Bandwidth Announces Third Quarter 2018 Financial Results

Bandwidth Blue Newspapers

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

(PRNewsfoto/BANDWIDTH.COM)

“We continued our trend of surpassing expectations during the third quarter and delivered strong financial results.  We grew CPaaS revenue 24% year-over-year and expanded customer relationships evidenced by our 117% dollar-based net retention rate,” stated David Morken, chief executive officer of Bandwidth.  “We have made excellent progress in bolstering our sales and marketing and technology teams.  I am proud of all Bandmates who continue to demonstrate strong execution during this period of accelerated hiring.  We are excited to deliver value and modernize communications for our enterprise customers.”

Third Quarter 2018 Financial Highlights

  • Revenue: Total revenue for the third quarter of 2018 was $50.5 million, up 22% compared to $41.3 million for the third quarter of 2017. Within total revenue, CPaaS revenue was $41.5 million, up 24% compared to $33.4 million for the third quarter of 2017. Other revenue contributed the remaining $8.9 million for the third quarter of 2018. Other revenue was $7.9 million in the same period last year.
  • Gross Profit: Gross profit for the third quarter of 2018 was $23.0 million, compared to $18.8 million for the third quarter of 2017. Gross margin for the third quarter of 2018 was 46%, compared to 45% for the third quarter of 2017. Non-GAAP gross profit for the third quarter of 2018 was $24.1 million, compared to $19.9 million for the third quarter of 2017. Non-GAAP gross margin was 48% for the third quarter of 2018, compared to 48% for the third quarter of 2017.
  • Net Income: Net income for the third quarter of 2018 was $2.5 million, or $0.12 per share, based on 21.1 million weighted average diluted shares outstanding. This includes a $4.2 million income tax benefit from option exercises. During the third quarter of 2017, net income attributable to common stockholders was $1.4 million, or $0.11 per share, based on 13.3 million weighted average diluted shares outstanding for the third quarter of 2017.
  • Non-GAAP Net Income/(Loss): Non-GAAP net loss for the third quarter of 2018 was $(1.0) million, or $(0.05) per share, based on 19.1 million weighted average basic shares outstanding. Non-GAAP net loss excludes the $4.2 million income tax benefit from option exercises. This compares to a Non-GAAP net income of $2.2 million, or $0.15 per share, based on 15.0 million weighted average diluted shares outstanding for the third quarter of 2017.
  • Adjusted EBITDA: Adjusted EBITDA was $2.3 million for the third quarter of 2018, compared to $5.2 million for the third 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.

Third Quarter 2018 Key Metrics

  • The number of active CPaaS customers was 1,155 as of September 30, 2018, an increase of 26% from 918 as of September 30, 2017.
  • The dollar-based net retention rate was 117% during the third quarter of 2018, compared to 105% during the third 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 October 30, 2018, Bandwidth is providing guidance for its fourth quarter and full year 2018 as follows:

  • Fourth Quarter 2018 Guidance: CPaaS revenue is expected to be in the range of $42.1 million to $42.6 million. Total revenue is expected to be in the range of $49.1 million to $49.6 million. Non-GAAP earnings per share is expected to be a loss in the range of ($0.28) to ($0.30) per share, using 19.4 million weighted average basic shares outstanding.
  • Full Year 2018 Guidance: CPaaS revenue is expected to be in the range of $162.3 million to $162.8 million. Total revenue is expected to be in the range of $200.8 million to $201.3 million. Non-GAAP earnings per share is expected to be in the range of approximately of $0.19 to $0.21 per share, using 21.1 million weighted average diluted shares outstanding.

Bandwidth has not reconciled its fourth quarter and full-year guidance related to non-GAAP net income (loss) to GAAP net income and non-GAAP earnings (loss) per share to GAAP earnings (loss) per share, 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 third quarter ended September 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  November 6, 2018, by dialing (844) 512-2921 for the U.S. or Canada, or (412) 317-6671 for international callers, and entering passcode 13683930.

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 is available at www.bandwidth.com.