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Ribbon Communications (RBBN)
:RBBN
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Ribbon Communications
(NASDAQ:RBBN)
57Neutral
Positive Factors
Earnings
The company reported strengthening F4Q24 results, with revenue of $251.4M, up 11% year-over-year.
Market Opportunities
The company has a significant market opportunity of over $10 billion and shows strength internationally and in working with U.S. federal customers.
Negative Factors
Geopolitical Factors
Uncertainties remain due to geopolitical factors affecting the IP Optical segment's growth projections.
Ribbon Communications (RBBN) vs. S&P 500 (SPY)
Market Cap
$629.84M
Dividend YieldN/A
Average Volume (3M)463.80K
Price to Earnings (P/E)―
Beta (1Y)1.73
Revenue Growth0.91%
EPS Growth19.89%
CountryUS
Employees3,052
SectorCommunication Services
Sector Strength80
IndustryTelecommunications Services
Share Statistics
EPS (TTM)-0.31
Shares Outstanding175,933,330
10 Day Avg. Volume410,440
30 Day Avg. Volume463,804
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.85
Price to Cash Flow (P/CF)2.90
P/FCF Ratio3.30
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$6.17Price Target Upside72.35% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering6
Ribbon Communications Business Overview & Revenue Model
Company DescriptionRibbon Communications Inc. provides communications technology in the United States, Europe, the Middle East, Africa, the Asia Pacific, and internationally. It operates through two segments, Cloud and Edge, and IP Optical Networks. The Cloud and Edge segment provides software and hardware products; and solutions and services for enabling voice over internet protocol communications, voice over long-term evolution, and voice over 5G communications and unified communications and collaboration. It also offers session border controller and network transformation products. This segment serves private, public, or hybrid cloud infrastructures, as well as data centers, enterprise premises, and service provider networks. It also provides multiple solutions for VoIP, VoLTE, VoNR, and UC&C in network, on-premises, or via the telco cloud. The IP Optical Networks segment provides hardware and software solutions for IP networking, switching, routing, and optical transport to support and enable technologies, such as 5G, distributed cloud computing, and corresponding applications. It also offers multiple solutions, including 5G-native solutions for mobile-backhaul, metro and edge aggregation, core networking, data center interconnect, legacy NTR, and transport solutions for wholesale carriers. This segment serves utilities, government, defense, finance, transportation, and education and research industries, as well as service providers and enterprises. It also provides advanced analytics solutions and next generation products that provides cloud-native and streaming analytics platform for networks and subscribers. The company was formerly known as Sonus Networks, Inc. and changed its name to Ribbon Communications Inc. in November 2017. Ribbon Communications Inc. was founded in 1997 and is headquartered in Plano, Texas.
How the Company Makes MoneyRibbon Communications generates revenue through the sale of its communications technology products and services. The company primarily makes money by providing software and hardware solutions such as session border controllers and voice application servers that help organizations manage and secure their communications networks. Additionally, Ribbon earns revenue from maintenance and support contracts, as well as from professional services that assist clients in deploying and optimizing their communication networks. Strategic partnerships with telecom operators and technology vendors also contribute to Ribbon's revenue streams by expanding its market reach and customer base.
Ribbon Communications Financial Statement Overview
Summary
Ribbon Communications is navigating a challenging financial landscape with moderate revenue growth and improvements in debt management. The company exhibits strong cash flow generation, which is crucial given its ongoing profitability challenges. While the reduction in debt and increase in free cash flow are positive, persistent net losses and low ROE suggest significant room for improvement in operational efficiency and profitability.Income Statement
Ribbon Communications shows a moderate revenue growth trend with a 0.91% increase from 2023 to 2024. Gross Profit Margin is healthy at 52.72% for 2024, indicating effective cost management. However, the company is struggling with profitability, as evidenced by the negative Net Profit Margin of -6.50% and negative EBIT Margin of 2.02%. This indicates ongoing challenges in covering operating expenses and achieving net profitability.55
Neutral
Balance Sheet
The company has improved its financial leverage significantly, reducing Total Debt from $287 million in 2023 to $52.9 million in 2024, which has positively impacted the Debt-to-Equity Ratio, now at a low 0.13. However, Return on Equity is negative at -13.40%, reflecting ongoing losses. The Equity Ratio stands at a solid 35.62%, suggesting a stable capital structure with reasonable equity financing.60
Neutral
Cash Flow
Ribbon Communications shows strong improvement in Free Cash Flow, which increased from $7.6 million in 2023 to $27.8 million in 2024, indicating a Free Cash Flow Growth Rate of 265.79%. Operating Cash Flow to Net Income Ratio is positive, suggesting effective cash generation relative to net income. The company's cash flow management is a positive indicator amidst challenging profitability.65
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 833.88M | 826.34M | 819.76M | 844.96M | 843.79M | Gross Profit |
| 439.51M | 379.48M | 400.94M | 444.66M | 493.11M | EBIT |
| 16.87M | -3.60M | -75.70M | -57.03M | 147.76M | EBITDA |
| 52.48M | 43.28M | -50.78M | -140.08M | 194.65M | Net Income Common Stockholders |
| -54.23M | -66.21M | -98.08M | -177.19M | 88.59M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 87.77M | 26.63M | 67.10M | 103.92M | 128.43M | Total Assets |
| 1.16B | 1.14B | 1.26B | 1.35B | 1.55B | Total Debt |
| 52.94M | 287.03M | 387.93M | 442.87M | 474.20M | Net Debt |
| -34.83M | 260.40M | 320.83M | 338.96M | 345.77M | Total Liabilities |
| 757.93M | 691.39M | 737.14M | 820.57M | 860.41M | Stockholders Equity |
| 404.62M | 452.76M | 518.43M | 527.17M | 686.85M |
| Cash Flow | Free Cash Flow | |||
| 27.83M | 7.61M | -39.92M | 2.05M | 74.84M | Operating Cash Flow |
| 50.24M | 17.09M | -26.36M | 19.18M | 101.56M | Investing Cash Flow |
| -22.87M | -9.48M | -12.14M | -14.19M | -330.07M | Financing Cash Flow |
| 37.71M | -47.86M | 931.00K | -33.68M | 319.30M |
Ribbon Communications Technical Analysis
Negative
3.58
Price Trends
4.07
Negative
4.06
Negative
3.73
Negative
Market Momentum
-0.14
Negative
45.41
Neutral
58.36
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RBBN, the sentiment is Negative. The current price of 3.58 is below the 20-day moving average (MA) of 3.60, below the 50-day MA of 4.07, and below the 200-day MA of 3.73, indicating a bearish trend. The MACD of -0.14 indicates Negative momentum. The RSI at 45.41 is Neutral, neither overbought nor oversold. The STOCH value of 58.36 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RBBN.
