Ribbon Communications Inc. Q1 FY2025 earnings call

• Momentum in Cloud & Edge continues as a growth engine, with strong demand from service providers and enterprises modernizing networks. - IP Optical segment sees momentum in Asia, Europe, Middle East, and North America. - First quarter sales flat YOY due to timing of enterprise projects, but much of the shortfall has been shipped and recognized in Q2. - Margins in Q1 were lower due to mix of shipments and lower volume, but expected to improve in Q2 with better mix. - Key projects include a new fiber network in the Philippines and a Fortune 500 AI contact center project.

Cloud & Edge segment: Sales grew approximately 6% year-over-year. Excluding maintenance revenue, product and services sales increased approximately 17% year-over-year. Adjusted EBITDA increased 17% year-over-year. Sales to global service providers were a primary driver, with total Cloud & Edge revenue up ~20% YOY, including a ~50% YOY increase to Verizon. Cloud & Edge sales to enterprise customers were down ~23% YOY due to timing of U.S. federal shipments. IP Optical segment: Revenue down 6% YOY versus prior year; excluding Eastern Europe, sales were up 25% YOY. Asia-PAC was a highlight, with India sales up 80% YOY and Southeast Asia up over 200% YOY. Gross margins for IP Optical were below expectations due to regional mix and product mix.

• Cloud & Edge segment projects ~20% sales growth YOY in Q2, driven by strong performance with Verizon, U.S. federal network modernization opportunities, and new enterprise wins. - IP Optical segment projects 5%-10% sequential growth in Q2, with continued momentum in Asia and opportunities in Europe, Middle East, and North America. - Revenue expected in range of $110M to $220M YOY increase of ~12% at midpoint, adjusted EBITDA in range of $28M to $32M YOY increase of 38% at midpoint.

• Uncertainty regarding U.S. tariffs and potential reciprocal trade barriers, though current impact is not expected to be material. The company is working with manufacturing partners to minimize cost impact passed to customers.

Q: Regarding book-to-bill 1.2 and tariff uncertainty, any pull ins due to tariffs?

A: No strong evidence of pull ins; bookings consistent across quarter.

Q: On tariff situation and customer plans, what's the outlook?

A: Customers not indicating strategy changes; software/services not impacted by tariffs, products from Mexico exempt, others working with manufacturers to mitigate costs.

Q: Update on AT&T's Neptune RAMP and wins?

A: Can't comment on AT&T's plans specifically, but bullish on IP Optical growth in North America.

Q: Verizon growth outlook, scaling with Verizon?

A: Expect Q2 to be similar to Q4 levels, with scaling in service portion of revenue, aiming to double migration rate as year progresses.

Q: Optical transport inventory and Tier 1 carrier pipeline?

A: Good growth in regions like India, Southeast Asia, with opportunities in rural broadband and data center interconnect; strong momentum in Asia-PAC and U.S. domestic market.