Cogent Communications (NASDAQ:CCOI) Releases Earnings Results, Beats Expectations By $2.38 EPS

Key Points

• Cogent beat EPS expectations, reporting $1.38 per share versus the consensus estimate of a $1.00 loss, but revenue of $235.6 million fell short of estimates and declined 4.4% year over year.
• The company improved profitability and reduced leverage by selling 10 data centers for about $225 million, repurchasing debt, and expanding gross and adjusted EBITDA margins. Wavelength revenue also surged 63.8% year over year.
• Financial risks remain significant: Sprint and off-net revenue continue to contract, the $750 million of 2027 notes must be refinanced, and analysts have lowered several price targets amid liquidity, demand, and backlog concerns.

Cogent Communications (NASDAQ:CCOI - Get Free Report) posted its quarterly earnings data on Thursday. The technology company reported $1.38 earnings per share (EPS) for the quarter, topping the consensus estimate of ($1.00) by $2.38, FiscalAI reports. Cogent Communications had a negative net margin of 4.73% and a negative return on equity of 842.48%. The business had revenue of $235.56 million during the quarter, compared to the consensus estimate of $239.55 million. During the same period in the prior year, the firm earned ($1.21) EPS. Cogent Communications's quarterly revenue was down 4.4% compared to the same quarter last year.

Here are the key takeaways from Cogent Communications' conference call:

• Deleveraging accelerated: Cogent sold 10 former Sprint data centers for $225 million and reduced adjusted net leverage to 6.23x EBITDA from 6.79x in the prior quarter. The company repurchased $138.8 million of 2032 notes at a discount and expects to use additional asset-sale proceeds to reduce debt.
• Margins improved despite lower revenue. Gross margin expanded 260 basis points year over year to 47%, while adjusted EBITDA rose sequentially to $71.1 million and adjusted EBITDA margin increased to 30.2%, supported by cost reductions and a shift toward higher-margin on-net services.
• Wavelength momentum remained strong, with revenue up 63.8% year over year to $14.8 million and customer connections up 66.4% to 2,445. However, 77 existing wavelengths were upgraded during the quarter, and management said customer equipment, power, and data-center constraints are delaying some new installations.
• Consolidated revenue declined 1.5% sequentially to $235.6 million, primarily because lower-margin off-net and acquired Sprint revenues continued to contract. Sprint-related quarterly revenue has fallen 71% since the acquisition, from $118 million to $34 million.
• Liquidity and refinancing remain key risks. The $750 million of 2027 unsecured notes are current and expected to be refinanced in the third quarter, likely at a higher cost of capital; management also acknowledged that achieving sustained positive free cash flow without T-Mobile subsidy payments will require further EBITDA growth, cost reductions, and lower capital expenditures.

Cogent Communications Stock Down 9.1%

Cogent Communications stock traded down $0.99 during mid-day trading on Friday, reaching $9.92. The company had a trading volume of 4,209,069 shares, compared to its average volume of 1,220,302. The firm has a market cap of $496.79 million, a price-to-earnings ratio of -10.33 and a beta of 0.80. The company has a 50 day moving average of $13.69 and a 200-day moving average of $18.56. Cogent Communications has a 52 week low of $9.00 and a 52 week high of $45.69.

Cogent Communications Dividend Announcement

The business also recently declared a quarterly dividend, which will be paid on Friday, September 4th. Shareholders of record on Friday, August 21st will be issued a $0.02 dividend. The ex-dividend date of this dividend is Friday, August 21st. This represents a $0.08 dividend on an annualized basis and a yield of 0.8%. Cogent Communications's dividend payout ratio is -2.25%.

Insider Transactions at Cogent Communications

In related news, VP Henry W. Kilmer sold 2,400 shares of the stock in a transaction dated Monday, June 15th. The shares were sold at an average price of $17.01, for a total value of $40,824.00. Following the completion of the sale, the vice president owned 38,600 shares in the company, valued at approximately $656,586. This trade represents a 5.85% decrease in their ownership of the stock. The transaction was disclosed in a filing with the Securities & Exchange Commission, which is accessible through this hyperlink. Also, CFO Thaddeus Gerard Weed sold 4,850 shares of Cogent Communications stock in a transaction dated Tuesday, June 16th. The stock was sold at an average price of $16.79, for a total value of $81,431.50. Following the sale, the chief financial officer directly owned 197,900 shares in the company, valued at approximately $3,322,741. This trade represents a 2.39% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. 4.20% of the stock is currently owned by corporate insiders.

Institutional Trading of Cogent Communications

A number of institutional investors and hedge funds have recently modified their holdings of CCOI. AQR Capital Management LLC bought a new position in Cogent Communications in the first quarter worth $202,000. Goldman Sachs Group Inc. increased its holdings in Cogent Communications by 26.9% in the 1st quarter. Goldman Sachs Group Inc. now owns 476,513 shares of the technology company's stock valued at $29,215,000 after buying an additional 100,969 shares during the period. Empowered Funds LLC increased its holdings in Cogent Communications by 10.3% in the 1st quarter. Empowered Funds LLC now owns 5,466 shares of the technology company's stock valued at $335,000 after buying an additional 510 shares during the period. UBS AM A Distinct Business Unit of UBS Asset Management Americas LLC raised its stake in shares of Cogent Communications by 23.4% in the 1st quarter. UBS AM A Distinct Business Unit of UBS Asset Management Americas LLC now owns 161,791 shares of the technology company's stock valued at $9,919,000 after buying an additional 30,630 shares in the last quarter. Finally, Strs Ohio acquired a new position in shares of Cogent Communications in the 1st quarter valued at $104,000. 92.45% of the stock is currently owned by institutional investors.

More Cogent Communications News

Here are the key news stories impacting Cogent Communications this week:

• Positive Sentiment: Cogent’s second-quarter loss was narrower than expected on an adjusted basis, with a loss of approximately $0.80 per share versus the $1.12 consensus estimate. The company also benefited from selling 10 data centers for $224.2 million, generating a $130.7 million gain. Cogent Incurs Narrower-Than-Expected Q2 Loss Despite Lower Revenues
• Positive Sentiment: TD Cowen maintained a “buy” rating, although it reduced its price target from $34 to $30. KeyCorp also kept an “overweight” rating, implying substantial upside from current levels. Analyst price-target updates
• Neutral Sentiment: Cogent declared a $0.02 quarterly dividend, payable September 4 to shareholders of record August 21. The payment provides a modest income return, but the small dividend is unlikely to offset broader concerns about the business.
• Negative Sentiment: Second-quarter service revenue of $235.6 million missed the $239.6 million consensus and declined 4.4% year over year. Weakness in Sprint Wireline and off-net services offset growth in on-net and wavelength offerings, raising questions about near-term demand and backlog conversion. Cogent Communications Reports Second Quarter 2026 Results
• Negative Sentiment: Wells Fargo lowered its target from $18 to $14 and assigned an “equal weight” rating. KeyCorp cut its target from $25 to $15, while TD Cowen also reduced its target, indicating analysts are recalibrating expectations despite some remaining bullish views. Analyst price-target updates
• Negative Sentiment: Multiple law firms publicized a securities class action covering investors who purchased CCOI shares between February 29, 2024, and May 1, 2026. The claims reportedly concern undisclosed demand and backlog problems and alleged overly optimistic growth and dividend statements. The lead-plaintiff deadline is September 21, 2026, increasing legal and reputational risk. Cogent securities-fraud class-action notice

Analyst Ratings Changes

Several research analysts recently commented on CCOI shares. Citigroup dropped their target price on shares of Cogent Communications from $22.00 to $20.00 and set a "neutral" rating on the stock in a report on Tuesday, May 19th. Wells Fargo & Company lowered their price target on Cogent Communications from $18.00 to $14.00 and set an "equal weight" rating on the stock in a research report on Friday. JPMorgan Chase & Co. reiterated a "neutral" rating and issued a $22.00 price objective on shares of Cogent Communications in a research note on Friday, May 29th. UBS Group cut their price objective on Cogent Communications from $21.00 to $17.00 and set a "neutral" rating for the company in a research report on Tuesday, May 5th. Finally, Wall Street Zen upgraded Cogent Communications from a "strong sell" rating to a "sell" rating in a research note on Saturday, June 27th. Three research analysts have rated the stock with a Buy rating, seven have assigned a Hold rating and one has issued a Sell rating to the company's stock. According to data from MarketBeat.com, Cogent Communications has a consensus rating of "Hold" and a consensus price target of $23.10.

About Cogent Communications

Cogent Communications NASDAQ: CCOI is a multinational Internet service provider specializing in high-speed Internet access and data transport services. The company operates one of the largest Tier 1 IP networks in the world, offering wholesale and enterprise customers reliable, low-latency connectivity. Cogent's core services include dedicated Internet access, Ethernet transport, wavelength services, and MPLS-based IP Virtual Private Networks, all delivered over its privately owned, fiber-optic backbone.

In addition to network connectivity, Cogent provides data center colocation and managed services designed to support businesses with demanding bandwidth and redundancy requirements.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.

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