Ribbon Communications Inc. Reports Second Quarter 2024 Financial Results

Rhea-AI Summary

Ribbon Communications Inc. (Nasdaq: RBBN) reported its Q2 2024 financial results, showing mixed performance. While revenue decreased to $193 million from $211 million in Q2 2023, the company saw significant improvements in profitability. Net income increased by 21% and Adjusted EBITDA rose by 65% in the first half of 2024 compared to the same period in 2023. The company achieved higher gross margins and lower operating expenses year-over-year.

Despite lower sales, Ribbon projects a strong second half of 2024, driven by growth from U.S. Tier 1, Rural Broadband, Enterprise, and India markets. The company completed a refinancing of its capital structure with a $385 million five-year senior secured credit facility, providing greater liquidity. Ribbon adjusted its full-year 2024 guidance, now expecting revenue between $830 million and $850 million, and Adjusted EBITDA between $105 million and $115 million.

Positive

• Net income increased by 21% in 1H 2024 compared to 1H 2023
• Adjusted EBITDA improved by 65% to $33 million in 1H 2024
• GAAP and Non-GAAP Gross Margin for Q2 improved 260 and 240 basis points year-over-year
• Operating expenses reduced by $4 million, reaching lowest level since ECI acquisition in 2020
• Completed refinancing with $385 million five-year senior secured credit facility, providing greater liquidity

Negative

• Q2 2024 revenue decreased to $193 million from $211 million in Q2 2023
• GAAP Net loss of $17 million in Q2 2024
• Full-year 2024 guidance adjusted downward due to conservative outlook for Eastern European region

Financial Analyst

Ribbon Communications' Q2 2024 results present a mixed picture. While revenue declined 8.5% year-over-year to $193 million, there are notable improvements in profitability. The company's focus on cost management and margin expansion is evident, with non-GAAP gross margin improving by 240 basis points year-over-year.

Key financial highlights include:

• First half 2024 Adjusted EBITDA increased by 65% to $33 million
• GAAP Net loss improved from ($21 million) to ($17 million) year-over-year
• Non-GAAP diluted earnings per share increased from $0.04 to $0.05

The company's refinancing of its capital structure with a $385 million five-year senior secured credit facility is a positive development, providing greater liquidity and flexibility for future growth.

However, the reduced full-year 2024 guidance, with revenue now expected between $830 million and $850 million, suggests ongoing challenges in the market, particularly in Eastern Europe. The company's ability to execute on growth opportunities in the U.S., Rural Broadband, Enterprise and India markets will be important for meeting these revised targets.

Market Research Analyst

Ribbon Communications' Q2 results reflect broader industry trends and geopolitical challenges. The suspension of product shipments to Eastern Europe due to the Ukraine conflict highlights the ongoing impact of global events on tech companies' operations.

The company's focus on key growth areas is noteworthy:

• U.S. Tier 1 providers (e.g., Verizon Voice Network modernization)
• Rural Broadband expansion
• Enterprise segment
• Indian market

These sectors align with current market dynamics, including the push for 5G infrastructure, increased demand for robust enterprise communications and the rapid digitalization in emerging markets like India.

The mention of "changes in the competitive landscape" presenting opportunities for share expansion is intriguing. This could be related to industry consolidation or competitors facing challenges, potentially allowing Ribbon to gain market share.

However, the lowered full-year guidance suggests caution. The company's ability to capitalize on these opportunities while navigating global uncertainties will be critical for its performance in the latter half of 2024.

Tech Expert

Ribbon Communications' position as a provider of real-time communications technology and IP optical networking solutions places it at the forefront of critical infrastructure modernization. The company's focus on voice network modernization, as evidenced by the Verizon project, aligns with the industry's shift towards more efficient, IP-based communications systems.

Key technological trends impacting Ribbon's business include:

• The transition from legacy TDM networks to IP-based solutions
• Increased demand for secure, reliable communications in enterprise settings
• The expansion of broadband infrastructure, particularly in rural areas
• The growing importance of IP optical networking in 5G deployments

The company's ability to address these trends will be important for its future growth. The mention of opportunities arising from changes in the competitive landscape suggests that Ribbon may be well-positioned to capitalize on industry shifts, possibly due to its diverse product portfolio spanning both software and hardware solutions.

However, the ongoing challenges in Eastern Europe highlight the need for geographical diversification in Ribbon's technology deployments. The company's focus on growth in India and other markets could help mitigate regional risks and tap into emerging opportunities in rapidly digitalizing economies.

