U.S. Markets closed
  • S&P Futures

    4,121.00
    +0.75 (+0.02%)
     
  • Dow Futures

    33,646.00
    +15.00 (+0.04%)
     
  • Nasdaq Futures

    13,822.50
    +13.75 (+0.10%)
     
  • Russell 2000 Futures

    2,227.20
    -3.40 (-0.15%)
     
  • Crude Oil

    59.87
    +0.17 (+0.28%)
     
  • Gold

    1,735.00
    +2.30 (+0.13%)
     
  • Silver

    24.92
    +0.06 (+0.23%)
     
  • EUR/USD

    1.1902
    -0.0016 (-0.1309%)
     
  • 10-Yr Bond

    1.6750
    +0.0090 (+0.54%)
     
  • Vix

    16.91
    +0.22 (+1.32%)
     
  • GBP/USD

    1.3738
    -0.0004 (-0.0275%)
     
  • USD/JPY

    109.6500
    +0.2740 (+0.2505%)
     
  • BTC-USD

    60,848.50
    +862.79 (+1.44%)
     
  • CMC Crypto 200

    1,299.32
    +4.73 (+0.37%)
     
  • FTSE 100

    6,889.12
    -26.63 (-0.39%)
     
  • Nikkei 225

    29,852.50
    +313.77 (+1.06%)
     

Bandwidth (BAND) Tops Q4 Earnings Estimates on Revenue Growth

  • Oops!
    Something went wrong.
    Please try again later.
Zacks Equity Research
·5 min read
  • Oops!
    Something went wrong.
    Please try again later.

Bandwidth Inc. BAND reported healthy fourth-quarter 2020 results, with the top and the bottom line surpassing the Zacks Consensus Estimate. Higher Communications Platform-as-a-Service (CPaaS) revenues on the back of dynamic fundamentals drove the financial performance.

Bottom Line

On a GAAP basis, net loss in the December quarter was $19.9 million or a loss of 81 cents per share compared with net loss of $1.9 million or a loss of 8 cents per share in the prior-year quarter. The year-over-year deterioration despite top-line growth was primarily caused by higher operating expenses.

On an adjusted basis, quarterly net income was $3.5 million or 13 cents per share against net loss of $0.5 million or a loss of 2 cents per share in the year-ago quarter. The bottom line beat the consensus estimate by 9 cents.

Bandwidth Inc. Price, Consensus and EPS Surprise

Bandwidth Inc. Price, Consensus and EPS Surprise
Bandwidth Inc. Price, Consensus and EPS Surprise

Bandwidth Inc. price-consensus-eps-surprise-chart | Bandwidth Inc. Quote

For 2020, net loss was $44 million or a loss of $1.83 per share against net income of $2.5 million or 10 cents per share in 2019. On an adjusted basis, net income for 2020 was $14.2 million or 55 cents per share against net loss of $5.3 million or a loss of 23 cents per share in 2019.

Revenues

Quarterly revenues came in at $113 million compared with $62 million in the year-ago quarter. The 82.3% year-over-year increase was primarily driven by higher CPaaS revenues. The top line was further augmented by increased messaging due to the Presidential elections and higher work-from-home trend owing to the virus outbreak. The top line surpassed the consensus estimate of $97 million. Total revenues in 2020 were $343.1 million, up from $232.6 million in 2019.

Quarterly Segment Results

CPaaS revenues surged 83.7% to $98.1 million from $53.4 million in the year-ago quarter. Accounting for 86.8% of total revenues, the improvement was primarily backed by higher demand for work-from-home connectivity solutions amid coronavirus-induced lockdowns. Elevated volumes of political messaging traffic was a contributing factor as well. With a resilient business model, the segment witnessed 109 CPaaS customer additions and 700 new Voxbone customer accounts during the reported quarter. Markedly, the dollar-based net retention rate was 133% compared with 113% in the prior-year quarter.

Adjusted CPaaS gross profit jumped to $50 million from $26.3 million in the year-ago quarter, with respective margins of 51% and 49%. Notably, Bandwidth ended the quarter with 2,848 active CPaaS customers.

Contributing 13.2% to total revenues, Other revenues increased 73.3% to $14.9 million from $8.6 million in the year-ago quarter.

Other Details

Total operating expenses were $63.9 million compared with $32.5 million in the prior-year quarter, primarily due to higher research and development, and general & administrative expenses.

Operating loss came in at $12.2 million compared with an operating loss of $3.5 million in the year-ago quarter. Adjusted gross profit in the quarter improved to $55.8 million from $31.1 million with respective margins of 49% and 50%. Adjusted EBITDA totaled $8.3 million compared with $1.2 million in the year-ago quarter.

Cash Flow & Liquidity

In 2020, Bandwidth generated $4.5 million of net cash from operating activities against net cash utilization of $1.3 million in 2019. As of Dec 31, 2020, the company had $72.2 million in cash and equivalents with total current liabilities of $92.2 million compared with respective tallies of $184.4 million and $45.7 million in the prior-year period.

Q1 and 2021 Guidance

Bandwidth provided the outlook for first quarter and 2021. For the first quarter, revenues are expected in the range of $108-$109 million. Adjusted earnings are anticipated to be 0-2 cents per share. CPaaS revenues are expected in the band of $96.6-$97.6 million.

For 2021, revenues are anticipated in the range of $460.4-$464.4 million. Adjusted earnings are estimated in the range of 2-12 cents. CPaaS revenues are projected in the band of $413.3-$417.3 million.

Zacks Rank & Stocks to Consider

Bandwidth currently has a Zacks Rank #4 (Sell). Some better-ranked stocks in the broader industry are Knowles Corporation KN, sporting a Zacks Rank #1 (Strong Buy), and Corning Incorporated GLW and Viavi Solutions Inc. VIAV, both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Knowles has a long-term earnings growth expectation of 10%. It delivered an earnings surprise of 19.3%, on average, in the trailing four quarters.

Corning has a long-term earnings growth expectation of 2%. It delivered an earnings surprise of 41.6%, on average, in the trailing four quarters.

Viavi has a trailing four-quarter earnings surprise of 20.2%, on average.

Just Released: Zacks’ 7 Best Stocks for Today

Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.9% per year.

These 7 were selected because of their superior potential for immediate breakout.

See these time-sensitive tickers now >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Corning Incorporated (GLW) : Free Stock Analysis Report

Knowles Corporation (KN) : Free Stock Analysis Report

Viavi Solutions Inc. (VIAV) : Free Stock Analysis Report

Bandwidth Inc. (BAND) : Free Stock Analysis Report

To read this article on Zacks.com click here.