Cogent Communications Holdings, Inc. posted third‑quarter 2025 results that included a $241.9 million service‑revenue total, a 5.9% year‑over‑year decline and a 5.9% sequential drop from the same quarter in 2024. The company’s net loss of $0.87 per share beat consensus estimates of $1.03 to $1.15 per share, a $0.24 or 24% surprise that reflects disciplined cost management and a favorable mix shift toward higher‑margin services.
Revenue fell largely because off‑net revenue dropped 6.9% to $95.1 million, driven by the migration of legacy off‑net customers to on‑net and the termination of low‑margin contracts acquired during the Sprint acquisition. On‑net revenue, however, rose modestly to $135.3 million, and wavelength services grew 12.4% to $10.2 million, underscoring the company’s continued investment in its high‑capacity optical network.
GAAP gross margin expanded to 20.6% from 3.8% in Q3 2024, while non‑GAAP gross margin climbed to 45.8%. The margin lift is largely attributable to higher operating efficiency, the monetization of the company’s IPv4 address inventory, and a shift toward the more profitable wavelength and on‑net segments. Non‑core services revenue fell to $1.4 million from $2.7 million, further tightening the mix.
Strategically, Cogent is accelerating a portfolio realignment. In October 2025 the company entered a letter of intent to sell two data centers acquired in the Sprint deal for $144 million, a move that signals a focus on core network assets and a desire to free cash. Capital expenditures fell sharply in Q3 2025, and net cash from operating activities turned positive at $3.1 million, a turnaround from a $44 million cash outflow in Q2 2025.
The company maintained its quarterly dividend of $0.02 per share, payable December 8, 2025 to shareholders of record on November 21, 2025, reaffirming its long‑term capital‑return policy. Investors reacted negatively to the revenue miss and the temporary pause in the stock‑repurchase program, with the stock falling 22.6% on the day of the announcement. The market’s focus on the revenue shortfall and capital‑allocation shift highlights concerns about Cogent’s ability to meet future revenue targets while sustaining its margin gains.
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