RBBN - Earnings call transcript Q4 2020 | Ribbon Communications Inc.

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Operator

Greeting, and welcome to the Ribbon Communications Fourth Quarter and Full Year 2020 Financial Results. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Tom Berry, Investor Relations for Ribbon Communications. sir. ahead, go Please

Tom Berry

and will welcome results fourth Berry, uncertainties conference Communications. Lopez, call of and Executive outlook Ribbon's year year could and to Officer; results These Safe materially Investor and conference XXXX for XXXX the X SEC, recent Ribbon supplemental Mick today Such the on cause financial call. Chief projections Also Bruce to from afternoon McClelland, supplemental quarter Chief Financial Ribbon's and Relations available. Ribbon's full this Relations our are our differ be call. in the Good being most I'm website at uncertainties those beyond in quarter and with refer slides forward-looking statements. of our financial matters is to call of will press Today's filed to be forward-looking including discussed that of full and and live and and discussing currently subject I the risks on statements. our be the for statements where section both Slide actual including statement XXXX, slides the archived we will Officer. XX-Q. included you business are XX-K webcast contained are first on Certain risks Form the release our Tom the are Investor documents the Form today Harbor ribboncommunications.com, our

available website. the of Investor the for applicable this press present the conference issued non-GAAP supplemental section measures release we will on in in Relations our are which call. again this as to In information earnings well slides afternoon, both call, GAAP addition, on this Reconciliations are included financial the we

of prior comparisons These periods. would like of we networks Cloud we quarter over segment to Edge Communications Telecom began acquisition in And Optical Kandy we call completed impact completed turn on reporting and I sale the on March As the and items Bruce? ECI IP the X, to businesses. for fourth December X, XXXX, our Further, XXXX, and Bruce. XXXX. noted, of now, to previously our

Bruce McClelland

and for on Thank joining to outlook also it the announced Tom. you thank preliminary XXXX. and discuss our afternoon, communicate Great. XX, today to fourth reporting quarter We XXXX was and our Good as we to results guidance, the results you, performance us to January important stronger due typically elongated felt relative schedule. everyone, for

more technology to virtualized very perspective, SBC ECI, Call Ribbon portfolio, of U.S. of dealing supporting mitigation platform participate the the Teams a of COVID, challenging repositioning continued integration in Session CXX challenges and deployments. with Microsoft large work our very the details This COVID-XX very I year. quickly to organization products grow and From Optical sales Ribbon systems last the transition our by service even I'm Robocall Before of to we've take XX% successful challenges for And early response year the discuss to our enabled accomplishments. results, outside presented of an market. proud wanted well to year, in product and Connect, our company's proof Controller, to reviewing sales organic rapid on of basis sales. the as quarter software Trust were our during began global minute selling When virtual now new achievements we to the year, presence total product such such with pandemic. our the XXXX transitioned a increased despite over Call as full pandemic And a remote significantly fourth the a concept. revenue us extraordinary the through a IP with for our have and we with centric

streamlined we organization integration, and the portfolio shift growth As higher realigned part areas. improve our and investment the profitability into to of

seeing profile, short-term combination our completed our of profitability to the quarter, changes, ability we're of portfolio of growth a Shifting and along business, software with higher stronger and combining broader of these we're of execution started, on details preserving demonstrate structural UCaaS the strategy. that in where value the means to The successfully a growth selling well-positioned further exceeded beyond. to diversification by have results good customers. strong Kandy XXXX improving our our for sale We to with in strategy, our Ribbon increased the strong our on expanded from business business. we our and upside report ended share giving fourth very a IP strong and expectations creation business, pleased we're than We're financial progressing a that the benefits much Optical XXXX range

X% again positive in quarter-over-quarter, for improvement the EBITDA, the This of Optical the and a business, the by Cloud benefits we earnings a second encouraged quarter, and with new XX%versus we achieved increased combined sales contribution level very our of Total revenue Edge quarter, record adjusted the adjusted realized and IP businesses. as quarter. increasing IP Optical third and consecutive

I'd in we in activity the from our by like total geographical sales, our IP XX% beginning generating in further to notable located of North the highlight growth revenue outside presence quarter, customer diversified the customers of some With Optical America. U.S.

