Cogent Communications Reports Second Quarter 2023 Results Including the Sprint Wireline Business, Records a $1.2 Billion Gain on Bargain Purchase, Records Basic Earnings per Share of $23.84 and Increases its Regular Quarterly Dividend on its Common Stock

About this update from Cogent Communications Holdings, Inc.

Financial and Business Highlights On May 1, 2023 Cogent completed its acquisition of the U.S. long-haul fiber network (including the non- U.S. extensions thereof) of the wireline business of Sprint Communications and its subsidiaries ("Sprint", or the "Wireline Business") from T-Mobile (TMUS). Cogent approved an increase of $0.01 per share to its regular quarterly dividend for a total of $0.945 per share for Q3 2023 as compared to $0.935 per share for Q2 2023 – Cogent's forty-fourth consecutive quarterly dividend increase. The Q3 2023 $0.945 dividend per share represents an annual increase of 4.4% from the dividend per share of $0.905 for Q3 2022. Service revenue increased from Q1 2023 to Q2 2023 by 56.1% to $239.8 million and increased from Q2 2022 to Q2 2023 by 61.5%. Service revenue, on a constant currency basis, increased from Q1 2023 to Q2 2023 by 55.9% and increased from Q2 2022 to Q2 2023 by 61.4%. Service revenue from the Wireline Business was $78.0 million from May 1, 2023 to June 30, 2023 . The gain on bargain purchase from the Sprint acquisition was $1.2 billion for Q2 2023. Included in the gain on bargain purchase was the discounted present value of a $700.0 million IP Transit Services Agreement totaling $620.4 million . Basic and fully diluted earnings per share for Q2 2023 were $23.84 and $23.65 , respectively. Net cash provided by operating activities increased by 130.7% from Q1 2023 to $82.7 million for Q2 2023 and increased from Q2 2022 to Q2 2023 by 140.3%. Sprint acquisition costs were $0.7 million for Q2 2023. EBITDA was $24.2 million for Q2 2023 EBITDA, as adjusted for Sprint acquisition costs and $29.2 million of a cash payment received under an IP Transit Agreement with T-Mobile for Q2 2023 was $54.1 million Amounts billed and amounts paid under an IP Transit Services Agreement with T-Mobile were $58.3 million and $29.2 million in the three months ended June 30, 2023 , respectively. EBITDA margin for Q2 2023 was 10.1%. EBITDA, as adjusted margin for Sprint acquisition costs and cash received under an IP Transit Agreement with T-Mobile for Q2 2023 was 22.5%. WASHINGTON , Aug. 10, 2023 /PRNewswire/ -- Cogent Communications Holdings, Inc. (NASDAQ: CCOI) ("Cogent") today announced service revenue of $239.8 million for the three months ended June 30, 2023 , an increase of 56.1% from the three months ended March 31, 2023 and an increase of 61.5% from the three months ended June 30, 2022 . Foreign exchange rates positively impacted service revenue growth from the three months ended March 31, 2023 to the three months ended June 30, 2023 by $0.4 million and positively impacted service revenue growth from the three months ended June 30, 2022 to the three months ended June 30, 2023 by $0.3 million . On a constant currency basis, service revenue increased by 55.9% from the three months ended March 31, 2023 to the three months ended June 30, 2023 and increased by 61.4% for the three months ended June 30, 2022 to the three months ended June 30, 2023 . Service revenue from the Wireline Business was $78.0 million from May 1, 2023 (the closing date of the Sprint acquisition) to June 30, 2023 . On-net service is provided to customers located in buildings that are physically connected to Cogent's network by Cogent facilities. On-net revenue was $127.7 million for the three months ended June 30, 2023 ; an increase of 9.9% from the three months ended March 31, 2023 and an increase of 14.0% from the three months ended June 30, 2022 . On-net revenue from the Wireline Business was $4.1 million from May 1, 2023 (the closing date of the Sprint acquisition) to June 30, 2023 . Off-net customers are located in buildings directly connected to Cogent's network using other carriers' facilities and services to provide the last mile portion of the link from the customers' premises to Cogent's network. Off-net revenue was $102.0 million for the three months ended June 30, 2023 ; an increase of 173.5% from the three months ended March 31, 2023 and an increase of 181.1% from the three months ended June 30, 2022 . Off-net revenue from the Wireline Business was $63.9 million from May 1, 2023 (the closing date of the Sprint acquisition) to June 30, 2023 . In connection with the Cogent's Sprint acquisition, Cogent expanded its offerings of optical wavelength services and optical transport services over its fiber network. Cogent is selling these wavelength services to its existing customers, Sprint customers and to new customers who require dedicated optical transport connectivity without the capital and ongoing expenses associated with owning and operating network infrastructure. Wavelength revenue was $1.6 million for the three months ended June 30, 2023 . Wavelength revenue from the Wireline Business was $1.6 million from May 1, 2023 (the closing date of the Sprint acquisition) to June 30, 2023 . Non-core services are legacy services, which Cogent acquired and continues to support but does not actively sell. Non-core revenue was $8.6 million for the three months ended June 30, 2023 . Non-core revenue from the Wireline Business was $8.4 million from May 1, 2023 (the closing date of the Sprint acquisition) to June 30, 2023 . GAAP gross profit is defined as total service revenue less network operations expense, depreciation and amortization and equity-based compensation included in network operations expense. GAAP gross margin is defined as GAAP gross profit divided by total service revenue. GAAP gross profit decreased by 27.7% from the three months ended June 30, 2022 to $49.8 million for the three months ended June 30, 2023 and decreased by 28.7% from the three months ended March 31, 2023 . GAAP gross margin was 20.8% for the three months ended June 30, 2023 . Non-GAAP gross profit represents service revenue less network operations expense, excluding equity-based compensation and amounts shown separately (depreciation and amortization expense). Non-GAAP gross margin is defined as Non-GAAP gross profit divided by total service revenue. Non-GAAP gross profit increased by 11.4% from the three months ended June 30, 2022 to $102.5 million for the three months ended June 30, 2023 and increased by 7.8% from the three months ended March 31, 2023 . Non-GAAP gross margin was 42.8% for the three months ended June 30, 2023 . Net cash provided by operating activities increased by 140.3% from the three months ended June 30, 2022 to $82.7 million for the three months ended June 30, 2023 and increased by 130.7% from the three months ended March 31, 2023 . Net cash provided by operating activities from the Wireline Business was $57.9 million from May 1, 2023 (the closing date of the Sprint acquisition) to June 30, 2023 . Earnings before interest, taxes, depreciation and amortization (EBITDA), decreased by 58.7% from the three months ended June 30, 2022 to $24.2 million for the three months ended June 30, 2023 and decreased by 56.9% from the three months ended March 31, 2023 . EBITDA margin was 10.1% for the three months ended June 30, 2023 . EBITDA, as