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Bandwidth (BAND) Q2 Earnings Beat Estimates, Revenues Up Y/Y

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Bandwidth Inc. (BAND - Free Report) reported healthy second-quarter 2021 results, wherein both the bottom line and the top line surpassed their respective Zacks Consensus Estimate. New customer additions, robust cross-selling momentum, differentiated global platform and reinforced customer relationships favored the Raleigh, NC-based company’s quarterly performance.

Bottom Line

On a GAAP basis, net loss in the June quarter was $6.9 million or loss of 28 cents per share compared with a net loss of $20.6 million or loss of 86 cents per share in the prior-year quarter. The narrower loss was primarily attributable to lower income tax provision and operating income to the tune of $0.9 million in the reported quarter.

Adjusted net income came in at $8.6 million or 32 cents per share compared with $3.1 million or 13 cents per share in the year-ago quarter. The bottom line also beat the Zacks Consensus Estimate by 23 cents, delivering a surprise of 255.6%.

Bandwidth Inc. Price, Consensus and EPS Surprise

Bandwidth Inc. Price, Consensus and EPS Surprise

Revenues

Quarterly total revenues were $120.7 million compared with $76.8 million in the prior-year quarter. The 57.1% growth was primarily driven by higher Communications Platform-as-a-Service (CPaaS) revenues. The growth was further bolstered by augmented global footprint and broad-based demand across all services. Also, the top line surpassed the consensus estimate of $115 million.

Segment-wise, CPaaS revenues increased 56.6% year over year to $105 million and accounted for 87.1% of total revenues. The rise was primarily driven by sustained broad-based growth as enterprise customers are increasingly migrating toward Bandwidth’s global platform to fulfill their communication requirements.

Bandwidth had 3,051 active CPaaS customers as of Jun 30, 2021, up 61% year over year. This includes the contribution from Voxbone. The dollar-based net retention rate was 114% compared with 133% in the prior-year quarter. Adjusted CPaaS gross profit jumped to $54.1 million from $32.1 million with respective margins of 52% and 48%.

Other revenues increased to $15.6 million from $9.7 million in the year-ago quarter.

Other Details

Total operating expenses were $53.7 million compared with $35 million in the prior-year quarter. Operating income came in at $0.9 million against operating loss of $0.3 million in the year-ago quarter.

Adjusted gross profit in the quarter improved to $59.8 million from $37.1 million with margins of 50% and 48%, respectively. Adjusted EBITDA totaled $13.8 million compared with $5.5 million in the year-ago quarter.

Cash Flow & Liquidity

In the first six months of 2021, Bandwidth generated $8.8 million of net cash from operating activities against cash utilization of $0.3 million in the year-ago quarter.

As of Jun 30, 2021, this enterprise software developer had $309.6 million in cash and cash equivalents with $92.3 million of total current liabilities.

Q3 & 2021 Guidance

Bandwidth has provided guidance for the third quarter and full-year 2021. For the ongoing quarter, total revenues are expected in the range of $123.6-$124.6 million. CPaaS revenues are estimated in the band of $106.1-$107.1 million. Adjusted earnings are anticipated to be 7-9 cents per share.

For 2021, total revenues are anticipated in the range of $484.8-$486.8 million. CPaaS revenues are projected in the band of $418.4-$420.4 million. Adjusted earnings are estimated in the range of 71-75 cents per share.

Zacks Rank & Stocks to Consider

Bandwidth currently has a Zacks Rank #3 (Hold).

A few better-ranked stocks in the broader industry are Iridium Communications Inc. (IRDM - Free Report) , SeaChange International, Inc. (SEAC - Free Report) and Knowles Corporation (KN - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Iridium delivered a trailing four-quarter earnings surprise of 64.4%, on average.

SeaChange International delivered a trailing four-quarter earnings surprise of 12.2%, on average.

Knowles delivered a trailing four-quarter earnings surprise of 10.8%, on average.