Ribbon Communications Inc. · NASDAQ:RBBN
Ribbon Communications — FY2021 Earnings Presentation
34 slides from Ribbon Communications's earnings presentation, Feb 16, 2022
Slide 1: Fourth Quarter and Full Year 2021 Results
Ribbon Communications Fourth Quarter and Full Year 2021 Results February 16, 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: Fourth Quarter and Full Year 2021 Business Overview
Fourth Quarter and Full Year 2021 Business Overview Bruce McClelland, President & CEO Mick Lopez, Executive Vice President & CFO
Slide 4: 2021 In Review & the Path Ahead
2021 In Review & the Path Ahead 2H21 Results Investing 2022 2023 and Below Expectation for Growth Targets Beyond • Converting numerous new Realigning investment Revenue: Significant player in IP Optical IP Optical wins to towards growth: • IP Optical: 10%+ • Optical Transport sustainable revenue tak
Slide 5: 2022 Operating Environment
2022 Operating Environment Network modernization top of Service providers accelerating Global supply chain mind for Service Providers investments in 5G and fiber disruptions and Enterprise Unique competitive Regional trends affecting Public investment in environment creates investment network infras
Slide 6: Our Product Strategy Builds on Key Technology Trends
Our Product Strategy Builds on Key Technology Trends Unified Service migration IP + Optical Open Networking Communications to the Cloud • 4.5X growth in global mobile • Best-of-breed agile solutions • Broad adoption of cloud-based • Pre-integrated friction-free traffic from 2020-20261 driving unifie
Slide 7: IP Wave Portfolio
IP Wave Portfolio Better Economics, Better Agility, Better Partner Key Additions Cognitive Software – Muse • MUSE Essentials – supporting Ribbon portfolio Multi Domain Control & Orchestration • MUSE Pro – including HMDO, custom automation Network Controller Network Planner Network Analytics Optimize
Slide 8: Key New Customer Wins & Awards in 2021
Key New Customer Wins & Awards in 2021 Customer Wins Awards IP and Optical Cloud & Edge Enterprise Cloud & Edge Telco Cloud 8
Slide 9: Fourth Quarter 2021 Business Highlights
Fourth Quarter 2021 Business Highlights ▪ IP Optical Networks 4Q21 revenue of $83 million, up 22% from 3Q21 o Initiated major project with U.S. Tier 1 service provider to modernize their fixed voice infrastructure over the next several years that will significantly reduce the complexity and operatin
Slide 10: Fourth Quarter and Full Year 2021 Financial Highlights
Fourth Quarter and Full Year 2021 Financial Highlights 4Q21 and FY21 Revenue Balance Sheet and Cash Flow Profitability Company Metrics Financials $231M in 4Q21, down 5% YoY1 $106M Ending Cash $26M Adjusted EBITDA3 in 4Q21 (excluding Kandy) $11M Cash Flow from Ops in 4Q21 $120M Adjusted EBITDA3 in FY
Slide 11: Fourth Quarter and Full Year 2021 GAAP Financial Summary
Fourth Quarter and Full Year 2021 GAAP Financial Summary 4Q201 3Q211 4Q211 20201 20211 Revenue $244M $210M $231M $844M $845M Gross Margin 55% 53% 50% 53% 53% 4Q21 Opex includes $116 million Opex $117M $109M $235M $449M $562M impairment against our IP Optical Networks goodwill carrying value Income (
Slide 12: Total Revenue and Adjusted EBITDA
Total Revenue and Adjusted EBITDA1 $244M $231M $231M $210M $211M $210M $89M $193M $78M $83M $64M $70M $68M $158M $67M $30M $147M $154M $155M $141M $142M $147M (Kandy $2M) $125M $128M (Kandy $3M) (Kandy $4M) (Kandy $3M) $30M $32M $26M $49M $20M $10M $43M $43M 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1
Slide 13: Fourth Quarter and Full Year 2021 Non-GAAP Financial Summary
Fourth Quarter and Full Year 2021 Non-GAAP Financial Summary 4Q20 3Q21 4Q21 FY20 FY21 Revenue $244M $210M $231M $844M $845M Non-GAAP Gross 59% 57% 54% 59% 57% Margin1 Non-GAAP Opex1 $100M $93M $102M $382M $381M Non-GAAP 18% 13% 9% 14% 12% Operating Margin1 Non-GAAP $49M $32M $26M $131M $120M Adjuste
Slide 14: Fourth Quarter and Full Year 2021 Non-GAAP Segment Summary
Fourth Quarter and Full Year 2021 Non-GAAP Segment Summary 4Q21 4Q21 FY21 FY21 Cloud and IP Optical 4Q21 Cloud and IP Optical FY21 Edge Networks Consolidated Edge Networks Consolidated Revenue $147M $83M $231M $557M $288M $845M Non-GAAP Gross 64% 36% 54% 67% 40% 57% Margin1 Non-GAAP $37M ($11M) $26M
Slide 15: Fourth Quarter 2021 Key Metrics
Fourth Quarter 2021 Key Metrics Pipeline Revenue Mix Balance Sheet Cash Flow 4Q21 Book to Revenue1 Ratio of 33% Software Revenue2 Cash Balance $106M $11M Cash From Operations 1.14 32% Maintenance Revenue3 Debt5 $377M $3M Capex Over 60% of 2022 maintenance Top 10 Customers Revenue 43%3 Annualized Wei
