Ribbon Communications Inc.

Greetings and welcome to the Ribbon Communications Second Quarter 2026 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. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Fahad Najam, Head of Investor Relations. Thank you. You may begin.

Good afternoon and welcome to Ribbon's second quarter 2026 Financial Results Conference Call. I'm 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 Eric Marmurek, 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 third quarter of 2026 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 the 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 GAAP measures are included in the earnings press release we issued earlier today, as well as 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.

Great, thanks Fahad. Good afternoon everyone and thanks for joining us today to discuss our second quarter results and outlook for the second half of the year. We had a solid second quarter with key financial metrics above the midpoint of our guidance. Revenue grew 18% sequentially to $192 million and earnings improved by $20 million to 12 million with improvement in both of our operating segments. Excluding maintenance, Product and services revenue increased 28% sequentially. Following a similar pattern to the first quarter, bookings in our IP optical segment were very strong. In fact, product and service bookings were an all time high in the quarter with a book to bill of 1.6 times revenue. Overall IP optical backlog has increased more than 60% so far this year. This includes several new data center interconnect projects, and one of our strongest quarters ever in the U.S. market, supporting mission critical networks and broadband services. The U.S. enterprise market segment was also a real highlight in the quarter. We expanded several strategic customer relationships, including voice and data projects with multiple Fortune 100 companies, including one of the nation's largest financial institutions and another project with one of the nation's largest energy producers. During the quarter, we announced a very significant and material partnership with Salesforce to accelerate time to market of its new agentic AI contact center offering, AgentForce Contact Center, which integrates Ribbon's secure carrier-grade voice capabilities. We believe this validates a new market segment, enabling enterprise customers to securely deploy AI-powered applications while leveraging the resiliency and reliability of carrier-grade communications infrastructure. I'll expand on this very important partnership in more detail shortly. When comparing year over year, as we expected sales in our cloud and edge segment in the second quarter were down 19% year over year, primarily as a result of lower sales to Verizon. It's important to remember that the prior year included record shipments and deployment activity associated with Verizon's voice network transformation program, creating a particularly difficult year over year comparison. IP Optical results in the second quarter were very consistent with the previous year, growing modestly after accounting for the completion of a long-term support and maintenance contract. So, in summary, solid performance in the second quarter with progress against several of our strategic growth objectives and meaningful improvement versus the first quarter. Looking into the balance of the year, we continue to expect sequential revenue growth and improved earnings in Q3 and Q4, supported by the strong IP optical bookings momentum in the first half and a strong pipeline of new projects. There are a number of larger opportunities within our IP optical business that could drive additional growth. Therefore, we have a wider range of potential outcomes for the second half of the year, which I'll comment on more later. Voice network modernization deployments with US Tier 1 service providers have improved. but more slowly than we expected, moderating our second half growth rate while increasing the backlog and opportunity in 2027. Looking at the broader market environment, we continue to see healthy investment across communications infrastructure, especially tied to building and expanding mission critical networks, data center interconnectivity, and adoption of cloud native technology to be able to innovate more quickly, improve cybersecurity, and support agentic AI voice deployments. From an end market perspective, as expected, sales to both service providers and enterprises in the second quarter were up significantly versus the first quarter. Total enterprise sales, which includes large enterprise, critical infrastructure and government and defense agencies, increased 42% sequentially. Year over year, sales were essentially flat with growth in large enterprise offsetting lower sales to federal and defense in the quarter. Total service provider revenue increased 9% sequentially in the second quarter, with both Verizon and Bardi remaining 10% plus customers. Consolidated gross margin in the quarter was in line with our expectations, with IP optical revenue and margins a little stronger than expected. Growth in the U.S. market contributed to the significant sequential improvement in IP optical margins in the second quarter. Cloud and Edge margins also improved sequentially, reflecting the higher product revenue offset by continued lower professional service revenue. Adjusted EBITDA for the quarter was $12 million, a $20 million improvement versus the first quarter and above the midpoint of our guidance. Now a few more highlights in each of our operating segments. Starting with our IP optical networks business, as I mentioned, we had our strongest bookings quarter ever since the acquisition of ECI in 2020. Demand was broad-based across multiple customer segments and geographies, giving us increasing confidence as we moved through the second half of the year. Product and services revenue