Revenue and profitability exceeded
guidance
On track to achieve 30% annual growth in
profitability
Achieved record Free Cash Flow
RALEIGH,
N.C., Nov. 2, 2023 /PRNewswire/ -- Bandwidth
Inc. (NASDAQ: BAND), a leading global enterprise cloud
communications company, today announced financial results for the
third quarter ended September 30,
2023.
"We are pleased to announce that we have exceeded both our
revenue and profitability guidance for the third quarter and made
strong progress towards our goal of growing profitability by 30%
for the full year. We look forward to finishing 2023 with strong
momentum," said David Morken,
Bandwidth's Chief Executive Officer. "With 2024 on the horizon, I'm
very encouraged by this momentum, our track record of success, our
strong financial position, and our commitment to innovation. I am
confident Bandwidth will remain fully on-track to achieve our 2026
medium-term targets we laid out at our Investor Day last
February."
Third Quarter 2023 Financial Highlights
The following table summarizes the consolidated financial
highlights for the three months ended September 30, 2023 and 2022 (in millions).
|
Three months
ended
September 30,
|
|
2023
|
|
2022
|
Revenue
|
$
152
|
|
$
148
|
Gross Margin
|
39 %
|
|
43 %
|
Non-GAAP Gross Margin
(1)
|
55 %
|
|
57 %
|
Adjusted
EBITDA(1)
|
$
14
|
|
$
13
|
Free Cash Flow
(1)
|
$
18
|
|
$
13
|
(1)
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.
|
"Accelerating profitable growth is a core principle for
Bandwidth and our results this quarter reflect that as we benefited
from our growing market position in commercial messaging and strong
operating discipline," said Daryl Raiford, Bandwidth's Chief
Financial Officer. "We believe that our third quarter financial
results, along with momentum from commercial messaging and
enterprise customers, position us for a solid fourth quarter and
full year of profitable growth against a macro backdrop that
remains constrained."
Third Quarter Customer and Operational
Highlights
- A European-based cloud contact center provider chose Bandwidth
as their primary provider across several regions for call quality
and reliability, award-winning support, and the ease of use of the
API-driven portal.
- A leader in customer engagement in the automotive industry
selected Bandwidth to help them meet the demand of their rapidly
growing conversational marketing messaging needs. Bandwidth's
enterprise-grade support experience and scalability are key to the
customer speeding up their time to market.
- A Global 2000 manufacturing conglomerate chose Bandwidth to
enable their migration to the cloud, starting with their internal
communications and dynamic 911. Bandwidth's expertise and ability
to support physical infrastructure throughout the transition is key
to the customer.
- Launched AIBridge with partners Google and Cognigy. AIBridge,
the newest pre-built integration with Maestro, enables enterprises
to resolve customer issues faster by first routing incoming contact
center calls to an AI-driven virtual agent, freeing up live agents'
time to resolve more complex issues.
Financial Outlook
Bandwidth's outlook is based on current indications for its
business, which are subject to change. Bandwidth is providing
guidance for its fourth quarter and full year 2023 as follows:
|
Q4 2023
Guidance
|
|
Full Year 2023
Guidance
|
Revenue
(millions)
|
$153
- $155
|
|
$589
- $591
|
Adjusted EBITDA
(millions)
|
$15 - $17
|
|
$44 - $46
|
Bandwidth has not reconciled its fourth quarter and full year
2023 guidance related to Adjusted EBITDA to GAAP net income or
loss, because stock-based compensation cannot be reasonably
calculated or predicted at this time. Accordingly, a reconciliation
is not available without unreasonable effort.
Upcoming Investor Conference Schedule
- Northland Capital Markets Communications SaaS Conference
virtual fireside chat on November 30,
2023 at 10:00AM Eastern
Time.
- Barclays Global Technology Conference in San Francisco, CA hosting meetings on
December 7, 2023.
Conference Call
Bandwidth will host a conference call
to discuss financial results for the third quarter ended
September 30, 2023 on
November 2, 2023. Details can be found below and on 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 2, 2023
5:00 pm ET
Domestic dial-in:
844-481-2707
International dial-in:
412-317-0663
Replay information
An audio replay of this conference
call will be available through November 9,
2023, by dialing (877)-344-7529 or (412)-317-0088 for
international callers, and entering passcode 8162695.
About Bandwidth Inc.
