Cogent Communications posted modest increases in off-net and on-net services revenue during the fourth quarter of 2020, though company executives acknowledged Cogent’s revenue growth is still being impacted by the Covid-19 pandemic.
In its quarterly report issued this morning, Cogent announced service revenue of $143.9 million for the fourth quarter of 2020, an increase of 1.1% from the previous quarter and about 2.6% year over year. The company also reported service revenue of $568.1 million for the full year of 2020, up 4% from the previous year. Results were positively impacted by changing foreign exchange values, according to Cogent.
Looking deeper, Cogent CEO and Chairman Dave Schaeffer said on Cogent’s quarterly earnings call today that the company’s corporate communications business saw revenue declines of 3.9% year over year for the fourth quarter, and 2.1% compared to the third quarter of 2020. Cogent’s network-centric business experienced a stronger fourth quarter of 2020, with revenue up 7.7% year over year and more than 15% sequentially.
Cogent CFO Sean Wallace, also speaking on the call, added “We believe the growth rate of our corporate revenues was directly impacted by office occupancy changes due to Covid-19.” Wallace said some customers delayed procurement and installation of services, and other closed satellite offices and workers were sent home to work remotely, trends which affected demand.
Still, Wallace noted that the negative trends were more prominent in off-net office buildings and among customers using Cogent’s 100 Mbps services and lower-bandwidth circuits. He said demand for Cogent’s 1 Gbps service remained strong with existing customers keeping upgrades on track.
Additionally, Cogent noted that some pandemic-related trends can lead to positive revenue development in some areas. For example, growth in remote networking from home is likely to continue to increase demand for high-capacity circuits to end users. Cogent also is helped by the fact that its revenue base is not highly concentrated around a small number of large customers, Schaeffer said.
During the early months of the pandemic, Cogent provided ample evidence of how radical changes in office environments, work-from-home policies and related networking needs can quickly impact service providers. For example, last spring Cogent saw demand for corporate bandwidth and related 1 Gbps upgrades spike, but by late summer, the decline in office space was beginning to cause concerns.