a the the sequential our the traffic up remain a our and XX% current economic basis. about brought. first we environment uncertainty of was basis in

show basis. quarter currency we X% an a of sequentially to growth experienced of of revenue year-over-year million, rate level a in revenues of results X.X%. constant as sequentially our $XXX.X first Our increase on growth rate X.X% by On growth a revenues year-over-year grew higher a basis, X.X%, and

an operate to in efficient extremely network. continue We

margin substantial EBITDA data of to in office our centers EBITDA Our network our experienced We’ve cost year-over-year North non-GAAP multi-tenant neutral growth able in and growth serves at business margin. a non-GAAP cities, gross is increase sequential traffic handle and in carrier our of fixed growing volume a in and base. relatively gross and profit, profit including American and the year-over-year number buildings the markets, central districts

basis. gross a non-GAAP grew X.X% sequentially by and X.X% grew year-over-year by profit Our on

by XXX margin basis. points record full a of basis basis grew year-over-year percentages sequentially quarter points improved for high Our XX.X%, non-GAAP our to and on gross the by XX

on Our grew XX.X% EBITDA quarterly by basis. a year-over-year

from most XXXX performance XXX quarter, to Customer by customer I all COVID-XX. churn, collections noted for Our maybe earlier, quarterly the of base and as points margin sales XX.X%. in corporate increased churn fell The the basis despite strong first cash and of the quarter impact improved importantly, be the EBITDA of our row. continues in existing quarter outstanding, our day rate a to second

sequentially these best Bad Our the quality to days a the sales base, percentage most the outstanding year-over-year expense those improved We customer believe importance of basis. and that history. stable and maybe a debt XX at ever Cogent’s our of strong organizations. importantly, as is days on was of credit revenues in indicate Cogent our statistics

We stock has quarterly of $XX.X available program. During program, returned our our to our did Board buybacks $XX.X the during authorized under quarter, we December regular quarter shareholder through million first have for to which not and dividend repurchase the any our through million XX, continue XXXX. a total stock

stock. of have months, representing shares XX repurchased we of $X.X worth approximately past stock, the million XX,XXX Over

$XXX is end, Our operating our Cogent held available at was This quarter’s cash cash end. approximately quarter’s use million companies to approximately at at was $XXX.X dividends million Cash our at stock cash unrestricted held at Holdings buybacks. and was million position consolidated quarter’s $XX.X for end. and and

X.XX quarter, X.XX and in the from times net from to fell ratio to leverage last ratio leverage also EBITDA our gross Our declined X.XX X.XX.

end. ratios, is X.XX consolidated as at calculated quarter’s note Our our under indenture leverage

in are The million euro result recently notes our scheduled increase a of fell ratio of disclosed is million in $XXX.X purchase a our leverage me, to XXXX. $XX.X on and notes notes translated cash Our €XXX - of as value March basis mature in senior for secured of operating our U.S. of dollar our principal flow. million decline the of excuse euro versus that of the amounts

of quarterly This $X.XXX from to raising our Directors, per $X.XX our quarterly dividend per in our regular generating in sequential by increase our increase Our on consecutive dividend investment dividends: another the for which strong quarterly Now reflected share, opportunities Board again quarter, decided is dividend XX.X%. represents share. per and have $X.XXX cash capabilities to growth rate annualized our dividend increase and XXth our

some Sean and on some Now you details read some language, give to additional our an you our on have of operating in safe the like I’d harbor quarter. additional give update color COVID-XX performance

Sean Wallace

continued undertakes these to obligation forward-looking are XX, use includes during the revise expectations. want financial statements. These everyone. engineers, Cogent This update new Cogent based intent, challenging could our call to that entire call, to results this conference entire reconciled we I workforce hard IT will in We’ll no the and other on lines front actual the XXXX on continues trends. Form that information forward-looking September June our you be in update may are our by our our field statements which COVID-XX. discussion, upon to at morning, detail forward-looking will pandemic and network COVID-XX actual continues measurement If XXXX, find XX-Q certain many continue other earnings who this on will our several website workforce and world. we March cause and historical responses billing our the a and during refer remotely. the very the statements our for forward-looking providing highlights this factors current around more times. all governments risks and quarterly and statements and many report employees or and customers, non-GAAP earnings statements. review number thank differ ended detail work differ. on the Good be subject installing more staff our XXXX. materially. for www.cogentco.com. Dave. XXXX to our Like customers. These greater are to described statistics. XX, SEC by of accompanying highlight these you, and GAAP Cogent that operational and XX-K in release, on and reports particular, is service on in risks impacted to I upgrading Please outstanding annual work operational our Cogent to quarters and thank other posted companies, call and made I measures our Virtually, Thank Throughout work in not may collection want contractors, the These department results maintaining facts filings are to for uncertainties, belief, to our also other XX, in for on to their Form

remarks, call Q&A. our the we’ll up open Following for

Now Dave. the like call turn I’d to back to

David Schaeffer

to Hopefully, Sean. a Thanks had chance you’ve our release. press earnings review

historical we report of consistent metrics Our press includes release on basis. a that a number

a against comments for against Now results, long-term our multiyear few reaffirming. been that targets have we

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

currency Our targeted growth multiyear is rate approximately constant long-term XX%.

Our revenue and multi-year guidance. not intended used as be EBITDA be and to guidance are quarterly to goals intended targets are

represents corporate of Our revenues. XX.X% business our

declined Our corporate fourth quarter XXXX. business of first declined X.X% and year-over-year by quarter X.X% by from of the from the XXXX

XX.X% the quarter-over-quarter in quarter represents showed had and accelerating Our XX.X% and to exchange first Volatility business, yet rates X.X% of of as quarter strong compared which growing sequentially grew growth revenues, XXXX. impact another by our foreign XX.X% our constant of NetCentric primarily that business the U.S. a On XXXX. quarter of the by by is from and currency basis, X.X% on basis the of outside half approximately as business sequential quarter NetCentric of our increased business a first from XXXX NetCentric fourth of

provide details our quarterly on will some additional results. Sean Now

Sean Wallace

based everyone. We upon NetCentric to includes about connections: good morning Talking non-core, of revenue customers revenues we again two Thanks off-net also and type, Dave, type. network analyze our our and all that into customer and and our NetCentric customer classify analyze on-net, on corporate revenues and customers. types, customers corporate based and We

