Ribbon Communications (RBBN) 26 Jul 232023 Q2 Earnings call transcript

Greetings, and welcome to the Ribbon Communications Second Quarter 2023 Financial Results Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Joni Roberts, Chief Marketing Officer. Thank you, Joni.

begin. may You

Bruce welcome conference and Officer second XXXX today quarter Ribbon and Executive on Chief at archived rbbn.com, Good I to supplemental our release Investor Lopez, where live, Ribbon's am is slides results webcast are call of and the available. call. Officer. both Also Financial Mick Relations are Marketing Ribbon's call Joni section Today's being financial Chief Communications. Officer; afternoon, on Ribbon's McClelland, and Roberts, at the website currently our Chief press

will cause these business Form and forward-looking subject in Form on slides are are we conference third results the from materially actual forward-looking supplemental filed projections with in are matters quarter be most call. and the I could for statements Such SEC, to Certain to discussing safe differ this X our the of today, the statement XX-Q. XX-K for our refer contained beyond statements. documents discussed those recent statements. outlook risks including to including harbour our of and risks the and Slide uncertainties and XXXX that financial These included uncertainties you

again on will slides we earnings are prepared for this we financial both as our conference GAAP supplemental on the are issued which website. well available section in release of Reconciliations present addition, earlier applicable non-GAAP we included to the In press the call. the information measures in today, Investors call, as this

turn And now over would the to call Bruce? to like I Bruce.

everyone today. our the pleased financial for to guidance. solid results of welcome the above us to And quarter team, I'm very Ribbon thanks Joni. Thanks, to with and Great. report midpoint a joining

our growing working on Optical in both Our enterprise is cross-selling sales focus earnings. and portfolio and with growth IP

$X year-over-year increasing while X%, $XXX American quarter, sales In continued down of million increased year, X.X% growth were in adjusted on improved earnings and EMEA have in increased half to sales XX% were and sales first basis. XX%, X%. the Pacific sales the For second Asia North year-over-year, India million sales resulting X% or overall an have the EBITDA with in up

a Cloud segment, of quarter continued the increasing the X% year-over-year, In lower sales Optical as expected Edge approximately sales with ago. in sales Federal a & our continued strategic sales overall segment, of product to XX% growth consecutive win the the fourth includes strength record XX% the we sales year double enterprise revenue our the were for product Verizon with U.S. XX% by Cloud year-over-year increasing due of sales Edge high year-over-year. digit very space. from offset new year-over-year, a This business This in was In & trend to compared in reaching to as quarter. primarily down

be believe The first modernization voice many projects. of we what will

million, Government includes to recognized security communication cloud-based, exceeding unified of services platforms quarter. agencies $XX with and project need initial product portion of transform their to this levels survivability. modern, This legacy and a was communication which high substantial infrastructure

revenue strong the second for in end point bookings with mix at the towards booking X.XXx was were XX% at the the Products guidance service half the guidance. above quarter, following quarter. and of overall high million. strong As the first of in and of high was EBITDA also gross lower the a with result of $XX to adjusted first expenses, Combined margins year quarter operating the our at X.Xx

we quarter-over-quarter have projected and XX%. year. EBITDA developing on of continued target investment improvement in for segments. growth being adjusted operating The a year-over-year with on adjusted new funnel to projects resulting an Financial in products, sales Now, a Optical a directly sales and continued made improve little the basis year. half of each with a resulted strong million margins EBITDA and in as the million second of $XX of last performance to in to IP segment growth the in is quarter breakeven to more the in of the related compared the This in detail increasing second $XX

Our to on routing show IP focus XX% increasing of products strong sales routing XX% results specifically continues with IP year-over-year. and quarter-over-quarter

a both portfolio solutions of expanding market fixed routing networks. and for broadband routing in multi-service addressable and Our addresses metro directly very aggregation edge mobile large

new revenue XX% year-over-year, with Shipments level XX% year-over-year, included services market X%. highest our Sales of Optical transport. since and Site once than our CSR of products optical maintenance of in new the the quarter Apollo and Cell second Deployments the optical as the program. acquisition in of long Neptune including ECI a reaching routers, haul QX we more products, versus increasing was XG India increased of Router, transport products strongest increased scale and sales again router IP XXXX. number XDR the doubled

volumes in to and the and as capacity balanced. We is products infrastructure increase new of expect these improve cards margins more mix

