Cogent Communications Holdings, Inc. reported a net loss of $39.5 million for the first quarter of 2026, a narrower loss than the $52.0 million recorded a year earlier. Diluted earnings per share were $‑0.83, beating the consensus estimate of $‑1.03 and the prior‑year loss of $‑1.09.
Total service revenue fell 3.2% year‑over‑year to $239.2 million, a 0.6% decline from the prior quarter. On‑net revenue, the higher‑margin core of the business, rose 1.0% to $135.6 million, while off‑net revenue dropped 4.2% to $89.0 million. Wavelength revenue grew 12.3% sequentially to $13.6 million, reflecting continued demand for high‑capacity data transmission.
Adjusted EBITDA margin expanded to 29.3% in Q1 2026 from 27.8% in Q1 2025, driven by the mix shift toward on‑net and wavelength services and disciplined cost management. GAAP gross margin improved to 23.4% and non‑GAAP gross margin reached 46.1%, underscoring the company’s ability to preserve profitability amid revenue pressure.
Management highlighted that the EPS beat was largely a result of strict cost controls and a favorable revenue mix, while the revenue miss was attributed to the ongoing attrition of Sprint‑acquired customers and the gradual phasing out of low‑margin legacy contracts. The company reiterated its multi‑year guidance of 6‑8% revenue growth and approximately 200 basis‑point EBITDA margin expansion, signaling confidence in the long‑term strategy.
Investors reacted negatively to the revenue miss, with concerns focused on the continued loss of Sprint customers and the impact on top‑line growth, despite the EPS beat. The market’s response underscored the importance placed on revenue growth in the ISP sector.
Cogent’s results illustrate a company in transition, balancing the need to shed legacy low‑margin revenue with the pursuit of higher‑margin on‑net and wavelength services. While the narrowed loss and margin improvement suggest operational progress, the revenue decline and customer attrition highlight ongoing challenges that will shape the company’s near‑term performance.
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