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目次

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

UNITED STATES

証券取引委員会

ワシントンDC20549

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

フォーム10-Q

この登録声明書はForm F-3で提出されました。

（表1）

この登録声明書はForm F-3で提出されました。

☒

証券取引法1934年のセクション13または15(d)に基づく四半期報告書

この登録声明書はForm F-3で提出されました。

報告期間が終了した2023年6月30日をもって2024年9月30日

この登録声明書はForm F-3で提出されました。

または

この登録声明書はForm F-3で提出されました。

☐

証券取引法1934年のセクション13または15(d)に基づく移行報告書

この登録声明書はForm F-3で提出されました。

期間の移行は、-から-までです。

この登録声明書はForm F-3で提出されました。

証券取引委員会ファイル番号001-37570001-38267

リボンコミュニケーションズ株式会社

（登記簿に指定された正確な名称）

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

デラウェア

    

82-1669692

（設立または組織の州またはその他の管轄区域）
（I.R.S.雇用者識別番号）

この登録声明書はForm F-3で提出されました。

（国税庁雇用者識別番号）

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

チェイスオークス・ブルバード6500番地、スイート100 プラノ市, テキサス州

    

75023

(主要執行オフィスの住所)

この登録声明書はForm F-3で提出されました。

（郵便番号）

この登録声明書はForm F-3で提出されました。

(978) 614-8100

（登録者の電話番号（市外局番を含む））

この登録声明書はForm F-3で提出されました。

該当なし

（前回報告から変更された場合は、名称やアドレス、更生年度を含む）

この登録声明書はForm F-3で提出されました。

法第12条（b）に基づいて登録された証券：

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

各クラスの名称

取引シンボル

登録されている各取引所の名称

普通株式、1株当たりの額面は$0.0001

RBBN

ナスダックグローバルセレクトマーケット

この登録声明書はForm F-3で提出されました。

12カ月間の前分において、会社の提出義務がある、または提出することが請求された、1934証券取引法第13条または15(d)条に必要なすべての報告書を提出したか、過去90日間に渡ってそのような提出要件に従っていたか。はい ☒いいえ☐

この登録声明書はForm F-3で提出されました。

規則405に基づいて提出が必要なすべてのインタラクティブデータファイルを、登録者が前の12か月間（または登録者がこのようなファイルを提出する必要があった期間が短かった場合は、その期間）に電子的に提出したかどうかをチェックマークで示してください。はい ☒いいえ☐

この登録声明書はForm F-3で提出されました。

登録者が大幅加速提出者、加速提出者、非加速提出者、小規模報告会社、または新興企業であるかをチェックマークで示してください。Exchange Actのルール120億2における“大幅加速提出者”、“加速提出者”、“小規模報告会社”、“新興企業”の定義については、ご参照ください。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

大型加速ファイラー

☐

加速ファイラー

☒

非加速度ファイラー

☐

小規模報告会社

☐

新興成長企業

☐

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

新興成長企業の場合、1.13(a)の規定に従って提供された新しいまたは改訂された財務会計基準の遵守に対する拡大移行期間を使用しないことを選択した場合は、それをチェックマークで示してください（取引所法の第13(a)条）☐

この登録声明書はForm F-3で提出されました。

Exchange ActのRule 12b-2で定義されるシェル企業であるかどうかをチェックマークで示してください はい☐いいえ☒

この登録声明書はForm F-3で提出されました。

2024年10月21日現在、ユナイテッドレンタルズの普通株式「1株0.01ドルの割額株式」が発行されていました。 175,383,687 発行会社の普通株式、株式1株あたりの額面$0.0001、発行済株式。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

目次

RIBBON COMMUNICATIONS INC.

FORM 10-Q

2024年9月30日終了の四半期

目次

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

項目

この登録声明書はForm F-3で提出されました。

ページ

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

将来を見据えた表明に関する注意書き

3

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

第I部　財務情報

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

1.

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

2024年9月30日と2023年12月31日の非監査の要約連結貸借対照表

4

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

2024年9月30日および2023年9月30日に終了する三か月および九か月の未検査財務諸表

5

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

2024年9月30日および2023年9月30日に終わる3か月および9か月の未検査包括損益財務諸表

6

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

2024年9月30日と2023年9月30日の三か月および九か月間にわたる未監査の簡約連結株主資本の計算書

7

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

2024年9月30日までの9か月間にわたる未監査の連結キャッシュ・フロー計算書および2023年

9

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

簡約化された連結財務諸表注記（未監査）

11

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

2.

経営陣による財務状況と業績に関する会話と分析

37

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

3.

市場リスクに関する数量的および質的な開示

52

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

4.

内部統制および手順

52

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

PART II その他の情報

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

1.

法的措置

53

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

1A.

リスクファクター

53

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

2.

未登録の株式の販売および手数料の利用

53

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

5.

その他の情報

53

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

6.

展示資料

54

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

署名

55

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

この登録声明書はForm F-3で提出されました。

目次

将来見通に関する注意喚起

この報告書には、米国民事訴訟改正法（1995年）の意味における「将来を見据えた声明」が含まれており、これにはさまざまなリスクや不確定要因が存在しています。この報告書に含まれる歴史的事実以外のすべての声明、ウクライナにおける戦争およびそれに伴う金融制裁および取引制限からの予想される影響、将来の経費およびリストラ活動、およびそれに伴う見込まれる利益、業績と財務状況、資本構造、イスラエルにおける戦争からの影響、ビジネス戦略に関する信念、製品の製造に必要な部品の入手可能性、裁判の進行状況、経営陣による将来の運営および製造に関する計画と目標を含むものは、将来を見据えた声明です。前述の内容に制限を設けることなく、"予想される"、「信じる」、「できるかもしれない」、「見積もる」、「期待する」、「意図する」、「できる」、「計画する」、「求める」などの類似の表現、否定的な表現又は肯定的な表現に関わらず、これらを展開する予定の将来を示す声明として識別する意図ですが、全ての将来を見据えた声明にこれらの識別用語が含まれているわけではありません。将来を見据えた声明は、当社の現在のビジネス、経済状況、その他の将来の状況に関する期待と仮定に基づいています。将来を見据えた声明は、将来に関連するため、未知の不確実性、リスク、予想しがたい環境の変化に苦しんでおり、これらが実際の結果、業績や達成を前向きな声明によって示唆されたものと異なる結果となる可能性があります。このようなリスクや不確実性には、四半期の売上の予測不能な変動、リストラおよびコスト削減活動の影響、製品への関税、取引制限、税金の増加、部品の入手可能性によるサプライチェーンの混乱および/または地政学的な不安定さ、イスラエルとウクライナの戦争に関連する事柄を含む紛争に起因するクローズ、イスラエルの弊社または契約製造業者の一時的な事務所、およびイスラエルの徴兵制度による弊社従業員の召集の影響、重大な訴訟、金利変動の影響、重要なサイバーセキュリティおよびデータ侵害の発生、顧客、従業員、または会社の情報の盗難、移転、または不正開示を引き起こすセキュリティ侵害を含む、適用される国内外の情報セキュリティとプライバシーに関連する法律、規制、技術プラットフォームのルールまたはその他のデータプライバシーおよびセキュリティに関連する義務を遵守する能力、通信機器及びネットワーク機器会社に対する成功した競争の失敗、顧客基盤の成長、既存顧客からの継続的なビジネスの生成に失敗すること、信用リスク、顧客購買決定のタイミング、経営層による業績産出、総収益認識の失敗、インフレを含むマクロ経済状況、迅速な技術と市場の変化に適応する能力、研究開発の積極的還元を出す能力、知的財産権を保護し、必要なライセンスを取得する能力、パートナー、リセラー、ディストリビューターおよびベンダーのサポートとサプライ関係を維持する能力、製品に欠陥がある可能性、弊社の信用契約の条項に関するリスク、国際事業と市場でのリスクの増加、通貨変動、法的、規制、税法に関する予期せぬ不利な変更、将来の会計原則又は弊社の会計方針の変更、および/またはコントロールと手続きの不作、または回避に関するリスクが含まれます。したがって、これらの将来を見据えた声明に依存しないように警告します。

これらの前向きな見通しに関連する実際の結果に差異をもたらす可能性のある追加の重要な要因については、当社の年次報告書フォーム10-Kに記載されている第I部第2項「財務状態および業績の管理者による検討と分析」および第I部第1A項、第II部第7A項「リスク要因」および「市場リスクに関する定量的および質的開示」でそれぞれ議論されています。当社がこの四半期報告書フォーム10-Qで行った前向きな見通しについての声明は、この報告書が初めて提出された日付をもってのみ有効です。私たちは、新しい情報、将来の展開などによるものであるかどうかに関係なく、法的義務に基づく範囲内で、いかなる前向きな声明も公に更新する義務はありません。

​

3

目次

PART I 財務情報

項目1. 財務諸表

RIBBON COMMUNICATIONS INC.

簡易合算貸借対照表

（千ドル、株式および株式当たり金額を除く）

(未監査)

​

​

​

​

​

​

​

​

​

​

2024年6月30日および2023年9月30日における

​

12月31日、

​

    

2024

    

2023

資産

​

​

​

​

​

​

流動資産:

​

​

​

​

​

​

現金及び現金同等物

​

$

37,240

​

$

26,494

制限付き現金

​

​

2,853

​

​

136

売掛金の純額

​

 

249,183

​

 

268,421

在庫

​

 

77,316

​

 

77,521

その他の流動資産

​

 

49,987

​

 

46,146

流動資産合計

​

 

416,579

​

 

418,718

有形固定資産、正味額

​

 

48,782

​

 

41,820

無形資産、純額

​

 

199,322

​

 

238,087

のれん

​

 

300,892

​

 

300,892

繰延税金資産

​

 

84,472

​

 

69,761

運用リース契約に基づく資産

​

 

30,732

​

 

39,783

その他の資産

​

 

33,980

​

 

35,092

​

​

$

1,114,759

​

$

1,144,153

負債および株主資本

​

 

  

​

 

  

流動負債：

​

 

  

​

 

  

定期借入金の流動部分

​

$

4,813

​

$

35,102

支払調整

​

 

78,939

​

 

85,164

未払費用その他

​

 

102,942

​

 

91,687

オペレーティングリース債務

​

 

10,644

​

 

15,739

前払収益

​

 

95,761

​

 

113,381

流動負債合計

​

 

293,099

​

 

341,073

長期債務、流動負債を除く

​

 

332,428

​

 

197,482

ワラントの負債

​

 

5,587

​

 

5,295

优先株の負債、$0.01株式当たりの公称額; 10,000,000株$300,000,000株式を認可し、なし 2024年9月30日時点で発行および発行済み; 55,000 2023年12月31日時点で発行済みで未払いのシェア数（$56,650 清算優先権)

​

 

—

​

 

53,337

短期償還義務を除く運用リース債務

​

 

33,249

​

 

38,711

未収入金（現在の値を差し引いた金額）

​

 

16,751

​

 

19,218

繰延税金資産

​

 

5,616

​

 

5,616

その他の長期負債

​

 

32,495

​

 

30,658

負債合計

​

 

719,225

​

 

691,390

契約や不確定性要因による拘束（注19）

​

 

  

​

 

  

株主資本:

​

 

  

​

 

  

普通株式、1株当たり0.001ドルの割額株式、承認済み株式総数900,000,000株、発行済み株式577,806,659株、2023年12月31日時点での流通株式540,387,949株、発行済み株式577,805,623株、2023年3月31日時点での流通株式545,459,814株、追加資本金0.0001株式当たりの公称額; 240,000,000株式を承認済み; 174,735,798 2024年9月30日時点で発行済みかつ未払いの株式数; 172,083,667 2023年12月31日時点で発行済みかつ未払いの株式数

​

 

17

​

 

17

追加の資本金

​

 

1,967,952

​

 

1,958,909

累積欠損

​

 

(1,580,549)

​

 

(1,519,950)

累積その他の包括利益

​

 

8,114

​

 

13,787

純資産合計

​

 

395,534

​

 

452,763

​

​

$

1,114,759

​

$

1,144,153

​

監査されていない短縮された連結財務諸表の注記を参照してください。

​

4

目次

RIBBON COMMUNICATIONS INC.

損益計算書

(株式データ以外は、千の数字で表示されます)

(未監査)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

9月30日終了3か月間

​

9月30日終了9か月間

​

​

2024年6月30日および2023年9月30日における

​

2024年6月30日および2023年9月30日における

​

2024年6月30日および2023年9月30日における

​

2024年6月30日および2023年9月30日における

​

    

2024

    

2023

    

2024

    

2023

売上高:

​

​

​

​

​

​

​

​

​

​

​

​

製品

​

$

112,151

​

$

108,501

​

$

298,894

​

$

319,166

サービス

 

​

98,087

 

​

94,660

 

​

283,628

 

​

280,772

合計売上高

 

​

210,238

 

​

203,161

 

​

582,522

 

​

599,938

原価費用：

 

​

​

 

​

​

 

​

​

 

​

​

製品

 

​

59,405

 

​

59,436

 

​

160,044

 

​

189,426

サービス

 

​

34,893

 

​

33,065

 

​

103,633

 

​

102,152

買収技術の減価償却

 

​

6,323

 

​

7,157

 

​

19,406

 

​

21,985

原価費用合計

 

​

100,621

 

​

99,658

 

​

283,083

 

​

313,563

粗利益

 

​

109,617

 

​

103,503

 

​

299,439

 

​

286,375

営業費用：

 

​

​

 

​

​

 

​

​

 

​

​

研究開発

 

​

45,645

 

​

46,229

 

​

134,897

 

​

145,309

営業・マーケティング

 

​

33,060

 

​

32,795

 

​

100,760

 

​

102,099

一般管理費用

 

​

21,588

 

​

12,885

 

​

51,680

 

​

41,276

取得された無形資産の減価償却費

 

​

6,457

 

​

7,216

 

​

19,671

 

​

21,740

取得、売却、統合に関連する

 

​

—

 

​

842

 

​

—

 

​

2,982

再編成および関連

 

​

3,794

 

​

2,680

 

​

8,779

 

​

13,924

営業費用合計

 

​

110,544

 

​

102,647

 

​

315,787

 

​

327,330

（損失）事業活動からの収入

 

​

(927)

 

​

856

 

​

(16,348)

 

​

(40,955)

金利費用、純額

 

​

(11,952)

 

​

(7,143)

 

​

(21,818)

 

​

(20,331)

その他の収益（費用）、純額

 

​

1,056

 

​

(2,620)

 

​

(15,960)

 

​

(536)

所得税前損失

 

​

(11,823)

 

​

(8,907)

 

​

(54,126)

 

​

(61,822)

事業税調整前当期純利益

 

​

(1,599)

 

​

(4,594)

 

​

(6,473)

 

​

(11,463)

最終損失

​

$

(13,422)

​

$

(13,501)

​

$

(60,599)

​

$

(73,285)

1株あたり損失:

​

 

  

​

 

  

​

 

  

​

 

  

Basic

​

$

(0.08)

​

$

(0.08)

​

$

(0.35)

​

$

(0.43)

希薄化後

​

$

(0.08)

​

$

(0.08)

​

$

(0.35)

​

$

(0.43)

損失1株当たり利益を計算するために使用される加重平均株式

​

 

  

​

 

  

​

 

  

​

 

  

Basic

​

 

174,613

​

 

171,190

​

 

173,615

​

 

169,955

希薄化後

​

 

174,613

​

 

171,190

​

 

173,615

​

 

169,955

​

監査されていない短縮された連結財務諸表の注記を参照してください。

​

5

Table of Contents

RIBBON COMMUNICATIONS INC.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(unaudited)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

Three months ended

​

Nine months ended

​

​

September 30, 

​

September 30, 

​

September 30, 

​

September 30, 

​

    

2024

    

2023

    

2024

    

2023

Net loss

​

$

(13,422)

​

$

(13,501)

​

$

(60,599)

​

$

(73,285)

Other comprehensive income (loss), net of tax:

​

​

​

​

​

​

​

​

​

​

​

​

Unrealized loss on interest rate swap, net of reclassifications and amortization into earnings

​

 

—

​

 

(1,322)

​

 

(6,019)

​

 

(8,544)

Reclassification of gain to other income (expense), net upon sale of interest rate swap

​

 

—

​

 

—

​

 

—

​

 

(5,099)

Foreign currency translation adjustments

​

 

286

​

 

(3)

​

 

346

​

 

(588)

Other comprehensive income (loss), net of tax

​

 

286

​

 

(1,325)

​

 

(5,673)

​

 

(14,231)

Comprehensive loss, net of tax

​

$

(13,136)

​

$

(14,826)

​

$

(66,272)

​

$

(87,516)

​

See notes to the unaudited condensed consolidated financial statements.

​

6

目次

RIBBON COMMUNICATIONS INC.

株主資本状況の簡約合併財務諸表

（株式を除く、千）

(未監査)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

2024年9月30日を終了した3ヶ月間

​

    

​

​

​

​

​

​

​

​

​

​

    

累積

    

​

​

​

​

​

​

​

​

    

追加

    

​

​

​

その他の

​

総計

​

​

普通株式

​

払込資本金

​

累積

​

包括利益（損失）

​

株主資本

​

​

株式

    

数量

​

資本

​

累積赤字

​

損益

​

株式以外の全セクター

2024年7月1日の残高

 

174,437,242

​

$

17

​

$

1,964,304

​

$

(1,567,127)

​

$

7,828

​

$

405,022

株式オプションの行使

​

53

​

 

—

​

 

—

​

 

—

​

 

—

​

 

—

制限付き株式アワードおよびユニットの付与

 

417,633

​

 

—

​

 

—

​

 

—

​

 

—

​

 

—

制限付き株のシェアは税金の源泉徴収の義務を履行するために会社に返却されました

 

(119,130)

​

 

—

​

 

(397)

​

 

—

​

 

—

​

 

(397)

株式報酬費用

 

—

​

 

—

​

 

4,045

​

 

—

​

 

—

​

 

4,045

その他の包括利益：

 

—

​

 

—

​

 

—

​

 

—

​

 

286

​

 

286

最終損失

 

—

​

 

—

​

 

—

​

 

(13,422)

​

 

—

​

 

(13,422)

2024年9月30日の残高

 

174,735,798

​

$

17

​

$

1,967,952

​

$

(1,580,549)

​

$

8,114

​

$

395,534

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

2024年9月30日までの9カ月間

​

​

​

​

​

​

​

​

​

​

​

​

​

累積

​

​

​

​

    

​

​

​

​

    

追加

    

​

​

    

その他の

    

総計

​

​

普通株式

​

払込資本金

​

累積

​

包括利益（損失）

​

株主の

​

​

株式

    

数量

​

資本

​

累積赤字

​

損益

​

株式以外の全セクター

2024年1月1日の残高

 

172,083,667

​

$

17

​

$

1,958,909

​

$

(1,519,950)

​

$

13,787

​

$

452,763

株式オプションの行使

 

8,677

​

 

—

​

 

17

​

 

—

​

 

—

​

 

17

制限付き株式アワードおよびユニットの付与

 

3,444,670

​

 

—

​

 

—

​

 

—

​

 

—

​

 

—

パフォーマンスベースの株式ユニットの配当

 

288,672

​

 

—

​

 

—

​

 

—

​

 

—

​

 

—

制限株のシェアは、税金の源泉徴収義務を満たすために会社に返却されました

 

(1,089,888)

​

 

—

​

 

(3,035)

​

 

—

​

 

—

​

 

(3,035)

株式報酬費用

 

—

​

 

—

​

 

12,061

​

 

—

​

 

—

​

 

12,061

その他包括損失

 

—

​

 

—

​

 

—

​

 

—

​

 

(5,673)

​

 

(5,673)

最終損失

 

—

​

 

—

​

 

—

​

 

(60,599)

​

 

—

​

 

(60,599)

2024年9月30日の残高

 

174,735,798

​

$

17

​

$

1,967,952

​

$

(1,580,549)

​

$

8,114

​

$

395,534

​

監査されていない短縮された連結財務諸表の注記を参照してください。

​

7

目次

RIBBON COMMUNICATIONS INC.

