Q2 2024 Ribbon Communications Inc Earnings Call
Greetings and welcome to the Arabian Communications' second quarter 'twenty 'twenty four financial results conference call. At this time, all participants are in a listen only mode.
Operator: Greetings and welcome to the Ribbon Communications 2nd Quarter 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode.
Operator: Greetings and welcome to the Ribbon Communications second quarter 2024 financial results conference call. At this time, all participants are in a listen-only mode.
Operator: A brief question and answer session will follow the formal presentation.
Speaker Change: Brief question and answer session will follow the formal presentation should anyone require operator assistance during the conference. Please press star zero on your telephone keypad.
Operator: Should anyone require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.
As a reminder, this conference is being recorded.
Joni Roberts: It is now my pleasure to introduce your host, Joni Roberts. Thank you, you may begin. Good afternoon and welcome to Ribbon's second quarter 2024 financial results conference call. I'm Joni Roberts, Chief Marketing Officer at Ribbon Communications. I'll also on the call today, Bruce McClelland, Ribbon's Chief Executive Officer, and Mick Lopez, Ribbon's Chief Financial Officer.
Speaker Change: It is now my pleasure to introduce your host Joni Roberts. Thank you you may begin.
Operator: A brief question and answer session will follow the formal presentation. Should anyone require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Joni Roberts. Thank you. You may begin. Good afternoon, and welcome to Ribbon's second quarter 2024 financial results conference call. I'm Joni Roberts, Chief Marketing Officer at Ribbon Communications. Also on the call today are Bruce McClelland, Ribbon's Chief Executive Officer, and Mick Lopez, Ribbon's Chief Financial Officer.
Good afternoon, and welcome to <unk> second quarter 'twenty 'twenty four financial results Conference call I'm, Tony Roberts, Chief Marketing Officer at Ribbon Communications also on the call today, Bruce Mcallen ribbons, Chief Executive Officer, and Mick Lopez ribbons Chief Financial Officer, today's call is being webcast live and will be archived on the investor.
Operator: Today's call is being webcast live and will be archived on the investor relations section of our website, rbbn.com, where both our press release and supplemental slides are currently available. Certain matters we'll be discussing today, including the business outlook and financial projections for the third quarter of 2024 and beyond, are forward-looking statements. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contained in these forward-looking statements.
Joni Roberts: Today's call is being webcast live and will be archived on the Investor Relations section of our website, rbbn.com, where both the press release and supplemental flights are currently available. Certain matters we'll be discussing today, including the business outlook and financial projections for the third quarter of 2024 and beyond, are forward-looking statements. Such statements are subject to the risks and uncertainties that could cause actual results to differ materially from those contained in these forward-looking statements. These risks and uncertainties are discussed in our documents filed with the SEC, including our most recent form 10-K. I refer you to our safe harbor statement included in the supplemental financial information posted on our website.
Speaker Change: Relations section of our website Army began dot com, where both our press release and supplemental slides are currently available certain matters, we'll be discussing today, including the business outlook and financial protections for third quarter of 2024 and beyond are forward looking statements such statements are subject to the risks and uncertainties that could.
Cause actual results to differ materially from those contained in these forward looking statements. These risks and uncertainties are discussed in our documents filed with the SEC.
Speaker Change: Our most recent Form 10-K, I refer you to our Safe Harbor statement included in the supplemental financial information posted on our website. In addition, we will present non-GAAP financial information on this call reconciliations to the applicable GAAP measure are included in the earnings press release, we issued earlier today as well.
Joni Roberts: These risks and uncertainties are discussed in our documents filed with the SEC, including our most recent Form 10-K. I refer you to our safe harbor statement included in the supplemental financial information posted on our website. In addition, we'll present non-GAAP financial information on this call. Reconciliations to the applicable GAAP measure are included in the earnings press release we issued earlier today, as well as the supplemental financial information we prepared for this conference call, which is again both available on the investor relations section of our website. Now I'd like to turn the call over to Bruce. Okay, Bruce?
Joni Roberts: In addition, we'll present non-GAAP financial information on this call. Reconciliation to the applicant will gap measure are included in the earnings press release we issued earlier today, as well as the supplemental financial information we prepared for this conference call, which again are both available on the Investor Relations section of our website.
Bruce: The supplemental financial information are we prepared for this conference call, which again are both available on the Investor Relations section of our website now I'd like to turn the call over to Bruce Bruce.
Bruce Mcclelland: Now I'd like to turn the call over to Bruce. Bruce?
Bruce Mcclelland: Great, thanks, Joni.
Oh, great. Thanks, Tony Good afternoon, everyone and thanks for joining us today to discuss our Q2 results and outlook for the rest of the year.
Bruce W. McClelland: Great Thanks, Joni. Good afternoon, everyone, and thanks for joining us today to discuss our Q2 results and outlook for the rest of the year. I'd like to start this afternoon with a short recap on the progress we've made over the last 18 months, executing against our strategic goals and improving the foundation of the company. In early 2023, we initiated the final phase of integration of the ECI acquisition by restructuring the organization and integrating common functions such as R&D, operations, customer support, and deployment services.
Bruce Mcclelland: Good afternoon, everyone, and thanks for joining us today to discuss our Q2 results and outlook for the rest of the year. I'd like to start this afternoon with a short recap on the progress we've made over the last 18 months executing against our strategic goals and improving the foundation of the company. In early 2023, we initiated the final phase of integration of the ECI acquisition by restructuring the organization and integrating common functions, such as R&D, operations, customer support, and deployment services. This allowed us to capture significant savings and better execute on programs that leverage products and technologies from both our business units, such as the significant investment being made in expanding broadband to more rural regions across the U.S.
Bruce W. McClelland: This allowed us to capture significant savings and better execute on programs that leverage products and technologies from both our business units, such as the significant investment being made in expanding broadband to more rural regions across the U.S., which will only accelerate with the $42 billion allocated in the Inflation Reduction Act for rural broadband. The investment that we've made in new products allowed us to capture additional share in regions such as India with the Long Haul and Sellsight rudder programs with Bharti Airtel, increasing our revenue in India by 30% last year. We expect to continue to see these benefits of the new operating structure for years to come.
Bruce: I'd like to start this afternoon with a short recap on the progress we've made over the last 18 months executing against our strategic goals and improving the foundation of the company.
Speaker Change: In early 2023 we initiated the final phase of integration of the UCI acquisition by restructuring the organization and integrating common functions, such as R&D operations customer support and deployment services.
Speaker Change: This allowed us to capture significant savings and better execute on programs that leverage products and technologies from both our business units such as the significant investment being made in expanding broadband to more rural regions across the U S and will only accelerate with the $42 billion allocated.
Bruce Mcclelland: that will only accelerate with the $42 billion allocated in the Inflation Reduction Act for rural broadband. The investment that we've made in new products allowed us to capture additional share in regions such as India with the Long Hall and Cell Site Retro programs with Barty Hertel, increasing our revenue in India by 30 percent last year. We expect to continue to see these benefits of the new operating structure for years to come. We've also been very successful in growing our business with enterprise customers as they modernize their communication infrastructure and leverage public cloud platforms. Williams. Similarly, we've won a series of significant multi-year voice modernization projects with U.S.
Speaker Change: The inflation reduction for rural broadband.
Speaker Change: The investment that we've made in new products allowed us to capture additional share in regions, such as India with the long haul and sulfate runner programs with Bharti airtel, increasing our revenue in India by 30% last year.
Speaker Change: We expect to continue to see these benefits of the new operating structure for years to come.
Bruce W. McClelland: We've also been very successful in growing our business with enterprise customers as they modernize their communication infrastructure and leverage public cloud platforms. Similarly, we've won a series of significant multi-year voice modernization projects with U.S. federal defense agencies that are now underway and will continue well into the future.
Speaker Change: We've also been very successful in growing our business with enterprise customers as they modernize their communication infrastructure and leverage public cloud platforms.
Speaker Change: Similarly, we won a series of significant multi year voice modernization projects with U S. Federal defense agencies that are now underway and will continue well into the future.
Bruce Mcclelland: federal defense agencies that are now underway and will continue well into the future. Financial results have improved significantly, particularly in the IP optical business where we have now had eight straight quarters of year-over-year higher earnings contribution from the business, resulting in trailing 12-month adjusted EBITDA for the company once again above $100 million in 2024. This allowed us to go to market in the second quarter and complete the refinancing of our credit facility, giving us the financial foundation to continue to execute on our strategy. We couldn't be more delighted with our new financial relationship with HPS and Whiteours and their interest in supporting our growth initiatives.
Bruce W. McClelland: Financial results have improved significantly, particularly in the IP optical business, where we have now had eight straight quarters of year-over-year higher earnings contribution from the business, resulting in trailing 12-month adjusted EBITDA for the company once again above $100 million in 2024. This allowed us to go to market in the second quarter and complete the refinancing of our credit facility, giving us the financial foundation to continue to execute on our strategy. We couldn't be more delighted with our new financial relationship with HPS and Whitehorse and their interest in supporting our growth initiatives.
Speaker Change: Financial results have improved significantly, particularly in the IP optical business, where we have now had eight straight quarters of year over year higher earnings contribution from our business, resulting in a trailing 12 month adjusted EBITDA for the company once again above $100 million in 2024.
This allowed us to go to market in the second quarter and complete the refinancing of our credit facility, giving us the financial foundation to continue to execute on our strategy.
Speaker Change: We couldn't be more delighted with our new financial relationship with H P. S in Whitehorse and their interest in supporting our growth initiatives.
Bruce Mcclelland: As we look forward to the second half of the year and beyond, we have multiple strong tailwinds supporting the business. The recently announced three-year Verizon voice network modernization contract and the potential for similar projects with other service providers, such as BrightSpeed, which we announced last week, along with growth in enterprise and U.S. federal, give us high confidence that the cloud-neds business will return to growth. In addition, the recent announcement by Microsoft has suspended development on the meta-switch portfolio, creating an excellent opportunity to further expand ribbon share in the global carrier voice infrastructure and unified communication space.
Speaker Change: As we look forward to the second half of the year and beyond we have multiple strong tailwind supporting the business.
Bruce W. McClelland: As we look forward to the second half of the year and beyond, we have multiple strong tailwinds supporting the business. The recently announced three-year Verizon Voice Network Modernization contract and the potential for similar projects with other service providers, such as BrightSpeed, which we announced last week, along with growth in enterprise and U.S. Federal, give us high confidence that the cloud meds business will return to growth. In addition, the recent announcement by Microsoft to suspend development on the Metaswitch portfolio creates an excellent opportunity to further expand Ribbon's share in the global carrier voice infrastructure and unified communication space.
Speaker Change: The recently announced three year, Verizon voice network modernization contract and the potential for similar projects with other service providers, such as bright speed, which we announced last week along with growth in enterprise and U S. Federal give us high confidence that the cloud managed business will return to growth.
Speaker Change: In addition, the recent announcement by Microsoft to suspend development on the medicine, which portfolio creates an excellent opportunity to further extend wouldn't share in the global carrier voice infrastructure and unified communication space.
Bruce Mcclelland: Similarly, recent industry announcements, including the Nokia Infanera combination and the HPE Juniper deal, create disruptions that we intend to capitalize on. These types of consolidations create significant distraction for their businesses and inevitable roadmap or realignment changes that open the door for alternative solutions. The one area that will create a near-term headwind is business we have in Eastern Europe supporting telecom operators in the deployment of internet access in this troubled region. As the war on the crane continues into its third year, it's becoming increasingly challenging to operate in Russia and continue to provide products. We therefore suspended new shipments and lowered our expectations with a more conservative outlook for the region for the rest of the year.
Bruce W. McClelland: Similarly, recent industry announcements, including the Nokia Infinera combination and the HPE Juniper deal, create disruptions that we intend to capitalize on. These types of consolidations create significant distractions for their businesses and inevitable roadmap realignment changes that open the door to alternative solutions. The one area that will create a near-term headwind is the business we have in Eastern Europe supporting telecom operators in the deployment of internet access in this troubled region. As the war in Ukraine continues into its third year, it's becoming increasingly challenging to operate in Russia and continue to provide products. We've therefore suspended new shipments and lowered our expectations with a more conservative outlook for the region for the rest of the year. This also had an impact at the end of the second quarter.
Speaker Change: Similarly, recent industry announcements, including the Nokia Infinera combination and the H P E juniper deal create disruptions that we intend to capitalize on.
Speaker Change: These types of consolidations create significant distraction for their businesses and inevitable roadmap realignment changes that opened the door for alternative solutions.
Speaker Change: The one area that will create a near term headwind is business, we have in eastern Europe supporting telecom operators in the deployment of Internet access in this troubled region.
Speaker Change: As the war on the Crane continues into its third year, it's become increasingly challenging to operate in Russia and continued to provide products.
Speaker Change: We therefore suspended new shipments and lowered our expectations with a more conservative outlook for the region for the rest of the year.
Bruce Mcclelland: This also had an impact at the end of the second quarter. In order to offset the profit contribution shortfall, we're phasing in additional cost-saving actions over the next several months, and we continue to target profitability for the IP optical business, although it will take a little longer than originally projected. 2024 is still expected to be a significant improvement over 2023.
Speaker Change: This also had an impact at the end of the second quarter.
Bruce W. McClelland: In order to offset the profit contribution shortfall, we're phasing in additional cost-saving actions over the next several months. And we continue to target profitability for the IP optical business, although it will take a little longer than originally projected. 2024 is still expected to be a significant improvement over 2023.
Speaker Change: In order to offset the profit contribution shortfall, we're phasing in additional cost saving actions over the next several months and we continue to target profitability for the IP optical business, although it will take a little longer than originally projected.
Speaker Change: 'twenty 'twenty four is still expected to be a significant improvement over 2023.
Bruce Mcclelland: Now on to Q2 results. Revenue came in below our guidance range for the quarter of $193 million. In addition to lower shipments in Eastern Europe, the largest shortfall was a significant cloud-nedge deal with a U.S. federal agency that was expected to close in Q2, but flipped out of the quarter. That deal alone would have put us in the revenue guidance range for the quarter and well of the top end of guidance on earnings. Predicting the planning of these U.S. Federal projects continues to be challenging, but we are expecting the deal to close this week and is included in our outlook for the third quarter.
Bruce W. McClelland: Now on to the Q2 results. Revenue came in below our guidance range for the quarter at $193 million. In addition to lower shipments to Eastern Europe, the largest shortfall was a significant cloud and edge deal with a U.S. federal agency that was expected to close in Q2 but slipped out of the quarter. That deal alone would have put us in the revenue guidance range for the quarter and well above the top end of guidance on earnings.
Speaker Change: Now onto Q2 results.
Speaker Change: Revenue came in below our guidance range for the quarter at $193 million in.
Speaker Change: In addition to lower shipments to eastern Europe, the largest shortfall was a significant cloud and edge deal with a U S. Federal agency that was expected to close in Q2, but slipped out of the quarter.
Speaker Change: That deal alone would have put us in the revenue guidance range for the quarter and well above the top end of guidance on earnings.
Bruce W. McClelland: Predicting the timing of these U.S. federal projects continues to be challenging, but we are expecting this deal to close this week and is included in our outlook for the third quarter. We are building momentum in this large and critical market segment where we have leadership and substantial differentiation. We did close and ship another large project in the second quarter to another U.S. defense agency. Despite the lower sales, earnings were very solid in the quarter, with adjusted non-gap EBITDA of $22 million.
Speaker Change: Predicting the timing of these U S federal projects continues to be challenging.
Speaker Change: We are expecting the steel to close this week and is included in our outlook for the third quarter.
Bruce Mcclelland: We are building momentum in this large and critical market segment where we have leadership and substantial differentiation. We did close and ship an additional large project in the second quarter to another U.S. Defense agency. Decivency. Despite the lower sales, earnings were very solid in the quarter with adjusted non-GAAP EBITDA of $22 million. Gross margins were at the high end of our guidance, with strength in both business units. Our continued focus on driving down expenses also contributed to the solid earnings result. Year-to-date profitability for the company increased 65% on an adjusted EBITDA basis as compared to 2023.
