RBBN - Earnings call transcript Q2 2024 | Ribbon Communications Inc.

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Operator

Greetings, and welcome to the Ribbon Communications Second Quarter 2024 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Joni Roberts. Thank you.

You may begin.

Joni Roberts

Good afternoon, and welcome to Ribbon's Second Quarter 2024 Financial Results Conference Call. Marketing Ribbon Chief Roberts, Joni Officer Communications. at I'm website both quarter are and outlook will is Ribbon's financial release Ribbon's for third Relations Chief on live our Financial the and Officer; currently section McClelland, beyond, slides today are call and business webcast being Lopez, Also of Executive our the rbbn.com, matters Bruce including and call is we'll statements. the archived be XXXX on Officer. Today's Investor Chief where of forward-looking and available. Certain be press supplemental discussing today, projections Mick risks Such uncertainties in statements are subject to differ those could the to actual contained materially from and results cause statements. forward-looking these that Form uncertainties These filed in the XX-K. are documents recent our discussed risks SEC, and with most including our safe included financial statement you I in website. our refer posted information to supplemental our on the harbor

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

Now, over Bruce? to the turn I'd Bruce. to like call

Bruce McClelland

investment us such significant the operations, the today and executing the organization for Good acquisition progress the months capture made support the to Joni. improving as joining that phase that short regions significant execute by will from better products U.S. programs on and start more across expanding goals a being the and such functions of and This rural the deployment made in recap early XX like investment on Great. Thanks, over with the services. billion customer the as both broadband $XX last business integrating against we discuss strategic to of ECI in that long Broadband. The with the to India Reduction this year. XX% in the we've our results share and Act thanks Site common R&D, allocated units, us with and to we've our for only allowed technologies the for in QX afternoon, accelerate year. I'd products allowed and final in leverage Cell savings our to increasing everyone, our company. In the Inflation of us new by outlook Airtel, XXXX, and revenue additional rest programs afternoon made Router haul Rural of last with India Bharti regions such integration foundation initiated the as capture restructuring

to underway also a relationship financial refinancing in their delighted more foundation our to and our the operating WhiteHorse a in in continue to that $XXX Optical the of in as structure year-over-year successful defense second of interest be contribution enterprise now HPS XXXX. This their the come. new modernize had customers quarter again complete now EBITDA to earnings into voice with we our Financial we won quarters from in business of years see benefits facility, modernization resulting Federal platforms. Similarly, are We these have U.S. growth the XX-month us us business, and will significant with results leverage with well IP expect agencies public business, the trailing market and our initiatives. improved have they giving future. credit cloud above infrastructure the to for We've continue with strategy. to once on company straight couldn't supporting series allowed X go been our financial projects higher We communication to execute of and multiyear in the very and growing adjusted the continue significantly, new particularly where for million

Brightspeed, business. the announced similar beyond, we the potential modernization with look Edge service in business enterprise to we with and X-year week, growth. will the last us to voice half Verizon return announced and growth & such of U.S. that along second as for As which tailwinds multiple supporting high the recently year we providers, Cloud confidence The projects contract forward the strong network other Federal have and give

create These the that alternative addition, their by voice that communications global on for open to create to share Microsoft suspend types create and we creates changes capitalize Nokia-Infinera have telecom and portfolio including In development in space. Similarly, disruptions access announcement combination and one operators map an the Ribbon's in realignment near-term announcements, to further intend troubled the HPE-Juniper unified significant is the distraction industry business deployment for the consolidations supporting a in excellent opportunity in of the of we recent recent on. carrier Metaswitch expand deal area that region. will solutions. The or door Eastern the Internet businesses this inevitable headwind road infrastructure Europe,

for to operate We, region of in products. impact business, little of profitability to a the and the several provide projected. the will XXXX the second profit XXXX. into order originally an although a quarter. In than is new continue phasing end become still over and IP had the to improvement it's year. conservative significant contribution longer Ukraine and in it As the year, war expectations additional therefore, at target take for next rest actions the in continue months, be Russia challenging outlook Optical its a continues for shipments lowered increasingly cost-saving to over our to the also expected with third we're suspended shortfall, offset more This the we

the guidance came Revenue million. to in quarter on our Now QX for below range $XXX at results.

to significant shipments the this & week in in close quarter. be is the earnings. lower challenging, the close expected of Eastern continues expecting Federal to quarter Cloud projects guidance largest the deal slipped Predicting to with put but third U.S. would to That a have Europe, but top us end out quarter. the that agency alone the guidance included we outlook U.S. was was range well above in shortfall these Edge revenue and are of QX, this for of our deal Federal to addition the the In for timing and on deal

the momentum We this market strength agency. Despite close very with lower the of quarter quarter project did with and large ship sales, second another both earnings were were We where million. defense EBITDA margins and additional leadership our business end in solid are non-GAAP of and differentiation. the the adjusted Gross U.S. high in substantial critical to guidance large $XX have units. in at in an segment we building

