Ribbon Communications Inc. Reports Fourth Quarter and Full Year 2020 Financial Results
WESTFORD, Mass., Feb. 17, 2021 /PRNewswire/ -- Ribbon Communications Inc. (Nasdaq: RBBN), a global provider of real time communications software and IP optical transport solutions to service providers, enterprises, and critical infrastructure sectors, today announced its financial results for the fourth quarter and full year 2020.
Revenue for the fourth quarter of 2020 was $244 million, compared to $161 million for the fourth quarter of 2019, an increase of 52%. Revenue for 2020 was $844 million, compared to $563 million in 2019, an increase of 50%. Approximately $89 million of the year-over-year revenue increase in the fourth quarter and $261 million of the increase in 2020 was attributable to the Company's acquisition of ECI Telecom Group, Ltd. (ECI), which closed on March 3, 2020.
"We are very pleased with our fourth quarter results, in particular our second consecutive quarter of record adjusted EBITDA as we benefitted from strong sales and gross margins, along with efficiencies in operating expense," noted Bruce McClelland, President and Chief Executive Officer of Ribbon Communications. "We are excited to carry this momentum forward in 2021 as we continue to focus on growing our IP Optical sales and improving overall profitability."
Financial Highlights(1, 2, 3)
The following table summarizes the consolidated financial highlights for the three months and years ended December 31, 2020 and 2019 (in millions, except per share amounts).
Three months ended Year ended
December 31, December 31,
2020 2019 2020 2019
GAAP Revenue $244 $161 $844 $563
GAAP Net income (loss) $124 ($150) $89 ($130)
Non-GAAP Net income $27 $30 $62 $51
GAAP diluted earnings (loss) per share $0.81 ($1.36) $0.61 ($1.19)
Non-GAAP diluted earnings per share $0.18 $0.27 $0.43 $0.47
Weighted average shares (basic and diluted) outstanding 153 110 145 110
Non-GAAP Adjusted EBITDA $49 $43 $131 $86
Cash was $136 million at December 31, 2020, compared with $111 million at September 30, 2020 and $45 million at December 31, 2019.
(1) Results for the three months ended December 31, 2020
represent three months of Ribbon and ECI. Results for the
year ended December 31, 2020 represent twelve months of
Ribbon and the period March 3, 2020 to December 31, 2020 for
ECI. Results for the year ended December 31, 2019 represent
twelve months of Ribbon.
(2) GAAP Net Income (loss) and GAAP diluted earnings per share
(loss) for both the three months and year ended December 31,
2020 include Other Income, net, of approximately $114 million
of income associated with the fair value and subsequent
remeasurement of the convertible debt and warrants received
from the sale of Kandy to American Virtual Cloud Technologies
Inc. (AVCT). The income was calculated using valuation
methods in accordance with accounting guidance. Fluctuations
in AVCT's stock price will impact the future amounts that are
recorded in Other Income, net, and could materially impact
our quarterly results.
(3) Please see the reconciliations of non-GAAP financial
measures to the most directly comparable GAAP measures and
additional information about non-GAAP measures in the
section entitled "Discussion of Non-GAAP Financial Measures"
in the attached schedules.
"This was an exceptional year from a cash perspective," said Mick Lopez, Chief Financial Officer of Ribbon Communications. "Our performance once again demonstrated strong focus and execution as we ended the year on a high note with strong growth and profitability."
Customer and Company Highlights
-- In addition to the Company's first IP Optical win in North America with
a Top 4 cable MSO, Ribbon earned new IP Optical business with 5 regional
telco carriers
-- Closed significant new orders with North American Tier-1 service
providers as they continue to utilize Ribbon solutions to grow and
evolve their networks
-- Revenue from customers outside the United States increased to 60% of
total sales in 4Q20; international highlights include:
-- New network transformation project with a Tier-1 carrier in CALA
using new virtualized C20 Call Session Controller
-- Secured the first large-scale OTN deployment for metro access for a
defense customer in Europe
-- Implementing metro optical networks globally with Telecom Italia and
collaborating with them to win new regional public, private, and
enterprise IP optical opportunities in Europe
-- Signed over $10 million in Cloud and Edge deals in Japan with Tier-1
service providers
-- 4Q20 India sales consistent with those in 3Q20 with improvements in
several accounts
Business Outlook(1)
The Company's outlook is based on current indications for its business, which are subject to change. For the first quarter of 2021, the Company projects revenue of $190 million to $200 million, non-GAAP gross margin of 55% to 56%, non-GAAP earnings per share of $0.01 to $0.03, and Adjusted EBITDA of $14 million to $18 million. For the full year 2021, the Company projects revenue of $925 million to $945 million, non-GAAP gross margin of 55% to 56%, non-GAAP earnings per share of $0.49 to $0.54, and Adjusted EBITDA of $145 million to $155 million. The current outlook assumes no worsening of conditions related to the COVID-19 pandemic.
(1) Please see the reconciliations
of non-GAAP financial measures to
the most directly comparable GAAP
measures and additional
information about the non-GAAP
measures in the section entitled
"Discussion of Non-GAAP Financial
Measures" in the attached
schedules.
Upcoming Virtual Investor Conference Schedule
-- May 24-26, 2021 - JP Morgan Global Technology, Media and Communications
Conference (presentation and one-on-one institutional investor
meetings).
Conference Call Details
Conference call to discuss the Company's financial results for the fourth quarter and year ended December 31, 2020 on February 17, 2021, via the investor section of its website at http://investors.ribboncommunications.com, where a replay will also be available shortly following the conference call.
Conference Call Details:
Date: February 17, 2021
Time: 4:30 p.m. (ET)
Dial-in number (Domestic): 877-407-2991
Dial-in number (Intl): 201-389-0925
Instant Telephone Access: Call me(TM)
Replay information:
A telephone playback of the call will be available following the conference call until March 3, 2021 and can be accessed by calling 877-660-6853 or 201-612-7415 for international callers. The reservation number for the replay is 13715444.
Investor Relations
Tom Berry
+1 (978) 614-8050
tom.berry@rbbn.com
North American Press
Dennis Watson
+1 (214) 695-2224
dwatson@rbbn.com
APAC, CALA & EMEA Press
Catherine Berthier
+1 (646) 741-1974
cberthier@rbbn.com
Analyst Relations
Michael Cooper
+1 (708) 212-6922
mcooper@rbbn.com
About Ribbon
Ribbon Communications (Nasdaq: RBBN) delivers communications software, IP and optical networking solutions to service providers, enterprises and critical infrastructure sectors globally. We engage deeply with our customers, helping them modernize their networks for improved competitive positioning and business outcomes in today's smart, always-on and data-hungry world. Our innovative, end-to-end solutions portfolio delivers unparalleled scale, performance, and agility, including core to edge software-centric solutions, cloud-native offers, leading-edge security and analytics tools, along with IP and optical networking solutions for 5G. To learn more about Ribbon visit rbbn.com.
Important Information Regarding Forward-Looking Statements
The information in this release contains "forward-looking" statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, which are subject to several risks and uncertainties. All statements other than statements of historical facts contained in this release, including without limitation statements regarding, projected financial results for the first quarter 2021 and beyond, sales trends, and plans and objectives of management for future operations are forward-looking statements. Without limiting the foregoing, the words "believes", "estimates", "expects", "expectations", "intends", "may", "plans", "projects" and other similar language, whether in the negative or affirmative, are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.
Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated in these forward-looking statements due to various risks, uncertainties and other important factors, including, among others, risks related to the COVID-19 pandemic; risks that the business of ECI will not be integrated successfully or that the combined companies will not realize estimated cost savings; failure to realize anticipated benefits of the merger with ECI or the sale of the Kandy business; disruptions from the integration efforts or sale of the Kandy business that could harm our business; our ability to recruit and retain key personnel; reductions in customer spending; geopolitical tensions, including those in India, that could disrupt shipments to customers; a slowdown in customer payments and changes in customer requirements, including the timing of customer purchasing decisions and our recognition of revenues; conditions in the credit markets, credit risks and risks related to the terms of our credit agreement; our international operations, which are subject to the risks of currency fluctuations and foreign exchange controls; unpredictable fluctuations in quarterly revenue and business from our existing customers; increases in tariffs, trade restrictions or taxes on our products; and currency fluctuations.
These factors are not intended to be an all-encompassing list of risks and uncertainties that may affect our business and results from operations. Additional information regarding these and other factors can be found in our reports filed with the Securities and Exchange Commission, including our Form 10-K for the year ended December 31, 2019 and our Form 10-Q for the quarter ended September 30, 2020. In providing forward-looking statements, the Company expressly disclaims any obligation to update these statements publicly or otherwise, whether as a result of new information, future events or otherwise, except as required by law.
Discussion of Non-GAAP Financial Measures
Ribbon Communications' management uses several different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of its business, making operating decisions, planning and forecasting future periods, and determining payments under compensation programs. We consider the use of non-GAAP financial measures helpful in assessing the core performance of our continuing operations and when planning and forecasting future periods. Our annual financial plan is prepared on a non-GAAP basis and is approved by our board of directors. In addition, budgeting and forecasting for revenue and expenses are conducted on a non-GAAP basis and actual results on a non-GAAP basis are assessed against the annual financial plan. By continuing operations, we mean the ongoing results of the business adjusted for certain expenses and credits, as described below. We believe that providing non-GAAP information to investors will allow investors to view the financial results in the way our management views them and helps investors to better understand our core financial and operating performance and evaluate the efficacy of the methodology and information used by our management to evaluate and measure such performance.
While our management uses non-GAAP financial measures as tools to enhance their understanding of certain aspects of our financial performance, our management does not consider these measures to be a substitute for, or superior to, GAAP measures. In addition, our presentations of these measures may not be comparable to similarly titled measures used by other companies. These non-GAAP financial measures should not be considered alternatives for, or in isolation from, the financial information prepared and presented in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures. In particular, many of the adjustments to our financial measures reflect the exclusion of items that are recurring and will be reflected in our financial results for the foreseeable future.
Acquisition-Related Inventory Adjustment
Acquisition-related inventory adjustment amounts are inconsistent in frequency and amount and are significantly impacted by the then-current market prices of such inventory items. We believe that excluding non-cash inventory adjustments arising from acquisitions facilitates the comparison of our financial results to our historical operating results and to other companies in our industry as if the inventory had been acquired by us through our normal channels rather than acquired.
Stock-Based Compensation
The expense related to stock-based awards is generally not controllable in the short-term and can vary significantly based on the timing, size and nature of awards granted. We believe that presenting non-GAAP operating results that exclude stock-based compensation provides investors with visibility and insight into our management's method of analysis and the Company's core operating performance.
Amortization of Acquired Intangible Assets
Amortization amounts are inconsistent in frequency and amount and are significantly impacted by the timing and size of acquisitions. We believe that excluding non-cash amortization of intangible assets facilitates the comparison of our financial results to our historical operating results and to other companies in our industry as if the acquired intangible assets had been developed internally rather than acquired.
Impairment of Goodwill
We performed our annual testing for impairment of goodwill in the fourth quarter of 2019, determined as a result of the testing that our goodwill was impaired, and recorded an impairment charge. We believe that such expenses are not part of our core business or ongoing operations. Accordingly, we believe that excluding the goodwill impairment charge facilitates the comparison of our financial results to our historical operating results and to other companies in our industry.
Litigation Costs
We have been involved in litigation with one of our competitors and with a former GENBAND business partner and have reached settlements in both cases. We exclude the costs of such litigation because we believe such costs are not part of our core business or ongoing operations.
