CCOI Cogent Communications Holdings Inc

Financial and Business Highlights

• Service revenue was $252.3 million for Q4 2024 and was $257.2 million for Q3 2024.
• Service revenue was $1.0 billion for full year 2024 and was $940.9 million for full year 2023.
  • Wavelength revenue increased by 31.8%, sequentially, and was $7.0 million for Q4 2024 and was $5.3 million for Q3 2024.
  • Revenue from leasing IPv4 addresses increased by 11.8%, sequentially, and was $12.6 million for Q4 2024 and was $11.2 million for Q3 2024.
• EBITDA increased by 16.7% to $41.9 million for Q4 2024 from Q3 2024.
  • EBITDA margin was 16.6% for Q4 2024 and was 13.9% for Q3 2024.
  • Net cash provided by operating activities was $14.5 million for Q4 2024. Net cash used in operating activities was $48.7 million for Q4 2023 and was $20.2 million for Q3 2024.
• EBITDA, as adjusted, increased by 9.8% to $66.9 million for Q4 2024 from Q3 2024.
  • EBITDA, as adjusted, margin was 26.5% for Q4 2024 and was 23.7% for Q3 2024.
• EBITDA, as adjusted, was $348.4 million for full year 2024 and was $352.5 million for full year 2023.
  • EBITDA, as adjusted, margin was 33.6% for full year 2024 and was 37.5% for full year 2023.
• Cogent received a US federal income tax refund of $24.2 million in 2024 for 2023 US federal income taxes paid and owed no US federal income taxes for full year 2023.
  • Cogent does not expect a US federal income tax liability for full year 2024.
• Cogent approved an increase of $0.01 per share to its regular quarterly dividend for a total of $1.005 per share for Q1 2025 as compared to $0.995 per share for Q4 2024 – Cogent's fiftieth consecutive quarterly dividend increase.

WASHINGTON, Feb. 27, 2025 /PRNewswire/ -- Cogent Communications Holdings, Inc. (NASDAQ: CCOI) ("Cogent") today announced service revenue of $252.3 million for the three months ended December 31, 2024, a decrease of 1.9% from the three months ended September 30, 2024 and a decrease of 7.3% from the three months ended December 31, 2023. On the closing date of the Sprint acquisition, Cogent and T-Mobile entered into a commercial agreement (the "Commercial Agreement"), for colocation and connectivity services.  Revenue under the Commercial Agreement, primarily classified as on-net revenue and net-centric revenue, was $1.5 million for the three months ended December 31, 2024, $4.1 million for the three months ended September 30, 2024, $8.6 million for the three months ended December 31, 2023, $23.9 million for the year ended December 31, 2023 and $14.7 million for the year ended December 31, 2024.  Service revenue was $1,036.1 million for the year ended December 31, 2024, an increase of 10.1% from the year ended December 31, 2023.

Foreign exchange rates negatively impacted service revenue growth from the three months ended September 30, 2024 to the three months ended December 31, 2024 by $1.0 million, negatively impacted service revenue growth from the three months ended December 31, 2023 to the three months ended December 31, 2024 by $0.4 million and negatively impacted service revenue growth from the year ended December 31, 2023 to the year ended December 31, 2024 by $0.3 million.  On a constant currency basis, service revenue decreased by 1.5% from the three months ended September 30, 2024 to the three months ended December 31, 2024, decreased by 7.1% for the three months ended December 31, 2023 to the three months ended December 31, 2024 and increased by 10.1% for the year ended December 31, 2023 to the year ended December 31, 2024.

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 $128.8 million for the three months ended December 31, 2024, a decrease of 5.7% from the three months ended September 30, 2024 and a decrease of 6.7% from the three months ended December 31, 2023. On-net revenue was $544.6 million for the year ended December 31, 2024; an increase of 6.2% over the year ended December 31, 2023.

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 $113.2 million for the three months ended December 31, 2024, an increase of 1.7% from the three months ended September 30, 2024 and a decrease of 8.5% from the three months ended December 31, 2023. Off-net revenue was $454.1 million for the year ended December 31, 2024; an increase of 15.4% over the year ended December 31, 2023.