XX% compared to also EBITDA adjusted profitability an as XXXX. Year-to-date earnings Our solid contributed the continued for basis down on focus result. to expenses company driving increased the on

detail Now operating more each our on a of segments. little

year-over-year As to of result year-over-year Europe, in million, a quarter the $X had revenue Eastern IP lower we've decline sales in down first quarters. the was $XX X Optical to second million

up up Excluding customers XX% positive was quarter-over-quarter. year-over-year sales to and all from Book-to-bill at Eastern was X% other Europe, revenue X.XXx.

was this increasing increasing quarter, Converge strong Armed a XXXX leverages Europe, fiber per India of The for agencies of the ramped includes and Israeli from the XX% was Asia AI new last network capacity also in Forces. The significant supply and first were as the customer, expand year Apollo in and exponential provider region support the XXXX we optical India we our EMEA shipments applications. Sales IP new following strong outside traffic approximately year-over-year. number when week growth region. year-over-year and market leading deals XX% Defense Eastern This in of This long-haul the Philippines, announced routers down Excluding sales projects cell to with the the X% half Pac again includes broadband defense hyperscale terabit this region initial strongest quarter, with of XX% X.X second long-standing quarter-over-quarter. Optical in with deployment fiber solutions to Swiss such to Forces ICT, the year-over-year, deployments. the site

year in growth the deploy Broadband sales However, half shipped we half. the we U.S. this we work to previous customers second were significant firms with the have expect strong continued of and opportunities margins. IP in with quarters. very second pipeline engineering Optical as Rural the products U.S. in But in quarter better a down closely of

year-over-year. negative to the the carriers, $X Sales year-over-year, than million moved were in better down Tier QX. and first In supply Federal the deal resulted continued large the U.S. adjusted including along expectations our & year. The quarter, down due sales first of Edge was that a we significant up of Cloud quarter. fact, half only and higher costs, IP currently mix, in XX%, the in backlog than Non-GAAP gross with margins EBITDA in with at customer amount down stabilized service from sequentially improvement Optical just the were year-over-year entire to first providers, X year-over-year primarily line timing shipped and the improvement chain in our for to is quarter. In slightly U.S. overall segment, the slightly

more year over by of are Brightspeed XXXX. access in for and in new They their Verizon small the significant in voice Metaswitch office is operators the the to rate year. The central achieve We We the continue locations. solutions interest and multi-service growth on our the our this are second planning discontinue Neptune per we X network the providers another shipped MSO of platform, voice run announcement similar a advanced effort routing Verizon as network the modernize next with and legacy work platform includes engineering our orders equipment, fully evaluate project the strong and expect some last reported project. also provide initial voice activity several We switch U.S. product with critical million quarter and accelerate with our transformation will to to voice a quarter area continues these portfolio Microsoft advanced initial the of expect half from discussion year. Overall to and the by the This of quantity operationalizing to started the leveraging portfolio engaged received increase, end highlighted initiated has service $XXX services. this rapidly to on announcement week. year. The options quarters, in their created which team track

second then come customers remained a that, turn quarter, XX% I'll quarter to projected results year. the revenue it with of and in of the and last Edge closed back is of discuss on we we Mick? larger & Our second increase our business of rest More recurring quarter. With renewal outlook our and year the a already on excess strong than to Cloud over significant modest this for for our detail provide revenue in booked, in to additional $XX the expect in maintenance one X-year Mick the half. million

Miguel Lopez

focus Bruce. Thank meet margins you, were and expense strong gross EBITDA Good everyone. We product pleased operating driven to continued by ability adjusted earnings again management. with Ribbon's on afternoon to guidance

months XX On the continue a last EBITDA to to the both for in negative in manage performance Optical Cloud last Most sustained getting XX business, improve. year, notably, our or of adjusted EBITDA revenue half remained for under profitability $X of With million. margin performance only trailing X% expectations XX-month $XXX resulting we EBITDA months. the closer & over adjusted growth just strong of will million is financial basis, in our our with breakeven IP consolidated second revenue. Meanwhile, the networks Ribbon's segments XX% Edge the of

As to information. the Relations our on financial website always, page Investor please Ribbon refer for supplemental

prior is results ECI Ribbon an positive XX.X%, which year year. of from In year and consolidated year. the of continued sales per a $X net an million reductions our was of a is low in a expense of and X.X% improvement $XX million operating of high share $X the financial year's our guidance. at optical XXXX. Non-GAAP the was is Non-GAAP diluted driven guidance. is lowest generated is operating Ribbon the million, merger last end since XXX This in This prior income and of a $X.XX restructuring expenses over the million, This gross $X.XX, increase second improvement non-GAAP regional with end by at XXXX, and mix IP begin efforts. Let's networks. Non-GAAP $XXX of quarter year-over-year previous R&D of which the and point expenses were the basis level decrease from generated due level. earnings million, corporate product quarter-over-quarter, of which below revenues and to which the improvement from is prior $X margin versus

