CCOI - Earnings call transcript Q4 2024 | Cogent Communications Holdings, Inc.

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Operator

Good morning and welcome to the Cogent Communications Holdings Fourth Quarter and Full Year 2024 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 at Cogent's website when it becomes available. Cogent's summary of financial and operational results attached to its press release can be downloaded from the Cogent's website. I would now like to turn the call over to Mr. Dave Schaeffer, Chairman and Chief Executive Officer of Cogent Communications Holdings.

David Schaeffer

morning good and you, to everyone. Thank our of our to fourth quarter summary and call earnings full XXXX Welcome year results. XXXX Schaeffer, Dave Cogent's Executive Officer. I'm Chief And our earnings Weed, release. is you've with morning's press a Chief had review Financial Officer. Hopefully me Tad to chance this on our call

hopefully business. release press which number in understanding reported historical of Our helpful consistently trends a metrics, includes are in our

a Cogent quarter and business year. had good combined Our good a

compared for the for quarter was $XXX,XXX,XXX and XXXX. million, year billion XXXX revenue $XXX.X full $X year total to full for Our

Our EBITDA, quarter, full the XXXX as adjusted, million million. for to was full and the $XX.X year compared $XXX.X for $XXX.X of XXXX million year

XXX adjusted, our XX.X%. basis $X for as increased quarter million. EBITDA, EBITDA, sequentially margin And adjusted, by by points Our as to the sequentially increased

at for $X previous year. revenues the or increase XXX% sequentially grew quarter over XX.X%, of wavelength the an million, Our

over was Our XXX% a wavelength for increase XXXX, revenue full year $XX.X XXXX. million

for million, by revenue sequentially the increased represents leasing year-over-year. increase that IPvX XX.X% and Our quarter $XX.X to XX.X% a

Our year XX.X% XXXX, million year. an for IPvX full of the previous over $XX.X increase revenue leasing was

traffic in XX% basis. flat, and quarter on a Our network quarterly was year-over-year the essentially up

for XXXX XX% XXXX. grew Our full over network by the traffic year

significant the Sprint We continuing are of cost process savings integration to assets. in the realize from of the

We savings. have $XXX targeted realized annual over XX% million in of our

greater savings projected $XXX the than million be through are initially will Our expected and to achieved continue be XXXX targeted. to

quarter for XXXX. and Our of or by decreased from it million SG&A $XX.X the X.X% or by XX.X% from $X.X -- quarter previous decreased million another the quarter, by QX

XX.X% to in -- decreased from a QX quarter Our percentage SG&A as revenues this XX.X% of of XXXX. XX.X%

million the or quarter ended the goods and by and of third X% quarter of million year on fourth of or cash the balance cash sold XXXX. We in Our $XX.X million our of $XXX.X with decreased equivalents sheet. the XXXX decreased by from quarter XX.X% $X.X cost from

and quarter per per rep fourth previous in per month in rep was the month X the X.X force productivity units units sales quarter. rep per Our

Sprint headcount employees of acquisition, Sprint reps these sales the XXX in a a connection former XXXX. hired employee This with employees XXX remain May base. Cogent. we Our At reduction year-end, the XX% of total and of productivity with employed represents in in

for existing our to transport We acquisition fiber-optic time provisioning we quarter, the target our to with able assets, fact customers. At of wavelength on wavelength a transport on in provisioning Now, in America. sales offering approximately will customers, XX locations we include wavelength sites comment to But as capability well of connection optical Sprint our the business, is optical XX new this by as and to weeks. X exceeded services the both North point, product of ultimately our connectivity services or XXX expanded network it end This throughout at our to around days. reduce be with and had of days. at XXX times year-end network that

out, go and sales orders and We funnel. our installed backlog, some dropped we funnel X,XXX orders those our had in sold of locations. and through in at we waves And as have actually existing have XXX quarter-end, still them wavelength

of carrier-neutral centers, Our which Sprint are Sprint acquired those XXX facilities XXX power. and our data materially At There year-end, our have to Cogent data we center XXX network acquisition footprint. expanded X,XXX added center reconfigured have data megawatts footprint.

power. and facilities. support XX can These now are former the centers. of XX megawatts We data typically and additional in are Cogent smaller in facilities converted their these some smaller aggregate, footprint about have data edge centers Sprint XX racks, also have edge of an of

with footprint have for XXX of data XXX we Cogent available total, in megawatts So customers. centers a combined

acquired Sprint with We centers Cogent and they redundant ] facilities, leased are our data are legacy facilities. where simple some decommissioning in the [ process of honestly

approved Directors, quarterly raising Board capabilities, generating investment in consecutive XXth in $X.XX sequential as once on $X.XXX reflects as of by growth well represents growth again quarterly another which flow our per a increase about to Our our opportunities, from strong sequentially $X.XXX and dividend of flow our dividend share cash the cash our our share. dividend This our the continued share per X.X%. rate increase for quarterly a quarter, the in and dividend

by with Now to that of the X% Sprint anticipate annual and legacy margins we basis growth EBITDA, per Cogent adjusted, year. points X% business expanding our is about combined XXX as business,

or Our to revenue targets designed and not be guidance. EBITDA be multi-year and annual quarterly guidance are to specific are designed

ratio $XXX million leverage of and and T-Mobile received assets. EBITDA, agreement as with timing sequencing the our these the of Our of payments adjusted, purchase IP are impacted by our as under part

Now, I'd our follow harbor to operating Tad then summary and to on performance, additional language, I'll questions answers. safe comments, to some provide like it floor the then over up open for some and turn detail our read with we'll and

