BAND - Earnings call transcript Q4 2018

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Operator

Greetings, and welcome to the Bandwidth Fourth and Full Year Earnings Results Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Griffin. Marc ahead. go Please

Marc Griffin

the this prepared Morken, Bandwidth's, afternoon, afternoon XXXX the to be earnings on we open issued remarks Jeff and Officer; Chief They Bandwidth. call results good me David Officer and up Financial discussing fourth full announced then after release Chief press of year call. is for our will close. and call you, With Bandwidth's on welcome quarter the market Executive and Thank the Today, Hoffman, begin Q&A. with will we'll

to our other we that statements ability our During make statements prospects. for of XXXX, and the call, existing execute will maintain financial to and plans the our be statements the acquire regarding including on related forward-looking, growth and new to fiscal plans customers, quarter of XXXX business strategy, considered first our and guidance may full-year concerning our

with upcoming. views expect, be any we revise words, forward-looking subsequent as often as, may of of as date. considered only statements statements These not our today and views statements. undertake update obligation identified or Forward-looking to be such these no should or reflect We anticipate we our

or to promises actual and not future are are differ of materially subject to results statements Forward-looking that could and expectations. a performance risks of the variety guarantees uncertainties cause from our

the section XX-K at website contained by of our the factors bandwidth.com, affect updated Relations SEC.com. of our could filings, in all other on actual XXXX, that website on For refer at available discussion which important risks please to material our on SEC and a those and of February Investor SEC's other results, are as filing XX,

let release A at to we on course financial issued the website of located after to sec.gov. close of SEC's over which that, website market press included turn is today's bandwidth.com on to non-GAAP the David. GAAP Finally, me call reconciliation refer today, at in non-GAAP will With our our and is during the the call, certain measures measures.

David Morken

our Thank thank we and our you, first and full year and current thanking Marc, to you all are and on Band I earnings full-year customers, for as Since their mates company, everyone XXXX reporting families, by results God, begin our joining investors. fourth quarter us public a want our to call.

proud are as only first We was and public possible it creative on we call. delivered because work those the of that of an commitment full-year excellent know and people, a including this many company

excited year our our strong to are well We the above guidance. so finish with also quarter performance fourth

remarkable enterprise During by past year, well. our achieved results customers serving we this

for with the We Our total this growth quarter ended revenue year year-over-year. revenue CPaaS million. exceeded $XXX XX% past

fourth driven our for to with Our of diverse was the by solid the services existing a by year continue quarter throughout and results enterprise our our in have using driven offering. be again relationships of set customers. breadth customers solid full been expanding Demand the

Our a vertically unique combination IP with network customers. all of clearly software resonates and voice nation-wide enterprise integrated APIs

had wins. notable our with During we developed customers relationships quarter, several deeper new existing customer and fourth

their will and phone solution. cloud to already nationwide calling power the we in modern leader announced video phone be power system XXXX. Cloud clients and Uber, a provides to will and For platform video fast-growing available who company's enterprise Sonos us services is recently example, of next in conferencing as excited solution APIs using others enterprise voice who are generation customer Slack, existing be Bandwidth's many the voice they components and an that a that system conferencing such

voice high-quality choose not stability and our IP messaging, speed APIs Our suited experiences. between software such of for teams the creative and gives voice voice platform of well do have both. them scale one as this to and the dynamic is our and launch to functionality Enterprises network

communication looking effectively systems, and growth, for their relationship centers, brands. new could enterprises, a the company Experiencing and most that started services. company communication Bandwidth recognizable with complete could also fastest was we many world's offers criteria cloud than as including more of with X,XXX the cloud quarter, the a provider company single unified a exclusive The solutions, it of one efficiently business. a the as the strategy enterprises, deliver platform serves cloud growing During that communications phone met scale contact including suite. cloud

