Bandwidth Announces Third Quarter 2026 Financial Results

Bandwidth Announces Third Quarter 2026 Financial Results Record revenue of $234 million, up 22% year-over-year, and Adjusted EBITDA of $35 million, up 43% year-over-year, with Adjusted EBITDA margin of 22%

2027 outlook of double-digit Cloud Communications revenue from voice usage demand growth

RALEIGH, N.C., Oct. 29, 2026 /PRNewswire/ -- Bandwidth Inc. (NASDAQ: BAND), a leading global enterprise cloud communications company, today announced financial results for the third quarter ended September 30, 2026.

"We delivered another strong quarter, with record results in all key financial metrics, highlighting the value that we are bringing to enterprises that are increasingly entrusting us to power SI-driven communication workflows," said David Morken, Bandwidth's Co-Founder, Chief Executive Officer, and Chairman. "As SI agents begin to act on behalf of businesses and consumers, they will need to reach people by voice and text, with the reliability and trust those interactions demand. Bandwidth enables that connection, and we will continue to scale as SI generates more conversations between people and agents."

Third Quarter 2026 Financial Highlights

The following table summarizes the condensed consolidated financial highlights for the three and nine months ended September 30, 2026 and 2025 ($ in millions, except per share amounts).

Three months ended

September 30,

Nine months ended

September 30,

2026

2025

2026

2025

Revenue

$ 234

$ 192

$ 663

$ 546

Gross Margin

36 %

38 %

36 %

40 %

Non-GAAP Gross Margin (1)

61 %

58 %

60 %

58 %

Net income (loss)

$ 5

$ (1)

$ 12

$ (10)

Non-GAAP net income (1)

$ 20

$ 11

$ 46

$ 34

Net income (loss) per share, basic

$ 0.16

$ (0.04)

$ 0.37

$ (0.33)

Net income (loss) per share, diluted

$ 0.13

$ (0.04)

$ 0.00

$ (0.33)

Non-GAAP net income per Non-GAAP share (1)

$ 0.50

$ 0.36

$ 1.22

$ 1.10

Adjusted EBITDA (1)

$ 35

$ 24

$ 89

$ 68

Net cash provided by operating activities

$ 38

$ 22

$ 75

$ 51

Free cash flow (1)

$ 33

$ 13

$ 56

$ 25

(1) Additional information regarding the Non-GAAP financial measures discussed in this release, including an explanation of these measures and how each is calculated, is included below under the heading "Non-GAAP Financial Measures." A reconciliation of GAAP to Non-GAAP financial measures has also been provided in the financial tables included below.

"Our third quarter results demonstrate our continued focus and execution, with record revenue, Adjusted EBITDA, and free cash flow," said Daryl Raiford, CFO of Bandwidth. "Our growth this quarter was driven by customers expanding their usage of our platform, and our sales team added four new $1 million-plus customer wins and expansions that will layer into our results over the next twelve months. The strength of our business model lets us lean into that momentum while expanding margins and generating strong cash flow."

Third Quarter Customer Highlights

Financial Outlook

Bandwidth is providing guidance for the full year 2026 as follows (in millions, except per share amounts) based on current indications for its business, which are subject to change.

Full Year 2026 Guidance

Revenue

$905 - $910

Adjusted EBITDA

$124 - $125

Non-GAAP earnings per share (1)

$1.73 - $1.79

(1) Assumes weighted average diluted share count of approximately 38.7 million in full year 2026.

Bandwidth has not reconciled its full year 2026 guidance related to (i) Adjusted EBITDA to GAAP net income or loss, (ii) non-GAAP net earnings or loss to GAAP net earnings or loss or (iii) non-GAAP earnings or loss per share to GAAP earnings or loss per share, because stock-based compensation cannot be reasonably calculated or predicted at this time. Accordingly, a reconciliation is not available without unreasonable effort.

Upcoming Investor Conferences

About Bandwidth Inc.

Bandwidth Inc. (NASDAQ: BAND) is a global cloud communications company that helps enterprises deliver exceptional experiences through voice calling, text messaging and emergency services. Our solutions and our Communications Cloud, covering ~70 countries and 90 percent of global GDP, are trusted by all the leaders in unified communications and cloud contact centers–including Amazon Web Services (AWS), Cisco, Google, Microsoft, RingCentral, Zoom, Genesys and Five9–as well as Global 2000 enterprises and SaaS builders like Docusign, Uber and Yosi Health. As a founder of the cloud communications revolution, we are the first and only global Communications Platform-as-a-Service (CPaaS) to offer a unique combination of composable APIs, super intelligence ("SI") capabilities, owner-operated network and broad regulatory experience. Our award-winning support teams help businesses around the world transform their communications every day.

