WASHINGTON - Cogent Communications Holdings, Inc. (NASDAQ: CCOI) reported a significant increase in service revenue for the fourth quarter and full year of 2023, following its acquisition of Sprint's Wireline Business. Service revenue for Q4 2023 reached $272.1 million, a 1.2% decrease from the previous quarter but a substantial 79.0% rise from the same period in 2022. The full-year service revenue climbed 56.9% to $940.9 million compared to the previous year.
The company's earnings per share (EPS) for Q4 2023 stood at $4.23 for basic and $4.17 for diluted shares. The full-year EPS figures were notably higher, at $26.88 for basic and $26.62 for diluted shares, reflecting the gain on bargain purchase from the Sprint acquisition.
Cogent's leverage ratios improved, with the gross leverage ratio dropping from 4.79 in Q3 2023 to 4.07 in Q4 2023. Similarly, the net leverage ratio decreased from 4.23 to 3.75 over the same period.
Despite the overall increase in service revenue, the company experienced a decrease in non-core revenue, falling 43.5% from Q3 2023 to $7.3 million in Q4 2023. Additionally, net cash used in operating activities was $48.7 million for Q4 2023, compared to a net cash provided by operating activities of $173.7 million for the full year 2022 and $17.3 million for the full year 2023.
Cogent's adjusted EBITDA for Q4 2023 was $110.5 million, with an adjusted EBITDA margin of 40.6%. For the full year, the adjusted EBITDA was $352.5 million, with a margin of 37.5%.
Cogent also announced a dividend increase of $0.01 per share to $0.965 for Q1 2024, marking the company's forty-sixth consecutive quarterly dividend increase.
The company noted the residual impact of the COVID-19 pandemic on its corporate results, with a mixed picture of declining vacancy rates and rising office occupancy in some areas, while other regions continue to see the pandemic's negative effects on leasing activity and office occupancy.
The information in this article is based on a press release.
InvestingPro Insights
As Cogent Communications Holdings, Inc. (NASDAQ: CCOI) continues to navigate the post-pandemic business landscape, its financial metrics and market performance offer a mixed picture, reflective of its recent strategic moves and market conditions. According to InvestingPro data, Cogent's market capitalization stands at $3.81 billion, with a Price to Earnings (P/E) ratio of 12.56 for the last twelve months as of Q3 2023. This valuation is underpinned by a substantial revenue growth of 35.85% for the same period, showcasing the company's successful expansion efforts.
The company's commitment to shareholder returns is evident, with a dividend yield of 4.73% and a consistent record of dividend growth, which stands at 5.52% for the last twelve months as of Q3 2023. This aligns with the company's announcement of a dividend increase for Q1 2024, marking its forty-sixth consecutive quarterly dividend increase.
InvestingPro Tips highlight that Cogent has raised its dividend for 12 consecutive years and has maintained dividend payments for the same duration, underscoring its reliability as an income-generating investment. Moreover, the company is trading at a high Price to Book (P/B) multiple of 8.61, which could suggest a premium valuation compared to its tangible assets.
For investors looking to delve deeper into Cogent's financial health and market potential, InvestingPro offers additional insights and metrics. There are 14 more InvestingPro Tips available, which can be accessed for a deeper analysis of Cogent's financials and market performance. Interested readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, enhancing their investment research with valuable data and expert insights.
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