Thaddeus Weed

are number earnings wavelength Cogent statements will to financial earnings that that GAAP are made our or forward-looking upon cogentco.com. We that current reconciled revenues conference and filings results to which results upon have obligation non-GAAP uncertainties, more and during the X forward-looking analyze on and corresponding our belief in on revise is historical includes statements This we type, statements enterprise customers. And differ off-net, you to call, undertakes be other actual the expectations. our cause risks are everyone. are posted customer based information measures forward-looking and corporate our differ. facts may not materially. customer could for also morning, and Please types: forward-looking may NetCentric, statements. good to factors that we our services non-core. our SEC analyze at statements. If releases revenues this measurement network no find use this these website based call upon update subject type, we connection and on-net, of to intent, a refer Dave, call and actual you, based These and all on our Thank These

million. for Our and was XX.X% corporate business our $XXX.X of revenues represented that the quarter,

year-over-year off-net the XX,XXX and in decreased These to Our sequentially elimination XX.X% decreases network corporate due of quarterly and customer by non-core corporate connections X.X%. grooming corporate our on We connections are products. had customer revenue by year-end. of our at primarily continued the revenue low-margin

business sales from and Our benefit artificial intelligence, was in streaming $XX.X million the and wavelength to traffic, continues the growth related continued to video activity NetCentric for quarter.

Our NetCentric quarter, represented revenues which our for year-over-year an X.X% of of of the business increase XX.X% and sequential increase X.X%. a was

by our revenue connections at network NetCentric $X.X our on NetCentric quarterly with NetCentric declined customer $X.X under and had revenue Our year-over-year, million, T-Mobile negatively XX,XXX sequentially million We our agreement by declined results. service commercial year-end. impacting

million. the connections customer was of network. of XX,XXX $XX.X on our the enterprise quarter our and We for had Our enterprise business represented XX.X% at end year revenues the

primarily or serve customers million and our enterprise Our quarterly X,XXX revenue revenue: year-over-year our by in non-core in total and due network sequentially reduction by enterprise a to XX.X% on-net on-net low-margin on-net revenues. On buildings. we revenues decreased $X.X X.X%, type, by

in connections continue to data select larger carrier-neutral We in XX multi-tenant centers connections selling gigabit office XXX connections succeed buildings. selling gigabit and and gigabit XXX in

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

T-Mobile; the items: by the on-net acquisition ] negatively terminated. component sequential Our acquired million customer a decline. low-margin that the [ mentioned of a revenue on-net was resale Sprint FX with $X services decline sequentially; That $X.X commercial the revenue million $X.X from the revenue million negative agreement, were in of essentially in of X we we impacted that last results and and quarter

connections on-net customer XX,XXX Our were year-end. at

increase due revenue a sequential to X.X%. of million increase off-net on quarter, Sprint X.X% was primarily The of Our the a is $XXX.X for former off-net margins in and decrease year-over-year sequential services. increase our

by impacted customers our contracts. off-net results to continued Our termination grooming migration also low-margin off-net off-net and of and revenue the on-net are certain of

end year. Our off-net customer of connections at were XX,XXX the the

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

customer wavelength of X,XXX the at Our end the were connections year.

addresses very $XX XX.X% We quarter. business good leasing quarter XX.X% end to million our of IPvX million year-over-year and from a and increased year, quarter. leasing the our and for quarter another IPvX IPvX of Our $XX.X by the productive had last revenue at the were

decrease, Lastly, of non-core a the was to our $X.X non-core $X.X $X.X for to again, decrease year-over-year million, million and these decision life of end was quarter. due That products. million revenue a

comments Some on pricing.

to decreased by X% our trends. with XX% year-over-year, consistent per base historical and Our by installed average megabit decreased price for sequentially $X.XX

which per new our contracts for megabit price year-over-year. increase customer an $X.XX, actually of increase average was was Our and XX% sequentially XX%

ARPU sequentially X.X% on-net decreased to from by our -- ARPU $XXX $XXX. Our

increased by increased Our off-net our $X,XXX, ARPU sequentially X% $X,XXX demonstrating from to margins.

this wavelength Our compared by $X,XXX quarter. ARPU and increased to was X.X% last sequentially $X,XXX quarter

address was $X.XX the quarter. IPvX the this a per XX% sold $X.XX address Our base revenue of the from year. address of beginning average at per increase That per average is

been increasing. have prices So

churn rates relatively Our are stable.

classic: was rate to compared And last to rate same EBITDA, monthly quarter. Comments each operations X.X% quarter. reconcile on-net from Our X.X% earnings EBITDA in the churn unit quarter monthly churn our quarterly our we was releases. this on unit flow EBITDA our press X.X% as of off-net last quarter, our cash this

EBITDA EBITDA Our sequentially to by XXX $X increased million, quarter our the XX.X%. margin and increased for basis points by

we as Sprint period adjustment no a $XXX.X adjusted, for any for quarter EBITDA EBITDA purchase if as payments our under costs T-Mobile. and acquisition. as of EBITDA, agreement full IP incurred incurred when was Sprint Transit the costs our XXXX, year, and Sprint million our our during accounting costs There XX.X%. was were second the after and the with ended adjusted: For the margin acquisition classified EBITDA, adjusted reminder, as acquisition the X-year period is

Our our million, points. was of was a XX.X%. XXX margin EBITDA, That's the and adjusted, for basis as increase $XX.X quarter sequential

million, our monthly have Agreement, this Services as paid $XX year and Transit and with EBITDA, adjusted, XX.X%. In million Our IP quarter, margin the full quarter. time. $XXX.X as payments in the on same last All we was was payments accordance totaling received been for the the X

X $XX.X and XXXX For amount payments streams total are XX, of full million equal different. total included the million, lease be $XX.X X $XX XX additional payment The will over XXXX, the payments in $X.X $XXX.X but each of and obligations full are November coincidentally, X assumed year same year we to that at for T-Mobile. from payments months payments XX each, and payments The additional $X.X of related the at same, monthly received total different. and million. There There were and February An $XXX.X the to the total payments we continue million, payments to XXXX XXXX. of these included payments will payments of for further until XXXX. to November so will monthly million payments agreement were the closing, under was X 'XX purchase least for with payments receive million paid total million but XXXX, we streams

related outside XX% of Oceanic, to Canada, quarter and revenues. last earned with relatively revenue our about operations. that the comments: X% currency XX% Europe of was African was in and consistent our States our is American Mexico, Foreign and South United of

