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Bandwidth (BAND) Q3 Earnings Beat Estimates, Revenues Up Y/Y
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Bandwidth Inc. (BAND - Free Report) reported solid third-quarter 2020 financial results, with the top and the bottom lines surpassing the respective Zacks Consensus Estimate. Growing subscriber base and higher Communications Platform-as-a-Service (CPaaS) revenues on the back of dynamic fundamentals buoyed Bandwidth’s financial performance.
Bottom Line
On a GAAP basis, net loss in the September quarter was $2.4 million or a loss of 10 cents per share compared with net loss of $1 million or a loss of 4 cents per share in the prior-year quarter. The year-over-year deterioration despite top-line growth was primarily caused by higher operating expenses during the reported quarter and income tax benefit in the year-earlier quarter.
On an adjusted basis, quarterly net income was $6.5 million or 24 cents per share against net loss of $1.4 million or a loss of 6 cents per share in the year-ago quarter. The bottom line beat the consensus estimate by 26 cents.
Quarterly revenues came in at $84.8 million compared with $60.5 million in the year-ago quarter. The 40.1% year-over-year increase was primarily driven by higher CPaaS revenues. The top line was further augmented by increased messaging due to the upcoming Presidential elections and higher work-from-home trend owing to the virus outbreak. The top line surpassed the consensus estimate of $76 million.
Quarterly Segment Results
CPaaS revenues surged 43.3% to $73.8 million from $51.5 million in the year-ago quarter. Accounting 87% of total revenues, the improvement was primarily backed by higher demand for work-from-home connectivity solutions amid coronavirus-induced lockdown. Elevated volumes of political messaging traffic was a contributing factor as well. With a resilient business model, the segment witnessed 25.2% jump in CPaaS customers during the reported quarter. Markedly, the dollar-based net retention rate was 131% compared with 116% in the prior-year quarter.
Adjusted CPaaS gross profit jumped to $36.7 million from $24 million in the year-ago quarter with respective margins of 50% and 47%. Notably, Bandwidth ended the quarter with 2,015 active CPaaS customers.
Contributing 13% to total revenues, Other revenues increased 22.2% to $11 million from $9 million in the year-ago quarter.
Other Details
Total operating expenses were $37.4 million compared with $32 million in the prior-year quarter, primarily due to higher research and development, and general & administrative expenses. Operating income came in at $1.9 million against operating loss of $4.6 million in the year-ago quarter. Adjusted gross profit in the quarter improved 42.6% to $41.6 million from $29.1 million with respective margins of 49% and 48%. Adjusted EBITDA totaled $9.3 million against loss of $0.6 million in the year-ago quarter.
Cash Flow & Liquidity
During the first nine months of 2020, Bandwidth generated $11.3 million of net cash from operating activities against net cash utilization of $3.5 million in the year-ago period. The company witnessed a negative free cash flow of $0.5 million for the same time period compared with a negative $19.3 million a year ago. As of Sep 30, the company had $300.2 million in cash and equivalents with total current liabilities of $57.8 million.
Q4 and Full-Year 2020 Guidance
Bandwidth provided the outlook for fourth-quarter and full-year 2020. For the fourth quarter, revenues are expected in the range of $96.5-$97 million. Adjusted earnings are anticipated to be 3-5 cents. CPaaS revenues are projected to be in the band of $84.3-$84.8 million.
For full-year 2020, revenues are anticipated to be in the range of $326.6-$327.1 million. Adjusted earnings are anticipated to be in the range of 44-46 cents. CPaaS revenues are projected to be in the band of $284.3-$284.8 million.
Zacks Rank & Other Stocks to Consider
Bandwidth currently carries a Zacks Rank #2 (Buy).
Calix delivered a trailing four-quarter positive earnings surprise of 72.2%, on average.
NETGEAR delivered a trailing four-quarter positive earnings surprise of 60%, on average.
Extreme Networks delivered a trailing four-quarter positive earnings surprise of 55.4%, on average.
Have You Seen Zacks’ 2020 Election Stock Report?
The upcoming election could be a massive buying opportunity for savvy investors. Trillions of dollars will shift into new market sectors after the election. The question is, which sectors will soar for each candidate? Zacks has put together a new special report to help readers like you target big profits.
The 2020 Election Stock Report reveals specific stocks you’ll want to own immediately after the results are announced – 6 if Trump wins, 6 if Biden wins. Past election reports have led investors to gains of +71%, +83%, even +185% in the following months. This year’s picks could be even more lucrative.
