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Item 1. Business

2023-02-23 compared with 2022-02-25 · 153 added, 234 removed, 218 unchanged (64% of the section changed)

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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.

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 the Bandwidth Communications Cloud, a global owned-and-operated network spanning 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 cloud platform.

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.

Bandwidth’s 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 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.

With the combination of our software APIs, our global Communications Cloud and our broad range of experience with global regulatory frameworks, we believe Bandwidth is one of the best-positioned providers in our space to deliver business-critical communications for global enterprises.

In fact, Bandwidth already powers all the 2022 Gartner Ⓡ Magic Quadrant Leaders in the key cloud communications categories of Unified Communications as a Service (“UCaaS”) and Contact Center as a Service (“CCaaS”).

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.

(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 cloud communications;

(2) by focusing on direct-to-enterprise growth to serve Global 2000 enterprises that come directly to Bandwidth to leverage our services to accelerate their digital transformations, and (3) by aiming to be the preferred provider for Software as a Service (“SaaS”) platforms that use conversational messaging to create digital engagements that enhance the customer experience.

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

Operating Segments

We have two reportable segments, CPaaS and Other.

Segments are evaluated based on revenue and gross profit.

We do not allocate operating expenses, interest expense or income tax expense to our segments.

Accordingly, we do not report such information.

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.

As a result of certain changes in our business during the quarter ended March 31, 2022, we re-evaluated our segment reporting and determined that one segment was appropriate, rather than the previously reported segments comprising “CPaaS” and “Other”.

The primary drivers for this change were the strategic alignment of our operating departments and the sale of certain immaterial legacy businesses.

We currently operate in one operating segment.

Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker, who is our Chief Executive Officer, in deciding how to allocate resources and assessing performance.

Our chief operating decision maker allocates resources and assesses performance based upon consolidated financial information.

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.

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

We believe we are the only global CPaaS provider that also owns and operates our own Communications Cloud network.

This competitive differentiator has enabled Bandwidth to power each successive wave of the cloud communications revolution–from the unified communications hyperscalers, to the messaging platform leaders, and now directly to global enterprises.

As each of these customer categories uses

services on the Bandwidth Communications Cloud in its own unique way, we have designed three key market offerings to power digital communications transformation:

• Market Offering 1:

Global Communications Plans.

This serves the leading power platforms at the forefront of the communications transformation in UCaaS and CCaaS, through a business-to-business-to-business (“B2B2B”) delivery model.

We enable these customers to rapidly automate voice, global number management and many other services on a scalable, global basis.

• Market Offering 2:

Programmable Services.

This comprises our text messaging solutions, through which we support innovative SaaS platforms with use cases like retail and eCommerce promotions, financial services identity authentication, and healthcare patient engagement, through a business-to-business-to-consumer (“B2B2C”) delivery model.

Programmable Services customers come to our Bandwidth Communications Cloud because we offer high capacity, volume and deliverability.

We believe this category represents a significant opportunity for future growth due to our ability to scale with customer demand.

• Market Offering 3:

Global Enterprises.

This category is a business-to-business channel, where Global 2000 enterprises can now engage directly with us to leverage our services in their digital transformation.

Bandwidth provides solutions to facilitate these customers’ efficient transition from their current on-premises equipment to a fully cloud-based solution.

To capitalize on this growing opportunity, we now have a dedicated focus on enterprises.

Market Offering 1:

Global Communications Plans

Through our Global Communications Plans market offering, we power all the leaders in UCaaS and CCaaS, as recognized by the research firm Gartner, including Microsoft, Google, Zoom, RingCentral, Genesys, and Five9.

We have been co-creating with many of these customers for more than a decade.

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

Our APIs also expedite customer onboarding with real-time global programmable number management (ordering, porting, provisioning) to allow providers to customize their customer journeys, embed our global communications capability into their platforms, and reduce friction to accelerate onboarding.

These platforms are global in nature, and they expect a communications partner who can provide direct global coverage and regulatory insight.

