Cogent’s first quarter results were met with a negative market reaction after the company reported revenue below Wall Street’s expectations, driven by ongoing churn in legacy Sprint contracts and continued efforts to exit low-margin services. CEO Dave Schaeffer openly acknowledged these headwinds, stating, “We have churned the vast majority of undesirable revenue from the Sprint base,” which contributed to the year-on-year revenue decline. On the positive side, Cogent highlighted significant growth in its wavelength services and improvements in operating margin, reflecting realized cost savings from the Sprint integration and ongoing network optimization.
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Cogent (CCOI) Q1 CY2025 Highlights:
- Revenue: $247 million vs analyst estimates of $249.6 million (7.2% year-on-year decline, 1% miss)
- Adjusted EPS: -$1.09 vs analyst estimates of -$1.11 (1.4% beat)
- Adjusted EBITDA: $43.76 million vs analyst estimates of $69.87 million (17.7% margin, 37.4% miss)
- Operating Margin: -16.3%, up from -22.3% in the same quarter last year
- Market Capitalization: $2.3 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Cogent’s Q1 Earnings Call
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Josh (Goldman Sachs) asked about competitive dynamics in the wavelength segment and the outlook for corporate revenue growth. CEO Dave Schaeffer said competitors lack Cogent’s coverage and provisioning speed, and expects corporate revenue to stabilize after churn completes by mid-year.
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Greg Williams (TD Cowen) inquired about the slower dividend growth and milestones to resume a higher pace. Schaeffer linked future dividend increases to deleveraging, stating that net leverage reduction is the key trigger.
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Alex Waters (Bank of America) questioned the trajectory of wavelength average revenue per user (ARPU) and timing of data center monetization. Schaeffer expects ARPU to stabilize around $1,900–$2,000 as higher-capacity sales rise and noted data center deals are progressing but lack a fixed timeline.
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Walter Piecyk (LightShed) asked if wavelength growth is limited by customer readiness or Cogent’s own capacity. Schaeffer clarified that Cogent can provision up to 500 installs per month, but growth is currently paced by customer preparedness.
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Chris Scholl (UBS) asked about the confidence behind raising long-term growth targets and segment-level growth rates. Schaeffer cited improved visibility after Sprint churn and forecasted double-digit NetCentric growth and mid-single-digit corporate growth post-churn.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) Cogent’s ability to complete the churn of low-margin Sprint contracts and achieve a return to revenue growth, (2) the scaling and monetization of its wavelength and data center assets, and (3) continued improvement in adjusted EBITDA margins as cost savings are realized. Progress on data center sales or leases, as well as sustained strength in IPv4 leasing, will also be key markers of execution.
Cogent currently trades at $47.66, down from $53.14 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).
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