Quarterly revenue and non-GAAP EPS exceeded high-end of
guidance ranges
Raises full year 2022 outlook for revenue and non-GAAP
EPS
RALEIGH,
N.C., Nov. 1, 2022 /PRNewswire/ -- Bandwidth
Inc. (NASDAQ: BAND), a leading global enterprise cloud
communications company, today announced financial results for the
third quarter ended September 30,
2022.
"We exceeded our guidance ranges for the third quarter and
raised our full-year outlook on both the top and bottom lines,"
said David Morken, Bandwidth's Chief
Executive Officer. "Looking ahead, our operating discipline,
mission-critical services, and stability of our customer base give
us deep conviction we will thrive during this uncertain macro
environment. I am incredibly proud of the team for serving our
customers so well during this period."
Third Quarter
2022 Financial Highlights The following table summarizes the consolidated
financial highlights for the three months ended September 30, 2022
and 2021 (in millions, except per share
amounts).(1)
|
|
Three months
ended
September 30,
|
|
2022
|
|
2021
|
Total
Revenue
|
$
148
|
|
$
131
|
Gross
Margin(1)
|
43 %
|
|
44 %
|
Non-GAAP Gross
Margin(1)
|
57 %
|
|
54 %
|
Net Loss
|
$
(1)
|
|
$
(7)
|
Non-GAAP Net
Income
|
$
8
|
|
$
6
|
Net loss per share,
basic and diluted
|
$
(0.03)
|
|
$
(0.28)
|
Non-GAAP net income per
Non-GAAP share
|
$
0.27
|
|
$
0.25
|
|
(1) Prior
period has been conformed to the current period presentation.
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.
|
|
|
Three months
ended
September 30,
|
|
2022
|
|
2021
|
Number of active
customers (1)
|
3,380
|
|
3,220
|
Dollar-based net
retention rate (1)
|
109 %
|
|
125 %
|
|
|
(1)
|
As a result of the
change in revenue segment reporting effective January 1, 2022, our
key performance indicators of active customers and
dollar-based net retention rates disclosed in previous SEC filings,
press releases and presentations prior to reporting periods ended
March 31, 2022, will not be directly comparable to our key
performance indicators reported going forward. To facilitate
comparison between the periods presented in the table above, number
of active customers and dollar-based net retention rate have been
conformed to the current period methodology. Additional information
regarding our active customers and dollar-based net retention rate
and how each are calculated are included below.
|
"Customer demand across our full range of software solutions
over-achieved our expectations while our operating leverage
delivered record non-GAAP gross margin," said Daryl Raiford, Bandwidth's Chief Financial
Officer. "Accordingly, we are raising our full year 2022 outlook
for both revenue and non-GAAP EPS. We are well positioned to
execute on our strategy of delivering business-critical services to
Global 2000 enterprises with profitable growth."
Third Quarter Customer and Operational
Highlights
- We launched two key product innovations: Send-To is a new
messaging app for Microsoft Teams, the latest co-creation in our
decade-long partnership with Microsoft. Call AssureTM is
the only comprehensive disaster recovery solution for toll-free
calls, and the first hands-off solution of its kind in our
space.
- America's leading security, fire and alarm monitoring provider
switched to Bandwidth to safeguard mission-critical services with
our 5-fold level of toll-free call redundancy with automatic
failure re-routing.
- A rapidly growing cloud platform provider specializing in
healthcare and hospitality chose Bandwidth for mission-critical
services worldwide, consolidating 20 different carrier
relationships into one. This also future-proofed their growth
strategy to expand in the APAC and EMEA regions.
- Five9 expanded its relationship with Bandwidth to manage
hundreds of thousands of telephone numbers and associated features
on our platform. Our solution accelerated their migration 10-fold
compared to alternatives, so Five9 can utilize Bandwidth's next-gen
capabilities much sooner.
Financial Outlook
Bandwidth's outlook assumes a continuation of current business
conditions and current foreign currency exchange rates. Bandwidth
is providing guidance for its fourth quarter and full year 2022 as
follows:
|
Q4 2022
Guidance
|
|
Full Year 2022
Guidance
|
Total Revenue
(millions)
|
$146
- $148
|
|
$562
- $564
|
Non-GAAP earnings per
share (1)
|
$0.03
- $0.05
|
|
$0.35
- $0.37
|
|
|
(1)
|
Assumes weighted
average diluted share count of approximately 29.4 million in 4Q
2022 and full year 2022.
|
Bandwidth has not reconciled its fourth quarter and full year
guidance related to non-GAAP net earnings or loss to GAAP net
earnings or loss and non-GAAP earnings or loss per share to GAAP
earnings or loss, because stock-based compensation cannot be
reasonably calculated or predicted at this time. Accordingly, a
reconciliation is not available without unreasonable effort.