Acquisition-, Disposal- and Integration-Related Expense
We consider certain acquisition-, disposal- and integration-related costs to be unrelated to the organic continuing operations of our acquired businesses and the Company, and such costs are generally not relevant to assessing or estimating the long-term performance of the acquired assets. We exclude such acquisition-, disposal- and integration-related costs to allow more accurate comparisons of our financial results to our historical operations and the financial results of less acquisitive peer companies and allows management and investors to consider the ongoing operations of the business both with and without such expenses.
Restructuring and Related Expense
We have recorded restructuring and related expense to streamline operations and reduce operating costs by closing and consolidating certain facilities and reducing our worldwide workforce. We believe that excluding restructuring and related expense facilitates the comparison of our financial results to our historical operating results and to other companies in our industry, as there are no future revenue streams or other benefits associated with these costs.
Gain on Sale of Business
On December 1, 2020, we completed the sale of Kandy to AVCT. As consideration, we received units of AVCT securities, comprised of AVCT's Series A-1 convertible debentures ("Debentures") and warrants to purchase shares of AVCT's common stock ("Warrants"), with an aggregate fair value approximating $84 million on the date of sale. We exclude this gain because we believe that such gain is not part of our core business or ongoing operations.
Increase in Fair Value of Investments
We calculate the fair value of the Debentures and Warrants at each quarter-end and record any adjustments to their fair values in Other income, net. We recorded the increase in the aggregate fair value of the Debentures and Warrants as of December 31, 2020 for the period since the sale of Kandy. We exclude this and any subsequent gains and losses from the change in fair value of the Debentures and Warrants because we believe that such gains or losses are not part of our core business or ongoing operations.
Reduction to Deferred Purchase Consideration
We reached an agreement related to the outstanding cash deferred purchase consideration for our acquisition of Edgewater Networks, Inc. in the first quarter of 2019 and recorded the gain on the reduction in Other income, net. We believe that such reductions to the cash deferred purchase consideration are not part of our core business or ongoing operations, as they relate to specific acquisitive transactions and that excluding such reductions facilitates the comparison of our financial results to our historical results and to other companies in our industry.
Gain on Litigation Settlement
We were involved in litigation with one of our competitors with whom we reached a settlement in the second quarter of 2019, which we recorded in Other income, net. We believe that such gains are not part of our core business or ongoing operations and that excluding such gains facilitates the comparison of our financial results to our historical operating results and to other companies in our industry.
Tax Effect of Non-GAAP Adjustments
Non-GAAP income tax expense is presented based on an estimated tax rate applied against forecasted annual non-GAAP income. Non-GAAP income tax expense assumes no available net operating losses or valuation allowances for the U.S. because of reporting significant cumulative non-GAAP income over the past several years. On a go-forward basis, we intend to report our non-GAAP quarterly income taxes by computing an annual rate for the Company and applying that single rate (rather than multiple rates by jurisdiction) to our consolidated quarterly results. We expect that this methodology will provide a more consistent rate throughout the year and allow investors to better understand the impact of income taxes on our results. We have re-cast the 2020 and 2019 historical results using this methodology; this did not change our full year non-GAAP income tax expense. Due to the methodology applied to our estimated annual tax rate, our estimated tax rate on non-GAAP income will differ from our GAAP tax rate and from our actual tax liabilities.
Adjusted EBITDA
We use Adjusted EBITDA as a supplemental measure to review and assess our performance. We calculate Adjusted EBITDA by excluding from Income (loss) from operations: depreciation; amortization of acquired intangible assets; stock-based compensation; acquisition-related inventory adjustments; certain litigation costs; impairment of goodwill; acquisition-, disposal- and integration-related expense; and restructuring and related expense. In general, we exclude the expenses that we consider to be non-cash and/or not part of our ongoing operations. We may exclude other items in the future that have those characteristics. Adjusted EBITDA is a non-GAAP financial measure that is used by our investing community for comparative and valuation purposes. We disclose this metric to support and facilitate our dialogue with research analysts and investors. Other companies may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.
RIBBON COMMUNICATIONS INC.
