SUBSCRIBE TO TMCnet
TMCnet - World's Largest Communications and Technology Community

TMC NEWS

TMCNET eNEWSLETTER SIGNUP

Bandwidth Announces Third Quarter 2019 Financial Results
[November 06, 2019]

Bandwidth Announces Third Quarter 2019 Financial Results


RALEIGH, N.C., Nov. 6, 2019 /PRNewswire/ -- Bandwidth Inc. (NASDAQ: BAND), a software company focused on communications for the enterprise, today announced financial results for the third quarter ended September 30, 2019.

"We believe our value proposition is strong and are pleased with our progress in driving adoption of our highly scalable platform of flexible APIs, our vertically integrated nationwide IP voice network that we built and operate, and our unique 911 capabilities. Enterprise customers who scale with our platform are increasingly viewing Bandwidth as a strategic partner and we take pride in succeeding when our customers succeed," stated David Morken, chief executive officer of Bandwidth. "Looking ahead, we continue to be optimistic about the growth opportunities and I want to thank our team who remain focused on executing on our mission and delivering best-in-class service to our enterprise customers."

Third Quarter 2019 Financial Highlights

  • Revenue: Total revenue for the third quarter of 2019 was $60.5 million, up 20% compared to $50.5 million in the third quarter of 2018. Within total revenue, CPaaS revenue was $51.5 million, up 24% compared to $41.5 million for the third quarter of 2018. Other revenue contributed the remaining $9.0 million for the third quarter of 2019. Other revenue was $8.9 million in the same period last year.
  • Gross Profit: Gross profit for the third quarter of 2019 was $27.4 million, compared to $23.0 million for the third quarter of 2018. Gross margin for the third quarter of 2019 was 45%, compared to 46% for the third quarter of 2018. Non-GAAP gross profit for the third quarter of 2019 was $29.1 million, compared to $24.1 million for the third quarter of 2018. Non-GAAP gross margin was 48% for the third quarter of 2019, compared to 48% for the third quarter of 2018.
  • Net Income (Loss): Net loss for the third quarter of 2019 was $(1.0) million, or $(0.04) per share, based on 23.4 million weighted average shares outstanding. During the third quarter of 2018, net income was $2.5 million, or $0.12 per share, based on 21.1 million weighted average diluted shares outstanding.
  • Non-GAAP Net Loss: Non-GAAP net loss for the third quarter of 2019 was $(1.4) million, or $(0.06) per share, based on 23.4 million weighted average shares outstanding. This compares to a Non-GAAP net loss of $(1.0) million, or $(0.05) per share, based on 19.1 million weighted average shares outstanding for the third quarter of 2018.
  • Adjusted EBITDA: Adjusted EBITDA was $(0.6) million for the third quarter of 2019, compared to $2.3 million for the third quarter of 2018.

Additional information regarding the non-GAAP financial measures discussed in this release, including an explanation of these measures and how each is calculated, is included below under the heading "Non-GAAP Financial Measures." A reconciliation of GAAP to non-GAAP financial measures has also been provided in the financial tables included below.

Third Quarter 2019 Key Metrics

  • The number of active CPaaS customers was 1,610 as of September 30, 2019, an increase of 39% from 1,155 as of September 30, 2018.
  • The dollar-based net retention rate was 116% during the third quarter of 2019, compared to 117% during the third quarter of 2018.

Additional information regarding our active CPaaS customers and dollar-based net retention rate and how each are calculated are included below.

Financial Outlook

As of November 6, 2019, Bandwidth is providing guidance for its fourth quarter and full year 2019 as follows:

  • Fourth Quarter 2019 Guidance: CPaaS revenue is expected to be in the range of $50.3 million to $50.8 million. Total revenue is expected to be in the range of $58.4 million to $58.9 million. Non-GAAP loss per share is expected to be in the range of ($0.15) to ($0.17) per share, using 23.5 million weighted average shares outstanding.
  • Full Year 2019 Guidance: CPaaS revenue is expected to be in the range of $194.8 million to $195.3 million. Total revenue is expected to be in the range of $229.0 million to $229.5 million. Non-GAAP loss per share is expected to be in the range of approximately of ($0.37) to ($0.39) per share, using 22.6 million weighted average shares outstanding.