Our continue and If quarter would about far quarterly $X the million. Canadian dollar on to is quarterly exchange USD year-over-year FX the those average $X.X sequential and be million, negative revenues impact the so be and at average current revenues rates conversion level, euro negative rate this is for also would $X.XX. about $X.XX, and rate

and customer revenue concentrated. is base Our not highly

of this revenues million $XX.X Our was about top year. XX% from full was XX.X% CapEx, XX this our the million customers quarter. On CapEx for quarter, was down quarter. and was $XXX our That last our CapEx

into data of into the former former continuing legacy and unified Cogent converting Sprint Cogent We network integration centers. sites and network network switch are network Sprint our one

our of program center obligations: leases. XXXX level due will We dark and our of last require half This of for expanded capital are first obligations the to to our demand for for then the half power the have IRU accelerated conversion tail spending be high and on that XXXX will similar availability. fiber lease data off. Comments IRU finance program our long-term

Our $XXX.X obligations year. the IRU the end at million finance of lease were

the different $XX.X and tied XXX and $XX.X IPvX have was our requirements a and of our million million year-end, fiber. At tied million cash dark was suppliers swap that of of cash $XXX.X cash is diverse notes. equivalents under suppliers was restricted, of restricted very We set $X.X to restricted contracts and our million. to and cash with

ratios. on comments debt and debt Some

par, debt was leases, total our at including and billion. gross net debt billion was Our $X at finance $X.X year-end,

adjusted, as X.XX. Our and total months debt net was was gross debt to X.XX, EBITDA, the last XX ratio

note was secured Our X.XX. our leverage X.XX. and calculated X.XX, under ratio indentures note the And was under ratio coverage ratio as our was fixed indentures our

from X.X% XXXX $XXX.X Our increased EBITDA, fourth quarter $XXX.X or by adjusted, as sequentially annualized million million. to million $XX

Some comments on the swap.

rate rate are variable reminder, interest the interest for that a million to an be value term. with million. the interest quarter obligation in million party with fair The fixed $X.X U.S. swap to a As a our obligation rate XXXX required to interest of fair value agreement modifies remaining notes we agreement on decreased swap Changes $XX.X based SOFR our are $XXX the under the swap of last by GAAP. our to expense from rate classified

and comments some bad days on Lastly, sales debt outstanding.

million significantly Our days quarter improved of for the XX our quarter. end our year-end the historical and -- substantially ] versus is expense and was bad was XXXX, our at which of And revenues debt only $X.X at and with days of million, was sales $X.X XX the full X% days [ only revenues results. also and for year consistent only third X.X% improved

call in to collections our for As recognize Cogent always, billing and serving I a turn back team that, the I worldwide our want to with and Dave. fantastic thank customers. And members job doing will

David Schaeffer

of base network, strengths our our force. sales Thanks, couple Tad. in and highlight like a customer I'd our to

year-over-year business. legacy in We to experience continue NetCentric significant our traffic growth

direct At connected artificial video, intelligence to The XXX our megawatts. customers our activities X,XXX traffic. had enables their smaller reduce carrier-neutral of XXX better, of breadth with coverage the them data additional year-end, to streaming serve data own and us of power optimize our and NetCentric beneficiaries edge help centers Cogent's networks data are capacity latency. an XX centers, of of available we third-party network and over-the-top We centers this

several widen We wavelength sell network year-end we reduced At our carrier-neutral of over provisioning continue the to carrier-neutral our able year-end, to of in times. reps. lead their project service managing with transit to to our were, this we for different to wave-enabled. purchasing expect year year-end, centers market on data and these systems, XXX fact, were as focused sales for of surpassed with XXX and of This our XXX next this carrier-neutral adding networks. We our we autonomous facilities Cogent to productivity, customers data in directly or X,XXX years. out networks these XX X,XXX and underperforming centers being committed At networks we representing were these connected force from in remain peers, are target

being a of professionals sales rep in sales the X.X% These XXX our month. X.X% the corporate services per districts had located At Our X about peak market, midsized our buildings of had office over new market. transit focused month. down It's height opportunities force focused below services, XXX summary, sell customer focused comprising year-end, and on of force enterprise and that IP major of XX individuals on wavelength the average square That We rentable business market turnover space. with X% to segment. In in base still the very turnover is in feet and the individuals of we're able small NetCentric the we both the cities. on optimistic professionals and multi-tenant of our at position in billion from pandemic. per the quarter was office on-net customers central X,XXX serve

around optical about able that the the enterprise and and world. in opportunity and the our continued to on-net transport to We're services wavelength are business off-net been progress geographically customers we provision. continuing have provide services We profitable to enthusiastic

a have over significant and funnel We X,XXX backlog of opportunities.

counterparties that the down more it's them. diligently network ability the customer cost with look of to reduced wavelength accelerate and various acquired. will slightly While our we and We center many due are discussion grooming months. for hope provisioning those Sprint the coverage integration either we could we of into reductions the believe been something or our and been monetize fiber the of year we with the our rapid convert additional next to opportunities cycles, result parts we we We -- excess this the inventory, on of dark installed the to funnel to do on several a business. space in leases address bases a Many the these quarter, to data digitally for currently our position have have provisioning year forward from continuing in IPvX orders. We're footprint continue that and working as announce now multiple funnel provision unleased next so. over to and And sales not a over funnel. direct cycles, over of wholesale basis, hopefully, as with ubiquitous we'll long-term a sites. We're is But the multiple be or in opportunities previous

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

Operator

And first Michael [Operator Instructions] line your from question of comes Citi. the Rollins with

Michael Rollins

you And terms Dave, for to of each us getting the terms terms start you revenues? of enterprise X-year customer just X-year, where curious these opportunity of now years, can reporting the you're and or verticals whether acquired grow off, those it's update are segments X-year of -- NetCentric, look through coming that holistically each just in us if these some what's over at a an view? the give corporate, in of legacy segments of to maybe in

David Schaeffer

Sure, Mike. Yes.

are those think I fair questions.

