Bandwidth Inc. BAND reported impressive third-quarter 2024 results, with both adjusted earnings and revenues surpassing the Zacks Consensus Estimate. 

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The strong performance was backed by enterprises increasingly relying on Bandwidth’s platform for cloud communications. To drive growth, the company plans to focus on winning large enterprises and becoming the best global CPaaS (Communications Platform as a Service) platform for scaling digital engagement. Focusing on strengthening profitability and expanding cash flow generation are positive factors.

Quarter Details

On a GAAP basis, net income for the third quarter was $0.41 million or a penny per share against a net loss of $5.13 million or a loss of 20 cents per share in the prior-year quarter. The significant improvement in earnings was attributable to top-line growth.

Excluding non-recurring items, non-GAAP net income during the reported quarter was $13 million or 43 cents per share compared with $6.66 million or 23 cents per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 9 cents.

Bandwidth Inc. Price, Consensus and EPS Surprise

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

Quarterly revenues improved to $194 million from $152 million in the prior-year quarter. The growth was backed by high demand for digital engagement and strong contributions from messaging services across a variety of use cases, including health care, retail and e-commerce shopping, fintech and civic engagement. The top line exceeded the consensus estimate of $182 million.

Operating Details

Non-GAAP gross margin during the quarter was 58%, up from 55% a year ago. Favorable product mix and operational efficiency propelled the gross margin. Adjusted EBITDA was $24 million, well above the guidance and up from $13.8 million in the prior-year period.

Cash Flow & Liquidity

In the first nine months of 2024, Bandwidth generated $47.4 million in cash from operations against a cash utilization of $19.7 million in the prior-year period. Cash and cash equivalents, as of Sept. 30, 2024, were $74.9 million, with convertible senior notes of $281 million.

Guidance

For the fourth quarter, revenues are expected to be between $198 million and $208 million. Adjusted EBITDA is anticipated to be in the band of $19 million to $21 million.

For 2024, Bandwidth expects revenues in the band of $737 million to $747 million, with adjusted EBITDA in the range of $78 million to $80 million.

BAND’s Zacks Rank

Bandwidth currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Motorola Solutions, Inc. MSI is scheduled to release third-quarter 2024 earnings on Nov. 7. The Zacks Consensus Estimate for earnings is pegged at $3.36 per share, indicating growth of 5.33% from the year-ago figure. 

Pinterest, Inc. PINS is scheduled to release third-quarter 2024 earnings on Nov. 7. The Zacks Consensus Estimate for earnings is pegged at 34 cents per share, indicating growth of 21.4% from the year-ago figure. 

Light and Wonder LNW is scheduled to release third-quarter 2024 earnings on Nov. 12. The Zacks Consensus Estimate for earnings is pegged at $1.11 per share, indicating growth of 37% from the year-ago figure.

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