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Yahoo
25-06-2025
- Business
- Yahoo
Twilio vs. Bandwidth: Which CPaaS Stock Is the Better Buy Right Now?
Twilio Inc. TWLO and Bandwidth Inc. BAND are two major names in the U.S. Communications Platform as a Service (CPaaS) market. Both help businesses and developers build apps for messaging, voice and emergency services using application programming interfaces (APIs). With the growing shift to cloud-based communications and artificial intelligence (AI)-driven solutions, the big question for investors is: Which of these CPaaS players offers a more compelling investment opportunity today? Let's break down their fundamentals, growth prospects and valuations to find out. Twilio remains the leader in customer communications, offering tools that help businesses connect with customers in real time and at scale. The company's focus on AI-powered products like Conversation Relay and Generative Custom Operators allows businesses to automate customer interactions, improve security and get smarter insights. This focus on AI is helping Twilio's clients work more efficiently and save costs. Twilio Segment, TWLO's customer data platform, is another growth driver. It allows businesses to bring together data from different sources to run targeted marketing campaigns that boost loyalty and sales. As AI adoption rises, Twilio's ability to combine communication with data gives it a real advantage. On the financial front, Twilio has made solid progress. In the first quarter of 2025, non-GAAP earnings per share jumped 42.5% on 12% revenue growth due to better cost control and efficiency. Twilio Inc. price-consensus-eps-surprise-chart | Twilio Inc. Quote Twilio's financial health looks strong, with $2.45 billion in cash and $991 million in long-term debt. It has been returning capital to shareholders aggressively by repurchasing stocks worth $2.3 billion in 2024 alone. In January 2025, Twilio authorized a $2 billion share buyback program, signaling confidence in its long-term prospects. During the first quarter of 2025, it repurchased shares worth $126.3 million. Bandwidth has built a respectable position in cloud communications but at a smaller scale than Twilio. In the first quarter of 2025, Bandwidth saw its non-GAAP earnings per share rise 33.3% on 7% revenue growth. Its Enterprise Voice business is the star performer, with the growing adoption of its Maestro and AI Bridge platforms. These help businesses modernize communications and integrate AI voice tools for better efficiency. Bandwidth Inc. price-consensus-eps-surprise-chart | Bandwidth Inc. Quote From a portfolio strength and market positioning view, Bandwidth's mix of Enterprise Voice, Global Voice Plans and Programmable Messaging provides a broad service offering. Its global network helps ensure reliable, low-latency service for demanding use cases like AI-powered voice applications. However, challenges remain. Messaging growth has been slow and could face more pressure if retail or marketing spending slows. The heavy reliance on Enterprise Voice for growth creates a concentration risk, and while Bandwidth's AI offerings show promise, it may take time before they drive significant revenues. Bandwidth's debt is another concern. As of March 31, 2025, the company had just $42 million in cash compared to $468 million in long-term liabilities. This debt load could limit its ability to invest or manage through tough periods. Twilio seems better positioned for growth. The Zacks Consensus Estimate for TWLO's 2025 revenues and EPS implies year-over-year growth of 7.9% and 22.3%, respectively. The consensus mark for BAND's 2025 revenues and EPS indicates a year-over-year increase of 0.3% and 14.2%, respectively. On the valuation front, Twilio trades at 3.61 times forward sales compared to 0.53 times for Bandwidth. While TWLO looks more expensive, its higher growth momentum justifies the premium. BAND's lower valuation reflects its risks, including slowing messaging growth, macroeconomic headwinds and a high debt level. Image Source: Zacks Investment Research Year to date, Twilio stock has risen 9%, while Bandwidth shares have fallen 17.3%. This difference shows how investors are weighing the risks and rewards of each company. Image Source: Zacks Investment Research Both companies offer ways to benefit from the shift to cloud communications and AI. However, Twilio's scale, product diversity, stronger growth outlook and solid balance sheet give it a clear edge. For investors looking for a more reliable and faster-growing player in CPaaS, Twilio stands out as the smarter choice right now. Currently, TWLO sports a Zacks Rank #1 (Strong Buy), making the stock a must-pick compared to Bandwidth, which has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Twilio Inc. (TWLO) : Free Stock Analysis Report Bandwidth Inc. (BAND) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Yahoo
11-06-2025
- Business
- Yahoo
BAND Q1 Earnings Call: Enterprise Voice and AI Drive Platform Expansion