XXX% Microsoft win our Altice, from We quarter relationships nearly in from ECI the business as carriers. last of IP for sales existing of for those all secured working. XXX% XX% revenue clear small region, Fourth was interest we with five we're than 'XX. commissioned this greater the surveyed and XXXX. sized regional but in among deploying to they that In third and cases. early, solutions. one for 'XX migration a of strategy Teams, earnings indicated that of with quarter routing software SBCs Ribbon to with we cable business, extended businesses business, customer matching A and implement direct IP our first connectivity. increase in the all new a report revenue that recent benefit our leveraged in our will still Teams, but certified reported It's wins four enable to telco continue of call, medium shows Optical in cloud top momentum requiring up Cloud Our MSO Optical Edge our America these seeing and we signs North from communications session from

with are in a we Latin million embarked service call Call American with countries, with continued SBCs across large and We to for projects capacity new in access operation. four pleased processing, North planned the and activities upon new projects expansion starting SBC $XX in CXX the our providers, with from of as project over This software-based to core work to It's Europe, replace gateways, Edge efficiently also our Metro the Huawei with announce units the shipped network defense OTN multimillion-dollar transformation XXX a Group, QX, product systems fourth a with over new Tier-X our America, of solutions. variety secure in the of quarter, orders that transformation we We're from platform noteworthy high network we In in into project media deployment Controller XXXXX our platform, a carrier, new announced two demand in Tier-X systems. Brazil, more of further wins Vivo, partner part network. was Telefonica's integration in Claro, countries with three using large the extends services and year. Brazilian first within SBCs countries metro this optical switching fourth a and expansion in virtualized this Mobile quarter. We of network scale [ph] In customer. and American the region

very continue networks Europe. fourth platform spending with pick with through opportunities enterprise we're cities more to year with with to to the we sales our win X, replacing previous but of new several multiservice accounts. optical divisions to the hopeful recovery, in new to than We're implement substantial April improvements Italia. for XX SDH the that up overall Additionally, them quarter, half optical in in too second We're regional Telecom early India, metro so It's XXXX. and consistent will starts momentum legacy networks, sell the In worldwide. timing in were sell collaborating the still fiscal of of them predict quarter working

several XG our shift our beyond. multiyear is significant at as Bharti rollouts, products. and purchase contract the as Tier underway orders Airtel a the last will expected In signed XG. with they Also and million. platform this and Initially, we for Huawei and of our our from multiple generating X wins, quarter Japan, of will summer, for Edge propel expect significant continued part benefiting $XX projects is providers business And saw Tata, This more XXXX valued network contracts more cycle Idea normal as in our conclude we long and over sales are they now their with in India, are from We in These service away XXXX. utilizing culmination help business enterprise bookings. Neptune prepare connectivity with we their throughout with growth Cloud transition. Vodafone

additional Now our product on transition commentary our regional from some detail to portfolio.

the in year, XXXX. as core in For where in core portfolio our negatively our pandemic. products than revenue on-premise revenue decline edge the in was versus impacted grew growth enterprise SBC more products, the full XXXX, COVID-XX offset by demand Overall X% CPE SBC XX% grew

going and through currently Microsoft have Connect and onboarding, another Ribbon the our nine launched and seven Team distributors pipeline. we Additionally, for up Direct in signed service, Routing

strong product to for were in year particularly quarter, in and Our enterprise total the XX% sales 'XX. and product of revenue quarter. the the X% defense full quarter-over-quarter, fourth customers represented segment XX% Sales the in grew