Bandwidth (NASDAQ: BAND) is a global cloud communications
software company that helps enterprises deliver exceptional
experiences through voice calling, text messaging and emergency
services. Our solutions and our Communications Cloud, covering 65+
countries and over 90 percent of global GDP, are trusted by all the
leaders in unified communications and cloud contact
centers–including Amazon Web Services (AWS), Cisco, Google,
Microsoft, RingCentral, Zoom, Genesys and Five9–as well as Global
2000 enterprises and SaaS builders like Docusign, Uber and Yosi
Health. As a founder of the cloud communications revolution, we are
the first and only global Communications Platform-as-a-Service
(CPaaS) to offer a unique combination of composable APIs,
owner-operated network and broad regulatory experience. Our
award-winning support teams help businesses around the world solve
complex communications challenges to reach anyone, anywhere. For
more information, visit www.bandwidth.com.
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 and year ending
December 31, 2023, the success of our
product offerings and our platform, and the value proposition of
our products, are forward-looking statements. The words
"anticipate," "assume," "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 ever-evolving cybersecurity threats, 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
(the "SEC") and any subsequent reports that we file with the SEC.
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 below, 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, 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 income (loss) as net income or loss
adjusted for certain items affecting period to period
comparability. Non-GAAP net income (loss) excludes stock-based
compensation, amortization of acquired intangible assets related to
acquisitions, amortization of debt discount and issuance costs for
convertible debt, acquisition related expenses, impairment charges
of intangibles assets, net cost associated with early lease
terminations and leases without economic benefit, (gain) loss on
sale of business, net (gain) loss on extinguishment of debt, gain
on business interruption insurance recoveries, non-recurring items
not indicative of ongoing operations and other, and estimated tax
impact of above adjustments, net of valuation allowances.
We define Adjusted EBITDA as net income or losses from
continuing operations, 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, (gain) loss on sale of business, net cost
associated with early lease terminations and leases without
economic benefit, net (gain) loss on extinguishment of debt, gain
on business interruption insurance recoveries, and
non-recurring items not indicative of ongoing operations and other.
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, plant 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.
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.
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,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenue
|
$
152,013
|
|
$
148,325
|
|
$
435,731
|
|
$
416,178
|
Cost of
revenue
|
92,514
|
|
84,861
|
|
261,624
|
|
241,896
|
Gross profit
|
59,499
|
|
63,464
|
|
174,107
|
|
174,282
|
Operating
expenses
|
|
|
|
|
|
|
|
Research and
development
|
24,792
|
|
25,044
|
|
75,305
|
|
71,735
|
Sales and
marketing
|
25,011
|
|
23,184
|
|
75,794
|
|
69,663
|
General and
administrative
|
15,843
|
|
16,623
|
|
48,430
|
|
50,191
|
Total operating
expenses
|
65,646
|
|
64,851
|
|
199,529
|
|
191,589
|
Operating
loss
|
(6,147)
|
|
(1,387)
|
|
(25,422)
|
|
(17,307)
|
Other income (expense),
net
|
|
|
|
|
|
|
|
Net gain on
extinguishment of debt
|
—
|
|
—
|
|
12,767
|
|
—
|
Gain on business
interruption insurance recoveries
|
—
|
|
—
|
|
4,000
|
|
—
|
Other income
(expense), net
|
798
|
|
(338)
|
|
52
|
|
2,282
|
Total other income
(expense), net
|
798
|
|
(338)
|
|
16,819
|
|
2,282
|
Loss before income
taxes
|
(5,349)
|
|
(1,725)
|
|
(8,603)
|
|
(15,025)
|
Income tax
benefit
|
219
|
|
923
|
|
3,194
|
|
1,161
|
Net loss
|
$
(5,130)
|
|
$
(802)
|
|
$
(5,409)
|
|
$
(13,864)
|
|
