Cogent Communications (CCOI) 8 Aug 242024 Q2 Earnings call transcript

Ladies and gentlemen, good morning, and welcome to the Cogent Communications Holdings Second Quarter 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 on 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 website. I would now like to turn the call over to Mr. Dave Schaeffer, Chairman and Chief Executive Officer of Cogent Communications Holdings.

thanks, joining and call. morning, good everyone, today's for Hey, Conference Quarter Welcome Second Earnings Call. to our XXXX I'm Dave Chief Schaeffer, Cogent's Executive Officer. review had With is me chance you've Tad call press to a Weed, our on Chief Financial this our earnings morning's release. Officer. Hopefully, historical number a each This we basis that of includes present metrics release quarter. a on consistent

asset-backed couple we on we million activity IPvX a extended a our debt transactions. was may This closed mature X IPvX X.X%. in inaugural had X notes issuance securitization On the of our of quarter. for Now transaction notes X, in of comments May the of quarter, These In for the lease at years securitization revenue. the ever and XX-year be first to up term. $XXX

flow our finance which as addresses IPvX XX, our at lease notes. proceeds the $XXX.X additional million owners been IRU XXXX million through acquired $XXX from a issuance cash we This approximately addresses. fiber month of IRU a in These when of had T-Mobile. On notes. are from these prepay of cash. addresses saving Markets existing the million, of materially we IPvX XXXX, mirrored million million in enhanced dark therefore, XX.X XX% rate, XXXX. this of improving eliminated, of in through the terms have notes June when cash million acquired of further monthly purchased We lease closed a have These of notes. identical our our $XX.X the December PSINet $X.X fiber of XXXX other and all to We Sprint our we payments dark the million discount XX.X Global $XXX We used offering to unsecured Group portfolio early X% X.X We and part acquisition acquisitions May million are XXXXs. of

resource. in month addresses revenue million rate We million out of for of are unleased monthly addresses average past per The increased common XXXX, million transaction. of IPvX of addresses we years. In were X.X at XX.X we addresses of also of and million the $XX.XX. addresses a securitization these We IPvX of the some leased advantage of for has purchased a XX.X that part stock an Internet June of at finite cost IPvX substantially price quarter. price the these our a volatility. over market back. of of market back XXX,XXX securitization. run securitized leasing our shares $X several are leases purchased approximately We of The million the our the X.X In end took stock $X.X our quarter, of million

through $XX.X repurchases We our million of XXXX. remaining have authorization December in share for

Now on savings. expected for a comment cost

million synergies assets $XXX of cost cost and rates integration Sprint represents through the the of rate the and are of a of upon realized our million. at significant in Cogent XXXX, This savings in have year savings rate an annualized May with X in the period. of targeted over cost June We cost XXXX process between monthly run of of we XX% monthly closing Based network. realizing run the $XXX differences savings

for of the We Now a did quarter. good very results summary have for some quarter.

million. $XXX.X was quarter the for revenue Our

the these on decline revenue Foreign $X.X services. sequential our of Adjusting our exchange negative sequential had a due had of off-net to for $XXX,XXX the and products tax impact negative revenues. in decline low-margin X by a our sequential rates X.X%, impacts management quarterly in negative non-core impact and million out changes of primarily USF did $X.X of million,

sequentially Traffic by our to $X.X $XXX.X sequentially in commercial $X.X quarter. million in by Revenues It year-over-year with million. X.X% up our sequentially agreement by million X.X%. Our network to was T-Mobile the on-net revenues XX.X% services on quarter basis. increased a under increased the increased on

low-margin X.X% Our continued by did due to to these of elimination revenues the decrease million services. $XXX.X off-net

generally quarter. not Our have the Sprint which while negative margin then non-core we some to million installed the And in the revenues, completed services. gross finally, reconfiguration $X.X of carry have network, million $X.X declined we wave by

Our sequentially increased actually quarter-over-quarter modestly wave year-over-year XXX.X% that a to and by increase $X.X revenue X% million represents basis. a on

early services this accelerate to expect will by for and wave year-end. materially complete the we We in optimization starting XXXX integration network as

as for we in adjusted, agreement accordance the XX.X% services Our the million payments In compares received EBITDA, X million. adjusted, this T-Mobile, XX made payments totaling XXXX. received $X.X $XX.X to a be additional margin as $X.X in $XX.X are payments in IP X payment. An continuing X included payments by X quarter QX transit quarter. of through the This EBITDA, and payments $XXX.X was with to with our our was we of quarter million each of million T-Mobile, $XX.X million expected quarter, million. November and The

$XX.X of and costs and were both SG&A portion this cost our in of Included significant employees reductions were costs and final cost, was these million. in Our million reimbursements acquisition the it, fully Sprint in T-Mobile. We quarter. reimbursable to by cost severance in a significant the T-Mobile former quarter goods $X the are that sold our in paid achieved

decreased our in or percentage the or second in decreased million SG&A XXXX. of the decreased million from from previous from revenue X.X% SG&A the of $XX.X XX% to previous XX.X% and quarter. Our by by QX quarter a as $X quarter XX.X%

by Group, $XX.X the basis cost a Sprint additional continue we X.X% the of or on-net. costs bringing that with gain to purchase, we as from sequential We an purchase bargain associated reduce our and network gain total this bargain and $X.X billion. decreased purchase accounting of Global million bring off-net in traffic final on to sold goods XXXX finalized quarter, received QX Markets Our acquisition our

