PR Newswire | Apr 28, 2021 05:23PM EDT

Quarterly Dividend on its Common Stock by $0.025

04/28 16:22 CDT

Cogent Communications Reports First Quarter Results and Increases its Regular Quarterly Dividend on its Common Stock by $0.025 WASHINGTON, April 28, 2021

WASHINGTON, April 28, 2021 /PRNewswire/ --

Financial and Business Highlights

* Cogent approved an increase of $0.025 per share to its regular quarterly dividend for a total of $0.780 per share for Q2 2021 as compared to $0.755 per share for Q1 2021 - Cogent's thirty-fifth consecutive quarterly dividend increase. * The Q2 2021 $0.780 dividend per share represents an annual increase of 14.7% from the dividend per share of $0.680 for Q2 2020.

* Service revenue increased by 2.0% from Q4 2020 to Q1 2021 and increased from Q1 2020 to Q1 2021 by 4.2%. * GAAP gross profit increased by 3.4% from Q1 2020 to $67.7 million for Q1 2021. Non-GAAP gross profit increased by 7.6% from Q1 2020 to $91.8 million for Q1 2021. * GAAP gross margin decreased by 40 basis points from Q1 2020 to Q1 2021 to 46.1%. Non-GAAP gross margin increased by 200 basis points from Q1 2020 to Q1 2021 to 62.5%.

* Net cash provided by operating activities was $47.1 million for Q1 2021, $37.6 million for Q4 2020 and $28.5 million for Q1 2020. * Sales rep productivity - units per full time equivalent sales rep per month - increased from 4.2 for Q4 2020 to 4.3 for Q1 2021. * EBITDA margin decreased by 90 basis points from Q4 2020 to 37.8% for Q1 2021 and increased by 200 basis points from Q1 2020 to Q1 2021. * EBITDA decreased by 0.2% from Q4 2020 to $55.6 million for Q1 2021 and increased by 10.2% from Q1 2020.

Cogent Communications Holdings, Inc. (NASDAQ: CCOI) ("Cogent") today announced service revenue of $146.8 million for the three months ended March 31, 2021, an increase of 2.0% from the three months ended December 31, 2020 and an increase of 4.2% from the three months ended March 31, 2020. Foreign exchange positively impacted service revenue growth from the three months ended December 31, 2020 to the three months ended March 31, 2021 by $0.4 million and positively impacted service revenue growth from the three months ended March 31, 2020 to the three months ended March 31, 2021 by $2.6 million. On a constant currency basis, service revenue increased by 1.7% from the three months ended December 31, 2020 to the three months ended March 31, 2021 and grew by 2.3% from the three months ended March 31, 2020 to the three months ended March 31, 2021.

On-net service is provided to customers located in buildings that are physically connected to Cogent's network by Cogent facilities. On-net revenue was $109.9 million for the three months ended March 31, 2021; an increase of 2.6% from the three months ended December 31, 2020 and an increase of 6.3% over the three months ended March 31, 2020.

Off-net customers are located in buildings directly connected to Cogent's network using other carriers' facilities and services to provide the last mile portion of the link from the customers' premises to Cogent's network. Off-net revenue was $36.7 million for the three months ended March 31, 2021; an increase of 0.1% from the three months ended December 31, 2020 and a decrease of 1.6% from the three months ended March 31, 2020.

Non-core services are legacy services, which Cogent acquired and continues to support but does not actively sell.

GAAP gross profit is defined as total service revenue less network operations expense, depreciation and amortization and equity-based compensation included in network operations expense. GAAP gross margin is defined as GAAP gross profit divided by total service revenue. GAAP gross profit increased by 3.4% from the three months ended March 31, 2020 to $67.7 million for the three months ended March 31, 2021 and increased by 1.6% from the three months ended December 31, 2020. GAAP gross margin was 46.1% for the three months ended March 31, 2021, 46.5% for the three months ended March 31, 2020 and 46.3% for the three months ended December 31, 2020.

Excise taxes, including Universal Service Fund fees, recorded on a gross basis and included in service revenue and cost of network operations expense were $4.5 million for the three months ended March 31, 2021, $3.7 million for the three months ended March 31, 2020 and $4.1 million for the three months ended December 31, 2020.