Speaker Change: We are building momentum in this large and critical market segment, where we have leadership and substantial differentiation.
Speaker Change: We did close and ship an additional large project in the second quarter to another U S Defense agency.
Speaker Change: Despite the lower sales earnings were very solid in the quarter with adjusted non-GAAP EBITDA of $22 million.
Bruce W. McClelland: Gross margins were at the high end of our guidance, with strength in both business units. Our continued focus on driving down expenses also contributed to the solid earnings results; year-to-date profitability for the company increased 65% on an adjusted EBITDA basis as compared to 2023. Now a little more detail on each of our operating segments. As a result of lower sales to Eastern Europe, IP Optical revenue in the second quarter was down $3 million year-over-year to $82 million.
Speaker Change: Gross margins were at the high end of our guidance with strength in both business units.
Speaker Change: Our continued focus on driving down expenses also contributed to the solid earnings results.
Speaker Change: Year to date profitability for the company increased 65% on an adjusted EBITDA basis as compared to 2023.
Bruce Mcclelland: Now a little more detail on each of our operating segments. As a result of lower sales to Eastern Europe, IP optical revenue in the second quarter was down $3 million year-to-82 million dollars. The first year-to-year decline we've had in eight quarters. Excluding sales to Eastern Europe, revenue from all other customers was up 4% year-to-year and up 35% quarter of a quarter. Look to bill was positive at 1.09 times. Excluding Eastern Europe, the EMEA region was the strongest market for IP optical solutions. Again, this quarter increasing 30% year-to-year and 9% quarter of a quarter. This included significant deals with defense agencies such as the Israeli Defense Forces and the Swiss Armed Forces.
Speaker Change: Now a little more detail on each of our operating segments.
Speaker Change: As a result of lower sales to eastern Europe, IP optical revenue in the second quarter was down $3 million year over year to $82 million. The first year over year decline, we've had in eight quarters.
Bruce W. McClelland: The first year-over-year decline we've had in eight quarters, excluding sales to Eastern Europe, revenue from all other customers was up 4% year over year and up 35% quarter over quarter. The bill was positive at 1.09 times. Excluding Eastern Europe, the EMEA region was the strongest market for IP optical solutions again this quarter, increasing 30% year-over-year and 9% quarter-over-quarter. This includes significant deals with defense agencies such as the Israeli Defense Forces and the Swiss Armed Forces. The Asia-Pac region outside of India was also strong in the quarter, with sales increasing 32% year over year.
Speaker Change: Including sales to eastern Europe revenue from all other customers was up 4% year over year and up 35% quarter over quarter.
Speaker Change: Book to Bill was positive at 1.09 times.
Speaker Change: Excluding eastern Europe, the EMEA region was the strongest market for IP optical solutions again, this quarter, increasing 30% year over year and 9% quarter over quarter.
Speaker Change: This includes significant deals with defense agencies, such as the Israeli defense forces and the Swiss armed forces.
Bruce Mcclelland: The Asia-PAC region outside of India was also strong in the quarter, with sales increasing 32% year-over-year. This includes a number of projects we announced this week with long-standing customer Converge, ICT and the Philippines, the leading fiber-broadband provider in the region. The new deployment leverages our new 1.2-terabits per second Apollo 9400 to expand the fiber network capacity to support exponential traffic growth from hyperscale and AI applications. Sales to India in the first half of 2024 were down approximately 20% year-over-year, following strong shipments last year when we ramped supply of cell site routers and initial long-haul optical deployments.
Speaker Change: The Asia Pac region outside of India was also strong in the quarter with sales increasing 32% year over year.
Bruce W. McClelland: This includes a number of projects we announced this week with longstanding customer Converge ICT in the Philippines, the leading fiber broadband provider in the region. The new deployment leverages our new 1.2 terabit per second Apollo 9400 to expand fiber network capacity to support exponential traffic growth from hyperscale and AI applications. However, sales to India in the first half of 2024 were down approximately 20% year over year following strong shipments last year when we ramped supply of cell site routers and initial long-haul optical deployment.
Speaker Change: This includes a number of projects, we announced this week with long standing customer converge ICT in the Philippines, the leading fiber broadband provider in the region.
Speaker Change: The new deployment Leverages, our new one two terabits per second Apollo 9400 to expand fiber network capacity to support exponential traffic growth from Hyperscale and AI applications.
Speaker Change: Sales to India in the first half of 'twenty 'twenty four were down approximately 20% year over year. Following strong shipments last year, when we ramped supply of cell site routers and initial long haul optical deployments.
Bruce Mcclelland: However, we expect significant growth in the second half of the year with continued better margins. IP optical sales in the US were down this quarter as we work closely with customers and engineering firms to deploy product shipped in previous quarters. But we have a very strong pipeline of US-world broadband opportunities in the second half. In fact, backlog is currently higher than the entire amount we shipped in the first half of the year. The overall customer mix, along with continued improvement and supply chain cost, resulted in gross margins in line with our expectations at 39%, up year-over-year and down just slightly from the first quarter.
Bruce W. McClelland: However, we expect significant growth in the second half of the year, with continued better margins. IP optical sales in the U.S. were down this quarter as we worked closely with customers and engineering firms to deploy products shipped in previous quarters.
Speaker Change: However, we expect significant growth in the second half of the year with continued better margins.
Speaker Change: I P optical sales in the U S were down this quarter as we worked closely with customers and engineering firms to deploy product shipped in previous quarters.
Bruce W. McClelland: But we have a very strong pipeline of U.S. rural broadband opportunities in the second half. In fact, our backlog is currently higher than the entire amount we shipped in the first half of the year. The overall customer mix, along with continued improvement in supply chain costs, resulted in gross margins in line with our expectations at 39 percent, up year-over-year and down just slightly from the first quarter. Non-gap adjusted EBITDA for IP Optical was negative $4 million in the quarter, a significant improvement year-over-year and sequentially better than the first quarter.
Speaker Change: Well, we have a very strong pipeline of U S Rural broadband opportunities in the second half in fact backlog is currently higher than the entire amount we shipped in the first half of the year.
Speaker Change: The overall customer mix, along with continued improvement in supply chain cost resulted in gross margins in line with our expectations at 39% up year over year and down just slightly from the first quarter.
Bruce Mcclelland: Non-GAAP adjusted up for IP optical was negative 4 million in the quarter, a significant improvement year-over-year and sequentially better than the first quarter. In our cloud mid segment, sales were down year-over-year primarily due to the timing of the large US federal deal that moved to Q3. Sales to service providers, including US Tier-1 carriers, stabilized and were down only slightly year-over-year. We expect strong growth from service providers in the second half of the year. The team is fully engaged in operationalizing the new Verizon Advanced Voice Network Platform project. We received initial product orders and shipped a small quantity in the quarter and started some of the advanced network engineering and planning effort for the initial switch location.
Speaker Change: non-GAAP adjusted EBITDA for IP optical was negative $4 million in the quarter, a significant improvement year over year and sequentially better than the first quarter.
And our cloud and edge segment sales were down year over year, primarily due to the timing of the large U S. Federal deal that moved to Q3.
Bruce W. McClelland: In our cloud and edge segment, sales were down year over year, primarily due to the timing of the large U.S. federal deal that moved to Q3. However, sales to service providers, including U.S. Tier 1 carriers, stabilized and were down only slightly year over year. We expect strong growth from service providers in the second half of the year. The team is fully engaged in operationalizing the new Verizon Advanced Voice Network Platform project.
Sales to service providers, including U S tier one carriers stabilized and were down only slightly year over year.
Speaker Change: We expect strong growth from service providers in the second half of the year.
Speaker Change: The team is fully engaged and operationalize the new Verizon Advanced voice network platform project we.
Bruce W. McClelland: We received initial product orders and shipped a small quantity in the quarter, and we started some of the advanced network engineering and planning efforts for the initial switch location. This will accelerate rapidly over the next two quarters, and we are on track to achieve our $100 million per year run rate with Verizon by the end of the year. Overall activity in the voice transformation area continues to increase, highlighted by our announcement with Brightspeed last week.
Speaker Change: We received initial product orders and shipped a small quantity in the quarter and started some of the advanced network engineering and planning effort for the initial switch locations.
Bruce Mcclelland: Williams. This will accelerate rapidly over the next two quarters, and we are on track to achieve our $100 million per year run rate with Verizon by the end of the year. Overall activity in the voice transformation area continues to increase, highlighted by our announcement with Bright's Feed last week. They are leveraging our portfolio of voice solutions to modernize their legacy central office equipment, which includes our multi-service access routing platform, the Neptune 1250. We initiated a similar project with another US MSO this quarter and expect several more this year. The reported Microsoft announcement to discontinue their work on the meta-switch portfolio has also created significant discussion and interest as operators evaluate options to continue to provide these critical voice services.
Speaker Change: This will accelerate rapidly over the next two quarters and we are on track to achieve our $100 million per year run rate with Verizon by the end of the year.
Speaker Change: Overall activity in the voice transformation area continues to increase highlighted by our announcement with bright speed last week.
Bruce W. McClelland: They are leveraging our portfolio of voice solutions to modernize their legacy central office equipment, which includes our multi-service access routing platform, the Neptune 1250. We initiated a similar project with another U.S. MSO this quarter and expect several more this year. The reported Microsoft announcement to discontinue their work on the Metaswitch portfolio has also created significant discussion and interest as operators evaluate options to continue to provide these critical voice services.
Speaker Change: They are leveraging our portfolio of voice solutions to modernize their legacy Central office equipment, which includes our multi service access routing platform the Neptune $12 50.
Speaker Change: We initiated a similar project with another U S. M. S O this quarter and expect several more this year.
Speaker Change: The reported Microsoft announcement to discontinue their work on the meta switch portfolio has also created significant discussion and interest as operators evaluate options to continue to provide these critical voice services.
Bruce Mcclelland: Our cloud niche recurring maintenance business remains strong this quarter, and we expect a modest increase in revenue in the second half. More than 90 percent of our projected revenue for the year is already booked, and we closed a significant three-year renewal in excess of $60 million with one of our larger customers in the last quarter.
Speaker Change: Our cloud and edge recurring maintenance business remained strong this quarter and we expect a modest increase in revenue in the second half.
Bruce W. McClelland: Our CloudNedge recurring maintenance business remains strong this quarter, and we expect a modest increase in revenue in the second half. More than 90% of our projected revenue for the year is already booked, and we closed a significant three-year renewal in excess of $60 million with one of our larger customers in the last quarter. With that, I'll turn it over to Mick to provide additional detail on our second quarter results and then come back on to discuss our outlook for the rest of the year. Mick?
Speaker Change: More than 90% of our projected revenue for the year is already booked and we closed a significant three year renewable in excess of $60 million with one of our larger customers in the last quarter.
Mick Lopez: With that, I'll turn it over to Mick to provide additional detail on our second quarter results, and then come back on to discuss outlook for the rest of the year. Mick.
Speaker Change: With that I'll turn it over to Mick to provide additional detail on our second quarter results and then come back on to discuss outlook for the rest of the year Nick.
Mick Lopez: Thank you, Bruce.
Mick Lopez: Thank you, Bruce. Good afternoon to everyone. We were pleased again with Ribbon's ability to meet adjusted EBITDA earnings guidance driven by strong product gross margins and continued focus on operating expense management. On a trailing 12-month basis, our consolidated adjusted EBITDA remained over $100 million. Most notably, our IP optical network is getting closer to sustained break-even profitability with a last 12 months adjusted EBITDA of negative $5 million, or just under 2% of revenue.
Thank you Bruce good afternoon to everyone.
Mick Lopez: Good afternoon to everyone. We will please, again, with ribbons ability to meet adjusted EBITDA earnings guidance driven by strong product growth margins and continued focus on operating expense management. On a trailing 12-month basis, a consolidated adjusted EBITDA remained over $100 million. Most notably, our IP optical networks is getting closer to sustained breakeven profitability, with a last 12 months adjusted EBITDA of negative $5 million, or just under 2 percent of revenue. Meanwhile, we continue to manage the cloud and edge business, resulting in strong EBITDA margin performance of 24 percent for the last 12 months. With our expectations for revenue growth in both segments in the second half of the year, Ribbon's financial performance will only improve.
Mick: We were pleased again ribbons ability to meet our adjusted EBITDA earnings guidance, driven by strong product gross margins and continued focus on operating expense management on a trailing 12 month basis, our consolidated adjusted EBITDA remained over $100 million, most notably our IP optical network.
Speaker Change: <unk> is getting closer to sustain breakeven profitability with the last 12 months adjusted EBITDA of negative $5 million or just under 2% of revenue means.
Mick Lopez: Meanwhile, we continue to manage the cloud and edge business, resulting in strong EBITDA margin performance of 24% for the last 12. With our expectations for revenue growth in both segments in the second half of the year, Ribbon's financial performance will only improve. As always, please refer to our investor relations page on the Ribbon website for supplemental financial information. Let's begin with financial results at the consolidated corporate level. In the second quarter of 2024, Ribbon generated revenues of $193 million, which is a decrease of 8.5% from the prior year and below the low end of our guidance. Non-GAAP gross margin was 54.4 percent, which is at the high end of our guidance.
Speaker Change: Meanwhile, we continue to manage the cloud and edge business, resulting in strong EBITDA margin performance up 24% for the last 12 months.
Speaker Change: With our expectations for revenue growth in both segments in the second half of the year Ravens financial performance will only improve as always please refer to our Investor Relations page on the ribbon web site for supplemental financial information.
Mick Lopez: As always, please refer to our Investor Relations page on the Ribbon website for supplemental financial information.
Mick Lopez: Let's begin with financial results at the consolidated corporate level. The second quarter of 2024, a ribbing generated revenues of $193 million, which is a decrease of 8.5 percent from the prior year and below the low end of our guidance. Non-GAAP gross margin was 54.4 percent, which is at the high end of our guidance. This is a 240 basis point improvement over prior year due to a positive product and regional mix in IP optical networks. Non-GAP operating expenses were 86 million dollars and improvement of $4 million dollars year over year and quarter over quarter, driven by continued reductions in R&D and sales expenses from last year's restructuring efforts.
Mick Lopez: This is a 240 basis point improvement over the prior year due to a positive product mix in regional mix and IP optical network. Non-GAAP operating expenses were $86 million, an improvement of $4 million year-over-year and quarter-over-quarter, driven by continued reductions in R&D and sales expenses from last year's restructuring efforts. This is the lowest operating expense level since the merger of Ribbon and ECI in 2019, and non-GAAP net income was $9 million, which is a $1 million improvement from the previous year.
Speaker Change: Let's begin with financial results at the consolidated corporate level in the second quarter of 2020 for ribbon generated revenues of $193 million, which is a decrease of eight 5% from the prior year and below the low end of our guidance.
Speaker Change: non-GAAP gross margin was 54, 4%, which was at the high end of our guidance. This is a 240 basis point improvement over prior year due to a positive product and regional mix and IP optical networks.
Speaker Change: non-GAAP operating expenses were $86 million, an improvement of $4 million year over year and quarter over quarter, driven by continued reductions in R&D and sales expenses from last year's restructuring efforts. This is the lowest operating expense level since the merger of ribbon and E C. I in 2020.
Mick Lopez: This is the lowest operating expense level since the merger of Ribbon and ECI in 2020. Non-GAP net income was $9 million, which is a $1 million improvement from the previous year. This generated non-GAP deluded earnings per share of five cents, which is an increase of one set versus prior year. Our non-gap tax rate year-to-date was 35%. Our interest expense for the quarter was $4 million, 42% less than the previous year. This was mostly driven by $6 million of non-cash accounting charges caused by the refinancing transaction, which included previous debt issuance costs from 2020 and the gain from the sale of the interest rate swap in 2023.
Speaker Change: non-GAAP net income was $9 million, which is a $1 million improvement from the previous year.
Mick Lopez: This generated non-GAAP diluted earnings per share of 5 cents, which is an increase of 1 cent versus the prior year. Our non-GAAP tax rate year-to-date was 35%. Our interest expense for the quarter was $4 million, 42% less than the previous year.
