Ribbon Communications Inc. Segments Disclosure
(17) 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.
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, along with related services such as large data analytics, fraud detection and prevention, and element management. The portfolio also includes the new Acumen AIOps and Automation platform.
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 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 9 for information regarding the allocation of goodwill between segments.
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 years ended December 31, 2025, 2024 and 2023 (in thousands):
Year ended December 31, | |||||||||
| 2025 | | 2024 | | 2023 | ||||
Segment revenue: | |||||||||
Cloud and Edge |
| $ | 511,430 |
| $ | 505,157 |
| $ | 477,647 |
IP Optical Networks |
| 333,126 |
| 328,724 |
| 348,692 | |||
Revenue |
| $ | 844,556 |
| $ | 833,881 |
| $ | 826,339 |
Year ended December 31, | |||||||||
2025 | | 2024 | | 2023 | |||||
Segment cost of revenue: | |||||||||
Cloud and Edge | $ | 188,355 |
| $ | 175,940 |
| $ | 177,629 | |
IP Optical Networks | 235,495 |
| 218,429 |
| 240,627 | ||||
Cost of revenue | $ | 423,850 |
| $ | 394,369 |
| $ | 418,256 | |
Year ended December 31, | |||||||||
| 2025 | | 2024 | | 2023 | ||||
Segment adjusted gross profit: | |||||||||
Cloud and Edge |
| $ | 326,717 |
| $ | 338,194 |
| $ | 314,594 |
IP Optical Networks |
| 115,293 |
| 127,836 |
| 124,436 | |||
Total segment adjusted gross profit |
| 442,010 |
| 466,030 |
| 439,030 | |||
Reconciliation of segment adjusted gross profit to gross profit and loss before income taxes | |||||||||
Stock-based compensation expense | (960) | (1,625) | (2,657) | ||||||
Amortization of acquired technology |
| (20,344) |
| (24,893) |
| (28,290) | |||
Gross profit |
| 420,706 |
| 439,512 |
| 408,083 | |||
Research and development expense | 178,872 | 179,941 | 190,660 | ||||||
Sales and marketing expense | 133,075 | 137,830 | 137,460 | ||||||
General and administrative expense | 64,239 | 68,740 | 54,962 | ||||||
Amortization of acquired intangible assets | 23,849 | 25,969 | 28,601 | ||||||
Acquisition-, disposal- and integration-related expense | 4,337 | — | 4,476 | ||||||
Restructuring and related expense | 19,658 | 10,160 | 16,209 | ||||||
Interest expense, net | 44,011 | 33,821 | 27,320 | ||||||
Other (income) expense, net | (2,226) | 29,119 | 3,768 | ||||||
Loss before income taxes | $ | (45,109) | $ | (46,068) | $ | (55,373) | |||
Year ended December 31, | |||||||||
| 2025 | | 2024 | | 2023 | ||||
Segment depreciation expense: | |||||||||
Cloud and Edge |
| $ | 9,554 |
| $ | 9,337 |
| $ | 9,798 |
IP Optical Networks |
| 7,174 |
| 4,202 |
| 4,307 | |||
Depreciation expense |
| $ | 16,728 |
| $ | 13,539 |
| $ | 14,105 |
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Mar 31, 2023 | |
| 2021 | Mar 11, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2017 | Mar 8, 2018 | |
About Segments Disclosures
Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.
Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.