BAND - Earnings call transcript Q1 2021

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Operator

Welcome to the Bandwidth First Quarter 2021 Earnings Conference Call.

As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] I would now like to turn the conference over to Sarah Walas, Vice President of Investor Relations for opening remarks. Please go ahead.

Sarah Walas

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

year call, that financial forward-looking, full considered concerning our XXXX may guidance quarter we the of including make fiscal related statements the future will the to be During to business second for extent our and periods. statements and provided

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

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

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

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

David Morken

mates ever strong on that call. about revenue thank set for first talk top let and But bottom for Denver, the Lord. both We're beat full a here new lines Raleigh, quarter first first communicate Romania, our a Bandwidth virtually Singapore, me everyone, quarter. the a the company. our afternoon, in as thanking for power delivered for you how global band you Good globe. highest and Dublin, customers we to guidance great to deliver London, team for our Sarah. thank joining record our results you, begin and develop a Good excited and these around CPaaS and and and the and by together February Rochester, To our QX a Thank Brussels,

so blessing You work have for your patience opportunities us are our lead persevered bringing and of bring perseverance thank for to God we two trying others as finally, and grateful through while mates. talented the teams. and our and times, serve together And loving we for you hands band

let's about Now, quarter. talk the first

grew achieved year-over-year was which These ever-increasing we fueled results revenue. are year-over-year than the In most the services messaging, first, quarter, some demand saw year. over of past and financials, I'll and increased to and for developments to across few over to expanded through continued reach CPaaS to XX% walk turn of testament CPaaS We and momentum growth give update exciting of global an the I'd and our for Jeff it platform including a platform-as-a-service. the Bandwidth communications the our the on wins like moments, you But you demand accelerating quarter. our increase power a strong from This The is now all in our footprint. broad-based by to XX% global XX% of a more revenue. guidance

and are team, excited global power to and reach we Our current for exciting Voxbone our ever about platform integrate efforts opportunity our months customers. Six is of this bringing more to the our bear most than the combination. future into

world. communication of long solutions compliant, the Our local existing for customers a and around provider countless others waiting been business have single

global platform local in We to global does customer are business are identity mean? nature. reliable and scalable, local calls components critical local believe thrilled that engagement. delivers this Our are voice voice as What We answer easily of call. voice that business recognizable really

We to around can on incredibly the local complex mission navigating than a critical communications world more trust, that are This with numbers this regulatory more an enterprises to more from of and capabilities we work decade a likely means including answer deliver countries. based they in provide number. Consumers than call that are X local times can able XX technical landscape. a

marketplace part for meet rentals of to can can countries when XX provider vacation the the in need delivery a When in corners as building the company out number for we Bandwidth. with needs without ridesharing reach online countries, world. home numbers establish of its to world an in and So their numbers electric different order phone likely riders drivers cars a new number, major and that When our or support local to get global to provide restaurants physical local more stays to presence turns market centers, around customer, producer that's far seeks we needs its provide own a answered. in a it local using of presence, contact that

our a years, scale. locally to ability been global For this customers for engage on clamoring have

delighted We them. bringing to to be that are

realized We to reach, CCaaS our a this carrier number are One magic in leader is serve APIs. for Less Bandwidth’s already company the customers. messaging pressure incumbent they'd later, six met In cross-selling using. supercharge better example inbound flexibility quadrant and than our needed provided messaging of more address offerings and and seeing to they the space. need economics fast-growing months better pent-up voice demand our the with with been that power competitive than that of ability this our global and XXXX,

to unit, In as well. services mission-critical engagement payments yet voice to business other to asked one contract this sales, has order us insurer, new of with to to later, a So the company rolls Voxbone a another acquisition product virtual example use announced million UK. purchases mobile with won this as provider a case to turned insurance Bandwidth more they platform defined and notifications Based trusted steadily from In between new Bandwidth’s peer-to-peer to that in delivering Bandwidth Bandwidth to customers. need messaging reach for key the a One stock multi-national us growing customers. We're serve provider world's been fractional with customers, payments, enable meet allows communications. leading CCaaS once numbers the merchants able XX in has needed We a a It headquartered were than grade new company enable and combining major to payroll and enterprise pleased the they these appointment out This of CCaaS Voxbone, entrusted Shortly to Bandwidth on this the opportunity notifications. communication. Bandwidth on to after Greatest seizing separate messaging-related this when again is with channel products marketing demonstrate relationship new legacy Time more messaging to and see value work and communications, scale. reminders year or This to grow of many. use choosing global on free of for just support company spanning our our the one in case our their customers proven a messaging toll APIs. two-way build of trust multiple its ways success, This for is we validation work, we customers customers do our provider. of to growth. messaging share them forms one our turned these digital driver existing XXXX, existing notifications, with receipts, platform. is their promotional are digital more from companies. reward the Bandwidth’s with the offering us new again, by our