Communications platform-as-a-service company Bandwidth (NASDAQ: BAND) reported Q1 CY2025 results beating Wall Street's revenue expectations , with sales up 1.9% year on year to $174.2 million. Guidance for next quarter's revenue was better than expected at $179 million at the midpoint, 1% above analysts' estimates. Its non-GAAP profit of $0.36 per share was 33.3% above analysts' consensus estimates. Is now the time to buy BAND? Find out in our full research report (it's free). Revenue: $174.2 million vs analyst estimates of $168.9 million (1.9% year-on-year growth, 3.1% beat) Adjusted EPS: $0.36 vs analyst estimates of $0.27 (33.3% beat) Adjusted Operating Income: $15.46 million vs analyst estimates of $11.96 million (8.9% margin, 29.3% beat) The company slightly lifted its revenue guidance for the full year to $752.5 million at the midpoint from $750 million EBITDA guidance for the full year is $87.5 million at the midpoint, above analyst estimates of $86.38 million Operating Margin: -2.7%, up from -6.1% in the same quarter last year Market Capitalization: $451.2 million Bandwidth's first quarter results were buoyed by strong demand for its cloud communications services, particularly in the enterprise voice segment. CEO David Morken highlighted that over half of enterprise customers now use the Maestro or AI Bridge platforms, underscoring their growing adoption to address complex communication needs in sectors like healthcare and financial services. Noteworthy customer wins included a major Midwest healthcare provider and a group of hospitals integrating Bandwidth's solutions for enhanced reliability and AI-powered voice agents. Management also attributed growth to new and expanded partnerships with managed service providers and system integrators, which accelerated large-scale deployments. These factors, along with increased cross-sell and up-sell activity, contributed to a rise in average annual revenue per customer and higher net retention rates. Looking ahead, Bandwidth's guidance is shaped by expectations of continued double-digit growth in its core platform offerings, driven by the increasing adoption of AI voice agents and further expansion of its channel partnerships. CFO Daryl Raiford noted that, while macroeconomic uncertainty persists, the company's diversified base—particularly its essential enterprise voice services—provides resilience. Raiford added, 'We are expecting our global voice plans to double their growth this year, and programmable messaging to maintain low double-digit growth.' Management remains focused on margin expansion and disciplined financial management, with an eye on achieving 60% gross margins in the medium term. The team also emphasized ongoing investments in platform innovation and regulatory expertise as key differentiators supporting future growth. Management attributed the quarter's performance to strong enterprise voice uptake, AI integration, and channel partner momentum, while also noting resilience in essential communications services amid macro volatility. Enterprise voice momentum: Over half of enterprise customers now use Maestro or AI Bridge, reflecting Bandwidth's ability to modernize complex communication infrastructures and enable AI-powered voice agents, especially in regulated industries like healthcare and financial services. Channel partnerships expanding: The company highlighted strengthened relationships with managed service providers and system integrators, which not only accelerated sales cycles but also enabled Bandwidth to tackle larger, more complex enterprise projects, such as new deployments for a major regional auto club. AI integration as a differentiator: Management pointed to Maestro's orchestration and AI Bridge's flexibility as key factors in recent customer wins, allowing enterprises to integrate AI voice agents for operational efficiency and improved customer experiences without overhauling legacy systems. Global voice plans growth: The company's largest voice offering continued to secure new business and upsell long-standing customers, benefiting from Bandwidth's global network reliability and regulatory expertise, particularly for clients launching advanced AI use cases like real-time multilingual voice translation. Programmable messaging stability: While more exposed to macroeconomic shifts, programmable messaging grew through diversified customer use cases and compliance capabilities, with new wins in consumer engagement and anticipated expansion into the wellness sector. Enhanced deliverability, campaign registration tools, and support for protected health information contributed to ongoing demand. Management expects continued expansion in enterprise voice and global voice plans, supported by AI adoption and partner channels, while monitoring macroeconomic conditions and messaging segment volatility. AI voice adoption accelerates: Management believes the shift toward AI voice agents in enterprise communication workflows will drive usage and wallet share across Bandwidth's product lines. The flexibility to integrate multiple AI solutions through Maestro and AI Bridge is viewed as a competitive advantage in addressing evolving customer needs. Channel and vertical diversification: Strategic expansion of partnerships with managed service providers and entry into new verticals—such as hospitality and manufacturing—are expected to support revenue growth and deal size, especially as large integrators facilitate more complex deployments for global enterprises. Messaging and macro sensitivity: Programmable messaging growth is projected in the low double digits, but management acknowledged greater exposure to macroeconomic headwinds in retail and digital marketing. The company is investing in enhanced deliverability and compliance tools to retain and grow this segment despite potential market volatility. In coming quarters, the StockStory team will be watching (1) further enterprise adoption of Maestro and AI Bridge, especially in new verticals; (2) continued momentum and revenue contribution from managed service provider and system integrator partnerships; and (3) the resilience of programmable messaging growth amid macroeconomic shifts. We will also track progress toward Bandwidth's medium-term gross margin targets and execution on additional AI-driven product enhancements. Bandwidth currently trades at a forward price-to-sales ratio of 0.6×. In the wake of earnings, is it a buy or sell? Find out in our full research report (it's free). Donald Trump's victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs. While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