We believe our leadership in this space continues to expand with our global footprint.

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

Offering 5X redundancy with available hands-free alternative routing, 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 return on investment.

Our four additional peered networks further enable best-in-class coverage as well as resilience—so if one network experiences quality-impacting issues, calls can be routed to a different network seamlessly, before impacts are even felt.

Bandwidth’s Call Assure solution, announced in October 2022, provides hands-free alternative routing that is fully insulated from the core network to protect against an extraordinary disruption, such as a fire, natural disaster or cyberattack.

Market Offering 2:

Programmable Services

Our Programmable Services market offering is aimed at B2B2C platforms that use Bandwidth to deliver digital engagement experiences, primarily through our text messaging solutions.

With a 98 percent open rate by users, text messaging has become a business-critical communication channel to reach consumers.

Our easy-to-use APIs and proven track record for deliverability have made Bandwidth a choice for many leading platforms in text messaging.

Our messaging customers are powering digital engagements across many of the major brands of products people wear, eat, drive, and use every day.

Use cases include retail and eCommerce promotions, financial services identity authentication, healthcare patient engagement, and many more.

Bandwidth offers a full suite of messaging products, including 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:

Bandwidth’s capacity, high deliverability, and regulatory know-how have positioned us as a leading provider for messaging platforms.

We believe we will continue to win high-volume contracts from enterprises that have run out of capacity with our competitors

Market Offering 3:

Global Enterprises

Much as the leading platforms in cloud communications have done for years, followed by the messaging leaders in SaaS, now Global 2000 enterprises need to accelerate their digital transformations.

Bandwidth can help these large enterprises transition from their current on-premises equipment to a fully or hybrid cloud-based solution.

We now have a dedicated go-to-market focus on enterprises in the Global 2000.

By partnering with Bandwidth, global enterprises can reduce complexity, gain greater control, centralize communication resources and operational workloads, and better prepare for future scale.

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

With these three market offerings, we aim for Bandwidth to be a “one stop shop” and critical enabler for global enterprises, SaaS platforms, and cloud communications platforms.

We believe the combined power of our software platform and global Communications Cloud helps our customers to future-proof their strategy for the integrations of today, and new services to come.

The Bandwidth Communications Cloud

We believe one of our key competitive differentiators is the Bandwidth Communications Cloud.

It provides a communications developer platform on top of an all-IP, owned-and-operated network with global reach.

We believe we provide reliability, scalability, and usage-based control for global business-critical communications.

Automation and Workflow

The Bandwidth Communication Cloud’s command over our own numbering resources enables real-time porting, provisioning and number ordering en masse, and includes:

• 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;

• network platform paired with peering relationships with major global networks ensure our customers are never more than one hop away from the public switched telephone network (“PSTN”);

• 5x resilient U.S.

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• 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.

• A2P messaging designed to support best-in-class deliverability and insight;

• a broad range of experience with global regulatory frameworks earned through offering communications services in more than 60 countries and territories.

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.

Bandwidth is continually investing in new domains in our Communications Cloud.

Below are some 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.

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

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.

As enterprises migrate from on-premises equipment to the cloud, Bandwidth can fuel their digital transformation with our software-driven SIP trunking services designed to integrate in hybrid or full cloud deployments.

Messaging API.

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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 provide 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.

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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.

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.

We allow customers to 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.

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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.

Bandwidth’s global Communications Cloud 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 in the Bandwidth Communications Cloud, they can be moved from platform to platform without leaving Bandwidth, decreasing cloud migration risk and complexity.

• Duet TM for Microsoft Teams:

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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.

• 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.

• 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:

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.

We believe three things give Bandwidth a competitive advantage.

First, we have an all-IP platform with global reach.

The Bandwidth Communications Cloud provides the connectivity, APIs, security, privacy, workflows, and tools to give enterprises of all sizes a simple, scalable way to consume our services.

