Greetings. Welcome to the Ribbon Communications First Quarter 2022 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. Please note, this conference is being recorded. I'll now turn the conference over to your host Bita Milanian, Senior Vice President of Marketing for Ribbon. You may begin.

Good afternoon, and welcome to Ribbon's first quarter 2022 financial results conference call. I'm Bita Milanian, SVP of Marketing at Ribbon Communications. Also on the call today are Bruce McClelland, Ribbon's Chief Executive Officer; and Mick Lopez, Ribbon's Chief Financial Officer. Today’s call is being webcast live and will be archived on the Investor Relations section of our website at rbbn.com, where both our press release and supplemental slides are currently available. Certain matters we will be discussing today, including the business outlook and financial projections for the second quarter and full year 2022 are forward-looking statements. Such statements are subject to the risks and uncertainties that could cause actual results to differ materially from those contained in these forward-looking statements. These risks and uncertainties are discussed in our documents filed with the SEC, including our most recent Form 10-K. I refer you to our Safe Harbor statement included on Slide 2 of the supplemental slides for this conference call. In addition, we will present non-GAAP financial information on this call. Reconciliations to the applicable GAAP measures are included in the earnings press release we issued earlier today as well as in the supplemental slides we prepared for this conference call, which again, are both available on the Investor Relations section of our website. And now I would like to turn the call over to Bruce.

