Our gross total debt trailing 12 month EBITDA as adjusted and our net debt ratio significantly improved in the quarter. Our gross debt to trailing 12 month EBITDA as adjusted ratio was 4.07 at year end and our net debt ratio was 3.75, a substantial improvement from the 4.23 times in the last quarter. Our net worth traffic increased sequentially by 7% and was up 22% year-over-year. We have a number of areas in which we expect to continue to execute on cost savings. We're in the process of realizing savings and synergies over a three-year period that will result in an annualized savings of $220 million. We anticipate achieving additional SG&A savings and other cost and revenue synergies over this over the next several years, hopefully exceeding that $220 million target.

Our recent progress in achieving these savings is very encouraging and we do intend to surpass the targets that we have laid out. Our sales force productivity last quarter was 3.6 units installed per rep and 3.3 units per full-time equivalent this quarter. Our sales rep productivity has been substantially impacted by the enterprise customer reps that joined us from the Sprint business. These new enterprise reps are continuing to receive training on Cogent sales processes and have not yet reached their full productivity. Now for the size and scope of our sales force, in connection with the Sprint acquisition, we hired a total of 942 employees. As of today, 742 of these employees remain employed with Cogent. During the quarter, our total sales rep count increased by 20 or approximately a 3% sequential increase.

For full year 2023, our total sales reps increased by 109 or a 20% increase, substantially ahead of our normal rate of sales force growth, catching up for some of the slower growth that occurred throughout the pandemic years. We ended the year with 657 sales reps of which 620 were counted as full-time equivalents. Now, for some comments on our wavelength and optical transport services. In connection with our acquisition of the Sprint business, we are expanding our product offering to include wavelengths and optical transport over our newly acquired fiber optic network. We are selling these wavelength services to existing customers as well as customers acquired from Sprint. These customers require dedicated optical transport connectivity without the capital and ongoing expenses associated with operating their own network.

We have sold wavelengths to date in 65 locations. Many of these have shorter provisioning cycles. We have connectivity and capability to sell wavelengths today in an additional 285 locations with longer provisioning cycles. By year end 2024, we expect to be able to offer wavelength services in 800 North American carrier neutral data center locations with substantially shorter provisioning times. Our footprint expanded materially with the acquisition of Sprint. We added 18,905 route miles of owned intercity fiber and 12,057 route miles of owned metropolitan fiber to our network. We also added 11,400 route miles of intercity IRU fiber and approximately 4,500 route miles of metropolitan IRU fiber to the Cogent network. We are in the process of rationalizing these acquired IRU fiber agreements as their contractual terms allow us to exit them.

To-date, we have also reconfigured 22 of the acquired Sprint facilities into data centers, and we added these new data centers to the 1558 carrier neutral data centers that we operate, and brought the total of Cogent operated data centers to 77, which today have 157 megawatts of power. We are in the process of converting an additional 23 Sprint facilities into Cogent data centers and optimizing and rationalizing our data center footprint. During the quarter, we returned $46.4 million to our shareholders with our regular quarterly dividend. We paid four quarterly dividends in 2023, totaling $181.7 million or $3.76 per share. We expect the tax treatment for these dividends are generally treated as completely return of capital, so therefore 100% of those dividends will be treated on a tax deferred basis.

Our board of directors, which continues to evaluate our growth and cash flow and the capabilities of our team to execute against our opportunities, inclusive of the Sprint acquisition, increased our quarterly dividend yet again by a penny a share sequentially, raising our quarterly dividend from $0.995 per share per quarter to $0.965 per share per quarter. This increase represents the 46th consecutive sequential increase in our quarterly dividend and a 4.3% annual growth rate in that dividend. Now for a couple of comments around our long-term targets. Now that Cogent is fully integrated and combined with the Sprint business, we anticipate our long-term average revenue growth to remain between 5% and 7% annually. And we expect our EBITDA margins as adjusted to increase by approximately 100 basis points annually.

This will be impacted in the short-term by the step down and payments from T-Mobile. Our revenue and EBITDA guidance targets are intended to be multi-year goals and are not intended to be used as quarterly or annual specific targets. Our EBITDA as adjusted and leverage ratios are impacted by the $700 million payment stream that we receive from T-Mobile. Beginning in May of 2024, these payments will step down from $29.2 million per month to $8.3 million a month and remain in place for the subsequent 42 months. The reductions will impact our future EBITDA as adjusted, leverage ratios, and will impact our ratios in the third quarter of 2024 on a trailing 12-month basis. Now I'd like to turn it over to Thad to read our safe harbor language and provide some additional details.

