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Press Release -- May 5th, 2016
Source: Cogent Communications
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Cogent Communications Reports First Quarter 2016 Results and Increases Regular Quarterly Dividend on Common Stock

WASHINGTON, May 5, 2016 /PRNewswire/ --

Financial and Business Highlights

  • Cogent approves a 2.8% increase of its regular quarterly dividend to $0.37 per common share to be paid on June 7, 2016 to shareholders of record on May 20, 2016
  • Service revenue for Q1 2016 increased by 3.0% from Q4 2015 and on a constant currency basis, increased by 3.0% from Q4 2015
  • Service revenue for Q1 2016 increased by 11.4% from Q1 2015 and on a constant currency basis increased by 12.2% from Q1 2015
  • EBITDA, as adjusted, for Q1 2016 increased by 14.2% to $35.6 million from $31.2 million for Q1 2015
  • There were 2,271 buildings on the Cogent network at the end of Q1 2016
  • There were 55,356 customer connections on the Cogent network at the end of Q1 2016 – an increase of 16.8% from the end of Q1 2015 and an increase of 4.1% from the end of Q4 2015

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 Cogent Communications Logo

Cogent Communications Holdings, Inc. (CCOI) today announced service revenue of $108.3 million for the three months ended March 31, 2016, an increase of 11.4% from $97.2 million for the three months ended March 31, 2015 and an increase of 3.0% from $105.2 million for the three months ended December 31, 2015. Foreign exchange had no impact on service revenue from Q4 2015 to Q1 2016 but negatively impacted service revenue growth from Q1 2015 to Q1 2016 by $0.9 million. On a constant currency basis, service revenue grew by 12.2% from Q1 2015 to Q1 2016 and grew by 3.0% from Q4 2015 to Q1 2016.

On-net service is provided to customers located in buildings that are physically connected to Cogent's network by Cogent facilities. On-net revenue was $78.7 million for the three months ended March 31, 2016; an increase of 10.5% over $71.2 million for the three months ended March 31, 2015 and an increase of 2.9% from $76.5 million for the three months ended December 31, 2015.

Off-net customers are located in buildings directly connected to Cogent's network using other carriers' facilities and services to provide the last mile portion of the link from the customers' premises to Cogent's network. Off-net revenue was $29.4 million for the three months ended March 31, 2016; an increase of 14.1% over $25.7 million for the three months ended March 31, 2015 and an increase of 3.3% over $28.4 million for the three months ended December 31, 2015.

Non-GAAP gross profit increased by 8.5% from $56.3 million for the three months ended March 31, 2015 to $61.1 million for the three months ended March 31, 2016 and increased by 2.8% from $59.5 million for the three months ended December 31, 2015. Non-GAAP gross profit margin percentage was 56.5% for the three months ended March 31, 2016, 57.9% for the three months ended March 31, 2015 and 56.5% for the three months ended December 31, 2015. Excise taxes, including Universal Service Fund fees, recorded on a gross basis and included in service revenue and cost of network operations expense were $2.0 million for the three months ended March 31, 2016, $1.7 million for the three months ended December 31, 2015 and $0.1 million for the three months ended March 31, 2015.

Earnings before interest, taxes, depreciation and amortization (EBITDA), as adjusted, increased by 14.2% from $31.2 million for the three months ended March 31, 2015 to $35.6 million for the three months ended March 31, 2016 and decreased by 3.1% from $36.8 million for the three months ended December 31, 2015. EBITDA, as adjusted, margin was 32.9% for the three months ended March 31, 2016, 32.1% for the three months ended March 31, 2015 and 34.9% for the three months ended December 31, 2015.

Basic and diluted net income (loss) per share was $0.08 for the three months ended March 31, 2016, $(0.04) for the three months ended March 31, 2015 and $0.06 for the three months ended December 31, 2015.

Total customer connections increased by 16.8% from 47,411 as of March 31, 2015 to 55,356 as of March 31, 2016 and increased by 4.1% from 53,152 as of December 31, 2015. On-net customer connections increased by 16.0% from 40,732 as of March 31, 2015 to 47,252 as of March 31, 2016 and increased by 3.9% from 45,473 as of December 31, 2015. Off-net customer connections increased by 20.2% from 6,368 as of March 31, 2015 to 7,654 as of March 31, 2016 and increased by 5.2% from 7,279 as of December 31, 2015.

