Financial Performance - Total revenue for the three months ended March 31, 2023, was $138 million, an increase of 5% compared to $131 million in the same period of 2022[146] - Net income for the three months ended March 31, 2023, was $4 million, a significant improvement from a net loss of $7 million in the same period of 2022[146] - Operating loss for Q1 2023 was $11.8 million, compared to an operating loss of $6.9 million in Q1 2022[164] - Gross profit for the same period was $55.7 million, a slight increase of less than $1 million from $55.4 million in 2022, resulting in a total gross margin of 40%, down from 42%[169] - Non-GAAP gross profit for Q1 2023 was $61,319 thousand, up from $60,921 thousand in Q1 2022, resulting in a Non-GAAP gross margin of 54%, compared to 53% in the previous year[195] - The company reported a net income of $3,611 thousand for Q1 2023, a significant improvement from a net loss of $6,814 thousand in Q1 2022[199] - Non-GAAP net income for Q1 2023 was $1,190 thousand, down from $2,544 thousand in Q1 2022[199] - Adjusted EBITDA for Q1 2023 was $5,059 thousand, a decrease from $8,368 thousand in Q1 2022[201] - Free cash flow for Q1 2023 was $(10,900) thousand, compared to $(12,620) thousand in Q1 2022, indicating improved cash management[204] Revenue Sources - 77% of revenue for the three months ended March 31, 2023, was derived from recurring sources, up from 76% in the same period of 2022[154] - Revenue growth was driven by an 8% increase in core messaging offerings and higher A2P messaging surcharges[167] - Approximately 16% of total revenue was generated outside North America for the quarterly period ended March 31, 2023[213] Expenses and Costs - Gross margin for Q1 2023 was 40%, down from 42% in Q1 2022, with cost of revenue increasing to 60% of total revenue[165] - Total operating expenses rose by $5.1 million, or 8%, to $67.4 million, with research and development expenses increasing by $3.2 million, or 14%[170] - Research and development expenses increased to $25.7 million in Q1 2023, compared to $22.4 million in Q1 2022[164] - Stock-based compensation for Q1 2023 was $7,378 thousand, compared to $5,346 thousand in Q1 2022, reflecting increased compensation expenses[201] Cash Flow and Liquidity - Net cash used in operating activities was $6.4 million for the three months ended March 31, 2023, compared to $6.7 million in the same period in 2022[185] - Net cash provided by investing activities was $29 million, driven by proceeds from the sales and maturities of marketable securities totaling $44 million[188] - Net cash used in financing activities was $52 million, primarily for the repurchase of $65 million aggregate principal amount of the 2026 Convertible Notes[189] - The company anticipates that cash and cash equivalents will be sufficient to meet anticipated cash needs for at least the next 12 months[182] - The company had cash and cash equivalents of $85 million and marketable securities of $38 million as of March 31, 2023, primarily for working capital purposes[210] Taxation - The effective tax rate for Q1 2023 was (647.6)%, significantly lower than (2.7)% in Q1 2022, primarily due to operating losses outside the U.S.[161] - The effective tax rate for the three months ended March 31, 2023, was (647.6)%, compared to (2.7)% in 2022, primarily due to operating losses outside the U.S.[174] - The Non-GAAP effective income tax rate for Q1 2023 was (143.4)%, significantly different from the federal statutory tax rate of 21% due to research and development tax credits[199] Debt and Financing - The company repurchased approximately $65 million of 2026 Convertible Notes for about $51 million, resulting in a gain of $13 million[148] - The company repurchased $65 million of its 2026 Convertible Notes in March 2023, following a $160 million repurchase in November 2022[212] - Future commitments include $425 million in Convertible Notes and a $496 million non-cancelable lease for a new headquarters[183] Internal Controls and Compliance - No changes in internal control over financial reporting were identified during the three months ended March 31, 2023[216] - The company intends to continue monitoring and upgrading internal controls as necessary[217] Legal Matters - The company has been named in multiple lawsuits related to the collection and remittance of 911 taxes and surcharges[220] - Litigation may have an adverse impact on the company due to defense and settlement costs, and diversion of management resources[222] Currency and Investment Activities - A hypothetical 10% adverse change in foreign currency exchange rates would have negatively impacted net income by approximately $0.9 million for the quarterly period ended March 31, 2023[213] - The company does not currently engage in hedging activities to reduce potential exposure to currency fluctuations[213] - The primary objective of investment activities is to preserve principal while maximizing income without significantly increasing risk[211] - The company aims to preserve principal while maximizing income through its investment activities, with no significant exposure to interest rate risks anticipated[211]

Bandwidth Inc. (NASDAQ:BAND) Q4 2022 Earnings Conference Call and Virtual Investor Day February 23, 2023 9:00 AM ET Company Participants Sarah Wallace – Vice President-Investor Relations David Morken – Co-Founder, Chairman and Chief Executive Officer Anthony Bartolo – Chief Operating Officer Daryl Raiford – Chief Financial Officer Conference Call Participants Ryan McWilliams – Barclays Tom Blakey – KeyBanc Meta Marshall – Morgan Stanley Matt Stotler – William Blair Will Power – Baird Ryan Koontz – Needham P ...

