Bandwidth Inc. 10-K

Item 8. Financial Statements BANDWIDTH INC. Index to Consolidated Financial Statements Page Reports of Independent Registered Public Accounting Firm 81 Consolidated Balance Sheets 84 Consolidated Statements of Operations 85 Consolidated Statements of Comprehensive Income (Loss) 86 Consolidated Statements of Changes in Stockholders’ Equity 87 Consolidated Statements of Cash Flows 88 Notes to Consolidated Financial Statements 90 80 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Bandwidth Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Bandwidth Inc. (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 19, 2026 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates. 81 Table of Contents Revenue Recognition Description of the Matter As discussed in Note 1, the Company recognizes revenue from the sale of cloud communications services offered through software solutions, which are predominantly derived from (i) reoccurring sources such as per minute voice usage and voice calling, per text message usage and other usage services and fees and (ii) monthly recurring charges arising from phone number services, 911-enabled phone number services, messaging services and other services. Revenue for reoccurring fees earned from customers accessing and using the Company’s communications platform is recognized in the period the traffic traverses the Company’s network. Revenue from recurring fees is recognized on a ratable basis as the service is provided, which is typically one month. The processing and recording of revenue from reoccurring sources and recurring charges is highly automated and involves capturing and pricing significant volumes of data across multiple systems. Given the complex automated systems utilized to capture, process, and ultimately record revenue, performing procedures to audit revenue required a high degree of auditor judgment and extensive audit effort. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls that address the risks of material misstatement relating to the measurement and occurrence of revenue. This included involvement of audit professionals with significant experience in the use of information technology (IT) to support business operations and related controls. With the involvement of our IT professionals, we tested the IT application and general controls including user access and change management controls over the significant systems used to capture and process voice usage, phone number services, 911 services access, messaging services and other services. In addition, our audit procedures included testing of other manual reconciliation and analytical review controls designed to determine the accuracy and completeness of data processed and transferred across multiple platforms in connection with the recognition of revenue. To test the Company’s revenue, our audit procedures included, among other procedures, performing data analytics by extracting data from the Company’s systems to evaluate the completeness and accuracy of recorded revenues, testing a sample of revenue transactions, which included evaluating the transaction price based on inspection of customer contracts and approved rate tables, as well as testing the mathematical accuracy of the recorded revenue based on the usage and services access during the period. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2012. Raleigh, North Carolina February 19, 2026 82 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Bandwidth Inc. Opinion on Internal Control Over Financial Reporting We have audited Bandwidth Inc.’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Bandwidth Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and our report dated February 19, 2026 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Raleigh, North Carolina February 19, 2026 83 Table of Contents BANDWIDTH INC. Consolidated Balance Sheets (In thousands, except share and per share amounts) As of December 31, 2025 2024 Assets Current assets: Cash and cash equivalents $ 102,788 $ 81,812 Marketable securities 8,476 1,975 Accounts receivable, net of allowances 91,409 86,455 Deferred costs 4,830 3,729 Prepaid expenses and other current assets 11,557 13,841 Total current assets 219,060 187,812 Property, plant and equipment, net 174,251 176,823 Operating right-of-use asset, net 152,950 153,601 Intangible assets, net 138,742 145,355 Deferred costs, non-current 3,098 4,355 Other long-term assets 7,754 3,977 Goodwill 356,772 317,243 Total assets $ 1,052,627 $ 989,166 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 42,600 $ 28,362 Accrued expenses and other current liabilities 91,151 101,819 Current portion of deferred revenue 8,742 7,031 Operating lease liability, current 3,947 3,111 Current portion of convertible senior notes 7,627 — Total current liabilities 154,067 140,323 Other liabilities 555 576 Operating lease liability, net of current portion 221,019 219,191 Deferred revenue, net of current portion 4,972 7,955 Deferred tax liability 24,479 27,304 Convertible senior notes 247,562 281,284 Total liabilities 652,654 676,633 Commitments and contingencies (Note 11) Stockholders’ equity: Preferred stock: $ 0.001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding — — Class A voting common stock: $ 0.001 par value; 100,000,000 shares authorized; 29,385,869 and 26,588,688 shares issued and outstanding as of December 31, 2025 and December 31, 2024, respectively 29 27 Class B voting common stock: $ 0.001 par value; 20,000,000 shares authorized; 1,958,028 shares issued and outstanding as of December 31, 2025 and December 31, 2024 2 2 Additional paid-in capital 485,836 435,927 Accumulated deficit ( 84,326 ) ( 71,414 ) Accumulated other comprehensive loss ( 1,568 ) ( 52,009 ) Total stockholders’ equity 399,973 312,533 Total liabilities and stockholders’ equity $ 1,052,627 $ 989,166 See accompanying notes. 84 Table of Contents BANDWIDTH INC. Consolidated Statements of Operations (In thousands, except share and per share amounts) Year ended December 31, 2025 2024 2023 Revenue $ 753,817 $ 748,487 $ 601,117 Cost of revenue 458,766 468,529 364,960 Gross profit 295,051 279,958 236,157 Operating expenses: Research and development 132,517 118,627 104,188 Sales and marketing 101,683 109,698 102,063 General and administrative 75,220 71,692 65,363 Total operating expenses 309,420 300,017 271,614 Operating loss ( 14,369 ) ( 20,059 ) ( 35,457 ) Other (expense) income, net: Net gain on extinguishment of debt 1,082 10,267 12,767 Gain on business interruption insurance recoveries — — 4,000 Interest expense, net ( 2,028 ) ( 1,861 ) ( 808 ) Other (expense) income, net ( 1,276 ) 2,700 195 Total other (expense) income, net ( 2,222 ) 11,106 16,154 Loss before income taxes ( 16,591 ) ( 8,953 ) ( 19,303 ) Income tax benefit 3,679 2,429 2,960 Net loss $ ( 12,912 ) $ ( 6,524 ) $ ( 16,343 ) Earnings per share: Net loss per share, basic and diluted $ ( 0.43 ) $ ( 0.24 ) $ ( 0.64 ) Weighted average number of common shares outstanding, basic and diluted 29,996,861 27,209,698 25,612,724 See accompanying notes. 85 Table of Contents BANDWIDTH INC. Consolidated Statements of Comprehensive Income (Loss) (In thousands) Year ended December 31, 2025 2024 2023 Net loss $ ( 12,912 ) $ ( 6,524 ) $ ( 16,343 ) Other comprehensive income (loss) Unrealized gain (loss) on marketable securities, net 24 ( 61 ) ( 248 ) Foreign currency translation, net 50,297 ( 23,306 ) 15,698 Unrealized gain (loss) on employee benefit plan, net 120 152 ( 30 ) Total other comprehensive income (loss) 50,441 ( 23,215 ) 15,420 Total comprehensive income (loss) $ 37,529 $ ( 29,739 ) $ ( 923 ) See accompanying notes. 86 Table of Contents BANDWIDTH INC. Consolidated Statements of Changes in Stockholders ’ Equity (In thousands, except share amounts) Class A voting common stock Class B voting common stock Additional paid-in capital Accumulated other comprehensive loss Accumulated deficit Total stockholders’ equity Shares Amount Shares Amount Balance at December 31, 2022 23,379,000 $ 23 1,965,170 $ 2 $ 364,913 $ ( 44,214 ) $ ( 48,547 ) $ 272,177 Exercises of vested stock options 61,349 — — — 414 — — 414 Vesting of restricted stock units 804,962 1 — — — — — 1 Equity awards withheld for tax liability ( 46,313 ) — — — ( 941 ) — — ( 941 ) Conversion of Class B voting common stock to Class A voting common stock 7,142 — ( 7,142 ) — — — — — Unrealized loss on marketable securities — — — — — ( 248 ) — ( 248 ) Foreign currency translation — — — — — 15,698 — 15,698 Unrealized loss on employee benefit pension plan — — — — — ( 30 ) — ( 30 ) Stock-based compensation — — — — 26,662 — — 26,662 Net loss — — — — — — ( 16,343 ) ( 16,343 ) Balance at December 31, 2023 24,206,140 24 1,958,028 2 391,048 ( 28,794 ) ( 64,890 ) 297,390 Exercises of vested stock options 17,305 — — — 167 — — 167 Vesting of restricted stock units 2,483,600 3 — — — — — 3 Equity awards withheld for tax liability ( 118,357 ) — — — ( 2,296 ) — — ( 2,296 ) Unrealized loss on marketable securities — — — — — ( 61 ) — ( 61 ) Foreign currency translation — — — — — ( 23,306 ) — ( 23,306 ) Unrealized gain on employee benefit pension plan — — — — — 152 — 152 Stock-based compensation — — — — 47,008 — — 47,008 Net loss — — — — — — ( 6,524 ) ( 6,524 ) Balance at December 31, 2024 26,588,688 27 1,958,028 2 435,927 ( 52,009 ) ( 71,414 ) 312,533 Exercises of vested stock options 11,414 — — — 109 — — 109 Vesting of restricted stock units 2,969,717 2 — — — — — 2 Equity awards withheld for tax liability ( 183,950 ) — — — ( 2,945 ) — — ( 2,945 ) Unrealized gain on marketable securities — — — — — 24 — 24 Foreign currency translation — — — — — 50,297 — 50,297 Unrealized gain on employee benefit pension plan — — — — — 120 — 120 Stock-based compensation — — — — 52,745 — — 52,745 Net loss — — — — — — ( 12,912 ) ( 12,912 ) Balance at December 31, 2025 29,385,869 $ 29 1,958,028 $ 2 $ 485,836 $ ( 1,568 ) $ ( 84,326 ) $ 399,973 See accompanying notes. 87 Table of Contents BANDWIDTH INC. Consolidated Statements of Cash Flows (In thousands) Year ended December 31, 2025 2024 2023 Cash flows from operating activities Net loss $ ( 12,912 ) $ ( 6,524 ) $ ( 16,343 ) Adjustments to reconcile net loss to net cash provided by operating activities Depreciation and amortization 53,764 49,242 41,717 Non-cash reduction to the right-of-use asset 3,386 3,601 9,323 Amortization of debt discount and issuance costs 1,384 1,709 2,520 Stock-based compensation 52,332 48,362 36,992 Deferred taxes and other ( 2,131 ) ( 4,452 ) ( 5,942 ) Gain on sale of intangible asset — ( 1,000 ) — Net gain on extinguishment of debt ( 1,082 ) ( 10,267 ) ( 12,767 ) Changes in operating assets and liabilities: Accounts receivable ( 3,956 ) ( 8,725 ) ( 3,454 ) Prepaid expenses and other assets ( 1,682 ) 4,062 2,141 Accounts payable 13,070 ( 4,639 ) 5,385 Accrued expenses and other liabilities ( 10,737 ) 18,108 ( 10,592 ) Operating right-of-use liability ( 1,945 ) ( 5,594 ) ( 9,979 ) Net cash provided by operating activities 89,491 83,883 39,001 Cash flows from investing activities Purchase of property, plant and equipment ( 22,261 ) ( 13,986 ) ( 9,257 ) Refund of deposits for construction in progress — 2,707 — Capitalized software development costs ( 10,680 ) ( 11,394 ) ( 10,642 ) Purchase of marketable securities ( 16,127 ) ( 34,050 ) ( 80,625 ) Proceeds from sales and maturities of marketable securities 9,650 53,502 130,120 Proceeds from sale of business 361 779 1,253 Proceeds from sale of intangible assets — 1,000 — Net cash (used in) provided by investing activities ( 39,057 ) ( 1,442 ) 30,849 Cash flows from financing activities Borrowings on line of credit 28,500 206,500 — Repayments on line of credit ( 28,500 ) ( 206,500 ) — Payments on finance leases ( 66 ) ( 87 ) ( 157 ) Net cash paid for debt extinguishment ( 26,144 ) ( 128,534 ) ( 51,259 ) Payment of debt issuance costs ( 25 ) ( 524 ) ( 710 ) Proceeds from exercises of stock options 109 167 413 Value of equity awards withheld for tax liabilities ( 2,942 ) ( 2,295 ) ( 1,062 ) Net cash used in financing activities ( 29,068 ) ( 131,273 ) ( 52,775 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 440 ) ( 1,241 ) 610 Net increase (decrease) in cash, cash equivalents, and restricted cash 20,926 ( 50,073 ) 17,685 Cash, cash equivalents, and restricted cash, beginning of period 82,234 132,307 114,622 Cash, cash equivalents, and restricted cash, end of period $ 103,160 $ 82,234 $ 132,307 Reconciliation of cash, cash equivalents, and restricted cash, end of period Cash and cash equivalents $ 102,788 $ 81,812 $ 131,987 Restricted cash included in prepaid expenses and other current assets 372 422 320 Total cash, cash equivalents, and restricted cash, end of period $ 103,160 $ 82,234 $ 132,307 88 Table of Contents BANDWIDTH INC. Consolidated Statements of Cash Flows (In thousands) Year ended December 31, 2025 2024 2023 Supplemental disclosure of cash flow information Cash (received from) paid for interest $ ( 182 ) $ 691 $ ( 1,500 ) Cash (refunded) paid for taxes $ ( 55 ) $ 3,815 $ 7,203 Right-of-use assets obtained in exchange for new operating lease liabilities $ 2,661 $ 1,905 $ 156,025 Supplemental disclosure of noncash investing and financing activities Purchase of property, plant and equipment, accrued but not paid $ 6,607 $ 11,447 $ 6,871 Purchase of property and equipment through lease incentive $ 1,875 $ — $ 57,329 Purchase of property and equipment through use of escrow deposits $ — $ — $ 20,674 See accompanying notes. 