Cogent Communications Holdings, Inc. Q4 FY2025 earnings call

• Increased margins driven by cost reductions and rotation to more profitable on-net products. On-net revenues as a percentage of total revenues increased from 47% in 2023 to 61% in the quarter. Off-net and non-core revenues as percentages of total revenues decreased. • Wavelength sales progress: Offered wavelength services in 1,068 locations at year end, increased to 1,096 locations as of today, wavelength revenue for the quarter was up 74% year-over-year, full year 2025 wavelength revenue up 100% from 2024. • Margin details: EBITDA as adjusted margins for the quarter increased sequentially by 140 basis points, EBITDA as adjusted for full year 2025 was affected by reductions in IP transit payments from T-Mobile and other acquisition costs. • Leverage improvement: Refined capital allocation priorities, improved leverage ratios. • IPv4 leasing activity: IPv4 leasing revenue increased 44% year over year, leased 15,300,000 addresses at year end. • Data centers: Converted 125 facilities into data centers, intended to monetize 24 surplus facilities, in active discussions with multiple parties for sale or leasing. • NetCentric performance: Benefiting from industry trends, sold wavelength services in 1,068 data centers, sold IP services globally in 57 countries and 1,902 data centers, directly connected to 7,659 networks. • Sales force: Focused on productivity, sales force turnover rate was 5.4% per month in the quarter, below historical average.

On-net revenues: $146,400,000 for the quarter, year-over-year increase of 7.8% and sequential increase of 0.6%, accounting for 58.4% of total revenue for the year. Off-net revenues: $92,900,000 for the quarter, year-over-year decrease of 17.9% and sequential decrease of 2.3%, accounting for 40.7% of total revenue for the year. Wavelength revenue: $12,100,000 for the quarter, 74% year-over-year increase, full year 2025 wavelength revenue was $38,500,000, an increase of 100% from 2024. IPv4 leasing revenue: $64,500,000 for full year 2025, a 44% year-over-year increase. EBITDA as adjusted for the quarter was $76,700,000, EBITDA as adjusted margins for the quarter were 31.9%, EBITDA as adjusted for full year 2025 was $55,600,000, EBITDA Classic for 2025 was $192,000,000.8, up from $122,800,000 in 2024, EBITDA Classic margins for full year 2025 were 19.8%, up from 11.9% in 2024.

• Revenue growth expected to continue to improve and be in the 6% to 8% range over a multiyear period. • EBITDA margin rate of expansion expected to moderate to roughly 200 basis points a year. • Wavelength business trends expected to continue with acceleration, as wavelength products are on-net and contribute to margin expansion. • Not providing specific quarterly or annual guidance, focusing on multiyear goals.

• Risk of further degradation in the off-net enterprise customer base, which is inherently less profitable. • Uncertainty around the timing and success of monetizing surplus data centers, including potential issues with previous LOI termination and ongoing negotiations. • Impact of foreign exchange rates on revenues. • Dependence on timely payments from T-Mobile under the IP transit agreement. • Risk of not achieving expected margin expansion rates over the long term.

Q: Christopher Joseph Schoell asked about total company revenues and EBITDA for 2026 and Waves business scaling.

A: Dave Schaeffer said after Sprint-acquired revenues runoff, Cogent revenues grew, expects positive quarterly revenue growth, 6%-8% annual growth over multiyear, margin expansion from revenue mix shift and on-net sales, Waves business has large footprint, low market share, expects growth.

Q: Gregory Bradford Williams asked about Waves funnel and data centers.

A: Dave Schaeffer said LOI for data centers terminated due to counterparty request for owner financing, in active discussions with other parties; on Waves funnel, not reporting specific numbers but funnel growing.

Q: Sebastiano Petty asked about Waves installed but not yet billed balance and data centers progress.

A: Dave Schaeffer said installed but not yet billed balance comparable to third quarter; data centers in active discussions, refinancing not assuming data center sale proceeds.

Q: Frank Garrett Louthan asked about data center market and IPv4 leasing.

A: Dave Schaeffer said data center valuations improved, IPv4 leasing business expected to continue growth.

Q: Brandon Nispel asked about Sprint revenue vs Cogent Classic and EBITDA contribution of Sprint business.

A: Dave Schaeffer said Sprint business revenue continuing to deteriorate, EBITDA contribution close to zero or slightly positive; explained process of analyzing Sprint vs Cogent Classic revenues.

Q: Nicholas Del Deo asked about data center LOI, legacy Cogent vs Sprint revenue splits, and IPv4 leasing dynamics.

A: Dave Schaeffer said LOI fell apart due to counterparty request for owner financing, legacy Cogent revenue growth from various line items, IPv4 leasing revenue change due to timing of agreements.

Q: Michael Ian Rollins asked about cost base and data center portfolio burn rate.

A: Dave Schaeffer said achieved most cost savings, incremental integration expenses decreasing, data center portfolio has negative EBITDA.

Q: David Barden asked about contract, incentives, secured financing, and Wave provisioning.

A: Dave Schaeffer said most compensation in equity, committed to shareholder returns, in negotiation for secured refinancing; Wave business at 20%-30% discount, provisioning time 30 days, working to improve.

Q: Michael J. Funk asked about sequential revenue growth and rep productivity.

A: Dave Schaeffer said not providing specific quarterly guidance, rep productivity focused on on-net services, training and incenting sales force.

Q: Anna asked about deleveraging plan and free cash flow confidence.

A: Dave Schaeffer said committed to reaching four times net leverage before changing return of capital strategy, expects to generate free cash flow with growth in EBITDA and reduced capital expenditures.