adjusted, excluding Sprint acquisition costs of $0.7 million and including $29.2 million for cash paid under the IP Transit Services Agreement (discussed below) for the three months ended June 30, 2023 was $54.1 million which was a decrease of 7.5% from the three months ended June 30, 2022 and a decrease of 4.2% from the three months ended March 31, 2023 . EBITDA as adjusted margin, excluding Sprint acquisition costs and including $29.2 million for cash paid under the IP Transit Services Agreement, was 22.5% for the three months ended June 30, 2023 . Amounts billed and amounts paid under the IP Transit Services Agreement were $58.3 million and $29.2 million in the three months ended June 30, 2023 , respectively. Basic net income per share was $23.84 for the three months ended June 30, 2023 . Diluted net income per share was $23.65 for the three months ended June 30, 2023 . Basic and diluted income per share include the impact of the $1.2 billion bargain purchase gain from the Sprint acquisition. Total customer connections increased by 58.1% from June 30, 2022 to 151,430 as of June 30, 2023 and increased by 55.4% from March 31, 2023 . Total customer connections from the Sprint acquisition were 46,212 as of June 30, 2023 . On-net customer connections increased by 12.8% from June 30, 2022 to 92,846 as of June 30, 2023 and increased by 11.5% from March 31, 2023 . On-net customer connections from the Sprint acquisition were 2,546 as of June 30, 2023 . Off-net customer connections increased by 194.5% from June 30, 2022 to 38,762 as of June 30, 2023 and increased by 181.2% from March 31, 2023 . Off-net customer connections from the Sprint acquisition were 24,243 as of June 30, 2023 . Wavelength customer connections were 414 as of June 30, 2023 . Wavelength customer connections from the Sprint acquisition were 402 as of June 30, 2023 . Non-core customer connections from the Sprint acquisition were 19,021 as of June 30, 2023 . The number of on-net buildings increased by 132 from June 30, 2022 to 3,227 as of June 30, 2023 and increased by 37 from March 31, 2023 . Technical buildings acquired in the Sprint acquisition were 482 buildings. Gain on bargain purchase and IP Transit Services Agreement The estimated gain on bargain purchase from the Sprint acquisition was $1.2 billion as shown below. The amounts presented are provisional and are subject to change as Cogent refines its estimates and inputs used in the calculations of the assets acquired and liabilities assumed. (In thousands) Gain on bargain purchase Fair value of net assets acquired $559,905 Total net consideration to be received from Seller, net of discounts 595,814 Gain on bargain purchase $1,155,719 IP Transit Services Agreement On the closing date of the Sprint acquisition, Cogent and T-Mobile USA, Inc. ("TMUSA"), a Delaware corporation and direct subsidiary of T-Mobile US, Inc., a Delaware corporation ("T-Mobile") , entered into an agreement for IP transit services (the "IP Transit Services Agreement"), pursuant to which TMUSA will pay Cogent an aggregate of $700.0 million , consisting of (i) $350.0 million in equal monthly installments during the first year after the closing date of the Sprint acquisition and (ii) $350.0 million in equal monthly installments over the subsequent 42 months. Amounts billed and amounts paid under the IP Transit Services Agreement were $58.3 million and $29.2 million in the three months ended June 30, 2023 , respectively. Cogent accounted for the transaction as a business combination under ASC Topic 805 Business Combinations ("ASC 805"). Cogent evaluated what elements are part of the business combination and the consideration exchanged to complete the acquisition. Under ASC 805, Cogent has concluded that the $700 million of payments to be made represent consideration received from T-Mobile to complete the acquisition of a distressed business. The $700.0 million IP Transit Services Agreement was recorded in connection with the Sprint acquisition at its discounted present value resulting in a discount of $79.6 million . The discounted amount totaling $620.4 million was included as a component of the gain on bargain purchase. As a result, revenue was not recognized under the IP Transit Services Agreement. Quarterly Dividend Increase Approved On August 2, 2023 , Cogent's Board approved a regular quarterly dividend of $0.945 per share payable on September 8, 2023 to shareholders of record on August 24, 2023 . This third quarter 2023 regular dividend represents an increase of $0.01 per share, or 1.1%, from the second quarter 2023 regular dividend of $0.935 per share and an annual increase of 4.4% from the third quarter 2022 dividend of $0.905 per share. The payment of any future dividends and any other returns of capital will be at the discretion of the Board and may be reduced, eliminated or increased and will be dependent upon Cogent's financial position, results of operations, available cash, cash flow, capital requirements, limitations under Cogent's debt indentures and other factors deemed relevant by the Board. Residual Impact of COVID-19 Pandemic on Corporate Results Cogent witnessed a deteriorating real estate market in and around the buildings it serves in central business districts in North America , largely attributable to businesses continuing remote work policies instituted during the COVID-19 pandemic. As a result of the rising vacancy levels and falling lease initiations or renewals, Cogent experienced a slowdown in new sales to its corporate customers, which negatively impacted its corporate revenue results. More recently, as the option to fully or partially work from home becomes permanently established at many companies, Cogent's corporate customers are integrating some of the new applications that became part of the remote work environment, which benefits Cogent's corporate business as these customers upgrade their Internet access infrastructure to higher capacity connections. During the three months ended June 30, 2023 , Cogent slowly began to see declining vacancy rates and rising office occupancy rates, and to see positive trends in its corporate business. If and when companies eventually return to the buildings in which Cogent operates, Cogent believes it will present an opportunity for increased sales. However, the exact timing and path of these positive trends remains uncertain, and Cogent may continue to see increased corporate customer turnover, fewer upgrades of existing corporate customer configurations and fewer new tenant opportunities, which would negatively impact Cogent's corporate revenue growth. These and other risks are described in more detail in Cogent's Annual Report on Form 10-K for the year ended December 31, 2022 and in its Quarterly Reports on Form 10-Q for the quarters ended September 30, 2022 , March 31, 2023 and June 30, 2023 . Conference Call and Website Information Cogent will host a conference call with financial analysts at 8:30 a.m. (ET) on August 10, 2023 to discuss Cogent's operating results for the second quarter of 2023 and expectations for full year 2023. Investors and other interested parties may access a live audio webcast of the earnings call in the "Events" section of Cogent's website at www.cogentco.com/events . A replay of the webcast, together with the press release, will be available on the website