Ribbon Communications Inc. — Call Transcript 2026

Greetings, welcome to the Ribbon Communications first 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, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Fahad Najam, Senior Vice President of Investor Relations. Please go ahead. Good afternoon, and welcome to Ribbon's first 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 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 second quarter of 2026 and beyond, are forward-looking statements. Such statements are subject to risk 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 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. 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 first quarter results and outlook for the rest of 2026. As highlighted on our last earnings call, we ended 2025 with a broadening customer base and increasing backlog, and we continue to expect a much stronger second half with meaningful improvements starting this quarter. Our first quarter revenue was in line with our expectations and consistent with the industry dynamics we outlined back in February, causing a slower than normal start to the year. Visibility into our customers' plans for the rest of the year and confidence in second half growth has improved since the beginning of the year, particularly around the specific areas we highlighted where we were being cautious. Sales in the first quarter were near the midpoint of our guidance, with stronger than expected demand in India, particularly with Bharti Airtel, who was a 10% plus customer in the quarter. This was offset by lower sales than we anticipated the U.S. tier one service providers, which I'll comment on more in a minute. This shift in mix resulted in lower gross margins and earnings for the quarter. When comparing year-over-year, as we expected, sales were lower in both of our segments, with Cloud & Edge down 8% and IP Optical Networks down 14% in the first quarter. From an end market perspective, the majority of the year-over-year decline was due to lower sales to service providers in multiple regions. Within the Cloud & Edge segment, sales to service providers declined approximately 5% year-over-year, primarily in the U.S. region across a number of smaller customers. Verizon remained a 10%+ customer in the first quarter. While voice network transformation activity was lower than we'd expected, impacting our first quarter results, deployment rates are increasing, and we anticipate a much stronger second half in 2026. Expansion into the Frontier footprint remains a significant incremental opportunity. Within the IP Optical segment, sales to service providers in the Asia PAC region were down year-over-year following a strong performance from the region last year. Demand in India was stronger than we initially expected, and we are increasingly confident in our outlook in that region for the year ahead. IP Optical sales in Europe in the first quarter were lower year-over-year, primarily due to the completion of a long-term support and maintenance contract with a tier-one service provider customer, reducing our IP Optical maintenance revenue, partially offset by maintenance increases with our growing installed base. Importantly, IP Optical bookings in the quarter were strong at 1.5x, indicating a much improved quarter ahead. Within the enterprise market vertical, aggregate sales to enterprise, defense, and critical infrastructure customers declined approximately 6% in the first quarter versus last year, with lower Cloud & Edge sales to U.S. government agencies, partially offset by increased IP Optical business with international defense agencies. Voice network modernization projects with several U.S. federal agencies continued to progress towards full deployment in the coming months, and we expect further capacity expansion and new projects in the second half of the year. These modernization projects are mission critical to our Department of Defense agencies as these legacy infrastructures are becoming increasingly expensive to maintain. Consolidated gross margin in the quarter was approximately 300 basis points below our expectations, primarily due to the lower network transformation professional services revenue with elevated service expenses. We believe voice modernization initiatives remain a strategic priority for service providers such as Verizon, and we expect activity to accelerate in the second half of the year. In order to support the increased work, we are deliberately retaining key resources and expertise even though revenue is lower in the first half. While this decision impacts gross margins and near-term profitability, we believe it positions us well to execute efficiently as volumes increase later in the year. This is a deliberate investment in execution readiness. Adjusted EBITDA for the quarter was -$8 million below our guidance range due to lower gross profit dollars. Overall book-to-bill in the quarter was 1.1x, with IP Optical at 1.5x, supporting the increased expectations in Q2 and second half of the year. Now a few more highlights in each of our operating segments. In our IP Optical Networks business, we had a number of key wins in several strategic areas, including in the rapidly growing Data Center Interconnect space, we had three new wins across multiple geographies, including Europe, the U.S., and Asia. Two of the projects involve a regional service provider expanding their network to support data center connectivity in their regions. One of the projects is a major biotech company connecting all of their major data center locations with a new high-capacity optical network. It's great to see our momentum picking up in this crucial high-growth area. Similarly, we had five new project awards in the quarter from major energy producers and distributors in countries such as Germany, Vietnam, Singapore, and Colombia. They are all focused on building out secure private command and control networks to keep pace with the critical nature of their business. In fact, two of the new 400 Gb networks are leveraging quantum key distribution encryption for enhanced security using our Apollo optical transport platform. In Africa, we have received an award for a major fiber network expansion across three countries, which we expect will exceed over $10 million with first revenue in the second quarter. Here in the U.S., we now have more than 30 customers who have already deployed our IP and optical products that have been awarded BEAD grants, where we expect incremental new business once funds are finally distributed. Similarly, in Cloud & Edge segment, we had a lot of activity in the first quarter around several strategic areas. One of the key areas of focus for many enterprise and service provider customers is the adoption of cloud-native technologies to lower cost and reduce complexity, whether in their own private data centers or in public cloud. We reached full commercial deployment of our cloud-native SBC solution with a leading service provider in Japan in the first quarter and have a very extensive program underway with a tier one provider in Europe. This is a fundamental shift in how networks are designed and how software is managed and deployed to achieve higher degrees of automation, elasticity, and reliability. Public cloud is the ultimate destination for many customers, which is why we've established a new partnership with Amazon Web Services that we recently announced at MWC in February. Our first two customers are now live and providing commercial service with our cloud-native SBC running in AWS. This is an important strategic milestone and reinforces our leadership position in cloud-native secure voice infrastructure. Over time, we see opportunities to help enable emerging agentic AI platforms to seamlessly support voice within their application environment. In the enterprise market, the financial services vertical is a key focus area for us, where we are widely deployed across many of the leading banks and insurance companies. Within the quarter, we were excited to further expand our presence, adding a new top 20 bank to our customer base in the U.S. As mentioned on our last earnings call, we had significant voice network transformation orders in the fourth quarter, and we are executing against these new contracts. These programs typically convert to revenue over six to 12 months or longer on large deployments, which positions us for a strong second half. Finally, we continue to make good progress preparing to launch our new AIOps and Automation platform, Acumen, with lead customer Optimum, which we expect to go live later this quarter. We have a growing pipeline of customers spanning a number of different use cases, including mobile and fixed wireless services, emergency E911 services, fiber to the home internet service assurance, and several others. With that, I'll turn the call over to John to provide additional financial details on our results and then come back on to discuss outlook for the second quarter. John? Thanks, Bruce, and good afternoon, everyone. Let's begin with financial results at a consolidated level. In the first quarter of 2026, Ribbon generated revenues $163 million, a decrease of 10% from the prior year, driven by the factors Bruce outlined and which I will touch on shortly in the segmental discussion. Consolidated non-GAAP gross margin was abnormally low in the quarter at 45.8%, down 280 basis points year-on-year, primarily due to lower professional services revenue with continued higher costs to support the anticipated ramp in the second half. Non-GAAP operating expenses were $87 million, an increase of $1 million year-over-year, driven by FX headwinds of approximately $4 million, offset by expense savings. This resulted in marginally higher R&D costs. Most of the FX impact was a result of the strong Israeli shekel. Adjusted EBITDA was a loss of $8 million, a $14 million decrease from the prior year, driven principally by the lower revenues and gross margins. Net interest expense in the quarter was $10 million. Quarterly non-GAAP net loss was $8 million, $4 million worse year-over-year. This generated a non-GAAP diluted loss per share of $0.05, which is a decrease of $0.02 versus the prior year. Now let's look at the results for our two business segments. In our IP Optical Networks results, we recorded first quarter revenues of $63 million, a 14% decrease versus the prior year, which is driven principally by lower sales in Asia Pacific and lower maintenance revenue. Encouragingly, we had stronger IP Optical bookings in the quarter, with a book-to-bill ratio of 1.5x, underpinning our expectations for improving top-line performance as we proceed through the year. First quarter non-GAAP gross margin for IP Optical is 28.4%, similar to last year, but lower than our target level due to the higher mix of India revenues and also fixed cost absorption. We expect this to improve materially in the second quarter and for the rest of the year. IP Optical Networks adjusted EBITDA for the quarter was a loss of $16 million, a $1.7 million higher loss than the prior year, driven by the low revenues. Now on to our Cloud & Edge business. We generated first quarter revenue of $100 million, down 8% year-over-year. Non-GAAP gross margins were 56.8%, down 575 basis points from the prior year, primarily due to lower professional services revenues while carrying higher service costs in readiness for the anticipated second-half ramp in voice network transformation deployments. As a result, adjusted EBITDA for the segment was $8 million, or 8% of revenue, and down $12 million year-over-year on the lower revenues and gross margins. Cash flow from operations was a usage of $22 million in the quarter, resulting from the lower billings and typical seasonal employee-related expenses. Closing cash was $70 million, and our net debt leverage ratio was 2.9x. Total CapEx spend in the quarter was $3 million, and this is in line with our normal run rate. In conclusion, we remain focused on operational execution and cost management and are confident that we will see meaningful growth in the second half of the year, improving both revenue and margins in both segments, which we expect to drive stronger profitability. With that, I'll turn the call back to Bruce. Great. Thanks, John. As we move forward through the balance of the year, our confidence in the broader setup for the business continues to improve. While first half results remain influenced by customer timing dynamics, the demand environment across our core markets is strengthening and our pipeline continues to expand. We are making targeted investments in execution readiness so we can capitalize on the opportunities already in front of us. Importantly, we entered the year with solid momentum reflected in the strong bookings over the last six months and a healthy pipeline across service provider, enterprise, EMEA, and Asia PAC markets. Looking ahead to the second quarter, we expect meaningful revenue acceleration from enterprise and EMEA customers, continued sequential improvement at our major Tier 1 service providers, and ongoing strength in India. In the second half, we anticipate growth across practically all regions and broad-based improvement across most of our markets, including a return to higher deployment levels at Verizon. Beyond that, we remain well-positioned to capture incremental growth opportunity from increasing traction in key growth pillars of our business. The largest market opportunity continues to be the replacement of legacy voice communication infrastructure within service provider networks with modern cloud-based technology. In addition to the large Verizon project, in the fourth quarter, we had more than $50 million of bookings from more than 12 service provider customers, where we were replacing legacy voice switch infrastructure with modern software-based systems. These projects will continue for most of the year, and we anticipate a re-acceleration of our Ribbon program in the second half of the year. In a growing number of cases, customers are choosing to move to a cloud-native technology stack, either deployed in their own private data centers or in a public cloud environment. Ribbon is certainly the technology leader in this area. The second key focus area of growth for Ribbon this year is in the enterprise and government market sectors, where we are uniquely positioned with our voice and data portfolio. We expect this to be a very strong segment for us this quarter, with a number of large enterprise projects across both our IP optical and secure voice portfolio. Within the U.S. government sector, we have several large voice modernization projects underway where we are heads down the first half of the year, migrating end users onto a new cloud-based platform and anticipate new opportunities and further capacity growth in the second half of the year. Our third major focus area this year is the exponential growth in data traffic and the massive investment in broadband infrastructure. We have a significant number of projects already underway in the second quarter, as highlighted by the strong book-to-bill in Q1. This includes several major network upgrade projects in Europe and Africa, further growth in India, large projects in the Asia PAC region, and continued strength with defense agencies in Europe. Finally, our Acumen AIOps initiatives continue to generate strong customer interest, with several proof-of-concept discussions progressing well across multiple target use cases. An integration of secure carrier-grade voice capability with emerging AI and agentic AI platforms is gaining traction. This is an area where Ribbon is uniquely differentiated. Our recently announced partnership with Amazon Web Services is an important strategic milestone and reinforces our leadership position in cloud-native secure voice infrastructure. This partnership is already generating increased customer engagement and pipeline activity. Overall, we remain confident in the broader setup for the year and continue to expect stronger performance starting this quarter. Based on the foregoing, for the second quarter, we expect