band-2024063000015144162024Q2FALSE--12-310.01098570.0055781276353xbrli:sharesiso4217:USDiso4217:USDxbrli:sharesxbrli:pureband:quarterband:day00015144162024-01-012024-06-300001514416us-gaap:CommonClassAMember2024-07-290001514416us-gaap:CommonClassBMember2024-07-2900015144162024-06-3000015144162023-12-310001514416us-gaap:CommonClassAMember2024-06-300001514416us-gaap:CommonClassAMember2023-12-310001514416us-gaap:CommonClassBMember2023-12-310001514416us-gaap:CommonClassBMember2024-06-3000015144162024-04-012024-06-3000015144162023-04-012023-06-3000015144162023-01-012023-06-300001514416us-gaap:CommonClassAMemberus-gaap:CommonStockMember2022-12-310001514416us-gaap:CommonClassBMemberus-gaap:CommonStockMember2022-12-310001514416us-gaap:AdditionalPaidInCapitalMember2022-12-310001514416us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310001514416us-gaap:RetainedEarningsMember2022-12-3100015144162022-12-310001514416us-gaap:CommonClassAMemberus-gaap:CommonStockMember2023-01-012023-03-310001514416us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-3100015144162023-01-012023-03-310001514416us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310001514416us-gaap:RetainedEarningsMember2023-01-012023-03-310001514416us-gaap:CommonClassAMemberus-gaap:CommonStockMember2023-03-310001514416us-gaap:CommonClassBMemberus-gaap:CommonStockMember2023-03-310001514416us-gaap:AdditionalPaidInCapitalMember2023-03-310001514416us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-310001514416us-gaap:RetainedEarningsMember2023-03-3100015144162023-03-310001514416us-gaap:CommonClassAMemberus-gaap:CommonStockMember2023-04-012023-06-300001514416us-gaap:AdditionalPaidInCapitalMember2023-04-012023-06-300001514416us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-04-012023-06-300001514416us-gaap:RetainedEarningsMember2023-04-012023-06-300001514416us-gaap:CommonClassAMemberus-gaap:CommonStockMember2023-06-300001514416us-gaap:CommonClassBMemberus-gaap:CommonStockMember2023-06-300001514416us-gaap:AdditionalPaidInCapitalMember2023-06-300001514416us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-300001514416us-gaap:RetainedEarningsMember2023-06-3000015144162023-06-300001514416us-gaap:CommonClassAMemberus-gaap:CommonStockMember2023-07-012023-09-300001514416us-gaap:AdditionalPaidInCapitalMember2023-07-012023-09-3000015144162023-07-012023-09-300001514416us-gaap:CommonClassBMemberus-gaap:CommonStockMember2023-07-012023-09-300001514416us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-012023-09-300001514416us-gaap:RetainedEarningsMember2023-07-012023-09-300001514416us-gaap:CommonClassAMemberus-gaap:CommonStockMember2023-09-300001514416us-gaap:CommonClassBMemberus-gaap:CommonStockMember2023-09-300001514416us-gaap:AdditionalPaidInCapitalMember2023-09-300001514416us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-09-300001514416us-gaap:RetainedEarningsMember2023-09-3000015144162023-09-300001514416us-gaap:CommonClassAMemberus-gaap:CommonStockMember2023-10-012023-12-310001514416us-gaap:AdditionalPaidInCapitalMember2023-10-012023-12-3100015144162023-10-012023-12-310001514416us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-10-012023-12-310001514416us-gaap:RetainedEarningsMember2023-10-012023-12-310001514416us-gaap:CommonClassAMemberus-gaap:CommonStockMember2023-12-310001514416us-gaap:CommonClassBMemberus-gaap:CommonStockMember2023-12-310001514416us-gaap:AdditionalPaidInCapitalMember2023-12-310001514416us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-310001514416us-gaap:RetainedEarningsMember2023-12-310001514416us-gaap:CommonClassAMemberus-gaap:CommonStockMember2024-01-012024-03-310001514416us-gaap:AdditionalPaidInCapitalMember2024-01-012024-03-3100015144162024-01-012024-03-310001514416us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-01-012024-03-310001514416us-gaap:RetainedEarningsMember2024-01-012024-03-310001514416us-gaap:CommonClassAMemberus-gaap:CommonStockMember2024-03-310001514416us-gaap:CommonClassBMemberus-gaap:CommonStockMember2024-03-310001514416us-gaap:AdditionalPaidInCapitalMember2024-03-310001514416us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-03-310001514416us-gaap:RetainedEarningsMember2024-03-3100015144162024-03-310001514416us-gaap:CommonClassAMemberus-gaap:CommonStockMember2024-04-012024-06-300001514416us-gaap:AdditionalPaidInCapitalMember2024-04-012024-06-300001514416us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-04-012024-06-300001514416us-gaap:RetainedEarningsMember2024-04-012024-06-300001514416us-gaap:CommonClassAMemberus-gaap:CommonStockMember2024-06-300001514416us-gaap:CommonClassBMemberus-gaap:CommonStockMember2024-06-300001514416us-gaap:AdditionalPaidInCapitalMember2024-06-300001514416us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-06-300001514416us-gaap:RetainedEarningsMember2024-06-300001514416us-gaap:MoneyMarketFundsMember2024-06-300001514416us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2024-06-300001514416us-gaap:FairValueInputsLevel2Memberus-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2024-06-300001514416us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2024-06-300001514416us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2024-06-300001514416us-gaap:CommercialPaperMember2024-06-300001514416us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMemberus-gaap:FairValueInputsLevel1Member2024-06-300001514416us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMember2024-06-300001514416us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMember2024-06-300001514416us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMember2024-06-300001514416us-gaap:CashAndCashEquivalentsMember2024-06-300001514416us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueInputsLevel1Member2024-06-300001514416us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CashAndCashEquivalentsMember2024-06-300001514416us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CashAndCashEquivalentsMember2024-06-300001514416us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CashAndCashEquivalentsMember2024-06-300001514416us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2024-06-300001514416us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2024-06-300001514416us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2024-06-300001514416us-gaap:FairValueMeasurementsRecurringMember2024-06-300001514416us-gaap:MoneyMarketFundsMember2023-12-310001514416us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2023-12-310001514416us-gaap:FairValueInputsLevel2Memberus-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001514416us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001514416us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001514416us-gaap:CashAndCashEquivalentsMember2023-12-310001514416us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueInputsLevel1Member2023-12-310001514416us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CashAndCashEquivalentsMember2023-12-310001514416us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CashAndCashEquivalentsMember2023-12-310001514416us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CashAndCashEquivalentsMember2023-12-310001514416us-gaap:BankTimeDepositsMember2023-12-310001514416us-gaap:FairValueMeasurementsRecurringMemberus-gaap:BankTimeDepositsMemberus-gaap:FairValueInputsLevel1Member2023-12-310001514416us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:BankTimeDepositsMember2023-12-310001514416us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:BankTimeDepositsMember2023-12-310001514416us-gaap:FairValueMeasurementsRecurringMemberus-gaap:BankTimeDepositsMember2023-12-310001514416us-gaap:CommercialPaperMember2023-12-310001514416us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMemberus-gaap:FairValueInputsLevel1Member2023-12-310001514416us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMember2023-12-310001514416us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMember2023-12-310001514416us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMember2023-12-310001514416us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2023-12-310001514416us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001514416us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001514416us-gaap:FairValueMeasurementsRecurringMember2023-12-310001514416us-gaap:ConvertibleDebtMemberband:ZeroPointTwoFivePercentConvertibleSeniorNotesDue2026Member2024-06-300001514416us-gaap:ConvertibleDebtMemberband:ZeroPointFiveZeroPercentConvertibleSeniorNotesDue2028Member2024-06-300001514416us-gaap:ConvertibleDebtMemberband:ZeroPointTwoFivePercentConvertibleSeniorNotesDue2026Member2023-12-310001514416us-gaap:ConvertibleDebtMemberband:ZeroPointFiveZeroPercentConvertibleSeniorNotesDue2028Member2023-12-310001514416us-gaap:FurnitureAndFixturesMember2024-06-300001514416us-gaap:FurnitureAndFixturesMember2023-12-310001514416band:ComputerAndOfficeEquipmentMember2024-06-300001514416band:ComputerAndOfficeEquipmentMember2023-12-310001514416band:TelecommunicationsEquipmentMember2024-06-300001514416band:TelecommunicationsEquipmentMember2023-12-310001514416us-gaap:LeaseholdImprovementsMember2024-06-300001514416us-gaap:LeaseholdImprovementsMember2023-12-310001514416us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2024-06-300001514416us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2023-12-310001514416us-gaap:SoftwareDevelopmentMember2024-06-300001514416us-gaap:SoftwareDevelopmentMember2023-12-310001514416us-gaap:AutomobilesMember2024-06-300001514416us-gaap:AutomobilesMember2023-12-310001514416us-gaap:LandMember2024-06-300001514416us-gaap:LandMember2023-12-310001514416us-gaap:LandImprovementsMember2024-06-300001514416us-gaap:LandImprovementsMember2023-12-310001514416us-gaap:CostOfSalesMember2024-04-012024-06-300001514416us-gaap:CostOfSalesMember2023-04-012023-06-300001514416us-gaap:CostOfSalesMember2024-01-012024-06-300001514416us-gaap:CostOfSalesMember2023-01-012023-06-300001514416us-gaap:ResearchAndDevelopmentExpenseMember2024-04-012024-06-300001514416us-gaap:ResearchAndDevelopmentExpenseMember2023-04-012023-06-300001514416us-gaap:ResearchAndDevelopmentExpenseMember2024-01-012024-06-300001514416us-gaap:ResearchAndDevelopmentExpenseMember2023-01-012023-06-300001514416us-gaap:SellingAndMarketingExpenseMember2024-04-012024-06-300001514416us-gaap:SellingAndMarketingExpenseMember2023-04-012023-06-300001514416us-gaap:SellingAndMarketingExpenseMember2024-01-012024-06-300001514416us-gaap:SellingAndMarketingExpenseMember2023-01-012023-06-300001514416us-gaap:GeneralAndAdministrativeExpenseMember2024-04-012024-06-300001514416us-gaap:GeneralAndAdministrativeExpenseMember2023-04-012023-06-300001514416us-gaap:GeneralAndAdministrativeExpenseMember2024-01-012024-06-300001514416us-gaap:GeneralAndAdministrativeExpenseMember2023-01-012023-06-300001514416us-gaap:CustomerRelationshipsMember2024-06-300001514416us-gaap:CustomerRelationshipsMember2023-12-310001514416us-gaap:DevelopedTechnologyRightsMember2024-06-300001514416us-gaap:DevelopedTechnologyRightsMember2023-12-310001514416us-gaap:OtherIntangibleAssetsMember2024-06-300001514416us-gaap:OtherIntangibleAssetsMember2023-12-310001514416us-gaap:LicensingAgreementsMember2024-06-300001514416us-gaap:LicensingAgreementsMember2023-12-310001514416band:BankOfAmericaCreditAgreementMemberus-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2023-08-010001514416us-gaap:LetterOfCreditMemberband:BankOfAmericaCreditAgreementMemberus-gaap:LineOfCreditMember2023-08-010001514416band:BankOfAmericaCreditAgreementMemberus-gaap:LineOfCreditMemberus-gaap:BridgeLoanMember2023-08-010001514416band:BankOfAmericaCreditAgreementMemberus-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2024-05-010001514416band:BankOfAmericaCreditAgreementMemberus-gaap:LineOfCreditMemberus-gaap:BridgeLoanMember2024-05-010001514416band:BankOfAmericaCreditAgreementMemberus-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:SecuredOvernightFinancingRateSofrMember2023-08-012023-08-010001514416band:BankOfAmericaCreditAgreementMembersrt:MinimumMemberus-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:SecuredOvernightFinancingRateSofrMember2023-08-012023-08-010001514416band:BankOfAmericaCreditAgreementMemberus-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:SecuredOvernightFinancingRateSofrMembersrt:MaximumMember2023-08-012023-08-010001514416band:BankOfAmericaCreditAgreementMemberus-gaap:BaseRateMembersrt:MinimumMemberus-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2023-08-012023-08-010001514416band:BankOfAmericaCreditAgreementMemberus-gaap:BaseRateMemberus-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMembersrt:MaximumMember