89 Table of Contents BANDWIDTH INC. Notes to Consolidated Financial Statements 1. Description of Business and Summary of Significant Accounting Policies Description of Business Bandwidth Inc. (together with its subsidiaries, “Bandwidth” or the “Company”) was founded in July 2000 and incorporated in Delaware on March 29, 2001. The Company’s headquarters are located in Raleigh, North Carolina. The Company is a global cloud-based, software-powered communications platform-as-a-service (“CPaaS”) provider that enables enterprises to create, scale and operate voice or messaging communications services across any mobile application or connected device. Basis of Presentation The consolidated financial statements and accompanying notes were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Principles of Consolidation The consolidated financial statements include the accounts of Bandwidth Inc. and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of the Company’s consolidated financial statements in conformity with GAAP requires the Company to make estimates and judgments that affect the amounts reported in these financial statements and accompanying notes. These estimates in the consolidated financial statements include, but are not limited to, allowance for doubtful accounts, reserve for expected credit losses, reserve for sales credits, recoverability of long lived and intangible assets, fair value of acquired intangible assets and goodwill, discount rates used in the valuation of right-of-use assets and lease liabilities, the fair value of the liability components of the Company’s Convertible Notes (as defined herein), estimated period of benefit, valuation allowances on deferred tax assets, certain accrued expenses and contingencies. Although the Company believes that the estimates it uses are reasonable, due to the inherent uncertainty involved in making these estimates, actual results reported in future periods could differ from those estimates. Revenue Recognition Revenue recognition commences upon transfer of control of promised goods or services to customers in an amount that the Company expects to receive in exchange for those products or services. The Company determines revenue recognition through the following steps: • identification of the contract, or contracts, with a customer; • identification of the performance obligations in the contract; • determination of the transaction price; • allocation of the transaction price to the performance obligations in the contract; and • recognition of revenue, when, or as, the Company satisfies a performance obligation. 90 Table of Contents Notes to Consolidated Financial Statements (continued) Infrequently, Bandwidth’s contracts with customers may include multiple performance obligations. For such arrangements, revenues are allocated to each performance obligation based on its relative standalone selling price. Generally, standalone selling prices are determined based on the prices charged to similar customers for similar services. When required as part of providing service, revenues and associated expenses related to nonrefundable, upfront service activation and setup fees are deferred and recognized over the longer of the associated service contract period or estimated customer life. The Company’s contracts do not contain general rights of return. However, occasionally credits may be issued. The Company’s contracts do not provide customers with the right to take possession of the software supporting the applications. Amounts that have been invoiced are recorded in accounts receivable and in revenue or deferred revenue depending on whether the revenue recognition criteria have been met. The Company maintains a reserve for sales credits. Credits are accounted for as variable consideration and are estimated based on several inputs including historical experience and current trends of credit issuances. Adjustments to the reserve are recorded against revenue. The Company has various sales commission plans for which eligible employees can earn commissions from the sale of products and services to customers. Eligible employees must be employed at the time of payment in order to receive a commission. The Company pays commissions over time and a corresponding requisite substantive service condition exists for the employee to receive the commission. The Company determined that the timing of the commission payments and the underlying service performed by the employee were commensurate. Accordingly, sales commissions are generally expensed as incurred. These costs are recorded within sales and marketing expenses. Nature of Products and Services Revenue consists primarily of two categories: (1) cloud communications and (2) messaging surcharges, which are described and quantified below. Year ended December 31, 2025 2024 2023 (In thousands) Cloud communications $ 561,379 $ 539,753 $ 478,892 Messaging surcharges 192,438 208,734 122,225 Total revenue $ 753,817 $ 748,487 $ 601,117 Cloud Communications Cloud communications revenue consists of the sale of communications services offered through Application Programming Interface (“API”) software solutions to customers and is derived from (i) reoccurring sources such as per minute voice usage and voice calling, per text message usage and other usage services and fees, and (ii) monthly recurring charges arising from phone number services, 911-enabled phone number services, messaging services and other services. The majority of the Company’s cloud communications revenue is generated from reoccurring fees earned from customers accessing and using the Company’s communications platform. Access to the Company’s communications platform is considered a series of distinct services with continuous transfer of control to the customer, comprising one performance obligation. Reoccurring fees are recognized in revenue in the period the traffic traverses the Company’s network. For the years ended December 31, 2025, 2024 and 2023, revenue from reoccurring cloud communications fees represented $ 414.5 million, $ 401.4 million, and $ 346.9 million of total revenue, respectively. 91 Table of Contents Notes to Consolidated Financial Statements (continued) Revenue from recurring fees is recognized on a ratable basis as the service is provided, which is typically one month. For the years ended December 31, 2025, 2024 and 2023, revenue from recurring cloud communications fees represented $ 146.9 million, $ 138.4 million and $ 132.0 million of total revenue, respectively. Messaging surcharges Messaging surcharge revenue consists of pass-through messaging surcharges imposed by the major mobile carriers in North America and is recognized in revenue during the period in which the messaging traffic traverses the Company’s network. Contract Assets and Liabilities The following table provides information about receivables and contract liabilities from contracts with customers: As of December 31, 2025 2024 (In thousands) Receivables (1) $ 91,409 $ 86,455 Contract liabilities (2) 13,714 14,986 ________________________ (1) Included in accounts receivable, net of allowances on the consolidated balance sheets. (2) Included in current portion of deferred revenue and deferred revenue, net of current portion on the consolidated balance sheets. Deferred revenue is recorded when cash payments are received in advance of future usage on contracts. Revenue is typically recognized in the following month when service is rendered or, in the case of nonrefundable upfront fees, over the estimated period of benefit from the date the fee is incurred by the customer. Customer refundable payments are recorded as advanced billings. During the year ended December 31, 2025, the Company recognized revenue of $ 6.5 million related to contract liabilities recorded at the beginning of the year. The Company expects to recognize $ 8.7 million in revenue over the next 12 months related to its contract liabilities as of December 31, 2025. Cost of Revenue Cost of revenue consists of fees paid to other network service providers, network operations costs, personnel costs, allocated costs of facilities and information technology, amortization of acquired technology intangibles and depreciation. Fees paid to other network service providers arise when the Company purchases services such as minutes of use, phone numbers, messages, porting of customer numbers and network circuits. Network operations costs are incurred for web services and cloud infrastructure, capacity planning and management, software licenses, hardware and software maintenance fees, customer support and network-related facility rents. Personnel costs (including stock-based compensation expenses) arise for employees who are responsible for the delivery of services, and operations and maintenance of, the communications network. 92 Table of Contents Notes to Consolidated Financial Statements (continued) Operating Expenses Research and Development Research and development expenses consist of salaries and related personnel costs for the design, development, testing and enhancement of our cloud network and software products. Research and development expenses include depreciation and allocated costs for facilities and information technology utilized by our research and development staff. Sales and Marketing Sales and marketing expenses consist of salaries and related personnel costs, commissions, and costs related to advertising, marketing, brand awareness activities, sales support and professional services fees, and customer billing and collections functions. Sales and marketing expenses include depreciation, amortization of acquired customer relationship intangible assets, and allocated costs of facilities and information technology utilized by our sales and marketing staff. General and Administrative General and administrative expenses consist of salaries and related personnel costs for accounting, legal, human resources, corporate, and other administrative and compliance functions. General and administrative expenses include depreciation, expenditures for third party professional services, and allocated costs of facilities and information technology utilized by our corporate and administrative staff. Cash and Cash Equivalents The Company classifies all highly liquid investments with original stated maturities of three months or less from the date of purchase as cash equivalents. All highly liquid investments with original stated maturities of greater than three months from the date of purchase are classified as current marketable securities. Cash deposits are primarily in financial institutions in the United States. However, cash for monthly operating costs of international operations are deposited in banks outside the United States. The Company has a policy of making investments only with commercial institutions that have at least an investment grade credit rating. The Company utilizes money market funds as an investment option and only invests in AAA rated funds. Marketable Securities The Company’s marketable securities consist of time deposits and commercial paper. The Company classifies marketable securities as available-for-sale at the time of purchase and reevaluates such classification as of each balance sheet date. The Company may sell these securities at any time for use in current operations even if they have not yet reached maturity. As a result, the Company classifies investments with maturities greater than 90 days as marketable securities in the accompanying consolidated balance sheets. Available-for-sale securities are recorded at their estimated fair value at the end of each reporting period. Unrealized gains and losses are excluded from earnings and recorded as a separate component within accumulated other comprehensive loss on the consolidated balance sheets until realized. Interest income is reported within other (expense) income, net on the consolidated statements of operations. The Company evaluates its investments to assess whether the amortized cost basis is in excess of estimated fair value and determines what amount of that difference, if any, is caused by expected credit losses. Allowance for credit losses are recognized as a charge in other (expense) income, net on the consolidated statements of operations, and any remaining unrealized losses are included in accumulated other comprehensive loss on the consolidated balance sheets. Due to the nature and investment grade of the Company’s marketable securities, there were no credit losses recorded for the year ended December 31, 2025. There have been no impairment charges for any unrealized losses during the period. The Company determines realized gains and 93 Table of Contents Notes to Consolidated Financial Statements (continued) losses on the sale of marketable securities using the specific identification method and records