X.XXx. $XXX.X our cash months the cash ended did balance at Our to X.XX in net of and We EBITDA equivalents quarter gross debt quarter end trailing the on from X.XXx EBITDA, with as reduce sheet. our ratio debt XX and adjusted, last the to quarter, the was ratio in million

our comment a for Now force. on sales

Our equivalent the QX. time per per productivity employees QX of X.X per Sprint XXX conjunction these rep acquisition, XXX remain in sales with month was units and employees. hired we units with us. rep employed month rep full end, X in per quarter At installed In

on to transport transport of for couple services. and we Now our In wavelength our wave expanded the optical Sprint comments services business, fiber optical the offering GMG a connection and of services our with product acquisition over network. optical include

expense to their as services wavelength own these infrastructure. optical owning and customers. customers selling new without ongoing are require transport customers well as and These existing the of operating capital dedicated We

in wavelength and XXX As locations. of today, we services have connectivity capability

about cycles at intend to remain substantially the provisioning XX as days. programs elongated complete time optimization We that reduce year-end. our network by provisioning However, we

year-end expect XXXX, services to sold wavelengths be provisioning in offer XXX American North reduced wavelength have locations. to in able We substantially By cycles. locations over we XXX with

wavelengths. backlog funnel X,XXX representing opportunities, unique significant and a wave over of have We

Sprint have Our these materially today operation expanded Cogent power. to To data centers the center Sprint XXXX carrier-neutral date, protected centers operates. XX in data megawatts acquisition facilities XX reconfigured footprint. and and our data we added Cogent have XXX these new of centers data acquired of The that

Sprint. fee centers We redundant where lease simple from and are facilities we are Cogent acquired some decommissioning owned with data facilities that legacy they

Board to flow Sprint consecutive decided, XXth quarterly $X.XXX sequentially raising sequential This converting on $X.XX share, the an quarterly to capabilities, data cash dividend our process optimize share. represents dividends, quarter $X.XXX are portfolio. With increase our Directors per Cogent investment by in the into of again, to to regard we former and additional we'll the our dividend grown centers once strong opportunities our XX We reflected of continue per a where generating facilities have regular from and our dividend. share

rate growth X.X%. now dividend rate is of an Our annualized at

Now for long-term expectations.

and we XXX rates Sprint to as to anticipate by our combined and between Cogent basis points margins have we long-term and be growth operations, X%, annually. expand that adjusted, approximately and networks Now the X% EBITDA, annual

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

the ratios we in In and month adjusted, agreement entered to XXXX, million trailing agreement, cash XX-month June as a will receiving EBITDA, million with IP per T-Mobile. this November beginning XX are as and next impacted of Transit reduction monthly payments began adjusted, then on months $XX.X The payments for months, for by we of accordance month into through $XXX cash in with Our those of and a million basis. XX EBITDA, XXXX. our the payments measured stepped impact down continued and are leverage $X.X which leverage ratios,

give like over to I'd us some read harbor Tad it the metrics and language operating business. additional on to Now, safe to turn

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

the XX.X% margin connections quarter, decrease but the X.X% The elimination connections revenues of on our corporate of low had customer X.X%. of quarter. We our the continued of decreased revenue our non-core Our grooming by was sequentially represented XX,XXX the year-over-year, by due grew to for at products. the corporate sequential corporate and network end business off-net and

continues of minus on continued video intelligence, traffic, NetCentric growth related our revenues and AI quarter, streaming the million. On the in sequential benefit to or wavelength negative from For sales. USF $X.X activity our NetCentric, artificial was impact business to

our had year-over-year of at Our constant on a but by grew and basis, end. NetCentric network NetCentric We quarter by currency X.X%. customer by business quarter X.X% on represented revenues sequentially declined XX% connections this and X% XX,XXX our

for X.X% enterprise. the traffic network by XX.X% by quarter, sequentially Dave mentioned, up as and Our was year-over-year. On increased

our and office multi-tenant on-net year-over-year and and and We by by our XX,XXX the XX.X% enterprise increased XX.X% had Our enterprise by revenues business quarter the was this million. connections $XX.X and serve type on-net data X,XXX at our revenue. carrier-neutral customers of customer on-net quarter buildings. enterprise total increased our revenue and revenue network connections of customer sequentially We represented X.X%. On in end center

We in on-net larger succeed the continue connections XX impact connections centers, and in carrier-neutral increasing of has multi-tenant our selected in XXX connections XXX ARPU, gigabit also selling gigabit Selling data connections to we occurred office larger this which again quarter. sell and these gigabit buildings.

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

were connections end. On customer on-net quarter XX,XXX Our at revenue. off-net

off-net low-margin revenue our was partially revenue year-over-year of off-net and Our the and importantly, the off-net contracts. grooming and, on-net X.X%. of X.X% in certain continued decrease Again, termination increase impacted quarter, for the of by million of $XXX.X off-net sequential sequential migration decline customers was customer to more a our

XX,XXX customer Our at connections were quarter end. off-net

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

of connections the an customer end which were the sequential wavelength X.X% XXX Our quarter, at increase. was

Some our IPvX, comments revenue. leasing on

an Our quarter. a XX.X last X.X% increase the quarter, leasing business IPvX quarter. the excellent addresses We in at that and of million leased from had of addresses was were leasing end

X.X% leased $XX.X last by revenue from quarter IPvX Our increased million. to

for for per quarter average of approximately Our is $X.XX and all that beginning our the IPvX address, increase address from very at a base was addresses material was per $X.XX. revenue the sold that quarter the

were non-core of Lastly, a sequential That quarter of Non-core our $X.X X,XXX million decline connections $X.X end, we're quarter. ending or a was revenue customer was XX.X%. products. as these at sequential million for non-core the decrease XX.X%

churn. and Some comments on ARPU pricing,

decreased per price to our for average installed sequentially $X.XX. by megabit base Our X%

larger megabit was contracts actually selling customer increased XX.X%. ARPU; Our new increase an from connections. ARPU for which per of was the of our price on-net average $X.XX, impact

off-net ARPU decreased. slightly Our

of it ARPU $XXX last $XXX. on-net year. from X.X% basis, increased sequentially of XX% an On year-over-year by from Our $XXX increase from QX a was to

was $X,XXX ARPU off-net $X,XXX of a to from decreased $X,XXX. Our that decrease was and year. Year-over-year, slightly XX.X%, sequentially last

