Q2 2023 Bandwidth Inc Earnings Call
Good day and welcome to the bandwidth second quarter 2023 earnings Conference call. All participants will be in a listen only mode should you need assistance. Please signal a conference specialists by pressing this Turkey followed by zero.
After today's presentation, there there'll be an opportunity to ask questions to ask a question. You May press start then one on a touchtone phone to withdraw your question. Please press Star then too. Please note. This event is being recorded.
Well, let's get on the conference over to Sarah Wallace Vice President of Investor Relations. Please go ahead. Thank you good afternoon, and welcome to bandwidth second quarter 20 twenty-three earnings call today.
Today, well discuss the results announced in our press release issued after the market closed.
The press release and earnings presentation with historical financial highlights can be found on the Investor Relations page at investors that bandwidth dot com.
With me on the call. This afternoon is David Morgan R. C E O and Darryl Raiford, our C F O.
They will begin with prepared remarks, and then we will open up the call for Q&A.
During the call we will make statements related to our business that may be considered forward-looking including statements concerning our financial guidance for the third quarter and full year of 2023 weeks.
We caution you not to put undue reliance on these forward looking statements as they may involve risks and uncertainties that may cause actual results to very materially from any future results or outcomes expressed or implied by the forward looking statements.
Any forward looking statements made on this call and in the presentation slides reflect our analysis as of today and we have no plans or obligation to update them.
For a discussion of material risks and other important factors that could affect our actual result, please refer to those contained in our latest 10-K filing is updated by other S. E. C filings all of which are available on the Investor Relations section of our website at bandwidth dotcom.
And on the S. E C website at S E C Dot Gov.
During the course of today's call, we will refer to certain non-GAAP financial measures a reconciliation of gap to non-GAAP measures is included in our press release issued after the close of market today as well as in the earnings presentation, which are located on our website at investors dot bandwidth dotcom.
With that let me turn the call over to David.
Thank you, Sir and welcome to everyone joining our call. This afternoon.
I'm delighted with the progress we made during our last quarter and I'm pleased with our financial results.
Four I share some of the successes of the last quarter.
Let me start by thanking God for all he has done for US our mission is to develop and deliver the power to communicate and we are motivated to serve customers together den.
The profound technological change in how we communicate is accelerating and bandwidth remains in the forefront no company has our unique combination of assets to meet emerging and dynamic communication needs.
A powerful global communications cloud deep expertise.
Long standing mostly embedded customer relationships and the culture of exceptional service and innovation. Thank.
Thank you to our customer for trusting us with your mission critical communications and to all the band raised around the world, whose hard work drive as our success.
Just as we had projected at the start of this year the macroeconomic environment remains uncertain.
We've observed continuing cautious behavior from our customers, who are shrewdly evaluating the environment and making investment decisions, where it makes most sense and for the greatest return.
We are likewise operated our business through the same environment by scrutinizing product and investment strategies, while balancing growth and profitability. We expected this season and thus far it has played out as we projected.
Given the macroeconomic choppiness I'm, so pleased with our business execution and our outperformance in the second quarter.
[noise] exceeded both our revenue and profitability guidance.
With a view toward the remainder of the year, we have raised our revenue outlook to reflect the overperformance in the quarter and we remain on track to achieve our 20 twenty-three financial targets, including growing profitability by 30% for the full year.
We're focused on the second half of 2023 as well as building our business for sustainable leadership with our medium and long-term targets in mind it.
It was fitting that I D. C again named US a leader in their worldwide. She passed marketscape for the third consecutive time, we believe it's a strong validation from the market of our longterm strategy and the enduring value, we're providing within the global cloud communications space.
As we described at our Investor day in February or enterprise grade consumable Apr's global owned and operated network and deep regulatory experience position as well in large and growing global markets. We focused our go to market around three distinct customer categories.
Mobile Communications plan programmable services and direct to enterprise each of these delivered solid customer momentum in the second quarter. Let me highlight a few examples from each.
And our largest customer category Global communications plans, we are honored to count as our customers. All 20 of the leading power platforms that comprise the gardener magic Quadras for both you cast and see cash.
We remain focused on leveraging our global footprint to drive upsell and across cell within our existing customer base as what was attracting new customers. This quarter, we want to highlight to new customers. In this category that have sustainable and substantial business outside the U S and chose bandwidth for a resiliency.
