Bandwidth Inc. BAND reported mixed fourth-quarter 2024 results, wherein the adjusted earnings missed the Zacks Consensus Estimate while revenues beat the same.

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The company reported revenue growth year over year, driven by enterprises increasingly relying on Bandwidth’s platform for cloud communications. To drive growth, management 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. However, stiff competition remains a headwind for Bandwidth. 

Quarter Details

On a GAAP basis, net loss during the quarter was $1.76 million or a loss of 6 cents per share compared with a loss of $10.9 million or a loss of 42 cents per share in the prior-year quarter. The narrower loss was attributable to top-line growth. 

Excluding non-recurring items, non-GAAP net income during the reported quarter was $11.8 million or 37 cents per share compared with a net income of $11.1 million or 38 cents per share in the prior-year quarter. The bottom line missed the Zacks Consensus Estimate by a penny. 

For 2024, GAAP net loss was $6.52 million or a loss of 24 cents per share compared with a net loss of $16.3 million or a loss of 64 cents per share in 2023. Non-GAAP net income for 2024 was $42 million or $1.34 per share compared with $24 million or 83 cents per share in 2023.
 

Bandwidth Inc. Price, Consensus and EPS Surprise

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

Quarterly revenues improved to $210 million from $165.4 million in the prior-year quarter. The 27% revenue growth was backed by high demand for its universal Maestro platform 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 $203 million. 

For 2024, revenues improved to $748.5 million from $601.1 million in 2023.

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 $23.4 million, well above the guidance and up from $18.8 million in the prior-year period.

Cash Flow & Liquidity

In 2024, net cash from operating activities was $84 million compared with an operating cash flow of $39 million in the prior year. Cash and cash equivalents as of Dec. 31, 2024, were $81.8 million, with convertible senior notes of $281.3 million compared with respective tallies of $132 million and $418.5 million a year ago. 

Guidance

For the first quarter of 2025, Bandwidth expects revenues in the range of $168-$170 million and adjusted EBITDA in the range of $16 million-$18 million.

For 2025, the business strategy remains consistent. As the wave of voice AI is approaching, the company aims to stay focused on three key principles, strategically investing in its business, profitable growth and strengthening the capital structure. For the full year, management anticipates revenues in the band of $740 million-$760 million. Adjusted EBITDA is forecasted to be in the range of $82 million-$90 million.

BAND’s Zacks Rank

Bandwidth currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Keysight Technologies, Inc. KEYS is scheduled to release first-quarter fiscal 2025 earnings on Feb. 25. The Zacks Consensus Estimate for earnings is pegged at $1.69 per share, indicating growth of 3.68% from the year-ago figure. 
 
Light and Wonder LNW is scheduled to release fourth-quarter earnings on Feb. 25. The Zacks Consensus Estimate for earnings is pegged at $1.08 per share, indicating growth of 47.95% from the year-ago figure.

Workday, Inc. WDAY is scheduled to release fourth-quarter fiscal 2025 earnings on Feb. 25. The Zacks Consensus Estimate for earnings is pegged at $1.75 per share, indicating growth of 11.5% from the year-ago figure. 

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