Bandwidth Announces Second Quarter 2018 Financial Results

Bandwidth Blue Newspapers

RALEIGH, N.C., July 31, 2018 /PRNewswire/ — Bandwidth Inc. (NASDAQ: BAND), a software company focused on communications for the enterprise, today announced financial results for the second quarter ended June 30, 2018.

(PRNewsfoto/BANDWIDTH.COM)

“Our second quarter results demonstrate that we are executing against our strategic initiatives as highlighted by our dollar-based net retention rate of 119%,” stated David Morken, chief executive officer of Bandwidth. “Bandwidth’s financial results demonstrate the continued strength of our core business and the impact of our differentiators in the enterprise segment. This includes our highly scalable platform with our easy to use APIs, our vertically integrated nationwide IP voice network that we built and operate and our one of a kind CPaaS based 911 capabilities. We are excited to be in the best position to take advantage of the growing multi-billion dollar CPaaS opportunity.”

Second Quarter 2018 Financial Highlights

  • Revenue: Total revenue for the second quarter of 2018 was $48.3 million, up 22% compared to $39.5 million for the second quarter of 2017. Within total revenue, CPaaS revenue was $39.8 million, up 26% compared to $31.5 million for the second quarter of 2017. Other revenue contributed the remaining $8.5 million for the second quarter of 2018. Other revenue was $8.0 million in the same period last year.
  • Gross Profit: Gross profit for the second quarter of 2018 was $21.7 million, compared to $17.2 million for the second quarter of 2017. Gross margin for the second quarter of 2018 was 45%, compared to 44% for the second quarter of 2017. Non-GAAP gross profit for the second quarter of 2018 was $22.8 million, compared to $18.3 million for the second quarter of 2017. Non-GAAP gross margin was 47% for the second quarter of 2018, compared to 46% for the second quarter of 2017.
  • Net Income: Net income for the second quarter of 2018 was $10.5 million, or $0.50 per share, based on 20.9 million weighted average diluted shares outstanding. This includes a $7.1 million income tax benefit from option exercises. During the second quarter of 2017, net income attributable to common stockholders was $1.7 million, or $0.13 per share, based on 12.9 million weighted average diluted shares outstanding for the second quarter of 2017.
  • Non-GAAP Net Income: Non-GAAP Net Income for the second quarter of 2018 was $4.1 million, or $0.20 per share, based on 20.9 million weighted average diluted shares outstanding. Non-GAAP net income excludes the $7.1 million income tax benefit from option exercises. This compares to a Non-GAAP net income of $2.5 million, or $0.17 per share, based on 14.7 million weighted average diluted shares outstanding for the second quarter of 2017.
  • Adjusted EBITDA: Adjusted EBITDA was $3.2 million for the second quarter of 2018, compared to $5.8 million for the second quarter of 2017.

Additional information regarding the non-GAAP financial measures discussed in this release, including an explanation of these measures and how each are calculated are included below under the heading “Non-GAAP Financial Measures.” A reconciliation of GAAP to non-GAAP financial measures has also been provided in the financial tables included below.

Second Quarter 2018 Key Metrics

  • The number of active CPaaS customers was 1,092 as of June 30, 2018, an increase of 26% from 865 as of June 30, 2017.
  • The dollar-based net retention rate was 119% during the second quarter of 2018, compared to 105% during the second quarter of 2017.

Additional information regarding our active CPaaS customers and dollar-based net retention rate and how each are calculated are included below.

Financial Outlook

As of July 31, 2018, Bandwidth is providing guidance for its third quarter and full year 2018 as follows:

  • Third Quarter 2018 Guidance: CPaaS revenue is expected to be in the range of $40.0 million to $40.5 million. Total revenue is expected to be in the range of $47.7 million to $48.2 million. Non-GAAP earnings per share is expected to be a loss in the range of ($0.19) to ($0.21) per share, using 18.8 million weighted average basic shares outstanding.
  • Full Year 2018 Guidance: CPaaS revenue is expected to be in the range of $160.7 million to $161.7 million. Total revenue is expected to be in the range of $198.0 million to $199.0 million. Non-GAAP earnings per share (“EPS”) is expected to be in the range of approximately of $0.04 to $0.09 per share, using 20.9 million weighted average diluted shares outstanding.

Bandwidth has not reconciled its third quarter and full-year guidance related to non-GAAP net income to GAAP net income and non-GAAP EPS to GAAP EPS, because stock-based compensation cannot be reasonably calculated or predicted at this time. Accordingly, a reconciliation is not available without unreasonable effort.

Quarterly Conference Call

Bandwidth will host a conference call today at 5:00 p.m. Eastern Time to review the Company’s financial results for the second quarter ended June 30, 2018. To access this call, dial (877) 407-0792 for the U.S. or Canada, or (201) 689-8263 for international callers. A live webcast of the conference call will be accessible from the Investors section of Bandwidth’s website at https://investors.bandwidth.com, and a recording will be archived and accessible at https://investors.bandwidth.com. An audio replay of this conference call will also be available through August 14, 2018, by dialing (844) 512-2921 for the U.S. or Canada, or (412) 317-6671 for international callers, and entering passcode 13681237.

About Bandwidth Inc.

Bandwidth (NASDAQ: BAND) is a software company focused on communications for the enterprise. Companies like Google, Microsoft, and Ring Central use Bandwidth’s APIs to easily embed voice, messaging and 9-1-1 access into software and applications. Bandwidth is the first and only CPaaS provider offering a robust selection of communications APIs built around their own nationwide IP voice network- one of the largest in the nation. More information available at www.bandwidth.com.

To read the full report, visit the Bandwidth Investors page.