Ribbon Communications Inc.

07/23/2026 | Press release | Archived content

RBBN 2Q 2026 Supplemental Financial Information

Balance Sheets

RIBBON COMMUNICATIONS INC.
Consolidated Balance Sheets
(in thousands)
December 31, December 31, December 31, March 31, June 30, September 30, December 31, March 31, June 30, September 30, December 31, March 31, June 30, September 30, December 31, March 31, June 30,
2020 2021 2022 2023 2023 2023 2023 2024 2024 2024 2024 2025 2025 2025 2025 2026 2026
Assets
Current assets:
Cash, cash equivalents and restricted cash $ 135,697 $ 106,485 $ 67,262 $ 46,034 $ 34,646 $ 24,501 $ 26,630 $ 30,931 $ 67,408 $ 40,093 $ 90,479 $ 73,814 $ 62,274 $ 76,767 $ 98,131 $ 69,599 $ 45,483
Accounts receivable, net 237,738 282,917 267,244 255,146 253,045 242,183 268,421 212,498 210,954 249,183 254,718 225,485 249,360 218,312 231,885 204,058 220,203
Inventory 45,750 54,043 75,423 75,641 74,382 70,184 77,521 80,758 79,216 77,316 79,179 79,631 80,299 80,007 78,806 81,463 87,811
Other current assets 28,461 37,545 68,057 52,815 58,869 53,620 46,146 44,943 46,576 49,987 39,286 46,133 42,007 43,341 45,663 53,379 52,132
Total current assets 447,646 480,990 477,986 429,636 420,942 390,488 418,718 369,130 404,154 416,579 463,662 425,063 433,940 418,427 454,485 408,499 405,629
Property and equipment, net 48,888 47,685 44,832 43,412 42,418 42,319 41,820 40,758 40,824 48,782 60,364 64,744 66,659 66,427 65,559 64,077 61,137
Intangible assets, net 417,356 350,730 294,728 280,075 265,376 251,053 238,087 224,880 212,052 199,322 187,537 175,994 164,742 153,752 143,344 134,233 124,384
Goodwill 416,892 300,892 300,892 300,892 300,892 300,892 300,892 300,892 300,892 300,892 300,892 300,892 300,892 300,892 300,892 300,892 300,892
Investments 115,183 43,931 - - - - - - 0 0 - - - - - - -
Deferred income taxes 10,651 47,287 53,649 65,902 66,829 63,422 69,761 72,438 78,067 84,472 88,982 93,672 99,314 91,117 174,318 181,834 182,727
Operating lease right-of-use assets 69,757 53,147 44,888 43,378 42,390 39,167 39,783 37,110 33,901 30,732 34,544 48,748 47,383 48,204 46,240 44,010 41,895
Other assets 20,892 23,075 38,589 28,365 28,349 34,274 35,092 33,252 35,562 33,980 26,573 28,364 29,242 26,415 27,417 26,157 26,158
$ 1,547,265 $ 1,347,737 $ 1,255,564 $ 1,191,660 $ 1,167,196 $ 1,121,615 $ 1,144,153 $ 1,078,460 $ 1,105,452 $ 1,114,759 $ 1,162,554 $ 1,137,477 $ 1,142,172 $ 1,105,234 $ 1,212,255 $ 1,159,702 $ 1,142,822
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of term debt $ 15,531 $ 20,058 $ 20,058 $ 20,058 $ 25,073 $ 30,087 $ 35,102 $ 228,168 $ 3,500 $ 4,813 $ 6,125 $ 7,438 $ 8,750 $ 8,750 $ 8,750 $ 8,750 $ 8,750
Revolving credit facility - - - - - 10,000 - - - - - - - - - - -
Accounts payable 63,387 97,121 95,810 84,008 93,640 73,873 85,164 66,847 64,333 78,939 87,759 80,843 88,697 76,743 79,840 77,293 87,077
Accrued expenses and other 134,865 100,752 85,270 102,000 97,620 89,076 91,687 84,491 92,847 102,942 106,251 89,935 90,144 88,069 90,759 77,890 82,512
Operating lease liabilities 17,023 17,403 15,416 14,973 15,340 14,901 15,739 14,213 12,347 10,644 9,443 10,341 10,816 11,615 11,699 11,601 11,655
Warrant liability - - - - - - - - - - - - - - - 682 1,007
Deferred revenue 96,824 109,119 113,939 121,761 113,915 107,536 113,381 110,596 99,547 95,761 119,295 116,623 115,212 106,697 124,425 122,619 118,333
Total current liabilities 327,630 344,453 330,493 342,800 345,588 325,473 341,073 504,315 272,574 293,099 328,873 305,180 313,619 291,874 315,473 298,835 309,334
Long-term debt, net of current 369,035 350,217 306,270 225,764 216,332 206,908 197,482 - 333,979 332,428 330,726 329,176 327,625 326,075 324,525 322,975 320,606
Warrant liability - - - 5,496 4,178 5,052 5,295 5,927 6,170 5,587 8,064 6,179 6,273 5,103 1,919 - -
Preferred stock liability - - - 47,854 50,582 49,855 53,337 56,204 - - - - - - - - -
Operating lease liabilities, net of current 72,614 55,196 46,183 43,367 41,827 38,282 38,711 36,768 34,858 33,249 37,376 61,144 62,063 61,806 60,159 57,042 56,000
Deferred revenue, net of current 26,010 20,619 19,254 18,356 20,045 17,865 19,218 14,019 16,632 16,751 20,991 23,515 31,749 29,748 31,654 32,423 34,632
Deferred income taxes 16,842 8,116 3,750 3,757 3,756 3,729 5,616 5,616 5,616 5,616 5,941 5,941 5,941 5,941 5,728 5,728 5,728
Other long-term liabilities 48,281 41,970 31,187 31,338 30,641 30,523 30,658 30,953 30,601 32,495 25,962 24,527 24,467 24,635 23,803 23,597 23,950
Total liabilities 860,412 820,571 737,137 718,732 712,949 677,687 691,390 653,802 700,430 719,225 757,933 755,662 771,737 745,182 763,261 740,600 750,250
Commitments and contingencies
Stockholders' equity:
Preferred stock - - - - - - - - - - - - - - - - -
Common stock 15 15 17 17 17 17 17 17 17 17 18 18 18 18 18 18 18
Additional paid-in capital 1,870,256 1,875,234 1,941,569 1,945,525 1,950,079 1,954,586 1,958,909 1,962,602 1,964,304 1,967,952 1,970,708 1,974,219 1,973,990 1,975,925 1,976,958 1,981,988 1,981,940
Accumulated deficit (1,178,476) (1,355,661) (1,453,744) (1,492,049) (1,513,528) (1,527,029) (1,519,950) (1,550,311) (1,567,127) (1,580,549) (1,574,185) (1,600,412) (1,611,505) (1,623,614) (1,534,549) (1,569,038) (1,595,909)
Accumulated other comprehensive income (4,942) 7,578 30,585 19,435 17,679 16,354 13,787 12,350 7,828 8,114 8,080 7,990 7,932 7,723 6,567 6,134 6,523
Total stockholders' equity 686,853 527,166 518,427 472,928 454,247 443,928 452,763 424,658 405,022 395,534 404,621 381,815 370,435 360,052 448,994 419,102 392,572
$ 1,547,265 $ 1,347,737 $ 1,255,564 $ 1,191,660 $ 1,167,196 $ 1,121,615 $ 1,144,153 $ 1,078,460 $ 1,105,452 $ 1,114,759 $ 1,162,554 $ 1,137,477 $ 1,142,172 $ 1,105,234 $ 1,212,255 $ 1,159,702 $ 1,142,822

Statements of Cash Flow

RIBBON COMMUNICATIONS INC.
