Bandwidth (NASDAQ:BAND) executives highlighted a “solid” fourth quarter and a year of improved fundamentals on the company’s fourth-quarter and full-year 2025 earnings call, pointing to record large-enterprise deal activity, increasing contributions from higher-margin software services, and a growing role for AI-driven voice applications.
CEO David Morken said the company made steady progress in 2025 across revenue, profitability, and free cash flow, while CFO Daryl Raiford characterized the fourth quarter as delivering “solid revenue and record levels of profitability and free cash flow.” Management also discussed a newly authorized share repurchase program and provided full-year 2026 guidance calling for continued growth and margin expansion.
Enterprise wins and AI voice focus
Among customer examples discussed on the call:
- A “major household name” insurance company selected Bandwidth in a $1 million-plus deal to replace a legacy provider, citing AI-enabling features and integration with a complex Cisco environment. Bandwidth will support a cloud-based customer experience stack using inbound voice and Google Conversational AI.
- A top 10 U.S. bank selected Bandwidth’s toll-free solution to modernize and protect contact center infrastructure, which management said was driven by Bandwidth’s failover architecture and integration approach.
- A financial services customer described as the U.S. consumer financing arm for a top five global automaker selected Bandwidth to launch AI-enabled communications for a Genesys contact center, a deal the company said came through its channel.
Morken also cited messaging wins, including an e-commerce platform that chose Bandwidth over what he described as the company’s largest CPaaS competitor due to deliverability, capacity, and operational support during peak retail periods. He highlighted progress in RCS messaging, noting a longtime customer used Bandwidth to support initial production RCS campaigns for several consumer brands.
Management said developer interest is increasing, with Morken stating the number of third-party conversational AI developers building on Bandwidth’s platform has more than quadrupled in the last six months, though he noted this group is not yet a material revenue contributor.
Fourth-quarter results and full-year 2025 performance
Raiford said fourth-quarter 2025 revenue increased 12% year over year on an organic basis, excluding “cyclical revenue generated from political campaign messaging in 2024.” He said both voice and messaging posted “healthy double-digit growth,” with voice up 11% year over year and messaging up 12% organically. Raiford reported fourth-quarter adjusted EBITDA margin of 17%, attributing the improvement to pricing and mix and progress on profitability.
For full-year 2025, Raiford reported:
- Total revenue of $754 million, up 10% organically year over year
- Non-GAAP gross margin of 58%
- Adjusted EBITDA of $93 million
- Free cash flow of $57 million
He said Global Voice Plans revenue grew 8% for the year, more than doubling its growth rate compared to 2024, and Enterprise Voice grew 21% supported by a record number of million-dollar-plus deals. Raiford also said the enterprise cohort added in 2025 already represents 15% of total enterprise revenue, making it the second-highest contributing annual cohort in the company’s history. Programmable Messaging grew 7% organically, which management said was in line with expectations.
2026 outlook: growth and margin expansion, including political messaging
Looking ahead, Raiford said the company expects 2026 to bring continued growth and margin expansion, including “accelerating revenue growth in voice” supported by usage demand, AI-influenced call flows, large deal activity, higher software services contribution, and geographic expansion.
For 2026, management guided to approximately 16% total revenue growth year over year, including about 10% cloud communications growth. Raiford also guided to nearly 30% year-over-year adjusted EBITDA improvement, consistent with the company’s aim to reach a 20% full-year adjusted EBITDA margin, and non-GAAP earnings per share of approximately $1.66 to $1.74, representing about 19% growth.
In response to a question about political contribution in 2026, Raiford said midterm election messaging dynamics differ from presidential cycles and tend to start later, around “mid-summer-ish” timing. Based on what the company is hearing from customers, he said Bandwidth expects political campaign contribution to be roughly 2.5% of cloud communications revenue, with limited impact expected in the first half of the year.
Business model discussion and software services traction
Raiford outlined what he described as five reasons supporting Bandwidth’s “durable” model, emphasizing customer retention and expansion economics. He said customer name retention remains above 99%, organic net retention was 107%, and the top 20 accounts have a median tenure of 12 years. Within Enterprise Voice, he said Bandwidth had 100% customer name retention in 2025 and cited 98% retention for the Enterprise Voice cohort from three years ago.
He also pointed to increasing customer value, saying average annual revenue per customer ended 2025 at $232,000, a record, up from $171,000 three years ago. Raiford said the company’s incremental gross profit yield was 82% in 2025.
On software services, Raiford said Bandwidth exited the fourth quarter with software services revenue at an approximately $15 million annualized run rate, ahead of a prior $10 million expectation. He also stated that software is now attached to all million-dollar-plus deals, citing offerings including Maestro, Call Assure, and Trust Services.
Capital allocation: inaugural share repurchase authorization
Management also announced an inaugural share repurchase program authorized by the board for up to $80 million of common stock. Raiford said the company plans a “balanced” approach that includes the repurchase program alongside what he described as the company’s largest R&D investment in its history in 2026 to accelerate AI portfolio innovation.
During Q&A, management addressed questions about Enterprise Voice growth trends, noting a tougher comparison from deployments in the prior year but reiterating confidence in enterprise growth as large deals ramp in 2026. Executives also said the gap between total revenue growth and cloud communications growth in 2026 guidance is expected to be driven by pass-through carrier messaging surcharges, following carrier price increases already announced.
About Bandwidth (NASDAQ:BAND)
Bandwidth Inc operates a cloud-based communications platform that provides voice, messaging and emergency services APIs for enterprises and developers. Through its proprietary network and software-as-a-service model, the company enables customers to integrate programmable voice calls, text messaging and 9-1-1 routing into their applications. Bandwidth’s solutions aim to reduce complexity and improve reliability in mission-critical communications, serving industries such as healthcare, financial services, on-demand mobility and customer engagement.
Founded in 1999 in Raleigh, North Carolina by co-founders David Morken and Henry Kaestner, Bandwidth initially focused on voice-over-IP infrastructure before evolving into a full communications API provider.
