Financial Analysis

"(20) COMMITMENTS AND CONTINGENCIES Contingencies Liabilities for Royalty Payments to the IIA In connection with the Companys acquisition of ECI Telecom Group Ltd. (""ECI"") in 2020, ECI had previously received research and development grants from the Office of the Innovation Authority of the Israeli Ministry of Economics (the ""IIA""). The Company assumed ECIs contract with the IIA, which requires the Company to pay royalties to the IIA on proceeds from the sale of products that the Israeli government has supported by way of research and development grants. 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 Companys research and development (R&D) centers, up to an amount not exceeding 100% of such grants plus interest at the London Inter-Bank Offered Rate (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 the Secured Overnight Financing Rate (SOFR). At June 30, 2026, the Company had $3.3 million of unpaid royalties accrued. The Companys maximum possible future royalties commitment at June 30, 2026 of $11.6 million, including interest of $0.8 million, was based upon estimates of future sales of product and services and the grants received from the IIA not yet repaid. Litigation The Company i …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

"(9) DEBT As of June 30, 2026, the Company had $337.8 million outstanding under its credit facility (the Credit Facility), all of which relate to its term loan. Scheduled quarterly principal repayments continued during the period in accordance with the terms of the Companys Senior Secured Credit Facilities Credit Agreement (the Credit Agreement). There were no amounts outstanding under the Companys revolving credit facility under its Credit Agreement, and the Company had $35.0 million of available borrowing capacity under the revolving credit facility as of June 30, 2026. On May 5, 2026, the Company entered into the First Amendment and Limited Waiver to Credit Agreement (the First Amendment) with Ribbon Communications Operating Company, Inc., HPS Investment Partners, LLC, as administrative agent, and the consenting lenders. The First Amendment (1) waives compliance with the maximum consolidated net leverage ratio financial covenant as of and for the period ending June 30, 2026, (2) increases the Maximum Consolidated Net Leverage Ratio (as defined in the 2024 Credit Facility) to 4.50 :1.00 as of and for the period ending September 30, 2026, and sets the ratio for all subsequent quarters to 4.00 :1.00, and (3) modifies the applicable interest rate margins for any quarter in which the Consolidated Net Leverage Ratio exceeds 3.75 :1.00 to 7.00 %. Debt issuance costs associated with the First Amendment totaled $1.0 million and are being amortized on a straight-line basis over the …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

Service revenue Product Service revenue (professional Three months ended June 30, 2026 revenue (maintenance) services) Total revenue United States $ 37,011 $ 34,977 $ 17,379 $ 89,367 Europe, Middle East and Africa 24,695 15,398 8,999 49,092 Asia Pacific 30,291 9,407 2,940 42,638 Other 3,563 6,240 1,440 11,243 $ 95,560 $ 66,022 $ 30,758 $ 192,340 Service revenue Product Service revenue (professional Three months ended June 30, 2025 revenue (maintenance) services) Total revenue United States $ 59,101 $ 33,546 $ 23,575 $ 116,222 Europe, Middle East and Africa 25,534 18,362 8,217 52,113 Asia Pacific 27,966 9,708 4,078 41,752 Other 2,456 6,681 1,359 10,496 $ 115,057 $ 68,297 $ 37,229 $ 220,583 Service revenue Product Service revenue (professional Six months ended June 30, 2026 revenue (maintenance) services) Total revenue United States $ 57,952 $ 68,710 $ 35,283 $ 161,945 Europe, Middle East and Africa 41,657 30,081 16,424 88,162 Asia Pacific 58,225 18,637 6,703 83,565 Other 5,840 12,261 3,173 21,274 $ 163,674 $ 129,689 $ 61,583 $ 354,946 Service revenue Product Service revenue (professional Six months ended June 30, 2025 revenue (maintenance) services) Total revenue United States $ 88,442 $ 66,870 $ 43,605 $ 198,917 Europe, Middle East and Africa 44,994 35,745 16,873 97,612 Asia Pacific 59,005 19,108 6,818 84,931 Other 4,607 12,996 2,799 20,402 $ 197,048 $ 134,719 $ 70,095 $ 401,862 The Companys product revenue from its direct sales program and from indirect sales through its cha …