Net income increased 21% and Adjusted EBITDA up 65% in 1H 2024 YoY

Continued improvement in gross margin and lower operating expenses

Expect strong second half based on growth from U.S. Tier 1, Rural Broadband, Enterprise, and India

PLANO, Texas, July 24, 2024 /PRNewswire/ -- Ribbon Communications Inc. (Nasdaq: RBBN), a global provider of real time communications technology and IP optical networking solutions to many of the world's largest service providers, enterprises, and critical infrastructure operators to modernize and protect their networks, today announced its financial results for the second quarter of 2024.

Revenue for the second quarter of 2024 was $193 million, compared to $211 for the second quarter of 2023 and $180 million for the first quarter of 2024. First half 2024 GAAP Loss from Operations improved $26 million year over year to ($15 million), and Non-GAAP Adjusted EBITDA improved $13 million, or 65%, to $33 million. GAAP and Non-GAAP Gross Margin for the second quarter improved 260 and 240 basis points year over year, respectively.

"Earnings increased significantly in the first half of 2024 with Adjusted EBITDA increasing 65% year over year despite lower sales. The improvement in profitability was driven by higher gross margins and lower operating expenses year over year. Revenue in the second quarter was impacted by a large U.S. Federal deal that was delayed to the third quarter. Sales were also lower as we suspended product shipments into Eastern Europe due to the extended war in Ukraine and increased complexities of operating in the region," stated Bruce McClelland, President and Chief Executive Officer of Ribbon Communications.

Mr. McClelland added, "We continue to project a strong second half of 2024 as we ramp the recently announced Verizon Voice Network modernization program and anticipate strong growth in several other areas such as Enterprise, U.S. Rural Broadband, Europe, and India. Recent changes in the competitive landscape also present an opportunity for further share expansion. However, we have adjusted our full year 2024 guidance slightly to reflect a more conservative outlook for the Eastern European region for the rest of the year."

Financial Highlights1
		Three months ended				Six months ended
		June 30,				June 30,
In millions, except per share amounts		2024		2023		2024		2023
GAAP Revenue		$       193		$       211		$       372		$        397
GAAP Net income (loss)		$        (17)		$        (21)		$        (47)		$         (60)
Non-GAAP Net income (loss)		$           9		$           8		$           7		$            5
Non-GAAP Adjusted EBITDA		$         22		$         23		$         33		$          20
GAAP diluted earnings (loss) per share		$     (0.10)		$     (0.13)		$     (0.27)		$      (0.35)
Non-GAAP diluted earnings (loss) per share		$      0.05		$      0.04		$      0.04		$       0.03
Weighted average shares outstanding basic		174		170		173		169
Weighted average shares outstanding diluted		176		175		176		175

1 Please see the reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures and additional information about non-GAAP measures in the section entitled "Discussion of Non-GAAP Financial Measures" in the attached schedules.

"During the second quarter of 2024, we completed the refinancing of our capital structure with a $385 million five-year senior secured credit facility that provides us greater liquidity with less restrictions. Our new strategic banking group relationship with HPS Investment Partners, LLC and WhiteHorse Capital Management, LLC will also give us opportunities to support our future growth needs," said Mick Lopez, Chief Financial Officer of Ribbon Communications. "Additionally, we continue to improve our operations, driving a 240 basis point improvement year over year in gross margins and a $4 million reduction in expenses, resulting in the lowest level of operating expenses since the ECI acquisition in 2020."

Business Outlook¹   
For the third quarter of 2024, the Company expects continued sequential growth in both of our businesses with revenue in a range of $205 million to $220 million. Non-GAAP gross margin is projected in a range of 53% to 53.5%. Adjusted EBITDA is projected in a range of $25 million to $30 million.

The Company has also adjusted full-year 2024 targets and now expects revenue in a range of $830 million to $850 million, non-GAAP gross margin in a range of 54% to 54.5%, and Adjusted EBITDA in a range of $105 million to $115 million.

The Company's outlook is based on current indications for its business, which are subject to change.

1 Please see the reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures and additional information about the non-GAAP measures in the section entitled "Discussion of Non-GAAP Financial Measures" in the attached schedules.

