RBBN - Earnings call 3 2022 | Ribbon Communications Inc.

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Operator

Greetings, and welcome to Ribbon Communications Third Quarter 2022 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Bruce McClelland, CEO. Sir, you may begin.

Bita Milanian

Good afternoon, and welcome to Ribbon's third quarter 2022 financial results conference call. I'm Bita Milanian, SVP of Marketing at Ribbon Communications. be today Lopez, McClelland, call website Ribbon's webcast and call Officer; Chief is at the Investor slides live Mick the are our and Chief will and rbbn.com, on where are of press Ribbon's Bruce Executive being Relations both Also section on release our supplemental archived Financial available. Officer. Today's currently projections today, for will we business the matters are including forward-looking be XXXX discussing statements. fourth the and Certain quarter of financial outlook uncertainties and in risks could the to subject are materially contained statements results actual those differ these that to Such cause statements. from forward-looking and our SEC, XX-K. the are risks These recent uncertainties discussed documents filed Form most our in with including refer of I on safe slides included call. statement Slide the to X you for our harbor supplemental this conference

this will Reconciliations non-GAAP this we are section present GAAP measures we website. And issued conference on information as Relations to Bruce? Investor call, for well are would in on as over the applicable the again, which like we to the the press call. to of Bruce. slides included call prepared financial turn both our supplemental earlier In earnings I release the addition, now, today, available

Bruce McClelland

have product issue and previous quarter. overall importantly, more Obviously, X.Xx could Business product us quarter Bita, not quarter. Revenues this of Perhaps of service book-to-bill very versus results to thanks Thanks, for was increased to a this for to year-over-year. and demand report significant the everyone to we our easily million, sequentially quarter IP excited Great. our in XX% an with Networks discuss over increased the our third bookings and joining more Optical for and up XX% the outlook the I'm our today remainder shipped year. and in $XX improvements significantly segment.

and challenges levels and is more gross than and improvement sales higher mix. in point The Optical at North a However, between XX%. in cost, logistics second XXX availability basis to of From XX% overall returning quarter output. The customer overall X over to IP more historical supply chain the margin small dramatic in increased by general continue perspective, non-GAAP the increased revenue limit increased versus key improvement components resulted a number of a factors: and product quarter by mix petitioned America equally in Europe volume, lower XX%. regional

in the Optical components. supply by down IP Our which limited sales India were of X%, key were about

received already segment product the India, look doing More recently we're wins mobile validation last XX pleased and IP Airtel significant and XG I'm huge network them, this routing. major and success. The to time, on are and we the progress revenue on includes announced cell and strategy large XX win with to we've the obviously Part and their and site linked XG layers in incremental aggregation with but in initial will bookings in of investment But in XDR the this doubling the largest mobile quarter. our profitable solutions. aggregation X to IP/MPLS portfolio is have is great third call, to routing expect routing Optical gigabit We've RFPs more positive. service make particularly the on from products others strategy than India made progress our I of quarter from carrier with our And stronger take on platforms We of building compared into strategy POs with in customer decisions X telecom opportunities. be and the this focus is pipeline more Ramping routing routing IP in the important been quarter a and major good the excluded to broadly, this initial than making of with for up segment second provider really making routing one router Cell carriers of a mobile Router these a of and quarter. An what element We them. large Airtel mobile been pending of new fourth booking in IP perfectly X of expanded Site XG again in R&D major the half of an Bharti advanced and the mentioned new IP footprint is momentum traffic. the extremely site of directly cell the include IP our ultimately, our deployments market, Tier ever software and of Of how flexible Neptune translates the continue X on bookings we hardware extends solutions, very the the builds new in win to opportunities. IP/MPLS family of world. This access and investment business. we've of routing increasing matters capabilities with suited sustainable, advanced

this these on this enterprise and our technologies This join XX% last of in TDM to with migration finding former across once solutions XX% in portfolio in customers in Verizon margins access we Networks quarter. and and technology retail, a and Activity The projects Engineering acquisition we're of great improved projects, Johnson XXXX in to nice quarter-over-quarter a many IP verticals, Once Marathon our Johnson real Cloud is providing & quarter, have operational And to Mair, and they input actions the to operational new overall business President, from the again, but top synergy in this increased of challenges. Operations Eagle cash new bright the modernization original to sell engagement many flow. In on and very that is AT&T ECI IP one in infrastructure build thing from Petroleum very enable quarter, of to strategy. our enterprise in of quarter, voice last solve honored all segment, network voice QX. by ways was IP product channel also Edge again to now XX%-plus path related quarter. to help bonus this over leveraging have solution portfolio customers. We reduce the Accenture resulting on The involved lower of close consulting. of resulting increasing regions. Sales growth and resulted continued additional healthcare, with energy, networks Ribbon along enterprise increase higher and partnership and spot of very to great a Giant and profitability all Calgary Overall providers including multiple market one we're the distribution customer growing network accelerate Ribbon transformation the opportunity technology We our a & in to routing communication Edge the and projects the of common of & have costs. focus costs were I'm becoming products and several the largest education in goal quarter. In all significantly in Directors of network institutions high from across encouraged this strong wins very reducing selected of the and stronger these AT&T other the customer, a their companies last opportunities existing Scott planning cost both real integrations. He IP with improvement AT&T is introduction cloud-based clear University in year-over-year. type Optical multi-service sell-through Cloud remains on shipped profitability to sales across sales quarter, funnel was needs, our a a We're complex large, to perspective. have combination direction, strategic expect and company with service deploying Board to