2023-08-012023-08-010001514416band:BankOfAmericaCreditAgreementMembersrt:MinimumMemberus-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2023-08-012023-08-010001514416band:BankOfAmericaCreditAgreementMemberus-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMembersrt:MaximumMember2023-08-012023-08-010001514416band:VotingCommonStockMember2023-08-012023-08-010001514416us-gaap:NonvotingCommonStockMember2023-08-012023-08-010001514416us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2024-06-300001514416us-gaap:OtherNoncurrentAssetsMember2024-06-300001514416us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2023-12-310001514416us-gaap:OtherNoncurrentAssetsMember2023-12-310001514416band:BankOfAmericaCreditAgreementMemberus-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2024-06-300001514416us-gaap:ConvertibleDebtMemberband:ZeroPointTwoFivePercentConvertibleSeniorNotesDue2026Member2020-02-280001514416us-gaap:ConvertibleDebtMemberband:ZeroPointTwoFivePercentConvertibleSeniorNotesDue2026Member2020-02-012020-02-280001514416us-gaap:CommonClassAMember2020-02-280001514416us-gaap:ConvertibleDebtMemberband:ZeroPointTwoFivePercentConvertibleSeniorNotesDue2026Member2024-05-090001514416us-gaap:ConvertibleDebtMemberband:ZeroPointTwoFivePercentConvertibleSeniorNotesDue2026Member2024-05-092024-05-090001514416us-gaap:ConvertibleDebtMemberband:ZeroPointTwoFivePercentConvertibleSeniorNotesDue2026Member2024-01-012024-06-300001514416us-gaap:ConvertibleDebtMemberband:ZeroPointFiveZeroPercentConvertibleSeniorNotesDue2028Member2021-03-310001514416us-gaap:ConvertibleDebtMemberband:ZeroPointFiveZeroPercentConvertibleSeniorNotesDue2028Member2021-03-012021-03-310001514416us-gaap:CommonClassAMember2021-03-310001514416band:ZeroPointTwoFivePercentConvertibleSeniorNotesDue2026Member2024-01-012024-06-300001514416us-gaap:ConvertibleDebtMemberus-gaap:DebtInstrumentRedemptionPeriodOneMemberus-gaap:CommonClassAMemberband:ZeroPointTwoFivePercentConvertibleSeniorNotesDue2026Member2024-01-012024-06-300001514416us-gaap:ConvertibleDebtMember2024-06-300001514416us-gaap:ConvertibleDebtMember2023-12-310001514416band:ZeroPointTwoFivePercentConvertibleSeniorNotesDue2026Member2024-04-012024-06-300001514416band:ZeroPointTwoFivePercentConvertibleSeniorNotesDue2026Member2023-04-012023-06-300001514416band:ZeroPointTwoFivePercentConvertibleSeniorNotesDue2026Member2023-01-012023-06-300001514416band:ZeroPointFiveZeroPercentConvertibleSeniorNotesDue2028Member2024-04-012024-06-300001514416band:ZeroPointFiveZeroPercentConvertibleSeniorNotesDue2028Member2023-04-012023-06-300001514416band:ZeroPointFiveZeroPercentConvertibleSeniorNotesDue2028Member2024-01-012024-06-300001514416band:ZeroPointFiveZeroPercentConvertibleSeniorNotesDue2028Member2023-01-012023-06-300001514416us-gaap:ConvertibleDebtMemberband:ZeroPointFiveZeroPercentConvertibleSeniorNotesDue2028Member2021-03-1600015144162020-02-282020-02-2800015144162021-03-162021-03-160001514416us-gaap:CommonClassAMember2020-02-282020-02-280001514416us-gaap:CommonClassAMember2021-03-162021-03-160001514416us-gaap:ConvertibleDebtMemberus-gaap:CommonClassAMemberband:ZeroPointTwoFivePercentConvertibleSeniorNotesDue2026Member2020-02-012020-02-280001514416us-gaap:ConvertibleDebtMemberband:ZeroPointFiveZeroPercentConvertibleSeniorNotesDue2028Memberus-gaap:CommonClassAMember2021-03-012021-03-310001514416srt:NorthAmericaMember2024-04-012024-06-300001514416srt:NorthAmericaMember2023-04-012023-06-300001514416srt:NorthAmericaMember2024-01-012024-06-300001514416srt:NorthAmericaMember2023-01-012023-06-300001514416band:NonNorthAmericaMember2024-04-012024-06-300001514416band:NonNorthAmericaMember2023-04-012023-06-300001514416band:NonNorthAmericaMember2024-01-012024-06-300001514416band:NonNorthAmericaMember2023-01-012023-06-300001514416band:NonNorthAmericaMember2024-06-300001514416band:NonNorthAmericaMember2023-12-310001514416us-gaap:EmployeeStockOptionMember2024-06-300001514416us-gaap:EmployeeStockOptionMember2023-12-310001514416us-gaap:RestrictedStockUnitsRSUMember2024-06-300001514416us-gaap:RestrictedStockUnitsRSUMember2023-12-310001514416us-gaap:StockCompensationPlanMember2024-06-300001514416us-gaap:StockCompensationPlanMember2023-12-3100015144162023-01-012023-12-310001514416us-gaap:RestrictedStockUnitsRSUMember2024-01-012024-06-300001514416band:OfficeSpaceMember2024-06-300001514416us-gaap:EmployeeStockOptionMember2024-01-012024-06-300001514416us-gaap:EmployeeStockOptionMember2023-01-012023-06-300001514416us-gaap:RestrictedStockUnitsRSUMember2024-01-012024-06-300001514416us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-06-300001514416us-gaap:ConvertibleDebtSecuritiesMember2024-01-012024-06-300001514416us-gaap:ConvertibleDebtSecuritiesMember2023-01-012023-06-300001514416band:RebeccaGBottorffMember2024-01-012024-06-300001514416band:DevinM.KrupkaMember2024-01-012024-06-300001514416band:DevinM.KrupkaMember2024-04-012024-06-300001514416band:RebeccaGBottorffMember2024-04-012024-06-300001514416band:DevinM.KrupkaMember2024-06-300001514416band:RebeccaGBottorffMember2024-06-30
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________
FORM 10-Q
__________________________________ | | | | | |
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2024
OR | | | | | |
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 001-38285
BANDWIDTH INC.
(Exact name of registrant as specified in its charter)
__________________________________
| | | | | | | | |
| Delaware | | 56-2242657 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification Number) |
2230 Bandmate Way
Raleigh, NC 27607
(Address of principal executive offices) (Zip Code)
(800) 808-5150
(Registrant’s telephone number, including area code)
__________________________________
Securities Registered Pursuant to Section 12(b) of the Act: | | | | | | | | | | | | | | |
| Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
| Class A Common Stock, par value $0.001 per share | | BAND | | NASDAQ Global Select Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | |
| Large accelerated filer | ☐ | Accelerated filer | ☒ |
| Non-accelerated filer | ☐ | Smaller reporting company | ☐ |
| Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of July 29, 2024, 25,340,464 shares of the registrant’s Class A common stock and 1,958,028 shares of registrant’s Class B common stock were outstanding.
Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements contained in this Quarterly Report on Form 10-Q, other than statements of historical fact, are forward-looking statements. Forward-looking statements generally can be identified by the words “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “would,” “project,” “plan,” “estimate,” or “continue,” or the negative of these words or other similar terms or expressions that concern our expectations strategy, plans or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
•our beliefs regarding the impact of macroeconomic conditions, including inflationary and/or recessionary pressures, on our business and financial condition;
•our ability to attract and retain customers, including large enterprises;
•our approach to identifying, attracting and keeping new and existing customers, as well as our expectations regarding customer turnover;
•our beliefs regarding network traffic growth and other trends related to the usage of our products and services;
•the impact of our customers’ violation of applicable laws, our policies or other misuse of our platform;
•our ability to successfully defend our network, systems and data against ever-evolving cybersecurity threats, including denial-of-service and ransomware attacks;
•our expectations regarding revenue, costs, expenses, gross margin, dollar based net retention rate, adjusted EBITDA, non-generally accepted accounting principles in the United States of America (“GAAP”) net income and capital expenditures;
•our beliefs regarding the growth of our business and how that impacts our liquidity and capital resources requirements;
•our expectations about the impact of public health epidemics, such as COVID-19, or natural disasters on the global economy and our business, results of operations and financial condition;
•the sufficiency of our cash and cash equivalents to meet our liquidity needs;
•our ability to attract, train, and retain qualified employees and key personnel;
•our beliefs regarding the expense and productivity of and competition for our sales force;
•our expectations regarding headcount;
•our ability to maintain and benefit from our corporate culture;
•our plans to further invest in and grow our business, including international offerings, and our ability to effectively manage our growth and associated investments;
•our ability to introduce new products and services and enhance existing products and services;
•our ability to successfully integrate and benefit from any strategic acquisitions, including our acquisition of Voxbone (as defined herein), or future strategic acquisitions or investments;
•our ability to effectively manage our international operations and expansion;
•our ability to compete successfully against current and future competitors;
•the evolution of technology affecting our products, services and markets;
•the impact of certain new accounting standards and guidance, as well as the time and cost of continued compliance with existing rules and standards;
•our beliefs regarding the use of Non-GAAP financial measures;
•our ability to comply with modified or new industry standards, laws and regulations applicable to our products, services and business, including the General Data Protection Regulation (“GDPR”), the California Consumer Privacy Act of 2018 and other privacy regulations that may be implemented in the future, and Secure Telephone Identity Revisited and Signature-based Handling of Asserted Information Using toKENs (“STIR/SHAKEN”), and other robocalling prevention and anti-spam standards and increased costs associated with such compliance;
•our ability to manage fees that have been or may be instituted by network providers that increase our costs;
•our ability to maintain, protect and enhance our intellectual property;
•our expectations regarding litigation and other pending or potential disputes;
•our ability to service the interest on our Convertible Notes (as defined herein) and repay such Convertible Notes, to the extent required; and
•other risks related to our indebtedness.
We caution you that the foregoing list may not contain all the forward-looking statements made in this Quarterly Report on Form 10-Q.
You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
BANDWIDTH INC.
Condensed Consolidated Balance Sheets
(In thousands, except share and per share amounts)
(Unaudited)
| | | | | | | | | | | |
| As of June 30, | | As of December 31, |
| |
| 2024 | | 2023 |
| Assets | | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 62,044 | | | $ | 131,987 | |
| | | |
| Marketable securities | 14,399 | | | 21,488 | |
| | | |
| Accounts receivable, net of allowance for doubtful accounts | 85,576 | | | 78,155 | |
| Deferred costs | 3,871 | | | 4,155 | |
| Prepaid expenses and other current assets | 15,492 | | | 16,990 | |
| | | |
| | | |
| Total current assets | 181,382 | | | 252,775 | |
| Property, plant and equipment, net | 173,400 | | | 177,864 | |
| Operating right-of-use asset, net | 155,484 | | | 157,507 | |
| Intangible assets, net | 155,966 | | | 166,914 | |
| Deferred costs, non-current | 4,800 | | | 4,586 | |
| Other long-term assets | 4,851 | | | 5,530 | |
| Goodwill | 326,220 | | | 335,872 | |
| | | |
| | | |
| Total assets | $ | 1,002,103 | | | $ | 1,101,048 | |
| Liabilities and stockholders’ equity | | | |
| Current liabilities: | | | |
| Accounts payable | $ | 31,933 | | | $ | 34,208 | |
| Accrued expenses and other current liabilities | 69,256 | | | 69,014 | |
| Current portion of deferred revenue | 7,685 | | | 8,059 | |
| Advanced billings | 4,111 | | | 6,027 | |
| Operating lease liability, current | 3,478 | | | 5,463 | |
| | | |
| Line of credit, current portion | 40,000 | | | — | |
| | | |
| | | |
| Total current liabilities | 156,463 | | | 122,771 | |
| Other liabilities | 354 | | | 386 | |
| Operating lease liability, net of current portion | 220,497 | | | 220,548 | |
| | | |
| Deferred revenue, net of current portion | 8,142 | | | 8,406 | |
| | | |
| Deferred tax liability | 28,540 | | | 33,021 | |
| Convertible senior notes | 280,660 | | | 418,526 | |
| Total liabilities | 694,656 | | | 803,658 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| Commitments and contingencies (Note 12) | | | |
| Stockholders’ equity: | | | |
Preferred stock: $0.001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding | — | | | — | |
Class A voting common stock: $0.001 par value; 100,000,000 shares authorized; 25,271,966 and 24,206,140 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively | 25 | | | 24 | |
Class B voting common stock: $0.001 par value; 20,000,000 shares authorized; 1,958,028 shares issued and outstanding as of June 30, 2024 and December 31, 2023 | 2 | | | 2 | |
| | | |
| | | |
| | | |
| Additional paid-in capital | 418,503 | | | 391,048 | |
| Accumulated deficit | (70,068) | | | (64,890) | |
| Accumulated other comprehensive loss | (41,015) | | | (28,794) | |
| Total stockholders’ equity | 307,447 | | | 297,390 | |
| Total liabilities and stockholders’ equity | $ | 1,002,103 | | | $ | 1,101,048 | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BANDWIDTH INC.
