Greetings and welcome to the Ribbon Communications Second Quarter 2024 Financial Results Conference Call. As a reminder, this conference is being recorded.

Good afternoon and welcome to Ribbon's second quarter 2024 financial results conference call. I'm Joni Roberts, Chief Marketing Officer at Ribbon Communications. Also on the call today is 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 rbbn.com, where both our press release and supplemental slides are currently available. Certain matters we'll be discussing today, including the business outlook and financial projections for third quarter of 2024 and beyond, 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 in the supplemental financial information posted on our website. In addition, we'll present non-GAAP financial information on this call. Reconciliations to the applicable GAAP measure are included in the earnings press release we issued earlier today as well as the supplemental financial information we prepared for this conference call which again are both available on the Investor Relations section of our website. Now, I'd like to turn the call over to Bruce.

Great. Thanks, Joni. Good afternoon, everyone and thanks for joining us today to discuss our Q2 results and outlook for the rest of the year. I'd like to start this afternoon with a short recap on the progress we've made over the last 18 months executing against our strategic goals and improving the foundation of the company. In early 2023, we initiated the final phase of integration of the ECI acquisition by restructuring the organization and integrating common functions such as R&D, operations, customer support, and deployment services. This allowed us to capture significant savings and better execute on programs that leverage products and technologies from both our business units, such as the significant investment being made in expanding broadband to more rural regions across the U.S. that will only accelerate with the $42 billion allocated in the Inflation Reduction Act for Rural Broadband. The investment that we've made in new products allowed us to capture additional share in regions such as India with the long-haul and Cell Site Router programs with Bharti Airtel, increasing our revenue in India by 30% last year. We expect to continue to see these benefits of the new operating structure for years to come. We've also been very successful in growing our business with enterprise customers as they modernize their communication infrastructure and leverage public cloud platforms. Similarly, we won a series of significant multiyear voice modernization projects with U.S. Federal defense agencies that are now underway and will continue well into the future. Financial results have improved significantly, particularly in the IP Optical business, where we have now had eight straight quarters of year-over-year higher earnings contribution from the business, resulting in a trailing 12-month adjusted EBITDA for the company once again above $100 million in 2024. This allowed us to go to market in the second quarter and complete the refinancing of our credit facility, giving us the financial foundation to continue to execute on our strategy. We couldn't be more delighted with our new financial relationship with HPS and WhiteHorse and their interest in supporting our growth initiatives. As we look forward to the second half of the year and beyond, we have multiple strong tailwinds supporting the business. The recently announced three-year Verizon voice network modernization contract and the potential for similar projects with other service providers, such as Brightspeed which we announced last week, along with growth in enterprise and U.S. Federal give us high confidence that the Cloud & Edge business will return to growth. In addition, the recent announcement by Microsoft to suspend development on the Metaswitch portfolio creates an excellent opportunity to further expand Ribbon's share in the global carrier voice infrastructure and unified communications space. Similarly, recent industry announcements, including the Nokia-Infinera combination and the HPE-Juniper deal create disruptions that we intend to capitalize on. These types of consolidations create significant distraction for their businesses and inevitable roadmap or realignment changes that open the door for alternative solutions. The one area that will create a near-term headwind is business we have in Eastern Europe, supporting telecom operators in the deployment of Internet access in this troubled region. As the war in Ukraine continues into its third year, it's become increasingly challenging to operate in Russia and continue to provide products. We, therefore, suspended new shipments and lowered our expectations with a more conservative outlook for the region for the rest of the year. This also had an impact at the end of the second quarter. In order to offset the profit contribution shortfall, we're phasing in additional cost-saving actions over the next several months and we continue to target profitability for the IP Optical business, although it will take a little longer than originally projected. 