What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-04-30 compared with 2024-10-24 · 254 added, 428 removed, 569 unchanged (55% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

September 30,

Current assets:

18 unchanged sentences

Warrant liability

Preferred stock liability, $ 0.01 par value per share;

10,000,000 shares authorized, none issued and outstanding at September 30, 2024;

55,000 shares issued and outstanding at December 31, 2023 ($ 56,650 liquidation preference)

Operating lease liabilities, net of current

7 unchanged sentences

240,000,000 shares authorized;

174,735,798 shares issued and outstanding at September 30, 2024;

175,967,875 shares issued and outstanding at March 31, 2025;

175,599,250 shares issued and outstanding at December 31, 2024

10 unchanged sentences

Three months ended

Nine months ended

September 30,

Total revenue

7 unchanged sentences

Amortization of acquired intangible assets

Acquisition-, disposal- and integration-related

Restructuring and related

Total operating expenses

(Loss) income from operations

Loss from operations

Interest expense, net

1 unchanged sentence

Loss before income taxes

Income tax provision

Income tax benefit (provision)

Loss per share:

5 unchanged sentences

Three months ended

Nine months ended

September 30,

Other comprehensive income (loss), net of tax:

Unrealized loss on interest rate swap, net of reclassifications and amortization into earnings

Reclassification of gain to other income (expense), net upon sale of interest rate swap

Other comprehensive (loss) income, net of tax:

Unrealized (loss) gain on interest rate swap, net of reclassifications and amortization into earnings

Foreign currency translation adjustments

Other comprehensive income (loss), net of tax

Other comprehensive (loss) income, net of tax

Comprehensive loss, net of tax

3 unchanged sentences

(in thousands, except shares)

Three months ended September 30, 2024

comprehensive

stockholders'

(loss) income

Balances, July 1, 2024

( 1,567,127 )

Exercise of stock options

Vesting of restricted stock awards and units

Shares of restricted stock returned to the Company under net share settlements to satisfy tax withholding obligations

Stock-based compensation expense

Other comprehensive income

Balances, September 30, 2024

( 1,580,549 )

Nine months ended September 30, 2024

Three months ended March 31, 2025

comprehensive

4 unchanged sentences

Exercise of stock options

Exercise of warrants

Vesting of restricted stock awards and units

1 unchanged sentence

Shares of restricted stock returned to the Company under net share settlements to satisfy tax withholding obligations

( 1,089,888 )

Stock-based compensation expense

Other comprehensive loss

Balances, September 30, 2024

( 1,580,549 )

See notes to the unaudited condensed consolidated financial statements.

RIBBON COMMUNICATIONS INC.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except shares)

Three months ended September 30, 2023

comprehensive

stockholders'

(loss) income

Balances, July 1, 2023

( 1,513,528 )

Exercise of stock options

Vesting of restricted stock awards and units

Shares of restricted stock returned to the Company under net share settlements to satisfy tax withholding obligations

Stock-based compensation expense

Other comprehensive loss

Balances, September 30, 2023

Balances, March 31, 2025

( 1,600,412 )

Nine months ended September 30, 2023

Three months ended March 31, 2024

comprehensive

7 unchanged sentences

Shares of restricted stock returned to the Company under net share settlements to satisfy tax withholding obligations

( 1,223,900 )

Stock-based compensation expense

Other comprehensive loss

Balances, September 30, 2023

Balances, March 31, 2024

( 1,550,311 )

3 unchanged sentences

(in thousands)

Nine months ended

September 30,

Three months ended

Cash flows from operating activities:

Adjustments to reconcile net loss to cash flows used in operating activities:

Adjustments to reconcile net loss to cash flows (used in) provided by operating activities:

Depreciation and amortization of property and equipment

4 unchanged sentences

Deferred income taxes

Gain on sale of swap

Change in fair value of warrant liability

1 unchanged sentence

Dividends accrued on preferred stock liability

Payment of dividends accrued on preferred stock liability

Foreign currency exchange losses

Foreign currency exchange (gains) losses

Changes in operating assets and liabilities:

4 unchanged sentences

Deferred revenue

Net cash used in operating activities

Net cash (used in) provided by operating activities

Cash flows from investing activities:

5 unchanged sentences

Principal payments on revolving line of credit

Proceeds from issuance of term debt

Principal payments of term debt

Payment of debt issuance costs

Proceeds from issuance of preferred stock and warrant liabilities

Payment of preferred stock liability

Proceeds from the exercise of stock options

Payment of tax obligations related to vested stock awards and units

Net cash provided by (used in) financing activities

Net cash used in financing activities

Effect of exchange rate changes on cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Cash, cash equivalents and restricted cash, beginning of year

3 unchanged sentences

(in thousands)

Nine months ended

September 30,

Three months ended

Supplemental disclosure of cash flow information:

6 unchanged sentences

Supplemental disclosure of non-cash financing activities:

Warrant liability released to additional paid-in-capital

Fair value of vested restricted and performance-based stock grants

19 unchanged sentences

The Company’s significant accounting policies are disclosed in Note 2 to the Consolidated Financial Statements included in the Annual Report.

There were no material changes to the significant accounting policies during the nine months ended September 30, 2024.

There were no material changes to the significant accounting policies during the three months ended March 31, 2025.

Principles of Consolidation

3 unchanged sentences

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods.

Significant estimates and judgments relied upon in preparing these condensed consolidated financial statements include revenue recognition for multiple element arrangements, inventory valuations, assumptions used to determine the fair value of stock-based compensation and the Preferred Stock and Warrants, intangible asset and goodwill valuations,

Significant estimates and judgments relied upon in preparing these condensed consolidated financial statements include revenue recognition for arrangements that contain multiple performance obligations, inventory valuations, assumptions used to determine the fair value of stock-based compensation and the Preferred Stock and Warrants, intangible asset and

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

including impairments, warranty accruals, legal contingencies and recoverability of Ribbon’s net deferred tax assets and the related valuation allowances.

goodwill valuations, including impairments, warranty accruals, legal contingencies and recoverability of Ribbon’s net deferred tax assets and the related valuation allowances.

Ribbon regularly assesses these estimates and records changes in estimates in the period in which they become known.

1 unchanged sentence

Actual results could differ from those estimates.

Restricted Cash

The Company classifies as restricted cash all cash pledged as collateral to secure long-term obligations and all cash otherwise limited in use by contractual provisions.

At September 30, 2024 and December 31, 2023, the Company had $ 2.9 million and $ 0.1 million of restricted cash, respectively, representing restricted short-term bank deposits pledged to secure certain guarantees and surety bonds as security for the Company’s obligations under tenders, and contracts.

Transfers of Financial Assets

3 unchanged sentences

The Company accounts for the factoring of its financial assets as a sale of the assets and records the factoring fees, when incurred, as a component of interest expense in the condensed consolidated statements of operations, and the proceeds from the sales of receivables are included in cash from operating activities in the condensed consolidated statements of cash flows.

Factoring of accounts receivable and associated fees for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands):

Factoring of accounts receivable and associated fees for the three months ended March 31, 2025 and 2024 were as follows (in thousands):

Three months ended

Nine months ended

September 30,

Accounts receivable sold

2 unchanged sentences

Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (the "FASB") issued ASU 2023-09, Income Taxes (Topic 740):

In November 2024, the Financial Accounting Standards Board (the "FASB") issued ASU 2024-03, Income Statement, Reporting Comprehensive Income:

Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”), which requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements.

The objective of this standard is to provide investors with information to better understand a public entity’s performance and prospects for future cash flows, and to compare its performance over time with that of other entities.

ASU 2024-03 will be effective for the Company beginning with our 2027 annual financial statements and interim financial statements thereafter, with early adoption permitted.

The adoption of ASU 2024-03 will require the Company to provide new footnote disclosure about the types of expenses that are included in certain captions on its Statements of Operations, such as Cost of revenue, Research and development, Sales and marketing, and General and administrative.

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 income taxes companies are required to pay.

ASU 2023-09 will be effective for the Company beginning with its 2025 annual financial statements, with early adoption permitted.

The Company expects the adoption of the standard will require certain additional income tax disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which improves reportable segment disclosure requirements, including enhancement of the disclosures of significant segment expenses and interim disclosure requirements, to enable investors to better understand an entity's overall performance and assess potential future cash flows.

ASU 2023-07 will be effective for the Company beginning with its 2024 annual financial statements and interim financial statements thereafter and will be applied retrospectively for all periods presented in the financial statements.

The Company’s adoption of this standard will require certain additional segment disclosures.

The Company expects the adoption of the standard will require certain additional income tax disclosure.

RIBBON COMMUNICATIONS INC.

5 unchanged sentences

Three months ended

Nine months ended

September 30,

Weighted average shares outstanding—basic

1 unchanged sentence

Weighted average shares outstanding—diluted

Options to purchase the Company’s common stock and unvested restricted and performance-based stock units aggregating 8.1 million and 14.4 million shares were excluded from the computation of diluted loss per share for the three and nine months ended September 30, 2024 and 2023, respectively, because their effect would have been antidilutive.

