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    BAND
    Earnings call· Jun 2026(Q2 FY26)

    Bandwidth Q2 FY26 earnings call BAND

    Jul 29, 2026 Source

    Executive summary

    Bandwidth Q2 FY26 — AI-Driven Growth and Raised Full-Year Outlook

    Bandwidth delivered strong Q2 FY26 results, driven by increasing AI adoption and strategic customer wins, leading to a raised full-year outlook. The company is capitalizing on the shift towards AI-driven communications infrastructure, expanding its global network and Maestro platform capabilities. While some growth rates show slight deceleration, management remains confident in its pipeline and the long-term cash-generating power of its business model.

    Highlights

    5

    • Total revenue grew 22% year-over-year to $220 million, exceeding expectations.

    • Adjusted EBITDA grew 27% to $28 million, with margin reaching a record 18.3%.

    • Secured five new million-dollar-plus customer wins and expansions, 100% including Maestro or AI services.

    • Free cash flow was $24 million, reinforcing the company's cash-generating power.

    • Successfully completed a $316 million convertible notes offering, reducing financing costs and improving the maturity profile.

    Concerns

    4

    • Cloud communications revenue growth is expected to slightly decelerate in H2 FY26 compared to H1 FY26.

    • Political campaign revenue expectation revised down from $15 million to $13 million for the full year FY26.

    • Net leverage increased slightly from 1.5x to 1.6x quarter-over-quarter.

    • Voice solutions revenue growth decelerated to 9% year-over-year in Q2 FY26.

    Guidance & targets

    13
    CategoryTargetConfidence
    Total revenue
    $231 million and $235 million
    high materiality
    High
    Adjusted EBITDA
    $32 million and $34 million
    high materiality
    High
    Non-GAAP EPS
    $0.45 and $0.49
    medium materiality
    High
    Full-year total revenue
    $900 million and $910 million
    high materiality
    High
    Full-year cloud communications revenue
    $622 million and $626 million
    high materiality
    High
    Full-year adjusted EBITDA
    $123 million and $125 million
    high materiality
    High
    Full-year non-GAAP EPS
    $1.71 and $1.79
    medium materiality
    High
    Net interest income
    $500,000 and $1 million
    low materiality
    High
    Depreciation expense
    $38 million and $42 million
    low materiality
    High
    Adjusted effective tax rate
    20% and 22%
    low materiality
    High
    Weighted average diluted shares outstanding
    Approximately 39 million
    low materiality
    High
    Capital expenditures
    $24 million and $26 million
    medium materiality
    High
    Political campaign revenue benefit
    $13 million
    low materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Cloud Communications
    Total revenue less messaging surcharge revenue of $68 million.
    		$152 million12%——
    Voice Solutions
    		$121 million9%——
    Programmable Messaging
    Commercial messaging growth: 18%Political campaign revenue: $1 million
    		$31 million22%——

    Operational metrics

    16
    Non-GAAP Gross Profit
    $90 million14% year over year
    Q2 FY26
    Non-GAAP Gross Margin
    59.4%improved one percentage point
    Q2 FY26
    Adjusted EBITDA
    $28 million27% growth
    Q2 FY26
    Adjusted EBITDA Margin
    18.3%record
    Q2 FY26
    Non-GAAP Net Income Growth
    15%
    Q2 FY26
    Non-GAAP EPS
    $0.37
    Q2 FY26

    Reflects net movement in fully diluted shares from new convertible issuance, 2028 convertible repurchase, and other capital activities.

    Software Services Revenue Growth
    66%compared with last year
    Q2 FY26

    Relatively small contributor to total revenue, but AI adoption converts directly into revenue.

    Net Retention Rate
    107%
    Q2 FY26

    Reported.

    Commercial Net Retention Rate
    113%growing 3% sequentially
    Q2 FY26

    Adjusted to normalize for cyclical political campaign revenue impact.

    Customer Name Retention Rate
    above 99%
    Q2 FY26

    Reflects mission critical nature and low churn.

    Average Annual Revenue Per Customer
    $256,000record
    Q2 FY26

    Reflects customer expansion and success attracting larger enterprise customers.

    Share Repurchases
    $15 million
    Q2 FY26

    Incremental amount deployed toward share repurchases.

    Share Repurchases
    $20 million
    YTD FY26

    Total cash used this year for share repurchases.

    Convertible Senior Notes Offering
    $316 million
    Q2 FY26

    Included the full exercise of the initial purchaser's option.

    2028 Convertible Notes Repurchase
    $122 million
    Q2 FY26

    Utilized proceeds from 2032 offering to repurchase a large portion of 2028 convertible notes.

    Political Campaign Revenue
    $1 million
    Q2 FY26

    Earned during the quarter from political campaign activities.

    Industry KPIs

    2
    MetricValueDetails
    Share buyback capital returned$15 millionUSD
    Net debt EBITDA deleveraging path1.6 timesx

    Product announcements

    3
    ProductTypeDetails
    Bandwidth Buildlaunch
    Maestro AI Voice Agent Integrationupdate
    AI Voice Bot Authenticationmilestone

    Deals & partnerships

    7
    one of the fastest growing AI native voice agent developersNew customer win for higher quality voice infrastructure, global reach, regulatory compliance, and higher control.million-dollar plus

    Customer outgrew previous provider, needed Bandwidth's capabilities to serve larger enterprises with production workloads.

    a growing healthcare system operating dozens of hospitals and 400 clinics across five states in the MidwestNew customer win through a channel partner to modernize legacy environment for the Cloud.million-dollar plus

    Selected Bandwidth's Communications Cloud and Maestro orchestration platform for native Webex calling integration, automated migration, and centralized operational control.

    a leading European appliance care and warranty providerNew customer win to modernize its customer engagement platform by consolidating fragmented communications across multiple European markets.million-dollar plus

    Selected Bandwidth's Global Communications Cloud combined with native Genesys Cloud BYOC integration.