Condensed Consolidated Statements of Operations
(In thousands, except share and per share amounts)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended June 30, | | Six months ended June 30, |
| | 2024 | | 2023 | | 2024 | | 2023 | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| Revenue | | $ | 173,602 | | | $ | 145,874 | | | $ | 344,635 | | | $ | 283,718 | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| Cost of revenue | | 108,773 | | | 86,919 | | | 214,322 | | | 169,110 | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| Gross profit | | 64,829 | | | 58,955 | | | 130,313 | | | 114,608 | | | |
| Operating expenses | | | | | | | | | | |
| Research and development | | 28,132 | | | 24,852 | | | 57,044 | | | 50,513 | | | |
| Sales and marketing | | 26,066 | | | 25,754 | | | 55,205 | | | 50,783 | | | |
| General and administrative | | 16,705 | | | 15,868 | | | 34,554 | | | 32,587 | | | |
| Total operating expenses | | 70,903 | | | 66,474 | | | 146,803 | | | 133,883 | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| Operating loss | | (6,074) | | | (7,519) | | | (16,490) | | | (19,275) | | | |
| Other income, net | | | | | | | | | | |
| Net gain on extinguishment of debt | | 10,267 | | | — | | | 10,267 | | | 12,767 | | | |
| Gain on business interruption insurance recoveries | | — | | | 4,000 | | | — | | | 4,000 | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| Other (expense) income, net | | (469) | | | (218) | | | 514 | | | (746) | | | |
| Total other income, net | | 9,798 | | | 3,782 | | | 10,781 | | | 16,021 | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| Income (loss) before income taxes | | 3,724 | | | (3,737) | | | (5,709) | | | (3,254) | | | |
| Income tax benefit (provision) | | 331 | | | (153) | | | 531 | | | 2,975 | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| Net income (loss) | | $ | 4,055 | | | $ | (3,890) | | | $ | (5,178) | | | $ | (279) | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| Net income (loss) per share: | | | | | | | | | | |
| Basic | | $ | 0.15 | | | $ | (0.15) | | | $ | (0.19) | | | $ | (0.01) | | | |
| Diluted | | $ | (0.17) | | | $ | (0.15) | | | $ | (0.19) | | | $ | (0.01) | | | |
| | | | | | | | | | |
| Numerator used to compute net income (loss) per share: | | | | | | | | | | |
| Basic | | $ | 4,055 | | | $ | (3,890) | | | $ | (5,178) | | | $ | (279) | | | |
| Diluted | | $ | (5,043) | | | $ | (3,890) | | | $ | (5,178) | | | $ | (279) | | | |
| | | | | | | | | | |
| Weighted average number of common shares outstanding: | | | | | | | | | | |
| Basic | | 27,079,333 | | | 25,555,219 | | | 26,786,568 | | | 25,502,131 | | | |
| Diluted | | 29,500,598 | | | 25,555,219 | | | 26,786,568 | | | 25,502,131 | | | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BANDWIDTH INC.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(In thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended June 30, | | Six months ended June 30, |
| | 2024 | | 2023 | | 2024 | | 2023 | | |
| Net income (loss) | | $ | 4,055 | | | $ | (3,890) | | | $ | (5,178) | | | $ | (279) | | | |
| Other comprehensive (loss) income | | | | | | | | | | |
| Unrealized gain on marketable securities, net of income taxes | | 117 | | | 54 | | | 126 | | | 126 | | | |
| Foreign currency translation, net of income taxes | | (3,007) | | | 234 | | | (12,347) | | | 7,881 | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| Total other comprehensive (loss) income | | (2,890) | | | 288 | | | (12,221) | | | 8,007 | | | |
| Total comprehensive income (loss) | | $ | 1,165 | | | $ | (3,602) | | | $ | (17,399) | | | $ | 7,728 | | | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BANDWIDTH INC.
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(In thousands, except share amounts)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Class A voting
common stock | | Class B voting
common stock | | | | | | Additional paid-in capital | | Accumulated other comprehensive loss | | Accumulated deficit | | Total stockholders’ equity |
| Shares | Amount | | Shares | Amount | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| Balance at December 31, 2022 | 23,379,000 | | $ | 23 | | | 1,965,170 | | $ | 2 | | | | | | | | | $ | 364,913 | | | $ | (44,214) | | | $ | (48,547) | | | $ | 272,177 | |
| Exercises of vested stock options | 22,975 | | — | | | — | | — | | | | | | | | | 155 | | | — | | | — | | | 155 | |
| Vesting of restricted stock units | 171,950 | | 1 | | | — | | — | | | | | | | | | — | | | — | | | — | | | 1 | |
| Equity awards withheld for tax liability | (43,325) | | — | | | — | | — | | | | | | | | | (903) | | | — | | | — | | | (903) | |
| | | | | | | | | | | | | | | | | | | |
| Unrealized gain on marketable securities | — | | — | | | — | | — | | | | | | | | | — | | | 72 | | | — | | | 72 | |
| Foreign currency translation | — | | — | | | — | | — | | | | | | | | | — | | | 7,647 | | | — | | | 7,647 | |
| | | | | | | | | | | | | | | | | | | |
| Stock-based compensation | — | | — | | | — | | — | | | | | | | | | 6,649 | | | — | | | — | | | 6,649 | |
| Net income | — | | — | | | — | | — | | | | | | | | | — | | | — | | | 3,611 | | | 3,611 | |
| Balance at March 31, 2023 | 23,530,600 | | 24 | | | 1,965,170 | | 2 | | | | | | | | | 370,814 | | | (36,495) | | | (44,936) | | | 289,409 | |
| Exercises of vested stock options | 38,374 | | — | | | — | | — | | | | | | | | | 259 | | | — | | | — | | | 259 | |
| Vesting of restricted stock units | 58,084 | | — | | | — | | — | | | | | | | | | — | | | — | | | — | | | — | |
| Equity awards withheld for tax liability | (2,289) | | — | | | — | | — | | | | | | | | | (30) | | | — | | | — | | | (30) | |
| | | | | | | | | | | | | | | | | | | |
| Unrealized gain on marketable securities | — | | — | | | — | | — | | | | | | | | | — | | | 54 | | | — | | | 54 | |
| Foreign currency translation | — | | — | | | — | | — | | | | | | | | | — | | | 234 | | | — | | | 234 | |
| | | | | | | | | | | | | | | | | | | |
| Stock-based compensation | — | | — | | | — | | — | | | | | | | | | 5,866 | | | — | | | — | | | 5,866 | |
| Net loss | — | | — | | | — | | — | | | | | | | | | — | | | — | | | (3,890) | | | (3,890) | |
| Balance at June 30, 2023 | 23,624,769 | | 24 | | | 1,965,170 | | 2 | | | | | | | | | 376,909 | | | (36,207) | | | (48,826) | | | 291,902 | |
| | | | | | | | | | | | | | | | | | | |
| Vesting of restricted stock units | 51,132 | | — | | | — | | — | | | | | | | | | — | | | — | | | — | | | — | |
| Equity awards withheld for tax liability | (242) | | — | | | — | | — | | | | | | | | | (3) | | | — | | | — | | | (3) | |
| Conversion of Class B voting common stock to Class A voting common stock | 7,142 | | — | | | (7,142) | | — | | | | | | | | | — | | | — | | | — | | | — | |
| Unrealized loss on marketable securities | — | | — | | | — | | — | | | | | | | | | — | | | (129) | | | — | | | (129) | |
| Foreign currency translation | — | | — | | | — | | — | | | | | | | | | — | | | (12,760) | | | — | | | (12,760) | |
| | | | | | | | | | | | | | | | | | | |
| Stock-based compensation | — | | — | | | — | | — | | | | | | | | | 6,107 | | | — | | | — | | | 6,107 | |
| Net loss | — | | — | | | — | | — | | | | | | | | | — | | | — | | | (5,130) | | | (5,130) | |
| Balance at September 30, 2023 | 23,682,801 | | 24 | | | 1,958,028 | | 2 | | | | | | | | | 383,013 | | | (49,096) | | | (53,956) | | | 279,987 | |
| | | | | | | | | | | | | | | | | | | |
| Vesting of restricted stock units | 523,796 | | — | | | — | | — | | | | | | | | | — | | | — | | | — | | | — | |
| Equity awards withheld for tax liability | (457) | | — | | | — | | — | | | | | | | | | (5) | | | — | | | — | | | (5) | |
| | | | | | | | | | | | | | | | | | | |
| Unrealized loss on marketable securities | — | | — | | | — | | — | | | | | | | | | — | | | (245) | | | — | | | (245) | |
| Foreign currency translation | — | | — | | | — | | — | | | | | | | | | — | | | 20,577 | | | — | | | 20,577 | |
| Unrealized loss on employee benefit pension plan | — | | — | | | — | | — | | | | | | | | | — | | | (30) | | | — | | | (30) | |
| Stock-based compensation | — | | — | | | — | | — | | | | | | | | | 8,040 | | | — | | | — | | | 8,040 | |
| Net loss | — | | — | | | — | | — | | | | | | | | | — | | | — | | | (10,934) | | | (10,934) | |
| Balance at December 31, 2023 | 24,206,140 | | 24 | | | 1,958,028 | | 2 | | | | | | | | | 391,048 | | | (28,794) | | | (64,890) | | | 297,390 | |
| Exercises of vested stock options | 10,849 | | — | | | — | | — | | | | | | | | | 103 | | | — | | | — | | | 103 | |
| Vesting of restricted stock units | 920,435 | | 1 | | | — | | — | | | | | | | | | — | | | — | | | — | | | 1 | |
BANDWIDTH INC.
