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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-38267

RIBBON COMMUNICATIONS INC.

(Exact name of Registrant as specified in its charter)


Delaware		82-1669692
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


6500 Chase Oaks Boulevard, Suite 100, Plano, Texas		75023
(Address of principal executive offices)		(Zip code)

(978) 614-8100

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001	RBBN	The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒	Non-accelerated filer	☐
Smaller reporting company	☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act) ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 18, 2025, there were 177,081,847 shares of the registrant’s common stock, $0.0001 par value per share, outstanding.

Table of Contents

RIBBON COMMUNICATIONS INC.

FORM 10-Q

QUARTERLY PERIOD ENDED JUNE 30, 2025

TABLE OF CONTENTS


Item		Page

	Cautionary Note Regarding Forward-Looking Statements	3

PART I FINANCIAL INFORMATION

1.	Financial Statements

	Condensed Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024 (unaudited)	4

	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2025 and 2024 (unaudited)	5

	Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2025 and 2024 (unaudited)	6

	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2025 and 2024 (unaudited)	7

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024 (unaudited)	9

	Notes to Condensed Consolidated Financial Statements (unaudited)	11

2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	39

3.	Quantitative and Qualitative Disclosures About Market Risk	54

4.	Controls and Procedures	54

PART II OTHER INFORMATION

1.	Legal Proceedings	55

1A.	Risk Factors	55

2.	Unregistered Sales of Equity Securities and Use of Proceeds	55

5.	Other Information	56

6.	Exhibits	57

	Signatures	58

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Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, which are subject to a number of risks and uncertainties. All statements other than statements of historical facts contained in this report, including statements regarding the effect of U.S. tariffs and the responses from other countries, future expenses and restructuring activities and the anticipated benefits thereof, results of operations and financial position, capital structure, impacts from the wars in Ukraine and Israel, financial sanctions and trade restrictions, beliefs about our business strategy, availability of components for the manufacturing of our products, ongoing litigation, plans and objectives of management for future operations and manufacturing are forward-looking statements. Without limiting the foregoing, the words “anticipates”, “believes”, “could”, “estimates”, “expects”, “intends”, “may”, “plans”, “seeks” and other similar language, whether in the negative or affirmative, are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are unknown and/or difficult to predict and that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. Such risks and uncertainties include, but are not limited to, unpredictable fluctuations in quarterly revenue and operating results; the impact of restructuring and cost-containment activities; increases in tariffs, trade restrictions or taxes on our products; supply chain disruptions resulting from component availability and/or geopolitical instabilities and disputes (including those related to the wars in Israel and Ukraine); the impact of military call-ups of our employees in Israel; material litigation; the impact of fluctuations in interest rates; material cybersecurity and data intrusion incidents, including any security breaches resulting in the theft, transfer, or unauthorized disclosure of customer, employee, or company information; our ability to comply with applicable domestic and foreign information security and privacy laws, regulations and technology platform rules or other obligations related to data privacy and security; failure to compete successfully against telecommunications equipment and networking companies; failure to grow our customer base or generate recurring business from our existing customers; credit risks; the timing of customer purchasing decisions and our recognition of revenues; macroeconomic conditions, including inflation; our ability to adapt to rapid technological and market changes; our ability to generate positive returns on our research and development; our ability to protect our intellectual property rights and obtain necessary licenses; our ability to maintain partner, reseller, distribution and vendor support and supply relationships; the potential for defects in our products; risks related to the terms of our credit agreement; higher risks in international operations and markets; currency fluctuations; unanticipated adverse changes in legal, regulatory or tax laws; future accounting pronouncements or changes in our accounting policies; and/or failure or circumvention of our controls and procedures. We therefore caution you against relying on any of these forward-looking statements. Additional important factors that could cause actual results to differ materially from those in these forward-looking statements are also discussed in Part I, Item 2, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and Part I, Item 1A and Part II, Item 7A, "Risk Factors" and "Quantitative and Qualitative Disclosures About Market Risk," respectively, of our Annual Report on Form 10-K for the year ended December 31, 2024. Any forward-looking statement made by us in this report speaks only as of the date on which this report was first filed. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

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PART I FINANCIAL INFORMATION

Item 1. Financial Statements

RIBBON COMMUNICATIONS INC.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(unaudited)


	June 30,		December 31,
	2025		2024
Assets
Current assets:
Cash and cash equivalents	$	60,450	$	87,770
Restricted cash		1,824		2,709
Accounts receivable, net		249,360		254,718
Inventory		80,299		79,179
Other current assets		42,007		39,286
Total current assets		433,940		463,662
Property and equipment, net		66,659		60,364
Intangible assets, net		164,742		187,537
Goodwill		300,892		300,892
Deferred income taxes		99,314		88,982
Operating lease right-of-use assets		47,383		34,544
Other assets		29,242		26,573
	$	1,142,172	$	1,162,554
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of term debt	$	8,750	$	6,125
Accounts payable		88,697		87,759
Accrued expenses and other		90,144		106,251
Operating lease liabilities		10,816		9,443
Deferred revenue		115,212		119,295
Total current liabilities		313,619		328,873
Long-term debt, net of current		327,625		330,726
Warrant liability		6,273		8,064
Operating lease liabilities, net of current		62,063		37,376
Deferred revenue, net of current		31,749		20,991
Deferred income taxes		5,941		5,941
Other long-term liabilities		24,467		25,962
Total liabilities		771,737		757,933
Commitments and contingencies (Note 20)
Stockholders’ equity:
Common stock, $0.0001 par value per share; 390,000,000 shares authorized at June 30, 2025; 240,000,000 shares authorized at December 31, 2024; 177,156,341 shares issued and outstanding at June 30, 2025; 175,599,250 shares issued and outstanding at December 31, 2024		18		18
Additional paid-in capital		1,973,990		1,970,708
Accumulated deficit		(1,611,505)		(1,574,185)
Accumulated other comprehensive income		7,932		8,080
Total stockholders’ equity		370,435		404,621
	$	1,142,172	$	1,162,554

See notes to the unaudited condensed consolidated financial statements.

