Ribbon munications (US:RBBN)2025-04-30 16:19PART I FINANCIAL INFORMATION Financial Statements Ribbon Communications reported Q1 2025 total revenue of $181,279 thousand, a net loss of $26,227 thousand, and cash used in operating activities of $3,535 thousand Condensed Consolidated Statements of Operations (Q1 2025 vs Q1 2024) | Financial Metric | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Total Revenue | $181,279 thousand | $179,664 thousand | | Gross Profit | $82,370 thousand | $91,955 thousand | | Loss from Operations | $(19,610) thousand | $(13,486) thousand | | Net Loss | $(26,227) thousand | $(30,361) thousand | | Diluted Loss Per Share | $(0.15) | $(0.18) | Condensed Consolidated Balance Sheets Highlights | Balance Sheet Item | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $71,243 thousand | $87,770 thousand | | Total Current Assets | $425,063 thousand | $463,662 thousand | | Total Assets | $1,137,477 thousand | $1,162,554 thousand | | Total Current Liabilities | $305,180 thousand | $328,873 thousand | | Long-term debt, net | $329,176 thousand | $330,726 thousand | | Total Liabilities | $755,662 thousand | $757,933 thousand | | Total Stockholders' Equity | $381,815 thousand | $404,621 thousand | Condensed Consolidated Statements of Cash Flows | Cash Flow Activity | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(3,535) thousand | $13,100 thousand | | Net cash used in investing activities | $(12,149) thousand | $(2,663) thousand | | Net cash used in financing activities | $(1,812) thousand | $(5,843) thousand | | Net (decrease) increase in cash | $(16,665) thousand | $4,301 thousand | Notes to Condensed Consolidated Financial Statements The notes detail the company's two operating segments, significant customer Verizon (15% of Q1 2025 revenue), a new $2,400 thousand restructuring plan, $347,400 thousand in term debt, and ongoing litigation with Charter Communications - The company operates and reports in two segments: Cloud and Edge and IP Optical Networks25112 - Verizon Communications Inc. was a major customer, accounting for 15% of total revenue in the three months ended March 31, 2025122 - In Q1 2025, the company initiated the '2025 Restructuring Plan' focused on workforce reductions, recording $2,400 thousand in related expenses53 - As of March 31, 2025, the company had an outstanding term debt balance of $347,400 thousand under its 2024 Credit Facility4367213 - The company is in ongoing litigation with Charter Communications, which filed complaints alleging breach of contract for indemnification obligations, with a trial date set for June 2025 in Delaware146147 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses economic factors like supply chain issues and inflation, noting Q1 2025 revenue of $181,279 thousand, a gross margin decline to 45.4%, operating expenses of $102,000 thousand, and $3,535 thousand cash used in operations, while affirming sufficient liquidity for the next twelve months - Key economic factors impacting the business include ongoing supply chain disruptions, the wars in Israel and Ukraine (affecting employee availability and customer purchasing), and persistent inflation and high interest rates150152154 - The company initiated the 2025 Restructuring Plan, recording $2,400 thousand in expenses, and continued to incur costs related to its 2023 and 2022 plans167168169 - Cash used in operating activities was $3,535 thousand in Q1 2025, compared to cash provided of $13,100 thousand in Q1 2024, largely driven by payments of variable employee compensation and changes in working capital205223 - Management expects total revenue in 2025 to increase compared to 2024, driven by growth in the Cloud & Edge segment, particularly from Verizon, and growth in the IP Optical segment in North America and EMEA185 Results of Operations Q1 2025 total revenue increased by 0.9% to $181,279 thousand, driven by Service revenue growth offsetting Product decline, with Cloud and Edge segment revenue growing to $107,591 thousand while IP Optical Networks declined, and overall gross margin fell to 45.4% due to mix, alongside decreased R&D and Sales & Marketing expenses but increased interest expense Revenue by Type (Q1 2025 vs Q1 2024) | Revenue Type | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Product | $81,991 | $87,610 | $(5,619) | (6.4)% | | Service | $99,288 | $92,054 | $7,234 | 7.9% | | Total | $181,279 | $179,664 | $1,615 | 0.9% | Revenue by Segment (Q1 2025 vs Q1 2024) | Segment | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Cloud and Edge | $107,591 | $101,669 | | IP Optical Networks | $73,688 | $77,995 | - Gross margin decreased to 45.4% in Q1 2025 from 51.2% in Q1 2024, with the IP Optical segment margin lower due to regional mix and the Cloud and Edge margin lower due to product mix186187 - R&D expenses decreased by 4.8% to $43,600 thousand due to lower headcount and subcontractor costs in both segments190 - Sales and Marketing expenses decreased by 8.4% to $31,800 thousand, primarily due to lower employee-related costs and agent commissions193 - Interest expense, net, increased by 75.4% to $10,500 thousand, mainly due to higher interest margins under the 2024 Credit Facility compared to the previous facility198 Liquidity and Capital Resources The company's liquidity showed cash at $74,000 thousand as of March 31, 2025, down from $90,000 thousand at year-end 2024, following a June 2024 debt refinancing into a new $385,000 thousand credit facility with a $347,400 thousand outstanding term loan, and management believes current liquidity is sufficient for the next twelve months - Cash, cash equivalents, and restricted cash decreased from $90,000 thousand at Dec 31, 2024 to $74,000 thousand at March 31, 2025205 - In June 2024, the company entered a new $385,000 thousand credit facility ($350,000 thousand term loan, $35,000 thousand revolver) to repay its 2020 facility and redeem preferred stock206 - As of March 31, 2025, the outstanding balance on the 2024 Term Loan was $347,400 thousand, with an average interest rate of 10.6%, and the revolving facility was undrawn213 - The company believes its current cash balances and available borrowings under the 2024 Credit Facility are sufficient to meet working capital and capital expenditure needs for at least the next twelve months230 Quantitative and Qualitative Disclosures About Market Risk The company reports no material changes in market risk exposures related to interest rates and foreign currency exchange rates since fiscal year-end 2024 - There have been no material changes in market risk from the information provided in the Annual Report on Form 10-K for the year ended December 31, 2024233 Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2025234 - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls235 PART II OTHER INFORMATION Legal Proceedings The company is involved in ongoing litigation with Charter Communications regarding alleged breach of contract for indemnification obligations, with a trial date set for June 2025 in Delaware - The company is involved in a legal dispute with Charter Communications Operating, LLC over alleged breach of contract for indemnification obligations146 - Discovery is ongoing, and a trial date for the Delaware complaint has been set for June 2025147 Risk Factors No material changes to the risk factors disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to the risk factors described in the Annual Report on Form 10-K for the year ended December 31, 2024, occurred during the three months ended March 31, 2025238 Unregistered Sales of Equity Securities and Use of Proceeds In Q1 2025, the company repurchased 226,862 common shares at an average price of $4.13 per share to satisfy tax withholding obligations from restricted stock awards Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | January 2025 | 9,399 | $4.02 | | February 2025 | 33,998 | $5.13 | | March 2025 | 183,465 | $3.95 | | Total | 226,862 | $4.13 | - The share purchases were conducted to satisfy employee tax withholding obligations upon the vesting of restricted stock awards239 Other Information No company directors or officers adopted, terminated, or modified Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2025 - No directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement during the three months ended March 31, 2025240 Exhibits This section lists exhibits filed with Form 10-Q, including CEO and CFO certifications and Inline XBRL data files - The report includes CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act of 2002241 - Inline XBRL Instance Documents and related taxonomy files are filed as exhibits241