Back to top

Image: Bigstock

Cogent (CCOI) Q4 Earnings Miss Estimates, Top Line Surges Y/Y

Read MoreHide Full Article

Cogent Communications Holdings Inc. (CCOI - Free Report) reported mixed fourth-quarter 2022 results, wherein the bottom line missed the Zacks Consensus Estimate, but the top line beat the same. The Washington, DC-based leading internet service provider witnessed a top-line improvement year over year, driven by the commercial expansion of its NetCentric business. The pandemic negatively impacted the company's largest customer base, mostly served in its multi-tenant office buildings. The customer base has not yet recovered, impeding the company's revenue prospects.

Net Income

Net income in the December quarter was $0.85 million or 2 cents per share compared with $18.5 million or 39 cents per share in the prior-year quarter. The year-over-year decline, in spite of top-line growth, was primarily caused by significantly higher interest expenses and greater administrative costs. The company reported an adjusted net income of 3 cents per share, which missed the Zacks Consensus Estimate of 18 cents.

In 2022, net income stood at $5.1 million or 11 cents per share compared with respective figures of $48.2 million or $1.03 per share in 2021.

 

Revenues

Quarterly service revenues increased to $152 million from $147.2 million in the year-ago quarter, driven by higher on-net revenues. However, changes in the USF tax rate partially offset this improvement. The top line beat the consensus estimate of $151 million.

On-net revenues in the reported quarter increased to $114.9 million from $110.7 million in the year-ago quarter. On-net customer connections increased 2.3% year over year. Net-centric business experienced healthy demand, driven by continued growth in video, traffic and streaming. The company witnessed a 7% year-over-year increase in Net-centric customer connections. Its on-net ARPU increased due to higher sales of 100- and 400-gigabit connections.

Off-net revenues increased by 1.6% year over year to $36.9 million from $36.3 million in the year-ago quarter. The revenues were impacted by the incorporation of the cost savings that the company obtained from local loop prices.

In 2022, the company generated $599.6 million in revenues compared with $589.8 million in 2021.

Other Details

GAAP gross profit was $71.4 million, up from $68.2 million in the year-ago quarter for margins of 47% and 46.3%, respectively. Operating income was $27.3 million, down from $36.2 million. EBITDA totaled $57.1 million compared with $57.4 million in the year-ago quarter for respective margins of 37.6% and 39%. Rising circuit costs induced by international expansion, higher sales representative headcount and a one-time bonus of $1.5 million for employees impacted the company’s EBITDA figures. Cogent increased its dividend for the 42nd consecutive quarter. It raised its quarterly dividend by 1 cent per share to 92.5 cents.

Cash Flow & Liquidity

In 2022, Cogent generated $173.7 million from operating activities compared with $170.3 million in the prior-year period. As of Dec 31, 2022, the company had $223.8 million in cash and cash equivalents and the finance lease obligations (net of current maturities) at quarter end totaled $287 million compared with respective tallies of $319.6 million and $228.8 million in 2021.

Zacks Rank & Stocks to Consider

Cogent currently carries a Zacks Rank #5 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

United States Cellular Corporation (USM - Free Report) , carrying a Zacks Rank #2, delivered an earnings surprise of 13.1% in the last reported quarter.

United States Cellular Corporation (U.S. Cellular) is the fourth largest full-service wireless carrier in the United States. The company provides a range of wireless products and services, and a high-quality network to increase the competitiveness of local businesses and improve the efficiency of government operations.

Arista Networks, Inc. (ANET - Free Report) , sporting a Zacks Rank #1, delivered an earnings surprise of 14.17%, on average, in the trailing four quarters. Earnings estimates for ANET for the current year stand at $5.76 per share.

Arista Networks, Inc. is engaged in providing cloud networking solutions for data centers and cloud computing environments. The company offers 10/25/40/50/100 Gigabit Ethernet switches and routers optimized for next-generation data center networks.

Splunk Inc. , carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 222%, on average, in the trailing four quarters. It has an Earnings ESP of +0.39%.

Splunk Inc. provides software solutions that enable enterprises to gain real-time operational intelligence by harnessing the value of their data. The company’s offerings enable users to investigate, monitor, analyze and act on machine data and big data, irrespective of format or source and help in operational decision-making

Published in