The number of on-net buildings increased by 116 on-net buildings from 2,155 on-net buildings as of March 31, 2015 to 2,271 on-net buildings as of March 31, 2016 and increased by 20 on-net buildings from 2,251 on-net buildings as of December 31, 2015.

Quarterly Dividend Increase Approved
On May 4, 2016, Cogent's board approved a regular quarterly dividend of $0.37 per common share payable on June 7, 2016 to shareholders of record on May 20, 2016. This first quarter 2016 regular dividend of $0.37 per share represents an increase of 2.8% from the fourth quarter 2015 regular dividend of $0.36 per share.

The payment of any future dividends and any other returns of capital will be at the discretion of Cogent's board of directors and may be reduced, eliminated or increased and will be dependent upon Cogent's financial position, results of operations, available cash, cash flow, capital requirements, limitations under Cogent's debt indenture agreements and other factors deemed relevant by Cogent's board of directors.

Conference Call and Website Information
Cogent will host a conference call with financial analysts at 8:30 a.m. (ET) on May 5, 2016 to discuss Cogent's operating results for the first quarter of 2016 and to discuss Cogent's expectations for full year 2016. Investors and other interested parties may access a live audio webcast of the earnings call in the "Events" section of Cogent's website at www.cogentco.com/events. A replay of the webcast, together with the press release, will be available on the website following the earnings call.

About Cogent Communications
Cogent Communications (CCOI) is a multinational, Tier 1 facilities-based ISP.  Cogent specializes in providing businesses with high speed Internet access, Ethernet transport, and colocation services. Cogent's facilities-based, all-optical IP network backbone provides services in over 190 markets globally.

Cogent Communications is headquartered at 2450 N Street, NW, Washington, D.C. 20037. For more information, visit www.cogentco.com. Cogent Communications can be reached in the United States at (202) 295-4200 or via email at info@cogentco.com.

COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIES

Summary of Financial and Operational Results

Q1 2015

Q2 2015

Q3 2015

Q4 2015

Q1 2016

Metric ($ in 000's, except share and per share data) – unaudited

On-Net revenue

$71,234

$72,010

$75,088

$76,513

$78,705

  % Change from previous Qtr.

-0.1%

1.1%

4.3%

1.9%

2.9%

Off-Net revenue

$25,730

$26,522

$27,688

$28,421

$29,356

% Change from previous Qtr.

2.3%

3.1%

4.4%

2.6%

3.3%

Non-Core revenue (1)

$278

$267

$241

$243

$230

  % Change from previous Qtr.

-3.8%

-4.0%

-9.7%

0.8%

-5.3%

Service revenue – total

$97,242

$98,799

$103,017

$105,177

$108,291

  % Change from previous Qtr.

0.5%

1.6%

4.3%

2.1%

3.0%

Constant currency total revenue quarterly growth rate – sequential quarters

2.9%

2.0%

4.4%

2.5%

3.0%

Constant currency total revenue quarterly growth rate – year over year quarters

9.3%

9.5%

12.1%

12.1%

12.2%

Network operations expenses (2)

$40,907

$42,252

$45,056

$45,710

$47,156

% Change from previous Qtr.

0.0%

3.3%

6.6%

1.5%

3.2%

Non-GAAP gross margin (2)

$56,335

$56,547

$57,961

$59,467

$61,135

% Change from previous Qtr.

0.9%

0.4%

2.5%

2.6%

2.8%

Non-GAAP gross margin percentage (2)

57.9%

57.2%

56.3%

56.5%

56.5%

Selling, general and administrative expenses (3)

$26,708

$25,987

$24,740

$24,737

$27,472

  % Change from previous Qtr.

6.6%

-2.7%

-4.8%

0.0%

11.1%

Depreciation and amortization expense

$17,513

$17,371

$17,634

$18,008

$17,753

% Change from previous Qtr.

-0.2%

-0.8%

1.5%

2.1%

-1.4%

Equity-based compensation expense

$3,141

$3,098

$2,704

$2,571

$2,181

% Change from previous Qtr.

4.7%

-1.4%

-12.7%

-4.9%

-15.2%

Operating  income

$10,487

$10,810

$15,519

$16,174

$15,675

% Change from previous Qtr.

-19.7%

3.1%

43.6%

4.2%

-3.1%

Interest expense

$11,307

$9,692

$10,002

$10,280

$10,065

% Change from previous Qtr.

