RALEIGH, N.C., Feb. 21,
2018 /PRNewswire/ -- Bandwidth Inc. (NASDAQ: BAND), a software
company focused on communications for the enterprise, today
announced financial results for the fourth quarter and full year
ended December 31, 2017.
"We were very pleased with our fourth quarter results, which
capped off a strong finish to the year," stated David Morken, chief executive officer of
Bandwidth. "During the quarter, the better-than-expected
results were driven by ongoing enterprise demand to embed voice,
messaging and 911 into software applications. We remain
well positioned to capitalize on the growing market opportunity
during 2018 and beyond given our unique combination of our API
platform and owned nationwide IP voice network, as well as our
significantly strengthened balance sheet to execute our growth
strategy."
Fourth Quarter 2017 Financial Highlights
- Revenue: Total revenue for the fourth quarter of 2017
was $42.5 million, compared to
$38.8 million for the fourth quarter
of 2016. Within total revenue, CPaaS revenue was $35.0 million, up 16% compared to $30.2 million for the fourth quarter of 2016.
Other revenue contributed the remaining $7.5
million for the fourth quarter of 2017, compared to
$8.6 million for the fourth quarter
of 2016.
- Gross Profit: Gross profit for the fourth quarter of
2017 was $19.6 million, compared to
$17.7 million for the fourth quarter
of 2016. Non-GAAP gross profit for the fourth quarter of 2017 was
$20.7 million, compared to
$18.8 million for the fourth quarter
of 2016. Gross margin for the fourth quarter of 2017 was 46%,
compared to 46% for the fourth quarter of 2016. Non-GAAP gross
margin was 49% for the fourth quarter of 2017, compared to 48% for
the fourth quarter of 2016.
- Net Income (Loss): Net loss from continuing operations
attributable to common stockholders for the fourth quarter of 2017
was $(0.6) million, or $(0.04) per share, based on 14.9 million weighted
average basic shares outstanding. This includes a charge of
$2.1 million or $0.14 per share related to the enactment of the
Tax Cuts and Jobs Act in December
2017 due to the remeasurement of our deferred tax assets at
the lower corporate tax rate. During the fourth quarter of 2016,
net income from continuing operations attributable to common
stockholders was $12.0 million, or
$0.92 per share, based on 13.0
million weighted average diluted shares outstanding for the fourth
quarter of 2016. This includes a $14.1
million or $1.08 per share
benefit due to the release of the deferred tax asset valuation
allowance subsequent to the spin-off of Republic Wireless.
Non-GAAP net income for the fourth quarter of 2017 was $1.6 million, or $0.09 per share, based on 18.1 million weighted
average diluted shares outstanding. This compares to a
non-GAAP net income of $0.5 million,
or $0.03 per share, based on 14.8
million weighted average diluted shares outstanding for the fourth
quarter of 2016.
- Adjusted EBITDA: Adjusted EBITDA was $4.4 million for the fourth quarter of 2017,
compared to $5.0 million for the
fourth quarter of 2016.
- Cash and Cash Flow: As of December 31, 2017, Bandwidth had cash and cash
equivalents of $37.6 million and no
debt.
The Company generated $4.8 million in
net cash provided by operating activities from continuing
operations for the fourth quarter of 2017, compared to $4.2 million during the fourth quarter of
2016. The Company generated $1.7
million in free cash flow for the quarter, compared to
$2.4 million for the fourth quarter
of 2016.
Full Year 2017 Financial Highlights
- Revenue: Total revenue for the full year of 2017 was
$163.0 million, compared to
$152.1 million in 2016. Within total
revenue, CPaaS revenue was $131.6
million, up 12% compared to $117.1
million in 2016. Other revenue contributed the remaining
$31.4 million for the full year of
2017, compared to $35.1 million for
the full year of 2016.
- Gross Profit: Gross profit for the full year of 2017 was
$73.7 million, compared to
$66.9 million in 2016. Non-GAAP gross
profit for the full year of 2017 was $78.1
million, compared to $71.6
million in 2016. Gross margin for the full year of 2017 was
45%, compared to 44% in 2016. Non-GAAP gross margin was 48% for the
full year of 2017, compared to 47% in 2016.