Options to purchase the Company’s common stock and unvested restricted and performance-based stock units aggregating 6.8 million and 12.1 million shares were excluded from the computation of diluted loss per share for the three months ended March 31, 2025 and 2024, respectively, because their effect would have been antidilutive.

On March 28, 2023, the Company 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 the Company’s common stock, par value $ 0.0001 per share (the "Private Placement"), at the exercise price of $ 3.77 per share.

1 unchanged sentence

On June 25, 2024, the Company redeemed the Preferred Stock with a portion of the proceeds from its refinancing of the 2020 Credit Facility at a rate of 103 % for a total of approximately $ 63.5 million.

The Warrants remain outstanding and without modification.

During the three months ended March 31, 2025, 0.2 million Warrants were exercised.

The remaining Warrants outstanding continue without modification.

See Note 9 for a description of the refinancing of the 2020 Credit Facility.

As of September 30, 2024 and 2023, the potential number of dilutive shares from the Warrants totaled 4.9 million shares.

However, there was no impact on weighted average shares outstanding from these Warrants for the three and nine months ended September 30, 2024 and 2023 as the average share price of the Company’s common stock was below the exercise price of $ 3.77 per share and their effect would have been antidilutive.

Dividends accrued on the Preferred Stock were not an adjustment to net income (loss) used for the calculation of diluted earnings (loss) per share as these dividends were included in the fair value adjustment of the Preferred Stock which was reflected in Other (expense) income, net until the redemption of the Preferred Stock on June 25, 2024.

As of March 31, 2025 and 2024, the potential number of dilutive shares from the Warrants outstanding totaled 4.7 million and 4.9 million shares, respectively.

For the three months ended March 31, 2025, 0.5 million Warrants would have been included in the calculation of diluted loss per share, but had no impact due to the Company’s net loss position.

There was no impact on weighted average shares outstanding from these Warrants for the three months ended March 31, 2024 as the average market price of the Company’s common stock was below the exercise price of $ 3.77 per share and their effect would have been antidilutive.

Dividends accrued on the Preferred Stock were not an adjustment to net income (loss) used for the calculation of diluted earnings (loss) per share as these dividends were included in the fair value adjustment of the Preferred Stock which was reflected in Other income (expense), net until the redemption of the Preferred Stock on June 25, 2024.

RIBBON COMMUNICATIONS INC.

1 unchanged sentence

(3) INVENTORY

Inventory at September 30, 2024 and December 31, 2023 consisted of the following (in thousands):

September 30,

On-hand final assemblies and finished goods inventories

Inventory at March 31, 2025 and December 31, 2024 consisted of the following (in thousands):

On-hand assemblies and finished goods inventories

Deferred cost of goods sold

2 unchanged sentences

(4) INTANGIBLE ASSETS AND GOODWILL

The Company’s intangible assets at September 30, 2024 and December 31, 2023 consisted of the following (in thousands):

September 30, 2024

The Company’s intangible assets at March 31, 2025 and December 31, 2024 consisted of the following (in thousands):

March 31, 2025

Developed technology

5 unchanged sentences

Software licenses

Estimated future amortization expense for the Company’s intangible assets at September 30, 2024 was as follows (in thousands):

Estimated future amortization expense for the Company’s intangible assets at March 31, 2025 was as follows (in thousands):

Years ending December 31,

2 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Continued)

There were no changes to the carrying value of the Company’s goodwill in the nine months ended September 30, 2024 and 2023.

The components of goodwill at both September 30, 2024 and 2023 were as follows (in thousands):

There were no changes to the carrying value of the Company’s goodwill in the three months ended March 31, 2025 and 2024.

The components of goodwill at both March 31, 2025 and 2024 were as follows (in thousands):

Accumulated impairment losses

1 unchanged sentence

The carrying amounts of the Company’s cash equivalents, accounts receivable, accounts payable and borrowings under a revolving credit facility in the condensed consolidated balance sheets approximates fair value due to the immediate or short-term nature of these financial instruments.

Ribbon’s term debt balance as of September 30, 2024 and December 31, 2023 of $ 349.1 million and $ 235.4 million, respectively, had a fair value of approximately $ 330.4 million and $ 235.1 million, respectively.

The Company’s Warrant liability had a fair value of $ 5.6 million and $ 5.3 million as of September 30, 2024 and December 31, 2023, respectively.

The Company’s Preferred Stock had a fair value of $ 53.3 million as of December 31, 2023 and was fully redeemed on June 25, 2024.

Ribbon’s term debt balance as of March 31, 2025 and December 31, 2024 of $ 347.4 million and $ 348.3 million, respectively, had a fair value of approximately $ 348.2 million and $ 350.4 million, respectively.

The Company’s Warrant liability had a fair value of $ 6.2 million and $ 8.1 million as of March 31, 2025 and December 31, 2024, respectively.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

4 unchanged sentences

● Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

The Company had no assets or liabilities fair valued using Level 1 input at September 30, 2024 or December 31, 2023.

The Company had no assets or liabilities fair valued using Level 1 input at March 31, 2025 or December 31, 2024.

● Level 2 applies to assets or liabilities for which there are inputs that are directly or indirectly observable in the marketplace, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets).

At December 31, 2024, the Company determined the fair value of its defined benefit plans’ assets using Level 2 input.

There were no significant changes to the Company’s defined benefit plans’ assets during the nine months ended September 30, 2024 that required the calculation of their fair value as of September 30, 2024.

There were no significant changes to the Company’s defined benefit plans’ assets during the three months ended March 31, 2025 that required the calculation of their fair value as of March 31, 2025.

● Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

Level 3 input was used to determine the fair value of the Company’s Warrants at September 30, 2024 and the fair value of the Company’s Preferred Stock and Warrants at December 31, 2023.

Level 3 input was used to determine the fair value of the Company’s Warrants at March 31, 2025 and December 31, 2024.

The Company had no transfers between Level 2 and Level 3 fair value measurements during the three months ended March 31, 2025 and 2024.

RIBBON COMMUNICATIONS INC.

1 unchanged sentence

(6) ACCRUED EXPENSES AND OTHER

Accrued expenses at September 30, 2024 and December 31, 2023 consisted of the following (in thousands):

September 30,

Accrued expenses at March 31, 2025 and December 31, 2024 consisted of the following (in thousands):

Employee compensation and related costs

1 unchanged sentence

Taxes payable

(7) WARRANTY ACCRUALS

The changes in the Company’s accrual balance in the nine months ended September 30, 2024 were as follows (in thousands):

The changes in the Company’s warranty accrual balance in the three months ended March 31, 2025 were as follows (in thousands):

Balance at January 1, 2025

Current period provisions

Balance at September 30, 2024

Balance at March 31, 2025

At March 31, 2025, the Company’s accrual for product warranties was reflected in its condensed consolidated balance sheet as a current liability in Accrued expenses and other of $ 5.4 million, and as a long-term liability in Other long-term liabilities of $ 7.2 million.

(8) RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES

The Company recorded restructuring and related expense aggregating $ 3.8 million and $ 2.7 million in the three months ended September 30, 2024 and 2023, respectively and $ 8.8 million and $ 13.9 million in the nine months ended September 30, 2024 and 2023, respectively.

Restructuring and related expense includes restructuring expense (primarily severance and related costs), estimated future variable lease costs for vacated properties with no intent or ability of sublease, and accelerated rent amortization expense.

The Company recorded restructuring and related expense aggregating $ 5.3 million and $ 3.1 million in the three months ended March 31, 2025 and 2024, respectively.

Restructuring and related expense includes restructuring expense (primarily severance and related costs), estimated future variable and other lease costs for vacated properties with no intent or ability to sublease, and accelerated rent amortization expense.

For restructuring events that involve lease assets and liabilities, the Company applies lease reassessment and modification guidance and evaluates the right-of-use assets for potential impairment.

3 unchanged sentences

Accelerated amortization of lease assets is recognized from the date that the Company commences the plan to fully or partially vacate a facility, for which there is no intent or ability to enter into a sublease, through the final vacate date.

Accelerated amortization of lease assets that are included as a component of restructuring and related expense are excluded from the restructuring accrual activity tables below, as the liability for lease payments for these facilities is included as a component of current and noncurrent Operating lease liabilities in the Company’s condensed consolidated balance sheets at September 30, 2024 and December 31, 2023 (see Note 16).

The Company may incur additional future expense if it is unable to sublease other locations included in the Company’s facilities consolidation initiatives.

Amounts of accelerated rent amortization that are included as a component of restructuring and related expense are excluded from the tables below, as the liability for lease payments for each respective facility is included as a component of Operating lease liabilities in the Company’s condensed consolidated balance sheets at March 31, 2025 and

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

Restructuring and related expense for the three and nine months ended September 30, 2024 and 2023 was comprised of the following (in thousands):

December 31, 2024 (see Note 16).

