Communications-platform-as-a-service (CPaaS) provider Bandwidth (BAND 0.14%) has been a solid investment since making its stock market debut toward the end of 2017. Shares of the company have jumped over 450% since it went public, handsomely crushing the broader market despite recent volatility.

Bandwidth stock's pullback in 2021 gives investors who missed its terrific rally over the years a golden opportunity to buy and set themselves up for long-term growth. Bandwidth is still growing at an outstanding pace, and it is unlikely to take its foot off the gas any time soon. The company's second-quarter results give us a good idea about why its days of high growth are here to stay.

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Outstanding Q2 growth points toward better times

Bandwidth's Q2 revenue jumped 57% year over year to $120.7 million, with the CPaaS segment producing 87% of the top line. Those results exceeded the higher end of the company's revenue guidance of $116 million to $117 million, driven by a sharp increase in the customer base and increased spending by existing customers.

Bandwidth finished the quarter with 3,051 active customers, up 61% from the year-ago period. The active customer count in Q2 also included customers of Voxbone, a communications-as-a-service provider that Bandwidth acquired in November last year for $520 million. Voxbone accounted for $27 million of Bandwidth's total revenue last quarter.

More importantly, Bandwidth's dollar-based net retention rate stood at 114% during the quarter, excluding the impact of the Voxbone acquisition. The dollar-based net retention rate compares Bandwidth's CPaaS revenue from active customers present in a particular quarter to the revenue generated from the same set of active customers in the year-ago period. The increase in this metric indicates that Bandwidth's customers are spending more money on its offerings.

It is worth noting that Bandwidth managed to increase its dollar-based net retention rate despite facing tough year-over-year comparisons. The outbreak of the coronavirus pandemic had led to increased demand for CPaaS solutions on account of an accelerated shift toward remote work, and Bandwidth generated an additional $4.5 million to $5 million in revenue thanks to pandemic-related tailwinds last year.

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Excluding the impact of the additional business generated by the pandemic last year, Bandwidth's dollar-based net retention rate would have been 123%. All in all, Bandwidth did well to increase customer spending year over year in a post-pandemic scenario, and its guidance indicates that the positive momentum is here to stay.

Bandwidth has increased its full-year revenue guidance to a range of $484.8 million to $486.8 million, while non-GAAP earnings are expected to be between $0.71 and $0.75 per share. The company was originally expecting revenue between $473.1 million and $476.1 million when the year began, with earnings expected to fall between $0.47 and $0.55 per share.

The midpoint of the updated revenue guidance would translate into year-over-year growth of almost 42%, compared to the 2020 revenue of $343.1 million. This makes it clear that Bandwidth is on track to record a solid year of growth once again, and the end-market opportunity indicates that the trend could continue.

A big opportunity lies ahead

Bandwidth points out that the global CPaaS market could hit $17.7 billion in revenue by 2024, according to an estimate by IDC. The company's revenue last year makes it clear that it is scratching the surface of a huge market.

More importantly, Bandwidth is taking the right steps to attack this big opportunity. Its acquisition of Voxbone, for example, gives Bandwidth access to 60 markets globally. This bodes well for Bandwidth, as 60% of the spending on CPaaS is expected to happen outside North America by 2024. Additionally, Voxbone has added a fast-growing niche to Bandwidth's portfolio -- it is now tapping the global telecom API (application programming interface) market, which is growing at nearly 22% a year, according to third-party research.

Given that Bandwidth is trading at 6.3 times sales right now as compared to last year's average price-to-sales ratio of 12.7, investors now have a solid opportunity to buy this cloud stock for cheap and reap long-term gains.