on application messaging available is with to toll-free from balance on solution, person messages messaging rates. protect need blocking, unwanted the consumers industry and reliably text raising economic messaging, is often APIs numbers at and from enable enable scale. customer, XXX value urgent And deliverability two-way work is their case and designed communications. Changes voice for and Our with demand code our today, customer services. to messaging rapidly, industry messaging sort codes, protect sun premium reliable impacted enables by shared Bandwidth��s us, the enterprise Wireless to messaging, among and setting flexible excellent only spam, develop consumers which engagement Messaging a support. by are a enables our the solutions to customer new and enterprise exceptional enterprises are impending which Unlike in is this Bandwidth’s voice, to with Enterprise services to one-way filtering, short service more as these not the that developing changes. customer full customer at dedicated placed large driving carriers

their was with the use within customers and empower We in platform merchant and now The to provides toll-free with enterprise issues toll-free loyalty numbers fourth to growing in than we will new During engage saw that customer end local AXP conversations loyalty short their large our strong XX,XXX bandwidth's company customer enterprise loyalty million full added The toll SMS uses. programs more businesses a marketing user people. a customer community. solution deliverability SMS. quarter, to program company rapidly codes free previously experiencing interest in for grade XX enterprise

excellent to our we in team and value Our customer scale, XXXX. dedicated throughput, support. want to investments turn offer at now I messaging expand made products to economic the high

XXX by to XXX last Bandmates and us hunters XX XX year, XXX. technology grew team than and enterprise sales now strategic We local and X XXX, joined more national sales from from and many software includes XX% marketing new our doubled reps. from to our companies. We During which team

marketing expanded addition, team adding new more sales our we to inside In representatives. in by sales our development support reps directly

The teams our who we and technology these developers market XXXX, also During of new will to meet XXX we were software with to grew majority growing better platform. allow of services management launch applications. platform and both our will platform add and toll-free This R&D our our develop our XX to engineers will from call our demand. capabilities. the hires contact center broaden accelerate to customers, on many XXXX, especially In serve voice us expand and planned and network those

their are built is to with dynamic continues increasingly become to to enterprise plan customers our needs within using a powered to work reached platform and The our to messaging enterprises by call and messaging day Furthermore, enhancements XXXX. meet creative who billion to IDC grow voice. fulfill to communicate. into assist experiences. cases scale customer engagement estimates embedding force also has specific emergencies. We applications rapidly notifications emergency and to our we to nationwide These use and capabilities customers. CPaaS location network The platform’s to marked time messaging used our enabling reiterate XXX lead voice the end-to-end opportunity software critical compliance APIs experiences. work, expand harnessing will the platform’s be XXXX like the mobile our plan moment and deliver fraud effort expand are I’d will support and Bandwidth additional strategy. well-positioned to which include play. need we tipping by plan meet our $XX.X services, voice voice messaging from customer as tenth-year we have responders Communications we enterprise enterprise where to support we past of which take AXP regulatory our that to on Last, greatest real and and of and continually the platform’s launch building customer’s first global point the continue both to combat now improve industry’s market to to mission in others every to precisely. a This billion year direct the the future of power mission capabilities fraudulent support customer develop our detection quickly and live, foundation will and expectations software $X teams robocalling.

expand year learning platform in strategy well of model leadership was spent We existing work reached base, in required we customers XXXX, the offerings. highest to assumptions an in And voice we our customers one countries that we this launch. support and with our our value product agreement important our EU are demand expanding innovating new international, developing and selling and with network our our a to in for are growth with We validate and UK commercial customers. expand and recruit could with international largest economic our largest scale, for domestic to And to legal higher great to and principle the during reliability, other and international growing platform excited our greater countries. our have larger to an them our in their into regarding organizations, the to today, to infrastructure voice platform relationships, serving announce how IT customer support regulatory

exploring or first the XXXX. of and you our challenges begin for world We year, of success. continued said many again, usage in you commitment officially progress work. begun. most We will a have who our and service throughout for of from us I’m has our quarter year team. better our responsible great scale have the customers international To am To in other differently, accomplished highest continue the moved understanding the each have was you thank and executing, of of thank we XXXX Overall, our your for services to pleased the during XXXX. opportunities we to end a I Bands investors, countries for for been to proud expect your providing to very have continued tour customers joined thank and important creative and our to extremely your with who everything Once the to Bandmates, trust. to by Bandwidth. many those now

to that, Jeff. the We over achieving together to me are and let With turn objectives call committed beyond. in our XXXX

