Cogent Grew Steadily In Q2/2010

Cogent Communications (NASDAQ:CCOI, news, filings) has been pretty quiet lately, with the only press releases this year being the obligatory announcements of presentations at conferences or of course earnings reports.  Hence I was curious to get a glimpse of where they are at with today’s Q2 earnings release.  Here is a quick glance at the numbers in context of prior quarters:

$ in millions	Q1/09	Q2/09	Q3/09	Q4/09	Q1/10	Q2/10
Revenue	55.1	58.0	60.2	62.5	62.8	64.4
COS	24.2	24.6	26.4	27.6	28.1	29.1
SG&A	17.1	17.0	16.8	17.6	17.4	16.4
EBITDA	13.9	16.7	17.0	17.4	17.5	18.9
Earnings per share	-0.19	-0.10	-0.07	-0.03	-0.01	-0.02
Gross Margins	56.1%	57.6%	57.8%	55.9%	55.3%	54.8%
EBITDA Margins	25.2%	28.7%	28.2%	27.8%	27.9%	29.3%

Revenues of $64.4M were slightly above expectations, as was a loss per share of two cents.  That comes despite a $1.2M revenue hit from currency fluctuations for the company’s European business.  Most of the sequential growth came from the sale of off-net services, which is a continuing trend that can be seen in the company’s declining gross margins.

However, the Q2 SG&A number was the lowest it has been in some time despite the higher revenues.  Therefore, EBITDA of $18.9M and EBITDA margins of 29.3% were new high water marks.  Loss per share of two cents was greater than the prior quarter, however it is this number that I believe Cogent is focusing on right now.  They are aiming squarely at sustainable profitability, something that has eluded them for so long.

Cogent added another 28 on-net buildings, bringing their current total to 1503, which is a continuation of the company’s steady progress on this number.  Traffic was flat with the prior quarter, which the company put down to seasonal fluctuations.

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