Bandwidth Announces Third Quarter 2025 Financial Results

Exceeded revenue and profitability guidance ranges

Solid revenue growth fueled by core voice usage and software

RALEIGH, N.C., Oct. 30, 2025 /PRNewswire/ -- Bandwidth Inc. (NASDAQ: BAND), a leading global enterprise cloud communications company, today announced financial results for the third quarter ended September 30, 2025.

"Innovation and disciplined execution continue to define Bandwidth's performance," said David Morken, CEO of Bandwidth. "We helped enterprises move from experimenting with AI to deploying it at scale, launched new intelligent services on our cloud platform and closed a record number of million-dollar-plus deals for mission-critical communications. These results show how we are delivering real AI-powered value today, while charting the future of secure, trusted customer engagement."

Third Quarter 2025 Financial Highlights

The following table summarizes the condensed consolidated financial highlights for the three and nine

months ended September 30, 2025 and 2024 ($ in millions).

Three months ended

September 30,

Nine months ended

September 30,

2025

2024

2025

2024

Revenue

$ 192

$ 194

$ 546

$ 539

Gross Margin

38 %

40 %

38 %

Non-GAAP Gross Margin (1)

58 %

57 %

Net (loss) income

$ (1)

$ 0

$ (10)

$ (5)

Adjusted EBITDA (1)

$ 24

$ 68

$ 59

Net cash provided by operating activities

$ 22

$ 20

$ 51

$ 47

Free cash flow (1)

$ 13

$ 14

$ 25

$ 28

(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.

"Our solid third quarter performance led by growing momentum in Voice AI, our increasing mix of software-driven revenue, and our sharp execution led us to raise our full year Adjusted EBITDA outlook to approximately $91 million," said Daryl Raiford, CFO of Bandwidth. "AI is not a standalone product for Bandwidth — it's embedded across our cloud platform and integral to the services our customers use every day. Looking to 2026, we expect growth in Voice and Voice AI offerings, higher software revenue, and a strong political messaging season to drive us toward our medium-term financial targets."

Third Quarter Customer and Operational Highlights

Financial Outlook

Bandwidth is providing guidance for the full year 2025 as follows (in millions) based on current indications for its business, which are subject to change.

For the full year 2025, Bandwidth's revenue guidance projects 9 percent to 11 percent year-over-year growth when adjusting for the expected cyclical reduction in political campaign messaging activity, which resulted in revenue of approximately $62 million in 2024.

Full Year 2025

Guidance

Revenue

$747 - $760

Adjusted EBITDA

$89 - $92

Bandwidth has not reconciled full year 2025 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

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, AI capabilities, 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.

Conference Call

Bandwidth will host a conference call to discuss financial results for the third quarter ended September 30, 2025 on October 30, 2025. 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 call.

Conference Call Details

October 30, 2025

8:00 am 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 6, 2025 by dialing 877-344-7529 or 412-317-0088 for international callers, and entering passcode 9320253.

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, 2025, 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 successfully leverage the use of artificial intelligence in our business operations and in our service offerings, 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 Annual Report on 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 condensed 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 cloud communications revenue, which is revenue less pass-through messaging surcharges.

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 condensed consolidated statements of cash flows.

We believe that these Non-GAAP financial measures provide useful information about our operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to metrics used by our management in its financial and operational decision-making. While a reconciliation of Non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis as a result of the uncertainty regarding, and the potential variability of, many of these costs and expenses that we may incur in the future, we have provided a reconciliation of Non-GAAP financial measures and other business metrics to the nearest comparable GAAP measures in the accompanying financial statement tables included in this press release.

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,

2025

2024

2025

2024

Revenue

$ 191,895

$ 193,883

$ 546,149

$ 538,518

Cost of revenue

118,097

120,749

329,175

335,071

Gross profit

73,798

73,134

216,974

203,447

Operating expenses

Research and development

33,008

30,171

95,389

87,215

Sales and marketing

24,702

26,285

75,976

81,490

General and administrative

18,096

17,576

56,052

52,130

Total operating expenses

75,806

74,032

227,417

220,835

Operating loss

(2,008)

(898)

(10,443)

(17,388)

Other (expense) income

(1,514)

577

(1,684)

11,358

Loss before income taxes

(3,522)

(321)

(12,127)

(6,030)

Income tax benefit

2,281

734

2,215

1,265

Net (loss) income

$ (1,241)

$ 413

$ (9,912)

$ (4,765)

Net (loss) income per share

Basic

$ (0.04)

$ 0.02

$ (0.33)

$ (0.18)

Diluted

$ (0.04)

$ 0.01

$ (0.33)

$ (0.18)

Weighted average number of common shares

outstanding

Basic

30,278,516

27,374,367

29,721,404

26,983,931

Diluted

30,278,516

28,615,520

29,721,404

26,983,931

Bandwidth recognized total stock-based compensation expense as follows:

