0001708055-24-000014 | 10-Q | XBRL Viewer | Ribbon Communications INC

RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES

9 Months Ended

Sep. 30, 2024

RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES

RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES

(8) RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES

The Company recorded restructuring and related expense aggregating $3.8 million and $2.7 million in the three months ended September 30, 2024 and 2023, respectively and $8.8 million and $13.9 million in the nine months ended September 30, 2024 and 2023, respectively. Restructuring and related expense includes restructuring expense (primarily severance and related costs), estimated future variable lease costs for vacated properties with no intent or ability of sublease, and accelerated rent amortization expense.

For restructuring events that involve lease assets and liabilities, the Company applies lease reassessment and modification guidance and evaluates the right-of-use assets for potential impairment. If the Company plans to exit all or distinct portions of a facility and does not have the ability or intent to sublease, the Company will accelerate the amortization of each of those lease components through the vacate date. The accelerated amortization is recorded as a component of Restructuring and related expense in the Company’s condensed consolidated statements of operations. Related variable lease expenses will continue to be expensed as incurred through the vacate date, at which time the Company will reassess the liability balance to ensure it appropriately reflects the remaining liability associated with the premises and record a liability for the estimated future variable lease costs.

Accelerated amortization of lease assets is recognized from the date that the Company commences the plan to fully or partially vacate a facility, for which there is no intent or ability to enter into a sublease, through the final vacate date. Accelerated amortization of lease assets that are included as a component of restructuring and related expense are excluded from the restructuring accrual activity tables below, as the liability for lease payments for these facilities is included as a component of current and noncurrent Operating lease liabilities in the Company’s condensed consolidated balance sheets at September 30, 2024 and December 31, 2023 (see Note 16). The Company may incur additional future expense if it is unable to sublease other locations included in the Company’s facilities consolidation initiatives.

Restructuring and related expense for the three and nine months ended September 30, 2024 and 2023 was comprised of the following (in thousands):


	Three months ended				Nine months ended
	September 30,		September 30,		September 30,		September 30,
	2024		2023		2024		2023
Severance and related costs	$	2,289	$	804	$	4,264	$	9,355
Variable and other facilities-related costs		1,505		1,653		4,515		3,784
Accelerated amortization of lease assets due to cease-use		—		223		—		785
	$	3,794	$	2,680	$	8,779	$	13,924

The CODM approved workforce reductions in 2024 for certain of the Company’s operating locations to correspond with the current sales levels in those areas. The Company recorded $2.2 million in the three months ended September 30, 2024 related to these actions. Any potential positions eliminated in countries outside of the United States are subject to local law and consultation requirements.

2023 Restructuring Plan

On February 22, 2023, the Company’s Board of Directors approved a strategic restructuring program (the "2023 Restructuring Plan") to streamline the Company’s operations in order to support the Company’s investment in critical growth areas. The 2023 Restructuring Plan includes, among other things, charges related to a workforce reduction. Any potential positions eliminated in countries outside the United States are subject to local law and consultation requirements.

In connection with the 2023 Restructuring Plan, the Company recorded restructuring and related expense of $0.1 million and $2.1 million in the three and nine months ended September 30, 2024, respectively, consisting entirely of severance related costs. A summary of the 2023 Restructuring Plan accrual activity for the nine months ended September 30, 2024 is as follows (in thousands):


	Balance at		Initiatives				Net transfer to		Balance at
	January 1,		charged to		Cash		operating lease		September 30,
	2024		expense		payments		accounts		2024
Severance	$	671	$	2,027	$	(2,399)	$	—	$	299

2022 Restructuring Plan

On February 14, 2022, the Company’s Board of Directors approved a strategic restructuring program (the "2022 Restructuring Plan") to streamline the Company’s operations in order to support the Company’s investment in critical growth areas. The 2022 Restructuring Plan includes, among other things, charges related to a consolidation of facilities and a workforce reduction. Any positions eliminated in countries outside the United States are subject to local law and consultation requirements.

The Company recorded restructuring and related expense of $1.5 million and $4.5 million in the three and nine months ended September 30, 2024, respectively, in connection with the 2022 Restructuring Plan for variable and other facilities-related costs. A summary of the 2022 Restructuring Plan accrual activity for the nine months ended September 30, 2024 is as follows (in thousands):


	Balance at		Initiatives
	January 1,		charged to	Cash	Balance at
	2024		expense	payments	September 30, 2024
Variable and other facilities-related costs	$	468	4,514	(4,613)	$	369

Balance Sheet Classification

The current portions of accrued restructuring were $2.7 million and $1.1 million at September 30, 2024 and December 31, 2023, respectively, and are included as components of Accrued expenses in the condensed consolidated balance sheets. The long-term portions of accrued restructuring are included as components of Other long-term liabilities in the condensed consolidated balance sheets. The long-term portions of accrued restructuring were $0.9 million and $1.1 million at September 30, 2024 and December 31, 2023, respectively.

INCOME TAXES	9 Months Ended
Sep. 30, 2024
INCOME TAXES
INCOME TAXES	(17) INCOME TAXES The Company recorded income tax provisions of $6.5 million and $11.5 million in the nine months ended September 30, 2024 and 2023, respectively. These amounts reflect the Company’s estimates of the effective rates expected to be applicable for the respective full years, adjusted for any discrete events, which are recorded in the period in which they occur. These estimates are reevaluated each quarter based on the Company’s estimated tax expense for the full fiscal year. The estimated effective tax rate includes the impact of valuation allowances in various jurisdictions. The Company intends to continue to maintain a valuation allowance on its deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of the respective allowances.

INCOME TAXES

9 Months Ended

Sep. 30, 2024

INCOME TAXES

INCOME TAXES

(17) INCOME TAXES

The Company recorded income tax provisions of $6.5 million and $11.5 million in the nine months ended September 30, 2024 and 2023, respectively. These amounts reflect the Company’s estimates of the effective rates expected to be applicable for the respective full years, adjusted for any discrete events, which are recorded in the period in which they occur. These estimates are reevaluated each quarter based on the Company’s estimated tax expense for the full fiscal year. The estimated effective tax rate includes the impact of valuation allowances in various jurisdictions. The Company intends to continue to maintain a valuation allowance on its deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of the respective allowances.

- Definition

The entire disclosure for income tax.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482685/740-10-50-12

Reference 2: http://www.xbrl.org/2003/role/exampleRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 55
-Paragraph 231
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482663/740-10-55-231

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12C
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482685/740-10-50-12C

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
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-Name Accounting Standards Codification
-Section 50
-Paragraph 12B
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482685/740-10-50-12B

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 270
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147477891/740-270-50-1

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SAB Topic 6.I.5.Q1)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147479360/740-10-S99-1

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480990/946-20-50-13

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
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-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480678/235-10-S99-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org/740/tableOfContent

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482685/740-10-50-14

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 21
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482685/740-10-50-21

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
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-Section 50
-Paragraph 17
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482685/740-10-50-17

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147479360/740-10-S99-2

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 30
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482603/740-30-50-2

+ Details

WARRANTY ACCRUALS - Changes in Accrual Balance (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2024 USD ($)
Changes in the company's accrual balance
Balance at January 1, 2024	$ 12,243
Current period provisions	4,281
Settlements	(3,959)
Balance at September 30, 2024	$ 12,565

DEBT - Schedule of Debt Maturities (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
DEBT
Remainder of 2024	$ 875
2025	6,125
2026	8,750
2027	13,125
2028	17,500
2029	302,750
Total Debt	$ 349,125	$ 235,395

- Definition

Amount, after deduction of unamortized premium (discount) and debt issuance cost, of long-term debt. Excludes lease obligation.

+ References + Details

LEASES - Future Minimum Lease Payments (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Operating leases
Remainder of 2024	$ 4,585
2025	11,118
2026	9,313
2027	7,987
2028	6,452
2029 and beyond	13,164
Total lease payments	52,619
Less: interest	(8,726)
Present value of lease liabilities	$ 43,893	$ 54,450

Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Common stock	Additional paid-in capital	Accumulated deficit	Accumulated other comprehensive (loss) income	Total
Beginning balance (in shares) at Dec. 31, 2022	168,324,995
Beginning balance at Dec. 31, 2022	$ 17	$ 1,941,569	$ (1,453,744)	$ 30,585	$ 518,427
Increase (Decrease) in Stockholders' Equity
Exercise of stock options (in shares)	7,816
Exercise of stock options		15			15
Vesting of restricted stock awards and units (in shares)	3,927,390
Vesting of performance-based stock units (in shares)	381,071
Shares of restricted stock returned to the Company under net share settlements to satisfy tax withholding obligations (in shares)	(1,223,900)
Shares of restricted stock returned to the Company under net share settlements to satisfy tax withholding obligations		(3,912)			(3,912)
Stock-based compensation expense		16,914			16,914
Other comprehensive loss				(14,231)	(14,231)
Net loss			(73,285)		(73,285)
Ending balance (in shares) at Sep. 30, 2023	171,417,372
Ending balance at Sep. 30, 2023	$ 17	1,954,586	(1,527,029)	16,354	443,928
Beginning balance (in shares) at Jun. 30, 2023	170,958,400
Beginning balance at Jun. 30, 2023	$ 17	1,950,079	(1,513,528)	17,679	454,247
Increase (Decrease) in Stockholders' Equity
Exercise of stock options (in shares)	6,899
Exercise of stock options		13			13
Vesting of restricted stock awards and units (in shares)	612,818
Shares of restricted stock returned to the Company under net share settlements to satisfy tax withholding obligations (in shares)	(160,745)
Shares of restricted stock returned to the Company under net share settlements to satisfy tax withholding obligations		(456)			(456)
Stock-based compensation expense		4,950			4,950
Other comprehensive loss				(1,325)	(1,325)
Net loss			(13,501)		(13,501)
Ending balance (in shares) at Sep. 30, 2023	171,417,372
Ending balance at Sep. 30, 2023	$ 17	1,954,586	(1,527,029)	16,354	$ 443,928
Beginning balance (in shares) at Dec. 31, 2023	172,083,667				172,083,667
Beginning balance at Dec. 31, 2023	$ 17	1,958,909	(1,519,950)	13,787	$ 452,763
Increase (Decrease) in Stockholders' Equity
Exercise of stock options (in shares)	8,677
Exercise of stock options		17			17
Vesting of restricted stock awards and units (in shares)	3,444,670
Vesting of performance-based stock units (in shares)	288,672
Shares of restricted stock returned to the Company under net share settlements to satisfy tax withholding obligations (in shares)	(1,089,888)
Shares of restricted stock returned to the Company under net share settlements to satisfy tax withholding obligations		(3,035)			(3,035)
Stock-based compensation expense		12,061			12,061
Other comprehensive loss				(5,673)	(5,673)
Net loss			(60,599)		$ (60,599)
Ending balance (in shares) at Sep. 30, 2024	174,735,798				174,735,798
Ending balance at Sep. 30, 2024	$ 17	1,967,952	(1,580,549)	8,114	$ 395,534
Beginning balance (in shares) at Jun. 30, 2024	174,437,242
Beginning balance at Jun. 30, 2024	$ 17	1,964,304	(1,567,127)	7,828	405,022
Increase (Decrease) in Stockholders' Equity
Exercise of stock options (in shares)	53
Vesting of restricted stock awards and units (in shares)	417,633
Shares of restricted stock returned to the Company under net share settlements to satisfy tax withholding obligations (in shares)	(119,130)
Shares of restricted stock returned to the Company under net share settlements to satisfy tax withholding obligations		(397)			(397)
Stock-based compensation expense		4,045			4,045
Other comprehensive loss				286	286
Net loss			(13,422)		$ (13,422)
Ending balance (in shares) at Sep. 30, 2024	174,735,798				174,735,798
Ending balance at Sep. 30, 2024	$ 17	$ 1,967,952	$ (1,580,549)	$ 8,114	$ 395,534

MAJOR CUSTOMERS

9 Months Ended

Sep. 30, 2024

MAJOR CUSTOMERS

MAJOR CUSTOMERS

(14) MAJOR CUSTOMERS

The following customer contributed 10% or more of the Company’s revenue in the three and nine months ended September 30, 2024 and 2023:


	Three months ended				Nine months ended
	September 30,		September 30,		September 30,		September 30,
	2024		2023		2024		2023
Verizon Communications Inc.	15	%	11	%	13	%	11	%

At September 30, 2024, Verizon Communications Inc. accounted for just over 10% of the Company’s accounts receivable balance. At December 31, 2023, no customer accounted for 10% or more of the Company’s accounts receivable balance. The Company performs ongoing credit evaluations of its customers and generally does not require collateral on accounts receivable. The Company maintains an allowance for doubtful accounts and such losses have historically been within management’s expectations.

RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES
Severance and related costs	$ 2,289	$ 804	$ 4,264	$ 9,355
Restructuring and related	3,794	$ 2,680	8,779	$ 13,924
Restructuring reserve current	2,700		2,700		$ 1,100
Restructuring reserve noncurrent	900		900		$ 1,100
2024 Workforce Reductions
RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES
Severance and related costs	2,200
2023 Restructuring Initiative
RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES
Restructuring and related	100		2,100
2022 Restructuring Plan
RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES
Restructuring and related	$ 1,500		$ 4,500

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References + Details

ACCRUED EXPENSES AND OTHER (Tables)

9 Months Ended

Sep. 30, 2024

ACCRUED EXPENSES AND OTHER

Schedule of accrued expenses

Accrued expenses at September 30, 2024 and December 31, 2023 consisted of the following (in thousands):


	September 30,		December 31,
	2024		2023
Employee compensation and related costs	$	36,982	$	33,682
Professional fees		19,232		19,702
Taxes payable		13,538		8,383
Other		33,190		29,920
	$	102,942	$	91,687

REVENUE RECOGNITION - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
REVENUE RECOGNITION
Total revenue	$ 210,238	$ 203,161	$ 582,522	$ 599,938
Cloud and Edge
REVENUE RECOGNITION
Total revenue	128,078	115,765	340,302	355,501
IP Optical Networks
REVENUE RECOGNITION
Total revenue	82,160	87,396	242,220	244,437
United States
REVENUE RECOGNITION
Total revenue	109,558	86,056	262,141	267,326
Europe, Middle East and Africa
REVENUE RECOGNITION
Total revenue	49,767	58,357	175,768	167,002
Asia Pacific
REVENUE RECOGNITION
Total revenue	38,240	45,129	106,478	127,503
Other
REVENUE RECOGNITION
Total revenue	12,673	13,619	38,135	38,107
Product revenue
REVENUE RECOGNITION
Total revenue	112,151	108,501	298,894	319,166
Product revenue \| Cloud and Edge
REVENUE RECOGNITION
Total revenue	53,455	42,305	124,554	137,496
Product revenue \| IP Optical Networks
REVENUE RECOGNITION
Total revenue	58,696	66,196	174,340	181,670
Product revenue \| Sales to enterprise customers
REVENUE RECOGNITION
Total revenue	40,002	32,044	115,912	97,163
Product revenue \| Sales to service provider customers
REVENUE RECOGNITION
Total revenue	72,149	76,457	182,982	222,003
Product revenue \| Indirect sales through channel partner program
REVENUE RECOGNITION
Total revenue	38,000	35,950	114,958	109,454
Product revenue \| Direct sales
REVENUE RECOGNITION
Total revenue	74,151	72,551	183,936	209,712
Product revenue \| United States
REVENUE RECOGNITION
Total revenue	58,198	40,162	120,173	131,774
Product revenue \| Europe, Middle East and Africa
REVENUE RECOGNITION
Total revenue	24,708	31,969	99,636	88,235
Product revenue \| Asia Pacific
REVENUE RECOGNITION
Total revenue	25,590	32,070	68,304	89,495
Product revenue \| Other
REVENUE RECOGNITION
Total revenue	3,655	4,300	10,781	9,662
Service
REVENUE RECOGNITION
Total revenue	98,087	94,660	283,628	280,772
Service revenue (maintenance)
REVENUE RECOGNITION
Total revenue	69,019	69,272	204,920	209,488
Service revenue (maintenance) \| Cloud and Edge
REVENUE RECOGNITION
Total revenue	53,595	55,004	159,454	164,848
Service revenue (maintenance) \| IP Optical Networks
REVENUE RECOGNITION
Total revenue	15,424	14,268	45,466	44,640
Service revenue (maintenance) \| United States
REVENUE RECOGNITION
Total revenue	33,670	33,454	99,156	100,417
Service revenue (maintenance) \| Europe, Middle East and Africa
REVENUE RECOGNITION
Total revenue	17,918	18,268	53,105	56,393
Service revenue (maintenance) \| Asia Pacific
REVENUE RECOGNITION
Total revenue	10,262	10,016	30,262	29,552
Service revenue (maintenance) \| Other
REVENUE RECOGNITION
Total revenue	7,169	7,534	22,397	23,126
Service revenue (professional services)
REVENUE RECOGNITION
Total revenue	29,068	25,388	78,708	71,284
Service revenue (professional services) \| Cloud and Edge
REVENUE RECOGNITION
Total revenue	21,028	18,456	56,294	53,157
Service revenue (professional services) \| IP Optical Networks
REVENUE RECOGNITION
Total revenue	8,040	6,932	22,414	18,127
Service revenue (professional services) \| United States
REVENUE RECOGNITION
Total revenue	17,690	12,440	42,812	35,135
Service revenue (professional services) \| Europe, Middle East and Africa
REVENUE RECOGNITION
Total revenue	7,141	8,120	23,027	22,374
Service revenue (professional services) \| Asia Pacific
REVENUE RECOGNITION
Total revenue	2,388	3,043	7,912	8,456
Service revenue (professional services) \| Other
REVENUE RECOGNITION
Total revenue	$ 1,849	$ 1,785	$ 4,957	$ 5,319

PREFERRED STOCK AND WARRANTS - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands			9 Months Ended	12 Months Ended
	Jun. 25, 2024	Mar. 28, 2023	Sep. 30, 2024	Dec. 31, 2023
Series A Preferred Stock
PREFERRED STOCK AND WARRANTS
Dividends Payable in Kind Year One		9.25%
Dividends Payable in Kind Year Two		9.75%
Dividends Payable In Cash Thereafter		12.00%
Proceeds from issuance of preferred stock		$ 53,400
Offering expenses paid				$ 3,500
Preferred stock, redemption, percentage year one		103.00%
Preferred stock, redemption, percentage year two		102.00%
Series A Preferred Stock \| Beneficial Owner
PREFERRED STOCK AND WARRANTS
Proceeds from issuance of preferred stock		$ 10,000
Preferred Stock
PREFERRED STOCK AND WARRANTS
Preferred Stock, redemption rate (in percent)	103.00%
Payable in-kind dividends			$ 2,743
Convertible preferred stock converted to other securities	$ 63,500
Preferred Stock \| Private Placement
PREFERRED STOCK AND WARRANTS
Stock issued in equity offering (in shares)		55,000
Share price (in dollars per share)		$ 970
Warrant \| Series A Preferred Stock
PREFERRED STOCK AND WARRANTS
Number of shares of common stock entitled from warrants (in shares)		4,900,000
Warrant \| Private Placement
PREFERRED STOCK AND WARRANTS
Share price (in dollars per share)		$ 3.77
Number of shares of common stock entitled from warrants (in shares)		4,858,090

PREFERRED STOCK AND WARRANTS

9 Months Ended

Sep. 30, 2024

PREFERRED STOCK AND WARRANTS

PREFERRED STOCK AND WARRANTS

(11) PREFERRED STOCK AND WARRANTS

On March 28, 2023, the Company issued 55,000 shares of Preferred Stock to investors in the Private Placement at a price of $970 per share, along with 4,858,090 Warrants with an exercise price of $3.77 per share.

