Ribbon Communications Inc. · NASDAQ:RBBN
Ribbon Communications — Investor Presentation (April 2018)
45 slides from Ribbon Communications's investor presentation, Apr 26, 2018
Slide 1: Forward-looking statements
This presentation 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 presentation, including statem
Slide 2: Legal Disclaimers
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Slide 3: About Ribbon
About Ribbon Ribbon is a global leader in secure real-time communications providing software, cloud and network infrastructure solutions to communications service providers and enterprises Transforming Communications Networks Enabling Cloud Communications Securing Communications
Slide 4: Ribbon Communications - Scope and Scale
Ribbon Communications - Scope and Scale Transformational Merger Closed October 27, 2017 Four Decades of Combined Leadership Experience in Real Time Communications ~2,300 Employees in 27 Countries 1,000+ Service Provider and Enterprise Customers Globally 600+ Patents Worldwide Publicly Traded Company
Slide 5: Executive Team
John McCready EVP, Chief Strategy Officer Tony Scarfo EVP, Products and R&D Kevin Riley EVP, CTO and Advanced R&D Steven Bruny EVP, Global Operations Daryl Raiford EVP, Chief Financial Officer Mike Swade EVP, Global Sales David Walsh Founder, Kandy Executive Team Patrick Joggerst CMO & EVP, Business
Slide 6: Investment Highlights
Investment Highlights Transformational merger creates market leader financial scale to benefit from further consolidation potential Accelerating EBITDA growth from cost synergies, product streamlining and shift to higher margin businesses Technology embedded in largest service providers worldwide po
Slide 7: Market, Position and Differentiation
Market, Position and Differentiation
Slide 8: Support for All Stages of Transformation
Support for All Stages of Transformation Hosted or Virtualized Embedded Applications Legacy Evolution IP Transformation Investing in Core and Accelerating Cloud Initiatives
Slide 9: What We Do For Our Customers
What We Do For Our Customers Network Transformation Cloud Communications and Security Core Business Cloud Initiatives Service Providers Enterprises Evolve Communications Networks to IP and Cloud Enable Software-Defined and Virtualized Networks Secure IP Communications Networks Enable Cloud Communica
Slide 10: Ribbon's Leadership Position and Market Opportunity
Ribbon’s Leadership Position and Market Opportunity Network Transformation 2022 TAM: $2.7B ’18 -’22 CAGR: 1.7% Leadership Ranking Source: IHS Research 4Q-2017 Market share data #1 #2 #3 #2 Core Business Cloud Initiatives Cloud Communications and Security 2022 TAM: $11.3B ’18 -’22 CAGR: 23.4%
Slide 11: Competitive and Technology Differentiation
Competitive and Technology Differentiation Large Installed Base Breadth of Product Portfolio Leader in Media Processing Technology Cloud, Security and Virtualization Expertise and Leadership Reliability, Performance, Functionality at Scale
Slide 12: Addressable Markets
Addressable Markets In Network ($B) SS, MGW, VAS, HW-SBC, STP Network Virtualization ($B) Network Transformation ($B) Expected 2022 TAM: $2.7B / 2018 – 2022 CAGR +1.7% CAGR -10.3% CAGR +11.9% V-SBC, MRF, VMC Cloud ($B) Security ($B) Cloud and Security Services ($B) Expected 2022 TAM: $11.3B / 2018 –
Slide 13: Long-Tail Network Transformation Opportunity
Long-Tail Network Transformation Opportunity Network Transformation PSTN Transformation: 514M TDM lines globally; 58M TDM lines in U.S. Our strength: DNA embedded in ~29M NA lines. Federal vertical: Early stages of SIP / UC transformation with 3M TDM lines. Our strength: JTIC certified SBC and TAS S
Slide 14: Cloud Initiatives
Cloud Initiatives Cloud Communications Communications Security Communications software platform and applications offered “as a Service” that enable service providers and enterprises to deploy embedded and unified communications Communications security, fraud management and network intelligence solut
Slide 15: End-to-End Solutions is Key Differentiator
End-to-End Solutions is Key Differentiator Brand/Product Session Border Controllers Application Server & WebRTC Call Controllers Media Gateways Network Functions Virtualization Signaling, Policy & Routing Security Solution Service Provider Market Enterprise Market
Slide 16: End-to-End Solutions is Key Differentiator
End-to-End Solutions is Key Differentiator Service Provider Market Enterprise Market Brand/Product ORACLE gy pion _metaswitch ORACLE PB AudioCodes ‘Session Border Controllers v v v ‘Application Server & WebRTC v Call Controllers Media Gateways Network Functions Virtualization v v v v Signaling, Poli