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

on-net the Our base was increase as average was unit was address revenue churn, monthly again, from last stable. for per again, address $X.XX the at quarter. IPvX the beginning. On sold, churn per our It $X.XX the a from quarter, X.X%, same significant rate

we tick last each our up. our groom quarterly churn We in quarter. margin. rate operations X.X% low-margin press X.X% of releases. and EBITDA and this off-net quarter, reconcile to flow off-net Again, terminate EBITDA It was contracts. EBITDA did Our to from cash our continue

Our as EBITDA, and cash sequentially million Transit XX.X%. acquisition as adjusted EBITDA Sprint increased the increased a $XXX We margin agreement IP reminder, payments $XX.X by cost XXX under adjusted, classic. EBITDA, This and for is adjusted, under sequentially Transit collected by EBITDA adjusted to our $X.X margin. And EBITDA T-Mobile. is basis services IP million and as received with points Services agreement. the as our million

agreement scheduled to quarter. as the quarter, was million under same was last it This it climb, $XX.X

reimbursed $X the X purchase. XX.X% gain for reported T-Mobile. transaction accounting a the severance costs now GAAP, acquisition this end of T-Mobile, record payment. in This is due from quarter Under as the margin. We on by $XX.X acquisition Our pay reimbursements, year in quarter from last to U.S. costs employee, million is $X of corresponding total quarter by purchase as million cash sheet quarter, to this the was we're for that non-capital reimbursed quarter, receivable $X the closing, opening be an payments. balance was final acquisition retroactively accounting us, but incurred and million after was the to million an Sprint acquired to increase million. These window an increase Included costs. the $X.X the are our asset from Sprint receivable was increase EBITDA, costs, paid reimbursed us. were $XXX.X needs as the we included is assets so for last adjusted, the million for severance we $X.X in acquired largely an severance these and to this When Sprint at results billion. When by of the these adjustments and costs the severance for our behind bargain costs T-Mobile fully are quarter severance and that reduced a gain that Again, in severance

Foreign currency impact.

these of was for in U.S. our The approximately About were revenues outside of revenues Mexican, very a quarter reported this rate and and is the that related is not of earned so levels, is and these States is believe We the revenue American our and Canadian our customer euro in FX not sequentially were we average dollar quarter. Europe based dollars XX% to expect to on rate year-over-year Oceanic, our average highly XX% Canadian, concentration. United Should $X.XX far impact the $X.XX. average rates current material X% basis. Customer and revenues Our both operations. of our USD remain and South African do base revenue at a concentrated.

capital expenditures. were customers our the Our quarter. On top XX about XX% for revenues of

Our expenditures quarterly capital quarter. million $XX.X were this

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

our program very level due the conversion high data for center availability. demand of our We have power to accelerated

lease finance dark IRU are for Our fiber obligations long-term leases.

new partly $XXX.X lease IRU the prepayment discount offset obligations Our of quarter. of quarter. million from from million end last IRU resulted IRU of quarter. the The a for at the replacement significant lease, million were routes That for a cancellations early $XX.X decrease under the was reduction quarter $XXX.X from route finance at the last $XX.X million by of

diverse cash quarter. At suppliers and end was million swap of the million, cash million. totaled dark that and $X.X We have cash $XX.X end, of to $XXX.X tied tied fiber quarter new, equivalents have and with processing at restricted the we million a total ratios. IRU Of is restricted which of and and customer of very set the payment contracts cash, debt suppliers, XXX notes. Debt the IPvX was to requirements our $XX.X our our under

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

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

ratio, notes, was secured calculated calculated our consolidated under was ratio, X.XX. leverage our and X.X; note our indentures, as Our leverage under as

swap. comments on further the Some

interest value fair are We are a to an $XXX agreement obligation of the $X.X The based of was last million our remaining in that with fair rate obligation swap in our the fixed million and required SOFR $XX.X for now quarter classified be variable our agreement interest by decreased interest million. Changes agreement of value rate rather interest swap the expense. filings from with swap public to through and XXXX term party modifies that notes our on these notes. XXXX is

swap As it's our declined. of million, agreement of today, so the was $XX.X value

Lastly, debt and bad outstanding. days on sales

thank Our last of $X.X revenues. from That's and versus quarter again last days to quarter. million, job with with in call serving a our just to XX And to Bad improved our consistent billing will customers. And historical the back want collections fantastic I that, for days sales was turn XX team and performance. expense and recognize our X.X% debt do Dave. worldwide Cogent continuing was I members

centers, more as independent over total and than X,XXX and our network NetCentric XX data better networks reduce our our X,XXX, third-party carrier-neutral by other to customers footprint bringing of optimize measured any centers enables connected At carrier have center our globally thanks coverage we base. our direct to force. highlight and We're significant Hey, customer our sales I'd few quarter a our traffic customer activity growth base of over-the-top the beneficiaries see video, of network, from our like the Tad. AI to our end, of strengths Cogent data continue breadth connected data business, NetCentric In we to to research. The and our streaming. latency.