On June 25, 2024, the Company redeemed the Preferred Stock with a portion of the proceeds from the refinancing of the 2020 Credit Facility at a rate of 103% for a total of approximately $63.5 million. The Warrants remain outstanding and without modification. See Note 9 for a description of the refinancing of the 2020 Credit Facility.

The Company accounted for the Preferred Stock until it was redeemed and continues to account for the Warrants as liability-classified instruments based on an assessment of their specific terms in accordance with ASC Topic 480, Distinguishing Liabilities from Equity. The fair value option was elected for the Preferred Stock, as the Company considered fair value to best reflect its expected future economic value. These liabilities are remeasured to fair value at each reporting date using the same valuation methodology applied upon issuance using current input assumptions.

The value of the Preferred Stock was calculated quarterly through March 31, 2024 using the Black-Derman-Toy (BDT) stochastic yield lattice model to capture the optimal timing of repayment, increasing dividend rate and other features and the value of the Warrants is calculated quarterly using the Black-Scholes Pricing Model.

Changes in the fair value of the Preferred Stock and the Warrants are reported as Other expense, net in the Company’s condensed consolidated statements of operations.

The Company determined the fair value of the Warrants using Level 3 input. The key assumptions into the model utilized was as follows as of September 30, 2024:


	Warrants
	(Black-Scholes)
Stock price	$	3.25
Strike price	$	3.77
Risk-free rate		3.59	%
Volatility		61.4	%
Dividend yield		0.0	%
Time to expiration (years)		2.5
Fair value of Warrant per share	$	1.15

The changes in the Company’s Preferred Stock and Warrant liabilities for the nine months ended September 30, 2024 were as follows (in thousands):


	Preferred stock
	liability
Balance at January 1, 2024	$	53,337
Payable in-kind dividends		2,743
Reversal of fair value adjustments		5,605
Call premium (3%)		1,851
Redemption (June 25, 2024)		(63,536)
Balance at September 30, 2024	$	—


	Warrant liability
Balance at January 1, 2024	$	5,295
Fair value change		292
Balance at September 30, 2024	$	5,587

The Preferred Stock, redeemed on June 25, 2024, was subordinate to the Company’s indebtedness and senior to the Company’s common stock or other equity. Holders of the Preferred Stock were entitled to cumulative dividends that accrued quarterly. Dividends were payable in-kind during the first year at a rate of 9.25%. At the Company’s option, the

dividends were payable in-kind or in cash during the second year at a rate of 9.75%. Dividends thereafter were to be payable in cash at a rate of 12.00%. The proceeds from the Preferred Stock issuance were approximately $53.4 million, including $10.0 million from existing related party stockholders. Offering costs paid by the Company of approximately $3.5 million were recorded in Other expense, net in the year ended December 31, 2023. The net proceeds from the Private Placement were used for the repayment of debt. The Preferred Stock was redeemable on or after the first and second anniversaries of the closing date at a rate of 103% and 102%, respectively.

The Warrants, which expire March 30, 2027, are immediately exercisable and upon an event such as a merger, consolidation, asset sale or similar change of control, may be exercised and the holders may vote the underlying shares of common stock. In connection with the Private Placement, the Company provided the investors with certain registration rights relating to the Preferred Stock, the Warrants and the shares of the Company’s common stock underlying the Warrants, that required the Company to file a registration statement on Form S-3 with the SEC within 30 days following the closing date of the Private Placement. The registration requirement was completed on May 19, 2023.

- Definition

The entire disclosure for equity.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481112/505-10-50-13

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

OPERATING SEGMENT INFORMATION (Tables)

9 Months Ended

Sep. 30, 2024

OPERATING SEGMENT INFORMATION

Schedule of segment reporting information

The tables below provide revenue, adjusted gross profit and depreciation expense by reportable segment for the three and nine months ended September 30, 2024 and 2023 (in thousands):


	Three months ended				Nine months ended
	September 30,		September 30,		September 30,		September 30,
	2024		2023		2024		2023
Segment revenue:
Cloud and Edge	$	128,078	$	115,765	$	340,302	$	355,501
IP Optical Networks		82,160		87,396		242,220		244,437
Revenue	$	210,238	$	203,161	$	582,522	$	599,938


	Three months ended				Nine months ended
	September 30,		September 30,		September 30,		September 30,
	2024		2023		2024		2023
Segment adjusted gross profit:
Cloud and Edge	$	86,661	$	78,455	$	226,726	$	231,729
IP Optical Networks		29,634		32,862		93,390		78,613
Total segment adjusted gross profit		116,295		111,317		320,116		310,342
Stock-based compensation expense		(355)		(657)		(1,271)		(1,982)
Amortization of acquired technology		(6,323)		(7,157)		(19,406)		(21,985)
Gross profit	$	109,617	$	103,503	$	299,439	$	286,375


	Three months ended				Nine months ended
	September 30,		September 30,		September 30,		September 30,
	2024		2023		2024		2023
Segment depreciation expense:
Cloud and Edge	$	2,324	$	2,426	$	6,981	$	7,402
IP Optical Networks		1,037		1,118		3,150		3,201
Depreciation expense	$	3,361	$	3,544	$	10,131	$	10,603

PREFERRED STOCK AND WARRANTS - Key Inputs (Details) - Fair Value, Inputs, Level 3 - Black Scholes Pricing Model - Warrant	Sep. 30, 2024 $ / shares
PREFERRED STOCK AND WARRANTS
Time to expiration (years)	2 years 6 months
Fair value of Warrant per share (in dollars per share)	$ 1.15
Stock price
PREFERRED STOCK AND WARRANTS
Measurement Input	3.25
Strike price
PREFERRED STOCK AND WARRANTS
Measurement Input	3.77
Risk-free rate
PREFERRED STOCK AND WARRANTS
Measurement Input	0.0359
Volatility
PREFERRED STOCK AND WARRANTS
Measurement Input	0.614
Dividend yield
PREFERRED STOCK AND WARRANTS
Measurement Input	0.000

WARRANTY ACCRUALS

9 Months Ended

Sep. 30, 2024

WARRANTY ACCRUALS

WARRANTY ACCRUALS

(7) WARRANTY ACCRUALS

The changes in the Company’s accrual balance in the nine months ended September 30, 2024 were as follows (in thousands):


Balance at January 1, 2024	$	12,243
Current period provisions		4,281
Settlements		(3,959)
Balance at September 30, 2024	$	12,565

ACCRUED EXPENSES AND OTHER (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
ACCRUED EXPENSES AND OTHER
Employee compensation and related costs	$ 36,982	$ 33,682
Professional fees	19,232	19,702
Taxes payable	13,538	8,383
Other	33,190	29,920
Total accrued expenses	$ 102,942	$ 91,687

BASIS OF PRESENTATION (Tables)

9 Months Ended

Sep. 30, 2024

BASIS OF PRESENTATION

Schedule of information regarding factoring of accounts receivable and associated fees

Factoring of accounts receivable and associated fees for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands):


	Three months ended				Nine months ended
	September 30,		September 30,		September 30,		September 30,
	2024		2023		2024		2023
Accounts receivable sold	$	26,635	$	24,701	$	73,597	$	73,028
Less factoring fees		(532)		(752)		(1,466)		(2,022)
Net cash proceeds	$	26,103	$	23,949	$	72,131	$	71,006

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Pay vs Performance Disclosure
Net Income (Loss)	$ (13,422)	$ (13,501)	$ (60,599)	$ (73,285)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

EARNINGS (LOSS) PER SHARE

9 Months Ended

Sep. 30, 2024

EARNINGS (LOSS) PER SHARE

EARNINGS (LOSS) PER SHARE

(2) EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares outstanding during the period. For periods in which the Company reports net income, diluted net earnings per share is determined by using the weighted average number of common and dilutive common equivalent shares outstanding during the period, unless the effect is antidilutive.

The shares used to compute loss per share were as follows (in thousands):


	Three months ended		Nine months ended
	September 30,	September 30,	September 30,	September 30,
	2024	2023	2024	2023
Weighted average shares outstanding—basic	174,613	171,190	173,615	169,955
Potential dilutive common shares	—	—	—	—
Weighted average shares outstanding—diluted	174,613	171,190	173,615	169,955

Options to purchase the Company’s common stock and unvested restricted and performance-based stock units aggregating 8.1 million and 14.4 million shares were excluded from the computation of diluted loss per share for the three and nine months ended September 30, 2024 and 2023, respectively, because their effect would have been antidilutive.

On March 28, 2023, the Company issued 55,000 shares of newly designated Series A Preferred Stock (the "Preferred Stock") to investors in a private placement offering at a price of $970 per share, along with 4.9 million warrants (the "Warrants") to purchase shares of the Company’s common stock, par value $0.0001 per share (the "Private Placement"), at the exercise price of $3.77 per share. The proceeds from the Private Placement were approximately $53.4 million, including approximately $10 million from existing related party stockholders (See Note 11).

On June 25, 2024, the Company redeemed the Preferred Stock with a portion of the proceeds from its refinancing of the 2020 Credit Facility at a rate of 103% for a total of approximately $63.5 million. The Warrants remain outstanding and without modification. See Note 9 for a description of the refinancing of the 2020 Credit Facility.

As of September 30, 2024 and 2023, the potential number of dilutive shares from the Warrants totaled 4.9 million shares. However, there was no impact on weighted average shares outstanding from these Warrants for the three and nine months ended September 30, 2024 and 2023 as the average share price of the Company’s common stock was below the exercise price of $3.77 per share and their effect would have been antidilutive.

Dividends accrued on the Preferred Stock were not an adjustment to net income (loss) used for the calculation of diluted earnings (loss) per share as these dividends were included in the fair value adjustment of the Preferred Stock which was reflected in Other (expense) income, net until the redemption of the Preferred Stock on June 25, 2024.

RELATED PARTIES (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
RELATED PARTIES (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
RELATED PARTIES
Total revenue	$ 210,238	$ 203,161	$ 582,522	$ 599,938
Related party
RELATED PARTIES
Total revenue	$ 1,400	$ 1,300	$ 4,400	$ 7,100

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

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+ Details

LEASES (Tables)

9 Months Ended

Sep. 30, 2024

LEASES

Schedule of right-of-use lease assets and lease liabilities

The Company’s right-of-use lease assets and lease liabilities at September 30, 2024 and December 31, 2023 were as follows (in thousands):


		September 30,		December 31,
	Classification	2024		2023
Assets:
Operating lease assets	Operating lease right-of-use assets	$	30,732	$	39,783

Liabilities:
Current Operating	Operating lease liabilities	$	10,644	$	15,739
Non-Current Operating	Operating lease liabilities, net of current		33,249		38,711
Total Operating lease liabilities		$	43,893	$	54,450

Schedule of components of lease expense

The components of lease expense for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands):


	Three months ended				Nine months ended
	September 30,		September 30,		September 30,		September 30,
	2024		2023		2024		2023
Operating lease cost*	$	4,165	$	4,708	$	12,471	$	14,205
Short-term lease cost		3,362		3,454		10,216		10,544
Variable lease costs (costs excluded from minimum fixed lease payments)**		814		819		2,497		2,525
Sublease income		(209)		(282)		(686)		(1,105)
Net lease cost	$	8,132	$	8,699	$	24,498	$	26,169

No accelerated amortization was recorded in the three and nine months ended September 30, 2024. Operating lease costs for three and nine months ended September 30, 2023 included $0.2 million and $0.8 million, respectively, of accelerated amortization for certain assets partially or fully vacated with no intent or ability to sublease.

**	No variable lease costs were accrued in the three and nine months ended September 30, 2024 or 2023 for future estimated variable expenses related to certain assets partially or fully vacated with no intent or ability to sublease.


	September 30,		December 31,
	2024		2023
Weighted average remaining lease term (years):
Operating leases	5.44		5.50
Weighted average discount rate:
Operating leases	7.20	%	6.34	%

Schedule of future minimum fixed lease payments under noncancelable leases

Future minimum fixed lease payments under noncancelable leases at September 30, 2024 were as follows (in thousands):


	Operating
	leases
Remainder of 2024	$	4,585
2025		11,118
2026		9,313
2027		7,987
2028		6,452
2029 and beyond		13,164
Total lease payments		52,619
Less: interest		(8,726)
Present value of lease liabilities	$	43,893

DEBT - Letters of Credit and Other Guarantees (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
DEBT
Letters of credit outstanding		$ 7,900,000
Restricted cash	$ 2,853,000	136,000
Letters of Credit \| 2024 Credit Facility
DEBT
Letters of credit outstanding	0
Letters of Credit \| 2020 Credit Facility
DEBT
Letters of credit outstanding		2,700,000
Various Uncommitted Facilities
DEBT
Letters of credit outstanding	$ 10,400,000	$ 5,200,000

WARRANTY ACCRUALS (Tables)

9 Months Ended

Sep. 30, 2024

WARRANTY ACCRUALS

Schedule of changes in accrual balance

The changes in the Company’s accrual balance in the nine months ended September 30, 2024 were as follows (in thousands):


Balance at January 1, 2024	$	12,243
Current period provisions		4,281
Settlements		(3,959)
Balance at September 30, 2024	$	12,565

MAJOR CUSTOMERS (Tables)

9 Months Ended

Sep. 30, 2024

MAJOR CUSTOMERS

Schedule of customer contributing 10% or more of the revenue


	Three months ended				Nine months ended
	September 30,		September 30,		September 30,		September 30,
	2024		2023		2024		2023
Verizon Communications Inc.	15	%	11	%	13	%	11	%

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Sep. 30, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false
Rule 10b5-1 Arrangement Modified	false
Non-Rule 10b5-1 Arrangement Modified	false

FAIR VALUE HIERARCHY

9 Months Ended

Sep. 30, 2024

FAIR VALUE HIERARCHY

FAIR VALUE HIERARCHY

(5) FAIR VALUE HIERARCHY

The carrying amounts of the Company’s cash equivalents, accounts receivable, accounts payable and borrowings under a revolving credit facility in the condensed consolidated balance sheets approximates fair value due to the immediate or short-term nature of these financial instruments. Ribbon’s term debt balance as of September 30, 2024 and December 31, 2023 of $349.1 million and $235.4 million, respectively, had a fair value of approximately $330.4 million and $235.1 million, respectively. The Company’s Warrant liability had a fair value of $5.6 million and $5.3 million as of September 30, 2024 and December 31, 2023, respectively. The Company’s Preferred Stock had a fair value of $53.3 million as of December 31, 2023 and was fully redeemed on June 25, 2024.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The three-tier fair value hierarchy is based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows:

Level 1. Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. The Company had no assets or liabilities fair valued using Level 1 input at September 30, 2024 or December 31, 2023.

