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Item 1. Business

2022-02-25 compared with 2021-03-01 · 292 added, 220 removed, 160 unchanged (76% of the section changed)

We are a leading global enterprise cloud communications company.

Our solutions include a broad range of software Application Programming Interfaces (“APIs”) for voice, messaging and emergency services.

Our sophisticated and easy-to-use software APIs allow enterprises to enhance their products and services by incorporating advanced, global connectivity for voice, messaging and emergency services communications capabilities.

Companies use our platform to more frequently and seamlessly connect with their end users, add voice calling capabilities to applications and devices, transition from on-premise to cloud-based communication tools and applications, integrate messaging capabilities into applications or software, build interactive voice response systems for contact centers, offer end users new mobile application experiences including emergency services and improve employee productivity, among other use cases.

We have established a reputation as a leader in the Communications Platform-as-a-Service (“CPaaS”) space through our innovation-rich culture and focus on empowering enterprises with end-to-end communications solutions.

We are the only CPaaS provider in the industry that owns and operates a nationwide IP voice network in the U.S.

In 2020 we acquired Voxbone, a leading European-based communications platform with its own IP voice network assembled by building relationships with local carriers around the globe.

Our deep U.S.

presence and global platform extending across more than 60 countries serves enterprises in countries representing more than 90% of global gross domestic product (“GDP”).

We believe that our current and future customers will benefit from using a unified software platform, network and team to serve people around the world.

As technologies evolve and new mobile applications and connected devices proliferate, enterprises must adapt and innovate their communications solutions to create a “connected” experience anywhere, anytime, on any device.

Enterprises looking to capitalize on trends such as work-from-anywhere, Application-to-Person (“A2P”) messaging, omni - channel customer service, and voice-as-an-interface need solutions that are reliable, secure, scalable and cost-efficient.

Most software-powered communications providers rely heavily on leased networks and cannot provide enterprise-grade service and support.

We believe traditional large-scale network providers lack the capabilities to build robust software platforms for agile development of communications solutions.

Enterprises focus on their core businesses and lack the technical know-how or strategic flexibility to build the customized solutions they require in-house.

As a result, enterprises need a third-party, end-to-end, cloud-based software solution that eliminates the complexity and expense of building and maintaining their own communications platform.

Our solutions address enterprises’ communications needs and we believe they are shaping the future of how enterprises connect through embedded voice and messaging for applications and devices.

At the core of our solutions are our communications software APIs, which allow companies to build and automate products and services on top of our cloud-based, out-of-the-box software.

Our software APIs include pre-defined functions that are easily customizable for specific use cases without the challenge and expense of building and deploying complex code.

Moreover, our platform collects and analyzes terabytes of call and messaging data records in real-time and provides a seamless integration to customer relationship management (“CRM”) and business intelligence analytics tools to provide meaningful data driven actionable insights for critical business decisions.

Customers can then launch and scale applications and solutions with reliability using our IP voice network with global reach.

Our voice software APIs allow enterprises to make and receive phone calls and create advanced voice experiences.

Integration with our IP voice network ensures enterprise-grade functionality and secure, high-quality connections.

Our messaging software APIs provide enterprises with advanced tools to connect with end users via messaging.

Our customers also use our solutions to enable emergency (911, 112, 999, etc.) response capabilities, real-time provisioning and activation of phone numbers, and toll-free number messaging across the globe.

The unique combination of software APIs and our IP voice network provides our customers high quality calls, automated workflows, enterprise-grade support and global coverage.

We believe that our network is capital-efficient and supports the applications and experiences that make a difference in the way enterprises communicate.

Since a communications platform is only as strong as the network that backs it, we believe our network provides a significant competitive advantage in the control, quality, pricing power and scalability of our offering.

We are able to control the quality and provide the support our customers expect, while meeting regulatory, scalability and cost requirements more efficiently.

Our customers currently include large enterprises, communications service providers, conferencing providers, contact centers, small and medium-sized businesses, emerging technology companies and many other businesses.

Our customers operate in a diverse set of industries, including technology, communications, financial, healthcare, hospitality, transportation and services, that need to launch and scale robust communications experiences.

Our customers choose Bandwidth because we empower them to embed seamless communications within their products and services in a reliable, flexible, scalable and cost-efficient manner.

Our customers include Cisco, Dialpad, Genesys, Google, Microsoft, RingCentral, Uber and Zoom, among many others.

We do not currently have any consumer or residential customers, although our enterprise customers may utilize our solutions to serve their own consumer or residential customers or end users.

Our usage-based revenue model allows us to grow with our customers and increase our revenue base as our customers expand their usage of our solutions.

Our dollar-based net retention rate, which measures our customers’ increased utilization of our platform, was 118%, 113% and 131% for the years ended December 31, 2018, 2019 and 2020, respectively.

We have continued growing our business in recent periods.

For the years ended December 31, 2018, 2019 and 2020, our revenue was $204.1 million, $232.6 million and $343.1 million, respectively, and our net income (loss) was $17.9 million, $2.5 million and ($44.0) million, respectively.

A global communications transformation is underway, and we believe Bandwidth is at the center.

Our mission is to develop and deliver the power to communicate.

Through the Bandwidth platform, we enable innovative organizations—from startup app developers to the world's largest enterprises—to engage their end-users and deliver exceptional experiences everywhere people live, learn, work and play.

Backed by our global network of more than 60 countries reaching over 90 percent of global gross domestic product (“GDP”), innovative enterprises use Bandwidth’s Application Programming Interfaces (“APIs”) to easily embed voice, messaging and emergency services capabilities into software and applications.

Bandwidth was the first CPaaS provider to offer a robust selection of APIs built on our own network.

Our award-winning support teams help businesses around the world solve complex communications challenges every day.

Our business benefits from multiple global megatrends, including the enterprise migration to the cloud, the adoption of Contact Center as a Service platforms, the need to be able to work from anywhere, the reinvention of customer experience and the growth in messaging and video applications to engage directly with consumers.

We believe these megatrends, which have created sizable total addressable markets, are secular, long-lasting and still early in the adoption curve.

With the combination of our software APIs and our global network, we believe the Bandwidth platform is well-positioned to deliver mission-critical communications for the enterprise.

In fact, Bandwidth powers all the 2021 Gartner Ⓡ Magic Quadrant Leaders in Unified Communications as a Service (“UcaaS”), Contact Center as a Service (“CcaaS”) and Meeting Solutions.

Our long-term vision is to continue strengthening this position as the key enabling platform for communications transformation.

We will seek to do this in three ways:

(1) by cross-selling and up-selling within our existing customers as they benefit from our global footprint and powerful APIs to automate and scale their cloud communications platforms;

(2) by focusing on enterprise growth to become the best platform for large enterprises seeking best-of-breed communications solutions for their tech stack and (3) to win in the Software and Applications space by becoming the best global platform for large app developers focused on digital engagements that revolutionize the enterprise customer experience.

These three strategies are the foundation of the durable business we are seeking to build.

Operating Segments

We have two reportable segments, CPaaS and Other.

2 unchanged sentences

Accordingly, we do not report such information.

We generate a majority of our revenue from our CPaaS segment.

CPaaS revenue is derived from voice usage, phone number services, emergency calling-enabled phone number services, messaging services and other services.