of and completed end across the January, maintenance had customers. these the we at XXXX, many renewals the nearly XX% are addition, in beyond. we'd of multiyear duration, the of In and XXX for contracts of By almost end for derisking plans XX% XXXX for of year our year, our approximately renewals booked

in In in for XXs percent had the direct surge proof the we evaluating our Optical rate XG year. late renewal IP demos Our business, for concepts in a business unique the customers. the and remains capabilities of high

the focused into Ribbon several service historical optical clear us the progressed Tier important in these a X to on converting share strong laser metro opportunities presence. stages U.S., are XXXX, on opportunities leveraging We've giving sales provider outside also We XXXX. to in gains the final path

implementing integration updates ECI, organizational are few and We're continued transformation great the making efficiencies our the a progress and across Now company. Ribbon efforts. on of on

we consolidated quarter, fourth the and enabled our cross selling platforms. automated sales During CRM processes

Corporate announced we've and including and managed joined security the also and XX-years Systems. internal many of streamlined other EMEA experience, happy sales of We to Technologies. I And Development called We're Executive tools, International join Sean December, and to focus business have to business portfolio to drive Strategy. the our leading just and product of our extensive evolve announced as part regions. Edge their over compliance for of Sean we enterprise to billion Cloud Information successfully both to both QualiTech, Last partnering business excited Asia-Pac our was our and And was with lead and Sean making and sharpening reliability a strategy. our He and for addressing has very previously the $X.X on I'm that's brings processes deal In month, we've and sale sell had and announced in Communications in strategy carriers the Kandy that expand Ribbon, carrier forward helping Cloud and he companies. of Steve businesses. in to the the them enterprises And TiVo growth business, initiatives Israeli corporate week, ARRIS. that ARRIS. business small with Matthews completed presence McCaffrey our Steve and prior EVP the & core and of testing Senior experience platforms development IP we Optical at progress global Virtual communications, appointed December, in Ribbon shaping joining team, customers operation. Ribbon we American been new a look Cloud this our

Texas Additionally, with global headquarters. we're designating our Plano,

months, consolidating from labs consolidation locations. research headquarters, new facility last ECI help Given will right costs. time our including we we in believe of global the reflects move operations process acquisition to other have opened and is recently this effectively business six reduce This the in change. the make Plano operating offices We our following to that in how year, been for of as a serve and last the the the we're changes several the

the to expect continue in strong to Westford, a have Although are headquarters we Mass. relocating, presence

our our effort. Sustainable that note report on global as We're providing and And for report to XXXX, we and performance, for our sustainability to that as of come outlook I'd ESG Goals. Mick we our this website talk increased the account and Lastly, and read visibility our key performance stakeholders through in United first on to comment month. now our to like XXXX a committed and in detail then published the with a ask full on earlier milestone XXXX how Mick? responsiveness, our report well I'll more QX Development Nations the support business. year and about as back see

Mick Lopez

you. Thank

an for year As XXXX. that Bruce stated, from the financial in second XX% second we strong a adjusted a quarter half outstanding expectations. the our had XXXX, performance and exceeded year of and quarter, of a full We $XX the record, full-year generating EBITDA $XXX million million fourth consecutive quarterly recorded increase

slides In our and analyst to to supplemental evaluating in Relations assist community million the efforts We from graphs year in end have to million with for our also $XX tables, fourth generated website significant flow cash. performance. fourth the the we with investor in refer and quarter $XXX quarter the our in ongoing statements. cash Investor in Please made enhancements improve our summarizing our financial to our three business, disclosures operations

have going reporting be business disclosures we'll additional we these the forward. segments formally company, established business First, segments and two within on

of into products. rather company. fourth We Ribbon out be and the in marketing legacy our non-GAAP business prior broken our clarity, we annual sales global greater quarterly networks intangible presentation. quarter Last, and product Edge periods ECI IP are for and of assets will Optical than within the earnings Cloud and includes in expenses. results change line the computing for operating will this separate we recast cost products, incorporated reference. historical by both have segment and report XX-K our expenses, within our amortization business results and includes good That in rate a an for taxes Our showing These