to widen several years. With market an XXX additional sell next over an network are XXX over we'll data the add year and provisioning lead projected can continue today the this extended in centers per cycle, we carrier-neutral to our expect locations. wavelengths in to We

on with are cable reduced of customers. majority connected This to networks our XX the operators and to expect carrier networks are network, to wavelength Cogent interconnected in provisioning transit network end, world's able are telephone our across the and shortening ISPs peers in networks, productivity therefore, companies, and America over that very services do of [ focused allow to We Cogent collection the these of and slow of phone mobile optimization At makes force remain X,XXX we reps. most are ] sell North entire directly of mobile focused these year-end the XXX be This of broadband X,XXX globally. phone because to and cycles neutrals users us intervals. quarter we efficacy reach base. By provisioning out the to we XXXX, the directly. We and subscribers underperforming vast on sales manage continue our companies

force on on of optimistic quarter's remain line enterprise force rate turnover central the on sales X.X% and peak rate turnover focused XXX space. quarter, from professionals corporate sales of market, our pandemic per month We and NetCentric the salespeople our about height X.X% and the of the business sales sales during serving historically in mid-sized small market focused businesses end, Our XXX XX average had was focused reps the we for position districts. exclusively in the unique a down in with X.X%. At

multi-tenant buildings billion We office have over square with feet. on-net X,XXX X

grow large that business. continuing also and remain selling are We to on enterprises focused to

of our of about the portfolio wavelengths center addition our or to We data and expansion services optical footprint. and the optimistic enthusiastic transport are product

XXXX, million the excited rates Based cycles, to optimistic the times integration that May shorter We orders significant the accentuated can achieved reconfiguration Cogent network bring year-end. opportunities and run network wavelengths. of provisioning the ability remain of optimization. We XX% the leases of wholesale already or for our complete active differences increasing retail in to and cost to while end wave still on the network discrete much these a or these savings targeted in of We to these our of working flow. have years. cost we look data of million the generate and center between We're and we the spaces of continue the discussion buybacks over X,XXX have by create about have to at into backlog next installed at a of of fiber Sprint either and that, and $XXX several XXXX to we And with our amounts our funnel We purchased many savings warranted. questions. and sites. With June over and hope on cash we of in stock work, $X floor for counterparties remain have monthly our in diligently these for facilities IPvX basis and like million are common million addresses, for if quarter monetize dark willing and multiple the enter with long-term $XXX $XX.X multiple savings. We open I'd additional sell

question of first Your line JPMorgan. from with Instructions] the Petti comes Sebastiano [Operator

cost just continue you just starting to provide contracts. classic. with savings touched on, you EBITDA exit mean, realized to tailwind of groom XX% Dave, a or I targeted likely is the and which unprofitable

talked speed something kind In guess, market Just here are a opportunity. to up $X us surprised XX.X% you deals and Is scale you expansion. have a that this we billion. dark and longer-term of a fiber quarter you to by announcement? kind then fiber maybe 'XX? And continue how a I dark past, the how the way on may announced opportunity, of you you're about the classic maybe action? as are thinking get of And today stand that dark about the expectations basis? after that any see And margin to you piece fiber the second in that perhaps competitor does change separately, first, of waves for about totaling think heard off recently EBITDA of can in help positioned

Sure. Sebastiano. questions, both Thanks for

the reduction that well take from our sold. me significant first. T-Mobile EBITDA, due but $X reduction improvement to in understand as as as down payments We in in sequentially of rate. only SG&A the quarter, effectively classic the that cost down. $XX due step had In payments, million the EBITDA question a improvements our classic We adjusted, to EBITDA let the million IP to those So, continuing had underlying the in goods are was we Transit

We to quarter, the payments. continue. expect be third only We in will that of the $X.X that receiving understand trend X we million

have to adjusted. headwind of effectively we EBITDA, another So, $XX as million

grooming improvement will cost think the continuing We continue on. in a QX see we EBITDA QX, see pace synergy cost QX at X and similar and these to probably to that and programs, to pacing X X you'll and to underlying even classic, to saw due to I from similar what

As we add wavelength a revenue, which carries classic now, that very high EBITDA fact contribution are the all margins, those question. wavelength we'll probably see that's number transition services a further virtually acceleration in second the to into on-net. And decent the due

of very of competitive number been and of market provisioning and reluctant reliability into routes. I of have our whether be very for action gaining installed We competitor think speed market was being particular have wavelengths a advantages, very entry about actually strategy a of was targeted clear That been fiber. once market. or share. We uniqueness competitor of it our think result we a dark in as aggressive ubiquity, to the defensive announced more what sell had by our our

onto multiple We, in of that sold fact, enabling and the fiber miles to back facilities of on off we Cogent, Sprint. a fact, as acquired migrate fiber the from we In give occasions fact had it that that fiber to dark intend XX,XXX competitor. regretted

that know also have excess fiber. network we for capacity We our on dark

fiber. will sell we dark Now

opportunity. significant a have do we think I

derives orders the we think maybe Cogent's dark significant acknowledgment customers placed competitive had of competitor, the wavelengths. but who in services. orders, orders. have we've wave no the our The enablement dominate proprietary a have so much actually the of want a result where their flow and provisioned many its to I the with wavelength reluctant done routes point been direct network. become some we market our to cash with to some is have fiber and they data centers single-tenant portion was to have They change same and of to unique, wavelength wavelength of us. position sell more hyperscalers said to I are market, We've Many the that from building are willingness of think is going final do I we you think entrance. The until that mentioned, those

We low single of subject monopsony have deploy in capital refused be location. tenant returns to single-digit we that would the where to at power that

not So, form build of also we higher a unless returns upfront and is out go derisking long-term facility specific to there contracts. and payments, in the sufficient tenanted will sole

I announced this competitor uneconomic. found think terms acceptance by what other day an was the was we of that

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

that than months to [ the long to we've you ] just get about it less up only to send say little centers But a the to you're by you X Dave, by wanted sold million, $X.X got waves June, end talk will XXX locations 'XX with Great. waves. It year-end. XXX. but did of at and XXX light can early go data you came got a ramp way to to and in going reach

help the X,XXX so X,XXX centers. of a that amount a on ramping parcel way XXX ARPU backlog feel get X,XXX apply that to just wave do that it? data can dollar Is with of we to comfortable the us And waves that, part So, backlog. to and mentioned the up fair to we you that circuits,