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RIBBON COMMUNICATIONS INC.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)


	Three months ended				Six months ended
	June 30,		June 30,		June 30,		June 30,
	2025		2024		2025		2024
Revenue:
Product	$	115,057	$	99,133	$	197,048	$	186,743
Service		105,526		93,487		204,814		185,541
Total revenue		220,583		192,620		401,862		372,284
Cost of revenue:
Product		66,746		54,845		124,639		100,639
Service		39,253		33,376		74,881		68,740
Amortization of acquired technology		5,277		6,532		10,665		13,083
Total cost of revenue		111,276		94,753		210,185		182,462
Gross profit		109,307		97,867		191,677		189,822
Operating expenses:
Research and development		44,696		43,489		88,264		89,252
Sales and marketing		32,536		32,984		64,324		67,700
General and administrative		16,630		14,901		31,758		30,092
Amortization of acquired intangible assets		5,975		6,508		12,130		13,214
Acquisition-, disposal- and integration-related		3,898		—		3,898		—
Restructuring and related		1,346		1,920		6,687		4,985
Total operating expenses		105,081		99,802		207,061		205,243
Income (loss) from operations		4,226		(1,935)		(15,384)		(15,421)
Interest expense, net		(10,977)		(3,879)		(21,477)		(9,866)
Other (expense) income, net		(2,159)		(9,503)		970		(17,016)
Loss before income taxes		(8,910)		(15,317)		(35,891)		(42,303)
Income tax provision		(2,183)		(1,499)		(1,429)		(4,874)
Net loss	$	(11,093)	$	(16,816)	$	(37,320)	$	(47,177)
Loss per share:
Basic	$	(0.06)	$	(0.10)	$	(0.21)	$	(0.27)
Diluted	$	(0.06)	$	(0.10)	$	(0.21)	$	(0.27)
Weighted average shares used to compute loss per share:
Basic		176,749		173,793		176,237		173,110
Diluted		176,749		173,793		176,237		173,110

See notes to the unaudited condensed consolidated financial statements.

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RIBBON COMMUNICATIONS INC.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(unaudited)


	Three months ended				Six months ended
	June 30,		June 30,		June 30,		June 30,
	2025		2024		2025		2024
Net loss	$	(11,093)	$	(16,816)	$	(37,320)	$	(47,177)
Other comprehensive loss, net of tax:
Unrealized loss on interest rate swap, net of reclassifications and amortization into earnings		—		(4,698)		—		(6,019)
Foreign currency translation adjustments		(58)		176		(148)		60
Other comprehensive loss, net of tax		(58)		(4,522)		(148)		(5,959)
Comprehensive loss, net of tax	$	(11,151)	$	(21,338)	$	(37,468)	$	(53,136)

See notes to the unaudited condensed consolidated financial statements.

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RIBBON COMMUNICATIONS INC.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except shares)

(unaudited)


Three months ended June 30, 2025
								Accumulated
				Additional				other		Total
	Common stock			paid-in		Accumulated		comprehensive		stockholders'
	Shares	Amount		capital		deficit		(loss) income		equity
Balances, April 1, 2025	175,967,875	$	18	$	1,974,219	$	(1,600,412)	$	7,990	$	381,815
Exercise of stock options	3,273		—		5		—		—		5
Exercise of warrants	—		—		—		—		—		—
Repurchase of common stock	(572,810)		—		(2,253)		—		—		(2,253)
Vesting of restricted stock awards and units	2,439,889		—		—		—		—		—
Vesting of performance-based stock units	—		—		—		—		—		—
Shares of restricted stock returned to the Company under net share settlements to satisfy tax withholding obligations	(681,886)		—		(2,458)		—		—		(2,458)
Stock-based compensation expense	—		—		4,477		—		—		4,477
Other comprehensive loss	—		—		—		—		(58)		(58)
Net loss	—		—		—		(11,093)		—		(11,093)
Balances, June 30, 2025	177,156,341	$	18	$	1,973,990	$	(1,611,505)	$	7,932	$	370,435


Six months ended June 30, 2025
								Accumulated
				Additional				other		Total
	Common stock			paid-in		Accumulated		comprehensive		stockholders'
	Shares	Amount		capital		deficit		(loss) income		equity
Balances, January 1, 2025	175,599,250	$	18	$	1,970,708	$	(1,574,185)	$	8,080	$	404,621
Exercise of stock options	3,697		—		6		—		—		6
Exercise of warrants	32,573		—		150		—		—		150
Repurchase of common stock	(572,810)		—		(2,253)		—		—		(2,253)
Vesting of restricted stock awards and units	2,624,628		—		—		—		—		—
Vesting of performance-based stock units	377,751		—		—		—		—		—
Shares of restricted stock returned to the Company under net share settlements to satisfy tax withholding obligations	(908,748)		—		(3,396)		—		—		(3,396)
Stock-based compensation expense	—		—		8,775		—		—		8,775
Other comprehensive loss	—		—		—		—		(148)		(148)
Net loss	—		—		—		(37,320)		—		(37,320)
Balances, June 30, 2025	177,156,341	$	18	$	1,973,990	$	(1,611,505)	$	7,932	$	370,435

