Ribbon Communications Inc. Reports Third Quarter 2023 Financial Results

Rhea-AI Summary

Ribbon Communications reports Q3 financial results, with revenue of $203 million. IP Optical Networks sales up 14% YTD. Company expects positive Non-GAAP Adjusted EBITDA for IP Optical Networks segment in Q4.

Positive

• IP Optical Networks sales up 14% YTD
• Positive Non-GAAP Adjusted EBITDA expected for IP Optical Networks segment in Q4

Negative

• EMEA region IP Optical Networks sales approximately 20% lower in Q3

Projecting significant improvement in full year company profitability 

IP Optical Networks Sales up 14% Year to Date – on track to achieve profitability in Fourth Quarter 2023

PLANO, Texas, Oct. 25, 2023 /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 third quarter of 2023.

Revenue for the third quarter of 2023 was $203 million, compared to $207 million for the third quarter of 2022 and $211 million for the second quarter of 2023.

"Ribbon delivered solid earnings in the third quarter as GAAP Income from Operations improved by $4 million and Non-GAAP Adjusted EBITDA increased 21% year over year. IP Optical Networks sales have increased 14% year-to-date and were up 6% in the third quarter with approximately 50% sales growth in India, the U.S., and Japan. However, IP Optical Networks sales in the EMEA region were approximately 20% lower in the quarter. Strategically, we went into live commercial service with our Neptune IP Router at a U.S. Tier One Service Provider this quarter. Cloud & Edge sales were lower primarily due to reduced spending from U.S. Tier One Service Providers, offset by additional voice modernization sales to U.S. Federal agencies," stated Bruce McClelland, President and Chief Executive Officer of Ribbon Communications.

"For the fourth quarter, we anticipate a strong finish to the year led by sequential growth in both the IP Optical Networks and Cloud & Edge segments. We expect to achieve our goal of positive Non-GAAP Adjusted EBITDA for the IP Optical Networks segment in the fourth quarter," continued Mr. McClelland.

Financial Highlights1
		Three months ended				Nine months ended
		September 30,				September 30,
In millions, except per share amounts		2023		2022		2023		2022
GAAP Revenue		$           203		$           207		$           600		$           586
GAAP Net income (loss)		$            (14)		$            (18)		$            (73)		$          (119)
Non-GAAP Net income (loss)		$                9		$                4		$              14		$                2
Non-GAAP Adjusted EBITDA		$              28		$              23		$              48		$              35
GAAP diluted earnings (loss) per share		$        (0.08)		$        (0.12)		$        (0.43)		$        (0.78)
Non-GAAP diluted earnings (loss) per share		$          0.05		$          0.02		$          0.08		$          0.01
Weighted average shares outstanding basic		171		159		170		153
Weighted average shares outstanding diluted		176		163		176		157

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.

"Our strong Adjusted EBITDA of $28 million for the third quarter 2023, or 14% of revenue, was driven by improved margins and continued spending controls. Gross margins increased for both segments due to positive mix and lower product royalties and costs," said Mick Lopez, Chief Financial Officer of Ribbon Communications. "We believe the continued sales growth and improving margins in IP Optical Networks, combined with continued solid performance from the Cloud & Edge segment, will result in an approximately 40% overall improvement in consolidated profitability for the full year."

Business Outlook¹  
For the fourth quarter of 2023, the Company projects revenue of $230 million to $240 million, Non-GAAP gross margin is projected in a range of 54.5% to 55.5%, and Adjusted EBITDA is projected in a range of $40 million to $46 million.  The current outlook assumes no worsening of geopolitical conditions and related sanctions activities in regions that the Company operates in, including the ongoing wars in Israel and Ukraine. The Company does not anticipate a significant impact to ongoing operations in Israel as a result of the war.

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

• November 14, 2023: 17th Annual Needham Virtual Security, Networking, & Communications Conference
• November 16, 2023: Craig-Hallum 14th Annual Alpha Select Conference
• January 17-18, 2024: 26th Annual Needham Growth Conference

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. 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 fourth quarter of 2023 and beyond; the impact of the wars in Israel and Ukraine; customer engagement and momentum; plans and objectives for future operations, including cost reductions; capital structure changes 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); 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 that the Company will not realize the estimated cost savings and/or anticipated benefits from its strategic restructuring efforts; the impact of restructuring and cost-containment activities; unpredictable fluctuations in quarterly revenue and operating results; risks related to the terms of the Company's credit agreement including compliance with the financial covenants; risks resulting from rising interests rates and 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; increases in tariffs, trade restrictions or taxes on 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, 2022 and its Form 10-Q for the quarter ended June 30, 2023. 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 will allow investors to view the 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, its 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 a certain ongoing contract litigation where Ribbon is defendant (as described in Note 25 to the Company's Consolidated Financial Statements included in its Annual Report on Form 10-K for the year ended December 31, 2022), the Company has incurred litigation costs beginning in the first quarter of 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 this specific legal matter 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 its acquired businesses and the Company. 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.

