|
|
|
|
|||||
|
|
|
Exceeded revenue and profitability guidance ranges
Solid revenue growth fueled by core voice usage and software
RALEIGH, N.C., Oct. 30, 2025 /PRNewswire/ -- Bandwidth Inc. (NASDAQ: BAND), a leading global enterprise cloud communications company, today announced financial results for the third quarter ended September 30, 2025.
"Innovation and disciplined execution continue to define Bandwidth's performance," said David Morken, CEO of Bandwidth. "We helped enterprises move from experimenting with AI to deploying it at scale, launched new intelligent services on our cloud platform and closed a record number of million-dollar-plus deals for mission-critical communications. These results show how we are delivering real AI-powered value today, while charting the future of secure, trusted customer engagement."
|
Third
Quarter 2025 Financial Highlights
The following table summarizes the condensed consolidated financial highlights for the three and nine |
|||||||
|
|
|||||||
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
||||
|
|
2025 |
|
2024 |
|
2025 |
|
2024 |
|
Revenue |
$ 192 |
|
$ 194 |
|
$ 546 |
|
$ 539 |
|
Gross Margin |
38 % |
|
38 % |
|
40 % |
|
38 % |
|
Non-GAAP Gross Margin (1) |
58 % |
|
58 % |
|
58 % |
|
57 % |
|
Net (loss) income |
$ (1) |
|
$ 0 |
|
$ (10) |
|
$ (5) |
|
Adjusted EBITDA (1) |
$ 24 |
|
$ 24 |
|
$ 68 |
|
$ 59 |
|
Net cash provided by operating activities |
$ 22 |
|
$ 20 |
|
$ 51 |
|
$ 47 |
|
Free cash flow (1) |
$ 13 |
|
$ 14 |
|
$ 25 |
|
$ 28 |
|
|
|||||||
|
(1) Additional information regarding the Non-GAAP financial measures discussed in this release, including an explanation of these measures and how each is calculated, is included below under the heading "Non-GAAP Financial Measures." A reconciliation of GAAP to Non-GAAP financial measures has also been provided in the financial tables included below. |
"Our solid third quarter performance led by growing momentum in Voice AI, our increasing mix of software-driven revenue, and our sharp execution led us to raise our full year Adjusted EBITDA outlook to approximately $91 million," said Daryl Raiford, CFO of Bandwidth. "AI is not a standalone product for Bandwidth — it's embedded across our cloud platform and integral to the services our customers use every day. Looking to 2026, we expect growth in Voice and Voice AI offerings, higher software revenue, and a strong political messaging season to drive us toward our medium-term financial targets."
Third Quarter Customer and Operational Highlights
Financial Outlook
Bandwidth is providing guidance for the full year 2025 as follows (in millions) based on current indications for its business, which are subject to change.
For the full year 2025, Bandwidth's revenue guidance projects 9 percent to 11 percent year-over-year growth when adjusting for the expected cyclical reduction in political campaign messaging activity, which resulted in revenue of approximately $62 million in 2024.
|
|
|
Full Year 2025 |
|
Revenue |
|
$747 - $760 |
|
Adjusted EBITDA |
|
$89 - $92 |
Bandwidth has not reconciled full year 2025 guidance related to Adjusted EBITDA to GAAP net income or loss, because stock-based compensation cannot be reasonably calculated or predicted at this time. Accordingly, a reconciliation is not available without unreasonable effort.
Upcoming Investor Conference
About Bandwidth Inc.
Bandwidth (NASDAQ: BAND) is a global cloud communications software company that helps enterprises deliver exceptional experiences through voice calling, text messaging and emergency services. Our solutions and our Communications Cloud, covering 65+ countries and over 90 percent of global GDP, are trusted by all the leaders in unified communications and cloud contact centers–including Amazon Web Services (AWS), Cisco, Google, Microsoft, RingCentral, Zoom, Genesys and Five9–as well as Global 2000 enterprises and SaaS builders like Docusign, Uber and Yosi Health. As a founder of the cloud communications revolution, we are the first and only global Communications Platform-as-a-Service (CPaaS) to offer a unique combination of composable APIs, AI capabilities, owner-operated network and broad regulatory experience. Our award-winning support teams help businesses around the world solve complex communications challenges to reach anyone, anywhere. For more information, visit www.bandwidth.com.
