Cogent Communications Reports Second Quarter 2016 Results and Increases Regular Quarterly Dividend on Common Stock

WASHINGTON, Aug. 4, 2016

Financial and Business Highlights

• Cogent approves a 2.7% increase of its regular quarterly dividend to $0.38 per common share to be paid on September 9, 2016 to shareholders of record on August 19, 2016
• Cogent's gross leverage ratio declines to 3.94 for Q2 2016 from 4.39 for Q1 2016
• Service revenue for Q2 2016 increased by 1.5% from Q1 2016 to $110.0 million
• Service revenue for Q2 2016 increased by 11.3% from Q2 2015
• EBITDA, as adjusted, for Q2 2016 increased by 10.6% from Q1 2016 to $39.4 million
• EBITDA, as adjusted, for Q2 2016 increased by 25.9% from Q2 2015
• EBITDA, as adjusted, margin for Q2 2016 increased to 35.8% from 32.9% for Q1 2016 and 31.7% for Q2 2015
• There were 57,563 customer connections on the Cogent network at the end of Q2 2016 – an increase of 17.7% from the end of Q2 2015 and an increase of 4.0% from the end of Q1 2016

Cogent Communications Holdings, Inc. (NASDAQ: CCOI) today announced service revenue of $110.0 million for the three months ended June 30, 2016, an increase of 11.3% from $98.8 million for the three months ended June 30, 2015 and an increase of 1.5% from $108.3 million for the three months ended March 31, 2016.  Foreign exchange positively impacted service revenue from Q1 2016 to Q2 2016 by $0.7 million and positively impacted service revenue growth from Q2 2015 to Q2 2016 by $0.2 million.  On a constant currency basis, service revenue grew by 11.1% from Q2 2015 to Q2 2016 and grew by 0.9% from Q1 2016 to Q2 2016.

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 $79.5 million for the three months ended June 30, 2016; an increase of 10.5% over $72.0 million for the three months ended June 30, 2015 and an increase of 1.1% from $78.7 million for the three months ended March 31, 2016.

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 $30.1 million for the three months ended June 30, 2016; an increase of 13.7% over $26.5 million for the three months ended June 30, 2015 and an increase of 2.7% over $29.4 million for the three months ended March 31, 2016.

Non-GAAP gross profit increased by 10.0% from $56.5 million for the three months ended June 30, 2015 to $62.2 million for the three months ended June 30, 2016 and increased by 1.8% from $61.1 million for the three months ended March 31, 2016. Non-GAAP gross profit margin percentage was 56.6% for the three months ended June 30, 2016, 57.2% for the three months ended June 30, 2015 and 56.5% for the three months ended March 31, 2016.  Excise taxes, including Universal Service Fund fees, recorded on a gross basis and included in service revenue and cost of network operations expense were $2.2 million for the three months ended June 30, 2016, $2.0 million for the three months ended March 31, 2016 and $0.1 million for the three months ended June 30, 2015.  Non-GAAP gross profit margin, excluding the impact of excise taxes, was 57.7% for the three months ended June 30, 2016, 57.3% for the three months ended June 30, 2015 and 57.5% for the three months ended March 31, 2016. 

Earnings before interest, taxes, depreciation and amortization (EBITDA), as adjusted, increased by 25.9% from $31.3 million for the three months ended June 30, 2015 to $39.4 million for the three months ended June 30, 2016 and increased by 10.6% from $35.6 million for the three months ended March 31, 2016. EBITDA, as adjusted, margin was 35.8% for the three months ended June 30, 2016, 31.7% for the three months ended June 30, 2015 and 32.9% for the three months ended March 31, 2016.