Jeff Hoffman

Today, good on call. of to David, revenue afternoon the standard the our results financial Thanks quarter to fourth XXX. will review ASC XXXX recognition and according historical I everyone

first will according In our the for and addition, financial XXXX full-year discuss new standard the we the guidance XXX. ASC quarter, to

to impact we are sales commissions reduction our adopting growth accounting. changes earnings in do revenue we and date, the January the As result to evaluation method any XXXX $XXX,XXX. expect between on recognition XXX starting Based not emerging expect approximately nor $XXX,XXX to the retrospective material related an under modified retain revenue a company, to X, and our our

Our to fourth a we metrics. the finish exceeded earlier, David pleased outstanding once our we and quarter great that report was year again to guiding of an high-end of all as mentioned are

continue this as well to over We value customers. place as our We good enterprise teams our enduring service. of product set customers commitment world-class the testament line see a entire combination delivery to software our to a and high across and of on our momentum platform, diverse the customer believe is network

revenue, remaining the and which XXXX, contributed fourth revenues. implied revenue was the range. During $X.X $XX.X XX% high-end the $X.X was million from indirect our total year-over-year Other Within higher year-over-year quarter, and guidance million revenue range. revenue total was $X.X the million total million $X.X than high-end our of up guidance due and $XX.X the million of fourth quarter CPaaS above XX% million, guidance $X.X revenue, million, to above our up more the our above of of

quarter year. the customer customers our from the Our company we of net CPaaS quarter best increased sales. the on and XXX% a of fourth robust was year-over-year, average, acceleration continue quarter. rate in and recorded ads level fourth annually. of spend early our quarter to the end is On above third dollar-based ended CPaaS customers, $XXX,XXX for enterprise which as Active payback demand XX achieved the customers up our was The growth XX% active to with us highest is indicators increased investments due fourth the XXXX. of public offering in during We sequentially X,XXX our well in the retention in yet XXX% with

to Before I be results forward. like would will discussing moving call metrics, profitability going out on I non-GAAP that to

full in reconciliation non-GAAP the found Our GAAP our financial along results with release. GAAP results and between earnings be can

million shares support marketing margin XXXX, adjusted timing slight EBITDA fourth in Our million and quarter non-GAAP million the the we same of yielding our reach year, gross of the primarily quarter and X.X we a reported long-term based to the on investments excludes of loss million, objectives. a sales gross compensation quarter quarter of the as of platform. $XX.X during the The compared was depreciation EBITDA made weighted growth fourth our On outstanding have research increased quarter to $X.X the as XXXX. and gross fourth $X.X which to XXXX margin Fourth the in $X.XX which profit, for was loss stock-based of of GAAP of investments basis, continue due average XX% and reflects fourth period of share development we for adjusted a and and million to million to basic net XX% compared expand in we last XX.X of $XX.X the achieved in margin a of the is scale XXXX. change gross per

Our in fourth average loss based or is as operating quarter was to compared expense quarter share. driven outstanding. per non-GAAP the above our the shares weighted of loss out XX.X primarily well guidance fourth guidance to million share A per by for loss million $X.X $X.XX net This profit $X.XX $X.XX of loss basic performance. gross favorable net net on of and non-GAAP variance our was a

million development use. which million equipment, capitalized cash from includes cash and of and internal During $X.X well utilized purchases property million flow, the of we $X.X as net for in in X software quarter, as cost generated operations free

revenue, XX%. financial a of million, up full-year during strong total the year-over-year. XXXX, the investment results total to The also we from of revenue XX% higher as million, our total $XXX.X gross quick for to Turning non-GAAP up was Within margins revenue summary CPaaS XX% of was year-over-year. year expanded business fundamentals a proved our $XXX.X XX%

$X.XX million on non-GAAP outstanding. During or XXXX, adjusted and income weighted was million share per $X net million $XX.X EBITDA shares based diluted XX.X was average

the to sheet. balance Turning

Bandwidth had equivalents, plus of securities marketable XX, As of XXXX, December million. $XX.X cash and

Now, like thoughts our with I’d financial to finish regarding some outlook.