increased 36% sequentially in the quarter, with the largest increase coming from our optical networking Apollo solutions, which increased over 70% sequentially. Geographically, the strongest growth in the quarter was here in the US, with a combination of regional service provider, data center, and Critical Infrastructure Projects. One of the most encouraging growth opportunities continues to be data center interconnect. During the quarter, we doubled the number of new projects as compared to the first quarter. These projects span multiple regions and customer types, including a new major award in Africa, where we will be helping our customer build an optical fiber backbone spanning several countries, connecting data centers and other services. Mission-critical infrastructure also continues to be a key area of strength and differentiation for our IP optical solutions. Utilities, transportation providers, and government agencies continue to invest in highly secure private communications networks where reliability and resiliency remain paramount. During the quarter, we had a significant number of projects in the U.S. and EMEA regions, including the major expansion project I mentioned with one of the largest energy providers in the U.S. We continue to expand our portfolio to address this key market segment. Our solutions are a great fit with significant differentiation. And we have a strong position with multiple defense agencies across Europe and the Middle East where it's imperative that they continue to modernize and expand their secure command and control networks. Defense-related revenue increased nearly 60% sequentially and year over year. reflecting the growing importance of secure optical transport and IP networking in these environments. To continue addressing the significant opportunities within the defense market, we recently announced the commercial availability of our Network in a Box product offering, targeting critical network infrastructure requirements in highly challenging and rugged environments. And in the Asia Pacific region, our business in India remains strong with good visibility into the second half and significant additional growth opportunities in 2027, including a very substantial optical networking expansion project. We also closed additional opportunities across Southeast Asia in countries such as the Philippines, Vietnam and Japan and expect further growth in the second half. Overall, demand across our IP Opticals business remains healthy and increasingly diversified. The mix of opportunities includes higher-value applications, including data center interconnect, mission-critical infrastructure, and secure communication networks, which we believe represent attractive long-term growth opportunities. Turning to our cloud and edge business, product and services revenue increased 19% sequentially, with sales to both enterprises and service providers increasing quarter over quarter. The majority of the sequential increase resulted from a number of new projects with large enterprise customers. In the quarter, we closed two significant voice communication infrastructure deals with major Fortune 50 companies. As I mentioned earlier, the first is a global Microsoft Teams deployment with one of the nation's largest financial institutions. It leverages our entire portfolio of SVC, policy routing, analytics, and management products. deployed on-premise across multiple data centers around the world. With the increased awareness and focus on cybersecurity, our ability to constantly monitor threats and proactively address vulnerabilities via a new SecOps offering was a key factor in our selection. This will be one of our largest Microsoft Teams deployments to date. The second is a new customer win and competitive replacement with one of the largest US car manufacturers, they're initiating a global voice communications upgrade and selected ribbon to replace a legacy platform. The other major announcement we had in the second quarter was the partnership with Salesforce for leveraging our cloud native portfolio to bring voice capabilities to its agent force platform. This win is highly strategic as we believe there is a new market forming with the integration of AI applications and voice communication. With Salesforce, will benefit from the growing traction agent force is enjoying in revolutionizing the contact center market across the entire spectrum of small, medium, and large businesses. As AI agents augment or even replace human agents and tasks, we expect a dramatic increase in total voice call sessions as contact center capacity will no longer be limited by human agent capacity and instead will be driven by available GPU compute capacity. This should drive strong demand for our cloud-native SBCs, serving as voice firewalls for each AI agent. In fact, another important and long-term customer bandwidth also called out the favorable tailwinds they expect from serving voice agents globally on their platform, which also leverages ribbon technology. The cloud-native ribbon session border controller and SIP routing engine is integrated into the AgentForce Contact Center application and deployed across multiple AWS instances to support rapid deployment and scalability. Public cloud is increasingly becoming the infrastructure of choice for these types of applications. And we added five additional customer wins in the second quarter where AWS is the chosen deployment platform. So overall, we continue to advance our strategy of broadening the base of solutions within our cloud and edge segment beyond traditional voice modernization into a broader secure communications portfolio supporting cloud-native networking, AI-enabled communications, and mission-critical enterprise infrastructure. With that, I'll turn it over to Rick to provide additional financial details on our results and come back on to discuss outlook for the third quarter. Rick?