Ribbon Communications (RBBN) 14 Feb 242023 Q4 Earnings call transcript

Greetings, and welcome to the Ribbon Communications Fourth Quarter and Full Year 2023 Financial Results conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions.) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Joni Roberts, Chief Marketing Officer. you. Thank

begin. may You

matters these are over slides supplemental of at Ribbon's welcome the prepared to being turn in I'm our present XX-K of projections call.In and website Fourth our Officer XX-Q. slides from statement recent Joni supplemental where on archived in GAAP we supplemental call, be differ Officer. included slides well Investor Bruce? the are I'd our like to risks Bruce for including rbbn.com, on uncertainties Communications. available.Certain release of this for call. XXXX this and Reconciliations Lopez, the Bruce. website.And financial and to our available and earnings of we Form Results again, refer those and the These filed Chief on in and Investor Slide as live Ribbon's which the at applicable XXXX both forward-looking press the business on we'll and Conference included as currently Also conference to press subject including harbor Financial are materially most measure it McClelland, that Relations today, are now issued for our beyond risks today SEC, conference on earlier call section Call. Roberts, both non-GAAP statements to you to documents call we'll quarter and the section addition, forward-looking financial and the I information Executive our today, this contained to our cause statements. afternoon, discussed discussing safe Form are X Officer Quarter uncertainties Mick is could are Ribbon's results release Today's Financial Ribbon outlook Such Chief webcast Good the Relations Chief statements. first be Marketing will actual with

three I'm our year to the very us thanks see our over almost our the financial the quarter environment macro everyone pleased last challenging investment made have to profitable several for telecom starting quarter, and of solid to really strategy today. and results years. in a suppliers, and for we most years. joining report the of fourth we're the Despite Joni, results Thanks, Great. quarter for strongest

business the IP For the profitable first for and the profit an second of time, basis half our adjusted a optical EBITDA on generated entire year. was

existing focus Middle all enterprise service Our strategy Japan, Tier X spend Tier this that to of the and lower continues portfolio providers. U.S. Europe in to by have U.S. East. regions, to And on we the period X offset customers cross-sell rural, working our vertical the carriers, is India, market

and well.Earnings XX% an EBITDA think the versus and million for just of is executing the really for an a increase This I up $XX XXXX. X% we're the spending with increase standing operations quarter were industry. XX% on a and from expectations, basis, year. X XX% service our U.S. original the result $XX from Revenue for in across the adjusted million up quarter. was a year million full were or Cash $XX from the macro providers the Tier XX% great lower both the below sequentially given accomplishment entire solid full growth was given environment. This segments very out in sales, quarter year-over-year of but

due more new turn on challenges. to IP It segment, I of year strong quarter for more in to XXXX.Now straight last now from and built project highlight software performance customers million up X federal mix that Texas from other time held with X% U.S. in all our about large to over EBITDA the year-over-year forum our timing reflecting $XXX real detail working. to segments XXXX. quarter-over-quarter our Networks sales Optical quarter awarded, and favorable opportunity grew the operating quarter, very the and this at regional since in margin of of new our the products guidance customers each Edge] XXX directly profitability points this Gross revenue.In strategy results. of before business EMEA see fourth the second of XX% was November, expect optical our mix was we solid been to increasing latest has their costs, improvement XX% priorities were acquired quarter.The with over continued volumes. from we $XX revenue recognize result the the XX% the year-over-year strong and ECI. annual North we've our in This million Ribbon to quarter we and U.S. basis XXXX XX%, in product sixth higher was become The The great shortfall detail positive large customers first due strong half customers, for that little earnings Excluding growth. a America was relative a for margins number going strong drive for into Apollo and our hear in or to attendance. revenue products X% exceeding customers with to Sales to Tier year-over-year. our many of names gross significant year-over-year, in it really on Plano, contribution in have our The Sales and very and foundation The entire [Cloud is strong a higher of Tech showcase was & were the quarter Mick a a great grew revenue transport year-over-year. the and of