株主資本状況の簡約合併財務諸表

（株式を除く、千）

(未監査)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

2023年9月30日を終了した3ヶ月間

​

    

​

​

​

​

​

​

​

​

​

​

​

累積

​

​

​

​

​

​

​

​

​

    

追加

    

​

​

    

その他の

    

総計

​

​

普通株式

​

払込資本金

​

累積

​

包括利益（損失）

​

株主資本

​

​

株式

    

数量

​

資本

​

累積赤字

​

損益

​

株式以外の全セクター

2023年7月1日の残高

 

170,958,400

​

$

17

​

$

1,950,079

​

$

(1,513,528)

​

$

17,679

​

$

454,247

株式オプションの行使

 

6,899

​

 

—

​

 

13

​

 

—

​

 

—

​

 

13

制限付き株式アワードおよびユニットの付与

 

612,818

​

 

—

​

 

—

​

 

—

​

 

—

​

 

—

制限株式の株式は、税金の差し引きに対応するために、会社に返却されました

 

(160,745)

​

 

—

​

 

(456)

​

 

—

​

 

—

​

 

(456)

株式報酬費用

 

—

​

 

—

​

 

4,950

​

 

—

​

 

—

​

 

4,950

その他包括損失

 

—

​

 

—

​

 

—

​

 

—

​

 

(1,325)

​

 

(1,325)

最終損失

 

—

​

 

—

​

 

—

​

 

(13,501)

​

 

—

​

 

(13,501)

2023年9月30日の残高

 

171,417,372

​

$

17

​

$

1,954,586

​

$

(1,527,029)

​

$

16,354

​

$

443,928

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

2023年9月30日までの9カ月間

​

​

​

​

​

​

​

​

​

​

​

​

    

累積

​

​

​

​

​

​

​

​

​

    

追加

​

​

​

​

その他の

    

総計

​

    

普通株式

​

払込資本金

    

累積

​

包括利益（損失）

​

株主の

​

​

株式

    

数量

​

資本

​

累積赤字

​

損益

​

株式以外の全セクター

2023年1月1日の残高

 

168,324,995

​

$

17

​

$

1,941,569

​

$

(1,453,744)

​

$

30,585

​

$

518,427

株式オプションの行使

 

7,816

​

 

​

​

 

15

​

 

—

​

 

—

​

 

15

制限付き株式アワードおよびユニットの付与

 

3,927,390

​

 

—

​

 

—

​

 

—

​

 

—

​

 

—

実績ベースの株式ユニットの分配

 

381,071

​

 

—

​

 

—

​

 

—

​

 

—

​

 

—

制限付き株の株式が、税金の源泉徴収義務を満たすために、会社に返還されました

 

(1,223,900)

​

 

—

​

 

(3,912)

​

 

—

​

 

—

​

 

(3,912)

株式報酬費用

 

—

​

 

—

​

 

16,914

​

 

—

​

 

—

​

 

16,914

その他包括損失

 

—

​

 

—

​

 

—

​

 

—

​

 

(14,231)

​

 

(14,231)

最終損失

 

—

​

 

—

​

 

—

​

 

(73,285)

​

 

—

​

 

(73,285)

2023年9月30日の残高

 

171,417,372

​

$

17

​

$

1,954,586

​

$

(1,527,029)

​

$

16,354

​

$

443,928

​

監査されていない短縮された連結財務諸表の注記を参照してください。

​

8

目次

リボンコミュニケーションズ株式会社

簡易連結キャッシュフロー計算書

（千米ドル単位）

(未監査)

​

​

​

​

​

​

​

​

​

    

9月30日終了9か月間

​

​

2024年6月30日および2023年9月30日における

​

2024年6月30日および2023年9月30日における

​

​

2024

    

2023

営業活動によるキャッシュフロー:

​

​

​

​

​

​

最終損失

​

$

(60,599)

​

$

(73,285)

営業活動に使用された現金への純損失の調整：

​

​

​

​

​

​

固定資産及び設備の償却費用

​

 

10,131

​

 

10,603

無形資産の摘早償却

​

 

39,077

​

 

43,725

債務の発行コストと原資発行割引の償却

​

 

4,137

​

 

2,517

利払い:スワップ金利に関連するその他包括利益の償却

​

 

(8,196)

​

 

(3,818)

株式報酬認識支払い

​

 

12,061

​

 

16,914

繰延税金資産

​

 

(14,614)

​

 

(3,617)

スワップ売却益

​

 

—

​

 

(7,301)

ワラント債務負担の公正価値変動

​

 

292

​

 

(444)

优先股負債の公正価値変動

​

 

8,091

​

 

(572)

优先股 Pass 的股利

​

 

2,743

​

 

2,573

優先株式 Pass の股利支払い

​

​

(6,686)

​

​

—

外貨為替損失

​

 

1,357

​

 

1,174

営業資産および負債の変動:

​

 

​

​

 

​

売掛金

​

 

18,896

​

 

31,345

在庫

​

 

(1,630)

​

 

(4,327)

その他の営業資産

​

 

9,456

​

 

27,785

支払調整

​

 

(7,580)

​

 

(22,276)

未払費用およびその他の長期負債

​

 

1,624

​

 

(16,255)

前払収益

​

 

(20,087)

​

 

(7,793)

営業によるキャッシュフローの純流出

​

 

(11,527)

​

 

(3,052)

投資活動によるキャッシュフロー：

​

 

​

​

 

​

設備資産の購入

​

 

(14,428)

​

 

(6,620)

ソフトウェアライセンスの購入

​

 

(462)

​

 

—

投資活動によるキャッシュフローの純流出

​

 

(14,890)

​

 

(6,620)

財務活動からのキャッシュフロー:

​

 

  

​

 

  

回転信用枠の借入

​

 

44,106

​

 

67,000

​

 

(44,106)

​

 

(57,000)

定額債務の発行による収益

​

 

342,300

​

 

—

償還取引の元本支払

​

 

(236,270)

​

 

(90,044)

債務発行費の支払い

​

 

(5,985)

​

 

(1,572)

优先股およびウォランティ債務の発行による収入

​

 

—

​

 

53,350

优先股 passの支払

​

 

(56,850)

​

​

—

ストックオプションの行使による収益金

​

​

17

​

 

15

ベストされた株式報酬や単位に関連する税金の支払い

​

​

(3,035)

​

​

(3,912)

財務活動による純現金提供（使用）

​

​

40,177

​

​

(32,163)

現金及び現金同等物の為替レート変動の影響

 

​

(297)

 

​

(926)

現金及び現金同等物の増加（減少）

 

​

13,463

 

​

(42,761)

年初現金、現金同等物及び制限された現金

 

​

26,630

 

​

67,262

期末残高の現金、現金同等物及び制限付き現金

​

$

40,093

​

$

24,501

​

9

目次

リボンコミュニケーションズ社

連結キャッシュ・フロー計算書 (続き)

（千米ドル単位）

(未監査)

​

​

​

​

​

​

​

​

​

​

    

9月30日終了9か月間

​

​

​

2024年6月30日および2023年9月30日における

​

2024年6月30日および2023年9月30日における

​

​

​

2024

    

2023

​

キャッシュフロー情報の補足開示:

​

​

​

​

​

​

​

支払利息

​

$

22,851

​

$

18,606

​

支払法人税等

​

$

12,807

​

$

9,721

​

所得税還付金を受け取りました

​

$

1,294

​

$

1,160

​

非現金投資活動の補足開示：

​

​

​

​

​

​

​

支出が発生していますが、まだ支払われていません

​

$

3,946

​

$

2,505

​

在庫の移転を有形固定資産へ

​

$

1,297

​

$

1,524

​

非現金ベースの融資活動に関する補足事項：

​

​

​

​

​

​

​

ベストされた制限株およびパフォーマンスベースの株式付与の公正価値

​

$

10,454

​

$

13,454

​

​

監査されていない短縮された連結財務諸表の注記を参照してください。

​

​

10

目次

リボンコミュニケーションズ社

総合財務諸表の注釈

(未監査)

​

(1) 提示の根拠

ビジネス

Ribbon Communications Inc.（Ribbonまたは会社）は、通信業種向けおよび企業向けの通信テクノロジーを提供する世界をリードする企業です。同社は、データと音声通信の安全な提供、高帯域幅ネットワーキングおよび住宅消費者、小規模、中規模、大規模企業、ファイナンス、教育、政府、公共企業、交通機関などの業種向けに、ソフトウェアおよび高性能ハードウェア製品、ネットワークソリューション、サービスを幅広く提供しています。Ribbonの使命は、情報の安全な交換を可能にする、認識されたグローバルテクノロジーリーダーを創出することであり、その際に類稀なるスケール、性能、弾力性を備えています。同社の本社はテキサス州プラノにあり、研究開発、販売、サポート拠点を含むグローバルプレゼンスを持っています。 30 世界各国。

「Performance-Based Awards（成果に基づく受賞）」は、第7.7条に基づき、委員会によって設定されたパフォーマンス目標や他の事業目標の達成に依存して現金、株式またはその他の受賞を受け取るための受賞です。

経営陣の見解では、添付された未監査の簡易連結財務諸表は、米国一般会計原則（"GAAP"）および米国証券取引委員会（"SEC"）の規則と規制に準拠して公正に表示されるために必要な通常発生する項目の調整を含んでいます。

四半期報告書フォーム10-Qに含まれる情報は、2023年12月31日に終了した会社の年次報告書フォーム10-K（修正済み）と併せて読むべきであり、これは2024年2月28日にSECに提出されたものです。途中結果は、通年または将来の中間期間の結果を必ずしも示すものではありません。

営業セグメント

企業の最高執行責任者（"CODM"）は、社長兼最高経営責任者です。CODMは、 two Ribbon内の個別の組織：クラウド・エッジセグメント（「クラウド・エッジ」）とIP光ネットワークセグメント（「IP光ネットワーク」）。

重要な会計方針

会社の重要な会計方針は、年次報告書に記載されている連結財務諸表の附属書2に開示されています。2024年9月30日までの9か月間において、重要な会計方針には実質的な変更はありませんでした。

連結財務諸表の原則

簡約連結財務諸表には、Ribbonおよびその完全子会社の勘定が含まれています。連結においては、対社間取引および残高は取り除かれています。

見積もりと判断の使用

米国一般会計原則に準拠して財務諸表を作成することは、管理陣が財務諸表日の資産と負債の報告金額、および潜在的資産および負債の開示、および財務諸表期間中の収益と費用の報告金額に影響を与える見積もりと仮定を行うことを必要とします。これらの簡約連結財務諸表の作成において依拠された重要な見積もりと判断には、複数の要素を含む取引の収益認識、在庫の評価、株式報酬および優先株式、warrantsの公正価値を決定するために使用される仮定、無形資産および商標の評価が含まれます。

11

目次

リボンコミュニケーションズ社

縮小連結財務諸表ノート（続き）

(未監査)

​

含む 、 インペアメント 、 保証債務 、 法的な紛争事項 、 および リボンの純配当税資産及びそれに関連する評価引当金の回収力。 リボンはこれらの見積もりを定期的に評価し 、 それらが判明した期において見積もりの変更を記録します。 リボンは 、 歴史的な経験や 、 その他の様々な仮定に基づいて 、 その状況下で合理的だと考える各種見積もりを行っています。 実際の結果は 、 それらの見積もりと異なる可能性があります。

制限付きの現金

会社は 、 長期債務を担保するために担保として納められた全ての現金と 、 契約条項によって使用が制限されている現金をすべて 、 制限付き現金として分類しています。 2024年9月30日および2023年12月31日時点で 、 会社は 、 $2.9$百万の売上高を認識しました0.1それぞれ制限された短期銀行預金、特定の保証および担保保証のための担保として会社の入札および契約に対する債務の保証として差し押さえられた短期銀行預金を表しています。

金融資産の譲渡

会社のIPオプティカルネットワークセグメントは、多くの金融機関との顧客債権譲渡契約を締結しています。これらの契約の条件に基づき、金融機関が事前に債権を承認する限り、会社は金融機関に対して返済責任なしで債権を譲渡することができます。会社は主要な保険会社からの信用保険契約を締結するか、請求債権の大部分に対してお客様からの信用状を取得しています。会社は、金融資産の譲渡を資産の売却として処理し、発生した債権譲渡手数料を収益計算書の利益の構成要素として記録し、債権譲渡から得た収益はキャッシュフロー計算書の営業活動における現金に含まれています。

2024年9月30日および2023年に終了した3か月および9か月の間における売掛金および関連料金のファクタリングは、次の通りでした（千件単位で）:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

9月30日終了3か月間

​

9月30日終了9か月間

​

​

2024年6月30日および2023年9月30日における

​

2024年6月30日および2023年9月30日における

​

2024年6月30日および2023年9月30日における

​

2024年6月30日および2023年9月30日における

​

    

2024

    

2023

    

2024

    

2023

売掛金売却

​

$

26,635

​

$

24,701

​

$

73,597

​

$

73,028

手形割引手数料

​

​

(532)

​

​

(752)

​

​

(1,466)

​

​

(2,022)

ネットキャッシュ収益

​

$

26,103

​

$

23,949

​

$

72,131

​

$

71,006

​

最近の会計原則

2023年12月、財務会計基準委員会（FASB）はASU 2023-09を発行しました。 所得税（740番分野）： 所得税開示の改善に関するものです。 （ASU 2023-09）により、金利調整情報および企業が支払う所得税の一部の種類に関する開示要件が強化されます。ASU 2023-09は、2025年の財務諸表から適用され、早期適用が許可されます。会社は、この基準の適用により、特定の追加所得税開示が必要となると予想しています。

​

2023年11月、FASbはASU 2023-07を発行しました。このASUにより、CODM ceo決定者に提供される重要なセグメント費用が、主要な決定要因者である製品のCEOのタイトル、役職、セグメントのパフォーマンスを評価する方法、リソースを割り当てる方法に関する説明とともに、年次および間隔性で開示する必要があります。ASU 2023-07は2023年12月15日以降の会計年度および2024年12月15日以降の会計年度の間隔期間に適用されます。セグメント報告（トピック280）：報告上のセグメント開示の改善 （ASU 2023-07）により、報告セグメントの開示要件が改善され、重要なセグメント経費および中間開示要件が強化され、投資家が事業全体のパフォーマンスをよりよく理解し、将来のキャッシュフローを評価できるようになります。ASU 2023-07は、2024年の財務諸表から会社に適用され、その後の中間財務諸表に適用され、財務諸表に提示された全期間にわたって準拠されます。会社のこの基準の適用により、特定の追加セグメント開示が必要となります。

​

12

目次

リボンコミュニケーションズ社

縮小連結財務諸表ノート（続き）

(未監査)

​

(2) 1株当たり利益（損失）

基本1株当たり利益（損失）は、当該期間中に発行済み株式の加重平均数で当期純利益（損失）を除いて計算します。会社が当期純利益を報告する期間には、希薄化後1株当たり当期純利益は、普通株式および希薄化後の普通株式に相当する株式の加重平均数を使用して算出されますが、その効果が希薄化に対して有利でない場合を除きます。

1株当たり損失算出に使用された株は以下の通り（単位: 千株）:

​

​

​

​

​

​

​

​

​

​

​

9月30日終了3か月間

​

9月30日終了9か月間

​

​

2024年6月30日および2023年9月30日における

​

2024年6月30日および2023年9月30日における

​

2024年6月30日および2023年9月30日における

​

2024年6月30日および2023年9月30日における

​

    

2024

    

2023

    

2024

    

2023

Weighted average shares outstanding—basic

 

174,613

 

171,190

 

173,615

 

169,955

希薄化後の普通株式の潜在株式数

 

—

​

—

 

—

 

—

Weighted average shares outstanding—diluted

 

174,613

 

171,190

 

173,615

 

169,955

​

Options to purchase the Company’s common stock and unvested restricted and performance-based stock units aggregating 8.12024年3月31日時点で、2023年から2039年までの固定価格構成要素の1つのPPAに関連する約4000万ドルの収益が納入されます。14.4 million shares were excluded from the computation of diluted loss per share for the three and nine months ended September 30, 2024 and 2023, respectively, because their effect would have been antidilutive.

2023年3月28日、会社は新たに指定されたシリーズAの優先株を投資家に非公募発行しました。 55,000 シェアを1株当たり$で非公募発行により優先株式（「優先株」）を投資家に発行しました。970 株式購入権（「ワラント」）を何百万も含む、シェア$1あたりの通常株式購入価格（「非公募発行」）を選択価格で投資家に発行しました。 4.9シェア$1あたりの議決権付きの通常株式（「非公募発行」）を購入するための権利証を何百万も含む、$は何百万も含むと$を超えている。0.0001 株式$1あたりの議決権付きの通常株式（「非公募発行」）を購入するための権利証を含む、価格は$1あたりとしました。3.77 非公募発行からの収益は約$百万で、その中には既存の関連当事者株主からの約$百万も含まれます（注11を参照）。53.4非公募発行からの収益は約$百万で、その中には既存の関連当事者株主からの約$百万も含まれます（注11を参照）。10非公募発行からの収益は約$百万で、その中には既存の関連当事者株主からの約$百万も含まれます（注11を参照）。

2024年6月25日、その他の収入合計額の一部を使って、優先株式を引き換えました。 103ベースの利率が〇%で、合計約$○百万ドルに達しました。63.5ワラントは引き続き未決済のままであり、修正はありません。2020年クレジット施設のリファイナンスの説明については、注記9を参照してください。

2024年9月30日と2023年、ワラントからの希薄化されたシェアの潜在的な数は○百万シェアでした。 4.9 ただし、2024年9月30日および2023年の3か月と9か月の間、当社の普通株式の平均株価が1株あたり$○以下であったため、これらのワラントからの重み付け平均シェアには影響がありませんでした。その影響は希薄化効果となる可能性がありました。3.77 6月25日の優先株式の弁済まで、優先株式に帰属する配当は希薄化された1株当たり利益（損失）の計算において調整されませんでした。これらの配当は、優先株式の公正価値調整に含まれており、そのままその他（収支）に含まれていました。

6月25日の優先株式の引き換えまで、当該優先株式についての利息は、希薄化された1株当たり利益（損失）の計算における調整ではありませんでした。

13

目次

リボンコミュニケーションズ社

縮小連結財務諸表ノート（続き）

(未監査)

​

(3) 在庫

2024年9月30日および2023年12月31日の在庫は、次のように構成されていました（単位：千）：

​

​

​

​

​

​

​

​

​

2024年6月30日および2023年9月30日における

​

12月31日、

​

    

2024

    

2023

完成品と仕上がり品の在庫

​

$

94,269

​

$

93,077

•2023年度の取得と統合費用は、2023年度第1四半期におけるBenuおよびTibitの買収に関連する財務、法務、会計顧問および従業員関連費用を反映しています。

​

 

2,409

​

 

3,269

​

​

 

96,678

​

 

96,346

その他資産に含まれる非流動部門が少ない

​

 

(19,362)

​

 

(18,825)

​

$

77,316

​

$

77,521

​

​

​

(4) 無形資産およびのれん

2024年9月30日および2023年12月31日の会社の無形資産は、次のように構成されています（千万円単位）：

​

​

​

​

​

​

​

​

​

​

​

​

​

    

加重平均価格

​

​

​

​

​

​

​

​

​

平均的に

​

​

​

​

​

​

​

​

​

​

​

減価償却

​

​

​

​

​

​

​

収益

​

​

期間

    

​

​

    

累積

    

帳簿価額

2024年9月30日

    

（歳）

​

コスト

    

減価償却

    

価値

開発された技術

​

7.84

​

$

340,380

​

$

257,078

​

$

83,302

顧客関係

​

11.86

​

​

268,140

​

​

154,346

​

​

113,794

商号

​

3.88

​

​

5,000

​

​

4,969

​

​

31

ソフトウェアライセンス

 

3.00

 

​

5,748

 

​

3,553

 

​

2,195

​

 

9.50

​

$

619,268

​

$

419,946

​

$

199,322

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

加重平均価格

​

​

​

​

​

​

​

​

​

平均的に

​

​

​

​

​

​

​

​

​

​

​

減価償却

​

​

​

​

​

​

​

収益

​

​

期間

    

​

​

    

累積

    

帳簿価額

2023年12月31日

    

（年）

​

コスト

    

減価償却

    

値

開発された技術

​

7.84

​

$

340,380

​

$

239,066

​

$

101,314

顧客関係

​

11.86

​

​

268,140

​

​

134,743

​

​

133,397

商号

​

3.88

​

​

5,000

​

​

4,901

​

​

99

ソフトウェアのライセンス

 

3.00

 

​

5,436

 

​

2,159

 

​

3,277

​

 

9.51

​

$

618,956

​

$

380,869

​

$

238,087

​

2024年9月30日時点で、会社の無形資産に対する将来の償却費予測は以下の通りでした（単位：千）:

​

​

​

​

12月31日を終える年

    

  

​

2024年の残りの期間

​

$

11,785

2025

​

 

44,192

2026

​

 

39,143

2027

​

 

33,979

2028

​

 

23,400

2029

​

 

18,379

それ以降

​

​

28,444

​

​

$

199,322

14

目次

リボンコミュニケーションズ株式会社

縮小連結財務諸表ノート（続き）

(未監査)

​

​

2024年9月30日および2023年9月30日に終了した9か月間に、会社のの企業価値に変更はありませんでした。2024年9月30日と2023年9月30日の優先股の構成要素は、以下の通りでした（単位：千ドル）：

​

​

​

​

​

​

​

​

​

​

​

    

クラウドと

    

IP 光学

    

​

​

​

​

エッジ

​

ネットワーク

​

総計

のれん

​

$

392,302

​

$

191,996

​

$

584,298

償却累計額

​

 

(167,406)

​

 

(116,000)

​

 

(283,406)

​

​

$

224,896

​

$

75,996

​

$

300,892

​

​

​

(5) 公正価値階層

当社の現金同等物、売掛金、買掛金、およびリボ払いの残高は、これらの金融機関の即時または短期的性質により、公正価値にほぼ一致しています。2024年9月30日および2023年12月31日のRibbonの期限付き債務残高は、それぞれ約$349.1$百万の売上高を認識しました235.4百万ドルで、約$330.4$百万の売上高を認識しました235.1 million, respectively. The Company’s Warrant liability had a fair value of $5.6$百万の売上高を認識しました5.3 million as of September 30, 2024 and December 31, 2023, respectively. The Company’s Preferred Stock had a fair value of $53.3 million as of December 31, 2023 and was fully redeemed on June 25, 2024.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The three-tier fair value hierarchy is based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows:

Level 1. Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. The Company had no assets or liabilities fair valued using Level 1 input at September 30, 2024 or December 31, 2023.

