v3.26.1
Description of the business: (Policies)
6 Months Ended
Jun. 30, 2026
Description of the business:  
Accounting Standards Not Yet Adopted

Accounting Standards Not Yet Adopted

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) Disaggregation of Income Statement Expenses, (“ASU 2024-03”), which requires a public business entity to disclose additional information about specific expense categories in the notes to financial statements on an annual and interim basis. The amendments are effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. A public entity should apply the amendments either prospectively to financial statements issued for reporting periods after the effective date of the ASU or retrospectively to any or all prior periods presented in the financial statements. The Company will not early adopt ASU 2024-03 and is in the process of evaluating the impact on its consolidated financial statements from the adoption of ASU 2024-03.

Basis of presentation

Basis of presentation

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the unaudited condensed consolidated financial statements reflect all normal recurring adjustments that the Company considers necessary for the fair presentation of its results of operations and cash flows for the interim periods covered, and of the financial position of the Company at the date of the interim condensed consolidated balance sheet. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), have been condensed or omitted pursuant to such rules and regulations. The operating results for interim periods are not necessarily indicative of the operating results for the entire year. While the Company believes that the disclosures are adequate to not make the information misleading, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in its annual report on Form 10-K for the year ended December 31, 2025. Certain prior year amounts have been reclassified to conform to current year presentation.

The accompanying unaudited condensed consolidated financial statements include all wholly owned subsidiaries. All inter-company accounts and activity have been eliminated.

Use of estimates

Use of estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates.

Financial instruments

Financial instruments

At June 30, 2026 and December 31, 2025, the carrying amount of cash and cash equivalents, restricted cash, accounts receivable, prepaid and other current assets, accounts payable, and accrued expenses approximated fair value because of the short-term nature of these instruments. The Company measures its cash equivalents and restricted cash at amortized cost, which approximates fair value based upon quoted market prices (Level 1).

Based upon recent trading prices (Level 2—market approach) at June 30, 2026:

●The fair value of the Company’s $450.0 million aggregate principal amount of 7.00% Senior Unsecured Notes due 2027 (the “2027 Notes”) was $446.1 million;
●The fair value of the Company’s $300.0 million aggregate principal amount of 7.00% Senior Unsecured Mirror Notes due 2027 (the “2027 Mirror Notes”) was $297.4 million;
●The fair value of the Company’s $579.6 million aggregate principal amount of 6.50% Senior Secured Notes due 2032 (the “2032 Notes”) was $518.7 million; and
●The fair value of the Company’s $380.4 million aggregate principal amount of secured IPv4 notes (the “IPv4 Notes”) was $387.4 million.
Restricted cash

Restricted cash

Restricted cash includes amounts held in segregated bank accounts by the Company’s clearing broker as margin in support of the Company’s Swap Agreement, as discussed in Note 3, and was $4.1 million as of December 31, 2025. The Swap Agreement was settled in February 2026. Restricted cash related to the IPv4 Notes, as discussed in Note 3, was $38.4 million as of June 30, 2026 and $52.5 million as of December 31, 2025. Restricted cash related to the Company’s 2032 Notes was $147.6 million as of June 30, 2026, as discussed in Note 3. Additional cash may be further restricted under the provisions of the Company’s IPv4 Note Indenture (as defined below) and the Company’s 2032 Notes. The Company does not use derivative financial instruments for trading purposes.

Gross receipts taxes, universal service fund and other surcharges

Gross receipts taxes, universal service fund and other surcharges

Revenue recognition standards include guidance relating to taxes or surcharges assessed by a governmental authority that are directly imposed on a revenue-producing transaction between a seller and a customer and may include, but are not limited to, gross receipts taxes, excise taxes, Universal Service Fund fees and certain state regulatory fees. Such charges may be presented gross or net based upon the Company’s accounting policy election. The Company records certain excise taxes and surcharges on a gross basis and includes them in its revenue and network operations expense. Excise taxes and surcharges billed to customers and recorded on a gross basis (as service revenue and network operations expense) were $18.9 million and $38.4 million for the three and six months ended June 30, 2026, respectively and were $20.0 million and $40.2 million for the three and six months ended June 30, 2025, respectively.

Basic and diluted net loss per common share

Basic and diluted net income (loss) per common share

Basic net income or net loss per share (“EPS”) excludes dilution for common stock equivalents and is computed by dividing net income or net loss available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS is based on the weighted-average number of shares of common stock outstanding during each period, adjusted for the effect of dilutive common stock equivalents. Shares of restricted stock are included in the computation of basic EPS as they vest and are included in diluted EPS, to the extent they are dilutive, determined using the treasury stock method.

