| --- | --- | --- | |-------|-------|-------| | | | | | | | | Legal Disclaimer 1 This presentation includes forward-looking statements. All statements contained in this presentation other than statements of historical facts, including, without limitation, future financial and business performance for the quarter ending September 30, 2024 and year ending December 31, 2024, the success of our product offerings and our platform, and the value proposition of our products, are forward-looking statements. The wor ...

Company Performance - Bandwidth reported quarterly earnings of $0.29 per share, exceeding the Zacks Consensus Estimate of $0.28 per share, and up from $0.16 per share a year ago, representing an earnings surprise of 3.57% [1] - The company posted revenues of $173.6 million for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 0.07%, and an increase from $145.87 million year-over-year [1] - Bandwidth has consistently surpassed consensus EPS and revenue estimates over the last four quarters [1] Stock Performance - Bandwidth shares have increased approximately 57.7% since the beginning of the year, significantly outperforming the S&P 500's gain of 15.8% [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.31 on revenues of $177.74 million, and for the current fiscal year, it is $1.31 on revenues of $715.6 million [4] - The estimate revisions trend for Bandwidth is currently unfavorable, resulting in a Zacks Rank 4 (Sell), indicating expected underperformance in the near future [4] Industry Context - The Communication - Infrastructure industry, to which Bandwidth belongs, is currently ranked in the bottom 27% of over 250 Zacks industries, suggesting potential challenges ahead [5] - Anterix, another company in the same industry, is expected to report a quarterly loss of $0.45 per share, reflecting a year-over-year change of -309.1%, with its consensus EPS estimate revised 9.7% lower in the last 30 days [5][6]

Financial Performance - Bandwidth reported revenue of $174 million for Q2 2024, representing a 19% increase year-over-year from $146 million in Q2 2023[1][6] - The company's Adjusted EBITDA reached $19 million, up 77% from $11 million in the prior year[6] - Free Cash Flow for Q2 2024 was $18 million, a significant improvement from a negative $1 million in Q2 2023[5][6] - Revenue for the three months ended June 30, 2024, was $173.6 million, a 19% increase from $145.9 million in the same period of 2023[24] - Gross profit for the six months ended June 30, 2024, was $130.3 million, compared to $114.6 million for the same period in 2023, reflecting a 13.6% increase[24] - Net income for the three months ended June 30, 2024, was $4.1 million, compared to a net loss of $(3.9) million in the same period of 2023[24] - Non-GAAP net income for Q2 2024 was $8,719,000, up from $4,399,000 in Q2 2023, reflecting a 97.5% increase[35] - Net income for Q2 2024 was $4,055,000, a turnaround from a net loss of $3,890,000 in Q2 2023[35] Guidance and Expectations - Bandwidth provided guidance for Q3 2024 revenue between $180 million and $184 million, and full-year 2024 revenue guidance of $710 million to $720 million[9] - The company expects Adjusted EBITDA for Q3 2024 to be between $18 million and $20 million, and for the full year 2024 between $72 million and $76 million[9] Operational Efficiency and Strategic Initiatives - Bandwidth's strategic investments and disciplined financial management have driven impressive operational efficiency and cash flow generation[6] - New product innovations like Maestro and AI Bridge are contributing to strong performance in a competitive market[3][6] - Bandwidth secured several key customers in the healthcare and insurance sectors, enhancing its market position and service offerings[7][8] - The company is focused on sustainable, profitable growth and is well-positioned to continue its momentum into the second half of the year[6] Cost and Expenses - Gross Margin for Q2 2024 was 37%, down from 40% in Q2 2023, while Non-GAAP Gross Margin improved to 56% from 55%[5][6] - Research and development expenses for the six months ended June 30, 2024, increased to $57.0 million from $50.5 million in the same period of 2023, a 12.9% rise[24] - Stock-based compensation expense of $23.7 million for the six months ended June 30, 2024, compared to $15.4 million in the same period of 2023[25] - Stock-based compensation for Q2 2024 was $11,360,000, up from $8,005,000 in Q2 2023[35] Cash Flow and Assets - The company recognized a net cash provided by operating activities of $26.9 million for the six months ended June 30, 2024, compared to $(3.3) million in the same period of 2023[29] - Total current assets decreased to $181.4 million as of June 30, 2024, from $252.8 million in 2023[26] - Cash and cash equivalents at the end of the period were $62.3 million, down from $92.0 million in the same period of 2023[29] Liabilities and Debt - Total liabilities decreased to $694.7 million as of June 30, 2024, from $803.7 million in 2023[26] - The company reported a net gain on extinguishment of debt of $(10,267,000) in Q2 2024, compared to no gain in Q2 2023[35] Shareholder Information - The weighted average number of diluted shares outstanding increased to 30,813,973 in Q2 2024 from 28,899,655 in Q2 2023[35]