The Company may incur additional future expense if it is unable to sublease other locations included in the Facilities Initiative.

The components of restructuring and related expense for the three months ended March 31, 2025 and 2024 were as follows (in thousands):

Three months ended

Nine months ended

September 30,

Severance and related costs

Variable and other facilities-related costs

Accelerated amortization of lease assets due to cease-use

The CODM approved workforce reductions in 2024 for certain of the Company’s operating locations to correspond with the current sales levels in those areas.

The Company recorded $ 2.2 million in the three months ended September 30, 2024 related to these actions.

Any potential positions eliminated in countries outside of the United States are subject to local law and consultation requirements.

2025 Restructuring Plan

During the first quarter of 2025, the Company’s President and CEO approved a strategic restructuring program (the "2025 Restructuring Plan") that consists of workforce reductions in certain of the Company’s operating locations to correspond with current sales levels in those areas.

Any potential positions eliminated in countries outside the United States are subject to local law and consultation requirements.

In connection with the 2025 Restructuring Plan, the Company recorded restructuring and related expense of $ 2.4 million in the three months ended March 31, 2025, with nominal cash payments to date.

2023 Restructuring Plan

On February 22, 2023, the Company’s Board of Directors approved a strategic restructuring program (the "2023 Restructuring Plan") to streamline the Company’s operations in order to support the Company’s investment in critical growth areas.

1 unchanged sentence

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, the Company recorded restructuring and related expense of $ 0.1 million and $ 2.1 million in the three and nine months ended September 30, 2024, respectively, consisting entirely of severance related costs.

A summary of the 2023 Restructuring Plan accrual activity for the nine months ended September 30, 2024 is as follows (in thousands):

Net transfer to

operating lease

September 30,

In connection with the 2023 Restructuring Plan, the Company recorded restructuring and related expense of $ 0.1 million and $ 1.6 million in the three months ended March 31, 2025 and 2024, respectively, consisting entirely of severance related costs.

The 2023 Restructuring Plan accrual activity for the three months ended March 31, 2025 was nominal, with a balance remaining at March 31, 2025 of $ 0.1 million.

2022 Restructuring Plan

2 unchanged sentences

Any positions eliminated in countries outside the United States are subject to local law and consultation requirements.

The Company recorded restructuring and related expense of $ 1.5 million and $ 4.5 million in the three and nine months ended September 30, 2024, respectively, in connection with the 2022 Restructuring Plan for variable and other facilities-related costs.

A summary of the 2022 Restructuring Plan accrual activity for the nine months ended September 30, 2024 is as follows (in thousands):

September 30, 2024

Variable and other facilities-related costs

The Company recorded restructuring and related expense of $ 3.1 million and $ 1.4 million in the three months ended March 31, 2025 and 2024, respectively, in connection with the 2022 Restructuring Plan for variable and other facilities-related costs.

A summary of the 2022 Restructuring Plan accrual activity for the three months ended March 31, 2025 is as follows (in thousands):

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

March 31, 2025

Variable and other facilities-related costs

Balance Sheet Classification

The current portions of accrued restructuring were $ 2.7 million and $ 1.1 million at September 30, 2024 and December 31, 2023, respectively, and are included as components of Accrued expenses in the condensed consolidated balance sheets.

The current portions of accrued restructuring were $ 2.8 million and $ 1.4 million at March 31, 2025 and December 31, 2024, respectively, and are included as components of Accrued expenses in the condensed consolidated balance sheets.

The long-term portions of accrued restructuring are included as components of Other long-term liabilities in the condensed consolidated balance sheets.

The long-term portions of accrued restructuring were $ 0.9 million and $ 1.1 million at September 30, 2024 and December 31, 2023, respectively.

The long-term portions of accrued restructuring were $ 0.7 million and $ 0.8 million at March 31, 2025 and December 31, 2024, respectively.

2024 Credit Facility

On June 21, 2024, the Company entered into a Senior Secured Credit Facilities Credit Agreement (the “2024 Credit Facility” and “2024 Credit Agreement”) as guarantor, with the Company’s wholly-owned subsidiary, Ribbon Communications Operating Company, Inc., as the borrower (the “Borrower”), HPS Investment Partners, LLC ("HPS"), as administrative agent, and HPS and WhiteHorse Capital Management, LLC ("WhiteHorse" and, together with HPS, the "Lenders"), pursuant to which the Lenders provided the Company with a $ 385 million senior secured credit facility comprised of (i) a $ 350 million term loan (the “2024 Term Loan”) and (ii) a $ 35 million revolving credit facility (the “2024 Revolver”), including a $ 20 million sublimit for letters of credit.

On June 21, 2024, the Company entered into a Senior Secured Credit Facilities Credit Agreement (the “2024 Credit Facility” or “Credit Agreement”) as guarantor, with the Company’s wholly-owned subsidiary, Ribbon Communications Operating Company, Inc., as the borrower (the “Borrower”), HPS Investment Partners, LLC ("HPS"), as administrative agent, and HPS and WhiteHorse Capital Management, LLC ("WhiteHorse" and, together with HPS, the "Lenders"), pursuant to which the Lenders provided the Company with a $ 385 million Credit Agreement comprised of (i) a $ 350 million term loan (the “2024 Term Loan”) and (ii) a $ 35 million revolving credit facility (the “2024 Revolver”), including a $ 20 million sublimit for letters of credit.

The proceeds received from the 2024 Term Loan were used to (a) repay 100 % of the amounts outstanding under the 2020 Credit Facility, (b) redeem in full the Preferred Stock and (c) pay fees and expenses related to the 2024 Credit Facility.

The excess proceeds are being used by the Company for working capital and other general corporate purposes.

The 2024 Term Loan and the 2024 Revolver bear interest, at the Borrower’s option, at either the Alternate Base Rate (“ABR”) or Term Secured Overnight Financing Rate ("SOFR") with an Applicable Margin for each (all as defined in the 2024 Credit Agreement).

Margins for the first six months are 5.25 % per annum for ABR Loans and 6.25 % per annum for SOFR Loans.

Margins for the first six months were 5.25 % per annum for ABR Loans and 6.25 % per annum for SOFR Loans.

Thereafter, margins vary based on the Company’s Consolidated Net Leverage Ratio, ranging from 4.75 % to 5.25 % per annum for ABR Loans and 5.75 % to 6.25 % per annum for SOFR Loans.

6 unchanged sentences

The 2024 Credit Facility requires compliance with a Maximum Consolidated Net Leverage Ratio (the "Financial Covenant"), as defined in the 2024 Credit Facility, which is tested on a quarterly basis.

The Company was in compliance with the Financial Covenant as of September 30, 2024.

The Company was in compliance with the Financial Covenant as of March 31, 2025 and December 31, 2024.

The indebtedness and other obligations under the 2024 Credit Facility are irrevocably and unconditionally guaranteed on a joint and several basis by the Company and its subsidiaries (together, the "Guarantors").

The 2024 Credit Facility is secured on a first-priority basis by a lien on substantially all assets of the Borrower and the Guarantors.

2020 Credit Facility

On June 21, 2024, the Company used the proceeds from the 2024 Credit Facility to, among other things, repay all amounts outstanding under its Senior Secured Credit Facilities Credit Agreement, dated March 3, 2020 (as amended, the "2020 Credit Facility"), by and among the Company, as a guarantor, Ribbon Communications Operating Company, Inc.,

The 2024 Credit Facility is secured on a first-priority basis by liens on substantially all assets of the Borrower and the Guarantors.

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

as the borrower (the "Borrower"), Citizens Bank, N.A., Santander Bank, N.A., and others as lenders ("2020 Credit Facility Lenders").

2020 Credit Facility

The Company wrote off $ 2.0 million of debt issuance costs in conjunction with the early extinguishment of the 2020 Credit Facility.

1 unchanged sentence

Under the 2020 Revolving Credit Facility, a $ 30 million sublimit was originally available for letters of credit and a $ 20 million sublimit was available for swingline loans.

The indebtedness and other obligations under the 2020 Credit Facility were unconditionally guaranteed on a senior secured basis by the Company, Edgewater Networks, Inc., a wholly-owned subsidiary of the Company, and GENBAND Inc., a wholly-owned subsidiary of the Company (together, the "2020 Credit Facility Guarantors").

The 2020 Credit Facility was secured by first-priority liens on substantially all of the assets of the Borrower and the 2020 Credit Facility Guarantors, including substantially all of the assets of the Company.

The 2020 Credit Facility required compliance with certain financial covenants, including a minimum Consolidated Fixed Charge Coverage Ratio and a maximum Consolidated Net Leverage Ratio (each as defined in the 2020 Credit Facility, and each tested on a quarterly basis).

On March 24, 2023, the Company entered into the Sixth Amendment to the 2020 Credit Facility (the “Sixth Amendment”) effective March 30, 2023.

The Sixth Amendment, among other things, increased the Maximum Consolidated Net Leverage Ratio (as defined in the 2020 Credit Facility), for the first, second and third quarters of 2023 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.