Slide 17: Verizon Enterprise Solutions offers SBC as a Service
Verizon Enterprise Solutions offers SBC as a Service with Ribbon Network Edge Services – First customer, a large U.S. City, is deploying
Slide 18: Government Solutions
Government Solutions Joint Interoperability Test Command (JITC) Certified Application Server Session Border Controller Supporting large number of civilian and secure users Ultra Secure, Scalable and Reliable Solutions Government computer security standard (FIPS 140-2) compliant SBC
Slide 19: Kandy Cloud Communications as a Service
Kandy Cloud Communications as a Service Migrating communications at airport, car sales sites and neighborhood locations to the cloud. Eleven locations migrated to Kandy and 70 more planned in the near term. Enhancing the library’s employee and customer communications across 73 libraries and providin
Slide 20: APAC Tier Service Provider Deploys Ribbon Protect
APAC Tier 1 Service Provider Deploys Ribbon Protect Ribbon Protect Communications Security and Analytics
Slide 21: APAC Tier Service Provider Deploys Ribbon Protect
APAC Tier 1 Service Provider Deploys Ribbon Protect o Ribbon Protect Communications Security and Analytics BAD ACTORS DON’T JUST GET IN - THEY ESCAPE WITH LARGE VOLUMES OF DATA
Slide 22: Ribbon Non-GAAP Statements of Operations
Ribbon Non-GAAP1 Statements of Operations2 Confidential and Proprietary Please see non-GAAP reconciliations in presentation appendix. Results for the period January 1, 2016 through September 30, 2017 are those of Sonus. Results in the quarter ended December 31, 2017 represent three months of Sonus a
Slide 23: Ribbon Condensed Balance Sheets
Ribbon Condensed Balance Sheets Confidential and Proprietary Includes cash, cash equivalents and short- and long-term investments. Note: Totals may not sum due to rounding. USD Millions Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 ASSETS Cash and Investments 1 142 143 121 126 129 126 132 83 85 Accou
Slide 24: 2018 Full Year Guidance and Outlook
2018 Full Year Guidance and Outlook Full year adjusted EBITDA guidance remains unchanged Adjusted EBITDA2 expected to increase to $75 million FY17 pro forma1 Adjusted EBITDA was $45 million Full year revenue Outlook remains unchanged 2018 Non GAAP Revenue expected to decline approximately 10% versus
Slide 25: Summary
Summary Strong Financial Profile Significantly higher revenue base, gross profit, earnings and cash flow from operations; Guidance of $75 million of Adjusted EBITDA expected in 2018 Scale and Synergy Platform Scalable cost structure to benefit from further consolidation potential Strong Installed-Ba
Slide 26: Summary
Summary Strong Financial Profile Scale and Synergy Platform Significantly higher revenue base, gross profit, earnings and cash flow from operations; Guidance of $75 million of Adjusted EBITDA expected in 2018 Scalable cost structure to benefit from further consoli potential tion Strong Installed-Bas
Slide 27: TAM and Market Share References
TAM and Market Share References TAM & Market Share (SS, MGW, VAS, SP-SBC ): IHS Markit, Service Provider VoIP and IMS Equipment and Subscribers, Published March 06, 2018, Edition: Q1 2018 (for the quarter ended 31 December 2017) (Quarterly) TAM & Market Share (E-SBC): IHS Markit, Enterprise SBCs and
Slide 28: Product Definitions
Product Definitions Call Controllers Call Controllers are communications network elements that connect voice calls between subscribers within a network and route voice calls between networks. Call controllers are essential elements in service provider networks utilized to provide regulated and un-re
Slide 29: Product Definitions
Product Definitions Application Servers Application servers are the elements in internet protocol (IP) communication networks that enable a variety of unified business communications capabilities like voice calling, messaging and collaboration across different devices. Application servers are essent
Slide 30: Ribbon GAAP Revenue Key Stats
Ribbon GAAP Revenue Key Stats Actual results are for all periods as it relates to Sonus and post-close (10/27/2017 to 12/31/2017) for GENBAND. Information is prepared on a GAAP basis. Millions except for percentages Q116 Q216 Q316 Q416 FY16 Q117 Q217 Q317 Q417 FY17 Q118 GAAP Revenue Product 35 35 39
Slide 31: Discussion of Non-GAAP Financial Measures
Ribbon management uses several different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of the business, making operating decisions, planning and forecasting future periods, and determining payments under compensation programs. Our annual financial pla
Slide 32: Acquisition-Related Revenue and Cost of Revenue; Impact of New Revenue Standard