Speaker Change: This generated non-GAAP diluted earnings per share of five sets, which is an increase of one set versus prior year.
Speaker Change: Our non-GAAP tax rate year to date was 35%.
Speaker Change: Our interest expense for the quarter was $4 million, 42% less than the previous year.
Mick Lopez: This was mostly driven by $6 million of non-cash accounting charges caused by the refinancing transaction, which included previous debt issuance costs from 2020 and the gain from the sale of the interest rate swap in 2023. Adjusted EBITDA was $22 million in the quarter, right in the middle of our guidance. It is slightly down $1 million from the prior year and up $10 million from the first quarter. Adjusted EBITDA year-to-date is now $33 million, and the trailing 12 months is $104 million. Our basic share count was 174 million shares, and our fully diluted share count was 176 million shares for the quarter.
Speaker Change: This was mostly driven by $6 million noncash accounting charges caused by the refinancing transaction, which included previous debt issuance cost from 2020 and the gain from the sale of the interest rate swap in 2023.
Mick Lopez: Adjusted EBDA was $22 million in the quarter, right in the middle of our guidance. It is slightly down $1 million from the prior year and up $10 million from the first quarter. Adjusted EBDA year-to-date is now $33 million and trailing 12 months is $104 million. Our basic share count was 174 million shares, and our fully diluted share count was 176 million shares for the quarter.
Speaker Change: Adjusted EBITDA was $22 million in the quarter right in the middle of our guidance. It is slightly down $1 million from the prior year and up $10 million from the first quarter. Adjusted EBITDA year to date is now $33 million and trailing 12 months is $104 million, our basic share count was.
Speaker Change: 174 million shares and our fully diluted share count was 176 million shares for the quarter.
Mick Lopez: Now let's look at the results of our two business segments. In our cloud and edge business, second quarter revenue was $111 million, a decrease of 12% year-over-year, driven by lower enterprise product sales, primarily due to the delayed U.S. federal defense deal. We are increasingly confident that we can grow our revenues for this business segment, especially with the incremental opportunity from Verizon's network modernization program. Cloud and Edge had strong second quarter non-GAAP growth margin of 66%, consistent with the previous quarter in prior year. Software sales were solid once again and made up 64% of total product revenues.
Mick Lopez: Now, let's look at the results of our two business segments. In our cloud and edge business, second quarter revenue was $111 million, a decrease of 12% year over year, driven by lower enterprise product sales, primarily due to the delayed US federal defense deal. We are increasingly confident that we can grow our revenues for this business segment, especially with the incremental opportunity from Verizon's network modernization program. Cloud and Edge had a strong second quarter non-gap gross margin of 66%, consistent with the previous quarter and prior year. Software sales were solid once again and made up 64% of total product revenue. Product and services bookings were good in the quarter at 1.04 times revenue.
Speaker Change: Now, let's look at the results of our two business segments.
Speaker Change: And our cloud and edge basis second quarter revenue was $111 million, a decrease of 12% year over year, driven by lower enterprise product sales, primarily due to the delayed U S Federal defense deal.
Speaker Change: We are increasingly confident that we can grow our revenues for this business segment, especially with the incremental opportunity from Verizon's network modernization program.
Speaker Change: Cloud and edge had strong second quarter non-GAAP gross margin of 66% consistent with the previous quarter and prior year software sales were solid once again made up 64% total product revenues.
Mick Lopez: Product and services bookings were good in the quarter at 1.04 times revenue. Cloud and Edge continues to steady cash and profit contribution with an adjusted EBDA of $26 million for 23% of revenues.
Speaker Change: And services bookings were good in the quarter at one point.
Speaker Change: Oh four times revenue.
Mick Lopez: CloudNedge continues to make steady cash and profit contribution with an adjusted EBITDA of $26 million for 23% of revenue. Now, let's turn to our IP Optical Networks business results. We recorded second quarter revenue of $82 million, or a 4% decrease versus the prior year.
Speaker Change: Cloud and edge continues its steady cash and profit contribution with an adjusted EBITDA of $26 million or 23% of revenues.
Mick Lopez: Let's turn to our IP optical networks business results. We recorded second quarter revenue of $82 million for a 4% decrease versus the prior year. While we had good revenue growth across most of Europe, this was mitigated by a substantial year-on-year decrease of about $6 million from our Eastern European operations. Also, as Bruce mentioned, sales to North America and India were lower this quarter, but we anticipate a significant increase in the second half of 2024. Non-GAAP growth margin for IP optical networks was 39%, up about 800 basis points from the prior year, mostly driven by lower product costs and better regional mix from EMEA sales.
Speaker Change: Let's turn to our IP optical networks business results, we recorded second quarter revenue of $82 million or a 4% decrease versus the prior year. While we had good revenue growth across most of Europe. This was mitigated by substantial year on year decrease of about $6 million from our eastern.
Mick Lopez: While we had good revenue growth across most of Europe, this was mitigated by a substantial year-on-year decrease of about $6 million from our Eastern European operation. Also, as Bruce mentioned, sales to North America and India were lower this quarter, but we anticipate a significant increase in the second half of 2024. Non-gap gross margin for IP optical networks was 39%, up about 800 basis points from the prior year, mostly driven by lower product costs and a better regional mix from EMEA sales.
Speaker Change: European operations.
Speaker Change: Also as Bruce mentioned sales to North America, and India were lower this quarter, but we anticipate a significant increase in the second half of 2024.
Speaker Change: non-GAAP gross margin for IP optical networks was 39% up about 800 basis points from the prior year, mostly driven by lower product costs and better regional mix from EMEA sales. This resulted in gross profit of $32 million, which is a $6 million improvement from previous.
Mick Lopez: This resulted in gross profit of $32 million, which is a $6 million improvement from the previous year. Actually, a last 12th month non-gap growth margin is over 40% driven by a better product mix, cost of good solid enhancements, and royalty reductions. Adjusted EBDA for the quarter was only a loss of $4 million, which is a great improvement of $8 million from the second quarter last year. This is the eighth straight quarter of year-over-year improvement in profitability for the IP optical networks.
Mick Lopez: This resulted in gross profit of $32 million, which is a $6 million improvement from previous. Actually, our last 12-month non-GAAP gross margin was over 40%, driven by a better product mix, cost of goods sold enhancements, and royalty reduction. Adjusted EBITDA for the quarter was only a loss of $4 million, which is a great improvement of $8 million from the second quarter last year.
Speaker Change: Sure actually a last 12 month non-GAAP gross margin is over 40% driven by a better product mix cost of goods sold enhancements and royalty reductions.
Speaker Change: Adjusted EBITDA for the quarter was only a loss of $4 million, which is a great improvement of $8 million from the second quarter last year. This is the eighth straight quarter of year over year improvement in profitability for the IP optical networks.
Mick Lopez: This is the eighth straight quarter of year-over-year improvement in profitability for IP optical networks. Now, let's discuss Total Company Cash Flows and Capital Structure. Cash flow from operations for the quarter was a negative $10 million, but that includes a one-time $7 million preferred equity dividend, which is classified as in. On a normalized basis, cash flow from operations was a negative $3 million for the quarter and a positive $7 million for the first half.
Speaker Change: Now.
Mick Lopez: Now, let's discuss total company cash flows and capital structure. Cash flow from operations for the quarter was a negative $10 million, but that includes a one-time $7 million preferred equity dividend, which is classified as interest. On a normalized basis, cash flow from operations was a negative $3 million for the quarter and a positive $7 million for the first half. Ribbon's capital structure was greatly enhanced in the second quarter. As we had committed, we were able to successfully refinance a term loan A before the end of June. With the proceeds of a new $350 million five-year term loan on June 21, we repaid $230 million of the existing term loan and redeemed in full for $64 million of preferred equity.
Speaker Change: Let's discuss total company cash flows and capital structure cash.
Speaker Change: Cash flow from operations for the quarter was a negative $10 million, but that includes a one time $7 million preferred equity dividend, which is classified as interest on a normalized basis cash flow from operations was a negative $3 million for the quarter and a positive $7 million for the first half of the year.
Mick Lopez: Ribbon's capital structure was greatly enhanced in the second quarter. As we had committed, we were able to successfully refinance our term loan aid before the end of June with the proceeds of a new $350 million five-year term loan. On June 21st, we repaid $230 million of the existing term loan and redeemed in full for $64 million of preferred equity.
Speaker Change: [noise] ribbons capital structure was greatly enhanced in the second quarter.
Mick Lopez: Additional detail on the transaction is in the second quarter presentation available on our Ribbon Investor website. As a result of the refinancing transaction, our liquidity has also improved significantly. We increased our cash balance over $36 million from the first quarter to finish at $67 million of cash and cash equivalents at the end of the second quarter. In addition, we have an untapped $35 million new revolving credit facility.
Speaker Change: As we had committed we were able to successfully refinance our term loan a before the end of June.
Speaker Change: With the proceeds of a new $350 million five year term loan on June 21st we repaid $230 million of the existing term loan and redeemed in full for $64 million or preferred equity.
Mick Lopez: Additional detail on the transaction is in the second quarter presentation available on our Ribbon Investor website. As a result of the refinancing transaction, our liquidity has also improved significantly. We increase our cash balance over $36 million from the first quarter to finish at $67 million of cash and cash equivalents at the end of the second quarter. In addition, we have an untapped $35 million new revolving credit facility.
Speaker Change: Additional detail on the transaction is in the second quarter presentation available on our ribbon investor website.
Speaker Change: As a result of the refinancing transaction our liquidity has also improved significantly.
Speaker Change: We increased our cash balance or $36 million from the first quarter to finish at $67 million of cash and cash equivalents at the end of the second quarter. In addition, we have an untapped $35 million new revolving credit facility.
Mick Lopez: All in all, this positions Ribbon well into the future with a Scrawm Foundation, solid capital structure, enhanced liquidity, less restrictive covenants, and especially a new strategic banking group relationship. We are fortunate to be financed by HPS Investment Partners and Whitehorse Capital due to their financial strength, this is acumen and long-term partnership perspective. With them, we will have the financial flexibility to address growth opportunities.
Mick Lopez: All in all, this position is poised well into the future with a strong foundation: Solid Capital Structure, Enhanced Liquidity, Less Restrictive Covenants, and especially a New Strategic Banking Group Relationship. We are fortunate to be financed by HPS Investment Partners and White Horse Capital due to their financial strength, business acumen, and long-term partnership perspective. With them, we will have the financial flexibility to address growth opportunities. Now I'll turn the call back to Bruce.
Speaker Change: All in all dispositions ribbon well into the future with a strong foundation.
Speaker Change: Solid capital structure enhance liquidity less restrictive covenants and especially our newest strategic banking group relationship. We are fortunate to be financed by H P. S investment partners and Whitehorse capital due to their financial strength. This is acumen and long term partnership perspective with them we will have.
Speaker Change: The financial flexibility to address growth opportunities now I'll turn the call back to Bruce.
Bruce Mcclelland: Now, I'll turn the call back to Bruce. Great, thanks, Mick. Now, focusing on the second half of the year, we're expecting significant growth, with revenue increasing approximately 25% as compared to the first half. We expect margins to remain relatively consistent with the first half, and with continued optics control, bottom line earnings are expected to more than double, very similar to the profile of the business in 2023. There are a number of specific tailwinds supporting the business and our outlook for the second half. First, the Verizon programs off to a great start, and the combined team is fully activated.
Bruce W. McClelland: Great. Thanks, Matt.
Bruce W. McClelland: Great, thanks, Mick. Now, focusing on the second half of the year, we're expecting significant growth, with revenue increasing approximately 25% as compared to the first half. We expect margins to remain relatively consistent with the first half.
Bruce W. McClelland: Now focusing on the second half of the year, we're expecting significant growth with revenue increasing approximately 25% as compared to the first half we.
Speaker Change: We expect margins to remain relatively consistent with the first half and we've continued opex control bottom line earnings are expected to more than double very similar to the profile of the business in 2023.
Bruce W. McClelland: And with continued OPEX control, bottom-line earnings are expected to more than double, very similar to the profile of the business in 2023. There are a number of specific tailwinds supporting the business and our outlook for the second half. First, the Verizon program is off to a great start, and the combined team is fully activated. The first phase of sites to be upgraded has been identified, and detailed designs are underway. We're scaling the deployment teams and ramping production on the necessary hardware components and installation materials. Revenue on hardware and software is recognized as we ship, and the professional service revenue is recognized as the work is performed on each site. Sales to Verizon in the second quarter once again exceeded 10% of sales, increasing 40% quarter over quarter, and we project sales in the second half of the year to increase approximately 50% versus the first half.
Bruce W. McClelland: There are a number of specific tailwind supporting the business and our outlook for the second half first the Verizon program is off to a great start and the combined team is fully activated.
Bruce Mcclelland: The first phase of sites to be upgraded have been identified, and detailed designs are underway. We're scaling the deployment teams and ramping production on the necessary hardware components and installation material. Revenue on hardware and software is recognized as we ship, and the professional service revenue is recognized as the work is performed on each site. Sales to Verizon in the second quarter once again exceeded 10% of sales, increasing 40% quarter over quarter, and we project sales in the second half of the year to increase approximately 50% versus the first half. Second, we expect a strong second half with rural and regional service providers in the U.S.
Bruce W. McClelland: The first phase of sites to be upgraded had been identified and detailed designs are underway.
Scaling the deployment teams and ramping production on the necessary hardware components and installation material.
Bruce W. McClelland: Revenue on hardware and software is recognized as we ship.
Bruce W. McClelland: And the professional service revenue was recognized as the work is performed on each site.
Bruce W. McClelland: Sales to Verizon in the second quarter, once again exceeded 10% of sales, increasing 40% quarter over quarter and we project sales in the second half of the year to increase approximately 50% versus the first half.
Bruce W. McClelland: Second, we expect a strong second half with rural and regional service providers in the U.S., building out fiber networks using both our optical transport and IP routing solutions. We have a very strong pipeline and growing backlog that projects significant growth versus the first half and approximately double year over year. We've increased the number of network engineering and consulting firms we're working with and broadened our geographic coverage to more areas, which has helped further increase our opportunity funnel.
Bruce W. McClelland: Second we expect a strong second half with rural and regional service providers in the U S building out fiber networks, using both our optical transport and IP routing solutions.
Bruce Mcclelland: Building out fiber networks using both our optical transport and IP routing solutions. We have a very strong pipeline and growing backlog that projects significant growth versus the first half, and it will approximately double year over year. We've increased the number of network engineering and consulting firms we're working with and broadened our geographic coverage to more areas, which has helped further increase our opportunity funnel. Approximately 50% of the projects are benefiting from some form of incentive funding, such as ARDOF and ReConnect. Matt. In addition, to traditional telecom service providers, we're also seeing a growing number of opportunities with utility providers.
Bruce W. McClelland: We have a very strong pipeline and growing backlog of project significant growth versus the first half and it will approximately double year over year.
Bruce W. McClelland: We've inquiries the number of network engineering and consulting firms were working with and broadened our geographic coverage to more areas, which has helped further increase our opportunity funnel.
Bruce W. McClelland: Approximately 50% of the projects are benefiting from some form of incentive funding, such as ARDOF and ReConnect. In addition to traditional telecom service providers, Third, we expect a strong second half with enterprise and U.S. federal and defense agencies, with revenue growing more than 50% versus the first half of the year. This includes a number of larger annual enterprise license agreement renewals with financial institutions that provide a solid base of recurring revenue.
Bruce W. McClelland: Approximately 50% of the projects are benefiting from some form of incentive funding such as art off and reconnect.
Bruce W. McClelland: In addition to traditional telecom service providers, we're also seeing a growing number of opportunities with utility partners.
Bruce Mcclelland: Third, we expect a strong second half with enterprise and U.S. federal and defense agencies, with revenue growing more than 50% versus the first half of the year. This includes a number of larger annual enterprise license agreement renewals with financial institutions that provides a solid base of recurring revenue. Fourth, we expect the business in India to grow approximately 30% in the second half versus the first half of the year on the strength of stronger fiber network deployments and long-awaited increased network spending by Vote-a-Phone Idea. The return of this strategic customer is a major opportunity given the shift away from Chinese manufacturers in this large region.