Level 2. Level 2 applies to assets or liabilities for which there are inputs that are directly or indirectly observable in the marketplace, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets). At December 31, 2023, the Company determined the fair value of its defined benefit plans’ assets using Level 2 input. There were no significant changes to the Company’s defined benefit plans’ assets during the nine months ended September 30, 2024 that required the calculation of their fair value as of September 30, 2024.

Level 3. Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. Level 3 input was used to determine the fair value of the Company’s Warrants at September 30, 2024 and the fair value of the Company’s Preferred Stock and Warrants at December 31, 2023.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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+ Details

EARNINGS (LOSS) PER SHARE (Tables)

9 Months Ended

Sep. 30, 2024

EARNINGS (LOSS) PER SHARE

Schedule of calculations of shares used to compute loss per share

The shares used to compute loss per share were as follows (in thousands):


	Three months ended		Nine months ended
	September 30,	September 30,	September 30,	September 30,
	2024	2023	2024	2023
Weighted average shares outstanding—basic	174,613	171,190	173,615	169,955
Potential dilutive common shares	—	—	—	—
Weighted average shares outstanding—diluted	174,613	171,190	173,615	169,955

EARNINGS (LOSS) PER SHARE - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions			3 Months Ended		9 Months Ended
	Jun. 25, 2024	Mar. 28, 2023	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
EARNINGS (LOSS) PER SHARE
Common stock, par value (in dollars per share)			$ 0.0001		$ 0.0001		$ 0.0001
Preferred Stock
EARNINGS (LOSS) PER SHARE
Preferred Stock, redemption rate (in percent)	103.00%
Convertible preferred stock converted to other securities	$ 63.5
Preferred Stock \| Private Placement
EARNINGS (LOSS) PER SHARE
Common stock issued in equity offering (in shares)		55,000
Share price (in dollars per share)		$ 970
Warrant \| Series A Preferred Stock
EARNINGS (LOSS) PER SHARE
Number of shares of common stock entitled from warrants (in shares)		4,900,000
Warrant \| Private Placement
EARNINGS (LOSS) PER SHARE
Share price (in dollars per share)		$ 3.77
Number of shares of common stock entitled from warrants (in shares)		4,858,090
Warrant \| Private Placement \| Series A Preferred Stock
EARNINGS (LOSS) PER SHARE
Proceeds from issuance of common stock		$ 53.4
Warrant \| Private Placement \| Series A Preferred Stock \| Beneficial Owner
EARNINGS (LOSS) PER SHARE
Proceeds from issuance of common stock		$ 10.0
Warrant \| Private Placement \| Common stock
EARNINGS (LOSS) PER SHARE
Common stock, par value (in dollars per share)		$ 0.0001
Exercise price of warrants (in dollars per share)		$ 3.77
Employee Stock Option
EARNINGS (LOSS) PER SHARE
Antidilutive securities not included in computation of diluted loss per share (in shares)			8,100,000	14,400,000	8,100,000	14,400,000
Warrant
EARNINGS (LOSS) PER SHARE
Antidilutive securities not included in computation of diluted loss per share (in shares)					4,900,000	4,900,000
Exercise price of warrants (in dollars per share)			$ 3.77	$ 3.77	$ 3.77	$ 3.77

DEBT - Schedule of Long Term Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023	Mar. 24, 2023
DEBT
Current portion of Term Debt	$ 4,813	$ 35,102
Long-term Debt, net of Current (Face Amount)	344,312	200,293
Original Issue Discount	(6,611)	0
Unamortized Debt Issuance Costs - Contra-Liability	(5,273)	(2,811)
Long-term Debt, net of Current	332,428	197,482
Total Face Amount of Borrowings	349,125	235,395
Other Assets	1,183	557
Long-Term Debt - Contra Liability	11,884	2,811
Total Unamortized Original Issue Discount and Debt Issuance Costs	13,067	3,368
2020 Credit Facility
DEBT
Remaining Borrowing Capacity	$ 35,000	$ 72,289
Term Loan
DEBT
Average Interest Rates:	11.20%	10.00%
Letters of Credit
DEBT
Letters of Credit Outstanding	$ 0	$ 2,711
Average Interest Rates:	0.00%	4.50%
Letters of Credit \| 2020 Credit Facility
DEBT
Average Interest Rates:			4.50%

STOCK-BASED COMPENSATION PLANS

9 Months Ended

Sep. 30, 2024

STOCK-BASED COMPENSATION PLANS

STOCK-BASED COMPENSATION PLANS

(15) STOCK-BASED COMPENSATION PLANS

The Company grants stock-based compensation to employees, officers and non-employee directors, as well as consultants and advisors of the Company and its subsidiaries under its Amended and Restated 2019 Incentive Award Plan which provides for the award of stock options, stock appreciation rights, restricted stock awards ("RSAs"), performance-based stock awards, restricted stock units ("RSUs"), performance-based stock units ("PSUs") and other stock- or cash-based awards.

Executive Equity Arrangements

Inducement Awards

In connection with his appointment as President and Chief Executive Officer of Ribbon on March 16, 2020, the Company awarded Bruce McClelland sign-on equity grants, comprised of RSUs and a PSU grant with both market and service conditions. The market conditions surrounding the PSUs granted were not met by the expiration date of September 1, 2024 and therefore the associated shares have been cancelled.

Performance-Based Stock Grants

In addition to granting RSAs and RSUs to its executives and certain of its employees, the Company also grants PSUs to certain of its executives and certain other employees. Vesting periods for RSAs, RSUs, and PSUs granted range from one to three years. PSUs granted consist of 60% that have both performance and service conditions (the "Performance PSUs") and 40% that have both market and service conditions (the "Market PSUs"). Each Performance PSU is comprised of three consecutive fiscal year performance periods beginning in the year of grant, with one-third of the Performance PSUs attributable to each fiscal year performance period. The Market PSUs have one three-year performance period, beginning January 1 in the year of grant and ending on December 31, three years thereafter. The number of shares of common stock underlying the PSUs that can be earned will not exceed 200% of the Performance or Market PSUs. Shares subject to PSUs that fail to be earned will be forfeited.

Restricted Stock Units

The activity related to the Company’s RSUs for the nine months ended September 30, 2024 was as follows:


		Weighted
		Average
		Grant Date
	Shares	Fair Value
Unvested balance at January 1, 2024	7,091,368	$	3.18
Granted	1,423,228	$	3.22
Vested	(3,444,670)	$	3.47
Forfeited	(326,985)	$	3.18
Unvested balance at September 30, 2024	4,742,941	$	2.99

The total grant date fair value of shares of restricted stock underlying RSUs that vested during the nine months ended September 30, 2024 was $11.9 million.

Performance-Based Stock Units

The activity related to the Company’s PSUs for the nine months ended September 30, 2024 was as follows:


		Weighted
		Average
		Grant Date
	Shares	Fair Value
Unvested balance at January 1, 2024	6,297,931	$	2.07
Granted	1,338,985	$	4.32
Vested	(288,672)	$	3.14
Forfeited	(4,035,835)	$	1.33
Unvested balance at September 30, 2024	3,312,409	$	3.79

The total grant date fair value of shares of restricted stock underlying PSUs that vested during the nine months ended September 30, 2024 was $0.9 million.

Stock-Based Compensation

The condensed consolidated statements of operations include stock-based compensation for the three and nine months ended September 30, 2024 and 2023 as follows (in thousands):


	Three months ended				Nine months ended
	September 30,		September 30,		September 30,		September 30,
	2024		2023		2024		2023
Product cost of revenue	$	64	$	121	$	234	$	385
Service cost of revenue		291		536		1,037		1,597
Research and development		745		1,259		2,429		3,821
Sales and marketing		1,108		1,402		3,219		5,673
General and administrative		1,837		1,632		5,142		5,438
	$	4,045	$	4,950	$	12,061	$	16,914

At September 30, 2024, there was $15.1 million, net of expected forfeitures, of unrecognized stock-based compensation expense related to unvested RSUs and PSUs. This expense is expected to be recognized over a weighted average period of approximately one year.

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Condensed Consolidated Balance Sheets
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	55,000
Preferred stock, shares outstanding (in shares)	0	55,000
Preferred stock, liquidation preference, value	$ 56,650	$ 56,650
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	240,000,000	240,000,000
Common stock, shares issued (in shares)	174,735,798	172,083,667
Common stock, shares outstanding (in shares)	174,735,798	172,083,667

INTANGIBLE ASSETS AND GOODWILL - Schedule of Components of Goodwill (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023	Sep. 30, 2023
INTANGIBLE ASSETS AND GOODWILL
Goodwill	$ 584,298		$ 584,298
Accumulated impairment losses	(283,406)		(283,406)
Goodwill, total	300,892	$ 300,892	300,892
Cloud and Edge
INTANGIBLE ASSETS AND GOODWILL
Goodwill	392,302		392,302
Accumulated impairment losses	(167,406)		(167,406)
Goodwill, total	224,896		224,896
IP Optical Networks
INTANGIBLE ASSETS AND GOODWILL
Goodwill	191,996		191,996
Accumulated impairment losses	(116,000)		(116,000)
Goodwill, total	$ 75,996		$ 75,996

- Definition

Amount, after accumulated impairment loss, of asset representing future economic benefit arising from other asset acquired in business combination or from joint venture formation or both, that is not individually identified and separately recognized.

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- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

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+ Details

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Revenue:
Total revenue	$ 210,238	$ 203,161	$ 582,522	$ 599,938
Cost of revenue:
Amortization of acquired technology	6,323	7,157	19,406	21,985
Total cost of revenue	100,621	99,658	283,083	313,563
Gross profit	109,617	103,503	299,439	286,375
Operating expenses:
Research and development	45,645	46,229	134,897	145,309
Sales and marketing	33,060	32,795	100,760	102,099
General and administrative	21,588	12,885	51,680	41,276
Amortization of acquired intangible assets	6,457	7,216	19,671	21,740
Acquisition-, disposal- and integration-related		842		2,982
Restructuring and related	3,794	2,680	8,779	13,924
Total operating expenses	110,544	102,647	315,787	327,330
(Loss) income from operations	(927)	856	(16,348)	(40,955)
Interest expense, net	(11,952)	(7,143)	(21,818)	(20,331)
Other income (expense), net	1,056	(2,620)	(15,960)	(536)
Loss before income taxes	(11,823)	(8,907)	(54,126)	(61,822)
Income tax provision	(1,599)	(4,594)	(6,473)	(11,463)
Net loss	$ (13,422)	$ (13,501)	$ (60,599)	$ (73,285)
Loss per share:
Basic (in dollars per share)	$ (0.08)	$ (0.08)	$ (0.35)	$ (0.43)
Diluted (in dollars per share)	$ (0.08)	$ (0.08)	$ (0.35)	$ (0.43)
Weighted average shares used to compute loss per share:
Basic (in shares)	174,613	171,190	173,615	169,955
Diluted (in shares)	174,613	171,190	173,615	169,955
Product
Revenue:
Total revenue	$ 112,151	$ 108,501	$ 298,894	$ 319,166
Cost of revenue:
Cost of revenue:	59,405	59,436	160,044	189,426
Service
Revenue:
Total revenue	98,087	94,660	283,628	280,772
Cost of revenue:
Cost of revenue:	$ 34,893	$ 33,065	$ 103,633	$ 102,152

EARNINGS (LOSS) PER SHARE - Calculations of Shares Used to Compute Loss Per Share (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Reconciliation of weighted average shares outstanding from basic to diluted
Weighted average shares outstanding-basic	174,613	171,190	173,615	169,955
Potential dilutive common shares	0	0	0	0
Weighted average shares outstanding-diluted	174,613	171,190	173,615	169,955

INVENTORY (Tables)

9 Months Ended

Sep. 30, 2024

INVENTORY

Schedule of inventory

Inventory at September 30, 2024 and December 31, 2023 consisted of the following (in thousands):


	September 30,		December 31,
	2024		2023
On-hand final assemblies and finished goods inventories	$	94,269	$	93,077
Deferred cost of goods sold		2,409		3,269
		96,678		96,346
Less noncurrent portion (included in Other assets)		(19,362)		(18,825)
Current portion	$	77,316	$	77,521

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Impact of Derivative Financial Instrument on Condensed Consolidated Statement of Operations (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Gain (loss) recognized in other comprehensive income (loss) on swap, net of tax			$ (2,715)
Unrealized gain (loss) on interest rate swap, net of reclassifications and amortization	$ (1,322)	$ (6,019)	(13,643)
Other Income
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Amount reclassified from accumulated other comprehensive income to interest expense			(5,099)
Interest Expense
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Amount reclassified from accumulated other comprehensive income to interest expense	$ (1,322)	$ (6,019)	$ (5,829)

DEBT (Tables)

9 Months Ended

Sep. 30, 2024

DEBT

Schedule of long term debt

The Company had the following outstanding borrowings, unamortized debt issuance costs and original issue discount, letters of credit, interest rates, and remaining borrowing capacity under the 2024 Credit Facility and the 2020 Credit Facility as of September 30, 2024 and December 31, 2023, respectively:


	September 30,			December 31,
	2024			2023
Current portion of Term Debt	$	4,813		$	35,102

Long-term Debt, net of Current:
Long-term Debt, net of Current (Face Amount)	$	344,312		$	200,293
Original Issue Discount		(6,611)			—
Unamortized Debt Issuance Costs - Contra-Liability		(5,273)			(2,811)
Long-term Debt, net of Current	$	332,428		$	197,482

Total Face Amount of Borrowings	$	349,125		$	235,395

Unamortized Original Issue Discount and Debt Issuance Costs:
Other Assets		1,183			557
Long-Term Debt - Contra Liability		11,884			2,811
Total Unamortized Original Issue Discount and Debt Issuance Costs	$	13,067		$	3,368

Letters of Credit Outstanding	$	—		$	2,711

Remaining Borrowing Capacity	$	35,000		$	72,289

Average Interest Rates:
Term Loan		11.2	%		10.0	%
Letters of Credit		—	%		4.5	%

Schedule of debt maturities

The Company’s debt maturities as of September 30, 2024 were as follows:


Years ending December 31,
Remainder of 2024	$	875
2025		6,125
2026		8,750
2027		13,125
2028		17,500
2029		302,750
	$	349,125

OPERATING SEGMENT INFORMATION (Details) $ in Thousands	3 Months Ended		9 Months Ended
OPERATING SEGMENT INFORMATION (Details) $ in Thousands	Sep. 30, 2024 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2024 USD ($) segment	Sep. 30, 2023 USD ($)
OPERATING SEGMENT INFORMATION
Number of reportable segments \| segment			2
Total revenue	$ 210,238	$ 203,161	$ 582,522	$ 599,938
Total segment adjusted gross profit	116,295	111,317	320,116	310,342
Stock-based compensation expense	(355)	(657)	(1,271)	(1,982)
Amortization of acquired technology	(6,323)	(7,157)	(19,406)	(21,985)
Gross profit	109,617	103,503	299,439	286,375
Segment depreciation expense:
Depreciation expense	3,361	3,544	10,131	10,603
Cloud and Edge
OPERATING SEGMENT INFORMATION
Total revenue	128,078	115,765	340,302	355,501
Total segment adjusted gross profit	86,661	78,455	226,726	231,729
Segment depreciation expense:
Depreciation expense	2,324	2,426	6,981	7,402
IP Optical Networks
OPERATING SEGMENT INFORMATION
Total revenue	82,160	87,396	242,220	244,437
Total segment adjusted gross profit	29,634	32,862	93,390	78,613
Segment depreciation expense:
Depreciation expense	$ 1,037	$ 1,118	$ 3,150	$ 3,201

STOCK-BASED COMPENSATION PLANS - Stock-Based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Stock-based compensation
Stock-based compensation	$ 4,045	$ 4,950	$ 12,061	$ 16,914
Product cost of revenue
Stock-based compensation
Stock-based compensation	64	121	234	385
Service cost of revenue
Stock-based compensation
Stock-based compensation	291	536	1,037	1,597
Research and development
Stock-based compensation
Stock-based compensation	745	1,259	2,429	3,821
Sales and marketing
Stock-based compensation
Stock-based compensation	1,108	1,402	3,219	5,673
General and administrative
Stock-based compensation
Stock-based compensation	$ 1,837	$ 1,632	$ 5,142	$ 5,438

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

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+ Details

INTANGIBLE ASSETS AND GOODWILL - Schedule of Intangible Assets and Amortization (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
INTANGIBLE ASSETS AND GOODWILL
Weighted average amortization period (years)	9 years 6 months	9 years 6 months 3 days
Cost	$ 619,268	$ 618,956
Accumulated amortization	419,946	380,869
Net carrying value	199,322	$ 238,087
Estimated future amortization expense for intangible assets
Remainder of 2024	11,785
2025	44,192
2026	39,143
2027	33,979
2028	23,400
2029	18,379
Thereafter	28,444
Total	$ 199,322
Developed technology
INTANGIBLE ASSETS AND GOODWILL
Weighted average amortization period (years)	7 years 10 months 2 days	7 years 10 months 2 days
Cost	$ 340,380	$ 340,380
Accumulated amortization	257,078	239,066
Net carrying value	$ 83,302	$ 101,314
Customer relationships
INTANGIBLE ASSETS AND GOODWILL
Weighted average amortization period (years)	11 years 10 months 9 days	11 years 10 months 9 days
Cost	$ 268,140	$ 268,140
Accumulated amortization	154,346	134,743
Net carrying value	$ 113,794	$ 133,397
Trade names
INTANGIBLE ASSETS AND GOODWILL
Weighted average amortization period (years)	3 years 10 months 17 days	3 years 10 months 17 days
Cost	$ 5,000	$ 5,000
Accumulated amortization	4,969	4,901
Net carrying value	$ 31	$ 99
Software licenses
INTANGIBLE ASSETS AND GOODWILL
Weighted average amortization period (years)	3 years	3 years
Cost	$ 5,748	$ 5,436
Accumulated amortization	3,553	2,159
Net carrying value	$ 2,195	$ 3,277

Cover - shares	9 Months Ended
Cover - shares	Sep. 30, 2024	Oct. 21, 2024
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2024
Document Transition Report	false
Entity File Number	001-38267
Entity Registrant Name	RIBBON COMMUNICATIONS INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	82-1669692
Entity Address, Address Line One	6500 Chase Oaks Boulevard, Suite 100,
Entity Address, City or Town	Plano
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75023
City Area Code	978
Local Phone Number	614-8100
Title of 12(b) Security	Common Stock, par value $0.0001
Trading Symbol	RBBN
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		175,383,687
Entity Central Index Key	0001708055
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q3
Amendment Flag	false

OPERATING SEGMENT INFORMATION

9 Months Ended

Sep. 30, 2024

OPERATING SEGMENT INFORMATION

OPERATING SEGMENT INFORMATION

(13) OPERATING SEGMENT INFORMATION

The Company has two reportable segments, which are intended to align with the manner in which the business is managed: Cloud and Edge, and IP Optical Networks.