Consolidated Statements of Cash Flows
(in thousands)
Year Year Year Three Months Three Months Three Months Three Months Year Three Months Three Months Three Months Three Months Year Three Months Three Months Three Months Three Months Year Three Months Three Months Six Months
Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended
December 31, December 31, December 31, March 31, June 30, September 30, December 31, December 31, March 31, June 30, September 30, December 31, December 31, March 31, June 30, September 30, December 31, December 31, March 31, June 30, June 30,
2020 2021 2022 2023 2023 2023 2023 2023 2024 2024 2024 2024 2024 2025 2025 2025 2025 2025 2026 2026 2026
Cash flows from operating activities:
Net income (loss) $ 88,591 $ (177,185) $ (98,083) $ (38,305) $ (21,479) $ (13,501) $ 7,079 $ (66,206) $ (30,361) $ (16,816) $ (13,422) $ 6,364 $ (54,235) $ (26,227) $ (11,093) $ (12,109) $ 89,065 $ 39,636 $ (34,489) $ (26,871) $ (61,360)
Adjustments to reconcile net income (loss) to cash flows provided by (used in) operating activities:
Depreciation and amortization of property and equipment 17,188 16,962 15,295 3,510 3,549 3,544 3,502 14,105 3,394 3,376 3,361 3,408 13,539 3,469 4,288 4,425 4,546 16,728 4,460 4,671 9,131
Amortization of intangible assets 60,910 66,626 61,188 14,653 14,699 14,373 13,166 56,891 13,257 13,040 12,780 11,785 50,862 11,543 11,252 10,990 10,408 44,193 10,218 9,849 20,067
Amortization of debt issuance costs and original issue discount 5,673 4,763 2,308 1,065 728 724 724 3,241 716 2,729 692 710 4,847 701 700 701 700 2,802 701 775 1,476
Amortization of accumulated other comprehensive gain related to interest rate swap - - - - (2,062) (1,756) (1,757) (5,575) (1,756) (6,440) - - (8,196) - - - - - - - -
Stock-based compensation 13,899 19,418 18,707 5,848 6,116 4,950 4,892 21,806 4,522 3,494 4,045 4,025 16,086 4,298 4,477 5,844 4,787 19,406 5,957 4,829 10,786
Impairment of goodwill - 116,000 - - - - - - - - - - - - - - - - - - -
Deferred income taxes (4,616) (45,596) (18,251) (6,048) (898) 3,329 (5,579) (9,196) (2,620) (5,484) (6,510) (2,273) (16,887) (4,628) (4,356) 9,036 (85,655) (85,603) (7,628) (842) (8,470)
Gain on sale of business (83,552) (2,772) (62) - - - - - - - - - - - - - - - - - -
Decrease (increase) in fair value of investments (30,296) 71,252 41,291 - - - - - - - - - - - - - - - - - -
Reduction to deferred purchase consideration (70) - - - - - - - - - - - - - - - - - - - -
Realized gain on swap sale - - - (7,301) - - - (7,301) - - - - - - - - - - - - -
Change in fair value of warrant liability - - - - (1,318) 874 243 (201) 632 243 (583) 2,477 2,769 (1,735) 94 (1,170) (3,184) (5,995) (1,237) 325 (912)
Change in fair value of preferred stock liability - - - - 1,456 (2,028) 2,120 1,548 1,512 6,579 - - 8,091 - - - - - - - -
Dividends accrued on preferred stock liability - - - - 1,272 1,301 1,362 3,935 1,355 1,388 - - 2,743 - - - - - - - -
Payment of dividends accrued on preferred stock liability - - - - - - - - - (6,686) - - (6,686) - - - - - - - -
Foreign currency exchange (gain) loss 2,961 5,002 1,576 (2,185) 1,105 2,254 (1,218) (44) 1,144 879 (666) 4,384 5,741 (1,328) 1,915 1,111 1,955 3,653 1,173 1,671 2,844
Changes in operating assets and liabilities:
Accounts receivable 9,578 (47,279) 14,285 19,742 1,792 9,811 (25,619) 5,726 55,384 762 (37,250) (6,476) 12,420 29,459 (24,881) 29,680 (14,230) 20,028 27,233 (16,838) 10,395
Inventory 11,842 (9,029) (32,099) (2,917) 696 (2,106) (6,374) (10,701) (4,379) (26) 2,775 (1,986) (3,616) (1,546) (1,274) 2,438 616 234 (4,600) (6,719) (11,319)
Other operating assets 44,343 9,958 2,109 15,031 (1,545) 14,299 7,049 34,834 7,923 931 602 21,003 30,459 (5,578) 5,392 1,008 (1,386) (564) (2,801) 3,839 1,038
Accounts payable (49,561) 34,482 (448) (10,405) 8,665 (20,536) 11,778 (10,498) (17,837) (2,704) 12,961 1,564 (6,016) (2,184) 7,267 (10,100) 1,760 (3,257) (3,389) 12,517 9,128
Accrued expenses and other long-term liabilities 20,629 (50,324) (37,635) 11,521 (9,178) (18,598) 1,571 (14,684) (11,800) 3,393 10,031 (10,991) (9,367) (9,631) (1,399) (4,850) 224 (15,656) (16,558) 3,371 (13,187)
Deferred revenue (5,955) 6,904 3,455 6,924 (6,157) (8,560) 7,200 (593) (7,986) (8,436) (3,665) 27,773 7,686 (148) 6,823 (10,515) 19,633 15,793 (1,036) (2,078) (3,114)
Net cash provided by (used in) operating activities 101,564 19,182 (26,364) 11,133 (2,559) (11,626) 20,139 17,087 13,100 (9,778) (14,849) 61,767 50,240 (3,535) (795) 26,489 29,239 51,398 (21,996) (11,501) (33,497)
Cash flows from investing activities:
Purchases of property and equipment (26,721) (17,132) (10,254) (2,413) (1,678) (2,529) (2,761) (9,381) (2,513) (3,100) (8,815) (7,978) (22,406) (12,149) (5,682) (5,537) (1,974) (25,342) (3,072) (4,296) (7,368)
Purchases of software licenses - - (3,300) - - - (100) (100) (150) (113) (199) - (462) - - - - - - (553) (553)
Business acquisitions, net of cash acquired (346,852) - - - - - - - - - - - - - - - - - - - -
Proceeds from the sale of business - 2,944 1,418 - - - - - - - - - - - - - - - - - -
Proceeds from the sale of fixed assets 43,500 - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - -
Net cash provided by (used in) investing activities (330,073) (14,188) (12,136) (2,413) (1,678) (2,529) (2,861) (9,481) (2,663) (3,213) (9,014) (7,978) (22,868) (12,149) (5,682) (5,537) (1,974) (25,342) (3,072) (4,849) (7,921)
Cash flows from financing activities:
Borrowings under revolving line of credit 615 - 73,625 - 30,000 37,000 30,000 97,000 15,000 29,106 - - 44,106 - - - - - - 15,000 15,000
Principal payments on revolving line of credit (8,615) - (73,625) - (30,000) (27,000) (40,000) (97,000) (15,000) (29,106) - - (44,106) - - - - - - (15,000) (15,000)
Proceeds from issuance of long-term debt 478,500 74,625 - - - - - - - 342,300 - - 342,300 - - - - - - - -
Principal payments of term debt (134,188) (92,176) (45,058) (80,015) (5,014) (5,015) (5,014) (95,058) (5,014) (230,381) (875) (875) (237,145) (875) (875) (2,188) (2,187) (6,125) (2,187) (2,188) (4,375)
Principal payments of finance leases (1,258) (903) (595) - - - - - - - - - - - - - - - - - -
Payment of debt issuance costs (14,147) (789) (1,046) (1,562) (10) - (113) (1,685) - (3,978) (2,007) (327) (6,312) - - - - - - (977) (977)
Proceeds from equity offering - - 52,067 - - - - - - - - - - - - - - - - - -
Payment of equity offering issuance costs - - (1,654) - - - - - - - - - - - - - - - - - -
Proceeds from issuance of preferred stock and warrant liabilities - - - 53,350 - - - 53,350 - - - - - - - - - - - - -
Payment of preferred stock liability - - - - - - - - - (56,850) - - (56,850) - - - - - - - -
Proceeds from the exercise of stock options 70 24 1 1 1 13 - 15 17 - - 4 21 1 5 - - 6 - - -
Payment of tax withholding obligations related to net share settlements of restricted stock awards (1,674) (14,464) (2,784) (1,893) (1,563) (456) (569) (4,481) (846) (1,792) (397) (1,273) (4,308) (938) (2,458) (431) (530) (4,357) (103) (4,877) (4,980)
Repurchase of common stock - - - - - - - - - - (2,253) (3,478) (3,224) (8,955) (824) - (824)
Net cash provided by (used in) financing activities 319,303 (33,683) 931 (30,119) (6,586) 4,542 (15,696) (47,859) (5,843) 49,299 (3,279) (2,471) 37,706 (1,812) (5,581) (6,097) (5,941) (19,431) (3,114) (8,042) (11,156)
Effect of exchange rate changes on cash and cash equivalents 260 (523) (1,654) 171 (565) (532) 547 (379) (293) 169 (173) (932) (1,229) 831 518 (362) 40 1,027 (350) 276 (74)
Net increase (decrease) in cash and cash equivalents 91,054 (29,212) (39,223) (21,228) (11,388) (10,145) 2,129 (40,632) 4,301 36,477 (27,315) 50,386 63,849 (16,665) (11,540) 14,493 21,364 7,652 (28,532) (24,116) (52,648)
Cash and cash equivalents, beginning of period 44,643 135,697 106,485 67,262 46,034 34,646 24,501 67,262 26,630 30,931 67,408 40,093 26,630 90,479 73,814 62,274 76,767 90,479 98,131 69,599 98,131
Cash and cash equivalents, end of period $ 135,697 $ 106,485 $ 67,262 $ 46,034 $ 34,646 $ 24,501 $ 26,630 $ 26,630 $ 30,931 $ 67,408 $ 40,093 $ 90,479 $ 90,479 $ 73,814 $ 62,274 $ 76,767 $ 98,131 $ 98,131 $ 69,599 $ 45,483 $ 45,483

Income Statements - GAAP

RIBBON COMMUNICATIONS INC.