Bandwidth Investor Day 2023 FEBRUARY 23, 2023 LEGAL DISCLAIMER This presentation contains forward-looking statements. All statements contained in this presentation other than statements of historical facts, including, without limitation, future financial and business performance or goals, attractiveness of our product offerings and platform and the value proposition of our products, are forward-looking statements. The words "anticipate," "believe," "continue," "estimate," "expect," "intend," "guide," "targe ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________________________________ FORM 10-K __________________________________ ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38285 BANDWIDTH INC. (Exact name of registrant as specified in its charte ...

Financial Data and Key Metrics Changes - The company reported revenue of $148 million for Q3 2022, which is a 14% increase year-over-year and exceeded guidance by $7 million [18][21] - Non-GAAP net income for the quarter was $8 million, also exceeding guidance by $7 million [18] - Non-GAAP gross margin reached a record 57%, up 300 basis points from the prior year [22] - The company raised its full-year revenue guidance to $563 million, reflecting a $9 million increase from previous guidance [18] Business Line Data and Key Metrics Changes - Messaging accounted for 14% of total revenue and grew 50% year-over-year, driven by political messaging contributing approximately $7 million in Q3 [21][13] - The average annual revenue per customer increased to $163,000, indicating a focus on larger enterprise customers [22] Market Data and Key Metrics Changes - The company noted a strong demand for its services among established customers, particularly in the context of digital transformation and cloud migration [45] - The net retention rate was reported at 109%, reflecting strong customer engagement and growth [22][68] Company Strategy and Development Direction - The company is focused on essential services and has introduced new products like Send-To and Call Assure to enhance its offerings [8][9] - The management emphasized the importance of cost savings for customers, which is driving adoption of their services [45] - The company is strategically positioned to benefit from the ongoing shift to digital communications and cloud services [7][8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate macroeconomic uncertainties due to the mission-critical nature of its services [17] - The company plans to continue managing its business prudently while focusing on profitability and growth [17][20] Other Important Information - The company announced leadership changes, including the departure of President Marina Carreker and the appointment of Devesh Agarwal as Chief Software Strategy Officer [15][16] - The company repurchased $160 million of convertible notes at a discount, strengthening its balance sheet [20] Q&A Session Summary Question: Impact of macro environment on usage trends - Management noted that contract customer term lengths and average annual customer spend have increased, indicating resilience in customer behavior despite macro uncertainties [25] Question: Drivers of gross margin performance - Management attributed the gross margin expansion to product mix, particularly the contribution from messaging, and operational efficiencies [26][27] Question: Addressing additional convertible notes - Management indicated confidence in repaying remaining convertible notes through earnings and available cash, while remaining opportunistic regarding capital structure [30] Question: Expectations for political messaging in Q4 - Management expects political messaging to contribute similarly in Q4 as seen in previous election cycles, with usage peaking around election time [31][39] Question: Operating expenses and guidance - Management explained that increased operating expenses in Q4 are due to seasonal factors and timing shifts from Q3 [34] Question: Churning lower spend customers - Management confirmed ongoing efforts to focus on larger enterprise customers, resulting in a net increase in customer count despite some churn [36] Question: Strategic OpEx investments - Management highlighted investments in innovative products like Send-To and Call Assure, as well as enhancements in contact center capabilities [60] Question: Development of direct to enterprise sales motion - Management reported positive progress in direct sales efforts, particularly with large enterprise customers [63] Question: Clarification on messaging growth - Management confirmed that messaging growth, excluding political contributions, was up 10% year-over-year, with overall pricing improvements [66][67]

