Bandwidth Inc.

BAND Details

Bandwidth Inc. (NASDAQ: BAND) is a global enterprise cloud communications company. It offers communications platform-as-a-service (CPaaS) that enables enterprises to create, scale and operate voice or text communications services across any mobile application, connected device, or enterprise.  Companies like Cisco, Google, Microsoft, RingCentral, Uber, and Zoom use BAND's APIs to embed voice, quick messages, and emergency services into software and applications. In Q2FY21, U.S. accounted for 88.60% of BAND's total revenue.

Introducing BYOC Solutions for Large Enterprises: On July 27, 2021, BAND announced the launch of Duet, a "Bring Your Own Carrier" (BYOC) solution for RingCentral, Inc., a provider of global enterprise cloud communications, video meetings, collaboration, and contact center solutions. BYOC solution will aid large enterprises in modernizing their cloud communications and enable RingCentral's Message Video Phone (MVP) platform to provide additional flexibility and control to enterprises transforming legacy communications.     

Management Changes: On July 08, 2021, BAND announced the appointment of Daryl Raiford as its CFO, effective from August. Before joining BAND, Mr. Raiford held the position of CFO at Ribbon Communications, a provider of communications software and network solutions.

Q2FY21 Results: The company reported YoY growth of 57.13% in total revenues to USD 120.66 million in Q2FY21 (ended June 30, 2021) compared to USD 76.79 million in Q2FY20, attributable to the acquisition of Voxbone S.A. in November 2020, and higher demand for all CPaaS services. CPaaS segment, which represented 87.06% of the total revenue in Q2FY21, improved by 56.60% YoY. In Q2FY21, BAND's active CPaaS customers increased 60.58% YoY to 3,051 vs. 1,900 in Q2FY20. Net loss for the company reduced to USD 6.93 million in Q2FY21 vs. USD 20.64 million in Q2FY20. As of June 30, 2021, the company had cash and cash equivalents of USD 309.62 million and total debt of USD 472.47 million.

Key Risks: BAND's top 10 enterprise customers accounted for the majority of its revenue in Q2FY21. The loss of any of these key customers could hurt the company's financials. In addition, BAND operates in the cloud communications industry and faces direct competition from more prominent players with higher financial and operational resources at their disposal. As a result, any advanced innovation or superior product development by its competitors could impact its operations.

Outlook: In Q3FY21, BAND expects its total revenue to range between USD 123.6 – 124.6 million, including CPaaS revenue to the tune of USD 106.1 – 107.1 million. It also expects its non-GAAP EPS to range between USD 0.07 – 0.09. For FY21, the company anticipates its revenue to be in the range of USD 484.8 – 486.8 million, including CPaaS revenue of USD 418.4 – 420.4 million. FY21, non-GAAP EPS is estimated to be around USD 0.71 – 0.75.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

 (Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

BAND Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: BAND's stock price decreased 40.58% in the past six months and is currently leaning towards the lower band of its 52-week range of USD 107.01 to USD 198.61. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 20.65. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 135.79. Considering the significant growth in topline, positive outlook, and associated risks, we recommend a "Buy" rating on the stock at the current price of USD 109.39, down 1.23% as of August 16, 2021, 12:21 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached. 

Aptorum Group Limited