jurisdiction rates quarterly We each by multiple rate quarter that will the for for single apply rather overall results. than

the We to to expect impact company's a to of this year, investors provide and on the rate the taxes more throughout understand enable consistent results. better

methodology. We XXXX this XXXX and are recasting also the using results non-GAAP

AVCT to line, on income the a will of our quarter. In performance fair recorded the other in the to the the GAAP the end that other income than periods, asset we million Kandy and equity of back earnings of $XXX.X from Fluctuations to a in Communications the the to reflecting we Unified sale stock and future debt price as period quarterly fluctuations volatility, in expense with also December of income period affect excluded our due method sale results. quarterly Now, a mark stock will sale quarter estimates. our X. provide valuation use price. line record market over longer during our Kandy AVCT value we received Note, warrants Kandy. the this we associated will evaluate of and convertible in We had business non-GAAP of the And results much

total the up $XXX of from our the of million of and quarter, XXXX revenue at last quarter year high for $XXX range guidance non-GAAP end performance to $XXX quarter fourth $XXX fourth million and was, Our full million. million,

year, quarter, million. was in $XX of EBITDA from for The we $XXX were For profit to Edge as Organic non-GAAP costs. higher from our quarter revenue our was quarter due lower both guidance operating the was million in range full divestiture last to and quarter sales third to million million million, improvement to increased OpEx business our as Edge discretionary the third and total our savings million was XX% the $XXX in $XX from of recorded the Optical fourth XXXX, quarter and XXXX. Fourth Cloud IP due million EBITDA divestiture. X% million for of year. $XX and Cloud Kandy expenses sequential Non-GAAP year fourth in savings the gross networks, of and gross compared in guidance Non-GAAP year. adjusted came margin full for in $XX above $XXX similar adjusted well the and in $XXX the year. quarter, in below million both the was fourth and growth Non-GAAP for Kandy gross to the XX% margin part and full $XXX

For $XXX Non-GAAP above full the XXXX. was adjusted year. million million, year, our the for share of $X.XX $X.XX, and $XX guided diluted non-GAAP $X.XX, range from was $X.XX was to in earnings full EBITDA per up

Our diluted in share XXX million count shares was quarter XXX million full the for and the fourth year.

Now, EBITDA strong our last quarter Edge million, margin from the sale, full and an revenue minimal of looking Non-GAAP adjusted XX%, quarter million, growth fourth expense which from adjusted at is year, $XX results was two prior our $XXX demand margin of above driven EBITDA was segments. Cloud third XX%, by customers. EBITDA In and travel of by X our than business for reflecting service Edge the adjusted higher $XXX points and XXXX year revenue year, while $X Kandy driven X% our savings, Cloud other million, of a and savings. million was provider percentage reflects discretionary the restructuring business,

Here are fourth revenue. million our revenue Cloud in and Edge million points We the a recorded performance $XX few services additional quarter. of and on of $XX product

to XX% for accounted revenue total fourth XXXX, quarter in the fourth product of quarter Software XX% compared XXXX. of in the of

was full of up revenue, XX% product the year, Cloud XX% and in Edge from For XXXX. software

for recorded quarter. again $XX the million we Turning EBITDA increase to the generated margins or and adjusted quarter Optical positive quarter, $XX million, gross an our Non-GAAP quarter. XX% IP the from revenue XX% fourth third IP Optical business, of of were for

some represented for quarter. company. total Maintenance fourth the in the metrics Now, consolidated key XX% revenue here of are

down accounted customers the quarter, from revenue Our XX%. in for accounted in of and total third of providers enterprise represented Service of in customers quarter top XX% XXXX. XX% quarter, fourth XX for the revenue the XX%