the In XX% million terms million range. midpoint year of range of $XXX we $XXX XXXX of or full expect to revenue, up CPaaS of at the the in the be to

other to to be in at in revenue total up I million range XXXX XXXX of We to expect that for midpoint revenue the everyone of million, the $XXX.X range. the $XXX.X want XX% remind normalize million we Verizon up impact, X.X one-time be related for at benefited midpoint impact XXXX to one-time revenue range. from a of the the XX% would If favorable total settlement. for this the

continue revenue In addition expected our includes slow services, their to legacy to indirect are in revenue, other decline XXXX. which

flowed aforementioned Total scale gross and that to directly XXXX network allow will front excited settlement CPaaS bottom to effects XXXX. in are expand in to continue in The CPaaS with our investment plan the XXXX. business from We of in our ongoing scale we opportunity economies strategy margins investments gross to benefited the us our coupled our about $X.X and in margin line. of million us platform one-time

margins offset the achieve the which to XXXX. in total one-time should with of the Verizon year, gross margins CPaaS coming XXXX by expanding benefit consistent virtually settlement in from expect lack We

to As is $XX.X for a of a loss result, per outstanding approximately weighted shares of share. non-GAAP share XXXX $X.XX This be to outlook approximately the of in earnings average assumes $X.XX million. per expected range

contributes in to want first some of perspective. I the revenue of in million to year-over-year quarter our we to now put range CPaaS total XX% for the guidance midpoint revenue XXXX, Turning $XX.X quarter the first to or be up range to provide $XX at $XX.X to CPaaS guidance revenue expect additional million $XX million million. $XX.X of This guidance of color to our our the of at million. view

in year-over-year quarter on facing in quarter high XXXX, a scaling challenging strong are concentration our a in performance from the benefited the We first first given our comparison of single quarter. a which platform customers of

be million, XX% this revenue adjust which over CPaaS at you our XXXX, the X.X compared midpoint, an you recall, CPaaS all-time of the of experienced first sequential If range. our to we full-year would quarter growth approximately $X is of year-end approximately the we quarters. first the As the in have expected high, for than outside at last in midpoint XXXX first that clear growth revenue will quarter second first growth million XXXX. revenue through we revenue consider quarter that sequential double Most the year-over-year quarter XXXX for when be eight XX% to the up the importantly, the guidance the of re-accelerate to XX% more for CPaaS performance was it in is quarter, average is growth expect of

As have revenue it our into growth discussed existing we past, from derived our since primarily visibility we is base. have in the high customer

from the expect our began in pace quarter to larger the are In force of we benefit full we XXXX. of sales XXXX, favorable fourth that acquisition throughout see and the see addition, to we productivity to increased of coming about impact excited

Turning a non-GAAP per average of of outlook to million. shares expected weighted our This very the of loss pleased earnings to XX.X is share. share $X.XX be in first outstanding performance. in approximately basic per In profitability, we XXXX are conclusion, to the quarter range assumes with $X.XX

are to of operator will be the customers. deliver embed core With portion business the enterprises expanding and Our back voice, mission for CPaaS XXX continue that, call to the messaging, the are capture the hand strong, to these market well-positioned bandwidth an as to connected now fundamentals I call. of continues experiences to Q&A enterprise that to

Operator

your KeyBanc. first proceed Our [Operator line with question Brent with Bracelin Please of Instructions] comes from question. the

Brent Bracelin

it just of years. to the it for like by and I retention with of three beat of CPaaS looks QX the two, lot a at love David maybe kind that you, the the like you've question net best I'd came start to in close kind from results, million. Yet, of Thanks rate looks $X midpoint look If taking here. over

your as seeing, there Help pattern drivers base, questions. drove it? a in that factors you of one-time think did are Thanks. have you other existing consumption the you I several of the drivers other benefit So, strength understand about customer kind from mid-term of us Was elections? the here QX, see the

David Morken

QX You the mentioned, time We customers of XX as but bet, course take they quarter, did broad-based. to ramp. add in growth new during Brent. was The Jeff

the election was [ph] I and Dubner some, high, breadth is of So, to is in primarily boats but as increase. does lift there certainly call what it growth The spikes but of was, it's emphasis, out. a said the you and the but characteristic no overall most the its doesn't explain think quarter lift, for messaging, us,

