Third quarter 2026
Filed Oct 27, 2026Revenue increased 14% sequentially and Net Income improved by $18M; further significant gains expected in 4Q 2026
Third-quarter revenue and GAAP operating income improved sequentially, but revenue, gross margin, Adjusted EBITDA and net income remained below the prior-year quarter, while nine-month operating cash flow was negative and cash declined.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q3 2026 total revenueGAAP | $218.7M | 14% | – |
| Q3 2026 product revenueGAAP | $ 121,322 | – | – |
| Q3 2026 service revenueGAAP | $ 97,388 | – | – |
| Q3 2026 gross profitGAAP | $105.5M | – | – |
| Q3 2026 gross marginGAAP | 48.2 % | – | – |
| Q3 2026 gross marginnon-GAAP | 50.3 % | – | – |
| Q3 2026 total operating expensesGAAP | $99.93M | – | – |
| Q3 2026 research and development expenseGAAP | $ 44,424 | – | – |
| Q3 2026 sales and marketing expenseGAAP | $ 33,376 | – | – |
| Q3 2026 general and administrative expenseGAAP | $ 15,233 | – | – |
| Q3 2026 income from operationsGAAP | $ 5,596 | – | – |
| Q3 2026 Adjusted EBITDAnon-GAAP | $26.77M | more than doubling | – |
| Q3 2026 net income (loss)GAAP | −$9.12M | – | – |
| Q3 2026 net income (loss)non-GAAP | $12.38M | – | – |
| Q3 2026 diluted earnings (loss) per shareGAAP | $ (0.05 ) | – | – |
| Q3 2026 diluted earnings (loss) per sharenon-GAAP | $ 0.07 | – | – |
| Nine months ended September 30, 2026 total revenueGAAP | $ 573,656 | – | – |
| Nine months ended September 30, 2026 gross marginGAAP | 46.3 % | – | – |
| Nine months ended September 30, 2026 gross marginnon-GAAP | 48.7 % | – | – |
| Nine months ended September 30, 2026 income (loss) from operationsGAAP | $ (38,318 ) | – | – |
| Nine months ended September 30, 2026 Adjusted EBITDAnon-GAAP | $ 30,369 | – | – |
| Nine months ended September 30, 2026 net income (loss)GAAP | $ (70,477 ) | – | – |
| Nine months ended September 30, 2026 net income (loss)non-GAAP | $ (879 ) | – | – |
| Nine months ended September 30, 2026 diluted earnings (loss) per shareGAAP | $ (0.40 ) | – | – |
| Nine months ended September 30, 2026 diluted earnings (loss) per sharenon-GAAP | $ - | – | – |
Fourth quarter of 2026 and year ending December 31, 2026 outlook
- Revenue$233 million to $247 million
- Gross marginNon-GAAP gross margin is projected in a range of 53.5% to 54.5%.
- NoteAdjusted EBITDA is projected in a range of $40 million to $47 million.
- NoteQ4 2026 GAAP gross margin outlook midpoint: 52.1 %.
- NoteQ4 2026 Adjusted EBITDA outlook midpoint: $ 43.5 +/-$3.5M.
- NoteFY 2026 revenue outlook midpoint: $ 814 +/-$7M.
- NoteFY 2026 GAAP gross margin outlook midpoint: 48.0 %.
- NoteFY 2026 Non-GAAP gross margin outlook midpoint: 50.3 % +/-0.2%.
- NoteFY 2026 GAAP income (loss) from operations outlook midpoint: $ (18.8 ).
- NoteFY 2026 Adjusted EBITDA outlook midpoint: $ 74.0 +/-$3.5M.
Capital returns
- Repurchase of common stock: $ (824 ) for the nine months ended September 30, 2026.
- Repurchase of common stock: $ (5,731 ) for the nine months ended September 30, 2025.
What drove it
- IP Optical Networks revenue increased 17% QoQ, led by new wins in North America.
- Cloud and Edge revenue increased 11% QoQ, led by U.S. Tier 1 Network Modernization.
- The company said IP Optical Networks bookings in the first half of the year translated into record third-quarter sales for that business, growing 5% year over year.
- Cloud and Edge Service Provider revenue grew 15% sequentially, supported by a 50% increase in sales to the company's largest customer.
- The company cited growth in Enterprise and Government market segments.
Concerns
- Q3 2026 GAAP gross margin was 48.2 %, below 50.1 % in the third quarter of 2025, and non-GAAP gross margin was 50.3 %, below 52.6 %.
- Q3 2026 Adjusted EBITDA was $ 26,773, below $ 28,919 in the third quarter of 2025.
- Nine-month 2026 revenue was $ 573,656, versus $ 617,233 in the prior-year period, while the GAAP net loss was $ (70,477 ) versus $ (49,429 ).
- Nine-month 2026 net cash used in operating activities was $ (47,915 ), compared with $ 22,159 of net cash provided by operating activities in the prior-year period.
- Cash and cash equivalents fell to $ 40,383 at September 30, 2026 from $ 96,405 at December 31, 2025.
What to watch
- Delivery against fourth-quarter revenue guidance of $233 million to $247 million.
- Delivery against fourth-quarter non-GAAP gross-margin guidance of 53.5% to 54.5%.
- Delivery against fourth-quarter Adjusted EBITDA guidance of $40 million to $47 million.
- Progress in IP Optical Networks customer wins and Cloud and Edge activity, including U.S. Tier 1 Network Modernization.
- Operating cash flow, cash and revolving-credit-facility borrowings.
Balance sheet and cash flow
- Cash and cash equivalents were $ 40,383 as of September 30, 2026, compared to $ 96,405 as of December 31, 2025.
- Restricted cash was $ 1,972 as of September 30, 2026, compared to $ 1,726 as of December 31, 2025.
- Current portion of term debt was $ 10,938 and revolving credit facility borrowings were $ 15,000 as of September 30, 2026.
- Long-term debt, net of current, was $ 316,937 as of September 30, 2026, compared to $ 324,525 as of December 31, 2025.
- Net cash used in operating activities was $ (47,915 ) for the nine months ended September 30, 2026, compared to net cash provided by operating activities of $ 22,159 for the nine months ended September 30, 2025.
- Purchases of property and equipment were $ (8,464 ) for the nine months ended September 30, 2026, compared to $ (23,368 ) for the nine months ended September 30, 2025.
- Net decrease in cash and cash equivalents was $ (55,776 ) for the nine months ended September 30, 2026, compared to $ (13,712 ) for the nine months ended September 30, 2025.
Analysis
Ribbon reported third-quarter 2026 GAAP revenue of $ 218,710, compared with $ 192,340 in the second quarter and $ 215,371 in the third quarter of 2025. The company characterized the sequential revenue increase as 14%. Product revenue was $ 121,322, while service revenue was $ 97,388. Management attributed momentum to a 17% QoQ increase in IP Optical Networks revenue and an 11% QoQ increase in Cloud and Edge revenue, while citing new North American wins and U.S. Tier 1 network modernization activity.
Profitability improved materially from the second quarter. GAAP income from operations was $ 5,596 after a $ (12,219 ) loss in the prior quarter, and Adjusted EBITDA was $ 26,773 after $ 11,874. GAAP net loss narrowed to $ (9,117 ) from $ (26,871 ), while non-GAAP net income was $ 12,379 after a $ (4,901 ) loss. The sequential recovery occurred with total GAAP operating expenses of $ 99,930, below $ 102,562 in the second quarter; management separately said non-GAAP operating expenses remained at $88 million.
The year-over-year comparison remains less favorable in several key areas. Q3 GAAP gross margin was 48.2 % compared with 50.1 %, and non-GAAP gross margin was 50.3 % compared with 52.6 %. Adjusted EBITDA of $ 26,773 was below $ 28,919 in the prior-year quarter. For the nine months ended September 30, 2026, total revenue was $ 573,656 versus $ 617,233, GAAP loss from operations was $ (38,318 ), and GAAP net loss was $ (70,477 ).
Cash flow and liquidity warrant attention. Net cash used in operating activities was $ (47,915 ) for the nine-month period, versus $ 22,159 of cash provided in the prior-year period. Cash and cash equivalents were $ 40,383 at September 30, 2026, compared with $ 96,405 at December 31, 2025, while the balance sheet included $ 15,000 on the revolving credit facility and $ 316,937 of long-term debt, net of current. The company repurchased $ (824 ) of common stock during the nine months.
The fourth-quarter outlook calls for revenue of $233 million to $247 million, non-GAAP gross margin of 53.5% to 54.5%, and Adjusted EBITDA of $40 million to $47 million. The outlook therefore sets up a further sequential step-up from third-quarter revenue of $ 218,710, non-GAAP gross margin of 50.3 %, and Adjusted EBITDA of $ 26,773. Management linked the expected improvement to positive trends in both operating segments and stated that stronger fourth-quarter results are projected.
Management, verbatim
We had meaningful sequential increases in revenue and profitability in both of our operating segments again in the third quarter, consistent with our second quarter results commentary.
Bruce McClelland, President and Chief Executive Officer of Ribbon Communications
Looking ahead to 2027, we see further growth drivers with the adoption of voice-enabled Enterprise AI applications, new solutions to mitigate AI-generated voice-phishing cyber-attacks, and broader demand for data center fiber infrastructure.
Bruce McClelland, President and Chief Executive Officer of Ribbon Communications
Our performance improved significantly in the third quarter, with revenue increasing 14% and Adjusted EBITDA more than doubling to $27 million from $12 million in the second quarter.
Rick Marmurek, Chief Financial Officer of Ribbon Communications
Not in the filing
stated, not guessed- Prior-period outlook was not provided, so no comparison of actual results with prior guidance is available.
- GAAP earnings guidance is not provided.
- Quarterly operating cash flow was not reported.
- Free cash flow was not reported.
- Dividend information was not reported.
- Revenue by the IP Optical Networks and Cloud and Edge operating segments was not reported in the filing.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.