Consolidated Statements of Operations - GAAP
(in thousands, except per share amounts)
Year Year Year Three Months Three Months Three Months Three Months Year Three Months Three Months Three Months Three Months Year Three Months Three Months Three Months Three Months Year Three Months Three Months Six Months
Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended
December 31, December 31, December 31, March 31, June 30, September 30, December 31, December 31, March 31, June 30, September 30, December 31, December 31, March 31, June 30, September 30, December 31, December 31, March 31, June 30, June 30,
2020 2021 2022 2023 2023 2023 2023 2023 2024 2024 2024 2024 2024 2025 2025 2025 2025 2025 2026 2026 2026
Revenue:
Product $ 467,912 $ 453,042 $ 442,680 $ 93,318 $ 117,347 $ 108,501 $ 125,984 $ 445,150 $ 87,610 $ 99,133 $ 112,151 $ 148,335 $ 447,229 $ 81,991 $ 115,057 $ 109,979 $ 127,560 $ 434,587 $ 68,114 $ 95,560 $ 163,674
Service 375,883 391,915 377,080 92,841 93,271 94,660 100,417 381,189 92,054 93,487 98,087 103,024 386,652 99,288 105,526 105,392 99,763 409,969 94,492 96,780 191,272
Total revenue 843,795 844,957 819,760 186,159 210,618 203,161 226,401 826,339 179,664 192,620 210,238 251,359 833,881 181,279 220,583 215,371 227,323 844,556 162,606 192,340 354,946
Cost of revenue:
Product 204,772 214,745 245,145 62,063 67,927 59,436 61,183 250,609 45,794 54,845 59,405 68,483 228,527 57,893 66,746 62,037 62,571 249,247 49,425 58,877 108,302
Service 145,916 147,209 142,137 35,305 33,782 33,065 37,205 139,357 35,364 33,376 34,893 37,316 140,949 35,628 39,253 40,311 39,067 154,259 38,928 38,766 77,694
Amortization of acquired technology 42,290 38,343 31,542 7,389 7,439 7,157 6,305 28,290 6,551 6,532 6,323 5,487 24,893 5,388 5,277 5,057 4,622 20,344 4,562 4,354 8,916
Total cost of revenue 392,978 400,297 418,824 104,757 109,148 99,658 104,693 418,256 87,709 94,753 100,621 111,286 394,369 98,909 111,276 107,405 106,260 423,850 92,915 101,997 194,912
Gross profit 450,817 444,660 400,936 81,402 101,470 103,503 121,708 408,083 91,955 97,867 109,617 140,073 439,512 82,370 109,307 107,966 121,063 420,706 69,691 90,343 160,034
Operating expenses:
Research and development 194,525 194,948 203,676 51,304 47,776 46,229 45,351 190,660 45,763 43,489 45,645 45,044 179,941 43,568 44,696 45,894 44,714 178,872 44,445 44,858 89,303
Sales and marketing 139,318 150,279 147,766 35,399 33,905 32,795 35,361 137,460 34,716 32,984 33,060 37,070 137,830 31,788 32,536 33,063 35,688 133,075 32,269 33,124 65,393
General and administrative 63,286 53,661 51,053 14,045 14,346 12,885 13,686 54,962 15,191 14,901 21,588 17,060 68,740 15,128 16,630 16,368 16,113 64,239 16,978 14,643 31,621
Amortization of acquired intangible assets 18,620 28,283 29,646 7,264 7,260 7,216 6,861 28,601 6,706 6,508 6,457 6,298 25,969 6,155 5,975 5,933 5,786 23,849 5,656 5,495 11,151
Impairment of goodwill - 116,000 - - - - - - - - - - - - - - - - - - -
Acquisition-, disposal- and integration-related 17,164 7,632 6,286 1,642 498 842 1,494 4,476 - - - - - - 3,898 439 - 4,337 - - -
Restructuring and related 16,235 11,653 10,833 6,937 4,307 2,680 2,285 16,209 3,065 1,920 3,794 1,381 10,160 5,341 1,346 3,506 9,465 19,658 2,038 4,442 6,480
Total operating expenses 449,148 562,456 449,260 116,591 108,092 102,647 105,038 432,368 105,441 99,802 110,544 106,853 422,640 101,980 105,081 105,203 111,766 424,030 101,386 102,562 203,948
Income (loss) from operations 1,669 (117,796) (48,324) (35,189) (6,622) 856 16,670 (24,285) (13,486) (1,935) (927) 33,220 16,872 (19,610) 4,226 2,763 9,297 (3,324) (31,695) (12,219) (43,914)
Interest expense, net (21,042) (15,831) (19,780) (6,422) (6,766) (7,143) (6,989) (27,320) (5,987) (3,879) (11,952) (12,003) (33,821) (10,500) (10,977) (11,606) (10,928) (44,011) (9,756) (10,685) (20,441)
Other (expense) income, net 112,690 (74,516) (44,495) 4,772 (2,688) (2,620) (3,232) (3,768) (7,513) (9,503) 1,056 (13,159) (29,119) 3,129 (2,159) (134) 1,390 2,226 514 (2,258) (1,744)
Income (loss) before income taxes 93,317 (208,143) (112,599) (36,839) (16,076) (8,907) 6,449 (55,373) (26,986) (15,317) (11,823) 8,058 (46,068) (26,981) (8,910) (8,977) (241) (45,109) (40,937) (25,162) (66,099)
Income tax benefit (provision) (4,726) 30,958 14,516 (1,466) (5,403) (4,594) 630 (10,833) (3,375) (1,499) (1,599) (1,694) (8,167) 754 (2,183) (3,132) 89,306 84,745 6,448 (1,709) 4,739
Net income (loss) $ 88,591 $ (177,185) $ (98,083) $ (38,305) $ (21,479) $ (13,501) $ 7,079 $ (66,206) $ (30,361) $ (16,816) $ (13,422) $ 6,364 $ (54,235) $ (26,227) $ (11,093) $ (12,109) $ 89,065 $ 39,636 $ (34,489) $ (26,871) $ (61,360)
Earnings (loss) per share
Basic $ 0.64 $ (1.20) $ (0.63) $ (0.23) $ (0.13) $ (0.08) $ 0.04 $ (0.39) $ (0.18) $ (0.10) $ (0.08) $ 0.04 $ (0.31) $ (0.15) $ (0.06) $ (0.07) $ 0.51 $ 0.22 $ (0.20) $ (0.15) $ (0.35)
Diluted $ 0.61 $ (1.20) $ (0.63) $ (0.23) $ (0.13) $ (0.08) $ 0.04 $ (0.39) $ (0.18) $ (0.10) $ (0.08) $ 0.04 $ (0.31) $ (0.15) $ (0.06) $ (0.07) $ 0.50 $ 0.22 $ (0.20) $ (0.15) $ (0.35)
Shares used to compute earnings (loss) per share:
Basic 138,967 147,575 156,668 168,541 170,103 171,190 171,755 170,408 172,428 173,793 174,613 175,321 174,044 175,719 176,749 176,620 175,704 176,199 175,661 177,251 176,460
Diluted 144,650 147,575 156,668 168,541 170,103 171,190 172,990 170,408 172,428 173,793 174,613 178,703 174,044 175,719 176,749 176,620 178,724 179,822 175,661 177,251 176,460

Income Statements - Non-GAAP

RIBBON COMMUNICATIONS INC.