Our more bear high of cross-selling reached sales continues sales in segment overall increasing than North new quarter. to XX% strategy America in year-over-year in XX% the Optical several IP regions. a fruit and representing

programs for has Following by sales segment more last leveraging strategic the providers versus we're become by where great tripling presence first reputation established. has in us This investment a was year. market broadband the very the strong that Ribbon funded trend in than and rural quarter, Federal part with

these networks. transport routing well suited growing is strong Our optical and very portfolio IP for

BEAD larger Federal as such next funding funding $XX augmented dramatically RDOF, are increase as programs the over existing the and ReConnect programs several will program. billion years by much

local successfully the Japan. we've and is where Ribbon, strategy, by leveraging relationships cross-selling established region presence implemented Another our

in first wins, X% Optical exceeded second of zero IP strategic sales sales in in IP Optical the Japan overall up essentially of half several from XXXX. quarter, products Following of the

half EMEA customers. grew infrastructure, sales variety across region, and XXXX Finally, telecom, in X% critical first in a of the the of defense

From the a products a strong supply high we're across chain planned have where production. projects to still for ramping demand localized region. remain half We perspective, the pipeline issues particular new of second

of continued expect in expedite remaining second the from see year the full improvements and half fees. to of start improvement elimination and some benefit cost We

segment margins the in still As but improved below expected, IP the our low are from point first normalized quarter, target. Optical

improvement and third expect mix. sales and both the cost higher fourth in from improving from quarter We fixed absorption further

from Now, Edge Cloud our sales year Cloud quarter X% some business. year-over-year record with a Overall, but highlights down & quarter-over-quarter, ago. were & X% Verizon a Edge after increased

with increased the mix quarter sales Verizon, sales year-over-year. favorable quarter. very at a actually software Excluding strong licenses of XX% and the in enterprise were Margins in

the Product and services book-to-revenue quarter. Xx X.Xx for -- was

a Department of very quarter. on-premise a U.S. IP anticipate Defense PBX close we starting of were to deal cloud-based in this transition as the significant communication legacy TDM projects agency infrastructure I Centrex mentioned, year As excited Federal for unified solutions. from be We agencies this or to one voice to modernization major several

Ribbon's border differentiator. and will very once multiple The unique suited to of process complexity servers, projects experience is such multi-site very quarter contribute is project Bank to Federal with allow America lengthy but significant to key to helped sales telephony managed sales for of including to requirements a Barclays. as at broad partners XX% again a sales Dell, JPMorgan, security The and portfolio advanced platforms with helped increasing these common quarter session core at working expansion of is scale with complex, well Goldman, the us media solid projects and SBC expertise other certainly standardize and shipments This and service key a for also The and to application solution and integration gateways, and SBC a for controllers, projects, the for project contribute financials survivability strong partners and market. vertical analytics. customers. Ribbon's leading enterprise The multiple was market year-over-year.

enterprise SBC the providers' with almost the products up sales sell-through remains increase first of the quarter. addition, XX% edge following X% also In service in strong business year-over-year,

than a with of operating they their these for investments cost of In of that network an benefit, four that TDM modern significant addition networks and and customers, case advances. key copper Europe, their infrastructure. activity operators, more on awarded U.S., replace to part with strategy providers, significant the high service immediate modern Middle grow. IP seen the not this were options this software-centric voice focused with part in but replacing significant In is the of improve now evaluating level all modernize platforms to years, in enterprise made legacy totaling while with projects aging four their to including engagement urgency service have we've multiple minimizing We operating recently networks The continues providers level regions, fiber-based to provide to efficiency. disruptions feature million service $XX infrastructure voice East, major Africa, are with increased

outlook the quarter second provide that, for detail then Mick? turn come half. back over Mick second our I'll to With to on discuss additional it results and the to on

