After returning to growth, Ribbon Communications (RBBN) looks to step on the gas

ribbon communication
RBBN
(RBBN) reported strong fourth quarter results last night. Earnings and adjusted earnings for him were $233.6 million, or 9 cents a share, well above analysts’ expectations for his $229.2 million loss and his one penny loss. Not only was this the company’s third straight earnings increase and its strongest quarterly earnings performance in 2022, but it was also a return to top and bottom line year-over-year growth after five straight quarters of decline. showed. Indeed, compared to the fourth quarter of 2021, particularly strong demand for IP optical solutions across all geographies led to revenue growth of 1.3% and adjusted earnings per share, with RBBN driving efficiency gains and A 9x increase thanks to the added benefit of our ongoing efforts to keep operating costs down. In addition, improved estimates of global tax provisions resulted in a significant reduction in the effective tax rate.

In addition, this improved operating performance also enabled the company to return to positive free cash flow production. His $15.6 million generated in the fourth quarter nearly doubled his $8.4 million last year, recouping most of his $52.2 million spent. In the first nine months of 2022.

More importantly, underlying demand for RBBN’s solutions remains very strong, as evidenced by the healthy book-to-claim ratio of 1.1 achieved during the last quarter and the company’s large opportunity funnel. The latter includes a mix of his IP Optical projects for both service providers and critical infrastructure in Europe. Rapid adoption of 5G underway in many countries. A recent extension of our multi-year contract with the Israeli Defense Forces to provide critical support and products that support their unique communications requirements. Significant investments by major carriers such as MTN, Airtel, Etisalat, Orange and major content providers such as Facebook, Google and Microsoft
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Bringing undersea and terrestrial fiber networks to developing markets such as Africa.

RBBN’s expectations of global supply chain constraints combined with associated rising costs have been addressed to continue adjusting. We believe the additional $20 million will reduce annual costs due to a series of recent organizational changes to enhance collaboration. It forecasts 2023 revenue and Adjusted EBITDA of $840 million to $870 million and Adjusted EBITDA of $95 million to $110 million. The former is just short of his $856.7 million consensus, but by the end of 2022 he’s back from $819.8 million to solid top-line growth of 4%. Additionally, the latter is 14% higher than the $89.9 million Street was asking for, suggesting a further 60% increase in operating profit from his $64 million achieved last year. If this is accompanied by a similar improvement in earnings and free cash flow production over the next year, as I expect, today’s rally in stocks could be just the beginning of a much more significant and sustained rally. I think there is.