AI Is Calling; Still Early In the Conversation – Initiate at Equal-weight

Early AI-driven traffic points to faster voice growth at Bandwidth after muted post-COVID years, with margins still expanding, but we are not yet underwriting durable double-digit growth and the YTD re-rating prices in much of the upside. Balanced risk/reward; initiate at Equal-weight with $56 PT. Bandwidth owns and operates its IP network underlying its voice and messaging CPaaS offering, with coverage in 65+ countries. Global Voice Plans growth accelerated from 4% YoY in 1Q25 to sustained 10%+ over the last three quarters, which management attributes to AI voice traffic; Enterprise Voice grew 21% in FY25 and 13 $1mn+ contracts have been signed since the start of FY25. We model ~8% cloud comms CAGR through FY28 to $730mn, below management's double-digit aspiration, with adjusted EBITDA margin (cloud comms) rising from 19.9% in FY26e to 23.6% in FY28e.