The following details the determination of diluted weighted-average shares:

​

​

​

​

​

​

​

​

​

​

​

  ​ ​ ​

Three Months

  ​ ​ ​

Three Months

  ​ ​ ​

Six Months

  ​ ​ ​

Six Months

​

​

Ended

​

Ended

​

Ended

​

Ended

​

  ​ ​ ​

June 30, 2026

  ​ ​ ​

June 30, 2025

​

June 30, 2026

​

June 30, 2025

Weighted average common shares - basic

​

47,921,120

​

47,592,836

​

47,972,542

​

47,804,421

Dilutive effect of stock options

​

—

​

—

​

—

​

—

Dilutive effect of restricted stock

​

508,046

​

—

​

361,382

​

—

Weighted average common shares - diluted

​

48,429,166

​

47,592,836

​

48,333,924

​

47,804,421

​

The following details unvested shares of restricted common stock as well as the anti-dilutive effects of stock options and restricted stock awards outstanding:

​

​

​

​

​

​

​

​

​

​

​

​

Three Months

​

Three Months

​

Six Months

​

Six Months

​

​

Ended

​

Ended

​

Ended

​

Ended

​

  ​ ​ ​

June 30, 2026

  ​ ​ ​

June 30, 2025

  ​ ​ ​

June 30, 2026

  ​ ​ ​

June 30, 2025

Unvested shares of restricted common stock

​

3,289,506

​

1,657,168

​

3,289,506

​

1,657,168

Anti-dilutive options for common stock

​

247,989

​

223,068

​

248,576

​

202,864

Anti-dilutive shares of restricted common stock

​

1,693,891

​

782,800

​

787,174

​

911,907

​

Stockholders' (Deficit) Equity

Stockholders’ (Deficit) Equity

The following details the changes in stockholders’ (deficit) equity for the three and six months ended June 30, 2026 and 2025 (in thousands except share data):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Accumulated

​

​

​

​

​

​

​

​

​

​

​

​

​

Additional

​

Other

​

​

​

​

Total

​

​

Common Stock

​

Paid-in

​

Comprehensive

​

Accumulated

​

Stockholders’

​

  ​ ​ ​

Shares

  ​ ​ ​

Amount

  ​ ​ ​

Capital

  ​ ​ ​

Loss

  ​ ​ ​

Deficit

  ​ ​ ​

Deficit

Balance at March 31, 2026

​

50,077,663

​

$

50

​

$

651,538

​

$

(6,327)

​

$

(749,423)

​

$

(104,162)

Forfeitures of shares granted to employees

​

(80,306)

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Equity-based compensation

​

—

​

​

—

​

​

8,389

​

​

—

​

​

—

​

​

8,389

Foreign currency translation

​

—

​

​

—

​

​

—

​

​

(2,713)

​

​

—

​

​

(2,713)

Issuances of common stock

​

1,218,379

​

​

1

​

​

—

​

​

—

​

​

—

​

​

1

Dividends paid

​

—

​

​

—

​

​

—

​

​

—

​

​

(2,281)

​

​

(2,281)

Net income

​

—

​

​

—

​

​

—

​

​

—

​

​

66,636

​

​

66,636

Balance at June 30, 2026

​

51,215,736

​

$

51

​

$

659,927

​

$

(9,040)

​

$

(685,068)

​

$

(34,130)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Accumulated

​

​

​

​

​

​

​

​

​

​

​

​

​

Additional

​

Other

​

​

​

​

Total

​

​

Common Stock

​

Paid-in

​

Comprehensive

​

Accumulated

​

Stockholders’

​

  ​ ​ ​

Shares

  ​ ​ ​

Amount

  ​ ​ ​

Capital

  ​ ​ ​

Loss

  ​ ​ ​

Deficit

  ​ ​ ​

Equity

Balance at March 31, 2025

​

49,337,310

​

$

49

​

$

639,248

​

$

(18,933)

​

$

(477,520)

​

$

142,844

Forfeitures of shares granted to employees

 

(59,281)

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Equity-based compensation

 

—

​

​

—

​

​

5,422

​

​

—

​

​

—

​

​

5,422

Foreign currency translation

 

—

​

​

—

​

​

—

​

​

17,737

​

​

—

​

​

17,737

Issuances of common stock

 

196,788

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Exercises of options

 

886

​

​

—

​

​

30

​

​

—

​

​

—

​

​

30

Common stock purchases & retirement

​

(229,507)

​

​

—

​

​

(11,998)