And then I will jump back on to address some additional operating metrics.

Thaddeus Weed: Thank you, Dave, and good morning, everyone. This earnings conference call includes forward-looking statements. These forward-looking statements are based upon our current intent, belief, and expectations. These forward-looking statements and all their statements that we made on this call that are not historical facts are subject to a number of risks and uncertainties and actual results may differ materially. Please refer to our SEC filings from more information on the factors that could cause actual results to differ. Cogent undertakes no obligation to update or revise our forward-looking statements. If we use non-GAAP financial measures during this call, you will find these reconciled to the corresponding GAAP measurement and our earnings releases that are posted on our website at www.cogentco.com.

So, some comments on the accounting for the Sprint acquisition, which was very complex, frankly. In connection with our accounting for the acquisition, we recorded a total gain on target purchase for the year of $1.4 billion, or almost $27 per share for the year, included in that $1.4 billion gain is the discounted present value of the $700 million IP Transit Services agreement with T-Mobile. During the fourth quarter and in consultation with our auditors and valuation specialists at Big4 accounting firms, we recorded both Big4 accounting firms, we recorded an additional and tangible asset for $9.9 million of IPv4 Internet addresses that we acquired in the Sprint acquisition. These IPv4 addresses have an indefinite useful life and are not being amortized.

This asset was recorded at $458 million, or an average of about $46 per address. Because of the novel nature of this asset and the fact that the transaction has already resulted in a material bargain purchase gain prior to recording this asset, we recorded the asset after consideration of the appropriate valuation approach. The net after-tax impact of recording the IPv4 Internet addresses and other valuation adjustments that we made this quarter resulted in a net additional gain on the bargain purchase of $254 million that we recorded in the fourth quarter. The acquired network, including owned real estate assets, fiber routes, right-of-way agreements, network equipment, and the IPv4 Internet addresses have been appraised by a Big4 accounting firm at a total valuation of $1.4 billion.

The total fair value of the net assets acquired, so net of liabilities, was $800 million, and including the net present value of the consideration to be paid to us by T-Mobile of $600 million while discounted value, and the $458 million of IPv4 Internet addresses. Again, the total acquisition resulted in a $1.4 billion bargain purchase gain. These amounts are subject to additional adjustments through one year from the closing date, which will be May 1 of 2024. Some comments on corporate and net-centric revenue and customer connections. We analyze our revenues based upon network connection type, which is on-net, off-net, wavelength services, and non-core services. And we analyze our revenues based upon customer type, and we classify all of our customers into three types, net-centric, corporate, and enterprise.

Our corporate business continues to be influenced by real estate activity in central business districts. We continue to remain cautious in our outlook for our corporate revenues, given the uncertain economic environment and other challenges from the lingering pandemic effects. Our corporate business was 46.5% of our revenues this quarter, and our quarterly corporate revenue increased year-over-year by 47.6% to a total of $126.6 million from the fourth quarter of last year, and increased sequentially by 5.1%. For the full year, 2023 corporate revenue increased by 29.5% to $443.7 million. We have 54,493 corporate customer connections on our network at year end. This represented a sequential decrease of 1% and a year-over-year increase of 21.5%.

For the quarter, the sequential impact of USF taxes recorded as revenues on our corporate revenues was a positive $5.9 million and a positive year-over-year quarterly impact of $16.3 million. For the full year, the positive USF impact was $34.8 million. Some comments on the net-centric business. Our net-centric business continues to benefit from the continued growth in video traffic, streaming, and wavelength sales. Our net-centric business represented 34.2% of our revenues this quarter and declined sequentially by 1.9% to $93.1 million and grew by 40.7% on a year-over-year basis. For the full year, 2023, our net-centric revenue increased by 33.7% to $343.6 million. We had 62,370 net-centric customer connections on our network at year end. That was a slight sequential increase of 0.1% and a year-over-year increase of 20.7%.

