PR Newswire | Nov 4, 2021 06:58AM EDT

Quarterly Dividend on its Common Stock by $0.025

11/04 05:58 CDT

Cogent Communications Reports Third Quarter Results and Increases its Regular Quarterly Dividend on its Common Stock by $0.025 WASHINGTON, Nov. 4, 2021

WASHINGTON, Nov. 4, 2021 /PRNewswire/ --

Financial and Business Highlights

* Cogent approved an increase of $0.025 per share to its regular quarterly dividend for a total of $0.830 per share for Q4 2021 as compared to $0.805 per share for Q3 2021 - Cogent's thirty-seventh consecutive quarterly dividend increase. * The Q4 2021 $0.830 dividend per share represents an annual increase of 13.7% from the dividend per share of $0.730 for Q4 2020.

* Service revenue increased from Q2 2021 to Q3 2021 by 0.03% and increased from Q3 2020 to Q3 2021 by 4.0%. * Service revenue, on a constant currency basis, increased from Q2 2021 to Q3 2021 by 0.5% and increased from Q3 2020 to Q3 2021 by 3.6%.

* GAAP gross profit increased by 3.8% from Q3 2020 to $68.7 million for Q3 2021. * Non-GAAP gross profit increased by 3.8% from Q3 2020 to $91.4 million for Q3 2021.

* Net cash provided by operating activities increased by 19.3% from Q2 2021 to $47.4 million for Q3 2021 and increased from Q3 2020 to Q3 2021 by 43.8%. * Sales rep productivity - units per full time equivalent sales rep per month - increased from 3.7 for Q3 2020 to 4.3 for Q3 2021. * Earnings before interest, taxes, depreciation and amortization (EBITDA) increased by 1.0% from Q2 2021 to $57.8 million for Q3 2021 and increased by 5.8% from Q3 2020. * EBITDA margin increased by 30 basis points from Q2 2021 to 39.0% for Q3 2021 and increased by 60 basis points from Q3 2020. * Cogent lit its 3,000th on-net building in Q3 2021 and now delivers its services in 50 countries.

Cogent Communications Holdings, Inc. (NASDAQ: CCOI) ("Cogent") today announced service revenue of $147.9 million for the three months ended September 30, 2021, an increase of 0.03% from the three months ended June 30, 2021 and an increase of 4.0% from the three months ended September 30, 2020. Foreign exchange negatively impacted service revenue growth from the three months ended June 30, 2021 to the three months ended September 30, 2021 by $0.7 million and positively impacted service revenue growth from the three months ended September 30, 2020 to the three months ended September 30, 2021 by $0.6 million. On a constant currency basis, service revenue increased by 0.5% from the three months ended June 30, 2021 to the three months ended September 30, 2021 and grew by 3.6% from the three months ended September 30, 2020 to the three months ended September 30, 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 $111.1 million for the three months ended September 30, 2021; an increase of 0.1% from the three months ended June 30, 2021 and an increase of 5.7% over the three months ended September 30, 2020.

Off-net customers are located in buildings directly connected to Cogent's network using other carriers' lit fiber optic 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 September 30, 2021; a decrease of 0.1% from the three months ended June 30, 2021 and a decrease of 1.2% from the three months ended September 30, 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 3.8% from the three months ended September 30, 2020 to $68.7 million for the three months ended September 30, 2021 and decreased by 1.3% from the three months ended June 30, 2021. GAAP gross margin was 46.4% for the three months ended September 30, 2021, 46.5% for the three months ended September 30, 2020 and 47.1% for the three months ended June 30, 2021.

Excise taxes, including Universal Service Fund fees, recorded on a gross basis and included in service revenue and cost of network operations expense were $4.8 million for the three months ended September 30, 2021, $3.9 million for the three months ended September 30, 2020 and $4.8 million for the three months ended June 30, 2021.

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 3.8% from the three months ended September 30, 2020 to $91.4 million for the three months ended September 30, 2021 and decreased by 0.4% from the three months ended June 30, 2021. Non-GAAP gross profit margin was 61.8% for the three months ended September 30, 2021, 61.9% for the three months ended September 30, 2020 and 62.1% for the three months ended June 30, 2021.

