Cogent Q2 2020 Earnings Report
Key Takeaways
Cogent Communications reported a service revenue of $141.0 million for Q2 2020, a 0.1% increase from the previous quarter and a 4.6% increase year-over-year. The company experienced growth in on-net revenue and total customer connections, while navigating the challenges posed by the COVID-19 pandemic, including decreased sales productivity among corporate customers.
Service revenue reached $141.0 million, showing a slight increase from the previous quarter.
GAAP gross profit increased by 11.3% year-over-year, reaching $67.2 million.
Total customer connections grew by 4.8% compared to the same period last year, reaching 88,112.
The Board approved a regular quarterly dividend increase of $0.025 per share.
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Forward Guidance
Cogent expects to be impacted by the COVID-19 pandemic. They anticipate a decrease in sales productivity, particularly in sales to its corporate customers. Traffic on the Cogent network is expected to grow at an accelerated rate compared to Cogent’s historical growth rates.
Positive Outlook
- Traffic on the Cogent network is expected to grow at an accelerated rate compared to Cogent’s historical growth rates.
- Cogent's entire workforce continues to work remotely with dedication.
- Cogent continues to be impacted by the COVID-19 pandemic and the accompanying responses by governments around the world.
- Cogent experienced a decrease in sales productivity, particularly in sales to its corporate customers.
- During the second quarter of 2020, the impact of the COVID-19 pandemic on Cogent’s business remained limited.
Challenges Ahead
- Cogent may also experience slowdowns in new customer orders, find it difficult to collect from customers who are experiencing financial distress, encounter difficulties accessing the buildings and locations where Cogent installs new services and serves existing customers, or have difficulties procuring, shipping or installing necessary equipment on its network.
- Cogent may also find that its largest customer base, which is served primarily in its multi-tenant office buildings, may be adversely affected by falling demand for commercial office space in central business districts as companies located in these buildings elect not to return to their office space either on a temporary or even permanent basis.
- In addition, Cogent’s corporate customer base may reduce their overall number of locations due to adverse economic conditions or new working configurations which may adversely affect Cogent’s number of corporate connections and service revenues.
- Cogent does not know the scope and duration of the pandemic, what actions governments may take in the future in response to the pandemic and what the impact will be on the economies of the world.
- Cogent provides no assurance that this will be sufficient to protect its workforce or its key employees.