Comments on the enterprise business. Our enterprise business represented 19.2% of our revenues for the quarter and was $52.3 million. We had 20,740 enterprise customer connections at the end of the year on our network. Our enterprise revenue decreased sequentially by $7.7 million or by 12.8%. For the full year, 2023, our enterprise business revenue was 16.3% of our revenues. It's a reminder there was no enterprise revenue last year or $153.6 million. Lastly, on the wavelength business, our new Wavelength product represented 1.2% of our revenues this quarter and was $3.3 million and we had a total of 667 connect Wavelength connections on our network at year end. Revenue and customer connections by network type, we need to make some comments also on the billing transition that we went through in the fourth quarter.

In the fourth quarter, we fully integrated our Sprint customers into our billing platform. All Cogent customers worldwide are now billed from one Cogent billing system. This transition delayed some customer payments from December into January since the former Sprint customers needed to update their systems to remit payments to our lockbox from the T-Mobile lockbox. This increased our day sales to 37 at year end, which was a temporary increase. Additionally, once we provisioned every Sprint order into our billing system, we reclassified 1 million of on-net revenue and 400,000 of off-net revenue from Q3 to non-core revenue. We also reclassified 1,373 on-net customer connections at the end of the third quarter to 157 off-net customer connections and 1,216 non-core customer connections.

This was to conform to our classification methodology as we were using the T-Mobile billing system through October of 2023. These changes are reflected retroactively in our summary of financial and operational results tables that is included in our press release. On-net revenue. Our on-net revenue, including wavelength revenue, was $141.2 million for the quarter. That was a sequential increase of 6.9% and a year-over-year increase of 22.8%. For the full year 2023, our on-net revenue increased by 14.5% to $518.6 million. Our on-net customer connections were 88,733 at year end. We serve our on-net customers in our 3,277 total on-net multi-tenant office and carrier neutral data center buildings. We continue to succeed in selling larger 100 gigabit connections and 400 gigabit connections in carrier neutral data centers and selling 10 gigabit connections in selected multi-tenant office buildings.

Selling these larger connections has the impact of increasing our year-over-year and sequentially on-net ARPU. Our off-net revenue was $123.7 million for the quarter. That was a sequential decrease of 5.3% and a year-over-year increase of 235.4%. The sequential decline in our off-net revenue was partially impacted by our migration to certain off-net customers to on-net. For full year 2023, our off-net revenue increased by $169.2 million to $393.5 million. Our off-net customer connections were 36,895 at year end and we serve these off-net customers in over 27,000 off-net buildings. These off-net buildings are primarily located in North America. Lastly, on non-core revenues, our non-core revenue was $7.3 million for the quarter. That was a sequential decrease of $5.6 million or 43.5% due to our decision to end of life these non-core products.

Non-core customer connections were 1,975 at year end. Some statistics on pricing, our average price per megabit for our installed base decreased sequentially by 7.1% to $0.28, but increased year over year by 4.9%. Our average price per megabit for our new customer contracts for the quarter was $0.10. ARPU, our on-net ARPU increased sequentially and our off-net ARPU decreased. However, our year-over-year on-net and off-net ARPUs increased primarily from the impact of the Sprint business and also selling larger connections, our on-net ARPU increased sequentially by 9.7% from 484 to 530, year-over-year, our on-net ARPU increased by 14.4% from 464 last year. Our off-net ARPU decreased sequentially by 2.9% from 1,150 to 1,117, year-over-year, our off-net ARPU increased by 22.2% from $914 last year.

Our sequential churn rate for our on-net and off-net connections for the combined business improved. Our on-net unit monthly churn rate was 1.2% for the quarter, which was a material improvement from 1.8% last quarter. Our off-net unit monthly churn rate was 1.3% this quarter and improvement from 1.5% last quarter. EBITDA and EBITDA margin, we reconcile our EBITDA to our cash flow from operations in each of our quarterly press releases. We incurred $17 million of Sprint non-capital acquisition costs this quarter compared to 400,000 last quarter, included in that $17 million of Sprint acquisition costs for the quarter our $16.2 million of severance costs that we paid but are fully reimbursed by T-Mobile and have been fully reimbursed. Under U.S. GAAP, these costs need to be reported as SG&A post-acquisition costs and correspondingly as a component of the bargain purchase gain, so no net P&L impact.