The Cloud and Edge segment provides secure and reliable software and hardware products, solutions and services for enabling Voice over Internet Protocol ("VoIP") communications, Voice over Long-Term Evolution ("VoLTE") and Voice Over 5G ("VoNR") communications, and Unified Communications and Collaboration ("UC&C") within service provider and enterprise networks and from the cloud. The Cloud and Edge products are increasingly software-centric and cloud-native for deployment on private, public or hybrid cloud infrastructures, in data centers, on enterprise premises

and within service provider networks. Ribbon’s Cloud and Edge product portfolio consists primarily of its Session Border Controller ("SBC") products and its Network Transformation products.

The IP Optical Networks segment provides high-performance, secure solutions for IP networking and optical transport, supporting wireless networks including 5G, metro and edge aggregation, core networking, data center interconnect, legacy transformation and transport solutions for wholesale carriers. This portfolio is offered to service provider, enterprise and industry verticals with critical transport network infrastructures including utilities, government, defense, transportation, and education and research.

The Company has not provided segment asset information as such information is not provided to the CODM and accordingly, asset information is not used in assessing segment performance. Segment revenue and expenses included in the tables below represent direct revenue and expense attributable to each segment. Please see Note 4 for information regarding the allocation of goodwill between segments.

The CODM utilizes revenue and adjusted gross profit to measure and assess each segment’s performance. The Company calculates adjusted gross profit by excluding from cost of revenue: amortization of acquired technology, stock-based compensation, and may also exclude other items in future periods that the Company believes are not part of the Company’s core business. Adjusted gross profit is not a financial measure determined in accordance with U.S. GAAP, may not be comparable to similarly titled measures used by other companies, and should not be considered a substitute for gross profit or other results reported in accordance with U.S. GAAP. See below for a reconciliation of adjusted gross profit to gross profit which is the most directly comparable U.S. GAAP measure.

The tables below provide revenue, adjusted gross profit and depreciation expense by reportable segment for the three and nine months ended September 30, 2024 and 2023 (in thousands):


	Three months ended				Nine months ended
	September 30,		September 30,		September 30,		September 30,
	2024		2023		2024		2023
Segment revenue:
Cloud and Edge	$	128,078	$	115,765	$	340,302	$	355,501
IP Optical Networks		82,160		87,396		242,220		244,437
Revenue	$	210,238	$	203,161	$	582,522	$	599,938


	Three months ended				Nine months ended
	September 30,		September 30,		September 30,		September 30,
	2024		2023		2024		2023
Segment adjusted gross profit:
Cloud and Edge	$	86,661	$	78,455	$	226,726	$	231,729
IP Optical Networks		29,634		32,862		93,390		78,613
Total segment adjusted gross profit		116,295		111,317		320,116		310,342
Stock-based compensation expense		(355)		(657)		(1,271)		(1,982)
Amortization of acquired technology		(6,323)		(7,157)		(19,406)		(21,985)
Gross profit	$	109,617	$	103,503	$	299,439	$	286,375


	Three months ended				Nine months ended
	September 30,		September 30,		September 30,		September 30,
	2024		2023		2024		2023
Segment depreciation expense:
Cloud and Edge	$	2,324	$	2,426	$	6,981	$	7,402
IP Optical Networks		1,037		1,118		3,150		3,201
Depreciation expense	$	3,361	$	3,544	$	10,131	$	10,603

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

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+ Details

MAJOR CUSTOMERS (Details)	3 Months Ended		9 Months Ended
MAJOR CUSTOMERS (Details)	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Verizon Communications Inc. \| Revenue \| Customer
MAJOR CUSTOMERS
Concentration risk, percentage	15.00%	11.00%	13.00%	11.00%

DEBT

9 Months Ended

Sep. 30, 2024

DEBT

DEBT

(9) DEBT

2024 Credit Facility

On June 21, 2024, the Company entered into a Senior Secured Credit Facilities Credit Agreement (the “2024 Credit Facility” and “2024 Credit Agreement”) as guarantor, with the Company’s wholly-owned subsidiary, Ribbon Communications Operating Company, Inc., as the borrower (the “Borrower”), HPS Investment Partners, LLC ("HPS"), as administrative agent, and HPS and WhiteHorse Capital Management, LLC ("WhiteHorse" and, together with HPS, the "Lenders"), pursuant to which the Lenders provided the Company with a $385 million senior secured credit facility comprised of (i) a $350 million term loan (the “2024 Term Loan”) and (ii) a $35 million revolving credit facility (the “2024 Revolver”), including a $20 million sublimit for letters of credit. The proceeds received from the 2024 Term Loan were used to (a) repay 100% of the amounts outstanding under the 2020 Credit Facility, (b) redeem in full the Preferred Stock and (c) pay fees and expenses related to the 2024 Credit Facility. The excess proceeds are being used by the Company for working capital and other general corporate purposes.

The 2024 Term Loan and the 2024 Revolver bear interest, at the Borrower’s option, at either the Alternate Base Rate (“ABR”) or Term Secured Overnight Financing Rate ("SOFR") with an Applicable Margin for each (all as defined in the 2024 Credit Agreement). Margins for the first six months are 5.25% per annum for ABR Loans and 6.25% per annum for SOFR Loans. Thereafter, margins vary based on the Company’s Consolidated Net Leverage Ratio, ranging from 4.75% to 5.25% per annum for ABR Loans and 5.75% to 6.25% per annum for SOFR Loans. The 2024 Term Loan and the 2024 Revolver will both mature on June 21, 2029. The 2024 Term Loan is being repaid in equal quarterly installments: approximately $0.9 million beginning with the third quarter of 2024 through the second quarter of 2025; approximately $2.2 million beginning with the third quarter of 2025 and ending with the second quarter of 2027; and approximately $4.4 million quarterly thereafter, with the remaining principal balance of approximately $298.4 million due on the maturity date of June 21, 2029. In connection with the establishment of the 2024 Credit Facility, $7.7 million of original issue discount was withheld by the Lenders and the Company incurred $6.1 million of debt issuance costs for a total of $13.8 million that is being amortized to Interest expense, net over the term of the 2024 Credit Facility.

The 2024 Credit Facility requires compliance with a Maximum Consolidated Net Leverage Ratio (the "Financial Covenant"), as defined in the 2024 Credit Facility, which is tested on a quarterly basis. The Company was in compliance with the Financial Covenant as of September 30, 2024.

The indebtedness and other obligations under the 2024 Credit Facility are irrevocably and unconditionally guaranteed on a joint and several basis by the Company and its subsidiaries (together, the "Guarantors"). The 2024 Credit Facility is secured on a first-priority basis by a lien on substantially all assets of the Borrower and the Guarantors.

2020 Credit Facility

On June 21, 2024, the Company used the proceeds from the 2024 Credit Facility to, among other things, repay all amounts outstanding under its Senior Secured Credit Facilities Credit Agreement, dated March 3, 2020 (as amended, the "2020 Credit Facility"), by and among the Company, as a guarantor, Ribbon Communications Operating Company, Inc.,

as the borrower (the "Borrower"), Citizens Bank, N.A., Santander Bank, N.A., and others as lenders ("2020 Credit Facility Lenders"). The Company wrote off $2.0 million of debt issuance costs in conjunction with the early extinguishment of the 2020 Credit Facility.

The 2020 Credit Facility had a maturity date of March 2025 and originally provided for $500 million of commitments from the 2020 Credit Facility Lenders to the Borrower, comprised of $400 million in term loans (the "2020 Term Loan Facility") and a $100 million facility available for revolving loans (the "2020 Revolving Credit Facility"). Under the 2020 Revolving Credit Facility, a $30 million sublimit was originally available for letters of credit and a $20 million sublimit was available for swingline loans.

The indebtedness and other obligations under the 2020 Credit Facility were unconditionally guaranteed on a senior secured basis by the Company, Edgewater Networks, Inc., a wholly-owned subsidiary of the Company, and GENBAND Inc., a wholly-owned subsidiary of the Company (together, the "2020 Credit Facility Guarantors"). The 2020 Credit Facility was secured by first-priority liens on substantially all of the assets of the Borrower and the 2020 Credit Facility Guarantors, including substantially all of the assets of the Company.

The 2020 Credit Facility required compliance with certain financial covenants, including a minimum Consolidated Fixed Charge Coverage Ratio and a maximum Consolidated Net Leverage Ratio (each as defined in the 2020 Credit Facility, and each tested on a quarterly basis).

On March 24, 2023, the Company entered into the Sixth Amendment to the 2020 Credit Facility (the “Sixth Amendment”) effective March 30, 2023. The Sixth Amendment, among other things, increased the Maximum Consolidated Net Leverage Ratio (as defined in the 2020 Credit Facility), for the first, second and third quarters of 2023 to 4.50:1.00. In the fourth quarter of 2023 and the first quarter of 2024, the Maximum Consolidated Net Leverage Ratio declined to 4.25:1.00 and 4.00:1.00, respectively. Also, the Sixth Amendment reduced the minimum Consolidated Fixed Charge Coverage Ratio (as defined in the 2020 Credit Facility) to 1.10:1.00 through the first quarter of 2024. The Sixth Amendment reduced the maximum borrowings allowed under the 2020 Revolving Credit Facility from $100 million to $75 million and the sublimit available for letters of credit was reduced from $30 million to $20 million. In addition, the Sixth Amendment replaced LIBOR with SOFR as the alternative rate available to the Company for calculating interest owed under the 2020 Credit Facility with the margin fixed at 4.5%. In conjunction with the Sixth Amendment, the Company made a $75 million prepayment that was applied to the final payment due upon maturity in March 2025. The $75 million prepayment was almost entirely funded with the net proceeds from the Private Placement and the sales of the Company’s interest rate swap. Debt issuance costs associated with the Sixth Amendment totaled $1.7 million and were being amortized on a straight-line basis over the remaining life of the 2020 Credit Facility and were written off in conjunction with the early extinguishment of the 2020 Credit Facility on June 21, 2024.

The Company’s interest rates for the nine months ended September 30, 2023 under the 2020 Term Loan benefited from a hedge instrument that was in place, specifically a fixed rate swap, until it was sold in March 2023 (see Note 10). Following the sale of the fixed rate swap in March 2023, the Company’s interest rate was based upon U.S. dollar SOFR plus a fixed margin of 4.5%. The Company was in compliance with all covenants of the 2020 Credit Facility at December 31, 2023, including the Consolidated Net Leverage Ratio calculation that considered the Company’s debt to include Preferred Stock.


	September 30,			December 31,
	2024			2023
Current portion of Term Debt	$	4,813		$	35,102

Long-term Debt, net of Current:
Long-term Debt, net of Current (Face Amount)	$	344,312		$	200,293
Original Issue Discount		(6,611)			—
Unamortized Debt Issuance Costs - Contra-Liability		(5,273)			(2,811)
Long-term Debt, net of Current	$	332,428		$	197,482

Total Face Amount of Borrowings	$	349,125		$	235,395

Unamortized Original Issue Discount and Debt Issuance Costs:
Other Assets		1,183			557
Long-Term Debt - Contra Liability		11,884			2,811
Total Unamortized Original Issue Discount and Debt Issuance Costs	$	13,067		$	3,368

Letters of Credit Outstanding	$	—		$	2,711

Remaining Borrowing Capacity	$	35,000		$	72,289

Average Interest Rates:
Term Loan		11.2	%		10.0	%
Letters of Credit		—	%		4.5	%

The Company’s debt maturities as of September 30, 2024 were as follows:


Years ending December 31,
Remainder of 2024	$	875
2025		6,125
2026		8,750
2027		13,125
2028		17,500
2029		302,750
	$	349,125

Letters of Credit and Other Guarantees

The Company uses letters of credit, bank guarantees, and surety bonds in the course of its business. At September 30, 2024, the Company had $10.4 million of letters of credit, bank guarantees, and surety bonds outstanding (collectively, "Guarantees") under various uncommitted facilities and no letters of credit outstanding under the 2024 Credit Facility. At December 31, 2023, the Company had Guarantees aggregating $7.9 million, comprised of the $2.7 million of letters of credit under the 2020 Credit Facility described above and $5.2 million of Other Guarantees. At September 30, 2024 and December 31, 2023, the Company had cash collateral of $2.9 million and $0.1 million, respectively, supporting the Guarantees, which are reported in Restricted cash in the Company’s condensed consolidated balance sheets.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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Reference 17: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481139/470-20-50-1C

Reference 18: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1E
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481139/470-20-50-1E

Reference 19: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481139/470-20-50-1I

Reference 20: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481139/470-20-50-1I

Reference 21: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481139/470-20-50-1I

+ Details

LEASES

9 Months Ended

Sep. 30, 2024

LEASES

LEASES

(16) LEASES

The Company has operating leases for corporate offices and research and development facilities and has historically had finance leases for certain equipment. Operating leases are reported separately in the Company’s condensed consolidated balance sheets. Assets acquired under finance leases, if any, are included in Property and equipment, net, in the condensed consolidated balance sheets.

The Company determines if an arrangement is a lease at inception. A contract is determined to contain a lease component if the arrangement provides the Company with a right to control the use of an identified asset. Lease agreements may include lease and non-lease components. In such instances for all classes of underlying assets, the Company does not separate lease and non-lease components but rather, accounts for the entire arrangement under leasing guidance. Leases with an initial term of 12 months or less are not recorded on the balance sheet and lease expense for these leases is recognized on a straight-line basis over the lease term.

Right-of-use assets and lease liabilities are initially measured based on the present value of the future minimum fixed lease payments (i.e., fixed payments in the lease contract) over the lease term at the commencement date. As the Company’s existing leases do not have a readily determinable implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future minimum fixed lease payments. The Company calculates its incremental borrowing rate to reflect the interest rate that it would have to pay to borrow on a collateralized basis an amount equal to the lease payments in a similar economic environment over a similar term and considers its historical borrowing activities and market data from entities with comparable credit ratings in this determination. The measurement of the right-of-use asset also includes any lease payments made prior to the commencement date (excluding any lease incentives) and initial direct costs incurred. The Company assessed its right-of-use assets for impairment as of September 30, 2024 and December 31, 2023 and determined no impairment has occurred.

Lease terms may include options to extend or terminate the lease and the Company incorporates such options in the lease term when it has the unilateral right to make such an election and it is reasonably certain that the Company will exercise that option. In making this determination, the Company considers its prior renewal and termination history and planned usage of the assets under lease, incorporating expected market conditions.

For operating leases, lease expense for minimum fixed lease payments is recognized on a straight-line basis over the lease term. The expense for finance leases includes both interest and amortization expense components, with the interest component calculated based on the effective interest method and the amortization component calculated based on straight-line amortization of the right-of-use asset over the lease term. Lease contracts may contain variable lease costs, such as common area maintenance, utilities and tax reimbursements that vary over the term of the contract. Variable lease costs are not included in minimum fixed lease payments and as a result, are excluded from the measurement of the right-of-use assets and lease liabilities. The Company expenses all variable lease costs as incurred.

Certain leased facilities are being partially or fully vacated as part of the 2022 Restructuring Plan and for some of those facilities, the Company has no plans to enter into sublease agreements. Accordingly, the Company accelerated the amortization of those lease assets through the planned cease-use date of each facility, resulting in additional amortization expense $0.2 million and $0.8 million, respectively, in the three and nine months ended September 30, 2023. No such accelerated amortization was recorded in the three and nine months ended September 30, 2024. The Company did not record estimated future variable lease costs in the three and nine months ended September 30, 2024 or 2023 related to the 2022 Restructuring Plan.

All incremental accelerated amortization and accruals for estimated future variable costs are included in Restructuring and related expense in the Company’s condensed consolidated statements of operations. At September 30, 2024 and December 31, 2023, the Company had accruals of $1.2 million and $1.5 million, respectively, for all future anticipated variable lease costs related to these facilities. The Company may incur additional future expense if it is unable to sublease other locations included in the Facilities Initiative.

