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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

February 15, 2023

 

Date of Report (Date of earliest event reported)

 

 

 

RIBBON COMMUNICATIONS INC.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware		001-38267		82-1669692
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

6500 Chase Oaks Blvd., Suite 100, Plano, TX 75023

(Address of Principal Executive Offices) (Zip Code)

 

(978) 614-8100

(Registrant’s telephone number, including area code)

 

N/A

(Former Name or Former Address, if Changed Since Last Report)

 

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

	¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
	¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
	¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
	¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.0001		RBBN		The Nasdaq Global Select Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

 

 

 

Item 2.02.

Results of Operations and Financial Condition.

 

The information in this Item 2.02 of this Current Report on Form 8-K (the "Current Report"), including Exhibit 99.1 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), otherwise subject to the liabilities of that Section or incorporated by reference in any filing under the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

On February 15, 2023, Ribbon Communications Inc. (the "Company") issued a press release reporting financial information for the quarter and year ended December 31, 2022, a copy of which is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

 

Item 9.01.

Financial Statements and Exhibits.

 

(d)          Exhibits.

 

99.1

Press Release of Ribbon Communications Inc., dated February 15, 2023.

104

Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: February 15, 2023	Ribbon Communications Inc.
	By:	/s/ Patrick Macken
		Name:	Patrick W. Macken
		Title:	Executive Vice President, Chief Legal Officer and Secretary

  

 

 

Exhibit 99.1

 

 

 

Ribbon Communications Inc. Reports
Fourth Quarter and Full Year 2022 Financial Results

 

Revenue Grew 13% Sequentially to $234 Million for the Fourth Quarter of 2022

IP Optical Sales Up 17% Year Over Year

 

 

Cash, cash equivalents, and restricted cash totaled $67 million at December 31, 2022.

 

“We are very encouraged with revenue and bookings momentum to close out the year and with the cash generation of the company during the quarter. Operating expenses were $5 million lower in the fourth quarter of 2022 compared to the fourth quarter of the prior year, and we expect to continue reducing our operating costs in 2023,” said Mick Lopez, Chief Financial Officer of Ribbon Communications.

 

 

 

 

Business Outlook¹

 

For 2023, the Company expects to build on the momentum from the second half of 2022, with a stronger portfolio and market presence, and to follow a normal seasonal pattern with the business accelerating as the year progresses.

 

For the first quarter of 2023, the Company projects revenue of $180 million to $190 million, up 7% year-over-year at the mid-point, constrained by a small number of specific supply chain shortages. Non-GAAP gross margin is projected in a range of 46% to 48%, lower than typical as a result of higher start-up costs associated with several new customer wins and product mix. Adjusted EBITDA is projected in a range of ($6) million to $1 million.

 

For the full year 2023, the Company projects revenue of $840 million to $870 million, up 4% year-over-year at the mid-point, non-GAAP gross margin of 53% to 54%, and Adjusted EBITDA of $95 million to $110 million, up 60% year-over-year at the mid-point. The Company’s outlook is based on current indications for its business, which are subject to change.

 

¹ Please see the reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures and additional information about the non-GAAP measures in the section entitled “Discussion of Non-GAAP Financial Measures” in the attached schedules.

 

Upcoming Investor Conference Schedule

 

	§	February 27 - March 2, 2023: Mobile World Congress.
	§	March 7 - 9, 2023: Optical Fiber Communication Conference and Exhibition.
	§	March 27 - 30, 2023: Enterprise Connect.
	§	May 25, 2023: B. Riley Securities 23rd Annual Institutional Investor Conference (one-on-one institutional investor meetings).

 

About Ribbon

 

Ribbon Communications (Nasdaq: RBBN) delivers communications software, IP and optical networking solutions to service providers, enterprises and critical infrastructure sectors globally. We engage deeply with our customers, helping them modernize their networks for improved competitive positioning and business outcomes in today's smart, always-on and data-hungry world. Our innovative, end-to-end solutions portfolio delivers unparalleled scale, performance, and agility, including core to edge software-centric solutions, cloud-native offers, leading-edge security and analytics tools, along with IP and optical networking solutions for 5G. We maintain a keen focus on our commitments to Environmental, Social and Governance (ESG) matters, offering an annual Sustainability Report to our stakeholders. To learn more about Ribbon visit rbbn.com.

