Ribbon Communications Inc. · NASDAQ:RBBN
Ribbon Communications — Q2 2022 Earnings Presentation
35 slides from Ribbon Communications's earnings presentation, Jul 27, 2022
Slide 1: Second Quarter 2022 Results
Ribbon Communications Second Quarter 2022 Results July 27, 2022 1
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: Second Quarter 2022 Business Overview
Second Quarter 2022 Business Overview Bruce McClelland, President & CEO Mick Lopez, Executive Vice President & CFO
Slide 4: Second Quarter 2022 Business Highlights | Cloud & Edge
Second Quarter 2022 Business Highlights | Cloud & Edge Verizon: Business voice modernization projects, and Verizon Wireless SBC and Policy capacity expansions Paritel: First STIR/SHAKEN call identification assurance win in Europe to mitigate fraudulent and nuisance calls Liberty: Selected Ribbon Ana
Slide 5: Second Quarter 2022 Business Highlights | IP Optical
Second Quarter 2022 Business Highlights | IP Optical Rogers: Expanding business to include wavelength services and last mile connections to large Enterprises Cheyenne River Sioux Tribe Telephone Authority: Packet and ROADM solution for broadband aggregation and transport Tri-County Rural Electric Co
Slide 6: Second Quarter 2022 Business Highlights | Enterprise
Second Quarter 2022 Business Highlights | Enterprise Insurance Continued modernization of Liberty’s voice network with addition of Analytics Tech refresh of Ribbon SBCs and PSX implementation as part of customer’s MS-Teams expansion Finance Ribbon SBCs chosen to support upgrades for their US Call Ce
Slide 7: Second Quarter 2022 Financial Highlights
Second Quarter 2022 Financial Highlights 2Q22 Revenue Balance Sheet Profitability Metrics $206M Up 19% QoQ $38M Ending Cash $21M Adjusted EBITDA International 52% of Sales Amended credit facility $0.06 Non-GAAP EPS Service Provider 80% of Sales Average interest rate 4.40% Cloud and Edge IP Optical N
Slide 8: Second Quarter 2022 GAAP Financial Summary
Second Quarter 2022 GAAP Financial Summary 2Q21 1Q22 2Q22 Revenue $211M $173M $206M Gross margin 56% 45% 51% OPEX $106M $117M $112M Income (loss) from $13M ($39M) ($7M) operations 2Q22 includes a $12M non-cash loss Other income associated with the quarterly mark-to-market $17M ($29M) ($10M) of the A
Slide 9: Second Quarter 2022 Non-GAAP Financial Summary
Second Quarter 2022 Non-GAAP Financial Summary 2Q21 1Q22 2Q22 Revenue $211M $173M $206M Gross margin 61% 50% 55% OPEX $90M $99M $96M Operating margin 18% (7%) 8% Adjusted EBITDA $43M ($9M) $21M Diluted EPS $0.17 ($0.08) $0.06 9
Slide 10: Second Quarter 2022 Non-GAAP Segment Summary
Second Quarter 2022 Non-GAAP Segment Summary Cloud and Edge IP Optical Networks Consolidated Revenue $137M $69M $206M Gross margin 68% 29% 55% Adjusted EBITDA $43M ($22M) $21M 10
Slide 11: Quarterly Performance: Revenue & Non-GAAP Gross Margins
Quarterly Performance: Revenue & Non-GAAP Gross Margins IP Optical Networks Cloud and Edge $141M $142M $147M $137M $110M $83M $70M $68M $69M $63M 48% 68% 67% 64% 68% 62% 37% 36% 29% 29% 2Q21 3Q21 4Q21 1Q22 2Q22 2Q21 3Q21 4Q21 1Q22 2Q22 11
Slide 12: Second Quarter 2022 Key Metrics
Second Quarter 2022 Key Metrics Pipeline Revenue Mix Balance Sheet Cash Flow 2Q22 Book to Revenue1 Ratio 38% Software Revenue2 Cash Balance $38M ($39M) Cash from Operations of 1.0x 34% Maintenance Revenue3 Debt5 $340M $15M principal debt paydown 93% of 2022 maintenance Top 10 Customers Revenue 50%3
Slide 13: Capital Structure and Cash Investments 2022 YTD
Capital Structure and Cash Investments 2022 YTD Term Loan 2020-2022 Cash Balance and Investments 2021-2022 YTD $M $M Principal 6/22 Principal 3/20 Cash 12/21 Cash 6/22 2020 2021 2022 Opening Non- AR Debt Inventory Restruct. & Interest CAPEX Tax Accruals Ending --------- Payments ---------- Cash GAAP
Slide 14: Key Trends and Outlook
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Slide 15: New Product Highlights: Cloud & Edge
New Product Highlights Call Trust - Nuisance and Fraud Call Mitigation • Cloud-based identity management, supporting reputation scoring and machine learning via Ribbon Analytics • Global adoption of STIR/SHAKEN industry standard • Ribbon Portfolio Solution SBC, PSX, C20, STI, Analytics CLOUD Virtual
Slide 16: New Product Highlights: IP Optical Networks
New Product Highlights IP Optical Networks Ribbon IP Wave rNOS Ribbon Neptune XDR 2100 • Telco-grade NOS provides flexibility for integrated and • First of Ribbon’s FleXible Disaggregated Routers disaggregated routing solutions • With IP Wave rNOS, 800G capacity, and multiservice interfaces • Enable
Slide 17: New IP Wave Microsite
New IP Wave Microsite ip-wave.rbbn.com 17
Slide 18: Third Quarter and Full Year 2022 Business Outlook
