Bandwidth (BAND) Q2 Earnings Outpace Estimates, Guidance Up
Bandwidth Inc. BAND reported solid second-quarter 2023 results, beating the top-line and bottom-line estimates and well exceeding its guided range. The strong performance was backed by enterprises increasingly relying on Bandwidth’s platform for communications in the cloud. In order to drive growth, the company plans to focus on winning large enterprises and becoming the best global CPaaS platform for scaling digital engagement.
Quarter Details
On a GAAP basis, net loss during the quarter was $3.9 million or a loss of 15 cents per share compared with a loss of $6.2 million or a loss of 25 cents per share in the prior-year quarter. The narrower loss was primarily attributable to top-line growth and gain on business interruption insurance recoveries.
Excluding non-recurring items, non-GAAP net income during the reported quarter was $4.4 million or 16 cents per share against non-GAAP net loss of $0.9 million or a loss of 4 cents per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 10 cents.
Bandwidth Inc. Price, Consensus and EPS Surprise
Bandwidth Inc. price-consensus-eps-surprise-chart | Bandwidth Inc. Quote
Quarterly revenues improved to $145.9 million from $136.5 million in the prior-year quarter and exceeded the consensus estimate of $141 million. The growth was backed by high demand for digital engagement and strong contributions from messaging services across a variety of use cases, including health care, retail and e-commerce shopping, fintech and civic engagement.
Operating Details
Non-GAAP gross margin during the quarter was 55%, reflecting growth of 2 percentage points, primarily due to efficient pricing and product mix, global coverage, economies of scale and diligent execution of operational plans within the cloud operations and service groups. Adjusted EBITDA was $10.6 million, well above the guidance and up from $5.1 million in the prior-year period.
Cash Flow & Liquidity
In the first six months of 2023, net cash utilized for operating activities was $3.3 million against an operating cash flow of $0.3 million in the prior year. Cash and cash equivalents as of Jun 30, 2023, were $91.8 million, with convertible senior notes of $417.6 million.
Guidance
For 2023, Bandwidth increased its revenue guidance with superior first-half performance and currently expects revenues in the band of $588 million to $592 million, up from $576 million to $584 million expected earlier. Adjusted EBITDA is expected in the range of $44 million to $46 million.
For the third quarter, revenues are expected to be within 148 million to $150 million. Adjusted EBITDA is expected in the band of $10 million to $12 million.
Zacks Rank & Other Stocks to Consider
Bandwidth currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
InterDigital, Inc. IDCC, sporting a Zacks Rank #1, delivered an earnings surprise of 170.89%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 579.03%. It has a long-term earnings growth expectation of 13.9%.
It is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular and wireless 3G, 4G and IEEE 802-related products and networks.
Akamai Technologies, Inc. AKAM, carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 4.9%, on average, in the trailing four quarters. It has a long-term earnings growth expectation of 10%.
Akamai is a global provider of content delivery network and cloud infrastructure services. The company’s solutions accelerate and improve the delivery of content over the Internet, enabling faster response to requests for web pages, streaming of video & audio, business applications, etc. Akamai’s offerings are intended to reduce the impact of traffic congestion, bandwidth constraints and capacity limitations on customers.
Motorola Solutions, Inc. MSI carries a Zacks Rank #2. It has a long-term earnings growth expectation of 9% and delivered an earnings surprise of 6.9%, on average, in the trailing four quarters.
As a leading provider of mission-critical communication products and services worldwide, Motorola has ensured a steady revenue stream from this niche market. The communications equipment maker intends to boost its position in the public safety domain by entering into strategic alliances with other players in the ecosystem.
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