Cogent Communications (NASDAQ:CCOI, news, filings) has been eerily quiet this year on the press release front, with nothing other than earnings releases, event announcements, and debt sales going over the wires. But their Q2 results filed this morning show more of the same, by which I mean steady, solid growth across the board. Here’s a quick summary of a few relevant metrics in the context of the prior four quarters:
| $ in millions | Q2/10 | Q3/10 | Q4/10 | Q1/11 | Q2/11 |
|---|---|---|---|---|---|
| Revenue | $64.4 | $66.8 | $69.5 | $73.5 | $75.6 |
| EBITDA | $18.9 | $20.3 | $22.6 | $24.2 | $25.4 |
| Earnings per share | -0.02 | -0.01 | +0.06 | -0.01 | 0.05 |
| Gross Margin | 54.8% | 54.3% | 55.5% | 56.9% | 56.2% |
| Adj. EBITDA Margin | 29.3% | 30.4% | 32.5% | 33.0% | 33.6% |
| On-net Buildings | 1503 | 1539 | 1579 | 1609 | 1669 |
Revenues: The second quarter saw revenues of $75.6M, right on target with analyst projections and up 17.4% over the same period last year and 2.8% sequentially. That’s organic growth of course ‐ it has been some time since Cogent dabbled in M&A, as the company feels pricing is too high. On-net revenue grew a bit more slowly this quarter (2.2% sequentially) than in the recent past, but still faster than during the same quarter last year.
EBITDA & Costs: Adjusted EBITDA of $25.4M was just about where one would expect it to be, with adjusted EBITDA margins up sequentially once again to 33.6%. Network expenses were up a bit more than usual, probably due in part to the contribution from faster off-net growth. But SG&A was down a bit more than usual, balancing it out.
On-Net Buildings: Cogent accelerated its buildout, adding 60 new buildings during the quarter. That’s as many as I have ever seen them add in a single quarter, but it’s probably partly just timing. Capex of $13.2M was in the usual neighborhood.
Earnings: Earnings per share during the quarter of $0.05 included a one time benefit from a release from a lease obligation of $0.06. Excluding that, EPS was a loss of $0.01 per share, just missing the break even point and perhaps below expectations, due to higher net interest expenses than in the prior quarter.
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Rob, Is this the same company certain CEO’s describe as giving their services away for free in exchange for ad space on their trucks rolling those internet services out and about?
I’m not familiar with the characterization, but it’s hard to have 30%+ adjusted EBITDA margins under the conditions you describe!
That’s interesting because I have always been taught that the “AD BIZ” brings in “high margin” profits when distributed X the proper venues. 🙂