Cogent Communications Clocks 61.5% Service Revenue Growth In Q2, Boosts Quarterly Dividend

Cogent Communications Holdings CCOI reported second-quarter FY23 service revenue growth of 61.5% year-over-year to $239.81 million, missing the consensus of $264.06 million.

EPS was $23.65 for the quarter; it includes the impact of the $1.2 billion bargain purchase gain from the Sprint acquisition. Adjusted EPS loss of $(0.67) missed the Street view of $0.01.

Total customer connections increased by 58.1% Y/Y to 151,430 as of June 30, 2023. Total customer connections from the Sprint acquisition were 46,212 as of June end.

The number of on-net buildings increased by 132 to 3,227 as of June 30, 2023. Technical buildings acquired in the Sprint acquisition were 482 buildings.

Adjusted gross profit increased by 11.4% Y/Y to $102.5 million, and the margin was 42.8%, compared to 62% in 2Q22.

The company recorded an operating loss of $(34.06) million in Q2, compared to an operating profit of $29.57 million in 2Q22.

EBITDA margin was 10.1%, and the adjusted EBITDA margin was 22.5% for Sprint acquisition costs and cash received under an IP Transit Agreement.

Net cash provided by operating activities increased 140.3% Y/Y to $82.7 million for Q3. Cash and equivalents & restricted cash as of June 30, 2023, totaled $243.95 million.

Dividend: On August 2, 2023, Cogent Board approved an increase of $0.01 per share to its regular quarterly dividend for a total of $0.945 per share for Q3 compared to $0.935 per share for Q2 2023. The dividend is payable on September 8, 2023, to shareholders of record on August 24, 2023. 

Price Action: CCOI shares traded higher by 5.57% at $61.61 on the last check Thursday.