Bandwidth has not reconciled its fourth quarter and full-year guidance related to non-GAAP net loss to GAAP net loss and non-GAAP loss per share to GAAP loss, because stock-based compensation cannot be reasonably calculated or predicted at this time. Accordingly, a reconciliation is not available without unreasonable effort.

Quarterly Conference Call

Bandwidth will host a conference call today at 5:00 p.m. Eastern Time to review the Company's financial results for the third quarter ended September 30, 2019. To access this call, dial (877) 407-0792 for the U.S. or Canada, or (201) 689-8263 for international callers. A live webcast of the conference call will be accessible from the Investors section of Bandwidth's website at https://investors.bandwidth.com, and a recording will be archived and accessible at https://investors.bandwidth.com. An audio replay of this conference call will also be available through November 13, 2019, by dialing (844) 512-2921 for the U.S. or Canada, or (412) 317-6671 for international callers, and entering passcode 13695047.

About Bandwidth Inc.

Bandwidth (NASDAQ: BAND) is a software company focused on communications for the enterprise. Companies like Google, Microsoft, and RingCentral use Bandwidth's APIs to easily embed voice, messaging and 9-1-1 access into software and applications. Bandwidth is the first and only CPaaS provider offering a robust selection of communications APIs built around their own nationwide IP voice network - one of the largest in the nation. More information available at www.bandwidth.com.

Forward-Looking Statements

This press release includes forward-looking statements. All statements contained in this press release other than statements of historical facts, including, without limitation, statements regarding our future financial and business performance for the fourth quarter 2019 and full-year 2019, attractiveness of our product offerings and platform and the value proposition of our products, are forward-looking statements. The words "anticipate," "believe," "continue," "estimate," "expect," "intend," "guide," "may," "will" and similar expressions and their negatives are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to a number of risks and uncertainties, including, without limitation, risks related to our rapid growth and ability to sustain our revenue growth rate, competition in the markets in which we operate, market growth, our ability to innovate and manage our growth, our ability to expand effectively into new markets, our ability to operate in compliance with applicable laws as well as other risks and uncertainties set forth in the "Risk Factors" section of our Form 10-K for the year ended December 31, 2018, filed with the Securities and Exchange Commission and any subsequent reports that we file with the Securities and Exchange Commission after December 31, 2018. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, we cannot guarantee future results, levels of activity, performance, achievements or events and circumstances reflected in the forward-looking statements will occur. We are under no obligation to update any of these forward-looking statements after the date of this press release to conform these statements to actual results or revised expectations, except as required by law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this press release.

Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with Generally Accepted Accounting Principles in the United States, or GAAP, we provide investors with certain non-GAAP financial measures and other business metrics, which we believe are helpful to our investors. We use these Non-GAAP financial measures and other business metrics for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons. We believe that these Non-GAAP financial measures and other business metrics provide useful information about our operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to metrics used by our management in its financial and operational decision-making.

The presentation of Non-GAAP financial information and other business metrics is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. While our Non-GAAP financial measures and other business metrics are an important tool for financial and operational decision-making and for evaluating our own operating results over different periods of time, we urge investors to review the reconciliation of these financial measures to the comparable GAAP financial measures included above, and not to rely on any single financial measure to evaluate our business.

We define Non-GAAP gross profit as gross profit after adding back depreciation and amortization and stock-based compensation. We add back depreciation and amortization and stock-based compensation because they are non-cash items. We eliminate the impact of these non-cash items, because we do not consider them indicative of our core operating performance. Their exclusion facilitates comparisons of our operating performance on a period-to-period basis. Therefore, we believe that showing gross margin, as adjusted to remove the impact of these non-cash expenses, such as depreciation, amortization and stock-based compensation, is helpful to investors in assessing our gross profit and gross margin performance in a way that is similar to how management assesses our performance. We calculate Non-GAAP gross margin by dividing adjusted gross profit by revenue, expressed as a percentage of revenue.

We define Non-GAAP net (loss) income as net income (loss) adjusted for certain items affecting period to period comparability. Non-GAAP net (loss) income excludes stock-based compensation, amortization of acquired intangible assets related to the Dash acquisition, impairment charges of intangibles assets, loss (gain) on disposal of property and equipment, estimated tax impact of above adjustments, income tax benefit resulting from excess tax benefits associated with the exercise of stock options and vested restricted stock, and benefit resulting from the release of the valuation allowance on our deferred tax assets ("DTA").

