😎 Summer Sale Exclusive - Up to 50% off AI-powered stock picks by InvestingProCLAIM SALE

Bandwidth (NASDAQ:BAND) Reports Upbeat Q4, Stock Jumps 23.3%

Published 2024-02-28, 07:28 a/m
Bandwidth (NASDAQ:BAND) Reports Upbeat Q4, Stock Jumps 23.3%

Stock Story -

Communications platform as a service company Bandwidth Inc (NASDAQ:BAND) (NASDAQ: BAND) reported Q4 FY2023 results topping analysts' expectations, with revenue up 5.4% year on year to $165.4 million. On top of that, next quarter's revenue guidance ($165 million at the midpoint) was surprisingly good and 7% above what analysts were expecting. It made a non-GAAP profit of $0.38 per share, improving from its profit of $0.19 per share in the same quarter last year.

Is now the time to buy Bandwidth? Find out by reading the original article on StockStory.

Bandwidth (BAND) Q4 FY2023 Highlights:

  • Revenue: $165.4 million vs analyst estimates of $154.1 million (7.4% beat)
  • EPS (non-GAAP): $0.38 vs analyst estimates of $0.22 ($0.16 beat)
  • Revenue Guidance for Q1 2024 is $165 million at the midpoint, above analyst estimates of $154.2 million
  • Management's revenue guidance for the upcoming financial year 2024 is $700 million at the midpoint, beating analyst estimates by 3.7% and implying 16.4% growth (vs 4.9% in FY2023)
  • Free Cash Flow of $13.04 million, down 28.3% from the previous quarter
  • Gross Margin (GAAP): 37.5%, down from 41.1% in the same quarter last year
  • Market Capitalization: $311.5 million

"We are proud to conclude 2023 with outstanding results, reflecting our commitment to innovation in cloud communications and profitable growth. Thanks to the disciplined execution of the team in the fourth quarter we surpassed our guidance and set new records in profitability," said David Morken, Bandwidth's Chief Executive Officer.

Started in 1999 by David Morken who was later joined by Henry Kaestner as co-founder in 2001, Bandwidth (NASDAQ:BAND) provides thousands of customers with a software platform that uses its own global network to provide phone numbers, voice, and text connectivity.

Communications PlatformThe first shift towards voice communication over the internet (VOIP), rather than traditional phone networks, happened when the enterprises started replacing business phones with the cheaper VOIP technology. Today, the rise of the consumer internet has increased the need for two way audio and video functionality in applications, driving demand for software tools and platforms that enable this utility.

Sales GrowthAs you can see below, Bandwidth's revenue growth has been unremarkable over the last two years, growing from $126.1 million in Q4 FY2021 to $165.4 million this quarter.

Bandwidth's quarterly revenue was only up 5.4% year on year, which might disappoint some shareholders. However, we can see that the company's revenue grew by $13.37 million quarter on quarter, accelerating from $6.14 million in Q3 2023.

Next quarter's guidance suggests that Bandwidth is expecting revenue to grow 19.7% year on year to $165 million, improving on the 4.9% year-on-year increase it recorded in the same quarter last year. For the upcoming financial year, management expects revenue to be $700 million at the midpoint, growing 16.4% year on year compared to the 4.9% increase in FY2023.

Cash Is KingIf you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. Bandwidth's free cash flow came in at $13.04 million in Q4, turning positive over the last year.

Bandwidth has generated $19.1 million in free cash flow over the last 12 months, or 3.2% of revenue. This FCF margin enables it to reinvest in its business without depending on the capital markets.

Key Takeaways from Bandwidth's Q4 Results We were impressed by Bandwidth's revenue guidance and rosy outlook for next quarter, which blew past analysts' expectations. We were also glad this quarter's revenue and EPS beat Wall Street's estimates. On the other hand, its gross margin declined, signaling the company's prices saw some pressure. Zooming out, we think this was an impressive quarter that should delight shareholders. The stock is up 23.3% after reporting and currently trades at $15 per share.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.