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RIBBON COMMUNICATIONS INC.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except shares)

(unaudited)


Three months ended June 30, 2024
								Accumulated
				Additional				other		Total
	Common stock			paid-in		Accumulated		comprehensive		stockholders'
	Shares	Amount		capital		deficit		(loss) income		equity
Balances, April 1, 2024	172,714,429	$	17	$	1,962,602	$	(1,550,311)	$	12,350	$	424,658
Vesting of restricted stock awards and units	2,138,848		—		—		—		—		—
Vesting of performance-based stock units	257,390		—		—		—		—		—
Shares of restricted stock returned to the Company under net share settlements to satisfy tax withholding obligations	(673,425)		—		(1,792)		—		—		(1,792)
Stock-based compensation expense	—		—		3,494		—		—		3,494
Other comprehensive loss	—		—		—		—		(4,522)		(4,522)
Net loss	—		—		—		(16,816)		—		(16,816)
Balances, June 30, 2024	174,437,242	$	17	$	1,964,304	$	(1,567,127)	$	7,828	$	405,022


Six months ended June 30, 2024
								Accumulated
				Additional				other		Total
	Common stock			paid-in		Accumulated		comprehensive		stockholders'
	Shares	Amount		capital		deficit		(loss) income		equity
Balances, January 1, 2024	172,083,667	$	17	$	1,958,909	$	(1,519,950)	$	13,787	$	452,763
Exercise of stock options	8,624		—		17		—		—		17
Vesting of restricted stock awards and units	3,027,037		—		—		—		—		—
Vesting of performance-based stock units	288,672		—		—		—		—		—
Shares of restricted stock returned to the Company under net share settlements to satisfy tax withholding obligations	(970,758)		—		(2,638)		—		—		(2,638)
Stock-based compensation expense	—		—		8,016		—		—		8,016
Other comprehensive loss	—		—		—		—		(5,959)		(5,959)
Net loss	—		—		—		(47,177)		—		(47,177)
Balances, June 30, 2024	174,437,242	$	17	$	1,964,304	$	(1,567,127)	$	7,828	$	405,022

See notes to the unaudited condensed consolidated financial statements.

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RIBBON COMMUNICATIONS INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	Six months ended
	June 30,		June 30,
	2025		2024
Cash flows from operating activities:
Net loss	$	(37,320)	$	(47,177)
Adjustments to reconcile net loss to cash flows (used in) provided by operating activities:
Depreciation and amortization of property and equipment		7,757		6,770
Amortization of intangible assets		22,795		26,297
Amortization of debt issuance costs and original issue discount		1,401		3,445
Amortization of accumulated other comprehensive gain related to interest rate swap		—		(8,196)
Stock-based compensation		8,775		8,016
Deferred income taxes		(8,984)		(8,104)
Change in fair value of warrant liability		(1,641)		875
Change in fair value of preferred stock liability		—		8,091
Dividends accrued on preferred stock liability		—		2,743
Payment of dividends accrued on preferred stock liability		—		(6,686)
Foreign currency exchange losses		587		2,023
Changes in operating assets and liabilities:
Accounts receivable		4,578		56,146
Inventory		(2,820)		(4,405)
Other operating assets		(186)		8,854
Accounts payable		5,083		(20,541)
Accrued expenses and other long-term liabilities		(11,030)		(8,407)
Deferred revenue		6,675		(16,422)
Net cash (used in) provided by operating activities		(4,330)		3,322
Cash flows from investing activities:
Purchases of property and equipment		(17,831)		(5,613)
Purchases of software licenses		—		(263)
Net cash used in investing activities		(17,831)		(5,876)
Cash flows from financing activities:
Borrowings under revolving line of credit		—		44,106
Principal payments on revolving line of credit		—		(44,106)
Proceeds from issuance of term debt		—		342,300
Principal payments of term debt		(1,750)		(235,395)
Payment of debt issuance costs		—		(3,978)
Payment of preferred stock liability		—		(56,850)
Proceeds from the exercise of stock options		6		17
Payment of tax obligations related to vested stock awards and units		(3,396)		(2,638)
Repurchase of common stock		(2,253)		—
Net cash (used in) provided by financing activities		(7,393)		43,456
Effect of exchange rate changes on cash and cash equivalents		1,349		(124)
Net (decrease) increase in cash and cash equivalents		(28,205)		40,778
Cash, cash equivalents and restricted cash, beginning of year		90,479		26,630
Cash, cash equivalents and restricted cash, end of period	$	62,274	$	67,408

See notes to the unaudited condensed consolidated financial statements.

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RIBBON COMMUNICATIONS INC.

Condensed Consolidated Statements of Cash Flows (continued)

(in thousands)

(unaudited)


	Six months ended
	June 30,		June 30,
	2025		2024
Supplemental disclosure of cash flow information:
Interest paid	$	19,167	$	12,222
Income taxes paid	$	7,716	$	9,664
Income tax refunds received	$	474	$	991
Supplemental disclosure of non-cash investing activities:
Capital expenditures incurred, but not yet paid	$	5,436	$	1,786
Inventory transfers to property and equipment	$	874	$	954
Supplemental disclosure of non-cash financing activities:
Warrant liability released to additional paid-in-capital	$	150	$	—
Fair value of vested restricted and performance-based stock grants	$	11,253	$	9,095

See notes to the unaudited condensed consolidated financial statements.