revenue in a range of $185 million-$195 million and adjusted EBITDA in a range of $9 million-$14 million. In summary, the market dynamics we discussed 90 days ago are unfolding as anticipated, and we remain confident in our outlook for accelerating performance in the second half of 2026. Before we open up for questions, I just wanted to take a moment to highlight we have also made an announcement this afternoon that John will be leaving the company for another opportunity back in the telecom services segment. While I'm sorry to see John leave and fully understand his decision, I'm very excited to announce the promotion of Rick Marmurek to the role of Ribbon Chief Financial Officer. Rick has been an important leader in the company for more than 15 years, playing a key role in building our global finance organization. He is absolutely the right person for the job and will help drive the next phase of execution for the company. John, we wish you well on your next endeavor. Thanks, Bruce. I'd really like to say I've enjoyed my time here at Ribbon. I remain confident that the company has a bright future. Rick, I know you'll do a great job. Congratulations. Thanks, John and Bruce. I'm very excited about this new opportunity and look forward to continuing to work closely with the teams across the business to drive sustainable growth and operational excellence. Great. Well, thanks, Rick. Operator, why don't we now open up for a few questions? We'll now be conducting a question and answer session. If you would like to ask your question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Thank you. Our first question is from Michael Genovese with Rosenblatt Securities. Thanks. First let me just say, John, congratulations on the new opportunity. It was nice working with you at Ribbon and just look forward to staying in touch. I guess, Bruce, the question that I'll start with is you seem to have a lot of confidence of improvement in the second quarter. The Verizon Cloud & Edge sounds like it doesn't really get meaningfully better until the second half of the year. Can you just talk more about, you know, Verizon's being stronger in the second half of the year than the first half of the year and just more detail on that? Hey, Mike. I know what John says thank you, by the way, with me. I think you read it correctly. You know, we don't expect a significant increase in revenue here in the second quarter, with our top customer. Although I think the, you know, the improvement in deployment rates will progressively improve throughout the quarter. You know, the growth in the second quarter is focused in a number of different areas. In particular, we expect a very strong quarter from enterprise customers in North America. We've got a great set of programs there that are both in the Cloud & Edge piece of the business, as well as in our IP Optical Networks business around some of the critical infrastructure deployments we have going here in the North America market. That's a big part of the growth. The EMEA region, both kind of continental Europe as well as Africa, we're looking forward to a pretty strong quarter. I think that's where, you know, the step-up is coming from here in the second quarter. As we get into third and fourth quarter, in addition to growth around Verizon growth relative to the first half of the year, obviously, you know, we've got a variety of different increases expected from U.S. federal market and additional capacity expansions there, growth in the Asia PAC region and again, even a stronger second half in Europe. It's pretty broad-based and a nice funnel ahead of us this year. Great. Okay, great. I noticed on your presentation, there's a slide about the number of data centers in rural areas, which I find interesting, but I'm wondering about the correlation between that and, you know, it seems like what would be more compelling is not the location of the data centers, but how many are being built by sort of regional service providers versus hyperscalers? I'm just curious if there is a relationship there between the location being rural and the regional service provider? I mean, are we supposed to draw? Like, can you just help me draw these conclusions? I think the correlation isn't so much the regional service providers building the data center. It's leveraging the network infrastructure they're putting in place for their fiber to the home and capacity expansions to then pick up additional traffic and interconnect into more regional data centers as they build out into those areas. You know, as you know, I think that's kind of our sweet spot is with the regional operators and, you know, I even mentioned the, you know, the growing opportunity around BEAD where funding's available to be able to build out middle mile capacity. It's a matter of how do you put as much traffic on that as you can. We see that in the North America market, and then we see it in a variety of international markets as well, where the, you know, the fiber connectivity is coming from an operator or a service provider, not necessarily just dedicated, dark fiber circuits. Great. Then finally from me before I pass it on, could you just flesh out more for me the agentic opportunity and how you guys support that and play into agentic AI? It's a little bit of a newer part of the story, so I'd like to be brought up to speed there. I'd like to think of it in kind of two different aspects. One is certainly this new platform we're launching called Acumen, where we're basically working with our current customers to add an agentic AI-driven operations center, if you will, to help them manage their network, create their own agents to be able to automate what today is done, you know, in a more human way into a much more automated way. We're building on top of a couple of different platforms we already have deployed, in particular our analytics platform, which is pretty widely deployed, collecting vast amounts of information off the network and then feeding that into an agentic layer, into a large language model, and basically learning different characteristics of the network and being able to take advantage of that. That's, that's one aspect of it. As I mentioned, we're launching late this quarter kinda commercially with our lead customer, Optimum, here in the U.S. The second part of how we see an opportunity for us is as the use of agentic AI becomes more prevalent in enterprises, you know, we think the connection between the user and the agentic applications will be voice driven. There's, you know, a need to basically protect that boundary and be able to facilitate the voice traffic, similar to what you would do in a Microsoft Teams or Zoom or a Webex type application. We are able to repurpose our voice platforms into that type of use case. The first launch customers on the AWS deployment that I talked about are effectively using our session border controller in that way to interconnect into their agentic AI applications. We think, you know, there's a real opportunity there as, you know, new types of agentic AI platforms are deployed for us to have a play there very, again, very similar to how UCaaS platforms are working. Great. Thanks so much. Yeah. Thank you, Mike. As a reminder please press star one from your telephone keypad. Our next question is from Tim Savageaux with Northland Capital Markets. Hey, good afternoon. Sorry about that. You talked about couple of the product drivers for the Q2, the sequential growth in Q2, but I don't know if you talked about that from a segment standpoint, whether you expect, you know, a meaningful difference in growth rate by segments. You've had 1.5 book-to-bills in each of them in the last quarter or two. Any color there, and then I follow? Yeah. No, good question, Tim. We expect growth in both segments here in the second quarter versus the first quarter. As you just pointed out, the bookings over the last six months, you know, combined have been very solid for us. We're expecting both segments to be growing. I do believe the IP Optical segment will grow more than the Cloud & Edge segment in the second quarter. You know, as I mentioned, in North America, we've got a number of great opportunities for growth here in the various different markets I mentioned. You know, I highlighted a number of kinda interesting wins in the first quarter that helped build the backlog, some around data center interconnect as we start to deploy our new 9408 optical transport platform into that market, and then a number of critical infrastructure. Again, a kind of a broad range of different customers, Colombia, Vietnam, Europe, Germany. You know, all of those are kinda contributing to the growth here in the second quarter. I think Cloud & Edge would obviously be growing faster, you know, as the Verizon deployments kinda pick back up again. And that'll be, you know, a key part of the growth into the second half of the year. Okay. Just as an aside, I just wanna check in. Those sound like absolute dollar comments. I know IP Optical Networks is smaller, so I'm gonna check on that versus percentages. The main follow-up question was, you know, if we look at Q1 results, is it fair to look at the year-on-year declines Cloud & Edge? Is that, you know, mostly Verizon or not at all? I know they stayed on the 10% list, I assume they are down pretty good. Then maybe a little more in-depth on the IP Optical Networks decline, year-over-year. I guess India was up, so what was the real weakness there? Yeah. Three good questions. The first one around dollars versus percentages for second quarter. I think from a dollars perspective, the IP Optical Networks business will be up more from a dollars or revenue perspective. I think that translates probably into a larger percentage increase at the same time. Yeah, we don't guide, you know, each individual segment, but I think that's the trend we're expecting to see in the second quarter. The question on kind of year-over-year, what was down in the first quarter, was it Verizon versus other things. Actually, Verizon was perhaps the smallest piece year-over-year from Q1 last year to Q1 this year. It was really actually not one specific thing. It was a number of kind of smaller projects that we had with different service providers. I think we were down 5%, 6% in the first quarter on Cloud & Edge. It wasn't a big drop, and it wasn't one individual customer, kind of a series of smaller things. I think in the last question, which was similar around the IP Optical decline, the Asia PAC region in the first quarter, including India, was fairly consistent. You know, maybe off $1 million or $2 million, something like that. Very consistent year-over-year, with India being the strongest piece of that market for us. The weaker parts was really around the European market and a little bit North America as well. I think Europe was the kind of the largest contributor to the decline in the first quarter. You know, our business in Europe, in particular, is concentrated with a whole variety of different types of critical infrastructure customers, railways, oil and gas, big in defense. You know, those projects tend to be project-based. You know, you win something, you complete it, and then you go, you know, find the next program. It can be a little bit lumpy. As you've seen, though, with the bookings metric, clearly that was a real positive and, you know, sets us up for, you know, stronger growth here in the second, third quarter. That was my last question, actually. Talking about that IP Optical book-to-bill, and you guys highlighted what's happening data center interconnect-wise, you know, pretty significantly here in the report. You know, say you gave us an order of magnitude, I think, on this contribution from your big Africa deal. I wonder, you know, to what extent do you see either what you've booked order-wise or the opportunity pipeline or however you'd wanna term it in terms of additional color, how you would look at this DCI opportunity in terms of materiality relative to either book-to-bill or the overall IP Optical business? Thanks. Yeah. You know, the data center interconnect space was not a big focus area for us, say, three or four years ago. You know, we really, as you know, have been very focused on. You know, we can't do everything, we're focused in on the critical infrastructure segment, where, you know, highly secure, robust, capabilities are really crucial. That was a real sweet spot. Building out our capabilities around middle mile, IP MPLS, and the access and aggregation layers of the network, which is one of the big strengths in our India deployments. The third leg in the stool really for us is around data center interconnect. You know, we kinda started in full earnest last year with the launch of two new platforms, our 2700 series, which is a very dense aggregation platform, for aggregating 400 Gb IP clients. The other optical transport platform, which was built for the data center, basically built for enterprise, different form factor, you know, a compact modular sled design that allows us to leverage pluggable optics. Those were the two new products that we launched last year focused around data center. That's allowed us to start to generate wins and kinda grow into that market. Relative to the first two markets, it's small for us today, but we've, you know, improved our go-to market to match the new products that have come out. You know, we do think it's a stronger growth path for us. It's a little hard for us to forecast revenue yet at this point, because we're kind of, you know, building wins as we go. You know, I think you'll hear a lot more about it from us in the future. Obviously, there's a ton of spend going into data centers, and we wanna be able to go after that market, both through our service provider customers as well as direct into different types of data centers. Great. Thanks very much. Okay. Thank you, Tim. Thank you. There are no further questions at this time. I would like to turn the floor back over to Bruce McClelland for any closing remarks. Okay, great. Thanks, Paul. Oh, there's one question there. Maybe, maybe Russ has squeezed in on the, on the, question line. Paul, if you can check with him. Yep. Our next question is from- Awesome. Great. Great. Hey, guys. Thanks for squeezing me in. Is it fair to say, Bruce, that visibility into the sustainability on the India CapEx side has improved since last quarter, and that's largely intact now? Yes. You know, on the last call, I talked about really three different areas that we were being cautious on around the growth in India, around plans with Verizon and others around network transformation. We feel like we've got, you know, better improved visibility. Clearly, you know, the India market is remaining very strong. In fact, it was a catalyst for us to do well in the revenue line for Q1. I think we're feeling, you know, better. I think the enterprise market, both critical infrastructure on our IP Optical side and then large enterprise around our secure voice looks really robust for the rest of the year. The final area that I, you know, I've been, you know, just cautious on is around the U.S. federal space. I mentioned, you know, we have a couple of large programs that need to get into full deployment, so we can start adding capacity to that. Those were the areas that I think we were more cautious on and feel better about all of those as we sit here kind of 90 days later. Thank you. Okay, Russ. Thank you. Thank you. There are no further questions at this time. I'd like to hand the floor back over to Bruce McClelland for any closing remarks. Well, great. Thanks for everyone joining us today. You know, just to reiterate, I guess the key messages here, you know, we, as we just summarized, I think we feel like we have good visibility going into the rest of the year, starting with improvements here in the second quarter. Look forward to keeping everyone updated. We have a whole slate of investor conferences over the next couple of months, and look forward to keeping you updated with our progress. Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you again for your participation.