Third Quarter and Full Year 2022 Business Outlook FY21 3Q22 FY22 (Actual) (Outlook) (Outlook) Revenue $845M $210M to $225M $840M to $870M Non-GAAP Gross Margin 57% 55.0% to 56.0% 54.0% to 54.5% Non-GAAP Adjusted EBITDA $120M $26M to $34M $90M to $100M Non-GAAP Diluted EPS $0.32 $0.05 to $0.08 $0.18
Slide 19: Appendix
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Slide 20: Ribbon Condensed Statements of Operations
Ribbon Condensed Statements of Operations USD Millions except percentages and EPS 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 2Q22 GAAP FINANCIAL MEASURES Product Revenue 98 113 112 130 453 82 113 Service Revenue 95 98 99 100 392 91 93 Total Revenue 193 211 210 231 845 173 206 Gross Profit 100 119 111 115 445 78
Slide 21: Ribbon Condensed Balance Sheets
Ribbon Condensed Balance Sheets USD Millions 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 ASSETS Cash and cash equivalents1 109 115 104 106 95 38 Accounts receivable, net 209 220 236 283 221 258 Inventory 45 47 45 54 62 65 Property and equipment, net 49 49 49 48 48 49 Intangible assets, net and Goodwill 818 801 78
Slide 22: Ribbon Condensed Statements of Cash Flows
Ribbon Condensed Statements of Cash Flows USD Millions 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 2Q22 Cash from Operations (6) 14 - 11 19 15 (39) Purchases of property and equipment (5) (5) (4) (3) (17) (3) (3) Proceeds from sale of business - 3 - - 3 - - Borrowings, net (4) (5) (5) (5) (19) (21) (16) Other (12
Slide 23: Ribbon Key Revenue Statistics
Ribbon Key Revenue Statistics USD Millions except for percentages 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 2Q22 Revenue Product 98 113 112 130 453 82 113 Service 95 98 99 100 392 91 93 Total Revenue 193 211 210 231 845 173 206 % of Total Revenue: Revenue Mix Product 51% 54% 53% 57% 54% 47% 55% Services 49% 46%
Slide 24: Basis of Presentation
Basis of Presentation Totals may not sum due to rounding. IP Optical Networks relates to the Company’s IP Optical Networks operating segment. Cloud and Edge relates to the Company’s Cloud and Edge operating segment. 24
Slide 25: Discussion of Non-GAAP Financial Measures
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 unde
Slide 26: Discussion of Non-GAAP Financial Measures (continued)
Discussion of Non-GAAP Financial Measures (continued) 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 op
Slide 27: Discussion of Non-GAAP Financial Measures (continued)
Discussion of Non-GAAP Financial Measures (continued) 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 ge
Slide 28: Discussion of Non-GAAP Financial Measures (continued)
Discussion of Non-GAAP Financial Measures (continued) Gain on Sale of Business On May 12, 2021, the Company sold its QualiTech business, which it had acquired as part of the ECI Acquisition, to Hermon Laboratories, Ltd. As consideration, the Company received $2.9 million of cash and recorded a gain
Slide 29: Discussion of Non-GAAP Financial Measures (continued)
Discussion of Non-GAAP Financial Measures (continued) 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; amortization of acquired intang
Slide 30: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $000's 1Q21 2Q21 3Q21 4Q21 FY21 Cloud and IP Optical Consolidated Cloud and IP Optical Consolidated Cloud and IP Optical Consolidated Cloud and IP Optical Consolidated Cloud and IP Optical Consolidated Edge Networks Edge Networks Edge Networks Edge Networks Edge Netwo
Slide 31: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) $000's 1Q22 2Q22 2Q22 YTD Cloud and IP Optical Consolidated Cloud and IP Optical Consolidated Cloud and IP Optical Consolidated Edge Networks Edge Networks Edge Networks Revenue $ 109,806 $ 63,392 $ 173,198 $ 137,080 $ 68,716 $ 205,796 $ 246,886 $ 132,108
Slide 32: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) $000s 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 2Q22 2Q22 YTD GAAP Operating expenses $ 113,090 $ 105,775 $ 108,662 $ 234,929 $ 562,456 $ 117,109 $ 111,789 $ 228,898 Stock-based compensation (4,798) (4,228) (3,973) (4,422) (17,421) (3,675) (3,798) (7,473) Amortization
Slide 33: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 2Q22 2Q22 YTD GAAP Diluted (loss) earnings per share $ (0.31) $ 0.15 $ (0.40) $ (0.65) $ (1.20) $ (0.47) $ (0.20) $ (0.67) Stock-based compensation 0.03 0.03 0.03 0.03 0.14 0.03 0.03 0.06 Amortization of acquired intangible as
Slide 34: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) Three months ending Year ending September 30, 2022 December 31, 2022 Outlook Range Range Revenue ($ millions) $ 210 $ 225 $ 840 $ 870 Gross margin: GAAP outlook 51.0% 52.3% 50.0% 50.7% Stock-based compensation 0.4% 0.3% 0.3% 0.3% Amortization of acquired t
Slide 35: Thank you
Thank you &) rioddon
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