|
|
|
|
|
|
|
Net loss per share,
basic and diluted
|
$
(0.20)
|
|
$
(0.03)
|
|
$
(0.21)
|
|
$
(0.55)
|
|
|
|
|
|
|
|
|
Weighted average number
of common shares outstanding, basic and diluted
|
25,613,441
|
|
25,304,057
|
|
25,539,642
|
|
25,268,216
|
|
The Company recognized
total stock-based compensation expense as follows:
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Cost of
revenue
|
$
182
|
|
$
93
|
|
$
578
|
|
$
283
|
Research and
development
|
2,822
|
|
1,767
|
|
9,278
|
|
5,298
|
Sales and
marketing
|
1,160
|
|
593
|
|
3,825
|
|
2,219
|
General and
administrative
|
2,778
|
|
2,439
|
|
8,644
|
|
7,259
|
Total
|
$
6,942
|
|
$
4,892
|
|
$
22,325
|
|
$
15,059
|
BANDWIDTH
INC.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
|
|
|
As of September
30,
|
|
As of December
31,
|
|
2023
|
|
2022
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
107,373
|
|
$
113,641
|
Marketable
securities
|
31,745
|
|
71,231
|
Accounts receivable,
net of allowance for doubtful accounts
|
75,046
|
|
74,465
|
Deferred
costs
|
4,185
|
|
3,566
|
Prepaid expenses and
other current assets
|
16,037
|
|
16,705
|
Total current
assets
|
234,386
|
|
279,608
|
Property, plant and
equipment, net
|
176,780
|
|
99,753
|
Operating right-of-use
asset, net
|
161,106
|
|
9,993
|
Intangible assets,
net
|
164,688
|
|
177,370
|
Deferred costs,
non-current
|
4,715
|
|
4,938
|
Other long-term
assets
|
6,404
|
|
31,251
|
Goodwill
|
322,003
|
|
326,405
|
Total assets
|
$
1,070,082
|
|
$
929,318
|
Liabilities and
stockholders' equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
31,211
|
|
$
26,750
|
Accrued expenses and
other current liabilities
|
60,452
|
|
62,577
|
Current portion of
deferred revenue
|
7,869
|
|
7,181
|
Advanced
billings
|
4,305
|
|
10,049
|
Operating lease
liability, current
|
4,766
|
|
7,450
|
Total current
liabilities
|
108,603
|
|
114,007
|
Other
liabilities
|
620
|
|
11,176
|
Operating lease
liability, net of current portion
|
222,714
|
|
4,640
|
Deferred revenue, net
of current portion
|
8,098
|
|
8,306
|
Deferred tax
liability
|
32,018
|
|
38,466
|
Convertible senior
notes
|
418,042
|
|
480,546
|
Total
liabilities
|
790,095
|
|
657,141
|
Stockholders'
equity:
|
|
|
|
Class A and Class B
common stock
|
26
|
|
25
|
Additional paid-in
capital
|
383,013
|
|
364,913
|
Accumulated
deficit
|
(53,956)
|
|
(48,547)
|
Accumulated other
comprehensive loss
|
(49,096)
|
|
(44,214)
|
Total stockholders'
equity
|
279,987
|
|
272,177
|
Total liabilities and
stockholders' equity
|
$
1,070,082
|
|
$
929,318
|
BANDWIDTH
INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
|
|
|
Nine months ended
September 30,
|
|
2023
|
|
2022
|
Cash flows from
operating activities
|
|
|
|
Net loss
|
$
(5,409)
|
|
$
(13,864)
|
Adjustments to
reconcile net loss to net cash provided by operating
activities
|
|
|
|
Depreciation and
amortization
|
29,687
|
|
26,866
|
Non-cash reduction to
the right-of-use asset
|
5,227
|
|
5,308
|
Amortization of debt
discount and issuance costs
|
1,995
|
|
2,343
|
Stock-based
compensation
|
22,325
|
|
15,059
|
Deferred taxes and
other
|
(5,902)
|
|
(5,496)
|
Net gain on
extinguishment of debt
|
(12,767)
|
|
—
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts receivable,
net of allowances
|
(654)
|
|
(18,311)
|
Prepaid expenses and
other assets
|
2,102
|
|
(13,389)
|
Accounts
payable
|
4,164
|
|
14,305
|
Accrued expenses and
other liabilities
|
(13,031)
|
|
17,142
|
Operating right-of-use
liability
|
(8,004)
|
|
(5,623)
|
Net cash provided by
operating activities
|
19,733
|
|
24,340
|
Cash flows from
investing activities
|
|
|
|
Purchase of property,
plant and equipment
|
(5,287)
|
|
(18,669)
|
Deposits for
construction in progress
|
—
|
|
(14,545)
|
Capitalized software
development costs
|
(8,384)
|
|
(2,121)
|
Purchase of marketable
securities
|
(60,625)
|
|
(178,153)
|
Proceeds from sales
and maturities of marketable securities
|
100,109
|
|
33,102
|
Proceeds from sale of
business
|
1,070
|
|
—
|
Net cash provided by
(used in) investing activities
|
26,883
|
|
(180,386)
|
Cash flows from
financing activities
|
|
|
|
Payments on finance
leases
