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Ribbon Communications Inc. Reports Second Quarter 2021 Financial Results

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Revenue grew 10% sequentially to $211 million for the second quarter of 2021, Net income increased to $23 million and Adjusted EBITDA grew 119% sequentially to $43 million

PLANO, Texas, July 28, 2021 /PRNewswire/ -- Ribbon Communications Inc. (Nasdaq: RBBN), a global provider of real-time communications software and IP optical transport solutions to service providers, enterprises, and critical infrastructure sectors, today announced its financial results for the second quarter of 2021.

(PRNewsfoto/Ribbon Communications)
(PRNewsfoto/Ribbon Communications)

Sales for the first half of 2021 were up 10% versus the first half of 2020, while Adjusted EBITDA increased 60% and Non-GAAP diluted earnings per share increased 133% over the same time period. Revenue for the second quarter of 2021 was $211 million, compared to $210 million for the second quarter of 2020.

"In the first half of the year, we made significant strides on the execution of our strategy, with new major IP Optical wins with Rogers, Optus, Singtel and several others," noted Bruce McClelland, President and Chief Executive Officer of Ribbon Communications. "These customer wins will significantly broaden our presence in this large addressable market and strengthen our foundation, establishing a clear path to growth in 2022 and beyond."

Mr. McClelland added, "Sales in India in the quarter were impacted by the surge in Covid infections and country-wide restrictions. Deployments have partially recovered in recent weeks, but timing of a full recovery in network investment is difficult to predict, so it is important for us to be prudent with our expectations for the remainder of the year."

Financial Highlights1, 2
The following table summarizes the consolidated financial highlights for the three months ended June 30, 2021 and 2020 (in millions, except per share amounts).


Three months ended


June 30,


2021

2020

GAAP Revenue

$ 211

$ 210

GAAP Net income (loss)

$ 23

$ ( 8)

Non-GAAP Net income

$ 27

$ 11

GAAP Diluted earnings (loss) per share

$ 0.15

$ (0.06)

Weighted average shares outstanding for GAAP diluted earnings (loss) per share

154

144

Non-GAAP diluted earnings per share

$ 0.17

$ 0.08

Weighted average shares outstanding for Non-GAAP diluted earnings per share

154

151

Non-GAAP Adjusted EBITDA

$ 43

$ 30








Cash, cash equivalents and restricted cash was $115 million at June 30, 2021, compared with $109 million at March 31, 2021 and $94 million at June 30, 2020. GAAP Net income of $23 million in the second quarter of 2021 includes a $12 million non-cash gain associated with the quarterly mark-to-market of the Company's investment in American Virtual Cloud Technologies, Inc. ("AVCT") from the sale of the Company's Kandy Communications business and a $2.8 million gain on the sale of our QualiTech business, which closed during the second quarter.

_____________

1 GAAP Net income and GAAP Diluted earnings per share for the three months ended June 30, 2021 include a $2.8 million gain on the sale of the QualiTech business. They also include $1.2 million of paid-in-kind interest income earned on the convertible debt and $12.1 million of income associated with the remeasurement of the convertible debt and warrants associated with the consideration received from the sale of the Company's Kandy Communications business to AVCT. The interest income is included in Interest expense, net, and the remeasurement expense is included in Other income (expense), net. The remeasurement income was calculated using valuation methods in accordance with accounting guidance. Fluctuations in AVCT's stock price will impact the future amounts that are recorded in Other income (expense), net, and could materially impact the Company's quarterly results.

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

"We were very pleased with the earnings and cash generation in the quarter with both Adjusted EBITDA and Earnings per share well above our targets for the quarter. Sales were slightly less than expected primarily due to the Covid situation in India, while gross margins were stronger due to favorable product mix. Operating expenses trended lower with continued spending discipline and the benefit from several one-time items," said Mick Lopez, Chief Financial Officer of Ribbon Communications.

Customer and Company Highlights

  • Strong 1H21 financial results:

  • Significant new IP Optical wins broadening Ribbon's global customer base:

  • Continuing portfolio innovation:

Business Outlook1
The Company's outlook is based on current indications for its business, which are subject to change. For the third quarter of 2021, the Company projects revenue of $215 million to $225 million, non-GAAP gross margin of 57% to 58%, non-GAAP diluted earnings per share of $0.11 to $0.13, and Adjusted EBITDA of $32 million to $36 million. For the full year 2021, earnings guidance remains unchanged with non-GAAP diluted earnings per share of $0.49 to $0.54, and Adjusted EBITDA of $145 million to $155 million. Revenue is now projected to be approximately $900 million with increased non-GAAP gross margin of 58% to 59%. The current outlook assumes no worsening of conditions related to the COVID-19 pandemic, or supply chain disruptions.