Non-GAAP gross profit represents service revenue less network operations expense, excluding equity-based compensation and amounts shown separately (depreciation and amortization expense). Non-GAAP gross margin is defined as Non-GAAP gross profit divided by total service revenue. Non-GAAP gross profit increased by 7.6% from the three months ended March 31, 2020 to $91.8 million for the three months ended March 31, 2021 and increased by 2.7% from the three months ended December 31, 2020. Non-GAAP gross profit margin was 62.5% for the three months ended March 31, 2021, 60.5% for the three months ended March 31, 2020 and 62.1% for the three months ended December 31, 2020.

Net cash provided by operating activities increased by 65.5% from the three months ended March 31, 2020 to $47.1 million for the three months ended March 31, 2021 and increased by 25.4% from the three months ended December 31, 2020.

Earnings before interest, taxes, depreciation and amortization (EBITDA) increased by 10.2% from the three months ended March 31, 2020 to $55.6 million for the three months ended March 31, 2021 and decreased by 0.2% from the three months ended December 31, 2020. EBITDA margin was 37.8% for the three months ended March 31, 2021, 35.8% for the three months ended March 31, 2020 and 38.7% for the three months ended December 31, 2020.

Basic and diluted net income (loss) per share was $0.41 for the three months ended March 31, 2021, $0.20 for the three months ended March 31, 2020 and $(0.14) for the three months ended December 31, 2020.

Unrealized foreign exchange gains (losses) on Cogent's 2024 Senior Euro Unsecured Notes were $18.9 million for the three months ended March 31, 2021, $2.9 million for the three months ended March 31, 2020 and $(19.2) million for the three months ended December 31, 2020.

Total customer connections increased by 4.3% from March 31, 2020 to 90,925 as of March 31, 2021 and increased by 1.5% from December 31, 2020. On-net customer connections increased by 4.3% from March 31, 2020 to 78,389 as of March 31, 2021 and increased by 1.4% from December 31, 2020. Off-net customer connections increased by 4.2% from March 31, 2020 to 12,216 as of March 31, 2021 and increased by 2.1% from December 31, 2020.

The number of on-net buildings increased by 116 from March 31, 2020 to 2,939 as of March 31, 2021 and increased by 25 from December 31, 2020.

Quarterly Dividend Increase Approved

On April 28, 2021, Cogent's Board approved a regular quarterly dividend of $0.780 per common share payable on May 28, 2021 to shareholders of record on May 14, 2021. This second quarter 2021 regular dividend represents a 3.3% increase of $0.025 per share from the first quarter 2021 regular dividend of $0.755 per share and an annual increase of 14.7% from the Q2 2020 dividend of $0.680 per share.

The payment of any future dividends and any other returns of capital will be at the discretion of the Board and may be reduced, eliminated or increased and will be dependent upon Cogent's financial position, results of operations, available cash, cash flow, capital requirements, limitations under Cogent's debt indenture agreements and other factors deemed relevant by the Board.

Impact of COVID-19

Cogent continues to be impacted by the COVID-19 pandemic and the accompanying responses by governments around the world. Cogent's workforce continues to work remotely with dedication.

The ongoing impact of the COVID-19 pandemic and related government restrictions on Cogent's business is unknown as a significant amount of uncertainty and volatility remains. Cogent does not know the ultimate scope and duration of the pandemic, the availability and efficacy of vaccines and therapeutic treatments, government actions that have been taken, or may be taken in the future in response to the pandemic and global economic conditions during and after the pandemic. While Cogent's workforce is working remotely, Cogent provides no assurance that this will be sufficient to protect its workforce or its key employees. Moreover, Cogent's results of operations may be adversely affected in the future as the pandemic and the related government restrictions continue. Cogent may also experience slowdowns in new customer orders, find it difficult to collect from customers who are experiencing financial distress, undergo an increase in customer churn, 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 or slow the pace of opening new offices. 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. As a result, the global economic impact of the COVID-19 pandemic may have prolonged effects that impact Cogent's business well into the future. These and other risks are described in more detail in Cogent's Annual Report on Form 10-K for the year ended December 31, 2020 and our Form 10-Q for the quarter ended March 31, 2021.