2024 is still expected to be a significant improvement over 2023. Now on to Q2 results. Revenue came in below our guidance range for the quarter at $193 million. In addition to lower shipments to Eastern Europe, the largest shortfall was a significant Cloud & Edge deal with the U.S. Federal agency that was expected to close in Q2 but slipped out of the quarter. That deal alone would have put us in the revenue guidance range for the quarter and well above the top end of guidance on earnings. Predicting the timing of these U.S. Federal projects continues to be challenging but we are expecting this deal to close this week and is included in our outlook for the third quarter. We are building momentum in this large and critical market segment where we have leadership and substantial differentiation. We did close and ship an additional large project in the second quarter to another U.S. defense agency. Despite the lower sales, earnings were very solid in the quarter with adjusted non-GAAP EBITDA of $22 million. Gross margins were at the high end of our guidance with strength in both business units. Our continued focus on driving down expenses also contributed to the solid earnings result. Year-to-date profitability for the company increased 65% on an adjusted EBITDA basis as compared to 2023. Now a little more detail on each of our operating segments. As a result of lower sales to Eastern Europe, IP Optical revenue in the second quarter was down $3 million year-over-year to $82 million, the first year-over-year decline we've had in eight quarters. Excluding sales to Eastern Europe, revenue from all other customers was up 4% year-over-year and up 35% quarter-over-quarter. Book-to-bill was positive at 1.09x. Excluding Eastern Europe, the EMEA region was the strongest market for IP Optical solutions again this quarter, increasing 30% year-over-year and 9% quarter-over-quarter. This includes significant deals with defense agencies such as the Israeli Defense Forces and the Swiss Armed Forces. The Asia Pac region outside of India was also strong in the quarter, with sales increasing 32% year-over-year. This includes a number of projects we announced this week with long-standing customer, Converge ICT, in the Philippines, the leading fiber broadband provider in the region. The new deployment leverages our new 1.2 terabit per second Apollo 9400 to expand fiber network capacity to support exponential traffic growth from hyperscale and AI applications. Sales to India in the first half of 2024 were down approximately 20% year-over-year, following strong shipments last year when we ramped supply of cell site routers and initial long-haul optical deployments. However, we expect significant growth in the second half of the year with continued better margins. IP Optical sales in the U.S. were down this quarter as we work closely with customers and engineering firms to deploy products shipped in previous quarters. But we have a very strong pipeline of U.S. Rural Broadband opportunities in the second half. In fact, backlog is currently higher than the entire amount we shipped in the first half of the year. The overall customer mix, along with continued improvement in supply chain costs, resulted in gross margins in line with our expectations at 39%, up year-over-year and down just slightly from the first quarter. Non-GAAP adjusted EBITDA for IP Optical was negative $4 million in the quarter, a significant improvement year-over-year and sequentially better than the first quarter. In our Cloud & Edge segment, sales were down year-over-year, primarily due to the timing of the large U.S. Federal deal that moved to Q3. Sales to service providers, including U.S. Tier 1 carriers, stabilized and were down only slightly year-over-year. We expect strong growth from service providers in the second half of the year. The team is fully engaged in operationalizing the new Verizon advanced voice network platform project. We received initial product orders and shipped a small quantity in the quarter and started some of the advanced network engineering and planning effort for the initial switch locations. This will accelerate rapidly over the next two quarters and we are on track to achieve our $100 million per year run rate with Verizon by the end of the year. Overall activity in the voice transformation area continues to increase, highlighted by our announcement with Brightspeed last week. They are leveraging our portfolio of voice solutions to modernize their legacy central office equipment which includes our multi-service access routing platform, the Neptune 1250. We initiated a similar project with another U.S. MSO this quarter and expect several more this year. The reported Microsoft announcement to discontinue their work on the Metaswitch portfolio has also created significant discussion and interest as operators evaluate options to continue to provide these critical voice services. Our Cloud & Edge recurring maintenance business remained strong this quarter and we expect a modest increase in revenue in the second half. More than 90% of our projected revenue for the year is already booked and we closed a significant three-year renewal in excess of $60 million with one of our larger customers in the last quarter. With that, I'll turn it over to Mick to provide additional detail on our second quarter results and then come back on to discuss outlook for the rest of the year.