Bruce W. McClelland: Third we expect a strong second half with enterprise and U S Federal and defense agencies with revenue growing more than 50% versus the first half of the year.
Bruce W. McClelland: This includes a number of larger annual enterprise license agreement renewals with financial institutions that provides a solid base of recurring revenue.
Bruce W. McClelland: Fourth, we expect the business in India to grow approximately 30% in the second half versus the first half of the year on the strength of stronger fiber network deployments and long-awaited increased network spending by Vodafone Idea. The return of this strategic customer is a major opportunity given the shift away from Chinese manufacturers in this large region. And finally, excluding Eastern Europe, our business in the EMEA region is expected to follow a seasonal trend with sales increasing approximately 30% in the second half.
Bruce W. McClelland: Fourth we expect the business in India to grow approximately 30% in the second half versus the first half of the year on the strength of stronger fiber network deployments and long awaited increase network spending by Vodafone idea.
Bruce W. McClelland: The return of this strategic customer is a major opportunity given the shift away from Chinese men Bancshares in this large region.
Bruce Mcclelland: And finally, excluding Eastern Europe, our business in the EMA region is expected to follow a seasonal trend, with sales increasing approximately 30% in the second half. This is a very strong market for our IP optical business with a base of with peak customers. The combination of all these trends provides us good visibility in the strong growth in the second half of the year. In addition, as I mentioned earlier, recent changes in the competitive landscape definitely create opportunities to expand our business with both existing and new customers. In particular, the reported decision by Microsoft to discontinue development on the Metiswitch portfolio and significantly reduce sales and engineering staff is a major opportunity for us to replace existing deployments of session border controllers and voice-sauce-switch and media gateways.
Bruce W. McClelland: And finally, excluding eastern Europe, our business in the EMEA region is expected to follow a seasonal trend with sales increasing approximately 30% in the second half.
Bruce W. McClelland: This is a very strong market for our IP optical business with a base of repeat customers; the combination of all these trends provides us with good visibility for strong growth in the second half of the year. In addition, as I mentioned earlier, recent changes in the competitive landscape definitely create opportunities to expand our business with both existing and new customers. In particular, the reported decision by Microsoft to discontinue development on the Metaswitch portfolio and significantly reduce sales and engineering staff is a major opportunity for us to replace existing deployments of session border controllers, voice soft switch, and media gateways.
Bruce W. McClelland: It was a very strong market for our IP optical business with a base of repeat customers.
Bruce W. McClelland: The combination of all these trends provide us good visibility into strong growth in the second half of the year.
Bruce W. McClelland: In addition, as I mentioned earlier recent changes in the competitive landscape definitely creates opportunities to expand our business with both existing and new customers.
Speaker Change: In particular, the reported decision by Microsoft to discontinue development on the medicine, which portfolio and significantly reduced sales and engineering staff is a major opportunity for us to replace existing deployments of session border controllers, and voice sauce, which and media gateways.
Bruce Mcclelland: We believe the majority of the Metiswitch footprint is with telecom service providers in North America and Europe. In many cases, the Metiswitch deployments are with customers where we don't currently have a footprint or where we have a minority share position. This is a great opportunity to provide customers with a migration to a state-of-the-art, feature-rich software platform that's deployed at scale with the largest service providers in the world. Our second half projections do not yet include upside from this major market opportunity. Of course, we'll have some headwind from the suspension of shipments to Russia. We estimate this at approximately $25 million of revenue in the second half.
Bruce W. McClelland: We believe the majority of the metaswitch footprint is with telecom service providers in North America and Europe. In many cases, the metaswitch deployments are with customers where we don't currently have a footprint or where we have a minority share position.
Speaker Change: We believe the majority of the meta switch footprint is with telecom service providers in North America and Europe.
Speaker Change: In many cases, the meta switch deployments are with customers, where we don't currently have footprint or where we have a minority share position.
Bruce W. McClelland: While this is a great opportunity to provide customers with a migration to a state-of-the-art, feature-rich software platform that's deployed at scale with the largest service providers in the world, our second half projections do not yet include upside from this major market opportunity. And, of course, we'll have some headwinds from the suspension of shipments to Russia. We estimate this at approximately 20 to 25 million dollars of revenue in the second half. However, we are implementing a number of expense reduction actions to mitigate a significant portion of the profit shortfall, and the additional tailwinds I outlined support the growth we're projecting in the second half.
Speaker Change: Great opportunity to provide customers with a migration to a state of the art feature rich software plat form that's deployed at scale with the largest service providers in the world.
Speaker Change: Our second half projections do not yet include upside from this major market opportunity.
Speaker Change: Of course, we'll have some headwind from the suspension of shipments to Russia. We estimate this at approximately $20 million to $25 million of revenue in the second half.
Bruce Mcclelland: However, we are implementing a number of expense reduction actions to mitigate a significant portion of the profit shortfall, and the additional tailwinds I outlined support the growth we're projecting in the second half.
Speaker Change: However, we are implementing a number of expense reduction actions to mitigate a significant portion of the profit shortfall and the additional tailwind as I outlined support the growth we are projecting in the second half.
Bruce Mcclelland: In summary, we continue to be focused on our key strategic goals, including achieving sustainable profitability in our IP optical business, returning to growth in our telco voice infrastructure business, diversifying and expanding sales in enterprise market verticals, including financial, healthcare, and government information security, and accelerating innovation and capturing cost efficiencies with full integration of our product teams. From a guidance perspective, for the third quarter, we expect continued sequential growth in both of our businesses. We expect gross margins to be consistent with the second quarter, although perhaps down approximately a hundred basis points given the expected mix of shipments.
Speaker Change: In summary, we continue to be focused on our key strategic goals, including achieving sustainable profitability in our IP optical business.
Bruce W. McClelland: In summary, we continue to be focused on our key strategic goals, including achieving sustainable profitability in our IP optical business, returning to growth in our telco voice infrastructure business, diversifying and expanding sales in enterprise market verticals, including financial, healthcare, and government information security, and accelerating innovation and capturing cost efficiencies with full integration of our product team. From a guidance perspective, for the third quarter, we expect continued sequential growth in both of our businesses. We expect gross margins to be consistent with the second quarter, although perhaps down approximately 100 basis points given the expected mix of shipments.
Turning to growth in our telco voice infrastructure business.
Speaker Change: Diversifying and expanding sales in enterprise market verticals, including financial health care and government information security.
Speaker Change: And accelerating innovation and capturing cost efficiencies with full integration of our product teams.
Speaker Change: From a guidance perspective for the third quarter. We expect continued sequential growth in both of our businesses. We expect gross margins to be consistent with the second quarter, although perhaps down approximately 100 basis points given the expected mix of shipments.
Bruce W. McClelland: And we expect OPEX to be up a few million dollars versus the second quarter due to variable employment expenses, but then to reduce further in the fourth quarter, given the cost actions underway. Based on this, for the third quarter, we're projecting revenue in a range of $205 to $220 million, non-gap gross margins of 53 to 53.5 percent, and Non-Gap Adjusted EBITDA in a range of For the full year, after accounting for the reduced sales to Eastern Europe offset by growth across multiple other areas and continued expense management actions, we believe we're still on track to be in our original guidance range, although more towards the bottom of the range.
Bruce Mcclelland: and we expect OpEx to be up a few million dollars versus the second quarter due to variable employment expenses, but then to reduce further in the fourth quarter given the cost actions underway. Based on this for the third quarter, we're projecting revenue in a range of 205 to 220 million dollars, non-GAAP gross margins of 53 to 53.5%, and non-GAAP adjusted EBITDA in a range of 25 to 30 million dollars. For the full year, after accounting for the reduced sales to Eastern Europe, offset by growth across multiple other areas and continued expense management actions, we believe we're still on track to be in our original guidance range, although more towards the bottom of the range.
Speaker Change: And we expect opex to be up a few million dollars versus the second quarter due to variable employment expenses.
Speaker Change: But then to reduce further in the fourth quarter, given the cost actions underway.
Speaker Change: Based on this for the third quarter, we're projecting revenue in a range of $205 million to $220 million.
Speaker Change: non-GAAP gross margins of 53% to 53%.
Speaker Change: And non-GAAP adjusted EBITDA in a range of $25 million to $30 million.
Speaker Change: For the full year.
Speaker Change: For accounting for the reduced sales to eastern Europe offset by growth across multiple other areas and continued expense management actions. We believe we're still on track to be in our original guidance range, although more towards the bottom of the range there.
Bruce Mcclelland: Therefore, we thought it was prudent to revise our guidance for the full year as follows: revenue in a range of 830 to 850 million dollars, non-GAAP gross margins of 54 to 54.5%, and non-GAAP adjusted EBITDA in a range of 105 to 115 million dollars. In conclusion, we're well positioned to benefit from the growing investment in fiber networks to meet the exponential increase in EBITDA consumption, and we expect a return to growth in our voice communications business as key customers, such as Verizon, accelerate modernization of their infrastructure. We're effectively managing things that are in our control, and as we continue to significantly improve our overall profitability, it should translate into significant value creation for our investors and employees.
Bruce W. McClelland: Therefore, we thought it was prudent to revise our guidance for the full year as follows: revenue in a range of $830 to $850 million, non-gap gross margins of 54 to 54.5%, and non-gap adjusted EBITDA in a range of $105 to $115 million.
Therefore, we thought it was prudent to revise our guidance for the full year as follows.
Speaker Change: Revenue in a range of $830 million to $850 million non.
Speaker Change: non-GAAP gross margins of 54 to 54, 5% and non-GAAP adjusted EBITDA in a range of $105 million to $115 million.
Bruce W. McClelland: In conclusion, we are well positioned to benefit from the growing investment in fiber networks to meet the exponential increase in data consumption, and we expect a return to growth in our voice communications business as key customers such as Verizon accelerate the modernization of their infrastructure. We're effectively managing things that are in our control. And as we continue to significantly improve our overall profitability, this should translate into significant value creation for our investors and employees.
Speaker Change: In conclusion, we are well positioned to benefit from the growing investment in fiber networks to meet the exponential increase in consumption.
Speaker Change: And we expect a return to growth in our voice communications business as key customers such as Verizon accelerate modernization of their infrastructure.
Speaker Change: We're effectively managing things that are in our control and as we continue to significantly improve our overall profitability. This should translate into significant value creation for our investors and employees.
Bruce Mcclelland: Our original strategy behind the combination of Ribbon and ECI to cross-sell the entire portfolio of voice and data products to a broad common customer base continues to progress and creates a strong foundation for the business to grow in 2025 and beyond.
Bruce W. McClelland: Our original strategy behind the combination of Ribbon and ECI to cross-sell the entire portfolio of voice and data products to a broad common customer base continues to progress and creates a strong foundation for the business to grow in 2025 and beyond. Operator, that concludes our prepared remarks, and we can now take a few questions. Thank you.
Speaker Change: Our original strategy behind the combination of ribbon and he see eye to cross sell the entire portfolio of voice and data products to a broad common customer base continues to progress and creates a strong foundation for the business to grow in 2025 and beyond.
Operator: Operator, that concludes our prepared remarks, and we can now take a few questions. Thank you.
Operator that concludes our prepared remarks, and we can now take a few questions.
Speaker Change: Thank you we will now be conducting the question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
Operator: We will now be conducting the question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please. I'll be pulled for questions.
Operator: We will now be conducting the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing start.
Operator: One moment, please, while we poll for questions. The first question is from Michael Genovese of Rosenblatt Securities. Please go ahead. Oh, great. Thanks very much.
Speaker Change: Press Star two if you would like to remove your question from the queue.
Speaker Change: For participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.
Speaker Change: One moment please poll for questions.
Speaker Change: Yeah.
Michael Genovese: The first question is from Michael Genovese of Rosenblatt Securities. Please go ahead.
Speaker Change: The first question is from Michael Genovese of Rosenblatt Securities. Please go ahead.
Michael Genovese: Okay, thanks very much. First, congratulations on the strong margins and EBITDA, and what sounds like a robust second half revenue outlook across a bunch of end markets. It's good to see all that.
Mick Lopez: First, congratulations on the strong margins and EBITDA and what sounds like a robust second half revenue outlook across a bunch of end markets. It's good to see all that. But I want to tie a bow on the second quarter and just understand the second quarter a little bit more.
Mick Lopez: Oh, great. Thanks, very much first congratulations on the on the strong margins and EBITDA and what sounds like a robust second half revenue outlook across a bunch of end markets.
Speaker Change: It's good to see all of that but I want to tie a bow on.
Michael Genovese: But I want to tie a bow on the second quarter and just understand the second quarter a little bit more. We got what you said about enterprise about federal and that basically edging cloud would have been in line. You know, the federal deal hadn't slipped.
Speaker Change: On the second quarter and just to understand in the second quarter, a little bit more we got what you said about enterprise AR about federal and that basically edging cloud would've been in line.
Bruce W. McClelland: We got what you said about enterprise and federal and that basically, edge and cloud would have been in line, you know, if the federal deal hadn't slipped. I want to quantify the shortfalls in optical in 2Q a little bit more. How much was Eastern Europe versus what sounds like the U.S. was soft in the second quarter but will be stronger in the second half of the year? Yeah, thanks for the question, Mike.
Speaker Change: The federal deal hadn't slipped.
Michael Genovese: I want to quantify, you know, the shortfalls in optical into queue a little bit more: like how much was Eastern Europe versus it sounds like the US with soft in the second quarter, but will be stronger in the second half of the year.
Speaker Change: I want to quantify them.
Speaker Change: Shortfalls and optical into Q, a little bit more like how much was eastern Europe versus it sounds like the U S.
Speaker Change: Soft in the second quarter, but will be stronger in the.
Speaker Change: Second half of the year.
Bruce Mcclelland: Yeah, thanks for the question, Mike. So the first part, I think you've got right. The largest shortfall was this, this federal deal, which was significant in size. I think, as I mentioned in the remarks, that it would have gotten us to the guidance range. So, you know, we were at 193 total, with the bottom the range at 200, so gives you an idea of the, you know, the size of that deal. And obviously, the incremental contribution from that, given it's a sense, essentially software, would have resulted in the earnings being even much, much stronger above the guidance range, just with that deal alone.
Bruce W. McClelland: So the first part, I think you've got it right, the largest shortfall was this federal deal, which was significant in size, I think, as I mentioned in the remarks that it would have gotten us to the guidance range. So, you know, we were at 193 total, with the bottom of the range at 200.
Speaker Change: Yeah. Thanks for the question Mike So the first part I think you've got right the.
Speaker Change: The largest shortfall was this this federal deal, which was significant in size I think as I mentioned and in the remarks that it would have gotten us to the to the guidance range. So.
Speaker Change: We were at 193 total with the bottom of the range at 200. So it gives you an idea of the you know the size of that deal.
Bruce W. McClelland: So it gives you an idea of the size of that deal. And obviously, the incremental contribution from that, given it's essentially software, would have resulted in earnings being even much, much stronger above the guidance range, just with that deal alone. On the optical side, I think Mick mentioned that the year-over-year change in Eastern Europe was about negative 6 million. That gives you an idea of the shortfall from Eastern Europe in the quarter, give or take a few million dollars.
And obviously the incremental contribution from that given its essentially a software would have resulted in the earnings being even much much stronger above the guidance range, just what that deal alone.
Bruce Mcclelland: On the optical side, I think, Mick mentioned that the year-over-year change in Eastern Europe was about negative six million. So that gives you an idea of the shortfall from Eastern Europe in the quarter, you know, give or take a few million dollars. So hope that makes sense.
Mick Lopez: On the optical side I think Mick mentioned that the year over year change in Eastern Europe was about negative 6 million. So that gives you an idea of of the shortfall from eastern Europe in the quarter, you know give or take a few million dollars. So hope that makes sense.
Bruce W. McClelland: So, I hope that makes sense. Yeah, and then, I mean, if we think about the guidance change for the whole year, is the primary moving piece there Eastern Europe, is that the way we should think about it? Yeah, from a negative perspective, it's all Eastern Europe.