Core Insights - Bandwidth Inc. reported a revenue of $174 million for Q2 2024, representing a 19% increase year-over-year, alongside significant progress in profitability and cash flow generation [1][2][3] - The company achieved an Adjusted EBITDA of $19 million, up 77% from the previous year, indicating strong operational performance [2][3] - Bandwidth's strategic investments and disciplined financial management have led to impressive free cash flow and operational efficiency, positioning the company for continued growth [2][3] Financial Highlights - Revenue for Q2 2024 was $174 million compared to $146 million in Q2 2023 [2] - Gross margin decreased to 37% from 40% year-over-year, while Non-GAAP gross margin improved to 56% from 55% [2][19] - Free cash flow for the quarter was $18 million, reflecting strong cash generation capabilities [2][10] Customer and Operational Highlights - Bandwidth secured exclusive voice calling contracts with a nationwide medical claims management provider, highlighting the effectiveness of its Maestro product [3] - A prominent healthcare provider selected Bandwidth for its cloud contact center, valuing the reliability of its communications cloud and Call Assure product [3] - A business insurance provider transitioned to Bandwidth for voice calling, appreciating the Advanced Call Routing solution for its resiliency [3] Financial Outlook - Bandwidth provided guidance for Q3 2024 revenue between $180 million and $184 million, and full-year revenue guidance of $710 million to $720 million [4] - Adjusted EBITDA guidance for Q3 2024 is set between $18 million and $20 million, with full-year guidance of $72 million to $76 million [4] Company Overview - Bandwidth Inc. is a global cloud communications software company, providing solutions for voice calling, text messaging, and emergency services across 65+ countries [5] - The company serves major clients including Amazon Web Services, Cisco, Google, and Microsoft, emphasizing its role in the cloud communications revolution [5]

Core Insights - Marvell Technology, Inc. has launched the Structera product line, which includes CXL devices designed to enhance memory performance and scalability in cloud data centers [1][3][11] - The Structera A CXL near-memory accelerators and Structera X CXL memory-expansion controllers are the first in the industry to integrate Arm Neoverse processors, inline compression, and support for four memory channels [1][3][7] Product Features - The Structera A CXL accelerators integrate 16 Arm Neoverse V2 cores and support up to 200 GB/sec memory bandwidth and 4TB memory capacity, targeting high-bandwidth applications like deep learning [4][9] - The Structera X CXL controllers support up to 12 DDR4 memory modules and are designed for high-capacity applications such as in-memory databases, enabling the recycling of existing DDR4 DIMMs to reduce e-waste [1][6][10] Market Context - Data center operators typically add extra servers to increase memory bandwidth and capacity, but this leads to inefficiencies in compute capabilities [2] - The CXL standard allows for new architectures that efficiently add memory to general-purpose servers, addressing the challenges of memory-intensive applications [2][3] Collaboration and Ecosystem - Marvell is collaborating with several companies, including AMD, Arm, Intel, and Micron, to support the Structera CXL product line and advance the CXL ecosystem [8] - These partnerships aim to enhance performance and energy efficiency for next-generation infrastructure, particularly for AI applications [8] Availability - The Structera A and X product families, along with custom CXL silicon, are expected to sample in the fourth quarter of 2024 [11]

Core Insights - Bandwidth Inc. has been awarded the UC Award for "Best CPaaS Platform," a significant recognition in the cloud communications industry [1][2][3] - The award highlights Bandwidth's innovative software solutions, specifically Maestro and AIBridge, which enhance enterprise customer experiences and accelerate time to value [2][3] Company Overview - Bandwidth Inc. is a global cloud communications software company that provides voice calling, text messaging, and emergency services across 65+ countries, covering over 90% of global GDP [4] - The company serves major players in unified communications and cloud contact centers, including AWS, Cisco, Google, Microsoft, and others, as well as Global 2000 enterprises and SaaS builders [4] - Bandwidth is recognized as a pioneer in the cloud communications sector, being the first and only global CPaaS provider to offer a unique combination of composable APIs, AI capabilities, and an owner-operated network [4]

Company Announcement - Bandwidth Inc. will report its financial results for the second quarter ended June 30, 2024, before market open on August 1, 2024 [1] - A live webcast of the conference call will be available on the Investor Relations section of the company's website, with a replay accessible shortly after the call [1] Conference Call Details - The conference call is scheduled for August 1, 2024, at 8:00 a.m. Eastern Time [1] - Domestic dial-in number is 844-481-2707, and international dial-in number is 412-317-0663 [1] Replay Information - A replay of the conference call will be available until August 8, 2024, by dialing 877-344-7529 for U.S. callers or 412-317-0088 for international callers, using passcode 9676778 [2] Company Overview - Bandwidth Inc. is a global cloud communications software company that provides voice calling, text messaging, and emergency services [3] - The company operates in over 65 countries and covers more than 90 percent of global GDP, serving major clients like AWS, Cisco, Google, Microsoft, and others [3] - Bandwidth is recognized as a pioneer in the cloud communications sector, offering a unique combination of APIs, AI capabilities, and a robust owner-operated network [3]

Market Overview - The stock market has experienced a stellar performance over the past year and a half, with optimistic projections for the coming years according to bullish analysts [1] - There are contrasting views, with bears warning of potential downturns reminiscent of the Dot-Com Bust, while bulls believe a soft landing has already occurred [1] Growth Stocks - Holding growth stocks for a decade is likely to yield positive results, despite potential short-term impacts from a recession [2] PDD Holdings (PDD) - PDD Holdings' international app Temu has gained significant traction in the U.S., becoming the most downloaded app since Q1 2023 with over 100 million active users [3] - The company has upgraded its 2024 revenue and earnings estimates, trading at 12 times forward earnings, nearly a 50% discount to the Nasdaq 100 [3] Super Micro Computer (SMCI) - Super Micro Computer reported a 200% year-over-year revenue increase to $3.85 billion and a net income surge of 367% to $402.5 million [5] - The stock has more than tripled year-to-date and trades at 38 times forward earnings, which is considered a bargain given its growth [6] Datadog (DDOG) - Datadog's Q1 2024 revenue increased by 27% year-over-year to $611 million, with significant growth in large customers [7] - The stock has surged over 20% this year, but trades at a steep valuation with a market cap of $42 billion [8] Duolingo (DUOL) - Duolingo's Q1 2024 revenue rose by 45% year-over-year to $167.6 million, with daily active users increasing by 54% [9][10] - The global language-learning market is projected to reach $115 billion by 2025, providing a substantial growth opportunity for Duolingo [10] Bandwidth Inc (BAND) - Bandwidth reported a 24% year-over-year revenue increase to $171 million and raised its full-year revenue outlook to $715 million [11] - The company is positioned to benefit from the CPaaS market, projected to grow from $12.5 billion in 2022 to $45.3 billion by 2027 [11] Paycom Software (PAYC) - Paycom's Q1 2024 revenue was $500 million, up 11% year-over-year, with strong demand for its payroll software [13][14] - Despite a 58.6% decline in stock price over the past year, the company continues to show double-digit revenue growth [13] Block Inc. (SQ) - Block Inc. reported a 19.4% year-over-year revenue increase to nearly $6 billion, with EPS of 85 cents exceeding estimates [15] - Analysts are overwhelmingly bullish, with a consensus price target of $89, indicating nearly 40% upside potential [16]

