Greetings, and welcome to Ribbon Communications Second 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. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Bita Milanian, Senior Vice President, Global Marketing. Please go ahead.

Good afternoon, and welcome to Ribbon’s second 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 third 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 second quarter results and our outlook for the remainder of the year. We had solid performance in the second quarter with financial results in line with our expectations and within our guidance. Revenue was $206 million and adjusted EBITDA was $21 million. Sales increased 19% versus the first quarter this year. And we had a particularly strong quarter in North America, with sales of our Cloud & Edge products and services increasing 33% sequentially led by a $25 million increase in voice over IP network transformation sales quarter over quarter. As anticipated, we had a very good quarter with Verizon as well as with other Tier 1 North American carriers. A particular note, Verizon Wireless went into full-scale production with our next generation NVIDIA GPU-based session border controller supporting tens of millions of voice transcode sessions per hour. This was a major milestone and underscores the technology leadership Ribbon has in the SBC space. Our IP optical network sales increased 8% compared to the first quarter, even though we had two substantial deals in Europe move from the end of June into July, which will get us off to a good start in the third quarter. In particular, sales in India and Europe were bright points this quarter, along with 13% sequential growth in North America. Sales of IP routing equipment and software increased 25% as compared to the second quarter of 2021, a strategic focus area for us. Based on the pipeline for the second half, we’re projecting over 20% growth in total IP optical sales in the third and fourth quarter versus our second quarter results. IP optical margins were lower than we anticipated in the quarter, but mostly due to the lower sales related to the movement of European deals into the third quarter. We still expect meaningful improvement in margins in the segment in the second half of the year. Earnings in the quarter benefited from the strong cloud niche sales, as well as product mix with software increasing to 58% of sales. We continue to effectively manage a variety of supply chain and logistics challenges in the quarter, with a comparable amount of shipments delayed to future quarters, as we’ve seen over the last several quarters, approximately $10 million. We anticipate modest improvements as the year progresses, but are still managing long lead times on a variety of key components that we expect to continue with at least for the rest of the year. From a customer perspective, I’d like to highlight several notable accomplishments over the last several months. As mentioned earlier, we had a very strong quarter with Verizon, modernization of their voice infrastructure, supporting Verizon business customers, as well as the fixed voice network remains a high priority. And we have a similar engagement with Verizon Wireless, adding SBC, and network policy, and routing management capacity for their network. In addition to the core infrastructure upgrades, we continue to develop new applications such as identity management and advanced analytics that leverage our large and growing deployed telecom infrastructure. Another similar project was a win with Hong Kong broadband in Asia. This project includes an evolution to our Telco Cloud Virtual C20 solution, fully replacing competitor switches and gateways, and is a great example of the opportunity ahead to transform the large base of legacy telecom infrastructure to a more modern cloud-based technology platform. And we were very pleased with three recent wins in France with our identity management solution. The voice robocall issue is a global problem. And the STIR/SHAKEN protocol developed by the ITF with initial deployments in the U.S. is expanding into other countries. We’ve really established Ribbon as a thought leader in this important security area and have more opportunities in the pipeline. STIR/SHAKEN digitally validates the handoff of phone calls, passing through the complex web of networks, ensuring that the consumer or enterprise receiving the call can be assured of the identity of the call originator. We continue to have a very good pipeline of IP and optical opportunities in Europe. In particular, the critical infrastructure market vertical is very active as all types of infrastructure providers look to expand and harden their communications networks. Working with our partner Telecom Italia Mobile, Ribbon was selected for a significant network expansion at Lepida building on the initial project announced in late 2020. Lepida provides the broadband infrastructure for regional public entities in northern Italy. Partnering with Swedish telecom operator Telia, we won a network upgrade project with Lithuania National Railway operator, LitRail that includes both our IP and optical solutions. And we also had a win with MEPSO, the electrical utility in Macedonia. This is a combined IP and optical deployment that leverages the security features in our Neptune and Apollo product lines. These new wins build on our strong industry-leading position in critical infrastructure with ongoing deployments with Axpo, SNCF, the Swiss Army, the Israeli Defense Force and many others. In North America, our optical transport deployments with Rogers continue to go very well. And we’re expanding our presence with this customer into commercial enterprise optical wavelength services that will be additive to the core transport network built out. And we also had one of our first enterprise IP networking wins in North America at Texas A&M, using our Neptune routing product. This deployment will expand their IP network capacity, as well as provide support for a new private 5G mobile network across the university. But more strategically, we’ve been making significant incremental investments in R&D to position the company to capture a large share of the CapEx being spent by Tier 1 service providers, who need to keep pace with the exponential growth in data traffic. In a recent discussion with a large provider in North America, they reported the traffic is growing at almost 40% annually. And there’s really no choice but to continue to invest and deploy new innovative technologies to drive down total cost of ownership and cost per bit. We have a large pipeline of new products being introduced over the next several quarters. In the second quarter, we delivered a major enhancement to our Ribbon network operating system routing protocol stack in support of 5G mobile networking requirements and converged multiservice broadband access aggregation. This will significantly expand our addressable market and serve as a foundation to many of the customer trials we have underway. In the third quarter, we’re introducing the first of a series of new IP routers we call the Neptune XDR 2000 series. XDR stands for Flexible Disaggregated Routing. The first new platform is the XDR 2100, which is targeted at a variety of applications including mobile networking, ethernet services for business, TDM-to-IP infrastructure transformation, and for business. The XDR 2100 is the first of a family of products, with four additional platforms being introduced over the next nine months, dramatically expanding the portfolio and our ability to win significant business in the large telecom IP routing industry. As mentioned in our last earnings call, we have a high level of customer activity across all our regions. The number of IP optical RFPs we are competing for with major Tier 1 mobile and telecom carriers has expanded from 12 to 18 over the last 90 days. We expect to double the number of customer POCs in 2022 versus 2021, having already exceeded the number of trials from last year, in particular, the number of IP trials have increased significantly. The combined portfolio of both optical and IP technology is a real strength, with 10 new wins in the quarter that included both IP routing and optical transport products. And with the continued supply chain challenges and global political complexity, there’s a heightened focus on supply assurance. Our Muse platform is central to our strategy here, simplifying the introduction of our products into an existing network and supporting a multi-vendor environment. As a result, we continue to anticipate a significantly stronger second half this year and the continued increase in Tier 1 service provider opportunities is evidence that the increased R&D investment we are making will pay off. With that, I’ll turn it over to Mick to provide additional detail on our second quarter results, and then I’ll come back on to discuss guidance for the third quarter.