Speaker 5: Greetings, welcome to the Ribbon Communications first 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, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Fahad Najam, Senior Vice President of Investor Relations. Please go ahead. Greetings, welcome to the Ribbon Communications first quarter 2026 financial results conference call. greetings welcome to the ribbon communications first quarter 2026 financial results conference call At this time, all participants are in a listen-only mode. at this time all participants are in a listen-only mode A question and answer session will follow the formal presentation. a question and answer session will follow the formal presentation If anyone should require operator assistance, please press star zero on your telephone keypad. if anyone should require operator assistance please press star zero on your telephone keypad As a reminder, this conference is being recorded. as a reminder this conference is being recorded It is now my pleasure to introduce Fahad Najam, Senior Vice President of Investor Relations. it is now my pleasure to introduce fahad najam senior vice president of investor relations Please go ahead. please go ahead

Speaker 2: Good afternoon, and welcome to Ribbon's first 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 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 second quarter of 2026 and beyond, are forward-looking statements. Such statements are subject to risk 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. Good afternoon, and welcome to Ribbon's first quarter 2026 financial results conference call. good afternoon and welcome to ribbon's first quarter 2026 financial results conference call I'm Fahad Najam, SVP Corporate Strategy and Investor Relations at Ribbon Communications. 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 John Townsend, Ribbon's Chief Financial Officer. 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. 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 of 2026 and beyond, are forward-looking statements. certain matters we will be discussing today including the business outlook and financial projections for the second quarter of 2026 and beyond are forward-looking statements Such statements are subject to risk and uncertainties that could cause actual results to differ materially from those contained in these forward-looking statements. such statements are subject to risk 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. 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 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. Now, I would like to turn the call over to Bruce. Bruce. I refer you to our Safe Harbor statement included in the supplemental financial information posted on our website. 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. 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. 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 Now, I would like to turn the call over to Bruce. now i would like to turn the call over to bruce Bruce. bruce

Speaker 1: Great. Thanks, Fahad. Good afternoon, everyone, and thanks for joining us today to discuss our first quarter results and outlook for the rest of 2026. As highlighted on our last earnings call, we ended 2025 with a broadening customer base and increasing backlog, and we continue to expect a much stronger second half with meaningful improvements starting this quarter. Our first quarter revenue was in line with our expectations and consistent with the industry dynamics we outlined back in February, causing a slower than normal start to the year. Visibility into our customers' plans for the rest of the year and confidence in second half growth has improved since the beginning of the year, particularly around the specific areas we highlighted where we were being cautious. Great. great Thanks, Fahad. thanks fahad Good afternoon, everyone, and thanks for joining us today to discuss our first quarter results and outlook for the rest of 2026. good afternoon everyone and thanks for joining us today to discuss our first quarter results and outlook for the rest of 2026 As highlighted on our last earnings call, we ended 2025 with a broadening customer base and increasing backlog, and we continue to expect a much stronger second half with meaningful improvements starting this quarter. as highlighted on our last earnings call we ended 2025 with a broadening customer base and increasing backlog and we continue to expect a much stronger second half with meaningful improvements starting this quarter Our first quarter revenue was in line with our expectations and consistent with the industry dynamics we outlined back in February, causing a slower than normal start to the year. our first quarter revenue was in line with our expectations and consistent with the industry dynamics we outlined back in february causing a slower than normal start to the year Visibility into our customers' plans for the rest of the year and confidence in second half growth has improved since the beginning of the year, particularly around the specific areas we highlighted where we were being cautious. visibility into our customers' plans for the rest of the year and confidence in second half growth has improved since the beginning of the year particularly around the specific areas we highlighted where we were being cautious Sales in the first quarter were near the midpoint of our guidance, with stronger than expected demand in India, particularly with Bharti Airtel, who was a 10% plus customer in the quarter. This was offset by lower sales than we anticipated the U.S. tier one service providers, which I'll comment on more in a minute. This shift in mix resulted in lower gross margins and earnings for the quarter. When comparing year-over-year, as we expected, sales were lower in both of our segments, with Cloud & Edge down 8% and IP Optical Networks down 14% in the first quarter. From an end market perspective, the majority of the year-over-year decline was due to lower sales to service providers in multiple regions. Sales in the first quarter were near the midpoint of our guidance, with stronger than expected demand in India, particularly with Bharti Airtel, who was a 10% plus customer in the quarter. sales in the first quarter were near the midpoint of our guidance with stronger than expected demand in india particularly with bharti airtel who was a 10% plus customer in the quarter This was offset by lower sales than we anticipated the U.S. tier one service providers, which I'll comment on more in a minute. this was offset by lower sales than we anticipated the u.s tier one service providers which i'll comment on more in a minute This shift in mix resulted in lower gross margins and earnings for the quarter. this shift in mix resulted in lower gross margins and earnings for the quarter When comparing year-over-year, as we expected, sales were lower in both of our segments, with Cloud & Edge down 8% and IP Optical Networks down 14% in the first quarter. when comparing year-over-year as we expected sales were lower in both of our segments with cloud & edge down 8% and ip optical networks down 14% in the first quarter From an end market perspective, the majority of the year-over-year decline was due to lower sales to service providers in multiple regions. from an end market perspective the majority of the year-over-year decline was due to lower sales to service providers in multiple regions Within the Cloud & Edge segment, sales to service providers declined approximately 5% year-over-year, primarily in the U.S. region across a number of smaller customers. Verizon remained a 10%+ customer in the first quarter. While voice network transformation activity was lower than we'd expected, impacting our first quarter results, deployment rates are increasing, and we anticipate a much stronger second half in 2026. Expansion into the Frontier footprint remains a significant incremental opportunity. Within the IP Optical segment, sales to service providers in the Asia PAC region were down year-over-year following a strong performance from the region last year. Demand in India was stronger than we initially expected, and we are increasingly confident in our outlook in that region for the year ahead. Within the Cloud & Edge segment, sales to service providers declined approximately 5% year-over-year, primarily in the U.S. region across a number of smaller customers. within the cloud & edge segment sales to service providers declined approximately 5% year-over-year primarily in the u.s region across a number of smaller customers Verizon remained a 10%+ customer in the first quarter. verizon remained a 10%+ customer in the first quarter While voice network transformation activity was lower than we'd expected, impacting our first quarter results, deployment rates are increasing, and we anticipate a much stronger second half in 2026. while voice network transformation activity was lower than we'd expected impacting our first quarter results deployment rates are increasing and we anticipate a much stronger second half in 2026 Expansion into the Frontier footprint remains a significant incremental opportunity. expansion into the frontier footprint remains a significant incremental opportunity Within the IP Optical segment, sales to service providers in the Asia PAC region were down year-over-year following a strong performance from the region last year. within the ip optical segment sales to service providers in the asia pac region were down year-over-year following a strong performance from the region last year Demand in India was stronger than we initially expected, and we are increasingly confident in our outlook in that region for the year ahead. demand in india was stronger than we initially expected and we are increasingly confident in our outlook in that region for the year ahead IP Optical sales in Europe in the first quarter were lower year-over-year, primarily due to the completion of a long-term support and maintenance contract with a tier-one service provider customer, reducing our IP Optical maintenance revenue, partially offset by maintenance increases with our growing installed base. Importantly, IP Optical bookings in the quarter were strong at 1.5x, indicating a much improved quarter ahead. Within the enterprise market vertical, aggregate sales to enterprise, defense, and critical infrastructure customers declined approximately 6% in the first quarter versus last year, with lower Cloud & Edge sales to U.S. government agencies, partially offset by increased IP Optical business with international defense agencies. Voice network modernization projects with several U.S. federal agencies continued to progress towards full deployment in the coming months, and we expect further capacity expansion and new projects in the second half of the year. IP Optical sales in Europe in the first quarter were lower year-over-year, primarily due to the completion of a long-term support and maintenance contract with a tier-one service provider customer, reducing our IP Optical maintenance revenue, partially offset by maintenance increases with our growing installed base. ip optical sales in europe in the first quarter were lower year-over-year primarily due to the completion of a long-term support and maintenance contract with a tier-one service provider customer reducing our ip optical maintenance revenue partially offset by maintenance increases with our growing installed base Importantly, IP Optical bookings in the quarter were strong at 1.5x , indicating a much improved quarter ahead. importantly ip optical bookings in the quarter were strong at 1.5x indicating a much improved quarter ahead Within the enterprise market vertical, aggregate sales to enterprise, defense, and critical infrastructure customers declined approximately 6% in the first quarter versus last year, with lower Cloud & Edge sales to U.S. government agencies, partially offset by increased IP Optical business with international defense agencies. within the enterprise market vertical aggregate sales to enterprise defense and critical infrastructure customers declined approximately 6% in the first quarter versus last year with lower cloud & edge sales to u.s government agencies partially offset by increased ip optical business with international defense agencies Voice network modernization projects with several U.S. federal agencies continued to progress towards full deployment in the coming months, and we expect further capacity expansion and new projects in the second half of the year. voice network modernization projects with several u.s federal agencies continued to progress towards full deployment in the coming months and we expect further capacity expansion and new projects in the second half of the year These modernization projects are mission critical to our Department of Defense agencies as these legacy infrastructures are becoming increasingly expensive to maintain. Consolidated gross margin in the quarter was approximately 300 basis points below our expectations, primarily due to the lower network transformation professional services revenue with elevated service expenses. We believe voice modernization initiatives remain a strategic priority for service providers such as Verizon, and we expect activity to accelerate in the second half of the year. In order to support the increased work, we are deliberately retaining key resources and expertise even though revenue is lower in the first half. While this decision impacts gross margins and near-term profitability, we believe it positions us well to execute efficiently as volumes increase later in the year. This is a deliberate investment in execution readiness. These modernization projects are mission critical to our Department of Defense agencies as these legacy infrastructures are becoming increasingly expensive to maintain. these modernization projects are mission critical to our department of defense agencies as these legacy infrastructures are becoming increasingly expensive to maintain Consolidated gross margin in the quarter was approximately 300 basis points below our expectations, primarily due to the lower network transformation professional services revenue with elevated service expenses. consolidated gross margin in the quarter was approximately 300 basis points below our expectations primarily due to the lower network transformation professional services revenue with elevated service expenses We believe voice modernization initiatives remain a strategic priority for service providers such as Verizon, and we expect activity to accelerate in the second half of the year. we believe voice modernization initiatives remain a strategic priority for service providers such as verizon and we expect activity to accelerate in the second half of the year In order to support the increased work, we are deliberately retaining key resources and expertise even though revenue is lower in the first half. While this decision impacts gross margins and near-term profitability, we believe it positions us well to execute efficiently as volumes increase later in the year. in order to support the increased work we are deliberately retaining key resources and expertise even though revenue is lower in the first half. while this decision impacts gross margins and near-term profitability we believe it positions us well to execute efficiently as volumes increase later in the year This is a deliberate investment in execution readiness. this is a deliberate investment in execution readiness Adjusted EBITDA for the quarter was -$8 million below our guidance range due to lower gross profit dollars. Overall book-to-bill in the quarter was 1.1x, with IP Optical at 1.5x, supporting the increased expectations in Q2 and second half of the year. Now a few more highlights in each of our operating segments. In our IP Optical Networks business, we had a number of key wins in several strategic areas, including in the rapidly growing Data Center Interconnect space, we had three new wins across multiple geographies, including Europe, the U.S., and Asia. Two of the projects involve a regional service provider expanding their network to support data center connectivity in their regions. One of the projects is a major biotech company connecting all of their major data center locations with a new high-capacity optical network. Adjusted EBITDA for the quarter was - $8 million below our guidance range due to lower gross profit dollars. adjusted ebitda for the quarter was - $8 million below our guidance range due to lower gross profit dollars Overall book-to-bill in the quarter was 1.1x , with IP Optical at 1.5x , supporting the increased expectations in Q2 and second half of the year. overall book-to-bill in the quarter was 1.1x with ip optical at 1.5x supporting the increased expectations in q2 and second half of the year Now a few more highlights in each of our operating segments. now a few more highlights in each of our operating segments In our IP Optical Networks business, we had a number of key wins in several strategic areas, including in the rapidly growing Data Center Interconnect space, we had three new wins across multiple geographies, including Europe, the U.S., and Asia. in our ip optical networks business we had a number of key wins in several strategic areas including in the rapidly growing data center interconnect space we had three new wins across multiple geographies including europe the u.s and asia Two of the projects involve a regional service provider expanding their network to support data center connectivity in their regions. two of the projects involve a regional service provider expanding their network to support data center connectivity in their regions One of the projects is a major biotech company connecting all of their major data center locations with a new high-capacity optical network. one of the projects is a major biotech company connecting all of their major data center locations with a new high-capacity optical network It's great to see our momentum picking up in this crucial high-growth area. Similarly, we had five new project awards in the quarter from major energy producers and distributors in countries such as Germany, Vietnam, Singapore, and Colombia. They are all focused on building out secure private command and control networks to keep pace with the critical nature of their business. In fact, two of the new 400 Gb networks are leveraging quantum key distribution encryption for enhanced security using our Apollo optical transport platform. In Africa, we have received an award for a major fiber network expansion across three countries, which we expect will exceed over $10 million with first revenue in the second quarter. It's great to see our momentum picking up in this crucial high-growth area. it's great to see our momentum picking up in this crucial high-growth area Similarly, we had five new project awards in the quarter from major energy producers and distributors in countries such as Germany, Vietnam, Singapore, and Colombia. similarly we had five new project awards in the quarter from major energy producers and distributors in countries such as germany vietnam singapore and colombia They are all focused on building out secure private command and control networks to keep pace with the critical nature of their business. they are all focused on building out secure private command and control networks to keep pace with the critical nature of their business In fact, two of the new 400 Gb networks are leveraging quantum key distribution encryption for enhanced security using our Apollo optical transport platform. in fact two of the new 400 gb networks are leveraging quantum key distribution encryption for enhanced security using our apollo optical transport platform In Africa, we have received an award for a major fiber network expansion across three countries, which we expect will exceed over $10 million with first revenue in the second quarter. in africa we have received an award for a major fiber network expansion across three countries which we expect will exceed over $10 million with first revenue in the second quarter Here in the U.S., we now have more than 30 customers who have already deployed our IP and optical products that have been awarded BEAD grants, where we expect incremental new business once funds are finally distributed. Similarly, in Cloud & Edge segment, we had a lot of activity in the first quarter around several strategic areas. One of the key areas of focus for many enterprise and service provider customers is the adoption of cloud-native technologies to lower cost and reduce complexity, whether in their own private data centers or in public cloud. We reached full commercial deployment of our cloud-native SBC solution with a leading service provider in Japan in the first quarter and have a very extensive program underway with a tier one provider in Europe. Here in the U.S., we now have more than 30 customers who have already deployed our IP and optical products that have been awarded BEAD grants, where we expect incremental new business once funds are finally distributed. here in the u.s we now have more than 30 customers who have already deployed our ip and optical products that have been awarded bead grants where we expect incremental new business once funds are finally distributed Similarly, in Cloud & Edge segment, we had a lot of activity in the first quarter around several strategic areas. similarly in cloud & edge segment we had a lot of activity in the first quarter around several strategic areas One of the key areas of focus for many enterprise and service provider customers is the adoption of cloud-native technologies to lower cost and reduce complexity, whether in their own private data centers or in public cloud. one of the key areas of focus for many enterprise and service provider customers is the adoption of cloud-native technologies to lower cost and reduce complexity whether in their own private data centers or in public cloud We reached full commercial deployment of our cloud-native SBC solution with a leading service provider in Japan in the first quarter and have a very extensive program underway with a tier one provider in Europe. we reached full commercial deployment of our cloud-native sbc solution with a leading service provider in japan in the first quarter and have a very extensive program underway with a tier one provider in europe This is a fundamental shift in how networks are designed and how software is managed and deployed to achieve higher degrees of automation, elasticity, and reliability. Public cloud is the ultimate destination for many customers, which is why we've established a new partnership with Amazon Web Services that we recently announced at MWC in February. Our first two customers are now live and providing commercial service with our cloud-native SBC running in AWS. This is an important strategic milestone and reinforces our leadership position in cloud-native secure voice infrastructure. Over time, we see opportunities to help enable emerging agentic AI platforms to seamlessly support voice within their application environment. In the enterprise market, the financial services vertical is a key focus area for us, where we are widely deployed across many of the leading banks and insurance companies. This is a fundamental shift in how networks are designed and how software is managed and deployed to achieve higher degrees of automation, elasticity, and reliability. this is a fundamental shift in how networks are designed and how software is managed and deployed to achieve higher degrees of automation elasticity and reliability Public cloud is the ultimate destination for many customers, which is why we've established a new partnership with Amazon Web Services that we recently announced at MWC in February. public cloud is the ultimate destination for many customers which is why we've established a new partnership with amazon web services that we recently announced at mwc in february Our first two customers are now live and providing commercial service with our cloud-native SBC running in AWS. our first two customers are now live and providing commercial service with our cloud-native sbc running in aws This is an important strategic milestone and reinforces our leadership position in cloud-native secure voice infrastructure. this is an important strategic milestone and reinforces our leadership position in cloud-native secure voice infrastructure Over time, we see opportunities to help enable emerging agentic AI platforms to seamlessly support voice within their application environment. over time we see opportunities to help enable emerging agentic ai platforms to seamlessly support voice within their application environment In the enterprise market, the financial services vertical is a key focus area for us, where we are widely deployed across many of the leading banks and insurance companies. in the enterprise market the financial services vertical is a key focus area for us where we are widely deployed across many of the leading banks and insurance companies Within the quarter, we were excited to further expand our presence, adding a new top 20 bank to our customer base in the U.S. As mentioned on our last earnings call, we had significant voice network transformation orders in the fourth quarter, and we are executing against these new contracts. These programs typically convert to revenue over six to 12 months or longer on large deployments, which positions us for a strong second half. Finally, we continue to make good progress preparing to launch our new AIOps and Automation platform, Acumen, with lead customer Optimum, which we expect to go live later this quarter. We have a growing pipeline of customers spanning a number of different use cases, including mobile and fixed wireless services, emergency E911 services, fiber to the home internet service assurance, and several others. Within the quarter, we were excited to further expand our presence, adding a new top 20 bank to our customer base in the U.S. within the quarter we were excited to further expand our presence adding a new top 20 bank to our customer base in the u.s As mentioned on our last earnings call, we had significant voice network transformation orders in the fourth quarter, and we are executing against these new contracts. as mentioned on our last earnings call we had significant voice network transformation orders in the fourth quarter and we are executing against these new contracts These programs typically convert to revenue over six to 12 months or longer on large deployments, which positions us for a strong second half. these programs typically convert to revenue over six to 12 months or longer on large deployments which positions us for a strong second half Finally, we continue to make good progress preparing to launch our new AIOps and Automation platform, Acumen, with lead customer Optimum, which we expect to go live later this quarter. finally we continue to make good progress preparing to launch our new aiops and automation platform acumen with lead customer optimum which we expect to go live later this quarter We have a growing pipeline of customers spanning a number of different use cases, including mobile and fixed wireless services, emergency E911 services, fiber to the home internet service assurance, and several others. we have a growing pipeline of customers spanning a number of different use cases including mobile and fixed wireless services emergency e911 services fiber to the home internet service assurance and several others With that, I'll turn the call over to John to provide additional financial details on our results and then come back on to discuss outlook for the second quarter. John? With that, I'll turn the call over to John to provide additional financial details on our results and then come back on to discuss outlook for the second quarter. with that i'll turn the call over to john to provide additional financial details on our results and then come back on to discuss outlook for the second quarter John? john