XXXX, ramp as a few good but this IP cell strategy securing trials transport sales in grew product of We're Availability to of which including have We've progress and we grow routers over optical pipeline XX% Apollo that several our TDM made introduction the use made and distances X.X access of somewhat is services XXXX the XXXX months.Sales interconnect center next reached opening address network We're data the increased are and applications which initial high-capacity year, we have general routing, new innovate full IP capacity subsea of with continuing MPLS long first on customer production, customer new on cases as as terabit shipments. on aggregation. we metro wins, focused in as new XG definitely the expanding our secure XX%. the of the to type on over Neptune high-performance of limited For focused include that is the solution, and we well is to segment. key can version and availability long-haul circuit maximize areas emulation, applications. broadband opportunities differentiation site good

increased a one assessment, national the extensive critical manages is commercial the Power. support to largest an segment highly core quarter, the solution, is technical previously in market growth look the strong region also point now discussed, in After to router a of Carrier an strongest XX% This MTN carriers U.S. versus to the network been largest and and our the products. far U.S. As U.S. a providers quarter Neptune year. India AEP.In to of the optical strategic such increasing sales the optical Africa, satisfying component needs, as IDF with our lines. week, been for successful world, the entry solid XXX% a portfolio by quarter routing a XX% grew mobile product of AT&T.As winning services and several of key bookings year-over-year momentum third which with is rural to year-over-year and We in we Apollo in that's Last North Electric broadband revenue. in and the see Muse a part the Optical our product with added we of communication perspective, combination From as Asia expected, providing energy it's was XX% in a service with bookings X.Xx revenue a increasing fourth expand very accounts, included Japan, Pacific, has key Global infrastructure. IP with full Israel EMEA already AEP strong a secure, of we've resulting very the the has in with new results.Sales IP with distributors key our seventh in data Connect quarter. with and further presence the in sales In Growth major had and in Neptune, sales announced And the XX% AEP in providers Europe in in transport XXXX. American reliable in the quarter critical throughout and region continued Africa. both extensive, the their strategic the operator infrastructure this which networking telecom includes strategy, of America, over part a we quarter. to year-over-year in and Ribbon such very win have in IP and so Voice

first strong of with the awarded Even segment, the expect large the integration modernization strong comprehensive year well X.XXx with weeks recognize in bookings and specialized million. were higher provide Product XX% integration from for our in across service sales, the as continue we project the We to release customers was X% lower Edge Dell were address and voice the a result. the the full lower federal as customers collaborate EBITDA good closely finally ago. enterprise this generate project quarter full in In We related working U.S. highlighted provider several partner and this with our year.Sales to excluding year. strongest quarter with a level, contribution affect we're service customers of with closely providers revenue partners phase to to the a was earnings & initial particular, but grew our revenue the the U.S. with revenue secure up But from the X X.XXx year-over-year expected earlier spend market. now were to our significantly agencies. full Tier as to revenue for solution, we growth year-over-year, to U.S. on and service quarter, Given were just Tier comparisons. sales Xs, number fourth the as of all XXXX this other adjusted federal a week.In this pretty project, $XXX of Cloud In win federal well the as press to a few projects year.

awarded their included being the that anticipate that the of Ribbon's had routing quarter banks have are that data one We centralized financial largest vertical, core, voice region MTN from months.In The number opportunities network upgrades. across a Group stages award received interconnect Edge on-prem with the called in six for significant center punctuated and for group global win additional market includes the next project [Baobab], for service we Rise policy of Africa. a a underpins over significant late new the deployment in fourth was project we we of EMEA quarter cloud-centric Shine called the an the a and fourth strong telecommunication the Cloud group's supporting award. with & in And and traffic wholesale SBCs MTN's by expansive

continue quarter in XXXX.Finally, one world focus fastest-growing period Africa We as is renewing our to this on region our and regions of support expected the maintenance to the be in for increase fourth is strongest contracts.

renewal rates over on XX% very first full almost have year's outlook were high, the year and and At strong revenue in bookings quarter. fourth come Our XXXX for Mick on and the detail Nick? quarter. to and in turn for Edge.With that, to maintenance we additional back of then quarter it provide discuss our Cloud remain I'll to & results the backlog point, this

gross Thank fourth continued of you, to quarter profitability expense we in were guidance financial and XXXX due everyone. very pleased performance management. Bruce. very as adjusted year our margins the met midpoint of full our EBITDA product afternoon, with Good and strong the We

the financial please the financial always, XXXX, our with of million, from of to which Ribbon revenues is consolidated page for the on fourth the begin Investor website results level. of Relations In corporate X% decrease year. $XXX performance supplemental generated prior [lives].Let's a As refer quarter Ribbon at