Thank you very much, Bruce. In the second quarter of 2022, our financial results were again in line with our guidance, Ribbon generated revenues of $206 million, which was within our guidance of $200 million to $215 million. We had an adjusted EBITDA of $21 million, which was slightly above the midpoint of guidance of $17 million to $23 million. This led to an adjusted earnings per share of $0.06, which was at the top of our guided range of $0.03 to $0.06. As always, please refer to our Investor Relations website for supplemental slides, summarizing our second quarter 2022 and historical financial performance. As customary, let’s start with commentary about our GAAP results for the quarter. Total revenue was $206 million, down 3% from last year, but up 19% quarter-over-quarter, it’s a Cloud & Edge revenues from new large telecom projects rebounded from seasonally low levels in the first quarter. Our GAAP loss for the second quarter includes a $12 million non-cash loss associated with the quarterly mark-to-market of the company’s investments in American Virtual Cloud Technologies known as AVCT from the sale of our Kandy Communications business in 2020. The AVCT investment is now valued at $4.5 million on our balance sheet. In addition to the usual other 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 $3 million in restructuring expenses and $2 million in integration expenses. Now, let’s provide insights about our second quarter results on an adjusted non-GAAP basis. Non-GAAP gross margin was 54.9%, which was above our guidance range of 53.5% to 54.5% due to strong software sales in Cloud & Edge. The year-over-year 600 basis point decline is entirely attributed to IP optical networks, which benefited from several one-time accounting adjustments and product mix in the second quarter of 2021. Non-GAAP operating expenses were $96 million, down sequentially from the first quarter by $3.4 million, after adjusting for one-time accounting accruals that benefited OpEx in the second quarter of 2021. Our comparable expenses were essentially flat year-over-year. The incremental investment we’re making in IP optical R&D has largely been offset by efficiencies in other areas. Non-GAAP adjusted EBITDA was $21 million in the quarter, and non-GAAP diluted earnings per share was $0.06. Our basic share count was 150 million shares, and our diluted share count was 154 million shares. Our non-GAAP tax rate for the quarter was 32%, giving us a first-half cumulative rate of 45%. We had previously guided to an overall rate of 35%. The increase in the rate is due to a change in our jurisdictional income towards North America. Please note that our guidance for the remainder of 2022 should now reflect that 45% adjusted non-GAAP tax rate. Now, looking at the results of our two business segments. In our Cloud & Edge business, second quarter revenue was $137 million down 3% or $4 million year-over-year. Quarter-over-quarter sales grew by $27 million or up 25% driven by large network transformation projects with several of our major telecom customers. Product revenue contributed $64 million. Maintenance revenue was $55 million and professional service revenue was $18 million. Product revenue was up 17% quarter-over-quarter, and software as a percentage of total revenue was 58%. Non-GAAP gross margins remained steady at 68% versus prior year, and up 600 basis points from the first quarter. Non-GAAP adjusted EBITDA for Cloud & Edge was $43 million, with an EBITDA margin of 31%. Year-over-year operating expenses were lower by $2 million as we continue to see the results of our strategic restructuring initiatives. Let’s turn to our IP optical networks business results. We recorded second quarter revenue of $69 million, which was a $1 million decrease versus the prior year, but an increase of $5 million or 8% quarter-over-quarter. Non-GAAP gross margin for IP optical was 29%, the same as the previous quarter, but significantly down from the record high of 48% in the second quarter of 2021. Last year’s gross margins benefited from a good product and regional mix, lower service delivery costs and lower warranty costs. In 2022, we continue to experience supply chain disruptions that affect our component prices and transportation logistics costs. However, we see some stabilization of the supply chain and therefore expect gross margins to improve in the third quarter and 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 second quarter. Maintenance revenue represented 34% of total revenue. Our top 10 customers were responsible for 50% of revenue. Service providers accounted for 80% of our product revenue and enterprise customers represented 20%. International customers provided 52% of revenue. We had a book-to-revenue excluding maintenance of approximately one time, several large IP orders from Europe were delayed to the third quarter. Turning to the balance sheet. We ended the quarter with cash and cash equivalents of $38 million, including $2 million in restricted cash. This is a decrease of $68 million from the beginning of the year as we continue to pay down our term loan, optimize our business and invest for growth in IP optical networks. Major strategic cash outlays include $35 million for debt pay down, of which $25 million has been voluntary, a $17 million increase in critical parts for inventory continuity, $11 million in restructuring and integration charges for efficiencies, and $7 million in capital expenditures mainly for research and development. Our term loan currently has $340 million outstanding, as we have paid off $60 million or 15% of the original balance, while a $100 million revolver remained undrawn at quarter end. We amended our credit facility during the second quarter, which increased our financial covenant metrics and gave us more flexibility as we continue to invest in our IP optical business. As per our amended credit facility calculations for the second quarter of 2022, our leverage ratio was 4.83 times versus a maximum of 5.25 times and our fixed charge coverage ratio was 1.3 times versus a minimum of 1.1 times. The leverage ratio maximum decreases to 5 times in the third quarter. As we stated in the previous earnings call, given volatile financial markets and geopolitical economic considerations, we will continue to evaluate capital structure enhancements to ensure credit facility compliance while we continue our strategic investments. Now, I’d like to turn the call back to Bruce.