レベル2。 資産または負債に適用されるレベル2は、市場で直接または間接的に観測可能な入力が存在するものであり、活発な市場で類似の資産や負債のための引用価格、または取引量が不十分で取引頻度が低い（活発でない市場）市場で同一の資産や負債のための引用価格などが含まれます。2023年12月31日時点で、会社は定義された給付計画の資産の公正な価値をレベル2の入力を使用して決定しました。2024年9月30日までの9か月間に、2024年9月30日時点での資産の公正な価値の計算を必要とする会社の定義された給付計画の資産には大きな変更はありませんでした。

レベル3。 資産または負債に適用されるレベル3は、評価方法に観測不可能な入力があり、その入力が資産または負債の公正な価値の計測に重要な影響を与えるものです。2024年9月30日時点で、会社のWarrantsの公正な価値及び2023年12月31日時点での会社のPreferred StockとWarrantsの公正な価値を決定するためにレベル3の入力が使用されました。

​

​

15

Table of Contents

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

​

(6) ACCRUED EXPENSES AND OTHER

Accrued expenses at September 30, 2024 and December 31, 2023 consisted of the following (in thousands):

​

​

​

​

​

​

​

​

​

September 30, 

​

December 31, 

​

    

2024

    

2023

Employee compensation and related costs

​

$

36,982

​

$

33,682

Professional fees

​

 

19,232

​

 

19,702

Taxes payable

​

 

13,538

​

 

8,383

Other

​

 

33,190

​

 

29,920

​

​

$

102,942

​

$

91,687

​

​

​

(7) WARRANTY ACCRUALS

The changes in the Company’s accrual balance in the nine months ended September 30, 2024 were as follows (in thousands):

​

​

​

​

Balance at January 1, 2024

    

$

12,243

Current period provisions

​

 

4,281

Settlements

​

 

(3,959)

Balance at September 30, 2024

​

$

12,565

​

​

​

(8) RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES

The Company recorded restructuring and related expense aggregating $3.8 million and $2.7 million in the three months ended September 30, 2024 and 2023, respectively and $8.8 million and $13.9 million in the nine months ended September 30, 2024 and 2023, respectively. Restructuring and related expense includes restructuring expense (primarily severance and related costs), estimated future variable lease costs for vacated properties with no intent or ability of sublease, and accelerated rent amortization expense.

For restructuring events that involve lease assets and liabilities, the Company applies lease reassessment and modification guidance and evaluates the right-of-use assets for potential impairment. If the Company plans to exit all or distinct portions of a facility and does not have the ability or intent to sublease, the Company will accelerate the amortization of each of those lease components through the vacate date. The accelerated amortization is recorded as a component of Restructuring and related expense in the Company’s condensed consolidated statements of operations. Related variable lease expenses will continue to be expensed as incurred through the vacate date, at which time the Company will reassess the liability balance to ensure it appropriately reflects the remaining liability associated with the premises and record a liability for the estimated future variable lease costs.

Accelerated amortization of lease assets is recognized from the date that the Company commences the plan to fully or partially vacate a facility, for which there is no intent or ability to enter into a sublease, through the final vacate date. Accelerated amortization of lease assets that are included as a component of restructuring and related expense are excluded from the restructuring accrual activity tables below, as the liability for lease payments for these facilities is included as a component of current and noncurrent Operating lease liabilities in the Company’s condensed consolidated balance sheets at September 30, 2024 and December 31, 2023 (see Note 16). The Company may incur additional future expense if it is unable to sublease other locations included in the Company’s facilities consolidation initiatives.

16

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RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

​

Restructuring and related expense for the three and nine months ended September 30, 2024 and 2023 was comprised of the following (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three months ended

​

Nine months ended

​

​

September 30, 

​

September 30, 

​

September 30, 

​

September 30, 

​

    

2024

    

2023

    

2024

    

2023

Severance and related costs

​

$

2,289

​

$

804

​

$

4,264

​

$

9,355

Variable and other facilities-related costs

​

 

1,505

​

 

1,653

​

 

4,515

​

 

3,784

Accelerated amortization of lease assets due to cease-use

​

 

—

​

 

223

​

 

—

​

 

785

​

​

$

3,794

​

$

2,680

​

$

8,779

​

$

13,924

​

The CODM approved workforce reductions in 2024 for certain of the Company’s operating locations to correspond with the current sales levels in those areas. The Company recorded $2.2 million in the three months ended September 30, 2024 related to these actions. Any potential positions eliminated in countries outside of the United States are subject to local law and consultation requirements.

2023 Restructuring Plan

On February 22, 2023, the Company’s Board of Directors approved a strategic restructuring program (the "2023 Restructuring Plan") to streamline the Company’s operations in order to support the Company’s investment in critical growth areas. The 2023 Restructuring Plan includes, among other things, charges related to a workforce reduction. Any potential positions eliminated in countries outside the United States are subject to local law and consultation requirements.

In connection with the 2023 Restructuring Plan, the Company recorded restructuring and related expense of $0.1 million and $2.1 million in the three and nine months ended September 30, 2024, respectively, consisting entirely of severance related costs. A summary of the 2023 Restructuring Plan accrual activity for the nine months ended September 30, 2024 is as follows (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Balance at

​

Initiatives

​

​

​

​

Net transfer to

​

Balance at

​

​

January 1,

​

charged to

​

Cash

​

operating lease

​

September 30, 

​

    

2024

    

expense

    

payments

    

accounts

    

2024

Severance

​

$

671

​

$

2,027

​

$

(2,399)

​

$

—

​

$

299

​

2022 Restructuring Plan

On February 14, 2022, the Company’s Board of Directors approved a strategic restructuring program (the "2022 Restructuring Plan") to streamline the Company’s operations in order to support the Company’s investment in critical growth areas. The 2022 Restructuring Plan includes, among other things, charges related to a consolidation of facilities and a workforce reduction. Any positions eliminated in countries outside the United States are subject to local law and consultation requirements.

The Company recorded restructuring and related expense of $1.5 million and $4.5 million in the three and nine months ended September 30, 2024, respectively, in connection with the 2022 Restructuring Plan for variable and other facilities-related costs. A summary of the 2022 Restructuring Plan accrual activity for the nine months ended September 30, 2024 is as follows (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Balance at

​

Initiatives

    

​

​

    

​

​

​

January 1,

​

charged to

​

Cash

​

Balance at

​

​

2024

​

expense

​

payments

​

September 30, 2024

Variable and other facilities-related costs

​

$

468

​

4,514

​

(4,613)

​

$

369

17

Table of Contents

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

​

​

Balance Sheet Classification

The current portions of accrued restructuring were $2.7 million and $1.1 million at September 30, 2024 and December 31, 2023, respectively, and are included as components of Accrued expenses in the condensed consolidated balance sheets. The long-term portions of accrued restructuring are included as components of Other long-term liabilities in the condensed consolidated balance sheets. The long-term portions of accrued restructuring were $0.9 million and $1.1 million at September 30, 2024 and December 31, 2023, respectively.

(9) DEBT

2024 Credit Facility

On June 21, 2024, the Company entered into a Senior Secured Credit Facilities Credit Agreement (the “2024 Credit Facility” and “2024 Credit Agreement”) as guarantor, with the Company’s wholly-owned subsidiary, Ribbon Communications Operating Company, Inc., as the borrower (the “Borrower”), HPS Investment Partners, LLC ("HPS"), as administrative agent, and HPS and WhiteHorse Capital Management, LLC ("WhiteHorse" and, together with HPS, the "Lenders"), pursuant to which the Lenders provided the Company with a $385 million senior secured credit facility comprised of (i) a $350 million term loan (the “2024 Term Loan”) and (ii) a $35 million revolving credit facility (the “2024 Revolver”), including a $20 million sublimit for letters of credit. The proceeds received from the 2024 Term Loan were used to (a) repay 100% of the amounts outstanding under the 2020 Credit Facility, (b) redeem in full the Preferred Stock and (c) pay fees and expenses related to the 2024 Credit Facility. The excess proceeds are being used by the Company for working capital and other general corporate purposes.

The 2024 Term Loan and the 2024 Revolver bear interest, at the Borrower’s option, at either the Alternate Base Rate (“ABR”) or Term Secured Overnight Financing Rate ("SOFR") with an Applicable Margin for each (all as defined in the 2024 Credit Agreement). Margins for the first six months are 5.25% per annum for ABR Loans and 6.25% per annum for SOFR Loans. Thereafter, margins vary based on the Company’s Consolidated Net Leverage Ratio, ranging from 4.75% to 5.25% per annum for ABR Loans and 5.75% to 6.25% per annum for SOFR Loans. The 2024 Term Loan and the 2024 Revolver will both mature on June 21, 2029. The 2024 Term Loan is being repaid in equal quarterly installments: approximately $0.9 million beginning with the third quarter of 2024 through the second quarter of 2025; approximately $2.2 million beginning with the third quarter of 2025 and ending with the second quarter of 2027; and approximately $4.4 million quarterly thereafter, with the remaining principal balance of approximately $298.4 million due on the maturity date of June 21, 2029. In connection with the establishment of the 2024 Credit Facility, $7.7 million of original issue discount was withheld by the Lenders and the Company incurred $6.1 million of debt issuance costs for a total of $13.8 million that is being amortized to Interest expense, net over the term of the 2024 Credit Facility.

The 2024 Credit Facility requires compliance with a Maximum Consolidated Net Leverage Ratio (the "Financial Covenant"), as defined in the 2024 Credit Facility, which is tested on a quarterly basis. The Company was in compliance with the Financial Covenant as of September 30, 2024.

The indebtedness and other obligations under the 2024 Credit Facility are irrevocably and unconditionally guaranteed on a joint and several basis by the Company and its subsidiaries (together, the "Guarantors"). The 2024 Credit Facility is secured on a first-priority basis by a lien on substantially all assets of the Borrower and the Guarantors.

2020 Credit Facility

On June 21, 2024, the Company used the proceeds from the 2024 Credit Facility to, among other things, repay all amounts outstanding under its Senior Secured Credit Facilities Credit Agreement, dated March 3, 2020 (as amended, the "2020 Credit Facility"), by and among the Company, as a guarantor, Ribbon Communications Operating Company, Inc.,

18

Table of Contents

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

​

as the borrower (the "Borrower"), Citizens Bank, N.A., Santander Bank, N.A., and others as lenders ("2020 Credit Facility Lenders"). The Company wrote off $2.0 million of debt issuance costs in conjunction with the early extinguishment of the 2020 Credit Facility.

The 2020 Credit Facility had a maturity date of March 2025 and originally provided for $500 million of commitments from the 2020 Credit Facility Lenders to the Borrower, comprised of $400 million in term loans (the "2020 Term Loan Facility") and a $100 million facility available for revolving loans (the "2020 Revolving Credit Facility"). Under the 2020 Revolving Credit Facility, a $30 million sublimit was originally available for letters of credit and a $20 million sublimit was available for swingline loans.

The indebtedness and other obligations under the 2020 Credit Facility were unconditionally guaranteed on a senior secured basis by the Company, Edgewater Networks, Inc., a wholly-owned subsidiary of the Company, and GENBAND Inc., a wholly-owned subsidiary of the Company (together, the "2020 Credit Facility Guarantors"). The 2020 Credit Facility was secured by first-priority liens on substantially all of the assets of the Borrower and the 2020 Credit Facility Guarantors, including substantially all of the assets of the Company.

The 2020 Credit Facility required compliance with certain financial covenants, including a minimum Consolidated Fixed Charge Coverage Ratio and a maximum Consolidated Net Leverage Ratio (each as defined in the 2020 Credit Facility, and each tested on a quarterly basis).

On March 24, 2023, the Company entered into the Sixth Amendment to the 2020 Credit Facility (the “Sixth Amendment”) effective March 30, 2023. The Sixth Amendment, among other things, increased the Maximum Consolidated Net Leverage Ratio (as defined in the 2020 Credit Facility), for the first, second and third quarters of 2023 to 4.50:1.00. In the fourth quarter of 2023 and the first quarter of 2024, the Maximum Consolidated Net Leverage Ratio declined to 4.25:1.00 and 4.00:1.00, respectively. Also, the Sixth Amendment reduced the minimum Consolidated Fixed Charge Coverage Ratio (as defined in the 2020 Credit Facility) to 1.10:1.00 through the first quarter of 2024. The Sixth Amendment reduced the maximum borrowings allowed under the 2020 Revolving Credit Facility from $100 million to $75 million and the sublimit available for letters of credit was reduced from $30 million to $20 million. In addition, the Sixth Amendment replaced LIBOR with SOFR as the alternative rate available to the Company for calculating interest owed under the 2020 Credit Facility with the margin fixed at 4.5%. In conjunction with the Sixth Amendment, the Company made a $75 million prepayment that was applied to the final payment due upon maturity in March 2025. The $75 million prepayment was almost entirely funded with the net proceeds from the Private Placement and the sales of the Company’s interest rate swap. Debt issuance costs associated with the Sixth Amendment totaled $1.7 million and were being amortized on a straight-line basis over the remaining life of the 2020 Credit Facility and were written off in conjunction with the early extinguishment of the 2020 Credit Facility on June 21, 2024.

The Company’s interest rates for the nine months ended September 30, 2023 under the 2020 Term Loan benefited from a hedge instrument that was in place, specifically a fixed rate swap, until it was sold in March 2023 (see Note 10). Following the sale of the fixed rate swap in March 2023, the Company’s interest rate was based upon U.S. dollar SOFR plus a fixed margin of 4.5%. The Company was in compliance with all covenants of the 2020 Credit Facility at December 31, 2023, including the Consolidated Net Leverage Ratio calculation that considered the Company’s debt to include Preferred Stock.

19

Table of Contents

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

​

The Company had the following outstanding borrowings, unamortized debt issuance costs and original issue discount, letters of credit, interest rates, and remaining borrowing capacity under the 2024 Credit Facility and the 2020 Credit Facility as of September 30, 2024 and December 31, 2023, respectively:

​

​

​

​

​

​

​

​

​

    

September 30, 

    

December 31, 

 

​

​

2024

​

2023

 

Current portion of Term Debt

​

$

4,813

​

$

35,102

​

​

​

​

​

​

​

​

​

Long-term Debt, net of Current:

​

​

​

​

​

​

​

Long-term Debt, net of Current (Face Amount)

​

$

344,312

​

$

200,293

​

Original Issue Discount

​

​

(6,611)

​

​

—

​

Unamortized Debt Issuance Costs - Contra-Liability

​

 

(5,273)

​

 

(2,811)

​

Long-term Debt, net of Current

​

$

332,428

​

$

197,482

​

​

​

​

​

​

​

​

​

Total Face Amount of Borrowings

​

$

349,125

​

$

235,395

​

​

​

​

​

​

​

​

​

Unamortized Original Issue Discount and Debt Issuance Costs:

​

 

​

​

 

​

​

Other Assets

​

​

1,183

​

​

557

​

Long-Term Debt - Contra Liability

​

 

11,884

​

 

2,811

​

Total Unamortized Original Issue Discount and Debt Issuance Costs

​

$

13,067

​

$

3,368

​

​

​

​

​

​

​

​

​

Letters of Credit Outstanding

​

$

—

​

$

2,711

​

​

​

​

​

​

​

​

​

Remaining Borrowing Capacity

​

$

35,000

​

$

72,289

​

​

​

​

​

​

​

​

​

Average Interest Rates:

​

​

​

​

​

​

​

Term Loan

​

 

11.2

%  

 

10.0

%

Letters of Credit

​

 

—

%  

 

4.5

%

​

The Company’s debt maturities as of September 30, 2024 were as follows:

​

​

​

​

Years ending December 31, 

    

​

​

Remainder of 2024

 

$

875

2025

​

​

6,125

2026

​

​

8,750

2027

​

​

13,125

2028

​

​

17,500

2029

 

​

302,750

​

 

$

349,125

​

Letters of Credit and Other Guarantees

The Company uses letters of credit, bank guarantees, and surety bonds in the course of its business. At September 30, 2024, the Company had $10.4 million of letters of credit, bank guarantees, and surety bonds outstanding (collectively, "Guarantees") under various uncommitted facilities and no letters of credit outstanding under the 2024 Credit Facility. At December 31, 2023, the Company had Guarantees aggregating $7.9 million, comprised of the $2.7 million of letters of credit under the 2020 Credit Facility described above and $5.2 million of Other Guarantees. At September 30, 2024 and December 31, 2023, the Company had cash collateral of $2.9 million and $0.1 million, respectively, supporting the Guarantees, which are reported in Restricted cash in the Company’s condensed consolidated balance sheets.

20

Table of Contents

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

​

(10) DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company is exposed to financial market risk related to foreign currency fluctuations and changes in interest rates. These exposures are actively monitored by management. To manage the volatility related to the exposure to changes in interest rates, the Company may enter into derivative financial instruments. Management’s objective has been to reduce, where it is deemed appropriate to do so, fluctuations in earnings and cash flows associated with changes in interest rates. Ribbon’s policies and practices are to use derivative financial instruments only to the extent necessary to manage exposures. Ribbon does not hold or issue derivative financial instruments for trading or speculative purposes.

The Company records derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a specific risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge, or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk even though hedge accounting does not apply or the Company elects not to apply hedge accounting.

Cash Flow Hedge of Interest Rate Risk

The 2024 Term Loan Facility and the 2020 Term Loan Facility had outstanding balances of $349.1 million and $235.4 million at September 30, 2024 and December 31, 2023, respectively. The 2024 Revolving Credit Facility and the 2020 Revolving Credit Facility were undrawn at September 30, 2024 and December 31, 2023, respectively. Borrowings under the 2024 Credit Facility and the 2020 Credit Facility have variable interest rates based on SOFR (see Note 9). As a result of exposure to interest rate movements, during March 2020, the Company entered into an interest rate swap arrangement, which effectively converted its $400 million term loan with its variable interest rate based upon one-month LIBOR to an aggregate fixed rate of 0.904%, plus a leverage-based margin as defined in the 2020 Credit Facility.

On July 22, 2022, the Company sold $30 million of the notional amount of its interest rate swap back to its counterparty for $1.5 million, reducing the notional amount of this swap to $370 million. On August 16, 2022, the Company sold another $30 million of the notional amount of its interest rate swap back to its counterparty for $1.6 million, reducing the notional amount to $340 million, which approximated the current level of our term loan debt then outstanding. The gain in accumulated other comprehensive (loss) income related to the $60 million notional amount sold of $3.1 million was being released into earnings on a straight line basis over the remaining term of the 2020 Credit Facility as a decrease to interest expense until it was refinanced on June 21, 2024, the amortization of which totaled $0.4 million and $0.7 million for the nine months ended September 30, 2024 and 2023, respectively. The remaining unamortized gain in accumulated other comprehensive (loss) income of approximately $0.5 million was written off to interest expense in conjunction with the refinancing of the 2020 Credit Facility on June 21, 2024. See Note 9 for a description of the refinancing.