[Special Note Regarding Forward-Looking Statements](index=3&type=section&id=Special%20Note%20Regarding%20Forward-Looking%20Statements) This section outlines the company's forward-looking statements, which are subject to risks and uncertainties and should not be considered predictions of future events - This report contains forward-looking statements concerning the company's expectations, strategy, plans, and intentions, which are subject to risks and uncertainties and are based on current expectations[7](index=7&type=chunk)[8](index=8&type=chunk) - The company cautions readers not to rely on these forward-looking statements as actual results could differ materially, and it does not undertake any obligation to update them except as required by law[10](index=10&type=chunk)[11](index=11&type=chunk) [PART I - FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for the period ended September 30, 2022, show a decrease in total assets to $1.01 billion from $1.07 billion at year-end 2021, primarily due to a reduction in cash and goodwill. Total liabilities increased to $813.8 million from $652.9 million, driven by an increase in convertible senior notes. For the third quarter of 2022, the company reported revenue of $148.3 million, up from $130.6 million in Q3 2021, and significantly narrowed its net loss to $0.8 million from $6.9 million in the prior-year period. For the nine-month period, revenue grew to $416.2 million, and net loss was reduced to $13.9 million from $19.2 million year-over-year [Unaudited Condensed Consolidated Balance Sheets](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a decrease in total assets to **$1.01 billion** and an increase in total liabilities to **$813.8 million** as of September 30, 2022 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $166,384 | $331,453 | | Total current assets | $417,115 | $412,885 | | Goodwill | $298,892 | $344,423 | | **Total assets** | **$1,008,399** | **$1,065,539** | | **Liabilities & Equity** | | | | Total current liabilities | $117,158 | $93,498 | | Convertible senior notes | $637,248 | $486,440 | | **Total liabilities** | **$813,803** | **$652,944** | | **Total stockholders' equity** | **$194,596** | **$412,595** | [Unaudited Condensed Consolidated Statements of Operations](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) The statements of operations show **Q3 2022 revenue of $148.3 million** and a **net loss of $0.8 million**, significantly reduced from the prior year Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | **$148,325** | **$130,638** | **$416,178** | **$364,775** | | Gross profit | $63,464 | $57,065 | $174,282 | $161,704 | | Operating (loss) income | $(1,387) | $938 | $(17,307) | $1,835 | | **Net loss** | **$(802)** | **$(6,944)** | **$(13,864)** | **$(19,188)** | | Net loss per share | $(0.03) | $(0.28) | $(0.55) | $(0.77) | [Unaudited Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The cash flow statements indicate a **net decrease in cash of $165.0 million** for the nine months ended September 30, 2022, primarily due to investing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $24,340 | $23,688 | | Net cash (used in) provided by investing activities | $(180,386) | $11,681 | | Net cash (used in) provided by financing activities | $(2,600) | $213,961 | | **Net (decrease) increase in cash** | **$(164,987)** | **$249,621** | - The significant cash used in investing activities for the nine months ended Sep 30, 2022, was primarily due to the purchase of marketable securities (**$178.2 million**)[29](index=29&type=chunk) - In the prior year period, financing activities provided significant cash due to the issuance of convertible senior notes (**$250.0 million**)[29](index=29&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's accounting policies, financial statement components, and significant events. Key disclosures include the re-evaluation to a single reporting segment in Q1 2022, the adoption of ASU 2020-06 which impacted the accounting for convertible notes, details on the company's debt structure including $650 million in convertible senior notes, commitments for a new corporate headquarters lease, and a subsequent event in November 2022 involving the repurchase of $160 million of its 2026 Convertible Notes - In Q1 2022, the company re-evaluated its segment reporting and determined that one segment was appropriate, rather than the previously reported "CPaaS" and "Other" segments, driven by strategic alignment and the sale of legacy assets[36](index=36&type=chunk) - The company adopted ASU 2020-06 on January 1, 2022, which simplified the accounting for convertible instruments, increasing the convertible notes balance by **$148.4 million** and decreasing non-cash interest expense[59](index=59&type=chunk) - On