Speaker 3: Thanks, Bruce, and good afternoon, everyone. Let's begin with financial results at a consolidated level. In the first quarter of 2026, Ribbon generated revenues $163 million, a decrease of 10% from the prior year, driven by the factors Bruce outlined and which I will touch on shortly in the segmental discussion. Consolidated non-GAAP gross margin was abnormally low in the quarter at 45.8%, down 280 basis points year-on-year, primarily due to lower professional services revenue with continued higher costs to support the anticipated ramp in the second half. Non-GAAP operating expenses were $87 million, an increase of $1 million year-over-year, driven by FX headwinds of approximately $4 million, offset by expense savings. This resulted in marginally higher R&D costs. Thanks, Bruce, and good afternoon, everyone. thanks bruce and good afternoon everyone Let's begin with financial results at a consolidated level. let's begin with financial results at a consolidated level In the first quarter of 2026, Ribbon generated revenues $163 million, a decrease of 10% from the prior year, driven by the factors Bruce outlined and which I will touch on shortly in the segmental discussion. in the first quarter of 2026 ribbon generated revenues $163 million a decrease of 10% from the prior year driven by the factors bruce outlined and which i will touch on shortly in the segmental discussion Consolidated non-GAAP gross margin was abnormally low in the quarter at 45.8%, down 280 basis points year-on-year, primarily due to lower professional services revenue with continued higher costs to support the anticipated ramp in the second half. consolidated non-gaap gross margin was abnormally low in the quarter at 45.8% down 280 basis points year-on-year primarily due to lower professional services revenue with continued higher costs to support the anticipated ramp in the second half Non-GAAP operating expenses were $87 million, an increase of $1 million year-over-year, driven by FX headwinds of approximately $4 million, offset by expense savings. non-gaap operating expenses were $87 million an increase of $1 million year-over-year driven by fx headwinds of approximately $4 million offset by expense savings This resulted in marginally higher R&D costs. this resulted in marginally higher r&d costs Most of the FX impact was a result of the strong Israeli shekel. Adjusted EBITDA was a loss of $8 million, a $14 million decrease from the prior year, driven principally by the lower revenues and gross margins. Net interest expense in the quarter was $10 million. Quarterly non-GAAP net loss was $8 million, $4 million worse year-over-year. This generated a non-GAAP diluted loss per share of $0.05, which is a decrease of $0.02 versus the prior year. Now let's look at the results for our two business segments. In our IP Optical Networks results, we recorded first quarter revenues of $63 million, a 14% decrease versus the prior year, which is driven principally by lower sales in Asia Pacific and lower maintenance revenue. Most of the FX impact was a result of the strong Israeli shekel. most of the fx impact was a result of the strong israeli shekel Adjusted EBITDA was a loss of $8 million, a $14 million decrease from the prior year, driven principally by the lower revenues and gross margins. adjusted ebitda was a loss of $8 million, a $14 million decrease from the prior year driven principally by the lower revenues and gross margins Net interest expense in the quarter was $10 million. net interest expense in the quarter was $10 million Quarterly non-GAAP net loss was $8 million, $4 million worse year-over-year. quarterly non-gaap net loss was $8 million, $4 million worse year-over-year This generated a non-GAAP diluted loss per share of $0.05, which is a decrease of $0.02 versus the prior year. Now let's look at the results for our two business segments. this generated a non-gaap diluted loss per share of $0.05 which is a decrease of $0.02 versus the prior year. now let's look at the results for our two business segments In our IP Optical Networks results, we recorded first quarter revenues of $63 million, a 14% decrease versus the prior year, which is driven principally by lower sales in Asia Pacific and lower maintenance revenue. in our ip optical networks results we recorded first quarter revenues of $63 million a 14% decrease versus the prior year which is driven principally by lower sales in asia pacific and lower maintenance revenue Encouragingly, we had stronger IP Optical bookings in the quarter, with a book-to-bill ratio of 1.5x, underpinning our expectations for improving top-line performance as we proceed through the year. First quarter non-GAAP gross margin for IP Optical is 28.4%, similar to last year, but lower than our target level due to the higher mix of India revenues and also fixed cost absorption. We expect this to improve materially in the second quarter and for the rest of the year. IP Optical Networks adjusted EBITDA for the quarter was a loss of $16 million, a $1.7 million higher loss than the prior year, driven by the low revenues. Now on to our Cloud & Edge business. We generated first quarter revenue of $100 million, down 8% year-over-year. Encouragingly, we had stronger IP Optical bookings in the quarter, with a book-to-bill ratio of 1.5x , underpinning our expectations for improving top-line performance as we proceed through the year. encouragingly we had stronger ip optical bookings in the quarter with a book-to-bill ratio of 1.5x underpinning our expectations for improving top-line performance as we proceed through the year First quarter non-GAAP gross margin for IP Optical is 28.4%, similar to last year, but lower than our target level due to the higher mix of India revenues and also fixed cost absorption. first quarter non-gaap gross margin for ip optical is 28.4% similar to last year but lower than our target level due to the higher mix of india revenues and also fixed cost absorption We expect this to improve materially in the second quarter and for the rest of the year. we expect this to improve materially in the second quarter and for the rest of the year IP Optical Networks adjusted EBITDA for the quarter was a loss of $16 million, a $1.7 million higher loss than the prior year, driven by the low revenues. ip optical networks adjusted ebitda for the quarter was a loss of $16 million a $1.7 million higher loss than the prior year driven by the low revenues Now on to our Cloud & Edge business. now on to our cloud & edge business We generated first quarter revenue of $100 million, down 8% year-over-year. we generated first quarter revenue of $100 million down 8% year-over-year Non-GAAP gross margins were 56.8%, down 575 basis points from the prior year, primarily due to lower professional services revenues while carrying higher service costs in readiness for the anticipated second-half ramp in voice network transformation deployments. As a result, adjusted EBITDA for the segment was $8 million, or 8% of revenue, and down $12 million year-over-year on the lower revenues and gross margins. Cash flow from operations was a usage of $22 million in the quarter, resulting from the lower billings and typical seasonal employee-related expenses. Closing cash was $70 million, and our net debt leverage ratio was 2.9x. Total CapEx spend in the quarter was $3 million, and this is in line with our normal run rate. Non-GAAP gross margins were 56.8%, down 575 basis points from the prior year, primarily due to lower professional services revenues while carrying higher service costs in readiness for the anticipated second-half ramp in voice network transformation deployments. non-gaap gross margins were 56.8% down 575 basis points from the prior year primarily due to lower professional services revenues while carrying higher service costs in readiness for the anticipated second-half ramp in voice network transformation deployments As a result, adjusted EBITDA for the segment was $8 million, or 8% of revenue, and down $12 million year-over-year on the lower revenues and gross margins. as a result adjusted ebitda for the segment was $8 million or 8% of revenue and down $12 million year-over-year on the lower revenues and gross margins Cash flow from operations was a usage of $22 million in the quarter, resulting from the lower billings and typical seasonal employee-related expenses. cash flow from operations was a usage of $22 million in the quarter resulting from the lower billings and typical seasonal employee-related expenses Closing cash was $70 million, and our net debt leverage ratio was 2.9x . closing cash was $70 million and our net debt leverage ratio was 2.9x Total CapEx spend in the quarter was $3 million, and this is in line with our normal run rate. total capex spend in the quarter was $3 million and this is in line with our normal run rate In conclusion, we remain focused on operational execution and cost management and are confident that we will see meaningful growth in the second half of the year, improving both revenue and margins in both segments, which we expect to drive stronger profitability. With that, I'll turn the call back to Bruce. In conclusion, we remain focused on operational execution and cost management and are confident that we will see meaningful growth in the second half of the year, improving both revenue and margins in both segments, which we expect to drive stronger profitability. in conclusion we remain focused on operational execution and cost management and are confident that we will see meaningful growth in the second half of the year improving both revenue and margins in both segments which we expect to drive stronger profitability With that, I'll turn the call back to Bruce. with that i'll turn the call back to bruce

