Bandwidth(BAND)2024-08-01 20:02Financial Performance - For the three months ended June 30, 2024, total revenue was $174 million, representing a 19% increase from $146 million in the same period of 2023[128]. - Net income for the three months ended June 30, 2024, was $4 million, compared to a net loss of $4 million in the same period of 2023[128]. - For the six months ended June 30, 2024, total revenue was $345 million, reflecting a 21% increase from $284 million in the same period of 2023[128]. - For the three months ended June 30, 2024, total revenue increased by $27.7 million, or 19%, to $173.6 million compared to the same period in 2023[150]. - Cloud communications revenue rose by $10 million, or 8%, driven by higher sales of messaging and political messaging related to the upcoming U.S. presidential election[150]. - Revenue from messaging surcharges increased by $18 million, or 65%, due to higher messaging traffic and new carrier fees[151]. - For the six months ended June 30, 2024, total revenue increased by $60.9 million, or 21%, to $344.6 million compared to the same period in 2023[161]. Profitability and Margins - Gross profit for the three months ended June 30, 2024, was $64.8 million, reflecting a $5.9 million increase from the same period in 2023[152]. - Total gross margin percentage for the six months ended June 30, 2024, was 38%, a decline of 2% compared to the same period in 2023[165]. - Non-GAAP net income for the three months ended June 30, 2024, was $8,719, compared to $4,399 for the same period in 2023, representing a 98.5% increase[196]. - Adjusted EBITDA for the three months ended June 30, 2024, was $18,741, up from $10,568 in the same period of 2023, indicating a 77.5% growth[202]. - Free cash flow for the three months ended June 30, 2024, was $18,320, compared to a negative $1,228 for the same period in 2023, showing a significant turnaround[205]. Expenses and Costs - Total cost of revenue for the three months ended June 30, 2024, increased by $21.9 million, or 25%, to $108.8 million[152]. - Total operating expenses for the three months ended June 30, 2024, were $70.9 million, up $4.4 million, or 7%, compared to the same period in 2023[154]. - Research and development expenses increased by $3.3 million, or 13%, primarily due to higher facilities and depreciation expenses[155]. - Total operating expenses for the six months ended June 30, 2024, were $146.8 million, representing 43% of revenue, down from 47% in the same period in 2023[166]. - Research and development expenses increased by $7 million, or 13%, for the six months ended June 30, 2024, compared to the same period in 2023[167]. - Sales and marketing expenses rose by $4 million, or 9%, for the six months ended June 30, 2024, compared to the same period in 2023[167]. - General and administrative expenses increased by $2 million, or 6%, for the six months ended June 30, 2024, compared to the same period in 2023[167]. Cash Flow and Liquidity - As of June 30, 2024, the company had cash and cash equivalents of $62 million and marketable securities of $14 million[173]. - Net cash provided by operating activities was $27 million for the six months ended June 30, 2024, compared to a cash outflow of $3.3 million in the same period in 2023[179]. - Net cash used in investing activities was $5 million for the six months ended June 30, 2024, primarily for the purchase of property, plant, and equipment[184]. - Net cash used in financing activities was $91 million for the six months ended June 30, 2024, mainly due to $128 million used for the 2024 Repurchases[185]. Debt and Financing - The company repurchased approximately $140 million of 2026 Convertible Notes for an aggregate cash price of approximately $128 million in May 2024[129]. - The credit agreement was amended to increase revolving credit commitments from $50 million to $100 million, with a maturity date extended to May 1, 2029[131]. - The company increased its Credit Facility from $50 million to $100 million on May 1, 2024, with an applicable weighted average interest rate of 7.94% and $40 million in outstanding borrowings[212]. - The company has $35 million and $250 million outstanding from its 2026 and 2028 Convertible Notes, respectively, with no exposure to interest rate changes due to fixed annual interest rates[213]. Taxation - The effective tax rate for the three months ended June 30, 2024, was (8.9)%, compared to (4.1)% in the same period of 2023[144]. - The effective tax rate for the six months ended June 30, 2024, was 9.3%, a significant decrease from 91.4% in 2023[169]. - The Non-GAAP effective income tax rate for the six months ended June 30, 2024, was 15.0%, significantly lower than the federal statutory tax rate of 21% due to research and development tax credits[198]. Legal Matters - The company is involved in multiple lawsuits regarding the failure to bill, collect, and remit certain taxes and surcharges associated with 911 services[222]. - The company intends to vigorously defend against the lawsuits and believes it has meritorious defenses[222]. - The company may face ongoing legal actions and claims related to number management and billing, employment-related issues, and customer misuse of offerings[223]. - Future litigation may be necessary to defend proprietary rights and recover amounts owed[223]. - The outcomes of current or future litigation cannot be predicted with certainty, potentially leading to adverse impacts[223]. - Litigation can incur defense and settlement costs, divert management resources, and affect overall operations[223]. Internal Controls - There were no changes in internal control over financial reporting that materially affected the company during the quarter ended June 30, 2024[218]. - The effectiveness of the company's internal control over financial reporting is subject to inherent limitations, and improvements may be necessary[219].