Ribbon Communications Beats Q3 Profit Forecast, Revenue Slips Slightly
The telecom equipment maker earned more than analysts expected in the third quarter of 2026, and its shares jumped after hours despite a small sales miss.
Ribbon Communications beat Wall Street's profit expectations for the third quarter of 2026, though its revenue came in just short of forecasts. The telecom equipment maker reported adjusted earnings of $0.07 per share, well above the $0.04 analysts had expected. Revenue reached $219 million, slightly below the $221.81 million forecast.
Investors seemed to care more about the profit figure. The stock closed the regular session up 4.48% at $1.40, then climbed another 9.56% in after-hours trading to $1.534.
CEO Bruce McClelland said the quarter delivered on the stronger second half the company had promised. Revenue rose 14% from the previous quarter, and adjusted EBITDA more than doubled to $27 million. That jump in profitability is the number that stands out for anyone watching whether the company can turn the corner.
The IP Optical Networks business had its best quarter on record for sales, growing 17% from the second quarter. Management pointed to one of the strongest quarters ever in the U.S. for that unit, which added two new tier 2 service provider customers. Sales in that segment were more than 50% higher than in the first quarter of 2026.
The Cloud and Edge segment also picked up steam, with sales up 11% from the prior quarter. Service provider revenue climbed 15%, driven by more activity with the company's largest customers. Enterprise and government sales stayed solid, including a notable new win with a large U.S. civilian federal agency.
Verizon remained Ribbon's largest customer accounting for more than 10% of revenue. Its purchases rose sharply, with sales to the carrier up roughly 50% compared with the first half of the year. For a company whose fortunes depend heavily on a handful of big telecom buyers, that concentration is both a strength and a risk.
The bottom line: Ribbon sold a bit less than Wall Street wanted, but it kept more of what it earned. For shareholders, the profit beat and the upbeat outlook outweighed the revenue shortfall. For the wider telecom sector, the results show that demand for optical networking gear and carrier upgrades is still moving.
Read the full earnings call transcript at Investing.com.
