Is this company our next TEN BAGGER ?

AN UNDER-THE-RADAR stock, up 150% since March lows in the same league as $TWLO $API

SALES ARE GROWING at 35% YoY up from 28% and 18% in prev. Qs.

Will this $ 3.5B company reach $TWLO $ 33B market cap?

Here is a SHORT thread

Bandwidth $BAND is a CPaaS founded by David Morken, the current CEO in 1999 and IPOed in 2017

It enables customers to create scale and operate voice or messaging communications services across any mobile application or connected device

These customers include top notch communication enablers $GOOG $MSFT $ZM $RNG $GDDY

You receive an sms with a code when logging to your Google account? $BAND is probably behind

You call on Zoom with your colleagues? $BAND is probably behind

If you are using Microsoft Teams at work, then you are using $BAND Direct Routing and E911 solution

Cloud communications to replace telecom lines

What happened with COVID? You went home and worked using $ZM & Teams

What happened behind the scenes? A Tier-1 Network enabled by a Session Initiation Protocol supported your voice and messaging communications

Tier-1 Networks are basically the back bone of the internet. These are the networks that are large enough to support the flow of internet traffic on a global level

What is best with these networks is Tier-1 networks don’t have to pay fees to each other, the exchange traffic based on strict peering agreements that don’t require the intervention of a third party - hereby reducing costs

A Session Initiation Protocol is a communications protocol used to start, manage and close calls and exchanges in an IP based network

Basically, it is just the instruction set that tells an application how to process a phone call

What will happen after COVID?

Will you go back to use that expensive land lines to make your calls?

Or will you rely on Zoom, Teams and any other Internet communication tool?

You’ve guessed it! You’ll stick to voice and messaging over the internet

In fact, the market for CPaaS is set to boom to $ 17B by 2023 according to IDC - up from $ 3B in 2018

This is boosted by 2 key arguments

Now that corporates have been transformed by $ZM and Teams there is a small chance that office workers ever go back to their costly landlines ($25 per month)

$ZM revenue grew 355% YoY during Q2 '20 topping $663.5m

Teams DAU in April reached 75m from 44m in March

eCommerce Food delivery Fintech serviceshave exploded with COVID. These industries are prime users of internet communications

Gross bookings on $UBER EATS grew 113% YoY

$AMZN revenue grew 40% to $88.9b

Here is an extract from Mordor Intelligence on how internet communications are helping Staples drive sales

“Staples used CPaaS as part of its Easy System, a smart-ordering platform, leveraging an IoT-driven virtual assistant that helps organisations manage office supplies.”

You know what is best? $BAND is the only API platform that owns a Tier 1 Network and provides SIP trunking

As a network carrier it is able to undercut $TWLO on pricing - Remember that this was first a disadvantage as $TWLO as able to expand further

But $BAND is now the network provider for major communication enablers such as $MSFT and $ZM

Bandwidth has built and operates its OWN nationwide IP voice network rather then relying on third party carriers like $TWLO

Meaning the company CONTROLS rather than OUTSOURCE its network

It offers a software platform on top of an IP network

It results in better quality , rates and control for its customers

Better ability to set prices and undercut customers ($ 0.35 per line per month for $BAND vs. $ 1 for $TWLO)

As explained by Bandwidth

“If you equate choosing your API to buying a new car, not only do we own the car dealership, we also built the engine, control the quality of the gas and oil, and can even give you a GPS to find the best route. The other guys are just dealerships [...]”

So… $TWLO is the big fish here right? Well they do not target the same customers

$TWLO targets mobile application developers that just need to integrate voice and messages into their apps

$BAND targets larger cloud native businesses that needs a cheaper infrastructure given their huge need for internet communications

Their business model is apart as $BAND places itself as the network of the future

$TWLO works with over 1,000 mobile carriers in over 150 countries

$BAND owns the network undercutting $TWLO on price by up to 50% and delivering better reliability

Increasing revenue growth and stable margins

Revenue grew 35.2% to $76.8m in Q2 ’20 YoY (vs 28.5% in Q2 ’20 YoY)

Gross margins at 46% (stable QoQ)

EBITDA at $5.5m and positive FCF of $2.7m

Active customers at 1900 (up 30% YoY)

Dollar based net retention rate at 133% (from 113% in the period ended June 30, 2020)

$BAND founder and current CEO David Morken enjoys a 99% approval rating on Glassdoor with a company score of 4.5/5

The bottom line

The market $BAND is tackling is set to grow to $ 17B by 2023 - CPaaS is still nascent and boosted by the shift to “Remote Everything”

With its Tier-1 network $BAND can undercut its competitors and offer the scale solution $ZM $GOOG $MSFT need

This is supported by $BAND return to growth and raising Q2 guidance

Hope you liked this thread!

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Here is a review for $BAND - A $TWLO alternative that might catch your attention - would love to hear your take the matter
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Disclaimer - This is not investment advice in any form and investors are responsible for conducting their own research before investing.

Sources

✑ https://www.gin.ntt.net/about/our-network/

✑ https://www.forbes.com 

✑ https://elite.net.uk/ 

✑ Investor presentation

✑ Company website

✑ https://www.mordorintelligence.com/