And our country coverage, reaching over 90% of global G. D P.
Our first example is a contact center services provider that has relied on for business critical operations by thousands of customers across a wide range of industry verticals worldwide.
After a major outage that severely disrupted their business their incumbent provider was unable to get answers or honor their S. L as resulting in a loss of several major accounts.
What's reliability resiliency and premium support concierge experience convince them to move their portfolio to bandwidth.
Now using nearly hour complete service offering, including telephone numbers and local and international calling in Europe , South America and Asia Pac. In addition to North America, along with you 911, and global Emergency services text messaging and U S toll free calling this customer signed over 200 new international.
Phone customers in the past year, so our global reach regulatory experience and ability to scale Archie to their future growth plans.
Another large contact center service provider chose bandwidth voice api's to serve their customers in 30 plus countries across the EMEA region.
This rapidly growing customer was looking to expand into new geographies from their home base in central Europe , but their collection of incumbent providers couldn't handle the complexity.
Bandwidth solve their challenges with our global reach and regulatory expertise while at the same time, enabling new capabilities to allow customized local services.
The value proposition bandwidth offers is clear we solve our customers communications complexity, we lower our customers cost and we create capabilities, allowing our customers to benefit from new revenue streams and we do it globally.
And are programmable services customer category, which primarily powers the leading text messaging platforms. We continued to benefit from a steadily rising baseline of activity to support commercial use cases, including banking and financial services retail and E Commerce health care patient engagement as well as <unk>.
Ongoing civic engagement about breaking news and issues of the day.
For example, one of our existing for Grandma services customer of scaling on the bandwidth communications cloud pioneered the use of automated text messaging for patient engagement across a variety of health care practices.
Bandwidth messaging API enable appointment reminders and two a texting to connect with patients through customizable Personalised touch points at every step of the carriage yearning.
Bandwidth is becoming a provider of choice for these use cases, because customers know their text messages will be delivered our platform is seen as a gold standard of enterprise grades support scalability reliability and throughput.
Finally, our direct to enterprise customer category delivered a strong performance in this dynamic and growing space, we're seeing a greater urgency from larger enterprises to begin migrating there on premises contact center collaboration services and internal communications to the cloud because of the operational savings and all.
Also the cloud enabled capabilities that build greater customer engagement and retention.
This is a large endurable longterm opportunity with 75% of global Enterprise is planning to migrate communications to the cloud, but having not yet begun according to I D. C Research Maestro Our award winning next generation Communications platform that we announced in March.
Is becoming a catalyst for our director enterprise strategy Maestro enables enterprises to achieve bastard time to value through rapid cloud deployment and configuration, while reducing complexity in ensuring future flexibility. It provides the crucial technology bridge enterprises need to create a modern communications.
<unk> solving the difficulties of interoperability and deployment of all the best in class cloud contact centers unified communications platforms, and artificial intelligence and machine learning environments. Just one example of mice rose newest capability is our integration with Cisco Webex.
Calling which we announced generally available in June .
This opens up a large new opportunity for bandwidth Cisco to provide cloud connectivity for over 10 million users at any stage of the enterprise migration journey, whether on premise hybrid or pure cloud. In fact, we just won our first customer for this new Cisco integration with Maestro.
A Texas based children's Hospital network widely regarded as one of the most prestigious in the United States. This large health care provider was eager to move its contact center in collaboration communications to the cloud, but needed to do it in stages to avoid business disruptions with their complex <unk>.
On premise legacy system <unk>.
Bandwidth number management, API and flexible call routing, we're able to maintain both their old on prim and new cloud environments at the same time preserving critical business continuity. It is another example of how our deep experience in digital transformation supports customers every step of the way on their journey to the class.
Route.
And another example of how we solve complexity for the enterprise this past quarter, we close to one of our largest ever Microsoft teams direct routing contracts a fortune 200 energy technology company was exhausted from their legacy providers failing to keep up with their usage growth.
Badly needed a modern communications provider to enable their teams deployment globally the.
The customer chose bandwidth over there multiple legacy telecom providers because of our incredible support capability global reach and our deep experience as a Microsoft direct routing provider to accelerate Onboarding. Our team worked with the customer to align their tech stack, ensuring they could maximize their teams deployment and the <unk>.
