Bandwidth Buys Voxbone to Offer Unified Software Platform

Zacks Equity Research
·3-min read

Bandwidth Inc. BAND recently inked a definitive agreement to acquire Voxbone for an enterprise value of €446 million ($527 million). The transaction complements Bandwidth’s product portfolio and enables it to offer a unified software platform to better serve global customers. The integrated offering will facilitate various firms to combine voice, video and text communications as part of their digital transition and help transform enterprise cloud communications for superior customer experience.

Headquartered in Brussels, Belgium, Voxbone is a leading Europe-based communications platform and IP voice network provider, serving customers in more than 60 countries that represent about 93% of global GDP. This communication as a service (CaaS) firm offers seamless communication services delivering carrier-grade calls from the cloud and quality coverage that can be integrated with any contact center, conferencing platform or voice application. It is trusted by more than 900 global enterprises, including leading companies like Uber Technologies, Inc. UBER, Zoom Video Communications, Inc. ZM and 8x8, Inc. EGHT.

Bandwidth intends to fund the transaction, likely to be completed on Oct 31, 2020 subject to mandatory closing conditions and regulatory approvals, with approximately €338 million in cash and €108 million in common stock. Voxbone is expected to generate $85 million in revenues in 2020, up 25% year over year, and will translate into incremental earnings and profitably for Bandwidth post completion of the deal. The acquisition will also enable the company to play a greater role in global enterprise cloud communications.

As a leading provider of a cloud-based communications platform, Bandwidth benefits from cost-effective operations. The company capitalizes on a variety of marketing channels to promote its products and services. This reinforces pricing flexibility and provides a significant competitive advantage to build a capital-efficient and customized networking infrastructure. Bandwidth follows a usage-based revenue model that enables it to augment its top-line growth and increase subscriber base. Bandwidth generates majority of its revenues from the CPaaS (Communications Platform as a Service) segment operating in the United States. The company believes that its evolving portfolio and accretive customer base are the cornerstones of long-term growth across a diverse set of markets.

Equipped with a dynamic business model, the company has been keen on developing its international offerings. It is undertaking the necessary steps to pursue international expansion opportunities, thereby strengthening its enterprise customer base overseas. Notably, Bandwidth established two data centers in Frankfurt and London in 2019, and has been permitted to operate in 13 European countries, which includes 11 members of the European Union, the United Kingdom and Switzerland. With an aim to fortify its communications platform, acquisitions and strategic investments in businesses and technology are believed to be the preferred modes for enhancing profitability in the long run. The Voxbone buyout is further expected to fuel its inorganic growth post the completion of the deal and successful integration.

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8x8 Inc (EGHT) : Free Stock Analysis Report
 
Bandwidth Inc. (BAND) : Free Stock Analysis Report
 
Zoom Video Communications, Inc. (ZM) : Free Stock Analysis Report
 
Uber Technologies, Inc. (UBER) : Free Stock Analysis Report
 
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