The Company leases its corporate offices and other facilities under operating leases, which expire at various times through 2033.

The Company’s right-of-use lease assets and lease liabilities at September 30, 2024 and December 31, 2023 were as follows (in thousands):


		September 30,		December 31,
	Classification	2024		2023
Assets:
Operating lease assets	Operating lease right-of-use assets	$	30,732	$	39,783

Liabilities:
Current Operating	Operating lease liabilities	$	10,644	$	15,739
Non-Current Operating	Operating lease liabilities, net of current		33,249		38,711
Total Operating lease liabilities		$	43,893	$	54,450

The components of lease expense for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands):


	Three months ended				Nine months ended
	September 30,		September 30,		September 30,		September 30,
	2024		2023		2024		2023
Operating lease cost*	$	4,165	$	4,708	$	12,471	$	14,205
Short-term lease cost		3,362		3,454		10,216		10,544
Variable lease costs (costs excluded from minimum fixed lease payments)**		814		819		2,497		2,525
Sublease income		(209)		(282)		(686)		(1,105)
Net lease cost	$	8,132	$	8,699	$	24,498	$	26,169

**	No variable lease costs were accrued in the three and nine months ended September 30, 2024 or 2023 for future estimated variable expenses related to certain assets partially or fully vacated with no intent or ability to sublease.

Cash flows related to the Company’s leases included in the measurement of operating lease liabilities were classified as operating cash flows and totaled $14.0 million and $14.3 million in the nine months ended September 30, 2024 and 2023, respectively.

Other information related to the Company’s leases as of September 30, 2024 and December 31, 2023 was as follows:


	September 30,		December 31,
	2024		2023
Weighted average remaining lease term (years):
Operating leases	5.44		5.50
Weighted average discount rate:
Operating leases	7.20	%	6.34	%

Future minimum fixed lease payments under noncancelable leases at September 30, 2024 were as follows (in thousands):


	Operating
	leases
Remainder of 2024	$	4,585
2025		11,118
2026		9,313
2027		7,987
2028		6,452
2029 and beyond		13,164
Total lease payments		52,619
Less: interest		(8,726)
Present value of lease liabilities	$	43,893

LEASES - Other Information (Details)	Sep. 30, 2024	Dec. 31, 2023
Weighted average remaining lease term (years):
Operating leases	5 years 5 months 8 days	5 years 6 months
Weighted average discount rate:
Operating leases	7.20%	6.34%

RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES - Components of Restructuring Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES
Severance and related costs	$ 2,289	$ 804	$ 4,264	$ 9,355
Variable and other facilities-related costs	1,505	1,653	4,515	3,784
Accelerated amortization of lease assets due to cease-use	0	223	0	785
Restructuring and related expense	$ 3,794	$ 2,680	$ 8,779	$ 13,924

PREFERRED STOCK AND WARRANTS - Warrant and Preferred Stock Liability (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Preferred stock liability
Reversal of fair value adjustments	$ 8,091	$ (572)
Warrant liability
Fair value change	292	$ (444)
Preferred Stock
Preferred stock liability
Beginning balance	53,337
Payable in-kind dividends	2,743
Reversal of fair value adjustments	5,605
Call premium (3%)	1,851
Redemption (June 25, 2024)	(63,536)
Warrant
Warrant liability
Beginning balance	5,295
Fair value change	292
Ending balance	$ 5,587

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Cash flows from operating activities:
Net loss	$ (60,599)	$ (73,285)
Adjustments to reconcile net loss to cash flows used in operating activities:
Depreciation and amortization of property and equipment	10,131	10,603
Amortization of intangible assets	39,077	43,725
Amortization of debt issuance costs and original issue discount	4,137	2,517
Amortization of accumulated other comprehensive gain related to interest rate swap	(8,196)	(3,818)
Stock-based compensation	12,061	16,914
Deferred income taxes	(14,614)	(3,617)
Gain on sale of swap		(7,301)
Change in fair value of warrant liability	292	(444)
Change in fair value of preferred stock liability	8,091	(572)
Dividends accrued on preferred stock liability	2,743	2,573
Payment of dividends accrued on preferred stock liability	(6,686)
Foreign currency exchange losses	1,357	1,174
Changes in operating assets and liabilities:
Accounts receivable	18,896	31,345
Inventory	(1,630)	(4,327)
Other operating assets	9,456	27,785
Accounts payable	(7,580)	(22,276)
Accrued expenses and other long-term liabilities	1,624	(16,255)
Deferred revenue	(20,087)	(7,793)
Net cash used in operating activities	(11,527)	(3,052)
Cash flows from investing activities:
Purchases of property and equipment	(14,428)	(6,620)
Purchases of software licenses	(462)
Net cash used in investing activities	(14,890)	(6,620)
Cash flows from financing activities:
Borrowings under revolving line of credit	44,106	67,000
Principal payments on revolving line of credit	(44,106)	(57,000)
Proceeds from issuance of term debt	342,300
Principal payments of term debt	(236,270)	(90,044)
Payment of debt issuance costs	(5,985)	(1,572)
Proceeds from issuance of preferred stock and warrant liabilities		53,350
Payment of preferred stock liability	(56,850)
Proceeds from the exercise of stock options	17	15
Payment of tax obligations related to vested stock awards and units	(3,035)	(3,912)
Net cash provided by (used in) financing activities	40,177	(32,163)
Effect of exchange rate changes on cash and cash equivalents	(297)	(926)
Net increase (decrease) in cash and cash equivalents	13,463	(42,761)
Cash, cash equivalents and restricted cash, beginning of year	26,630	67,262
Cash, cash equivalents and restricted cash, end of period	40,093	24,501
Supplemental disclosure of cash flow information:
Interest paid	22,851	18,606
Income taxes paid	12,807	9,721
Income tax refunds received	1,294	1,160
Supplemental disclosure of non-cash investing activities:
Capital expenditures incurred, but not yet paid	3,946	2,505
Inventory transfers to property and equipment	1,297	1,524
Supplemental disclosure of non-cash financing activities:
Fair value of vested restricted and performance-based stock grants	$ 10,454	$ 13,454

LEASES - Right of Use Lease Assets and Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Assets:
Operating lease assets	$ 30,732	$ 39,783
Liabilities:
Current Operating	10,644	15,739
Non-Current Operating	33,249	38,711
Total Operating lease liabilities	$ 43,893	$ 54,450

INVENTORY (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
INVENTORY
On-hand final assemblies and finished goods inventories	$ 94,269	$ 93,077
Deferred cost of goods sold	2,409	3,269
Gross inventory	96,678	96,346
Less noncurrent portion (included in Other assets)	(19,362)	(18,825)
Current portion	$ 77,316	$ 77,521

RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES - Restructuring Accrual Activity (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Restructuring plan accrual activity
Initiatives charged to expense	$ 3,794	$ 2,680	$ 8,779	$ 13,924
2023 Restructuring Initiative
Restructuring plan accrual activity
Initiatives charged to expense	100		2,100
2022 Restructuring Plan
Restructuring plan accrual activity
Initiatives charged to expense	1,500		4,500
Severance \| 2023 Restructuring Initiative
Restructuring plan accrual activity
Balance at the beginning of the period			671
Initiatives charged to expense			2,027
Cash payments			(2,399)
Net transfer to operating lease accounts			0
Balance at the end of the period	299		299
Variable and other facilities-related costs \| 2022 Restructuring Plan
Restructuring plan accrual activity
Balance at the beginning of the period			468
Initiatives charged to expense			4,514
Cash payments			(4,613)
Balance at the end of the period	$ 369		$ 369

BASIS OF PRESENTATION - Narrative (Details) $ in Thousands	9 Months Ended
BASIS OF PRESENTATION - Narrative (Details) $ in Thousands	Sep. 30, 2024 USD ($) segment country	Dec. 31, 2023 USD ($)
BASIS OF PRESENTATION
Number of countries \| country	30
Number of operating segments \| segment	2
Restricted cash	$ 2,853	$ 136
Restricted short-term bank deposits
BASIS OF PRESENTATION
Restricted cash	$ 2,900	$ 100

RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES (Tables)

9 Months Ended

Sep. 30, 2024

RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES

Schedule of restructuring accrual activity

Restructuring and related expense for the three and nine months ended September 30, 2024 and 2023 was comprised of the following (in thousands):


	Three months ended				Nine months ended
	September 30,		September 30,		September 30,		September 30,
	2024		2023		2024		2023
Severance and related costs	$	2,289	$	804	$	4,264	$	9,355
Variable and other facilities-related costs		1,505		1,653		4,515		3,784
Accelerated amortization of lease assets due to cease-use		—		223		—		785
	$	3,794	$	2,680	$	8,779	$	13,924

A summary of the 2023 Restructuring Plan accrual activity for the nine months ended September 30, 2024 is as follows (in thousands):


	Balance at		Initiatives				Net transfer to		Balance at
	January 1,		charged to		Cash		operating lease		September 30,
	2024		expense		payments		accounts		2024
Severance	$	671	$	2,027	$	(2,399)	$	—	$	299

A summary of the 2022 Restructuring Plan accrual activity for the nine months ended September 30, 2024 is as follows (in thousands):


	Balance at		Initiatives
	January 1,		charged to	Cash	Balance at
	2024		expense	payments	September 30, 2024
Variable and other facilities-related costs	$	468	4,514	(4,613)	$	369

INTANGIBLE ASSETS AND GOODWILL (Tables)

9 Months Ended

Sep. 30, 2024

INTANGIBLE ASSETS AND GOODWILL

Schedule of intangible assets

The Company’s intangible assets at September 30, 2024 and December 31, 2023 consisted of the following (in thousands):


	Weighted
	average
	amortization					Net
	period			Accumulated		carrying
September 30, 2024	(years)	Cost		amortization		value
Developed technology	7.84	$	340,380	$	257,078	$	83,302
Customer relationships	11.86		268,140		154,346		113,794
Trade names	3.88		5,000		4,969		31
Software licenses	3.00		5,748		3,553		2,195
	9.50	$	619,268	$	419,946	$	199,322


	Weighted
	average
	amortization					Net
	period			Accumulated		carrying
December 31, 2023	(years)	Cost		amortization		value
Developed technology	7.84	$	340,380	$	239,066	$	101,314
Customer relationships	11.86		268,140		134,743		133,397
Trade names	3.88		5,000		4,901		99
Software licenses	3.00		5,436		2,159		3,277
	9.51	$	618,956	$	380,869	$	238,087

Schedule of estimated future amortization expense for intangible assets

Estimated future amortization expense for the Company’s intangible assets at September 30, 2024 was as follows (in thousands):


Years ending December 31,
Remainder of 2024	$	11,785
2025		44,192
2026		39,143
2027		33,979
2028		23,400
2029		18,379
Thereafter		28,444
	$	199,322

Schedule of goodwill

There were no changes to the carrying value of the Company’s goodwill in the nine months ended September 30, 2024 and 2023. The components of goodwill at both September 30, 2024 and 2023 were as follows (in thousands):


	Cloud and		IP Optical
	Edge		Networks		Total
Goodwill	$	392,302	$	191,996	$	584,298
Accumulated impairment losses		(167,406)		(116,000)		(283,406)
	$	224,896	$	75,996	$	300,892

- Definition

Tabular disclosure of goodwill by reportable segment and in total which includes a rollforward schedule.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
-Topic 350
-SubTopic 20
-Name Accounting Standards Codification
-Section 55
-Paragraph 24
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482548/350-20-55-24

Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 350
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482573/350-20-50-1

Reference 3: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 350
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (h)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482573/350-20-50-1

Reference 4: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 350
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482573/350-20-50-1

Reference 5: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 350
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482573/350-20-50-1

Reference 6: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 350
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482573/350-20-50-1

Reference 7: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 350
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482573/350-20-50-1

Reference 8: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 350
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (e)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482573/350-20-50-1

Reference 9: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 350
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (f)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482573/350-20-50-1

Reference 10: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 350
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (g)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482573/350-20-50-1

Reference 11: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 350
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1A
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482573/350-20-50-1A

Reference 12: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 350
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482573/350-20-50-2

+ Details

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Current assets:
Cash and cash equivalents	$ 37,240	$ 26,494
Restricted cash	2,853	136
Accounts receivable, net	249,183	268,421
Inventory	77,316	77,521
Other current assets	49,987	46,146
Total current assets	416,579	418,718
Property and equipment, net	48,782	41,820
Intangible assets, net	199,322	238,087
Goodwill	300,892	300,892
Deferred income taxes	84,472	69,761
Operating lease right-of-use assets	30,732	39,783
Other assets	33,980	35,092
Total assets	1,114,759	1,144,153
Current liabilities:
Current portion of term debt	4,813	35,102
Accounts payable	78,939	85,164
Accrued expenses and other	102,942	91,687
Operating lease liabilities	10,644	15,739
Deferred revenue	95,761	113,381
Total current liabilities	293,099	341,073
Long-term debt, net of current	332,428	197,482
Warrant liability	5,587	5,295
Preferred stock liability, $0.01 par value per share; 10,000,000 shares authorized, none issued and outstanding at September 30, 2024; 55,000 shares issued and outstanding at December 31, 2023 ($56,650 liquidation preference)		53,337
Operating lease liabilities, net of current	33,249	38,711
Deferred revenue, net of current	16,751	19,218
Deferred income taxes	5,616	5,616
Other long-term liabilities	32,495	30,658
Total liabilities	719,225	691,390
Commitments and contingencies (Note 19)
Stockholders' equity:
Common stock, $0.0001 par value per share; 240,000,000 shares authorized; 174,735,798 shares issued and outstanding at September 30, 2024; 172,083,667 shares issued and outstanding at December 31, 2023	17	17
Additional paid-in capital	1,967,952	1,958,909
Accumulated deficit	(1,580,549)	(1,519,950)
Accumulated other comprehensive income	8,114	13,787
Total stockholders' equity	395,534	452,763
Total liabilities and stockholders' equity	$ 1,114,759	$ 1,144,153

STOCK-BASED COMPENSATION PLANS (Tables)

9 Months Ended

Sep. 30, 2024

STOCK-BASED COMPENSATION PLANS

Schedule of activity related to unvested restricted stock units


		Weighted
		Average
		Grant Date
	Shares	Fair Value
Unvested balance at January 1, 2024	7,091,368	$	3.18
Granted	1,423,228	$	3.22
Vested	(3,444,670)	$	3.47
Forfeited	(326,985)	$	3.18
Unvested balance at September 30, 2024	4,742,941	$	2.99

Schedule of activity related to performance based stock units


		Weighted
		Average
		Grant Date
	Shares	Fair Value
Unvested balance at January 1, 2024	6,297,931	$	2.07
Granted	1,338,985	$	4.32
Vested	(288,672)	$	3.14
Forfeited	(4,035,835)	$	1.33
Unvested balance at September 30, 2024	3,312,409	$	3.79

Schedule of stock-based compensation expenses which are Included in condensed consolidated statement of operations

The condensed consolidated statements of operations include stock-based compensation for the three and nine months ended September 30, 2024 and 2023 as follows (in thousands):


	Three months ended				Nine months ended
	September 30,		September 30,		September 30,		September 30,
	2024		2023		2024		2023
Product cost of revenue	$	64	$	121	$	234	$	385
Service cost of revenue		291		536		1,037		1,597
Research and development		745		1,259		2,429		3,821
Sales and marketing		1,108		1,402		3,219		5,673
General and administrative		1,837		1,632		5,142		5,438
	$	4,045	$	4,950	$	12,061	$	16,914

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables)

9 Months Ended

Sep. 30, 2024

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Schedule of impact of derivative financial instrument on condensed consolidated statement of operations

The impact of the Company’s derivative financial instrument on its condensed consolidated statements of comprehensive (loss) income for the three and nine months ended September 30, 2024 and 2023 was as follows, net of tax (in thousands):


	Three months ended				Nine months ended
	September 30,		September 30,		September 30,		September 30,
	2024		2023		2024		2023
Gain (loss) recognized in other comprehensive income (loss) on swap, net of tax	$	—	$	—	$	—	$	(2,715)
Amount reclassified from accumulated other comprehensive income to other expense, net upon sale of swap, net of tax		—		—		—		(5,099)
Amount reclassified from accumulated other comprehensive income to interest expense		—		(1,322)		(6,019)		(5,829)
Unrealized gain (loss) on interest rate swap, net of reclassifications and amortization	$	—	$	(1,322)	$	(6,019)	$	(13,643)

INCOME TAXES (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
INCOME TAXES (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
INCOME TAXES
Income tax provisions	$ 1,599	$ 4,594	$ 6,473	$ 11,463

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References

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+ Details

REVENUE RECOGNITION - Narrative (Details) $ in Millions	9 Months Ended
REVENUE RECOGNITION - Narrative (Details) $ in Millions	Sep. 30, 2024 USD ($) item	Sep. 30, 2023 USD ($)	Dec. 31, 2023 USD ($)
REVENUE RECOGNITION
Number of primary revenue sources \| item	2
Revenue agreement term	1 year
Revenue recognized	$ 95	$ 92
Customer contract expected life (in years)	5 years
Deferred sales commissions capitalized	$ 3		$ 3
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01
REVENUE RECOGNITION
Revenue to be recognized	$ 3
Revenue, remaining performance obligation, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01
REVENUE RECOGNITION
Revenue to be recognized	$ 7
Revenue, remaining performance obligation, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-01-01
REVENUE RECOGNITION
Revenue to be recognized	$ 7
Revenue, remaining performance obligation, period	1 year

BASIS OF PRESENTATION - Factoring of Accounts Receivable and Associated Fees (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
BASIS OF PRESENTATION
Accounts receivable sold	$ 26,635	$ 24,701	$ 73,597	$ 73,028
Less factoring fees	(532)	(752)	(1,466)	(2,022)
Net cash proceeds	$ 26,103	$ 23,949	$ 72,131	$ 71,006

ACCRUED EXPENSES AND OTHER

9 Months Ended

Sep. 30, 2024

ACCRUED EXPENSES AND OTHER

ACCRUED EXPENSES AND OTHER

(6) ACCRUED EXPENSES AND OTHER

Accrued expenses at September 30, 2024 and December 31, 2023 consisted of the following (in thousands):


	September 30,		December 31,
	2024		2023
Employee compensation and related costs	$	36,982	$	33,682
Professional fees		19,232		19,702
Taxes payable		13,538		8,383
Other		33,190		29,920
	$	102,942	$	91,687

FAIR VALUE HIERARCHY (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
FAIR VALUE HIERARCHY
Total Face Amount of Borrowings	$ 349,125	$ 235,395
Fair value of debt	330,400	235,100
Warrant liability	5,587	5,295
Fair value of preferred stock		53,300
Term loan facility \| 2020 credit facility
FAIR VALUE HIERARCHY
Total Face Amount of Borrowings	$ 349,100	$ 235,400

- Definition

Amount, after deduction of unamortized premium (discount) and debt issuance cost, of long-term debt. Excludes lease obligation.

