Ribbon Communications Inc. · NASDAQ:RBBN
Ribbon Communications — Q2 2021 Earnings Presentation
31 slides from Ribbon Communications's earnings presentation, Jul 28, 2021
Slide 1: Second Quarter 2021 Results
Ribbon Communications Second Quarter 2021 Results July 28, 2021 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 2021 Business Overview
Second Quarter 2021 Business Overview Bruce McClelland, President & CEO Mick Lopez, Executive Vice President & CFO
Slide 4: Business Highlights
Business Highlights ▪ Strong 1H21 financial results: o 10% YoY1 revenue growth o 60% YoY1 Adj. EBITDA growth o Strong gross margins in both business units and continued disciplined expense control ▪ Significant new IP Optical wins broadening Ribbon’s global customer base: o Rogers Communications sel
Slide 5: Second Quarter 2021 Financial Highlights
Second Quarter 2021 Financial Highlights Growing Revenue Balance Sheet and Cash Flow Improving CompanyProfitability Financials $211M in 2Q21, up 2% YoY1 $115M Ending Cash $43M Adjusted EBITDA3, up 46% YoY4 (excluding Kandy) $14M Cash Flow from $0.17 Non-GAAP EPS3, up 113% YoY4 $404M in 1H21, up 12%
Slide 6: Second Quarter 2021 GAAP Financial Summary
Second Quarter 2021 GAAP Financial Summary 2Q201 1Q211 2Q211 Revenue $210M $193M $211M Gross Margin 59% 57% 61% Opex $122M $123M $115M 2Q21 Other income (expense), net includes $12.1M measurement non-cash gain Other income associated with fair value and quarterly mark- ($2M) ($25M) $17M to-market of
Slide 7: Total Revenue and Adjusted EBITDA
Total Revenue and Adjusted EBITDA1 $244M $231M $210M $211M $78M $89M $193M $64M $70M $158M $67M $30M $154M $155M $141M $147M (Kandy $2M) $125M (Kandy $4M) $128M (Kandy $3M) (Kandy $3M) $43M $23M $30M $20M $10M $43M $49M 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 1 Cloud and Edge Revenue IP Optical Networks Reven
Slide 8: Second Quarter and First Half 2021 Non-GAAP Financial Summary
Second Quarter and First Half 2021 Non-GAAP Financial Summary 2Q20 1Q21 2Q21 1H21 Revenue $210M $193M $211M $404M +10% yr/yr Non-GAAP Gross 59% 57% 61% 59% Margin1 +1 ppt yr/yr Non-GAAP Opex1 $99M $95M $90M $186M +1% yr/yr Non-GAAP Operating 12% 8% 18% 13% Margin1 +5 ppts yr/yr Non-GAAP Adjusted $30
Slide 9: Second Quarter 2021 Non-GAAP Segment Summary
Second Quarter 2021 Non-GAAP Segment Summary Cloud and Edge IP Optical Networks Consolidated Revenue $141M $70M $211M Non-GAAP Gross Margin1 68% 48% 61% Non-GAAP Adjusted EBITDA1 $44M ($0.5M) $43M Non-GAAP Adjusted EBITDA Margin1 31% (1%) 20% Note: 1. Please see the basis of presentation and the non
Slide 10: Quarterly Performance: Revenue & Non-GAAP Gross Margins
Quarterly Performance: Revenue & Non-GAAP Gross Margins1 IP Optical Networks1 Cloud and Edge1 $154M $155M $147M $141M $128M $125M $89M $78M 67% 68% 68% $70M 66% 67% $64M $67M 62% $30M 48% 46% 44% 39% 39% 39% 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 1 Note: 1. Please see the basis
Slide 11: Second Quarter 2021 Key Metrics
Second Quarter 2021 Key Metrics Pipeline Revenue Mix Balance Sheet Cash Flow 2Q21 Book to Revenue1 Ratio of 35% Software Revenue2 Cash Balance $115M $14M Cash From Operations 1.02 34% Maintenance Revenue3 Debt5 $386M $13M Unlevered Free Cash Flow6 Annualized Weighted Interest Over 90% of 2021 mainte
Slide 12: Key Trends and Outlook
Key Trends and Outlook &) rioddon
Slide 13: Positioned for Increased Growth and On-Going Success
Positioned for Increased Growth and On-Going Success Favorable Industry Focused on Large Disruptive Trusted Business Trends Market Segments Innovation Partner • 4.5X growth in global mobile • Optical Transport • Software-defined, multilayer • We have the world’s leading traffic from 2020-20261 ➢ Met
Slide 14: Market Trends and Operating Environment
Market Trends and Operating Environment Expecting increased spend in second half to meet exponential traffic growth; significant IP Optical wins in 2Q21 provide momentum and validation of our strategy India: surge in COVID-19 cases impacting deployments; recovery timing uncertain but necessary to me
Slide 15: Third Quarter and Full Year 2021 Business Outlook
Third Quarter and Full Year 2021 Business Outlook 1H21 3Q21 FY21 (Actual) Revenue $404M $215M to $225M ~$900M India/Supply Dependency Non-GAAP Gross Margin1 59% 57% to 58% 58% to 59% Improved Non-GAAP Adjusted EBITDA1 $63M $32M to $36M $145M to $155M Unchanged Non-GAAP Diluted EPS1 $0.21 $0.11 to $0
