Bandwidth guides 20% 2026 revenue, 33% EBITDA rise
Bandwidth Inc. presents 2026 guidance with double‑digit revenue and EBITDA growth, rising margins, and sharply reduced net leverage.
Rhea-AI Filing Summary
Bandwidth Inc. (BAND) furnished an investor presentation outlining its positioning as a global cloud communications provider and its financial trajectory through 2026. The company highlights a large and growing addressable market, including a total addressable market increasing from $111 billion in 2025 to $174 billion in 2030.
Guidance for 2026 includes 20% total revenue growth year over year and 33% Adjusted EBITDA growth, with an expected 20% Adjusted EBITDA margin on projected cloud communications revenue. Non-GAAP gross margin expanded from 55% in 2022 and 2023 to 57% in 2024 and 58% in 2025.
The presentation cites strong balance sheet improvement, with net leverage falling from 8.8x to 1.6x over recent periods and free cash flow rising from about –$11 million to $57 million in three years. Customer metrics include 99% customer name retention, a 113% net retention rate, and long tenures among top customers.
Positive
- 2026 outlook shows 20% revenue growth and 33% Adjusted EBITDA growth, with an expected 20% Adjusted EBITDA margin on cloud communications revenue, indicating a materially stronger earnings profile.
- Leverage declines from 8.8x to 1.6x net debt/TTM Adjusted EBITDA, supported by strong cash generation and rising free cash flow from roughly –$11M to $57M over three years.
- Non-GAAP gross margin improves to 58% in 2025, up from 55% in 2022–2023 and 57% in 2024, reflecting better mix, scale, and operational efficiency.
- Customer metrics are very strong, including 99% customer name retention, 113% net retention rate, and a 12‑year median tenure for the top 20 customers as of June 30, 2026.
Negative
- None.
Filing Explained
The September 15 Form 8-K furnishes an investor presentation for third-quarter conferences; the materials are not treated as “filed” for Section 18 liability, are not incorporated into other filings, and the company does not undertake to update them.
8-K Event Classification
2 items: 7.01, 9.01
2 items
Item 7.01
Regulation FD Disclosure
Disclosure
Material non-public information disclosed under Regulation Fair Disclosure, often investor presentations or guidance.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, or exhibit attachments filed with this report.
Key Figures
Total Addressable Market 2025: $111 billion
Total Addressable Market 2030: $174 billion
2026E Total Revenue Growth: 20%
+5 more
8 metrics
Total Addressable Market 2025
$111 billion
Projected Bandwidth TAM in 2025
Total Addressable Market 2030
$174 billion
Projected Bandwidth TAM in 2030
2026E Total Revenue Growth
20%
Year-over-year total revenue growth guidance for 2026
2026E Adjusted EBITDA Growth
33%
Year-over-year Adjusted EBITDA growth guidance for 2026
Non-GAAP Gross Margin 2025
58%
Non-GAAP gross margin for full year 2025
Adjusted EBITDA 2025
$93.3 million
Adjusted EBITDA for full year 2025
Adjusted EBITDA 2026E
$124 million
Midpoint of 2026 Adjusted EBITDA guidance
Customer Name Retention
99%
Customer name retention rate as of June 30, 2026
Key Terms
Adjusted EBITDA, Free cash flow, Non-GAAP Gross Margin, Net debt, +2 more
6 terms
Adjusted EBITDA financial
"Accelerating profitability: Adjusted EBITDA growth"
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
Free cash flow financial
"Free cash flow and Free cash flow margin are Non-GAAP financial measures"
Free cash flow is the amount of money a company has left over after paying all its expenses and investing in its business, like buying equipment or updating facilities. It shows how much cash is available to reward shareholders, pay down debt, or save for future growth. This helps investors understand if a company is financially healthy and able to grow.
Non-GAAP Gross Margin financial
"Non-GAAP Gross Margin is calculated by dividing non-GAAP gross profit"
Non-GAAP gross margin is a measure of a company's profitability that shows how much money it makes from sales after subtracting the direct costs of producing its products or services, but without applying certain accounting adjustments required by standard rules. It helps investors understand the company's core earning ability by excluding items like one-time expenses or accounting changes. This metric provides a clearer picture of ongoing business performance beyond official financial reports.
