What changed in this filing

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Item 1. Business

2024-02-28 compared with 2023-02-23 · 67 added, 72 removed, 299 unchanged (32% of the section changed)

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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.

Backed by the Bandwidth Communications Cloud, our global owned-and-operated network spanning more than 65 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 cloud communications 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.

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.

Bandwidth’s business benefits from multiple global megatrends, including enterprise migration to the cloud, adoption of Contact Center as a Service platforms, the need to be able to work from anywhere, reinvention of customer experience, growth in messaging applications to engage directly with consumers, and application of artificial intelligence (“AI”) technologies to cloud communications use cases.

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

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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 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.

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

(2) focus on direct-to-enterprise growth to serve Global 2000 enterprises that directly leverage Bandwidth services to accelerate their digital transformations, and (3) aim to be the preferred provider for Software as a Service (“SaaS”) platforms that use conversational voice and 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

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.

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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:

We believe we are the only global Communications Platform as a Service (“CPaaS”) provider that also owns and operates our own cloud communications network.

This competitive differentiator has enabled Bandwidth to power the forces behind successive waves of the cloud communications revolution–from the growth of unified communications hyperscalers, to the acceleration of messaging platform leaders, and to directly powering global enterprise communications.

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:

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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.

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

• Market Offering 2:

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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.

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

Bandwidth’s new Maestro TM platform (described below) is designed to accelerate these customers’ transitions from on-premises equipment to a hybrid or fully cloud-based solution utilizing integrations with leading UCaaS, CCaaS, voice authentication, conversational AI, and other platforms.

Market Offering 1:

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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 our leadership in this market 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.

Offering 5x carrier redundancy with available hands-free alternative routing, our own toll-free voice network is combined with four additional directly peered toll-free 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.

Bandwidth’s unique Call Assure TM solution 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:

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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.

With a significantly higher open rate by end users than email, 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 top 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.

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.

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

Bandwidth’s capacity, high deliverability, regulatory know-how and exceptional human-based support has positioned us as a leading provider for messaging platforms.

We believe we will continue to win high-volume contracts from customers that have run out of capacity with our competitors or who seek the robustness, reliability and resilience of our service.

Market Offering 3:

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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.

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

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

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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.

In 2023, we launched Bandwidth Maestro TM ( “ Maestro ” ), a first-of-its-kind, next-generation enterprise cloud communications platform that enables IT customers to solve the key challenge of integrating best-in-class, real-time voice applications across their UCaaS, CCaaS, AI and machine learning platforms.

We believe Maestro ’ s open approach, designed to accommodate technologies developed by third parties, is unique in the cloud communications space.

It provides a critical technology bridge that enterprises need to orchestrate a modern customer experience stack without months of costly integration work resulting in faster time to value and enhanced customer and employee experiences and loyalty.

Maestro is a key platform for Bandwidth ’ s AI innovation strategy.

In 2023, Bandwidth launched AIBridge, a solution for Maestro, which enables enterprises to easily deploy voice-based AI tools in their contact centers to resolve calls faster and more efficiently in the communications cloud.

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.

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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;

• coverage in more than 65 countries, serving over 90 percent of global GDP;

• 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”);

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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 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 trackable video.

Phone Numbers.

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

CCaaS and UCaaS Platform Integrations.

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.

Bring your own carrier ( “ BYOC ” ) with CCaaS and UCaaS Integrations.

Bandwidth’s global Communications Cloud integrates with several leading UCaaS and CCaaS platforms under our BYOC 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:

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.

• UCaaS integration for Microsoft Teams:

We have BYOC partnerships with leading CCaaS platforms.

We also have a BYOC offering in the UCaaS space, including 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.

• Direct routing and dynamic E911:

Consolidate telephony globally with direct access to the Bandwidth Communications Cloud, and solve for an increasingly dynamic workforce with dynamic location routing for E911 — all from a single, certified provider.

• Microsoft Teams Operator Connect:

Integrate Bandwidth’s telephony in more than 30 countries through the Microsoft Teams Operator Connect program, enabling the move away from on-premise equipment to cloud-hosted session border controllers and seamless management in the Teams admin portal.

• 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.

Allows enterprises the ability to send text messages in and outside of the organization from within a user’s Teams environment using the same phone number they use for phone calls, built to work seamlessly with a direct routing or BYOC strategy.

Competitive Strengths

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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 offer greater quality and delivery assurance than providers that offer aggregated services across the public Internet or that simply resell partner networks.

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

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

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

Moreover, our dynamic geospatial routing capability can route emergency calls over our E911 network based on a real-time location of the caller to produce industry-leading results.

Experience & expertise :

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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.

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.

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.

Making work-life balance possible is not just something to feel good about.

It drives real results.

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We have a broad and diversified customer base.

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

We benefit from long-standing relationships with some of the largest technology companies, well-recognized enterprise customers, and 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, 2023.

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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.

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

Customers order specific services in separate service order forms that incorporate the applicable MSA.

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Sales and Marketing

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.

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

Bandwidth Communications Cloud.

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

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

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

As of December 31, 2023, we had 33 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.

In addition, as of December 31, 2023, we had 18 registered trademarks and 34 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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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.

These laws and regulations govern telecommunications activities, but also govern privacy, data protection, intellectual property, competition, consumer protection, taxation or other subjects.

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.

below certain material components of the telecommunications 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

The Federal Communications Commission (“FCC”) has jurisdiction over interstate and international telecommunications services in the U.S.

The Federal Communications Commission (“FCC”) has jurisdiction over interstate and international communications services in the U.S.

We have obtained FCC authorization to provide services on a facilities and resale basis.

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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.

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.

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

Separately, the FCC, FTC and state attorneys general work to thwart illegal robocalling through various methods, including enforcing compliance with 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 Telemarketing Sales Rule (the “TSR”), and other federal and state laws.

The FCC also has the authority to issue an order to downstream voice service providers to block and cease delivery of voice traffic from gateway providers identified by the FCC.

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

VoIP Regulation .

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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 subject to ongoing reform efforts at the FCC.

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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In addition, we need to maintain interconnection agreements with ILECs where we wish to provide service, which are subject to approval by individual states and subject to state arbitration in the event of disputes.

We expect that we should be able to negotiate or otherwise obtain renewals or successor agreements through adoption of others’ contracts or through arbitration proceedings, although the rates, terms and conditions applicable to interconnection and the exchange of traffic with certain ILECs could change significantly in certain cases.

We expect that we should be able to negotiate or otherwise obtain renewals or successor agreements through adoption of

others’ contracts or through arbitration proceedings, although the rates, terms and conditions applicable to interconnection and the exchange of traffic with certain ILECs could change significantly in certain cases.

International

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.

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

These laws and regulations may concern communications, 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.

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was founded in July 2000 and incorporated in Delaware on March 29, 2001.

Our principal executive offices are located at 900 Main Campus Drive, Raleigh, NC 27606, and our telephone number is (800) 808-5150.

Our principal executive offices are located at 2230 Bandmate Way, Raleigh, NC 27607, and our telephone number is (800) 808-5150.

Our website address is www.bandwidth.com.

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We intend to satisfy the applicable disclosure requirements regarding amendments to, or waivers from, provisions of our Code of Business Conduct and Ethics by posting such information on our website.

The information contained on, or that can be accessed through, our website is not incorporated by reference into this Annual Report on Form 10-K and should not be considered part of this report.

information contained on, or that can be accessed through, our website is not incorporated by reference into this Annual Report on Form 10-K and should not be considered part of this report.

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