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What changed in Ribbon Communications Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Ribbon Communications Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+402 added−456 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-28)

Top changes in Ribbon Communications Inc.'s 2024 10-K

402 paragraphs added · 456 removed · 324 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

77 edited+11 added−6 removed98 unchanged
Biggest changeThis presents a significant growth and market share opportunity. This technology evolution challenge extends beyond service providers to many enterprises as well as Federal, State, and Local governments. In particular, the US Federal government and agencies have a significant need to modernize their voice communications infrastructure, replacing legacy on-premise systems with modern cloud-based voice and video solutions.
Biggest changeService providers in some global regions, as mandated by governments or voluntarily, are also replacing certain incumbent vendor communications equipment and technology in their networks because of concerns for security. This presents a significant growth and market share opportunity. This technology evolution challenge extends beyond service providers to many enterprises as well as Federal, State, and Local governments.
The increased bandwidth unlocked by the higher capacity radio infrastructure enables new use cases such as Fixed Wireless Access, displacing lower capacity wired internet access solutions, and we believe new mobile applications will emerge, such as Reality/Virtual Reality, cloud gaming, 4 telehealth, Internet of Things, and Industry 4.0, all made possible by the massive bandwidth increases, low latency and highly secure infrastructure that 5G provides.
The increased bandwidth unlocked by the higher capacity radio infrastructure enables new use cases such as Fixed Wireless Access, displacing lower capacity wired internet access solutions, and we believe new mobile applications will emerge, such as Reality/Virtual Reality, cloud gaming, telehealth, Internet of Things, and Industry 4.0, all made possible by the massive bandwidth increases, low latency and highly secure infrastructure that 5G provides.
In addition, Neptune provides a 400G ZR+ 10 pluggable capability, allowing it to support both single layer IP over DWDM connectivity or multi-layer optimized IPoOTN/DWDM connectivity, whichever best meets the network operator's needs. With these capabilities, Neptune is ideally suited for residential broadband backhaul, business services, MSOs and private enterprise networks.
In addition, Neptune provides a 400G ZR+ pluggable capability, allowing it to support both single layer IP over DWDM 10 ​ connectivity or multi-layer optimized IPoOTN/DWDM connectivity, whichever best meets the network operator’s needs. With these capabilities, Neptune is ideally suited for residential broadband backhaul, business services, MSOs and private enterprise networks.
To support our customers' requirements, our direct sales team is organized geographically and by major customers. Our sales teams sell our full portfolio of products and solutions from both segments to customers in each salesperson's assigned 11 region.
To support our customers’ requirements, our direct sales team is organized geographically and by major customers. 11 ​ Our sales teams sell our full portfolio of products and solutions from both segments to customers in each salesperson’s assigned region.
The market is shifting from an ecosystem dominated by a few large telecommunications legacy hardware equipment companies with proprietary solutions such as Ciena Corporation ("Ciena"), Cisco, and Nokia, to a market that is characterized by a combination of closed and open solutions, software-defined networking, and dis-aggregation ready for next generation networks, services and applications including 5G, leveraging merchant silicon technology.
The market is shifting from an ecosystem dominated by a few large telecommunications legacy hardware equipment companies with proprietary solutions such as Ciena Corporation (“Ciena”), Cisco, and Nokia, to a market that is characterized by a combination of closed and open solutions, software-defined networking, and dis-aggregation ready for next generation networks, services and applications including 5G, leveraging merchant silicon technology.
At the foundation, high performance Optical connections and advanced IP networking are needed to keep pace with the advancements in communications. This hyper-connectivity will be a key enabler and deliver disruptive ultra-low cost-per-bit communications within and between networks and the cloud, while also delivering on the promise of latency sensitive networking demanded by many of the applications.
At the foundation, high performance Optical connections and advanced IP networking are needed to keep pace with the advancements in communications. This hyper-connectivity will be a key enabler and deliver disruptive ultra-low cost-per-bit 5 ​ communications within and between networks and the cloud, while also delivering on the promise of latency sensitive networking demanded by many of the applications.
In particular, we are focused on penetrating the largest service providers around the world in order to drive long term growth and improved competitiveness. • North American IP Optical Networks Market Share – We expect to continue to unlock the value of our former ECI portfolio by growing IP Optical Networks market share in the North American market by leveraging the extensive deployment base and ongoing business that we have with service providers and enterprise customers.
In particular, we are focused on penetrating the largest service providers around the world in order to drive long term growth and improved competitiveness. 6 ​ ● North American IP Optical Networks Market Share – We expect to continue to unlock the value of our former ECI portfolio by growing IP Optical Networks market share in the North American market by leveraging the extensive deployment base and ongoing business that we have with service providers and enterprise customers.
Mergers between service providers may also increase competition for a smaller number of more concentrated customers and channels for products and solutions. IP Optical Networks Business Segment The global information society is generating a very high volume of telecommunications traffic for business, entertainment, education, surveillance, industrial control, and other applications.
Mergers between service providers may also increase competition for a smaller number of more concentrated customers and channels for products and solutions. 9 ​ IP Optical Networks Business Segment The global information society is generating a very high volume of telecommunications traffic for business, entertainment, education, surveillance, industrial control, and other applications.
As a result, businesses and consumers have rapidly shifted from brick-and-mortar facilities and travel to work-from-home, or hybrid work-in-the-office and work-from home, using cloud communications and collaboration platforms such as Microsoft Teams, Zoom Phone and others, and require these communications platforms to be highly secure and scalable.
As a result, businesses and consumers rapidly shifted from brick-and-mortar facilities and travel to work-from-home, or hybrid work-in-the-office and work-from home, using cloud communications and collaboration platforms such as Microsoft Teams, Zoom Phone and others, and require these communications platforms to be highly secure and scalable.
The solutions provided with this portfolio include those for: • Securing and providing resilient connectivity and calling via direct routing for Operator Connect - Microsoft Teams, Zoom and other cloud-based UC&C applications. • Securing contact center applications. • Securing service provider hosted and managed unified communications ("UC") services. • Securing network interconnects for communications services. • Network transformation of fixed service provider voice services networks to help evolve, consolidate, and modernize legacy networks to VoIP and onto virtualized network environments or the Telco Cloud. • Implementing IP Multimedia Subsystem ("IMS") networks required by mobile service providers for VoLTE service deployments and for 5G voice services. • Modernizing, evolving, and securing enterprise and industry vertical UC environments, supporting both on-premises and cloud-based deployments. • Securing voice sessions and protecting VoIP communications connectivity infrastructures, contact centers, Private Branch Exchanges and media servers. • Providing identity assurance that helps mitigate robocalls, prevent fraud by determining phone caller identity, intent, and reputation. • Analytics to provide visibility, security, and service assurance to enhance communication network operations and customer experiences.
The solutions provided with this portfolio include those for: ● Securing and providing resilient connectivity and calling via direct routing for Operator Connect - Microsoft Teams, Zoom and other cloud-based UC&C applications. ● Securing contact center applications. ● Securing service provider hosted and managed unified communications (“UC”) services. ● Securing network interconnects for communications services. ● Network transformation of fixed service provider voice services networks to help evolve, consolidate, and modernize legacy networks to VoIP and onto virtualized network environments or the Telco Cloud. ● Implementing IP Multimedia Subsystem (“IMS”) networks required by mobile service providers for VoLTE service deployments and for 5G voice services. ● Modernizing, evolving, and securing enterprise and industry vertical UC environments, supporting both on-premises and cloud-based deployments. ● Securing voice sessions and protecting VoIP communications connectivity infrastructures, contact centers, Private Branch Exchanges and media servers. ● Providing identity assurance that helps mitigate robocalls, prevent fraud by determining phone caller identity, intent, and reputation. ● Analytics to provide visibility, security, and service assurance to enhance communication network operations and customer experiences.
Cloud and Edge Competition Competition in the market for the Cloud and Edge portfolio remains strong. The market is shifting from an environment dominated by a few large telecommunications legacy hardware equipment companies, such as Ericsson LM Telephone Company ("Ericsson"), Huawei Technologies Co. Ltd.
Cloud and Edge Competition Competition in the market for the Cloud and Edge portfolio remains strong. The market is shifting from an environment dominated by a few large telecommunications legacy hardware equipment companies, such as Ericsson LM Telephone Company (“Ericsson”), Huawei Technologies Co. Ltd.
Other smaller private and public companies are also focusing on similar market opportunities. Mergers among any of the above companies or other competitors, as well as additional competitors with significant financial resources entering our markets, 9 could further intensify competition.
Other smaller private and public companies are also focusing on similar market opportunities. Mergers among any of the above companies or other competitors, as well as additional competitors with significant financial resources entering our markets, could further intensify competition.
All these factors are causing service providers to re-think and evolve, or even over-haul, the way networks are designed, architected, managed, and optimized to deliver services to their customers with disruptive economics.
All these factors are causing service providers to re-think and evolve, or even over-haul, the way 4 ​ networks are designed, architected, managed, and optimized to deliver services to their customers with disruptive economics.
Information contained on, or that can be accessed through, our website does not constitute a part of this annual report and is not incorporated by reference herein.
Information contained on, or that can be accessed through, our website does not constitute a part of this annual report and is not incorporated by reference herein. 16 ​
Industry Background Today’s communications service providers ("CSPs") and enterprises are investing in their networks to compete in an ever-changing technology and customer experience landscape driven largely by cloud computing, mobile workforces requiring hyper-connectivity, new high-performance applications and use cases, and an insatiable demand for bandwidth by end-customers and the applications they use.
Industry Background Today’s communications service providers (“CSPs”) and enterprises are investing in their networks to compete in an ever-changing technology and customer experience landscape driven largely by cloud computing, mobile workforces requiring hyper-connectivity, new high-performance applications and use cases, and an insatiable demand for bandwidth by end-customers and the applications they use.
Our transformative acquisition of ECI in 2020 dramatically expanded our addressable market beyond secure voice communications into IP Networking, Optical Transport, and Software-Defined Networking ("SDN") Management and Automation. We are implementing a focused strategy to target our broad global base of service provider and enterprise customers to establish us as key supplier of networking solutions.
Our transformative acquisition of ECI in 2020 dramatically expanded our addressable market beyond secure voice communications into IP Networking, Optical Transport, and Software-Defined Networking (“SDN”) Management and Automation. We are implementing a focused strategy to target our broad global base of service provider and enterprise customers to establish us as key supplier of networking solutions.
Verizon is a service provider that offers interconnect, fixed line and mobile communications services, and our software solutions are sold across their business divisions supporting their large enterprises, SMB and consumer telecommunications and cable-related offerings. Our top five customers represented approximately 34% of our revenue in the year ended December 31, 2023.
Verizon is a service provider that offers interconnect, fixed line and mobile communications services, and our software solutions are sold across their business divisions supporting their large enterprises, SMB and consumer telecommunications and cable-related offerings. Our top five customers represented approximately 34% of our revenue in the year ended December 31, 2024.
("Huawei"), and Nokia Corporation ("Nokia"), to a market that is characterized by cloud-native software network function virtualization, hybrid private public cloud compute environments, and open interoperable interfaces. We believe this shift creates opportunities for us to differentiate and gain share from competitors such as: • Huawei, Ericsson, Nokia, Oracle Corporation, Cisco Systems, Inc.
(“Huawei”), and Nokia Corporation (“Nokia”), to a market that is characterized by cloud-native software network function virtualization, hybrid private public cloud compute environments, and open interoperable interfaces. We believe this shift creates opportunities for us to differentiate and gain share from competitors such as: ● Huawei, Ericsson, Nokia, Oracle Corporation, Cisco Systems, Inc.
Our Professional Services team includes hundreds of cloud communications, VoIP, IMS, IP and Optical networking specialists offering technical depth, network breadth and proprietary tools to assist customers in all aspects of network modernization, design, operation and deployment. Our Maintenance Support offerings deliver a comprehensive support strategy for all of our products, applications, and solutions sold.
Our Professional Services team includes hundreds of VoIP, IMS, IP and Optical networking specialists offering technical depth, network breadth and proprietary tools to assist customers in all aspects of network modernization, design, operation and deployment. Our Maintenance Support offerings deliver a comprehensive support strategy for all of our products, applications, and solutions sold.
We leverage partnerships with key go-to-market channels and solutions providers such as Dell and Microsoft, as well as other popular unified communications and collaboration ("UC&C") platforms such as Zoom Phone and similar service provider UC&C offerings. • Partnerships - We continually look to form industry partnerships that will enhance our current solution offerings to our customers.
We leverage partnerships with key go-to-market channels and solutions providers such as Dell and Microsoft, as well as other popular unified communications and collaboration (“UC&C”) platforms such as Zoom Phone and similar service provider UC&C offerings. ● Partnerships – We continually look to form industry partnerships that will enhance our current solution offerings to our customers.
This has largely moderated in 2023 , however some higher input costs remain, and our inventory levels are somewhat elevated. We continue to implement specific actions to manage these issues, including investment in key re-design of sub-assemblies to improve product availability and lower costs.
This largely moderated in 2023 and 2024, however some higher input costs remain, and our inventory levels are somewhat elevated. We continue to implement specific actions to manage these issues, including investment in key re-design of sub-assemblies to improve product availability and lower costs.
The exponential growth in traffic has largely been driven by the consumption of video and in the next several years, it is expected that new applications leveraging large language model ("LLM") AI will dramatically increase the amount of network bandwidth usage.
The exponential growth in traffic has largely been driven by the consumption of video and in the next several years, it is expected that new applications leveraging large language model (“LLM”) AI will dramatically increase the amount of network bandwidth usage.
Enterprise SBCs provide service assurance and visibility within the enterprise for service-provider hosted and managed UC services. The EdgeMarc multi-service gateway portfolio provide support for e nterprise voice interfaces such as PRI, T1, and FXO, as well as aggregation and transport of local data traffic.
Enterprise SBCs provide service assurance and visibility within the enterprise for service-provider hosted and managed UC services. The EdgeMarc multi-service gateway portfolio provide support for enterprise voice interfaces such as PRI, T1, and FXO, as well as aggregation and transport of local data traffic.
Neptune supports multiple services delivered over multiple access network technologies. Ethernet interfaces ranging from Gigabit Ethernet ("GbE") through to 100GbE allow all IP/MPLS and Ethernet access networks to be supported, and pluggables providing XGS-PON, EPON and TDM circuit emulation allow PON access networks and legacy TDM access network to be supported.
Neptune supports multiple services delivered over multiple access network technologies. Ethernet interfaces ranging from Gigabit Ethernet (“GbE”) through to 100GbE allow all IP/MPLS and Ethernet access networks to be supported, and pluggables providing XGS-PON, EPON and TDM circuit emulation allow PON access networks and legacy TDM access network to be supported.
Our Cloud and Edge market-leading product portfolio consists of two main categories – Session Border Controller ("SBC") products and Network Transformation products: Our SBC product portfolio encompasses a full range of deployment platforms including: • High performance carrier-grade compute platforms leveraging the latest advancements in silicon including NVIDIA GPU processors. • Feature-rich virtualized and cloud-native software products for deployment in both private and public cloud environments such as Amazon Web Services ("AWS"), Microsoft Azure and Google Cloud Platform. • Fully cloud-native implementation supporting as-a-Service ("aaS") offers and business models. • On-premises dedicated appliances that scale up and down to meet the most demanding performance and security requirements.
Our Cloud and Edge market-leading product portfolio consists of two main categories – Session Border Controller (“SBC”) products and Network Transformation products: Our SBC product portfolio encompasses a full range of deployment platforms including: ● High performance carrier-grade compute platforms leveraging the latest advancements in silicon including NVIDIA GPU processors. ● Feature-rich virtualized and cloud-native software products for deployment in both private and public cloud environments such as Amazon Web Services (“AWS”), Microsoft Azure and Google Cloud Platform. ● Fully cloud-native implementation supporting as-a-Service (“aaS”) offers and business models. ● On-premises dedicated appliances that scale up and down to meet the most demanding performance and security requirements.
Internally we launched the "Ribbon 3.0" program, reflecting our continued transformation and drive towards best-in-class operational efficiencies and execution. • Cross-Selling and Tier One Service Provider Growth - We are laser-focused on marketing and selling our combined post-acquisition broad portfolio to our global deployed base of service provider and enterprise customers to expand our presence and share of the larger IP and Optical networking and transport market and cross-sell our complete portfolio.
Internally we launched the “Ribbon 3.0” program, reflecting our continued transformation and drive towards best-in-class operational efficiencies and execution. ● Cross-Selling and Tier One Service Provider Growth – We are laser-focused on marketing and selling our combined post-acquisition broad portfolio to our global deployed base of service provider and enterprise customers to expand our presence and share of the larger IP and Optical networking and transport market and cross-sell our complete portfolio.
Our Employees As a global company with employees in more than 30 countries, we focus on creating an inclusive global community, aligning our resources, processes, and platforms to build a work culture that reflects and expresses our core values. This enables us to work efficiently across borders and functions.
Our Employees As a global company with employees in over 30 countries, we focus on creating an inclusive community, aligning our resources, processes, and platforms to build a work culture that reflects and expresses our core values. This enables us to work efficiently across borders and functions.
We have seen significant success 6 with regional service providers in the U.S., bolstered by the f ederal funding programs focused on improving internet access to underserved markets. • Participate in the 5G Opportunity – We have made significant R&D investments in our IP Optical product portfolio in order to address multiple opportunities tied to the deployment of 5G mobile networks.