Wavelength revenue was $7.0 million for the three months ended December 31, 2024, an increase of 31.8% from the three months ended September 30, 2024 and an increase of 124.1% from the three months ended December 31, 2023. Wavelength revenue was $19.2 million for the year ended December 31, 2024; an increase of 239.6% over the year ended December 31, 2023.

Non-core services are legacy services, which Cogent acquired and continues to support but does not actively sell.  Non-core revenue was $3.4 million for the three months ended December 31, 2024, $4.1 million for the three months ended September 30, 2024 and was $7.3 million for the three months ended December 31, 2023.  Non-core revenue was $18.2 million for the year ended December 31, 2024; a decrease of 37.0% over the year ended December 31, 2023.

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 0.3% from the three months ended December 31, 2023 to $29.8 million for the three months ended December 31, 2024 and increased by 203.4% from the three months ended September 30, 2024. GAAP gross profit decreased by 41.5% from the year ended December 31, 2023 to $96.3 million for the year ended December 31, 2024.

GAAP gross margin was 11.8% for the three months ended December 31, 2024, 3.8% for the three months ended September 30, 2024, 10.9% for the three months ended December 31, 2023, 17.5% for the year ended December 31, 2023 and 9.3% for the year ended December 31, 2024.

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 decreased by 0.3% from the three months ended December 31, 2023 to $97.6 million for the three months ended December 31, 2024 and increased by 1.5% from the three months ended September 30, 2024. Non-GAAP gross profit decreased by 0.5% from the year ended December 31, 2023 to $395.9 million for the year ended December 31, 2024.

Non-GAAP gross margin was 38.7% for the three months ended December 31, 2024, 37.4% for the three months ended September 30, 2024, 36.0% for the three months ended December 31, 2023, 42.3% for the year ended December 31, 2023 and 38.2% for the year ended December 31, 2024.

Net cash provided by operating activities was $14.5 million for the three months ended December 31, 2024.  Net cash used in operating activities was $20.2 million for the three months ended September 30, 2024 and was $48.7 million for the three months ended December 31, 2023. Net cash provided by operating activities was $17.3 million for the year ended December 31, 2023 and net cash used in operating activities was $8.6 million for the year ended December 31, 2024.

Total Sprint acquisition costs were $17.0 million for the three months ended December 31, 2023, $18.5 million for the year ended December 31, 2023 and $21.4 million for the year ended December 31, 2024. 

IP Transit Services Agreement
On May 1, 2023, the closing date of the Sprint acquisition, Cogent and T-Mobile USA, Inc. ("TMUSA"), a Delaware corporation and direct subsidiary of T-Mobile US, Inc., a Delaware corporation ("T-Mobile"), entered into an agreement for IP transit services (the "IP Transit Services Agreement"), pursuant to which TMUSA will pay Cogent an aggregate of $700.0 million, consisting of (i) $350.0 million paid in equal monthly installments during the first year after the closing date of the Sprint acquisition and (ii) $350.0 million paid in equal monthly installments over the subsequent 42 months. Amounts paid under the IP Transit Services Agreement were $87.5 million, $25.0 million and $25.0 million in the three months ended December 31, 2023, September 30, 2024 and December 31, 2024, respectively. Amounts paid under the IP Transit Services Agreement were $204.2 million in the year ended December 31, 2023 and $204.2 million in the year ended December 31, 2024.

Earnings before interest, taxes, depreciation and amortization (EBITDA), was $41.9 million for the three months ended December 31, 2024, $35.9 million for the three months ended September 30, 2024 and $6.0 million for the three months ended December 31, 2023. EBITDA was $129.8 million for the year ended December 31, 2023 and $122.8 million for the year ended December 31, 2024.   

EBITDA margin, was 16.6% for the three months ended December 31, 2024, 13.9% for the three months ended September 30, 2024 and 2.2% for the three months ended December 31, 2023.  EBITDA margin was 13.8% for the year ended December 31, 2023 and 11.9% for the year ended December 31, 2024.

