Ribbon Communications shares plunge 30% after Q4 delays crush revenue
Project delays and budget timing issues trigger revenue miss, analyst downgrades as stock falls below 52-week low
Ribbon Communications shares plunged 30.5% on Thursday, dropping from $2.72 to $1.89, after the telecommunications equipment provider reported fourth-quarter revenue that fell short of analyst expectations due to customer and project delays. The stock now trades below its 52-week low of $2.60, valuing the Plano, Texas-based company at approximately $476 million.
The company reported fourth-quarter revenue of $227 million, a 10% decline from the same period last year and significantly below the $241 million to $246 million range anticipated by Wall Street. The revenue shortfall was attributed to "several customer and project delays," including delayed deployment schedules for deliverables already in backlog and budget availability issues that affected multiple orders.
Bruce McClelland, Ribbon's president and CEO, acknowledged the impact of the delays but emphasized that the affected projects were "not lost business." In the earnings release, he highlighted that the company achieved a new record level of product and services bookings during the quarter, including over $50 million from new voice modernization programs.
Despite the revenue miss, Ribbon reported earnings per share of $0.59, significantly beating analyst estimates of $0.11. However, this beat was largely driven by a $90 million deferred tax benefit, rather than operational improvements.
Analysts responded swiftly to the disappointing results, with B. Riley downgrading the stock from "Buy" to "Neutral" and slashing its price target from $6.00 to $2.90. The firm stated that Ribbon is "missing out on the broader telecom recovery." Rosenblatt maintained its "Buy" rating but reduced its price target from $6.00 to $4.00.
Looking ahead, the company provided conservative guidance for 2026, projecting full-year revenue between $840 million and $875 million. For the first quarter, management anticipates revenue of $160 million to $170 million, indicating what they described as a "slower than typical start" to the year. The conservative outlook reflects expectations of continued lower U.S. Federal agency spending and timing uncertainty created by recent industry mergers and acquisitions.
The company also disclosed that it incurred expenses related to a cybersecurity incident, including costs for external legal services, cybersecurity experts, and IT restoration activities. These costs were treated as non-recurring adjustments in the company's non-GAAP financial measures.
Despite the near-term challenges, McClelland pointed to several growth drivers for the medium term, including the accelerating adoption of artificial intelligence across enterprise and the shift toward fully autonomous networking. The company's new Acumen AIOps platform is positioned to capitalize on these trends. Additionally, management expects increased global government and defense spending to benefit the business.
CFO John Townsend noted that the tax benefit recognized in the fourth quarter is expected to reduce future cash tax payments by approximately $15 million to $20 million over the next several years, providing some balance sheet relief going forward.
With the stock now trading at just 0.55 times trailing revenue, investors will be watching closely for signs that management can execute on its bookings backlog and navigate the challenging spending environment. The company's ability to convert its record bookings into recognizable revenue without further delays will be critical to restoring investor confidence.