Skip to content

Research: Ribbon Communications

  • 110mm shares at $4 for $440mm market cap
  • $81mm of cash
  • $391mm of debt
  • cash flow was okay though $37mm in H120 $22mm fcf in H120
  • company seems to generate a fair bit of FCF – see table at the end
  • this is one of those companies where their business description is all jargon which is a flag of sorts
  • software solutions provide a secure way for our customers to connect and leverage multivendor, multiprotocol communications systems and applications across their networks and the cloud
  • here it is in a nutshell: their products help CSPs and to lessor extent enterprises upgrade legacy infrastructure to cloud, IP-based networks
  • 70/30 split with CSPs/enterprise
  • software is about 50% of product revenue

Their business is focused on:

  1. providing software to modernize network to IP
  2. providing IP network security
  3. providing edge solutions
  4. providing NFV solutions

here is how they break down what they are providing in the 10-K:

  • sell mainly to service providers – both fixed and wireless, MSOs, ISPs
  • I’m not sure if I have ever made money on a company selling to CSPs 😛
  • secure cloud-based delivery of UC solutions
  • use direct and indirect sales channels
  • These guys are a merger and acquisitions machine, making it even more complicated to look at


  • Network transformation: AudioCodes Ltd., Mavenir Systems, Inc., Metaswitch Networks Corporation, Oracle Corporation (Session Border Controller) and ADTRAN, Inc (also MSFT recently bought Metaswitch)
  • Security and Analytics: SecureLogix Corporation, RedShift Networks Corporation, Empirix Inc. and Oracle Corporation.
  • A concern I see in transcripts is they are competing against much bigger companies, I guess referring to Oracle and Microsoft

Acquisition of Anova Data

  • Feb 2019
  • provides advanced analytics solutions (wtf is that?)
  • acquired Feb 2019
  • has something to do with big data analytics and machine learning

Edgewater Networks

  • Network Edge Orchestration for the distributed enterprise and UC market – well at least I can understand what that one is
  • software leader in session border controlers
  • allows RBBN to get into SD-WAN market


  • not really clear what product these guys sell but improves RBBN position in move to IP networks and cloud-based networks

ECI Telecom Group

  • merger in Nov 2019
  • issued 32.5mm shares to ECI and $324mm of cash
  • leading packet optical solution provider
  • address markets like NFV and SDN
  • had $25mm EBITDA in 2018, $27mm EBITDA in 9m 2019
  • 50% of ECI revenue comes from India and Russia
  • There’s some sort of adjusted revenue accounting problem in India right now with major CSPs and that is impacting the India business
  • the Cowen guys don’t think a lot of ECI
  • According to RBBN merger presentation ECI does have a big TAM – not sure if its growing much though


  • this one was a divestiture
  • received 13mm shares of ACVtechnologies for Kandy
  • Kandy was a provider of deployments of UCaaS, CPaaS, and CCaaS for mid-market and enterprise
  • so these Kandy guys are competition to RingCentral, 8×8, Vonage
  • they had a slight loss in Q220 – revenue was significantly higher yoy though

This is from Cowen about the risk of competition now from MSFT:

  • Metaswitch portfolio is similar to RBBN both have session border controllers (SBCs), media gateways, voice applicationservers, and software under the Unified Communications
  • There is also an interesting point alluded to on last CC – asking whether UCaaS is going to be against headwinds
  • It seems like a lot of elements of their business are under headwinds
  • Makes you wonder what real reason was for acquisition of ECI

Cash flow

  • working capital was about -$30mm though so that would be something to look into more


  • while the stock is pretty cheap, I’m not sure its worth buying
  • The Cowen guys note on a number of pieces that they are going up against larger, better capitalized competitors
  • Would probably want to see that they can succeed first, esp with ECI acquisition
  • doesn’t really seem like they are in a good place, competing against very large competition, MSFT just bought up a smaller player to add to that competition, so I don’t know… seems like a pass for now
No comments yet

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: