Third Quarter 2026
Filed Oct 29, 2026Record revenue of $234 million, up 22% year-over-year, and Adjusted EBITDA of $35 million, up 43% year-over-year, with Adjusted EBITDA margin of 22%
Third-quarter revenue, Adjusted EBITDA and free cash flow reached record levels, while GAAP net income turned positive and full-year 2026 guidance calls for $905 - $910 million of revenue and $124 - $125 million of Adjusted EBITDA.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Revenue, three months ended September 30, 2026GAAP | $234.0M | – | 22% |
| Revenue, nine months ended September 30, 2026GAAP | $662.7M | – | – |
| Cloud communications revenue, three months ended September 30, 2026other | $158M | – | – |
| Cloud communications revenue, nine months ended September 30, 2026other | $460M | – | – |
| Cost of revenue, three months ended September 30, 2026GAAP | 149,217 | – | – |
| Cost of revenue, nine months ended September 30, 2026GAAP | 421,441 | – | – |
| Gross profit, three months ended September 30, 2026GAAP | $84.8M | – | – |
| Gross profit, nine months ended September 30, 2026GAAP | $241.3M | – | – |
| Gross margin, three months ended September 30, 2026GAAP | 36 % | – | – |
| Gross margin, nine months ended September 30, 2026GAAP | 36 % | – | – |
| Non-GAAP gross profit, three months ended September 30, 2026non-GAAP | $96.08M | – | – |
| Non-GAAP gross profit, nine months ended September 30, 2026non-GAAP | $275.6M | – | – |
| Non-GAAP gross margin, three months ended September 30, 2026non-GAAP | 61 % | – | – |
| Non-GAAP gross margin, nine months ended September 30, 2026non-GAAP | 60 % | – | – |
| Research and development expense, three months ended September 30, 2026GAAP | 36,495 | – | – |
| Research and development expense, nine months ended September 30, 2026GAAP | 112,304 | – | – |
| Sales and marketing expense, three months ended September 30, 2026GAAP | 25,567 | – | – |
| Sales and marketing expense, nine months ended September 30, 2026GAAP | 75,554 | – | – |
| General and administrative expense, three months ended September 30, 2026GAAP | 20,943 | – | – |
| General and administrative expense, nine months ended September 30, 2026GAAP | 60,778 | – | – |
| Total operating expenses, three months ended September 30, 2026GAAP | 83,005 | – | – |
| Total operating expenses, nine months ended September 30, 2026GAAP | 248,636 | – | – |
| Operating income (loss), three months ended September 30, 2026GAAP | 1,795 | – | – |
| Operating income (loss), nine months ended September 30, 2026GAAP | (7,379) | – | – |
| Net income (loss), three months ended September 30, 2026GAAP | $5.25M | – | – |
| Net income (loss), nine months ended September 30, 2026GAAP | $11.75M | – | – |
| Non-GAAP net income, three months ended September 30, 2026non-GAAP | $19.88M | – | – |
| Non-GAAP net income, nine months ended September 30, 2026non-GAAP | $45.96M | – | – |
| Net income (loss) per share, diluted, three months ended September 30, 2026GAAP | $ 0.13 | – | – |
| Net income (loss) per share, diluted, nine months ended September 30, 2026GAAP | $ 0.00 | – | – |
| Non-GAAP net income per Non-GAAP share, diluted, three months ended September 30, 2026non-GAAP | $ 0.50 | – | – |
| Non-GAAP net income per Non-GAAP share, diluted, nine months ended September 30, 2026non-GAAP | $ 1.22 | – | – |
| Adjusted EBITDA, three months ended September 30, 2026non-GAAP | $34.80M | – | 43% |
| Adjusted EBITDA, nine months ended September 30, 2026non-GAAP | $88.54M | – | – |
| Adjusted EBITDA margin, three months ended September 30, 2026non-GAAP | 22% | – | – |
| Net cash provided by operating activities, three months ended September 30, 2026GAAP | $37.70M | – | – |
| Net cash provided by operating activities, nine months ended September 30, 2026GAAP | $75.25M | – | – |
| Free cash flow, three months ended September 30, 2026non-GAAP | $32.98M | – | – |
| Free cash flow, nine months ended September 30, 2026non-GAAP | $56.14M | – | – |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
Full Year 2026 Guidance outlook
- Revenue$905 - $910
- NoteAdjusted EBITDA $124 - $125
- NoteNon-GAAP earnings per share $1.73 - $1.79
- NoteAssumes weighted average diluted share count of approximately 38.7 million in full year 2026.
Capital returns
- Repurchase of Class A common stock $ 29,978
- Purchase of capped call $ 21,821
What drove it
- Management said third-quarter growth was driven by customers expanding their usage of the platform.
- The sales team added four new $1 million-plus customer wins and expansions that management said will layer into results over the next twelve months.
- Customer activity included enterprise voice, contact-center, toll-free, 911, international calling, recurring platform fees and incremental usage-based revenue.
