Cogent Still Rebuilding Its Growth Profile, Declares Dividend

August 9th, 2012 by · Leave a Comment

Currency headwinds and a final bit of fallout from the Megaupload incident slowed down growth at Cogent Communications (NASDAQ:CCOI, news, filings) in the first quarter, as the company priced its dividend payment at $0.10 per share.  Here's a quick table summarizing their results in context:

$ in millions Q2/11 Q3/11 Q4/11 Q1/12 Q2/12
Revenue 75.6 77.4 79.1 76.9 77.8
EBITDA 25.4 26.7 27.8 22.6 25.3
Earnings per share 0.05 0.01 0.12 -0.05 -0.04
Gross Margin 56.2% 56.7% 57.8% 55.4% 55.0%
Adj. EBITDA Margin 33.6% 34.5% 35.2% 29.3% 32.6%
On-net Buildings 1669 1707 1744 1769 1799

Revenues grew sequentially but were nevertheless lighter than anticipated, mainly due to the loss of another 0.9% of revenues from Megaupload that Cogent still had in Q1 that are now obviously gone.  I hadn't realized there was still that speed bump left to cross.  In parallel, the European currency effects slowed them down by $0.4M sequentially.  Without either headwind, Cogent's revenues would have increased 2.9% sequentially.

Despite the revenue levels, EBITDA rose back to $25.3M --  higher than I expected and reflecting cost controls on the SG&A line.  However, this has yet to help on the bottom line, as a loss per share of $0.04 was below composite analyst projections of break-even.

Cogent followed through with its intention to start returning cash to shareholders through a quarterly dividend, declaring it to be $0.10 per common share for shareholders of record on August 22, 2012.  The company has just over 45M shares outstanding, so that will take about $4.5M out of company coffers - which are still overflowing at $237M of course.

Cogent added 30 buildings on-net, while headcount remained basically where it was at the end of Q1, rising to 613 from 612.

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