Up and running rapidly with bandwidth.
In summary.
I'm pleased with our progress through the first half of 2023 looking forward, we will continue to navigate the current commercial environment, maintaining our strong focus on disciplined execution and expanded profitability, while leveraging our global reach regulatory experienced enterprise grade a P. I's.
And breakthrough innovations like Maestro all for the benefit of our customers I'll now turn it over to Darryl to walk through the details of our queue to financial results.
Thank you David and good afternoon, everyone. We completed the first half of the year with another solid quarter exceeding expectations on both the top and bottom lines.
Second quarter revenue of $146 million exceeded the mid point of our guidance by $5 billion ajar.
Just the D V D or you have $11 million exceeded the midpoint of guidance by $6 million.
Second quarter revenue compared with last your benefited from higher messaging usage up 11% and higher monthly recurring charges for phone numbers and emergency services, which combined were up 8% year over year.
Messaging in the quarter represented 17% of total revenue excluding surcharges.
Our commercial messaging growth was driven by solid demand across a variety of use cases, including health care.
Retail and e-commerce.
Vin Tech is civic engagement.
Pass through surcharges associated with messaging, where $27 million in the second quarter.
In terms of our market results are global communications plans revenue performance, excluding surcharges was in line with our expectations essentially unchanged year over year is this large voice component continued to see softness from current macroeconomic conditions.
Programmable services and direct to enterprise customer categories grew 15% and 21% respectively year over year <unk>.
Programmable services continued to strengthen from the aforementioned broad based demanded messaging.
Direct enterprise benefited from new customer additions.
The global 2000 migration to cloud communications is evident in the enterprise customer wins that David just highlighted and coupled with a strong enterprise pipeline. We have confidence this market will be a key contributor to driving future profitable growth.
Rounding out our second quarter results non-GAAP gross margin was 55%.
Two percentage points from the prior year's quarter.
We continued to benefit from economies of scale.
Ah Richard mix of higher margin products.
Global coverage in operating improvements as we continued to March towards our medium term targets of greater than 60%.
A favorable combination of increased non-GAAP gross margin and operating leverage produced adjusted EBITDA of $11 million.
In terms of operating metrics or first quarter net dollar retention rate was 106%.
For larger customers with greater than $100000 annual revenue Arnett dollar retention was 108%.
Two percentage points higher than the total customer metric and clearly demonstrating the benefits of focusing on large customers indirect enterprise opportunities.
Customer logo retention remained well above 99%.
Average annual revenue per customer, which has steadily increased over the past six quarters reached $176000 in the second quarter.
Again, demonstrating our success as securing larger customer opportunities.
We ended the quarter with a cash and securities balance of $123 million.
Ah more than sufficient amount to meet our business needs and sustain a great deal of financial flexibility.
Following quarter and in July we.
We received $4 million in proceeds from our insurance carrier is reimbursement of lost profits related to the cyber incident experienced in September 21.
And recently, we established in Undrawn 50 million dollar revolving credit facility with Bank of America and Wells Fargo is code lead agent to round out are working capital profile.
This new facility replaces the Undrawn facility, we previously maintained with S. B b.
You'll recall, we unilaterally terminated the SBB facility in March.
Turning to our full year outlook, we're increasing our revenue guidance to approximately $590 million to reflect our first half revenue overachievement and higher than expected messaging surcharges.
We will strengthen our operating flexibility bad maintaining our outlook for full your adjusted EBITDA of approximately $45 billion, representing a projected growth of 30% from last year.
For the third quarter, we expect revenue of approximately $149 million and adjusted EBITDA of approximately $11 million.
In summary, we're pleased with our first half 20 twenty-three financial and operating performance.
Especially in light of the choppy commercial environment over that same period.
As we move into the second half will continue to focus on what we can control.
Serving and delighting our customers everyday.
Growing our margin being disciplined with our cost.
An increasing our profitability.
Now I'll turn the call back over to the operator for questions.
We will now begin the question and answer session to ask a question you May Press Tower, then one on your Touchtone phone.
If you're using a speaker phone please pick up your handset before pressing the keys.
If at any time. Your question has been address and you would like to withdraw your question. Please press start then too at.