Net debt financial
"Net debt at respective balance sheet date"
Net debt is the total amount a company owes after subtracting the cash and assets it has that can be used to pay off that debt. It shows how much debt is truly a burden, helping investors understand if a company is financially healthy or heavily borrowed. Think of it like calculating how much money you owe after using your savings to pay part of it.
UCaaS technical
"UCaaS - Unified Communications as a Service"
Unified Communications as a Service (UCaaS) is a cloud-based bundle of business communication tools — such as phone calling, video meetings, messaging, and voicemail — delivered over the internet instead of on-site hardware. For investors, UCaaS matters because it shifts companies from buying and maintaining equipment to paying recurring subscription fees, creating predictable revenue for providers and signaling how widely businesses are adopting flexible, remote-ready communications, which can affect growth and valuation.
CPaaS technical
"Leader in Worldwide CPaaS-2025"
A Communications Platform as a Service (CPaaS) is a cloud-based toolkit that lets companies add voice calls, text messages, video and chat features to their apps or websites without building the underlying phone or messaging systems. Think of it as a plug-and-play communications engine developers drop into software. Investors watch CPaaS because it often produces usage-based and recurring revenue, can scale quickly with customer communication needs, and benefits from trends like remote work and digital customer service.
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What growth guidance did Bandwidth Inc. (BAND) provide for 2026?
Bandwidth guides to 20% total revenue growth and 33% Adjusted EBITDA growth for 2026. It also indicates an expected 20% Adjusted EBITDA margin on projected cloud communications revenue between $622 million and $626 million, based on its July 29, 2026 outlook.
How is Bandwidth Inc. (BAND) describing its market opportunity?
Bandwidth cites a growing total addressable market increasing from $111 billion in 2025 to $174 billion in 2030. Management emphasizes AI‑driven voice and messaging as key growth drivers within global cloud communications.
What margin trends does Bandwidth Inc. (BAND) highlight in the presentation?
The company reports non-GAAP gross margin of 55% in 2022 and 2023, rising to 57% in 2024 and 58% in 2025. It attributes this to scale, AI adoption, software mix, global coverage, and operational efficiencies.
How has Bandwidth Inc. (BAND) improved leverage and cash flow?
Bandwidth shows net leverage declining from 8.8x to 1.6x net debt/TTM Adjusted EBITDA. Free cash flow improves from about –$11 million to $57 million over three years, supported by higher operating cash flow and controlled capital spending.
What customer retention metrics does Bandwidth Inc. (BAND) report?
As of June 30, 2026, Bandwidth reports 99% customer name retention, a 113% net retention rate excluding political campaign revenue, and a 12‑year median tenure for its top 20 customers, indicating durable relationships and recurring revenue.
How does Bandwidth Inc. (BAND) characterize its role in AI communications?
Bandwidth presents itself as an orchestrator of AI, voice and messaging, via its Maestro platform and owned global network across about 70 countries. It positions AI-driven interactions as expanding usage, which can increase revenue and margins.
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________________
FORM 8-K
___________________________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 15, 2026
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
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Item 7.01 Regulation FD Disclosure.
Bandwidth Inc. (the “Company”) plans to use certain presentation materials at various investor conferences during the third quarter of 2026. A copy of these materials is furnished with this Current Report on Form 8-K as Exhibit 99.1 and will be available on Bandwidth’s investor relations website at investors.bandwidth.com. The Company is not undertaking to update these materials.