Greg. X So, very questions, different

First we of today. data all, as wave-enabled are in XXX centers of

only actually have those XXX. sold XXX in We of waves

wave cumbersome allowed build sheet a Now, a physical a capital wavelength. very clean which paper, a number to those the capital possible. us doing, top on have we and the is for very wavelengths inefficient The the competitors assets provision use Sprint provision permutations is our similar allow pre-deploying network way starting of are transponders, to without that of to provision wavelength work to us the of would we that with foundational a method to that that based are on way weeks in X

take away we time resources the provision each from reconfiguration work. wave So, today, we a network

and that take We XXX all be XXX year-end. by at will

end-to-end we to way to with into have confident also network to of is provisioning to the the rapidly be internal we go dispatches to similar that Two, but to to the today. And a a we to X have it average industry compared that build only able backlog, occur network literally X XXX field should goal. to dispatches, allow which X with we of we conducting are do hopefully, probably backlog. of that, So, larger even number modifications we're eat an and will make wave

As provision faster much customers are competitors. than to our say, we able

is XXX the and pricing gig, to the speeds; gig X which wavelength, Now gig. question. the in larger ARPU speed X of characteristics, The the XX Wavelength expensive. the by comes determined more XXX speed,

pricing traversed. of distance The second the is dimension

means notice, our did sequentially skewed towards More backlog of waves. ARPU with That can larger in waves backlog modest If gig. across effort the what's slightly the of gig ARPU probably sure XXX make is the X% the footprint. in than number the XXX of ARPU XX of the and of is part tick speeds quarter than to our base. A in support we big incremental you that is up these installed of that a all

higher helpful, systems dominant, meaning be adhering As we've up. And based path the flexibility away dominant think XXX and that that available. Hopefully, allow The gig, these over and throughputs therefore, we form to commercially remains XXX XXX-gig as installed of or waves. the more them there vendors seeing continue beyond support ITU X.X no will grid ARPUs I terabit was year XX standards, wavelengths, then the transition a bringing are Greg. X, to the are deploying spectrum, flex gig these a need but migration higher the will longer bandwidth equipment to equipment the us eventually applications on we connectivity, make support that, from next are be they're to

That was helpful.

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

explanation the that fiber on deals. Dave, thanks for

dark some up. Just money, burn flow a And cash your leverage time, deal it that use just returns, maybe maybe I as just the terms, some mean counter I right. to construction just dark the on interrupt, type is or is a may Recognizing is have payments -- single-digit to it's your lower right? With deal, higher a Sprint time an value basically obviously, you they for that I happen of and -- mean going to, thought, except there that to TSA in free future. thought money? then a they but Dave, some to basically used this. a needed get opportunity is period thoughts not cash coming situation. it's sorry, maybe that go fiber your still when -- get similar as ratio, guess, of your of will to in do up, at over like but it's in fiber may I returns, terms use mean

ahead. go Sorry,

Yes.

to So, I X that, think I think Walt. parts

sell the to that have, on because expect are is basis where absolutely willing We that negative return routes sell our in we infinite dark have fiber fiber. inventory i.e., the cost and a we

to the We has the much go single-purpose at against weighed better new allocate And alternatives speak resources of can that speak Cogent places I to to have I has. be has what to cash. to facilities we will other my uses Cogent raise competitor's provision when do capital. can't to construction fiber. The are. to to our what

and X $XX million X.X a asset that million megawatts XXX over surplus price The type center compared megawatt. of is or market price million of our about to about megawatt a space. data for current feet offering have $XX square of We

low and to accept a better off construction a go very have centers take than us out rather of data our negative these it and resources we for and in. that, basis again, So, project, sell is return capital some

equipment these Many quarter Tad facilities. Again, we as everyone, built were had locations. capital those as we're and now of data these to our offices. dozens telephone we them counterparties They in remind but As with in were to mentioned, discussions did dozens and are built condition to availability marketable for increase of of into centers. spending the large raise And to accelerate quite central data them pivoted turn slightly not the of cash. to That had better telephone centers. spaces we a to remove is way

to are our you IPvX also raise cost actually inventory We pricing raise not with of years on ago a The did low we inventory. that ability of continued revenue have We capital. a their large not. flexibility our us to the cash competitor very we sheet, and We've grow portion Prices chose the The balance cash, that to gives goal to mentioned to. at to can borrow million $XXX appreciate. fact leasing we demonstrated several securitize money sold a off IRRs. continue deploying our our network, to we X% that to of stock, My as not on buy to our fast in get say and low we back dividend, have to capital no is as single-digit we X% return.

fair. That's

data segue grew sell adding carrier-neutral you centers, centers but pace net to question. next your typically first, data them, on the So, Dave, I'm talking was I I data on my can yes, think you that's about. centers, mean, and good a

year. you typically XXX think a add I

You seem pace. well ahead of that

growth of Just you sales increase. lease no those pace still leases, in table? kind than quarter sequentially revenue the give on just Obviously, that was quarter not then curious, Is the in the market may update lease given sales the type a you or thoughts quarter IPvX, of some this question. the every happen to thought current of number growth you the implemented may process on But expect on slower the the last rather us the add talking and price leases. and about in Can of quarter? terms similar the on or little you're IP given whether on a there, are is there. And

Yes.

let So, Walt. in take me those order,

to countries to We licensed goal the to world, get are country reactive On and in. XX we centers, operate carrier-neutral is the data be every our in it's in honest, every process. around a

size center. the on get of the we to operator to quality our the ability measure Now facility, cost-effective of that those the based and underlying

the coming of rapid seeing over past of number larger we year market data centers much are continuing, data the the into capital online. influx center a and With

next just increased conditions. likely significant So, because are at currently may buyers X premium addresses. or for know prices. over a we addresses leasing selling X, considering do that XXX We then it year largest evaluate IPvX, And we still a the We the more is the are the market on that built. being year are even there to our

As across base. Tad address pricing of average we $X.XX from increased an month the mentioned, an per

