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Cogent (CCOI) Records Q2 Loss, Shares Up on Dividend Hike
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Cogent Communications Holdings, Inc. (CCOI - Free Report) reported modest second-quarter 2021 results with the top line increasing year over year and matching the Zacks Consensus Estimate. However, the company recorded quarterly loss largely due to loss on extinguishment of debt. Nevertheless, the share price moved up 4.6% post earnings release in the consecutive trading sessions to close at $77.96 as on Aug 6, probably due to dividend hike.
Net Loss
Net loss in the June quarter was $2.5 million or loss of 5 cents per share against net income of $8.6 million or 18 cents per share in the prior-year quarter. The decline primarily resulted from loss on debt extinguishment and redemption of 2022 senior secured notes. The Zacks Consensus Estimate was pegged at 24 cents per share.
Cogent Communications Holdings, Inc. Price, Consensus and EPS Surprise
Quarterly service revenues increased 4.9% year over year to $147.9 million, driven by higher on-net revenues, along with a positive impact of foreign exchange. The top line was in sync with the consensus estimate.
On-net revenues grew 7% year over year to $111 million, reflecting an increase in on-net customer connections. On-net service is provided to customers located in buildings that are physically connected to Cogent’s network by its facilities.
Off-net revenues declined 0.9% to $36.7 million. Off-net customers are located in buildings directly connected to Cogent’s network using other carriers’ facilities.
Other Details
GAAP gross profit was $69.6 million, up from $67.2 million for respective margins of 47.1% and 47.7%. Total operating expenses were $119.7 million compared with $113.6 million in the prior-year quarter. Operating income was $28.2 million, up from $27.6 million. EBITDA totaled $57.2 million compared with $53.3 million in the year-ago quarter with respective margins of 38.7% and 37.8%. Total customer connections grew 4.3% to 91,868 on Jun 30, 2021.
Cogent increased its dividend for the 36th consecutive quarter. It increased its quarterly dividend by 2.5 cents per share to 80.5 cents for the third quarter of 2021. The amount is payable on Sep 3 to shareholders on record as of Aug 20.
Cash Flow & Liquidity
During the first six months of 2021, Cogent generated $86.9 million of net cash from operating activities compared with $69.8 million in the year-ago period. As of Jun 30, 2021, the company had $374 million in cash and cash equivalents with $16 million of finance lease obligations.
Cogent issued $500.0 million worth of senior secured notes due in 2026 for net proceeds of $496.9 million, which were used to redeem and extinguish the remaining $329.1 million worth of senior secured notes due in 2022. This resulted in loss on early debt extinguishment to the tune of $10.8 million in the quarter.
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Cogent (CCOI) Records Q2 Loss, Shares Up on Dividend Hike
Cogent Communications Holdings, Inc. (CCOI - Free Report) reported modest second-quarter 2021 results with the top line increasing year over year and matching the Zacks Consensus Estimate. However, the company recorded quarterly loss largely due to loss on extinguishment of debt. Nevertheless, the share price moved up 4.6% post earnings release in the consecutive trading sessions to close at $77.96 as on Aug 6, probably due to dividend hike.
Net Loss
Net loss in the June quarter was $2.5 million or loss of 5 cents per share against net income of $8.6 million or 18 cents per share in the prior-year quarter. The decline primarily resulted from loss on debt extinguishment and redemption of 2022 senior secured notes. The Zacks Consensus Estimate was pegged at 24 cents per share.
Cogent Communications Holdings, Inc. Price, Consensus and EPS Surprise
Cogent Communications Holdings, Inc. price-consensus-eps-surprise-chart | Cogent Communications Holdings, Inc. Quote
Revenues
Quarterly service revenues increased 4.9% year over year to $147.9 million, driven by higher on-net revenues, along with a positive impact of foreign exchange. The top line was in sync with the consensus estimate.
On-net revenues grew 7% year over year to $111 million, reflecting an increase in on-net customer connections. On-net service is provided to customers located in buildings that are physically connected to Cogent’s network by its facilities.
Off-net revenues declined 0.9% to $36.7 million. Off-net customers are located in buildings directly connected to Cogent’s network using other carriers’ facilities.
Other Details
GAAP gross profit was $69.6 million, up from $67.2 million for respective margins of 47.1% and 47.7%. Total operating expenses were $119.7 million compared with $113.6 million in the prior-year quarter. Operating income was $28.2 million, up from $27.6 million. EBITDA totaled $57.2 million compared with $53.3 million in the year-ago quarter with respective margins of 38.7% and 37.8%. Total customer connections grew 4.3% to 91,868 on Jun 30, 2021.
Cogent increased its dividend for the 36th consecutive quarter. It increased its quarterly dividend by 2.5 cents per share to 80.5 cents for the third quarter of 2021. The amount is payable on Sep 3 to shareholders on record as of Aug 20.
Cash Flow & Liquidity
During the first six months of 2021, Cogent generated $86.9 million of net cash from operating activities compared with $69.8 million in the year-ago period. As of Jun 30, 2021, the company had $374 million in cash and cash equivalents with $16 million of finance lease obligations.
Cogent issued $500.0 million worth of senior secured notes due in 2026 for net proceeds of $496.9 million, which were used to redeem and extinguish the remaining $329.1 million worth of senior secured notes due in 2022. This resulted in loss on early debt extinguishment to the tune of $10.8 million in the quarter.
Zacks Rank & Stocks to Consider
Cogent currently has a Zacks Rank #4 (Sell). Some better-ranked stocks in the industry are Clearfield, Inc. (CLFD - Free Report) and Qualcomm Incorporated (QCOM - Free Report) , sporting a Zacks Rank #1 (Strong Buy), and Juniper Networks, Inc. (JNPR - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Clearfield delivered a trailing four-quarter earnings surprise of 49%, on average.
Qualcomm has a long-term earnings growth expectation of 21%. It delivered an earnings surprise of 13.5%, on average, in the trailing four quarters.
Juniper has a long-term earnings growth expectation of 11.8%. It delivered an earnings surprise of 7.5%, on average, in the trailing four quarters.