Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported August 6, 2026 · Beat 5 of last 7 quarters
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Cogent's continued growth in wavelength revenue and on-net services reflects rising demand for high-capacity connectivity driven by AI and cloud buildout. The company's ability to monetize legacy Sprint data centers and reduce leverage supports its role as a key provider of IP transit and optical transport for AI infrastructure. The acceleration in IP traffic growth (16% YoY) and the shift toward symmetric traffic from AI inference could drive future revenue growth for Cogent.
Cogent reported Q2 2026 revenue of $235.6M, down 1.5% sequentially, with on-net revenue growing to 64% of total and off-net declining to 35.9%. The company closed the sale of 10 data centers for $225M, used proceeds to repurchase $138.8M of 2032 notes at a discount, and reduced net leverage to 6.23x. Wavelength revenue grew 63.8% YoY to $14.8M, with 77 existing wavelengths upgraded to higher capacity. EBITDA as adjusted rose sequentially to $71.1M, and gross margin improved to 47%.
Management reiterated multi-year revenue growth of 6-8% and annual EBITDA margin expansion of ~200 bps, acknowledging Q2 revenue declined but noting the Sprint customer runoff is moderating. They expect to complete the refinancing of its $750M 2027 unsecured notes in Q3 2026. They continue to market the remaining Sprint data centers and are in negotiations for several letters of intent on these facilities. CapEx declined sequentially and year-over-year in Q2, and they expect that trend to continue.
“We have made significant progress in several areas: our data center monetization, our net leverage reduction, our cost reduction, and completion of various integration projects.”
on Quarterly progress
“We still believe that we will capture 25% of the North American long-haul wavelength market. We also today still have only captured 3% of that market.”
on Wavelength market share
“We are keenly aware of the fact that those subsidy payments from T-Mobile will end in about 2 years or less than 2 years. And we need to be able to grow EBITDA.”
on T-Mobile subsidy and EBITDA growth
On waves, your numbers came in a touch light. Any help on backlog direction? And on EBITDA, it barely grew QoQ—any one-time costs from headcount reduction, and are we done with cost takeout?
Dave noted wave demand remains strong with backlog growing, but customers face equipment, power, and space constraints delaying acceptance. He expects wave installs to accelerate but reaching 25% share will take several years. On EBITDA, he cited integration wind-down costs and severance from the 6% workforce reduction as temporary drags, with more moderate reductions in Q3 and accelerated margin expansion in coming quarters.
On the 14 remaining Sprint data centers, do you envision selling as a block or piecemeal, and what's the timeline?
Dave said sales will likely be in chunks, with two LOIs on four facilities (one for three, one for one) that were deemed unacceptable on price, and negotiations ongoing. He expects most remaining facilities to transact over the next several quarters, possibly waiting until early next year for NOL capacity.
On the remaining $100M of data center proceeds, will you buy back more secured debt or repay the 27s? And are you committing future data center sale proceeds to the borrower group?
Dave said they plan to raise less than $750M for the 27s refinancing and may buy back some 27s or additional 32s. He confirmed they are receptive to contributing future data center proceeds to the borrower group, and that could be part of discussions with underwriters for the new bond.