Slide 16: Appendix
Appendix &) rioddon
Slide 17: Ribbon Condensed Statements of Operations
Ribbon Condensed Statements of Operations USD Millions except percentages and EPS 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 GAAP FINANCIAL MEASURES Product Revenue 76 121 129 142 468 98 113 Service Revenue 82 90 102 102 376 95 98 Total Revenue 158 210 231 244 844 193 211 Gross Profit 91 123 135 144 493 111
Slide 18: Ribbon Condensed Balance Sheets
Ribbon Condensed Balance Sheets USD Millions 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 ASSETS 1 Cash and cash equivalents 110 94 111 136 109 115 Accounts receivable, net 206 205 208 238 209 220 Inventory 67 58 51 46 45 47 Property and equipment, net 47 48 48 49 49 49 Intangible assets, net and Goodwill 866 866
Slide 19: Ribbon Condensed Statements of Cash Flows
Ribbon Condensed Statements of Cash Flows USD Millions 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 Cash from Operations 40 (3) 29 36 102 (6) 14 Purchases of property and equipment (6) (9) (4) (8) (27) (5) (5) Business Acquisitions (347) - - - (347) - - Sale of Fixed Assets 44 - - - 44 - 3 Borrowings, net 336
Slide 20: Ribbon Key Revenue Statistics
Ribbon Key Revenue Statistics USD Millions except for percentages 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 Revenue Product 76 121 129 142 468 98 113 Service 82 90 102 102 376 95 98 Total Revenue 158 210 231 244 844 193 211 % of Total Revenue: Revenue Mix Product 48% 57% 56% 58% 55% 51% 54% Services 52% 43
Slide 21: 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 excluding the recently acquire
Slide 22: Discussion of Non-GAAP Financial Measures
Discussion of Non-GAAP Financial Measures Our 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 compensa
Slide 23: Discussion of Non-GAAP Financial Measures (Continued)
Discussion of Non-GAAP Financial Measures (Continued) Acquisition-Related Inventory Adjustment Acquisition-related inventory adjustment amounts are inconsistent in frequency and amount and are significantly impacted by the then-current market prices of such inventory items. We believe that excluding
Slide 24: Discussion of Non-GAAP Financial Measures (Continued)
Discussion of Non-GAAP Financial Measures (Continued) Restructuring and Related Expense We have recorded restructuring and related expense to streamline operations and reduce operating costs by closing and consolidating certain facilities and reducing our worldwide workforce. We believe that excludi
Slide 25: Discussion of Non-GAAP Financial Measures (Continued)
Discussion of Non-GAAP Financial Measures (Continued) Tax Effect of Non-GAAP Adjustments Non-GAAP income tax expense is presented based on an estimated tax rate applied against forecasted annual non-GAAP income. Non-GAAP income tax expense assumes no available net operating losses or valuation allow
Slide 26: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $000's 1Q20 2Q20 3Q20 4Q20 FY20 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 27: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) $000's 1Q21 2Q21 Cloud and IP Optical Consolidated Cloud and IP Optical Consolidated Edge Networks Edge Networks Revenue $ 125,422 $ 67,350 $ 192,772 $ 141,421 $ 69,789 $ 211,210 GAAP Gross profit $ 84,162 $ 26,385 $ 110,547 $ 95,463 $ 32,964 $ 128,427 GAA
Slide 28: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) $000s 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 GAAP Operating expenses $ 119,264 $ 121,675 $ 123,037 $ 127,462 $ 491,438 $ 123,151 $ 115,475 Stock-based compensation (2,819) (3,024) (3,708) (3,473) (13,024) (4,798) (4,228) Amortization of acquired intangible ass
Slide 29: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 Earnings (loss) per share GAAP (Loss) per share or diluted earnings per share $ (0.27) $ (0.06) $ 0.04 $ 0.81 $ 0.61 $ (0.31) $ 0.15 Acquisition-related inventory adjustment - - 0.01 - 0.01 - - Stock-based compensation 0.
Slide 30: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) Three months ending Year ending September 30, 2021 December 31, 2021 Outlook Range Range Revenue (in $ millions) $ 215 $ 225 $ 900 $ 900 Gross margin GAAP outlook 56.8% 57.8% 57.8% 58.8% Stock-based compensation 0.2% 0.2% 0.2% 0.2% Non-GAAP outlook 57.0% 5
Slide 31: Thank you
Thank you &) rioddon
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