Thank you, Bruce. Good afternoon to everyone. We were pleased again with Ribbon's ability to meet adjusted EBITDA earnings guidance driven by strong product gross margins and continued focus on operating expense management. On a trailing 12-month basis, our consolidated adjusted EBITDA remained over $100 million. Most notably, our IP Optical networks is getting closer to sustained breakeven profitability with the last 12 months adjusted EBITDA of negative $5 million or just under 2% of revenue. Meanwhile, we continue to manage the Cloud & Edge business, resulting in strong EBITDA margin performance of 24% for the last 12 months. With our expectations for revenue growth in both segments in the second half of the year, Ribbon's financial performance will only improve. As always, please refer to our Investor Relations page on the Ribbon website for supplemental financial information. Let's begin with financial results at the consolidated corporate level. In the second quarter of 2024, Ribbon generated revenues of $193 million which is a decrease of 8.5% from the prior year and below the low end of our guidance. Non-GAAP gross margin was 54.4% which is at the high end of our guidance. This is a 240 basis point improvement over prior year due to a positive product and regional mix and IP optical networks. Non-GAAP operating expenses were $86 million, an improvement of $4 million year-over-year and quarter-over-quarter, driven by continued reductions in R&D and sales expenses from last year's restructuring efforts. This is the lowest operating expense level since the merger of Ribbon and ECI in 2020. Non-GAAP net income was $9 million which is a $1 million improvement from the previous year. This generated non-GAAP diluted earnings per share of $0.05 which is an increase of $0.01 versus prior year. Our non-GAAP tax rate year-to-date was 35%. Our interest expense for the quarter was $4 million, 42% less than the previous year. This was mostly driven by $6 million of noncash accounting charges caused by the refinancing transaction which included previous debt issuance costs from 2020 and the gain from the sale of the interest rate swap in 2023. Adjusted EBITDA was $22 million in the quarter, right in the middle of our guidance. It is slightly down $1 million from the prior year and up $10 million from the first quarter. Adjusted EBITDA year-to-date is now $33 million and trailing 12 months is $104 million. Our basic share count was 174 million shares and our fully diluted share count was 176 million shares for the quarter. Now let's look at the results of our two business segments. In our Cloud & Edge business, second quarter revenue was $111 million, a decrease of 12% year-over-year, driven by lower enterprise product sales, primarily due to the delayed U.S. Federal defense deal. We are increasingly confident that we can grow our revenues for this business segment, especially with the incremental opportunity from Verizon's network modernization program. Cloud & Edge had a strong second quarter non-GAAP gross margin of 66%, consistent with the previous quarter and prior year. Software sales were solid once again and made up 64% of total product revenues. Product and services bookings were good in the quarter at 1.04 times revenue. Cloud & Edge continues its steady cash and profit contribution with an adjusted EBITDA of $26 million or 23% of revenues. Let's turn to our IP Optical networks business results. We recorded second quarter revenue of $82 million or a 4% decrease versus the prior year. While we had good revenue growth across most of Europe, this was mitigated by substantial year-on-year decrease of about $6 million from our Eastern European operations. Also, as Bruce mentioned, sales to North America and India were lower this quarter but we anticipate a significant increase in the second half of 2024. Non-GAAP gross margin for IP Optical networks was 39%, up about 800 basis points from the prior year, mostly driven by lower product costs and better regional mix from EMEA sales. This resulted in gross profit of $32 million which is a $6 million improvement from previous year. Actually, our last 12-month non-GAAP gross margin is over 40%, driven by a better product mix, cost of goods sold enhancements, and royalty reductions. Adjusted EBITDA for the quarter was only a loss of $4 million which is a great improvement of $8 million from the second quarter last year. Now, let's discuss total company cash flows and capital structure. Cash flow from operations for the quarter was a negative $10 million but that includes a one-time $7 million preferred equity dividend which is classified as interest. On a normalized basis, cash flow from operations was a negative $3 million for the quarter and a positive $7 million for the first half of the year. Ribbon's capital structure was greatly enhanced in the second quarter. As we had committed, we were able to successfully refinance our term loan A before the end of June with the proceeds of a new $350 million 5-year term loan. On June 21st, we repaid $230 million of the existing term loan and redeemed in full for $64 million of preferred equity. Additional detail on the transaction is in the second quarter presentation available on our Ribbon Investor website. As a result of the refinancing transaction, our liquidity has also improved significantly. We increased our cash balance over $36 million from the first quarter to finish at $67 million of cash and cash equivalents at the end of the second quarter. In addition, we have an untapped $35 million new revolving credit facility. All in all, this positions Ribbon well into the future with a strong foundation, solid capital structure, enhanced liquidity, less restrictive covenants and especially a new strategic banking group relationship. We are fortunate to be financed by HPS Investment Partners and WhiteHorse Capital due to their financial strength, business acumen, and long-term partnership perspective. With them, we will have the financial flexibility to address growth opportunities. Now, I'll turn the call back to Bruce.

Great. Thanks, Mick. Now, focusing on the second half of the year, we're expecting significant growth with revenue increasing approximately 25% as compared to the first half. We expect margins to remain relatively consistent with the first half. And with continued OpEx control, bottom line earnings are expected to more than double, very similar to the profile of the business in 2023. There are a number of specific tailwinds supporting the business and our outlook for the second half. First, the Verizon program is off to a great start and the combined team is fully activated. The first phase of sites to be upgraded have been identified and detailed designs are underway. We're scaling the deployment teams and ramping production on the necessary hardware components and installation material. Revenue on hardware and software is recognized as we ship and the professional service revenue is recognized as the work is performed on each site. Sales to Verizon in the second quarter once again exceeded 10% of sales, increasing 40% quarter-over-quarter and we project sales in the second half of the year to increase approximately 50% versus the first half. Second, we expect a strong second half with rural and regional service providers in the U.S., building out fiber networks using both our optical transport and IP routing solutions. We have a very strong pipeline and growing backlog that projects significant growth versus the first half and will approximately double year-over-year. We've increased the number of network engineering and consulting firms we're working with and broadened our geographic coverage to more areas which has helped further increase our opportunity funnel. Approximately 50% of the projects are benefiting from some form of incentive funding such as RDOF and ReConnect. In addition to traditional telecom service providers, we're also seeing a growing number of opportunities with utility providers. Third, we expect a strong second half with enterprise and U.S. Federal and defense agencies with revenue growing more than 50% versus the first half of the year. This includes a number of larger annual enterprise license agreement renewals with financial institutions that provides a solid base of recurring revenue. Fourth, we expect the business in India to grow approximately 30% in the second half versus the first half of the year on the strength of stronger fiber network deployments and long-awaited increased network spending by Vodafone Idea. The return of this strategic customer is a major opportunity given the shift away from Chinese manufacturers in this large region. And finally, excluding Eastern Europe, our business in the EMEA region is expected to follow a seasonal trend with sales increasing approximately 30% in the second half. This is a very strong market for our IP Optical business with a base of repeat customers. The combination of all these trends provides us good visibility and strong growth in the second half of the year. In addition, as I mentioned earlier, recent changes in the competitive landscape definitely create opportunities to expand our business with both existing and new customers. In particular, the reported decision by Microsoft to discontinue development on the Metaswitch portfolio and significantly reduced sales and engineering staff is a major opportunity for us to replace existing deployments of session border controllers, voice softswitch, and media gateways. We believe the majority of the Metaswitch footprint is with telecom service providers in North America and Europe. In many cases, the Metaswitch deployments are with customers where we don't currently have a footprint or where we have a minority share position. This is a great opportunity to provide customers with a migration to a state-of-the-art feature-rich software platform that's deployed at scale with the largest service providers in the world. Our second half projections do not yet include upside from this major market opportunity. Of course, we'll have some headwind from the suspension of shipments to Russia. We estimate this at approximately $20 million to $25 million of revenue in the second half. However, we are implementing a number of expense reduction actions to mitigate a significant portion of the profit shortfall and the additional tailwinds I outlined support the growth we're projecting in the second half. In summary, we continue to be focused on our key strategic goals, including achieving sustainable profitability in our IP Optical business, returning to growth in our telco voice infrastructure business, diversifying and expanding sales in enterprise market verticals, including financial, healthcare and government, information security and accelerating innovation and capturing cost efficiencies with full integration of our product teams. From a guidance perspective, for the third quarter, we expect continued sequential growth in both of our businesses. We expect gross margins to be consistent with the second quarter, although perhaps down approximately a hundred basis points given the expected mix of shipments. And we expect OpEx to be up a few million dollars versus the second quarter due to variable employment expenses but then to reduce further in the fourth quarter given the cost actions underway. Based on this, for the third quarter, we're projecting revenue in the range of $205 million to $220 million, non-GAAP gross margins of 53% to 53.5% and non-GAAP adjusted EBITDA in the range of $25 million to $30 million. For the full year, after accounting for the reduced sales to Eastern Europe offset by growth across multiple other areas and continued expense management actions, we believe we're still on track to be in our original guidance range, although more towards the bottom of the range. Therefore, we thought it was prudent to revise our guidance for the full year as follows. Revenue in a range of $830 million to $850 million, non-GAAP gross margins of 54% to 54.5% and non-GAAP adjusted EBITDA in a range of $105 million to $115 million. In conclusion, we are well positioned to benefit from the growing investment in fiber networks to meet the exponential increase in the consumption. And we expect a return to growth in our voice communications business as key customers such as Verizon accelerate modernization of their infrastructure. We're effectively managing things that are in our control and as we continue to significantly improve our overall profitability, this should translate into significant value creation for our investors and employees. Our original strategy behind the combination of Ribbon and ECI to cross-sell the entire portfolio of voice and data products to a broad common customer base continues to progress and creates a strong foundation for the business to grow in 2025 and beyond. Operator, that concludes our prepared remarks and we can now take a few questions.