Networks higher due X% increase For is non-GAAP previous IP gross full But to than Fourth margins. mix, the as Optical the the same points as IP prior gross mix prior products, XX.X%, XXX product units full the positive which of year quarter business in year, the both was is margin the of year. mostly million, XX.X%, a an margin year unit.For gross $XXX the revenues result remained versus business were of year. optical of increased XXXX, higher which at very a basis

operating expenses non-GAAP X% by of the fourth improvement quarter, million and For sales an in $XX or reductions driven million, year-over-year, expenses. were R&D $X

which which programs.Quarterly diluted million, our For previous a per non-GAAP is generated share net restructuring XX% $XX from was prior than income the XXXX prior Diluted reduction XX% were the year. $X.XX, of $XXX a year. earnings year the $X.XX up by an XXXX. was million, versus income than per year, $X.XX, was non-GAAP operating year This million, million, net result. of increase increase of $X expenses Full $XX was $X.XX driven share double or or million which net more is $XX earnings higher

rate non-GAAP XX%. Our tax was year-to-date

was a Adjusted million $XX entirely improvement previous interest is EBITDA the Our interest quarter, than $X quarter the higher driven increase million, $X expense increases.For which year, in for which the $XX million by $XX million, totaled was is year. previous from a expense the million rate interest year-over-year. year, is $X the million which

the enhanced is increase For a for full $XX the million year, Optical by mostly previous IP million, year $XX XXXX, Networks. driven profitability from adjusted EBITDA which was

million XXX of XXX revenue fully the at let's the providers. decrease XX% segments. business for million, expenditure two cutbacks was our year-over-year, shares, our shares U.S. $XXX & quarter.Now X quarter was service Edge Cloud business, count our count share basic Tier from driven capital million share and a In our by results was fourth diluted look Our of

year, full decrease from million, which X% $XX reflects revenue a the XXXX. For or million $XXX was

software revenues, Our points & product XXX Cloud strong a of $XXX XX% delivering of margin and fourth remained business services generation.The up basis year, by Edge strong number total million sales. to driven gross had XX.X%, customers prior were of the which our large consistent business a at XX% or from non-GAAP quarter profit sales, of value

as sold. year XXXX, up goods gross basis full experienced prior XX.X%, cost was the of year XX points For of we from lower margin

profit For high XXXX, consistent the Cloud the we mid- in to business from XX% would Edge expect continued margins segment. contributions to drive & range.We continue

revenue $XX a or fourth the adjusted million For This XX%. decrease is of the was from XX% although $X previous X% quarter, decreased EBITDA million. percentage only or year,

We EBITDA For in revenue $X which IP of Optical year Networks full of North increase quarter adjusted results. XXXX, America to Japan. growth by XX% continued our million, or led and $XXX $XXX business India, an at remained million.Let's turn fourth recorded million, was EMEA,

caused new regional IP growth cost year, increased a XX% basis geographies from prior were higher the strong volumes. the a year. was absorption for million $XXX XX%, and product same lower product by up was strategic for from by gross revenues points the EMEA driven For XXX Optical fixed introductions.Non-GAAP better mix from double-digit and margin mostly This sales, costs

gross in As targeted greater with XXX the we was Networks.For XXXX, up full in IP XX% said and year quarter, last for America, Optical with revenues upper higher would mid- the XX.X%, and especially a beyond our percentage gross improve EMEA of points. margin to of we basis margins range sales

