A month has gone by since the last earnings report for Bandwidth (BAND Quick QuoteBAND - Free Report) . Shares have added about 33.5% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Bandwidth due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

BAND’s Q2 Revenue Growth Fueled by Voice and Messaging

Bandwidth delivered total revenues of $220 million, up from $180 million in the year-ago quarter, supported by healthy demand across its cloud communications platform.

Cloud communications revenues, excluding messaging surcharge revenues, increased 12% year over year to $152 million. Voice solutions generated revenues of $121 million, rising 9%, while programmable messaging revenues climbed 22% to $31 million, benefiting from strong commercial messaging demand and approximately $1 million of political campaign-related messaging revenues. Software services attached to voice and messaging expanded 66% year over year as AI adoption increased platform usage.

Bandwidth Expands Enterprise AI Momentum

Bandwidth continued to strengthen its position as a communications infrastructure provider for AI-driven applications through large enterprise wins and customer expansions.

During the quarter, the company secured five new million-dollar-plus customer wins and expansions, with every deal including Maestro or AI services. New customers included a large Midwest healthcare system and a European appliance care provider, while existing customers such as a global electronic brokerage, a hyperscaler partner and a large U.S. messaging platform expanded their relationships. Management also highlighted growing momentum from its exclusive infrastructure partnership with Salesforce for Agentforce Contact Center, with initial customer traffic already flowing through the platform.

BAND’s Margins Improve as Platform Scales

Profitability improved alongside revenue growth, reflecting operating leverage from Bandwidth's owned communications network.

Non-GAAP gross margin expanded 100 basis points year over year to 59.4%, while non-GAAP gross profit increased 14% to $90 million. Adjusted EBITDA rose 27% year over year to $28 million, with the adjusted EBITDA margin reaching a record 18.3%. Management attributed the margin improvement to continued investments in its owned-and-operated network, which are generating structural efficiency gains as transaction volumes increase.

Bandwidth Delivers Strong Cash Flow and Balance Sheet

Bandwidth continued to generate healthy cash flows while strengthening its capital structure during the second quarter.

Free cash flow totaled $24 million, reflecting another quarter of solid execution. The company also reported customer name retention above 99%, while average annual revenue per customer reached a record $256,000 as larger enterprise customers expanded their spending.

Capital allocation remained active. During the quarter, Bandwidth repurchased $15 million of shares, buying back approximately 263,000 shares. It also completed a $316 million offering of 0.00% convertible senior notes due 2032 and used about $122 million of the proceeds to repurchase a substantial portion of its 2028 convertible notes, improving its debt maturity profile while maintaining net leverage at 1.6x.

BAND Raises Outlook on Sustained Demand

Encouraged by its second-quarter execution, Bandwidth raised its full-year 2026 financial outlook.

For the third quarter of 2026, management expects revenues between $231 million and $235 million, adjusted EBITDA of $32 million to $34 million and non-GAAP earnings per share of 45 cents to 49 cents.

For the full year, the company now projects revenues between $900 million and $910 million, up from the prior outlook of $880 million to $900 million. Adjusted EBITDA is expected in the range of $123 million to $125 million, compared with the previous guidance of $119 million to $125 million, while non-GAAP earnings per share are projected between $1.71 and $1.79.

Management expects recent enterprise customer wins, increasing AI voice adoption and continued expansion of software services to support future revenue growth, profitability and cash generation as customers increasingly standardize on Bandwidth's communications platform.

Management attributed the upbeat outlook to strong demand trends, increasing software contribution and improved customer metrics, including retention and average revenue per customer.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a upward trend in fresh estimates.

The consensus estimate has shifted 44.68% due to these changes.

VGM Scores

Currently, Bandwidth has a nice Growth Score of B, a score with the same score on the momentum front. Following the exact same course, the stock was allocated a score of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Bandwidth has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.