The first question is from Michael Genovese of Rosenblatt Securities.

First, congratulations on the strong margins and EBITDA and the promising revenue outlook for the second half across various end markets. It's great to see that. However, I would like to focus on the second quarter and gain a deeper understanding of it. We heard your comments regarding enterprise and Federal, and that Edge and Cloud performed as expected, with the Federal deal remaining on track. I would like to clarify the shortfall in optical during the second quarter. Specifically, how much of that was due to Eastern Europe, and it seems like the U.S. market was weak in the second quarter but is expected to improve in the latter half of the year?

Yes. Thanks for the question, Mike. So like the first part, I think you've got right. The largest shortfall was this Federal deal which was significant in size. I think as I mentioned in the remarks that it would have gotten us to the guidance range. So we were at $193 million total with the bottom of the range of $200 million. So it gives you an idea of the size of that deal. And obviously, the incremental contribution from that, given it's essentially software, would have resulted in the earnings being even much, much stronger above the guidance range just with that deal alone. On the optical side, I think Mick mentioned that the year-over-year change in Eastern Europe was about negative $6 million. So that gives you an idea of the shortfall from Eastern Europe in the quarter, give or take a few million dollars. So, I hope that makes sense.

Yes. If we consider the guidance change for the entire year, should we primarily attribute that to Eastern Europe? Is that the correct way to look at it?

Yes. From a negative perspective, it's all Eastern Europe. And I frame that in the $20 million to $25 million range, again, offset by the other tailwinds I mentioned across the board, really a whole variety of different things. So we have a pretty strong outlook for the second half despite the fact that we're reducing shipments into Eastern Europe. And I think that's in line with what we've seen from others, the pickup in the second half and then some of the things a little more specific to us around the Verizon project, around U.S. Rural Broadband expansions, all driving the growth in the second half of the year for us.

Okay. And just a couple more for me. So we've got the Verizon, new deal is already kicking in and you guys announced Brightspeed the other day. Those are pretty impressive names. And should we think about there's something going on in the industry where this is a trend and we can expect to see more of the same going forward with other customers?

Yes. This certainly feels like that, Mike. The other one we talked about earlier in the year was with MTN Group in Africa even with a modernization of their voice infrastructure. And so there's been a series of these. I also referenced another U.S. MSO program. And I think as people look at the investment in their network infrastructure and how do they get more efficiency, drive down costs and be able to feed the growth in fiber and in mobile, it's a really great area to look. And we've done some work to drive down costs in the ROI and getting some good momentum. You kind of overlay that with the opportunity around the Metaswitch footprint which is pretty substantial in the market and gives us some really good momentum around the Cloud & Edge business and the return to growth there.

Finally, with operating expenses decreasing significantly, we appreciate this trend, but I would like to inquire about the current requirements for research and development. What does the R&D intensity look like at this moment? How are you ensuring the protection of R&D while you are undergoing such an aggressive restructuring?

Yes. Thanks, Mike. So we're pretty careful about that. I mean R&D is the fuel. It's the engine of the future for sure. We've gotten at it by really coming at it structurally and being able to get the most out of the combined set of resources in the company with the reorganization we started about 18 months ago. And the area we're focused on is really around sustaining engineering, how do we get really, really efficient around the cost structure for supporting the installed base. We've actually implemented some really interesting technology that helps our customers upgrade their networks more efficiently and get them on a common software base and that allows us to obviously get more efficient in how we support them as well. So there's a whole series of things that we've gone after there to keep the engine strong, so. But thanks for all the questions, Mike.

The next question is from Christian Schwab from Craig-Hallum Capital.

So a lot of the questions were kind of answered there. But just on the Rural Broadband, a lot of people are really talking about Rural Broadband or the BEAD. You kind of mentioned the other programs. Is the strength that you're seeing for Rural Broadband on the OTN and optical side getting ready for those money to be released? Or are there a few states where you guys are really well positioned where money is getting into the market a little bit faster than, say, broadly based?

