Ribbon’s CEO said Verizon’s modernization project was a key Q4 revenue growth contributor

Verizon is leveraging Ribbon’s portfolio of Voice Products, including the vC20 Call Controller, G5 Line Access Gateway, G6 Universal Media Gateway, virtual and Cloud-native Session Border Controllers, and others. This allows for the consolidation and replacement of equipment with software-centric platforms while maintaining full feature functionality.

“The Verizon Voice Network Modernization Project is a significant part of this major recovery,” McClelland said. “Sales to this key customer accounted for 17% of overall company revenue in the fourth quarter and grew 80% in the second half of the year. The program's initial phase continues to ramp, and we're migrating approximately one voice switch every week and expect to scale further as the year progresses.”

Network modernization ramps

While Ribbon will continue to ramp up its engagement with Verizon, the vendor is seeing network modernization sales increase with several other U.S. service providers.

Ribbon reported that overall network modernization sales grew 21% quarter-over-quarter for the quarter.

Ribbon’s other network transformation deals included an IMS Mobile Core win and a cloud migration project with a European Tier 1 service provider, which McLelland said “highlights the technology leadership we have in leveraging a cloud-native operational and software delivery model.”

However, the momentum is not just about Tier 1 service providers.

As more states receive funding allocations from the BEAD program, Ribbon sees an opportunity to provide network equipment, particularly to support rural providers deploying fiber-to-the-home (FTTH). Sales have risen 5% year over year.

This has driven Ribbon to enhance its rural-focused capabilities.

“We're increasing our focus and investment in this area, adding additional resources to the sales organization and presales specialists,” McClelland said. “It's also critical to establish strong relationships with the engineering firms that specialize in this area, and we've continued to expand our efforts here as well.”

Another potential growth area for Ribbon will be with the over 200 Metaswitch customers. Microsoft sold the Metaswitch assets last fall to Alianza, which has positioned itself as a cloud communications platform for service providers.

McClelland said that the company’s voice services capabilities could fit these customers well.

“Microsoft's decision to sell that business to a small cloud platform provider does not give service providers much comfort that the future of their regulated on-premise lifeline voice platform is secure, and this is our sweet spot,” he said.

Federal opportunities abound

While Ribbon has long been a supplier to the service provider community, the vendor is seeing continual growth in both the enterprise and the public sector segments.

Enterprise currently accounts for 41% of Ribbon’s revenue. During the quarter, Ribbon secured new deals with key financial services companies, such as JPMorgan Chase, Bank of America, Citibank, and others.

McClelland said it is looking to make it easier for enterprises to work with Ribbon.

“We continue to transition customers to a flexible enterprise license agreement framework that simplifies their use of our software products and technical support services and provides better revenue predictability,” he said. “We expect the fourth quarter to continue to be the strongest in the year as we renew these enterprise term license agreements and recognize significant revenue.”

Besides traditional enterprises, Ribbon continues to gain traction with public sector agencies, particularly U.S. Defense agencies.  

Federal government agency customer wins included expansion orders on a large voice network modernization project. The vendor also secured a customer win for a portable network-in-a-box communication platform that can be quickly deployed in a forward command and control environment.

“As anticipated, we had a robust quarter with several new U.S. Defense agency awards,” McClelland said. “For the full year, our business with U.S. federal agencies increased almost 150% year-over-year.”

Cloud and Edge dominate results

Ribbon’s Cloud & Edge business was a key star in its portfolio during the fourth quarter.  

Driven by strong sales to service providers, enterprises, and government agencies, the company reported that Cloud & Edge sales grew 35% yearly to $165 million. Full-year revenues were $505 million, which reflects a $28 million or 6% increase from 2023.

“This was an excellent quarter for our Cloud & Edge business, with all aspects of the operation performing well,” McClelland said. “The business is solidly diversified with approximately two-thirds of our sales to service providers and one-third to enterprise, federal, and defense customers.”

Also, Ribbon’s Services and Support business rose 5% to $294 million or 58% of revenues.

Alternatively, Ribbon’s IP Optical Networks business revenues declined 17% yearly to $87 million and 6% for the entire year to $329 million.

John Townsend, Ribbon's CFO, said the IP Optical Networks decline was “due to the impact of suspending shipments to Eastern Europe.”

Buoyed by Tier 1 service provider customer wins, Ribbon Communications reported revenue of $251 million for the fourth quarter of 2024, up from $226 million for the fourth quarter of 2023 and $210 million for the third quarter of 2024.

From a segment perspective, service provider sales accounted for 59% of total revenue, while enterprise sales accounted for 41%. On a regional basis, 51% of customer wins were domestic, and 47% were international.  

“Revenue growth was underpinned by higher sales to U.S. Tier One Service Providers, U.S. Federal Defense agencies, and Enterprise customers,” McClelland said. “We also had solid contributions from U.S. Rural Broadband, Europe, and India.”

Looking forward to the rest of 2025, Ribbon expects profitable growth in both operating segments, with continued momentum from network modernization across Service Providers, Enterprise, and Federal and Defense customers.

The company projects revenue of $870 million to $890 million for the full year 2025 and $185 million to $195 million for the first quarter of 2025.

“We expect a normal seasonal pattern with the business accelerating as the year progresses,” Ribbon said.

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