 

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 regarding the Company’s projected financial results for the first quarter of 2023 and beyond; customer engagement and momentum; plans and objectives for future operations, including cost reductions; capital structure changes and plans for future product development and manufacturing and the expected benefits therefrom, are forward-looking statements. Without limiting the foregoing, the words “believes”, “estimates”, “expects”, “expectations”, “intends”, “may”, “plans”, “projects” and other similar language, are intended to identify forward-looking statements.

 

Forward-looking statements are based on the Company’s current expectations and assumptions regarding its 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. Actual results may differ materially from those contemplated in these forward-looking statements due to various risks, uncertainties and other important factors, including, among others, the effects of geopolitical instabilities and disputes, including between Russia and Ukraine and the impact of sanctions imposed as a result thereof; the potential impact of litigation; risks related to supply chain disruptions, including as a result of component availability; risks that the Company will not realize the estimated cost savings and/or anticipated benefits from its strategic restructuring efforts; the impact of restructuring and cost-containment activities; unpredictable fluctuations in quarterly revenue and operating results; risks related to the terms of the Company’s credit agreement including compliance with the financial covenants; risks resulting from rising interests rates and inflationary pressures; risks related to cybersecurity and data intrusion; failure to compete successfully against telecommunications equipment and networking companies; failure to grow the Company’s customer base or generate recurring business from existing customers; credit risks; the timing of customer purchasing decisions and the Company’s recognition of revenues; macroeconomic conditions, including inflation; market acceptance of the Company’s products and services; rapid technological and market change; the ability to protect Company intellectual property rights and obtain necessary licenses; the ability to maintain partner, reseller, distribution and vendor support and supply relationships; the potential for defects in the Company’s products; increases in tariffs, trade restrictions or taxes on the Company’s products; and currency fluctuations.

 

These factors are not intended to be an all-encompassing list of risks and uncertainties that may affect the Company's business and results from operations. Additional information regarding these and other factors can be found in the Company's reports filed with the Securities and Exchange Commission, including, without limitation, its Form 10-K for the year ended December 31, 2021. In providing forward-looking statements, the Company expressly disclaims any obligation to update these statements publicly or otherwise, whether as a result of new information, future events or otherwise, except as required by law.

 

 

 

 

Discussion of Non-GAAP Financial Measures

 

The Company’s management uses several different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of its business, making operating decisions, planning and forecasting future periods, and determining payments under compensation programs. The Company considers the use of non-GAAP financial measures helpful in assessing the core performance of its continuing operations and when planning and forecasting future periods. The Company’s annual financial plan is prepared on a non-GAAP basis and is approved by its board of directors. In addition, budgeting and forecasting for revenue and expenses are conducted on a non-GAAP basis, and actual results on a non-GAAP basis are assessed against the annual financial plan. The Company defines continuing operations as the ongoing results of its business adjusted for certain expenses and credits, as described below. The Company believes that providing non-GAAP information to investors will allow investors to view the financial results in the way its management views them and helps investors to better understand the Company’s core financial and operating performance and evaluate the efficacy of the methodology and information used by its management to evaluate and measure such performance.

 

While the Company’s management uses non-GAAP financial measures as tools to enhance its understanding of certain aspects of the Company’s financial performance, its management does not consider these measures to be a substitute for, or superior to, GAAP measures. In addition, the Company’s presentations of these measures may not be comparable to similarly titled measures used by other companies. These non-GAAP financial measures should not be considered alternatives for, or in isolation from, the financial information prepared and presented in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures. In particular, many of the adjustments to the Company’s financial measures reflect the exclusion of items that are recurring and will be reflected in its financial results for the foreseeable future.

 

Stock-Based Compensation

 

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. The Company believes that presenting non-GAAP operating results that exclude stock-based compensation provides investors with visibility and insight into its management’s method of analysis and its core operating performance.

