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1. Company Snapshot

1.a. Company Description

Bandwidth Inc.operates as a cloud-based software-powered communications platform-as-a-service (CPaaS) provider in the United States.The company operates in two segments, CPaaS and Other.


Its platform enables enterprises to create, scale, and operate voice or messaging communications services across various mobile applications or connected devices.The company also provides SIP trunking, data resale, and hosted voice over Internet protocol services.It serves large enterprises, communications service providers, conferencing providers, contact centers, small and medium-sized businesses, emerging technology companies, and many other businesses.


Bandwidth Inc.was founded in 2000 and is headquartered in Raleigh, North Carolina.

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1.b. Last Insights on BAND

The recent 3-month performance of Bandwidth Inc. was negatively impacted by a Q4 earnings miss, despite strong revenue growth. The company reported a quarterly earnings of $0.37 per share, missing the Zacks Consensus Estimate of $0.38 per share. This earnings miss was partly offset by a 27% year-over-year revenue growth, exceeding analyst consensus estimates of $203 million. Additionally, the company's guidance for FY25 suggests a 10% organic revenue growth, but this may not be enough to offset the market's expectations.

1.c. Company Highlights

2. Bandwidth's Q3 2025 Earnings: A Strong Performance

Bandwidth Inc. reported a robust third quarter 2025, with total revenue reaching $192 million, an 11% year-over-year increase on a normalized basis. Cloud communications revenue stood at $142 million, growing 8% year-over-year. The company's non-GAAP gross margin remained strong at 58%. Earnings per share (EPS) came in at $0.36, slightly below estimates of $0.38. The company's adjusted EBITDA exceeded the high end of guidance ranges, reflecting its focus on profitability.

Publication Date: Nov -19

📋 Highlights
  • Revenue Growth:: Total revenue reached $192 million, reflecting 11% year-over-year growth normalized for political campaign revenue.
  • Cloud Communications Momentum:: Cloud communications revenue hit $142 million, up 8% year-over-year, driven by accelerating voice segment growth.
  • Full-Year Guidance:: Tightened revenue guidance midpoint to $753 million, projecting 10% organic growth, with cloud communications growth raised to 8% organically.
  • Gross Margin Stability:: Non-GAAP gross margin held strong at 58%, supported by higher software-like margin products and AI integration.
  • International Voice Expansion:: Voice segment grew 11% year-over-year, nearly all from international markets, highlighting global demand for AI-driven solutions.

Revenue Growth Drivers

The growth was primarily driven by the company's core voice business, with broad-based demand across global voice plans and enterprise market offers. The increasing adoption of AI in voice usage contributed to this growth. As David Morken, CEO, noted, "We saw accelerating growth in our core voice business, driven by broad-based demand across our global voice plans and enterprise market offers as real-world AI voice usage continued to grow."

Guidance and Outlook

For full-year 2025, Bandwidth tightened its revenue guidance range, with the midpoint indicating 10% organic revenue growth year-over-year. The company increased its full-year cloud communications revenue growth guidance to 8% organically year-over-year, driven by strength in voice. Analysts estimate next year's revenue growth at 15.1%, indicating potential for continued expansion.

Valuation Metrics

With a P/S Ratio of 0.57 and an EV/EBITDA of 16.57, the market appears to be pricing in moderate growth expectations. However, the estimated revenue growth for next year suggests that the company may be poised for further upside. The current P/E Ratio of -36.61 and ROE of -3.25 indicate that the company's profitability is still a concern, but the focus on adjusted EBITDA and cash flow yield (14.87%) provides a more positive outlook.

Key Takeaways

The company's strong performance in the voice business and its focus on AI-enabled communications position it well for future growth. The tightening of revenue guidance and the increase in cloud communications revenue growth guidance reflect the company's confidence in its momentum. As Bandwidth continues to execute on its strategy, investors will be watching to see if the company can meet its medium-term targets and achieve above-market revenue growth.