Conference Call
Bandwidth will host a conference call to discuss financial results for the third quarter ended September 30, 2025 on October 30, 2025. Details can be found below and on the investor section of its website at https://investors.bandwidth.com where a replay will also be available shortly following the call.
Conference Call Details
October 30, 2025
8:00 am ET
Domestic dial-in:
844-481-2707
International dial-in:
412-317-0663
Replay information
An audio replay of this conference call will be available through November 6, 2025 by dialing 877-344-7529 or 412-317-0088 for international callers, and entering passcode 9320253.
Forward-Looking Statements
This press release includes forward-looking statements. All statements contained in this press release other than statements of historical facts, including, without limitation, future financial and business performance for the quarter and year ending December 31, 2025, the success of our product offerings and our platform, and the value proposition of our products, are forward-looking statements. The words "anticipate," "assume," "believe," "continue," "estimate," "expect," "intend," "guide," "may," "will" and similar expressions and their negatives are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to a number of risks and uncertainties, including, without limitation, risks related to our rapid growth and ability to sustain our revenue growth rate, competition in the markets in which we operate, market growth, our ability to innovate and manage our growth, our ability to successfully leverage the use of artificial intelligence in our business operations and in our service offerings, our ability to expand effectively into new markets, macroeconomic conditions both in the U.S. and globally, legal, reputational and financial risks which may result from ever-evolving cybersecurity threats, our ability to operate in compliance with applicable laws, as well as other risks and uncertainties set forth in the "Risk Factors" section of our latest Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC") and any subsequent reports that we file with the SEC. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, we cannot guarantee future results, levels of activity, performance, achievements or events and circumstances reflected in the forward-looking statements will occur. We are under no obligation to update any of these forward-looking statements after the date of this press release to conform these statements to actual results or revised expectations, except as required by law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this press release.
Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States, or GAAP, we provide investors with certain Non-GAAP financial measures and other business metrics, which we believe are helpful to our investors. We use these Non-GAAP financial measures and other business metrics for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons. We believe that these Non-GAAP financial measures and other business metrics provide useful information about our operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to metrics used by our management in its financial and operational decision-making.
The presentation of Non-GAAP financial information and other business metrics is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. While our Non-GAAP financial measures and other business metrics are an important tool for financial and operational decision-making and for evaluating our own operating results over different periods of time, we urge investors to review the reconciliation of these financial measures to the comparable GAAP financial measures included below, and not to rely on any single financial measure to evaluate our business.
We define Non-GAAP gross profit as gross profit after adding back depreciation, amortization of acquired intangible assets related to acquisitions and stock-based compensation. We add back depreciation, amortization of acquired intangible assets related to acquisitions and stock-based compensation because they are non-cash items. We eliminate the impact of these non-cash items, because we do not consider them indicative of our core operating performance. Their exclusion facilitates comparisons of our operating performance on a period-to-period basis. Therefore, we believe that showing gross margin, as adjusted to remove the impact of these non-cash expenses, is helpful to investors in assessing our gross profit and gross margin performance in a way that is similar to how management assesses our performance. We calculate Non-GAAP gross margin by dividing Non-GAAP gross profit by cloud communications revenue, which is revenue less pass-through messaging surcharges.
We define Non-GAAP net income (loss) as net income or loss adjusted for certain items affecting period to period comparability. Non-GAAP net income (loss) excludes stock-based compensation, amortization of acquired intangible assets related to acquisitions, amortization of debt discount and issuance costs for convertible debt, acquisition related expenses, impairment charges of intangibles assets, net cost associated with early lease terminations and leases without economic benefit, (gain) loss on sale of business, net (gain) loss on extinguishment of debt, gain on business interruption insurance recoveries, non-recurring items not indicative of ongoing operations and other, and estimated tax impact of above adjustments, net of valuation allowances.
