Cogent Checks In Light, But Raises Dividend Again

In its Q4 earnings release this morning, Cogent Communications posted revenues and earnings per share that came in short of analyst projections.  But currency fluctuations held back the top line, and didn’t stop them from increasing their quarterly dividend 3.2% to $0.32 plus a special dividend of another 3 cents.

$ in millions	Q4/13	Q1/14	Q2/14	Q3/14	Q4/14
– On-net	66.0	69.1	70.4	71.1	71.3
– Off-net	23.4	23.5	23.9	24.3	25.1
– Other	0.4	0.4	0.4	0.3	0.3
Revenue	89.9	92.9	94.6	95.7	96.7
EBITDA	31.5	32.1	33.5	33.7	33.6
Earnings per share	1.10	0.00	0.03	(0.00)	(0.01)
Adj. Gross Margin	57.4%	58.3%	58.3%	57.9%	57.7%
Adj. EBITDA Margin	35.0%	34.6%	35.4%	35.4%	34.7%
On-net Buildings	1990	2024	2057	2090	2125
Employees	706	724	760	768	776

 

In constant currency terms, revenue growth would have been 10.0% since the same quarter last year, and 2.5% over the third quarter, which would have been pretty good.  It does always seem as if currency effects are a headwind rather than tailwind, but that’s certainly not unique to Cogent and especially not this quarter for companies with significant business in Europe.

Cogent has grown steadily and organically for some time now, albeit not spectacularly.  While inorganic growth was an early feature of its rise, in recent years they have seen the pricing of assets as too high and have not been in the game.

During the quarter, Cogent added another 35 buildings to its network.  Their expansion over the years has been tightly focused on the large multi-tenant office buildings, of which there is not an infinite supply.  They still seem to have enough targets though. Headcount continued to rise steadily, hitting 776 by the end of the year.

Like everyone else, Cogent awaits the details of the FCC’s net neutrality plans.

 

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