Conference Call and Website Information

Cogent will host a conference call with financial analysts at 8:30 a.m. (ET) on April 29, 2021 to discuss Cogent's operating results for the first quarter of 2021 and to discuss Cogent's expectations for full year 2021. Investors and other interested parties may access a live audio webcast of the earnings call in the "Events" section of Cogent's website at www.cogentco.com/events. A replay of the webcast, together with the press release, will be available on the website following the earnings call. A downloadable file of Cogent's "Summary of Financial and Operational Results" and a transcript of its conference call will also be available on Cogent's website following the conference call.

About Cogent Communications

Cogent Communications (NASDAQ: CCOI) is a multinational, Tier 1 facilities-based ISP. Cogent specializes in providing businesses with high-speed Internet access, Ethernet transport, and colocation services. Cogent's facilities-based, all-optical IP network backbone provides services in over 200 markets globally.

Cogent Communications is headquartered at 2450 N Street, NW, Washington, D.C. 20037. For more information, visit www.cogentco.com. Cogent Communications can be reached in the United States at (202) 295-4200 or via email at info@cogentco.com.

COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIESSummary of Financial and Operational Results

Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021

Metric ($ in 000's,except share and per share data) -unaudited

On-Net revenue $103,457 $103,800 $105,091 $107,109 $109,947

% Change from previous Qtr. 0.8% 0.3% 1.2% 1.9% 2.6%

Off-Net revenue $37,321 $37,044 $37,092 $36,672 $36,723

% Change from previous Qtr. -0.4% -0.7% 0.1% -1.1% 0.1%

Non-Core revenue (1) $137 $146 $119 $120 $107

% Change from previous Qtr. 5.4% 6.6% -18.5% 0.8% -10.8%

Service revenue - total $140,915 $140,990 $142,302 $143,901 $146,777

% Change from previous Qtr. 0.4% 0.1% 0.9% 1.1% 2.0%

Constant currency total revenuequarterly growth rate - sequential 0.6% 0.2% -0.2% 0.7% 1.7%quarters (6)

Constant currency total revenuequarterly growth rate - year over 5.6% 5.1% 3.1% 1.2% 2.3%year quarters (6)

Excise Taxes included in service $3,743 $3,298 $3,902 $4,144 $4,528revenue

% Change from previous Qtr. -13.6% -11.9% 18.3% 6.2% 9.3%

Network operations expenses (2) $55,669 $53,581 $54,173 $54,513 $55,016

% Change from previous Qtr. -% -3.8% 1.1% 0.6% 0.9%

GAAP gross profit (3) $65,486 $67,208 $66,164 $66,617 $67,715

% Change from previous Qtr. 1.8% 2.6% -1.6% 0.7% 1.6%

GAAP gross margin (3) 46.5% 47.7% 46.5% 46.3% 46.1%

Non-GAAP gross profit (4) (6) $85,246 $87,409 $88,129 $89,388 $91,761

% Change from previous Qtr. 0.8% 2.5% 0.8% 1.4% 2.7%

Non-GAAP gross margin (4) (6) 60.5% 62.0% 61.9% 62.1% 62.5%

Selling, general and $34,852 $34,061 $33,546 $33,713 $36,211administrative expenses (5)

% Change from previous Qtr. 9.3% -2.3% -1.5% 0.5% 7.4%

Depreciation and amortization $19,508 $19,896 $21,619 $22,455 $21,970expense

% Change from previous Qtr. -2.5% 2.0% 8.7% 3.9% -2.2%

Equity-based compensation expense $5,075 $6,083 $6,522 $5,846 $7,307

% Change from previous Qtr. 2.7% 19.9% 7.2% -10.4% 25.0%

Operating income $25,850 $27,574 $26,036 $27,384 $26,291

% Change from previous Qtr. -7.8% 6.7% -5.6% 5.2% -4.0%

Interest expense $15,220 $15,499 $15,760 $16,007 $15,836

% Change from previous Qtr. 0.1% 1.8% 1.7% 1.6% -1.1%

Net income (loss) $9,227 $8,564 $(4,955) $(6,620) $18,851

Realized and unrealized gains $2,908 $(873) $(17,315) $(19,170) $18,870(losses) on 2024 Euro Notes