We define Adjusted EBITDA as net income or losses from continuing operations, adjusted to reflect the addition or elimination of certain statement of operations items including, but not limited to: income tax (benefit) provision, interest (income) expense, net, depreciation and amortization expense, acquisition related expenses, stock-based compensation expense, impairment of intangible assets, (gain) loss on sale of business, net cost associated with early lease terminations and leases without economic benefit, net (gain) loss on extinguishment of debt, gain on business interruption insurance recoveries, and non-recurring items not indicative of ongoing operations and other. We have presented Adjusted EBITDA because it is a key measure used by our management and board of directors to understand and evaluate our core operating performance and trends, generate future operating plans, and make strategic decisions regarding the allocation of capital. In particular, we believe that the exclusion of certain items in calculating Adjusted EBITDA can produce a useful measure for period-to-period comparisons of our business.
We define free cash flow as net cash provided by or used in operating activities less net cash used in the acquisition of property, plant and equipment and capitalized development costs for software for internal use. We believe free cash flow is a useful indicator of liquidity and provides information to management and investors about the amount of cash generated from our core operations that can be used for investing in our business. Free cash flow has certain limitations in that it does not represent the total increase or decrease in the cash balance for the period, it does not take into consideration investment in long-term securities, nor does it represent the residual cash flows available for discretionary expenditures. Therefore, it is important to evaluate free cash flow along with our condensed consolidated statements of cash flows.
We believe that these Non-GAAP financial measures provide useful information about our operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to metrics used by our management in its financial and operational decision-making. While a reconciliation of Non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis as a result of the uncertainty regarding, and the potential variability of, many of these costs and expenses that we may incur in the future, we have provided a reconciliation of Non-GAAP financial measures and other business metrics to the nearest comparable GAAP measures in the accompanying financial statement tables included in this press release.
|
BANDWIDTH INC. Condensed Consolidated Statements of Operations (In thousands, except share and per share amounts) (Unaudited) |
|||||||
|
|
|||||||
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
||||
|
|
2025 |
|
2024 |
|
2025 |
|
2024 |
|
Revenue |
$ 191,895 |
|
$ 193,883 |
|
$ 546,149 |
|
$ 538,518 |
|
Cost of revenue |
118,097 |
|
120,749 |
|
329,175 |
|
335,071 |
|
Gross profit |
73,798 |
|
73,134 |
|
216,974 |
|
203,447 |
|
Operating expenses |
|
|
|
|
|
|
|
|
Research and development |
33,008 |
|
30,171 |
|
95,389 |
|
87,215 |
|
Sales and marketing |
24,702 |
|
26,285 |
|
75,976 |
|
81,490 |
|
General and administrative |
18,096 |
|
17,576 |
|
56,052 |
|