We generate a portion of our CPaaS revenue from usage-based fees, which include voice calling and messaging services.

We also earn monthly fees from services such as phone number services and emergency access service.

The remainder of our revenue is generated by our Other segment.

Other revenue is composed of revenue earned from our legacy services and indirect revenue.

CPaaS segment revenue is derived from reoccurring sources such as per-minute voice usage and voice calling, per-text message usage and other usage services and fees and from monthly recurring charges arising from phone number services, 911-enabled phone number services, messaging services and other services.

The remainder of our revenue not classified in our CPaaS segment is generated by our Other segment.

Other segment revenue is derived from various communications services and products, indirect revenue and messaging surcharge revenue.

See Note 10, “Segment and Geographic Information” in our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, for additional information about our segments.

Our communications platform empowers enterprises to create and scale voice, messaging and emergency communications services across any application and device.

Our software platform and IP voice network enable our enterprise customers to rapidly develop and deploy real-time and mission-critical, software-powered communications solutions.

Our sophisticated and easy-to-use software APIs allow enterprises to enhance their products and services by incorporating advanced voice, messaging and emergency calling capabilities.

By operating our own capital-efficient, IP voice network, we are able to offer advanced monitoring, reporting and analytics, superior customer service, dedicated operating teams, personalized support and flexible cost structures.

Our cloud-based platform is a proprietary CPaaS offering consisting of voice, messaging and emergency services solutions:

Voice Software API.

We provide flexible software APIs that are used to build voice calling within applications, innovative call flows between users or machines, call recording, text-to-speech for interactive voice response, call detail records, conference calling, bridging and more.

We provide the ability to have customized high-

quality call routing for business voice use cases and global reach.

Our voice quality monitoring service provides tools and processes for network quality tests and proactive tuning.

While we provide a wide range of functionalities, some of the common use cases are:

• Enabling local and toll-free numbers via software API :

Our platform empowers enterprises with a capability to activate, automate and manage phone numbers instantly and at scale.

With our bulk porting option customers can port an unlimited amount of phone numbers at once, coordinating port dates and times from multiple carriers.

Using our easy to use software APIs, our enterprise customers can easily add additional lines to their business as well as for their end users.

• Automating voice communication while preserving privacy :

Our software APIs enable voice communication capabilities from a mobile application to an individual or a group with or without disclosing personal identity.

• Embedding ‘click-to-call’ communication feature :

We enhance our enterprise customers’ mobile and web marketing capabilities by embedding click-to-call functionality in their customer outreach, including advertising campaigns, that enables them to connect with consumers instantly.

• Real-time call analytics :

We provide our enterprise customers with real-time call analytics through our dashboard that correlates the raw data from calls with CRM records, including the call duration, customer sentiment and other attributes, in order to provide meaningful contextual sales and other business insights.

Go-to-Market Strategy

Bandwidth’s go-to-market strategy is designed around the global shift from on-premises based technology to cloud-based communications software.

Bandwidth’s enterprise-grade communications platform serves and benefits from two phases of digital transformation:

Powering the platforms at the forefront of the communications transformation in categories including Unified Communications as a Service Platforms, Contact Center as a Service Platforms, and Digital Engagement Platforms.

Powering Global Fortune 2000 adoption of these cloud communications platforms.

Powering Cloud Communication Platforms

Our most long-term, strategic customer relationships are those in the Cloud Communications space, including Microsoft, Google, Zoom, RingCentral, Genesys, and Five9.

These companies rely on Bandwidth’s platform to deliver the voice, messaging, and emergency services that are central to their own user experiences.

The bottom line:

when Bandwidth innovates, the cloud communications space moves forward.

In addition, many brands choose to build their own applications—we believe Bandwidth’s unique combination of network expertise, coverage, and API-first mentality create a best-in-class platform for SaaS and consumer app product owners, particularly those looking for a partner that can deliver mission-critical, scalable communications.

Work Communications Platforms

In a world of remote and hybrid work, the Unified Communications market has never been more critical.

Bandwidth powers all the major Unified Communications platforms, giving them access to platform-centric voice, emergency, and messaging capabilities.

We believe Bandwidth is a key partner in enabling the entire industry to innovate, particularly with areas like customer onboarding and troubleshooting, where our APIs expedite customer onboards with real-time number ordering and porting,

These platforms are global in nature, and expect a communications partner who can deliver direct global coverage and regulatory insight around the world.

Bandwidth’s platform is built with these customers in mind, delivering global reach where it matters most.

Our APIs also help their enterprise customers comply with E911 requirements in the United States for dynamic address provisioning and SMS alerting.

Bandwidth’s network architecture prioritizes owned and operated coverage wherever possible, to deliver cost and qualitative benefits as well as a seat at the regulatory table.

One of Bandwidth’s key UCaaS customers is a long-standing, global leader for team collaboration, agnostic of industry verticals and across multiple continents.

This customer uses Bandwidth’s suite of APIs to programmatically deliver voice and E911 services, along with the programmatic onboarding and provisioning of new phone numbers, to enable a seamless customer experience through its native calling plans–available direct from their platform.

Bandwidth’s APIs eliminate the need for manual number management, allowing them to provision services for their all-in-one solution in real-time.

Our strategic partnership has led to new developments in dynamic location routing through E911 technology.

These Bandwidth-led E911 innovations are scalable across our other UCaaS customers to enable compliant emergency solutions for their customers as well.

Contact Center Platforms

Bandwidth is a driving force of communications innovation behind the dominant global contact center platforms, powering all of the leaders in Gartner’s 2021 Magic Quadrant for CCaaS.

These CCaaS providers compete to create the best software platform and portfolio of offerings to enable exceptional customer experience (CX).

That competition drives the need for highly resilient and reliable core capabilities like toll-free voice and messaging, which are powered by software and delivered on a global scale.

We believe Bandwidth’s toll-free voice solution is a major reason these contact center platforms build with Bandwidth for their North American traffic.

Offering 5X redundancy, our own toll-free voice network is directly peered with four additional network partners, offering customers greater peace of mind.

Whenever possible, Bandwidth keeps calls on its own network to enable excellent quality and better ROI.

Our four additional peered networks further enable best-in-class coverage as well as resilience—if one network experiences quality-impacting

issues, calls can be routed to a different network seamlessly, before impacts are even felt.

In addition to utilizing Bandwidth’s toll-free services, these platforms also find that Bandwidth’s global number availability and National Operator status is an invaluable asset to them as they expand their services across EMEA, LATAM, and APAC.

Bandwidth’s competitive strength isn't just limited to carrier infrastructure.

Our suite of APIs is leveraged by CX-focused customers to power innovation for their end-users—offering CCaaS platforms instant access to programmable number management (ordering, porting, provisioning) so they can customize their customer journeys, embed our global communications into their world-class platforms and reduce friction to achieve near-real time onboards.

Forward-leaning contact centers are also leveraging our programmable voice, messaging and video APIs to craft a more mobile and digital-centric experience.

A long-time CCaaS customer initially chose to work with Bandwidth because we were the cloud-native carrier they needed to digitally transform their own platform.

Utilizing our software-powered network capabilities, this customer created calling plans for their cloud customers.

