Financial Data and Key Metrics Changes - Revenue reached an all-time high of $221 million in Q2 2025, representing a 15% increase year over year and exceeding guidance [15][23] - Adjusted EBITDA increased by 47% year over year to $32 million, aligning with the high end of guidance [17][23] - Non-GAAP gross margin was 52.1%, slightly below guidance due to a higher mix of hardware and professional services [16][23] Business Line Data and Key Metrics Changes - Cloud and Edge business revenue grew by 24% year over year to $137 million, with adjusted EBITDA for the segment increasing by 43% [18][19] - IP Optical Networks revenue was $84 million, a 2% increase year over year, with adjusted EBITDA showing a loss of $5 million [19][20] - Sales to service providers increased by 18% year over year, while enterprise revenue rose by 7% year over year [8][19] Market Data and Key Metrics Changes - Strong demand in North America, particularly from service providers and enterprise markets, including U.S. federal agencies [6][7] - IP Optical sales in North America grew over 45% year over year, driven by critical infrastructure projects [13] - Sales in Asia Pacific, particularly India, saw over 40% growth year over year, supported by major operators investing in network modernization [12][13] Company Strategy and Development Direction - The company is in a multi-year investment period to modernize communication networks across service providers and enterprise verticals [24][25] - Focus on leveraging the entire voice and IP networking portfolio to differentiate offerings against larger competitors [24][25] - Continued innovation in cloud-native voice and edge routing solutions to capture market share [6][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a robust demand picture for the second half of the year, projecting revenue growth of 15% to 20% compared to the first half [23][30] - Anticipated strong performance in Q4, similar to previous years, due to timing of enterprise deals and service provider projects [23][30] - Potential pressure on operating expenses and gross margins due to a weakening U.S. dollar [25][26] Other Important Information - The company announced a new stock repurchase program to buy back up to $50 million of common stock [22] - Cash from operations was a usage of $1 million, with a closing cash balance of $62 million [20] - The company expects a cash tax saving of approximately $15 million to $20 million for 2025 due to recent tax legislation [21] Q&A Session Summary Question: Clarification on gross margins being below expectations - Management explained that the lower gross margins were primarily due to a shift towards more hardware in the cloud and edge segment and increased professional services [34][35] Question: Insights on revenue guidance for Q3 - Management indicated that while Q3 revenue is expected to be flat sequentially, it will still show year-over-year growth [36][38] Question: Outlook on the separation of cloud and edge businesses - Management expressed confidence in the synergy between the two business segments, highlighting successful integration in projects with Verizon [39][40] Question: Commentary on classified replacement opportunities - Management noted a correlation between fiber upgrades and modernization of voice services, emphasizing cost savings from parallel upgrades [46][47] Question: CapEx spending environment - Management acknowledged a positive outlook for CapEx due to recent tax legislation allowing for immediate expensing of R&D investments [49][50] Question: FX impact on operations - Management confirmed that the weakening U.S. dollar had a minor impact in Q2 but could pose a headwind of approximately $2 million per quarter moving forward [60][61] Question: Details on Verizon's contribution to revenue - Management confirmed that Verizon accounted for over 20% of total sales in Q2, with expectations for continued strong performance [70][71] Question: Deferred revenue trends - Management explained that the increase in deferred revenue is indicative of future revenue growth, particularly from maintenance contracts [92][94] Question: Gross margin expectations for Q3 - Management projected an increase in gross margin for Q3 due to a favorable mix of software over hardware [62][63]

Financial Data and Key Metrics Changes - Total revenues and adjusted EBITDA each grew by 3.5% year over year during Q2 2025 [15] - Adjusted EPS was $0.54, up approximately 6% from $0.51 the prior year [15] - Free cash flow for Q2 was $4.4 billion, an increase from $4.0 billion the previous year [15] - Capital investment was $5.1 billion, showing modest year-over-year growth [15] Business Line Data and Key Metrics Changes - Mobility service revenue grew by 3.5%, with EBITDA growth of 3.2% year over year [18] - The company added 401,000 postpaid phone customers in Q2, exceeding expectations [18] - Consumer Wireline revenue grew by 5.8%, driven by approximately 19% growth in fiber revenue [22] - Fiber customer additions were 243,000 in Q2, with a convergence rate of 40.9% for fiber and 5G services [23] Market Data and Key Metrics Changes - The company reported a significant increase in Internet Air net additions, exceeding 200,000 for the first time [24] - The mobility subscriber growth is increasingly driven by customers taking both wireless and broadband services [19] - The company expects to reach approximately 50 million customer locations by 2030, doubling its fiber reach [10] Company Strategy and Development Direction - The company aims to become the best connectivity provider in America, focusing on customer-first strategies and advanced technologies [3][4] - Plans to accelerate fiber deployment to 4 million new locations per year by the end of 2026 [10] - The company is transitioning away from legacy copper infrastructure, targeting to discontinue service across the majority of its copper