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

Upcoming Investor Conference Schedule

  • August 10-11, 2021Oppenheimer Technology, Internet & Communications Conference (virtual presentation and one-on-one institutional investor meetings).

  • August 31-September 1, 2021Jefferies Virtual Semiconductor, IT Hardware & Communications Infrastructure Summit (virtual one-on-one institutional investor meetings).

  • September 14-15, 2021Jefferies Virtual Software Conference (virtual presentation and one-on-one institutional investor meetings).

  • November 15-18, 2021Needham Virtual Security, Networking & Communications Conference (virtual presentation and one-on-one institutional investor meetings).

Conference Call Details
Conference call to discuss the Company's financial results for the second quarter ended June 30, 2021 on July 28, 2021, via the investor section of its website at http://investors.ribboncommunications.com, where a replay will also be available shortly following the conference call.

Conference Call Details:
Date: July 28, 2021
Time: 4:30 p.m. (ET)
Dial-in number (Domestic): 877-407-2991
Dial-in number (Intl): 201-389-0925
Instant Telephone Access: Call me™

Replay information:
A telephone playback of the call will be available following the conference call until August 11, 2021 and can be accessed by calling 877-660-6853 or 201-612-7415 for international callers. The reservation number for the replay is 137200791.

Investor Relations
Tom Berry
+1 (978) 614-8050
tom.berry@rbbn.com

North American Press
Dennis Watson
+1 (214) 695-2224
dwatson@rbbn.com

APAC, CALA & EMEA Press
Catherine Berthier
+1 (646) 741-1974
cberthier@rbbn.com

Analyst Relations
Michael Cooper
+1 (708) 212-6922
mcooper@rbbn.com

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

Important Information Regarding Forward-Looking Statements
The information in this release contains "forward-looking" statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, which are subject to several risks and uncertainties. All statements other than statements of historical facts contained in this release, including without limitation statements regarding, projected financial results for the third quarter 2021 and beyond, sales trends, and plans and objectives of management for future operations are forward-looking statements. Without limiting the foregoing, the words "believes", "estimates", "expects", "expectations", "intends", "may", "plans", "projects" and other similar language, whether in the negative or affirmative, are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated in these forward-looking statements due to various risks, uncertainties and other important factors, including, among others, risks related to the continuing COVID-19 pandemic, including delays in customer deployments as a result of rises in cases risks that will not realize estimated cost savings and/or anticipated benefits from the acquisition of ECI; failure to realize anticipated benefits from the sale of our Kandy Communications business ("Kandy"); supply chain disruptions resulting from component availability and/or geopolitical instabilities and disputes; unpredictable fluctuations in quarterly revenue and operating results; failure to compete successfully against telecommunications equipment and networking companies; credit risks; the timing of customer purchasing decisions and our recognition of revenues; macroeconomic conditions; our ability to recruit and retain key personnel; the impact of restructuring and cost-containment activities; litigation; rapid technological and market change; our ability to protect our intellectual property rights and obtain necessary licenses; risks related to cybersecurity and data intrusion; the potential for defects in our products; risks related to the terms of our credit agreement; higher risks in international operations and markets; increases in tariffs, trade restrictions or taxes on our products; currency fluctuations; and failure or circumvention of our controls and procedures.

These factors are not intended to be an all-encompassing list of risks and uncertainties that may affect our business and results from operations. Additional information regarding these and other factors can be found in our reports filed with the Securities and Exchange Commission, including our Form 10-K for the year ended December 31, 2020. In providing forward-looking statements, the Company expressly disclaims any obligation to update these statements publicly or otherwise, whether as a result of new information, future events or otherwise, except as required by law.

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

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

Stock-Based Compensation
The expense related to stock-based awards is generally not controllable in the short-term and can vary significantly based on the timing, size and nature of awards granted. We believe that presenting non-GAAP operating results that exclude stock-based compensation provides investors with visibility and insight into our management's method of analysis and the Company's core operating performance.

