BAND earnings analysis
What we found in BAND's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Bandwidth delivered Q2 revenue of $219.897 million, up 22% year over year and 5% sequentially, and turned to $2.387 million of GAAP net income from a $4.931 million prior-year loss. Growth was broad-based across cloud communications and messaging surcharges, but GAAP gross margin declined 4 percentage points year over year to 36% as pass-through messaging surcharges expanded. Cash generation remained positive at $23.739 million of quarterly free cash flow, while the company refinanced its debt stack with $316 million of 0% 2032 convertible notes and reduced 2028 notes to approximately $28 million.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue growth accelerated to 22% YoY
- Q2 revenue rose 22% year over year to $219.897 million from $180.013 million, and increased 5% sequentially from $208.784 million in Q1 2026. Revenue was driven by $151.869 million of cloud communications revenue (+12%) and $68.028 million of messaging surcharges (+54%).
- GAAP profitability turns positive
- GAAP net income was $2.387 million, versus a $4.931 million loss a year earlier; GAAP basic EPS was $0.07 versus a $(0.16) loss. Non-GAAP diluted EPS increased to $0.37 from $0.38 in the prior-year quarter, while adjusted EBITDA rose 27% to $27.768 million.
- Positive free cash flow maintained
- Free cash flow was $23.739 million in Q2, with $28.772 million of operating cash flow and $5.033 million of capital-asset investment. This compares with $25.631 million of free cash flow in Q2 2025.
- Liquidity supported by cash and undrawn revolver
- The company ended June with $170 million of cash and cash equivalents, $4 million of marketable securities, and $150 million of undrawn revolver capacity. It also had approximately $60 million remaining under its $80 million share-repurchase authorization after repurchasing $20 million year to date.
- Core product demand and customer scale grew
- Cloud-communications growth reflected Global Voice Plans growth of 10%, Programmable Messaging growth of 22%, and Enterprise Voice growth of 8%. Average annual customer revenue increased 11% to $0.3 million.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Pass-through mix compresses gross margin
- GAAP gross margin fell to 36% from 40% a year earlier and 37.3% in Q1 2026. Cost of revenue increased 30% to $141.354 million, chiefly reflecting $23 million of higher pass-through messaging surcharges.
- Net retention rate declined 5 points
- Net retention rate declined to 107% from 112%, which management attributed to less political messaging over the prior four quarters. The lower retention rate points to a reduced contribution from existing-customer usage expansion.
- Regulatory, AI and capital-structure exposure
- The risk factors newly emphasize AI, government-operation disruption, and financing exposure. The company has $344 million of convertible notes outstanding and cites a 2025 government shutdown that delayed FCC processes; a hypothetical 10% adverse FX move would have reduced six-month net income by approximately $3 million.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $-0.07
- Gross margin
- 36%
- Operating margin
- -2.1%
- Segment
- Cloud communications revenue: $151.869 million, up 12% year over year from $135.857 million.
- Segment
- Messaging surcharges revenue: $68.028 million, up 54% year over year from $44.156 million.
What they said about what is next.
The 10-Q does not provide a quantitative revenue or EPS outlook; outlook was deferred to communications outside the filing.
The filing reads about the same as the one before it.
What came before.
- 10-Q · April 30, 2026
- Bandwidth reported strong Q1 2026 results with a total revenue of $209 million, up 20% from $174 million in Q1 2025. The company reversed its previous losses, achieving a net income of $4 million compared to a net loss…
- 10-K · February 19, 2026
- Bandwidth positions itself as a cloud communications provider anchored by an owned global network and an AI-first enterprise offering (Maestro) to capture AI voice and cloud migration demand. Revenue was roughly flat…
- 10-Q · October 31, 2024
- Bandwidth reported Q3 revenue of $193,883,000, up $41,870,000 (+27.6%) versus Q3 2023, with gross profit of $73,134,000 (gross margin ~37.7%). The company narrowed operating loss to $(898,000) from $(6,147,000) a year…
- 10-Q · August 1, 2024
- Bandwidth reported Q2 revenue of $173,602,000, up $27,728,000 (+19.0%) year-over-year and slightly up versus the prior quarter ($171,033,000 computed from six-month totals). The company generated GAAP net income of…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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