+ References + Details

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

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-URI https://asc.fasb.org/1943274/2147477271/946-320-S99-6

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-Paragraph 6
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-Section S99
-Paragraph 6
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Reference 54: http://www.xbrl.org/2003/role/disclosureRef
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Reference 56: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

DEBT - Credit Facilities (Details) $ in Thousands			9 Months Ended
DEBT - Credit Facilities (Details) $ in Thousands	Jun. 21, 2024 USD ($)	Mar. 24, 2023 USD ($)	Sep. 30, 2024 USD ($)	Sep. 30, 2023 USD ($)	Dec. 31, 2023 USD ($)	Mar. 03, 2020 USD ($)
DEBT
Original Issue Discount			$ 6,611		$ 0
Amortization of debt issuance costs and original issue discount			$ 4,137	$ 2,517
Letters of Credit
DEBT
Debt interest rate			0.00%		4.50%
2024 Credit Agreement
DEBT
Commitments from lender	$ 385,000
2024 Credit Agreement \| Term loan facility
DEBT
Commitments from lender	350,000
Remaining principal payable at maturity	298,400
Original Issue Discount	7,700
Debt issuance costs, gross	6,100
Amortization of debt issuance costs and original issue discount	13,800
2024 Credit Agreement \| Term loan facility \| Debt Instrument, Period One
DEBT
Quarterly principal payment amount	900
2024 Credit Agreement \| Term loan facility \| Debt Instrument, Period Two
DEBT
Quarterly principal payment amount	2,200
2024 Credit Agreement \| Term loan facility \| Debt Instrument, Period Three
DEBT
Quarterly principal payment amount	$ 4,400
2024 Credit Agreement \| Term loan facility \| Alternate Base Rate
DEBT
Basis spread on variable rate	5.25%
2024 Credit Agreement \| Term loan facility \| Minimum \| Alternate Base Rate
DEBT
Basis spread on variable rate	4.75%
2024 Credit Agreement \| Term loan facility \| Maximum \| Alternate Base Rate
DEBT
Basis spread on variable rate	5.25%
2024 Credit Agreement \| Revolving Credit Facility
DEBT
Commitments from lender	$ 35,000
2024 Credit Agreement \| Revolving Credit Facility \| SOFR
DEBT
Basis spread on variable rate	6.25%
2024 Credit Agreement \| Revolving Credit Facility \| Minimum \| SOFR \| Line of Credit
DEBT
Basis spread on variable rate	5.75%
2024 Credit Agreement \| Revolving Credit Facility \| Maximum \| SOFR \| Line of Credit
DEBT
Basis spread on variable rate	6.25%
2024 Credit Agreement \| Letters of Credit
DEBT
Commitments from lender	$ 20,000
2020 credit facility
DEBT
Commitments from lender	$ 500,000
Percentage of debt repaid or redeemed	100.00%
Write off of capitalized debt issuance costs	$ 2,000
Consolidated net leverage ratio		1.10
2020 credit facility \| Maximum \| Debt Instrument, Period One
DEBT
Consolidated net leverage ratio		4.50
2020 credit facility \| Maximum \| Debt Instrument, Period Two
DEBT
Consolidated net leverage ratio		4.25
2020 credit facility \| Maximum \| Debt Instrument, Period Three
DEBT
Consolidated net leverage ratio		4.00
2020 credit facility \| Term loan facility
DEBT
Commitments from lender	400,000
2020 credit facility \| Revolving Credit Facility
DEBT
Commitments from lender	100,000	$ 75,000				$ 100,000
Debt issuance costs, gross		1,700
Repayments of debt		75,000
2020 credit facility \| Letters of Credit
DEBT
Commitments from lender	30,000	$ 20,000				$ 30,000
Debt interest rate		4.50%
2020 credit facility \| Letters of Credit \| SOFR
DEBT
Basis spread on variable rate			4.50%
2020 credit facility \| Swingline Loan
DEBT
Commitments from lender	$ 20,000

COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2024

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

(19) COMMITMENTS AND CONTINGENCIES

Liabilities for Royalty Payments to the IIA

Prior to the Company’s acquisition of ECI Telecom Group Ltd. ("ECI"), ECI had received research and development grants from the Office of the Innovation Authority of the Israeli Ministry of Economics (the "IIA"). The Company assumed ECI’s contract with the IIA, which requires the Company to pay royalties to the IIA on proceeds from the sale of products which the Israeli government has supported by way of research and development grants. The

royalties for grants prior to 2017 were calculated at the rates of 1.3% to 5.0% of the aggregated proceeds from the sale of such products developed at certain of the Company’s R&D centers, up to an amount not exceeding 100% of such grants plus interest at LIBOR. Effective for grants approved in 2017 and subsequently, interest was calculated at the higher of LIBOR plus 1.5% to 2.75%. At September 30, 2024, the Company had $1.6 million of unpaid royalties accrued. The Company’s maximum possible future royalties commitment at September 30, 2024 was $19.8 million, including interest of $1.2 million, is based upon estimates of future product sales and the grants received from the IIA not yet repaid.

Litigation

The Company is often a party to disputes and legal proceedings that it considers routine and incidental to its business, including those described below. The Company believes that it has meritorious defenses to the allegations made in the pending cases and intends to vigorously defend these lawsuits; however, the Company is currently unable to forecast the ultimate outcome of these or similar matters. Since it is difficult to predict the outcome of legal proceedings, it is possible that the ultimate outcomes could materially and adversely affect the Company’s business, financial position, results of operations or cash flows. Accordingly, with respect to these proceedings, the Company is currently unable to reasonably estimate the possible loss or range of possible loss.

Miller Complaint. On November 8, 2018, Ron Miller, a purported stockholder of the Company, filed a Class Action Complaint (the "Miller Complaint") in the United States District Court for the District of Massachusetts (the "Massachusetts District Court") against the Company and three of its former officers (collectively, the "Defendants"), claiming to represent a class of purchasers of Sonus common stock during the period from January 8, 2015 through March 24, 2015 and alleging violations of the federal securities laws. Similar to a previous complaint entitled Sousa et al. vs. Sonus Networks, Inc. et al., which was dismissed with prejudice by an order dated June 6, 2017, the Miller Complaint claims that the Defendants made misleading forward-looking statements concerning Sonus’ expected fiscal first quarter of 2015 financial performance, which statements were also the subject of an August 7, 2018 Securities and Exchange Commission Cease and Desist Order, whose findings the Company neither admitted nor denied. The Miller plaintiffs are seeking monetary damages.

After the Miller Complaint was filed, several parties filed and briefed motions seeking to be selected by the Massachusetts District Court to serve as a Lead Plaintiff in the action. On June 21, 2019, the Massachusetts District Court appointed a group as Lead Plaintiffs and the Lead Plaintiffs filed an amended complaint on July 19, 2019. On August 30, 2019, the Defendants filed a motion to dismiss the Miller Complaint and, on October 4, 2019, the Lead Plaintiffs filed an opposition to the motion to dismiss. There was an oral argument on the motion to dismiss on February 12, 2020, and on October 20, 2022 the court denied the motion to dismiss. In June 2023, the Defendants agreed to a settlement in principle with the named plaintiffs, and final approval of the settlement was provided by the court on April 24, 2024. The settlement provided a release of all claims asserted in the litigation to all Defendants, who continue to deny liability. The $4.5 million settlement amount was funded by the provider of the Company’s Directors and Officers liability insurance policy.

Charter Complaint. On September 19, 2022, Charter Communications Operating, LLC (“Charter”) filed two complaints against two of our subsidiaries (Sonus Networks, Inc. and Ribbon Communications Operating Company, Inc.) alleging breach of contract with respect to indemnification obligations purportedly owed to Charter in connection with Charter’s legal dispute with Sprint Communications Company L.P., which was settled by Charter in March 2022. One complaint was filed in the Supreme Court of the State of New York, in New York County; the second complaint was filed by Charter as well as co-plaintiffs Charter Communications Holding Company, LLC and Bright House Networks, LLC, in the Superior Court of the State of Delaware in and for New Castle County. In both complaints, Charter is seeking monetary damages. The Company filed its answer to the first complaint file in New York on December 7, 2022 and to the second complaint filed in Delaware on January 9, 2023. Discovery is on-going and the court in the Delaware complaint has set a new trial date of June 2025.

WideOpenWest Complaint. On August 9, 2023, WideOpenWest, Inc. and WideOpenWest Finance, LLC (collectively, “WOW”) filed a complaint against Ribbon alleging breach of contract with respect to indemnification obligations purportedly owed to WOW in connection with WOW’s legal dispute with Sprint Communications Company L.P., which was settled by WOW in the second quarter of 2023. The complaint was filed in the 429th Judicial District of the District Court of the State of Texas, in Collin County, Texas and has since been transferred to the 493rd Judicial District Court in Collin County. In the complaint, WOW is seeking monetary damages. The Company filed its answer to the complaint on October 5, 2023. On October 14, 2024, the Company and WOW agreed to settle this matter. In connection with the settlement, the Company will pay WOW a total of $5.0 million, with $2.0 million paid at the time of settlement and the remaining $3.0 million paid over the next 18-months in equal quarterly installments.

PREFERRED STOCK AND WARRANTS (Tables)

9 Months Ended

Sep. 30, 2024

PREFERRED STOCK AND WARRANTS

Schedule of fair value of preferred stock and warrants


	Warrants
	(Black-Scholes)
Stock price	$	3.25
Strike price	$	3.77
Risk-free rate		3.59	%
Volatility		61.4	%
Dividend yield		0.0	%
Time to expiration (years)		2.5
Fair value of Warrant per share	$	1.15

The changes in the Company’s Preferred Stock and Warrant liabilities for the nine months ended September 30, 2024 were as follows (in thousands):


	Preferred stock
	liability
Balance at January 1, 2024	$	53,337
Payable in-kind dividends		2,743
Reversal of fair value adjustments		5,605
Call premium (3%)		1,851
Redemption (June 25, 2024)		(63,536)
Balance at September 30, 2024	$	—


	Warrant liability
Balance at January 1, 2024	$	5,295
Fair value change		292
Balance at September 30, 2024	$	5,587

REVENUE RECOGNITION (Tables)

9 Months Ended

Sep. 30, 2024

REVENUE RECOGNITION

Schedule of timing of performance obligation


	When Performance Obligation is Typically
Performance Obligation	Satisfied	When Payment is Typically Due
Software and Product Revenue
Software licenses (perpetual or term)	Upon transfer of control; typically, when made available for download (point in time)	Generally, within 30 days of invoicing except for term licenses, which may be paid for over time
Software licenses (subscription)	Upon activation of hosted site (over time)	Generally, within 30 days of invoicing
Hardware	When control of the hardware passes to the customer; typically, upon delivery (point in time)	Generally, within 30 days of invoicing
Software upgrades	Upon transfer of control; typically, when made available for download (point in time)	Generally, within 30 days of invoicing
Customer Support Revenue
Customer support	Ratably over the course of the support contract (over time)	Generally, within 30 days of invoicing
Professional Services
Other professional services (excluding training services)	As work is performed (over time)	Generally, within 30 days of invoicing (upon completion of services)
Training	When the class is taught (point in time)	Generally, within 30 days of services being performed

Schedule of disaggregation of revenue


					Service revenue
	Product		Service revenue		(professional
Three months ended September 30, 2024	revenue		(maintenance)		services)		Total revenue
United States	$	58,198	$	33,670	$	17,690	$	109,558
Europe, Middle East and Africa		24,708		17,918		7,141		49,767
Asia Pacific		25,590		10,262		2,388		38,240
Other		3,655		7,169		1,849		12,673
	$	112,151	$	69,019	$	29,068	$	210,238


					Service revenue
	Product		Service revenue		(professional
Three months ended September 30, 2023	revenue		(maintenance)		services)		Total revenue
United States	$	40,162	$	33,454	$	12,440	$	86,056
Europe, Middle East and Africa		31,969		18,268		8,120		58,357
Asia Pacific		32,070		10,016		3,043		45,129
Other		4,300		7,534		1,785		13,619
	$	108,501	$	69,272	$	25,388	$	203,161


					Service revenue
	Product		Service revenue		(professional
Nine months ended September 30, 2024	revenue		(maintenance)		services)		Total revenue
United States	$	120,173	$	99,156	$	42,812	$	262,141
Europe, Middle East and Africa		99,636		53,105		23,027		175,768
Asia Pacific		68,304		30,262		7,912		106,478
Other		10,781		22,397		4,957		38,135
	$	298,894	$	204,920	$	78,708	$	582,522


					Service revenue
	Product		Service revenue		(professional
Nine months ended September 30, 2023	revenue		(maintenance)		services)		Total revenue
United States	$	131,774	$	100,417	$	35,135	$	267,326
Europe, Middle East and Africa		88,235		56,393		22,374		167,002
Asia Pacific		89,495		29,552		8,456		127,503
Other		9,662		23,126		5,319		38,107
	$	319,166	$	209,488	$	71,284	$	599,938

The Company’s product revenue from indirect sales through its channel partner program and from its direct sales program for the three and nine months ended September 30, 2024 and 2023 was as follows (in thousands):


	Three months ended				Nine months ended
	September 30,		September 30,		September 30,		September 30,
	2024		2023		2024		2023
Indirect sales through channel partner program	$	38,000	$	35,950	$	114,958	$	109,454
Direct sales		74,151		72,551		183,936		209,712
	$	112,151	$	108,501	$	298,894	$	319,166

The Company’s product revenue from sales to enterprise customers and from sales to service provider customers for the three and nine months ended September 30, 2024 and 2023 was as follows (in thousands):


	Three months ended				Nine months ended
	September 30,		September 30,		September 30,		September 30,
	2024		2023		2024		2023
Sales to enterprise customers	$	40,002	$	32,044	$	115,912	$	97,163
Sales to service provider customers		72,149		76,457		182,982		222,003
	$	112,151	$	108,501	$	298,894	$	319,166

The Company’s product revenue and service revenue components by segment for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands):


	Three months ended				Nine months ended
	September 30,		September 30,		September 30,		September 30,
	2024		2023		2024		2023
Product revenue:
Cloud and Edge	$	53,455	$	42,305	$	124,554	$	137,496
IP Optical Networks		58,696		66,196		174,340		181,670
Total product revenue	$	112,151	$	108,501	$	298,894	$	319,166

Service revenue:
Maintenance:
Cloud and Edge	$	53,595	$	55,004	$	159,454	$	164,848
IP Optical Networks		15,424		14,268		45,466		44,640
Total maintenance revenue		69,019		69,272		204,920		209,488
Professional services:
Cloud and Edge		21,028		18,456		56,294		53,157
IP Optical Networks		8,040		6,932		22,414		18,127
Total professional services revenue		29,068		25,388		78,708		71,284
Total service revenue	$	98,087	$	94,660	$	283,628	$	280,772

Schedule of customer assets and liabilities

The changes in the Company’s accounts receivable, unbilled receivables and deferred revenue balances for the nine months ended September 30, 2024 were as follows (in thousands):


			Unbilled		Deferred		Deferred
	Accounts		accounts		revenue		revenue
	receivable		receivable		(current)		(long-term)
Balance at January 1, 2024	$	186,938	$	81,483	$	113,381	$	19,218
Increase (decrease), net		(12,435)		(6,803)		(17,620)		(2,467)
Balance at September 30, 2024	$	174,503	$	74,680	$	95,761	$	16,751

BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2024

BASIS OF PRESENTATION

BASIS OF PRESENTATION

(1) BASIS OF PRESENTATION

Business

Ribbon Communications Inc. ("Ribbon" or the "Company") is a leading global provider of communications technology to service providers and enterprises. The Company provides a broad range of software and high-performance hardware products, network solutions, and services that enable the secure delivery of data and voice communications, and high-bandwidth networking and connectivity for residential consumers and for small, medium, and large enterprises and industry verticals such as finance, education, government, utilities, and transportation. Ribbon’s mission is to create a recognized global technology leader providing cloud-centric solutions that enable the secure exchange of information, with unparalleled scale, performance, and elasticity. The Company is headquartered in Plano, Texas, and has a global presence with research and development, or sales and support locations in over thirty countries around the world.