Speaker 1: Great. Thanks, John. As we move forward through the balance of the year, our confidence in the broader setup for the business continues to improve. While first half results remain influenced by customer timing dynamics, the demand environment across our core markets is strengthening and our pipeline continues to expand. We are making targeted investments in execution readiness so we can capitalize on the opportunities already in front of us. Importantly, we entered the year with solid momentum reflected in the strong bookings over the last six months and a healthy pipeline across service provider, enterprise, EMEA, and Asia PAC markets. Looking ahead to the second quarter, we expect meaningful revenue acceleration from enterprise and EMEA customers, continued sequential improvement at our major Tier 1 service providers, and ongoing strength in India. Great. great Thanks, John. thanks john As we move forward through the balance of the year, our confidence in the broader setup for the business continues to improve. as we move forward through the balance of the year our confidence in the broader setup for the business continues to improve While first half results remain influenced by customer timing dynamics, the demand environment across our core markets is strengthening and our pipeline continues to expand. while first half results remain influenced by customer timing dynamics the demand environment across our core markets is strengthening and our pipeline continues to expand We are making targeted investments in execution readiness so we can capitalize on the opportunities already in front of us. we are making targeted investments in execution readiness so we can capitalize on the opportunities already in front of us Importantly, we entered the year with solid momentum reflected in the strong bookings over the last six months and a healthy pipeline across service provider, enterprise, EMEA, and Asia PAC markets. importantly we entered the year with solid momentum reflected in the strong bookings over the last six months and a healthy pipeline across service provider enterprise emea and asia pac markets Looking ahead to the second quarter, we expect meaningful revenue acceleration from enterprise and EMEA customers, continued sequential improvement at our major Tier 1 service providers, and ongoing strength in India. looking ahead to the second quarter we expect meaningful revenue acceleration from enterprise and emea customers continued sequential improvement at our major tier 1 service providers and ongoing strength in india In the second half, we anticipate growth across practically all regions and broad-based improvement across most of our markets, including a return to higher deployment levels at Verizon. Beyond that, we remain well-positioned to capture incremental growth opportunity from increasing traction in key growth pillars of our business. The largest market opportunity continues to be the replacement of legacy voice communication infrastructure within service provider networks with modern cloud-based technology. In addition to the large Verizon project, in the fourth quarter, we had more than $50 million of bookings from more than 12 service provider customers, where we were replacing legacy voice switch infrastructure with modern software-based systems. These projects will continue for most of the year, and we anticipate a re-acceleration of our Ribbon program in the second half of the year. In the second half, we anticipate growth across practically all regions and broad-based improvement across most of our markets, including a return to higher deployment levels at Verizon. in the second half we anticipate growth across practically all regions and broad-based improvement across most of our markets including a return to higher deployment levels at verizon Beyond that, we remain well-positioned to capture incremental growth opportunity from increasing traction in key growth pillars of our business. beyond that we remain well-positioned to capture incremental growth opportunity from increasing traction in key growth pillars of our business The largest market opportunity continues to be the replacement of legacy voice communication infrastructure within service provider networks with modern cloud-based technology. the largest market opportunity continues to be the replacement of legacy voice communication infrastructure within service provider networks with modern cloud-based technology In addition to the large Verizon project, in the fourth quarter, we had more than $50 million of bookings from more than 12 service provider customers, where we were replacing legacy voice switch infrastructure with modern software-based systems. in addition to the large verizon project in the fourth quarter we had more than $50 million of bookings from more than 12 service provider customers where we were replacing legacy voice switch infrastructure with modern software-based systems These projects will continue for most of the year, and we anticipate a re-acceleration of our Ribbon program in the second half of the year. these projects will continue for most of the year and we anticipate a re-acceleration of our ribbon program in the second half of the year In a growing number of cases, customers are choosing to move to a cloud-native technology stack, either deployed in their own private data centers or in a public cloud environment. Ribbon is certainly the technology leader in this area. The second key focus area of growth for Ribbon this year is in the enterprise and government market sectors, where we are uniquely positioned with our voice and data portfolio. We expect this to be a very strong segment for us this quarter, with a number of large enterprise projects across both our IP optical and secure voice portfolio. Within the U.S. government sector, we have several large voice modernization projects underway where we are heads down the first half of the year, migrating end users onto a new cloud-based platform and anticipate new opportunities and further capacity growth in the second half of the year. In a growing number of cases, customers are choosing to move to a cloud-native technology stack, either deployed in their own private data centers or in a public cloud environment. in a growing number of cases customers are choosing to move to a cloud-native technology stack either deployed in their own private data centers or in a public cloud environment Ribbon is certainly the technology leader in this area. ribbon is certainly the technology leader in this area The second key focus area of growth for Ribbon this year is in the enterprise and government market sectors, where we are uniquely positioned with our voice and data portfolio. the second key focus area of growth for ribbon this year is in the enterprise and government market sectors where we are uniquely positioned with our voice and data portfolio We expect this to be a very strong segment for us this quarter, with a number of large enterprise projects across both our IP optical and secure voice portfolio. we expect this to be a very strong segment for us this quarter with a number of large enterprise projects across both our ip optical and secure voice portfolio Within the U.S. government sector, we have several large voice modernization projects underway where we are heads down the first half of the year, migrating end users onto a new cloud-based platform and anticipate new opportunities and further capacity growth in the second half of the year. within the u.s government sector we have several large voice modernization projects underway where we are heads down the first half of the year migrating end users onto a new cloud-based platform and anticipate new opportunities and further capacity growth in the second half of the year Our third major focus area this year is the exponential growth in data traffic and the massive investment in broadband infrastructure. We have a significant number of projects already underway in the second quarter, as highlighted by the strong book-to-bill in Q1. This includes several major network upgrade projects in Europe and Africa, further growth in India, large projects in the Asia PAC region, and continued strength with defense agencies in Europe. Finally, our Acumen AIOps initiatives continue to generate strong customer interest, with several proof-of-concept discussions progressing well across multiple target use cases. An integration of secure carrier-grade voice capability with emerging AI and agentic AI platforms is gaining traction. This is an area where Ribbon is uniquely differentiated. Our third major focus area this year is the exponential growth in data traffic and the massive investment in broadband infrastructure. our third major focus area this year is the exponential growth in data traffic and the massive investment in broadband infrastructure We have a significant number of projects already underway in the second quarter, as highlighted by the strong book-to-bill in Q1. we have a significant number of projects already underway in the second quarter as highlighted by the strong book-to-bill in q1 This includes several major network upgrade projects in Europe and Africa, further growth in India, large projects in the Asia PAC region, and continued strength with defense agencies in Europe. this includes several major network upgrade projects in europe and africa further growth in india large projects in the asia pac region and continued strength with defense agencies in europe Finally, our Acumen AIOps initiatives continue to generate strong customer interest, with several proof-of-concept discussions progressing well across multiple target use cases. finally our acumen aiops initiatives continue to generate strong customer interest with several proof-of-concept discussions progressing well across multiple target use cases An integration of secure carrier-grade voice capability with emerging AI and agentic AI platforms is gaining traction. an integration of secure carrier-grade voice capability with emerging ai and agentic ai platforms is gaining traction This is an area where Ribbon is uniquely differentiated. this is an area where ribbon is uniquely differentiated Our recently announced partnership with Amazon Web Services is an important strategic milestone and reinforces our leadership position in cloud-native secure voice infrastructure. This partnership is already generating increased customer engagement and pipeline activity. Overall, we remain confident in the broader setup for the year and continue to expect stronger performance starting this quarter. Based on the foregoing, for the second quarter, we expect revenue in a range of $185 million-$195 million and adjusted EBITDA in a range of $9 million-$14 million. In summary, the market dynamics we discussed 90 days ago are unfolding as anticipated, and we remain confident in our outlook for accelerating performance in the second half of 2026. Our recently announced partnership with Amazon Web Services is an important strategic milestone and reinforces our leadership position in cloud-native secure voice infrastructure. This partnership is already generating increased customer engagement and pipeline activity. our recently announced partnership with amazon web services is an important strategic milestone and reinforces our leadership position in cloud-native secure voice infrastructure. this partnership is already generating increased customer engagement and pipeline activity Overall, we remain confident in the broader setup for the year and continue to expect stronger performance starting this quarter. overall we remain confident in the broader setup for the year and continue to expect stronger performance starting this quarter Based on the foregoing, for the second quarter, we expect revenue in a range of $185 million-$195 million and adjusted EBITDA in a range of $9 million-$14 million. based on the foregoing for the second quarter we expect revenue in a range of $185 million-$195 million and adjusted ebitda in a range of $9 million-$14 million In summary, the market dynamics we discussed 90 days ago are unfolding as anticipated, and we remain confident in our outlook for accelerating performance in the second half of 2026 . in summary the market dynamics we discussed 90 days ago are unfolding as anticipated and we remain confident in our outlook for accelerating performance in the second half of 2026 Before we open up for questions, I just wanted to take a moment to highlight we have also made an announcement this afternoon that John will be leaving the company for another opportunity back in the telecom services segment. While I'm sorry to see John leave and fully understand his decision, I'm very excited to announce the promotion of Rick Marmurek to the role of Ribbon Chief Financial Officer. Rick has been an important leader in the company for more than 15 years, playing a key role in building our global finance organization. He is absolutely the right person for the job and will help drive the next phase of execution for the company. John, we wish you well on your next endeavor. Before we open up for questions, I just wanted to take a moment to highlight we have also made an announcement this afternoon that John will be leaving the company for another opportunity back in the telecom services segment. before we open up for questions i just wanted to take a moment to highlight we have also made an announcement this afternoon that john will be leaving the company for another opportunity back in the telecom services segment While I'm sorry to see John leave and fully understand his decision, I'm very excited to announce the promotion of Rick Marmurek to the role of Ribbon Chief Financial Officer. while i'm sorry to see john leave and fully understand his decision i'm very excited to announce the promotion of rick marmurek to the role of ribbon chief financial officer Rick has been an important leader in the company for more than 15 years, playing a key role in building our global finance organization. rick has been an important leader in the company for more than 15 years playing a key role in building our global finance organization He is absolutely the right person for the job and will help drive the next phase of execution for the company. he is absolutely the right person for the job and will help drive the next phase of execution for the company John, we wish you well on your next endeavor. john we wish you well on your next endeavor

