Bandwidth Inc.BAND
Bandwidth Inc. Fair Value Disclosure
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 | |||||||||||||||||||||||||||
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.
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About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.