Ribbon Communications Risk Analysis
Ribbon Communications disclosed 49 risk factors in its most recent earnings report. Ribbon Communications reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Ribbon Communications Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | $170.55M | 25.08 | 7.82% | ― | 18.23% | 81.31% | |
65 Neutral | $317.05M | ― | 0.20% | ― | 9.62% | ― | |
63 Neutral | $137.19M | ― | ― | ― | ― | ||
58 Neutral | $13.61B | 6.75 | -2.45% | 3.85% | 2.33% | -35.55% | |
57 Neutral | $325.68M | ― | -8.45% | ― | 8.50% | -743.51% | |
57 Neutral | $629.84M | ― | -12.65% | ― | 0.91% | 19.89% | |
42 Neutral | $559.83M | ― | -18.92% | ― | 66.77% | -293.79% |
* Communication Services Sector Average
Performance Comparison
RBBN
Ribbon Communications
3.58
0.45
14.38%
RDCM
Radcom
10.98
2.32
26.79%
SIFY
Sify Technologies
4.39
-2.75
-38.52%
ATEX
Anterix
30.12
-2.09
-6.49%
OOMA
Ooma
11.80
4.92
71.51%
SNRE
Sunrise Communications AG Unsponsored ADR Class A
52.81
6.81
14.80%
Ribbon Communications Earnings Call Summary
Earnings Call Date: Feb 12, 2025 | % Change Since: -17.32% | Next Earnings Date: Apr 29, 2025
Earnings Call Sentiment Positive
Ribbon Communications reported a strong financial performance for Q4 2024, with record-breaking revenue and significant growth in its Cloud & Edge segment driven by network modernization projects and international expansion. However, the company faced challenges in its IP Optical segment and the suspension of shipments to Eastern Europe, impacting revenue. Despite these challenges, the overall outlook remains positive with strong momentum across most business areas.Highlights
Record-Breaking Revenue and Growth
Ribbon Communications reported the highest levels of revenue and earnings in its history, with a revenue increase of 11% year-over-year for Q4 2024 and a record adjusted EBITDA of $55 million, up 30% from the prior year.
Strong Cloud & Edge Segment Performance
Cloud & Edge sales increased by 35% year-over-year in Q4 2024. The segment saw robust growth, with US federal agency sales increasing by almost 150% year-over-year.
Successful Network Modernization Projects
The Verizon voice network modernization project contributed significantly to revenue, accounting for 17% of overall company revenue in Q4 2024, with sales growing 80% in the second half of the year.
International Expansion
Strong growth was reported in India and the Asia Pacific region, with sales increasing 30% quarter-over-quarter and 60% year-over-year in Asia Pacific.
Improved Financial Metrics
The company ended 2024 with a strong cash balance of $90 million and free cash flow of $54 million in Q4. Gross margin for the full year improved by 280 basis points to 55.9%.
Lowlights
IP Optical Revenue Decline
The IP Optical Networks segment experienced a 17% revenue decrease in Q4 2024 compared to the prior year, primarily due to the suspension of shipments to Eastern Europe.
Challenges in Eastern Europe
The company faced challenges due to the suspension of shipments to Eastern Europe, impacting revenue and resulting in an adjusted EBITDA loss of $4 million for the IP Optical segment in Q4 2024.
Lower Expected Gross Margins
For 2025, gross margins are projected to be approximately 100 basis points lower than 2024, primarily due to an increased revenue mix from professional services, which have lower margins.
Company Guidance
During the Ribbon Communications fourth quarter and full year 2024 financial results conference call, the company reported strong performance across key financial metrics. Revenue for the fourth quarter reached $251 million, an 11% increase year-over-year, while full-year revenue was $834 million, marking a 1% increase. The company achieved a record non-GAAP gross margin of 58.1% in the fourth quarter and 55.9% for the year, driven by improvements in both business segments. Notably, Cloud & Edge sales grew by 35% year-over-year in the quarter, with a significant 80% growth from Verizon's voice network modernization project. Overall profitability increased by 30% year-over-year, with adjusted EBITDA reaching $119 million for the full year. The company also reported a healthy cash position, closing the year with $90 million. Looking ahead, Ribbon projects 2025 revenue between $870 million and $890 million, with a strong emphasis on network modernization and fiber network investments driving future growth.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.