Cogent Communications Holdings, Inc. · NASDAQ:CCOI
Cogent Communications — Q3 2023 Earnings Presentation
28 slides from Cogent Communications's earnings presentation, Nov 9, 2023
Slide 1: Investor Presentation
NASDAQ CCOI INVESTOR PRESENTATION
Slide 2: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements This presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which relate to future, not past, events and are subject to risks and uncertainties. The forward-looking statements,
Slide 3: Company overview
company overview • We operate a global network carrying approximately 25% of Cogent is a all internet traffic leading, global • We offer high speed internet access to three customer bases: ― Corporate: 44% of revenues provider of ― Netcentric: 34% of revenues Internet ― Enterprise: 22% of revenues A
Slide 4: The on-net corporate IP & VPN opportunity
the on-net corporate IP & VPN opportunity Market Players Cogent Advantages Competitors • Price per connection is relatively equivalent • Lumen Technologies • Bell Canada • Verizon • Comcast • Superior reliability: ring architecture; fiber; electronics • AT&T • Spectrum • 3x more reliable, on-net, th
Slide 5: The off-net corporate IP & VPN opportunity
the off-net corporate IP & VPN opportunity Market Players Cogent Advantages Competitors • Lumen Technologies • Bell Canada • Price per connection is relatively equivalent • Verizon • Comcast • Truly dedicated, non-oversubscribed bandwidth • AT&T • Spectrum Location • Connected right to the heart of
Slide 6: The netcentric IP opportunity
the netcentric IP opportunity Market Players Market Dynamics Competitors • New applications drive bandwidth National Regional ― File Sharing/Gaming/Video/Streaming • Lumen Technologies • AT&T • Verizon • Product sold on a per Mbps basis from 1 Gbps to 400 Gbps • NTT • DT • Tata • Internet connectivi
Slide 7: The netcentric wave opportunity
the netcentric WAVE opportunity Market Players Cogent Advantages Competitors • Unique and physical diverse network along railways Global Regional • Cogent owns the fiber • Lumen Technologies • Windstream • Zayo • Uniti • Rapid provisioning • Ubiquities locations Customers Industries such as finance,
Slide 8: The enterprise opportunity
the enterprise opportunity Market Players Cogent Advantages Competitors • Global IP Network in 54 countries • AT&T • BT Global Services • Large global salesforce • Verizon • Orange Business Services • Lumen Technologies • T Systems • Low cost connectivity • Verizon • Telephonica • Over 587 off-net c
Slide 9: Customer segmentation
customer segmentation corporate netcentric enterprise Connections: 55,045 Connections: 62,291 Connections: 20,689 Revenue Revenue Revenue 44% 34% 22% Share: Share: Share: Traffic Share: 5% Traffic Share: 95% Traffic Share: 0.01% Geography: North America Geography: Global Geography: Global Profession
Slide 10: Highly focused sales organization
highly focused sales organization Large Salesforce Consistent Productivity Sales Rep Productivity (orders per month) Salesforce Growth 10 Q1 2010 – Q3 2023 700 647 Q1 2010 – Q3 2023 600 8 500 6 Avg 5.2 400 300 262 4 200 2 100 0 0 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 201
Slide 11: Business breakout
business breakout 6% 2% 1% 4% 10% 12% 22% 20% 20% 44% 7% 27% Q3 2023 34% 21% 84% 85% 1% 5% 2% 2% 10% <1% 45% 46% 98% 98% Q3 2023 95% On Net Off Net 6% 5% <1% 15% 10% 8% 20% 40% 11% 26% 10% 74% 6% 45% 85% 38% 1% Q3 2023 On-Net Corporate Off-Net Corporate US Europe Corporate Netcentric IP (DIA & Trans
Slide 12: Broad, deep, scaleable network
broad, deep, scaleable network • Interconnected with 7,971 access networks • 1,154 metro networks; 18,000+ metro route miles; 43,300+ metro fiber miles • 3,257 On-Net buildings • 61,300+ intercity fiber route miles • 57% multi-tenant office buildings (1,860) • North America Up to 4,800 Gbps per city
Slide 13: Acquired Sprint network
acquired Sprint network Longhaul Fiber Metro Fiber • 19,135 Owned Fiber Route Miles • 1,259 Owned Metro Fiber Route Miles • 11,376 Leased Fiber Route Miles* • 4,047 Leased Metro Fiber Route Miles* * Cogent intends to exit these uneconomical fiber leases and utilize Cogent IRU fiber 13
Slide 14: Network architecture IRU/owned fiber
network architecture IRU/owned fiber • Longhaul and metro backbone is built from a diverse set of 321 IRU suppliers • Owned fiber allows unique rights of way • IRUs from 10 to 44 years; many are pre-paid and have diverse end dates Our network is • O+M expenses are calculated by share of fiber pairs