Executive Leadership Updates
Bandwidth also announced two executive leadership updates:
- Marina Carreker informed us of
her intention to resign from her position as President. At our
request, Ms. Carreker agreed to continue in her position until
December 31, 2022.
- Devesh Agarwal has joined
Bandwidth as Chief Software Strategy Officer, overseeing all our
software development operations. Mr. Agarwal is an experienced
leader with over 30 years of communications experience and 25
patents invented. He previously served as Chief Product Officer of
Sandvine and in executive and engineering leadership roles at
Oracle, Tekelec and Nokia.
"Marina's passion for our customers and her mind for the
business have been essential in helping us advance our vision,"
said David Morken. "She has been
critical in orchestrating and unlocking new revenue among Fortune
500 customers and in enabling the recent growth of our messaging
portfolio. The entire Bandwidth team joins me in wishing her the
very best. Fair winds and following seas to the Carreker family. We
also welcome Devesh as a key addition to our team. With his immense
global experience in SaaS and a proven track record of making a
long-lasting impact on growing companies, he will be a strong
leader and catalyst for our software mission."
Marina Carreker added, "My
experience at Bandwidth has been incredible and I am grateful to
have served alongside David Morken
and the rest of the team through nearly seven years of
extraordinary growth. I leave with immense pride in the work we
have done together and the way we've done it. I know there
are great things to come for Bandwidth and look forward to cheering
on the team's continued success."
Repurchase of Convertible Notes
Bandwidth announced that it has entered into separate, privately
negotiated repurchase agreements with a limited number of holders
of its 0.250% Convertible Senior Notes due 2026 (the "Notes") to
repurchase (the "Repurchases") $160
million aggregate principal amount of the Notes at
approximately a 29 percent discount to par value. The repurchase
price payable by Bandwidth will be paid in cash and will be based
in part on the daily volume-weighted average price per share of
Bandwidth's Class A common stock over a 15 consecutive trading day
measurement period beginning on, and including, November 2, 2022.
Bandwidth has previously entered into capped call transactions
with certain financial institutions in connection with the Notes.
All of these transactions are expected to remain in effect
notwithstanding the Repurchases.
The repurchases are expected to close on November 28, 2022, subject to the satisfaction of
customary closing conditions. Following such closings,
approximately $240 million principal
amount of the Notes will remain outstanding.
Upcoming Investor Conference Schedule
- Barclays Global Technology, Media and Telecommunications
Conference in San Francisco,
CA. Fireside chat on Wednesday,
December 7th at 2:00PM Eastern
Time.
Live webcasts and replays of the presentation will be available
on the Investor Relations section of the Bandwidth's website at
https://investors.bandwidth.com.
No Offer or Solicitation
This press release is neither an offer to sell nor a
solicitation of an offer to buy any securities described above, nor
will there be any offer, solicitation or sale of any securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful.
About Bandwidth Inc.
Bandwidth (NASDAQ: BAND) is a global communications software
company that helps enterprises connect people around the world with
cloud-ready voice, messaging and emergency services. Backed by a
network reaching 60+ countries covering 90 percent of global GDP,
companies like Cisco, Google, Microsoft, RingCentral, Uber and Zoom
use Bandwidth's APIs to easily embed communications into software
and applications. Bandwidth has more than 20 years in the
technology space and was the first Communications
Platform-as-a-Service (CPaaS) provider offering a robust selection
of APIs built on our own global network. Our award-winning support
teams help businesses around the world solve complex communications
challenges every day. More information is available at
www.bandwidth.com.
Conference Call
Conference call to discuss Bandwidth's financial results for the
third quarter ended September 30,
2022 on November 1, 2022, via
the investor section of its website at
https://investors.bandwidth.com where a replay will also be
available shortly following the conference call.
Conference Call Details
November 1, 2022
5:00 pm ET
Domestic dial-in:
877-270-2148
International dial-in:
412-902-6510
Replay information
An audio replay of this conference call will be available
through November 8, 2022, by dialing
(877)-344-7529 or (412)- 317-0088 for international callers, and
entering passcode 4996013.
