Bandwidth Announces Second Quarter 2024 Financial Results

Revenue of $174 million, up 19% year-over-year

Accelerating profitability, exceeding guidance

Expanding cash flow generation

RALEIGH, N.C., Aug. 1, 2024 /PRNewswire/ -- Bandwidth Inc. (NASDAQ: BAND), a leading global enterprise cloud communications company, today announced financial results for the second quarter ended June 30, 2024.

"We're pleased to report a very strong first half, making significant progress toward our plan for 2024. In the second quarter, we delivered solid revenue growth while accelerating profitability and cash flow," said David Morken, CEO of Bandwidth. "Our team's disciplined approach, coupled with innovative solutions like Maestro and AI Bridge, is driving strong performance in a dynamic market. I am incredibly proud of our Bandmates' execution and grateful for the trust our customers place in us. As we move forward, we remain focused on delivering exceptional value and transforming the communications landscape."

Second Quarter 2024 Financial Highlights

The following table summarizes the condensed consolidated financial highlights for the three months ended June 30, 2024 and 2023 ($ in millions).


                                
     
          Three months ended
                                   
          June 30,


                                    2024                   2023



     Revenue                       $174                   $146



     Gross Margin                  37 %                  40 %



     Non-GAAP Gross Margin (1)     56 %                  55 %



     Adjusted EBITDA(1)             $19                    $11



     Free Cash Flow (1)             $18                   $(1)



     (1) Additional information regarding the Non-GAAP financial measures discussed in this release, including an explanation of these measures and how each is calculated, is 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.

"Bandwidth's second quarter results underscore our commitment to sustainable, profitable growth. With total revenue reaching $174 million and Adjusted EBITDA up 77% from the prior year, we are performing well across all categories," said Daryl Raiford, CFO of Bandwidth. "Our strategic investments and disciplined financial management have driven impressive free cash flow and operational efficiency. We are well-positioned to continue this momentum into the second half of the year, further enhancing our financial strength and growth trajectory."

Second Quarter Customer and Operational Highlights

    --  A nationwide provider of medical claims management selected Bandwidth as
        their exclusive provider for voice calling, valuing our exceptional
        customer support and the flexibility of our Maestro product to
        orchestrate and enhance functionality across their platform.
    --  A prominent provider of healthcare integrated supportive care solutions
        chose Bandwidth to power its cloud contact center. Our communications
        cloud reliability and the comprehensive protection offered by our Call
        Assure product resonated with the customer, ensuring redundancy and
        safeguarding mission critical communications.
    --  A trusted provider of business insurance switched to Bandwidth as their
        sole provider for voice calling. They valued our Advanced Call Routing
        solution, which offers robust resiliency and redundancy for their
        contact center traffic, along with our superior back-end reporting
        tools.
    --  A well-established customer and provider of communications management
        software significantly increased their messaging business with us. Our
        deep industry knowledge and outstanding customer service played pivotal
        roles in securing this additional business.

Financial Outlook

Bandwidth's outlook is based on current indications for its business, which are subject to change. Bandwidth is providing guidance for its third quarter and full year 2024 as follows (in millions):


                               3Q           Full Year 2024
                          2024 Guidance         Guidance



     Revenue         
         $180 - $184 
          $710 - $720



     Adjusted EBITDA   
         $18 - $20   
          $72 - $76

Bandwidth has not reconciled its third quarter and full year 2024 guidance related to Adjusted EBITDA to GAAP net income or loss, because stock-based compensation cannot be reasonably calculated or predicted at this time. Accordingly, a reconciliation is not available without unreasonable effort.

Upcoming Investor Conference Schedule

    --  Canaccord Genuity Growth Conference in Boston, MA. Presentation by Daryl
        Raiford, CFO on Wednesday, August 14th at 10:00AM Eastern Time.
    --  Piper Sandler Growth Frontiers Conference in Nashville, TN. Fireside
        chat with David Morken, CEO and Daryl Raiford, CFO on Tuesday, September
        10th at 10:00AM Central Time.