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Bandwidth (BAND) Q3 Earnings Beat Estimates, Revenues Up Y/Y
Bandwidth Inc. (BAND - Free Report) reported solid third-quarter 2020 financial results, with the top and the bottom lines surpassing the respective Zacks Consensus Estimate. Growing subscriber base and higher Communications Platform-as-a-Service (CPaaS) revenues on the back of dynamic fundamentals buoyed Bandwidth’s financial performance.
Bottom Line
On a GAAP basis, net loss in the September quarter was $2.4 million or a loss of 10 cents per share compared with net loss of $1 million or a loss of 4 cents per share in the prior-year quarter. The year-over-year deterioration despite top-line growth was primarily caused by higher operating expenses during the reported quarter and income tax benefit in the year-earlier quarter.
On an adjusted basis, quarterly net income was $6.5 million or 24 cents per share against net loss of $1.4 million or a loss of 6 cents per share in the year-ago quarter. The bottom line beat the consensus estimate by 26 cents.
Bandwidth Inc. Price, Consensus and EPS Surprise
Bandwidth Inc. price-consensus-eps-surprise-chart | Bandwidth Inc. Quote
Revenues
Quarterly revenues came in at $84.8 million compared with $60.5 million in the year-ago quarter. The 40.1% year-over-year increase was primarily driven by higher CPaaS revenues. The top line was further augmented by increased messaging due to the upcoming Presidential elections and higher work-from-home trend owing to the virus outbreak. The top line surpassed the consensus estimate of $76 million.
Quarterly Segment Results
CPaaS revenues surged 43.3% to $73.8 million from $51.5 million in the year-ago quarter. Accounting 87% of total revenues, the improvement was primarily backed by higher demand for work-from-home connectivity solutions amid coronavirus-induced lockdown. Elevated volumes of political messaging traffic was a contributing factor as well. With a resilient business model, the segment witnessed 25.2% jump in CPaaS customers during the reported quarter. Markedly, the dollar-based net retention rate was 131% compared with 116% in the prior-year quarter.
Adjusted CPaaS gross profit jumped to $36.7 million from $24 million in the year-ago quarter with respective margins of 50% and 47%. Notably, Bandwidth ended the quarter with 2,015 active CPaaS customers.
Contributing 13% to total revenues, Other revenues increased 22.2% to $11 million from $9 million in the year-ago quarter.
Other Details
Total operating expenses were $37.4 million compared with $32 million in the prior-year quarter, primarily due to higher research and development, and general & administrative expenses. Operating income came in at $1.9 million against operating loss of $4.6 million in the year-ago quarter. Adjusted gross profit in the quarter improved 42.6% to $41.6 million from $29.1 million with respective margins of 49% and 48%. Adjusted EBITDA totaled $9.3 million against loss of $0.6 million in the year-ago quarter.
Cash Flow & Liquidity
During the first nine months of 2020, Bandwidth generated $11.3 million of net cash from operating activities against net cash utilization of $3.5 million in the year-ago period. The company witnessed a negative free cash flow of $0.5 million for the same time period compared with a negative $19.3 million a year ago. As of Sep 30, the company had $300.2 million in cash and equivalents with total current liabilities of $57.8 million.
Q4 and Full-Year 2020 Guidance
Bandwidth provided the outlook for fourth-quarter and full-year 2020. For the fourth quarter, revenues are expected in the range of $96.5-$97 million. Adjusted earnings are anticipated to be 3-5 cents. CPaaS revenues are projected to be in the band of $84.3-$84.8 million.
For full-year 2020, revenues are anticipated to be in the range of $326.6-$327.1 million. Adjusted earnings are anticipated to be in the range of 44-46 cents. CPaaS revenues are projected to be in the band of $284.3-$284.8 million.
Zacks Rank & Other Stocks to Consider
Bandwidth currently carries a Zacks Rank #2 (Buy).
A few other top-ranked stocks in the broader industry are Calix, Inc. (CALX - Free Report) , NETGEAR, Inc. (NTGR - Free Report) and Extreme Networks, Inc. (EXTR - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Calix delivered a trailing four-quarter positive earnings surprise of 72.2%, on average.
NETGEAR delivered a trailing four-quarter positive earnings surprise of 60%, on average.
Extreme Networks delivered a trailing four-quarter positive earnings surprise of 55.4%, on average.
Have You Seen Zacks’ 2020 Election Stock Report?
The upcoming election could be a massive buying opportunity for savvy investors. Trillions of dollars will shift into new market sectors after the election. The question is, which sectors will soar for each candidate? Zacks has put together a new special report to help readers like you target big profits.
The 2020 Election Stock Report reveals specific stocks you’ll want to own immediately after the results are announced – 6 if Trump wins, 6 if Biden wins. Past election reports have led investors to gains of +71%, +83%, even +185% in the following months. This year’s picks could be even more lucrative.
Check out Zacks’ 2020 Election Stock Report >>