Ribbon Communications Inc.

Greetings and welcome to the Ribbon Communications fourth quarter and full year 2025 financial results conference call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star 1 on your telephone keypad. As a reminder, this conference is being recorded. If anyone should require operator assistance, please press star 0 on your telephone keypad. It's now my pleasure to introduce your host, Fahad Najam, Senior Vice President, Investor Relations and Corporate Strategy. Fahad, please go ahead.

Good afternoon and welcome to Ribbon's fourth quarter and full year 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 release and supplemental slides are currently available. Certain matters we will be discussing today, including the business outlook and financial projections for the first quarter of 2026 and beyond, 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 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 gap measures are included in the earnings press release we issued earlier today, as well as in the supplemental financial information we prepared for this 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 Q4 results and outlook for 2026. When we spoke with you back in October, we entered Q4 with a sense of optimism, but also recognized we are operating in a very dynamic macro environment, including budget uncertainty related to the recent US government shutdown. We remain optimistic as we start the year. We successfully closed multiple significant deals in the quarter and achieved record product and professional service bookings. A significant portion of these new orders is associated with new voice modernization projects where we expect revenues starting in the second half of 2026. We've expanded the customer base and reinforced our industry leadership in cloud-centric voice modernization where our portfolio and technical teams really sets us apart from the competition. We also see a significant opportunity to integrate voice technologies with the expanding set of conversational AI and agentic AI platforms. And our Acumen AIOps platform continues to garner strong interest. However, relative to our guidance for Q4, revenue was below our expectations and was impacted by several customer and project delays. The delayed programs are not lost business and are primarily tied to two key reasons. Half of the shortfall was associated with projects already in backlog where implementation delays pushed out project completion milestones or product shipments, delaying revenue recognition to future quarters. This included one of our primary US customers where deployments slowed during their recent restructuring. The remaining gap in the fourth quarter was with several customers impacted by budget availability at the end of the year. This included an IP optical project where the end customer is still waiting for BEAD funding to be distributed. When comparing year over year, as expected, the largest contributor to the lower sales in Q4 was the reduction in new sales to US federal agencies, which were approximately $10 million lower than the fourth quarter of 2024. The other primary contributor to the year over year reduction in Q4 is the challenging comparison to the record quarter we had with Verizon in the fourth quarter of 24, when we shipped significant amounts of equipment to begin to ramp the voice modernization project across multiple sites. For the full year, our business with Verizon was very strong with sales increasing 27% year over year. And now with the closure of the Frontier acquisition, there is a significant opportunity to expand the scope of our program across the Frontier footprint over the next several years. For the full year, sales to global service providers increased 5% and were 70% of overall sales for the company. Sales to enterprise customers increased 2% year over year while sales to government and defense declined 23% and were 9% of overall sales. So we made good progress growing our position in telecom and enterprise markets while government and defense were below expectations. On a regional basis, 2025 sales in the Americas were essentially flat year over year given the reduction in U.S. federal offset by the increased business with service providers. EMEA sales were down year over year as a result of the reduced sales to Russia starting in the second quarter of 2024. Excluding Russia, sales in EMEA were flat year over year. And sales in the Asia Pacific region grew 19% year over year on the significant increase of business in India. Consolidated gross margin in the quarter was in line with our expectations with very strong cloud and edge margins benefiting from a stronger mix of software revenue this quarter. offset by lower IP optical networks gross margin from the increased sales in India and lower sales in North America and EMEA regions. Adjusted EBITDA for the quarter was $40 million, $2 million below our guidance range due to the lower sales, offset by lower operational expenses, primarily related to reduced employee variable compensation. Despite the lower than expected Q4 results, we ended 2025 in a solid financial position, And as expected, Q4 was the strongest quarter of the year, increasing 6% versus the third quarter. For the full year, revenue increased 1% to $845 million, but excluding sales to Russia in 2024, sales to all of the customers increased 4% in 2025. I'll also note that you'll see a significant increase to our net income and EPS this quarter related to a new tax benefit that John will describe shortly. Now a little more detail on our operating segments. In our IP optical networks business, revenue was down $2 million year-over-year in the quarter, which was below our target of mid-single-digit growth. As mentioned earlier, we saw several projects in North America push out into 2026, including a significant new deployment awaiting the release of BEAD funding. And sales were lower in the MEA region, primarily due to a year-end budget freeze with a government defense agency. This was offset by continued growth in India, with sales in the fourth quarter increasing 28% year-over-year on the strength of deployments with BARTi, as well as first shipments for a new world broadband deployment. For the full year, sales in India grew more than 40% and exceeded $100 million. In other regions, we won several optical transport expansion projects in Southeast Asia with Converge CICT and Moritel. and in the critical infrastructure market segment, we won significant projects with two major European railways, Danish Railway, Banne-Denmark, and pan-European operator, Deutsche Bahn. We also had a first win with one of the largest electric power generation and distribution cooperatives in the US, which provides service across nine states. IP optical product and services bookings to revenue was 1.1 times in the quarter, and bookings were the highest level of the year. For the full year, revenue grew approximately 1%, but when excluding sales to Russia in 24, revenue across all other regions increased 9% year over year. In our cloud and edge segment, revenue in the fourth quarter was down $23 million year over year and below our expectations, as I previously mentioned. Despite the lower revenue in the quarter, cloud and edge booking set a new record high with product and professional services booked a revenue of 1.5 times. As I mentioned on our last earnings call, we're seeing an increasing number of service providers investing in modernizing their traditional voice networks. In addition to Verizon, we've booked over $50 million of voice network transformation orders in the quarter across more than a dozen different customers. Revenue for these projects is normally spread out over time, typically six to 12 months, or perhaps longer for larger projects. It's a very good start, and there are several additional significant opportunities that we are pursuing. In addition to legacy class five switch replacement, another key voice modernization priority for both service providers and enterprises is to migrate from purpose-built hardware to fully virtual cloud native implementations. We now have several major projects underway with tier one service providers in Europe and Asia pack, along with a significant new win with the US tier one customer this quarter to migrate SBC and routing workloads to cloud native implementations running in both private and public cloud. For the full year, cloud and edge sales increased 1%, with service provider sales growing 8%, and enterprise and government sales decreasing 16%. With that, I'll turn it over to John to provide additional financial details on our results, and then come back on to discuss Outlook for 2026. John?