Upcoming Conference Schedule

• August 27, 2024: Evercore ISI 2024 Semiconductor, IT Hardware & Networking Conference
• August 28, 2024: Jefferies Semiconductor, IT Hardware & Communication Technology Summit

About Ribbon
Ribbon Communications (Nasdaq: RBBN) delivers communications software, IP and optical networking solutions to service providers, enterprises and critical infrastructure sectors globally. We engage deeply with our customers, helping them modernize their networks for improved competitive positioning and business outcomes in today's smart, always-on and data-hungry world. Our innovative, end-to-end solutions portfolio delivers unparalleled scale, performance, and agility, including core to edge software-centric solutions, cloud-native offers, leading-edge security and analytics tools, along with IP and optical networking solutions for 5G and broadband internet. We maintain a keen focus on our commitments to Environmental, Social and Governance (ESG) matters, offering an annual Sustainability Report to our stakeholders. To learn more about Ribbon visit rbbn.com.

Important Information Regarding Forward-Looking Statements 
The information in this release contains "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, which are subject to a number of risks and uncertainties.  All statements other than statements of historical facts contained in this release, including without limitation statements regarding the Company's projected financial results for the third quarter of 2024 and beyond; plans and objectives for future operations, including cost reductions; the impact of the wars in Israel and Ukraine; customer spending and engagement and momentum; and plans for future product development and manufacturing and the expected benefits therefrom, are forward-looking statements. Without limiting the foregoing, the words "believes", "estimates", "expects", "expectations", "intends", "may", "plans", "projects" and other similar language, are intended to identify forward-looking statements. 

Forward-looking statements are based on the Company's current expectations and assumptions regarding its business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Actual results may differ materially from those contemplated in these forward-looking statements due to various risks, uncertainties and other important factors, including, among others, the effects of geopolitical instabilities and wars, including in Israel and Ukraine (and the impact of sanctions and trade restrictions imposed as a result thereof); unpredictable fluctuations in quarterly revenue and operating results; increases in tariffs, trade restrictions or taxes on the Company's products; the impact of restructuring and cost-containment activities; operational disruptions at facilities located in Israel including as a result of military call-ups of the Company's employees in Israel, closure of the offices there or the temporary or long-term closure of contract manufacturing in the region; the potential impact of litigation; risks related to supply chain disruptions, including as a result of component availability; risks resulting from higher interests rates and continued inflationary pressures; risks related to cybersecurity and data intrusion; failure to compete successfully against telecommunications equipment and networking companies; failure to grow the Company's customer base or generate recurring business from existing customers; credit risks; the timing of customer purchasing decisions and the Company's recognition of revenues; macroeconomic conditions, including inflation; market acceptance of the Company's products and services; rapid technological and market change; the ability to protect Company intellectual property rights and obtain necessary licenses; the ability to maintain partner, reseller, distribution and vendor support and supply relationships; the potential for defects in the Company's products; and currency fluctuations.

These factors are not intended to be an all-encompassing list of risks and uncertainties that may affect the Company's business and results from operations. Additional information regarding these and other factors can be found in the Company's reports filed with the Securities and Exchange Commission, including, without limitation, its Form 10-K for the year ended December 31, 2023 and its Form 10-Q for the quarter ended March 31, 2024. In providing forward-looking statements, the Company expressly disclaims any obligation to update these statements publicly or otherwise, whether as a result of new information, future events or otherwise, except as required by law.

Discussion of Non-GAAP Financial Measures
The Company's management uses several different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of its business, making operating decisions, planning and forecasting future periods, and determining payments under compensation programs. The Company considers the use of non-GAAP financial measures helpful in assessing the core performance of its continuing operations and when planning and forecasting future periods. The Company's annual financial plan is prepared on a non-GAAP basis and is approved by its board of directors. In addition, budgeting and forecasting for revenue and expenses are conducted on a non-GAAP basis, and actual results on a non-GAAP basis are assessed against the annual financial plan. The Company defines continuing operations as the ongoing results of its business adjusted for certain expenses and credits, as described below. The Company believes that providing non-GAAP information to investors allows them to view the Company's financial results in the way its management views them and helps investors to better understand the Company's core financial and operating performance and evaluate the efficacy of the methodology and information used by its management to evaluate and measure such performance.

While the Company's management uses non-GAAP financial measures as tools to enhance its understanding of certain aspects of the Company's financial performance, management does not consider these measures to be a substitute for, or superior to, GAAP measures. In addition, the Company's presentations of these measures may not be comparable to similarly titled measures used by other companies. These non-GAAP financial measures should not be considered alternatives for, or in isolation from, the financial information prepared and presented in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures. In particular, many of the adjustments to the Company's financial measures reflect the exclusion of items that are recurring and will be reflected in its financial results for the foreseeable future.

