Bandwidth Inc. (BAND) Stock Analysis and Metrics

Sector: Technology Industry: Software - Infrastructure CIK: 0001514416

P/B 1.14

P/E -38.46

P/S 0.59

Market Cap 448.88 Mn

ROIC (Qtr) -0.53

Div Yield % 0.00

Rev 1y % (Qtr) -1.03

Total Debt (Qtr) 479.62 Mn

Debt/Equity (Qtr) 1.22

About

Bandwidth Inc., commonly recognized by its stock symbol BAND, operates in the global communications transformation industry. The company's mission is to develop and deliver the power to communicate, which it achieves through a robust selection of APIs built on its own cloud platform. Bandwidth's operations are focused on the global shift from on-premises-based technology to cloud-based communications. Bandwidth's primary business activities revolve around providing a range of communication solutions. These activities are carried out in three key...

Bandwidth Inc., commonly recognized by its stock symbol BAND, operates in the global communications transformation industry. The company's mission is to develop and deliver the power to communicate, which it achieves through a robust selection of APIs built on its own cloud platform. Bandwidth's operations are focused on the global shift from on-premises-based technology to cloud-based communications.

Bandwidth's primary business activities revolve around providing a range of communication solutions. These activities are carried out in three key market offerings: Global Communications Plans, Programmable Services, and Global Enterprises. Global Communications Plans serve as the backbone for the leading power platforms in the communications transformation, specifically in Unified Communications as a Service (UCaaS) and Contact Center as a Service (CCaaS). This is achieved through a business-to-business-to-business (B2B2B) delivery model. Programmable Services comprise the company's text messaging solutions, which support innovative Software as a Service (SaaS) platforms with use cases such as retail and eCommerce promotions, financial services identity authentication, and healthcare patient engagement. This is delivered through a business-to-business-to-consumer (B2B2C) model. Global Enterprises is a business-to-business channel where Global 2000 enterprises engage directly with Bandwidth to leverage its services in their digital transformation.

Bandwidth generates revenue through its core product domains, which include Voice, Messaging API, Emergency Services, Phone Numbers, and Insights. The company's Voice services offer customers the ability to interact with its voice services through SIP or programmable voice API. Its Messaging API delivers a full suite of Application-to-Person (A2P) messaging capabilities. The company's Emergency Services provide complete communications solutions with integrated local emergency services in 38 countries around the globe.

Bandwidth's position within the industry is strengthened by its Bandwidth Communications Cloud, which provides a communications developer platform on top of an all-IP, owned-and-operated network with global reach. This, coupled with an API-first approach, facilitates the embedding of automation, enterprise-grade tooling, and simple UX/UI throughout the Bandwidth Communications Cloud. The company's full-stack, open Communications Cloud, global reach from a single source, and CPaaS-based emergency calling capabilities set it apart from its competitors, which include AT&T, Colt, Lumen, and Verizon.

Bandwidth's customers are a broad and diversified group, including large technology companies, well-recognized enterprise customers, and innovative SaaS platforms. The company's management is highly focused on creating and maintaining strategic partnerships beyond standard transactional customer relationships.

Bandwidth's product and service brands include the Bandwidth Communications Cloud, Global Communications Plans, Programmable Services, Global Enterprises, Voice, Messaging API, Emergency Services, Phone Numbers, and Insights.

Stock Price Chart

Analysis

Pros

Healthy cash reserves of 73.37M provide 6.51x coverage of short-term debt 11.27M, demonstrating strong liquidity position and minimal refinancing risk.
Operating cash flow of 87.39M provides exceptional 25.75x coverage of interest expenses 3.39M, showing strong debt service capability.
Tangible assets of 532.83M provide exceptional 37.40x coverage of deferred revenue 14.25M, showing strong service capability backing.
Robust free cash flow of 55.82M exceeds capital expenditure of 31.58M by 1.77x, indicating strong organic growth funding capability.
Operating cash flow of 87.39M provides strong 6.13x coverage of deferred revenue 14.25M, indicating service delivery capability.