 

Amortization of Acquired Technology (including software licenses); Amortization of Acquired Intangible Assets

 

Amortization amounts are inconsistent in frequency and amount and are significantly impacted by the timing and size of acquisitions. Amortization of acquired technology is reported separately within Cost of revenue and Amortization of acquired intangible assets is reported separately within Operating expenses. These items are reported collectively as Amortization of acquired intangible assets in the accompanying reconciliations of non-GAAP and GAAP financial measures. The Company believes that excluding non-cash amortization of these intangible assets facilitates the comparison of its financial results to its historical operating results and to other companies in its industry as if the acquired intangible assets had been developed internally rather than acquired.

 

Impairment of Goodwill

 

The Company performs its annual testing for impairment of goodwill in the fourth quarter each year. For the purpose of testing goodwill for impairment, all goodwill has been assigned to one of the Company’s two operating segments. The Company performs a fair value analysis using both an income and market approach, which encompasses a discounted cash flow analysis and a guideline public company analysis using selected multiples. Based on the results of the impairment test completed in the fourth quarter of 2021, the Company determined that the carrying value of its IP Optical Networks segment exceeded its fair value, and accordingly, recorded a non-cash impairment charge of $116 million. There was no impairment of the Company’s Cloud and Edge segment. The Company believes that such non-cash costs are not part of its core business or ongoing operations. Accordingly, the Company believes that excluding the goodwill impairment charge facilitates the comparison of the Company’s financial results to its historical operating results and to other companies in its industry.

 

Acquisition-, Disposal- and Integration-Related

 

The Company considers certain acquisition-, disposal- and integration-related costs to be unrelated to the organic continuing operations of its acquired businesses and the Company. Such costs are generally not relevant to assessing or estimating the long-term performance of the acquired assets. The Company excludes such acquisition-, disposal- and integration-related costs to allow more accurate comparisons of its financial results to its historical operations and the financial results of less acquisitive peer companies and allows management and investors to consider the ongoing operations of the business both with and without such expenses.

 

 

 

 

Restructuring and Related

 

The Company has recorded restructuring and related expense to streamline operations and reduce operating costs by closing and consolidating certain facilities and reducing its worldwide workforce. The Company believes that excluding restructuring and related expense facilitates the comparison of its financial results to its historical operating results and to other companies in its industry, as there are no future revenue streams or other benefits associated with these costs.

 

Interest Income on Debentures

 

The Company recorded paid-in-kind interest income on the American Cloud Technologies, Inc. (“AVCT”) Series A-1 convertible debentures (the “Debentures”) it received as consideration in connection with the sale of its Kandy Communications business (the “Kandy Sale”) through September 8, 2021, when the Debentures were converted to shares of AVCT common stock (the “Debenture Shares”), which increased their fair value. The Company excludes this interest income because it believes that such a gain is not part of its core business or ongoing operations.

 

Gain on Sale of Business

 

On May 12, 2021, the Company sold its QualiTech business, which it had acquired as part of its acquisition of ECI Telecom Group Ltd., to Hermon Laboratories, Ltd. As consideration, the Company received $2.9 million of cash and recorded a gain on the sale of $2.8 million. The Company excludes this gain because it believes that such gain is not part of its core business or ongoing operations.

 

Decrease in Fair Value of Investments

 

The Company calculated the fair values of the Debentures and the warrants to purchase shares of AVCT common stock it received as consideration in connection with the Kandy Sale (the “Warrants”) (prior to September 8, 2021) and the Debenture Shares and Warrants (effective September 8, 2021) and at each quarter-end until their disposal on August 29, 2022 when they were used as partial consideration in connection with the Company’s acquisition of perpetual software licenses from AVCT. The Company recorded any adjustments to their fair values in Other (expense) income, net. The Company excluded these gains and losses from the change in fair value of this investment because it believes that such gains or losses were not part of its core business or ongoing operations.