Stock-Based Compensation
The expense related to stock-based awards is generally not controllable in the short-term and can vary significantly based on the timing, size and nature of awards granted. The Company believes that presenting non-GAAP operating results that exclude stock-based compensation provides investors with visibility and insight into its management's method of analysis and its core operating performance.

Amortization of Acquired Technology (including software licenses); Amortization of Acquired Intangible Assets
Amortization amounts are inconsistent in frequency and amount and are significantly impacted by the timing and size of acquisitions. Amortization of acquired technology is reported separately within Cost of revenue and Amortization of acquired intangible assets is reported separately within Operating expenses. These items are reported collectively as Amortization of acquired intangible assets in the accompanying reconciliations of non-GAAP and GAAP financial measures. The Company believes that excluding non-cash amortization of these intangible assets facilitates the comparison of its financial results to its historical operating results and to other companies in its industry as if the acquired intangible assets had been developed internally rather than acquired.

Litigation Costs
In connection with certain ongoing contract litigation where Ribbon is the defendant (as described in Note 26 to the Company's Consolidated Financial Statements included in its Annual Report on Form 10-K for the year ended December 31, 2023), the Company has incurred litigation costs beginning in 2023. These costs are included as a component of general and administrative expense. The Company believes that such costs are not part of its core business or ongoing operations, are unplanned and generally not within its control.  Accordingly, the Company believes that excluding the litigation costs related to these specific legal matters facilitates the comparison of the Company's financial results to its historical operating results and to other companies in its industry.

Acquisition-, Disposal- and Integration-Related
The Company considers certain acquisition-, disposal- and integration-related costs to be unrelated to the organic continuing operations of the Company and its acquired businesses. Such costs are generally not relevant to assessing or estimating the long-term performance of the acquired assets. The Company excludes such acquisition-, disposal- and integration-related costs to allow more accurate comparisons of its financial results to its historical operations and the financial results of less acquisitive peer companies and allows management and investors to consider the ongoing operations of the business both with and without such expenses. 

Restructuring and Related
The Company has recorded restructuring and related expense to streamline operations and reduce operating costs by closing and consolidating certain facilities and reducing its worldwide workforce. The Company believes that excluding restructuring and related expense facilitates the comparison of its financial results to its historical operating results and to other companies in its industry, as there are no future revenue streams or other benefits associated with these costs. 

Preferred Stock and Warrant Liability Mark-to-Market Adjustment
The Company recorded adjustments to the fair value of its Series A Preferred Stock and Warrants to purchase shares of the Company's common stock in Other (expense) income, net. Both of these instruments were issued in March 2023 in connection with the Company's private placement and have been classified as liabilities and marked to market each reporting period until the Series A Preferred Stock was fully redeemed on June 25, 2024. The Warrant liability remains outstanding and will continue to be marked to market each reporting period. The Company excluded these gains and losses from the change in the fair value of these liabilities because it believes that such gains or losses were not part of its core business or ongoing operations.

Tax Effect of Non-GAAP Adjustments
The Non-GAAP income tax provision is presented based on an estimated tax rate applied against forecasted annual non-GAAP income. The Non-GAAP income tax provision assumes no available net operating losses or valuation allowances for the U.S. because of reporting significant cumulative non-GAAP income over the past several years. The Company is reporting its non-GAAP quarterly income taxes by computing an annual rate for the Company and applying that single rate (rather than multiple rates by jurisdiction) to its consolidated quarterly results. The Company expects that this methodology will provide a consistent rate throughout the year and allow investors to better understand the impact of income taxes on its results. Due to the methodology applied to its estimated annual tax rate, the Company's estimated tax rate on non-GAAP income will differ from its GAAP tax rate and from its actual tax liabilities.

Adjusted EBITDA
The Company uses Adjusted EBITDA as a supplemental measure to review and assess its performance. The Company calculates Adjusted EBITDA by excluding from income (loss) from operations: depreciation; stock-based compensation; amortization of acquired intangible assets; certain litigation costs; acquisition-, disposal- and integration-related expense; and restructuring and related expense. In general, the Company excludes the expenses that it considers to be non-cash and/or not a part of its ongoing operations. The Company may exclude other items in the future that have those characteristics. Adjusted EBITDA is a non-GAAP financial measure that is used by the investing community for comparative and valuation purposes. The Company discloses this metric to support and facilitate dialogue with research analysts and investors. Other companies may calculate Adjusted EBITDA differently than the Company does, limiting its usefulness as a comparative measure.