Thank everyone. you, Bruce. afternoon, Good

revenue improvement financial Optical website of second financial over quarter Relations in historical bolstered XXXX again the prior double refer continued Ribbon for quarter our year, For Please and the our digit our page Networks slides once growth supplemental Investor to business. second our XXXX, summarizing on IP showed results by performance.

from In revenue the from million, mix, or $X consolidated increase of in and is due quarter, million previous year, $X driven operating from quarter mostly or Non-GAAP of XX%, generated increases $XX the year, product by second the $XX points $X X% and or begin quarter. X% of prior improvement an and with a XXX of a year-over-year prior business margin XXX quarter. is and gross than lower Let's decrease previous results. mix. change point were which from corporate the expenses was to revenues Non-GAAP the million revenue Ribbon basis basis $XXX down million segment about financial the XX% which XXXX, increase million, first million

costs, earlier implemented to operations, focus announced strategic restructuring growth streamline reduce this plan a areas. year, on As we and

target million definitely supplier real headcount our operating track $XX We optimized synergies. We terms estate, to expense on renegotiated of are driven reduction and exceed have year-on-year.

income net a per share of generated non-GAAP non-GAAP was earnings $X.XX. million, diluted which Our $X

Our for was rate quarter XX%. tax non-GAAP the

Non-GAAP the for $XX is expense and $XX $X previous X% quarter the change year-over-year, in million million a interest was which is $X.X the from a quarter, quarter. million, EBITDA from of million or improvement $X the million positive year. Our was increase previous a which

the count share million shares basic million and XXX diluted shares was Our share quarter. our was count for fully XXX

of Now X% business decrease revenue the our two million, & our of a $XXX let's results In Edge second business, year-over-year. at quarter Cloud was segments. look

was for customer. to As XXXX largest you quarter year of strong by may Cloud second the for led highest & revenue Edge recall, our sales the

XX% quarter. XX% first Adjusted points the had year quarterly and up revenues. slightly a was from of margin in million basis in as the first a prior total XX%, revenue business a line increase point was the of is year and The Edge in XX% quarter. product prior & Cloud from with Software percentage from which percentage XX%, EBITDA of or XX gross down non-GAAP $XX XXX

Networks Japan. of Let's Optical turn $XX second which million recorded million basis or points XX%, XXX or was was points Optical million, gross year-over-year which $XX versus a the gross North India, previous IP an is higher cost growth than factor to year. our quarter quarter higher IP XXX $XX Network's than margin revenue results. margin. Fixed and business prior XX% led in in and by absorption XX% of We America, Non-GAAP basis and for prior key is IP quarter, Optical about increase the

points. for current the revenue, XXX improves basis of levels, every incremental by gross $XX At million about margin

strive increases XX%. For of revenue of to gross to can current to by improve the in With XX% in was our and Optical improvements year-on-year, quarter level about mid improved will more the margins adjusted lower for loss million, expenses, With this upper segment. second $XX half, from products business million the target mix, million, Networks. and EBITDA of basis margins current of in if operating XXX profitability $XX XX% the gross over continue achieve $XX is for revenue to we revenue IP $XX improvement in growth points product the we million an previous example, million mix which quarter. and Non-GAAP grows $XX for

which of decrease is $XX equivalents, previous of $XX the with million a million quarter the and cash cash ended quarter. from We

Cash end. our made $X we million, used were million, revolver operations and capital was remained $X just $X Our term loan from quarter at undrawn expenditures repayment. million quarterly

the to business higher grow expect second we capital the requirements We working in half. third have the in quarter as

of equity in are $XXX Our metrics loan bank Per balance the senior among debt $XX which warrants preferred calculations, the loan we and million. preferred comfortably at term include the other term second and both stock is our adjustments, total covenant valued and amended quarter. met million covenant