solutions functionality. in cloud investing and be Microsoft, sizes adoption We're and be of of platforms to public Poly and controller enablers partnering channel and unified technologies. Service educating session XXXs communication continue successful for promoting Asia, for solutions the of roadshow on service work our management Microsoft augmenting and on UCaaS their on-premise One across to a to productivity of the important increasingly, the market with of the continues key with such America, enterprises hybrid And improvement North merits very services, very and managed enterprises all platforms. a Zoom. border policy as they're Europe Teams providers for large

were This complements deployment. service of Our the using we've fit, by a Connect is Connect Edge their business SBC developed many Enterprise broad portfolio. highly sell-through perfect we selected Cincinnati recently successful Bell and Ribbon the Operator on-premise to U.S. providers Microsoft our with partnering service support

an application, planning revenue received this in mitigation of applications by guidance timing infrastructure with with monitoring, predict, and a fully has in France be quarter, focus us last added the QX, quarter on fraud as assurance, mobile our congestion deal the radio these finally, network also XXXX. And revenue. a service highlighted a government revenue were [ and agencies QX, I modernization than awarded of deals next U.S. STIR/SHAKEN We this beginning the with leadership very agency market communications quarter application opportunity anticipated larger a initial additional several for established they'll for a for very U.S. wins operator, closing across difficult largest the where more defense in several large position and strong is carriers. of ] very doubled Overall while ship Tier years. quarter. As The such for value network over robocalling them to order have the but awarded and X significant X we proven boost in we derisked our anticipate in to projects federal we

have beginning of As we we last to come discussed products new a market. pipeline quarter, great to

platforms of the on and aggregation on to and with perspective, addressed IP routing variety a Based high-performance of latest generation the set built-for-purpose routing Our routing silicon, metro broadband applications telecom cost, routing favorably market. new edge for density and these routers merchant XDR from a address wide large to power a mobile multiservice through feature IP compare networks.

XXXX a portfolio of customer further an last has platform expect to gigabit the platform very transform further unique set strong initial a compelling of as will pay-as-you-grow and network. In aggregation the technologies. detail to to of interfaces, X by new turn the expect that edge of providing several IP terabit a the to introduction and service the the and providers including full transport X and XXX half IP modular back market. capacity new convergence and switching for XG we solutions terabit quarter, portfolio coherent of a architectures the through hyperscale Mick? and completes of enabling optical including optimized second the routing already shipments it this networks to significantly the The that from have platform metro redundant IP on a to year the expand and cost XDR architecture fourth high-capacity XXX Mick their that, pluggables, initial per first come supports variants, of XXXX provide comprehensive end orders added quarter. additional the with expands discuss We XDR over ownership total a ZR metro of optical XDR the very router network the layers modular be optical [ of market the begin transport. for third also addressable then our to XXXX entrant ], our guidance leverage gig of XXXX, data The ZR+, center XXXX, as to IP quarter results, on I'll be core. With needed, Following allows

Miguel Lopez

very you Bruce. afternoon to much, Thank Good everyone.

summarizing Investor Relations below the our over performance. our showed were just our slightly refer for of financial website and quarter As slides, XXXX, guidance current results quarter our quarter to range. financial In the and improvement supplemental an previous always, third historical please

generated quarter, was million, quarter gross a by of Non-GAAP Let's dollar. expenses start were million million strong negatively with consolidated would profits. Non-GAAP higher per $XX basis. Ribbon from have million the in diluted margin on foreign to million adjusted currency impact the Ribbon was $X also which currency impacted changes. the share non-GAAP been in million, was by and performance. Non-GAAP was $XX revenues XX.X%, $XXX $X corporate financial $X operating constant positively effectively EBITDA impacted Therefore, $X.XX. earnings U.S. to third exchange neutral

basic count million XXX was million Our XXX share diluted was shares, and shares. count our share

our we with settlement into Our royalty-free Gateway that non-GAAP have the rights as technology controllers tax rate XX%, we agreement servers. to integrated perpetual In session is August, into stated income derived from entered for that of jurisdictional quarter before granted AVCT and is a border which Ribbon WebRTC taxation. application some was

in AVCT. written our consideration, the sheet. the balance in warrants cash X company our and shares As paid surrendered and AVCT And in to therefore, down has investment been

X was our year-over-year quarter revenue down million of Product look XX% $XXX and segments. maintenance revenue Edge Now, the was quarter-over-quarter. $XX X% at let's third million, & million. business was professional and business, In results service revenue contributed our million, Cloud $XX $XX revenue

Although of an profitability margins a as & of experienced in total EBITDA percentage Cloud was revenues, revenue non-GAAP to maintain product declines of able business $XX high level was margin Edge ] EBITDA it Software with or XX%. and adjusted [ XX%. XX% million non-GAAP gross of its of our

third Optical previous a of percentage compared for to quarter our of margin XX% quarter-over-quarter. an quarter We increase Product up point $XX than a third Let's year-over-year business Optical of percentage increase revenue results. the third million XXXX. was increase XX%, IP and IP Networks turn X was XX% XXXX. the of Non-GAAP $XX XX% to of million, recorded was the revenue or which quarter over gross and quarter an X point higher

significant lower EBITDA increased of supply As cost overall higher Bruce half Non-GAAP by loss quarter by expense driven mentioned, equally with margins and controls. volume, reduced was driven quarter, and mix. for from $XX the the million improvement stable by revenues the the chain previous product was

approximately higher was indicators Ribbon, revenues $XX both represented of million, for providing percentage revenues. had some percentage for quarter a book previous X.XXx revenue Optical revenue, revenue is of XX% to of We customers with Optical product for quarter. and XX%. increase commensurate IP for providers ratios and Ribbon which as represented XX% customers in Cloud & constant XX were key the performance the Here total from of in for revenue, which the of consolidated IP company third are Verizon customers Edge. as Service of and a of X.XXx Top excluding included XX% provided enterprise revenue, and was year-on-year. AT&T quarter. over and our XX% business accounted total XX% the Maintenance for International X.XXx healthy revenue maintenance

end the ended Turning addition balance Neuberger and led the successful Group. balance equivalents $XX the the cash JPMorgan increase sheet. raise an the quarter. to second of of of of This $XX in our by to including cash our $XX million. Berman, million We capital is and quarter major [indiscernible] Swarth some from with cash is million investors,

term balance. or Our $XXX currently XX% off outstanding, we $XX million million is of the as original loan at have paid

Our end. at remained undrawn $XXX million quarter revolver

metrics loan level the we our of cure For met the third quarter in our result of a of and XXXX, rate hedged constant interest continued by equity covenant term rate profitability, loan our swap agreement. as fixed of application clause

appreciation. and positive IP through With the and strategic in the million support of capital see down. it beginning $X manufacturer to profitability expecting and resiliency supply continued million, inventory driven of expenditures, navigate our and increase we're in reduction current including return $XX interest indicator WebRTC bookings these During cash rate $X revenues timing million growth perpetual of of of next pay in by chain limits and payments. We're million revenues month that in $XX benefits of a of operations LIBOR positive strategy. to couple our enjoys investments increases $X Ribbon of the basis to the million components in the XXX a payable, only for a outlays points times for the in about our dollar interest XX inflation, of rate show use included rates points. We million benefits in of basis for quarters. In cash flow as growth, third $X swap increasing to disruptions, cash one from to quarter, mostly had to the spot contract deferred compared rate Ribbon U.S. accounts global Major rates, fixed revenue our we license, very debt Optical,

I'd now the turn back like to call Now Bruce. to

Bruce McClelland

Thanks, Mick.

a our is developing the quarter to win quarter recent third backlog quarter in IP improvement by in on key a virtually anticipated, the making The stronger Optical entering approaching our Business results, a segment basis. Similarly, we're significant growth but the with our and adjusted we session the provider new gross providers bookings expect fourth As we and quarter Overall, mitigated in and customer quarter the be further an Transport Routing our business, and supported base. Edge continues the challenge, the impact higher in volatility fourth fourth inventory, quarter. expect Airtel Optical border increase with enterprise strong much significant in margins be be in majority XG anticipate platforms expect for of we've visibility profitability Networks the Bharti site very in to service both and investment regions, products of marked SBC show some a the with increase chain underlined with significantly was to with cell sequentially backlog all by quarter the we non-GAAP enterprise consistent working background a quarter. Supply to to metrics. & high-capacity in previous revenue increased In router core beginning good IP service Cloud controller of customers. licenses with revenue capacity and particular, shipments and we traditional in across the and

provider of primarily large as our sold opportunity and modernization federal increasing a As us. network usage our for well Connect as-a-service platform. projects enterprise remain service SBCs U.S. The through Ribbon customers

assessing account with However, we the that are our taking approach taken a timing and guidance. of revised have more cautious awards into

industry business into investment resources product equity providers to technologies to and all in with almost invest to other positive in momentum build outlook macroeconomic vision, this recent realize need The I look recessionary continue expanded industries, effects the successful company our weather is the on the just imperative that in to the very we we new with and and tends remain results, keep growth telecommunications see As continue and pace our than it's diversified XXXX, us for to exponential the gives we service we're to The traffic. portfolio. now starting better beginning. the our

opportunities entire of changing I path further be be However, operating accelerating as addressed profitable on our to any generation. generation. With expectations to our that of the across the more are of to non-GAAP for to million. I'd improve in integration for quarter open million we partners finish a a And adjusted range backdrop, $XX million to to cash fourth in for an as the of XXXX expense XX.X% and react cash for don't to cost a remain and reductions to profitability company need and capital additional opportunities and functional signs to improve into complex particular, look follows: that environment $XXX that perspective, we we are flexible forward million, gross to quickly focus revenue best market questions. the $XX non-GAAP investment EBITDA and XXXX. operating see reductions From of by going watchful $XXX efficiently XX.X%, the up environment. Ribbon to planning like implement to In Operator, and profitability growth, would margins we our and our thank team now prepared few strong concludes for a remarks. navigating why