Basic net income (loss) per common $0.20 $0.19 $(0.11) $(0.14) $0.41share

Diluted net income (loss) per $0.20 $0.18 $(0.11) $(0.14) $0.41common share

Weighted average common shares - 45,658,565 45,754,880 45,815,718 45,904,943 46,067,096basic

% Change from previous Qtr. 0.2% 0.2% 0.1% 0.2% 0.4%

Weighted average common shares - 46,391,066 46,686,665 45,815,718 45,904,943 46,507,258diluted

% Change from previous Qtr. 0.5% 0.6% -1.9% 0.2% 1.3%

EBITDA (6) $50,394 $53,348 $54,583 $55,675 $55,550

% Change from previous Qtr. -4.4% 5.9% 2.3% 2.0% -0.2%

EBITDA margin 35.8% 37.8% 38.4% 38.7% 37.8%

Gains on asset related $39 $205 $99 $10 $18transactions

EBITDA, as adjusted (6) $50,433 $53,553 $54,682 $55,685 $55,568

% Change from previous Qtr. -4.8% 6.2% 2.1% 1.8% -0.2%

EBITDA, as adjusted, margin 35.8% 38.0% 38.4% 38.7% 37.9%

Net cash provided by operating $28,458 $41,311 $32,980 $37,571 $47,106activities

% Change from previous Qtr. -38.3% 45.2% -20.2% 13.9% 25.4%

Capital expenditures $12,866 $13,930 $13,296 $15,860 $15,444

% Change from previous Qtr. 30.0% 8.3% -4.6% 19.3% -2.6%

Principal payments of capital $6,167 $3,716 $9,509 $4,598 $5,744(finance) lease obligations

% Change from previous Qtr. 200.0% -39.7% 155.9% -51.6% 24.9%

Dividends paid $30,557 $31,738 $32,657 $34,460 $36,081

Purchases of common stock $ - $- $270 $4,225 $-

Gross Leverage Ratio 4.78 5.08 5.10 5.14 4.39

Net Leverage Ratio 2.92 3.07 3.24 3.40 3.31

Customer Connections - end ofperiod

On-Net 75,163 75,927 76,338 77,305 78,389

% Change from previous Qtr. 0.8% 1.0% 0.5% 1.3% 1.4%

Off-Net 11,721 11,846 11,849 11,970 12,216

% Change from previous Qtr. 0.5% 1.1% 0.0% 1.0% 2.1%

Non-Core (1) 329 339 322 325 320

% Change from previous Qtr. 1.2% 3.0% -5.0% 0.9% -1.5%

Total customer connections 87,213 88,112 88,509 89,600 90,925

% Change from previous Qtr. 0.8% 1.0% 0.5% 1.2% 1.5%

On-Net Buildings - end of period

Multi-Tenant office buildings 1,769 1,771 1,783 1,792 1,796

Carrier neutral data center 1,000 1,029 1,047 1,068 1,089buildings

Cogent data centers 54 54 54 54 54

Total on-net buildings 2,823 2,854 2,884 2,914 2,939

Total carrier neutral data center 1,175 1,203 1,225 1,252 1,274nodes

Square feet - multi-tenant office 961,154,384 962,049,183 968,355,695 976,813,678 978,095,164buildings - on-net

Network - end of period

Intercity route miles 58,009 58,009 58,142 58,285 58,761

Metro fiber miles 36,079 36,438 36,725 37,567 38,058

Connected networks - AS's 7,042 7,133 7,222 7,338 7,471

Headcount - end of period

Sales force - quota bearing 542 572 597 569 547

Sales force - total 684 716 740 712 693

Total employees 1,052 1,083 1,110 1,083 1,066

Sales rep productivity - units perfull time equivalent sales rep 4.5 4.0 3.7 4.2 4.3("FTE") per month

FTE - sales reps 522 533 563 542 522

(1) Consists of legacy services of companies whose assets or businesses were acquired by Cogent.