About Bandwidth Inc.

Bandwidth (NASDAQ: BAND) is a global cloud communications software company that helps enterprises deliver exceptional experiences through voice calling, text messaging and emergency services. Our solutions and our Communications Cloud, covering 65+ countries and over 90 percent of global GDP, are trusted by all the leaders in unified communications and cloud contact centers-including Amazon Web Services (AWS), Cisco, Google, Microsoft, RingCentral, Zoom, Genesys and Five9-as well as Global 2000 enterprises and SaaS builders like Docusign, Uber and Yosi Health. As a founder of the cloud communications revolution, we are the first and only global Communications Platform-as-a-Service (CPaaS) to offer a unique combination of composable APIs, AI capabilities, owner-operated network and broad regulatory experience. Our award-winning support teams help businesses around the world solve complex communications challenges to reach anyone, anywhere. For more information, visit www.bandwidth.com.

Conference Call

Bandwidth will host a conference call to discuss financial results for the second quarter ended June 30, 2024 on August 1, 2024. Details can be found below and on the investor section of its website at https://investors.bandwidth.com where a replay will also be available shortly following the call.

Conference Call Details

August 1, 2024
8:00 am ET
Domestic dial-in:
844-481-2707
International dial-in:
412-317-0663

Replay information

An audio replay of this conference call will be available through August 8, 2024, by dialing 877-344-7529 or 412-317-0088 for international callers, and entering passcode 9676778.

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, future financial and business performance for the quarter ending September 30, 2024 and year ending December 31, 2024, the success of our product offerings and our platform, and the value proposition of our products, are forward-looking statements. The words "anticipate," "assume," "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, macroeconomic conditions both in the U.S. and globally, legal, reputational and financial risks which may result from ever-evolving cybersecurity threats, 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 latest Form 10-K filed with the Securities and Exchange Commission (the "SEC") and any subsequent reports that we file with the SEC. 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 condensed 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 below, 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, amortization of acquired intangible assets related to acquisitions and stock-based compensation. We add back depreciation, amortization of acquired intangible assets related to acquisitions 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, 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 Non-GAAP gross profit by cloud communications revenue, which is revenue less pass-through messaging surcharges.

We define Non-GAAP net income (loss) as net income or loss adjusted for certain items affecting period to period comparability. Non-GAAP net income (loss) excludes stock-based compensation, amortization of acquired intangible assets related to acquisitions, amortization of debt discount and issuance costs for convertible debt, acquisition related expenses, impairment charges of intangibles assets, net cost associated with early lease terminations and leases without economic benefit, (gain) loss on sale of business, net (gain) loss on extinguishment of debt, gain on business interruption insurance recoveries, non-recurring items not indicative of ongoing operations and other, and estimated tax impact of above adjustments, net of valuation allowances.

We define Adjusted EBITDA as net income or losses from continuing operations, adjusted to reflect the addition or elimination of certain statement of operations items including, but not limited to: income tax (benefit) provision, interest (income) expense, net, depreciation and amortization expense, acquisition related expenses, stock-based compensation expense, impairment of intangible assets, (gain) loss on sale of business, net cost associated with early lease terminations and leases without economic benefit, net (gain) loss on extinguishment of debt, gain on business interruption insurance recoveries, and non-recurring items not indicative of ongoing operations and other. We have presented Adjusted EBITDA because it is a key measure used by our management and board of directors to understand and evaluate our core operating performance and trends, 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 net cash provided by or used in operating activities less net cash used in the acquisition of property, plant and equipment and capitalized development costs for software for internal use. We believe free cash flow is a useful indicator of liquidity and provides information to management and investors about the amount of cash generated from our core operations that can be used for investing in our business. Free cash flow has certain limitations in that it does not represent the total increase or decrease in the cash balance for the period, it does not take into consideration investment in long-term securities, nor does it represent the residual cash flows available for discretionary expenditures. Therefore, it is important to evaluate free cash flow along with our condensed consolidated statements of cash flows.

