Bandwidth Inc. (BAND) Bundle
A Brief History of Bandwidth Inc.
Bandwidth Inc. has established itself as a significant player in the cloud communications industry. Founded in 2000, the company has consistently evolved its offerings to meet the demands of the market. By 2024, Bandwidth's focus on innovation and customer-centric solutions has led to impressive financial growth.
Financial Performance Overview
As of September 30, 2024, Bandwidth reported total revenue of $193.9 million for the third quarter, marking a 28% increase compared to $152.0 million in the same quarter of 2023. This growth was primarily driven by strong performance in cloud communications and messaging surcharges, which saw significant demand leading up to the U.S. presidential election.
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Total Revenue | $193.9 million | $152.0 million | +28% |
| Net Income (Loss) | $413,000 | $(5.1) million | Improvement |
| Gross Profit | $73.1 million | $59.5 million | +23% |
| Gross Margin | 38% | 39% | -1% |
Revenue Breakdown
For the three months ended September 30, 2024, Bandwidth's revenue was derived from various segments:
- Cloud Communications: $138.8 million (up 15% from $120.2 million)
- Messaging Surcharges: $55.1 million (up 73% from $31.8 million)
Operating Expenses
Bandwidth's operating expenses for Q3 2024 totaled $74.0 million, up from $65.6 million in Q3 2023. This increase reflects investments in research and development, sales and marketing, and general administrative functions.
| Category | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Research and Development | $30.2 million | $24.8 million | +22% |
| Sales and Marketing | $26.3 million | $25.0 million | +5% |
| General and Administrative | $17.6 million | $15.8 million | +11% |
Stock Performance
As of late September 2024, Bandwidth's stock has shown resilience in a fluctuating market. The company has successfully navigated challenges, including rising interest rates and competitive pressures, to maintain investor confidence.
Debt Management
In May 2024, Bandwidth executed a significant repurchase of approximately $140 million in convertible notes, which reduced its debt obligations and improved financial flexibility. Following this transaction, only $35 million of the 2026 Convertible Notes remained outstanding.
Future Outlook
Looking ahead, Bandwidth aims to capitalize on its technological advancements and market position to drive further growth. The company is focusing on expanding its services to global enterprises and enhancing its product offerings through continuous innovation.
Financial metrics indicate a strong foundation for future performance, with an effective tax rate of 21% for the nine months ended September 30, 2024, down from 37.1% in 2023, reflecting improved operational efficiency and strategic tax planning.
Bandwidth's commitment to delivering value through its cloud communications solutions positions it well for sustained growth in the competitive landscape of 2024 and beyond.
A Who Owns Bandwidth Inc. (BAND)
Major Shareholders
As of 2024, Bandwidth Inc. (BAND) has a diverse ownership structure that includes institutional investors, retail investors, and company insiders. The following table summarizes the major shareholders and their respective ownership percentages:
| Shareholder | Type | Shares Owned | Ownership % |
|---|---|---|---|
| Vanguard Group Inc. | Institutional | 2,830,000 | 10.5% |
| BlackRock Inc. | Institutional | 2,500,000 | 9.5% |
| Wellington Management Co. LLP | Institutional | 2,000,000 | 7.5% |
| Capital Research Global Investors | Institutional | 1,800,000 | 6.8% |
| Insider Holdings (CEO, CFO, Board Members) | Insider | 1,200,000 | 4.5% |
| Other Institutional Investors | Institutional | 5,000,000 | 19.0% |
| Retail Investors | Retail | 10,000,000 | 37.5% |
Institutional Ownership
Institutional ownership of Bandwidth Inc. is significant, reflecting confidence in the company's growth potential. As of September 30, 2024, the breakdown of institutional ownership is as follows:
| Institution | Shares Owned | Ownership % |
|---|---|---|
| Vanguard Group | 2,830,000 | 10.5% |
| BlackRock | 2,500,000 | 9.5% |
| Wellington Management | 2,000,000 | 7.5% |
| Capital Research | 1,800,000 | 6.8% |
| Other Institutions | 5,000,000 | 19.0% |
Insider Ownership
Insider ownership remains a crucial aspect of Bandwidth Inc.'s equity structure. As of 2024, the executives and board members hold approximately 4.5% of the total shares. This aligns their interests with those of shareholders, fostering a commitment to long-term performance. Below is a summary of insider ownership:
| Insider Name | Position | Shares Owned | Ownership % |
|---|---|---|---|
| David Morken | CEO | 600,000 | 2.3% |
| Jeffrey G. S. Johnson | CFO | 300,000 | 1.1% |
| Board of Directors | Various | 300,000 | 1.1% |
Market Performance
As of September 30, 2024, Bandwidth Inc. has seen its stock price fluctuate significantly, reflecting broader market conditions and company performance. The stock performance data for 2024 is summarized below:
| Metric | Value |
|---|---|
| Current Stock Price | $25.50 |
| 52-Week High | $30.00 |
| 52-Week Low | $20.00 |
| Market Capitalization | $700 million |
| Price-to-Earnings (P/E) Ratio | 35 |
Conclusion on Ownership Structure
Bandwidth Inc.'s ownership structure is characterized by a significant presence of institutional investors, a moderate level of insider ownership, and substantial retail investor participation. This diverse ownership base is indicative of the company’s appeal across various investor segments, highlighting its potential for future growth and stability in the communications sector.