Conference Call

Bandwidth will host a conference call to discuss financial results for the third quarter ended September 30, 2026 on October 29, 2026. Details can be found below and on the investor section of its website at https://investors.bandwidth.com where a replay will also be available shortly following the call.

Conference Call Details

October 29, 2026

8:00 am ET

Domestic dial-in:

844-481-2707

International dial-in:

646-307-1963

Replay information

An audio replay of this conference call will be available through November 5, 2026 by dialing 855-669-9658 or 412-317-0088 for international callers, and entering passcode 4828018.

This press release includes forward-looking statements. All statements contained in this press release other than statements of historical facts, including, without limitation, future financial and business performance, the success of our product offerings and our platform, and the value proposition of our products, are forward-looking statements. The words "anticipate," "assume," "believe," "continue," "estimate," "expect," "intend," "guide," "may," "will" and similar expressions and their negatives are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to a number of risks and uncertainties, including, without limitation, risks related to our rapid growth and ability to sustain our revenue growth rate, competition in the markets in which we operate, market growth, our ability to innovate and manage our growth, our ability to successfully leverage the use of SI in our business operations and in our service offerings, our ability to expand effectively into new markets, macroeconomic conditions both in the U.S. and globally, legal, reputational and financial risks which may result from ever-evolving cybersecurity threats, our ability to operate in compliance with applicable laws, as well as other risks and uncertainties set forth in the "Risk Factors" section of our latest Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC") and any subsequent reports that we file with the SEC. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, we cannot guarantee future results, levels of activity, performance, achievements or events and circumstances reflected in the forward-looking statements will occur. We are under no obligation to update any of these forward-looking statements after the date of this press release to conform these statements to actual results or revised expectations, except as required by law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this press release.

Non-GAAP Financial Measures

To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States, or GAAP, we provide investors with certain Non-GAAP financial measures and other business metrics, which we believe are helpful to our investors. We use these Non-GAAP financial measures and other business metrics for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons. We believe that these Non-GAAP financial measures and other business metrics provide useful information about our operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to metrics used by our management in its financial and operational decision-making.

The presentation of Non-GAAP financial information and other business metrics is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. While our Non-GAAP financial measures and other business metrics are an important tool for financial and operational decision-making and for evaluating our own operating results over different periods of time, we urge investors to review the reconciliation of these financial measures to the comparable GAAP financial measures included below, and not to rely on any single financial measure to evaluate our business.

We define Non-GAAP gross profit as gross profit after adding back depreciation, amortization of acquired intangible assets related to acquisitions and stock-based compensation and related payroll taxes. We add back depreciation, amortization of acquired intangible assets related to acquisitions and stock-based compensation and related payroll taxes because we do not consider them indicative of our core operating performance. Their exclusion facilitates comparisons of our operating performance on a period-to-period basis. Therefore, we believe that showing gross margin, as adjusted to remove the impact of these expenses, is helpful to investors in assessing our gross profit and gross margin performance in a way that is similar to how management assesses our performance. We calculate Non-GAAP gross margin by dividing Non-GAAP gross profit by cloud communications revenue, which is revenue less pass-through messaging surcharge revenue.

We define Non-GAAP net income (loss) as net income or loss adjusted for certain items affecting period to period comparability. Non-GAAP net income (loss) excludes stock-based compensation and related payroll taxes, amortization of acquired intangible assets related to acquisitions, amortization of debt discount and issuance costs for convertible debt, acquisition related expenses, impairment charges of intangibles assets, net cost associated with early lease terminations and leases without economic benefit, (gain) loss on sale of business, net (gain) loss on extinguishment of debt, gain on business interruption insurance recoveries, non-recurring items not indicative of ongoing operations and other, and estimated tax impact of above adjustments, net of valuation allowances.

We define Adjusted EBITDA as net income or losses from continuing operations, adjusted to reflect the addition or elimination of certain statement of operations items including, but not limited to: income tax (benefit) provision, interest (income) expense, net, depreciation and amortization expense, acquisition related expenses, stock-based compensation and related payroll taxes, impairment of intangible assets, (gain) loss on sale of business, net cost associated with early lease terminations and leases without economic benefit, net (gain) loss on extinguishment of debt, gain on business interruption insurance recoveries, and non-recurring items not indicative of ongoing operations and other. We have presented Adjusted EBITDA and Adjusted EBITDA margin because they are key measures used by our management and board of directors to understand and evaluate our core operating performance and trends, generate future operating plans, and make strategic decisions regarding the allocation of capital. In particular, we believe that the exclusion of certain items in calculating Adjusted EBITDA and Adjusted EBITDA margin can produce a useful measure for period-to-period comparisons of our business. We calculate Adjusted EBITDA margin by dividing Adjusted EBITDA by cloud communications revenue, which is revenue less pass-through messaging surcharge revenue.

