Bandwidth Inc. (NASDAQ: BAND) reported fourth‑quarter 2025 results that included a revenue of $207.7 million, slightly down 1% from $210 million in Q4 2024. Non‑GAAP gross margin held steady at 58% for both quarters, while adjusted EBITDA rose to $25 million from $23 million in the prior year. Earnings per share of $0.35 exceeded the consensus estimate of $0.33 by $0.02, a 6% beat that reflects disciplined cost management and a favorable mix of high‑margin AI‑driven voice contracts.
The company’s free cash flow increased to $31 million from $30 million, supporting a newly authorized $80 million share‑repurchase program. Bandwidth’s full‑year 2026 guidance now projects revenue of $864 million to $884 million and adjusted EBITDA of $117 million to $123 million, a significant lift from the previous outlook and a signal of confidence in continued demand for its Communications Cloud and Maestro platform.
"2025 was a year of sustained business performance and strengthening fundamentals for Bandwidth, with record million‑plus deals and continued enterprise adoption of AI‑driven voice," said CEO David Morken. CFO Daryl Raiford added, "For 2026, we expect approximately 16 percent revenue growth and 29 percent Adjusted EBITDA growth, reflecting continued acceleration in voice demand, expanding software services contribution, and continued operating leverage." These comments underscore the company’s focus on scaling its AI‑enabled services while maintaining margin discipline.
The revenue decline was driven by a modest contraction in legacy voice services, offset by robust growth in the Communications Cloud segment, which benefited from increased adoption by large enterprises and technology firms. The steady gross margin indicates that the company has successfully managed cost pressures while expanding its higher‑margin software offerings. The EPS beat was largely attributable to cost controls and the higher mix of software contracts, which have higher profitability than traditional voice services.
Investors responded positively to the earnings release, citing the EPS beat, the upgraded full‑year guidance, and the share‑repurchase authorization as evidence of management’s confidence in the company’s growth trajectory and capital allocation strategy.
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