52,130 |
|
Total operating expenses |
75,806 |
|
74,032 |
|
227,417 |
|
220,835 |
|
Operating loss |
(2,008) |
|
(898) |
|
(10,443) |
|
(17,388) |
|
Other (expense) income |
(1,514) |
|
577 |
|
(1,684) |
|
11,358 |
|
Loss before income taxes |
(3,522) |
|
(321) |
|
(12,127) |
|
(6,030) |
|
Income tax benefit |
2,281 |
|
734 |
|
2,215 |
|
1,265 |
|
Net (loss) income |
$ (1,241) |
|
$ 413 |
|
$ (9,912) |
|
$ (4,765) |
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share |
|
|
|
|
|
|
|
|
Basic |
$ (0.04) |
|
$ 0.02 |
|
$ (0.33) |
|
$ (0.18) |
|
Diluted |
$ (0.04) |
|
$ 0.01 |
|
$ (0.33) |
|
$ (0.18) |
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares |
|
|
|
|
|
|
|
|
Basic |
30,278,516 |
|
27,374,367 |
|
29,721,404 |
|
26,983,931 |
|
Diluted |
30,278,516 |
|
28,615,520 |
|
29,721,404 |
|
26,983,931 |
|
|
|||||||
|
|
|||||||
|
Bandwidth recognized total stock-based compensation expense as follows: |
|||||||
|
|
|||||||
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
||||
|
|
2025 |
|
2024 |
|
2025 |
|
2024 |
|
Cost of revenue |
$ 542 |
|
$ 352 |
|
$ 1,597 |
|
$ 1,123 |
|
Research and development |
5,622 |
|
4,606 |
|
16,703 |
|
14,606 |
|
Sales and marketing |
1,799 |
|
1,744 |
|
5,940 |
|
6,014 |
|
General and administrative |
4,365 |
|
4,747 |
|
14,208 |
|
13,405 |
|
Total |
$ 12,328 |
|
$ 11,449 |
|
$ 38,448 |
|
$ 35,148 |
|
BANDWIDTH INC. Condensed Consolidated Balance Sheets (In thousands) (Unaudited) |
|||
|
|
|||
|
|
As of September 30, |
|
As of December 31, |
|
|
2025 |
|
2024 |
|
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
$ 73,373 |
|
$ 81,812 |
|
Marketable securities |
6,999 |
|
1,975 |
|
Accounts receivable, net of allowances |
93,390 |
|
86,455 |
|
Deferred costs |
4,595 |
|
3,729 |
|
Prepaid expenses and other current assets |
14,653 |
|
13,841 |
|
Total current assets |
193,010 |
|
187,812 |
|
Property, plant and equipment, net |
176,097 |
|
176,823 |
|
Operating right-of-use asset, net |
152,612 |
|
153,601 |
|
Intangible assets, net |
143,467 |
|
145,355 |
|
Deferred costs, non-current |
3,248 |
|
4,355 |
|
Other long-term assets |
7,858 |
|
3,977 |
|
Goodwill |
357,043 |
|
317,243 |
|
Total assets |
$ 1,033,335 |
|
$ 989,166 |
|
Liabilities and stockholders' equity |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
$ 34,380 |
|
$ 28,362 |
|
Accrued expenses and other current liabilities |
85,221 |
|
101,819 |
|
Current portion of deferred revenue |
8,386 |
|
7,031 |
|
Operating lease liability, current |
3,655 |
|
3,111 |
|
Current portion of convertible senior notes |
7,617 |
|
— |
|
Total current liabilities |
139,259 |
|
140,323 |
|
Other liabilities |
610 |
|
576 |
|
Operating lease liability, net of current portion |
221,059 |
|
219,191 |
|
Deferred revenue, net of current portion |
5,860 |
|
7,955 |
|
Deferred tax liability |
26,510 |
|
27,304 |
|
Convertible senior notes |
247,293 |
|
281,284 |
|
Total liabilities |
640,591 |
|
676,633 |
|
Stockholders' equity: |
|
|
|
|
Class A and Class B common stock |
31 |
|
29 |
|
Additional paid-in capital |
475,353 |
|
435,927 |
|
Accumulated deficit |
(81,326) |
|
(71,414) |
|
Accumulated other comprehensive loss |
(1,314) |
|
(52,009) |
|
Total stockholders' equity |
392,744 |
|
312,533 |
|
Total liabilities and stockholders' equity |
$ 1,033,335 |
|
$ 989,166 |
|
