Bandwidth(BAND) - 2024 Q1 - Quarterly Report

Financial Performance - Total revenue for the three months ended March 31, 2024, was $171 million, representing a 24$138 million in the same period of 2023[131]. - Net loss for the three months ended March 31, 2024, was $9 million, compared to a net income of$4 million in the same period of 2023[131]. - For the three months ended March 31, 2024, cloud communications revenue increased by $14 million, or 12$19 million, or 82%, compared to the same period in 2023, attributed to increased messaging traffic and new carrier fees[151]. - Gross profit for the three months ended March 31, 2024, was $65 million, an increase of$10 million, or 18%, from the same period in 2023[152]. - Non-GAAP gross profit for Q1 2024 was $72,617,000, up from$61,319,000 in Q1 2023, representing a 18.5% increase[179]. - Non-GAAP gross margin for Q1 2024 was 57%, compared to 54% in Q1 2023[179]. - The company reported a net loss of $9,233,000 for Q1 2024, compared to a net income of$3,611,000 in Q1 2023[185]. - Non-GAAP net income for Q1 2024 was $7,820,000, significantly higher than$1,190,000 in Q1 2023[185]. - Adjusted EBITDA for Q1 2024 was $15,923,000, compared to$5,059,000 in Q1 2023, indicating a substantial improvement[188]. - Free cash flow for Q1 2024 was $(4,407,000), an improvement from$(10,900,000) in Q1 2023[191]. Revenue Composition - 74% of cloud communications revenue for the three months ended March 31, 2024, was derived from recurring sources, up from 72% in the same period of 2023[136]. - Approximately 13% of total revenue was generated outside North America for the three months ended March 31, 2024, compared to 16% for the same period in 2023[202]. Expenses and Costs - Cost of revenue for the three months ended March 31, 2024, was $105.5 million, resulting in a gross profit of$65.5 million, compared to a cost of revenue of $82.2 million and gross profit of$55.7 million in the same period of 2023[147]. - Operating expenses totaled $75.9 million for the three months ended March 31, 2024, compared to$67.4 million in the same period of 2023[147]. - Research and development expenses increased to $28.9 million for the three months ended March 31, 2024, from$25.7 million in the same period of 2023[147]. - Total cost of revenue increased by $23 million, or 28$8 million, or 13%, compared to the same period in 2023, with research and development expenses rising by $3 million, or 13$2 million for the three months ended March 31, 2024, compared to a cash outflow of $6 million in the same period of 2023[170]. - Net cash used in investing activities was$27 million, driven by the purchase of marketable securities totaling $22 million[172]. - As of March 31, 2024, the company had cash and cash equivalents of$105 million and marketable securities of $42 million[162]. - The company expects its cash, cash equivalents, and marketable securities to be sufficient to meet anticipated cash needs for at least the next 12 months[165]. Taxation - The effective tax rate for the three months ended March 31, 2024, was 2.1$50 million Credit Facility on August 1, 2023, with interest rates tied to either a base rate or SOFR, exposing it to interest rate risk[199]. - The company has $175 million and$250 million outstanding from its 2026 and 2028 Convertible Notes, respectively, which have fixed annual interest rates[200]. - A hypothetical 10% adverse change in foreign currency exchange rates would have negatively impacted the company's net loss by approximately $0.8 million for the quarterly period ended March 31, 2024[202]. - The company has not engaged in any hedging activity to reduce potential exposure to currency fluctuations but may consider it in the future[202]. - The company has not experienced significant fluctuations in interest income to date, and a hypothetical 10% change in interest rates would not have materially impacted financial results[198]. Internal Controls - The company intends to continue monitoring and upgrading its internal controls as necessary[206].