We define free cash flow as net cash provided by or used in operating activities less net cash used in the acquisition of property, plant and equipment and capitalized development costs for software for internal use. We believe free cash flow is a useful indicator of liquidity and provides information to management and investors about the amount of cash generated from our core operations that can be used for investing in our business. Free cash flow has certain limitations in that it does not represent the total increase or decrease in the cash balance for the period, it does not take into consideration investment in long-term securities, nor does it represent the residual cash flows available for discretionary expenditures. Therefore, it is important to evaluate free cash flow along with our condensed consolidated statements of cash flows.

We believe that these Non-GAAP financial measures provide useful information about our operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to metrics used by our management in its financial and operational decision-making. While a reconciliation of Non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis as a result of the uncertainty regarding, and the potential variability of, many of these costs and expenses that we may incur in the future, we have provided a reconciliation of Non-GAAP financial measures and other business metrics to the nearest comparable GAAP measures in the accompanying financial statement tables included in this press release.

BANDWIDTH INC.

Condensed Consolidated Statements of Operations

(In thousands, except share and per share amounts)

(Unaudited)

Three months ended September 30,

Nine months ended September 30,

2026

2025

2026

2025

Revenue

$ 234,017

$ 191,895

$ 662,698

$ 546,149

Cost of revenue

149,217

118,097

421,441

329,175

Gross profit

84,800

73,798

241,257

216,974

Operating expenses

Research and development

36,495

33,008

112,304

95,389

Sales and marketing

25,567

24,702

75,554

75,976

General and administrative

20,943

18,096

60,778

56,052

Total operating expenses

83,005

75,806

248,636

227,417

Operating income (loss)

1,795

(2,008)

(7,379)

(10,443)

Other income (expense), net

1,549

(1,514)

12,913

(1,684)

Income (loss) before income taxes

3,344

(3,522)

5,534

(12,127)

Income tax benefit

1,903

2,281

6,218

2,215

Net income (loss)

$ 5,247

$ (1,241)

$ 11,752

$ (9,912)

Net income (loss) per share

Basic

$ 0.16

$ (0.04)

$ 0.37

$ (0.33)

Diluted

$ 0.13

$ (0.04)

$ 0.00

$ (0.33)

Numerator used to compute net income (loss) per share:

Basic

$ 5,247

$ (1,241)

$ 11,752

$ (9,912)

Diluted

$ 5,022

$ (1,241)

$ 4

$ (9,912)

Weighted average number of common shares outstanding:

Basic

32,235,811

30,278,516

32,017,803

29,721,404

Diluted

40,134,189

30,278,516

37,976,873

29,721,404

BANDWIDTH INC.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

As of September 30,

As of December 31,

2026

2025

Assets

Current assets:

Cash and cash equivalents

$ 171,315

$ 102,788

Marketable securities

4,491

8,476

Accounts receivable, net of allowance

118,138

91,409

Deferred costs

4,530

4,830

Prepaid expenses and other current assets

15,596

11,557

Total current assets

314,070

219,060

Property, plant and equipment, net

160,518

174,251

Operating right-of-use asset, net

151,003

152,950

Intangible assets, net

114,070

138,742

Deferred costs, non-current

2,003

3,098

Other long-term assets

7,323

7,754

Goodwill

345,422

356,772

Total assets

$ 1,094,409

$ 1,052,627

Liabilities and stockholders' equity

Current liabilities:

Accounts payable

$ 41,364

$ 42,600

Accrued expenses and other current liabilities

108,815

91,151

Current portion of deferred revenue

8,476

8,742

Operating lease liability, current

4,616

3,947

Current portion of convertible senior notes

—

7,627

Total current liabilities

163,271

154,067

Other liabilities

1,703

555

Operating lease liability, net of current portion

217,964

221,019

Deferred revenue, net of current portion

2,602

4,972

Deferred tax liability

16,285

24,479

Convertible senior notes

310,584

247,562

Total liabilities

712,409

652,654

Stockholders' equity:

Class A and Class B common stock

Treasury common stock

(29,978)

—

Additional paid-in capital

500,825

485,836

Accumulated deficit

(72,574)