We define adjusted EBITDA as net income (loss) adjusted to reflect the addition or elimination of certain statement of operations items including, but not limited to: income tax provision (benefit), interest income, net, depreciation and amortization expense, stock-based compensation expense, impairment of intangible assets, and loss (gain) from disposal of property and equipment. We have presented Adjusted EBITDA because it is a key measure used by our management and board of directors to understand and evaluate our core operating performance, generate future operating plans, and make strategic decisions regarding the allocation of capital. In particular, we believe that the exclusion of certain items in calculating Adjusted EBITDA can produce a useful measure for period-to-period comparisons of our business.

We define free cash flow as net cash provided by or used in operating activities less net cash used in investments of property, plant and equipment activities and capitalized development costs for software for internal use. We believe free cash flow is a useful indicator of liquidity and provides information to management and investors about the amount of cash generated from our core operations that can be used for investing in our business. Free cash flow has certain limitations in that it does not represent the total increase or decrease in the cash balance for the period, it does not take into consideration investment in long-term securities, nor does it represent the residual cash flows available for discretionary expenditures. Therefore, it is important to evaluate free cash flow along with our consolidated statements of cash flows.

We believe that these Non-GAAP financial measures provide useful information about our operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to metrics used by our management in its financial and operational decision-making.

While a reconciliation of Non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis as a result of the uncertainty regarding, and the potential variability of, many of these costs and expenses that we may incur in the future, we have provided a reconciliation of Non-GAAP financial measures and other business metrics to the nearest comparable GAAP measures in the accompanying financial statement tables included in this press release.

We define an active CPaaS customer account at the end of any period as an individual account, as identified by a unique account identifier, for which we have recognized at least $100 of revenue in the last month of the period. We believe that the use of our platform by active CPaaS customer accounts at or above the $100 per month threshold is a stronger indicator of potential future engagement than trial usage of our platform at levels below $100 per month. A single organization may constitute multiple unique active CPaaS customer accounts if it has multiple unique account identifiers, each of which is treated as a separate active CPaaS customer account.

Our dollar-based net retention rate compares the CPaaS revenue from customers in a quarter to the same quarter in the prior year. To calculate the dollar-based net retention rate, we first identify the cohort of customers that generate CPaaS revenue and that were customers in the same quarter of the prior year. The dollar-based net retention rate is obtained by dividing the CPaaS revenue generated from that cohort in a quarter, by the CPaaS revenue generated from that same cohort in the corresponding quarter in the prior year. When we calculate dollar-based net retention rate for periods longer than one quarter, we use the average of the quarterly dollar-based net retention rates for the quarters in such period.

 





BANDWIDTH INC.

Condensed Consolidated Statements of Operations

(In thousands, except share and per share amounts)

(Unaudited)



Three months ended September 30,


Nine months ended September 30,


2018


2019


2018


2019

Revenue

$

50,454


$

60,491


$

151,770


$

170,591

Cost of revenue

27,474


33,104


79,404


91,980

Gross profit

22,980


27,387


72,366


78,611

Operating expenses:








Research and development

5,895


7,939


14,111


23,312

Sales and marketing

5,422


8,784


14,598


25,647

General and administrative

11,576


15,269


33,635


43,884

Total operating expenses

22,893


31,992


62,344


92,843

Operating income (loss)

87


(4,605)


10,022


(14,232)

Other income, net

103


781


242


1,711

Income (loss) before taxes

190


(3,824)


10,264


(12,521)

Income tax benefit

2,320


2,810


8,949


16,971

Net income (loss)

$

2,510


$

(1,014)


$

19,213


$

4,450









Earnings per share:








Net income (loss) per share:








Basic

$

0.13


$

(0.04)


$

1.05


$

0.20

Diluted

$

0.12


$

(0.04)


$

0.91


$

0.19

Weighted average number of common shares
outstanding:








Basic

19,072,196


23,426,455


18,300,435


22,353,097

Diluted

21,146,124


23,426,455


21,065,802


23,692,571


The Company recognized total stock-based compensation expense as follows:


