Ribbon Communications Inc. Reports Second Quarter 2019 Financial Results
"Our second quarter financial results and improving profitability demonstrate the progress we are making," said
Second Quarter 2019 Financial Highlights1, 2
- GAAP revenue was
$145 million , compared with$137 million in the second quarter of 2018. - GAAP net income was
$49 million , compared with a net loss of$20 million in the second quarter of 2018. - Non-GAAP net income was
$16 million , compared with $14 million in the second quarter of 2018. - GAAP diluted earnings per share was
$0.45 , compared with a loss per share of$0.20 in the second quarter of 2018. - Non-GAAP diluted earnings per share was
$0.14 in both the second quarter of 2019 and 2018. - Non-GAAP Adjusted EBITDA was
$22 million , compared with$20 million in the second quarter of 2018.
The Company resolved an intellectual property infringement dispute with a competitor, resulting in a
- The Company repurchased and retired approximately 976,000 shares of common stock at an average price of
$4.65 for a total of$5 million in the second quarter of 2019. - Cash was
$51 million atJune 30, 2019 , compared with cash and investments of$46 million atMarch 31, 2019 .
"Revenue was
Second Quarter 2019 Customer and Company Highlights
- A national telecommunications service provider in
Asia selected Ribbon to transform its nationwide communication services network using Ribbon's portfolio of core and session software solutions and services. VOD Communications , a value-added distributor of technology and converged communications solutions focusing on the enterprise, SMB and consumer markets inSouthern Africa , added Ribbon's Network Edge Orchestration, a hybrid Cloud/Edge solution to its distribution portfolio.- Ribbon extended its partnership with
Neustar , a leading global information services provider and the exclusive host of the ATIS Robocalling Testbed, to deliver a comprehensive solution designed to combat robocalling and call spoofing. - A major service provider in the US continued deployments of Ribbon's session software, transformation solutions and services associated with its mobile, fixed and business network service offerings.
- A major global financial institution began deploying Ribbon's session software and Kandy CPaaS3 solutions to secure and enhance its
Unified Communications environments with an intelligent session layer for its network. - A service provider and a public sector enterprise customer chose Ribbon Analytics solutions and applications for enhanced network visibility and security.
Business Outlook1,2
Effective as of the second quarter of 2019, the Company no longer increases non-GAAP results by adding back revenue lost in purchase accounting. The Company's Adjusted EBITDA guidance, taking into account this change in practice, is approximately
1Please see the reconciliation of non-GAAP and GAAP financial measures, and additional information about non-GAAP measures in the press release appendix.
2Effective as of the second quarter of 2019, the Company no longer increases non-GAAP revenue for the impact of purchase accounting on revenue; effective as of the first quarter of 2019, the Company no longer increases non-GAAP revenue for the impact of the adoption in 2018 of the new revenue standard.
3CPaaS is defined as communications platform as a service.
Conference Call Details
Ribbon will offer a live, listen-only webcast of the conference call to discuss its financial results for the second quarter ended
Conference Call Details:
Date:
Time:
Dial-in number (Domestic): 877-407-2991
Dial-in number (Intl): 201-389-0925
Instant Telephone Access: Call me™
Replay information:
A telephone playback of the call will be available following the conference call until
Investor Relations
+1 (212) 871-3927
IR@rbbn.com
+1 (214) 695-2214
dwatson@rbbn.com
+1 (646) 741-1974
cberthier@rbbn.com
Industry Analyst Relations
+1 (708) 383-3387
mcooper@rbbn.com
About
Important Information Regarding Forward-Looking Statements
The information in this release contains "forward-looking" statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, which are subject to a number of risks and uncertainties. All statements other than statements of historical facts contained in this release, including without limitation statements made by our chief executive officer and our chief financial officer regarding our anticipated financial performance, statements in the sections "Second Quarter 2019 Financial Highlights" and "Business Outlook" statements regarding our future expenses, results of operations and financial position, potential stock repurchases, business strategy, strategic position, and plans and objectives of management for future operations, are forward-looking statements. Without limiting the foregoing, the words "believes", "estimates", "expects", "expectations", "intends", "may", "plans", "projects" and other similar language, whether in the negative or affirmative, are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.
Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated in these forward-looking statements due to various risks, uncertainties and other important factors, including our ability to realize benefits from acquisitions that we have completed; the effects of disruption from acquisitions, making it more difficult to maintain relationships with employees, customers, business partners or government entities; the timing of customer purchasing decisions and our recognition of revenues; economic conditions; our ability to recruit and retain key personnel; difficulties supporting our strategic focus on channel sales; difficulties retaining and expanding our customer base; difficulties leveraging market opportunities; the impact of restructuring and cost-containment activities; litigation; actions taken by significant stockholders; difficulties providing solutions that meet the needs of customers; market acceptance of our products and services; rapid technological and market change; our ability to protect our intellectual property rights; our ability to maintain partner, reseller, distribution and vendor support and supply relationships; higher risks in international operations and markets; the impact of increased competition; increases in tariffs, trade restrictions or taxes on our products; currency fluctuations; changes in the market price of our common stock; and/or failure or circumvention of our controls and procedures.
Our forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements express or implied by the forward-looking statements. We caution you against relying on any of these forward-looking statements. For further information regarding risks and uncertainties associated with
Discussion of Non-GAAP Financial Measures
Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. In particular, many of the adjustments to Ribbon's financial measures reflect the exclusion of items that are recurring and will be reflected in our financial results for the foreseeable future.
Acquisition-Related Revenue and Cost of Revenue; Impact of New Revenue Standard
We provide the historical supplementary non-GAAP financial measure of non-GAAP Total revenue, which, for periods prior to the second quarter of 2019, included revenue related to our acquisitions that we would have recognized but for the purchase accounting treatment of these transactions, and which, for periods prior to the first quarter of 2019, included eliminated revenue resulting from our adoption of the new revenue recognition standard in 2018. Effective for the second quarter of 2019 and for subsequent reporting periods, we no longer include any increases to non-GAAP revenue arising from the purchase accounting treatment of assumed deferred revenue. Effective for the first quarter of 2019 and for subsequent reporting periods, we no longer include any increases to non-GAAP revenue arising from the 2018 revenue standard adoption. Therefore, for the second quarter of 2019 and for subsequent reporting periods, our non-GAAP revenue is equivalent to our GAAP revenue.
Stock-Based Compensation
Stock-based compensation expense is different from other forms of compensation, as it is a non-cash expense. For example, a cash salary generally has a fixed and unvarying cash cost. In contrast, the expense associated with an equity-based award is generally unrelated to the amount of cash ultimately received by the employee, and the cost to us is based on a stock-based compensation valuation methodology, subjective assumptions and the variety of award types, all of which may vary over time. We evaluate performance without these measures because stock-based compensation expense is influenced by the Company's stock price and other factors such as volatility and interest rates that are beyond our control. The expense related to stock-based awards is generally not controllable in the short-term and can vary significantly based on the timing, size and nature of awards granted. As such, we do not include such charges in our operating plans, and we believe that presenting non-GAAP operating results that exclude stock-based compensation provides investors with visibility and insight into our management's method of analysis and the Company's core operating performance. It is reasonable to expect that stock-based compensation will continue in future periods.
Amortization of Intangible Assets
We exclude the amortization of acquired intangible assets from non-GAAP expense and income measures. These amortization amounts are inconsistent in frequency and amount and are significantly impacted by the timing and size of acquisitions. Although we exclude amortization of acquired intangible assets from our non-GAAP expenses, we believe that it is important for investors to understand that intangible assets contribute to revenue generation. We believe that excluding the non-cash amortization of intangible assets facilitates the comparison of our financial results to our historical operating results and to other companies in our industry as if the acquired intangible assets had been developed internally rather than acquired. Amortization of intangible assets that relate to past acquisitions will recur in future periods until such intangible assets have been fully amortized.
Acquisition-Related Facilities Adjustments
GAAP accounting requires that the deferred rent liability of an acquired company be written off as part of purchase accounting and that the combined company's rent expense on a straight-line basis begin as of the acquisition date. As a result, we recorded more rent expense than would have been recognized but for the purchase accounting treatment of GENBAND's assumed deferred rent liability. We included this adjustment, which related to the acquisition of GENBAND, through the fourth quarter of 2018, to allow for more complete comparisons to the financial results of our historical operations and the financial results of peer companies.