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RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

(1) BASIS OF PRESENTATION

Business

Ribbon Communications Inc. ("Ribbon" or the "Company") is a leading global provider of communications technology to service providers and enterprises. The Company provides 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. Ribbon’s 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. The Company is headquartered in Plano, Texas, and has a global presence with research and development, or sales and support locations in over thirty countries around the world.

Basis of Presentation

In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring items, necessary for their fair presentation with accounting principles generally accepted in the United States of America ("GAAP") and with the rules and regulations of the U.S. Securities and Exchange Commission ("SEC").

Interim results are not necessarily indicative of results for a full year or any future interim period. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, (the "Annual Report"), which was filed with the SEC on February 27, 2025.

Operating Segments

The Company’s chief operating decision maker (the "CODM") is its president and chief executive officer. The CODM assesses the Company’s performance based on the performance of two separate organizations within Ribbon: the Cloud and Edge segment ("Cloud and Edge") and the IP Optical Networks segment ("IP Optical Networks").

Significant Accounting Policies

The Company’s significant accounting policies are disclosed in Note 2 to the Consolidated Financial Statements included in the Annual Report. There were no material changes to the significant accounting policies during the six months ended June 30, 2025.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Ribbon and its wholly-owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates and Judgments

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and judgments relied upon in preparing these condensed consolidated financial statements include revenue recognition for arrangements that contain multiple performance obligations, inventory valuations, assumptions used to determine the fair value of stock-based compensation and the Preferred Stock and Warrants, intangible asset and

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RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

goodwill valuations, including impairments, warranty accruals, legal contingencies and recoverability of Ribbon’s net deferred tax assets and the related valuation allowances. Ribbon regularly assesses these estimates and records changes in estimates in the period in which they become known. Ribbon bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from those estimates.

Transfers of Financial Assets

The Company’s IP Optical Networks segment maintains customer receivables factoring agreements with a number of financial institutions. Under the terms of these agreements, the Company may transfer receivables to the financial institutions, on a non-recourse basis, provided that the financial institutions approve the receivables in advance. The Company maintains credit insurance policies from major insurance providers or obtains letters of credit from the customers for a majority of its factored trade receivables. The Company accounts for the factoring of its financial assets as a sale of the assets and records the factoring fees, when incurred, as a component of interest expense in the condensed consolidated statements of operations, and the proceeds from the sales of receivables are included in cash from operating activities in the condensed consolidated statements of cash flows.

Factoring of accounts receivable and associated fees for the three and six months ended June 30, 2025 and 2024 were as follows (in thousands):


	Three months ended				Six months ended
	June 30,		June 30,		June 30,		June 30,
	2025		2024		2025		2024
Accounts receivable sold	$	25,957	$	25,970	$	54,723	$	46,962
Less factoring fees		(577)		(543)		(1,050)		(934)
Net cash proceeds	$	25,380	$	25,427	$	53,673	$	46,028

Recent Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board (the "FASB") issued ASU 2024-03, Income Statement, Reporting Comprehensive Income: Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”), which requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. The objective of this standard is to provide investors with information to better understand a public entity’s performance and prospects for future cash flows, and to compare its performance over time with that of other entities. ASU 2024-03 will be effective for the Company beginning with our 2027 annual financial statements and interim financial statements thereafter, with early adoption permitted. The adoption of ASU 2024-03 will require the Company to provide new footnote disclosure about the types of expenses that are included in certain captions on its Statements of Operations, such as Cost of revenue, Research and development, Sales and marketing, and General and administrative.

In December 2023, 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 the Company beginning with its 2025 annual financial statements. The Company expects the adoption of the standard will require certain additional income tax disclosure.

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RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

(2) EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares outstanding during the period. For periods in which the Company reports net income, diluted net earnings per share is determined by using the weighted average number of common and dilutive common equivalent shares outstanding during the period, unless the effect is antidilutive.

The shares used to compute loss per share were as follows (in thousands):


	Three months ended		Six months ended
	June 30,	June 30,	June 30,	June 30,
	2025	2024	2025	2024
Weighted average shares outstanding—basic	176,749	173,793	176,237	173,110
Potential dilutive common shares	—	—	—	—
Weighted average shares outstanding—diluted	176,749	173,793	176,237	173,110

Options to purchase the Company’s common stock and unvested restricted and performance-based stock units aggregating 13.6 million and 11.9 million shares were excluded from the computation of diluted loss per share for the three and six months ended June 30, 2025 and 2024, respectively, because their effect would have been antidilutive.

On March 28, 2023, the Company issued 55,000 shares of newly designated Series A Preferred Stock (the "Preferred Stock") to investors in a private placement offering at a price of $970 per share, along with 4.9 million warrants (the "Warrants") to purchase shares of the Company’s common stock, par value $0.0001 per share (the "Private Placement"), at the exercise price of $3.77 per share. The proceeds from the Private Placement were approximately $53.4 million, including approximately $10 million from existing related party stockholders (See Note 11).

On June 25, 2024, the Company redeemed the Preferred Stock with a portion of the proceeds from its refinancing of the 2020 Credit Facility at a rate of 103% for a total of approximately $63.5 million. During the six months ended June 30, 2025, 0.2 million Warrants were exercised. The remaining Warrants outstanding continue without modification. See Note 9 for a description of the refinancing of the 2020 Credit Facility.