Network operations expense excludes equity-based compensation expense of $252, $305, $346, $316 and $2,076 in the three month periods ended March(2) 31, 2020 through March 31, 2021, respectively. Network operations expense includes excise taxes, including Universal Service Fund fees of $3,743, $3,298, $3,902, $4,144 and $4,528 in the three month periods ended March 31, 2020 through March 31, 2021, respectively.

GAAP gross profit is defined as total service revenue less network(3) operations expense, depreciation and amortization and equity based compensation included in network operations expense. GAAP gross margin is defined as GAAP gross profit divided by total service revenue.

Non-GAAP gross profit represents service revenue less network operations expense, excluding equity-based compensation and amounts shown separately (depreciation and amortization expense). Non-GAAP gross margin is defined(4) as non-GAAP gross profit divided by total service revenue. Management believes that non-GAAP gross profit and non-GAAP gross profit margin are relevant metrics to provide investors, as they are metrics that management uses to measure the margin available to the company after network service costs, in essence a measure of the efficiency of the Company's network.

Excludes equity-based compensation expense of $4,823, $5,778, $6,176,(5) $5,530 and $5,231 in the three month periods ended March 31, 2020 through March 31, 2021, respectively.

(6) See Schedules of Non-GAAP measures below for definitions and reconciliations to GAAP measures.

Schedules of Non-GAAP Measures

EBITDA and EBITDA, as adjusted

EBITDA represents net cash flows provided by operating activities plus changes in operating assets and liabilities, cash interest expense and cash income tax expense. Management believes the most directly comparable measure to EBITDA calculated in accordance with generally accepted accounting principles in the United States, or GAAP, is net cash provided by operating activities. The Company also believes that EBITDA is a measure frequently used by securities analysts, investors, and other interested parties in their evaluation of issuers. EBITDA, as adjusted, represents EBITDA plus net gains (losses) on asset related transactions.

The Company believes that EBITDA, and EBITDA, as adjusted, are useful measures of its ability to service debt, fund capital expenditures and expand its business. EBITDA, and EBITDA, as adjusted are an integral part of the internal reporting and planning system used by management as a supplement to GAAP financial information. EBITDA, and EBITDA, as adjusted are not recognized terms under GAAP and accordingly, should not be viewed in isolation or as a substitute for the analysis of results as reported under GAAP, but rather as a supplemental measure to GAAP. For example, these metrics are not intended to reflect the Company's free cash flow, as it does not consider certain current or future cash requirements, such as capital expenditures, contractual commitments, and changes in working capital needs, interest expenses and debt service requirements. The Company's calculations of these metrics may also differ from the calculations performed by its competitors and other companies and as such, its utility as a comparative measure is limited.

EBITDA, and EBITDA, as adjusted, are reconciled to net cash provided byoperating activities in the table below.

Q1 Q2 Q3 Q4 Q1 2020 2020 2020 2020 2021

($ in 000's) - unaudited

Net cash provided by operating $28,458 $41,311 $32,980 $37,571 $47,106activities

Changes in operating assets and 5,325 $ $6,255 $1,920 $liabilities (3,232) (9,060)

Cash interest expense and income tax 16,611 15,269 15,348 16,184 17,504expense

EBITDA $50,394 $53,348 $54,583 $55,675 $55,550

PLUS: Gains on asset related 39 205 99 10 18transactions

EBITDA, as adjusted $50,433 $53,553 $54,682 $55,685 $55,568

EBITDA margin 35.8% 37.8% 38.4% 38.7% 37.8%

EBITDA, as adjusted, margin 35.8% 38.0% 38.4% 38.7% 37.9%

Constant currency revenue is reconciled to service revenue as reported in thetables below.