The information furnished with this Item 7.01, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act, except as expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description | |||||||
99.1 | Bandwidth Inc. Investor Presentation | |||||||
| 104 | Cover Page Interactive File (the cover page tags are embedded within the Inline XBRL document) | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| BANDWIDTH INC. | ||||||||
| Date: September 15, 2026 | By: | /s/ Daryl E. Raiford | ||||||
| Name: | Daryl E. Raiford | |||||||
| Title: | Chief Financial Officer | |||||||
Investor Presentation September 2026
Legal disclaimer This presentation includes forward-looking statements. All statements contained in this presentation other than statements of historical facts, including, without limitation, the success of our product offerings and our platform, and the value proposition of our products, and anticipated growth of the addressable market, are forward-looking statements. The words “anticipate,” “assume,” “believe,” “continue,” “estimate,” “expect,” “intend,” “guide,” “may,” “will” and similar expressions and their negatives are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to a number of risks and uncertainties, including, without limitation, risks related to our rapid growth and ability to sustain our revenue growth rate, competition in the markets in which we operate, market growth, our ability to innovate and manage our growth, our ability to expand effectively into new markets, macroeconomic conditions both in the U.S. and globally, legal, reputational and financial risks which may result from ever-evolving cybersecurity threats, our ability to operate in compliance with applicable laws, as well as other risks and uncertainties set forth in the “Risk Factors” section of our latest Form 10-K filed with the Securities and Exchange Commission (the “SEC”) and any subsequent reports that we file with the SEC. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, we cannot guarantee future results, levels of activity, performance, achievements or events and circumstances reflected in the forward-looking statements will occur. We are under no obligation to update any of these forward-looking statements after the date of this presentation to conform these statements to actual results or revised expectations, except as required by law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this presentation. This presentation also includes certain guidance on non-GAAP financial measures. These non-GAAP financial measures are in addition to, and not as a substitute for or superior to measures of financial performance prepared in accordance with GAAP. There are a number of limitations related to the use of these non-GAAP financial measures versus their nearest GAAP equivalents. For example, other companies may calculate non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of the Company’s non-GAAP financial measures as tools for comparison. The Company provides a reconciliation of certain non-GAAP measures to the most directly comparable GAAP measures, which are available in the earnings press release for the relevant period and in the appendix of this presentation. Market data and industry information used throughout this Presentation are based on management's knowledge of the industry and the good faith estimates of management. Management also relied, to the extent available, upon management's review of independent industry surveys and publications and other publicly available information prepared by a number of third party sources. The market data and industry information used in this presentation involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. Although we believe that these sources are reliable, we cannot guarantee the accuracy or completeness of this information, and we have not independently verified this information. While we believe the estimated market position, market opportunity and market size information included in this presentation are generally reliable, such information, which is derived in part from management's estimates and beliefs, is inherently uncertain and imprecise. No representations or warranties are made by the Company or any of its affiliates as to the accuracy of any such statements or projections. Projections, assumptions and estimates of our future performance and the future performance of the industry in which we operate are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described above. These and other factors could cause results to differ materially from those expressed in our estimates and beliefs and in the estimates prepared by independent parties. 2
321 Bandwidth: an attractive investment opportunity A global cloud communications leader in a large and growing market Orchestrating AI, voice, and messaging across cloud communications Proven business model delivering growth, profitability, and capital strength 3
A global cloud communications leader in a large and growing market 4 1
1.6X Bandwidth’s market is large and growing Source: Analyst and company estimates. 5 $111 $174 2025 2030 Bandwidth TAM ($ billions) AI voice driving market growth
Bandwidth powers mission-critical communications across three customer categories… 100% of the GartnerⓇ UCaaS1 and CCaaS2 platform Leaders The largest global enterprises High-volume messaging platforms and apps 1 UCaaS - Unified Communications as a Service. 2 CCaaS - Contact Center as a Service. GLOBAL VOICE PLANS ENTERPRISE VOICE PROGRAMMABLE MESSAGING 6
7 Bandwidth and Salesforce expand collaboration First certified carrier for global rollout 25+ countries in SF’s initial expansion NEW Maestro™ BYOC integration Extends our growth opportunity • Usage-based model • More interactions → revenue and margin Expands our reach • North America → International • Initial markets: Europe, UK, Australia, New Zealand Deepens our integration • Maestro™ inside governed workflows • Control, observability, and infrastructure depth. INVESTOR TAKEAWAY Broadens Bandwidth’s role from North American native voice to global infrastructure for AI-driven enterprise engagement. 1st More AI-driven interactions, more value
Bandwidth’s Competitive Edge Durable Customer Loyalty Trusted platform for hyperscalers and global enterprises → Sustained 99%+ customer name retention Global Communications Infrastructure Owned network and regulatory licenses across ~70 countries, covering 90% of the global economy → Structural margin advantage and durable barriers to entry AI Voice Orchestration Platform Maestro enables enterprises to deploy and scale AI voice agents with ultra-low latency, reliability, scalability—with trust and compliance embedded → Accelerating software services revenue 8
Exceptional customer retention and loyalty 9 99% Customer Name Retention 113% Net Retention Rate1 12 years Top 20 Customer Median Tenure 1 Net Retention Rate excludes the benefit of political campaign revenue of $3m and $46m recognized for the twelve months ended June 30, 2026 and 2025, respectively. Note: Customer metrics as of June 30, 2026. See Appendix for definitions of metrics presented in this slide.
