Cogent Communications reported mixed results for Q2 2024, with service revenue rising to $260.4 million, an 8.6% increase compared to the same period in 2023, but a 2.2% decline from the previous quarter. The company’s performance was influenced by the ongoing effects of the COVID-19 pandemic on its corporate network operations, particularly in central business districts where remote work policies have led to decreased office occupancy and slower new sales to corporate clients. Despite some positive trends in certain areas of the U.S., Cogent continues to face challenges in fully recovering its corporate revenue growth.
Cogent's acquisition of Sprint has also played a significant role in its recent financial outcomes. The company incurred $12.4 million in costs related to the acquisition during Q2 2024, affecting its EBITDA, which adjusted for these costs, was $106.2 million—down from $115.0 million in Q1 2024. Additionally, the company’s EBITDA margin improved slightly to 10.4% in Q2 2024 from 6.9% in Q1 2024, signaling some operational efficiency gains despite the ongoing integration of Sprint’s assets.
The pandemic's residual effects continue to linger, particularly in terms of corporate customer turnover and fewer new tenant opportunities. However, Cogent is cautiously optimistic about the future, as the gradual return to office spaces and the integration of new applications that support remote work environments could eventually boost its service revenues and corporate sales.
Key Points:
- Service Revenue: $260.4 million in Q2 2024, up 8.6% YoY but down 2.2% QoQ.
- EBITDA: Adjusted EBITDA was $106.2 million in Q2 2024, down from $115.0 million in Q1 2024.
- Pandemic Impact: Continued slow recovery in corporate network sales due to lingering effects of remote work policies.
- Sprint Acquisition Costs: $12.4 million in Q2 2024, impacting overall profitability.
- Dividend Increase: Quarterly dividend increased to $0.985 per share, marking the 48th consecutive increase.
Cogent acquires the legacy Sprint fiber network