- Net Income: Net income from continuing operations
attributable to common stockholders for the full year of 2017 was
$5.3 million, or $0.37 per share, based on 14.5 million weighted
average diluted shares outstanding. This includes the
aforementioned charge of $2.1 million
or $0.14 per share related to the
enactment of the Tax Cuts and Jobs Act in December 2017. This compares to net income from
continuing operations attributable to common stockholders of
$22.1 million, or $1.72 per share, based on 12.9 million weighted
average diluted shares outstanding in 2016. This includes a
$14.1 million or $1.10 per share benefit due to the release of the
deferred tax asset valuation allowance subsequent to the spin-off
of Republic Wireless.
Non-GAAP net income for the full year of 2017 was $9.5 million, or $0.59 per share, based on 16.1 million weighted
average diluted shares outstanding. This compares to a
non-GAAP net income of $9.8 million,
or $0.67 per share, based on 14.6
million weighted average diluted shares outstanding in
2016.
- Adjusted EBITDA: Adjusted EBITDA was $22.2 million for the full year of 2017, compared
to $23.5 million in 2016.
- Cash Flow: The Company generated $14.6 million in net cash provided by operating
activities from continuing operations for the full year of 2017,
compared to $16.9 million during
2016. The Company generated $6.7
million in free cash flow for the year, compared to
$10.9 million in 2016.
Additional information regarding the non-GAAP financial measures
discussed in this release, including an explanation of these
measures and how they are calculated are included below under the
heading "Non-GAAP Financial Measures." A reconciliation of GAAP to
non-GAAP financial measures has also been provided in the financial
tables included below.
Fourth Quarter 2017 Key Metrics
- The number of active CPaaS customers was 965 as of December 31, 2017, an increase of 21% from 798 as
of December 31, 2016.
- The dollar-based net retention rate was 111% during the fourth
quarter of 2017, compared to 108% during the fourth quarter of
2016.
Financial Outlook
As of February 21, 2018, Bandwidth is providing guidance
for its first quarter and full year 2018 as follows:
- First Quarter 2018 Guidance: CPaaS revenue is expected
to be in the range of $36.0 million
to $36.5 million. Total revenue is
expected to be in the range of $47.0
million to $47.5 million.
Non-GAAP EPS is expected to be in the range of $0.07 to $0.10 per
share, using 20.3 million weighted average diluted shares
outstanding.
- Full Year 2018 Guidance: CPaaS revenue is expected to be
in the range of $156.0 million to
$158.0 million. Total revenue is
expected to be in the range of $188.0
million to $190.0 million.
Non-GAAP EPS is expected to be in the range of approximately
breakeven to a loss of ($0.11) per
share, using 17.8 million weighted average shares outstanding.
Bandwidth has not reconciled its first quarter and full-year
guidance related to non-GAAP net income to GAAP net income and
non-GAAP EPS to GAAP EPS, because stock-based compensation cannot
be reasonably calculated or predicted at this time. Accordingly, a
reconciliation is not available without unreasonable effort.
Quarterly Conference Call
Bandwidth will host a conference call today at 5:00 p.m. Eastern Time to review the Company's
financial results for the fourth quarter and full year ended
December 31, 2017. To access
this call, dial (877) 407-0792 for the U.S. or Canada, or (201) 689-8263 for international
callers. A live webcast of the conference call will be
accessible from the Investors section of Bandwidth's website at
https://investors.bandwidth.com, and a recording will be archived
and accessible at https://investors.bandwidth.com. An audio
replay of this conference call will also be available through
March 7, 2018, by dialing (844)
512-2921 for the U.S. or Canada,
or (412) 317-6671 for international callers, and entering passcode
13675784.
About Bandwidth, Inc.
Bandwidth (NASDAQ: BAND) is a software company focused on
communications for the enterprise. Companies like Google,
Microsoft, and Ring Central use Bandwidth's APIs to easily embed
voice, messaging and 9-1-1 access into software and applications.
Bandwidth is the first and only CPaaS provider offering a robust
selection of communications APIs built around their own nationwide
IP voice network- one of the largest in the nation. More
information available at www.bandwidth.com.