Net cash provided by operating activities increased by 43.8% from the three months ended September 30, 2020 to $47.4 million for the three months ended September 30, 2021 and increased by 19.3% from the three months ended June 30, 2021.

Earnings before interest, taxes, depreciation and amortization (EBITDA) increased by 5.8% from the three months ended September 30, 2020 to $57.8 million for the three months ended September 30, 2021 and increased by 1.0% from the three months ended June 30, 2021. EBITDA margin was 39.0% for the three months ended September 30, 2021, 38.4% for the three months ended September 30, 2020 and 38.7% for the three months ended June 30, 2021.

Basic and diluted net income (loss) per share was $0.29 and $0.28 for the three months ended September 30, 2021, $(0.11) for the three months ended September 30, 2020 and $(0.05) for the three months ended June 30, 2021.

Unrealized and realized foreign exchange gains (losses) on Cogent's 2024 Senior Euro Unsecured Notes were $10.2 million for the three months ended September 30, 2021, $(17.3) million for the three months ended September 30, 2020 and $(5.3) million for the three months ended June 30, 2021.

Total customer connections increased by 5.1% from September 30, 2020 to 92,991 as of September 30, 2021 and increased by 1.2% from June 30, 2021. On-net customer connections increased by 5.0% from September 30, 2020 to 80,162 as of September 30, 2021 and increased by 1.3% from June 30, 2021. Off-net customer connections increased by 5.5% from September 30, 2020 to 12,495 as of September 30, 2021 and increased by 0.9% from June 30, 2021.

The number of on-net buildings increased by 124 from September 30, 2020 to 3,008 as of September 30, 2021 and increased by 33 from June 30, 2021.

Quarterly Dividend Increase ApprovedOn November 2, 2021, Cogent's Board approved a regular quarterly dividend of $0.830 per common share payable on December 3, 2021 to shareholders of record on November 19, 2021. This fourth quarter 2021 regular dividend represents a 3.1% increase of $0.025 per share from the third quarter 2021 regular dividend of $0.805 per share and an annual increase of 13.7% from the Q4 2020 dividend of $0.730 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-19Cogent continues to be impacted by the COVID-19 pandemic and the accompanying responses by governments around the world. The recent spread of the Delta variant of COVID-19 has introduced new uncertainty.

The ongoing impact of the COVID-19 pandemic, including the spread of variant strains, 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, efficacy and uptake 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. Cogent has experienced a slight slowdown in the availability and delivery of networking equipment but Cogent believes it can adequately manage the operation, maintenance, upgrading and growth of its network. A worsening or prolonged slowdown may impact our ability to expand and augment our network. Cogent recently returned its employees in the United States back to its offices on a full-time basis and is planning on returning the rest of its employees outside of the United States to its offices on a full-time basis in the fourth quarter of 2021. Cogent is implementing measures to protect its workforce, but it can provide no assurance that these measures will be sufficient. Cogent's decisions to require its employees to return to its offices on a full-time basis and to implement a COVID-19 vaccine mandate, where legally permitted, may impede its ability to retain existing employees or attract new employees. Moreover, Cogent's results of operations may be adversely affected in the future as the pandemic and the related government restrictions continue or are reintroduced. 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 quarters ended March 31, 2021, June 30, 2021 and September 30, 2021.

Conference Call and Website InformationCogent will host a conference call with financial analysts at 8:30 a.m. (ET) on November 4, 2021 to discuss Cogent's operating results for the third 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 CommunicationsCogent 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 215 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 SUBSIDIARIES Summary of Financial and Operational Results

Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 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 $111,041 $111,099

% Change from previous Qtr.0.8% 0.3% 1.2% 1.9% 2.6% 1.0% 0.1%

Off-Net revenue $37,321 $37,044 $37,092 $36,672 $36,723 $36,699 $36,656

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

Non-Core revenue (1) $137 $146 $119 $120 $107 $139 $172

% Change from previous Qtr.5.4% 6.6% -18.5% 0.8% -10.8% 29.9% 23.7%

Service revenue - total $140,915 $140,990 $142,302 $143,901 $146,777 $147,879 $147,927

% Change from previous Qtr.0.4% 0.1% 0.9% 1.1% 2.0% 0.8% 0.0%

Constant currency total revenue quarterly growth rate0.6% 0.2% -0.2% 0.7% 1.7% 0.6% 0.5% - sequential quarters (6)