XX%. Our rate was non-GAAP year-to-date tax

EBITDA million swap in year-to-date XX quarter. quarter sale charges million. previous by It is included in $XX noncash from in year quarter, the right down interest million the $X by gain XXXX. Adjusted first and Adjusted million XX% which mostly was transaction, the our than from accounting XXXX is the up the refinancing previous million for million year. costs from less $XX EBITDA middle rate is the and and issuance trailing was expense guidance. now $X interest driven the Our million, the slightly the from caused prior debt $X of $XXX was the months This of of $XX

our million count Our basic share and shares shares was diluted share the count for XXX fully million quarter. was XXX

of look the $XXX was In quarter let's XX% the delayed our primarily our deal. product million, lower Edge decrease & at Cloud Now of U.S. revenue year-over-year, driven X results to by segments. second business, defense due enterprise business Federal a sales,

non-GAAP are year. we that grow business and revenues the had from increasingly can consistent confident of our margin previous this especially Verizon's & gross the XX%, strong for network opportunity with program. Cloud We incremental prior second quarter modernization segment, with Edge quarter

cash revenue. times Product steady of revenues. & again services adjusted $XX XX% up were profit bookings sales and in an with were continues and solid once Edge EBITDA Software of quarter product total its and of million X.XX revenues. good the contribution made Cloud at or XX%

Let's revenue business networks results. the year. We or quarter million X% of second decrease prior our to versus IP $XX a recorded Optical turn

quarter good half While significant the points gross America XX-month and reductions. Adjusted million, for which enhancements of only growth year-over-year last profitability sold regional Also, of mentioned, driven and had was EBITDA up North were the in of as to anticipate improvement product a $X was we second EMEA this a a by $X India XX%, mitigated of $XX This million gross XXX from is over better was a from eighth profit sales. last European and we mix, IP decrease quarter is by lower lower from year. prior revenue of quarter mostly the loss $X cost driven gross improvement about the Eastern Optical improvement year, previous increase margin million year. basis XX%, quarter, a IP million, substantial of networks. is but of Actually, non-GAAP from million resulted second for mix Bruce for great our the straight about is margin across costs the in XXXX. Non-GAAP better networks our royalty operations. Europe, of from Optical year-on-year product $X in goods This by this sales most which

a a cash equity interest. flows greatly classified cash year. Ribbon's onetime negative Cash positive which from basis, normalized a is company total On was enhanced the a discuss in million, was for includes a let's the million million $X and for that million structure. capital $X for Now, flow operations $XX first and quarter preferred quarter. second flow dividend, the but from of quarter $X operations negative half the was capital the structure as

had new $XXX A June $XX able were $XXX the XXst, the preferred loan for of full X-year repaid our we term we On equity. loan. and term June million loan to million the a committed, with successfully end we As term million existing in of before of redeemed proceeds of refinance

our Ribbon presentation in on available on is Investor quarter the detail website. the second Additional transaction

transaction, As $XX from cash $XX cash also end first has significantly. at quarter million second improved our a quarter. at balance of result of to cash equivalents the liquidity our finish over of We the increased the and the million refinancing

group In addition, relationship. strategic enhanced restrictive untapped revolving in positions solid especially Ribbon we strong with new covenants new the capital into million foundation, banking an all, less structure, a future credit $XX have and facility. All well liquidity, a this

their We and and financial long-term are Investment fortunate due Partners perspective. to strength, be WhiteHorse partnership financed acumen by Capital HPS to business

we will to growth the them, flexibility have With address financial opportunities.

the turn to Bruce. back call I'll Now

Bruce McClelland

Thanks, Mick. Great.

to increasing expecting significant the of second first focusing with Now, as on revenue approximately XX% year, growth compared half half. the the we're

with are the to remain our expected double, to specific of the than control, OpEx similar half. in supporting half. to of business bottom the with second very first earnings a And and the relatively tailwinds margins the There more line continued XXXX. for outlook consistent profile expect We are business number

to Verizon combined start, the off fully is First, the great activated. program is a and team

been installation ship identified we ramping to as teams to upgraded service scaling is and increasing necessary sites underway. XX% software on and is of and in hardware be professional detailed site. material. Revenue the and phase half are the on recognized hardware revenue production deployment on designs recognized XX% of quarter once the the first have the Sales The We're project and performed the in XX% sales increase sales, work Verizon exceeded the as approximately quarter-over-quarter, the of and versus second is second year each we again first half. to components

building in with providers out U.S., networks Second, solutions. and expect rural strong a both half fiber using the IP transport service second our we and optical routing regional

and number backlog half and have growing double first the firms We year-over-year. We've with and pipeline growth approximately very consulting network the that will versus projects engineering working significant we're a strong of increased broadened our benefiting from the geographic ReConnect. some helped has which coverage opportunity projects of incentive increase funnel. as our form and and funding to further of areas, such XX% are Approximately more RDOF

number providers, traditional service to also addition telecom a In seeing of with utility we're providers. opportunities growing