Decrease in Fair Value of Investments
The Company calculated the fair values of the debentures (the "Debentures") and the warrants to purchase shares of AVCT common stock (the "AVCT Warrants") it received as consideration in connection with the Kandy Sale (prior to September 8, 2021) and the 13,700,421 shares of AVCT common stock received upon the conversion of the Debentures and AVCT Warrants (effective September 8, 2021) and at each quarter-end until their disposal on August 29, 2022 when they were used as partial consideration in connection with the Company's acquisition of perpetual software licenses from AVCT. The Company recorded any adjustments to their fair values in Other (expense) income, net. The Company excluded these gains and losses from the change in fair value of this investment because it believes that such gains or losses were not part of its core business or ongoing operations.

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 in Other (expense) income, net. Both instruments issued in March 2023 are classified as liabilities and 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.

Preferred Stock and Warrant Liability Issuance Costs
The Company incurred $3.5 million of investment banking, advisory and legal fees in its March 2023 Private Placement of Series A Preferred Stock and warrants to purchase shares of the Company's common stock, both of which are classified by the Company as liabilities that are marked to market each reporting period. The Company excludes these issuance costs to allow more accurate comparisons of its financial results to its historical operations and the financial results of other companies in its industry, and it allows management and investors to consider the ongoing operations of the business both with and without such expenses.

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; impairment of goodwill; acquisition-, disposal- and integration-related expense; certain litigation costs; and restructuring and related expense. In general, the Company excludes the expenses that it considers to be non-cash and/or not 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 third quarter ended September 30, 2023 on October 25, 2023, via the investor section of its website at investors.ribboncommunications.com, where a replay will also be available shortly following the conference call.

Conference Call Details: 
Date: October 25, 2023
Time: 4:30 p.m. (ET)
Dial-in number (USA): 877-407-2991
Dial-in number (Intl): 201-389-0925
Instant Telephone Access:  Call me™ 

Replay information:
A telephone playback of the call will be available following the conference call until November 8, 2023 and can be accessed by calling 877-660-6853 or 201-612-7415 for international callers. The reservation number for the replay is 13741778.

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
				September 30,		June 30,		September 30,
				2023		2023		2022
Revenue:
	Product			$          108,501		$                117,347		$          111,152
	Service			94,660		93,271		95,975
		Total revenue		203,161		210,618		207,127
Cost of revenue:
	Product			59,436		67,927		59,866
	Service			33,065		33,782		35,175
	Amortization of acquired technology			7,157		7,439		7,768
		Total cost of revenue		99,658		109,148		102,809
Gross profit				103,503		101,470		104,318
Gross margin				50.9 %		48.2 %		50.4 %
Operating expenses:
	Research and development			46,229		47,776		49,366
	Sales and marketing			32,795		33,905		36,365
	General and administrative			12,885		14,346		12,118
	Amortization of acquired intangible assets			7,216		7,260		7,508
	Acquisition-, disposal- and integration-related			842		498		988
	Restructuring and related			2,680		4,307		1,269
		Total operating expenses		102,647		108,092		107,614
Income (loss) from operations				856		(6,622)		(3,296)
Interest expense, net				(7,143)		(6,766)		(5,266)
Other expense, net				(2,620)		(2,688)		(3,732)
Loss before income taxes				(8,907)		(16,076)		(12,294)
Income tax provision				(4,594)		(5,403)		(6,122)
Net loss				$           (13,501)		$                 (21,479)		$           (18,416)
Loss per share:
	Basic			$               (0.08)		$                     (0.13)		$               (0.12)
	Diluted			$               (0.08)		$                     (0.13)		$               (0.12)
Weighted average shares used to compute loss per share:
	Basic			171,190		170,103		158,921
	Diluted			171,190		170,103		158,921