Consolidated Statements of Operations - Non-GAAP
(in thousands, except per share amounts)
Year Year Year Three Months Three Months Three Months Three Months Year Three Months Three Months Three Months Three Months Year Three Months Three Months Three Months Three Months Year Three Months Three Months Six Months
Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended
December 31, December 31, December 31, March 31, June 30, September 30, December 31, December 31, March 31, June 30, September 30, December 31, December 31, March 31, June 30, September 30, December 31, December 31, March 31, June 30, June 30,
2020 2021 2022 2023 2023 2023 2023 2023 2024 2024 2024 2024 2024 2025 2025 2025 2025 2025 2026 2026 2026
Revenue:
Product $ 467,912 $ 453,042 $ 442,680 $ 93,318 $ 117,347 $ 108,501 $ 125,984 $ 445,150 $ 87,610 $ 99,133 $ 112,151 $ 148,335 $ 447,229 $ 81,991 $ 115,057 $ 109,979 $ 127,560 $ 434,587 $ 68,114 $ 95,560 $ 163,674
Service 375,883 391,915 377,080 92,841 93,271 94,660 100,417 381,189 92,054 93,487 98,087 103,024 386,652 99,288 105,526 105,392 99,763 409,969 94,492 96,780 191,272
Total revenue 843,795 844,957 819,760 186,159 210,618 203,161 226,401 826,339 179,664 192,620 210,238 251,359 833,881 181,279 220,583 215,371 227,323 844,556 162,606 192,340 354,946
Cost of revenue:
Product 202,598 214,432 244,674 61,914 67,812 59,315 61,058 250,099 45,688 54,781 59,341 68,417 228,227 57,827 66,713 62,020 62,528 249,088 49,382 58,838 108,220
Service 145,215 145,525 139,980 34,770 33,256 32,529 36,655 137,210 34,892 33,102 34,602 37,028 139,624 35,342 39,055 40,159 38,902 153,458 38,767 38,591 77,358
Amortization of acquired technology - - - - - - - - -
Total cost of revenue 347,813 359,957 384,654 96,684 101,068 91,844 97,713 387,309 80,580 87,883 93,943 105,445 367,851 93,169 105,768 102,179 101,430 402,546 88,149 97,429 185,578
Gross profit 495,982 485,000 435,106 89,475 109,550 111,317 128,688 439,030 99,084 104,737 116,295 145,914 466,030 88,110 114,815 113,192 125,893 442,010 74,457 94,911 169,368
Operating expenses:
Research and development 191,557 190,695 198,568 50,042 46,476 44,970 44,239 185,727 44,695 42,873 44,900 44,307 176,775 42,843 44,241 45,496 44,278 176,858 43,968 44,398 88,366
Sales and marketing 135,189 143,061 141,692 33,270 31,763 31,393 33,923 130,349 33,559 32,030 31,952 35,892 133,433 30,615 31,470 31,570 34,773 128,428 31,139 32,021 63,160
General and administrative 55,258 47,711 46,156 12,095 12,199 10,775 11,481 46,550 12,521 11,547 12,855 13,721 50,644 12,280 11,591 11,632 11,312 46,815 12,088 11,289 23,377
Amortization of acquired intangible assets - - - - - - - - - - - - - - - - - - - - -
Impairment of goodwill - - - - - - - - - - - - - - - - - - - - -
Acquisition-, disposal- and integration-related - - - - - - - - - - - - - - - - - - - - -
Restructuring and related - - - - - - - - - - - - - - - - - - - - -
Total operating expenses 382,004 381,467 386,416 95,407 90,438 87,138 89,643 362,626 90,775 86,450 89,707 93,920 360,852 85,738 87,302 88,698 90,363 352,101 87,195 87,708 174,903
Income (loss) from operations 113,978 103,533 48,690 (5,932) 19,112 24,179 39,045 76,404 8,309 18,287 26,588 51,994 105,178 2,372 27,513 24,494 35,530 89,909 (12,738) 7,203 (5,535)
Interest expense, net (21,042) (19,387) (19,780) (6,422) (6,766) (7,143) (6,989) (27,320) (5,987) (3,879) (11,952) (12,003) (33,821) (10,500) (10,977) (11,606) (10,928) (44,011) (9,756) (10,685) (20,441)
Other (expense) income, net (1,158) (2,479) (3,203) 8,317 (1,278) (2,472) 492 5,059 (4,014) (1,293) 473 (4,368) (9,202) 1,394 (2,065) (1,304) (1,794) (3,769) (723) (1,933) (2,656)
Income (loss) before income taxes 91,778 81,667 25,707 (4,037) 11,068 14,564 32,548 54,143 (1,692) 13,115 15,109 35,623 62,155 (6,734) 14,471 11,584 22,808 42,129 (23,217) (5,415) (28,632)
Income tax benefit (provision) (30,061) (32,251) (8,359) 1,210 (3,320) (5,209) (10,976) (18,295) 596 (4,594) (6,623) (7,342) (17,963) 2,155 (4,862) (4,633) 83,342 76,002 14,860 514 15,374
Net income (loss) $ 61,717 $ 49,416 $ 17,348 $ (2,827) $ 7,748 $ 9,355 $ 21,572 $ 35,848 $ (1,096) $ 8,521 $ 8,486 $ 28,281 $ 44,192 $ (4,579) $ 9,609 $ 6,951 $ 106,150 $ 118,131 $ (8,357) $ (4,901) $ (13,258)
Income (loss) from operations $ 113,978 $ 103,533 $ 48,690 $ (5,932) $ 19,112 $ 24,179 $ 39,045 $ 76,404 $ 8,309 $ 18,287 $ 26,588 $ 51,994 $ 105,178 $ 2,372 $ 27,513 $ 24,494 $ 35,530 $ 89,909 $ (12,738) $ 7,203 $ (5,535)
Depreciation expense 17,188 16,962 15,295 3,510 3,549 3,544 3,502 14,105 3,394 3,376 3,361 3,408 13,539 3,469 4,288 4,425 4,546 16,728 4,460 4,671 9,131
Adjusted EBITDA $ 131,166 $ 120,495 $ 63,985 $ (2,422) $ 22,661 $ 27,723 $ 42,547 $ 90,509 $ 11,703 $ 21,663 $ 29,949 $ 55,402 $ 118,717 $ 5,841 $ 31,801 $ 28,919 $ 40,076 $ 106,637 $ (8,278) $ 11,874 $ 3,596
Earnings (loss) per share
Basic $ 0.44 $ 0.33 $ 0.11 $ (0.02) $ 0.05 $ 0.05 $ 0.13 $ 0.21 $ (0.01) $ 0.05 $ 0.05 $ 0.16 $ 0.25 $ (0.03) $ 0.05 $ 0.04 $ 0.59 $ 0.66 $ (0.05) $ (0.03) $ (0.08)
Diluted $ 0.43 $ 0.32 $ 0.11 $ (0.02) $ 0.04 $ 0.05 $ 0.12 $ 0.21 $ (0.01) $ 0.05 $ 0.05 $ 0.16 $ 0.25 $ (0.03) $ 0.05 $ 0.04 $ 0.59 $ 0.66 $ (0.05) $ (0.03) $ (0.08)
Shares used to compute earnings (loss) per share:
Basic 138,967 147,575 156,668 168,541 170,103 171,190 171,755 170,408 172,428 173,793 174,613 175,321 174,044 175,719 176,749 176,620 175,704 176,199 175,661 177,251 176,460
Diluted 144,650 154,527 161,325 168,541 175,220 176,298 172,990 172,947 172,428 176,246 177,028 178,703 177,306 175,719 179,884 181,033 178,724 179,822 175,661 177,251 176,460

Non-GAAP Recon

RIBBON COMMUNICATIONS INC.
