Bandwidth NASDAQ: BAND reported third-quarter 2026 revenue of $234 million, up 22% from a year earlier, as the cloud communications provider cited enterprise voice demand, messaging growth and expanding adoption of its software offerings.
Adjusted EBITDA rose 43% year over year to a record $35 million, producing a 22% adjusted EBITDA margin. Non-GAAP net income was $20 million, or $0.50 per diluted share, while free cash flow totaled $33 million.
Chief Executive Officer David Morken said the company raised the midpoint of its full-year outlook across all guidance measures and expects the fourth quarter to mark a turning point in its growth rate. He also said Bandwidth has growing confidence that cloud communications revenue can grow at a double-digit rate in 2027, even as it laps political messaging revenue recorded in 2026.
Cloud communications and software growth
Cloud communications revenue, which excludes messaging surcharge revenue, reached $158 million, up 12% year over year. Programmable Messaging revenue increased 26% to $33 million, including 14% commercial messaging growth and about $3 million in political campaign-related messaging revenue.
Voice revenue rose 9% to $125 million. Enterprise Voice grew 15%, while Global Voice Plans increased 8%.
Software services revenue climbed 68% from a year earlier to $7 million. The company exited the quarter with software services annual recurring revenue above $30 million, more than double its level nine months earlier, according to Chief Financial Officer Daryl Raiford. Software services represented about 5% of cloud communications revenue.
Bandwidth reported a net retention rate of 113%. Its commercial net retention rate, adjusted for cyclical political campaign revenue, was 114%. Customer name retention remained above 99%, and average annual revenue per customer reached a record $273,000.
Raiford said non-GAAP gross margin improved nearly 300 basis points to 60.6%, while GAAP gross margin declined 200 basis points to 36%, which he attributed solely to higher carrier messaging surcharge revenue.
Enterprise wins and AI-focused voice infrastructure
Morken emphasized the company’s opportunity in communications tied to artificial intelligence, which management referred to during the call as “super intelligence,” or SI. He said Bandwidth’s owned communications network, phone-number inventory, caller identity capabilities and carrier interconnections position it to support voice and messaging agents that require low latency, trusted identities and regulatory coverage.
The company signed 11 deals with annual contract value above $1 million since the start of 2026. Those customers are deploying in phases, and management expects the associated revenue to enter results over the next 12 months.
Bandwidth said it won a financial services customer that is modernizing its contact center and integrating an SI agent. The customer selected Bandwidth over a major CPaaS competitor, citing the company’s low-latency network, toll-free redundancy, Maestro routing and observability tools, Genesys integration and support, according to Morken.
The company also highlighted an expansion with a consumer privacy company that uses millions of Bandwidth phone numbers and has introduced an SI-powered call-screening service using Bandwidth voice infrastructure and transcription capabilities. Another customer, an enterprise network and communications provider, adopted Bandwidth’s platform voice offering while retaining its own phone numbers. A specialized communications provider also selected Bandwidth to expand international calling services.
Management said it expects Enterprise Voice growth to exceed 20% in the fourth quarter and continue at healthy, increasing rates through 2027. Raiford described Global Voice Plans as a roughly $50 million revenue base with exposure to contact-center usage growth as well as stable connectivity services, including emergency services. He said the company does not expect that business to accelerate meaningfully above market rates in the near term.
Salesforce relationship expands globally
Bandwidth in September announced an expanded relationship with Salesforce, becoming the first certified carrier supporting the global rollout of Salesforce’s native contact center through a bring-your-own-carrier model. The partnership covers more than 25 countries across Europe, the United Kingdom, Australia and New Zealand, with additional markets planned.
Morken said the Salesforce opportunity was not included in Bandwidth’s 2026 guidance but is expected to contribute in 2027. He said the company believes Salesforce could potentially become its largest customer by the end of 2028, though he did not provide a formal forecast for the relationship.
Management said the international arrangement combines Bandwidth’s global network and Maestro orchestration platform to help enterprises navigate cross-border regulations, local network requirements and complex transitions from existing carriers.
Raised 2026 outlook and capital actions
For full-year 2026, Bandwidth now expects:
- Total revenue of $905 million to $910 million, representing 20% year-over-year growth at the midpoint.
- Cloud communications revenue of $624 million to $626 million, or 11% growth at the midpoint.
- Adjusted EBITDA of $124 million to $125 million, representing 34% growth at the midpoint and a 20% margin.
- Non-GAAP earnings per share of $1.73 to $1.79.
The company raised its expectation for commercial cloud communications revenue by $4 million while reducing its expected political campaign revenue by $3 million, to $10 million for the full year.
Bandwidth ended the quarter with $176 million in cash and marketable securities. During the quarter, it repurchased 225,000 shares for $10 million at an average price of $44.20 per share. It also repurchased $21 million in principal amount of its 2028 convertible notes at a discount, leaving about $7 million of principal outstanding.
The company said its net leverage declined to 1.3 times at quarter-end from 1.6 times at the end of the prior quarter. Bandwidth also expanded its revolving credit facility to $200 million and extended its maturity to Oct. 26, 2031. No amounts were drawn under the facility.
Separately, Bandwidth announced that Chip Schroeder joined its board of directors. Morken said Schroeder spent more than a decade at Silver Lake advising large technology companies on go-to-market strategy and capital allocation.
About Bandwidth (NASDAQ:BAND)
Bandwidth Inc NASDAQ: BAND is a cloud communications company that provides application programming interfaces (APIs) and related network services for integrating voice, messaging and emergency communications into software applications. Its platform is designed for businesses, communications providers and technology companies that need to build communications capabilities into customer-facing products and internal workflows.
The company's offerings include programmable voice, text messaging and toll-free messaging services, as well as emergency calling capabilities through its E911 solution.
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