Cogent Communications Holdings, Inc.

Cogent reported Q2 2026 revenue of $235.6 million, down $3.6 million or 1.5% sequentially. Gross margin was 47%, up 260 basis points year over year and 90 basis points sequentially. Adjusted EBITDA was $71.1 million, up about $900,000 sequentially, and adjusted EBITDA margin was 30.2%, up 90 basis points sequentially. Wavelength revenue was $14.8 million, up 63.8% year over year and 9.2% sequentially. On-net revenue, including on-net wavelengths, was $150.2 million, up 6.2% year over year and 0.7% sequentially; off-net revenue was $84.5 million, down 17.3% year over year and 5.1% sequentially. CapEx was $38.5 million, down 16.7% sequentially and 31.4% year over year, and capital lease principal payments were $9.7 million. The company sold 10 data centers for $225 million in cash and recognized a GAAP gain of $130.7 million. Net leverage as adjusted fell to 6.23x EBITDA from 6.79x last quarter and 6.61x in Q2 2025. Total cash and restricted cash was $369.7 million. Guidance/commentary: Management did not give quarterly revenue or EPS guidance. It reiterated a multi-year view for 6% to 8% revenue growth and said EBITDA margins should average expansion of about 200 basis points per year over the long term. Management also said CapEx should continue to moderate sequentially and year over year in Q3, and that the 2027 unsecured notes refinancing is expected to close in Q3 2026.

Dave Schaeffer said the quarter showed continued progress on monetizing assets, reducing leverage, cutting costs, and completing integration work from the Sprint acquisition. He emphasized that Cogent is shifting more revenue toward higher-margin on-net services, with 82% of incremental sales in the quarter on-net, and said the company expects margin expansion to accelerate as integration costs roll off. His tone was confident but practical: he acknowledged that revenue growth was negative, that wavelength backlog conversion is being slowed by customer-side constraints, and that full recovery in leverage and cash generation will take more time.

Tad Weed said the quarter’s revenue decline was driven mainly by less-profitable off-net and Sprint-related revenue, while on-net and wavelength revenue held up better. He highlighted that gross margin rose to 47%, adjusted EBITDA margin to 30.2%, and that CapEx fell to $38.5 million while capital lease payments dropped to $9.7 million. He also detailed debt moves: $20.4 million of 2032 notes repurchased in the quarter at $91.955, another $118.4 million bought in July at $90.071, and cumulative repurchases of $138.8 million face value for a $13.4 million gain. He added that DSO improved to 29 days and bad debt expense was 0.6% of revenue.

Analysts focused heavily on why wavelength connections were not accelerating faster, and management said demand is strong but customers are constrained by equipment deliveries, power, data-center space, and other supply-chain issues. Schaeffer said Cogent continues to add to backlog, is seeing customers upgrade existing wavelengths, and believes the 25% North American long-haul share target is still achievable but likely several years away. Questions also centered on SG&A, sales force sizing, CapEx, and leverage; management said SG&A should decline in Q3 and Q4, about 40% of the headcount reduction was in sales, and further CapEx moderation is expected despite vendor price increases. On debt, Schaeffer said the company may use remaining proceeds from data-center sales to reduce the size of the refi and potentially buy back more debt, while also considering whether future asset-sale proceeds should be contributed into the borrowing group.