Earnings before interest, taxes, depreciation and amortization (EBITDA), as adjusted, for Sprint acquisition costs and cash paid under the IP Transit Services Agreement, was $66.9 million for the three months ended December 31, 2024, $60.9 million for the three months ended September 30, 2024 and $110.5 million for the three months ended December 31, 2023. EBITDA, as adjusted, for Sprint acquisition costs and cash paid under the IP Transit Services Agreement was $352.5 million for the year ended December 31, 2023 and $348.4 million for the year ended December 31, 2024.   

EBITDA as adjusted, for Sprint acquisition costs and cash paid under the IP Transit Services Agreement margin, was 26.5% for the three months ended December 31, 2024, 23.7% for the three months ended September 30, 2024 and 40.6% for the three months ended December 31, 2023.  EBITDA, as adjusted, for Sprint acquisition costs and cash paid under the IP Transit Services Agreement margin was 37.5% for the year ended December 31, 2023 and 33.6% for the year ended December 31, 2024.

Basic and diluted net (loss) per share was $(0.91) for the three months ended December 31, 2024 and was $(1.33) for the three months ended September 30, 2024.  Basic net income per share was $4.23 for the three months ended December 31, 2023 and diluted net income per share was $4.17 for the three months ended December 31, 2023. Basic net income per share was $26.88 for the year ended December 31, 2023.  Diluted net income per share was $26.62 for the year ended December 31, 2023. Basic and diluted net (loss) per share was $(4.28) for the year ended December 31, 2024.

Total customer connections decreased by 10.3% from December 31, 2023 to 123,383 as of December 31, 2024 and decreased by 2.3% from September 30, 2024.  On-net customer connections decreased by 0.9% from December 31, 2023 to 87,500 as of December 31, 2024 and decreased by 0.2% from September 30, 2024. Off-net customer connections decreased by 21.0% from December 31, 2023 to 28,963 as of December 31, 2024 and decreased by 10.7% from September 30, 2024. Wavelength customer connections were 1,118 as of December 31, 2024, 1,041 as of September 30, 2024 and 661 as of December 31, 2023.  Non-core customer connections were 5,802 as of December 31, 2024, 5,217 as of September 30, 2024 and 11,975 as of December 31, 2023. 

The number of on-net buildings increased by 176 from December 31, 2023 to 3,453 as of December 31, 2024 and increased by 29 from September 30, 2024.

Optical Wave Network
Acquiring the Sprint network has also allowed Cogent to construct a wavelength network using predominantly owned fiber. This enabled Cogent to expand its product offerings to include optical wavelength services.  As of December 31, 2024, Cogent was offering optical wavelength services in 808 data centers in the United States, Mexico and Canada.

Federal Income Taxes – United States
Cogent received a US federal income tax refund of $24.2 million in 2024 for 2023 US federal income taxes paid and owed no US federal income taxes for full year 2023.  Under current law, Cogent does not expect to incur a US federal income tax liability for full year 2024.

Quarterly Dividend Increase Approved
On February 26, 2025, Cogent's Board approved a regular quarterly dividend of $1.005 per share payable on March 28, 2025 to shareholders of record on March 13, 2025. This first quarter 2025 regular dividend represents an increase of $0.01 per share, or 1.0%, from the fourth quarter 2024 regular dividend of $0.995 per share and an annual increase of 4.1% from the first quarter 2024 dividend of $0.965 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 indentures and other factors deemed relevant by the Board.

Tax Treatment of 2024 Dividends
Cogent paid four quarterly dividends in 2024 totaling $189.4 million, or $3.92 per share. The expected tax treatment of these dividends are generally that 100.0% are treated as a return of capital and 0.0% are generally treated as dividends for United States federal income tax purposes. While the above information includes general statements about the tax classification of dividends paid on Cogent common stock, these statements do not constitute tax advice. The taxation of corporate distributions can be complex, and stockholders are encouraged to consult their tax advisers to determine what impact the above information may have on their specific tax situation.

