Key Highlights

  • Record quarterly Revenue of $234 million rose 22% year-over-year, with nine-month revenue of $663 million up 21%
  • Adjusted EBITDA of $35 million increased 43% year-over-year; Adjusted EBITDA Margin expanded to 22% from 18% in the prior-year period
  • Free Cash Flow reached a record $33 million, up from $13 million in Q3 2025
  • Four new $1 million-plus customer wins and expansions during the quarter; Salesforce named Bandwidth first certified international carrier

Bandwidth Inc. (NASDAQ:BAND), a global enterprise cloud communications company, posted its best financial quarter on record in the three months ended September 30, 2026. Revenue of $234 million grew 22% year-over-year, Adjusted EBITDA of $35 million expanded 43%, and free cash flow of $33 million more than doubled from a year earlier, reflecting the accelerating Demand for voice and messaging infrastructure as enterprises embed AI-driven agents into customer communications workflows.

AI-Powered Demand Fuels Customer Expansion

CEO David Morken characterized the growth as early-stage validation of a significant infrastructure opportunity: as AI agents begin acting on behalf of businesses and consumers, they require reliable, low-latency voice and text connectivity that Bandwidth's owned network is positioned to provide. Four new enterprise wins and expansions at the $1 million-plus revenue threshold were secured during the quarter, including a national digital banking platform that displaced a major competitor and an all-digital privacy company that expanded into an AI-powered call-screening service. Separately, Salesforce named Bandwidth its first certified international carrier to support the global rollout of Salesforce's native Contact Center across 25-plus countries in Europe, the U.K., Australia, and New Zealand.

Financial Performance Reflects Operating Leverage

Non-GAAP gross margin reached 61% in Q3, up from 58% a year earlier, and non-GAAP Net Income was $20 million, or $0.50 per share, compared to $11 million, or $0.36 per share, in Q3 2025. GAAP net income turned positive at $5 million versus a prior-year loss of $1 million. Cash generated from Operating Activities reached $38 million, up 73% from Q3 2025. For the nine months ended September 30, 2026, free cash flow was $56 million compared to $25 million in the same period of 2025, an improvement driven by higher revenues, margin expansion, and disciplined expense management.

Full-Year Guidance Raised; 2027 Outlook Positive

Bandwidth raised its full-year 2026 revenue guidance to $905–$910 million and maintained Adjusted EBITDA guidance of $124–$125 million, with non-GAAP EPS of $1.73–$1.79. Management also highlighted a 2027 outlook for double-digit Cloud Communications revenue growth driven by voice usage demand, citing the company's global reach across approximately 70 countries and 90% of global GDP as a structural competitive advantage.

Bandwidth's combination of a carrier-grade owned network, regulatory expertise, and accelerating enterprise AI adoption positions the company as a key beneficiary of the ongoing shift toward agent-driven communications. The consistent pace of new customer wins and expansion of marquee platform partnerships supports management's confidence in durable revenue growth through 2027 and beyond.