NON-GAAP RECONCILIATION
(in millions, except per share amounts and %s)
FY20 FY21 FY22 1Q23 2Q23 3Q23 4Q23 FY23 1Q24 2Q24 3Q24 4Q24 FY24 1Q25 2Q25 3Q25 4Q25 FY25 1Q26 2Q26 1H26
Cloud and IP Optical Cloud and IP Optical Cloud and IP Optical Cloud and IP Optical Cloud and IP Optical Cloud and IP Optical Cloud and IP Optical Cloud and IP Optical Cloud and IP Optical Cloud and IP Optical Cloud and IP Optical Cloud and IP Optical Cloud and IP Optical Cloud and IP Optical Cloud and IP Optical Cloud and IP Optical Cloud and IP Optical Cloud and IP Optical Cloud and IP Optical Cloud and IP Optical Cloud and IP Optical
Edge Networks Consolidated Edge Networks Consolidated Edge Networks Consolidated Edge Networks Consolidated Edge Networks Consolidated Edge Networks Consolidated Edge Networks Consolidated Edge Networks Consolidated Edge Networks Consolidated Edge Networks Consolidated Edge Networks Consolidated Edge Networks Consolidated Edge Networks Consolidated Edge Networks Consolidated Edge Networks Consolidated Edge Networks Consolidated Edge Networks Consolidated Edge Networks Consolidated Edge Networks Consolidated Edge Networks Consolidated Edge Networks Consolidated
Revenue $ 583,270 $ 260,525 $ 843,795 $ 556,656 $ 288,301 $ 844,957 $ 508,137 $ 311,623 $ 819,760 $ 114,480 $ 71,679 $ 186,159 $ 125,256 $ 85,362 $ 210,618 $ 115,765 $ 87,396 $ 203,161 $ 122,146 $ 104,255 $ 226,401 $ 477,647 $ 348,692 $ 826,339 $ 101,669 $ 77,995 $ 179,664 $ 110,555 $ 82,065 $ 192,620 $ 128,078 $ 82,160 $ 210,238 $ 164,855 $ 86,504 $ 251,359 $ 505,157 $ 328,724 $ 833,881 $ 107,591 $ 73,688 $ 181,279 $ 137,048 $ 83,535 $ 220,583 $ 124,438 $ 90,933 $ 215,371 $ 142,353 $ 84,970 $ 227,323 $ 511,430 $ 333,126 $ 844,556 $ 99,512 $ 63,094 $ 162,606 $ 110,505 $ 81,835 $ 192,340 $ 210,017 $ 144,929 $ 354,946
GAAP Gross profit $ 353,465 $ 97,352 $ 450,817 $ 343,464 $ 101,196 $ 444,660 $ 310,297 $ 90,639 $ 400,936 $ 66,077 $ 15,325 $ 81,402 $ 79,330 $ 22,140 $ 101,470 $ 74,731 $ 28,772 $ 103,503 $ 79,880 $ 41,828 $ 121,708 $ 300,018 $ 108,065 $ 408,083 $ 64,430 $ 27,525 $ 91,955 $ 70,441 $ 27,426 $ 97,867 $ 84,349 $ 25,268 $ 109,617 $ 109,997 $ 30,076 $ 140,073 $ 329,217 $ 110,295 $ 439,512 $ 66,126 $ 16,244 $ 82,370 $ 83,707 $ 25,600 $ 109,307 $ 76,509 $ 31,457 $ 107,966 $ 96,733 $ 24,330 $ 121,063 $ 323,075 $ 97,631 $ 420,706 $ 56,149 $ 13,542 $ 69,691 $ 65,747 $ 24,596 $ 90,343 $ 121,896 $ 38,138 $ 160,034
GAAP Gross margin (Gross profit/Revenue) 60.6% 37.4% 53.4% 61.7% 35.1% 52.6% 61.1% 29.1% 48.9% 57.7% 21.4% 43.7% 63.3% 25.9% 48.2% 64.6% 32.9% 50.9% 65.4% 40.1% 53.8% 62.8% 31.0% 49.4% 63.4% 35.3% 51.2% 63.7% 33.4% 50.8% 65.9% 30.8% 52.1% 66.7% 34.8% 55.7% 65.2% 33.6% 52.7% 61.5% 22.0% 45.4% 61.1% 30.6% 49.6% 61.5% 34.6% 50.1% 68.0% 28.6% 53.3% 63.2% 29.3% 49.8% 56.4% 21.5% 42.9% 59.5% 30.1% 47.0% 58.0% 26.3% 45.1%
Stock-based compensation 0.1% 0.0% 0.1% 0.2% 0.2% 0.2% 0.3% 0.3% 0.3% 0.3% 0.4% 0.4% 0.3% 0.3% 0.3% 0.4% 0.3% 0.3% 0.4% 0.1% 0.3% 0.4% 0.3% 0.3% 0.4% 0.1% 0.3% 0.3% 0.1% 0.2% 0.2% 0.1% 0.2% 0.2% 0.1% 0.2% 0.2% 0.1% 0.2% 0.2% 0.2% 0.2% 0.1% 0.1% 0.1% 0.1% 0.0% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.2% 0.1% 0.1% 0.2% 0.1% 0.1% 0.2% 0.1% 0.1%
Amortization of acquired technology 5.3% 4.3% 5.0% 4.6% 4.4% 4.6% 3.6% 4.2% 3.9% 3.1% 5.4% 4.0% 2.9% 4.6% 3.5% 2.8% 4.4% 3.6% 2.0% 3.8% 2.7% 2.7% 4.4% 3.4% 2.2% 5.6% 3.6% 2.0% 5.2% 3.4% 1.6% 5.2% 3.0% 0.7% 4.9% 2.2% 1.5% 5.2% 3.0% 0.8% 6.0% 3.0% 0.7% 5.2% 2.4% 0.6% 4.8% 2.4% 0.2% 5.1% 2.0% 0.6% 5.2% 2.4% 0.2% 6.8% 2.8% 0.1% 5.0% 2.2% 0.2% 5.9% 2.5%
Acquisition-related inventory adjustment 0.0% 0.8% 0.3% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Non-GAAP Gross margin 66.0% 42.5% 58.8% 66.5% 39.7% 57.4% 65.0% 33.6% 53.1% 61.1% 27.2% 48.1% 66.5% 30.8% 52.0% 67.8% 37.6% 54.8% 67.8% 44.0% 56.8% 65.9% 35.7% 53.1% 66.0% 41.0% 55.1% 66.0% 38.7% 54.4% 67.7% 36.1% 55.3% 67.6% 39.8% 58.1% 66.9% 38.9% 55.9% 62.5% 28.2% 48.6% 61.9% 35.9% 52.1% 62.2% 39.4% 52.6% 68.3% 33.8% 55.4% 63.9% 34.6% 52.3% 56.8% 28.4% 45.8% 59.8% 35.2% 49.3% 58.4% 32.3% 47.7%
GAAP Income (loss) from operations $ 48,624 $ (46,955) $ 1,669 $ 76,356 $ (194,152) $ (117,796) $ 61,716 $ (110,040) $ (48,324) $ 839 $ (36,028) $ (35,189) $ 19,022 $ (25,644) $ (6,622) $ 16,862 $ (16,006) $ 856 $ 20,075 $ (3,405) $ 16,670 $ 56,798 $ (81,083) $ (24,285) $ 3,214 $ (16,700) $ (13,486) $ 12,736 $ (14,671) $ (1,935) $ 19,867 $ (20,794) $ (927) $ 48,275 $ (15,055) $ 33,220 $ 84,092 $ (67,220) $ 16,872 $ 9,555 $ (29,165) $ (19,610) $ 20,650 $ (16,424) $ 4,226 $ 14,491 $ (11,728) $ 2,763 $ 34,600 $ (25,303) $ 9,297 $ 79,296 $ (82,620) $ (3,324) $ (4,092) $ (27,603) $ (31,695) $ 4,221 $ (16,440) $ (12,219) $ 129 $ (44,043) $ (43,914)
Depreciation 12,111 5,077 17,188 12,269 4,693 16,962 10,758 4,537 15,295 2,499 1,011 3,510 2,477 1,072 3,549 2,426 1,118 3,544 2,396 1,106 3,502 9,798 4,307 14,105 2,333 1,061 3,394 2,324 1,052 3,376 2,324 1,037 3,361 2,356 1,052 3,408 9,337 4,202 13,539 2,353 1,116 3,469 2,399 1,889 4,288 2,399 2,026 4,425 2,403 2,143 4,546 9,554 7,174 16,728 2,322 2,138 4,460 2,564 2,107 4,671 4,886 4,245 9,131
Amortization of acquired intangible assets 47,774 13,136 60,910 44,464 22,162 66,626 35,731 25,457 61,188 7,639 7,014 14,653 7,704 6,995 14,699 7,381 6,992 14,373 6,171 6,995 13,166 28,895 27,996 56,891 5,879 7,378 13,257 5,887 7,153 13,040 5,627 7,153 12,780 4,631 7,154 11,785 22,024 28,838 50,862 4,336 7,207 11,543 4,335 6,917 11,252 4,073 6,917 10,990 3,491 6,917 10,408 16,235 27,958 44,193 3,368 6,850 10,218 3,300 6,549 9,849 6,668 13,399 20,067
Impairment of goodwill - - - - 116,000 116,000 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Stock-based compensation 12,650 1,249 13,899 12,508 6,910 19,418 11,517 7,190 18,707 3,657 2,191 5,848 3,817 2,299 6,116 3,146 1,804 4,950 3,436 1,456 4,892 14,056 7,750 21,806 3,163 1,359 4,522 2,524 970 3,494 2,866 1,179 4,045 2,837 1,188 4,025 11,390 4,696 16,086 2,898 1,400 4,298 3,218 1,259 4,477 4,164 1,680 5,844 3,391 1,396 4,787 13,671 5,735 19,406 4,255 1,702 5,957 3,442 1,387 4,829 7,697 3,089 10,786
Acquisition-related inventory adjustment - 2,000 2,000 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Litigation costs 2,101 - 2,101 - - - - - - 129 48 177 83 31 114 349 129 478 393 145 538 954 353 1,307 695 256 951 1,290 478 1,768 5,034 1,862 6,896 1,155 428 1,583 8,174 3,024 11,198 584 216 800 1,689 625 2,314 695 257 952 709 264 973 3,677 1,362 5,039 542 202 744 221 81 302 763 283 1,046