On March 24, 2023, the Company received $9.4 million, consisting of $0.4 million of interest and $9.0 million for the sale of $170 million of its $340 million notional amount interest rate swap back to its counterparty, reducing the notional amount to $170 million. On March 27, 2023, the Company received $9.8 million, consisting of $0.4 million of interest and $9.4 million for the sale of the remaining $170 million of its interest rate swap back to its counterparty. The portion of the gain in accumulated other comprehensive (loss) income related to the term loan debt prepaid on the date of

21

Table of Contents

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

​

the final sale of our swap totaled $7.3 million and was released into earnings immediately as Other expense, net. The portion of the gain in accumulated other comprehensive (loss) income related to our remaining term loan debt balance was $12.0 million and was being released into earnings on a straight line basis over the remaining term of the 2020 Credit Facility as a decrease to interest expense until it was refinanced on June 21, 2024, the amortization of which totaled $3.0 million and $3.1 million for the nine months ended September 30, 2024 and 2023, respectively. The remaining unamortized gain in accumulated other comprehensive (loss) income of $4.4 million was written off to interest expense in conjunction with the refinancing of the 2020 Credit Facility on June 21, 2024. See Note 9 for a description of the refinancing.

The Company’s objectives in using interest rate derivatives have been to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company has used an interest rate swap as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the related agreements without exchange of the underlying notional amount.

The effective portion of changes in the fair value of designated derivatives that qualify as cash flow hedges is recorded in accumulated other comprehensive income in the condensed consolidated balance sheet and is subsequently reclassified into earnings in the period that the hedged forecasted transactions affect earnings. During the nine months ended September 30, 2023, such a derivative was used to hedge the variable cash flows associated with the outstanding borrowings under the 2020 Credit Facility and the Company accounted for this derivative as an effective hedge until the final portion of the swap was sold on March 27, 2023. Any ineffective portion of the change in the fair value of the derivative would have been recognized directly in earnings. However, there was no hedge ineffectiveness recorded over the life of the swap.

Amounts reported in accumulated other comprehensive income related to the Company’s derivative are reclassified to interest expense as interest is accrued on the Company’s variable-rate debt. The impact of the Company’s derivative financial instrument on its condensed consolidated statements of comprehensive (loss) income for the three and nine months ended September 30, 2024 and 2023 was as follows, net of tax (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

Three months ended

    

Nine months ended

​

​

September 30, 

​

September 30, 

​

September 30, 

​

September 30, 

​

    

2024

    

2023

    

2024

    

2023

Gain (loss) recognized in other comprehensive income (loss) on swap, net of tax

​

$

—

​

$

—

​

$

—

​

$

(2,715)

Amount reclassified from accumulated other comprehensive income to other expense, net upon sale of swap, net of tax

​

 

—

​

 

—

​

 

—

​

 

(5,099)

Amount reclassified from accumulated other comprehensive income to interest expense

​

 

—

​

 

(1,322)

​

 

(6,019)

​

 

(5,829)

Unrealized gain (loss) on interest rate swap, net of reclassifications and amortization

​

$

—

​

$

(1,322)

​

$

(6,019)

​

$

(13,643)

​

The Company had no derivative assets or liabilities at September 30, 2024 or December 31, 2023.

​

(11) PREFERRED STOCK AND WARRANTS

On March 28, 2023, the Company issued 55,000 shares of Preferred Stock to investors in the Private Placement at a price of $970 per share, along with 4,858,090 Warrants with an exercise price of $3.77 per share.

22

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RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

​

On June 25, 2024, the Company redeemed the Preferred Stock with a portion of the proceeds from the refinancing of the 2020 Credit Facility at a rate of 103% for a total of approximately $63.5 million. The Warrants remain outstanding and without modification. See Note 9 for a description of the refinancing of the 2020 Credit Facility.

The Company accounted for the Preferred Stock until it was redeemed and continues to account for the Warrants as liability-classified instruments based on an assessment of their specific terms in accordance with ASC Topic 480, Distinguishing Liabilities from Equity. The fair value option was elected for the Preferred Stock, as the Company considered fair value to best reflect its expected future economic value. These liabilities are remeasured to fair value at each reporting date using the same valuation methodology applied upon issuance using current input assumptions.

The value of the Preferred Stock was calculated quarterly through March 31, 2024 using the Black-Derman-Toy (BDT) stochastic yield lattice model to capture the optimal timing of repayment, increasing dividend rate and other features and the value of the Warrants is calculated quarterly using the Black-Scholes Pricing Model.

Changes in the fair value of the Preferred Stock and the Warrants are reported as Other expense, net in the Company’s condensed consolidated statements of operations.

The Company determined the fair value of the Warrants using Level 3 input. The key assumptions into the model utilized was as follows as of September 30, 2024:

​

​

​

​

​

​

​

    

Warrants

 

​

    

(Black-Scholes)

 

Stock price

​

$

3.25

​

Strike price

​

$

3.77

​

Risk-free rate

​

 

3.59

%

Volatility

​

 

61.4

%

Dividend yield

​

 

0.0

%

Time to expiration (years)

​

 

2.5

​

Fair value of Warrant per share

​

$

1.15

​

​

The changes in the Company’s Preferred Stock and Warrant liabilities for the nine months ended September 30, 2024 were as follows (in thousands):

​

​

​

​

​

    

Preferred stock

​

​

liability

Balance at January 1, 2024

​

$

53,337

Payable in-kind dividends

 

​

2,743

Reversal of fair value adjustments

 

​

5,605

Call premium (3%)

 

​

1,851

Redemption (June 25, 2024)

​

​

(63,536)

Balance at September 30, 2024

​

$

—

​

​

​

​

​

​

    

Warrant liability

Balance at January 1, 2024

​

$

5,295

Fair value change

​

 

292

Balance at September 30, 2024

​

$

5,587

​

The Preferred Stock, redeemed on June 25, 2024, was subordinate to the Company’s indebtedness and senior to the Company’s common stock or other equity. Holders of the Preferred Stock were entitled to cumulative dividends that accrued quarterly. Dividends were payable in-kind during the first year at a rate of 9.25%. At the Company’s option, the

23

Table of Contents

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

​

dividends were payable in-kind or in cash during the second year at a rate of 9.75%. Dividends thereafter were to be payable in cash at a rate of 12.00%. The proceeds from the Preferred Stock issuance were approximately $53.4 million, including $10.0 million from existing related party stockholders. Offering costs paid by the Company of approximately $3.5 million were recorded in Other expense, net in the year ended December 31, 2023. The net proceeds from the Private Placement were used for the repayment of debt. The Preferred Stock was redeemable on or after the first and second anniversaries of the closing date at a rate of 103% and 102%, respectively.

The Warrants, which expire March 30, 2027, are immediately exercisable and upon an event such as a merger, consolidation, asset sale or similar change of control, may be exercised and the holders may vote the underlying shares of common stock. In connection with the Private Placement, the Company provided the investors with certain registration rights relating to the Preferred Stock, the Warrants and the shares of the Company’s common stock underlying the Warrants, that required the Company to file a registration statement on Form S-3 with the SEC within 30 days following the closing date of the Private Placement. The registration requirement was completed on May 19, 2023.

(12) REVENUE RECOGNITION

The Company derives revenue from two primary sources: products and services. Product revenue includes the Company’s hardware and software that function together to deliver the products’ essential functionality. Software and hardware are also sold on a standalone basis. Services include customer support (software updates, upgrades and technical support), consulting, design services, installation services and training. Generally, contracts with customers contain multiple performance obligations, consisting of products and services. For these contracts, the Company accounts for individual performance obligations separately if they are considered distinct.

When an arrangement contains more than one performance obligation, the Company will allocate the transaction price to each performance obligation on a relative standalone selling price basis. The Company utilizes the observable price of goods and services when they are sold separately to similar customers in order to estimate standalone selling price.

The Company’s software licenses typically provide a perpetual right to use the Company’s software. The Company also sells term-based software licenses that expire and Software-as-a-Service ("SaaS")-based software which are referred to as subscription arrangements. The Company does not customize its software nor are installation services required, as the customer has a right to utilize internal resources or a third-party service company. The software and hardware are delivered before related services are provided and are functional without professional services or customer support. The Company has concluded that its software licenses are functional intellectual property that are distinct, as the user can benefit from the software on its own. Product revenue is typically recognized upon transfer of control or when the software is made available for download, as this is the point the user of the software can direct the use of, and obtain substantially all of the remaining benefits from, the functional intellectual property. The Company begins to recognize software revenue related to the renewal of subscription software licenses at the start of the subscription period.

The Company offers warranties on its products. Certain of the Company’s warranties are considered to be assurance-type in nature, ensuring the product is functioning as intended. Assurance-type warranties do not represent separate performance obligations. The Company also sells separately-priced maintenance service contracts which qualify as service-type warranties and represent separate performance obligations. The Company does not allow and has no history of accepting product returns.

Services revenue includes revenue from customer support and other professional services. Customer support includes software updates on a when-and-if-available basis, telephone support, integrated web-based support and bug fixes or patches. The Company sells its customer support contracts at a percentage of list or net product price. Customer support revenue is recognized ratably over the term of the customer support agreement, which is typically one year.

24

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RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

​

The Company’s professional services include consulting, technical support, resident engineer services, design services and installation services. Because control transfers over time, revenue is recognized based on progress toward completion of the performance obligation. The method to measure progress toward completion requires judgment and is based on the nature of the products or services to be provided. The Company generally uses the input method to measure progress for its contracts because it believes such method best depicts the transfer of assets to the customer, which occurs as the Company incurs costs for the contracts. However, in some instances, the Company uses the output method because it best depicts the transfer of asset to the customer. Under the cost-to-cost measure of progress, the progress toward completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. When the measure of progress is based upon expended labor, progress toward completion is measured as the ratio of labor time expended to date versus the total estimated labor time required to complete the performance obligation. Revenue is recorded proportionally as costs are incurred or as labor is expended. Costs to fulfill these obligations include internal labor as well as subcontractor costs.

Customer training includes courses offered by the Company. The related revenue is typically recognized as the training services are performed.

The Company’s typical performance obligations include the following:

​

​

​

​

​

​

​

    

When Performance Obligation is Typically 

    

​

Performance Obligation

​

Satisfied

​

When Payment is Typically Due

Software and Product Revenue

​

​

​

​

Software licenses (perpetual or term)

 

Upon transfer of control; typically, when made available for download (point in time)

 

Generally, within 30 days of invoicing except for term licenses, which may be paid for over time

Software licenses (subscription)

 

Upon activation of hosted site (over time)

​

Generally, within 30 days of invoicing

Hardware

 

When control of the hardware passes to the customer; typically, upon delivery (point in time)

 

Generally, within 30 days of invoicing

Software upgrades

 

Upon transfer of control; typically, when made available for download (point in time)

 

Generally, within 30 days of invoicing

Customer Support Revenue

 

  

 

  

Customer support

 

Ratably over the course of the support contract (over time)

 

Generally, within 30 days of invoicing

Professional Services

 

  

 

  

Other professional services (excluding training services)

 

As work is performed (over time)

 

Generally, within 30 days of invoicing (upon completion of services)

Training

 

When the class is taught (point in time)

 

Generally, within 30 days of services being performed

​

Significant Judgments

The Company’s contracts with customers often include promises to transfer multiple products and services to the customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment.

Judgment is required to determine the standalone selling price ("SSP") for each distinct performance obligation. The Company typically has more than one SSP for individual products and services due to the stratification of those products

25

Table of Contents

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

​

and services by customers and circumstances. In these instances, the Company may use information such as the size of the customer and geographic region in determining the SSP.

Deferred Revenue

Deferred revenue is a contract liability representing amounts collected from or invoiced to customers in excess of revenue recognized. This results primarily from the billing of annual customer support agreements where the revenue is recognized over the term of the agreement. The value of deferred revenue will increase or decrease based on the timing of recognition of revenue.

Disaggregation of Revenue

The Company disaggregates its revenue from contracts with customers based on the nature of the products and services and the geographic regions in which each customer is domiciled. The Company’s revenue for the three and nine months ended September 30, 2024 and 2023 was disaggregated as follows:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

​

​

    

​

​

    

Service revenue

    

​

​

​

​

Product

​

Service revenue

​

(professional

​

​

​

Three months ended September 30, 2024

​

revenue

​

(maintenance)

​

services)

​

Total revenue

United States

​

$

58,198

​

$

33,670

​

$

17,690

​

$

109,558

Europe, Middle East and Africa

​

​

24,708

​

​

17,918

​

​

7,141

​

​

49,767

Asia Pacific

​

​

25,590

​

​

10,262

​

​

2,388

​

​

38,240

Other

​

​

3,655

​

​

7,169

​

​

1,849

​

​

12,673

​

​

$

112,151

​

$

69,019

​

$

29,068

​

$

210,238

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

​

​

    

​

​

    

Service revenue

    

​

​

​

​

Product

​

Service revenue

​

(professional

​

​

​

Three months ended September 30, 2023

​

revenue

​

(maintenance)

​

services)

​

Total revenue

United States

​

$

40,162

​

$

33,454

​

$

12,440

​

$

86,056

Europe, Middle East and Africa

​

 

31,969

​

 

18,268

​

 

8,120

​

 

58,357

Asia Pacific

​

 

32,070

​

 

10,016

​

 

3,043

​

 

45,129

Other

​

 

4,300

​

 

7,534

​

 

1,785

​

 

13,619

​

​

$

108,501

​

$

69,272

​

$

25,388

​

$

203,161

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

​

​

    

​

​

    

Service revenue

    

​

​

​

​

Product

​

Service revenue

​

(professional

​

​

​

Nine months ended September 30, 2024

​

revenue

​

(maintenance)

​

services)

​

Total revenue

United States

​

$

120,173

​

$

99,156

​

$

42,812

​

$

262,141

Europe, Middle East and Africa

​

 

99,636

​

​

53,105

​

​

23,027

​

 

175,768

Asia Pacific

​

 

68,304

​

​

30,262

​

​

7,912

​

 

106,478

Other

​

 

10,781

​

​

22,397

​

​

4,957

​

 

38,135

​

​

$

298,894

​

$

204,920

​

$

78,708

​

$

582,522

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

​

​

    

​

​

    

Service revenue

    

​

​

​

​

Product

​

Service revenue

​

(professional

​

​

​

Nine months ended September 30, 2023

​

revenue

​

(maintenance)

​

services)

​

Total revenue

United States

​

$

131,774

​

$

100,417

​

$

35,135

​

$

267,326

Europe, Middle East and Africa

​

 

88,235

​

 

56,393

​

 

22,374

​

 

167,002

Asia Pacific

​

 

89,495

​

 

29,552

​

 

8,456

​

 

127,503

Other

​

 

9,662

​

 

23,126

​

 

5,319

​

 

38,107

​

​

$

319,166

​

$

209,488

​

$

71,284

​

$

599,938

26

Table of Contents

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

​

​

The Company’s product revenue from indirect sales through its channel partner program and from its direct sales program for the three and nine months ended September 30, 2024 and 2023 was as follows (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three months ended

​

Nine months ended

​

​

September 30, 

​

September 30, 

​

September 30, 

​

September 30, 

​

    

2024

    

2023

    

2024

    

2023

Indirect sales through channel partner program

​

$

38,000

​

$

35,950

​

$

114,958

​

$

109,454

Direct sales

​

 

74,151

​

 

72,551

​

 

183,936

​

 

209,712

​

​

$

112,151

​

$

108,501

​

$

298,894

​

$

319,166

​

The Company’s product revenue from sales to enterprise customers and from sales to service provider customers for the three and nine months ended September 30, 2024 and 2023 was as follows (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

Three months ended

​

Nine months ended

​

​

September 30, 

​

September 30, 

​

September 30, 

​

September 30, 

​

    

2024

    

2023

    

2024

    

2023

Sales to enterprise customers

​

$

40,002

​

$

32,044

​

$

115,912

​

$

97,163

Sales to service provider customers

​

 

72,149

​

 

76,457

​

 

182,982

​

 

222,003

​

​

$

112,151

​

$

108,501

​

$

298,894

​

$

319,166

​

The Company’s product revenue and service revenue components by segment for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three months ended

​

Nine months ended

​

​

September 30, 

​

September 30, 

​

September 30, 

​

September 30, 

​

    

2024

    

2023

    

2024

    

2023

Product revenue:

​

​

​

​

​

​

​

​

​

​

​

​

Cloud and Edge

 

$

53,455

 

$

42,305

 

$

124,554

 

$

137,496

IP Optical Networks

 

​

58,696

 

​

66,196

 

​

174,340

 

​

181,670

Total product revenue

 

$

112,151

 

$

108,501

 

$

298,894

 

$

319,166

​

​

​

​

​

​

​

​

​

​

​

​

​

Service revenue:

 

​

  

 

​

  

 

​

  

 

​

  

Maintenance:

 

​

  

 

​

  

 

​

  

 

​

  

Cloud and Edge

 

$

53,595

 

$

55,004

 

$

159,454

 

$

164,848

IP Optical Networks

 

​

15,424

 

​

14,268

 

​

45,466

 

​

44,640

Total maintenance revenue

 

​

69,019

 

​

69,272

 

​

204,920

 

​

209,488

Professional services:

 

​

  

 

​

  

 

​

  

 

​

  

Cloud and Edge

 

​

21,028

 

​

18,456

 

​

56,294

 

​

53,157

IP Optical Networks

 

​

8,040

 

​

6,932

 

​

22,414

 

​

18,127

Total professional services revenue

 

​

29,068

 

​

25,388

 

​

78,708

 

​

71,284

Total service revenue

 

$

98,087

 

$

94,660

 

$

283,628

 

$

280,772

​

Revenue Contract Balances

The timing of revenue recognition, billings and cash collections results in billed accounts receivable; unbilled receivables, which are contract assets; and customer advances and deposits, which are contract liabilities, in the Company’s condensed consolidated balance sheets. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals or upon achievement of contractual milestones. Completion of services and billing may occur subsequent to revenue recognition, resulting in contract assets. The Company may receive advances or deposits from its customers before revenue is recognized, resulting in contract liabilities that are

27

Table of Contents

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

​

classified as deferred revenue. These assets and liabilities are reported in the Company’s condensed consolidated balance sheets on a contract-by-contract basis as of the end of each reporting period. Changes in the contract asset and liability balances during the nine months ended September 30, 2024 were not materially impacted by any factors other than billing and revenue recognition. Nearly all of the Company’s deferred revenue balance is related to services revenue, primarily customer support contracts. Unbilled receivables stem primarily from engagements where services have been performed; however, billing cannot occur until services are completed.

In some arrangements, the Company allows customers to pay for term-based software licenses and products over the term of the software license. The Company also sells SaaS-based software under subscription arrangements, with payment terms over the term of the SaaS agreement. Amounts recognized as revenue in excess of amounts billed are recorded as unbilled receivables. Unbilled receivables that are anticipated to be invoiced in the next twelve months are included in Accounts receivable on the Company’s condensed consolidated balance sheets. The changes in the Company’s accounts receivable, unbilled receivables and deferred revenue balances for the nine months ended September 30, 2024 were as follows (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Unbilled

​

Deferred

​

Deferred

​

​

Accounts

​

accounts

​

revenue

​

revenue

​

    

receivable

    

receivable

    

(current)

    

(long-term)

Balance at January 1, 2024

​

$

186,938

​

$

81,483

​

$

113,381

​

$

19,218

Increase (decrease), net

​

 

(12,435)

​

 

(6,803)

​

 

(17,620)

​

 

(2,467)

Balance at September 30, 2024

​

$

174,503

​

$

74,680

​

$

95,761

​

$

16,751

​

The Company recognized approximately $95 million of revenue in the nine months ended September 30, 2024 that was recorded as deferred revenue at December 31, 2023 and approximately $92 million of revenue in the nine months ended September 30, 2023 that was recorded as deferred revenue at December 31, 2022. Of the Company’s deferred revenue reported as long-term in its condensed consolidated balance sheet at September 30, 2024, the Company expects that approximately $3 million will be recognized as revenue in 2025, approximately $7 million will be recognized as revenue in 2026 and approximately $7 million will be recognized as revenue in 2027 and beyond.