such gains and losses in other (expense) income, net on the consolidated statements of operations. Accounts Receivable and Current Expected Credit Losses Accounts receivable are stated at realizable value, net of allowances, which includes an allowance for doubtful accounts and a reserve for expected credit losses. The allowance for doubtful accounts is based on management’s assessment of the collectability of its customer accounts. The Company regularly reviews the composition of the accounts receivable aging, historical bad debts, changes in payment patterns, customer creditworthiness, current economic trends, and reasonable and supportable forecasts about the future. Relevant risk characteristics include customer size and historical loss patterns. Management has evaluated the expected credit losses related to trade accounts receivable and determined that allowances of approximately $ 0.5 million and $ 2.2 million for uncollectible accounts and customer balances that are disputed were required as of December 31, 2025 and 2024, respectively. Refer to Note 3, “Financial Statement Components” to these consolidated financial statements, for a rollforward of the components of the allowances for the years ended December 31, 2025, 2024 and 2023. The Company includes unbilled receivables in its accounts receivable balance. Generally, these receivables represent earned revenue from services provided to customers, which will be billed in the next billing cycle. All amounts are considered collectible and billable. As of December 31, 2025 and 2024, unbilled receivables were $ 57.4 million and $ 46.8 million, respectively. Concentration of Credit Risk Financial instruments that are exposed to concentration of credit risk consist primarily of cash and cash equivalents, marketable securities and trade accounts receivable. The Company maintains its cash, cash equivalents and marketable securities with high credit-quality financial institutions. Certain balances held by such financial institutions exceed federally-insured limits. With regard to customers, credit evaluation and account monitoring procedures are used to minimize the risk of loss. The Company believes that no additional credit risk beyond amounts provided for by the allowance for doubtful accounts are inherent in accounts receivable. As of December 31, 2025 and 2024, no individual customer represented more than 10% of the Company’s accounts receivable, net of allowance for doubtful accounts. For the years ended December 31, 2025, 2024 and 2023, no individual customer represented more than 10% of the Company’s revenue. Leases The Company determines if an arrangement is or contains a lease at inception and reassesses that conclusion if the contract is modified. All leases are assessed for classification as an operating lease or a finance lease. For facility leases, the Company does not account for lease and non-lease components as a single lease component. Operating lease right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company does not include options to extend or terminate the lease unless it is reasonably certain that it will exercise any such options. Variable lease payments, such as common areas maintenance costs, are not included in the measurement of ROU assets and lease liabilities, and instead are expensed as incurred. The Company generally uses its incremental borrowing rate (“IBR”) based on the information available at commencement to determine the present value of lease payments, except when an implicit interest rate is readily determinable. Operating lease expense attributable to lease payments is recognized on a straight-line basis over the lease term and is part of allocated facilities costs based on employee headcount within the cost of revenue, research and development, sales and marketing, and general and administrative expense categories on the Company’s 94 Table of Contents Notes to Consolidated Financial Statements (continued) consolidated statements of operations. The Company presents the operating leases in long-term assets and current and long-term liabilities in the accompanying consolidated balance sheets. Finance leases result in the recognition of depreciation expense, which is recognized on a straight-line basis over the expected life of the leased asset, and interest expense, which is recognized following an effective interest rate method. Depreciation expense attributable to finance leases is included in operating expenses on the Company’s consolidated statements of operations. Finance leases are reported in property, plant and equipment, net, accrued expenses and other current liabilities, and other liabilities on the Company’s consolidated balance sheets. The Company did not have significant finance leases as of December 31, 2025 and 2024. The Company does not recognize ROU assets or lease liabilities for leases with a term of twelve months or less. Lease cost for short-term leases is recognized on a straight-line basis over the lease term. Property, Plant and Equipment, net Property, plant and equipment, net is stated at cost, less accumulated depreciation and amortization. Depreciation and amortization is calculated on a straight-line basis over the estimated useful lives of those assets. Refer to Note 4, “Property, Plant and Equipment” to these consolidated financial statements, for the useful lives of the Company’s property, plant and equipment as of December 31, 2025 and 2024. Deferred Costs The Company defers certain direct and incremental upfront costs related to the generation of a revenue stream or obtaining a new customer agreement. These costs include installment fees, activation and other telecommunication fees. The Company capitalizes these costs and amortizes them over the longer of the term of the customer contract or the estimated period of benefit. Internal-Use Software Development Costs Internal-use software includes software that has been acquired, internally developed, or modified exclusively to meet the Company’s needs. The Company capitalizes qualifying internal-use software development costs that are incurred during the application development stage. Capitalization of costs begins when two criteria are met: (i) the preliminary project stage is completed, and (ii) it is probable that the software will be completed and used for its intended function. Capitalization ceases when the software is substantially complete and ready for its intended use, including the completion of all significant testing. The Company also capitalizes costs related to specific upgrades and enhancements when the expenditures will result in additional functionality, and expenses costs incurred for maintenance and minor upgrades and enhancements. Costs related to preliminary project activities and post-implementation operating activities are expensed as incurred. Capitalized costs of platform and other software applications are included in property, plant and equipment, net. These assets are placed into service when ready for use and amortized over the estimated useful life of the software on a straight-line basis over four years . Management evaluates the useful life of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. Debt Issuance Costs The Company incurs debt issuance costs associated with obtaining and entering into credit agreements and issuing convertible notes. These costs customarily include non-refundable structuring fees, commitment fees, up-front fees and syndication expenses. The Company has a policy of deferring and amortizing these costs based on the effective interest method over the term of the credit agreements or the convertible notes, as applicable. 95 Table of Contents Notes to Consolidated Financial Statements (continued) Amortization of Intangibles Intangible assets with determinable economic lives are carried at cost, less accumulated amortization. Amortization is computed over the estimated useful life of each asset on a straight-line basis. The Company determines the useful lives of identifiable intangible assets after considering the specific facts and circumstances related to each intangible asset. Factors the Company considers when determining useful lives include the contractual term of any agreement related to the asset, the historical performance of the asset, the Company’s long-term strategy for using the asset, any laws or other local regulations which could impact the useful life of the asset and other economic factors, including competition and specific market conditions. Intangible assets without determinable economic lives are carried at historical cost and reviewed for impairment at least annually. The useful lives of the Company’s intangible assets as of December 31, 2025 and 2024 are as follows: Customer relationships 15 - 20 years Developed technology 10 years Other, definite lived 2 - 7 years Licenses, indefinite lived Indefinite Goodwill In accordance with Accounting Standards Codification 350, “Intangibles - Goodwill and Other” (“ASC 350”), goodwill is not amortized, but rather is reviewed for impairment at the reporting unit level on the last day of the Company’s fourth quarter of each fiscal year, or when there is evidence that events or changes in circumstances indicate that the fair value of the reporting unit is less than the carrying amount of the reporting unit, including goodwill. The Company establishes its reporting units based on its current organizational structure and management’s view of the business. The Company has determined it has one reporting unit. Under ASC 350, the Company has the option to first assess qualitatively whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. In performing qualitative assessments, consistent with ASC 350-20-35-3C, the Company considers, among other factors, macroeconomic conditions (both in the United States and internationally), the Company’s overall financial performance (including, but not limited to, comparisons to prior periods, current period internal expectations, and comparable peer companies), broader industry and market considerations, and the trading price performance of the Company’s Class A common stock. As of December 31, 2025, the Company completed a qualitative assessment under ASC 350 to determine whether the existence of events or circumstances indicated that it was more likely than not that the fair value of its reporting unit was less than its respective carrying value. The Company concluded that based on the relevant events and circumstances, it was more likely than not that the reporting unit’s fair value exceeded its related carrying value and therefore no quantitative assessment was required. No goodwill impairment charges were recorded for the years ended December 31, 2025, 2024 and 2023. Impairment of Long-Lived Assets The Company evaluates long-lived assets, including property, plant and equipment, operating right-of-use assets and definite lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets held and used is measured by a comparison of the carrying amount of an asset or an asset group to estimated undiscounted future net cash flows expected to be generated by the asset or asset group. If such evaluation indicates that the carrying amount of the asset or the asset group is not recoverable, any impairment loss would be equal to the amount the carrying value exceeds the fair value. 96 Table of Contents Notes to Consolidated Financial Statements (continued) Business Combinations The Company uses the acquisition method of accounting for business combinations which requires the tangible and intangible assets acquired and liabilities assumed to be recorded at their respective fair market value as of the acquisition date. Goodwill represents the excess of the consideration transferred over the fair value of the net assets acquired. The fair values of the assets acquired and liabilities assumed are determined based upon the Company’s valuation and involves making significant estimates and assumptions based on facts and circumstances that existed as of the acquisition date. The Company uses a measurement period following the acquisition date to gather information that existed as of the acquisition date that is needed to determine the fair value of the assets acquired and liabilities assumed. The measurement period ends once all information is obtained, but no later than one year from the acquisition date. Advertising Costs The Company expenses advertising costs as incurred. Advertising costs totaled $ 1.1 million, $ 1.2 million and $ 1.2 million for the years ended December 31, 2025, 2024 and 2023, respectively, which are included in sales and marketing expenses in the accompanying consolidated statements of operations. Commissions Commissions consist of variable compensation earned by sales personnel and third-party resellers. Sales commissions associated with the acquisition of a new customer contract are paid over time, based on monthly revenues, and are recognized as sales and marketing expense in the period incurred. Stock-Based Compensation The Company accounts for stock-based compensation expense related to all stock-based awards based on the fair value of the award on the grant date. Stock-based compensation expense is recognized on a straight-line basis over the requisite service period, which is generally three or four years for stock options and restricted stock units granted to employees, and one year for restricted stock units granted to non-employee members of the Board of Directors. The fair value of the restricted stock units is determined using the fair value of the Company’s Class A common stock on the date of grant. Certain share-based payment arrangements contingent upon company performance are classified as liability-based awards with expense recognized ratably over the service period (typically one year) and based on the probability of achievement. The Company used the Black-Scholes option pricing model, net of estimated forfeitures, to measure the fair value of its stock options. The Company has elected to estimate expected forfeitures, and, as such, the Company must also determine a forfeiture rate to calculate the stock-based compensation expense for awards. Through December 31, 2025, the Company recognized compensation expense for only the portion of restricted stock units expected to vest using an estimated forfeiture rate that was derived from historical employee termination behavior. As of December 31, 2025, all outstanding stock options are fully vested. 