As of June 30, 2025 and 2024, the potential number of dilutive shares from the Warrants outstanding totaled 4.7 million and 4.9 million shares, respectively. For the six months ended June 30, 2025, 0.2 million Warrants would have been included in the calculation of diluted loss per share, but had no impact due to the Company’s net loss position. There was no impact on weighted average shares outstanding from these Warrants for three months ended June 30, 2025 or for the three and six months ended June 30, 2024 as the average market price of the Company’s common stock was below the exercise price of $3.77 per share and their effect would have been antidilutive.

Dividends accrued on the Preferred Stock were not an adjustment to net income (loss) used for the calculation of diluted earnings (loss) per share as these dividends were included in the fair value adjustment of the Preferred Stock which was reflected in Other income (expense), net until the redemption of the Preferred Stock on June 25, 2024.

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RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

(3) INVENTORY

Inventory at June 30, 2025 and December 31, 2024 consisted of the following (in thousands):


	June 30,		December 31,
	2025		2024
On-hand assemblies and finished goods inventories	$	96,514	$	95,366
Deferred cost of goods sold		3,228		2,430
		99,742		97,796
Less noncurrent portion (included in Other assets)		(19,443)		(18,617)
Current portion	$	80,299	$	79,179

(4) INTANGIBLE ASSETS AND GOODWILL

The Company’s intangible assets at June 30, 2025 and December 31, 2024 consisted of the following (in thousands):


	Weighted
	average
	amortization					Net
	period			Accumulated		carrying
June 30, 2025	(years)	Cost		amortization		value
Developed technology	7.84	$	340,380	$	271,792	$	68,588
Customer relationships	11.86		268,140		172,746		95,394
Trade names	3.88		5,000		4,997		3
Software licenses	3.00		5,748		4,991		757
		$	619,268	$	454,526	$	164,742


	Weighted
	average
	amortization					Net
	period			Accumulated		carrying
December 31, 2024	(years)	Cost		amortization		value
Developed technology	7.84	$	340,380	$	262,085	$	78,295
Customer relationships	11.86		268,140		160,635		107,505
Trade names	3.88		5,000		4,978		22
Software licenses	3.00		5,748		4,033		1,715
		$	619,268	$	431,731	$	187,537

Estimated future amortization expense for the Company’s intangible assets at June 30, 2025 was as follows (in thousands):


Years ending December 31,
Remainder of 2025	$	21,397
2026		39,143
2027		33,979
2028		23,400
2029		18,379
2030		7,722
Thereafter		20,722
	$	164,742

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RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

There were no changes to the carrying value of the Company’s goodwill in the six months ended June 30, 2025 and 2024. The components of goodwill at both June 30, 2025 and 2024 were as follows (in thousands):


	Cloud and		IP Optical
	Edge		Networks		Total
Goodwill	$	392,302	$	191,996	$	584,298
Accumulated impairment losses		(167,406)		(116,000)		(283,406)
	$	224,896	$	75,996	$	300,892

(5) FAIR VALUE HIERARCHY

The carrying amounts of the Company’s cash equivalents, accounts receivable, accounts payable and borrowings under a revolving credit facility in the condensed consolidated balance sheets approximate fair value due to the immediate or short-term nature of these financial instruments. Ribbon’s term debt balance as of June 30, 2025 and December 31, 2024 of $346.5 million and $348.3 million, respectively, had a fair value of approximately $350.8 million and $350.4 million, respectively. The Company’s Warrant liability had a fair value of $6.3 million and $8.1 million as of June 30, 2025 and December 31, 2024, respectively.

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 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 June 30, 2025 or December 31, 2024.

●

Level 2 applies to assets or liabilities for which there are inputs that are directly or indirectly observable in the marketplace, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets). At December 31, 2024, the Company determined the fair value of its defined benefit plans’ assets using Level 2 input. There were no significant changes to the Company’s defined benefit plans’ assets during the six months ended June 30, 2025 that required the calculation of their fair value as of June 30, 2025.

●

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. Level 3 input was used to determine the fair value of the Company’s Warrants at June 30, 2025 and December 31, 2024.

The Company had no transfers between Level 2 and Level 3 fair value measurements during the three and six months ended June 30, 2025 or 2024.

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RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

(6) ACCRUED EXPENSES AND OTHER

Accrued expenses at June 30, 2025 and December 31, 2024 consisted of the following (in thousands):


	June 30,		December 31,
	2025		2024
Employee compensation and related costs	$	33,178	$	44,948
Professional fees		17,235		16,339
Taxes payable		10,066		6,364
Other		29,665		38,600
	$	90,144	$	106,251

(7) WARRANTY

The changes in the Company’s warranty accrual balance in the six months ended June 30, 2025 were as follows (in thousands):


Balance at January 1, 2025	$	12,300
Current period provisions		3,209
Settlements		(2,596)
Balance at June 30, 2025	$	12,913

At June 30, 2025, the Company’s accrual for product warranties was reflected in its condensed consolidated balance sheet as a current liability in Accrued expenses and other of $5.5 million, and as a long-term liability in Other long-term liabilities of $7.4 million.

(8) RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES

The Company recorded restructuring and related expense aggregating $1.3 million and $1.9 million in the three months ended June 30, 2025 and 2024, respectively and $6.7 million and $5.0 million in the six months ended June 30, 2025 and 2024, respectively. Restructuring and related expense includes restructuring expense (primarily severance and related costs), estimated future variable and other lease costs for vacated properties with no intent or ability to 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. Amounts of accelerated rent amortization that are included as a component of restructuring and related expense are excluded from the tables below, as the liability for lease payments for each respective facility is included as a component of Operating lease liabilities in the Company’s condensed consolidated balance sheets at June 30, 2025 and

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RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

December 31, 2024 (see Note 17). The Company may incur additional future expense if it is unable to sublease other locations included in the Facilities Initiative.

The components of restructuring and related expense for the three and six months ended June 30, 2025 and 2024 were as follows (in thousands):


	Three months ended				Six months ended
	June 30,		June 30,		June 30,		June 30,
	2025		2024		2025		2024
Severance and related costs	$	137	$	359	$	2,413	$	1,975
Variable and other facilities-related costs		1,209		1,561		4,274		3,010
	$	1,346	$	1,920	$	6,687	$	4,985

2025 Restructuring Plan

During the first quarter of 2025, the Company’s President and CEO approved a strategic restructuring program (the "2025 Restructuring Plan") that consists of workforce reductions in certain of the Company’s operating locations to correspond with current sales levels in those areas. Any potential positions eliminated in countries outside the United States are subject to local law and consultation requirements. In connection with the 2025 Restructuring Plan, the Company recorded restructuring and related expense of $0.2 million and $2.6 in three and six months ended June 30, 2025, respectively, with payments of $2.1 million in 2025.

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.

No expense was recorded in the three or six months ended June 30, 2025 related to the 2023 Restructuring Plan. However, the Company recorded restructuring and related expense, consisting entirely of severance related costs, of $0.4 million and $2.0 million in the three and six months ended June 30, 2024, respectively. Changes to accrued restructuring during the six months ended June 30, 2025 and the ending accrual balance as of June 30, 2025 related to the 2023 Restructuring Plan was nominal.

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 $1.2 million and $1.6 million in the three months ended June 30, 2025 and 2024, respectively, and $4.3 million and $3.0 million in the six months ended June 30, 2025 and 2024, respectively, in connection with the 2022 Restructuring Plan for variable and other facilities-related costs. A

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RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

summary of the 2022 Restructuring Plan accrual activity for the six months ended June 30, 2025 is as follows (in thousands):


	Balance at		Initiatives
	January 1,		charged to	Cash	Balance at
	2025		expense	payments	June 30, 2025
Variable and other facilities-related costs	$	347	4,275	(4,318)	$	304

Balance Sheet Classification

The current portions of accrued restructuring were $0.8 million and $1.4 million at June 30, 2025 and December 31, 2024, 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 $0.6 million and $0.8 million at June 30, 2025 and December 31, 2024, 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” or “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 Credit Agreement 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 Facility). Margins for the first six months were 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 $6.3 million of debt issuance costs for a total of $14.0 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 June 30, 2025 and December 31, 2024.

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RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

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 liens 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., 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 Company entered into the Sixth Amendment to the 2020 Credit Facility (the “Sixth Amendment”) effective March 30, 2023. Among other things, 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. Also, 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%. 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.

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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 as of June 30, 2025 and December 31, 2024:


		June 30,			December 31,
	2025			2024
Current portion of Term Debt	$	8,750		$	6,125

Long-term Debt, net of Current:
Long-term Debt, net of Current (Face Amount)	$	337,750		$	342,125
Original Issue Discount		(5,561)			(6,261)
Unamortized Debt Issuance Costs - Contra-Liability		(4,564)			(5,138)
Long-term Debt, net of Current	$	327,625		$	330,726

Total Face Amount of Borrowings	$	346,500		$	348,250

Unamortized Original Issue Discount and Debt Issuance Costs:
Other Assets	$	1,007		$	1,134
Long-Term Debt - Contra Liability		10,125			11,399
Total Unamortized Original Issue Discount and Debt Issuance Costs	$	11,132		$	12,533

Remaining Borrowing Capacity	$	35,000		$	35,000

Average Interest Rates:
Term Loan		10.6	%		10.6	%

The Company’s debt maturities as of June 30, 2025 were as follows:


Years ending December 31,
Remainder of 2025	$	4,375
2026		8,750
2027		13,125
2028		17,500
2029		302,750
	$	346,500

Letters of Credit and Other Guarantees

In the course of its business, the Company uses letters of credit, bank guarantees, and surety bonds (collectively, "Guarantees"). The Company had $9.9 million and $10.9 million of Guarantees under various uncommitted facilities as of June 30, 2025 and December 31, 2024, respectively. The Company had no letters of credit outstanding under the 2024 Credit Facility as of June 30, 2025 or December 31, 2024. At June 30, 2025 and December 31, 2024, the Company had cash collateral of $1.8 million and $2.7 million supporting the Guarantees, respectively, which are reported as Restricted cash in the Company’s condensed consolidated balance sheets.

(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

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RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

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 had outstanding balances of $346.5 million and $348.3 million at June 30, 2025 and December 31, 2024, respectively. The 2024 Revolving Credit Facility was undrawn at June 30, 2025 and December 31, 2024. 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, the Company entered into an interest rate swap arrangement in March 2020 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.

In two separate transactions during 2022, the Company sold a total of $60 million of the notional amount of its interest rate swap back to its counterparty for $3.1 million, reducing the notional amount of this swap to $340 million. The gain in Accumulated other comprehensive (loss) income related to these sales totaled $3.1 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, the amortization of which totaled $0.2 million and $0.4 million in three and six months ended June 30, 2024, 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.

In two separate transactions in 2023, the Company received a total of $19.2 million, consisting of $0.8 million of interest and $18.4 million for the sale of the remaining $340 million notional amount of its swap. 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 the 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 the 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 $1.4 million and $3.0 million for three and six months ended June 30, 2024, 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.