Consolidated Statements of Operations
(in thousands, except percentages and per share amounts)
(unaudited)
Three months ended
December 31,
September 30,
December 31,
2020 2020 2019
Revenue:
Product $142,225 $128,926 $81,339
Service 101,977 102,192 79,770
Total revenue 244,202 231,118 161,109
Cost of revenue:
Product 59,669 58,545 23,977
Service 40,171 37,619 27,873
Total cost of revenue 99,840 96,164 51,850
Gross profit 144,362 134,954 109,259
Gross margin:
Product 58.0% 54.6% 70.5%
Service 60.6% 63.2% 65.1%
Total gross margin 59.1% 58.4% 67.8%
Operating expenses:
Research and development 51,321 49,113 35,604
Sales and marketing 37,551 36,898 26,701
General and administrative 14,966 16,021 13,037
Amortization of acquired intangible assets 15,558 16,349 12,396
Impairment of goodwill 164,300
Acquisition-, disposal- and integration-
related expense 2,557 1,366 6,092
Restructuring and related expense 5,509 3,290 (49)
Total operating expenses 127,462 123,037 258,081
Income (loss) from operations 16,900 11,917 (148,822)
Interest expense, net (5,393) (6,854) (525)
Other income, net 115,534 407 316
Income (loss) before income taxes 127,041 5,470 (149,031)
Income tax (provision) benefit (3,281) 782 (1,332)
Net income (loss) $123,760 $6,252 $(150,363)
===
Earnings (loss) per share:
Basic $0.85 $0.04 $(1.36)
Diluted $0.81 $0.04 $(1.36)
Weighted average shares used to compute earnings (loss) per share:
Basic 145,311 144,948 110,269
Diluted 153,441 151,680 110,269
RIBBON COMMUNICATIONS INC.
Consolidated Statements of Operations
(in thousands, except percentages and per share amounts)
(unaudited)
Year ended
December 31,
December 31,
2020 2019
Revenue:
Product $467,912 $262,030
Service 375,883 301,081
Total revenue 843,795 563,111
Cost of revenue:
Product 204,772 95,774
Service 145,916 112,680
Total cost of revenue 350,688 208,454
Gross profit 493,107 354,657
Gross margin:
Product 56.2% 63.4%
Service 61.2% 62.6%
Total gross margin 58.4% 63.0%
Operating expenses:
Research and development 194,525 141,060
Sales and marketing 139,318 106,310
General and administrative 63,286 53,870
Amortization of acquired intangible assets 60,910 49,225
Impairment of goodwill 164,300
Acquisition-, disposal- and integration-
related expense 17,164 12,953
Restructuring and related expense 16,235 16,399
Total operating expenses 491,438 544,117
Income (loss) from operations 1,669 (189,460)
Interest expense, net (21,042) (3,877)
Other income, net 112,690 70,444
Income (loss) before income taxes 93,317 (122,893)
Income tax provision (4,726) (7,182)
Net income (loss) $88,591 $(130,075)
===
Earnings (loss) per share:
Basic $0.64 $(1.19)
Diluted $0.61 $(1.19)
Weighted average shares used to compute earnings (loss) per share:
Basic 138,967 109,734
Diluted 144,650 109,734
RIBBON COMMUNICATIONS INC.