All freight-related customer invoicing is recorded as revenue, while the shipping and handling costs that occur after control of the promised goods or services transfer to the customer are reported as fulfillment costs, a component of Cost of revenue - product in the Company’s condensed consolidated statements of operations.

Deferred Commissions Cost

Sales commissions earned by the Company’s employees are considered incremental and recoverable costs of obtaining a contract with a customer. These costs have been deferred on our condensed consolidated balance sheet and are being amortized over the expected life of the customer contract, which is generally five years. At both September 30, 2024 and December 31, 2023, the Company had $3 million of deferred sales commissions capitalized.

(13) OPERATING SEGMENT INFORMATION

The Company has two reportable segments, which are intended to align with the manner in which the business is managed: Cloud and Edge, and IP Optical Networks.

The Cloud and Edge segment provides secure and reliable software and hardware products, solutions and services for enabling Voice over Internet Protocol ("VoIP") communications, Voice over Long-Term Evolution ("VoLTE") and Voice Over 5G ("VoNR") communications, and Unified Communications and Collaboration ("UC&C") within service provider and enterprise networks and from the cloud. The Cloud and Edge products are increasingly software-centric and cloud-native for deployment on private, public or hybrid cloud infrastructures, in data centers, on enterprise premises

28

Table of Contents

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

​

and within service provider networks. Ribbon’s Cloud and Edge product portfolio consists primarily of its Session Border Controller ("SBC") products and its Network Transformation products.

The IP Optical Networks segment provides high-performance, secure solutions for IP networking and optical transport, supporting wireless networks including 5G, metro and edge aggregation, core networking, data center interconnect, legacy transformation and transport solutions for wholesale carriers. This portfolio is offered to service provider, enterprise and industry verticals with critical transport network infrastructures including utilities, government, defense, transportation, and education and research.

The Company has not provided segment asset information as such information is not provided to the CODM and accordingly, asset information is not used in assessing segment performance. Segment revenue and expenses included in the tables below represent direct revenue and expense attributable to each segment. Please see Note 4 for information regarding the allocation of goodwill between segments.

The CODM utilizes revenue and adjusted gross profit to measure and assess each segment’s performance. The Company calculates adjusted gross profit by excluding from cost of revenue: amortization of acquired technology, stock-based compensation, and may also exclude other items in future periods that the Company believes are not part of the Company’s core business. Adjusted gross profit is not a financial measure determined in accordance with U.S. GAAP, may not be comparable to similarly titled measures used by other companies, and should not be considered a substitute for gross profit or other results reported in accordance with U.S. GAAP. See below for a reconciliation of adjusted gross profit to gross profit which is the most directly comparable U.S. GAAP measure.

The tables below provide revenue, adjusted gross profit and depreciation expense by reportable segment for the three and nine months ended September 30, 2024 and 2023 (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three months ended

​

Nine months ended

​

​

September 30, 

​

September 30, 

​

September 30, 

​

September 30, 

​

    

2024

    

2023

    

2024

    

2023

Segment revenue:

​

​

​

​

​

​

​

​

​

​

​

​

Cloud and Edge

 

$

128,078

 

$

115,765

 

$

340,302

 

$

355,501

IP Optical Networks

 

​

82,160

 

​

87,396

 

​

242,220

 

​

244,437

Revenue

 

$

210,238

 

$

203,161

 

$

582,522

 

$

599,938

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three months ended

​

Nine months ended

​

​

September 30, 

​

September 30, 

​

September 30, 

​

September 30, 

​

    

2024

    

2023

    

2024

    

2023

Segment adjusted gross profit:

​

​

​

​

​

​

​

​

​

​

​

​

Cloud and Edge

 

$

86,661

 

$

78,455

 

$

226,726

 

$

231,729

IP Optical Networks

 

​

29,634

 

​

32,862

 

​

93,390

 

​

78,613

Total segment adjusted gross profit

 

​

116,295

 

​

111,317

 

​

320,116

 

​

310,342

Stock-based compensation expense

​

​

(355)

​

​

(657)

​

​

(1,271)

​

​

(1,982)

Amortization of acquired technology

 

​

(6,323)

 

​

(7,157)

 

​

(19,406)

 

​

(21,985)

Gross profit

 

$

109,617

 

$

103,503

 

$

299,439

 

$

286,375

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three months ended

​

Nine months ended

​

​

September 30, 

​

September 30, 

​

September 30, 

​

September 30, 

​

    

2024

    

2023

    

2024

    

2023

Segment depreciation expense:

​

​

​

​

​

​

​

​

​

​

​

​

Cloud and Edge

 

$

2,324

 

$

2,426

 

$

6,981

 

$

7,402

IP Optical Networks

 

​

1,037

 

​

1,118

 

​

3,150

 

​

3,201

Depreciation expense

 

$

3,361

 

$

3,544

 

$

10,131

 

$

10,603

​

29

Table of Contents

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

​

​

(14) MAJOR CUSTOMERS

The following customer contributed 10% or more of the Company’s revenue in the three and nine months ended September 30, 2024 and 2023:

​

​

​

​

​

​

​

​

​

​

​

​

​

Three months ended

​

Nine months ended

 

​

​

September 30, 

​

September 30, 

​

September 30, 

​

September 30, 

​

​

    

2024

    

2023

    

2024

    

2023

 

Verizon Communications Inc.

​

15

%

11

%

13

%

11

%

​

At September 30, 2024, Verizon Communications Inc. accounted for just over 10% of the Company’s accounts receivable balance. At December 31, 2023, no customer accounted for 10% or more of the Company’s accounts receivable balance. The Company performs ongoing credit evaluations of its customers and generally does not require collateral on accounts receivable. The Company maintains an allowance for doubtful accounts and such losses have historically been within management’s expectations.

(15) STOCK-BASED COMPENSATION PLANS

The Company grants stock-based compensation to employees, officers and non-employee directors, as well as consultants and advisors of the Company and its subsidiaries under its Amended and Restated 2019 Incentive Award Plan which provides for the award of stock options, stock appreciation rights, restricted stock awards ("RSAs"), performance-based stock awards, restricted stock units ("RSUs"), performance-based stock units ("PSUs") and other stock- or cash-based awards.

Executive Equity Arrangements

Inducement Awards

In connection with his appointment as President and Chief Executive Officer of Ribbon on March 16, 2020, the Company awarded Bruce McClelland sign-on equity grants, comprised of RSUs and a PSU grant with both market and service conditions. The market conditions surrounding the PSUs granted were not met by the expiration date of September 1, 2024 and therefore the associated shares have been cancelled.

Performance-Based Stock Grants

In addition to granting RSAs and RSUs to its executives and certain of its employees, the Company also grants PSUs to certain of its executives and certain other employees. Vesting periods for RSAs, RSUs, and PSUs granted range from one to three years. PSUs granted consist of 60% that have both performance and service conditions (the "Performance PSUs") and 40% that have both market and service conditions (the "Market PSUs"). Each Performance PSU is comprised of three consecutive fiscal year performance periods beginning in the year of grant, with one-third of the Performance PSUs attributable to each fiscal year performance period. The Market PSUs have one three-year performance period, beginning January 1 in the year of grant and ending on December 31, three years thereafter. The number of shares of common stock underlying the PSUs that can be earned will not exceed 200% of the Performance or Market PSUs. Shares subject to PSUs that fail to be earned will be forfeited.

​

30

Table of Contents

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

​

Restricted Stock Units

The activity related to the Company’s RSUs for the nine months ended September 30, 2024 was as follows:

​

​

​

​

​

​

​

​

    

​

    

Weighted

​

​

​

​

Average

​

​

​

​

Grant Date

​

​

Shares

​

Fair Value

Unvested balance at January 1, 2024

 

7,091,368

​

$

3.18

Granted

 

1,423,228

​

$

3.22

Vested

 

(3,444,670)

​

$

3.47

Forfeited

 

(326,985)

​

$

3.18

Unvested balance at September 30, 2024

 

4,742,941

​

$

2.99

​

The total grant date fair value of shares of restricted stock underlying RSUs that vested during the nine months ended September 30, 2024 was $11.9 million.

Performance-Based Stock Units

The activity related to the Company’s PSUs for the nine months ended September 30, 2024 was as follows:

​

​

​

​

​

​

​

​

    

​

    

Weighted

​

​

​

​

Average

​

​

​

​

Grant Date

​

​

Shares

​

Fair Value

Unvested balance at January 1, 2024

 

6,297,931

​

$

2.07

Granted

 

1,338,985

​

$

4.32

Vested

 

(288,672)

​

$

3.14

Forfeited

 

(4,035,835)

​

$

1.33

Unvested balance at September 30, 2024

 

3,312,409

​

$

3.79

​

The total grant date fair value of shares of restricted stock underlying PSUs that vested during the nine months ended September 30, 2024 was $0.9 million.

Stock-Based Compensation

The condensed consolidated statements of operations include stock-based compensation for the three and nine months ended September 30, 2024 and 2023 as follows (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three months ended

​

Nine months ended

​

​

September 30, 

​

September 30, 

​

September 30, 

​

September 30, 

​

    

2024

    

2023

    

2024

    

2023

Product cost of revenue

​

$

64

 

$

121

 

$

234

 

$

385

Service cost of revenue

 

​

291

 

​

536

 

​

1,037

 

​

1,597

Research and development

 

​

745

​

​

1,259

​

​

2,429

​

​

3,821

Sales and marketing

​

​

1,108

​

​

1,402

​

​

3,219

​

​

5,673

General and administrative

​

​

1,837

​

​

1,632

​

​

5,142

​

​

5,438

​

​

$

4,045

 

$

4,950

 

$

12,061

 

$

16,914

​

31

Table of Contents

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

​

At September 30, 2024, there was $15.1 million, net of expected forfeitures, of unrecognized stock-based compensation expense related to unvested RSUs and PSUs. This expense is expected to be recognized over a weighted average period of approximately one year.

(16) LEASES

The Company has operating leases for corporate offices and research and development facilities and has historically had finance leases for certain equipment. Operating leases are reported separately in the Company’s condensed consolidated balance sheets. Assets acquired under finance leases, if any, are included in Property and equipment, net, in the condensed consolidated balance sheets.

The Company determines if an arrangement is a lease at inception. A contract is determined to contain a lease component if the arrangement provides the Company with a right to control the use of an identified asset. Lease agreements may include lease and non-lease components. In such instances for all classes of underlying assets, the Company does not separate lease and non-lease components but rather, accounts for the entire arrangement under leasing guidance. Leases with an initial term of 12 months or less are not recorded on the balance sheet and lease expense for these leases is recognized on a straight-line basis over the lease term.

Right-of-use assets and lease liabilities are initially measured based on the present value of the future minimum fixed lease payments (i.e., fixed payments in the lease contract) over the lease term at the commencement date. As the Company’s existing leases do not have a readily determinable implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future minimum fixed lease payments. The Company calculates its incremental borrowing rate to reflect the interest rate that it would have to pay to borrow on a collateralized basis an amount equal to the lease payments in a similar economic environment over a similar term and considers its historical borrowing activities and market data from entities with comparable credit ratings in this determination. The measurement of the right-of-use asset also includes any lease payments made prior to the commencement date (excluding any lease incentives) and initial direct costs incurred. The Company assessed its right-of-use assets for impairment as of September 30, 2024 and December 31, 2023 and determined no impairment has occurred.

Lease terms may include options to extend or terminate the lease and the Company incorporates such options in the lease term when it has the unilateral right to make such an election and it is reasonably certain that the Company will exercise that option. In making this determination, the Company considers its prior renewal and termination history and planned usage of the assets under lease, incorporating expected market conditions.

For operating leases, lease expense for minimum fixed lease payments is recognized on a straight-line basis over the lease term. The expense for finance leases includes both interest and amortization expense components, with the interest component calculated based on the effective interest method and the amortization component calculated based on straight-line amortization of the right-of-use asset over the lease term. Lease contracts may contain variable lease costs, such as common area maintenance, utilities and tax reimbursements that vary over the term of the contract. Variable lease costs are not included in minimum fixed lease payments and as a result, are excluded from the measurement of the right-of-use assets and lease liabilities. The Company expenses all variable lease costs as incurred.

Certain leased facilities are being partially or fully vacated as part of the 2022 Restructuring Plan and for some of those facilities, the Company has no plans to enter into sublease agreements. Accordingly, the Company accelerated the amortization of those lease assets through the planned cease-use date of each facility, resulting in additional amortization expense $0.2 million and $0.8 million, respectively, in the three and nine months ended September 30, 2023. No such accelerated amortization was recorded in the three and nine months ended September 30, 2024. The Company did not record estimated future variable lease costs in the three and nine months ended September 30, 2024 or 2023 related to the 2022 Restructuring Plan.

32

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RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

​

All incremental accelerated amortization and accruals for estimated future variable costs are included in Restructuring and related expense in the Company’s condensed consolidated statements of operations. At September 30, 2024 and December 31, 2023, the Company had accruals of $1.2 million and $1.5 million, respectively, for all future anticipated variable lease costs related to these facilities. The Company may incur additional future expense if it is unable to sublease other locations included in the Facilities Initiative.

The Company leases its corporate offices and other facilities under operating leases, which expire at various times through 2033.

The Company’s right-of-use lease assets and lease liabilities at September 30, 2024 and December 31, 2023 were as follows (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

    

September 30, 

​

December 31, 

​

    

Classification

    

2024

    

2023

Assets:

​

  

 

​

  

 

​

  

Operating lease assets

​

Operating lease right-of-use assets

​

$

30,732

​

$

39,783

​

​

​

​

​

​

​

​

​

Liabilities:

​

  

​

 

  

​

 

  

Current Operating

​

Operating lease liabilities

​

$

10,644

​

$

15,739

Non-Current Operating

​

Operating lease liabilities, net of current

​

 

33,249

​

 

38,711

Total Operating lease liabilities

​

​

​

$

43,893

​

$

54,450

​

The components of lease expense for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

Three months ended

​

Nine months ended

​

​

September 30, 

​

September 30, 

​

September 30, 

​

September 30, 

​

​

2024

    

2023

    

2024

    

2023

Operating lease cost*

​

$

4,165

​

$

4,708

​

$

12,471

​

$

14,205

Short-term lease cost

​

 

3,362

​

 

3,454

​

 

10,216

​

 

10,544

Variable lease costs (costs excluded from minimum fixed lease payments)**

​

 

814

​

 

819

​

 

2,497

​

 

2,525

Sublease income

​

 

(209)

​

 

(282)

​

 

(686)

​

 

(1,105)

Net lease cost

​

$

8,132

​

$

8,699

​

$

24,498

​

$

26,169

*

No accelerated amortization was recorded in the three and nine months ended September 30, 2024. Operating lease costs for three and nine months ended September 30, 2023 included $0.2 million and $0.8 million, respectively, of accelerated amortization for certain assets partially or fully vacated with no intent or ability to sublease.

**

No variable lease costs were accrued in the three and nine months ended September 30, 2024 or 2023 for future estimated variable expenses related to certain assets partially or fully vacated with no intent or ability to sublease.

Cash flows related to the Company’s leases included in the measurement of operating lease liabilities were classified as operating cash flows and totaled $14.0 million and $14.3 million in the nine months ended September 30, 2024 and 2023, respectively.

33

Table of Contents

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

​

Other information related to the Company’s leases as of September 30, 2024 and December 31, 2023 was as follows:

​

​

​

​

​

​

​

​

​

September 30, 

​

December 31, 

​

​

    

2024

    

2023

 

Weighted average remaining lease term (years):

 

  

 

  

​

Operating leases

 

5.44

 

5.50

​

Weighted average discount rate:

 

  

​

  

​

Operating leases

 

7.20

%  

6.34

%

​

Future minimum fixed lease payments under noncancelable leases at September 30, 2024 were as follows (in thousands):

​

​

​

​

​

    

Operating

​

​

leases

Remainder of 2024

​

$

4,585

2025

​

 

11,118

2026

​

 

9,313

2027

​

 

7,987

2028

​

 

6,452

2029 and beyond

​

 

13,164

Total lease payments

​

 

52,619

Less: interest

​

 

(8,726)

Present value of lease liabilities

​

$

43,893

​

​

(17) INCOME TAXES

The Company recorded income tax provisions of $6.5 million and $11.5 million in the nine months ended September 30, 2024 and 2023, respectively. These amounts reflect the Company’s estimates of the effective rates expected to be applicable for the respective full years, adjusted for any discrete events, which are recorded in the period in which they occur. These estimates are reevaluated each quarter based on the Company’s estimated tax expense for the full fiscal year. The estimated effective tax rate includes the impact of valuation allowances in various jurisdictions. The Company intends to continue to maintain a valuation allowance on its deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of the respective allowances.

(18) RELATED PARTIES

The Company recognized revenue from its largest stockholder of $1.4 million and $1.3 million in the three months ended September 30, 2024 and 2023, respectively, and $4.4 million and $7.1 million in the nine months ended September 30, 2024 and 2023, respectively. Also, certain related party stockholders participated in the Private Placement (See Note 11).

(19) COMMITMENTS AND CONTINGENCIES

Liabilities for Royalty Payments to the IIA

Prior to the Company’s acquisition of ECI Telecom Group Ltd. ("ECI"), ECI had received research and development grants from the Office of the Innovation Authority of the Israeli Ministry of Economics (the "IIA"). The Company assumed ECI’s contract with the IIA, which requires the Company to pay royalties to the IIA on proceeds from the sale of products which the Israeli government has supported by way of research and development grants. The

34

Table of Contents

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

​

royalties for grants prior to 2017 were calculated at the rates of 1.3% to 5.0% of the aggregated proceeds from the sale of such products developed at certain of the Company’s R&D centers, up to an amount not exceeding 100% of such grants plus interest at LIBOR. Effective for grants approved in 2017 and subsequently, interest was calculated at the higher of LIBOR plus 1.5% to 2.75%. At September 30, 2024, the Company had $1.6 million of unpaid royalties accrued. The Company’s maximum possible future royalties commitment at September 30, 2024 was $19.8 million, including interest of $1.2 million, is based upon estimates of future product sales and the grants received from the IIA not yet repaid.

Litigation

The Company is often a party to disputes and legal proceedings that it considers routine and incidental to its business, including those described below. The Company believes that it has meritorious defenses to the allegations made in the pending cases and intends to vigorously defend these lawsuits; however, the Company is currently unable to forecast the ultimate outcome of these or similar matters. Since it is difficult to predict the outcome of legal proceedings, it is possible that the ultimate outcomes could materially and adversely affect the Company’s business, financial position, results of operations or cash flows. Accordingly, with respect to these proceedings, the Company is currently unable to reasonably estimate the possible loss or range of possible loss.

Miller Complaint. On November 8, 2018, Ron Miller, a purported stockholder of the Company, filed a Class Action Complaint (the "Miller Complaint") in the United States District Court for the District of Massachusetts (the "Massachusetts District Court") against the Company and three of its former officers (collectively, the "Defendants"), claiming to represent a class of purchasers of Sonus common stock during the period from January 8, 2015 through March 24, 2015 and alleging violations of the federal securities laws. Similar to a previous complaint entitled Sousa et al. vs. Sonus Networks, Inc. et al., which was dismissed with prejudice by an order dated June 6, 2017, the Miller Complaint claims that the Defendants made misleading forward-looking statements concerning Sonus’ expected fiscal first quarter of 2015 financial performance, which statements were also the subject of an August 7, 2018 Securities and Exchange Commission Cease and Desist Order, whose findings the Company neither admitted nor denied. The Miller plaintiffs are seeking monetary damages.

After the Miller Complaint was filed, several parties filed and briefed motions seeking to be selected by the Massachusetts District Court to serve as a Lead Plaintiff in the action. On June 21, 2019, the Massachusetts District Court appointed a group as Lead Plaintiffs and the Lead Plaintiffs filed an amended complaint on July 19, 2019. On August 30, 2019, the Defendants filed a motion to dismiss the Miller Complaint and, on October 4, 2019, the Lead Plaintiffs filed an opposition to the motion to dismiss. There was an oral argument on the motion to dismiss on February 12, 2020, and on October 20, 2022 the court denied the motion to dismiss. In June 2023, the Defendants agreed to a settlement in principle with the named plaintiffs, and final approval of the settlement was provided by the court on April 24, 2024. The settlement provided a release of all claims asserted in the litigation to all Defendants, who continue to deny liability. The $4.5 million settlement amount was funded by the provider of the Company’s Directors and Officers liability insurance policy.

