Bandwidth Inc.

Greetings and welcome to the Bandwidth Incorporated second quarter 2022 earnings conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question and answer session. At that time, if you have a question, please press the 1 followed by the 4 on your telephone. If at any time during the conference you need to reach an operator, please press star 0. As a reminder, this conference is being recorded today, Wednesday, August 3rd. 2022. I would now like to turn the conference over to Sarah Wallace, VP of Investor Relations. Please go ahead.

Thank you, Grant. Good afternoon and welcome to Bandwidth's second quarter 2022 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 Morkan, our CEO, and Darrell 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 third quarter and full year of 2022. 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 any future results or outcomes expressed or implied by the forward-looking statements. Any forward-looking statements made on this call and in 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 gap to non-gap 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 thanks to each of you for joining us. We're pleased to share that we exceeded expectations on the top and bottom lines for the second quarter with revenue up 13% over last year to $136 million and a non-GAAP net loss ahead of our guidance of $1 million. Thank you to all our bandmates for another terrific quarter and for your commitment to our customers and to each other. And I thank God for watching over us and for giving us our work to do together. In a few moments, I'll share details about the quarter and our strong momentum within the enterprise. But first, I'd like to discuss the question looming front and center. How will bandwidth business perform during this economic downturn? Amid the current economic turbulence, there is no such thing as business as usual, and macroeconomic factors are likely to impact all of us, The only question is magnitude. And the answer to that question is that for four key reasons, bandwidth is well positioned to do what we said we will do through these uncertain times. First, we power business critical communication for a diverse set of customers across many industries, contact centers, telehealth, hybrid work and emergency calling are just a few examples of how our customers rely on the bandwidth cloud for essential communication Early indicators prove that certain categories of IT spend are more exposed in this season than others For example, it seems marketing use cases are being impacted more than cloud computing by contrast many of the connections bandwidth enables are mandatory rather than discretionary and History has shown that these are not just less susceptible to cost savings measures But are actually essential to achieve them second We believe that enterprises cost-cutting efforts will actually lead them to embrace cloud communication solutions and Businesses everywhere must now do more with less, and we enable them to do just that. We do not expect a sustained downturn to halt large enterprises' unrelenting march to the cloud and all the cost savings and the enhanced productivity that they find there. Third, bandwidth's position is strengthened by our large enterprise customer base, our enterprise product, and our enterprise go-to-market focus. Because the large enterprises we serve are well-funded, established businesses, we believe there is less likelihood that their ongoing digital transformations, all designed to drive efficiencies, will be disrupted. We enjoy a strong position because our revenue is not heavily concentrated among small and medium businesses who are likely to be disproportionately impacted in a downturn. Fourth and finally, profitable growth is a first principle for this team. Bandwidth was largely bootstrapped until its IPO in 2017, and we have always been focused on profitability. This enduring commitment to operating bottom line discipline has always served us well. Our leaders are focused on cost management and effective investment with prudent payback periods, directing resources to initiatives that are most certain to reinforce our success. So in summary, we are confident in the profitable course and speed that we've charted through these troubled times because we provide mission-critical cloud communications that reduce costs for large enterprises. Now, I'd like to turn to our Q2 results, which show that our team is executing well and delivering solid outcomes in spite of the isolated customer headwinds we've previously discussed. We're focused on growing with existing customers, winning new large enterprise customers, and becoming the global CPaaS platform of choice for scaling digital engagement. Our wins this quarter demonstrate success on each of those fronts. Our global network, cloud native mentality, and consultative support team established our mission critical role powering all the Gartner Magic Quadrant leaders in UCAS, in CCAS, and meeting solutions. And these same capabilities are now creating exciting new opportunities within global 2000 enterprises. Last quarter, we shared news of our new AI integration with PinDrop, a leading voice biometric authentication and anti-fraud solution. I'm pleased to share that some examples of how that unique integration is helping us win new business, both with existing and with new customers. We've told you before about a top 10 bank, one of the largest issuers of Visa and