Networks of $X that can mid- adjusted business EBITDA believe we quarterly XX%. improvement we quarter mix.For regional we we XXXX, negative million million loss note Optical in EBITDA adjusted business full half the the and million from EBITDA that segment. to IP Networks $XX over year $XX XXXX year gross XXXX, Optical with that an to year-on-year. EBITDA $XX for million upper Adjusted from positive IP better improved range can performance our by of improved adjusted a achieve the first the negative was positive For validates million. targeted the of revenues $XX half sales stellar second this This to $XXX margin This is million. achieve Please

loan loan ended equivalents and term XXXX. million cash The bank include and We be million, X.XXx repayment. was charge debt, amended from adjustments, comfortably We quarter $XXX fourth $XX metrics $XX calculations, These both the A now preferred of in cash to structure preferred bank to the our was focused discuss and leverage improvements of expenditures quarter flows one cash at we in $X IP ratio quarter which among with X, in was of profitability total full the the of September XXXX. covenant term of our and market commence and the a million XXXX, our $XX loan and $XX Cash achieving term total from revolver loan X.XXx. ratio covenant operations Networks.Let's from capital the the a from balance met covenant are capital December year is year-end metrics million very term shares $XX million capital now fixed with quarter. on for of equity performance other year loan great positive of excellent XXXX million senior even and Per The used the the for $XX coverage million continue the over $X objective cash We March matures structure. conditions, on later our for decrease company $X XXXX.Given was and our XXXX. in refinancing financial on mature outstanding.Our near and term. XX, quarterly Optical at million million balance financial the improved

We long-term to are for partners I'll Bruce outlook flexible confident financial our comments provide in profitable call growth.Now our to to the capital the turn to back sustain continued support our structure more obtain of a XXXX. on and

Great. I'm voice to with have addressable in and expand optical ability significant market to barrier an to communications enterprise is carrier high that that undergoing networking a of IP the strategic unique goals Ribbon excellent very change opportunity XXXX. grow revenue our both accomplished the a number year, powerful company, disruption, a into complemented markets.We in share profitability. entry. improve a practice and Thanks, combination the is The The with our by to differentiation large transformed providing made in constantly and a we've very data Mick. in business in confident Entering continue investments telecom

both strategic regions. business had every our is second a and Networks culminating key First a IP sales of the quarter improvement previous routing and profitable the in behind and lines foremost, performance dramatic half we factors three of product the This wins three success. of years. financial optical last There improved are over in Optical year. IP We grew all year, the this

deep business. America relationships Ribbon that and in and and has we've Optical Australia the IP grow First, win to leveraged with providers, service North like markets particularly Japan our

the was and internationally.Finally, on investment is drivers a diversification key transport opportunities.Looking of from our on we've execution as we of the our really and we made a and and but IP in demand to lines blur focused improved forward, portfolio year, accomplishments. Mile investment agents. expanded large goal for standing helping Optical the portfolio clear Edge resulted unlock driving product market care segment key perfect the new we between significant business In industry. our impacted market, business the Tier we're significant sales and been while And has the service provide that with unique a innovation several providers, that transformation third, in The had This optical our look the Middle (inaudible) implemented There lower spend company year Federal strategic a macro Second, had map have progress where a us. with we with addressable others more road wins final have reason made in very the are we IP market in these to our health strategy the out expand in build integration strong expand combined fit cost routing.In we has advantages ECI. network and of early Ribbon by U.S. of the position by strong enterprise competitive providers, a efficiencies, X networks Cloud importantly, restructuring is the phase voice vertical. we & good to our on business, particular, financial have U.S. and a of number very and the

bolstered expand and This year. this is programs, similar variety First, the of we for networks. has fiber dramatically RAN deploying particularly fit funding perfect and is investment middle and portion continued critical network the in infrastructure a customers.Second, IP XG U.S. portfolio, capacity investment in us to being a is and governmental XXXX, was opportunity includes of unprecedented reach opportunities our the optical for of a major mile that expect wide by made The a network pipeline access in needed of the and a the investment aggregation increased the and we global have great the in mobile growth

network to bandwidth to applications next the limited to spending pace.Third, year, AI investment have having TDM are U.S. internationally. and seen to still half by dramatically services. infancy solutions big grow. generative Teams of more require expected first in their growth the address interactive discussions new Zoom the improve This the and we customers continues Microsoft over and order additive service have focus a and to will X a network on the in CapEx largest push their keep in many New we Tier us, plans catalyst on operate of regarding key detailed their access relentless begin growth to and middle business. are be create as copper to in lowering and investment half expect to there's coming to providers our this remaining in expect is networks, traffic second And And of cost The of platforms, in with the and for adoption years substantial a are We're this mile the be years. area. we but such second several key a networks our nature to become the enterprise the in will enabler.While behind our in finally, fund several continue parts