​

35

Table of Contents

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

​

Charter Complaint. On September 19, 2022, Charter Communications Operating, LLC (“Charter”) filed two complaints against two of our subsidiaries (Sonus Networks, Inc. and Ribbon Communications Operating Company, Inc.) alleging breach of contract with respect to indemnification obligations purportedly owed to Charter in connection with Charter’s legal dispute with Sprint Communications Company L.P., which was settled by Charter in March 2022. One complaint was filed in the Supreme Court of the State of New York, in New York County; the second complaint was filed by Charter as well as co-plaintiffs Charter Communications Holding Company, LLC and Bright House Networks, LLC, in the Superior Court of the State of Delaware in and for New Castle County. In both complaints, Charter is seeking monetary damages. The Company filed its answer to the first complaint file in New York on December 7, 2022 and to the second complaint filed in Delaware on January 9, 2023. Discovery is on-going and the court in the Delaware complaint has set a new trial date of June 2025.

WideOpenWest Complaint. On August 9, 2023, WideOpenWest, Inc. and WideOpenWest Finance, LLC (collectively, “WOW”) filed a complaint against Ribbon alleging breach of contract with respect to indemnification obligations purportedly owed to WOW in connection with WOW’s legal dispute with Sprint Communications Company L.P., which was settled by WOW in the second quarter of 2023. The complaint was filed in the 429th Judicial District of the District Court of the State of Texas, in Collin County, Texas and has since been transferred to the 493rd Judicial District Court in Collin County. In the complaint, WOW is seeking monetary damages. The Company filed its answer to the complaint on October 5, 2023. On October 14, 2024, the Company and WOW agreed to settle this matter. In connection with the settlement, the Company will pay WOW a total of $5.0 million, with $2.0 million paid at the time of settlement and the remaining $3.0 million paid over the next 18-months in equal quarterly installments.

​

​

​

36

Table of Contents

Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of the financial condition and results of operations of Ribbon Communications Inc. should be read in conjunction with the condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the audited financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the U.S. Securities and Exchange Commission on February 28, 2024.

Overview

We are a leading global provider of communications technology to service providers and enterprises. We provide a broad range of software and high-performance hardware products, network solutions, and services that enable the secure delivery of data and voice communications, and high-bandwidth networking and connectivity for residential consumers and for small, medium, and large enterprises and industry verticals such as finance, education, government, utilities, and transportation. Our mission is to create a recognized global technology leader providing cloud-centric solutions that enable the secure exchange of information, with unparalleled scale, performance and elasticity. We are headquartered in Plano, Texas, and have a global presence with research and development or sales and support locations in over thirty countries around the world.

Key Trends and Economic Factors Affecting Ribbon

Supplier Disruptions. Ongoing uncertainty in the global economy due to inflation, the wars in Israel and Ukraine, national security concerns and other factors, continue to disrupt various manufacturing, commodity and financial markets, increase volatility, and impede global supply chains. Our ability to deliver our solutions as agreed upon with our customers depends in part on the ability of our global contract manufacturers, vendors, licensors and other business partners to deliver products or perform services we have procured from them.

Continued uncertain global economic conditions may cause our customers to restrict spending or delay purchases for an indeterminate period of time and consequently cause our revenues to decline. Further, such factors may negatively impact our operating costs resulting in a reduction in net income. The degree to which the ongoing wars in Israel and Ukraine and the inflationary and high interest rate environment impacts our future business, financial position and results of operations will depend on developments beyond our control.

The Ongoing Wars in Israel and Ukraine. The uncertainty resulting from the wars in Israel and Ukraine and the expansion of, and the threat of continued expansion of, one or both of these wars could result in some of our customers delaying purchases from us. As a result of safety concerns, we may close our offices in Israel from time to time. Although our employees in these offices have the ability to work remotely and business continuity plans are in place to address any medium- or long-term disruptions that could result from the closure of these offices, the office closures and general effects of employees operating in a region at war could have a negative impact on our operations. Further, a number of our employees in Israel are members of the military reserves and subject to immediate call-up in response to the war in Israel. Following the terrorist attacks in Israel in October 2023, a number of our employees have been activated for military duty and we expect that additional employees will also be activated if the war in Israel continues. While we have business continuity plans in place to address the military call-ups, it could affect the timing of projects in the short-term as the work is shifted to other team members both inside and outside of Israel.

Further, the U.S. and other European countries have imposed sanctions and trade restrictions against Russia in connection with the war in Ukraine. These sanctions and restrictions currently prohibit our ability to sell hardware products. The sanctions continue to evolve and further changes in the current sanctions or trade restrictions could further limit our ability to sell products and services to customers in Russia and, our ability to collect on outstanding accounts receivable from such customers. If we are further limited in our ability to sell products and services to Russia and other countries for an extended period, it could have a material impact on our financial results.

37

Table of Contents

Inflation and Interest Rates. We continue to see near-term impacts on our business due to inflation, including ongoing global price pressures driving up energy prices, component costs, freight premiums, and other operating costs above normal rates. Although headline inflation in the United States and Europe appears to be decreasing, core inflation (excluding food and energy prices) remains elevated and is a source of continued cost pressure on businesses and households. Interest rates have increased significantly as central banks in developed countries attempt to subdue inflation while government deficits and debt remain at high levels in many global markets. However, in September 2024, the Federal Reserve’s Federal Open Market Committee lowered the target range for the federal funds rate by 0.5% to 4.75% to 5%, noting that it has gained greater confidence that inflation is moving sustainability toward the Committee’s two percent objective. Yet, the economic outlook remains uncertain, and the implications of higher government deficits and debt, tighter monetary policy, and potentially higher long-term interest rates may drive a higher cost of capital for our business.

Presentation

Unless otherwise noted, all financial amounts, excluding tabular information, in this Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") are rounded to the nearest million dollar amount, and all percentages, excluding tabular information, are rounded to the nearest percentage point.

Operating Segments

Our Chief Operating Decision Maker assesses our performance based on the performance of two separate organizations within Ribbon: the Cloud and Edge operating segment ("Cloud and Edge") and the IP Optical Networks operating segment ("IP Optical Networks"). For additional details regarding our operating segments, see Note 13 - Operating Segment Information to our condensed consolidated financial statements.

Financial Overview

Financial Results

We reported a loss from operations of $0.9 million and income from operations of $0.9 million for the three months ended September 30, 2024 and 2023, respectively. We reported a loss from operations of $16.3 million and $41.0 million for the nine months ended September 30, 2024 and 2023, respectively.

Our revenue was $210.2 million and $203.2 million in the three months ended September 30, 2024 and 2023, respectively. Our gross profit and gross margin were $109.6 million and 52.1%, respectively, in the three months ended September 30, 2024, and $103.5 million and 50.9%, respectively, in the three months ended September 30, 2023. The higher revenue in the three months ended September 30, 2024 compared to 2023 is due to $12.3 million of higher Cloud and Edge sales, primarily to U.S. service providers and Federal agencies, partially offset by $5.2 million of lower IP Optical Networks sales led by lower sales into Eastern Europe and India, which were partially offset by growth in the U.S. rural market. Our revenue was $582.5 million and $599.9 million in the nine months ended September 30, 2024 and 2023, respectively. Our gross profit and gross margin were $299.4 million and 51.4%, respectively, in the nine months ended September 30, 2024, and $286.4 million and 47.7%, respectively, in the nine months ended September 30, 2023. The lower revenue in the nine months ended September 30, 2024 compared to 2023 is due to $15.2 million of lower Cloud and Edge sales to both U.S. service providers and enterprise customers overall, partially offset by higher Federal agency sales, and $2.2 million of lower IP Optical Networks sales.

Revenue from our Cloud and Edge segment was $128.1 million and $115.8 million in the three months ended September 30, 2024 and 2023, respectively. Gross profit and gross margin for this segment were $84.3 million and 65.9%, respectively, in the three months ended September 30, 2024, and $74.7 million and 64.6%, respectively, in the three months ended September 30, 2023. Revenue from our Cloud and Edge segment was $340.3 million and $355.5 million in the nine months ended September 30, 2024 and 2023, respectively. Gross profit and gross margin for this segment were $219.2 million and 64.4%, respectively, in the nine months ended September 30, 2024, and $220.1 million and 61.9%, respectively, in the nine months ended September 30, 2023.

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Table of Contents

Revenue from our IP Optical Networks segment was $82.2 million and $87.4 million in the three months ended September 30, 2024 and 2023, respectively. Gross profit and gross margin for this segment were $25.3 million and 30.8%, respectively, in the three months ended September 30, 2024, and $28.8 million and 32.9%, respectively, in the three months ended September 30, 2023. Revenue from our IP Optical Networks segment was $242.2 million and $244.4 million in the nine months ended September 30, 2024 and 2023, respectively. Gross profit and gross margin for this segment were $80.2 million and 33.1%, respectively, in the nine months ended September 30, 2024, and $66.2 million and 27.1%, respectively, in the nine months ended September 30, 2023.

Our operating expenses were $110.5 million and $102.6 million in the three months ended September 30, 2024 and 2023, respectively, and $315.8 million and $327.3 million in the nine months ended September 30, 2024 and 2023, respectively. The increased operating expenses in the three months ended September 30, 2024 compared to 2023 are primarily related to a $5.0 million legal settlement and associated legal fees related to certain specific legal matters. Operating expenses for the three months ended September 30, 2024 included $6.5 million of amortization of acquired intangible assets, and $3.8 million of restructuring and related expense. Operating expenses for the three months ended September 30, 2023 included $7.2 million of amortization of acquired intangible assets, $0.8 million of acquisition-, disposal- and integration-related expense, and $2.7 million of restructuring and related expense. The decreased operating expenses in the nine months ended September 30, 2024 compared to 2023 are primarily related to lower restructuring and related expense, acquisition-, disposal- and integration-related expense and amortization of acquired intangible assets. Operating expenses for the nine months ended September 30, 2024 included $19.7 million of amortization of acquired intangible assets, and $8.8 million of restructuring and related expense. Operating expenses for the nine months ended September 30, 2023 included $21.7 million of amortization of acquired intangible assets, $3.0 million of acquisition-, disposal- and integration-related expense, and $13.9 million of restructuring and related expense.

We recorded stock-based compensation expense of $4.0 million and $5.0 million in the three months ended September 30, 2024 and 2023, respectively, and $12.1 million and $16.9 million in the nine months ended September 30, 2024 and 2023, respectively. These amounts are included as components of both Cost of revenue and Operating expenses in our condensed consolidated statements of operations.

See "Results of Operations" in this MD&A for a discussion of the changes in our revenue and expenses for three and nine months ended September 30, 2024 compared to three and nine months ended September 30, 2023.

Restructuring and Cost Reduction Initiatives

Our CODM approved workforce reductions in 2024 for certain of our operating locations to correspond with the current sales levels in those areas. We recorded $2.2 million in the three months ended September 30, 2024 related to these actions.

In February 2023, our Board of Directors approved a strategic restructuring program (the "2023 Restructuring Plan") to streamline our operations in order to support our investment in critical growth areas. The 2023 Restructuring Plan includes, among other things, charges related to a workforce reduction. Any potential positions eliminated in countries outside the United States are subject to local law and consultation requirements. In connection with the 2023 Restructuring Plan, we recorded restructuring and related expense for severance related costs of $0.1 million and $2.1 million in the three and nine months ended September 30, 2024, respectively, and $0.9 million and $9.4 million in three and nine months ended September 30, 2023, respectively. We anticipate that we will record nominal future expense for severance in connection with the 2023 Restructuring Plan.

In February 2022, our Board of Directors approved a strategic restructuring program (the "2022 Restructuring Plan") to streamline our operations in order to support our investment in critical growth areas. The 2022 Restructuring Plan includes, among other things, charges related to a consolidation of facilities and a workforce reduction. Any positions eliminated in countries outside the United States are subject to local law and consultation requirements. In connection with the 2022 Restructuring Plan, we recorded restructuring and related expense of $1.5 million and $4.5 million in the three and nine months ended September 30, 2024, respectively, for variable and other facilities-related costs, and we recorded restructuring and related expense of $1.9 million and $4.6 million in the three and nine months ended September 30, 2023, respectively. The amount for the three months ended September 30, 2023 was

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Table of Contents

comprised of $1.7 million for variable and other facilities-related costs and $0.2 million for accelerated amortization of lease assets no longer being used with no ability or intent to sublease. The amount for the nine months ended September 30, 2023 was comprised of $3.8 million for variable and other facilities-related costs and $0.8 million for accelerated amortization of lease assets no longer being used with no ability or intent to sublease. We anticipate that we will record approximately $2 million of expense in the remainder of 2024 related to the 2022 Restructuring Plan.

For facilities that are part of a restructuring plan, for which we have no intent or ability to enter into a sublease, we recognize accelerated rent amortization over the period from the date that we commence the plan to fully or partially vacate a facility through the final vacate date. We did not record accelerated rent amortization in the three and nine months ended September 30, 2024. We recorded $0.2 million and $0.8 million for accelerated rent amortization in the three and nine months ended September 30, 2023, respectively. We continue to evaluate our properties included in our restructuring plans for accelerated amortization and/or right-of-use asset impairment. We may incur additional future expense if we are unable to sublease other locations included in these initiatives.

Critical Accounting Policies and Estimates

This MD&A is based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates and judgments on historical experience, knowledge of current conditions and beliefs of what could occur in the future given available information. We consider the following accounting policies to be both those most important to the portrayal of our financial condition and those that require the most subjective judgment. The significant accounting policies that we believe are the most critical include revenue recognition, the valuation of inventory, warranty accruals, loss contingencies and reserves, stock-based compensation, the Preferred Stock and Warrants, business combinations, goodwill and intangible assets, accounting for leases, and accounting for income taxes. If actual results differ significantly from management’s estimates and projections, there could be a material effect on our condensed consolidated financial statements. There were no significant changes to our critical accounting policies from January 1, 2024 through September 30, 2024. For a further discussion of our critical accounting policies and estimates, please refer to our Annual Report on Form 10-K for the year ended December 31, 2023.

Results of Operations

Three and nine months ended September 30, 2024 and 2023

Revenue. Revenue for the three and nine months ended September 30, 2024 and 2023 was as follows (in thousands, except percentages):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

​

    

​

    

Increase

 

​

​

Three months ended

​

from prior year

​

​

​

September 30, 

​

September 30, 

​

​

​

​

​

​

​

    

2024

    

2023

    

$

    

%  

 

Product

​

$

112,151

​

$

108,501

​

$

3,650

​

3.4

%

Service

​

 

98,087

​

 

94,660

​

 

3,427

​

3.6

%

Total revenue

​

$

210,238

​

$

203,161

​

$

7,077

​

3.5

%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

​

    

​

    

Increase/(decrease)

 

​

​

Nine months ended

​

from prior year

​

​

​

September 30, 

​

September 30, 

​

​

​

​

​

​

​

​

2024

    

2023

    

$

    

%  

 

Product

​

$

298,894

​

$

319,166

​

$

(20,272)

​

(6.4)

%

Service

 

​

283,628

 

​

280,772

​

 

2,856

​

1.0

%

Total revenue

​

$

582,522

​

$

599,938

​

$

(17,416)

​

(2.9)

%

​

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Table of Contents

Segment revenue for the three and nine months ended September 30, 2024 and 2023 was as follows (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

Three months ended September 30, 2024

    

Three months ended September 30, 2023

​

​

Cloud and

​

IP Optical

​

​

​

​

Cloud and

​

IP Optical

​

​

​

​

    

Edge

    

Networks

    

Total

    

Edge

    

Networks

    

Total

Product

​

$

53,455

​

$

58,696

​

$

112,151

​

$

42,305

​

$

66,196

​

$

108,501

Service

 

​

74,623

 

​

23,464

 

​

98,087

 

​

73,460

 

​

21,200

 

​

94,660

Total revenue

​

$

128,078

​

$

82,160

​

$

210,238

​

$

115,765

​

$

87,396

​

$

203,161

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

Nine months ended September 30, 2024

    

Nine months ended September 30, 2023

​

​

Cloud and

​

IP Optical

​

​

​

​

Cloud and

​

IP Optical

​

​

​

​

    

Edge

    

Networks

    

Total

    

Edge

    

Networks

    

Total

Product

​

$

124,554

​

$

174,340

​

$

298,894

​

$

137,496

​

$

181,670

​

$

319,166

Service

 

​

215,748

 

​

67,880

 

​

283,628

 

​

218,005

 

​

62,767

 

​

280,772

Total revenue

​

$

340,302

​

$

242,220

​

$

582,522

​

$

355,501

​

$

244,437

​

$

599,938

​

The increase in our product revenue in the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was the result of $11 million of higher sales of our Cloud and Edge products, partially offset by $7 million of lower sales of our IP Optical Networks products. The decrease in our product revenue in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was due to $13 million of lower sales of our Cloud and Edge products and $7 million of lower sales of our IP Optical Networks products. The increase in revenue from the sale of Cloud and Edge products in the three months ended September 30, 2024 was attributable to higher sales to U.S. service providers and Federal agencies. The decrease in revenue from the sale of IP Optical Networks products in the three months ended September 30, 2024 was attributable to lower sales into Eastern Europe and India, partially offset by higher sales in the U.S. rural market. The decrease in revenue from the sale of Cloud and Edge products in the nine months ended September 30, 2024 was attributable to lower sales to both U.S. service providers and enterprise customers overall, partially offset by higher sales to Federal agencies for network transformation projects. The decrease in revenue from the sale of IP Optical Networks products in the nine months ended September 30, 2024 was attributable to lower sales into India, partially offset by higher sales in Europe, the Middle East and Africa (“the EMEA region”).

Revenue from sales to enterprise customers was 36% and 30% of our product revenue in the three months ended September 30, 2024 and 2023, respectively. These sales were made through both our direct sales team and indirect sales channel partners. Revenue from sales to enterprise customers was 39% and 30% in the nine months ended September 30, 2024 and 2023, respectively. The increase in enterprise sales reflects stronger sales of our products to customers in the Federal agencies.

Revenue from indirect sales through our channel partner program was 34% and 33% of our product revenue in the three months ended September 30, 2024 and 2023, respectively, and 38% and 34% of our product revenue in the nine months ended September 30, 2024 and 2023, respectively. The increase in channel sales in the nine months ended September 30, 2024 reflects stronger IP Optical Networks deployments through systems integrators as well as sell-thru our service provider channel partners in Eastern Europe.

The timing of the completion of customer projects and revenue recognition criteria satisfaction may cause our product revenue to fluctuate from one period to the next.

Service revenue is primarily comprised of hardware and software maintenance and support (“maintenance revenue”) and network design, installation and other professional services (“professional services revenue”).

​

41

Table of Contents

Service revenue for the three and nine months ended September 30, 2024 and 2023 was comprised of the following (in thousands, except percentages):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

     

​

​

​

​

​

     

Increase/(decrease)

​

​

​

Three months ended

​

from prior year

​

​

​

September 30, 

​

September 30, 

​

​

​

​

​

 

​

​

2024

     

2023

     

$

     

%

 

Maintenance

​

$

69,019

​

$

69,272

​

$

(253)

​

(0.4)

%

Professional services

​

 

29,068

​

 

25,388

​

 

3,680

​

14.5

%

​

​

$

98,087

​

$

94,660

​

$

3,427

​

3.6

%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

     

​

​

​

​

​

     

Increase/(decrease)

 

​

​

Nine months ended

​

from prior year

 

​

​

September 30, 

​

September 30, 

​

​

​

​

​

 

​

​

2024

     

2023

     

$

     

%

 

Maintenance

​

$

204,920

​

$

209,488

​

$

(4,568)

​

(2.2)

%

Professional services

​

 

78,708

​

 

71,284

​

 

7,424

​

10.4

%

​

​

$

283,628

​

$

280,772

​

$

2,856

​

1.0

%

​

Segment service revenue for the three and nine months ended September 30, 2024 and 2023 was comprised of the following (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

Three months ended September 30, 2024

    

Three months ended September 30, 2023

​

​

Cloud and

​

IP Optical

​

​

​

​

Cloud and

​

IP Optical

​

​

​

​

​

Edge

    

Networks

    

Total

    

Edge

    

Networks

    

Total

Maintenance

​

$

53,595

​

$

15,424

​

$

69,019

​

$

55,004

​

$

14,268

​

$

69,272

Professional services

​

 

21,028

​

 

8,040

​

 

29,068

​

 

18,456

​

 

6,932

​

 

25,388

Total service revenue

​

$

74,623

​

$

23,464

​

$

98,087

​

$

73,460

​

$

21,200

​

$

94,660

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

Nine months ended September 30, 2024

    

Nine months ended September 30, 2023

​

​

Cloud and

​

IP Optical

​

​

​

​

Cloud and

​

IP Optical

​

​

​

​

​

Edge

    

Networks

    

Total

    

Edge

    

Networks

    

Total

Maintenance

​

$

159,454

​

$

45,466

​

$

204,920

​

$

164,848

​

$

44,640

​

$

209,488

Professional services

​

 

56,294

​

 

22,414

​

 

78,708

​

 

53,157

​

 

18,127

​

 

71,284

Total service revenue

​

$

215,748

​

$

67,880

​

$

283,628

​

$

218,005

​

$

62,767

​

$

280,772

​

Maintenance revenue was lower in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to modestly lower renewal rates from decommissioning some older legacy equipment with several Cloud & Edge customers.