Operator

first Silverstein with Paul from Instructions] question [Operator comes Our Cowen.

Paul Silverstein

level apologize, Bruce, building questions, call. with starting got on I a several down. it and I've was I then high

you don't -- you you gave in in the I & could with First I Edge? tell us? give business. the us something But off, Cloud can is see book-to-revenue it could that on the share book-to-revenue you deck. IP the Optical know But us

Bruce McClelland

Yes.

it is -- the somewhere in the Paul it's in think well, quarter. -- X.XXx I it's

Paul Silverstein

the the book-to-revenue? for was overall company, what So

Miguel Lopez

X.XXx.

Paul Silverstein

demand, energy optical exposure terms the both response any you this in outside And Europe's given macro. doesn't trying weakness But your remarks. demand macro be seeing right. how of seeing And what prepared what particular? seem business, adversely apologize of to I Edge X.XXx. you but let of if in demand of are or versus and FX in much U.S. in in Cloud businesses. It decipher the All especially you're the to And terms weakness, secular me of & trends? answered then given certainly to let in terms -- impacting the

Bruce McClelland

this combination, perspective, guess I it the the kind Optical the it's as I think, and if also, India. I in as new momentum the Europe backdrop East, And third the revenue Europe, deal X mentioned we of break quarter or Cloud around well. significantly of Airtel significantly pieces, the improved was in demand and the whole guided. into Middle demand in a expected up the new quarter, a quarter demand the region a IP around Yes, In obviously, as with certainly, -- now quarter market. business Africa the really Obviously, & by quarter down we to we EMEA from I increase Europe in in those the previous around half in in bringing being we're the was the underpinned for and as that the was or of bookings segment And second in in quarter, the products. than deploying quarter mentioned, Verizon Edge more bookings of mentioned. year, lot IP particular, third great down previous the the activity some from underlined I third good quarter with in to I'd in had products was the see particular, routing, pretty particular, had

becoming the real quarter. as revenue there, of naturally in of customer So kind once And again by strength now XX%-plus I mentioned, with a AT&T. offset was kind down

dynamics, that those I think, third some So of affected the are quarter.

cautious what We don't fourth quarter. the in around in particular from the in quarter, in is quarter. an the part, around IP increases obviously, As we're perspective, each Europe, And every little business, in Optical really X most of some around into what happens being in reduction I what them, was is the fourth about some one again, the saw part a as we look guidance the world projecting segments increase. think level for of in strong here we as the of the third we're more geographies the think increase expecting of Europe

challenging procurement of to really and get some through and they closed I we when just have partners, timing into been as mentioned, just some As opportunities trying go our also flow space, when predict in down the deals it's of significant but to exactly. the the nail they federal exact

more to fourth So I'll see cautious quarter. little what happen we try in a be in the

Paul Silverstein

are I in that you all the the not world. largest Bruce, appreciate supplier

macro FX the traditional signs -- Europe new X, pausing, case So trains. And worse. concern of on caution that have the Europe purchasing because in terms it they're elongating see these in you beyond of or about Any on to your of and again, about but perhaps But slowing U.S. that Federal, as even actually the but just what better if was re-evaluating, service warning relative be trends and divorce would concern larger your special not well, causing for Europe, about cycles? just is rhythm, the there a you broader not unusual general between appreciable the Asia and or commentary there the Any your those Is thing extent are these carriers customers that of and question due same on and European is U.S. that about cautious the U.S. or Federal in to to note Pac. Federal communicated Federal? you providers broader team and/or either Europe. not or are

Bruce McClelland

Yes.

color, particular, business Europe. bit with So critical Europe a to Quite little more around a infrastructure providers. provide of in is our in

I -- nothing think decision-making railways, infrastructure. their of of takes programs range to longer, macro and great the oil happened of transportation, in environment. caused given and on of own got pipeline of those that's think expect, kind build I that opportunities the just And types right, has these I to really are some that a out and customers anything a it's gas, investing So we've disappear. projects

in I expect exactly clearly, be go business individual a and over to we they when more great when previous in little Europe increase in But trying opportunities predict to QX look they a to strong a I'm Now trying and quarter. QX, be the revenue, we and as saw cautious. quarter, close at to