Cybersecurity incident - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 600 - 600 600 - 600 - - - - - - - - -
Acquisition-, disposal- and integration-related 1,852 15,312 17,164 481 7,151 7,632 156 6,130 6,286 - 1,642 1,642 - 498 498 - 842 842 - 1,494 1,494 - 4,476 4,476 - - - - - - - - - - - - - - - - - - 3,898 - 3,898 281 158 439 - - - 4,179 158 4,337 - - - - - - - - -
Restructuring and related 10,566 5,669 16,235 8,055 3,598 11,653 7,944 2,889 10,833 5,742 1,195 6,937 1,678 2,629 4,307 1,470 1,210 2,680 1,747 538 2,285 10,637 5,572 16,209 2,088 977 3,065 1,144 776 1,920 2,121 1,673 3,794 465 916 1,381 5,818 4,342 10,160 672 4,669 5,341 847 499 1,346 1,838 1,668 3,506 3,002 6,463 9,465 6,359 13,299 19,658 1,601 437 2,038 3,897 545 4,442 5,498 982 6,480
Non-GAAP Adjusted EBITDA $ 135,678 $ (4,512) $ 131,166 $ 154,133 $ (33,638) $ 120,495 $ 127,822 $ (63,837) $ 63,985 $ 20,505 $ (22,927) $ (2,422) $ 34,781 $ (12,120) $ 22,661 $ 31,634 $ (3,911) $ 27,723 $ 34,218 $ 8,329 $ 42,547 $ 121,138 $ (30,629) $ 90,509 $ 17,372 $ (5,669) $ 11,703 $ 25,905 $ (4,242) $ 21,663 $ 37,839 $ (7,890) $ 29,949 $ 59,719 $ (4,317) $ 55,402 $ 140,835 $ (22,118) $ 118,717 $ 20,398 $ (14,557) $ 5,841 $ 37,036 $ (5,235) $ 31,801 $ 27,941 $ 978 $ 28,919 $ 48,196 $ (8,120) $ 40,076 $ 133,571 $ (26,934) $ 106,637 $ 7,996 $ (16,274) $ (8,278) $ 17,645 $ (5,771) $ 11,874 $ 25,641 $ (22,045) $ 3,596
Adjusted EBITDA Margin (Adjusted EBITDA/Revenue):
GAAP Income (loss) from operations 8.3% (18.0%) 0.2% 13.7% (67.3%) (13.9%) 12.1% (35.3%) (5.9%) 0.7% (50.3%) (18.9%) 15.2% (30.0%) (3.1%) 14.6% (18.3%) 0.4% 16.4% (3.3%) 7.4% 11.9% (23.3%) (2.9%) 3.2% (21.4%) (7.5%) 11.5% (17.9%) (1.0%) 15.5% (25.3%) (0.4%) 29.3% (17.4%) 13.2% 16.6% (20.4%) 2.0% 8.9% (39.6%) (10.8%) 15.1% (19.7%) 1.9% 11.6% (12.9%) 1.3% 24.3% (29.8%) 4.1% 15.5% (24.8%) (0.4%) (4.1%) (43.7%) (19.5%) 3.8% (20.1%) (6.4%) 0.1% (30.4%) (12.4%)
Depreciation 2.1% 1.9% 2.0% 2.2% 1.6% 2.0% 2.1% 1.5% 1.9% 2.2% 1.4% 1.9% 2.0% 1.3% 1.7% 2.1% 1.3% 1.7% 2.0% 1.1% 1.5% 2.1% 1.2% 1.7% 2.3% 1.4% 1.9% 2.1% 1.3% 1.8% 1.8% 1.3% 1.6% 1.4% 1.2% 1.4% 1.8% 1.3% 1.6% 2.2% 1.5% 1.9% 1.8% 2.3% 1.9% 1.9% 2.2% 2.1% 1.7% 2.5% 2.0% 1.9% 2.2% 2.0% 2.3% 3.4% 2.7% 2.3% 2.6% 2.4% 2.3% 2.9% 2.6%
Amortization of acquired intangible assets 8.2% 5.0% 7.3% 8.1% 7.7% 7.9% 7.1% 8.1% 7.4% 6.7% 9.7% 7.9% 6.2% 8.1% 7.0% 6.3% 7.9% 7.2% 5.1% 6.8% 5.8% 6.1% 8.1% 6.9% 5.7% 9.4% 7.4% 5.3% 8.7% 6.7% 4.4% 8.7% 6.0% 2.8% 8.2% 4.7% 4.4% 8.8% 6.2% 4.1% 9.8% 6.4% 3.2% 8.3% 5.2% 3.4% 7.7% 5.1% 2.5% 8.2% 4.5% 3.2% 8.4% 5.2% 3.4% 10.8% 6.3% 3.1% 7.9% 5.2% 3.1% 9.3% 5.7%
Impairment of goodwill 0.0% 0.0% 0.0% 0.0% 40.2% 13.7% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Stock-based compensation 2.2% 0.5% 1.6% 2.2% 2.4% 2.3% 2.3% 2.3% 2.3% 3.2% 3.1% 3.1% 3.0% 2.7% 2.9% 2.7% 2.1% 2.4% 2.8% 1.4% 2.2% 2.9% 2.2% 2.6% 3.1% 1.7% 2.5% 2.3% 1.2% 1.8% 2.2% 1.4% 1.9% 1.7% 1.4% 1.6% 2.3% 1.4% 1.9% 2.7% 1.9% 2.4% 2.3% 1.5% 2.0% 3.3% 1.8% 2.7% 2.4% 1.6% 2.1% 2.7% 1.7% 2.3% 4.3% 2.7% 3.7% 3.1% 1.7% 2.5% 3.7% 2.1% 3.0%
Acquisition-related inventory adjustment 0.0% 0.8% 0.2% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Litigation costs 0.4% 0.0% 0.2% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.1% 0.1% 0.1% 0.1% * 0.1% 0.3% 0.1% 0.2% 0.3% 0.1% 0.2% 0.2% 0.1% 0.2% 0.7% 0.3% 0.5% 1.2% 0.6% 0.9% 3.9% 2.3% 3.3% 0.7% 0.5% 0.6% 1.6% 0.9% 1.3% 0.5% 0.3% 0.4% 1.2% 0.7% 1.0% 0.6% 0.3% 0.4% 0.5% 0.3% 0.4% 0.7% 0.4% 0.6% 0.5% 0.3% 0.4% 0.2% 0.1% 0.2% 0.4% 0.2% 0.3%
Cybersecurity incident 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.4% 0.0% 0.3% 0.1% 0.0% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Acquisition-, disposal- and integration-related 0.3% 5.9% 2.0% 0.1% 2.5% 0.9% * 2.0% 0.8% 0.0% 2.3% 0.9% 0.0% 0.6% 0.2% 0.0% 1.0% 0.4% 0.0% 1.4% 0.7% 0.0% 1.3% 0.5% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 2.8% 0.0% 1.8% 0.2% 0.2% 0.2% 0.0% 0.0% 0.0% 0.8% 0.0% 0.5% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Restructuring and related 1.8% 2.2% 2.0% 1.4% 1.2% 1.4% 1.6% 0.9% 1.3% 5.0% 1.7% 3.7% 1.3% 3.1% 2.0% 1.3% 1.4% 1.3% 1.4% 0.5% 1.0% 2.2% 1.6% 2.0% 2.1% 1.3% 1.7% 1.0% 0.9% 1.0% 1.7% 2.0% 1.8% 0.3% 1.1% 0.5% 1.2% 1.3% 1.2% 0.6% 6.3% 2.9% 0.6% 0.6% 0.6% 1.5% 1.8% 1.6% 2.1% 7.6% 4.2% 1.2% 4.0% 2.3% 1.6% 0.7% 1.3% 3.5% 0.7% 2.3% 2.6% 0.7% 1.8%
Non-GAAP Adjusted EBITDA Margin 23.3% (1.7%) 15.5% 27.7% (11.7%) 14.3% 25.2% (20.5%) 7.8% 17.9% (32.0%) (1.3%) 27.8% (14.2%) 10.8% 27.3% (4.5%) 13.6% 28.0% 8.0% 18.8% 25.4% (8.8%) 11.0% 17.1% (7.3%) 6.5% 23.4% (5.2%) 11.2% 29.5% (9.6%) 14.2% 36.2% (5.0%) 22.0% 27.9% (6.7%) 14.2% 19.0% (19.8%) 3.2% 27.0% (6.3%) 14.4% 22.5% 1.1% 13.4% 33.9% (9.6%) 17.6% 26.1% (8.1%) 12.6% 8.0% (25.8%) (5.1%) 16.0% (7.1%) 6.2% 12.2% (15.2%) 1.0%
* Less than 0.1% impact on non-GAAP Adjusted EBITDA margin
GAAP Operating expenses $ 449,148 $ 562,456 $ 449,260 $ 116,591 $ 108,092 $ 102,647 $ 105,038 $ 432,368 $ 105,441 $ 99,802 $ 110,544 $ 106,853 $ 422,640 $ 101,980 $ 105,081 $ 105,203 $ 111,766 $ 424,030 $ 101,386 $ 102,562 $ 203,948
Stock-based compensation (13,024) (17,421) (16,079) (5,164) (5,475) (4,293) (4,217) (19,149) (3,944) (3,156) (3,690) (3,671) (14,461) (3,946) (4,246) (5,675) (4,579) (18,446) (5,753) (4,615) (10,368)
Amortization of acquired intangible assets (18,620) (28,283) (29,646) (7,264) (7,260) (7,216) (6,861) (28,601) (6,706) (6,508) (6,457) (6,298) (25,969) (6,155) (5,975) (5,933) (5,786) (23,849) (5,656) (5,495) (11,151)
Impairment of goodwill - 0 (116,000) - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0
Litigation costs (2,101) - 0 - 0 (177) (114) (478) (538) (1,307) (951) (1,768) (6,896) (1,583) (11,198) (800) (2,314) (952) (973) (5,039) (744) (302) (1,046)
Cybersecurity incident - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 (600) (600) - 0 - 0 - 0
Acquisition-, disposal- and integration-related (17,164) (7,632) (6,286) (1,642) (498) (842) (1,494) (4,476) - 0 - 0 - 0 - 0 - 0 - 0 (3,898) (439) - 0 (4,337) - 0 - 0 - 0
Restructuring and related (16,235) (11,653) (10,833) (6,937) (4,307) (2,680) (2,285) (16,209) (3,065) (1,920) (3,794) (1,381) (10,160) (5,341) (1,346) (3,506) (9,465) (19,658) (2,038) (4,442) (6,480)
Non-GAAP Operating expenses $ 382,004 $ 381,467 $ 386,416 $ 95,407 $ 90,438 $ 87,138 $ 89,643 $ 362,626 $ 90,775 $ 86,450 $ 89,707 $ 93,920 $ 360,852 $ 85,738 $ 87,302 $ 88,698 $ 90,363 $ 352,101 $ 87,195 $ 87,708 $ 174,903