Great. Thanks, Mick. Our results in the second quarter demonstrate the strong foundation we have in our Cloud & Edge business with major carriers around the world. As we enter the second half of the year, we expect to start to see the benefits of the significant investment we’re making in our IP optical product development, supported by strong POC and customer activity. We continue to project a stronger second half of the year, with a large funnel of opportunities driving a particularly strong fourth quarter and further growth in 2023. From a regional perspective, we expect Europe to grow significantly with a combination of both service provider and critical infrastructure IP optical projects. We anticipate growth in India with the upcoming 5G investment cycle beginning and we expand our presence with key mobile operators in the region. And we’re finalizing an extension of our tenure product and support agreement with the Israeli Defense Forces, setting the foundation for future business with this important regional customer. We expect continued growth in North America on the strength of key customers such as Rogers and Viaero Wireless, as well as a host of regional telco providers who are investing heavily to upgrade their broadband infrastructure, and the introduction of our new IP routing solutions. In our Cloud & Edge business, we have several ongoing telco cloud and analytics projects with U.S. service providers that should provide high-margin revenue in the second half, and establish a land-and-expand strategy for future growth. The expertise we have in migrating traditional infrastructure to the cloud, and enabling improved performance is driving strong demand for our professional services, and we expect a seasonally strong fourth quarter contribution from this part of our portfolio. Modernization of the U.S. federal government agencies' unified communications infrastructure continues to present a very large opportunity for us, with projects expected to be awarded starting this quarter. And we’re well positioned with partners such as Verizon and AT&T to win a significant share. Similarly, we expect continued growth in the second half of the year from the enterprise unified communications market. Our funnel of opportunities with Fortune 2000 accounts continues to grow and we’re projecting several larger deals to close in the fourth quarter. The combination of the above activities and investment that we’re making in new products establishes a great foundation for growth in 2023. With that backdrop, our expectations for the third quarter are as follows: revenue in a range of $210 million to $225 million; non-GAAP gross margins of 55% to 56%; and non-GAAP adjusted EBITDA of $26 million to $34 million. We’re also adjusting our full-year targets based on our results to date, our outlook for the third quarter, the continued expectation of a strong fourth quarter, as well as continued elevated supply chain costs and inflation pressure on operating costs. For the full year, we now expect revenue in a range of $840 million to $870 million. Non-GAAP gross margins of 54% to 54.5%, and non-GAAP adjusted EBITDA of $90 million to $100 million. I’d like to thank the entire Ribbon team and our partners for navigating a complex operating environment, and I look forward to a stronger second half of 2022. Operator, that concludes our prepared remarks and we can now take a few questions.

