Ribbon’s CEO says DCI is one of the most encouraging growth opportunities
Key Highlights
- Ribbon's DCI projects doubled in Q2, including a major award in Africa, emphasizing its strategic focus on global network expansion.
- IP/Optical revenue increased 30% sequentially, with record bookings and a 60%+ backlog growth, driven by optical solutions and regional demand.
- The company secured significant enterprise and service provider contracts, including Fortune 50 companies and U.S. defense agencies, expanding its market footprint.
- Cloud and edge revenue showed mixed results, but Ribbon is working closely with Verizon to accelerate voice switch upgrades and capitalize on cost-saving opportunities.
- Overall, Ribbon anticipates continued revenue growth in H2 2026, supported by strong IP optical bookings and a robust pipeline of new projects.
Keep up to date with Lightwave’s Q2 2026 earnings coverage.
You can check our publication’s key segments:
And
Here are other stories on Ribbon:
- Ribbon is poised to enhance its data center interconnect (DCI) funnel
- Ribbon Communications’ Q4 results take a hit from the government shutdown and BEAD uncertainty
- Ribbon’s Q3 public sector sales delayed by government shutdown
- Ribbon sees sales potential with U.S. enterprise, government customers
- Ribbon’s CEO does not expect a material impact from tariffs
Ribbon likes what it is seeing in the data center interconnection (DCI) market segment — one where a growing host of competitive and incumbent fiber providers are offering an array of high-speed lit services like wavelengths and dark fiber.
Following its momentum in the first quarter, Ribbon had six projects that included DCI during the second quarter.
Speaking to investors during its second-quarter call, Bruce McClelland, CEO of Ribbon, said DCI is a key target for its IP/optical communications unit.
“One of the most encouraging growth opportunities continues to be data center interconnect,” he said. “During the quarter, we doubled the number of new projects as compared to the first quarter. These projects span multiple regions and customer types, including a new major award in Africa, where we will be helping our customer build an optical fiber backbone, spanning several regions, connecting data centers and other services.”
While DCI is a part of Ribbon’s growth trajectory, the vendor finds that many customers use its IP/Optical equipment for multiple purposes.
McClelland said its service providers are leveraging its IP/Optical platforms for building metro, long-haul and, at times, subsea networks. “In many cases, it's not a dedicated DCI interconnect network,” he said. “And they're being used for multiple purposes, particularly international; you know, a network will handle mobile backhaul. It'll do internet broadband aggregation. In some cases, even satellite. And then in almost all cases, they're now picking up data center, regional data center traffic.”
He added that service providers “look at that as our business case and they want multiple sources of revenue to justify the investment.”
Still, Ribbon sees DCI as a key element of its revenue mix. “If we added up the projects that we had in the second quarter that included data center interconnect, it would be more than 10% of our revenue in the quarter,” McClelland said.
IP/Optical leads revenues
IP/Optical continued to be a star revenue performer in its portfolio, with second-quarter revenue of $82 million, up 30% sequentially.
While North America grew significantly, year-over-year sales were down 2%, primarily due to lower sales in Europe, reflecting the end of a legacy maintenance contract in the fourth quarter of 2025, partially offset by higher sales in the Americas region and our European defense vertical.
The second quarter was the strongest bookings quarter since the acquisition of ECI in 2020. Driven by demand across multiple customer segments and geographies, IP/optical product and services revenue increased 36% sequentially in the quarter, with the largest increase coming from its optical networking Apollo solutions, which increased over 70% sequentially. Geographically, the strongest growth in the quarter was in the U.S., driven by a combination of regional service provider, data center, and critical infrastructure projects.
“Following a similar pattern to the first quarter, bookings in our IP optical segment were very strong,” McClelland said. “In fact, product and service bookings were an all-time high in the quarter, with a book-to-bill of 1.6 times revenue. Overall IP optical backlog has increased more than 60% so far this year.”
Ribbon saw growth in both the service provider and enterprise segments. Total service provider revenue increased 9% sequentially in the second quarter, with both Verizon and Vardy remaining 10% plus customers. Likewise, total enterprise sales, which include large enterprise, critical infrastructure, and government and defense agencies, rose 42% sequentially.
“In the enterprise segment, we expanded several strategic customer relationships, including voice and data projects with multiple Fortune 100 companies, including one of the nation's largest financial institutions and another project with one of the nation's largest energy producers,” McClelland said.
Cloud, edge gains, challenges
In the cloud and edge segment, results were mixed: revenue rose 11% but declined 19% year over year, while sales to both enterprises and service providers increased quarter over quarter.
The company attributed the decline to lower sales to Verizon, a key supplier of cloud-based technologies, as the telco looks to retire legacy TDM switching platforms.
McClelland noted that the “prior year results included record shipments and deployment activity associated with Verizon's voice network transformation program, creating a particularly difficult year-over-year comparison.”
Despite the near-term slip, Ribbon is confident it can make up ground next year given the efficiencies Verizon is gaining by shutting down Class 5 switch platforms that require multiple power sources to operate.
“We continue to work closely with Verizon to re-accelerate voice switch upgrades within their network and have good alignment and engagement, although there is still more work to do to achieve the higher velocity that we're mutually targeting for the rest of the year and even higher deployment rates in 2027,” McClelland said. “There is a sense of urgency to go faster and capture the significant cost savings associated with the investment.”
Ribbon is looking at what it calls catch products with several customers that could bring more cost savings by moving TDM-to-IP conversion to the subscriber edge, allowing service providers to eliminate legacy copper infrastructure.
On the enterprise side, Ribbon is seeing progress with large voice modernization projects it has underway with several U.S. defense agencies. The company is confident these projects will reach full commercial deployment this year.
McClelland said these defense agency projects are “opening the opportunity for additional expansion business in the new government fiscal year” and that “there’s a very good pipeline of additional projects across civilian and military organizations where Ribbon is highly differentiated and we expect new wins later this year.”
Most of the revenue increase Ribbon saw in the cloud and edge segment was due to several new projects with large enterprise customers. During the quarter, Ribbon closed two significant voice communication infrastructure deals with major Fortune 50 companies.
It won a global Microsoft Teams deployment with one of the nation's largest financial institutions, leveraging Ribbon’s portfolio of SBC, policy routing, analytics, and management products. These platforms were deployed on premises across multiple data centers worldwide.
From an overall financial perspective, Ribbon reported second-quarter revenue of $192 million, up 18% sequentially and down 13% year over year.
Looking at the rest of 2026, Ribbon expects sequential revenue growth and improved earnings in the third and fourth quarters, supported by the strong IP optical bookings momentum in the first half and a strong pipeline of new projects.
“Several larger opportunities within our IP optical business could drive additional growth, meaning we have a wider range of potential outcomes for the second half of the year," McClelland said. "Voice network modernization deployments with US Tier 1 service providers have improved, but more slowly than we expected, moderating our second half growth rate while increasing the backlog and opportunity in 2027."
For related articles, visit the Business Topic Center.
For more information on high-speed transmission systems and suppliers, visit the Lightwave Buyer’s Guide.
To stay abreast of fiber network deployments, subscribe to Lightwave’s Service Providers and Datacom/Data Center newsletters.
About the Author
Sean Buckley
Sean is responsible for establishing and executing the editorial strategy of Lightwave across its website, email newsletters, events, and other information products.