Great. Thanks, Bita, and thanks to everyone for joining us today to discuss our first quarter results and our outlook for the remainder of the year. Financial results for the first quarter were in line with our expectations and at the midpoint of our guidance. Revenue was $173 million, and adjusted EBITDA was a loss of $8.7 million. We successfully navigated the continued supply chain-related challenges, including new issues like the increased delays being incurred for material transiting through the shipping ports in Shanghai. We expect margins to continue to be affected by higher material and logistics costs again in the second quarter, but fees associated with expediting components are beginning to lessen, and as a result, combined with higher revenues, we expect margins to improve this quarter and as the year progresses. Product and service bookings in the quarter were good with an overall book-to-revenue ratio of 1.2 times. Our IP optical business was 1.27 times for the quarter. Our maintenance and support backlog grew nicely with nearly 80% of the year's maintenance revenue now booked. Our Cloud & Edge business had several notable customer accomplishments so far this year. Last week, we jointly announced with Microsoft the availability of support from Microsoft's Operator Connect using our Ribbon Connect platform. Operator Connect is Microsoft's operator-managed service for interconnection between teams and telecom services. We've extended our multi-tenant cloud-native software as a service-driven connect solution to support service provider deployments of Operator Connect and announced our first customer, Switch Connect in Australia, now offering this turnkey Microsoft Teams service. Our solution leverages the same proven carrier-grade security products and services that are already trusted and deployed in the world's largest telecom networks. Google also announced support for SIP trunking for their Google Voice offering, leveraging certified SBCs from Ribbon, and Colt just announced the selection of Ribbon's cloud-based virtual SBC solution to deliver a complete secure Microsoft Teams communication service across Japan. These recent announcements build on the enterprise momentum we're seeing with several other major businesses, including Liberty Mutual, Goldman Sachs, Citibank, Bank of America, Cleveland Clinic, John Deere, Shell, and others that have chosen Ribbon for their most demanding voice communication requirements. We also announced a new international win with Turkcell, who selected Ribbon to support the digitization of their mobile and fixed voice network interconnect platform, using our virtualized cloud-based SBC policy and routing management and element management platforms. In our IP optical business, we announced a significant win in the first quarter with the second largest European railway company, SNCF, based in France. This is a five-year project to replace obsolete SDH equipment with our latest OTN WDM optical platforms, followed by the deployment of our MPLS routing solutions. Ribbon continues to build on the great position we have with many European critical infrastructure operators, and we expect additional growth in the second half of the year in this important segment. We also capitalized on the win I mentioned last quarter with MTN Group with the award of two major projects in the Africa region. We expect business in this region to accelerate as we build on the success of these initial projects with this top 10 global mobile and telecom operator serving over 270 million subscribers across Africa and the Middle East. As Sam Bucci, our IP optical network's business leader outlined on our last earnings call, we have a strong pipeline of new products being introduced over the next several quarters. There's a growing emphasis on the software aspects of our solutions with major new IP routing features being introduced across our IP portfolio. These are foundational capabilities that will expand our addressable market and they're complemented by the work we've done to productize our disaggregated Ribbon IP network operating system that supports the diversity of network requirements using both our custom high-performance products and a growing number of third-party platforms. We're introducing a new series of white box products over the next several months called the Neptune 2000 series, which will broaden our portfolio and expand our reach from the edges of the network further into the higher performance Metro layers. We have a steady stream of enhancements to our Muse multi-domain, multi-vendor management and orchestration cloud-based software platform with growing engagements with customers. There continues to be a significant gap in the industry when it comes to enabling a truly open and interoperable networking environment in a simple customizable way. And the vision we have for this platform is resonating. From an optical transport perspective, we have a number of important enhancements to our Apollo platform, including support for a new cost-reduced and feature-enhanced 400G ZR plus plugin that includes OTN support and interoperability at the transponder level. This will be another step towards realizing our strategy to enable open WDM transport networking. Our cloud and edge team is also in high gear with the introduction of the operator connect integration, as well as supporting a growing number of cloud-native SBC opportunities. We have a major new automation management platform being introduced this quarter that unifies the management of all of our cloud and edge software platforms for both enterprise and service provider customers. This will greatly reduce the friction of introducing new software, leveraging a CICD continuous integration and continuous delivery process that will significantly differentiate us from the competition. And finally, we're introducing two new enterprise edge SBC products. The first is a fully containerized cloud-native version of our edge SBC software product that's already in use in our Ribbon Connect solution. And the second is a next-generation enterprise edge hardware platform that provides a significant increase in networking performance at a lower cost point. This new enterprise edge 8000 is a multipurpose voice and data platform that will expand our market beyond voice services at the enterprise edge. This brings me to a few comments on the outlook for the rest of 2022, starting first with our IP optical business. The level of activity across all regions has significantly increased this year. We have active RFPs with 12 major mobile and telecom carriers worldwide. Several of these opportunities are being driven by the need to replace Huawei in the network. We have a good mix of both IP and optical opportunities where we're well-positioned due to the expanded roadmap we're investing in. For the remainder of 2022, we expect year-over-year growth in both traditional regions such as India and Europe, as well as in strategic new growth areas like North America, Japan, Africa, and the Middle East. In North America, shipments of our IP and optical products increased by more than 190% in Q1 versus the first quarter of 2021, and we expect continued momentum with existing customers such as Rogers, Viral Wireless, Digicel, and CFE, the largest electric company in Mexico, as well as with new customers. On our last call, I mentioned a new major project with a US tier one service provider to modernize their voice infrastructure over the next several years, which will significantly reduce the complexity and operating costs of their network. The solution combines our Telco cloud voice core solution with technology from our IP optical portfolio. The project is going well, with solution validation underway following initial shipments of lab and field validation equipment. We anticipate commercial deployments to begin in the second half of the year. I'd also like to mention a new project in Japan with a major multi-service communications provider that uses our Neptune routing platform in a converged edge IP application. Lab validation of the solution continues, and we anticipate early deployments in the third quarter with this strategic customer. In our Cloud and Edge business, we have a strong funnel of network transformation projects with our largest traditional service provider customers over the next several orders that underpin our view for the year. Similarly, there's a growing pipeline of large enterprise communication modernization projects, as businesses begin the process of returning to the office and updating their voice infrastructure to leverage cloud collaboration platforms that have become commonplace in the work-from-home era. This includes very large opportunities with US federal agencies beginning this year as they replace aging IP PBX-centric platforms with modern cloud platforms that are hardened for their unique requirements. With our existing carrier-grade voice application server and policy management deployments at places like the Pentagon, Ribbon is very well positioned to win a significant share of this large investment over the next several years. In summary, I'm excited to see the results of the investment we're making in new products as they begin to reach the market and validation of the strategy as we compete for and win new business. As a result, I expect we'll continue to improve our financial performance as the year progresses. With that, I'll turn it over to Mick to provide some additional detail on our first quarter results and then come back on to discuss guidance for the second quarter.

Thank you very much, Bruce. In the first quarter of 2022, our financial results were in line with our guidance. Ribbon generated revenues of $173.2 million, which was just above the midpoint of our guidance of $165 million to $180 million. We had an adjusted EBITDA loss of $8.7 million, which was also near the midpoint of our guidance of $5 million to $11 million. This led to an adjusted loss per share of $0.08, also within our guided range of $0.10 to $0.07 loss. As always, please refer to our Investor Relations website or supplemental slides summarizing our first quarter 2022 and historical financial performance. Let's start with commentary on our GAAP results for the quarter. Our GAAP loss includes a $27 million non-cash loss associated with the quarterly mark-to-market of the company's investment in American Virtual Cloud Technologies, known as AVCT, from the sale of our Candy Communications business in 2020. In addition to the usual factors contributing to the difference between our GAAP and non-GAAP results, such as the amortization of intangible assets and non-cash compensation, we incurred $5 million in restructuring expenses and $2 million in integration expenses. On an adjusted non-GAAP basis, first quarter 2022 results were as follows; total revenue was $173 million, down 10% from last year. Non-GAAP gross margin was 50.2%, which is expected within our guidance range of 50% to 51%. Gross margin was 700 basis points lower versus our prior year due to lower revenue to absorb fixed costs, higher costs in our supply chain and service delivery organizations, and less favorable mix. Non-GAAP operating expenses were $99 million, down sequentially from the fourth quarter by $3 million. Year-on-year expenses increased by 4% as we continued to invest in our research and development for IP optical networks. Non-GAAP adjusted EBITDA was an $8.7 million loss in the quarter due to the lower revenue volumes and gross margin drivers previously indicated. Non-GAAP diluted earnings per share was a loss of $0.08 compared to prior year diluted earnings per share of $0.03. Our basic share count was 149 million shares, and our diluted share count was 154 million shares. Our non-GAAP tax rate for the quarter was 35%, which is 4% higher than our guidance as a consequence of revisions to income from different foreign tax jurisdictions. Please note that our guidance for the full year should now reflect a 35% tax rate. We're still evaluating the impact on our overall taxes from the requirement to capitalize research and development that became effective in 2022, as part of the tax cuts and jobs act. Now looking at the results of our two business segments; in our cloud and edge business, first quarter revenue was $110 million, down $16 million year-over-year, mostly driven by declines in product revenues and timing of some service projects. Non-GAAP adjusted EBITDA for Cloud and Edge was $16 million, down $12 million year-over-year, with an EBITDA margin of 15%. The decline was primarily a result of lower sales and elevated component costs. This was partially offset by lower operating expenses of $4 million as we begin to see the results of the strategic restructuring initiatives. Here are a few additional points on the cloud and edge performance in the quarter. Product revenue was $38 million while service revenue contributed $72 million. Software accounted for 44% of total product revenue, lowered from 52% in the prior year's first quarter due to a higher mix of media gateways versus virtual voice application software in our large network transformation projects. Let's turn to our IP optical business results. We recorded first quarter revenue of $63 million, which was a $4 million decrease compared to the prior year. Non-GAAP gross margin of 29% was down 700 basis points from the previous quarter. The decrease was driven by lower revenue absorption of fixed cost of goods sold items, higher freight logistics, and supply chain price expedite fees. We expect gross margins to improve throughout the year as our revenue increases and component expedite fees are mitigated. Now, here are some consolidated key metrics for the company in the first quarter. Maintenance revenue represented 40% of total revenue. The top 10 customers accounted for 44% of revenue. Service providers represented 73% of our revenue, while enterprise customers contributed 27%. International customers provided 56% of revenue. We are encouraged by the book-to-revenue performance, excluding maintenance, of 1.2 times, which demonstrates solid momentum with our customers, especially in our IP optical business following a strong bookings quarter. Now turning to the balance sheet. We ended the quarter with cash and cash equivalents of $95 million, including $3 million in restricted cash. This is a decrease of $11 million from the previous quarter driven by a term loan payment of $20 million, including a voluntary $15 million prepayment we made in the quarter. Our $100 million revolver remains undrawn. As previously announced, we amended our credit facility in early March. We appreciate the support of our banking syndicate led by Citizens Bank. The outstanding term loan principal balance is now $355 million after the $20 million payment in the quarter. We met our financial covenants for the first quarter. As per our credit facility calculations, our leverage ratio was 3.54 times versus a maximum of 4.25 times, and our fixed charge coverage ratio was 2.12 times versus a minimum of 1.25 times. The second quarter leverage ratio maximum is now 4.5 times, which we plan to achieve via a combination of enhanced profits and further loan prepayments. We are evaluating enhancements to our capital structure to improve our balance sheet flexibility and credit facility compliance to further support the continued investment in our growth strategy. From a cash perspective, the company generated $15 million in cash from operations in the quarter. Capital expenditures were $3 million for the quarter, primarily driven by our research and development investments. We met our guidance in the first quarter and expect sequential growth in both revenue and margin in the second quarter and further improvement in the second half. Our 2022 outlook is bolstered by good book to ratios for both business units, strong services backlog, and new product introductions in the second half of the year. We are confident that the steps we have taken to manage the increased input costs such as raising prices and reducing expedite fees, as well as reduction in our discretionary expenses will allow us to significantly improve our profitability in the second half.