At this time, we will be conducting a question-and-answer session. Our first question is from Paul Silverstein with Cowen & Company. Please proceed with your question.

Thanks. I’ve got a question, I guess, primarily for you, Bruce, and then one primarily for Mick, but feel free to answer either one of you. First of all, Bruce, I appreciate all the disclosure, can you give some additional insight on the IP optical business between the IP portion of the business and the optical portion, and what you’re seeing in terms of demand trends?

Yeah. Hey, Paul. Well, both are expected to grow as the second half progresses. So, I guess, I’ve kind of indicated, we’re definitely strategically focused on becoming a part of a larger presence around IP in particular, though, and it’s great to see the funnel of opportunities, and in fact, the customer POCs increase really substantially around that business. If I think about kind of in the midterm, I would expect more growth out of the IP portion, and that becomes a larger share. It’s a little less than half the revenue there; optical is a little larger today.

Yeah, I assume the margin structure is pretty different between the two?

I think all things being equal, we expect the margins around the IP products and some of the new products in particular to be a little stronger than traditional optical. As you know, it depends a little bit on whether you’re putting out a brand new optical transport network and you’re deploying the optical line system and whatnot; the margins are lower there, so it can move around a little bit depending on the mix, but all things being equal, IP tends to be a stronger portfolio.

Bruce, I apologize, I may have a misunderstanding of the IP portion of the portfolio. But I would have thought that the IP was not just modestly stronger, which is the sense I’m getting from you, but from a gross margin perspective, would have been significantly greater than the optical transport case?