Conference Call Details:
Conference call to discuss the Company's financial results for the second quarter ended June 30, 2024.

Date: Wednesday, July 24, 2024
Time: 4:30 p.m. (ET)

Dial-In Information:
US/Canada: 877-407-2991
International: 201-389-0925
Instant Telephone Access: Call me™  

A telephone playback of the call will be available following the conference call until August 7, 2024 and can be accessed by calling 877-660-6853 or 201-612-7415 for international callers. The reservation number for the replay is 13747581.

Live (Listen-Only) Webcast:
Available via the Investor Relations website, where a replay will also be available shortly following the conference call.

For more details on financial results, please visit investors.ribboncommunications.com.

Investor Relations
+1 (978) 614-8050
ir@rbbn.com  

Media Contact
Catherine Berthier
+1 (646) 741-1974
cberthier@rbbn.com  

 

RIBBON COMMUNICATIONS INC.
Consolidated Statements of Operations
(in thousands, except percentages and per share amounts)
(unaudited)
				Three months ended
				June 30,		March 31,		June 30,
				2024		2024		2023
Revenue:
	Product			$  99,133		$  87,610		$ 117,347
	Service			93,487		92,054		93,271
		Total revenue		192,620		179,664		210,618
Cost of revenue:
	Product			54,845		45,794		67,927
	Service			33,376		35,364		33,782
	Amortization of acquired technology			6,532		6,551		7,439
		Total cost of revenue		94,753		87,709		109,148
Gross profit				97,867		91,955		101,470
Gross margin				50.8 %		51.2 %		48.2 %
Operating expenses:
	Research and development			43,489		45,763		47,776
	Sales and marketing			32,984		34,716		33,905
	General and administrative			14,901		15,191		14,346
	Amortization of acquired intangible assets			6,508		6,706		7,260
	Acquisition-, disposal- and integration-related			-		-		498
	Restructuring and related			1,920		3,065		4,307
		Total operating expenses		99,802		105,441		108,092
Income (loss) from operations				(1,935)		(13,486)		(6,622)
Interest expense, net				(3,879)		(5,987)		(6,766)
Other (expense) income, net				(9,503)		(7,513)		(2,688)
Income (loss) before income taxes				(15,317)		(26,986)		(16,076)
Income tax benefit (provision)				(1,499)		(3,375)		(5,403)
Net income (loss)				$(16,816)		$(30,361)		$ (21,479)
Income (loss) per share:
	Basic			$    (0.10)		$    (0.18)		$     (0.13)
	Diluted			$    (0.10)		$    (0.18)		$     (0.13)
Weighted average shares used to compute income (loss) per share:
	Basic			173,793		172,428		170,103
	Diluted			173,793		172,428		170,103

 

RIBBON COMMUNICATIONS INC.
Consolidated Statements of Operations
(in thousands, except percentages and per share amounts)
(unaudited)
				Six months ended
				June 30,		June 30,
				2024		2023
Revenue:
	Product			$ 186,743		$ 210,665
	Service			185,541		186,112
		Total revenue		372,284		396,777
Cost of revenue:
	Product			100,639		129,990
	Service			68,740		69,087
	Amortization of acquired technology			13,083		14,828
		Total cost of revenue		182,462		213,905
Gross profit				189,822		182,872
Gross margin				51.0 %		46.1 %
Operating expenses:
	Research and development			89,252		99,080
	Sales and marketing			67,700		69,304
	General and administrative			30,092		28,391
	Amortization of acquired intangible assets			13,214		14,524
	Acquisition-, disposal- and integration-related			-		2,140
	Restructuring and related			4,985		11,244
		Total operating expenses		205,243		224,683
Income (loss) from operations				(15,421)		(41,811)
Interest expense, net				(9,866)		(13,188)
Other (expense) income, net				(17,016)		2,084
Income (loss) before income taxes				(42,303)		(52,915)
Income tax benefit (provision)				(4,874)		(6,869)
Net income (loss)				$ (47,177)		$ (59,784)
Income (loss) per share:
	Basic			$     (0.27)		$     (0.35)
	Diluted			$     (0.27)		$     (0.35)
Weighted average shares used to compute income (loss) per share:
	Basic			173,110		169,326
	Diluted			173,110		169,326

