Ribbon Communications Inc. · NASDAQ:RBBN
Ribbon Communications — Q1 2021 Earnings Presentation
30 slides from Ribbon Communications's earnings presentation, Apr 28, 2021
Slide 1: First Quarter 2021 Results
Ribbon Communications First Quarter 2021 Results April 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: First Quarter 2021 Business Overview
First Quarter 2021 Business Overview Bruce McClelland, President & CEO Mick Lopez, Executive Vice President & CFO
Slide 4: First Quarter 2021 Business Highlights
First Quarter 2021 Business Highlights ▪ Strong performance in Cloud & Edge segment with Non-GAAP Adjusted EBITDA up 191% year over year1 to $28 million o Core SBC grew 12% year over year1 o Support for newly introduced Microsoft Operator Connect o Continued strong demand for VoIP Network Transforma
Slide 5: First Quarter 2021 Financial Highlights
First Quarter 2021 Financial Highlights Growing Revenue Balance Sheet Improving Profitability $193M, up $35M YoY1; (includes $109M Ending Cash $20M Adjusted EBITDA2, up $37M YoY increase in IP Optical) Amended credit facility, 106% YoY1 weighted average interest rate 3.40% Cloud and Edge2 IP Optical
Slide 6: First Quarter 2021 GAAP Financial Summary
First Quarter 2021 GAAP Financial Summary 1Q201 4Q201 1Q211 Revenue $158M $244M $193M Gross Margin 57% 59% 57% The sale of the Kandy business to American Virtual Cloud Technologies, Inc. (AVCT) in 4Q20 resulted in a non-cash GAAP gain of Opex $119M $127M $123M $114M and $0.74 increase to EPS in 4Q20
Slide 7: Total Revenue and Adjusted EBITDA
Total Revenue and Adjusted EBITDA1 $244M $231M $210M $78M $89M $193M $64M $158M $158M $67M $30M $30M $154M $155M $147M (Kandy $2M) $128M (Kandy $3M) (Kandy $4M) $128M $125M (Kandy $3M) (Kandy $3M) $43M $49M $20M $10M $30M $10M 1Q20 2Q20 3Q20 4Q20 1Q20 1Q21 Note: 1. Please see the basis of presentati
Slide 8: First Quarter 2021 Non-GAAP Financial Summary
First Quarter 2021 Non-GAAP Financial Summary 1Q20 4Q20 1Q21 Revenue $158M $244M $193M Non-GAAP Gross Margin1 57% 59% 57% Non-GAAP Opex1 $85M $100M $95M Non-GAAP Operating 4% 18% 8% Margin1 Non-GAAP Adjusted $10M $49M $20M EBITDA1 Non-GAAP Diluted EPS1 $0.01 $0.18 $0.03 Note: 1. Please see the basis
Slide 9: First Quarter 2021 Non-GAAP Segment Summary
First Quarter 2021 Non-GAAP Segment Summary Cloud and Edge IP Optical Networks Consolidated Revenue $125M $67M $193M Non-GAAP Gross Margin1 67% 39% 57% Non-GAAP Adjusted EBITDA1 $28M ($9M) $20M Non-GAAP Adjusted EBITDA Margin1 23% (13%) 10% Note: 1. Please see the basis of presentation and the non-G
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 $128M $125M $89M $78M 67% 68% 66% 67% $64M $67M 62% $30M 46% 44% 39% 39% 39% 1Q20 2Q20 3Q20 4Q20 1Q21 1Q20 2Q20 3Q20 4Q20 1Q21 1 Note: 1. Please see the basis of presentation and the non-G
Slide 11: First Quarter 2021 Key Metrics
First Quarter 2021 Key Metrics Pipeline Revenue Mix Balance Sheet Cash Flow 1Q21 Book to Revenue1 30% Software Revenue2 Cash Balance $109M ($6M) Cash From Operations Ratio of 1.14 36% Maintenance Revenue3 Debt5 $391M ($7M) Unlevered Free Cash Flow6 Nearly 80% of 2021 Top 10 Customers Revenue 46%3 Cu
Slide 12: Key Trends and Outlook
Key Trends and Outlook &) rioddon
Slide 13: Market Trends and Operating Environment
Market Trends and Operating Environment Market Trends Portfolio and Customer Activity • Strong secular demand for bandwidth accelerated by Cloud & Edge COVID-19 with increased federal funding opportunities ‒ Enterprise adoption of Cloud Communications driving growth in SBC demand thru Service Provid
Slide 14: Second Quarter and Full Year 2021 Business Outlook
Second Quarter and Full Year 2021 Business Outlook 2020 2Q21 FY21 Revenue $844M $215M to $225M $925M to $945M Non-GAAP Gross Margin1 59% 56% to 57% 55% to 56% Non-GAAP Adjusted EBITDA1 $131M $30M to $34M $145M to $155M Non-GAAP Diluted EPS1 $0.43 $0.09 to $0.11 $0.49 to $0.54 Interest & Other Expens
