Cogent Communications — Second Quarter 2026 Earnings Summary

Financial Performance

• Service revenue was $235.6 million for Q2 2026, a decrease of 1.5% from Q1 2026 and 4.3% from Q2 2025.
• On a constant currency basis, service revenue decreased 1.4% sequentially and 4.6% year-over-year.
• GAAP gross profit increased 3.0% sequentially to $57.6 million and 72.1% year-over-year; GAAP gross margin was 24.5% in Q2 2026 compared to 23.4% in Q1 2026 and 13.6% in Q2 2025.
• Non-GAAP gross profit was $110.7 million, increasing 0.3% sequentially and 1.3% year-over-year; Non-GAAP gross margin was 47.0% in Q2 2026.
• EBITDA was $46.1 million for Q2 2026, compared to $45.2 million in Q1 2026 and $48.5 million in Q2 2025; EBITDA margin was 19.6%.
• EBITDA, as adjusted for cash payments under the IP Transit Services Agreement, was $71.1 million, up 1.3% from Q1 2026; adjusted EBITDA margin was 30.2%.
• Net cash provided by operating activities was $3.2 million for Q2 2026, compared to $14.8 million in Q1 2026 and ($44.0) million in Q2 2025.
• Capital expenditures were $38.5 million in Q2 2026.
• Total cash and restricted cash at the end of Q2 2026 was $369.7 million.
• Net earnings per share (basic and diluted) were $1.39 and $1.38, respectively, for Q2 2026, compared to a loss of $0.83 in Q1 2026 and a loss of $1.21 in Q2 2025.
• The gain on the sale of ten owned data centers was $130.7 million and was included in earnings per share.
• Net leverage ratio, adjusted for amounts due from T-Mobile, declined to 6.23 for Q2 2026 from 6.79 in Q1 2026 and 6.61 in Q2 2025.

Guidance and Future Outlook

• No specific forward guidance or future growth targets were provided in the press release.
• The Board stated that future dividends and returns of capital will be at their discretion and dependent on financial position, results of operations, available cash, and debt indenture limitations.

Business Segments and Product Lines

• On-net revenue (including wavelengths) was $150.2 million, up 0.7% sequentially and 6.2% year-over-year.
• Off-net revenue was $84.5 million, down 5.1% sequentially and 17.3% year-over-year.
• Wavelength revenue was $14.8 million, up 9.2% sequentially and 63.8% year-over-year.
• Non-core revenue was $0.9 million, down from $1.0 million in Q1 2026 and $2.7 million in Q2 2025.
• Total customer connections decreased 2.4% year-over-year to 115,839 as of June 30, 2026.
• On-net customer connections increased 0.7% year-over-year to 88,013.
• Off-net customer connections decreased 12.2% year-over-year to 23,033.
• Wavelength customer connections increased 66.4% year-over-year to 2,445.
• The number of on-net buildings increased to 3,627 as of June 30, 2026.
• Cogent offers optical wavelength services in 1,137 locations in the United States, Mexico, and Canada.
• IP Network traffic increased 2% sequentially and 16% year-over-year.

Market and Competitive Landscape

• Foreign exchange rates negatively impacted service revenue growth by $0.3 million from Q1 2026 to Q2 2026.
• Foreign exchange rates positively impacted service revenue growth by $0.7 million from Q2 2025 to Q2 2026.
• The company noted risks regarding increasing competition leading to lower prices for services.

Risks and Challenges

• Risks include difficulties integrating the acquired Wireline Business, transition service costs, delays in network equipment delivery, loss of right-of-way agreements, and global economic instability.
• Risks include changing foreign exchange rates, legal and operational difficulties in new markets, and potential Universal Service Fund contributions based on Internet revenue.
• Risks include cyber-attacks, security breaches, and reliance on third-party fiber and right-of-way providers.
• Risks include the ability to retain key customers, manage network failures, and make payments on indebtedness.

Management Commentary and Tone

• Management highlighted the sale of ten data centers and the resulting gain as a key financial highlight.
• Management noted the continued growth in wavelength revenue and customer connections.
• Management emphasized the reduction in the net leverage ratio adjusted for T-Mobile amounts due.

Analyst Questions and Answers

• No analyst questions and answers were included in the press release text.

Other Key Points

• Cogent sold ten owned data centers for net proceeds of $224.2 million, resulting in a gain of $130.7 million in Q2 2026.
• Cogent purchased $20.4 million par value of its 2032 secured notes at a discount during Q2 2026, resulting in a gain of $1.6 million.
• In July 2026, Cogent purchased an additional $118.4 million par value of its 2032 secured notes at a discount, resulting in a gain of $11.8 million.
• Total purchases of 2032 secured notes through July 31, 2026, were $138.8 million for a total gain of $13.4 million.
• The First Supplemental Indenture for the 2032 secured notes became effective in June 2026, increasing the maximum secured debt leverage ratio from 4.00 to 4.75 and committing to use at least $175.0 million of data center sale proceeds to repurchase debt at a discount.
• The Board approved a regular quarterly dividend of $0.02 per share for Q2 2026, payable on September 4, 2026.
• Cash payments under the IP Transit Services Agreement with T-Mobile were $33.3 million for Q2 2026.
• The $8.3 million monthly payment for July 2026 was received on June 30, 2026.