Third, in U.S. growing we with of the of to year we includes business the with increased is a a on region. And half finally, region all of in annual This number recurring enterprise visibility revenue This provides away XX% approximately base by second increasing sales first more and agreement defense the market a the of Europe, with strong opportunity network of Eastern XX% spending base expected of year. Federal business the The and major long-awaited in good solid first the given with large the agencies financial stronger shift and versus that strong a trends strength half our provide the trend than follow return institutions excluding customers. us business enterprise our larger is the half network with license in of fiber for the revenue. Fourth, India Vodafone in and a EMEA the half expect expect second versus Idea. grow deployments IP half strategic a second renewals year. a strong is growth manufacturers very this The combination the this second of repeat customer Chinese Optical these seasonal to approximately in the half. from XX% of

In the with replace the a majority footprint recent business deployments of America softswitch by opportunity we both have major definitely minority North is believe mentioned discontinue as changes in or at providers that's and development migration and are on In creates to scale to competitive state-of-the-art I and customers. border platform existing don't significantly We customers expand is in a telecom Microsoft the to we the the service controllers feature-rich gateways. software particular, great addition, opportunity service is media Metaswitch with world. decision and in engineering the our portfolio voice session provide where opportunities share Europe. In with earlier, reported landscape a to Metaswitch new many the to sales customers and reduced footprint Metaswitch cases, currently deployments have and a This position. where us deployed with a for the of largest staff providers existing with

not Our yet upside do second include half market projections from this major opportunity.

from to million half. course, Russia. the we'll estimate We have $XX some $XX million Of of revenue shipments approximately at suspension in of headwind to the this second

our enterprise actions growth the business, in summary, we goals, key for our and including implementing we innovation and our infrastructure growth a outlined support government, sales of capturing are information second focused the sustainable a to strategic growth of profitability continue expense mitigate we efficiencies the the profit However, our full achieving we're both our teams. From guidance businesses. product shortfall projecting including Optical and returning business, security tailwinds cost expect to and on verticals, financial, integration to I portion sequential a perspective, be half. In additional telco care quarter, continued IP in the of voice in number significant in health third diversifying with of accelerating and in market reduction expanding

dollars further $XXX expected adjusted variable to in to quarter, non-GAAP with although margins million perhaps million. quarter this, employment the given the underway. Based consistent range gross to the a expect basis down to range non-GAAP approximately we're cost million be actions fourth to second shipments. And in up third mix quarter, OpEx then of We the to in EBITDA of million, second the few the XX.X% and the expenses, we $XXX points versus reduce given expect XX% a $XX gross $XX but to on be due projecting of the quarter margins of for million revenue XXX

increase million, to after of growth Eastern expense although our from as still For into to for we're be range improve key positioned the by our guidance significant in meet full to And in non-GAAP in range. customers gross across are exponential to investment prudent million bottom $XXX the Revenue $XXX for was modernization infrastructure. this We're our continue non-GAAP Europe guidance we revise million. In XX.X% believe towards our investors value to profitability, continued and other management networks benefit business consumption. as of effectively it on Verizon multiple overall $XXX million as things full are conclusion, should accounting original year, translate return to creation track for a growth the margins year the as range our the and actions, follows. in reduced EBITDA a our sales fiber well to of the Therefore, that offset a more we the we thought and adjusted we expect in to and communications of managing areas significantly voice in in their employees. control, range, we the of accelerate such XX% $XXX to to growing

take common beyond. Operator, broad and of XXXX in foundation original now strong progress can the base that behind and to prepared a cross-sell combination strategy and concludes and products voice of and portfolio creates our remarks, to the for Ribbon data to ECI we customer business continues the few Our to a entire a grow questions.

Operator

Michael from Securities. Genovese of Instructions] question The first is Rosenblatt [Operator

Michael Genovese

revenue tie of sounds second see I second want the half First, outlook to EBITDA that. markets. bunch on margins little congratulations a It's and to more. end understand what on and what across But a bit We about enterprise, a second got and about all a strong said quarter bow you the good robust just like the quarter Federal line, how hasn't to a the XQ and in it basically been in in quantify the sounds slipped. I shortfall bit be but would year? second of the was Federal was little half soft Cloud Edge Like much Eastern and the Europe in more. want versus have deal the second in that U.S. optical -- stronger quarter, will like

Bruce McClelland

Yes. Thanks for the question, Mike.

part, The So got deal, think I was in this significant the first you've was right. which largest Federal shortfall size.

remarks mentioned have would I the as I guidance gotten think range. in it the that us to

So total of the we bottom of with were million. at $XXX range the $XXX million

idea size even essentially just of So an resulted And the obviously, the have it much, that, stronger much with guidance gives software, incremental it's alone. the above would deal in given you deal. contribution that of being from earnings that the range

in change On the Europe was million. year-over-year Mick that $X negative about the side, think mentioned I Eastern optical

from So gives idea shortfall quarter, Eastern take dollars. give in Europe the few of that million you a the an or

