Ribbon Communications Inc. · NASDAQ:RBBN
Ribbon Communications — Oppenheimer 24th Annual Technology, Internet & Communications Conference (August 2021)
39 slides from Ribbon Communications's conference presentation, Aug 11, 2021
Slide 1: Ribbon Communications
Ribbon Communications Oppenheimer 24th Annual Technology, Internet & Communications Conference August 11, 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: We Provide Real Time Communications Technology
We Provide Real Time Communications Technology IP Optical Networking • IP Switching and Routing • High-capacity Optical Transport Enterprise & Service • SDN, Automation & Multi-layer networking Industry Providers Secure VoIP Communications Verticals • Cloud-based secure Voice over IP • Voice calling
Slide 8: 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 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: Large and Diverse Service Provider and Enterprise Customer Base
Large and Diverse Service Provider and Enterprise Customer Base Telco and Mobile Multi-System Operators Enterprise Verticals Utilities Transportation Government Finance Healthcare Education 15
Slide 16: Second Quarter 2021 Results Overview
Second Quarter 2021 Results Overview Bruce McClelland, President & CEO Mick Lopez, Executive Vice President & CFO
Slide 17: Business Highlights
Business Highlights ▪ Strong 1H21 financial results: o 10% YoY1 revenue growth o 60% YoY1 Adj. EBITDA growth o Strong gross margins in both business units and continued disciplined expense control ▪ Significant new IP Optical wins broadening Ribbon’s global customer base: o Rogers Communications sel
Slide 18: Second Quarter 2021 Financial Highlights
Second Quarter 2021 Financial Highlights Growing Revenue Balance Sheet and Cash Flow Improving CompanyProfitability Financials $211M in 2Q21, up 2% YoY1 $115M Ending Cash $43M Adjusted EBITDA3, up 46% YoY4 (excluding Kandy) $14M Cash Flow from $0.17 Non-GAAP EPS3, up 113% YoY4 $404M in 1H21, up 12%
Slide 19: Second Quarter and First Half 2021 Non-GAAP Financial Summary
Second Quarter and First Half 2021 Non-GAAP Financial Summary 2Q20 1Q21 2Q21 1H21 Revenue $210M $193M $211M $404M +10% yr/yr Non-GAAP Gross 59% 57% 61% 59% Margin1 +1 ppt yr/yr Non-GAAP Opex1 $99M $95M $90M $186M +1% yr/yr Non-GAAP Operating 12% 8% 18% 13% Margin1 +5 ppts yr/yr Non-GAAP Adjusted $30
Slide 20: Quarterly Performance: Revenue & Non-GAAP Gross Margins
Quarterly Performance: Revenue & Non-GAAP Gross Margins1 IP Optical Networks1 Cloud and Edge1 $154M $155M $147M $141M $128M $125M $89M $78M 67% 68% 68% $70M 66% 67% $64M $67M 62% $30M 48% 46% 44% 39% 39% 39% 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 1 Note: 1. Please see the basis
Slide 21: Second Quarter 2021 Key Metrics
Second Quarter 2021 Key Metrics Pipeline Revenue Mix Balance Sheet Cash Flow 2Q21 Book to Revenue1 Ratio of 35% Software Revenue2 Cash Balance $115M $14M Cash From Operations 1.02 34% Maintenance Revenue3 Debt5 $386M $13M Unlevered Free Cash Flow6 Annualized Weighted Interest Over 90% of 2021 mainte
Slide 22: Market Trends and Operating Environment
Market Trends and Operating Environment Expecting increased spend in second half to meet exponential traffic growth; significant IP Optical wins in 2Q21 provide momentum and validation of our strategy India: surge in COVID-19 cases impacting deployments; recovery timing uncertain but necessary to me
Slide 23: 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 24: Appendix
Appendix &) rioddon
Slide 25: Ribbon Condensed Statements of Operations
Ribbon Condensed Statements of Operations USD Millions except percentages and EPS 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 GAAP FINANCIAL MEASURES Product Revenue 76 121 129 142 468 98 113 Service Revenue 82 90 102 102 376 95 98 Total Revenue 158 210 231 244 844 193 211 Gross Profit 91 123 135 144 493 111
Slide 26: Ribbon Condensed Balance Sheets
Ribbon Condensed Balance Sheets USD Millions 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 ASSETS 1 Cash and cash equivalents 110 94 111 136 109 115 Accounts receivable, net 206 205 208 238 209 220 Inventory 67 58 51 46 45 47 Property and equipment, net 47 48 48 49 49 49 Intangible assets, net and Goodwill 866 866
Slide 27: Ribbon Condensed Statements of Cash Flows
Ribbon Condensed Statements of Cash Flows USD Millions 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 Cash from Operations 40 (3) 29 36 102 (6) 14 Purchases of property and equipment (6) (9) (4) (8) (27) (5) (5) Business Acquisitions (347) - - - (347) - - Sale of Fixed Assets 44 - - - 44 - 3 Borrowings, net 336
Slide 28: Ribbon Key Revenue Statistics
Ribbon Key Revenue Statistics USD Millions except for percentages 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 Revenue Product 76 121 129 142 468 98 113 Service 82 90 102 102 376 95 98 Total Revenue 158 210 231 244 844 193 211 % of Total Revenue: Revenue Mix Product 48% 57% 56% 58% 55% 51% 54% Services 52% 43
Slide 29: 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 30: 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 31: 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 32: 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 33: Discussion of Non-GAAP Financial Measures (Continued)
Discussion of Non-GAAP Financial Measures (Continued) Restructuring and Related Expense We have recorded restructuring and related expense to streamline operations and reduce operating costs by closing and consolidating certain facilities and reducing our worldwide workforce. We believe that excludi
Slide 34: Discussion of Non-GAAP Financial Measures (Continued)
Discussion of Non-GAAP Financial Measures (Continued) Tax Effect of Non-GAAP Adjustments Non-GAAP income tax expense is presented based on an estimated tax rate applied against forecasted annual non-GAAP income. Non-GAAP income tax expense assumes no available net operating losses or valuation allow
Slide 35: 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 36: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) $000's 1Q21 2Q21 Cloud and IP Optical Consolidated Cloud and IP Optical Consolidated Edge Networks Edge Networks Revenue $ 125,422 $ 67,350 $ 192,772 $ 141,421 $ 69,789 $ 211,210 GAAP Gross profit $ 84,162 $ 26,385 $ 110,547 $ 95,463 $ 32,964 $ 128,427 GAA
Slide 37: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) $000s 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 GAAP Operating expenses $ 119,264 $ 121,675 $ 123,037 $ 127,462 $ 491,438 $ 123,151 $ 115,475 Stock-based compensation (2,819) (3,024) (3,708) (3,473) (13,024) (4,798) (4,228) Amortization of acquired intangible ass
Slide 38: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 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 Acquisition-related inventory adjustment - - 0.01 - 0.01 - - Stock-based compensation 0.
Slide 39: Thank you
Thank you &) rioddon