TDM an the throughout knows contemplated replaced experience infrastructure products significant through selling can as service go much programs working infrastructure. of different the I IP as to infrastructure there of procurement to on, interfaces call, need earnings around and the lineup a is of And we're little specificity commentary Europe. Federal And Fed this is whole bid. so the unpredictable. similar. over being awarded I years. Federal got there Anybody somewhat moved be it more is a be last timing mentioned communication not is in mean and on of a it's So really macro a and next where over with the legacy couple that's when all things and get provider

it's again, is just on trying that's the exact So challenge. real a something not commentary the changed, to really timing predict

Paul Silverstein

or One may. if it. I X [indiscernible] Got questions,

the the is How me But you Optical, strength broader in it bookings how significant Airtel. sounds of beyond well On goes is of like it the much let IP yours? than increase ask question, a much function of a Airtel?

Bruce McClelland

Yes.

way. XX% been they'd be or that So Airtel has for plus a us significant customer they're a not listed for a while. customer Obviously,

strength of, piece the of third portion but obviously, it. quarter, just the a in they're So a

out not the mean as strength piece So a is seeing but well. just you it's it growth, obviously, dominant revenue was of tells piece like there or was elsewhere the Europe of the it I anything like that. numbers,

Paul Silverstein

comment, the bookings? bookings XX% up true Bruce, in also Optical IP Q-over-Q that's on the with And you're

Bruce McClelland

Yes, on Same commentary exactly. bookings, yes.

Paul Silverstein

you're share just to demand you are. growth. I smaller the again, you doesn't seeing appreciate supply very the smaller, that appreciate can be a about you're far very seem there? September, supply your are your your All right. Nokia But standpoint, remains wouldn't for the necessarily from numbers what Again, remains said size [indiscernible] restraining units the And early extent to said I to last that Any said in challenged, back but optical were chain of that insight business that strong, problems that experience far optical, less. week you relative so they

Bruce McClelland

Yes.

activity. ship -- in the So tired and areas, are was the supply, mentioned or mentioned component a every couple of component quarter of expected meant because are in us issues week about background the a opening in for lower it every products frankly. than that various little called my there if that And amount produce a that we chain, primarily That be, a hand-to-hand I down particular in I particular, just third can day, But battle, region. problems a there with to quarter. on I I that specific still around I still into limit talking India, it is issues. specific we I'm start it of supply ship

given it's been quarter, shipped an we still issue. we've We third lot in more had able the third the obviously, could have So quarter a to that we in bookings if could it. have supply the

be an that issue. to So continues

to we're issue, to continues and ended size, the in we're should doing completed stronger and getting where have -- transits completing a a quarter, number be But world. scope maybe Again, logistics up the had business as of that et cetera. we an shipments general it's of were we products we had and the finish as Just third reflection around a quarter.

spend And to environment capital contribute there things see unchanged in any on this and week, carefully had. More I overall rest I forward, we'll the anyway, an spend I both kind carriers reductions relate at here And spend plans for -- their I you've least that of just more obviously, what have capital from think last and taking watching But to time certainly to seen. we'll recognize the about budget. announced see in made 'XX. that so they do or is am AT&T demand U.S. comments, on not plus not level commentary of those the to listened a think perspective. the broadly my commented get macro reductions all capital of really investments. Verizon macro kind being in I've signs happens of of to see year, allocation some can I the decisions over Nokia in expect more the and as So know for mentioned going it I

Paul Silverstein

you Bruce, have just number any given you be mean it and you because your on carries be the -- may expressed, that just on or that cut general to based concern have I it that That's clear, magnitude you number to history, actually with any not communicated the of appropriately appropriate planning conversations concerned. Is that's just is concern? appreciable back? you they're team [indiscernible]? Or it with to question. just based is currently have

Bruce McClelland

heard is, yet. public plans in think statements but I capital, out around for have again, in And No, reductions I publicly. I what any detail put think what they've don't seen 'XX said their we've haven't people

that's into So look I my little far as pretty spending, comes seems to year consistent. this to in, be cautiousness, guess, further a capital trying just where this future the as

Paul Silverstein

last right. All I One question, promise.

had the sure out out XG not [indiscernible] India announcements I just note opportunity, massive On Jio are of these buildouts. of if you've I'm

over the [indiscernible] the You're going imminently be talking of ton we in XX months, started have of the next spend to already picture. it's out a about that the

XX part over months the in And your Has so it's is What's reference out to build-outs? what you, outlook especially are XG already there? and that swing in or for trusted started, The are you Nokia, optical this I funds the opportunity the of next India? so? of always But Airtel terms that. flow seeing there think Bharti only in pipeline the

Bruce McClelland

site opportunity starting. know, think, router new cell the And XG as around you they're build-out. is to just the investment I infrastructure linked This directly Yes.

the clearly in a and watch we're to grew exciting of quarter, we and optical the a growth really been opportunity there. spot reason balance we a investment building to IP the company also carriers the to to we've in one have, in that increased So not ahead that is of making and grow And but kind architecture series doing, for But just out the And see the us products world it's XG really product infrastructure. it's runway business in most addition there's the really apply portfolio around to here. that portfolio. just significant the long the of Bharti, the which the in