Speaker Change: Yeah, and then I mean, if we think about the guidance range for the whole year is is that the primary moving piece there eastern Europe.
Bruce Mcclelland: Yeah, and then, I mean, if we, we think about the guidance change for the whole year, is the primary moving piece there. Eastern Europe is not going to think about it. Yeah, from a, from a negative perspective, it's all Eastern Europe. You know, and I, I frame that in the 20 to 25 million dollar range. Again, offset by the other tailwinds I mentioned across the board, really a whole variety of different things. So we have a, you know, a pretty strong outlook for the second half despite the fact that, you know, that we're reducing shipments into, into Eastern Europe.
Speaker Change: Is that the way, we should think about it.
Bruce W. McClelland: You know, and I frame that in the 20 to $25 million range. Again, offset by the other tailwinds I mentioned, across the board, really a whole variety of different things. So we have a, you know, pretty strong outlook for the second half, despite the fact that, you know, we're reducing shipments into Eastern Europe. And, you know, I think that's in line with what we've seen from others, the pickup in the second half, and then, you know, some of the things a little more specific to us around the Verizon project around us world broadband, exploit expansions, all driving growth in the Okay, and a couple more for me.
Speaker Change: Yeah from a from a negative perspective, it it's all eastern Europe you know.
Speaker Change: When I I frame that in the $20 million to $25 million range again offset by the other tailwind as I mentioned are across the board really a whole variety of different things. So we have a.
Speaker Change: A pretty strong outlook for the second half. Despite the fact that you know that we're reducing shipments into into eastern Europe in.
Bruce Mcclelland: And, you know, I think that's in line with what we've seen from others. The pick up in the second half and then, you know, some of the things a little more specific to us around the Verizon project around US world broadband extensions all driving the globe in the second half of the year for us.
Speaker Change: No I think that's in line with what we've seen from others are the pick up in the second half and then some.
Speaker Change: Some of the things a little more specific to us around the Verizon project around U S World broadband <unk>.
Speaker Change: Expansions are all driving the growth in the second half of the year for us.
Bruce W. McClelland: You know, so we've got the Verizon New Deal is already kicking in. And you guys announced Brightspeed the other day. Those are, you know, pretty impressive names.
Michael Genovese: Okay, and a couple more for me. You know, so we've got the, the Verizon new deal is already kicking in and you guys announced Brightspeed the other day. Those are, you know, pretty impressive names.
Speaker Change: Okay, and then just couple more for me.
Speaker Change: So we've got the had not did the horizon new deal is already kicking in and you guys announced bright speed. The other day. Those are you know pretty impressive names and you know.
Bruce Mcclelland: And, you know, should we think about there's something going on in the industry where this is a trend, and we can expect to see more of the same going forward. Yeah, it certainly feels like that, that Mike, you know, the other one we talked about earlier in the year was with MTN Group in Africa, even with a modernization of their voice infrastructure. And so there's been a series of these, also referenced another US MSO program. And, you know, I think as people look at the investment network infrastructure and how do they get more efficiency, drive down cost and be able to feed the growth in fiber and in mobile.
Speaker Change: Should we think about there is something going on in the industry, where this is a trend and we can expect to see more of the same going forward.
Bruce W. McClelland: And, you know, is there something going on in the industry where this is a trend and we can expect to see more of the same going forward, with other customers? Yeah, it certainly feels like that. Mike, you know, the other one we talked about earlier in the year was with MTN Group in Africa, even with a modernization of their voice infrastructure. And so there's been a series of these, which also referenced another US MSO program.
Speaker Change: Yeah.
Speaker Change: It certainly feels like that that might be you know the other one that we talked about earlier in the year was with the MTN group in Africa, even with.
Speaker Change: A modernization of their voice infrastructure and so there's been a series of these also referenced another U S. M. S. O program and you know I think as people look at the investment in their network infrastructure and how do they get more efficiency drive down cost in and be able to feed the.
Bruce W. McClelland: And you know, I think, as people look at the investment in their network infrastructure and how to get more efficiency, drive down costs, and be able to feed the growth in fiber and in mobile, it's a really great area to look at, and, you know, we've done some work to drive down costs and the ROI, and we're getting some good momentum; you kind of overlay that with the opportunity around the meta switch footprint, which is pretty substantial And, you know, it gives us some really good momentum around the cloud and edge business and the return to growth there. Great, great.
Speaker Change: The growth in fiber and in mobile.
Bruce Mcclelland: It's a really great area to look and, you know, we've done some work to drive down costs and the ROI and getting some good momentum. You know, you kind of overlay that with the opportunity around the Meta Switch footprint, which is pretty substantial in the market and, you know, gives us some really good momentum around the cloud and edge business and then we turn the growth there. Great, great.
Speaker Change: Really great area to look and we've done some work to drive down costs in the ROI and getting some good momentum and you kind of.
Speaker Change: Overlay that with the opportunity around the medicine, which footprint, which is pretty substantial in the market and it gives us some really good momentum around the cloud and edge business and a return to growth there.
Bruce W. McClelland: And then finally, you know, the OpEx, with OpEx coming down so much, I mean, it's, you know, we like to see it. But I guess I just want to ask the question about sort of the R&D requirements of the business, you know, what the R&D intensity looks like right now. How do you protect R&D? Restructuring, progressively. Thanks. Yeah, thanks, Mike. So we were pretty careful about that.
Speaker Change: Great Great and then finally, you know the Opex with Opex coming down so much I mean, you know we like to see it but I guess I just wanted to ask the question about sort of the R&D requirements of the business.
Michael Genovese: And then finally, you know, the op-x, with op-x coming down so much.
Bruce Mcclelland: I mean, it's, you know, we like to see it, but I guess I just want to ask a question about sort of the R&D requirements of the business, you know, what the R&D intensity looks like right now. How do you protect R&D? as you're restructuring this aggressively. Thanks.
Speaker Change: What the R&D intensity looks like right now how do you protect R&D as your restructured.
Speaker Change: Restructuring.
Speaker Change: Aggressively thanks.
Bruce Mcclelland: Yeah, thanks, Mike. So, we're pretty careful about that.
Bruce W. McClelland: I mean, R&D is the fuel, it's the engine of the future, for sure. You know, we've gotten ahead of it by really coming at it structurally and being able to get the most out of the combined set of resources in the company with the reorganization we started about 18 months ago. And, you know, the area we're focused on is really around sustaining engineering, how do we get really, really efficient around the cost structure for supporting the installed base? We've actually implemented some really interesting technology that helps our customers upgrade their networks more efficiently and get them on a common software base.
Speaker Change: Yeah. Thanks, Mike. So we were pretty careful about that I mean R&D is the fuel it's the engine of the future for sure.
Bruce Mcclelland: I mean, R&D is the fuel; it's the engine of the future, for sure. You know, we've gotten at it by really coming at it structurally and being able to, you know, get the most out of the combined set of resources in the company with the reorganization we started about 18 months ago. And you know, the area we're focused on is really around sustaining engineering. How do we get really, really efficient around the cost structure for supporting the install base? We've actually implemented some really interesting technology that helps our customers upgrade their networks more efficiently and get them on a common software base.
Speaker Change:
Speaker Change: We've gotten added by really coming at it structurally and be able to get the most out of the combined set of resources in the company with the reorganization, we started about 18 months ago.
Speaker Change: The area. We're focused on is really around sustaining engineering, how do we get really really efficient around the cost structure for supporting the installed base. We've actually implemented some really interesting technology that helps our customers upgrade their networks more efficiently I can get them on a common software base and that allows.
Bruce W. McClelland: And that allows us to obviously get more efficient in how we support them as well. So there's a whole series of things that we've done since then to keep the, you know, the, engine strong. So, But thanks for all the questions, Mike. Perfect. I'll pass it on. The next question is from Christian Schwab from Craig Hallam Capital. Please go ahead.
Michael Genovese: And that allows us to obviously get more efficient in how we support them as well. So, there's a whole series of things that we've gone after there to keep the, you know, the engine strong. So, but thanks for all the questions, Mike.
Speaker Change: US to obviously get more efficient in how we support them as well so there's a whole series of things that that we've gone after there to keep the you know the the the engine strong so.
Mike: But thanks for all the questions Mike Perfect I'll pass it on.
Christian Schwab: The next question is from Christian Swab from Craig Hallam Capital. Please go ahead.
Mike: The next question is from Christian Schwab from Craig Hallum Capital. Please go ahead.
Christian Schwab: Hey, good afternoon, guys. So, I love the questions. We're kind of answered there, but I'm just on the rural broadband. You know, a lot of people aren't really talking about rural broadband or the BEAD money yet. You kind of mentioned the other programs. You know, is the strength that you're seeing for rural broadband, you know, on the OTN and optical side getting ready for those money to be released? Or are there a few states where you guys are really well positioned? Where money is getting into the market a little bit faster than, say, you know, broadly based.
Christian David Schwab: Hey, good afternoon guys.
Christian David Schwab: Hey, good afternoon, guys. So a lot of the questions were kind of answered there, but I'm just on rural broadband. [inaudible] You know, a lot of people aren't really talking about rural broadband or the bond money yet. You kind of mentioned the other programs. Is the strength that you're seeing for rural broadband, you know, on the OTN and optical side getting ready for the money to be released, or are there a few states where you guys are really well positioned where money is getting into the market a little bit faster than say, you Yeah. Hey Christian.
Christian David Schwab: A lot of questions that were kind of answered there, but I'm, just saying the rural broadband.
Christian Schwab:
Christian David Schwab: You know a lot of people aren't really talking about rural broadband or the bead Buddy yet or are you kind of mentioned the other programs you know it is the strength that you're seeing.
Speaker Change: For rural broadband you know on the O T N and optical side getting ready for those money to be released or are there a few states where you guys are really well positioned.
Speaker Change: Their money is is getting into the market a little bit faster than say you know broadly based.
Christian Schwab: Yeah.
Speaker Change: Yeah, Hey, Christian so the the bead program is not contributing anything yet today. So it's not a you know the.
Bruce W. McClelland: So the BEAD program is not contributing anything yet today. So it's not, you know, the source behind the programs we have this year at all. As I mentioned, I think about half the programs, we estimate half the programs have some sort of federal assistance or state assistance behind them. But it's not the new BEAD program.
Bruce Mcclelland: Hey, Christian, so the, you know, the bead program is not contributing anything yet today. So, it's not, you know, the source behind the programs we have this year at all. As I mentioned, I think about half the programs we estimate half the programs have some sort of federal assistance or state assistance behind them, but it's not the new BEAD program. It tends to be hard off or reconnect funds or a few other sources of funding. It's interesting that our participation in the middle mile portion of the network is probably a spend that's staged a little later than the initial investment around driving fiber, putting in the fiber access equipment, etc.
Speaker Change: The source behind the programs that we have this year at all as I mentioned I think about half the programs. We estimate a half the programs have some sort of federal assistant are state of the systems behind them, but it's not the new B program, you know it tends to be art off or or reconnect funds are a few other sources of funding.
Bruce W. McClelland: You know, it tends to be RDOF or ReConnect funds or a few other sources of funding. It's interesting that, you know, our participation in the middle mile portion of the network is probably a spend that's staged a little later than the initial investment around driving fiber, putting in the fiber access equipment, etc. And then as that infrastructure gets put in place and the traffic grows, then they have to upgrade the middle mile portion of the network. And so I think it may be just a reflection of the timing of how that works and where our participation is.
Speaker Change: Interesting that you know our participation in the middle mile portion of the network.
Speaker Change: There will be a spend that's staged a little later than the initial investment around driving fiber putting in the you know the fiber access equipment et cetera, and then as that infrastructure gets put in place and the traffic Rose then they have to upgrade the middle mile portion of the network and so I think it may be just a reflection of the timing on how that works and.
Bruce Mcclelland: And then, as that infrastructure gets put in place and the traffic grows, then they have to upgrade the middle mile portion of the network. And so I think it may be just a reflection of the timing on how that works and where our participation is. And yeah, we've just got a great funnel of opportunities in the second half here. Some of them a little larger, you know, that really helped obviously drive growth. And then the final thing I'll add is, you know, we're participating in the optical transport layer as well as the Metro IP routing layer.
Bruce W. McClelland: And yeah, we've just got a great funnel of opportunities in the second half here, some of them a little larger, you know, that really helped, obviously, drive growth. And then the final thing I'll add is that we participate in the optical transport layer, as well as the metro IP routing layer. And so that gives us access to, you know, a good source of the program or size part of the program as we, you know, we have a little broader addressable market.
Speaker Change: Where our participation is.
Speaker Change: And yeah, we've just got a great funnel of opportunities in the second half here some of them a little larger.
Speaker Change: And that really helped obviously drive growth and then the final thing I'll add is we're participating in the in the optical transport layer or as well as the metro IP routing layer and so that gives us access to a good source of the program or size part of the program. As we are you know we are a little broader addressable market.
Bruce Mcclelland: And so that gives us access to, you know, a good source of the program or part of the program as we, you know, we have a little broader addressable market.
Christian Schwab: And then on the disruption due to M&A, I mean, there are more opportunities, you know, here in the United States, kind of on infinite, I know, infinite areas opportunities were more data center centric, which you know, you know, and more longer, hawish type of applications. But we're, you know, what would product...
Speaker Change: And then on the disruption due to M&A.
Speaker Change: I mean are there more opportunities you know you know here in the United States kind of on Infinera I know, if there is opportunities where more data center centric, which they don't.
Speaker Change: And in more long haul ish type of applications, but.
Speaker Change: Where you know what what products you know in both of those acquisitions you know the Hewlett Packard Juniper, the Nokia Infinera what products that you have that you think you know you have the opportunity to be.
Bruce Mcclelland: Alex, you know, in both of those acquisitions, you know, the Hill of Packard, Juniper, the O'Kiah Infanera, what products that you have that you think, you know, you have the opportunity to be disruptive in the marketplace and maybe take shares as roadbabs or questions, and, you know, employees are let go. Yeah, so in the case of the O'Kiah Infanera deal, it's squarely in the optical transport arena. And as you as you rightly pointed out, it's not so much in the North American kind of hyperscale data center portion of the market. It's more in Europe and Asia pack.
Bruce W. McClelland: [inaudible] you know, in both of those acquisitions, you know, Hewlett-Packard, Juniper, Nokia, Infiniera. What products do you have that you think, you know, you have the opportunity to be disruptive in the marketplace and maybe take, share as roadmaps or questions, and, you know, employees are let go?
Speaker Change: Disruptive in the marketplace and maybe take share as Roadmaps our questions in.
Speaker Change: Employees are let go.
Speaker Change: Yeah. So in the in the case of the Nokia Infinera deal. It's squarely in the optical transport Arena and as you as you rightfully pointed out it's not so much in the North American kind of a hyperscale data center portion of the market, it's more in Europe and Asia Pac.
Bruce W. McClelland: Yeah, so in the case of the Nokia Infinera deal, it's squarely in the optical transport arena. And, as you rightfully pointed out, it's not so much in the North American kind of hyperscale data center portion of the market. It's more in Europe and Asia-Pacific.
Bruce W. McClelland: And typically, it's in cases where maybe both Nokia and Infinera don't have a share of the deployments at a customer. And they want to make sure they have a diversified customer base or supplier base, so it prevents opportunities for others to come in and win some of that share.
Bruce Mcclelland: And typically it's in cases where maybe both Nokia and an Infanera, I don't have a share of the deployments at a customer. And, you know, they want to make sure they have a diversified customer base or a supplier base. And so it prevents, you know, opportunities for others to come in and win some of that share.
Speaker Change: And typically it's in cases, where maybe both Nokia and air Infinera I don't have a share of the.
Speaker Change: The deployments at a customer.
Speaker Change: And they want to make sure they have a diversified customer base, our supplier base and so it presents opportunities for others to come in and.
Speaker Change: And and win some of that share in the case of the H P and juniper deal. It's it's squarely in the IP routing space really in the metro middle mile and access aggregation layer, where perhaps juniper had a position with a telecom operator, and you know, it's an opportunity for us to go.