Litigation Costs
We were involved in litigation with a certain competitor with whom we reached a settlement in the second quarter of 2019, under which the competitor agreed to pay us an aggregate amount of
Acquisition- and Integration-Related Expense
We consider certain acquisition- and integration-related costs to be unrelated to the organic continuing operations of our acquired businesses and the Company and they are generally not relevant to assessing or estimating the long-term performance of the acquired assets. In addition, the size, complexity and/or volume of an acquisition, which often drives the magnitude of acquisition- and integration-related costs, may not be indicative of future acquisition- and integration-related costs. By excluding these acquisition- and integration-related costs from our non-GAAP measures, management is better able to evaluate our ability to utilize our existing assets and estimate the long-term value that acquired assets will generate for us. We exclude certain acquisition- and integration-related costs to allow more accurate comparisons of our financial results to our historical operations and the financial results of less acquisitive peer companies. In addition, we believe that providing supplemental non-GAAP measures that exclude these items allows management and investors to consider the ongoing operations of the business both with and without such expenses.
Restructuring and Related Expense
We have recorded restructuring and related expense to streamline operations and reduce operating costs by closing and consolidating certain facilities and reducing our worldwide workforce. We review our restructuring accruals and facilities requirements regularly and record adjustments to these estimates as required. We believe that excluding restructuring and related expense facilitates the comparison of our financial results to our historical operating results and to other companies in our industry, as there are no future revenue streams or other benefits associated with these costs.
Gain on Litigation Settlement
We were involved in litigation with a certain competitor with whom we reached a settlement in the second quarter of 2019, under which the competitor agreed to pay us an aggregate amount of
Reduction in Deferred Purchase Consideration
We recorded
Tax Effect of Non-GAAP Adjustments
Beginning with the second quarter of 2019 and for subsequent reporting periods, non-GAAP income tax expense is calculated based on an estimated tax rate applied against forecasted annual non-GAAP income. The non-GAAP income tax expense assumes no available net operating losses or any valuation allowances as a result of reporting significant cumulative non-GAAP income over the past several years. Due to the methodology applied to our estimated annual tax rate as described above, our estimated tax rate on non-GAAP income will differ from our GAAP tax rate and from our actual tax liabilities.
Adjusted EBITDA
We use Adjusted EBITDA as a supplemental measure to review and assess our performance. We calculate Adjusted EBITDA by excluding from net income (loss): interest income (expense), net; income tax provision; depreciation; and amortization of intangible assets. In addition, we exclude from net income (loss): historical adjustments to revenue and cost of revenue related to revenue reductions resulting from purchase accounting (for periods prior to the second quarter of 2019 only) and adoption of the new revenue standard (for periods prior to the first quarter of 2019 only); stock-based compensation expense; acquisition-related facilities adjustments; certain litigation costs; acquisition- and integration-related expense; restructuring and related expense; and other income (expense), net. In general, we add back the expenses that we consider to be non-cash and/or not part of our ongoing operations. Adjusted EBITDA is a non-GAAP financial measure that is used by our investing community for comparative and valuation purposes. We disclose this metric to support and facilitate our dialogue with research analysts and investors. Other companies may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.
We believe that providing non-GAAP information to investors, in addition to the GAAP presentation, will allow investors to view the financial results in the way management views them. We further believe that providing this information helps investors to better understand our core financial and operating performance and evaluate the efficacy of the methodology and information used by our management to evaluate and measure such performance.