Now quarter. to the I'll back turn on call for comments provide Bruce our to more the outlook third

Great. Thanks, Mick.

optical diversify to new in of company the the such I provider spending. such Broadband that the positioned portfolio U.S. has our company important And addition the and geography an that As areas IP significant transport industry clear enterprise perspective, counterbalances the working. second as become and major the year, growth of From Rural very perspective, a the half growth vector into well it's from has is has look opened in is strategy routing and perspective, service India a segment. for increasingly become Africa. From as a new opportunities company variances high

projections Our the the from and assumptions. for are strategy financial half on four year this second based of benefit key

we become First, by several likely the U.S. providers available. the expect increase in funding spending over as market, rural the to next American continue, North service elevated provider new sources years, broadband and

a Our we're great share. portfolio fit and is taking

XXXX by X increased more voice costs. reduce modernization, network constrained offset in the U.S. case anticipated for spending expect compelling XXXX that in We business operating providers to broadband given with rural spending service opportunity Tier the

mentioned area service I activity this not increased in multiple As a past. regions we've across made who the providers also seen have earlier, priority this in with

Where Second, positioned collaboration customers several the significant very away it will revenue we enables the platforms major recurring subscription well we revenue. business. create in with are companies being models to enterprise predictable U.S. perpetual to vertical effectiveness. sense, gain second stream the continue that licenses market the and share transitioning This generate we're efficiency to their that communication Federal more as business will and for anticipate from expect opportunities a where model enterprise makes in in includes investment awarded we and improve half to

expect wins Third, other routing deployments IP enable the optical countries the announced further XG in and the we've opportunities create we've and gain region both experienced growth in in region. growth mature new India of in strategic in continue I number and to us will and region several as transport. XXXX Asia the in accelerate, this to a share

Africa half in looks strategy we've architecture critical introduce of to the from region, And in increasing Europe ecosystem. infrastructure and second the East. service strong Middle that and the EMEA and expand new enable is open our the making investment and our finally, been portfolio the providers a Underpinning products in with investment providers year more

silicon. As at per that second market we announced very X.X Apollo less per will form a be bit wavelengths, leveraging Optical excited first the power than year, to XXXX factor. solutions platform with The competing Conference half uses industry latest industry in earlier about we're with OFC the this the X density nanometer leading terabit of the XXXX DSP leading in pluggable compact new modular

to We the expect fourth production be testing early quarter this in quarter. in and customer

is In where begins our with expand latest XDR addressable IP types variants is including the our routing protocols quarter and which Equally important generation series and IP and as by to a platform, market applications deployed. XXXX be continue XXXX, aggregation. capabilities features expand can new EVPN. networks Neptune set ship we portfolio, of next this mobile the routing growing segment Neptune the such our that advanced networks for it significantly supported that product fit supporting XL the is broadband routing new perfect The to metro of

The expanding we in XX% has XXXX. our product Optical have significant investment in first resulted made half the in IP of line growth

year. XX% in the the growth for target We that trend expect second the half, plus to supporting continue

second better target profitability higher for of mix. to EBITDA in continue margins as also adjusted enable We this half on basis segment improved regional the an volumes 'XX and

has the U.S. & lower sales Cloud provider the service in growth strong offset segment, Edge in first half our mostly In enterprise spending.

quarter, financial typically followed quarter. the quarter to seasonally our by to fourth second third be expect strong We performance similar

Edge than lower primarily expect to & XXXX, Cloud earnings to expenses. higher due contributions we be For the operating full year,

Our spend to early XXXX recovery in network additive growth indicates view on for enterprise continued in providers North modernization, Federal. and voice a which by American be service the would