Forward-Looking Statements
This press release includes forward-looking statements. All
statements contained in this press release other than statements of
historical facts, including, without limitation, statements
regarding our future financial and business performance for the
first quarter 2018 and full-year 2018, attractiveness of our
product offerings and platform and the value proposition of our
products, are forward-looking statements. The words "anticipate,"
"believe," "continue," "estimate," "expect," "intend," "guide,"
"may," "will" and similar expressions and their negatives are
intended to identify forward-looking statements. We have based
these forward-looking statements largely on our current
expectations and projections about future events and financial
trends that we believe may affect our financial condition, results
of operations, business strategy, short-term and long-term business
operations and objectives and financial needs. These
forward-looking statements are subject to a number of risks and
uncertainties, including, without limitation, risks related to our
rapid growth and ability to sustain our revenue growth rate,
competition in the markets in which we operate, market growth, our
ability to innovate and manage our growth, our ability to expand
effectively into new markets, our ability to operate in compliance
with applicable laws as well as other risks and uncertainties set
forth in the "Risk Factors" section of our prospectus related to
the initial public offering (IPO), filed with the Securities and
Exchange Commission pursuant to Rule 424(b)(4) under the Securities
Act of 1933, as amended, on November 13,
2017 and subsequent reports that we file with the Securities
and Exchange Commission. Moreover, we operate in a very
competitive and rapidly changing environment. New risks emerge from
time to time. It is not possible for our management to predict all
risks, nor can we assess the impact of all factors on our business
or the extent to which any factor, or combination of factors, may
cause actual results to differ materially from those contained in
any forward-looking statements we may make. In light of these
risks, uncertainties and assumptions, we cannot guarantee future
results, levels of activity, performance, achievements or events
and circumstances reflected in the forward-looking statements will
occur. We are under no obligation to update any of these
forward-looking statements after the date of this press release to
conform these statements to actual results or revised expectations,
except as required by law. You should, therefore, not rely on these
forward-looking statements as representing our views as of any date
subsequent to the date of this press release.
Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are
prepared and presented in accordance with Generally Accepted
Accounting Principles in the United
States, or GAAP, we provide investors with certain non-GAAP
financial measures and other business metrics, which we believe are
helpful to our investors. We use these non-GAAP financial measures
and other business metrics for financial and operational
decision-making purposes and as a means to evaluate
period-to-period comparisons. We believe that these non-GAAP
financial measures and other business metrics provide useful
information about our operating results, enhance the overall
understanding of past financial performance and future prospects
and allow for greater transparency with respect to metrics used by
our management in its financial and operational
decision-making.
The presentation of non-GAAP financial information and other
business metrics is not meant to be considered in isolation or as a
substitute for the directly comparable financial measures prepared
in accordance with GAAP. While our non-GAAP financial
measures and other business metrics are an important tool for
financial and operational decision-making and for evaluating our
own operating results over different periods of time, we urge
investors to review the reconciliation of these financial measures
to the comparable GAAP financial measures included above, and not
to rely on any single financial measure to evaluate our
business.
We define non-GAAP gross profit as gross profit after adding
back depreciation and amortization and stock-based
compensation. We add back depreciation and amortization and
stock-based compensation because they are non-cash items. We
eliminate the impact of these non-cash items because we do not
consider them indicative of our core operating performance. Their
exclusion facilitates comparisons of our operating performance on a
period-to- period basis. Therefore, we believe that showing gross
margin, as adjusted to remove the impact of these non- cash
expenses, such as depreciation, amortization and stock-based
compensation, is helpful to investors in assessing our gross profit
and gross margin performance in a way that is similar to how
management assesses our performance. We calculate non-GAAP gross
margin by dividing adjusted gross profit by revenue, expressed as a
percentage of revenue.
We define non-GAAP net income as net income or losses adjusted
for certain items affecting period to period comparability.
Non-GAAP net (loss) income excludes stock-based compensation,
change in fair value of stockholders' antidilutive arrangement,
amortization of acquired intangible assets related to the Dash
acquisition, impairment charges of intangibles assets, loss (gain)
on disposal of property and equipment, estimated tax impact of
above adjustments, impact from the release of the valuation
allowance on our deferred tax assets (DTA)during 2016, and impact
of re-measurement of our DTA as a result of the 2017 tax reform
act.
We define adjusted EBITDA as net income or losses from
continuing operations, adjusted to reflect the addition or
elimination of certain income statement items including, but not
limited to: income tax expense (benefit), interest expense, net,
depreciation and amortization expense, stock-based compensation
expense, impairment of intangible assets, loss (gain) from disposal
of property and equipment, and change in fair value of financial
instruments, including any change in shareholders' anti-dilutive
arrangements. We have presented Adjusted EBITDA because it is a key
measure used by our management and board of directors to understand
and evaluate our operating performance, generate future operating
plans, and make strategic decisions regarding the allocation of
capital. In particular, we believe that the exclusion of certain
items in calculating Adjusted EBITDA can produce a useful measure
for period-to-period comparisons of our business.
We define Free Cash Flow as cash flow provided by or used in
operating activities from continuing operations, adjusted to
include the acquisition of property, equipment and capitalized
development costs for software for internal use. We have presented
Free Cash Flow because it is a measure of the Company's financial
performance that represents the cash that the Company is able to
generate after expenditures required to maintain or expand our
asset base.