Consolidated Balance Sheets
(in thousands)
(unaudited)
December 31,
December 31,
2020 2019
Assets
Current assets:
Cash and cash equivalents $128,428 $44,643
Restricted cash 7,269
Accounts receivable, net 237,738 192,706
Inventory 45,750 14,800
Other current assets 28,461 27,146
Total current assets 447,646 279,295
Property and equipment, net 48,888 28,976
Intangible assets, net 417,356 213,366
Goodwill 416,892 224,896
Investments 115,183 -
Deferred income taxes 10,651 4,959
Operating lease right-of-use assets 69,757 36,654
Other assets 20,892 26,762
$1,547,265 $814,908
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of term debt $15,531 $2,500
Revolving credit facility 8,000
Accounts payable 63,387 31,412
Accrued expenses and other 134,865 56,700
Operating lease liabilities 17,023 7,719
Deferred revenue 96,824 100,406
Total current liabilities 327,630 206,737
Long-term debt, net of current 369,035 45,995
Operating lease liabilities, net of current 72,614 37,202
Deferred revenue, net of current 26,010 20,482
Deferred income taxes 16,842 4,648
Other long-term liabilities 48,281 16,589
Total liabilities 860,412 331,653
Commitments and contingencies
Stockholders' equity:
Common stock 15 11
Additional paid-in capital 1,870,256 1,747,784
Accumulated deficit (1,178,476) (1,267,067)
Accumulated other comprehensive (loss)
income (4,942) 2,527
Total stockholders' equity 686,853 483,255
$1,547,265 $814,908
RIBBON COMMUNICATIONS INC.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Year ended
December 31,
December 31,
2020 2019
Cash flows from operating activities:
Net income (loss) $88,591 $(130,075)
Adjustments to reconcile net income (loss) to cash flows provided by operating
activities:
Depreciation and amortization of property and equipment 17,188 11,949
Amortization of intangible assets 60,910 49,225
Amortization of debt issuance costs 5,673 360
Stock-based compensation 13,899 12,601
Impairment of intangible assets and goodwill 164,300
Deferred income taxes (5,305) 5,299
Gain on sale of business (83,552)
Increase in fair value of investments (30,296)
Reduction in deferred purchase consideration (70) (8,124)
Foreign currency exchange losses 2,961 1,090
Changes in operating assets and liabilities:
Accounts receivable 9,578 (3,936)
Inventory 11,842 7,776
Other operating assets 45,032 (17,849)
Accounts payable (49,561) (16,282)
Accrued expenses and other long-term liabilities 20,629 (18,538)
Deferred revenue (5,955) (2,111)
Net cash provided by operating activities 101,564 55,685
Cash flows from investing activities:
Purchases of property and equipment (26,721) (10,824)
Business acqusitions, net of cash acquired (346,852)
Maturities of marketable securities 7,295
Proceeds from the sale of fixed assets 43,500
Net cash used in investing activities (330,073) (3,529)
Cash flows from financing activities:
Borrowings under revolving line of credit 615 117,000
Principal payments on revolving line of credit (8,615) (164,000)
Proceeds from issuance of term debt 478,500 50,000
Principal payment of debt, related party (24,716)
Principal payments of term debt (134,188) (1,250)
Payment of deferred purchase consideration (21,876)
Principal payments of finance leases (1,258) (913)
Payment of debt issuance costs (14,147) (891)
Proceeds from the sale of common stock in connection with employee stock purchase
plan 863
Proceeds from the exercise of stock options 70 235
Payment of tax withholding obligations related to net share settlements of
restricted stock awards (1,674) (1,193)
Repurchase of common stock (4,536)
Net cash provided by (used in) financing activities 319,303 (51,277)
Effect of exchange rate changes on cash, cash equivalents and restricted cash 260 70
Net increase in cash, cash equivalents and restricted cash 91,054 949
Cash and cash equivalents, beginning of year 44,643 43,694
Cash, cash equivalents and restricted cash, end of year $135,697 $44,643
===
RIBBON COMMUNICATIONS INC.
Supplemental Information
(in thousands)
(unaudited)
The following tables provide the details of stock-based compensation included as components of other line items in the Company's Consolidated Statements of Operations and the line items in which these amounts are reported.
Three months ended
Year ended
December 31,
September 30,
December 31,
December 31,
December 31,
2020 2020 2019 2020 2019
Stock-based compensation
Cost of revenue - product $51 $57 $14 $174 $76
Cost of revenue - service 208 204 111 701 478
Cost of revenue 259 261 125 875 554
Research and development 804 868 539 2,968 1,898
Sales and marketing 1,177 1,189 763 4,129 3,028
General and administrative 1,492 1,651 3,020 5,927 7,121
Operating expense 3,473 3,708 4,322 13,024 12,047
Total stock-based
compensation $3,732 $3,969 $4,447 $13,899 $12,601
RIBBON COMMUNICATIONS INC.