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(In thousands, except share amounts)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Class A voting
common stock | | Class B voting
common stock | | | | | | Additional paid-in capital | | Accumulated other comprehensive loss | | Accumulated deficit | | Total stockholders’ equity |
| Shares | Amount | | Shares | Amount | | | | | | | | |
| Equity awards withheld for tax liability | (116,747) | | — | | | — | | — | | | | | | | | | (2,267) | | | — | | | — | | | (2,267) | |
| | | | | | | | | | | | | | | | | | | |
| Unrealized gain on marketable securities | — | | — | | | — | | — | | | | | | | | | — | | | 9 | | | — | | | 9 | |
| Foreign currency translation | — | | — | | | — | | — | | | | | | | | | — | | | (9,340) | | | — | | | (9,340) | |
| | | | | | | | | | | | | | | | | | | |
| Stock-based compensation | — | | — | | | — | | — | | | | | | | | | 21,536 | | | — | | | — | | | 21,536 | |
| Net loss | — | | — | | | — | | — | | | | | | | | | — | | | — | | | (9,233) | | | (9,233) | |
| Balance at March 31, 2024 | 25,020,677 | | 25 | | | 1,958,028 | | 2 | | | | | | | | | 410,420 | | | (38,125) | | | (74,123) | | | 298,199 | |
| Exercises of vested stock options | 1,625 | | — | | | — | | — | | | | | | | | | 16 | | | — | | | — | | | 16 | |
| Vesting of restricted stock units | 251,015 | | — | | | — | | — | | | | | | | | | — | | | — | | | — | | | — | |
| Equity awards withheld for tax liability | (1,351) | | — | | | — | | — | | | | | | | | | (24) | | | — | | | — | | | (24) | |
| | | | | | | | | | | | | | | | | | | |
| Unrealized gain on marketable securities | — | | — | | | — | | — | | | | | | | | | — | | | 117 | | | — | | | 117 | |
| Foreign currency translation | — | | — | | | — | | — | | | | | | | | | — | | | (3,007) | | | — | | | (3,007) | |
| | | | | | | | | | | | | | | | | | | |
| Stock-based compensation | — | | — | | | — | | — | | | | | | | | | 8,091 | | | — | | | — | | | 8,091 | |
| Net income | — | | — | | | — | | — | | | | | | | | | — | | | — | | | 4,055 | | | 4,055 | |
| Balance at June 30, 2024 | 25,271,966 | | $ | 25 | | | 1,958,028 | | $ | 2 | | | | | | | | | $ | 418,503 | | | $ | (41,015) | | | $ | (70,068) | | | $ | 307,447 | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BANDWIDTH INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
| | | | | | | | | | | | | | |
| | Six months ended June 30, |
| | 2024 | | 2023 | | |
| Cash flows from operating activities | | | | | | |
| Net loss | | $ | (5,178) | | | $ | (279) | | | |
| | | | | | |
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities | | | | | | |
| Depreciation and amortization | | 24,714 | | | 18,692 | | | |
| Non-cash reduction to the right-of-use asset | | 2,007 | | | 3,242 | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| Amortization of debt discount and issuance costs | | 962 | | | 1,485 | | | |
| Stock-based compensation | | 23,699 | | | 15,383 | | | |
| | | | | | |
| Deferred taxes and other | | (4,116) | | | (5,225) | | | |
| | | | | | |
| | | | | | |
| Net gain on extinguishment of debt | | (10,267) | | | (12,767) | | | |
| Gain on business interruption insurance recoveries | | — | | | (4,000) | | | |
| | | | | | |
| Changes in operating assets and liabilities: | | | | | | |
| Accounts receivable, net of allowances | | (7,642) | | | 3,712 | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| Prepaid expenses and other assets | | 1,886 | | | (957) | | | |
| Accounts payable | | (1,112) | | | (6,171) | | | |
| Accrued expenses and other liabilities | | 3,968 | | | (12,464) | | | |
| | | | | | |
| Operating right-of-use liability | | (2,020) | | | (3,919) | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| Net cash provided by (used in) operating activities | | 26,901 | | | (3,268) | | | |
| Cash flows from investing activities | | | | | | |
| Purchase of property, plant and equipment | | (7,145) | | | (3,859) | | | |
| | | | | | |
| Capitalized software development costs | | (5,843) | | | (5,001) | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| Purchase of marketable securities | | (31,096) | | | (40,625) | | | |
| Proceeds from sales and maturities of marketable securities | | 38,312 | | | 81,233 | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| Proceeds from sale of business | | 469 | | | 835 | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| Net cash (used in) provided by investing activities | | (5,303) | | | 32,583 | | | |
| Cash flows from financing activities | | | | | | |
| Borrowings on line of credit | | 65,000 | | | — | | | |
| Repayments on line of credit | | (25,000) | | | — | | | |
| | | | | | |
| Payments on finance leases | | (44) | | | (90) | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| Net cash paid for debt extinguishment | | (128,451) | | | (51,259) | | | |
| | | | | | |
| | | | | | |
| Payment of debt issuance costs | | (354) | | | — | | | |
| Proceeds from exercises of stock options | | 119 | | | 413 | | | |
| | | | | | |
| Value of equity awards withheld for tax liabilities | | (2,290) | | | (1,000) | | | |
| | | | | | |
| Net cash used in financing activities | | (91,020) | | | (51,936) | | | |
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | | (608) | | | 27 | | | |
| Net decrease in cash, cash equivalents, and restricted cash | | (70,030) | | | (22,594) | | | |
| Cash, cash equivalents, and restricted cash, beginning of period | | 132,307 | | | 114,622 | | | |
| Cash, cash equivalents, and restricted cash, end of period | | $ | 62,277 | | | $ | 92,028 | | | |
| | | | | | |
| Reconciliation of cash, cash equivalents, and restricted cash, end of period | | | | | | |
| Cash and cash equivalents | | $ | 62,044 | | | $ | 91,824 | | | |
| Restricted cash included in prepaid expenses and other current assets | | 233 | | | 204 | | | |
| Total cash, cash equivalents, and restricted cash, end of period | | $ | 62,277 | | | $ | 92,028 | | | |
| | | | | | |
| Supplemental disclosure of cash flow information | | | | | | |
| Cash received from interest | | $ | (762) | | | $ | (417) | | | |
| Cash paid for taxes, net | | $ | 3,020 | | | $ | 2,593 | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| Supplemental disclosure of noncash investing and financing activities | | | | | | |
| Purchase of property, plant and equipment, accrued but not paid | | $ | 4,459 | | | $ | 2,924 | | | |
| Purchase of property and equipment through lease incentive | | $ | — | | | $ | 53,125 | | | |
| Purchase of property and equipment through use of escrow deposits | | $ | — | | | $ | 20,000 | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BANDWIDTH INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Organization and Description of Business
