Slide 1: Ribbon Communications Investor Presentation
Ribbon Communications Investor Presentation Ray Dolan, President and CEO Sara Leggat, Investor Relations Fourth Quarter, 2017
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: Agenda
Agenda 1. Who is Ribbon Communications 2. Investment Thesis 3. Market Overview 4. Strategic Positioning 5. Growth Initiatives Kandy/Security 6. Financial Highlights 7. Q&A 3
Slide 4: Merger closed October 27th, 2017
Merger closed October 27th, 2017 Two decades of leadership in real-time communications Built on world class technology and intellectual property Market-leading portfolio and fully virtualized environment Global reach across 27 countries 4
Slide 5: Why Ribbon Communications?
Why Ribbon Communications? The world is more complexly woven together than ever before, impacting the way we live, work and play. Communications must be seamless, convenient and secure, and harmoniously threaded together. This is why we are launching Ribbon. Ribbon starts from the beginning and live
Slide 6: Who We Are
Who We Are Enabling and securing real-time communication at scale with Our Mission continuous focus on top and bottom line financial results Become a leader in the new mobile, Our Vision fixed, enterprise, cloud and security architectures for real time communications, while driving strong financial
Slide 7: A Multi-Year Journey
A Multi-Year Journey Acquiring, Integrating & Building a Strategic Business Media Gateways Session Border Enterprise Strategy Controllers Portfolio Policy & Routing Virtualized Virtualized SBC Cloud Offer GM1 57% GM1 67% GM1 71% 1997 …….. 2005 2007 2009 2011 2013 2015 2017 1999 2006 2008 2010 2012 2
Slide 8: Ribbon Communications is Transformational
Ribbon Communications is Transformational Key Pillars of Success Softswitching Cloud Services UC&C1 Security Virtualization Session Border Controllers Transforming Networks to Virtualization & Cloud 1) UC&C is abbreviated for Unified Communications & Collaboration. 8
Slide 9: Who is Ribbon Communications?
Who is Ribbon Communications? We provide end-to-end communications software and infrastructure solutions to Service Providers (Service Providers/MSO's1), Enterprises (focused on Financial, Federal, and Healthcare verticals) and Hyperscale Cloud Players. What we do: § We transform fixed, mobile and e
Slide 10: Investment Thesis
Investment Thesis Market leader in IP and cloud-based network transformation • Merger to drive strong financial performance: • Projected cost synergies of $50MM+ and adjusted EBITDA of $100MM in 2018 • Projected strong Free Cash Flow generation • Additional cost savings, revenue synergies and gross
Slide 11: Communications Networks are Rapidly Evolving
Communications Networks are Rapidly Evolving Service Providers Are… § Increasing Services Agility via Cloud to Compete § Looking to Lower Network Costs § Introducing New Services to Increase Revenue All while needing to secure communications Enterprises Are… § Enhancing Customer and Employee Engagem
Slide 12: Market Opportunity
Market Opportunity Growth Drivers § Service Provider: Interconnect / NNI / VoLTE / Access / UCaaS § Enterprise: Migration to SIP and Unified Communications § Network Transformation Longer Term Growth Driver § Migration to NFV § CPaaS/UCaaS/Kandy § Securing UC and Cloud 12
Slide 13: Network Transformation and Cloud Communications Markets
Network Transformation and Cloud Communications Markets Anticipated 2021 Total Addressable Market: $21.9B Estimated 2017-2021 CAGR +22.4% Network Transformation ($B) Cloud Services ($B) Expected 2021 TAM: $4B / 2017-2021 CAGR +3% $17.9 $18 In Network Network Virtualization $16 CAGR +30% $2.96 $14 $2
Slide 14: Ribbon Communications Go-To-Market (GTM) Opportunity
Ribbon Communications Go-To-Market (GTM*) Opportunity Leveraging Strong Virtualization Leadership CPaaS + UCaaS Incumbency Provides Opportunities Provides Opportunities Network Transformation ($B) Cloud Services ($B) Expected 2021 GTM: $2.2B / 2017-2021 CAGR +11.03% In Network Network Virtualization
Slide 15: Why is Ribbon Communications Strategically Positioned?
Why is Ribbon Communications Strategically Positioned? Deployed in the World’s Largest Real-Time Communication Networks Our DNA is Enabling Secure Real-Time Communications Unmatched Reliability, Performance and Functionality at Scale Leader in Signaling and Transcoding technology for Mobile Solution
Slide 16: Network Transformation Market – Competitive Landscape
Network Transformation Market – Competitive Landscape Competitive Advantages * • Portfolio Breadth – Broadest solution set in the market • Large Installed Base • Reliability, Performance and Functionality at Scale • Leader in Cloud and Virtualization • Leader in Signaling and Transcoding technology
Slide 17: Strong Growth Initiatives
Strong Growth Initiatives An innovative Cloud Solutions powered from the New offers can be rapidly Deployment options on Communications Kandy platform include: created via SDK's, API's, with the public cloud, carrier Platform enabling rapid Unified communications, revenue-ready micro-apps cloud, or
Slide 18: Financial Highlights
Financial Highlights ©: aereleya| communications
Slide 19: Ribbon Financial Profile
Ribbon Financial Profile GENBAND GENBAND GENBAND Non-GAAP Gross Adjusted EBITDA2 Revenue Margin $24 $22 GENBAND Stand-Alone Excludes Impact of $417 $427 $383 Merger with 47.5% 50.8% 51.5% Sonus1 ($25) 2015 2016 2017E3 2015 2016 2017E 3 2015 2016 2017E3 Sonus Sonus Non-GAAP Gross Sonus Revenue Adjust
Slide 20: Sonus Key Metrics
Sonus Key Metrics ($000's) Q317 Q217 Q117 FY16 Q416 Q316 Q216 Q116 FY15 Q415 Q315 Q215 Q115 Revenue Product 44,120 28,790 25,395 146,381 37,662 38,601 35,349 34,769 141,913 47,776 42,230 27,042 24,865 Services 30,509 26,943 27,973 106,210 29,910 26,410 25,508 24,382 107,121 28,550 25,632 27,659 25,2
Slide 21: Sonus Stand-Alone Projections Q4'17 and FY'17
Sonus Stand-Alone Projections Q4’17 and FY’17 Excludes Impact of the Merger with GENBAND1 Q417 Guidance FY17 Guidance Total Revenue $69M $252.6M Non-GAAP Gross Margin 72% 71% Non-GAAP net income $5.8M $13M2 Adjusted EBITDA3 $8.1M $21.2M 1) Sonus/GENBAND merger closed on 10/27/2017. 2) Equates to $0.