I hope sense. makes So, that

Michael Genovese

way the Yes. think change should Is the it? if And piece -- year, is Eastern moving we Europe? we that guidance about I there primary then about for think at mean, the whole the

Bruce McClelland

variety $XX different of $XX million perspective, mentioned And I in all a things. that again, to Eastern I by it's tailwinds the Yes. From negative a other million whole the range, across offset board, the frame really Europe.

second Europe. outlook what I Eastern the that have line fact the into think strong all for And U.S. shipments from pickup the expansions, growth some second others, a the Broadband we of pretty we're us. of more around things project, the half reducing despite year for the the half with second specific a that's and seen us the then driving we've Verizon little in the Rural in around So to in half

Michael Genovese

Okay. me. a more couple just for And

is other forward new Those where is can and we've industry So trend customers? more see kicking pretty are to Brightspeed announced day. the the in and on guys about And there's of you we a deal same something already names. the think impressive in, other should we going this going Verizon, expect the with got

Bruce McClelland

Yes. like feels This that, Mike. certainly

about a year with Group modernization with The of we was voice talked MTN other their Africa in one the infrastructure. even earlier in

And these. at more people growth program. great to think so a investment series how costs there's drive feed really MSO their and the also been done it's fiber some I another down work get infrastructure momentum. look and costs U.S. I network to look. And referenced area a And getting of in efficiency, do as in in drive mobile, and be good the and some in down able we've to ROI the they

of footprint, Metaswitch substantial the the Edge kind and around the momentum to which with pretty opportunity that overlay the in the Cloud growth You us and there. around is & market good really return gives some business

Michael Genovese

question restructuring OpEx about guess business, like looks intensity as the OpEx R&D you're this right requirements the the of to do -- a then finally, I much protect it, but I How you what And just want of we R&D down aggressively? coming sort with ask so the -- I mean like R&D now? to see

Bruce McClelland

Yes. Thanks, Mike.

We've that. we're focused at future months gotten out the being about about coming of at of really fuel. combined able company the resources it by to we sure. XX I So we're the pretty reorganization R&D careful started It's for the the ago. area and well. to upgrade support with the technology them And get is it the set engine engineering, of most and structurally common around networks base. We've in customers interesting mean efficient really is we us obviously them more implemented our get helps more around installed in how software that get the as really allows actually supporting we on efficient sustaining really a efficiently on get some the cost for structure their that really, and do the base how

questions, a there's we've strong, gone so. Mike. of things the But for engine thanks all to keep series the So there that after whole

Operator

from question Capital. next is Craig-Hallum Christian The from Schwab

Christian Schwab

questions the or of [ a lot Rural talking ]. So the answered just really Rural BEAD lot Broadband on of funding were are the about But people there. kind a Broadband, of

the on are into the and money you're bit the You getting market Or a other OTN programs. released? there where be side positioned few kind faster Is getting states money of you are is ready seeing the guys strength little well those for a where Broadband that Rural based? broadly mentioned say, for to optical than, really

Bruce McClelland

Yes.

BEAD today. anything contributing not the program So is yet

the not at the we all. have programs behind it's year this So source

Federal I be it's programs half BEAD think of funds the It the them. behind have about programs RDOF of stated not ReConnect I to new funding. other -- As or sources some program. or half But assistance tends the estimate we few mentioned, sort or assistant a

participation the the of middle around in driving equipment, and our to network access mile initial that than upgrade is the they middle et that in staged in investment interesting probably a then the place later traffic infrastructure a put putting grows, fiber, gets that's mile It's then fiber the cetera. And have the little portion the spend network. of portion as

And reflection so a And opportunities just got timing how yes, that works is. the on of be participation second of and great in I think funnel it here. the just our where half may we've a

-- Metro layer gives a to and we are I'll source really larger then drive the optical as size broader we're addressable the the is add IP market. a participating or little part of the little thing helped, growth. And well as program so, that of obviously, Some as us that layer, access the a of have good routing transport them final program in

Christian Schwab

in be you States here M&A, Infinera center both have more more Nokia-Infinera, data of are the -- the Infinera? maps as kind there more longer opportunity in disruption in let the have the -- in what to type are share -- mean, I applications. But of where the opportunities of And and marketplace on disruptive know centric, which were that I then questions haul-ish United due Hewlett on what or to take think and maybe those the -- products employees Packard-Juniper, acquisitions, you that products road you go? opportunities

Bruce McClelland

Yes.