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

and from sequential positive freight predict impact million by million the year-over-year USF data rate a $XX.X million USF as distribution includes tax $X.X $X.X our buy bandwidth us had fell corporate content our well and the Our The the the for on impact to sequentially USF quarterly significant carrier-neutral a consumers Revenue revenues. rate our increase positive providers in by we serve An year-over-year. of changes service X.X%. cannot quarter future fell as networks NetCentric on of changes customers had content. and in and tax and revenues streaming amounts who corporate centers, X.X% companies customers of from access quarterly, impact

as cities reduced that result As of was we the earnings in directly central districts major business discussed of we calls, pandemic. in growth the revenues of corporate our by believe have occupancy building impacted previous COVID-XX a

our positive a our normal corporate row environment rising direct result we Sales its third one system are of historical and seeing that also corporate in and a a in gigabit beginning delayed had in by largest access On signs that corporate modest indicate that quarters. general challenges more for that of network second work-from-home quarter normal levels found a from We new reduction with to of contributed buying are our note, several decisions past level. return sales, upgrades Internet churn, pandemic customers connections, to product of slowdown some investments. and to The as has combined patterns about product per revenue a the of many revenues the sales.

customer to of our had off-net we revenues we months, fallen our the megabits of decrease XXXX. reconfigure direct applies second X.X% trend X% our versus five churn network higher rate, products, VPN low a to corporate are to of the continue on base, our each clients the to these connections, and quarter, has in connections. first The begin was and decline quarter-end, larger to continuing and terms XX,XXX corporate in are from savings to We And very and per at of new the $X.X only their customers. increased one-gigabit the of some a pass access for We our churn seeing expand million levels see corporate loop also corporate that the fourth corporate reduction older by on continue USF as off-net which from encouraged churn we and is in last corporate XXX revenues of most churn quarter VPN the quarter our Internet in of contributed networks. of pricing year-over-year, derived lower while which connections of from

streaming to first XX,XXX an services growth X.X% Continued months. and customers increased and quarter the of for by nine network past in X.X% our by first on to sequentially impressive year-over-year connections NetCentric customer, Quarterly quarter-end, and an NetCentric the international increased our business and the continue revenue traffic from million sequentially XX.X% helped in our growth quarter $XX.X increase at of an of NetCentric We XXXX. XX.X%. over had accelerate increase

United demand of gigabits Our NetCentric and continued larger year. our from per the from strong the significantly particularly was activity the ports. from average business was first quarterly strong, than demand our second XXX and in quarter Europe outside gigabits States sales The for higher benefited XX last

Our NetCentric primarily grew related to revenues significantly larger traffic. to NetCentric impact result year-on-year, revenue by a by and experiences exchange, than certain network as volatility customer of size usage. our foreign primarily increased Traffic due our corporate factors more of on and X% growth sequentially XX% the seasonal

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

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

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

installed increased connections by for in X,XXX average X.X% our trends, customer the customer sequentially by with per off-net buildings of connections primarily America. decreased megabit our customer off-net and XX,XXX North in X.X% year-over-year. quarter base increased buildings. We off-net Our off-net price quarter. both historical the Consistent over are ended serving These

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

megabit the per unchanged contracts price average first from was Our new of customer for $X.XX quarter XXXX. our from

our change As will than in pricing XX a price to we in or of per continue mix per greater gigabit succeed customers, ARPU. XXX gigabit in have connection larger connections effect selling megabit and lowering rate connection the this our to changes our change at

on-net off-net the decreased contribute Growth in The in of NetCentric for sequentially to the change corporate the increased in to our ARPU customers our ARPU importance larger Our corporate year-over-year. mix connections higher on-net sequentially and and ARPU. products year-over-year, gigabit bandwidth a and and our reflects increases growing ARPU on-net our to markets. continues X

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

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

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

continue We market. of of this loops. and corporate lower and passed we to discounts our as volume ARPU more local in making are advantage competitive take decline in time reductions expect in that to customers the our will costs us based to are on order These off-net cost

Our and improved. rate was rate churn sequential our connection quarterly off-net on-net churn stable connection

Our last churn same was rate quarter, for as on-net X% this unit the quarter.

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

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

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

increases was primarily by SG&A Our our increased EBITDA flat sequentially, primarily increase due our seasonal of in million year-over-year, revenue. our on-net as result to costs, million in $X.X EBITDA a and $X.X

year-over-year margin quarterly increased points, basis long-term which Our by and points, is decreased XXX in to EBITDA with line expectations. sequentially by XX by XX.X% our basis

XXXX. quarter. on Euro a variability the Unrealized our $X.XX income diluted quarter. an contributor or per $X.XX for and into of of share, Our per consequently, XXXX dollars share basic in share income that’s losses the quarter was $X.XX U.S. last primary the compared this and income income to loss quarter quarter, per for to was and first And per loss gains last share and particular the our notes and translation are the net in our loss of income

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

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

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

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

less represented for customers revenues our quarter. X.X% XX top than Our of this

capital million million and sequentially increased $X.X expenditures by by quarterly decreased year-over-year. Our $X.X

capital the the the first $XX.X expenditures were in result quarter $XX.X to compared $XX.X of in fourth million the XXXX. A for increase parts the quarter to of of expenditures was of Our increase need segment. network a good million on million capacity and quarter NetCentric deal certain demand capital XXXX result of for a growing as of this the our our

We fiscal our capital in XXXX. expenditures continue to a for reduction anticipate

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

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

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

million $XX.X quarter combined $XX.X quarter XXXX. the our $XX.X payments compared for to expenditures were this and million last principal were lease finance of quarter capital Our million with first

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

payment partial of decreased quarter, million, quarterly notes on principal cash primarily from and of our an redemption million our payment. our $XXX.X $XXX.X the increase in the XXXX the dividend by For

due Our by increase increased million flow year-over-year. in from quarterly working capital, to cash to from an operations our XX.X% operations million, primarily by million $X.X sequentially $XX.X flow cash increased $XX.X quarterly our

represented Our largest cash operations in quarter amount this the from Cogent’s history. flow

including debt our par, debt $XXX.X at million. XX, total finance Our obligations, and was gross net XXXX, IRU lease March $XXX.X our was at million