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.

The Sixth Amendment reduced the maximum borrowings allowed under the 2020 Revolving Credit Facility from $ 100 million to $ 75 million and the sublimit available for letters of credit was reduced from $ 30 million to $ 20 million.

In addition, the Sixth Amendment replaced LIBOR with SOFR as the alternative rate available to the Company for calculating interest owed under the 2020 Credit Facility with the margin fixed at 4.5 %.

In conjunction with the Sixth Amendment, the Company 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 the Company’s interest rate swap.

The Company entered into the Sixth Amendment to the 2020 Credit Facility (the “Sixth Amendment”) effective March 30, 2023.

Among other things, the Sixth Amendment reduced the maximum borrowings allowed under the 2020 Revolving Credit Facility from $ 100 million to $ 75 million and the sublimit available for letters of credit was reduced from $ 30 million to $ 20 million.

Also, the Sixth Amendment replaced LIBOR with SOFR as the alternative rate available to the Company for calculating interest owed under the 2020 Credit Facility with the margin fixed at 4.5 %.

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 and were written off in conjunction with the early extinguishment of the 2020 Credit Facility on June 21, 2024.

The Company’s interest rates for the nine months ended September 30, 2023 under the 2020 Term Loan benefited from a hedge instrument that was in place, specifically a fixed rate swap, until it was sold in March 2023 (see Note 10).

Following the sale of the fixed rate swap in March 2023, the Company’s interest rate was based upon U.S.

dollar SOFR plus a fixed margin of 4.5 %.

The Company was in compliance with all covenants of the 2020 Credit Facility at December 31, 2023, including the Consolidated Net Leverage Ratio calculation that considered the Company’s debt to include Preferred Stock.

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

The Company had the following outstanding borrowings, unamortized debt issuance costs and original issue discount, letters of credit, interest rates, and remaining borrowing capacity under the 2024 Credit Facility and the 2020 Credit Facility as of September 30, 2024 and December 31, 2023, respectively:

September 30,

Current portion of Term Debt

8 unchanged sentences

Total Unamortized Original Issue Discount and Debt Issuance Costs

Letters of Credit Outstanding

Remaining Borrowing Capacity

Average Interest Rates:

Letters of Credit

The Company’s debt maturities as of September 30, 2024 were as follows:

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

The Company’s debt maturities as of March 31, 2025 were as follows:

Years ending December 31,

1 unchanged sentence

Letters of Credit and Other Guarantees

The Company uses letters of credit, bank guarantees, and surety bonds in the course of its business.

At September 30, 2024, the Company had $ 10.4 million of letters of credit, bank guarantees, and surety bonds outstanding (collectively, "Guarantees") under various uncommitted facilities and no letters of credit outstanding under the 2024 Credit Facility.

At December 31, 2023, the Company had Guarantees aggregating $ 7.9 million, comprised of the $ 2.7 million of letters of credit under the 2020 Credit Facility described above and $ 5.2 million of Other Guarantees.

At September 30, 2024 and December 31, 2023, the Company had cash collateral of $ 2.9 million and $ 0.1 million, respectively, supporting the Guarantees, which are reported in Restricted cash in the Company’s condensed consolidated balance sheets.

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

In the course of its business, the Company uses letters of credit, bank guarantees, and surety bonds (collectively, "Guarantees").

The Company had $ 10.9 million of Guarantees under various uncommitted facilities as of both March 31, 2025 and December 31, 2024.

The Company had no letters of credit outstanding under the 2024 Credit Facility as of March 31, 2025 or December 31, 2024.

At March 31, 2025 and December 31, 2024, the Company had cash collateral of $ 2.6 million and $ 2.7 million, respectively, supporting the Guarantees, which are reported as Restricted cash in the Company’s condensed consolidated balance sheets.

(10) DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

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Cash Flow Hedge of Interest Rate Risk

The 2024 Term Loan Facility and the 2020 Term Loan Facility had outstanding balances of $ 349.1 million and $ 235.4 million at September 30, 2024 and December 31, 2023, respectively.

The 2024 Revolving Credit Facility and the 2020 Revolving Credit Facility were undrawn at September 30, 2024 and December 31, 2023, respectively.

The 2024 Term Loan Facility had outstanding balances of $ 347.4 million and $ 348.3 million at March 31, 2025 and December 31, 2024, respectively.

The 2024 Revolving Credit Facility was undrawn at March 31, 2025 and December 31, 2024.

Borrowings under the 2024 Credit Facility and the 2020 Credit Facility have variable interest rates based on SOFR (see Note 9).

As a result of exposure to interest rate movements, during March 2020, the Company entered into an interest rate swap arrangement, which effectively converted its $ 400 million term loan with its variable interest rate based upon one-month LIBOR to an aggregate fixed rate of 0.904 %, plus a leverage-based margin as defined in the 2020 Credit Facility.

On July 22, 2022, the Company sold $ 30 million of the notional amount of its interest rate swap back to its counterparty for $ 1.5 million, reducing the notional amount of this swap to $ 370 million.

On August 16, 2022, the Company sold another $ 30 million of the notional amount of its interest rate swap back to its counterparty for $ 1.6 million, reducing the notional amount to $ 340 million, which approximated the current level of our term loan debt then outstanding.

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 until it was refinanced on June 21, 2024, the amortization of which totaled $ 0.4 million and $ 0.7 million for the nine months ended September 30, 2024 and 2023, respectively.

The remaining unamortized gain in accumulated other comprehensive (loss) income of approximately $ 0.5 million was written off to interest expense in conjunction with the refinancing of the 2020 Credit Facility on June 21, 2024.

See Note 9 for a description of the refinancing.

On March 24, 2023, the Company received $ 9.4 million, consisting of $ 0.4 million of interest and $ 9.0 million for the sale of $ 170 million of its $ 340 million notional amount interest rate swap back to its counterparty, reducing the notional amount to $ 170 million.

On March 27, 2023, the Company received $ 9.8 million, consisting of $ 0.4 million of interest and $ 9.4 million for the sale of the remaining $ 170 million of its interest rate swap back to its counterparty.

The portion of the gain in accumulated other comprehensive (loss) income related to the term loan debt prepaid on the date of

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

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 our remaining term loan debt balance was $ 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 until it was refinanced on June 21, 2024, the amortization of which totaled $ 3.0 million and $ 3.1 million for the nine months ended September 30, 2024 and 2023, respectively.

As a result of exposure to interest rate movements, the Company entered into an interest rate swap arrangement in March 2020 which effectively converted its $ 400 million term loan with its variable interest rate based upon one-month LIBOR to an aggregate fixed rate of 0.904 %, plus a leverage-based margin as defined in the 2020 Credit Facility.

In two separate transactions during 2022, the Company sold a total of $ 60 million of the notional amount of our interest rate swap back to its counterparty for $ 3.1 million, reducing the notional amount of this swap to $ 340 million.

The gain in Accumulated other comprehensive (loss) income related to these sales totaled $ 3.1 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, the amortization of which totaled $ 0.2 million in the three months ended March 31, 2024.

The remaining unamortized gain in Accumulated other comprehensive (loss) income of approximately $ 0.5 million was written off to interest expense in conjunction with the refinancing of the 2020 Credit Facility on June 21, 2024.

In two separate transactions in 2023, the Company received a total of $ 19.2 million, consisting of $ 0.8 million of interest and $ 18.4 million for the sale of the remaining $ 340 million notional amount of its swap.

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 the 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 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 $ 1.6 million for the three months ended March 31, 2024.

The remaining unamortized gain in Accumulated other comprehensive (loss) income of $ 4.4 million was written off to interest expense in conjunction with the refinancing of the 2020 Credit Facility on June 21, 2024.

See Note 9 for a description of the refinancing.

The Company’s objectives in using interest rate derivatives have been to add stability to interest expense and to manage its exposure to interest rate movements.

2 unchanged sentences

The effective portion of changes in the fair value of designated derivatives that qualify as cash flow hedges is recorded in Accumulated other comprehensive income in the condensed consolidated balance sheet and is subsequently reclassified into earnings in the period that the hedged forecasted transactions affect earnings.

During the nine months ended September 30, 2023, such a derivative was used to hedge the variable cash flows associated with the outstanding borrowings under the 2020 Credit Facility and the Company accounted for this derivative as an effective hedge until the final portion of the swap was sold on March 27, 2023.

Any ineffective portion of the change in the fair value of the derivative would have been recognized directly in earnings.

1 unchanged sentence

Amounts reported in Accumulated other comprehensive income related to the Company’s derivative are reclassified to interest expense as interest is accrued on the Company’s variable-rate debt.

The impact of the Company’s derivative financial instrument on its condensed consolidated statements of comprehensive (loss) income for the three and nine months ended September 30, 2024 and 2023 was as follows, net of tax (in thousands):

Three months ended

Nine months ended

September 30,

Gain (loss) recognized in other comprehensive income (loss) on swap, net of tax

Amount reclassified from accumulated other comprehensive income to other expense, net upon sale of swap, net of tax

Amount reclassified from accumulated other comprehensive income to interest expense

Unrealized gain (loss) on interest rate swap, net of reclassifications and amortization

The Company had no derivative assets or liabilities at September 30, 2024 or December 31, 2023.

