Yahoo Finance Bandwidth (BAND) Down 1% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Bandwidth (BAND). Shares have lost about 1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Bandwidth due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Bandwidth Q1 Earnings Beat, 2024 Guidance Raised
Bandwidth reported strong first-quarter 2024 results, beating the top-line and bottom-line estimates and well exceeding its guided range. The strong performance was backed by enterprises increasingly relying on Bandwidth’s platform for communications in the cloud. In order to drive growth, the company plans to focus on winning large enterprises and becoming the best global CPaaS (Communications Platform as a Service) platform for scaling digital engagement.
Quarter Details
On a GAAP basis, net loss during the quarter was $9.2 million or a loss of 35 cents per share against a net income of $3.6 million or 14 cents per share in the prior-year quarter. Higher operating expenses and a decrease in other income, net affected net income during the quarter.
Excluding non-recurring items, non-GAAP net income during the reported quarter was $8.1 million or 27 cents per share compared with $1.5 million or 5 cents per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 6 cents.
Quarterly revenues improved to $171 million from $137.8 million in the prior-year quarter. The growth was backed by high demand for digital engagement and strong contributions from messaging services across a variety of use cases, including health care, aviation, retail and e-commerce shopping, fintech and civic engagement. The top line exceeded the consensus estimate of $163 million.
The company witnessed healthy demand across all three market categories. The programmable service category grew 49% year over year, driven by solid demand from commercial clients in e-commerce, financial services and health care. An increase in political campaign messaging also supported revenues in this category. Global communication plans revenues grew 4% year over year, while the direct-to-enterprise customer category reported 20% year-over-year revenue growth.
Operating Details
Non-GAAP gross margin during the quarter was 57%, up from 54% a year ago. The gross margin improved as net sales growth outpaced the higher cost of revenues. The company witnessed solid growth in profitability, backed by strong performance in all three market offerings. Adjusted EBITDA was $15.9 million, well above the guidance and up from $5.1 million in the prior-year period.
Cash Flow & Liquidity
In the March quarter, net cash from operating activities was $2.5 million against cash utilization of $6.4 million in the prior year. Cash and cash equivalents as of Mar 31, 2024, were $105.4 million, with convertible senior notes of $419 million.
Guidance Up
Backed by strong momentum, Bandwidth expects revenues for 2024 in the band of $710-720 million, up from $695-705 million expected earlier. Adjusted EBITDA is now expected in the range of $72-76 million, up from the prior estimation of $70-74 million.
For the second quarter, revenues are expected to be $171-$175 million. Adjusted EBITDA is anticipated in the band of $15 million to $17 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted 350% due to these changes.
VGM Scores
Currently, Bandwidth has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Bandwidth has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Bandwidth Inc. (BAND) : Free Stock Analysis Report