Brent Bracelin

guess and what understand cloud QX, gives the the trying XX% I XX% a new in think up you Got obviously, of Thanks. it just tough implies sequential last full-year, so phone customer back of get compare, in I at in in Is here going for the you QX? business, then, in growth spike rollout a your year, QX, CPaaS I QX, and it. QX, get to there tied QX question step it change will step-up And big Just and about but I a win $X.X is, to line million some the see to that to the QX increase order then as dollar growth, comparing confidence you to my of CPaaS tough to big the big to step-ups and CPaaS QX so system? we sight Jeff, QX in guide, also have in looked you're the get the what's to the clearly have QX? the business

Jeff Hoffman

Thanks question, Brent. for the Sure.

the and due XXXX, well force is but year, we our in from expect plan that in the same contribution our a sales this expanding serving meaningful XXXX enterprise relationships, in more investments time, larger to we Our rooted our at made customers late XXXX.

quarters factors combination sales sales the in online implies customer these at to comes that and of full XXXX three increase average two those of an new fashion for expect in cascading forms productivity. guide quarters a then cohort each last CPaaS XX% that will revenue grow quarterly new and in We The reaches as XX%. rep

Brent Bracelin

color. Got it. That's helpful

existing moderate think we're like you're net as also sounds about of new could dollar pricing about get that the think you've or for around to expect change those as what but sales you some, talk rates good investments around help I baked Clearly, sales to understand I looking then know, very visibility it getting literally you in net your off, base? and the business? we installed the the to So, about the in there, we pricing retention, want retention and thinking maybe pay ramp you would within

Jeff Hoffman

Sure.

pricing remained consistent. very has So, our

lower rest important new So, things I the don't report. but of Certainly, discussed, expect a our that net the retention of all again already that's to rate, there quarter think would growth. we a there's year, first for anything in really part we've based the for the dollar

expect One you we from know, our of bit that fluctuate always to why a is will but the and customers that annual well, emphasize team can you linear with strong always a on we little rates. expand things quarter-to-quarter, the relationships retention like with which folks it we serve our is so, is we and them not growth to expect as trends, continue and focus

Brent Bracelin

here, that question and run? an the ask off, short costs Is burden now it last I secured you, sounds – capital does My that absorb tour here, Thanks. that on the David you the have got some kicking you here that in world is anchor of for to could you're tenant. will Great. help correct like that

David Morken

involved, we was Brent. building and them tour. learned last to pristine we year a begin during it, tenant. we're that expense that the got as is our that serve have internationally world orientation opposed to And an excited we got You reduces with no to with incur We've exposure correct. we That the something customers anchor as relationship the

Brent Bracelin

had. I Thanks. all That's you. thank Great,

Operator

question. of question comes with line Davis your Genuity. Canaccord the proceed with next Richard Please Our from

D.J. Hynes

off core impact And talk gross on out on the Congrats thanks question move you Maybe of Hi, the you of actually some the have international. costs Hynes different guys. upfront Brent's Can It's about good kind that there that for business? of margin think D.J. all us news. line piggybacking last than about the Will a profile just building effort? of the Richard. help internationally? just kind materially in as involved on

Jeff Hoffman

is if David This D.J. in, I'll start, Jeff. wants Sure, to can. then and fill he

very we us international, here. as product matters for look nascent still into it's So,

we of and very from them a scale a the could that's be that think benefit material base more I messaging be in economies grow make, it we influenced so margin effects the little obviously the what U.S., like have starting margins potentially bit but initially that's also have and will it we we're over but so of out margin and new time, just gross do to be scales still a investments than here voice network in little margins. and is will us for over number we lower, domestically, as we territories, will the gross certainly and of higher influencer will bit by the time and that the size that our expect largest

David Morken

Jeff DJ, economic how I can be the infrastructure well that platform international and articulated customers voice and the a reliable what Thanks, are we've understand to as would service, all-IP more we doing deploy networks add to desire value. for that, is are better year, for over our as last just

of have value trying our replicate the that's that we goal. combination U.S., in and we're the the asset-based to So,

D.J. Hynes

Yes.

