Ribbon Communications Inc. (Nasdaq: RBBN), a global software leader in secure and intelligent cloud communications, today announced a restructuring initiative to further streamline its global footprint, improve its operations and enhance its customer delivery. This initiative includes refinement of the Company's research and development (R&D) activities and facilities consolidation.
Driven by the growing market opportunity and customer demand for Network Function Virtualization (NFV) and the resulting virtualized software products, Ribbon is progressing its engineering talent, go-to-market teams and R&D efforts towards software and virtualized capabilities and plans to reduce its focus on hardware and appliance-based development over time. The Company's improved development efforts are expected to focus on virtualization, functional simplicity and important customer requirements.
The facilities initiative includes a consolidation of Ribbon's North Texas site into a single campus housing engineering, customer training and support, and administrative functions and a reduction or elimination of certain excess and duplicative facilities elsewhere. In addition, Ribbon plans to substantially consolidate its global software laboratories and server farms into two, lower cost North American sites.
"We are encouraged by our recent market share gains and the growing market acceptance of our virtualized, software-only portfolio of products. Our service provider and large enterprise customers are demanding greater software capabilities and features and we believe focusing our R&D activities will better position Ribbon over the next several years to take advantage of these market opportunities," commented Fritz Hobbs, President and Chief Executive Officer of Ribbon.
"We believe this initiative will better position Ribbon strategically over the next several years as well as contribute to our long-term goals of sustainable profitable growth," said Daryl Raiford, Chief Financial Officer of Ribbon. "With our projected increase in year-over-year profitability and expected resulting cash flow this year, Ribbon is in a solid position to undertake these strategic R&D actions and optimize its operations and facilities while continuing our previously announced stock repurchase program."
The Company estimates that the restructuring initiative will reduce its cost footprint by approximately $25 million on an annualized basis once complete and that it will realize approximately $10 million of savings during the remainder of fiscal 2019. Ribbon estimates that it will record approximately $6 million of restructuring expense associated with workforce reduction initiatives. The Company plans to discuss its restructuring initiatives in more detail during its next quarterly earnings conference call.
Business Outlook The Company is reaffirming its outlook for non-GAAP Adjusted EBITDA of approximately $100 million for its fiscal year 2019. Ribbon intends to utilize the majority of its anticipated savings in 2019 to further invest in its software development programs.
About Ribbon Communications
Ribbon Communications Inc. (Nasdaq: RBBN) delivers market-leading software solutions that secure and power many of the world's leading service provider and enterprise communications environments. Built on world-class technology and intellectual property, the company's cloud-native solutions deliver intelligent and secure real-time communications solutions for the cloud, network and enterprise edge. Ribbon's Kandy Cloud real-time communications software platform delivers advanced and embedded CPaaS and UCaaS capabilities enabling service providers to rapidly create and deploy high-value communications services. To learn more, visit ribboncommunications.com.