At this time, we will pause momentarily to assemble our roster.
Our first question comes from Rhine Mcwilliams with Barclays. Please go ahead.
Thanks, taking the question please to see the Reacceleration arrhythmia grew up in the corner.
David as a sense of day, how do you see the macro outlook impacting fans results in the second half like did you see improving signs on customers at the end of the second quarter or sense.
Hey, Thanks, Ryan I think the macro environment remains as we've.
Thought about the year in the first half and think it will continue throughout the second half their our customers, making shrewd and intelligent optimizing decisions across.
Their businesses there are some deals cycle concerns, but these are things that we've thought about all year and are reflected in both the results in the first half an hour forecasting the rest of the year.
Excellent.
Color and then lots of questions from investors on how January they it could impact, let's see past market. So I know, it's early alright, uhm, but I'd love to hear it at least from your city of David How're, you think bandwidth together <unk> could fit together for some new opportunities.
Okay.
Okay. Thanks for thanks for asking all of our voice messaging customers enterprise customers contact center customers are looking for the real force multiplier that is generative AI certainly within call flows where you have the opportunity to put the attribute to the call to large datasets to add value to resolve a question in a contact center where.
Router call. Accordingly, there are many many opportunities and so we've got two approaches to adding value to our customers in a I one involves our maestro orchestration product that we announced.
Earlier, this year and that will be generally available right now in this month and that product is open in that it allows the customer to avoid just locking into a walled garden AI approach, a particular vendor and instead select the ideal a I tools that they're bringing to bear on their call flow or on their message.
<unk> experiences for customers and to do it in a very elegant way within our maestro user experience. The other is just being an ecosystem historically that has really specialized in being open and that means API integrations with best of breed providers in the contact center and you cast we've been very successful in that regard and I think that our platform.
I'm generally will embrace all the emerging AI tools that are available for both voice and messaging experiences. So we're excited about what it means for our customers and the fact that our platform has been architected now for several years to embrace the change that is generally they I.
Does the caller discuss.
Your next question comes from meta Marshall with Morgan Stanley . Please go ahead.
Great. Thanks, maybe it kind of following up on that I mean, what do you see as the trigger trigger project or trigger of that that would make customers evaluate my throat is it you know something like they're evaluating their contact center solutions and AI solution or just what what do you think will be <unk>.
<unk> and then maybe as a second question.
You've talked about kind of customers being more budget conscious I just wanted to get a sense of is that.
You know there.
Limiting and some of their interaction activity or is it just kind of lengthening at all cycles on evaluating and new opportunities. Thanks.
So I think thanks me to I think that mice truths inflection point has a lot to do with the complexity that is in both the contact center environment and in the enterprise operating environment. There are so many emerging voice messaging experiences both internally for teams externally to customers and customer bases and.
So what's needed is an orchestration later that rests upon a global high fidelity owned and operated network and has all the favourable attribute that we provide now in so many different countries, but on top of that fundamental carrying capacity of voice calls and text messages.
Enterprises are are engaging them in the most complex environment that.
The decision maker has ever seen and so what an orchestration layer provides is an elegant user experience, allowing you to select a best of breed configure provision activate assign and pay for elegant experiences across your enterprise or in your contact center, taking advantage of the latest developments in a I or the <unk>.
Latest developments in authentication or fraud prevention, but to be able to do it in the user interface, that's manageable and without this kind of a layer, which we've seen elsewhere in software we've seen it in log in and password management within enterprise we've seen it elsewhere. We think it's a natural analog for what we're doing with maestro and the inflection point.
Really has everything to do with the complexity that these decision makers are grappling with today.
And regarding the <unk>, the macro environment and different aspects of decision, making affected by the economy. We we just continue to see Choppiness generally and we're cautious as we look forward toward the rest of this year as we have been in the first half.
Great. Thank you.
Our next question comes from will power back. Please go ahead.
Okay, great. Thanks, Yeah, they'll look like a nice results and a quarter I guess a couple of questions. What is it that you can provide any further.
Kind of color on sources of of upside the revenue in the corridor.
The message of your business remains strong.
Yeah, maybe that was a conservative paper any areas of surprising I guess, there's within messaging. If you could help break down kind of at the key drivers and you'll be receiving right now.