Operator

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

Dave Kang

My is, were was talking correctly? first question of chain I clarify, because reasons that the correctly just about when wanted Did that went you margins did to margins one when you your said hear -- down. I costs supply increase you hear

Bruce McClelland

that in quarter. X incremental in as allowed through essentially was us the had areas, the of and third and course, margins we improved and Yes. reasons flowed much of also supply Optical expedite about in fees with so good quarter. inventory, the was the paying improvement obviously, discussion X/X variety And fees, any to we've Dave, IP Paul And did. were a why quarter-over-quarter. we've improvements, lower expedite One that's possible in was on chain. invested that But avoid as we of you seen just a there

into what X pieces, And and The the in other general obviously was improved fixed shipping products just overall cost quarter. third the we're just absorption volume and quarter. the what regions the margin mix in gross then on percentage

Dave Kang

expedite expedite situation, there decline? like in like to room compared fees, to regarding is are we where of terms fees? And pre-pandemic Or more

Bruce McClelland

question. great a that's Yes,

So we of do Or how do and things. And the dialogue later? of we amount sorts are make a ship expedite it some and and incremental in soon fees fees, businesses. little both pay and on, or they those depends wait need still a with decision in game quarter on each a bit customer time we product obviously, we kind and lot pull of the of accelerate paying the

some continuing So some around pay anticipate fees. still customers. We this to paying we expedite get we sure of are products to making amount quarter

Dave Kang

$XX supply the how sounds this a you second it quarter, situation, table. regarding that missed as It far quarter, about like much like last million million think looks since $XX quarter, left about about million And it revenue the meaning you was as quantified you chain as $XX impact. I on

Bruce McClelland

Yes.

gone at end to half say have logistics supply right was could chain either -- of is would the and I way. related the So easily it and quarter of directly

been Clearly, the quarter shipped shortage the able with But and I impact accumulate add, we've we've of quarter, other projection. the that growing this will expected other we Dave. to we've deals to to stronger these more. I anticipated a bookings come ever revenue to of chain. a the not able it, piece we don't of The probably from half, lot quarter in had incremental I the the that of was third we call some to the relative point. third third federal backlog a the if than could had build in have to backlog so guidance, given have course, kind quarter, in been with that that a we start at supply fourth had in more enter the

direct a the on reflection bookings third momentum quarter. So the in

Dave Kang

be just that impacted C&E to correct? more And wanted so Optical. clear, seems than IP Is be to it

Bruce McClelland

the I opportunities logistics & think was at evenly between the Optical Federal around our the split relative was on most guidance on to the the Cloud simply and end was the IP shortfall impact of Edge X components of businesses. and impact quarter. of Most the

Dave Kang

what's wondering What's mix And between just margins IP? the optical the X? I the are differential -- And versus rough what are different. assume margin quite between those

Bruce McClelland

Yes.

IP perspective. half from I out optical we so So say that in region in will just to of the in comment, vary obviously, can a specifically. it did expanding almost grew that stronger bookings also directional it's margins. bookings from was I that's and to break between were IP QX, from doubled product days. significantly, we're area because IP more on the I optical quarter be portfolio we're going perspective similar of guess, and quarter-over-quarter revenue both margins I've though, what over different time what in general, they third and shipping I bookings I a will shipping than nature. around But that a perspective, that's XX-XX the stronger perspective, expect, that type comment. it increased be as a into kind it characterized of it and the in I third the quarter, than don't comment mean, it general, depends But a directionally, Optical traditionally, definitely as IP And well, expect forward. From routing, a IP and growth margin given and

Dave Kang

color backlog. are the you increase -- a talk the in backlog talking revenues? be I'll and if you when just some to that when X.XXx increase again pretty situation? you peak? book-to-bill, And any And significant with you Got that then expect -- about situation? on so, backlog obviously, Can companies, And it. does When backlog like it quarter? convert do start sounds do to NIM in to fourth other building like it

Bruce McClelland

Yes.

easily going $XX you IP think it of the course, backlog, but significant increasing the And math can if report revenue in in overall where our bookings on together, XX% entering it third increase And backlog think Optical. QX. in I was this for far IP a of Optical million So the had book-to-bill by into -- with revenue and bookings. to of add the was And I way increasing we don't the is, X.XXx, that. obviously, quarters bookings about big think do been to the fact, we've from best up I pretty backlog has momentum, a lot I quarter in in into That plus our our quarter that past. goes and

outlook So quarter. building that we gives But is quarter. the and the us the better clearly, and thinking do. fourth in have. backlog quarter, see into a little outlook We'll something how predictability fourth similar XXXX we're expect we that's fourth in going the the And for