A history of award-winning innovation Best of Show Enterprise Connect—2023 Innovation in Customer Service Stevie Awards—2025 Best CPaaS Platform UC Awards—2024 Most Innovative Product CX Today—2023 Leader G2 10 Leader in Worldwide CPaaS-20251 Leader in Worldwide Communications Engagement Platforms 20262 1 IDC MarketScape: Worldwide Communications Platform as a Service (CPaaS) 2025 Vendor Assessment (doc #US52039625, Feb. 2025). 2 IDC MarketScape: Worldwide Communications Engagement Platforms (CEP) 2026 Vendor Assessment (doc #US53542326, April 2026).
Orchestrating AI, voice, and messaging across cloud communications 11 2
AI-enabled AI Communications Era Emerging market EnterpriseEnterprise AI is reshaping the enterprise communications stack Consumer Consumer CCaaS “Digital” Apps Human Agent Conversations One-Way Digital Notifications Orchestrated AI Voice + Messaging (CPaaS 2.0) Enterprise Voice Carriers CRMUCaaS CCaaS “Digital” AppsCRMUCaaS Native AI Voice Agent Messaging (CPaaS 1.0) Human Agent Conversations Two-Way Digital Conversations AI Voice Agent Conversations Customer Experience Communication Channel Applications Cloud Communications Era Established market 12Usage model expands with AI voice adoption
13 The orchestration layer for AI-driven enterprise communications… …With the world’s largest number of ecosystem integrations CCaaS UCaaS CRM Trust Conversational AI 911 Location Maestro connects the enterprise ecosystem
14 Genesys Genesys fuels global CX growth through AI-driven orchestration and its partnership with Bandwidth Five9 Five9 partners with Bandwidth to drive customer communication at a global scale for many of their products Bookline Bookline’s platform helps hospitality venues adopt conversational AI- driven customer service and reclaim missed revenue ibex ibex transforms its telecom strategy with Bandwidth, adopting BYOC cloud services to support its diverse client needs Pennymac Pennymac leverages BYOC with Bandwidth to deliver technology solutions that improve customer and employee communications Wyndham Wyndham’s CCaaS (Five9) and AI (Canary) setup that ensures routing control, full DR, and mitigates vendor lock-in Bandwidth powers mission-critical voice VIEW STORY→ VIEW STORY→ VIEW STORY→ VIEW STORY→ VIEW STORY→ VIEW STORY→
Bandwidth powers mission-critical messaging 15 Attentive Retail and ecommerce leaders rely on Attentive for text message marketing Dental Intelligence Dental Intelligence helps practices boost profitability with smart SMS Jars Capital SMS fuels better resident communications in housing developments DeansList DeansList connects schools and parents with two-way 10DLC SMS MEA Helping institutions connect with customers via Short code, Toll-free, and 10DLC SMS Yosi Health Yosi creates efficiencies and big savings for healthcare providers, thanks to SMS VIEW STORY→ VIEW STORY→ VIEW STORY→ VIEW STORY→ VIEW STORY→ VIEW STORY→
Proven business model delivering growth, profitability, and capital strength 16 3
Durable revenue growth (USD Millions) Cloud communications revenue2 Messaging surcharges3 1 Represents midpoint of guidance provided in the Financial Outlook section of the July 29, 2026 earnings press release. 2 Cloud communications revenue is total revenue less pass-through messaging surcharge revenue. 3 Messaging surcharges is defined as pass-through messaging surcharges levied by carriers on Application to Person (A2P) text messages. Note: Totals may not sum due to rounding. 20% 2026E Total revenue growth y/y1 $99 $122 $209 $192 $905 $475 $479 $540 $561 2022 2023 2024 2025 2026E1 Cloud comms surcharges $573 $601 $748 $754 17
Expanding non-GAAP gross margin Scale and AI adoption Software mix Global coverage Operational efficiencies Fueling gross margin expansion Note: Non-GAAP Gross Profit and Non-GAAP Gross Margin are Non-GAAP financial measures. See Appendix for Non-GAAP definitions and reconciliations. 2022 2023 2024 2025 55% 55% 57% 58% 18