squarely or hyperscale of rightly the deployments so arena. others North So the in the come the share -- the want not have as much optical customer Nokia-Infinera and don't and more center in of base, you so Europe portion it's for at customer squarely market. deal, sure Asia Nokia of it's the where a out, in and of a they a in in It's base case diversified I American And opportunities it Pac. pointed they it's both cases prevents typically, in and data And to transport supplier kind of on maybe and position to access case make IP layer the Infinera the and have and it's deal, aggregation telecom Juniper had to mile space, a have an some that middle share that given I of provide an market for operator, position more it's perhaps with Juniper and a of and opportunity routing win take the us HP share. In in really in metro, we've in in the where the as that there we to well. specifically particular source. the go for that think us designed focus telecom good additional and type gives And a products the it network,

Christian Schwab

And then in here, my last question, Bruce. I'll sneak

exit opportunity years, over could that Brightspeed the next the be? multiyear done the in of of just of few give you color good at us what of Can On million-ish this a any $XX Brightspeed opportunity you've the at $XXX QX Verizon announced, year. you at kind job million quantifying

Bruce McClelland

Yes.

providers Just directionally, Tier customer, to not too talk line than Xs obviously, an fixed individual smaller but about Verizon. and is the larger specific like footprint AT&T Brightpeed's

I the do think programs get was we've really quite location, footprint ROI to footprint portion a I time a the network X think across of to there's switch to network. least. And TDM But these there, substantial and of lines. obviously, doesn't worked million and modernizing about they modernize and legacy IP take overnight. that transition a up at successfully And lines there's the picked justify fiber done a

identify it can footprint in to board grow kind customers program. deploying the already hopefully, that a of the that well get And we and in new stretches period continue time. we're of of on So then some can similar as we over for these

Operator

Northland question next is from Tim The from Markets. Capital Savageaux

Timothy Savageaux

much sense a of stay that could Brightspeed footprint, try that and mean. obvious smaller. second not that smaller to what it's a be one would Let's And at is get a an of on guidepost it for because least but kind

of I business there Verizon hard, that. too something Is at it they've it? In million, got lines, terms big XX think and to million network you fair XX anything. look Verizon is pressing guess without over way that material a seems proportional what, at understanding, I like overall, a or...

Bruce McClelland

Yes, could like, be. it

Timothy Savageaux

Fair to say?

Bruce McClelland

uniqueness left, very I cost mean, market in think we of configuration what legacy lot than an generally a cost love with there between split and many them the residential power I region it's in. modernization, say and more lines be is is and of the what very the is here some and depending a the are deployed other how Yes, they're it's this of regions. switch businesses strategic. here. partnered power in Brightspeed then would no, switch, higher innovator California market, meaningful, on the in I The little to I of the what guess kind about are of

So sense and an has of to installed you investment. that roll the kind upfront the to got figure of your make up sleeves what portion really ROI makes out base

too Brightspeed just of again, kind so specifically, got on one. to each much more on look really And at don't I generally, comment want say would to more but the you've I details

And behind comparisons of you but I'm kind -- scenes. scales of helping so aren't lines, And number the know got they've so not a the particular I just it lot, a proportionately. that's nuances the -- and

Timothy Savageaux

maybe the helpful. more voice top That's more markets of ones these voice or hey, rural your actually lines well. as you traditional head, bigger the Off have than think,

Bruce McClelland

Yes.

Timothy Savageaux

don't you maybe I us the and the Is you on that about -- thoughts at Brightspeed out Would about the you talk where spun -- of any there? to Any some degrees, to see what opportunity CenturyLink, where company we're if put you're While topic, current on kind can you know. or -- there Lumen? the of, already stand old the sister

Bruce McClelland

Yes.

here we've help we're we large to -- portion that large many network, not Nothing around operators network of and about of support the have one the that there. around we and So to continuing in specific talk plans, the a of base a their footprint definitely surprisingly, across but installed got the Lumen being U.S. them. maintain, that's across

Timothy Savageaux

Okay.

growth take higher a the and in break discussion, you uncomfortably mentioning basis. in on I which both I move customer to Mick, think expect segments year-over-year think, I'll a half second you level names on is, said that a from

Am confirm the maybe touch. that for put flat to And to seems at it you want Optical like that? I the would up IP looking a Just of right kind year that in way?

Bruce McClelland

Yes.

Let me jump in. this Mick well. on can as comment

obviously, year we'd So projecting. the the IP with, the little year-over-year a is the less Optical Europe, what Eastern change started in in the growth -- than on business

full it if maybe with guidance, you & X% Cloud a new a up to like little more. up think back of year-over-year. bit, into year business kind X%, our tad it's I And the a Edge that, something

back could you into think I numbers directionally. those So

Timothy Savageaux

a sort enterprise any continued given amount -- it Edge either expectations some for last of of out certain in quarter, think or quarter, was the service update, year declines Cloud for provider, is And I implied this called growth this the now. and which

& thus non-Tier and that terms any Given expect seen the how half, moving in you're what forward and was of seeing far, the X carrier X, second is that progress Tier or kind strength I in reports there out we've from of dynamics, from in that seeing to those Cloud Edge? you're versus see, update borne think the