Constant currency impact on revenue changes - sequential periods

($ in 000's) - unaudited Q1 Q2 Q3 Q4 Q1 2020 2020 2020 2020 2021

Service revenue, as reported - $140,915 $140,990 $142,302 $143,901 $146,777current period

Impact of foreign currencies on 184 202 (1,616) (621) (447)service revenue

Service revenue - as adjusted $141,099 $141,192 $140,686 $143,280 $146,330for currency impact (1)

Service revenue, as reported - $140,292 $140,915 $140,990 $142,302 $143,901prior sequential period

Constant currency (decrease) $807 $277 $(304) $978 $2,429increase

Constant currency percent 0.6% 0.2% (0.2)% 0.7% 1.7%(decrease) increase

Service revenue, as adjusted for currency impact, is determined by translating the service revenue for the current period at the average foreign currency exchange rates for the prior sequential period. The(1) Company believes that disclosing quarterly sequential revenue growth without the impact of foreign currencies on service revenue is a useful measure of sequential revenue growth. Service revenue, as adjusted for currency impact, is an integral part of the internal reporting and planning system used by management as a supplement to GAAP financial information.

Constant currency impact on revenue changes - prior year periods

($ in 000's) - unaudited Q1 Q2 Q3 Q4 Q1 2020 2020 2020 2020 2021

Service revenue, as reported - $140,915 $140,990 $142,302 $143,901 $146,777current period

Impact of foreign currencies on 746 674 (1,141) (1,891) (2,608)service revenue

Service revenue - as adjusted for $141,661 $141,664 $141,161 $142,010 $144,169currency impact (2)

Service revenue, as reported - $134,137 $134,789 $136,942 $140,292 $140,915prior year period

Constant currency increase $7,524 $6,875 $4,219 $1,718 $3,254

Percent increase 5.6% 5.1% 3.1% 1.2% 2.3%

Service revenue, as adjusted for currency impact, is determined by translating the service revenue for the current period at the average foreign currency exchange rates for the comparable prior year period. The(2) Company believes that disclosing year over year revenue growth without the impact of foreign currencies on service revenue is a useful measure of revenue growth. Service revenue, as adjusted for currency impact, is an integral part of the internal reporting and planning system used by management as a supplement to GAAP financial information.

Non-GAAP gross profit and Non-GAAP gross margin

Non-GAAP gross profit and Non-GAAP gross margin are reconciled to GAAP grossprofit and GAAP gross margin in the table below.

Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021

($ in 000's) - unaudited

Service revenue total $140,915 $140,990 $142,302 $143,901 $146,777

Minus - Network operations expenseincluding equity-basedcompensation and including 75,429 73,782 76,138 77,284 79,062depreciation and amortizationexpense

GAAP Gross Profit (1) $65,486 $67,208 $66,164 $66,617 $67,715

Plus - Equity-based compensation 252 305 346 316 2,076- network operations expense

Plus - Depreciation and 19,508 19,896 21,619 22,455 21,970amortization expense

Non-GAAP Gross Profit (2) $85,246 $87,409 $88,129 $89,388 $91,761

GAAP Gross Margin (1) 46.5% 47.7% 46.5% 46.3% 46.1%

Non-GAAP Gross Margin (2) 60.5% 62.0% 61.9% 62.1% 62.5%

GAAP gross profit is defined as total service revenue less network(1) operations expense, depreciation and amortization and equity-based compensation included in network operations expense. GAAP gross margin is defined as GAAP gross profit divided by total service revenue.

Non-GAAP gross profit represents service revenue less network operations expense, excluding equity-based compensation and amounts shown separately (depreciation and amortization expense). Non-GAAP gross margin is defined as non-GAAP gross profit divided by total service revenue. Management(2) believes that non-GAAP gross profit and non-GAAP gross margin are relevant metrics to provide to investors, as they are metrics that management uses to measure the margin and amount available to the Company after network service costs, in essence these are measures of the efficiency of the Company's network.

Gross and Net Leverage Ratios

Gross leverage ratio is defined as total debt divided by the trailing last 12 months EBITDA, as adjusted. Net leverage ratio is defined as total net debt (total debt minus cash and cash equivalents) divided by the trailing last 12 months EBITDA, as adjusted. Cogent's gross leverage ratio and net leverage ratio are shown below.