Amortization of Acquired Intangible Assets
Amortization amounts are inconsistent in frequency and amount and are significantly impacted by the timing and size of acquisitions. We believe that excluding non-cash amortization of intangible assets facilitates the comparison of our financial results to our historical operating results and to other companies in our industry as if the acquired intangible assets had been developed internally rather than acquired.

Litigation Costs
We have been involved in litigation with a former GENBAND business partner and have reached a settlement with the other party. We exclude the costs of such litigation because we believe such costs are not part of our core business or ongoing operations.

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

Restructuring and Related Expense
We have recorded restructuring and related expense to streamline operations and reduce operating costs by closing and consolidating certain facilities and reducing our worldwide workforce. We believe that excluding restructuring and related expense facilitates the comparison of our financial results to our historical operating results and to other companies in our industry, as there are no future revenue streams or other benefits associated with these costs.

Gain on Sale of Business
On May 12, 2021, we sold our QualiTech business, which we had acquired as part of the ECI Acquisition, to Hermon Laboratories, Ltd. As consideration, we received $2.9 million of cash and recorded a gain on the sale of $2.8 million. We exclude this gain because we believe that such gains are not part of our core business or ongoing operations.

Interest Income on Debentures
We recorded paid-in-kind interest income on the Debentures, which increased their fair value. We exclude this interest income because we believe that such a gain is not part of our core business or ongoing operations.

(Increase) Decrease in Fair Value of Investments
We calculate the fair value of the Debentures and Warrants at each quarter-end and record any adjustments to their fair values in Other income (expense), net. We exclude these and any subsequent gains and losses from the change in fair value of the Debentures and Warrants because we believe that such gains or losses are not part of our core business or ongoing operations.

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

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

RIBBON COMMUNICATIONS INC.

Condensed Consolidated Statements of Operations

(in thousands, except percentages and per share amounts)

(unaudited)



















Three months ended





June 30,


March 31,


June 30,





2021


2021


2020

Revenue:







Product

$ 113,129


$ 97,889


$ 120,862


Service

98,081


94,883


89,631



Total revenue

211,210


192,772


210,493










Cost of revenue:







Product

46,641


44,445


50,579


Service

36,142


37,780


36,647



Total cost of revenue

82,783


82,225


87,226










Gross profit

128,427


110,547


123,267










Gross margin:







Product

58.8%


54.6%


58.2%


Service

63.2%


60.2%


59.1%



Total gross margin

60.8%


57.3%


58.6%










Operating expenses:







Research and development

46,797


47,410


51,796


Sales and marketing

34,881


37,218


33,898


General and administrative

12,734


15,553


15,094


Amortization of acquired intangible assets

17,181


15,823


14,669


Acquisition-, disposal- and integration-related expense

1,052


1,197


857


Restructuring and related expense

2,830


5,950


5,361



Total operating expenses

115,475


123,151


121,675










Income (loss) from operations

12,952


(12,604)


1,592

Interest expense, net

(3,048)


(5,819)


(5,400)

Other income (expense), net

17,180


(25,448)


(2,407)










Income (loss) before income taxes

27,084


(43,871)


(6,215)

Income tax provision

(3,843)


(816)


(2,036)










Net income (loss)

$ 23,241


$ (44,687)


$ (8,251)










Earnings (loss) per share:







Basic


$ 0.16


$ (0.31)


$ (0.06)


Diluted

$ 0.15


$ (0.31)


$ (0.06)










Weighted average shares used to compute earnings (loss) per share:






Basic


147,467


145,936


144,483


Diluted

154,160


145,936


144,483

RIBBON COMMUNICATIONS INC.