$XXX margins and $XXX Based and range million range we're in gross a the $XX the of on a adjusted for above of non-GAAP XX.X% XX.X%; million projecting million non-GAAP backdrop for quarter. quarter, the to in EBITDA to assumptions, of $XX revenue third to million;

of the which targets our the Operating we continue on we overall guidance believe $XXX half is the are of million year, be full to to million our track the to achievable. lower revenue is For a exceed expenses million spending range $XXX significant established. $XX $XXX tracking projected adjusted to to will million to Due mix, EBITDA year-over-year. improvement currently range, lower XX%

strongest we great expect the quarter the We pipeline have a years, to quarter the most of as year. be And opportunities. with fourth of

questions. Operator, concludes prepared take that few our we now and remarks can a

from Schwab [Operator Christian Instructions] is Group. Our with Craig-Hallam Capital first question

strong Hey. results. the Congratulations on

Difficulty]. [Technical So

apologize. I Christian, Hey,

You're breaking I think. up,

Hello?

Christian. Yes, try again,

I could us that that. could about broadband, timeframe? multiple rural tell asking big year sorry be was I'm how over on a you

so Yes, again. connect thanks, to Christian. Good

obviously that substantially So grow this seen we've here year.

year. I think, what Xx up from doing last we're we were about

I perspective think industry. from whole a resource some there just upper are bounds construction in the

So it's hard in a funding second point, this year. the of next like to half funding particularly flow looks at year. to into of predict as starts exactly It's what BEAD lack the not growth next

going limitations going fiber. pace construction it that the and the But as are for they is at certainly more us do think addressable the of market, can amount expand. I the funding to drive envelope to be increases

pretty grow to it well expect I year. into going next So

can that selling introductions many new 'XX and by And how to customers you're the number the to tell you expand should Optical to then as up? IP of that on anticipate us of what come currently, end say business, customers we

quarter. projects infrastructure, quarter, dozen the critical my operators. with don't come quarter, number A Yes, the head. off of let's And so our several a a projects will have the In every question. definitely say. or from that's we particular are within of the adding I customers revenue a number top good customers of are majority

kind quarter try up a being every more keep press of a had quarter. And releases quarter somebody within on We good added. adds the and there's new cadence of some every do of we've strategic so,

of So names account in quarter the revenue stream some larger much of are I being new think for kind every added. indication velocity that smaller gives future. you of of projects and course, the can some an And

months? Do question, that's then X the with I is optical landing XX last something top any that the about for updates my on time, know on Great. And us have have guys you how side carriers. or material the Tier business going over talked for for some enthusiastic next you're you

Yes.

three That's announced with with in talked definitely there's names in third already in a expansion infrastructure And opportunities that's about I Obviously, I Optus about although with our with presence healthy region we're we are And clearly wins quarter. X% Asia So had some for Bharti, my I different was there, Canada, as mentioned, it Europe, remarks, the new us. market. with I the we've Rogers a In here a pipeline in us. Pac. products. great a announced Again, think, regions, Ribbon of haven't and pretty America, think regions, revenue Singtel, primary as where any significant MTN, those for and voice Africa the North wins kind Japan building momentum. of in

So, kind regional stay tuned. telecom we're that with infrastructure critical with -- to We're definitely the in addition momentum on providers. part building of and focused

Capital from Savageaux next Markets. question with Our is Tim Northland

some was of of the you assume, rural I discussion, A following talked couple of questions, Optical on that. U.S. vast U.S. for majority that XX%. IP and I at think -- about maybe recent

is India. expect region it's being implications U.S. I should size a growth of some market, rural rural big that from you rural right have growth Can clear about My scenario India? -- of maybe to of broadband IP question segment? a there it become quarter, relate last -- a and you markets you Japan. standpoint, U.S. that than should does out bigger grow. is that talked And broadband about sort think a kind your is, what largest assume revenue U.S. we XX% greater for just standpoint. you how now? Can now? the that you're if and with in years? about of margin we not you've But couple talked Optical country of this single How talked to e.g., I about growth than where that's these And India the talking

Yes, great. All good questions.

the broadband, North American was So, portion and rural significant that. XX% a of of number, a sales

the up you that As customers Canada, was sales. in rural quarter. more that a of recall portion including other got half certainly broadband to that North America, in Rogers in than XX% we've contribute all of number the of But