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

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

and or notes notes rate. quarter million euro dollars using euro are an of The each euro converted $XX.X the our exchange U.S. dollar to the million U.S. share last at in to $X.X million foreign U.S. unrealized million €XXX first an month-end gain was this loss $XX.X Our $X.XX for unrealized reported dollars month-end to exchange unrealized quarter of XXXX. per gain compared quarter of and on

debt stable and sequentially. expense revenues percentage of year-over-year our as bad a improved was Our

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

of was revenues debt bad Our expense our quarter. last X.X%

for turn recognize customers quarter, a very for want and I Our Dave. days a for times. was a sales challenging worldwide accounts last customers job improvement representing with for our worldwide I’ll thank day record outstanding it collecting XX XX DSO members And during our from to do in corporate to quarter. the serving and fantastic or DSO, collections team receivable billing back to that, continuing our from significant and days and

David Schaeffer

network, strengths I’d of Thanks, the customer sales force. a highlight our of couple Sean. and base, to our our like

want breadth At data strength Cogent international key globally, our networks some we beneficiary revenue impressive allows neutral acceleration NetCentric latency. are XX.X% saw in subscriptions, we Streaming our quarter-end, their an by measured I centers we this their the centers. better direct our more analysts’ of markets, outpace continued highlight of coverage than and and an reduce data business. This growth NetCentric quarters expectations of primarily connected believe statistics is As carrier trend. of reflects business that and this carrier of some growth in three rate to the NetCentric third-party and independent year-over-year. optimize earlier, to to last in X,XXX a NetCentric other customers to during we in research. the any The as I stated XX

our per construction allows project data for X.X% We to to XXX from this widen This earlier. the expect carrier based represents facilities. of group industry XXX gives this carriers planned an the sales a to of networks. as that networks, professionals directly will cable phone additional a At X,XXX centers to of access mobile believe sales one of pipeline solely broadband we mobile NetCentric year of had on This in users. the the world’s quarter-end, other telephone ISPs, on neutral the the increase segment. connected and companies, At years a focused quarter-end, network lead most market subscribers us us these next over several this of and collection we force teams we professionals year operators, and connect direct in sophisticated market. We that majority largest

Now corporate for our business. some on comments

yet We are revenue seeing positive have business, they fully trends some corporate but in growth. materialize our positive to in

way becomes connections people their continue to to of part the customers access As upgrade larger work-from-home established work to environment look connections. going infrastructure our forward, and corporate will symmetric internet as

This connections, outside applications both of of the aggressively of corporate customers high-capacity as require Our inside integrating video part conferencing. new that world, and will premise. the work-from-home have usage become the are such some

As for size XX-gigabit customers’ connections. to either some our Sean to symmetric one push in aggressive us cases an has mentioned earlier, and corporate increase this connection gigabit, been

management Our sales out accelerated underperforming of efforts force continued and to training continued from the experience the improvement reps.

full-time at rep on five our or XXX was result, headcount equivalent full-time equivalents flat. total end. sequential reps full-time our to sales count increased by did sales Year-over-year, a As equivalent X%, and to and quarter’s our shrank basis, decline a reps our force force reps XXX

the turnover of those XXXX, we fourth productivity sequential per rebound in remote of we month the per year. factors sales monitoring previous to from of force. experienced result month sales equivalent improving a of continued in in sales quarter managing is drop per X.X% slight our a Overall, force great X.X believe full-time and the These quarter, our in as orders efficacy a orders per month X.X% X.X% quarter. per sales a our the from out X.X equivalent per underperformers has disciplined month in and past in force accomplished installed which that the sales our increase was deal primarily Our approach force in full-time the resulted the

The team’s was our Cogent first that XXXX. that thank entire force and company’s quarter. quarter installing history. fully the is and reflected continued the will business I support entire of our Much in wanted work quarter best the sales sales and and second be to in team in the for all hard that throughout they’ve implementing had improvements COVID-XX we’re done they’ve the

buildings new these of will America, cities X,XXX Despite are recent in new million North and districts beginning terms, located on-net levels. cities, per these of in The that low-cost cost and buildings landlords XXX the compounded rents, lower their keep central summary, square we lease high have with medium-sized feet. remain provider is the fact amenities, since Cogent in access rate the A demonstrating our in the Class into small value businesses goods tenant byte over serving an see and position proposition tenants many in business our optimistic with sold So occupancy tenancy XXXX, is transmitted unique services. approximately which multi-tenant position entice transit annual drop industry, of to in of in of Internet low-cost office unmatched we shorter remains a aggressively major mile by our space We at about improved XX.X%. lowered

to long-term our COVID growth in trends. United the and can throughout to return increase footprint. will begin return tenants its corporate As business vaccinations to States historic believe Canada, multi-tenant that the our We

outstanding than quality sales Our numbers. value historic believe high of customers the this debt, base churn, our credit these days service unique, customers. We customer our the represents and better our all to bad are of

constant XXX growth and best revenue our basis rate XX% per outlook. of expansion EBITDA multiyear points targeted Our current of currency year remains margin

$X.XXX per Our our to $X.XX, rate consecutive quarter growth for a at XX.X% quarter has Board in the of increased representing dividend dividend. share annual XXth per Directors

leverage business, consistent, importantly, optimism of increases Our generating flow dividend our most business. of capabilities in the model, business the and demonstrate cash operating accelerating the our our

in repurchase the available remain million to $XX did we program repurchase place a we not stock for through quarter, year-end. While have in did over

take Now our and I’d to of a like moment markets capital close some just activity. on

balance our million interest environment. We are lower of hand. $XXX.X sheet senior are our We cash looking the of XXXX rate to by due and that able a anticipate interest $XX to cash principal notes quarter, with the on expense million In March advantage of year. we take being over optimize repurchased secured current first

$XX these conditional a issued million also call We for of another notes.

