Greetings and welcome to the Ribbon Communications First Quarter 2019 Earnings Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded Thursday May 02, 2019. It's my pleasure to now turn the conference over to Daryl Raiford, CFO of Ribbon Communications. Please go ahead.

Thank you, and good afternoon. Welcome to Ribbon's first quarter 2019 financial results conference call. I’m Daryl Raiford, CFO of Ribbon and on the call with me today is Fritz Hobbs, our President and CEO. Today’s call is being webcast live on our Investor Relations website at ribboncommunications.com. Both our press release and our supplemental data are currently available on our website. Shortly after the call, a recording of this call and the transcript will be available. I’d like to remind you that during this call, we may make certain forward-looking statements. Such statements are based on our current expectations, forecasts and our assumptions regarding Ribbon's business, financial results, growth, anticipated benefits from acquisitions, stock repurchases and other opportunities in the marketplace that include risks and uncertainties that could cause actual results to differ materially from the statements discussed today. Any forward-looking statements are qualified in their entirety by cautionary statements contained in Ribbon's most recent annual reports on Form 10-K. While we may elect to update or revise forward-looking statements at some point, we specifically disclaim any obligation to do so. Unless otherwise indicated, all results discussed are on a non-GAAP basis. Statements about profitability refer to adjusted EBITDA, unless otherwise indicated. Free cash flow is defined as net cash provided by operating activities, less purchases of property and equipment as reported on a GAAP basis. A reconciliation of GAAP to non-GAAP results may be found in our press release and within the supplemental data on our Investor Relations website. And now, I’d like to turn the call over to Fritz.

Thank you, Daryl, and good afternoon to everyone on the call. I’ll begin with a review of our results for the first quarter along with some of our key achievements. I will then proceed, provide an update on our outlook for the remainder of the year before turning the call over to Daryl for more detailed review of our financial performance and outlook. Our first quarter results were in line with our internal projections. Non-GAAP revenue was $122 million as compared to $135 million in the comparable quarter a year ago, Adjusted EBITDA was break even as compared with the $1 million we reported in last year's first quarter. As we detailed on our fourth quarter 2018 earnings call, we expected to experience more revenue seasonality in the first half of 2019 as compared to last year and during the first quarter, service provider sales tracked to this expectation. Our service provider business is experiencing headwinds both from challenges our customers are experiencing in their businesses as well as the expected timing of completion of our project deployments for these customers. However, over the past six quarters, we've taken significant cost reduction actions. We've streamlined our product portfolio and organization while continuing to invest in software virtualization. As a result, despite lower revenue in this past quarter our significantly improved cost structure, coupled with an increased mix of high margin software resulted in stable Non-GAAP gross margins and adjusted EBITDA margins year-over-year. In addition, we continued to make solid progress on building a strong pipeline for our core software solutions for both network transformation and session software while ramping up our cloud offerings. This quarter, we saw an increase in our product revenue for our session solutions while we experienced softer demand for our network transformation solutions. I'd like to…

Thank you, Fritz. As a reminder, the slides on our Investor Relations website have the details regarding our historical financial performance. I'd encourage you to find these materials on our Website. We utilize various -- we utilized various metrics to assess the performance of our business. Not all these metrics are GAAP metrics and where our internal metrics are non-GAAP, we both provide these during the call to help explain our performance and provide a reconciliation of GAAP to non-GAAP results in our press release and within the supplemental data on our Investor Relations website. When I referred to non-GAAP in conjunction with the financial metrics, these financial metrics exclude the effects of purchase accounting and other items detailed in our earnings materials. Turning to the first quarter, Ribbon produced a solid financial performance that was in line with our internal expectations. In summary, our first quarter 2019 non-GAAP financial results were as follows; Total non-GAAP revenue was $122 million. Gross margin was 57%. Operating expenses were $72 million, loss per share was $0.05, adjusted EBITDA was breakeven. Both Verizon and AT&T were greater than 10% customers in the first quarter of 2019. We grew enterprise sales to 31% of our GAAP product revenue in the first quarter, as compared to 14% in first quarter 2018 resulting from our strategic investment in the enterprise edge market. Sales sessions software solutions grew to 65% of product revenue in first quarter. Sales of network transformation solutions represented 29% of product revenue in the first quarter, lower than a year ago, due to order timing and higher sales experienced in Asia last year. Applications and security sales were 6% of product revenue. Turning to the balance sheet, cash and investments were $46 million at March 31, which was down slightly from $51 million…

[Operator Instructions] Our first question is from Mark Kelleher with D.A. Davidson. Your line is open.

Great. Thanks for taking the questions. I wanted to start with the commentary on the weaker service provider environment. Can you just tell us a little bit about what type of visibility you have? I know last year it kind of -- we kind of started out the same way last year and it did come roaring back in the back half of the year. But can you just refresh our memory on how you get your visibility and build that pipeline?

Well we’ve got you know we're regularly talking with the clients. I would say, I wouldn't be as confident about the back half as we were last year, but it still looks stronger. We continue to believe we're going to follow the same pattern. It's hard to get a feel on just how strong it is because it started off pretty soft. Our view on -- our view on linearity [ph] right now would have us just a couple of points less than this time last year in terms of percent of total revenue for the quarter but we do believe that they are looking at our forecast and our visibility that the linearity will improve in those couple of points will be made up in the fourth quarter.

Okay. And you've got a pretty good enterprise business ramping, like you said 31% of product revenue, is that right?

That's correct.

Does that have less visibility than your service provider revenue?

It's more -- the enterprise business is more exposed to market demands and enterprise bookshop business are in. We go to market through our large service provider partners who are servicing their small medium enterprise and large institutional enterprise business. We fulfill through them. We do have -- we do work with them on demand planning quite well. But that generally moves out about six to eight months in advance.

Okay. And geographically, what were you seeing in Europe in particular, in EMEA got a lot of reports say that's weaker than usual.

Europe, North America to this time last year, North America and Japan were improved for us, both as a company and in the service provider business. The Europe was particularly weaker in the service provider space, and in Asia, we were lower year-over-year, quarter-to-quarter. We had in network transformation solutions within Asia. We deployed a large order in the first quarter of last year that was is now in terms of our pipeline scheduled more towards the second half this year.

Okay. And then just on Metaswitch, just to make sure I understand it, that's not in the courts. That's not a legal action, that's been settled, right. There's no appeal. They're going to pay that.

We did, we did enter into a binding agreement on -- because we disclosed in that 8-K. We do expect to receive $63 million in total payments of which 30 [Indiscernible] spread, $37.5 million will be received in the second quarter, and then $20 have the balance, $25.5 million will be received in three equal installments over the next three years.

Okay. Great. Thanks.

Thank you. We have no further questions at this time. I'll turn the call back to you.

Thank you then. In summary, what we'd -- we'd like to say we remain focused on managing the business to improve efficiencies and increase our cash flow. At Ribbon, we continue to expand our market share position and our new product introductions and application and security are gaining traction. So we do believe the service providers and enterprise transition to software centric solutions that Ribbon is very well positioned to capture additional market share and disproportionately benefit. We're very grateful for everyone joining the call today and your interest in Ribbon and we’ll speak with you next quarter.

That does conclude your conference call for today. We thank everyone for participating and you may now disconnect.