Oct 27, 2026 earnings call — Q3 growth and improved profitability
Revenue increased 14% sequentially to $219 million and adjusted EBITDA more than doubled to $27 million.
Revenue $0.2B (est $0.2B) · EPS $0.07 (est $0.04) · Next-quarter revenue outlook $0.2B
Key quotes
"The strong IP optical bookings trend in the first half translated into a record third quarter of sales for the segment."
"As I mentioned earlier, 1 of the most encouraging developments in the quarter was the improvement in our business with Verizon."
"Consistent with the broader industry trend, we do anticipate being supply limited to some extent in the fourth quarter given the increasing demand environment for key technologies."
Analyst Q&A 4
Q3 bookings and Q4 margin drivers
Q (Michael Genovese · Rosenblatt): He asked for the IP optical bookings number for Q3 and whether bookings were new business. He also asked what exactly drives the gross margin improvement in Q4.
A: Management said Q3 IP optical bookings were up about 9% year-over-year with a book-to-bill of about 0.82x. They said Q4 growth is largely from the cloud and edge business, plus a higher mix of software and higher professional service revenue, which lifts margin. They also said one big customer contributes some Q4 revenue but is not the majority of the increase and 2027 planning is still early.
"So on the on the IP optical bookings number, you know, the bookings number in Q3 was up about 9% year-over-year." — Eric S. Marmurek (CFO)
Who is in the growing pipeline
Q (Timothy Savageaux · Northland): He asked whether the growing pipeline of data center and AI opportunities involves tier-one carriers or data centers directly, and whether Ribbon expects tier-one traction in IP optical in 2027. He also asked how meaningful the two tier-2 ISP wins are.
A: Management said the biggest opportunities are with traditional tier 1 telecom operators investing in fiber, not primarily direct data center builds, and that demand is growing internationally. They said fiber buildouts can be optical or IP and the combined portfolio is complementary, so they expect potential tier-1 traction. They also said tier-2 operators are a good, somewhat underserved market where customers invest double-digit millions in fiber and routing each year.
"So I. First of all, I would say know, the biggest opportunities we are seeing are with more traditional tier 1 telecom operators as they are investing in more fiber infrastructure, expanding, you know, their networks, etcetera." — Bruce W. McClelland (CEO)
IP vs optical trends and margins
Q (Dave Kang · B. Riley): He asked how bookings look for Q4 after Q3 pulled back. He also asked if IP outperformance was a repeatable trend and what the margin difference is between IP and optical.
A: Management said Q4 bookings look pretty positive and they expect to add backlog for next year as customers want supply assurance. They said deployments are project-based so mix will vary, but there is a trend toward combined IP and optical solutions; pure optical pipeline also exists. They said gross margins are currently pretty consistent, noting IP today often uses lower-cost aggregation routers with lower margins but could improve over time.
"So I think you know, the bookings number for Q4 looks pretty positive." — Bruce W. McClelland (CEO)
Supply limits and cash flow outlook
Q (Michael Genovese · Rosenblatt): He asked which components and segments were most affected by supply limits and how much revenue might be pushed into 2027. He also asked if operating cash flow will turn positive in Q4 and how to think about working capital as revenue ramps.
A: Management said supply pressure touched many components depending on mix, citing memory, core silicon lead times, and long lead times for line-system optical technology. They said they expect to push about $5 million to $10 million of customer demand into the next quarter. They also said operating cash flow should improve in Q4 and into Q1 2027, and accounts receivable rose in Q3 as invoicing increased.
"I do expect we will probably push know, $5 million to $10 million that customers would wanna get in the quarter, probably ends up in the next quarter or something like that." — Bruce W. McClelland (CEO)