97 Table of Contents Notes to Consolidated Financial Statements (continued) Income Taxes The Company accounts for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on temporary differences between the financial statement and tax basis of assets and liabilities using enacted tax rates. The Company recognizes the effect of a change in tax rates on deferred tax assets and liabilities in the period that includes the enactment date. The Company reduces the measurement of a deferred tax asset, if necessary, by a valuation allowance if it is more likely than not that it will not realize some or all the deferred tax asset. Quarterly, the Company reviews the deferred tax assets for recoverability based on historical taxable income, projected future taxable income, the expected timing of the reversals of existing temporary differences and the implementation of prudent and feasible tax planning strategies. The evaluation of the recoverability of deferred tax assets requires judgment in assessing future profitability. Should there be a change in the ability to recover deferred tax assets, the Company’s income tax provision would increase or decrease in the period in which the assessment is changed. The Company accounts for uncertain tax positions by recognizing the financial statement effects of a tax position only when, based upon technical merits, it is more likely than not that the position will be sustained upon examination. The tax benefit recognized is measured as the largest amount of benefit determined on a cumulative probability basis that the Company believes is more likely than not to be realized upon ultimate settlement of the position. The Company recognizes potential accrued interest and penalties associated with unrecognized tax positions in income tax benefit in the accompanying consolidated statements of operations. Basic and Diluted Loss per Common Share Basic net loss per share attributable to common stockholders is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period. Diluted net loss per share is calculated by giving effect to all potentially dilutive shares of common stock, including stock options, and stock related to unvested restricted stock awards and convertible debt. In periods of net loss, all potentially issuable shares of common stock are excluded from the diluted net loss per share computation because they are anti-dilutive. The Company is in a net loss position for the years ended December 31, 2025, 2024 and 2023, and therefore diluted shares equals basic shares. Foreign Currency The Company has foreign operations with non-USD functional currencies. The Euro and British Pound are the primary functional currencies for the Company’s international operations. All of the assets and liabilities of these subsidiaries are translated to U.S. dollars at the exchange rate in effect at the balance sheet date, and equity accounts are translated at historical exchange rates. Revenue and expenses are translated at average exchange rates in effect during each reporting period . The net effect of currency translation adjustments is included in shareholder’s equity as a component of accumulated other comprehensive loss in the accompanying consolidated balance sheets. Foreign currency transaction gains and losses are realized upon cash settlement of transactions denominated in currencies others than the functional currency. They result from exchange rate changes during the period of time between the consummation and cash settlement of such transactions. When realized, foreign currency transaction gains and losses are recognized in current period earnings as incurred, and included in other (expense) income, net in the Company’s consolidated statements of operations. Foreign exchange gains and losses, which result from the process of remeasuring foreign currency assets and liabilities into the appropriate functional currency at exchange rates in place as of the reporting date, are included in other (expense) income, net in the Company’s consolidated statements of operations. 98 Table of Contents Notes to Consolidated Financial Statements (continued) Fair Value of Financial Instruments The Company minimizes its credit risk associated with investments by investing primarily in investment grade, liquid securities. The Company’s policy is designed to preserve capital, maintain liquidity and minimize credit risk, and the policy limits exposure to any one issuer and also establishes minimum credit ratings of approved investments. Periodic evaluations of relative credit standing of those issuers are considered in the Company's investment strategy. The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires use of observable inputs when available, and to minimize the use of unobservable inputs when determining fair value. The three tiers are defined as follows: • Level 1. Observable inputs based on unadjusted quoted prices in active markets for identical assets or liabilities; • Level 2. Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and • Level 3. Unobservable inputs for which there is little or no market data, which requires the Company to develop its own assumptions. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Comprehensive Income (Loss) The Company has elected to present comprehensive income (loss) and its components as a separate financial statement. Comprehensive income (loss) refers to net loss and other revenue, expenses, gains and losses that, under generally accepted accounting principles, are recorded as an element of stockholders’ equity but are excluded from the calculation of net income. Business Interruption Insurance Recovery Beginning in September 2021, the Company’s communications network was subjected to a distributed denial of service attack (the “DDoS Attack”) that caused intermittent communications services disruptions affecting certain of its markets and customers. During the period of the DDoS Attack, the Company maintained certain insurance coverage, including business interruption insurance, intended to cover such circumstances. In June 2023, the Company resolved its claim with an insurer, pursuant to which the Company was entitled to receive $ 4.0 million in proceeds from business interruption insurance. The proceeds of the insurance payment were received in full in July 2023 and were recorded within gain on business interruption insurance recoveries on the Company’s consolidated statements of operations in the year ended December 31, 2023. 99 Table of Contents Notes to Consolidated Financial Statements (continued) Recently Adopted Accounting Standards In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). The amendments in this update require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a certain quantitative threshold. The amendments also require entities on an annual basis to disclose disaggregated amounts of income taxes paid. The Company adopted ASU 2023-09 effective January 1, 2025, which had no impact on the Company’s financial position or results of operations. See Note 14 , “Income Taxes,” to the consolidated financial statements, for the additional applicable disclosures. Recent Accounting Pronouncements Not Yet Adopted In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires public entities to disclose disaggregated information about certain costs and expenses on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with the option to apply the guidance prospectively or retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2024-03 on its consolidated financial statements. In November 2024, the FASB issued ASU 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments (“ASU 2024-04”), which provides additional guidance to stakeholders about how to determine whether a settlement of convertible debt (particularly, cash convertible instruments) at terms that differ from the original conversion terms should be accounted for under the induced conversion or extinguishment guidance. ASU 2024-04 is effective for annual reporting periods beginning after December 15, 2025, and interim periods within those annual reporting periods. Early adoption is permitted for all entities that have adopted the amendments in Update 2020-06. The Company, which has adopted ASU 2020-06, is currently evaluating the impact of adopting ASU 2024-04 on its consolidated financial statements and will adopt the guidance upon its effective date. In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”), which provides a practical expedient for the estimation of expected credit losses for current accounts receivable and current contract assets under ASC 606. The practical expedient election assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. ASU 2025-05 is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Entities should apply the guidance prospectively and early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2025-05 on its consolidated financial statements and will adopt the guidance upon its effective date. In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”), which amends certain aspects of the accounting for and disclosure of software costs under ASC 350-40. The guidance removes all references to project stages throughout ASC 350-40 and clarifies the threshold entities apply to begin capitalizing costs. ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with the option to apply the guidance prospectively, retrospectively, or via a modified prospective transition method. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2025-06 on its consolidated financial statements. 100 Table of Contents Notes to Consolidated Financial Statements (continued) In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270) (“ASU 2025-11”), which updates the guidance in Topic 270, Interim Reporting, by improving the navigability of the required interim disclosures and clarifying when that guidance is applicable. The amendments also provide additional guidance on what disclosures should be provided in interim reporting periods. ASU 2025-11 does not intend to change the fundamental nature of interim reporting or expand or reduce current interim disclosures requirements, but rather to provide clarification. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027 with the option to apply the guidance prospectively or retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2025-11 on its consolidated financial statements. In December 2025, the FASB issued ASU 2025-12, Codification Improvements (“ASU 2025-12”), which addresses suggestions received from stakeholders on the accounting standards and to make other incremental improvements to GAAP. ASU 2025-12 addresses thirty-three issues on a broad range of topics which are intended to be improvements that are not expected to have a significant effect on current accounting practice or result in significant costs to most entities. ASU 2025-12 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with the option to apply the guidance prospectively or retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2025-12 on its consolidated financial statements. 