November 1, 2022, the company entered into agreements to repurchase approximately **$160.0 million** of its 2026 Convertible Notes at a **29% discount** to par value, with approximately **$240.0 million** remaining outstanding after the expected closing[166](index=166&type=chunk)[167](index=167&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=40&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's performance, highlighting a 14% revenue increase to $148.3 million for Q3 2022, driven primarily by growth in pass-through messaging surcharge revenue. The number of active customer accounts grew 5% year-over-year to 3,380. The dollar-based net retention rate was 109%. Operating expenses increased, led by a 49% rise in R&D due to higher personnel costs. The company's liquidity is supported by cash from operations and financing activities, with sufficient cash expected for the next 12 months despite significant future commitments, including convertible notes and a new headquarters lease [Overview](index=40&type=section&id=Overview) This section provides an overview of Bandwidth's business as a global CPaaS provider and highlights key performance metrics for Q3 2022 - Bandwidth is a global enterprise cloud communications (CPaaS) provider offering software APIs for voice, messaging, and emergency services, operating its own nationwide IP voice network in the U.S. and a global platform across more than 60 countries due to the 2020 acquisition of Voxbone[169](index=169&type=chunk)[170](index=170&type=chunk) Q3 2022 Performance Highlights | Metric | Q3 2022 | Q3 2021 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $148.3M | $131.0M | +14% | | Net Loss | $(1.0)M | $(7.0)M | N/A | | Active Customer Accounts | 3,380 | 3,220 | +5% | [Key Performance Indicators](index=42&type=section&id=Key%20Performance%20Indicators) Key performance indicators show **3,380 active customer accounts** and a **dollar-based net retention rate of 109%** for Q3 2022 Key Performance Indicators (Q3 2022 vs Q3 2021) | KPI | Q3 2022 | Q3 2021 | | :--- | :--- | :--- | | Number of active customers | 3,380 | 3,220 | | Dollar-based net retention rate | 109% | 125% | - An active customer account is defined as an account with at least **$100** of revenue in the last month of the period[181](index=181&type=chunk) - The dollar-based net retention rate is calculated by comparing revenue from a cohort of customers in the current quarter to the same quarter in the prior year, averaged over four quarters[182](index=182&type=chunk) [Results of Operations](index=45&type=section&id=Results%20of%20Operations) For Q3 2022, revenue grew 14% YoY to $148.3 million, largely due to a $13 million increase in pass-through messaging surcharges. Gross margin slightly decreased to 43% from 44%. Operating expenses rose 16%, driven by a 49% increase in R&D. For the nine-month period, revenue also grew 14% to $416.2 million, with gross margin declining to 42% from 44%. The company's effective tax rate was favorable due to operating losses outside the U.S. not offset by a valuation allowance Comparison of Three Months Ended September 30 (in thousands) | Metric | 2022 | 2021 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $148,325 | $130,638 | $17,687 | 14% | | Cost of Revenue | $84,861 | $73,573 | $11,288 | 15% | | Gross Profit | $63,464 | $57,065 | $6,399 | 11% | | Total Operating Expenses | $64,851 | $56,127 | $8,724 | 16% | - The Q3 2022 revenue increase was primarily driven by **$13 million** in pass-through messaging surcharge revenue, with core messaging offerings growing **50%** aided by higher volumes leading up to the U.S. midterm elections, while voice revenue was lower due to the prior year's DDoS incident and divested businesses[200](index=200&type=chunk) Comparison of Nine Months Ended September 30 (in thousands) | Metric | 2022 | 2021 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $416,178 | $364,775 | $51,403 | 14% | | Cost of Revenue | $241,896 | $203,071 | $38,825 | 19% | | Gross Profit | $174,282 | $161,704 | $12,578 | 8% | | Total Operating Expenses | $191,589 | $159,869 | $31,720 | 20% | [Liquidity and Capital Resources](index=51&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is supported by cash from operations and financing, with significant future commitments including **$650 million in Convertible Notes** and a **$496 million lease** - The company's liquidity is provided by free cash flow and financing activities, with no borrowings under the **$50 million** revolving credit facility as of September 30, 2022[229](index=229&type=chunk)[230](index=230&type=chunk) - Principal future commitments include **$650 million** in Convertible Notes, a **$496 million** non-cancelable