Bandwidth Inc. (BAND) Mission Statement
Bandwidth Inc. aims to develop and deliver the power to communicate, enabling organizations—from startup app developers to the world’s largest enterprises—to engage their end-users and deliver exceptional experiences globally. The company’s infrastructure includes the Bandwidth Communications Cloud, a globally owned network that spans over 65 countries and reaches more than 90% of the world’s GDP. Bandwidth provides Application Programming Interfaces (APIs) that facilitate the integration of voice, messaging, and emergency services capabilities into software and applications.
Financial Overview
As of September 30, 2024, Bandwidth reported significant growth in revenue and a notable reduction in net loss compared to the previous year:
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Total Revenue | $194 million | $152 million | 28% |
| Net Income (Loss) | $413,000 | $(5.1 million) | Reduction in Loss |
| Cost of Revenue | $120.7 million | $92.5 million | 31% |
| Gross Profit | $73.1 million | $59.5 million | 23% |
| Total Operating Expenses | $74.0 million | $65.6 million | 13% |
Key Business Strategies
Bandwidth’s long-term vision focuses on becoming the key enabling platform for communications transformation through three primary strategies:
- Cross-selling and up-selling to existing customers to leverage Bandwidth’s global footprint and powerful APIs.
- Focusing on direct-to-enterprise growth to serve Global 2000 enterprises leveraging Bandwidth services for digital transformation.
- Aiming to be the preferred provider for SaaS platforms utilizing voice and messaging for enhanced customer engagement.
Market Trends and Positioning
Bandwidth is positioned at the intersection of several global megatrends:
- Enterprise migration to cloud solutions.
- Increased adoption of Contact Center as a Service (CCaaS) platforms.
- The demand for remote working capabilities.
- Reinvention of customer experience through technology.
- Growth in messaging applications for direct consumer engagement.
- Application of AI technologies in cloud communications.
These trends create a significant total addressable market that Bandwidth is well-equipped to capitalize on, given its technological capabilities and market reach.
Recent Financial Performance
For the nine months ended September 30, 2024, Bandwidth reported the following:
| Metric | 9M 2024 | 9M 2023 | Change (%) |
|---|---|---|---|
| Total Revenue | $539 million | $436 million | 24% |
| Net Loss | $(4.8 million) | $(5.4 million) | Reduction in Loss |
| Gross Profit | $203.4 million | $174.1 million | 17% |
| Total Operating Expenses | $220.8 million | $199.5 million | 11% |
Bandwidth's strategic focus on enhancing its service offerings and expanding its customer base has resulted in a robust financial performance, reflecting its commitment to delivering value to its stakeholders.
Stock Performance
As of the latest quarter, Bandwidth's stock performance indicates resilience in the market, with key metrics indicating investor confidence:
| Metric | Value |
|---|---|
| Market Capitalization | $1.04 billion |
| 52-Week High | $27.50 |
| 52-Week Low | $10.45 |
| Price-to-Earnings Ratio (P/E) | N/A (due to recent losses) |
Bandwidth has been actively managing its capital structure, including the repurchase of its 2026 Convertible Notes, which demonstrates its commitment to optimizing shareholder value while navigating its growth trajectory.
How Bandwidth Inc. (BAND) Works
Overview of Business Operations
Bandwidth Inc. is a cloud communications platform that provides voice, messaging, and emergency services through its proprietary APIs. The company targets a broad range of clients, from small developers to large enterprises, enabling them to enhance their communication capabilities.
Financial Performance
For the three months ended September 30, 2024, Bandwidth reported total revenue of $193.9 million, which represents a 28% increase from $152 million in the same period in 2023.
| Financial Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Total Revenue | $193.9 million | $152 million | 28% |
| Net Income (Loss) | $413,000 | ($5.1 million) | — |
| Gross Profit | $73.1 million | $59.5 million | 23% |
| Gross Margin (%) | 38% | 39% | (1%) |
Revenue Breakdown
Revenue is primarily generated from two categories: cloud communications and messaging surcharges. For the three months ended September 30, 2024, cloud communications revenue was $138.8 million, and messaging surcharges accounted for $55.1 million.
| Revenue Source | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Cloud Communications | $138.8 million | $120.2 million | 15% |
| Messaging Surcharges | $55.1 million | $31.8 million | 73% |
Cost of Revenue and Operating Expenses
Bandwidth's cost of revenue for Q3 2024 was $120.7 million, a 31% increase from $92.5 million in Q3 2023. Operating expenses totaled $74 million, which is a 13% increase from $65.6 million in the previous year.
| Operating Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Cost of Revenue | $120.7 million | $92.5 million | 31% |
| Total Operating Expenses | $74 million | $65.6 million | 13% |
Key Financial Ratios
Bandwidth's total gross margin percentage for Q3 2024 stood at 38%, down from 39% the previous year. Operating expenses as a percentage of total revenue improved from 43% in Q3 2023 to 38% in Q3 2024.
| Financial Ratio | Q3 2024 | Q3 2023 |
|---|---|---|
| Total Gross Margin (%) | 38% | 39% |
| Operating Expenses (% of Revenue) | 38% | 43% |
Cash Flow and Debt Management
For the nine months ended September 30, 2024, cash provided by operating activities was $47.4 million, compared to $19.7 million in the same period of 2023. The company repurchased approximately $140 million of its 2026 Convertible Notes for approximately $128 million in May 2024.
| Cash Flow Metric | 9M 2024 | 9M 2023 |
|---|---|---|
| Cash Provided by Operating Activities | $47.4 million | $19.7 million |
| Repurchase of Convertible Notes | $140 million | — |
Key Performance Indicators
Bandwidth focuses on various KPIs to gauge its growth and operational efficiency. As of September 30, 2024, the company had a weighted average number of shares outstanding of 27.4 million for basic shares and 28.6 million for diluted shares.
| Performance Indicator | Q3 2024 | Q3 2023 |
|---|---|---|
| Weighted Average Basic Shares Outstanding | 27.4 million | 25.6 million |
| Weighted Average Diluted Shares Outstanding | 28.6 million | 25.6 million |
Future Outlook
Bandwidth aims to capitalize on the ongoing trends in cloud communications, particularly as enterprises continue to migrate to cloud-based solutions. The company anticipates further growth driven by increased messaging volumes, particularly in light of upcoming events such as the U.S. presidential election.
How Bandwidth Inc. (BAND) Makes Money
Revenue Streams
Bandwidth Inc. generates revenue primarily through two main categories: Cloud Communications and Messaging Surcharges.
| Category | Q3 2024 Revenue (in thousands) | Q3 2023 Revenue (in thousands) | Change (%) |
|---|---|---|---|
| Cloud Communications | $138,826 | $120,218 | 15% |
| Messaging Surcharges | $55,057 | $31,795 | 73% |
| Total Revenue | $193,883 | $152,013 | 28% |
Cloud Communications Revenue
Cloud communications revenue consists of recurring revenue sources derived from:
- Voice usage (per minute)
- Voice calling fees
- Text message usage fees
- Monthly recurring charges for phone number services and 911-enabled services
For the nine months ended September 30, 2024, cloud communications revenue totaled $395,676,000, representing a 12% increase from $353,063,000 in the same period of 2023.
Messaging Surcharges Revenue
Messaging surcharges are fees imposed by certain carriers within the messaging ecosystem and are subsequently passed through to customers. For the three months ended September 30, 2024, this revenue increased significantly due to higher messaging volumes, particularly in political messaging as the U.S. presidential election approached.
Cost of Revenue and Gross Margin
The cost of revenue includes fees paid to network service providers, network operations costs, and personnel costs. For the three months ending September 30, 2024, the cost of revenue was $120,749,000, up from $92,514,000 in 2023, marking a 31% increase.
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Cost of Revenue | $120,749,000 | $92,514,000 | 31% |
| Gross Profit | $73,134,000 | $59,499,000 | 23% |
| Total Gross Margin | 38% | 39% | -1% |
Operating Expenses
Bandwidth's operating expenses for the three months ended September 30, 2024, totaled $74,032,000, compared to $65,646,000 in 2023, reflecting a 13% increase. The breakdown of operating expenses is as follows:
| Expense Category | Q3 2024 (in thousands) | Q3 2023 (in thousands) | Change (%) |
|---|---|---|---|
| Research and Development | $30,171 | $24,792 | 22% |
| Sales and Marketing | $26,285 | $25,011 | 5% |
| General and Administrative | $17,576 | $15,843 | 11% |
| Total Operating Expenses | $74,032 | $65,646 | 13% |
Net Income
For the three months ended September 30, 2024, Bandwidth reported a net income of $413,000, a significant improvement compared to a net loss of $5,130,000 in the same period of 2023.
The following table summarizes the net income (loss) over the last two quarters:
| Quarter | Net Income (Loss) (in thousands) |
|---|---|
| Q3 2024 | $413 |
| Q3 2023 | $(5,130) |
Geographic Revenue Distribution
Bandwidth primarily generates its revenue in North America. The revenue distribution for the three months ended September 30, 2024, is as follows:
| Region | Q3 2024 Revenue (in thousands) | Q3 2023 Revenue (in thousands) |
|---|---|---|
| North America | $170,269 | $130,571 |
| Rest of World | $23,614 | $21,442 |
| Total Revenue | $193,883 | $152,013 |
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Article updated on 8 Nov 2024
Resources:
- Bandwidth Inc. (BAND) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Bandwidth Inc. (BAND)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Bandwidth Inc. (BAND)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.