The impact of the Company’s derivative financial instrument on its condensed consolidated statements of comprehensive (loss) income for the three months ended March 31, 2024 was a reclassification of $ 1.3 million to increase interest expense.

The Company had no derivative assets or liabilities at March 31, 2025 or December 31, 2024.

(11) PREFERRED STOCK AND WARRANTS

On March 28, 2023, the Company issued 55,000 shares of Preferred Stock to investors in the Private Placement at a price of $ 970 per share, along with 4,858,090 Warrants with an exercise price of $ 3.77 per share.

On June 25, 2024, the Company redeemed the Preferred Stock with a portion of the proceeds from the refinancing of the 2020 Credit Facility at a rate of 103 % for a total of approximately $ 63.5 million.

During the three months ended

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

The Warrants remain outstanding and without modification.

March 31, 2025, 0.2 million Warrants were exercised.

The remaining Warrants outstanding continue without modification.

See Note 9 for a description of the refinancing of the 2020 Credit Facility.

The Company accounted for the Preferred Stock until it was redeemed and continues 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 .

The Company accounted for the Preferred Stock until it was redeemed and continues to account for the remaining 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 the Company considered fair value to best reflect its expected future economic value.

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The Company determined the fair value of the Warrants using Level 3 input.

The key assumptions into the model utilized was as follows as of September 30, 2024:

(Black-Scholes)

The key assumptions into the model utilized was as follows as of March 31, 2025 and 2024:

Risk-free rate

2 unchanged sentences

Fair value of Warrant per share

The changes in the Company’s Preferred Stock and Warrant liabilities for the nine months ended September 30, 2024 were as follows (in thousands):

The changes in the Company’s Preferred Stock liabilities for the three months ended March 31, 2024 were as follows (in thousands):

Preferred stock

1 unchanged sentence

Payable in-kind dividends

Reversal of fair value adjustments

Call premium (3%)

Redemption (June 25, 2024)

Balance at September 30, 2024

Warrant liability

Balance at January 1, 2024

Fair value change

Balance at September 30, 2024

Balance at March 31, 2024

The changes in the Company’s Warrant liabilities for the three months ended March 31, 2025 and 2024 were as follows (in thousands):

Three months ended March 31,

Balance at beginning of year

Exercise of warrants

Fair value change

Balance at end of period

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

The Preferred Stock, redeemed on June 25, 2024, was subordinate to the Company’s indebtedness and senior to the Company’s common stock or other equity.

1 unchanged sentence

Dividends were payable in-kind during the first year at a rate of 9.25 %.

At the Company’s option, the

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

dividends were payable in-kind or in cash during the second year at a rate of 9.75 %.

At the Company’s option, the dividends were payable in-kind or in cash during the second year at a rate of 9.75 %.

Dividends thereafter were to be payable in cash at a rate of 12.00 %.

3 unchanged sentences

The Preferred Stock was redeemable on or after the first and second anniversaries of the closing date at a rate of 103 % and 102 %, respectively.

The Warrants, which expire March 30, 2027, are immediately exercisable and upon an event such as a merger, consolidation, asset sale or similar change of control, may be exercised and the holders may vote the underlying shares of common stock.

The Warrants are immediately exercisable and upon an event such as a merger, consolidation, asset sale or similar change of control, the Warrants may be exercised and the holders may vote the underlying shares of common stock.

In connection with the Private Placement, the Company provided the investors with certain registration rights relating to the Preferred Stock, the Warrants and the shares of the Company’s common stock underlying the Warrants, that required the Company to file a registration statement on Form S-3 with the SEC within 30 days following the closing date of the Private Placement.

The registration requirement was completed on May 19, 2023.

During the three months ended March 31, 2025, 176,658 of the Warrants were exercised in cashless exercises, resulting in the issuance of 32,573 of the Company’s common stock at a weighted average fair value of $ 4.62 per share.

There were 4,681,432 remaining Warrants outstanding as of March 31, 2025.

(12) REVENUE RECOGNITION

1 unchanged sentence

products and services.

Product revenue includes the Company’s hardware and software that function together to deliver the products’ essential functionality.

Software and hardware are also sold on a standalone basis.

Product revenue includes:

1) the Company’s proprietary hardware and software that function together to deliver the products’ essential functionality and 2) the Company’s software only solutions that can be used on either the Company’s hardware or third-party hardware.

Both proprietary hardware and software only solutions are also sold on a standalone basis.

Services include customer support (software updates, upgrades and technical support), consulting, design services, installation services and training.

2 unchanged sentences

When an arrangement contains more than one performance obligation, the Company will allocate the transaction price to each performance obligation on a relative standalone selling price basis.

The Company utilizes the observable price of goods and services when they are sold separately to similar customers in order to estimate standalone selling price.

The Company utilizes the observable price of goods and services, including when they are sold separately to similar customers, in order to estimate standalone selling price (“SSP”).

The Company’s software licenses typically provide a perpetual right to use the Company’s software.

The Company also sells term-based software licenses that expire and Software-as-a-Service ("SaaS")-based software which are referred to as subscription arrangements.

However, the Company also sells term-based software licenses that expire and Software-as-a-Service (“SaaS”)-based software which are referred to as subscription arrangements.

The Company does not customize its software nor are installation services required, as the customer has a right to utilize internal resources or a third-party service company.

1 unchanged sentence

The Company has concluded that its software licenses are functional intellectual property that are distinct, as the user can benefit from the software on its own.

Product revenue is typically recognized upon transfer of control or when the software is made available for download, as this is the point the user of the software can direct the use of, and obtain substantially all of the remaining benefits from, the functional intellectual property.

The Company begins to recognize software revenue related to the renewal of subscription software licenses at the start of the subscription period.

Product revenue from sales of the Company’s perpetual and term-based software licenses is typically recognized when the software is made available for download, as this is the point the user of the software can direct the use of and obtain substantially all of the remaining benefits from the functional intellectual property.

The Company begins to recognize software revenue related to the renewal of term-based software licenses at the start of the renewal period.

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

Revenue related to sales of SaaS-based software is recognized ratably over the service period as the customer does not take possession of the software or have the ability to take possession of the software.

The Company offers warranties on its products.

3 unchanged sentences

The Company does not allow and has no history of accepting product returns.

Services revenue includes revenue from customer support and other professional services.

Service revenue includes revenue from customer support and other professional services.

Customer support includes software updates on a when-and-if-available basis, telephone support, integrated web-based support and bug fixes or patches.

1 unchanged sentence

Customer support revenue is recognized ratably over the term of the customer support agreement, which is typically one year.

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

The Company’s professional services include consulting, technical support, resident engineer services, design services and installation services.

1 unchanged sentence

The method to measure progress toward completion requires judgment and is based on the nature of the products or services to be provided.

The Company generally uses the input method to measure progress for its contracts because it believes such method best depicts the transfer of assets to the customer, which occurs as the Company incurs costs for the contracts.

However, in some instances, the Company uses the output method because it best depicts the transfer of asset to the customer.

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 Company generally uses the input method to measure progress for its contracts and to recognize revenue because it believes such method, in general, best depicts the transfer of assets to its customers.

The input method measures costs the Company has incurred in the period for its contracts.

In some infrequent instances, the Company may engage a third-party to perform services on its behalf and in those cases the output method is used to recognize revenue because it best depicts the transfer of assets to its customers.

Under the output method, there is a 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.

When the measure of progress is based upon expended labor, progress toward completion is measured as the ratio of labor time expended to date versus the total estimated labor time required to complete the performance obligation.

Revenue is recorded proportionally as costs are incurred or as labor is expended.

Costs to fulfill these obligations include internal labor as well as subcontractor costs.

Costs to fulfill these obligations can include internal labor as well as subcontractor costs.

Customer training includes courses offered by the Company.

The related revenue is typically recognized as the training services are performed.

The related revenue is typically recognized as the training services are performed, typically over a period of one to five days .

Payment terms for the Company’s contracts with its customers typically range from 30 to 60 days from the invoice date.

In certain cases, the Company may offer extended payment terms, which are assessed on a case-by-case basis.

The Company does not generally offer significant financing components in its contracts with customers.

However, if a contract includes a significant financing component, the transaction price is adjusted for the time value of money.

For the three months ended March 31, 2025, the impact of financing components was immaterial.

Amounts billed to customers for sales and other taxes are excluded from the transaction price.

Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to government authorities.