Basis of Presentation

In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring items, necessary for their fair presentation with accounting principles generally accepted in the United States of America ("GAAP") and with the rules and regulations of the U.S. Securities and Exchange Commission ("SEC").

Interim results are not necessarily indicative of results for a full year or any future interim period. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, as amended (the "Annual Report"), which was filed with the SEC on February 28, 2024.

Operating Segments

The Company’s chief operating decision maker (the "CODM") is its president and chief executive officer. The CODM assesses the Company’s performance based on the performance of two separate organizations within Ribbon: the Cloud and Edge segment ("Cloud and Edge") and the IP Optical Networks segment ("IP Optical Networks").

Significant Accounting Policies

The Company’s significant accounting policies are disclosed in Note 2 to the Consolidated Financial Statements included in the Annual Report. There were no material changes to the significant accounting policies during the nine months ended September 30, 2024.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Ribbon and its wholly-owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates and Judgments

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and judgments relied upon in preparing these condensed consolidated financial statements include revenue recognition for multiple element arrangements, inventory valuations, assumptions used to determine the fair value of stock-based compensation and the Preferred Stock and Warrants, intangible asset and goodwill valuations,

including impairments, warranty accruals, legal contingencies and recoverability of Ribbon’s net deferred tax assets and the related valuation allowances. Ribbon regularly assesses these estimates and records changes in estimates in the period in which they become known. Ribbon bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from those estimates.

Restricted Cash

The Company classifies as restricted cash all cash pledged as collateral to secure long-term obligations and all cash otherwise limited in use by contractual provisions. At September 30, 2024 and December 31, 2023, the Company had $2.9 million and $0.1 million of restricted cash, respectively, representing restricted short-term bank deposits pledged to secure certain guarantees and surety bonds as security for the Company’s obligations under tenders, and contracts.

Transfers of Financial Assets

The Company’s IP Optical Networks segment maintains customer receivables factoring agreements with a number of financial institutions. Under the terms of these agreements, the Company may transfer receivables to the financial institutions, on a non-recourse basis, provided that the financial institutions approve the receivables in advance. The Company maintains credit insurance policies from major insurance providers or obtains letters of credit from the customers for a majority of its factored trade receivables. The Company accounts for the factoring of its financial assets as a sale of the assets and records the factoring fees, when incurred, as a component of interest expense in the condensed consolidated statements of operations, and the proceeds from the sales of receivables are included in cash from operating activities in the condensed consolidated statements of cash flows.

Factoring of accounts receivable and associated fees for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands):


	Three months ended				Nine months ended
	September 30,		September 30,		September 30,		September 30,
	2024		2023		2024		2023
Accounts receivable sold	$	26,635	$	24,701	$	73,597	$	73,028
Less factoring fees		(532)		(752)		(1,466)		(2,022)
Net cash proceeds	$	26,103	$	23,949	$	72,131	$	71,006

Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (the "FASB") issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which increases the disclosure requirements around rate reconciliation information and certain types of income taxes companies are required to pay. ASU 2023-09 will be effective for the Company beginning with its 2025 annual financial statements, with early adoption permitted. The Company expects the adoption of the standard will require certain additional income tax disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which improves reportable segment disclosure requirements, including enhancement of the disclosures of significant segment expenses and interim disclosure requirements, to enable investors to better understand an entity's overall performance and assess potential future cash flows. ASU 2023-07 will be effective for the Company beginning with its 2024 annual financial statements and interim financial statements thereafter and will be applied retrospectively for all periods presented in the financial statements. The Company’s adoption of this standard will require certain additional segment disclosures.

STOCK-BASED COMPENSATION PLANS - Narrative (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2024 USD ($) item Y	Sep. 30, 2023 USD ($)
Stock-based compensation
Fair value of vested restricted and performance-based stock grants	$ 10,454	$ 13,454
Fair value of the assumed awards attributable to future stock-based compensation expense	$ 15,100
Expected period for unrecognized expense	1 year
Performance Shares, Performance Based
Stock-based compensation
Granted percentage	60.00%
Number of performance periods \| Y	3
Performance Shares, Market Based
Stock-based compensation
Performance period (in years)	3 years
Granted percentage	40.00%
Number of performance periods \| item	1
Percent of performance metrics achieved	200.00%
RSAs and RSUs
Stock-based compensation
Fair value of vested restricted and performance-based stock grants	$ 11,900
PSUs
Stock-based compensation
Fair value of vested restricted and performance-based stock grants	$ 900
Minimum \| RSAs, RSUs and PSUs
Stock-based compensation
Performance period (in years)	1 year
Maximum \| RSAs, RSUs and PSUs
Stock-based compensation
Performance period (in years)	3 years

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Narrative (Details) - USD ($)						1 Months Ended	3 Months Ended	9 Months Ended		12 Months Ended
	Jun. 21, 2024	Mar. 27, 2023	Mar. 24, 2023	Aug. 16, 2022	Jul. 22, 2022	Aug. 16, 2022	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023	Mar. 31, 2020
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Debt balance								$ 349,125,000		$ 235,395,000
Interest Expense
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Amount reclassified from accumulated other comprehensive income (loss)							$ 1,322,000	6,019,000	$ 5,829,000
Interest Rate Swap
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Derivative instrument sold		$ 170,000,000	$ 170,000,000	$ 30,000,000	$ 30,000,000	$ 60,000,000
Proceeds from sale		9,800,000	9,400,000	1,600,000	1,500,000
Notional amount			170,000,000	$ 340,000,000	$ 370,000,000	340,000,000
Amount reclassified from accumulated other comprehensive income (loss)		7,300,000				$ 3,100,000
Amortization of derivative instrument								400,000	$ 700,000
Proceeds from derivative interest		400,000	400,000
Proceeds from sale of derivative, gross		9,400,000	$ 9,000,000.0
Interest Rate Swap \| Interest Expense
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Amount reclassified from accumulated other comprehensive income (loss)	$ 500,000
Interest Rate Swap \| Fair Value, Inputs, Level 2
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Interest rate derivative								0		0
2020 credit facility \| Interest Rate Swap
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Amount reclassified from accumulated other comprehensive income (loss)		$ 12,000,000.0
Amortization of derivative instrument								3,000,000.0		3,100,000
2020 credit facility \| Interest Rate Swap \| Interest Expense
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Amount reclassified from accumulated other comprehensive income (loss)	$ 4,400,000
Term loan facility \| 2024 Credit Agreement
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Debt balance								349,100,000
Term loan facility \| 2020 credit facility
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Debt balance								$ 349,100,000		$ 235,400,000
Principal amount											$ 400,000,000
Fixed rate								0.904%

LEASES - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
LEASES - Narrative (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
LEASES
Additional amortization expense	$ 0	$ 223	$ 0	$ 785
Variable lease cost accrued	0	0	0	0
Operating lease, payments			14,000	14,300
Facility Closing
LEASES
Accrual for future anticipated variable lease costs	1,200		1,200		$ 1,500
Facility Closing \| 2022 Restructuring Plan
LEASES
Additional amortization expense	0	200	0	800
Variable lease cost accrued	$ 0	$ 0	$ 0	$ 0

REVENUE RECOGNITION - Schedule of Customer Assets & Liabilities (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2024 USD ($)
Accounts receivable
Beginning balance	$ 186,938
Increase (decrease), net	(12,435)
Ending balance	174,503
Unbilled accounts receivable
Beginning balance	81,483
Increase (decrease), net	(6,803)
Ending balance	74,680
Deferred revenue (current)
Beginning balance	113,381
Increase (decrease), net	(17,620)
Ending balance	95,761
Deferred revenue (long-term)
Beginning balance	19,218
Increase (decrease), net	(2,467)
Ending balance	$ 16,751

COMMITMENTS AND CONTINGENCIES (Details) $ in Millions			9 Months Ended
COMMITMENTS AND CONTINGENCIES (Details) $ in Millions	Oct. 14, 2024 USD ($)	Sep. 19, 2022 complaint subsidiary	Sep. 30, 2024 USD ($)	Oct. 18, 2023 USD ($)	Nov. 08, 2018 item	Dec. 31, 2017
COMMITMENTS AND CONTINGENCIES
Sale of stock grant interest (as a percent)						100.00%
Unpaid loyalties accrued			$ 1.6
Maximum future royalty commitment			19.8
Maximum future royalty commitment, interest			$ 1.2
Litigation liability amount				$ 4.5
Miller Complaint
COMMITMENTS AND CONTINGENCIES
Number of former officers \| item					3
Charter Complaints
COMMITMENTS AND CONTINGENCIES
Loss contingency, claims filed, number \| complaint		2
Loss contingency, number of defendants \| subsidiary		2
Charter Complaint Filed With Supreme Court Of The State Of New York
COMMITMENTS AND CONTINGENCIES
Loss contingency, claims filed, number \| complaint		1
WideOpenWest Complaint.
COMMITMENTS AND CONTINGENCIES
Litigation liability amount	$ 3.0
Total litigation settlement, amount awarded to WOW	5.0
Total litigation settlement, amount paid to WOW	$ 2.0
Litigation settlement, number of quarterly installments	18 months
Minimum
COMMITMENTS AND CONTINGENCIES
Royalties rates						1.30%
Basis spread on variable rate			1.50%
Maximum
COMMITMENTS AND CONTINGENCIES
Royalties rates						5.00%
Basis spread on variable rate			2.75%

RELATED PARTIES

9 Months Ended

Sep. 30, 2024

RELATED PARTIES

RELATED PARTIES

(18) RELATED PARTIES

The Company recognized revenue from its largest stockholder of $1.4 million and $1.3 million in the three months ended September 30, 2024 and 2023, respectively, and $4.4 million and $7.1 million in the nine months ended September 30, 2024 and 2023, respectively. Also, certain related party stockholders participated in the Private Placement (See Note 11).

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480990/946-20-50-2

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480990/946-20-50-5

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480990/946-20-50-6

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147477968/946-235-50-2

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (e)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147477968/946-235-50-2

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483326/850-10-50-1

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.6-07(2)(g)(3))
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-URI https://asc.fasb.org/1943274/2147479134/946-220-S99-1

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.6-07(2)(c))
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147479134/946-220-S99-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.6-07(2)(e))
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147479134/946-220-S99-1

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org/850/tableOfContent

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483326/850-10-50-6

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483326/850-10-50-1

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483326/850-10-50-1

+ Details

STOCK-BASED COMPENSATION PLANS - Restricted Stock Awards and Units and Performance-Based Stock Units (Details)	9 Months Ended
	Sep. 30, 2024 $ / shares shares
RSUs
Shares
Unvested balance at the beginning of the period (in shares) \| shares	7,091,368
Granted (in shares) \| shares	1,423,228
Vested (in shares) \| shares	(3,444,670)
Forfeited (in shares) \| shares	(326,985)
Unvested balance at the end of the period (in shares) \| shares	4,742,941
Weighted Average Grant Date Fair Value
Unvested balance at the end of the period (in dollars per share) \| $ / shares	$ 3.18
Granted (in dollars per share) \| $ / shares	3.22
Vested (in dollars per share) \| $ / shares	3.47
Forfeited (in dollars per share) \| $ / shares	3.18
Unvested balance at end of the period (in dollars per share) \| $ / shares	$ 2.99
PSUs
Shares
Unvested balance at the beginning of the period (in shares) \| shares	6,297,931
Granted (in shares) \| shares	1,338,985
Vested (in shares) \| shares	(288,672)
Forfeited (in shares) \| shares	(4,035,835)
Unvested balance at the end of the period (in shares) \| shares	3,312,409
Weighted Average Grant Date Fair Value
Unvested balance at the end of the period (in dollars per share) \| $ / shares	$ 2.07
Granted (in dollars per share) \| $ / shares	4.32
Vested (in dollars per share) \| $ / shares	3.14
Forfeited (in dollars per share) \| $ / shares	1.33
Unvested balance at end of the period (in dollars per share) \| $ / shares	$ 3.79

LEASES - Components of Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
LEASES
Operating lease, cost	$ 4,165	$ 4,708	$ 12,471	$ 14,205
Short-term lease cost	3,362	3,454	10,216	10,544
Variable lease costs (costs excluded from minimum fixed lease payments)	814	819	2,497	2,525
Sublease income	(209)	(282)	(686)	(1,105)
Net lease cost	$ 8,132	$ 8,699	$ 24,498	$ 26,169
Operating Lease, Lease Income, Statement of Income or Comprehensive Income [Extensible Enumeration]	Other income (expense), net	Other income (expense), net	Other income (expense), net	Other income (expense), net
Accelerated amortization	$ 0	$ 200	$ 0	$ 800
Variable lease cost accrued	$ 0	$ 0	$ 0	$ 0

REVENUE RECOGNITION

9 Months Ended

Sep. 30, 2024

REVENUE RECOGNITION

REVENUE RECOGNITION

(12) REVENUE RECOGNITION

The Company derives revenue from two primary sources: products and services. Product revenue includes the Company’s hardware and software that function together to deliver the products’ essential functionality. Software and hardware are also sold on a standalone basis. Services include customer support (software updates, upgrades and technical support), consulting, design services, installation services and training. Generally, contracts with customers contain multiple performance obligations, consisting of products and services. For these contracts, the Company accounts for individual performance obligations separately if they are considered distinct.

When an arrangement contains more than one performance obligation, the Company will allocate the transaction price to each performance obligation on a relative standalone selling price basis. The Company utilizes the observable price of goods and services when they are sold separately to similar customers in order to estimate standalone selling price.

The Company’s software licenses typically provide a perpetual right to use the Company’s software. The Company also sells term-based software licenses that expire and Software-as-a-Service ("SaaS")-based software which are referred to as subscription arrangements. The Company does not customize its software nor are installation services required, as the customer has a right to utilize internal resources or a third-party service company. The software and hardware are delivered before related services are provided and are functional without professional services or customer support. The Company has concluded that its software licenses are functional intellectual property that are distinct, as the user can benefit from the software on its own. Product revenue is typically recognized upon transfer of control or when the software is made available for download, as this is the point the user of the software can direct the use of, and obtain substantially all of the remaining benefits from, the functional intellectual property. The Company begins to recognize software revenue related to the renewal of subscription software licenses at the start of the subscription period.

The Company offers warranties on its products. Certain of the Company’s warranties are considered to be assurance-type in nature, ensuring the product is functioning as intended. Assurance-type warranties do not represent separate performance obligations. The Company also sells separately-priced maintenance service contracts which qualify as service-type warranties and represent separate performance obligations. The Company does not allow and has no history of accepting product returns.

Services revenue includes revenue from customer support and other professional services. Customer support includes software updates on a when-and-if-available basis, telephone support, integrated web-based support and bug fixes or patches. The Company sells its customer support contracts at a percentage of list or net product price. Customer support revenue is recognized ratably over the term of the customer support agreement, which is typically one year.

The Company’s professional services include consulting, technical support, resident engineer services, design services and installation services. Because control transfers over time, revenue is recognized based on progress toward completion of the performance obligation. The method to measure progress toward completion requires judgment and is based on the nature of the products or services to be provided. The Company generally uses the input method to measure progress for its contracts because it believes such method best depicts the transfer of assets to the customer, which occurs as the Company incurs costs for the contracts. However, in some instances, the Company uses the output method because it best depicts the transfer of asset to the customer. Under the cost-to-cost measure of progress, the progress toward completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. When the measure of progress is based upon expended labor, progress toward completion is measured as the ratio of labor time expended to date versus the total estimated labor time required to complete the performance obligation. Revenue is recorded proportionally as costs are incurred or as labor is expended. Costs to fulfill these obligations include internal labor as well as subcontractor costs.

Customer training includes courses offered by the Company. The related revenue is typically recognized as the training services are performed.

The Company’s typical performance obligations include the following:


	When Performance Obligation is Typically
Performance Obligation	Satisfied	When Payment is Typically Due
Software and Product Revenue
Software licenses (perpetual or term)	Upon transfer of control; typically, when made available for download (point in time)	Generally, within 30 days of invoicing except for term licenses, which may be paid for over time
Software licenses (subscription)	Upon activation of hosted site (over time)	Generally, within 30 days of invoicing
Hardware	When control of the hardware passes to the customer; typically, upon delivery (point in time)	Generally, within 30 days of invoicing
Software upgrades	Upon transfer of control; typically, when made available for download (point in time)	Generally, within 30 days of invoicing
Customer Support Revenue
Customer support	Ratably over the course of the support contract (over time)	Generally, within 30 days of invoicing
Professional Services
Other professional services (excluding training services)	As work is performed (over time)	Generally, within 30 days of invoicing (upon completion of services)
Training	When the class is taught (point in time)	Generally, within 30 days of services being performed

Significant Judgments

The Company’s contracts with customers often include promises to transfer multiple products and services to the customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment.

