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Cogent Communications: Cogent Communications Holdings: Steady Revenue Growth and Margin Expansion

Cogent Communications Holdings, Inc. reported its fourth quarter and full year 2025 earnings, with total revenue for the quarter being $200.14 million, a 0.6% sequential decline, while total revenue for the year was $975.8 million. On-net revenues increased by 0.6% sequentially and 7.8% year-over-year to $146.4 million. Gross margin increased sequentially by 100 basis points to 46.8% and 720 basis points year-over-year to 45.4%. EBITDA, not including payments under the IP transit agreement, increased sequentially by $3 million to $51.7 million, and EBITDA margin increased by 130 basis points to 21.5%. The company's actual EPS came out at '-0.64' relative to estimates at '-1.09', indicating a better-than-expected performance.

CCOI

USD 18.94

5.99%

A-Score: 4.1/10

Publication date: February 20, 2026

Full Report

Author: Analystock.ai

📋 Highlights
  • On-net Revenue Growth Sequential increase of 0.6% to $146.4M (7.8% YoY), driven by strategic focus on on-net services (80% of quarterly sales).
  • Margin Expansion Gross margin improved 100 bps sequentially to 46.8%, with EBITDA rising $3M to $51.7M (+130 bps margin) due to cost savings ($230M of $240M target achieved).
  • Wavelength Business Acceleration Revenue surged 74% YoY to $12.1M, with 18% sequential customer growth to 2,064 connections.
  • IPv4 Leasing Surge Revenue jumped 44% YoY to $64.5M, leasing 15.3M addresses (+17% YoY), boosted by enhanced security features.
  • Deleveraging Progress Net debt ratio reduced to 6.64, with CEO emphasizing 200 bps annual margin expansion and 6-8% revenue growth guidance over multi-years.

Revenue Growth and Segment Performance

The company's Wavelength revenue for the quarter was $12.1 million, a 74% year-over-year increase, and Wavelength customers increased by 18% sequentially to 2,064 connections. IPv4 leasing revenue increased 44% year-over-year to $64.5 million, with the company leasing 15.3 million addresses at year-end, an increase of 2.2 million incremental addresses or 17% on a year-over-year basis. As Dave Schaeffer, Cogent's CEO, highlighted, the company's focus on cost reduction and product optimization drove the increase in gross margin and EBITDA margins.

Margin Expansion and Cash Flow

The company expects its revenue growth to continue in the 6-8% range, with EBITDA margin moderating to around 200 basis points per year over a multi-year period. Cogent's CapEx was $37,000,000 this quarter and $187,600,000 for the year, and principal payments on capital leases were $8,500,000 for the quarter and $33,800,000 for the year, both declining year over year. With a net debt ratio of 6.64 and a gross debt leverage as adjusted ratio of 7.35, the company's leverage ratios have improved.

Valuation Metrics

Analyzing Cogent's valuation metrics, we see a P/S Ratio of 0.92, indicating a relatively reasonable valuation given the company's revenue growth prospects. The EV/EBITDA ratio stands at 20.07, suggesting that the market is pricing in a certain level of EBITDA growth. With a Net Debt / EBITDA ratio of 15.19, Cogent's debt levels are still relatively high, but the company's commitment to deleveraging is evident.

Outlook and Guidance

Cogent expects to continue sequential revenue growth and anticipates an annual rate of growth in the 6% to 8% range. The company aims to achieve a 200 basis point rate of margin expansion, following an 800 basis point expansion last year. Analysts estimate next year's revenue growth at 6.8%, which is within the company's guided range.

Cogent Communications's A-Score