Financial Data and Key Metrics Changes - In Q4 2025, Ribbon generated revenues of $227 million, a decrease of 10% from the prior year [14] - For the full year, revenues were $845 million, an increase of 1% or $11 million year-over-year [14] - Adjusted EBITDA for Q4 was $40 million, a $15 million decrease from the prior year [15] - Non-GAAP gross margin for Q4 was 55.4%, down 270 basis points due to lower software revenue [14] - Non-GAAP net income for Q4 was $106 million, a $78 million improvement year-over-year, driven by a tax benefit [16] Business Line Data and Key Metrics Changes - In the IP optical networks segment, Q4 revenues were $85 million, a 2% decrease year-over-year [17] - Cloud-and-edge segment revenue in Q4 was $142 million, down 14% year-over-year but up 14% sequentially [17] - For the full year, cloud-and-edge sales increased 1%, with service provider sales growing 8% [13] Market Data and Key Metrics Changes - Sales to U.S. federal agencies decreased by approximately $10 million year-over-year in Q4 [7] - Sales to global service providers increased 5% and accounted for 70% of overall sales [8] - Sales in the Asia-Pacific region grew 19% year-over-year, driven by significant business growth in India [8] Company Strategy and Development Direction - The company aims to drive profitable growth through modernization projects with service providers and enterprises [21] - There is a focus on integrating voice technologies with AI platforms, particularly through the Acumen AIOps platform [24] - The company is exploring opportunities in high-speed broadband infrastructure, particularly in underserved regions [24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the backlog and customer base for secure voice and IP optical solutions [21] - The company is taking a cautious approach to 2026 guidance due to macro uncertainties and restructuring efforts [28] - Management expects revenue growth to be back-end loaded in 2026, with significant opportunities anticipated in the second half of the year [43] Other Important Information - The company repurchased approximately 972,000 shares in Q4, totaling 2.5 million shares for the year [19] - A deferred tax benefit of approximately $90 million was recognized in Q4, providing a favorable impact on non-GAAP EPS [15] Q&A Session Summary Question: Details on new cloud and edge bookings - The $50 million in new bookings were from non-Verizon customers, spread across a growing base of about a dozen different customers [32] Question: Clarification on delays affecting revenue - Delays were primarily due to project backlog and budget issues, with significant impacts from U.S. federal and service provider customers [38][39] Question: Expectations for sequential growth throughout the year - Management indicated that they expect sequential growth after the first quarter, with a cautious outlook due to various macro factors [40][41] Question: Federal segment revenue decline - U.S. federal business revenue was approximately $10 million in Q4, down from over $20 million in the previous year [71] Question: Insights on Acumen platform POCs - The company is focusing on deploying Acumen with lead customers and has several POCs lined up, aiming for revenue generation in the second half of the year [80]

Financial Data and Key Metrics Changes - In Q4 2025, Ribbon generated revenues of $227 million, a decrease of 10% from the prior year [14] - For the full year, revenues were $845 million, an increase of 1% or $11 million year-over-year [14] - Adjusted EBITDA for Q4 was $40 million, a $15 million decrease from the prior year [15] - Non-GAAP net income for Q4 was $106 million, a $78 million improvement year-over-year, driven by a tax benefit [16] Business Line Data and Key Metrics Changes - IP Optical Networks revenue in Q4 was $85 million, a 2% decrease versus the prior year, while full year revenue was $333 million, up 1% from 2024 [16] - Cloud and Edge revenue in Q4 was $142 million, down 14% year-over-year, but full year revenues were $511 million, a $6 million increase from 2024 [17] - For the full year, sales to global service providers increased 5% and were 70% of overall sales, while sales to enterprise customers increased 2% year-over-year [8] Market Data and Key Metrics Changes - Sales to U.S. federal agencies were approximately $10 million lower than the fourth quarter of 2024 [7] - EMEA sales were down year-over-year due to reduced sales to Russia, while excluding Russia, sales in EMEA were flat [8] - Sales in the Asia-Pacific region grew 19% year-over-year, significantly driven by business in India [8] Company Strategy and Development Direction - The company aims to drive profitable growth through modernization projects with service providers, governments, and enterprises [21] - There is a focus on integrating voice technologies with AI platforms, particularly through the Acumen AIOps platform [24] - The company is exploring opportunities in high-speed broadband infrastructure, particularly in underserved regions [24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism despite a dynamic macro environment, citing a strong backlog and customer base [4] - The company is taking a cautious approach for 2026 due to uncertainties in investment priorities and federal spending [28] - Management expects revenue growth to be back-end loaded in 2026, with significant opportunities anticipated in the second half of the year [43] Other Important Information - The company repurchased approximately 972,000 shares of common stock in Q4 for a total cost of approximately $3.3 million [19] - A deferred tax benefit of approximately $90 million was recognized in Q4, resulting in cash tax savings of $15 million-$20 million per annum [15] Q&A Session Summary Question: Details on new Cloud and Edge bookings - The $50 million of new bookings were from non-Verizon customers, spread across a growing base of about a dozen different customers [32] Question: Clarification on delays affecting revenue - Delays were primarily due to backlog projects and budget issues, with significant impacts from a U.S. customer undergoing restructuring [38][39] Question: Expectations for sequential growth throughout the year - Management indicated that they expect sequential growth throughout the year, with a cautious approach due to current uncertainties [40][41] Question: Federal segment revenue decline - U.S. federal business revenue was approximately $10 million in Q4, down from over $20 million in the prior year [70] Question: Insights on Acumen platform POCs - The company is in deployment with its lead customer and has about a dozen other POCs lined up, focusing on demonstrating OpEx savings [78]