for use responses case cars. the new relying companies. emergency across at platform IoT time vehicle Bandwidth’s for the powering longitude number customer, call X-Y the cases path also determines how of vehicle, convey this will the This provider PSAP the deal Bandwidth’s detection integrated connected routing an soon this with based on QX a exciting back most using including accident. growth world's routing roadside of use in of new using call crash case, call dropped. XXX precise The the call DLR Our new service. a correct creative the dynamic for delivery response to EXXX the with Bandwidth distressed the the units, XXX communications will routing service solutions, call for be service shows assistance emergency latitude In drive location for solution In and service innovation also we and their business landed call coordinate from can the is

real-time Our and EXXX dynamic rich, location highly routing service capabilities. offers toolkit for a emergency calling advanced feature flexible building

effective the more inspired it will cars around country. making soon for response be are connected We emergency that

tools are of We are cloud. the flexibility, seek Businesses antiquated transformation. premise-based software-based advantages the communications in found digital legacy accelerating around looking innovation the the favor to ditch their in economic solutions. world in They and of midst

of growth to as across expanding in Gartner's Quadrant. leaders is to As major Magic contact meeting the markets. is these of segments, players their The with example provider center broad-based recent Bandwidth Gartner trusted CCaaS a relationship in the power each Bandwidth turn industry a enjoying our solution provider to growth. many One UCaaS, platform and fast-growing in a the

For Bandwidth messaging years this customer and voice, numbers. has on relied for

the migration in traffic this seeing increase quarter, confidence a the one cloud. a growth example in accelerating steady are will This as a its communication new customer platform of reiterated Bandwidth commitment across the result of This of result products. world's that the broad-based two-year just is by we signing to

and to meetings powering growth explosive be proud We CCaaS segments. are the UCaaS, across the so

global a change. trusted alike, platform Bandwidth capitalize continue will to on As visionaries and this challengers leaders, generational to

this opportunity. and are of moment by humbled We unparalleled motivated

enterprise energized and role, creativity unfolding are in global We innovation, the unique incredible enabling by our scale communications.

and around broad our forward momentum turn Our of to and customers network develop the everywhere. enterprise the the teams unique platform With to two I'll and deliver that across the power the it to affirm Jeff. look and We strategy. fulfilling bringing work over together deep communicate industry world to and relationships to strength of

Jeff Hoffman

good and Thank David afternoon everyone. you,

strong off XXXX. to is business Our a start very in

of up XX% total quarter Within CPaaS higher total $XXX than $XXX was year-over-year. up million guidance. million revenue midpoint revenue and XX% was million year-over-year the $X revenue our First

$X global solid as their the all Other the from which the revenue quarter. using Voxbone communication of $X our XX% contributed is the in over-performance contributed $XX up was customers needs. to and driven to Our period. growth to total approximately million CPaaS revenue $XX other surcharges meet ago AXP across year revenue revenue, same and enterprise increasingly million remaining in are products a of by messaging of our includes million platform million approximately period

standalone revenue was grew XX% and total year-over-year Excluding Bandwidth XX% CPaaS year-over-year. Voxbone, standalone growth Bandwidth’s revenue

retention by net be expand the is our of land Voxbone net to remember this addition fourth and acquisition with the with rate XXX% XXXX. of and period ability which the metric X,XXX dollar-based in will until period. not XXX ended We customers, the quarter accounts in customers. our of we deal close Our impacted quarter CPaaS that lap first of continued the the customer was represents strong please Again, active evidence the in the

the Moving in on came margin at margins gross strong be to by the non-GAAP to for profitability higher inclusion CPaaS continue the quarter. Bandwidth and of business. XX% enhanced Voxbone margins

AXP factors carrier However, to we offset by continue these messaging partially to customers. new surcharges existing which positive and be our pass-through

Our expenses. the higher to million was quarter revenue, non-GAAP anticipated and first income gross $X than due operating higher net profit in stronger favorable

