RBBN - Earnings call transcript Q1 2021 | Ribbon Communications Inc.

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Operator

Greetings, and welcome to the Ribbon Communications First Quarter 2021 Financial Results Conference Call. [Operator Instructions]. Please note, this conference is being recorded. I will now turn the conference over to your host, Tom Berry, Investor Relations for Ribbon Communications. Thank you.

begin. may You

Tom Berry

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

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

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

Bruce McClelland

Great. first year. you profitability and start quarter the thank of and EBITDA had Thanks, the the from to and share of a joining earnings adjusted per discuss results our to XXXX above our strong perspective, with end Tom. Good us outlook remainder afternoon, We today guidance our at or for everyone, XXXX high ranges. for both non-GAAP a

our our We XX%. in adjusting gross are first also new including momentum business. after Demand and our a Sales partnership PBX for for posted maintenance This with X.XXx compared alternatives current to the in partners. channel the deployment had service via easily offering environment. Microsoft controller broad border maintenance, Cloud for legacy service our along platform offering the weaker our edge offset XXXX. We Ribbon enterprise business, voice complement with This core operating nearly which new includes continued very revenue In month, expenses strong nearly to financial prolonged sale our mobile an the Team's quarter margins of service available, book this the announced non-GAAP fixed good products. demand EBITDA to enterprises ratio, in targets new portfolio the & this high-quality now our Edge us the believe growing on-premise year-over-year, base deploy with session for direct with already the tripling already we XX% by friction reduction given that as remains resulting Connect strength strong, work-from-home during and flat support essentially new were our of year-over-year, XX% platforms support and a reduce at Connect SBC gives Kandy very quarter, year. year we for the for in excluding plays bookings routing providers. our good service, the interoperability with will operator service to the for capability Last will bookings towards

this the customers program growing partner signed reseller the in and with partners multiyear resellers the expect orders with expansion were in in recurring consistent platform other are quarters, unfortunately, slow deals basis, very are to strong prior a and continues America Europe, COVID, fiber to our in rating robocalling We for forward innovative India several international network initiative were customers operator and totaling had collaboration, X-star our a deal further a products that completely wave where we in embracing a $XX network providing carrier a new the Sales a Sini,a, Tier based organizations. to million look multiple current government levels largest service in that more supplier. organizations. wins we Europe very and strong our including critical the Finland last quarter. including in Ribbon, suffering new on Northern rural and recovery. XX Deployment quarter. This standards. strong quarter. East, base We and negotiations Asia grew than we during active contract first currently over X we're projects we proof bookings quarter of to Bookings in with intelligent incumbent to with When on connections half we system, new the new Globally, regions, X-country our an on Pacific, meaningful XX STIR/SHAKEN Ribbon meeting carriers, existing are our had of network is replace onboarding were XXXX North over modernization were finalizing opportunities COVID second Middle India wins We our Huawei network optical and a and to a in pipeline through segment, last have market. in in dealing signed U.S. program and transformation channel States, leverage the And announcement significant to that United Huawei building partner experience American with X momentum our currently forma a an program. IP also of pro In business of Optical infrastructure is million we week, as $X with North guide. operates quarter. build offers from awarded their pipeline although and from strong roughly X infections a they have those adding in secure deal. year-over-year CRN both this sales in businesses In providers legacy the WDM in XX% the to IP network We replace products Last very revenue. infrastructure the another continue in important of the relationships received of announced Europe we And optic recovery. replacement earn XX% where the

We several Asia are opportunities. stages of XX We final a large-scale also proof-of-concept in in in both completed quarter, networking significant the America, first fixed Russia the and mobile and and transport of opportunities operator IP Pacific. North cross-sell WDM mix

innovative products. introduce to new continue We

and come Lightwave der transport reviews. OTN and the that a to the With deployment also provide our quarter These markets pluggable guidance XXXX on traffic, on on XG Innovation IP switch X now to XXXX it Maxon And optics. high-density XG leveraging handle our well address the we versions. and our on support available and critical segment In reliably of as introduced detail in remainder fully first the networks for infrastructure the redundant the turn both the for access XG portfolio, directly to XXX-gig cell dual Mick platforms access the to site are needs hard nonredundant year. received new provide types additional Apollo our coherent to operators' slicing traffic. precision the in over high new flexi to focused review quarter plans products additional rebuild The different requirements Neptune scores the results router of Mick? products of networks of backhaul back timing in I'll as I'll successful details that

