Cogent Still Rebuilding Its Growth Profile, Declares Dividend

Currency headwinds and a final bit of fallout from the Megaupload incident slowed down growth at Cogent Communications (NASDAQ:CCOI, news, filings) in the first quarter, as the company priced its dividend payment at $0.10 per share.  Here’s a quick table summarizing their results in context:

$ in millions	Q2/11	Q3/11	Q4/11	Q1/12	Q2/12
Revenue	75.6	77.4	79.1	76.9	77.8
EBITDA	25.4	26.7	27.8	22.6	25.3
Earnings per share	0.05	0.01	0.12	-0.05	-0.04
Gross Margin	56.2%	56.7%	57.8%	55.4%	55.0%
Adj. EBITDA Margin	33.6%	34.5%	35.2%	29.3%	32.6%
On-net Buildings	1669	1707	1744	1769	1799

Revenues grew sequentially but were nevertheless lighter than anticipated, mainly due to the loss of another 0.9% of revenues from Megaupload that Cogent still had in Q1 that are now obviously gone.  I hadn’t realized there was still that speed bump left to cross.  In parallel, the European currency effects slowed them down by $0.4M sequentially.  Without either headwind, Cogent’s revenues would have increased 2.9% sequentially.

Despite the revenue levels, EBITDA rose back to $25.3M —  higher than I expected and reflecting cost controls on the SG&A line.  However, this has yet to help on the bottom line, as a loss per share of $0.04 was below composite analyst projections of break-even.

Cogent followed through with its intention to start returning cash to shareholders through a quarterly dividend, declaring it to be $0.10 per common share for shareholders of record on August 22, 2012.  The company has just over 45M shares outstanding, so that will take about $4.5M out of company coffers – which are still overflowing at $237M of course.

Cogent added 30 buildings on-net, while headcount remained basically where it was at the end of Q1, rising to 613 from 612.

If you haven't already, please take our Reader Survey! Just 3 questions to help us better understand who is reading Telecom Ramblings so we can serve you better!

Categories: Financials · Internet Backbones · Metro fiber