- Salesforce named Bandwidth its first certified international carrier to support the global rollout of its native Contact Center.
Concerns
- GAAP gross margin was 36 % in the third quarter of 2026 versus 38 % in the third quarter of 2025.
- GAAP gross margin was 36 % for the nine months ended September 30, 2026 versus 40 % in the prior-year period.
- Operating income was 1,795 for the third quarter, while operating income (loss) remained (7,379) for the nine-month period.
- The company identified competition, rapid growth, market conditions, cybersecurity threats, compliance requirements and international expansion among its forward-looking risks.
What to watch
- Execution against full-year 2026 revenue guidance of $905 - $910 and Adjusted EBITDA guidance of $124 - $125.
- Whether the four new $1 million-plus customer wins and expansions contribute over the next twelve months as management indicated.
- Cloud communications revenue and non-GAAP gross margin, which was 61 % in the third quarter.
- The effect of enterprise voice usage growth and Salesforce international Contact Center deployment on recurring platform fees and usage-based revenue.
Balance sheet and cash flow
- Cash and cash equivalents as of September 30, 2026: $ 171,315; as of December 31, 2025: $ 102,788.
- Marketable securities as of September 30, 2026: 4,491; as of December 31, 2025: 8,476.
- Convertible senior notes as of September 30, 2026: 310,584; as of December 31, 2025: 247,562.
- Current portion of convertible senior notes as of September 30, 2026: —; as of December 31, 2025: 7,627.
- Net cash provided by operating activities for the nine months ended September 30, 2026: 75,245.
- Net cash used in investing activities for the nine months ended September 30, 2026: (15,101).
- Net cash provided by financing activities for the nine months ended September 30, 2026: 10,027.
- Net increase in cash, cash equivalents, and restricted cash for the nine months ended September 30, 2026: 68,526.
- Cash, cash equivalents, and restricted cash at September 30, 2026: $ 171,686.
Analysis
Bandwidth reported record third-quarter revenue of $234 million, up 22% year-over-year, and Adjusted EBITDA of $35 million, up 43% year-over-year. The detailed financial statements reported revenue of $ 234,017, GAAP net income of $ 5,247 and non-GAAP net income of $ 19,884. The company reported diluted GAAP earnings per share of $ 0.13 and diluted non-GAAP earnings per share of $ 0.50.
Demand was described as customer usage expansion, supported by four new $1 million-plus customer wins and expansions. Customer highlights point to enterprise voice traffic, contact-center modernization, toll-free and 911 services, international calling, and recurring platform fees and usage-based revenue. Salesforce's certification of Bandwidth as its first international carrier for the native Contact Center rollout expands the company's stated enterprise deployment opportunity.
Profitability improved on several measures. Third-quarter Adjusted EBITDA was $ 34,797 versus $ 24,330, and free cash flow was $ 32,981 versus $ 13,135. Non-GAAP gross margin increased to 61 % from 58 %, while GAAP gross margin declined to 36 % from 38 %. GAAP operating income turned to 1,795 from an operating loss of (2,008), although the nine-month period still reported an operating loss of (7,379).
Liquidity increased during the nine-month period, with cash and cash equivalents of $ 171,315 as of September 30, 2026, compared with $ 102,788 at December 31, 2025. Financing activity included $ 316,250 of proceeds from issuance of convertible senior notes, $ 236,084 of net cash paid for debt extinguishment, a $ 29,978 repurchase of Class A common stock and a $ 21,821 capped-call purchase. Full-year guidance calls for $905 - $910 of revenue, $124 - $125 of Adjusted EBITDA and $1.73 - $1.79 of non-GAAP earnings per share. The company did not provide a GAAP reconciliation for its Adjusted EBITDA or non-GAAP earnings guidance because stock-based compensation cannot be reasonably calculated or predicted at this time.
Management, verbatim
We delivered another strong quarter, with record results in all key financial metrics, highlighting the value that we are bringing to enterprises that are increasingly entrusting us to power SI-driven communication workflows.
David Morken, Co-Founder, Chief Executive Officer, and Chairman
Our third quarter results demonstrate our continued focus and execution, with record revenue, Adjusted EBITDA, and free cash flow.
Daryl Raiford, CFO of Bandwidth
Our growth this quarter was driven by customers expanding their usage of our platform, and our sales team added four new $1 million-plus customer wins and expansions that will layer into our results over the next twelve months.
Daryl Raiford, CFO of Bandwidth
Not in the filing
stated, not guessed- Segment revenue disclosure and segment-level comparisons were not provided.
- Prior-quarter revenue, profit, margin, EPS, Adjusted EBITDA and cash-flow figures were not provided.
- GAAP revenue growth rates for the nine-month period were not provided.
- GAAP operating-margin figures were not provided.
- GAAP net-income, GAAP EPS and GAAP gross-margin guidance were not provided.
- A reconciliation of full-year 2026 Adjusted EBITDA, non-GAAP net income and non-GAAP EPS guidance to GAAP measures was not available.
- Dividend information was not provided.
- Prior guidance was not provided.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.