Bandwidth restricted and million, March. XX, had we was successfully cash note of March which of As convertible the $XXX executed bolstered plus equivalents in offering by cash

around of XX% of full-year first And revenue we CPaaS to reflect our want mention the two I million of up and that implement total due carriers midpoint and that other additional in range. million we are up in surcharges at in the revenue, Turning now to initiated $XXX to XX% to revenue by are Within range. higher to for coming not timing. our of recently remainder our revenues midpoint expect driven impact to to strength factored we the be AXP full-year XXXX, CPaaS months, XXXX carriers. XXXX saw $XXX range uncertainty the the range the to but expect quarter. were messaging in revenue financial forecast also million of $XXX into forecasting be at total expect the raising the $XXX by the at the we million time We surcharges are we additional this the momentum to guidance outlook

year, range in to we share, $X.XX our approximately the assuming strong We're weighted outlook. our the average XX per share our to start million outstanding. full-year non-GAAP per shares raising profitability estimating also of to be earnings are $X.XX Given

million we to XX% total XXXX, to range guidance Turning in to $XXX This our of quarter for million revenue of to our the contributes be $XXX of $XXX midpoint revenue guidance second to year-over-year million the of $XXX expect or million. CPaaS at range. the the up

Second share shares to range XX.X quarter million the expected non-GAAP earnings per to using be per share outstanding. $X.XX average in is $X.XX of

as to down did release The from adventure today, with proud all and is want Bandwidth extraordinary like to last the I I them has this thank I my be David, have change as my time earlier decided never reported decade together. Board in band an easy, period X. role exit. incredible effective honor press will we team Lastly, of alongside always of accomplishment. Though feels been for a and during our work Directors of September, and mates CFO to make my the of step the the right this serving growth

than the stronger ever. We from are emerging pandemic

Bandwidth identify to on as Bandwidth success right to solid robust And forward on and is come. in first balance a be chapter. next quarter. to is Our sheet candidate we'll for company look closely outlook years annual serve CFO our to David based I'll working the the the with cheering increasing

David Now, it I'll back final for to turn comments. some

David Morken

last a Jeff we you, far and steady guided we of of sense leadership today, today. transition open on team enormous call Each the ambitions, for fair Operator? mark hand questions. Jeff. IPO gratitude commitment made has on Thank public for When us organization owes to allowed God is thank indelible. and so global humor cry behalf are over debt joined of team an the a all me, he enduring to winds following I and helping team and your ago, grateful Jeff’s with were smooth you, we that has are seas, and we’ll every decade. up Jeff our for the that, once company a the here to His a given company your us the scrappy mate to to Jeff, decade of the us finance to but has us from and Jeff path become all and unflappable it band thrive our Hoffmans. that big and we bless us, for With through. entire am the

Operator

session. Bhavan with We comes from will William ahead. Instructions] Blair. Please question-and-answer first the The Suri now go begin question [Operator

Bhavan Suri

a I it’s question. Jeff, been for Hey, earnings pleasure, you’re know pleasure. real leaving a my but Thanks been yet, gents. not real has taking And got couple friend. more a we’ve calls, my it

Jeff Hoffman

Thanks, Bhavan.

Bhavan Suri

a touch initially on just the opportunity. CCaaS little I want bit to

that future? broader how I’m space. in in point is, do You’ve solutions specialized used about sort there or that in communication as area, now maybe for some had be some wins almost I you own its thinking there? think guess, CCaaS create approaching the of platform the a custom Dave, at opportunity to verticalization I what to guess is

David Morken

having question do favor Bhavan, just in than to providers there’s do and integrations the no third-party flexibility doing do CCaaS differently things UCaaS. to large

in performance So rapidly for really third-party do flows for want we has call our scale to representatives customize utility to integrations believe optimize that to call others a high to in do great at platform and that scale. integrate companies high that center route compelling to uniquely and quality the that secured the seen with we We’ve calls agility have and flexibility wins at environment. to be massive

I important relates So you’re absolutely of as think aspect platform see CCaaS. to onto our it an

Bhavan Suri

for cetera. the guess thoughts, of Inteliquent, seen and Got on you. guess a last couple And acquired, been quarters, consolidation, messaging, layer in connectivity broad we’ve then bought Bandwidth. Sinch both and the et over implications to voice then So notable level, kind amount of get we’ve I importantly, mGage I of insights a Infobip, seen more network to the consolidation broader at right? your your the love I’d

David Morken

Voxbone in countries global with footprint. that And the the have is were and when The consolidation asset we PSTN the acquisition important crown precisely by most Every voice. stack to in conversation about that over an They expanding customers. were enterprise, enterprise they one comes far replacement jewel singular because the the And unique. XX full by acquisition global we’re Bandwidth, only. of Bhavan, layer worldwide it’s it network was and and platform important for coverage, most consolidated

acquisition a voice do most our moves before the to highlight been global voice humor. we’re we differentiated have So the I in and competitor we sense past. ever that’s of That important see as company, focused your and appreciate said, robust much more confident about foremost and first than think than to approach important the

Bhavan Suri

you. Got of gents. helpful. sense got sense humor, humor. a Thanks, Very And appreciate you but my Jeff’s better of

Jeff Hoffman

Thank you, Bhavan.

