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OPERATING SEGMENT INFORMATION
 9 Months Ended
Sep. 30, 2025
OPERATING SEGMENT INFORMATION  
OPERATING SEGMENT INFORMATION

(13) OPERATING SEGMENT INFORMATION

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.

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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.

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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.

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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.

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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.

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The tables below present significant segment expenses regularly reviewed by the CODM for the three and nine months ended September 30, 2025 and 2024 (in thousands):

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​

​

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Three months ended

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Nine months ended

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​

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September 30, 

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September 30, 

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September 30, 

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September 30, 

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2025

    

2024

    

2025

    

2024

    

Segment revenue:

​

​

​

​

​

​

​

​

​

​

​

​

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Cloud and Edge

 

$

124,438

 

$

128,078

 

$

369,077

 

$

340,302

 

IP Optical Networks

 

​

90,933

 

​

82,160

 

​

248,156

 

​

242,220

 

Revenue

 

$

215,371

 

$

210,238

 

$

617,233

 

$

582,522

 

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​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three months ended

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Nine months ended

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​

​

September 30, 

​

September 30, 

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September 30, 

​

September 30, 

​

​

    

2025

    

2024

    

2025

    

2024

    

Segment adjusted gross profit:

​

​

​

​

​

​

​

​

​

​

​

​

​

Cloud and Edge

 

$

77,387

 

$

86,661

 

$

229,537

 

$

226,726

 

IP Optical Networks

 

​

35,805

 

​

29,634

 

​

86,580

 

​

93,390

 

Total segment adjusted gross profit

 

​

113,192

 

​

116,295

 

​

316,117

 

​

320,116

 

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​

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​

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

​

​

​

​

​

​

​

​

​

​

​

​

​

Stock-based compensation expense

​

​

(169)

​

​

(355)

​

​

(752)

​

​

(1,271)

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Amortization of acquired technology

 

​

(5,057)

 

​

(6,323)

 

​

(15,722)

 

​

(19,406)

 

Gross profit

 

​

107,966

 

​

109,617

 

​

299,643

 

​

299,439

 

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Research and development expense

​

​

45,894

​

​

45,645

​

​

134,158

​

​

134,897

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Sales and marketing expense

​

​

33,063

​

​

33,060

​

​

97,387

​

​

100,760

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General and administrative expense

​

​

16,368

​

​

21,588

​

​

48,126

​

​

51,680

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Amortization of acquired intangible assets

​

​

5,933

​

​

6,457

​

​

18,063

​

​

19,671

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Acquisition-, disposal- and integration-related expense

​

​

439

​

​

—

​

​

4,337

​

​

—

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Restructuring and related expense

​

​

3,506

​

​

3,794

​

​

10,193

​

​

8,779

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Interest expense, net

​

​

11,606

​

​

11,952

​

​

33,083

​

​

21,818

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Other expense (income), net

​

​

134

​

​

(1,056)

​

​

(836)

​

​

15,960

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Loss before income taxes

​

$

(8,977)

​

$

(11,823)

​

$

(44,868)

​

$

(54,126)

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​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three months ended

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Nine months ended

​

​

​

September 30, 

​

September 30, 

​

September 30, 

​

September 30, 

​

​

    

2025

    

2024

    

2025

    

2024

    

Segment depreciation expense:

​

​

​

​

​

​

​

​

​

​

​

​

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Cloud and Edge

 

$

2,399

 

$

2,324

 

$

7,151

 

$

6,981

 

IP Optical Networks

 

​

2,026

 

​

1,037

 

​

5,031

 

​

3,150

 

Depreciation expense

 

$

4,425

 

$

3,361

 

$

12,182

 

$

10,131

 

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