-7.2%

-14.3%

3.2%

2.8%

-2.1%

Net income (loss)

$(1,585)

$840

$3,161

$2,480

$3,354

Basic net income (loss) per common share

$(0.04)

$0.02

$0.07

$0.06

$0.08

Diluted net income (loss) per common share

$(0.04)

$0.02

$0.07

$0.06

$0.08

Weighted average common shares – basic

45,158,250

44,774,831

44,474,724

44,323,131

44,402,640

% Change from previous Qtr.

-0.2%

-0.8%

-0.7%

-0.3%

0.2%

Weighted average common shares – diluted

45,158,250

45,054,507

44,702,127

44,558,089

44,571,937

% Change from previous Qtr.

-0.2%

-0.2%

-0.8%

-0.3%

0.0%

EBITDA (4)

$29,627

$30,560

$33,221

$34,730

$33,663

% Change from previous Qtr.

-3.8%

3.1%

8.7%

4.5%

-3.1%

EBITDA margin

30.5%

30.9%

32.2%

33.0%

31.1%

Gains on asset related transactions

$1,548

$719

$1,152

$2,023

$1,946

EBITDA, as adjusted (4)

$31,175

$31,279

$34,373

$36,753

$35,609

  % Change from previous Qtr.

-7.3%

0.3%

9.9%

6.9%

-3.1%

EBITDA, as adjusted, margin

32.1%

31.7%

33.4%

34.9%

32.9%

 Fees – net neutrality

$1,405

$952

$816

$569

$493

Net cash provided by operating activities

$18,372

$20,035

$23,403

$21,999

$27,557

% Change from previous Qtr.

2.4%

9.1%

16.8%

-6.0%

25.3%

Capital expenditures

$12,916

$10,866

$6,838

$4,962

$15,034

  % Change from previous Qtr.

-0.8%

-15.9%

-37.1%

-27.4%

203.0%

Principal payments on capital leases

$3,650

$7,332

$5,956

$3,273

$3,369

  % Change from previous Qtr.

31.8%

100.9%

-18.8%

-45.0%

2.9%

Dividends paid

$16,001

$18,972

$15,296

$16,045

$16,171

Purchases of common stock

$8,119

$19,106

$12,169

$ -

$ -

Gross Leverage Ratio

4.42

4.50

4.57

4.55

4.39

Net Leverage Ratio

2.45

2.77

2.98

3.02

2.97

Customer Connections – end of period

On-Net

40,732

42,002

43,364

45,473

47,252

  % Change from previous Qtr.

2.4%

3.1%

3.2%

4.9%

3.9%

Off-Net

6,368

6,583

6,897

7,279

7,654

% Change from previous Qtr.

4.8%

3.4%

4.8%

5.5%

5.2%

Non-Core (1)

311

325

356

400

450

  % Change from previous Qtr.

-14.1%

4.5%

9.5%

12.4%

12.5%

Total customer connections

47,411

48,910

50,617

53,152

55,356

  % Change from previous Qtr.

2.6%

3.2%

3.5%

5.0%

4.1%

On-Net Buildings – end of period

Multi-Tenant office buildings

1,488

1,510

1,523

1,541

1,545

Carrier neutral data center buildings

618

631

647

659

675

Cogent data centers

49

50

51

51

51

Total on-net buildings

2,155

2,191

2,221

2,251

2,271

Square feet – multi-tenant office buildings – on-net

804,760,238

818,039,601

823,712,433

831,585,875

834,341,216

Network  – end of period

Intercity route miles

59,161

55,191

56,079

56,079

56,183

Metro fiber miles

27,619

28,036

28,067

28,158

28,316

Connected networks – AS's

5,334

5,435

5,511

5,582

5,617

Headcount – end of period

Sales force – quota bearing

343

358

363

378

398

Sales force - total

459

464

474

495

517

Total employees

785

799

808

828

855

Sales rep productivity – units per full time equivalent sales rep ("FTE") per month

5.3

5.6

6.0

6.3

6.3

FTE – sales reps

326

330

337

351

373

(1)

Consists of legacy services of companies whose assets or businesses were acquired by Cogent, primarily including voice services (only provided in Toronto, Canada).