BANDWIDTH INC. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) |
|||
|
|
|||
|
|
Nine months ended September 30, |
||
|
|
2025 |
|
2024 |
|
Cash flows from operating activities |
|
|
|
|
Net loss |
$ (9,912) |
|
$ (4,765) |
|
Adjustments to reconcile net loss to net cash provided by operating activities |
|
|
|
|
Depreciation and amortization |
39,658 |
|
37,138 |
|
Non-cash reduction to the right-of-use asset |
2,472 |
|
2,759 |
|
Amortization of debt discount and issuance costs |
1,054 |
|
1,332 |
|
Stock-based compensation |
38,448 |
|
35,148 |
|
Deferred taxes and other |
(1,056) |
|
(4,249) |
|
Gain on sale of intangible asset |
— |
|
(1,000) |
|
Net gain on extinguishment of debt |
(1,082) |
|
(10,267) |
|
Changes in operating assets and liabilities: |
|
|
|
|
Accounts receivable, net of allowances |
(5,930) |
|
(21,318) |
|
Prepaid expenses and other assets |
(4,767) |
|
2,482 |
|
Accounts payable |
5,630 |
|
(11,940) |
|
Accrued expenses and other liabilities |
(12,692) |
|
24,991 |
|
Operating right-of-use liability |
(946) |
|
(2,946) |
|
Net cash provided by operating activities |
50,877 |
|
47,365 |
|
Cash flows from investing activities |
|
|
|
|
Purchase of property, plant and equipment |
(17,188) |
|
(10,636) |
|
Refund of deposits for construction in progress |
— |
|
2,707 |
|
Capitalized software development costs |
(8,218) |
|
(8,571) |
|
Purchase of marketable securities |
(12,680) |
|
(32,081) |
|
Proceeds from sales and maturities of marketable securities |
7,672 |
|
48,649 |
|
Proceeds from sale of business |
361 |
|
624 |
|
Proceeds from sale of intangible assets |
— |
|
1,000 |
|
Net cash (used in) provided by investing activities |
(30,053) |
|
1,692 |
|
Cash flows from financing activities |
|
|
|
|
Borrowings on line of credit |
28,500 |
|
165,500 |
|
Repayments on line of credit |
(28,500) |
|
(140,500) |
|
Payments on finance leases |
(46) |
|
(68) |
|
Net cash paid for debt extinguishment |
(26,144) |
|
(128,534) |
|
Payment of debt issuance costs |
(25) |
|
(379) |
|
Proceeds from exercises of stock options |
80 |
|
128 |
|
Value of equity awards withheld for tax liabilities |
(2,941) |
|
(2,291) |
|
Net cash used in financing activities |
(29,076) |
|
(106,144) |
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
(284) |
|
41 |
|
Net decrease in cash, cash equivalents, and restricted cash |
(8,536) |
|
(57,046) |
|
Cash, cash equivalents, and restricted cash, beginning of period |
82,234 |
|
132,307 |
|
Cash, cash equivalents, and restricted cash, end of period |
$ 73,698 |
|
$ 75,261 |
|
BANDWIDTH INC. Reconciliation of Non-GAAP Financial Measures (In thousands, except share and per share amounts) (Unaudited) |
|||||||
|
|
|||||||
|
Non-GAAP Gross Profit and Non-GAAP Gross Margin |
|||||||
|
|
|||||||
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
||||
|
|
2025 |
|
2024 |
|
2025 |
|
2024 |
|
Gross Profit |
$ 73,798 |
|
$ 73,134 |
|
$ 216,974 |
|
$ 203,447 |
|
Gross Profit Margin % |
38 % |
|
38 % |
|
40 % |
|
38 % |
|
Depreciation |
5,299 |
|
4,679 |
|
15,137 |
|
14,135 |
|
Amortization of acquired intangible assets |
2,100 |
|
1,977 |
|
6,039 |
|
5,877 |
|
Stock-based compensation |
542 |
|
352 |
|
1,597 |
|
1,123 |
|
Non-GAAP Gross Profit |
$ 81,739 |
|
$ 80,142 |
|
$ 239,747 |
|
$ 224,582 |
|
Non-GAAP Gross Margin % (1) |
58 % |
|
58 % |
|
58 % |
|
57 % |
|
|
|
|
|
|
|
|
(1) Calculated by dividing Non-GAAP gross profit by cloud communications revenue of $142 million and $411 million for the three and nine months ended September 30, 2025, respectively, and $139 million and $396 million for the three and nine months ended September 30, 2024, respectively. |
|||||
|
BANDWIDTH INC. Reconciliation of Non-GAAP Financial Measures (In thousands, except share and per share amounts) (Unaudited) |
|||||||
|
|
|||||||
|
Non-GAAP Net Income |
|||||||
|
|
|||||||
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
||||
|
|
2025 |
|
2024 |
|
2025 |
|
2024 |
|
Net (loss) income |
$ (1,241) |
|
$ 413 |
|
$ (9,912) |
|
$ (4,765) |
|
Stock-based compensation |
12,328 |
|
11,449 |
|
38,448 |
|
35,148 |
|
Amortization of acquired intangibles |
4,633 |
|
4,436 |
|
13,485 |
|
13,133 |
|
Amortization of debt discount and issuance |
278 |
|
311 |
|
854 |
|
1,180 |
|
Net cost associated with early |
— |
|
350 |
|
— |
|
2,383 |
|
Net gain on extinguishment of debt |
— |
|
— |
|
(1,082) |
|
(10,267) |
|
Non-recurring items not indicative of |
1,185 |
|
(957) |
|
2,002 |
|
(828) |
|
Estimated tax effects of adjustments (2) |
(5,721) |
|
(3,211) |
|
(9,373) |
|
(6,654) |
|
Non-GAAP net income |
$ 11,462 |
|
$ 12,791 |
|
$ 34,422 |
|
$ 29,330 |
|
Interest expense on Convertible Notes (3) |
238 |
|
251 |
|
726 |
|
868 |
|
Numerator used to compute Non-GAAP |
$ 11,700 |
|
$ 13,042 |
|
$ 35,148 |
|
$ 30,198 |
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share |
|
|
|
|
|
|
|
|
Basic |
$ (0.04) |
|
$ 0.02 |
|
$ (0.33) |
|
$ (0.18) |
|
Diluted |
$ (0.04) |
|
$ 0.01 |
|
$ (0.33) |
|
$ (0.18) |
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income per Non-GAAP |
|
|
|
|
|
|
|
|
Basic |
$ 0.38 |
|
$ 0.47 |
|
$ 1.16 |
|
$ 1.09 |
|
Diluted |
$ 0.36 |
|
$ 0.43 |
|
$ 1.10 |
|
$ 0.98 |
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares |
|
|
|
|
|
|
|
|
Basic |
30,278,516 |
|
27,374,367 |
|
29,721,404 |
|
26,983,931 |
|
Diluted |
30,278,516 |
|
28,615,520 |
|
29,721,404 |
|
26,983,931 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP basic shares |
30,278,516 |
|
27,374,367 |
|
29,721,404 |
|
26,983,931 |
|
Convertible debt conversion |
1,478,379 |
|
1,779,025 |
|
1,537,847 |
|
2,503,118 |
|
Stock options issued and outstanding |
17,324 |
|
25,021 |
|
20,247 |
|
28,785 |
|
Nonvested RSUs outstanding |
510,590 |
|
1,216,132 |
|
811,839 |
|
1,430,317 |
|
Non-GAAP diluted shares |
32,284,809 |
|
30,394,545 |
|
32,091,337 |
|
30,946,151 |
|
|
|
|
|
|
|
|
(1) Non-recurring items not indicative of ongoing operations and other include (i) $1.2 million of foreign exchange charges primarily related to balance sheet revaluations during the three and nine months ended September 30, 2025, and less than $0.1 million and $0.2 million of losses on disposals of property, plant and equipment during the three and nine months ended September 30, 2025, respectively, (ii) $0.5 million of nonrecurring litigation expense and $0.1 million of losses on sale of business during the nine months ended September 30, 2025, and (iii) $1.0 million gain on the sale of an intangible asset during the three and nine months ended September 30, 2024, and less than $0.1 million and $0.2 million of losses on disposals of property, plant and equipment during the three and nine months ended September 30, 2024, respectively. |