We believe that these non-GAAP financial measures provide useful
information about our operating results, enhance the overall
understanding of past financial performance and future prospects
and allow for greater transparency with respect to metrics used by
our management in its financial and operational
decision-making.
While a reconciliation of non-GAAP guidance measures to
corresponding GAAP measures is not available on a forward-looking
basis as a result of the uncertainty regarding, and the potential
variability of, many of these costs and expenses that we may incur
in the future, we have provided a reconciliation of non-GAAP
financial measures and other business metrics to the nearest
comparable GAAP measures in the accompanying financial statement
tables included in this press release.
We define an active CPaaS customer account at the end of any
period as an individual account, as identified by a unique account
identifier, for which we have recognized at least $100 of revenue in the last month of the period.
We believe that the use of our platform by active CPaaS customer
accounts at or above the $100 per
month threshold is a stronger indicator of potential future
engagement than trial usage of our platform at levels below
$100 per month. A single organization
may constitute multiple unique active CPaaS customer accounts if it
has multiple unique account identifiers, each of which is treated
as a separate active CPaaS customer account.
Our dollar-based net retention rate compares the CPaaS revenue
from customers in a quarter to the same quarter in the prior year.
To calculate the dollar-based net retention rate, we first identify
the cohort of customers that generate CPaaS revenue and that were
customers in the same quarter of the prior year. The dollar-based
net retention rate is obtained by dividing the CPaaS revenue
generated from that cohort in a quarter, by the CPaaS revenue
generated from that same cohort in the corresponding quarter in the
prior year. When we calculate dollar-based net retention rate for
periods longer than one quarter, we use the average of the
quarterly dollar-based net retention rates for the quarters in such
period.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND
|
COMPREHENSIVE
INCOME
|
(In Thousands,
Except Share and per Share Amounts)
|
(unaudited)
|
|
|
Three Months
Ended
December 31,
|
|
Year
Ended December
31,
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
Revenue
|
$
|
38,763
|
|
|
$
|
42,466
|
|
|
$
|
152,135
|
|
|
$
|
162,955
|
|
Cost of
revenue
|
21,042
|
|
|
22,831
|
|
|
85,218
|
|
|
89,262
|
|
Gross
profit
|
17,721
|
|
|
19,635
|
|
|
66,917
|
|
|
73,693
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Research and
development
|
2,363
|
|
|
2,927
|
|
|
8,520
|
|
|
10,789
|
|
Sales and
marketing
|
2,418
|
|
|
3,119
|
|
|
9,294
|
|
|
11,218
|
|
General and
administrative
|
10,289
|
|
|
11,378
|
|
|
33,859
|
|
|
37,069
|
|
Total operating
expenses
|
15,070
|
|
|
17,424
|
|
|
51,673
|
|
|
59,076
|
|
Operating
income
|
2,651
|
|
|
2,211
|
|
|
15,244
|
|
|
14,617
|
|
Other expense,
net
|
(310)
|
|
|
222
|
|
|
(908)
|
|
|
(1,728)
|
|
Income from
continuing operations before income taxes
|
2,341
|
|
|
2,433
|
|
|
14,336
|
|
|
12,889
|
|
Income tax benefit
(provision)
|
11,500
|
|
|
(3,032)
|
|
|
11,094
|
|
|
(6,918)
|
|
Income (loss) from
continuing operations
|
13,841
|
|
|
(599)
|
|
|
25,430
|
|
|
5,971
|
