Bandwidth Q1 2025 slides: Revenue growth across all segments, guidance raised

Bandwidth Inc. (NASDAQ:BAND) released its first quarter 2025 earnings presentation on May 7, 2025, revealing solid revenue growth across all customer segments and improved profitability metrics. The cloud communications company raised its full-year guidance, citing strong performance and continued business momentum.

Executive Summary

Bandwidth reported total revenue of $174 million for Q1 2025, representing a 7% year-over-year increase when normalized for campaign messaging revenue. The company’s adjusted EBITDA grew 40% year-over-year to $22 million, resulting in a 17% adjusted EBITDA margin. Based on these strong results, management raised the full-year 2025 guidance to 9-11% total revenue growth.

As shown in the following financial highlights slide, Bandwidth’s trailing twelve months performance demonstrates significant growth across key metrics:

"We develop and deliver the power to communicate" remains Bandwidth’s core mission, with the company providing voice, messaging, and emergency services to a diverse range of global enterprises.

Quarterly Performance Highlights

Bandwidth’s Q1 2025 revenue growth was driven by strong performance across all three of its customer categories. Enterprise Voice led the way with impressive 26% year-over-year growth, followed by Programmable Messaging at 9% and Global Voice Plans at 4%.

The company’s quarterly revenue breakdown shows the distribution between cloud communications revenue and messaging surcharges, with overall growth despite seasonal factors:

Bandwidth’s cloud communications revenue reached $545 million on a trailing twelve-month basis, growing 11% year-over-year. This growth reflects the company’s success in expanding relationships with existing customers while adding new enterprise clients to its platform.

The company’s global communications platform serves major technology companies and enterprises across various industries, providing critical voice and messaging infrastructure:

Customer Metrics and Loyalty

One of Bandwidth’s most impressive achievements is its customer loyalty metrics, which demonstrate the stickiness of its platform and services. The company maintained a name retention rate exceeding 99%, while its Net Retention Rate increased to 116% in Q1 2025 from 107% in the same period last year.

The improvement in Net Retention Rate indicates Bandwidth’s success in expanding revenue from existing customers. Additionally, the company reported a 20% year-over-year increase in average annual customer revenue, which grew from $190,000 in Q1 2024 to $228,000 in Q1 2025.

The following slide illustrates these positive customer metrics trends:

Margin Expansion and Profitability

Bandwidth continued to demonstrate margin expansion, with non-GAAP gross margin improving to 59% in Q1 2025, up from 57% in Q1 2024. This improvement reflects the company’s focus on scale and platform ownership, product mix optimization, global coverage expansion, and operational efficiencies.

The margin expansion translated into strong adjusted EBITDA growth, with Q1 2025 adjusted EBITDA increasing 40% year-over-year to $22 million. This resulted in an adjusted EBITDA margin of 17%, showing the company’s ability to scale efficiently.

Free cash flow for the trailing twelve months reached $50 million, representing a remarkable 94% year-over-year growth. This strong cash generation provides Bandwidth with financial flexibility to invest in growth initiatives while maintaining a solid balance sheet.

Forward Outlook

Based on the strong Q1 performance, Bandwidth raised its full-year 2025 guidance. The company now expects total revenue growth of 9-11% year-over-year when normalized for 2024 cyclical political campaign revenue.

For the second quarter of 2025, Bandwidth projects revenue of $178-$180 million and adjusted EBITDA of $18-$20 million. For the full year 2025, the company expects revenue of $745-$760 million and adjusted EBITDA of $84-$91 million.

Strategic Initiatives

Bandwidth highlighted its AI focus with an open strategy enabling integrations as a key strategic initiative. The company’s vertically integrated platform positions it well to capitalize on the growing demand for AI-powered communications solutions.

The presentation’s key takeaways slide summarizes Bandwidth’s strong performance and strategic positioning:

Market Context

Bandwidth’s stock closed at $12.28 on May 6, 2025, with a 0.82% increase during regular trading hours. In after-hours trading, the stock gained an additional 2.12%, reaching $12.54, suggesting a positive market reaction to the earnings results.

The company’s current market capitalization is relatively modest compared to its revenue scale, with the stock trading well below its 52-week high of $23.90. This Q1 2025 performance, featuring growth across all segments and improved profitability metrics, may help address investor concerns about the company’s growth trajectory.

Compared to its Q3 2024 performance, when Bandwidth reported 28% year-over-year revenue growth, the current 7% normalized growth rate represents a moderation. However, the company’s focus on profitability is evident in the continued expansion of adjusted EBITDA margins and strong free cash flow generation.

With raised guidance and solid customer metrics, Bandwidth appears well-positioned to continue its growth trajectory throughout 2025, leveraging its established customer relationships and expanding service offerings.

Full presentation:

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