Ribbon Communications Inc.

Greetings. Welcome to the Ribbon Communications first quarter 2022 financial results conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Bita Malanian, Senior Vice President of Marketing for Ribbon. You may begin.

Good afternoon and welcome to Ribbon's first quarter 2022 financial results conference call. I'm Bita Melanian, SVP of Marketing at Ribbon Communications. Also on the call today are Bruce McLennan, 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 rbbn.com, where both our press release and supplemental slides are currently available. Certain matters we will be discussing today, including the business outlook and financial projections for the second quarter and full year 2022 are forward-looking statements. Such statements are subject to the risks and uncertainties that could cause actual results to differ materially from those contained in these forward-looking statements. These risks and uncertainties are discussed in our documents filed with the SEC, including our most recent form 10-K. 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 measure are included in the earnings press release we issued earlier today, as well as in the supplemental slides we prepared for this conference call, which again are both available on the investor relations section of our website. And now I would like to turn the call over to Bruce. Bruce?

Great. Thanks, Bita, and thanks to everyone for joining us today to discuss our first quarter results and our outlook for the remainder of the year. Financial results for the first quarter were in line with our expectations and at the midpoint of our guidance. Revenue was $173 million and adjusted EBITDA was a loss of $8.7 million. We successfully navigated the continued supply chain related challenges. including new issues like the increased delays being incurred for material transiting through the shipping ports in Shanghai. We expect margins to continue to be affected by higher material and logistics costs again in the second quarter, but fees associated with expediting components are beginning to lessen. And as a result, combined with higher revenues, we expect margins to improve this quarter and as the year progresses. Product and service bookings in the quarter were good, with an overall book-to-revenue ratio of 1.2 times. Our IP optical business was 1.27 times for the quarter. Our maintenance and support backlog grew nicely with nearly 80% of the year's maintenance revenue now booked. Our Cloud and Edge business had several notable customer accomplishments so far this year. Last week, we jointly announced with Microsoft the availability of support for Microsoft's Operator Connect using our Ribbon Connect platform. Operator Connect is Microsoft's operator-managed service for interconnection between teams and telecom services. We've extended our multi-tenant, cloud-native, software-as-a-service Riven Connect solution to support service provider deployments of Operator Connect and announced our first customer, Switch Connect in Australia, now offering this turnkey Microsoft Teams service. Our solution leverages the same proven carrier-grade security products and services that are already trusted and deployed in the world's largest telecom networks. Google also announced support for SIP trunking for their Google Voice offering leveraging certified SBCs from Ribbon. And Colt just announced selection of Ribbon's cloud-based virtual SBC solution to deliver a complete, secure Microsoft Teams communication service across Japan. These recent announcements build on the enterprise momentum we're seeing with a number of other major businesses. including Liberty Mutual, Goldman Sachs, Citibank, Bank of America, Cleveland Clinic, John Deere, Shell, and others that have chosen Ribbon for their most demanding voice communication requirements. We also announced a new international win with Turkcell, who selected Ribbon to support the digitization of their mobile and fixed voice network interconnect platform using our virtualized cloud-based SBC, policy and routing management, and element management platforms. In our IP optical business, we announced a significant win in the first quarter with the second largest European railway company, SNCF, based in France. This is a five-year project to replace obsolete SDH equipment with our latest OTN WDM optical platforms, followed by the deployment of our MPLS routing solutions. Ribbon continues to build on the great position we have with many European critical infrastructure operators, And we expect additional growth in the second half of the year in this important segment. We also capitalized on the win I mentioned last quarter with MTN Group with the award of two major projects in the Africa region. We expect business in this region to accelerate as we build on the success of these initial projects with this top 10 global mobile and telecom operator serving over 270 million subscribers across Africa and the Middle East. As Sam Bucci, our IP Optical Network's business leader, outlined on our last earnings call, we have a strong pipeline of new products being introduced over the next several quarters. There's a growing emphasis on the software aspects of our solutions with major new IP routing features being introduced across our IP portfolio. These are foundational capabilities that will expand our addressable market, and they're complemented by the work we've done to productize our disaggregated ribbon IP network operating