Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Bandwidth (NASDAQ:BAND) Surprises With Q3 Sales But Stock Drops

Published 11/02/2023, 04:07 PM
Updated 11/02/2023, 04:34 PM
Bandwidth (NASDAQ:BAND) Surprises With Q3 Sales But Stock Drops
BAND
-

Communications platform as a service company Bandwidth (NASDAQ: NASDAQ:BAND) reported results ahead of analysts' expectations in Q3 FY2023, with revenue up 2.49% year on year to $152 million. However, next quarter's revenue guidance of $154 million was less impressive, coming in 2.1% below analysts' estimates. Turning to EPS, Bandwidth made a non-GAAP profit of $0.23 per share, down from its profit of $0.27 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) Q3 FY2023 Highlights:

  • Revenue: $152 million vs analyst estimates of $149.1 million (1.96% beat)
  • EPS (non-GAAP): $0.23 vs analyst estimates of $0.20 (16.5% beat)
  • Revenue Guidance for Q4 2023 is $154 million at the midpoint, below analyst estimates of $157.3 million
  • Free Cash Flow of $18.2 million is up from -$1.23 million in the previous quarter
  • Gross Margin (GAAP): 39.1%, down from 42.8% in the same quarter last year
"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.

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 $130.6 million in Q3 FY2021 to $152 million this quarter.

Bandwidth's quarterly revenue was only up 2.49% year on year, which might disappoint some shareholders. Additionally, its growth did slow down compared to last quarter as the company's revenue increased by just $6.14 million in Q3 compared to $8.03 million in Q2 2023. While we'd like to see revenue increase by a greater amount each quarter, a one-off fluctuation is usually not concerning.

Next quarter, Bandwidth is guiding for a 1.89% year-on-year revenue decline to $154 million, a further deceleration from the 24.5% year-on-year decrease it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 9.47% over the next 12 months before the earnings results announcement.

Key Takeaways from Bandwidth's Q3 ResultsWith a market capitalization of $270.8 million, Bandwidth is among smaller companies, but its more than $107.4 million in cash on hand and near break-even free cash flow margins puts it in a stable financial position.

It was encouraging to see Bandwidth narrowly top analysts' revenue expectations this quarter. That really stood out as a positive in these results. On the other hand, its revenue guidance for next quarter underwhelmed and its gross margin shrunk. Overall, this was a mediocre quarter for Bandwidth. The company is down 6.2% on the results and currently trades at $10.13 per share.

The author has no position in any of the stocks mentioned in this report.

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.