As you compare India to North of kind is significantly larger still than it India, today. America

Xx, than Mick, ballpark? right, I think that in more

Yes.

customer enjoyed this one course, of in Bharti here we've So, we year. that good India with growth have large

where were a getting I back to the since ago companies As merged together. quarter was our kind few maybe strongest of we we've mentioned, had years we

pipeline there don't can drive if know enterprise partners in going are we've bigger operators X.X major well with in and a some India's and allowed We're your from markets to question with can build getting us We're final three -- billion Teleservices had be people, well, new scale. ways be? customers lot that us good success back on big think I India know rural Tata that's that. to other have folks we're some deployed deployed of how with So, us that like I than to good like I really just in products it today, start as I that customers. a started. mean, mean, to India.

for a I remain to So that's significant really us. going think market

you Japan. similar I time? I for X a likely significant mean, production can with your how And there over maybe you're Tier that get think is question implying but around carriers,

cases, just we're there great momentum different use mean, in of operators, Again, with as well in kind IP. it optical of see several market. number both some a I to the entering was as the of

go Japan. commercial in through of kind now cross-selling. elements was process, us We've vetting into about excited combination several go infrastructure process taken to years of the and a It's while pretty on to the one ago strategic service. great place focused market. I'm a So the It the that got through in testing

for plank us it So another the will to for sure. operation here add

in after Optical what Obviously IP the pretty in question and very you how guess, characterize significantly a that last orders for me. Optical I QX. are came expectations strong in Okay. would half? orders your down for IP QX, And second

reasons were a order mention in I'd quarter, large third why the defense in so those that multi-year we bookings of accelerated of with with all second previously -- second in for shipping Europe. market operation the A all the second quarter, orders against shipping in quarter, and they the strong the the second and in related in of share Normally, India the those quarter. but some the portion two quarter. Yes, bookings part lower that gotten the was part agreement velocity expansion other was to was second were of would've into so the Bharti we there QX. first And in those were then some of QX were the quarter. larger we're expansion around orders of kind

X.XX not, like Optical obviously for number I I'm second quarter half we're IP numerically -- is first some So the although or the the at first think that. for half, down for number X.XX, in the

So, half. I for year, Obviously, projecting still going the second good. we're still feel the half of growth into the second

achieve number, plus will XX% XX% versus growth second annualized I more think last grow to half than year. our the

second feeling velocity the in So, half here. about good the we're

you. Thank

Our Riley. with next question Dave from is Kang B.

is the IP on First question Optical.

us first next can Just second becoming they year and you before in wondering negative you just quarter dip will year? Just quarter? half trajectory their help wondering into if in in out. And be I next can into will second positive? EBITDA if if mean, talk positive about it

Yes.

business So if on the I breakeven and half OpEx positive. here do on the to whatnot, to and think, margin you modeling EBITDA with second and for the is target assumptions the get

business reason That's done whole we've contribute. on. the to is focused acquisition. what This that's So team the the needs

the be You We projected that the do quarter to find year. are range lower in $XXX million plus quarter tends every there. be target is to margins half. And a the where the quarter for second that's with need first to per what be

early be to is not commentary get additional on too provide the the But that fourth whether So the is and at sure quarter combined. the and a here that we little level on. mark in making quarter me focus half second first third we'll in to for or

And think supply situation, impacted first I your by that then about $XX million the chain quarter. believe, I in regarding revenue

what was wondering in that second quarter? Just

very more I So it unlike of Yes. could time. caught very up long in Dave. sort issues our quarter. we're think, on the I'm in quarter others, similar, sure, the similar shipped our products. We same Site the not lead the haul products the as this It more Router particular quarter was again Really But right? Cell products. have comment and the new time we get didn't some I longer in very, third on parts second of do on in ramping

find I of the think, future. as in as majority I mentioned, half surprises issues So the the of get into those are year, we who existing we second behind us, the knows what new

impact quarter million go going to we it or should like zero? third something maybe is expect to in $X So just