It’s probably somewhere in between. I don’t want to undersell it, that’s for sure, if the margins can be much more positive. Again, it depends a little bit on the mix and the timing.

Can I ask a question this way: would it be a reasonable assumption that the IP portions are in the 50s, if not the 60s from a gross margin perspective?

Yeah. I don’t know if I want to really put a fine point on it that much. But it’s going to be better than the optical, all things being equal, Paul, for sure.

All right. Fair enough. I’ll move on. For you, Mick, with respect to the margin structure, if I saw the numbers correctly, optical was down or pro forma basis to 29% that I read that correctly?

Right. So we were at 29%, the same as where we were in the first quarter of this year.

Yeah. So the question is the visibility as to improvement both from a glide path and where you could get back to. I understand that you’re in the same boat with others in terms of supply chain impacts and other stuff. But what is your visibility as to improvement?

Yeah. So we have good confidence that the second half of the year moves those margins back up into the mid- to upper-30 range. Half of that increase comes from just the higher volume and the absorption of some of the fixed costs associated with manufacturing. And the other half is around some modest improvement around cost as well as the mix of products. And as you pointed out, as the IP portion of the business grows, that’s going to be accretive for us. So we’ve got pretty good visibility in the second half of the year and the improvements that we’re projecting.

All right. One last one for me, which is everyone understand was worried about the macro. Even if there’s no currency translation issue, obviously, you and other U.S. suppliers and tiers is more expensive abroad. Any signs of macro weakness where customers are going projects, canceling projects and communicating to you that they’re thinking about doing so? At this point, it might say otherwise, but what are you seeing?

Yeah, Paul, I’ve been on the road a lot over the last 90 days, several trips into Europe, Asia, etc., meeting with customers. And I asked them the exact same question. I can tell you the response I get is they’re continuing to invest. These projects tend to be long-term. And so you know, as you ramp up and you start to do a broadband expansion, or a mobile capacity upgrade, you don’t turn that on and off overnight. More importantly, the bandwidth demand continues to grow exponentially. And there’s really no choice but to continue to add capacity and move to the next technology curves, you can lower the cost of ownership and cost per bit. So really, absolutely no signs kind of at a macro level of pulling back on investment. We’ll see, obviously, how the world turns here over the next 6 to 12 months, and whether there’s more pressure on profitability, and does that change CapEx plans, etc. But I can tell you at this stage, direct feedback from customers has been really robust.

And Bruce, can you remind me, have you all implemented? Or are you planning on implementing a price increase the way everybody else has?

Yeah, so I remember, I think we had a question last call. We have raised prices really across the portfolio; those don’t kick into effect until you’re on kind of the next cycle or the next contract renewal depending on maintenance contracts, those sorts of things. I will also comment though that a lot of our business, we’re out and competing to win new business on a quarterly basis. And our price increases aren’t necessarily going to flow through on every deal. So…

Just calculate the way…

You’re out to win business. We don’t have kind of long-term contracts where you’re able to adjust prices quite as effectively. So, we’re going to compete for business and we want to be an alternative in these major Tier 1 accounts. And so we’re really out being aggressive and looking to grow the business here.

I assume that answers the related question, which is, it sounds like we should not expect your price increases to translate at some point in time in the future into some meaningful step up in margin structure?

Well, I think we’ve described where we think the margin growth comes from, and we’ve got, again, good visibility on that. I think there’s an evolution over time as the base costs increase; those have to flow through into the market. And so I think we expect that to happen over time. I do think from a competitive perspective, though, again, one of the key things that we’ve seen in the market internationally is around what suppliers are being deployed in the network. And, in particular, as some of the Chinese OEMs get removed from the network, that’s a big opportunity to grow and gain share. And, I think, all things being equal is positive from a pricing dynamics perspective, as well.

Bruce, Have you secured any of those wins, whether anywhere else? We’ve always been a huge presence in India, have you yet to see if not revenue, any awards that have been directly related to Huawei?