Second, our API-first approach facilitates the embedding of automation, enterprise-grade tooling, and simple UX/UI throughout the Bandwidth Communications Cloud.

Third, we have a broad range of experience with global regulatory frameworks informed by our communications services offerings.

We believe customers view Bandwidth as a trusted resource, helping them navigate constant change in the global regulatory landscape.

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

A full-stack, open Communications Cloud :

We built the Bandwidth Communications Cloud to be enterprise grade.

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

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

It 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) allows 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.

Our Communications Cloud 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.

We believe that the control we have over our Communications Cloud gives us distinct competitive advantages that include:

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

CPaaS based emergency calling capabilities :

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.

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

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

Our customers can meet compliance commitments using a single provider in multiple markets where they do business—across North America, Europe and Asia-Pacific.

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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.

Our senior leadership team consists of both new and long-tenured leaders – each an expert with deep and proven experience in the telecommunications and SaaS space.

W e regularly interact with local regulators in more than 30 countries, and we currently power all the 2022 Gartner Magic Quadrant Leaders in UCaaS and CCaaS.

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

Growing Relationships with Low Customer Churn :

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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.

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We have a broad and diversified customer base.

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.

We benefit from long-standing relationships with some of the largest tech companies, well-recognized enterprise customers, as well as innovative SaaS platforms.

Many of our customers have multi-year contracts, with no single customer representing 10% of total revenue for the year ended December 31, 2022.

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

We seek to empower enterprises to create, scale and operate business-critical 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 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.

Our sales and marketing teams are part of a single revenue organization that works closely together to identify and acquire new customers, expand relationships with existing enterprises, and integrate them with the Bandwidth Communications Cloud.

Our marketing team generates marketing qualified leads and pipeline for sales through a number of demand-generating channels, including our website, marketing campaigns, webinars, sponsored virtual and live events, white papers and blogs, public relations, social media, analyst relations, paid

search and search engine optimization and 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 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.

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

Our sales and marketing 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 and marketing executives work to educate these decision makers and their teams about the benefits of using the Bandwidth Communications Cloud 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, revenue enablement and sales engineering functions.

Research and Development

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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.

Our product and network teams are responsible for the ongoing design, development, testing and release of new features and functions in the Bandwidth Communications Cloud.

Our executive management is responsible for creating a vision for our product roadmap and new innovation, and our sales and marketing teams relay customer insights, enterprise needs and possible new use cases or enhancements.

Our vision for the Bandwidth Communications Cloud is to be viewed as a singular resource for global enterprise communications.

Our near-term roadmap includes a range of solutions to help enterprises create a better total experience for consumers and employees whether through the contact center, hybrid work, text messaging engagement, intelligent emergency services, or a combination thereof.

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 compete directly with us across the combination of all our global scale, platform and product offerings.

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 the combination of our global scale, all-IP Communications Cloud, enterprise-grade APIs, and broad regulatory experience gained through our service offerings..

Our competitors fall into two primary categories:

• 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.

• Incumbent network operators that offer limited geographical reach and limited developer functionality on top of their networks and physical infrastructure, such as AT&T, Colt, Lumen and Verizon.

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

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

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

patents and five U.S.

patent application pending.

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

As of December 31, 2022, we had twenty-nine U.S.

patents and three U.S.

patent applications pending.

In addition, as of December 31, 2022, we had nineteen registered trademarks and two trademark applications pending 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.

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We have not experienced any work stoppages, and we consider our relations with our employees to be good.

We and the communications services that we provide through our software APIs are subject to many U.S.

We and the communications services that we provide through our Communications Cloud and software APIs are subject to many U.S.

federal and state and foreign laws and regulations.

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 or applied in ways that could harm our business.

Many of the laws and regulations that apply to us and the communications services that we provide through our Communications Cloud and software APIs are still evolving and being tested in courts and could be interpreted or applied in ways that could harm our business.

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

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With these technological advances, there have been challenges to the traditional regulatory structure under the 1996 Act.