|||||
|
(2) The estimated tax-effect of adjustments is determined by recalculating the tax provision on a Non-GAAP basis. The Non-GAAP effective income tax rate was 17.2% and 15.5% for the nine months ended September 30, 2025 and 2024, respectively. For the nine months ended September 30, 2025, the Non-GAAP effective income tax rate differed from the federal statutory tax rate of 21% in the U.S. primarily due to the research and development tax credits generated in 2025. We analyze the Non-GAAP valuation allowance position on a quarterly basis. As of September 30, 2025, we have no valuation allowance against our deferred tax assets for Non-GAAP purposes. |
|||||
|
(3) Non-GAAP net income is increased for interest expense as part of the calculation for diluted Non-GAAP earnings per share. |
|||||
|
BANDWIDTH INC. Reconciliation of Non-GAAP Financial Measures (In thousands, except share and per share amounts) (Unaudited) |
|||||||
|
|
|||||||
|
Adjusted EBITDA |
|||||||
|
|
|||||||
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
||||
|
|
2025 |
|
2024 |
|
2025 |
|
2024 |
|
Net (loss) income |
$ (1,241) |
|
$ 413 |
|
$ (9,912) |
|
$ (4,765) |
|
Income tax benefit |
(2,281) |
|
(734) |
|
(2,215) |
|
(1,265) |
|
Interest expense, net |
498 |
|
1,025 |
|
1,533 |
|
1,090 |
|
Depreciation |
9,208 |
|
7,989 |
|
26,173 |
|
24,005 |
|
Amortization |
4,633 |
|
4,436 |
|
13,485 |
|
13,133 |
|
Stock-based compensation |
12,328 |
|
11,449 |
|
38,448 |
|
35,148 |
|
Net cost associated with early lease |
— |
|
350 |
|
— |
|
2,383 |
|
Net gain on extinguishment of debt |
— |
|
— |
|
(1,082) |
|
(10,267) |
|
Non-recurring items not indicative of |
1,185 |
|
(957) |
|
2,002 |
|
(828) |
|
Adjusted EBITDA |
$ 24,330 |
|
$ 23,971 |
|
$ 68,432 |
|
$ 58,634 |
|
|
|
|
|
|
|
|
(1) Non-recurring items not indicative of ongoing operations and other include (i) $1.2 million of foreign exchange charges primarily related to balance sheet revaluations during the three and nine months ended September 30, 2025, and less than $0.1 million and $0.2 million of losses on disposals of property, plant and equipment during the three and nine months ended September 30, 2025, respectively, (ii) $0.5 million of nonrecurring litigation expense and $0.1 million of losses on sale of business during the nine months ended September 30, 2025, and (iii) $1.0 million gain on the sale of an intangible asset during the three and nine months ended September 30, 2024, and less than $0.1 million and $0.2 million of losses on disposals of property, plant and equipment during the three and nine months ended September 30, 2024, respectively. |
|||||
|
Free Cash Flow |
|||||||
|
|
|||||||
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
||||
|
|
2025 |
|
2024 |
|
2025 |
|
2024 |
|
Net cash provided by operating activities |
$ 22,239 |
|
$ 20,464 |
|
$ 50,877 |
|
$ 47,365 |
|
Net cash used in investing in capital assets |
(9,104) |
|
(6,219) |
|
(25,406) |
|
(19,207) |
|
Free cash flow |
$ 13,135 |
|
$ 14,245 |
|
$ 25,471 |
|
$ 28,158 |
|
|
|
|
|
|
|
|
(1) Represents the acquisition cost of property, plant and equipment and capitalized development costs for software for internal use. |
|||||
SOURCE Bandwidth Inc.
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