system that supports the diversity of network requirements using both our custom high performance products and a growing number of third party platforms. We're introducing a new series of white box products over the next several months called the Neptune 2000 series, which will broaden our portfolio and expand our reach from the edges of the network further into the higher performance metro layers. We have a steady stream of enhancements to our MUSE multi-domain, multi-vendor management and orchestration cloud-based software platform with growing engagements with customers. There continues to be a significant gap in the industry when it comes to enabling a truly open and interoperable networking environment in a simple, customizable way. And the vision we have for this platform is really resonating. From an optical transport perspective, We have a number of important enhancements to our Apollo platform, including support for a new cost-reduced and feature-enhanced 400G ZR Plus plug-in that includes OTN support and interoperability at the transponder level. This will be another step towards realizing our strategy to enable open WDM transport networking. Our Cloud and Edge team is also in high gear with the introduction of the Operator Connect integration, as well as a growing number of cloud native SBC opportunities we have a major new automation management platform being introduced this quarter that unifies management of all of our cloud and edge software platforms for both enterprise and service provider customers this will greatly reduce the friction of introducing new software leveraging a CI CD continuous integration continuous development delivery process that will really differentiate us from the competition And finally, we're introducing two new Enterprise Edge SPC products. The first is a fully containerized cloud native version of our Edge SPC software product that's already in use in our Ribbon Connect solution. And the second is a next generation Enterprise Edge hardware platform that provides a significant increase in networking performance at a lower cost point. This new Enterprise Edge 8000 is a multipurpose voice and data platform that will expand our market beyond voice services at the enterprise edge. Which brings me to a few comments on the outlook for the rest of 2022, starting first with our IP optical business. The level of activity across all regions has certainly increased this year. We had active RFPs with 12 major mobile and telecom carriers around the world. Several of these opportunities are being driven by the need to replace Huawei in the network. We have a good mix of both IP and optical opportunities where we're well positioned as a result of the expanded roadmap we're investing in. For the remainder of 2022, we expect year-over-year growth in both traditional regions such as India and Europe, as well as in strategic new growth areas such as North America, Japan, Africa, and the Middle East. In North America, shipments of our IP and optical products increased more than 190% in Q1 versus the first quarter of 2021, and we expect continued momentum with existing customers, such as Rogers, ViaWireless, Digicel, and CFE, the largest electric company in Mexico, as well as with new customers. On our last call, I'd mention a new major project with a US Tier 1 service provider to modernize their voice infrastructure over the next several years that will significantly reduce the complexity and operating cost of their network. The solution combines our Telco Cloud voice core solution with technology from our IP optical portfolio. The project's going well with solution validation well underway following initial shipments of lab and field validation equipment. We anticipate commercial deployments to begin in the second half of the year. I'd also mention a new project in Japan with a major multi-service communications provider that uses our Neptune routing platform in a converged edge IP application. Lab validation of the solution continues and we anticipate early deployments in the third quarter with this strategic customer. In our cloud and edge business, we have a strong funnel of network transformation projects with our largest traditional service provider customers over the next several quarters that underpin our view for the year. Similarly, there's a growing pipeline of large enterprise communication modernization projects as businesses begin the process of returning to the office and updating their voice infrastructure to leverage cloud collaboration platforms that have become commonplace in the work from home era. This includes very large opportunities with U.S. federal agencies beginning this year as they replace aging IP PBX Centrix platforms with modern cloud platforms that are hardened for their unique requirements. With our existing carrier grade voice application server and policy management deployments at places like the Pentagon, Ribbon is very well positioned to win a significant share of this large investment over the next several years. In summary, I'm excited to see the results of the investment we're making in new products as they begin to reach the market and validation of the strategy as we compete for and win new business. As a result, I expect we'll continue to improve our financial performance as the year progresses. With that, I'll turn it over to Mick to provide some additional detail on our first quarter results and then come back on to discuss guidance for the second quarter. Mick?