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

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 the challenges are fraud and abuse in the form of illegal robocalling and unwanted text messaging.

In December 2019, Congress adopted 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.

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VoIP Regulation .

Some of our communications services provided through our software APIs may qualify as Voice-over Internet Protocol (“VoIP”).

The FCC has imposed various regulatory requirements on VoIP providers that previously applied only to traditional telecommunications providers, such as obligations to provide 911 functionality, to contribute to the federal universal service fund, to comply with regulations relating to local number portability, to abide by the FCC’s service discontinuance rules, to contribute to the Telecommunications Relay Services fund and to abide by the regulations concerning Customer Proprietary Network Information, outage reporting, access for persons with disabilities, the Communications Assistance for Law Enforcement Act and expanded obligations with respect to the transmission of emergency calls.

Some communications services provided through our software APIs may qualify as Voice-over Internet Protocol (“VoIP”).

The FCC has imposed regulatory requirements on VoIP providers that previously applied only to traditional telecommunications providers, such as obligations to provide 911 functionality, to contribute to the federal universal service fund, to comply with regulations relating to local number portability, to abide by the FCC’s service discontinuance rules, to contribute to the Telecommunications Relay Services fund and to abide by the regulations concerning Customer Proprietary Network Information (“CPNI”), outage reporting, access for persons with disabilities, the Communications Assistance for Law Enforcement Act and expanded obligations with respect to the transmission of emergency calls.

In some instances, these regulations indirectly affect us because they directly apply to our customers.

Additionally, several state public utility commissions are conducting regulatory proceedings that could affect our rights and obligations, or the rights and obligations of our customers, with respect to IP-based voice applications.

Specifically, some states have taken the position that the “local” component of VoIP service is subject to traditional regulations applicable to local telecommunications services, such as the obligation to pay intrastate universal service fees and other state-related telecommunications taxes, fees and surcharges.

Some states have taken the position that the “local” component of VoIP service is subject to traditional regulations applicable to local telecommunications services, such as the obligation to pay intrastate universal service fees and other state-related telecommunications taxes, fees and surcharges.

We cannot predict whether the FCC or state public utility commissions will impose additional requirements, regulations or charges upon our provision of services related to IP communications.

Universal Service .

Some of our services are subject to federal and state regulations that implement universal service support for access to communications services in rural and high-cost areas and to low-income consumers at reasonable rates;

Some services are subject to federal and state regulations that implement universal service support for access to communications services in rural and high-cost areas and to low-income consumers at reasonable rates;

and access to advanced communications services by schools, libraries and rural health care providers.

In some instances, these regulations indirectly affect us because they directly apply to our customers.

The FCC assesses us a percentage of interstate and international revenue we receive from certain customers as our contribution to the Federal Universal Service Fund, which assessments we generally pass on to our customers.

The FCC assesses a contribution amount based on a percentage of interstate and international revenue we receive from certain customers as our contribution to the Federal Universal Service Fund.

These assessments are generally passed on to our customers.

Additionally, the FCC has ruled that states may assess contributions to their state Universal Service Funds on VoIP providers’ intrastate revenue.

Any change in the assessment methodology may affect our revenue and expenses, but at this time it is not possible to predict the extent we would be affected, if at all.

Any change in the assessment methodology may affect our revenue and expenses, but at this time it is not possible to predict the extent we would be affected.

Intercarrier Compensation.

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Local telephone companies historically have charged one another for local and Internet-bound traffic terminating on each other’s networks.

The methodology by which carriers have compensated one another for exchanged traffic, whether it be for local, intrastate or interstate traffic, has been under review by the FCC for over a decade and continues to be subject to on-going reform efforts.

The methodology by which carriers have

compensated one another for exchanged traffic, whether it be for local, intrastate or interstate traffic, has been subject to ongoing reform efforts at the FCC.

In its November 2011 Universal Service Fund/Intercarrier Compensation Transformation Order (the “USF/ICC Transformation Order”) and subsequent related FCC orders, most terminating switched access charges and all reciprocal compensation charges were capped at then-current levels, and were reduced to zero over, as relevant to us, generally a six-year transition period that began July 1, 2012.