Judgment is required to determine the standalone selling price ("SSP") for each distinct performance obligation. The Company typically has more than one SSP for individual products and services due to the stratification of those products

and services by customers and circumstances. In these instances, the Company may use information such as the size of the customer and geographic region in determining the SSP.

Deferred Revenue

Deferred revenue is a contract liability representing amounts collected from or invoiced to customers in excess of revenue recognized. This results primarily from the billing of annual customer support agreements where the revenue is recognized over the term of the agreement. The value of deferred revenue will increase or decrease based on the timing of recognition of revenue.

Disaggregation of Revenue

The Company disaggregates its revenue from contracts with customers based on the nature of the products and services and the geographic regions in which each customer is domiciled. The Company’s revenue for the three and nine months ended September 30, 2024 and 2023 was disaggregated as follows:


					Service revenue
	Product		Service revenue		(professional
Three months ended September 30, 2024	revenue		(maintenance)		services)		Total revenue
United States	$	58,198	$	33,670	$	17,690	$	109,558
Europe, Middle East and Africa		24,708		17,918		7,141		49,767
Asia Pacific		25,590		10,262		2,388		38,240
Other		3,655		7,169		1,849		12,673
	$	112,151	$	69,019	$	29,068	$	210,238


					Service revenue
	Product		Service revenue		(professional
Three months ended September 30, 2023	revenue		(maintenance)		services)		Total revenue
United States	$	40,162	$	33,454	$	12,440	$	86,056
Europe, Middle East and Africa		31,969		18,268		8,120		58,357
Asia Pacific		32,070		10,016		3,043		45,129
Other		4,300		7,534		1,785		13,619
	$	108,501	$	69,272	$	25,388	$	203,161


					Service revenue
	Product		Service revenue		(professional
Nine months ended September 30, 2024	revenue		(maintenance)		services)		Total revenue
United States	$	120,173	$	99,156	$	42,812	$	262,141
Europe, Middle East and Africa		99,636		53,105		23,027		175,768
Asia Pacific		68,304		30,262		7,912		106,478
Other		10,781		22,397		4,957		38,135
	$	298,894	$	204,920	$	78,708	$	582,522


					Service revenue
	Product		Service revenue		(professional
Nine months ended September 30, 2023	revenue		(maintenance)		services)		Total revenue
United States	$	131,774	$	100,417	$	35,135	$	267,326
Europe, Middle East and Africa		88,235		56,393		22,374		167,002
Asia Pacific		89,495		29,552		8,456		127,503
Other		9,662		23,126		5,319		38,107
	$	319,166	$	209,488	$	71,284	$	599,938


	Three months ended				Nine months ended
	September 30,		September 30,		September 30,		September 30,
	2024		2023		2024		2023
Indirect sales through channel partner program	$	38,000	$	35,950	$	114,958	$	109,454
Direct sales		74,151		72,551		183,936		209,712
	$	112,151	$	108,501	$	298,894	$	319,166


	Three months ended				Nine months ended
	September 30,		September 30,		September 30,		September 30,
	2024		2023		2024		2023
Sales to enterprise customers	$	40,002	$	32,044	$	115,912	$	97,163
Sales to service provider customers		72,149		76,457		182,982		222,003
	$	112,151	$	108,501	$	298,894	$	319,166

The Company’s product revenue and service revenue components by segment for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands):


	Three months ended				Nine months ended
	September 30,		September 30,		September 30,		September 30,
	2024		2023		2024		2023
Product revenue:
Cloud and Edge	$	53,455	$	42,305	$	124,554	$	137,496
IP Optical Networks		58,696		66,196		174,340		181,670
Total product revenue	$	112,151	$	108,501	$	298,894	$	319,166

Service revenue:
Maintenance:
Cloud and Edge	$	53,595	$	55,004	$	159,454	$	164,848
IP Optical Networks		15,424		14,268		45,466		44,640
Total maintenance revenue		69,019		69,272		204,920		209,488
Professional services:
Cloud and Edge		21,028		18,456		56,294		53,157
IP Optical Networks		8,040		6,932		22,414		18,127
Total professional services revenue		29,068		25,388		78,708		71,284
Total service revenue	$	98,087	$	94,660	$	283,628	$	280,772

Revenue Contract Balances

The timing of revenue recognition, billings and cash collections results in billed accounts receivable; unbilled receivables, which are contract assets; and customer advances and deposits, which are contract liabilities, in the Company’s condensed consolidated balance sheets. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals or upon achievement of contractual milestones. Completion of services and billing may occur subsequent to revenue recognition, resulting in contract assets. The Company may receive advances or deposits from its customers before revenue is recognized, resulting in contract liabilities that are

classified as deferred revenue. These assets and liabilities are reported in the Company’s condensed consolidated balance sheets on a contract-by-contract basis as of the end of each reporting period. Changes in the contract asset and liability balances during the nine months ended September 30, 2024 were not materially impacted by any factors other than billing and revenue recognition. Nearly all of the Company’s deferred revenue balance is related to services revenue, primarily customer support contracts. Unbilled receivables stem primarily from engagements where services have been performed; however, billing cannot occur until services are completed.

In some arrangements, the Company allows customers to pay for term-based software licenses and products over the term of the software license. The Company also sells SaaS-based software under subscription arrangements, with payment terms over the term of the SaaS agreement. Amounts recognized as revenue in excess of amounts billed are recorded as unbilled receivables. Unbilled receivables that are anticipated to be invoiced in the next twelve months are included in Accounts receivable on the Company’s condensed consolidated balance sheets. The changes in the Company’s accounts receivable, unbilled receivables and deferred revenue balances for the nine months ended September 30, 2024 were as follows (in thousands):


			Unbilled		Deferred		Deferred
	Accounts		accounts		revenue		revenue
	receivable		receivable		(current)		(long-term)
Balance at January 1, 2024	$	186,938	$	81,483	$	113,381	$	19,218
Increase (decrease), net		(12,435)		(6,803)		(17,620)		(2,467)
Balance at September 30, 2024	$	174,503	$	74,680	$	95,761	$	16,751

The Company recognized approximately $95 million of revenue in the nine months ended September 30, 2024 that was recorded as deferred revenue at December 31, 2023 and approximately $92 million of revenue in the nine months ended September 30, 2023 that was recorded as deferred revenue at December 31, 2022. Of the Company’s deferred revenue reported as long-term in its condensed consolidated balance sheet at September 30, 2024, the Company expects that approximately $3 million will be recognized as revenue in 2025, approximately $7 million will be recognized as revenue in 2026 and approximately $7 million will be recognized as revenue in 2027 and beyond.

All freight-related customer invoicing is recorded as revenue, while the shipping and handling costs that occur after control of the promised goods or services transfer to the customer are reported as fulfillment costs, a component of Cost of revenue - product in the Company’s condensed consolidated statements of operations.

Deferred Commissions Cost

Sales commissions earned by the Company’s employees are considered incremental and recoverable costs of obtaining a contract with a customer. These costs have been deferred on our condensed consolidated balance sheet and are being amortized over the expected life of the customer contract, which is generally five years. At both September 30, 2024 and December 31, 2023, the Company had $3 million of deferred sales commissions capitalized.

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 9
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147479806/606-10-50-9

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 10
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147479806/606-10-50-10

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 15
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147479806/606-10-50-15

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147479806/606-10-50-12

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147479806/606-10-50-12

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147479806/606-10-50-12

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+ Details

BASIS OF PRESENTATION (Policies)

9 Months Ended

Sep. 30, 2024

BASIS OF PRESENTATION

Basis of Presentation

Operating Segments

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Ribbon and its wholly-owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates and Judgments

Restricted Cash

Transfers of Financial Assets

Factoring of accounts receivable and associated fees for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands):


	Three months ended				Nine months ended
	September 30,		September 30,		September 30,		September 30,
	2024		2023		2024		2023
Accounts receivable sold	$	26,635	$	24,701	$	73,597	$	73,028
Less factoring fees		(532)		(752)		(1,466)		(2,022)
Net cash proceeds	$	26,103	$	23,949	$	72,131	$	71,006

Recent Accounting Pronouncements

- Definition

Disclosure of accounting policy for segment reporting.

+ References

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+ Details

- Definition

Disclosure of accounting policy for transfers and servicing financial assets, including securitization transactions as well as repurchase and resale agreements. This disclosure may include how the entity (1) determines whether a transaction is accounted for as a sale; (2) accounts for a sale transaction, including the initial and subsequent accounting for any interests that the entity obtains or continues to hold in the transaction, how such interests are valued, and the significant assumptions used in the valuation; (3) accounts for a transaction that does not qualify for sale treatment (that is, a financing); and (4) accounts for its servicing assets and liabilities ("servicing"), including how such servicing is measured initially and subsequently, and the methodology and significant assumptions used to value such servicing.

+ References + Details

Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Condensed Consolidated Statements of Comprehensive Loss
Net loss	$ (13,422)	$ (13,501)	$ (60,599)	$ (73,285)
Other comprehensive income (loss), net of tax:
Unrealized loss on interest rate swap, net of reclassifications and amortization into earnings		(1,322)	(6,019)	(8,544)
Reclassification of gain to other income (expense), net upon sale of interest rate swap				(5,099)
Foreign currency translation adjustments	286	(3)	346	(588)
Other comprehensive income (loss), net of tax	286	(1,325)	(5,673)	(14,231)
Comprehensive loss, net of tax	$ (13,136)	$ (14,826)	$ (66,272)	$ (87,516)

- Definition

Amount after tax of increase (decrease) in equity from transactions and other events and circumstances from net income and other comprehensive income, attributable to parent entity. Excludes changes in equity resulting from investments by owners and distributions to owners.

+ References + Details

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

+ Details

INVENTORY

9 Months Ended

Sep. 30, 2024

INVENTORY

INVENTORY

(3) INVENTORY

Inventory at September 30, 2024 and December 31, 2023 consisted of the following (in thousands):


	September 30,		December 31,
	2024		2023
On-hand final assemblies and finished goods inventories	$	94,269	$	93,077
Deferred cost of goods sold		2,409		3,269
		96,678		96,346
Less noncurrent portion (included in Other assets)		(19,362)		(18,825)
Current portion	$	77,316	$	77,521

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

9 Months Ended

Sep. 30, 2024

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

(10) DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company is exposed to financial market risk related to foreign currency fluctuations and changes in interest rates. These exposures are actively monitored by management. To manage the volatility related to the exposure to changes in interest rates, the Company may enter into derivative financial instruments. Management’s objective has been to reduce, where it is deemed appropriate to do so, fluctuations in earnings and cash flows associated with changes in interest rates. Ribbon’s policies and practices are to use derivative financial instruments only to the extent necessary to manage exposures. Ribbon does not hold or issue derivative financial instruments for trading or speculative purposes.

The Company records derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a specific risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge, or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk even though hedge accounting does not apply or the Company elects not to apply hedge accounting.

Cash Flow Hedge of Interest Rate Risk

The 2024 Term Loan Facility and the 2020 Term Loan Facility had outstanding balances of $349.1 million and $235.4 million at September 30, 2024 and December 31, 2023, respectively. The 2024 Revolving Credit Facility and the 2020 Revolving Credit Facility were undrawn at September 30, 2024 and December 31, 2023, respectively. Borrowings under the 2024 Credit Facility and the 2020 Credit Facility have variable interest rates based on SOFR (see Note 9). As a result of exposure to interest rate movements, during March 2020, the Company entered into an interest rate swap arrangement, which effectively converted its $400 million term loan with its variable interest rate based upon one-month LIBOR to an aggregate fixed rate of 0.904%, plus a leverage-based margin as defined in the 2020 Credit Facility.

On July 22, 2022, the Company sold $30 million of the notional amount of its interest rate swap back to its counterparty for $1.5 million, reducing the notional amount of this swap to $370 million. On August 16, 2022, the Company sold another $30 million of the notional amount of its interest rate swap back to its counterparty for $1.6 million, reducing the notional amount to $340 million, which approximated the current level of our term loan debt then outstanding. The gain in accumulated other comprehensive (loss) income related to the $60 million notional amount sold of $3.1 million was being released into earnings on a straight line basis over the remaining term of the 2020 Credit Facility as a decrease to interest expense until it was refinanced on June 21, 2024, the amortization of which totaled $0.4 million and $0.7 million for the nine months ended September 30, 2024 and 2023, respectively. The remaining unamortized gain in accumulated other comprehensive (loss) income of approximately $0.5 million was written off to interest expense in conjunction with the refinancing of the 2020 Credit Facility on June 21, 2024. See Note 9 for a description of the refinancing.

On March 24, 2023, the Company received $9.4 million, consisting of $0.4 million of interest and $9.0 million for the sale of $170 million of its $340 million notional amount interest rate swap back to its counterparty, reducing the notional amount to $170 million. On March 27, 2023, the Company received $9.8 million, consisting of $0.4 million of interest and $9.4 million for the sale of the remaining $170 million of its interest rate swap back to its counterparty. The portion of the gain in accumulated other comprehensive (loss) income related to the term loan debt prepaid on the date of

the final sale of our swap totaled $7.3 million and was released into earnings immediately as Other expense, net. The portion of the gain in accumulated other comprehensive (loss) income related to our remaining term loan debt balance was $12.0 million and was being released into earnings on a straight line basis over the remaining term of the 2020 Credit Facility as a decrease to interest expense until it was refinanced on June 21, 2024, the amortization of which totaled $3.0 million and $3.1 million for the nine months ended September 30, 2024 and 2023, respectively. The remaining unamortized gain in accumulated other comprehensive (loss) income of $4.4 million was written off to interest expense in conjunction with the refinancing of the 2020 Credit Facility on June 21, 2024. See Note 9 for a description of the refinancing.

The Company’s objectives in using interest rate derivatives have been to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company has used an interest rate swap as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the related agreements without exchange of the underlying notional amount.

The effective portion of changes in the fair value of designated derivatives that qualify as cash flow hedges is recorded in accumulated other comprehensive income in the condensed consolidated balance sheet and is subsequently reclassified into earnings in the period that the hedged forecasted transactions affect earnings. During the nine months ended September 30, 2023, such a derivative was used to hedge the variable cash flows associated with the outstanding borrowings under the 2020 Credit Facility and the Company accounted for this derivative as an effective hedge until the final portion of the swap was sold on March 27, 2023. Any ineffective portion of the change in the fair value of the derivative would have been recognized directly in earnings. However, there was no hedge ineffectiveness recorded over the life of the swap.

Amounts reported in accumulated other comprehensive income related to the Company’s derivative are reclassified to interest expense as interest is accrued on the Company’s variable-rate debt. The impact of the Company’s derivative financial instrument on its condensed consolidated statements of comprehensive (loss) income for the three and nine months ended September 30, 2024 and 2023 was as follows, net of tax (in thousands):


	Three months ended				Nine months ended
	September 30,		September 30,		September 30,		September 30,
	2024		2023		2024		2023
Gain (loss) recognized in other comprehensive income (loss) on swap, net of tax	$	—	$	—	$	—	$	(2,715)
Amount reclassified from accumulated other comprehensive income to other expense, net upon sale of swap, net of tax		—		—		—		(5,099)
Amount reclassified from accumulated other comprehensive income to interest expense		—		(1,322)		(6,019)		(5,829)
Unrealized gain (loss) on interest rate swap, net of reclassifications and amortization	$	—	$	(1,322)	$	(6,019)	$	(13,643)

The Company had no derivative assets or liabilities at September 30, 2024 or December 31, 2023.

INTANGIBLE ASSETS AND GOODWILL

9 Months Ended

Sep. 30, 2024

INTANGIBLE ASSETS AND GOODWILL

INTANGIBLE ASSETS AND GOODWILL

(4) INTANGIBLE ASSETS AND GOODWILL

The Company’s intangible assets at September 30, 2024 and December 31, 2023 consisted of the following (in thousands):


	Weighted
	average
	amortization					Net
	period			Accumulated		carrying
September 30, 2024	(years)	Cost		amortization		value
Developed technology	7.84	$	340,380	$	257,078	$	83,302
Customer relationships	11.86		268,140		154,346		113,794
Trade names	3.88		5,000		4,969		31
Software licenses	3.00		5,748		3,553		2,195
	9.50	$	619,268	$	419,946	$	199,322


	Weighted
	average
	amortization					Net
	period			Accumulated		carrying
December 31, 2023	(years)	Cost		amortization		value
Developed technology	7.84	$	340,380	$	239,066	$	101,314
Customer relationships	11.86		268,140		134,743		133,397
Trade names	3.88		5,000		4,901		99
Software licenses	3.00		5,436		2,159		3,277
	9.51	$	618,956	$	380,869	$	238,087

Estimated future amortization expense for the Company’s intangible assets at September 30, 2024 was as follows (in thousands):


Years ending December 31,
Remainder of 2024	$	11,785
2025		44,192
2026		39,143
2027		33,979
2028		23,400
2029		18,379
Thereafter		28,444
	$	199,322


	Cloud and		IP Optical
	Edge		Networks		Total
Goodwill	$	392,302	$	191,996	$	584,298
Accumulated impairment losses		(167,406)		(116,000)		(283,406)
	$	224,896	$	75,996	$	300,892