Three months ended September 30,


Nine months ended September 30,


2018


2019


2018


2019

Cost of revenue

$

30


$

52


$

79


$

158

Research and development

173


371


376


1,101

Sales and marketing

146


280


364


892

General and administrative

413


951


1,198


2,809

Total

$

762


$

1,654


$

2,017


$

4,960


 

 

BANDWIDTH INC.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)



December 31,


September 30,


2018


2019

Assets




Current assets:




Cash and cash equivalents

$

41,261


$

192,410

Marketable securities

17,400


Accounts receivable, net of allowance for doubtful accounts

24,009


30,030

Prepaid expenses and other current assets

6,114


8,350

Deferred costs

2,630


2,522

Total current assets

91,414


233,312

Restricted cash

240


391

Property and equipment, net

25,136


36,085

Intangible assets, net

7,089


6,699

Deferred costs, non-current

1,828


1,901

Other long-term assets

487


1,250

Goodwill

6,867


6,867

Deferred tax asset

17,359


34,449

Total assets

$

150,420


$

320,954

Liabilities and stockholders' equity




Current liabilities:




Accounts payable

$

3,418


$

3,343

Accrued expenses and other current liabilities

21,393


28,002

Current portion of deferred revenue

5,324


5,020

Advanced billings

2,588


4,720

Total current liabilities

32,723


41,085

Deferred rent, net of current portion

2,503


3,728

Deferred revenue, net of current portion

6,424


5,755

Total liabilities

41,650


50,568

Stockholders' equity:




Class A and Class B common stock

19


23

Additional paid-in capital

116,600


273,970

Accumulated deficit

(7,848)


(3,572)

Accumulated other comprehensive loss

(1)


(35)

Total stockholders' equity

108,770


270,386

Total liabilities and stockholders' equity

$

150,420


$

320,954

 

 

BANDWIDTH INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)



Nine months ended September 30,


2018


2019

Operating activities




Net income

$

19,213


$

4,450

Adjustments to reconcile net income to net cash provided by (used in) operating activities:




Depreciation and amortization

4,109


6,628

Accretion of bond discount

(80)


(700)

Gain on sale of marketable securities


(4)

Amortization of debt issuance costs

48


159

Stock-based compensation

2,017


4,960

Deferred taxes

(9,041)


(17,091)

Loss on disposal of property and equipment

27


354

Changes in operating assets and liabilities:




Accounts receivable

(2,555)


(5,304)

Prepaid expenses and other assets

(1,122)


(3,046)

Deferred costs

345


(42)

Accounts payable

(778)


(169)

Accrued expenses and other liabilities

4,375


4,696

Deferred revenue and advanced billings

5,347


985

Deferred rent

2,096


644

Net cash provided by (used in) operating activities

24,001


(3,480)

Investing activities




Purchase of property and equipment

(4,921)


(13,088)

Capitalized software development costs

(3,511)


(2,749)

Proceeds from sale of property and equipment

3


Purchase of marketable securities

(23,860)


(68,361)

Proceeds from sales and maturities of marketable securities

9,000


86,468

Net cash (used in) provided by investing activities

(23,289)


2,270

Financing activities




Payments on capital leases

(74)


Payment of costs related to the initial public offering

(285)


Payment of costs related to the follow-on public offering


(757)

Proceeds from the follow-on public offering, net of underwriting discounts


147,391

Payment of debt issuance costs


(142)

Proceeds from exercises of stock options

10,547


7,249

Proceeds from exercises of warrants

37


Equity awards withheld and paid for tax liabilities


(1,212)

Net cash provided by financing activities

10,225


152,529

Effect of exchange rate changes on cash, cash equivalents and
restricted cash


(19)

Net increase in cash, cash equivalents, and restricted cash

10,937


151,300

Cash, cash equivalents, and restricted cash, beginning of period

37,870


41,501

Cash, cash equivalents, and restricted cash, end of period

$

48,807


$

192,801





 

 


BANDWIDTH INC.