Cons

Operating cash flow of 87.39M barely covers its investment activities of (33.19M), with a coverage ratio of -2.63, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
Investment activities of (33.19M) provide weak support for R&D spending of 126.80M, which is -0.26x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
The company's operating cash flow of 87.39M shows concerning coverage of stock compensation expenses of 51.66M, with a 1.69 ratio indicating potential earnings quality issues.
Operating cash flow of 87.39M provides minimal -25.86x coverage of tax expenses of (3.38M), suggesting potential tax planning inefficiencies or unsustainable tax positions.
Operating earnings of (11.66M) show weak coverage of depreciation charges of 51.76M, with a -0.23 ratio indicating high capital intensity and potential reinvestment needs.

Peer Comparison

Companies in the Software - Infrastructure

S.No.	Ticker	Company	Market Cap	P/E	P/S	Total Debt (Qtr)
1	MSFT	Microsoft Corp	3,542.10 Bn	33.76	12.06	60.56 Bn
2	ORCL	Oracle Corp	533.93 Bn	34.61	8.75	124.39 Bn
3	PLTR	Palantir Technologies Inc.	437.56 Bn	399.47	112.31	0.24 Bn
4	PANW	Palo Alto Networks Inc	125.16 Bn	112.03	13.10	0.35 Bn
5	CRWD	CrowdStrike Holdings, Inc.	120.85 Bn	-384.67	26.47	0.82 Bn
6	SNPS	Synopsys Inc	71.69 Bn	35.89	11.14	15.14 Bn
7	NET	Cloudflare, Inc.	67.84 Bn	-658.43	33.70	3.50 Bn
8	FTNT	Fortinet, Inc.	63.33 Bn	33.80	9.66	1.00 Bn

Industry Comparisons

Current Valuation

Metric	Value	Industry
EV to Assets	0.84	2.56
EV to Cash from Ops.	9.94	38.32
EV to Debt	1.81	-11.37
EV to EBIT	-74.54	-12.79
EV to EBITDA	22.48	7.72
EV to Free Cash Flow [EV/FCF]	15.57	24.22
EV to Market Cap	1.94	0.58
EV to Revenue	1.15	-35.00
Price to Book Value [P/B]	1.14	3.74
Price to Earnings [P/E]	-38.46	-18.61

Dividend Metrics

Metric	Value	Industry
Dividend Coverage Ratio	0.00	-0.30
Dividend Payout Ratio %	0.00	2.69
Dividend per Basic Share	0.00	0.10
FCF Dividend Payout Ratio %	0.00	1.67
Interest Coverage	-3.43	-13.15

Growth Metrics

Metric	Value	Industry
Capex Growth (1y) %	-24.16	-404.11
Cash and Equivalents Growth (1y) %	-2.09	226.02
Dividend Growth (1y) %	0.00	-0.27
EBIAT Growth (1y) %	35.06	31.15
EBITDA Growth (1y) %	77.73	49.02
EBIT Growth (1y) %	21.41	25.85
EBT Growth (1y) %	10.04	17.82
EPS Growth (1y) %	36.07	70.69
FCF Growth (1y) %	35.48	295.45
Gross Profit Growth (1y) %	10.54	49.96

Liquidity Ratios

Metric	Value	Industry
Asset Utilization Ratio	0.73	0.68
Cash Payout Ratio	0.00	0.02
Cash Ratio	0.53	1.21
Current Ratio	1.39	2.57
Debt to Equity Ratio	1.22	-0.93
Interest Cover Ratio	-3.43	-13.15
Times Interest Earned	-3.43	-13.15

Profitability

Metric	Value	Industry
EBITDA Margin %	5.30	-544.82
EBIT Margin %	-1.54	-197.78
EBT Margin %	-1.99	-602.74
Gross Margin %	38.80	52.06
Net Profit Margin %	-1.50	-605.52

Bandwidth Inc. (NASDAQ: BAND)