 

RIBBON COMMUNICATIONS INC. Consolidated Statements of Operations (in thousands, except percentages and per share amounts) (unaudited)
				Nine months ended
				September 30,		September 30,
				2023		2022
Revenue:
	Product			$          319,166		$          305,809
	Service			280,772		280,312
		Total revenue		599,938		586,121
Cost of revenue:
	Product			189,426		169,226
	Service			102,152		106,049
	Amortization of acquired technology			21,985		23,923
		Total cost of revenue		313,563		299,198
Gross profit				286,375		286,923
Gross margin				47.7 %		49.0 %
Operating expenses:
	Research and development			145,309		153,159
	Sales and marketing			102,099		109,827
	General and administrative			41,276		37,881
	Amortization of acquired intangible assets			21,740		22,296
	Acquisition-, disposal- and integration-related			2,982		4,372
	Restructuring and related			13,924		8,977
		Total operating expenses		327,330		336,512
Loss from operations				(40,955)		(49,589)
Interest expense, net				(20,331)		(13,869)
Other expense, net				(536)		(42,760)
Loss before income taxes				(61,822)		(106,218)
Income tax provision				(11,463)		(12,353)
Net loss				$           (73,285)		$         (118,571)
Loss per share
	Basic			$               (0.43)		$               (0.78)
	Diluted			$               (0.43)		$               (0.78)
Weighted average shares used to compute loss per share:
	Basic			169,955		152,795
	Diluted			169,955		152,795

 

RIBBON COMMUNICATIONS INC. Consolidated Balance Sheets (in thousands) (unaudited)
				September 30,		December 31,
				2023		2022
Assets
Current assets:
	Cash and cash equivalents			$            24,501		$            67,262
	Accounts receivable, net			242,183		267,244
	Inventory			70,184		75,423
	Other current assets			53,620		68,057
		Total current assets		390,488		477,986
Property and equipment, net				42,319		44,832
Intangible assets, net				251,053		294,728
Goodwill				300,892		300,892
Deferred income taxes				63,422		53,649
Operating lease right-of-use assets				39,167		44,888
Other assets				34,274		38,589
				$       1,121,615		$       1,255,564
Liabilities and Stockholders' Equity
Current liabilities:
	Current portion of term debt			$            30,087		$            20,058
	Revolving credit facility			10,000		-
	Accounts payable			73,873		95,810
	Accrued expenses and other			89,076		85,270
	Operating lease liabilities			14,901		15,416
	Deferred revenue			107,536		113,939
		Total current liabilities		325,473		330,493
Long-term debt, net of current				206,908		306,270
Warrant liability				5,052		-
Preferred stock liability				49,855		-
Operating lease liabilities, net of current				38,282		46,183
Deferred revenue, net of current				17,865		19,254
Deferred income taxes				3,729		3,750
Other long-term liabilities				30,523		31,187
			Total liabilities	677,687		737,137
Commitments and contingencies
Stockholders' equity:
	Common stock			17		17
	Additional paid-in capital			1,954,586		1,941,569
	Accumulated deficit			(1,527,029)		(1,453,744)
	Accumulated other comprehensive income			16,354		30,585
			Total stockholders' equity	443,928		518,427
				$       1,121,615		$       1,255,564

 