Income (loss) from operations as a percentage of revenue ("Operating margin"):
GAAP Operating margin 0.2% 66.6% (5.9%) (18.9%) (3.1%) 0.4% 7.4% (2.9%) (7.5%) (1.0%) (0.4%) 13.2% 2.0% (10.8%) 1.9% 1.3% 4.1% (0.4%) (19.5%) (6.4%) (12.4%)
Stock-based compensation 1.6% 1.6% 2.3% 3.1% 2.9% 2.4% 2.2% 2.6% 2.5% 1.8% 1.9% 1.6% 1.9% 2.4% 2.0% 2.7% 2.1% 2.3% 3.7% 2.5% 3.0%
Amortization of acquired intangible assets 7.3% 7.3% 7.4% 7.9% 7.0% 7.2% 5.7% 6.8% 7.4% 6.8% 6.0% 4.8% 6.2% 6.4% 5.2% 5.2% 4.5% 5.2% 6.2% 5.1% 5.7%
Acquisition-related inventory adjustment 0.2% 0.2% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Litigation costs 0.2% 0.2% 0.0% 0.1% 0.1% 0.2% 0.2% 0.2% 0.5% 0.9% 3.3% 0.6% 1.3% 0.4% 1.0% 0.4% 0.4% 0.6% 0.5% 0.2% 0.3%
Cybersecurity incident 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.3% 0.1% 0.0% 0.0% 0.0%
Acquisition-, disposal- and integration-related 2.0% 2.0% 0.8% 0.9% 0.2% 0.4% 0.7% 0.5% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 1.8% 0.2% 0.0% 0.5% 0.0% 0.0% 0.0%
Restructuring and related 2.0% 2.0% 1.3% 3.7% 2.0% 1.3% 1.0% 2.0% 1.7% 1.0% 1.8% 0.5% 1.2% 2.9% 0.6% 1.6% 4.2% 2.3% 1.3% 2.3% 1.8%
Non-GAAP Operating margin 13.5% 79.9% 5.9% (3.2%) 9.1% 11.9% 17.2% 9.2% 4.6% 9.5% 12.6% 20.7% 12.6% 1.3% 12.5% 11.4% 15.6% 10.6% (7.8%) 3.7% (1.6%)
GAAP Diluted earnings (loss) per share $ 0.61 $ (1.20) $ (0.63) $ (0.23) $ (0.13) $ (0.08) $ 0.04 $ (0.39) $ (0.18) $ (0.10) $ (0.08) $ 0.04 $ (0.31) $ (0.15) $ (0.06) $ (0.07) $ 0.50 $ 0.22 $ (0.20) $ (0.15) $ (0.35)
Stock-based compensation 0.11 0.14 0.12 0.04 0.03 0.03 0.03 0.13 0.03 0.02 0.02 0.02 0.09 0.02 0.02 0.04 0.03 0.11 0.03 0.03 0.06
Amortization of acquired intangible assets 0.42 0.44 0.39 0.08 0.09 0.08 0.08 0.33 0.07 0.08 0.08 0.06 0.29 0.07 0.06 0.06 0.06 0.25 0.06 0.05 0.11
Impairment of goodwill - 0 0.77 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0
Acquisition-related inventory adjustment 0.01 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0
Litigation costs 0.01 - 0 - 0 ** ** ** ** 0.01 0.01 0.01 0.04 0.01 0.06 - 0 0.01 0.01 0.01 0.03 0.01 - 0 0.01
Cybersecurity incident - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 ** ** - 0 - 0 - 0
Acquisition-, disposal- and integration-related 0.12 0.05 0.04 0.01 0.01 ** 0.01 0.03 - 0 - 0 - 0 - 0 - 0 - 0 0.02 ** - 0 0.02 - 0 - 0 - 0
Restructuring and related 0.11 0.08 0.07 0.04 0.02 0.02 0.01 0.09 0.02 0.01 0.02 0.01 0.06 0.03 0.01 0.02 0.05 0.11 0.01 0.03 0.04
Interest income on debentures - 0 (0.02) - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0
Decrease (increase) in fair value of investments (0.21) 0.50 0.26 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0
Gain on sale of business (0.58) (0.02) - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0
Preferred stock and warrant liability mark-to-market adjustment - 0 - 0 - 0 - 0 0.01 ** 0.02 0.03 0.02 0.05 ** 0.01 0.08 (0.01) ** (0.01) (0.02) (0.03) (0.01) - 0 (0.01)
Preferred stock and warrant liability issuance costs - 0 - 0 - 0 0.02 - 0 - 0 - 0 0.02 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0
Tax indemnification write-off - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 0.04 0.04 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0
Tax effect of non-GAAP adjustments (0.17) (0.42) (0.14) 0.02 0.01 ** (0.07) (0.04) 0.02 (0.02) (0.03) (0.03) (0.06) 0.01 (0.01) (0.01) (0.04) (0.05) 0.05 0.01 0.06
Non-GAAP Diluted earnings (loss) per share $ 0.43 $ 0.32 $ 0.11 $ (0.02) $ 0.04 $ 0.05 $ 0.12 $ 0.21 $ (0.01) $ 0.05 $ 0.05 $ 0.16 $ 0.25 $ (0.03) $ 0.05 $ 0.04 $ 0.59 $ 0.66 $ (0.05) $ (0.03) $ (0.08)
Weighted average shares used to compute diluted earnings (loss) per share (000's):
Shares used to compute GAAP diluted earnings (loss) per share 138,967 147,575 156,668 168,541 170,103 171,190 171,755 170,408 172,428 173,793 174,613 175,321 174,044 175,719 176,749 176,620 175,704 176,199 175,661 177,251 176,460
Shares used to compute non-GAAP diluted earnings (loss) per share 144,650 154,527 161,325 168,541 175,220 176,298 172,990 172,947 172,428 176,246 177,028 178,703 177,306 175,719 179,884 181,033 178,724 179,822 175,661 177,251 176,460
** Less than $0.01 impact on non-GAAP Diluted earnings (loss) per share

Non-GAAP Discussion

Discussion of Non-GAAP Financial Measures
The Company's management uses several different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of its business, making operating decisions, planning and forecasting future periods, and determining payments under compensation programs. The Company considers the use of non-GAAP financial measures helpful in assessing the core performance of its continuing operations and when planning and forecasting future periods. The Company's annual financial plan is prepared on a non-GAAP basis and is approved by its board of directors. In addition, budgeting and forecasting for revenue and expenses are conducted on a non-GAAP basis, and actual results on a non-GAAP basis are assessed against the annual financial plan. The Company defines continuing operations as the ongoing results of its business adjusted for certain expenses and credits, as described below. The Company believes that providing non-GAAP information to investors allows them to view the Company's financial results in the way its management views them and helps investors to better understand the Company's core financial and operating performance and evaluate the efficacy of the methodology and information used by its management to evaluate and measure such performance.
While the Company's management uses non-GAAP financial measures as tools to enhance its understanding of certain aspects of the Company's financial performance, management does not consider these measures to be a substitute for, or superior to, GAAP measures. In addition, the Company's presentations of these measures may not be comparable to similarly titled measures used by other companies. These non-GAAP financial measures should not be considered alternatives for, or in isolation from, the financial information prepared and presented in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures. In particular, many of the adjustments to the Company's financial measures reflect the exclusion of items that are recurring and will be reflected in its financial results for the foreseeable future.
