Bandwidth Price Target Maintained With a $36.00/Share by JMP Securities

(13:26 GMT) Bandwidth Price Target Cut to $15.00/Share From $20.00 by Baird

Bandwidth posted 2% revenue growth and a narrowed net loss in Q1 2025, with improved gross margin and strong customer retention, while repurchasing a portion of its convertible notes and maintaining a solid liquidity position.

Original document: Bandwidth Inc. [BAND] SEC 10-Q Quarterly Report — May. 7 2025

Bandwidth Inc. BAND reported impressive first-quarter 2025 results, with both adjusted earnings and revenues surpassing the respective Zacks Consensus Estimate.

The strong performance was backed by enterprises increasingly relying on Bandwidth’s platform for cloud-based communications. To drive growth, the company plans to focus on winning large enterprises and become the leading global CPaaS (Communications Platform as a Service) platform for scaling digital engagement. A strong focus on strengthening profitability and expanding cash flow generation is a positive factor.

Quarter Details

On a GAAP basis, net loss during the quarter was $3.74 million or a loss of 13 cents per share compared with a net loss of $9.2 million or a loss of 35 cents per share in the prior-year quarter. The narrower loss was attributable to top-line growth. 

Excluding non-recurring items, non-GAAP net income during the reported quarter was $11.4 million or 36 cents per share compared with $8.1 million or 27 cents per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate of 29 cents. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Bandwidth Inc. Price, Consensus and EPS Surprise

Bandwidth Inc. price-consensus-eps-surprise-chart | Bandwidth Inc. Quote

Quarterly revenues improved to $174 million from $171 million in the prior-year quarter. The growth was driven by high demand for digital engagement and strong contributions from messaging services across various use cases, including healthcare, IT services, fintech, and civic engagement. The top line exceeded the consensus estimate of $169 million. Bandwidth’s Maestro and AI Bridge, which allows for the seamless integration of preferred voice agents, are gaining popularity.

Operating Details

Non-GAAP gross margin during the quarter was 59%, up from 57% a year ago. Favorable product mix and operational efficiency propelled the gross margin. Adjusted EBITDA was $22.2 million, well above the guidance and up from $15.9 million in the prior-year period.

Cash Flow & Liquidity

In the March quarter, net cash used in operating activities was $3.1 million against a cash generation of $2.5 million in the prior year. Cash and cash equivalents as of March 31, 2025, were $35.9 million, with convertible senior notes of $246.8 million.

Guidance Up

Backed by strong momentum, Bandwidth expects continued growth, with a focus on strategic investments and strengthening its capital structure. Revenues for 2025 are anticipated to be in the band of $745-760 million, reflecting 9-11% year-over-year growth. Management forecasts adjusted EBITDA in the range of $84-$91 million, up from the prior estimate of $82-90 million. 

For the second quarter, revenues are expected to be between $178 million and $180 million. Adjusted EBITDA is anticipated to be in the band of $18 million-$20 million.

BAND’s Zacks Rank

Bandwidth currently carries a Zacks Rank #5 (Strong Sell). 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

Upcoming Releases

Pinterest, Inc. PINS is scheduled to release first-quarter 2025 earnings on May 8. The Zacks Consensus Estimate for earnings is pegged at 25 cents per share, indicating growth of 25% from the year-ago figure. 

Akamai Technologies, Inc. AKAM is scheduled to release first-quarter 2025 earnings on May 8. The Zacks Consensus Estimate for earnings is pegged at $1.58 per share, indicating decline of 3.66% from the year-ago figure. 

HubSpot, Inc. HUBS is scheduled to release first-quarter 2025 earnings on May 8. The Zacks Consensus Estimate for earnings is pegged at $1.74 per share, indicating growth of 3.57% from the year-ago figure. 

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research