For new temporary. I saw think somewhat went address and reduction and a modest $X.XX that's we unit per to volume, in sales, very

base are average the We raise contract existing to with going the months. ability length of to also evaluate X.X our

existing customers. This of is great per annual a have an deal X.X% churn of We a with business year. in rate very flexibility sticky prices raising to

rate So addresses a we DCF will look at addresses those versus that our higher ability sell more lease what and cost we in with of associated can the the capital versus our at to us any open our [Indiscernible] maximize to to on queue to options us [Indiscernible]. are those answer long that. Well, return Walt. of put we and got shareholders. Walter, help just marketplace, I a That

this leasing, The that's pace is to down? pace be or of prepared up Your comments, it -- it typical the is is and going the issue.

depend the any going you're appear quarter. very with it demand. demand for with no the to But It's are IP remains specific leasing in strong. we price, And service, a in offering funnel in does that diminution on seeing increase even real the

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

looks timing? following substantially addresses? why you to so not maybe like larger secondly, is And If on Lumen about on the IPvX market. prices Would Walt. raise up a the and Just base legacy talking then it

the will better and large, prices doubling competitor? a also seeing or provision there? go -- or Are lower wavelength the you market you think speaking. they're that platform you locations Are about and services. worried that the or market, $X better IP for a the to more they improve to much I so quality well, be is maybe think they obviously Do broadly them billion they're talking referencing

Yes.

So, first, We installed take absolutely one base. raise the intend prices IPvX to Tim. on me let the

portion that and impact of will the later on doing measure We churn. quarter be base for the this a

the definitely The price the to think the will at likelihood go is sell is addresses to us up. And the last increase highest possible. monitor the We then clear to and the I table. not it's continue that put goal is now that market will that And increase. for of on sale in off pricing, we that IPvX the place finally, prices there be not will

As the we addresses, our process scarcity, in normalized our our resource increase leasing process inventory. price maximize intend continues We've to return structure. to on of our streamlined to compensation sales adjust and

continue this to while All sequential our going it And grow is of see those total X% revenues, help us things, a grow. think, over did quarter-over-quarter. X% I to rate of only are it growth at of

Now, fiber to both wavelength and there and There some fungibility. market. is the wavelengths dark is

operational makes of sense no of For because support ongoing dark and the customers, expense. the a lot fiber upfront capital

haul. measured by metro $X.X in that America. that's is For can't Lumen then long participate global others, both they The so parties. Unfortunately, And may North in is market North third it make sense. only wavelength as includes billion, of outside $X and America, billion

we We will day we I the the player win the customers day value monopolist. fact Listen, every is any to locations Walt's that to center pricing, Cogent not. I means follow have have up going about question the them enabled to expect Canada to that be center better continue data up additions. welcome are add competitors. player. wave We'll so than have data and if to we our quite absolutely U.S. more that wish dominant we on a means I Mexico, more be North could in anyone Any do. that America; add, else. than of you value with of X, will in be the mentioned competition. In that something we the welcome and one we with and largest we traffic, and able globally confident from wave deliver, prepared And wave make world's enabled a that where XXX aggressive fact, market in being are I the the we that wake am competitor dominant business, to player we players. proposition And a day XX% displaced that I'm compete the was on on transit to and become

grow to revenue. incremental going and business are generate that that We

guess, do faster there's level, than you I think a total. year much billion because guess well potential $XX the of what I thought they're you ago billion, $X up, high -- so growing larger, maybe market like another $X much AI? maybe a at seeing but Yes, they're locked a just is billion

is fiber in that -- opportunity it's out. How big is is of it somewhat construction what facilities big those figured think before. projects, I yet but revenue referencing the facilities recurring they're new part to to never be probably fiber had larger, meaning is a building

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

-- Do wanted check. I questions. the Great. A answer, but of I just know couple you think to

network going you in once GMG that with of would And these spare you forward, you So, that could compete looking have configured do have, gets then, at it deals? your selling all that reasonable you is network have and run for set you waves, up to sell conduit business do so once speed? possibly you're rate quarterly forth buildings a that think of the and for what some

Yes.

typically feet network below So, of terms jacket, in conduit, grade along fiber below direct conduit built public buried with versus have not plastic that we was Sprint generally in right-of-way, networks grade. feet armored spare are highway X do X The in conduit.

is fewer As a result, better we We decade the per have throughput. fiber to had loss splices gives better those XX% and than absolutely have though becomes network mile terabit a XXX, XXX that networks, wavelengths That us sell, older. even facto de and conduits, all supporting of the coherent not XXX and we of even fiber is technology for and that standard. capable X.X the other have when the

from referenced. Now, have I said And is the will would target by should will in we acquisition, undersized we feel in we a of $X there. be so think we from and get growth But fairly And that be We our believe have XXXX, of out run million wave we wave maybe our market that a $XXX complete, that quite we bit. May for we absolutely that that market X once provisioning generating addressable Tim's normalized the footprint linear. that little is rate confident that to revenues. of growth, rate billion years point, terms our be realistic

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

with us controls this? there takeout go is an could the But to cost wanted potentially cost growth side, you or I Sprint non-classic payments, on of to may XXXX? other on takeouts, more transitions on you, more the control importantly, situation ask and for data how of center things. in very Any strong sufficient of sort to to cost you're, some EBITDA be? cost buckets get other those that much the you delivering quantify with a Dave, is there Maybe

thanks and of all, well, Cogent. Welcome first question. welcome your coverage with Jim, for to to us,

to have absolutely savings more we significantly achieve. So, cost

We of savings. services, then have G&A services, additional revenue a combination and low-margin non-core

that down. T-Mobile burn were to stepping payments We also meant period understand the of are maximum this bridge

will position at for be be rate million a next in the of in a rate that, we run $X.X on the XX lower month. With we're will XXXX per months, apples-to-apples when now XX We at absolutely an basis.