Accelerating profitability: Adjusted EBITDA growth 1 Represents midpoint of guidance provided in the Financial Outlook section of the July 29, 2026 earnings press release. Bandwidth has not reconciled full year 2026 guidance related to Adjusted EBITDA to GAAP Net income or loss, because stock-based compensation cannot be reasonably calculated or predicted at this time. 2Calculated by dividing the midpoint of 2026 Adjusted EBITDA guidance provided in the Financial Outlook section of the July 29, 2026 earnings press release by the midpoint of 2026 projected Cloud communications revenue of between $622 million and $626 million. 19 33% 2026E Adjusted EBITDA growth y/y1 20% 2026E Adjusted EBITDA margin2 (USD Millions) $35 $48 $82 $93 $124 2022 2023 2024 2025 2026E1
Deleveraging through strong cash flow generation 20 (USD Millions) 2022 2023 2024 2025 2Q26 $305 $272 $201 $146 $169 8.8x 5.6x 2.5x Net Debt1 Cash Flow 1 Net debt at respective balance sheet date (long-term debt plus current portion of debt, less the sum of cash and cash equivalents and available for sale securities), divided by the corresponding period's TTM adjusted EBITDA 2 Free cash flow and Free cash flow margin are Non-GAAP financial measures. See Appendix for Non-GAAP definitions and reconciliations. 1.6x1.6x $19 $59 $57 $23 $35 $39 $84 $89 2022 2023 2024 2025 1H26 ($11) Net Cash Provided by Operating Activities Free Cash Flow2 $38
Why Bandwidth wins – and why now The global cloud communications leader, positioned where AI is expanding every interaction IDC MarketScape Leader — Worldwide CPaaS & Communications Engagement Platforms Owned network + licenses across ~70 countries (90% of the global economy), fused with Maestro orchestration software 99% customer name retention · 113% net retention rate Mission-critical infrastructure embedded in governed AI workflows — chosen to power Salesforce Native Contact Center Usage expands as AI agents drive more, higher-value interactions Guided to 20% revenue growth and 33% Adjusted EBITDA growth for 2026, with net leverage down from 8.8x to 1.6x Free cash flow up from –$11M to $57M in three years Growing Market Competitive Advantage Essential for Voice AI Strong Financial Position 21A durable moat, a proven model, and the infrastructure the AI era runs on.
22 We develop and deliver the power to communicate Voice Messaging Emergency Services AI
Appendix
GAAP to non-GAAP reconciliation - gross profit 1 Calculated by dividing Non-GAAP gross profit by revenue less pass-through surcharges of $98.6M in FY22, $122.2M in FY23, $208.7M in FY24, and $192.4M in FY25. Note: Totals may not sum due to rounding. USD millions FY22 FY23 FY24 FY25 Gross Profit 238.4 236.2 280.0 295.1 Gross Margin % 42% 39% 37% 39% Depreciation 13.6 16.3 18.5 20.7 Amortization of acquired intangible assets 7.7 7.8 7.8 8.1 Stock-based compensation 0.4 1.1 1.6 2.2 Non-GAAP Gross Profit 260.0 261.4 307.9 326.0 Non-GAAP Gross Margin %1 55% 55% 57% 58% 24
1 Non-recurring items not indicative of ongoing operations and other include (i) $0.9 million of foreign currency losses on the settlement of intercompany borrowings, which were repatriated in conjunction with the repurchase of the 2026 Convertible Notes and $0.6 million of nonrecurring litigation expense for the year ended December 31, 2022, (ii) a $1.0 million gain on the sale of an intangible asset for the year ended December 31, 2024, and (iii) $0.4 million, $0.8 million, and $0.5 million of losses on disposals of property, plant and equipment during the years ended December 31, 2024, 2023, and 2022, respectively. For the year ended December 31, 2025, non-recurring items not indicative of ongoing operations and other include $1.3 million of foreign exchange charges primarily related to balance sheet revaluations, $0.5 million in nonrecurring litigation expense, $0.9 million of losses on disposals of property, plant and equipment, and $0.1 million of losses on sale of business. 2Represents the acquisition cost of property, plant and equipment and capitalized development costs for software for internal use. Note: Totals may not sum due to rounding. GAAP to non-GAAP reconciliation – adjusted EBITDA, free cash flow USD millions FY22 FY23 FY24 FY25 Net Income (loss) 19.6 (16.3) (6.5) (12.9) Income tax benefit (2.3) (3.0) (2.4) (3.7) Interest expense, net 3.0 0.8 1.9 2.0 Depreciation 18.4 24.4 31.7 35.7 Amortization 17.2 17.3 17.5 18.1 Stock-based compensation 20.7 37.0 48.4 52.3 Gain on sale of business (3.8) - - - Net cost associated with early lease terminations and leases without economic benefit - 4.0 2.4 - Net gain on extinguishment of debt (40.2) (12.8) (10.3) (1.1) Gain on business interruption insurance recoveries - (4.0) - - Non-recurring items not indicative of ongoing operations and other1 2.0 0.8 (0.6) 2.8 Adjusted EBITDA 34.6 48.2 82.1 93.3 USD millions FY22 FY23 FY24 FY25 1Q26 2Q26 Net cash provided by operating activities 34.9 39.0 83.9 89.5 8.8 28.8 Net cash used in investing in capital assets2 (45.4) (19.9) (25.4) (32.9) (9.4) (5.0) Free cash flow (10.5) 19.1 58.5 56.6 (0.6) 23.7 25