Bruce Mcclelland: In the case of the HP and Juniper deal, it's squarely in the IP routing space, really in the metro middle mile and access aggregation layer, where perhaps Juniper had a position with a telecom operator and, you know, it's an opportunity for us to go in and provide an additional source. And, you know, given the focus that we have on the telecom market in particular and the products that we've designed specifically for that type of network, I think it gives us a good position to take more share there as well. Great.
Bruce W. McClelland: In the case of the HP and Juniper deal, it's squarely in the IP routing space, really in the metro, middle mile, and access aggregation layer, where perhaps Juniper has a position with a telecom operator, and it's an opportunity for us to go in and provide an additional source. And given the focus that we have on the telecom market in particular and the products that we've designed specifically for that type of network, I think it gives us a good position to take more share there as well.
Speaker Change: In and provided an additional source and.
Speaker Change: Given the focus that we have on the telecom market in particular and the products that we've designed specifically for that type of network I think it gives us a good position to take more share there as well.
Speaker Change: Great and then my last question I'll sneak in here Bruce is it on the bright speed that you just announced you know you've done a good job of quantifying the Verizon opportunity you know 300 million over the next few years, you know exited that you know kind of you know.
Bruce W. McClelland: And then my last question, I'll sneak in here, Bruce, is on the Brightspeed that you just announced. You did a good job of quantifying, you know, the Verizon opportunity at, you know, $300 million over the next few years, you know, exit at, you know, kind of, you know, $25 million-ish, you know, in Q4 of this year. Can you give us any color on what the multi-year opportunity at Brightspeed could be?
Christian Schwab: And then my last question, I'll sneak in here, Bruce. On the bright speed that you just announced, you know, you've done a good job of, you know, quantifying, you know, the Verizon opportunity at, you know, 300 million over the next few years, you know, accident, you know, kind of, you know, 25 million ish, you know, in Q4 of this year.
Speaker Change: 25 million ish, you know in Q4 of this year could you give us any color on what the multiyear opportunity up rates need to be.
Bruce Mcclelland: Can you give us any color at what the multi-year opportunity of Brightspeed to be? Yeah, you know, just directly not to talk, you know, too specific about an individual customer. But obviously, Brightspeed's footprint is smaller than the larger tier ones, fixed line providers like AT&T and Verizon. I think the footprint they picked up was about 6 million lines, and obviously, there's a transition to fiber and IP across the network. But there's quite a, you know, a substantial footprint of legacy TDM lines there, and I think we've worked really successfully to justify the ROI and modernizing a portion of that network at least.
Speaker Change: Yeah.
Bruce W. McClelland: Yeah, you know, just directionally, not to get, you know, too specific about an individual customer. But obviously, Brightspeed's footprint is smaller than the larger tier ones, fixed line providers like AT&T and Verizon. I think the footprint they picked up was about 6 million lines.
Speaker Change: Just directionally not to talk to specific about an individual customer, but obviously bright speeds footprint is smaller than the larger tier ones fixed line providers like AT&T and Verizon are I think the footprint. They picked up was about 6 million lines and obviously, there's a transition to.
Bruce W. McClelland: And obviously, there's a transition to fiber and IP across the network, but there's quite a substantial footprint of legacy TDM lines there. And I think we've worked really successfully to justify the ROI and modernizing a portion of that network at least. And, you know, these programs do take time. Modernizing a switch location doesn't get done overnight. So it kind of spreads out over a period of time.
Speaker Change: To fiber in an IP across the network.
Speaker Change: But theres quite a substantial footprint of legacy Tdm lines, there and I think we've worked really successfully to justify their ROI and modernizing a portion of that network at least and you know these programs do take time.
Bruce Mcclelland: And, you know, these programs do take time to modernize; a switch location doesn't get done overnight, so it kind of stretches over a period of time. Hopefully, we can continue to grow in the footprint that we're already deploying in and then identify some of these new customers as well that, you know, that we can get on board for the similar program.
Speaker Change: To modernize our switch location doesn't get done overnight. So it kind of stretches over a period of time and hopefully we can continue to grow in the footprint that we're already deploying in and then identify some of these new customers as well that are that we can get onboard with a similar program.
Bruce W. McClelland: And hopefully, we can continue to grow in the footprint that we're already deploying in and then identify some of these new customers as well that, you know, that we can get on board with a similar program. Great, no other questions, thank you. Thanks Christian. The next question is from Tim Savageaux from Northland Capital Markets. Please go ahead. Hey, good afternoon. Let's stay on that one for a second because that would be an obvious kind of guidepost to try and, you know, at least get a sense of what bright speed could mean. And it is a smaller footprint, but it's not that much smaller.
Christian Schwab: Great, no other questions. Thank you.
Speaker Change: Great no other questions. Thank you.
Christian Schwab: Nice question.
Speaker Change: Next question.
Okay.
Tim Savageau: The next question is from Tim Savageau from Northland for a second, because I would be an obvious kind of guidepost to try and, you know, please get a sense of what Brightspeed could mean. And it is a smaller footprint, but it's- I'm not that much smaller, I think Verizon is what 17, 20 million like something like that. Is that a fair way to get it in terms of proportional understanding? They've got a big business network over there, Verizon, and anything. I guess, you know, overall, without, you know, pressing too hard, it seems material or like it could be.
Speaker Change: The next question is from Tim Savvy, Joe from Northland Capital markets. Please go ahead.
Timothy Paul Savageaux: I think Verizon's, what, $17-$20 million, something like that. Material, or like it could be. Yeah, hi, Tim.
Speaker Change: Hey, good afternoon.
Speaker Change: On that one for a second.
Speaker Change: Because that would be an obvious kind of guy.
Speaker Change: Guidepost to try and.
Speaker Change: At least get a sense of what bright speed could mean and it is a smaller footprint, but it's.
Speaker Change: Not that much smaller.
Speaker Change: There's about 17 to 20 million line something like that.
Speaker Change: Is that a fair way to look at it in terms of proportional understanding they've got a big business network over there at Verizon and anything I guess, you know overall without pressing too hard it seems.
Speaker Change: Cheerio.
Or like it could be fair to say.
Bruce Mcclelland: Yeah, hi Tim. Yeah, no, it's, I think it's very meaningful and it's very strategic. I mean, Bright speeds up, you know, an innovator here in the market, and we love to be partnered with them here.
Speaker Change: Yeah, Hi, Tim Yeah, No. It's I think it's very meaningful and it's very strategic I mean bright speed. The you know what.
Bruce W. McClelland: Um, yeah, no, it's, I think it's very meaningful, and it's very strategic. I mean, BrightSpeed's an innovator here in the market, and we love to be partnered with them here. You know, I guess what I would say kind of a little more generally about this switch modernization, there are some uniquenesses depending on the configuration of the switch, how many legacy lines are left, what the split is between businesses and residential, and then what region of the market they're deployed in. For example, the cost of power in California is a lot higher than the cost of power in other regions.
Speaker Change: An innovator here in the market and we love to be partnered with them here.
Bruce Mcclelland: You know, I guess what I would say, kind of a little more generally about this switch modernization. There are some uniqueness depending on the configuration of the switch; how many legacy lines are left. What the split is between businesses and residential, and then what region of the market they're deployed in, you know, the cost of power in California is a lot higher than the cost of power in other regions. So you really got to kind of roll up your sleeves and figure out, you know, what portion of the install base has an ROI that makes sense to make the upfront investment.
Speaker Change: I guess, what I would say kind of a little more generally about this switch modernization.
Speaker Change: There are some uniqueness depending on the configuration of the switch how many legacy lines are left what the split is between businesses and residential and then what region of the market. They are deployed in the cost of power in California's a lot higher than the cost of power in other regions. So you really got to kind of roll.
Bruce W. McClelland: So you really have to kind of roll up your sleeves and figure out what portion of the installed base has an ROI that makes sense to make the upfront investment. And so, you know, again, I don't want to comment too much more on BrightSpeed specifically, but I would just say more generally, you've got to really kind of look at the details on each one. And so the comparisons aren't just, you know, they've got a particular number of lines, and so it scales proportionately.
Speaker Change: Up your sleeves and figure out what portion of the installed base has an ROI that makes sense to make the upfront investment.
Bruce Mcclelland: And so, you know, again, I don't want to comment too much more on Brightspeed specifically, but I would just say more generally you've got to really kind of look at the details on each one. And so the comparisons aren't just, you know, they've got a particular number of lines, and so it scales proportionately. And I know I'm not helping you a lot, but that's kind of the nuances behind this.
Speaker Change: And so you know again I don't want to comment too much more on price speak specifically, but I would just say more generally you've got a really kind of look at the details on each one and so the comparisons arent just you know they've got a particular number of lines and so it scales proportionately.
Speaker Change: I know I'm not helping you a lot, but that's kind of the nuances behind the scenes.
Tim Savageau: You know, that's helpful.
Bruce W. McClelland: And I know I'm not helping you a lot, but that's kind of the nuances behind the scenes. You know, that's helpful. You know, off the top of your head, you think, hey, maybe these rural markets have actually more voice lines or more traditional voice than the bigger ones as well. While we're on the topic, can you talk to us about where you stand or if you see any opportunity at the, I'm a sister company where Brightspeed spun out of. You know, the old CenturyLink, the current Lumen, this would you put that on a, you I don't know. But any thoughts?
Speaker Change: That's helpful.
Tim Savageau: You know, after top of your head, you think, hey, maybe these rural market have actually more voice lines or more traditional voice than the bigger ones as well. You know, while we're on the topic, what about can you talk to us about where you stand or if you see any opportunity at the kind of sister company where Brightspeed spun out of. You know, the old Century Link, the current woman is, would you put that on a, you know, and maybe you're already there to some degrees.
Speaker Change: After copier How'd, you think hey, maybe these rural markets have actually more voice lines are more traditional voice than the bigger ones as well.
Speaker Change: While we're on the topic what about.
Speaker Change: Can you talk to us about where you stand or if you see any opportunity at the.
And the sister company, where bright speed spun out of.
Speaker Change: Yeah, the old Centurylink the current lumen.
Speaker Change: Would you put that on the.
Speaker Change: And maybe you already there to some degree it's I don't know.
Bruce Mcclelland: I don't know what any thoughts.
Bruce Mcclelland: Yeah. Yeah, so we, you know, not surprisingly, we've got a large install base across many of the operators here in the US, and Lumen being one of them, nothing specific to talk about around their plans around that portion of the network. But, you know, we definitely have a large footprint that we're continuing to help support and maintain that's across the network there.
Yeah.
Bruce W. McClelland: Yes, we, you know, not surprisingly, we've got a large installed base across many of the operators here in the U.S., and Lumen being one of them. Nothing specific to talk about around their plans for that portion of the network, but, you know, we definitely have a large footprint that we're continuing to help support and maintain that's across the network there. Okay, I think I'll take a break from uncomfortably mentioning customer names and move on to a higher level discussion with you.
Speaker Change: Yes. So we you know not surprisingly we've got a large installed base across many of the operators here in the U S and and lumen being one of them.
Speaker Change: Nothing specific to talk about around their plans are around that portion of the network, but we definitely how about at a large footprint that we're continuing to help support and maintain that sun that's across the network there.
Mick Lopez: Yeah, take a break from uncomfortably mentioning customer names and move on to a local discussion. I think make that you said you expect growth in both segments in the second half on a year-over-year basis. Just want to confirm that. And it seems like that would put you for the year in IP optical, you know, maybe flat to up a touch. Am I kind of looking at that the right way?
Speaker Change: Okay.
Speaker Change: I think I'll take a break from uncomfortable you're mentioning customer names and move on to a higher level.
Speaker Change: Discussion with you.
Bruce W. McClelland: I think, Mick, that you said you expected growth in both segments in the second half on a year-over-year basis. Just want to confirm that. And it seems like that would put you for the year in IP optical, maybe flat to up a touch. Am I... Kind of looking at that the right way? Yeah, let me jump in.
Speaker Change: I think maybe you said you expect growth in both segments in the second half on a year over year basis, just want to confirm that and it seems like that would put you for the year in IP optical.
Speaker Change: To be flat to up a touch.
Speaker Change: Kind of looking at that the right way.
Mick Lopez: Yeah, let me jump and make a comment on this as well. So the, with obviously the change in the business in Eastern Europe, the year-over-year growth on IP optical is a little less than what we started the year projecting. I think if you kind of back into it with our new full year guidance, it's a bit a tad year over year and the cloud and edge business up, you know, two to three percent something like that, maybe a little more. So I think you can, you could back into those numbers directly.
Speaker Change: Yeah, let me jump in Mike and Nick can comment on this as well so.
Bruce W. McClelland: Mick can comment on this as well. So obviously, with the change in the business in Eastern Europe, the year over year growth on IP Optical is a little less than what we'd started the year projecting. I think if you kind of back into it with our new full-year guidance, it's up a bit, a tad, year over year. And the cloud and edge business is up, you know, two to 3%, something like that, maybe a little more. So I think you could back into those numbers, directionally, right.
Speaker Change: <unk>.
Speaker Change: Obviously the change in the businesses in eastern Europe, the year over year growth on IP optical was a little less than what we'd started the year projecting.
Speaker Change: I think if you kind of back into it with our new full year guidance, it's up a bit a tad year over year, and the cloud and edge business up a you know 2% to 3% something like that maybe a little more so I think you can you could back into those numbers directionally.
Yeah.
Mick Lopez: Right, and any update given this, I think it was last quarter called out a certain amount of enterprise growth, either for the quarter expectation for the year, which sort of implied some continuous declines and service provider, you know, this is cloud edge now, you know, given the strength that you're seeing in the second half or expectancy, and I think that was born out, you know, from what we've seen from the carrier report. As far as there any update, in terms of those dynamics, kind of tier one versus non tier one, and how you're seeing that progress moving forward in in cloud edge.
Right.
Bruce W. McClelland: And any update given on this, I think it was last quarter, called out a certain amount of enterprise growth, either for the quarter or expectation for the year, which implied some continued declines in service provider, and this is the cloud edge now. Given the strength that you're seeing in the second half, or expect to see, and I think that was borne out from what we've seen from the carrier reports thus far, is there any update in terms of those dynamics? kind of Tier 1 versus non-Tier 1, and how you're seeing that progress moving forward in Claudette. Yeah, I think you got the math very accurate there, Tim.
Speaker Change: And any update you had given this I think it was last quarter called out a certain amount of enterprise growth either for the quarter expectation for the year.
Speaker Change: What's sort of implied some continued declines in service provider. This is cloud edge now.
Speaker Change: Given the strength that you're seeing in the second half or expect to see and I think that was borne out from what we've seen from the carrier reports thus far.
Speaker Change: Is there any update.
Speaker Change: In terms of those dynamics.
Speaker Change: The tier one versus non tier one.
And how youre seeing that progress moving forward in closets.
Mick Lopez: Yeah, I think you've got the math very accurate there, Tim. So I think in the second quarter, service provider for cloud edge was very consistent with a year ago, down a few million dollars, and the tier one portion of that very stabilized. So, you know, great to see I'll call it kind of bottoming out. We said that last quarter we kind of reached the bottom and expect, you know, significant growth in the second half from the service provider piece. So the decline in cloud edge in the second quarter year or year was essentially mostly enterprise and within enterprise, it was mostly the, you know, the one said will deal the contributed most of it.
Speaker Change #100: Yeah, I think he's got the math.
Speaker Change #101: Accurate there Tim So I think in the in the second quarter service provider.
Bruce W. McClelland: So I think in the second quarter, the service provider for CloudNedge was very consistent with a year ago, down a few million dollars, and the tier one portion of that was very stabilized. So, you know, great to see, I'll call it kind of bottoming out. We said that last quarter we kind of reached the bottom and expect, you know, significant growth in the second half from the service provider piece. So the decline in cloud and edge in the second quarter year over year was essentially mostly enterprise. And within enterprise, it was mostly the one federal deal that contributed most of it. So, you know, it's unfortunate, right, that it just closed inside the quarter like we planned.
Speaker Change #102: For cloud and edge was very consistent with a year ago down a few million dollars and the tier one portion of that very stabilized so great to see I'll call. It kind of bottoming out we said that last quarter, we kind of reached the bottom.
Speaker Change #102: And expect significant growth in the second half are from the service provider piece.
Speaker Change #102: The decline in cloud and edge in the second quarter year over year was essentially mostly enterprise and within enterprise. It was mostly the you know the one federal deal that contributed most of it so.
Bruce Mcclelland: So, you know, it's unfortunate, right, to set it just closed inside the quarter like we planned. We would have had a really strong number in the second quarter, particularly on the earnings line; would have been outstanding.
Speaker Change #102:
Speaker Change #102: It's unfortunate right to further just closed inside the quarter like we planned we would've had a really a really strong number in the second quarter, particularly on the earnings line would've been outstanding.
Bruce W. McClelland: We would have had a really, really strong number in the second quarter, particularly on the earnings line, would have been outstanding. Okay, and last one for me, I mean, I do think this kind of shifting competitive landscape is really intriguing. And it makes a lot of sense.
Bruce Mcclelland: Okay, and last one for me, I do think this kind of shifting competitive landscape is really intriguing and makes a lot of sense. You know, anecdotally, can you give us anything in terms of, you know, immediate customer reaction and the wake of, you know, the recent Finera deal or with regard to the Microsoft apparent news? You know, is that something that's happening real time from your perspective, and is there anything you can share with us in terms of, you know, reaction you're getting across the customer base. Yeah, so it's definitely happening in real time, kind of not just supposition, I suppose, right.
Okay and last one for me.
Speaker Change #103: Do you think this kind of shifting competitive landscape is really intriguing.
Speaker Change #104: It makes a lot of sense.
Bruce W. McClelland: You know, anecdotally, can you give us anything in terms of, you know, immediate customer reaction in the wake of, you know, the recent Infinera deal, or..., or with regard to the Microsoft apparent news. I mean, is that something that's happening in real time from your perspective? And is there anything you can share with us in terms of?
Speaker Change #105: Anecdotally can you give us anything in terms of.
Speaker Change #106: Immediate customer reaction in the wake of.
Speaker Change #106: You know the reason infinera deal or.
Speaker Change #106:
Speaker Change #106: With regards to the Microsoft apparent news.
Speaker Change #107: Is that something that's happening real time from your perspective and is there anything you can share with us in terms of.
Bruce W. McClelland: you know, the reaction you're getting across, the customer base. Yeah, so it's definitely happening in real time, kind of not just speculation, I suppose, right? We have a couple of specific examples where, and again, we're obviously focused on going out and trying to capture this. So we're proactive in reaching out and looking for opportunities. But, you know, specific cases where we know two vendors are deployed in the network that are becoming one supplier. And, you know, we want to be the alternative there providing that supplier assurance. So, several specific examples like that. But they don't translate into revenue overnight. It does take time, obviously, but there are, you know, several specific examples just like that.
Speaker Change #108: No reaction you're getting across.
Speaker Change #108: The customer base.
Speaker Change #109: Yes, so it's definitely happening in real time kind of not just a supposition I suppose right. We have a couple of specific examples where.
Bruce Mcclelland: We have a couple of specific examples where, and again, we're obviously focused on going and trying to capture this, so we're proactive in reaching out and looking for opportunities. But, you know, specific cases where we know two vendors are deployed in the network that are becoming one supplier. And, you know, we want to be the alternative there, providing that supplier assurance. So several specific examples like that, they don't translate into revenue overnight. It does take time, obviously, but there's, you know, several specific examples, just like that. But on the, on the meta switch side, you know, given kind of the abrupt approach taken around the transition there, there's a lot of discussions with customers, where, you know, maybe they felt comfortable sweating the asset and the network for a continued period of time.
Speaker Change #109: And again, we're we're obviously focused on going and trying to capture this were proactive in reaching out and looking for opportunities, but you know specific cases, where we know two vendors that are deployed in the network that are becoming one supplier and we want to be the alternative there providing that supplier assurance. So several specific examples like that.
Speaker Change #109: I don't they don't translate into revenue overnight. It does take time, obviously, but there's several specific examples just like that.
Speaker Change #109: On the on the meta switch side, you know given kind of the abrupt approach taken around around the transition there.
Bruce W. McClelland: On the Metaswitch side, you know, given kind of the abrupt approach taken around the transition there, there's a lot of discussions with customers where, you know, maybe they felt comfortable sweating acid in the network for a continued period of time but are now kind of concerned over what the future holds. And so discussions around replacing a product that's deployed or transitioning from an on-premise solution to more of a cloud-based solution, you know, it just opens up the funnel of opportunity in a pretty broad way. We don't have any of that in our projections for the year because, again, I think it takes time to translate that into wins and revenue, but it's an area we're pretty focused on. Great, thanks.
Speaker Change #109: There's a lot of discussions with customers.
Speaker Change #109: Where maybe they felt comfortable sweating the assets in the network for for a continued period of time, but now kind of concerned over what what the future holds and so discussions around a replacing product that's deployed or trends you know transitioning from our on premise solution to more of a cloud based.
Bruce Mcclelland: But now kind of concerned over what, what the future holds and so discussions around replacing product that's deployed or trans, you know, transitioning from a on-premise solution to more of a cloud-based solution, you know, it just opens up the funnel of opportunity in a pretty broad way. We don't have any of that in our projections for the year because, again, I think it takes time to translate that into wins and revenue, but it's an area we're pretty focused in.
Speaker Change #109: And it just opens up the funnel of opportunity in it.
Speaker Change #109: Pretty broad way so.
Speaker Change #109: We don't have any of that in our projections for the year, because again I think it takes time to translate that into wins and revenue, but it's an area we're pretty focused in.
Tim Savageau: Great, thanks.
Great. Thanks.
Tim Savageau: Yeah, thank you, Tim.
Bruce W. McClelland: Yeah, thank you, Tim. The next question is from Dave Kang from B. Reilly Securities. Please go ahead. Thank you. Good afternoon.
Timothy Paul Savageaux: Yes, Thank you Tim.
Tim Savvy: Yeah.
Dave Kang: The next question is from Dave Kang from Be Rily Securities.
Tim Savvy: The next question is from Dave Kang from B Riley Securities. Please go ahead.
Dave Kang: Please go ahead. Thank you.
Ku Kang: My first question is, I was wondering if you can talk about Neptune's RAMP at AT&T and other tier ones. I think you mentioned MSO might maybe provide more color in that customer. Yeah, hey, Dave.
Ku Kang: Thank you. Good afternoon. My first question is I was wondering if you can talk about.
Dave Kang: Good afternoon. My first question is I was wondering if you can't talk about Neptune's ramp at AT&T and other care ones. I think you mentioned MS, so maybe provide more color and that customer.
Ku Kang: Neptunes ramp at AT&T and other tier ones I think you mentioned M. S. So maybe provide more color on that customer.
Bruce Mcclelland: Yeah, hey Dave. So, you know, we pointed out even with the the Bright Speed migration that we're doing it leverages our Neptune router as part of that solution and it's involved in a couple of different ways kind of as a standard router as well as being able to sell. So we're going to support what they call TDM circuit emulation. Being able to remove legacy TDM circuits or sonic infrastructure and carry it all over an IP fiber network really helps reduce the cost of supporting all this legacy infrastructure. So that concept, that solution that we're using it at a bright speed, same sort of approach that we talked about with AT&T last year.
Bruce W. McClelland: So, you know, we pointed out that even with the Brightspeed migration that we're doing, it leverages our Neptune router as part of that solution. And it's involved in a couple of different ways, kind of as a standard router, as well as being able to support what they call TDM circuit emulation. Being able to, you know, remove legacy TDM circuits or SONET infrastructure and carry it all over an IP fiber network really helps reduce the cost of supporting all this legacy infrastructure.
Speaker Change #113: Yeah, Hey, Dave.
So.
Speaker Change #114: We pointed out even with the bright speed migration that we're doing it leverages, our Neptune router as part of that solution and its involved in a couple of different ways kind of as a standard router as well as being able to support what they called the Tdm circuit emulation being able to.
Speaker Change #114: Remove legacy Tdm circuits or saw in it infrastructure and carry it all over and IP fiber network. It really helps reduce the.
Bruce W. McClelland: So that concept, that solution that we're using at Brightspeed, the same sort of approach that we talked about with AT&T last year. And it's, it's actually a key enabler in this whole migration. So we want it to become really a standard element of the voice network modernization. And that's the entry point for a number of carriers, large and small.
Speaker Change #114: The cost of supporting all this legacy infrastructure.
Speaker Change #114: That that concept that solution that are that we're using it at a price P. The same sort of approach that we are that we talked about with AT&T last year and it's it's a it's actually a key enabler in this whole migration. So we want it to become really as a standard element of the voice network.
Bruce Mcclelland: And it's actually a key enabler in this whole migration. So we want it to become really a standard element of the voice network modernization. And that's the entry point at a number of carriers large and small. So I don't want to get into specific commenting on a specific customer, but it's an integral part of that solution now. And really that linkage between the portfolio that we acquired from ECI and have been investing in and how that combination makes a lot of sense for us.
Speaker Change #114: Modernization and that's the entry point at a number of carriers large and small so.
Bruce W. McClelland: So, you know, I don't want to get into specific comments on a specific customer, but it's an integral part of that solution now. And really, the linkage between the portfolio that we acquired from ECI and have been investing in, and how that combination makes a lot of sense for us. And can you just do it?
Speaker Change #114: Don't want to get into specific comment on a specific customer, but it's a it's an integral part of that solution now and really that the linkage between the portfolio that are that we acquired from Sci and have been investing in and how does that combination makes a lot of sense for us.
Bruce Mcclelland: And can you just talk about the ramp of the trajectory, you know, like, is it going to, you know, peak in maybe fourth quarter or next year and, you know, any color on that? Well, we definitely have a strong second half. And in fact, I think, as you do the analysis on the numbers of very strong Q4. And again, it's similar to what I've heard from others. I know Nokia said something similar this week that the fourth quarter is expected to be unusually strong, if you will. I don't think of that as a peak. I think it's a peak for this year, obviously, but it creates a foundation for us to grow into 25, and clearly we think that's what we'll be able to do.
Speaker Change #115: And can you just.
Bruce W. McClelland: talk about the ramp, the trajectory, you know, like... Is it going to peak in maybe the fourth quarter or next year and any color on that? Well, we definitely have a strong second half. And in fact, I think as you do the analysis on the numbers, a very strong Q4. And again, it's similar to what I've heard from others. I know Nokia said something similar this week that the fourth quarter is expected to be unusually strong, if you will. But I don't think of that as a peak.
Speaker Change #116: Talk about the ramp of the trajectory are you know like.
Speaker Change #116: Is it going to peak in maybe fourth quarter or next year and.
Speaker Change #117: Any color on that.
Speaker Change #118: Well, we definitely have a strong second half and in fact I think as you do the analysis on the numbers are very strong on Q4.
Speaker Change #119: And again, it's similar what I, what I have.
Speaker Change #120: Or from others that I know Nokia said something similar this week that the so the fourth quarter is expected to be unusually strong. If you will I don't think of that as a peak I think it's a peak for this year, obviously, but it creates a foundation for us to grow into 25 and <unk>.
Bruce W. McClelland: I think it's a peak for this year, obviously, but it creates a foundation for us to grow into 25. And clearly, we think that's what we'll be able to do, despite the reduced business out of Eastern Europe. We're able to, as the growth we've been able to experience over the last couple of years, be able to continue that trajectory, even with that coming out of the picture for next year. So that's what we're here for.
Clearly, we think that's what we'll be able to do despite you know the the the reduced business how to eastern Europe. We're.
Bruce Mcclelland: Despite, you know, the reduced business out of Eastern Europe, you know, we're able to, you know, as the growth we've been able to, you know, experience over the last couple of years. Be able to continue that trajectory even with that coming out of the view for next year. So, you know, that's what we're here for. We want we want nature to be a significant improvement over this year. And I think the foundation we created, the wins in some of these larger accounts, now really provide us the ability to do that.
Speaker Change #120: We're able to you know is the growth we've been able to.
Speaker Change #120: Experienced over the last couple of years be able to continue that trajectory, even with that coming out of the view for for next year. So that's.
Speaker Change #120: That's what we're here for we want we want to make sure to be a significant improvement over this year and I think the foundation, we've created the wins in some of these larger accounts now really provide us the ability to do that.
Bruce W. McClelland: We want next year to be a significant improvement over this year. And I think the foundation we've created, the wins in some of these larger accounts now really provide us the ability to do that. Got it. And then last quarter you talked about Apollo 9500. Sounds like a number of trials. Just wondering if we can get an update.
Bruce Mcclelland: Scott. And then last quarter, you talked about Apollo 9500. Sounds like a number of trials, just when we can get an update. Any kind of potential wins in the pipeline? Yeah, exactly. So that new platform, the 9400 uses the 1.2 terabit and the latest generation optical front end. In fact, the announcement we had, I think, on Tuesday this week with Converge over in the Philippines, is using that new platform. So we're able to, you know, dramatically improve or increase the capacity on the existing fiber network by migrating from a 400 gig infrastructure to 800 gig, basically with that new optical platform.
Speaker Change #121: Got it and then last quarter, you talked about Apollo 9500 sounded like a number of trials.
Bruce W. McClelland: Any kind of potential, you know, wins in the pipeline? Yeah, exactly. So that new platform, the 9400, uses 1.2 terabits and the latest generation optical front end.
Speaker Change #122: We can get an update and you kind of a potential you know our wins are in the pipeline.
Speaker Change #124: Yeah, exactly so that new platform. The 9400. Good uses the 1.2 terabits of latest generation optical front and in fact, the announcement, we had I think on Tuesday. This week with the with converge over in in the Philippines is using that new platform.
Bruce W. McClelland: In fact, the announcement we had, I think on Tuesday this week with Converge over in the Philippines is using that new platform. So we're able to dramatically improve or increase the capacity on the existing fiber network by migrating from a 400 gigabit infrastructure to 800 gigabits, basically, with that new optical platform. And that's a perfect example, Dave, of a new win with a key customer that we're really helping expand. And if you go check out the press release, they talk about the growth that they're seeing from the hyper data center build out and AI applications.
Speaker Change #122: So we're able to dramatically improve or increase the capacity on the existing fiber network by migrating from a 400 gig infrastructure to 800 gig basically with that new optical platform.
Bruce Mcclelland: And that's a perfect example, Dave, of a new win with a key customer that we're really helping expand. You know, and if you go check the press release out, you know, they talk about the growth that they're seeing from the hyper data center build-out and AI applications. So, you know, I think that's an indication of a future opportunity here with this new platform, which has been adapted to be more data center centric, right? The different form factors in the, the agree, the ability to aggregate 400 gig client size interfaces on this platform is pretty unique.
Speaker Change #122: And that's a perfect example, Dave of of a new win with a key customer that were really helping expand.
Ku Kang: And then if you could check the press release, they talk about the growth that they're seeing from the hyper data center.
Bruce W. McClelland: So I think that's an indication of the future opportunity here with this new platform, which has been adapted to be more data center-centric, right? The different form factors and the ability to aggregate 400 gigabit client-size interfaces on this platform are pretty unique.
Ku Kang: Build out and in AI applications. So you know I think.
Speaker Change #125: That's an indication of the future opportunity here with this new platform, which has been adapted to be more data center centric right the different form factors and the the aggregate the ability to aggregate 400 gig client size interfaces on this platform and its pretty unique. So we're excited about where that goes and we had a good good second quarter.
Bruce W. McClelland: So we're excited about where that goes. And we had a good second quarter continuing to grow on the deployments kind of at a similar rate as what we saw in the first quarter. Got it. And my last question is regarding the Vodafone idea. It looks like they got capitalized.
Bruce Mcclelland: So we're excited about where that goes. And we had a good, good second quarter. Continue to grow on the deployments, kind of at a similar rate as what we saw in the first quarter.
To grow on the deployments kind of at a similar rate as what we saw in the first quarter.
Dave Kang: Got it.
