• Total Revenue: $252.3 million for Q4 2024; $1 billion for full year 2024, up from $940.9 million in 2023.
• EBITDA: $66.9 million for Q4 2024; $348.4 million for full year 2024, compared to $352.5 million in 2023.
• EBITDA Margin: Increased by 280 basis points to 26.5% sequentially.
• Wavelength Revenue: $7 million for Q4 2024, a 31.8% sequential increase; $19.2 million for full year 2024, a 240% increase over 2023.
• IPv4 Leasing Revenue: $12.6 million for Q4 2024, an 11.8% sequential increase; $44.9 million for full year 2024, a 24.5% increase over 2023.
• SG&A Expenses: Increased by $4.5 million or 7.5% sequentially; decreased by $19.2 million or 25.6% from Q4 2023.
• Cost of Goods Sold: Decreased by $6.4 million or 4% sequentially; decreased by $19.5 million or 11.2% from Q4 2023.
• Cash and Cash Equivalents: $227.9 million at year end.
• Dividend: Increased by $0.01 to $1.01 per share for the quarter, marking the 50th consecutive increase.
• CapEx: $46.1 million for Q4 2024; $195 million for full year 2024.
• Debt: Total gross debt at par $2 billion; net debt $1.8 billion.
• Net-Centric Revenue: $93.6 million for Q4 2024, a 0.5% year-over-year increase.
• Corporate Revenue: $113.1 million for Q4 2024, a 10.7% year-over-year decrease.
• Enterprise Revenue: $45.6 million for Q4 2024, a 12.8% year-over-year decrease.

• Warning! GuruFocus has detected 12 Warning Signs with CCOI.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Cogent Communications Holdings Inc (NASDAQ:CCOI) reported a total revenue of $252.3 million for Q4 2024 and $1 billion for the full year, showing growth from the previous year.
• The company's EBITDA adjusted for the quarter increased sequentially by $6 million, with an EBITDA margin increase of 280 basis points to 26.5%.
• Wavelength revenues for the quarter grew sequentially by 31.8%, marking a 124% increase over the previous year.
• Cogent Communications Holdings Inc (NASDAQ:CCOI) has realized over 90% of its targeted $220 million in annual savings from the integration of Sprint assets.
• The company increased its quarterly dividend for the 50th consecutive time, reflecting strong cash flow and growth prospects.

Negative Points

• Corporate revenues decreased by 10.7% year over year and sequentially by 2.7%, primarily due to the grooming of low-margin off-net customer connections.
• The company's network traffic was essentially flat for the quarter, with only an 11% year-over-year increase.
• Salesforce productivity declined, with sales reps averaging 3.5 units per rep per month in Q4, down from 4 units in the previous quarter.
• The company experienced a 34% reduction in the former Sprint employee base, indicating potential challenges in workforce integration.
• Cogent Communications Holdings Inc (NASDAQ:CCOI) reported a sequential decline in net-centric revenue under its commercial service agreement with T-Mobile.

Q & A Highlights

Q: Can you provide an update on the growth opportunities for Cogent's customer segments, particularly corporate, enterprise, and netcentric? A: David Schaeffer, CEO, explained that the netcentric segment is growing and expected to accelerate due to wavelength sales and IPv4 leasing. The corporate segment is undergoing a grooming process to eliminate low-margin services, with growth anticipated after a few more quarters. The enterprise segment will see a longer decline due to international operations restructuring, with growth expected by early 2026.

Q: What investments are needed to unlock the potential of wavelength services, and how is the provisioning timeline improving? A: David Schaeffer, CEO, stated that the provisioning time for wavelength services has improved from 120 days to 30 days, with a goal of reaching two weeks. The company is ramping up installations to 500 per month and expects to achieve this cadence soon. Capital investments are largely complete, with future CapEx focused on data center conversions.

Q: How does Cogent plan to compete with other companies investing in wavelength services, and what is the growth potential? A: David Schaeffer, CEO, highlighted Cogent's competitive advantages, including faster provisioning, more endpoints, and lower costs. The company aims to capture new opportunities and displace current providers. Cogent supports 10, 100, and 400 gig waves at all sites, with plans to expand 400 gig capabilities.

Q: Can you clarify the recent adjustments in IPv4 leasing revenue and address growth? A: David Schaeffer, CEO, explained that previous disclosures were based on MRCs rather than GAAP revenue, leading to adjustments. The company added nearly 100,000 IPv4 addresses in the quarter and expects to maintain an average growth rate of 500,000 addresses per quarter.

Q: What is the outlook for Cogent's wavelength revenue, and how is the sales effort progressing? A: David Schaeffer, CEO, expressed confidence in reaching a $500 million annual run rate for wavelength sales by mid-2028. The sales effort is ramping up, with new orders accelerating as provisioning capabilities improve.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.