Condensed Consolidated Statements of Operations

(in thousands, except percentages and per share amounts)

(unaudited)



















Six months ended





June 30,


June 30,





2021


2020

Revenue:





Product

$ 211,018


$ 196,761


Service

192,964


171,714



Total revenue

403,982


368,475








Cost of revenue:





Product

91,086


86,558


Service

73,922


68,126



Total cost of revenue

165,008


154,684








Gross profit

238,974


213,791








Gross margin:





Product

56.8%


56.0%


Service

61.7%


60.3%



Total gross margin

59.2%


58.0%








Operating expenses:





Research and development

94,207


94,091


Sales and marketing

72,099


64,869


General and administrative

28,287


32,299


Amortization of acquired intangible assets

33,004


29,003


Acquisition-, disposal- and integration-related expense

2,249


13,241


Restructuring and related expense

8,780


7,436



Total operating expenses

238,626


240,939








Income (loss) from operations

348


(27,148)

Interest expense, net

(8,867)


(8,795)

Other expense, net

(8,268)


(3,251)








Loss before income taxes

(16,787)


(39,194)

Income tax provision

(4,659)


(2,227)








Net loss


$ (21,446)


$ (41,421)








Loss per share





Basic


$ (0.15)


$ (0.31)


Diluted

$ (0.15)


$ (0.31)








Weighted average shares used to compute loss per share:





Basic


146,706


132,737


Diluted

146,706


132,737

RIBBON COMMUNICATIONS INC.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)



















June 30,


December 31,





2021


2020

Assets




Current assets:





Cash and cash equivalents

$ 112,155


$ 128,428


Restricted cash

2,646


7,269


Accounts receivable, net

219,867


237,738


Inventory

46,556


45,750


Other current assets

31,739


28,461



Total current assets

412,963


447,646








Property and equipment, net

49,287


48,888

Intangible assets, net

384,352


417,356

Goodwill


416,892


416,892

Investments

106,012


115,183

Deferred income taxes

10,915


10,651

Operating lease right-of-use assets

57,869


69,757

Other assets

20,698


20,892





$ 1,458,988


$ 1,547,265








Liabilities and Stockholders' Equity




Current liabilities:





Current portion of term debt

$ 20,058


$ 15,531


Accounts payable

57,939


63,387


Accrued expenses and other

89,762


134,865


Operating lease liabilities

17,974


17,023


Deferred revenue

101,471


96,824



Total current liabilities

287,204


327,630








Long-term debt, net of current

359,333


369,035

Operating lease liabilities, net of current

62,615


72,614

Deferred revenue, net of current

22,036


26,010

Deferred income taxes

17,993


16,842

Other long-term liabilities

40,526


48,281




Total liabilities

789,707


860,412








Commitments and contingencies











Stockholders' equity:





Common stock

15


15


Additional paid-in capital

1,868,066


1,870,256


Accumulated deficit

(1,199,922)


(1,178,476)


Accumulated other comprehensive income (loss)

1,122


(4,942)




Total stockholders' equity

669,281


686,853





$ 1,458,988


$ 1,547,265

RIBBON COMMUNICATIONS INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)






















Six months ended






June 30,


June 30,






2021


2020

Cash flows from operating activities:





Net loss


$ (21,446)


$ (41,421)


Adjustments to reconcile net loss to cash flows provided by operating activities:






Depreciation and amortization of property and equipment

8,475


8,260



Amortization of intangible assets

33,004


29,003



Amortization of debt issuance costs

3,684


2,554



Stock-based compensation

9,850


6,198



Deferred income taxes

918


97



Gain on sale of business

(2,772)


-



Decrease in fair value of investments

9,171


-



Reduction in deferred purchase consideration

-


(69)



Foreign currency exchange losses

2,013


3,463



Changes in operating assets and liabilities:







Accounts receivable

17,360


45,422




Inventory

(1,527)


773




Other operating assets

10,671


14,282




Accounts payable

(3,508)


(41,515)




Accrued expenses and other long-term liabilities

(58,536)


9,111




Deferred revenue

673


554





Net cash provided by operating activities

8,030


36,712









Cash flows from investing activities:





Purchases of property and equipment

(10,570)


(14,891)


Business acqusitions, net of cash acquired

-


(346,852)


Proceeds from sale of business

2,944


-


Proceeds from the sale of fixed assets

-


43,500





Net cash used in investing activities

(7,626)


(318,243)









Cash flows from financing activities:





Borrowings under revolving line of credit

-


615


Principal payments on revolving line of credit

-


(8,615)


Proceeds from issuance of term debt

74,625


403,500


Principal payments of term debt

(82,147)


(52,400)


Principal payments of finance leases

(507)


(668)


Payment of debt issuance costs

(789)


(10,573)


Proceeds from the exercise of stock options

24


23


Payment of tax withholding obligations related to net share settlements of restricted stock awards

(12,064)


(808)





Net cash (used in) provided by financing activities

(20,858)


331,074









Effect of exchange rate changes on cash, cash equivalents and restricted cash

(442)


(142)









Net (decrease) increase in cash, cash equivalents and restricted cash

(20,896)


49,401

Cash and cash equivalents, beginning of year

135,697


44,643

Cash, cash equivalents and restricted cash, end of period

$ 114,801


$ 94,044

RIBBON COMMUNICATIONS INC.