that hanging something It's the in out always to quarter. next up that Dave. There's probably, of ends ballpark kind

in yes. So ballpark, it's that probably

you split what routing is wondering And then, know the just growth. gave I between the IP --

their Just differential, optical? margin optical what's IP and And what between if can split you IP is? versus wondering

think, the routing. talked IP IP. is Obviously the XX% been so with we've that's split the in historically rate last Yes, I range that the around XX% growth for several increasing to over quarters

recent I the product I think now XX% -- revenue over think perspective we're with from growth. it's a

you've businesses grow. seen both Now

I XX%. and think grew IP optical grew about about XX%

expect see not over routing time is mix continues we to what IP towards But the as to more optical either, think that's standing it's shift and So I well. growing. still

And differential? XX%, what's X% Is margin about something their it like that?

a that product. performance the Yes, much it's margin. by product region If Router type type so of tends we volume it's high don't If break a more out. It a terabit X and margin. routing lower platform, that's Site little Cell varies higher to that better be

of depending the Dave, is type products. the So it In on quarter. just products the margin mix a general, shipping the we're can IP in the bit, little on vary and trend towards higher

my a kind actually or C&E, say clarification. missheard? this will maybe be flat is Did you And year question of I last

third last will earnings as quarter the the a half in characterized be quarter, and being fourth I've stronger up the Yes, from quarter second overall similar so, contribution second to with year.

So I've given those data points. of kind two

next Our from Capital. WestPark is with Greg question Mesniaeff

Edge on My & Cloud question segment. is the

in You the to little I to more namely the call doing a revenue in has from totally path Can other had steps had. model that are to your mentioned that this perpetual that are one the subscription us starting follow to the the a existing licenses words, you model, on model? weaning process based down keeping that, are ones of up. business you a customers as are where in and to that the you're color give proceed out smooth of your you And why understand the Or license with have older then a you're subscription quick off the and kind license of process? Thanks. I subscription lumpiness transitioning what and perpetual you perpetual kind model? of new customers In

Hi, Yes. Greg. Good question.

Most Cisco completely but stream, business which Connect seat a type Ribbon per as-a-service that's it's -- Webex, offer And couple So small of platform today, acceptability or the or in different space. per but per not as fairly cloud-based UCaaS side. revenue models is the Microsoft the interest at of a multi most you or Zoom the There's is in in obviously model. provider there. if a that's enterprise mostly a There carrier pricing enterprise Teams all, -- for of space, or our first the of an that's look growing. service is typical small example, a it's month subscriber

license much professional And license, ELA subscription that's provides set license for, whatever other SBC kind to the significant that a an licenses the it type includes ability that we're term an licenses, perhaps or for. to enterprise-wide you The from a those moving services, transition license includes an of includes kind more up software of renew that every underway. approach and say maintenance, it year type term is it perpetual a period and to licenses let's

of -- software analytics transition. that And the significant content are which new we're of Many it's in most the a software a or controller probably in themselves to that's border of high and like both finding lot And that customers. lend products moving our really model. customers direction. And interest a highly session platforms, existing combination

being say, carrier legacy especially on would ones you to customers receptive the Are this side? transition larger

wouldn't to wherever economics I customer it their We'll are to meet it. meet the force best needs. we're describe as the Yes, trying

their customer the although number enterprise, of is so that it just offering as to this I not in Connect thing. carrier a mostly enterprises. side, managed mentioned The Again, and it's most service used So platform, around the the around Ribbon supports interested is a by receptive not cases, is type carriers of very of much approach.

it So well. that model pretty fits

Thank you.

with Our JMP. is from next question Suppiger Erik

couple questions. A of

to First a these did fair Is there normal off, you of amount. going in secondly, that's that the believe picking had that likes some then by uptick Nokia QX particularly margins? Did to be anything gross was customer. seasonal up XX% gross noted you that some some carriers just their of I Verizon were a see implies down Ericsson is and been range adjustments -- of expecting? And inventories? Verizon to was in terms inventory the of beneficial see you a in margins of or QX Or guidance working your the