RIBBON COMMUNICATIONS INC. |
||||||||
Consolidated Statements of Operations |
||||||||
(in thousands, except percentages and per share amounts) |
||||||||
(unaudited) |
||||||||
Three months ended |
||||||||
June 30, |
March 31, |
June 30, |
||||||
2019 |
2019 |
2018 |
||||||
Revenue: |
||||||||
Product |
$ 72,059 |
$ 47,480 |
$ 63,123 |
|||||
Service |
73,362 |
71,448 |
74,238 |
|||||
Total revenue |
145,421 |
118,928 |
137,361 |
|||||
Cost of revenue: |
||||||||
Product |
36,433 |
33,147 |
30,278 |
|||||
Service |
28,315 |
29,192 |
31,972 |
|||||
Total cost of revenue |
64,748 |
62,339 |
62,250 |
|||||
Gross profit |
80,673 |
56,589 |
75,111 |
|||||
Gross margin: |
||||||||
Product |
49.4% |
30.2% |
52.0% |
|||||
Service |
61.4% |
59.1% |
56.9% |
|||||
Total gross margin |
55.5% |
47.6% |
54.7% |
|||||
Operating expenses: |
||||||||
Research and development |
35,301 |
35,933 |
35,604 |
|||||
Sales and marketing |
28,893 |
30,059 |
30,738 |
|||||
General and administrative |
12,466 |
18,694 |
15,028 |
|||||
Acquisition- and integration-related |
1,965 |
3,199 |
4,280 |
|||||
Restructuring and related |
9,144 |
4,932 |
6,097 |
|||||
Total operating expenses |
87,769 |
92,817 |
91,747 |
|||||
Loss from operations |
(7,096) |
(36,228) |
(16,636) |
|||||
Interest expense, net |
(1,262) |
(1,364) |
(735) |
|||||
Other income (expense), net |
62,861 |
7,774 |
(2,052) |
|||||
Income (loss) before income taxes |
54,503 |
(29,818) |
(19,423) |
|||||
Income tax provision |
(5,033) |
(1,014) |
(499) |
|||||
Net income (loss) |
$ 49,470 |
$ (30,832) |
$ (19,922) |
|||||
Earnings (loss) per share: |
||||||||
Basic |
$ 0.45 |
$ (0.29) |
$ (0.20) |
|||||
Diluted |
$ 0.45 |
$ (0.29) |
$ (0.20) |
|||||
Shares used to compute earnings (loss) per share: |
||||||||
Basic |
110,394 |
108,167 |
102,160 |
|||||
Diluted |
110,698 |
108,167 |
102,160 |
|||||
RIBBON COMMUNICATIONS INC. |
||||||
Consolidated Statements of Operations |
||||||
(in thousands, except percentages and per share amounts) |
||||||
(unaudited) |
||||||
Six months ended |
||||||
June 30, |
June 30, |
|||||
2019 |
2018 |
|||||
Revenue: |
||||||
Product |
$ 119,539 |
$ 114,654 |
||||
Service |
144,810 |
143,887 |
||||
Total revenue |
264,349 |
258,541 |
||||
Cost of revenue: |
||||||
Product |
69,580 |
63,292 |
||||
Service |
57,507 |
64,865 |
||||
Total cost of revenue |
127,087 |
128,157 |
||||
Gross profit |
137,262 |
130,384 |
||||
Gross margin: |
||||||
Product |
41.8% |
44.8% |
||||
Service |
60.3% |
54.9% |
||||
Total gross margin |
51.9% |
50.4% |
||||
Operating expenses: |
||||||
Research and development |
71,234 |
74,653 |
||||
Sales and marketing |
58,952 |
62,664 |
||||
General and administrative |
31,160 |
30,629 |
||||
Acquisition- and integration-related |
5,164 |
8,692 |
||||
Restructuring and related |
14,076 |
12,765 |
||||
Total operating expenses |
180,586 |
189,403 |
||||
Loss from operations |
(43,324) |
(59,019) |
||||
Interest expense, net |
(2,626) |
(1,334) |
||||
Other income (expense), net |
70,635 |
(1,804) |
||||
Income (loss) before income taxes |
24,685 |
(62,157) |
||||
Income tax provision |
(6,047) |
(2,669) |
||||
Net income (loss) |
$ 18,638 |
$ (64,826) |
||||
Earnings (loss) per share: |
||||||
Basic |
$ 0.17 |
$ (0.64) |
||||
Diluted |
$ 0.17 |
$ (0.64) |
||||
Shares used to compute earnings (loss) per share: |
||||||
Basic |
109,239 |
102,039 |
||||
Diluted |
109,672 |
102,039 |
||||
RIBBON COMMUNICATIONS INC. |
||||||
Consolidated Balance Sheets |
||||||
(in thousands) |
||||||
(unaudited) |
||||||
June 30, |