of greater international XX% revenue as XX% of generating represented to customers percentage revenue, in in a quarter As previously of XXXX, third the fourth the our quarter. total compared mentioned,

was full times the year of XXXX. ratio revenue book Our to for excluding X.XX maintenance

to of Turning including $XX million cash the and cash million. with the increase quarter from balance an This $XXX $X quarter. of we sheet, million, restricted the cash equivalents ended of previous is

undrawn. quarter Our quarterly payment. of $XXX $XXX million is December on third as rate interest loan principal million XXXX, rate revolver of the effective was in principal the similar the The X.X% million $X reflecting fourth in XX, loan a The quarter. still which scheduled our was term of down balance term our remained to

refinancing portion lower our interest to of We effective facility the quarterly are of forward. process going a in met again covenants. credit rate our now financial further our comfortably We

per maximum As a a calculations, leverage versus charge our coverage our X.XX times. X.XX credit was the minimum facility of fourth and ratio of in our X X.XX times, of versus times times quarter fixed ratio

net of million XX, million generated company the XXXX, fourth of was X last EBITDA of quarter. a the by Our which ratio as less cash divided adjusted exceptional months perspective, December an in of operations From cash from a debt cash times. the XX than provides leverage $XXX $XX

full Metaswitch million million year, quarter in which expenditures the Ribbon $XX improvements. were leasehold $X cash million settlement. legal expenses from million for million restructuring estate $X for the in of the the operations, approximately real quarter, first receipts included of and included of from Capital XXXX. acquisition generated For related which $X $XXX We anticipate

Tokyo million $XX For for by that our $XX including the leasehold the year, and capital of headquarters million offices, full improvements Plano of expenditures new with $XX landlord. million, were reimbursed

Bruce XXXX. back outlook call to discuss the our of turn full to for year to and first like quarter Bruce? the I'd Now,

Bruce McClelland

Thanks, Mick.

the market and how Optical our to Cloud broader are and provide reviewing to from enterprise shift like trends, engagement level of that distributed edge some Edge well-positioned XXXX.Our and we're increasing the the workloads communications guidance, customers about applications, strong. including I commentary thinking large requirements restrictions, would benefit multiple a performance transport, computing, IP businesses on and in travel marketplace, are the networks. Despite ongoing XG remains presenting network with Before our

constraints. in contributed expenses continue significant and concept we RFP product marketing to remote activity significant and half on-site demonstrations in chain We and remains of experienced the to of the this we operating continue have proof supply travel Visibility our solid, lab Lower in evaluations. see place to first lower and also not XXXX. activity XXXX, project business of in

of providers turned larger Asia-Pacific as competitive in market from for a be the in be has the very balanced. providing consistent catalyst providers a infrastructure across ability great for The we the is as U.S. will shift years, technologies. come and the a broader Ribbon. such With continue the as years types funding our advantage will home and investment field multiple few we last priorities, Europe weeks the provided by this compete to more ago, our shifts the RDOF expect sentiment share towards equipment broadband expectations the Ribbon key and significant and of working release additional quarter. of focused, in will believe for such against negative, XX and for networks. competitive towards to government emphasize first attempting We year And opportunities importance quarter visibility ensuring and Chinese part Broadband more fourth with the playing competitors Perhaps that to XXXX has regions. of in on full range a is shifted backdrop are solutions a time becoming first the results press of specialized

our in on in noted the both our relative XX% top bottom roughly press release, in growth As lines. XXXX, to performance we and expect XXXX, of

XX% in sales. annual the We roughly results, momentum of seasonality quarter also year, expect typical first with and representing the our growing throughout

of For we gross the Adjusted adjusted EBITDA in million $XXX XX% be margin $XXX million. to $XXX to sales million of full XX%, $XXX to to year, of range anticipate the million. and

our tax interest presentation to to visibility million refer and For the the to XX%, margin the million, additional sales expenses income $XX first year. to of expected and we of additional range in Please providing details. million for for $XX projecting of XX% also adjusted on EBITDA quarter the our million. on We're website XXXX, gross of $XXX adjusted be to $XXX are

focus the industry working a in that we're now questions. year and about few a ahead. excited take can prepared strengthen Operator, concludes dynamics team, our very strong leadership With and favor, the our remarks strategy we many the

