Cogent Communications Holdings, Inc. Q1 FY2026 earnings call

Entered nonbinding LOI for sale of 10 Sprint data centers, expect closing early summer. Working on refinancing 2027 $750 million unsecured notes. Company reached verbal agreement with 2032 noteholders on amendment to indenture. Wavelength services offered in 1,107 locations with 90.8% y-o-y revenue increase. EBITDA adjusted for quarter increased $1.4 million, margin up 150 basis points. SG&A increased $7.1 million q-o-q due to seasonal factors.

Wavelength revenues for the quarter were $13.6 million, an increase of 90.8% year-over-year and 12.3% sequentially. Wavelength customer connections increased 71.2% year-over-year and 9.6% sequentially to 2,263. IP Leasing revenues increased 4% to $18 million, up 25% year-over-year. Average price per IP address stable at $0.40. Total revenue for the quarter was $239.2 million. On-net revenues including on-net wave revenues increased $2.8 million, off-net revenues declined $3.9 million, noncore revenues decreased $12.2 million. Gross margin percentage increased 150 basis points to 46.1%.

Anticipate long-term average revenue growth rate 6%-8% and EBITDA margin expansion ~200 basis points per year. Revenue and EBITDA targets are multiyear.

Equipment price increases from vendors due to supply chain constraints. Potential impact on CapEx and margins. Supply chain constraints affecting wavelength installs and customer acceptance.

Q: Greg Williams on EBITDA and data center sales.

A: David Schaeffer on EBITDA margin expansion and data center sale details.

Q: Sebastiano Petti on top line trajectory and wave installs.

A: David Schaeffer on core business growth and wave install factors.

Q: Chris Schoell on CapEx and sales force.

A: David Schaeffer on equipment pricing impact and sales force productivity.

Q: Ana Goshko on data center sale timing and cost savings.

A: David Schaeffer on sale timeline and cost reduction progress.

Q: Frank Louthan on wavelength size and IPv4 sales.

A: David Schaeffer on wavelength wave sizes and IPv4 activity.

Q: Walter Piecyk on data center sale terms and refi.

A: David Schaeffer on sale terms and refi considerations.

Q: Tim Horan on data center sale binding and wavelength share.

A: David Schaeffer on sale binding and wavelength share progress.

Q: Nicholas Del Deo on CapEx and corporate sales.

A: David Schaeffer on CapEx drivers and corporate sales trends.