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.


                                                                    
              
                BANDWIDTH INC.

                                                   
              
                Condensed Consolidated Statements of Operations

                                                  
              
                (In thousands, except share and per share amounts)

                                                                     
              
                (Unaudited)




                                                                                                                                      Three months ended June 30,                 Six months ended June 30,


                                                                                                                                 2024             2023                  2024        2023



     Revenue                                                                                                                $173,602         $145,874              $344,635    $283,718



     Cost of revenue                                                                                                         108,773           86,919               214,322     169,110



     Gross profit                                                                                                             64,829           58,955               130,313     114,608



     Operating expenses



     Research and development                                                                                                 28,132           24,852                57,044      50,513



     Sales and marketing                                                                                                      26,066           25,754                55,205      50,783



     General and administrative                                                                                               16,705           15,868                34,554      32,587



     Total operating expenses                                                                                                 70,903           66,474               146,803     133,883



     Operating loss                                                                                                          (6,074)         (7,519)             (16,490)   (19,275)



     Other income, net                                                                                                         9,798            3,782                10,781      16,021



     Income (loss) before income taxes                                                                                         3,724          (3,737)              (5,709)    (3,254)



     Income tax benefit (provision)                                                                                              331            (153)                  531       2,975



     Net income (loss)                                                                                                        $4,055         $(3,890)             $(5,178)     $(279)





     Net income (loss) per share:



     Basic                                                                                                                     $0.15          $(0.15)              $(0.19)    $(0.01)



     Diluted                                                                                                                 $(0.17)         $(0.15)              $(0.19)    $(0.01)





     Numerator used to compute net income (loss) per share:



     Basic                                                                                                                    $4,055         $(3,890)             $(5,178)     $(279)



     Diluted                                                                                                                $(5,043)        $(3,890)             $(5,178)     $(279)





     Weighted average number of common shares outstanding:



     Basic                                                                                                                27,079,333       25,555,219            26,786,568  25,502,131



     Diluted                                                                                                              29,500,598       25,555,219            26,786,568  25,502,131





     The Company recognized total stock-based compensation expense as follows:




                                                                                                                                      Three months ended June 30,                 Six months ended June 30,


                                                                                                                                 2024             2023                  2024        2023



     Cost of revenue                                                                                                            $375             $204                  $771        $396



     Research and development                                                                                                  4,684            3,315                10,000       6,456



     Sales and marketing                                                                                                       2,105            1,428                 4,270       2,665



     General and administrative                                                                                                4,196            3,058                 8,658       5,866



     Total                                                                                                                   $11,360           $8,005               $23,699     $15,383


                                                             
        
                BANDWIDTH INC.

                                                  
              
          Condensed Consolidated Balance Sheets

                                                             
        
                (In thousands)

                                                               
        
                (Unaudited)




                                                                                                          As of June 30, As of December 31,


                                                                                                                    2024                2023



     
                Assets



     Current assets:



     Cash and cash equivalents                                                                                  $62,044            $131,987



     Marketable securities                                                                                       14,399              21,488



     Accounts receivable, net of allowance for doubtful accounts                                                 85,576              78,155



     Deferred costs                                                                                               3,871               4,155



     Prepaid expenses and other current assets                                                                   15,492              16,990



     Total current assets                                                                                       181,382             252,775



     Property, plant and equipment, net                                                                         173,400             177,864



     Operating right-of-use asset, net                                                                          155,484             157,507



     Intangible assets, net                                                                                     155,966             166,914



     Deferred costs, non-current                                                                                  4,800               4,586



     Other long-term assets                                                                                       4,851               5,530



     Goodwill                                                                                                   326,220             335,872



     Total assets                                                                                            $1,002,103          $1,101,048



     
                Liabilities and stockholders' equity



     Current liabilities:



     Accounts payable                                                                                           $31,933             $34,208



     Accrued expenses and other current liabilities                                                              69,256              69,014



