Cogent Communications (CCOI) Q1 2025 earnings summary

Executive summary

• Service revenue for Q1 2025 was $247.0 million, down 2.1% sequentially and 7.2% year-over-year, primarily due to the churn of low-margin Sprint-acquired contracts and non-core customers.

• EBITDA rose 4.6% sequentially to $43.8 million and 137.2% year-over-year; adjusted EBITDA was $68.8 million, up 2.9% sequentially, with adjusted margin at 27.8%.

• Net loss for the quarter was $52.0 million, or $(1.09) per share, an improvement from $65.3 million in the prior year.

• Integration of the Sprint Business continued, with $220 million in cost savings realized and a focus on expanding optical wavelength and transport services.

• Quarterly dividend increased to $1.01 per share for Q2 2025, marking the 51st consecutive increase.

Financial highlights

• On-net revenue was $129.6 million, up 0.7% sequentially but down 6.5% year-over-year; off-net revenue was $107.3 million, down 5.2% sequentially and 9.2% year-over-year.

• Wavelength revenue increased 2.2% sequentially and 114% year-over-year to $7.1 million.

• Non-core revenue was $3.0 million, down 10.3% sequentially and 50% year-over-year.

• Gross margin (non-GAAP) improved to 44.6%, up 790 basis points year-over-year.

• Net cash from operating activities was $36.4 million, up from $14.5 million in Q4 2024.

Outlook and guidance

• Management expects revenue growth to turn positive by mid-Q3 2025 as Sprint revenue churn completes.

• Multi-year revenue growth target set at 6-8% annually, with EBITDA margin expansion of 150 basis points per year.

• Anticipate 4-5% of the wavelength funnel to be installed monthly, with the funnel expected to reach 10,000 opportunities by year-end.

• Dividend policy remains subject to board discretion, financial position, and cash flow.