Ribbon Communications Inc.

Greetings and welcome to the Ribbon Communications third quarter 2025 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, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. And it is now my pleasure to introduce to you Fahad Najam with Investor Relations. Thank you, sir. You may begin.

Good afternoon and welcome to Ribbon's third quarter 2025 financial results conference call. I am Fahad Najam, SVP Corporate Strategy and Investor Relations at Ribbon Communications. Also on the call today are Bruce McClelland, Ribbon's Chief Executive Officer, and John Townsend, 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 releases and supplemental slides are currently available. Certain matters we will be discussing today, including the business outlook and financial projections for the fourth quarter of 2025 and beyond are forward-looking statements. Such statements are subject to 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 statements included in the supplemental financial information posted on our website. 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 earlier today, as well as in the supplemental financial information 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, Fahad. Good afternoon, everyone, and thanks for joining us today to discuss our Q3 results and the outlook for the fourth quarter and full year. I'd like to start by highlighting a recent new product announcement that's getting considerable interest from customers. Acumen is our new powerful AIOps automation platform. designed to help service providers and enterprises navigate the complexity of today's challenging operational environment and accelerate their transition to autonomous networks. Our recent announcement included the endorsement from Altice-owned Optimum, who are integrating the platform into their operation to enhance network reliability and performance. The Acumen platform is built to reduce deployment timelines and deliver customizable automation across the entire network lifecycle. It ingests data from all layers of network, providing end-to-end network observability across multi-vendor and multiple networks. Moreover, it combines out-of-the-box applications built on our analytics and use products with a powerful agent builder capability that enables our customers to develop their own AI agents with various LLM integrations. Our deep protocol and networking experience uniquely positions us to help our customers build fully autonomous AI-driven networks. Beyond AIOps, our Cloud and Edge portfolio is becoming increasingly strategic to our customers' agentic AI platforms and roadmap. We had several very important awards in the third quarter where we've been selected by leading technology providers, including one of the largest SaaS companies in the world, which is leveraging our cloud-native SPCs and WebRTC APIs deployed in AWS to enhance their customer service agentic AI operations. Another notable win in the quarter was with IBM, which is embedding our virtual SPC solutions within its Watson AI platform to enable support for multiple different formats, including voice, to interact with users. These are just some of the examples of the new innovations our team is working on with more to come And I'm extremely excited about the convergence of AI and voice technologies and the significant opportunity ahead for Riven. Okay, now onto our quarterly results. I'm pleased to report a solid third quarter with sales increasing 2% year over year, even as we navigate short-term disruption related to the US federal government shutdown. Year to date, revenue has increased 6% this year and EBITDA has increased 5% versus the same period in 2024. Excluding the impact of sales to Eastern Europe, revenue has increased more than 10% so far this year. Sales to service providers in the quarter increased 5% year-over-year, with growth across multiple accounts, including Verizon, Bardi, and several other operators in North America. Sales to enterprise customers in the quarter were down approximately 3% year-over-year and were impacted by lower sales to U.S. government agencies. Excluding this segment, enterprise sales to all other customers were up almost 7% year over year. While the U.S. government shutdown officially started October 1st, it became a growing distraction in the last few weeks of the third quarter and delayed the procurement process on several projects that would have easily put us above the midpoint of our guidance for the quarter. The ongoing shutdown is obviously affecting many government activities with significant non-critical staff furloughed. This has become an important segment for us, contributing mid to high single-digit percentages of our cloud and edge revenue in 2024. In any event, these projects remain a high priority for U.S. federal agencies, and purchases are simply delayed, not lost. But given the uncertainty over when a resolution will be reached, we have removed the majority of U.S. government-related sales from our projection for the fourth quarter, and now assume these purchases will occur in 2026. To be clear, no business has been lost. Deployments and services are continuing, and we're supporting our customers' mission-critical needs. Notwithstanding this near-term impact, the fundamentals across our cloud and edge and IP optical businesses remain strong. Continuing on the momentum built over the last several quarters, we're benefiting from very good demand across both service provider and enterprise customers as they continue to invest in modernizing