Bruce McClelland

very you I accurate the got Yes, think there, Tim. math

Cloud was in down for ago, Tier very portion So service the and Edge quarter, provider a & million year X I consistent the think that dollars stabilized. X second few with very of

that call half from of bottoming in the out. the provider the and piece. I'll bottom said see, quarter, to it, of last reached significant we service second great expect kind kind So growth We

Cloud in in and most Edge one enterprise, deal decline year-over-year it. the it second was the enterprise, Federal that contributed the quarter was mostly within of So essentially & mostly

really second it's been on in strong we closed earnings would particularly the line like right, planned, we the have unfortunate, So quarter, the outstanding. just number that would it quarter inside had a

Timothy Savageaux

one I Okay. is with customer across in the wake is and us that immediate recent intriguing the me. to competitive landscape regard And give for of lot in us your reaction shift the Anecdotally, do makes anything Infinera you're apparent Is there of you news? something customer reaction of think And of from anything a really sense. this getting kind last in happening you in deal that's the real can base? can terms of time with Microsoft perspective? ] or share [ terms

Bruce McClelland

Yes.

capture So it's of definitely obviously trying We to real kind have right? again, on specific not suppose, going I a happening where and in of focused just we're -- this. supposition, couple examples and time,

becoming know that in So X providing we're assurance. are network for are looking in specific reaching be one to and deployed vendors alternative want But proactive out that and there the we supplier opportunities. we where the supplier that cases

translate specific just several examples examples into don't revenue They but like time, does So there's It take several that. specific that. overnight. like obviously,

up that's way. customers around side, given the a concerned in or transitioning pretty on-premise Metaswitch It solution. maybe there's comfortable period just so they to a asset of deployed there, funnel of from holds broad time, the the more felt future in solution and what discussions approach opens for cloud-based a kind discussions now a taken but abrupt replacing the kind a of over the product lot opportunity On transition of the continued around sweating network with of where the of

but because, in. revenue, we're focused to have our any think and projections in pretty into don't it we it's translate that takes of I year So area that again, time for wins the an

Operator

The is B. question Dave Securities. next from Kang from Riley

Dave Kang

first can My I ramp Xs? question provide the and I AT&T at that is, more on customer? think about you MSO, talk other Neptune's mentioned color was if maybe you wondering Tier

Bruce McClelland

Yes.

emulation, legacy this of legacy all reduce they what as So with involved and of call of kind all solution, the ways carry different being a couple an infrastructure that support of cost in circuit fiber really remove able over supporting standard TDM being it TDM we the to infrastructure. a IP Brightspeed router as helps pointed it's circuits part SONET or out to that we're even as migration able Neptune as router leverages doing, well our in network, and it

at that with So sort whole year, a using that we last in of solution key enabler AT&T talked about we're that, this that that migration. same a and approach actually concept, it's Brightspeed,

large carriers, number the of entry the point a and at network a that's So we small. of wanted really modernization, standard to element and become voice

So that combination that on customer, of have of specific but sense really that I been now portfolio a acquired makes to integral lot specific from between want we ECI linkage into the a solution an that in don't us. commenting get it's how part for investing and and

Dave Kang

can like, is fourth peak year? trajectory, any color ramp, And going in or quarter And about to it you talk the the next that? just maybe on

Bruce McClelland

to quarter on I've Well, second we strong what to QX. And said be that as expected think you in I the again, unusually if strong, have week the know a definitely heard it's something numbers fourth this I half. the will. do is similar Nokia And analysis are similar fact, very you strong others, on from

as a don't of peak. that think I

what the trajectory even obviously, I Eastern year. Europe. out think with us but couple years, to be a despite year, grow of the able reduced this clearly, it been creates peak it's as think to We're next 'XX. we've we business growth to that's for view for we'll last of to into that be able out a foundation the for able And continue that of to -- over experience the able coming do

improvement want I what these next over foundation to the wins some We we're now here this the think to significant the really year accounts And year. provide larger that. of in be for. created, us that's do So, we've ability a

Dave Kang

a like Apollo And then sounded last trials. quarter, number XXXX, you talked of about

the can Just update, pipeline? of potential an we get in wins kind any if

Bruce McClelland

exactly. Yes,

uses So latest the at optical end. the platform, front that generation new X.X the terabit XXXX

think, fact, using on announcement over I this new had, is the Converge Philippines In Tuesday we the that with week platform. in

infrastructure to really improve we're a new that that's platform. And fiber Dave, a XXX-gig win key customer basically that helping So we're new capacity dramatically by to on migrating optical able perfect a example, from existing XXX-gig increase with of a with the the expand. or network

they're out, and they press center release If the check growth data seeing the talk from the that about you go AI build-out applications. hyper

with right, to on the indication is to an client-size this which platform, pretty different new been interfaces platform this has opportunity I So ability data centric, XXX-gig the of that's here factors future center think and aggregate the be more unique. adapted form

deployments of as second excited about And had the goes. we what on quarter, continue saw good a we grow that quarter. at the rate to we're kind where in So similar first a