Miguel Lopez

much. very Thank you

We start the $XX high and growth we end the of first to to earnings million which $XX a was year million. stated, continued Bruce guidance, expectations. in $X.XX million, with adjusted strong adjusted This was with was revenue $XXX profitability quarter $XX our which which had our generated million, an line As and led $X.XX that guidance our at exceeded to revenue of $X.XX, of above guided our per EBITDA to of share of range.

and website Relations supplemental refer for graphs XXXX with quarter summarizing slides financial please performance. and to our tables historical first our always, As Investor

some with for start quarter. GAAP the results our about Let's commentary

sale debt for by in earnings Technologies, of of the the American year. transaction from impact in-kind share convertible noncash a associated with $X.XX $XXX of million $XX the loss This known in impact sharp This negative income $X.X was large with income per AVCT, Our share. to to GAAP $X.XX a Kandy in from a paid as partially earned per the fourth included million company's offset GAAP business earnings positive of the Communications or million million XXXX. Cloud same contrast and to on net quarter in was of Virtual investment last the quarterly our mark-to-market interest income $XX

the have investment. Kandy other fluctuations volatility, mark-to-market price on Due excluded call, as results. As our expense our and we stock mentioned last sale asset items this line from income related non-GAAP ABC these affect earnings we to quarter's in we our to

quarter, up of quarter, first we was addition the discretionary and $X mostly quarter Non-GAAP first adjusted of Non-GAAP other our Total XX% $XX adjusted estate the the the non-GAAP $X.XX. noncash per million downsizing results expenses intangible quarter, expenses. our We share favorable XXXX. expenses. operating as first to the compensation, of from quarter, our restructuring the to XXXX was gross in In margin usual an was in favorability GAAP $XXX XXXX basis, expenses $X.XX, to follows. between our expenses, per as XXXX million to drive assets XXXX similar Non-GAAP efficiency. such and On quarter was earnings above the of $XX the gross results product to our favorability in non-GAAP in in in continue related share from facility, our diluted operating million Non-GAAP integration for million real expenditures. amortization quarter EBITDA contributing margin quarter we footprint million product up were and the of quarter to were $XX in million, in the had earnings diluted other first difference revenue due in as non-GAAP to and mix first $X XX% incurred mix. travel and due factors continued of

million was the diluted XXX for Our count shares quarter. earnings in share non-GAAP

the but year-over-year, of our X slightly segments. candy the XX%. Edge Xx the an quarter sale, generated with XXXX, million, first was of Non-GAAP travel margin our flat our discretionary business, restructuring was adjusting year-over-year results at the change for the nearly business million other when EBITDA million, was of savings. The $XX business Edge driven Looking $XXX Kandy minimal and first $XX quarter & business. for In by savings, EBITDA in Now expense sale & Cloud of adjusted revenue down Cloud the

Product on service Cloud few are Here additional & while revenue the million, was revenue $XX performance a Edge quarter. points million. contributed in $XX the

first accounted of roughly flat the product for quarter Software revenue, of XX% XXXX. total in

was $XX quarter We million, basis. $XX this non-GAAP IP pro increase revenue On of from margin our or a forma year-over-year. XX%. to of Turning gross XX% the Optical margins with increase as-reported on prior We period level of revenue million an an first recorded good basis, at business. had $XX the million

business optical IP generated quarter. Our of EBITDA for million loss $X an adjusted the

line first from for of XXXX. first consolidated the in XXXX were customers accounted are fourth XX customers total customers total and XX% fourth approximately of XX% the slightly record million key the revenue International Service in metrics quarter some the by revenue here provided $X quarter, in up XX% in above a of for in enterprise in represented the quarter, total XX% the quarter quarter revenue of quarter and the XX% the in first of revenue our first from of of company. represented Now XX% of XX% revenue with first the XXXX. from increasing company XX%. of quarter providers our Top Maintenance XXXX. quarter,

excludes the quarter. Bruce X.XXx are As of we which book with mentioned, revenue, to for the first encouraged maintenance

a and to Turning cash $XXX balance restricted with $XX including cash quarter. million quarter in the is sheet. million, million This of equivalents the the previous $X ended of We cash. decrease from

expected to variable payouts As and annual factors. due compensation seasonal

still Our $XXX undrawn. million revolver remained

to As higher approximately previously our Term off margin Term carried pay Loan amended than the that balance the B Term facility increasing balance. XXX Loan early was by interest A rate $XX announced, using basis an we points credit A. B proceeds Loan million, Loan the our in March, Term

effective $XXX of to XX. our X.X% of Loan again, balance interest Term from million covenants. principal gone Now the our as March met And we rate comfortably X.X%. has The Once quarterly A was financial

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

of estate From debt million operations was cash Capital million which cash of in last real of adjusted net $XXX company of perspective, which as cash million improvements. quarter, XX, by the EBITDA leverage for a the $X the less March provides months had were million the accounting Our leasehold XX from than Xx. an divided $X used expenditures ratio in $X quarter.

