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Ribbon Communications Inc (RBBN)
NASDAQ:RBBN
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Ribbon Communications
(NASDAQ:RBBN)
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Rating:50Neutral
Price Target:
$3.00
▲(7.53% Upside)
Ribbon Communications' overall stock score is primarily influenced by its strong revenue growth and improved cash flow, which are offset by significant profitability challenges and bearish technical indicators. The earnings call provided some optimism for future growth, but the negative P/E ratio and lack of dividend yield weigh heavily on the valuation.
Positive Factors
Revenue Growth
Consistent revenue growth indicates strong market demand and effective sales strategies, supporting long-term business expansion.
Regional Performance
Strong growth in EMEA and India suggests successful regional strategies and potential for further international market penetration.
Product Innovation
Innovative products like Acumen enhance competitive positioning and open new revenue streams, bolstering long-term growth prospects.
Negative Factors
Profitability Challenges
Ongoing profitability issues highlight operational inefficiencies, which could hinder financial health and shareholder returns if not addressed.
Impact of U.S. Government Shutdown
The shutdown's impact on sales underscores vulnerability to government-related disruptions, affecting revenue stability and planning.
Decline in North American Sales
Declining sales in a key market like North America could signal competitive pressures or market saturation, impacting future growth.
Ribbon Communications (RBBN) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$501.54M
Dividend YieldN/A
Average Volume (3M)594.19K
Price to Earnings (P/E)―
Beta (1Y)1.69
Revenue Growth7.38%
EPS Growth20.81%
CountryUS
Employees3,052
SectorTechnology
Sector Strength88
IndustryTelecommunications Services
Share Statistics
EPS (TTM)0.04
Shares Outstanding176,599,600
10 Day Avg. Volume588,593
30 Day Avg. Volume594,189
Financial Highlights & Ratios
PEG Ratio0.65
Price to Book (P/B)1.79
Price to Sales (P/S)0.87
P/FCF Ratio26.01
Enterprise Value/Market Cap2.10
Enterprise Value/Revenue1.22
Enterprise Value/Gross Profit2.40
Enterprise Value/Ebitda15.06
Forecast
1Y Price Target
$5.63Price Target Upside101.79% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
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 primarily through the sale of its software products and services, including licensing fees, professional services, and maintenance contracts. The company has multiple key revenue streams, including direct sales to telecommunications providers, enterprises, and government organizations. Additionally, Ribbon benefits from recurring revenue through subscription-based models for its cloud services. Significant partnerships with telecom operators and technology companies further bolster its earnings by expanding its market reach and enhancing its product offerings. The company also leverages its expertise in network security and optimization to meet the growing demand for secure communication solutions, which contributes to its financial performance.
Ribbon Communications Earnings Call Summary
Earnings Call Date:Oct 22, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Feb 18, 2026
Earnings Call Sentiment Neutral
The earnings call highlighted strong year-over-year growth in several segments, particularly in IP Optical Networks and key regions like EMEA and India. However, challenges such as the U.S. government shutdown and its impact on sales, especially in North America and the Cloud & Edge segment, were significant. New product innovations and strategic wins were promising, but the uncertainty surrounding U.S. government-related sales adds caution to the outlook.Q3-2025 Updates
Positive Updates
Sales Increase and Revenue Growth
Sales increased 2% year-over-year, and year-to-date revenue increased 6%. Excluding Eastern Europe, revenue increased more than 10% year-to-date.
IP Optical Networks Performance
Sales in the IP Optical Networks business grew 11% year-over-year, marking one of the strongest quarters in the last 5 years. Revenue from IP Routing Solutions grew by more than 20% year-to-date.
Strong Regional Performance in EMEA and India
Sales to Europe, Middle East, and Africa grew 26% year-over-year, with business in Europe and the Middle East increasing almost 50%. Sales in India grew 31% year-over-year this quarter and are up 50% year-to-date.
New Product Innovations and Wins
The new AIOps automation platform, Acumen, received considerable interest. Important awards were received from technology providers like IBM and a large SaaS company for cloud-native SBCs and WebRTC APIs.
Positive EBITDA Contribution from IP Optical
The IP Optical Networks segment achieved a positive earnings contribution on an EBITDA basis.
Negative Updates
Impact of U.S. Government Shutdown
U.S. government shutdown affected sales, particularly impacting the Cloud & Edge segment with federal sales down approximately 60% year-over-year.
Decline in North American Sales
Sales in North America declined approximately 10% year-over-year, primarily due to lower U.S. federal sales.
Enterprise Sales Decline
Sales to enterprise customers were down approximately 3% year-over-year, affected by lower sales to U.S. government agencies.
Bookings Below Expectations
Consolidated bookings were below 1x for the first time in almost 2 years, reflecting the impact from the U.S. government shutdown.