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 ending December 31, 2022 and year ending December 31, 2022, the success of our product
offerings and our platform, the value proposition of our products,
and our assessment of the impact of the distributed denial of
service ("DDoS") attacks discussed herein and in previous press
releases are forward-looking statements. The words "anticipate,"
"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 expand
effectively into new markets, macroeconomic conditions both in the
U.S. and globally, legal, reputational and financial risks which
may result from the DDoS attacks or other cybersecurity incidents,
risks that the anticipated benefits of the acquisition of Voxbone
may not be fully realized or may take longer to realize than
expected, 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 Form 10-K filed with the
Securities and Exchange Commission and any subsequent reports that
we file with the Securities and Exchange Commission. 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 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 above, 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, such as depreciation, amortization of acquired
intangible assets related to acquisitions and stock-based
compensation, 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 revenue less
pass-through messaging surcharges, expressed as a percentage of
revenue.
We define Non-GAAP net (loss) income as net (loss) income
adjusted for certain items affecting period to period
comparability. Non-GAAP net (loss) income excludes stock-based
compensation, amortization of acquired intangible asset related to
acquisitions, amortization of debt discount and issuance costs for
convertible debt, acquisition related expenses, impairment charges
of intangibles assets, loss (gain) on sale of business, loss (gain)
on disposal of property and equipment, net cost associated with
early lease terminations and leases without economic benefit,
estimated tax impact of above adjustments, net of valuation
allowances.
We define adjusted EBITDA as net (loss) income 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, loss (gain)
on sale of business, loss (gain) from disposal of property and
equipment and net cost associated with early lease terminations and
leases without economic benefit. 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 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 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.
We define an active customer account at the end of any period as
an individual account, as identified by a unique account
identifier, for which we have recognized at least $100 of revenue in the last month of the period.
We believe usage of our platform by an active customer at or above
the $100 per month threshold is a
stronger indicator of potential future engagement than trial usage
at levels below $100 per month. A
single organization may constitute multiple unique active customer
accounts if it has multiple unique account identifiers, each of
which is treated as a separate active customer account. Customers
who pay after using our platform and customers that have credit
balances are included in the number of active customer
accounts.
To calculate the dollar-based net retention rate, we first
identify the cohort of customers that generate revenue and that
were customers in the same quarter of the prior year. The
dollar-based net retention rate is obtained by dividing the revenue
generated from that cohort in a quarter, by the revenue generated
from that same cohort in the corresponding quarter in the prior
year. The dollar-based net retention rate reported in a
quarter is then obtained by averaging the result from that quarter,
by the corresponding results from each of the prior three quarters.
Customers of acquired businesses are included in the subsequent
year's calendar quarter of acquisition. Our dollar-based net
retention rate increases when such customers increase usage of a
product, extend usage of a product to new applications or adopt a
new product. Our dollar-based net retention rate decreases when
such customers cease or reduce usage of a product or when we lower
prices on our solutions. For comparative purposes, the dollar-based
net retention rate presented herein has been updated to reflect the
change in our reporting segments.
Cost Alignment
During the quarter ended March 31,
2022, Bandwidth changed its presentation of certain costs to
align with the definitions of cost of revenue, research and
development, sales and marketing, and general and administrative
expenses used by many of our peers. As part of the benchmarked
definitions, Bandwidth has included allocations of facilities and
shared IT costs based on employee headcount within the cost of
revenue, research and development, sales and marketing, and general
and administrative expense categories.
Additionally, expense related to our product management function
is now included in research and development rather than general and
administrative as previously reported and the customer billing and
collections function and amortization of acquired customer
relationship intangible assets is now included in sales and
marketing rather than general and administrative as previously
reported. Management believes use of the benchmarked definitions
will enhance the comparability of our performance to that of our
peers. Financial data from prior periods have been conformed to the
current definitions of cost of revenue, research and development,
sales and marketing, and general and administrative expenses. There
was no impact to revenue or net income for any periods presented.
The condensed consolidated balance sheets, condensed consolidated
statements of changes in stockholders' equity, and condensed
consolidated statements of cash flows are not affected by these
changes.