RIBBON COMMUNICATIONS INC.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
					Nine months ended
					September 30,		September 30,
					2023		2022
Cash flows from operating activities:
	Net loss				$             (73,285)		$           (118,571)
	Adjustments to reconcile net loss to cash flows used in operating activities:
		Depreciation and amortization of property and equipment			10,603		11,688
		Amortization of intangible assets			43,725		46,219
		Amortization of debt issuance costs			2,517		1,697
		Amortization of accumulated other comprehensive gain related to interest rate swap			(3,818)		-
		Stock-based compensation			16,914		13,495
		Deferred income taxes			(3,617)		(19,071)
		Realized gain on swap sale			(7,301)		-
		Decrease in fair value of investments			-		41,291
		Change in fair value of warrant liability			(444)		-
		Change in fair value of preferred stock liability			(572)		-
		Dividends accrued on preferred stock liability			2,573		-
		Foreign currency exchange loss			1,174		830
		Changes in operating assets and liabilities:
			Accounts receivable		31,345		44,604
			Inventory		(4,327)		(24,002)
			Other operating assets		27,785		6,066
			Accounts payable		(22,276)		(22,311)
			Accrued expenses and other long-term liabilities		(16,255)		(6,983)
			Deferred revenue		(7,793)		(17,414)
				Net cash used in operating activities	(3,052)		(42,462)
Cash flows from investing activities:
	Purchases of property and equipment				(6,620)		(9,744)
	Purchases of software licenses				-		(3,300)
				Net cash used in investing activities	(6,620)		(13,044)
Cash flows from financing activities:
	Borrowings under revolving line of credit				67,000		58,625
	Principal payments on revolving line of credit				(57,000)		(58,625)
	Principal payments of term debt				(90,044)		(40,044)
	Principal payments of finance leases				-		(433)
	Payment of debt issuance costs				(1,572)		(1,046)
	Proceeds from equity offering				-		52,067
	Payment of equity offering issuance costs				-		(1,654)
	Proceeds from issuance of preferred stock and warrant liabilities				53,350		-
	Proceeds from the exercise of stock options				15		1
	Payment of tax withholding obligations related to net share settlements of restricted stock awards				(3,912)		(2,684)
				Net cash (used in) provided by financing activities	(32,163)		6,207
Effect of exchange rate changes on cash and cash equivalents					(926)		(1,251)
Net decrease in cash and cash equivalents					(42,761)		(50,550)
Cash and cash equivalents, beginning of year					67,262		106,485
Cash and cash equivalents, end of period					$               24,501		$               55,935

 

		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						Nine months ended
				September 30,		June 30,		September 30,		September 30,		September 30,
				2023		2023		2022		2023		2022
Stock-based compensation
Cost of revenue - product				$               121		$               115		$               133		$               385		$               339
Cost of revenue - service				536		526		592		1,597		1,567
	Cost of revenue			657		641		725		1,982		1,906
Research and development				1,259		1,300		1,289		3,821		3,735
Sales and marketing				1,402		2,142		1,567		5,673		4,418
General and administrative				1,632		2,033		1,260		5,438		3,436
	Operating expense			4,293		5,475		4,116		14,932		11,589
		Total stock-based compensation		$            4,950		$            6,116		$            4,841		$          16,914		$          13,495

 