Assuming that leverage defined perform notes. as and do in fall XXXX times our we both on our X.XX call, will XXXX below this pro indentures, forma our in

returned to company, will accumulated we more to freeing that, the shareholders. capital of able transfer holding the result a to be be As an builder from basket to up operating company

expect repurchases. analyze critical call, next retire our felt complete the in our our this are into the for senior Yesterday we XX, of transaction. buybacks. the $XXX to quarter. cash Pro our but we through $XX million restricted new quarter $XXX.X in analysts team of apologies this for research balance information excellent like entire cash secured this reclassification, we to management for and company total for XXXX secured holding into will support million can outlook. all to March forma get this dividends and new quarterly Cogent conditional so we market, notes, senior the planning continued million of due this morning, then our dividends in XXXX issue ending to we move permitted future and notes full this million early we Post we of program, our Again, are facilitate million [inaudible] we pricing afternoon, will senior debt potential $XXX I’d released share and available thank will the have My our it was from If our XXXA. secured XXXX $XXX successful will at repay notes. our an of reclassify this offering, capital information fund we payments, share and release XX-Q part who holdings investors press and on transaction, As XXXX to offer improved the investors under XXXX, notes this to of could business hand our their

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

Operator

first the & [Operator Company. line of Your Cowen question Colby from Synesael is Instructions] with

Michael Zolezzi

NetCentric I should Michael part momentum there in Hey, items be time this as Two quarter, may. that also on you, then backdrop, the and you That ask in mentioned us currently? the there we particularly for your funnel the give sales business improvement how either of would sustainability the NetCentric think of improvement, be about the should seeing aware year-over-year? the Colby. you’re any questions or you. is we quantification business? or seeing sales quarter-over-quarter that, the good. corporate the one you know within seeing I if what And on we’re in growth would you’re is any know Thank And of you Were could

David Schaeffer

questions. for Yes, Michael, sure the three thanks

business as or peering our know in shift think accelerated about our video to and part customer customer or sale sending sell NetCentric a benefited not there results receiving Cogent our where This the actually a the that continued payment, of base. declined. foreign both customer from since in traffic was So improving to the peers XX% and paying and the broad very NetCentric this of XX% of moving we investors, the increased and content is currency two delivery throughout video, settlement network number that our To your result exits nearly and resolution, enters network. translations our world, choices peering access a does subscription an of our Almost both in customers, is are the our of increasing half rather were of both first outside reflects of We question, one sided service. of models. Only Cogent. This transit extraordinary improving than broadening second you U.S., through business. a purchase that of remind of from viewership content, the all our actually streaming or new utilization price traffic improving free items no fact of networks the linear

these business, internationalized. well disproportionate becoming and particular capture occurred share very Cogent the That should of things are All should nature now of to of more for the that, networks in first a of bode and in NetCentric number versus the advantage. carrier network, carrier, us a sustainable that any we and to footprint the global other connect the neutral due sheer give our access described us that U.S.

some bit this generally particularly people more grow on not time more because does time outside we think lockdowns same In a enjoy where the more the be a and [inaudible] pattern. able business. seasonal U.S. be typically I the spend usage go a not they are people Europe, because to are Now, good months video. sequential of normally seeing able to. is of throughout out and consuming normalized would year rapidly This It basis different, way weather less as based the a may as

X% company’s corporate best history second the I the You year-over-year we in was over plus of the either the XX% the years. know think best growth or about as and violations of XX business, peering that delivered net some rate. flows, averaged the ebbs underperforming We Megaupload and of since issues a of the with neutrality. were business ever but That loss has growth

Internet. by encouraged an to the commitment backdrop are administration’s current and the We open current regulatory

well bodes All about of foreseeable trends performing this the historic future. this for for at business

we we exhibit but year-over-year have single Now, XX business think good next really growth to XX% can NetCentric the may years, that X% or the quarters, over digit high rate. several five

churn of we Now around your in corporate to have rates. visibility; decline the final part one, the question seen

or more from full-time a for looking as a on and are trend still accommodate basis. companies has Offsetting come of work that us need opportunities day, connections to by for churn either the a to These connection been home. spoke-Xs in return of work that office, realize for return with and converted companies companies demonstrated positive and That of of the that have in the larger symmetric, the number now and the number hybrid market sequential its plan built here over grooming business been network number as [ph] office growth sizes average our force productivity the return some per be of XX% of from measured We force focused the improvement the larger will have pandemic to seen corporate world. by to has a corporate smaller, [ph] opportunities for they sold, pressure There America. in sales the return anticipate increase increased customers sales of and rate the in to but spoke-X’s locations. force corporate workforces offices, to sales pandemic. and some who economic long in North most continued expecting part activity Many are we the on increase level post of most term a as is that that in because older

Next question, please.

Operator

line is LightShed. with the of question The Walter next Piecyk from

Walter Piecyk

Dave. Hi,

the term look been you So go to in growth just back, the from quarters USF quarter? flat obviously returning June X% in the quarter? corporate, current let’s maintain it’s Can long as June do how or for more you sequentially? to come revenue trends of Would people the three last explain back Aside the the down.

David Schaeffer

decline The think five troughed for So actually sequentially will has this declined further. even for it improvement. churn decline indicates data consecutive now see months I commented. numbers we rate The will of month I continued and have as preliminary

enough and addition accommodate seen. activities, need a in to Northeast the Whether office you model. work new in on actually this quarter. on to that of will know In corporate is is the parts be an an number immediate except to yet many we’re based everywhere an hybrid to probably improve Toronto, seeing But the country, sales business aggregate second re-openings increase return basis in that believe we to positive sequential that and

Walter Piecyk

revenue So, but unclear deliver within KPIs right? flat it’s it’s your seeing some do that improving? that So if I understand business, the when can say just sequentially, you improving like

David Schaeffer

– I the early have it that tell. to correct. Will of quarter will visibility I the decline rate to do decline; – improve. now too in of have it’s a the visibility revenue is rate That’s fact do improve zero to

Sean Wallace

Walter, add I’ll insights. Dave’s into just

is is our that if products products; in we at three, think in the first on We from gig, was product a is mix GigE the meg product the look It’s we so corporate megabit product two that to and in Personally biggest of indeed over XXX which of XX% versus happened as look XXX. our what’s what discussed we every at XXXX, quarter to XXX interesting – XXX I our grew revenue all looked impact meg month gone X,XXX decline gigabit the that product. megabits down of of between churn second earlier, last we’ve that was year. going down. per

as churn is the and down declined, mentioned older impact at seen go in disconnecting net first who year. And our February of we the but also the down units months going in in Internet look that units since January we of March last increases five And saw so clients our we’ve row. and are a direct growth beginning in product. we access

a going we is see in green companies place, all of beginning in great tripled product, the they’re lower churn; of So environment; how bunch shoots our units. to in look but new over small VPN their operate product, growth the to business at XX-gig a which sort

about corporates to decisions capacity over typically that that. of and are sorts and to the XXXX suffered their they’re down, we’re going do to network churn what is all their and to see of make right are we improvements they’re company had do, means to going beginning that going increase we end So reconfigure beginning the

Walter Piecyk

just Got operating $XX just Can net year. your guess you obviously refresh When expenses why debt the to numbers, about cite is debt question can X.Xx just course XX, terms not goes ask booked depreciated, it, I that are is citing expenses thanks you’re million as was so, debt memory Sean. increased are And of does lease quick in and – like offset year – $XXX if year. over across the also that if our an of on it one leverage? you there there that which talking sheet? of I last you you’re into liabilities, covenants that the went And when balance of from the exclude this then QX kind the that million and up, factor in terms this

David Schaeffer

It’s our current X.XX net... is

Walter Piecyk

benefit include three-eighths. change takes EBITDA? I from the it is a up liabilities, then the includes was to kind million that million if actually, leverage of takes the Right, knew you year of puts to and that from a I’m from include operating trying so, accounting $XXX lease. operating I the when understand and lease EBITDA operating kind that lease on ago assume lease I to just of liabilities, of could me, the of accounting – – or but an benefits $XXX there operating million $XXX excuse any having

David Schaeffer

lease FASB year So changed if for last rules you the remember, accounting.

your classify lease You operating characterizations as not to future have liability. they used but an were of obligations, also types contingent those

As reclassified capital some saw a long-term O&M particularly on of some we IRUs. our result, as expenses leases, fiber contracts

Secondly, we saw...

Walter Piecyk

right? EBITDA, Which helps

David Schaeffer

to quarter. have does to future the you operating And was and classified then, now obligations add disclosed first balance now last seen that don’t we Which clearly help be year Sean, if also know those want increase of EBITDA, because in I as leases. any some the need accounting. And operating lease more

Walter Piecyk

leverage is do about of leverage, and in calculating year-over-year. numerator denominator? If – think on you just like we net trying just you’re the forget up look of you the include get terms kind even at those we’re your if guess I the I’m expenses current max I’m the In in put leases. four operating trying think you using it. to three-three, have think to Do I we’ve leverage? last you debt to if you quarters, is right the your you’re leverage, reached annualized, we this obviously any just know event, know – back kind of that however Like the was whether it’s quarter clear. excluding the peak

David Schaeffer

of This Yes, so a purely is there this accounting balance P&L change. gross-up. no sheet impact is

So there is no on ratios. impact our

Walter Piecyk

reduction growth quarters, cash CapEx flow over in going levels the levels And couple modest – EBITDA come given down to our in we quarter-on-quarter. that the next of marginally are given a and expect debt-to-EBITDA

David Schaeffer

million a I’d of $XX end the mentioned call, up level And cash $XXX.X this about proposed constant of in prior year repurchase as effective refinancing the interest our and anticipate will we going earlier that the with XXX expense. back – we debt, saving million of finally to debt when in

Walter Piecyk

Okay. thanks Sean. Thanks Dave,

David Schaeffer

Thanks.

Operator

is Your Oppenheimer. the question from of Tim Horan next line with

Tim Horan

give the guys. last and quarter total it, this have missed it? corporate I have Thanks customer if you might could connection you

David Schaeffer

must – think XX is the me you Yes, get let number. be... it exact It I

Sean Wallace

connections, asking? what you’re Corporate that is

Tim Horan

Yes.

Sean Wallace

So we had last XX,XXX end the at XX,XXX of at this we had of quarter. the end quarter,

David Schaeffer

of decrease a X%? So

Sean Wallace

X%.

Tim Horan

well, Okay, it why a it’s down, got – it. little churn I that kind of of churn weird quarters, declined. off-net over due and that to couple the was the But last guess

David Schaeffer

That is in correct. smaller And the connections. decline

possible. actually is of see it So have because growth actually unit churn, from while improve. revenue the we larger can uplift to the connections ARPU

on-net shift to and bits primarily also also we We get so of benefit offices, Off-net cash those connections with our more benefit being are secondary the off-net. than that mix get the flow.

Tim Horan

it. Got

ARPU, corporate the on be we’re would just slightly it would the so that been page, same year-over-year, So – have down right?

David Schaeffer

correct. is That

Tim Horan

climbing I to is that XXX I is mean, guess the would shifting from to number have if megs? so gigabit that how expect mix increased? I

Sean Wallace

you two going So on. have things

an seeing ARPU. in increase are you side on-net the On

rapidly. the On is off-net very it side, declining

David Schaeffer

open our all of Because tops [ph].

Sean Wallace

strategy. part of that’s the Indeed,

off-net year, our ARPU connections. lower in Our sort our on-net our much changes to – has X% declined on XX% per than faster of

Tim Horan

I mean stabilize what’s the know you I price some now and at that think? it. got guess decline average X% that it, point, will do what, And Got you connection like year, per

Sean Wallace

To off-net?

Tim Horan

Yes.

Sean Wallace

per become more is again, the one-gigabit Off-net year that’s competitive. that $X,XXX about we high digits single for can a part so and strategy more connection. And of in as declining

Tim Horan

Talk]. I a it’s there for little same I have hundred high. the cable dollars. mean guys seems out just of a quality, the mean are know mean but couple with I the you [Cross not I know $X,XXX connections. gigabit I

David Schaeffer

you like Talk] just a is co-opt. not XXX% companies services, delivered type of work-from-home does over off-net know on-net VPN difference. remember, our have [Cross when product fiber And there connection. they the are is, cable really one-gigabit that have but can no services surged only they connection, believe a and of that’s I employees, what realize and they not it support quickly that capacity, is it our

Tim Horan

Got it.

So who there out and I market the the you guess? are with point price what’s guess I $X,XXX, competing

David Schaeffer

back. go let’s So,

First all, in with sold of on-net. our business of conjunction is off-net most

customer our similar We gig a fiber-served XX% best get tool in in and likely $XXX customer. want with relationship from automated four is price different the an $XXX that most product range then nearly vendors. a kind term. develop location. service we says connection, gross database and the which off-net of So look an on to price get connection buildings XX one I contract of to depending the on-net to loop then The very We a double million that in margin at go offer the

rates win much Our in are off-net. lower

over viable in our delivered TDM on-net locations. products, dedicated, un an an is pipe, business, is or bundled inferior we’re a business but with not many relationship, naked selling a competing from services. And co-opt, probably us We’re not just customers it over why we selling again, and – are off-net buy and adjunct to rather the many that’s

Sean Wallace

just it’s simplicity. and Yes,

off-net, got are let’s four buy more it’s if and, are eight difficult that. you say and to much vendor on-net four to another a to So company reconfiguring, you’re go locations

blend use costs for vendor, circuit to of versus most circuit, one on-net off-net use vendors our multiple So having all i.e., you Cogent prefer corporates different the to circuits. our will versus when

Tim Horan

you. helpful, Very thank

know of know kind half been last You stable the relatively Lastly slow? you comps the second pretty this traffic year. difficult five it’s Dave, the just I could of overall expect do get here to I mean growth months, the in year-over-year

David Schaeffer

based. it’s question know that You usage it a because little to answer hard is

and the rest place. markets in still U.S., shutdowns are to the Israel, The in work stay people pretty some of a good of seeing U.K., there to behind. we’re Korea, required the returning re-openings, Singapore, are world lot where but is we there While much of is

So to think packages, elevated is going for phenomenon, term future. continue growth streaming early the and rates this at we’re also the the multiple we’re the figuring the for us I receiving it And in going streaming then long day. out, foreseeable that’s a of concurrent are adoption have which It bits they’re see more probably But of I to supply and actually traffic many streaming stages also think of actually packages linear the reduction ways. the still receivers chain people we have. how means of helps more the broadening who us charging two more are hours out helps to in going and packages paying

Tim Horan

Thanks much. very

David Schaeffer

thanks. Hey,

Operator

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

Nick Del Deo

some has customer front, adoption hard obviously base NetCentric all growing of to you’ve tie feel you drivers you for the the kind for like growth. call overseas time; pushing been to time; make it’s in been on Like some for broadening The so the changes they’ve First, has been know been sense, out while, some stunning. has time. out the OTT for I along pretty but a there improvement chugging been

think the such that’s on that’s anything down even little growth inflection? there different of an impact traffic growth a quarter now a and bit. the I ticked pace having else drove this Is such dramatic

David Schaeffer

Okay.

a we it bit traffic take live. as are this normally tends several sequential So I’ve had that so of But to first tend want fully thanking chance are of bit. of you to you able a that the really thank to per right long in all, do NetCentric and for quarters would Cogent But manifest slightly you I be get that. know been know, have effectively time to year. These I trends. to we’ll lumpy. not you for by trends you growth higher these to down tick revenue start a continuations and think themselves, participating did term The business

up. broader went price universe. slightly that two ways: actually of of see sold the a a average You That’s buyer benefits new One, reflection

is more Cogent access largest U.S., We the of the the know the in United outside also fact transit are U.S., were the growth three rather networks customers helped the stronger. coming peers. we are are you of where access In by States that not network but

international those from from for of that globally, not buy are and markets, but buy is peers. or us they customers, of they of buy all They anywhere. in Asian us, our true our Now some peers three European the converse not us from transit do companies

with been also the Northeast, has than of U.S. most It back Probably and Continental to to So this has long reopening. impacting is most exception think in worse the it phenomena of be Europe the about the COVID. a I the internationalization go, been way appears to of U.S. in it has question really

Sean Wallace

I’d dare would may just more – me, growth add, I is Nick, with overseas. but I there say disagree Dave think clearly

as They has XX about indicating from slow that Max, are start to one a markets, is more up not vendor countries. find they really HBO would but which steam. begin are Dave a a XX mentioned, United – outside but Cogent customer going now a in they much we’re are States, theoretically You they better in and that market to pick talk had much given the

in We’re these have Dave all CNDC’s, access networks. we out, these and as all points

as and outsized I international benefited months, portion goes from happened streaming that as competitors. an versus we the think last over several So

Nick Del Deo

moves Okay, a the takes would should on okay. one from in know and segment. up we you space looking mechanics business last of thinking starts know a a corporate and What just about think in goes a how you And of look how from signs take one you lease maybe for typically to and Cogent for signs it tenant DIA. then business like? the potential Kind the building – customer, a a time the typically and space does a cycle that when about

David Schaeffer

much the anywhere to in event. will that’s forcing they into year that’s until month extensive to decision, best an make a as a suite there’s they new So, build-out. a one for to news. advance as the take are moving if a a They spec tenant, Typically out look intend pre-built there’s have company if occupancy from

because on leases more that is been landlords for to I to improve suites, the think from the new shorter willing in to to actual shortening. decision think build spec of order tend window be many duration in average and occupancy move have I

factors: much customer key and portion an the belief their I they that tenant work think as the existing will for some think three workforce today. And impacting the is there important what continue think back a Cogent I of from the office are Cogent more bringing employees home. decision the One, about to not there though, cycle are is they of trend to

out access enough be network. got that going in computing deploying of VPN top reevaluate that and storage more applications the and more requirement. All I’ve sure off-prem I’m be companies on to and have of the make off-prem. Two, are the my Internet will and data and to need drivers bandwidth both these I Layer transition. therefore their more So more

as the by have So happening necessarily MPLS as see in a new of was a architecture VPN’s we’ve opposed pandemic MPLS. network a provided lifeline were to pandemic. because talked dominated degradation long about before kind and That Actually been a providers, making many the wait decision. way, mode times, customers those to in

was that coming Now the and question they’re asked, one this my that going like very to to look new first of Michael what’s and the is to strong office-to-office back that questions positive. the office, is connectivity a

while we’ll the customers to not tenants customers new opportunity new win bigger the architecture. or existing in, a So Cogent network office, are coming existing is those for when customers returning us needing who

