Ribbon munications (RBBN) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported revenues of $251 million for Q4 2024, an increase of 11% year-over-year, and full-year revenues of$ 834 million, up 1% from the previous year [28] - Adjusted EBITDA for Q4 was $55 million, a 30% increase year-over-year, and for the full year, adjusted EBITDA reached$ 119 million, up $28 million from the prior year [32][33] - Non-GAAP gross margin for Q4 was 58.1%, up 130 basis points year-over-year, while the full-year gross margin was 55.9%, an increase of 280 basis points [29] Business Line Data and Key Metrics Changes - The Cloud & Edge segment generated Q4 revenues of$ 165 million, a 35% increase year-over-year, and full-year revenues of $505 million, reflecting a 6% increase [34] - The IP Optical Networks segment reported Q4 revenues of$ 87 million, a 17% decrease year-over-year, with full-year revenues of $329 million, down 6% due to the suspension of shipments to Eastern Europe [36] Market Data and Key Metrics Changes - Sales to US Tier 1 service providers in the Cloud & Edge segment doubled year-over-year, while sales to global enterprises, including US federal agencies, increased by over 60% [9] - In India, sales increased by 30% quarter-over-quarter and 10% year-over-year, with a strong second half contributing to over 40% growth compared to the first half [20][22] Company Strategy and Development Direction - The company aims to leverage its broad portfolio and global presence, focusing on cross-selling solutions and expanding its business with Tier 1 service providers [42] - There is a commitment to improving the IP routing and optical transport business in North America, with a focus on rural broadband expansion [43][45] - The company is also targeting growth in the fiber transport market and investing in AI technologies to enhance its offerings [45][52] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the investment cycle in network modernization and fiber networks, expecting continued profitable growth in 2025 [11][41] - The company anticipates a revenue range of$ 870 million to $890 million for 2025, implying a year-over-year growth rate of approximately 5% [55] Other Important Information - The company ended Q4 with a cash balance of$ 90 million and a net debt leverage ratio of 2.2 times [39] - The company has over 200 potential metaswitch replacement opportunities in its pipeline [17] Q&A Session Summary Question: What should be taken away from the quarterly guide regarding seasonality? - Management indicated that the toughest comparison will be in Q1 due to the Eastern European impact, but they expect easier comparisons in subsequent quarters [62] Question: Is there a possibility to restart business in Eastern Europe? - Management confirmed that they are prepared to restart business quickly if restrictions are lifted, but the timeline is uncertain [64] Question: What is the most important driver for the Cloud & Edge and IP Optical segments moving forward? - For Cloud & Edge, execution on existing contracts is crucial, while for IP Optical, growth in North America and India are key focus areas [68][70] Question: What is the potential revenue from Verizon's modernization program? - Management indicated a run rate of over $100 million per annum with Verizon, expecting growth from that level [97] Question: What is the opportunity related to the replacement of Chinese suppliers? - Management noted that there is a long tail of opportunity related to replacing Chinese suppliers, which they continue to pursue [53]