101 Table of Contents Notes to Consolidated Financial Statements (continued) 2. Fair Value Measurements The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value as of December 31, 2025 and 2024 because of the relatively short duration of these instruments. The Company evaluated its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting period. The following tables summarize the Company’s financial assets measured at fair value as of December 31, 2025 and 2024: Amortized cost or carrying value Unrealized gains Unrealized losses Fair value measurements on a recurring basis December 31, 2025 Level 1 Level 2 Level 3 Total (In thousands) Financial assets: Cash and cash equivalents: Money market account $ 65,027 $ — $ — $ 65,027 $ — $ — $ 65,027 Commercial paper 29,082 — — 29,082 — — 29,082 Total included in cash and cash equivalents 94,109 — — 94,109 — — 94,109 Marketable securities: Time deposits 5,000 5 — 5,005 — — 5,005 Commercial paper 3,447 24 — 3,471 — — 3,471 Total marketable securities 8,447 29 — 8,476 — — 8,476 Total financial assets $ 102,556 $ 29 $ — $ 102,585 $ — $ — $ 102,585 Amortized cost or carrying value Unrealized gains Unrealized losses Fair value measurements on a recurring basis December 31, 2024 Level 1 Level 2 Level 3 Total (In thousands) Financial assets: Cash and cash equivalents: Money market account $ 57,759 $ — $ — $ 57,759 $ — $ — $ 57,759 Commercial paper 18,489 — — 18,489 — — 18,489 Total included in cash and cash equivalents 76,248 — — 76,248 — — 76,248 Marketable securities: Commercial paper 1,970 5 — 1,975 — — 1,975 Total marketable securities 1,970 5 — 1,975 — — 1,975 Total financial assets $ 78,218 $ 5 $ — $ 78,223 $ — $ — $ 78,223 102 Table of Contents Notes to Consolidated Financial Statements (continued) The Company classifies its marketable securities as current assets as they are available for current operating needs. The following table summarizes the contractual maturities of marketable securities as of December 31, 2025: Amortized cost Aggregate fair value (In thousands) Financial assets: Less than one year $ 8,447 $ 8,476 Total $ 8,447 $ 8,476 As of December 31, 2025, marketable securities were in an unrealized gain position. The Company has determined that (i) it does not have the intent to sell any of these investments and (ii) it is not more likely than not that it will be required to sell any of these investments before recovery of the entire amortized cost basis. As of December 31, 2025, the Company anticipates that it will recover the entire amortized cost basis of its marketable securities before maturity. During the years ended December 31, 2025, 2024 and 2023, there were $ 9.7 million, $ 53.5 million, and $ 91.8 million , respectively, in maturities of marketable securities. There were no proceeds from sales of marketable securities for the years ended December 31, 2025 and 2024. Proceeds from sales of marketable securities were $ 38.3 million for the year ended December 31, 2023. Interest earned on marketable securities was $ 0.3 million, $ 1.0 million, and $ 2.0 million for the years ended December 31, 2025, 2024 and 2023, respectively. The interest is recorded in other (expense) income, net, on the accompanying consolidated statements of operations. As of December 31, 2025 and 2024, the accrued interest receivable, net of allowance for credit losses, was not material. As of December 31, 2025, the fair value of the 2026 Convertible Notes and 2028 Convertible Notes, as further described in Note 7, “Debt,” to these consolidated financial statements, was approximately $ 7.5 million and $ 219.7 million, respectively. As of December 31, 2024, the fair value of the 2026 Convertible Notes and the 2028 Convertible Notes was approximately $ 31.8 million and $ 199.0 million, respectively. The fair value was determined based on the closing price for the Convertible Notes on the last trading day of the reporting period and is considered as Level 2 in the fair value hierarchy. As of December 31, 2025 and 2024, the fair value of the Pension Plan’s assets, as further described in Note 13, “Employee Benefit Plans,” to these consolidated financial statements, was approximately $ 4.6 million and $ 3.7 million, respectively. The fair value was determined by an independent actuary and is considered as Level 2 in the fair value hierarchy. The Company monitors the availability of observable market data to assess the appropriate classification of financial instruments within the fair value hierarchy. Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. In such instances, the transfer is reported at the beginning of the reporting period. There were no transfers between Levels 1, 2 or 3 during the years ended December 31, 2025 and 2024. The money market account is included in cash and cash equivalents in the consolidated balance sheets as of December 31, 2025 and 2024. 103 Table of Contents Notes to Consolidated Financial Statements (continued) 3. Financial Statement Components Accounts receivable, net of allowances consist of the following: As of December 31, 2025 2024 (In thousands) Trade accounts receivable $ 34,322 $ 41,727 Unbilled accounts receivable 57,400 46,795 Allowance for doubtful accounts and reserve for expected credit losses ( 537 ) ( 2,172 ) Other accounts receivable 224 105 Total accounts receivable, net $ 91,409 $ 86,455 Components of the allowance for expected credit losses are as follows: Year ended December 31, 2025 2024 2023 (In thousands) Balance, beginning of period $ ( 2,172 ) $ ( 1,128 ) $ ( 1,191 ) Charged to credit loss expense, net of reversals ( 1,288 ) ( 2,984 ) ( 733 ) Deductions (1) 3,071 1,896 807 Impact of foreign currency translation ( 148 ) 44 ( 11 ) Balance, end of period $ ( 537 ) $ ( 2,172 ) $ ( 1,128 ) ________________________ (1) Write-off of uncollectible accounts after all collection efforts have been exhausted. Accrued expenses and other current liabilities consisted of the following: As of December 31, 2025 2024 (In thousands) Accrued expense $ 60,808 $ 63,665 Accrued compensation and benefits 20,405 25,992 Accrued sales, use, VAT and telecommunications related taxes 4,421 7,898 Customer deposits 4,320 3,710 Other accrued expenses 1,197 554 Total accrued expenses and other current liabilities $ 91,151 $ 101,819 104 Table of Contents Notes to Consolidated Financial Statements (continued) 4. Property, Plant and Equipment Property, plant and equipment, net consisted of the following: As of December 31, Useful Life 2025 2024 (In thousands) (In years) Furniture and fixtures $ 15,845 $ 15,925 5 Computer and office equipment 14,789 13,967 2 to 5 Telecommunications equipment 92,829 82,608 5 to 7 Leasehold improvements 77,704 76,054 5 to 15 Software 22,302 24,916 1 to 5 Internal-use software development 44,198 35,499 4 Automobile 452 447 3 Land 27,636 27,636 Indefinite Land Improvements 1,065 1,065 20 Total cost 296,820 278,117 Less—accumulated depreciation ( 122,569 ) ( 101,294 ) Total property, plant and equipment, net $ 174,251 $ 176,823 The Company capitalizes the costs to design software for internal use related to the development of its platform during the application development stage of the projects. The costs are primarily comprised of salaries and benefits of the projects’ engineers and product development teams. Internally developed software is reported at cost less accumulated amortization. Amortization begins once the project is substantially complete and ready for its intended use. Costs incurred prior to the application development stage, maintenance activities or minor upgrades are expensed in the period incurred. Unamortized software development costs were approximately $ 25.7 million and $ 22.4 million as of December 31, 2025 and 2024, respectively. The Company capitalized $ 10.5 million, $ 11.7 million, and $ 10.6 million of software development costs for the years ended December 31, 2025, 2024 and 2023, respectively. Amortization expense related to capitalized software development costs was $ 6.9 million, $ 4.2 million, and $ 3.2 million for the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025, all implementation costs related to cloud computing arrangements were fully amortized. The Company recognized no material impairment during the years ended December 31, 2025, 2024 and 2023, related to capitalized software development costs that provided no future benefit. 105 Table of Contents Notes to Consolidated Financial Statements (continued) The Company recognized depreciation expense, which includes amortization of capitalized software development costs, as follows: Year ended December 31, 2025 2024 2023 (In thousands) Cost of revenue $ 20,673 $ 18,532 $ 16,273 Research and development 7,243 6,476 3,977 Sales and marketing 4,903 4,455 2,628 General and administrative 2,851 2,276 1,565 Total depreciation expense $ 35,670 $ 31,739 $ 24,443 5. Goodwill and Intangible Assets Goodwill The change in carrying amount of goodwill was as follows: Total (In thousands) Balance as of December 31, 2023 $ 335,872 Foreign currency translation adjustments ( 18,629 ) Balance as of December 31, 2024 317,243 Foreign currency translation adjustments 39,529 Balance as of December 31, 2025 $ 356,772 Intangible Assets Intangible assets, net consisted of the following: As of December 31, 2025 2024 Gross Amount Accumulated Amortization Net Carrying Value Gross Amount Accumulated Amortization Net Carrying Value (In thousands) Customer relationships $ 154,492 $ ( 57,344 ) $ 97,148 $ 145,625 $ ( 44,754 ) $ 100,871 Developed technology 84,765 ( 43,795 ) 40,970 75,189 ( 31,329 ) 43,860 Other, definite lived 2,828 ( 2,828 ) — 2,828 ( 2,828 ) — Licenses, indefinite lived 624 — 624 624 — 624 Total intangible assets, net $ 242,709 $ ( 103,967 ) $ 138,742 $ 224,266 $ ( 78,911 ) $ 145,355 106 Table of Contents Notes to Consolidated Financial Statements (continued) The Company recognized amortization expense as follows: Year ended December 31, 2025 2024 2023 (In thousands) Cost of revenue $ 8,142 $ 7,811 $ 7,810 Sales and marketing 9,952 9,692 9,464 Total amortization expense $ 18,094 $ 17,503 $ 17,274 The remaining weighted average amortization period for definite lived intangible assets is 8.1 years. Future estimated amortization expense for definite lived intangible assets is as follows: As of December 31, 2025 (In thousands) 2026 $ 18,603 2027 18,603 2028 18,603 2029 18,603 2030 17,190 Thereafter 46,516 $ 138,118 6. Leases The Company has entered into various operating lease agreements for office space and finance lease agreements for automobiles. The Company primarily leases facilities for office space under non-cancelable operating leases for its U.S. and international locations. As of December 31, 2025, non-cancelable leases expire on various dates between 2026 and 2043, some of which include options to extend the leases for up to 20 years. The components of operating lease expense recorded in the consolidated statements of operations were as follows: Year ended December 31, 2025 2024 2023 (In thousands) Operating lease cost $ 22,843 $ 23,106 $ 15,655 Sublease income ( 2,199 ) — — Total net lease cost $ 20,644 $ 23,106 $ 15,655 107 Table of Contents Notes to Consolidated Financial Statements (continued) During the years ended December 31, 2025, 2024 and 2023, short-term operating lease expense was $ 0.7 million, $ 0.7 million, and $ 0.6 million, respectively. Operating lease assets are recorded net of accumulated amortization of $ 5.5 million and $ 7.3 million as of December 31, 2025 and 2024, respectively. Other supplemental information related to operating leases were as follows: Year ended December 31, 2025 2024 2023 Weighted average remaining lease term (in years) 17.25 18.29 19.30 Weighted average discount rate 8.75 % 8.76 % 8.76 % Maturities of operating lease liabilities were as follows: As of December 31, 2025 (In thousands) 2026 $ 23,267 2027 23,364 2028 23,616 2029 24,042 2030 24,425 Thereafter 333,344 Total lease payments 452,058 Less: imputed interest ( 227,092 ) Total lease obligations 224,966 Less: current obligations ( 3,947 ) Long-term lease obligations $ 221,019 Corporate Headquarters On August 1, 2023, the Company commenced a lease for a new corporate headquarters in Raleigh, North Carolina. The lease term will continue for a period of twenty ( 20 ) years (the “Initial Term”). The Company has the option to renew the Initial Term for two ten-year periods at a rental rate equal to 100 % of the then-prevailing market rental rate for comparable buildings in the Raleigh, North Carolina, market. The Company relocated its corporate headquarters to the leased property during the third quarter of 2023. Upon commencement of the lease, the Company recognized ROU assets of $ 156.0 million and operating lease liabilities of $ 223.1 million, both of which do not include the two ten-year renewal options. The operating lease liabilities include $ 67.8 million of incentives provided by the landlord throughout development of the new corporate headquarters. Assets obtained through lease incentives are reported in property, plant and equipment, net, on the consolidated balance sheets. The Company also recorded $ 2.5 million in security deposits and $ 1.0 million in escrow deposits to fund additional improvements. As of December 31, 2024, there is no balance remaining on the escrow deposits to fund additional improvements. 108 Table of Contents Notes to Consolidated Financial Statements (continued) Related Party On April 20, 2015, the Company created a wholly owned subsidiary, Relay, Inc., a Delaware corporation (f/k/a Republic Wireless, Inc.) ( “ Relay ” ) . On November 30, 2016, the Company completed a pro-rata distribution of the common stock of Relay to its stockholders of record as of the close of business. Due to equity ownership in Relay by certain members of Bandwidth’s Board of Directors, Relay is considered a related party to the Company. On January 1, 2025, the Company commenced a sublease of a portion of its corporate headquarters to Relay. The sublease expires on December 31, 2029 and does not include any option to renew or purchase, nor does it include any residual value guarantees. During the year ended December 31, 2025, the Company received approximately $ 1.0 million in rental payments from Relay under the sublease. As of December 31, 2025, total future minimum rent payments to the Company under this sublease were $ 10.0 million . 