Greetings. Welcome to Ribbon Communications Third Quarter 2019 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. [Operator Instructions] Please note, this conference is being recorded. I would now like to turn the conference over to your host, Lindsay Savarese, Investor Relations. Thank you. You may begin.

Good afternoon and welcome to Ribbon's third quarter 2019 financial results conference call. I am Lindsay Savarese, Investor Relations for Ribbon. And on the call with me today are Fritz Hobbs, Ribbon’s President and CEO; and Daryl Raiford, CFO. Today's call is being webcast live and will be archived on the investor relations section of our website at ribboncommunications.com, where both our press release and our supplemental data are currently 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, our restructuring and cost containment activities, global economic conditions 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 report on Form 10-K/A and the company's other SEC filings. While we may elect to update or revise forward-looking statements at some point, we specifically disclaim any obligation to do so, except as may be required by law. We utilize various metrics to assess the performance of our business. Not all of these metrics are GAAP metrics. And where our metrics are discussed on a non-GAAP basis, we have provided a reconciliation of GAAP to non-GAAP results in our press release and within the supplemental data on the Investor Relations section of our website. Statements about profitability refer to adjusted EBITDA unless otherwise indicated and are on a non-GAAP basis. And now, I would like to turn the call over to Fritz.

Thank you, Lindsay and good afternoon to everyone on the call. I will begin with review of our results for the third quarter and key business trends along with some of our noteworthy accomplishments. I will then turn the call to Daryl for a more detailed review of our financial performance and outlook. Our third quarter financial results were in line with our expectations. GAAP revenue was $138 million and adjusted EBITDA was $23 million. Adjusted EBITDA rose sequentially on the strength of higher gross margins and lower operating expenses. I view the state of our business as being on track to achieve the pillars underpinning our strategy. We set out last year to increasingly center our business on software through fully virtualized core products, our cloud-based application software and our security and analytics software. We further sought to expand our presence in the enterprise edge segment of the market, which we regard as faster growing than our service provider market. Adjusted EBITDA grew compared to the second quarter of 2019 on lower third quarter revenue. Our revenue was lower due to the deployment timing of network transformation projects and our increased mix of software sales. Nevertheless, our pure software product revenue rose 17% year-to-date in 2019 compared with the first nine months of 2018. In fact, software revenue accounted for more than half of our product revenue in the third quarter, marking the first time that software sales accounted for the majority of our product revenue. As we noted last quarter, the shift to higher software revenue was encouraging as it drives higher gross margins. However, it dampens compared to top line results, because we have less revenue uplift of attached appliance sales. In addition to higher software sales during the third quarter, we made good progress in growing…

Thank you, Fritz. As a reminder, slides detailing our historical financial performance are available on the Investor Relations section of our website. I would like to remind everyone about second quarter's format change where we no longer increase our non-GAAP revenue for revenue loss applying purchase accounting. We have conformed prior periods to this presentation basis. In summary, our third quarter 2019 financial results were as follows: total revenue was $138 million; non-GAAP gross margin was 64%; non-GAAP operating expenses were $69 million; non-GAAP diluted earnings per share was $0.13; and adjusted EBITDA was $23 million. First let me address our revenue. Session software solutions accounted for 55% of product revenue in the third quarter, while network transformation solutions represented 37% and applications and security solutions were 8%. Within these categories our software sales comprised 51% of our total product revenue in third quarter up from 41% in the third quarter of 2018. Most of this growth came from increasing sales of virtualized software for example session solutions with more modest growth in the first nine months contributed from our security, analytics and application products. In terms of market segments conditions in our service provider market segment continued to be challenging particularly in our largest market the United States. For example two of our Tier 1 service providers in the U.S. are undertaking a business combination which resulted in a CapEx pause during the third quarter from both customers. But in terms of our enterprise market, our investment last year in enterprise edge solutions has yielded higher sales mix contribution from our enterprise customers now accounting for 29% of our product revenue in third quarter. We recently expanded the distribution of our EdgeMarc product line with new partners in Europe, Latin America and Asia-Pacific including Westcon. We believe the enterprise…

Thank you. At this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Paul Silverstein with Cowen. Please proceed with your question.

Hi, guys appreciate taking the question. My apologies if I missed it in your prepared remarks. But as you look beyond here and now out to calendar 2020, any thoughts for where EBITDA will be? And I recognize macro backdrop is challenging and there are some other issues. But any thoughts for where EBITDA will be next year coming out of the year?

Hi, Paul, good evening this is Daryl. We're not prepared to guide to 2020 on this call right now.

Paul, you know my attitude on this. We're here to make money for the shareholders.

I appreciate that. I trust visibility -- consistently your remarks visibility is a little bit of a challenge right now.

[Operator Instructions]

Okay. Well, thank you then. We appreciate everyone joining the call and your support of Ribbon. We look forward to speaking with you again soon. Thank you.

This concludes today's teleconference. You may now disconnect your lines at this time. Thank you for your participation and have a wonderful day.