DisaggregationOfRevenueTableTextBlock · excerpt; the full note is in the filing

"(16) STOCK-BASED COMPENSATION PLANS The Company grants stock-based compensation to employees, officers and non-employee directors, as well as consultants and advisors of the Company and its subsidiaries under its 2025 Incentive Award Plan (the 2025 Plan) which provides for the award of stock options, stock appreciation rights (""SARs""), restricted stock awards (""RSAs""), performance-based stock awards (""PSAs""), restricted stock units (""RSUs""), performance-based stock units (""PSUs"") and other stock- or cash-based awards. The 2025 Plan has been approved by the Companys stockholders. Executive Equity Arrangements Performance-Based Stock Grants In addition to granting RSAs and RSUs to its executives and certain of its employees, the Company also grants PSUs to certain of its executives and certain other employees. Vesting periods for RSAs, RSUs, and PSUs granted range from one to three years. PSUs granted consist of 60% that have both performance and service conditions (the ""Performance PSUs"") and 40% that have both market and service conditions (the ""Market PSUs""). Each Performance PSU is comprised of three consecutive fiscal year performance periods beginning in the year of grant, with one -third of the Performance PSUs attributable to each fiscal year performance period. The Market PSUs have one three-year performance period, beginning January 1 in the year of grant and ending on December 31, three years thereafter. The number of shares of common stock underlying …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

(5) FAIR VALUE HIERARCHY The carrying amounts of the Companys cash equivalents, accounts receivable, accounts payable and borrowings under a revolving credit facility in the condensed consolidated balance sheets approximate fair value due to the immediate or short-term nature of these financial instruments. The carrying amount of the Companys term debt at June 30, 2026 and December 31, 2025 also approximates fair value, based on prevailing market conditions. The Companys warrant liability had a fair value of $1.0 million and $1.9 million as of June 30, 2026 and December 31, 2025, 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. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The three-tier fair value hierarchy is based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instruments classification within the fair value hierarchy is based upon the lowest level of inputs that is significant to the fair value measurement. The fair value hierarchy is as follows: 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 inputs at June 30, 2026 or December …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

(4) INTANGIBLE ASSETS AND GOODWILL The Companys intangible assets at June 30, 2026 and December 31, 2025 consisted of the following (in thousands): Weighted average amortization Net period Accumulated carrying June 30, 2026 (years) Cost amortization value Developed technology 7.84 $ 340,380 $ 289,571 $ 50,809 Customer relationships 11.86 268,140 195,613 72,527 Software licenses 3.00 6,855 5,807 1,048 Trade names 3.88 5,000 5,000 $ 620,375 $ 495,991 $ 124,384 Weighted average amortization Net period Accumulated carrying December 31, 2025 (years) Cost amortization value Developed technology 7.84 $ 340,380 $ 281,000 $ 59,380 Customer relationships 11.86 268,140 184,462 83,678 Software licenses 3.00 5,748 5,462 286 Trade names 3.88 5,000 5,000 $ 619,268 $ 475,924 $ 143,344 Estimated future amortization expense for the Companys intangible assets at June 30, 2026 was as follows (in thousands): Years ending December 31, Remainder of 2026 $ 19,443 2027 34,347 2028 23,769 2029 18,380 2030 7,723 2031 5,927 Thereafter 14,795 $ 124,384 There were no changes to the carrying value of the Companys goodwill in the six months ended June 30, 2026. The components of goodwill at both June 30, 2026 and December 31, 2025 were as follows (in thousands): Cloud and IP Optical Edge Networks Total Goodwill $ 392,302 $ 191,996 $ 584,298 Accumulated impairment losses (167,406) (116,000) (283,406) $ 224,896 $ 75,996 $ 300,892 …

GoodwillAndIntangibleAssetsDisclosureTextBlock · excerpt; the full note is in the filing

(18) INCOME TAXES The Company recorded an income tax benefit of $4.7 million and an income tax provision $1.4 million in the six months ended June 30, 2026 and 2025, respectively. These amounts reflect the Companys 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. These estimates are reevaluated each quarter based on the Companys estimated tax expense for the full fiscal year. The estimated effective tax rate includes the impact of valuation allowances in various jurisdictions. The Company intends to continue to maintain a valuation allowance on its deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of the respective allowances. …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

(17) LEASES The Company has operating leases for corporate offices and research and development facilities. Operating leases are reported separately in the Companys condensed consolidated balance sheets. The Company determines if an arrangement is a lease at inception. A contract is determined to contain a lease component if the arrangement provides the Company with a right to control the use of an identified asset. Lease agreements may include lease and non-lease components. In such instances for all classes of underlying assets, the Company does not separate lease and non-lease components but rather, accounts for the entire arrangement under leasing guidance. Leases with an initial term of 12 months or less are not recorded on the balance sheet and lease expense for these leases is recognized on a straight-line basis over the lease term. Right-of-use assets and lease liabilities are initially measured based on the present value of the future minimum fixed lease payments (i.e., fixed payments in the lease contract) over the lease term at the commencement date. As the Companys existing leases do not have a readily determinable implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future minimum fixed lease payments. The Company calculates its incremental borrowing rate to reflect the interest rate that it would have to pay to borrow on a collateralized basis an amount equa …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

