Ribbon Communications — Third Quarter 2026 Earnings Summary

Financial Performance:

• Revenue was $219 million for the quarter, a 14% increase sequentially and a 2% increase year-over-year compared to $215 million in Q3 2025; year-to-date revenue was $574 million, down from $617 million in the same period in 2025.
• GAAP operating income was $6 million, compared to $3 million in Q3 2025; GAAP net loss was $9 million, improving from a $12 million loss in Q3 2025.
• Non-GAAP Adjusted EBITDA was $27 million, a decrease from $29 million in Q3 2025, though it more than doubled from $12 million in Q2 2026.
• GAAP gross margin was 48.2%, down from 50.1% in Q3 2025; Non-GAAP gross margin was 50.3%, down from 52.6% in Q3 2025.
• Non-GAAP operating expenses remained flat at $88 million.
• GAAP diluted loss per share was $(0.05), compared to $(0.07) in Q3 2025; Non-GAAP diluted earnings per share were $0.07, up from $0.04 in Q3 2025.
• Cash and cash equivalents were $40.4 million as of September 30, 2026, down from $96.4 million at December 31, 2025.
• Total debt (current and long-term) was $327.9 million as of September 30, 2026, compared to $333.3 million at December 31, 2025.
• Deferred revenue was $149.3 million total ($112.5 million current, $36.9 million long-term) as of September 30, 2026, down from $156.1 million at December 31, 2025.

Guidance and Future Outlook:

• For Q4 2026, the Company projects revenue between $233 million and $247 million.
• Non-GAAP gross margin for Q4 2026 is projected between 53.5% and 54.5%.
• Adjusted EBITDA for Q4 2026 is projected between $40 million and $47 million.
• Management expects further significant gains in Q4 2026 and positive trends in both operating segments.
• Long-term growth drivers identified for 2027 include the adoption of voice-enabled Enterprise AI applications, new solutions to mitigate AI-generated voice-phishing cyber-attacks, and broader demand for data center fiber infrastructure.

Business Segments and Product Lines:

• IP Optical Networks revenue increased 17% sequentially, driven by new wins in North America, including two new U.S. Tier 2 Internet Service Provider customers.
• Cloud and Edge revenue increased 11% sequentially, led by U.S. Tier 1 Network Modernization and a 50% increase in sales to the Company's largest customer.
• HubOne selected Ribbon's PSX to unify voice traffic across its applications.
• Ribbon's Optical and DCI Solutions enabled PT Jala Lintas Media (JLM) to unlock subsea and metro network capacity between Indonesia and Singapore.
• Ribbon and TNS are collaborating to simplify legacy voice switch replacement.
• The Company reports a growing pipeline of data center and AI-related opportunities.

Market and Competitive Landscape:

• The Company serves mobile and wireline service providers, enterprises, critical infrastructure, and defense sectors.
• Management highlights a record third quarter for the IP Optical Networks business, growing 5% year-over-year.
• Service Provider revenue in the Cloud and Edge segment grew 15% sequentially.
• The Company supports customers' "Path to Autonomous Networks" using AIOps automation platforms and Agentic AI technologies.

Risks and Challenges:

• Forward-looking statements are subject to risks including unpredictable quarterly revenue fluctuations, restructuring impacts, and supply chain disruptions.
• Specific risks include new tariffs, USMCA modifications, geopolitical volatility from wars in the Middle East and Ukraine, and military call-ups of employees in Israel.
• Potential risks involve cybersecurity incidents, litigation, interest rate fluctuations, and compliance with data privacy laws.
• The Company faces risks related to credit agreements, including the ability to comply with maximum net leverage ratios.

Management Commentary and Tone:

• Bruce McClelland, President and CEO, stated that meaningful sequential increases in revenue and profitability were consistent with Q2 results, driven by strong IP Optical Networks bookings and increased Cloud and Edge activity.
• Rick Marmurek, CFO, noted that Adjusted EBITDA more than doubled from Q2 to Q3, emphasizing a focus on expanding margins, cost discipline, and strengthening the balance sheet.
• Management expressed encouragement regarding the progress in both operating segments and confidence in the projected Q4 improvement.

Other Key Points:

• The Company hosts a conference call on October 27, 2026, at 4:30 p.m. ET.
• Upcoming conference appearances include Ribbon Insights (Nov 10-12), Needham Virtual Technology Conference (Nov 19), and UBS Global Technology & AI Conference (Dec 1).
• GAAP earnings guidance is not provided for the outlook period.
• The Company recorded a $600,000 expense related to a cybersecurity incident in the trailing twelve months.
• Restructuring and related expenses were $1.4 million in Q3 2026, down from $4.4 million in Q2 2026 and $3.5 million in Q3 2025.
• Litigation costs were minimal at $3,000 in Q3 2026, compared to $952,000 in Q3 2025.
• Stock-based compensation totaled $5.7 million in Q3 2026.