following the earnings call. A downloadable file of Cogent's "Summary of Financial and Operational Results" and a transcript of its conference call will also be available on Cogent's website following the conference call. About Cogent Communications Cogent Communications (NASDAQ: CCOI) is a multinational, Tier 1 facilities-based ISP. Cogent specializes in providing businesses with high-speed Internet access, Ethernet transport, and colocation services. Cogent's facilities-based, all-optical IP network backbone provides services in 227 markets globally. Cogent Communications is headquartered at 2450 N Street, NW , Washington, D.C. 20037. For more information, visit www.cogentco.com . Cogent Communications can be reached in the United States at (202) 295-4200 or via email at [email protected] . # # # COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIES Summary of Financial and Operational Results Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Metric ($ in 000's, except share and per share data) – unaudited On-Net revenue (1) $112,634 $111,975 $113,219 $114,949 $116,143 $127,665 % Change from previous Qtr. 1.7 % -0.6 % 1.1 % 1.5 % 1.0 % 9.9 % Off-Net revenue (2) $36,387 $36,282 $36,611 $36,873 $37,283 $101,984 % Change from previous Qtr. 0.2 % -0.3 % 0.9 % 0.7 % 1.1 % 173.5 % Wavelength revenue (3) - - - - - $1,585 % Change from previous Qtr. - - - - - NM Non-Core revenue (4) $154 $193 $170 $157 $162 $8,572 % Change from previous Qtr. -0.6 % 25.3 % -11.9 % -7.6 % 3.2 % NM Service revenue – total $149,175 $148,450 $150,000 $151,979 $153,588 $239,806 % Change from previous Qtr. 1.3 % -0.5 % 1.0 % 1.3 % 1.1 % 56.1 % Constant currency total revenue quarterly growth rate – sequential quarters (5) 1.7 % 0.4 % 2.0 % 1.3 % 0.2 % 55.9 % Constant currency total revenue quarterly growth rate – year overyear quarters (5) 2.9 % 2.7 % 4.3 % 5.5 % 4.0 % 61.4 % Constant currency and excise taximpact on total revenue quarterlygrowth rate – sequential quarters (5) 2.1 % 0.6 % 1.6 % 1.3 % 0.1 % 51.4 % Constant currency and excise taximpact on total revenue quarterlygrowth rate – year over yearquarters (5) 3.5 % 3.6 % 4.7 % 5.7 % 3.7 % 56.2 % Excise Taxes included in service revenue (6) $3,742 $3,448 $4,118 $4,086 $4,193 $11,040 % Change from previous Qtr. -13.7 % -7.9 % 19.4 % -0.8 % 2.6 % 163.3 % Corporate revenue (7) $86,116 $85,177 $85,495 $85,783 $85,627 $110,998 % Change from previous Qtr. -0.8 % -1.1 % 0.4 % 0.3 % -0.2 % 29.6 % Net-centric revenue (7) $63,060 $63,274 $64,506 $66,196 $67,961 $87,582 % Change from previous Qtr. 4.4 % 0.3 % 1.9 % 2.6 % 2.7 % 28.9 % Enterprise revenue (7) - - - - - $41,227 % Change from previous Qtr. - - - - - NM Network operations expenses (6) $57,305 $56,369 $57,044 $56,884 $58,489 $137,271 % Change from previous Qtr. 1.8 % -1.6 % 1.2 % -0.3 % 2.8 % 134.7 % GAAP gross profit (8) $69,038 $68,865 $69,883 $71,444 $69,790 $49,793 % Change from previous Qtr. 1.2 % -0.3 % 1.5 % 2.2 % -2.3 % -28.7 % GAAP gross margin (8) 46.3 % 46.4 % 46.6 % 47.0 % 45.4 % 20.8 % Non-GAAP gross profit (5) (9) $91,870 $92,081 $92,956 $95,095 $95,099 $102,535 % Change from previous Qtr. 1.0 % 0.2 % 1.0 % 2.3 % 0.0 % 7.8 % Non-GAAP gross margin (5) (9) 61.6 % 62.0 % 62.0 % 62.6 % 61.9 % 42.8 % Selling, general and administrative expenses (10) $34,715 $33,624 $33,079 $37,713 $38,646 $77,640 % Change from previous Qtr. 3.5 % -3.1 % -1.6 % 14.0 % 2.5 % 100.9 % Depreciation and amortization expense $22,688 $23,071 $22,897 $23,563 $25,160 $52,511 % Change from previous Qtr. 0.5 % 1.7 % -0.8 % 2.9 % 6.8 % 108.7 % Equity-based compensation expense $6,056 $5,907 $6,211 $6,264 $6,581 $6,249 % Change from previous Qtr. 0.0 % -2.5 % 5.1 % 0.9 % 5.1 % -5.0 % Operating income (loss) $28,784 $29,566 $28,095 $27,311 $24,312 $(34,604) % Change from previous Qtr. -20.4 % 2.7 % -5.0 % -2.8 % -11.0 % NM Interest expense (11) $14,168 $13,478 $17,948 $21,990 $19,005 $28,653 % Change from previous Qtr. 3.3 % -4.9 % 33.2 % 22.5 % -13.6 % 50.8 % Non-cash change in valuation – Swap agreement $21,271 $7,510 $16,923 $(2,590) $(1,847) $1,305 Gain on bargain purchase (12) - - - - - $1,155,719 Net income (loss) $1,137 $11,164 $(8,007) $851 $6,148 $1,123,863 Foreign exchange gains (losses) on 2024 Euro Notes $8,014 $23,547 $- $- $- $- Basic net income (loss) per common share $0.02 $0.24 $(0.17) $0.02 $0.13 $23.84 Diluted net income (loss) per common share $0.02 $0.24 $(0.17) $0.02 $0.13 $23.65 Weighted average common shares – basic 46,575,848 46,691,142 46,736,742 46,885,512 47,037,091 47,137,822 % Change from previous Qtr. 0.3 % 0.2 % 0.1 % 0.3 % 0.3 % 0.2 % Weighted average commonshares – diluted 46,929,191 47,029,446 46,736,742 47,196,890 47,381,226 47,526,207 % Change from previous Qtr. -0.1 % 0.2 % -0.6 % 1.0 % 0.4 % 0.3 % EBITDA (5) $57,155 $58,457 $57,873 $57,138 $56,053 $24,156 % Change from previous Qtr. -0.4 % 2.3 % -1.0 % -1.3 % -1.9 % -56.9 % EBITDA margin (5) 38.3 % 39.4 % 38.6 % 37.6 % 36.5 % 10.1 % Sprint acquisition costs (18) $- $- $2,004 $244 $400 $739 Cash payments under IP Transit Services Agreement (13) $- $- $- $- $- $29,167 EBITDA, as adjusted for Sprint acquisition costs and cash payments under IP TransitServices Agreement (5) (13) $57,155 $58,457 $59,877 $57,382 $56,453 $54,062 % Change from previous Qtr. -0.4 % 2.3 % 2.4 % -4.2 % -1.6 % -4.2 % EBITDA, as adjusted for Sprint acquisition costs and cash payments under IP Transit Services Agreement, margin (5) (13) 38.3 % 39.4 % 39.9 % 37.8 % 36.8 % 22.5 % Net cash provided by operating activities $49,411 $34,403 $53,570 $36,323 $35,821 $82,654 % Change from previous Qtr. 37.3 % -30.4 % 55.7 % -32.2 % -1.4 % 130.7 % Capital expenditures $18,121 $17,288 $23,971 $19,591 $23,204 $37,449 % Change from previous Qtr. 18.5 % -4.6 % 38.7 % -18.3 % 18.4 % 61.4 % Principal payments of capital(finance) lease obligations $5,863 $5,236 $9,859 $24,514 $9,450 $7,797 % Change from previous Qtr. -5.9 % -10.7 % 88.3 % 148.6 % -61.5 % -17.5 % Dividends paid $41,298 $41,855 $42,729 $43,975 $45,311 $44,907 Gross Leverage Ratio (5) (13) 4.94 5.22 5.32 5.39 5.47 5.63 Net Leverage Ratio (5) (13) 3.58 3.70 3.93 4.20 4.46 4.56 Customer Connections – end ofperiod (14) (15) On-Net customer connections (14) 81,627 82,277 82,614 82,620 83,268 92,846 % Change from previous Qtr. 1.1 % 0.8 % 0.4 % 0.0 % 0.8 % 11.5 % Off-Net customer connections(14) 12,922 13,160 13,359 13,531 13,785 38,762 % Change from previous Qtr. 2.0 % 1.8 % 1.5 % 1.3 % 1.9 % 181.2 % Wavelength customer connections (3) (14) - - - - - 414 % Change from previous Qtr. - - - - - NM Non-Core customer connections (4) (14) 335 340 348 363 374 19,408 % Change from previous Qtr. 0.3 % 1.5 % 2.4 % 4.3 % 3.0 % NM Total customer connections (14) 94,884 95,777 96,321 96,514 97,427 151,430 % Change from previous Qtr. 1.2 % 0.9 % 0.6 % 0.2 % 0.9 % 55.4 % Corporate customer connections (14) 45,393 45,103 45,176 44,844 44,570 61,284 % Change from previous Qtr. -0.1 % -0.6 % 0.2 % -0.7 % -0.6 % 37.5 % Net-centric customer connections (14) 49,491 50,674 51,145 51,670 52,857 66,711 % Change from previous Qtr. 2.5 % 2.4 % 0.9 % 1.0 % 2.3 % 26.2 % Enterprise customer connections (14) - - - - - 23,435 % Change from previous Qtr. - - - - - NM On-Net Buildings – end of period Multi-Tenant office buildings 1,824 1,826 1,832 1,837 1,841 1,844 Carrier neutral data center buildings 1,187 