The short answer is yes. There’s no question. Has it dramatically moved the top line? Not yet. I think there’s lots of opportunities yet that have not flown through. Many of the RFPs that I mentioned are associated with finding new suppliers in the market. So, I think, most of it’s ahead of us still. But we’ve definitely had wins actually in both businesses associated with some of the Chinese OEMs being either removed from the network or competing for new business going forward.

All right. And I really will make this my last question. I apologize, anybody waiting in the queue? But, Mick, has inflation impacted labor costs yet? Are you expecting a meaningful impact on your labor costs?

Yes, absolutely. We do see it not only in our own costs, but costs that come towards us. Obviously, the freight and transport has been up significantly. And we’ve noticed that in our hardware components that we see labor costs are going up, not just in our own labor, but also in contract labor.

I’ll just add to that comment as well. From a FX perspective, we have some natural hedging; obviously, our non-USD expenses are benefiting from the stronger U.S. dollar. Obviously, any business we have priced in non-USD can be impacted by that. But that gives us a bit of a helping hand there as well and kind of keeps it balanced. As Mick said, inflation kind of hits everything. And we’ve taken that into account, as you’ve seen with our full-year outlook and a lower margin projection.

And if I could add to that, we also benefit from our dollar-denominated sales, where approximately 90% of our sales are in dollars. And you’re absolutely correct, Paul, that there might be a competitive pressure. But most of our competitors are also dollar-denominated.

Understood. I appreciate the responses. Thanks, guys.

Thanks very much, Paul.

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

Hi, good afternoon, I wanted to start on the RFP pipeline. I think in terms of number of RFPs, you talked to a 50% increase from 12 to 18. I wonder if you could try and quantify that from a kind of TAM perspective or dollar opportunity perspective, what sort of increase you might have seen there, relative to the additional RFPs. And I think you mentioned a doubling and proof-of-concept, I wonder if it’s possible to maybe get a sense of what sort of numbers we’re talking about there as well. And I’ll follow-up.

Yeah. So, hey, Tim, appreciate the question. So first of all, the RFPs I’m referring to here, these are the major Tier 1 names; obviously, we’ve got a whole funnel of activity with customers at all different scales. Critical infrastructure, in fact, critical infrastructure has been really robust for us, particularly in Europe, but these are with the large carriers in a global sense. And so their total spend in our types of products around optical and IP is measured in billions of dollars on an annual basis. Now, I’m not saying that’s what we’re going to win or necessarily even that’s where we have a sweet spot fit, necessarily, but that just gives you the level of analysis that’s going on out there as carriers evaluate their supplier base and look for a variety of different alternatives, partly because of the political situation around Chinese manufacturers, partly because of supply assurance concerns, making sure they have alternatives. There’s just a lot of activity as our customers are reevaluating their supply base. And so it’s a really significant large opportunity for us. A lot of which, any individual one would significantly move the needle for us. From a POC perspective, I can’t remember whether we have it in one of the slides. But, I think we’re at something like 70 unique proof-of-concept trials this year. And what does that mean? It means a customer is spending a considerable amount of time, either with our products in their lab or remotely working with our team in our lab to evaluate our products, how they perform, how they interoperate with the competition, and how do they work? How do they maintain them and support them in their network? There’s nothing like getting a customer engaged hands-on on the product to help sell it. And so I think those are meaningful indicators. We’ll probably double the number of POCs that we do this year versus last year. And one other metric related to that, we’ve seen a doubling in the number of POCs we’re doing on the IP routing portfolio. And again, that’s a real key strategic area for us to grow into, and so I’m real excited about that portion in particular.

Okay. So it sounds like it might, these continue to be major Tier 1 deals that you’re kind of grouping in this RFP pipeline. So it sounds like it might be fair to say if the number of RFPs increased by 50%, the value of the dollar opportunity may have as well or somewhere in that range?

Yes.