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

Bruce McClelland

Mick. Thanks,

the execute cloud for is in demand focus also communication our share the we time to near to and of for the with Ribbon benefiting creating adoption while bandwidth unique increased strong This secular While transformation the industry services. competitive is longer-term of term, gain shifts the opportunity our from company. in continue a well on significant

Over funding deployment improve legacy network years, infrastructure, significant the upgrade to XG we TDM and networks. modernize broadband federal next support to several to with also expect along initiatives investment the further

excited growing to evaluations, winning directly the is line. are provider existing strategy Ribbon X strong bottom new opportunities, and combined of that IP both and We Tier several validating service relationships. I'm pipeline Optical top very portfolio and about of strong the strength ribbon merger particular, in late-stage and business and ECI, related the leveraging

market Our and portfolio the differentiation our with is customers. becoming in more clear

WDM metro routing strong optimized and highly products. perfectly a are complemented MPLS Our platforms portfolio switching IP by of

opportunities XXX-gig evaluated is the these WDM new solution. dual ZR+ One key of in elements being our

new the to of third market We in expect one with to early with the first availability quarter. be for general this capability, planned

environment. in we're interoperability, vendor anticipate XX% in technology represents supporting operating the bill expectations across in of backdrop, revenue today. SDN suite significant where key ultimately to in be supporting million, significant optimization here With is enables proving with and second large-scale of second solution interest important optical for and multilayer that is seeing an is savings. orchestration the of This deployment and both factor in with addition differentiator Bardi to In cost the material network, our margins This this tools amuse for domain to a the to opportunities We IP new the multivendor be India of Ribbon $XXX orchestration the as A XX%. $XXX quarter. our platform. these are range million to gross layers

to to We expect million per share. $X.XX non-GAAP adjusted of $XX $XX of million EBITDA and per $X.XX earnings share

questions employees for times. a unchanged. few these Once to guidance take remarks, full now. to for and thanks challenging we Our the concludes deliver during year remains Operator, our our prepared again, that can continuing

Operator

Instructions]. [Operator

Latimore Our Markets. Northland with first question Capital comes from Dave

Mike Latimore

is Mike in. brother, Latimore, his This calling

these did X say regions you maybe customers, with Edge opportunities, So what were Cloud also that late-stage one. Tier they & And they are interesting on in?

Bruce McClelland

Yes.

IP referring not was the Cloud Edge it's regions. in I commentary. Mike, & multiple So in that And to in Optical,

I think mentioned Russia, and America, as specifically Pacific I North well. Asia specifically

on So opportunities different the a them pipeline of well basically comment to now. number down

Mike Latimore

looking also is at independent current that Yes. it? Cloud it of this? customers And Edge are with they & are Or

Bruce McClelland

Yes.

of than not them. half are several So more of of all them them, but

Mike Latimore

is your Okay, more then right, for that of that India, you're while? I a you guidance assuming restrictions. a here, sounds factor little And tighter in it right. obviously, it a guess like sort into lot

Bruce McClelland

pretty -- half year. what in consistent saw Yes, with I the first last know of commented on quarter second we the well was I exactly.

robust first not So it certainly more in to anywhere was what is full back it the last than half velocity. year. But deployment

at the now, right saw look XX% what we're you If it's we of seeing that pre-COVID. deployment about

with into here. our plenty take run account, to that guidance still certainly there's So of and to we've tried second quarter room

Mike Latimore

At traffic on levels. to just commented voice you And volumes pre-COVID relative last one. point, one

on XX% think volumes? any you of seeing at above point of were I in terms year. what guess update they said last like X kind I traffic recover -- you're

Bruce McClelland

quote I front I traffic I of if anything follow don't just kind an and up I have detail latest that, Mike, of updated me can on on in but see will get some don't it, have levels. more here now. right on