new voice customers practically in build to XXXX, the projects cloud our on approach modernization map expect in success expect efficiencies federal and to XXXX architectures. focused is deliver very we win initiate commitments, to perspective, inflationary normal from U.S. native to and R&D similar migration the strongly mile middle XXXX, effects. road an also we investment additional the be all opportunity XXXX.From and in expect to agencies to including to on rate We capture prioritized offset investment the on

differentiation.Now that to portfolio on products our competitive to new continue have positioning the and will across We guidance. improve

performance with financial business in in our sales. of the high improvement single-digit IP continued growth expect Optical We

revenues are year-over-year. service grow and expected product to more XX% than maintenance, Excluding

improved margins potential high year the company with for and the With half spending sales EBITDA lower and we're the revenue second of flat Cloud to year the the product from year-over-year accretive service for margins similar we're costs, Visibility & higher is and targeting conservatively Edge, be contribution. EBITDA.In in XXs to mix providers gross adjusted still U.S. and projecting the developing.

certainly there's the to this opportunity year So, an progresses. than do better as

has business revenue seasonality a point the similar element Our the an much XXXX. year.Overall, of quarter we've million the of typically anticipate projecting than half the at range with XXXX half million. We as in first lowest second experienced of first stronger we're pattern in in XXXX to with a the $XXX $XXX

would of with on of to XX% growth fiber stated earlier, $XXX adjusted million company, Excluding really which product for stronger EBITDA the this, for the range at made growth X% million of and spending revenue product exponentially, overall service a the networks share higher XXXX, catalyst bandwidth as of projected be demand million an year and XXXX projecting I rate $XXX maintenance, $XXX margins for million we non-GAAP therefore the level first better the revenue in further the XX% applications but XXXX to more continued and projecting X quarter.As believe Based digits. $XX this and continue for to will than investments similar market growth single continue to is the a is million, expect due year more AI in this to we $X of lower in to the of are to Adjusted stringent significantly gain gross in to range our the bookings. will supercharge offerings. out Tier margins and relative provider we're growing U.S. And that's be range than for to service and to EBITDA modernize low requirements. service Ribbon. a midpoint.For We quarter revenue a $XXX this for million, last XX% stands growing non-GAAP with implies in which we've

our to few this take improve for now continue into overall and questions. profitability, As significant we that can employees.Operator, translate and prepared significantly value our a we our should concludes remarks, our investors creation

One Instructions). for you. Thank (Operator questions. moment, be poll will please,

of comes from the first question line JMP Securities. Our Suppiger Erik with

Congrats strong Optical. on IP

Did know and just off, carriers you for customers year? the any weak. the -- XX% First did you your have in fourth I were quarter

year. year. so, Erik, a fourth full the We was customer. XX% full for XX% didn't Verizon have the in the for did quarter, we

on do it Or And what you think could second sounds half? in half. think pick Okay. into the second pick the carriers have you carrier the up. up we will makes front, North that, get it then American like around for that there? pick as you up What could context timing improvements

Thanks, Good carriers the Eric. sell today into modernization voice question. we primarily Yes. products. What our is

seven the and estate, or it Today, to for cost eight real is so, years. maybe a of modernizing payback Class is if been trying a lower related factors. period And sorts power to lot is those products. switch, we've the on or of what cooling IV And payback working those or basically V the the deployment Class the you're of in investment and

years, I business think down case. it the Now we get or to four that five improve really helps or can three if cost

things been one the that's we've key So that of on. working

you into the that get will of available be second And half the as year?

Yes.

having. with the And kind I that I right level think we're of those lower we're discussions the be in volume, mentioned able and costs of to range.

levels. last definitely half there's in get to of it the the with historical the first year, here second the spending which half again back little year, second more grow a we're think the half starts path consistent is today seeing year where and of in I of a the that to

the Christian of line question with comes Craig next Schwab from Our Hallum.

to between the the question of in my an first And asked. provider assume revenue being second the is the as follow-up a we the idea the should second you I just first mix have service just and Can -- that us of give better. question half half rough the what was year? half

Yes, half the you XX% to what, XX% it's off don't of probably, the if XX%? head, know your Mick, first and to that top in have I XX%

the telecom where quarter in in expenditures. XX% in then that do third the both their half fourth pattern of set first normal about first averaging or the been the the half follows the most seasonal second and of expenditures they the we've their budgets providers quarter. and Yes, XX% and They in

