Ribbon Communications Inc. · NASDAQ:RBBN
Ribbon Communications — Q3 2021 Earnings Presentation
32 slides from Ribbon Communications's earnings presentation, Oct 27, 2021
Slide 1: Ribbon Communications Third Quarter 2021 Results
Ribbon Communications Third Quarter 2021 Results October 27, 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: Third Quarter 2021 Business Overview
Third Quarter 2021 Business Overview Bruce McClelland, President & CEO Mick Lopez, Executive Vice President & CFO
Slide 4: Business Highlights
Business Highlights ▪ Q3 Results in-line with guidance when adjusted for supply chain constraints o 2% year-to-date YoY1 revenue growth 3Q21 Revenue vs Guidance o 14% year-to-date YoY1 Adj. EBITDA growth $225M $219.5M o Approximately $9.5 million of shipments delayed to 4Q21 and approximately $3 mil
Slide 5: 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 6: Third Quarter 2021 GAAP Financial Summary
Third Quarter 2021 GAAP Financial Summary 3Q201 2Q211 3Q211 Revenue $231M $211M $210M Gross Margin 58% 61% 57% Opex $123M $115M $118M Income from $12M $13M $2M operations Other (expense) income, net includes non- cash measurement associated with the fair Other (expense) value and quarterly mark-to-m
Slide 7: 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 8: Third Quarter and YTD 2021 Non-GAAP Financial Summary
Third Quarter and YTD 2021 Non-GAAP Financial Summary 3Q20 2Q21 3Q21 YTD21 Revenue $231M $211M $210M $614M +2% yr/yr Non-GAAP Gross 59% 61% 57% 59% Margin1 flat yr/yr Non-GAAP Opex1 $98M $90M $93M $279M -1% yr/yr Non-GAAP Operating 17% 18% 13% 13% Margin1 +2 ppts yr/yr Non-GAAP Adjusted $43M $43M $3
Slide 9: Third Quarter 2021 Non-GAAP Segment Summary
Third Quarter 2021 Non-GAAP Segment Summary Cloud and Edge IP Optical Networks Consolidated Revenue $142M $68M $210M Non-GAAP Gross Margin1 67% 37% 57% Non-GAAP Adjusted EBITDA1 $45M ($13M) $32M Non-GAAP Adjusted EBITDA Margin1 32% (19%) 15% Note: 1. Please see the basis of presentation and the non-
Slide 10: Third Quarter 2021 Key Metrics
Third Quarter 2021 Key Metrics Pipeline Revenue Mix Balance Sheet Cash Flow 3Q21 Book to Revenue1 Ratio of 43% Software Revenue2 Cash Balance $104M Neutral Cash From Operations, 0.98 driven by timing of collections of 34% Maintenance Revenue3 Debt5 $381M receivables ($16M A/R increase in 3Q21) 99%+
Slide 11: Key Trends and Outlook
Key Trends and Outlook &) rioddon
Slide 12: Executing on our strategy
Executing on our strategy: Expanding Tier One IP Optical Wins and Pipeline Attacking the competition across extensive Ribbon customer base Engagement Evaluation New Wins (last 6 months) Scaled Deployments $$ $$ $$$$ $$$$$ 12
Slide 13: 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 14: Disruptive Strategy to Achieve Outsized Growth
Disruptive Strategy to Achieve Outsized Growth Key Investments Differentiators + For Market Disruption = Growing Confidence “Open and Optimized” Recent Customer Wins Longstanding Ribbon IP and Optical Networks Relationships with Tier 1 Service Providers Disaggregated Networking World-Class VoIP and
Slide 15: 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 16: Fourth Quarter 2021 Business Outlook
Fourth Quarter 2021 Business Outlook YTD21 4Q21 (Actual) Revenue $614M $240M to $260M Non-GAAP Gross Margin1 59% 58% Non-GAAP Adjusted EBITDA1 $94M $45M to $51M Non-GAAP Diluted EPS1 $0.31 $0.13 to $0.17 Interest & Other Expense ($16M) ~($5M) Non-GAAP Income Taxes 27% 39% for 4Q21; 31% for FY21 Dilu
Slide 17: Appendix
Appendix &) rioddon
Slide 18: 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 19: 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 20: 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 21: 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 22: 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 23: 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 24: 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 25: 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 26: 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 27: 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 28: 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 29: 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 30: 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 31: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) Three months ending December 31, 2021 Outlook Range Revenue (in $ millions) $ 240 $ 260 Gross margin GAAP outlook 57.8% 57.8% Stock-based compensation 0.2% 0.2% Non-GAAP outlook 58.0% 58.0% Earnings per share* GAAP outlook Stock-based compensation 0.04 0.0
Slide 32: Thank you
Thank you &) rioddon
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