Thanks, Mick. To reiterate some mixed comments, we're projecting a sequentially stronger second quarter. We expect double-digit growth in both our product segments based on solid backlog and identified projects this quarter. IP optical sales are expected to increase primarily related to projects in the European region, and Cloud and Edge growth is related to network transformation projects in North America, as well as increasing sales in our enterprise business. We also expect to see the benefit of improvements we've made throughout our supply chain, including investment in strategic inventory and agreements with key suppliers to reduce expedite fees and component costs. We expect the combination of higher sales and improved product costs will significantly improve profitability compared to the first quarter. As a result, our expectations for this second quarter are as follows: for revenue in a range of $200 million to $215 million; non-GAAP gross margins of 53.5% to 54.5%; non-GAAP adjusted EBITDA between $17 million and $23 million; and non-GAAP diluted earnings per share of $0.03 to $0.06. For the full year, we believe the targets we established on our last call are still achievable based on the growing opportunity funnel and new product introductions. We look forward to solid performance in the second quarter and further improvements in both sales and profitability in the second half of the year. We have an incredible opportunity in front of us as the global investment in communications technology surges over the next several years. Operator, that concludes our prepared remarks, and we can now take a few questions.

Our first question is from Paul Silverstein with Cowen. Please proceed with your question.

Thanks, Bruce and Mick, I appreciate you taking the questions. It seems pretty clear that your visibility has improved. My direct question to you is beyond Q2, how would you characterize the degree of visibility into the back half of the year?

I think it's great to talk to you, Paul. Looking through Q3 into Q4, we have strong visibility, especially on the Cloud and Edge aspects. I've noted the network transformation initiatives and the activity involved, which gives us solid insight into those efforts. In our IP optical segment, I've pointed out strength in various regions for the second half of the year. We're seeing promising opportunities in Europe with our critical infrastructure clients, and I've mentioned a few successes in Africa where we're expanding our presence, as well as growth potential in India. Overall, we have a robust pipeline of activity, and when we examine specific opportunities, they aren't just regional but also involve detailed projects with specific clients. You've summarized it well; our visibility is definitely in a favorable position.

Bruce, I don't want to put words in your mouth, but what I think I just heard you say is your visibility is not dependent. It sounds pretty broad-based. It's not dependent upon any one particular region, any one particular customer or again, it's fairly broad-based. Is that an accurate rendition?

It is. It's not one or two opportunities of extensive size that we're hinging on. It's a whole broad base of accounts across a variety of different regions and some of them we've announced, and they're projects that are just getting started. I mentioned one of the new voice modernization projects we have with a major operator here in the US that uses products from both portfolios. That project is just going through validations, so we expect revenue in the second half. Yeah, so there's a whole variety of different things in the funnel here that are looking very positive.

All right. And guys, I recognize this is not unique to you, but impacts all companies. Have you factored in, are you factoring in these lockdowns in China? It doesn't sound like they've had a meaningful impact on you as of yet, but can you give us any color as to whether they have had an impact? What the risk is, if they continue for another two weeks, another four weeks? Do you feel a meaningful impact? I assume everyone's got exposure, even if you don't have direct exposure.

Yeah. The primary impact is the logistics coming out of that region. From a production perspective, we haven't been impacted, but just the amount of time it takes to get either finished goods or material through the ports there has extended two to three weeks, and that did have an impact on us in the first quarter. What we are expecting is that it improves in the second half of the second quarter. They're talking about some further openings on May 15, and we've tried to take all of that into account, obviously, as we set the outlook for the second quarter. So we did have some impact in the first quarter that reduced some sales in the first quarter. But we obviously were trying to estimate those things as we put guidance together, and we're able to come in right in the middle of the guidance.

One last question for me before I hop back into the queue. Bruce, I pause, you said this, but the view for the two different businesses, cloud and managed and IP Optical for the year beyond the quarter, are you expecting growth from both businesses for the year?

I think our view is very similar to where we were 75 days ago. We did the last earning call. We still expect the IP optical business to have double-digit growth going into the full year, and the Cloud and Edge business flat to maybe down a little bit for the full year, Paul. So very similar to what we guided to at the last earnings call.