The BEAD program is not contributing to our current initiatives at all. We estimate that about half of our programs have some form of federal assistance, but it's not from the new BEAD program. The funding primarily comes from RDOF, ReConnect, and other sources. Our involvement in the middle mile aspect of the network will likely happen later, after we've made initial investments in fiber and related equipment. As the infrastructure is established and traffic increases, upgrades to the middle mile will be needed. This might just reflect the timing of our participation. We have a strong pipeline of opportunities for the second half of the year, with some larger projects that will significantly contribute to growth. Additionally, we are involved in the optical transport layer and Metro IP routing layer, which provides us with access to a broader segment of the program and market.

Are there more opportunities for Infinera in the United States, especially since Infinera's focus has been on data center applications rather than long-haul solutions? In both acquisitions, Hewlett Packard-Juniper and Nokia-Infinera, what products do you believe could be disruptive in the marketplace and potentially help gain market share as roadmaps evolve and layoffs occur?

In the case of the Nokia-Infinera deal, it is focused on optical transport and is more prevalent in Europe and Asia Pacific rather than the North American hyperscale data center segment. Both Nokia and Infinera may be looking to ensure a diverse customer and supplier base to prevent others from gaining market share. Regarding the HP and Juniper deal, it relates to the IP routing domain, particularly in the metro, middle mile, and access aggregation layers. Juniper has existing ties with telecom operators, which presents us with an opportunity to offer additional services. Given our emphasis on the telecom sector and the specialized products we've developed for that market, we believe we are well-positioned to increase our market share in that area as well.

And then my last question, I'll sneak in here, Bruce. On the Brightspeed that you just announced, you've done a good job of quantifying the Verizon opportunity at $300 million over the next few years, exit at kind of $25 million-ish in Q4 of this year. Can you give us any color at what the multiyear opportunity of Brightspeed could be?

Yes. Just directionally, not to talk too specific about an individual customer but obviously, Brightspeed's footprint is smaller than the larger Tier 1s fixed line providers like AT&T and Verizon. I think the footprint they picked up was about 6 million lines. And obviously, there's a transition to fiber and IP across the network. But there's quite a substantial footprint of legacy TDM lines there and I think we've worked really successfully to justify the ROI and modernizing a portion of that network at least. And these programs do take time to modernize a switch location, doesn't get done overnight. So it kind of stretches over a period of time. And hopefully, we can continue to grow in the footprint that we're already deploying in and then identify some of these new customers as well that we can get onboard for the similar program.

The next question is from Tim Savageaux from Northland Capital Markets.

Let's stay on that one for a second because that would be an obvious kind of guidepost to try and at least get a sense of what Brightspeed could mean. And it is a smaller footprint but it's not that much smaller. I think Verizon is what, 17 million, 20 million lines, something like that. Is that a fair way to look at it? In terms of proportional understanding, they've got a big business network over there at Verizon and anything. I guess overall, without pressing you too hard, it seems material or...

Yes, like, it could be.

Fair to say?

Yes, I believe it's very significant and strategic. Brightspeed is an innovator in the market, and we are excited to partner with them. More generally regarding switch modernization, there are unique factors depending on the configuration of the switch, the number of legacy lines remaining, the distribution between business and residential lines, and the region in which they are deployed. For instance, the cost of power in California is considerably higher than in other areas. Therefore, it's important to analyze which parts of the installed base have a return on investment that justifies the initial expense. While I can't provide extensive details regarding Brightspeed specifically, it's crucial to examine the specifics of each situation. Comparisons are not merely based on the number of lines; the scaling isn't as straightforward. I understand this may not fully address your question, but those are the complexities at play.

That's helpful. Off the top of your head, you think, hey, maybe these rural markets have actually more voice lines or more traditional voice than the bigger ones as well.

Yes.

Can you discuss your current position regarding potential opportunities with Brightspeed's former parent company, CenturyLink, now known as Lumen? Would you say you're already engaging with them to some extent? I would appreciate any insights you might have.

Yes. Not surprisingly, we have a large installed base with many of the operators in the U.S., including Lumen. There is nothing specific to discuss regarding their plans for that part of the network, but we certainly have a significant presence that we continue to support and maintain across the network.

Okay, I think I'll take a break from uncomfortably mentioning customer names and move on to a discussion which is, I think, Mick, that you said you expect growth in both segments in the second half on a year-over-year basis. Just want to confirm that? And it seems like that would put you for the year in IP Optical maybe flat to up a touch. Am I kind of looking at that the right way?

