Greetings. And welcome to the Ribbon Communications Fourth Quarter and Full Year 2019 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. Its now pleasure to introduce your host, Lindsay Savarese. Lindsay, please go ahead.

Good afternoon and welcome to Ribbon's fourth quarter 2019 financial results conference call. I am Lindsay Savarese, Investor Relations for Ribbon. And on the call with me today are Kevin Riley, Ribbon's Interim Co-CEO and CTO,; and Daryl Raiford, CFO. Today's call is being webcast live and will be archived on the investor relations section of our website at ribboncommunications.com, where both our press release and our supplemental data are currently available, including slides detailing our historical financial performance. I'd like to remind you that during this call, we may make certain forward-looking statements. Such statements are based on our current expectations, forecasts and/or assumptions regarding Ribbon's business, financial results, growth, anticipated completion of and benefits from acquisitions, including the pending combination with ECI, The expected closing date of the pending merger, our restructuring and cost containment activities, management and board changes, global economic conditions and other opportunities in the marketplace that include risks and uncertainties that could cause our actual results to differ materially from the statements discussed today. Any forward-looking statements are qualified in their entirety by cautionary statements contained in Ribbon's most annual report on Form 10-K/A and the company's other SEC filings. While we may elect to update or revise forward-looking statements at some point, we specifically disclaim any obligation to do so, except as may be required by law. We utilize various metrics to assess the performance of our business. Not all of these metrics are GAAP metrics. And where our metrics are discussed on a non-GAAP basis, we have provided a reconciliation of GAAP to non-GAAP results in our press release and within the supplemental presentation on the Investor Relations section of our website. Statements about profitability refer to adjusted EBITDA unless otherwise indicated and are on a non-GAAP basis. And now, I would like to turn the call over to Daryl.

Thank you, Lindsay. I'll take you through the fourth quarter and full year 2019 highlights and financial results and then turn the call to Kevin to discuss both Ribbon's ongoing strategy and pending combination with ECI. As a reminder, slides detailing our historical financial performance are available on the Investor Relations section of our website. Before I start, I'd like to highlight that the Ribbon Board of Directors announced the appointment of Bruce McClelland as our new CEO effective March 1st 2020. Bruce was recently the CEO of ARRIS which was acquired by CommScope in 2019. The board believes his deep industry knowledge and long track record of growing and diversifying revenue streams, while successfully integrating acquisitions make Bruce the right person to lead the company and drive long term value for our customers and stockholders. The management team is very excited to have Bruce joint at Ribbon at this important time and we are looking forward to working with him to help lead the company through the next chapter of growth. Additionally, the Board today announced the appointment of two very talented new board members and we'd likewise welcome them to Ribbon. Now turning to our results and as highlighted on page 9 of our posted earnings deck, our fourth quarter 2019 financial results were as follows, total revenue was $161 million, non-GAAP gross margin was 68%, non-GAAP operating expenses were $69 million, non-GAAP diluted earnings per share was $0.27, and adjusted EBITDA was $43 million. For the full year total revenue was $563 million, non-GAAP gross margin was 63%, non-GAAP operating expenses were $281 million, non GAAP diluted earnings per share was $0.47 and adjusted EBITDA was $86 million. First let me start by addressing revenue. For 2019 overall sales were down slightly, but with a positive shift…

Thank you, Daryl. As I reflect on 2019, we realized significant progress on our march towards increased software sales, investing in our intelligent edge [ph] strategy and pivoting our strategic investments and applications towards growth. I'm very encouraged by the progress we have made on operational cost controls, expanding our business with customers around the world and realizing the next phase of our corporate strategy with the announcement and stockholder approval of the ECI merger. Team has worked tirelessly to rightsize our spend and pivot Ribbon into new product domains and selling models. Towards this end in 2019 we continue to optimize our operational spend by realizing an 8% year-over-year reduction in non-GAAP operating expenses. I will now take a few minutes to comment on the 2019 accomplishments that are top of mind, and more importantly serve to underpin what I believe is a strong business foundation for 2020. In 2019, we continue to make solid progress on expanding our software sales and growing our public cloud business. Our software sales grew from 36% of total product revenue in 2018 to 47% of total product - product revenue in 2019, driving a gross margin improvement of 200 basis points. In total, we now have over 850 customers who have purchased our software SBC solutions, with 45% of those customers leveraging our technology for Microsoft Skype for Business and Teams, reflecting solid progress on our partnership with Microsoft. With respect for our public cloud business, we have active production instances in Amazon, Google Cloud and Azure. This gives us great confidence that we are leading our industry on software transformation and cloud migration with products that are highly differentiated. Our customers trust Ribbon to transform and secure their voice services and software and cloud infrastructure. Our SBC session counts grew 5%…

Thank you. [Operator Instructions] Our first question today is coming from Paul Silverstein from Cowen and Company. Your line is now live.