Sprint, So when of customers. customers, enterprise and only acquired we we a acquired NetCentric corporate handful both

business be that virtually NetCentric NetCentric. continues of grow, IPvX actually approximately NetCentric the since all Our our wavelength growth accelerate will and is of rate sales will to and to XX% leasing

So anticipate rate are to and performs those growing meaningfully to today, are that business the add growth both and within underlying able wavelength the segment, customers. we revenue we to we IP NetCentric as accelerate

of non-fiber-delivered non-core our desirable in Sprint, less grooming purchasing guidance in from corporate and have who to that purchasing the ] have our expect why And acquired we we bandwidth, continue. of customers services, a those It corporate of were terms margins For [ growth segment, our off-net very exceeded services. were process we been number services. is rate, low

business corporate in growth VPLS. I segment of has based think district continuing from and to have that exposed purchase VPN turned we services that see occupancy, that markets DIA heavily been meaning office quarters actually in positive in absorption, rates through Those that. a the vacancy since improvements couple Many then negative country. the seeing we're net still been will across predominantly getting our exercise markets we're on central corporate away is a most absorption positive net just pandemic, are across customers to positive and had It and probably segment. and increases seeing grooming now,

grooming, couple result of beginning probably corporate will more grow. stable then see and a to quarters as growth, a of So, the negative we

X the segment, primary Most Cogent, MPLS. these and access enterprise of global are Internet off-net. of they the these On from locations products, take customers services based VPNs take on majority and

for allowed us support a enterprise Our win increase actually brand-new at actually connections to going handful today that. but decade to that decision handful MPLS have Cogent has accounts of they least with will forward have indicated a of a only

Cogent enter effectively port in provider were previously that we a is reselling revenue licensed, resell customer So are XXXX, continue is, to to service those. Sprint for some the sub-reselling, and they worked contract last licensed where enterprise and will bifurcating and into structure, a operations are the grooming corporate. then that early the longer we were resale main had into sell country the with with but than as international construct. the to anticipate reason reduction the direct probably in through are where uncomfortable requiring we the loop that And where we or to legal will customer, we local not we

that. to Sprint XXX these we around provide service a require that Cogent result, we In customers world. in as acquired the the but had loop. over always the off-net countries the their purchase own as countries, differential, -- to and are remind countries circuits XX investors, we're enterprise in in migrating to non-licensed structure, customer used licensed So, we

of top modest to a then probably. segment, than enterprise probably a X% flat annual not do In we growth. year more anticipate line decline, So of that about kind continued very growth

Operator

the comes of question from with next JPMorgan. Petti your Sebastiano And line

Sebastiano Petti

can in us to to CapEx costs perhaps you think a how connection the about in from you I perspective? enabling but the to opportunity Just waves, regards installs, from the additional investment a just And target, force remind about there, but part related from so should it near-term we waves perhaps that perspective, predicated I or said think monthly be Dave, installs needed XXX sales pace then, we of maybe unlock is investments the probably is accelerating probably that if perhaps think just backlog, there. a of think on whether

waves. should trend area as And think related we would cadence how so, helpful or well. And one there? That the then, be of the guess, I about housekeeping to

Can I now. down provisioning what's the On days line remind that get where quarter? us think last you're the And to weeks? the to XX to was times, time you X

David Schaeffer

take to going order, those I'm enough. Sebastiano. Fair reverse in Yes.

and backlog ] have are else. The somewhere had available go anyone to our XXX is feel the are capabilities. IP coordinators to So cut in a full which through to quarter, By the customers and -- were last that were deployment the the days else ramping at in can always we average over but XX. in And regard and now comfortable hard waves the now and been we can the and we've do, the the quarter, to to learn QX, But same several flushing we probably provisioning years. to which for pacing processes which We got we orders to real tested get for up all provisioning service refine that the months. With that we have we we of we we that so configurations, the for QX, and of down provisioned, the there world which window. to install the what In to the are part for in down can in that we that we is systems half install that at ability from. field far ones corner are great, some been beyond XX next the X-week provision. month. that services, resources we has XXX XX cases this mechanisms are do in field feel support you we And over we that of both continuing days, still have industry [ delivery comfortable have installs, out very down a effectively but working to able XX-day these

been for And new time-consuming order the into have some accelerate in And shrink, And we intake the of funnel. even as coming there these a that expect demonstrated the the did year. orders funnel. actually groomed have we some our though have And new funnel funnel now, over we to process. in were ability a It to orders is install.

I away month iterative still of or to month forth installs probably cadence of grooming think of it and X we're from a full result this exercise as because XXX a kind getting a customer. an the back does with take

that easiest Now, the the of take areas, CapEx. the is part answer investment X one force wavelength capital both question, first, the to network which I'll investment. and and I'll in different in sales

substantially target, past We footprint. over and are the rapidly announced XX that have have are online in centers we months catching There complete data up. we been additional come XXX that since our

So the we have ubiquitous wavelength footprint. capability across

that both going-forward services. that probably to And don't weeks In is connectivity are or rapidly wave IP center XX now fact, from North close have X in automatically months waves in that XXX. with, data America data were have XX the come X centers adding still the year There will that ended or XXX the past additions, in that later, they capability. have about online XX new we basis, on have Cogent a

X-part a be So it won't process.