And they are reflected as Sprint acquisition costs since they are directly tied to the acquisition, classified that way on our P&L. EBITDA as adjusted and EBITDA as adjusted margin. Our EBITDA as adjusted includes adjustments for Sprint acquisition costs and cash payments received under the $700 million IP Transit Services agreement with T-Mobile. We billed and collected $87.5 million under that agreement this quarter. We billed $233.3 million and collected $242.2 million under that agreement for the full year 2023. All amounts billed under the IP Transit Services agreement have been paid to us on time. Our EBITDA as adjusted for Sprint acquisition costs and cash payments under the IP Transit Services agreement was $110 million for the quarter and a 40.6% margin.

Our EBITDA as adjusted was $352.5 million for the full year and a 37.5% margin. Comments on foreign currency. Our revenue earned outside of the United States is reported in U.S. dollars and was about 16% of our revenue this quarter and 18% for the year. About 10% of our revenues for the quarter were based in Europe and the remaining 6% outside of the U.S. were related to Canada, Mexico, Oceanic, South American and African operations. The average USD euro rate so far this quarter is $1.09 and the Canadian dollar average rate $0.75 and if those average rates remain at their current levels for the remainder of the first quarter of this year, we estimate that the FX conversion impact on our sequential quarterly revenues would be positive and about $0.5 million and the same impact on a year-over-year basis.

We believe that our revenue and customer base is not very highly concentrated even with the Sprint acquisition, including the impact of the customers acquired in the Sprint business. Our top 25 customers represented 16% of our revenues this quarter and 15% for the year. CapEx, our quarterly CapEx was $43.6 million this quarter and our CapEx was $129.6 million for the year. We are continuing our network integration of the former Sprint network and legacy Cogent network to one unified network in converting Sprint switch sites into Cogent data centers. On finance leases and payments, our finance lease IRU obligations are for long-term dark fiber leases and typically have initial terms of 15 to 20 years or longer and often include multiple renewal options after the initial term.

Our total IRU finance lease obligations were $484.5 million at quarter end. We have a very diverse set of IRU suppliers and we have contracts with over 325 different dark fiber suppliers worldwide. Comments on cash and cash flow. At quarter end, our cash and cash equivalents and restricted cash is $113.8 million. Our $38.7 million of restricted cash is directly tied to the estimated fair value of our interest rate swap agreement. Our operating cash flow results are materially impacted by the timing and amount of our payments under our transition services agreement with T-Mobile and the presentation of payments under the $700 million IP Transit Services agreement. Payments under the IP transit $700 million agreement under U.S. GAAP are considered cash receipts from investing activities and not classified as operating activities.

Our operating cash flow was a use of $32.5 million for the quarter compared to $52.4 million of a use last quarter. Our operating cash flow this quarter was impacted by the billing conversion and our operating cash flow was $33.6 million for full year 2023. Our payments received under the IP transit agreement are recorded as cash provided by investing activities and were $87.5 million last quarter, the same as this quarter and for the year $204.2 million was collected. Our total gross debt at par, including finance IRU lease obligations, was $1.5 billion at year end and net debt was $1.4 billion. Our total gross debt to last 12 months EBITDA has adjusted and our net debt ratios both significantly improved this quarter. Our total gross debt to last 12 months EBITDA as adjusted was $4.07 a year end and net debt was $3.75, an improvement to $4.23 at the end of Q3.

This is compared to a gross debt and last 12 months EBITDA as adjusted ratio of $4.79 at the end of Q3 and again a net ratio of $4.23 last quarter. Our consolidated leverage ratio as calculated under our note indentures, slightly different, reduced to $3.67 from $4.57 last quarter and our secured leverage ratio as calculated under the note indentures reduced to $2.4 from $2.97 last quarter. Some comments related to our swap agreement, we are party to an interest rate swap agreement that modifies our fixed interest rate obligation associated with our $500 million 2026 notes to a variable interest rate obligation based upon the secured overnight financing rate or SOFR for the remaining term of those notes. We recorded the estimated fair value of the swap agreement each reporting period and incur corresponding non-cash gains and losses due to the changes in market interest rates.

Our interest expense and operating cash flow for the full year 2023 was impacted by $21.5 million of interest expense paid in May and November associated with the swap agreement and that was compared to $2.1 million last year, the fair value of our swap agreement decreased by $17.7 million from last quarter to $38.7 million. We are required to maintain restricted cash balance with the counterparty equal to the liability. Our day sales outstanding or DSO, as I mentioned earlier, was significantly impacted by the billing conversion. Our DSO for worldwide accounts receivable was 37 days versus 27 last quarter. Our DSO's after year end have reverted back to historical norms. Our bad debt expense was $1.9 million and 0.7% of our revenues for the quarter.