($ in 000's) - unaudited As of December 31, As of March 31, 2020 2021

Cash and cash equivalents $371,301 $237,980

Debt

Capital (finance) leases - current 15,702 15,996 portion

Capital (finance) leases - long term 203,438 202,514

Senior Secured 2022 Notes 445,000 329,080

Senior Unsecured Euro 2024 Notes 429,264 410,471

Note payable 7,712 5,334

Total debt 1,101,116 963,395

Total net debt 729,815 725,415

Trailing 12 months EBITDA, as 214,353 219,488 adjusted

Gross leverage ratio 5.14 4.39

Net leverage ratio 3.40 3.31

Cogent's SEC filings are available online via the Investor Relations section of www.cogentco.com or on the Securities and Exchange Commission's website at www.sec.gov.

COGENT COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETSAS OF MARCH 31, 2021 AND DECEMBER 31, 2020(IN THOUSANDS, EXCEPT SHARE DATA)

March 31, December 31, 2021 2020

(Unaudited)

Assets

Current assets:

Cash and cash equivalents $ 237,980 $ 371,301

Accounts receivable, net of allowance for credit 41,234 44,185losses of $1,457 and $1,921, respectively

Prepaid expenses and other current assets 37,056 40,851

Total current assets 316,270 456,337

Property and equipment, net 425,492 430,335

Right-of-use leased assets 97,365 99,666

Deposits and other assets 13,835 14,139

Total assets $ 852,962 $ 1,000,477

Liabilities and stockholders' equity

Current liabilities:

Accounts payable $ 12,190 $ 9,775

Accrued and other current liabilities 49,656 51,029

Senior secured 2022 notes, net of unamortized debt 328,777 -costs of $733 and including premium of $430

Installment payment agreement, current portion, net 5,035 6,786of discount of $80 and $136, respectively

Current maturities, operating lease liabilities 11,055 11,151

Current maturities, finance lease obligations 15,996 15,702

Total current liabilities 422,709 94,443

Senior unsecured 2024 Euro notes, net ofunamortized debt costs of $2,751 and $2,961, 406,700 425,160 respectively, and net of discount of $1,020 and$1,142, respectively

Senior secured 2022 notes, net of unamortized debt - 444,492costs of $1,052 and including premium of $544

Operating lease liabilities, net of current 109,377 111,318maturities

Finance lease obligations, net of current 202,514 203,438maturities

Other long term liabilities 19,221 14,792

Total liabilities 1,160,521 1,293,643

Commitments and contingencies:

Stockholders' equity:

Common stock, $0.001 par value; 75,000,000 sharesauthorized; 47,522,672 and 47,214,077 shares 48 47 issued and outstanding, respectively

Additional paid-in capital 523,913 515,867

Accumulated other comprehensive income - foreign (6,516) (1,306)currency translation

Accumulated deficit (825,004) (807,774)

Total stockholders' deficit (307,559) (293,166)

Total liabilities and stockholders' deficit $ 852,962 $ 1,000,477

COGENT COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEFOR THE THREE MONTHS ENDED MARCH 31, 2021 AND MARCH 31, 2020(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

Three Months Three Months Ended Ended March 31, 2021 March 31, 2020

(Unaudited) (Unaudited)

Service revenue $ 146,777 $ 140,915

Operating expenses:

Network operations (including $2,076 and $252of equity-based compensation expense, respectively, exclusive of 57,092 55,921depreciation and amortization shown separatelybelow)

Selling, general, and administrative (including$5,231 and $4,823 of equity-based 41,442 39,675 compensation expense, respectively)

Depreciation and amortization 21,970 19,508

Total operating expenses 120,504 115,104

Gains on equipment transactions 18 39

Operating income 26,291 25,850

Interest expense (15,836) (15,220)

Unrealized foreign exchange gain on 2024 Euro 18,870 2,904Notes

Loss on debt extinguishment and repurchase - (3,868) -2022 Notes

Interest income and other, net 744 (699)

Income before income taxes 26,201 12,835

Income tax provision (7,350) (3,608)

Net income $ 18,851 $ 9,227

Comprehensive income:

Net income $ 18,851 $ 9,227

Foreign currency translation adjustment (5,210) (3,493)

Comprehensive income $ 13,641 $ 5,734

Net income per common share:

Basic and diluted net income per common share $ 0.41 $ 0.20

Dividends declared per common share $ 0.755 $ 0.660

Weighted-average common shares - basic 46,067,096 45,658,565

Weighted-average common shares - diluted 46,507,258 46,391,066

COGENT COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE THREE MONTHS ENDED MARCH 31, 2021 AND MARCH 31, 2020(IN THOUSANDS)

Three months Three months Ended Ended March 31, 2021 March 31, 2020

(Unaudited) (Unaudited)

Cash flows from operating activities:

Net income $ 18,851 $ 9,227

Adjustments to reconcile net income to net cashprovided by operating activities:

Depreciation and amortization 21,970 19,508

Amortization of debt discount and premium 441 477

Equity-based compensation expense (net of 7,307 5,075amounts capitalized)

Gains - equipment transactions and other, net 371 (454)

Unrealized foreign currency exchange gain on (18,870) (2,904)2024 Euro Notes

Loss on extinguishment of 2022 Notes 3,868 -

Deferred income taxes 4,497 2,439

Changes in operating assets and liabilities:

Accounts receivable 2,420 (2,790)

Prepaid expenses and other current assets 2,826 (3,093)

Accounts payable, accrued liabilities and other 2,951 1,067long-term liabilities

Deposits and other assets 474 (94)

Net cash provided by operating activities 47,106 28,458

Cash flows from investing activities:

Purchases of property and equipment (15,444) (12,866)

Net cash used in investing activities (15,444) (12,866)

Cash flows from financing activities:

Dividends paid (36,081) (30,557)

Repurchase and extinguishment of 2022 Notes (119,679) -

Proceeds from exercises of stock options 215 718

Principal payments on installment payment (2,378) (2,566)agreement

Principal payments of finance lease obligations (5,744) (6,167)

Net cash used in financing activities (163,667) (38,572)

Effect of exchange rates changes on cash (1,316) (1,326)

Net decrease in cash and cash equivalents (133,321) (24,306)

Cash and cash equivalents, beginning of period 371,301 399,422

Cash and cash equivalents, end of period $ 237,980 $ 375,116

Except for historical information and discussion contained herein, statements contained in this release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.Such statements include, but are not limited to statements identified by words such as "believes," "expects," "anticipates," "estimates," "intends," "plans," "targets," "projects" and similar expressions. The statements in this release are based upon the current beliefs and expectations of Cogent's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. Numerous factors could cause or contribute to such differences, including the impact of the COVID-19 pandemic and the related government policies; future economic instability in the global economy or a contraction of the capital markets which could affect spending on Internet services and our ability to engage in financing activities; the impact of changing foreign exchange rates (in particular the Euro to USD and Canadian dollar to USD exchange rates) on the translation of our non-USD denominated revenues, expenses, assets and liabilities; legal and operational difficulties in new markets;the imposition of a requirement that we contribute to the US Universal Service Fund on the basis of our Internet revenue;changes in government policy and/or regulation, including net neutrality rules by the United States Federal Communications Commission and in the area of data protection;cyber-attacks or security breaches of our network;increasing competition leading to lower prices for our services; our ability to attract new customers and to increase and maintain the volume of traffic on our network; the ability to maintain our Internet peering arrangements on favorable terms; our reliance on an equipment vendor, Cisco Systems Inc., and the potential for hardware or software problems associated with such equipment; the dependence of our network on the quality and dependability of third-party fiber providers; our ability to retain certain customers that comprise a significant portion of our revenue base; the management of network failures and/or disruptions; and outcomes in litigation as well as other risks discussed from time to time in our filings with the Securities and Exchange Commission, including, without limitation, our Annual Report on Form 10-K for the year ended December 31, 2020 and our Form 10-Q for the quarter ended March 31, 2021. Cogent undertakes no duty to update any forward-looking statement or any information contained in this press release or in other public disclosures at any time.

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SOURCE Cogent Communications Holdings, Inc.