1,216 1,240 1,264 1,294 1,327 Cogent data centers 54 53 54 54 55 56 Total on-net buildings 3,065 3,095 3,126 3,155 3,190 3,227 Total carrier neutral data center nodes 1,383 1,409 1,433 1,458 1,490 1,526 Square feet – multi-tenant office buildings – on-net 992,336,259 993,590,499 995,522,774 1,000,044,418 1,001,382,577 1,001,491,002 Total Technical Buildings Owned (15) - - - - - 482 Square feet – Technical Buildings Owned (15) - - - - - 1,603,569 Network – end of period (16) Intercity route miles – Leased (16) 60,869 61,024 61,065 61,292 61,300 72,694 Metro route miles – Leased (16) 16,614 16,822 17,477 17,616 17,826 22,556 Metro fiber miles – Leased (16) 40,113 40,529 42,212 42,491 42,863 75,577 Intercity route miles – Owned (16) 2,748 2,748 2,748 2,748 2,748 21,883 Metro route miles – Owned (16) 445 445 445 445 445 1,704 Connected networks – AS's 7,625 7,685 7,766 7,792 7,864 7,891 Headcount – end of period (17) Sales force – quota bearing (17) 479 477 522 548 562 647 Sales force – total (17) 620 619 669 698 714 841 Total employees (17) 987 988 1,041 1,076 1,107 2,020 Sales rep productivity – units per full time equivalent sales rep ("FTE") per month 4.7 4.9 4.6 3.8 4.0 9.2 FTE – sales reps 453 449 465 503 539 567 (1) On-net revenue from Sprint for the period from the closing date of the acquisition ( May 1, 2023 ) to June 30, 2023 was $4.1 million . (2) Off-net revenue from Sprint for the period from the closing date of the acquisition ( May 1, 2023 ) to June 30, 2023 was $63.9 million . (3) In connection with the Cogent's Sprint acquisition, Cogent began to provide optical wavelength services and optical transport services over its fiber network. Wavelength revenue from Sprint for the period from the closing date of the acquisition ( May 1, 2023 ) to June 30, 2023 was $1.6 million (4) Consists of legacy services of companies whose assets or businesses were acquired by Cogent. Non-core revenue from Sprint for the period from the closing date of the acquisition ( May 1, 2023 ) to June 30, 2023 was $8.4 million . (5) See Schedules of Non-GAAP measures below for definitions and reconciliations to GAAP measures. (6) Network operations expense excludes equity-based compensation expense of $144 , $145 , $176 , $88 , $149 and $231 in the three month periods ended March 31, 2022 through June 30, 2023 , respectively. Network operations expense includes excise taxes, including Universal Service Fund fees of $3,742 , $3,448 , $4,118 , $4,086 , $4,193 and $11,040 in the three month periods ended March 31, 2022 through June 30, 2023 , respectively. Excise taxes related to the Wireline Business totaled $7.0 million for the period from May 1, 2023 (the Sprint acquisition closing date) to June 30, 2023 . (7) In connection with the Sprint acquisition, Cogent classified $12.9 million of Sprint monthly recurring revenue and 17,823 customer connections as corporate revenue and corporate customer connections, respectively, $6.5 million of monthly recurring revenue and 5,711 customer connections as net-centric revenue and customer connections, respectively, and $20.1 million of monthly recurring revenue and 23,209 customer connections as enterprise revenue and enterprise customer connections, respectively. Conversely, Cogent reclassified $0.3 million of monthly recurring revenue and 387 customer connections of legacy Cogent monthly recurring revenue to enterprise revenue and enterprise customer connections, respectively ( $0.3 million of corporate monthly recurring revenue and 363 corporate customer connections and $0.02 million of net-centric monthly recurring revenue and 24 net-centric customer connections). (8) GAAP gross profit is defined as total service revenue less network operations expense, depreciation and amortization and equity based compensation included in network operations expense. GAAP gross margin is defined as GAAP gross profit divided by total service revenue. (9) Non-GAAP gross profit represents service revenue less network operations expense, excluding equity-based compensation and amounts shown separately (depreciation and amortization expense). Non-GAAP gross margin is defined as non-GAAP gross profit divided by total service revenue. Management believes that non-GAAP gross profit and non-GAAP gross margin are relevant measures to provide investors. Management uses them to measure the margin available to the company after network service costs, in essence a measure of the efficiency of the Company's network. (10) Excludes equity-based compensation expense of $5,912 , $5,762 , $6,035 , $6,176 , $6,432 and $6,018 in the three month periods ended March 31, 2022 through June 30, 2023 , respectively and excludes $2,004 , $244 , $400 and $739 of Sprint acquisition costs for the three month periods ended September 30, 2022 , December 31, 2022 , March 31, 2023 and June 30, 2023 , respectively. (11) As of June 30, 2023 , the Cogent was party to an interest rate swap agreement (the "Swap Agreement") that has the economic effect of modifying the fixed interest rate obligation associated with its Senior Secured 2026 Notes to a variable interest rate obligation based on the Secured Overnight Financing Rate ("SOFR") so that the interest payable on the 2026 Notes effectively became variable based on overnight SOFR. Interest expense includes $(1.2 million) , $3.3 million and $9.5 million of interest (income) expense for the three month periods ended June 30, 2022 , December 31, 2022 and June 30, 2023 , respectively related to the Swap Agreement. (12) The estimated gain on bargain purchase from the Sprint acquisition was $1.2 billion as shown below. The amounts presented are provisional and are subject to change as Cogent refines its estimates and inputs used in the calculations of the assets acquired and liabilities assumed. (In thousands) Gain on bargain purchase Fair value of net assets acquired $559,905 Total net consideration to be received from Seller, net of discounts 595,814 Gain on bargain purchase $1,155,719 (13) Includes cash payments under an IP Transit Services Agreement, as discussed above, of $29.2 million for the three months ended June 30, 2023 . On the Closing Date, Cogent and TMUSA, Inc. entered into an IP Transit Services Agreement, pursuant to which TMUSA will pay Cogent an aggregate of $700 million , consisting of (i) $350 million in equal monthly installments during the first year after the Closing Date and (ii) $350 million in equal monthly installments over the subsequent 42 months. Amounts billed and amounts paid under the IP Transit Services Agreement were $58.3 million and $29.2 million in the three months ended June 30, 2023 , respectively. (14) Total customer connections from the Sprint acquisition were 46,212 as of June 30, 2023 . On-net customer connections from the Sprint acquisition were 2,546 as of June 30, 2023 . Off-net customer connections from the Sprint acquisition were 24,243 as of June 30, 2023 . Wavelength customer connections from the Sprint acquisition were 402 as of June 30, 2023 . Non-core customer connections from the Sprint acquisition were 19,021 as of June 30, 2023 . Enterprise customer connections from the Sprint acquisition were 23,034 as of June 30, 2023 . Corporate customer connections were 17,571 as of June 30, 2023 . Net-centric customer connections were 5,607 as of June 30, 2023 . (15) In