Operator

[Operator Thank be a you. sir. ahead, instructions] from conducting Please first is session. question The At of Cowen. this Paul question-and-answer time, Silverstein we'll go

Paul Silverstein

they're can Bruce, answer. a of questions, Thanks, and disclosure. got hoping all I've discreet. appreciate very handful detailed I'm all the you but

terms March of offer and you OpEx First balance quarterly account in XXXX insight off, the of expenditure of any what the for about into in you're can disposition taking levels? Kandy, planning

Bruce McClelland

Hey, Paul. Yes.

I ballpark of think for think quarter take we're to we $XXX some XX And a that in of under will variability. range, like XX or million or the, sort first we dollars. quarter, then in year with million bit few progresses, a give little the a that be as range, right

Paul Silverstein

All right. that. Appreciate

IP about have and other your Optical among are that gamut Do X many in at in of the business Or think mix referenced total customers? cases? the service you or does on that providers, I present? what's business? service And you nature I wins, middle mix think wins. XX enterprise are How transport? providers the play heard use the Secondly, they focused Tier the customers What run business, other the however on particular they

Bruce McClelland

enterprise between of customers, customers, certain call slow, list of up a look Yes, Russia, a of is mix there providers maybe it's the of customers. and in as research what providers. in get think evenly there Mick type infrastructure some and was number obviously and reasonable India it's what it And, I number obviously, back Tier of the we do so on as don't a bunch exact we little of or the North you long in America would think service like X to balanced here. a he But of hundreds, but obviously, active is today, both. geographies, less have a fairly It critical service there. questions

Paul Silverstein

Okay.

a growth for Russia of Indian other I in to before an that on like expectations you forward better want and is go I was solid say confidence lack your India mouth. think all tied much words regions? the put your and way we as that for business, to to that flattish, optimistic. downturn your was global such sounds in piece story emerging less of were to I a But is it rebound How heard the and markets of don't those put big look

Bruce McClelland

it a think Well, think heard not Yes. in so We did this quarter. QX. And different right. we're really I QX certainly, was I which projecting from good. to mix a was consistent India of see you very snapback, in purchasing customers,

As I mentioned, start year of fiscal X there. the the April starts

So, as hope see budget think India versus the get to at finalize and of months, at summer our year they to of XXXX. was the in we that year, the of date, planning, their was spending in level down Overall, business end start XXXX, kind into similar we to we something the end the of kind I like XX% XXXX.

And essentially Europe entire for Union the in this the year. that business. getting we partially we with the entire where XXXX. board XXXX. of part across expectation across was very was strong the is grow were fourth consistent certainly part was I of So, there's the recovery, overall year That's certainly just pretty solid, back plenty Soviet think of Other regions, in even to the quarter, for room former story. as And

Paul Silverstein

individual to characterize you relative ago? Bruce, you but relative improving, the would healthy, to know the you're status you open XXX-days relatively XX-days it Let characterize I would ago in is a thinking demand characterize just me aside small putting meaningfully dynamics, on you ask putting regions, question, how again, writ of [indiscernible] demand would environment size about large, aside demand bit quo?

Bruce McClelland

Yes, good question.

on. in for to month of us trials else, was that or we Ultimately the got we for and the last year. the maxed but the business and as ended demand activities into really looked were environment As going or translate almost into two of healthy number XXXX, really proof-of-concept work that's out going someone we

Paul Silverstein

you in right. had I both others are One and many are Huawei that Huawei, you were two that All Cloud With and are optical heard wins cut Those apologize last you mostly other. directly platforms? your or on real but opportunities active to quick. the the related referenced to or How some call, and to I SBC question, out think optical Edge, respect backs. these there? And other in I

Bruce McClelland

Yes.