 

Tax Effect of Non-GAAP Adjustments

 

The Non-GAAP income tax provision is presented based on an estimated tax rate applied against forecasted annual non-GAAP income. The Non-GAAP income tax provision assumes no available net operating losses or valuation allowances for the U.S. because of reporting significant cumulative non-GAAP income over the past several years. The Company is reporting its non-GAAP quarterly income taxes by computing an annual rate for the Company and applying that single rate (rather than multiple rates by jurisdiction) to its consolidated quarterly results. The Company expects that this methodology will provide a consistent rate throughout the year and allow investors to better understand the impact of income taxes on its results. Due to the methodology applied to its estimated annual tax rate, the Company’s estimated tax rate on non-GAAP income will differ from its GAAP tax rate and from its actual tax liabilities.

 

Adjusted EBITDA

 

The Company uses Adjusted EBITDA as a supplemental measure to review and assess its performance. The Company calculates Adjusted EBITDA by excluding from (Income) loss from operations: depreciation; amortization of acquired intangible assets; stock-based compensation; impairment of goodwill; acquisition-, disposal- and integration-related expense; and restructuring and related expense. In general, the Company excludes the expenses that it considers to be non-cash and/or not part of its ongoing operations. The Company may exclude other items in the future that have those characteristics. Adjusted EBITDA is a non-GAAP financial measure that is used by the investing community for comparative and valuation purposes. The Company discloses this metric to support and facilitate dialogue with research analysts and investors. Other companies may calculate Adjusted EBITDA differently than the Company does, limiting its usefulness as a comparative measure.

 

 

 

RIBBON COMMUNICATIONS INC.

Consolidated Statements of Operations

(in thousands, except percentages and per share amounts)

(unaudited)

 

		Three months ended
		December 31,				September 30,				December 31,
		2022				2022				2021
Revenue:
Product		$	136,871			$	111,152			$	130,298
Service			96,768				95,975				100,279
Total revenue			233,639				207,127				230,577
Cost of revenue:
Product			75,919				59,866				70,165
Service			36,088				35,175				36,711
Amortization of acquired technology			7,619				7,768				8,908
Total cost of revenue			119,626				102,809				115,784
Gross profit			114,013				104,318				114,793
Gross margin			48.8	%			50.4	%			49.8	%
Operating expenses:
Research and development			50,517				49,366				51,609
Sales and marketing			37,939				36,365				42,067
General and administrative			13,172				12,118				13,226
Amortization of acquired intangible assets			7,350				7,508				7,493
Impairment of goodwill			-				-				116,000
Acquisition-, disposal- and integration-related			1,914				988				3,428
Restructuring and related			1,856				1,269				1,106
Total operating expenses			112,748				107,614				234,929
Income (loss) from operations			1,265				(3,296	)			(120,136	)
Interest expense, net			(5,911	)			(5,266	)			(3,995	)
Other expense, net			(1,735	)			(3,732	)			(8,546	)
Loss before income taxes			(6,381	)			(12,294	)			(132,677	)
Income tax benefit (provision)			26,869				(6,122	)			36,369
Net income (loss)		$	20,488			$	(18,416	)		$	(96,308	)
Income (loss) per share:
Basic		$	0.12			$	(0.12	)		$	(0.65	)
Diluted		$	0.12			$	(0.12	)		$	(0.65	)
Weighted average shares used to compute income (loss) per share:
Basic			168,163				158,921				148,675
Diluted			172,213				158,921				148,675

 

 

 

RIBBON COMMUNICATIONS INC.
Consolidated Statements of Operations
(in thousands, except percentages and per share amounts)
(unaudited)
		Year ended
		December 31,				December 31,
		2022				2021
Revenue:
Product		$	442,680			$	453,042
Service			377,080				391,915
Total revenue			819,760				844,957
Cost of revenue:
Product			245,145				214,745
Service			142,137				147,209
Amortization of acquired technology			31,542				38,343
Total cost of revenue			418,824				400,297
Gross profit			400,936				444,660
Gross margin			48.9	%			52.6	%
Operating expenses:
Research and development			203,676				194,948
Sales and marketing			147,766				150,279
General and administrative			51,053				53,661
Amortization of acquired intangible assets			29,646				28,283
Impairment of goodwill			-				116,000
Acquisition-, disposal- and integration-related			6,286				7,632
Restructuring and related			10,833				11,653
Total operating expenses			449,260				562,456
Loss from operations			(48,324	)			(117,796	)
Interest expense, net			(19,780	)			(15,831	)
Other expense, net			(44,495	)			(74,516	)
Loss before income taxes			(112,599	)			(208,143	)
Income tax benefit			14,516				30,958
Net loss		$	(98,083	)		$	(177,185	)
Loss per share
Basic		$	(0.63	)		$	(1.20	)
Diluted		$	(0.63	)		$	(1.20	)
Weighted average shares used to compute loss per share:
Basic			156,668				147,575
Diluted			156,668				147,575

 

 

 

RIBBON COMMUNICATIONS INC.
Consolidated Balance Sheets
(in thousands)
(unaudited)
		December 31,				December 31,
		2022				2021
Assets
Current assets:
Cash and cash equivalents		$	67,101			$	103,915
Restricted cash			161				2,570
Accounts receivable, net			267,244				282,917
Inventory			75,423				54,043
Other current assets			68,057				37,545
Total current assets			477,986				480,990
Property and equipment, net			44,832				47,685
Intangible assets, net			294,728				350,730
Goodwill			300,892				300,892
Investments			-				43,931
Deferred income taxes			53,649				47,287
Operating lease right-of-use assets			44,888				53,147
Other assets			38,589				23,075
		$	1,255,564			$	1,347,737
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of term debt*		$	20,058			$	20,058
Accounts payable			95,810				97,121
Accrued expenses and other			85,270				100,752
Operating lease liabilities			15,416				17,403
Deferred revenue			113,939				109,119
Total current liabilities			330,493				344,453
Long-term debt, net of current*			306,270				350,217
Operating lease liabilities, net of current			46,183				55,196
Deferred revenue, net of current			19,254				20,619
Deferred income taxes			3,750				8,116
Other long-term liabilities			31,187				41,970
Total liabilities			737,137				820,571
Commitments and contingencies
Stockholders' equity:
Common stock			17				15
Additional paid-in capital			1,941,569				1,875,234
Accumulated deficit			(1,453,744	)			(1,355,661	)
Accumulated other comprehensive income			30,585				7,578
Total stockholders' equity			518,427				527,166
		$	1,255,564			$	1,347,737

 

*Based on the current financial forecast, the Company continues to evaluate compliance with the financial covenants under the Company’s Senior Secured Credit Facilities, as amended (the “Credit Agreement”), for the first quarter of 2023 and beyond. While the Company believes that it has plans in place that will permit the Company to remain in compliance with such covenants under the Credit Agreement (including paying down debt, obtaining an amendment or waiver of the covenants from the lenders under the Credit Agreement, or raising additional capital), no such plans have been completed as of the date of this press release and no assurance can be provided that such plans, if necessary, will be successful. As a result, if the Company determines, prior to the completion of the audit of its 2022 financial statements, that a potential default may occur under the Credit Agreement in the next 12 months as a result of its failure to comply with the financial covenants and the Company has not completed any of the steps noted above to remedy a potential default, the Company may reclassify the indebtedness outstanding under the Credit Facility as “Current Indebtedness” for purposes of the Company’s balance sheet as of December 31, 2022.

 

 

 

