Bandwidth Q2 Earnings Call Highlights AI Shift, 2026 Outlook Raised

BAND Targets AI Communications Growth

CEO David Morken said AI is changing enterprise purchasing decisions, increasing demand for trusted communications platforms that can support production AI interactions. He highlighted opportunities across AI-native companies, Global 2000 customers, hyperscalers and software platforms.

Morken noted that Bandwidth secured five new $1 million-plus customer wins and expansions in the second quarter, with all including Maestro or AI services. He emphasized that customers are moving from AI experimentation to scaled deployments.

The company reported revenues of $219.9 million, which exceeded the Zacks Consensus Estimate of $217 million, while non-GAAP EPS of $0.37 surpassed the Zacks Consensus Estimate of $0.36.

Bandwidth Expands Enterprise Wins

Bandwidth highlighted several strategic customer additions, including healthcare, European enterprise, brokerage, hyperscaler and messaging platform expansions. Management said these wins reflect demand for global coverage, compliance and orchestration capabilities.

CFO Daryl Raiford said cloud communications revenues reached $152 million, up 12% year over year, while voice revenue grew 9% and programmable messaging revenues increased 22%.

Management also pointed to customer expansion metrics, including a 107% reported net retention rate and a commercial net retention rate of 113% after adjusting for political campaign revenue effects.

BAND Builds Network & Maestro

Morken discussed investments in Bandwidth’s global Communications Cloud, Maestro orchestration platform and trust capabilities as key priorities. The company also introduced Bandwidth Build to enable autonomous agent-based provisioning of communication services.

Management said Maestro adoption is expanding as enterprises seek greater control over AI-powered communications across multiple platforms. The company is also investing in network expansion and infrastructure closer to end users.

Bandwidth said its owned and operated network contributed to margin expansion, with non-GAAP gross margin improving to 59.4% and Adjusted EBITDA margin reaching 18.3%.

Bandwidth Raises 2026 Outlook

Bandwidth raised full-year 2026 guidance, citing sustained demand strength and improving profitability. Revenues are now expected to be between $900 million and $910 million, with Adjusted EBITDA projected at $123 million to $125 million.

For the third quarter, management expects revenues of $231-$235 million, Adjusted EBITDA of $32 million to $34 million and non-GAAP EPS of $0.45 to $0.49.

Raiford said recent enterprise wins provide visibility, with 13 new $1 million-plus annual contracts won since the beginning of last year. He also cited the company’s usage-based model as a driver of cash generation.

BAND Faces Investor Questions

Analysts pressed management on Salesforce Agentforce Contact Center, voice growth timing and the ramp of large customer contracts. Morken said Salesforce-related opportunities are already generating traffic across Bandwidth’s platform.

A Citizens JMP Securities analyst asked about margins, and Raiford said the company remains on track for approximately 60% non-GAAP gross margin for the full year.

A Needham analyst asked about AI-related customer volumes, and management explained that many customers are beginning with AI use cases while planning additional deployments throughout contract lifecycles.

Bandwidth Ends Call With Focus

Bandwidth ended the call emphasizing AI adoption, enterprise modernization and continued investment in communications infrastructure. Management said these themes are driving customer wins across multiple categories.

The company also strengthened its balance sheet during the second quarter through a convertible notes offering and reduced its 2028 convertible maturity exposure.

Zacks Signals

BAND carries a Zacks Rank #2 (Buy). The Zacks Rank focuses on earnings estimate revisions and is designed to help identify stocks with stronger potential over the next one to three months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The stock has a Value Score of B, Growth Score of A, Momentum Score of A, and VGM Score of A. Zacks Style Scores of A or B combined with Zacks Rank #1 or 2 stocks have historically shown stronger performance characteristics, though the Zacks Rank can change as analysts update earnings estimates after quarterly results.

Research Chief Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research