Cogent Communications (NASDAQ:CCOI) reported fourth-quarter and full-year 2025 results that management said reflect continued margin improvement, an accelerating wavelength business, and ongoing shifts in revenue mix following the Sprint Wireline acquisition. On the call, Chairman and CEO Dave Schaeffer and CFO Tad Weed also detailed deleveraging priorities, refinancing plans for upcoming debt maturities, and the company’s efforts to monetize certain acquired data center assets.
Revenue trends and mix shift toward on-net
Cogent posted total revenue of $240.5 million for the fourth quarter and $975.8 million for full-year 2025. Revenue declined sequentially by $1.4 million, or 0.6%, which Weed said was an improvement from the prior quarter’s $4.3 million sequential decline. He added that revenue increased each month during the quarter, with continued month-to-month increases from December 2025 to January 2026, and noted a negative foreign exchange impact of $0.2 million on sequential revenue.
Weed provided a quarterly breakdown by connection type:
- On-net revenue (including wavelength): $146.4 million, up 7.8% year over year and up 0.6% sequentially.
- Off-net revenue: $92.9 million, down 17.9% year over year and down 2.3% sequentially; Weed attributed the decline to migrating some off-net customers to on-net and “grooming and termination” of acquired low-margin off-net contracts.
- Non-core revenue: down to $1.2 million.
Wavelength growth accelerates; footprint expands
Schaeffer highlighted wavelength services as a key growth driver and contributor to margin expansion, noting that the product is “virtually all on-net.” At year-end, Cogent was offering wavelength services in 1,068 locations capable of 10 gigabit, 100 gigabit, and 400 gigabit services with provisioning intervals of about 30 days; he said the footprint has since expanded to 1,096 locations.
Wavelength revenue was $12.1 million in the quarter, up 74% year over year. Sequential growth accelerated to roughly 19%, compared with 12% sequential growth in the third quarter. Wavelength connections increased 18% sequentially to 2,064 at quarter-end. For full-year 2025, wavelength revenue totaled $38.5 million, up 100% from 2024, and management said wavelength customers increased 85% over that period. Cogent reported having sold wavelengths in 518 locations at quarter-end, up from 454 at the end of the third quarter.
In response to analyst questions, Schaeffer said the company believes it has less than 2% share of the North American wavelength market and reiterated Cogent’s expectation of capturing 25% of what he described as a “highly concentrated” market over time. He also said the company’s provisioning time remains faster than industry norms and cited supply constraints for pluggable optics as one factor influencing intervals. On pricing, Schaeffer said Cogent is “probably at a 20%-30% discount” to market.
Margin expansion, EBITDA metrics, and T-Mobile payments
Cogent reported higher profitability in the quarter, driven by cost reductions and product mix optimization. Weed said gross margin increased sequentially by $1.6 million to $112.5 million, with gross margin percentage rising 100 basis points to 46.8%. Full-year gross margin increased $46.7 million to $442.7 million, and the gross margin percentage rose to 45.4% from 38.2% in 2024.
On EBITDA, management discussed multiple measures. Schaeffer said adjusted EBITDA for the quarter increased by $3 million to $76.7 million, and adjusted EBITDA margin rose 140 basis points sequentially to 31.9%. Weed separately stated EBITDA excluding payments under the IP transit agreement increased sequentially to $51.7 million, with margin of 21.5%.
For full-year 2025, Weed said EBITDA excluding the IP transit agreement and Sprint acquisition costs rose by $70 million to $192.8 million, versus $122.8 million in 2024, with margin expanding to 19.8% from 11.9%.
Management also detailed the remaining cash inflows from T-Mobile under the IP transit agreement. Schaeffer said Cogent will receive 23 additional monthly payments of $8.3 million through November 2027. He also referenced at least $28 million of further cash payments from T-Mobile tied to assumed lease obligations, to be paid in four equal monthly payments from December 2027 through March 2028.
Sprint revenue runoff vs. “Cogent Classic” growth
Weed and Schaeffer provided additional disclosure separating acquired Sprint Wireline revenue from Cogent’s legacy business. Weed said Sprint Wireline revenue had a run rate of $118 million per quarter at closing in May 2023 and has fallen to $43 million in the fourth quarter of 2025—down $75 million, or 64%. Over the same period, Cogent Classic revenue increased from $155 million per quarter at closing to $197 million in the fourth quarter of 2025, up 27% (a $42 million increase). Weed said Cogent Classic revenue rose 1.5% sequentially, 3.1% year over year, and 2.3% for full-year 2025 compared with 2024.
By customer type, Weed said quarterly corporate revenue declined 9.1% year over year and 2.3% sequentially, while NetCentric revenue increased 10.4% year over year and 3.1% sequentially. Enterprise revenue declined 24.7% year over year and 5.8% sequentially, which he attributed primarily to reductions in acquired non-core enterprise and off-net low-margin enterprise revenues.
Schaeffer said the Sprint portion’s EBITDA contribution is “close to zero, but slightly positive,” estimating a range of 0% to 5% margin, and described continued deterioration in the acquired base as the company applies margin discipline and sunsets non-core products.
Capital allocation: deleveraging, refinancing, and data center monetization
Management reiterated a focus on balance sheet flexibility and deleveraging. Schaeffer said gross debt leverage (adjusted for amounts due from T-Mobile) improved to 7.35 from 7.45 in the prior quarter, while the net debt ratio was 6.64 versus 6.65. Weed said total gross debt at par was $2.4 billion at year-end (including $623.4 million of finance lease obligations under long-term IRUs), and net debt was $1.9 billion after including cash and $203.1 million due from T-Mobile.
Cogent also discussed plans to refinance its $750 million June 2027 unsecured notes. Schaeffer said the company intends to complete a refinancing into $750 million of new secured notes “as soon as the make-whole period expires” in June, referencing about $13 million of make-whole cost if refinanced prior to mid-June.
On asset monetization, Schaeffer said Cogent intends to sell or wholesale-lease 24 data center facilities acquired through the Sprint transaction. A previously disclosed non-binding letter of intent was not finalized after the prospective buyer sought owner financing for more than 50% of the purchase price—terms Schaeffer said Cogent found unacceptable. He said the company is in active discussions with multiple parties and expects several to result in multi-site acquisition offers, with the potential for an announcement in the next couple of months. Tad Weed said such sales would create taxable income, but he expects net operating losses and depreciation to offset cash tax payments.
Separately, Schaeffer said Cogent’s infrastructure business has negative EBITDA of about $140 million, partially offset by about $60 million of EBITDA from the IPv4 securitization under infrastructure. He said roughly 20% of the negative costs are associated with data centers, and Cogent is looking to sell “at least 50%” of that footprint.
About Cogent Communications (NASDAQ:CCOI)
Cogent Communications (NASDAQ:CCOI) is a multinational Internet service provider specializing in high-speed Internet access and data transport services. The company operates one of the largest Tier 1 IP networks in the world, offering wholesale and enterprise customers reliable, low-latency connectivity. Cogent’s core services include dedicated Internet access, Ethernet transport, wavelength services, and MPLS-based IP Virtual Private Networks, all delivered over its privately owned, fiber-optic backbone.
In addition to network connectivity, Cogent provides data center colocation and managed services designed to support businesses with demanding bandwidth and redundancy requirements.