RIBBON COMMUNICATIONS INC.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
		Year ended
		December 31,				December 31,
		2022				2021
Cash flows from operating activities:
Net loss		$	(98,083	)		$	(177,185	)
Adjustments to reconcile net loss to cash flows (used in) provided by operating activities:
Depreciation and amortization of property and equipment			15,295				16,962
Amortization of intangible assets			61,188				66,626
Amortization of debt issuance costs			2,308				4,763
Stock-based compensation			18,707				19,418
Impairment of goodwill			-				116,000
Deferred income taxes			(18,251	)			(45,596	)
Gain on sale of business			(62	)			(2,772	)
Decrease in fair value of investments			41,291				71,252
Foreign currency exchange losses			1,576				5,002
Changes in operating assets and liabilities:
Accounts receivable			14,285				(47,279	)
Inventory			(32,099	)			(9,029	)
Other operating assets			2,109				9,958
Accounts payable			(448	)			34,482
Accrued expenses and other long-term liabilities			(37,635	)			(50,324	)
Deferred revenue			3,455				6,904
Net cash (used in) provided by operating activities			(26,364	)			19,182
Cash flows from investing activities:
Purchases of property and equipment			(10,254	)			(17,132	)
Proceeds from sale of business			1,418				2,944
Purchases of software licenses			(3,300	)			-
Net cash used in investing activities			(12,136	)			(14,188	)
Cash flows from financing activities:
Borrowings under revolving line of credit			73,625				-
Principal payments on revolving line of credit			(73,625	)			-
Proceeds from issuance of term debt			-				74,625
Principal payments of term debt			(45,058	)			(92,176	)
Principal payments of finance leases			(595	)			(903	)
Payment of debt issuance costs			(1,046	)			(789	)
Proceeds from equity offering			52,067				-
Payment of equity offering issuance costs			(1,654	)			-
Proceeds from the exercise of stock options			1				24
Payment of tax withholding obligations related to net share settlements of restricted stock awards			(2,784	)			(14,464	)
Net cash provided by (used in) by financing activities			931				(33,683	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash			(1,654	)			(523	)
Net decrease in cash, cash equivalents and restricted cash			(39,223	)			(29,212	)
Cash, cash equivalents and restricted cash, beginning of year			106,485				135,697
Cash, cash equivalents and restricted cash, end of period		$	67,262			$	106,485

 

 

 

RIBBON COMMUNICATIONS INC.
Supplemental Information
(in thousands)
(unaudited)
The following tables provide the details of stock-based compensation 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												Year ended
		December 31,				September 30,				December 31,				December 31,				December 31,
		2022				2022				2021				2022				2021
Stock-based compensation
Cost of revenue - product		$	132			$	133			$	97			$	471			$	313
Cost of revenue - service			590				592				488				2,157				1,684
Cost of revenue			722				725				585				2,628				1,997
Research and development			1,373				1,289				1,243				5,108				4,253
Sales and marketing			1,656				1,567				2,011				6,074				7,218
General and administrative			1,461				1,260				1,168				4,897				5,950
Operating expense			4,490				4,116				4,422				16,079				17,421
Total stock-based compensation		$	5,212			$	4,841			$	5,007			$	18,707			$	19,418

 

 

 

RIBBON COMMUNICATIONS INC.
Reconciliation of Non-GAAP and GAAP Financial Measures
(in thousands, except per share amounts)
(unaudited)
		Three months ended
		December 31,				September 30,				December 31,
		2022				2022				2021
GAAP Gross margin			48.8	%			50.4	%			49.8	%
Stock-based compensation			0.3	%			0.4	%			0.3	%
Amortization of acquired technology			3.3	%			3.7	%			3.8	%
Non-GAAP Gross margin			52.4	%			54.5	%			53.9	%
GAAP Net income (loss)		$	20,488			$	(18,416	)		$	(96,308	)
Stock-based compensation			5,212				4,841				5,007
Amortization of acquired intangible assets			14,969				15,276				16,401
Impairment of goodwill			-				-				116,000
Acquisition-, disposal- and integration-related			1,914				988				3,428
Restructuring and related			1,856				1,269				1,106
Decrease in fair value of investments			-				1,881				6,508
Tax effect of non-GAAP adjustments			(28,950	)			(1,881	)			(50,830	)
Non-GAAP Net income		$	15,489			$	3,958			$	1,312
GAAP Diluted income (loss) per share		$	0.12			$	(0.12	)		$	(0.65	)
Stock-based compensation			0.03				0.03				0.03
Amortization of acquired intangible assets			0.09				0.09				0.12
Impairment of goodwill			-				-				0.77
Acquisition-, disposal- and integration-related			0.01				0.01				0.02
Restructuring and related			0.01				0.01				0.01
Decrease in fair value of investments			-				0.01				0.04
Tax effect of non-GAAP adjustments			(0.17	)			(0.01	)			(0.33	)
Non-GAAP Diluted earnings per share		$	0.09			$	0.02			$	0.01
Weighted average shares used to compute diluted earnings per share
Shares used to compute GAAP diluted loss per share			168,163				158,921				148,675
Shares used to compute Non-GAAP diluted earnings per share			172,213				163,463				153,898
GAAP Income (loss) from operations		$	1,265			$	(3,296	)		$	(120,136	)
Depreciation			3,607				3,915				4,278
Amortization of acquired intangible assets			14,969				15,276				16,401
Stock-based compensation			5,212				4,841				5,007
Impairment of goodwill			-				-				116,000
Acquisition-, disposal- and integration-related			1,914				988				3,428
Restructuring and related			1,856				1,269				1,106
Non-GAAP Adjusted EBITDA		$	28,823			$	22,993			$	26,084