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

The Company’s typical performance obligations include the following:

4 unchanged sentences

Software licenses (perpetual or term)

Upon transfer of control;

typically, when made available for download (point in time)

For perpetual licenses, typically when made available for download (point in time);

for term-based licenses, at the beginning of the specified term (point in time)

Generally, within 30-60 days of invoicing, except for term licenses which may be paid for over time

15 unchanged sentences

Other professional services (excluding training services)

As work is performed (over time)

As work is performed (over time), typically on the input method based on hours incurred

Generally, within 30-60 days of invoicing (upon completion of services)

When the class is taught (point in time)

As the training is delivered (over time), typically one to five days

Generally, within 30-60 days of services being performed

2 unchanged sentences

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 standalone selling price ("SSP") for each distinct performance obligation.

The Company typically has more than one SSP for individual products and services due to the stratification of those products

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

and services by customers and circumstances.

Judgment is required to determine the SSP for each distinct performance obligation.

The Company typically has more than one SSP for individual products and services due to the stratification of those products and services by customers and circumstances.

In these instances, the Company may use information such as the size of the customer and geographic region in determining the SSP.

2 unchanged sentences

This results primarily from the billing of annual customer support agreements where the revenue is recognized over the term of the agreement.

The value of deferred revenue will increase or decrease based on the timing of recognition of revenue.

The value of deferred revenue will increase or decrease based on the timing of invoices and recognition of revenue.

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

Disaggregation of Revenue

The Company disaggregates its revenue from contracts with customers based on the nature of the products and services and the geographic regions in which each customer is domiciled.

The Company’s revenue for the three and nine months ended September 30, 2024 and 2023 was disaggregated as follows:

Service revenue

(professional

Three months ended September 30, 2024

(maintenance)

Total revenue

United States

Europe, Middle East and Africa

Service revenue

(professional

Three months ended September 30, 2023

(maintenance)

Total revenue

United States

Europe, Middle East and Africa

The Company’s total revenue for the three months ended March 31, 2025 and 2024 was disaggregated geographically as follows:

Service revenue

1 unchanged sentence

(professional

Nine months ended September 30, 2024

Three months ended March 31, 2025

(maintenance)

5 unchanged sentences

(professional

Nine months ended September 30, 2023

Three months ended March 31, 2024

(maintenance)

2 unchanged sentences

Europe, Middle East and Africa

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

The Company’s product revenue from indirect sales through its channel partner program and from its direct sales program for the three and nine months ended September 30, 2024 and 2023 was as follows (in thousands):

The Company’s product revenue from its direct sales program and from indirect sales through its channel partner program for the three months ended March 31, 2025 and 2024 was as follows (in thousands):

Three months ended

Nine months ended

September 30,

Indirect sales through channel partner program

The Company’s product revenue from sales to enterprise customers and from sales to service provider customers for the three and nine months ended September 30, 2024 and 2023 was as follows (in thousands):

The Company’s product revenue from sales to enterprise customers and from sales to service provider customers for the three months ended March 31, 2025 and 2024 was as follows (in thousands):

Three months ended

Nine months ended

September 30,

Sales to enterprise customers

Sales to service provider customers

The Company’s product revenue and service revenue components by segment for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands):

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

The Company’s product revenue and service revenue components by segment for the three months ended March 31, 2025 and 2024 were as follows (in thousands):

Three months ended

Nine months ended

September 30,

Product revenue:

12 unchanged sentences

Revenue Contract Balances

The timing of revenue recognition, billings and cash collections results in billed accounts receivable;

unbilled receivables, which are contract assets;

and customer advances and deposits, which are contract liabilities, in the Company’s condensed consolidated balance sheets.

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables, which are contract assets, and customer advances and deposits, which are contract liabilities, in the Company’s condensed consolidated balance sheets.

Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals or upon achievement of contractual milestones.

Completion of services and billing may occur subsequent to revenue recognition, resulting in contract assets.

The Company may receive advances or deposits from its customers before revenue is recognized, resulting in contract liabilities that are

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

classified as deferred revenue.

Billing may occur subsequent to revenue recognition, resulting in contract assets.

The Company may receive advances or deposits from its customers before revenue is recognized, resulting in contract liabilities which are classified as deferred revenue.

These assets and liabilities are reported in the Company’s condensed consolidated balance sheets on a contract-by-contract basis as of the end of each reporting period.

Changes in the contract asset and liability balances during the nine months ended September 30, 2024 were not materially impacted by any factors other than billing and revenue recognition.

Changes in the contract asset and liability balances during the three months ended March 31, 2025 were not materially impacted by any factors other than billing and revenue recognition.

Nearly all of the Company’s deferred revenue balance is related to services revenue, primarily customer support contracts.

5 unchanged sentences

Unbilled receivables that are anticipated to be invoiced in the next twelve months are included in Accounts receivable on the Company’s condensed consolidated balance sheets.

The changes in the Company’s accounts receivable, unbilled receivables and deferred revenue balances for the nine months ended September 30, 2024 were as follows (in thousands):

The changes in the Company’s accounts receivable, unbilled receivables and deferred revenue balances for the three months ended March 31, 2025 were as follows (in thousands):

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

Balance at January 1, 2025

Increase (decrease), net

Balance at September 30, 2024

The Company recognized approximately $ 95 million of revenue in the nine months ended September 30, 2024 that was recorded as deferred revenue at December 31, 2023 and approximately $ 92 million of revenue in the nine months ended September 30, 2023 that was recorded as deferred revenue at December 31, 2022.

Of the Company’s deferred revenue reported as long-term in its condensed consolidated balance sheet at September 30, 2024, the Company expects that approximately $ 3 million will be recognized as revenue in 2025 , approximately $ 7 million will be recognized as revenue in 2026 and approximately $ 7 million will be recognized as revenue in 2027 and beyond.

Balance at March 31, 2025

The Company recognized approximately $ 51 million of revenue in the three months ended March 31, 2025 that was recorded as deferred revenue at December 31, 2024 and approximately $ 51 million of revenue in the three months ended March 31, 2024 that was recorded as deferred revenue at December 31, 2023.

Of the Company’s deferred revenue reported as long-term in its condensed consolidated balance sheet at March 31, 2025, the Company expects that approximately $ 10 million will be recognized as revenue in 2026 , approximately $ 8 million will be recognized as revenue in 2027 and approximately $ 6 million will be recognized as revenue in 2028 and beyond.

The Company applies the optional exemption of not disclosing the transaction price allocated to the remaining performance obligation for its contracts with an original duration of less than one year.

In 2024, the Company entered into a contract with an existing customer that has revenue allocated to remaining performance obligations, which includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods of approximately $ 275 million and $ 285 million as of March 31, 2025 and December 31, 2024, respectively.

The Company expects to recognize the remaining revenue in 2025, 2026 and 2027.

All freight-related customer invoicing is recorded as revenue, while the shipping and handling costs that occur after control of the promised goods or services transfer to the customer are reported as fulfillment costs, a component of Cost of revenue - product in the Company’s condensed consolidated statements of operations.

2 unchanged sentences

These costs have been deferred on our condensed consolidated balance sheet and are being amortized over the expected life of the customer contract, which is generally five years .

At both September 30, 2024 and December 31, 2023, the Company had $ 3 million of deferred sales commissions capitalized.

At March 31, 2025 and December 31, 2024, the Company had $ 2.5 million and $ 2.8 million of deferred sales commissions capitalized, respectively.

(13) OPERATING SEGMENT INFORMATION

The Company has two reportable segments, which are intended to align with the manner in which the business is managed:

Cloud and Edge, and IP Optical Networks.

The Company has two operating and reportable segments, Cloud and Edge and IP Optical Networks, that align with the way the business is managed.

The Company’s CODM, its President and Chief Executive Officer, makes key operating decisions and assesses performance based upon these reportable segments.

The Cloud and Edge segment provides secure and reliable software and hardware products, solutions and services for enabling Voice over Internet Protocol ("VoIP") communications, Voice over Long-Term Evolution ("VoLTE") and Voice Over 5G ("VoNR") communications, and Unified Communications and Collaboration ("UC&C") within service provider and enterprise networks and from the cloud.

The 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

The 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 networks.

Ribbon's Cloud and Edge product portfolio consists primarily of its Session Border Controller ("SBC") products and its Network Transformation products.

The IP Optical Networks segment provides high-performance, secure solutions for IP networking and optical

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

and within service provider networks.

Ribbon’s Cloud and Edge product portfolio consists primarily of its Session Border Controller ("SBC") products and its Network Transformation products.

The IP Optical Networks segment provides high-performance, secure solutions for IP networking and optical transport, supporting wireless networks including 5G, metro and edge aggregation, core networking, data center interconnect, legacy transformation and transport solutions for wholesale carriers.

transport, supporting wireless networks including 5G, metro and edge aggregation, core networking, data center interconnect, legacy transformation and transport solutions for wholesale carriers.

This portfolio is offered to service provider, enterprise and industry verticals with critical transport network infrastructures including utilities, government, defense, transportation, and education and research.

The Company has not provided segment asset information as such information is not provided to the CODM and accordingly, asset information is not used in assessing segment performance.

The Company does not provide segment asset information as such information is not provided to the CODM and accordingly, asset information is not used in assessing segment performance.

