Ribbon Communications Inc. · NASDAQ:RBBN

Ribbon Communications — Q3 2022 Earnings Presentation

34 slides from Ribbon Communications's earnings presentation, Oct 26, 2022

  1. Slide 1: Ribbon Communications Third Quarter 2022 Results

    Ribbon Communications Third Quarter 2022 Results October 26, 2022 1

  2. 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

  3. Slide 3: Third Quarter 2022 Business Overview

    Third Quarter 2022 Business Overview Bruce McClelland, President & CEO Mick Lopez, Executive Vice President & CFO

  4. Slide 4: Third Quarter 2022 Business Highlights | IP Optical

    Third Quarter 2022 Business Highlights | IP Optical +20% Growth in Revenue QoQ IP Routing win 5G Cell Site Router - (CSR) based on Ribbon’s Neptune IP/MPLS Router for Airtel’s 5G roll-out +90% Bookings growth QoQ Tier 1 Carrier Opportunities +50% IP Routing as a % of Product Bookings 10%+ growth in

  5. Slide 5: Third Quarter 2022 Business Highlights | Cloud & Edge

    Third Quarter 2022 Business Highlights | Cloud & Edge Enterprise Growth in Q3 AT&T 10%+ customer* UCaaS- Microsoft, Zoom, Google, RingCentral Network Transformation programs Local government Centrex modernization leveraging VoIP and IP routing portfolios STIR/SHAKEN Maintenance Strong multi-year ren

  6. Slide 6: Third Quarter 2022 Business Highlights | Enterprise

    Third Quarter 2022 Business Highlights | Enterprise Significant voice network modernization with Ribbon unified communications solutions Government Education Network upgrades with Analytics, MNOC for several states Continued expansion of Unified Communications application upgrade for global location

  7. Slide 7: Third Quarter 2022 Financial Highlights

    Third Quarter 2022 Financial Highlights 3Q22 Revenue Balance Sheet Profitability Metrics $207M up $1M QoQ $56M Ending Cash $23M Adjusted EBITDA International 58% of Sales $52M Capital Raise $0.02 Non-GAAP EPS Service Provider 70% of Sales Average interest rate 5.40% Cloud & Edge IP Optical Networks

  8. Slide 8: Third Quarter 2022 GAAP Financial Summary

    Third Quarter 2022 GAAP Financial Summary 3Q21 2Q22 3Q22 Revenue $210M $206M $207M Gross margin 53% 51% 50% OPEX $109M $112M $108M Income (loss) from $2M ($7M) ($3M) operations Other income ($58M) ($10M) ($4M) (expense), net1 Net income (loss) ($59M) ($30M) ($18M) Diluted EPS ($0.40) ($0.20) ($0.12)

  9. Slide 9: Third Quarter 2022 Non-GAAP Financial Summary

    Third Quarter 2022 Non-GAAP Financial Summary 3Q21 2Q22 3Q22 Revenue $210M $206M $207M Gross margin 57% 55% 54.5% OPEX $93M $96M $94M Operating margin 13% 8% 9% Adjusted EBITDA $32M $21M $23M Diluted EPS $0.11 $0.06 $0.02 9

  10. Slide 10: Third Quarter 2022 Non-GAAP Segment Summary

    Third Quarter 2022 Non-GAAP Segment Summary Cloud & Edge IP Optical Networks Consolidated Revenue $125M $82M $207M Gross margin 65% 38% 54.5% Adjusted EBITDA $33M ($10M) $23M 10

  11. Slide 11: Quarterly Performance: Revenue & Non-GAAP Gross Margins

    Quarterly Performance: Revenue & Non-GAAP Gross Margins IP Optical Networks Cloud & Edge $142M $147M $137M $125M $110M $83M $82M $68M $69M $63M 67% 64% 62% 68% 65% 37% 36% 38% 29% 29% 3Q21 4Q21 1Q22 2Q22 3Q22 3Q21 4Q21 1Q22 2Q22 3Q22 11

  12. Slide 12: Third Quarter 2022 Key Metrics

    Third Quarter 2022 Key Metrics Pipeline Revenue Mix Balance Sheet Cash Flow Cash Balance $56M 3Q22 Book to Revenue1 Ratio 35% Software Revenue2 ($18M) Cash from Operations of 1.28x Debt5 $335M 35% Maintenance Revenue3 $5M principal debt paydown Cloud & Edge: 1.13x Current Annualized Weighted Top 10

  13. Slide 13: Cash Investments 2022 Third Quarter

    Cash Investments 2022 Third Quarter $M Cash 9/22 Cash 6/22 Non- Deferred CAPEX & Opening Capital Debt & Accruals Ending GAAP AR AP Revenue Tax Inventory Perpetual Cash Raise Interest & Other Cash EBITDA (seasonal) Licenses

  14. Slide 14: Key Trends & Outlook

    Key Trends & Outlook &} riddon

  15. Slide 15: IP Wave: Continuous Innovation to Meet Customer Needs

    IP Wave: Continuous Innovation to Meet Customer Needs IP Routing with Neptune • Proven state of the art IP stack with common NOS • Right fit with range of form factors and capabilities • New high performance router family - Neptune XDR Optical Networking with Apollo Domain Orchestration with Muse •

  16. Slide 16: Neptune IP Routing: WAN Access, Metro & Edge Router Applications

    Neptune IP Routing: WAN Access, Metro & Edge Router Applications Ribbon MUSE Automation thru Programmability & Industry Standard Open APIs (NetConf/YANG, BGP-LS, PCEP, Streaming Telemetry) NPT 1K NPT 2K NPT 1K NPT 2K NPT 2100 NPT 2K NPT WB NPT 1K Internet NPT 2K IP/MPLS OLT Smart SFP Intra-DC Leaf-S

  17. Slide 17: Fourth Quarter 2022 Business Outlook

    Fourth Quarter 2022 Business Outlook 3Q22 4Q22 (Actual) (Outlook) Revenue $207M $220M to $240M Non-GAAP Gross Margin 54.5% 53.5% to 54.5% Non-GAAP Adjusted EBITDA $23M $30M to $36M Non-GAAP Diluted EPS $0.02 ($0.01) to $0.01 Interest & Other Expense ($7M) ~($7M) Non-GAAP Income Taxes ($8M) ~($25M) D

  18. Slide 18: Appendix

    Appendix &} riddon

  19. Slide 19: Ribbon Condensed Statements of Operations

    Ribbon Condensed Statements of Operations USD Millions except percentages and EPS 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 2Q22 3Q22 GAAP FINANCIAL MEASURES Product Revenue 98 113 112 130 453 82 113 111 Service Revenue 95 98 99 100 392 91 93 96 Total Revenue 193 211 210 231 845 173 206 207 Gross Profit 100 119

  20. Slide 20: Ribbon Condensed Balance Sheets

    Ribbon Condensed Balance Sheets USD Millions 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 ASSETS Cash and cash equivalents1 109 115 104 106 95 38 56 Accounts receivable, net 209 220 236 283 221 258 238 Inventory 45 47 45 54 62 65 70 Property and equipment, net 49 49 49 48 48 49 46 Intangible assets, net and G

  21. Slide 21: Ribbon Condensed Statements of Cash Flows

    Ribbon Condensed Statements of Cash Flows USD Millions 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 2Q22 3Q22 Cash from Operations (6) 14 - 11 19 15 (39) (18) Purchases of property and equipment (5) (5) (4) (3) (17) (3) (3) (7) Proceeds from sale of business - 3 - - 3 - - - Borrowings, net (4) (5) (5) (5) (19) (21

  22. Slide 22: Ribbon Key Revenue Statistics

    Ribbon Key Revenue Statistics USD Millions except for percentages 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 2Q22 3Q22 Revenue Product 98 113 112 130 453 82 113 111 Service 95 98 99 100 392 91 93 96 Total Revenue 193 211 210 231 845 173 206 207 % of Total Revenue: Revenue Mix Product 51% 54% 53% 57% 54% 47% 55%

  23. Slide 23: 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 & Edge relates to the Company’s Cloud & Edge operating segment. 23

  24. Slide 24: Discussion of Non-GAAP Financial Measures

    Discussion of Non-GAAP Financial Measures 24

  25. Slide 25: Discussion of Non-GAAP Financial Measures (continued)

    Discussion of Non-GAAP Financial Measures (continued) 25

  26. Slide 26: Discussion of Non-GAAP Financial Measures (continued)

    Discussion of Non-GAAP Financial Measures (continued) 26

  27. Slide 27: Discussion of Non-GAAP Financial Measures (continued)

    Discussion of Non-GAAP Financial Measures (continued) 27

  28. Slide 28: Discussion of Non-GAAP Financial Measures (continued)

    Discussion of Non-GAAP Financial Measures (continued) 28

  29. Slide 29: 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

  30. Slide 30: GAAP to Non-GAAP Reconciliation (Continued)

    GAAP to Non-GAAP Reconciliation (Continued) $000's 1Q22 2Q22 3Q22 3Q22 YTD 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 Revenue $ 109,806 $ 63,392 $ 173,

  31. Slide 31: GAAP to Non-GAAP Reconciliation (Continued)

    GAAP to Non-GAAP Reconciliation (Continued) $000s 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 2Q22 3Q22 3Q22 YTD GAAP Operating expenses $ 113,090 $ 105,775 $ 108,662 $ 234,929 $ 562,456 $ 117,109 $ 111,789 $ 107,614 $ 336,512 Stock-based compensation (4,798) (4,228) (3,973) (4,422) (17,421) (3,675) (3,798) (4,11

  32. Slide 32: GAAP to Non-GAAP Reconciliation (Continued)

    GAAP to Non-GAAP Reconciliation (Continued) 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 2Q22 3Q22 3Q22 YTD GAAP Diluted (loss) earnings per share $ (0.31) $ 0.15 $ (0.40) $ (0.65) $ (1.20) $ (0.47) $ (0.20) $ (0.12) $ (0.78) Stock-based compensation 0.03 0.03 0.03 0.03 0.14 0.03 0.03 0.03 0.09 Amortization of acq

  33. Slide 33: GAAP to Non-GAAP Reconciliation (Continued)

    GAAP to Non-GAAP Reconciliation (Continued) Three months ending December 31, 2022 Outlook Range Revenue ($ millions) $ 220 $ 240 Gross margin: GAAP outlook 50.6% 50.0% Stock-based compensation 0.4% 0.3% Amortization of acquired technology 3.5% 3.2% Non-GAAP outlook 54.5% 53.5% Earnings (loss) per sh

  34. Slide 34: Thank You

    Thank You &} riddon

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