(2)

Network operations expense excludes equity-based compensation expense of $172, $160, $126, $126 and $121 in the three month periods ended March 31, 2015 through March 31, 2016, respectively.  Network operations expense includes excise taxes, including Universal Service Fund fees of $53, $57, $1,757, $1,729 and $2,003 in the three month periods ended March 31, 2015 through March 31, 2016, respectively.  Non-GAAP gross margin represents service revenue less network operations expense, excluding equity-based compensation and amounts shown separately (depreciation expense).Non-GAAP gross margin percentage is defined as non-GAAP gross margin divided by total service revenue.  Management believes that gross margin is a relevant metric to provide investors, as it is a metric that management uses to measure the margin available to the company after network service costs, in essence a measure of the efficiency of the Company's network.

(3)

Excludes equity-based compensation expense of $2,969, $2,938, $2,578, $2,445 and $2,060 in the three month periods ended March 31, 2015 through March 31, 2016, respectively. 

(4)

See schedule of non-GAAP metrics below for definition and reconciliation to GAAP measures below.

Schedule of Non-GAAP Measures
EBITDA and EBITDA, as adjusted
EBITDA represents net cash flows from operating activities plus changes in operating assets and liabilities, cash interest expense and income tax expense.  Management believes the most directly comparable measure to EBITDA calculated in accordance with generally accepted accounting principles in the United States, or GAAP, is cash flows provided by operating activities. The Company also believes that EBITDA is a frequently used measure by securities analysts, investors, and other interested parties in their evaluation of issuers.  EBITDA, as adjusted, represents EBITDA plus net gains (losses) on asset related transactions.

The Company believes EBITDA, and EBITDA, as adjusted, are useful measures of its ability to service debt, fund capital expenditures and expand its business.  EBITDA, and EBITDA, as adjusted are an integral part of the internal reporting and planning system used by management as a supplement to GAAP financial information. EBITDA, and EBITDA, as adjusted are not recognized terms under GAAP and accordingly, should not be viewed in isolation or as a substitute for the analysis of results as reported under GAAP, but rather as a supplemental measure to GAAP. For example, these metrics are not intended to reflect the Company's free cash flow, as it does not consider certain current or future cash requirements, such as capital expenditures, contractual commitments, and changes in working capital needs, interest expenses and debt service requirements. The Company's calculations of these metrics may also differ from the calculations performed by its competitors and other companies and as such, its utility as a comparative measure is limited.

COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIES

EBITDA, and EBITDA, as adjusted, are reconciled to cash flows provided by operating activities in the table below.

Q1 2015

Q2 2015

Q3 2015

Q4 2015

Q1 2016

($ in 000's) – unaudited

Net cash flows provided by operating activities

$18,372

$20,035

$23,403

$21,999

$27,557

Changes in operating assets and liabilities

(159)

1,245

(68)

3,047

(3,681)

Cash interest expense and income tax expense

11,414

9,280

9,886

9,684

9,787

EBITDA

$29,627

$30,560

$33,221

$34,730

$33,663

PLUS: Gains on asset related transactions

1,548

719

1,152

2,023

1,946

EBITDA, as adjusted

$31,175

$31,279

$34,373

$36,753

$35,609

Impact of foreign currencies ("constant currency" impact) on change in sequential quarterly service revenue

($ in 000's) – unaudited

Q1 2016

Service revenue, as reported – Q1 2016

$108,291

Impact of foreign currencies on service revenue

(10)

Service revenue -  Q1 2016, as adjusted (1)

$108,281

Service revenue, as reported – Q4 2015

$105,177

Constant currency increase from Q4 2015 to Q1 2016 - (Service revenue, as adjusted for Q1 2016 less service revenue, as reported for Q4 2015)

$3,104

Percent increase (Constant currency increase from Q4 2015 to Q1 2016 divided by service revenue, as reported for Q4 2015)

3.0%

(1)

Service revenue, as adjusted, is determined by translating the service revenue for the three months ended March 31, 2016 at the average foreign currency exchange rates for the three months ended December 31, 2015. The Company believes that disclosing quarterly revenue growth without the impact of foreign currencies on service revenue is a useful measure of revenue growth. Service revenue, as adjusted, is an integral part of the internal reporting and planning system used by management as a supplement to GAAP financial information.

