Bandwidth 2025 Q2 Earnings Misses Targets as Net Income Declines 221.6%

Bandwidth (BAND) reported its fiscal 2025 Q2 earnings on Jul 29th, 2025. The company's performance fell short of expectations, with a notable shift from a profit to a loss in net income compared to the previous year. Despite this, Bandwidth has maintained its full-year guidance, projecting 10% organic revenue growth. The outlook for adjusted EBITDA has been raised, reflecting corporate confidence in strategic and financial achievements anticipated in the latter half of 2025.

Revenue
The total revenue of Bandwidth increased by 3.7% to $180.01 million in 2025 Q2, up from $173.60 million in 2024 Q2. The cloud communications segment generated $135.86 million, while messaging surcharges contributed $44.16 million, collectively leading to the overall revenue figure.

Earnings/Net Income
Bandwidth swung to a loss of $0.16 per share in 2025 Q2 from a profit of $0.15 per share in 2024 Q2, marking a 206.7% negative change. The company reported a net loss of $-4.93 million in 2025 Q2, a 221.6% deterioration from the net income of $4.05 million achieved in 2024 Q2. This reflects a challenging quarter for Bandwidth.

Price Action
The stock price of Bandwidth has tumbled 10.17% during the latest trading day, plummeted 15.57% during the most recent full trading week, and has tumbled 11.91% month-to-date.

Post-Earnings Price Action Review
The strategy of purchasing Bandwidth (BAND) shares following quarterly revenue increases and holding them for 30 days has resulted in significant underperformance. Over a three-year period, this approach yielded a -85.15% return compared to a benchmark return of 87.35%, leading to an excess return of -172.49% and a compound annual growth rate (CAGR) of -31.85%. Despite the losses, the strategy did not expose investors to additional risk during the holding period, as indicated by a maximum drawdown of 0.00%. This suggests that investors faced substantial losses without the opportunity for recovery within the 30-day holding period.

CEO Commentary
David Andrew Morken, Co-Founder, CEO, & Chairman, noted a solid second quarter with revenue of $180 million and adjusted EBITDA of $22 million, highlighting a 15% revenue growth and a 36% increase in EBITDA year-over-year. He emphasized the progress of their AI strategy, stating, "the demand for mission-critical enterprise communications is durable." Morken described how the Maestro and AI Bridge platforms are essential for integrating AI into customer experiences, driving significant usage increases. He expressed confidence in Bandwidth's positioning within the AI voice revolution, asserting, "we are uniquely positioned to lead this market," and underscoring a commitment to creating long-term shareholder value.

Guidance
Bandwidth maintains its full-year 2025 guidance, projecting 10% organic revenue growth at the midpoint. For the third quarter, the company anticipates 10% organic growth, with expectations of accelerating to 13% in the fourth quarter. The adjusted EBITDA outlook has been raised to $88 million at the midpoint for the year, reflecting confidence in achieving strategic and financial goals throughout the second half of 2025.

Additional News
In recent non-earnings related developments, Bandwidth hosted a strategic customer roundtable in London, led by Chief Product Officer John Bell, focusing on AI-era fraud, compliance, and trust. The company showcased its Trust Services strategy, including its multilayered Trust Solutions framework, to address challenges in AI-powered communications. Additionally, Bandwidth has announced a successful cloud migration partnership with Pennymac, resulting in over 50% annual telecom cost savings and faster loan processing times. This partnership underscores Bandwidth's growing influence in financial services communications solutions, as highlighted by American Banker. Lastly, Bandwidth announced winners of its second annual Textie Awards, recognizing excellence in business text messaging across various sectors, demonstrating its commitment to messaging innovation.