center million $XXX the that, range. That In the terms be dependent run think that our on roughly somewhat kind a rate is will of rate of year stabilized incremental capital of we in to CapEx intensity data the per online. bring trivial, of But to center. come amount than the data just new IP capital versus which incremental centers wavelengths $XX,XXX is fairly less data probably at

uptick don't material in a So CapEx. we see

we midyear. focused by being where do heavily XXX of trying center XX CapEx program, them to facilities be them. we the the feet a CapEx of conversion converted. wholesale their now able that our we XX be center square the is basis. megawatts control conversion on fully fully of we spending underway. the and will the declining been to of to to million allow be lease a X largest after footprint capital to Their on data June, have completing end Three in We they take marketed are facilities been the conversion. fact, data by of see them, intensive. of targeted process And those In whether all elevated are anticipate, It that. And unlock purchase has is to counterparty ready or XX midyear, are

along marketing letters have offers we of next of X and tours. We in enough these doing of at out that offers LOIs weeks, facilities economics. for some calls sense are it ready of serious the as We do for us to to that many far make will fact X in kind flush and well will probably kind been as in collecting and be intent, and how believe the are what to incremental transact

wavelengths. accuracy route with We our X CRM provisioning the of produce a no Now map actually meter and for wave That order. the is invested each automatically to sales force provider have other that a quoting in automate based that GIS series piece, it the do. one we organically due something part of data on or company. by fact was built large can was a in it since the but to And it's was Sprint acquisitions, roll-up extremely network with not accurate

additional We also resources. have actually of redirection training number And to have sites. ongoing an that programs these not force are is to of a ability cost in window a sales a due the extraordinary just sales our provision the It's that of in training been reasonable now expense. and accelerating

They dedicated primary products. and sales several months, over a on trainers. all training train wave salespeople We XX their focus past the But of total on have certification. has been

force extraordinary any investment. anticipate not do we sales So

Operator

TD next with line question your comes from Cowen. Greg And the Williams of

Gregory Williams

answer wave conference fiber country. just to We X then waves is and competitive a the sales accuracy weeks calling off XXX out just provisioning, Lumen X you across dovetailing back your Maybe got your for the in talking from advantage of about you investing getting Zayo is gig there, force. mentioned Dave, specifically of obviously meter heavily and mentioned waves.

of much to is they future of their version the trying your on like ] the competitive your concerns scaling the Is [ in for expansion Just X that question opportunity? is understand per there address. it's versus you? Second $XXX $X.XX wave just enough ramp IP around target million market all how up And sounds It to hikes. product. share growth price go

going your going XX revenue is of on to math maybe that like in million along? $X.XX Where You that's XX mentioned I that the addresses. million hike is think And about process $XX If prices how on and price million there? what's hike addresses, opportunity. you're

Just correctly. trying to understand if I'm thinking of it

David Schaeffer

questions, I'll the again, these in reverse Yes. take Thanks And Greg. for order.

pricing, IPvX the on not have covered and do increasing next prices that will the initially lower the rates several be of through cycling We still was months. began we we at raised over by customers contracts. base price the new sales, some that we On

to strong addition are do addresses we we raise can further we also will inventory there We sales. unleased, demand. that prices In but for whether new evaluate that, is have know that of

of as and back and price progress raising by leasing It revenues, going as I to X% a much release, contract and out will incremental of the in have combination you Cogent. new focus raising see and both cadence now think It do almost of of the become average So we for IPvX of it in customers well base can activity, which our press represents incremental has our the that. can continue outpaced of total leasing. to our more growth raising be the

you We wave-by-wave are and we to mentioned we on a always basis. never question. footprint. have capital and be companies should substantial believe have access to to the We players naive. competitors, win established business have wavelength Now, should with The

XXX months, XXX market a at However, that out each smaller We services, data the in at at number over too. and new important. tell additional be much year-end we to wave wavelength or network. where those and advertise of That ubiquity centers could the has they We'll on today. least close is data XXX of them the few deliver they companies those next remaining as bring centers were

reason, field of rapid us companies mentioned It radically minimum accurate allows with The had and second of provision and a is point this in key The X different any deploy. dispatches we the and Zayo acquired Lumen, that inventory. it very fiber you architecture to any number period disparate to XX is to than XXX operate typically field number more requires unable And route to which or that we have. for install level wave X typical networks. an days, they visits in They custom take the produce map does accurate are of and companies. that unintegrated their even engineering to

think than endpoints. their But we more at also in unique of cost much So lower have we provisioning, have of way. the day, got assets. we We've the they basis end faster a do right

be will we So aggressive.

gig XXX% but in out is, opportunities, to and sites. can to going costs XXX different data grow is I current speeds going previous we direction issue vectors It's trivial by support can by in about that very better a with provider. all sites XXX center our at the today, The think you gig, because we with the waves. so of And all can XXX center the easy The also LOA provide. will cross-connect vector, gig a finally, we're business XXX We gig switching operator new the every the provider migrate a to solution. that gig we very an capturing XX XX% XXX% support can our XX I'm providers that new we're to displace then the competitors. on every of from data support, and X a interface can process. And data XXX% of on are of offering do we to in our the support caveat coverage. center site, speeds at that put than Again, that's gig,

So to be take and of gig. should bit make can That that direction site first sure XXX work every that 'XX. enabled XXX work little gig sites quarter of support are a of also complete in out some do quarter, have we this the

Operator

the LightShed. And your next Walter with line of comes question Piecyk from

Walter Piecyk

was Dave, Tad IPvX in at last But it looking revenue, sequential the quarter's revenue. higher. growth was highlighted I

that I lease QX? then, restatement that meaning XX,XXX to revenue? on is delivering on XXX,XXX, you're IPvX again, So, IPvX XX,XXX net that based growth, there XXX,XXX. you and of on think, XXX,XXX, used in like of new Was increased of And in terms a the increase adds, only terms rate kind in the terms this some IPvX run Or some area? it you're was that in decline. that type on there shows the addresses lines, a Was focusing leasing, of quarter, saying restatement in sequential by by of focusing

