Ribbon Communications reported the following preliminary estimates for the fourth quarter of 2021: revenue is expected to be $231 million, gross margin is expected to be 50%, non-GAAP gross margin is expected to be 54%, operating loss is expected to be $4 million and adjusted EBITDA is expected to be $26 million. Cash on hand at the end of the quarter increased to $106 million.
Demand for products and services increased in the fourth quarter of 2021 with sequential sales growth of 10% and a product/service book-to-bill ratio of 1.13.
However, overall sales were below the company's previous guidance range as supply chain and logistics issues increased significantly in the final weeks of the quarter, impacting the Company's ability to deliver products and reducing sales by approximately $10 million. IP Optical Networks segment sales increased more than 20% quarter-over-quarter to approximately $83 million. Cloud & Edge revenue is expected to be $147 million, with several software deals having moved into 2022 and higher Enterprise Edge hardware sales, impacting both revenue and margin.
Higher component costs, expedite and production fees, and logistics expenses in both segments reduced margins by approximately 220 basis points versus expectations. Customer and deal mix contributed an additional 200 basis points to the lower-than-expected margins. Ribbon anticipates a portion of the higher supply chain related costs to persist at least through the first half of 2022.
"While we are disappointed by the results this quarter and the impact from the challenging supply environment, we remain excited by the continued progress we are making on our strategy to position our IP Optical Networks solutions with key Ribbon customers including several new wins with major carriers this quarter in the US, Japan, and Africa regions, and that investment in fiber networks and communications will position us for growth in 2022 and beyond," said Bruce McClelland, President and Chief Executive Officer of Ribbon Communications. "We will discuss further details on our conference call on February 16, 2022."