​

​

—

​

​

—

​

​

(11,998)

Dividends paid

 

—

​

​

—

​

​

—

​

​

—

​

​

(49,560)

​

​

(49,560)

Net loss

 

—

​

​

—

​

​

—

​

​

—

​

​

(57,807)

​

​

(57,807)

Balance at June 30, 2025

 

49,246,196

​

$

49

​

$

632,702

​

$

(1,196)

​

$

(584,887)

​

$

46,668

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Additional

​

Other

​

​

​

​

Total

​

​

Common Stock

​

Paid-in

​

Comprehensive

​

Accumulated

​

Stockholders’

​

  ​ ​ ​

Shares

  ​ ​ ​

Amount

  ​ ​ ​

Capital

  ​ ​ ​

Loss

  ​ ​ ​

Deficit

  ​ ​ ​

Deficit

Balance at December 31, 2025

 

50,062,158

​

$

50

​

$

643,256

​

$

1,428

​

$

(708,582)

​

$

(63,848)

Forfeitures of shares granted to employees

 

(91,316)

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Equity-based compensation

 

—

​

​

—

​

​

16,671

​

​

—

​

​

—

​

​

16,671

Foreign currency translation

 

—

​

​

—

​

​

—

​

​

(10,468)

​

​

—

​

​

(10,468)

Issuances of common stock

 

1,244,894

​

​

1

​

​

—

​

​

—

​

​

—

​

​

1

Dividends paid

​

—

​

​

—

​

​

—

​

​

—

​

​

(3,580)

​

​

(3,580)

Net income

 

—

​

​

—

​

​

—

​

​

—

​

​

27,094

​

​

27,094

Balance at June 30, 2026

 

51,215,736

​

$

51

​

$

659,927

​

$

(9,040)

​

$

(685,068)

​

$

(34,130)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Additional

​

Other

​

​

​

​

Total

​

​

Common Stock

​

Paid-in

​

Comprehensive

​

Accumulated

​

Stockholders’

​

  ​ ​ ​

Shares

  ​ ​ ​

Amount

  ​ ​ ​

Capital

  ​ ​ ​

Loss

  ​ ​ ​

Deficit

  ​ ​ ​

Equity

Balance at December 31, 2024

 

49,034,925

​

$

49

​

$

629,829

​

$

(30,685)

​

$

(376,345)

​

$

222,848

Forfeitures of shares granted to employees

 

(69,541)

​

 

—

​

 

—

​

 

—

​

 

—

​

 

—

Equity-based compensation

 

—

​

 

—

​

 

14,720

​

 

—

​

 

—

​

 

14,720

Foreign currency translation

 

—

​

 

—

​

 

—

​

 

29,489

​

 

—

​

 

29,489

Issuances of common stock

 

507,386

​

 

—

​

 

—

​

 

—

​

 

—

​

 

—

Exercises of options

 

2,933

​

 

—

​

 

151

​

 

—

​

 

—

​

 

151

Common stock purchases & retirement

​

(229,507)

​

​

—

​

​

(11,998)

​

​

—

​

​

—

​

​

(11,998)

Dividends paid

 

—

​

 

—

​

 

—

​

 

—

​

 

(98,693)

​

 

(98,693)

Net loss

 

—

​

 

—

​

 

—

​

 

—

​

 

(109,849)

​

 

(109,849)

Balance at June 30, 2025

 

49,246,196

​

$

49

​

$

632,702

​

$

(1,196)

​

$

(584,887)

​

$

46,668

​

Revenue recognition

Revenue recognition

The Company recognizes revenue under ASU No. 2014 - 09, Revenue from Contracts with Customers (“ASC 606”), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. Fees billed in connection with customer installations are recorded as deferred revenue. Installation fees for contracts with terms longer than month-to-month are recognized over the contract term. The Company recognizes revenue over the estimated average customer life for installation fees associated with month-to-month contracts. To the extent a customer contract is terminated prior to its contractual end, the customer is subject to termination fees. The Company vigorously seeks payment of these termination fees. The Company recognizes revenue for termination fees as they are collected.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

  ​ ​ ​

Three Months

  ​ ​ ​

Three Months

  ​ ​ ​

Six Months

  ​ ​ ​

Six Months

​

​

Ended

​

Ended

​

Ended

​

Ended

(in thousands)

​

June 30, 2026

​

June 30, 2025

​

June 30, 2026

​

June 30, 2025

Service revenue recognized from deferred revenue balance at beginning of period

​

$

2,409

​

$

2,310

​

$

4,528

​

$

4,107

Amortization expense for contract costs

​

 