connection with the Cogent's Sprint acquisition, Cogent acquired 482 technical buildings. One of those buildings was converted to a Cogent Data Center . (16) Leased intercity route miles of dark fiber include 11,376 former Sprint route miles and 61,318 Cogent route miles. Leased metro route miles of dark fiber include 4,527 former Sprint route miles and 18,029 Cogent route miles. Leased metro fiber miles of dark fiber include 32,346 Sprint fiber miles and 43,231 Cogent fiber miles. In connection with the Cogent's Sprint acquisition, Cogent acquired 19,135 owned intercity route miles of dark fiber and 1,259 owned metro route miles of dark fiber. (17) In connection with the Cogent's Sprint acquisition Cogent hired 942 total employees, including 75 quota bearing sales employees and 114 sales employees. (18) In connection with the acquisition of the Wireline Business and negotiation of the Purchase Agreement, the Company incurred $2.2 million of professional fees in the year ended December 31, 2022 , $0.4 million in the three months ended March 31, 2023 , and $0.7 million in the three months ended June 30, 2023 . NM Not meaningful Schedules of Non-GAAP Measures EBITDA, EBITDA, as adjusted for Sprint acquisition costs and cash payments made to the Company under the IP Transit Services Agreement , EBITDA margin and EBITDA, as adjusted for Sprint acquisition costs and cash payments made to the Company under the IP Transit Services Agreement , margin EBITDA represents net cash flows provided by operating activities plus changes in operating assets and liabilities, cash interest expense and cash income tax expense. Management believes the most directly comparable measure to EBITDA calculated in accordance with generally accepted accounting principles in the United States , or GAAP, is net cash provided by operating activities. The Company also believes that EBITDA is a measure frequently used by securities analysts, investors, and other interested parties in their evaluation of issuers. EBITDA, as adjusted for Sprint acquisition costs and cash payments under the IP Transit Services Agreement with T-Mobile, represents EBITDA plus costs related to the Company's acquisition of Sprints Wireline Business and cash payments made to the Company under the IP Transit Agreement. EBITDA margin is defined as EBITDA divided by total service revenue. EBITDA, as adjusted for Sprint acquisition costs and cash payments made to the Company under the IP Transit Agreement margin is defined as EBITDA, as adjusted for Sprint acquisition costs and cash payments made to the Company under the IP Transit Agreement, divided by total service revenue. The Company believes that EBITDA, EBITDA, as adjusted for Sprint acquisition costs and cash payments made to the Company under the IP Transit Services Agreement, EBITDA margin and EBITDA as adjusted for Sprint acquisition costs and cash payments made to the Company under the IP Transit Services Agreement margin are useful measures of its ability to service debt, fund capital expenditures, pay dividends and expand its business. The company believes its EBITDA, as adjusted for Sprint acquisition costs and cash payments made to the Company under the IP Transit Services Agreement, is a useful measure because it includes recurring cash flows stemming from the IP Transit Services Agreement that are of the same type as contracted payments under commercial contracts. The measurements are an integral part of the internal reporting and planning system used by management as a supplement to GAAP financial information. EBITDA, EBITDA, as adjusted for Sprint acquisition costs and cash payments made to the Company under the IP Transit Agreement, EBITDA margin and EBITDA as adjusted for Sprint acquisition costs and cash payments made to the Company under the IP Transit Agreement margin are not recognized terms under GAAP and accordingly, should not be viewed in isolation or as a substitute for the analysis of results as reported under GAAP, but rather as a supplemental measure to GAAP. For example, these measures are not intended to reflect the Company's free cash flow, as it does not consider certain current or future cash requirements, such as capital expenditures, contractual commitments, and changes in working capital needs, interest expenses and debt service requirements. The Company's calculations of these measures may also differ from the calculations performed by its competitors and other companies and as such, its utility as a comparative measure is limited. EBITDA, and EBITDA, as adjusted for Sprint acquisition costs and cash payments made to the Company under the IP Transit Services Agreement, are reconciled to net cash provided by operating activities in the table below. Q12022 Q22022 Q32022 Q42022 Q12023 Q22023 ($ in 000's) – unaudited Net cash provided by operating activities $49,411 $34,403 $53,570 $36,323 $35,821 $82,654 Changes in operating assets and liabilities $(6,294) $5,108 $(13,017) $4,152 $1,435 $(90,373) Cash interest expense and income tax expense 14,038 18,946 17,320 16,663 18,797 31,875 EBITDA $57,155 $58,457 $57,873 $57,138 $56,053 $24,156 PLUS: Sprint acquisition costs - - $2,004 $244 $400 $739 PLUS: Cash payments made to the Company under IP Transit Services Agreement - - - - - 29,167 EBITDA, as adjusted for Sprint acquisition costs and cash payments made to the Companyunder IP Transit Services Agreement $57,155 $58,457 $59,877 $57,382 $56,453 $56,042 EBITDA margin 38.3 % 39.4 % 38.6 % 37.6 % 36.5 % 10.1 % EBITDA, as adjusted for Sprint acquisition costs and cash payments made to the Companyunder IP Transit Services Agreement, margin 38.3 % 39.4 % 39.9 % 37.8 % 36.8 % 22.5 % Constant currency revenue is reconciled to service revenue as reported in the tables below. Constant currency impact on revenue changes – sequential periods ($ in 000's) – unaudited Q12022 Q22022 Q32022 Q4 2022 Q1 2023 Q2 2023 Service revenue, as reported – current period $149,175 $148,450 $150,000 $151,979 $153,588 $239,806 Impact of foreign currencies on servicerevenue 516 1,350 1,486 (92) (1,292) (417) Service revenue - as adjusted for currency impact (1) $149,691 $149,800 $151,486 $151,887 $152,296 $239,389 Service revenue, as reported – prior sequential period $147,208 $149,175 $148,450 $150,000 $151,979 $153,588 Constant currency increase $2,483 $625 $3,036 $1,887 $317 $85,801 Constant currency percent increase 1.7 % 0.4 % 2.0 % 1.3 % 0.2 % 55.9 % (1) Service revenue, as adjusted for currency impact, is determined by translating the service revenue for the current period at the average foreign currency exchange rates for the prior sequential period. The Company believes that disclosing quarterly sequential revenue growth without the impact of foreign currencies on service revenue is a useful measure of sequential revenue growth. Service revenue, as adjusted for currency impact, is an integral part of the internal reporting and planning system used by management as a supplement to GAAP financial information. Constant currency impact on revenue changes – prior year periods ($ in 000's) – unaudited Q1 2022 Q22022 Q32022 Q4 2022 Q1 2023 Q2 2023 Service revenue, as reported – current period $149,175 $148,450 $150,000 $151,979 $153,588 $239,806 Impact of foreign currencies on service revenue 1,914 3,417 4,246 3,371 1,553 (277) Service revenue - as