Ribbon is poised to enhance its data center interconnect (DCI) funnel

Ribbon’s entry into the data center interconnect (DCI) market may still be nascent, but the vendor sees that it has the right solutions to target this growing segment.

Data center interconnection (DCI) is the networking technology used to link two or more distributed data centers. 

Speaking to investors during its first-quarter earnings call, Bruce McCelland, CEO of Ribbon Communications, said the DCI market segment is the third leg of a stool. This opportunity includes critical infrastructure and middle-mile networks.

Ribbon enhanced its DCI capabilities with the launch of two key optical platforms—the NPT 2714 and NPT 2507--in 2025.

“Our 2700 series, which is a very dense aggregation platform for aggregating 400-gig IP clients, and the other optical transport platform, which was built for the data center, basically built for enterprise, different form factor, a compact modular sled design that allows us to leverage pluggable optics,” he said. “Those were the 2 new products that we launched last year, focused on the data center.”

While Ribbon admits that DCI was not a major market for the company three or four years ago, the release of the 2700 series has enabled it to establish a foothold in the DCI market.  

“It's a little hard for us to forecast revenue yet at this point because we're kind of building wins as we go,” McClelland said. “But I think you'll hear a lot more about it from us in the future. Obviously, there's a ton of spend going into data centers, and we want to be able to go after that market, both through our service provider customers and directly into different types of data centers.”

Ribbon is already signing up DCI customers in both North American and international markets, leveraging its IP Optical Networking platforms. It secured new customers across multiple geographies, including Europe, the U.S. and Asia.

McClelland said these wins reflect the momentum for optical networking platforms in the DCI market.

“In our IP Optical Networks business, we achieved several key wins across several strategic areas, including the rapidly growing data center interconnect space,” McClelland said. “We had 3 new wins across multiple geographies, including Europe, the U.S. and Asia. Two of the projects involve a regional service provider expanding its network to support data center connectivity in its regions. And one of the projects is a major biotech company, connecting all of their major data center locations with a new high-capacity optical network.”

Cloud, optical revenues dip

Ribbon saw its revenues decline 10% year-over-year to $163 million, driven by slow growth in its Cloud & Edge and IP Optical Networks segments.

In its Optical Networks unit, Ribbon recorded first quarter revenues of $63 million, down 14% year-over-year, due to what the company said was principally lower sales in Asia Pacific and lower maintenance revenue.

Despite the revenue hit in optical, McClelland said he’s encouraged by customers participating in the BEAD program.

“Here in the U.S., we now have more than 30 customers who have already deployed our IP and optical products that have been awarded BEAD grants, where we expect incremental new business once funds are finally distributed,” he said.

Within the enterprise market vertical, aggregate sales to enterprise, defense, and critical infrastructure customers declined approximately 6% in the first quarter versus last year, with lower Cloud & Edge sales to U.S. government agencies partially offset by increased IP optical business with international defense agencies.

Despite the decline, John Townsend, CFO of Ribbon, noted that the company had “stronger IP optical bookings in the quarter with a book-to-bill ratio of 1.5x, underpinning our expectations for improving top line performance as we proceed through the year.”

Likewise, Ribbon's Cloud & Edge business fell 8% year-over-year to $100 million.

Like optical, Ribbon sees potential for an uptick in enterprise and service provider voice network transformation deployments later in the year and into 2027.

Ribbon has signed two key customer wins for its cloud-native session border controller (SBC) solution: a large Japanese provider and a program is underway with a Tier 1 provider in Europe.

“One of the key areas of focus for many enterprise and service provider customers is the adoption of cloud-native technologies to lower costs and reduce complexity, whether in their own private data centers or in public cloud,” said McClelland. This is a fundamental shift in how networks are designed and how software is managed and deployed to achieve higher degrees of automation, elasticity and reliability.”

For the second quarter of 2026, Ribbon has forecast revenue of $185 million to $195 million, but cautioned its outlook is based on current indications for its business, which are subject to change.

Looking ahead, McClelland said the company expects a strong second quarter from its North American enterprise customers.

“We've got a great set of programs there that are both in the Cloud & Edge piece of the business as well as in our IP Optical business, around some of the critical infrastructure deployments we have going here in the North America market,” he said. So I think that's where the step-up is coming from here in the second quarter.”

The company expects to see further growth as it enters the third and fourth quarters, driven by Verizon’s voice modernization program.  

“Verizon remained a 10%-plus customer in the first quarter. And while voice network transformation activity was lower than expected, it impacted our first-quarter results, but deployment rates are increasing. We anticipate a much stronger second half in 2026,” McClelland said. “Expansion into the Frontier footprint remains a significant incremental opportunity.

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