Speaker 3: Thanks, Bruce. I'd really like to say I've enjoyed my time here at Ribbon. I remain confident that the company has a bright future. Rick, I know you'll do a great job. Congratulations. Thanks, Bruce. thanks bruce I'd really like to say I've enjoyed my time here at Ribbon. i'd really like to say i've enjoyed my time here at ribbon I remain confident that the company has a bright future. i remain confident that the company has a bright future Rick, I know you'll do a great job. rick i know you'll do a great job Congratulations. congratulations

Speaker 6: Thanks, John and Bruce. I'm very excited about this new opportunity and look forward to continuing to work closely with the teams across the business to drive sustainable growth and operational excellence. Thanks, John and Bruce. thanks john and bruce I'm very excited about this new opportunity and look forward to continuing to work closely with the teams across the business to drive sustainable growth and operational excellence. i'm very excited about this new opportunity and look forward to continuing to work closely with the teams across the business to drive sustainable growth and operational excellence

Speaker 1: Great. Well, thanks, Rick. Operator, why don't we now open up for a few questions? Great. great Well, thanks, Rick. well thanks rick Operator, why don't we now open up for a few questions? operator why don't we now open up for a few questions

Speaker 5: We'll now be conducting a question and answer session. If you would like to ask your question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Thank you. Our first question is from Michael Genovese with Rosenblatt Securities. We'll now be conducting a question and answer session. we'll now be conducting a question and answer session If you would like to ask your question, please press star one on your telephone keypad. if you would like to ask your question please press star one on your telephone keypad A confirmation tone will indicate your line is in the question queue. a confirmation tone will indicate your line is in the question queue You may press star two to remove your question from the queue. you may press star two to remove your question from the queue For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. for participants using speaker equipment it may be necessary to pick up your handset before pressing the star keys One moment please while we poll for questions. one moment please while we poll for questions Thank you. thank you Our first question is from Michael Genovese with Rosenblatt Securities. our first question is from michael genovese with rosenblatt securities

Speaker 4: Thanks. First let me just say, John, congratulations on the new opportunity. It was nice working with you at Ribbon and just look forward to staying in touch. I guess, Bruce, the question that I'll start with is you seem to have a lot of confidence of improvement in the second quarter. The Verizon Cloud & Edge sounds like it doesn't really get meaningfully better until the second half of the year. Can you just talk more about, you know, Verizon's being stronger in the second half of the year than the first half of the year and just more detail on that? Thanks. thanks First let me just say, John, congratulations on the new opportunity. first let me just say john congratulations on the new opportunity It was nice working with you at Ribbon and just look forward to staying in touch. it was nice working with you at ribbon and just look forward to staying in touch I guess, Bruce, the question that I'll start with is you seem to have a lot of confidence of improvement in the second quarter. i guess bruce the question that i'll start with is you seem to have a lot of confidence of improvement in the second quarter The Verizon Cloud & Edge sounds like it doesn't really get meaningfully better until the second half of the year. the verizon cloud & edge sounds like it doesn't really get meaningfully better until the second half of the year Can you just talk more about, you know, Verizon's being stronger in the second half of the year than the first half of the year and just more detail on that? can you just talk more about you know verizon's being stronger in the second half of the year than the first half of the year and just more detail on that

Speaker 1: Hey, Mike. I know what John says thank you, by the way, with me. I think you read it correctly. You know, we don't expect a significant increase in revenue here in the second quarter, with our top customer. Although I think the, you know, the improvement in deployment rates will progressively improve throughout the quarter. You know, the growth in the second quarter is focused in a number of different areas. In particular, we expect a very strong quarter from enterprise customers in North America. We've got a great set of programs there that are both in the Cloud & Edge piece of the business, as well as in our IP Optical Networks business around some of the critical infrastructure deployments we have going here in the North America market. Hey, Mike . hey mike I know what John says thank you, by the way, with me. i know what john says thank you by the way with me I think you read it correctly. i think you read it correctly You know, we don't expect a significant increase in revenue here in the second quarter, with our top customer. you know we don't expect a significant increase in revenue here in the second quarter with our top customer Although I think the, you know, the improvement in deployment rates will progressively improve throughout the quarter. although i think the you know the improvement in deployment rates will progressively improve throughout the quarter You know, the growth in the second quarter is focused in a number of different areas. you know the growth in the second quarter is focused in a number of different areas In particular, we expect a very strong quarter from enterprise customers in North America. in particular we expect a very strong quarter from enterprise customers in north america We've got a great set of programs there that are both in the Cloud & Edge piece of the business, as well as in our IP Optical Networks business around some of the critical infrastructure deployments we have going here in the North America market. we've got a great set of programs there that are both in the cloud & edge piece of the business as well as in our ip optical networks business around some of the critical infrastructure deployments we have going here in the north america market That's a big part of the growth. The EMEA region, both kind of continental Europe as well as Africa, we're looking forward to a pretty strong quarter. I think that's where, you know, the step-up is coming from here in the second quarter. As we get into third and fourth quarter, in addition to growth around Verizon growth relative to the first half of the year, obviously, you know, we've got a variety of different increases expected from U.S. federal market and additional capacity expansions there, growth in the Asia PAC region and again, even a stronger second half in Europe. It's pretty broad-based and a nice funnel ahead of us this year. That's a big part of the growth. that's a big part of the growth The EMEA region, both kind of continental Europe as well as Africa, we're looking forward to a pretty strong quarter. the emea region both kind of continental europe as well as africa we're looking forward to a pretty strong quarter I think that's where, you know, the step-up is coming from here in the second quarter. i think that's where you know the step-up is coming from here in the second quarter As we get into third and fourth quarter, in addition to growth around Verizon growth relative to the first half of the year, obviously, you know, we've got a variety of different increases expected from U.S. federal market and additional capacity expansions there, growth in the Asia PAC region and again, even a stronger second half in Europe. as we get into third and fourth quarter in addition to growth around verizon growth relative to the first half of the year obviously you know we've got a variety of different increases expected from u.s federal market and additional capacity expansions there growth in the asia pac region and again even a stronger second half in europe It's pretty broad-based and a nice funnel ahead of us this year. it's pretty broad-based and a nice funnel ahead of us this year

Speaker 4: Great. Okay, great. I noticed on your presentation, there's a slide about the number of data centers in rural areas, which I find interesting, but I'm wondering about the correlation between that and, you know, it seems like what would be more compelling is not the location of the data centers, but how many are being built by sort of regional service providers versus hyperscalers? I'm just curious if there is a relationship there between the location being rural and the regional service provider? I mean, are we supposed to draw? Like, can you just help me draw these conclusions? Great. great Okay, great. okay great I noticed on your presentation, there's a slide about the number of data centers in rural areas, which I find interesting, but I'm wondering about the correlation between that and, you know, it seems like what would be more compelling is not the location of the data centers, but how many are being built by sort of regional service providers versus hyperscalers? i noticed on your presentation there's a slide about the number of data centers in rural areas which i find interesting but i'm wondering about the correlation between that and you know it seems like what would be more compelling is not the location of the data centers but how many are being built by sort of regional service providers versus hyperscalers I'm just curious if there is a relationship there between the location being rural and the regional service provider? i'm just curious if there is a relationship there between the location being rural and the regional service provider I mean, are we supposed to draw? i mean are we supposed to draw Like, can you just help me draw these conclusions? like can you just help me draw these conclusions

Speaker 1: I think the correlation isn't so much the regional service providers building the data center. It's leveraging the network infrastructure they're putting in place for their fiber to the home and capacity expansions to then pick up additional traffic and interconnect into more regional data centers as they build out into those areas. You know, as you know, I think that's kind of our sweet spot is with the regional operators and, you know, I even mentioned the, you know, the growing opportunity around BEAD where funding's available to be able to build out middle mile capacity. I think the correlation isn't so much the regional service providers building the data center. i think the correlation isn't so much the regional service providers building the data center It's leveraging the network infrastructure they're putting in place for their fiber to the home and capacity expansions to then pick up additional traffic and interconnect into more regional data centers as they build out into those areas. it's leveraging the network infrastructure they're putting in place for their fiber to the home and capacity expansions to then pick up additional traffic and interconnect into more regional data centers as they build out into those areas You know, as you know, I think that's kind of our sweet spot is with the regional operators and, you know, I even mentioned the, you know, the growing opportunity around BEAD where funding's available to be able to build out middle mile capacity. you know as you know i think that's kind of our sweet spot is with the regional operators and you know i even mentioned the you know the growing opportunity around bead where funding's available to be able to build out middle mile capacity It's a matter of how do you put as much traffic on that as you can. We see that in the North America market, and then we see it in a variety of international markets as well, where the, you know, the fiber connectivity is coming from an operator or a service provider, not necessarily just dedicated, dark fiber circuits. It's a matter of how do you put as much traffic on that as you can. it's a matter of how do you put as much traffic on that as you can We see that in the North America market, and then we see it in a variety of international markets as well, where the, you know, the fiber connectivity is coming from an operator or a service provider, not necessarily just dedicated, dark fiber circuits. we see that in the north america market and then we see it in a variety of international markets as well where the you know the fiber connectivity is coming from an operator or a service provider not necessarily just dedicated dark fiber circuits

Speaker 4: Great. Then finally from me before I pass it on, could you just flesh out more for me the agentic opportunity and how you guys support that and play into agentic AI? It's a little bit of a newer part of the story, so I'd like to be brought up to speed there. Great. great Then finally from me before I pass it on, could you just flesh out more for me the agentic opportunity and how you guys support that and play into agentic AI? then finally from me before i pass it on could you just flesh out more for me the agentic opportunity and how you guys support that and play into agentic ai It's a little bit of a newer part of the story, so I'd like to be brought up to speed there. it's a little bit of a newer part of the story so i'd like to be brought up to speed there