|
(124)
|
|
(162)
|
Net cash paid for debt
extinguishment
|
(51,259)
|
|
—
|
Payment of debt
issuance costs
|
(696)
|
|
(553)
|
Proceeds from
exercises of stock options
|
413
|
|
162
|
Value of equity awards
withheld for tax liabilities
|
(1,056)
|
|
(2,047)
|
Net cash used in
financing activities
|
(52,722)
|
|
(2,600)
|
Effect of exchange rate
changes on cash, cash equivalents and restricted cash
|
(887)
|
|
(6,341)
|
Net decrease in cash,
cash equivalents, and restricted cash
|
(6,993)
|
|
(164,987)
|
Cash, cash equivalents,
and restricted cash, beginning of period
|
114,622
|
|
332,289
|
Cash, cash equivalents,
and restricted cash, end of period
|
$
107,629
|
|
$
167,302
|
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,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Gross
Profit
|
$
59,499
|
|
$
63,464
|
|
$
174,107
|
|
$
174,282
|
Gross Profit Margin
%
|
39 %
|
|
43 %
|
|
40 %
|
|
42 %
|
Depreciation
|
4,056
|
|
3,403
|
|
11,790
|
|
10,141
|
Amortization of
acquired intangible assets
|
1,959
|
|
1,831
|
|
5,863
|
|
5,797
|
Stock-based
compensation
|
182
|
|
93
|
|
578
|
|
283
|
Non-GAAP Gross
Profit
|
$
65,696
|
|
$
68,791
|
|
$
192,338
|
|
$
190,503
|
Non-GAAP Gross
Margin % (1)
|
55 %
|
|
57 %
|
|
54 %
|
|
54 %
|
________________________
(1)
Calculated by dividing Non-GAAP gross profit by revenue less
pass-through messaging surcharges of $32 million and $27 million in
the three months ended September 30, 2023 and 2022, respectively,
and $83 million and $65 million in the nine months ended September
30, 2023 and 2022, 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,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net
loss
|
$
(5,130)
|
|
$
(802)
|
|
$
(5,409)
|
|
$
(13,864)
|
Stock-based
compensation
|
6,942
|
|
4,892
|
|
22,325
|
|
15,059
|
Amortization of
acquired intangibles
|
4,348
|
|
4,118
|
|
12,960
|
|
13,018
|
Amortization of debt
discount and issuance costs for convertible debt
|
484
|
|
763
|
|
1,520
|
|
2,284
|
Gain on sale of
business
|
—
|
|
—
|
|
—
|
|
(3,777)
|
Net cost associated
with early lease terminations and leases without economic
benefit
|
1,175
|
|
—
|
|
1,175
|
|
—
|
Net gain on
extinguishment of debt
|
—
|
|
—
|
|
(12,767)
|
|
—
|
Gain on business
interruption insurance recoveries
|
—
|
|
—
|
|
(4,000)
|
|
—
|
Non-recurring items
not indicative of ongoing operations and other
(1)
|
54
|
|
101
|
|
793
|
|
290
|
Estimated tax effects
of adjustments (2)
|
(1,526)
|
|
(1,074)
|
|
(4,661)
|
|
(3,360)
|
Non-GAAP net
income
|
$
6,347
|
|
$
7,998
|
|
$
11,936
|
|
$
9,650
|
Interest expense on
Convertible Notes (3)
|
317
|
|
563
|
|
971
|
|
1,688
|
Numerator used to
compute Non-GAAP diluted net income per share
|
$
6,664
|
|
$
8,561
|
|
$
12,907
|
|
$
11,338
|
|
|
|
|
|
|
|
|
Net loss per share,
basic and diluted
|
$
(0.20)
|
|
$
(0.03)
|
|
$
(0.21)
|
|
$
(0.55)
|
|
|
|
|
|
|
|
|
Non-GAAP net income
per Non-GAAP share
|
|
|
|
|
|
|
|
Basic
|
$
0.25
|
|
$
0.32
|
|
$
0.47
|
|
$
0.38
|
Diluted
|
$
0.23
|
|
$
0.27
|
|
$
0.44
|
|
$
0.36
|
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding
|
|
|
|
|
|
|
|
Basic and diluted
shares
|
25,613,441
|
|
25,304,057
|
|
25,539,642
|
|
25,268,216
|
|
|
|
|
|
|
|
|
Non-GAAP basic
shares
|
25,613,441
|
|
25,304,057
|
|
25,539,642
|
|
25,268,216
|
Convertible debt
conversion
|
3,317,023
|
|
5,788,805
|
|
3,484,424
|
|
5,788,805
|
Stock options issued
and outstanding
|
20,360
|
|
64,905
|
|
47,345
|
|
107,215
|
Non-GAAP diluted
shares
|
28,950,824
|
|
31,157,767
|
|
29,071,411
|
|
31,164,236
|
________________________
(1) Non-recurring items not
indicative of ongoing operations and other include (i) $0.1 million
of losses on disposals of property, plant and equipment in the
three months ended September 30, 2023 and 2022, (ii) $0.4 million
of expense resulting from the early termination of the Company's
undrawn SVB credit facility and $0.4 million of losses on disposals
of property, plant and equipment for the nine months ended
September 30, 2023 and (iii) $0.3 million of losses on disposals of
property, plant and equipment for the nine months ended September
30, 2022.