|
Income (loss) from
discontinued operations, net of income taxes
|
667
|
|
|
—
|
|
|
(3,072)
|
|
|
—
|
|
Net income
(loss)
|
$
|
14,508
|
|
|
$
|
(599)
|
|
|
$
|
22,358
|
|
|
$
|
5,971
|
|
Total comprehensive
income (loss)
|
$
|
14,508
|
|
|
$
|
(599)
|
|
|
$
|
22,358
|
|
|
$
|
5,971
|
|
Earnings (loss) per
share:
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations
|
$
|
13,841
|
|
|
$
|
(599)
|
|
|
$
|
25,430
|
|
|
$
|
5,971
|
|
Less: income (loss)
allocated to participating securities
|
1,812
|
|
|
(21)
|
|
|
3,355
|
|
|
644
|
|
Income (loss) from
continuing operations attributable to common
stockholders
|
$
|
12,029
|
|
|
$
|
(578)
|
|
|
$
|
22,075
|
|
|
$
|
5,327
|
|
Income (loss) from
continuing operations per share:
|
|
|
|
|
|
|
|
Basic
|
$
|
1.02
|
|
|
$
|
(0.04)
|
|
|
$
|
1.89
|
|
|
$
|
0.42
|
|
Diluted
|
$
|
0.92
|
|
|
$
|
(0.04)
|
|
|
$
|
1.72
|
|
|
$
|
0.37
|
|
Net income
(loss)
|
$
|
14,508
|
|
|
$
|
(599)
|
|
|
$
|
22,358
|
|
|
$
|
5,971
|
|
Less: income (loss)
allocated to participating securities
|
1,900
|
|
|
(21)
|
|
|
2,950
|
|
|
644
|
|
Net income (loss)
attributable to common stockholders
|
$
|
12,608
|
|
|
$
|
(578)
|
|
|
$
|
19,408
|
|
|
$
|
5,327
|
|
Net income (loss) per
share:
|
|
|
|
|
|
|
|
Basic
|
$
|
1.07
|
|
|
$
|
(0.04)
|
|
|
$
|
1.66
|
|
|
$
|
0.42
|
|
Diluted
|
$
|
0.97
|
|
|
$
|
(0.04)
|
|
|
$
|
1.51
|
|
|
$
|
0.37
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
11,782,523
|
|
|
14,893,439
|
|
|
11,678,568
|
|
|
12,590,221
|
|
Diluted
|
13,040,193
|
|
|
14,893,439
|
|
|
12,870,632
|
|
|
14,543,170
|
|
The Company recognized total stock-based compensation expense in
continuing operations as follows:
|
Three Months
Ended
December 31,
|
|
Year
Ended December
31,
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
Cost of
revenue
|
$
|
16
|
|
|
$
|
23
|
|
|
$
|
61
|
|
|
$
|
80
|
|
Research and
development
|
30
|
|
|
54
|
|
|
138
|
|
|
155
|
|
Sales and
marketing
|
40
|
|
|
48
|
|
|
182
|
|
|
172
|
|
General and
administrative
|
185
|
|
|
576
|
|
|
989
|
|
|
1,396
|
|
Total
|
$
|
271
|
|
|
$
|
701
|
|
|
$
|
1,370
|
|
|
$
|
1,803
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In
Thousands)
|
(unaudited)
|
|
|
As of December
31,
|
|
2016
|
|
2017
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
6,788
|
|
|
$
|
37,627
|
|
Accounts receivable,
net of allowance for doubtful accounts
|
16,838
|
|
|
21,225
|
|
Prepaid expenses and
other current assets
|
4,417
|
|
|
6,400
|
|
Total current
assets
|
28,043
|
|
|
65,252
|
|
Property and
equipment, net
|
11,180
|
|
|
14,946
|
|
Intangible assets,
net
|
8,482
|
|
|
7,643
|
|
Deferred costs,
non-current
|
1,696
|
|
|
2,068
|
|
Other long-term
assets
|
1,011
|
|
|
1,192
|
|
Goodwill
|
6,867
|
|
|
6,867
|
|
Deferred tax
asset
|
12,694
|
|
|
6,526
|
|
Total
assets
|
$
|
69,973
|
|
|
$
|
104,494
|
|
Liabilities,
redeemable convertible preferred stock and stockholders' (deficit)
equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
4,688
|
|
|
$
|
3,025
|
|
Accrued expenses and
other current liabilities
|
14,649
|
|
|
15,633
|
|
Current portion of
deferred revenue and advanced billings
|
4,032
|
|
|
5,768
|
|
Line of credit,
current portion
|
5,000
|
|
|
—
|
|
Current portion of
long-term debt and capital lease obligations
|
2,101
|
|
|
92
|
|
Total current
liabilities
|
30,470
|
|
|
24,518
|
|
Other
liabilities
|
609
|
|
|
716
|
|
Deferred revenue, net
of current portion