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RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

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. 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 three and six months ended June 30, 2024 was a reclassification of $4.7 million and $6.0 million, respectively, to increase interest expense. The Company had no derivative assets or liabilities at June 30, 2025 or December 31, 2024.

(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.

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. During six months ended June 30, 2025, 0.2 million Warrants were exercised. The remaining Warrants outstanding continue 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 remaining 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 were as follows as of June 30, 2025 and December 31, 2024:

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RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)



		June 30,			December 31,
	2025			2024
Stock price	$	4.01		$	4.16
Strike price	$	3.77		$	3.77
Risk-free rate		3.74	%		4.21	%
Volatility		56.0	%		57.5	%
Dividend yield		0.0	%		0.0	%
Time to expiration (years)		1.8			2.2
Fair value of Warrant per share	$	1.34		$	1.66

The changes in the Company’s Preferred Stock liabilities for the six months ended June 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 June 30, 2024	$	—

The changes in the Company’s Warrant liabilities for the six months ended June 30, 2025 and 2024 were as follows (in thousands):


	Six months ended June 30,
	2025		2024
Balance at beginning of year	$	8,064	$	5,295
Exercise of warrants		(150)		—
Fair value change		(1,641)		875
Balance at end of period	$	6,273	$	6,170

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 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 are immediately exercisable and upon an event such as a merger, consolidation, asset sale or similar change of control, the Warrants 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.

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RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

During the six months ended June 30, 2025, 176,658 of the Warrants were exercised in cashless exercises, resulting in the issuance of 32,573 of the Company’s common stock at a weighted average fair value of $4.62 per share. There were 4,681,432 remaining Warrants outstanding as of June 30, 2025.

(12) REVENUE RECOGNITION

The Company derives revenue from two primary sources: products and services. Product revenue includes: 1) the Company’s proprietary hardware and software that function together to deliver the products’ essential functionality and 2) the Company’s software only solutions that can be used on either the Company’s hardware or third-party hardware. Both proprietary hardware and software only solutions 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, including when they are sold separately to similar customers, in order to estimate standalone selling price (“SSP”).

The Company’s software licenses typically provide a perpetual right to use the Company’s software. However, 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 from sales of the Company’s perpetual and term-based software licenses is typically recognized 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 term-based software licenses at the start of the renewal period. Revenue related to sales of SaaS-based software is recognized ratably over the service period as the customer does not take possession of the software or have the ability to take possession of the software.

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.

Service 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.

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

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RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

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 and to recognize revenue because it believes such method, in general, best depicts the transfer of assets to its customers. The input method measures costs the Company has incurred in the period for its contracts. In some infrequent instances, the Company may engage a third-party to perform services on its behalf and in those cases the output method is used to recognize revenue because it best depicts the transfer of assets to its customers. Under the output method, there is a 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 can 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, typically over a period of one to five days.

Payment terms for the Company’s contracts with its customers typically range from 30 to 60 days from the invoice date. In certain cases, the Company may offer extended payment terms, which are assessed on a case-by-case basis.

The Company does not generally offer significant financing components in its contracts with customers. However, if a contract includes a significant financing component, the transaction price is adjusted for the time value of money. For the three and six months ended June 30, 2025, the impact of financing components was immaterial.

Amounts billed to customers for sales and other taxes are excluded from the transaction price. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to government authorities.

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RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

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)	For perpetual licenses, typically when made available for download (point in time); for term-based licenses, at the beginning of the specified term (point in time)	Generally, within 30-60 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 30-60 days of invoicing
Hardware	When control of the hardware passes to the customer; typically, upon delivery (point in time)	Generally, within 30-60 days of invoicing
Software upgrades	Upon transfer of control; typically, when made available for download (point in time)	Generally, within 30-60 days of invoicing
Customer Support Revenue
Customer support	Ratably over the course of the support contract (over time)	Generally, within 30-60 days of invoicing
Professional Services
Other professional services (excluding training services)	As work is performed (over time), typically on the input method based on hours incurred	Generally, within 30-60 days of invoicing (upon completion of services)
Training	As the training is delivered (over time), typically one to five days	Generally, within 30-60 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 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 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 invoices and recognition of revenue.

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RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

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 total revenue for three and six months ended June 30, 2025 and 2024 was disaggregated geographically as follows:


					Service revenue
	Product		Service revenue		(professional
Three months ended June 30, 2025	revenue		(maintenance)		services)		Total revenue
United States	$	59,101	$	33,546	$	23,575	$	116,222
Europe, Middle East and Africa		25,534		18,362		8,217		52,113
Asia Pacific		27,966		9,708		4,078		41,752
Other		2,456		6,681		1,359		10,496
	$	115,057	$	68,297	$	37,229	$	220,583


					Service revenue
	Product		Service revenue		(professional
Three months ended June 30, 2024	revenue		(maintenance)		services)		Total revenue
United States	$	35,368	$	32,639	$	13,462	$	81,469
Europe, Middle East and Africa		33,239		17,491		8,188		58,918
Asia Pacific		26,081		9,759		2,597		38,437
Other		4,445		7,631		1,720		13,796
	$	99,133	$	67,520	$	25,967	$	192,620


					Service revenue
	Product		Service revenue		(professional
Six months ended June 30, 2025	revenue		(maintenance)		services)		Total revenue
United States	$	88,442	$	66,870	$	43,605	$	198,917
Europe, Middle East and Africa		44,994		35,745		16,873		97,612
Asia Pacific		59,005		19,108		6,818		84,931
Other		4,607		12,996		2,799		20,402
	$	197,048	$	134,719	$	70,095	$	401,862


