Bandwidth Inc. (NASDAQ: BAND)

Sector: Technology Industry: Software - Infrastructure CIK: 0001514416
Market Cap 421.35 Mn
P/B 1.07
P/E -36.10
P/S 0.56
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...

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Price action

Investment thesis

Bull case

  • 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.

Bear case

  • 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.

Product and Service Breakdown of Revenue (2024)

Geographical Breakdown of Revenue (2024)

Peer comparison

Companies in the Software - Infrastructure
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 MSFT Microsoft Corp 3,563.59 Bn 33.97 12.13 60.56 Bn
2 ORCL Oracle Corp 561.87 Bn 36.43 9.21 124.39 Bn
3 PLTR Palantir Technologies Inc. 413.65 Bn 377.64 106.17 0.24 Bn
4 PANW Palo Alto Networks Inc 126.45 Bn 113.19 13.23 0.35 Bn
5 CRWD CrowdStrike Holdings, Inc. 116.42 Bn -370.56 25.50 0.82 Bn
6 SNPS Synopsys Inc 86.06 Bn 64.60 12.20 14.29 Bn
7 NET Cloudflare, Inc. 62.78 Bn -609.27 31.18 3.50 Bn
8 FTNT Fortinet, Inc. 60.83 Bn 32.47 9.28 1.00 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.81 2.69
EV to Cash from Ops. EV/CFO 9.63 28.91
EV to Debt EV to Debt 1.75 19.83
EV to EBIT EV/EBIT -72.18 -9.95
EV to EBITDA EV/EBITDA 21.77 6.82
EV to Free Cash Flow [EV/FCF] EV/FCF 15.07 26.09
EV to Market Cap EV to Market Cap 2.00 0.36
EV to Revenue EV/Rev 1.11 -9.34
Price to Book Value [P/B] P/B 1.07 3.88
Price to Earnings [P/E] P/E -36.10 -10.66
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.00 -0.30
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 2.71
Dividend per Basic Share Div per Share (Qtr) 0.00 0.10
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 1.68
Interest Coverage Int. cover (Qtr) -3.43 -14.20
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -24.16 -408.01
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -2.09 226.39
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 -0.28
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 35.06 25.27
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 77.73 47.48
EBIT Growth (1y) % EBIT 1y % (Qtr) 21.41 20.13
EBT Growth (1y) % EBT 1y % (Qtr) 10.04 14.16
EPS Growth (1y) % EPS 1y % (Qtr) 36.07 67.50
FCF Growth (1y) % FCF 1y % (Qtr) 35.48 296.60
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 10.54 46.75
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.73 0.67
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.01
Cash Ratio Cash Ratio (Qtr) 0.53 1.22
Current Ratio Curr Ratio (Qtr) 1.39 2.59
Debt to Equity Ratio Debt/Equity (Qtr) 1.22 -0.96
Interest Cover Ratio Int Coverage (Qtr) -3.43 -14.20
Times Interest Earned Times Interest Earned (Qtr) -3.43 -14.20
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 5.30 -548.16
EBIT Margin % EBIT Margin % (Qtr) -1.54 -199.84
EBT Margin % EBT Margin % (Qtr) -1.99 -607.20
Gross Margin % Gross Margin % (Qtr) 38.80 51.88
Net Profit Margin % Net Margin % (Qtr) -1.50 -610.00