Yes. Let me jump in. Mick can comment on this as well. Due to the changes in the business in Eastern Europe, the year-over-year growth for IP Optical is not as high as we initially projected at the beginning of the year. However, with our updated full-year guidance, it is slightly up year-over-year. The Cloud & Edge business has grown approximately 2% to 3%, potentially a bit more. So, you can derive those numbers directionally.

Can you provide an update on the enterprise growth mentioned last quarter, which suggested continued declines in service provider, specifically regarding Cloud Edge? Considering the strength anticipated in the second half of the year, supported by carrier reports, what is the current outlook on the dynamics between Tier 1 and non-Tier 1, and how do you see that progressing in Cloud & Edge?

Yes, I think you got the math very accurate there, Tim. So I think in the second quarter, service provider for Cloud & Edge was very consistent with one year ago, down a few million dollars and the Tier 1 portion of that very stabilized. So great to see, I'll call it, kind of bottoming out. We said that last quarter, we kind of reached the bottom and expect significant growth in the second half from the service provider piece. So the decline in Cloud & Edge in the second quarter year-over-year was essentially mostly enterprise and within enterprise, it was mostly the one Federal deal that contributed most of it. So it's unfortunate, right, that it just closed inside the quarter like we planned, we would have had a really strong number in the second quarter, particularly on the earnings line would have been outstanding.

The next question is from Dave Kang from B. Riley Securities.

My first question is, I was wondering if you can talk about the Neptune's ramp at AT&T and other Tier 1s? I think you mentioned MSO, maybe provide more color on that customer?

Yes. So we pointed out even with the Brightspeed migration that we're doing, it leverages our Neptune router as part of that solution and it's involved in a couple of different ways kind of as a standard router as well as being able to support what they call TDM circuit emulation, being able to remove legacy TDM circuits or SONET infrastructure and carry it all over an IP fiber network, really helps reduce the cost of supporting all this legacy in infrastructure. So that concept, that solution that we're using at a Brightspeed, same sort of approach that we talked about with AT&T last year and it's actually a key enabler in this whole migration. So we wanted to become really a standard element of the voice network modernization and that's the entry point at a number of carriers, large and small. So I don't want to get into specific commenting on a specific customer but it's an integral part of that solution now and really that linkage between the portfolio that we acquired from ECI and have been investing in how that combination makes a lot of sense for us.

And can you just talk about the ramp, the trajectory, like, is it going to peak in maybe fourth quarter or next year? And any color on that?

We definitely have a strong second half, and as you analyze the numbers, Q4 looks very promising. Other companies, like Nokia, have indicated that the fourth quarter is expected to be quite robust. While I see this as a peak for the year, it lays the groundwork for growth into 2025. We believe we can maintain our growth trajectory despite reduced business from Eastern Europe. We aim for significant improvement next year compared to this year, and the achievements with some of our larger accounts set us up well for that.

And then last quarter, you talked about Apollo 9500, sounded like a number of trials. Just if we can get an update, any kind of potential wins in the pipeline?

Yes, exactly. So that new platform, the 9400 uses the 1.2 terabit at the latest generation optical front end. In fact, the announcement we had, I think, on Tuesday this week with Converge over in the Philippines is using that new platform. So we're able to dramatically improve or increase the capacity on the existing fiber network by migrating from a 400-gig infrastructure to 800-gig basically with that new optical platform. And that's a perfect example, Dave, of a new win with a key customer that we're really helping expand. If you go check the press release out, they talk about the growth that they're seeing from the hyper data center build-out and AI applications. So I think that's an indication of the future opportunity here with this new platform which has been adapted to be more data center centric, right, the different form factors and the ability to aggregate 400-gig client-size interfaces on this platform is pretty unique. So we're excited about where that goes. And we had a good second quarter, continue to grow on the deployments kind of at a similar rate as what we saw in the first quarter.

And my last question is regarding Vodafone Idea, it looks like they got capitalized. Can you just remind us what kind of customer, how big they were? What kind of products you are providing? And going forward, what kind of opportunities should we expect from these guys?

Thank you for your question, Dave. The India market was over $100 million annually for ECI, with Vodafone representing about 30% of that. We have not yet returned to that level, but we expect a significant improvement in the second half as they increase their investment in the optical platforms and IP MPLS platforms we offer. This could mean tens of millions in additional business for us as we move into 2025. It's encouraging to see them getting back on their feet. We've worked hard to support them over the last couple of years to ensure the network runs smoothly, and we hope this leads to new business opportunities for us in the future.

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