versus we're of have that growing, $X.X will EBITDA continue. 'XX at QX, $X.X to payments monthly where X so So, quarters million at million and 'XX in be looking and we we be it 'XX, expect the will growth that

number. to eventually only that remainder we $XXX belief targeted fully in be will to -- we So, step And million. million EBITDA of this will down 'XX normalize our in that to will because the adjusted $XX down down million due offset to lower question, improve, now from after the step improvement But EBITDA a $XXX rate, to absolutely achieved the that XX% continue will million yes, time of EBITDA savings. but payments is these is go And $XX earlier not growth EBITDA our classic that positive we've at in up. will

savings there about we'll to additional opportunities be quarters in the talk some think come. I are that able to

sense, your kind piling risk wanted one, unique which if believe can And future think maybe competitors? sort view deals say which unique. the could particularly characterize are how routes that and dark additional And of and of to Cogent the And that maybe on second something be waves has routes on of many get for transpire. might at a fiber, landscape you has but any you your to us of just about your competitor relative about are you your maybe, whether

Yes.

markets, the roughly our competitors, of we all multiple American and So, serve competitors, key North cities. XXX

X I fiber at think X least or cities. between routes there's dark those

add going a the flexibility have from conduit Phoenix just distances cities, could random, But public parallel other no build would but our you and highway in have railroad their The also or public to pick if and highway, unique route most you along Cogent along be a to X just a built right-of-way, you a pins competitors Zayo plastic more. map, along They these of fiber or Cleveland. on conduit. absolutely their were may differently routes burial Lumen a buy connect say, them. Sprint route, fiber lower the a unique put right X along of There to I'm XX% those a different of gives ways. X to pipeline. Generally, fiber path X Now, did pick a build in cities.

be unique payers. to that all not right Now, those other the us going are on not likely than but it's X a maybe serve way, of X of where to X able more city

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

I'm color of all connection corporate tease Sprint this of happening connections your could remarks, on on and trends the first, to revenue the dig detail declines corporate bad I specifically. but connections the a was that Appreciate of function in hoping what's little versus out you you better Sprint classic just a rolling off trying little prepared how and I some was call. gave Cogent into guess, and much of bit us corporate kind revenue with a connections?

Yes.

your for question, thanks Nick. So,

revenue all, sequentially actually revenues quarter. of growth NetCentric in even the slightly declined our on-net our though the First in quarter, grew

of business business revenue buckets that that are migrated well Sprint Sprint from of on-net. desirable. So, to acquired That we that kind from we are corporate off-net as X grew Cogent on-net revenues. was There traditional as both not we

is circuit traffic rapidly in to buildings Sprint we're are fix that We Cogent, that contracts that those customers those is have on-net of an and X as migrating for easy mature. those off-net to were X. That tail

as to margins. And rate some million we're on products absolutely non-core final and the still go not have migrating media delivered that off-net fixed non-core may products upping those that wireless, but been revenue sequentially, Sprint acquired are coax, and that it's over are to bucket a because fiber, then, they X quickly those or also to a We really speeds. $X help us run life in in of speed, saw sub-optimal we our And twisted-pair you bucket about million profitable, low by end there's want decline and $X needs improve quarter as to we're cases they're circuits that have very over possible.

Some a transition of of fiber will go Most it that solution. revenue actually away. to will

the that rid So, by sequential managing well intentionally, are sold, that, as we of business decline, think, part we business I we the good getting over And goods off-net as cost of that look that is corporate basis at points is as way XXX of is bad off really low-margin and growing. was achieved it of improvement the non-core. business and that

real a and the on we versus that results of of EBITDA, that about the out think you guess, probably you're kind that suppressed number update not I specifically in could breaking reported on quarters? what should underlying how are. Obviously, progressing future one us that Okay. cost, the and question That Again, being talked other lease and about we've in good there cost make will fair a remediation progress integration bit costs lease of think, sense. on exit cost, so I past And EBITDA. there.

add had XX do past to to, We the spending back acquisition, to the since for we've the we think, it said integration you positive $XXX was those looked not And of just EBITDA anticipate to $X if Yes. go $XX month did complicate take million back We a the that million million we break would million to separately. EBITDA OpEx because customers, it the drag projects. on T-Mobile related complexity $XX million not a from $X months been not add about that added We month want about us and I out what on of overly a X-year be drag. That acquired of EBITDA to, our at negative accounting. to EBITDA. do

are we I do think that. to track on

drag will year to taper start beyond that into well I -- and think next will year. continue But in off. it this

of ahead taking of turn off are which some the schedule to extraordinary We that ability sooner. terms out, costs in gives us of expense

comes from RBC question line with next of the Lee Markets. your Bora Capital And

a to Once what be point rough force its timeline what's the for to to turn the is services? would take sales fiber, for to And sort done team internal start the fiber is dark it wave offering attention get that to enablement operationally process? freed to dark able a and of up

knows sales the specific force fiber is dark the had multiple They've from already customers for So, coming. routes. requests

these of each We requests very kind Wave the bigger that project of, the customers people actually really to sales a couple modest certain dark put do that this a then of in show year-end, in QX, fiber to can in calculus opportunity we of to is provisioning. and of complete specific but network? By will up quarter optimization help kind be we jeopardy optimize do will free situations,

to and sell fiber to to optimal for then pricing latitudes bespoke. business It's less on don't view I But think and year, building figure standard more it inventory. one that all is route. hit in the distance, also we uniqueness we the path. data expected will have route would fiber think of of of the it do I a very the and But of the complexity, out next Coast. that goes suboptimal route-specific. than curved. our reason, pivot the dark market particularly what example terms it line. And distance our Not for fiber We sold true? availability the lower lowest means at these be Chicago is routes shorter particularly product, That on out have as resources are of longitudinal able The a higher in-demand start same same. An working are the in is is and based new is, and means actively the assess of latency the total at build be be between is to requests Why West Coast most as that. routes between our kind earth haven't we reason in-demand and route northern no intention but of certain excess that applications. funnel interesting East again, is. that's path it's then The where wave returns, a position that fully and That's the we'll The a Seattle. to to latitudes is enough for have

to continues you're past, the on-net monthly tick-up. And to connections. from it. In Got benefiting that ARPU transition higher you've a mentioned capacity

driving if can what's you mix And that's that you've this the us trends seeing if quarter? so, and ARPU the wondering on been there? update Just gains

is, That driver. in fact, Yes. a key

opportunities number gig even the are on and in transit of then And buildings. side, to an side, of see multi-tenant expansion XX-gig we the office increased NetCentric continue XXX On XXX corporate gig seeing ports. an we