This customer was also a pioneer in programmatic Bring Your Own Carrier (“BYOC”), co-marketing with us since 2018, and laying the groundwork for more success with large enterprises down the road, via our Duet TM portfolio.

Brand-to-Customer Engagement

The rules of how consumers engage with the brands they trust have been re-written in a new era of digital customer experience.

Preferred communication channels, expected reliability and ease of interactions are driving an increased focus on customer engagement and loyalty for businesses of all types and sizes across the globe.

This is where a high-growth category of brand-to-consumer engagement platforms has emerged, which we call our Software-as-a-Service and Application (SaaS/Apps) customers.

These digital-native innovators are transforming customer engagement, unleashing new channels, enabling automation and simplifying interactions for their own customers who operate across a wide range of industries—including healthcare, fintech, hospitality, transportation, e-commerce and retail.

Bandwidth’s robust messaging, emergency, and voice APIs help these platforms and applications build better digital experiences for the brands that rely on them.

Messaging, the main product leveraged by this segment of customers, accounted for about 13% of our CPaaS revenue in 2021.

We continue to see growth here as big brands use our customers’ applications to communicate directly with their own consumers, building engagement and loyalty.

Bandwidth offers developers a full suite of business Application to Person (A2P) messaging solutions, supporting both SMS and MMS on Local Numbers (10DLC), Toll Free Numbers, and Short Codes.

All our solutions support bi-directional unicode, including emojis.

An example customer in this category is our steadily-growing relationship with one of the world’s leading decentralized finance and digital payment companies.

In 2018, this company turned to us for enterprise-grade, toll-free messaging to enable digital receipts, promotional notifications, appointment reminders, and payroll notifications for their customers.

Based on Bandwidth’s proven success delivering these mission-critical communications, a year later, they asked us to enable a new use case in a separate business unit:

messaging related to peer-to-peer payments, fractional stock purchases, and other notifications.

More recently, as this company rolled out yet another new channel of communication, it once again turned to Bandwidth as its trusted provider.

This new channel allows for multiple forms of two-way messaging engagement between merchants and customers, spanning sales, marketing, and support communications.

Our growth with this customer—powering new use cases across business units—shows how the Bandwidth Platform can drive communications innovation for the world’s most innovative companies.

Powering enterprise adoption of cloud communications platforms

While small and medium sized businesses were quick to adopt new cloud platform technology, the largest enterprises have lagged behind because of their inherently complex migration path.

This complexity has resulted from a mixture of different service providers, legacy infrastructure, critical integrations and proprietary technologies.

These large enterprises (Global Fortune 2000) often find they have new needs like better cost

structure, access to a global footprint, or help tackling complex integrations that can't be met by either their legacy telephony partners or the platforms themselves.

Bandwidth addresses these migration challenges by enabling enterprises to unbundle telephony from their UCaaS or CCaaS platforms and choose Bandwidth as their underlying communications partner.

Bandwidth utilizes software-driven tooling alongside the power of its open cloud communications platform for real-time access to phone numbers around the world, carrier-grade SIP-trunking, business text messaging and emergency services delivered via our unique Duet TM solutions.

By partnering with Bandwidth, global enterprises can reduce complexity, gain greater control of their employees’ workstations (both knowledge workers or contact center agents), centralize communication resources and operational workloads, and better prepare for future scale as they move business communications to and around the cloud.

We believe Ba ndwidth’s history as an enabler to the cloud communications platforms creates additional competitive benefits such as deep automation of communications services, enterprise-grade quality and support, as well as deep operational relationships with some of the largest UCaaS and CCaaS platforms.

Key Global Enterprise Use Case:

UC for the Global, Dynamic Workforce

Unbundling telephony and deploying a BYOC solution such as Bandwidth’s Duet TM solutions enables IT leaders to centralize their communications across their CCaaS and also UCaaS platforms, making it easier to manage emergency services, phone numbers, employee station set-up and tear-down, platform migration, and connectivity across multiple platforms and geographies.

E911 and emergency connectivity can be a particular challenge to these companies—especially as the workforce becomes increasingly dynamic and remote.

Bandwidth’s dynamic emergency location routing is intelligent and allows for a real-time location pull, enabling more effective emergency call routing, at the most important times.

One key enterprise customer is a $16 billion, Fortune 500 U.S.

managed care provider.

This company is on the front lines of patient communication and chose Bandwidth because it was uniquely able to power both their UCaaS and CCaaS communications stack—Microsoft Teams and Genesys CX.

Bandwidth’s tools and automation enable the customer to manage their entire organization, including dynamic workers across multiple locations, without the need for specialized telecom expertise, including a user-friendly interface to make real-time number changes on the fly.

Key Global Enterprise Use Case:

The Integrated Cloud Contact Center

Big brands recognize that the war for customer loyalty will be fought by providing an elite customer experience.

To that end, there is no shortage of specialized enterprise applications catering to these big brands.

They need to customize their CX to the specific needs of their business and their customers’ demands—and everyone wants to help.

To truly reap the benefits of this new “best of breed” ecosystem and build the contact center of the future, enterprises demand flexibility and cloud-native capabilities.

Because of all of the complexities these large enterprises face in moving their contact center to the cloud, many have resisted the move.

To connect their disparate, global infrastructure with their contact centers, most enterprises have been relying on multiple carriers, each with different contracts, uncertain redundancy, and traffic limitations.

For the largest global companies, trying to migrate these systems to a modern, cloud-based solution can move slowly, or even be blocked by the need to retain critical call data to power third-party integrations such as voice authentication, fraud detection, artificial intelligence (AI), and other services essential to a better customer experience.

Bandwidth’s global, cloud-native carrier architecture, paired with our software platform, has helped Global Fortune 2000 brands navigate telecomplexity as they migrate, and maintain flexibility as they stay agile in responding to new and evolving CX demands.

One of Bandwidth’s key multi-country BYOC customers in the contact center space is a global leader in electronic agreements.

In an innovative effort to modernize its contact center while improving customer experience

and efficiency, this customer chose Bandwidth as its communications platform as they migrated their 15-location global contact center stack to the cloud.

This also eliminated the complexity of existing on-premises equipment and consolidated legacy carrier agreements from several different global providers into one singular vendor.

With our two-phased digital transformation strategy, Bandwidth is a critical enabler for both enterprises and rapidly growing cloud communications platform providers, creating a virtuous circle of innovation and information.

We believe the combined power of our software platform and cloud-native global network allows our customers to future-proof their strategy for all the integrations of today, and new services to come.

The Bandwidth Platform

The Bandwidth Platform is designed for digital transformation.

Customers today expect clear, real-time communication.

But as enterprises rely on an increasing number of communications tools, they become increasingly dependent on the ability to integrate these tools.

Bandwidth’s universal communications platform (CPaaS) simplifies how enterprises deliver integrated global experiences.

The Bandwidth Platform can be viewed in three layers:

CX, core products and global network and infrastructure.

Our core product domains (such as Phone Numbers, Voice, Emergency, Video, Analytics & Insights, as well as Integrations with major UCaaS & CCaaS platforms) are all enabled and made accessible by a Customer Experience layer.

This CX layer includes our Developer Experience, Portal, as well as Accounts & Identity groups.