December 31, |
|||||
2019 |
2018 |
|||||
Assets |
||||||
Current assets: |
||||||
Cash and cash equivalents |
$ 51,186 |
$ 43,694 |
||||
Marketable securities |
- |
7,284 |
||||
Accounts receivable, net |
155,415 |
187,853 |
||||
Inventory |
16,509 |
22,602 |
||||
Other current assets |
27,484 |
17,002 |
||||
Total current assets |
250,594 |
278,435 |
||||
Property and equipment, net |
28,297 |
27,042 |
||||
Intangible assets, net |
238,022 |
251,391 |
||||
Goodwill |
389,196 |
383,655 |
||||
Deferred income taxes |
5,785 |
9,152 |
||||
Operating lease right-of-use assets |
40,029 |
- |
||||
Other assets |
25,021 |
7,484 |
||||
$ 976,944 |
$ 957,159 |
|||||
Liabilities and Stockholders' Equity |
||||||
Current liabilities: |
||||||
Current portion of long-term debt |
$ 2,500 |
$ - |
||||
Revolving credit facility |
35,000 |
55,000 |
||||
Accounts payable |
33,499 |
45,304 |
||||
Accrued expenses and other |
54,693 |
84,263 |
||||
Operating lease liabilities |
7,800 |
- |
||||
Deferred revenue |
96,944 |
105,087 |
||||
Total current liabilities |
230,436 |
289,654 |
||||
Long-term debt, net of current |
47,215 |
- |
||||
Long-term debt, related party |
- |
24,100 |
||||
Operating lease liabilities, net of current |
40,247 |
- |
||||
Deferred revenue, net of current |
15,115 |
17,572 |
||||
Deferred income taxes |
5,031 |
4,738 |
||||
Other long-term liabilities |
12,331 |
30,797 |
||||
Total liabilities |
350,375 |
366,861 |
||||
Commitments and contingencies |
||||||
Stockholders' equity: |
||||||
Common stock |
11 |
11 |
||||
Additional paid-in capital |
1,740,563 |
1,723,576 |
||||
Accumulated deficit |
(1,118,354) |
(1,136,992) |
||||
Accumulated other comprehensive income |
4,349 |
3,703 |
||||
Total stockholders' equity |
626,569 |
590,298 |
||||
$ 976,944 |
$ 957,159 |
|||||
RIBBON COMMUNICATIONS INC. |
|||||||
Consolidated Statements of Cash Flows |
|||||||
(in thousands) |
|||||||
(unaudited) |
|||||||
Six months ended |
|||||||
June 30, |
June 30, |
||||||
2019 |
2018 |
||||||
Cash flows from operating activities: |
|||||||
Net income (loss) |
$ 18,638 |
$ (64,826) |
|||||
Adjustments to reconcile net income (loss) to cash flows provided by (used in) operating activities: |
|||||||
Depreciation and amortization of property and equipment |
5,891 |
5,318 |
|||||
Amortization of intangible assets |
24,569 |
24,273 |
|||||
Stock-based compensation |
5,669 |
4,905 |
|||||
Deferred income taxes |
4,358 |
817 |
|||||
Foreign currency exchange losses |
521 |
2,079 |
|||||
Reduction in deferred purchase consideration |
(8,124) |
- |
|||||
Changes in operating assets and liabilities: |
|||||||
Accounts receivable |
33,121 |
28,752 |
|||||
Inventory |
6,159 |
2,077 |
|||||
Other operating assets |
(20,851) |
(275) |
|||||
Accounts payable |
(12,763) |
(13,872) |
|||||
Accrued expenses and other long-term liabilities |
(17,129) |
(15,203) |
|||||
Deferred revenue |
(10,940) |
3,264 |
|||||
Net cash provided by (used in) operating activities |
29,119 |
(22,691) |
|||||
Cash flows from investing activities: |
|||||||
Purchases of property and equipment |
(6,153) |
(3,492) |
|||||
Maturities of marketable securities |
7,295 |
4,278 |
|||||
Net cash provided by investing activities |
1,142 |
786 |
|||||
Cash flows from financing activities: |
|||||||
Borrowings under revolving line of credit |
92,000 |
25,000 |
|||||
Principal payments on revolving line of credit |
(112,000) |
(25,000) |
|||||
Proceeds from issuance of long-term debt |
50,000 |
- |
|||||
Principal payment of debt, related party |
(24,716) |