Supplemental Information

(in thousands)

(unaudited)



























The following tables provide the details of stock-based compensation included as components of other line
items in the Company's Condensed Consolidated Statements of Operations and the line items in which these
amounts are reported.































Three months ended


Six months ended





June 30,


March 31,


June 30,


June 30,


June 30,





2021


2021


2020


2021


2020

Stock-based compensation










Cost of revenue - product

$ 93


$ 27


$ 39


$ 120


$ 66

Cost of revenue - service

469


235


159


704


289


Cost of revenue

562


262


198


824


355














Research and development

1,160


627


738


1,787


1,296

Sales and marketing

1,752


1,874


1,011


3,626


1,763

General and administrative

1,316


2,297


1,275


3,613


2,784


Operating expense

4,228


4,798


3,024


9,026


5,843
















Total stock-based compensation

$ 4,790


$ 5,060


$ 3,222


$ 9,850


$ 6,198

RIBBON COMMUNICATIONS INC.

Reconciliation of Non-GAAP and GAAP Financial Measures

(in thousands, except per share amounts)

(unaudited)














Three months ended


June 30,


March 31,


June 30,


2021


2021


2020







GAAP Total gross margin

60.8%


57.3%


58.6%

Stock-based compensation

0.3%


0.2%


0.1%

Non-GAAP Total gross margin

61.1%


57.5%


58.7%













GAAP Net income (loss)

$ 23,241


$ (44,687)


$ (8,251)

Stock-based compensation

4,790


5,060


3,222

Amortization of acquired intangible assets

17,181


15,823


14,669

Litigation costs

-


-


(937)

Acquisition-, disposal- and integration-related expense

1,052


1,197


857

Restructuring and related expense

2,830


5,950


5,361

Gain on sale of business

(2,772)


-


-

Interest income on debentures

(1,196)


(1,459)


-

Decrease (increase) in fair value of investments

(12,074)


23,900


-

Tax effect of non-GAAP adjustments

(6,205)


(880)


(3,518)

Non-GAAP Net income

$ 26,847


$ 4,904


$ 11,403







Earnings (loss) per share






GAAP Diluted earnings (loss) per share

$ 0.15


$ (0.31)


$ (0.06)

Stock-based compensation

0.03


0.03


0.02

Amortization of acquired intangible assets

0.11


0.11


0.10

Litigation costs

-


-


(0.01)

Acquisition-, disposal- and integration-related expense

0.01


0.01


0.01

Restructuring and related expense

0.02


0.05


0.04

Gain on sale of business

(0.02)


-


-

Interest income on debentures

(0.01)


(0.01)


-

(Increase) decrease in fair value of investments

(0.08)


0.16


-

Tax effect of non-GAAP adjustments

(0.04)


(0.01)


(0.02)

Non-GAAP Diluted earnings per share

$ 0.17


$ 0.03


$ 0.08







Weighted average shares used to compute diluted earnings (loss) per share






Shares used to compute GAAPdiluted earnings (loss) per share

154,160


145,936


144,483

Shares used to compute Non-GAAPdiluted earnings per share

154,160


155,032


150,512







Adjusted EBITDA






GAAP Income (loss) from operations

$ 12,952


$ (12,604)


$ 1,592

Depreciation

4,249


4,226


4,786

Amortization of acquired intangible assets

17,181


15,823


14,669

Stock-based compensation

4,790


5,060


3,222

Litigation costs

-


-


(937)

Acquisition-, disposal- and integration-related expense

1,052


1,197


857

Restructuring and related expense

2,830


5,950


5,361

Non-GAAP Adjusted EBITDA

$ 43,054


$ 19,652


$ 29,550

RIBBON COMMUNICATIONS INC.