Impact of foreign currencies ("constant currency" impact) on change in prior year quarterly service revenue

($ in 000's) – unaudited

Q1 2016

Service revenue, as reported – Q1 2016

$108,291

Impact of foreign currencies on service revenue

855

Service revenue -  Q1 2016, as adjusted (2)

$109,146

Service revenue, as reported – Q1 2015

$97,242

Constant currency increase from Q1 2015 to Q1 2016 - (Service revenue, as adjusted for Q1 2016 less service revenue, as reported for Q1 2015)

$11,904

Percent increase (Constant currency increase from Q1 2015 to Q1 2016 divided by service revenue, as reported for Q1 2015)

12.2%

(2)

Service revenue, as adjusted, is determined by translating the service revenue for the three months ended March 31, 2016 at the average foreign currency exchange rates for the three months ended March 31, 2015. The Company believes that disclosing quarterly revenue growth without the impact of foreign currencies on service revenue is a useful measure of revenue growth. Service revenue, as adjusted, is an integral part of the internal reporting and planning system used by management as a supplement to GAAP financial information.

Gross and Net Leverage Ratios

Cogent's Gross Leverage Ratio was 4.55 at December 31, 2015 and 4.39 at March 31, 2016 and Cogent's Net Leverage Ratio was 3.02 at December 31, 2015 and 2.97 at March 31, 2016 and as shown below.

($ in 000's) – unaudited

As of December 31, 2015

As of March 31, 2016

Cash and cash equivalents

$203,591

$196,050

Debt

Capital leases – current portion

6,247

5,584

Capital leases – long term

129,763

131,371

Senior unsecured notes

200,000

200,000

Senior secured notes

250,000

250,000

Note payable

21,203

19,020

Total debt

607,213

605,975

Total net debt

403,622

409,925

Trailing 12 months EBITDA, as adjusted

133,579

138,014

Gross Leverage Ratio

4.55

4.39

Net Leverage Ratio

3.02

2.97

Cogent's SEC filings are available online via the Investor Relations section of www.cogentco.com or on the Securities and Exchange Commission's website at www.sec.gov.

COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2016 AND DECEMBER 31, 2015

(IN THOUSANDS, EXCEPT SHARE DATA)

March 31,
2016

December 31,
2015

(Unaudited)

Assets

Current assets:

Cash and cash equivalents

$

196,050

$

203,591

Accounts receivable, net of allowance for doubtful accounts of $1,241
and $1,757, respectively

31,528

30,718

Prepaid expenses and other current assets

19,815

17,030

Total current assets

247,393

251,339

Property and equipment, net

366,482

360,136

Deferred tax assets - noncurrent

42,858

45,142

Deposits and other assets - $133 and $355 restricted,
respectively

8,363

6,199

Total assets

$

665,096

$

662,816

Liabilities and stockholders' equity

Current liabilities:

Accounts payable

$

19,025

$

12,401

Accrued and other current liabilities

40,896

38,355

Installment payment agreement, current portion, net of discount of $540
and $678, respectively

13,406

11,901

Current maturities, capital lease obligations

5,584

6,247

Total current liabilities

78,911

68,904

Senior secured 2022 notes, net of unamortized debt costs of
$1,209 and $1,252, respectively

248,791

248,748

Senior unsecured 2021 notes, net of unamortized debt costs
of $3,171 and $3,305, respectively

196,829

196,695

Capital lease obligations, net of current maturities

131,371

129,763

Other long term liabilities

27,576

30,977

Total liabilities

683,478

675,087

Commitments and contingencies:

Stockholders' equity:

Common stock, $0.001 par value; 75,000,000 shares authorized;
45,217,520 and 45,198,718 shares issued and outstanding,
respectively

45

45

Additional paid-in capital

436,793

434,161

Accumulated other comprehensive income — foreign currency
translation

(10,619)

(14,693)

Accumulated deficit

(444,601)

(431,784)

Total stockholders' deficit

(18,382)

(12,271)

Total liabilities and stockholders' deficit

$

665,096

$

662,816

COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2016 AND MARCH 31, 2015

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

Three Months
Ended
March 31, 2016

Three Months
Ended
March 31, 2015

(Unaudited)

(Unaudited)

Service revenue

$

108,291

$

97,242

Operating expenses:

Network operations (including $121 and $172 of equity-based
compensation expense, respectively, exclusive of depreciation and
amortization shown separately below)

47,277

41,079

Selling, general, and administrative (including $2,060 and $2,969 of
equity-based compensation expense, respectively)

29,532

29,677

Depreciation and amortization

17,753

17,513

Total operating expenses

94,562

88,269

Gain on capital lease termination

10,110

Gains on equipment transactions

1,946

1,548

Loss on debt extinguishment and redemption

(10,144)

