Ribbon Communications Inc. · NASDAQ:RBBN
Ribbon Communications — Q3 2023 Earnings Presentation
33 slides from Ribbon Communications's earnings presentation, Oct 25, 2023
Slide 1: Ribbon Communications Third Quarter 2023 Results
Ribbon Communications Third Quarter 2023 Results October 25, 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: Third Quarter 2023 Business Overview
Third Quarter 2023 Business Overview Bruce McClelland, President & CEO Mick Lopez, Executive Vice President & CFO
Slide 4: Third Quarter and 2023 Business Highlights | Consolidated
Third Quarter and 2023 Business Highlights | Consolidated Improved Financial Profitability Diversification Strategy Driving Growth +21% Growth in Q3 Adj. EBITDA YoY Neptune IP Router in Service at U.S. Tier 1 $28M Adjusted EBITDA Service Provider 33bps Improvement in Gross Margin 7% Reduction in Ope
Slide 5: Third Quarter and 2023 Business Highlights | IP Optical
Third Quarter and 2023 Business Highlights | IP Optical Path to Profitability Key Trends Growth in Revenue YTD Multi-Service Edge IP Routing Solution at U.S. Tier 1 +14% YTD IP Routing Growth: +31% Positive Earnings Contribution Expected in Q4 YTD Optical Growth: + 9% U.S. Rural Growth / India Stren
Slide 6: Third Quarter and 2023 Business Highlights | Cloud & Edge
Third Quarter and 2023 Business Highlights | Cloud & Edge Consistent Earnings Performance Market Diversification U.S. Department of Defense: -4% Revenue Change YTD New Wins in Voice Modernization Lower US Tier 1 Service Provider Global Service Provider Wins: APAC / EMEA Growth Areas Gross Margin Imp
Slide 7: Third Quarter 2023 Financial Highlights
Third Quarter 2023 Financial Highlights 3Q23 Revenue Balance Sheet Profitability Metrics $203M down 2% YoY $25M Ending Cash $28M Adjusted EBITDA1 International 58% of Sales $240M Term Loan Balance $0.05 Non-GAAP EPS1 Enterprise 30% of Product Sales $10M Revolver Loan Balance Cloud & Edge IP Optical
Slide 8: Third Quarter 2023 GAAP Financial Summary
Third Quarter 2023 GAAP Financial Summary 3Q22 2Q23 3Q23 Revenue $207M $211M $203M Gross Margin 50% 48% 51% OpEx $108M $108M $103M Income (loss) from ($3M) ($7M) $1M operations Other (expense) ($9M) ($9M) ($10M) income, net1 Net income (loss) ($18M) ($21M) ($14M) Diluted EPS ($0.12) ($0.13) ($0.08)
Slide 9: Total Revenue and Adjusted EBITDA
Total Revenue and Adjusted EBITDA1 $234M $207M $211M $203M $186M $97 $82 $85 $87 $72 $137 $125 $116 $125 $114 $23 $29 $23 $28 ($2) 3Q22 4Q22 1Q23 2Q23 3Q23 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: Third Quarter 2023 Non-GAAP Financial Summary
Third Quarter 2023 Non-GAAP Financial Summary 3Q22 2Q23 3Q23 Revenue $207M $211M $203M Non-GAAP Gross Margin1 54% 52% 55% Non-GAAP OpEx1 $94M $90M $87M Non-GAAP Operating 9% 9% 12% Margin1 Non-GAAP Adjusted $23M $23M $28M EBITDA1 Non-GAAP Diluted EPS1 $0.02 $0.04 $0.05 Note: 1. Please see the discus
Slide 11: Third Quarter 2023 Non-GAAP Segment Summary
Third Quarter 2023 Non-GAAP Segment Summary 3Q23 3Q23 Cloud & IP Optical 3Q23 Edge Networks Consolidated Revenue $116M $87M $203M vs Prior Year -7% +6% -2% Non-GAAP Gross Margin1 68% 38% 55% Non-GAAP Adjusted $32M ($4M) $28M EBITDA1 Non-GAAP Adjusted EBITDA Margin1 27% -4% 14% Note: 1. Please see th
Slide 12: Quarterly Performance: Revenue & Non-GAAP Gross Margins
Quarterly Performance: Revenue & Non-GAAP Gross Margins IP Optical Networks Cloud & Edge $137M $125M $125M $114M $116M $97M $85M $87M $82M $72M 65% 64% 67% 68% 38% 61% 38% 36% 31% 27% 3Q22 4Q22 1Q23 2Q23 3Q23 3Q22 4Q22 1Q23 2Q23 3Q23 Note: 1. Please see the discussion of non-GAAP financial measures
Slide 13: Third Quarter 2023 Key Metrics
Third Quarter 2023 Key Metrics Pipeline Revenue Mix Balance Sheet Cash Flow Book to Enterprise 30%2 Senior Term Loan Debt4 $240M Cash Balance $25M 3Q23 YTD Revenue1 Service Provider 70%2 Outstanding Revolver Loan4 $10M Total 0.9x 1.0x 34% Maintenance Revenue3 ($12M) Cash from Operations Total Debt I
Slide 14: Key Trends & Outlook
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Slide 15: Multi-Service Edge IP Routing Solutions for Carrier Networks
Multi-Service Edge IP Routing Solutions for Carrier Networks End-to-End Solution for Service Provider TDM Network Transformation Network Transformation Replace TDM/copper networks with Ribbon IP technology • Virtual C20 replaces legacy PSTN switches • G5 media gateway to support legacy services • Ed
Slide 16: Ribbon's Industry Leading High Density Optical Transport
Ribbon’s Industry Leading High Density Optical Transport Ribbon’s Optical Portfolio Meets Global Growing Demands for Bandwidth Industry-leader for high density and low power Performance Optimized Cost Optimized Shipping Q4 ’23 Shipping Q2 ’24 applications required by large SPs and ICPs Application M
Slide 17: Fourth Quarter and Full Year 2023 Business Outlook
Fourth Quarter and Full Year 2023 Business Outlook 3Q23 4Q23 FY23 (Actual) (Outlook) (Outlook) Revenue $203M $230M to $240M $830M to $840M Non-GAAP Gross Margin1 54.8% 54.5% to 55.5% 52.5% to 53.0% Non-GAAP Adjusted EBITDA1 $28M $40M to $46M $88M to $94M Note: 1. Please see non-GAAP reconciliations
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 3Q23 GAAP FINANCIAL MEASURES Product Revenue 82 113 111 137 443 93 117 109 Service Revenue 91 93 96 97 377 93 93 95 Total Revenue 173 206 207 234 820 186 211 203 Gross Profit 78 105 1
Slide 20: Ribbon Condensed Balance Sheets
Ribbon Condensed Balance Sheets USD Millions 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 ASSETS 1 Cash and cash equivalents 95 38 56 67 46 35 25 Accounts receivable, net 221 258 238 267 255 253 242 Inventory 62 65 70 75 76 74 70 Property and equipment, net 48 49 46 45 43 42 42 Intangible assets, net and Good
Slide 21: Ribbon Condensed Statements of Cash Flows
Ribbon Condensed Statements of Cash Flows USD Millions 1Q22 2Q22 3Q22 4Q22 FY22 1Q23 2Q23 3Q23 Cash from Operations 15 (39) (18) 16 (26) 11 (3) (12) Purchases of property and equipment (3) (3) (7) (1) (14) (2) (2) (3) Proceeds from sale of business - - - 1 1 - - - Borrowings, net (21) (16) (5) (5) (
Slide 22: Ribbon Key Revenue Statistics
Ribbon Key Revenue Statistics USD Millions except for percentages 1Q22 2Q22 3Q22 4Q22 FY22 1Q23 2Q23 3Q23 Revenue Product 82 113 111 137 443 93 117 109 Service 91 93 96 97 377 93 93 95 Total Revenue 173 206 207 234 820 186 211 203 % of Total Revenue: Revenue Mix Product 47% 55% 54% 59% 54% 50% 56% 5
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 3Q23 YTD23 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 $ 114,480 $ 71,679 $ 186,159
Slide 30: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) $000s 1Q22 2Q22 3Q22 4Q22 FY22 1Q23 2Q23 3Q23 YTD23 GAAP Operating expenses $ 117,109 $ 111,789 $ 107,614 $ 112,748 $ 449,260 $ 116,591 $ 108,092 $ 102,647 $ 327,330 Stock-based compensation (3,675) (3,798) (4,116) (4,490) (16,079) (5,164) (5,475) (4,293)
Slide 31: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) 1Q22 2Q22 3Q22 4Q22 FY22 1Q23 2Q23 3Q23 YTD23 GAAP Diluted earnings (loss) per share $ (0.47) $ (0.20) $ (0.12) $ 0.12 $ (0.63) $ (0.23) $ (0.13) $ (0.08) $ (0.43) Stock-based compensation 0.03 0.03 0.03 0.03 0.12 0.04 0.03 0.03 0.10 Amortization of acquir
Slide 32: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) Three months ending Year ending December 31, 2023 December 31, 2023 Range Range Revenue ($ millions) $ 230 $ 240 $ 830 $ 840 Gross margin: GAAP outlook 51.5% 52.6% 48.8% 49.3% Stock-based compensation 0.3% 0.3% 0.3% 0.3% Amortization of acquired technology
Slide 33: Thank You
Thank You &} riddon
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