Ribbon Communications Inc.

Good afternoon, everyone, and welcome to the Ribbon Communications third quarter 2020 earnings conference call. All participants are currently in a listen-only mode. Should you need assistance, please say no to a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to Monica Gould, Investor Relations for Ribbon Communications. Ma'am, please go ahead.

Good afternoon, and welcome to Ribbon's third quarter 2020 financial results conference call. I'm Monica Gould, Investor Relations for Ribbon Communications. Also on the call today will be Bruce McClelland, Ribbon's Chief Executive Officer, and Mick Lopez, Ribbon's Chief Financial Officer. Today's call is being webcast live and will be archived on the investor relations section of our website at ribboncommunications.com, where both our press release and our supplemental slides are currently available. Certain matters we will be discussing today include the business outlook and financial projections for the fourth quarter 2020 and beyond and our forward-looking statements. Such statements are subject to the risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. These risks and uncertainties are discussed in our documents filed with the SEC, including our most recent Form 10-K and Form 10-Q. I refer you to our safe harbor statement included on slide two of the supplemental slides for this conference call. In addition, we will present non-GAAP financial information on this call. Reconciliations to the applicable GAAP measures are included in the earnings press release we issued this afternoon, as well as the supplemental slides for this conference call, which again are both available on the investor relations section of our website. As we previously noted, we completed our acquisition of ECI Telecom on March 3rd, 2020, which impacts comparisons to prior periods. Ribbon operates as a single segment. However, for the sake of clarity, We are continuing to include additional detail on the former ECI telecom business performance. As we continue to integrate, we expect a transition to providing business unit performance in Q4 2020 rather than legal entity financials. And now, I would like to turn the call over to Bruce.

Thanks, Monica. Good afternoon, everyone, and thank you for joining us during this busy earnings week. I hope that you are all healthy and safe. We're very pleased to report strong third quarter results that exceeded our expectations. We're clearly beginning to see the benefits of our strategy to diversify and broaden our portfolio, combining a strong software business with a higher growth packet optical business, resulting in both strong profitability and revenue growth. We achieved a new record level of adjusted EBITDA during the quarter on the strength of increasing software sales in our cloud and edge business. And we're very encouraged by the improvement in our packet optical business, with sales increasing 22% sequentially and a positive adjusted earnings contribution for the quarter. Our strategy to sell the expanded portfolio to our combined customer footprint is beginning to bear fruit. As noted last quarter, our customers continue to see elevated voice and data traffic levels related to the increased usage of digital and social platforms, as well as broad-based adoption of online collaboration platforms such as Microsoft Teams and Zoom. Both service providers and enterprises have responded to this network strain by increasing or accelerating their investment in capacity and capabilities, directly aligning with our portfolio offerings and strategy. Our engagement level with customers remains strong. RFP activity has increased significantly, and we've been able to leverage remote proof of concept product demonstrations in place of onsite lab evaluations. Visibility in the business remains solid, and we have no significant supply chain restrictions. Lower travel and marketing activity have also contributed to the lower operating expenses in 2020. I'd like to start by highlighting a number of recent notable customer accomplishments and activity in the quarter. A key part of our strategy is to strengthen our packet optical business and presence in North America, leveraging the position we have with the cloud managed portfolio. In particular, we have a strong focus on cable operators as well as the regional telco providers. We're making good progress on this strategy and expect to report meaningful sales in the fourth quarter. More broadly, we've continued our packet optical networks momentum, securing business with eight new critical infrastructure and enterprise customers in the quarter, including a smart city project in Asia, a large European railway deployment, a European car manufacturer, and expansion of a national research and education network in Europe. In India, the long-standing dispute between the telecom service providers and the Department of Telecommunications has been resolved by their Supreme Court. Closure on this issue provides certainty over the operating environment and a path to renewed investment in the country's communications infrastructure. While we expect it will take several quarters for spending to fully rebound, were optimistic about the opportunity for growth in 2021. We had very strong sales of our SBC session management portfolio in the third quarter across a variety of applications and regions, contributing to the earnings beat this quarter. As an example, we continued the strong momentum we have in the financials vertical with a large software order from a major US-based multinational bank to support their migration to Microsoft Teams, and to increase call center capacity. Our high-performance enterprise and service provider SPC platform sales are up more than 25% year to date. As adoption and usage of cloud-based communications and collaboration platforms accelerate, we have expanded our offerings to include multiple cloud-native deployment and usage models. We also announced additional Zoom phone certifications this quarter. Finally, we secured several new contracts for our Call Trust platform that addresses the growing security challenges related to fraud and robocalling. Bookings for this solution in the quarter were three times the level of the previous quarter. Despite operating in the midst of the COVID pandemic, we've made great progress on the integration of Ribbon and ECI and implementing organizational efficiencies across the company. Last month, we announced that Sam Bucci has joined Ribbon to lead our packet optical networks business unit. Sam was previously with Nokia responsible for their multi-billion dollar optical division. I couldn't be more excited to have Sam join the team and supercharge our efforts to expand our presence and share of this massive multi-billion dollar packet and optical market. Also, last quarter, we announced that we've signed an agreement to sell our candy cloud communications business to American virtual cloud technologies. We continue to make progress on the deal, which remains contingent on successful completion of their capital raise. Year to date, Candy has contributed $10 million in sales with a $12 million EBITDA loss. I'll now ask Mick to comment in more detail on our Q3 performance, and we'll then come back on to talk about our outlook for the business. Mick?