Segment revenue and expenses included in the tables below represent direct revenue and expense attributable to each segment.

Please see Note 10 for information regarding the allocation of goodwill between segments.

The CODM utilizes revenue and adjusted gross profit to measure and assess each segment’s performance.

The Company calculates adjusted gross profit by excluding from cost of revenue:

amortization of acquired technology, stock-based compensation, and may also exclude other items in future periods that the Company believes are not part of the Company’s core business.

Adjusted gross profit is not a financial measure determined in accordance with U.S.

GAAP, may not be comparable to similarly titled measures used by other companies, and should not be considered a substitute for gross profit or other results reported in accordance with U.S.

See below for a reconciliation of adjusted gross profit to gross profit which is the most directly comparable U.S.

GAAP measure.

The tables below provide revenue, adjusted gross profit and depreciation expense by reportable segment for the three and nine months ended September 30, 2024 and 2023 (in thousands):

The CODM utilizes adjusted gross profit to evaluate each segment's performance.

The Company calculates adjusted gross profit by excluding from cost of revenue both amortization of acquired technology and stock-based compensation and may also exclude other items in future periods that the Company believes are not part of the Company's core business.

The Company uses adjusted gross profit to develop its annual budget and quarterly forecasts.

The CODM analyzes adjusted gross profit compared to the annual budget and quarterly forecasts to allocate resources.

Ribbon’s calculation of adjusted gross profit may not be comparable to similarly titled measures used by other companies.

See below for a reconciliation of segment adjusted gross profit to gross profit and loss before income taxes.

The tables below present significant segment expenses regularly reviewed by the CODM for the three months ended March 31, 2025 and 2024 (in thousands):

Three months ended

Nine months ended

September 30,

Segment revenue:

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Three months ended

Nine months ended

September 30,

Segment adjusted gross profit:

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Total segment adjusted gross profit

Reconciliation of segment adjusted gross profit to gross profit and loss before income taxes

Stock-based compensation expense

Amortization of acquired technology

Research and development expense

Sales and marketing expense

General and administrative expense

Amortization of acquired intangible assets

Restructuring and related expense

Interest expense, net

Other income (expense), net

Loss before income taxes

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

Three months ended

Nine months ended

September 30,

Segment depreciation expense:

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Depreciation expense

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(14) MAJOR CUSTOMERS

The following customer contributed 10% or more of the Company’s revenue in the three and nine months ended September 30, 2024 and 2023:

The following customer contributed 10% or more of the Company’s revenue in the three months ended March 31, 2025 and 2024:

Three months ended

Nine months ended

September 30,

Verizon Communications Inc.

At September 30, 2024, Verizon Communications Inc.

accounted for just over 10% of the Company’s accounts receivable balance.

At December 31, 2023, no customer accounted for 10% or more of the Company’s accounts receivable balance.

* Less than 10% of total revenue

At March 31, 2025 and December 31, 2024, no customer accounted for 10% or more of the Company’s accounts receivable balance.

The Company performs ongoing credit evaluations of its customers and generally does not require collateral on accounts receivable.

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Executive Equity Arrangements

Inducement Awards

In connection with his appointment as President and Chief Executive Officer of Ribbon on March 16, 2020, the Company awarded Bruce McClelland sign-on equity grants, comprised of RSUs and a PSU grant with both market and service conditions.

The market conditions surrounding the PSUs granted were not met by the expiration date of September 1, 2024 and therefore the associated shares have been cancelled.

Performance-Based Stock Grants

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Restricted Stock Units

The activity related to the Company’s RSUs for the nine months ended September 30, 2024 was as follows:

The activity related to the Company’s RSUs for the three months ended March 31, 2025 was as follows:

Unvested balance at January 1, 2025

( 3,444,670 )

Unvested balance at September 30, 2024

The total grant date fair value of shares of restricted stock underlying RSUs that vested during the nine months ended September 30, 2024 was $ 11.9 million.

Unvested balance at March 31, 2025

The total grant date fair value of shares of restricted stock underlying RSUs that vested during the three months ended March 31, 2025 was $ 0.6 million.

Performance-Based Stock Units

The activity related to the Company’s PSUs for the nine months ended September 30, 2024 was as follows:

The activity related to the Company’s PSUs for the three months ended March 31, 2025 was as follows:

Unvested balance at January 1, 2025

( 4,035,835 )

Unvested balance at September 30, 2024

The total grant date fair value of shares of restricted stock underlying PSUs that vested during the nine months ended September 30, 2024 was $ 0.9 million.

Unvested balance at March 31, 2025

The total grant date fair value of shares of restricted stock underlying PSUs that vested during the three months ended March 31, 2025 was $ 1.4 million.

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

Stock-Based Compensation

The condensed consolidated statements of operations include stock-based compensation for the three and nine months ended September 30, 2024 and 2023 as follows (in thousands):

The condensed consolidated statements of operations include stock-based compensation for the three months ended March 31, 2025 and 2024 as follows (in thousands):

Three months ended

Nine months ended

September 30,

Product cost of revenue

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General and administrative

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

At September 30, 2024, there was $ 15.1 million, net of expected forfeitures, of unrecognized stock-based compensation expense related to unvested RSUs and PSUs.

At March 31, 2025, there was $ 10.3 million, net of expected forfeitures, of unrecognized stock-based compensation expense related to unvested RSUs and PSUs.

This expense is expected to be recognized over a weighted average period of approximately one year .

The Company has operating leases for corporate offices and research and development facilities and has historically had finance leases for certain equipment.

The Company has operating leases for corporate offices and research and development facilities.

Operating leases are reported separately in the Company’s condensed consolidated balance sheets.

Assets acquired under finance leases, if any, are included in Property and equipment, net, in the condensed consolidated balance sheets.

The Company determines if an arrangement is a lease at inception.

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The measurement of the right-of-use asset also includes any lease payments made prior to the commencement date (excluding any lease incentives) and initial direct costs incurred.

The Company assessed its right-of-use assets for impairment as of September 30, 2024 and December 31, 2023 and determined no impairment has occurred.

The Company assessed its right-of-use assets for impairment as of March 31, 2025 and December 31, 2024 and determined no impairment has occurred.

Lease terms may include options to extend or terminate the lease and the Company incorporates such options in the lease term when it has the unilateral right to make such an election and it is reasonably certain that the Company will exercise that option.

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For operating leases, lease expense for minimum fixed lease payments is recognized on a straight-line basis over the lease term.

The expense for finance leases includes both interest and amortization expense components, with the interest component calculated based on the effective interest method and the amortization component calculated based on straight-line amortization of the right-of-use asset over the lease term.

Lease contracts may contain variable lease costs, such as common area maintenance, utilities and tax reimbursements that vary over the term of the contract.

Lease contracts may contain variable lease costs, such as common area maintenance, utilities and tax

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

reimbursements that vary over the term of the contract.

Variable lease costs are not included in minimum fixed lease payments and as a result, are excluded from the measurement of the right-of-use assets and lease liabilities.

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Certain leased facilities are being partially or fully vacated as part of the 2022 Restructuring Plan and for some of those facilities, the Company has no plans to enter into sublease agreements.

Accordingly, the Company accelerated the amortization of those lease assets through the planned cease-use date of each facility, resulting in additional amortization expense $ 0.2 million and $ 0.8 million, respectively, in the three and nine months ended September 30, 2023.

No such accelerated amortization was recorded in the three and nine months ended September 30, 2024.

The Company did no t record estimated future variable lease costs in the three and nine months ended September 30, 2024 or 2023 related to the 2022 Restructuring Plan.

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

Accordingly, the Company may accelerate the amortization of those lease assets through the planned cease-use date of each facility, resulting in additional amortization expense.

No such accelerated amortization was recorded in the three months ended March 31, 2025 or March 31, 2024.

The Company did no t record estimated future variable lease costs in the three months ended March 31, 2025 or 2024 related to the 2022 Restructuring Plan.

All incremental accelerated amortization and accruals for estimated future variable costs are included in Restructuring and related expense in the Company’s condensed consolidated statements of operations.

At September 30, 2024 and December 31, 2023, the Company had accruals of $ 1.2 million and $ 1.5 million, respectively, for all future anticipated variable lease costs related to these facilities.

At March 31, 2025 and December 31, 2024, the Company had accruals of $ 1.0 million and $ 1.1 million, respectively, for all future anticipated variable lease costs related to these facilities.

The Company may incur additional future expense if it is unable to sublease other locations included in the Facilities Initiative.

The Company leases its corporate offices and other facilities under operating leases, which expire at various times through 2036.

The Company’s right-of-use lease assets and lease liabilities at September 30, 2024 and December 31, 2023 were as follows (in thousands):

September 30,

The Company’s right-of-use lease assets and lease liabilities at March 31, 2025 and December 31, 2024 were as follows (in thousands):

Classification

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Total Operating lease liabilities

The components of lease expense for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands):

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

The components of lease expense for the three months ended March 31, 2025 and 2024 were as follows (in thousands):

Three months ended

Nine months ended

September 30,

Operating lease cost*

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Net lease cost

No accelerated amortization was recorded in the three and nine months ended September 30, 2024.