- |
|||||
Payment of deferred purchase consideration |
(21,876) |
- |
|||||
Principal payments on financing leases |
(500) |
(293) |
|||||
Payment of debt issuance costs |
(884) |
(624) |
|||||
Proceeds from the exercise of stock options |
190 |
10 |
|||||
Proceeds from the sale of common stock in connection with employee stock purchase plan |
506 |
- |
|||||
Payment of tax withholding obligations related to net share settlements of restricted stock awards |
(1,080) |
(716) |
|||||
Repurchase of common stock |
(4,536) |
- |
|||||
Net cash used in financing activities |
(22,896) |
(1,623) |
|||||
Effect of exchange rate changes on cash and cash equivalents |
127 |
(134) |
|||||
Net increase (decrease) in cash and cash equivalents |
7,492 |
(23,662) |
|||||
Cash and cash equivalents, beginning of year |
43,694 |
57,073 |
|||||
Cash and cash equivalents, end of period |
$ 51,186 |
$ 33,411 |
RIBBON COMMUNICATIONS INC. |
||||||||||||
Supplemental Information |
||||||||||||
(in thousands) |
||||||||||||
(unaudited) |
||||||||||||
The following tables provide the details of stock-based compensation and amortization of intangible assets included as components of other line items in the Company's Consolidated Statements of Operations and the line items in which these amounts are reported. |
||||||||||||
Three months ended |
Six months ended |
|||||||||||
June 30, |
March 31, |
June 30, |
June 30, |
June 30, |
||||||||
2019 |
2019 |
2018 |
2019 |
2018 |
||||||||
Stock-based compensation |
||||||||||||
Cost of revenue - product |
$ 22 |
$ 14 |
$ 19 |
$ 36 |
$ 70 |
|||||||
Cost of revenue - service |
151 |
92 |
67 |
243 |
199 |
|||||||
Cost of revenue |
173 |
106 |
86 |
279 |
269 |
|||||||
Research and development expense |
331 |
507 |
151 |
838 |
1,051 |
|||||||
Sales and marketing expense |
560 |
984 |
485 |
1,544 |
1,359 |
|||||||
General and administrative expense |
466 |
2,542 |
1,359 |
3,008 |
2,226 |
|||||||
Operating expense |
1,357 |
4,033 |
1,995 |
5,390 |
4,636 |
|||||||
Total stock-based compensation |
$ 1,530 |
$ 4,139 |
$ 2,081 |
$ 5,669 |
$ 4,905 |
|||||||
Amortization of intangible assets |
||||||||||||
Cost of revenue - product |
$ 10,092 |
$ 9,645 |
$ 9,270 |
$ 19,737 |
$ 18,862 |
|||||||
Sales and marketing expense |
2,555 |
2,277 |
2,694 |
4,832 |
5,411 |
|||||||
Total amortization of intangible assets |
$ 12,647 |
$ 11,922 |
$ 11,964 |
$ 24,569 |
$ 24,273 |
RIBBON COMMUNICATIONS INC. |
|||||
Reconciliation of Non-GAAP and GAAP Financial Measures |
|||||
(in thousands, except per share amounts) |
|||||
(unaudited) |
|||||
Three months ended |
|||||
June 30, |
March 31, |
June 30, |
|||
2019 |
2019 |
2018 |
|||
GAAP Total revenue |
$ 145,421 |
$ 118,928 |
$ 137,361 |
||
Acquisition-related revenue adjustment** |
- |
2,798 |
4,288 |
||
Adjustment for new revenue standard*** |
- |
- |
2,949 |
||
Non-GAAP Total revenue |
$ 145,421 |
$ 121,726 |
$ 144,598 |
||
GAAP Net income (loss) |
$ 49,470 |
$ (30,832) |
$ (19,922) |
||
Acquisition-related revenue adjustment** |
- |
2,798 |
4,288 |
||
Adjustment for new revenue standard*** |
- |
- |
2,949 |
||
Stock-based compensation |
1,530 |
4,139 |
2,081 |
||
Amortization of intangible assets |
12,647 |
11,922 |
11,964 |
||
Acquisition-related facilities adjustment |
- |
- |
252 |
||
Litigation costs |
1,315 |
6,186 |
1,901 |
||
Acquisition- and integration-related expense |
1,965 |
3,199 |
4,280 |
||
Restructuring and related expense |
9,144 |
4,932 |
6,097 |
||
Gain on litigation settlement |
(63,000) |
- |
- |
||
Reduction in deferred purchase consideration |
