Bandwidth’s third quarter results drew a negative market reaction, despite delivering revenue above Wall Street’s expectations. Management pointed to accelerating growth in its core voice offerings and highlighted robust customer adoption, especially among Global 2000 enterprises. CEO David Morken cited the “record pace” of million-dollar-plus deals and underscored the growing demand for AI-powered voice solutions as a key driver this quarter. However, the company’s non-GAAP profit fell slightly short of analyst consensus, and management acknowledged cross currents in gross margin due to the absence of political campaign messaging revenue compared to last year.
Is now the time to buy BAND? Find out in our full research report (it’s free for active Edge members).
Bandwidth (BAND) Q3 CY2025 Highlights:
- Revenue: $191.9 million vs analyst estimates of $190 million (1% year-on-year decline, 1% beat)
- Adjusted EPS: $0.36 vs analyst expectations of $0.37 (3.2% miss)
- Adjusted Operating Income: $17.72 million vs analyst estimates of $15.33 million (9.2% margin, 15.6% beat)
- The company slightly lifted its revenue guidance for the full year to $753.5 million at the midpoint from $752.5 million
- EBITDA guidance for the full year is $90.5 million at the midpoint, above analyst estimates of $88.95 million
- Operating Margin: -1%, in line with the same quarter last year
- Market Capitalization: $449 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Bandwidth’s Q3 Earnings Call
- Patrick Walravens (Citizens): asked whether Bandwidth can achieve its medium-term revenue targets and how they reflect customer demand. CFO Daryl Raiford reiterated the focus on above-market growth and achieving 60%+ gross margins and 20%+ EBITDA margins by 2026.
- Joshua Reilly (Needham): inquired about the onboarding time for large customer wins and how new products are contributing to enterprise and global voice deals. CEO David Morken explained that deal cycles are compressing, and Chief Product Officer John Bell said new software products are quickly adopted by both enterprise and global voice customers.
- James Fish (Piper Sandler): questioned whether the AI-powered digital commerce win represented a broader trend toward DIY solutions or deeper integration with third-party AI tools. Bell responded that Bandwidth supports both approaches, focusing on standards-based integrations to maximize customer flexibility.
- William Power (Baird): sought more detail on the revised revenue guidance and the relative strength of voice versus messaging. Morken clarified that stronger voice performance led to raised guidance, while messaging was held in line, with surcharges slightly lowered.
- William Power (Baird): also asked about the number reputation management product’s market opportunity. Bell highlighted its immediate value to customers and noted its recent expansion to wholesale segments as a growth lever.
Catalysts in Upcoming Quarters
Looking ahead, our analyst team is monitoring (1) the pace of software-driven revenue adoption, especially from new AI-powered products; (2) continued expansion in large enterprise voice deals and associated onboarding speed; and (3) improvements in gross margin as the mix shifts toward higher-value software and automation. The progress of the trust services portfolio and developments in the messaging revenue stream will also be important to watch.
Bandwidth currently trades at $14.89, down from $16.79 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free for active Edge members).
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