Bandwidth (BAND -17.70%), a provider of cloud-based communications software for enterprises worldwide, released second-quarter 2025 results on July 29, 2025. The key news: revenue (GAAP) climbed to $180.0 million, beating analyst expectations of $178.87 million (GAAP), and non-GAAP earnings per share reached $0.38, ahead of the $0.33 estimate. The company reported a record non-GAAP gross margin of 58%, and though operating under a GAAP net loss for the period, Bandwidth delivered another quarter of outperformance on core metrics while continuing to invest in innovation and enterprise growth.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $0.38 | $0.33 | $0.29 | 31.0 % |
| Revenue | $180.0 million | $178.87 million | $173.6 million | 3.7% |
| Non-GAAP Gross Margin | 58 % | 56 % | 2.0 pp | |
| Adjusted EBITDA | $21.9 million | $18.7 million | 17.1 % | |
| Free Cash Flow | $25.6 million | $18.3 million | 39.9 % |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Company Overview and Business Focus
Bandwidth operates a global communications platform offering voice, messaging, emergency services, and number management for large enterprises. Its infrastructure allows customers to build, automate, and manage communications across over 65 countries, reaching over 90% of global economic output.
The company has recently concentrated on three core focus areas: advancing its AI-driven enterprise voice offerings, growing its programmable messaging business, and ensuring regulatory compliance across multiple jurisdictions. Its competitive advantages include an all-IP global network, an API-focused product design, and deep regulatory experience, which are critical for providing reliable and scalable service to clients like Microsoft, Cisco, Zoom, and AWS.
Quarterly Highlights and Key Metrics
Several metrics stood out this quarter. Revenue rose 3.7% compared to Q2 2024, reflecting continued demand for Bandwidth’s suite of cloud-based voice and messaging solutions. The non-GAAP gross margin increased to a record 58%, up from 56% in Q2 2024.
Adjusted EBITDA, a measure of earnings before interest, taxes, depreciation, and amortization, grew 17.1% compared to Q2 2024, reaching $21.9 million. Free cash flow (non-GAAP) increased nearly 40% compared to Q2 2024, reaching $25.6 million, supported by higher operating cash flow and disciplined capital spending.
This was also a quarter marked by higher innovation spend. Research and development expenses (GAAP) rose to $31.75 million, up 12.9% from Q2 2024, as the company continued to enhance its product suite. General and administrative expenses were up 12.8% compared to Q2 2024.
Product progress was notable. Enterprise customers accelerated adoption of Maestro and AI Bridge—software platforms that help organizations orchestrate and integrate artificial intelligence into contact centers and customer engagement channels. Over half of all enterprise customers now use these platforms as of Q1 2025. Major wins included a large healthcare provider selecting Bandwidth as its sole voice provider for reliability, as well as a leading insurance brokerage migrating complex communications infrastructure to Bandwidth, citing the power of programmable call routing and AI integration.
Programmable Messaging, which lets businesses embed text messaging into their applications, accounted for 19% of cloud communications revenue in Q1 2025.
Customer retention metrics remained strong. Average annual revenue per customer reached a record in Q1 2025, and name retention held above 99% for Q1 2025. Channel partnerships gained momentum in Q1 2025, supporting both direct sales and partner-led implementations.
No material one-time charges were reported for the period.
Looking Ahead: Management Guidance and Investor Watchpoints
For the third quarter, Bandwidth projects revenue in the range of $189–$191 million for Q3 2025 and adjusted EBITDA between $19–$21 million for Q3 2025. For the full fiscal year 2025, guidance calls for revenue of $745–$760 million for full year 2025 and adjusted EBITDA of $86–$91 million for full year 2025. The outlook factors in the absence of last year’s significant political campaign messaging revenue, normalizing the year-over-year comparison.
Investors should keep an eye on several key trends for the remainder of the year. Growth in enterprise cloud adoption and AI-driven communications solutions remains a priority for the company and its customer base. Management will need to sustain margin improvement while monitoring costs, particularly as research and development investments continue to rise.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