|
1,712
|
|
|
2,549
|
|
Long-term debt and
capital lease obligations, net of current portion
|
37,738
|
|
|
—
|
|
Total
liabilities
|
70,529
|
|
|
27,783
|
|
Redeemable
convertible preferred stock
|
21,818
|
|
|
—
|
|
Commitments and
contingencies
|
|
|
|
Stockholders'
(deficit) equity:
|
|
|
|
Class A voting common
stock
|
—
|
|
|
4
|
|
Class B voting common
stock
|
—
|
|
|
13
|
|
Old Class A voting
common stock
|
12
|
|
|
—
|
|
Old Class B
non-voting common stock
|
—
|
|
|
—
|
|
Preferred
stock
|
—
|
|
|
—
|
|
Additional paid-in
capital
|
9,356
|
|
|
102,465
|
|
Accumulated
deficit
|
(31,742)
|
|
|
(25,771)
|
|
Total stockholders'
(deficit) equity
|
(22,374)
|
|
|
76,711
|
|
Total liabilities,
redeemable convertible preferred stock and stockholders' (deficit)
equity
|
$
|
69,973
|
|
|
$
|
104,494
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In
Thousands)
|
(unaudited)
|
|
|
Year Ended
December 31,
|
|
2016
|
|
2017
|
Operating
activities
|
|
|
|
Net income
|
$
|
22,358
|
|
|
$
|
5,971
|
|
Loss from
discontinued operations, net of income taxes
|
3,072
|
|
|
—
|
|
Adjustments to
reconcile net income to net cash provided by (used in) operating
activities:
|
|
|
|
Depreciation and
amortization
|
6,142
|
|
|
5,712
|
|
Amortization of debt
issuance costs
|
52
|
|
|
376
|
|
Stock-based
compensation
|
1,370
|
|
|
1,803
|
|
Deferred
taxes
|
(11,086)
|
|
|
6,168
|
|
Loss on disposal of
property and equipment
|
19
|
|
|
91
|
|
Impairment of
intangible asset
|
695
|
|
|
—
|
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
(4,043)
|
|
|
(4,387)
|
|
Prepaid expenses and
other assets
|
(848)
|
|
|
(1,622)
|
|
Deferred
costs
|
(975)
|
|
|
(906)
|
|
Accounts
payable
|
243
|
|
|
(2,429)
|
|
Accrued expenses and
other liabilities
|
(567)
|
|
|
1,273
|
|
Deferred revenue and
advanced billings
|
510
|
|
|
2,573
|
|
Net cash provided by
operating activities from continuing operations
|
16,942
|
|
|
14,623
|
|
Net cash used in
operating activities from discontinued operations
|
(11,788)
|
|
|
—
|
|
Net cash provided by
operating activities
|
5,154
|
|
|
14,623
|
|
Investing
activities
|
|
|
|
Purchase of property
and equipment
|
(3,831)
|
|
|
(5,021)
|
|
Capitalized software
development costs
|
(2,230)
|
|
|
(2,942)
|
|
Net cash used in
investing activities from continuing operations
|
(6,061)
|
|
|
(7,963)
|
|
Net cash used in
investing activities from discontinued operations
|
(1,311)
|
|
|
—
|
|
Net cash used in
investing activities
|
(7,372)
|
|
|
(7,963)
|
|
Financing
activities
|
|
|
|
Borrowings on line of
credit
|
56,950
|
|
|
4,000
|
|
Repayments on line of
credit
|
(68,950)
|
|
|
(9,000)
|
|
Payments on capital
leases
|
(102)
|
|
|
(73)
|
|
Borrowings on term
loan
|
40,000
|
|
|
—
|
|
Repayments on term
loan
|
—
|
|
|
(40,000)
|
|
Payment of debt
issuance costs
|
(554)
|
|
|
(25)
|
|
Payment of costs
related to the initial public offering
|
—
|
|
|
(5,385)
|
|
Proceeds from the
initial public offering, net of underwriting discounts
|
—
|
|
|
74,400
|
|
Proceeds from
issuances of common stock
|
974
|
|
|
174
|
|
Proceeds from
exercises of warrants
|
150
|
|
|
91
|
|
Cash distribution to
Republic
|
(30,000)
|
|
|
—
|
|
Decrease (increase)
in restricted cash
|
479
|
|
|
(3)
|
|
Net cash (used in)
provided by financing activities from continuing
operations
|
(1,053)
|
|
|
24,179
|
|
Net (decrease)
increase in cash and cash equivalents
|
(3,271)
|
|
|
30,839
|