Okay.

the the though half be for the same. mix looks to even slow, to starting first relatively So Great. is the year

So, or XXXX highlighted expect impact as talked and to Do second mile. the increased half then of event? investment that is the impact, B a slides fiber XXXX, you we that have middle the program could noticeable the in of about in more you

Right.

programs, that half of rural doing today funding broadband sort So, space, the some related of are we're governmental program. leveraging about in

not about it's like of and funding types all They're half Reconnect of all And them. It's not those of RDOF related. are programs. programs programs, them previous of America, approximately. most those BEAD So, them of

be funding might BEAD if that current it the the So, probably additive in in, not would I layer network. operating don't into be And coming environment. our it does, in And market of the of it's to see segment, XXXX. access more

us. a it's think XXXX for I more So, phenomenon of

news well done business. we've growing that So, really is the good

year-over-year year, Broadband funding. think were the Rural in up BEAD XX% I last we about segment without

we could pretty should that be that. -- to So additive be

line the from Securities. comes of with Riley B. question next Dave Our Kang

India and on Bharti. First question on more is specifically

three have you programs think I there.

one you an is which wondering update, Just started, has program can follow that? any on give if which to us color

business third India the quarter, in consistent quarter. very pretty strong the fourth with so the Dave, was again

we the year, up year. relative were in XX% think up prior and I full to were XX% year, the we in the India, For QX for

being So, largest in year there. our customer Bharti solid India, really a

layer layer areas routers you third business. of around MPLS IP of networking, mentioned, around the the the IP As kind and the access cell transport, three second site the around optical the One network. aggregation then their there's of is

All was year. last one throughout cell The of we the that active ramping are were site today. those router

spot Our It's production is this point. in with picture. a balanced good kind at now of demand the

should saw the we And kind think not solid of grow don't so, It's you I be at pretty it XXXX a what leveled right? business. I rate -- is in out, will, same it's if but XXXX still in to expect

in sharp said decline and third was actually a They quarter. saw So, of that European couple the a fairly quarter they vendors. sequential peak fourth

all by growth for some expect slower still XXXX? you pace and that, seeing not You're

Yes.

third So, level was in what very we saw consistent quarter. to fourth the quarter

like We others. we in just region, have do in seasonality that

end first So, in finalized The March. budget budgets India will part slower. the year we -- the be the are of at of cycle

process. once think year of I the we'll half have gone So, on through second the better that we've visibility

And greater for wasn't or year? XX% and for India than the quarter the XX%

the Mick can XX% check double it the numbers growth, ballpark, there. Certainly, Dave. in right growth that year-over-year plus puts

the the for XX% Right. Certainly, of business. above twice company, IP Yes. for that it Optical and is

on just a update Neptune AT&T. And it. and Got quick

that? give were this I but next Maybe about by you that figures figure think opportunity. year, not update bullish a an maybe can year? eight Can you on reach pretty you us maybe

Yes.

described plans. these information process a it I not And So deployments time to get levels opportunity I continue do fast market not take It's we'll customer to And to probably call. grow the think their our exactly think year. last of of business share, a ahead as I I does this-year Dave. to is a thing, the are sure, it earnings a on as want for think time year to but migrations, get on those we lot to of so implementation. next Early get new to It's do I our don't as bit and it continuing. And there will take not into still the progresses. the

Optical is it negative Is going for on adjusted And my to first regarding quarter. last be IP EBITDA positive? or question

Yes.

up QX. -- the lower quarter, So, considerably than year-over-year, revenue had just again, in it we quarter, good but are lower expecting the will but margins in fourth not first seasonality, than at be we levels given the

So, year EBITDA see it was dramatically We'll likely ago. is final what but looks quarter better than a like, the negative. I what mix the the in think first adjusted

comes of question Tim from next Capital Savageaux Northland Markets. with line the Our

are a put when a think means But down more Tier to trying There's being or up that them. I -- I'm you I looking few numbers XX% in Edge talking Xs your something in that. so, about X% mean, about XXXX. ex it, here. Tier Xs I'm like at together Cloud talked of lot

and of you're and Tier grow So, the Xs really in honestly that anecdotal guide it enterprise, to A, be the stuff like looks we're federal right? much. growth sounds about But Cloud of drivers And that able Edge not if continue of is a from to you that kind ex lot seeing the very outlaid the should case.