Constant currency total revenue quarterly growth rate5.6% 5.1% 3.1% 1.2% 2.3% 2.8% 3.6% - year over year quarters (6)

Excise Taxes included in $3,743 $3,298 $3,902 $4,144 $4,528 $4,811 $4,813 service revenue

% Change from previous Qtr.-13.6% -11.9% 18.3% 6.2% 9.3% 6.3% 0.0%

Network operations expenses $55,669 $53,581 $54,173 $54,513 $55,016 $56,044 $56,482 (2)

% Change from previous Qtr.-% -3.8% 1.1% 0.6% 0.9% 1.9% 0.8%

GAAP gross profit (3) $65,486 $67,208 $66,164 $66,617 $67,715 $69,603 $68,673

% Change from previous Qtr.1.8% 2.6% -1.6% 0.7% 1.6% 2.8% -1.3%

GAAP gross margin (3) 46.5% 47.7% 46.5% 46.3% 46.1% 47.1% 46.4%

Non-GAAP gross profit (4) (6)$85,246 $87,409 $88,129 $89,388 $91,761 $91,835 $91,445

% Change from previous Qtr.0.8% 2.5% 0.8% 1.4% 2.7% 0.1% -0.4%

Non-GAAP gross margin (4) (6)60.5% 62.0% 61.9% 62.1% 62.5% 62.1% 61.8%

Selling, general and $34,852 $34,061 $33,546 $33,713 $36,211 $34,654 $33,692 administrative expenses (5)

% Change from previous Qtr.9.3% -2.3% -1.5% 0.5% 7.4% -4.3% -2.8%

Depreciation and amortization$19,508 $19,896 $21,619 $22,455 $21,970 $22,096 $22,609 expense

% Change from previous Qtr.-2.5% 2.0% 8.7% 3.9% -2.2% 0.6% 2.3%

Equity-based compensation $5,075 $6,083 $6,522 $5,846 $7,307 $6,874 $6,588 expense

% Change from previous Qtr.2.7% 19.9% 7.2% -10.4% 25.0% -5.9% -4.2%

Operating income $25,850 $27,574 $26,036 $27,384 $26,291 $28,211 $28,556

% Change from previous Qtr.-7.8% 6.7% -5.6% 5.2% -4.0% 7.3% 1.2%

Interest expense $15,220 $15,499 $15,760 $16,007 $15,836 $14,236 $17,349

% Change from previous Qtr.0.1% 1.8% 1.7% 1.6% -1.1% -10.1% 21.9%

Net income (loss) $9,227 $8,564 $(4,955) $(6,620) $18,851 $(2,493) $13,320

Realized and unrealized gains$2,908 $(873) $(17,315) $(19,170) $18,870 $(5,280) $10,169 (losses) on 2024 Euro Notes

Basic net income (loss) per $0.20 $0.19 $(0.11) $(0.14) $0.41 $(0.05) $0.29 common share

Diluted net income (loss) per$0.20 $0.18 $(0.11) $(0.14) $0.41 $(0.05) $0.28 common share

Weighted average common 45,658,565 45,754,880 45,815,718 45,904,943 46,067,096 46,229,603 46,293,524 shares - basic

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

Weighted average common 46,391,066 46,686,665 45,815,718 45,904,943 46,507,258 46,229,603 46,866,929 shares - diluted

% Change from previous Qtr.0.5% 0.6% -1.9% 0.2% 1.3% -0.6% 1.4%

EBITDA (6) $50,394 $53,348 $54,583 $55,675 $55,550 $57,181 $57,753

% Change from previous Qtr.-4.4% 5.9% 2.3% 2.0% -0.2% 2.9% 1.0%

EBITDA margin 35.8% 37.8% 38.4% 38.7% 37.8% 38.7% 39.0%

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

EBITDA, as adjusted (6) $50,433 $53,553 $54,682 $55,685 $55,568 $57,181 $57,753

% Change from previous Qtr.-4.8% 6.2% 2.1% 1.8% -0.2% 2.9% 1.0%

EBITDA, as adjusted, margin 35.8% 38.0% 38.4% 38.7% 37.9% 38.7% 39.0%

Net cash provided by $28,458 $41,311 $32,980 $37,571 $47,106 $39,749 $47,418 operating activities