Operating lease costs for three and nine months ended September 30, 2023 included $ 0.2 million and $ 0.8 million, respectively, of accelerated amortization for certain assets partially or fully vacated with no intent or ability to sublease.

No variable lease costs were accrued in the three and nine months ended September 30, 2024 or 2023 for future estimated variable expenses related to certain assets partially or fully vacated with no intent or ability to sublease.

Cash flows related to the Company’s leases included in the measurement of operating lease liabilities were classified as operating cash flows and totaled $ 14.0 million and $ 14.3 million in the nine months ended September 30, 2024 and 2023, respectively.

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

Other information related to the Company’s leases as of September 30, 2024 and December 31, 2023 was as follows:

September 30,

No accelerated amortization was recorded in the three months ended March 31, 2025 or 2024.

No variable lease costs were accrued in the three months ended March 31, 2025 or 2024 for future estimated variable expenses related to certain assets partially or fully vacated with no intent or ability to sublease.

Cash flows related to the Company’s leases included in the measurement of operating lease liabilities were classified as operating cash flows and totaled $ 3.5 million and $ 4.8 million in the three months ended March 31, 2025 and 2024, respectively.

The Company’s non-cash investing and financing activities in the three months ended March 31, 2025 and 2024 related to the addition of operating leases resulted in right-of-use assets (“ROUs”) obtained in exchange for lease obligations of $ 16.6 million and $ 1.3 million, respectively, and operating lease liabilities recorded of $ 27.3 million and $ 1.3 million, respectively.

Other information related to the Company’s leases as of March 31, 2025 and December 31, 2024 was as follows (in thousands):

Weighted average remaining lease term (years):

2 unchanged sentences

Operating leases

Future minimum fixed lease payments under noncancelable leases at September 30, 2024 were as follows (in thousands):

Future minimum fixed lease payments under noncancelable leases at March 31, 2025 were as follows (in thousands):

Remainder of 2025

2 unchanged sentences

Present value of lease liabilities

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

(17) INCOME TAXES

The Company recorded income tax provisions of $ 6.5 million and $ 11.5 million in the nine months ended September 30, 2024 and 2023, respectively.

The Company recorded income tax benefits (provisions) of $ 0.8 million and $( 3.4 ) million in the three months ended March 31, 2025 and 2024, respectively.

These amounts reflect the Company’s estimates of the effective rates expected to be applicable for the respective full years, adjusted for any discrete events, which are recorded in the period in which they occur.

3 unchanged sentences

(18) RELATED PARTIES

The Company recognized revenue from its largest stockholder of $ 1.4 million and $ 1.3 million in the three months ended September 30, 2024 and 2023, respectively, and $ 4.4 million and $ 7.1 million in the nine months ended September 30, 2024 and 2023, respectively.

Also, certain related party stockholders participated in the Private Placement (See Note 11).

The Company recognized revenue from its largest stockholder of $ 1.7 million and $ 1.5 million in the three months ended March 31, 2025 and 2024, respectively.

Also, the Company’s accounts receivable from its largest stockholder totaled $ 4.7 million and $ 5.5 million as of March 31, 2025 and December 31, 2024, respectively.

In addition, certain related party stockholders participated in the Private Placement described in Note 11.

(19) COMMITMENTS AND CONTINGENCIES

Contingencies

Liabilities for Royalty Payments to the IIA

2 unchanged sentences

The Company assumed ECI’s contract with the IIA, which requires the Company to pay royalties to the IIA on proceeds from the sale of products which the Israeli government has supported by way of research and development grants.

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

royalties for grants prior to 2017 were calculated at the rates of 1.3 % to 5.0 % of the aggregated proceeds from the sale of such products developed at certain of the Company’s R&D centers, up to an amount not exceeding 100 % of such grants plus interest at LIBOR.

Effective for grants approved in 2017 and subsequently, interest was calculated at the higher of LIBOR plus 1.5 % to 2.75 %.

At September 30, 2024, the Company had $ 1.6 million of unpaid royalties accrued.

The Company’s maximum possible future royalties commitment at September 30, 2024 was $ 19.8 million, including interest of $ 1.2 million, is based upon estimates of future product sales and the grants received from the IIA not yet repaid.

The royalties for grants prior to 2017 were calculated at the rates of 1.3 % to 5.0 % of the aggregated proceeds from the sale of such products developed at certain of the Company’s R&D centers, up to an amount not exceeding 100 % of such grants plus interest at LIBOR.

Effective for grants approved in 2017 and effective through 2023, interest was calculated at the higher of LIBOR plus 1.5 % to 2.75 %.

For grants approved in 2024 and thereafter, interest is calculated based on SOFR.

At March 31, 2025, the Company had $ 2.1 million of unpaid royalties accrued.

The Company’s maximum possible future royalties commitment at March 31, 2025 of $ 14.1 million, including interest of $ 0.9 million, was based upon estimates of future sales of product and services and the grants received from the IIA not yet repaid.

The Company is often a party to disputes and legal proceedings that it considers routine and incidental to its business, including those described below.

3 unchanged sentences

Accordingly, with respect to these proceedings, the Company is currently unable to reasonably estimate the possible loss or range of possible loss.

Miller Complaint.

On November 8, 2018, Ron Miller, a purported stockholder of the Company, filed a Class Action Complaint (the "Miller Complaint") in the United States District Court for the District of Massachusetts (the "Massachusetts District Court") against the Company and three of its former officers (collectively, the "Defendants"), claiming to represent a class of purchasers of Sonus common stock during the period from January 8, 2015 through March 24, 2015 and alleging violations of the federal securities laws.

Similar to a previous complaint entitled Sousa et al.

Sonus Networks, Inc.

et al., which was dismissed with prejudice by an order dated June 6, 2017, the Miller Complaint claims that the Defendants made misleading forward-looking statements concerning Sonus’ expected fiscal first quarter of 2015 financial performance, which statements were also the subject of an August 7, 2018 Securities and Exchange Commission Cease and Desist Order, whose findings the Company neither admitted nor denied.

The Miller plaintiffs are seeking monetary damages.

After the Miller Complaint was filed, several parties filed and briefed motions seeking to be selected by the Massachusetts District Court to serve as a Lead Plaintiff in the action.

On June 21, 2019, the Massachusetts District Court appointed a group as Lead Plaintiffs and the Lead Plaintiffs filed an amended complaint on July 19, 2019.

On August 30, 2019, the Defendants filed a motion to dismiss the Miller Complaint and, on October 4, 2019, the Lead Plaintiffs filed an opposition to the motion to dismiss.

There was an oral argument on the motion to dismiss on February 12, 2020, and on October 20, 2022 the court denied the motion to dismiss.

In June 2023, the Defendants agreed to a settlement in principle with the named plaintiffs, and final approval of the settlement was provided by the court on April 24, 2024.

The settlement provided a release of all claims asserted in the litigation to all Defendants, who continue to deny liability.

The $ 4.5 million settlement amount was funded by the provider of the Company’s Directors and Officers liability insurance policy.

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

Charter Complaint.

On September 19, 2022, Charter Communications Operating, LLC (“Charter”) filed two complaints against two of our subsidiaries (Sonus Networks, Inc.

and Ribbon Communications Operating Company, Inc.) alleging breach of contract with respect to indemnification obligations purportedly owed to Charter in connection with Charter’s legal dispute with Sprint Communications Company L.P., which was settled by Charter in March 2022.

RIBBON COMMUNICATIONS INC.

Notes to Condensed Consolidated Financial Statements (Continued)

One complaint was filed in the Supreme Court of the State of New York, in New York County;

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The Company filed its answer to the first complaint file in New York on December 7, 2022 and to the second complaint filed in Delaware on January 9, 2023.

Discovery is on-going and the court in the Delaware complaint has set a new trial date of June 2025.

WideOpenWest Complaint.

On August 9, 2023, WideOpenWest, Inc.

and WideOpenWest Finance, LLC (collectively, “WOW”) filed a complaint against Ribbon alleging breach of contract with respect to indemnification obligations purportedly owed to WOW in connection with WOW’s legal dispute with Sprint Communications Company L.P., which was settled by WOW in the second quarter of 2023.

The complaint was filed in the 429th Judicial District of the District Court of the State of Texas, in Collin County, Texas and has since been transferred to the 493rd Judicial District Court in Collin County.

In the complaint, WOW is seeking monetary damages.

The Company filed its answer to the complaint on October 5, 2023.

On October 14, 2024, the Company and WOW agreed to settle this matter.

In connection with the settlement, the Company will pay WOW a total of $ 5.0 million, with $ 2.0 million paid at the time of settlement and the remaining $ 3.0 million paid over the next 18-months in equal quarterly installments.

Discovery is on-going and the court in the Delaware complaint has set a trial date of June 2025.

No trial date has been set for the case in New York.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements