Slide 1: Needham Virtual Security, Networking & Communications Conference
Needham Virtual Security, Networking & Communications Conference November 16, 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: Key Technology Trends Are Transforming Our Communications Networks
Key Technology Trends Are Transforming Our Communications Networks Market Connected Applications Software Personalized Explosion Drivers Devices for Everything As a Service & Customized of Data Software Wireless Everything Technology Driven Network Moving to Trends Innovations Utilization the Cloud
Slide 4: Carriers and Enterprises are Facing Evolving Network Challenges
Carriers and Enterprises are Facing Evolving Network Challenges Global Internet Users 5G Mobile Subscriptions Unified Communications 66% ▪ Global Internet Users to surpass 3.5B ▪ 55% CAGR from 2020 to 2026 >1B ▪ Zoom has 497k customers with Global 5.3B by 2023 >10 employees Global 5G ▪ 5G to reach 4
Slide 5: Key Company Highlights
Key Company Highlights ➢ Market leader in Session Border is a unique Company Controllers globally ➢ Recognized for delivering a very strong providing open cloud-centric 5G optical transport portfolio solutions spanning multiple ➢ Positioned to capitalize on large growing optical networking markets n
Slide 6: Ribbon at a Glance
Ribbon at a Glance Global provider of software and network solutions to service providers, enterprises, and critical infrastructure sectors enabling communications and high-bandwidth networking and connectivity Headquarters: Plano, Texas • NASDAQ: RBBN 1000+ $844M 3,700 140 1000+ Customers1 2020 Rev
Slide 7: Rich History of Innovation Brought Together as Ribbon
Rich History of Innovation Brought Together as Ribbon Session Border Controllers Secure and interwork VoIP communications networks and enable 2018 2019 2020 cloud communications applications 2017 Founded 1997 2010 Media Gateways Interwork legacy voice communications networks with Voice over Internet
Slide 8: Experienced Leadership Team
Experienced Leadership Team Tony Scarfo Mick Lopez Patrick Macken Sam Bucci Bruce Steven Bruny Steve McCaffery Petrena Ferguson Sean Matthews EVP, GM Cloud EVP & Chief EVP, General EVP, GM IP Optical McClelland EVP., Sales, EVP, Sales, EMEA SVP Human EVP Corp. Dev & Edge BU Financial Officer Counsel
Slide 9: 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 10: Servicing Multiple Segments Across the Network
Servicing Multiple Segments Across the Network 2020 Serviceable Market Education Utilities Enterprises Health Res Transportation IP Routing Mobile Access $6B Aggregation Dell’Oro Service Provider Edge Router minus China Optical Transport Metro $8B Dell’Oro Metro & Long Haul minus China and DCI Core
Slide 11: Focused on Gaining Share in Large Markets
Focused on Gaining Share in Large Markets Higher Growth Serviceable Share Gain Focus Market Segments and CAGR IP Routing Edge Router 3% 1 Focus on higher-growth market sub-segments 2 Leading the transition to Open Networking Optical Transport WDM Metro 3% 3 Disruptive solutions enabled by 5G and clo
Slide 12: IP Optical Networking Portfolio Delivering Multi-layer Optimization
IP Optical Networking Portfolio Delivering Multi-layer Optimization Higher Level Services User Orchestration Interface Controller - Muse MuseTM Domain Orchestration Multi-layer Optimization Increase in automation Network Controller Network Network Improved asset utilization Platform Admin Network Se
Slide 13: Secure VoIP Portfolio Applications Across Networks and the Cloud
Secure VoIP Portfolio Applications Across Networks and the Cloud Enterprise Enterprise Network Secure Unified Communications and Teams and Zoom Calling Secure Contact Center Cloud Cloud Secure VoIP, UC applications and Teams Analytics and Call Trust Secure Contact Center Service Provider VoIP Commun
Slide 14: Significant Revenue from Services and Recurring Maintenance
Significant Revenue from Services and Recurring Maintenance Professional Services Presence and Scale ($101M revenue in 2020) Network analysis & Engineering design Integration & consulting & installation validation Transformation & Managed network migration operation Maintenance Provides Durable Recu
Slide 15: Total Revenue and Adjusted EBITDA
Total Revenue and Adjusted EBITDA1 $244M $231M $210M $211M $210M $78M $89M $193M $64M $70M $68M $158M $67M $30M 3Q21 results negatively impacted by global $155M supply challenges; $154M $141M $142M $147M (Kandy $2M) $125M impact to revenue: $128M (Kandy $3M) (Kandy $4M) (Kandy $3M) $43M ~$9.5M $30M
Slide 16: Third Quarter 2021 Financial Highlights
Third Quarter 2021 Financial Highlights 3Q21 and YTD21 Revenue Balance Sheet and Cash Flow Profitability Company Metrics Financials $210M in 3Q21, down 7% YoY1 $104M Ending Cash $32M Adjusted EBITDA4 (excluding Kandy) 15% Adj. EBITDA margin $0M Cash Flow from Operations; $614M in YTD FY21, up 4% YoY
Slide 17: Executing on our Strategy