7. Debt Revolving Credit Facility In August 2023, the Company entered into a credit agreement (as amended, the “Credit Agreement”) among the Company, as borrower, the lenders from time to time party thereto, and Bank of America, N.A., as administrative agent, swingline lender and letters of credit issuer. The Credit Agreement provided for a $ 50.0 million revolving credit facility (the “Credit Facility”), including a $ 15.0 million sublimit for the issuance of letters of credit and a swingline subfacility of up to $ 5.0 million. The Credit Facility has an accordion feature that allows for an increase in the total borrowing size of up to $ 25.0 million, subject to certain conditions. The Credit Agreement was amended in 2024 to increase the Credit Facility to $ 150.0 million and increase the swingline sublimit to $ 10.0 million. The Credit Facility matures on the earlier of (a) May 1, 2029 or (b) the date that is 91 days prior to the scheduled maturity date or mandatory conversion date of any of the Company’s outstanding convertible notes due 2028. The Credit Agreement requires that the Company maintain (a) (i) for each fiscal quarter ending on or prior to June 30, 2025, a consolidated senior secured leverage ratio not to exceed 2.75 to 1.00, and (ii) for each fiscal quarter thereafter, a consolidated senior secured leverage ratio not to exceed 2.50 to 1.00; and (b) a consolidated fixed charge coverage ratio not less than 2.00 to 1.00, in each case tested as of the end of any fiscal quarter. Exceptions to certain customary negative covenants require a pro forma consolidated senior secured leverage ratio of at least 0.50 to 1.00 inside the maximum then-applicable consolidated senior secured leverage ratio, and exceptions to the restriction on additional convertible indebtedness require a pro forma consolidated total leverage ratio over the most recent four fiscal quarters not to exceed 4.50 to 1.00. Interest on borrowings under the Credit Facility accrues at an annual rate tied to a base rate or the Secured Overnight Financing Rate (“SOFR”), at the Company’s election. Loans based on SOFR bear interest at a rate equal to term SOFR for the applicable interest period plus 10 basis points plus an applicable margin between 2.00 % and 2.50 %, and loans based on the base rate bear interest at a rate equal to the base rate plus an applicable margin between 1.00 % and 1.50 %, in each case of the foregoing, depending upon the Company’s consolidated total leverage ratio for the most recent fiscal quarter for which financial statements have been delivered under the Credit Agreement. The Company is required to pay a quarterly commitment fee equal to between 0.20 % and 0.25 % on the unused portion of the borrowing commitment, depending upon the Company’s consolidated total leverage ratio for the most recent fiscal quarter for which financial statements have been delivered under the Credit Agreement. The obligations under the Credit Agreement are secured by a lien on substantially all of the Company’s tangible and intangible property and by a pledge of all of the equity interests of the Company’s direct domestic subsidiaries and 65 % of the voting capital stock and 100 % of the non-voting capital stock of any first-tier foreign subsidiaries, subject to limited exceptions. In addition, the Company’s direct domestic subsidiaries guarantee the obligations under the Credit Agreement and grant a lien and pledge, as applicable, on substantially all of their tangible and intangible property to secure the obligations under the Credit Agreement. 109 Table of Contents Notes to Consolidated Financial Statements (continued) As of December 31, 2025, unamortized debt issuance costs were $ 0.7 million, of which $ 0.2 million were included in prepaid expenses and other current assets and $ 0.5 million were included in other long-term assets. As of December 31, 2024, unamortized debt issuance costs were $ 1.0 million, of which $ 0.2 million were included in prepaid expenses and other current assets and $ 0.8 million were included in other long-term assets. As of December 31, 2025, the Company had no outstanding borrowings under the Credit Facility and was in compliance with all financial and non-financial covenants for all periods presented. As of December 31, 2025, the available borrowing capacity under the Credit Facility was $ 150.0 million. Convertible Senior Notes and Capped Call Transactions 2026 Convertible Notes In February 2020, the Company issued $ 400.0 million aggregate principal amount of 0.25 % Convertible Notes due 2026 in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act (the “2026 Convertible Notes”). The interest on the 2026 Convertible Notes is payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2020. The 2026 Convertible Notes will mature on March 1, 2026, unless earlier repurchased, redeemed by the Company, or converted pursuant to their terms. The total net proceeds from the 2026 Convertible Notes, after deducting initial purchaser discounts, costs related to the 2026 Capped Calls (as defined herein), and debt issuance costs, paid by the Company, were approximately $ 344.7 million. The excess of the principal amount of the liability component over its carrying amount, or the debt discount, was amortized to interest expense at an annual effective interest rate of 0.510 % over the contractual terms of the 2026 Convertible Notes. Each $1,000 principal amount of the 2026 Convertible Notes is initially convertible into 10.9857 shares of the Company’s Class A common stock, par value $ 0.001 per share, which is equivalent to an initial conversion price of approximately $ 91.03 per share. During February 2025, the Company entered into separate, privately negotiated repurchase agreements with a limited number of holders of the 2026 Convertible Notes (the “2025 Repurchases”) to repurchase approximately $ 27.4 million aggregate principal amount of the 2026 Convertible Notes for an aggregate cash price of approximately $ 26.1 million. The 2025 Repurchases closed on February 24, 2025. Following the 2025 Repurchases and previous repurchases, approximately $ 7.6 million aggregate principal amount of the 2026 Convertible Notes remains outstanding. The difference between the consideration used for the 2025 Repurchases and the carrying value of the 2026 Convertible Notes resulted in a gain of $ 1.1 million recorded within net gain on extinguishment of debt on the Company’s consolidated statements of operations for the year ended December 31, 2025. The Company had previously entered into capped call transactions with certain financial institutions in connection with the 2026 Convertible Notes. All of these transactions are expected to remain in effect notwithstanding the repurchases. 2028 Convertible Notes In March 2021, the Company issued $ 250.0 million aggregate principal amount of 0.50 % Convertible Notes due 2028 in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act (the “2028 Convertible Notes” and, together with the 2026 Convertible Notes, the “Convertible Notes”). The interest on the 2028 Convertible Notes is payable semi-annually in arrears on April 1 and October 1 of each year, beginning on October 1, 2021. The 2028 Convertible Notes will mature on April 1, 2028, unless earlier repurchased, redeemed by the Company, or converted pursuant to their terms. The total net proceeds from the 2028 Convertible Notes, after deducting initial purchaser discounts, costs related to the 2028 Capped Calls (as defined herein), and debt issuance costs, paid by the Company, were approximately $ 217.0 million. The excess of the principal amount of the liability component over its carrying amount, or the debt discount, was amortized to interest expense at an annual effective interest rate of 0.442 % over the contractual terms of the 2028 Convertible Notes. 110 Table of Contents Notes to Consolidated Financial Statements (continued) Each $1,000 principal amount of the 2028 Convertible Notes is initially convertible into 5.5781 shares of the Company’s Class A common stock, par value $ 0.001 per share, which is equivalent to an initial conversion price of approximately $ 179.27 per share. Other Terms of the Convertible Notes The Convertible Notes are effectively subordinated to the Company’s future senior secured indebtedness to the extent of the value of the collateral securing that indebtedness. The Convertible Notes are the senior, unsecured obligations of the Company and are equal in right of payment with the Company’s future senior unsecured indebtedness, if any, senior in right of payment to the Company’s existing and future indebtedness that is expressly subordinated to the Convertible Notes and the Convertible Notes will be structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and preferred equity, if any, of the Company’s subsidiaries. The Convertible Notes may bear special interest under specified circumstances relating to the Company’s failure to comply with its reporting obligations under the indenture governing the applicable Convertible Notes (each, a “Notes Indenture” and collectively, the “Notes Indentures”) or if the Convertible Notes are not freely tradeable as required by the applicable Notes Indenture. The conversion rate is subject to adjustment upon the occurrence of certain specified events but will not be adjusted for any accrued and unpaid interest. In addition, upon the occurrence of a make-whole fundamental change (which includes the calling of any Convertible Notes for redemption), as defined in the applicable Notes Indenture, the Company will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its Convertible Notes in connection with such make-whole fundamental change or during the relevant redemption period. The Company may redeem the Convertible Notes, in whole or in part, at its option at any time, and from time to time, on or after (i) March 6, 2023 for the 2026 Convertible Notes, or (ii) after April 6, 2025 for the 2028 Convertible Notes, in each case, on or before the fortieth ( 40 th ) scheduled trading day immediately before the maturity date, at a cash redemption price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding the redemption date, if the last reported sale price of the Class A common stock has exceeded 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading date immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading days ending on, and including, the trading date immediately before the date on which the Company provides the related redemption notice. No sinking fund is provided for the Convertible Notes. The Convertible Notes will be convertible at certain times and upon the occurrence of certain events in the future. Further, on or after September 1, 2025 for the 2026 Convertible Notes, and on or after October 1, 2027 for the 2028 Convertible Notes, in each case, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders of the Convertible Notes may convert all or a portion of their Convertible Notes regardless of these conditions. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of Class A common stock, or a combination of cash and shares of Class A common stock, at the Company’s election. It is the Company’s current intent to settle the principal amount of the Convertible Notes with cash. During the years ended December 31, 2025, 2024 and 2023, the conditions allowing the holders of the 2026 Convertible Notes and the 2028 Convertible Notes to convert were not met. The Convertible Notes may be convertible thereafter if one or more of the conversion conditions specified in each respective Notes Indenture are satisfied during future measurement periods. The Company classifies the 2026 Convertible Notes as a current liability and the 2028 Convertible Notes as a long-term liability in its consolidated balance sheets as of December 31, 2025, based on contractual settlement provisions. 