Cogent Communications Holdings, Inc. (NASDAQ:CCOI) Q3 2024 Earnings Conference Call November 7, 2024 8:30 AM ET

Company Participants

Dave Schaeffer – Founder and Chief Executive Officer
Tad Weed – Chief Financial Officer

Conference Call Participants

Jim Schneider – Goldman Sachs
Greg Williams – TD Cowen
David Barden – Bank of America
Walter Piecyk – BTIG
Michael Rollins – Citi
Nick Del Deo – MoffettNathanson
Tim Horan – Oppenheimer

Operator

Good morning and welcome to Cogent Communications Holdings Third 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 that is www.cogentco.com. A transcript of this conference call will be posted on Cogent's website when it becomes available. Cogent Summary of Financial and Operational Results attached to the spectrum. These can be downloaded from the Cogent website.

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

Dave Schaeffer

Thank you and good morning to everyone. Welcome to our third quarter 2024 earnings conference call. I'm Dave Schaeffer, Cogent's Chief Executive Officer, and 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. Our press release includes a number of historical quarterly metrics, which we present on a consistent basis every quarter.

I'd like to take a moment to address some of the expected cost savings that we've been able to achieve. We are continuing to make substantial progress in realizing cost savings and synergies from the acquisition of the Sprint Global Markets business. Based on the difference between our monthly cost run rates in May of 2023 and September of 2024, we have realized $125 million – or $165 million of these savings are approximately 75% of our targeted $220 million in annual cost savings. These cost savings were initially expected to be achieved in their entirety by May of 2026. Our combined Cogent business had a very good quarter. Our total revenue was $257.2 million for the quarter.

Our revenue results for the quarter were impacted by the continuing grooming of low margin off-net connections, the continued elimination of non-core products and low margin business that with the reduction in revenues from the commercial services agreement that we have with T-Mobile. Revenues under our commercial services agreement with T-Mobile decreased sequentially by $1.8 million to $4.1 million for the quarter from $5.9 million for Q2. Revenue from a low margin resale customer contract, which was acquired in the Sprint acquisition which we intentionally terminated, was classified as on-net revenue and enterprise revenue and declined by $3.5 million sequentially.