Ribbon Communications Reports Mixed Q3 Results, Net Loss Narrows

Ribbon Communications Inc. reported its financial results for the third quarter and the nine months ended September 30, 2024, showing a mixed performance in revenue and profitability compared to the previous fiscal period.

For the three months ended September 30, 2024, Ribbon Communications generated total revenue of $210.2 million, a 3.5% increase from $203.2 million in the same period of 2023. This growth was primarily driven by a $12.3 million increase in the Cloud and Edge segment, which reported revenue of $128.1 million, up from $115.8 million. However, the IP Optical Networks segment saw a decline, with revenue decreasing to $82.2 million from $87.4 million. Gross profit for the quarter was $109.6 million, reflecting a gross margin of 52.1%, compared to $103.5 million and a 50.9% margin in the prior year.

In contrast, for the nine months ended September 30, 2024, total revenue decreased to $582.5 million from $599.9 million in 2023. The decline was attributed to lower sales in both the Cloud and Edge segment and the IP Optical Networks segment. Gross profit for the nine-month period increased to $299.4 million, with a gross margin of 51.4%, up from $286.4 million and 47.7% in the previous year.

The company reported a net loss of $13.4 million for the third quarter, slightly improved from a loss of $13.5 million in the same quarter of 2023. For the nine months, the net loss was $60.6 million, a significant reduction from a loss of $73.3 million in the prior year. Operating expenses for the third quarter increased to $110.5 million from $102.6 million, influenced by a $5.0 million legal settlement and restructuring expenses.

Strategically, Ribbon Communications entered into a $385 million Senior Secured Credit Facility in June 2024, which included a $350 million term loan and a $35 million revolving credit facility. The proceeds were utilized to repay the previous 2020 Credit Facility and redeem Preferred Stock. The company also reported a significant increase in cash and cash equivalents, totaling $40 million as of September 30, 2024, compared to $27 million at the end of 2023.

The company continues to face challenges, including supplier disruptions and geopolitical tensions affecting operations and customer spending. Despite these challenges, Ribbon Communications anticipates revenue growth in 2024, particularly from its Cloud and Edge segment, driven by projects with Verizon and increased sales to Federal agencies.