Reconciliation of Non-GAAP and GAAP Financial Measures
(in thousands, except per share amounts)
(unaudited)
Three months ended
December 31,
September 30,
December 31,
2020 2020 2019
GAAP Total gross margin 59.1% 58.4% 67.8%
Stock-based compensation 0.1% 0.1% 0.1%
Acquisition-related inventory adjustment 0.0% 0.9% 0.0%
Non-GAAP Total gross margin 59.2% 59.4% 67.9%
GAAP Net income (loss) $123,760 $6,252 $(150,363)
Acquisition-related inventory adjustment - 2,000
Stock-based compensation 3,732 3,969 4,447
Amortization of acquired intangible assets 15,558 16,349 12,396
Impairment of goodwill - 164,300
Litigation costs - 1,767
Acquisition-, disposal- and integration-related expense 2,557 1,366 6,092
Restructuring and related expense 5,509 3,290 (49)
Gain on sale of business (83,552) -
Increase in fair value of investments (30,296) -
Tax effect of non-GAAP adjustments (10,000) (11,409) (8,904)
Non-GAAP Net income $27,268 $21,817 $29,686
===
Earnings (loss) per share
GAAP Diluted earnings per share or (loss) per share $0.81 $0.04 $(1.36)
Acquisition-related inventory adjustment - 0.01
Stock-based compensation 0.02 0.03 0.04
Amortization of acquired intangible assets 0.10 0.11 0.10
Impairment of goodwill - 1.49
Litigation costs - 0.02
Acquisition-, disposal- and integration-related expense 0.02 0.01 0.06
Restructuring and related expense 0.04 0.02
*
Gain on sale of business (0.54) -
Increase in fair value of investments (0.20) -
Tax effect of non-GAAP adjustments (0.07) (0.08) (0.08)
Non-GAAP Diluted earnings per share $0.18 $0.14 $0.27
===
Weighted average shares used to compute diluted earnings per share or (loss) per share
Shares used to compute GAAP diluted earnings per share or (loss) per share 153,441 151,680 110,269
Shares used to compute Non-GAAP diluted earnings per share 153,441 151,680 110,491
Adjusted EBITDA
GAAP Income (loss) from operations $16,900 $11,917 $(148,822)
Depreciation 4,434 4,494 3,125
Amortization of acquired intangible assets 15,558 16,349 12,396
Stock-based compensation 3,732 3,969 4,447
Acquisition-related inventory adjustment - 2,000
Litigation costs - 1,767
Impairment of goodwill - 164,300
Acquisition-, disposal- and integration-related expense 2,557 1,366 6,092
Restructuring and related expense 5,509 3,290 (49)
Non-GAAP Adjusted EBITDA $48,690 $43,385 $43,256
===
* Less than $0.01 impact on earnings (loss) per share.
RIBBON COMMUNICATIONS INC.