Operator

Capital. question from with next Greg Mesniaeff The WestPark comes

Greg Mesniaeff

of and on integration, your little could tell give on -- XXXX by if Can expense in that? that you mean and much you're end further some color. what you the quote pretty towards you additional remarks, Bruce, functional us us prepared you Give I reductions said that expand anticipating that. a

Bruce McClelland

how Yes. Greg, these and well transition now a we're that both you technologies include of Optical technology to voice in we're TDM as particular, interfaces the from portfolios Edge, number technology. opportunities out IP technology of seeing as, coming routing see the of both IP as different core from the able are from X And to these the products over the IP, teams, & leverage customer, more networks Cloud advantage and as sales and we how we maintenance business. And we closely do ways services, we particularly serve around looking together, bring to seeing units business how today, support. think and at the take global professional et opportunities We're cetera. organizations what around organized market we're I do and

tightly I opportunities together. and frankly, think to we efficient the more more organization bring be there's as effective, more

outlook for on have and into get behind You could think that's as we results fourth but it X XXXX, color brought of of kind obviously, together. of next after companies detail integration kind scenes. more of phase the the quarter And the that, as the we we'll

Greg Mesniaeff

And just to that same follow-up topic. a quick

any of sales similar and have product explored do other you strategic possibilities organizations? that vendors you As may partnerships that, marketing with have complementary and fit

Bruce McClelland

a There's Greg. question, threads great a of actually around number that. that's Yes,

of about you think a portion we're the in that I companies the not network. networks as As for complementary and the most products. for part, there have of we good partners set of access broadband us access a are the number There's think

one that's active. that's So area fairly

are you on network other the and the fits and in, end into kind operating of as is the accelerate that of a network, broader includes automation IP other network the the I is orchestration. that of entire really domains there access that network. vision about environment opportunities the some and think optical and orchestration RAN think Clearly, products The really foundation orchestration we're for to focused kind but like that news and the the around interesting we're partnership our of around automation

that we're Greg. there, exploring So couple there's of examples a good real

Operator

Markets. Capital Next question comes with from Tim Northland Savageaux

Timothy Savageaux

in just a a QX follow-up X.XXx couple when or backlog expecting wanted A or XX% you Optical, referring are book-to-bill similar of increase on I on, is to you that but there? again here, what something to is, which to in something IP commented you talked questions just

Bruce McClelland

been Yes. Maybe clear, Tim. should I have more

do think about the our overall plus if a ratio. from math, you in for And necessarily perspective, QX target dollars assumes in So to if what in similar for outlook And revenue, bookings done we growth X.XXx QX obviously, not it's the revenue. company, bookings obviously. the growth something think IP for QX Optical we've I a XX%

Timothy Savageaux

try to on. that little bit later I'll a Okay. decode one

for thanks detail on RFP and the update -- pipeline. the of and terms In the the

total either Xs. couple recall which them characterize this I the aggregate in A if you is, properly, of X. you you won think that annual X can I taken any I number that, metrics And one, said as in XX of multi-XXX of Tier wins I in we'd to release around questions think of aggregate. had think annually? pipeline on give revenue pieces us or the those value million you

Or those think is to 'XX, hand, to more the extent other, into on revenues? that? into were that, on to that QX we So should about what relative wins one and the contributors backlog

Bruce McClelland

Yes.

that example So talk can the router Bharti about. site is cell I an

of first I next those for it's kind is that are double-digit of it's -- order of example deals part an millions, give takes initial opportunities. significant those the don't numbers, year if through specific it's The us. So one us you but to want And -- of will.

these -- ramp So characterized are dollars of you've millions each all these XXs are of time. them, as and obviously over

mode deployment that about at spend If level some. that full we're but think then Rogers it level, now we're with, in you deal ramp kind the of took on an to while of a annual to that and basis

for pretty So increases of for meaningful are where we're from. these each one starting

Timothy Savageaux

Well, right.

fairly I And case, given constraints, be for mid-single-digits that's would I'm and some supply in IP might you of kind expectation grew the basing robust efficiently. to exit on so to I continued given ourselves mean, able the comments without with you're bookings that backlog getting year. rate 'XX pretty going with, ahead I imagine significant Optical expect in QX, growth acceleration a this the grow that. your of you're in

Bruce McClelland

piece routing in some year, for Yes, of -- in line, we're that that next for to think, product kind in made the guidance getting obviously, a start to changer. seeing point particular, investing is sorry, while, we're And And that of the game without IP significant investment momentum play. obviously we've now forward. a Yes, getting specific come into of the this providing Tim. I yes, without said there, and going the we've expecting growth we're

same growth what getting profitability, how the do a of into lowering obviously, operating cost year matters and we the we go help whole into and well margin next really at going and little better the and by to good as part as and that's ourselves next we're here is the So growth improvement that get time. year, expecting picture bit the

Timothy Savageaux

year, looks a same I through what one last the in XX% the mix given got feel Optical close about you on in think imagine of side, QX. to QX, in IP and plus talked pretty I mean, the year, targets? ask past pretty me, you those And Any improving for little the end given approaching reasonable I non-question a like you I'll better-than-expected in the XX% obviously I darn guess next And IP gross is performance margins update Great. to about the be target.