% Change from previous Qtr.-38.3% 45.2% -20.2% 13.9% 25.4% -15.6% 19.3%

Capital expenditures $12,866 $13,930 $13,296 $15,860 $15,444 $17,217 $21,959

% Change from previous Qtr.30.0% 8.3% -4.6% 19.3% -2.6% 11.5% 27.5%

Principal payments of capital$6,167 $3,716 $9,509 $4,598 $5,744 $6,192 $4,890 (finance) lease obligations

% Change from previous Qtr.200.0% -39.7% 155.9% -51.6% 24.9% 7.8% -21.0%

Dividends paid $30,557 $31,738 $32,657 $34,460 $36,081 $37,001 $37,654

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

Gross Leverage Ratio 4.78 5.08 5.10 5.14 4.39 5.13 5.07

Net Leverage Ratio 2.92 3.07 3.24 3.40 3.31 3.45 3.50

Customer Connections - end of period

On-Net 75,163 75,927 76,338 77,305 78,389 79,146 80,162

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

Off-Net 11,721 11,846 11,849 11,970 12,216 12,386 12,495

% Change from previous Qtr.0.5% 1.1% 0.0% 1.0% 2.1% 1.4% 0.9%

Non-Core (1) 329 339 322 325 320 336 334

% Change from previous Qtr.1.2% 3.0% -5.0% 0.9% -1.5% 5.0% -0.6%

Total customer connections 87,213 88,112 88,509 89,600 90,925 91,868 92,991

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

On-Net Buildings - end of period

Multi-Tenant office buildings1,769 1,771 1,783 1,792 1,796 1,802 1,816

Carrier neutral data center 1,000 1,029 1,047 1,068 1,089 1,119 1,138 buildings

Cogent data centers 54 54 54 54 54 54 54

Total on-net buildings 2,823 2,854 2,884 2,914 2,939 2,975 3,008

Total carrier neutral data 1,175 1,203 1,225 1,252 1,274 1,309 1,332 center nodes

Square feet - multi-tenant 961,154,384962,049,183968,355,695976,813,678978,095,164979,876,141984,753,702office buildings - on-net

Network - end of period

Intercity route miles 58,009 58,009 58,142 58,285 58,761 59,741 59,741

Metro fiber miles 36,079 36,438 36,725 37,567 38,058 38,351 38,825

Connected networks - AS's 7,042 7,133 7,222 7,338 7,471 7,530 7,597

Headcount - end of period

Sales force - quota bearing 542 572 597 569 547 565 516

Sales force - total 684 716 740 712 693 710 662

Total employees 1,052 1,083 1,110 1,083 1,066 1,087 1,031

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

FTE - sales reps 522 533 563 542 522 511 521

(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, $2,076, $136 and $163 in the three month periods ended March 31, 2020 through September 30, 2021, respectively. Network(2) operations expense includes excise taxes, including Universal Service Fund fees of $3,743, $3,298, $3,902, $4,144, $4,528, $4,811 and $4,813 in the three month periods ended March 31, 2020 through September 30, 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, $5,231, $6,738 and $6,425 in the three month periods ended March 31, 2020 through September 30, 2021, respectively.

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

Schedules of Non-GAAP MeasuresEBITDA 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 by operating activities in the table below.

Q1 Q2 Q3 Q4 Q1 Q2 Q3 2020 2020 2020 2020 2021 2021 2021

($ in 000's) - unaudited

Net cash provided by operating activities $28,458$41,311$32,980$37,571$47,106$39,749$47,418

Changes in operating assets and liabilities 5,325 $ $6,255 $1,920 $ $2,352 $ (3,232) (9,060) (6,267)

Cash interest expense and income tax expense16,611 15,269 15,348 16,184 17,504 15,080 16,602

EBITDA $50,394$53,348$54,583$55,675$55,550$57,181$57,753

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

EBITDA, as adjusted $50,433$53,553$54,682$55,685$55,568$57,181$57,753

EBITDA margin 35.8% 37.8% 38.4% 38.7% 37.8% 38.7% 39.0%

EBITDA, as adjusted, margin 35.8% 38.0% 38.4% 38.7% 37.9% 38.7% 39.0%

Constant currency revenue is reconciled to service revenue as reported in the tables below.Constant currency impact on revenue changes - sequential periods