Dave Kang

Can regarding customer, providing? Vodafone looks big remind are you of they you is forward, these my Idea, it got guys? we of going they And What kind were? us what last kind how expect of And kind opportunities like what from products capitalized. just should question

Bruce McClelland

that Dave. Yes. question, Thanks for

probably So But we're the XX% level. India the for that Vodafone excess of was ECI. ramped of in market that. was And annually so or to $XXX not million back obviously we the MPLS investment they're second we the into we making a half improvement see the platforms platforms as IP provide the in market. well that meaningful have on optical that as

into as last millions network So that them years translate it's will potential successfully. the hopefully, we support business to into -- of forward. kind to over us for of tens for it's see sure a lot make incremental it's of to we've done us business go them to And operate back And just XXXX. And their great of the work on feet. going of new continues couple

Dave Kang

that? one incumbents to you're get through Just still you of all Or -- the square that just have to are to we relationship to have back do you have purchase that, clear, go for or a POs? and be through redesigned and just one go in and you waiting

Bruce McClelland

new adds, streams of resources, bit help to businesses, We're operate to the do find they on those money network. of and support continue a quarter And revenue the them continue to support with to the of little investments. Yes. to business new can continued we local one have helping make incumbents them kind where they -- every keep new

ready roll. at no there's rebuilding We're all. on So the ground required to

Operator

next Walsh JMP. question Trevor from is Citizens from The

Trevor Walsh

quick challenges time, Europe like It maybe of a for kind seems maybe one there. a building was and type seeing over Bruce, business. of of around Eastern that you occurrence kind happening probably troubles the just

operations broke you kind that camel's stop there? curious change or that back in -- a of caused was just if there particular something that allowed to that So anything -- the

business it to then outlook come or what's hostilities for return? ending a kind of from what's to And that perspective? essentially required of like Is the secondarily, back that kind of

Bruce McClelland

Thanks that question, Yes. for Trevor.

approach our just to of there. recap kind So

Internet be region. felt have the there. Those of to sorts customers, able business of and something of manage information sanctions the to And we participate equipment whole that of got operators to around do We people to we access increased was of areas. telecom focused a were access coming and the to was given There's would and able that like continue in. to order telecom that provide that Israel, those be restrictions basically regulations and number small our through we able in have to recently to you've continue set important a to that. of And products the heritage support out

subject changes, periodically. would after shipping the that those we rules the to came suspend new we And so the analyzing conclusion change to products is change, into region. finished It we

And second carefully. in so -- And removed that approximately but we'll half it year, at $XX we've from the basically view our of just this of for watch rest $XX point, the year. the impacting million to million the

Trevor Walsh

of in jumping I profitability just improvement trip that just and appreciate Optical be kind profitability continued that really ordinary the continued it kind to drive kind out the of that maybe is and kind of, of to IP up on you. you Mick, progression? the see seeing of can necessarily Or see? nothing just terms any quarter execute continuing color. that positive the and towards might that over given you of continued front. there anything in to Good Is

Miguel Lopez

total now, and of As they $X regional in selling less the mix about months And at last negative it and EBITDA that. you million satisfaction, is working to of a our customers There's of impact. than on customer well really profitability know, or it's value a IP revenues. margins, the been we've with been back just X% improving the XX on Optical higher

our positive, and that's also optimizing we've course, R&D. Of been very

committed profitability, on its it be lot this growth. bringing is continue to to we segment business So continued of going to and contingent a

Trevor Walsh

more. one just Maybe

now of there kind opened perspective up from the access that can have kind to With you Anything of investment terms you're looking game anything in that an the changed has new perspective areas forward of go on you just us the or now the give investment refinancing given cap of structure, on kind before? kind is priorities at of now have of set have liquidity? not might you that of that funds that to or

Miguel Lopez

we think that very that to our in a partners. We're really And in we nothing are plan focused strategic the on We we're solid focused strategy very to base. I major have near capital on. now have these our the executing There is It's really -- executing talked foundation fortunate that we've term plan. about.

Bruce McClelland

jump Mick, Yes. And just to a for here. in second

can having have strategic quickly a I larger do just of to or if enables little to move more something. that think it's it X bank to us managing lenders syndicate fair discussions say kind wanted we we with, than a X that

structure just So it what more lot cap a used in flexibility. previously. just this -- is lot There's the had buzzword we a flexibility than we

Operator

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

Bruce McClelland

here call our everyone for Well, today. thank joining you. Thanks

of great coming next up couple conferences We over a weeks. have investor the X

So our Thank forward talking of well. many you you we much, apprised and to look operator. keeping Thank you as individually progress. to of very you

Operator

This teleconference. you. concludes today's Thank

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

Ribbon Communications (RBBN) 24 Jul 242024 Q2 Earnings call transcript