Verizon And Federal Wins Power Ribbon Communications' Confident Outlook
This growth was fueled by strong performance with major clients, including Verizon Communications (NYSE:VZ) and U.S. federal agencies, and the successful closure of several previously delayed deals.
Despite some pressure on gross margins due to a mix of hardware and professional services sales, the company's Cloud and Edge segment delivered record-high profitability, and its IP Optical segment saw a significant improvement in its financial performance. Ribbon Communications also maintained its full-year outlook, forecasting continued growth and profitability.Following the earnings report, Rosenblatt analyst Mike Genovese reaffirmed a Buy rating for Ribbon Communications and increased his price forecast from $5.50 to $6.00. This positive adjustment came despite a slight dip in the stock's trading price on the day of the announcement.
Genovese highlighted that the impressive revenue growth was driven by continued strong demand from Verizon Communications, U.S. federal agencies, new wins in critical infrastructure, and Bharti Airtel in India. He said the company also secured a new contract with a Tier 1 telecom operator in Southeast Asia, while several previously delayed deals closed during the quarter.
Domestic revenue reached $117 million, jumping 40% quarter-over-quarter and 45% year-over-year. International revenue came in at $104 million, rising 6% sequentially but declining 7% compared to the prior year. Genovese noted that the Cloud and Edge segment delivered $137 million in revenue, up 27% sequentially and 24% year-over-year, which was in line with expectations driven by robust growth from Verizon and government customers. He pointed out that Verizon accounted for 20% of Ribbon's total revenue and was the only customer exceeding 10% of sales, as it continues to modernize its voice network.
Cloud and Edge gross margins contracted 110 basis points sequentially and 410 basis points year-over-year to 61.9%, largely due to a higher mix of professional services and hardware and a dip in maintenance and software sales. Despite the margin pressure, Genovese pointed out that the segment posted a record adjusted EBITDA of $37 million.
The analyst said IP Optical revenue rose to $84 million, up 13% sequentially and 2% year-over-year, beating estimates by 6%. Sales in India and North America surged over 40% year-over-year. Excluding Eastern Europe, the IP Optical segment posted a 5% annual increase. He noted that the segment's gross margin expanded 760 basis points sequentially to 35.9%, supported by stronger North American sales, improved mix and margins in Asia-Pacific, and better fixed cost absorption from higher volume. The adjusted EBITDA loss for IP Optical narrowed to $5 million from a $15 million loss a year ago.
Company-wide gross margin reached 52.1%, expanding 340 basis points quarter-over-quarter, though contracting 230 basis points year-over-year, missing estimates due to a greater share of hardware and services revenue, Genovese noted. The analyst said that operating margin expanded sharply to 12.5%, up 1,120 basis points sequentially and 300 basis points year-over-year, beating projections by 20 basis points. He noted that adjusted EBITDA totaled $32 million, representing a 433% increase sequentially and 47% growth year-over-year, at the high end of company guidance.
Genovese noted that management guided third-quarter revenue between $213 million and $227 million, slightly below prior estimates. The analyst expects IP Optical revenue to grow sequentially, while Cloud and Edge revenue will likely decline, primarily due to project timing with Verizon. Gross margins are projected between 53.5% and 54%, below the prior 55.9% estimate, and adjusted EBITDA is forecast between $28 million and $34 million.
The company reiterated its full-year 2025 outlook, maintaining revenue guidance of $870 million to $890 million, gross margins of 54%–55%, and adjusted EBITDA of $130 million to $140 million. However, management noted that GMs and EBITDA are trending toward the lower end of those ranges due to stronger-than-expected product and professional services sales and a $2 million quarterly opex impact from the weaker U.S. dollar.
Genovese noted that management expects the fourth quarter to remain the strongest quarter of the year, as is typical for Ribbon. Additionally, the firm anticipates $15 million to $20 million in tax savings following a recent bill passed by Congress.
Genovese highlighted that the Ribbon story remains attractive, especially at a valuation of 12.5x estimated 2026 EPS. The analyst emphasized Ribbon's ability to weather recent headwinds, such as its exit from Eastern Europe and timing-related delays in the Federal and Enterprise sectors, while consistently delivering on its guidance across multiple quarters.
He also noted meaningful improvement in the Cloud and Edge narrative, particularly with Verizon's shift to next-gen voice infrastructure, enhancing Ribbon's growth prospects. Additionally, Genovese noted that Ribbon could win a similar deal with AT&T (NYSE:T), which has committed to fully modernizing its voice systems by 2029. He highlighted growing synergies between Ribbon's business segments, as Verizon now uses its routers for the Cloud and Edge upgrade, a signal of broader strategic alignment and opportunity ahead.
Price Action: RBBN stock is trading lower by 11.7% to $3.76 at last check Thursday.
Latest Ratings for RBBN
Date
Firm
Action
From
To
Jan 2021
B. Riley Securities
Initiates Coverage On
Buy
Oct 2019
Northland Capital Markets
Downgrades
Outperform
Market Perform
Aug 2018
Cowen & Co.
Upgrades
Underperform
Market Perform
View More Analyst Ratings for RBBN
View the Latest Analyst Ratings
Up Next: Transform your trading with Benzinga Edge's one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today's competitive market.
Get the latest stock analysis from Benzinga?
This article Verizon And Federal Wins Power Ribbon Communications' Confident Outlook originally appeared on Benzinga.com
© 2025 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
5 minutes ago
- Yahoo
Earnings To Watch: NMI Holdings (NMIH) Reports Q2 Results Tomorrow
Mortgage insurance provider NMI Holdings (NASDAQ:NMIH) will be reporting results this Tuesday after the bell. Here's what you need to know. NMI Holdings beat analysts' revenue expectations by 3% last quarter, reporting revenues of $173.2 million, up 10.9% year on year. It was an exceptional quarter for the company, with a solid beat of analysts' net premiums earned estimates and a solid beat of analysts' EPS estimates. Is NMI Holdings a buy or sell going into earnings? Read our full analysis here, it's free. This quarter, analysts are expecting NMI Holdings's revenue to grow 7.6% year on year to $174.4 million, slowing from the 13.6% increase it recorded in the same quarter last year. Adjusted earnings are expected to come in at $1.19 per share. Analysts covering the company have generally reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings. NMI Holdings has only missed Wall Street's revenue estimates once over the last two years, exceeding top-line expectations by 1.2% on average. Looking at NMI Holdings's peers in the property & casualty insurance segment, some have already reported their Q2 results, giving us a hint as to what we can expect. Stewart Information Services delivered year-on-year revenue growth of 20.1%, beating analysts' expectations by 9.2%, and First American Financial reported revenues up 14.2%, topping estimates by 4.9%. Stewart Information Services traded up 10.3% following the results while First American Financial was also up 3.5%. Read our full analysis of Stewart Information Services's results here and First American Financial's results here. Debates over possible tariffs and corporate tax adjustments have raised questions about economic stability in 2025. While some of the property & casualty insurance stocks have shown solid performance in this choppy environment, the group has generally underperformed, with share prices down 3.5% on average over the last month. NMI Holdings is down 9.9% during the same time and is heading into earnings with an average analyst price target of $43.71 (compared to the current share price of $38). When a company has more cash than it knows what to do with, buying back its own shares can make a lot of sense–as long as the price is right. Luckily, we've found one, a low-priced stock that is gushing free cash flow AND buying back shares. Click here to claim your Special Free Report on a fallen angel growth story that is already recovering from a setback. StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
5 minutes ago
- Yahoo
Republic Services (RSG) Reports Earnings Tomorrow: What To Expect
Waste management company Republic Services (NYSE:RSG) will be reporting results this Tuesday afternoon. Here's what you need to know. Republic Services missed analysts' revenue expectations by 0.9% last quarter, reporting revenues of $4.01 billion, up 3.8% year on year. It was a mixed quarter for the company, with a solid beat of analysts' adjusted operating income estimates but sales volume in line with analysts' estimates. Is Republic Services a buy or sell going into earnings? Read our full analysis here, it's free. This quarter, analysts are expecting Republic Services's revenue to grow 5.3% year on year to $4.26 billion, slowing from the 8.6% increase it recorded in the same quarter last year. Adjusted earnings are expected to come in at $1.76 per share. Heading into earnings, analysts covering the company have grown increasingly bearish with revenue estimates seeing 9 downward revisions over the last 30 days (we track 16 analysts). Republic Services has missed Wall Street's revenue estimates five times over the last two years. Looking at Republic Services's peers in the environmental and facilities services segment, some have already reported their Q2 results, giving us a hint as to what we can expect. Waste Connections delivered year-on-year revenue growth of 7.1%, beating analysts' expectations by 0.7%, and Rollins reported revenues up 12.1%, topping estimates by 1.1%. Waste Connections traded up 2.2% following the results while Rollins was also up 5.2%. Read our full analysis of Waste Connections's results here and Rollins's results here. There has been positive sentiment among investors in the environmental and facilities services segment, with share prices up 6.8% on average over the last month. Republic Services's stock price was unchanged during the same time and is heading into earnings with an average analyst price target of $263.90 (compared to the current share price of $245.16). Today's young investors likely haven't read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next. StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
Yahoo
5 minutes ago
- Yahoo
FTAI Aviation Earnings: What To Look For From FTAI
Aircraft leasing company FTAI Aviation (NASDAQ:FTAI) will be announcing earnings results this Tuesday after market close. Here's what you need to know. FTAI Aviation missed analysts' revenue expectations by 2.1% last quarter, reporting revenues of $502.1 million, up 53.7% year on year. It was a mixed quarter for the company, with an impressive beat of analysts' EBITDA estimates but a significant miss of analysts' adjusted operating income estimates. Is FTAI Aviation a buy or sell going into earnings? Read our full analysis here, it's free. This quarter, analysts are expecting FTAI Aviation's revenue to grow 42.2% year on year to $630.6 million, slowing from the 61.7% increase it recorded in the same quarter last year. Adjusted earnings are expected to come in at $1.39 per share. Analysts covering the company have generally reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings. FTAI Aviation has missed Wall Street's revenue estimates three times over the last two years. Looking at FTAI Aviation's peers in the industrial distributors segment, some have already reported their Q2 results, giving us a hint as to what we can expect. Fastenal delivered year-on-year revenue growth of 8.6%, beating analysts' expectations by 0.5%, and Richardson Electronics reported revenues up 9.5%, falling short of estimates by 3.7%. Fastenal traded up 4.2% following the results while Richardson Electronics was also up 10.9%. Read our full analysis of Fastenal's results here and Richardson Electronics's results here. There has been positive sentiment among investors in the industrial distributors segment, with share prices up 6.8% on average over the last month. FTAI Aviation's stock price was unchanged during the same time and is heading into earnings with an average analyst price target of $167.26 (compared to the current share price of $115.00). When a company has more cash than it knows what to do with, buying back its own shares can make a lot of sense–as long as the price is right. Luckily, we've found one, a low-priced stock that is gushing free cash flow AND buying back shares. Click here to claim your Special Free Report on a fallen angel growth story that is already recovering from a setback. StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