Great. And I also wanted to try and quantify to some degree the push you saw from some of the big European deals you talked about. In particular, maybe to help do that. Quickly, what would you—I guess, what would your book-to-bill have been had those deals come in Q2 relative to what I think you reported last quarter, which was at 1.2?

Yeah, just to call on that, the movement of those orders was in the range of $10 million, probably a little more than that. Not all of that would have shipped in the second quarter, but we probably would have gotten some of it out by the end of the quarter. So that would have added another, I don’t know, 10 to 15 basis points on our book-to-bill, something like that.

Great. I’ll pass it along for now.

Okay. Thanks, Tim.

Our next question comes from an unidentified analyst. Please proceed with your question.

Yeah, thanks for taking the question. And just a quick follow-up on the last one. Did you say what the book-to-bill for this quarter?

Yeah, I think we were right at 1.0 basically for book-to-bill. I’m not sure; I think Mick mentioned it, but it’s in our deck on the website as well.

Okay, great. Can you talk a little bit about the spending on 5G right now? Where are we in terms of kind of carrier focus between the access and the transport part of the network?

Well, I think it varies a lot by region. I mean, obviously here in the U.S., all the major carriers have launched a 5G service; typically, it’s a 5G non-standalone. So it’s kind of an adjunct to the current 4G network for additional capacity. In a lot of cases, using adjacent spectrum or farming spectrum that they’re currently using. As a good example, Verizon and AT&T have been very public about their 5G launches. And I think the infrastructure to support that obviously goes in prior to the spectrum being lit up and the mobile technology turned on. Many of the regions we’re being deployed in today 5G hasn’t even started yet. If you look at the India market, the 5G spectrum auctions are just starting this quarter. So none of the infrastructure really has been put in place yet to support 5G, and I think, I even mentioned in my remarks, that’s an area that we’re focused on capturing more share, partly because of the 5G deployment, adding more IP capacity to the network. But secondly, the investment we’re making in these new products really positions us much better to win more business in that space. So long answer to your question, but I think it’s quite different depending on the region. And I think we’re in the early innings still on the investment cycle around 5G.

Very good. And then lastly, on the Huawei discussion, which regions? I think it said India. What about Europe? How much opportunity is there for displacement of Huawei in Europe?

Well, I think there’s a very large opportunity, again, it will change—it will be a little different depending on the country. There are some countries that have already decided that Huawei is not allowed to be deployed in major portions of the network. There are other major spins and other countries Germany, Italy, Spain, etc., that have not banned Chinese equipment in the network yet. But again, I can tell you that the RFP activity we have, people are looking at alternatives and making sure they have multiple sources because nobody knows, both from a kind of a technology supply perspective as well as a political perspective how things are going to evolve. So just a lot of engagement, looking at alternatives and making sure they have flexibility in their supply chain.

Okay. Then last one, on the supply chain front. It didn’t sound like you were suggesting there’s too much incremental difference from a quarter ago. Is there any indication that things are improving? Or any comments just in terms of constraints incremental changes?

Yeah, so what we have been able to improve is the expedite-related costs, where we’re scrambling last minute to be able to find components to complete production. We’ve been able to limit that to a much smaller number in the first quarter and less in the second quarter, certainly less than in the second half of the year. The base component cost increases that we’ve seen though, we expect they’re here for quite a period of time. And we haven’t seen any relaxation around individual components, and certainly logistics costs and whatnot have continued to be elevated. So that’s what we’re expecting going forward, not a lot of dramatic improvement there. Again, what we’re expecting margin improvements on is a lot around the increased volume, the absorption of some of the fixed costs, and in the cost of manufacture and delivery.

Very good. Thank you.

All right, thank you.

Ladies and gentlemen, we have reached the end of the question-and-answer session, and I would now like to turn the call back over to Bruce McClelland for closing remarks.

Hey, great, thanks very much, operator. Thanks again for everyone being on the call with us and for the interest in Ribbon. I really look forward to speaking with many of you at the upcoming conferences that we have over the next 60 or 90 days and keeping you abreast of our progress during future earnings calls. With that, operator, thank you very much, and that concludes our call.

This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.