Continued Impact of Changing Office Occupancy Rates on Corporate Results
Cogent continues to witness lower office occupancy rates overall in the buildings it serves in central business districts in North America, largely attributable to remote work policies originally instituted during the COVID-19 pandemic. Since the end of the pandemic, and despite some improvement in certain markets, Cogent continues to see office occupancy rates that do not approach pre-2020 levels. Because of the rising vacancy levels and/or lower numbers of  lease initiations or renewals resulting in fewer tenants, Cogent has experienced a slowdown in new sales to its corporate customers, which has negatively impacted its corporate revenue results. This overall trend is not uniform throughout North America; Cogent has seen declining vacancy rates and increasing office occupancy rates in some cities, including in the three months ended December 31, 2024. Moreover, as the option to fully or partially work from home becomes permanently established at many companies, Cogent's corporate customers are integrating some of the new applications that were part of the remote work environment into their everyday use, which benefits Cogent's corporate business as these customers upgrade their Internet access infrastructure to higher capacity connections. These factors have helped mitigate the impact of lower office occupancy rates and during the three months ended December 31, 2024, Cogent continued to see these positive trends in its corporate business in some markets.  If and when companies eventually return to the buildings in which Cogent operates, whether existing tenants or new tenants, Cogent believes it will present an opportunity for increased sales. However, the exact timing, path and spread of these positive trends remains uncertain, office occupancy rates in some markets may not recover, and Cogent may continue to see increased corporate customer turnover, fewer upgrades of existing corporate customer configurations and fewer new tenant opportunities, which would negatively impact Cogent's corporate revenue growth.

These and other risks are described in more detail in Cogent's Annual Report on Form 10-K for the years ended December 31, 2023 and December 31, 2024 and in its Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2023, June 30, 2023, September 30, 2023, March 31, 2024, June 30, 2024 and September 30, 2024.

Conference Call and Website Information
Cogent will host a conference call with financial analysts at 8:30 a.m. (ET) on February 27, 2025 to discuss Cogent's operating results for the fourth quarter of 2024 and full year 2024.  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, optical wavelength, optical transport and colocation services. Cogent's facilities-based, all-optical IP network backbone provides services in 264 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.

(1) In connection with the acquisition of the Wireline Business, Cogent began to provide optical wavelength services and optical transport services over its fiber network.
(2) Consists of legacy services of companies whose assets or businesses were acquired by Cogent.
(3) See Schedules of Non-GAAP measures below for definitions and reconciliations to GAAP measures.
(4) Network operations expense excludes equity-based compensation expense of $149, $231, $370, $370, $385, $350, $469 and $477 in the three-month periods ended March 31, 2023 through December 31, 2024 respectively.  Network operations expense includes excise taxes, including Universal Service Fund fees, of $4,193, $11,040, $14,557, $20,428, $20,549, $19,182, $19,752 and $20,960 in the three-month periods ended March 31, 2023 through December 31, 2024, respectively.
(5) In connection with the acquisition of the Wireline Business, Cogent classified revenue and customer connections as follows:

• $12.9 million of the Wireline Business monthly recurring revenue and 17,823 customer connections as corporate revenue and corporate customer connections, respectively,
• $6.5 million of monthly recurring revenue and 5,711 customer connections as net-centric revenue and net-centric customer connections, respectively, and
• $20.1 million of monthly recurring revenue and 23,209 customer connections as enterprise revenue and enterprise customer connections, respectively.
• Conversely, Cogent reclassified $0.3 million of monthly recurring revenue and 387 customer connections of legacy Cogent monthly recurring revenue to enterprise revenue and enterprise customer connections, respectively
  • $0.3 million of corporate monthly recurring revenue and 363 corporate customer connections and $0.02 million of net-centric monthly recurring revenue and 24 net-centric customer connections.