Three months ended September 30,

Nine months ended September 30,

2025

2024

2025

2024

Cost of revenue

$ 542

$ 352

$ 1,597

$ 1,123

Research and development

5,622

4,606

16,703

14,606

Sales and marketing

1,799

1,744

5,940

6,014

General and administrative

4,365

4,747

14,208

13,405

Total

$ 12,328

$ 11,449

$ 38,448

$ 35,148

BANDWIDTH INC.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

As of September 30,

As of December 31,

2025

2024

Assets

Current assets:

Cash and cash equivalents

$ 73,373

$ 81,812

Marketable securities

6,999

1,975

Accounts receivable, net of allowances

93,390

86,455

Deferred costs

4,595

3,729

Prepaid expenses and other current assets

14,653

13,841

Total current assets

193,010

187,812

Property, plant and equipment, net

176,097

176,823

Operating right-of-use asset, net

152,612

153,601

Intangible assets, net

143,467

145,355

Deferred costs, non-current

3,248

4,355

Other long-term assets

7,858

3,977

Goodwill

357,043

317,243

Total assets

$ 1,033,335

$ 989,166

Liabilities and stockholders' equity

Current liabilities:

Accounts payable

$ 34,380

$ 28,362

Accrued expenses and other current liabilities

85,221

101,819

Current portion of deferred revenue

8,386

7,031

Operating lease liability, current

3,655

3,111

Current portion of convertible senior notes

7,617

—

Total current liabilities

139,259

140,323

Other liabilities

610

576

Operating lease liability, net of current portion

221,059

219,191

Deferred revenue, net of current portion

5,860

7,955

Deferred tax liability

26,510

27,304

Convertible senior notes

247,293

281,284

Total liabilities

640,591

676,633

Stockholders' equity:

Class A and Class B common stock

Additional paid-in capital

475,353

435,927

Accumulated deficit

(81,326)

(71,414)

Accumulated other comprehensive loss

(1,314)

(52,009)

Total stockholders' equity

392,744

312,533

Total liabilities and stockholders' equity

$ 1,033,335

$ 989,166

BANDWIDTH INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Nine months ended September 30,

2025

2024

Cash flows from operating activities

Net loss

$ (9,912)

$ (4,765)

Adjustments to reconcile net loss to net cash provided by operating activities

Depreciation and amortization

39,658

37,138

Non-cash reduction to the right-of-use asset

2,472

2,759

Amortization of debt discount and issuance costs

1,054

1,332

Stock-based compensation

38,448

35,148

Deferred taxes and other

(1,056)

(4,249)

Gain on sale of intangible asset

—

(1,000)

Net gain on extinguishment of debt

(1,082)

(10,267)

Changes in operating assets and liabilities:

Accounts receivable, net of allowances

(5,930)

(21,318)

Prepaid expenses and other assets

(4,767)

2,482

Accounts payable

5,630

(11,940)

Accrued expenses and other liabilities

(12,692)

24,991

Operating right-of-use liability

(946)

(2,946)

Net cash provided by operating activities

50,877

47,365

Cash flows from investing activities

Purchase of property, plant and equipment

(17,188)

(10,636)

Refund of deposits for construction in progress

—

2,707

Capitalized software development costs

(8,218)

(8,571)

Purchase of marketable securities

(12,680)

(32,081)

Proceeds from sales and maturities of marketable securities

7,672

48,649

Proceeds from sale of business

361

624

Proceeds from sale of intangible assets

—

1,000

Net cash (used in) provided by investing activities

(30,053)

1,692

Cash flows from financing activities

Borrowings on line of credit

28,500

165,500

Repayments on line of credit

(28,500)

(140,500)

Payments on finance leases

(46)

(68)

Net cash paid for debt extinguishment

(26,144)

(128,534)

Payment of debt issuance costs

(25)

(379)

Proceeds from exercises of stock options

128

Value of equity awards withheld for tax liabilities

(2,941)

(2,291)

Net cash used in financing activities

(29,076)

(106,144)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

(284)

Net decrease in cash, cash equivalents, and restricted cash

(8,536)

(57,046)

Cash, cash equivalents, and restricted cash, beginning of period

82,234

132,307

Cash, cash equivalents, and restricted cash, end of period

$ 73,698

$ 75,261

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,

2025

2024

2025

2024

Gross Profit

$ 73,798

$ 73,134

$ 216,974

$ 203,447

Gross Profit Margin %

38 %

40 %

38 %

Depreciation

5,299

4,679

15,137

14,135

Amortization of acquired intangible assets

2,100

1,977

6,039

5,877

Stock-based compensation

542

352

1,597

1,123

Non-GAAP Gross Profit

$ 81,739

$ 80,142

$ 239,747

$ 224,582

Non-GAAP Gross Margin % (1)