MasterCard credit cards in the US, who chose Bandwidth for a new cloud contact center build out to support its vast credit card services operation. With the release of our PinDrop AI integration, we secured traffic from an additional business unit in their contact center portfolio. It is another terrific example of how we're expanding the bandwidth platform ecosystem to add more value and more capabilities for complex contact center migrations. I'd also like to highlight another bring your own carrier contact center win, this time with 5.9. The customer, who provides consolidated technology support for state credit unions, selected Five9 to modernize its contact center. But they were struggling to integrate the incumbent provider into both Five9 and Pindrop, enter bandwidth, and our seamless integrations with both of these partners. Our platform ecosystem and operational excellence solved what we call the telecomplexity often found in such transformations and dramatically accelerated this customer's journey to the cloud. Last quarter, we also shared examples of the strong momentum we're seeing with our new Duet for Genesis partnerships. That momentum is growing with new customers in diverse businesses across retail, healthcare, Fortune 500 global manufacturing, and call center outsourcing. Duet for Genesys allows enterprises to capture the power and feature set of Genesys Cloud while maintaining the flexibility, the service, and the savings that come from a direct global relationship with bandwidth. So one of these new wins is the largest duet for Genesys opportunity that we've signed outside of the US to date. This customer is one of the fastest growing contact center and customer experience providers in the entire Asia Pacific region with more than 18,000 employees across five countries. As they continued to expand, they were facing challenges maintaining five different carrier relationships, each with its own contract terms and interconnections. Consolidating with bandwidth, this customer not only solved for complexity, but also benefited from upgraded call quality, reliability, and speed of deployment. So despite the magnitude of their operation, this customer was up and running faster than they expected thanks to the permanent test environment that Bandwidth and Genesys maintain as an element of our ongoing partnership. With big plans to grow outside their home region, including into Europe and North America, this customer knows that Bandwidth can meet even their most ambitious future needs. Our contacts there summed it up best when they said, quote, Bandwidth has accomplished in weeks what it took other vendors months to do. These examples show how our duet strategy positions us to unlock the massive opportunity represented by enterprise contact center transformations. Each of these large enterprises recognize bandwidth as the best partner for their journey to the cloud. We differentiate by combining a collaborative co-creation mentality with our enterprise-grade CPaaS platform and our global network. And that really allows us to power complex business-critical contact center solutions out of the box, to move at lightning speed compared to legacy carriers, and really to deliver access to the apps in the geographic regions that enterprises need to build a best-of-breed total customer experience. Another strategic priority is for bandwidth to be the global CPaaS platform of choice for scaling enterprise digital engagement. And today, we are announcing another major new customer win this past quarter. If you are one of the millions of consumers who interact with brands over text message to get coupons or shopping assistance, then you've most likely used this company. They've rapidly become one of the largest and fastest growing players in text messaging commerce with a customer base of over 5,000 top retail brands that send billions of text messages annually. Our new customer's incumbent provider could not adequately support their hypergrowth. So they came to Bandwidth for our ability to reliably deliver at scale for our ease of use of our APIs and for the customer experience that has absolutely wowed them since they onboarded. Their goal is to achieve no less than 20% of their customer's total online revenue through conversational texting. And Bandwidth simplifies the complex underlying requirements that are essential to reliable, scalable message delivery. When they told us, quote, nobody could have gotten this done but bandwidth, it was a huge validation of our enterprise-grade messaging capabilities and our team. And when we say we're enterprise-grade, it's because we have a long history of serving the largest and most demanding technology companies in the world. These customers hold us to the highest standards of information security and data privacy. In keeping with this commitment, We are announcing a significant accomplishment by our team, the extension of our ISO 27001 certification from our North American network to our entire global network. ISO 27001 is the gold standard for information security management, and it's highly valued by our customers. Additionally, bandwidth has now completely implemented, stir-shaken throughout 100% of our IP network. Congratulations to all our bandmates whose hard work allows us to meet our customers' exacting standards. I'll now turn it over to Darrell to walk through the details of our financial results and outlook for the second half of the year. Darrell?