Speaker 1: I'd like to think of it in kind of two different aspects. One is certainly this new platform we're launching called Acumen, where we're basically working with our current customers to add an agentic AI-driven operations center, if you will, to help them manage their network, create their own agents to be able to automate what today is done, you know, in a more human way into a much more automated way. We're building on top of a couple of different platforms we already have deployed, in particular our analytics platform, which is pretty widely deployed, collecting vast amounts of information off the network and then feeding that into an agentic layer, into a large language model, and basically learning different characteristics of the network and being able to take advantage of that. I'd like to think of it in kind of two different aspects. i'd like to think of it in kind of two different aspects One is certainly this new platform we're launching called Acumen, where we're basically working with our current customers to add an agentic AI-driven operations center, if you will, to help them manage their network, create their own agents to be able to automate what today is done, you know, in a more human way into a much more automated way. one is certainly this new platform we're launching called acumen where we're basically working with our current customers to add an agentic ai-driven operations center if you will to help them manage their network create their own agents to be able to automate what today is done you know in a more human way into a much more automated way We're building on top of a couple of different platforms we already have deployed, in particular our analytics platform, which is pretty widely deployed, collecting vast amounts of information off the network and then feeding that into an agentic layer, into a large language model, and basically learning different characteristics of the network and being able to take advantage of that. we're building on top of a couple of different platforms we already have deployed in particular our analytics platform which is pretty widely deployed collecting vast amounts of information off the network and then feeding that into an agentic layer into a large language model and basically learning different characteristics of the network and being able to take advantage of that That's, that's one aspect of it. As I mentioned, we're launching late this quarter kinda commercially with our lead customer, Optimum, here in the U.S. The second part of how we see an opportunity for us is as the use of agentic AI becomes more prevalent in enterprises, you know, we think the connection between the user and the agentic applications will be voice driven. There's, you know, a need to basically protect that boundary and be able to facilitate the voice traffic, similar to what you would do in a Microsoft Teams or Zoom or a Webex type application. We are able to repurpose our voice platforms into that type of use case. That's, that's one aspect of it. that's that's one aspect of it As I mentioned, we're launching late this quarter kinda commercially with our lead customer, Optimum, here in the U.S. as i mentioned we're launching late this quarter kinda commercially with our lead customer optimum here in the u.s The second part of how we see an opportunity for us is as the use of agentic AI becomes more prevalent in enterprises, you know, we think the connection between the user and the agentic applications will be voice driven. the second part of how we see an opportunity for us is as the use of agentic ai becomes more prevalent in enterprises you know we think the connection between the user and the agentic applications will be voice driven There's, you know, a need to basically protect that boundary and be able to facilitate the voice traffic, similar to what you would do in a Microsoft Teams or Zoom or a Webex type application. there's you know a need to basically protect that boundary and be able to facilitate the voice traffic similar to what you would do in a microsoft teams or zoom or a webex type application We are able to repurpose our voice platforms into that type of use case. we are able to repurpose our voice platforms into that type of use case The first launch customers on the AWS deployment that I talked about are effectively using our session border controller in that way to interconnect into their agentic AI applications. We think, you know, there's a real opportunity there as, you know, new types of agentic AI platforms are deployed for us to have a play there very, again, very similar to how UCaaS platforms are working. The first launch customers on the AWS deployment that I talked about are effectively using our session border controller in that way to interconnect into their agentic AI applications. the first launch customers on the aws deployment that i talked about are effectively using our session border controller in that way to interconnect into their agentic ai applications We think, you know, there's a real opportunity there as, you know, new types of agentic AI platforms are deployed for us to have a play there very, again, very similar to how UCaaS platforms are working. we think you know there's a real opportunity there as you know new types of agentic ai platforms are deployed for us to have a play there very again very similar to how ucaas platforms are working

Speaker 4: Great. Thanks so much. Great. great Thanks so much. thanks so much

Speaker 1: Yeah. Thank you, Mike. Yeah. yeah Thank you, Mike. thank you mike

Speaker 5: As a reminder please press star one from your telephone keypad. Our next question is from Tim Savageaux with Northland Capital Markets. As a reminder please press star one from your telephone keypad. Our next question is from Tim Savageaux with Northland Capital Markets. as a reminder please press star one from your telephone keypad. our next question is from tim savageaux with northland capital markets

Speaker 8: Hey, good afternoon. Sorry about that. You talked about couple of the product drivers for the Q2, the sequential growth in Q2, but I don't know if you talked about that from a segment standpoint, whether you expect, you know, a meaningful difference in growth rate by segments. You've had 1.5 book-to-bills in each of them in the last quarter or two. Any color there, and then I follow? Hey, good afternoon. hey good afternoon Sorry about that. sorry about that You talked about couple of the product drivers for the Q2, the sequential growth in Q2, but I don't know if you talked about that from a segment standpoint, whether you expect, you know, a meaningful difference in growth rate by segments. you talked about couple of the product drivers for the q2 the sequential growth in q2 but i don't know if you talked about that from a segment standpoint whether you expect you know a meaningful difference in growth rate by segments You've had 1.5 book-to-bills in each of them in the last quarter or two. you've had 1.5 book-to-bills in each of them in the last quarter or two Any color there, and then I follow? any color there and then i follow

Speaker 1: Yeah. No, good question, Tim. We expect growth in both segments here in the second quarter versus the first quarter. As you just pointed out, the bookings over the last six months, you know, combined have been very solid for us. We're expecting both segments to be growing. I do believe the IP Optical segment will grow more than the Cloud & Edge segment in the second quarter. You know, as I mentioned, in North America, we've got a number of great opportunities for growth here in the various different markets I mentioned. Yeah. yeah No, good question, Tim. no good question tim We expect growth in both segments here in the second quarter versus the first quarter. we expect growth in both segments here in the second quarter versus the first quarter As you just pointed out, the bookings over the last six months, you know, combined have been very solid for us. as you just pointed out the bookings over the last six months you know combined have been very solid for us We're expecting both segments to be growing. we're expecting both segments to be growing I do believe the IP Optical segment will grow more than the Cloud & Edge segment in the second quarter. i do believe the ip optical segment will grow more than the cloud & edge segment in the second quarter You know, as I mentioned, in North America, we've got a number of great opportunities for growth here in the various different markets I mentioned. you know as i mentioned in north america we've got a number of great opportunities for growth here in the various different markets i mentioned You know, I highlighted a number of kinda interesting wins in the first quarter that helped build the backlog, some around data center interconnect as we start to deploy our new 9408 optical transport platform into that market, and then a number of critical infrastructure. Again, a kind of a broad range of different customers, Colombia, Vietnam, Europe, Germany. You know, all of those are kinda contributing to the growth here in the second quarter. I think Cloud & Edge would obviously be growing faster, you know, as the Verizon deployments kinda pick back up again. And that'll be, you know, a key part of the growth into the second half of the year. You know, I highlighted a number of kinda interesting wins in the first quarter that helped build the backlog, some around data center interconnect as we start to deploy our new 9408 optical transport platform into that market, and then a number of critical infrastructure. you know i highlighted a number of kinda interesting wins in the first quarter that helped build the backlog some around data center interconnect as we start to deploy our new 9408 optical transport platform into that market and then a number of critical infrastructure Again, a kind of a broad range of different customers, Colombia, Vietnam, Europe, Germany. again a kind of a broad range of different customers colombia vietnam europe germany You know, all of those are kinda contributing to the growth here in the second quarter. you know all of those are kinda contributing to the growth here in the second quarter I think Cloud & Edge would obviously be growing faster, you know, as the Verizon deployments kinda pick back up again. i think cloud & edge would obviously be growing faster you know as the verizon deployments kinda pick back up again And that'll be, you know, a key part of the growth into the second half of the year. and that'll be you know a key part of the growth into the second half of the year

Speaker 8: Okay. Just as an aside, I just wanna check in. Those sound like absolute dollar comments. I know IP Optical Networks is smaller, so I'm gonna check on that versus percentages. The main follow-up question was, you know, if we look at Q1 results, is it fair to look at the year-on-year declines Cloud & Edge? Is that, you know, mostly Verizon or not at all? I know they stayed on the 10% list, I assume they are down pretty good. Then maybe a little more in-depth on the IP Optical Networks decline, year-over-year. I guess India was up, so what was the real weakness there? Okay. okay Just as an aside, I just wanna check in. just as an aside i just wanna check in Those sound like absolute dollar comments. those sound like absolute dollar comments I know IP Optical Networks is smaller, so I'm gonna check on that versus percentages. i know ip optical networks is smaller so i'm gonna check on that versus percentages The main follow-up question was, you know, if we look at Q1 results, is it fair to look at the year-on-year declines Cloud & Edge? Is that, you know, mostly Verizon or not at all? the main follow-up question was you know if we look at q1 results is it fair to look at the year-on-year declines cloud & edge? is that you know mostly verizon or not at all I know they stayed on the 10% list, I assume they are down pretty good. i know they stayed on the 10% list i assume they are down pretty good Then maybe a little more in-depth on the IP Optical Networks decline, year-over-year. then maybe a little more in-depth on the ip optical networks decline year-over-year I guess India was up, so what was the real weakness there? i guess india was up so what was the real weakness there

Speaker 1: Yeah. Three good questions. The first one around dollars versus percentages for second quarter. I think from a dollars perspective, the IP Optical Networks business will be up more from a dollars or revenue perspective. I think that translates probably into a larger percentage increase at the same time. Yeah, we don't guide, you know, each individual segment, but I think that's the trend we're expecting to see in the second quarter. The question on kind of year-over-year, what was down in the first quarter, was it Verizon versus other things. Actually, Verizon was perhaps the smallest piece year-over-year from Q1 last year to Q1 this year. It was really actually not one specific thing. It was a number of kind of smaller projects that we had with different service providers. Yeah. yeah Three good questions. three good questions The first one around dollars versus percentages for second quarter. the first one around dollars versus percentages for second quarter I think from a dollars perspective, the IP Optical Networks business will be up more from a dollars or revenue perspective. i think from a dollars perspective the ip optical networks business will be up more from a dollars or revenue perspective I think that translates probably into a larger percentage increase at the same time. i think that translates probably into a larger percentage increase at the same time Yeah, we don't guide, you know, each individual segment, but I think that's the trend we're expecting to see in the second quarter. yeah we don't guide you know each individual segment but i think that's the trend we're expecting to see in the second quarter The question on kind of year-over-year, what was down in the first quarter, was it Verizon versus other things. the question on kind of year-over-year what was down in the first quarter was it verizon versus other things Actually, Verizon was perhaps the smallest piece year-over-year from Q1 last year to Q1 this year. actually verizon was perhaps the smallest piece year-over-year from q1 last year to q1 this year It was really actually not one specific thing. it was really actually not one specific thing It was a number of kind of smaller projects that we had with different service providers. it was a number of kind of smaller projects that we had with different service providers I think we were down 5%, 6% in the first quarter on Cloud & Edge. It wasn't a big drop, and it wasn't one individual customer, kind of a series of smaller things. I think in the last question, which was similar around the IP Optical decline, the Asia PAC region in the first quarter, including India, was fairly consistent. You know, maybe off $1 million or $2 million, something like that. Very consistent year-over-year, with India being the strongest piece of that market for us. The weaker parts was really around the European market and a little bit North America as well. I think Europe was the kind of the largest contributor to the decline in the first quarter. I think we were down 5%, 6% in the first quarter on Cloud & Edge. i think we were down 5% 6% in the first quarter on cloud & edge It wasn't a big drop, and it wasn't one individual customer, kind of a series of smaller things. it wasn't a big drop and it wasn't one individual customer kind of a series of smaller things I think in the last question, which was similar around the IP Optical decline, the Asia PAC region in the first quarter, including India, was fairly consistent. i think in the last question which was similar around the ip optical decline the asia pac region in the first quarter including india was fairly consistent You know, maybe off $1 million or $2 million, something like that. you know maybe off $1 million or $2 million something like that Very consistent year-over-year, with India being the strongest piece of that market for us. very consistent year-over-year with india being the strongest piece of that market for us The weaker parts was really around the European market and a little bit North America as well. the weaker parts was really around the european market and a little bit north america as well I think Europe was the kind of the largest contributor to the decline in the first quarter. i think europe was the kind of the largest contributor to the decline in the first quarter You know, our business in Europe, in particular, is concentrated with a whole variety of different types of critical infrastructure customers, railways, oil and gas, big in defense. You know, those projects tend to be project-based. You know, you win something, you complete it, and then you go, you know, find the next program. It can be a little bit lumpy. As you've seen, though, with the bookings metric, clearly that was a real positive and, you know, sets us up for, you know, stronger growth here in the second, third quarter. You know, our business in Europe, in particular, is concentrated with a whole variety of different types of critical infrastructure customers, railways, oil and gas, big in defense. you know our business in europe in particular is concentrated with a whole variety of different types of critical infrastructure customers railways oil and gas big in defense You know, those projects tend to be project-based. you know those projects tend to be project-based You know, you win something, you complete it, and then you go, you know, find the next program. you know you win something you complete it and then you go you know find the next program It can be a little bit lumpy. it can be a little bit lumpy As you've seen, though, with the bookings metric, clearly that was a real positive and, you know, sets us up for, you know, stronger growth here in the second, third quarter. as you've seen though with the bookings metric clearly that was a real positive and you know sets us up for you know stronger growth here in the second third quarter