RIBBON COMMUNICATIONS INC.
Reconciliation of Non-GAAP and GAAP Financial Measures
(in thousands, except per share amounts)
(unaudited)
	Three months ended
	September 30,		June 30,		September 30,
	2023		2023		2022
GAAP Gross margin	50.9 %		48.2 %		50.4 %
Stock-based compensation	0.3 %		0.3 %		0.4 %
Amortization of acquired technology	3.6 %		3.5 %		3.7 %
Non-GAAP Gross margin	54.8 %		52.0 %		54.5 %
GAAP Net loss	$           (13,501)		$           (21,479)		$           (18,416)
Stock-based compensation	4,950		6,116		4,841
Amortization of acquired intangible assets	14,373		14,699		15,276
Litigation costs	478		114		-
Acquisition-, disposal- and integration-related	842		498		988
Restructuring and related	2,680		4,307		1,269
Decrease in fair value of investments	-		-		1,881
Preferred stock and warrant liability mark-to-market adjustment	148		1,410		-
Tax effect of non-GAAP adjustments	(615)		2,083		(1,881)
Non-GAAP Net income	$              9,355		$              7,748		$              3,958
GAAP Diluted loss per share	$               (0.08)		$               (0.13)		$               (0.12)
Stock-based compensation	0.03		0.03		0.03
Amortization of acquired intangible assets	0.08		0.09		0.09
Litigation costs	*		*		-
Acquisition-, disposal- and integration-related	*		0.01		0.01
Restructuring and related	0.02		0.02		0.01
Decrease in fair value of investments	-		-		0.01
Preferred stock and warrant liability mark-to-market adjustment	*		0.01		-
Tax effect of non-GAAP adjustments	*		0.01		(0.01)
Non-GAAP Diluted earnings per share	$                0.05		$                0.04		$                0.02
Weighted average shares used to compute diluted earnings per share
Shares used to compute GAAP diluted loss per share	171,190		170,103		158,921
Shares used to compute Non-GAAP diluted earnings per share	176,298		175,220		163,463
GAAP Income (loss) from operations	$                 856		$             (6,622)		$             (3,296)
Depreciation	3,544		3,549		3,915
Stock-based compensation	4,950		6,116		4,841
Amortization of acquired intangible assets	14,373		14,699		15,276
Litigation costs	478		114		-
Acquisition-, disposal- and integration-related	842		498		988
Restructuring and related	2,680		4,307		1,269
Non-GAAP Adjusted EBITDA	$            27,723		$            22,661		$            22,993
* 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)
	Nine months ended
	September 30,		September 30,
	2023		2022
GAAP Gross Margin	47.7 %		49.0 %
Stock-based compensation	0.3 %		0.3 %
Amortization of acquired technology	3.7 %		4.1 %
Non-GAAP Gross Margin	51.7 %		53.4 %
GAAP Net loss	$           (73,285)		$         (118,571)
Stock-based compensation	16,914		13,495
Amortization of acquired intangible assets	43,725		46,219
Litigation costs	769		-
Acquisition-, disposal- and integration-related	2,982		4,372
Restructuring and related	13,924		8,977
Decrease in fair value of investments	-		41,292
Preferred stock and warrant liability mark-to-market adjustment	1,558		-
Preferred stock and warrant liability issuance costs	3,545		-
Tax effect of non-GAAP adjustments	4,144		6,075
Non-GAAP Net income	$            14,276		$              1,859
GAAP Diluted loss per share	$               (0.43)		$               (0.78)
Stock-based compensation	0.10		0.09
Amortization of acquired intangible assets	0.26		0.30
Litigation costs	*		-
Acquisition-, disposal- and integration-related	0.02		0.03
Restructuring and related	0.08		0.06
Decrease in fair value of investments	-		0.27
Preferred stock and warrant liability mark-to-market adjustment	0.01		-
Preferred stock and warrant liability issuance costs	0.02		-
Tax effect of non-GAAP adjustments	0.02		0.04
Non-GAAP Diluted earnings per share	$                0.08		$                0.01
Weighted average shares used to compute diluted earnings per share
Shares used to compute GAAP diluted loss per share	169,955		152,795
Shares used to compute Non-GAAP diluted earnings per share	175,986		157,412
GAAP Loss from operations	$           (40,955)		$           (49,589)
Depreciation	10,603		11,688
Stock-based compensation	16,914		13,495
Amortization of acquired intangible assets	43,725		46,219
Litigation costs	769		-
Acquisition-, disposal- and integration-related	2,982		4,372
Restructuring and related	13,924		8,977
Non-GAAP Adjusted EBITDA	$            47,962		$            35,162
* Less than $0.01 impact on earnings (loss) per share.

 

RIBBON COMMUNICATIONS INC.
Reconciliation of Non-GAAP and GAAP Financial Measures - Outlook
(unaudited)
			Three months ending				Year ending
			December 31, 2023				December 31, 2023
			Range				Range
Revenue ($ millions)			$                 230		$                 240		$                 830		$                 840
Gross margin:
	GAAP outlook		51.5 %		52.6 %		48.8 %		49.3 %
	Stock-based compensation		0.3 %		0.3 %		0.3 %		0.3 %
	Amortization of acquired technology		2.7 %		2.6 %		3.4 %		3.4 %
		Non-GAAP outlook	54.5 %		55.5 %		52.5 %		53.0 %
Adjusted EBITDA ($ millions):
	GAAP income (loss) from operations		$                14.6		$                20.6		$               (27.2)		$               (21.2)
	Depreciation		3.4		3.4		14.0		14.0
	Stock-based compensation		6.0		6.0		24.0		24.0
	Amortization of acquired intangible assets		13.2		13.2		56.9		56.9
	Litigation costs		0.6		0.6		1.3		1.3
	Acquisition-, disposal- and integration-related		0.1		0.1		3.0		3.0
	Restructuring and related		2.1		2.1		16.0		16.0
		Non-GAAP outlook	$                40.0		$                46.0		$                88.0		$                94.0

 

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SOURCE Ribbon Communications Inc.

FAQ

What were Ribbon Communications' Q3 revenue?

Ribbon Communications reported Q3 revenue of $203 million.

What was the growth rate of IP Optical Networks sales?

IP Optical Networks sales increased by 14% YTD.

What is the company's outlook for Q4?

The company expects to achieve positive Non-GAAP Adjusted EBITDA for the IP Optical Networks segment in Q4.

What was the performance of IP Optical Networks sales in the EMEA region?

IP Optical Networks sales in the EMEA region were approximately 20% lower in Q3.