Bandwidth Inc.

Good day, and welcome to the Bandwidth, Inc. fourth quarter and full year 2025 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 your question, please press star then two. Please note today's event is being recorded. I would now like to turn the conference over to Sarah Wallace, Vice President, Investor Relations. Please go ahead.

Good morning. I'm joined today by 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. Our earnings press release was issued earlier today. The press release in an earnings presentation with historical financial highlights and a reconciliation of gap to non-gap financial results can be found on the Investor Relations page at investors.bandwidth.com. During the call, we will make statements related to our business that may be considered forward-looking. We caution you not to put undue reliance on these forward-looking statements as they may involve risks and uncertainties that could 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. With that, let me turn the discussion over to David.

Thank you, and welcome everyone. We're pleased to report a solid fourth quarter, capping off a year defined by sustained business performance and strengthening fundamentals. Throughout 2025, we delivered steady progress across revenue, profitability, and free cash flow. A primary highlight of the year was our success in the large enterprise space. We closed a record number of million-dollar-plus deals, including two significant wins in the fourth quarter alone. We also continued to invest in high-margin innovation. We are seeing tangible results from our AI voice tools, our trust portfolio, our global communications cloud, and our Maestro orchestration software. Entering 2026, we are confident in the upward trajectory of our business. When we reported 2022 results, we set ambitious four-year goals extending through 2026. a 15% to 20% revenue compound annual growth rate, a 5 percentage point increase in gross margin to 60%, a 20% EBITDA margin, a 15% free cash flow margin, and $125 million in cumulative free cash flow. While market dynamics, particularly in messaging, will almost certainly keep us short of our multi-year revenue CAGR target, our 2026 outlook is fully on track to achieve our goals for gross margin, EBITDA margin, and free cash flow margin. Furthermore, we will significantly exceed our 2026 cumulative free cash flow objective, having already surpassed $125 million by the end of 2025. Daryl will walk through our full 2026 guidance in more detail shortly. But at a high level, our 2026 outlook reflects healthy demand across both voice and messaging, along with continued solid execution, giving us confidence in the direction of our business and our financial model. Earlier today, we also announced the authorization of our inaugural share repurchase program. This reflects our confidence in the durability of our business model and our ability to generate cash while simultaneously investing in our future. I want to thank our customers for their continued trust in bandwidth. I also want to thank our bandmates for their tireless commitment to excellence. And I thank God for the blessing of another year filled with opportunities for our team to learn and grow. Over two years ago, we identified AI voice as the next frontier. Since then, we've helped customers move from AI voice experimentation into real-world production. From an AI voice concierge for a global hospitality brand to an AI-powered voice ordering system for food venues nationwide, enterprises are trusting bandwidth to launch new AI-driven customer experience use cases. our AI investments are paying off. The Bandwidth Communications Cloud and Maestro are purpose-built to integrate and manage AI voice across diverse environments with the quality, reliability, ultra-low latency, and scale that global businesses require to support multi-channel AI-driven customer conversations. Our enterprise momentum validates this network-centric approach. Our role as a foundational platform for AI, deeply embedded in the global communications network, becomes even more critical as enterprises manage constant change across shifting AI models and application platforms. Simply put, Our communications cloud and Maestro orchestration software are essential to enabling AI in enterprise production environments. We're seeing AI-driven voice adoption across both new enterprise wins and expanding deployments within our existing customer base. A good illustration comes from a major household name, US Insurance Group, which selected Bandwidth to replace their legacy provider in a million-dollar-plus deal. They cited our AI-enabling features and seamless integration with their complex Cisco environment. Bandwidth will power a new cloud-based customer experience stack for claims and customer quoting functions. utilizing inbound voice calling alongside Google conversational AI. This is a blueprint for how we serve large global enterprises, achieving rapid value capture for our customers through low-risk cloud adoption while enabling new AI voice capabilities. Our other million-dollar-plus deal in Q4 is with a top 10 U.S. bank serving millions of customers nationwide. They selected Bandwidth's resilient, toll-free solution to modernize and protect their contact center infrastructure to enhance customer experience. This win was driven by our differentiated failover architecture and open integration strategy. A similar dynamic resulted in another win in financial services, the U.S. consumer financing arm for a top five global carmaker. In this case, Bandwidth was selected to launch AI-enabled communications for their Genesys Contact Center. This win came through our channel and reflects our ability to align with partner ecosystems while serving the customer directly. By moving to Bandwidth, the customer gained greater flexibility and freed up cost savings, which supported their investments in new AI services. The transition has been seamless thanks to the long-standing partnership and technical alignment between Bandwidth and Genesys. It's a strong example of our Maestro orchestration platform enabling enterprise customers to modernize on their terms. We also saw momentum in our messaging business, winning an e-commerce platform that supports high-volume, time-sensitive communications for top brands. This customer chose bandwidth over our largest CPaaS competitor, citing our superior deliverability, scalable capacity, and operational support during high-demand retail seasons like Black Friday. A particularly strong example of our progress in RCS messaging is highlighted by a longtime customer that supports hundreds of enterprise brands on their platform. Our customer trusted us to power their first production RCS campaigns for several of their well-known consumer brands across retail, home furnishings, and hospitality. The decision followed a broader evaluation of messaging providers and was driven by bandwidth's ability to ensure consistent deliverability, scalable throughput, and operational reliability as RCS grows from early trials toward broader enterprise use. Taken together, these wins share a common theme. Customers need an open, scalable, reliable global platform to support their most mission critical communications, both for today's customer experience and the AI driven conversations now being deployed. The majority of these wins also follow our broader pattern of large enterprise wins in 2025. Multi-location rollouts, deep integration into existing infrastructure, and clear line of business value realization within the first 90 to 180 days of launch. Perhaps most exciting is the validation we are seeing from the AI developer community. The number of third-party conversational AI developers building on our platform has more than quadrupled over the past six months. While this cohort does not yet contribute materially to revenue, the momentum is a powerful leading indicator. Developers are choosing bandwidth for our low latency, quality, and predictable economics. Bandwidth enters 2026 at the exciting confluence of enterprise communications and AI with the global infrastructure, software platform, and the vibrant ecosystem to lead this next wave of innovation. Now, I'll turn it over to Daryl to walk through the financial details of the last quarter.