RALEIGH – Hackers did indeed attack Raleigh-based communications provider Bandwidth seeking a ransom, but its CEO said the company didn’t pay and ultimately defeated what he called an “unprecedented” assault and “running gun battle.”
CEO David Morken briefed Wall Street Analysts in a conference call Monday after Bandwidth reported quartertly earnings and formally acknowledged losing as much as $12 million as a result of the September hack described as a DDOS, or distributed denial of service.
Bandwidth had denied to even acknowledge that the cyber attack was indeed ransomeware before Monday’s call.
“We did not pay a ransom and instead relied on innovative solutions and strategies to confront the threat, head on. To sum up, we believe, Bandwidth is now stronger than ever and we plan to leverage what we’ve learned to help make the ecosystem safer for enterprise communications,” he said.
Learning from the attack, Bandwidth has deployed additional safeguards – what he called prophylactic security” – against future hacks, he added.
Ransomware attacks, which have soared in recent years, have led to payoffs as much as $67 million plus inflict remediation cosots on average totalling more than $2 million.
Bandwidth projects bigger revenue loss from hack attack, stock drops
“It is a small price to pay right now as a prophylactic security to have that additional nominal step at the beginning of a user experience,” Morken explained.
Bandwidth is a global provider of communications services such as 911 access to a host of tech giants.
Bandwidth’s customers include Microsoft, Google, Zoom and many others that utilize internet-based services in Bandwidth’s product portfolio.
Morken also sought to assure analysts that the company, whose stock (Nasdaq: BAND) is down nearly 50% this year due in part to the attack, is regaining some customers who turned to other service providers in the VoIP [voice over internet protocol] marketplace for voice and data as Bandwidth suffered outages and service delays.
“Those conversations [with customers], unexpectedly have become extremely positive regarding Bandwidth being the most resilient and best place to go if you are concerned about a DDoS attack and the reason is we have successfully fought back against the latest methods in the VoIP space that before now were unheralded, unprecedented,” Morken told one analyst.
In opening remarks, Morken said the attack could have been much more devastating.
“Attacks like ours have been aimed at a number of companies in our global VoIP ecosystem. First, we were prepared and we weathered the storm well,” he explained.
“Our infrastructure includes specific DDoS mitigation systems and has routinely audited in responding to the attack in real time, we augmented our DDoS defenses to keep pace with the attackers evolving methods. Some customers saw periodic service disruptions and we regret any impact to their business.
Bandwidth says network ‘back to normal’ after cyber attack; stock hits 52-week low
“At the same time we are proud of our team and our partners and the resilience of our platform in avoiding the crippling effects others have seen in similar attacks across the industry. In fact, the vast majority of our traffic continued to be delivered. Second, we serve our customers well and they supported us too.”
Morken said the scale and type of attack posed “unique” and “massive” challenges.
“We rallied during this attack and used vendors like Cloudflare and taught them how to address this issue for the first time and collaborated with them in a way that they then were able to go to the whole industry and share. So, it was an unprecedented size and in a very unique way that we experienced this attack for what was really the first time. Confident the way that we have adjusted our defenses that we can withstand this and other similar threats going forward,” he explained.
Morken also said Bandwidth “reached out to our top competitors” to share knowledge about the attack.
“We told them get ready it’s probably going to hit you next, here’s what we did, here’s how we did it here is the playbook and shared it openly and the vitality and the quality of our ecosystem is essential for enterprises around the world. And so, we wanted to protect it with those that we happen to compete with and did so openly right out of the gate,” he said.
Read more of Morken’s remarks online.
The financials: From AP
Bandwidth reported a loss of $6.9 million in its third quarter, the Associated Press reported.
On a per-share basis, the company said it had a loss of 28 cents. Earnings, adjusted for one-time gains and costs, came to 24 cents per share.
The results surpassed Wall Street expectations. The average estimate of six analysts surveyed by Zacks Investment Research was for earnings of 9 cents per share.
The enterprise software developer posted revenue of $130.6 million in the period, also exceeding Street forecasts. Four analysts surveyed by Zacks expected $125.7 million.
For the current quarter ending in December, Bandwidth expects its results to range from a loss of 15 cents per share to a loss of 11 cents per share.
The company said it expects revenue in the range of $115.7 million to $120.7 million for the fiscal fourth quarter.
Bandwidth expects full-year earnings in the range of 74 cents to 78 cents per share, with revenue ranging from $480.5 million to $485.5 million.
Bandwidth shares have dropped 46% since the beginning of the year. In the final minutes of trading on Monday, shares hit $83.25, a decrease of 49% in the last 12 months.