Underpinning both our CX layer as well as our core product domains are our global network and infrastructure layers.

The Bandwidth Platform empowers both product leaders and enterprises to build and integrate communications services at scale, around the world.

The platform is open where it matters most, with optionality and control, so our customers can benefit from added flexibility where their businesses demand it.

The platform’s connectivity makes it easier to unbundle telecom and integrate directly into applications like collaboration tools (ex:

Duet TM for Teams) or contact center platforms (ex:

Duet TM for Genesys).

Its automation simplifies orchestration, and its API library offers global use cases companies can start with and scale.

By operating much of our own capital-efficient, cloud-native, global network, we are able to offer advanced monitoring, reporting and analytics, superior customer service, dedicated operating teams, personalized support and flexible cost structures.

Bandwidth’s Modern Carrier Network

Bandwidth’s all-IP voice network, messaging network and public safety-grade network serve as the foundation for the entire Bandwidth platform.

It is a custom-built network, with coverage around the world.

Direct control over our network assets allows Bandwidth to expose greater automation possibilities to our customers, while delivering best-in-class quality and support.

Deep and actionable insights to quality allow our teams to act faster on behalf of our customers.

Our platform's command over our own numbering resources enables real-time porting, provisioning and number ordering en masse:

• coverage in more than 60 countries, serving 90 percent of global GDP;

• owned and operated network paired with peering relationships with major global networks ensure our customers are never more than one hop away from the PSTN;

• 5x resilient U.S.

toll-free network, with interconnections to four toll-free networks in addition to our own, designed for best-in-class resiliency from a single provider;

• public safety connectivity purpose-built for today’s dynamic, increasingly remote workforce, interconnected with emergency calling networks worldwide;

• A2P messaging aggregator network is deeply connected into the messaging ecosystem, designed to support best-in-class deliverability and insight;

• extensive regulatory experience, allowing us to advocate on behalf of our customers around the world.

Core Product Domains

Bandwidth is continually investing in new domains of our platform.

This overview gives a briefing on a few of the major product offerings and use cases supported.

We offer customers the ability to interact with our voice services through SIP or programmable voice API.

Our voice services are used to build voice calling in applications and platforms, orchestrate call flows between users or machines, record and bridge calls, initiate text-to-speech for interactive voice response and more.

Enterprises can customize high-quality call routing for business voice use cases and global reach.

Some of the common use cases are:

• Powering calling plans within cloud communications platforms (UCaaS, CCaaS, Meetings Solutions):

Our platform empowers cloud communications leaders to connect their enterprise end-users with local and toll-free connectivity at global scale.

• Embedding ‘click-to-call’ feature :

We enhance our enterprise customers’ ability to connect with consumers instantly.

Our programmable voice API enables many use cases including call notifications and surveys, advertising campaigns, etc.

• Transitioning from traditional premise focused communications to cloud based services:

We provide unified communications providers modern, scalable and cost efficient voice and messaging solutions, which enable their digital transformation efforts.

Our network and API solutions work in a hybrid environment as well as a full cloud deployment.

Messaging Software API.

Our software APIs for messaging deliver a complete wireless experience for both P2P and A2P messaging including:

delivery receipts, MMS, long text support, short code support, emoji support and bi-directional unicode (international characters) and short codes interoperability.

Bandwidth’s messaging services are enabled for local and toll-free phone numbers as well as short codes.

As enterprises kick their on-premise PBX to the curb, Bandwidth can fuel their digital transformation with our software-driven SIP trunking services designed to integrate in hybrid or full cloud deployments.

Messaging API.

Our software APIs for messaging deliver a full suite of A2P messaging capabilities, designed to help brands engage with their customers.

Bandwidth’s North American messaging services are enabled for local and toll-free phone numbers as well as short codes.

While we provide a wide range of functionalities, some of the common use cases are:

• Automated real-time notification and alerts :

Our software APIs empower our enterprise customers with predefined functionalities to send and receive messages to and from an application to an individual or a group.

Our customers often build more customized use cases on top of our predefined use cases.

Our APIs empower product leaders and enterprise developers with predefined functionalities to send and receive A2P messages, uniquely integrated with their own business processes or tech stacks.

• Two-factor authentication :

We enable enterprises to verify the identity and maintain security of end users through our software-based SMS verification service that sends unique codes to end users in order to log in to mobile and web applications.

We enable enterprises to verify the identity and maintain security of end users through our software-based, multi-channel verification service that sends unique codes to end users to log in to mobile and web applications.

• Group messaging :

Enterprises utilize our platform to collaborate with their end users on a real-time basis by enabling group messaging within their user community to share messages, videos, carry out polls and surveys amongst other uses without leaving the application.

Emergency Services Software API.

We are the only software platform that provides complete communications solutions with integrated local emergency services in more than 60 countries around the globe.

Product owners utilize our platform to build messaging applications that enable their end-users to share SMS and MMS messages, videos, carry out polls and surveys amongst other uses without leaving the application.

Emergency Services.

We are the only software platform that provides complete communications solutions (full PSTN replacement) with integrated local emergency services in 38 countries around the globe.

We can instantly connect numbers, devices or applications to emergency services with reliable and accurate emergency routing.

Our Dynamic Geospatial Routing uses geocoding to enable real-time routing based on X,Y coordinates of the caller and defined Public Safety Access Point boundaries.

Additionally, our notification API enables an email notification sent to on-site security personnel when an emergency call takes place within a large enterprise.

Our Advanced “Next Generation 911” “i3”-ready NENA i2 “Enhanced” service network covers approximately 99% of the population of the United States.

Outside the United States in the jurisdictions we serve, in-country routing guarantees that emergency calls will connect directly to the appropriate Public Safety Answering Point.

Key Benefits of Our Software Platform

Our communications platform provides the following benefits to the enterprises we serve:

• Easy to Build and Deploy .

Our easy-to-use, intuitive software APIs are ready to launch and scale from day one.

We enable enterprises to rapidly and easily scale communications functionalities to a vast range of applications and devices.

Our technology requires minimal lines of code to build customized applications, which allows for rapid composition of customized solutions and seamless embedding within other applications.

• Easy to Scale .

We enable enterprises to easily scale globally at launch, without sacrificing quality, while meeting the most stringent requirements.

We can deliver full end-to-end automation for even the largest of enterprises using our IP voice network.

We are able to support high user volumes without impacting deliverability.

Our enterprise-grade tooling makes it easy to order, provision, and port phone numbers as our customers grow their businesses.

Our software removes complexity, eliminates performance degradation and increases cost efficiencies at scale.

• Flexibility .

Our software APIs are easy to deploy and use and allow for the creation of solutions to address a broad array of use cases.

Our software can be implemented directly into product workflow for a variety of custom solutions such as creation of virtual call centers, group messaging and dynamic call location routing.

We enable developers to easily and rapidly innovate with our platform.

Key Benefits of Our Network

Our IP voice network provides the following benefits to the enterprises we serve:

• Enhanced Quality and Reliability .

We offer greater levels of quality and delivery assurance than providers offering services across the public Internet or through partnerships.

As a result, the enterprises we serve have enjoyed 99.9% network uptime in 2020.

• Total Accountability.

