Core Insights - EMEA enterprises are at a critical juncture in AI adoption, balancing innovation with regulatory compliance and security concerns [1] - The report emphasizes that 2026 will focus on intentional progress in simplifying enterprise communications rather than rapid transformation [1] Security, Trust, and Compliance - 64% of enterprises are concerned about their voice provider's ability to maintain uptime amid evolving regulations [1] - 63% cite security, fraud, and compliance risks as their primary communications technology challenge [1] AI and Machine Learning Priorities - 49% of organizations rank AI/ML implementation as a top communications priority for 2026 [1] - Security and fraud prevention are also significant concerns, with 46% of enterprises highlighting these areas [1] Role of Managed Service Providers (MSPs) - 99% of enterprises rely on MSPs, typically engaging with two to three providers to manage regulatory and operational complexities [1] - Security and compliance are the top buying criteria for 53% of enterprises when selecting MSPs [1] Hybrid-Cloud and Multi-Carrier Models - 75% of enterprises have partially transitioned their contact centers to the cloud, indicating a hybrid operational state [1] - 46% operate a hybrid carrier model, combining global and local providers for regulatory compliance [1] Trust in Communications - 66% of EMEA enterprises report legitimate outbound calls being labeled as "spam" or "scam," affecting customer engagement [1] - Trust in voice communications is declining across both EMEA and North America, impacting business operations [1] Adaptability as a Key Differentiator - Success in enterprise communications is increasingly defined by adaptability to regulatory changes and technological advancements [1]

Group 1 - The stock market theme since early 2026 indicates a shift away from high-growth stocks towards safer, cheaper rebound plays gaining traction [1] Group 2 - Gary Alexander has extensive experience in technology sectors, covering companies on Wall Street and working in Silicon Valley, contributing to the understanding of current industry themes [2]

Core Insights - Bandwidth Inc. reported modest fourth-quarter 2025 results, with revenues slightly exceeding estimates and adjusted earnings meeting expectations [1][3] Revenue Performance - Quarterly revenues decreased to $207.7 million from $210 million in the prior-year quarter, primarily due to lower messaging surcharges and the absence of political campaign revenues, although it beat the Zacks Consensus Estimate of $207.2 million [5][9] - For 2025, total revenues increased to $753.8 million from $748.5 million in 2024 [5] Income and Earnings - On a GAAP basis, the net loss for the quarter was $3 million or a loss of 10 cents per share, compared to a net loss of $1.8 million or a loss of 6 cents per share in the prior-year quarter [2] - Non-GAAP net income for the quarter was $11.5 million or 35 cents per share, slightly down from $11.6 million or 37 cents per share in the prior-year quarter, aligning with the Zacks Consensus Estimate [3] Gross Profit and Margins - Non-GAAP gross profit for the quarter was $86.3 million with a margin of 57%, compared to $83.4 million and a margin of 58% in the year-ago quarter [7] - For 2025, non-GAAP gross profit rose to $326 million from $307.9 million in 2024, with respective margins of 58% and 57% [7] Cash Flow and Liquidity - In the fourth quarter, cash generated from operations was $38.6 million, up from $36.5 million in the year-earlier quarter [8] - For 2025, cash from operating activities totaled $89.5 million compared to $83.9 million in 2024 [8] Future Outlook - For the first quarter of 2026, Bandwidth expects revenues between $200 million and $203 million, with adjusted EBITDA forecasted in the range of $21 million to $24 million [10] - For 2026, the company anticipates revenues between $864 million and $884 million, indicating approximately 16% year-over-year growth, and adjusted EBITDA expected to be between $117 million and $123 million [11]