We have seen significant success with regional service providers in the U.S., bolstered by the federal funding programs focused on improving internet access to underserved markets. ● Participate in the 5G Opportunity – We have made significant R&D investments in our IP Optical product portfolio in order to address multiple opportunities tied to the deployment of 5G mobile networks.
We have reported several recent strategic wins in this area and believe this will be a key catalyst for growth. • Software-Centric and Cloud-Native Offerings - The value of virtual, cloud-native, and software-driven solutions deployable in the cloud has only grown because of the COVID-19 pandemic and the migration of network services to the Telco Cloud, which underscores another area of major focus for us.
We have reported several recent strategic wins in this area and believe this will be a key catalyst for growth. ● Software-Centric and Cloud-Native Offerings – The value of virtual, cloud-native, and software-driven solutions deployable in the cloud grew because of the COVID-19 pandemic and the migration of network services to the Telco Cloud, which underscores another area of major focus for us.
Traffic from the access networks is aggregated and connected to the services, applications, and compute platforms, meeting the specific service level agreements required for each service, including guaranteed latency, jitter, capacity, or reliability. To achieve this, Neptune uses a range of protocols such as IP/MPLS, MPLS-TP and segment routing traffic engineered ("SR-TE").
Traffic from the access networks is aggregated and connected to the services, applications, and compute platforms, meeting the specific service level agreements required for each service, including guaranteed latency, jitter, capacity, or reliability. To achieve this, Neptune uses a range of protocols such as IP/MPLS, MPLS-TP and segment routing traffic engineered (“SR-TE”).
Company History The Ribbon name was created by the merger of Sonus Networks, Inc. and GENBAND US LLC ("GENBAND") in October 2017, with both companies specializing in secure high-performance Voice Over Internet Protocol ("VoIP") technology and solutions.
Company History The Ribbon name was created by the merger of Sonus Networks, Inc. and GENBAND US LLC (“GENBAND”) in October 2017, with both companies specializing in secure high-performance Voice Over Internet Protocol (“VoIP”) technology and solutions.
In addition, our operations are also subject to a number of environmental regulations such as the Waste Electrical and Electronic Equipment Directive ("WEEE") and the Directive on the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment ("RoHS"). We have developed policies and procedures to assist us in complying with these laws and regulations.
In addition, our operations are also subject to a number of environmental regulations such as the Waste Electrical and Electronic Equipment Directive (“WEEE”) and the Directive on the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment (“RoHS”). We have developed policies and procedures to assist us in complying with these laws and regulations.
Customers Our customers are comprised of a diverse set of service providers and enterprises located in over 140 countries around the world. Service provider customers include telephone companies ("telcos") offering fixed and wireless communications services, cable Multi-System Operators ("MSOs") and Communications as a service providers. Our service provider customers include many of the largest CSPs globally.
Customers Our customers are comprised of a diverse set of service providers and enterprises located in over 140 countries around the world. Service provider customers include telephone companies (“telcos”) offering fixed and wireless communications services, cable Multi-System Operators (“MSOs”) and Communications as a service providers. Our service provider customers include many of the largest CSPs globally.
We have tightened the alignment further in 2024 with the integration of several software research and development ("R&D") teams and an integrated customer support and services organization. Similarly, the go-to-market team was combined under a single Global Sales Leader role.
We have tightened the alignment further in 2024 with the integration of several software research and development (“R&D”) teams and an integrated customer support and services organization. Similarly, the go-to-market team was combined under a single Global Sales Leader role.
To maintain our position as a leader in product and solution development, we continue to invest in our development methodologies, leveraging and adopting industry best practices in the domains of DevOPs, Continuous Integration and Continuous Delivery ("CI/CD"), cloud-native software, and Security and Test Automation.
To maintain our position as a leader in product and solution development, we continue to invest in our development methodologies, leveraging and adopting industry best practices in the domains of DevOPs, Continuous Integration and Continuous Delivery (“CI/CD”), cloud-native software, and Security and Test Automation.
We continue to invest in analytics and automation using the latest artificial intelligence and machine learning ("AI/ ML") technology, to allow our customers to operate our solutions at scale with end-to-end visibility and control over the robustness, security, and efficiency of the solution.
We continue to invest in analytics and automation using the latest artificial intelligence and machine learning (“AI/ML”) technology, to allow our customers to operate our solutions at scale with end-to-end visibility and control over the robustness, security, and efficiency of the solution.
An example of this is our focus on continuously improving the power and space efficiency of our products to reduce overall energy consumption in our customers' networks at our own facilities. We align our compliance goals with component directives such as RoHS legislation in the European Union and China and with the European WEEE directive.
An example of this is our focus on continuously improving the power and space efficiency of our products to reduce overall energy consumption. We align our compliance goals with component directives such as RoHS legislation in the European Union and China and with the European WEEE directive.
Additionally, we believe the governance improvements made as a result of our strategy will result in enhancements in our accountability and that of our suppliers and partners. We are committed to protecting the environment and preventing pollution within a product's lifecycle through responsible product design and requiring suppliers to adhere to sustainable practices.
Additionally, we believe the governance improvements made as a result of our strategy will result in enhancements in our accountability and that of our suppliers and partners. We are committed to protecting the environment and reducing the impact on the environment within a product’s lifecycle through responsible product design and requiring suppliers to adhere to sustainable practices.
Our customer-centric culture shapes all of our activities and inspires our team members to make a positive impact with our clients, investors, and communities. In the year ended December 31, 2023, Verizon Communications Inc. ("Verizon") accounted for approximately 11% of our revenue.
Our customer-centric culture shapes all of our activities and inspires our team members to make a positive impact with our clients, investors, and communities. In the year ended December 31, 2024, Verizon Communications Inc. (“Verizon”) accounted for approximately 14% of our revenue.
("ECI") (March 2020) (the "ECI Acquisition"): Further expanded our focus and strategy to include optical transport and Internet Protocol ("IP") networking, switching, and routing products and solutions, and helped us create an industry-leading communications software and networking company with a comprehensive portfolio of advanced voice, security, data and IP optical networking and transport solutions.
(“ECI”) (March 2020) (the “ECI Acquisition”): Further expanded our focus and strategy to include optical transport and Internet Protocol (“IP”) networking, switching, and routing products and solutions, and helped us create an industry-leading communications software and networking company with a comprehensive portfolio of advanced voice, security, data and IP optical networking and transport solutions.
Our IP Optical Networks multi-layer product portfolio includes: • The Apollo product line provides programmable and open Optical Transport Network ("OTN") capabilities over Dense Wavelength Division Multiplexing ("DWDM") support.
Our IP Optical Networks multi-layer product portfolio includes: ● The Apollo product line provides programmable and open Optical Transport Network (“OTN”) capabilities over Dense Wavelength Division Multiplexing (“DWDM”) support.
We have a formalized employee referral program in place as we have found that employees who join us through employee referrals are a good cultural fit and remain with us longer than those who have no personal connection to us. Approximately one-third of our hires in 2023 came from employee referrals.
We have a formalized employee referral program in place as we have found that employees who join us through employee referrals are a good cultural fit and remain with us longer than those who have no personal connection. Approximately 29% of our hires in 2024 came from employee referrals.
The ongoing war in the Middle East has caused some disruption to material supply chain and production operations in that region.
The ongoing unrest and conflict in the Middle East has caused some disruption to material supply chain and production operations in that region.
("Cisco") and AudioCodes Ltd. for our SBCs, Enterprise Edge products and Ribbon Connect. • Neustar, Inc., Metaswitch Networks ("Metaswitch"), First Orion Corp., Secure Logix Corporation, TransNexus, Inc. and Transaction Network Services, Inc. for our Identity Assurance and Ribbon Call Trust offerings. • NETSCOUT Systems, Inc., Mobileum, Empirix Inc. and Ericsson for our Analytics offerings. • Huawei, Metaswitch, Nokia and Ericsson for our Network Transformation offerings.
(“Cisco”) and AudioCodes Ltd. for our SBCs, Enterprise Edge products and Ribbon Connect. ● Neustar, Inc., Metaswitch Networks (“Metaswitch – A Microsoft Company”), First Orion Corp., Secure-Logix Corporation, TransNexus, Inc. and Transaction Network Services, Inc. for our Identity Assurance and Ribbon Call Trust offerings. ● NETSCOUT Systems, Inc., Mobileum, Empirix Inc. and Ericsson for our Analytics offerings. ● Huawei, Metaswitch, netsapiens, Nokia and Ericsson for our Network Transformation offerings.
The Coronavirus Disease 2019 ("COVID-19") pandemic accelerated this trend significantly, driven by the need for more remote working and commerce for many businesses and industries.
The Coronavirus Disease 2019 (“COVID-19”) pandemic accelerated this trend significantly, driven by the need for more remote working and commerce for many businesses and industries.
They are migrating services to new software platforms that can be deployed in both private and/or public cloud environments (referred to as the "Telco Cloud") using cloud-native technologies, architectures and operational processes with automation and concepts such as Continuous Integration and Continuous Delivery ("CI/CD").
They are migrating services to new software platforms that can be deployed in both private and/or public cloud environments (referred to as the “Telco Cloud”) using cloud-native technologies, architectures and operational processes with automation and concepts such as Continuous Integration and Continuous Delivery (“CI/CD”).
As of December 31, 2023, we had 30 trademarks registered or pending in the U.S. and 120 trademarks registered or pending in foreign jurisdictions.
As of December 31, 2024, we had 30 trademarks registered or pending in the U.S. and 174 trademarks registered or pending in foreign jurisdictions.
Major technology trends supported by our solutions include the accelerated adoption of collaboration platforms such as Microsoft Teams and Zoom; the 5G revolution; accelerating customers' ability to transfer carbon-intensive data storage from using local physical environments to the cloud; supporting service providers’ increased network demands to allow more people to work from home; and using our analytics solutions to maximize network efficiencies. 15 We have taken a more strategic position to our environmental, social and governance ("ESG") practices.
Major technology trends supported by our solutions include the accelerated adoption of collaboration platforms such as Microsoft Teams and Zoom; the 5G revolution; accelerating customers’ ability to transfer carbon-intensive data storage from using local physical environments to the cloud; supporting service providers’ increased network demands to allow more people to work from home; and using our analytics solutions to maximize network efficiencies.
We believe that a culture which encourages all team members, regardless of race, sex, background, or affiliation, to take pride in their individual contributions and work together as a team is key to our success. In 2023, our DEI Council focused on conducting educational initiatives to increase awareness of different employee backgrounds, cultures, and experiences.
We believe that a culture which encourages all employees, regardless of race, sex, background, or affiliation, to take pride in their individual contributions and work together as a team is key to our success. In 2024, our employee-led council focused on conducting educational initiatives to increase awareness of different employee backgrounds and cultures, as well as to promote gender diversity.
Our turnover and hiring metrics are refreshed on a weekly basis. This up-to-date information allows us to quantify our success with employee retention, implement timely and selective retention initiatives as needed, and measure the speed at which we attract and onboard qualified candidates. In 2023, we experienced an improved retention rate compared to the previous year.
Employee Hiring, Turnover and Engagement. Our turnover and hiring metrics are refreshed on a weekly basis and formally presented monthly. This up-to-date information allows us to quantify our success with employee retention, implement timely and selective retention initiatives as needed, and measure the speed at which we attract and onboard qualified candidates.
In 2023, we delivered more than 21 live training webinars, 4 manager/leader development programs, 6 Excellence in Service Programs and approximately 13 training hours per employee across our workforce, matching the total hours in 2022. Safety, Health and Well-being. Our objective is to provide a safe and hazard-free work environment for all employees.
In 2024, we delivered more than 19 live training webinars, 9 manager/leader development programs, and approximately 13 training hours per employee across our workforce. Safety, Health and Well-being. Our objective is to provide a safe and hazard-free work environment for all employees.
As of December 31, 2023, we had 688 issued patents in the U.S., 631 of which expire between 2024 and 2042, and we had 41 in-process patent applications in the U.S. As of such date, we also had 335 issued patents in foreign jurisdictions, and we had 87 in-process patent applications in foreign jurisdictions.
As of December 31, 2024, we had 787 issued patents in the U.S., 659 of which expire between 2025 and 2042, and we had 41 in-process patent applications in the U.S. As of such date, we also had 351 issued patents in foreign jurisdictions, and we had 86 in-process patent applications in foreign jurisdictions.
These solutions integrate intelligent optical transport with agile IP networking to provide a converged, secure, communication network that can be rapidly configured and deployed in challenging environmental conditions.
The data must be delivered securely, in real-time, to wherever it is required. These solutions integrate intelligent optical transport with agile IP networking to provide a converged, secure, communication network that can be rapidly configured and deployed in challenging environmental conditions.
The average time to fill a position in 2023 was just over 31 days. 14 Our employee management process includes conducting exit interviews with all employees that leave us voluntarily. The data obtained from this questionnaire and an in-person exit interview is referenced when creating and updating benefit plans and other employee offerings.
The average time to fill a position in 2024 was 38 days. Our employee management process includes conducting exit interviews with all employees that leave us voluntarily. The data obtained from our exit questionnaire and one-on-one interviews are referenced when creating and updating benefit plans and other employee initiatives/offerings.
Also, we regularly promotes our Employee Assistance Program (the “EAP”) that is offered to all employees and their families which provides customized sessions to meet varying needs globally. The EAP is a confidential support service to help our employees and their dependents at no cost to our employees.
Ribbon regularly promotes our Employee Assistance Program (the “EAP”), which is offered to all employees and their families to provide customized services to meet varying needs globally. The EAP is a confidential support service to help our employees and their dependents at no cost to our employees. In 2024, we saw a significant increase in the utilization of our EAP.
It is imperative that Providers invest to capture new revenue streams, while reducing the cost to operate their networks. Legacy services such as IP Multiprotocol Label Switching ("MPLS") circuits, Centrex lines, and TDM phone are increasingly expensive to operate, and Providers need to migrate customers to new offerings or risk high margin revenue streams.
Legacy services such as IP Multiprotocol Label Switching (“MPLS”) circuits, Centrex lines, and TDM phone are increasingly expensive to operate, and providers need to migrate customers to new offerings or risk high margin revenue streams.
For additional information on Ribbon’s talent and our current engagement activities, please see our most recent sustainability report, which is available at ribboncommunications.com/company/company-policies/sustainability-report. Corporate Governance and Social Responsibility We are committed to operating ethically, efficiently and inclusively. We believe we contribute to the communities in which we operate through the mitigation of climate change and other global sustainable development priorities.
For additional information on Ribbon’s talent and our current engagement activities, please see our most recent sustainability report, which is available at ribboncommunications.com/company/company-policies/sustainability-report. 15 ​ Corporate Governance and Social Responsibility We are committed to operating ethically, efficiently and inclusively.
As a result, service providers and enterprises must constantly seek out new technologies to refresh their networks to provide increased flexibility, programmability, scalability, and reliability, to enable these new applications and services with an expedited time to market. These investments provide a competitive advantage and bring value-added services to increase network efficiency, increase customer satisfaction and produce new revenue streams.
As a result, service providers and enterprises must constantly seek out new technologies to refresh their networks to provide increased flexibility, automation, programmability, scalability, and reliability, to enable these new applications and services with an expedited time to market.
Our Cloud and Edge products are increasingly software-centric and cloud-native for deployment on private, public, or hybrid cloud infrastructures, in data centers, on enterprise premises, and within service provider private networks. 7 Cloud and Edge Products and Solutions Our Cloud and Edge portfolio delivers multiple solutions for enabling VoIP, VoLTE, VoNR, and UC&C in network, on-premises, or via the Telco Cloud for a broad range of service provider and enterprise customers.
Cloud and Edge Products and Solutions Our Cloud and Edge portfolio delivers multiple solutions for enabling VoIP, VoLTE, VoNR, and UC&C in network, on-premises, or via the Telco Cloud for a broad range of service provider and enterprise customers.
All of our employees understand that adherence to proper conduct helps us improve our competitive positioning and business outcomes. To assist in this, we are deliberate in making sure that each employee is aware that they play a role in fostering a work environment that encourages mutual respect and congenial relationships among employees. Diversity, Equity and Inclusion ("DEI").
To assist in this, we are deliberate in making sure that each employee is aware that they play a role in fostering a work environment that encourages mutual respect and congenial relationships among employees.
We are currently subject to, and expect to face in the future, allegations that we have infringed the intellectual property rights of third parties, including those of our competitors and non-practicing entities. 13 Regulatory Considerations As a company with global operations, we are subject to complex U.S. and foreign laws and regulations, including trade regulations, tariffs, import and export regulations, anti-bribery and corruption laws, antitrust or competition laws, cybersecurity, privacy and data protection, among others.
Regulatory Considerations As a company with global operations, we are subject to complex U.S. and foreign laws and regulations, including trade regulations, tariffs, import and export regulations, anti-bribery and corruption laws, antitrust or competition laws, cybersecurity, privacy and data protection, among others.
Need for Reliable, Secure, High-Bandwidth Enterprise and Critical Infrastructure Communications The “critical infrastructure” market vertical is defined as those companies whose assets, systems, and networks, whether physical or virtual, are considered vital to a country’s national interest. Critical infrastructure providers are under increasing pressure to support new services, reduce carbon emission, improve security, expand automation, and increase safety.
New applications enabled by LLM AI will dramatically increase the traffic from the subscriber device to the data center. Need for Reliable, Secure, High-Bandwidth Enterprise and Critical Infrastructure Communications The “critical infrastructure” market vertical is defined as those companies whose assets, systems, and networks, whether physical or virtual, are considered vital to a country’s national interest.
This architecture shift impacts the entire ecosystem, from handsets and Radio Access Network through the metro and core network and back-office systems. The ultimate goal is a step-function improvement in capacity and coverage, as well as to unlock new revenue generating applications for consumers and businesses.
The ultimate goal is a step-function improvement in capacity and coverage, as well as to unlock new revenue generating applications for consumers and businesses.
Increasingly, network operators are also pursuing open, multi-layer optimized and disaggregated IP and Optical networking solutions, where they have the flexibility to assemble networks based on transport and control subsystems from different vendors with software-defined networking. 5 Service providers in some global regions, as mandated by governments or voluntarily, are also replacing certain incumbent vendor communications equipment and technology in their networks because of concerns for security.
Increasingly, network operators are also pursuing open, multi-layer optimized and disaggregated IP and Optical networking solutions, where they have the flexibility to assemble networks based on transport and control subsystems from different vendors with software-defined networking.
New applications enabled by LLM AI will dramatically increase the traffic from the subscriber device to the data center. Evolution of Communications Service Provider Networks to Reduce Total Cost of Ownership CSPs of all types operate in a hyper-competitive environment as consumers and businesses have an increasing number of choices for their communication needs.
Modernization of Communications Service Provider Networks to Reduce Total Cost of Ownership CSPs of all types operate in a hyper-competitive environment as consumers and businesses have an increasing number of choices for their communication needs. It is imperative that providers invest to capture new revenue streams, while reducing the cost to operate their networks.
As of December 31, 2023, we had a total of 3,107 employees worldwide, located geographically as follows: Number of employees Percentage of total Asia 1,173 38 % North America 863 28 % EMEA 971 31 % LATAM 100 3 % Approximately 657 employees are covered by collective bargaining agreements or works councils and we believe that our relations with the labor unions are generally good.
As of December 31, 2024, we had a total of 3,052 employees worldwide, located geographically as follows: ​ ​ ​ ​ ​ ​ ​ ​ Number of Percentage of ​ ​ employees ​ total ​ Asia ​ 1,174 ​ 39 % North America 852 28 % EMEA 927 ​ 30 % LATAM 99 3 % ​ Approximately 635 employees are covered by collective bargaining agreements or works councils.
Cloud and Edge Business Segment The Cloud and Edge segment provides secure and reliable software and hardware products, solutions, and services for VoIP communications, Voice Over LTE ("VoLTE") and Voice Over 5G ("VoNR") communications, as well as UC&C services to both service provider and enterprise customers.
Segment Information Our Chief Operating Decision Maker (“CODM”) assesses our performance based on the performance of two separate lines of our business: the Cloud and Edge segment (“Cloud and Edge”) and the IP Optical Networks segment (“IP Optical Networks”). 7 ​ Cloud and Edge Business Segment The Cloud and Edge segment provides secure and reliable software and hardware products, solutions, and services for VoIP communications, Voice Over LTE (“VoLTE”) and Voice Over 5G (“VoNR”) communications, as well as UC&C services to both service provider and enterprise customers.
Ribbon takes pride in conducting business in accordance with the highest ethical standards. Our Code of Conduct outlines the importance of employees acting in an honest and ethical manner. Ribbon employees are familiar with this policy. The principles of integrity, accountability and fair dealing are the cornerstone of our business and are critical to our future success.
We believe that in general we have good relationships with these various labor organizations. Ribbon takes pride in conducting business in accordance with the highest ethical standards. Our Code of Conduct outlines the importance of employees acting in an honest and ethical manner. Ribbon employees are informed and aware of this policy.
In addition, as a company consistently advocating for a healthy, balanced lifestyle, we offer a Wellness Program, which is available to all of our employees and their families. This program includes a variety of monthly wellness related topics delivered through activities such as webinars, exercise sessions, and engaging challenges.
Our goal is to continue to focus on finding ways to support our employees and their families. In addition, as a company consistently advocating for a healthy, balanced lifestyle, we offer a Wellness Program, which is available to all employees and their families.
We encourage a service mindset among our employees wherever they are and support community involvement and engagement. Our Employee Engagement committees have developed ongoing relationships with local Non-Profit organizations where Ribbon and our employees are contributing both time and funds to provide needed support.
Our Employee Engagement committees have developed ongoing relationships with local Non-Profit organizations where Ribbon and our employees are contributing both time and funds to provide needed support. Ribbon also sponsors events and campaigns that support organizations such as the American Heart Association, Make a Wish Foundation, and the United Way.
Enterprises deploy optical networking, secured by optical encryption, to attain the needed performance and security. Similarly, command and control groups within today’s defense forces have a need for high performance secure networks as their strategic sensors and assault systems are becoming more integrated.
Similarly, command and control groups within today’s defense forces have a need for high performance secure networks as their strategic sensors and assault systems are becoming more integrated. In this ecosystem, effective decision-making requires the pooling and analysis of data from a vast array of sensors and other information sources.
In 2023, we continued our Hybrid Work Model where employees spend a minimum of two days per week working from one of our offices. This encourages collaboration, innovation, and socialization while maintaining the flexibility to work remotely as well. Community Investment . We value the communities in which we work.
This encourages collaboration, innovation, and socialization while maintaining the flexibility to work remotely as well. Community Investment . We value the communities in which we work. We encourage a service mindset among our employees wherever they are and support community involvement and engagement.
However, the unique requirements regarding security and survivability are not easily met by off-the-shelf enterprise applications, creating significant opportunity for companies that specialize in this area.
In particular, the U.S. Federal defense agencies have a significant need to modernize their voice communications infrastructure, replacing legacy on-premises systems with modern cloud-based voice and video solutions. However, the unique requirements regarding security and survivability are not easily met by off-the-shelf enterprise applications, creating significant opportunities for companies that specialize in this area.
Data is the lifeblood of any business, and it must be easily accessible across the enterprise to power business applications and to support services to end-customers. It must also be replicated across multiple locations for business continuity and disaster recovery and must be protected from inappropriate access, theft, and corruption.
It must also be replicated across multiple locations for business continuity and disaster recovery and must be protected from inappropriate access, theft, and corruption. Enterprises deploy optical networking, secured by optical encryption, to attain the needed performance and security.
Achieving these goals requires a transition to a modernized, secure communications network that provides seamless IP connectivity and services and very high capacity optical transport. With an integrated IP and optical transport solution, a critical infrastructure network operator can provide a highly reliable, secure, future proof communications solution optimized for critical industries.
Critical infrastructure providers are under increasing pressure to support new services, reduce carbon emission, improve security, expand automation, and increase safety. Achieving these goals requires a transition to a modernized, secure communications network that provides seamless IP connectivity and services and very high capacity optical transport.
Within this broad industry context, investment in our products and services is driven by several key industry trends and strategic priorities. Deployment of 5G Mobile Technology One of the most significant investments being made by mobile carriers across the world is the deployment of 5G broadband cellular technology.
Deployment of 5G Mobile Technology One of the most significant investments being made by mobile carriers across the world is the deployment of 5G broadband cellular technology. This architecture shift impacts the entire ecosystem, from handsets and Radio Access Network through the metro and core network and back-office systems.
Our recognition program, “Real Time Rewards”, which was launched in 2022 and continued in 2023, reinforces our “thank you culture.” Our employees are able to recognize the achievements and contributions of their teammates, peers, and managers. In 2023, approximately 3,000 such awards were given, whereby 48% of our employees were recognized and rewarded for their contributions.
Our recognition program, “Real Time Rewards,” is an online platform which allows employees across all job levels and countries to recognize and express appreciation to their colleagues. This tool allows employees to be recognized for going above and beyond. In 2024, approximately 3,000 awards were distributed, whereby 49% of our employees were rewarded for their contributions.
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In this ecosystem, effective decision-making requires the pooling and analysis of data from a vast array of sensors and other information sources. The data must be delivered securely, in real-time, to wherever it is required.
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These investments provide a competitive advantage and bring value-added services to increase network efficiency, increase customer satisfaction and produce new revenue streams. Within this broad industry context, investment in our products and services is driven by several key industry trends and strategic priorities.
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Segment Information Our Chief Operating Decision Maker ("CODM") assesses our performance based on the performance of two separate lines of our business: the Cloud and Edge segment ("Cloud and Edge") and the IP Optical Networks segment ("IP Optical Networks").

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAdditionally, investors should not interpret the disclosure of a risk to imply that the risk has not already materialized. 16 Risk Factors Summary The following is a summary of the principal risks that could adversely affect our business, operations and financial results: Risks Related to Our Business and Industry • Our quarterly revenue and operating results are unpredictable and may fluctuate significantly quarter to quarter. • Failure to compete successfully could impair our ability to increase revenues and/or remain profitable. • Our future success is dependent on growing our base of customers and expanding our recurring revenue. • Consolidation in the telecommunications industry could harm our business. • Restructuring activities could adversely affect our ability to execute our business strategy. • Exposure to the credit risk of some of our customers and to credit exposures in fragile financial markets could result in material losses. • Disruptions to relationships with distributors, resellers, system integrators and other channel partners could adversely affect our revenues. • Failure to align our strategic plan with our customers' investments, or failure of products and services to meet customers' demands, could impact our revenues. • Failure of our products to interoperate with our customers' existing networks could result in customer losses. • Delay in the anticipated shift to more virtualized networks, or failure for customers to adopt our new products and services focused on virtualized networks, could reduce our revenues. • Failure by our strategic partners or by us in integrating products could harm our business. • We rely on contract manufacturers. • We rely on single or limited sources for supply of some components of our products. • Failure to correctly estimate future requirements for end-of-production products purchased from third parties could harm our operating results or business. • Products may have errors or defects that we find only after full deployment. • Government sales are subject to potential delays and cutbacks, may require specific testing efforts, or impose significant compliance obligations. • Future investments, mergers or acquisitions could be difficult to integrate, disrupt our business, dilute shareholder value and harm our financial condition. • Failure to hire and retain key personnel could negatively impact our ability to meet our business objectives and impair future growth. • Man-made problems, such as terrorism, and natural catastrophic events may disrupt our operations and harm our operating results.
Biggest changeRisk Factors Summary The following is a summary of the principal risks that could adversely affect our business, operations and financial results: Risks Related to Our Business and Industry ● Our quarterly revenue and operating results are unpredictable and may fluctuate significantly quarter to quarter. ● Failure to compete successfully could impair our ability to increase revenues and/or remain profitable. ● Our future success is dependent on growing our base of customers and expanding our recurring revenue. ● Consolidation in the telecommunications industry could harm our business. ● Restructuring activities could adversely affect our ability to execute our business strategy. ● Exposure to the credit risk of some of our customers and to credit exposures in fragile financial markets could result in material losses. ● Disruptions to relationships with distributors, resellers, system integrators and other channel partners could adversely affect our revenues. ● Failure to align our strategic plan with our customers’ investments, or failure of products and services to meet customers’ demands, could impact our revenues. ● Failure of our products to interoperate with our customers’ existing networks could result in customer losses. ● Failure for customers to adopt our new products and services focused on virtualized networks, could reduce our revenues. ● Failure by our strategic partners or by us in integrating products could harm our business. ● We rely on contract manufacturers. ● We rely on single or limited sources for supply of some components of our products. ● Failure to correctly estimate future requirements for end-of-production products purchased from third parties could harm our operating results or business. ● Products may have errors or defects that we find only after full deployment. ● Government sales are subject to potential delays and cutbacks, may require specific testing efforts, or impose significant compliance obligations. ● Future investments, mergers or acquisitions could be difficult to integrate, disrupt our business, dilute shareholder value and harm our financial condition. ● Failure to hire and retain key personnel could negatively impact our ability to meet our business objectives and impair future growth. ● Man-made problems, such as terrorism, and natural catastrophic events may disrupt our operations and harm our operating results. ● We may not be successful in our artificial intelligence initiatives and such initiatives may expose us to greater litigation and regulatory risk. ​ Risks Related to Our International Operations ● Worldwide global economic conditions and uncertainties may have a material adverse impact on our business. ● Increases in tariffs, trade restrictions or taxes on our products could have an adverse impact on our operations. 17 ​ ● The wars in Israel and Ukraine could materially impact our sales to customers in that region. ● Conditions in Israel may materially and adversely affect our business. ● Risks associated with our international operations could impair our ability to grow our international revenue. ● Fluctuations in currency exchange rates could negatively impact our financial results and cash flows. ● Use and reliance upon research and development resources in global locations may expose us to unanticipated costs and/or liabilities.
While we believe that we leverage appropriate detection and prevention systems and services and that we focus on continuous improvement based upon the latest attack vectors in the industry, we cannot guarantee that there will never be any information technology system failures, including future breaches of our or our third-party providers' data security measures through a cyberattack, other cyber incident or otherwise, or the theft or loss of laptops, other mobile devices or electronic records used to back up our systems or our third-party providers' systems, which could result in a disclosure of customer, employee, or our information or otherwise disrupt our ability to function in the normal course of business by potentially causing, among other things, delays in the fulfillment or cancellation of customer 27 orders or disruptions in the manufacture or shipment of products or delivery of services, any of which could have a material adverse effect on our operating results.
While we believe that we leverage appropriate detection and prevention systems and services and that we focus on continuous improvement based upon the latest attack vectors in the industry, we cannot guarantee that there will never be any information technology system failures, including future breaches of our or our third-party providers’ data security measures through a cyberattack, other cyber incident or otherwise, or the theft or loss of laptops, other mobile devices or electronic records used to back up our systems or our third-party providers’ systems, which could result in a disclosure of customer, employee, or our information or otherwise disrupt our ability to function in the normal course of business by potentially causing, among other things, delays in the fulfillment or cancellation of customer orders or disruptions in the manufacture or shipment of products or delivery of services, any of which could have a material adverse effect on our operating results.
General Risk Factors • Litigation and government investigations could result in significant legal expenses and settlement payments, fines or damage awards. • Our stock price has been and may continue to be volatile. • We are party to a stockholders' agreement with certain stockholders which provides such stockholders with certain rights that may differ from the rights of our other stockholders. • Delaware law and our charter documents contain provisions that could discourage or prevent a potential takeover.
General Risk Factors ● Litigation and government investigations could result in significant legal expenses and settlement payments, fines or damage awards. 18 ​ ● Our stock price has been and may continue to be volatile. ● We are party to a stockholders’ agreement with certain stockholders which provides such stockholders with certain rights that may differ from the rights of our other stockholders. ● Delaware law and our charter documents contain provisions that could discourage or prevent a potential takeover.
Risks Related to Intellectual Property • Our business could be jeopardized if we are unable to protect our intellectual property. • Failure to obtain necessary licenses or ongoing maintenance and support of third-party technology at acceptable prices on acceptable terms, or at all, it could harm our operating results or business. • A breach of the security of our information systems or those of our third-party providers could adversely affect our operating results.
Risks Related to Intellectual Property ● Our business could be jeopardized if we are unable to protect our intellectual property. ● Failure to obtain necessary licenses or ongoing maintenance and support of third-party technology at acceptable prices on acceptable terms, or at all, could harm our operating results or business. ● A breach of the security of our information systems or those of our third-party providers could adversely affect our operating results.
Moreover, if we invest in the development of technologies, products and solutions that do not function as expected, are not adopted by the industry, are not ready in time, are not accepted by our customers as quickly as anticipated or at all, mature more quickly than we anticipated or are not successful in the marketplace, our sales and earnings may suffer and, as a result, our stock price could decline.
Moreover, if we invest in the development of technologies, products and solutions that do not function as expected, are not adopted by the industry, are not ready in time, are not accepted by our customers as quickly as anticipated or at all, 21 ​ mature more quickly than we anticipated or are not successful in the marketplace, our sales and earnings may suffer and, as a result, our stock price could decline.
While we have business continuity plans in place to address the military call-ups of our employees, any of these circumstances could have a material adverse effect on our business, results of operations, financial condition, cash flows and prospects. 25 We may face risks associated with our international operations that could impair our ability to grow our international revenue.
While we have business continuity plans in place to address the military call-ups of our employees, any of these circumstances could have a material adverse effect on our business, results of operations, financial condition, cash flows and prospects. We may face risks associated with our international operations that could impair our ability to grow our international revenue.
Legal Proceedings." We are generally obliged, to the extent permitted by law, to indemnify our current and former directors and officers who are named as defendants in these lawsuits. Defending against litigation or government investigation may require significant attention and resources of management. Regardless of the outcome, such litigation or investigation could result in significant legal expenses.
Legal Proceedings.” We are generally obliged, to the extent permitted by law, to indemnify our current and former directors and officers who are named as defendants in these lawsuits. Defending against litigation or government investigation may require significant attention and resources of management. Regardless of the outcome, such litigation or investigation could result in significant legal expenses.
In addition, we may not be able to develop international market demand for our products, which could impair our ability to grow our revenue. In many international markets, long-standing relationships between potential customers and their local suppliers and protective regulations, including local content requirements and approvals, create barriers to entry.
In addition, we may not be able to develop international market demand for our products, which could impair our ability to grow our revenue. In many international markets, long-standing relationships between potential customers and their local 27 ​ suppliers and protective regulations, including local content requirements and approvals, create barriers to entry.