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,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Revenue
|
$
148,325
|
|
$
130,638
|
|
$
416,178
|
|
$
364,775
|
Cost of
revenue
|
84,861
|
|
73,573
|
|
241,896
|
|
203,071
|
Gross profit
|
63,464
|
|
57,065
|
|
174,282
|
|
161,704
|
Operating
expenses:
|
|
|
|
|
|
|
|
Research and
development
|
25,044
|
|
16,857
|
|
71,735
|
|
50,036
|
Sales and
marketing
|
23,184
|
|
21,143
|
|
69,663
|
|
60,458
|
General and
administrative
|
16,623
|
|
18,127
|
|
50,191
|
|
49,375
|
Total operating
expenses
|
64,851
|
|
56,127
|
|
191,589
|
|
159,869
|
Operating (loss)
income
|
(1,387)
|
|
938
|
|
(17,307)
|
|
1,835
|
Other (expense) income,
net
|
(338)
|
|
(7,567)
|
|
2,282
|
|
(20,768)
|
Loss before income
taxes
|
(1,725)
|
|
(6,629)
|
|
(15,025)
|
|
(18,933)
|
Income tax benefit
(provision)
|
923
|
|
(315)
|
|
1,161
|
|
(255)
|
Net loss
|
$
(802)
|
|
$
(6,944)
|
|
$
(13,864)
|
|
$
(19,188)
|
|
|
|
|
|
|
|
|
Net loss per share,
basic and diluted
|
$
(0.03)
|
|
$
(0.28)
|
|
$
(0.55)
|
|
$
(0.77)
|
Weighted average number
of common shares outstanding, basic and diluted
|
25,304,057
|
|
25,114,762
|
|
25,268,216
|
|
25,075,941
|
|
The Company recognized
total stock-based compensation expense as follows:
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Cost of
revenue
|
$
93
|
|
$
80
|
|
$
283
|
|
$
275
|
Research and
development
|
1,767
|
|
877
|
|
5,298
|
|
2,892
|
Sales and
marketing
|
593
|
|
603
|
|
2,219
|
|
1,847
|
General and
administrative
|
2,439
|
|
2,265
|
|
7,259
|
|
6,578
|
Total
|
$
4,892
|
|
$
3,825
|
|
$
15,059
|
|
$
11,592
|
BANDWIDTH
INC.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
|
|
|
As of September
30,
|
|
As of December
31,
|
|
2022
|
|
2021
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
166,384
|
|
$
331,453
|
Restricted
cash
|
918
|
|
836
|
Marketable
securities
|
145,171
|
|
—
|
Accounts receivable,
net of allowance for doubtful accounts
|
76,597
|
|
61,572
|
Deferred
costs
|
3,772
|
|
3,204
|
Prepaid expenses and
other current assets
|
24,273
|
|
15,820
|
Total current
assets
|
417,115
|
|
412,885
|
Property and equipment,
net
|
73,205
|
|
69,604
|
Operating right-of-use
asset, net
|
11,251
|
|
14,061
|
Intangible assets,
net
|
170,498
|
|
211,217
|
Deferred costs,
non-current
|
5,145
|
|
4,676
|
Other long-term
assets
|
32,293
|
|
8,673
|
Goodwill
|
298,892
|
|
344,423
|
Total assets
|
$
1,008,399
|
|
$
1,065,539
|
Liabilities and
stockholders' equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
21,034
|
|
$
9,142
|
Accrued expenses and
other current liabilities
|
75,053
|
|
65,921
|
Current portion of
deferred revenue
|
6,233
|
|
6,248
|
Advanced
billings
|
7,672
|
|
6,380
|
Operating lease
liability, current
|
7,166
|
|
5,807
|
Total current
liabilities
|
117,158
|
|
93,498
|
Other
liabilities
|
9,601
|
|
6,018
|
Operating lease
liability, net of current portion
|
6,426
|
|
10,958
|
Deferred revenue, net
of current portion
|
8,155
|
|
7,634
|
Deferred tax
liability
|
35,215
|
|
48,396
|
Convertible senior
notes
|
637,248
|
|
486,440
|
Total
liabilities
|
813,803
|
|
652,944
|
Stockholders'
equity:
|
|
|
|
Class A and Class B
common stock
|
25
|
|
25
|
Additional paid-in
capital
|
359,465
|
|
502,477
|
Accumulated
deficit
|
(81,981)
|
|
(76,867)
|
Accumulated other
comprehensive loss
|
(82,913)
|
|
(13,040)
|
Total stockholders'
equity
|
194,596
|
|
412,595
|
Total liabilities and
stockholders' equity
|
$
1,008,399
|
|
$
1,065,539
|
BANDWIDTH
INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
|
|
|
Nine months ended
September 30,
|
|
2022
|
|
2021
|
Cash flows from