    A global electronic brokerage serving investors in more than 200 countriesExpansion of a multi-year messaging relationship into global voice services.$3 million-plus

    Replaced regional carriers across its highly regulated markets with Bandwidth as a single global partner.

    one of our longest standing hyperscaler partnersSignificant expansion of Bandwidth's role supporting a key digital service internationally.$3 million-plus

    Proof that as these partners scale their AI and cloud platforms, they scale on Bandwidth.

    one of the largest text messaging platforms in the US, serving approximately 2,500 brandsExisting customer expansion, consolidating messaging volume onto Bandwidth's platform.million-dollar plus

    Moved over 95% of messaging volume from six different vendors to Bandwidth for scale, deliverability, and digital campaign management. Expect to add RCS in 2027.

    SalesforceExclusive critical infrastructure partner for voice and messaging within AgentForce Contact Center.

    Salesforce has publicly discussed customer momentum following the March launch. Bandwidth is embedded in Salesforce's governed workflows with required controls, tools, observability, and integration depth.

    Risks & headwinds

    2
    Political campaign revenue cyclicalityFY26

    Full-year FY26 expectation revised down from $15 million to $13 million.

    Mitigation: Management is increasing commercial cloud communications revenue expectations to offset this.

    Timing of new customer ramps and voice business decelerationQ2 FY26, with expected acceleration in H2 FY26 and into FY27.

    Voice solutions revenue grew 9% YoY in Q2 FY26, a deceleration from last quarter.

    Mitigation: Management expects large growth and acceleration from enterprise customers in the second half of the year and into 2027, attributing the Q2 deceleration to timing.

    What to watch in Q3 FY26

    5

    Salesforce AgentForce revenue contribution

    Next quarter (Q3 FY26) and beyond
    CurrentFirst traffic flowing
    TargetRevenue growth as customer deployments scale

    Why it matters

    This partnership is expected to be a significant growth driver, and its ramp will indicate the success of the strategic alliance.

    It's exciting to see the first traffic flowing across our platform and we expect revenue to begin growing as customer deployments scale.

    Q&A highlights

    8

    Will Salesforce AgentForce's global expansion benefit Bandwidth, and does the Veterans Administration deal fit into Bandwidth's services?

    Management confirmed that global expansion would be beneficial and that large opportunities like the VA deal fit well with their platform, with traffic already flowing.

    “The short answer to both dimensions of your Salesforce question are yes. Global expansion serving customers around the world fits very nicely into our underlying global platform and network. and would be beneficial.”

    asked by Patrick Walravens · answered by David Morken

    2 min read6 chapters

    Detailed Narrative

    01

    AI-Driven Enterprise Modernization

    Bandwidth is observing a significant shift in customer buying decisions, with AI and AI voice agents driving demand for trusted, compliant, and high-performance communications platforms. This trend is leading to larger customer wins across AI-native companies, global enterprises, hyperscalers, and software platforms, as AI's effectiveness is directly tied to the underlying communications infrastructure. The company is strategically positioned to capitalize on this market evolution.

    02

    Strategic Customer Wins and Expansions

    In Q2 FY26, Bandwidth secured five new million-dollar-plus customer wins and expansions, all of which incorporated Maestro or AI services. Notable examples include a rapidly growing AI-native voice agent developer, a Midwest healthcare system modernizing for the cloud, and a European appliance care provider consolidating fragmented communications. Existing partners, such as a global electronic brokerage and a hyperscaler, also deepened their strategic relationships, expanding their usage of Bandwidth's platform.

    03

    Innovation in AI Communications

    The company is accelerating innovation across four key areas: expanding its global network footprint into strategic markets, enhancing the Maestro platform with new capabilities like Bandwidth Build for autonomous agent provisioning, broadening its trust portfolio (including a patent for AI voice bot authentication), and investing in edge and data center infrastructure to power AI-driven communications. These investments are already contributing to improved gross margin and adjusted EBITDA.

    04

    Salesforce AgentForce Partnership

    Bandwidth has been designated as Salesforce's exclusive critical infrastructure partner for voice and messaging within the AgentForce Contact Center. Following its March launch, Salesforce has reported customer momentum, with initial traffic now flowing across Bandwidth's platform. Revenue contribution is anticipated to grow as customer deployments scale, aligning with a shared vision for integrated human and AI agent interactions.

    05

    Financial Performance and Outlook

    Bandwidth exceeded Q2 FY26 expectations across key financial metrics, including revenue, gross profit, adjusted EBITDA, non-GAAP EPS, and free cash flow. This strong performance has led to a raised full-year financial guidance. The company's confidence is underpinned by the revenue ramp from 13 new million-dollar-plus annual contracts secured since the beginning of last year and the structural margin gains derived from its owned and operated global network.

    06

    Capital Allocation and Balance Sheet

    During Q2 FY26, Bandwidth deployed an additional $15 million for share repurchases, acquiring 263,000 shares. The company also completed a $316 million convertible senior notes offering due 2032, utilizing approximately $122 million of the net proceeds to repurchase a significant portion of its 2028 convertible notes, reducing the outstanding principal to $28 million. Net leverage closed at 1.6x, improving the maturity profile and lowering financing costs.

    AI-generated summary of the company’s earnings call. Not investment advice.