Reconciliation of Non-GAAP and GAAP Financial Measures

(in thousands, except per share amounts)

(unaudited)










Six months ended


June 30,


June 30,


2021


2020





GAAP Total gross margin

59.2%


58.0%

Stock-based compensation

0.2%


0.1%

Non-GAAP Total gross margin

59.4%


58.1%









GAAP Net loss

$ (21,446)


$ (41,421)

Stock-based compensation

9,850


6,198

Amortization of acquired intangible assets

33,004


29,003

Litigation costs

-


2,101

Acquisition-, disposal- and integration-related expense

2,249


13,241

Restructuring and related expense

8,780


7,436

Gain on sale of business

(2,772)


-

Interest income on debentures

(2,655)


-

Decrease in fair value of investments

11,826


-

Tax effect of non-GAAP adjustments

(7,085)


(3,926)

Non-GAAP Net income

$ 31,751


$ 12,632





(Loss) earnings per share




GAAP Loss per share

$ (0.15)


$ (0.31)

Stock-based compensation

0.06


0.05

Amortization of acquired intangible assets

0.22


0.21

Litigation costs

-


0.02

Acquisition-, disposal- and integration-related expense

0.01


0.10

Restructuring and related expense

0.07


0.05

Gain on sale of business

(0.02)


-

Interest income on debentures

(0.02)


-

Decrease in fair value of investments

0.09


-

Tax effect of non-GAAP adjustments

(0.05)


(0.03)

Non-GAAP Diluted earnings per share

$ 0.21


$ 0.09





Weighted average shares used to compute (loss) diluted earnings per share




Shares used to compute GAAPloss per share

146,706


132,737

Shares used to compute Non-GAAPdiluted earnings per share

154,651


136,159





Adjusted EBITDA




GAAP Income (loss) from operations

$ 348


$ (27,148)

Depreciation

8,475


8,260

Amortization of acquired intangible assets

33,004


29,003

Stock-based compensation

9,850


6,198

Litigation costs

-


2,101

Acquisition-, disposal- and integration-related expense

2,249


13,241

Restructuring and related expense

8,780


7,436

Non-GAAP Adjusted EBITDA

$ 62,706


$ 39,091

RIBBON COMMUNICATIONS INC.

Reconciliation of Non-GAAP and GAAP Financial Measures - Outlook

(unaudited)
























Three months ending


Year ending




September 31, 2021


December 31, 2021




Range


Range











Revenue ($ millions)

$ 215


$ 225


$ 900


$ 900











Gross margin









GAAP outlook

56.8%


57.8%


57.8%


58.8%


Stock-based compensation

0.2%


0.2%


0.2%


0.2%



Non-GAAP outlook

57.0%


58.0%


58.0%


59.0%











(Loss) earnings per share









GAAP outlook

$ (0.03)


$ -


$ (0.11)


$ (0.04)


Stock-based compensation

0.04


0.04


0.14


0.14


Amortization of acquired intangible assets

0.11


0.11


0.43


0.43


Acquisition-, disposal- and integration-related expense

0.01


0.01


0.03


0.03


Restructuring and related expense

0.01


0.01


0.07


0.07


(Gain) loss on change in value of debentures*

(0.01)


(0.01)


0.04


0.04


Tax effect of non-GAAP adjustments

(0.02)


(0.03)


(0.11)


(0.13)



Non-GAAP outlook

$ 0.11


$ 0.13


$ 0.49


$ 0.54











Weighted average shares used to compute (loss) diluted earnings per share (in thousands)









Shares used to compute GAAP(loss) diluted earnings per share

148,000


148,000


148,000


148,000


Shares used to compute Non-GAAPdiluted earnings per share

155,000


155,000


155,000


155,000











Adjusted EBITDA ($ millions)









GAAP income from operations

$ 1.9


$ 5.9


$ 24.4


$ 34.4


Depreciation

4.2


4.2


16.9


16.9


Amortization of acquired intangible assets

17.3


17.3


66.6


66.6


Stock-based compensation

5.7


5.7


20.7


20.7


Acquisition-, disposal- and integration-related expense

1.9


1.9


5.3


5.3


Restructuring and related expense

1.0


1.0


11.1


11.1



Non-GAAP outlook

$ 32.0


$ 36.0


$ 145.0


$ 155.0





















*


Excludes any estimated future (income) loss related to the revaluation of the debentures and warrants received as consideration from the sale of the Kandy Communications Business.

Cision
Cision

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SOURCE Ribbon Communications Inc.