Slide 16: 1Q22 and FY22 Outlook
1Q22 and FY22 Outlook &) rioddon
Slide 17: First Quarter and Full Year 2022 Business Outlook
First Quarter and Full Year 2022 Business Outlook FY21 1Q22 FY22 (Actual) Revenue $845M $165M to $180M $850M to $880M Non-GAAP Gross Margin1 57% 50% to 51% 55% to 56% Non-GAAP Adjusted EBITDA1 $120M ($11M) to ($5M) $110M to $120M Non-GAAP Diluted EPS1 $0.32 ($0.10) to ($0.07) $0.30 to $0.34 Interest
Slide 18: Appendix
Appendix &) rioddon
Slide 19: Ribbon Condensed Statements of Operations
Ribbon Condensed Statements of Operations USD Millions except percentages and EPS 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 3Q21 4Q21 FY21 GAAP FINANCIAL MEASURES Product Revenue 76 121 129 142 468 98 113 112 130 453 Service Revenue 82 90 102 102 376 95 98 99 100 392 Total Revenue 158 210 231 244 844 193 2
Slide 20: Ribbon Condensed Balance Sheets
Ribbon Condensed Balance Sheets USD Millions 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 ASSETS Cash and cash equivalents1 110 94 111 136 109 115 104 106 Accounts receivable, net 206 205 208 238 209 220 236 283 Inventory 67 58 51 46 45 47 45 54 Property and equipment, net 47 48 48 49 49 49 49 48 Intangi
Slide 21: Ribbon Condensed Statements of Cash Flows
Ribbon Condensed Statements of Cash Flows USD Millions 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 3Q21 4Q21 FY21 Cash from Operations 40 (3) 29 36 102 (6) 14 (0) 11 19 Purchases of property and equipment (6) (9) (4) (8) (27) (5) (5) (4) (3) (17) Business Acquisitions (347) - - - (347) - - - - - Sale of Fixe
Slide 22: Ribbon Key Revenue Statistics
Ribbon Key Revenue Statistics USD Millions except for percentages 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 3Q21 4Q21 FY21 Revenue Product 76 121 129 142 468 98 113 112 130 453 Service 82 90 102 102 376 95 98 99 100 392 Total Revenue 158 210 231 244 844 193 211 210 231 845 % of Total Revenue: Revenue Mix P
Slide 23: 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 24: 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 25: 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 26: Discussion of Non-GAAP Financial Measures (Continued)
Discussion of Non-GAAP Financial Measures (Continued) Litigation Costs The Company has been involved in litigation with a former GENBAND business partner and had reached a settlement with the other party. The Company excludes the costs of such litigation because it believes such costs are not part o
Slide 27: Discussion of Non-GAAP Financial Measures (Continued)
Discussion of Non-GAAP Financial Measures (Continued) Restructuring and Related Expense The Company has recorded restructuring and related expense to streamline operations and reduce operating costs by closing and consolidating certain facilities and reducing its worldwide workforce. The Company bel
Slide 28: Discussion of Non-GAAP Financial Measures (Continued)
Discussion of Non-GAAP Financial Measures (Continued) (Increase) Decrease in Fair Value of Investments The Company calculates the fair values of the Debentures and the Warrants (prior to September 8, 2021) and the Debenture Shares and Warrants (effective September 8, 2021) at each quarter-end and re
Slide 29: 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 30: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) $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 Network
Slide 31: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) $000s 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 3Q21 4Q21 FY21 GAAP Operating expenses $ 110,310 $ 110,725 $ 111,394 $ 116,719 $ 449,148 $ 113,090 $ 105,775 $ 108,662 $ 234,929 $ 562,456 Stock-based compensation (2,819) (3,024) (3,708) (3,473) (13,024) (4,798) (4
Slide 32: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 3Q21 4Q21 FY21 GAAP (Loss) per share or diluted earnings per share $ (0.27) $ (0.06) $ 0.04 $ 0.81 $ 0.61 $ (0.31) $ 0.15 $ (0.40) $ (0.65) $ (1.20) Stock-based compensation 0.02 0.02 0.03 0.02 0.11 0.03 0.03 0.03 0.03 0.
Slide 33: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) Three months ending Year ending March 31, 2022 December 31, 2022 Outlook Range Range Revenue ($ millions) $ 165 $ 180 $ 850 $ 880 Gross margin: GAAP outlook 44.6% 46.0% 51.0% 52.1% Stock-based compensation 0.4% 0.4% 0.4% 0.4% Amortization of acquired techn
Slide 34: Thank you
Thank you &) rioddon