Stock-Based Compensation: The expense related to stock-based awards is generally not controllable in the short-term and can vary significantly based on the timing, size and nature of awards granted. The Company believes that presenting non-GAAP operating results that exclude stock-based compensation provides investors with visibility and insight into its management's method of analysis and its core operating performance.
Amortization of Acquired Technology (including software licenses); Amortization of Acquired Intangible Assets: Amortization amounts are inconsistent in frequency and amount and are significantly impacted by the timing and size of acquisitions. Amortization of acquired technology is reported separately within Cost of revenue and Amortization of acquired intangible assets is reported separately within Operating expenses. These items are reported collectively as Amortization of acquired intangible assets in the accompanying reconciliations of non-GAAP and GAAP financial measures. The Company believes that excluding non-cash amortization of these intangible assets facilitates the comparison of its financial results to its historical operating results and to other companies in its industry as if the acquired intangible assets had been developed internally rather than acquired.
Impairment of Goodwill: The Company performs its annual testing for impairment of goodwill in the fourth quarter each year. For the purpose of testing goodwill for impairment, all goodwill has been assigned to one of the Company's two operating segments. The Company performs a fair value analysis using both an income and market approach, which encompasses a discounted cash flow analysis and a guideline public company analysis using selected multiples. Based on the results of the impairment test completed in the fourth quarter of 2021, the Company determined that the carrying value of its IP Optical Networks segment exceeded its fair value, and accordingly, recorded a non-cash impairment charge of $116 million. There was no impairment of the Company's Cloud and Edge segment. The Company believes that such non-cash costs are not part of its core business or ongoing operations. Accordingly, the Company believes that excluding the goodwill impairment charge facilitates the comparison of the Company's financial results to its historical operating results and to other companies in its industry.
Acquisition-Related Inventory Adjustment: Acquisition-related inventory adjustment amounts are inconsistent in frequency and amount and are significantly impacted by the then-current market prices of such inventory items. In 2020, in connection with the ECI Acquisition, the Company adjusted inventory as part of purchase accounting. The Company believes that excluding non-cash inventory adjustments arising from acquisitions facilitates the comparison of its financial results to its historical operating results and to other companies in its industry as if the inventory had been acquired by the Company through its normal channels rather than in connection with its acquired businesses.
Litigation Costs: In connection with certain ongoing litigation, as described in the Company's Commitments and Contingencies footnotes in its Form 10-Qs and Form 10-Ks filed with the SEC, the Company has incurred litigation costs. Also, on October 14, 2024, a settlement in principle was reached on one of these legal matters and the Company accrued the $5 million settlement in the third quarter of 2024. These costs are included as a component of general and administrative expense. The Company believes that such costs are not part of its core business or ongoing operations, are unplanned, and are generally not within its control. Accordingly, the Company believes that excluding litigation costs related to these specific legal matters facilitates the comparison of the Company's financial results to its historical operating results and to other companies in its industry.
Cybersecurity Incident: The Company has recorded expenses associated with responding to and remediating a cybersecurity incident, including costs for external legal services, cybersecurity experts, and IT restoration activities. The Company believes that excluding these expenses facilitates the comparison of its financial results to its historical operating performance and to other companies in its industry, as these costs are non-recurring in nature and are not associated with future revenue streams or ongoing operational benefits.
Acquisition-, Disposal- and Integration-Related: The Company considers certain acquisition-, disposal- and integration-related costs to be unrelated to the organic continuing operations of the Company and its acquired businesses. Such costs are generally not relevant to assessing or estimating the long-term performance of the acquired assets. The Company excludes such acquisition-, disposal- and integration-related costs to allow more accurate comparisons of its financial results to its historical operations and the financial results of less acquisitive peer companies and allows management and investors to consider the ongoing operations of the business both with and without such expenses.
Restructuring and Related: The Company has recorded restructuring and related expense to streamline operations and reduce operating costs by closing and consolidating certain facilities and reducing its worldwide workforce. The Company believes that excluding restructuring and related expense facilitates the comparison of its financial results to its historical operating results and to other companies in its industry, as there are no future revenue streams or other benefits associated with these costs.
Interest Income on Debentures: The Company recorded paid-in-kind interest income on the American Cloud Technologies, Inc. ("AVCT") Series A-1 convertible debentures (the "Debentures") it received as consideration in connection with the sale of its Kandy Communications business (the "Kandy Sale") through September 8, 2021, when the Debentures were converted to shares of AVCT common stock (the "Debenture Shares"), which increased their fair value. The Company excluded this interest income because it believes that such a gain is not part of its core business or ongoing operations.
Decrease/(Increase) in Fair Value of Investments: Each reporting period, the Company calculated the fair values of the debentures (the "Debentures") and the warrants to purchase shares of AVCT common stock (the "AVCT Warrants") that it received as consideration in connection with the Kandy Sale on December 1, 2020. Effective September 8, 2021, the Company received 13,700,421 shares of AVCT common stock upon the conversion of the Debentures and AVCT Warrants. The AVCT common stock was also marked to market each reporting period by the Company until their disposal on August 29, 2022, when they were used as partial consideration in connection with the Company's acquisition of perpetual software licenses from AVCT. The Company recorded adjustments to the fair value of these investments in Other (expense) income, net. The Company excluded the gains and losses from the change in the fair value of these investments because it believes that such gains or losses were not part of its core business or ongoing operations.
Gain on Sale of Business: On May 12, 2021, the Company sold its QualiTech business, which it had acquired as part of its acquisition of ECI Telecom Group Ltd., to Hermon Laboratories, Ltd. As consideration, the Company received $2.9 million of cash and recorded a gain on the sale of $2.8 million. The Company excludes this gain because it believes that such gain is not part of its core business or ongoing operations.
Preferred Stock and Warrant Liability Mark-to-Market Adjustment: The Company recorded adjustments to the fair value of its Series A Preferred Stock and Warrants to purchase shares of the Company's common stock in Other (expense) income, net. Both of these instruments were issued in March 2023 in connection with the Company's private placement and have been classified as liabilities and marked to market each reporting period until the Series A Preferred Stock was fully redeemed on June 25, 2024. The Warrant liability remains outstanding and will continue to be marked to market each reporting period. The Company excluded these gains and losses from the change in the fair value of these liabilities because it believes that such gains or losses were not part of its core business or ongoing operations.
Preferred Stock and Warrant Liability Issuance Costs: The Company incurred $3.5 million of investment banking, advisory and legal fees in its March 2023 private placement of the Series A Preferred Stock and warrants to purchase shares of the Company's common stock, both of which are classified by the Company as liabilities that are marked to market each reporting period. The Company excludes these issuance costs to allow more accurate comparisons of its financial results to its historical operations and the financial results of other companies in its industry, and it allows management and investors to consider the ongoing operations of the business both with and without such expenses.
Tax Indemnification Write-Off: In connection with the Company's ECI Acquisition in 2020, a portion of the shares of our common stock that were issued as consideration were held in escrow for potential future tax liabilities. This $6 million tax indemnity asset, consisting of 2 million shares of common stock held in escrow, was written off upon its expiration on December 31, 2024. The Company believes that excluding this tax indemnification write-off facilitates the comparison of the Company's financial results to its historical operating results and to other companies in its industry.
Tax Effect of Non-GAAP Adjustments: The Non-GAAP income tax provision is presented based on an estimated tax rate applied against forecasted annual non-GAAP income. The Non-GAAP income tax provision assumes no available net operating losses or valuation allowances for the U.S. because of reporting significant cumulative non-GAAP income over the past several years. The Company is reporting its non-GAAP quarterly income taxes by computing an annual rate for the Company and applying that single rate (rather than multiple rates by jurisdiction) to its consolidated quarterly results. The Company expects that this methodology will provide a consistent rate throughout the year and allow investors to better understand the impact of income taxes on its results. Due to the methodology applied to its estimated annual tax rate, the Company's estimated tax rate on non-GAAP income will differ from its GAAP tax rate and from its actual tax liabilities.
Adjusted EBITDA: The Company uses Adjusted EBITDA as a supplemental measure to review and assess its performance. The Company calculates Adjusted EBITDA by excluding from income (loss) from operations: depreciation; stock-based compensation; amortization of acquired intangible assets; certain litigation costs; acquisition-, disposal- and integration-related expense; and restructuring and related expense. In general, the Company excludes the expenses that it considers to be non-cash and/or not a part of its ongoing operations. The Company may exclude other items in the future that have those characteristics. Adjusted EBITDA is a non-GAAP financial measure that is used by the investing community for comparative and valuation purposes. The Company discloses this metric to support and facilitate dialogue with research analysts and investors. Other companies may calculate Adjusted EBITDA differently than the Company does, limiting its usefulness as a comparative measure.
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