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OPERATING SEGMENT INFORMATION
 9 Months Ended
Sep. 30, 2024
OPERATING SEGMENT INFORMATION  
OPERATING SEGMENT INFORMATION

(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 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

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. 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. Segment revenue and expenses included in the tables below represent direct revenue and expense attributable to each segment. Please see Note 4 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. GAAP. 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):

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​

​

​

​

​

​

​

​

​

​

​

Three months ended

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Nine months ended

​

​

September 30, 

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September 30, 

​

September 30, 

​

September 30, 

​

    

2024

    

2023

    

2024

    

2023

Segment revenue:

​

​

​

​

​

​

​

​

​

​

​

​

Cloud and Edge

 

$

128,078

 

$

115,765

 

$

340,302

 

$

355,501

IP Optical Networks

 

​

82,160

 

​

87,396

 

​

242,220

 

​

244,437

Revenue

 

$

210,238

 

$

203,161

 

$

582,522

 

$

599,938

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​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three months ended

​

Nine months ended

​

​

September 30, 

​

September 30, 

​

September 30, 

​

September 30, 

​

    

2024

    

2023

    

2024

    

2023

Segment adjusted gross profit:

​

​

​

​

​

​

​

​

​

​

​

​

Cloud and Edge

 

$

86,661

 

$

78,455

 

$

226,726

 

$

231,729

IP Optical Networks

 

​

29,634

 

​

32,862

 

​

93,390

 

​

78,613

Total segment adjusted gross profit

 

​

116,295

 

​

111,317

 

​

320,116

 

​

310,342

Stock-based compensation expense

​

​

(355)

​

​

(657)

​

​

(1,271)

​

​

(1,982)

Amortization of acquired technology

 

​

(6,323)

 

​

(7,157)

 

​

(19,406)

 

​

(21,985)

Gross profit

 

$

109,617

 

$

103,503

 

$

299,439

 

$

286,375

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​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three months ended

​

Nine months ended

​

​

September 30, 

​

September 30, 

​

September 30, 

​

September 30, 

​

    

2024

    

2023

    

2024

    

2023

Segment depreciation expense:

​

​

​

​

​

​

​

​

​

​

​

​

Cloud and Edge

 

$

2,324

 

$

2,426

 

$

6,981

 

$

7,402

IP Optical Networks

 

​

1,037

 

​

1,118

 

​

3,150

 

​

3,201

Depreciation expense

 

$

3,361

 

$

3,544

 

$

10,131

 

$

10,603

​