Thaddeus Weed

the revenue, IPvX that the entity has the So going audited. be secured notes to is

revenue totaling So per been we as been have The data begun based quarter. GAAP MRCs, that upon that disclosed U.S. auditing process MRCs have streams. to opposed in revenue and has the

be coming we you to next weeks the the observing numbers some correct of for to periods that So in get U.S. here. the GAAP will that prior audited in few up amounts are adjusted

David Schaeffer

Right.

some units continue X.X quarter a side. We revenue quarter. the expect shock. the just was period. did addresses of on in under that's initial growth million sticker nearly But raise rate to be XXX,XXX the we side, So the multi-quarter also to on we And prices, there per as add over able average unit

data number you there If quarter of the of in and go addresses every new provided, is back net terms that look we the at added. volatility in

Walter Piecyk

Okay.

it's bounce we is wasn't business then you you're and QX? I So even guess, on increased So revenue though increases, because are less price the even going were audited to was you though in XXX,XXX, that this price since And new contemplating that seen more. before? because just haven't revenue And IPvX? it focusing, to generating just back restatement just and actually

Thaddeus Weed

example, opposed were month, the to based amounts. was the prorating revenue installed, on up as XXth MRCs, up If Disclosure customer we the a adding right? of the for upon No, adding MRCs, proper

Walter Piecyk

So MRCs, right? end-of-quarter

Thaddeus Weed

That's right.

had you So, go... to

Walter Piecyk

or that ]... remarks been prepared in out to or have release [ the It actually in the helpful a press side call might

Thaddeus Weed

honest So, to be you... with

Walter Piecyk

up it to in wavelengths? we than Rather to Q&A. move come But can on have the having

Thaddeus Weed

The total revenue...

Walter Piecyk

just it's you some but had XX%, talk The customers from I then reported, whatever. Wavelengths, and you ago growth, time a material down what backlog had they you like of question. actually sequential and when you in similar dollars, any that this after in on they've backlog? When type your if declining based not think XX% what you'd these your time existing decline orders basically orders similar checked And because guess, elsewhere? gone about gone and it's wavelengths? maybe was we last I in yes, for the curious, their chance is like, checked in And quarter have look customers this remains with the a next orders wavelength is in elsewhere reduction we'll at that there with see I'm sequentially,

David Schaeffer

were have we those that an funnel we provision order and as as not stated we orders. we knew could previous Well, calls, backlog, multiple on building

those orders were Some provisioned. of

of provisioned. decline the some incremental were came So the from that orders

gone Some previously order going in of the to months ago else. put and decline had from came an had customers somewhere who maybe XX

at a in established breakage, have fail sites commitment we an with a we some that deliver will penalty contractual days there cycling we There and are rate. of today, are sites XXX at but today also intakes to XXX if be XX accelerating Now through order year-end new that.

I think it is waves a XX% is... the correct. you as way What in characterized it decline not

Walter Piecyk

[ X,XXX basic math, that's math. to X,XXX ], Well, Dave. It's

David Schaeffer

number funnel. not reduced a but grooming the waves. The funnel of is installed actually It grew. of The a waves

Walter Piecyk

leave which declining was corporate is also next -- I'll you I for just X.X%. north which the now call, just of Can topic guess, aside my lastly, X, from is Okay. but leverage, your revenue, the, that just favorite

there cut what's Cogent the about root off-net of dividend is off-net to going just But can and in -- Is business? about organic growth think forever like talking I you historically. just that growth the any the talked shifting on-net. on what again, prepared traditional comments, it to your that in really in drove you kind corporate decline? this Or opportunity corporate? in I'm of

David Schaeffer

growth has cash flow Well, growth that been growth and dividend in by cash our in driven flow...

Walter Piecyk

cash cash debt leverage. flow. not It's flow. Debt [ leverage, flow, cash leverage. Not ] There's no

David Schaeffer

ask answering finish the I question. you I'll it. let

which growth will the already earlier, groom. as question for or answered decline corporate that Rollins we to quarter continue for is I another Mike So X

As that groom this We services and strategy. in to the both decline on-net, continues in but think on-net results be we cannot corporate appropriate that footprint off-net expansion grow. non-core to negative-margin a an EBITDA. line migrated underlying The top is

Operator

Tim Oppenheimer. And with comes your next Horan the line question of from

Timothy Horan

discount And important can years? of kind much wavelength; type what redundant get think you're price you still and on what Back us now get in to revenue you and how on maybe give update share? route in architecture new can capture the is in of you how your conversations, expecting an you wavelengths do the need and to X

David Schaeffer

Yes.

Tim. questions, for thanks the So

potential rank If First provisioning time center is coverage, of customers. data we redundancy, say that I would concerns; most it's pricing; in the all, redundancy actually route their to actually and order. factor important route

business. help important most price the factor, will probably So some it close is but not us

value of would demand market. waves terms dark of out service, you fiber, have an chosen services for the take But redundancy to In companies more. initially fiber redundancy, build the unprotected that they even or that are either on or even because actually dark the buy

be to us we have that going gives there of customers ability some some for surprising, we're in interest received comfortable particularly the backlog generates in a customer laid our the us of the that think prove demand taking over We demand we sales. we would to confidence it a market deal X unique continued me fact the pair May on of very at as both out actually had a we within that years, incremental is So we number, funnel said actually million and at have terms little for to are still have target run route. We year to and feel deliver. been in city a great in waves the of and that rate that the wavelength enough delivered. 'XX them order in of annually closing make same $XXX that confidence of about deal the The but a

we target others, mid-'XX comfortable wavelength and very we're with credibility the But revenue. build think for these install do by For waves. way is we're million $XXX I that have to to our going

Timothy Horan

now just basically you're So dramatically? can provisioning now? of be, there I Have, effort's about. and pitches on things all we're I on coverage, characterize you ramped how mean the a right months guess, talking the there you're going now couple the from sales will

David Schaeffer

They have.

days. begun as well XX into would told to do XXXX, to accelerate. that the turned And The the customers. force in and we calendar into to go we XXX convey new reach signed was sales customers the as and new we the actually of as orders out funnel had sites getting people reach empowered cadence has message So already funnel that out of on

further will we that can with think cadence ability even accelerate to up show that as an we I end provision.

