Bandwidth (BAND) Q4 Earnings Beat on Healthy Revenue Growth
Bandwidth Inc. BAND reported healthy fourth-quarter 2021 results, wherein both the bottom line and the top line surpassed their respective Zacks Consensus Estimate. New customer additions, robust cross-selling momentum, differentiated global platform and reinforced customer relationships favored the Raleigh, NC-based company’s quarterly performance.
Bottom Line
On a GAAP basis, net loss in the December quarter was $8.2 million or a loss of 33 cents per share compared with a net loss of $19.9 million or a loss of 81 cents per share in the prior-year quarter. The narrower GAAP loss was primarily attributable to top-line growth and lower operating expenses.
Non-GAAP net income in the reported quarter was $2.3 million or 9 cents per share compared with $3.5 million or 13 cents per share in the year-earlier quarter. The bottom line beat the Zacks Consensus Estimate by 23 cents.
In 2021, Bandwidth recorded a net loss of $27.4 million or a loss of $1.09 per share compared with a net loss of $44 million or a loss of $1.83 per share in the prior-year quarter. Non-GAAP net income in 2021 improved to $25.7 million or 97 cents per share compared with $14.2 million or 55 cents per share in the year-earlier quarter.
Bandwidth Inc. Price, Consensus and EPS Surprise
Bandwidth Inc. price-consensus-eps-surprise-chart | Bandwidth Inc. Quote
Revenues
Quarterly revenues were $126.1 million, up 11.6% year over year and well above the company expectations of $115.7-$120.7 million. This includes Communications Platform-as-a-Service (CPaaS) revenues of $101.4 million (up 3.4% year over year), surpassing expectations of $94.5-$99.5 million. The higher revenues were primarily attributable to healthy demand trends driven by a customized networking infrastructure. The growth was further bolstered by an augmented global footprint and broad-based demand across all services. The top line surpassed the consensus estimate of $118 million. In 2021, total revenues improved to $490.9 million from $343.1 million in 2020 on higher CPaaS revenues (up 38.9% to $414 million)
However, quarterly revenues were hurt by the DDoS attack due to lost transaction volume and impact on network services. This malicious attempt to disrupt normal traffic is likely to reduce CPaaS revenues for 2022 by $16-$24 million. Despite the setbacks, the company has been able to restore normalcy and mitigate risks for customers for top-line growth, as exemplified by its ability to exceed fourth-quarter revenue guidance.
The higher CPaaS revenues, which accounted for 80.2% of total revenues, were primarily driven by sustained broad-based growth as enterprise customers are increasingly migrating toward Bandwidth’s global platform to fulfill their communication requirements. Bandwidth had 3,228 active CPaaS customers as of Dec 31, 2021, up 13.3% year over year. The dollar-based net retention rate was 117% compared with 123% in the prior-year quarter. Adjusted CPaaS gross profit increased to $53.8 million from $50 million with respective margins of 53% and 51%, owing to high margin international business.
Other Details
Total operating expenses were $57.6 million compared with $63.9 million in the prior-year quarter. Operating loss came in at $4.1 million compared with an operating loss of $12.2 million in the year-ago quarter. Non-GAAP gross profit in the quarter improved to $58.8 million from $55.8 million with respective margins of 47% and 49%. Adjusted EBITDA remained flat at $8.3 million.
Cash Flow & Liquidity
In 2021, Bandwidth generated $40.8 million of net cash from operating activities compared with $4.5 million in 2020. As of Dec 31, 2021, this enterprise software developer had $331.5 million in cash and cash equivalents with $93.5 million of total current liabilities compared with respective tallies of $72.2 million and $92.2 million in the year-ago period.
Guidance
Bandwidth has provided guidance for the first quarter and 2022. For the ongoing quarter, total revenues are expected in the range of $125-$127 million. Adjusted loss is anticipated to be 7-11 cents per share.
For 2022, total revenues are anticipated in the range of $547-$555 million. Adjusted earnings are estimated in the band of 3-9 cents per share.
Zacks Rank & Stocks to Consider
Bandwidth currently has a Zacks Rank #3 (Hold).
ADTRAN Inc. ADTN, carrying a Zacks Rank #2 (Buy) is a solid pick for investors. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ADTRAN delivered an earnings surprise of 140.4%, on average, in the trailing four quarters. The company’s end-to-end solutions simplify the deployment of fiber-based broadband services and provide a better customer experience. ADTRAN is focused on being a top global supplier of access infrastructure and related value-added solutions from the Cloud Edge to the Subscriber Edge through a broad portfolio of flexible hardware and software network solutions. Over the past year, it has gained a modest 14.7%.
CommScope Holding Company, Inc. COMM, carrying a Zacks Rank #2, is another key pick. It has a long-term earnings growth expectation of 21.6% and delivered an earnings surprise of 10.3%, on average, in the trailing four quarters.
CommScope is focused on sound technology, a highly efficient supply chain and commitment to continuous improvement. This will potentially make it a preferred partner for all carriers as the entire industry moves toward 5G. With operators moving toward converged or multi-use network structures, combining voice, video and data communications into a single network, CommScope is dedicatedly developing solutions to support wireline and wireless network convergence.
Knowles Corporation KN sports a Zacks Rank #1. It has a long-term earnings growth expectation of 10% and delivered a modest earnings surprise of 14.9%, on average, in the trailing four quarters. Earnings estimates for the current year have moved up 21% since February 2021.
The transformation from an acoustic component supplier to an audio solutions provider has enabled Knowles to migrate to higher-value solutions and increase content per device. This, in turn, has empowered the company to capitalize on the positive macro trends in audio and edge processing solutions.
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