Operating income

15,675

10,487

Interest income and other, net

133

97

Interest expense

(10,065)

(11,307)

Income (loss) before income taxes

5,743

(723)

Income tax provision

(2,389)

(862)

Net income (loss)

$

3,354

$

(1,585)

Comprehensive income (loss):

Net income (loss)

$

3,354

$

(1,585)

Foreign currency translation adjustment

4,074

(7,396)

Comprehensive income (loss)

$

7,428

$

(8,981)

Net income (loss) per common share:

Basic and diluted net income (loss) per common share

$

0.08

$

(0.04)

Dividends declared per common share

$

0.36

$

0.35

Weighted-average common shares - basic

44,402,640

45,158,250

Weighted-average common shares - diluted

44,571,937

45,158,250

COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2016 AND MARCH 31, 2015

(IN THOUSANDS)

Three months
Ended
March 31, 2016

Three months
Ended
March 31, 2015

(Unaudited)

(Unaudited)

Cash flows from operating activities:

Net income (loss)

$

3,354

$

(1,585)

Adjustments to reconcile net income (loss) to net cash provided by
operating activities:

Depreciation and amortization

17,753

17,513

Amortization of debt discount and premium

216

(164)

Equity-based compensation expense (net of amounts capitalized)

2,181

3,141

Loss on debt extinguishment and redemption

10,144

Gain on capital lease termination

(10,110)

Gains — equipment transactions and other, net

(2,186)

(1,022)

Deferred income taxes

2,323

822

Changes in operating assets and liabilities:

Accounts receivable

(387)

2,123

Prepaid expenses and other current assets

(2,217)

(4,550)

Accounts payable, accrued liabilities and other long-term liabilities

8,379

2,088

Deposits and other assets

(1,859)

(28)

Net cash provided by operating activities

27,557

18,372

Cash flows from investing activities:

Purchases of property and equipment

(15,034)

(12,916)

Net cash used in investing activities

(15,034)

(12,916)

Cash flows from financing activities:

Dividends paid

(16,171)

(16,001)

Purchases of common stock

(8,119)

Net proceeds from issuance of senior secured 2022 notes

248,659

Redemption of senior secured 2018 notes

(251,280)

Proceeds from exercises of stock options

206

130

Principal payments on installment payment agreement

(2,184)

Principal payments of capital lease obligations

(3,369)

(3,650)

Net cash used in financing activities

(21,518)

(30,261)

Effect of exchange rates changes on cash

1,454

(2,935)

Net decrease in cash and cash equivalents

(7,541)

(27,740)

Cash and cash equivalents, beginning of period

203,591

287,790

Cash and cash equivalents, end of period

$

196,050

$

260,050

Except for historical information and discussion contained herein, statements contained in this release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Such statements include, but are not limited to statements identified by words such as "believes," "expects," "anticipates," "estimates," "intends," "plans," "targets," "projects" and similar expressions.  The statements in this release are based upon the current beliefs and expectations of Cogent's management and are subject to significant risks and uncertainties.  Actual results may differ from those set forth in the forward-looking statements.  Numerous factors could cause or contribute to such differences, including future economic instability in the global economy or a contraction of the capital markets which could affect spending on Internet services and our ability to engage in financing activities; the impact of changing foreign exchange rates (in particular the Euro to USD and Canadian dollar to USD exchange rates) on the translation of our non-USD denominated revenues, expenses, assets and liabilities; legal and operational difficulties in new markets; the imposition of a requirement that we contribute to the U.S. Universal Service Fund and similar funds in other countries; changes in government policy and/or regulation, including net neutrality rules  by the United States Federal Communications Commission and in the area of data protection; increasing competition leading to lower prices for our services; our ability to attract new customers and to increase and maintain the volume of traffic on our network; the ability to maintain our Internet peering arrangements on favorable terms; our reliance on an equipment vendor, Cisco Systems Inc., and the potential for hardware or software problems associated with such equipment; the dependence of our network on the quality and dependability of third-party fiber providers; our ability to retain certain customers that comprise a significant portion of our revenue base; the management of network failures and/or disruptions; and outcomes in litigation as well as other risks discussed from time to time in our filings with the Securities and Exchange Commission, including, without limitation, our report on Form 10-Q for the quarter ended March 31, 2016 to be filed with the Securities and Exchange Commission. Cogent undertakes no duty to update any forward-looking statement or any information contained in this press release or in other public disclosures at any time.

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