The ability to vertically integrate our software platform with our IP voice network provides us with a differentiated ability to continuously monitor, report and resolve any software- or network-related issues on a real-time basis.

For our enterprise customers, having a single platform solution for their entire communications requirements, including software and network, offers tremendous value with respect to time and financial resources.

Our service-level agreements with our enterprise customers assure that we provide high quality service and give them peace of mind and confidence in our service.

• Owner Economics Drives Value for Our Customers .

The differentiated pairing of our software combined with owning the delivery capability in the United States through our IP voice network creates lower marginal costs at scale, which we are able to pass on to our customers.

Our Competitive Strengths

In our 20 years of business, we have prided ourselves on maintaining a start-up culture and our focus on continuous innovation.

We have innovated on our CPaaS offerings to empower our enterprise customers with a comprehensive software-powered communications platform that integrates seamlessly with one of the largest IP voice networks in the world.

• Dynamic Location Routing :

Enables real-time, geocoded routing based on X,Y coordinates of the caller and defined Public Safety Answering Point boundaries.

This helps enterprises meet compliance requirements and enable increasingly remote workforces.

• Emergency Calling API:

Connects apps to the public safety infrastructure without the need for on-premise technology or telephony expertise.

• Emergency Notification API :

Enables a multi-channel notification sent to on-site security personnel when an emergency call takes place within a large enterprise.

Our API for video easily combines with our programmable voice API to create an integrated collaboration experience, and enables users to join calls by video or by voice calling.

Easily deployed with mobile, browser, and server SDKs, our Video API provides such features as multi-party conferencing, support for VP8, H.264 video codecs, screen sharing, connection to the PSTN, and detailed call records.

• PSTN, SIP and browser-based endpoints:

We allow customers to easily connect to PSTN, SIP and browser-based voice and video endpoints to create a multi-party communication experience, and enable users to make and receive calls around the globe.

• Improve the impact of direct in-application communications:

Our API allows applications that depend on making a real connection, such as telehealth, the ability to do so without leaving the context of the application, allowing them to connect face-to-face with consumers with a quick, easy and trackable video.

Phone Numbers.

The Bandwidth Dashboard is Bandwidth’s user-friendly interface for a comprehensive number management solution.

Every function within The Bandwidth Dashboard has an accompanying API, allowing our customers’ product leaders and developers to integrate Bandwidth’s functionality within their own user interfaces or web applications.

• Global Number Management :

Order, provision, and activate local and toll-free phone numbers around the world, in real-time, allowing customers to search and sort by availability, geographic region, city/state, country/area code and many other options.

• Programmatically port up to 20,000 numbers simultaneously :

Gain control over the confusing carrier landscape and automate number porting across all major carriers.

This allows for a more reliable end-user experience with controlled scheduling and triggered porting activation.

Bandwidth Insights gives customers a detailed view of their voice and messaging performance to make data-driven decisions and ensure quality of service.

• Understand and solve for deliverability issues:

Real-time error codes and alerting allows enterprises to understand and solve for SMS deliverability challenges in an ever-changing text messaging environment.

• Real-time call quality analytics:

We provide our customers with real-time call analytics including data such as call duration, customer sentiment and other attributes to better understand call performance and customer experience.

• Track trends, benchmarks and usage :

Our Insights API shows trends, delivery rates and usage patterns by product and carrier.

CCaaS and UCaaS Platform Integrations.

Bandwidth’s platform integrates with several leading UCaaS and CCaaS platforms under the Duet TM solutions portfolio, to provide a holistic solution that's seamlessly aligned with the organization, and allows enterprises to move communications to the cloud at their own pace.

Once numbers are on the Bandwidth network, they can be moved from platform-to-platform without leaving the Bandwidth network, decreasing cloud migration risk and complexity.

• Duet TM for Microsoft Teams

As mentioned earlier, we have a Duet partnership with the leading CCaaS platform.

We also have Duets in the UCaaS space, including Duet for Microsoft Teams.

This includes:

• Direct routing & dynamic e911 Consolidate SIP globally with meaningful direct access to the telephony, and solve for an increasingly dynamic workforce from a single provider.

• Hosted session border controllers (SBCs) Connect telephony without another piece of on-premise equipment.

A hosted SBC eliminates complexity and allows for a truly cloud deployment.

• Send-to SMS web application Allows enterprises the ability to send text messages in and outside of the organization from within the Teams environment, built to work seamlessly with a direct routing or BYOC strategy.

Competitive Strengths

We believe that successful companies win by optimizing customer experience – :

engaging and exciting their customers, and earning their trust over time.

And to win on customer experience, companies must communicate across continents, time zones and cultures, using a variety of technology tools and platforms.

As the communications ecosystem grows, so does complexity.

In our 20 years of business, we have prided ourselves on solving these most critical business challenges with great innovation.

Our innovation-rich culture, customer-centric solutions and track record of successful execution provide us with the following competitive strengths:

• Highly Scalable Platform Built for the Enterprise.

We built our communications platform from the ground up as an enterprise-grade cloud application.

As a result, our deployment is fast, our software APIs are flexible and easy-to-use, and we enable enterprises to launch and scale on day one.

Our software APIs allow the enterprise customers we serve to grow with flexibility and seamlessly embed communications in their applications or devices.

Our scalable platform allows us to serve large-scale Internet companies and cloud service providers.

• One of the Broadest, Most Complete Solutions in the Industry.

We provide enterprises one of the broadest, most complete communications services solutions in the industry through our integrated software and IP voice network.

Our large library of voice, messaging and emergency services APIs enables our customers to incorporate into their products and services a broad range of capabilities not otherwise attainable.

A full-stack, open platform :

We built our communications platform as an enterprise-grade cloud platform.

As a result, our deployment is fast, our software APIs are flexible and we enable enterprises to launch and scale quickly.

The scale and quality of our platform allows us to serve large-scale Internet companies and cloud service providers.

Our platform also allows us to provide enterprises with one of the broadest, most complete communications services solutions in the industry--solutions that are ready to integrate with leading UC and contact center platforms to create customized, best-of-breed solutions.

Our large library of APIs (including voice, messaging, numbers, emergency services, insights and integrations) allow customers to incorporate a broad range of capabilities into their products and services that would be otherwise unattainable.

Global reach from a single source :

Our global voice network provides coverage in more than 60 countries covering more than 90 percent of global GDP.

This means our customers can consolidate their communications vendor relationships with Bandwidth, while gaining global reach, resiliency and efficiency for their communications stack.

We offer greater levels of quality and delivery assurance than providers offering aggregated services across the public Internet or through resold partnerships.

We believe that the control we have over our IP voice network and communications platform gives us distinct competitive advantages that include:

enabling our customers to deploy cloud-native services, consistent high quality, in-depth enterprise support, real-time network visibility and economies of scale.

CPaaS based emergency calling capabilities :

We believe we are the only CPaaS software provider with emergency service capabilities.

We believe our emergency calling capabilities provide a significant advantage as compared to software platform providers that are enabling residential voice services through new connected device experiences.

We believe we are one of the only CPaaS software providers with full stack emergency service capabilities.

In many countries, it’s a legal obligation to ensure on-premise access to local emergency services.

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Moreover, our dynamic geospatial routing capability routes emergency calls based on a real-time location of the caller to produce industry-leading results.