Slide 22: GENBAND Stand-Alone Projections Q4'17 and FY'17
GENBAND Stand-Alone Projections Q4’17 and FY’17 Excludes Impact of the Merger with Sonus1 Q417 Guidance FY17 Guidance Total Revenue $106M to $120M $375M to $390M Non-GAAP Gross Margin 55% to 56% 51% to 52% Non-GAAP net (loss) $1M to $10M ($10M) to ($1M) income Adjusted EBITDA2 $12M to $21M $17M to $
Slide 23: FY'17 Pro Forma (Sonus & GENBAND Combined)
FY’17 Pro Forma (Sonus & GENBAND Combined) Assumes mid-point of projections excluding purchase accounting $ Millions FY'17 FY'17 FY'17 Sonus GENBAND Combined Revenue $ 252.6 $ 382.5 $ 635.1 Non-GAAP Gross Margin 71% 51.5% 58.0% Adjusted non-GAAP EBITDA $ 21.0 $ 21.5 $ 42.5 The sum of the parts gets
Slide 24: FY'17 Guidance (Sonus & GENBAND Combined)
FY’17 Guidance (Sonus & GENBAND Combined) GENBAND1 Restructuring Sonus 10/30/2017 to Combined 01/01/2017- 10/30/2017-12/31/2017 12/31/2017 (2 month stub period) 12/31/2017 FY’17 Total Revenue $332.6M3 to excluding impact of $252.6M2 $80M3 to $90M3 $342.6M3 purchase accounting Non-GAAP Diluted $0.22
Slide 25: Summary
Summary Stronger Financial § Significantly higher revenue base, gross profit, earnings and cash flow Profile from operations; $100M Adjusted EBITDA expected in 2018 Scale and Synergy § Scalable cost structure to benefit from further consolidation potential Platform Strong Installed- § Large Nortel i
Slide 26: Appendix
Appendix {> 900N
Slide 27: Source references for Slides 13 and 14
Source references for Slides 13 and 14 1.TAM & Market Share (SS, MGW, VAS, SP-SBC ): IHS Markit, Q2-2017 Data, Service Provider VoIP and IMS Equipment and Subscribers, Published August 23, 2017, Edition Q3 2017 2. TAM & Market Share (E-SBC): IHS Markit, Q1-2017, Enterprise SBCs and VoIP Gateways, Pu
Slide 28: Acronym Descriptions
Acronym Descriptions •CAGR Compound Annual Growth •CPaaS Communications Platform as a Service •Diameter IP Signaling Solution/Protocol •E-SBC Enterprise Session Border Controller •GTM Go to Market (used to represent a portion of the TAM which is best fit for Ribbon solutions, applications, and produ
Slide 29: Discussion of Non-GAAP Financial Measures
Discussion of Non-GAAP Financial Measures Sonus 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 compen
Slide 30: Discussion of Non-GAAP Financial Measures (continued)
Discussion of Non-GAAP Financial Measures (continued) 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 timing and size of acquisitions. Althou
Slide 31: Discussion of Non-GAAP Financial Measures (continued)
Discussion of Non-GAAP Financial Measures (continued) We consider certain transition, integration and other acquisition-related costs to be unpredictable and dependent on a significant number of factors that may be outside of our control. We do not consider these acquisition-related costs to be rela
Slide 32: Discussion of Non-GAAP Financial Measures (continued)
Discussion of Non-GAAP Financial Measures (continued) When we originally prepared our outlook for the third quarter of 2017, as provided on August 3, 2017, we anticipated that we would reverse $0.7 million of deferred tax assets related to net operating loss carryforwards for our subsidiary in Canad
Slide 33: Sonus Gross Margin GAAP to Non-GAAP Reconciliation
Sonus Gross Margin GAAP to Non-GAAP Reconciliation FY'11 FY'14 FY'15 FY'16 GAAP total gross margin 56.3% 65.3% 64.9% 66.4% Stock-based compensation expense 0.6% 0.6% 0.7% 0.7% Amortization of intangible assets 0.0% 0.9% 2.2% 2.3% COGS set-up 0.0% 0.6% 0.0% 0.0% Non-GAAP total gross margin 56.9% 67.4
Slide 34: Sonus GAAP Net Loss to Adjusted EBITDA Non-GAAP Reconciliation
Sonus GAAP Net Loss to Adjusted EBITDA Non-GAAP Reconciliation FY'15 FY'16 Adjusted EBITDA GAAP net income (loss) $(31,895) $(13,932) Interest income/expense (207) (769) Income tax provision 2,007 2,516 Depreciation 11,961 7,970 Amortization of intangible assets 7,107 7,500 Other income/expense, net
Slide 35: Thank You
Thank You communications g> rlooon