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Bandwidth (NASDAQ:BAND) surprises with third-quarter sales, but shares fall
Communication platform as a service company Bandwidth (NASDAQ: NASDAQ:) reported results that exceeded analyst expectations in the third quarter of fiscal 2023, with revenue up 2.49% year over year to $152 million. However, next quarter’s revenue forecast of $154 million was less impressive, falling 2.1% below analyst estimates. In terms of earnings per share, Bandwidth posted non-GAAP earnings of $0.23 per share, compared to earnings of $0.27 per share in the same quarter last year.
Is Now the Time to Buy Bandwidth? Find out by reading the original article on StockStory.
Bandwidth (BAND) Highlights Q3 FY2023:
- Gain: $152 million vs. analyst estimates of $149.1 million (1.96% better)
- EPS (non-GAAP): $0.23 vs. analyst estimates of $0.20 (16.5% better)
- Revenue guidance for the fourth quarter of 2023 is at $154 million at the mid-point, below analyst estimates of $157.3 million
- Free cash flow of $18.2 million is an increase from -$1.23 million in the previous quarter
- Gross margin (GAAP): 39.1%, compared to 42.8% in the same quarter last year
“We are pleased to announce that we exceeded both our revenue and profitability expectations for the third quarter and made strong progress toward our goal of growing profitability by 30% for the full year. We look forward to closing 2023 with strong momentum,” said David Morken, CEO of Bandwidth.
Founded in 1999 by David Morken, who was later joined by Henry Kaestner as co-founder in 2001, Bandwidth (NASDAQ:BAND) provides thousands of customers with a software platform that uses its own global network to provide phone numbers, voice and text connectivity. .
Communications Platform The first shift to voice communications over the Internet (VOIP), instead of traditional telephone networks, occurred when companies began replacing business phones with the cheaper VOIP technology. Today, the rise of the consumer Internet has increased the need for two-way audio and video functionality in applications, increasing the demand for software tools and platforms that enable this utility.
Revenue growth As you can see below, Bandwidth’s revenue growth has been unremarkable over the past two years, going from $130.6 million in Q3 FY2021 to $152 million this quarter.
Bandwidth’s quarterly revenue rose only 2.49% year over year, which could disappoint some shareholders. Additionally, growth slowed compared to last quarter, as the company’s revenue rose by just $6.14 million in the third quarter, compared to $8.03 million in the second quarter of 2023. While we would like to see revenue increase every quarter If it were to increase by a larger amount, one-off fluctuations would usually not be a concern.
Next quarter, Bandwidth expects revenue to decline 1.89% year-over-year to $154 million, a further slowdown from the 24.5% year-over-year decline recorded in the same quarter last year. Looking ahead, before the earnings results were announced, analysts who follow the company expected revenue to grow 9.47% over the next twelve months.
Highlights from Bandwidth’s Q3 results With a market cap of $270.8 million, Bandwidth is one of the smaller companies, but its more than $107.4 million in cash and near break-even free cash flow margins puts it in a stable financial position.
It was encouraging to see Bandwidth narrowly exceed analyst revenue expectations this quarter. That really stood out as a positive in these results. On the other hand, revenue expectations for the next quarter were disappointing and gross margin shrank. Overall, this was a mediocre quarter for Bandwidth. The company is down 6.2% on its results and currently trades at $10.13 per share.
The author has no position in any of the stocks mentioned in this report.