Thanks. I appreciate you all taking the question. Just curious, it's not a huge difference, but if I look at I think your last proxy filing you all were projecting $609 million in revenue and $102 million in EBITDA. If I remember the guidance this evening, you're projecting further an $80 million in revenue and $90 million to $95 million in EBITDA. What account - what change, what accounts for the difference from when you last commented?

You're right, Paul. And hello, this is Daryl. It's nice to speak with you. Our forecast from the proxy in the mid third quarters did anticipate a perhaps modest improvement in the service provider market that we - that we think based on our current outlook will - with some of those - persisting we've moderated that to the current guidance that we've given you.

Daryl, I'm sorry. That's based on macro environment, that's based on the healthy carrier spend? Or that's something above and beyond?

Based on the health of carrier spend.

Got it. All right. And I appreciate the color you all offer tonight, greatly appreciate it. On that score, when you look at to next year, I assume you're expecting growth from enterprise and it sounds like you're expecting service provider to be somewhat better than you previously thought. But I trust that's still a challenge. Why don’t I let you respond.

Yes, we are expecting – yes, we've experienced good growth in our enterprise business and as we said it's approaching 29% to product revenue. We feel good about that. That market is growing faster and we do expect to continue to benefit from that. We also do expect that the service provider conditions, again, primarily in United States, but elsewhere will persist. We've heard a lot of that from other - from our peers as well. And we're taking that into account in terms of our overall view.

So, okay. If I can push you on this, getting to that low single digit growth rate that you're talking about for Ribbon proper before taking ECI into account. Can you give any sense for what type of growth you expect in the enterprise business and what type of headwinds you're expecting in carrier and service provider?

Well, certainly, we haven't disaggregated. We haven't disaggregated it in terms of our outlook and I appreciate that you're always - you're always interested in revenue components. We do think that the enterprise edge business is growing, but it will continue - it has grown and will continue to grow very nicely. The service provider business has a long - a long sales cycle, very large orders, subject to the network demands and the CapEx, the CapEx forecast of the service providers. And we think that we have good visibility into that. So based on our order pipeline and just based on what we're seeing when we talk to customers, we feel like we'll take a - we'll take just a really modest growth view in terms of service provider spend and that's up and down within some of our solution categories too. We do expect some of our solution categories, like session control to improve through 2020, but that's basically what we're seeing.

All right. Let me ask one last question. It's a little bit unfair. I understand Bruce is been with the company for about 10 minutes. But that said, you know, I don't want to rehash ECI acquisition in terms in my view. But given that ECI is pretty far, I think objectively speaking, it's pretty far outside of Ribbons historical core competency of UCC. Again, putting aside you have a presence with carriers today. But I guess my question for Bruce and Kevin and you, if you're willing to do ECI and you're talking about Bruce's fine track record in terms of M&A and contemplating future M&A deals, are there any limits to what you would not do?

That's a great question, Paul. This is Kevin, I'll take that to connect with you again. You know, I think for now, I don't want to speak for Bruce. Basically we're looking forward to him joining the team and I'll let him speak for himself once he's here. But in terms of M&A down the road, I think we have a large integration ahead of us. We're very focused on getting ECI integrated onboarded and focusing on sales growth with ECI, which is you know one of the fundamental thesis of the deal. And that is what we're entirely focused on. In terms of what we would consider down the road, I think we have a demonstrated history of evaluating what are the market opportunities and can we go after them organically or do we benefit from M&A to move faster and address an opportunity in a more timely manner. So I think it would be disingenuous to me to try to predict you know, what's in play and what's out of play in the future. But what I will say is that you know, we now have a pretty broad base to expand off of. We now have offerings for a service provider voice, now service provided data with ECI and now we also have offerings for enterprise voice and enterprise data with our organic enterprise assets and our Edgewater assets. So as we look forward in terms of market opportunities down the road, I think we have a broad base to consider where we want to add to and whether we want to do that organically or inorganically.

All right. I'll take the rest of questions offline. I appreciate it. Thank you.

Well, thank you, Paul.

Thank you. [Operator Instructions] We’ve reached end of our question-and-answer session. Let's turn the floor back over to Kevin for any further or closing comments.

Yeah. So on behalf of Daryl, the leadership team and myself, I would just like to thank everybody for joining the call today and look forward to corresponding with you in the future. Thank you.

Thank you. That does conclude today's teleconference. You may disconnect your lines at this time. And have a wonderful day. We thank you for your participation today.