Alternatively, if a court were to find the choice of forum provision contained in our Certificate of Incorporation to be inapplicable or unenforceable in an action, 31 we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition.
Alternatively, if a court were to find the choice of forum provision contained in our Certificate of Incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition.
As we virtualize our product portfolio, we expect our margins 21 to improve due to decreased costs tied to production and sales of our appliance products, however, our revenue may decline as a result of the decreases in sales of appliance products, many of which have generated higher revenue on a per-unit basis than certain of our software products.
As we virtualize our product portfolio, we expect our margins to improve due to decreased costs tied to production and sales of our appliance products, however, our revenue may decline as a result of the decreases in sales of appliance products, many of which have generated higher revenue on a per-unit basis than certain of our software products.
For example, the U.S. Department of Defense ("DOD") has issued specific requirements for IP networking products for features and interoperability. In order for our products to be used to connect to the DOD network, that product must pass a series of significant tests and be certified by the Joint Interoperability Test Command (“JITC”).
For example, the U.S. Department of Defense (“DOD”) has issued specific requirements for IP networking products for features and interoperability. In order for our products to be used to connect to the DOD network, that product must pass a series of significant tests and be certified by the Joint Interoperability Test Command (“JITC”).
If we are unable to expand our customer base, the loss of any significant customer, or any substantial reduction in purchase orders or deferral of purchasing decisions from these customers, could materially adversely affect our results of operations and financial condition. 19 Consolidation in the telecommunications industry could harm our business.
If we are unable to expand our customer base, the loss of any significant customer, or any substantial reduction in purchase orders or deferral of purchasing decisions from these customers, could materially adversely affect our results of operations and financial condition. Consolidation in the telecommunications industry could harm our business.
Risks Related to the Ownership of our Common Stock Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us more difficult, limit attempts by our stockholders to replace or remove our current management and may negatively affect the market price of our common stock.
Risks Related to the Ownership of our Common Stock and Warrants Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us more difficult, limit attempts by our stockholders to replace or remove our current management and may negatively affect the market price of our common stock.
If these or other sanctions are enacted, they may limit our ability to provide products and services in an important country or region for our business. The war between Russia and Ukraine, and the sanctions imposed as a result, could materially impact our sales to customers in that region.
If these restrictions or other sanctions are enacted, they may limit our ability to provide products and services in an important country or region for our business. The war between Russia and Ukraine, and the sanctions imposed as a result, could materially impact our sales to customers in that region.
If we were to fail to comply with existing or future export licensing, customs regulations, economic sanctions and other laws, we could be subject to substantial civil and criminal penalties, including fines and incarceration for responsible employees and managers, and the possible loss of export or import privileges.
If we were to fail to comply with existing or future export licensing, customs regulations, economic sanctions and other laws, we could be subject to substantial civil and criminal penalties, including fines and incarceration for responsible employees and managers, and the possible loss of export or import 30 ​ privileges.
Disruptions to, or our failure to effectively develop, manage and maintain our government customer relationships could adversely affect our ability to generate revenue from these customers. Further, such government sales are subject to potential delays and cutbacks, may require specific testing efforts, or impose significant compliance obligations.
Disruptions to, or our failure to effectively develop, manage and maintain our government customer relationships could adversely affect our ability to generate revenue from these customers. Further, sales to government customers are subject to potential delays and cutbacks, may require specific testing efforts, or impose significant compliance obligations.
If we are unable to maintain effective internal controls, we may not have adequate or timely financial information, and we may be unable to meet our reporting obligations as 30 a publicly traded company or comply with the requirements of the SEC or the Sarbanes-Oxley Act of 2002.
If we are unable to maintain effective internal controls, we may not have adequate or timely financial information, and we may be unable to meet our reporting obligations as a publicly traded company or comply with the requirements of the SEC or the Sarbanes-Oxley Act of 2002.
We believe this shift creates opportunities for us, as well as our direct competitors in telecommunications and networking. The shift also creates opportunities for new entrants, including some that may currently be our strategic partners, that could become competitors in the industry. See Item 1. " Business – Competition ".
We believe this shift creates opportunities for us, as well as our direct competitors in telecommunications and networking. The shift also creates opportunities for new entrants, including some that may currently be our strategic partners, that could become competitors in the industry. See Item 1. “ Business – Competition ”.
Monitoring unauthorized use of our products is difficult and we cannot be certain that the steps we have taken will prevent unauthorized use of our technology, particularly in foreign countries where the laws may not protect our proprietary rights as fully as in the United States.
Monitoring unauthorized use of our products is difficult and we cannot be certain that the steps we have taken will prevent unauthorized use of our technology, particularly in foreign countries where the laws may not protect our proprietary 28 ​ rights as fully as in the United States.
Material factors that may affect our revenue and operating results include those discussed below under “Risks Related to our Business and Industry.” 18 Equipment purchases by CSPs and enterprises continue to be unpredictable.
Material factors that may affect our revenue and operating results include those discussed below under “Risks Related to our Business and Industry.” Equipment purchases by CSPs and enterprises continue to be unpredictable.
Further, the U.S. and other European countries have imposed sanctions against Russia in connection with the war. These sanctions currently prohibit our ability to sell certain products and services to customers in Russia.
Further, the U.S. and other European countries have imposed sanctions against Russia in connection with the war. These sanctions currently prohibit our ability to sell our hardware products and certain services to customers in Russia.
However, if we underestimate our forecast and our customers place orders to purchase more products than are available, we may not have sufficient inventory to support their needs.
However, if we underestimate our forecast and our customers place orders to purchase more products than are available, we may not have 23 ​ sufficient inventory to support their needs.
Given the general uncertainty regarding global economic conditions and other factors, such as inflation, high interest rates and foreign exchange rate fluctuations, we believe that customers have tried to maintain or improve profitability through cost control and constrained capital spending, which places additional pressure on IT departments to demonstrate acceptable return on investment.
Given the general uncertainty regarding global economic conditions and other factors, such as inflation, high interest rates and foreign exchange rate fluctuations, we believe that customers have tried to maintain or improve profitability through cost control and constrained capital spending, which places additional pressure to demonstrate acceptable return on investment.
We continue to enhance our sales strategy, which we expect will include more partner sales engagements to resell our products and services through authorized distributors, value-added resellers ("VARs"), system integrators and other channel partners. Our future success is dependent upon establishing and maintaining successful relationships with a variety of distributors, VARs, 20 system integrators and other channel partners.
We continue to enhance our sales strategy, which we expect will include more partner sales engagements to resell our products and services through authorized distributors, value-added resellers (“VARs”), system integrators and other channel partners. Our future success is dependent upon establishing and maintaining successful relationships with a variety of distributors, VARs, system integrators and other channel partners.
Our competitors' broad product portfolios, coupled with already existing relationships, may cause our customers to buy our competitors' products or harm our ability to attract new customers.
Our competitors’ broad product 19 ​ portfolios, coupled with already existing relationships, may cause our customers to buy our competitors’ products or harm our ability to attract new customers.
If we are prevented from borrowing or if we are unable to extend, renew or replace the credit facilities under the 2020 Credit Facility by the maturity dates, on favorable terms, or at all, this could have a material adverse effect on our liquidity and cause our business, operations and financial condition to suffer.
If we are prevented from borrowing or if we are unable to extend, renew or replace the credit facilities under the 2024 Credit Facility by the maturity dates, on favorable terms, or at all, this could have a material adverse effect on our liquidity and cause our business, operations and financial condition to suffer.
Terms in the 2020 Credit Facility impose limitations on our ability to, among other things, incur additional indebtedness, create liens, make acquisitions or engage in mergers, enter into transactions with affiliates, dispose of assets, make certain investments and amend or repay certain junior debt.
Terms in the 2024 Credit Facility impose limitations on our ability to, among other things, incur additional indebtedness, create liens, make acquisitions or engage in mergers, enter into transactions with affiliates, dispose of assets, make certain investments and amend or repay certain junior debt.
Import tariffs and/or other mandates recently imposed by the United States have and could in the future lead to retaliatory actions by affected countries, including China, resulting in “trade wars,” and could significantly increase the prices on raw materials, the manufacturing of our equipment, and/or increased costs for goods imported into the United States, all of which are critical to our business.
Import tariffs and/or other mandates recently imposed by the United States, have led to and could in the future lead to retaliatory actions by affected countries, including Canada, Mexico and China, resulting in “trade wars,” and could significantly increase the prices on raw materials, the manufacturing of our equipment, and/or increased costs for goods imported into the United States, all of which are critical to our business.
The warrants are exercisable for common stock, which would increase the number of shares eligible for future resale in the public market and result in dilution to stockholders. The warrants to purchase an aggregate of 4,858,090 shares of our common stock are immediately exercisable.
The warrants are exercisable for common stock, which would increase the number of shares eligible for future resale in the public market and result in dilution to stockholders. The warrants to purchase an aggregate of 4,858,090 shares of our common stock are currently exercisable.
Bribery Act ("UKBA") and similar regulations could subject us to significant civil or criminal penalties. 17 • Governmental export and import controls could subject us to liability, require a license from the U.S. government or impair our ability to compete in international markets. • Changes in governmental regulation, especially with respect to the telecommunications industry, could harm our operating results and future prospects.
Bribery Act (“UKBA”) and similar regulations could subject us to significant civil or criminal penalties. ● Governmental export and import controls could subject us to liability, require a license from the U.S. government or impair our ability to compete in international markets. ● Changes in governmental regulation, especially with respect to the telecommunications industry, could harm our operating results and future prospects.
We could be adversely affected by regulation of IP networks and commerce in any country where we operate, including the United States. Such regulations could include matters such as voice over the Internet or using Internet Protocol, encryption technology, and access charges for service providers.
We could be adversely affected by regulation of IP networks and commerce in any country where we operate, including the United States. Such regulations could include matters such as VoIP or using Internet Protocol, encryption technology, and access charges for service providers.
In addition to cooperating with our strategic partners, such as Dell and Microsoft, on specific customer projects, we also may compete in some areas with these same partners.
In addition to cooperating with our strategic partners, such as Dell, on specific customer projects, we also may compete in some areas with these same partners.
We manufacture certain of our appliance products and purchase a portion of our raw materials and components from suppliers in Mexico, Malaysia, China and other foreign countries.
We manufacture certain of our appliance products and purchase a portion of our raw materials and components from suppliers in Mexico, Malaysia, Thailand, Israel, China and other foreign countries.
We have also been named as a defendant in securities class action and stockholder derivative lawsuits and have also been subject to investigations by the government. For more information on currently pending litigation, please see "Part I, Item 3.
We have also previously been named as a defendant in securities class action and stockholder derivative lawsuits and have also been subject to investigations by the government. For more information on currently pending litigation, please see “Part I, Item 3.
Popular uprisings in various countries in the Middle East over the last few years have also affected the political stability of those countries and have led to a decline in the regional security situation. Such instability may also lead to deterioration in the political and trade relationships that exist between Israel and these countries.
Popular uprisings in various countries in the Middle East over the last few years, including in Syria in December 2024, have also affected the political stability of those countries and have led to a decline in the regional security situation. Such instability may also lead to deterioration in the political and trade relationships that exist between Israel and these countries.
While we have developed plans to relocate our manufacturing sites, the timing required for relocation could impact our ability to sell such products or timely deliver the products, and could result in lower or lost sales in India. The need to move the manufacturing of such products could also negatively impact the margin earned on the sale of such products.
While we are developing plans to relocate our manufacturing sites, the timing required for relocation could impact our ability to sell such products or timely deliver the products and could result in lower or lost sales in India. The need to move the manufacturing of such products could also negatively impact the margin earned on the sale of such products.
We rely on certain key customers, and our future success will depend on our ability to generate recurring business from our existing customers and to attract additional customers beyond our current customer base. One customer, Verizon , contributed approximately 11% of our revenue in the year ended December 31, 2023.
We rely on certain key customers, and our future success will depend on our ability to generate recurring business from our existing customers and to attract additional customers beyond our current customer base. One customer, Verizon, contributed approximately 14% of our revenue in the year ended December 31, 2024.
In 2023, approximately 6 % of our sales were to customers in Eastern European countries, including Ukraine, Russia, and the surrounding countries. In February 2022, Russia commenced a military action in Ukraine. The uncertainty and the threat of an expansion of the war has resulted in some of our customers delaying purchases from us.
In 2024, approximately 4% of our sales were to customers in Eastern European countries, including Ukraine, Russia, and the surrounding countries. In February 2022, Russia commenced a military action in Ukraine. The uncertainty and the threat of an expansion of the war has resulted in some of our customers delaying purchases from us.
The JPM Stockholders and Swarth collectively own approximately 46% of our common stock as of December 31, 2023, and may decide to sell their shares in bulk or from time to time, except as provided under the Stockholders Agreement, which timing we cannot control.
The JPM Stockholders and Swarth collectively own approximately 45% of our common stock as of December 31, 2024, and may decide to sell their shares in bulk or from time to time, except as provided under the Stockholders Agreement, which timing we cannot control.
Provisions of our Certificate of Incorporation and By-laws may have the effect of delaying or preventing a change of control or changes in our management, including, generally, provisions that: • do not provide cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • allow only the Board to fill a vacancy on the Board, however occurring, including a vacancy resulting from an enlargement of the Board; • require advance notice for stockholder proposals to be brought before a meeting of stockholders, including proposed nominations of persons for election to the board of directors; • only allow stockholder action to be taken at an annual or special meeting; • require a vote of holders of at least 66 2/3% of the voting power of our outstanding voting stock entitled to vote thereon to amend or repeal certain provisions of our Certificate of Incorporation or its By-laws; • limit the ability of stockholders to call a special meeting; and • authorize blank check preferred stock.
Provisions of our Certificate of Incorporation and By-laws may have the effect of delaying or preventing a change of control or changes in our management, including, generally, provisions that: ● do not provide cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; ● allow only the Board to fill a vacancy on the Board, however occurring, including a vacancy resulting from an enlargement of the Board; ● require advance notice for stockholder proposals to be brought before a meeting of stockholders, including proposed nominations of persons for election to the board of directors; ● only allow stockholder action to be taken at an annual or special meeting; ● require a vote of holders of at least 66 2/3% of the voting power of our outstanding voting stock entitled to vote thereon to amend or repeal certain provisions of our Certificate of Incorporation or its By-laws; ● limit the ability of stockholders to call a special meeting; and ● authorize blank check preferred stock. 32 ​ These provisions may make it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management.
We have expanded, and expect to continue to expand, our operations in international and emerging markets. International operations are a significant part of our business, accounting for approximately 58% of total revenues in 2023. We expect such operations to continue to require significant management attention and financial resources to successfully grow.
We have expanded, and expect to continue to expand, our operations in international and emerging markets. International operations are a significant part of our business, accounting for approximately 53% of total revenues in 2024. We expect such operations to continue to require significant management attention and financial resources to successfully grow.
Any disruption in the supply of key components would seriously adversely affect our ability to meet committed delivery dates and could result in loss of customers, harm to our ability to attract new customers, or legal action.
Any disruption in the supply of key components would seriously adversely affect our ability to meet committed delivery dates and could result in loss of customers, harm to our ability to attract new customers, the payment of contractual liquidated damages or legal action.
Consolidation among our customers may cause delays or reductions in capital expenditure plans by such customers and/or increased competitive pricing pressures as the number of available customers declines and the relative bargaining power of customers increases in relation to suppliers. Any of these factors could materially adversely affect our business.
(2021). We expect this trend to continue. Consolidation among our customers may cause delays or reductions in capital expenditure plans by such customers and/or increased competitive pricing pressures as the number of available customers declines and the relative bargaining power of customers increases in relation to suppliers. Any of these factors could materially adversely affect our business.
An active trading market for the Series A Preferred Stock and warrants does not exist and may not develop. The Series A Preferred Stock and warrants have no established trading market and are not listed on any securities exchange, and we do not intend to list the Series A Preferred Stock and warrants on any securities exchange.
An active trading market for the warrants does not exist and may not develop. The warrants have no established trading market and are not listed on any securities exchange, and we do not intend to list the warrants on any securities exchange.
Our top five customers contributed approximately 34% of our revenue in 2023.
Our top five customers contributed approximately 34% of our revenue in 2024.
Risks Related to Our Indebtedness and Accounting Matters • The terms of our credit agreement could adversely affect our operating flexibility and pose risks of default, which would negatively impact our liquidity and operations. • The terms of the Series A Preferred Stock and warrants impose additional challenges on our ability to raise capital. • Impairment of our goodwill or intangible assets may require us to record a significant charge to earnings. • Failure to maintain appropriate internal controls in the future may adversely affect our stock price and our business.
Risks Related to Our Indebtedness and Accounting Matters ● The terms of our credit agreement could adversely affect our operating flexibility and pose risks of default, which would negatively impact our liquidity and operations. ● Impairment of our goodwill or intangible assets may require us to record a significant charge to earnings. ● Failure to maintain appropriate internal controls in the future may adversely affect our stock price and our business.
In addition, there continue to be hostilities between Israel and Hezbollah in Lebanon which resulted in rockets being fired into Israel, causing casualties and disruption of economic activities.
In addition, there continue to be hostilities between Israel and Hezbollah in Lebanon, as well as groups in Syria and Iran which resulted in rockets being fired into Israel, causing casualties and disruption of economic activities.
Our revenue is likely to decline in such circumstances, which may result in erosion of our profit margins and significant losses. 24 Moreover, economic conditions worldwide may contribute to slowdowns in the communications and networking industries, as well as to specific segments and markets in which we operate, particularly the telecom sector, resulting in, among other things, reduced demand for our products and services as a result of our customers choosing to refrain from building capital intensive networks; increased price competition for our products, not only from our competitors, but also as a consequence of customers disposing of unutilized products; and risk of excess and obsolete inventories.
Moreover, economic conditions worldwide may contribute to slowdowns in the communications and networking industries, as well as to specific segments and markets in which we operate, particularly the telecom sector, resulting in, among other things, reduced demand for our products and services as a result of our customers choosing to refrain from building or upgrading capital intensive networks; increased price competition for our products, not only from our competitors, but also as a consequence of customers disposing of unutilized products; and risk of excess and obsolete inventories.
If we enter into a merger or make acquisitions in the future, we could, among other things issue stock that would dilute existing stockholders' percentage ownership; incur significant debt or assume significant liabilities; materially reduce our cash; incur significant amortization expenses related to intangible assets; and/or incur large and immediate write-offs for in-process research and development and stock-based compensation.
If we enter into a merger or make acquisitions in the future, we could, among other things issue stock that would dilute existing stockholders’ percentage ownership; incur significant debt or assume significant liabilities; materially reduce our cash; incur significant amortization expenses related to intangible assets; and/or incur large and immediate write-offs for in-process research and development and stock-based compensation. 24 ​ Mergers, acquisitions and dispositions are inherently risky and subject to many factors outside of our control.
As a result, political, economic and military conditions in Israel may directly affect our business. In October 2023, Hamas conducted several terrorist attacks in Israel resulting in ongoing war across the country, forcing the closure of our offices in Israel for several days.
As a result, political, economic and military conditions in Israel may directly affect our business. In October 2023, Hamas conducted several terrorist attacks in Israel resulting in 26 ​ ongoing war across the country.
While we have developed plans to adjust manufacturing locations, if necessary, to avoid tariffs or other restrictions, any such tariffs could reduce customer demand for our products if our customers have to pay increased prices for our products as a result of such tariffs.
While some of the tariffs have been temporarily stayed, we continue to develop plans to adjust manufacturing locations, if necessary, to avoid tariffs or other restrictions, any such tariffs could reduce customer demand for our products if our customers have to pay increased prices for our products as a result of such tariffs.
During 2023, our closing stock price ranged from a high of $4.63 per share to a low of $1.86 per share. The stock market has experienced significant price and volume fluctuation with such volatility often unrelated to the operating performance of these companies.
During 2024, our closing stock price ranged from a high of $4.30 per share to a low of $2.56 per share. The stock market has experienced significant price and volume fluctuation with such volatility often unrelated to the operating performance of these companies.
Our current restructuring and any future restructuring, should it become necessary for us to further restructure our business due to market conditions or other factors that reduce the demand for our products and services, could adversely affect our ability to execute our business strategy in a number of ways, including through loss of key employees; diversion of management's attention from normal daily operations of the business; diminished ability to respond to customer requirements related to both products and services; disruption of our engineering and manufacturing processes, which could adversely affect our ability to introduce new products and to deliver products both on a timely basis and in accordance with the highest quality standards; and/or reduced ability to execute effectively internal administrative processes, including the implementation of key information technology programs.
Our current restructuring and any future restructuring, should it become necessary for us to further restructure our business due to market conditions or other factors that reduce the demand for our products and services, could adversely affect our ability to execute our business strategy in a number of ways, including through loss of key employees; potential work stoppages by our unionized employees; diversion of management’s attention from normal daily operations of the business; diminished ability to respond to customer requirements related to both products and services; disruption of our engineering and manufacturing processes, which could adversely affect our ability to introduce new products and to deliver products both on a timely basis and in accordance with the highest quality standards; and/or reduced ability to execute effectively internal administrative processes, including the implementation of key information technology programs. 20 ​ There can be no assurance that any restructuring actions we have taken in the past, or may take in the future, will improve our financial condition or results of operations.
Risks Related to Ownership of our Common Stock • The choice of forum provision in our Certificate of Incorporation could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or agents. • Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us more difficult, limit attempts by our stockholders to replace or remove our current management and may negatively affect the market price of our common stock. • Our Series A Preferred Stock has rights, preferences, and privileges that are not held by, and are preferential to, the rights of holders of our common stock. • The existence of the liquidation preference of the Series A Preferred Stock may reduce the value of our common stock. • The outstanding warrants are exercisable for common stock, which would increase the number of shares eligible for future resale in the public market and result in dilution to stockholders. • We may issue debt and equity securities that are senior to our common stock, which could negatively affect the value of our common stock.
Risks Related to Ownership of our Common Stock and Warrants ● The choice of forum provision in our Certificate of Incorporation could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or agents. ● Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us more difficult, limit attempts by our stockholders to replace or remove our current management and may negatively affect the market price of our common stock. ● The outstanding warrants are exercisable for common stock, which would increase the number of shares eligible for future resale in the public market and result in dilution to stockholders. ● We may issue debt and equity securities that are senior to our common stock, which could negatively affect the value of our common stock. ● The outstanding warrants are speculative in nature and may not have any value. ● Holders of our warrants will have no rights as a common stockholder until they acquire our common stock. ● The market price of shares of our common stock may experience volatility, which could cause holders of the warrants to incur substantial losses. ● An active trading market for the warrants does not exist and may not develop.
If the architectural shift does not occur, if it does not occur at the pace we predict, or if the products and services we have developed are not attractive to our customers after such shift takes place, our revenue could decline. We believe the telecommunications industry remains in the early stages of transitioning to the virtualization of networks.
If the architectural shift does not occur at the pace we predict, or if the products and services we have developed are not attractive to our customers after such shift takes place, our revenue could decline. We believe the telecommunications industry continues to transition to the virtualization of networks. However, our customers may adapt to such changes at varying rates.
In addition, tariff increases may have a similar impact on other suppliers and certain other customers, which could increase the negative impact on our operating results or future cash flows. We are exposed to fluctuations in currency exchange rates that could negatively impact our financial results and cash flows.
In addition, tariff increases may have a similar impact on other suppliers and certain other customers, which could increase the negative impact on our operating results or future cash flows.
We cannot predict or estimate the amount, timing or nature 32 of our future offerings and debt financings. Future offerings could reduce the value of our common stock and dilute the interests of our stockholders.
We cannot predict or estimate the amount, timing or nature of our future offerings and debt financings. Future offerings could reduce the value of our common stock and dilute the interests of our stockholders. 33 ​ The warrants are speculative in nature and may not have any value.
Goodwill is tested annually for impairment and, along with our intangible assets, is also reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.
As of December 31, 2024, we had $300.9 million of goodwill and $187.5 million of intangible assets. Goodwill is tested annually for impairment and, along with our intangible assets, is also reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.
If we are unable to generate sufficient cash flows in the future, and if availability under our current facility is not sufficient to support our operations, we may need to refinance our debt or obtain additional financing.
If we are unable to generate sufficient cash flows in the future, and if availability under our current facility is not sufficient to support our operations, we may need to refinance our debt or obtain additional financing. 31 ​ If our goodwill or intangible assets become impaired, we may be required to record a significant charge to earnings.
If we or our intermediaries fail to comply with the requirements of the FCPA and the UKBA, governmental authorities in the United States and the United Kingdom, as applicable, could seek to impose civil and/or criminal penalties, which could have a material adverse effect on our reputation, results of operations and the trading price of our common stock. 28 We are subject to governmental export and import controls that could subject us to liability, require a license from the U.S. government or impair our ability to compete in international markets.
If we or our intermediaries fail to comply with the requirements of the FCPA and the UKBA, governmental authorities in the United States and the United Kingdom, as applicable, could seek to impose civil and/or criminal penalties, which could have a material adverse effect on our reputation, results of operations and the trading price of our common stock.
From time to time, we are subject to litigation regarding intellectual property rights or other claims and have indemnification clauses in most of our customer contracts that may require us to indemnify customers against similar claims.
General Risk Factors Litigation and government investigations could result in significant legal expenses and settlement payments, fines or damage awards. From time to time, we are subject to litigation regarding intellectual property rights or other claims and have indemnification clauses in most of our customer contracts that may require us to indemnify customers against similar claims.
If these strategic partners fail to perform or choose not to cooperate with us on certain projects, in addition to the effects described above, we could experience loss of customers and market share, or fail to attract new customers.
If these strategic partners fail to perform or choose not to cooperate with us on certain projects, in addition to the effects described above, we could experience loss of customers and market share, or fail to attract new customers. 22 ​ If our contract manufacturers fail to perform, or if we change or consolidate manufacturers, we may fail to meet the demands of our customers and damage our customer relationships, which could materially adversely affect our business.
These provisions of our Certificate of Incorporation, our By-Laws or Delaware law could have the effect of delaying or deterring a change in control that some stockholders may consider beneficial and therefore could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock. 35
As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation law, which prevents some stockholders holding more than 15% of our outstanding common stock from engaging in certain business combinations without approval of the holders of substantially all of our outstanding common stock. 35 ​ These provisions of our Certificate of Incorporation, our By-Laws or Delaware law could have the effect of delaying or deterring a change in control that some stockholders may consider beneficial and therefore could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock.
Our failure to comply with these covenants may result in the declaration of an event of default, which could cause us to be unable to borrow under the credit facility or result in the acceleration of the maturity of indebtedness outstanding under the 2020 Credit Facility at such time.
However, if we should fail to comply with this covenant in future periods, it may result in the declaration of an event of default, which could cause us to be unable to borrow or result in the acceleration of the maturity of indebtedness outstanding under the 2024 Credit Facility at such time.
Further, consolidation has also occurred in the telecommunications supplier and vendor space, including the proposed acquisition of Juniper Networks by Hewlett Packard Enterprises (January 2024), the combination of ADTRAN, Inc. and ADVA (2022) and the acquisition of Acacia Communications, Inc. by Cisco Systems, Inc. (2021). We expect this trend to continue.
Further, consolidation has also occurred in the telecommunications supplier and vendor space, including the proposed acquisition by Alianza of the Metaswitch business held by Microsoft (December 2024), the proposed merger of Infinera with Nokia (June 2024), the proposed acquisition of Juniper Networks by Hewlett Packard Enterprises (January 2024), the combination of ADTRAN, Inc. and ADVA (2022) and the acquisition of Acacia Communications, Inc. by Cisco Systems, Inc.
Other events that we do not currently anticipate or that we currently deem immaterial may also affect our business, prospects, financial condition and results of operations.
Other events that we do not currently anticipate or that we currently deem immaterial may also affect our business, prospects, financial condition and results of operations. Additionally, investors should not interpret the disclosure of a risk to imply that the risk has not already materialized.
We evaluate and monitor individual customer payment capability in granting such open credit arrangements, maintain reserves that we believe are adequate to cover exposure for doubtful accounts, and in some cases, insure credit risk.
In our IP Optical Networks segment, some payment terms may be as long as 180 days or, in limited circumstances, even longer. We evaluate and monitor individual customer payment capability in granting such open credit arrangements, maintain reserves that we believe are adequate to cover exposure for doubtful accounts, and in some cases, insure credit risk.
Continuing turmoil in the geopolitical environment in many parts of the world may continue to put pressure on global economic conditions which in turn, could materially adversely affect our operating results. For example, following recent border clashes with China, India has enacted bans on the import of some goods manufactured in China.
Continuing turmoil in the geopolitical environment in many parts of the world may continue to put pressure on global economic conditions, which in turn could materially adversely affect our operating results.
The telecommunications industry, including many of our customers, has experienced consolidation, including, in the carrier space, the merger between Rogers Communications Inc. and Shaw Communications Inc. (April 2023), the acquisition of certain Lumen Technologies assets by Brightspeed (2022), the merger between T-Mobile US, Inc. and Sprint Corporation (2020) and the acquisition of Blue Face Ltd. by Comcast Corporation (2020).
(April 2023), the acquisition of certain Lumen Technologies assets by Brightspeed (2022), the merger between T-Mobile US, Inc. and Sprint Corporation (2020) and the acquisition of Blue Face Ltd. by Comcast Corporation (2020).
There is no guarantee that our financial results will not be adversely affected by currency exchange rate fluctuations. 26 Our use and reliance upon R&D resources in global locations may expose us to unanticipated costs and/or liabilities. We have R&D offices in various global locations, including the United States, Canada, India and Israel.
Our use and reliance upon R&D resources in global locations may expose us to unanticipated costs and/or liabilities. We have R&D offices in various global locations, including the United States, Canada, India and Israel.
Therefore, changes in the value of the U.S. dollar against other currencies will affect our revenue, income from operations, net income and the value of balance sheet items originally denominated in other currencies.
Therefore, changes in the value of the U.S. dollar against other currencies will affect our revenue, income from operations, net income and the value of balance sheet items originally denominated in other currencies. There is no guarantee that our financial results will not be adversely affected by currency exchange rate fluctuations.
Additionally, any unforeseen increases in the prices of components could reduce our profitability or force us to increase our prices, which could result in a loss of customers or harm our ability to attract new customers and could have a material adverse effect on our results of operations. 22 Our customer contracts may allow customers to reschedule delivery dates or cancel orders within certain time frames before shipment without penalty and outside those times frames with a penalty.
Additionally, any unforeseen increases in the prices of components could reduce our profitability or force us to increase our prices, which could result in a loss of customers or harm our ability to attract new customers and could have a material adverse effect on our results of operations.
Additionally, the compromise of our information systems, or the information systems of our third party providers and our customers, could lead to unauthorized tampering with our products.
Additionally, the compromise of our information systems, or the information systems of the U.S. government, financial markets, financial institutions, our third-party providers or our customers, could disrupt our normal business operations, and in some cases lead to unauthorized tampering with our products.
The maximum Consolidated Net Leverage Ratio covenant uses our EBITDA (calculated in accordance with the 2020 Credit Agreement) for the last 12 months (as of the testing date) to determine compliance.
In addition, we are required to comply with a maximum Consolidated Net Leverage Ratio (as defined in the 2024 Credit Facility) which is tested on a quarterly basis. The maximum Consolidated Net Leverage Ratio covenant uses our EBITDA (calculated in accordance with the 2024 Credit Facility) for the last 12 months (as of the testing date) to determine compliance.
Our Senior Secured Credit Facilities Credit Agreement, as amended, provides $475 million of commitments, comprised of a $400 million term loan (the “2020 Loan Facility”) and a $75 million revolving facility (the “2020 Revolving Credit Facility” and, together with the 2020 Loan Facility, the "2020 Credit Facility").
Our Senior Secured Credit Facilities Credit Agreement, provides $385 million of commitments, comprised of a $350 million term loan and a $35 million revolving facility (the “2024 Credit Facility”).
Mergers, acquisitions and dispositions are inherently risky and subject to many factors outside of our control. Therefore, we cannot be certain that we would be successful in overcoming problems in connection with our past or future acquisitions. Our inability to do so could significantly harm our business, revenue, and results of operations.
Therefore, we cannot be certain that we would be successful in overcoming problems in connection with our past or future acquisitions. Our inability to do so could significantly harm our business, revenue, and results of operations. Failure to hire and retain key personnel could negatively impact our ability to meet our business objectives and impair our future growth.
In addition, we may not have sufficient funds available for 29 repayment or we may not have the ability to borrow or obtain sufficient funds to replace the indebtedness on terms acceptable to us, or at all.
In addition, we may not have sufficient funds available for repayment or we may not have the ability to borrow or obtain sufficient funds to replace the indebtedness on terms acceptable to us, or at all. We cannot be sure that our current cash and available borrowings under our 2024 Credit Facility will be sufficient to meet our future needs.
These privacy laws impose onerous accountability obligations requiring data controllers and processors to maintain a record of their data processing and implement policies as part of its mandated privacy governance framework.
For example, the General Data Protection Regulation has caused more stringent data protection requirements in the U.K. and the European Union, which has adopted similar regulations. These privacy laws impose onerous accountability obligations requiring data controllers and processors to maintain a record of their data processing and implement policies as part of its mandated privacy governance framework.
In response to the Hamas terrorist attacks in October 2023, a number of our employees in Israel have been activated for military duty and we expect that additional employees may also be activated if the war in Israel continues or expands into additional geographic areas.
In response to the Hamas terrorist attacks in October 2023, a number of our employees in Israel have been activated for military duty.
Due to our reliance on significant customers, we are dependent on the continued financial strength of our customers. If one or more of our significant customers experience financial difficulties, it could result in uncollectible accounts receivable and our loss of significant customers and anticipated revenue.
If one or more of our significant customers experience financial difficulties, it could result in uncollectible accounts receivable and our loss of significant customers and anticipated revenue. Most of our sales are on an open credit basis, with typical payment terms of 30 to 90 days.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeBased on the gap assessment, for example, we have taken a number of actions intended to reduce our cybersecurity risk, including implementing network segmentation, enhancing our email and end-point security programs and improving our web application filtering programs.
Biggest changeBased on the gap assessment, for example, we have taken a number of actions intended to reduce our cybersecurity risk, including enhancing our email and end-point security programs, implementing a single dashboard for security monitoring and improving our web application filtering programs.
In addition, if any cybersecurity incident is determined under our incident response policy to pose a risk in excess of an identified threshold (as set forth in the policy), our Chief Legal Officer will promptly notify the Audit Committee regarding the incident.
