Bandwidth Inc.

Thank you for standing by. This is the conference operator. Welcome to the bandwidth fourth quarter 2020 earnings call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, You may signal an operator by pressing star and zero. I would now like to turn the conference over to Sarah Walas, Vice President of Investor Relations. Please go ahead.

Thank you. Good afternoon and welcome to Bandwidth's fourth quarter 2020 earnings call. Today we'll be discussing the results announced in our press release issued after the market closed. With me on the call this afternoon is David Morken, , and Jeff Hoffman . They will begin with prepared remarks, and then we will open up the call for Q&A. During the call, we will make statements related to our business that may be considered forward-looking, including statements concerning our financial guidance for the first fiscal quarter and full year of 2021 and, to the extent provided, future periods Statements regarding the expected benefits of the VoxBone acquisition and our expectations around the impact of the COVID-19 pandemic on our business. Forward-looking statements may often be identified with words such as we expect, we anticipate, or upcoming. These statements reflect our views only as of today and should not be considered our views as of any subsequent date. We undertake no obligation to update or revise these forward-looking statements. Forward-looking statements are not promises or guarantees of future performance and are subject to a variety of risks and uncertainties that could cause the actual results to differ materially from our expectations. For a discussion of material risks and other important factors that could affect our actual results, please refer to those contained in our latest 10 filing. as updated by other SEC filings, all of which are available on the investor relations section of our website at bandwidth.com and on the SEC's website at sec.gov. During the course of today's call, we will refer to certain non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in our press release issued after the close of market today. which is located on our website at investors.bandwidth.com. With that, let me turn the call over to David.

