Ribbon Communications: 3 Key Takeaways for Long-Term Investors
Key Points
Third-quarter revenue increased 14% quarter over quarter to $219 million.
Internet protocol routing product shipments grew approximately 35% sequentially.
Sales to Verizon Communications increased roughly 50% over the first-half quarterly run rate.
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On its third-quarter 2026 earnings call, held on Oct. 27, 2026, Ribbon Communications (NASDAQ:RBBN) reported sequential revenue growth of 14% to $219 million as demand recovered in both operating segments. Long-term investors need to evaluate whether the shift toward internet protocol (IP) routing software and edge artificial intelligence (AI) capabilities provides a lasting path to margin expansion.
Three things management said stand out.
1. Internet Protocol Routing Growth Outpaces Optical Sales
Sales in the IP optical networks segment rose 17% sequentially to $96 million, led by demand from regional service providers and utility networks. Modernization projects replacing legacy gear lifted routing shipments beyond total optical equipment volume.
Shipments of our IP routing portfolio was a strength this quarter growing approximately 35% and was higher than total optical sales. Highlighting the importance of our combined IP and optical portfolio.
-- Bruce W. McClelland, chief executive officer
2. Verizon Network Modernization Drives Cloud and Edge Recovery
Ribbon Communications reaccelerated voice switch modernization efforts with Verizon Communications, its largest single customer accounting for more than 10% of total revenue. Cloud and edge segment sales grew 11% sequentially to $123 million as customer activity increased across service provider accounts.
Importantly, Verizon continued as our largest 10%-plus customer in the quarter, with increased activity resulting in sales growth of approximately 50% compared to the first half quarterly run rate.
-- Bruce W. McClelland, chief executive officer
3. Security Platforms Expand Into Artificial Intelligence Threat Detection
Management is expanding its session border controller (SBC) footprint, which manages and secures voice communication flows, to combat synthetic voice impersonation. The technology targets voice phishing risks across enterprise and defense clients.
We recently announced new capabilities that we have developed that leverages our widely deployed SBC platform to be able to detect AI generated voice impersonation deep fakes, and other new security threats.
-- Bruce W. McClelland, chief executive officer
Looking Ahead
Supply chain constraints in memory and core silicon are capping fourth-quarter shipments, even as management projects fourth-quarter revenue between $233 million and $247 million.
Consistent with the broader industry trend, we do anticipate being supply limited to some extent in the fourth quarter given the increasing demand environment for key technologies.
-- Bruce W. McClelland, chief executive officer
Ribbon Communications relies on pricing discipline and customer diversification across electric utilities, government contracts, and cloud voice partnerships to strengthen recurring margins.
As we move into 2027, we believe Ribbon has a more diversified set of growth opportunities, improving momentum with key customers and an expanding presence in several attractive markets to support our growth objectives.
-- Bruce W. McClelland, chief executive officer
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