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Bandwidth Expects Q3 Revenue to Surpass Guidance; Shares Rise

Shares of Bandwidth, Inc. (BAND) gained 2.6% in Tuesday’s extended trade after the cloud-based communications services provider disclosed higher preliminary revenue for the third quarter of 2021 (ended September 30, 2021).

The company expects to report revenue of $131 million in the third quarter, up 54% year-over-year and more than the previously guided range of $123.6 million to $124.6 million. The consensus estimate for the same stands at $125.3 million. (See Bandwidth stock charts on TipRanks)

Communications Platform as a Service (CPaaS) revenue is anticipated to rise 46% year-over-year to $107.4 million. This compares favorably with the prior guidance range of $106.1 million to 107.1 million. 

In its release, the company stated that the third-quarter results include a negative impact of nearly $0.7 million from lost transaction volume and customer credits due to the DDoS attack. It expects CPaaS revenue for full-year 2021 to decrease by $9 million to $12 million due to the same reason.

The CEO of Bandwidth, David Morken, said, “Consistent with our ethos to do the right thing for our customers, we helped some of our customers divert traffic from our platform during the attack to mitigate impacts to their businesses. While that traffic is beginning to come back, we believe we will see a top-line impact of that lost volume primarily in the fourth quarter. We believe we are now stronger than ever, and are focused on serving our customers.”

Following the news, William Blair analyst Bhavan Suri maintained a Buy rating on the stock.

Suri said, “We continue to believe that underlying demand trends remain strong and think that the company can sustain normalized, organic year-over-year CPaaS revenue growth in excess of 20% going forward.” (See Analysts’ Top Stocks on TipRanks)

Consensus among analysts is a Strong Buy based on 10 Buys and 3 Holds. The average Bandwidth price target stands at $164.5, which implies upside potential of 91.2%.

TipRanks data shows that financial blogger opinions are 100% Bullish on BAND, compared to a sector average of 69%.

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