Ribbon munications (RBBN) - 2021 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q2 2021 was $211 million, up 2% year-over-year when adjusted for the sale of Kandy [24] - Adjusted EBITDA was $43 million, a 60% increase year-over-year, and non-GAAP earnings per share was $0.17, up 133% from the previous year [8][19] - Cash generated from operations was $14 million, with cash and cash equivalents at $115 million, an increase of $6 million from the previous quarter [32][34] Business Line Data and Key Metrics Changes - In the IP Optical segment, sales grew 10% year-over-year, with revenue of $70 million for Q2 2021 [9][30] - Cloud and Edge business revenue was $141 million, down 1% on an organic basis, but adjusted EBITDA increased to $44 million, up from $37 million in the previous year [27] - Maintenance revenue represented 34% of total revenue, increasing by approximately $4 million from Q2 2020 [31] Market Data and Key Metrics Changes - International customers accounted for 52% of total revenue, consistent with the previous year [31] - Service providers represented 78% of revenue, while enterprise customers made up 22% [31] Company Strategy and Development Direction - The company is focusing on increasing its presence in the IP Optical Networking space, with significant wins from Rogers, Optus, and Singtel [36][37] - The strategy includes leveraging new technologies like 400 gig ZR+ and 5G network slicing to gain market share [38] - A dedicated organization has been created to target the enterprise unified communications market more effectively [39] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the resurgence of COVID-19 in India affecting growth plans, with revenue in India dropping to approximately $17 million in Q2 [40][48] - Supply chain challenges, particularly in semiconductor availability, are expected to limit the company's ability to respond to demand changes [42] - For Q3 2021, revenue is projected to be between $215 million and $225 million, with expectations for higher gross margins and lower operating expenses [45] Other Important Information - The company completed the sale of its QualiTech business, resulting in a $2.8 million gain [21] - The company ended the quarter with a bank leverage ratio of 2.17 times, below the threshold of 2.25 times, which will reduce the interest rate margin [33] Q&A Session Summary Question: Impact of macro issues on revenue - Management indicated that revenue in India was significantly impacted, with expectations of $22 million to $24 million but only achieving $17 million in Q2 [48][49] Question: Revenue opportunities from new wins - Management noted that while these wins are significant, they do not expect substantial revenue in 2021, with material revenue expected in future years [60] Question: Deployment challenges in India - Management clarified that deployment rates dropped significantly due to COVID-19, but they are seeing some recovery in July [70][71] Question: Demand activity in optical business - Management characterized demand activity as intensive, with significant engagement in various areas [72][75] Question: Performance of cloud and edge business - Management acknowledged that while the service provider portion is performing well, the enterprise side needs improvement [80][81]