- |
(8,124) |
- |
||
Tax effect of non-GAAP adjustments |
2,625 |
- |
- |
||
Non-GAAP net income (loss) |
$ 15,696 |
$ (5,780) |
$ 13,890 |
||
Earnings (loss) per share |
|||||
GAAP Diluted earnings per share or (loss) per share |
$ 0.45 |
$ (0.29) |
$ (0.20) |
||
Acquisition-related revenue adjustment** |
- |
0.03 |
0.04 |
||
Adjustment for new revenue standard*** |
- |
- |
0.03 |
||
Stock-based compensation |
0.01 |
0.04 |
0.02 |
||
Amortization of intangible assets |
0.12 |
0.11 |
0.13 |
||
Acquisition-related facilities adjustment |
- |
- |
* |
||
Litigation costs |
0.01 |
0.06 |
0.02 |
||
Acquisition- and integration-related expense |
0.02 |
0.03 |
0.04 |
||
Restructuring and related expense |
0.08 |
0.05 |
0.06 |
||
Gain on litigation settlement |
(0.57) |
- |
- |
||
Reduction in deferred purchase consideration |
- |
(0.08) |
- |
||
Tax effect of non-GAAP adjustments |
0.02 |
- |
- |
||
Non-GAAP Diluted earnings per share or (loss) per share |
$ 0.14 |
$ (0.05) |
$ 0.14 |
||
Shares used to compute diluted earnings per share or (loss) per share |
|||||
GAAP Shares used to compute diluted earnings per share or (loss) per share |
110,698 |
108,167 |
102,160 |
||
Non-GAAP Shares used to compute diluted earnings per share or (loss) per share |
110,698 |
108,167 |
102,334 |
||
* Less than $0.01 impact on earnings (loss) per share |
|||||
** Effective Q2 2019, the Company no longer adjusts for the impact of purchase accounting on revenue |
|||||
*** Effective Q1 2019, the Company no longer adjusts for the impact of the adoption in 2018 of the new revenue standard |
RIBBON COMMUNICATIONS INC. |
|||||
Reconciliation of Non-GAAP and GAAP Financial Measures |
|||||
(in thousands, except per share amounts) |
|||||
(unaudited) |
|||||
Three months ended |
|||||
June 30, |
March 31, |
June 30, |
|||
2019 |
2019 |
2018 |
|||
Adjusted EBITDA: |
|||||
GAAP Net income (loss) |
$ 49,470 |
$ (30,832) |
$ (19,922) |
||
Interest expense, net |
1,262 |
1,364 |
735 |
||
Income tax provision |
5,033 |
1,014 |
499 |
||
Depreciation |
2,970 |
2,921 |
2,811 |
||
Amortization of intangible assets |
12,647 |
11,922 |
11,964 |
||
Acquisition-related revenue adjustment* |
- |
2,798 |
4,288 |
||
Adjustment for new revenue standard** |
- |
- |
2,949 |
||
Stock-based compensation |
1,530 |
4,139 |
2,081 |
||
Acquisition-related facilities adjustment |
- |
- |
252 |
||
Litigation costs |
1,315 |
6,186 |
1,901 |
||
Acquisition- and integration-related expense |
1,965 |
3,199 |
4,280 |
||
Restructuring and related expense |
9,144 |
4,932 |
6,097 |
||
Other (income) expense, net |
(62,861) |
(7,774) |
2,052 |
||
Non-GAAP Adjusted EBITDA |
$ 22,475 |
$ (131) |
$ 19,987 |
||
* Effective Q2 2019, the Company no longer adjusts for the impact of purchase accounting on revenue |
|||||
** Effective Q1 2019, the Company no longer adjusts for the impact of the adoption in 2018 of the new revenue standard |
|||||
RIBBON COMMUNICATIONS INC. |
|||
Reconciliation of Non-GAAP and GAAP Financial Measures - Outlook |
|||
Adjusted EBITDA: Ribbon has not provided a reconciliation of Adjusted EBITDA for the year ending December 31, 2019, as it is unable to project without unreasonable efforts the comparable GAAP net loss figure, which includes interest expense, net; income tax provision; depreciation; amortization of intangible assets; stock-based compensation; settlement expense; certain litigation costs; restructuring and related expense; and other income (expense), net. |
|||
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