I call So voice mentioned existing Edge over in were Latin America, that were the Cloud of business, control basically. two in these replacements our and IP systems, calls,

So, Cloud much sure. that for certainly, share is several piece we're and in and Europe seeing Edge meaningful to that happening there And markets. opportunity in where in for get will of broadly, in in us. going a More be that's larger countries shift opportunity we're Asia-Pacific this year certain for very we be obviously focused. spend, some If

Paul Silverstein

responses. appreciate the you. I Thank

Bruce McClelland

Thanks, I appreciate Paul. it.

Operator

question from Dave sir. Riley. B. We a Please King, go have ahead,

Dave King

afternoon. Good you. Thank

First provided question America numbers provide optical - for Europe you've you Can to similar Asia? then the XXX% North increased is sequentially. on and sales

Bruce McClelland

Hey, Dave. Yes.

Europe, probably in up for the numbers in have Mick, you have So strongly Mick? was Europe QX. us into QX Do QX, handy again, from you pretty that handy, overall

Mick Lopez

Yes.

the was $X to three ending by $XX $X So million September, we $XX almost million most months at from Russia of million, have - million. Europe about by for Europe up was up

Dave King

the final number? to XX to? what? XX What was

Mick Lopez

Asia you numbers have too? got XX, it, okay. for And do

Mick Lopez

$XX so we Let million $XX real a million here quick, basically optical. went to me add like from [Indiscernible] on

Dave King

whole you you're And just then What's optical? assumptions the are helpful. Very optical just expecting that? that's down guiding this to for margin gross versus your points be share about you as XXXX, March C&E be and for why I'm be will well stronger points quarter curious your than Are regarding C&E percentage lower? X as both driving can to margin it. Got regarding because what about X gross year.

Bruce McClelland

thanks, Yes, Dave.

the kind For the almost the always quarter of year. quarter first first of we've weakest the see being again, quarter,

both Edge, around particularly Cloud got Cloud to definitely And, you've lower the expect the IP the see richness be the the then little given first it down with the And segments quarter being I right. revenue for Edge, we affects the So in growth that company. that fourth And higher overall to Optical we has on an piece. versus overall year, than blend expect gross the from a and mean, disproportionately margin effect quarter. for and margin. that entire the margin

really a a shift mix either opposed margin as in the it's shift portfolios. So of for to gross

Mick Lopez

like to impact gross consideration, would [Technical and Difficulty]. some Please, certainly that take add. into margins. to there is I revenues seasonality our Yes, also our

Bruce McClelland

getting a Dave. Sorry, sounds like of noise there. we're lot It

Operator

King, Mr. line? are on still you the

Dave King

Yes, I'm here.

Bruce McClelland

well, you hear We Dave.

Dave King

out Or on that first closed? is as it question as year's in is quarter been QualiTech. last this my revenue outlook? take factored the Has transaction after Actually, well the out we Okay. should

Bruce McClelland

Yes.

take until or wouldn't we're out $X a revenue it's in $X in million business, earnings. and sub million we relatively it small less closed. It's So

a indication the big really we're of So, focus the not the numbers. it's company, good good a needle making on product is a and benefit mover on and how nice business just from to work strategy little and and testing pretty a size, able core whatnot. that for to closely on we continue group, But sure certification a little focus. we'll actually more with we'll And this be

Dave King

you. Thank it. Got

Bruce McClelland

Thanks, Dave.