Acquisition-Related Revenue and Cost of Revenue; Impact of New Revenue Standard We provide the supplementary non-GAAP financial measures, non-GAAP Product revenue, non-GAAP Service revenue and non-GAAP Total revenue, which include revenue related to the acquisition of GENBAND that we would have reco
Slide 33: Amortization of Intangible Assets
Amortization of Intangible Assets We exclude the amortization of acquired intangible assets from non-GAAP expense and income measures. These amortization amounts are inconsistent in frequency and amount and are significantly impacted by the timing and size of acquisitions. Although we exclude amorti
Slide 34: Settlement Expense
Settlement Expense In March 2018, we recorded $1.7 million of expense related to settlements, comprised of $1.4 million for the settlement of litigation in connection with our acquisition of Taqua LLC and $0.3 million of patent litigation settlement expense. In September 2017, we recorded $1.6 milli
Slide 35: Acquisition-Related Facilities Adjustments
Discussion of Non-GAAP Financial Measures (continued) Acquisition-Related Facilities Adjustments GAAP accounting requires that the deferred rent liability of an acquired company be written off as part of purchase accounting and that the combined company’s rent expense on a straight-line basis begin
Slide 36: Acquisition- and Integration-Related Costs
Acquisition- and Integration-Related Costs We consider certain acquisition- and integration-related costs to be unrelated to the organic continuing operations of our acquired businesses and the Company and they are generally not relevant to assessing or estimating the long-term performance of the ac
Slide 37: Gain on Sales of Intangible Assets
Gain on Sales of Intangible Assets In 2017 and 2016, we sold intangible assets that we had acquired in connection with two previous acquisitions. These amounts, aggregating $0.6 million in 2017 and $1.3 million in 2016, are included as components of other income, net. We believe that such gains are
Slide 38: Adjusted EBITDA
Adjusted EBITDA We use Adjusted EBITDA as a supplemental measure to review and assess our performance. We calculate Adjusted EBITDA by excluding from net income (loss): interest income (expense), net; income tax benefit (provision); depreciation; and amortization and impairment of intangible assets.
Slide 39: Annual and Quarterly GAAP to Non-GAAP Reconciliation
Annual and Quarterly GAAP to Non-GAAP Reconciliation $000's Q116 Q216 Q316 Q416 FY16 Q117 Q217 Q317 Q417 FY17 Q118 GAAP Product revenue 34,769 $ 35,349 $ 38,601 $ 37,662 $ 146,381 $ 25,395 $ 28,790 $ 44,120 $ 82,814 $ 181,119 $ 51,531 $ Acquisition-related revenue adjustment - - - - - - - - 3,230 3,
Slide 40: Annual and Quarterly GAAP to Non-GAAP Reconciliation (continued)
Annual and Quarterly GAAP to Non-GAAP Reconciliation (continued) $000s Q116 Q216 Q316 Q416 FY16 Q117 Q217 Q317 Q417 FY17 Q118 GAAP Operating expenses 42,284 $ 42,936 $ 47,902 $ 48,098 $ 181,220 $ 44,530 $ 49,105 $ 50,628 $ 112,462 $ 256,725 $ 97,956 $ Stock-based compensation (4,012) (4,226) (5,982)
Slide 41: Annual and Quarterly GAAP to Non-GAAP Reconciliation (continued)
Annual and Quarterly GAAP to Non-GAAP Reconciliation (continued) $000s, except per share amounts Q116 Q216 Q316 Q416 FY16 Q117 Q217 Q317 Q417 FY17 Q118 GAAP Net income (loss) (4,654) $ (2,916) $ (3,731) $ (2,631) $ (13,932) $ (10,646) $ (12,345) $ 3,453 $ (15,714) $ (35,252) $ (44,904) $ Acquisition
Slide 42: Annual and Quarterly GAAP to Non-GAAP Reconciliation (continued)
Annual and Quarterly GAAP to Non-GAAP Reconciliation (continued) $000's Q116 Q216 Q316 Q416 FY16 Q117 Q217 Q317 Q417 FY17 Q118 Adjusted EBITDA GAAP Net income (loss) (4,654) $ (2,916) $ (3,731) $ (2,631) $ (13,932) $ (10,646) $ (12,345) $ 3,453 $ (15,714) $ (35,252) $ (44,904) $ Interest (income) ex
Slide 43: Outlook GAAP to Non-GAAP Reconciliation
Outlook GAAP to Non-GAAP Reconciliation $ millions Year ending December 31, 2018 Non-GAAP Revenue 580.0 $ Less acquisition-related adjustments and impact of new revenue standard (31.5) GAAP Revenue 548.5 $ Adjusted EBITDA: Ribbon has not provided a reconciliation of Adjusted EBITDA for the year endi
Slide 44: Outlook GAAP to Non-GAAP Reconciliation
Outlook GAAP to Non-GAAP Reconciliation Year ending December 31, 2018 ‘Non-GAAP Revenue s 580.0 Less acquisition-related adjustments and impact of new revenue standard B15) GAAP Revenue 5 548.5 Adjusted EBITDA: Ribbon has not provided a reconciliation of Adjusted EBITDA for the year ending December
Slide 45: Thank You
Thank You 3 rliooon communications
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