Bandwidth (NASDAQ:BAND) reported second-quarter 2026 results that exceeded its expectations, citing demand for AI-enabled communications, enterprise modernization projects and operating leverage from its owned network. The company raised its full-year outlook after reporting 22% year-over-year revenue growth and a 27% increase in adjusted EBITDA.
Chief Executive Officer David Morken said artificial intelligence is increasingly shaping customer decisions around communications infrastructure. “AI is only as good as the communications platform it runs on,” Morken said, arguing that enterprises and AI-native companies are placing greater value on network performance, compliance, trust and global reach.
AI Adoption Drives Customer Wins
Morken said Bandwidth signed or expanded five customer relationships worth more than $1 million during the quarter, with all five including Maestro, the company’s orchestration platform, or AI services.
Among the new customers was an AI-native voice-agent developer that had outgrown its original provider, according to Morken. The customer selected Bandwidth for higher-quality voice infrastructure, global coverage, regulatory compliance, and greater operational control and auditability as it expanded toward enterprise deployments.
Bandwidth also cited a healthcare system with dozens of hospitals and 400 clinics across five Midwestern states. The customer selected Bandwidth’s Communications Cloud and Maestro platform in part for Webex calling integration, automated migration tools and centralized management, the company said. The deployment is intended to support the healthcare system’s planned cloud contact-center and AI communications initiatives.
Another new million-dollar customer, a European appliance care and warranty provider, chose Bandwidth to consolidate communications operations that had been spread across carriers and regulatory frameworks in multiple markets. The company said its Communications Cloud and Genesys Cloud integration will support the customer’s planned use of AI within Genesys Cloud.
Bandwidth also highlighted expansions with a global electronic brokerage, a longtime hyperscaler partner and a U.S. text-messaging platform serving about 2,500 brands. The messaging customer moved more than 95% of its volume to Bandwidth from six vendors, according to Morken, and could add Rich Communication Services, or RCS, as it considers a 2027 launch.
Salesforce Relationship Begins Generating Traffic
The company said it has begun supporting customer opportunities through its relationship with Salesforce, which selected Bandwidth in March as its exclusive critical infrastructure partner for voice and messaging within Agentforce Contact Center.
Morken said the first traffic has begun flowing across Bandwidth’s platform and that revenue should grow as customer deployments scale. In response to an analyst question about potential Salesforce expansion outside the U.S. and Canada, Morken said global availability would fit Bandwidth’s network and “would be beneficial.” He also said larger opportunities are a key reason the company is enthusiastic about the partnership.
Bandwidth introduced Bandwidth Build in June, a platform intended to enable authenticated AI agents to provision and launch communications services on its network. Morken said early users are already generating traffic and revenue, describing the product as a new purchasing channel that supports autonomous-agent sign-ups.
The company is also investing in global network coverage, Maestro integrations with AI and voice platforms, trust and security features, and edge infrastructure. Morken said Bandwidth has begun deploying graphics processing units in certain points of presence to move elements of the AI voice technology stack closer to end users.
Margins, Messaging and Customer Retention
Chief Financial Officer Daryl Raiford said non-GAAP gross profit increased 14% to $90 million, and non-GAAP gross margin improved by one percentage point to 59.4%. The company expects gross margin to expand during the third and fourth quarters and is targeting approximately 60% non-GAAP gross margin for the full year.
- Voice revenue was $121 million, up 9% year over year.
- Programmable Messaging revenue was $31 million, up 22%.
- Commercial messaging grew 18%, supplemented by about $1 million in political campaign-related messaging revenue.
- Software-services revenue attached to voice and messaging rose 66% from the prior year.
- Reported net retention was 107%; commercial net retention, adjusted for political campaign activity, was 113%.
- Customer name retention remained above 99%, while average annual revenue per customer reached a record $256,000.
Raiford said the company expects about $13 million in political campaign revenue for 2026, down from its prior expectation of approximately $15 million. However, he said the company increased its expectations for commercial Cloud Communications revenue, including voice and commercial messaging.
Management said the timing of larger customer deployments affected quarterly voice growth, but it expects enterprise revenue growth to accelerate as recent wins ramp. Bandwidth has won 13 annual contracts worth more than $1 million since the start of 2025, including seven so far in 2026.
Raised 2026 Outlook and Capital Actions
For the third quarter, Bandwidth forecast revenue of $231 million to $235 million, representing roughly 21% year-over-year growth. It expects adjusted EBITDA of $32 million to $34 million and non-GAAP earnings per share of $0.45 to $0.49.
For the full year, the company raised its total revenue outlook to $900 million to $910 million, from a previous range of $880 million to $900 million. It now expects Cloud Communications revenue of $622 million to $626 million and adjusted EBITDA of $123 million to $125 million, implying a 20% midpoint EBITDA margin.
During the quarter, Bandwidth repurchased 263,000 shares for $15 million at an average price of $57.06 per share, bringing year-to-date repurchases to $20 million. The company also issued $316 million of 0% convertible senior notes due 2032, generating approximately $282 million in net proceeds after related costs. It used about $122 million of the proceeds to repurchase much of its 2028 convertible notes, leaving approximately $28 million outstanding on those notes.
Free cash flow was $24 million, and net leverage ended the quarter at 1.6 times, compared with 1.5 times at the end of the first quarter.
About Bandwidth (NASDAQ:BAND)
Bandwidth Inc operates a cloud-based communications platform that provides voice, messaging and emergency services APIs for enterprises and developers. Through its proprietary network and software-as-a-service model, the company enables customers to integrate programmable voice calls, text messaging and 9-1-1 routing into their applications. Bandwidth’s solutions aim to reduce complexity and improve reliability in mission-critical communications, serving industries such as healthcare, financial services, on-demand mobility and customer engagement.
Founded in 1999 in Raleigh, North Carolina by co-founders David Morken and Henry Kaestner, Bandwidth initially focused on voice-over-IP infrastructure before evolving into a full communications API provider.