Speaker Change #123: Got it and my last question is regarding Vodafone idea it looks like they got capitalized can you just remind us what kind of customer how big they were what kind of products.
Dave Kang: And my last question is regarding Vodafone Idea that they got capitalized. Can you just remind us what kind of customer, how big they were, what kind of products yours, providing and going forward, what kind of opportunity should we expect from these guys? Yeah, thanks for that question, Dave. So, you know, the India market was in excess of $100 million annually for ECI. Vodafone was probably 30% or so of that. And, you know, we're obviously not ramping back to that level, but the second half we see a meaningful improvement in the investment they're making on the optical platforms that we have as well as the IP/MPLS platforms that we provide into the market.
Bruce W. McClelland: Can you just remind us what kind of customer, how big they were, what kind of products you were providing, and, you know, going forward, what kind of opportunities we should expect from these guys? Yeah, thanks for that question, Dave. So, you know, the Indian market was in excess of $100 million annually for ECI, and Vodafone was probably 30% or so of that.
Speaker Change #127: Yours are providing and you know going forward, what kind of opportunity or should we expect from these guys.
Bruce W. McClelland: And, you know, we're obviously not ramped back to that level, but in the second half, we see a meaningful improvement in the investment they're making on the optical platforms that we have, as well as the IP and PLS platforms that we provide to the market. So, you know, it's 10s of millions of potential incremental business for us as we go into 2025. And, you know, it's just, it's great to see them kind of back on their feet.
Speaker Change #126: Yeah. Thanks for that question, Dave. So you know the India market was in excess of $100 million annually for for E. C. I, Vodafone was probably only 30% or so of that and.
We're we're obviously not ramp back to that level, but the second half, we see a meaningful improvement in the investment they're making.
Speaker Change #126: On the the optical platforms that we have as well as the IP mpls platforms that we provide into the market. So.
Dave Kang: So, you know, it's, it's tens of millions of potential incremental business for us as we go into 2025. And, you know, it's just, it's great to see them kind of back on their feet. And, you know, we've done a lot of work to support them over the last couple of years to make sure the network continues to operate successfully. And, and hopefully that'll, that'll translate into new business force going forward. Just to be clear, you still have that relationship or you have to go through, you know, back to square one and get, you know, redesigned in and all that. Do we have to go through that or you're just, you are one of the incumbents and just waiting for, for purchase, you know, POs.
Speaker Change #126: It's it's tens of millions of potential incremental business for us as we go into 2025 and you know, it's just it's great to see them kind of back on their feet and.
Speaker Change #126: Done a lot of work to support them over the last couple of years to make sure. The network continues to operate successfully in and hopefully that'll that'll translate into new business for us going forward.
Bruce W. McClelland: And, you know, we've done a lot of work to support them over the last couple years to make sure the network continues to operate successfully. And, hopefully, that'll translate into new business for us going forward. Just to be clear, do you still have that relationship, or do you have to go back to square one and get redesigned and all that?
Speaker Change #128: Just to be clear you still have that relationship or you have to go through you know back to square, one and get a redesigned in and all of that do we have to go through that or you're just you're one of the incumbents and just waiting for for a purchase P OS.
Bruce W. McClelland: Do we have to go through that, or are you just one of the incumbents waiting for purchase POs? Yeah, we're one of the incumbents and have continued to do a little bit of business with them every quarter to help support new ads, new businesses, new revenue streams where they can, you know, they find the money to kind of continue to make those investments. And we continue to support them with local resources, helping operate the network. So there's no rebuilding required at all.
Bruce Mcclelland: Yeah, we're, we're one of the incumbents and have continued to do a little bit of business with them and recorder to help support keep, you know, new ads, new businesses, new revenue streams where they can, you know, they find the money to kind of continue to make those investments. And we continue to support them on, you know, local resources helping operate the network. So, there's no rebuilding required at all. We're on the ground ready to roll.
Bruce W. McClelland: We're on the ground ready to roll. Got it. Thank you. Yeah, thanks Dave. The next question is from Trevor Walsh from Citizens JMP. Please go ahead.
Speaker Change #129: Yeah, where we're one of the incumbents and have continued to do a little bit of business with them every quarter to help support keep the new adds new new businesses.
Speaker Change #129: New revenue streams, where they can they.
Speaker Change #129: They find the money to kind of continue to make those investments and we continue to support them on a.
Speaker Change #129: Local resources, helping operate the network.
Speaker Change #129: So theres no rebuilding of required at all were on the ground ready to roll.
Dave Kang: Thank you.
Speaker Change #130: Got it thank you.
Ku Kang: Yeah. Thanks, Dave.
Trevor Walsh: The next question is from Trevor Walsh from Citizens JMP. Please go ahead.
Ku Kang: The next question is from Trevor Walsh from citizens JMP. Please go ahead.
Trevor Walsh: Great. Thanks for taking my questions. Bruce, maybe a quick one for you around the Eastern Europe business. It seems like that was probably maybe kind of a building type of occurrence, kind of happening over time, just seeing challenges and troubles there.
Great. Thanks for taking my questions Bruce maybe a quick one for you around the eastern Europe business. It seems like that was probably maybe kind of a building.
Trevor Walsh: Great. Thanks for taking my questions. Bruce, maybe a quick one for you around the Eastern Europe business. It seems like that was probably maybe kind of a building type of occurrence, kind of happening over time, just seeing challenges and troubles there. So just curious if there was anything in particular that broke the camel's back or a change that allowed that kind of caused you to stop operations there?
Speaker Change #131: Type of occurrence.
Speaker Change #132: Over time, just seeing challenges and troubles. There. So just curious if there was anything in particular that something that broke the camel's back or a change that allows that kind of caused you to stop operations. There and then secondarily, what what what's required for that business to kind of come back or to return as it essentially like IBM ending of hostilities or kind of what's the outlook from that perspective.
Bruce Mcclelland: So just curious if there was anything in particular that something that broke the camel's back or a change that caused you to stop operations there, and then secondarily, what's required for that business to kind of come back here to return is essentially like an ending of hostility or kind of what's the outlook from that perspective. Yeah, thanks for that question, Trevor. So just to kind of recap our approach there, we have a small number of customers, telecom operators that basically provide internet access and access to information to the people of the region. And we felt like, you know, that was something that was important that we would continue to participate in.
Bruce W. McClelland: And then secondarily, what's required for that business to kind of come back or to return? Is it essentially like an ending of hostilities, or kind of what's the outlook from that? Yeah, thanks for that question, Trevor. So, you know, just to kind of recap our approach there, we have a small number of customers, telecom operators that basically provide internet access and access to information to the people of the region. And we felt like, you know, that was something that was important that we would continue to participate in.
Speaker Change #132: Yeah. Thanks for that question Trevor So just to kind of recap our approach there are.
Speaker Change #133: We have a small number of customers telecom operators that basically provide internet access and access to information.
Speaker Change #133: To the people of the region and we felt like that.
Speaker Change #133: That was something that was important that we would continue to participate in and there's a whole set of regulations and and sanctions you've got to be able to manage through in order to be able to do that and given the heritage of our products coming out of Israel, We were able to continue to support the business. There those restrictions have recently increased.
Bruce Mcclelland: There's a whole set of regulations and sanctions you've got to be able to manage through in order to be able to do that. And given the heritage of our products coming out of Israel, we were able to continue to support the business there. Those restrictions have recently increased and focused around telecom equipment and those sorts of areas. And so, you know, after we finished analyzing the changes, we came to the conclusion that we would suspend shipping new product into the region. It is subject to change; those rules change periodically. And so we'll just watch that carefully.
Bruce W. McClelland: There's a whole set of regulations and sanctions you've got to be able to manage through in order to be able to do that. And given the heritage of our products coming out of Israel, we were able to continue to support the business there. Those restrictions have recently increased and focused around telecom equipment and those sorts of areas.
Speaker Change #133: And focused around telecom equipment, and those sorts of areas and so you know that after we finish analyzing the changes we came to the conclusion that.
Bruce W. McClelland: And so, you know, after we finished analyzing the changes, we came to the conclusion that we would suspend shipping new products into the region. That is subject to change. Those rules change periodically.
Speaker Change #133: We would we would suspend shipping new product into the region. It is subject to change those rules change periodically and so we'll just watch that carefully and Ah, but at this point, we've we basically removed it from our view for the rest of the year.
Bruce W. McClelland: And so we'll just watch that carefully. But at this point, we've basically removed it from our view for the rest of the year, impacting on, you know, approximately 20 to 25 million in the second half of the year. Got it. Appreciate the color.
Trevor Walsh: And, but at this point, we've basically removed it from our view for the rest of the year, impacting, you know, approximately 20 to 25 million in the second half of the year. Got it. Appreciate the color.
Speaker Change #133: Impacting approximately $20 million to $25 million in the second half of the year.
Speaker Change #133: Got it appreciate the color Nick maybe jumping over to you are going to see the continued improvement on the IP optical profitability front is there anything kind of in any given quarter that might kind of trip you. All trip you up in terms of just clean that and continued drive towards profitability.
Trevor Walsh: Mick, maybe jumping over to you, good to see the continued improvement on the IP optical profitability front. Is there anything kind of in any given quarter that might kind of trip you up in terms of just seeing that and the continued, you know, drive towards profitability that you see? Or is it really just kind of continuing to execute, and nothing necessarily that can be out of the ordinary in that kind of continued positive progression?
Mick Lopez: Nick, maybe jumping over to you. Good to see the continued improvement on the optical profitability front. Is there anything kind of in any given quarter that might kind of trip you all, trip you up in terms of just seeing that and continued, you know, drive towards profitability that you see, or is it really just kind of just continuing to execute. And nothing necessarily that can be out of the ordinary in that kind of continued positive progression. As you well know, we've been working on improving the profitability and ideological now and it is last 12 months with a negative habit of just $5 million or about less than 2% of total revenues.
Nick: That you see or is it really just kind of just continuing to execute and nothing necessarily that can be out of the ordinary in that in that kind of continued positive progression.
Mick Lopez: As you well know, we've been working on improving the profitability in IP Optical now, and the last 12 months with a negative EBITDA of just $5 million, or about less than 2% of total revenues. And it's really on the back of customer satisfaction, selling to our customers at higher margins, and they value that. There's been a regional mix impact, of course, that's very positive.
Speaker Change #135: As you well know we've been working on improving the profitability and IP optical now and it is last 12 months.
Speaker Change #135: With a negative EBITDA of just $5 million or.
Speaker Change #135: About less than 2% of total revenues and it's really on the back of customer satisfaction and selling to our customers at higher margins and they value that theres been a regional mix impact of course, that's very positive and we've also been.
Mick Lopez: And it's really on the back of customer satisfaction, selling to our customers at higher margins, and they value that. There's been a regional mix impact. Of course, that's very positive, and we've also been optimizing our R&D.
Mick Lopez: And we've also been optimizing our R&D. So we are still committed to bringing this business segment to profitability, and a lot of it's going to be contingent on its continued growth. Great. Maybe just one more.
Speaker Change #135: Optimizing our R&D. So we continue committed to.
Mick Lopez: So we continue committed to bringing this business segment profitability, and a lot of it's going to be contingent on its continued growth.
Speaker Change #135: Bringing this business segment to profitability and a lot of it is going to be contingent on its continued growth.
Mick Lopez: Great.
Speaker Change #136: Great maybe just one more with the refinancing of the cap. The cap structure is there anything kind of on the go forward now from an investment.
Trevor Walsh: With the refinancing of the cap structure, is there anything kind of on the go forward now from an investment perspective or investment priorities that you kind of have now access to or opened up to that you might not have before, or anything you can kind of give us perspective on in terms of areas that you're looking at that have now changed the game just given that new set of funds and liquidity? Well, we are very fortunate to have these strategic partners, and I think that we now have a very solid capital foundation.
Mick Lopez: Maybe just one more with the refinancing of the cap the cap structure.
Mick Lopez: Is there anything kind of on the go forward now from an investment perspective or investment kind of priorities that you kind of have now have access to or opened up to that you might not have before or anything you kind of give us perspective on in terms of areas you're looking at that is now changing the game just given that new set of funds liquidity. We are very fortunate to have these strategic partners, and I think that we now are very solid capital foundation base. We're focused on executing to our plan. There's nothing really major in the near term that we're focused on.
Speaker Change #137: Perspective, or an investment kind of priorities that you've kind of have now have access to or opened up to that you might not add before anything you'd kind of give us perspective on in terms of areas that you're looking at that is now changed the game just given that new.
Speaker Change #137: New set of funds liquidity.
We are very fortunate to have these strategic.
Speaker Change #137: Partners.
Speaker Change #138: I think that we know are very solid capital Foundation base that we're focused on executing to our plan.
Trevor Walsh: We're focused on executing on our plan. There's nothing really major in the near term that we're focused on. It's really executing the plan that we talked about in our strategy. Yeah, and Mick, just to jump in for a sec here, I think it's fair to say that having one or two lenders that we can have strategic discussions with, you know, it just enables us to kind of move a little more quickly than managing a larger bank syndicate if we wanted to do something. So it just, you know, the buzzword we use a lot is flexibility.
Speaker Change #139: There is nothing really major.
Speaker Change #139: The near term that we're focused on it's really.
Mick Lopez: It's really executing the plan that we and our strategy we've talked about.
Executing the plan that we get in our strategy that we've talked about yes, Nick just to jump in for a SEC here I think it's fair to say that.
Bruce W. McClelland: So there's just a lot more flexibility in this cap structure than we had previously. That's absolutely right. Great, appreciate the questions. All right, thanks, Trevor. Appreciate it. There are no further questions at this time. I would like to turn the floor back over to Bruce McClelland for closing.
Mick Lopez: Yeah, and Mick, just to jump in for Secure, I think it's fair to say that having one or two lenders that we can have strategic discussions with, you know, it just enables us to kind of move a little more quickly than managing a larger bank syndicate if we wanted to do something. So, it just, you know, to keep the buzzword we used a lot as flexibility. There's just a lot more flexibility in this cap structure than what we had previously. That's absolutely right.
Nick: Having one or two lenders.
Nick: Lenders that we can have strategic discussions with you know it just enables us to kind of move a little more quickly than managing a larger bank syndicate. If we wanted to do something so it just it at that.
Speaker Change #140: The kit the buzzword, we used a lot of flexibility, there's just a lot more flexibility in this cap structure than what we had previously.
Speaker Change #141: Absolutely right.
Trevor Walsh: Great. Appreciate the questions.
Speaker Change #141: Great I appreciate the questions.
Bruce Mcclelland: All right. Thanks, Trevor. Appreciate it.
Speaker Change #141: Alright, Thanks, Trevor which hit it.
Operator: There are no further questions at this time.
There are no further questions at this time I would like to turn the floor back over to Bruce Mcclelland for closing comments.
Bruce Mcclelland: I would like to turn the floor back over to Bruce McClelland for closing comments. Great. Well, thank you. Thanks for everyone joining our call here today. We have a couple of great investor conferences coming up over the next six weeks. So, we look forward to talking to many of you individually and keeping you apprised of our progress. Thank you very much, Robert. Thank you as well.
Bruce W. McClelland: Great well. Thank you. Thanks for everyone joining our call here today, we have a couple of a great investor conferences coming up over the next six weeks. So we look forward to talking to.
Bruce W. McClelland: Great. Well, thank you. Thanks for everyone joining our call here today. We have a couple of great investor conferences coming up over the next six weeks.
Bruce W. McClelland: So we look forward to talking to many of you individually and keeping you apprised of our progress. Thank you very much, operator. Thank you, too, and thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Bruce W. McClelland: Many of you individually and keeping you apprised of our progress thank.
Speaker Change #142: Thank you very much operator, thank you as well.
Operator: Thank you.
Speaker Change #143: Thank you. This concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.
Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Speaker Change #143: [music].
Speaker Change #143: Hum.
Speaker Change #143: Hum.
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Speaker Change #143: [music].
Speaker Change #143: Okay.
Speaker Change #143: Yeah.
Speaker Change #143: Yeah.
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Speaker Change #143: Mhm.