operating activities
|
|
|
|
Net loss
|
$
(13,864)
|
|
$
(19,188)
|
Adjustments to
reconcile net loss to net cash provided by operating
activities
|
|
|
|
Depreciation and
amortization
|
26,866
|
|
27,478
|
Non-cash reduction to
the right-of-use asset
|
5,308
|
|
4,251
|
Amortization of debt
discount and issuance costs
|
2,343
|
|
19,475
|
Stock-based
compensation
|
15,059
|
|
11,592
|
Deferred taxes and
other
|
(5,496)
|
|
686
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts receivable,
net of allowances
|
(18,311)
|
|
(20,610)
|
Prepaid expenses and
other assets
|
(13,389)
|
|
(4,173)
|
Accounts
payable
|
14,305
|
|
7,122
|
Accrued expenses and
other liabilities
|
17,142
|
|
1,590
|
Operating right-of-use
liability
|
(5,623)
|
|
(4,535)
|
Net cash provided by
operating activities
|
24,340
|
|
23,688
|
Cash flows from
investing activities
|
|
|
|
Purchase of property
and equipment
|
(18,669)
|
|
(9,552)
|
Deposits for
construction in progress
|
(14,545)
|
|
(3,000)
|
Capitalized software
development costs
|
(2,121)
|
|
(3,212)
|
Purchase of
land
|
—
|
|
(30,017)
|
Proceeds from sale of
land
|
—
|
|
17,462
|
Purchase of marketable
securities
|
(178,153)
|
|
—
|
Proceeds from sales and
maturities of marketable securities
|
33,102
|
|
—
|
Proceeds from sales and
maturities of other investments
|
—
|
|
40,000
|
Net cash (used in)
provided by investing activities
|
(180,386)
|
|
11,681
|
Cash flows from
financing activities
|
|
|
|
Payments on finance
leases
|
(162)
|
|
(161)
|
Proceeds from issuance
of convertible senior notes
|
—
|
|
250,000
|
Purchase of Capped
Call
|
—
|
|
(25,500)
|
Payment of debt
issuance costs
|
(553)
|
|
(7,544)
|
Proceeds from exercises
of stock options
|
162
|
|
886
|
Value of equity awards
withheld for tax liabilities
|
(2,047)
|
|
(3,720)
|
Net cash (used in)
provided by financing activities
|
(2,600)
|
|
213,961
|
Effect of exchange rate
changes on cash, cash equivalents and restricted cash
|
(6,341)
|
|
291
|
Net (decrease) increase
in cash, cash equivalents, and restricted cash
|
(164,987)
|
|
249,621
|
Cash, cash equivalents,
and restricted cash, beginning of period
|
332,289
|
|
81,437
|
Cash, cash equivalents,
and restricted cash, end of period
|
$
167,302
|
|
$
331,058
|
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,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Gross
Profit
|
$
63,464
|
|
$
57,065
|
|
$
174,282
|
|
$
161,704
|
Gross Profit Margin
%
|
43 %
|
|
44 %
|
|
42 %
|
|
44 %
|
Depreciation
|
3,403
|
|
3,138
|
|
10,141
|
|
9,345
|
Amortization of
acquired intangible assets
|
1,831
|
|
2,128
|
|
5,797
|
|
6,479
|
Stock-based
compensation
|
93
|
|
80
|
|
283
|
|
275
|
Non-GAAP Gross
Profit
|
$
68,791
|
|
$
62,411
|
|
$
190,503
|
|
$
177,803
|
Non-GAAP Gross
Margin % (1)
|
57 %
|
|
54 %
|
|
54 %
|
|
52 %
|
|
|
|
|
|
(1)
Calculated by dividing Non-GAAP gross profit by revenue less
pass-through messaging surcharges of $26.9 million and $14.3
million for the three months ended September 30, 2022 and 2021,
respectively, and $65.3 million and $24.5 million for the
nine months ended September 30, 2022 and 2021,
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,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net
loss
|
$
(802)
|
|
$
(6,944)
|
|
$
(13,864)
|
|
$
(19,188)
|
Stock-based
compensation
|
4,892
|
|
3,825
|
|
15,059
|
|
11,592
|
Amortization of
acquired intangibles
|
4,118
|
|
4,764
|
|
13,018
|
|
14,495
|
Amortization of debt
discount and issuance costs for convertible debt
|
763
|
|
7,168
|
|
2,284
|
|
19,393
|
Loss on disposal of
property and equipment
|
101
|
|
21
|
|
290
|
|
357
|
Gain on sale of
business
|
—
|
|