footprint by 2029 [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory, citing strong customer demand and improved operating efficiencies [12][14] - The company anticipates a competitive environment in the second half of the year but remains optimistic about its performance [20] - Management highlighted favorable policy tailwinds for investment, comparing the current environment to the Telecommunications Act of 1996 [11][90] Other Important Information - The company plans to contribute $1.5 billion to its pension plan by the end of next year, enhancing the plan's funded status [12] - The company expects to realize $6.5 billion to $8 billion in cash tax savings from 2025 to 2027 due to recent tax legislation [32] - The company intends to accelerate share repurchases, expecting to buy back $4 billion of stock by year-end [34] Q&A Session Questions and Answers Question: Wireless churn and cost savings from decommissioning wire centers - Management acknowledged the 17 basis point increase in phone churn and noted that they expect a competitive environment in the second half of the year [38][39] - They highlighted ongoing cost savings from legacy transformation and expect to continue driving costs down as more wirelines come offline [41][42] Question: Impact of churn on pricing strategy and spectrum acquisition budget - Management stated that pricing is not the primary issue affecting churn and emphasized their strategy of tying prices to value [48] - They confirmed that they are constantly evaluating spectrum options and have the flexibility to make strategic acquisitions if opportunities arise [51][54] Question: Fiber build returns and mobility customer quality - Management expressed confidence in the profitability of their fiber builds and noted that the returns from new customers are improving due to converged services [60][62] - They emphasized that they are focused on acquiring high-value customers and improving lifetime values [63][66] Question: Mobility margins and macroeconomic impacts - Management indicated that while growth-related spending may be lumpy, they expect operating leverage to remain strong and margins to perform well [88] - They highlighted favorable investment policies and incentives that support organic growth in the telecom sector [90]

Financial Data and Key Metrics Changes - In Q1 2025, Ribbon generated revenues of $181 million, an increase of 1% year over year [19] - Non-GAAP gross margin for Q1 was 48.6%, lower than expected due to higher sales in India and increased hardware shipments [19] - Adjusted EBITDA for Q1 was $6 million, a decrease of $6 million year over year, primarily due to tighter margins across segments [20] - Non-GAAP net loss for Q1 was $5 million compared to a $1 million loss in the prior year, resulting in a non-GAAP diluted loss per share of $0.03 [21] Business Line Data and Key Metrics Changes - Cloud and Edge segment revenues in Q1 were $108 million, a 6% year-over-year increase, with product and professional services revenue increasing 17% [22] - IP Optical segment revenues in Q1 were $74 million, a 6% decrease year over year; excluding Eastern Europe, sales were up 25% [23] - Cloud and Edge non-GAAP gross margins were 62.5%, down 350 basis points from the prior year due to a higher mix of professional services and hardware revenue [22] Market Data and Key Metrics Changes - Sales in India for the IP Optical segment increased 80% year over year, with strong performance in Southeast Asia and North America [15][18] - Service provider sales increased more than 10% year over year in Q1, with a significant increase in sales in the U.S. and India [8] - The backlog grew by 35% year over year, indicating strong demand and a book-to-bill ratio of 1.2 times [7] Company Strategy and Development Direction - The company is focusing on modernizing voice and data networks, with a strong emphasis on cloud technologies and AI deployments [5][6] - Ribbon is investing in new product development, particularly in routing platforms to support TDM elimination and IP over optical networks [31][32] - The company aims to improve gross margins in Q2 with a better product mix and regional profile [10][33] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about strong demand in the first half of 2025, projecting sales growth of 5% to 8% year over year [7] - The company anticipates a strong second quarter with sales growth of more than 10% year over year, driven by delayed enterprise deals and ongoing projects with U.S. Federal agencies [35] - Management noted that while there is uncertainty regarding U.S. tariffs, they do not expect a material impact on business operations [34] Other Important Information - Cash from operations was a usage of $4 million in Q1, with a closing cash balance of $74 million [24] - Total capital expenditures in Q1 were $12 million, with expectations for full-year CapEx to remain consistent with prior years [25] Q&A Session Summary Question: Any pull-ins due to tariff uncertainty? - Management indicated no strong evidence of pull-ins related to tariff uncertainty, with bookings consistent across the quarter [38] Question: Customer plans regarding potential tariffs? - Customers have not indicated changes in strategy or plans due to tariffs, and most service providers do not expect significant impacts [40] Question: Update on AT&T's Neptune ramp? - Management could not provide specific details but remains a strategic partner to AT&T and expects growth in IP optical in North America [42] Question: Benefits from retiring copper networks? - The company is involved in both eliminating copper and maintaining services through media gateways and software solutions [46] Question: Growth expectations for Cloud and Edge products? - Management expects Cloud and Edge sales to grow approximately 20% year over year in Q2, with IP Optical projected to grow 5% to 10% [49]