Bandwidth Hits 59% Margin, 10% Growth, $15M Software ARR and $100M Note Buyback
Bandwidth posted a record 59% non-GAAP gross margin for 2025 with $0.82 gross profit per incremental cloud communications dollar, targeting 60%+ in 2026. It drove 10% annual revenue growth, exited with a $15 million ARR run rate from new software services, and repurchased $100 million of convertible notes.
1. Margin Performance and Guidance
Bandwidth generated $0.82 of gross profit for every incremental dollar of cloud communications revenue in 2025 and achieved a record non-GAAP gross margin of 59%, with management guiding to at least 60% in 2026.
2. Revenue Growth and ARR Milestones
The company posted 10% revenue growth for 2025 and exited the year with a $15 million annual recurring revenue run rate from new high-margin software services such as Maestro, Call Assure, and Trust Services, noting a 100% attach rate on enterprise deals.
3. Debt Reduction and Capital Allocation
Bandwidth repurchased $100 million of its 2028 convertible notes at a discount, leaving $150 million outstanding, and has retired over $550 million of convertible debt since 2022. It maintains an $80 million share repurchase program, an undrawn $150 million revolver, and ended the year with $111 million in cash and securities.
4. AI Voice Demand and Network Usage
Executives highlighted rebounding voice demand driven by AI agents, leveraging the company’s vendor-agnostic orchestration layer and ultra-low latency network across 65 countries. The usage-based model benefits as AI call flows multiply signaling and media paths, expanding consumption and cloud migration trends.