111 Table of Contents Notes to Consolidated Financial Statements (continued) Upon the occurrence of a fundamental change (as defined in the applicable Notes Indenture) prior to the maturity date, holders may require the Company to repurchase all or a portion of the 2026 Convertible Notes or 2028 Convertible Notes for cash at a price equal to the principal amount of the Convertible Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The net carrying amount of the Convertible Notes were as follows: As of December 31, 2025 2024 2026 Convertible Notes: (In thousands) Principal $ 7,633 $ 35,000 Unamortized debt issuance costs ( 6 ) ( 205 ) 2026 Convertible Notes net carrying amount 7,627 34,795 2028 Convertible Notes: Principal 250,000 250,000 Unamortized debt issuance costs ( 2,438 ) ( 3,511 ) 2028 Convertible Notes net carrying amount 247,562 246,489 Total net carrying amount $ 255,189 $ 281,284 The following table sets forth the interest expense recognized related to the Convertible Notes: Year ended December 31, 2025 2024 2023 2026 Convertible Notes: (In thousands) Contractual interest expense $ 36 $ 241 $ 465 Amortization of debt issuance costs 60 421 940 Total interest expense related to the 2026 Convertible Notes 96 662 1,405 2028 Convertible Notes: Contractual interest expense 1,252 1,250 1,250 Amortization of debt issuance costs 1,073 1,071 1,064 Total interest expense related to the 2028 Convertible Notes 2,325 2,321 2,314 Total interest expense $ 2,421 $ 2,983 $ 3,719 112 Table of Contents Notes to Consolidated Financial Statements (continued) Capped Calls In connection with the offering of the 2026 Convertible Notes and the 2028 Convertible Notes, the Company entered into privately negotiated capped call transactions with certain counterparties (the “2026 Capped Calls” and the “2028 Capped Calls,” respectively and, collectively, the “Capped Calls”). The initial strike price of the Capped Calls corresponds to the initial conversion price of the 2026 Convertible Notes and the 2028 Convertible Notes. The Capped Calls are generally intended to reduce or offset the potential dilution to the Class A common stock upon any conversion of the 2026 Convertible Notes and 2028 Convertible Notes with such reduction or offset, as the case may be, subject to a cap based on the cap price. The Capped Calls expire on the earlier of (i) the last day on which any convertible securities remain outstanding and (ii) March 1, 2026 for the 2026 Capped Calls and April 1, 2028 for the 2028 Capped Calls, subject to earlier exercise. The Capped Calls are subject to either adjustment or termination upon the occurrence of specified extraordinary events affecting the Company, including a merger event, a tender offer, and a nationalization, insolvency or delisting involving the Company. In addition, the Capped Calls are subject to certain specified additional disruption events that may give rise to a termination of the Capped Calls, including changes in law, insolvency filings, and hedging disruptions. The Capped Call transactions are recorded in stockholders’ equity and are not accounted for as derivatives. The net cost to purchase the Capped Calls was recorded as a reduction to additional paid-in capital in the accompanying condensed consolidated balance sheets. The following table sets forth key terms and costs incurred for the Capped Calls related to the Convertible Notes as of December 31, 2025: 2026 Convertible Notes 2028 Convertible Notes (In thousands, except share and per share amounts) Initial approximate strike price per share, subject to certain adjustments $ 91.03 $ 179.27 Initial cap price per share, subject to certain adjustments $ 137.40 $ 260.76 Net costs incurred $ 43,320 $ 25,500 Class A common stock covered, subject to anti-dilution adjustments 83,854 1,394,525 All of the Capped Calls were outstanding as of December 31, 2025. 8. Geographic Information The following table summarizes the Company’s revenue by geographic region, which is apportioned based on the destination of the service: Year ended December 31, 2025 2024 2023 (In thousands) United States $ 653,973 $ 658,735 $ 514,048 International 99,844 89,752 87,069 Total $ 753,817 $ 748,487 $ 601,117 For the years ended December 31, 2025, 2024 and 2023, no country outside of the United States represented 10% or more of the Company’s total revenues. 113 Table of Contents Notes to Consolidated Financial Statements (continued) The following table summarizes the Company’s long-lived assets by geographic region: As of December 31, 2025 2024 (In thousands) United States $ 320,406 $ 326,634 International 6,795 3,790 Total $ 327,201 $ 330,424 9. Stockholders’ Equity Common Stock Shares of Class B common stock are convertible into shares of Class A common stock on a 1 :1 basis upon the stockholder’s voluntary written notice to the Company’s transfer agent or a transfer by the stockholder, subject to limited exceptions for transfers for estate planning purposes. Voting Rights The holders of Class A common stock and Class B common stock have identical rights, except that holders of Class A voting common stock are entitled to one vote per share of Class A common stock and holder of Class B common stock are entitled to ten votes per share of Class B common stock. Dividends Any dividends or distributions paid or payable to the holders of shares of Class A common stock and Class B common stock shall be paid pro-rata, on an equal priority. During the years ended December 31, 2025, 2024 and 2023, no dividends were declared. Dividend payments are not subject to restriction. Reserved Shares The Company had reserved shares of Class A common stock for issuance under stock-based award agreements as follows: As of December 31, 2025 2024 Stock options issued and outstanding 67,297 79,238 Nonvested restricted stock units issued and outstanding 5,534,657 4,364,486 Stock-based awards available for grant under the 2017 Plan 3,751,786 1,878,290 Total 9,353,740 6,322,014 10. Stock-Based Compensation Equity Incentive Plans The Company adopted the 2010 Equity Compensation Plan (the “2010 Plan”) on July 26, 2010. On November 9, 2017, the 2010 Plan was terminated in connection with the Company’s initial public offering. Accordingly, no shares are available for future issuance under the 2010 Plan. However, the 2010 Plan continues to govern the terms and conditions of the outstanding awards granted thereunder. 114 Table of Contents Notes to Consolidated Financial Statements (continued) The Company’s Third Amended and Restated 2017 Incentive Award Plan (as amended from time to time, the “2017 Plan”) originally became effective on November 9, 2017. The 2017 Plan provides for the grant of stock options, including incentive stock options and non-qualified stock options, stock appreciation rights, restricted stock, dividend equivalents, restricted stock units, and other stock or cash-based awards to employees, consultants and directors of the Company. These available shares automatically increase each January 1, beginning on January 1, 2018, by 5 % of the number of shares of the Company’s Class A common stock outstanding on the final day of the immediately preceding calendar year. On January 1, 2025, the shares available for grant under the 2017 Plan were automatically increased by 1,329,434 shares. On May 18, 2023 and May 29, 2025, stockholders approved amendments to the 2017 Plan that increased the number of shares available for grant by 2,500,000 and 4,500,000 shares, respectively. The terms of the stock option grants are determined by the Company’s Board of Directors. The Company’s stock options vest based on terms of the stock option agreements. The stock options have a contractual life of ten years . Restricted stock units (“RSUs”) granted to employees, non-employee members of the Board of Directors and other Service Providers (as defined in the 2017 Plan) under the 2017 Plan are subject to an immediate or time-based vesting condition as specified by the underlying compensation plans. Vesting schedules may differ between different categories of award recipients. Stock compensation expense is based on the grant date fair value of the RSUs and is recognized on a ratable basis over the applicable service period. Depending on the nature of the underlying compensation plan, certain share-based payment arrangements contingent upon company performance are classified as liability-based awards resulting in classification as accrued expenses on the consolidated balance sheets with the corresponding offset to stock-based compensation expense. As of December 31, 2025, awards granted under the 2010 Plan consist of stock options and awards granted under the 2017 Plan consist of stock options and RSUs. Outstanding stock options and related activity are not material for the periods presented. Restricted Stock Units The following summarizes the RSU activity for the year ended December 31, 2025: Number of awards outstanding Weighted-average grant date fair value (Per share) Nonvested RSUs as of December 31, 2024 4,364,486 $ 19.25 Granted 4,510,702 14.63 Vested ( 2,969,717 ) 18.56 Forfeited ( 370,814 ) 18.18 Nonvested RSUs as of December 31, 2025 5,534,657 $ 15.91 Year ended December 31, 2025 2024 2023 Weighted average grant date fair value of RSUs granted (per share) $ 14.63 $ 21.23 $ 11.35 Total fair value of RSUs vested (in thousands) 55,123 49,636 25,186 As of December 31, 2025, total unrecognized compensation cost related to non-vested RSUs was $ 79.1 million, which will be amortized over a weighted-average period of 2.36 years. 115 Table of Contents Notes to Consolidated Financial Statements (continued) Stock-Based Compensation Expense The Company recognized total stock-based compensation expense as follows: Year ended December 31, 2025 2024 2023 (In thousands) Cost of revenue $ 2,159 $ 1,638 $ 1,136 Research and development 23,133 20,433 15,661 Sales and marketing 7,850 8,105 6,273 General and administrative 19,190 18,186 13,922 Total $ 52,332 $ 48,362 $ 36,992 11. Commitments and Contingencies Operating Leases The Company leases office space under non-cancelable operating lease agreements that expire on various dates through July 2043. As of December 31, 2025, the Company has $ 452.1 million in future minimum rent payments for its current office space. See Note 6, “Leases,” to the consolidated financial statements, for additional details on the Company ’ s operating lease commitments. Contractual Obligations As of December 31, 2025, the Company has $ 24.2 million in non-cancellable purchase obligations, consisting of primarily network equipment maintenance and software license contracts, of which $ 9.2 million will be fulfilled within one year. Legal Matters The Company is subject to certain legal proceedings described below, and from time to time may be subject to legal matters arising in the ordinary course of business. Where it is determined that a loss is probable and estimable in a given matter, the Company establishes an accrual. Any amounts accrued as of the balance sheet date are not material in any of the currently pending matters. In management’s opinion, the Company does not expect that the ultimate resolution of any currently pending legal matter in future periods will have a material effect on our financial condition, but could have a material effect on our results of operations for a given reporting period. On July 10, 2025, the City and County of San Francisco Tax Collector (“City of San Francisco”) issued a Corrected Tax Collector Decision on Petition for Redetermination to Bandwidth, asserting an Access Line Tax (“ALT”) deficiency in the amount of $ 3.8 million. The Company disputes the City of San Francisco’s application of the ALT to Bandwidth as well as the amount of the deficiency. On July 25, 2025, the Company paid and placed on deposit the amount under protest, as required by law. On August 7, 2025, Bandwidth filed a Claim for Refund with the City of San Francisco seeking a refund of the full amount. The Company to date has been unable to resolve the Claim for Refund with the City of San Francisco, and on December 31, 2025 the Company filed a Complaint for Refund challenging the assessment in the Superior Court of the State of California. The Company believes it has meritorious arguments that support a refund of the full amount. 116 Table of Contents Notes to Consolidated Financial Statements (continued) The Company is also involved as a defendant in a lawsuit alleging that the Company failed to bill, collect and remit certain taxes and surcharges associated with the provision of 911 services in Cook and Kane Counties, Illinois, the City of Chicago, Illinois, and the State of Illinois. The Company intends to vigorously defend this lawsuit and believes that it has meritorious defenses. 12. Segment Reporting The Company manages its business activities on a consolidated basis and operates in one operating segment. Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the Chief Operating Decision Maker (the “CODM”) in deciding how to make operating decisions, allocate resources and in assessing performance. The Company’s CODM is its Chief Executive Officer. The CODM utilizes the Company’s budgeted and forecasted expense information as a key input to resource allocation. The CODM makes decisions on resource allocation, assesses performance of the business and monitors budget versus actual results using net loss, as reported in the accompanying consolidated statements of operations. Significant expenses within net loss include cost of revenue, research and development, sales and marketing, and general and administrative expenses, which are each separately presented on the Company’s consolidated statements of operations. Other segment items within net loss include net gain on extinguishment of debt, gain on business interruption insurance recoveries, interest expense, net, other (expense) income, net, and income tax benefit. 13. Employee Benefit Plans The Company sponsors a U.S. defined contribution 401(k), which allows eligible U.S.-based employees to defer a portion of their compensation. The Company, at its discretion, may make matching contributions. With the acquisition of Voxbone S.A. on November 1, 2020, the Company assumed sponsorship for Voxbone S.A.’s U.S. defined contribution 401(k). In connection with that acquisition, the Company also assumed sponsorship for a non-U.S. defined contribution plan for which it pays fixed contributions into a separate entity. The Company has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current or prior periods. The contributions are recognized as employee benefit expense when they are due. The Company made matching contributions for the defined contribution plans of $ 4.5 million, $ 4.4 million, and $ 4.8 million for the years ended December 31, 2025, 2024 and 2023, respectively. In addition, as a result of the acquisition of Voxbone S.A., the Company assumed sponsorship for Voxbone S.A.’s non-U.S. defined benefit pension plans. The liability recognized is the present value of the defined benefit obligation at the end of the reporting period less the fair value of the plan assets and is included in other liabilities in the accompanying consolidated balance sheets. The defined benefit obligation is calculated annually by an independent actuary using the Projected Unit Credit Method. The net funded status and periodic benefit cost were not material for the years ended December 31, 2025, 2024 and 2023. 117 Table of Contents Notes to Consolidated Financial Statements (continued) 14. Income Taxes The following table presents domestic and foreign components of loss before income taxes for the tax years ended December 31, 2025, 2024 and 2023: Year Ended December 31, 2025 2024 2023 (In thousands) United States $ ( 3,486 ) $ 7,670 $ 759 International ( 13,105 ) ( 16,623 ) ( 20,062 ) Loss before income taxes $ ( 16,591 ) $ ( 8,953 ) $ ( 19,303 ) Benefit for income taxes from operations consists of the following: Year Ended December 31, 2025 2024 2023 (In thousands) Current: Federal $ 39 $ ( 342 ) $ ( 653 ) State ( 388 ) ( 1,581 ) ( 1,309 ) Foreign ( 1,070 ) ( 1,053 ) ( 2,219 ) Total ( 1,419 ) ( 2,976 ) ( 4,181 ) Deferred: Federal ( 23 ) 29 ( 75 ) Foreign 5,121 5,376 7,216 Total 5,098 5,405 7,141 Income tax benefit $ 3,679 $ 2,429 $ 2,960 118 Table of Contents Notes to Consolidated Financial Statements (continued) The table below provides the updated requirements of ASU 2023-09 for 2025, as previously referred to in Note 1, “Description of Business and Summary of Significant Accounting Policies—Recently Adopted Accounting Standards,” to the consolidated financial statements. The effective income tax rate for the year ended December 31, 2025 differs from the statutory federal income tax rate as follows: Year Ended December 31, 2025 Amount Percent (In thousands) United States statutory tax rate $ 3,484 21.0 % State and local income taxes, net of federal income tax effect (1) ( 307 ) ( 1.8 ) Foreign tax effects: Belgium: Effect of rates different than statutory 297 1.8 Innovation income deduction 702 4.2 Other ( 28 ) ( 0.2 ) Ireland: Other ( 40 ) ( 0.2 ) United Kingdom: Effect of rates different than statutory 323 1.9 Other ( 69 ) ( 0.4 ) Other foreign jurisdictions 115 0.7 Tax credits: Federal research credits 4,247 25.6 Other 150 0.9 Changes in valuation allowances ( 1,901 ) ( 11.5 ) Nontaxable or nondeductible items: Meals and entertainment ( 195 ) ( 1.2 ) Stock-based compensation ( 1,700 ) ( 10.2 ) Non-deductible executive compensation ( 824 ) ( 5.0 ) Income from branch ( 288 ) ( 1.7 ) Other ( 125 ) ( 0.8 ) Changes in unrecognized tax benefits ( 284 ) ( 1.7 ) Other adjustments: Other 122 0.8 Effective tax rate $ 3,679 22.2 % ________________________ (1) State taxes in Washington, D.C. and Virginia made up greater than 50% of the tax effect in this category. 119 Table of Contents Notes to Consolidated Financial Statements (continued) For the year ended December 31, 2025, the Company recognized an income tax benefit of $ 3.7 million on pre-tax book loss of $ 16.6 million, resulting in an effective income tax rate of 22.2 %. As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the effective income tax rate differs from the statutory federal income tax rate as follows: Year Ended December 31, 2024 2023 Federal tax rate 21.0 % 21.0 % State tax rate - statutory blended rate 4.2 4.3 Other effective state tax adjustments ( 8.5 ) ( 5.2 ) Non-deductible expenses ( 4.6 ) ( 4.1 ) Non-deductible executive compensation ( 12.4 ) — Research tax benefits 49.4 24.4 Stock-based compensation 1.2 ( 18.0 ) Change in valuation allowance ( 22.8 ) ( 11.7 ) Deferred tax rate change 0.1 0.6 Intangibles and deferred adjustments ( 7.3 ) — Foreign rate differential 5.4 2.8 Other 1.4 1.2 Total 27.1 % 15.3 % For the year ended December 31, 2024, the Company recognized an income tax benefit of $ 2.4 million on pre-tax book loss of $ 9.0 million, resulting in an effective income tax rate of 27.1 %. For the year ended December 31, 2023, the Company recognized an income tax benefit of $ 3.0 million on pre-tax book income of $ 19.3 million, resulting in an effective income tax rate of 15.3 %. 120 Table of Contents Notes to Consolidated Financial Statements (continued) The following table presents the significant components of the Company’s net deferred tax liability: As of December 31, 2025 2024 (In thousands) Deferred tax assets: Allowance for doubtful accounts $ 146 $ 276 Accrued liabilities 3,497 3,256 Operating lease liabilities 56,758 56,788 Deferred revenue 1,828 1,913 Stock-based compensation 2,322 2,826 Capitalized research and development expenses 32,193 44,716 Tax credits 19,807 15,694 Net operating losses 20,632 12,761 Other deferred tax assets 1,641 1,859 Gross deferred tax assets 138,824 140,089 Less: valuation allowance ( 71,324 ) ( 70,008 ) Total deferred tax assets 67,500 70,081 Deferred tax liabilities: Property, plant and equipment 18,781 22,436 Goodwill 1,699 1,554 Intangibles 33,058 34,305 Operating lease assets 38,441 39,090 Total deferred tax liabilities 91,979 97,385 Net deferred tax liability $ 24,479 $ 27,304 On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law. The OBBBA did not change the statutory U.S. federal tax rate. Accordingly, the OBBBA did not require the Company to remeasure its deferred tax assets and liabilities solely because of a rate change. However, the various changes in tax law did impact the Company’s current and deferred tax calculations. The decreased deferred tax asset for capitalized research and development expenses and the increased deferred tax asset for net operating losses is primarily due to this new legislation. The Company’s accounting for deferred taxes involves the evaluation of a number of factors concerning the realizability of its net deferred tax assets. The Company primarily considered its historic performance, the nature of its deferred tax assets and the timing, likelihood and amount, if any, of future taxable income during the periods in which those temporary differences and carryforwards become deductible. Based on an analysis of these factors, the Company determined that in 2025, a valuation allowance against U.S. deferred tax assets was required. The valuation allowance increased by $ 1.3 million during the year ended December 31, 2025. As of December 31, 2025, the Company had approximately $ 44.1 million in U.S. federal net operating loss carryforwards, and $ 19.8 million in U.S. federal tax credits. All U.S. federal net operating loss carryforwards were generated after the enactment of the Tax Cuts and Jobs Act (the “Act”) and as such do not expire, but can only be utilized to offset up to 80% of taxable income in any given year. The U.S. federal tax credits begin to expire in 2039. Additionally, as of December 31, 2025 the Company had approximately $ 25.8 million in UK loss carryforwards. Under current UK tax law, these losses can be carried forward indefinitely. 121 Table of Contents Notes to Consolidated Financial Statements (continued) As of December 31, 2025, the Company had approximately $ 76.8 million in state net operating loss carryforwards. If not utilized, some state net operating loss carryforwards will expire at various dates beginning in 2030. At December 31, 2025, the amount of unremitted earnings generated by the Company’s foreign subsidiaries is not significant. The Company does not assert indefinite reinvestment on a portion of its unremitted earnings of certain foreign subsidiaries as of December 31, 2025. On the earnings that are not indefinitely reinvested, the Company did not recognize deferred income taxes related to those unremitted foreign earnings, due to the tax favorable manner in which it would be repatriated. For the subsidiaries that the Company asserts permanent reinvestment, if repatriation were to occur, the Company would be required to accrue U.S. taxes, if any, and remit applicable withholding taxes as appropriate. A determination of the amount of the unrecognized deferred tax liability related to these undistributed earnings is not practicable due to the complexity and variety of assumptions necessary based on the manner in which the undistributed earnings would be repatriated. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: Year Ended December 31, 2025 2024 (In thousands) Unrecognized tax benefits—January 1, $ 7,438 $ 6,170 Gross increases—tax positions in prior period 284 91 Gross increases—tax positions in current period 1,056 1,177 Unrecognized tax benefits—December 31, $ 8,778 $ 7,438 If the $ 8.8 million of unrecognized tax benefit is recognized, it would not impact the effective tax rate due to the valuation allowance on the Company’s net U.S. deferred tax assets. For the years ended December 31, 2025, 2024 and 2023, the Company recognized $ 0.0 million, $ 0.1 million and $ 0.3 million, respectively, in interest and penalties related to income taxes within income tax benefit in the accompanying consolidated statements of operations. The Company files U.S. federal income tax returns as well as income tax returns in many U.S. states and foreign jurisdictions. As of December 31, 2025, the tax years 2022 through 2024 remain open to examination by the major jurisdictions in which the Company is subject to tax. The Company is currently under audit by the Internal Revenue Service for the year ended December 31, 2023. 122 Table of Contents Notes to Consolidated Financial Statements (continued) A summary of income taxes paid (refunded) by jurisdiction is as follows: As of December 31, 2025 (In thousands) US Federal $ ( 280 ) State: California 674 Washington, D.C. 206 Delaware 95 New Jersey 94 Pennsylvania ( 157 ) Other State ( 36 ) Foreign: Belgium ( 821 ) Ireland 94 Other Foreign 76 Net Refund $ ( 55 ) 15. Basic and Diluted Loss per Common Share The components of basic and diluted loss per share are as follows: Year ended December 31, 2025 2024 2023 (In thousands, except share and per share amounts) Earnings per share: Net loss attributable to common stockholders $ ( 12,912 ) $ ( 6,524 ) $ ( 16,343 ) Net loss per share, basic and diluted $ ( 0.43 ) $ ( 0.24 ) $ ( 0.64 ) Weighted average number of common shares outstanding, basic and diluted 29,996,861 27,209,698 25,612,724 The following common share equivalents were excluded from the weighted average shares used to calculate diluted net loss per common share because their effects would have been anti-dilutive: Year ended December 31, 2025 2024 2023 Stock options issued and outstanding 67,297 79,238 97,480 Restricted stock units issued and outstanding 6,400,636 5,195,945 5,911,794 Convertible senior notes 1,522,858 2,321,106 3,442,229 Total 7,990,791 7,596,289 9,451,503 123 Table of Contents Notes to Consolidated Financial Statements (continued) 16. Subsequent Events On February 19, 2026, Bandwidth’s Board of Directors authorized a share repurchase program of up to $ 80.0 million of the Company’s outstanding Class A common stock, subject to market conditions, contractual restrictions and other factors. Under the share repurchase program, the Company may purchase shares from time to time at the discretion of management through open market purchases, block trades, accelerated or other structured share repurchase programs, privately negotiated transactions, Rule 10b5-1 plans or other means. Open market repurchases will be structured to occur in accordance with applicable federal securities laws, including within the pricing and volume requirements of Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The manner, timing, pricing and amount of any transactions will be subject to the discretion of management and may be based upon market conditions, regulatory requirements and alternative opportunities that the Company may have for the use or investment of its capital. The program does not obligate the Company to acquire any particular amount of Class A common stock, and the program may be extended, modified, suspended or terminated at any time at the Company’s discretion. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. 124 Table of Contents