Bandwidth Inc. (together with its subsidiaries, “Bandwidth” or the “Company”) was founded in July 2000 and incorporated in Delaware on March 29, 2001. The Company’s headquarters are located in Raleigh, North Carolina. The Company is a global cloud-based, software-powered communications platform-as-a-service (“CPaaS”) provider that enables enterprises to create, scale and operate voice or messaging communications services across any mobile application or connected device.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Certain information and disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K, filed with the SEC on February 28, 2024.
The condensed consolidated balance sheet as of December 31, 2023, included herein, was derived from the audited financial statements as of that date, but does not include all disclosures, including certain notes required by GAAP on an annual reporting basis.
In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive income (loss) and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year 2024 or any future period.
Principles of Consolidation
The condensed consolidated financial statements include the accounts of Bandwidth Inc. and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the Company’s condensed consolidated financial statements in conformity with GAAP requires the Company to make estimates and judgments that affect the amounts reported in these financial statements and accompanying notes. These estimates in the condensed consolidated financial statements include, but are not limited to, allowance for doubtful accounts, reserve for expected credit losses, reserve for sales credits, recoverability of long lived and intangible assets, fair value of acquired intangible assets and goodwill, discount rates used in the valuation of right-of-use assets and lease liabilities, the fair value of the liability of the Company’s Convertible Notes (as defined herein), estimated period of benefit, valuation allowances on deferred tax assets, certain accrued expenses and contingencies, economic and demographic actuarial assumptions related to pension and other postretirement benefit costs and liabilities. Although the Company believes that the estimates it uses are
Notes to Condensed Consolidated Financial Statements (continued)
reasonable, due to the inherent uncertainty involved in making these estimates, actual results reported in future periods could differ from those estimates.
Marketable Securities
The Company classifies marketable securities as available-for-sale at the time of purchase and reevaluates such classification as of each balance sheet date. The Company may sell these securities at any time for use in current operations even if they have not yet reached maturity. As a result, the Company classifies investments with maturities greater than 90 days as marketable securities in the accompanying condensed consolidated balance sheets. The Company evaluates its investments to assess whether the amortized cost basis is in excess of estimated fair value and determines what amount of that difference, if any, is caused by expected credit losses. Allowances for credit losses are recognized as a charge in other income, net on the condensed consolidated statements of operations, and any remaining unrealized losses are included in accumulated other comprehensive loss on the condensed consolidated balance sheets. Due to the nature and investment grade of the Company’s marketable securities, there were no credit losses recorded for the three and six months ended June 30, 2024. There have been no impairment charges for any unrealized losses during the period.
Accounts Receivable and Current Expected Credit Losses
Accounts receivable are stated at realizable value, net of allowances, which includes an allowance for doubtful accounts and a reserve for expected credit losses. The allowance for doubtful accounts is based on management’s assessment of the collectability of its customer accounts. The Company regularly reviews the composition of the accounts receivable aging, historical bad debts, changes in payment patterns, customer creditworthiness, current economic trends, and reasonable and supportable forecasts about the future. Relevant risk characteristics include customer size and historical loss patterns. Management has evaluated the expected credit losses related to trade accounts receivable and determined that an allowance of approximately $2.8 million and $1.1 million for uncollectible accounts and customer balances that are disputed was required as of June 30, 2024 and December 31, 2023, respectively. Refer to Note 4, “Financial Statement Components” to these condensed consolidated financial statements, for a rollforward of the components of the allowances for the three and six months ended June 30, 2024 and 2023.
The Company includes unbilled receivables in its accounts receivable balance. Generally, these receivables represent earned revenue from services provided to customers, which will be billed in the next billing cycle. All amounts are considered collectible and billable. As of June 30, 2024 and December 31, 2023, unbilled receivables were $47.2 million and $43.6 million, respectively.
Concentration of Credit Risk
Financial instruments that are exposed to concentration of credit risk consist primarily of cash and cash equivalents, marketable securities and trade accounts receivable. The Company maintains its cash, cash equivalents and marketable securities with high credit-quality financial institutions. Certain balances held by such financial institutions exceed insured limits.
With regard to customers, credit evaluation and account monitoring procedures are used to minimize the risk of loss. The Company believes that no additional credit risk beyond amounts provided for by the allowance for doubtful accounts are inherent in accounts receivable. As of June 30, 2024 and December 31, 2023, no individual customer represented more than 10% of the Company’s accounts receivable, net of allowance for doubtful accounts.
For the three and six months ended June 30, 2024 and 2023, no individual customer represented more than 10% of the Company’s revenue.
Notes to Condensed Consolidated Financial Statements (continued)
Recent Accounting Pronouncements Not Yet Adopted
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires public entities to disclose information about their reportable segments’ significant expenses on an interim and annual basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of adopting this new accounting guidance on its financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). The amendments in this update require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate). The amendments also require entities on an annual basis to disclose disaggregated amounts of income taxes paid. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of adopting this new accounting guidance on its financial statements.
