Use of estimates

The preparation of consolidated financial statements in conformity with US 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.

Restricted cash and interest rate swap agreement

Restricted cash and interest rate swap agreement

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 $13.6 million as of June 30, 2025 and $22.3 million at December 31, 2024. Additional restricted cash related to the IPv4 Notes, as discussed in Note 3, was $79.5 million as of June 30, 2025 and $7.1 million at December 31, 2024. Additional cash may be further restricted to maintain the Company’s Swap Agreement as interest rates fluctuate and margin requirements change and under the provisions of the Company’s IPv4 Notes Indenture (as defined below). The Company does not use derivative financial instruments for trading purposes.

Basic and diluted net income per common share

Basic and diluted net loss per common share

Basic 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, 2025	June 30, 2024	June 30, 2025	June 30, 2024
Weighted average common shares - basic	47,592,836	47,511,613	47,804,421	47,408,786
Dilutive effect of stock options	—	—	—	—
Dilutive effect of restricted stock	—	—	—	—
Weighted average common shares - diluted	47,592,836	47,511,613	47,804,421	47,408,786

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, 2025	June 30, 2024	June 30, 2025	June 30, 2024
Unvested shares of restricted common stock	1,657,168	1,624,434	1,657,168	1,624,434
Anti-dilutive options for common stock	223,068	185,211	202,864	152,867
Anti-dilutive shares of restricted common stock	782,800	384,098	911,907	373,452

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, 2025		June 30, 2024		June 30, 2025		June 30, 2024
Service revenue recognized from deferred revenue balance at beginning of period	$	2,310	$	2,042	$	4,107	$	4,663
Amortization expense for contract costs		5,562		5,017		10,935		9,913

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-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, 2025		June 30, 2024		June 30, 2025		June 30, 2024
Finance lease cost
Amortization of right-of-use assets	$	13,975	$	12,204	$	27,891	$	23,768
Interest expense on finance lease liabilities		12,509		9,919		23,615		20,330
Operating lease cost		18,569		22,716		36,013		46,967
Total lease costs	$	45,053	$	44,839	$	87,519	$	91,065


	Six Months			Six Months
	Ended			Ended
	June 30, 2025			June 30, 2024
Other lease information (amounts in thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	(22,650)		$	(16,562)
Operating cash flows from operating leases		(35,790)			(47,671)
Financing cash flows from finance leases		(16,523)			(156,707)
Right-of-use assets obtained in exchange for new finance lease liabilities		79,076			96,606
Right-of-use assets obtained in exchange for new operating lease liabilities		15,105			8,265
Weighted-average remaining lease term — finance leases (in years)		17.1			16.3
Weighted-average remaining lease term — operating leases (in years)		11.3			12.5
Weighted average discount rate — finance leases		8.1	%		8.4	%
Weighted average discount rate — operating leases		7.6	%		8.0	%

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, 2025, the Company had committed to additional IRU agreements totaling $142.2 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
2026	$	63,741	$	70,101
2027		59,578		64,390
2028		57,370		65,586
2029		55,203		64,092
2030		34,497		64,055
Thereafter		249,220		803,928
Total minimum lease obligations		519,609		1,132,152
Less—amounts representing interest		(170,162)		(526,995)
Present value of minimum lease obligations		349,447		605,157
Current maturities		(50,932)		(26,523)
Lease obligations, net of current maturities	$	298,515	$	578,634

Accounting Standards Not Yet Adopted

Accounting Standards Not Yet Adopted

In December 2023, the FASB issued Accounting Standards Update (“ASU 2023-09”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires a public business entity to disclose, on an annual basis, a tabular rate reconciliation disaggregated into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold as defined within the standard. In addition, all entities will be required to disclose income taxes paid, net of refunds received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received. The amendments in ASU 2023-09 are effective for public business entities for annual periods beginning after December 15, 2024, and early adoption is permitted. The Company will not early adopt ASU 2023-09 and does not expect a material impact on its consolidated financial statements from the adoption of ASU 2023-09.

In November 2024, the FASB issued ASU 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.