adjusted for currency impact (2) $151,089 $151,867 $154,246 $155,350 $155,141 $239,529 Service revenue, as reported – prior year period $146,777 $147,879 $147,927 147,208 149,175 148,450 Constant currency increase $4,312 $3,988 $6,319 8,142 5,966 91,079 Constant currency percent increase 2.9 % 2.7 % 4.3 % 5.5 % 4.0 % 61.4 % (2) Service revenue, as adjusted for currency impact, is determined by translating the service revenue for the current period at the average foreign currency exchange rates for the comparable prior year period. The Company believes that disclosing year over year revenue growth without the impact of foreign currencies on service revenue is a useful measure of revenue growth. Service revenue, as adjusted for currency impact, is an integral part of the internal reporting and planning system used by management as a supplement to GAAP financial information. Revenue on a constant currency basis and adjusted for the impact of excise taxes is reconciled to service revenue as reported in the tables below. Constant currency and excise tax impact on revenue changes – sequential periods ($ in 000's) – unaudited Q12022 Q22022 Q32022 Q4 2022 Q1 2023 Q2 2023 Service revenue, as reported – current period $149,175 $148,450 $150,000 $151,979 $153,588 $239,806 Impact of foreign currencies on service revenue 516 1,350 1,486 (92) (1,292) (417) Impact of excise taxes on service revenue 594 294 (670) 32 (107) (6,847) Service revenue - as adjusted forcurrency and excise taxes impact(3) $150,285 $150,094 $150,816 $151,919 $152,189 $232,542 Service revenue, as reported – prior sequential period $147,208 $149,175 $148,450 $150,000 $151,979 $153,588 Constant currency and excise taxes increase $3,077 $919 $2,366 $1,919 $210 $78,954 Constant currency and excise tax percent increase 2.1 % 0.6 % 1.6 % 1.3 % 0.1 % 51.4 % (3) Service revenue, as adjusted for currency impact and the impact of excise taxes, is determined by translating the service revenue for the current period at the average foreign currency exchange rates for the prior sequential period and adjusting for the changes in excise taxes recorded as revenue between the periods presented. The Company believes that disclosing quarterly sequential revenue growth without the impact of foreign currencies and excise taxes on service revenue is a useful measure of sequential revenue growth. Service revenue, as adjusted for the impact of foreign currency and excise taxes, is an integral part of the internal reporting and planning system used by management as a supplement to GAAP financial information. Constant currency and excise tax impact on revenue changes – prior year periods ($ in 000's) – unaudited Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Service revenue, as reported –current period $149,175 $148,450 $150,000 $151,979 $153,588 $239,806 Impact of foreign currencies on service revenue 1,914 3,417 4,246 3,371 1,553 (277) Impact of excise taxes on service revenue 786 1,363 695 250 (451) (7,592) Service revenue - as adjusted forcurrency and excise taxes impact (4) $151,875 $153,230 $154,941 $155,600 $154,690 $231,937 Service revenue, as reported – prior year period $146,777 $147,879 $147,927 $147,208 $149,175 $148,450 Constant currency and excisetaxes increase $5,098 $5,351 $7,014 $8,392 $5,515 $83,487 Constant currency and excise tax percent increase 3.5 % 3.6 % 4.7 % 5.7 % 3.7 % 56.2 % (4) Service revenue, as adjusted for currency impact and the impact of excise taxes, is determined by translating the service revenue for the current period at the average foreign currency exchange rates for the prior year period and adjusting for the changes in excise taxes recorded as revenue between the periods presented. The Company believes that disclosing quarterly sequential revenue growth without the impact of foreign currencies and excise taxes on service revenue is a useful measure of sequential revenue growth. Service revenue, as adjusted for the impact of foreign currency and excise taxes, is an integral part of the internal reporting and planning system used by management as a supplement to GAAP financial information. Non-GAAP gross profit and Non-GAAP gross margin Non-GAAP gross profit and Non-GAAP gross margin are reconciled to GAAP gross profit and GAAP gross margin in the table below. Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 ($ in 000's) – unaudited Service revenue total $149,175 $148,450 $150,000 $151,979 $153,588 $239,806 Minus - Network operations expense including equity-based compensation and including depreciation and amortization expense 80,137 79,585 80,117 80,535 83,798 190,013 GAAP Gross Profit (1) $69,038 $68,865 $69,883 $71,444 $69,790 $49,793 Plus - Equity-based compensation – network operations expense 144 145 176 88 149 231 Plus – Depreciation and amortization expense 22,688 23,071 22,897 $23,563 $25,160 $52,511 Non-GAAP Gross Profit (2) $91,870 $92,081 $92,956 $95,095 $95,099 $102,535 GAAP Gross Margin (1) 46.3 % 46.4 % 46.6 % 47.0 % 45.4 % 20.8 % Non-GAAP Gross Margin (2) 61.6 % 62.0 % 62.0 % 62.6 % 61.9 % 42.8 % (1) GAAP gross profit is defined as total service revenue less network operations expense, depreciation and amortization and equity-based compensation included in network operations expense. GAAP gross margin is defined as GAAP gross profit divided by total service revenue. (2) Non-GAAP gross profit represents service revenue less network operations expense, excluding equity-based compensation and amounts shown separately (depreciation and amortization expense). Non-GAAP gross margin is defined as non-GAAP gross profit divided by total service revenue. Management believes that non-GAAP gross profit and non-GAAP gross margin are relevant measures to provide to investors, as they are measures that management uses to measure the margin and amount available to the Company after network service costs, in essence, these are measures of the efficiency of the Company's network. Gross and Net Leverage Ratios Gross leverage ratio is defined as total debt divided by the trailing last 12 months EBITDA, as adjusted for Sprint acquisition costs and cash payments under IP Transit Services Agreement. Net leverage ratio is defined as total net debt (total debt minus cash and cash equivalents) divided by the trailing last 12 months EBITDA, as adjusted for Sprint acquisition costs and cash payments under IP Transit Services Agreement. Cogent's gross leverage ratio and net leverage ratio are shown below. ($ in 000's) – unaudited As of June 30, 2023 As of March 31, 2023 Cash and cash equivalents & restricted cash $243,953 $234,422 Debt Capital (finance) leases – current portion 20,114 19,782 Capital (finance) leases – long term 311,405 300,600 Senior Secured 2026 Notes 500,000 500,000 Senior Unsecured 2027 Notes 450,000 450,000 Total debt 1,281,519 1,270,382 Total net debt 1,037,566 1,035,960 Trailing 12 months EBITDA, as adjusted for Sprint acquisition costs and cash payments from IP Transit Services Agreement 227,774 232,169 Gross leverage ratio 5.63 5.47 Net leverage ratio 4.56 4.46 Cogent's SEC filings are available online via the Investor Relations section of www.cogentco.com or on the Securities and Exchange Commission's website at www.sec.gov . COGENT COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2023 AND DECEMBER 31, 2022 (IN THOUSANDS, EXCEPT SHARE