Ribbon Communications Inc. · NASDAQ:RBBN
Ribbon Communications — Q3 2020 Earnings Presentation
26 slides from Ribbon Communications's earnings presentation, Oct 29, 2020
Slide 1: Ribbon Communications Third Quarter 2020 Results
Ribbon Communications Third Quarter 2020 Results Bruce McClelland Mick Lopez October 29, 2020 President & CEO EVP & CFO
Slide 2: Note Regarding Forward-Looking Statements and Non-GAAP Financial Measures
Note Regarding Forward-Looking Statements and Non-GAAP Financial Measures 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 state
Slide 3: 3Q20 Business Overview
3Q20 Business Overview Bruce McClelland President & CEO
Slide 4: Business Highlights
Business Highlights Customers • Secured eight new packet optical wins with critical Infrastructure and Enterprise customers • Indian telecom AGR resolution provides certainty over the operating environment in the country and provides path to improved 2021 outlook • Strong year-to-date growth of 25%+
Slide 5: 3Q20 Financial Highlights
3Q20 Financial Highlights Growing Revenue Cash Flow and Balance Sheet Improving Profitability $231M Sales, up $93M YoY1 $111M Ending Cash Record $43M Adjusted EBITDA2, (Includes $78M from Packet Optical $29M Cash flow from Operations up $20M YoY1 Networks) Cloud and Edge2 Packet Optical Networks2 $
Slide 6: Total Revenue and Adjusted EBITDA
Total Revenue and Adjusted EBITDA1 Cloud and Edge Consolidated $231M $210M $78M $158M $64M $30M $161M $147M $154M $145M $128M $138M $119M $43M $43M $23M $30M $22M ($3M) $10M 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 Cloud and Edge Revenue Packet Optical Networks Revenue Adjusted EBITDA 1Please see the basi
Slide 7: GAAP Financial Highlights
GAAP Financial Highlights 3Q191 2Q20 3Q20 Revenue $138M $210M $231M Gross Margin 57% 53% 53% OPEX $76M $111M $111M Net income $2M $(8)M $6M (loss) Diluted EPS $0.01 $(0.06) $0.04 1Please see the basis of presentation in the appendix. For the three months ended September 30, 2020, Ribbon’s consolidat
Slide 8: Non-GAAP Financial Highlights 3Q20
Non-GAAP Financial Highlights 3Q20 Packet Optical Networks Cloud and Edge (former ECI) Consolidated 3Q20 3Q20 3Q20 Revenue $154M $78M $231M +12% YoY1 -19% YoY3 Non-GAAP Gross 66% 46% 59% Margin2 + 2 ppts YoY1 Non-GAAP $63M $35M $98M OPEX2 - 8% YoY1 Non-GAAP Operating 25% 0% 17% Margin2 +11 ppts YoY1
Slide 9: Quarterly Performance
Quarterly Performance Revenue and Non-GAAP Gross Margins1 Packet Optical Networks Cloud and Edge $161M $154M $145M $147M $138M $128M $119M 68% 67% 66% 64% 63% 62% $78M 56% $64M 46% $30M 39% 39% 1Q20 2Q20 3Q20 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 1Please see the basis of presentation and the non-GAAP r
Slide 10: Third Quarter 2020 Key Metrics
Third Quarter 2020 Key Metrics Pipeline Revenue Mix Balance Sheet Cash Flow 43% Software Revenue2 Cash Balance $111M $29M Cash From Operations 32% Maintenance Revenue3 Debt $395M $29M Unlevered Free Cash Flow5 Solid 4Q20 Visibility Top 10 Customers Revenue 49%3 Assigned $75M Term Loan A $4M Capex in
Slide 11: Key Trends and Outlook
Key Trends and Outlook
Slide 12: Cloud & Edge Portfolio
Cloud & Edge Portfolio Products & Services Looking Forward Core and Edge Solutions Key Trends ▪ Digital Network Transformation (NTR) – Application Server, Call Control, Media GW, Policy & Routing, Signaling ▪ Work-from-home driving continued higher network utilization and ▪ Session Management (SBC)
Slide 13: Packet Optical Networks Portfolio
Packet Optical Networks Portfolio Products & Services Looking Forward Apollo Key Trends ▪ Optical Transport ▪ OTN Switching ▪ Work-from-home driving continued higher network utilization and need for capacity augmentation Neptune ▪ Mobile network traffic growing exponentially and will increase 5x by
Slide 14: 4Q20 Business Outlook
4Q20 Business Outlook Focused on serving Cloud and Edge customers and caring for our ▪ Continued strong performance employees ▪ Revenues consistent with 3Q20 Packet Optical Networks Revenue growth as Packet ▪ Projected sequential improvement in demand Optical Network North America strategy gains ▪ C
Slide 15: Appendix
APPENDIX g} riddon
Slide 16: Ribbon Condensed Statements of Operations
Ribbon Condensed Statements of Operations USD Millions except percentages and EPS 1Q19 2Q19 3Q19 4Q19 FY19 1Q20 2Q20 3Q20 GAAP FINANCIAL MEASURES Product Revenue 47 72 61 81 262 76 121 129 Service Revenue 71 73 77 80 301 82 90 102 Total Revenue 119 145 138 161 563 158 210 231 Gross Profit 57 81 79 1
Slide 17: Ribbon Condensed Balance Sheets
Ribbon Condensed Balance Sheets USD Millions 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 ASSETS 1 Cash and Investments 46 51 40 45 110 94 111 Accounts Receivable, Net 135 155 163 193 206 205 208 Inventory, Net 19 17 14 15 67 58 51 Property Plant Equipment, Net 28 28 27 29 47 48 48 Goodwill and Intangibles 64
Slide 18: Ribbon Condensed Statements of Cash Flows
Ribbon Condensed Statements of Cash Flows USD Millions 1Q19 2Q19 3Q19 4Q19 FY19 1Q20 2Q20 3Q20 Cash from Operations 20 10 (6) 33 56 40 (3) 29 Purchases of PP&E (4) (2) (2) (2) (11) (6) (9) (4) Stock Repurchase - (5) - - (5) - - - Business Acquisitions (22) - - - (22) (347) - - Sale of Fixed Assets -
Slide 19: Ribbon Key Revenue Statistics
Ribbon Key Revenue Statistics USD Millions except for percentages 1Q19 2Q19 3Q19 4Q19 FY19 1Q20 2Q20 3Q20 GAAP Revenue Product 47 72 61 81 262 76 121 129 Service 71 73 77 80 301 82 90 102 Total Revenue 119 145 138 161 563 158 210 231 % of Total GAAP Revenue: GAAP Revenue Mix Product 40% 50% 44% 50%
Slide 20: Basis of Presentation
Basis of Presentation Totals may not sum due to rounding. The terms “Cloud and Edge”, “Ribbon standalone”, “Ribbon’s organic business” and “organic” as used herein refer to the business, continuing operations and/or financial results, as the context dictates, of Ribbon Communications excluding the r
Slide 21: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation 21
Slide 22: GAAP to Non-GAAP Reconciliation (continued)
GAAP to Non-GAAP Reconciliation (continued) 22
Slide 23: GAAP to Non-GAAP Reconciliation (continued)
GAAP to Non-GAAP Reconciliation (continued) 23
Slide 24: GAAP to Non-GAAP Reconciliation (continued)
GAAP to Non-GAAP Reconciliation (continued) 24
Slide 25: GAAP to Non-GAAP Reconciliation (continued)
GAAP to Non-GAAP Reconciliation (continued) 25
Slide 26: Thank You
&} riddon Thank You
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