Timothy Horan

Lastly, some can't. Dave, just reluctant know us and can you're you give -- this to I maybe you do

there's year. we for consolidated Obviously parts. should what on for this lot total and color EBITDA revenue Some moving in a consolidated expect maybe of

David Schaeffer

'XX, and about the versus most are. sell-side not be did EBITDA analysts of at ended said million we think or relatively million delta. our There And equivalent $XXX And $X year that. we believe then the 'XX I would $XXX to at that beginning so million X%

the kind think of in down was going for from to about T-Mobile. payments due year, the a consensus into step EBITDA the in reduction I XX%

our We demonstrated have costs. to ability take out

or 'XX So so I million. we should around 'XX, effectively deliver at think 'XX look equivalent to as we EBITDA $XXX

to like guidance. don't annual give You're right, we specific

I of would various through we be of full each noncore the delivering suspect grooming the for flushed will kind We up and to the of the to that is have when year segments customer due wavelength sales. slightly that the also addressed and expect we revenue segments those declines products.

Operator

And from your Jim next question of Sachs. comes Schneider the line Goldman with

James Schneider

in you of a and sales force productivity how think the of a in required to get few different get just way, terms quarters? corporate of to needs there? growing mean terms can force about direction required get much could, talk to kind what's wanted connections to and going Maybe positive And on-net those Maybe we customer in to that sort sales trends. if connections kind of over to revenue either order it in or Dave. corporate connections more increase the headcount productivity and I what's in next specifically core question be I of

David Schaeffer

Yes.

we noncore those sold customers. groom to need of in So corporate that connections, are to on-net products terms

be We've done that we a loop recognize So we is but also there were off-net has cases to amount that of that grooming that savings. in some on-net. only other to connection customer significant Sprint we customers ended so are there were are can off-net that and customers contract on from trapped migrate that where and that on-net migrating we a once contract going buildings there acquired that, from goes

I is On of think is got base, and very connection we relatively headwinds couple it that be ARPUs some So migrations more quarters positive. a offset as a our our of flat. force to sales of the the that focus normal force XXX the of it, majority we sales training the basis, focus portion roughly piece salespeople of XXX decline connections. To That There then on larger price a similar think address we've has the on highest revenue turnover. is corporate -- be the will will That typically by segment. the where activities. is

we As I is X.X corporate training per sold be the back training some which able divert of but And up. to very the to NetCentric team. diverted average force, to sales mentioned We're rep month wave at go to earlier, number those stable, need per to we connections the average continue the number the is of today. quarter. I'd And corporate we've do I to right long-term see like that, salespeople, have in just under is There turnover. we previous right some always but do at X. we believe on-net think to that around the growth. were The of lower. I volatility We will X turnover will be

that and It backdrop that seeing sign so the but reached we're least is expected much starting Now have the a are is up. absorption only quarter, markets turning return office longer dozen against. lasted net we at been environment we in than office tough. we this positive a It's bottom has and to we're working or

a positive quarters of to space. it's that companies decision probably as combination said growth. we feel companies corporate comfortable from X So But X the making I occupying question, we're and to Mike's revenue a away

James Schneider

$XXX the understood sustaining which noise all I is you million all-in annualized in business just run what the -- you said want flushed out should numbers. before heard is the confirmation. maybe be a quick to that properly, said CapEx after make And rate I sure what of the

David Schaeffer

and at of we be QX a That's $XXX of run should million year. roughly rate QX by this correct. And

first enablement and most at the is incremental being spent elevated half data program. an the of rate that the We are on for center year capital of

Operator

next question of your line Schoell UBS. And with comes from the Christopher

Christopher Schoell

Maybe transactions? few and about leasing deals value, large selling for of through stage? likely you undermonetized there's would this or Dave, do be as data center this versus X series so more on you most And the achieved at through the assets will assets. just preference IPvX think a say maximizing a you a believe

David Schaeffer

we So to them. are this leasing point on committed the IPvXs, at

Today, sold the think we between they Amazon not blocks and at per end trading at leaving on $XX. acquiring are liquid would in are since peaked scale, average $XX. about could The and the be While address exchanges be we 'XX price money least are at today of that $XX and Microsoft table. on

So up long-term that is $XX. prices $X an at look you years and XX that and today a trades back about address in they're trade is If I appreciation, XX% as likely at the about reduction. later, think the first occurred at XXXX

address trend is up, we of space. but long-term a consider would the that think I being some of seller

a purchase. XX% looked letters today; and of about centers data the In models the really allowing a they both intent or which We're which about it XX% of of use. if at to centers, want would say terms prefer X us to I cash would market to sale is of they pool whether I the agnostic are tell lease. they're lease, we the data

not out There's and there's XX preference a on working counterparties overwhelming these assets. by actively several after while for still different that's tours of almost it's slight counterparties. So hundred leasing,

calling offers to overall for we to We are to are decide my ripe that look securitize next to point not and leases. because for would just offers. If cash have off a months economics was because for been better we assets the Cogent, lease happen those reluctant raise will deal the over to accept the that That any take probably of few about monetization.

be a have underlying for one-off? several the our your assets on And of the within holistic the we deal tenant is do specific the We've done got decision-making to question, to want that. something portfolio. we our call for but we for would haven't line a I credit a part clear investors. they offers the value absolutely just is the we before. I'm offers process. reasonable is Again portfolio, really and in not want and demand, answer maximize This strong can While position until entire therefore, be answer quality that up, it the to not going So or be final everything do us. to critical in strong of then pricing question indications market with there's