Operator

question next Riley. Our comes from Kang B. with Dave

Dave Kang

first outlook? your My situation. regarding question or second results quarter is chip the to quarter Any impact first

Bruce McClelland

We've second We're saw types It out obviously But front substantive, like variety of goes. anticipating seen right We'll QX. comes trying big nothing you coming. But promised impacted tight. every decommits we this much lengthening was times down the plan and ahead I quarter, we be to But And There it of lead sufficient The with as get again, so good. lead was components. kind could trying it's got the issues different we're Dave, issue up now, and that end QX. how on issues guess, of see It's far, in many, deliveries. not had here. for need. pretty times as challenges that within to half tight. definitely to of in a second on worked to any so real

Dave Kang

you because reported are about somebody margin increasing talked margins hit guys going earlier any of this -- equipment another getting the What because Also, morning impact vendor prices? prices about up.

Bruce McClelland

logistics little portion -- a which on Certainly, seen as prices. example, business. which our an that. of elevated some impacts around pressure will a on we've is There costs

well. software lot a of course, Of what is sell we as

the effect might profitability a somebody hardware. less concentrated more than overall for the So that's on be the little direct company on

Dave Kang

on India. question I Got it. And a then have did

something expect to fully you half? Are running the level? it's second there year? do about second So assuming half recover When XX% Or back this is pre-pandemic beyond to you India pre-pandemic.

Bruce McClelland

happens and we the strengthen perspective from pre-COVID to but new And budgets, it's to country we're the country. believe our hard service products on and Obviously, levels. we're the it's tell sitting directly when a back projects logistics exactly a And we're involved where get et half from second of deployment the velocity. factors of is around we're what so for and year able to logistics of little today. funding good combination the Well, then in just begins cetera, to deployment visibility pretty in the a

based on is now. And accurate so the right seeing XX% number what we're pretty

Dave Kang

And can or? India it pandemic? pre you remind us what Was XX% about was

Bruce McClelland

Yes.

of business to Ribbon. prior about with it So for ECI, the was merging X/X

So mix rate range, annual range call it like in the a run pre-COVID. million $XXX that -- something

Operator

comes next Our Cowen. from Paul with question Silverstein

Paul Silverstein

I I've -- couple you're you half. to got say just remarks, if a I about to improvement meaningful start in of One what talking you just Bruce, with talk second the guess I And try in questions. to when the you about When bins. prepared India, heard -- saw I've sounds the could how terms strength a exactly And different have than the second in terms half in underlying visibility you into expecting second the view you're little the press if of to year? degree But that what of bit half in of that. view? of much is your

Bruce McClelland

with have have on where with and products Well, given pretty providers lead working whatnot. gone times we tight India, planning service a the we're larger in relationship

whole in There's the sell that right visibility have we that we sell, a to and different configurations We planning you've have phase. variety to portfolio have of got of a good and products.

to customers things bit a to then get of and bill through to go process process be the of able engineering a many driving material to be of an with correctly. we budgeting our So

next directional X get the have months. more next we say, X planning we to months good that, visibility And beyond on, information. the X So

is of pretty the And of you'll XXX% that. where on not we're new and it's see network So decent. variabilities of bidding replacement when product like course, or but things regions it's scientific,

for know so win win, how to you're those variability you're there's sure don't some or going around You if much to going things.

Paul Silverstein

pandemic you change Bruce, also had real-time that start customers that X issue, there's recognize we're I a since given X yesterday, demand in and plans? planning you week just the relatively inform it's in side their deployment have second your had to the of whether deploy recognize last in or be X the recent those as about it's appears product. half Have didn't not vintage. communications respect literally to communications not changed a want would that months deployments the old. But but with be spike it fiscal been the after a in to but up been I year? or or ability the the their pandemic to apparent customers your to whether spiked you that's of you

Bruce McClelland

and in accurate we're a here up here quite Well, the while couple do effect, pretty in guidance, job second pretty a growth dramatically, suppose, view. I not make given If we up in been providing India. reasonably has as of tight got the the But obviously. to significant quarter an right, would of timing earnings a sure And projecting weeks we've hand, in thorough a leading living restrictions other on tightened country things it for some have the well.

and So happens think second had We've discussions we've in an view the accurate is believe to what yes. on your answer the here question got quarter. I

Paul Silverstein

my India. last question Bruce, And apologies. again, One on

been up beyond second in second past quarter of couple of of in the change COVID? because plans this weeks Looking calendar there spike this half any year, their the in deployment has into the

