Ribbon Communications Q2 Earnings Call Highlights

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Ribbon Communications (NASDAQ:RBBN) reported second-quarter 2026 revenue of $192 million, up 18% sequentially but down 13% from a year earlier, as stronger IP Optical demand and enterprise activity offset continued softness in its Cloud and Edge business tied largely to lower Verizon sales.

Chief Executive Officer Bruce McClelland said revenue and earnings exceeded the midpoint of the company’s guidance. Adjusted EBITDA was $12 million, improving by $20 million from the first quarter, while non-GAAP gross margin rose 350 basis points sequentially to 49.3%.

“We had a solid second quarter with key financial metrics above the midpoint of our guidance,” McClelland said, pointing to improving results in both operating segments. Product and services revenue excluding maintenance increased 28% sequentially, according to the company.

IP Optical bookings reach record level

Ribbon’s IP Optical Networks segment generated $82 million in second-quarter revenue, up 30% sequentially and down 2% year-over-year. The annual decline reflected the expiration of a legacy maintenance contract in Europe, partially offset by higher sales in the Americas and European defense markets.

IP Optical product and services bookings reached an all-time high, with a book-to-bill ratio of 1.6 times. Overall backlog in the segment has increased by more than 60% so far in 2026, McClelland said. Segment gross margin rose 680 basis points sequentially to 35.2%, supported by product and geographic mix as well as higher fixed-cost absorption.

Demand was broad-based across regional service providers, data-center interconnect projects, critical infrastructure customers and defense agencies. Ribbon said the number of new data-center interconnect projects doubled from the first quarter, with three projects awarded in the first quarter and six additional projects in the second quarter.

McClelland said data-center interconnect-related projects represented more than 10% of IP Optical revenue during the quarter. The company also cited a new project in Africa to build an optical fiber backbone across several countries, connecting data centers and other services.

Defense-related revenue increased nearly 60% both sequentially and year-over-year, according to Ribbon. The company recently introduced its “Network in a Box” offering for secure networking requirements in rugged environments.

Despite strong bookings, the IP Optical segment posted an adjusted EBITDA loss of $6 million. Chief Financial Officer Rick Marmorek said the result improved by $11 million sequentially. Management said it is seeking additional efficiency improvements and noted that greater sales in North America and Europe could help margins, given comparatively lower margins in parts of Asia-Pacific.

Cloud and Edge affected by Verizon comparisons

Cloud and Edge revenue was $111 million, up 11% from the first quarter but down 19% year-over-year. McClelland attributed the annual decline primarily to lower sales to Verizon, following record shipments and deployment activity related to the carrier’s Voice Network Transformation program in the prior-year period.

Verizon and Vardi each remained customers accounting for more than 10% of Ribbon’s revenue in the quarter. Management expects Verizon to remain a 10%-plus customer in the second half, though it said voice switch upgrade deployments have progressed more slowly than anticipated.

Ribbon has reduced its expected second-half growth rate because of the timing of U.S. Tier 1 voice-modernization projects, while saying that the delayed activity increases backlog and opportunity for 2027. McClelland said the company and Verizon remain aligned on accelerating deployments and capturing the cost savings associated with retiring legacy systems.

Cloud and Edge gross margin was 59.8%, up 300 basis points sequentially but down 210 basis points from a year earlier. Marmorek said Ribbon has adjusted staffing that had been retained for anticipated service deployments and expects professional-services revenue and margins to improve in the second half.

The segment’s adjusted EBITDA was $18 million, or 16% of revenue, up $10 million sequentially but down $19 million year-over-year.

Enterprise wins and AI communications partnership

Enterprise sales, including large Enterprise, critical infrastructure, government and defense customers, rose 42% sequentially. Ribbon reported significant voice communications infrastructure wins with large companies, including a global Microsoft Teams deployment for a major financial institution and a competitive replacement project with a major U.S. automobile manufacturer.

The company also announced a partnership with Salesforce for its Agentforce Contact Center offering. Salesforce is using Ribbon’s cloud-native voice capabilities as part of the platform, which is deployed across multiple AWS instances. McClelland said Ribbon sees AI-enabled contact centers as a potential emerging market for secure, carrier-grade voice communications.

Ribbon added five customer wins during the quarter in which AWS was selected as the deployment platform. The company said it is seeing increased interest in cloud-native communications platforms that can connect people, applications and AI services securely.

Outlook updated amid cost and supply pressures

For the third quarter, Ribbon forecast revenue of $215 million to $230 million and adjusted EBITDA of $26 million to $31 million. For the full year, it updated its outlook to revenue of $810 million to $840 million and adjusted EBITDA of $78 million to $88 million.

Management said the outlook includes approximately $2 million per quarter of higher product costs tied to components and logistics, with potential partial offsets from price increases. The company expects supply limitations in the second half as demand rises for key technologies.

• Second-quarter cash flow from operations was negative $12 million, driven by lower billings and adjusted EBITDA.
• Ribbon ended the quarter with $45 million in cash and a net debt leverage ratio of 4.0 times.
• Net interest expense totaled $11 million, while non-GAAP net loss was $5 million, or $0.03 per diluted share.

McClelland said Ribbon expects meaningful sequential improvement through the remainder of 2026 and a stronger 2027, supported by IP Optical bookings, enterprise demand, secure communications opportunities and the anticipated recovery in voice-network modernization deployments.

About Ribbon Communications (NASDAQ:RBBN)

Ribbon Communications Inc is a global provider of real-time communications software and network solutions for service providers and enterprises. The company's offerings address the full life cycle of voice, video and data transmission across fixed, mobile and cloud environments. Ribbon's technology portfolio is designed to enable secure, intelligent and interoperable communications in applications such as unified communications, contact centers, wholesale VoIP interconnect and next-generation 5G networks.

Ribbon's product suite includes session border controllers (SBCs), which secure and interwork IP voice and multimedia sessions; Diameter signaling controllers for 4G/5G policy and charging control; network edge virtualization platforms; and analytics engines for service assurance and fraud management.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].

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