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

Service revenue, as reported - current period $140,915$140,990$142,302$143,901$146,777$147,879$147,927

Impact of foreign currencies on service revenue 184 202 (1,616) (621) (447) (150) 709

Service revenue - as adjusted for currency impact (1)$141,099$141,192$140,686$143,280$146,330$147,729$148,636

Service revenue, as reported - prior sequential period$140,292$140,915$140,990$142,302$143,901$146,777$147,879

Constant currency (decrease) increase $807 $277 $(304) $978 $2,429 $952 $757

Constant currency percent (decrease) increase 0.6% 0.2% (0.2)% 0.7% 1.7% 0.6% 0.5%

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 Q2 Q3 2020 2020 2020 2020 2021 2021 2021

Service revenue, as reported - current period $140,915$140,990$142,302$143,901$146,777$147,879$147,927

Impact of foreign currencies on service revenue 746 674 (1,141) (1,891) (2,608) (2,965) (555)

Service revenue - as adjusted for currency impact (2)$141,661$141,664$141,161$142,010$144,169$144,914$147,372

Service revenue, as reported - prior year period $134,137$134,789$136,942$140,292$140,915$140,990$142,302

Constant currency increase $7,524 $6,875 $4,219 $1,718 $3,254 $3,924 $5,070

Percent increase 5.6% 5.1% 3.1% 1.2% 2.3% 2.8% 3.6%

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

Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021

($ in 000's) - unaudited

Service revenue total $140,915$140,990$142,302$143,901$146,777$147,879$147,927

Minus - Network operations expense including equity-based compensation and including depreciation and amortization 75,429 73,782 76,138 77,284 79,062 78,276 79,254 expense

GAAP Gross Profit (1) $65,486 $67,208 $66,164 $66,617 $67,715 $69,603 $68,673

Plus - Equity-based compensation - network operations expense252 305 346 316 2,076 136 163

Plus - Depreciation and amortization expense 19,508 19,896 21,619 22,455 21,970 22,096 22,609

Non-GAAP Gross Profit (2) $85,246 $87,409 $88,129 $89,388 $91,761 $91,835 $91,445

GAAP Gross Margin (1) 46.5% 47.7% 46.5% 46.3% 46.1% 47.1% 46.4%

Non-GAAP Gross Margin (2) 60.5% 62.0% 61.9% 62.1% 62.5% 62.1% 61.8%

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 June 30, As of September 30, 2021 2021

Cash and cash equivalents & $373,963 $354,955 restricted cash

Debt

Capital (finance) leases - current 16,004 16,685 portion

Capital (finance) leases - long term 208,588 222,854

Senior Secured 2022 Notes - -

Senior Secured 2026 Notes 500,000 500,000

Senior Unsecured Euro 2024 Notes 415,751 405,637

Note payable 3,365 1,868

Total debt 1,143,708 1,147,044

Total net debt 769,745 792,089

Trailing 12 months EBITDA, as 223,116 226,187 adjusted

Gross leverage ratio 5.13 5.07

Net leverage ratio 3.45 3.50

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 SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2021 AND DECEMBER 31, 2020

(IN THOUSANDS, EXCEPT SHARE DATA)

September 30, December 31, 2021 2020

(Unaudited)

Assets

Current assets:

Cash and cash equivalents $ 351,879 $ 371,301

Restricted cash 3,076 -

Accounts receivable, net of allowance for credit losses of $1,413 and $1,921, 43,672 44,185respectively

Prepaid expenses and other current assets 37,491 40,851

Total current assets 436,118 456,337

Property and equipment, net 454,710 430,335

Right-of-use leased assets 103,666 99,666

Deposits and other assets 14,255 14,139

Total assets $ 1,008,749 $ 1,000,477

Liabilities and stockholders' equity

Current liabilities:

Accounts payable $ 11,639 $ 9,775

Accrued and other current liabilities 57,510 51,029

Installment payment agreement, current portion, net of discounts of $18 and 1,850 6,786$136, respectively

Current maturities, operating lease liabilities 11,312 11,151

Current maturities, finance lease obligations 16,685 15,702

Total current liabilities 98,996 94,443

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

Senior unsecured 2024 Euro notes, net of unamortized debt costs of $2,327 and$2,961, 402,447 425,160 respectively, and net of discounts of $863 and $1,142, respectively