So, all of that ARPU higher is helping on-net. drive

their center Are of you the just these their financial own size. given And lastly, be who've use counterparties that interest assets, the or helpful. the most about enterprises data for shown If could sponsor just provide any or in would curious types color strategics? there,

for understand Yes. who there edge of advantage that who X looking there is greater businesses are to a but data different are a X looking funds U.S. Tier footprint. least are private platform who that density carriers time-to-market I international center facilities. counterparties are want some would center attracted potential looking to. compute these a power at There are equity There talking are There who AI are markets. are to that say of. of hyperscalers There at these for we're there as facilities. data And are operators are these build of categories off

for So customers are all X mix today in of data the centers. those these of types

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

Great. how the rate an as could of so low-margin what Mostly sort question. by to terms or corporate look losses is? reported at those give for Could we adds in can grooming the many we of was segments, understand provide housekeeping non-core a estimate net guys other underlying from products try then us coming you NetCentric are run just enterprise? or you what rate churn And the and connection,

Yes.

corporate was that the to bit between little this and off-net, NetCentric to we per So, rate. rate was X.X% further It's below month. on-net below And a good a is a quarter. our just that. roughly churn about enterprise triangulate And way which give little churn

As you grow sequentially. actually saw, enterprise revenues

So, deviations rate no from material kind there were of norms. in terms historical churn of

your Now, second Brandon? what question, was

I function us or adjustments low-margin you non-core sort versus at look guys was reported you what underlying as just understand or business provide losses the hoping the what around gains is could making we of connection decisions is products us some of to help a doing. for

Okay.

away have contractual XXXX. that part make we of business you through So, to non-core, churn, to and end have We run that get today both but transit would obligations payment go on intentional. Again, that the the should dollar, XXXX. we T-Mobile non-core the if is through assumption that's and those reason of every like why November the honor unit in of continue to subsidies from we we could,

do concluded Secondly, did not selling for both corporate not for that for customers, enterprise program there business. those we legal and we meet our an Sprint agency customers in that countries through are enterprise threshold licensed had are to compliance. been locations

we loop customer but selling buy port separately. the effectively the So, loop the and the having taking are

ARPU bifurcate and that that our enterprise So taking stream. the customer off-net an exotic off loop that's an service churn revenue of intentional in of the market lower to by

looking On corporate the it's mostly side, are this services migrate. that to we broadband very low-speed

was the for we was the which very profitable. connectivity, looked totality of our state solution. And at hundred to is relationship, the none terming all over [ management quarter, an termination, large to megabit locations are corporate copper, them very just and at upgradable independent speed. automatically in SCADA that a rural, is of If which location of ERCOT, happen those if we with Texas. when migrating we're primarily in was particular ] which X several They're that last speed in rural providing not customer the backhaul a system of are, of they building, for management be was upgrading energy substations intentional meg They that in Now, a delivered of on-net those, customer a this circuits. very in X services business is fact, example, fiber copper not had

So, of we, fact, terming are in all those.

off-net which actually the They them, us those was were some in helped on Now, but money on customer, churn bulk actually uneconomic a still have big contract margin. circuits. term that of quarter losing very specific, this improve

Michael Rollins comes final your of And the question from line Citi. with

Thanks for hanging there, in Mike.

a Sure. Appreciate me for squeezing you question. in

trends, little buildings the Just respect customers the VPN respect of happening the with to curious services, patterns unique into of their with a side the a what's and you if spending in us they're the give with to on corporate sense can that corporate bandwidth and bit core the delve transit types more you, buying. to

Yes.

our in levels. of on-net below seeing are we still order modest So, probably the in about X% year-over-year, growth business, substantially corporate pre-pandemic

the albeit new incremental there building less customers, pre-pandemic. tenants in winning fact today there were than the that are are We

of want seeing not but very that a probably -- several We percent also now of migration a subset are base all, XX-gig a of customers, the that's connections.

uplift offices. ARPU we on-net in remote is it that VPN of as product XX VPLS to of from connections. corporate a customers see sales not an about to going as to pre-pandemic. don't incremental to went were the We've for going that customers be services. And is able XXX grooming pandemic which companies premise gig. of dramatic to because out gig. multiple pairing connection I where corporate we we a years, through the was customer those to stabilize are I coming increasing to saw the for to several seeing and a then equipment fairly question, new that that VPNs corporate of But similar think I think beginning transition We're most So, back dominant sales, do see starting seen our take be are X/X

to So, started it come has dipped, it when back.

VPN dwarfed saw to that sales provided enterprise provide sequentially, customers by actually and grow large it's And our speeds. Sprint the that part increase port MPLS. Now we business of the we to are over enterprise in legacy those continuing networks because grow

Dave. Thanks,

seeing Thanks, forward Mike. call, Well, like the I Look appreciate we you on thank and I your and all. take all to Bye-bye. soon your patience hopefully, care everyone. would questions. answered to

participation. this gentlemen, and today's and we for you concludes call, your Ladies thank

disconnect. now You may