—
|
|
(3,777)
|
|
—
|
Estimated tax effects
of adjustments (1)
|
(1,074)
|
|
(2,348)
|
|
(3,360)
|
|
(3,287)
|
Non-GAAP net
income
|
$
7,998
|
|
$
6,486
|
|
$
9,650
|
|
$
23,362
|
Cash interest expense
on Convertible Notes (2)
|
563
|
|
—
|
|
1,688
|
|
—
|
Numerator used to
compute Non-GAAP diluted net income per share
|
$
8,561
|
|
$
6,486
|
|
$
11,338
|
|
$
23,362
|
|
|
|
|
|
|
|
|
Net loss per share,
basic and diluted
|
$
(0.03)
|
|
$
(0.28)
|
|
$
(0.55)
|
|
$
(0.77)
|
|
|
|
|
|
|
|
|
Non-GAAP net income
per Non-GAAP share
|
|
|
|
|
|
|
|
Basic
|
$
0.32
|
|
$
0.26
|
|
$
0.38
|
|
$
0.93
|
Diluted
|
$
0.27
|
|
$
0.25
|
|
$
0.36
|
|
$
0.87
|
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding
|
|
|
|
|
|
|
|
Basic and diluted
shares
|
25,304,057
|
|
25,114,762
|
|
25,268,216
|
|
25,075,941
|
|
|
|
|
|
|
|
|
Non-GAAP basic
shares
|
25,304,057
|
|
25,114,762
|
|
25,268,216
|
|
25,075,941
|
Convertible debt
conversion
|
5,788,805
|
|
929,971
|
|
5,788,805
|
|
1,316,199
|
Stock options issued
and outstanding
|
64,905
|
|
171,623
|
|
107,215
|
|
186,665
|
Nonvested RSUs
outstanding
|
—
|
|
159,888
|
|
—
|
|
214,562
|
Non-GAAP diluted
shares
|
31,157,767
|
|
26,376,244
|
|
31,164,236
|
|
26,793,367
|
|
|
|
|
|
|
|
(1)
|
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 18.6% and 13.2% for the nine months ended September 30,
2022 and 2021, respectively. These rates differ from the federal
statutory tax rate of 21% in the U.S. primarily due to the
valuation allowance recognized against federal and state deferred
tax assets in the U.S. We analyze the Non-GAAP valuation allowance
position on a quarterly basis. As of September 30, 2022 we continue
to maintain a valuation allowance against all U.S. deferred tax
assets for Non-GAAP purposes.
|
(2)
|
Upon the adoption of
ASU 2020-06, net income is increased for cash interest expense as
part of the calculation for diluted Non-GAAP earnings per share.
See Note 2, "Summary of Significant Accounting Policies" to the
condensed consolidated financial statements, for additional details
on the adoption of ASU 2020-06.
|
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,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net
loss
|
$
(802)
|
|
$
(6,944)
|
|
$
(13,864)
|
|
$
(19,188)
|
Income tax (benefit)
provision
|
(923)
|
|
315
|
|
(1,161)
|
|
255
|
Interest expense,
net
|
737
|
|
7,715
|
|
2,861
|
|
20,824
|
Depreciation
|
4,661
|
|
4,469
|
|
13,848
|
|
12,983
|
Amortization
|
4,118
|
|
4,764
|
|
13,018
|
|
14,495
|
Stock-based
compensation
|
4,892
|
|
3,825
|
|
15,059
|
|
11,592
|
Loss on disposal of
property and equipment
|
101
|
|
21
|
|
290
|
|
357
|
Gain on sale of
business
|
—
|
|
—
|
|
(3,777)
|
|
—
|
Adjusted
EBITDA
|
$
12,784
|
|
$
14,165
|
|
$
26,274
|
|
$
41,318
|
|
Free Cash
Flow
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net cash provided by
operating activities
|
$
24,016
|
|
$
14,843
|
|
$
24,340
|
|
$
23,688
|
Net cash used in
investing in capital assets (1) (2)
|
(10,524)
|
|
(2,657)
|
|
(20,790)
|
|
(28,319)
|
Free cash
flow
|
$
13,492
|
|
$
12,186
|
|
$
3,550
|
|
$
(4,631)
|
|
|
|
|
|
|
(1)
|
Represents the
acquisition cost of property, equipment and capitalized development
costs for software for internal use.
|
(2)
|
Includes the net cash
used from the purchase of land of $(30.0) million offset by the
proceeds from sale of land of $17.5 million from investing
activities of the statement of cash flows for the nine months ended
September 30, 2021.
|
View original
content:https://www.prnewswire.com/news-releases/bandwidth-announces-third-quarter-2022-financial-results-301665260.html
SOURCE Bandwidth Inc.