Hi, this is Darryl.
We did see we did see good results in the quarter with revenue exceeding our garden that.
That was driven as I said in part by messaging and in part by monthly recurring charges from phone number 911, so essentially half and half messaging was up 11% we saw that broadly across all commercial messages.
You'll recall, we experienced some political last year that was in the 34 quarter of last year. So compare our commercial messaging grew nicely over this time last year.
Also monthly recurring charges wishes subscription base for phone numbers and emergency services within the enterprise.
<unk> grew nicely as well those do contribute two two overall company performance is the gross margin profiles of those products are are very rich indeed.
Okay. So that's helpful. I appreciate it <unk>, maybe one other financial question advice upside of EBITDA and a quarter. Okay. Let me pull your guidance is unchanged is that just a function of.
Plans to perhaps reimburse some of the upside conservatism.
The color on that problem.
You're right we were pleased with the Overperformance in terms of profitability for the quarter, we see in terms of going forward in the guide we did raise our revenue the $10 million as we've noted.
For holding to the the full your guide to $45 million at the mid point, we did.
Collapse. The rain, we've we've brought up the lower end of that range taking into account the revenue overperformance, but on the whole we think that it's important to derisk to continue to derisked, the year and to be prudent and cautious in the environment and so we're we're holding with the mid point guidance of 45.
Okay. Thank you.
Our next question comes from Chin face slips Piper signing up please go ahead.
Hey, this is quintan on for Gemfish. Thanks for taking our questions. Maybe first you know another player in the space is talked up concerns with messaging traffic volumes, mainly due to enterprises evaluating other options for two factor authentication, but you know you guys continue to post pretty strong messaging gross.
<unk> can you remind us your exposure to two factor authentication or one time passwords and then secondly are you seeing any changing dynamics within two factor authentication, where maybe that could benefit your voice solution, if they're moving away from S. M S space.
Hey, Quintan, we don't have any exposure at all to two factor authentication, we don't have customers they generate any meaningful revenue.
From it so that's not a concern of ours at all and so don't really have any insight as to what's driving folks to utilize other alternatives.
Got it makes sense and then maybe more of a financial question for you know we can do you see a declining number of total customers, which I get is a part of the strategy of trainees lower and payers have you think about the the gross add to your you know what would that number and then a restarting to see any impact on the margins or an improvement in customers.
E. As we continue to move up to the enterprise or is the is the churn kind of still too early where we're gonna see can I continue to permit throughout this year and next.
Clinton this is Darryl.
We did see we did see a modest decline in total customer account. We've said in the past in February then again, it may and we've been consistent that customer count as a leading indicator of our.
Not particularly relevant any longer in our minds as we continue to grow into the larger enterprise category and indeed are average cause customer revenue has continues to grow and it's grown to 176000 over something like 161.
Thousand dollars at this time last year, So we're really pleased.
Pleased with that growth with that said we did.
We did add 70 customer 70, new customer logos during the during the quarter. These are we consider high quality customers. We did in terms of contributing to our average revenue per customer growth and then with that if you do the math, we removed 91 customer.
Or churned 91 customers in the quarter, it's worth mentioning that the median of those 91 customers D. A R. R was $3000. So again, not really focused on the customer count any longer.
More focused on the the profitability potential of the customers that we acquire.
That makes sense. Thank you.
Alright next question comes from Austin Cool, let citizens.
Please go ahead.
Yeah. Thanks for taking my question and can crowd congrats on that a good quarter. My question is just regards to the cash flow generation you guys mentioned.
$123 million in cash and then with the balance sheet is there any kind of updated thinking on on the the longterm that on there and how you guys are thinking about that it looks like casual turned out pretty good this quarter. Thanks.
Yes cash flow was basically in line with our with our.
Patients, we finished the quarter with $123 million of cash and marketable securities.
Said in the prepared remarks, we think that that's sufficient for it.
In terms of our capital structure, we did as I said, we did replace our Sbb's facility that we had terminated in March with a with a new undrawn revolving credit facility. It's just all part of of the blocks that contribute to building our capital structure.
In terms of going forward. We we've said before will continue to monitor the the convertible debt market and be opportunistic on any repurchases. If we think that's wise to do so our first our first convertible maturity is still.