Slide 15: Cogent's network advantage
cogent’s network advantage Choice Implication • Simple, predictable performance Cogent’s IP over DWDM • Lowest cost network Simple Vendor / • ‘Southwest Airlines’ cost and network offers Configuration operating advantages • Reduced capital intensity and substantial LT Lease of Fiber Pairs operating
Slide 16: Big, diverse & balanced global IP network
big, diverse & balanced global IP network Access to Business/Residential Leading Share of Content Customers Worldwide Providers • 55,045 corporate connections • OTT Media Services primarily in North America • Gaming Providers • CDN Networks ‘Network Effect’ • In 1,860 On-Net MTOBs • 27,826 Off-Net B
Slide 17: Proven integration execution
proven integration execution Investment Customers Network Building Original Peering Access Cogent purchased PP&E Date $34 BILLION of NetRail Sep 2001 $180 $35 Allied Riser Feb 2002 $590 $335 original PSINet* FNSI Apr 2002 Feb 2003 $5,180 $30 $2,175 $5 investment for (Fiber Networ
Slide 18: Revenue growth
-4% -2% 0% 2% 4% 6% 8% -5% -10% 0% 5% 10% 15% Q1 2010 Q1 2010 Q2 2010 Q2 2010 Q3 2010 Q3 2010 Q4 2010 Q4 2010 Q1 2011 Q1 2011 Q2 2011 Q2 2011 Q3 2011 Q3 2011 Q4 2011 Q4 2011 Sequential **Q1 2012 Q1 2012 Q2 2012 Q2 2012 Q3 2012 Q3 2012 Q4 2012 Q4 2012 Q1 2013 Q1 2013 Q2 2013 Q2 2013 Q1 2010 – Q3 2023
Slide 19: Historical & continuing margin expansion
$- $100 $150 $200 $250 $0 $50 $100 $150 $200 $250 $300 $50 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 On net revenue 2010 – 2022 Q2 2012 ($ in millions) Q3 2012 Q4 2012 Q1 2013 Q1 2010 – Q3 2023 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 ($ in millions) & (%
Slide 20: Investing: increasing returns, demand driven, all funded internally
investing: increasing returns, demand driven, all funded internally 120 Capital Expenditures and Principal Payments on IRU Finance (Capital) Leases * 58.5 ($ in millions) 2010 – 2023 YTD 100 45.5 80 23.1 18.2 24.0 60 19.1 15.5 16.8 11.2 10.3 20.2 12.5 11.2 9.1 79.0 86.0 40 52.8 45.9 44.3 49.0 60.0 3
Slide 21: Highlights
highlights ($ in millions) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q/Q % Y/Y % 2022 2022 2022 2022 2023 2023* 2023 Change Change On-Net Revenue $112.6 $112.0 $113.2 $114.9 $116.1 $127.7 $130.0 1.9% 14.9% Wavelength Revenue - - - - - $1.6 $3.0 88.8% - Off-Net Revenue $36.4 $36.3 $36.6 $36.9 $37.3 $102.0 $130.1 28.4% 25
Slide 22: Highly disciplined allocator of capital
highly disciplined allocator of capital • M&A Discipline: Cogent has evaluated and passed on 825 acquisitions since 2005. • Sprint (T-Mobile Wireline) Acquisition: Cogent paid $1 for the Purchased Interests Cogent is o Less a commitment from T-Mobile to purchase $700 Million in IP Transit services f
Slide 23: Consistent return of capital; modest leverage
consistent return of capital; modest leverage Cumulative Total Return of Capital by type ($M) $1,500 $1,000 $500 $- 2007* 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 YTD *Includes June 2007 Note Transaction Cumulative Total Share Buyback Cumulative Total Dividends
Slide 24: Investment highlights
investment highlights • Fundamentals provide for continued, consistent growth and profitability • Focused on fastest growth products in Telecommunications • Independent, low-cost international network Cogent is a • Network footprint targeted at high traffic locations leading global • Substantial net
Slide 25: Cogent Communications Holdings, Inc.
Cogent Communications Holdings, Inc.
Slide 26: Appendix
Appendix Reconciliation of non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP 26
Slide 27: Non-GAAP EBITDA reconciled to GAAP cash flows
Non-GAAP EBITDA and non-GAAP EBITDA, as adjusted, reconciled to GAAP cash flows provided by operating activities Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 ($ in 000’s) – unaudited Net cash flows provided by operating activities $49,411 $34,403 $53,570 $36,323 $35,821 $82,654 $(52,433)
Slide 28: ESG efforts
ESG efforts Cogent is focusing on its ESG performance and improving and broadening its disclosure: Cogent is Environmental • Provided detailed performance characteristics and carbon footprint related to focused on its Network Backbone. • Carbon emissions from Network Backbone declined in 2022. • 75%
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