Executing on our Strategy Expanding Tier One IP Optical Wins and Pipeline Engagement Evaluation New Wins (last 6 months) Scaled Deployments $ $ $$ $$$ 17
Slide 18: Capital Position and Priorities
Capital Position and Priorities Capital Priorities ($M) 2019 2020 • $381 million in debt1 with annualized weighted average interest rate of 2.90% as GAAP Net Cash provided by of end of 3Q21 56 102 operating activities • $104 million in cash as of end 3Q21; will evaluate opportunities to gain scale i
Slide 19: 2022 Operating Environment: Growth Opportunity Ahead
2022 Operating Environment: Growth Opportunity Ahead Service providers Telecommunications Global supply chain accelerating investments in modernization driving disruptions provide 5G and fiber to the home network transformation challenges and opportunities products and services Ribbon’s growing pres
Slide 20: Ribbon Spotlight Series
Ribbon Spotlight Series Date: November 18th Date: November 18th Time: 11 am EST Time: 2 pm EST Transitioning networks to the cloud with cloud-native Creating better overall economics and services velocity software to drive new 5G and business service revenues for IP Optical with CI/CD and automation
Slide 21: Building Shareholder Value
Building Shareholder Value Strategy to Address Growing Market Opportunity ✓ Favorable industry trends ✓ Focused on large market segments ✓ Disruptive innovation ✓ Trusted business partner Strong Leadership and Execution ✓ Experienced management team with proven track record incentivized to drive gro
Slide 22: Appendix
Appendix &) rioddon
Slide 23: Ribbon Condensed Statements of Operations
Ribbon Condensed Statements of Operations USD Millions except percentages and EPS 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 3Q21 GAAP FINANCIAL MEASURES Product Revenue 76 121 129 142 468 98 113 112 Service Revenue 82 90 102 102 376 95 98 99 Total Revenue 158 210 231 244 844 193 211 210 Gross Profit 91 123
Slide 24: Ribbon Condensed Balance Sheets
Ribbon Condensed Balance Sheets USD Millions 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 ASSETS 1 Cash and cash equivalents 110 94 111 136 109 115 104 Accounts receivable, net 206 205 208 238 209 220 236 Inventory 67 58 51 46 45 47 45 Property and equipment, net 47 48 48 49 49 49 49 Intangible assets, net an
Slide 25: Ribbon Condensed Statements of Cash Flows
Ribbon Condensed Statements of Cash Flows USD Millions 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 3Q21 Cash from Operations 40 (3) 29 36 102 (6) 14 (0) Purchases of property and equipment (6) (9) (4) (8) (27) (5) (5) (4) Business Acquisitions (347) - - - (347) - - - Sale of Fixed Assets 44 - - - 44 - 3 - Bo
Slide 26: Ribbon Key Revenue Statistics
Ribbon Key Revenue Statistics USD Millions except for percentages 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 3Q21 Revenue Product 76 121 129 142 468 98 113 112 Service 82 90 102 102 376 95 98 99 Total Revenue 158 210 231 244 844 193 211 210 % of Total Revenue: Revenue Mix Product 48% 57% 56% 58% 55% 51% 54%
Slide 27: Addressable Market Sizing References
Addressable Market Sizing References 1. Dell’Oro Group, Optical Transport Five Year Forecast Report 2021 – 2025 (Optical), (Yearly) Volume 21, Number 1 O2A, Published January 2021, Covering: WDM, Multiservice Multiplexer, Optical Switch, Optical Packet, and Data Center Interconnect 2. Dell’Oro Group
Slide 28: 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 29: 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 our business, making operating decisions, planning and forecasting future periods, and determining payments under compensa
Slide 30: 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 31: 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 32: Discussion of Non-GAAP Financial Measures (Continued)
Discussion of Non-GAAP Financial Measures (Continued) (Increase) Decrease in Fair Value of Investments We calculate the fair values of the Debentures and Warrants (prior to September 8, 2021) and the shares of AVCT common stock and Warrants (effective September 8, 2021) at each quarter-end and recor
Slide 33: 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 34: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) $000's 1Q21 2Q21 3Q21 3Q21 YTD 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 Revenue $ 125,422 $ 67,350 $ 192,
Slide 35: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) $000s 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 3Q21 3Q21 YTD GAAP Operating expenses $ 119,264 $ 121,675 $ 123,037 $ 127,462 $ 491,438 $ 123,151 $ 115,475 $ 118,336 $ 356,962 Stock-based compensation (2,819) (3,024) (3,708) (3,473) (13,024) (4,798) (4,228) (3,97
Slide 36: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 3Q21 3Q21 YTD 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 $ (0.40) $ (0.55) Acquisition-related inventory adjustment - - 0.01 - 0.01
Slide 37: Thank you
Thank you &) rioddon