Ribbon Communications Fourth Quarter & Full Year 2025 Results February 5, 2026 © 2026 Ribbon | Public 1 Note Regarding Forward-Looking Statements and Non-GAAP Financial Measures This presentation contains "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, which are subject to a number of risks and uncertainties. All statements other than statements of historical facts contained in this presentation, including without limitation, statements regarding ...

Core Insights - Ribbon Communications Inc. reported strong cash flow and bookings driven by an expanding customer base in voice modernization, with U.S. Tier 1 service provider sales projected to increase over 25% in 2025 [1][2] - The fourth quarter results were affected by delays in customer projects and budget timing, but the company achieved a record level of product and services bookings, including over $50 million from new voice modernization programs [2][4] - The company is targeting growth in high-demand AI and defense markets, anticipating increased government spending in these areas [1][2] Financial Performance - Fourth Quarter 2025 financial results showed revenue of $227 million, down from $251 million in Q4 2024, with GAAP operating income of $9 million compared to $33 million in the previous year [4][5] - Non-GAAP adjusted EBITDA for Q4 2025 was $40 million, down from $55 million in Q4 2024, while GAAP gross margin decreased to 53.3% from 55.7% year-over-year [4][5] - For the full year 2025, total revenue was $845 million, slightly up from $834 million in 2024, but GAAP operating income turned to a loss of $3 million compared to a profit of $17 million in 2024 [4][5] Business Outlook - The company projects revenue for 2026 to be between $840 million and $875 million, with non-GAAP gross margin expected to range from 52.5% to 53.5% [6] - For Q1 2026, revenue is projected to be between $160 million and $170 million, with non-GAAP gross margin anticipated to be between 48% and 49% [6] - The company expects to benefit from a new tax advantage that could reduce future cash tax payments by approximately $15-$20 million over the next several years, starting in 2026 [2][6]

Core Insights - Ribbon Communications reported a year-over-year revenue growth of 2% for Q3 2025, with a year-to-date increase of 6% [2] - The IP Optical Networks segment saw a significant sales increase of 11% year-over-year, particularly in the EMEA and India regions [2] - The introduction of the Acumen AIOps platform marks a strategic innovation aimed at enhancing service providers' operational efficiency [2] Financial Highlights - Q3 2025 GAAP revenue was $215 million, compared to $210 million in Q3 2024 [6] - GAAP net loss for Q3 2025 was $12 million, an improvement from a loss of $13 million in Q3 2024 [6] - Non-GAAP adjusted EBITDA for Q3 2025 was $29 million, slightly down from $30 million in Q3 2024 [6] Business Outlook - For Q4 2025, the company projects revenue between $230 million and $250 million, with a non-GAAP gross margin expected to be in the range of 55% to 56% [3] - Adjusted EBITDA for Q4 2025 is projected to be between $42 million and $48 million [3] Operational Performance - Cash flow from operations for Q3 2025 was $26 million, with a closing cash balance of $77 million, up $14 million from Q2 2025 [2] - The company maintained a net debt leverage ratio of 2.2 times at the end of Q3 2025 [2] Segment Performance - Cloud & Edge sales increased by over 8% year-to-date, with continued growth in sales to Global Service Providers [2] - The company experienced minor impacts from the U.S. Federal Government shutdown, but ongoing voice modernization projects are progressing [2]