6,747

​

​

5,562

​

​

13,339

​

​

10,935

​

Leases

Leases

In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 replaced most existing lease accounting guidance. The operating lease liability under ASU 2016-02 is not considered a liability under the consolidated leverage ratio calculations in the indentures governing the Company’s senior unsecured and senior secured note obligations. The Company has made an accounting policy election to not apply the recognition requirements of ASU 2016-02 to its short-term leases, which are leases with a term of one year or less. The Company has also elected to apply certain practical expedients under ASU 2016-02 including not separating lease and non-lease components on its finance and operating leases.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

  ​ ​ ​

Three Months

 

Three Months

  ​ ​ ​

Six Months

 

Six Months

​

​

Ended

 

Ended

​

Ended

 

Ended

(Amounts in thousands)

  ​ ​ ​

June 30, 2026

  ​ ​ ​

June 30, 2025

  ​ ​ ​

June 30, 2026

  ​ ​ ​

June 30, 2025

Finance lease cost

 

​

  ​

​

​

​

 

​

​

​

​

​

Amortization of right-of-use assets

​

$

13,553

​

$

13,975

​

$

27,089

​

$

27,891

Interest expense on finance lease liabilities

​

 

12,472

​

​

12,509

​

​

24,985

​

​

23,615

Operating lease cost

​

 

18,169

​

​

18,569

​

​

35,816

​

​

36,013

Total lease costs

​

$

44,194

​

$

45,053

​

$

87,890

​

$

87,519

​

​

​

​

​

​

​

​

​

​

  ​ ​ ​

Six Months

  ​ ​ ​

Six Months

​

​

​

Ended

​

Ended

​

​

​

June 30, 2026

​

June 30, 2025

​

Other lease information (amounts in thousands)

​

​

​

​

​

​

​

Cash paid for amounts included in the measurement of lease liabilities

​

​

​

​

​

​

​

Operating cash flows from finance leases

​

$

(28,276)

​

$

(22,650)

​

Operating cash flows from operating leases

​

​

(37,084)

​

​

(35,790)

​

Financing cash flows from finance leases

​

​

(23,007)

​

​

(16,523)

​

Right-of-use assets obtained in exchange for new finance lease liabilities

​

​

52,102

​

​

79,076

​

Right-of-use assets obtained in exchange for new operating lease liabilities

​

​

1,765

​

​

15,105

​

Weighted-average remaining lease term — finance leases (in years)

​

​

16.8

​

​

17.1

​

Weighted-average remaining lease term — operating leases (in years)

​

​

11.4

​

​

11.3

​

Weighted-average discount rate — finance leases

​

​

8.3

%

​

8.1

%

Weighted-average discount rate — operating leases

​

​

7.2

%

​

7.6

%

​

Operating leases and finance leases

The Company has entered into lease agreements with numerous providers of dark fiber under IRUs. These IRUs typically have initial terms of 15-20 years and include renewal options after the initial lease term. The majority of these leases are finance leases. The Company also leases office space, rights-of-way, dark fiber and certain data center facilities under operating leases. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments under the lease.

As of June 30, 2026, the Company had committed to additional IRU agreements totaling $96.7 million in future payments to be paid over periods of up to 20 years. These obligations begin when the related fiber is accepted, which is generally expected to occur in the next 12 months.

The future minimum payments under the Company’s operating lease and finance lease agreements are as follows (in thousands):

​

​

​

​

​

​

​

​

  ​ ​ ​

Operating

  ​ ​ ​

Finance

For the Twelve Months Ending June 30,

​

Leases

​

Leases

2027

​

$

60,082

​

$

70,239

2028

​

​

57,534

​

​

69,157

2029

​

​

55,440

​

​

67,913

2030

​

​

34,482

​

​

67,537

2031

​

​

27,688

​

​

67,426

Thereafter

​

​

220,283

​

​

827,320

Total minimum lease obligations

​

​

455,509

​

​

1,169,592

Less—amounts representing interest

​

​

(146,033)

​

​

(539,382)

Present value of minimum lease obligations

​

​

309,476

​

​

630,210

Current maturities

​

​

(53,102)

​

​

(21,171)

Lease obligations, net of current maturities

​

$

256,374

​

$

609,039

Asset Retirement Obligations

Asset Retirement Obligations

In accordance with ASC 410, the Company has not recorded an asset retirement obligation related to restoration obligations for the removal of optical fiber because a settlement date for which to remove the fiber is indeterminable and therefore a reasonable estimation of fair value cannot be made.