Ribbon’s Q3 public sector sales delayed by government shutdown

The vendor said that government agencies will eventually move forward next year, while optical and cloud remained strong during the quarter.
Nov. 5, 2025
6 min read

Key Highlights

  • Ribbon's enterprise segment was impacted by the U.S. government shutdown, causing a 3% YoY sales decline, though other customer segments grew nearly 7%.
  • Strong performance in IP optical networks and cloud services, with sales up 11% YoY to $91 million, driven by projects in Europe, Middle East, and Asia-Pacific regions.
  • International markets, including Japan, India, and Southeast Asia, contributed significantly to growth, with India sales up 31% YoY and 50% YTD.
  • The company secured key data center interconnect projects in Central Europe and received a provisional BEAD award, signaling future growth opportunities.
  • Despite short-term headwinds, Ribbon remains confident, projecting Q4 revenue of $230-$250 million and emphasizing ongoing support for mission-critical government projects.
www.ribboncommunications.com
690bb3390b47585de4921523 Ribbon

Ribbon is weathering near-term headwinds in its enterprise segment as the government shutdown is delaying sales to its U.S government agency customers.

Sales to enterprise customers in the quarter were down approximately 3% year over year and were impacted by lower sales to U.S. government agencies. Excluding this segment, enterprise sales to all other customers were up almost 7% year over year.

Speaking to investors during its third-quarter earnings call, Bruce McCelland, CEO of Ribbon, said that the government shutdown has held up the procurement process on several projects that could have advanced it above the midpoint of its third-quarter guidance.  

www.ribboncommunications.com/
Bruce McClelland, CEO of Ribbon Communications.

Bruce McClelland, CEO of Ribbon Communications. 

“The ongoing shutdown is obviously affecting many government activities, with significant non-critical staff furloughed,” he said. “This has become an important segment for us, contributing mid to high single-digit percentages of our Cloud and Edge revenue in 2024.”

Despite the near-term challenges, McClelland remains bullish about Ribbon’s prospects in the U.S. government sector. The projects the company is involved in are high priority and equipment purchases have been put on hold, not cancelled.

“Given the uncertainty over when a resolution will be reached, we have removed the majority of U.S. government-related sales from our projection for the fourth quarter and now assume these purchases will occur in 2026,” he said. “To be clear, no business has been lost. Deployments and services are continuing, and we’re supporting our customers’ mission-critical needs.”

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Also, here's coverage of other key stories on Ribbon Communications:
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IP optical uptick

Amidst a challenging quarter for the U.S. public sector market, Ribbon had a strong quarter in IP optical networks and cloud services, with sales rising 11% year-over-year to $91 million.

Ribbon saw that IP Optical sales in Europe and the Middle East rose nearly 50% year over year, with a variety of critical infrastructure and defense agency projects.

The company also saw growth in Asia-Pacific, with various customer wins in Japan, India, and Southeast Asia. Likewise, sales to India continue to grow, increasing 31% year over year this quarter and are up 50% year to date. Finally, it had several new projects in Japan, including a new 400-gig long-haul transport win with a regional electric power company that provides internet, mobile, and data center services throughout the region.

McLelland said this was “one of our strongest quarters in the last five years, and compensating for lost sales to Eastern Europe.”

Data center interconnect (DCI) sales in Central Europe were a key highlight. The first project was in support of a large regional insurance provider to provide secure high-speed connectivity between its data centers, with a key focus on low latency and traffic encryption. The second was with a regional telecom operator building a new 400G internet peering network connecting over 200 cities.

“I’m pleased with the growing pipeline of DCI opportunities that have opened up with our expanded portfolio of IP over DWDM solutions,” McClelland said.

While IP Optical sales in North America were lower this quarter, Ribbon did win its World Broadband Project Award, tied to a provisional BEAD award expected to be ratified shortly.

“With growing clarity around the new BEAD rules and process, I expect momentum to quickly increase over the next several months,” McLelland said.

He added that Ribbon continues to make progress in diversifying its IP optical revenue base. “IP Routing Solutions has grown by more than 20% year to date and represents approximately 50% of new product sales for the segment so far this year.”

Cloud opportunities emerge

While U.S. federal sales impacted the Cloud and Edge segment, Ribbon saw revenue grow nearly 9% due to voice network modernization projects.

Excluding low-growth maintenance revenue, Cloud and Edge product and professional service revenue have grown almost 18% so far this year, as compared to last year. The service provider segment remained strong, growing 5% year over year.

McClelland noted that, besides “another strong quarter with Verizon, where revenue grew approximately 20% year over year, we’re seeing an increasing number of service providers beginning to invest in voice network modernization, with eight new projects initiated this last quarter.”

The company also saw growth in the enterprise segment. Excluding U.S. government agencies, Cloud and Edge sales to enterprise customers were up slightly from the second quarter, but down about 10% year over year.

Ribbon’s initiative to get customers on annual software license agreements continues to bear fruit.

“As we’ve moved more customers towards annual enterprise software license agreements, we see a larger concentration of revenue in the fourth quarter when we renew these recurring license agreements,” McClelland said. “As a result, the amount of our Cloud and Edge revenue, which is recurring in nature, including high-margin support and maintenance contracts, continues to increase.”

While Cloud and Edge sales to U.S. federal customers in the quarter were impacted by the impending government shutdown, and were down approximately 60% year over year from the company’s first half 2025 run rate, McClelland noted “we did receive a significant first order from a new U.S. federal DOD agency that has started a major voice modernization project, and we continue to see the scope of opportunity growing within our U.S. federal customer segment.”

www.ribboncommunications.com
Ribbon sees multiple opportunities across various vertical markets to pursue to raise revenues in 2025.

Ribbon sees multiple opportunities across various vertical markets to pursue to raise revenues in 2025.

Confident prospects

Ribbon reported that overall third-quarter revenue was $215 million, up from $210 million for the third quarter of 2024.

McLelland said that he still felt confident about the company’s prospects despite the interruption of the government shutdown.

He noted that service provider sales during the quarter rose 5% year over year, with growth across multiple accounts, including Verizon, Bardi, and several other operators in North America.

“I’m pleased to report a solid third quarter with sales increasing 2% year over year, even as we navigate short-term disruption related to the U.S. federal government shutdown,” he said. “Year to date, revenue has increased 6% this year, and EBITDA has increased 5% versus the same period in 2024. Excluding the impact of sales to Eastern Europe, revenue has increased more than 10% so far this year.”

Looking toward the fourth quarter of 2025, Ribbon projects revenue of $230 million to $250 million.

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Sean Buckley
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Sean Buckley

Sean is responsible for establishing and executing the editorial strategy of Lightwave across its website, email newsletters, events, and other information products.

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