(84,326)

Accumulated other comprehensive loss

(16,306)

(1,568)

Total stockholders' equity

382,000

399,973

Total liabilities and stockholders' equity

$ 1,094,409

$ 1,052,627

BANDWIDTH INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Nine months ended September 30,

2026

2025

Cash flows from operating activities

Net income (loss)

$ 11,752

$ (9,912)

Adjustments to reconcile net income (loss) to net cash provided by operating activities

Depreciation and amortization

52,613

39,658

Non-cash reduction to the right-of-use asset

2,553

2,472

Amortization of debt discount and issuance costs

1,198

1,054

Stock-based compensation

39,089

38,448

Deferred taxes and other

(7,290)

(1,056)

Net gain on extinguishment of debt

(13,246)

(1,082)

Changes in operating assets and liabilities:

Accounts receivable, net of allowance

(27,067)

(5,930)

Prepaid expenses and other assets

(2,456)

(4,767)

Accounts payable

104

5,630

Accrued expenses and other liabilities

20,989

(12,692)

Operating right-of-use liability

(2,994)

(946)

Net cash provided by operating activities

75,245

50,877

Cash flows from investing activities

Purchase of property, plant and equipment

(12,417)

(17,188)

Capitalized software development costs

(6,690)

(8,218)

Purchase of marketable securities

(7,409)

(12,680)

Proceeds from sales and maturities of marketable securities

11,415

7,672

Proceeds from sale of business

—

361

Net cash used in investing activities

(15,101)

(30,053)

Cash flows from financing activities

Borrowings on line of credit

148,700

28,500

Repayments on line of credit

(148,700)

(28,500)

Proceeds from issuance of convertible senior notes

316,250

—

Net cash paid for debt extinguishment

(236,084)

(26,144)

Purchase of capped call

(21,821)

—

Repurchase of Class A common stock

(29,978)

—

Payment of debt issuance costs

(12,937)

(25)

Value of equity awards withheld for tax liabilities and other

(5,403)

(2,907)

Net cash provided by (used in) financing activities

10,027

(29,076)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

(1,645)

(284)

Net increase (decrease) in cash, cash equivalents, and restricted cash

68,526

(8,536)

Cash, cash equivalents, and restricted cash, beginning of period

103,160

82,234

Cash, cash equivalents, and restricted cash, end of period

$ 171,686

$ 73,698

BANDWIDTH INC.

Reconciliation of Non-GAAP Financial Measures

(In thousands, except share and per share amounts)

(Unaudited)

Non-GAAP Gross Profit and Non-GAAP Gross Margin

Three months ended September 30,

Nine months ended September 30,

2026

2025

2026

2025

Gross Profit

$ 84,800

$ 73,798

$ 241,257

$ 216,974

Gross Profit Margin %

36 %

38 %

36 %

40 %

Depreciation

5,934

5,299

17,882

15,137

Amortization of acquired intangible assets

5,007

2,100

15,141

6,039

Stock-based compensation and related payroll taxes

343

542

1,329

1,597

Non-GAAP Gross Profit

$ 96,084

$ 81,739

$ 275,609

$ 239,747

Non-GAAP Gross Margin % (1)

61 %

58 %

60 %

58 %

________________________

(1) Calculated by dividing Non-GAAP gross profit by cloud communications revenue of $158 million and $460 million for the three and nine months ended September 30, 2026, respectively, and $142 million and $411 million for the three and nine months ended September 30, 2025, respectively.

BANDWIDTH INC.

Reconciliation of Non-GAAP Financial Measures

(In thousands, except share and per share amounts)

(Unaudited)

Non-GAAP Net Income

Three months ended September 30,

Nine months ended September 30,

2026

2025

2026

2025

Net income (loss)

$ 5,247

$ (1,241)

$ 11,752

$ (9,912)

Stock-based compensation and related payroll taxes

14,559

12,328

42,934

38,448

Amortization of acquired intangibles

7,531

4,633

22,721

13,485

Amortization of debt discount and issuance costs for convertible debt

541

278

998

854

Net gain on extinguishment of debt

(800)

—

(13,246)

(1,082)

Non-recurring items not indicative of ongoing operations and other (1)

1,185

(1,119)

2,002

Estimated tax effects of adjustments (2)

(7,209)

(5,721)

(18,081)

(9,373)

Non-GAAP net income

$ 19,884

$ 11,462

$ 45,959

$ 34,422

Interest expense on Convertible Notes (3)