In addition, if any cybersecurity incident is determined under our incident response policy to pose a risk in excess of an identified threshold (as set forth in the policy), our 36 ​ Chief Legal Officer will promptly notify the Audit Committee regarding the incident.
We are focused on the continuous improvement of key processes such as asset management, access control, vulnerability management, incident response, and third-party risk management. We also maintain business continuity management certification to ensure the ongoing review of our business continuity, disaster recovery and incident management processes, including as a result of a cybersecurity breach.
We are focused on the continuous improvement of key processes such as data security, asset management, access control, vulnerability management, incident response, and third-party risk management. We also maintain business continuity management certification to ensure the ongoing review of our business continuity, disaster recovery and incident management processes, including as a result of a cybersecurity breach.
He has over 25 years of experience in the IT area including over eight years overseeing IT cybersecurity, cybersecurity roadmaps and IT general controls. During his career he has overseen initial ISO 27001 certifications, as well as the implementation of over 30 cybersecurity platforms.
He has over 25 years of experience in the IT area including over nine years overseeing IT cybersecurity, cybersecurity roadmaps and IT general controls. During his career he has overseen initial ISO 27001 certifications, as well as the implementation of over 30 cybersecurity platforms.
She is a Certified Information Security Manager, has operated her own security firm, and has over 19 years of 36 cybersecurity experience, including her time as a US Navy Operations and Training Manager. Our CIO has held that position (or Head of IT) at Ribbon for over 6 years.
She is a Certified Information Security Manager, has operated her own security firm, and has over 20 years of cybersecurity experience, including her time as a US Navy Operations and Training Manager. Our CIO has held that position (or Head of IT) at Ribbon for over seven years.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also lease smaller spaces that are each under 50,000 square feet for our staff in various countries around the world in sales, marketing, R&D/engineering, customer services and support, as well as for warehouse purposes. We believe our remaining facilities will be adequate for our current needs and that suitable additional space will be available as needed.
Biggest changeA new lease was signed in 2023 for a building under construction in Petah Tikva. ​ We also lease smaller spaces that are each under 50,000 square feet for our staff in various countries around the world in sales, marketing, R&D/engineering, customer services and support, as well as for warehouse purposes.
As of December 31, 2023, we maintained the following principal facilities: Location Location Lease expiration Plano, Texas (a) Corporate headquarters, sales, marketing, research and development/engineering, customer support, general and administrative September 2032 Westford, Massachusetts Research and development, customer support, general and administrative August 2028 Ottawa, Canada (b) Research and development/engineering, customer support, general and administrative December 2029 Petah Tikva, Israel (Main Campus) (b)(c) Research and development/engineering, sales and marketing, customer support, general and administrative January 2025 Petah Tikva, Israel (Kshatot) (b)(c) Service, research and development/engineering, supply chain January 2025 Bangalore, India (Delta) (d) Research and development/engineering, customer support, general and administrative October 2024 Bangalore, India (Alpha) Research and development/engineering, customer support, general and administrative December 2028 (a) A portion of this facility was not in use at December 31, 2023 and is being marketed for sublease.
As of December 31, 2024, we maintained the following principal facilities: ​ ​ ​ ​ ​ ​ Location Location Lease expiration Plano, Texas (a) Corporate headquarters, sales, marketing, research and development/engineering, customer support, general and administrative September 2032 Westford, Massachusetts (a) Research and development, customer support, general and administrative August 2028 Ottawa, Canada (b) Research and development/engineering, customer support, general and administrative December 2029 Petah Tikva, Israel (Main Campus) (c)(d) Research and development/engineering, sales and marketing, customer support, general and administrative ​ March 2025 Petah Tikva, Israel (Kshatot) (c)(d) Service, research and development/engineering, supply chain January 2025 Bangalore, India (Delta) Research and development/engineering, customer support, general and administrative December 2034 Bangalore, India (Alpha) Research and development/engineering, customer support, general and administrative December 2028 (a) A portion of this facility was not in use at December 31, 2024 and is being marketed for sublease.
(b) A portion of this facility was not in use at December 31, 2023 and some of the unused space is being subleased. (c) We plan to consolidate and relocate our office space in Israel. A new lease was signed in 2023 for a building under construction in Petah Tikva.
(b) A portion of this facility was not in use at December 31, 2024 and some of the unused space is being subleased. (c) A portion of this facility was not in use at December 31, 2024. (d) We plan to consolidate and relocate our office space in Israel.
Removed
Buildout of the space to our specifications will begin in mid 2024 with occupancy expected in 2025. (d) We plan to renew this lease through January 2028.
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We believe our remaining facilities will be adequate for our current needs and that suitable additional space will be available as needed.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeOur material legal proceedings are described in Part II, Item 8 of this Form 10-K in the Notes to Consolidated Financial Statements in Note 26, " Commitments and Contingencies " under the heading "Contingencies". The outcome of litigation is inherently uncertain.
Biggest changeOur material legal proceedings are described in Part II, Item 8 of this Form 10-K in the Notes to Consolidated Financial Statements in Note 26, “ Commitments and Contingencies ” under the heading “Contingencies”. 37 ​ The outcome of litigation is inherently uncertain.
We settled certain matters during the fourth quarter of 2023 that did not individually or in the aggregate have a material impact on our financial condition or operating results. 37
We settled certain matters during the fourth quarter of 2024 that did not individually or in the aggregate have a material impact on our financial condition or operating results.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThis graph is not deemed to be "filed" with the SEC or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and should not be deemed to be incorporated by reference into any of our prior or subsequent filings under the Securities Act of 1933, as amended, or the Exchange Act.
Biggest changeThis graph is not deemed to be “filed” with the SEC or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and should not be deemed to be incorporated by reference into any of our prior or subsequent filings under the Securities Act of 1933, as amended, or the Exchange Act. 39 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2019 ​ 2020 ​ 2021 ​ 2022 ​ 2023 ​ 2024 Ribbon Communications Inc. ​ $ 100.00 ​ $ 211.61 ​ $ 195.16 ​ $ 90.00 ​ $ 93.55 ​ $ 134.19 Nasdaq Composite ​ $ 100.00 ​ $ 144.92 ​ $ 177.06 ​ $ 119.45 ​ $ 172.77 ​ $ 223.87 Russell 2000 ​ $ 100.00 ​ $ 119.96 ​ $ 137.74 ​ $ 109.59 ​ $ 128.14 ​ $ 142.93 Nasdaq Telecommunications ​ $ 100.00 ​ $ 110.08 ​ $ 112.44 ​ $ 82.21 ​ $ 90.96 ​ $ 103.21 ​ ​
The comparison assumes an investment of $100 on December 31, 2018 in our common stock and in each of the indices and, in each case, assumes reinvestment of all dividends, if any. The performance shown is not necessarily indicative of future performance.
The comparison assumes an investment of $100 on December 31, 2019 in our common stock and in each of the indices and, in each case, assumes reinvestment of all dividends, if any. The performance shown is not necessarily indicative of future performance.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on The Nasdaq Global Select Market under the symbol "RBBN." Holders At February 23, 2024 , there were approximately 356 holders of record of our common stock. Recent Sales of Unregistered Securities None.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on The Nasdaq Global Select Market under the symbol “RBBN.” Holders At February 24, 2025, there were approximately 340 holders of record of our common stock. Recent Sales of Unregistered Securities None.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers The following table summarizes repurchases of our common stock during the fourth quarter of 2023: Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs October 1, 2023 to October 31, 2023 128,636 $ 2.15 — $ — November 1, 2023 to November 30, 2023 29,535 $ 2.05 — $ — December 1, 2023 to December 31, 2023 88,882 $ 2.60 — $ — Total 247,053 $ 2.30 — $ — (1) Upon vesting of restricted stock awards, certain of our employees may return to us a portion of the newly vested shares to satisfy the tax withholding obligations that arise in connection with such vesting.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers The following table summarizes repurchases of our common stock during the fourth quarter of 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Approximate Dollar ​ ​ ​ ​ ​ ​ ​ Total Number of ​ Value of Shares ​ ​ ​ ​ ​ ​ ​ Shares Purchased ​ that May ​ ​ ​ ​ ​ ​ ​ as Part of ​ Yet be Purchased ​ ​ Total Number ​ Average ​ Publicly ​ Under ​ ​ of Shares ​ Price Paid ​ Announced Plans ​ the Plans Period Purchased (1) per Share or Programs or Programs October 1, 2024 to October 31, 2024 ​ 296,525 ​ $ 3.45 ​ — ​ $ — November 1, 2024 to November 30, 2024 ​ 11,792 ​ $ 3.93 ​ — ​ $ — December 1, 2024 to December 31, 2024 ​ 49,120 ​ $ 4.09 ​ — ​ $ — Total ​ 357,437 ​ $ 3.56 ​ — ​ $ — (1) Upon vesting of restricted stock awards, certain of our employees may return to us a portion of the newly vested shares to satisfy the tax withholding obligations that arise in connection with such vesting.
During the fourth quarter of 2023, 247,053 shares of restricted stock were returned to us by employees to satisfy tax withholding obligations arising in connection with vesting of restricted stock, which shares are included in this column. 39 Performance Graph The following performance graph compares the cumulative total return to stockholders for our common stock for the period from December 31, 2018 through December 31, 2023 with the cumulative total return over the same period on the Nasdaq Composite Index, the Nasdaq Telecommunications Index and the Russell 2000.
Performance Graph The following performance graph compares the cumulative total return to stockholders for our common stock for the period from December 31, 2019 through December 31, 2024 with the cumulative total return over the same period on the Nasdaq Composite Index, the Nasdaq Telecommunications Index and the Russell 2000.
Removed
December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 Ribbon Communications Inc. $ 100.00 $ 64.32 $ 136.10 $ 125.52 $ 57.88 $ 60.17 Nasdaq Composite $ 100.00 $ 136.69 $ 198.10 $ 242.03 $ 163.28 $ 236.17 Russell 2000 $ 100.00 $ 125.52 $ 150.58 $ 172.90 $ 137.56 $ 160.85 Nasdaq Telecommunications $ 100.00 $ 118.74 $ 130.71 $ 133.51 $ 97.62 $ 108.00
Added
During the fourth quarter of 2024, 357,437 shares of restricted stock were returned to us by employees to satisfy tax withholding obligations arising in connection with vesting of restricted stock, which shares are included in this column.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOur cost of revenue, gross profit and gross margin for the years ended December 31, 2023 and 2022 were as follows (in thousands, except percentages): Year ended December 31, Increase (decrease) from prior year 2023 2022 $ % Cost of revenue: Product $ 250,609 $ 245,145 $ 5,464 2.2 % Service 139,357 142,137 (2,780) (2.0) % Amortization of acquired technology 28,290 31,542 (3,252) (10.3) % Total cost of revenue $ 418,256 $ 418,824 $ (568) (0.1) % Gross profit $ 408,083 $ 400,936 $ 7,147 1.8 % Gross margin 49.4 % 48.9 % Our segment cost of revenue, gross profit and gross margin for the years ended December 31, 2023 and 2022 were as follows (in thousands, except percentages): Year ended December 31, 2023 Year ended December 31, 2022 Cloud and Edge IP Optical Networks Total Cloud and Edge IP Optical Networks Total Product $ 72,081 $ 178,528 $ 250,609 $ 80,570 $ 164,575 $ 245,145 Service 92,644 46,713 139,357 98,799 43,338 142,137 Amortization of acquired technology 12,904 15,386 28,290 18,471 13,071 31,542 Total cost of revenue $ 177,629 $ 240,627 $ 418,256 $ 197,840 $ 220,984 $ 418,824 Gross profit $ 300,018 $ 108,065 $ 408,083 $ 310,297 $ 90,639 $ 400,936 Gross margin 62.8 % 31.0 % 49.4 % 61.1 % 29.1 % 48.9 % Our gross margin was slightly higher with a 0.5 percentage point increase in 2023 compared to 2022.
Biggest changeOur cost of revenue, gross profit and gross margin for the years ended December 31, 2024 and 2023 were as follows (in thousands, except percentages): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended Increase/(decrease) ​ ​ December 31, ​ from prior year ​ ​ 2024 2023 $ % Cost of revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Product ​ $ 228,527 ​ $ 250,609 ​ $ (22,082) ​ (8.8) % Service ​ 140,949 ​ 139,357 ​ 1,592 ​ 1.1 % Amortization of acquired technology ​ 24,893 ​ 28,290 ​ (3,397) ​ (12.0) % Total cost of revenue ​ $ 394,369 ​ $ 418,256 ​ $ (23,887) ​ (5.7) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross profit ​ $ 439,512 ​ $ 408,083 ​ $ 31,429 ​ 7.7 % Gross margin ​ ​ 52.7 % ​ 49.4 % ​ ​ ​ ​ ​ 50 ​ Our segment cost of revenue, gross profit and gross margin for the years ended December 31, 2024 and 2023 were as follows (in thousands, except percentages): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended Year ended ​ ​ December 31, 2024 ​ December 31, 2023 ​ ​ ​ Cloud and ​ IP Optical ​ ​ ​ ​ Cloud and ​ IP Optical ​ ​ ​ ​ ​ Edge Networks Total Edge Networks Total ​ Product ​ $ 73,684 ​ $ 154,843 ​ $ 228,527 ​ $ 72,081 ​ $ 178,528 ​ $ 250,609 ​ Service ​ ​ 94,579 ​ ​ 46,370 ​ ​ 140,949 ​ ​ 92,644 ​ ​ 46,713 ​ ​ 139,357 ​ Amortization of acquired technology ​ 7,677 ​ 17,216 ​ 24,893 ​ 12,904 ​ 15,386 ​ 28,290 ​ Total cost of revenue ​ $ 175,940 ​ $ 218,429 ​ $ 394,369 ​ $ 177,629 ​ $ 240,627 ​ $ 418,256 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross profit ​ $ 329,217 ​ $ 110,295 ​ $ 439,512 ​ $ 300,018 ​ $ 108,065 ​ $ 408,083 ​ Gross margin ​ ​ 65.2 % ​ 33.6 % ​ 52.7 % ​ 62.8 % ​ 31 % ​ 49.4 % ​ Our gross margin was 3.3 percentage points higher in 2024 compared to 2023.
On March 24, 2023, we received $9.4 million, consisting of $0.4 million of interest and $9.0 million for the sale of $170 million of the $340 million notional amount of our interest rate swap back to our counterparty, reducing the notional amount to $170 million.
On March 24, 2023, we received $9.4 million, consisting of $0.4 million of interest and $9.0 million for the sale of $170 million of our $340 million notional amount interest rate swap back to our counterparty, reducing the notional amount to $170 million.
While we have business continuity plans in place to address the military call-ups, it could affect the timing of projects in the short-term as the work is shifted to other team members both inside and outside of Israel. Further, the U.S. and other European countries have imposed sanctions and trade restrictions against Russia in connection with the war in Ukraine.
While we have business continuity plans in place to address the military call-ups, it could affect the timing of projects in the short-term as the work is shifted to other team members both inside and outside of Israel. The U.S. and other European countries have imposed sanctions and trade restrictions against Russia in connection with the war in Ukraine.
The preparation of these financial statements requires us to make 43 estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. We base our estimates and judgments on historical experience, knowledge of current conditions and beliefs of what could occur in the future given available information.
The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. We base our estimates and judgments on historical experience, knowledge of current conditions and beliefs of what could occur in the future given available information.
In connection with the 2022 Restructuring Plan, we recorded restructuring and related expense of $6.3 million in 2023, comprised of $5.3 million for variable and other facilities-related costs and $1.0 million for accelerated amortization of lease assets no longer being used with no ability or intent to sublease.
In 2023, we recorded $6.3 million of expense for the 2022 Restructuring Plan, comprised of $5.3 million for variable and other facilities-related costs, and $1.0 million for accelerated amortization of lease assets no longer being used with no ability or intent to sublease.
Our stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which is generally the vesting period. 45 We use the Black-Scholes valuation model for estimating the fair value on the date of grant of employee stock options.
Our stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which is generally the vesting period. We use the Black-Scholes valuation model for estimating the fair value on the date of grant of employee stock options.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with our financial statements and the related notes included in Item 8, "Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with our financial statements and the related notes included in Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.
The portion of the gain in Accumulated other comprehensive income related to the term loan debt prepaid on the date of the final sale of our swap totaled $7.3 million and was released into earnings immediately as Other expense, net.
The portion of the gain in accumulated other comprehensive (loss) income related to the term loan debt prepaid on the date of the final sale of our swap totaled $7.3 million and was released into earnings immediately as Other expense, net.
On August 16, 2022, we sold another $30 million of the notional amount of our interest rate swap back to our counterparty for $1.6 million, reducing the notional amount to $340 million, which approximated the term loan debt then outstanding.
On August 16, 2022, we sold another $30 million of the notional amount of our interest 55 ​ rate swap back to our counterparty for $1.6 million, reducing the notional amount to $340 million, which approximated the term loan debt then outstanding.
We recorded restructuring and related expense of $16.2 million in 2023, comprised of $9.9 million for severance and related costs, and $6.3 million for variable and other facilities-related costs, including $1.0 million of net expense for the accelerated amortization of lease assets.
In 2023, we recorded restructuring and related expense of $16.2 52 ​ million, comprised of $9.9 million for severance and related costs, and $6.3 million for variable and other facilities-related costs, including $1.0 million of net expense for the accelerated amortization of lease assets.
Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. 44 Judgment is required to determine the SSP for each distinct performance obligation.
Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Judgment is required to determine the SSP for each distinct performance obligation.
Our operating activities provided $17 million of cash in 2023, primarily resulting from our net loss, which was more than offset by certain non-cash expenses, such as amortization of intangible assets, stock-based compensation, depreciation and amortization of property and equipment, amortization of debt issuance costs and the change in the fair value of our preferred stock and warrant liabilities, including dividends on our preferred stock, partially offset by deferred income taxes and the gain on the sale of our interest rate swap.
Our operating activities provided $17.1 million of cash in 2023, primarily resulting from our net loss, which was more than offset by certain non-cash expenses, such as amortization of intangible assets, stock-based compensation, depreciation and amortization of property and equipment, amortization of debt issuance costs and the change in the fair value of our preferred stock and warrant liabilities, including dividends on our preferred stock, partially offset by deferred income taxes and the gain 56 ​ on the sale of our interest rate swap.
On March 27, 54 2023, we received $9.8 million, consisting of $0.4 million of interest and $9.4 million for the sale of the remaining $170 million of our interest rate swap back to our counterparty.
On March 27, 2023, we received $9.8 million, consisting of $0.4 million of interest and $9.4 million for the sale of the remaining $170 million of our interest rate swap back to our counterparty.
We are subject to various legal claims. We reserve for legal contingencies and legal fees when the amounts are probable and reasonably estimable. Stock-Based Compensation.
We are subject to various legal claims. We reserve for legal contingencies and legal fees when the amounts are probable and reasonably estimable. 45 ​ Stock-Based Compensation.
During 2023 and 2022, we performed an analysis to determine if, based on all available evidence, we considered it more likely than not that some portion or all of the recorded deferred tax assets will not be realized in a future period.
During 2024 and 2023, we performed an analysis to determine if, based on all available evidence, we considered it more likely than not that some portion or all of the recorded deferred tax assets will not be realized in a future period.
As a result of our evaluations, in 2023, for the U.S. deferred tax assets, we concluded that deferred tax assets are generally realizable, with the exception of certain federal and state net operating loss carryforwards, as well as certain tax credits, that are not anticipated to be utilized.
As a result of our evaluations, in 2024, for the U.S. deferred tax assets, we concluded that deferred tax assets are generally realizable, with the exception of certain federal and state net operating loss carryforwards, as well as certain tax credits, that are not anticipated to be utilized.
If we elect to repatriate all of the funds held by our non-U.S. subsidiaries as of December 31, 2023, we do not believe that the amounts of potential withholding taxes that would arise from the repatriation would have a material effect on our liquidity.
If we elect to repatriate all of the funds held by our non-U.S. subsidiaries as of December 31, 2024, we do not believe that the amounts of potential withholding taxes that would arise from the repatriation would have a material effect on our liquidity.
In addition, we received $53 million of proceeds from the issuance of the Preferred Stock and Warrants in the Private Placement.
In addition, we received $53.4 million of proceeds from the issuance of the Preferred Stock and Warrants in the Private Placement.
Accordingly, we are required to recognize deferred taxes for 2023 on the outside basis differences related to the foreign subsidiaries, the largest of these differences being undistributed earnings. 47 We assess all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by relevant taxing authorities.
Accordingly, we are required to recognize deferred taxes for 2024 on the outside basis differences related to the foreign subsidiaries, the largest of these differences being undistributed earnings. We assess all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by relevant taxing authorities.
Accounting for Income Taxes. Our provision for income taxes is comprised of both current taxes and deferred taxes. The current income tax provision is generally calculated as the estimated taxes payable or refundable on tax returns to be filed for the year ended December 31, 2023.
Accounting for Income Taxes. Our provision for income taxes is comprised of both current taxes and deferred taxes. The current income tax provision is generally calculated as the estimated taxes payable or refundable on tax returns to be filed for the year ended December 31, 2024.
We recorded other expense, net, aggregating $3.8 million in 2023, primarily comprised of the $5.3 million fair value adjustment of our Preferred Stock and Warrants, including dividends on the Preferred Stock, and $3.5 million of costs incurred in the Private Placement, partially offset by the gain of $7.3 million recognized from Accumulated other comprehensive income in connection with the sale of our interest rate swap .
We recorded other expense, net, aggregating $3.8 million in 2023, primarily comprised of $5.3 million fair value adjustments for our Preferred Stock and Warrants, including dividends on the Preferred Stock, and $3.5 million of costs incurred in the Private Placement, partially offset by the gain of $7.3 million recognized from Accumulated other comprehensive income in connection with the sale of our interest rate swap.
In 2022, we recorded $10.2 million of expense for the 2022 Restructuring Plan, comprised of $3.3 million for variable and other facilities-related costs, $1.6 million for accelerated amortization of lease assets no longer being used with no ability or intent to sublease, and $5.3 million for severance and related costs for approximately 70 employees.
In 2022, we recorded $10.2 million of expense for the 2022 Restructuring Plan, comprised of $3.3 million for variable and other facilities-related costs, $1.6 million for accelerated amortization of lease assets no longer being used with no ability or intent to sublease, and $5.3 million for severance and related costs.
In conjunction with the Sixth Amendment, we made a $75 million prepayment that was applied to the final payment due upon maturity in March 2025 of approximately $200.3 million. The $75 million prepayment was almost entirely funded with the net proceeds from the Private Placement and the sales of our interest rate swap.
In conjunction with the Sixth Amendment, we made a $75 million prepayment that was applied to the final payment due upon maturity in March 2025. The $75 million prepayment was almost entirely funded with the net proceeds from the Private Placement and the sales of our interest rate swap.
Judgments concerning the recognition and measurement of a tax benefit might change as new information becomes available. Results of Operations Years Ended December 31, 2023 and 2022 Revenue.
Judgments concerning the recognition and measurement of a tax benefit might change as new information becomes available. Results of Operations Years Ended December 31, 2024 and 2023 Revenue.
The Sixth Amendment, among other things, increased the Maximum Consolidated Net Leverage Ratio (as defined in the 2020 Credit Facility), with the first, second and third quarters of 2023 increasing to 4.50:1.00 and then decreasing to 4.25:1.00 and 4.00:1.00 in the fourth quarter of 2023 and the first quarter of 2024, respectively.
The Sixth Amendment, among other things, increased the Maximum Consolidated Net Leverage Ratio (as defined in the 2020 Credit Facility), with the first, second and third quarters of 2023 increasing to 4.50:1.00. In the fourth quarter of 2023 and the first quarter of 2024, the Maximum Consolidated Net Leverage Ratio declined to 4.25:1.00 and 4.00:1.00, respectively.
We write down our evaluation equipment at the time of shipment to our customers, as it is not probable that the inventory value will be realizable. Investments . We received debentures (the "Debentures") and warrants (the "AVCT Warrants") as sale consideration in connection with our December 1, 2020 sale of the Kandy Communications Business to American Virtual Cloud Technologies, Inc.
We write down our evaluation equipment at the time of shipment to our customers, as it is not probable that the inventory value will be realizable. Investments . We received debentures (the “Debentures”) and warrants (the “AVCT Warrants”) as sale consideration in connection with our December 1, 2020 sale of the Kandy Communications Business to American Virtual Cloud Technologies, Inc.
In connection with the conversion of the Debentures to the Debenture Shares, we elected to use the fair value option to account for its equity investment in AVCT as permitted under Accounting Standards Codification ("ASC") 825, Financial Instruments ("ASC 825"), which then refers to ASC 820, Fair Value Measurement ("ASC 820") to provide the fair value framework for valuing such investments.
In connection with the conversion of the Debentures to the Debenture Shares, we elected to use the fair value option to account for its equity investment in AVCT as permitted under Accounting Standards Codification (“ASC”) 825, Financial Instruments (“ASC 825”), which then refers to ASC 820, Fair Value Measurement (“ASC 820”) to provide the fair value framework for valuing such investments.
Upon determination by the Compensation Committee of the number of shares that will be received upon vesting, such number of shares becomes fixed and the unamortized expense is recorded through the remainder of the service period, at which time any performance-based stock units earned will vest pending each executive's continued employment with us through that date.
Upon determination by the Compensation Committee of the number of shares that will be received upon vesting, such number of shares becomes fixed and the unamortized expense is recorded through the remainder of the service period, at which time any performance-based stock units earned will vest pending each employee’s continuing employment with us through that date.
During the years ended December 31, 2023 and 2022, such a derivative was used to hedge the variable cash flows associated with the outstanding borrowings under the 2020 Credit Facility and we have accounted for this derivative as an effective hedge until the final portion of the swap was sold on March 27, 2023.
During the year ended December 31, 2023, such a derivative was used to hedge the variable cash flows associated with the outstanding borrowings under the 2020 Credit Facility and we accounted for this derivative as an effective hedge until the final portion of the swap was sold on March 27, 2023.
The Fifth 53 Amendment allowed us to incur junior secured or unsecured debt in an amount no less than $50 million, subject to certain conditions, including the requirement that 50% of the aggregate amount of such incurred debt (net of certain costs, fees and other amounts) must be applied to prepay the 2020 Credit Facility, and compliance with certain leverage ratio-based covenant exceptions.
The 2020 Credit Facility, as amended, allowed us to incur junior secured or unsecured debt in an amount no less than $50 million, subject to certain conditions, including the requirement that 50% of the aggregate amount of such incurred debt (net of certain costs, fees and other amounts) must be applied to prepay the 2020 Credit Facility and compliance with certain leverage ratio-based covenant exceptions.
We assess each valuation methodology based upon the relevance and availability of the data at the time the valuation is performed and the methodologies are weighted appropriately. Based upon the completion of our 2023 and 2022 annual test for goodwill impairment, we determined that there was no impairment of goodwill for either of our reporting units.
We assess each valuation methodology based upon the relevance and availability of the data at the time the valuation is performed and the methodologies are weighted appropriately. Based upon the completion of our 2024, 2023, and 2022 annual tests for goodwill impairment, we determined that there was no impairment of goodwill for either of our reporting units. Leases .
Private Placement On March 28, 2023, we issued 55,000 shares of newly designated Series A Preferred Stock (the "Preferred Stock") to investors in a private placement offering at a price of $970 per share, along with 4.9 million warrants (the "Warrants") to purchase shares of our common stock, par value $0.0001 per share (the "Private Placement"), at an exercise price of $3.77 per share.
Private Placement On March 28, 2023, we issued 55,000 shares of newly designated Series A Preferred Stock (the “Preferred Stock”) to investors in a private placement offering at a price of $970 per share, along with 4.9 million warrants (the “Warrants”) to purchase shares of our common stock, par value $0.0001 per share (the “Private Placement”), at an exercise price of $3.77 per share.
Operating Segments Our CODM assesses our performance based on the performance of two separate organizations within Ribbon, the Cloud and Edge operating segment ("Cloud and Edge") and the IP Optical Networks operating segment ("IP Optical Networks"). For additional details regarding our operating segments, see Note 18 - Operating Segment Information to our consolidated financial statements.
Operating Segments Our CODM assesses our performance based on the performance of two separate organizations within Ribbon, the Cloud and Edge operating segment (“Cloud and Edge”) and the IP Optical Networks operating segment (“IP Optical Networks”). For additional details regarding our operating segments, see Note 18 - Operating Segment Information to our consolidated financial statements.
The rate at which we consume cash is dependent on the cash needs of our future operations, including our contractual obligations at December 31, 2023, primarily comprised of our debt principal and interest obligations as described above, and our operating lease and purchase obligations.
The rate at which we consume cash is dependent upon the cash needs of our future operations, including our contractual obligations at December 31, 2024, primarily comprised of our debt principal and interest obligations as described above, and our operating lease and purchase obligations.
We anticipate that we will record nominal future expense for severance in connection with the 2023 Restructuring Plan. In February 2022, our Board of Directors approved the 2022 Restructuring Plan to streamline our operations in order to support our investment in critical growth areas.
We anticipate that we will record nominal future expense for severance in connection with the 2023 Restructuring Plan. In February 2022, our Board of Directors approved a strategic restructuring program (the “2022 Restructuring Plan”) to streamline our operations in order to support our investment in critical growth areas.
Under the cost-to-cost measure of progress, the progress toward completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation.
The progress toward completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation.
Accordingly, we have maintained a valuation allowance on our U.S. deferred tax assets of $ 23.9 million. As a result of our evaluations for Israel, we maintained a full valuation allowance against our net deferred tax assets in Israel.
Accordingly, we have maintained a valuation allowance on our U.S. deferred tax assets of $18.6 million. As a result of our evaluations for Israel, we maintained a full valuation allowance against our net deferred tax assets in Israel.
Costs to fulfill these obligations include internal labor as well as subcontractor costs. We offer customer training courses, for which the related revenue is typically recognized as the training services are performed. Our contracts with customers often include promises to transfer multiple products and services to the customer.
Costs to fulfill these obligations can include internal labor as well as subcontractor costs. ​ We offer customer training courses, for which the related revenue is typically recognized over the period the training services are performed, typically over one to five days. Our contracts with customers often include promises to transfer multiple products and services to the customer.
Based on our current expectations, we believe our current cash balance, the cash generated from our operations, and borrowings available under the 2020 Credit Facility, will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for at least twelve months from the date of issuance of these financial statements.
Based on our current expectations, we believe our current cash balances and available borrowings under the 2024 Credit Facility will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for at least twelve months from the date of issuance of these financial statements.
We continue to see near-term impacts on our business due to inflation, including ongoing global price pressures driving up energy prices, component costs, freight premiums, and other operating costs above normal rates.
We continue to see near-term impacts on our business due to inflation, including ongoing global price pressures resulting in higher energy prices, component costs, freight premiums, and other operating costs above normal rates.
Although headline inflation in the United States and Europe appears to have reached a peak , core inflation (excluding food and energy prices) remains elevated and is a source of continued cost pressure on businesses and households.
Although headline inflation in the United States and Europe appears to be easing, core inflation (excluding food and energy prices) remains elevated and is a source of continued cost pressure on businesses and households.
The gain in Accumulated other comprehensive income related to the $60 million notional amount sold of $3.1 million is being released into earnings on a straight-line basis over the remaining term of the 2020 Credit Facility as a decrease to interest expense, the amortization of which totaled $0.9 million for the year ended December 31, 2023.
The gain in accumulated other comprehensive (loss) income related to the $60 million notional amount sold of $3.1 million was being released into earnings on a straight line basis over the remaining term of the 2020 Credit Facility as a decrease to interest expense, the amortization of which totaled $0.4 million and $0.9 million for the years ended December 31, 2024 and 2023, respectively.
We had cash held by our non-U.S. subsidiaries aggregating approximately $16 million and $15 million at December 31, 2023 and 2022, respectively.
We had cash held by our non-U.S. subsidiaries aggregating approximately $18 million and $16 million at December 31, 2024 and 2023, respectively.
We anticipate devoting substantial capital resources to continue our research and development efforts, to maintain our sales, support and marketing, and for other general corporate activities. We further believe that our financial resources, along with managing discretionary expenses, will allow us to manage the ongoing impact of inflation and the supply chain disruptions on our business operations.
We anticipate devoting substantial capital resources to continue our R&D efforts, to maintain our sales, support and marketing, and for other general corporate activities. We believe that our financial resources, along with managing discretionary expenses, will allow us to manage the ongoing impact of inflation on our business operations.
The portion of the gain in Accumulated other comprehensive income related to our remaining term loan debt balance totaled $12.0 million and is being released into earnings on a straight-line basis over the remaining term of the 2020 Credit Facility as a decrease to interest expense, the amortization of which was $4.7 million for the year ended December 31, 2023.
The portion of the gain in accumulated other comprehensive (loss) income related to our remaining term loan debt balance totaled $12.0 million and was being released into earnings on a straight line basis over the remaining term of the 2020 Credit Facility as a decrease to interest expense beginning in the second quarter of 2023, the amortization of which was $3.0 million and $4.7 million for the years ended December 31, 2024 and 2023, respectively.
These sanctions and restrictions currently prohibit our ability to sell certain products and services. The sanctions continue to evolve and further changes in the current sanctions or trade restrictions could further limit our ability to sell products and services to customers in Russia and, our ability to collect on outstanding accounts receivable from such customers.
The sanctions continue to evolve and further changes in the current sanctions or trade restrictions could further limit our ability to sell products and services to customers in Russia, our ability to collect on outstanding accounts receivable from such customers, and our ability to repatriate funds.
Research and development ("R&D") expenses consist primarily of salaries and related personnel expenses and prototype costs for the design, development, testing and enhancement of our products.
Research and Development. Research and development (“R&D”) expenses consist primarily of salaries and related personnel expenses and prototype costs for the design, development, testing and enhancement of our products.
The following customer contributed 10% or more of our revenue in the years ended December 31, 2023 and 2022: Year ended December 31, 2023 2022 Verizon Communications Inc. 11% 15% Revenue earned from customers domiciled outside the United States was 58% and 57% of total revenue in 2023 and 2022, respectively.
The following customer contributed 10% or more of our revenue in the years ended December 31, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ Year ended ​ December 31, ​ December 31, ​ Customer 2024 2023 Verizon Communications Inc. 14 % 11 % ​ 49 ​ Revenue earned from customers domiciled outside the United States was 53% and 58% of total revenue in 2024 and 2023, respectively.