Senior secured 2026 notes, net of unamortized debt costs of $1,217 and discount 497,165 -of $1,618

Operating lease liabilities, net of current maturities 115,065 111,318

Finance lease obligations, net of current maturities 222,854 203,438

Other long-term liabilities 28,989 14,792

Total liabilities 1,365,516 1,293,643

Commitments and contingencies:

Stockholders' equity:

Common stock, $0.001 par value; 75,000,000 shares authorized; 47,663,276 and47,214,077 shares 48 47 issued and outstanding, respectively

Additional paid-in capital 540,575 515,867

Accumulated other comprehensive income - foreign currency translation (8,558) (1,306)

Accumulated deficit (888,832) (807,774)

Total stockholders' deficit (356,767) (293,166)

Total liabilities and stockholders' deficit $ 1,008,749 $ 1,000,477

COGENT COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021 AND SEPTEMBER 30, 2020

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

Three Months Three Months Ended Ended September 30, 2021 September 30, 2020

(Unaudited) (Unaudited)

Service revenue $ 147,927 $ 142,302

Operating expenses:

Network operations (including $163 and $346 of equity-based compensationexpense, 56,645 54,519 respectively, exclusive of depreciation and amortization shown separatelybelow)

Selling, general, and administrative (including $6,425 and $6,176 ofequity-based compensation 40,117 39,722 expense, respectively)

Depreciation and amortization 22,609 21,619

Total operating expenses 119,371 115,860

Loss on finance lease amendment - (505)

Gains on equipment transactions - 99

Operating income 28,556 26,036

Interest expense (17,349) (15,760)

Unrealized foreign exchange gain (loss) on 2024 Euro Notes 10,169 (17,315)

Interest income and other, net 648 484

Income (loss) before income taxes 22,024 (6,555)

Income tax (provision) benefit (8,704) 1,600

Net income (loss) $ 13,320 $ (4,955)

Comprehensive income:

Net income (loss) $ 13,320 $ (4,955)

Foreign currency translation adjustment (3,818) 5,408

Comprehensive income $ 9,502 $ 453

Net income (loss) per common share:

Basic net income (loss) per common share $ 0.29 $ (0.11)

Diluted net income (loss) per common share $ 0.28 $ (0.11)

Dividends declared per common share $ 0.805 $ 0.705

Weighted-average common shares - basic 46,293,524 45,815,718

Weighted-average common shares - diluted 46,866,929 45,815,718

COGENT COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND SEPTEMBER 30, 2020

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

Nine Months Nine Months Ended Ended September 30, 2021 September 30, 2020

(Unaudited) (Unaudited)

Service revenue $ 442,584 $ 424,205

Operating expenses:

Network operations (including $2,375 and $903 of equity-based compensationexpense, 169,920 164,326 respectively, exclusive of depreciation and amortization shown separatelybelow)

Selling, general, and administrative (including $18,394 and $16,776 ofequity-based compensation 122,952 119,232 expense, respectively)

Depreciation and amortization 66,675 61,022

Total operating expenses 359,547 344,580

Losses on finance lease amendments - (423)

Gains on equipment transactions 18 343

Operating income 83,055 79,545

Interest expense (47,421) (46,481)

Realized foreign exchange gain on issuance of 2024 Euro Notes - 2,547

Unrealized gain (loss) on foreign exchange on 2024 Euro Notes 23,759 (17,827)

Loss on debt extinguishment and redemption - 2021 Notes - (638)

Loss on debt extinguishment and redemption - 2022 Notes (14,698) -

Interest income and other, net 1,460 430

Income before income taxes 46,155 17,576

Income tax provision (16,477) (4,740)

Net income $ 29,678 $ 12,836

Comprehensive income:

Net income $ 29,678 $ 12,836

Foreign currency translation adjustment (7,252) 4,828

Comprehensive income $ 22,426 $ 17,664

Net income per common share:

Basic net income per common share $ 0.64 $ 0.28

Diluted net income per common share $ 0.63 $ 0.28

Dividends declared per common share $ 2.340 $ 2.045

Weighted-average common shares - basic 46,290,452 45,818,677

Weighted-average common shares - diluted 46,825,948 46,598,870

COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021 AND SEPTEMBER 30, 2020