     Current portion of deferred revenue                                                                          7,685               8,059



     Advanced billings                                                                                            4,111               6,027



     Operating lease liability, current                                                                           3,478               5,463



     Line of credit, current portion                                                                             40,000



     Total current liabilities                                                                                  156,463             122,771



     Other liabilities                                                                                              354                 386



     Operating lease liability, net of current portion                                                          220,497             220,548



     Deferred revenue, net of current portion                                                                     8,142               8,406



     Deferred tax liability                                                                                      28,540              33,021



     Convertible senior notes                                                                                   280,660             418,526



     Total liabilities                                                                                          694,656             803,658



     Stockholders' equity:



     Class A and Class B common stock                                                                                27                  26



     Additional paid-in capital                                                                                 418,503             391,048



     Accumulated deficit                                                                                       (70,068)           (64,890)



     Accumulated other comprehensive loss                                                                      (41,015)           (28,794)



     Total stockholders' equity                                                                                 307,447             297,390



     Total liabilities and stockholders' equity                                                              $1,002,103          $1,101,048


                                                                           
              
                BANDWIDTH INC.

                                                           
              
                Condensed Consolidated Statements of Cash Flows

                                                                           
              
                (In thousands)

                                                                             
              
                (Unaudited)




                                                                                                                                             Six months ended June 30,


                                                                                                                                        2024                   2023



     
                Cash flows from operating activities



     Net loss                                                                                                                      $(5,178)                $(279)



     Adjustments to reconcile net loss to net cash provided by (used in) operating activities



     Depreciation and amortization                                                                                                   24,714                 18,692



     Non-cash reduction to the right-of-use asset                                                                                     2,007                  3,242



     Amortization of debt discount and issuance costs                                                                                   962                  1,485



     Stock-based compensation                                                                                                        23,699                 15,383



     Deferred taxes and other                                                                                                       (4,116)               (5,225)



     Net gain on extinguishment of debt                                                                                            (10,267)              (12,767)



     Gain on business interruption insurance recoveries                                                                                   -               (4,000)



     Changes in operating assets and liabilities:



     Accounts receivable, net of allowances                                                                                         (7,642)                 3,712



     Prepaid expenses and other assets                                                                                                1,886                  (957)



     Accounts payable                                                                                                               (1,112)               (6,171)



     Accrued expenses and other liabilities                                                                                           3,968               (12,464)



     Operating right-of-use liability                                                                                               (2,020)               (3,919)



     Net cash provided by (used in) operating activities                                                                             26,901                (3,268)



     
                Cash flows from investing activities



     Purchase of property, plant and equipment                                                                                      (7,145)               (3,859)



     Capitalized software development costs                                                                                         (5,843)               (5,001)



     Purchase of marketable securities                                                                                             (31,096)              (40,625)



     Proceeds from sales and maturities of marketable securities                                                                     38,312                 81,233



     Proceeds from sale of business                                                                                                     469                    835



     Net cash (used in) provided by investing activities                                                                            (5,303)                32,583



     
                Cash flows from financing activities



     Borrowings on line of credit                                                                                                    65,000



     Repayments on line of credit                                                                                                  (25,000)



     Payments on finance leases                                                                                                        (44)                  (90)



     Net cash paid for debt extinguishment                                                                                        (128,451)              (51,259)



     Payment of debt issuance costs                                                                                                   (354)



     Proceeds from exercises of stock options                                                                                           119                    413



     Value of equity awards withheld for tax liabilities                                                                            (2,290)               (1,000)



     Net cash used in financing activities                                                                                         (91,020)              (51,936)



     Effect of exchange rate changes on cash, cash equivalents and restricted cash                                                    (608)                    27



     Net decrease in cash, cash equivalents, and restricted cash                                                                   (70,030)              (22,594)



     Cash, cash equivalents, and restricted cash, beginning of period                                                               132,307                114,622



     Cash, cash equivalents, and restricted cash, end of period                                                                     $62,277                $92,028


                                                                
              
                BANDWIDTH INC.

                                                 
              
                Reconciliation of Non-GAAP Financial Measures

                                              
              
                (In thousands, except share and per share amounts)

                                                                  
              
                (Unaudited)





              
                
                  Non-GAAP Gross Profit and Non-GAAP Gross Margin




                                                                                                                         Three months ended June 30,               Six months ended June 30,


                                                                                                                2024                2023                 2024      2023



              
                Gross Profit                                                                     $64,829             $58,955             $130,313  $114,608


    Gross Profit Margin %                                                                                     37 %               40 %                38 %     40 %



              Depreciation                                                                                    4,678               4,205                9,456     7,734



              Amortization of acquired intangible assets                                                      1,941               1,959                3,900     3,904



              Stock-based compensation                                                                          375                 204                  771       396



              
                Non-GAAP Gross Profit                                                            $71,823             $65,323             $144,440  $126,642



              
                Non-GAAP Gross Margin % (1)                                                         56 %               55 %                56 %     54 %


     
     ________________________


        (1) Calculated by dividing Non-GAAP gross profit by cloud communications revenue of $128 million and $257 million in the three and six months ended June 30, 2024, respectively, and $118 million and $233 million for the three and six months ended June
         30, 2023, respectively.


                                                                                              
            
                BANDWIDTH INC.

                                                                                  
             
            Reconciliation of Non-GAAP Financial Measures

                                                                               
              
           (In thousands, except share and per share amounts)

                                                                                                
            
                (Unaudited)





     
                
                  Non-GAAP Net Income




                                                                                                                                                                Three months ended June 30,                 Six months ended June 30,


                                                                                                                                                           2024             2023                  2024        2023



     
                Net income (loss)                                                                                                                     $4,055         $(3,890)             $(5,178)     $(279)



     Stock-based compensation                                                                                                                           11,360            8,005                23,699      15,383



     Amortization of acquired intangibles                                                                                                                4,336            4,338                 8,697       8,612



     Amortization of debt discount and issuance costs for convertible debt                                                                                 384              474                   869       1,036



     Net cost associated with early lease terminations and leases without economic benefit                                                                 877                                 2,033



     Net gain on extinguishment of debt                                                                                                               (10,267)                             (10,267)   (12,767)



     Gain on business interruption insurance recoveries                                                                                                      -         (4,000)                         (4,000)



     Non-recurring items not indicative of ongoing operations and other (1)                                                                                 49              180                   129         739



     Estimated tax effects of adjustments (2)                                                                                                          (2,075)           (708)              (3,443)    (3,135)



     
                Non-GAAP net income                                                                                                                   $8,719           $4,399               $16,539      $5,589



     Interest expense on Convertible Notes (3)                                                                                                             300              317                   617         655



     
                Numerator used to compute Non-GAAP diluted net income per share                                                                       $9,019           $4,716               $17,156      $6,244





     
                Net income (loss) per share



     Basic                                                                                                                                               $0.15          $(0.15)              $(0.19)    $(0.01)



     Diluted                                                                                                                                           $(0.17)         $(0.15)              $(0.19)    $(0.01)





     
                Non-GAAP net income per Non-GAAP share



     Basic                                                                                                                                               $0.32            $0.17                 $0.62       $0.22



     Diluted                                                                                                                                             $0.29            $0.16                 $0.55       $0.21





     
                Weighted average number of shares outstanding



     
                Basic                                                                                                                             27,079,333       25,555,219            26,786,568  25,502,131



     
                Diluted                                                                                                                           29,500,598       25,555,219            26,786,568  25,502,131





     
                Non-GAAP basic shares                                                                                                             27,079,333       25,555,219            26,786,568  25,502,131



     Convertible debt conversion                                                                                                                     2,421,265        3,317,023             2,869,144   3,569,511



     Stock options issued and outstanding                                                                                                               28,513           27,413                30,108      60,583



     Nonvested RSUs outstanding                                                                                                                      1,284,862                             1,260,376



     
                Non-GAAP diluted shares                                                                                                           30,813,973       28,899,655            30,946,196  29,132,225


     
     ________________________


        (1) Non-recurring items not indicative of ongoing operations and other include (i) less than $0.1 million and $0.2 million of losses on disposals of property, plant and equipment during the three months ended June 30, 2024 and 2023, respectively, (ii)
         $0.1 million of losses on disposals of property, plant and equipment during the six months ended June 30, 2024, and (iii) $0.4 million of expense resulting from the early termination of our undrawn SVB credit facility and $0.3 million of losses on
         disposals of property, plant and equipment during the six months ended June 30, 2023.


        (2) The estimated tax-effect of adjustments is determined by recalculating the tax provision on a Non-GAAP basis. The Non-GAAP effective income tax rate was 15.0% and 2.8% for the six months ended June 30, 2024 and 2023, respectively. For the six
         months ended June 30, 2024, the Non-GAAP effective income tax rate differed from the federal statutory tax rate of 21% in the U.S. primarily due to the research and development tax credits generated in 2024. We analyze the Non-GAAP valuation
         allowance position on a quarterly basis. In the fourth quarter of 2022, we removed the valuation allowance against all U.S. deferred tax assets for Non-GAAP purposes as a result of cumulative Non-GAAP U.S. income over the past three years and a
         significant depletion of net operating loss and tax credit carryforwards on a Non-GAAP basis. As of June 30, 2024, we have no valuation allowance against our remaining deferred tax assets for Non-GAAP purposes.



     
     (3) Non-GAAP net income is increased for interest expense as part of the calculation for diluted Non-GAAP earnings per share.


                                                                                                
           
                BANDWIDTH INC.

                                                                                   
              
          Reconciliation of Non-GAAP Financial Measures

                                                                                 
              
          (In thousands, except share and per share amounts)

                                                                                                 
           
                (Unaudited)





     
                
                  Adjusted EBITDA




                                                                                                                                                               Three months ended June 30,                 Six months ended June 30,


                                                                                                                                                          2024             2023                  2024        2023



     
                Net income (loss)                                                                                                                    $4,055         $(3,890)             $(5,178)     $(279)



     Income tax (benefit) provision                                                                                                                     (331)             153                 (531)    (2,975)



     Interest expense, net                                                                                                                                698              322                    65       1,236



     Depreciation                                                                                                                                       7,964            5,460                16,017      10,080



     Amortization                                                                                                                                       4,336            4,338                 8,697       8,612



     Stock-based compensation                                                                                                                          11,360            8,005                23,699      15,383



     Net cost associated with early lease terminations and leases without economic benefit                                                                877                                 2,033



     Net gain on extinguishment of debt                                                                                                              (10,267)                             (10,267)   (12,767)



     Gain on business interruption insurance recoveries                                                                                                     -         (4,000)                         (4,000)



     Non-recurring items not indicative of ongoing operations and other (1)                                                                                49              180                   129         337



     
                Adjusted EBITDA                                                                                                                     $18,741          $10,568               $34,664     $15,627


     
     ________________________


        (1) Non-recurring items not indicative of ongoing operations and other include less than $0.1 million and $0.2 million of losses on disposals of property, plant and equipment during the three months ended June 30, 2024 and 2023, respectively, and
         $0.1 million and $0.3 million for the six months ended June 30, 2024 and 2023, respectively.



     
                
                  Free Cash Flow




                                                                  Three months ended June 30,                Six months ended June 30,


                                                             2024             2023                  2024       2023



     Net cash provided by (used in) operating activities $24,436           $3,086               $26,901   $(3,268)



     Net cash used in investing in capital assets (1)    (6,116)         (4,314)             (12,988)   (8,860)



     
                Free cash flow                         $18,320         $(1,228)              $13,913  $(12,128)


     
     ________________________



     
     (1) Represents the acquisition cost of property, plant and equipment and capitalized development costs for software for internal use.

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SOURCE Bandwidth Inc.