What Happened: Shares of communications platform-as-a-service company Bandwidth (NASDAQ: NASDAQ:BAND) jumped 19.2% in the morning session after the company reported a "beat and raise" quarter. Specifically, it was great to see Bandwidth's optimistic revenue guidance for the next quarter, which exceeded analysts' expectations. Full-year revenue guidance was raised. Its revenue, adjusted EBITDA, and EPS also outperformed Wall Street's estimates during the quarter. Overall, we think this was a strong quarter that should satisfy shareholders.
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What is the market telling us: Bandwidth's shares are very volatile and over the last year have had 39 moves greater than 5%. But moves this big are very rare even for Bandwidth and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 9 months ago, when the stock gained 11.6% on the news that the company reported an impressive "beat and raise" quarter. Second-quarter results exceeded Wall Street's estimates for revenue, adjusted EBITDA and earnings per share. Guidance also came in strong, with revenue topping estimates for the next quarter and the full year.
On the other hand, its slowing growth in net revenue retention wasn't great, and while full-year revenue guidance was raised, full-year adjusted EBITDA guidance was maintained at the midpoint.
Overall, it was a solid quarter for the company, with the strong topline results likely raising investors' optimism.
Bandwidth is up 64.1% since the beginning of the year. Investors who bought $1,000 worth of Bandwidth's shares 5 years ago would now be looking at an investment worth $323.43.
