Cogent Communications Holdings Inc at Citi Global TMT Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Mike Rollins - Citigroup - Analyst : Great. So maybe get us started. It's been at couple of years of change for Cogent both in terms of the acquisition that you completed and you've been integrating and also the operating environment. So just curious if you can provide an update on the strategy for Cogent to grow and create value for shareholders.

Question: Mike Rollins - Citigroup - Analyst : It has that gives us a lot to drill down on the first maybe survey question, we'll get to the pull this up on the screen and you can also, as a reminder, the QR codes with your camera to be able to participate in the survey completely anonymous, and we're not tracking. So let's turn this on the first question, so does Cogent have the right products and strategy to return to significantly positive annual organic revenue growth within the next two years? And just a simple up or down? Yes, or no, while those results kind of come in will keep my eye on the system here. Maybe briefly remind us now that you have additional products within the portfolio, what your addressable market for revenue is and what your share position currently is? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 5:20PM, CCOI.OQ - Cogent Communications Holdings Inc at Citi Global TMT Conference

Question: Mike Rollins - Citigroup - Analyst : Really helpful. And let's go to our first survey results here. So I'm pointing to the survey 89%. Yes, you have the right products and strategy return to significantly positive annual organic revenue growth for the next two years, 11% now. So as you look at your conviction to get back to revenue growth, and I'm also seeing that the visible alpha consensus also has you growing revenue in 2025. Does it seem like a fair expectation?

Question: Mike Rollins - Citigroup - Analyst : Great. And introduce the next survey question, and then we're going to talk a little bit more, maybe that the revenue and the EBITDA environment that will throw this one out there. Will Cogent monetize a significant portion of the noncore assets previously identified as the unused IPV four addresses the data center capacity in the dark fiber over the next 12 months. So we'll get our responses and we'll come back to this in a moment. Just on the revenue side, you mentioned, I think on the earnings call or one of the investor conferences recently that the core corporate performance is back to growth?

Question: Mike Rollins - Citigroup - Analyst : And so as you look at what's happening with the sales force, the intake, the churn, do you feel like this is now back to a sustainable growth position for that segment.

Question: Mike Rollins - Citigroup - Analyst : On the net Centric side, we saw some deceleration there and some deceleration in traffic. What's happening there? And is this something that you view as temporal the decel? Or is there something more significant that we should appreciate from a trending perspective?

Question: Mike Rollins - Citigroup - Analyst : The question and different product than the wage side of the equation. You've talked about the importance on getting the 800 online getting the install windows to the two weeks, and that would be the catalyst to accelerate the bookings relative to the pipeline you have. So that pipeline, is it a little bit of a cycle where you have stuff coming in customers, how it's going to take maybe longer than I like, and they're going elsewhere for their ways. And then you're replenishing that with new interest? Or is there stickiness to this pipeline that you're seeing for the interest to use Cogent for wavelength service?

Question: Mike Rollins - Citigroup - Analyst : And then just thinking about how the use cases, how can the emergence of Gen-AI capabilities help revenue as well as drop off and which is the greater opportunity for value creation at Cogent?

Question: Mike Rollins - Citigroup - Analyst : Let's see what the survey results are for the second question we asked which was that will Cogent monetize a significant portion of the non-core assets over the next 12 months. 40%, yes. 60%, no. So Dave, from your perspective, if you can review for us the opportunities for monetization and how you see these opportunities playing out over the next 12 months? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 5:20PM, CCOI.OQ - Cogent Communications Holdings Inc at Citi Global TMT Conference

Question: Mike Rollins - Citigroup - Analyst : And one of the features of the data centers, there's a number of them. And I think based on the math that the numbers that you gave us, the math is something like two megawatts, the data center on average?

Question: Mike Rollins - Citigroup - Analyst : And is there a difference in value per megawatt between the larger facilities and the smaller facilities? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 5:20PM, CCOI.OQ - Cogent Communications Holdings Inc at Citi Global TMT Conference

Question: Mike Rollins - Citigroup - Analyst : We've got a few minutes left, so I want to hit our last survey question and then I had a question on your EBITDA opportunities. And as well as on capital allocation. So the question is, do you view Cogent's current dividend payout in recent policy to increase the dividend quarterly by $0.01 as sustainable and the choices are for audiences listening in. Yes, the payout in recent policy to grow the quarterly given our sustainable, yes, the payout is sustainable because it's unlikely to grow the dividend per share in the future. No expected dividend payout will eventually need to be cut. So we'll see what our audience thinks of that before we get there. And we talk a little bit about the EBITDA opportunities. So if I'm doing the math right, the EBITDA from the core business without the payments from T-Mobile was about $40 million. So then on the $39 million in the second quarter?

Question: Mike Rollins - Citigroup - Analyst : So $160 million annualized. And I think there's you mentioned the percentage synergies done. So there's about $85 million left for synergy balancing off among them, and that takes you 245 versus the 230 pre-deal?

Question: Mike Rollins - Citigroup - Analyst : So can you walk us through you mentioned the $500 million EBITDA target, how you think about scaling the EBITDA through these cost synergies and then towards that 500 level?

Question: Mike Rollins - Citigroup - Analyst : And that gets us to the capital allocation question. So we look at the results of the survey and 25%. The payout and recent policy to grow the quarterly dividend are sustainable, 50% payout is sustainable for Cogent is unlikely to grow the quarterly dividend per share in the future 25%, expect the dividend payout will eventually need to be cut. Can you walk us through the capital allocation, your outlook for the dividend and what investors should expect.

Question: Mike Rollins - Citigroup - Analyst : And then in terms of and as you look at over the next couple of quarters, are there any step function opportunities that we should be expecting in terms of costs? Our cash flow performance, especially as some of those payments from T-Mobile start to wind down.

Question: Mike Rollins - Citigroup - Analyst : Dave, thank you for joining us.