|
Cash and cash
equivalents, beginning of period
|
10,059
|
|
|
6,788
|
|
Cash and cash
equivalents, end of period
|
$
|
6,788
|
|
|
$
|
37,627
|
|
Reconciliation of
Non-GAAP Financial Measures
|
(In Thousands,
Except Share and per Share Amounts)
|
(Unaudited)
|
|
Non-GAAP Gross
Profit and Non-GAAP Gross Margin
|
|
Consolidated
|
|
|
Three Months
Ended
December 31,
|
|
Year
Ended
December
31,
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
(In
thousands)
|
Consolidated Gross
Profit
|
$
|
17,721
|
|
|
$
|
19,635
|
|
|
$
|
66,917
|
|
|
$
|
73,693
|
|
Depreciation
|
1,060
|
|
|
1,071
|
|
|
4,574
|
|
|
4,315
|
|
Stock-based
compensation
|
16
|
|
|
23
|
|
|
61
|
|
|
80
|
|
Non-GAAP Gross
Profit
|
$
|
18,797
|
|
|
$
|
20,729
|
|
|
$
|
71,552
|
|
|
$
|
78,088
|
|
Non-GAAP Gross
Margin %
|
48%
|
|
49%
|
|
47%
|
|
48%
|
|
By
Segment
|
|
CPaaS
|
|
|
Three Months
Ended
December 31,
|
|
Year
Ended
December
31,
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
(In
thousands)
|
CPaaS Gross
Profit
|
$
|
12,536
|
|
|
$
|
15,517
|
|
|
$
|
45,860
|
|
|
$
|
55,713
|
|
Depreciation
|
1,060
|
|
|
1,071
|
|
|
4,574
|
|
|
4,315
|
|
Stock-based
compensation
|
16
|
|
|
23
|
|
|
61
|
|
|
80
|
|
Non-GAAP Gross
Profit
|
$
|
13,612
|
|
|
$
|
16,611
|
|
|
$
|
50,495
|
|
|
$
|
60,108
|
|
Non-GAAP Gross
CPaaS Margin %
|
45%
|
|
47%
|
|
43%
|
|
46%
|
|
There are no non-GAAP
adjustments to gross profit for the Other segment.
|
|
Adjusted
EBITDA
|
|
|
Three Months
Ended
December 31,
|
|
Year
Ended December
31,
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
(In
thousands)
|
Income (loss) from
continuing operations
|
$
|
13,841
|
|
|
$
|
(599)
|
|
|
$
|
25,430
|
|
|
$
|
5,971
|
|
Income tax (benefit)
provision
|
(11,500)
|
|
|
3,032
|
|
|
(11,094)
|
|
|
6,918
|
|
Interest expense,
net
|
310
|
|
|
467
|
|
|
908
|
|
|
1,728
|
|
Depreciation
|
1,152
|
|
|
1,229
|
|
|
5,251
|
|
|
4,873
|
|
Amortization
|
222
|
|
|
210
|
|
|
891
|
|
|
839
|
|
Stock-based
compensation
|
271
|
|
|
701
|
|
|
1,370
|
|
|
1,803
|
|
Impairment of
intangible asset
|
695
|
|
|
—
|
|
|
695
|
|
|
—
|
|
Loss on disposal of
property and equipment
|
8
|
|
|
36
|
|
|
19
|
|
|
91
|
|
Change in fair value
of shareholders' anti-dilutive arrangement (1)
|
—
|
|
|
(689)
|
|
|
—
|
|
|
—
|
|
Adjusted
EBITDA
|
$
|
4,999
|
|
|
$
|
4,387
|
|
|
$
|
23,470
|
|
|
$
|
22,223
|
|
________________________
|
(1) Relates to
an antidilutive agreement which allows certain principal
non-founder shareholders the ability to purchase additional common
shares
|
|
Non-GAAP Net
Income (loss)
|
|
|
Three Months
Ended
December 31,
|
|
Year
Ended
December 31,
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
(In
thousands)
|
Net income
(loss)
|
$
|
14,508
|
|
|
$
|
(599)
|
|
|
$
|
22,358
|
|
|
$
|
5,971
|
|
Stock-based
compensation
|
271
|
|
|
701
|
|
|
1,370
|
|
|
1,803
|
|
Change in fair value
of shareholders' anti-dilutive arrangement (1)
|
—
|
|
|
(689)
|
|
|
—
|
|
|
—
|
|
Amortization related
to acquisitions
|
130
|
|
|
130
|
|
|
520
|
|
|
520
|
|
Impairment of
intangible asset
|
695
|
|
|
—
|
|
|
695
|
|
|
—
|
|
Loss on disposal of
property and equipment
|
8
|
|
|
36
|
|
|
19
|
|
|
91
|
|
Estimated tax effects
of above adjustments (2)
|
(994)
|
|
|
(69)
|
|
|
(994)
|
|
|
(921)
|
|
Release of valuation
allowance (3)
|
(14,138)
|
|
|
—
|
|
|
(14,138)
|
|
|
—
|
|
Re-measurement of DTA
associated with Tax rate change (4)
|
—
|
|
|
2,073
|
|