"Recent Accounting Pronouncements In December 2025, the Financial Accounting Standards Board (the ""FASB"") issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements (ASU 2025-11), to improve the navigability of the required interim disclosures, to clarify when that guidance is applicable and to enhance disclosure requirements. The amendments add to Topic 270 a principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 will be effective for the Company beginning with its 2028 interim and annual financial statements, with early adoption permitted. The Company believes this ASU will have no material impact on its condensed consolidated financial statements. In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities (ASU 2025-10), to clarify the appropriate accounting, reduce diversity in practice, and increase consistency across business entities. ASU 2025-10 will be effective for us beginning with our 2029 interim and annual financial statements, with early adoption permitted. The Company believes this ASU will have no material impact on its condensed consolidated financial statements. In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements (ASU 2025-09), to enhance hedge accounting guidance and better align it with entities …

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(19) RELATED PARTIES The Company recognized revenue from its largest stockholder of $1.1 million and $1.3 million in the three months ended June 30, 2026 and 2025, respectively, and $2.1 million and $3.0 million in the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, the Company had accounts receivable of $6.5 million outstanding from its largest stockholder, compared to $8.5 million as of December 31, 2025.

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"(8) RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES The Company recorded restructuring and related expense aggregating $4.4 million and $1.3 million in the three months ended June 30, 2026 and 2025, respectively and $6.5 million and $6.7 million in the six months ended June 30, 2026 and 2025, 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. If the Company plans to exit all or distinct portions of a facility and does not have the ability or intent to sublease, the Company will accelerate the amortization of each of those lease components through the vacate date. The accelerated amortization is recorded as a component of Restructuring and related expense in the Companys condensed consolidated statements of operations. Related variable lease expenses will continue to be expensed as incurred through the vacate date, at which time the Company will reassess the liability balance to ensure it appropriately reflects the remaining liability associated with the premises and record a liability for the estimated future variable lease costs. Accelerated amortization o …

RestructuringAndRelatedActivitiesDisclosureTextBlock · excerpt; the full note is in the filing

(12) REVENUE RECOGNITION The Company derives revenue from two primary sources: products and services. Product revenue includes: 1) the Companys proprietary hardware and software that function together to deliver the products essential functionality and 2) the Companys software only solutions that can be used on either the Companys 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. Generally, contracts with customers contain multiple performance obligations, consisting of products and services. For these contracts, the Company accounts for individual performance obligations separately if they are considered distinct. 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, including when they are sold separately to similar customers, in order to estimate standalone selling price (SSP). The Companys software licenses typically provide a perpetual right to use the Companys software. 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 Compa …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

"(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 Companys 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. 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 crit …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

(11) PREFERRED STOCK AND WARRANTS In connection with a private placement completed in March 2023, the Company issued 4.9 million warrants to purchase shares of the Companys common stock at an exercise price of $3.77 per share, 4.7 million of which remain outstanding following the June 2024 redemption of the related preferred stock. No warrant exercises occurred during the six months ended June 30, 2026. In the six months ended June 30, 2025, holders exercised 0.2 million warrants, and the remaining warrants continue to be outstanding without modification. The Company accounts for the warrants as liability-classified instruments under ASC 480, Distinguishing Liabilities from Equity , and remeasures them to fair value at each reporting date using a Black-Scholes option-pricing model. Changes in fair value are recognized within Other income, net in the condensed consolidated statements of operations. The Company determined the fair value of the warrants using Level 3 inputs. The key assumptions into the model utilized were as follows as of June 30, 2026 and December 31, 2025: June 30, December 31, 2026 2025 Stock price $ 2.34 $ 2.88 Strike price $ 3.77 $ 3.77 Risk-free rate 4.00 % 3.48 % Volatility 67.7 % 50.7 % Dividend yield 0.0 % 0.0 % Time to expiration (years) 0.8 1.2 Fair value of warrant per share $ 0.22 $ 0.41 The changes in the Companys warrant liabilities for the six months ended June 30, 2026 and 2025 were as follows (in thousands): Six months ended June 30, June 30, …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing