Ribbon munications (US:RBBN)2025-04-29 21:32Financial 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, driven by tighter margins across segments [20] 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, but up 25% when excluding Eastern Europe [23] - Cloud and Edge non-GAAP gross margins were 62.5%, down 350 basis points from the prior year [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 as well [16][17] - North American sales more than doubled year over year, driven by rural broadband projects and critical infrastructure growth [18] - Service provider sales increased more than 10% year over year, with a significant increase in India [8] 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 expects to see continued growth in its Cloud and Edge business, projecting approximately 20% sales growth in Q2 year over year [27] - The company is investing in new product development, particularly in routing platforms to support TDM elimination use cases [31][32] Management's Comments on Operating Environment and Future Outlook - Management noted strong demand from service providers and enterprises, with a backlog growth of 35% year over year [7] - The company anticipates a strong second quarter with sales projected to grow more than 10% year over year [36] - Management expressed optimism about the future despite uncertainties related to tariffs and trade barriers [35] Other Important Information - Cash from operations was a usage of $4 million in Q1, with a closing cash balance of $74 million [25] - The company expects significant improvement in gross margins in Q2 due to a better product mix [34] Q&A Session Summary Question: Was there any pull-in due to tariff uncertainty? - Management indicated no strong evidence of pull-ins related to tariffs, with bookings consistent across the quarter [39] Question: What are customers saying about potential tariffs? - Management noted that customers have not indicated changes in their strategies or plans due to tariffs, and many service providers do not expect significant impacts [41] Question: Update on AT&T's Neptune ramp? - Management stated they remain a strategic partner to AT&T and expect growth in IP optical in North America [44] Question: How does the company benefit from copper retirement in the U.S.? - Management explained that they provide solutions for both complete copper elimination and maintaining services while transitioning to fiber or IP [48] Question: Growth expectations for Cloud and Edge products? - Management expects Cloud and Edge growth to be approximately 20% year over year in Q2, with IP Optical projected to grow 5% to 10% [51][52] Question: Update on Verizon's revenue expectations? - Management confirmed expectations for Verizon to return to Q4 levels and noted the scaling of service revenue [58][60] Question: Observations on optical transport growth? - Management highlighted strong growth in India and Southeast Asia, with good opportunities stemming from competitive dynamics in the region [67]