Fundamentals snapshot

Bandwidth Inc.

BAND · NMS · Technology · Software - Infrastructure

Current price

$56.87

52-week range

$12.50 - $79.08

Market cap

$1.83B

One-glance verdict

Overvalued

$20.35 our estimate vs market $56.87

Wall Street consensus: $70.75 (247.6% higher than our fair-value estimate)

Balance sheet

Distressed

-7.09x Concerning

Net debt $380.06M. Interest coverage shows how many times profit covers the interest bill.

What stands out

2 Rewards 1 Risk

2 rewards · 1 risks

Reward Revenue grew 4.6% last year.
Reward Free cash flow was positive in 3/10 years.
Risk Net debt grew 19.9% over 3 years.

View details ↓

What this company does

Bandwidth Inc.

Bandwidth provides the behind-the-scenes technology that allows major companies like Google and Microsoft to add voice calling and text messaging directly into their apps. The company makes most of its money by charging these businesses based on how much they use its communication network, much like a phone bill. This is important because as more software products need to communicate, Bandwidth's role as the essential "plumbing" can grow along with its customers.

How the company got here

Founded in 1999 by David Morken, Bandwidth started out by reselling internet access to businesses. A key moment came when they built their own nationwide all-IP voice network, which means they own the technology that phone calls travel over, unlike some competitors who rent from others. The company went public in 2017, raising money to fuel its growth. A major turning point was the 2020 acquisition of Voxbone, a European company, which significantly expanded Bandwidth's international reach and made it a more global player.

What it actually does

Think of Bandwidth as a company that provides the behind-the-scenes plumbing for many of the communication tools other businesses use. They offer software tools called APIs (Application Programming Interfaces) that allow companies like Google, Microsoft, and Zoom to easily add voice calling, text messaging, and 911 access into their own apps and software. Instead of building these complex communication features from scratch, a company can use Bandwidth's pre-built solutions. This allows other businesses to focus on their main product while still offering robust communication options to their customers.

Cloud Communications

This is Bandwidth's main business, making up the vast majority of its revenue. Here, they charge customers based on how much they use the services, like the number of minutes for phone calls or the volume of text messages sent. This segment also includes recurring monthly fees for things like phone numbers and access to emergency services like 911. Their customers are typically other large businesses and software companies that want to build communication features directly into their products.

What management is betting on now

Bandwidth is heavily focused on the growing use of Artificial Intelligence (AI) in communications. They are positioning their services as the essential infrastructure for AI-powered voice and messaging tools that businesses are increasingly adopting. Another key priority is international expansion, building on the foundation of their Voxbone acquisition to serve large global companies. The company is also aiming for profitable growth, meaning they are focused not just on increasing sales but also on improving their margins (the profit made on each dollar of sales) and generating more cash.

Price history

How the share price has moved

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Earnings history

Last 8 quarters — what happened

Click any quarter to read the call summary and what the numbers say.

Revenue $208.78M

Net income $4.12M

Diluted EPS -0.08

Operating cash flow $8.77M

Free cash flow —

Revenue $207.67M

Net income $-3.00M

Diluted EPS -0.10

Operating cash flow $38.61M

Free cash flow —

Revenue $191.90M

Net income $-1.24M

Diluted EPS -0.04

Operating cash flow $22.24M

Free cash flow —

Revenue $180.01M

Net income $-4.93M

Diluted EPS -0.16

Operating cash flow $31.72M

Free cash flow —

Revenue $174.24M

Net income $-3.74M

Diluted EPS -0.13

Operating cash flow $-3.08M

Free cash flow —

Revenue $209.97M

Net income $-1.76M

Diluted EPS 0.27

Operating cash flow $36.52M

Free cash flow —

Revenue $193.88M

Net income $413.00K

Diluted EPS 0.01

Operating cash flow $20.46M

Free cash flow —

Revenue $173.60M

Net income $4.05M

Diluted EPS -0.17

Operating cash flow $24.44M

Free cash flow —

Is it cheap or expensive?

Fair value $20.35 vs current price $56.87

Wall Street consensus is the average analyst price target: $70.75 (247.6% higher than our fair-value estimate).

Our most-likely fair value is $20.35 a share — about 64.2% below today's price of $56.87, so the stock currently looks expensive (overvalued).

overvalued

We estimate the cash this business should generate over the next 10 years and beyond, then convert it to today's money for a fair value per share, in its trading currency. Cautious, middle and optimistic growth cases give a range. Not for banks/insurers.

Base

Growth 14.0% · Discount 12.7% · Terminal 2.0%

$20.35

Bear

Growth 5.0% · Discount 12.7% · Terminal 2.0%

$8.23

Bull

Growth 22.0% · Discount 12.7% · Terminal 2.0%

$36.59

Is it drowning in debt?

Distressed

Net debt $380.1M. Interest coverage -7.1x.

Net debt $380.06M

Interest coverage -7.09x

Bandwidth Inc.'s profit covers its interest bill about 0.0 times over. which is weaker than most peers shown here.

Distressed

Worse cushion Baseline Better cushion

BAND BASELINE Bandwidth Inc.

Total debt $554.42M Interest coverage -7.09x This is the baseline the peer rows are being compared against.

RNG RingCentral, Inc.

Total debt $1.16B Interest coverage 2.00x This peer still has a real interest-payment cushion, while BAND does not.

FIVN Five9, Inc.

Total debt $843.26M Interest coverage 2.05x This peer still has a real interest-payment cushion, while BAND does not.

EGHT 8x8, Inc.

Total debt $357.52M Interest coverage 1.07x This peer still has a real interest-payment cushion, while BAND does not.

What you should know

The case for and against BAND

2 Rewards 1 Risk

Rewards

Revenue grew 4.6% last year.
Free cash flow was positive in 3/10 years.

Risks

Net debt grew 19.9% over 3 years.

The numbers

All the key metrics, grouped by purpose

Tap any ? icon to learn what it means.

Valuation

How expensive the stock looks

P/E (TTM)

—

Forward P/E

29.34x

P/B

4.84x

P/S

2.21x

EV/EBITDA

54.64x

PEG ratio

—

Profitability

How much profit each dollar creates

Gross margin

37.2%

Operating margin

-2.1%

Net margin

0.3%

ROE

0.6%

ROA

-0.9%

Health

Liquidity and balance-sheet strength

Debt / equity

1.47x

Current ratio

2.04x

Quick ratio

1.90x

Total debt

$554.42M

Total cash

$174.36M

Growth

How the business has been compounding

Revenue TTM

$788.36M

Revenue 5Y CAGR

11.3%

EPS TTM

-0.34

EPS 5Y CAGR

—

Cash flow

How much cash the business throws off

Operating CF TTM

$101.34M

Free CF TTM

$56.55M

FCF margin

7.2%

Dividend

Shareholder payout

Yield

—

Payout ratio

0.0%

Last ex-div date

—

Bandwidth Inc.

$20.35 our estimate vs market $56.87

-7.09x Concerning

2 rewards · 1 risks

Bandwidth Inc.

How the company got here

What it actually does

Cloud Communications

What management is betting on now

How the share price has moved

Last 8 quarters — what happened

Fair value ? $20.35 vs current price $56.87

Distressed

The case for and against BAND

Rewards

Risks

All the key metrics, grouped by purpose

How expensive the stock looks

How much profit each dollar creates

Liquidity and balance-sheet strength

How the business has been compounding

How much cash the business throws off

Shareholder payout

Fair value $20.35 vs current price $56.87