Yes, thanks questions, Erik. the for

great of of had the the modernization a just a a in basically XXXX. So quarter we Verizon with all We second them, ago from had revenue second a going quarter. to perspective, year voice in quarter variety programs

So comparison. we in of not had a Verizon a fair quarter year a ways lot It's the with it's ever best ago.

pretty is substantial. stepdown year-over-year so And the

from you actually Verizon provider service year-over-year. though, ends, mentioned up business revenue both excluded I our was As if the in

was the quarter strong it just phenomenon as year ago. -- primarily So, a a it's

build a Erik, really So going issues. comparison was quarter inventory consistent year over -- around it's others up and the to just it what we the from those previous hearing, be and exactly year of don't I little in it where that's it to sorts the you're predicted very And wasn't think tough. quarter. ended

that you be we our I the of XX% revenue for XX-Q able that'll see to plus think if out, our report come there. customer percentage you'll see

be a margins margin businesses. perspective, stronger From QX in yes, both Yes. do so QX to expect we

makes a margin of pretty absorption mentioned, a detail cost gross larger in the percentage pipeline and & a difference a to velocity It IP be of have Cloud level. Edge. service at provider we well higher driving revenue the mix. increased in Mick QX. the of the a -- to deals, increased due just Optical the fixed But As around both and in good Obviously, as tends revenue enterprise lot lot margin level the

model in have, sounds that We stronger and models towards more as just correct. your general annual the of benefit But I mentioned, software us this QX. in on kind mix ELAs transition

that can discussed then you that? about you or products last contributing of revenues. Optical had And to Can any provide update color any IP you quarter add XX% lastly, new

to apologize. that think, it's Erik, I unfortunately, on some me, don't I'm have it. I Yes, have I going to front more so in do go of similar. research number

is next Our from Savageaux Northland with Markets. Capital question Tim

Hi.

Sorry that. rate in to Optical. I of follow-up. the QX, IP the of base $X run is breakeven million, cost overall profitability looks brought And well. your something as just kind know, in terms performance like IP and about reflected you in -- down $X that. wanted looks like pretty OpEx It in I in like it don't significantly particular, revenue And Optical your that's million, in subject

be range. kind at to IP and sort of increasing question like in revenues way here It Is the flattish OpEx EBITDA to high quarter -- cut Is and expect it loss is looks you EBITDA and or stay? again more that forecasting a described, you're where Mick a QX? positive in in that maybe looking that gross is, QX. to to guess of another look your right? that kind as obviously I reasonable you're assuming XXs in in about half Optical margins, that's be that So I'm things, little then of

Yes.

you the made, parse improvements we've improvements, to that year. think of benefiting in both don't QX spending we guidance ahead the is and higher. going the want the But profit the half, will what so directionally directionally second and for QX order of committed correct, higher, were of that's we cost combination portion I are So what the be A said we're businesses. of breakeven we're ahead the do plan, a of QX QX to much. volumes it's the to It I too the is correct. In absolutely get

Optical, I better remember think million cost level. the gross right savings about We If OpEx the QX, at margin in that certainly forward we're well. in that but that of do is plays there's think line as $X level, the at IP above in -- service also I company some on and whatnot

to million than we QX, be the minus and $XX or a $X think similar in QX get year $XX plus OpEx OpEx. of greater net of we in range that were and would the for million in I savings to sort Mick, in QX, expect at thing million and us

to time. are floor There like you. McClelland Bruce over no turn I further would to Thank back closing for this the at questions any comments.

Paul. today, the thanks, Thanks Well, everyone Communications. being in again on great. for us call here Okay, your interest with Ribbon

call. conferences, and a have help. number meeting appreciate we to your operator, much, concludes We upcoming Thanks so our dialogue. continuing of And very look forward investor everyone there the that

conference. concludes This today's

for at your this disconnect participation. you time. your Thank lines You may