Ribbon Communications Inc. · NASDAQ:RBBN
Ribbon Communications — Q3 2018 Earnings Presentation
24 slides from Ribbon Communications's earnings presentation, Oct 30, 2018
Slide 1: Third Quarter 2018 Financial Results
Third Quarter 2018 Financial Results October 30, 2018
Slide 2: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding 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 f
Slide 3: Strategy
Strategy Invest In Core Products with Balanced Investments Broaden Solution Offers to Global Installed Base Expand Into New Adjacent Markets and Applications Scale With Acquisitions and Alliances 3
Slide 4: Ribbon Non-GAAP Statements of Operations
Ribbon Non-GAAP1 Statements of Operations2 USD Millions except percentages and EPS FY16 Q117 Q217 Q317 Q417 FY17 Q118 Q218 Q318 Product Revenue 146 25 29 44 86 184 60 67 81 Service Revenue 106 28 27 31 83 169 76 77 77 Total Non-GAAP Revenue 253 53 56 75 169 353 135 145 159 Gross Margin 175 36 38 56
Slide 5: Ribbon Condensed Balance Sheets
Ribbon Condensed Balance Sheets USD Millions Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 ASSETS 1 Cash and Investments 126 129 126 132 83 85 55 43 Accounts Receivable, Net 54 40 43 52 165 126 136 151 Inventory, Net 18 18 17 16 21 21 19 22 Property Plant Equipment, Net 12 11 11 10 25 24 24 26 Goodwill an
Slide 6: Ribbon Condensed Statements of Cash Flows
Ribbon Condensed Statements of Cash Flows USD Millions FY16 Q117 Q217 Q317 Q417 FY17 Q118 Q218 Q318 Cash from Operations 19 4 (1) 6 (1) 8 3 (26) (1) Purchases of PP&E (5) (1) (2) (1) (1) (4) (2) (2) (2) Stock Repurchase (10) 0 0 0 0 0 0 0 0 Business Acquisitions (21) 0 0 0 (43) (43) 0 0 (46) Revolve
Slide 7: Ribbon GAAP Revenue Key Stats
Ribbon GAAP Revenue Key Stats1 USD Millions except for percentages FY16 Q117 Q217 Q317 Q417 FY17 Q118 Q218 Q318 GAAP Revenue Product 146 25 29 44 83 181 52 63 77 Services 106 28 27 31 63 149 70 74 75 Total GAAP Revenue 253 53 56 75 146 330 121 137 152 % of Total GAAP Revenue: GAAP Revenue Mix Produc
Slide 8: 2018 Full Year Guidance
2018 Full Year Guidance Full year revenue Outlook • 2018 Non-GAAP Revenue expected to be approximately $610 million – FY17 pro forma1 non-GAAP revenue was $643 million Full year adjusted EBITDA • Adjusted EBITDA2 expected be in excess of $80 million – FY17 pro forma1 Adjusted EBITDA was $45 million
Slide 9: Appendix
APPENDIX &Y riddon
Slide 10: Discussion of Non-GAAP Financial Measures
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 compe
Slide 11: Discussion of Non-GAAP Financial Measures (continued)
Discussion of Non-GAAP Financial Measures (continued) 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
Slide 12: Discussion of Non-GAAP Financial Measures (continued)
Discussion of Non-GAAP Financial Measures (continued) 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 timin
Slide 13: Discussion of Non-GAAP Financial Measures (continued)
Discussion of Non-GAAP Financial Measures (continued) 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 settlem
Slide 14: Discussion of Non-GAAP Financial Measures (continued)
Discussion of Non-GAAP Financial Measures (continued) Merger Integration Costs We consider certain merger integration costs to be unpredictable and dependent on a significant number of factors that may be outside of our control. This amount represents costs related to the Merger initially recorded a
Slide 15: Discussion of Non-GAAP Financial Measures (continued)
Discussion of Non-GAAP Financial Measures (continued) Depreciation Expense Related to Abandoned Facilities During the second quarter of 2015, we reached an agreement with the landlord of one of our previously restructured facilities to vacate the facility without penalty or future payments. As a res
Slide 16: Discussion of Non-GAAP Financial Measures (continued)
Discussion of Non-GAAP Financial Measures (continued) Restructuring We have recorded restructuring expense to streamline operations and reduce operating costs by closing and consolidating certain facilities and reducing our worldwide workforce. We review our restructuring accruals regularly and reco
Slide 17: Discussion of Non-GAAP Financial Measures (continued)
Discussion of Non-GAAP Financial Measures (continued) Tax Benefits Arising from Purchase Accounting and Tax Reform In both the third quarter of 2018 and the fourth quarter of 2017, we assessed our ability to use our tax benefits and determined that it was more likely than not that some of these bene
Slide 18: Discussion of Non-GAAP Financial Measures (continued)
Discussion of Non-GAAP Financial Measures (continued) 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;
Slide 19: 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 Q218 Q318 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 $ 63,123 $ 77,283 Acquisition-related revenue adjustm
Slide 20: 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 Q218 Q318 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 $ 91,747 $ 89,800 Stock-based compensa
Slide 21: 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 Q218 Q318 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) $
Slide 22: 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 Q218 Q318 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) $ (19,922)
Slide 23: Standalone Ribbon Financial Measures (Excluding Edgewater) Reconciliation
Standalone Ribbon Financial Measures (Excluding Edgewater) Reconciliation $000's Q318 Non-GAAP Consolidated total revenue $ 158,709 Less Edgewater (10,430) Non-GAAP Total revenue excluding Edgewater $ 148,279 Non-GAAP Consolidated diluted earnings per share $ 0.21 Less Edgewater (0.01) Non-GAAP Dilu
Slide 24: Outlook GAAP to Non-GAAP Reconciliation
Outlook GAAP to Non-GAAP Reconciliation $ millions Year ending December 31, 2018 Non-GAAP Revenue $ 610 Less acquisition-related adjustments and impact of new revenue standard (34) GAAP Revenue $ 576 Adjusted EBITDA: Ribbon has not provided a reconciliation of Adjusted EBITDA for the year ending Dec
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