3. Fair Value Measurements
The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires use of observable inputs when available, and to minimize the use of unobservable inputs when determining fair value. The three tiers are defined as follows:
•Level 1. Observable inputs based on unadjusted quoted prices in active markets for identical assets or liabilities;
•Level 2. Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
•Level 3. Unobservable inputs for which there is little or no market data, which requires the Company to develop its own assumptions.
A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value as of June 30, 2024 and December 31, 2023 because of the relatively short duration of these instruments. Marketable securities consist of time deposits and commercial paper not otherwise classified as cash equivalents. All marketable securities are considered to be available-for-sale and are recorded at their estimated fair values. Unrealized gains and losses for available-for-sale securities are recorded in accumulated other comprehensive loss.
Notes to Condensed Consolidated Financial Statements (continued)
The Company evaluated its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting period. The following tables summarize the Company’s financial assets measured at fair value as of June 30, 2024 and December 31, 2023:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Amortized cost or carrying value | | Unrealized gains | | Unrealized losses | | Fair value measurements on a recurring basis
June 30, 2024 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| | | | | | | | | | | | | |
| (In thousands) |
| Financial assets: | | | | | | | | | | | | | |
| Cash and cash equivalents: | | | | | | | | | | | | | |
| Money market account | $ | 33,605 | | | $ | — | | | $ | — | | | $ | 33,605 | | | $ | — | | | $ | — | | | $ | 33,605 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Commercial paper | 19,586 | | | — | | | — | | | 19,586 | | | — | | | — | | | 19,586 | |
| | | | | | | | | | | | | |
| Total included in cash and cash equivalents | 53,191 | | | — | | | — | | | 53,191 | | | — | | | — | | | 53,191 | |
| Marketable securities: | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Commercial paper | 14,207 | | | 192 | | | — | | | 14,399 | | | — | | | — | | | 14,399 | |
| Total marketable securities | 14,207 | | | 192 | | | — | | | 14,399 | | | — | | | — | | | 14,399 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Total financial assets | $ | 67,398 | | | $ | 192 | | | $ | — | | | $ | 67,590 | | | $ | — | | | $ | — | | | $ | 67,590 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Amortized cost or carrying value | | Unrealized gains | | Unrealized losses | | Fair value measurements on a recurring basis
December 31, 2023 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| | | | | | | | | | | | | |
| (In thousands) |
| Financial assets: | | | | | | | | | | | | | |
| Cash and cash equivalents: | | | | | | | | | | | | | |
| Money market account | $ | 120,724 | | | $ | — | | | $ | — | | | $ | 120,724 | | | $ | — | | | $ | — | | | $ | 120,724 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Total included in cash and cash equivalents | 120,724 | | | — | | | — | | | 120,724 | | | — | | | — | | | 120,724 | |
| Marketable securities: | | | | | | | | | | | | | |
| Time deposits | 20,000 | | | — | | | — | | | 20,000 | | | — | | | — | | | 20,000 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Commercial paper | 1,422 | | | 66 | | | — | | | 1,488 | | | — | | | — | | | 1,488 | |
| Total marketable securities | 21,422 | | | 66 | | | — | | | 21,488 | | | — | | | — | | | 21,488 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Total financial assets | $ | 142,146 | | | $ | 66 | | | $ | — | | | $ | 142,212 | | | $ | — | | | $ | — | | | $ | 142,212 | |
The Company classifies its marketable securities as current assets as they are available for current operating needs. The following table summarizes the contractual maturities of marketable securities as of June 30, 2024:
| | | | | | | | | | | |
| Amortized cost | | Aggregate fair value |
| | | |
| (In thousands) |
| Financial assets: | | | |
| Less than one year | $ | 14,207 | | | $ | 14,399 | |
| | | |
| Total | $ | 14,207 | | | $ | 14,399 | |
As of June 30, 2024, the marketable securities were in an unrealized gain position. The Company has determined that (i) it does not have the intent to sell any of these investments and (ii) it is not more likely than not that it will be required to sell any of these investments before recovery of the entire amortized cost basis. As of June
Notes to Condensed Consolidated Financial Statements (continued)
30, 2024, the Company anticipates that it will recover the entire amortized cost basis of its marketable securities before maturity.
During the three and six months ended June 30, 2024, there were $36.9 million and $38.3 million, respectively, in maturities of marketable securities. There were no proceeds from sales of marketable securities for the three and six months ended June 30, 2024. There were $16.7 million and $42.9 million in maturities from marketable securities for the three and six months ended June 30, 2023, respectively. Proceeds from sales of marketable securities were $20.6 million and $38.3 million for the three and six months ended June 30, 2023, respectively. The Company determines realized gains and losses on sale of marketable securities using the specific identification method and records such gains and losses in other (expense) income, net on the condensed consolidated statements of operations. Interest earned on marketable securities was $0.2 million and $0.6 million for the three and six months ended June 30, 2024, respectively, and $0.4 million and $0.7 million for the three and six months ended June 30, 2023, respectively. The interest is recorded in other income, net, on the accompanying condensed consolidated statements of operations. Accrued interest receivable is recorded in prepaid expenses and other current assets on the accompanying condensed consolidated balance sheets.
As of June 30, 2024, the fair value of the 2026 Convertible Notes and 2028 Convertible Notes, as further described in Note 8, “Debt,” to these condensed consolidated financial statements, was approximately $31.4 million and $185.4 million, respectively. As of December 31, 2023, the fair value of the 2026 Convertible Notes and the 2028 Convertible Notes was approximately $145.5 million and $157.6 million, respectively. The fair value was determined based on the closing price for the Convertible Notes on the last trading day of the reporting period and is considered as Level 2 in the fair value hierarchy.
4. Financial Statement Components
Accounts receivable, net of allowances consist of the following:
| | | | | | | | | | | |
| As of June 30, | | As of December 31, |
| |
| 2024 | | 2023 |
| | | |
| (In thousands) |
| Trade accounts receivable | $ | 40,763 | | | $ | 35,612 | |
| Unbilled accounts receivable | 47,161 | | | 43,631 | |
Allowance for doubtful accounts and reserve for expected credit losses | (2,843) | | | (1,128) | |
| Other accounts receivable | 495 | | | 40 | |
| Total accounts receivable, net | $ | 85,576 | | | $ | 78,155 | |
Components of allowance for doubtful accounts and reserve for expected credit losses are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended June 30, | | Six months ended June 30, |
| 2024 | | 2023 | | 2024 | | 2023 | | |
| | | | | | | | | |
| (In thousands) | | |
| Balance, beginning of period | $ | (2,508) | | | $ | (1,382) | | | $ | (1,128) | | | $ | (1,191) | | | |
| Charged to bad debt expense, net of reversals | (419) | | | (421) | | | (1,876) | | | (725) | | | |
Deductions (1) | 78 | | | 156 | | | 138 | | | 304 | | | |
| Impact of foreign currency translation | 6 | | |