Cash Flows from Financing Activities Our financing activities used $48 million of cash in 2023, primarily due to $95 million of principal payments on our term debt, including a $75 million prepayment in connection with the Sixth Amendment to the 2020 Credit Facility, $2 million of debt issuance costs also paid in connection with the Sixth Amendment, and $4 million for the payment of tax withholding 55 related to the net share settlements of restricted stock awards upon vesting.
Our financing activities used $47.9 million of cash in 2023, primarily due to $95.1 million of principal payments on our term debt, including a $75.0 million prepayment in connection with the Sixth Amendment to the 2020 Credit Facility, $1.7 million of debt issuance costs also paid in connection with the Sixth Amendment, and $4.5 million for the payment of tax withholding related to the net share settlements of restricted stock awards upon vesting.
Any ineffective portion of the change in fair value of the derivative was recognized directly in earnings. However, during the years ended December 31, 2023, 2022 and 2021, we recorded no hedge ineffectiveness. In the year ended December 31, 2023, we recorded $7.3 million of Other expense, net due to the sale of our interest rate swap arrangement .
Any ineffective portion of the change in fair value of the derivative would be recognized directly in earnings. However, we recorded no hedge ineffectiveness over the life of our swap. In the year ended December 31, 2023, we recorded $7.3 million of Other expense, net due to the sale of our interest rate swap arrangement.
In addition, the Sixth Amendment replaced LIBOR with the Secured Overnight Financing Rate ("SOFR") as the alternative rate that may be used by us for calculating interest owed under the 2020 Credit Facility, with the margin now fixed at 4.5%.
In addition, the Sixth Amendment replaced LIBOR with the Secured Overnight Financing Rate ("SOFR") as the alternative rate available to us for calculating interest owed under the 2020 Credit Facility with the margin fixed at 4.5%.
The product revenue is typically recognized upon transfer of control or when the software is made available for download, as this is the point that the user of the software can direct the use of, and obtain substantially all of the remaining benefits from, the functional intellectual property.
The product revenue related to our perpetual licenses is typically recognized when the software is made available for download, as this is the point that the user of the software can direct the use of and obtain substantially all of the remaining benefits from the functional intellectual property.
At December 31, 2023, we had $7.9 million of letters of credit, bank guarantees, and performance and bid bonds outstanding (collectively, "Guarantees"), comprised of $2.7 million of letters of credit under the 2020 Credit Facility described above (the "Letters of Credit") and $5.2 million of bank guarantees and performance and bid bonds (collectively, the "Other Guarantees").
At December 31, 2023, we had Guarantees aggregating $7.9 million, comprised of $2.7 million of letters of credit under the 2020 Credit Facility described above and $5.2 million of Other Guarantees.
We were in compliance with all covenants of the 2020 Credit Facility at both December 31, 2023 and 2022 , including the current Consolidated Net Leverage Ratio calculation that considers our debt to include Preferred Stock. We use letters of credit, bank guarantees, and performance and bid bonds in the course of our business.
We were in compliance with all covenants of the 2024 Credit Facility and 2020 Credit Facility at December 31, 2024 and 2023, respectively, including the Consolidated Net Leverage Ratio calculation under the 2020 Credit Facility that considered our debt to include Preferred Stock. We use letters of credit, bank guarantees and surety bonds in the course of our business.
Also, the Sixth Amendment reduced the minimum Consolidated Fixed Charge Coverage Ratio (as defined in the 2020 Credit Facility) to 1.10:1.00 through the first quarter of 2024 and in all subsequent quarters the ratio will be fixed at 1.25:1.00.
Also, the Sixth Amendment reduced the minimum Consolidated Fixed Charge Coverage Ratio (as defined in the 2020 Credit Facility) to 1.10:1.00 through the first quarter of 2024.
R&D expenses for the years ended December 31, 2023 and 2022 were as follows (in thousands, except percentages): Year ended December 31, Decrease from prior year 2023 2022 $ % $ 190,660 $ 203,676 $ (13,016) (6.4) % The decrease in our research and development expenses in 2023 compared to 2022 was primarily attributable to approximately $8 million of lower expenses in our IP Optical Networks segment and approximately $5 million of lower expenses in our Cloud and Edge segment.
R&D expenses for the years ended December 31, 2024 and 2023 were as follows (in thousands, except percentages): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended Decrease ​ December 31, ​ from prior year ​ 2024 2023 $ % $ 179,941 ​ $ 190,660 ​ $ (10,719) ​ (5.6) % ​ The decrease in our research and development expenses in 2024 compared to 2023 was primarily attributable to approximately $9 million of lower expenses in our IP Optical Networks segment and approximately $2 million of lower expenses in our Cloud and Edge segment.
Acquisition- and disposal-related expenses include professional and services fees, such as legal, audit, consulting, paying agent and other fees. Integration-related expenses 51 represent incremental costs related to combining our systems and processes with those of acquired businesses, such as third-party consulting and other third-party services.
Acquisition- and disposal-related expenses include professional and services fees, such as legal, audit, consulting, paying agent and other fees. Integration-related expenses represent incremental costs related to combining our systems and processes with those of acquired businesses, such as third-party consulting and other third-party services. We recorded no such expenses in 2024 compared to $4.5 million recorded in 2023.
Because control transfers over time, revenue is recognized based on progress toward completion of the performance obligation. The method to measure progress toward completion requires judgment and is based on the nature of the products or services to be provided.
Our professional services include consulting, technical support, resident engineer services, design services and installation services. Because control transfers over time, revenue is recognized based on progress toward completion of the performance obligation. The method to measure progress toward completion requires judgment and is based on the nature of the products or services to be provided.
Our interest rates under our 2020 Term Loan benefited from a hedge instrument that was in place, specifically a fixed rate swap, until the instrument was sold in March 2023 (see Note 15).
Our interest rates under our 2020 Term Loan for the year ended December 31, 2023 benefited from a hedge instrument that was in place, specifically a fixed rate swap, which was sold in March 2023 (see Note 10).
Debt issuance costs associated with the Sixth Amendment totaled $1.7 million and are being amortized on a straight-line basis over the remaining life of the 2020 Credit Facility to Interest expense, net.
Debt issuance costs associated with the Sixth Amendment totaled $1.7 million and were being amortized on a straight-line basis over the remaining life of the 2020 Credit Facility to Interest expense, net and were written off in conjunction with the early extinguishment of the 2020 Credit Facility on June 21, 2024.
These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates we are using to manage our underlying businesses. Such assessment is completed on a jurisdiction-by-jurisdiction basis.
These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates we are using to manage our underlying businesses.
The degree to which the ongoing wars in Israel and Ukraine and the inflationary and high interest rate environment impacts our future business, financial position and results of operations will depend on developments beyond our control, including the duration of the global economic downturn that has resulted from these factors. The Ongoing Wars in Israel and Ukraine .
The degree to which the ongoing wars in Israel and Ukraine and the inflationary and high interest rate environment impacts our future business, financial position and results of operations will depend on developments beyond our control. The Ongoing Wars in Israel and Ukraine .
The 2022 Restructuring Plan includes, among other things, charges related to a consolidation of facilities and a workforce reduction. Any positions eliminated in countries outside the United States are subject to local law and consultation requirements.
The 2022 Restructuring Plan includes, among other things, charges related to a consolidation of facilities and a workforce reduction. Any positions eliminated in countries outside the United States are subject to local law and consultation requirements. In connection with the 2022 Restructuring Plan, we recorded restructuring and related expense of $6.1 million in 2024 for variable and other facilities-related costs.
This increase was the result of higher margins in both of our segments. The higher margin in our IP Optical segment was due to higher sales volume, favorable mix, lower product costs and royalties, and improved absorption of fixed costs from higher sales.
This increase was the result of higher margins in both of our segments. The higher margin in our IP Optical segment was due to favorable regional mix, partially offset by lower sales volume and higher royalties.
We have provided for income taxes on the undistributed earnings of our non-U.S. subsidiaries as of December 31, 2023, excluding Ireland and Israel, which are indefinitely reinvested.
Such assessment is completed on a jurisdiction-by-jurisdiction basis. 47 ​ We have provided for income taxes on the undistributed earnings of our non-U.S. subsidiaries as of December 31, 2024, excluding Ireland and Israel, which are indefinitely reinvested.
Amortization of acquired intangible assets included in Operating expenses ("Opex Amortization") for the years ended December 31, 2023 and 2022 was as follows (in thousands, except percentages): Year ended December 31, Decrease from prior year 2023 2022 $ % $ 28,601 $ 29,646 $ (1,045) (3.5) % Opex Amortization was lower in 2023 compared to 2022 due to our method of amortization.
Amortization of acquired intangible assets included in Operating expenses (“Opex Amortization”) for the years ended December 31, 2024 and 2023 was as follows (in thousands, except percentages): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended Decrease December 31, ​ from prior year 2024 2023 $ % $ 25,969 ​ $ 28,601 ​ $ (2,632) ​ (9.2) % ​ Opex Amortization was lower in 2024 compared to 2023 due to our method of amortization.
Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for making fixed-rate payments over the life of an agreement without exchange of the underlying notional amount.
To accomplish this objective, we have used an interest rate swap as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for making fixed-rate payments over the life of an agreement without exchange of the underlying notional amount.
Higher product revenue in our IP Optical Networks segment and lower operating expenses company-wide due to our various cost saving initiatives, including lower employee and facilities expenses, have all positively affected our operating cash flow in 2023.
Higher product revenue in our IP Optical Networks segment and lower operating expenses company-wide due to our various cost saving initiatives, including lower employee and facilities expenses, all positively affected our operating cash flow in 2023. Cash Flows from Investing Activities Our investing activities used cash of $22.9 million and $9.5 million in 2024 and 2023, respectively.
The swap was to mature on March 3, 2025, the same date the 2020 Credit Facility matures. On July 22, 2022, we sold $30 million of the notional amount of our interest rate swap back to our counterparty for $1.5 million, reducing the notional amount of this swap to $370 million.
On July 22, 2022, we sold $30 million of the notional amount of our interest rate swap back to our counterparty for $1.5 million, reducing the notional amount of this swap to $370 million.
The 2023 Restructuring Plan includes, among other things , charges related to a workforce reduction . Any potential positions eliminated in countries outside the United States are subject to local law and consultation requirements. We recorded restructuring and related expense of $9.9 million in 2023 in connection with the 2023 Restructuring Plan for severance related costs for approximately 200 employees.
Any potential positions eliminated in countries outside the United States are subject to local law and consultation requirements. In connection with the 2023 Restructuring Plan, we recorded restructuring and related expense for severance related costs of $2.0 million and $9.9 million in 2024 and 2023, respectively.
Any impairment charges are reported separately in our consolidated statements of operations. 46 Judgment is required in determining whether an event has occurred that may impair the value of goodwill, identifiable intangible assets or other long-lived assets.
Judgment is required in determining whether an event has occurred that may impair the value of goodwill, identifiable intangible assets or other long-lived assets.
Subsequent to the Fifth Amendment, we are required to make quarterly principal payments on the 2020 Term Loan aggregating approximately $5.0 million per quarter through March 31, 2024 and $10.0 million in each of the three quarters thereafter, with the final payment due on the maturity date in March 2025.
Quarterly principal payments were required on the 2020 Term Loan aggregating approximately $5.0 million per quarter through March 31, 2024, and if the refinancing had not occurred, $10.0 million would have been required in each of the three quarters thereafter, with the remaining and final payment due on the maturity date in March 2025.
Our 2023 operating expenses included $28.6 million of amortization of acquired intangible assets, $4.5 million of acquisition-, disposal- and integration-related expense, and $16.2 million of restructuring and related expense. Our 2022 operating expenses included $29.6 million of amortization of acquired intangible assets, $6.3 million of acquisition-, disposal- and integration-related expense, and $10.8 million of restructuring and related expense.
Our 2023 operating expenses included $28.6 million of amortization of acquired intangible assets, $4.5 million of acquisition-, disposal- and integration-related expense, and $16.2 million of restructuring and related expense. We recorded stock-based compensation expense of $16.1 million in 2024 and $21.8 million in 2023.
These sales were made through both our direct sales team and indirect sales channel partners. Revenue from indirect sales through our channel partner program was 35% and 30% of our product revenue in 2023 and 2022, respectively. The increase in channel sales reflects stronger deployments through systems integrators as well as sell-through from our Service Provider channel partners.
Revenue from indirect sales through our channel partner program was 38% and 35% of our product revenue in 2024 and 2023, respectively. The increase in channel sales in 2024 reflects stronger IP Optical Networks deployments through systems integrators as well as sell-thru service provider channel partners in Eastern Europe.
In these cases, inventory is written down to estimated realizable value based on historical usage and expected demand. Inherent in our estimates of market value in determining inventory valuation are estimates related to economic trends, future demand for our products and technical obsolescence of our products.
Inherent in our estimates of market value in determining inventory valuation are estimates related to economic trends, future demand for our products and technical obsolescence of our products.
We account for the Preferred Stock and Warrants as liability-classified instruments based on an assessment of their specific terms in accordance with ASC Topic 480, Distinguishing Liabilities from Equity . The fair value option was elected for the Preferred Stock, as we consider fair value to best reflect the expected future economic value.
We accounted for the Preferred Stock until it was redeemed on June 25, 2024 and we continue to account for the Warrants as liability-classified instruments based on an assessment of their specific terms in accordance with ASC Topic 480, Distinguishing Liabilities from Equity .
Our revenue was $819.8 million in 2022, comprised of $508.2 million attributable to Cloud and Edge and $311.6 million attributable to IP Optical Networks. Our gross profit was $408.1 million in 2023, comprised of $300.0 million attributable to Cloud and Edge and $108.1 million attributable to IP Optical Networks.
Our gross profit was $439.5 million in 2024, comprised of $329.2 million attributable to Cloud and Edge and $110.3 million attributable to IP Optical Networks. Our gross profit was $408.1 million in 2023, comprised of $300.0 million attributable to Cloud and Edge and $108.1 million attributable to IP Optical Networks.
The software and hardware are delivered before related services are provided and are functional without professional services or customer support. We have concluded that our software licenses are functional intellectual property that are distinct, as the user can benefit from the software on its own.
We have concluded that our software licenses are functional intellectual property that are distinct, as the user can benefit from the software on its own.
Recent Accounting Pronouncements In December 2023, the Financial Accounting Standards Board (the "FASB") issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which increases the disclosure requirements around rate reconciliation information and certain types of income taxes companies are required to pay.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which increases the disclosure requirements around rate reconciliation information and certain types of 57 ​ income taxes companies are required to pay. ASU 2023-09 will be effective for us beginning with our 2025 annual financial statements, with early adoption permitted.
A contract is determined to contain a lease component if the arrangement provides us with a right to control the use of an identified asset. Lease agreements may include lease and non-lease components. In such instances for all classes of underlying assets, we do not separate lease and non-lease components but rather, account for the entire arrangement under leasing guidance.
Lease agreements may include lease and non-lease components. In such instances for all classes of underlying assets, we do not separate lease and non-lease components but rather, account for the entire arrangement under leasing guidance.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to market risk related to changes in interest rates and foreign currency exchange rates. The following discussion about these market risks includes forward-looking statements. Actual results could differ materially from those projected in these forward-looking statements. Interest Rate Risk.
Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to market risk related to changes in interest rates and foreign currency exchange rates. The following discussion about these market risks includes forward-looking statements. Actual results could differ materially from those projected in these forward-looking statements. At December 31, 2024, we had outstanding debt totaling $348.3 million.
Dollar expenses. A hypothetical 10% strengthening of the U.S. Dollar would have negatively impacted our revenues for the year ended December 31, 2023 by approximately $18 million.
Dollar expenses. A hypothetical 10% strengthening of the U.S. Dollar would have negatively impacted our revenues for the year ended December 31, 2024 by approximately $20 million.
Because a higher proportion of our expenses are denominated in foreign currencies compared to our revenue, our net loss for the year ended December 31, 2023 would have been positively impacted by approximately $19 million. 57
Because a higher proportion of our expenses are denominated in foreign currencies compared to our revenue, our net loss for the year ended December 31, 2024 would have been positively impacted by approximately $11 million. ​ 58 ​
A hypothetical movement of plus or minus 50 basis points in the interest rate of our outstanding debt would have changed our interest expense by approximately $1 million for the year ended December 31, 2023. Foreign Currency Exchange Risk.
A hypothetical movement of plus or minus 50 basis points in the interest rate of our outstanding debt would have changed our interest expense by approximately $2 million for the year ended December 31, 2024.
Removed
To manage the volatility related to the exposure to changes in interest rates, we have historically entered into a derivative financial instrument, specifically an interest rate swap. Our objective has been to reduce, where it is deemed appropriate to do so, fluctuations in earnings and cash flows associated with changes in interest rates.
Removed
Our policies and practices are to use derivative financial instruments only to the extent necessary to manage exposures. We do not hold or issue derivative financial instruments for trading or speculative purposes. In March 2023, we disposed of our interest rate swap by selling the remaining notional value totaling $340 million back to our counterparty.
Removed
We received $19.2 million from our counterparty, consisting of $0.8 million of interest and $18.4 million for the sale and we recognized a gain from Accumulated other comprehensive income of $7.3 million to Other expense, net in our consolidated statement of operations.
Removed
Amounts remaining in Accumulated other comprehensive income related to our derivative totaled $12.0 million and are being amortized to interest expense over the remaining term of our variable-rate debt on a straight-line basis. At December 31, 2023, we had outstanding debt totaling $235.4 million.

Other RBBN 10-K year-over-year comparisons