RBBN - Earnings call transcript Q4 2017 | Ribbon Communications Inc.

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Ribbon Communications fourth quarter 2017 earnings conference call.

During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions].

conference recorded, this XXXX. March reminder, a is Thursday, being X, As would the investor head turn like relations. over I to Leggat, conference now to Sara of Please go ahead.

Sara Leggat

fiscal to Thanks, fourth and Good financial welcome Lynne. quarter conference morning and year call. XXXX results our

from which in website may with available latest filed posted shortly call Fritz including, products and A of market risk difficulties the condition; are and as efforts. these without are making be regarding other website leveraging in factors after recording are and on SEC and and economic to Sonus; outlook. may ribboncommunications.com. to Ribbon Daryl decisions; the annual, purchasing market successfully our today customer the with our website. release, services; CEO; of note these subject opportunities and supplemental our that of materially discussion Hobbs, of future and ability earnings results press or that A and contained such will company's integrate all revenue quarterly and of the CFO. reports IR recognition; GENBAND and cost available impact call. IR uncertainties containment various forward-looking of forward-looking call, Today's each Communications' to during limitation, the Please our our the opportunities; events affect of me statements IR release acceptance current today's timing in and business items market a this data and results the On President Actual Raiford, our be have and transcript call we future been financial strategy, on will financial statements differ at

uncertainties could differ actual Additionally, materially from many to any forward-looking statements. risks results and cause

forward-looking revise point, may do specifically so. obligation at or some we elect to we disclaim update any statements to While

financial release today. measures will our it in historical call, presentation our measures are certain Chief let Fritz GAAP on be earnings that, GAAP me of included Hobbs. Reconciliation website referring non-GAAP issued non-GAAP press to With financial President our turn measures. our comparable in Officer to we and and During Executive to and over our

Franklin Hobbs

enterprises. Good you, an which on real-time XXXX, the rebranded for positioned the our driving for innovative well-positioned experience the our business. provider, we providers merger October and completed service we encouraged and Ribbon. In future XXXX, the to my leverage I I value. Sonus for call. late Sara. of lead secure technology Thank our transformed became CEO Communications, signified Ribbon demand the growing both outlook company everyone as as shareholder role Ribbon In morning are GENBAND, to modernization meet network and generating We executive which communications. as to significant I long-term I'm prior December trends by the change can believe transformational of

to such representing During I'm companies. David at We integration talent up team the evaluating focused I've cost to sales, to GENBAND's team made with me key Ribbon. lead – first of is as lead industry Patrick our CEO, GENBAND the of of related has Swade CFO business domain – deep surrounding starting of on Ribbon, synergies. both Walsh, and months Joggerst driving and reviewing best Mike former strategy, together Daryl activities and and The CFO been my former few and expertise, that create go-to-market veterans product portfolio very at the our balanced of extended marketing Raiford, retain come level development. impressed a our management with mix management executive

combined continues to we the Riley experienced efforts who in I'm and lead exceptional treasury. product our executive. thoughts through the the strategy going to to year. end begun results corporate our the at products to Daryl John is And current of by for pleased as financial planning January McCready progress initiatives After Kevin I'll in solid integration CFO formerly capture with the to also team and XXXX. well call led you of Bruny, update fourth-quarter company's our turn lead highly that, I'd Tony outlook. of industry very operations and progress. an now Steven will our Sonus, to as our And overview synergies, an XXXX leads development and This which ribbon contribute like financial on Sonus We operationalizing functions. Scarfo cost detail successful give to team. full-year then I'll CTO. our is on Additionally, market Villare, are our overseen over and strategic you Susan performance profit opportunities back made has who the to R&D services have a interim combined SBC and forward. welcomed development. discuss

and process Our synergies. near-term our in to top capture priority complete swiftly integration the cost merger is

our cost already million at exceeding the fact, merger of $XX set operationalized savings we we've In time annualized announcement. the target

beyond out combined expanded whole also thoughtfully benefit synergy intensely while are these from and positively across that and discipline cost of We reach targets. we're focused will customers continue to optimizing we teams. and costs, It's our customer cost the organization focused merger important our efficiencies on believe remain depth on the satisfaction to point

and competitive in our Now, than product remained I'd much company if expanded stronger and scale, market had talk advantage customer strategic either company a initiatives combined footprint, the like our gives increased Ribbon's base global long-standing opportunities. independent. about operational and offerings to position

four strategy is In addition in that is integration to work underway, the areas. well already key our focused

solutions to of and the in portfolio of phase We've modernization. continue virtualizing our product lead next will ahead network the core into heavily products our our customers invested we competition. to invest First, in

our The opportunities for will We displace invest market vendors. us to existing continue to drive networks to virtual opens to transition position. potentially leadership

evaluating options deployment, strategic and our product are are efficiently Verizon to deploy direction to We're aligned which carriers. profitability. led within contributors sunset capital has significant to more will other This that several not not recent an allow us certain tier important incumbent, and initiatives areas. less effectively Our virtualization with displaced growth one meaningful to to our and Verizon offerings other

is initiative second markets into to related adjacent Our and applications. expand

have Protect For branded namely to develop adoption market embedded Ribbon. example, applications we introduced and Mobile we initiatives, Kandy significant CPaaS and a Ribbon and our opportunity security The cloud-based which branded market CPaaS our rapid during leveraged technology science Congress. as for this World week's of presents

we by addition, In service increasing security providers for enterprises focus our network. an driven and on security opportunity initiatives, and the from fraud, see

the providers and the customers to strong expanded Third, to plan reach world. we will to enterprises telecom and footprint expand utilize business. have drive globally, Today, largest customer We service in including our base leverage we installed our opportunities. over global our cross-selling X,XXX

comes And transformation plan financial from leverage our projects a significant where and fourth, will network pursue large shareholder benefit relationships base our to to moves of that as create addition, our should our contributor advance scale we value. we strategic In phase revenue modernization. the installed acquisitions, alliances certain network to strategy to next and

for drive sales leverage. will our We significant desired can that our relationships and/or global look financial leverage scale initiatives accelerate footprint cloud-based to and

virtualization leadership. the gaining believe I Ribbon. Ribbon transition us in an to early cloud. Our as virtualization to share and on count help XXXX and in important believe is is secular to move shift on are we year innings We partners focused our them of market for market a trusted their customers expanding

marketplace, and intently we strategic four on a progressing face our While we initiatives. are with completing challenging key focused the integration

path a we We market On anticipate network the consolidation North to of continue a to overall service our level, we their America. in especially that believe in and macro spending remain certain carrier have market. challenging, pause will conditions as home evaluate modernization market providers customer in

revenue than lower be pro We expect forma XXXX revenue. to XXXX

business, profitability. we building a focus solid dynamics, these emphasizing to Given on intend

our such, to expect or from million adjusted we pro increase XX% on $XX forma focus is As an approximately of be in which XXXX EBITDA XXXX.

Rather, manage to a intend Daryl. will discuss results Daryl more financial grow. business build not from the call foundation and we in the quarter. XXXX do to turn we our to detail. forward, I'll to quarter operating which now outlook solid over by Going

Daryl Raiford

review financial Fritz. for non-GAAP our going everyone. then fourth-quarter results good and Thanks, turn commentary morning, XXXX full-year And to and XXXX. to on I'm

of results and the relations release are investor on As Both available are our reconciled end our press website. today's for presentation. of non-GAAP a earnings financial both reminder, our you at

team results with earnings and term a conjunction full-year of and began Sonus communications a months on proposition the launch Beginning exclude which months GENBAND financial purchase the and financial we of forma, combination respective aggressively combined pro if of of will the in of use XX. promote other operations results exciting Overall, two period our hardware the secure solution. of XX operation. as cloud Communications also the real-time accounting our very the non-GAAP beginning presented. Our metric, immediately software, post-close, sales metrics of and Ribbon's means detailed of October include had with the quarter GENBAND Sonus in I materials. Ribbon refer these to I value to the When effect items at native

Ribbon. progress. combined Our exceeded a of was externally quarter merger and On fourth-quarter The a revenue, provided per adjusted metrics a made third basis. on $X.XX. Operating immediately the importantly, basis, XX%. $XXX call off GENBAND earnest Gross diluted earnings were Earnings accretive our was substantial million. total and non-GAAP share and we And $XX integration EBITDA immediately margin approximately fourth-quarter we revenue kicked to million. was was was both million. earnings XXXX standalone expenses Ribbon's plans margin during acquisition gross in And guidance $XX our

expenses XXXX, $X.XX. the million. million. was Gross Operating XX%. total Diluted full on were margin adjusted EBITDA was $XXX year was $XXX million. was basis, $XX For EPS revenue And a non-GAAP

Our benefited revenue revenue coupled a controller higher-than-previously-projected stronger mix to from sales. margin. border gross fourth-quarter stronger-than-expected Favorable non-GAAP with led revenue session

$XX sheet, of existing essentially million acquisition-related fourth to revolver now the decreased with borrowings and the compared use up million which $XX outstanding expanded undrawn investments quarter, allows cash $XXX used from the availability accordion. plus $XX In uncommitted integration earnings on cash million. the acquisition we for expenditures, $XX were facility, as the of items. and breakeven of this due million, At of a we million fund by of which and net capital to to the Cash end quarter, $XX Turning million. a operations investments to million had and amended of QX. $XX December, the September were and end operation cash of XXXX We our to credit end was from past balance GENBAND, at

I'd XXXX to turn like our Now, to outlook.

to policy. I'd guidance so, like let do Ribbon you established has that I know its Before

Going to forward, formal full generally EBITDA not basis a we provide adjusted intend guide do going profitability, forward. will numeric year. namely quarterly We annual for on guidance the

we combination quarter first However, our and our on commentary provide it do recent outlook to market conditions, appropriate believe given today. is

quarter first quarter to be XXXX. forma first the XX% For expect of than revenue our less we XXXX, approximately pro

the adjusted with time, of market expect in for XX% lower to to we compared and we pro to At first we believe will XXXX offset XXXX remainder fully conditions quarter pro projected essentially expect unchanged this revenue. persist initial However, XXXX. forma of an as improvements be first-quarter EBITDA XXXX, our the outlook be lower about by synergies with through our revenue forma cost resulting compared effect

Although dampen year, not does we line to it's through believe this important the continue point these challenges outlook. revenue our will bottom out that

are our this an $XX activities deliver swiftly of savings. improvement pro which, improvement EBITDA to remarked, Fritz merger adjusted capturing We focused XX% XXXX. margin aggressively and expense compared forma on of value completing with XXXX is We're non-GAAP and as million, driving and operating integration

driven return CPaaS by in virtualization growth to time our gains to initiatives and over projected communications, well expect Meanwhile, as unified from security. revenue We our share benefiting growth as in would should the call to dramatic back for improvement cost XXXX closing us like EBITDA and remarks. in growth in position With well beyond. to turn for Fritz I that, adjusted structure

Franklin Hobbs

reach Daryl. face our challenges, to In market term. cross-selling us opportunities take and over that summary, global and will near-term expanded confident you, benefit we while long from I feel share market the position allow Thank both

driving core on organization. We invest throughout will to we cost are disciplined the cost our our continue highly structure, and new while products efficiencies in being cloud-based initiatives,

revenue the achievements financial and our delivering XXXX initiatives. market, of us In the balance on I drive our busy gives all want was thank fourth-quarter a indeed the last to the Ribbon guidance, restructuring – both sheet as consolidate closing very growth of the to solid merger, to personally it Reflecting employees and addition, Ribbon flexibility over a financial integration commencing on three for and quarter scale. months, the further our results

of future. Ribbon answers. to for are would at excited I to open All the now ask like us about the operator questions the call and

Operator

proceed. of line our with from Blair. William the Thank you. [Operator And question Instructions]. Dmitry comes first Please Netis

Steven Sarver

Steven is This Sarver guys. in for Hi, Dmitry.

expecting So, and specifically what I you you America. seeing XXXX? from mentioned that challenges customers in AT&T, Verizon in those are two you're relating North still to guess

Daryl Raiford

is morning, while you. at We that really It's you? Daryl. to Steven. demand we specifically Verizon with to expect of in first to speak and AT&T, customers This term, of do Good their good are dampening How to the do much the don't definition, half least expect, speak we XXXX. the near some

Steven Sarver

just then, more expect persist the you feel pressure bit much XXXX. said you the to you quarter about of guys more guidance, year? Are visibility And to rest to how you of taking be a stance Or and Okay. throughout have conservative and don't you little do that conservative? a relating the just the want you first

Daryl Raiford

participating bringing we from the picture, companies. We're their you back first, same big space other guidance. same a these as see, Well, that in the see in XXXX Steven, companies space the down stepping

SPC reading And our and account. gauging as the said in that – we're managers they to the opportunity term, that our fourth, out it a And, hearing you're good their in to customer behavior customer and every time their same bit transition the GENBAND us Sonus Fritz purchasing into what our said, reports customers the intent as analyst are of a for base a buying customers for certify the in well. near-term and SPC is labs. to have market their we we some reading that in taking that that patterns of buying And and believe takes we're long expect account the with that Second, we time that day, to is behavior terms take does little transition, the base. but

persist half what picture, from from So, least space our taken to then watching market we're the through and for the closely. picture, it second half that altogether, we first we'll be from the customers, at do hearing expect the

Steven Sarver

if then, it. I And Got one may. more,

as Just, changed CEO, Fritz, after wondering. was the I president anything just and close? taken strategy merger Since over the has you've in

Franklin Hobbs

think. No, don't I

is, I think a to earnings this sheet. obviously, got we the for opportunity a exposed that can that time and first company being generate I've cash. seen have strong balance the We've very

or some the we with I more sense, months is ago. firepower So, whole think, might have looking the to financial us positive. something approach at I think a world might behind be than we've It the very even in three four emphasized

Operator

Capital Mike comes Markets. of question next our line And from the Please proceed. Latimore with Northland

Nick Altmann

Mike. guys. is Thanks for Nick our This Hey, taking questions. for on Altmann

on couple this you'll about a first Can you regarding Just maybe Kandy. just guys some be And year? talk your additional services plans color Kandy adding? give what for

Franklin Hobbs

a is I'd good and this customer quickly. is speak us is my This He head – the has to paygrade Gets Nick. it. Konrad consumer Fritz, who like – he with have Myk very on maybe relations. of over could view to pretty

Mykola Konrad

adding. a of we'll Hey be there, Kandy Myk And things was from product around Ribbon. Nick. what This perspective, VP is here Konrad, think management your question I new at

think Kandy. that out talking features can lines we've putting been expect I you new about along functionality the and keep on two So, us to

front, the believe the one as mentioned CPaaS On UC-as-a-service earlier us the upside that lot of front on is both we other forward. a And front. Daryl think – for I there the on do CPaaS going Daryl

over So, hopefully, about that this you'll be next hearing year.

Nick Altmann

in partners go-to-market you focus guess, just do the to side of of Got developer there? regards follow-up how guys have on the any a distribution CPaaS is And it. in okay. strategy I then, key things, with channel? Kandy, terms the And much just

Mykola Konrad

to deep with – perspective, have a in – those we CPaaS, and working with. to obviously, to developers that distributors some get And we that developer be So, need they do on announcing more as we We'll really are more ISVs come you vendors. key working from a fruition. independent have are software

Nick Altmann

you. Thank it. Got

Operator

of Thank you. Mark next D.A. our comes from Instructions]. And Davidson. question line Please [Operator the proceed. Kelleher from

Mark Kelleher

months? quarter, Thanks it the the the to in revenue the two from Is break taking Great. questions. for possible GENBAND out contribution

Daryl Raiford

possible. Hey, nice is It the to months with Yes. was revenue in The from it's the GENBAND million. two for contribution quarter you. good speak $XX.X And morning.

Mark Kelleher

previous were then, generating two any you'd per at to – million. me if in And that was were million companies together, generally, wrong; the put get of trying that's Generally, correct of deal the $XX you time to EBITDA if get I'm cost why thought and get the some $XX savings to two that then year, I'm it saying companies of made could million the $XXX $XX the great. is – reconcile comments announcement. just this Okay, million

So, you're $XX million you $XX I'm missing? something I'm to million. giving for $XXX trying there to just of guidance ahead in schedule you're savings. just trying reconcile Is said cost and – I'm these the million. to

Daryl Raiford

It's good Absolutely. a question.

all Our we that of we on maintained an first of place fully That through And right exit June XXXX of May because $XXX expected that rate XXXX have million does not. yields year. the of have on the The million all before. they're of fully that in yield last said – now run $XXX this are EBITDA. is outlook, at from and for comments we track if a million combination end $XXX we of to undertaking million EBITDA that. are That of believe we the year us but $XX in it derived was and synergies million adjusted adjusted as completely to correspond as we're $XX been would – we

Mark Kelleher

a you dynamic And GENBAND anticipating? customers of is terms very talked to sales Great. the about more been That's of architecture, there impact? What's then, Sonus transformation in headwind than of had there you over helpful. the the there

Franklin Hobbs

to made acquire we've GENBAND, It's SPC Sonus take the we're an pause, company. merger bit more than say a of GENBAND October before, not which and did if demand the remarks on with was a did where natural to subsequent you're merging sales that announcement SPC XX, No. the We was anticipating.

worldwide We are introduce the merger to a that about Sonus very very product line. does into closed, take to pipeline. now it certified planning but time GENBAND some the that, customer aggressively, SPC has the strong expose into our We're and to that excited base to working very get since it, it's lineup. and to feel get We network

Mark Kelleher

Thanks. Okay, great.

Operator

And questions this further no at you. Thank there time. are

Franklin Hobbs

everyone. a look with speaking pleasure to Well, in thank and speaking forward we It future. you, you with you was the today

Operator

the please conference That and thank that you, conclude your your lines. disconnect ladies does you We today. Thank and call for you ask participation gentlemen. for

Ribbon Communications (RBBN) 1 Mar 182017 Q4 Earnings call transcript