Nick Del Deo

Dave, Sean. Okay, got it. thanks Thanks

Operator

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

James Breen

side question. taking the here opportunity Dave, real just know you guys estate around on companies to You downsize have in for your the space, as footprint? where for when start happen. landlord any an opportunity our up Thanks to the as take discussions in go average tenants tends about past XX best you’ve less selling and changes it starts to the talked had as

that. on thoughts Thanks. your give Just

David Schaeffer

Yes, have reached MTOB. roughly so out owners our XXX institutional we to of

owned about for building we people One, is and to things: have attract tenant with buildings their the what from space. X,XXX single largest the different a high-quality three our estate need owner, maybe bandwidth organizations as to to them is heard Brookfield XXX increased a as by team small real amenity So engaged

for York building that that that were of some that serve construct being put another doing agreement can give to are of free that I right for We a of in not opposed into the a actually even a may handful Cogent’s agreement we you even We’ll as exactly think now building to you seen our may the say, have the up. you license of we’ve met building. buildings repositioned, have criteria. landlords bill So part come us to to pay lot. and license New

by, a and love smaller are access internet XX know know speed XX quickly tenants. lease. spec every The for is the second them. those big Martindale, top get, attract increasing landlords they the law thing we’re $XXX are landlord is to having specs, news are XX-year to to come the of What smaller the firm you foot The leases hard high for would tenants moving there to and attractive. markets Those in, of immediately Hubbell seeing are designed you come or kind come landlords markets spending down, hoping good so building available tenants a is that’s and suites, out very amount

happened used of that’s in the thing there’s third is a a building actually amenities. for that shared proportion decrease been The has

can is means a internet space, was of how care could they war of there paying room there’s a in, where traditional put of leasing for really bit space. available a about in So to how center we’re I all my a fancy shared care now more for I put seeing going much that beer gym footage say, how tenants. a was free square in, back on that landlords by a available they and don’t go party rent purchasing and of they people about conference tenants, more model and

all of bode things think I well So our addressable these increase to total market.

James Breen

Great, thanks.

David Schaeffer

Okay, thanks Jim.

Operator

next of from line Brennan with is question Your the Nispel KeyBanc.

Evan Young

Young it’s for on Brandon. Evan guys, Hey

growing domestic settling in and do the NetCentric Thanks. of You’re international the mix few average you affect see price showing revenue a bit? per international Does trend years? demand next international kind more between in the the demand. Where

David Schaeffer

two really there trends. So different are very

pretty U.S.-based. other but markets, services the all streaming content be of The there’s there much Bollywood, some first phenomenon. an tends to one Yes, production virtually are is are major American

reflected may a on revenue will they be latency, us the order and purchase global to priced Now are internationally reduce they domestically both agreement. in from accordingly, purchase but and

The behind in to second The for that a will the lags has lot look declined X% between we world get we decline Europe U.S. is of the eventually of world’s is Eventually example, lags multi we developed of this of from global U.S., in That in receiving internet traffic, the thing XX adoption XX%. less XX% Internet positive. looks access Korea and model because network. at know years population streaming even what the as most traffic that’s That’s as somewhere the things and broadband. percentage U.S. are. at infrastructure the for because a Everybody teledensity I a to infrastructure. trend, of world behind decade and for X%, in and poor the for

getting incentives There still the the significant the in a government France, being U.K. premise. For ubiquity fiber two in major speed the prem-builds a such of the and most U.S. seeing of in national much overbuild, very effort are we prices part, more as Netherlands. rest and to the than Germany examples higher in build Openreach, in by strong is – major the to there promulgated Elliot fiber is higher every are world effort

over So international represent our a business. I percentage think larger larger NetCentric will time of and

it’s to think exact I impossible the predict mix out. four or years three

Evan Young

Great! Thanks guys.

David Schaeffer

thanks. Hey,

Operator

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

Frank Louthan

more in larger off-net where business Great, where the Dave, that some for about but business your lives. they’re wireless maybe to some targeting anyway – It seems some backup off-net services? the fixed are for concerned carriers, this of claims, of suburban-type your type areas, will one, of thanks. of some generally guess particularly be the like I answer can some your you Alright probably

thoughts your us that. give on Just

David Schaeffer

traffic ultimately they More is Cogent. prem times Frank, whether fixed as for that a access the for bodes to internationally, positive brings to stated the fiber or anything we’ve our wireless, well be many So business. or technologies, more Internet domestically

off-net less Now, more business per-unit as services services. someone from business. and are or our reliable though our fixed is We that is an anywhere is wireless There admit adjunct off-net no they’re cost-effective expensive fiber even reliable, our on-net corporate on basis a to as delivered that nearly fully on-net service our over else.

fixed a resell to access refused that is very There per wireless the that use of will high have bit. product. We segment because of market cost the

just material because whether to be to broadband I’m or bit traffic very going high. not is cost growth, skeptical that’s per Now so the

effort areas alternative. but that such It had it’s concerted subscribers, Just end day world in, the and constraint, never very ambitious, lots cost-justified will closed will the that very, digital expensive we’ve it path divide the new and the that is fixed that what seeing venture; at per as generate a and you space as is unserviceable wireless finally, the to [inaudible] a we’re fiber if Starlink, cannot the you of fiber fiber white but society. a very those know is terrestrial of ventures the a compete questions bit to satellite be white know and governments there around be is realize around work needs of are infrastructure U.S. necessary in

Frank Louthan

growth what up just relative the do for Right, to for year? year? the did of your the end is Where expect great. quickly, headcount to outlook where at And you Thanks. beginning you sales

David Schaeffer

in remains at stated in rolling is the challenges year, X% up we laps. lagging. So Part a to our lag sales force per to are XX% our grow a the at remote that so managing the goal on basis, our managing force right X% total now of sales year-over-year and pandemic underperforming

those we think to place to productivity have systems sales in our able put be that’s why productivity I increasing. monitor and is force rep

the for XX% track and U.K. get back to North are least should by summer back X% onboarding our us that and hiring We the return us America growth. program allow total a to more offices, to should end on reaccelerate our force that and get and traditional of for to in at a training hoping that sales

Frank Louthan

Alright, Thanks great. Dave.

