Ribbon Communications (NasdaqGS:RBBN) Q3 2025 Earnings Call October 22, 2025 04:30 PM ET Company ParticipantsBruce McClelland - CEOFahad Najam - SVP of Corporate Strategy and Investor RelationsJohn Townsend - CFOConference Call ParticipantsMichael Genovese - AnalystDave Kang - AnalystRustam Kanga - AnalystTim Savageaux - AnalystChristian Schwab - AnalystRyan Koontz - AnalystOperatorGreetings, and welcome to the Ribbon Communications Third Quarter 2025 Financial Results Conference Call. At this time, all par ...

Ribbon Communications (NasdaqGS:RBBN) Q3 2025 Earnings Call October 22, 2025 04:30 PM ET Company ParticipantsBruce McClelland - CEOFahad Najam - SVP of Corporate Strategy and Investor RelationsJohn Townsend - CFOConference Call ParticipantsMichael Genovese - AnalystDave Kang - AnalystRustam Kanga - AnalystNone - Analyst 1Tim Savageaux - AnalystChristian Schwab - AnalystRyan Koontz - AnalystOperatorGreetings, and welcome to the Ribbon Communications Third Quarter 2025 Financial Results Conference Call. At th ...

Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $215 million, a 2% increase year over year, within the guidance range [17] - Year-to-date revenue increased by 6%, and EBITDA rose by 5% compared to the same period in 2024 [6][17] - Non-GAAP gross margin was 52.6%, lower than expected due to reduced software sales to U.S. government customers [17] - Adjusted EBITDA for Q3 was $29 million, a $1 million decrease from the prior year [18] Business Line Data and Key Metrics Changes - IP Optical Networks revenue was $91 million, an 11% increase year over year, with a positive EBITDA contribution of $1 million [19] - Cloud and Edge revenue decreased by 3% year over year to $124 million, with adjusted EBITDA down $10 million year over year [20] - Sales to service providers increased by 5% year over year, while enterprise sales were down approximately 3% year over year [7][14] Market Data and Key Metrics Changes - Sales in Europe, Middle East, and Africa grew 26% year over year, while Asia-Pacific sales increased by 13% [9] - North American sales declined approximately 10% year over year, primarily due to lower U.S. federal sales [9] - Sales to India increased by 31% year over year, contributing to strong growth in the Asia-Pacific region [11] Company Strategy and Development Direction - The company is focusing on AI ops and automation through its new Acumen platform, which aims to help customers transition to autonomous networks [4][5] - Continued investment in voice and data network modernization is expected to drive growth across service provider and enterprise customers [8][24] - The company anticipates strong demand for its Cloud and Edge and IP Optical Networks businesses, despite short-term disruptions [8][26] Management's Comments on Operating Environment and Future Outlook - Management noted that the U.S. government shutdown has delayed procurement processes but emphasized that no business has been lost [8][34] - The outlook for Q4 is expected to be strong, with a projected revenue range of $230 to $250 million and non-GAAP adjusted EBITDA of $42 to $48 million [26] - Management remains optimistic about the growth potential in data centers and critical infrastructure investments [26] Other Important Information - The company repurchased approximately 900,000 shares for a total cost of $3.5 million during the quarter [21] - The company is experiencing foreign exchange headwinds of approximately $3 million year over year, primarily due to the shekel [38] Q&A Session Summary Question: Impact of AI on Cloud and Edge growth - Management views AI as a new category that will drive growth in Cloud and Edge, allowing customers to build their own smart agents [30][31] Question: Performance of Verizon and U.S. IP Optical business - Verizon grew about 20% year over year in Q3, with a focus on services rather than products [32] - U.S. IP Optical business is expected to be lumpy, with revenue fluctuating based on project timing [33] Question: Shutdown impact on Q3 and Q4 - Management indicated that the shutdown impacted Q3 results, and they would have comfortably met guidance without it [34][54] Question: Foreign exchange and tariff impacts - Foreign exchange impacts were approximately $3 million, while tariffs posed a smaller headwind of about $0.5 million per quarter [37][39] Question: Government business growth expectations - Management expects solid growth in government business as new projects are initiated, despite current uncertainties [56][58] Question: BEAD funding and outlook - Management is cautiously optimistic about BEAD funding but has not factored it significantly into the outlook yet [62] Question: New product innovation with Acumen - The Acumen platform is generating significant interest, and management is exploring how to categorize it within their business segments [66][67]

Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $215 million, a 2% increase year over year, within the guidance range [24] - Year-to-date revenue increased by 6%, and EBITDA rose by 5% compared to the same period in 2024 [9][24] - Non-GAAP gross margin for Q3 was 52.6%, lower than expected due to reduced software sales to U.S. government customers [24] - Non-GAAP net income for the quarter was $7 million, down from $8 million in the prior year, resulting in a diluted EPS of $0.04 [27] Business Line Data and Key Metrics Changes - IP Optical Networks revenue for Q3 was $91 million, an 11% increase year over year, driven by strong sales in India and EMEA [28] - Cloud and Edge segment revenue was $124 million, a decrease of 3% year over year, primarily due to lower U.S. Federal sales [30] - Sales to service providers increased by 5% year over year, with Verizon's revenue growing approximately 20% [20][44] Market Data and Key Metrics Changes - Sales in Europe, Middle East, and Africa grew by 26% year over year, while Asia Pacific sales increased by 13%, led by India [13] - North American sales declined approximately 10% year over year, impacted by lower U.S. Federal sales due to the government shutdown [14][22] - IP Optical sales in North America were lower, but Europe and the Middle East saw significant growth, particularly in critical infrastructure projects [16][17] Company Strategy and Development Direction - The company is focusing on the convergence of AI and voice technologies, with the launch of the Acumen AIOps automation platform [5][6] - There is a strategic emphasis on modernizing voice and data networks for service providers and enterprises, with ongoing investments in cloud and edge solutions [13][20] - The company aims to expand its presence in the U.S. Federal market, despite current delays due to the government shutdown [12][90] Management's Comments on Operating Environment and Future Outlook - Management noted that the U.S. government shutdown has delayed procurement processes but emphasized that no business has been lost [10][12] - The outlook for Q4 is expected to be strong, with continued momentum in enterprise and service provider segments, despite the impact of the government shutdown [33][35] - The company anticipates revenue in Q4 to range from $230 million to $250 million, with adjusted EBITDA between $42 million and $48 million [37] Other Important Information - The company repurchased approximately 900,000 shares for a total cost of $3.5 million during the quarter [31] - The cash balance at the end of the quarter was $77 million, up $14 million from the previous quarter [31] Q&A Session Summary Question: Is AI a driver for future growth in Cloud and Edge? - Management views AI as a new category that will drive growth, particularly through AIOps and the convergence of voice and AI technologies [40][42] Question: How did Verizon perform in Q3 and what is the outlook? - Verizon grew about 20% year over year in Q3, with expectations for continued strong performance in Q4 [43][44] Question: What was the impact of the government shutdown on Q3 and Q4? - The shutdown impacted Q3 results, with management estimating a potential $10 million to $15 million effect on revenue for Q4 [79][82] Question: What is the expected growth rate for government business in 2026? - Management anticipates solid growth in government business as new projects are initiated, but specific growth rates are uncertain due to the current budget situation [90] Question: What is the impact of foreign exchange and tariffs? - Foreign exchange headwinds were approximately $3 million year over year, primarily due to the shekel's performance [54][56]

