Cogent Communications (NASDAQ:CCOI, news, filings), which operates both a top IP transit backbone and a substantial on-net metro footprint, checked in with its third quarter results this morning too. The company reported revenues just under analyst expectations but up steadily sequentially, and EBITDA margins expanded nicely once again. The company also maintained its foot in the positive earnings door with earnings per share of $0.01. As usual, here’s a quick table of the more relevant numbers in the context of the past four quarters:
|$ in millions||Q3/10||Q4/10||Q1/11||Q2/11||Q3/11|
|Earnings per share||-0.01||+0.06||-0.01||0.05||0.01|
|Adj. EBITDA Margin||30.4%||32.5%||33.0%||33.6%||34.5%|
Cogent reported 10% traffic growth on its backbone sequentially, and 44% over the same quarter last year. Those are steady numbers, but not big ones. However it has been interesting to watch lately as Cogent’s improving numbers have had little to do with its historically aggressive traffic land grabs and far more to do with simply scaling the business at high incremental margins. EBITDA margins have been rising steadily for a long time now, and they are knocking in the door of 35% — something I wouldn’t have believed if you’d told me a couple of years ago.
Cogent added 38 buildings to its network in the third quarter. That’s slower than in the prior quarter, which was uncharacteristically brisk. This quarter’s rate is much closer to their rate in the quarters prior. The company has continued to be very quiet this year. But I wonder now with their improving results they might not become an M&A target. Hmmm.
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