					Service revenue
	Product		Service revenue		(professional
Six months ended June 30, 2024	revenue		(maintenance)		services)		Total revenue
United States	$	61,975	$	65,486	$	25,122	$	152,583
Europe, Middle East and Africa		74,928		35,187		15,886		126,001
Asia Pacific		42,714		20,000		5,524		68,238
Other		7,126		15,228		3,108		25,462
	$	186,743	$	135,901	$	49,640	$	372,284

The Company’s product revenue from its direct sales program and from indirect sales through its channel partner program for the three and six months ended June 30, 2025 and 2024 was as follows (in thousands):


	Three months ended				Six months ended
	June 30,		June 30,		June 30,		June 30,
	2025		2024		2025		2024
Indirect sales through channel partner program	$	38,988	$	31,282	$	61,723	$	76,957
Direct sales		76,069		67,851		135,325		109,786
	$	115,057	$	99,133	$	197,048	$	186,743

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RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

The Company’s product revenue from sales to enterprise customers and from sales to service provider customers for the three and six months ended June 30, 2025 and 2024 was as follows (in thousands):


	Three months ended				Six months ended
	June 30,		June 30,		June 30,		June 30,
	2025		2024		2025		2024
Sales to enterprise customers	$	39,052	$	38,040	$	62,284	$	75,910
Sales to service provider customers		76,005		61,093		134,764		110,833
	$	115,057	$	99,133	$	197,048	$	186,743

The Company’s product revenue and service revenue components by segment for the three and six months ended June 30, 2025 and 2024 were as follows (in thousands):


	Three months ended				Six months ended
	June 30,		June 30,		June 30,		June 30,
	2025		2024		2025		2024
Product revenue:
Cloud and Edge	$	56,112	$	39,586	$	87,973	$	71,099
IP Optical Networks		58,945		59,547		109,075		115,644
Total product revenue	$	115,057	$	99,133	$	197,048	$	186,743

Service revenue:
Maintenance:
Cloud and Edge	$	51,816	$	52,663	$	102,584	$	105,859
IP Optical Networks		16,481		14,857		32,135		30,042
Total maintenance revenue		68,297		67,520		134,719		135,901
Professional services:
Cloud and Edge		29,120		18,306		54,082		35,266
IP Optical Networks		8,109		7,661		16,013		14,374
Total professional services revenue		37,229		25,967		70,095		49,640
Total service revenue	$	105,526	$	93,487	$	204,814	$	185,541

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. 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 which are 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 six months ended June 30, 2025 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

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RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

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 six months ended June 30, 2025 were as follows (in thousands):


			Unbilled		Deferred		Deferred
	Accounts		accounts		revenue		revenue
	receivable		receivable		(current)		(long-term)
Balance at January 1, 2025	$	176,575	$	78,143	$	119,295	$	20,991
Increase (decrease), net		1,109		(6,467)		(4,083)		10,758
Balance at June 30, 2025	$	177,684	$	71,676	$	115,212	$	31,749

The Company recognized approximately $75 million of revenue in the six months ended June 30, 2025 that was recorded as deferred revenue at December 31, 2024 and approximately $78 million of revenue in the six months ended June 30, 2024 that was recorded as deferred revenue at December 31, 2023. Of the Company’s deferred revenue reported as long-term in its condensed consolidated balance sheet at June 30, 2025, the Company expects that approximately $10 million will be recognized as revenue in 2026, approximately $9 million will be recognized as revenue in 2027 and approximately $13 million will be recognized as revenue in 2028 and beyond.

The Company applies the optional exemption of not disclosing the transaction price allocated to the remaining performance obligation for its contracts with an original duration of less than one year. In 2024, the Company entered into a contract with an existing customer that has revenue allocated to remaining performance obligations, which includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods of approximately $235 million and $285 million as of June 30, 2025 and December 31, 2024, respectively. At this time, the Company expects to recognize the majority of the revenue related to this contract in the years 2025 through 2028.

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 June 30, 2025 and December 31, 2024, the Company had $2.2 million and $2.8 million of deferred sales commissions capitalized, respectively.

(13) OPERATING SEGMENT INFORMATION

The Company has two operating and reportable segments, Cloud and Edge and IP Optical Networks, that align with the way the business is managed. The Company’s CODM, its President and Chief Executive Officer, makes key operating decisions and assesses performance based upon these reportable segments.

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

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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 does not provide 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 10 for information regarding the allocation of goodwill between segments.

The CODM utilizes adjusted gross profit to evaluate each segment's performance. The Company calculates adjusted gross profit by excluding from cost of revenue both amortization of acquired technology and 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. The Company uses adjusted gross profit to develop its annual budget and quarterly forecasts. The CODM analyzes adjusted gross profit compared to the annual budget and quarterly forecasts to allocate resources. Ribbon’s calculation of adjusted gross profit may not be comparable to similarly titled measures used by other companies. See below for a reconciliation of segment adjusted gross profit to gross profit and loss before income taxes.

The tables below present significant segment expenses regularly reviewed by the CODM for the three and six months ended June 30, 2025 and 2024 (in thousands):

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RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)


	Three months ended				Six months ended
	June 30,		June 30,		June 30,		June 30,
	2025		2024		2025		2024
Segment revenue:
Cloud and Edge	$	137,048	$	110,555	$	244,639	$	212,224
IP Optical Networks		83,535		82,065		157,223		160,060
Revenue

Ribbon Communications Inc. 10-Q