that you headcount expansion these build made newer about international a of talked just XXXX, infrastructure sales cost the that result more So, now being XXXX by out? the losses and know, you investments guidance, in growth the efforts? the bearing is the the that higher in in you in the is driven Or of of some implicit

David Morken

the marketing – our shows of to the is make and folks I piece is more our the XXXX success a we hiring in that's the have think call within to international answer there the at is, in now The new investment there, above need clarity to then that we million ad some when $X and to other both could are CapEx the but growth, here, plan and new also it international that that in investment, we to also certainly and D.J. plan been just development our really you and well, that our sort to guidance want because continue OpEx XXXX so and of as our of our full sales plan all look and EPS. that XXXX classified the sort but short that, reinforce it things one has all folks of $X within our is had in and or OpEx included you range million in informs research non-GAAP circle, of loss extent have to plan to bring we've and in that along years, net think the we that G&A, here of

D.J. Hynes

two mix versus may, would driven IoT or answer, Yes, guess calls? seen any call you that guess spend BXC okay. volumes call change what of I Yes, I so I the if fair BXB one give could differences in some And part of quantifying the of as that would that hours you you is about can is helpful. BXC One you traffic, those margin helpful. peak have talk with of IoT And last that I color assumption? a you kind can – between may off I'm assuming leverage that be any see

David Morken

having much question, the in interface we of an that as we to answer your with customers and and seen of quantity calling fixed-cost consumer platform aspects cost. relates are business that so occur a does it calling of as question? fixed a Does that normal hours, that after network and offset new answer there that call indeed the we've interface devices, a serve that to across new favorably steady very your work extent to voice pattern So, drumbeat

D.J. Hynes

Yes, does. it

mix with So you're that the discernible nice doesn't shift, devices? but new like interface sound seeing a traction

David Morken

of what – between to traffic the consumer absolute are we Yes. folks as as adoption are a the which far two is go some seeing interface, the in I of but What BXB experiences mix serve not an the I doing are shift comment wouldn't drumbeat steady categories. and in the creative who specific on so voice answer we BXC. ready new of around space, home, those where across to

D.J. Hynes

Thanks, Very guys, perfect. good. That's congrats.

Operator

Our proceed with with line Marshall next question. question of comes from your Morgan the Stanley. Meta Please

Meta Marshall

just I in just kind get salespeople a traction new just sense wanted with you starting investments, customer? Great, thanks of guys. see margins, anything to of second, a And size if was of the course, to around the some gross have some guys of, and understand of obviously, and back the there around get are some then initial piece their targeting these average a far what the been, you of the should circling some was you've on so margins, to gross to – kind kind or their expect some sense of, making expecting you of of spend to some been were year of leverage we off year kind context whether as it's just normal but original I those get kind the just international I guys as initial XXXX, just Thanks. what of investments? wanted list, were and customers what the in

David Morken

David. is this Meta, bet, You

your Just sales as we on question, quick distinct a groups. first reminder, two have

$XX,XXX month expect ramp team, to strategic We enterprise in XX third with after $XX,XXX, enterprise team answer Hunter have at the team, year annual first their new when our to XX-month customers, Hunter joining that in our generate XX we the them revenue, period onboarding per is and and annually. a will average close will the large that That full first $XX,XXX second take your within and year other X.X days customers they to and question, you $XXX,XXX of then customer the combine in quota. months thereafter after

or will reps platform. those of year. closing second nine On on question Their large X.X] X.X those are your months year for to then strategic their turn reps over to generate side, part gross first $XXX,XXX their revenue customer Jeff that [X first I'll about the first annual your one. and to And close within it a deals of And deal. strategic margin take our was

Jeff Hoffman

Meta. Hi, David. Thanks,

our growing our year-over-year track despite level higher of XXXX, of yes, So record investment continued. margin gross in

basis So, XXX was XX% point improvement XXXX, over which we achieved in XXXX.