|
(2) 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 11.0% and 18.6% for the nine months ended
September 30, 2023 and 2022, respectively. For the nine months
ended September 30, 2023, the Non-GAAP effective income tax rate
differed from the federal statutory tax rate of 21% in the U.S.
primarily due to the research and development tax credits generated
in 2023. We analyze the Non-GAAP valuation allowance position on a
quarterly basis. In the fourth quarter of 2022, we removed the
valuation allowance against all U.S. deferred tax assets for
Non-GAAP purposes as a result of cumulative Non-GAAP U.S. income
over the past three years and a significant depletion of net
operating loss and tax credit carryforwards on a Non-GAAP basis. As
of September 30, 2023, we have no valuation allowance against our
remaining deferred tax assets for Non-GAAP purposes.
|
(3) Upon the adoption of ASU 2020-06
on January 1, 2022, net income is increased for interest expense as
part of the calculation for diluted Non-GAAP earnings per
share.
|
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,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net
loss
|
$
(5,130)
|
|
$
(802)
|
|
$
(5,409)
|
|
$
(13,864)
|
Income tax
benefit
|
(219)
|
|
(923)
|
|
(3,194)
|
|
(1,161)
|
Interest (income)
expense, net
|
(59)
|
|
737
|
|
1,177
|
|
2,861
|
Depreciation
|
6,647
|
|
4,661
|
|
16,727
|
|
13,848
|
Amortization
|
4,348
|
|
4,118
|
|
12,960
|
|
13,018
|
Stock-based
compensation
|
6,942
|
|
4,892
|
|
22,325
|
|
15,059
|
Gain on sale of
business
|
—
|
|
—
|
|
—
|
|
(3,777)
|
Net cost associated
with early lease terminations and leases without economic
benefit
|
1,175
|
|
—
|
|
1,175
|
|
—
|
Net gain on
extinguishment of debt
|
—
|
|
—
|
|
(12,767)
|
|
—
|
Gain on business
interruption insurance recoveries
|
—
|
|
—
|
|
(4,000)
|
|
—
|
Non-recurring items
not indicative of ongoing operations and other
(1)
|
54
|
|
101
|
|
391
|
|
290
|
Adjusted
EBITDA
|
$
13,758
|
|
$
12,784
|
|
$
29,385
|
|
$
26,274
|
________________________
(1) Non-recurring items not
indicative of ongoing operations and other include $0.1 million of
losses on disposals of property, plant and equipment in the three
months ended September 30, 2023 and 2022, and $0.4 million and $0.3
million of losses on disposals of property, plant and equipment in
the nine months ended September 30, 2023 and 2022,
respectively.
|
Free Cash
Flow
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net cash provided by
operating activities
|
$
23,001
|
|
$
24,016
|
|
$
19,733
|
|
$
24,340
|
Net cash used in
investing in capital assets (1)
|
(4,811)
|
|
(10,524)
|
|
(13,671)
|
|
(20,790)
|
Free cash
flow
|
$
18,190
|
|
$
13,492
|
|
$
6,062
|
|
$
3,550
|
________________________
(1) Represents the acquisition cost
of property, plant and equipment and capitalized development costs
for software for internal use.
|
View original
content:https://www.prnewswire.com/news-releases/bandwidth-announces-third-quarter-2023-financial-results-301976193.html
SOURCE Bandwidth Inc.