Core Viewpoint - Bandwidth (BAND) reported a slight decline in revenue and earnings per share (EPS) for the quarter ended December 2025, indicating potential challenges in maintaining growth despite meeting some analyst expectations [1][2]. Financial Performance - Revenue for the quarter was $207.67 million, a year-over-year decline of 1.1%, compared to the Zacks Consensus Estimate of $207.17 million, resulting in a surprise of +0.24% [1]. - EPS for the same period was $0.35, down from $0.37 a year ago, with an EPS surprise of -0.71% against the consensus estimate of $0.35 [1]. Key Metrics - Geographic Revenue- International reached $27.78 million, slightly below the two-analyst average estimate of $27.9 million, but showed a year-over-year increase of +23.6% [4]. - Geographic Revenue- North America was $179.88 million, exceeding the two-analyst average estimate of $178.81 million, but reflecting a year-over-year decline of -4.1% [4]. - Revenue from Messaging surcharges was $57.41 million, surpassing the average estimate of $56.83 million, but down -12.9% year over year [4]. - Revenue from Cloud communications was $150.26 million, slightly below the average estimate of $150.36 million, with a year-over-year increase of +4.3% [4]. Stock Performance - Bandwidth shares have returned -4.6% over the past month, underperforming the Zacks S&P 500 composite, which changed by -0.8% [3]. - The stock currently holds a Zacks Rank 4 (Sell), suggesting potential underperformance in the near term [3].

分组1 - Bandwidth reported quarterly earnings of $0.35 per share, matching the Zacks Consensus Estimate, but down from $0.37 per share a year ago, resulting in an earnings surprise of -0.71% [1] - The company posted revenues of $207.67 million for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 0.24%, but down from $209.97 million year-over-year [2] - Bandwidth shares have declined approximately 15.9% since the beginning of the year, contrasting with the S&P 500's gain of 0.5% [3] 分组2 - The earnings outlook for Bandwidth is uncertain, with current consensus EPS estimates at $0.34 for the coming quarter and $1.90 for the current fiscal year, with revenues expected to be $189.15 million and $840.33 million respectively [7] - The Communication - Infrastructure industry, to which Bandwidth belongs, is currently ranked in the bottom 22% of over 250 Zacks industries, indicating potential underperformance compared to higher-ranked industries [8]

Financial Data and Key Metrics Changes - In Q4 2025, total revenue increased by 12% year-over-year on an organic basis, excluding cyclical revenue from political campaign messaging [15][16] - For the full year 2025, total revenue reached $754 million, up 10% organically year-over-year, with a non-GAAP gross margin of 58% and adjusted EBITDA of $93 million [16][19] - Free cash flow for 2025 was $57 million, significantly exceeding the cumulative target of $125 million set for 2026 [7][19] Business Line Data and Key Metrics Changes - Voice segment achieved 11% year-over-year growth driven by increased usage and adoption of voice-based AI applications [15][16] - Messaging segment saw an organic growth of 12% year-over-year, primarily due to robust holiday messaging demand [15][16] - The enterprise voice customer category grew by 21% in 2025, supported by a record number of million-dollar-plus deals [16][17] Market Data and Key Metrics Changes - The company noted strong demand across both voice and messaging markets, with healthy execution contributing to confidence in future growth [8][18] - The political campaign contribution to revenue is expected to be approximately 2.5% of cloud communications revenue for 2026, with monitoring ongoing [32][34] Company Strategy and Development Direction - The company is focused on high-margin innovation, particularly in AI voice tools and orchestration software, which are seen as critical for future growth [6][9] - A share repurchase program of up to $80 million was authorized, reflecting confidence in the business model and cash generation capabilities [8][24] - The company aims for a 15%-20% revenue compound annual growth rate through 2026, with specific targets for gross margin, EBITDA margin, and free cash flow [7][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the upward trajectory of the business, despite market dynamics potentially impacting revenue growth [6][7] - The company anticipates continued growth in voice driven by AI applications and large deal activity, projecting a total revenue growth of approximately 16% year-over-year for 2026 [18][19] - Management highlighted the importance of customer relationships and the durability of the business model, with a customer retention rate above 99% [20][21] Other Important Information - The number of third-party conversational AI developers building on the company's platform has quadrupled over the past six months, indicating strong momentum [13] - The company is positioned at the intersection of enterprise communications and AI, with a robust infrastructure to support future innovations [14][26] Q&A Session Summary Question: Insights on Enterprise Voice segment growth - Management acknowledged a slight tick down in Q4 growth rates but expressed optimism for continued healthy growth in 2026 driven by large deals [30] Question: Political contribution to revenue - Management indicated that political campaign contributions are expected to be around 2.5% of cloud communications revenue for 2026, with ongoing monitoring [32][34] Question: Dynamics between cloud communication growth and total revenue growth - Management explained the difference is due to carrier messaging surcharges, which are expected to increase due to recent price hikes from carriers [38][43] Question: Competitive landscape with Twilio - Management noted that recent customer wins were not influenced by Twilio, highlighting competitive advantages over other carriers [46][47] Question: Details on the insurance example and Google AI integration - Management elaborated on the integration of Google AI within a complex Cisco environment, emphasizing the value of their orchestration platform [51] Question: AI's impact on the business and competitive moats - Management described AI as a significant tailwind for the business, with strong infrastructure and customer relationships serving as competitive advantages [53][54] Question: Pipeline for voice AI and its revenue impact - Management indicated that 2026 is expected to be a pivotal year for AI adoption in voice, with significant revenue implications [58][59] Question: Composition of million-dollar-plus deals - Management confirmed that the number of million-dollar-plus deals in 2025 exceeded previous years, driven by an expanded product portfolio and customer demand for AI integration [60][61]

