Slide 1: Bandwidth 3Q23 Earnings Results
Bandwidth 3Q23 Earnings Results November 2, 2023
Slide 2: Legal Disclaimer
Legal Disclaimer This presentation includes forward-looking statements. All statements contained in this presentation 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
Slide 3: Communications cloud for global enterprises
Communications cloud for global enterprises $12b 55% 1 2 Powering A communications cloud covering business-critical 2022 Total communications TTM Non-GAAP >65 countries Addressable Market Gross Margin and >90% GDP $593m Worldwide TTM Revenue CPaaS Leader 2020-2023 1 Source: Analyst and company estim
Slide 4: Bandwidth solves complex communications challenges across three target markets
Bandwidth solves complex communications challenges across Target markets Go-to-market Example customers three target markets Global Communications B2B2B Plans Powering 100% Programmable of the UCaaS and B2B2C CCaaS Leaders Services Direct Enterprise B2B Solutions 3
Slide 5: 3Q 2023 Customer and Operational Highlights
3Q 2023 Customer and Operational Highlights European-based cloud contact Automotive industry leader in center provider customer engagement • Providing voice services in Europe • Scaling conversational messaging • Values Bandwidth’s call quality, reliability, • Values Bandwidth’s support experience U
Slide 6: 3Q 2023 Financial Highlights
3Q 2023 Financial Highlights Revenue of $152m, up 5% y/y1 Exceeded revenue and profitability Messaging 17% of revenue2 guidance Commercial messaging1 grew 51% y/y Continued execution in Adjusted EBITDA of $14m a turbulent macro environment Free cash flow of $18m Average annual customer revenue reach
Slide 7: Quarterly Revenue Performance
Quarterly Revenue Performance Quarterly Geographic Revenue Revenue2 Direct enterprise up 19% y/y Programmable 1 services up 47% y/y Global communications plans down 4% y/y (USD Millions) Revenue North America4 Campaign messaging revenue2 Rest of World Messaging surcharges3 1 Excluding 3Q22 campaign
Slide 8: Customer Metrics Performance
Customer Metrics Performance Net Retention Average Annual (“DBNRR”) Customer Revenue Average annual customer revenue $177k Large enterprise customers driving average revenue growth (USD Thousands) Note: Information regarding average annual customer revenue and DBNRR including definitions and how the
Slide 9: Non-GAAP Gross Margin Performance
Non-GAAP Gross Margin Performance Quarterly Annual Fueling gross margin expansion Scale and platform ownership Product mix Global coverage Operational efficiencies Note: We calculate Non-GAAP gross margin by dividing non-GAAP gross profit by revenue less pass through messaging surcharges. See Append
Slide 10: Adjusted EBITDA Performance
Adjusted EBITDA Performance Quarterly Annual Longstanding 50 commitment to 45 profitability 35 26 Guiding to 30% annual EBITDA growth 2020 2021 2022 2023E1 (USD Millions) 1 Represents midpoint of guidance provided in the Financial Outlook section of November 2, 2023 earnings press release. Bandwidth
Slide 11: 4Q23 and Full Year 2023 Outlook
4Q23 and Full Year 2023 Outlook 4Q 2023 FY 2023 (midpoint) (midpoint) Macro backdrop remains constrained Revenue $154m $590m 1 Adjusted EBITDA $16m $45m 30% annual EBITDA growth 1 Bandwidth has not reconciled its fourth quarter and full year 2023 guidance related to Adjusted EBITDA to GAAP net incom
Slide 12: Core Operating Principles and Medium-term Targets
Core Operating Principles and Medium-term Targets 1 Medium-term targets exclude revenue from pass through messaging surcharges. 2 The Company has not reconciled its long-term goals for the non-GAAP measures of gross margin, adjusted EBITDA margin or free cash flow margin to their most closely compar
Slide 13: Thank you!
Thank you!
Slide 14: Appendix
Appendix
Slide 15: Historical Metrics
Historical Metrics USD millions FY20 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 2Q22 3Q22 4Q22 FY22 1Q23 2Q23 3Q23 Total Revenue 343.1 113.5 120.7 130.6 126.1 490.9 131.4 136.5 148.3 157.0 573.2 137.8 145.9 152.0 Total Gross Profit 153.9 51.2 53.5 57.1 52.1 213.8 55.4 55.4 63.5 64.1 238.4 55.7 59.0 59.5 Non-GAAP
Slide 16: GAAP to Non-GAAP Reconciliation - Net Income
GAAP to Non-GAAP Reconciliation - Net Income USD millions, except per share amounts FY20 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 2Q22 3Q22 4Q22 FY22 1Q23 2Q23 3Q23 Net (loss) income (44.0) (5.3) (6.9) (6.9) (8.2) (27.4) (6.8) (6.2) (0.8) 33.4 19.6 3.6 (3.9) (5.1) Stock-based compensation 9.9 4.4 3.4 3.8 2.9 1
Slide 17: GAAP to Non-GAAP Reconciliation - Earnings per share
GAAP to Non-GAAP Reconciliation - Earnings per share USD millions, except per share amounts FY20 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 2Q22 3Q22 4Q22 FY22 1Q23 2Q23 3Q23 Net income (loss) per share Basic (1.83) (0.21) (0.28) (0.28) (0.33) (1.09) (0.27) (0.25) (0.03) 1.32 0.77 0.14 (0.15) (0.20) Diluted (1.8
Slide 18: GAAP to Non-GAAP Reconciliation - Gross Profit, Adjusted EBITDA, Free Cash Flow
GAAP to Non-GAAP Reconciliation - Gross Profit, Adjusted EBITDA, Free Cash Flow USD millions FY20 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 2Q22 3Q22 4Q22 FY22 1Q23 2Q23 3Q23 Gross Profit 153.9 51.2 53.5 57.1 52.1 213.8 55.4 55.4 63.5 64.1 238.4 55.7 59.0 59.5 Gross Margin % 45 % 45 % 44 % 44 % 41 % 44 % 42 % 4
Slide 19: Definitions
Definitions Non-GAAP Net Income: net income or loss adjusted for certain items affecting period to period comparability. Non-GAAP net income excludes stock-based compensation, amortization of acquired intangible assets related to acquisitions, amortization of debt discount and issuance costs for con