(IN THOUSANDS)

Three months Three months Ended Ended September 30, 2021 September 30, 2020

(Unaudited) (Unaudited)

Cash flows from operating activities:

Net income (loss) $ 13,320 $ (4,955)

Adjustments to reconcile net income (loss) to net cash provided by operatingactivities:

Depreciation and amortization 22,609 21,619

Amortization of debt costs, discounts and premiums 439 496

Equity-based compensation expense (net of amounts capitalized) 6,588 6,522

Unrealized (gain) loss on foreign exchange - 2024 Notes (10,169) 17,378

Gains - equipment transactions and other, net (589) 406

Deferred income taxes 8,364 (2,153)

Changes in operating assets and liabilities:

Accounts receivable (249) (1,009)

Prepaid expenses and other current assets (962) (788)

Accounts payable, accrued liabilities and other long-term liabilities 7,949 (4,305)

Deposits and other assets 118 (231)

Net cash provided by operating activities 47,418 32,980

Cash flows from investing activities:

Purchases of property and equipment (21,959) (13,296)

Net cash used in investing activities (21,959) (13,296)

Cash flows from financing activities:

Dividends paid (37,654) (32,657)

Purchases of common stock - (270)

Principal payments on installment payment agreement (1,498) (2,727)

Principal payments of finance lease obligations (4,890) (9,509)

Proceeds from exercises of stock options 362 186

Net cash used in financing activities (43,680) (44,977)

Effect of exchange rates changes on cash (787) 1,560

Net decrease in cash and cash equivalents & restricted cash (19,008) (23,733)

Cash and cash equivalents & restricted cash, beginning of period 373,963 417,026

Cash and cash equivalents & restricted cash, end of period $ 354,955 $ 393,293

COGENT COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND SEPTEMBER 30, 2020

(IN THOUSANDS)

Nine months Nine months Ended Ended September 30, 2021 September 30, 2020

(Unaudited) (Unaudited)

Cash flows from operating activities:

Net income $ 29,678 $ 12,836

Adjustments to reconcile net income to net cash provided by operatingactivities:

Depreciation and amortization 66,675 61,022

Amortization of debt costs, discounts and premium 1,333 1,426

Equity-based compensation expense (net of amounts capitalized) 20,769 17,679

Loss on debt extinguishment and redemption - 2021 Notes - 638

Loss on debt extinguishment and redemption - 2022 Notes 14,698 -

Unrealized (gain) loss on foreign exchange - 2024 Notes (23,759) 17,281

Realized foreign exchange gain on issuance of 2024 Notes - (2,547)

Gains - equipment transactions and other, net (347) 80

Deferred income taxes 11,922 2,100

Changes in operating assets and liabilities:

Accounts receivable (159) (1,102)

Prepaid expenses and other current assets 1,734 (3,253)

Accounts payable, accrued liabilities and other long-term liabilities 11,752 (2,783)

Deposits and other assets (23) (628)

Net cash provided by operating activities 134,273 102,749

Cash flows from investing activities:

Purchases of property and equipment (54,620) (40,092)

Net cash used in investing activities (54,620) (40,092)

Cash flows from financing activities:

Dividends paid (110,736) (94,952)

Purchases of common stock - (270)

Extinguishment and redemption of 2021 Notes - (189,225)

Extinguishment and redemption of 2022 Notes (459,317) -

Net proceeds from issuance of senior unsecured 2024 Euro Notes - net of debt - 240,285costs of $2,137

Net proceeds from issuance of senior secured 2026 Notes - net of debt costs of 496,933 -$1,317

Principal payments on installment payment agreement (5,845) (7,855)

Principal payments of finance lease obligations (16,826) (19,392)

Proceeds from exercises of stock options 1,237 1,175

Net cash used in financing activities (94,554) (70,234)

Effect of exchange rates changes on cash (1,445) 1,448

Net decrease in cash and cash equivalents & restricted cash (16,346) (6,129)

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

Cash and cash equivalents & restricted cash, end of period $ 354,955 $ 393,293

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 quarters ended March 31, 2021, June 30, 2021 and September 30, 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.