 

RIBBON COMMUNICATIONS INC.
Consolidated Balance Sheets
(in thousands)
(unaudited)
				June 30,		December 31,
				2024		2023
Assets
Current assets:
	Cash and cash equivalents			$      64,558		$       26,494
	Restricted cash			2,850		136
	Accounts receivable, net			210,954		268,421
	Inventory			79,216		77,521
	Other current assets			46,576		46,146
		Total current assets		404,154		418,718
Property and equipment, net				40,824		41,820
Intangible assets, net				212,052		238,087
Goodwill				300,892		300,892
Deferred income taxes				78,067		69,761
Operating lease right-of-use assets				33,901		39,783
Other assets				35,562		35,092
				$ 1,105,452		$  1,144,153
Liabilities and Stockholders' Equity
Current liabilities:
	Current portion of term debt			$        3,500		$       35,102
	Accounts payable			64,333		85,164
	Accrued expenses and other			92,847		91,687
	Operating lease liabilities			12,347		15,739
	Deferred revenue			99,547		113,381
		Total current liabilities		272,574		341,073
Long-term debt, net of current				333,979		197,482
Warrant liability				6,170		5,295
Preferred stock liability				-		53,337
Operating lease liabilities, net of current				34,858		38,711
Deferred revenue, net of current				16,632		19,218
Deferred income taxes				5,616		5,616
Other long-term liabilities				30,601		30,658
			Total liabilities	700,430		691,390
Commitments and contingencies
Stockholders' equity:
	Common stock			17		17
	Additional paid-in capital			1,964,304		1,958,909
	Accumulated deficit			(1,567,127)		(1,519,950)
	Accumulated other comprehensive income			7,828		13,787
			Total stockholders' equity	405,022		452,763
				$ 1,105,452		$  1,144,153

 

RIBBON COMMUNICATIONS INC.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
					Six months ended
					June 30,		June 30,
					2024		2023
Cash flows from operating activities:
	Net loss				$  (47,177)		$  (59,784)
	Adjustments to reconcile net income (loss) to cash flows provided by (used in) operating activities:
		Depreciation and amortization of property and equipment			6,770		7,059
		Amortization of intangible assets			26,297		29,352
		Amortization of debt issuance costs and original issue discount			3,445		1,793
		Amortization of accumulated other comprehensive gain related to interest rate swap			(8,196)		(2,062)
		Stock-based compensation			8,016		11,964
		Deferred income taxes			(8,104)		(6,946)
		Gain on sale of swap			-		(7,301)
		Change in fair value of warrant liability			875		(1,318)
		Change in fair value of preferred stock liability			8,091		1,456
		Dividends accrued on preferred stock liability			2,743		1,272
		Payment of dividends accrued on preferred stock liability			(6,686)		-
		Foreign currency exchange (gains) losses			2,023		(1,080)
		Changes in operating assets and liabilities:
			Accounts receivable		56,146		21,534
			Inventory		(4,405)		(2,221)
			Other operating assets		8,854		13,486
			Accounts payable		(20,541)		(1,740)
			Accrued expenses and other long-term liabilities		(8,407)		2,343
			Deferred revenue		(16,422)		767
				Net cash provided by (used in) operating activities	3,322		8,574
Cash flows from investing activities:
	Purchases of property and equipment				(5,613)		(4,091)
	Purchases of software licenses				(263)		-
				Net cash provided by (used in) investing activities	(5,876)		(4,091)
Cash flows from financing activities:
	Borrowings under revolving line of credit				44,106		30,000
	Principal payments on revolving line of credit				(44,106)		(30,000)
	Proceeds from issuance of term debt				342,300		-
	Principal payments of term debt				(235,395)		(85,029)
	Payment of debt issuance costs				(3,978)		(1,572)
	Proceeds from issuance of preferred stock and warrant liabilities				-		53,350
	Payment of preferred stock liability				(56,850)		-
	Proceeds from the exercise of stock options				17		2
	Payment of tax obligations related to vested stock awards and units				(2,638)		(3,456)
				Net cash provided by (used in) financing activities	43,456		(36,705)
Effect of exchange rate changes on cash and cash equivalents					(124)		(394)
Net increase (decrease) in cash and cash equivalents					40,778		(32,616)
Cash and cash equivalents, beginning of year					26,630		67,262
Cash and cash equivalents, end of period					$    67,408		$    34,646