Financial Data and Key Metrics Changes - In Q4 2025, total revenue increased by 12% year-over-year on an organic basis, with both voice and messaging segments contributing to this growth [15][16] - For the full year 2025, total revenue reached $754 million, up 10% organically year-over-year, with a non-GAAP gross margin of 58% and adjusted EBITDA of $93 million [16][18] - Free cash flow for 2025 was $57 million, significantly exceeding the cumulative target of $125 million set for 2026 [7][18] Business Line Data and Key Metrics Changes - Voice segment achieved 11% year-over-year growth, driven by increased usage and adoption of voice-based AI applications [15][16] - Messaging segment saw an organic growth of 12% year-over-year, primarily due to robust holiday messaging demand [15][16] - The enterprise voice customer category grew by 21% in 2025, supported by a record number of million-dollar-plus deals [16][17] Market Data and Key Metrics Changes - The company anticipates a 16% total revenue growth for 2026, with cloud communications growth projected at approximately 10% [18][19] - Political campaign contributions are expected to account for roughly 2.5% of cloud communications revenue in 2026, with no significant impact anticipated in the first half of the year [32][34] Company Strategy and Development Direction - The company is focused on expanding its AI voice capabilities and has seen significant adoption of AI-driven voice applications across various sectors [9][10] - A new share repurchase program of up to $80 million has been authorized, reflecting confidence in the business model and cash generation capabilities [8][25] - The company aims to achieve a 20% EBITDA margin and maintain a strong focus on operating leverage and platform investments to support margin expansion [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the upward trajectory of the business, citing strong demand across voice and messaging segments [6][8] - The company is optimistic about the impact of AI on voice growth, viewing 2026 as a critical year for AI adoption and deployment [58] - Management highlighted the durability of customer relationships and the potential for upselling and cross-selling software services as key growth drivers [19][24] Other Important Information - The company reported a customer name retention rate above 99% and an organic net retention rate of 107%, indicating strong customer loyalty [20][21] - The average annual revenue per customer reached a record $232,000, up from $171,000 three years ago, reflecting deeper integrations and larger deployments [21][22] Q&A Session Summary Question: Insights on Enterprise Voice segment growth - Management acknowledged a slight tick down in Q4 growth rates but emphasized a strong annual growth rate of 21% and projected healthy growth into 2026 driven by large deals [30][31] Question: Political contribution outlook for 2026 - Management indicated that political campaign contributions are expected to be around 2.5% of cloud communications revenue, with monitoring ongoing for better visibility [32][34] Question: Dynamics between cloud communication growth and total revenue growth - The difference is attributed to carrier messaging surcharges, with expected price increases from carriers factored into the guidance [38][43] Question: Competitive landscape with Twilio - Management noted that recent customer wins were not influenced by Twilio, highlighting competitive advantages over other carriers [46][47] Question: Details on the insurance example and collaboration with Google - The integration of Google Conversational AI within a complex Cisco environment was crucial, showcasing the flexibility of the company's orchestration platform [50] Question: Moats against AI disruption - Management emphasized the company's extensive global infrastructure and strong customer relationships as significant barriers to entry for new competitors [52] Question: Pipeline for voice AI relative to other opportunities - Management believes 2026 will be a pivotal year for AI adoption in voice, with significant growth expected as enterprises move from experimentation to real deployment [58]