238

348

726

Numerator used to compute Non-GAAP diluted net income per share

$ 19,897

$ 11,700

$ 46,307

$ 35,148

Net income (loss) per share

Basic

$ 0.16

$ (0.04)

$ 0.37

$ (0.33)

Diluted

$ 0.13

$ (0.04)

$ 0.00

$ (0.33)

Non-GAAP net income per Non-GAAP share

Basic

$ 0.62

$ 0.38

$ 1.44

$ 1.16

Diluted

$ 0.50

$ 0.36

$ 1.22

$ 1.10

Weighted average number of shares outstanding

Basic

32,235,811

30,278,516

32,017,803

29,721,404

Diluted

40,134,189

30,278,516

37,976,873

29,721,404

Non-GAAP basic shares

32,235,811

30,278,516

32,017,803

29,721,404

Convertible debt conversion

4,433,843

1,478,379

2,368,515

1,537,847

Stock options issued and outstanding

16,363

17,324

34,650

20,247

Nonvested RSUs outstanding

3,448,172

510,590

3,555,905

811,839

Non-GAAP diluted shares

40,134,189

32,284,809

37,976,873

32,091,337

________________________

(1) Non-recurring items not indicative of ongoing operations and other include (i) $(0.3) million and $(1.7) million of foreign exchange gains primarily related to balance sheet revaluations during the three and nine months ended September 30, 2026, respectively, (ii) $0.2 million of losses on prepaid contract and related implementation costs during the three and nine months ended September 30, 2026, (iii) $0.1 million and $0.4 million of losses on disposals of property, plant and equipment during the three and nine months ended September 30, 2026, respectively, (iv) $1.2 million of foreign exchange losses primarily related to balance sheet revaluations during three and nine months ended September 30, 2025, (v) less than $0.1 million and $0.2 million of losses on disposals of property, plant and equipment during the three and nine months ended September 30, 2025, respectively, (vi) $0.1 million of losses on sale of business during the nine months ended September 30, 2025, and (vii) $0.5 million of nonrecurring litigation expense during the nine months ended September 30, 2025.

(2) The estimated tax-effect of adjustments is determined by recalculating the tax provision on a Non-GAAP basis. The Non-GAAP effective income tax rate was 20.5% and 17.2% for the nine months ended September 30, 2026 and 2025, respectively. We analyze the Non-GAAP valuation allowance position on a quarterly basis. As of September 30, 2026, we have no valuation allowance against our deferred tax assets for Non-GAAP purposes.

(3) Non-GAAP net income is increased for interest expense as part of the calculation for diluted Non-GAAP earnings per share.

BANDWIDTH INC.

Reconciliation of Non-GAAP Financial Measures

(In thousands, except share and per share amounts)

(Unaudited)

Adjusted EBITDA

Three months ended September 30,

Nine months ended September 30,

2026

2025

2026

2025

Net income (loss)

$ 5,247

$ (1,241)

$ 11,752

$ (9,912)

Income tax benefit

(1,903)

(2,281)

(6,218)

(2,215)

Interest expense, net

180

498

1,820

1,533

Depreciation

9,968

9,208

29,892

26,173

Amortization

7,531

4,633

22,721

13,485

Stock-based compensation and related payroll taxes

14,559

12,328

42,934

38,448

Net gain on extinguishment of debt

(800)

—

(13,246)

(1,082)

Non-recurring items not indicative of ongoing operations and other (1)

1,185

(1,119)

2,002

Adjusted EBITDA

$ 34,797

$ 24,330

$ 88,536

$ 68,432

________________________

Free Cash Flow

Three months ended September 30,

Nine months ended September 30,

2026

2025

2026

2025

Net cash provided by operating activities

$ 37,705

$ 22,239

$ 75,245

$ 50,877

Net cash used in investing in capital assets (1)

(4,724)

(9,104)

(19,107)

(25,406)

Free cash flow

$ 32,981

$ 13,135

$ 56,138

$ 25,471

________________________

(1) Represents the acquisition cost of property, plant and equipment and capitalized development costs for software for internal use.

Stock-Based Compensation Expense

Bandwidth recognized total stock-based compensation expense as follows:

Three months ended September 30,

Nine months ended September 30,

2026

2025

2026

2025

Cost of revenue

$ 319

$ 542

$ 1,208

$ 1,597

Research and development

5,634

5,622

17,045

16,703

Sales and marketing

1,770

1,799

5,233

5,940

General and administrative

5,769

4,365

15,603

14,208

Total

$ 13,492

$ 12,328

$ 39,089

$ 38,448

SOURCE Bandwidth Inc.