Cogent Communications Holdings, Inc. · NASDAQ:CCOI
Cogent Communications — Q1 2023 Earnings Presentation
26 slides from Cogent Communications's earnings presentation, May 4, 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 24% of all internet traffic Cogent is a • We offer high speed internet access to two customer bases: leading, global ― Corporate: 56% of revenues provider of ― Netcentric: 44% of revenues • We differentiate and gain share in a com
Slide 4: The on-net corporate opportunity
the on-net corporate opportunity Market Players Cogent Advantages Competitors • AT&T • Bell Canada • Price per connection is relatively equivalent • Verizon • Comcast Spectrum • Superior reliability: ring architecture; fiber; electronics • Lumen Technologies • 3x more reliable, on-net, than competit
Slide 5: The off-net corporate opportunity
the off-net corporate opportunity Market Players Cogent Advantages Competitors • AT&T • Bell Canada • Price per connection is relatively equivalent • Verizon • Comcast Spectrum • Lumen Technologies • Truly dedicated, non-oversubscribed bandwidth Location • Connected right to the heart of the interne
Slide 6: The netcentric opportunity
$0 $2 $4 $6 $8 $10 $12 $14 $16 $18 Q1 2010 Q2 2010 Q3 2010 • NTT Q4 2010 Global Q1 2011 • CDNs Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 • Lumen Technologies Q4 2014 Q1 2015 • Access Networks/ISPs Q2 2015 Q3 2015 • Arelion (previo
Slide 7: Customer segmentation
customer segmentation corporate netcentric Connections: 44,570 Connections: 52,857 Revenue Share: 56% Revenue Share: 44% Traffic Share: 4% Traffic Share: 96% Geography: North America Geography: Global Professional Services (Law Firms, Access Networks - ILECs, Cable, ISPs Accounting, Insurance) CDNs
Slide 8: Large & growing addressable market
large & growing addressable market • Corporate services are sold On-Net in MTOBs Our broad Potential Existing Existing Existing Customers Connections Customers network reach On-Net Buildings in MTOBs* in MTOBs in MTOBs Market % 1,841 93,891 36,505 13,085 13.9% results in a * Assumes 51 tenants per b
Slide 9: Highly focused sales organization
100 200 400 500 600 700 0 Q1 2010 Q2 2010 300 262 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Direct Q2 2013 Q3 2013 Salesforce Growth Sales Force Q4 2013 Q1 2010 – Q1 2023 Q1 2014 Systematic Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 4.0 Q1 2
Slide 10: Business breakout
business breakout 3% 3% <1% 8% 15% 56% 21% 35% 17% 44% On-Net Corporate 82% On-Net NetCentric 75% Off-Net Corporate Q1 2023 United States Off-Net NetCentric 41% Europe Non Core Canada, Mexico, South IP (DIA & Transit) VPN Corporate NetCentric America, Asia Pacific & Africa 4% Rack & Power 2% 2% 8% 4
Slide 11: Broad, deep, scaleable network
broad, deep, scaleable network • Interconnected with 7,864 access networks • 1,136 metro networks; 17,800+ metro route miles; 42,800+ metro fiber miles • 3,190 On-Net buildings • 61,300 intercity fiber route miles • 58% multi-tenant office buildings (1,841) • North America Up to 4,400 Gbps per city
Slide 12: Network architecture
network architecture • Longhaul metro backbone is built from a diverse set of 319 IRU suppliers Our network is • IRUs from 10 to 44 years; most are pre-paid and have diverse facilities based— end dates • O+M expenses are calculated by share of fiber pairs thereby IRUs on fiber & reducing the cost to
Slide 13: Cogent's network advantage
cogent’s network advantage Choice Implication Cogent’s IP over DWDM • Simple, predictable performance • Lowest cost network network offers Simple Vendor / Configuration • ‘Southwest Airlines’ cost and operating advantages substantial LT Lease of Fiber Pairs • Reduced capital intensity and operating
Slide 14: Big, diverse & balanced global network
big, diverse & balanced global network Access to Business/Residential Leading Share of Content Customers Worldwide Providers • 44,570+ corporate connections • OTT Media Services primarily in North America • Gaming Providers • CDN Networks ‘Network Effect’ • In 1,841 On-Net MTOBs • 8,484 Off-Net Buil
Slide 15: Proven integration execution
proven integration execution Investment Customers Network Building Original Peering Access Cogent purchased PP&E Date $14 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 16: 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 *Loss of Megaupload Q4 2012 Q4 2012 Q1 2013 Q1 2013 Q2 2013 Q1 2
Slide 17: Historical & continuing margin expansion
$- $100 $150 $200 $250 $100 $120 $140 $160 $180 $0 $50 $20 $40 $60 $80 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 2010 – 2022 ($ in millions) Q2 2012 On-Net Revenue Q3 2012 Q4 2012 Q1 2010 – Q1 2023 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 ($ in millions)
Slide 18: 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 ($ 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 40 52.8 45.9 44.3 49.0 60.0 9.5 35.6 45.2
Slide 19: Highlights
highlights ($ in millions) Q/Q % Y/Y % Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Change Change On-Net Revenue $112.6 $112.0 $113.2 $114.9 $116.1 1.0% 3.1% Off-Net Revenue $36.4 $36.3 $36.6 $36.9 $37.3 1.1% 2.5% Non-Core Revenue $0.2 $0.2 $0.2 $0.2 $0.2 3.2% 5.2% Total Revenue $149.2 $148.5 $150.0 $152
Slide 20: Highly disciplined allocator of capital
highly disciplined allocator of capital • M&A Discipline: Cogent has evaluated and passed on over 800 acquisitions since 2005. Cogent is • Sprint (T-Mobile Wireline) Acquisition: Cogent paid $1 for the Purchased Interests focused on o Less a commitment from T-Mobile to purchase $700 Million in IP Tr
Slide 21: Consistent return of capital; modest leverage
consistent return of capital; modest leverage Cumulative Total Return of Capital by type ($M) $1,400 $1,200 $1,000 $800 $600 $400 $200 $- 2007* 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 YTD *Includes June 2007 Note Transaction Cumulative Total Share Buyback Cumu
Slide 22: Investment highlights
investment highlights • Fundamentals provide for continued, consistent growth and profitability • Independent, low-cost international network • Network footprint targeted at high traffic locations • Substantial network capacity; very high operating leverage with low capital Cogent is a • intensity P
Slide 23: Cogent Communications Holdings, Inc.
Cogent Communications Holdings, Inc.
Slide 24: Appendix
Appendix Reconciliation of non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP 24
Slide 25: Non-GAAP EBITDA reconciled to GAAP cash flows
Non-GAAP EBITDA and non-GAAP EBITDA, as adjusted, reconciled to GAAP cash flows provided by operating activities Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 ($ in 000’s) – unaudited Net cash flows provided by operating activities $49,411 $34,403 $53,570 $36,323 $35,821 Changes in operating assets and li
Slide 26: 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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