 

 

 

RIBBON COMMUNICATIONS INC.
Reconciliation of Non-GAAP and GAAP Financial Measures
(in thousands, except per share amounts)
(unaudited)
		Year ended
		December 31,				December 31,
		2022				2021
GAAP Gross Margin			48.9	%			52.6	%
Stock-based compensation			0.3	%			0.2	%
Amortization of acquired technology			3.9	%			4.6	%
Non-GAAP Gross Margin			53.1	%			57.4	%
GAAP Net loss		$	(98,083	)		$	(177,185	)
Stock-based compensation			18,707				19,418
Amortization of acquired intangible assets			61,188				66,626
Impairment of goodwill			-				116,000
Acquisition-, disposal- and integration-related			6,286				7,632
Restructuring and related			10,833				11,653
Interest income on debentures			-				(3,556	)
Gain on sale of business			-				(2,772	)
Decrease in fair value of investments			41,292				74,809
Tax effect of non-GAAP adjustments			(22,875	)			(63,209	)
Non-GAAP Net income		$	17,348			$	49,416
GAAP Diluted loss per share		$	(0.63	)		$	(1.20	)
Stock-based compensation			0.12				0.14
Amortization of acquired intangible assets			0.39				0.44
Impairment of goodwill			-				0.77
Acquisition-, disposal- and integration-related			0.04				0.05
Restructuring and related			0.07				0.08
Gain on sale of business			-				(0.02	)
Interest income on debentures			-				(0.02	)
Decrease in fair value of investments			0.26				0.50
Tax effect of non-GAAP adjustments			(0.14	)			(0.42	)
Non-GAAP Diluted earnings per share		$	0.11			$	0.32
Weighted average shares used to compute diluted earnings per share
Shares used to compute GAAP diluted loss per share			156,668				147,575
Shares used to compute Non-GAAP diluted earnings per share			161,325				154,527
GAAP Loss from operations		$	(48,324	)		$	(117,796	)
Depreciation			15,295				16,962
Amortization of acquired intangible assets			61,188				66,626
Stock-based compensation			18,707				19,418
Impairment of goodwill			-				116,000
Acquisition-, disposal- and integration-related			6,286				7,632
Restructuring and related			10,833				11,653
Non-GAAP Adjusted EBITDA		$	63,985			$	120,495

 

 

 

RIBBON COMMUNICATIONS INC.

Reconciliation of Non-GAAP and GAAP Financial Measures - Outlook

(unaudited)

 

		Three months ending								Year ending
		March 31, 2023								December 31, 2023
		Range								Range
Revenue ($ millions)		$	180			$	190			$	840			$	870
Gross margin:
GAAP outlook			42.5	%			43.7	%			49.3	%			50.4	%
Stock-based compensation			0.4	%			0.4	%			0.3	%			0.3	%
Amortization of acquired technology			4.1	%			3.9	%			3.4	%			3.3	%
Non-GAAP outlook			47.0	%			48.0	%			53.0	%			54.0	%
Adjusted EBITDA ($ millions):
GAAP (loss) income from operations		$	(36.4	)		$	(29.4	)		$	(17.3	)		$	(2.3	)
Depreciation			3.8				3.8				15.4				15.4
Stock-based compensation			5.4				5.4				22.0				22.0
Amortization of acquired intangible assets			14.7				14.7				56.9				56.9
Acquisition-, disposal- and integration-related			0.4				0.4				0.6				0.6
Restructuring and related			6.1				6.1				17.4				17.4
Non-GAAP outlook		$	(6.0	)		$	1.0			$	95.0			$	110.0