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Bandwidth (BAND) Tops Q1 Earnings Estimates on Revenue Growth

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Bandwidth Inc. (BAND - Free Report) reported impressive first-quarter 2021 results, wherein both the bottom and the top lines beat the respective Zacks Consensus Estimate.

Bottom Line

On a GAAP basis, net loss in the March quarter was $5.3 million or loss of 21 cents per share compared with a net loss of $1.1 million or loss of 4 cents per share in the prior-year quarter. The deterioration despite narrower operating loss was largely due to other expenses to the tune of $5.6 million.

Adjusted net income came in at $8.3 million or 30 cents per share compared with $1.1 million or 4 cents per share in the year-ago quarter. Also, the bottom line beat the Zacks Consensus Estimate by 29 cents, delivering a surprise of 2,900%.

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

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

Revenues

Quarterly total revenues were $113.5 million compared with $68.5 million in the prior-year quarter. The 65.7% growth was primarily driven by higher Communications Platform-as-a-Service (CPaaS) revenues. Also, the top line surpassed the consensus estimate of $108 million.

Segment-wise, CPaaS revenues increased 69.4% year over year to $100.1 million and accounted for 88.2% of total revenues. The rise was primarily driven by increased demand for work-from-home connectivity solutions.

Bandwidth had 2,959 active CPaaS customers as of Mar 31, 2021, up 63.7% year over year. This includes the contribution from Voxbone. The dollar-based net retention rate was 125% compared with 126% in the prior-year quarter. Adjusted CPaaS gross profit jumped to $51.7 million from $29.7 million with respective margins of 52% and 50%.

Other revenues increased to $13.3 million from $9.4 million in the year-ago quarter.

Other Details

Total operating expenses were $52.2 million compared with $35 million in the prior-year quarter. Operating loss was $37K compared with a loss of $2.9 million in the year-ago quarter.

Adjusted gross profit in the quarter improved to $57.4 million from $34.7 million with margin of 51% and 51%, respectively. Adjusted EBITDA totaled $13.4 million compared with $3.1 million in the year-ago quarter.

Cash Flow & Liquidity

During the first quarter of 2021, Bandwidth generated $10 million of net cash from operating activities against cash utilization of $7.6 million in the year-ago quarter.

As of Mar 31, 2021, this enterprise software developer had $319.7 million in cash and cash equivalents with $464.8 million of convertible senior notes. This compares with the respective tallies of $72.2 million and $282.2 million at the end of the previous quarter.

Q2 & 2021 Guidance

Bandwidth has provided guidance for the second quarter and full-year 2021. For the ongoing quarter, total revenues are expected in the range of $116-$117 million. CPaaS revenues are expected in the band of $101.2-$102.2 million. Adjusted earnings are anticipated to be 8-10 cents per share.

For 2021, total revenues are anticipated in the range of $473.1-$476.1 million. CPaaS revenues are projected in the band of $417.6-$420.6 million. Adjusted earnings are estimated in the range of 47-55 cents per share.

Zacks Rank & Other Stocks to Consider

Bandwidth currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader industry are Vicor Corporation (VICR - Free Report) , Cogent Communications Holdings, Inc. (CCOI - Free Report) and Western Digital Corporation (WDC - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Vicor delivered a trailing four-quarter earnings surprise of 80.6%, on average.

Cogent delivered a trailing four-quarter earnings surprise of 29%, on average.

Western Digital delivered a trailing four-quarter earnings surprise of 26.3%, on average.

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