Cogent Communications Holdings, Inc. (NASDAQ:CCOI) Q2 2024 Earnings Conference Call August 8, 2024 8:30 AM ET

Company Participants

Dave Schaeffer - Founder, Chairman, President and Chief Executive Officer
Thaddeus Weed - VP, Treasurer and Chief Financial Officer

Conference Call Participants

Sebastiano Petti - JPMorgan
Greg Williams - TD Cowen
Walter Piecyk - LightShed
Timothy Horan - Oppenheimer
Frank Louthan - Raymond James
James Schneider - Goldman Sachs
Nick Del Deo - MoffettNathanson
Bora Lee - RBC Capital Markets
Brandon Nispel - KeyBanc Capital Markets
Michael Rollins - Citigroup Global Markets

Operator

Ladies and gentlemen, good morning and welcome to the Cogent Communications Holdings Second Quarter 2024 Earnings Conference Call. As a reminder, this conference call is being recorded and it will be available for replay at www.cogentco.com. A transcript of this conference call will be posted on Cogent's website when it becomes available. Cogent's summary of financial and operational results attached to its press release can be downloaded from the Cogent's website.

I would now like to turn the call over to Mr. Dave Schaeffer, Chairman and Chief Executive Officer of Cogent Communications Holdings.

Dave Schaeffer

Hey, good morning and thanks everyone for joining today this call. Welcome to our second quarter 2024 earnings conference call. I'm Dave Schaeffer, Cogent's Chief Executive Officer. With me on this morning's call is Tad Weed, our Chief Financial Officer.

Hopefully, you've had a chance to review our earnings press release. The press release includes a number of historical metrics that we present on a consistent basis each quarter.

Now for a couple of comments on activity in the quarter. In the quarter we had two debt transactions. On May 2, we closed the issuance of our inaugural $206 million asset backed securitization of our IPV4 notes at 7.9%. These notes mature in five years and may be extended for up to a 30-year term. This securitization transaction was the first ever of IPV4 lease revenue.

We are the owners of approximately $37.8 million IPV4 addresses. We acquired $27.9 million of these addresses when we purchased PSINet and other acquisitions in the early 2000s. We further enhanced our portfolio when we acquired $9.9 million additional IPV4 addresses in May of 2023 as part of our acquisition of the Sprint Global Markets Group from T-Mobile.

On June 11, we closed the issuance of our $300 million 7% unsecured notes. These are mirrored notes. These notes have identical terms to our existing $450 million 2027 notes. We use $114.6 million of the proceeds from this offering to prepay a Dark Fiber IRU finance lease at a 12% discount rate, saving $15.6 million in cash. This IRU Dark Fiber lease had monthly cash payments of $4.2 million a month through 2026, all of which have been eliminated and therefore materially improving our cash flow.