Reconciliation of Non-GAAP and GAAP Financial Measures
(in thousands, except per share amounts)
(unaudited)
Year ended
December 31,
December 31,
2020 2019
GAAP Total gross margin 58.4% 63.0%
Stock-based compensation 0.1% 0.1%
Acquisition-related inventory adjustment 0.3% 0.0%
Non-GAAP Total gross margin 58.8% 63.1%
GAAP Net income (loss) $88,591 $(130,075)
Acquisition-related inventory adjustment 2,000 -
Stock-based compensation 13,899 12,601
Amortization of acquired intangible assets 60,910 49,225
Impairment of goodwill - 164,300
Litigation costs 2,101 7,734
Acquisition-, disposal- and integration-related expense 17,164 12,953
Restructuring and related expense 16,235 16,399
Gain on sale of business (83,552) -
Increase in fair value of investments (30,296) -
Reduction to deferred purchase consideration - (8,124)
Gain on litigation settlement - (63,000)
Tax effect of non-GAAP adjustments (25,335) (10,560)
Non-GAAP Net income $61,717 $51,453
===
Earnings (loss) per share
GAAP Diluted earnings per share or (loss) per share $0.61 $(1.19)
Acquisition-related inventory adjustment 0.01 -
Stock-based compensation 0.11 0.11
Amortization of acquired intangible assets 0.42 0.46
Impairment of goodwill - 1.49
Litigation costs 0.01 0.07
Acquisition-, disposal- and integration-related expense 0.12 0.12
Restructuring and related expense 0.11 0.15
Gain on sale of business (0.58) -
Increase in fair value of investments (0.21) -
Reduction to deferred purchase consideration - (0.07)
Gain on litigation settlement - (0.57)
Tax effect of non-GAAP adjustments (0.17) (0.10)
Non-GAAP Diluted earnings per share $0.43 $0.47
===
Weighted average shares used to compute diluted earnings per share or (loss) per share
Shares used to compute GAAP diluted earnings per share or (loss) per share 144,650 109,734
Shares used to compute Non-GAAP diluted earnings per share 144,650 110,271
Adjusted EBITDA
GAAP Income (loss) from operations $1,669 $(189,460)
Depreciation 17,188 11,949
Amortization of acquired intangible assets 60,910 49,225
Stock-based compensation 13,899 12,601
Acquisition-related inventory adjustment 2,000 -
Litigation costs 2,101 7,734
Impairment of goodwill - 164,300
Acquisition-, disposal- and integration-related expense 17,164 12,953
Restructuring and related expense 16,235 16,399
Non-GAAP Adjusted EBITDA $131,166 $85,701
===
RIBBON COMMUNICATIONS INC.
Reconciliation of Non-GAAP and GAAP Financial Measures - Outlook
(unaudited)
Three months ending
Year ending
March 31, 2021 December 31, 2021
Range
Range
Revenue ($ millions) $190 to $200 $925 $945
===
Gross margin
GAAP outlook 54.8% 55.8% 54.9% 55.9%
Stock-based compensation 0.2% 0.2% 0.1% 0.1%
Non-GAAP outlook 55.0% 56.0% 55.0% 56.0%
(Loss) earnings per share **
GAAP outlook $(0.18) $(0.15) $(0.03) $0.03
Stock-based compensation 0.03 0.03 0.12 0.12
Amortization of acquired intangible assets 0.10 0.10 0.43 0.43
Acquisition-, disposal- and integration-related expense 0.01 0.01 0.02 0.02
Restructuring and related expense 0.05 0.05 0.07 0.07
Tax effect of non-GAAP adjustments
* (0.01) (0.12) (0.13)
Non-GAAP outlook $0.01 $0.03 $0.49 $0.54
Weighted average shares used to compute (loss) per share or diluted earnings per share (in thousands)
Shares used to compute GAAP loss per share or diluted earnings per share 146,000 146,000 147,000 154,000
Shares used to compute Non-GAAP diluted earnings per share 153,000 153,000 154,000 154,000
Adjusted EBITDA ($ millions)
GAAP (loss) income from operations $(19.9) $(15.9) $27.5 $37.5
Depreciation 4.2 4.2 17.4 17.4
Amortization of acquired intangible assets 15.9 15.9 66.7 66.7
Stock-based compensation 4.4 4.4 19.1 19.1
Acquisition-, disposal- and integration-related expense 1.7 1.7 3.5 3.5
Restructuring and related expense 7.7 7.7 10.8 10.8
Non-GAAP outlook $14.0 $18.0 $145.0 $155.0
*
Less than $0.01 impact on earnings (loss) per share
** Excludes any income (loss) related to the change in fair value of the Debentures and Warrants received
as sale consideration
View original content to download multimedia:http://www.prnewswire.com/news-releases/ribbon-communications-inc-reports-fourth-quarter-and-full-year-2020-financial-results-301230355.html
SOURCE Ribbon Communications Inc.