That was also impacted by the billing conversion. Our bad debt expense was $8.6 million and 0.9% of our revenues for the year. Finally, I want to thank and recognize our worldwide billing and collection team members for managing this billing conversion from the legacy T-Mobile Sprint billing platform to our Cogent billing engine. This was a tremendous operational achievement and we completed this in only six months from the acquisition date. All customers were billed worldwide from the Cogent billing system starting in November 2023. I will now turn the call back over to Dave.

Dave Schaeffer: Hey, thanks, Thad. I'd like to highlight a couple of the strengths of our network, our customer base, and sales force. We continue to experience significant traffic growth in our net-centric business. We continue to beat beneficiaries of increased over-the-top video and streaming, particularly in international markets. By quarter's end, we ended with 1,558 carrier neutral data centers and 68 Cogent data centers directly connected to our network. That total of 1,626 data centers is more than any other carrier globally as measured by independent third-party research. The breadth of this coverage allows us to serve the net-centric market better allowing our customers to optimize their networks for reduced latency.

We expect to continue to widen this lead in the market as we project adding over an additional 100 carrier neutral data centers to our network per year for the next several years. We also expect to continue to convert Sprint facilities into Cogent data centers. 23 of these facilities are in process of being converted. To-date, we have completed the conversion of 22 of the facilities into Cogent data centers. As of today, we are selling Wavelength services in 65 carrier neutral data centers. With expended provisioning cycles, we can also sell wavelengths and an additional 285 carrier neutral data centers or a total of 360 facilities across North America. We're generating $3.3 million of revenue from wavelength sales in the previous quarter with 667 discreet installed wavelengths.

We have a significant funnel of wavelength orders in the pipeline. Today, we have a combination of orders signed as well as in our sales funnel of over 2,300 orders. Our network traffic continues to increase. It increased 7% sequentially and 22% year-over-year. At quarter end, we directly connected to 7,988 networks. This collection of ISPs, telephone companies, cable companies, mobile operators, and other carriers allow us to directly reach the vast majority of the world's broadband subscribers and mobile phone users. At quarter end, we had a sales force of 271 net-centric reps focused on this market. That was in addition to the 374 reps that we have focused on our corporate segment and 12 sales reps focused on our enterprise market. The corporate trends that we're seeing are positive, but have still been impacted by the pandemic.

Our corporate customers are continuing to integrate new applications which have become part of their normal workload including the extended use of videoconferencing. This usage requires high-speed, high-capacity connections both inside and outside of their premises. Our enterprise customers continue to focus on dedicated internet access and VPN services inclusive of the older MPLS technology to manage their networks. We remain focused on improving our sales force efficacy through training and managing out underperforming sales reps. Our sales force turnover rate get improved substantially in the quarter to 4.1% per rep per month for the quarter down from a peak of 8.7 reps per month at the height of the pandemic and much better than our average historical number of 5.6%.

We are continuing to train reps who join Cogent from the Sprint business. We remain optimistic about our unique position in serving the market particularly around our corporate footprint and central business districts where we have over a billion square feet of rentable office space and 1862 multi-tenant buildings on net. We're excited about our large enterprise customer base as this provides us a new targeted market and our wavelength opportunity is just beginning to unfold as we continue to repurpose the Sprint network and optimize it for the delivery of Wavelength services. As mentioned earlier we can serve customers in 65 locations today where we are delivering waves. We have another 285 locations that are enabled for service with longer provisioning windows.

That significant backlog and funnel of approximately 2300 wavelength opportunities gives us a great deal of confidence that as we continue to modify and enhance the Sprint network to provision wavelengths we will be able to convert these on a much more expeditious schedule and by year end hope to mirror the provisioning windows that we have experienced in our net-centric transit services. The key indicators of office activity workplace reentry and leasing activity remain substantially below pre-pandemic levels. However many tenants are returning to their offices and leasing activity appears to be getting to improve. We are diligently working to continue to integrate all the Sprint assets and customers into our systems, our processes and one unified network.

This will allow us to continue to improve our cash flow generation. Over the next three years we anticipate an annual savings due to multiple synergies of over $220 million a year. With that, I'd like to open the call now for questions.

See also 13 Best EV Stocks To Buy in 2024 and 30 Worst Countries for Women’s Rights.

To continue reading the Q&A session, please click here.