Bandwidth (BAND) Q3 2024 earnings summary

Executive summary

• Achieved record Q3 2024 revenue of $194 million, up 28% year-over-year, and Adjusted EBITDA of $24 million, up 74% year-over-year, both exceeding guidance.

• Net income for Q3 2024 was $0.4 million, reversing a $5.1 million loss in Q3 2023; net retention rate improved to 117%.

• Raised full-year 2024 guidance for both revenue and profitability due to Q3 overperformance.

• Strong free cash flow conversion and continued operating discipline highlighted, with free cash flow for the trailing twelve months at $41 million.

• Launched next-generation Universal Platform, expanded BYOC integrations, and hosted inaugural Reverb24 user conference.

Financial highlights

• Q3 2024 total revenue: $194 million (+28% YoY); cloud communications revenue: $139 million (+15% YoY).

• Q3 2024 gross margin: 38% (non-GAAP: 58%); Adjusted EBITDA: $24 million; non-GAAP net income: $12.8 million.

• Direct enterprise customer revenue grew 30% YoY; programmable services up 55% YoY; global communications plans up 15% YoY.

• Commercial messaging revenue grew 32% YoY for the 12 months ended September 30; messaging represented 24% of cloud communications revenue.

• Free cash flow for Q3 2024 was $14 million; trailing twelve months: $41 million.

Outlook and guidance

• Full-year 2024 revenue guidance raised to $742 million at midpoint (+23% YoY); Adjusted EBITDA guidance raised to $79 million at midpoint (+65% YoY).

• Q4 2024 revenue guidance: $198M–$208M; Adjusted EBITDA: $19M–$21M.

• Expecting $25 million in cloud communications revenue from political campaign messaging in 2024, less than 5% of segment revenue.

• On track for over $50 million in free cash flow for 2024.