lease for a new headquarters commencing in June 2023, **$15 million** in purchase obligations, and **$13 million** in current office rent[232](index=232&type=chunk) Cash Flow Summary - Nine Months Ended Sep 30 (in thousands) | Cash Flow | 2022 | 2021 | | :--- | :--- | :--- | | From Operating Activities | $24,340 | $23,688 | | From Investing Activities | $(180,386) | $11,681 | | From Financing Activities | $(2,600) | $213,961 | | **Net Change in Cash** | **$(164,987)** | **$249,621** | [Non-GAAP Financial Measures](index=53&type=section&id=Non-GAAP%20Financial%20Measures) This section reconciles GAAP net loss to non-GAAP measures, reporting **Adjusted EBITDA of $12.8 million** and **Non-GAAP net income of $8.0 million** for Q3 2022 Adjusted EBITDA Reconciliation (in thousands) | | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net loss | $(802) | $(6,944) | $(13,864) | $(19,188) | | Adjustments... | ... | ... | ... | ... | | **Adjusted EBITDA** | **$12,784** | **$14,165** | **$26,274** | **$41,318** | Non-GAAP Net Income (in thousands) | | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net loss | $(802) | $(6,944) | $(13,864) | $(19,188) | | Adjustments... | ... | ... | ... | ... | | **Non-GAAP net income** | **$7,998** | **$6,486** | **$9,650** | **$23,362** | Free Cash Flow (in thousands) | | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $24,016 | $14,843 | $24,340 | $23,688 | | Net cash used in investing in capital assets | $(10,524) | $(2,657) | $(20,790) | $(28,319) | | **Free cash flow** | **$13,492** | **$12,186** | **$3,550** | **$(4,631)** | [Item 3. Quantitative and Qualitative Disclosure About Market Risk](index=58&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) The company's primary market risks are related to interest rate and foreign currency exchange rate fluctuations. Interest rate risk stems from its cash equivalents, marketable securities, and variable-rate credit facility. The fixed-rate convertible notes are not subject to economic interest rate risk, but their fair value fluctuates with rate changes. Foreign currency risk arises from international operations, primarily in Euros and British Pounds, which accounted for approximately 11% of total revenue for the nine months ended September 30, 2022. The company does not currently use hedging instruments for these risks - As of September 30, 2022, the company held **$166.4 million** in cash and cash equivalents and **$145.2 million** in marketable securities, which are exposed to interest rate risk, though a hypothetical **10%** change is not expected to have a material impact due to their short-term nature[259](index=259&type=chunk)[260](index=260&type=chunk) - The company's **$50.0 million** revolving credit facility has a variable interest rate tied to SOFR or a base rate, exposing it to interest rate risk if drawn upon, though there were no outstanding borrowings as of September 30, 2022[261](index=261&type=chunk) - Foreign currency risk is present as approximately **11%** of total revenue for the first nine months of 2022 was generated outside the U.S., primarily in Euros and British Pounds, and the company does not currently engage in hedging[264](index=264&type=chunk) [Item 4. Controls and Procedures](index=60&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of September 30, 2022. They concluded that these controls are effective at a reasonable assurance level to ensure timely and accurate reporting as required by the SEC. No material changes to internal control over financial reporting were identified during the quarter - The CEO and CFO concluded that as of the end of the quarter, the company's disclosure controls and procedures were effective to provide reasonable assurance that required information is recorded, processed, summarized, and reported in a timely manner[266](index=266&type=chunk) - There were no changes in internal control over financial reporting during the quarter ended September 30, 2022, that have materially affected, or are reasonably likely to materially affect, internal controls[267](index=267&type=chunk) [PART II - OTHER INFORMATION](index=61&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section details the company's legal proceedings and outlines significant risk factors affecting its business operations and financial condition [Item 1. Legal Proceedings](index=61&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in multiple lawsuits alleging failure to properly bill, collect, and remit 911 service taxes and surcharges in jurisdictions including California, Illinois, and New York. Additionally, it is a defendant in a putative class action related to the alleged failure to block unsolicited phone calls under the Telephone Consumer Protection Act (TCPA). The company intends to vigorously defend these lawsuits but acknowledges that litigation is inherently uncertain - The company faces multiple lawsuits from various jurisdictions, including San Francisco, CA; Cook and Kane Counties, IL; Chicago, IL; and the State of New York, alleging failure to bill, collect, and remit 911-related taxes and surcharges[270](index=270&type=chunk)[271](index=271&type=chunk) - Bandwidth is a defendant in a putative class action lawsuit (Mey v. All Access Telecom, Inc., et al.) under the TCPA for allegedly failing to block unsolicited phone calls[271](index=271&type=chunk) [Item 1A. Risk Factors](index=62&type=section&id=Item%201A.