 

RIBBON COMMUNICATIONS INC.
Supplemental Information
(in thousands)
(unaudited)
The following tables provide the details of stock-based compensation included as components of other line items in the Company's Consolidated Statements of Operations and the line items in which these amounts are reported.
				Three months ended						Six months ended
				June 30,		March 31,		June 30,		June 30,		June 30,
				2024		2024		2023		2024		2023
Stock-based compensation
Cost of revenue - product				$        64		$        106		$      115		$      170		$       264
Cost of revenue - service				274		472		526		746		1,061
	Cost of revenue			338		578		641		916		1,325
Research and development				616		1,068		1,300		1,684		2,562
Sales and marketing				954		1,157		2,142		2,111		4,271
General and administrative				1,586		1,719		2,033		3,305		3,806
	Operating expense			3,156		3,944		5,475		7,100		10,639
		Total stock-based compensation		$   3,494		$     4,522		$   6,116		$   8,016		$  11,964

 

RIBBON COMMUNICATIONS INC.
Reconciliation of Non-GAAP and GAAP Financial Measures
(in thousands, except per share amounts)
(unaudited)
	Three months ended
	June 30,		March 31,		June 30,
	2024		2024		2023
GAAP Gross margin	50.8 %		51.2 %		48.2 %
Stock-based compensation	0.2 %		0.3 %		0.3 %
Amortization of acquired technology	3.4 %		3.6 %		3.5 %
Non-GAAP Gross margin	54.4 %		55.1 %		52.0 %
GAAP Net income (loss)	$(16,816)		$(30,361)		$(21,479)
Stock-based compensation	3,494		4,522		6,116
Amortization of acquired intangible assets	13,040		13,257		14,699
Litigation costs	1,768		951		114
Acquisition-, disposal- and integration-related	-		-		498
Restructuring and related	1,920		3,065		4,307
Preferred stock and warrant liability mark-to-market adjustment	8,210		3,499		1,410
Tax effect of non-GAAP adjustments	(3,095)		3,971		2,083
Non-GAAP Net income (loss)	$   8,521		$  (1,096)		$   7,748
GAAP Diluted earnings (loss) per share	$    (0.10)		$    (0.18)		$    (0.13)
Stock-based compensation	0.02		0.03		0.03
Amortization of acquired intangible assets	0.08		0.07		0.09
Litigation costs	0.01		0.01		*
Acquisition-, disposal- and integration-related	-		-		0.01
Restructuring and related	0.01		0.02		0.02
Preferred stock and warrant liability mark-to-market adjustment	0.05		0.02		0.01
Tax effect of non-GAAP adjustments	(0.02)		0.02		0.01
Non-GAAP Diluted earnings (loss) per share	$     0.05		$    (0.01)		$     0.04
Weighted average shares used to compute diluted earnings (loss) per share
Shares used to compute GAAP diluted earnings (loss) per share	173,793		172,428		170,103
Shares used to compute Non-GAAP diluted earnings (loss) per share	176,246		172,428		175,220
GAAP Income (loss) from operations	$  (1,935)		$(13,486)		$  (6,622)
Depreciation	3,376		3,394		3,549
Stock-based compensation	3,494		4,522		6,116
Amortization of acquired intangible assets	13,040		13,257		14,699
Litigation costs	1,768		951		114
Acquisition-, disposal- and integration-related	-		-		498
Restructuring and related	1,920		3,065		4,307
Non-GAAP Adjusted EBITDA	$  21,663		$  11,703		$  22,661
* Less than $0.01 impact on earnings (loss) per share.

 