(6) 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.
(7) 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 believes that non-GAAP gross profit and non-GAAP gross margin are relevant measures to provide investors. Management uses them to measure the margin available to the company after network service costs, in essence a measure of the efficiency of the Company's network.
(8) Excludes equity-based compensation expense of $6,432, $6,018, $7,041, $6,314, $6,565, $3,215, $7,406 and $6,871 in the three-month periods ended March 31, 2023 through December 31, 2024, respectively and excludes $400, $739, $351, $17,001, $9,037 and $12,370 of Sprint acquisition costs for the three-month periods ended March 31, 2023 through June 30, 2024, respectively.  There were no Sprint acquisition costs for the three months ended September 30, 2024 or December 31, 2024.
(9) As of December 31, 2024, Cogent was party to an interest rate swap agreement (the "Swap Agreement") that has the economic effect of modifying the fixed interest rate obligation associated with its Senior Secured 2026 Notes to a variable interest rate obligation based on the Secured Overnight Financing Rate ("SOFR") so that the interest payable on the 2026 Notes effectively became variable based on overnight SOFR. Interest expense includes payments of $9,507, $11,997, $12,122 and $12,081 for the three-month periods ended June 30, 2023, December 31, 2023, June 30, 2024 and December 31, 2024, respectively related to the Swap Agreement. Under GAAP, changes in the valuation of the Swap Agreement are classified with interest expense in the condensed consolidated statements of comprehensive (loss) income.
(10) The gain on bargain purchase from the Sprint acquisition was $1.4 billion as shown below.

(11) Includes cash payments under the IP Transit Services Agreement, as discussed above, of

• $29.2 million for the three months ended June 30, 2023,
• $87.5 million for the three months ended September 30, 2023,
• $87.5 million for the three months ended December 31, 2023,
• $87.5 million for the three months ended March 31, 2024,
• $66.7 million for the three months ended June 30, 2024,
• $25.0 million for the three months ended September 30, 2024, and
• $25.0 million for the three months ended December 31, 2024.

(12) In connection with the acquisition of the Wireline Business, Cogent acquired 482 technical buildings.  Fifty two of those buildings have been converted to a Cogent Data Center.

(13) In connection with the acquisition of the Wireline Business, Cogent hired 942 total employees, including 75 quota bearing sales employees and 114 sales employees.

• As of June 30, 2023, there were 888 employees remaining from the original Wireline Business employees.
• As of September 30, 2023, there were 839 employees remaining from the original Wireline Business employees.
• As of December 31, 2023, there were 758 employees remaining from the original Wireline Business employees.
• As of March 31, 2024, there were 718 employees remaining from the original Wireline Business employees.
• As of June 30, 2024, there were 655 employees remaining from the original Wireline Business employees.
• As of September 30, 2024, there were 635 employees remaining from the original Wireline Business employees.
• As of December 31, 2024, there were 624 employees remaining from the original Wireline Business employees.

(14) In connection with the acquisition of the Wireline Business the Company incurred the following Sprint acquisition costs:

• $0.4 million of in the three months ended March 31, 2023,
• $0.7 million in the three months ended June 30, 2023,
• $0.4 million in the three months ended September 30, 2023,
• $17.0 million in the three months ended December 31, 2023,
• $9.0 million in the three months ended March 31, 2024, and
• $12.4 million in the three months ended June 30, 2024.

Included in Sprint acquisition costs were the following reimbursable severance costs:

• $16.2 million of reimbursable severance costs in the three months ended December 31, 2023,
• $4.3 million of reimbursable severance costs in the three months ended March 31, 2024, and
• $8.0 million of reimbursable severance costs in the three months ended June 30, 2024.

(15) Sales rep productivity for Q2 2023 included 9,084 net-centric customer connections from a commercial services agreement ("CSA") with TMUSA entered into in May 2023.  Net-centric revenue under the CSA (predominantly on-net revenue) was

• $7.3 million for the three months ended June 30, 2023,
• $8.0 million for the three months ended September 30, 2023,
• $8.6 million for the three months ended December 31, 2023
• $3.2 million for the three months ended March 31, 2024,
• $5.9 million for the three months ended June 30, 2024,
• $4.1 million for the three months ended September 30, 2024, and
• $1.5 million for the three months ended December 31, 2024.

