Ribbon Communications Inc. · NASDAQ:RBBN
Ribbon Communications — Sonus Networks — Investor Presentation (November 2017)
32 slides from Ribbon Communications's investor presentation, Nov 7, 2017
Slide 1: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements 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 statements of historical f
Slide 2: Agenda
Agenda 1. Who is Ribbon Communications 3. Market Overview 4. Strategic Positioning 5. Growth Initiatives Kandy/Security 6. Financial Highlights 7. Q&A 2. Investment Thesis
Slide 3: Merger closed October 27th, 2017
Merger closed October 27th, 2017 Two decades of leadership in real-time communications Global reach across 27 countries Built on world class technology and intellectual property Market-leading portfolio and fully virtualized environment
Slide 4: Who We Are
Who We Are Enabling and securing real-time communication at scale with continuous focus on top and bottom line financial results Become a leader in the new mobile, fixed, enterprise, cloud and security architectures for real time communications, while driving strong financial performance Our Mission
Slide 5: A Multi-Year Journey
A Multi-Year Journey Media Gateways Policy & Routing Session Border Controllers Enterprise Strategy Virtualized SBC Portfolio Virtualized Cloud Offer GM is abbreviated for Non-GAAP Gross Margins. Non-GAAP financial measure; please see reconciliation in presentation appendix. GM1 57% GM1 67% GM1 71%
Slide 6: Ribbon Communications is Transformational
Virtualization Session Border Controllers Cloud Services Security Transforming Networks to Virtualization & Cloud Ribbon Communications is Transformational Softswitching UC&C1 Key Pillars of Success UC&C is abbreviated for Unified Communications & Collaboration.
Slide 7: Who is Ribbon Communications?
Who is Ribbon Communications? We provide end-to-end communications software and infrastructure solutions to Service Providers (Service Providers/MSO's1), Enterprises (focused on Financial, Federal, and Healthcare verticals) and Hyperscale Cloud Players. What we do: We transform fixed, mobile and ent
Slide 8: Investment Thesis
Investment Thesis Market leader in IP and cloud-based network transformation Merger to drive strong financial performance: Projected cost synergies of $50MM+ and adjusted EBITDA of $100MM in 2018 Projected strong Free Cash Flow generation Additional cost savings, revenue synergies and gross margin e
Slide 9: Communications Networks are Rapidly Evolving
Communications Networks are Rapidly Evolving Enterprises Are Enhancing Customer and Employee Engagements Embedding Unified Communications Migrating to Virtual and Cloud-based Infrastructures All while needing to secure communications Service Providers Are Increasing Services Agility via Cloud to Com
Slide 10: Market Opportunity
Market Opportunity Service Provider: Interconnect / NNI / VoLTE / Access / UCaaS Enterprise: Migration to SIP and Unified Communications Network Transformation Migration to NFV CPaaS/UCaaS/Kandy Securing UC and Cloud Growth Drivers Longer Term Growth Driver
Slide 11: Anticipated 2021 Total Addressable Market: $21.9B
Anticipated 2021 Total Addressable Market: $21.9B Estimated 2017-2021 CAGR +22.4% Network Transformation and Cloud Communications Markets CAGR -11% CAGR +12% CAGR +30% UCaaS +21% CPaaS +47% In Network Network Virtualization Expected 2021 TAM: $4B / 2017-2021 CAGR +3% Network Transformation ($B) SS,
Slide 12: Why is Ribbon Communications Strategically Positioned?
Why is Ribbon Communications Strategically Positioned? Leader in Real-Time Communications Virtualization and Cloud Deployed in the World’s Largest Real-Time Communication Networks Our DNA is Enabling Secure Real-Time Communications Unmatched Reliability, Performance and Functionality at Scale Leader
Slide 13: Network Transformation Market – Competitive Landscape
Network Transformation Market – Competitive Landscape Competitive Advantages Portfolio Breadth – Broadest solution set in the market Large Installed Base Reliability, Performance and Functionality at Scale Leader in Cloud and Virtualization Leader in Signaling and Transcoding technology *
Slide 14: Strong Growth Initiatives
Strong Growth Initiatives An innovative Cloud Communications Platform enabling rapid new service deployment and revenue for carriers, ISV's and enterprises Solutions powered from the Kandy platform include: Unified communications, embedded communications and OTT solutions Cloud Security Offer Securi
Slide 15: Strong Growth Initiatives
Strong Growth Initiatives € Kanoy ‘An innovative Cloud ‘Communications Platform enabling rapid new service deployment and revenue for carriers, ISV's and enterprises Solutions powered from the Kandy platform include: Unified communications, embedded communications and OTT solutions Cloud Security Of
Slide 16: Ribbon Financial Profile
Ribbon Financial Profile Sonus Stand-Alone Excludes Impact of Merger with GENBAND1 GENBAND Stand-Alone Excludes Impact of Merger with Sonus1 1) Sonus/GENBAND merger closed on 10/27/2017; 2) Calculated as non-GAAP operating income less depreciation expense; 3) Midpoint of guidance provided by managem
Slide 17: Sonus Stand-Alone Projections Q4'17 and FY'17
Sonus Stand-Alone Projections Q4’17 and FY’17 Excludes Impact of the Merger with GENBAND1 Sonus/GENBAND merger closed on 10/27/2017. Equates to $0.26 Non-GAAP income per share assuming 50M diluted shares, which excludes the impact of the shares granted on 10/27/2017 in connection with the merger. Ca
Slide 18: GENBAND Stand-Alone Projections Q4'17 and FY'17
GENBAND Stand-Alone Projections Q4’17 and FY’17 Excludes Impact of the Merger with Sonus1 Sonus/GENBAND merger closed on 10/27/2017. Calculated as non-GAAP operating income less depreciation expense. We are unable to provide a reconciliation of the forward-looking non-GAAP measures presented above t
Slide 19: FY'17 Pro Forma (Sonus & GENBAND Combined)
FY’17 Pro Forma (Sonus & GENBAND Combined) Figures above are stand alone FY’17 projections for each company added together. This assumes no benefit of Q4’17 restructuring activities nor does it take into account the impact of any purchase accounting adjustments. These values are for informational pu
Slide 20: FY'17 Guidance (Sonus & GENBAND Combined)
FY’17 Guidance (Sonus & GENBAND Combined) Projections are post close from 10/30/2017 to 12/31/2017 for GENBAND. Flat from FY’16 revenue for Sonus of $252.6M Revenue does not include impact of purchase accounting reductions, which are expected to be completed in Q4’17. Share count increased from prio
Slide 21: Summary
Summary Stronger Financial Profile Significantly higher revenue base, gross profit, earnings and cash flow from operations; $100M Adjusted EBITDA expected in 2018 Scale and Synergy Platform Scalable cost structure to benefit from further consolidation potential Strong Installed-Base Large Nortel ins
Slide 22: Summary
Summary Stronger Financial | * Significantly higher revenue base, gross profit, earings and cash flow from Profile operations; $100M Adjusted EBITDA expected in 2018 Scale and Synergy = Scalable cost structure to benefit from further consolidation potential Platform Strong Installed- Base | " /a"ge
Slide 23: Source References
1. TAM & Market Share (SS, MGW, VAS, SP-SBC ): IHS Markit, Q2-2017 Data, Service Provider VoIP and IMS Equipment and Subscribers, Published August 23, 2017, Edition Q3 2017 2. TAM & Market Share (E-SBC): IHS Markit, Q1-2017, Enterprise SBCs and VoIP Gateways, Published June 1, 2017 Edition Q2 2017 3
Slide 24: Acronym Descriptions
Acronym Descriptions CAGR Compound Annual Growth CPaaS Communications Platform as a Service Diameter IP Signaling Solution/Protocol E-SBC Enterprise Session Border Controller GTM Go to Market (used to represent a portion of the TAM which is best fit for Ribbon solutions, applications, and products)
Slide 25: Use of Non-GAAP Financial Measures
Sonus management uses several different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of the business, making operating decisions, planning and forecasting future periods, and determining payments under compensation programs. Our annual financial plan
Slide 26: Exclusion of Amortization of Acquired Intangibles
We exclude the amortization of acquired intangible assets from non-GAAP expense and income measures. These amortization amounts are inconsistent in frequency and amount and are significantly impacted by the timing and size of acquisitions. Although we exclude amortization of acquired intangible asse
Slide 27: Acquisition-Related and Restructuring Costs
We consider certain transition, integration and other acquisition-related costs to be unpredictable and dependent on a significant number of factors that may be outside of our control. We do not consider these acquisition-related costs to be related to the continuing operations of the acquired busin
Slide 28: Income Tax Adjustments
When we originally prepared our outlook for the third quarter of 2017, as provided on August 3, 2017, we anticipated that we would reverse $0.7 million of deferred tax assets related to net operating loss carryforwards for our subsidiary in Canada based on positive earnings evidence in the subsidiar
Slide 29: Sonus Gross Margin GAAP to Non-GAAP Reconciliation
Sonus Gross Margin GAAP to Non-GAAP Reconciliation FY'11 FY'14 FY'15 FY'16 GAAP total gross margin 56.3% 65.3% 64.9% 66.4% Stock-based compensation expense 0.6% 0.6% 0.7% 0.7% Amortization of intangible assets 0.0% 0.9% 2.2% 2.3% COGS set-up 0.0% 0.6% 0.0% 0.0% Non-GAAP total gross margin 56.9% 67.4
Slide 30: Sonus GAAP Net Loss to Adjusted EBITDA Reconciliation
Sonus GAAP Net Loss to Adjusted EBITDA Non-GAAP Reconciliation FY'15 FY'16 Adjusted EBITDA GAAP net income (loss) $(31,895) $(13,932) Interest income/expense (207) (769) Income tax provision 2,007 2,516 Depreciation 11,961 7,970 Amortization of intangible assets 7,107 7,500 Other income/expense, net
Slide 31: Sonus GAAP Net Loss to Adjusted EBITDA Reconciliation
Sonus GAAP Net Loss to Adjusted EBITDA Non-GAAP Reconciliation 2 Adjusted EBITDA GAAP net income (loss) Interest income/expense Income tax provision Depreciation Amortization of intangible assets Other income/expense, net Stock-based compensation expense Merger integration expense Settlement expense
Slide 32: Thank You
Thank You 3 riodon communications
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