Investment Thesis - Bandwidth has faced challenges post-pandemic, including a DDoS attack, leading to a decline in platform usage and a drop in share price below its 2017 IPO price of $20, despite revenue growth tripling [1] - The company is expected to achieve double-digit revenue growth this year and improve its debt situation through strong free cash flow generation [1] Company Overview - Bandwidth operates a B2B Communications Platform as a Service (CPaaS) on its own IP voice network, providing APIs for voice calling, text messaging, and emergency services [2] - The company serves major clients like Microsoft, Google, Uber, and Zoom, and has a global presence in over 65 countries following the acquisition of Voxbone [2] - Bandwidth has a gross retention rate of 99% and a net retention rate of 107% in its latest quarter, indicating strong customer loyalty [2] Revenue Growth Drivers - Revenue growth stagnated in 2022 and 2023, but recent quarters have shown signs of recovery with a 12% revenue increase in the latest quarter [3][4] - Messaging revenue grew by 50% year-over-year, contributing 21% of cloud communications revenue, with further growth expected from election-related messaging [4] - The Direct Enterprise solution also saw a 20% growth, indicating strong demand for Bandwidth's services [4] Profitability and Margins - Bandwidth's non-GAAP gross margin increased from approximately 52% in 2021 to nearly 57% in Q1 2024, with expectations to exceed 60% in the coming years [5] - The company generated $18 million of adjusted EBITDA in Q1 2024, with a margin of 12%, and forecasts a full-year adjusted EBITDA of $74 million, implying a margin close to 14% [7] Debt Management - Bandwidth's debt includes $400 million and $250 million in convertible notes due in 2028, with a previous net debt to adjusted EBITDA ratio peaking at 8 [6] - Recent improvements in EBITDA profitability and debt repayment have reduced the remaining debt due by 2026 to $35 million [6] - The company expects to generate over $50 million in free cash flow, leading to a healthier balance sheet by year-end with a projected net debt of around $230 million [7] Growth Prospects and Valuation - Management's medium-term targets suggest revenue growth rates of 15-20%, driven by segments like Programmable messaging and Direct Enterprises, which are expected to grow at CAGRs of 21% and 14% respectively until 2026 [8] - Bandwidth's current valuation at an EV to adjusted EBITDA of 10.8 and a Price to FCF ratio of 11.3 is considered attractive compared to competitors like Twilio, which has lower growth rates [8]

Core Insights - Bandwidth Inc. has launched "The Texties," an annual awards program recognizing excellence in business text messaging among its customers, focusing on business results, innovation, and end-user impact [1][2] Group 1: Award Winners - **Attentive Mobile**: Achieved significant results with its SMS marketing platform, including a 120% increase in clicks, 117% increase in purchases, and 115% increase in revenue [3] - **DeansList**: Facilitated over 170,000 conversations and a 5x increase in school subscriptions within a year, enhancing student success through two-way texting [3] - **Review Wave**: Helped clinics achieve a 930% increase in new Google reviews and a 22% increase in new patients within six months [4] - **Yotpo**: Demonstrated strong SMS messaging capabilities with a 43% month-over-month subscriber growth and a 73x ROI from non-engaged segments during a flash sale [5] Group 2: Award Finalists - **Directful**: Generated over $107 million in new revenue for hospitality clients with a 17% conversion rate using SMS [6] - **MessageDesk**: Assisted in closing a $110 million real estate listing by integrating text messaging into agents' existing landlines [6] - **MyTextMate**: Reported that 92% of users felt more organized and 57% saw improved grades through its student success software [7] - **Reachify**: Enabled restaurants to reduce call volume by up to 80% while improving guest satisfaction through its Ordering AI capability [7] Group 3: Company Overview - Bandwidth Inc. is a global cloud communications software company that provides solutions for voice calling, text messaging, and emergency services, trusted by major enterprises and covering over 65 countries [8]