Ribbon Communications Inc. · NASDAQ:RBBN
Ribbon Communications — Q2 2024 Earnings Presentation
33 slides from Ribbon Communications's earnings presentation, Jul 24, 2024
Slide 1: Ribbon Communications Second Quarter 2023 Results
Ribbon Communications Second Quarter 2023 Results July 26, 2023 1 Ribbon Communications Confidential and Proprietary - rbbn.com
Slide 2: Note Regarding Forward-Looking Statements and Non-GAAP Financial Measures
Note Regarding Forward-Looking Statements and Non-GAAP Financial Measures The information in 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 statemen
Slide 3: Second Quarter 2023 Business Overview
Second Quarter 2023 Business Overview Bruce McClelland, President & CEO Mick Lopez, Executive Vice President & CFO
Slide 4: 2023 Business Highlights | Consolidated
2023 Business Highlights | Consolidated Strength in Financial Performance Diversification Strategy Driving Growth +2% Growth in Q2 Revenue YoY C&E Enterprise Product: +94% Growth in Regional U.S. Service Providers IP Routing: +41% Strong momentum in U.S. Rural broadband +9% Growth in Q2 Adj. EBITDA
Slide 5: Second Quarter 2023 Business Highlights | IP Optical
Second Quarter 2023 Business Highlights | IP Optical Improving Financial Performance Key Trends Growth in Revenue YoY +24% YTD Book to Revenue of 1.14x IP Routing: +41% Defense and Critical Infrastructure Optical: +21% U.S. Rural Growth Improvement in YoY Adj. EBITDA Apollo 9400 Platform $10M +$7M G
Slide 6: Second Quarter 2023 Business Highlights | Cloud & Edge
Second Quarter 2023 Business Highlights | Cloud & Edge Solid Financial Performance Market Diversification U.S. Department of Defense: +9% Revenue Growth QoQ Significant Voice Modernization Win Enterprise Growth Financial Sector Growth Awarded Major Global Service Provider Projects in Multiple Region
Slide 7: Second Quarter 2023 Financial Highlights
Second Quarter 2023 Financial Highlights 2Q23 Revenue Balance Sheet Profitability Metrics $211M up 2% YoY $35M Ending Cash $23M Adjusted EBITDA1 International 53% of Sales $245M Term Loan Balance $0.04 Non-GAAP EPS1 Enterprise 32% of Product Sales Cloud & Edge IP Optical Networks Steady Contribution
Slide 8: Second Quarter 2023 GAAP Financial Summary
Second Quarter 2023 GAAP Financial Summary 2Q22 1Q23 2Q23 Revenue $206M $186M $211M Gross Margin 51% 44% 48% OpEx $112M $117M $108M Income (loss) from ($7M) ($35M) ($7M) operations Other (expense) ($15M) ($2M) ($9M) income, net1 Net income (loss) ($30M) ($38M) ($21M) Diluted EPS ($0.20) ($0.23) ($0.
Slide 9: Total Revenue and Adjusted EBITDA
Total Revenue and Adjusted EBITDA1 $234M $206M $207M $211M $186M $97 $69 $82 $85 $72 $137 $125 $137 $125 $114 $23 $29 $23 $21 ($2) 2Q22 3Q22 4Q22 1Q23 2Q23 Cloud and Edge Revenue IP Optical Networks Revenue Adjusted EBITDA Note: 1. Please see the discussion of non-GAAP financial measures in the appe
Slide 10: Second Quarter 2023 Non-GAAP Financial Summary
Second Quarter 2023 Non-GAAP Financial Summary 2Q22 1Q23 2Q23 Revenue $206M $186M $211M Non-GAAP Gross Margin1 55% 48% 52% Non-GAAP OpEx1 $96M $95M $90M Non-GAAP Operating 8% (3%) 9% Margin1 Non-GAAP Adjusted $21M ($2M) $23M EBITDA1 Non-GAAP Diluted EPS1 $0.06 ($0.02) $0.04 Note: 1. Please see the d
Slide 11: Second Quarter 2023 Non-GAAP Segment Summary
Second Quarter 2023 Non-GAAP Segment Summary 2Q23 2Q23 Cloud & IP Optical 2Q23 Edge Networks Consolidated Revenue $125M $85M $211M vs Prior Year -9% +24% +2% Non-GAAP Gross Margin1 67% 31% 52% Non-GAAP Adjusted $35M ($12M) $23M EBITDA1 Non-GAAP Adjusted EBITDA Margin1 28% -14% 11% Note: 1. Please se
Slide 12: Quarterly Performance: Revenue & Non-GAAP Gross Margins
Quarterly Performance: Revenue & Non-GAAP Gross Margins IP Optical Networks Cloud & Edge $137M $137M $125M $125M $114M $97M $82M $85M $69M $72M 68% 65% 64% 67% 61% 38% 36% 31% 29% 27% 2Q22 3Q22 4Q22 1Q23 2Q23 2Q22 3Q22 4Q22 1Q23 2Q23 Note: 1. Please see the discussion of non-GAAP financial measures
Slide 13: Second Quarter 2023 Key Metrics
Second Quarter 2023 Key Metrics Pipeline Revenue Mix Balance Sheet Cash Flow Book to Enterprise 32%2 Senior Term Loan Debt4 $245M Cash Balance $35M 1Q23 2Q23 1H23 Revenue1 Service Provider 68%2 Total Debt Including Preferred Total 1.23x 0.90x 1.05x 33% Maintenance Revenue3 Stock $300M ($3M) Cash fro
Slide 14: Key Trends & Outlook
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Slide 15: Growth Trajectory Underpinned by Strategy & Execution
Growth Trajectory Underpinned by Strategy & Execution Regional Growth Cost Structure Service Providers Enterprise Market New Products Opportunities Efficiencies US Rural Broadband U.S. Federal India and Japan Apollo 9400 Streamline Operations Voice Modernization Financial Sector EMEA Infrastructure
Slide 16: Ribbon Innovation Leading The Industry
Ribbon Innovation Leading The Industry Apollo OT9408 Flexible Disaggregated Compact Modular Optical Transport Routing 2700 2400 2300 8T 4.8T 7RU Modular First-to-market 5nm-140Gbaud optical transport, 2100 (Future) delivering: 2RU Fixed 3T • First ever 1.2T wavelengths 800G 3RU Modular Metro • 800G
Slide 17: Third Quarter and Full Year 2023 Business Outlook
Third Quarter and Full Year 2023 Business Outlook 2Q23 3Q23 FY23 (Actual) (Outlook) (Outlook Unchanged) Revenue $211M $215M to $225M $840M to $870M Non-GAAP Gross Margin1 52% 51.5% to 52.5% 53% to 54% Non-GAAP Adjusted EBITDA1 $23M $26M to $32M $95M to $110M Note: 1. Please see non-GAAP reconciliati
Slide 18: Appendix
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Slide 19: Ribbon Condensed Statements of Operations
Ribbon Condensed Statements of Operations USD Millions except percentages and EPS 1Q22 2Q22 3Q22 4Q22 FY22 1Q23 2Q23 GAAP FINANCIAL MEASURES Product Revenue 82 113 111 137 443 93 117 Service Revenue 91 93 96 97 377 93 93 Total Revenue 173 206 207 234 820 186 211 Gross Profit 78 105 104 114 401 81 10
Slide 20: Ribbon Condensed Balance Sheets
Ribbon Condensed Balance Sheets USD Millions 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 ASSETS 1 Cash and cash equivalents 95 38 56 67 46 35 Accounts receivable, net 221 258 238 267 255 253 Inventory 62 65 70 75 76 74 Property and equipment, net 48 49 46 45 43 42 Intangible assets, net and Goodwill 636 621 611 5
Slide 21: Ribbon Condensed Statements of Cash Flows
Ribbon Condensed Statements of Cash Flows USD Millions 1Q22 2Q22 3Q22 4Q22 FY22 1Q23 2Q23 Cash from Operations 15 (39) (18) 16 (26) 11 (3) Purchases of property and equipment (3) (3) (7) (1) (14) (2) (2) Proceeds from sale of business - - - 1 1 - - Sale of Fixed Assets - - - - - - - Borrowings, net
Slide 22: Ribbon Key Revenue Statistics
Ribbon Key Revenue Statistics USD Millions except for percentages 1Q22 2Q22 3Q22 4Q22 FY22 1Q23 2Q23 Revenue Product 82 113 111 137 443 93 117 Service 91 93 96 97 377 93 93 Total Revenue 173 206 207 234 820 186 211 % of Total Revenue: Revenue Mix Product 47% 55% 54% 59% 54% 50% 56% Services 53% 45%
Slide 23: 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 24: 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 25: Discussion of Non-GAAP Financial Measures (continued)
Discussion of Non-GAAP Financial Measures (continued) Acquisition-, Disposal- and Integration-Related The Company considers certain acquisition-, disposal- and integration-related costs to be unrelated to the organic continuing operations of its acquired businesses and the Company. Such costs are ge
Slide 26: Discussion of Non-GAAP Financial Measures (continued)
Discussion of Non-GAAP Financial Measures (continued) Preferred Stock and Warrant Liability Mark-to-Market Adjustment The Company recorded adjustments to the fair value of its Series A Preferred Stock and warrants in Other (expense) income, net. Both instruments issued in March 2023 are classified a
Slide 27: Discussion of Non-GAAP Financial Measures (continued)
Discussion of Non-GAAP Financial Measures (continued) Adjusted EBITDA The Company uses Adjusted EBITDA as a supplemental measure to review and assess its performance. The Company calculates Adjusted EBITDA by excluding from income (loss) from operations: depreciation; stock-based compensation; amort
Slide 28: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $000's 1Q22 2Q22 3Q22 4Q22 FY22 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 29: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) $000's 1Q23 2Q23 FY23 Cloud and IP Optical Consolidated Cloud and IP Optical Consolidated Cloud and IP Optical Consolidated Edge Networks Edge Networks Edge Networks Revenue $ 114,480 $ 71,679 $ 186,159 $ 125,256 $ 85,362 $ 210,618 $ 239,736 $ 157,041 $ 39
Slide 30: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) $000s 1Q22 2Q22 3Q22 4Q22 FY22 1Q23 2Q23 GAAP Operating expenses $ 117,109 $ 111,789 $ 107,614 $ 112,748 $ 449,260 $ 116,591 $ 108,092 Stock-based compensation (3,675) (3,798) (4,116) (4,490) (16,079) (5,164) (5,475) Amortization of acquired intangible ass
Slide 31: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) 1Q22 2Q22 3Q22 4Q22 FY22 1Q23 2Q23 GAAP Diluted earnings (loss) per share $ (0.47) $ (0.20) $ (0.12) $ 0.12 $ (0.63) $ (0.23) $ (0.13) Stock-based compensation 0.03 0.03 0.03 0.03 0.12 0.04 0.03 Amortization of acquired intangible assets 0.11 0.10 0.09 0.0
Slide 32: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) Three months ending Year ending September 30, 2023 December 31, 2023 Range Range Revenue ($ millions) $ 215 $ 225 $ 840 $ 870 Gross margin: GAAP outlook 47.8% 49.0% 49.3% 50.4% Stock-based compensation 0.3% 0.3% 0.3% 0.3% Amortization of acquired technolog
Slide 33: Thank You
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