Operator

We question Latimore, from Northland sir. go have Capital Mike Please a Markets. ahead,

Mike Latimore

the and execution Thanks on this congratulations year. great

Bruce McClelland

Mike. Thanks,

Mike Latimore

do of speaking, you think Cloud business, as Edge business software a dynamic and stable, I software? that you view what the this faster And bit declining being then, Cloud the little the than Do generally this grows growing of overall year? Edge bit, little year? guess, about and terms In business

Bruce McClelland

Yes.

start portion in back XXXX, deployments this X% we of year, we grew mix. to a as should enterprise kind mode, and pick into obviously, taking and come We're get a at if still we grow think, of back more, business in office bit particular, back up. for of our the should of year-over-year of those out back Kandy the targeting the enterprise account So, in kind edge as growth

grow want we definitely, business that year. this So to

Mike Latimore

Microsoft or the enterprise XX% Is I because Cloud it under? that of I'm over trying get influential it to to on Edge. of, growth? Teams then is the demand side pretty just How seems business? guess, a to and be high And sense,

Bruce McClelland

it's for of or think of still Again, I enterprise being few it's than Yes, in SBC sometimes as business. described used our for I've applications. a carrier when times to past, tell SBCs our XX% the kind are less hard

think And But so an the sometimes hard to exact on But don't on put a I to it. XX%. a pretty number it. a significant. is Again, put complete, Microsoft piece fine hard I think it's it's point it's

Mike Latimore

or year? just free maybe of general then CapEx guidance really cash what on guidance And for in kind the any implied the flows Okay.

Bruce McClelland

that think… that noise take where you don't one, have why coming have Mick, from. connection, been may Yes. the Mick We was please? might with his had trouble

Mick Lopez

I got it.

Bruce McClelland

go. we There

Mick Lopez

I got had $XX it. real million was which about for estate, CapEx of stated we of This million, year we of $XX reimbursed we got then $XX million that.

it, $XX number, normalize our if million. you about So it's

quarter. before, $X As it's million million we $X a stated to

to into invest and that that year, our as us development $XX $XX be range product would we acceptable we million in going expect million in would labs So particular. to next forward

cash thing they those you Optical, so type so particularly to emerging year, for flow a and consideration into working of longer far use cycle payment going is we take modeling expect as next for markets, a some should the as have growth cash in customers, for of IP as in that the there's And capital. only be

Mike Latimore

sense. Optical And in and what key product last year? of just this about development, should terms on Cloud product makes and That it. Got we IP on Edge then think enhancements

Bruce McClelland

Yes.

there's programs, of this Edge, of processing and virtualization mentioned call Cloud final some in several So, the virtual of important kind CXX. I platforms. the

still really on there's ago, well leverage Ribbon technologies products maybe service going critical for with networking cut off months service where Edge few call some Cloud a as a of really the some MEK work and we back we I think, development around time analytics platform. some and the investment as from business. we're exploratory our skills models as [ph], software Mike the - doing from then around ECI can Connect, And a And on work that. call I there's on mentioned SBC as your So on

quite interesting investment an of this and a There's year, new IP coming for XXX-Gig that's year. ZR have routing bit a a area. robust interfaces, Optical, kind then In roadmap and So platforms a TDM migration, few pretty standardized additional protocols, IP around we of including introduction plus out. of to enhancements investments, this optical-related variety

program active this year. pretty So

Mike Latimore

Thanks. Great. right. Good All luck.

Bruce McClelland

Hey, Mike. thanks,

Operator

question-and-answer go of reached Please over like remarks. And I'd to the end session. ahead, have the now we McClelland Gentlemen, sir. to back for turn closing Bruce call the

Bruce McClelland

in very we're 'XX, here and outlook proud much Well, XXXX, core reiterate, for focused strategy. and about to on great. the of more here really excited appreciate even Yes, and interest. accomplishments just everybody's the Again, really thanks the

throughout the conferences year have very forward So you we Thanks some coming shortly. of that look much. the up to updating in Have the in progress a good evening.

Operator

concludes conference. today's This

You at and participation. may disconnect time, this for thank lines you your your

Ribbon Communications (RBBN) 18 Feb 212020 Q4 Earnings call transcript