And so if, how do I put this? If one assumed and normalized a stable supply chain environment, it doesn't sound like it is all that stable from other companies that report, but if one assumes no degradation in supply chain, where's the greatest opportunity from a demand perspective for upside?

Yeah, I think from a top-line revenue perspective, it's definitely in the IP optical, both the IP networking portion of the business and optical. Both of those segments are growing for us. There’s definitely room for upside opportunity on the Cloud and Edge business. It's less dependent on supply chain and more dependent on some of the projects I mentioned. As an example, one I mentioned was around the federal government modernizing their voice infrastructure. We think that's a big opportunity. It does take a while for those programs to get funded and get into deployment and whatnot, but there's definitely an opportunity for upside on the Cloud and Edge business around those types of activities.

All right. And Bruce, again, I'll apologize. One more question. It's probably too real to say, but what can I be obstacle to get back to within the next two to three years from a revenue standpoint? If India comes back, why that would seem to be good for you. Sounds like good opportunities. Results where how big can that business be in the next two, three years?

Yeah. When we get into the midterm planning, Paul, I get really excited. I talked a little bit about the product pipeline that's coming out, and it really creates a much stronger competitive position for us. In particular around IP routing, I just think there's an untapped opportunity. So in that timeframe, in the $0.5 billion plus range, those are the areas that we're clearly targeting to grow the business. A lot of good things have to happen. We have to execute well to do that, but it's easy to see how that business can grow to that level over the next few years.

I appreciate the responses. Thank you.

Thanks, Paul.

Our next question is from Tim Savageaux with Northland Capital Markets. Please proceed with your question.

Sorry. Hi, good afternoon. And congrats on the outlook in particular. The question to start with about the RFP pipeline and IP optical that you mentioned, I think you talked about a dozen opportunities there, and I want to ask a couple of questions about, I guess, can you give us, you mentioned most are having to do with maybe replacing Huawei. So I assume that most of these are carrier type deals. I wonder if there's any, well, if you can give us kind of the size of this pipeline in the aggregate, kind of what you think you might be able to take out of it in terms of a competitive situation, and whether you expect these decisions to be made this year or impact. Is any of this contemplated in your guidance, I guess, or would converting these represent an upside?

Yeah, yeah. Yeah. Great questions and Tim, good to chat with you. So, these are all carrier deals. I think all of the ones, the 12 that I mentioned are all active service provider telecom and mobile carrier RFPs. Not all of them are Huawei replacement, but there is definitely a trend internationally in Europe, in certain countries in Asia Pacific, where they are squarely positioned on additional suppliers, replacing Huawei in the infrastructure. And when I say replace, that doesn't mean necessarily rip out and replace, but certainly replace them as a supplier. These are all kind of major providers. There's a longer list of smaller opportunities obviously, but we kind of honed in on what we think of as tier one carriers. Now, tier one's, it's an overused term, so I tend not to use it very much, but these are major telecom providers, infrastructure providers, typically both mobile and fixed carriers that are looking at either capacity additions into the network from an optical perspective, as I mentioned, potentially replacement of existing suppliers, or in quite a few cases as well, looking at IP networking and really pushing IP networking further and further out to the edge, particularly around 5G networks and the front hall portion of the network. From a size perspective, the spend on every one of these is multi-tens of millions a year. We don't expect that we end up single-store or anything like that on these opportunities. We're typically coming in to be a new supplier in the network, and I don't expect we win business on every one of them, but I think it just gives you an indication of the potential opportunity here, and the company is positioned differently than where ECI had been previously. We're now getting opportunities in at these major carriers that are transformative for the company. So I think your last question was on the impact this year. In our outlook for this year, we really have very little of this planned in. I've learned the hard way, I think that it takes quite a bit of time to go from this stage of engagement to really significant levels of deployment. So I think these are all really pipeline things for 2022 or 2023, sorry.

Got it. And thanks for that. Just to finish up on that topic, within that group of 12 tier ones, any overlap with your Cloud and Edge business, or are these all kind of net new customers?

Yeah, I'm not sure what the exact percentage is. Maybe it's 50% or something like that or maybe a little more where we have overlap, just given that most of the carriers around the world, we have some sort of business with our Cloud and Edge side. So…

Wow, great. Okay. And then the last question for me was going to be in the same business, IP optical on the gross margin side. They obviously dipped down here in Q1, and I know you talked about double-digit growth in both businesses in Q2, but any commentary on where you expect that gross margin to go in Q2 and maybe through the end of the year as you continue to see growth?