mix we've product basis, that, enjoying and on tailwind and and to have gross a of influenced Verizon effects level with platform owner and influences a in do investing great we result discussed we've expand we economics. a reach economies team, as the very vertically is one-time that of our XXXX factors platform, margin. events the Certainly, saying been the certainly it, XXXX explicit of As our longer-term network we're platform that scale positive there's our and and enjoy that we like integrated settlement that the the but XXXX in and and in with experienced scale of we investment more number of affect the

and so, would margins balance on line in on and things balance, XXXX you investments virtually in another be we in gross certainly load XXXX. again the expect in those And heavier with getting investments our XXXX, but we what when consistent all of to with XXXX those some yield in saw

rest believe future, of Now in more we that, the some this expect of leverage. XX% is And I operating got just through to and the to we've to along margin the as get would margins gross demonstrate some sort with out a and we still business, that David scale team continue enhance. grow of

Meta Marshall

you Just going margins? about XXXX back like real sort or to overall solid margins gross from are you're of that margins CPaaS talking and gross saying when gross XXXX steady quick, or

Jeff Hoffman

of see That's XX% and of grow, as will The expect that happened that XXXX settlement we the you're not in network the overall in to reoccur margins and have so to the on blending a reason margin, scale of happen for additional us of scale Verizon will our to we so of impacts year. those see starting you're actually come the what's CPaaS we'll than side which this where some and flattish economies margin revenue, gross into there, effects there. do is in is going going so XXXX, the play sort grow, level and reduce less is XXXX this business, is two one-time put other at to

Meta Marshall

guys. I wanted Great, No, it. Got clarify. thanks just to

Operator

line of Walravens with question. Group. the from comes Pat JMP question your with Please next Our proceed

Pat Walravens

Oh, impressive. you guys. congratulations really Thank and to great. That's you

heard years going growth for grow than you I guys lot What at accelerate CPaaS are once the would you say would you guidance question year, and to rather sort big this is, next doing, point? this for investments, to So, four, XX% look quarter of at XX% out a you have Dave, is for say? XX% XX% I investors that me growth of what some as current XX range of the for

David Morken

I investments, and sales by – from and should investments would marketing, we've growth, I that kind on our XXXX those would XXXX have words, as as short I Pat. growth successful so grown and a headcount answer. don't Well, XX% your the say investments doubled a growth those are we increase we've in That's way, you CPaaS our goes contributors thank if they individual growth, our basis for and per made fuel we the in The XX% beat done, have that failed in leader. to just have CPaaS if sales on.

Pat Walravens

people? – my Alright. impressive And today? have – an of so increase top priority is just number Great. Thank question What in what you. with R&D second the you is their

David Morken

growth throughput depth, platform voice of are asked capacity There's and making incremental that that support to the But well be and growth to Expand the platform work of the also with effective for sure up jurisdictions. network development is in as terms cases on some we're enterprise the different both keeps and international messaging the the by that focus experiencing. both our as customers. use being breadth across

Pat Walravens

you. Thank Awesome.

Operator

Please your proceed line with with Dougherty. the next Our from question Catharine Trebnick of question. comes

Catharine Trebnick

quarter. Congratulations on the

what just So, understand I in here, saying. you're to on just the make drill sure guide to I need

Street like $X.XX full for to to $X.XX. $X.XX, looks the for guiding $X.XX it you're The at year and So, Street $X.XX $X.XX to QX, was loss at was of at

attributed that attribute much I, that drag? expansion, do can much is So, how and of is to international how we this of a –

David Morken

Yes.

Catharine, far difference which and OpEx, David that here, to per about, range talked our in for about as that get we're there customer into hitting $X international of that's bit add we and going then is share, million so had little and us So, it. million earnings to we'll was, to of there this forecast with guidance from the new D.J.'s a this with to $X talked primary entrant as annual a the CapEx well the as flagship some question, as adding is additional sort our a

was The and making us If The OpEx make expand Street you Street that is international, above, will the think the profit I look is those investments rev at is in and gross and above grow it, the future. everything generally in once else we we're this year where that believe scale help is again in in but to line, absent investment

Catharine Trebnick

of So, when a modeling like this them. we we means, think think and will most hired of you about back-end it with QX of in QX, majority that them year be loaded guys, seems more sales

split, at more as revenue should model a So, top when that? XX-XX we up or line of this we how maybe the think we should look

David Morken

I think fair. that's

and we is our was year, XXXX intent performed a into full gets what in but there each and Our online was hiring the impact productivity. to have consistent throughout cohort pretty all cascading XXXX as comes

think that well us I little back expanding but relationships all with of serving more foundation weighted but effect and underlines the that, a generally that our on existing bit So, customers is, that it you're the track. of is our there, is

Catharine Trebnick

of question board customers, other any Internet new have quarter? the on during any then cases use And say just I'd interesting I of had, the current large usually you couple good. with a app new giants, nuggets existing interesting Okay, the on came

David Morken

there's announced nothing that we so None publicly, Catharine, announced that no, we've publicly.