Financial Data and Key Metrics Changes - In Q4 2025, total revenue increased by 12% year-over-year on an organic basis, excluding cyclical revenue from political campaign messaging [14] - For the full year 2025, total revenue reached $754 million, up 10% organically year-over-year, with a non-GAAP gross margin of 58% and adjusted EBITDA of $93 million [16][18] - Free cash flow for 2025 was $57 million, significantly exceeding the cumulative target of $125 million set for 2026 [5][18] Business Line Data and Key Metrics Changes - Voice segment achieved 11% year-over-year growth driven by increased usage and adoption of voice-based AI applications [14][15] - Messaging segment saw organic growth of 12% year-over-year, supported by robust holiday messaging demand [14][16] - The enterprise voice customer category grew by 21% in 2025, with a record number of million-dollar plus deals contributing to this growth [16][17] Market Data and Key Metrics Changes - The company anticipates a 16% total revenue growth for 2026, with cloud communications growth projected at approximately 10% [18] - Political campaign contributions are expected to account for about 2.5% of cloud communications revenue in 2026, with no significant impact anticipated in the first half of the year [32][34] Company Strategy and Development Direction - The company is focused on high-margin innovation, particularly in AI voice tools and orchestration software, to drive future growth [4][6] - An inaugural share repurchase program of up to $80 million has been authorized, reflecting confidence in the business model and cash generation capabilities [6][25] - The company aims to achieve a 20% adjusted EBITDA margin and continue expanding gross margins and free cash flow beyond 2026 [18][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the upward trajectory of the business, citing strong demand across voice and messaging segments [4][6] - The company is optimistic about the impact of AI on voice growth, viewing it as a significant tailwind for future revenue [52] - Management highlighted the durability of customer relationships and the importance of software services in enhancing customer engagement and retention [20][23] Other Important Information - The number of third-party conversational AI developers building on the company's platform has quadrupled over the past six months, indicating strong momentum in AI adoption [12] - The company has achieved a customer name retention rate above 99% and an organic net retention rate of 107%, showcasing strong customer loyalty [20] Q&A Session Summary Question: Insights on Enterprise Voice segment growth - Management acknowledged a slight tick down in Q4 growth but emphasized a strong annual growth rate of 21% and projected healthy growth into 2026 driven by large deals [30] Question: Political contribution impact on 2026 - Management indicated that political contributions are expected to be around 2.5% of cloud communications revenue, with more visibility anticipated as the year progresses [32][34] Question: Dynamics between cloud communication growth and total revenue growth - The difference is attributed to carrier messaging surcharges, with two major carriers announcing price increases that will positively impact revenue [38][43] Question: Competitive landscape with Twilio - Management noted that recent customer wins were from competitors like Verizon and AT&T, with no significant competitive pressure from Twilio observed [46] Question: Details on the insurance example and Google AI integration - The integration of Google AI within a complex Cisco environment was highlighted as a key factor in winning the insurance customer, showcasing the value of the company's orchestration capabilities [51] Question: AI's impact on business and competitive moats - Management described the company's extensive global infrastructure and customer relationships as significant competitive advantages, enabling durable growth and high margins [52] Question: Pipeline for voice AI and its revenue impact - Management indicated that AI is integral to enterprise conversations, with 2026 expected to be a pivotal year for AI-driven voice revenue growth [56]

4Q25 and 2025 Earnings Results February 19, 2026 Legal Disclaimer 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 March 31, 2026 and year ending December 31, 2026, the success of our product offerings and our platform, and the value proposition of our products, are forward-looking statements. The words "anticipate," "a ...