Christopher Schoell

Dave. And X more. maybe That's then helpful, just

Can in and with 'XX. down policy contemplating await your EBITDA in just uplift pointed You you us level as comfort growth payments from step the initiatives? you to the what with remind you're the dividend stable

David Schaeffer

Yes. We're very comfortable with our dividend policy.

basis, on is QX. previous mentioned the call, to LTM 'XX. QX On troughed EBITDA our we LQA that in of in an going As trough

today. We are X.XX

capital. on to drain We making on that will part get centers into the the the in we're X.X, data high Xs, X.X expenditures that and due

also and that QX we year know with sometime growth the mid-'XX, by comfortable because we EBITDA, of are see that with target. a rapid below actually the starting our of this in We in be in midpoint probably delevering we will occurring

Operator

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

Nicholas Del Deo

the given ones time. quick X Just

guess I on the XX% front, in mean up I data you're when XX% I guess about in there I so. maybe I the had ever or think spruce of you what for said broader what's to we you assets, the the go you from supply-demand does your lapped think the which in traffic data rates growth on in as sale. XXXX. is mostly light historically and going was then obviously to center for NetCentric aside the But Megaupload that space? facilities the range we're And year-over-year, outlook? think the back on up they've I guess dynamic you've expect utilization had think quarter it trying focused wholesale lowest should or retail center for

David Schaeffer

Yes.

But so traffic up was XX% full On it quarterly So number, versus full flat. first 'XX. for sequentially was essentially the year-over-year. calendar growth a 'XX of calendar basis, year it year, traffic all the up year XX% was on

are developed rate in inference new versus of saw ubiquitous terms roughly see is leg to growth world a In more going stick in growth being as AI I the hockey matures a in what's we XX% level of become streaming that streamed do post of maturity reaching in now more we we and XX%, the as with up that commonly video pandemic all and think streaming and models moderating. are going on, used.

new downs. Yes, if history YouTube's look at there a leg think casual Megaupload reported mature, abrupt when shot slowed been I business and also a will over down traffic as that XX-year of have matured. business growth. particularly we video [ was drive When public traffic ], ups and other go growth. seen Cogent's growth to company, a Napster's sharing a but we've And back file slowdowns started that our

Now much these of smaller were off bases.

similar the quarterly ebbs see flows and I think in tough And rates. NetCentric and rate. are business, CDN our traffic. pretty there volumes XX% have Internet I our stopped IP continue That's quarter heavily X%, we will in growth several for at dependent in I know their a that growing. did terms don't think think I kind the of of are us. on historic to they of But customers traffic

added The before XX XXX I that With matured. To capacity your in our supply are our racks X/X is data we faster about data existing way megawatt center side aggregate, space of are share materially. which average We utilization of retail of gaining so and lot and smaller edge and XX our monetize it's grow can question, excess the footprint, it. centers long in facilities, it. that fast brought these But business lot on primary rate a Internet, haven't more this you today or retail did so we're think got for correct has our add a premise of marketable fairly base. declined focused added to of a a as the it's getting go we power. focus than on that in about we the sold kilowatts going to

and position portion. retail been think the significant a whole centers that have into I exit may the to of the is data our wholesale of put a the footprint. and retail facility reluctant occupancy we for We've we will be a will in may take that to little in someone want retail to also some reason increase amount

XX,XXX X or X general, in X facility. months or put whole that to sense in that when be Our retail comes feet the that didn't someone of X And on about was taking footprint X megawatt. in make now probably someone from and feet years I square says occupancy. facilities away impediment those to getting But we is back think take about and want a typically cabinets to from it XX,XXX and are I an XX% could couple

focused changes driver the that hopefully, inference significant of accelerates AI change geographic that. the data I evolve. our we're corporates lot at that's inference the phase been and and of at aimed But Now least of business today, mostly footprint may think today. a have ubiquity as small some we Basically, That colocation. as our around don't of colo a models and where retail has edge cases AI

Operator

final And Capital of from Nispel with KeyBanc comes line Brandon question the your Markets.

Brandon Nispel

time. housekeeping you many I how of funnel? questions waves specifically Dave, Just groom suppose did given out the

David Schaeffer

We groomed funnel. about X,XXX out the of

Brandon Nispel

X,XXX. onetime you some Okay. quarter out last network I there center called any Were expenses? data think costs?

David Schaeffer

is So the yes. answer

go demolition would that of quarter fourth expense. associated $X the We there capitalized. of the those the that of centers I in we QX data was mentioned not about million in spent that elevated we call, but we noncapitalizable said with clearing earnings capital would a is are component away that is of and spend spending facilities quarter, that COGS and the that and also in spending on the third some

for yes, that costs So direct some there effort. was

Brandon Nispel

the lastly, there is way you a grooming sort rate can and then to just the corporate excluding churn X includes disconnects And and/or purposeful with any of rate so on quantify disconnects what churn that enterprise, activities related a purposeful disconnects? and Perfect. number NetCentric; those provide

David Schaeffer

single for hard X things. time on going things really give are It because the same well, me at you -- number X is a to there

for to You're in low where North on-net, turning fiber there's But cases off-net a moving America. are that from you're keeping circuit other no customer. people some the alternative off there corporate you're capacity

in corporate we're finally, $X about circuits sequentially both of end enterprise, enterprise this continue and off then that international footprints lifing [ of turning You're we'll where ] and segments, licensed. turn off. quarter, we $XXX,XXX, not to are those products had for these And we million headwind and

So a single number. there's not

prepared subcomponents at remarks. than of care everyone. We everyone. appreciate really done in of We less need we'll A Bye to did X the each and to got cut be soon. misleading. Thanks, headline going talk know what's And of thanks, Take hours. bye. kind number our listening. I on. look to want You kind everyone would X.X

Operator

all call. This Thank joining. concludes you conference today's for

disconnect. now may You

Cogent Communications (CCOI) 27 Feb 252024 Q4 Earnings call transcript