Slide 15: Appendix
Appendix &) rioddon
Slide 16: Ribbon Condensed Statements of Operations
Ribbon Condensed Statements of Operations USD Millions except percentages and EPS 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 GAAP FINANCIAL MEASURES Product Revenue 76 121 129 142 468 98 Service Revenue 82 90 102 102 376 95 Total Revenue 158 210 231 244 844 193 Gross Profit 91 123 135 144 493 111 Gross Margin %
Slide 17: Ribbon Condensed Balance Sheets
Ribbon Condensed Balance Sheets USD Millions 1Q20 2Q20 3Q20 4Q20 1Q21 ASSETS Cash and cash equivalents1 110 94 111 136 109 Accounts receivable, net 206 205 208 238 209 Inventory 67 58 51 46 45 Property and equipment, net 47 48 48 49 49 Intangible assets, net and Goodwill 866 866 850 834 818 Investme
Slide 18: Ribbon Condensed Statements of Cash Flows
Ribbon Condensed Statements of Cash Flows USD Millions 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 Cash from Operations 40 (3) 29 36 102 (6) Purchases of property and equipment (6) (9) (4) (8) (27) (5) Business Acquisitions (347) - - - (347) - Sale of Fixed Assets 44 - - - 44 - Borrowings, net 336 (4) (7) (3) 322
Slide 19: Ribbon Key Revenue Statistics
Ribbon Key Revenue Statistics USD Millions except for percentages 1Q20 2Q20 3Q20 Q420 FY20 1Q21 Revenue Product 76 121 129 142 468 98 Service 82 90 102 102 376 95 Total Revenue 158 210 231 244 844 193 % of Total Revenue: Revenue Mix Product 48% 57% 56% 58% 55% 51% Services 52% 43% 44% 42% 45% 49% Re
Slide 20: 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 Communications excluding the r
Slide 21: 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 22: 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 23: Discussion of Non-GAAP Financial Measures (continued)
Discussion of Non-GAAP Financial Measures (continued) Acquisition-, Disposal- and Integration-Related Expense We consider certain acquisition-, disposal- and integration-related costs to be unrelated to the organic continuing operations of our acquired businesses and the Company, and such costs are
Slide 24: Discussion of Non-GAAP Financial Measures (continued)
Discussion of Non-GAAP Financial Measures (continued) Interest Income on Debentures We recorded paid-in-kind interest income on the Debentures, which increased their fair value. We exclude this interest income because we believe that such a gain is not part of our core business or ongoing operations
Slide 25: 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 Income (loss) from operations: depreciation; amortization of acquired intangible assets; stock-b
Slide 26: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $000's 1Q20 2Q20 3Q20 4Q20 FY20 Q121 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 Cloud and IP Optical Consolidated Edge Networks Edge Networks
Slide 27: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) $000s 1Q20 Q220 Q320 Q420 FY20 Q121 GAAP Operating expenses $ 119,264 $ 121,675 $ 123,037 $ 127,462 $ 491,438 $ 123,151 Stock-based compensation (2,819) (3,024) (3,708) (3,473) (13,024) (4,798) Amortization of acquired intangible assets (14,334) (14,669) (
Slide 28: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 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) Acquisition-related inventory adjustment - - 0.01 - 0.01 - Stock-based compensation 0.02 0.02 0.03 0
Slide 29: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) Three months ending Year ending June 30, 2021 December 31, 2021 Outlook Range Range Revenue (in $ millions) $ 215 to $ 225 $ 925 to $ 945 Gross margin GAAP outlook 55.9% 56.9% 54.9% 55.9% Stock-based compensation 0.1% 0.1% 0.1% 0.1% Non-GAAP outlook 56.0%
Slide 30: Thank you
Thank you &) rioddon
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