Operator

the Your of next Angela America. Bank from question is Zhao line of with

Angela Zhao

question. Funk This is on Angela at Hi! Mike Thank you BoA. for for taking my

I talk So could enterprise earlier if on remainder going the call focused projected new And Thanks. Could XXXX? about about being talked overall here? NetCentric may, on you for can margin expand the from And forward connections of you the the about the force two margins. in sales progression growth in that? you you talk

David Schaeffer

In EBITDA. our $X.XX XX% and of carries Yes, only business, and on-net, are we margin. $X add let contribution on-net, it’s on with XXX% me margin are gross When of over XX% NetCentric, XX% start off. XX% of In Corporate so sales roughly it off.

margin gross NetCentric well So growth expansion. the increase EBITDA for margin and expansion in bodes

to side operating expansion that, half guided roughly the but per margin gross offset some the half from with benefit a pandemic improvement. coming actually margins and coming have increased of EBITDA. EBITDA margin expansion We multiyear achieved the of most gross point was from the We on SG&A basis year XXX the in and and costs of

As be of at margins plateau the size able factors market. the think we a to addressable points XX% say basis to on until EBITDA about we our should normalize those we around year return and based office, to should XXX continue

enterprise increase the connection we to penetration the have. we continue Now question, to buildings in to expect that on-net the

an average sold the to X.X customers for expect with connection we’ll VPN. of per second of half either a that customer, connections also We or taking return for backup

that also be secondary of in all only the metropolitan believe those offices same not market. will We the shuttered,

To call So coming the down. and pressure continue Sean think or as input on-net Horan’s and connections, Telco off-net suburban as expect ARPU off-net infrastructure a earlier, for unit overbuild mirror Tim for about loops, fiber those those XX% our kind have volume and long of been has mentioned facilities. loops cable annual our cost the should long-term XX%, growth put continue to as it But we’ve one-gigabit that we which result, on reduction grower XX% those cost a we our that to question business, been a of seen averages. in term, X%

XX% that This business of or indicates or have our that now systems fiber addressable vertical to expanded XX has market. off-net know employees more have more greatly premises suppliers You one them. all

Angela Zhao

much. Thank you so

David Schaeffer

Okay, thanks.

Operator

the Capital is RBC of question Markets. next Bora line Your from Lee with

Bora Lee

as perhaps on the model. that can Can talk as of and path the it takes traffic by call. is the shutdowns that COVID curve, network touched Europe You the a about reopening where and I’m to aspects to the you and saw this that on any there’s the just extent the during U.S. in patterns trying you you in to U.S. relates quantification provide? understand

David Schaeffer

sure Bora. Yes,

points. of couple a So

you our all, traffic know is of XX% of First our NetCentric from business.

side, corporate On we I that XX% about what saw, talked the first.

asymmetric, much opposed a business just As sending to people and bids a are connection sitting information the and pulling more down in normal when the be going in in the home, a as they’re the up. and few actually employees more request work time than needed to be office, of out out symmetric in bandwidth from can

to I important. a what going corporate in is become businesses, model, increasingly to that appears for think is which hybrid be evolving symmetry

That content and consumer, XX% data Now, to distributed comes the traffic that in is to residential going is from, where of consumer. content centers.

greater gives direct wants That power as have as connectivity access competitive X,XXX and content lower be of high needs to to to us latency, advantage. which space have closer we but the to to – over then to that. utilization justify We customer latent We a have possible; need them the many expense. also networks have

our Highlex several of whether over cable the buying competitive customers. as operators as North America, [ph] independent us, our goes our in Telco’s, more of or most If very in they PTTs small peers pivot regional from in traffic the international operators most relatively Now Telco’s; than players, do to have thousands we the carriers. we many the of exiting of have customers; world be to small. We cable large a customer U.S. but base CLEX, of of percentage and market, very rather most rural the are the rural areas they

the megabit. both effective internationally, where and So on our improved sides much we higher price internationalization this have increased paid a U.S., of has per percentage versus traffic we’re getting

Bora Lee

I think sales an tenure you indicator just past of terms of said headcount? given provide you’ve the – in And force an Great! as the in in reps, the sales how number updated moving pieces efficient Can is the is. all

David Schaeffer

gone the which in six point We’ve at rep months, where months Actually Most force pandemic. about has throughout sales Cogent. sales peaks. of just increased from tenure Yes. the actually months the of an the XX around to productivity turnover XX force of occurs our is our slightly tenure optimal average first life rep’s

funnels. in are happens the not training, and then what large may number reps funnel first five are the or include seen can that and greatest we build but you in have that’s the is way that succeed business. there’s the And KPIs the struggle six building activity pandemic no of The and spoke-X’s hit to train to on expected a being is next significant in to out quota, environment, first require for five month where inadequate, of months is customer reps if and of number those a adequate months and your onboarding then really managed phone, do they then funnel of

Bora Lee

Okay, when advantage like force is so it if well to you’re positioned reasonably take actually the things sounds well – and reopen? sales

David Schaeffer

always question, back I so. can I better, grow capture we force as sales believe Frank’s a feel come to we in share we but to are market the to the to and we mean do looking position office. absolutely are people

Bora Lee

peer hoping Okay, your great, just and just It you you’ve on color connect you’re one little last question. provide looks seen a third that local like customer Can interest since service, launched in you the to service what achieve the quarter. launch? the and

David Schaeffer

Sure.

best the public a is to to firm internet. that for are way networks connect we So transit believer the smaller

use is where That no distant has the single of very fixed that port exchange there a been as market and in be of We well advantage exchanges received. commitment. replicated XX% sensitivity, and markets. such built multiple may [inaudible]. is assets there our unique about took to global chosen However, there They is no had location

XXXs ports We to of sold networks. XXXs of have

where that one require provides to provider. and of networks is that your the there cheaper to But Now it’s scalability. wants of our transit purchase of our that feature of when easier it still traffic becomes more the exchange direct entering successful. and vast think has use; been exchange traffic It’s the an very with to upstream control exchange you this the I another, it does exchange majority transit. agree through XX% goes The affirmatively obligation market

and you of You hundreds know know the connect to adoption effect exchange network think I there a do is the very transit early has customers by but business them. have the of our chosen we’re to and a year XX start, head encouraged who

Bora Lee

Thanks, Great. Dave.

David Schaeffer

Okay.

Operator

will At the host to are any closing for I no back the turn further this time over there remarks. questions. call

David Schaeffer

work know to trying needed I just markets did activity our long. script, to calls have that capital we to these did we the but really thank like touch We go on. everyone. on shorten I

you everyone. your in stay want support Bye-bye. I and safe touch and stay and thank for thank again, So to Please well.

Operator

conference you Ladies your Thank a wonderful and have gentlemen, today’s this call. and for day. participation concludes

may all disconnect. You

Cogent Communications (CCOI) 1 May 212021 Q1 Earnings call transcript