Yeah. So Q1 was an abnormal level for sure. The short answer on Q2, we're expecting to be in the mid-thirties overall for the IP optical portion of the business. There's clearly improvement simply from the higher revenue that we're projecting for the quarter, and the fixed cost absorption takes us almost halfway there. The mix that we're seeing in the second are kind of a richer mix of shipments into Europe, into critical infrastructure. So I think that helps our mix a little bit from a margin perspective. And then, finally, from a component or product cost perspective, we're seeing a reduction in expedite fees as we've been engaging with our suppliers and trying to control that. You may have seen our inventory level went up a little bit in the first quarter, as we are trying to get ahead of making sure we're not scrambling for components at the last minute as much as possible. So yeah, that's kind of the bridge and how we get into the mid-thirties in the second quarter. And then we expect to continue to grind away at this and improve as the year progresses from there.

Great. Thanks very much.

Our next question is from Dave Kang with B. Riley. Please proceed with your question.

Thank you. Good afternoon. I joined the call a bit late, but did you mention what the backlog was in relation to the book to bill?

Yes. We don't report the backlog. It is up from previous quarters, Dave coming into the second quarter, but we don't break it out in detail.

Is it roughly like maybe at least a couple of quarters or any granularity?

No, we typically don't have that level of backlog, Dave. We will cover over 50% of the current quarter, and much of it is due to the nature of the customers we are engaging with, especially in the critical infrastructure sectors. A significant portion of what we ship in a quarter or the following quarter tends to be finalized within the 90 days leading up to shipping. Mick can provide additional insights on that.

Yeah, I'd just like to point out that our server services backlog is very robust. We have multiple quarters, almost 80% of the year kind of in the backlog. It's our product backlog that given the nature of the business and our customers is not as forward-looking.

Yeah, that's a great point. A lot of the given the significant portion of maintenance that we have, the big chunk of that's already in backlog. So we're really, normally when we're referring to backlog, we're talking about the product portion.

Got it. Regarding your outlook, it looks like what, $30 million to $40 million sequential growth from first to second quarter. Should we expect sort of similar contributions from both optical and Cloud and Edge, meaning like if it's $30 million then $15 million and $15 million each, or is one going to contribute more than the others?

Yeah, so we expect both businesses to be up double-digit percentage from the first quarter in the second quarter. So we definitely are projecting growth in both of those segments in a similar sort of percentage, Cloud and Edge may be up a little bit more.

Got it. And then regarding optical gross margin starting at 29%, I think you said mid-thirties this current quarter. You're guiding total gross margin to be blended gross margin to be 55%, 56%. So should we expect gross margin for optical to be maybe, I don't know, high 30s, to hit your 55%, 56% target for the year?

That's directionally correct. We do expect in the second half, again, partly because of volume and partly because of mix and control of product cost that the margins on IP optical continue to grow back towards where we had been traditionally. We don't think we get back to the 40% range this year, but we're directionally getting close there in the second half.

Got it. And my last question is once again, I missed some of your earlier comments, but sounded like you're implying the supply situation is starting to improve because some of the other companies that reported before you are saying things could be getting actually worse and certainly won't improve until next year. What's your view on that?

Well, perhaps it's all relative. When we started the year, we obviously saw the pressure on the supply chain and adjusted our guidance and expectations on surprises at the end of the quarter, those sorts of things, and took our estimates down. And I'm glad to see we delivered on the results for Q1 as we expected. So perhaps it's a bit of a timing thing. We saw this coming and have taken actions as well as communicated that early. I wouldn't describe the situations that it's dramatically improved and what I mean by that is the elevated component costs that we're seeing are here to stay for most of the year. What we've tried to do is get in front of some of the other related costs, whether it's expedite fees, increased costs around shipping and logistics, those sorts of things to try and get it at everything we can control. So I wouldn't describe it as it's gotten better, but I think one, we saw it coming, and two, we're addressing the things that are in our control.

Got it. Thank you.

We have reached the end of the question-and-answer session, and I'll now turn the call over to Bruce for closing remarks.

Well, great, thanks again for everyone being on the call and the interest in Ribbon Communications. As a reminder, we're holding our Annual Shareholder Meeting on Wednesday, May 25, and we're once again using a virtual format for ease of attendance. We ask everyone to join us on that. We also have a series of upcoming investor conferences over the next month or two and invite you to chat with us, and we'll keep you posted on progress. So with that, operator, thanks very much, and that concludes our call.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.