RIBBON COMMUNICATIONS INC.
Reconciliation of Non-GAAP and GAAP Financial Measures
(in thousands, except per share amounts)
(unaudited)
	Six months ended
	June 30,		June 30,
	2024		2023
GAAP Gross Margin	51.0 %		46.1 %
Stock-based compensation	0.2 %		0.3 %
Amortization of acquired technology	3.5 %		3.8 %
Non-GAAP Gross Margin	54.7 %		50.2 %
GAAP Net income (loss)	$(47,177)		$(59,784)
Stock-based compensation	8,016		11,964
Amortization of acquired intangible assets	26,297		29,352
Litigation costs	2,719		291
Acquisition-, disposal- and integration-related	-		2,140
Restructuring and related	4,985		11,244
Preferred stock and warrant liability mark-to-market adjustment	11,709		1,410
Preferred stock and warrant liability issuance costs	-		3,545
Tax effect of non-GAAP adjustments	876		4,759
Non-GAAP Net income (loss)	$    7,425		$    4,921
GAAP Diluted earnings (loss) per share	$     (0.27)		$    (0.35)
Stock-based compensation	0.05		0.07
Amortization of acquired intangible assets	0.14		0.18
Litigation costs	0.02		*
Acquisition-, disposal- and integration-related	-		0.01
Restructuring and related	0.03		0.06
Preferred stock and warrant liability mark-to-market adjustment	0.07		0.01
Preferred stock and warrant liability issuance costs	-		0.02
Tax effect of non-GAAP adjustments	*		0.03
Non-GAAP Diluted earnings (loss) per share	$      0.04		$      0.03
Weighted average shares used to compute diluted earnings per share
Shares used to compute GAAP diluted loss per share	173,110		169,326
Shares used to compute Non-GAAP diluted earnings per share	175,784		175,359
GAAP Income (loss) from operations	$(15,421)		$(41,811)
Depreciation	6,770		7,059
Stock-based compensation	8,016		11,964
Amortization of acquired intangible assets	26,297		29,352
Litigation costs	2,719		291
Acquisition-, disposal- and integration-related	-		2,140
Restructuring and related	4,985		11,244
Non-GAAP Adjusted EBITDA	$  33,366		$  20,239
* Less than $0.01 impact on earnings (loss) per share.

 

RIBBON COMMUNICATIONS INC.
Reconciliation of Non-GAAP and GAAP Financial Measures
(in thousands)
(unaudited)
	Trailing Twelve Months
	June 30,		March 31,		June 30,
	2024		2024		2023
GAAP Income (loss) from operations	$     2,105		$     (2,582)		$(43,842)
Depreciation	13,816		13,989		14,581
Stock-based compensation	17,858		20,480		22,017
Amortization of acquired intangible assets	53,836		55,495		59,597
Litigation costs	3,735		2,081		291
Acquisition-, disposal- and integration-related	2,336		2,834		5,042
Restructuring and related	9,950		12,337		14,369
Non-GAAP Adjusted EBITDA	$ 103,636		$  104,634		$  72,055

 

RIBBON COMMUNICATIONS INC.
Reconciliation of Non-GAAP and GAAP Financial Measures - Outlook
(unaudited)
			Three months ending					Year ending
			September 30, 2024					December 31, 2024
			Midpoint (1)			Range		Midpoint (1)		Range
Revenue ($ millions)			$     212.5			+/- $7.5M		$        840		+/- $10M
Gross margin:
	GAAP outlook		50.09 %					51.07 %
	Stock-based compensation		0.26 %					0.24 %
	Amortization of acquired technology		2.90 %					2.94 %
		Non-GAAP outlook	53.25 %			+/- 0.25%		54.25 %		+/- 0.25%
Adjusted EBITDA ($ millions):
	GAAP income (loss) from operations		$         3.0					$         5.9
	Depreciation		3.8					14.4
	Stock-based compensation		4.7					17.2
	Amortization of acquired intangible assets		12.8					50.9
	Litigation costs		0.9					4.6
	Restructuring and related		2.3					17.0
		Non-GAAP outlook	$       27.5			+/- $2.5M		$     110.0		+/- $5M
	(1) Q3 2024 and FY 2024 outlook represents the midpoint of the expected ranges

 

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SOURCE Ribbon Communications Inc.

FAQ

What was Ribbon Communications' (RBBN) revenue for Q2 2024?

Ribbon Communications (RBBN) reported revenue of $193 million for Q2 2024, compared to $211 million in Q2 2023.

How did Ribbon's (RBBN) Adjusted EBITDA perform in the first half of 2024?

Ribbon's (RBBN) Adjusted EBITDA improved by 65% to $33 million in the first half of 2024 compared to the same period in 2023.

What is Ribbon Communications' (RBBN) updated revenue guidance for full-year 2024?

Ribbon Communications (RBBN) adjusted its full-year 2024 revenue guidance to a range of $830 million to $850 million.

How did Ribbon's (RBBN) gross margin perform in Q2 2024?

Ribbon's (RBBN) GAAP and Non-GAAP Gross Margin for Q2 2024 improved by 260 and 240 basis points year-over-year, respectively.