Professional services revenue was higher in the three and nine months ended September 30, 2024 compared to the same periods in 2023 primarily due to increased sales of Cloud and Edge services to U.S. service providers and a U.S. Federal agency for voice modernization projects and growing sales of IP Optical Networks services in the EMEA region.

The following customer contributed 10% or more of our revenue in the three and nine months ended September 30, 2024 and 2023:

​

​

​

​

​

​

​

​

​

​

​

    

Three months ended

 

Nine months ended

 

​

​

September 30, 

​

September 30, 

​

September 30, 

​

September 30, 

​

Customer

    

2024

    

2023

 

2024

    

2023

 

Verizon Communications Inc.

​

15

%  

11

%

13

%  

11

%

​

Revenue from customers domiciled outside the United States was 48% and 58% in the three months ended September 30, 2024 and 2023, respectively, and 55% of revenue in both the nine months ended September 30, 2024 and 2023. U.S. revenue is increasing due to higher sales into the U.S. market from both the Cloud and Edge and IP Optical

42

Table of Contents

Networks segments. Due to the timing of project completions, we expect that the domestic and international components as a percentage of revenue may fluctuate from quarter to quarter and year to year.

Our deferred product revenue was $13 million and $17 million at September 30, 2024 and December 31, 2023, respectively. Our deferred service revenue was $100 million and $116 million at September 30, 2024 and December 31, 2023, respectively. Our deferred revenue balance may fluctuate as a result of the timing of revenue recognition, customer payments, maintenance contract renewals, contractual billing rights and maintenance revenue deferrals included in multiple element arrangements.

We expect that our total revenue in 2024 will increase modestly compared to our revenue in 2023 due to growth in the Cloud & Edge segment, particularly with the increased purchases from Verizon as part of a voice modernization project, as well as increased sales to Federal agencies, offset by lower revenue from our IP Optical segment. From a regional perspective, we anticipate continued IP Optical Networks revenue growth in 2024 from North America, and EMEA, offset by lower revenue in Eastern Europe due to additional trade restrictions. In the Cloud & Edge segment, we expect continued revenue growth from enterprise customers, including U.S. Federal agencies, as well as higher U.S. service provider spending.

Cost of Revenue/Gross Margin. Our cost of revenue consists primarily of amounts paid to third-party manufacturers for purchased materials and services, royalties, amortization of acquired technology, inventory valuation adjustments, warranty costs, and manufacturing and services personnel and related costs. Our cost of revenue, gross profit and gross margin for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands, except percentages):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

​

​

    

​

​

    

Increase/(decrease)

 

​

    

Three months ended

​

from prior year

​

​

​

September 30, 

    

September 30, 

​

​

​

    

​

 

​

    

2024

​

2023

    

$

    

%  

​

Cost of revenue:

​

​

​

​

​

​

​

​

​

​

​

 

Product

​

$

59,405

​

$

59,436

​

​

(31)

​

(0.1)

%

Service

 

​

34,893

 

​

33,065

​

 

1,828

​

5.5

%

Amortization of acquired technology

 

​

6,323

 

​

7,157

​

 

(834)

​

(11.7)

%

Total cost of revenue

​

$

100,621

​

$

99,658

​

 

963

​

1.0

%

​

​

​

​

​

​

​

​

​

​

​

​

​

Gross profit

​

$

109,617

​

$

103,503

​

$

6,114

​

5.9

%

Gross margin

​

​

52.1

%

​

50.9

%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

​

​

​

​

​

    

Increase/(decrease)

 

​

    

Nine months ended

​

from prior year

​

​

​

September 30, 

    

September 30, 

​

​

​

    

​

​

​

    

2024

​

2023

    

$

    

%  

 

Cost of revenue:

​

  

​

​

  

​

​

  

​

​

  

 

Product

​

$

160,044

​

$

189,426

​

​

(29,382)

​

(15.5)

%

Service

​

​

103,633

​

​

102,152

​

​

1,481

​

1.4

%

Amortization of acquired technology

 

​

19,406

 

​

21,985

 

​

(2,579)

 

(11.7)

%

Total cost of revenue

​

$

283,083

​

$

313,563

 

​

(30,480)

 

(9.7)

%

​

​

​

​

​

​

​

​

​

​

​

​

​

Gross profit

​

$

299,439

​

$

286,375

​

$

13,064

 

4.6

%

Gross margin

​

​

51.4

%

​

47.7

%

​

​

​

​

​

​

43

Table of Contents

Our segment cost of revenue, gross profit and gross margin for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands, except percentages):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

Three months ended September 30, 2024

    

Three months ended September 30, 2023

 

​

​

Cloud and

    

IP Optical

    

​

​

​

Cloud and

    

IP Optical

    

​

​

​

​

​

Edge

​

Networks

​

Total

​

Edge

​

Networks

​

Total

 

Product

​

$

18,672

​

$

40,733

​

$

59,405

​

$

15,222

​

$

44,214

​

$

59,436

 

Service

 

​

23,031

 

​

11,862

 

​

34,893

 

​

22,495

 

​

10,570

 

​

33,065

​

Amortization of acquired technology

 

​

2,026

 

​

4,297

 

​

6,323

 

​

3,317

 

​

3,840

 

​

7,157

​

Total cost of revenue

​

$

43,729

​

$

56,892

​

$

100,621

​

$

41,034

​

$

58,624

​

$

99,658

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Gross profit

​

$

84,349

​

$

25,268

​

$

109,617

​

$

74,731

​

$

28,772

​

$

103,503

​

Gross margin

​

 

65.9

%  

 

30.8

%  

 

52.1

%  

 

64.6

%  

 

32.9

%  

 

50.9

%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

Nine months ended September 30, 2024

    

Nine months ended September 30, 2023

 

​

​

Cloud and

    

IP Optical

    

​

​

​

Cloud and

    

IP Optical

    

​

​

​

​

​

Edge

​

Networks

​

Total

​

Edge

​

Networks

​

Total

 

Product

​

$

45,854

​

$

114,190

​

$

160,044

​

$

55,498

​

$

133,928

​

$

189,426

 

Service

 

​

68,740

​

​

34,893

 

​

103,633

 

​

69,423

 

​

32,729

 

​

102,152

​

Amortization of acquired technology

 

​

6,488

 

​

12,918

​

​

19,406

​

​

10,442

 

​

11,543

 

​

21,985

​

Total cost of revenue

​

$

121,082

​

$

162,001

​

$

283,083

​

$

135,363

​

$

178,200

​

$

313,563

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Gross profit

​

$

219,220

​

$

80,219

​

$

299,439

​

$

220,138

​

$

66,237

​

$

286,375

​

Gross margin

​

 

64.4

%  

 

33.1

%  

 

51.4

%  

 

61.9

%  

 

27.1

%  

 

47.7

%

​

Our gross margin was higher with a 1% increase overall in the three months ended September 30, 2024 compared to the three months ended September 30, 2023, due to a 1% increase in our Cloud & Edge segment, partially offset by a 2% decrease in our IP Optical Networks segment. Our gross margin increased 4% in the nine months ended September 30, 2024 compared to the same period in 2023 due to a 6% increase in our IP Optical Networks segment and a 3% increase in our Cloud & Edge segment. The higher margin in the nine months ended September 30, 2024 in our IP Optical Networks segment was primarily attributable to favorable customer and product mix along with lower material and labor costs. Our Cloud and Edge segment’s gross margin for the nine months ended September 30, 2024 increased primarily due to favorable product mix and lower amortization of acquired technology costs.

We expect gross margin in our IP Optical Networks segment to increase slightly in the fourth quarter of 2024. We expect our overall corporate gross margin in 2024 to be slightly higher compared to 2023 due to increased revenue from our Cloud & Edge segment and its higher margins due to the higher software content in its products, along with slightly higher margins from our IP Optical Networks segment due to favorable customer and product mix.

Research and Development. R&D expenses consist primarily of salaries and related personnel expenses and prototype costs for the design, development, testing, and enhancement of our products. R&D expenses for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands, except percentages):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Decrease

 

​

​

September 30, 

​

September 30, 

​

from prior year

 

​

    

2024

    

2023

    

$

    

%  

 

Three months ended

​

$

45,645

​

$

46,229

​

$

(584)

​

(1.3)

%

Nine months ended

​

$

134,897

​

$

145,309

​

$

(10,412)

​

(7.2)

%

​

The decrease in our R&D expenses in the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023 was attributable to lower expenses in both of our segments. However, our IP Optical Networks segment contributed the most to the improvement by decreasing costs by under $1 million and $8 million in the three and nine months ended September 30, 2024, respectively. The reduced expenses are a combination

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of lower employee headcount and outside subcontractors resulting from the cost savings implemented in the 2023 Restructuring Plan.

Our IP Optical Networks R&D investment is focused on significantly expanding our portfolio of IP Routing solutions, adding additional features and capabilities to our Optical Transport portfolio, and supporting features in our next generation SDN management and orchestration platform.

Some aspects of our R&D efforts require significant short-term expenditures, the timing of which may cause variability in our expenses. We believe that rapid technological innovation is critical to our long-term success, and we are tailoring our investments to meet the requirements of our customers and market. However, we do expect that 2024 R&D expenses will be lower than 2023 overall, with reduced investment in both segments in areas such as sustaining engineering, as well as a full year benefit from the cost savings implemented in the 2023 Restructuring Plan.

Sales and Marketing Expenses. Sales and marketing expenses consist primarily of salaries and related personnel costs, commissions, travel and entertainment expenses, promotions, customer trial and evaluations inventory and other marketing and sales support expenses. Sales and marketing expenses for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands, except percentages):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Increase/(decrease)

 

​

​

September 30, 

​

September 30, 

​

from prior year 

 

​

    

2024

    

2023

    

$

    

%

 

Three months ended

​

$

33,060

​

$

32,795

​

$

265

​

0.8

%

Nine months ended

​

$

100,760

​

$

102,099

​

$

(1,339)

​

(1.3)

%

​

The decrease in sales and marketing expenses in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 is primarily a result of the global sales organization realignment that reduced management layers, as well as reduced investment in under-performing regions, with essentially equal reductions in both of our operating segments.

We expect our sales and marketing expenses in 2024 to be similar to 2023 as we continue to benefit from the realigned global sales structure.

General and Administrative Expenses. General and administrative expenses consist primarily of salaries and related personnel costs for executive and administrative personnel, and audit, legal and other professional fees. General and administrative expenses for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands, except percentages):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Increase

 

​

​

September 30, 

​

September 30, 

​

from prior year

​

​

    

2024

    

2023

    

$

    

%  

​

Three months ended

​

$

21,588

​

$

12,885

​

$

8,703

​

67.5

%

Nine months ended

​

$

51,680

​

$

41,276

​

$

10,404

​

25.2

%

​

The increase in general and administrative expenses in the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023 was primarily attributable to a $5.0 million legal settlement and associated legal fees related to certain specific legal matters, as well as increased employee costs.

We believe that our general and administrative expenses in 2024 will increase compared to our 2023 levels primarily due to higher legal fees, settlement expense, employee costs, and as a result of inflation.

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Amortization of Acquired Intangible Assets included in Operating expenses. Amortization of acquired intangible assets included in Operating expenses ("Opex Amortization") for the three and nine months ended September 30, 2024 and 2023 was as follows (in thousands, except percentages):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Decrease

 

​

​

September 30, 

​

September 30, 

​

from prior year

​

​

    

2024

    

2023

    

$

    

%

 

Three months ended

​

$

6,457

​

$

7,216

​

$

(759)

​

(10.5)

%

Nine months ended

​

$

19,671

​

$

21,740

​

$

(2,069)

​

(9.5)

%

​

Opex Amortization was lower for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023. We record our amortization in relation to expected future cash flows rather than on a straight-line basis. Accordingly, such expense may vary from one period to the next.

Acquisition-, Disposal- and Integration-Related. Acquisition-, disposal- and integration-related expenses include those expenses related to acquisitions that we would otherwise not have incurred. Acquisition- and disposal-related expenses include professional and services fees, such as legal, audit, consulting, paying agent and other fees. Integration-related expenses represent incremental costs related to combining our systems and processes with those of acquired businesses, such as third-party consulting and other third-party services.

We recorded no such expenses in the three and nine months ended September 30, 2024 compared to $0.8 million and $3.0 million of such expenses recorded in the three and nine months ended September 30, 2023, respectively. These costs were related to integration following the Company’s acquisition of ECI and included license fees for systems in the process of being retired.

Restructuring and Related. We have been committed to streamlining our operations and reducing operating costs by closing and consolidating certain facilities and reducing our worldwide workforce. Please see the additional discussion of our restructuring initiatives in the "Restructuring and Cost Reduction Initiatives" section of the Overview of this MD&A.

We recorded restructuring and related expense of $3.8 million and $2.7 million in the three months ended September 30, 2024 and 2023, respectively, and $8.8 million and $13.9 million in the nine months ended September 30, 2024 and 2023, respectively. Although we have eliminated positions as part of our restructuring initiatives, we continue to hire in certain areas that we believe are important to our future growth.

Interest Expense, Net. Interest expense and interest income for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands, except percentages):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Increase/(decrease)

 

​

​

Three months ended

​

from prior year

​

​

    

September 30, 2024

    

September 30, 2023

    

$

    

%

 

Interest income

​

$

67

​

$

157

​

$

(90)

​

(57.0)

%

Interest expense

​

 

(12,019)

​

 

(7,300)

​

$

4,719

​

64.7

%

Interest expense, net

​

$

(11,952)

​

$

(7,143)

​

$

4,809

​

67.3

%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Increase/(decrease)

 

​

​

Nine months ended

​

from prior year

​

​

    

September 30, 2024

    

September 30, 2023

    

$

    

%

 

Interest income

​

$

221

​

$

273

​

$

(52)

​

(19.0)

%

Interest expense

​

 

(22,039)

​

 

(20,604)

​

$

1,435

​

7.0

%

Interest expense, net

​

$

(21,818)

​

$

(20,331)

​

$

1,487

​

7.3

%

​

Our interest income was nominal in 2024 and 2023. Our interest expense in the three and nine months ended September 30, 2024 and 2023 primarily represents interest, amortization of debt issuance costs and original issue discount, and the amortization of gains in accumulated other comprehensive (loss) income from the sales of our interest

46

Table of Contents

rate swap. Interest expense in the three months ended September 30, 2024 was higher than the three months ended September 30, 2023 primarily due to higher margins under our 2024 Term Loan compared to our 2020 Term Loan, both as defined below. Interest expense in the nine months ended September 30, 2024 was higher than the nine months ended September 30, 2023 primarily due to higher margins under our 2024 Term Loan compared to our 2020 Term Loan, and higher interest in 2024 due to our interest rate swap no longer being in place, partially offset by write offs related to the refinancing of the 2020 Credit Facility with a portion of the proceeds from the 2024 Credit Facility on June 21, 2024. The write offs related to the refinancing consisted of the remaining unamortized gains in accumulated other comprehensive (loss) income from the sales of our interest rate swap totaling $4.9 million, partially offset by the write off of debt issuance costs from the 2020 Credit Facility totaling $2.0 million. Our interest expense for the nine months ended September 30, 2023 benefited from our interest rate swap that fixed our interest rate at 0.904% and was sold in March 2023. See Note 10 to our condensed consolidated financial statements for a discussion of the sale of our interest rate swap.

Other (Expense) Income, Net. We recorded other income, net of $1.1 million, and other expense, net of $2.6 million in the three months ended September 30, 2024 and 2023, respectively. We recorded other expense, net of $16.0 million and of $0.5 million in the nine months ended September 30, 2024 and 2023, respectively. Other income in the three months ended September 30, 2024 was primarily comprised of the fair value adjustment related to our Warrant liability and foreign currency exchange gains. Other expense in the three months ended September 30, 2023 was primarily attributable to foreign currency exchange losses. Other expense in the nine months ended September 30, 2024 was primarily comprised of $6.6 million of fair value adjustments, $2.7 million of accrued dividends, and the $1.8 million call premium on our Preferred Stock that we redeemed on June 25, 2024, and foreign currency exchange losses of $1.4 million. Other expense in the nine months ended September 30, 2023 was primarily comprised of foreign currency exchange losses of $1.2 million, the $1.6 million fair value adjustment of our Preferred Stock and Warrants, including dividends on the Preferred Stock, and $3.5 million of costs incurred in the Private Placement, partially offset by the gain of $7.3 million recognized from Accumulated other comprehensive income in connection with the sale of our interest rate swap.

Income Taxes. We recorded income tax provisions of $1.6 million and $4.6 million in the three months ended September 30, 2024 and 2023, respectively, and $6.5 million and $11.5 million in the nine months ended September 30, 2024 and 2023, respectively. These amounts reflect our estimates of the effective rates expected to be applicable for the respective full fiscal years, adjusted for any discrete events, which are recorded in the period that they occur. These estimates are reevaluated each quarter based on our estimated tax rate for the full year. The estimated effective tax rate includes the impact of valuation allowances in various jurisdictions. We intend to continue to maintain a valuation allowance on our deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of the respective allowances.

The Organization for Economic Cooperation and Development (the "OECD") Pillar 2 global minimum tax rules are intended to apply for tax years beginning in 2024. On February 1, 2023, the FASB staff noted that they believe that the Pillar 2 tax would be an alternative minimum tax and therefore deferred tax assets would not need to be recognized related to this parallel taxing system. On February 2, 2023, the OECD issued administrative guidance providing transition and safe harbor rules around the implementation of the Pillar 2 global minimum tax. Under an additional transitional safe harbor released July 17, 2023, the undertaxed profits rule top-up tax will not be applied by any constituent entity’s jurisdiction of residence with respect to income earned by a company’s ultimate parent entity in its jurisdiction of residence, if the ultimate parent entity’s jurisdiction has a corporate tax rate of at least 20%. This transition safe harbor will apply to fiscal years beginning on or before December 31, 2025 and ending before December 31, 2026. We are closely monitoring developments and evaluating the impacts these new rules will have on our tax rate, including eligibility to qualify for these safe harbor rules and do not expect Pillar 2 to have a significant impact on our financial statements.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial position, changes in financial position, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

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Table of Contents

Liquidity and Capital Resources

Our condensed consolidated statements of cash flows are summarized as follows (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

    

Nine months ended

    

    

​

    

​

​

September 30, 

​

September 30, 

​

​

​

​

​

    

2024

    

2023

    

Change

    

Net loss

​

$

(60,599)

​

$

(73,285)

​

$

12,686

​

Adjustments to reconcile net loss to cash flows used in operating activities:

 

​

48,393

 

​

61,754

 

​

(13,361)

 

Changes in operating assets and liabilities

 

​

679

 

​

8,479

 

​

(7,800)

 

Net cash used in operating activities

​

$

(11,527)

​

$

(3,052)

​

$

(8,475)

​

Net cash used in investing activities

​

$

(14,890)

​

$

(6,620)

​

$

(8,270)

​

Net cash provided by (used in) financing activities

​

$

40,177

​

$

(32,163)

​

$

72,340

​

​

We had cash, cash equivalents, and restricted cash aggregating $40 million and $27 million at September 30, 2024 and December 31, 2023, respectively. We had cash held by our non-U.S. subsidiaries aggregating $15 million and $16 million at September 30, 2024 and December 31, 2023, respectively. If we elect to repatriate all of the funds held by our non-U.S. subsidiaries as of September 30, 2024, we do not believe that the amounts of potential withholding taxes that would arise from the repatriation would have a material effect on our liquidity.