58 %

57 %

(1) Calculated by dividing Non-GAAP gross profit by cloud communications revenue of $142 million and $411 million for the three and nine months ended September 30, 2025, respectively, and $139 million and $396 million for the three and nine months ended September 30, 2024, 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,

2025

2024

2025

2024

Net (loss) income

$ (1,241)

$ 413

$ (9,912)

$ (4,765)

Stock-based compensation

12,328

11,449

38,448

35,148

Amortization of acquired intangibles

4,633

4,436

13,485

13,133

Amortization of debt discount and issuance

costs for convertible debt

278

311

854

1,180

Net cost associated with early

lease terminations and leases

without economic benefit

—

350

—

2,383

Net gain on extinguishment of debt

—

(1,082)

(10,267)

Non-recurring items not indicative of

ongoing operations and other (1)

1,185

(957)

2,002

(828)

Estimated tax effects of adjustments (2)

(5,721)

(3,211)

(9,373)

(6,654)

Non-GAAP net income

$ 11,462

$ 12,791

$ 34,422

$ 29,330

Interest expense on Convertible Notes (3)

238

251

726

868

Numerator used to compute Non-GAAP

diluted net income per share

$ 11,700

$ 13,042

$ 35,148

$ 30,198

Net (loss) income per share

Basic

$ (0.04)

$ 0.02

$ (0.33)

$ (0.18)

Diluted

$ (0.04)

$ 0.01

$ (0.33)

$ (0.18)

Non-GAAP net income per Non-GAAP

Basic

$ 0.38

$ 0.47

$ 1.16

$ 1.09

Diluted

$ 0.36

$ 0.43

$ 1.10

$ 0.98

Weighted average number of shares

outstanding

Basic

30,278,516

27,374,367

29,721,404

26,983,931

Diluted

30,278,516

28,615,520

29,721,404

26,983,931

Non-GAAP basic shares

30,278,516

27,374,367

29,721,404

26,983,931

Convertible debt conversion

1,478,379

1,779,025

1,537,847

2,503,118

Stock options issued and outstanding

17,324

25,021

20,247

28,785

Nonvested RSUs outstanding

510,590

1,216,132

811,839

1,430,317

Non-GAAP diluted shares

32,284,809

30,394,545

32,091,337

30,946,151

(1) Non-recurring items not indicative of ongoing operations and other include (i) $1.2 million of foreign exchange charges primarily related to balance sheet revaluations during the three and nine months ended September 30, 2025, and less than $0.1 million and $0.2 million of losses on disposals of property, plant and equipment during the three and nine months ended September 30, 2025, respectively, (ii) $0.5 million of nonrecurring litigation expense and $0.1 million of losses on sale of business during the nine months ended September 30, 2025, and (iii) $1.0 million gain on the sale of an intangible asset during the three and nine months ended September 30, 2024, and less than $0.1 million and $0.2 million of losses on disposals of property, plant and equipment during the three and nine months ended September 30, 2024, respectively.

(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 17.2% and 15.5% for the nine months ended September 30, 2025 and 2024, respectively. For the nine months ended September 30, 2025, 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 2025. We analyze the Non-GAAP valuation allowance position on a quarterly basis. As of September 30, 2025, we have no valuation allowance against our deferred tax assets for Non-GAAP purposes.

(3) Non-GAAP 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,

2025

2024

2025

2024

Net (loss) income

$ (1,241)

$ 413

$ (9,912)

$ (4,765)

Income tax benefit

(2,281)

(734)

(2,215)

(1,265)

Interest expense, net

498

1,025

1,533

1,090

Depreciation

9,208

7,989

26,173

24,005

Amortization

4,633

4,436

13,485

13,133

Stock-based compensation

12,328

11,449

38,448

35,148

Net cost associated with early lease

terminations and leases without economic

benefit

—

350

—

2,383

Net gain on extinguishment of debt

—

(1,082)

(10,267)

Non-recurring items not indicative of

ongoing operations and other (1)

1,185

(957)

2,002

(828)

Adjusted EBITDA

$ 24,330

$ 23,971

$ 68,432

$ 58,634

Free Cash Flow

Three months ended September 30,

Nine months ended September 30,

2025

2024

2025

2024

Net cash provided by operating activities

$ 22,239

$ 20,464

$ 50,877

$ 47,365

Net cash used in investing in capital assets

(1)

(9,104)

(6,219)

(25,406)

(19,207)

Free cash flow

$ 13,135

$ 14,245

$ 25,471

$ 28,158

(1) Represents the acquisition cost of property, plant and equipment and capitalized development costs for software for internal use.

SOURCE Bandwidth Inc.