|
—
|
|
|
2,073
|
|
Non-GAAP net
income
|
$
|
480
|
|
|
$
|
1,583
|
|
|
$
|
9,830
|
|
|
$
|
9,537
|
|
|
|
|
|
|
|
|
|
Non-GAAP net
income per non-GAAP share, basic
|
|
|
|
|
|
|
|
Non-GAAP net
income
|
$
|
480
|
|
|
$
|
1,583
|
|
|
$
|
9,830
|
|
|
$
|
9,537
|
|
Non-GAAP weighted
average shares used to compute net income per share,
basic
|
13,557,523
|
|
|
15,665,178
|
|
|
13,453,568
|
|
|
14,112,344
|
|
Non-GAAP net income
per share, basic
|
$
|
0.04
|
|
|
$
|
0.10
|
|
|
$
|
0.73
|
|
|
$
|
0.68
|
|
Non-GAAP net
income per non-GAAP share, diluted
|
|
|
|
|
|
|
|
Non-GAAP net
income
|
$
|
480
|
|
|
$
|
1,583
|
|
|
$
|
9,830
|
|
|
$
|
9,537
|
|
Non-GAAP weighted
average shares used to compute net income per share,
diluted
|
14,815,193
|
|
|
18,127,461
|
|
|
14,645,632
|
|
|
16,065,293
|
|
Non-GAAP net income
per share, diluted
|
$
|
0.03
|
|
|
$
|
0.09
|
|
|
$
|
0.67
|
|
|
$
|
0.59
|
|
Reconciliation of
non-GAAP weighted average shares outstanding (5)
|
|
|
|
|
|
|
|
GAAP weighted average
shares used to compute net income per share, basic
|
11,782,523
|
|
|
14,893,439
|
|
|
11,678,568
|
|
|
12,590,221
|
|
Add back:
|
|
|
|
|
|
|
|
Additional weighted
average shares giving effect to conversion of preferred stock at
the beginning of the period
|
1,775,000
|
|
|
771,739
|
|
|
1,775,000
|
|
|
1,522,123
|
|
Non-GAAP weighted
average shares used to compute non-GAAP net income per share,
basic
|
13,557,523
|
|
|
15,665,178
|
|
|
13,453,568
|
|
|
14,112,344
|
|
Dilutive effect of
stock options and warrants
|
1,257,670
|
|
|
2,462,283
|
|
|
1,192,064
|
|
|
1,952,949
|
|
Non-GAAP weighted
average shares used to compute non-GAAP net income per share,
diluted
|
14,815,193
|
|
|
18,127,461
|
|
|
14,645,632
|
|
|
16,065,293
|
|
________________________
|
(1) Relates to an
anti-dilutive agreement which allows certain principal non-founder
shareholders the ability to purchase additional common
shares.
|
(2) The Company had a
full valuation allowance against its deferred tax assets for the
nine months ended September 30, 2016.
|
(3) The Company
recognized a tax benefit due to the release of the deferred tax
asset valuation allowance subsequent to the spin-off of Republic
Wireless.
|
(4) On December 22,
2017, the Tax Cuts and Jobs Act was enacted into law. As a result
of this change in tax law, the Company recorded a one-time re-
measurement of its deferred tax
assets which resulted in additional expense.
|
(5) Assumes proforma
conversion of preferred stock at the beginning of the respective
period; in connection with the initial public offering, the
conversion of
the 1,775,000 convertible preferred
shares into shares of common stock occurred in the fourth quarter
of 2017.
|
|
Free Cash
Flow
|
|
|
Three Months
Ended
December 31,
|
|
Year
Ended December
31,
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
(In
thousands)
|
Net cash provided by
operating activities from continuing operations
|
$
|
4,215
|
|
|
$
|
4,777
|
|
|
$
|
16,942
|
|
|
$
|
14,623
|
|
Net cash used in
investing activities from continuing operations (1)
|
(1,836)
|
|
|
(3,054)
|
|
|
(6,061)
|
|
|
(7,963)
|
|
Free cash
flow
|
$
|
2,379
|
|
|
$
|
1,723
|
|
|
$
|
10,881
|
|
|
$
|
6,660
|
|
________________________
|
(1) Represents the
acquisition cost of property, equipment and capitalized development
costs for software for internal use.
|
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SOURCE Bandwidth Inc.