Cogent Communications Holdings Inc at Goldman Sachs Communacopia & Technology Conference Transcript

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

Question: Jim Schneider - Goldman Sachs - Analyst : Excellent I want to start, I think with a topic that I believe is near and dear to your heart that is wavelengths and that business, one of your competitors has had some news out recently related to AI and the use of AI Dark-Fiber for transport between data center properties. So that caused a lot of flows, I think in the sector last couple of weeks. We both have heard your bill. You talk about your ability to provide Dark-Fiber, some of these same customers. And when you evaluated some of these opportunities you found there to be, I think you think you said subpar returns. Maybe talk about just zoom out for us for a second and help frame for us the size of the wavelengths market you see both domestically and internationally?

Question: Jim Schneider - Goldman Sachs - Analyst : And how concentrated do you think is the customer base for that for that market as you see it and maybe say something about how many customers in your view are sort of really positioned to actually be able to handle and manage Dark-Fiber capability?

Question: Jim Schneider - Goldman Sachs - Analyst : And maybe how many customers are able to handle the Dark-Fiber kind of deals you think?

Question: Jim Schneider - Goldman Sachs - Analyst : And from a competitive standpoint, who do you see as your main competitors in this in this part of the market besides, let's say, lumen and they are. 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 09, 2024 / 5:10PM, CCOI.OQ - Cogent Communications Holdings Inc at Goldman Sachs Communacopia & Technology Conference

Question: Jim Schneider - Goldman Sachs - Analyst : In terms of your competitive advantage, I think you've said you want speed of provisioning to be one of your advantages you're going from, what 90 days today to a matter of weeks and some amount of time and give us a sense of like once you get there, how much time advantage in terms of provisioning. Does that give you relative to your competition and then maybe speak to any other points of competitive differentiation like unique routes or otherwise that you think will give you a leg up in market.

Question: Jim Schneider - Goldman Sachs - Analyst : Any unique routes for you?

Question: Jim Schneider - Goldman Sachs - Analyst : In terms of revenue and the revenue ramp you can expect you'd reported just under I think $3.6 million last quarter. You've talked about getting to $500 million annualized over time for wavelengths. Give us a sense about, you know, when this really starts to go nonlinear, you said you expect a big step-up in 2025. But when you can we kind of like sort of approach that $100 million-plus revenue run rate per quarter?

Question: Jim Schneider - Goldman Sachs - Analyst : Very good. And I guess just maybe talk about the backlog. You've kind of touched on it before you've got sort of a backlog of I think of 2,700 or so, I mean, do you think you can get through all that backlog you think you can get through backlog before it potentially expires or goes away into security confidence level in achieving that.

Question: Jim Schneider - Goldman Sachs - Analyst : You've talked about different speed grades for wavelength, the Panel 100 gig, 400 gig. Obviously there was a long time getting to 100, but obviously, that's most of where the sales are today. But our people have asked me, investors are actually well given what this potential JNI data center demand looks like might we see a faster upgrade to 400 gig cycle? What's your view on that? 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 09, 2024 / 5:10PM, CCOI.OQ - Cogent Communications Holdings Inc at Goldman Sachs Communacopia & Technology Conference

Question: Jim Schneider - Goldman Sachs - Analyst : Maybe if we could switch to the core corporate business for a moment to kind of your bread-and-butter business, I think you're post-pandemic fairly cautious previously about the amount of recovery kind of given in office trends, post-COVID and so on. But since then, it's stabilized and is growing okay at this point, again. Maybe talk about some of the key drivers and reasons for that recovery. And how kind of close do you think we are kind of getting back to that core sort of 2% to 3% sequential 10%-plus annualized revenue growth rate in the quarter?

Question: Jim Schneider - Goldman Sachs - Analyst : Well, then that absolve MIVo responsibility, maybe can we talk about the core competitive dynamics in the business because I think historically, there's been a lot of pricing pressure in fiber. And on the corporate side, you've talked about that I think, fairly fairly openly. I mean, are you starting to see those dynamics change structurally any moderation in pricing or potentially improvement in those dynamics?

Question: Jim Schneider - Goldman Sachs - Analyst : I won't come back to the asset sales, but make sure we have time to get to the financial questions. So maybe we'll go there next. I think your last earnings call, you talked about your sort of long-term annual growth targets being 5% to 7%, 100 bps of EBITDA margin expansion annualized on a multiyear basis. What are the kind of key assumptions underlying those targets? And do you see potentially when you sort of get there? And how do you think about arriving at that target?

Question: Jim Schneider - Goldman Sachs - Analyst : Fair enough. Last time you were at can you took you two years deal, you just announced the Sprint acquisition last quarter, you talked about you're 60% to 62% of the way through the original $200 million cost saves target you have outlined. Maybe give us a sense about, you know, how are you feeling about the progress towards those targets? Any update or are you thinking about those numbers being higher over time? And then how quickly can you get to the next 40% versus the first 60%?

Question: Jim Schneider - Goldman Sachs - Analyst : Last quarter your net debt EBITDA leverage ratio was about 3.2 times, I believe that's in your started stated target of 2.5 times to 3.5 times once the T-Mobil payments roll off. How do you think about kind of addressing those headwinds to your leverage, do you think that you're actually going to get enough cost saves to kind of by too much there? So the EBITDA is actually underlying much stronger than that to get to that same level. And towards that, are you comfortable kind of operating towards the high or even above the high end of the target leverage range.

Question: Jim Schneider - Goldman Sachs - Analyst : And I think you've timed that masterfully. So worked out. I think we're out of time. But thank you very much, Dave, for being with us today.