DATA) June 30 , 2023 December 31 , 2022 (Unaudited) Assets Current assets: Cash and cash equivalents $ 192,366 $ 223,783 Restricted cash 51,587 52,129 Accounts receivable, net of allowance for credit losses of $4,882 and $2,303 , respectively 89,207 44,123 Due from T-Mobile, IP Transit Services Agreement, current portion, net of discount of $32,391 291,160 — Due from T-Mobile, Transition Services Agreement 7,015 — Prepaid expenses and other current assets 81,854 45,878 Total current assets 713,189 365,913 Property and equipment: Property and equipment 2,856,108 1,714,906 Accumulated depreciation and amortization (1,248,667) (1,170,476) Total property and equipment, net 1,607,441 544,430 Right-of-use leased assets 415,602 81,601 Intangible assets, net 56,070 — Deposits and other assets 22,169 18,238 Due from T-Mobile, IP Transit Services Agreement, net of discount of $39,550 307,732 — Due from T-Mobile, Purchase Agreement, net of discount of $16,526 40,534 — Total assets $ 3,162,737 $ 1,010,182 Liabilities and stockholders' equity Current liabilities: Accounts payable $ 30,278 $ 27,208 Accrued and other current liabilities 117,612 63,889 Due to T-Mobile – Transition Services 118,777 — Due to T-Mobile – Purchase Agreement 3,492 — Current maturities, operating lease liabilities 125,551 12,005 Finance lease obligations, current maturities 20,114 17,182 Total current liabilities 415,824 120,284 Senior secured 2026 notes, net of unamortized debt costs of $776 and $905 , respectively, and discount of $1,032 and $1,203 , respectively 498,192 497,892 Senior unsecured 2027 notes, net of unamortized debt costs of $1,059 and $1,173 , respectively, and discount of $2,218 and $2,456 , respectively 446,723 446,371 Operating lease liabilities, net of current maturities 455,713 94,587 Finance lease obligations, net of current maturities 311,405 287,044 Deferred income tax liabilities 424,507 Other long-term liabilities 71,173 82,636 Total liabilities 2,623,537 1,528,814 Commitments and contingencies: Stockholders' equity (deficit): Common stock, $0.001 par value; 75,000,000 shares authorized; 48,617,162 and 48,013,330 shares issued and outstanding, respectively 49 48 Additional paid-in capital 589,573 575,064 Accumulated other comprehensive loss (15,627) (19,156) Accumulated deficit (34,795) (1,074,588) Total stockholders' equity (deficit) 539,200 (518,632) Total liabilities and stockholders' equity (deficit) $ 3,162,737 $ 1,010,182 COGENT COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED JUNE 30, 2023 AND JUNE 30, 2022 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) Three Months Ended June 30, 2023 Three Months Ended June 30, 2022 (Unaudited) (Unaudited) Service revenue $ 239,806 $ 148,450 Operating expenses: Network operations (including $231 and $145 of equity-based compensation expense, respectively, exclusive of depreciation and amortization shown separately below) 137,502 56,514 Selling, general, and administrative (including $6,018 and $5,762 of equity-based compensation expense, respectively) 83,658 39,386 Acquisition costs – Sprint Wireline Business 739 — Depreciation and amortization 52,511 23,071 Total operating expenses 274,410 118,971 Gains on lease terminations — 87 Operating (loss) income (34,604) 29,566 Interest expense (28,653) (13,478) Gain on bargain purchase – Sprint Wireline Business 1,155,719 — Change in valuation – interest rate swap agreement (1,305) (7,510) Unrealized foreign exchange gain on 2024 Euro Notes — 23,547 Loss on debt extinguishment and redemption – 2024 Euro Notes — (11,885) Interest income – IP Transit Services Agreement 7,669 — Interest income – Purchase Agreement 506 — Interest income and other, net 200 (522) Income before income taxes 1,099,532 19,718 Income tax benefit (expense) 24,331 (8,554) Net income $ 1,123,863 $ 11,164 Comprehensive income: Net income $ 1,123,863 $ 11,164 Foreign currency translation adjustment 1,741 (7,493) Comprehensive income $ 1,125,604 $ 3,671 Net income per common share: Basic net income per common share $ 23.84 $ 0.24 Diluted net income per common share $ 23.65 $ 0.24 Dividends declared per common share $ 0.935 $ 0.88 Weighted-average common shares - basic 47,137,822 46,691,142 Weighted-average common shares - diluted 47,526,207 47,029,446 COGENT COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND JUNE 30, 2022 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) Six Months Ended June 30, 2023 Six Months Ended June 30, 2022 (Unaudited) (Unaudited) Service revenue $ 393,395 $ 297,622 Operating expenses: Network operations (including $380 and $289 of equity-based compensation expense, respectively, exclusive of depreciation and amortization shown separately below) 196,140 113,963 Selling, general, and administrative (including $12,450 and $11,674 of equity-based compensation expense, respectively) 128,736 80,013 Acquisition costs – Sprint Wireline Business 1,139 — Depreciation and amortization 77,669 45,762 Total operating expenses 403,684 239,738 Gains on lease terminations — 460 Operating (loss) income (10,289) 58,344 Interest expense (47,658) (27,648) Gain on bargain purchase – Sprint Wireline Business 1,155,719 — Change in valuation – interest rate swap agreement 542 (28,781) Unrealized foreign exchange gain on 2024 Euro Notes — 31,561 Loss on debt extinguishment and redemption- 2024 Euro Notes — (11,885) Interest income – IP Transit Services Agreement 7,669 — Interest income – Purchase Agreement 506 — Interest income and other, net 3,695 (195) Income before income taxes 1,110,184 21,396 Income tax benefit (expense) 19,827 (9,095) Net income $ 1,130,011 $ 12,301 Comprehensive income : Net income $ 1,130,011 $ 12,301 Foreign currency translation adjustment 3,529 (9,658) Comprehensive income $ 1,133,540 $ 2,643 Net income per common share: Basic net income per common share $ 23.97 $ 0.26 Diluted net income per common share $ 23.79 $ 0.26 Dividends declared per common share $ 1.860 $ 1.735 Weighted-average common shares - basic 47,142,074 46,705,088 Weighted-average common shares - diluted 47,508,334 47,050,911 COGENT COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED JUNE 30, 2023 AND JUNE 30, 2022 (IN THOUSANDS) Three Months Ended June 30, 2023 Three Months Ended June 30, 2022 (Unaudited) (Unaudited) Cash flows from operating activities: Net income $ 1,123,862 $ 11,164 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 52,511 23,071 Amortization of debt discount and premium 328 412 Amortization of discounts, Due from T-Mobile, IP Transit Services & Purchase Agreements (8,175) — Equity-based compensation expense (net of amounts capitalized) 6,249 5,907 Gain on bargain purchase – Sprint Wireline Business (1,155,719) — Gains – lease transactions — — Gains - equipment transactions and other, net 7 1,155 Loss on debt extinguishment and redemption – 2024 Euro Notes — 11,885 Unrealized foreign currency exchange gain on 2024 Euro Notes — (23,547) Deferred income taxes (28,080) 3,196 Changes in operating assets and liabilities: Accounts receivable (4,058) (3,605) Prepaid expenses and other current assets (11,221) (2,197) Change in valuation – interest rate swap agreement 1,305 7,510 Due to T-Mobile – Transition Services Agreement 118,777 — Due from T-Mobile – Transition Services Agreement (7,015) — Unfavorable lease liabilities (6,469) — Accounts payable, accrued