• Our IP Voice Network.

Our communications platform’s IP voice network, which we operate in more than 60 countries globally, supports our ability to scale at a reliable and consistent quality for the enterprises we serve.

The control and scale we have over our IP voice network integrated with our communications platform provides us distinct competitive advantages that include consistent high quality, in-depth enterprise support, real-time network visibility and economies of scale.

• Deep Experience and Expertise in Voice and Messaging.

The combination of our versatile software API platform and our IP voice network control allows us to offer not just best efforts, but best-in-class voice and messaging solutions for enterprises.

Our senior leadership team has a combined 100+ years of industry experience and an average tenure with Bandwidth of more than a decade.

• Growing, Long-Term Relationships with Low Customer Churn.

We deliver comprehensive solutions that address the unique and complex needs of the enterprises we serve.

As a result, these enterprises have continued to innovate and grow with our platform over extended time frames.

Our relationship with each of the enterprises we serve often expands across different product suites, divisions and use cases over time.

Our customers include large enterprises and small and medium-sized businesses across various industries, and we rarely lose customers that have been on our platform for more than three months.

For example, a number of our largest enterprise customers have been on our platform for more than ten years.

Experience & Expertise :

Our senior leadership team has a combined 100+ years of industry experience and a long average tenure with Bandwidth.

W e maintain direct relationships with the local regulators in more than 30 countries , and we currently power all the 2021 Gartner Magic Quadrant Leaders in UCaaS, CCaaS, and Meeting Solutions.

We seek to bring this body of experience and knowledge to our customer engagements.

Growing Relationships with Low Customer Churn :

We address the complex needs of the customers we serve, and as a result, these enterprises have continued to innovate and grow with our platform over many years.

A number of our largest enterprise customers have been on our platform for more than ten years.

Our relationship with each of the enterprises we serve often spans product suites, divisions and use cases over time.

Based on surveys conducted after customer interactions in 2021, our customers have expressed a 97% satisfaction rate.

While we will always be mission-first, our people ensure that we deliver on our mission for the customers we proudly serve.

We seek to identify, attract, and retain team members who will contribute to our inclusive culture that promotes diversity of thought and experience.

Our Whole Person Promise is at the core of our culture.

We believe that each of our team members can do meaningful work while enjoying a full personal life.

We have developed a variety of programs to help our team members develop and maintain their bodies, minds and spirits in connection with our Whole Person Promise.

Additionally, we have a saying at Bandwidth:

“Your music matters to the BAND.” We believe people are essential to accomplishing our mission, so we celebrate our differences and encourage “Bandmates” to be their authentic selves.

This culture supports our hiring and serves as a competitive advantage in attracting and retaining top talent.

Our Growth Strategy

• Expand Existing Enterprise Relationships.

We seek to continue to expand our relationships with our existing enterprise customers.

For example, enterprises often initially purchase only our voice solution and later expand to purchase additional services like messaging and emergency calling capability.

Enterprises often launch voice, messaging or emergency calling in one country or region and expand to additional geographies over time.

Additionally, we are able to help enterprises scale efficiently and offer their solutions to more of their customers as they grow.

• Grow Our Enterprise Customer Base.

We believe there is a substantial opportunity to increase our enterprise customer base across a broad range of industries, companies and geographies.

We plan to continue to grow and invest in our direct sales force and marketing to increase our enterprise customer base.

• Continue to Innovate Our Platform.

We are committed to building on our track record of leveraging our innovative product capabilities to meet our customers’ needs, just as we have done throughout our history, through dramatic waves of change in communications technology.

We were early to deploy software-based networks and to offer hosted cloud-based voice services, while building out one of the fastest growing IP voice networks over the last ten years in the United States.

We have expanded our coverage to over 60 countries.

Our team has continued to adapt to a dynamic environment to grow our business, and we intend to invest in continued development of our platform and product features to support new use cases and help our enterprise customers succeed as communications technologies evolve.

• Cultivate Long Term Relationships Through Customer Satisfaction.

We intend to continue focusing on delivering world-class services and support to the enterprises we serve to ensure a high level of satisfaction.

We believe that satisfied customers provide vital product feedback, purchase additional services, renew contracts at a high rate and provide broad advocacy and new customer referrals for our business.

• Expand Breadth and Depth of International Coverage.

We offer various communications services in over 60 countries, representing over 90% of global GDP.

We plan to pursue new coverage areas and expanded offerings within those coverage areas we already serve in response to our customers’ needs.

• Pursue Acquisitions and Strategic Investments Selectively.

We may selectively pursue acquisitions and strategic investments in businesses and technologies that strengthen our platform.

A unique culture focused on people:

At Bandwidth, we are mission first.

To accomplish that mission, we’ve created a unique, service-oriented culture, centered on meaningful work, lifting each other up, and investing in the bodies, minds, and spirits of our Bandmates.

For our customers, this means there’s always a smiling, world-class Bandmate on the other end of the line who will go the extra mile for them.

We often hear from our customers that Bandwidth just cares more.

For our employees, this means we make a “whole person promise” to offer

meaningful work and programs that ensure Bandmates can find the work/life balance necessary to enjoy a healthy and fulfilling life.

Our culture is focused on helping each other succeed in our mission and makes work-life balance possible isn’t just something to feel good about.

It drives real results.

Our Bandmate engagement and satisfaction scores are consistently ranked higher than our peers.

We have been recognized as a top place to work by the Today Show, Fast Company, Forbes, The Wall Street Journal and The Triangle (North Carolina, USA) Business Journal, among others.

While we are exceptionally proud of the team we have assembled, we also acknowledge that there is important work for us to do to continue developing a more diverse and inclusive team.

We believe diverse and inclusive teams are more innovative and make better business decisions.

At Bandwidth, we say, “Your music matters to the BAND.” We celebrate differences and encourage our team members to be their authentic selves.

No matter what music a team member makes, we support each team members’ unique gifts and needs with our programs that deliver on our Whole Person Promise.

The real masterpiece is in the music we make together with the strength and ingenuity to lift up all those we serve.

Our Your Music Matters program builds outreach programs and initiatives to fill our recruiting funnel with diverse candidates who possess the “Bandwidth Edge”—smart, common sense, hardworking, honest, competitive energy and emotional intelligence.

We build external and internal campaigns to fill the recruiting funnel using our talented team members, creative local and non-local outreach partnerships, and virtual platforms to connect with talent who come from different backgrounds, skills, abilities and experiences.

We believe the benefits that we offer each of our team members are an important component of our Whole Person Promise.

These benefits, which vary based on country location and applicable laws, include:

robust medical benefits in which we pay 100% of the premiums for medical, dental and vision insurance;

industry leading parental leave;

and access to mental health resources.

Bandwidth’s compensation philosophy embraces transparency and educates all Bandmates on our benchmarking process, pay structure design and logical approach to compensation strategy.

Research has shown that rigorously-designed compensation strategies like ours are one of the best ways to combat pay disparity and ensure fairness for every team member.

Our Customers

We have a broad and diversified customer base.

We benefit from longstanding relationships with well-recognized enterprise customers, as well as small and medium-sized businesses.