Bruce McClelland

on the the best I put finger now, Not question. right my can yes, that I can Paul. that's But answer

think. I

Paul Silverstein

that. to be to in the appreciate strong second year I number? healthy, of clear, Bruce, that half No, you're a XX% expecting And relative increase a the

Bruce McClelland

We are.

stronger already Part the we're first the new is network half part being wins opportunities anticipating than that parts second of and the projecting gains deployed for in it We're are. projects given market it is We in the were of or of share half. market. that

Paul Silverstein

deployments? optical exclusively or primarily are these And

Bruce McClelland

the optical portfolio combination and IP a It's portfolio. the of No. MPLS

Paul Silverstein

that appreciate I insight. Okay.

move on. me Let

at of times to and you've I make a In call, secured opportunities, referenced one I want sounds couple you've It if understand. sure of Huawei already the deal. terms during like least particular

optics, of I of I finalizing opportunities million. that also many many in close think displacement you $X of it the you Huawei in various are to of a you voice are any void terms And how are you're or on the total to house. whether incremental I displace them sight us characterized I to can deal heard voice misunderstood. as think in side you think although in say it is perhaps But there And was give in directly opportunity? on trying whether win steady many those there of are awards? it's those new communications, are et of it's linked that how cetera? not to state, any that stages in optics, And accelerating, insight the How

Bruce McClelland

Yes.

portion for So it the needle, India are referred kind meaningful market you in think opportunities today. voice first key first things. general, as Europe the we're portion referred focus Cloud well network as the wouldn't the to replacement opportunity to that both one in the several optical in answer sort the certainly, these and to them of of of as Edge I part, the opportunity finish is seeing on wouldn't areas fairly characterized in IP replacement the of of move or correctly. or the IP a in opportunities And network. us And to in refer countries Optical. I well to will I The are as & mention line also a close

deployed We're share either specific So where are opportunities new dozens customers. or necessarily. list we on more currently can already not gain focused insertion dozens and opportunities with these we're and of new today a

Paul Silverstein

lower dozens potential at even dozen not X% to you look dozens. or would than like Is it's that opportunities in appreciate X% more terms or be it XX% and a of it while total over Bruce, I

Bruce McClelland

ones kind meaningful shotgun dozen. in focus the are these There's real under a array. of a a term The It's broad in around not short things.

Paul Silverstein

that X% Would have to XX% been in range?

Bruce McClelland

Yes.

Paul Silverstein

that. appreciate I

you you're most X growth and what -- would revenue about X? be Beyond Huawei, are number specifically, to had you driving what of and X tier excited terms in if what

Bruce McClelland

Top Well, Huawei the X, Huawei top opportunities. Well, opportunities. X, our

The will we market. Those success third North recovery year this we're are American progresses as drive on X is the India and things, And market. the here optical that portfolio about talked North here IP year? in targeting areas is growth in focused the the in second the America the we've that that growth all the believe then

Paul Silverstein

I of asked already have I've service think the actually to is quantification right. the to get some -- dozen? range you -- got Again, a it X than that also in well, providers one X any that can characterize question around the North say Is granular insight, XX? can U.S., of Russia, And just you've a broader I All number less those. world, just America. et rough X of question more Is of do? I a cetera. the you on you in half trying a about than already dozen, opportunities

Bruce McClelland

Well, let different it me come a way. at

I think fairly be going on significantly us to America North is quarter the for second optical. in IP stronger

a quarter. projects number have we So second flight the in are we'll that of in already today that recognize revenue on

referred Tier to meaningful at meaningful them, call to share of, to half call. winning very see a we have on them. these opportunities the detail they're set we're share on X are I some focused dozen believe improvement we'll more there. I in hopefully, -- So opportunities, And focused next that as shot and company the that specific very these And good think are a have a some again, we'll

Operator

Ladies and at gentlemen, there I'll questions Thank to closing this are it you. no further management for time. turn remarks. back

Bruce McClelland

progress call. Ribbon We forward virtual thanks our with conferences. Communications. and next and again earnings on being you on investor Well, on to in that that, our operator, the upcoming our of you your everyone really With many Great. call. at look concludes updating interest the for speaking call

Operator

Thank disconnect. you. parties may Have All a good evening.

Ribbon Communications (RBBN) 29 Apr 212021 Q1 Earnings call transcript