Bandwidth Inc. BAND reported solid fourth-quarter 2023 results, beating the top-line and bottom-line estimates and well exceeding its guided range. The strong performance was backed by enterprises increasingly relying on Bandwidth's platform for communications in the cloud. In order to drive growth, the company plans to focus on winning large enterprises and becoming the best global CPaaS (Communications Platform as a Service) platform for scaling digital engagement.
Quarter Details
On a GAAP basis, net loss during the quarter was $10.9 million or a loss of 42 cents per share compared with a loss of $4.9 million or a loss of 16 cents per share in the prior-year quarter. The wider loss, despite top-line growth, was primarily attributable to higher cost of revenues.
Excluding non-recurring items, non-GAAP net income during the reported quarter was $11.1 million or 38 cents per share compared with $5.8 million or 19 cents per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 14 cents. For 2023, GAAP net loss was $16.3 million or a loss of 64 cents per share compared with a loss of $14.9 million or a loss of 48 cents per share in 2022. Non-GAAP net income for 2023 was $24 million or 83 cents per share compared with $16.7 million or 54 cents per share in 2022.
Bandwidth Inc. Price, Consensus and EPS Surprise
Bandwidth Inc. Price, Consensus and EPS Surprise
Bandwidth Inc. price-consensus-eps-surprise-chart | Bandwidth Inc. Quote
Quarterly revenues improved to $165.4 million from $157 million in the prior-year quarter and exceeded the consensus estimate of $154 million. The growth was backed by high demand for digital engagement and strong contributions from messaging services across a variety of use cases, including health care, retail and e-commerce shopping, fintech and civic engagement. For 2023, revenues improved to $601.1 million from $573.2 million in 2022.
Operating Details
Non-GAAP gross margin during the quarter was 55% down from 56% a year ago, primarily due to higher cost of revenues. However, the company made solid progress toward its goal of improving profits and achieved record profitability of 39% for the quarter. Adjusted EBITDA was $18.8 million, well above the guidance and up from $8.3 million in the prior-year period.
Cash Flow & Liquidity
In 2023, net cash from operating activities was $39 million compared with an operating cash flow of $34.9 million in the prior year. Cash and cash equivalents as of Dec 31, 2023, were $132 million, with convertible senior notes of $418.5 million compared with respective tallies of $113.6 million and $480.5 million a year ago.
Guidance
For 2024, Bandwidth expects revenues in the band of $695 million to $705 million, with adjusted EBITDA in the range of $70 million to $74 million.
For the first quarter, revenues are expected to be within $164 million to $166 million. Adjusted EBITDA is anticipated in the band of $11 million to $13 million.
Bandwidth currently carries a Zacks Rank #2 (Buy).
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Key Picks
Arista Networks, Inc. ANET, carrying a Zacks Rank #2, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has a long-term earnings growth expectation of 17.5% and delivered an earnings surprise of 13.3%, on average, in the trailing four quarters.
It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. Arista is increasingly gaining market traction in 200- and 400-gig high-performance switching products and remains well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.
Headquartered in Wilmington, DE, InterDigital, Inc. IDCC is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular as well as wireless 3G, 4G and IEEE 802-related products and networks.
This Zacks Rank #2 stock has a long-term earnings growth expectation of 17.4% and has surged 46.7% in the past year. A well-established global footprint, diversified product portfolio and ability to penetrate different markets are key growth drivers for InterDigital. The addition of technologies related to sensors, user interface and video to its already strong portfolio of wireless technology solutions is likely to drive considerable value, given the massive size of the market it offers licensing technologies to.
Ubiquiti Inc. UI, carrying a Zacks Rank #2 at present, is a key pick in the broader industry. Headquartered in New York, it offers a comprehensive portfolio of networking products and solutions for service providers and enterprises at disruptive prices.
It boasts a proprietary network communication platform that is well-equipped to meet end-market customer needs. In addition, it is committed to reducing operational costs by using a self-sustaining mechanism for rapid product support and dissemination of information by leveraging the strength of the Ubiquiti Community.
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