Bandwidth Inc tumbles after Needham downgrades on "slower growth than advertised"

Bandwidth

06/05/2022 17:19

** Shares of communications-platform-as-a-service (CPaaS)
provider  BAND.O  slump 11.3% to $23.72; set for worst day since
the Feb 24. markets sell-off when the Ukraine war began
    ** Brokerage Needham downgrades BAND to "hold" from "buy"
and withdraws PT previously at $45
    ** BAND on Wed. reported Q1 results; revenue grew 16%
year-over-year  urn:newsml:reuters.com:*:nPn5y1tYBa
    ** However, Needham notes revenue grew only 4% YoY once
BAND's pass-through messaging (A2P) surcharges are excluded;
BAND began disclosing A2P fees this year
    ** "We view recent top-line growth as meaningfully inflated
by these A2P fees, which are pass-through costs to customers
that are neutral to gross profit dollars, and see a meaningful
decline in quality of revenue growth" - Needham
    ** Brokerage also sees no meaningful operating margins
expansion over the next 12 months for BAND, as co's operating
expenses are expected to remain above 40% of revenue
    ** BAND has fallen 63% YTD through last close

 (Reporting by Ruhi Soni in Bengaluru)
 ((Ruhi.Soni@thomsonreuters.com;
Twitter: https://twitter.com/ruhithere;))