3. NewsRoom

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Bandwidth: Profit Upside Will Eventually Grab Value Investors' Attention

Oct -31

Source: seekingalpha.com

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Bandwidth Q3 Earnings Fall Short of Estimates, Revenues Decline

Oct -31

Source: zacks.com

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Compared to Estimates, Bandwidth (BAND) Q3 Earnings: A Look at Key Metrics

Oct -30

Source: zacks.com

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Bandwidth Inc. (BAND) Q3 2025 Earnings Call Transcript

Oct -30

Source: seekingalpha.com

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Bandwidth (BAND) Q3 Earnings Miss Estimates

Oct -30

Source: zacks.com

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Bandwidth Announces Third Quarter 2025 Financial Results

Oct -30

Source: prnewswire.com

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Bandwidth to Report Third Quarter 2025 Financial Results on October 30, 2025

Oct -08

Source: prnewswire.com

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Bandwidth Wins Ally Financial's 2025 'Technology Disruptor' Award For Powering AI-Enabled Cloud Transformation

Sep -30

Source: prnewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (11.59%)

6. Segments

Cloud Communications

Expected Growth: 12%

Cloud Communications from Bandwidth Inc. growth driven by increasing adoption of cloud-based unified communication platforms, rising demand for scalable and flexible communication solutions, and growing need for secure and reliable communication infrastructure, particularly among enterprises and large organizations, resulting in 12% growth.

Messaging Surcharges

Expected Growth: 10%

Bandwidth Inc.'s Messaging Surcharges growth is driven by increasing demand for business messaging, expansion of CPaaS (Communications Platform as a Service) adoption, and rising SMS traffic. Additionally, the shift towards omnichannel communication, growth in e-commerce, and the need for secure and reliable messaging solutions contribute to this 10% growth.

7. Detailed Products

Voice Services

Bandwidth's Voice Services provide scalable, high-quality voice communications for businesses and applications.

Messaging Services

Bandwidth's Messaging Services enable businesses to send and receive SMS and MMS messages, facilitating customer engagement and communication.

911 Access

Bandwidth's 911 Access provides reliable and compliant emergency calling services for businesses and applications.

Toll-Free Services

Bandwidth's Toll-Free Services offer scalable and reliable toll-free numbers for businesses, enabling efficient customer communication.

Phone Numbers and Porting

Bandwidth's Phone Numbers and Porting services enable businesses to manage and port phone numbers, ensuring flexibility and control.

API and SDKs

Bandwidth's APIs and SDKs provide developers with the tools to build custom communication solutions, integrating voice, messaging, and 911 access.

8. Bandwidth Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bandwidth Inc. operates in a highly competitive industry, but its unique offerings and strong brand recognition mitigate the threat of substitutes.

Bargaining Power Of Customers

Bandwidth Inc.'s customers are largely enterprise-level clients who have limited bargaining power due to the company's specialized services and high switching costs.

Bargaining Power Of Suppliers

Bandwidth Inc. relies on a diverse supplier base, which reduces the bargaining power of individual suppliers, but the company still faces some pressure from key vendors.

Threat Of New Entrants

The cloud-based communication industry is rapidly evolving, and new entrants with innovative solutions could potentially disrupt Bandwidth Inc.'s market share.

Intensity Of Rivalry

The cloud-based communication industry is highly competitive, with multiple established players and new entrants vying for market share, leading to intense rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 58.77%
Debt Cost 3.95%
Equity Weight 41.23%
Equity Cost 11.14%
WACC 6.91%
Leverage 142.57%

11. Quality Control: Bandwidth Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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EverCommerce

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Value: 4.3

Growth: 7.9

Quality: 4.3

Yield: 0.0

Momentum: 6.0

Volatility: 5.3

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LiveRamp

A-Score: 4.5/10

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Yield: 0.0

Momentum: 6.0

Volatility: 4.7

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Repay

A-Score: 3.9/10

Value: 9.2

Growth: 5.1

Quality: 4.3

Yield: 0.0

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Volatility: 3.3

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Bandwidth

A-Score: 3.9/10

Value: 6.8

Growth: 7.1

Quality: 2.6

Yield: 0.0

Momentum: 4.0

Volatility: 3.0

1-Year Total Return ->

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Value: 4.8

Growth: 3.2

Quality: 3.2

Yield: 0.0

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Volatility: 2.0

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Synchronoss Technologies

A-Score: 3.3/10

Value: 8.4

Growth: 6.2

Quality: 3.2

Yield: 0.0

Momentum: 0.5

Volatility: 1.7

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

14.9$

Current Price

14.9$

Potential

-0.00%

Expected Cash-Flows