%20Risk%20Factors) The company outlines significant risks to its business, operations, and financial condition. Key risks include intense competition in the CPaaS market, dependence on economic conditions and customer usage growth, and potential impacts from inflation. Operational risks involve cybersecurity threats, such as the DDoS attack experienced in September 2021, reliance on third-party suppliers, and the complexities of regulatory compliance in the telecommunications industry, both domestically and internationally. Financial risks are associated with servicing its convertible notes, potential tax liabilities, and foreign currency fluctuations. The company also notes risks related to its dual-class stock structure, which concentrates voting control - The business faces significant competition from other CPaaS companies and network service providers, some of whom are larger and have greater resources, leading to pricing pressure and challenges in attracting new customers cost-effectively[285](index=285&type=chunk)[290](index=290&type=chunk) - Cybersecurity is a major risk, highlighted by the Distributed Denial of Service (DDoS) attack in September 2021, which caused service disruptions and can result in service degradation, data loss, and reputational harm[327](index=327&type=chunk) - The company is subject to significant and complex regulatory uncertainties in the communications industry, including rules related to 911 services, IP-based services (like STIR/SHAKEN for robocall mitigation), and data privacy laws, which could increase costs and impact operations[340](index=340&type=chunk)[344](index=344&type=chunk)[353](index=353&type=chunk) - Servicing the Convertible Notes requires significant cash, and the company may not have the ability to raise funds for cash settlement upon conversion or repurchase, while the dual-class stock structure concentrates voting control with early stockholders, potentially limiting the influence of other shareholders[445](index=445&type=chunk)[464](index=464&type=chunk)

Bandwidth, Inc. (NASDAQ:BAND) Q2 2022 Earnings Conference Call August 3, 2022 5:00 PM ET Company Participants Sarah Walas - VP, IR David Morken - Co-Founder, CEO, & Chairman Daryl Raiford - EVP, CFO & Principal Accounting Officer Conference Call Participants Ryan Koontz - Needham & Company William Power - Robert W. Baird & Co. James Fish - Piper Sandler & Co. Patrick Walravens - JMP Securities Matthew Stotler - William Blair & Company Ryan MacWilliams - Barclays Bank Operator Greetings, and welcome to the B ...

Company Overview - Bandwidth is a global cloud communications leader powering enterprise digital transformation through software APIs and its global network[3] - The company's global total addressable market (TAM) is $83 billion[5] - Bandwidth experienced a 3-year compound annual growth rate (CAGR) of 36% in revenue[5] - Bandwidth provides communication services in over 60 countries[5] Technology and Services - Bandwidth's software API library powers next-generation, global use cases, including in-browser calling, A2P messaging, real-time 911 location updates, and telehealth calls[8] - The company's platform supports various applications, such as customer notifications, IVRs with natural language processing, appointment reminders, call data analytics, and two-factor authentication[8] Market Opportunity and Strategy - The company is capitalizing on the global move to the cloud with a three-pronged growth strategy: growing existing customers, winning direct enterprise customers, and being the best CPaaS platform[19] - Bandwidth is focused on opportunities across four key customer categories: work communications, contact center platforms, brand-to-customer engagement, and global enterprises[18] Financial Performance - Bandwidth's revenue experienced +36% CAGR from 2018 to 2021[35] - In FY21, the company's GAAP gross profit was $2138 million, with a gross margin of 44%, while the Non-GAAP gross profit was $2353 million, with a Non-GAAP gross margin of 53%[46]