Bandwidth Inc. (BAND - Free Report) 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.
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 - Free Report) , sporting a Zacks Rank #1 (Strong Buy), and Corning Incorporated (GLW - Free Report) and Viavi Solutions Inc. (VIAV - Free Report) , 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.
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Bandwidth Inc. (BAND - Free Report) 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.
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 - Free Report) , sporting a Zacks Rank #1 (Strong Buy), and Corning Incorporated (GLW - Free Report) and Viavi Solutions Inc. (VIAV - Free Report) , 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 >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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