Bruce McClelland

Yes.

the about the margins so on looking on So those what is it nearer-term, costs. improvement, call third room to we Optical. expect chain numbers, for is in if quarter There did we I IP just me, businesses, mix -- particularly excuse in supply the on XX% at quarter, think around what both similar the fourth gross

I improvement components. things I still fees in then and look of what we that to to like And expedite around on We think kind close So I've securing direct that, at see exclude need if target. margin like and better the I pay around what have we seen.

Operator

question Next JMP with comes Erik Suppiger Securities. from

Erik Suppiger

I'm it describe trying gauge incremental Did status to off, First you change QX? would couple change quarters? supply the the Or the last relative to chain. in what from the how of you would --

Bruce McClelland

Erik, yes, question. good

say incremental QX. had improvements the in would we have I So

in missed needed you and one material key couple of more of were having had things. don't So have But and Intel you we we doesn't it's specific example than to variety XX% build, of as a QX. positive we but at we very that many parts solve of meant level couldn't to expected it ended a issues build That We an and QX, the full up we able mean them. shortages was in what component. to

incrementally of So on quarter. the down came we in in expedite think the Mick, that? whatnot, were from some and in quarter, what thoughts they on fees where -- just second there obviously, you commented improved quarter. I But was as that the on, do so

Miguel Lopez

agree. I

the are I think in much around not more move it spiking that logistics basic of far particular, has the still stable, costs we're readily improved. up those components year, of available the special And It's and to able beginning and transportation more and they're In the We're things yet. woods down dear and very were out. out better. which parts, are now. still

Bruce McClelland

that. and Ultimately, add have peers of the our some know one commented Erik, more to comment I just same. I'll

on to cut getting design components to changes that in available. by be some in, getting have course, cases more that look approved readily changes, some hardware at And customers time. making are of takes We design

the in improvement components. on the products readily to we see, chain, get actually are another some continue will So and next because on of year, supply quarter going kind parts get to stability available as second into of know we some just around struggle step-up we more that designed

Erik Suppiger

be the gradual, that sounds but you chain see some going next question to year I of So and how QX the do relates is incremental to had next like is, changes? start back when you see getting towards it's supply it significant normal, to

Bruce McClelland

them Yes. to for line to the on from in another sight component, The is perspective. a us. until to not of We're we on expect availability them second great still supply going couple are time to tied a be painful There move that through and we happen frame. that quarter improving

not talking get all probably we're and it's this based seeing. frame currently better we're when it, said, So does in if about time I on that what

Erik Suppiger

the on? pass And environment around, what your much the you're to what have Okay. pricing moving of that able pricing dealing is for out component costs as is there then you Or been the environment? product with

Bruce McClelland

that is goes cetera. X employees We Yes. around the the facilities, inflationary around product et costs relative really and focus cost on other into to then One everything areas. the labor and and

And around part our focused of, revenue to maintenance is business, so our obviously, prices trying on we're a raised get key stream. which

renewal, lot new pricing have wins, to insertion. needle that And obviously, that. support. got for to come products. we've then, pricing for to higher competitive new control to pricing of around ultimately, on press as trying contracts less a I on the we're competing trying trying we on be out these there's on So we're price focus for I and harder, power, or up get And that prices find around move business, new think,

So that's really approaching we're it. the way

Erik Suppiger

work dip. you deployments? through last short-term some Then it's it expect question. the XX% they to AT&T, to of like kind return as them a sounded back quick Would contribution of

Bruce McClelland

Yes.

refer you think I to probably Verizon.

so... And

Erik Suppiger

Verizon, sorry.

Bruce McClelland

as our projects mentioned continue be to top continues a programs. but and customer at to we activity them those I expect services, we'd products, our shipped so that QX, in foreseeable point. future XX, XX%-plus of largest that lot of a a we're of customer, helping kind QX, this there's Verizon The in lot for with complete the of them, deploy our absorbing still lot lot again, professional Yes, a

in network partners I addition in as continue. the think doing upgrades I'm them the address of They're Federal with about to opportunities with excited we're we Federal. the that our Verizon space. key pretty one the work transformation

then that. And partner around help as around a focus great well big a them so channel as for enterprise enterprise, business. us they're And grow we their

of I number sure is strong think a different book a business of to So on threads here there we make with Verizon. pull to maintain

Operator

questions There turn for are the time. further back Bruce over to I closing at floor to would no this like comments.

Bruce McClelland

finish of at Victoria, thanks, and with and many afternoon. strong a Great. everyone, We upcoming forward you to this our call for look obviously, investor to year. Okay. speaking Well, joining thanks, the conferences

concludes you. operator. our very That Thank thanks call. So much,

Operator

concludes you. Thank teleconference. This today's

for lines you time. your your participation. disconnect may Thank You this at

Ribbon Communications (RBBN) 26 Oct 222022 Q3 Earnings call transcript