Catharine Trebnick

pull to trying just was something. I

Jeff Hoffman

did leverage basis might names no use that or three cases, Catharine, though, that's if you David highlight [Indiscernible] helpful. four

Catharine Trebnick

Thank Oh, much. find last just very was time to looking for about just you there. color some you Google, trying talked – I I no. was other

David Morken

you, Thank Catharine.

Jeff Hoffman

Thanks.

Operator

comes your of the proceed Power from Will Our question. final with line Please question Baird. with

WillPower

question. big been guess that that's numbers, just front, David phone while. switches, questions access that on on a architecturally international contribution, like to overall can for up the And the you do it do well, the question my the Great, about will congratulations the pertains how I in, is, thanks. other in guidance? you soft us be several And revenue look requirements the focus Yes, CapEx maybe versus understand progress, I gate? look we revenue help how Thanks. how a regard and what out like? as many That's to U.S. contribution first of to XXXX know with will then running countries think

David Morken

U.S. internationally, that I'll replicates the What's in Will. we're deploy to same going mind stack Jeff architecture over what we're the then keep talk bet, talk that what important maintain to You that strategy to revenue turn and it the to most about trying and is architecture contribution. to achieve we and and the about in margin a is

calling team do as is level IP, the and our to for how able to for a highest what regulatory are got approvals, enterprise able and jurisdiction of United as putting you the as the right achieve mentioned, voice, easy a and the regulatory with to and great a value the cost the been the demand, value is economic infrastructure many trying Jeff. you services, cross to gear design and allows do, voice multiple need just we United a just you're where And the and that services, we've customers structure but as the the really desire. not of jurisdictions. it's what ability in to with of in on to of close to and in Be reliability. those or of and key targeting this large other today the added the so what you've then interconnects under all States get commercial to right it's emergency our well. that the centers. put button, high the and is volume ability model, quality UK to the reliability thing, and in of or the voice here to as So, do domiciled and that's platform using in data we of States. that's U.S. I'll I product characteristics in teams We've your best the maintain able supporting we that's whether regular United same of over our lower operating extension in and that cost the in on to the replicate, and messaging States, gear you're whom that supports and at center connect great done under you've an are it agreement customers, be data administer, the in by gear utilize the to all achieve very It level focused platform, the precisely hallmarks quality that customer are the a gear we result that know prioritize you're that licenses interconnect incumbent offer U.S. knows underlying replicated service centers, providers jurisdictions And Yes, multiple U.S., support domestically the come high new a and but after they've And their we'll understand it in do that for customer EU the platform already in based to just the has have how the same well they it lighthouse same that architecture jurisdiction. turn our data and we're scaled

Jeff Hoffman

out, David. the while revenue course so of all it Thanks, international we’re expenses still plan a is for despite overly come and in on early emphasize and just takes our articulate revenue, to days reliant would David precede Will. not XXXX. guidance Hi, that laid at I

we’d international CapEx spend, of but think and already of would range in initial revenue for about a talked terms this X% I the CapEx of contribution, the the in build in CapEx, about OpEx terms In out.

serving opportunity it, X% As X% CapEx to range we forward revenue. in so everyone see coming we CapEx that's customers about sort very be we're a our XX% is to call so it and guided we've overall or this so an jurisdictions. new in what look XXXX how of that, speak, the This greenfield excited on top of reminder, for domestically, and would is of additional

WillPower

for that. Yes. It Good nice sounds like a opportunity. luck

David Morken

Will. you, Thank

Operator

this wonderful call. our as and for well as gentlemen, question-and-answer our session, and a have thank you concludes your day. participation We Ladies

now may You disconnect.

Bandwidth (BAND) 13 Feb 192018 Q4 Earnings call transcript