Still remains quite a ways away in 2026, and we feel like we have a lot of time to.
You know evaluate that going forward.
Awesome, Thanks, and if I could just throw in a quick follow up just since last quarter, just with the kind of overarching conversation about a I M. C to production in the seat couch space is there any kind of updated thinking since then I know I know you guys are more on the on the usage based site. So is there any kind of <unk>.
He takeaways with some of what the larger players are doing that.
Nothing new to add to the perspective that we shared in the most recent period, we think that AI ultimately is going to enhance the user experience or contact center experience for lots of our customers for good reasons and we see that we see contact centers I'm focused on AI, when they're talking to us about the flexibility.
B a R platform and the utility of our maestro product and so it's it's a catalyst moment in terms of the technology innovation and ultimately I don't think that it'll be a zero sum game, and ucas or see cats or elsewhere, but I certainly understand the anxiety when anything like this comes comes out.
Awesome. Thank you.
The next question comes from Orion Coons with me then let's go ahead.
Our next question what to ask about your exposure you perceive exposure to the big gross drivers in the in the cloud space General of Sekos, which sounds like you. Please of your progress and wanted to see how are Ya.
Your penetration.
And then similarly, James phone, which obviously is it it's kinda remaining big your cash driver out there.
How do you view your exposure to see direct routing is still the primary vehicle and how do you view the take up an operator connect for the teams phones right. Thank you.
I'll take those in reverse order. So we've got continuing good growth interaction with art awesome, Microsoft partner, so that the the teams phone product.
Is still a very good <unk>.
Path to market for us direct routing and bring your own carrier continue to contribute to our enterprise wins in the examples that we sided for example in this most recent quarter just now they were very material in each of those operator connect has been fantastic for international growth in particular, so that's been a vital and.
Prove meant in our past market with Microsoft.
And in terms of our exposure to contact center and penetration we've got lots of progress, we can still make and capturing sharing the contact center from a usage based perspective, we've got great relationships with most of the leaders in contact center, but a long way to go to displacing the incumbents like Verizon and a T N T looming and then.
Finale, other incumbent and so there's a long way to go which is both it's a wonderful problem for us to have a space like see casts where we've got.
What's that we can still do for a lot of new customers.
That's great to hear David and can you give us any idea of where you are and penetration of the fortune 500 major wins right now obviously, it's pretty early days, but.
You think you're in a.
A couple of dozen range are you guys.
Above that yet.
Yeah, we've we've not shared a particular number of the fortune 500, or a fortune 200, although we did announce a win within the fortune 200 in this period, which we're proud of but expect that as we grow enterprise.
Between now and 2026 from five per cent of our total revenue up to 10% of our total revenue you're going to see many many more fortune 500 logos and we really think more of a global 2000 focus just because we've got footprint in so many different countries and so you'll think of US best I think is focused on the global 2000, not just the fortune 500, but we will continue.
You to share wins in those categories and believe that they'll they'll continue to grow.
Alright.
Our next question comes from map Stotler with William May I. Please go ahead.
Hey, there. Thank you for taking the questions maybe just one more on moisture start you know I was just know early would love to just kind of get your thoughts on how the Cisco relationships are kind of opens up the the go to market for that product with you and then how you're thinking about monetization of of my sure from here.
Hey, Matt we did talk about the Cisco innovation that we announced with Maestro Uhm that we're excited about and it allows somebody that has had a premise based solution historically to engage in the cloud and to do so with maestro and to begin their journey to the cloud in a very elegant way from an <unk>.
An administrative point of view.
So we're excited about that.
In particular, if my throat I just forgot the second part of your question.
So the the amount of my sure going for you.
Yeah. So it is a software application and as an orchestration tool we are planning for maestro to be a revenue enhancing product that we offer that is.
You should understand to be in the revenue model with SAS based cloud based software there will be usage associated with it but the platform fee element will be what you're used to when you think about cloud based software.
Charges and billing.
That's very helpful. And then maybe just just one more broader question on the on your your partner investments. The number one estimates this quarter right. Just go obviously, a mere check scheduling ribbon, let's just go to a broader update on the partner ecosystem your investments there in in.
What you're prioritizing at this point.