Reconciliation of Non-GAAP Financial Measures

(In thousands, except share and per share amounts)

(Unaudited)


Non-GAAP Gross Profit and Non-GAAP Gross Margin


     Consolidated



Three months ended September 30,


Nine months ended September 30,


2018


2019


2018


2019

Consolidated Gross Profit

$

22,980


$

27,387


$

72,366


$

78,611

Depreciation

1,135


1,700


3,214


4,523

Stock-based compensation

30


52


79


158

Non-GAAP Gross Profit

$

24,145


$

29,139


$

75,659


$

83,292

Non-GAAP Gross Margin %

48 %


48 %


50 %


49 %


















     By Segment


     CPaaS



Three months ended September 30,


Nine months ended September 30,


2018


2019


2018


2019

CPaaS Gross Profit

$

17,541


$

22,202


$

51,229


$

63,431

Depreciation

1,135


1,700


3,214


4,523

Stock-based compensation

30


52


79


158

Non-GAAP CPaaS Gross Profit

$

18,706


$

23,954


$

54,522


$

68,112

Non-GAAP CPaaS Gross Margin %

45 %


47 %


45 %


47 %


















     Other


        There are no non-GAAP adjustments to gross profit for the Other segment.


Adjusted EBITDA



Three months ended September 30,


Nine months ended September 30,


2018


2019


2018


2019

Net income (loss)

$

2,510


$

(1,014)


$

19,213


$

4,450

Income tax benefit (1)

(2,320)


(2,810)


(8,949)


(16,971)

Interest income, net

(103)


(778)


(242)


(1,698)

Depreciation

1,296


2,177


3,685


6,238

Amortization

130


130


424


390

Stock-based compensation

762


1,654


2,017


4,960

Loss on disposal of property and equipment

17


3


27


354

Adjusted EBITDA

$

2,292


$

(638)


$

16,175


$

(2,277)


__________

     (1) Includes excess tax benefits associated with the exercise of stock options and vesting of restricted stock units of $4,163 and $11,215 in the three and nine months ended September 30, 2018, respectively, and $1,749 and $13,488 in the three and nine months ended September 30, 2019, respectively.

 

 

BANDWIDTH INC.

Reconciliation of Non-GAAP Financial Measures

(In thousands, except share and per share amounts)

(Unaudited)


Non-GAAP Net (Loss) Income



Three months ended September 30,


Nine months ended September 30,


2018


2019


2018


2019

Net income (loss)

$

2,510


$

(1,014)


$

19,213


$

4,450

Stock-based compensation

762


1,654


2,017


4,960

Amortization related to acquisitions

130


130


390


390

Loss on disposal of property and equipment

17


3


27


354

Estimated tax effects of adjustments

(233)


(451)


(625)


(1,440)

Income tax benefit of option exercises

(4,163)


(1,631)


(11,215)


(12,437)

Income tax benefit of vesting restricted stocks units


(118)



(1,051)

Non-GAAP net (loss) income

$

(977)


$

(1,427)


$

9,807


$

(4,774)









Non-GAAP net (loss) income per Non-GAAP share








Basic

$

(0.05)


$

(0.06)


$

0.54


$

(0.21)

Diluted

$

(0.05)


$

(0.06)


$

0.47


$

(0.21)









Non-GAAP weighted average number
of shares outstanding








Non-GAAP basic shares

19,072,196


23,426,455


18,300,435


22,353,097

Non-GAAP diluted shares

19,072,196


23,426,455


21,065,802


22,353,097


Free Cash Flow



Three months ended September 30,


Nine months ended September 30,


2018


2019


2018


2019

Net cash provided by (used in) operating activities

$

6,884


$

1,932


$

24,001


$

(3,480)

Net cash used in investing in capital assets (1)

(3,772)


(6,318)


(8,432)


(15,837)

Free cash flow

$

3,112


$

(4,386)


$

15,569


$

(19,317)


_____________

     (1) Represents the acquisition cost of property, equipment and capitalized development costs for software for internal use.

 

 

Cision View original content:http://www.prnewswire.com/news-releases/bandwidth-announces-third-quarter-2019-financial-results-300953050.html

SOURCE Bandwidth Inc.


[ Back To TMCnet.com's Homepage ]









Technology Marketing Corporation

35 Nutmeg Drive Suite 340, Trumbull, Connecticut 06611 USA
Ph: 800-243-6002, 203-852-6800
Fx: 203-866-3326

General comments: tmc@tmcnet.com.
Comments about this site: webmaster@tmcnet.com.

STAY CURRENT YOUR WAY

© 2019 Technology Marketing Corporation. All rights reserved | Privacy Policy