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Cogent (CCOI) Q2 Earnings Beat Estimates, Revenues Lag

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Cogent Communications Holdings Inc. (CCOI - Free Report) reported mixed second-quarter 2022 results, wherein the bottom line beat the Zacks Consensus Estimate, but the top line missed the same. Cogent continues to operate in an efficient network, serving a growing number of markets, carrier-neutral data and multi-tenant office buildings. The company believes that despite the COVID-19 setback, its existing customer base remains strong.

Bottom Line

Net income in the June quarter was $11.2 million or 24 cents per share against a loss of $2.5 million or loss of 5 cents per share in the prior-year quarter. The year-over-year rise was primarily driven by higher foreign exchange gains on 2024 Euro Notes and lower interest expenses. Net income in the quarter beat the Zacks Consensus Estimate by 2 cents.

 

Revenues

Quarterly service revenues increased to $148.4 million from $147.9 million in the year-ago quarter, driven by higher on-net revenues. The top line, however, missed the consensus estimate of $151 million.

On-net revenues in the reported quarter grew 0.8% year over year to $112 million. On-net customer connections increased 4%. On-net customers, including streaming companies and content distribution service providers, bought a significant amount of bandwidth in carrier-neutral data centers.

Off-net revenues declined 1.1% year over year to $36.3 million. The revenues were impacted by the incorporation of the cost savings that the company obtained from local loop prices.

Other Details

GAAP gross profit was $68.9 million, down from $69.6 million for margins of 46.4% and 47.1%, respectively. Operating income was $29.6 million, up from $28.2 million. EBITDA totaled $58.5 million compared with $57.2 million in the year-ago quarter for respective margins of 39.4% and 38.7%. Cogent increased its dividend for the 40th consecutive quarter. It raised its quarterly dividend by 2.5 cents per share to 90.5 cents.

Cash Flow & Liquidity

During the first six months of 2022, Cogent generated $34.4 million from operating activities compared with $39.7 million in the prior-year period. As of Jun 30, 2022, the company had $312.1 million in cash and cash equivalents. The finance lease obligations (net of current maturities) at quarter end totaled $236.7 million.

Zacks Rank & Stocks to Consider

Cogent currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Lemonade, Inc. (LMND - Free Report) , sporting a Zacks Rank #1, delivered an earnings surprise of 4.6%, on average, in the trailing four quarters. Over the past year, the stock has fallen 71.1%.

Earnings estimates for the current year have moved down 41.7% since August 2021. Lemonade’s primary strategy is to provide insurance products in the United States and Europe.

Celsius Holdings, Inc. (CELH - Free Report) , sporting a Zacks Rank #1, is another key pick for investors. It delivered an earnings surprise of 200% in the previous quarter and a stellar earnings surprise of 206.25%, on average, in the trailing four quarters. Celsius develops, markets, distributes and sells functional drinks and liquid supplements in North America, Europe, Asia and internationally.

Earnings estimates for the current year have moved up 23.7% since August 2021.

Delek US Holdings, Inc. (DK - Free Report) sports a Zacks Rank #1. The Zacks Consensus Estimate for Delek’s current-year earnings has been revised 3239.1% upward since August 2021.