Operator

with question Please next Baird. from comes Power ahead. Will The go

Charlie Erlikh

Charlie the taking for years. Yes, you. It’s This working with success for question. – the been Baird. Erlikh the is Jeff, on XX for on a thanks congrats last guys, all pleasure Hey

might you one-time Or that you is So that relevant less bit any way is maybe can impacts? what a the quarter? COVID little there quantify call this

Jeff Hoffman

This for It Hey, thanks words. relevant. less kind is Charlie, your Jeff. is

second had to there due environment. in it’s pre-pandemic a last peaked so of to what quantifying weren’t since call power many in we will XXXX, levels. the XXXX, the work that foreshadowed tell we from we we So solution hybrid going back quarter impact of UCaaS We can And long-term meeting our benefit I that providers. each as you we’re of declined know COVID a and not goodness anymore. and is the But be saw to persistence think company, we quarter since is that we on

Charlie Erlikh

of the great some and more to competitors? also Great. messaging little maybe parse between platform then base. is in that you much that messaging growth versus from kind maybe product and And bit of what just your into Voxbone growth cross-sell? then leading to And there. out a I’m see messaging the about that of enabling you then win this business quarter broadly, was on cross-selling the core How messaging growth it’s messaging the the the business, hoping can growth messaging

David Morken

David. And is of revenue. you, overall you is grower for robust Messaging This our as is Thank a XX% us. Charlie. very mentioned,

specifically messaging You Voxbone the know of on customers. focused voice. wouldn’t question, also we’re to your very overweight answer To cross-selling I

continue to lead to with going We’re voice worldwide.

an we We occasion for voice. will on value on platform have important with add as do what the in messaging conjunction

a be wouldn’t significant emphasize from to platform as it focused as forward that globally. I differentiation So on are really important really going of messaging We revenue we want trend. call the nor voice amount the a of significant our would that crossover out a

out call will overemphasize but that. when We important, messaging wouldn’t wins I

Charlie Erlikh

Got it. Thanks guys.

Operator

ahead. with go Walravens question comes Securities. Please The Pat from next JMP

Pat Walravens

Thank Great. you. congratulations, And you guys.

Jeff, two you. So, for

of for consensus earnings February, look all, year. $X.XX this I the was first back as at in So

guided us now back up took You way to down, you and $X.XX to to we’re $X.XX $X.XX.

consensus sort actually of So right. was

in We’re least. at ballpark, What the right changed?

Jeff Hoffman

Yes.

So you quarter need first I across to the strong really to Pat, guys are was a Seriously, continue obviously really just good, improve. and performance board.

top obviously We carries favorable to also on You OpEx. which through saw, we beat were line, gross profit.

that we less. And we as spent so that’s many our as like was related of pandemic companies, what of T&E thought example strong it been. as would not was Some just And lot with an a just it think of could I maybe hiring our it. nor was other have

in some had also We timing. shifts

that the where So year. work doing running out the project-based anyone integration particular time. on at were, Voxbone particular thing, don’t expenses we some have some shifted fact of a I hitting that in in later the just those around we're leave we’re it's IT behind the those are in to And lot of want projects, SOX, ERP,

but ticked was we've top so and the line And well. very the first and up quarter, both of a bottom the rest year guidance raise performance strong did it in as we

Pat Walravens

thank man so But significant you. is you. all, good right, your of then CFO years hate of All to the great. XX life a hand, on contribution, we other a go. And very see Thank first

XX, do? too, next? do what love I'm why do we why I'm what and want Jeff have right, sure now So now to with so you Yeah, and working so do for exactly, you would you to

Jeff Hoffman

Appreciate the question Pat.

in sidelines. So always I from place on a love I it. phenomenal some the we're balance be you particular at had and I've should strong. I've been better but quarter time there, that, August sheet pandemic, doing The always taught well, from just cheering Bandwidth, raised good found here. I'll been how it. in timing than business shape is it's guidance. I you look after the and hope a emerging leave will, believed you pretty when great the accomplished the I've enjoyed I and the is U.S. we always very

you on adventure lining what wife's pretty I in so is will about be to September, hope my And is figure and take me nicely life anniversary, next can timing. my break do me. think XXth and then my that's for as as something good up that it – little do a for wedding I out special, for XXth

Pat Walravens

great. you Okay, Thank and congrats.

Jeff Hoffman

you Thank Pat.