Definitions Adjusted EBITDA: Net income or losses from continuing operations, adjusted to reflect the addition or elimination of certain statement of operations items including, but not limited to: income tax (benefit) provision, interest (income) expense, net, depreciation and amortization expense, acquisition related expenses, stock-based compensation expense, impairment of intangible assets, (gain) loss on sale of business, net cost associated with early lease terminations and leases without economic benefit, net (gain) loss on extinguishment of debt, gain on business interruption insurance recoveries, and non-recurring items not indicative of ongoing operations and other. Adjusted EBITDA margin: Adjusted EBITDA margin is calculated by dividing adjusted EBITDA by cloud communications revenue, which excludes pass-through messaging surcharge revenue. Average annual customer revenue: Average annual customer revenue is the trailing twelve month revenue divided by the average [number] of active customers from the current quarter and number of active customers from the same quarter of the prior year. Adjusted Net Retention Rate: To calculate Adjusted Net Retention Rate, we first identify the cohort of customers that generated revenue in the same quarter of the prior year. Revenue attributable to political campaign activity recognized during the corresponding periods is excluded from the calculation. Adjusted Net Retention Rate is obtained by dividing the revenue generated from that adjusted cohort in a quarter by the revenue generated from that same adjusted cohort in the corresponding quarter in the prior year. The Adjusted Net Retention Rate reported in a quarter is then obtained by averaging the result from that quarter with the corresponding results from each of the prior three quarters. Customers of acquired businesses are included in the subsequent year's calendar quarter of acquisition. Cloud communications revenue: Total revenue less pass-through messaging surcharge revenue. Customer name retention rate: Customer name retention rate (CNRR) is defined as the percentage of customers with $100k or greater revenue in the prior twelve month period that remain customers in the current twelve month period. Free cash flow: Free cash flow represents net cash provided by or used in operating activities less net cash used in the acquisition of property, plant and equipment and capitalized development costs of software for internal use. Free cash flow margin: Free cash flow margin is calculated by dividing free cash flow by cloud communications revenue, which excludes pass-through messaging surcharge revenue. Messaging surcharge revenue: Revenue derived from fees imposed by certain carriers within the messaging ecosystem, which are subsequently invoiced and passed through to customers. Net Retention Rate ("NRR"): To calculate the net retention rate, we first identify the cohort of customers that generated revenue in the same quarter of the prior year. The net retention rate is obtained by dividing the revenue generated from that cohort in a quarter, by the revenue generated from that same cohort in the corresponding quarter in the prior year. The net retention rate reported in a quarter is then obtained by averaging the result from that quarter by the corresponding results from each of the prior three quarters. Customers of acquired businesses are included in the subsequent year’s calendar quarter of acquisition. Non-GAAP Gross Profit: Gross profit after adding back the following items: depreciation and amortization; amortization of acquired intangible assets related to acquisitions; and stock-based compensation. Non-GAAP Gross Margin: Non-GAAP Gross Margin is calculated by dividing non-GAAP gross profit by cloud communications revenue, which excludes pass-through messaging surcharge revenue. 26