Bandwidth Inc.

Thank you for standing by. This is the conference operator. Welcome to the Bandwidth, Inc. Third Quarter 2021 Earnings Conference 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 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and 0. I would now like to turn the conference over to Sarah Wallace, VP of Investor Relations. Please go ahead.

Thank you. Good afternoon and welcome to Bandwidth's third quarter 2021 earnings call. Today we'll be discussing the results announced in our press release issued after the market closed. The press release and an earnings presentation with historical financial highlights can be found on the Investor Relations page at investors.bandwidth.com. With me on the call this afternoon is David Morkin, our CEO, and Daryl Rayford, our CFO. 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 fourth fiscal quarter and full year of 2021 and and to the extent provided, future periods and our views on the impact of the recent DDoS attacks we've previously disclosed. We caution you not to put undue reliance on these forward-looking statements as they may involve risks and uncertainties that may cause actual results to vary materially from forward-looking statements as described in our risk factors in our reports filed with the SEC. Any forward-looking statements made on this call and the presentation slides reflect our analysis as of today, and we have no plans or obligation to update them. 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-K 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, as well as in the earnings presentation, which are located on our website at investors.bandwidth.com. With that, let me turn the call over to David.

Thank you, Sarah. And hello, everyone. Thank you for joining us today. This quarter, bandwidth continued to play a critical role in the enterprise move to the cloud. We celebrated a number of important wins with both new and existing customers. We largely completed the integration of our VoxBone acquisition, and we withstood an unprecedented cyber attack on our business. Bandwidth delivered another quarter of solid financial results, exceeding revenue guidance, including 46% CPAS revenue year-over-year growth. From both the mountaintops and the valleys that we visited during the quarter, I was inspired by this team's unwavering commitment to our mission and our customers. I have never been more proud of our brave and brilliant team or more thankful for God's faithfulness. I want to start by talking about the DDoS attack at the end of September. Attacks like ours have been aimed at a number of companies in our global VoIP ecosystem. First, we were prepared and we weathered the storm well. Our infrastructure includes specific DDoS mitigation systems and is routinely audited. In responding to the attack in real time, we augmented our DDoS defenses to keep pace with the attacker's evolving methods. Some customers saw periodic service disruptions and we regret any impact to their business. At the same time, we are proud of our team and our partners and the resilience of our platform in avoiding the crippling effects others have seen in similar attacks across the industry. In fact, the vast majority of our traffic continued to be delivered. Second, we serve our customers well and they supported us too. We have been moved by our customers' trust. We count many of the world's largest and most sophisticated technology leaders as our customers, and a number of them joined us in our situation room. In a true demonstration of our longstanding partnerships, they stood shoulder to shoulder with us in this fight. Nevertheless, a number of our customers did move services to other options. Our operations team worked around the clock to accommodate these choices, consistent with our commitment to always do the next right thing for our customers. Many of those customers have already brought their business back. I am confident that others are in the process of doing so in the coming days and weeks. Daryl will give more details on the estimated financial impact of the DDoS attack. Third. We are now using our lessons learned to help our customers and partners protect themselves against similar attacks. Our experience puts us at the forefront of understanding how to combat these threats against the VoIP ecosystem. We did not pay a ransom and instead relied on innovative solutions and strategies to confront the threat head on. To sum up, we believe bandwidth is now stronger than ever. and we plan to leverage what we've learned to help make the ecosystem safer for enterprise communications. With that, I want to highlight a few important milestones and wins in the past quarter. We just celebrated the first anniversary of the close of our acquisition of VoxBone, and I'm excited that the bulk of our international integration is complete. Even as we continue to chart the course for our single global platform, we are now fully serving our customers as one global band. We continue to make progress on the huge cross-sell opportunities from the VoxBone acquisition as we expand our long-term customer relationships from domestic to global. Our customers told us they wanted the bandwidth experience, enterprise-grade quality, service, and reliability around the world. They are showing us that they meant what they said. I am very pleased to announce the latest example. One of our largest and longest tenured customers signed a contract for global service in the third quarter. This is a customer that was not previously working with VoxBone and now is going global with bandwidth. In short, this is yet another growing relationship that was only made possible by the global reach achieved through the acquisition. and it is a takeaway from multiple competing international IP network providers. In the initial phase of