On June 21, 2024, we entered into a Senior Secured Credit Facilities Agreement (the “2024 Credit Facility” and “2024 Credit Agreement”) as guarantor, with our wholly-owned subsidiary, Ribbon Communications Operating Company, Inc., as the borrower (“Borrower”), HPS Investment Partners, LLC ("HPS"), as administrative agent, and HPS and WhiteHorse Capital Management, LLC ("WhiteHorse" and, together with HPS, the "Lenders"), pursuant to which the Lenders provided us with a $385 million senior secured credit facility comprised of (i) a $350 million term loan (the “2024 Term Loan”) and (ii) a $35 million revolving credit facility (the “2024 Revolver”), including a $20 million sublimit for letters of credit. The proceeds received from the 2024 Term Loan were used to (a) repay 100% of the amounts outstanding under the 2020 Credit Facility, (b) redeem in full the Preferred Stock and (c) pay fees and expenses related to the 2024 Credit Facility. Excess proceeds are being used by us for working capital and other general corporate purposes.

The 2024 Term Loan and the 2024 Revolver bear interest, at the Borrower’s option, at either the Alternate Base Rate (“ABR”) or Term Secured Overnight Financing Rate ("SOFR") with an Applicable Margin for each (all as defined in the 2024 Credit Agreement). Margins for the first six months are 5.25% per annum for ABR Loans and 6.25% per annum for SOFR Loans. Thereafter, margins vary based on our Consolidated Net Leverage Ratio, ranging from 4.75% to 5.25% per annum for ABR Loans and 5.75% to 6.25% per annum for SOFR Loans. The 2024 Term Loan and the 2024 Revolver will both mature on June 21, 2029. The 2024 Term Loan is being repaid in equal quarterly installments: approximately $0.9 million beginning with the third quarter of 2024 through the second quarter of 2025; approximately $2.2 million beginning with the third quarter of 2025 and ending with the second quarter of 2027; and approximately $4.4 million quarterly thereafter, with the remaining principal balance of approximately $298.4 million due on the maturity date of June 21, 2029. In connection with the establishment of the 2024 Credit Facility, $7.7 million of original issue discount was withheld by the Lenders and we incurred $6.1 million of debt issuance costs for a total of $13.8 million that is being amortized to Interest expense, net over the term of the agreement.

Our previous credit facility was the Senior Secured Credit Facilities Credit Agreement (as amended, the "2020 Credit Facility"), which we entered into on March 3, 2020, by and among us, as a guarantor, Ribbon Communications Operating Company, Inc., as the borrower (the "Borrower"), Citizens Bank, N.A., Santander Bank, N.A., and others as lenders, ("2020 Credit Facility Lenders"). For additional details regarding the terms of the 2024 Credit Facility and 2020 Credit Facility, see Note 9 to our condensed consolidated financial statements.

On March 24, 2023, we entered into the Sixth Amendment to the 2020 Credit Facility (the “Sixth Amendment”) effective March 30, 2023. The Sixth Amendment, among other things, increased the Maximum Consolidated Net Leverage Ratio (as defined in the 2020 Credit Facility), with the first, second and third quarters of 2023 increasing to

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Table of Contents

4.50:1.00. In the fourth quarter of 2023 and the first quarter of 2024, the Maximum Consolidated Net Leverage Ratio declined to 4.25:1.00 and 4.00:1.00, respectively. Also, the Sixth Amendment reduced the minimum Consolidated Fixed Charge Coverage Ratio (as defined in the 2020 Credit Facility) to 1.10:1.00 through the first quarter of 2024. The Sixth Amendment reduced the maximum borrowings allowed under the 2020 Revolving Credit Facility from $100 million to $75 million and the sublimit available for letters of credit was reduced from $30 million to $20 million. In addition, the Sixth Amendment replaced LIBOR with the Secured Overnight Financing Rate ("SOFR") as the alternative rate that may be used by the Company for calculating interest owed under the 2020 Credit Facility with the margin now fixed at 4.5%. In conjunction with the Sixth Amendment, we made a $75 million prepayment that was applied to the final payment due upon maturity in March 2025. The $75 million prepayment was almost entirely funded with the net proceeds from the Private Placement and the sales of our interest rate swap. Debt issuance costs associated with the Sixth Amendment totaled $1.7 million and were being amortized on a straight-line basis over the remaining life of the 2020 Credit Facility to Interest expense, net and were written off in conjunction with the early extinguishment of the 2020 Credit Facility on June 21, 2024.

The 2020 Credit Facility, as amended, allowed us to incur junior secured or unsecured debt in an amount no less than $50 million, subject to certain conditions, including the requirement that 50% of the aggregate amount of such incurred debt (net of certain costs, fees and other amounts) must be applied to prepay the 2020 Credit Facility and compliance with certain leverage ratio-based covenant exceptions. Quarterly principal payments were required on the 2020 Term Loan aggregating approximately $5.0 million per quarter through March 31, 2024, and if the refinancing had not occurred, $10.0 million would have been required in each of the three quarters thereafter, with the remaining and final payment due on the maturity date in March 2025.

At September 30, 2024, we had an outstanding balance under the 2024 Term Loan of $349.1 million at an average interest rate of 11.2%, with no revolver balance and no letters of credit outstanding under our 2024 Credit Facility. Our interest rates under our 2020 Term Loan for the nine months ended September 30, 2023 benefited from a hedge instrument that was in place, specifically a fixed rate swap, which was sold in March 2023 (see Note 10). We were in compliance with all covenants of the 2024 Credit Facility and 2020 Credit Facility at both September 30, 2024 and December 31, 2023, respectively, including the Consolidated Net Leverage Ratio calculation under the 2020 Credit Facility that considered our debt to include Preferred Stock.

We use letters of credit, bank guarantees and surety bonds in the course of our business. At September 30, 2024, we had $10.4 million of letters of credit, bank guarantees, and surety bonds outstanding (collectively, "Guarantees") under various uncommitted facilities and no letters of credit outstanding under the 2024 Credit Facility. At December 31, 2023, we had Guarantees aggregating $7.9 million, comprised of $2.7 million of letters of credit under the 2020 Credit Facility described above and $5.2 million of Other Guarantees. At September 30, 2024 and December 31, 2023, we had cash collateral of $2.9 million and $0.1 million, respectively, supporting the Guarantees, which are reported in Restricted cash in our condensed consolidated balance sheets.

We are exposed to financial market risk related to foreign currency fluctuations and changes in interest rates. These exposures are actively monitored by management. To manage the volatility related to the exposure to changes in interest rates, we may enter into a derivative financial instrument. Management’s objective has been to reduce, where it is deemed appropriate to do so, fluctuations in earnings and cash flows associated with changes in interest rates. Our policies and practices are to use derivative financial instruments only to the extent necessary to manage exposures. We do not hold or issue derivative financial instruments for trading or speculative purposes.

As a result of exposure to interest rate movements, during March 2020, we entered into an interest rate swap arrangement, which effectively converted our $400 million term loan with its variable interest rate based upon one-month LIBOR to an aggregate fixed rate of 0.904%, plus a leverage-based margin as defined in the 2020 Credit Facility. On July 22, 2022, we sold $30 million of the notional amount of our interest rate swap back to our counterparty for $1.5 million, reducing the notional amount of this swap to $370 million. On August 16, 2022, we sold another $30 million of the notional amount of our interest rate swap back to our counterparty for $1.6 million, reducing the notional amount to $340 million, which approximated the term loan debt then outstanding. The gain in accumulated other comprehensive (loss) income related to the $60 million notional amount sold of $3.1 million was being released into earnings on a straight line basis over the remaining term of the 2020 Credit Facility as a decrease to interest

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expense, the amortization of which totaled $0.4 million and $0.7 million for the nine months ended September 30, 2024 and 2023, respectively. The remaining unamortized gain in accumulated other comprehensive (loss) income of approximately $0.5 million was written off to interest expense in conjunction with the refinancing of the 2020 Credit Facility on June 21, 2024. On March 24, 2023, we received $9.4 million, consisting of $0.4 million of interest and $9.0 million for the sale of $170 million of its $340 million notional amount interest rate swap back to our counterparty, reducing the notional amount to $170 million. On March 27, 2023, we received $9.8 million, consisting of $0.4 million of interest and $9.4 million for the sale of the remaining $170 million of our interest rate swap back to our counterparty. The portion of the gain in accumulated other comprehensive (loss) income related to the term loan debt prepaid on the date of the final sale of our swap totaled $7.3 million and was released into earnings immediately as Other expense, net. The portion of the gain in accumulated other comprehensive (loss) income related to our remaining term loan debt balance totaled $12.0 million and was being released into earnings on a straight line basis over the remaining term of the 2020 Credit Facility as a decrease to interest expense beginning in the second quarter of 2023, the amortization of which was $3.0 million and $3.1 million for the nine months ended September 30, 2024 and 2023, respectively. The remaining unamortized gain in accumulated other comprehensive (loss) income of $4.4 million was written off to interest expense in conjunction with the refinancing of the 2020 Credit Facility on June 21, 2024.

Our objectives in using interest rate derivatives have been to add stability to interest expense and to manage our exposure to interest rate movements. To accomplish these objectives, we have used an interest rate swap as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for making fixed-rate payments over the life of an agreement without exchange of the underlying notional amount.

The effective portion of changes in the fair value of designated derivatives that qualify as cash flow hedges is recorded in Accumulated other comprehensive income in the condensed consolidated balance sheet and is subsequently reclassified into earnings in the period that the hedged forecasted transactions affect earnings. During the nine months ended September 30, 2023, such a derivative was used to hedge the variable cash flows associated with the outstanding borrowings under the 2020 Credit Facility and the Company accounted for this derivative as an effective hedge until the final portion of the swap was sold on March 27, 2023. Any ineffective portion of the change in the fair value of the derivative would be recognized directly in earnings. However, we recorded no hedge ineffectiveness over the life of our swap. During the nine months ended September 30, 2023, we recorded $7.3 million of Other expense, net due to the sale of our swap.

Cash Flows from Operating Activities

Our primary source of cash from operating activities has been from cash collections from our customers. We expect cash flows from operating activities to be affected by increases and decreases in sales volumes and timing of collections, and by purchases and shipments of inventory. Our primary uses of cash for operating activities have been for personnel costs and investment in our research and development and in our sales and marketing, and general and administrative departments.

Our operating activities used cash of $11.5 million in the nine months ended September 30, 2024, primarily as a result of lower deferred revenue, accounts payable, and inventory and our net loss adjusted for non-cash expenses. These amounts were partially offset by lower accounts receivable and other operating assets, and higher accrued expenses and other long-term liabilities. Our net loss is adjusted for non-cash expenses such as amortization of intangible assets, stock-based compensation, and the increase in the fair value of our Preferred Stock liability, partially offset by a $6.7 million one time payment of accumulated dividends as a result of our redemption of our Preferred Stock liability on June 25, 2024 and $8.2 million adjustment for amortization of an accumulated other comprehensive gain related to our interest rate swap and $14.6 million for deferred income tax expense. Higher revenue in our IP Optical Networks segment and lower operating expenses company-wide due to our various cost saving initiatives, including lower employee and facilities expenses, continue to positively affect our operating cash flow.

Cash used in operating activities in the nine months ended September 30, 2023 of $3.1 million was primarily a result of lower accounts payable, accrued expenses and other long-term liabilities, our net loss adjusted for non-cash expenses, and lower deferred revenue and higher inventory, partially offset by lower accounts receivable and other

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operating assets. Higher product revenue in our IP Optical Networks segment and lower operating expenses company-wide due to our various cost saving initiatives, including lower employee and facilities expenses, all positively affected our operating cash flow in 2023.

Cash Flows from Investing Activities

Our investing activities used $14.9 million and $6.6 million of cash to purchase property and equipment in the nine months ended September 30, 2024 and 2023, respectively. The increase is primarily due to the build out of a new facility in Israel.

Cash Flows from Financing Activities

Our financing activities provided $40.2 million of cash in the nine months ended September 30, 2024. We received $342.3 million of proceeds, net of $7.7 million of original issue discount, from the issuance of term debt under the 2024 Credit Facility that was established on June 21, 2024 to refinance the 2020 Credit Facility. Also, we had $44.1 million of both borrowings and principal payments under the 2020 Revolving Credit Facility. In conjunction with the establishment of the 2024 Credit Facility, we repaid the 2020 Term Debt amounting to $235.4 million, redeemed all of the outstanding Preferred Stock totaling $56.9 million, and paid $6.0 million in debt issuance costs. Also, we paid $0.9 million in principal payments on our 2024 Term Debt. In addition, we paid $3.0 million of tax obligations related to the vesting of stock awards and units.

Our financing activities used $32.2 million of cash in the nine months ended September 30, 2023, primarily due to $90.0 million of principal payments on our term debt, including a $75.0 million prepayment in connection with the Sixth Amendment to the 2020 Credit Facility, $1.6 million of debt issuance costs also paid in connection with the Sixth Amendment, and $3.9 million for the payment of tax obligations related to the vesting of stock awards and units. In addition, we received $53.4 million of proceeds from the issuance of the Preferred Stock and Warrants in the Private Placement and had $10.0 million of net borrowings under our 2020 Revolving Credit Facility.

The rate at which we consume cash is dependent upon the cash needs of our future operations, including our contractual obligations at September 30, 2024, primarily comprised of our debt principal and interest obligations as described above, and our operating lease and purchase obligations. Our operating lease obligations totaled $52.6 million at September 30, 2024, with payments to be made aggregating $4.6 million in the remainder of 2024, $11.1 million in 2025, $9.3 million in 2026 and $27.6 million thereafter. Estimated payments for purchase obligations for the full year 2024 total approximately $101 million. We anticipate devoting substantial capital resources to continue our R&D efforts, to maintain our sales, support and marketing, and for other general corporate activities. We believe that our financial resources, along with managing discretionary expenses, will allow us to manage the ongoing impact of inflation on our business operations. Looking ahead, we have developed contingency plans to reduce costs further if the situation deteriorates.

Based on our current expectations, we believe that our current cash balances and available borrowings under the 2024 Credit Facility will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for at least twelve months from the date of issuance of these financial statements.

Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (the "FASB") issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which increases the disclosure requirements around rate reconciliation information and certain types of income taxes companies are required to pay. ASU 2023-09 will be effective for us beginning with our 2025 annual financial statements, with early adoption permitted. We expect the adoption of the standard will require certain additional income tax disclosures.

​

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which improves reportable segment disclosure requirements, including enhancement of the disclosures of significant segment expenses and interim disclosure requirements, to enable investors

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to better understand an entity's overall performance and assess potential future cash flows. ASU 2023-07 will be effective for us beginning with our 2024 annual financial statements and interim financial statements thereafter and will be applied retrospectively for all periods presented in the financial statements. Our adoption of this standard will require certain additional segment disclosures.

​

Item 3.   Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk related to changes in interest rates and foreign currency exchange rates. There have been no material changes in market risk from the information provided in Item 7A. Quantitative and Qualitative Disclosures About Market Risk of our Annual Report on Form 10-K, for the year ended December 31, 2023.

Item 4.   Controls and Procedures

Disclosure Controls and Procedures

Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of September 30, 2024.

Changes in Internal Control over Financial Reporting. There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II OTHER INFORMATION

Item 1.   Legal Proceedings

We are subject to legal proceedings and claims that have not been fully resolved and that have arisen in the ordinary course of business. Our material legal proceedings as described in Part I, Item 1 of this Form 10-Q in the notes to the condensed consolidated financial statements in Note 19, "Commitments and Contingencies," under the heading "Litigation."

The outcome of litigation is inherently uncertain. If one or more legal matters were resolved against the Company in a reporting period for amounts above management’s expectations, our financial condition and operating results for that reporting period could be materially adversely affected. We settled certain matters during the nine months ended September 30, 2024 that did not individually or in the aggregate have a material impact on our financial condition or results of operations.

Item 1A.  Risk Factors

Our business faces significant risks and uncertainties, which may have a material adverse effect on our business prospects, financial condition and results of operations, and you should carefully consider them. There have been no material changes in the nine months ended September 30, 2024 to the risk factors described in Part I, Item 1A. of our Annual Report on Form 10-K for the year ended December 31, 2023.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

(c)   Issuer Purchases of Equity Securities

The following table provides information with respect to the shares of common stock repurchased by us for the periods indicated:

​

​

​

​

​

​

​

​

​

​

​

​

    

​

​

    

​

    

​

​

Approximate Dollar

​

​

​

​

​

​

​

Total Number of

​

Value of Shares

​

​

​

​

​

​

​

Shares Purchased

​

that May

​

​

​

​

​

​

​

as Part of

​

Yet be Purchased

​

​

Total Number

​

Average

​

Publicly

​

Under

​

​

of Shares

​

Price Paid

​

Announced Plans

​

the Plans

Period

    

Purchased (1)

    

per Share

    

or Programs

    

or Programs

July 1, 2024 to July 31, 2024

​

48,909

​

$

3.88

​

—

​

$

—

August 1, 2024 to August 31, 2024

​

67,643

​

$

2.94

​

—

​

$

—

September 1, 2024 to September 30, 2024

​

2,578

​

$

3.05

​

—

​

$

—

Total

​

119,130

​

$

3.33

​

—

​

$

—

(1)Upon vesting of restricted stock awards, certain of our employees surrender to us a portion of the newly vested shares of common stock to satisfy the tax withholding obligations that arise in connection with such vesting. During the third quarter of 2024, 119,130 shares of restricted stock were returned to us by employees to satisfy tax withholding obligations arising in connection with vesting of restricted stock.

Item 5.   Other Information

During the three months ended September 30, 2024, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) adopted, terminated or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933). During the three months ended September 30, 2024, the Company did not adopt, terminate or modify a Rule 10b5-1 trading arrangement.

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Item 6. Exhibits

​

​

​

​

​

Exhibit No.

    

Description

2.1

​

​

Agreement and Plan of Merger, dated as of November 14, 2019, by and among the Registrant, Ribbon Communications Israel Ltd., Eclipse Communications Ltd., ECI Telecom Group Ltd. and ECI Holding (Hungary) Korlátolt Felelősségű Társág (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K, filed November 14, 2019 with the SEC).

2.2

​

​

Amended and Restated Purchase Agreement, dated December 1, 2020, among Ribbon Communications Inc., Ribbon Communications Operating Company, Inc., Ribbon Communications International Limited and American Virtual Cloud Technologies, Inc. (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K, filed December 7, 2020 with the SEC).

3.1

​

​

Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K12B, filed October 30, 2017 with the SEC).

3.2

​

​

Certificate of Amendment of the Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed November 28, 2017 with the SEC).

3.3

​

​

Certificate of Designation of Series A Preferred Stock (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed March 30, 2023 with the SEC).

3.4

​

​

Certificate of Amendment of the Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed August 4, 2023 with the SEC).

3.5

​

​

Amended and Restated By-Laws of the Registrant (incorporated by reference to Exhibit 3.3 to the Registrant’s Annual Report on Form 10-K, filed March 8, 2018 with the SEC).

4.1

​

​

Form of Warrant (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed March 30, 2023 with the SEC).

10.1

​

​

Employment Agreement, dated as of October 3, 2024, among Ribbon Communications Inc., Ribbon Communications Operating Company, Inc. and John Townsend (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed October 4, 2024 with the SEC).

10.2

​

​

Severance Agreement, dated as of October 3, 2024, among Ribbon Communications Inc., Ribbon Communications Operating Company, Inc. and John Townsend (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed October 4, 2024 with the SEC).

10.3

​

​

Form of Restricted Stock Unit Award Agreement (Performance-Based Vesting) between the Company and John Townsend (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K, filed October 4, 2024 with the SEC).

31.1

*

​

Certificate of Ribbon Communications Inc. Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

*

​

Certificate of Ribbon Communications Inc. Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

#

​

Certificate of Ribbon Communications Inc. Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

#

​

Certificate of Ribbon Communications Inc. Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS

*

​

Inline XBRL Instance Document

101.SCH

*

​

Inline XBRL Taxonomy Extension Schema

101.CAL

*

​

Inline XBRL Taxonomy Extension Calculation Linkbase

101.DEF

*

​

Inline XBRL Taxonomy Extension Definition Linkbase

101.LAB

*

​

Inline XBRL Taxonomy Extension Label Linkbase

101.PRE

*

​

Inline XBRL Taxonomy Extension Presentation Linkbase

104

*

​

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

​

*

Filed herewith.

#

Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

​

​

​

​

RIBBON COMMUNICATIONS INC.

​

​

​

​

​

By:

/s/ Miguel A Lopez

​

​

Miguel A. Lopez

​

​

Executive Vice President and Chief Financial Officer

​

​

(Principal Financial Officer)

​

​

Date: October 24, 2024

​

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