Speaker 8: That was my last question, actually. Talking about that IP Optical book-to-bill, and you guys highlighted what's happening data center interconnect-wise, you know, pretty significantly here in the report. You know, say you gave us an order of magnitude, I think, on this contribution from your big Africa deal. I wonder, you know, to what extent do you see either what you've booked order-wise or the opportunity pipeline or however you'd wanna term it in terms of additional color, how you would look at this DCI opportunity in terms of materiality relative to either book-to-bill or the overall IP Optical business? Thanks. That was my last question, actually. that was my last question actually Talking about that IP Optical book-to-bill, and you guys highlighted what's happening data center interconnect-wise, you know, pretty significantly here in the report. talking about that ip optical book-to-bill and you guys highlighted what's happening data center interconnect-wise you know pretty significantly here in the report You know, say you gave us an order of magnitude, I think, on this contribution from your big Africa deal. you know say you gave us an order of magnitude i think on this contribution from your big africa deal I wonder, you know, to what extent do you see either what you've booked order-wise or the opportunity pipeline or however you'd wanna term it in terms of additional color, how you would look at this DCI opportunity in terms of materiality relative to either book-to-bill or the overall IP Optical business? i wonder you know to what extent do you see either what you've booked order-wise or the opportunity pipeline or however you'd wanna term it in terms of additional color how you would look at this dci opportunity in terms of materiality relative to either book-to-bill or the overall ip optical business Thanks. thanks

Speaker 1: Yeah. You know, the data center interconnect space was not a big focus area for us, say, three or four years ago. You know, we really, as you know, have been very focused on. You know, we can't do everything, we're focused in on the critical infrastructure segment, where, you know, highly secure, robust, capabilities are really crucial. That was a real sweet spot. Building out our capabilities around middle mile, IP MPLS, and the access and aggregation layers of the network, which is one of the big strengths in our India deployments. The third leg in the stool really for us is around data center interconnect. Yeah. yeah You know, the data center interconnect space was not a big focus area for us, say, three or four years ago. you know the data center interconnect space was not a big focus area for us say three or four years ago You know, we really, as you know, have been very focused on. you know we really as you know have been very focused on You know, we can't do everything, we're focused in on the critical infrastructure segment, where, you know, highly secure, robust, capabilities are really crucial. you know we can't do everything we're focused in on the critical infrastructure segment where you know highly secure robust capabilities are really crucial That was a real sweet spot. that was a real sweet spot Building out our capabilities around middle mile, IP MPLS, and the access and aggregation layers of the network, which is one of the big strengths in our India deployments. building out our capabilities around middle mile ip mpls and the access and aggregation layers of the network which is one of the big strengths in our india deployments The third leg in the stool really for us is around data center interconnect. the third leg in the stool really for us is around data center interconnect You know, we kinda started in full earnest last year with the launch of two new platforms, our 2700 series, which is a very dense aggregation platform, for aggregating 400 Gb IP clients. The other optical transport platform, which was built for the data center, basically built for enterprise, different form factor, you know, a compact modular sled design that allows us to leverage pluggable optics. Those were the two new products that we launched last year focused around data center. That's allowed us to start to generate wins and kinda grow into that market. Relative to the first two markets, it's small for us today, but we've, you know, improved our go-to market to match the new products that have come out. You know, we kinda started in full earnest last year with the launch of two new platforms, our 2700 series, which is a very dense aggregation platform, for aggregating 400 Gb IP clients. you know we kinda started in full earnest last year with the launch of two new platforms our 2700 series which is a very dense aggregation platform for aggregating 400 gb ip clients The other optical transport platform, which was built for the data center, basically built for enterprise, different form factor, you know, a compact modular sled design that allows us to leverage pluggable optics. the other optical transport platform which was built for the data center basically built for enterprise different form factor you know a compact modular sled design that allows us to leverage pluggable optics Those were the two new products that we launched last year focused around data center. those were the two new products that we launched last year focused around data center That's allowed us to start to generate wins and kinda grow into that market. that's allowed us to start to generate wins and kinda grow into that market Relative to the first two markets, it's small for us today, but we've, you know, improved our go-to market to match the new products that have come out. relative to the first two markets it's small for us today but we've you know improved our go-to market to match the new products that have come out You know, we do think it's a stronger growth path for us. It's a little hard for us to forecast revenue yet at this point, because we're kind of, you know, building wins as we go. You know, I think you'll hear a lot more about it from us in the future. Obviously, there's a ton of spend going into data centers, and we wanna be able to go after that market, both through our service provider customers as well as direct into different types of data centers. You know, we do think it's a stronger growth path for us. you know we do think it's a stronger growth path for us It's a little hard for us to forecast revenue yet at this point, because we're kind of, you know, building wins as we go. it's a little hard for us to forecast revenue yet at this point because we're kind of you know building wins as we go You know, I think you'll hear a lot more about it from us in the future. you know i think you'll hear a lot more about it from us in the future Obviously, there's a ton of spend going into data centers, and we wanna be able to go after that market, both through our service provider customers as well as direct into different types of data centers. obviously there's a ton of spend going into data centers and we wanna be able to go after that market both through our service provider customers as well as direct into different types of data centers

Speaker 8: Great. Thanks very much. Great. great Thanks very much. thanks very much

Speaker 1: Okay. Thank you, Tim. Okay. okay Thank you, Tim. thank you tim

Speaker 5: Thank you. There are no further questions at this time. I would like to turn the floor back over to Bruce McClelland for any closing remarks. Thank you. thank you There are no further questions at this time. there are no further questions at this time I would like to turn the floor back over to Bruce McClelland for any closing remarks. i would like to turn the floor back over to bruce mcclelland for any closing remarks

Speaker 1: Okay, great. Thanks, Paul. Okay, great. okay great Thanks, Paul. thanks paul

Speaker 5: Oh, there's one question there. Oh, there's one question there. oh there's one question there

Speaker 1: Maybe, maybe Russ has squeezed in on the, on the, question line. Paul, if you can check with him. Maybe, maybe Russ has squeezed in on the, on the, question line. maybe maybe russ has squeezed in on the on the question line Paul, if you can check with him. paul if you can check with him

Speaker 5: Yep. Our next question is from- Yep. yep Our next question is from- our next question is from-

Speaker 7: Awesome. Great. Great. Hey, guys. Thanks for squeezing me in. Is it fair to say, Bruce, that visibility into the sustainability on the India CapEx side has improved since last quarter, and that's largely intact now? Awesome. awesome Great. great Great. great Hey, guys. hey guys Thanks for squeezing me in. thanks for squeezing me in Is it fair to say, Bruce, that visibility into the sustainability on the India CapEx side has improved since last quarter, and that's largely intact now? is it fair to say bruce that visibility into the sustainability on the india capex side has improved since last quarter and that's largely intact now

Speaker 1: Yes. You know, on the last call, I talked about really three different areas that we were being cautious on around the growth in India, around plans with Verizon and others around network transformation. We feel like we've got, you know, better improved visibility. Clearly, you know, the India market is remaining very strong. In fact, it was a catalyst for us to do well in the revenue line for Q1. I think we're feeling, you know, better. I think the enterprise market, both critical infrastructure on our IP Optical side and then large enterprise around our secure voice looks really robust for the rest of the year. Yes. yes You know, on the last call, I talked about really three different areas that we were being cautious on around the growth in India, around plans with Verizon and others around network transformation. you know on the last call i talked about really three different areas that we were being cautious on around the growth in india around plans with verizon and others around network transformation We feel like we've got, you know, better improved visibility. we feel like we've got you know better improved visibility Clearly, you know, the India market is remaining very strong. clearly you know the india market is remaining very strong In fact, it was a catalyst for us to do well in the revenue line for Q1. in fact it was a catalyst for us to do well in the revenue line for q1 I think we're feeling, you know, better. i think we're feeling you know better I think the enterprise market, both critical infrastructure on our IP Optical side and then large enterprise around our secure voice looks really robust for the rest of the year. i think the enterprise market both critical infrastructure on our ip optical side and then large enterprise around our secure voice looks really robust for the rest of the year The final area that I, you know, I've been, you know, just cautious on is around the U.S. federal space. I mentioned, you know, we have a couple of large programs that need to get into full deployment, so we can start adding capacity to that. Those were the areas that I think we were more cautious on and feel better about all of those as we sit here kind of 90 days later. The final area that I, you know, I've been, you know, just cautious on is around the U.S. federal space. the final area that i you know i've been you know just cautious on is around the u.s federal space I mentioned, you know, we have a couple of large programs that need to get into full deployment, so we can start adding capacity to that. i mentioned you know we have a couple of large programs that need to get into full deployment so we can start adding capacity to that Those were the areas that I think we were more cautious on and feel better about all of those as we sit here kind of 90 days later. those were the areas that i think we were more cautious on and feel better about all of those as we sit here kind of 90 days later

Speaker 7: Thank you. Thank you. thank you

Speaker 1: Okay, Russ. Thank you. Okay, Russ. okay russ Thank you. thank you

Speaker 5: Thank you. There are no further questions at this time. I'd like to hand the floor back over to Bruce McClelland for any closing remarks. Thank you. thank you There are no further questions at this time. there are no further questions at this time I'd like to hand the floor back over to Bruce McClelland for any closing remarks. i'd like to hand the floor back over to bruce mcclelland for any closing remarks

Speaker 1: Well, great. Thanks for everyone joining us today. You know, just to reiterate, I guess the key messages here, you know, we, as we just summarized, I think we feel like we have good visibility going into the rest of the year, starting with improvements here in the second quarter. Look forward to keeping everyone updated. We have a whole slate of investor conferences over the next couple of months, and look forward to keeping you updated with our progress. Thank you. Well, great. well great Thanks for everyone joining us today. thanks for everyone joining us today You know, just to reiterate, I guess the key messages here, you know, we, as we just summarized, I think we feel like we have good visibility going into the rest of the year, starting with improvements here in the second quarter. you know just to reiterate i guess the key messages here you know we as we just summarized i think we feel like we have good visibility going into the rest of the year starting with improvements here in the second quarter Look forward to keeping everyone updated. look forward to keeping everyone updated We have a whole slate of investor conferences over the next couple of months, and look forward to keeping you updated with our progress. we have a whole slate of investor conferences over the next couple of months and look forward to keeping you updated with our progress Thank you. thank you

Speaker 5: This concludes today's conference. You may disconnect your lines at this time. Thank you again for your participation. This concludes today's conference. this concludes today's conference You may disconnect your lines at this time. you may disconnect your lines at this time Thank you again for your participation. thank you again for your participation