Revenue and Financial Performance - Bandwidth's consolidated revenue for the year ended December 31, 2025, was approximately 60% from the Voice domain and 40% from the Programmable Messaging category[43][49]. - Bandwidth Inc. reported total revenue of $753.8 million for the year ended December 31, 2025, representing a 0.2% increase from $748.5 million in 2024[436]. - Total revenue for the year ended December 31, 2025, was $753.8 million, a 0.4% increase from $748.5 million in 2024 and a 25.4% increase from $601.1 million in 2023[460]. - Cloud communications revenue reached $561.4 million in 2025, up from $539.8 million in 2024 and $478.9 million in 2023, indicating a growth of 4.0% year-over-year[460]. - Revenue from recurring cloud communications fees was $414.5 million in 2025, representing 55.0% of total revenue, compared to $401.4 million (53.6%) in 2024 and $346.9 million (57.7%) in 2023[462]. - Bandwidth's gross profit for 2025 was $295.1 million, up from $280.0 million in 2024, indicating a gross margin improvement[436]. - Operating loss narrowed to $14.4 million in 2025 from a loss of $20.1 million in 2024, reflecting better cost management[436]. - Net loss for 2025 was $12.9 million, compared to a net loss of $6.5 million in 2024, with a net loss per share of $0.43[436]. - The company reported a total comprehensive income of $37.5 million for 2025, a significant recovery from a comprehensive loss of $29.7 million in 2024[439]. Customer and Market Engagement - The twelve-month customer retention rate at the end of 2025 was greater than 98.8 percent, with a customer satisfaction rate exceeding 97 percent[59]. - Bandwidth has established partnerships with leading UCaaS and CCaaS platforms, including Microsoft, Google, and Zoom, enhancing its market presence[31][34]. - Bandwidth's messaging solutions have a significantly higher open rate compared to email, making it a preferred choice for digital engagement[38]. - Bandwidth's sales approach involves direct engagement with C-level executives to educate them on the benefits of the Bandwidth Communications Cloud[70]. - No individual customer represented more than 10% of the company's revenue for the years ended December 31, 2025, 2024, and 2023, indicating a diversified customer base[479]. Innovation and Technology - The Maestro platform is designed to integrate AI voice services and provides a critical technology bridge for enterprises, enabling faster time to value[36]. - The company is focused on AI innovation, with the Maestro platform enabling integration of conversational AI into cloud communications[36]. - Bandwidth's competitive strengths include a high-quality, secure global platform and broad experience with regulatory frameworks, positioning it as a trusted resource[52][55]. - The company aims to continuously enhance existing offerings and develop new products, with a vision for the Bandwidth Communications Cloud to be a singular resource for global enterprise communications[71][72]. Regulatory and Compliance - Bandwidth's emergency services are integrated in 42 countries, providing dynamic location routing for compliance with local regulations[44]. - Regulatory challenges include compliance with evolving telecommunications laws and potential impacts from legislative initiatives like the TRACED Act[80][84]. - The company is required to comply with the FCC's new 911 outage reporting requirements by April 15, 2025, which may impact its business[91]. - The ePrivacy Directive requires providers to safeguard personal data and notify any breach to the applicable NRA, with potential impacts on the company's operations[97]. - Bandwidth is authorized to provide competitive local exchange telecommunications services in 49 states and the District of Columbia, subject to state regulations[92]. Financial Position and Assets - As of December 31, 2025, Bandwidth had cash and cash equivalents of $103 million and marketable securities of $8 million[406]. - Total assets increased to $1.05 billion as of December 31, 2025, up from $989.2 million in 2024, driven by higher cash and cash equivalents[434]. - Cash and cash equivalents rose to $102.8 million in 2025, compared to $81.8 million in 2024, indicating improved liquidity[434]. - Total stockholders' equity grew to $400.0 million in 2025, up from $312.5 million in 2024, reflecting a stronger financial position[434]. - The company had approximately 1,100 employees as of December 31, 2025, with no employees represented by a labor union[79]. Research and Development - Research and development expenses increased to $132.5 million in 2025, up from $118.6 million in 2024, highlighting continued investment in innovation[436]. - The company incurred research and development expenses for the design and enhancement of cloud network and software products, which are included in operating expenses[469]. Cash Flow and Financing - Cash provided by operating activities increased to $89,491 thousand in 2025 from $83,883 thousand in 2024, and $39,001 thousand in 2023[445]. - The company had a net cash used in financing activities of $29,068 thousand in 2025, compared to $131,273 thousand in 2024[445]. - The company carries its Convertible Notes at face value less unamortized discount, with gross carrying amounts of $8 million and $250 million outstanding from its 2026 and 2028 Convertible Notes, respectively[408]. Marketable Securities and Investments - The company maintains a policy of investing only with commercial institutions that have at least an investment grade credit rating, ensuring the safety of cash and cash equivalents[472]. - The company classified its marketable securities as current assets, with all securities maturing in less than one year as of December 31, 2025[525]. - The company has determined it does not intend to sell any marketable securities before recovering the entire amortized cost basis[525]. - Interest earned on marketable securities decreased to $0.3 million in 2025 from $1.0 million in 2024 and $2.0 million in 2023[527].