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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.

More recently, in November 2022, the FCC released new 911 outage reporting requirements that expanded the scope of previous 911 outage reporting obligations to now broadly include originating service providers.

State Telecommunications Regulation

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International

As we have expanded internationally, we have become subject to telecommunications laws and regulations in the non-US jurisdictions where we offer our services.

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

The European Electronic Communications Code.

In 2002, the European Council adopted a set of six directives to create the framework for telecommunication laws in Europe (the “2002 Directives”).

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

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 .

Part I of the EECC describes the European regulatory framework and defines terms.

Part I of the EECC also mandates the independence of the national regulatory authorities (the “NRAs”) to ensure the proper administration and exercise of power.

Part I of the EECC also foresees the rules governing the provision of electronic communications networks and services.

Part II of the EECC – Networks .

Part II of the EECC establishes a uniform framework for the regulation of access to and the interconnection of electronic communications networks, including spectrum licensing.

Part II of the EECC also outlines the relationships among suppliers of network and services, including principles to govern contractual relationships and regulatory involvement by the NRAs as necessary.

Part II of the EECC effectively governs the relationships among service providers at a wholesale level and defines the principle of market analysis and significant market power, and related termination rates.

Part III of the EECC - Services .

Part III of the EECC governs universal service obligations and the provision of electronic communication networks and services to end users.

Part III of the EECC seeks to ensure that end users have access to a minimum set of services, including access to emergency services.

However, the minimum set of services is not required to be provided by all providers.

Instead, the applicable NRAs may designate one or more companies to achieve the universal service in each country.

It also establishes the principles governing the management of telephone numbers and the licensure requirements for the allocation of telephone numbers.

Part III of the EECC - Services .

Part III of the EECC governs universal service obligations and the provision of electronic communication networks and services to end users.

Part III of the EECC seeks to ensure that end users have access to a minimum set of services, including access to emergency services.

However, the minimum set of services is not required to be provided by all providers.

Instead, the applicable NRAs may designate one or more companies to achieve the universal service in each country.

It also establishes the principles governing the management of telephone numbers and the licensure requirements for the allocation of telephone numbers.

The E-Privacy Directive .

As an international company, we are subject to telecommunications laws and regulations in the non-US jurisdictions in which 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.

In European markets, we are subject to the European Electronic Communications Code (the “Code”) and its transposition into the laws of the European Union (“EU”) and European Economic Area (“EEA”) countries in which we operate.

The Code sets forth the European regulatory framework and harmonized rules across the EU and EEA, which govern the provision of electronic communications networks and services.

While the Code provides a harmonized framework, laws of each jurisdiction of the EU and the EEA, and related regulations, will differ from country to country.

For example, rules around suballocation of numbering resources differ from country to country.

The E-Privacy Directive seeks to ensure privacy and confidentiality in the processing of personal data in electronic communications.

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The E-Privacy Directive also requires notification of any breach or loss of personal data to the applicable NRA.

Implementing National Legislation .

The directives of the European Council ensure substantial similarities among nations, but not absolute uniformity.

Each of the EU member states must adopt national legislation to implement the directives of the European Council.

United Kingdom .

The United Kingdom (“U.K.”) departed from the EU in January 2020.

We understand that the transition period contemplated by the withdrawal agreement governing the U.K.’s departure from the EU provided that EU law applied in and in relation to the UK only through December 2020.

Thereafter, the EECC will no longer directly apply in the U.K.

We do not anticipate considerable changes, however, since the EECC has been transposed into U.K.

law as of December 2020.

Other Non-US Jurisdictions.

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.

The United Kingdom’s (“U.K.”) departure from the EU was finalized in December 2020.

While the Code is therefore no longer directly applicable in the U.K., we do not currently anticipate that considerable changes will be made to the U.K.

regulatory framework.

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