Cogent Wavelength sales skyrocket 100% as strategic pivot offsets revenue slump

Cogent Communications (NASDAQ:CCOI), the Washington-based internet service provider, reported fourth-quarter and full-year 2025 results on Friday, showcasing a business in the midst of a high-stakes transition.

While the company’s legacy wireline business continues to face headwinds following the acquisition of Sprint’s wireline network, its push into high-capacity optical services is delivering explosive growth.

Cogent reported fourth-quarter service revenue of $240.5 million, a 4.7% decline from the previous year.

For the full year 2025, service revenue reached $975.8 million, down from $1.036 billion in 2024.

The top-line pressure was primarily driven by a decline in off-net customer connections and non-core legacy services.

However, the company’s Wavelength revenue emerged as a massive bright spot, surging 100.3% year-over-year to $38.5 million as AI-driven demand for data center connectivity intensifies.

Profitability metrics remained stable despite the revenue dip.

Full-year adjusted EBITDA rose to $292.8 million, while the adjusted EBITDA margin expanded to 31.9% in the fourth quarter—the highest level since 2022.

The company also benefited from its IPv4 address leasing business, which grew 43.8% annually to reach $64.5 million.

Demonstrating confidence in its cash flow profile, Cogent’s board approved a $0.02 per share quarterly dividend for the first quarter of 2026.

This follows a volatile 2025 in which the company aggressively prioritized deleveraging and fleet integration, returning a total of $150.1 million to shareholders throughout the year.