liabilities and other long-term liabilities 255 (1,809) Deposits and other assets 97 1,261 Net cash provided by operating activities 82,654 34,403 Cash flows from investing activities: Cash payments - IP Transit Services Agreement – T-Mobile 29,167 — Acquisition of Sprint Wireline Business, net of $47.1 million of cash acquired (14,034) — Purchases of property and equipment (37,449) (17,288) Net cash used in investing activities (22,316) (17,288) Cash flows from financing activities: Dividends paid (44,907) (41,855) Redemption and extinguishment – 2024 Euro Notes — (375,354) Net proceeds from issuance of senior unsecured 2027 Notes - net of debt costs of $1,290 — 446,010 Proceeds from exercises of stock options 240 130 Principal payments on installment payment agreement — (219) Principal payments of finance lease obligations (7,797) (5,236) Net cash (used in) provided by financing activities (52,464) 23,476 Effect of exchange rates changes on cash 1,657 (2,515) Net increase in cash, cash equivalents and restricted cash 9,531 38,076 Cash, cash equivalents and restricted cash, beginning of period 234,422 311,771 Cash, cash equivalents and restricted cash, end of period $ 243,953 $ 349,847 COGENT COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND JUNE 30, 2022 (IN THOUSANDS) Six Months Ended June 30, 2023 Six Months Ended June 30, 2022 (Unaudited) (Unaudited) Cash flows from operating activities: Net income $ 1,130,011 $ 12,301 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 77,669 45,762 Amortization of debt discount and premium 652 829 Amortization of discounts, Due from T-Mobile, IP Transit Services & Purchase Agreements (8,175) — Equity-based compensation expense (net of amounts capitalized) 12,830 11,963 Gain on bargain purchase – Sprint Wireline Business (1,155,719) — Gains - equipment transactions and other, net (608) 1,308 Loss on debt extinguishment and redemption – 2024 Euro Notes — 11,885 Unrealized foreign currency exchange gain on 2024 Euro Notes — (31,561) Deferred income taxes (27,190) 3,138 Changes in operating assets and liabilities: Accounts receivable (4,918) (3,529) Prepaid expenses and other current assets (14,140) (5,150) Change in valuation – interest rate swap agreement (542) 28,781 Due to T-Mobile – Transition Services Agreement 118,777 — Due from T-Mobile – Transition Services Agreement (7,015) — Unfavorable lease liabilities (6,469) — Accounts payable, accrued liabilities and other long-term liabilities 3,179 8,233 Deposits and other assets 133 (146) Net cash provided by operating activities 118,475 83,814 Cash flows from investing activities: Cash payments - IP Transit Services Agreement – T-Mobile 29,167 — Acquisition of Sprint Wireline Business, net of $47.1 million of cash acquired (14,034) — Purchases of property and equipment (60,653) (35,409) Net cash used in investing activities (45,520) (35,409) Cash flows from financing activities: Dividends paid (90,218) (83,153) Redemption and extinguishment – 2024 Euro Notes — (375,354) Net proceeds from issuance of senior unsecured 2027 Notes - net of debt costs of $1,290 — 446,010 Proceeds from exercises of stock options 385 334 Principal payments on installment payment agreement — (790) Principal payments of finance lease obligations (17,247) (11,099) Net cash used in financing activities (107,080) (24,052) Effect of exchange rates changes on cash 2,166 (3,130) Net (decrease) increase in cash, cash equivalents and restricted cash (31,959) 21,223 Cash, cash equivalents and restricted cash, beginning of period 275,912 328,624 Cash, cash equivalents and restricted cash, end of period $ 243,953 $ 349,847 Except for historical information and discussion contained herein, statements contained in this release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to statements identified by words such as "believes," "expects," "anticipates," "estimates," "intends," "plans," "targets," "projects" and similar expressions. The statements in this release are based upon the current beliefs and expectations of Cogent's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. Numerous factors could cause or contribute to such differences, including the impact of our acquisition of the Wireline Business, including our difficulties integrating our business with the acquired Wireline Business, which may result in the combined company not operating as effectively or efficiently as expected; transition services required to support the acquired Wireline Business and the related costs continuing for a longer period that expected,; transition related costs associated with the acquisition; the COVID-19 pandemic and the related government policies; future economic instability in the global economy, including the risk of economic recession, recent bank failure and liquidity concerns at certain other banks or a contraction of the capital markets, which could affect spending on Internet services and our ability to engage in financing activities; the impact of changing foreign exchange rates (in particular the Euro to USD and Canadian dollar to USD exchange rates) on the translation of our non-USD denominated revenues, expenses, assets and liabilities; legal and operational difficulties in new markets; the imposition of a requirement that we contribute to the US Universal Service Fund on the basis of our Internet revenue; changes in government policy and/or regulation, including net neutrality rules by the United States Federal Communications Commission and in the area of data protection; cyber-attacks or security breaches of our network; increasing competition leading to lower prices for our services; our ability to attract new customers and to increase and maintain the volume of traffic on our network; the ability to maintain our Internet peering arrangements and right-of-way agreements on favorable terms; our reliance on a few equipment vendors, and the potential for hardware or software problems associated with such equipment; the dependence of our network on the quality and dependability of third-party fiber and right-of-way providers; our ability to retain certain customers that comprise a significant portion of our revenue base; the management of network failures and/or disruptions; our ability to make payments on our indebtedness as they become due and outcomes in litigation, risks associated with variable interest rates under our interest rate swap agreement, and outcomes in litigation as well as other risks discussed from time to time in our filings with the Securities and Exchange Commission , including, without limitation, our Annual Report on Form 10-K for the year ended December 31, 2022 and our Form 10-Q for the quarters ended September 30, 2022 , March 31, 2023 and June 30, 2023 . Cogent undertakes no duty to update any forward-looking statement or any information contained in this press release or in other public disclosures at any time. ### View original content to download multimedia: https://www.prnewswire.com/news-releases/cogent-communications-reports-second-quarter-2023-results-including-the-sprint-wireline-business-records-a-1-2-billion-gain-on-bargain-purchase-records-basic-earnings-per-share-of-23-84-and-increases-its-regular-quarterly-divi-301897329.html SOURCE Cogent Communications Holdings, Inc.

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