their voice and data networks, and we're tracking well against our growth objectives. From a regional perspective, sales to Europe, Middle East and Africa were very strong this quarter, growing 26% year over year. Sales to Asia Pacific countries were also strong, growing 13%, with India really leading the way. Sales in North America were impacted by the lower US federal sales and declined approximately 10% year over year in the quarter. From a consolidated bookings perspective, Product and professional services booking in the quarter were below one times for the first time in almost two years. To some extent, this reflects the impact from the U.S. government shutdown. Booking's momentum so far in the fourth quarter has been good, with more than $30 million of new enterprise and service provider orders received over the last few weeks. Now, a little more detail on each of our operating segments. Sales in our IP optical networks business continued to grow, increasing 11% year over year. one of our strongest quarters in the last five years, and compensating for lost sales to Eastern Europe. The higher sales, favorable regional and customer mix, and expense management resulted in a positive earnings contribution on an EBITDA basis, an important milestone for the business. Business in Europe and the Middle East increased almost 50% year over year with a variety of critical infrastructure and defense agency projects. This included several notable new data center interconnect projects in Central Europe. The first was in support of a large regional insurance provider to provide secure high speed connectivity between its data centers with a key focus on low latency and traffic encryption. The second was with a regional telecom operator building a new 400 gig internet peering network connecting over 200 cities. I'm pleased with the growing pipeline of DCI opportunities that have opened up with our expanded portfolio of IP over DWDM solutions. We also had a very nice optical transport award with a new customer in the Ukraine and are seeing several additional opportunities as this region continues to rebuild and modernize their infrastructure. In the Asia Pacific region, we saw IP optical growth across multiple areas, including Japan, India, and Southeast Asia. Sales to India continued to grow, increasing 31% year-over-year this quarter and are up 50% year-to-date. We had several new projects in Japan, including a new 400-gig long-haul transport win with a regional electric power company that provides internet, mobile, and data center services throughout the region. While IP optical sales in North America were lower this quarter, we were pleased to see our first World Broadband Project Award tied to a provisional bead award expected to be ratified shortly. With growing clarity around the new bead rules and process, I expect momentum to quickly increase over the next several months. To further underscore the progress we've made over the last several quarters in diversifying our IP optical revenue, I'm pleased to highlight that revenue from IP routing solutions has grown by more than 20% year-to-date, and represents approximately 50% of new product sales for the segment so far this year. Optical sales are down year-to-date, but entirely due to the suspension of shipments to Russia mid-last year. In our cloud and edge segment, despite the lower sales this quarter due to reduced U.S. federal sales, we've generated solid revenue growth year-to-date with revenue up almost 9% year-over-year, primarily on the strength of voice network modernization projects. Excluding low growth maintenance revenue, Cloud and Edge product and professional service revenue has grown almost 18% so far this year as compared to last year. We had another strong quarter with service provider customers, growing 5% year over year. In addition to another strong quarter with Verizon, where revenue grew approximately 20% year over year, we're seeing an increasing number of service providers beginning to invest in voice network modernization, with eight new projects initiated this last quarter. Cloud and Edge sales to enterprise customers, excluding US government agencies, were up slightly from the second quarter, but down approximately 10% year over year. As we've moved more customers towards annual enterprise software license agreements, we see a larger concentration of revenue in the fourth quarter when we renew these recurring license agreements. As a result, the amount of our cloud and edge revenue, which is reoccurring in nature, including high margin support and maintenance contracts, continues to increase. As mentioned earlier, cloud and edge sales to U.S. federal customers in the quarter were impacted by the impending government shutdown and were down approximately 60% year over year from our first half 25 run rate. However, In the third quarter, we did receive a significant first order from a new US federal DOD agency that had started a major voice modernization project, and we continue to see the scope of opportunity growing within our US federal customer segment. As I highlighted earlier, we're uncovering multiple new opportunities tied to our customers' agentic and generative AI roadmap, which is very exciting. I already mentioned two very notable wins in the quarter, and our pipeline of opportunities related to adgentic and generative AI platforms is growing. With that, I'll turn it over to John to provide additional financial details on our third quarter results, and then come back on to discuss outlook for the fourth quarter. John.