So you've known us to go to market well with with some great. Brandon names. Historically, we've continued I think through the leadership of the senior executive team to reach out to more and more ecosystem partners, whether you're the ones that you just mentioned, whether it's distribution related whether it's folks that we buy from an and integrate with whether it's folks like Cisco, who we go to market with.
In the early innings of our channel strategy also you do have lots of new folks that that we're engaging with and have I I don't have any others in particular to announce on this call, but whether it's go to market, whether it's a collaboration with other application providers.
We are being approached by lots of ecosystem names to help them navigate the complexity of global regulatory landscape of technology changes like AI and so it's a wonderful time to collaborate in our space everybody's talking to each other about how they can add value.
And see cashing Ucas N with enterprise. So we liked the announcements and we liked the conversations going on right now up stacking down stack and around the world.
Got it thank you very much.
Thank you Matt.
Again, if you have a question. Please press star then one to be joined into the queue for.
Our next question comes from Tom Blinky with Keybanc capital markets. Please go ahead.
Hi, Thanks for taking my question and congratulations on the results.
Maybe David starting with you on.
Let me see I was gonna talk to you about consolidating spend you mentioned that a little bit in your prepared remarks, I'm wondering how those conversations have maybe evolved through the year here is more see how that was all kind of cut spend or consolidate spend especially given how does it go to market kind of mission or messaging from you.
Bandwidth is we can we can do more for less and just wanted to know if there's you know in terms of and this is all in the context of yours are strong commentary about enterprise direct direct enterprise in the prepared remarks.
Yeah. Thank you Tom.
We did call out during the.
Prepared remarks, the contact services provider that <unk>.
Consolidated 30, plus country needs with us and we save them, 20%. When we did so we talk about another one that took seven partners and consolidate and consolidated them down into using bandwidth and in each case those are incumbents.
And ultimately you have among those C I O as in decision makers in.
A very complex and cost sensitive world Ah need to optimize mission critical communications and it really bet on a trusted partner and before US there weren't many you could consolidate geographically with.
So we've had the the advantage of expanding footprint to allow a C. I O are a decision maker to say Wow I can use bandwidth instead of instead of eight 910, or even 20 partners why wouldn't do that.
In addition to that you know have with maestro the opportunity to consolidate optimize entrust us with an orchestration layer for both your voice your messaging and your third party apps in the communications space. So you've got geography, driving as we've seen historically consolidation and betting on bandwidth is a trusted partner and now.
Now you have our software platform.
Platform that is also driving an opportunity for those see I have to say, it's time for us to believe in bandwidth is our primary partner to reduce complexity to reduce costs and these are these are conversations not just about unit volumes are price. These are very deep conversations about being architectural <unk>.
Partners production partner is globally and that relationship that we have is indeed in the C suite and among the senior most executives at the very largest companies in the global 2000, and I'm excited about how those conversations have developed.
And we should we expect more of them going forward.
That was a perfect segue David to my second question. Thank you in terms of the more strategic architectural partner ship that you know kind of like seeing in some of these conversations which I think you've made the comments in the past that you're comfortable or maybe the members of your team in my conversations as you're comfortable with the with the infrastructure and a lack of.
That way the sales and marketing go to market expenses that you have in place to attack. This G. Two K opportunity.
Maybe update us that and you know and maybe in the probability of a potential for they have to like spend a little bit more to attack. This opportunity. If it takes off from here and thank you very much for the questions again.
Yeah, you bet, Tom the opportunity to invest will be behind success, we will reinforce success, if we see it and if the opportunity for yield from that additional sales investment to materialize within our profitability discipline. That's what you would see is reinforced but we are very happy with the sales leadership that we have with the global sales team that we have.
With the enterprise team that's focused on the the G. Two K as you mentioned, they're staffed they're building pipeline, they're executing we've got strong senior leadership and sales operations globally. So we like our approach we've got a channels, it's developing and emerging and it really promising way that we've never had before so you've you've seen investment made in.
Pass you've seen current leadership focused on it the way that you would see us invest in any additional manner is again, if the yield from doing so was clearly within the profitability discipline that we've outlined in our midterm guidance.
Pretty clear thank you.
Thank you Tom.
This concludes that question and answer session. The confidence has also now concluded. Thank you for attending today's presentation. You me I'll know disconnect.