Xs I'll guide. Am getting another this expecting something down there? year I flat Tier And implicit wrong follow in You're in up.

Yes.

the the of were mid-XXs. the down in Xs ballpark. of question, part first on Tier the So, Tim, That's sort

So the the I'm range, Tim. XX% the not question? at second sorry, part kind And of mid-XXs. was what of

that by talking was for answer the that don't know same is was both. if about, Yes, way. the Tier Xs I U.S. I

Edge. And that's -- Cloud well, pertains to for & only obviously,

For Tier Cloud & U.S. Tim. Xs. Edge, right, That's right,

U.S. Optical Well, time business be have right. X, it us that IP tell right would with a now. good All to about you if Tier

go last Well, on I don't have the a call of mentioned the this lot and around. of programs updates earnings one

mean compares. and for these I No, (inaudible)

X% me The Cloud to X, revenue Tier all it the for relative Edge given ways Cloud Edge it year-over-year in was the X Tier No, relative the & obviously. full increase can X%, excluding company in & year. be Yes. let corporate in other or were decline, At customers, to up U.S. the full U.S. IP just describe level, clear. we the two optical

factoring Okay. compare second And in flat, relatively -- guiding my the you're it what commentary. easy looks then seems was half is -- it U.S. -- and the number rest further question like doesn't like if in you're that look with terribly That's Tier positive looks declines you're the So, Xs. of consistent

the back. still starts when on come what spend outlook cautious being We're is the and incremental to Yes.

in seen federal. We that We're the in cautious about being service market are clearly looks growth Obviously, internationally in like. enterprise. segment. growing growing provider we've We're what

look next of months what visibility like the and So, few a second half we'll the here, into see year. we over get better the we

Okay.

and have beat right to I this Just to here. completely death, started should

that to do X% north in Tier & So, expect Cloud south or XXXX? of you be growth rate Xs in ex Edge

similar deals, gets as period think, momentum the I over The of internationally, Tim. a of programs, some in we time. a number, revenue the recognized probably these fact, book It's

start a on that. good we've got So,

enterprise, think international, I to so, And federal, relative XXXX. they year all grow this

Okay. Great.

Just X.X here. more

You've IP growth Optical got decelerating.

a contribution a it of you -- sort big is horribly. doesn't and bit had India just like sounds couple wins like not sound compare, of announced. tough a material of it What but -- You

quarters here do of of and contribution what big in have factored telco you in from utility sort the in when last your your couple So, XXXX? you've announced big

They're to not of Each tens Tim. this contributions. and millions dramatic of one single-digit tens revenue of the these year probably contributes millions line,

to grow. need that we to those continue of types keep so, us will And customers help adding

year. a Optical XX% at more the As be piece IP piece think product of grows this or we that. I mentioned, There'll of

Of there some will be don't course, regions grow. that

got in you've So, make other to up that areas.

So that's this our at best point. view

Okay.

Last me. next you're here. or margin was actually what us of IP breakeven, like a forecasting you combined, there more plus pretty to a So get grow. world decline your expect & Edge trying just I'm are chunk, looks the modest telling the at anecdotal third for can to Cloud commentary for seemed It looks India year. rest of question it growth like like If a significant indeed, to you're Optical significant least than flat. about there down the

want to try those, and just So, too. I reconcile

Yes.

points around we it that right software, but It is there now move pretty XXX & move is on ship, hardware is the it lot some here consistent. It of amount So, dramatically. services. percentage lot our Cloud will or best depending for of is gross margin of basis view a Edge a doesn't

not basis it's more change. range, don't than If significant we So, think in the so point I there's XXX is there a that. or much think, dramatic Tim,

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

and interest investor many got We've Yes. few Thank call look of there a and you the in to our San and of OFC conference optical for Congress some at Diego see you, being up Mobile towards We the coming the speaking forward World you your of Ribbon the Communications. thanks large everyone we'll with on in and upcoming March. in Barcelona weeks, end conferences. in

So, that our with concludes call. that, thank you, operator, and

you. Thank

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