We benefit from longstanding relationships with some of the largest hyperscale tech companies, well-recognized enterprise customers, as well as small and medium-sized businesses.

Many of our customers have multi-year contracts, with no single customer representing 10% of total revenue for the year ended December 31, 2021.

Our management is highly focused on creating and maintaining strategic partnerships beyond standard transactional customer relationships.

We empower enterprises to create, scale and operate voice or messaging communications services across any mobile application or connected device, and this ability reinforces our customer relationships.

We seek to empower enterprises to create, scale and operate voice, messaging, and emergency services across any mobile application or connected device, and this capability reinforces our customer relationships.

The majority of our customers sign master service agreements (“MSAs”) that contain standard terms and conditions, including billing and payment, default, termination, limitations of liability, confidentiality, assignment and notification, and other key terms and conditions.

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Sales and Marketing

Our sales and marketing teams work together to identify and establish relationships with prospects, acquire new enterprise customers, expand relationships with existing enterprises and integrate them with our communications platform.

Our marketing staff generates leads through our website, online marketing campaigns, webinars, sponsored events, white papers, public relations and other outbound lead development efforts.

Our marketing staff also targets companies with products that could use our services for the first time or to displace our competitors.

Our marketing initiatives enhance awareness and adoption of our services.

Our sales and marketing teams work closely together to identify and establish relationships with prospects, acquire new enterprise customers, expand relationships with existing enterprises, and integrate them with the

Bandwidth platform.

Our marketing team generates leads and pipeline for sales through a number of demand-generating channels, including our website, online marketing campaigns, webinars, sponsored events, white papers, public relations, social media, analyst relations and other outbound lead development efforts.

These marketing initiatives enhance awareness, preference and adoption of our services, and help us cross-sell opportunities with existing customers.

We engage potential customers and existing customers through an enterprise sales approach.

Our sales executives directly engage C-level executives and other senior business, product and technical decision makers responsible for the end user experience and financial results at their enterprises.

Our sales executives work to

educate these decision makers and their teams about the benefits of using our communications platform to launch and scale robust communications experiences.

Our sales team includes sales development, inside sales, field sales and sales engineering personnel.

As of December 31, 2020, we had 216 employees in our sales and marketing organization.

Our sales executives often directly engage C-level executives and other senior business, product and technical decision makers responsible for the end-user experience and financial results at their enterprises.

Our sales executives work to educate these decision makers and their teams about the benefits of using the Bandwidth platform to engage their end-users and deliver exceptional experiences everywhere people live, learn, work and play.

Our sales team includes a full stack of sales development, inside sales, field sales and sales engineering functions.

Research and Development

Our ability to compete depends in large part on our continuous commitment to research and development (R&D).

We also seek to continuously enhance our existing services and develop new products and services.

Our product and network teams are responsible for the design, development, testing and release of our platform.

These teams closely coordinate with our executive management, which is responsible for creating a vision for our platform, and with our sales and marketing teams, which relay enterprise demands and possible new use cases or enhancements.

We seek to continuously enhance our existing offerings and develop new products and services.

Our product and network teams are responsible for the design, development, testing and release of the Bandwidth platform.

These teams closely coordinate with our executive management, which is responsible for creating a vision for the platform, and with our sales and marketing teams, which relay customer insights, enterprise demands and possible new use cases or enhancements.

Our development efforts focus on the availability and resiliency of our communications platform and our network, including infrastructure, ease-of-use and flexibility, end-user experience and ability to integrate with other enterprise systems.

As of December 31, 2020, we had 296 employees in our R&D organization.

The CPaaS market is rapidly evolving and increasingly competitive.

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• credibility with product executives and developers.

We believe that we compete favorably based on the factors listed above and believe that none of our competitors currently competes directly with us across all our product offerings.

We believe that we compete favorably based on the factors listed above and believe that none of our competitors currently compete directly with us across the combination of all our global scale, platform and product offerings.

Our competitors fall into two primary categories:

• CPaaS companies that offer a narrower set of software APIs, less robust customer support and fewer other features while relying on third-party networks and physical infrastructure;

• CPaaS companies that offer a narrower set of software APIs, more limited global reach, less robust customer support and fewer other features while relying on third-party networks and physical infrastructure;

• Network service providers that offer limited developer functionality on top of their own networks and physical infrastructure, such as AT&T, Colt, Lumen and Verizon.

Some of our competitors have greater financial, technical and other resources, greater geographic reach, greater name recognition, larger sales and marketing budgets and larger intellectual property portfolios.

As a result, certain competitors may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards or enterprise requirements.

In addition, some competitors may offer products or services that address one or a limited number of functions at lower prices, with greater depth than our services or in geographies where we do not operate.

With the introduction of new products and services and new market entrants, we expect competition to intensify in the future.

Moreover, as we expand the scope of our platform, we may face additional competition.

Some of our competitors have greater financial and technical resources, geographic reach, name recognition or intellectual property portfolios than we do.

In addition, some competitors may offer a greater number and variety of products and services than we do, or may offer services in geographies in which we do not operate.

We expect competition to intensify in the future.

See “Risk Factors–Risks Related to Our Business” elsewhere in this Annual Report on Form 10-K, for additional information on the competitive environment in which we operate, and risks related thereto.

Intellectual Property

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We also rely on registered and unregistered trademarks to protect our brand.

As of December 31, 2020, we had fifteen U.S.

patents and two U.S.

As of December 31, 2021, we had twenty U.S.

patents and five U.S.

patent application pending.

In addition, as of December 31, 2020, we had twenty-four registered trademarks in the United States and elsewhere.

We seek to protect our intellectual property rights by implementing a policy that requires our employees and independent contractors involved in development of intellectual property on our behalf to enter into agreements acknowledging that all works or other intellectual property generated or conceived by them on our behalf are our property, and assigning to us any rights, including intellectual property rights, that they may claim or otherwise have in those works or property, to the extent allowable under applicable law.

Despite our efforts to protect our technology and proprietary rights through intellectual property rights, licenses and other contractual protections, unauthorized parties may still copy or otherwise obtain and use our software and other technology.

Any significant impairment of our intellectual property rights could harm our business or our ability to compete.

Further, companies in the communications and technology industries may own large numbers of patents, copyrights and trademarks and may frequently threaten litigation, or file suit against us based on allegations of infringement or other violations of intellectual property rights.

In the future, we may face allegations that we have infringed the intellectual property rights of third parties, including our competitors and non-practicing entities.

As of December 31, 2020, we had a total of 960 employees, who are primarily located in the United States, Europe and Asia Pacific.

In addition, as of December 31, 2021, we had twenty-one registered trademarks in the United States and elsewhere.

We seek to protect our intellectual property rights by requiring our employees and independent contractors involved in development of intellectual property on our behalf to enter into agreements acknowledging that all works or other intellectual property generated or conceived by them on our behalf are our property, and assigning to us any rights, including intellectual property rights, that they may claim or otherwise have in those works or property, to the extent allowable under applicable law.

See “ Risk Factors–Risks Related to Our Business ” elsewhere in this Annual Report on Form 10-K for additional information on our intellectual property rights and risks related thereto.

As of December 31, 2021, we had approximately 1,100 employees, who are primarily located in the United States, Europe and Asia Pacific.