Thank you, Sarah. And thank you to everyone joining us today. We are thrilled to share our 2020 results and talk about what's ahead. As we reflect on the past year, I thank God for leading us through so many storms and pray for our team, their families and for all those whose lives are impacted by the global pandemic. Before we discuss our 2020 results, I want to take a minute to remember where we were nearly one year ago. As the world was shutting down around us, our team gathered for what remains the last time we were all together in one room. None of us knew what the next weeks or months would bring, only that it would be unlike anything we'd lived through before. We resolved that no matter what unfolded, we would be steadfast and resolute in serving our customers and loving each other. This team delivered on that charge over and over and over again. I am humbled by our bandmates' commitment to our mission, especially as so many of them and their families navigated great personal adversity. To all the bandmates listening today, thank you. Your work fueled the success I now have the honor to share. and that success includes a record 51% annual CPaaS revenue growth year over year and 84% CPaaS revenue growth in Q4, both demonstrating accelerating broad-based demand for our software-powered solutions. We deepened and strengthened our existing customer relationships as evidenced by an all-time high dollar-based net retention rate of 131% for the full year. We are gratified that in 2020, we achieved these record results while staying true to our principle of responsible growth which balances top and bottom lines. Early last year, we announced our plans to accelerate by a full year our return to positive non-gap net income and are proud we delivered on that commitment in 2020. In the face of extraordinary events, we remain committed to growing steadily and consistently not just quarter over quarter or year over year, but decade over decade. In a few minutes, Jeff will walk through the full financial picture of what this team accomplished in 2020. But before he does, I'd like to discuss the broader impact of what we achieved and the ways our work this past year positions us for success globally in the years to come. The pandemic forced us not just to work from home, but to learn from home, to teach from home, to worship from home, To exercise at home, love our friends and family from home, and innovate and build from home. To enable the tools and platforms that make this modern work and life reality today possible, enterprises everywhere are looking to the cloud. The pandemic made clear something that we at Bandwidth already knew. Communications are no longer merely a service measured by minutes and messages. Today's businesses demand communication solutions provided as part of a dynamic platform, allowing for integration with adjacent applications, exponential scale, and unfettered creativity and flexibility. 70% of companies say the pandemic has accelerated their shift to the cloud. They seek the extraordinary efficiency, economic advantage, and enhanced innovation made possible by cloud-based communication solutions. But it is no small task to break free of antiquated premise-based analog telecom infrastructure. Companies around the globe need the right partner to help them tackle the myriad technical and regulatory challenges that come with migrating their communications to the cloud. These challenges put into sharp focus precisely why we believe bandwidth is the preferred cloud communications provider for tech giants and enterprises alike. We provide a software platform rich with APIs, automation, and analytics. Second, we operate our own IP voice network that provides world-class quality at scale. We proved this when we were able to rapidly scale the network to keep pace with the 30% surge in concurrent calls caused by lockdowns last March. We offer world-class support. Collectively, the Bandwidth team has centuries worth of deep expertise in software voice and messaging, and we put this expertise to work providing solutions to our customers' most difficult communication challenges. I'd like to give a few recent examples of how the Bandwidth software platform and network have delivered quality automation and support to our customers. We have previously highlighted a five-year, multimillion-dollar relationship with a Fortune 500 company that offers communications and technology solutions for residential, small business, and enterprise customers across the U.S. Under the terms of the agreement, this existing customer uses bandwidth CPaaS platform and nationwide voice network to expand the engagement and collaboration services offered to its enterprise customers. I'm proud to report today that this customer is now all in with bandwidth and is utilizing services across our entire platform after moving its end users to bandwidth emergency services as well. The customer's massive customer base drove increased usage of toll free and local calling, messaging traffic, and 911 enabled phone numbers in 2020. This use case is a great example of our ability to build trust and scale our full suite of services at whatever pace The customer requires to meet its cloud communications needs. During the fourth quarter and throughout 2020, we found continued success in serving cloud-based contact centers. Our platform is being used to enable incredible end-user experiences in this critical segment, both by CCaaS providers and by enterprises we work with directly. This year, we significantly expanded our relationship with a longstanding customer who provides a cloud-based contact center platform and works with established mid-sized market leaders to help them create transformative customer experiences utilizing voice, chat, and text. We've partnered with this customer to develop and bring new services to market gaining their trust and becoming their primary voice provider. Their trust in us and the decision to go all in with bandwidth resulted in a doubling of the scope of our relationship over the past year. They've chosen to expand with us over the years because of our exceptional customer service and intuitive portal to manage number porting and all aspects of their account. In the fourth quarter, we also signed a deal with one of the fastest growing providers of cloud contact center software. This company, headquartered in the U.S., is the first and only cloud contact center platform for the smartphone era customer experience that delivers global support. The company powers the world's largest elastic CCAS tenant and is trusted by innovative customer-centric enterprises. The company selected bandwidth to power their contact center platform and currently uses inbound calling across more than a dozen countries, primarily in Europe, with plans of expanding to additional countries and activating outbound calling. All of these because our reputation for call quality and ability to scale. Bandwidth is not just powering CCaaS providers, however. Our platform is also used by enterprises who leverage our platform directly in order to scale their own large cloud-based global contact centers and other communications needs. In the fourth quarter, we welcomed to our platform a large pharmaceutical company with operations in 90 countries. This company is in the process of overhauling its entire communications suite as part of its migration to the cloud. This company chose Bandwidth to power internal communications as well as inbound and outbound calling for their customer contact center in a dozen countries. Before I turn things over to Jeff, I want to update you on the integration efforts following our acquisition of VoxBone last quarter. As many of you know, with the VoxBone acquisition, Bandwidth expanded its reach to more than 60 countries that represent 93% of the world's GDP. Bandwidth's ambition is nothing less and to be the world's dominant cloud communications provider and the VoxBone acquisition means we are uniquely positioned to serve the world's most innovative companies with global communications solutions. Instead of cobbling together agreements with multiple providers around the globe for piecemeal solutions enterprises will be able to get reliable, compliant, flexible solutions on a global scale from one source bandwidth. Our existing customers are ecstatic that we will be able to offer them global business voice solutions with the care and collaboration that they've come to expect from the Bandwidth team. And we are hearing from new prospects every day who are clamoring to learn how a truly global platform can help them develop, launch, and hyperscale their applications and customer experiences. The energy and enthusiasm from customers and prospects around the world confirms our acquisition thesis. We are hard at work to bring these transformational benefits to our customers as quickly as possible. Guided by the superb leadership of our integration team, we've made steady progress. Our combined financial and legal teams have been working tirelessly in an effort to ensure the smooth transition of regulatory approvals and complete combined company financial reporting. Our sales teams are taking advantage of opportunities to expand customer relationships by cross-selling and upselling. We've got a massive sales enablement effort underway to ensure that we're pursuing global opportunities in a coherent, coordinated way and to make the most of the incredible opportunities within reach. There is much work to be done as we seek to bring the absolute best of the bandwidth and VoxBone products, services, and customer experiences together in a unified global offering. We are so excited for the new and bigger ways our combined company will be able to serve our customers around the world. We're doing this all on top of our mission to serve our customers and improve our offerings day in and day out. Additionally, we began offering local phone numbers in Hong Kong and enabled toll-free number porting in Switzerland. We also enabled full-stack services in Cyprus, paving the way for us to be the only provider offering full two-way cloud-based voice services across the European Union. Each of these is an important step in our efforts to be the world's only one-stop shop for global cloud communications. And of course, we're doing the joyful work of creating one team from two. Our unique bandwidth culture has been the not-so-secret ingredient of our success for two decades. We are eagerly sharing that culture with our new bandmates, and they are generously enriching us with their global perspectives and with new traditions that we're adopting as our own. Even though we still can't be together in person, the chemistry between our new bandmates is unmistakable. We at Bandwidth had been watching and admiring the work of the VoxBone team for years. It's amazing to see these two teams now roll up their sleeves and get to work together to unlock our full potential. You've never seen a more energized group and I'm confident that the chapter we are writing now will be Bandwidth's best one yet. We look to 2021 and beyond with enormous optimism and the courage of our convictions. Bandwidth opportunity to develop and deliver the power to communicate globally is larger and more important now than ever before. With that, I'll turn it over to Jeff.