the contract, this customer is testing voice services over our global network in select countries during the fourth quarter. We expect services and coverage to expand throughout 2022. Our team is humbled by this customer's desire to build with bandwidth to the ends of the earth And we look forward to growing this foundational relationship at a global scale. Powering the platform players and internet giants has always been a core strength of ours. And this win demonstrates again how compelling a truly global offering is to these customers. We also see significant momentum building among global 2000 enterprises executing their digital transformations. The enterprise migration to the cloud is extremely complex and fraught with technical and regulatory challenges. We are nimble and quick in a world of sluggish, entrenched legacy carriers. Today, I want to zero in on an area where we are particularly winning in the enterprise category, global contact centers. Customer service agents are becoming critical to helping brands create a better customer experience in a post-COVID world. But the contact centers in today's large global enterprises can be enormously complex. There may be multiple locations with expensive on-premise equipment requiring top-tier expertise to manage. To connect it all, most enterprises have been relying on multiple carriers, each with different contracts, uncertain redundancy, and traffic limitations. They have the need to retain critical call data to power third-party integrations, such as CRM, voice authentication, fraud detection, AI monitoring, and other services essential to a better customer experience. Bandwidth simplifies this challenge. Our network is cloud native, so it can work seamlessly with the largest cloud contact center platforms for global interoperability, scalability, and security. The biggest global contact center players are recognizing our new global capability and potential. I'll share what one enterprise customer told us recently after successfully rebuilding their entire contact center architecture on the bandwidth platform. Quote, we built a better architecture, a smarter architecture, and we've saved a ton of money. This migration has been a huge success. One of the contact center wins we closed in Q3 is a global leader in electronic signature. This customer chose bandwidth because with our expanded footprint, we could move their entire 15-country global contact center stack to the cloud. Not only were we able to eliminate the complexity of their existing on-premise equipment, but we consolidated their nine legacy carrier agreements into one. The project has propelled this customer forward into the efficiency and scalability of cloud-based communications. Our customer values bandwidth's ability to integrate with nearly every major communications platform and enterprise needs, from UCaaS to CCaaS, which opens the door to more efficiency and savings. We're also continuing to win with U.S.-only enterprises. This was the case for a new deal this past quarter with a $16 billion Fortune 200 managed care provider. This company is on the front lines of patient communication, and their contact center is critical to managing customer engagement. They came to us and said, no kidding, that they wanted to take all their legacy communications hardware, throw it into a giant dumpster, and light it on fire. It was that cumbersome and frustrating to manage. They chose bandwidth because we were uniquely able to power their entire communications stack in the cloud, both UCaaS and CCaaS. In addition, our tools and automation enable them to manage their system without specialized telecom expertise. They can literally drag and drop using CPaaS software to make real-time number changes on the fly. This customer joins a growing cohort in the healthcare space who rely on bandwidth to power their cloud communications needs. In fact, healthcare is one of the markets where we are seeing particularly strong momentum. in both the large enterprise space and also with innovative app developers that are building a better patient experience. In closing, I want to talk about our continued thought leadership in an increasingly complex regulatory landscape. We take seriously our obligation to help our customers navigate issues like fraud and robocalling, which impact their businesses and their customers. Bandwidth has been at the forefront of implementing new security standards like Stir Shaken, which went into effect on June 30 in the United States to reduce fraudulent calling activity. We will continue to aim to use our seat at the table with the leading standards and rulemaking bodies to provide our customers with critical support and over-the-horizon insights on important regulatory developments. We are also providing our customers with innovative and unique solutions to enable them to meet evolving 911 compliance requirements. Bandwidth's dynamic location routing solution can deliver enhanced location information to 911 dispatchers and help to ensure first responders are sent to the right building, floor, and room. Our solutions are among only three that have been certified for use with Microsoft Teams Direct Routing and are powering Zoom Phone as well. Emergency services continue to be a growing and important component of our suite of service offerings. Often it serves as a unique door opener. Customers who come to us for help with emergency services learn about the broader power of the bandwidth platform, driving new cross-sell opportunities. With that, it is my pleasure again to welcome Daryl Rayford, who is joining us for his first earnings call as our new Chief Financial Officer. He has been a great addition to our team, bringing strong leadership and new perspective. I'll now turn it over to Daryl to walk through our financial results and outlook.