Cogent Incurs Narrower-Than-Expected Q2 Loss Despite Lower Revenues

Net Income

Excluding non-recurring items, the company reported a net loss of 80 cents per share compared with a net loss of $1.21 per share in the prior-year quarter. The bottom line was narrower than the Zacks Consensus Estimate loss of $1.12.

Revenues

Service revenues decreased to $235.6 million from $246.2 million in the year-earlier quarter, primarily due to a decline in off-net revenues. The top line fell short of the Zacks consensus estimate of $240.9 million. 

On-Net revenues in the quarter were $135.4 million, up from $132.3 million in the year-ago quarter, driven by continued growth in higher-margin on-net services and higher IPv4 leasing revenues. Segment revenues beat our estimate of $134 million. On-Net customer connections rose to 88,013 from 87,407.

Off-Net revenues were $84.5 million compared with $102.2 million in the year-earlier quarter, due to the continued decline in the acquired Sprint Wireline business. The segment's customer connections decreased to 23,033 from 26,239 in the year-ago quarter. Net sales missed our segment revenue estimate of $90.5 million.

Wavelength revenues were $14.8 million in the quarter, up from $9.1 million in the year-ago quarter, reflecting strong demand for wavelength services. The segment's customer connections were 2,445, up from 1,469 in the prior-year quarter. Segment revenues missed our estimate of $15.1 million.

Non-core revenues were $0.9 million, down from $2.7 million in the year-ago quarter. The segment's customer connections were 2,348, down from 3,615 in the prior-year quarter.The company’s net-centric customer connections increased to 65,556 from 62,659 a year ago. Enterprise customer connections decreased to 8,957 from 11,764 a year ago.

Other Details

GAAP gross profit was $57.6 million, up from $33.5 million a year ago, with respective margins of 24.5% and 13.6%. Non-GAAP gross profit aggregated $110.7 million compared with $109.3 million in the year-ago quarter, with respective margins of 47% and 44.4%. Operating income was $118.9 million against an operating loss of $31.5 million a year ago due to a gain on asset sale.

During the quarter, EBITDA was $46.1 million compared with $48.5 million a year ago, with respective margins of 19.6% and 19.7%. Adjusted EBITDA decreased to $71.1 million from $73.5 million in the year-ago quarter, with respective margins of 30.2% and 29.8%.

Cash Flow & Liquidity

In the second quarter of 2026, Cogent generated $3.2 million of net cash from operating activities against cash utilization of $44 million in the year-ago quarter. During the first six months of 2026, Cogent generated $18 million in cash from operations against a cash usage of $7.7 million in the year-ago period. As of June 30, 2026, the company had $369.7 million in cash and cash equivalents & restricted cash, with $609 million of finance lease obligations (net of current maturities).

CCOI’s Zacks Rank

Cogent currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Keysight Technologies, Inc. KEYS is scheduled to release third-quarter fiscal 2026 earnings on Aug. 18. The Zacks Consensus Estimate for earnings is pegged at $2.46 per share, suggesting growth of 43.02% from the year-ago reported figure.

Keysight has a long-term earnings growth expectation of 19.44%. The company delivered an average earnings surprise of 9.46% in the last four reported quarters.

Analog Devices, Inc. ADI is set to release third-quarter fiscal 2026 earnings Aug. 19. The Zacks Consensus Estimate for earnings is pegged at $3.33 per share, implying growth of 62.44% from the year-ago reported figure.

Analog Devices has a long-term earnings growth expectation of 31.04%. The company delivered an average earnings surprise of 5.48% in the last four reported quarters.

Applied Materials, Inc. AMAT is scheduled to release third-quarter fiscal 2026 earnings on Aug. 13. The Zacks Consensus Estimate for earnings is pegged at $3.36 per share, suggesting growth of 35.48% from the year-ago reported figure.

Applied Materials has a long-term earnings growth expectation of 32.44%. The company delivered an average earnings surprise of 6.06% in the last four reported quarters.

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