None of our employees are represented by a labor union or covered by a collective bargaining agreement.

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These laws and regulations may concern telecommunications, as well as privacy, data protection, intellectual property, competition, consumer protection, taxation or other subjects.

Many of the laws and regulations to which we and the communications services that we provide through our software APIs are subject are still evolving and being tested in courts and could be interpreted in ways that could harm our business.

In addition, the application and interpretation of these laws and regulations are often uncertain, particularly in the new and rapidly evolving industry in which we operate.

Because laws and regulations have continued to develop and evolve rapidly, it is possible that we may not be, or may not have been, compliant with each such applicable law or regulation.

We describe below certain material components of the regulatory framework in which we operate.

See “ Risk Factors–Risks Related to Our Business ” elsewhere in this Annual Report on Form 10-K for additional information on the regulatory framework in which we operate and risks related thereto.

Federal Telecommunications Regulation

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Among the challenges that have arisen is fraud and abuse in the form of illegal robocalling and unwanted text messaging.

Recently, Congress passed and the President signed the TRACED Act.

In an effort to address these challenges, Congress recently adopted new federal legislation called the Telephone Robocall Abuse Criminal Enforcement and Deterrence (“TRACED”) Act.

Among other things, the TRACED Act directs the FCC to conduct a number of different rulemaking proceedings and increases the FCC’s enforcement authority.

As a result, the FCC is conducting several proceedings to understand and address fraud and abuse in the form of illegal robocalling.

Among various FCC proceedings and orders, on December 23, 2020 the FCC granted our application for a STIR/SHAKEN compliance exemption for our IP network and services.

Separately, the FCC also thwarts illegal robocalling through the Telephone Consumer Protection Act of 1991 (the “TCPA”), which restricts telemarketing calls and the use of automatic text messages without the recipient’s proper consent.

Separately, the FCC and other governmental agencies work to thwart illegal robocalling through the Telephone Consumer Protection Act of 1991 (the “TCPA”), which restricts telemarketing calls and the use of automatic text messages without the recipient’s proper consent.

The Federal Trade Commission and state attorneys general also have the authority to enforce compliance with the TCPA.

Moreover, the TCPA also allows aggrieved private parties to directly seek civil remedies and seek statutory-defined damages for calls or text messages received without recipients’ proper consent.

The scope and interpretation of these laws and regulations continue to evolve and develop.

If we do not comply with these laws or regulations or if we become liable under these laws or regulations due to the failure of our customers to comply with these laws by obtaining the recipient’s proper consent, we could face direct liability.

VoIP Regulation .

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The new 8YY originating access rules took effect on December 28, 2020.

The new rules will shift most switched access charges for 8YY calls to a bill-and-keep framework over a three-year period.

The new rules are generally intended to shift most switched access charges for 8YY calls to a bill-and-keep framework over a three-year period.

Emergency Services.

Pursuant to Federal legislation called Ray Baum’s Act and Kari’s Law, the FCC has adopted new emergency calling regulations that began to take effect in early 2020 and will continue to take effect through January 2022.

The new FCC rules adopted pursuant to Ray Baum’s Act and Kari’s Law govern the configuration of customer equipment and transmission of emergency calls in variety of different settings have and will take effect.

The rules address the obligations of communication service providers and software providers, like us, as well as equipment installers, managers and operators of a variety of different types of communications systems.

Generally, the rules require uniformity in dialing patterns for contacting emergency operators, implementing central notification functionalities, and rules governing the transmission of more precise location information in enterprise or campus environments.

Pursuant to Federal legislation called Ray Baum’s Act and Kari’s Law, the FCC adopted new emergency calling regulations that began to take effect in early 2020 continuing through January 2022.

These new regulations address the obligations of communication service providers and software providers, like us, as well as equipment installers, managers and operators of a variety of different types of communications systems, and generally require uniformity in dialing patterns for contacting emergency operators, implementing central notification functionalities.

The rules also require the transmission of more precise location information in enterprise or campus environments.

The granularity of the location information depends on the type of service.

For example, fixed and nomadic VoIP services that can only be used within a certain location have different requirements than nomadic services that can be used both within and outside of certain locations.

There is some ambiguity in the rules as to the specific obligations of each party involved in the service delivery chain and the rules have not been interpreted by the FCC or a court due to their recent promulgation and, in some cases, some of the rules are not yet effective.

To the extent that we do not comply with these rules for any reason, we may be subject to enforcement actions by the FCC, other federal agencies as well as state agencies.

We could also be subject to personal liability claims in certain instances.

There is some ambiguity in the rules as to the specific obligations of each party involved in the service delivery chain and the rules have not yet been interpreted by the FCC or a court.

State Telecommunications Regulation

The 1996 Act intended to increase competition in the telecommunications industry, especially in the local market.

The 1996 Act was intended to increase competition in the telecommunications industry, especially in the local market.

With respect to local services, incumbent local exchange carriers (“ILECs”) such as AT&T are required to allow interconnection to their incumbent networks and to provide access to network facilities, as well as several other pro-competitive measures.

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A portion of our traffic may be classified as intrastate telecommunications and therefore subject to state regulation.

We are authorized to provide competitive local exchange telecommunications

services in 49 states and the District of Columbia, and thus are subject to these additional regulatory regimes.

We are authorized to provide competitive local exchange telecommunications services in 49 states and the District of Columbia, and thus are subject to these additional regulatory regimes.

Changes in applicable state regulations could affect our business.

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Prior to our November 2020 acquisition of Voxbone, we concentrated our efforts in Europe, including the United Kingdom.

Following our November 2020 acquisition of Voxbone, we became subject to telecommunications laws and regulations in other non-US jurisdictions where we offer our services.

The European Electronic Communications Code.

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The directives are binding upon the European Union (the “EU”) member states, which must adopt implementing national laws consistent with the directives.

The 2002 Directives included the Framework Directive, the Authorization Directive, the Access Directive, the Universal Service Directive and the E-Privacy Directive, each of which applies or will apply to us.

In 2009 the European Council adopted two directives that amended the Framework Directive, the Authorization Directive, the Access Directive, the Universal Service Directive and the E-Privacy Directive (the “2009 Directives”), which the European Council repealed and replaced with the European Electronic Communications Code (the “EECC”).

The EECC contemplated a December 2020 deadline for each of the EU member states to implement national laws consistent with the EECC, although most member states have not adopted implementing legislation.

The European Council adopted the European Electronic Communications Code (the “EECC”), which contemplated a December 2020 deadline for each of the EU member states to implement national laws consistent with the EECC, but to date, 18 EU member states have not adopted implementing legislation.

Part I of the EECC – The Framework .

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Other Non-US Jurisdictions.

Following our November 2020 acquisition of Voxbone, we became subject to telecommunications laws and regulations in other non-US jurisdictions where we offer our services.

These laws and regulations may concern telecommunications, as well as privacy, data protection, intellectual property, competition, consumer protection, taxation or other subjects.

Following our acquisition of Voxbone, we became subject to telecommunications laws and regulations in other non-US jurisdictions where we offer our services.

These laws and

regulations may concern telecommunications, as well as privacy, data protection, intellectual property, competition, consumer protection, taxation or other subjects.

Corporate Information

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business