Ribbon Communications Inc. · NASDAQ:RBBN
Ribbon Communications — FY2020 Earnings Presentation
32 slides from Ribbon Communications's earnings presentation, Feb 17, 2021
Slide 1: Fourth Quarter and Full Year 2020 Results
Ribbon Communications Fourth Quarter and Full Year 2020 Results February 17, 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: 4Q20 and Full Year 2020 Business Overview
4Q20 and Full Year 2020 Business Overview Bruce McClelland, President & CEO
Slide 4: 2020 Highlights
2020 Highlights Customer Focus Product Enhancements Portfolio Optimization Maintained sales Core SBC growth, transition Completed ECI acquisition effectiveness during COVID- to software and introducing and Kandy divestiture 19 pandemic as a service models Ribbon Communications is well-positioned for
Slide 5: Business Highlights
Business Highlights ▪ In addition to the Company’s first IP Optical win in North America with a Top 4 cable MSO, Ribbon earned new IP Optical business with 5 regional telco carriers ▪ Closed significant new orders with North American Tier-1 service providers as they continue to utilize Ribbon soluti
Slide 6: 4Q20 and Full Year 2020 Financial Highlights
4Q20 and Full Year 2020 Financial Highlights Growing Revenue Cash Flow and Balance Sheet Improving Profitability $244M Sales in 4Q20, up $83M YoY1 ; $136M Ending Cash Record $49M Adjusted EBITDA2 in 4Q20 $844M in 2020, up $281M YoY1; $36M Cash Flow from Operations Record $131M Adjusted EBITDA2 in 20
Slide 7: 4Q20 and Full Year 2020 GAAP Financial Summary
4Q20 and Full Year 2020 GAAP Financial Summary 4Q191 3Q201 4Q201 20191 20201 Revenue $161M $231M $244M $563M $844M Gross Margin 68% 58% 59% 63% 58% Opex $258M $123M $127M $544M $491M Net income (loss) ($150M) $6M $124M ($130M) $89M Diluted EPS ($1.36) $0.04 $0.81 ($1.19) $0.61 Note: 1. Please see th
Slide 8: 4Q20 and Full Year 2020 Non-GAAP Financial Summary
4Q20 and Full Year 2020 Non-GAAP Financial Summary 4Q19 3Q20 4Q20 2019 2020 Revenue $161M $231M $244M $563M $844M Non-GAAP Gross Margin1 68% 59% 59% 63% 59% Non-GAAP Opex1 $69M $98M $100M $281M $382M Non-GAAP Operating 25% 17% 18% 13% 14% Margin1 Non-GAAP Adjusted $43M $43M $49M $86M $131M EBITDA1 N
Slide 9: 4Q20 and Full Year 2020 Non-GAAP Segment Summary
4Q20 and Full Year 2020 Non-GAAP Segment Summary 4Q20 2020 Cloud and IP Optical Cloud and IP Optical Consolidated Consolidated Edge Networks Edge Networks Revenue $155M $89M $244M $583M $261M $844M Non-GAAP Gross 68% 44% 59% 66% 43% 59% Margin1 Non-GAAP Adjusted $47M $2M $49M $136M ($5M) $131M EBITD
Slide 10: Total Revenue and Adjusted EBITDA
Total Revenue and Adjusted EBITDA1 Cloud and Edge Consolidated $244M $231M $210M $78M $89M $64M $158M $30M $155M $161M $147M $154M $145M $128M $138M $119M $43M $43M $49M $23M $30M $22M $10M ($3M) 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 Cloud and Edge Revenue IP Optical Networks Adjusted EBITDA1 Note
Slide 11: Quarterly Performance: Revenue & Non-GAAP Gross Margins
Quarterly Performance: Revenue & Non-GAAP Gross Margins1 IP Optical Networks Cloud and Edge $161M $154M $155M $145M $147M $138M $128M $119M 68% 67% 68% 66% 64% 63% 62% $89M $78M 56% $64M 46% $30M 44% 39% 39% 1Q20 2Q20 3Q20 4Q20 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 Note: 1. Please see the basis of
Slide 12: Fourth Quarter 2020 Key Metrics
Fourth Quarter 2020 Key Metrics Pipeline Revenue Mix Balance Sheet Cash Flow Full Year 2020 Book to 36% Software Revenue2 Cash Balance $136M $36M Cash From Operations Revenue1 Ratio of 1.02 29% Maintenance Revenue3 Debt $393M $33M Unlevered Free Cash Flow5 Booked nearly 60% of Top 10 Customers Reven
Slide 13: Key Trends and Outlook
Key Trends and Outlook &) rioddon
Slide 14: Market Trends & Customer Activity
Market Trends & Customer Activity ✓ Work-from-home driving continued higher network ✓ Engagement level with customers remains utilization and need for capacity augmentation strong as we continue to sell in a virtual environment ✓ Digital transformation to modernize networks remains a priority ✓ Incr
Slide 15: 2021 Operating Environment
2021 Operating Environment Strong secular demand for bandwidth Legacy network refresh cycle gaining accelerated by COVID-19 with increased momentum federal funding 5G mobile technology upgrade cycle creating demand for front-, mid-, and Unique competitive environment creating back-haul capacity expa
Slide 16: 1Q21 and Full Year 2021 Business Outlook
1Q21 and Full Year 2021 Business Outlook 2020 1Q21 FY21 Revenue $844M $190M to $200M $925M to $945M Non-GAAP Gross Margin1 59% 55% to 56% 55% to 56% Non-GAAP Adjusted EBITDA1 $131M $14M to $18M $145M to $155M Non-GAAP Diluted EPS1 $0.43 $0.01 to $0.03 $0.49 to $0.54 Interest & Other Expense2 ($22M)
Slide 17: Appendix
Appendix &) rioddon
Slide 18: Ribbon Condensed Statements of Operations
Ribbon Condensed Statements of Operations USD Millions except percentages and EPS 1Q19 2Q19 3Q19 4Q19 FY19 1Q20 2Q20 3Q20 4Q20 FY20 GAAP FINANCIAL MEASURES Product Revenue 47 72 61 81 262 76 121 129 142 468 Service Revenue 71 73 77 80 301 82 90 102 102 376 Total Revenue 119 145 138 161 563 158 210 2
Slide 19: Ribbon Condensed Balance Sheets
Ribbon Condensed Balance Sheets USD Millions 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 ASSETS 1 Cash and Investments 46 51 40 45 110 94 111 136 Accounts Receivable, Net 135 155 163 193 206 205 208 238 Inventory, Net 19 17 14 15 67 58 51 46 Property Plant Equipment, Net 28 28 27 29 47 48 48 49 Goodwill
Slide 20: Ribbon Condensed Statements of Cash Flows
Ribbon Condensed Statements of Cash Flows USD Millions 1Q19 2Q19 3Q19 4Q19 FY19 1Q20 2Q20 3Q20 4Q20 FY20 Cash from Operations 20 10 (6) 33 56 40 (3) 29 36 102 Purchases of PP&E (4) (2) (2) (2) (11) (6) (9) (4) (8) (27) Stock Repurchase - (5) - - (5) - - - - 0 Business Acquisitions (22) - - - (22) (3
Slide 21: Ribbon Key Revenue Statistics
Ribbon Key Revenue Statistics USD Millions except for percentages 1Q19 2Q19 3Q19 4Q19 FY19 1Q20 2Q20 3Q20 Q420 FY20 GAAP Revenue Product 47 72 61 81 262 76 121 129 142 468 Service 71 73 77 80 301 82 90 102 102 376 Total Revenue 119 145 138 161 563 158 210 231 244 844 % of Total GAAP Revenue: GAAP Re
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 Communications excluding the r
Slide 23: Discussion of Non-GAAP Financial Measures
Discussion of Non-GAAP Financial Measures Ribbon Communications’ 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 paym
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) Litigation Costs We have been involved in litigation with one of our competitors and with a former GENBAND business partner and have reached settlements in both cases. We exclude the costs of such litigation because we believe such costs are not
Slide 26: Discussion of Non-GAAP Financial Measures (continued)
Discussion of Non-GAAP Financial Measures (continued) Increase in Fair Value of Investments We calculate the fair value of the Debentures and Warrants at each quarter-end and record any adjustments to their fair values in Other income (expense), net. We recorded the increase in the aggregate fair va
Slide 27: 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 28: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $000's 1Q19 2Q19 3Q19 4Q19 FY19 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
Slide 29: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) $000s 1Q19 Q219 3Q19 4Q19 FY19 1Q20 Q220 Q320 Q420 FY20 GAAP Operating expenses $ 102,462 $ 97,861 $ 85,713 $ 258,081 $ 544,117 $ 119,264 $ 121,675 $ 123,037 $ 127,462 $ 491,438 Stock-based compensation (4,033) (1,357) (2,335) (4,322) (12,047) (2,819) (3,0
Slide 30: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) 1Q19 Q219 3Q19 4Q19 FY19 1Q20 2Q20 3Q20 4Q20 FY20 Earnings (loss) per share GAAP (Loss) per share or diluted earnings per share $ (0.29) $ 0.45 $ 0.01 $ (1.36) $ (1.19) $ (0.27) $ (0.06) $ 0.04 $ 0.81 $ 0.61 Acquisition-related inventory adjustment - - - -
Slide 31: GAAP to Non-GAAP Reconciliation (Continued)
GAAP to Non-GAAP Reconciliation (Continued) Three months ending Year ending March 31, 2021 December 31, 2021 Outlook Range Range Revenue (in $ millions) $ 190 to $ 200 $ 925 to $ 945 Gross margin GAAP outlook 54.8% 55.8% 54.9% 55.9% Stock-based compensation 0.2% 0.2% 0.1% 0.1% Non-GAAP outlook 55.0%
Slide 32: Thank you
Thank you &) rioddon