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Bandwidth (BAND) Revenues Top Q3 View in Preliminary Results

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·3 min read
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  • BAND
  • CLFD
  • SEAC

Bandwidth Inc. BAND recently issued preliminary results for third-quarter 2021. The selective preliminary metrics offer clarity regarding its business operations as it aims to navigate through an adverse revenue impact from distributed denial of service (DDoS) attack in September.

Management currently expects third-quarter GAAP revenues to be about $131 million, up 54% year over year, and well above prior expectations of $123.6-$124.6 million. This includes Communications Platform-as-a-Service (CPaaS) revenues of $107.4 million (up 46% year over year) compared with earlier expectations of $106.1-$107.1 million. The higher revenue projection is primarily attributable to healthy demand trends driven by a customized networking infrastructure. The Zacks Consensus Estimate for revenues is currently pegged at $124 million.

However, the company expects the DDoS attack to hurt revenues by $0.7 million due to lost transaction volume and impact on network services. This malicious attempt to disrupt normal traffic is likely to reduce CPaaS revenues for 2021 by $9-$12 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 third-quarter revenue guidance.

Backed by an avant-garde software platform, the company monitors and resolves any network-related issues on a real-time basis. Bandwidth enables enterprises to rapidly scale communications functionalities to a vast range of applications and devices with its easy-to-use software application programming interfaces (API). It supports high user volumes without affecting deliverability and eliminates performance degradation in a cost-effective manner. Bandwidth’s reduced capital expenditure requirements and lower marginal costs enable it to minimize total cost to customers. Continuous innovation on CPaaS offerings allows enterprise customers to have direct access to its comprehensive suite of products and services that cater to the networking requirements of large-scale Internet companies and cloud service providers based in the United States.

Bandwidth is the only API platform provider that owns a Tier 1 network with enhanced network capacity, primarily catering to business enterprises. It delivers unparalleled network quality and proactively monitors network operations 24/7 to resolve quality issues, capitalizing on an efficient cost structure for seamless connectivity and speed-to-market. The company capitalizes on a variety of marketing channels to promote its products and services. This reinforces pricing flexibility and provides a significant competitive advantage to build capital-efficient network infrastructure.

The stock has declined 48.8% in the past year compared with an industry loss of 19.8%.

Zacks Investment Research
Zacks Investment Research

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Bandwidth currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader industry are Clearfield, Inc. CLFD, sporting a Zacks Rank #1, and SeaChange International, Inc. SEAC and Ubiquiti Inc. UI, both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Clearfield delivered a trailing four-quarter earnings surprise of 49%, on average.

SeaChange International has a long-term earnings growth expectation of 10%. It delivered an earnings surprise of 28.9%, on average, in the trailing four quarters.

Ubiquiti has a long-term earnings growth expectation of 32.9%. It delivered an earnings surprise of 20.5%, on average, in the trailing four quarters.

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