Core Insights - The article highlights 13 tech stocks under $10 that present investment opportunities due to their potential for revenue growth, profit improvement, and market share expansion [2][6] - The current technology market is experiencing a boom, particularly driven by artificial intelligence, although not all AI-related companies are deemed worthy of their high valuations [3][5] - The methodology for selecting these stocks involved screening U.S.-listed tech companies under $10, with additional filters for market capitalization and upside potential [8] Group 1: Market Context - Many tech stocks under $10 are involved in rapidly growing sectors such as software, semiconductors, cybersecurity, and digital services [2] - Tom Lee from Fundstrat noted that the technology market is in a significant boom, with AI creating substantial growth opportunities, but cautioned that some companies may not sustain their high valuations [3] - Comparisons were made to the late 1990s, indicating that current valuations are more reasonable than those seen during that period, with Nvidia trading at approximately 26 times forward earnings compared to Cisco's 60 times at a similar stage in 1998 [4] Group 2: Investment Methodology - The selection process for the best tech stocks under $10 involved screening for companies trading below this price, with a minimum market capitalization of $300 million and an estimated upside potential exceeding 20% [8] - The final list was based on the number of hedge funds holding positions in each stock, indicating a level of confidence from institutional investors [9] Group 3: Featured Companies - **Blaize Holdings Inc. (NASDAQ:BZAI)**: Stock price at $3.90 with a potential upside of 99%. The company announced a partnership with Technology Control Company to enhance AI infrastructure in Saudi Arabia [11][12] - **Ribbon Communications Inc. (NASDAQ:RBBN)**: Stock price at $3.80 with a potential upside of 60%. The company launched an AI-powered automation platform, Acumen, aimed at modernizing network management for telecom operators [15][16]

Core Insights - Ribbon Communications Inc. has launched Acumen, an AIOps and automation platform aimed at enhancing network operations for service providers and enterprises, facilitating their transition to autonomous networks [1][2][3] - The platform is designed to address operational challenges, reduce costs, and improve customer experience through AI-driven insights and customizable automation [2][3] Group 1: Product Features and Benefits - Acumen provides end-to-end observability and AI-driven insights, enabling network operators to enhance reliability and performance while reducing operational costs [2][3] - The platform includes a low-code/no-code workflow builder, allowing for the creation of custom applications tailored to the needs of telecom and critical infrastructure [3] - Acumen supports both Ribbon and third-party components, offering a unified view of network performance and enabling proactive, data-driven decision-making [3] Group 2: Industry Positioning and Strategy - Ribbon Communications positions itself as a leader in real-time communications technology and IP optical networking solutions, focusing on modernizing and securing networks for service providers and critical infrastructure operators [1][4] - The company emphasizes its commitment to Environmental, Social, and Governance (ESG) matters, providing an annual Sustainability Report to stakeholders [4]

Core Insights - JLL has launched a new AI solution, JLL Property Assistant, aimed at enhancing operational efficiency and decision-making for real estate owners [1][2] - The solution is built on JLL Falcon, the first comprehensive AI platform in the industry, providing insights and recommendations to optimize property performance [2] - JLL Property Assistant integrates with Acumen, JLL's property and business intelligence platform, to analyze performance across various metrics [3] Features and Benefits - The AI solution facilitates faster decision-making by providing data on tenancy reports, expense trends, and tenant retention [4] - It enhances operational efficiency by reviewing high-priority tasks, identifying tenant satisfaction issues, and analyzing work order trends [4] - JLL Property Assistant improves profitability by offering operational budget breakdowns, vacancy filling suggestions, and financial reporting [5] - The solution adheres to enterprise-grade security protocols to ensure client data protection [5] Management Commentary - Neil Murray, CEO of Real Estate Management Services at JLL, emphasized that AI, data, and applications form the foundation of JLL's property management technology platform [6] - The new AI solution is expected to deliver faster and smarter insights, improving asset performance for clients [6] Market Performance - Despite the launch of the AI solution, macroeconomic uncertainties and geopolitical tensions are anticipated to impact JLL's performance in the near term [7] - Over the past three months, JLL's shares have declined by 17.6%, compared to a 0.8% decline in the industry [7]