Net-centric customer connections under the CSA were:

• 8,028 as of June 30, 2023,
• 4,661 as of September 30, 2023,
• 3,576 as of December 31, 2023,
• 2,658 as of March 31, 2024,
• 2,117 as of June 30, 2024,
• 2,053 as of September 30, 2024, and
• 1,776 as of December 31, 2024.

(16) As of June 30, 2023, total non-core customer connections included 8,486 Session Initiation Protocol ("SIP") customer connections. This non-core corporate product was discontinued. There were no SIP, non-core customer connections from September 30, 2023 to December 31, 2024.

(17) The first quarter 2024 dividend totaling $45.8 million was declared on February 28, 2024, and paid on April 9, 2024.

(18) Included in on-net revenue and enterprise revenue from May 2023 to July 2024 was $1.7 million of monthly revenue from an uneconomic resale customer acquired in connection with the Wireline Business.  The service was cancelled on July 31, 2024.

(19) On July 1, 2024, Cogent changed its estimated useful life of its owned fiber to an average of 14 years to an average of 40 years.

NM  Not meaningful

Schedules of Non-GAAP Measures 

EBITDA, EBITDA, as adjusted for Sprint acquisition costs and cash payments made to the Company under the IP Transit Services Agreement, EBITDA margin and EBITDA, as adjusted for Sprint acquisition costs and cash payments made to the Company under the IP Transit Services Agreement , margin

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 for Sprint acquisition costs and cash payments under the IP Transit Services Agreement with T-Mobile, represents EBITDA plus costs related to the Company's acquisition of the Wireline Business and cash payments made to the Company under the IP Transit Agreement. EBITDA margin is defined as EBITDA divided by total service revenue. EBITDA, as adjusted for Sprint acquisition costs and cash payments made to the Company under the IP Transit Agreement margin is defined as EBITDA, as adjusted for Sprint acquisition costs and cash payments made to the Company under the IP Transit Agreement, divided by total service revenue.

The Company believes that EBITDA, EBITDA, as adjusted for Sprint acquisition costs and cash payments made to the Company under the IP Transit Services Agreement, EBITDA margin and EBITDA as adjusted for Sprint acquisition costs and cash payments made to the Company under the IP Transit Services Agreement margin are useful measures of its ability to service debt, fund capital expenditures, pay dividends and expand its business.  The company believes its EBITDA, as adjusted for Sprint acquisition costs and cash payments made to the Company under the IP Transit Services Agreement, is a useful measure because it includes recurring cash flows stemming from the IP Transit Services Agreement that are of the same type as contracted payments under commercial contracts.  The measurements are an integral part of the internal reporting and planning system used by management as a supplement to GAAP financial information. EBITDA, EBITDA, as adjusted for Sprint acquisition costs and cash payments made to the Company under the IP Transit Agreement, EBITDA margin and EBITDA as adjusted for Sprint acquisition costs and cash payments made to the Company under the IP Transit Agreement margin 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 measures are not intended to reflect the Company's free cash flow, as they do 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 measures may also differ from the calculations performed by its competitors and other companies and as such, their utility as a comparative measure is limited.

EBITDA, and EBITDA, as adjusted for Sprint acquisition costs and cash payments made to the Company under the IP Transit Services Agreement, are reconciled to net cash provided by operating activities in the table below. 

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

Constant currency impact on revenue changes – sequential periods

Constant currency impact on revenue changes – prior year periods

Revenue on a constant currency basis and adjusted for the impact of excise taxes is reconciled to service revenue as reported in the tables below.

Constant currency and excise tax impact on revenue changes – sequential periods

Constant currency and excise tax impact on revenue changes – prior year periods

Non-GAAP gross profit and non-GAAP gross margin 

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

Gross and Net Leverage Ratios

Gross leverage ratio is defined as total debt divided by the trailing 12 months EBITDA, as adjusted for Sprint acquisition costs and cash payments under the IP Transit Services Agreement.  Net leverage ratio is defined as total net debt (total debt minus cash and cash equivalents) divided by the last 12 months EBITDA, as adjusted for Sprint acquisition costs and cash payments under the IP Transit Services Agreement.  Cogent's gross leverage ratios and net leverage ratios are shown below.

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.