Operator

Please The Stanley. Meta from Morgan question comes ahead. go Marshall with

Unidentified Analyst

for Hi, Meta guess for question. thank two Marshall, I this you the quick have Ron is questions. I

give you any would you any with routing with be, – your are direct with one the or First context is can there traction solution additional Microsoft? seeing for growth

David Morken

about generally we're script, specific Nothing talk in seeing that we the didn't routing. direct traction for

routing We Microsoft, a providing communication where and direct plans of that we we're as to connect number serving proud be service that services, soon Teams and operator have including will in cohort. for of ways their call

got we've So different, ways users. powering global something we Microsoft that XXX in Teams like seats are wonderful four million

bright be is relationship. the them. really So we're happy really us to working regarding our with And for Microsoft future

Unidentified Analyst

of? just quick should know you. a there And then about mindful foreign That's Thank any is question or that Voxbone, exchange on be it. helpful. we Got impact

Jeff Hoffman

impact, not the out There is future so there some is. – countries is and It if X, driver we quarter to we'll XX in within in call it to a more November obviously expanded that big foreign since was though the and exchange it. the

Unidentified Analyst

Okay. Got you Thank much. it. very

David Morken

Thank you.

Operator

from Steve go KeyBanc. Enders question Please next ahead. with The comes

Steve Enders

had built rest the there a kind still second but Great. the said Hi. the you for question. and what's year from they're know what there. half for I little of COVID I guess that sense half. saying the impact revenue was back I to want expectations into built the a in earlier of impact, the guidance the of Thanks get to my year taking – you of just better into into

Jeff Hoffman

Yes.

a we've of it's broad-based So that some I for I lot by driven continued digital been experiencing think And is strong time. transformation. growth that a think

a the that in we I mentioned an pandemic too. all playing response driving role on environment are earlier think here that those also things is hybrid work

And we've only acknowledge hard the expect time COVID, had the an also from was usual more same but continued comps messaging got the it volumes. so we half not election and year growth, second in we political where of some at year, recognize we than

And so bit, that challenge us good will a raising really guidance. feel but about

Steve Enders

what to with just Okay, just cross-sell there great. for kind saying And maybe customer yet about it going you're of Bandwidth then hear kind Voxbone? you your with full-quarter opportunity you're – of but have David, in wondering belt insurance with a the you win since company, Voxbone surprised crossover UK the has, what the under anything today

David Morken

I'm international pipeline global working the Voxbone and the still has build opportunities. remote, work proud unable done really sales We're that challenging on who to it's the given from acquisition. together Bandwidth that coordination collaborating both the we've for the teams teams early. strides. very are are In that product making That to proud been of of comes travel, quarter,

more upside work significant see being future, of we that's pride just the a in think I will there's in the that but surprises, lots done. no lot

Steve Enders

Thanks you. Thank for great. taking questions. my Okay,

David Morken

bet. You

Operator

Walkley ahead. Canaccord Genuity. comes next Please The question from with Mike go

Daniel Park

my Mike. for question. Daniel guys on Hi Thanks taking is This good for evening.

guys overtime obviously you we more moving just if color I'm should trend Just you wondering, dollar-based customers wondering really us retention on adopt rate, as what's on could solutions. down frame think a some strong driving this forward. XXX% could this about should just for for how us net on provide

David Morken

add begin, then I'll invite to on with in and Jeff Daniel?

Daniel Park

Yes.

David Morken

Terrific.

it's to think that adoption groundswell the that set and customers single across concentrated usage platform. first of outperforming a is I of it thing attributable call broad isn't or our I'd out are a

not a it's a product. concentration is single single it nor customer, just So customers of just

almost When globally. what it's a to world-class service. use providing illustrative customers or believe business and of in also we keep encourages their think a primary as we us to do customers it testament our promises, continuing enterprise really all to I

time And it we're our pause stay team to about the growing like suggested although go continue how continued over to promises that, who us will the hope so those to add. with we'd business with and me would has but we from keeping customers, excited question our see time, best, existing proud ask but know and and of really Jeff your customers it to down let buoyant tell, that, win

Jeff Hoffman

thing I more pretty business a the your succeed. businesses think would only that well, is, I this Yes as succeed, usage-based what and add they do, try we customers that comprehensive, with was we you their is we business as serve reward to

great. according And say plan, going are to so, things I'd which is

Daniel Park

for great. the Okay, Thanks again color.

David Morken

You bet. Thank Daniel. you,

Operator

concludes This today's conference call.

You disconnect may day. your and pleasant have you a lines. participating for Thank

Bandwidth (BAND) 6 May 212021 Q1 Earnings call transcript