Company Guidance
During the Ribbon Communications Third Quarter 2025 Financial Results Conference Call, the company provided guidance for the fourth quarter and beyond, highlighting both opportunities and challenges. Despite a 2% year-over-year sales increase in Q3, the company faced a significant impact from the U.S. federal government shutdown, which delayed several projects. Year-to-date, revenue grew 6% and EBITDA increased 5% compared to 2024, with revenue up over 10% excluding Eastern Europe sales. The company removed most U.S. government-related sales from its Q4 projections, now assuming these will occur in 2026. Nevertheless, Ribbon expects Q4 to be the strongest quarter of the year, projecting revenues between $230 million and $250 million, and non-GAAP adjusted EBITDA between $42 million and $48 million. The company remains optimistic about the momentum in its Cloud & Edge and IP Optical segments, driven by increased investments in network modernization and data center interconnect projects, with sales in regions like EMEA and Asia-Pacific showing substantial growth.Ribbon Communications Financial Statement Overview
Summary
Ribbon Communications demonstrates strong revenue growth and improved cash flow generation, but profitability remains a significant challenge. The company has made progress in reducing leverage, but negative returns on equity and net losses indicate a need for strategic improvements to enhance profitability and shareholder value.Income Statement
Ribbon Communications shows a mixed performance in its income statement. The TTM (Trailing-Twelve-Months) revenue growth rate is strong at 59.4%, indicating a significant increase in sales. However, the company struggles with profitability, as evidenced by a negative net profit margin of -4.96% and a low EBIT margin of 1.03%. The gross profit margin is relatively healthy at 50.62%, but the overall profitability is hampered by high operating costs and negative net income.Balance Sheet
The balance sheet reveals a moderate financial position. The debt-to-equity ratio has improved to 0.23 in the TTM, indicating reduced leverage compared to previous years. However, the return on equity remains negative at -11.36%, reflecting ongoing challenges in generating returns for shareholders. The equity ratio stands at 33.37%, suggesting a stable capital structure but highlighting the need for improved profitability.Cash Flow
Cash flow analysis shows positive trends, with a substantial free cash flow growth rate of 577.14% in the TTM. The operating cash flow to net income ratio is 0.29, indicating some efficiency in converting earnings into cash. The free cash flow to net income ratio of 0.63 suggests that the company is generating cash despite net losses, which is a positive sign for liquidity management.| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 868.59M | 833.88M | 826.34M | 819.76M | 844.96M | 843.79M |
| Gross Profit | 439.72M | 439.51M | 379.48M | 400.94M | 444.66M | 450.82M |
| EBITDA | 70.12M | 91.43M | 43.28M | -16.34M | -108.72M | 192.46M |
| Net Income | -43.06M | -54.23M | -66.21M | -98.08M | -177.19M | 88.59M |
Balance Sheet | ||||||
| Total Assets | 1.11B | 1.16B | 1.14B | 1.26B | 1.35B | 1.55B |
| Cash, Cash Equivalents and Short-Term Investments | 74.80M | 87.77M | 26.63M | 67.10M | 103.92M | 128.43M |
| Total Debt | 408.25M | 383.67M | 287.03M | 387.93M | 442.87M | 474.20M |
| Total Liabilities | 745.18M | 757.93M | 691.39M | 737.14M | 820.57M | 860.41M |
| Stockholders Equity | 360.05M | 404.62M | 452.76M | 518.43M | 527.17M | 686.85M |
Cash Flow | ||||||
| Free Cash Flow | 52.58M | 27.37M | 7.61M | -39.92M | 2.05M | 74.84M |
| Operating Cash Flow | 83.93M | 50.24M | 17.09M | -26.36M | 19.18M | 101.56M |
| Investing Cash Flow | -31.35M | -22.87M | -9.48M | -12.14M | -14.19M | -330.07M |
| Financing Cash Flow | -15.96M | 37.71M | -47.86M | 931.00K | -33.68M | 319.30M |
Ribbon Communications Technical Analysis
Negative
2.79
Price Trends
2.98
Negative
3.42
Negative
3.58
Negative
Market Momentum
-0.04
Positive
37.16
Neutral
17.70
Positive
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 2.79 is below the 20-day moving average (MA) of 2.91, below the 50-day MA of 2.98, and below the 200-day MA of 3.58, indicating a bearish trend. The MACD of -0.04 indicates Positive momentum. The RSI at 37.16 is Neutral, neither overbought nor oversold. The STOCH value of 17.70 is Positive, 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $208.38M | 20.54 | 10.54% | ― | 17.27% | 39.41% | |
62 Neutral | $320.44M | 144.72 | 2.59% | ― | 4.22% | ― | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
57 Neutral | $972.83M | ― | -8.89% | ― | 5.81% | ― | |
50 Neutral | $501.54M | -11.39 | -11.40% | ― | 7.38% | 20.81% | |
50 Neutral | $634.07M | -15.98 | -4.41% | 0.97% | 11.59% | -106.83% | |
44 Neutral | $1.09B | -5.46 | -136.94% | 13.93% | -6.48% | -588.01% |
* Technology Sector Average
RBBN
Ribbon Communications
2.79
-1.16
-29.37%
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13.00
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11.62
-0.24
-2.02%
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-15.60%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.