Bandwidth Inc.

Hello and welcome to the Bandwidth, Inc. fourth quarter and full year 2023 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad, and to withdraw from the question queue, please press star, then two. I would now like to hand the call to Sarah Wallace. Please go ahead.

Thank you. Good morning, and welcome to Bandwidth's fourth quarter 2023 earnings call. Today, we'll discuss the results announced in our press release issued earlier this morning. 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 morning is David Morkan, 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 first quarter and full year of 2024. 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 GAAP to non-GAAP measures is included in our press release issued earlier this morning, as well as in the earnings presentation, which we are located on our website at investors.bandwidth.com. With that, let me turn the call over to David.

Thank you, Sarah. Welcome to Bandwidth's Q4 2023 earnings call. We're pleased to report we exceeded our guidance for the fourth quarter, capping off a full year of solid execution. We grew and diversified our revenue by adding a number of significant customers across our commercial messaging and direct to large enterprise categories. We invested in our business and introduced new products like our next generation Maestro platform and AI bridge. And we grew profitability 39% year over year, delivering record-adjusted EBITDA in the fourth quarter and yielding record second-half free cash flow. The team is grateful and honored by our customers' trust and bandwidth to provide their business-critical communication services around the world. Thank you to our bandmates for serving our customers, executing our mission, and delivering these strong results. And I thank God as we charge into our 25th year as a company. Last year, during our investor day, we laid out a four-year plan and said we were more confident about our mission to develop and deliver the power to communicate than when we started the company or at any time since. After exceeding our plans for the first year, we are even more confident today. That's because bandwidth is leading in the front ranks of the worldwide cloud communications revolution, which is a secular trend still in its early stages. Automating voice, text messaging, and emergency calling through cloud software is the fastest way for enterprises to build a better brand experience, reduce operating costs, leverage emerging AI technologies, and simplify and de-risk digital transformation company-wide. And they're doing it with bandwidth because we are the only provider in our space with a unique combination of global owned and operated cloud network, AI-ready capabilities, programmable software APIs, and deep regulatory insight. Today, we are the only CPaaS provider with our own global communications cloud. The depth and breadth of our competitive moat is evidenced by the fact that we serve all the world's leading power platforms in cloud communications as recognized by Gartner Research. Whether it's iconic hyperscalers like Microsoft, Google, or Zoom for hybrid work, customer experience pioneers like AWS, Genesis, and Five9 for cloud contact centers, or the many innovative SaaS and application companies building text messaging into everything from healthcare to conversational e-commerce, bandwidth is their communications cloud. All these players count on us for global reach, scale, reliability, security, leading edge innovation, and incredible customer support that is always available 24-7. During the past year, we continued to expand our investment in innovation with a launch of many new features and capabilities. In our global communications plans category, we improved our already best-in-class customer experience with expansive new self-service capabilities. That's why TNS, a provider serving 27,000 separate businesses, switched bandwidth from a key competitor, placing their trust in us as the sole provider for their mission-critical toll-free calling and other programmable voice services. In our enterprise category, we launched 10 new products, including Bandwidth Maestro, our AI-ready, next-gen software platform, which was judged by our peers to be such a game-changer that it won Best of Show at Enterprise Connect. In fact, industry recognition for Maestro continues, as it won a Product of the Year award from Internet Telephony just last week. These new offerings, each substantial in their own right, drove our opportunity pipeline to new highs, accelerated our enterprise revenue growth 21% year over year, and led to new customer wins like Ally Financial, Western Union, Children's Health, Fabletics, and so many others. All chose bandwidth to improve their customer experiences and to adopt conversational AI. In our programmable services category, we are adding new global two-way messaging capabilities in more markets around the world, which we expect to continue to fuel our growth. Last year, we grew commercial messaging 32% year over year. The most demanding high volume senders are using our global messaging API for diverse commercial use cases across FinTech, healthcare patient engagement, civic engagement, conversational e-commerce, and more. Like WellSky, for example, a premier health and community care technology provider in North America, which in Q4 moved the rest of its HIPAA-compliant messaging and voice to bandwidth from a competitor, trusting us to deliver vital communications between their more than 600,000 caregivers and 4,000 personal care agencies across the U.S. and Canada. In 2024, We expect our growth in commercial messaging to be joined by further benefit from the U.S. election season, where our capabilities uniquely serve many long-standing customers. Each one of these examples demonstrates the growth and rapid innovative capabilities of the bandwidth communications cloud. As we reflect on the past year, we are pleased with our execution and forward momentum through any crosswinds in the current macro environment. For example, we hosted more in-person visits in 2023 from large global 2000 enterprise customers and prospects than in any other year by far. We launched Maestro and AI Bridge, our biggest innovations ever. And as you would expect from a durable franchise, our profitability has shown remarkable growth significantly outpacing our revenue increases as we deliver on our promise to grow revenue profitably. As we enter our milestone 25th year as a company, we are more confident in our mission and our opportunity than ever before. I'll now turn it over to Daryl to walk through the details of our financial results and outlook.