Calix Inc ((CALX)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Calix Inc. recently held its earnings call, revealing a strong performance marked by record revenue and improvements in gross margin. The sentiment during the call was positive, driven by strategic customer acquisitions and robust platform innovations. However, the company acknowledged challenges such as increased operating expenses due to strategic investments and reduced BEAD funding impacting expected growth. Despite these hurdles, Calix maintains a positive outlook with ongoing demand and strategic positioning in AI and platform services.
Record Revenue Achievement
Calix Inc. reported a record revenue of $265 million for the quarter, reflecting a sequential quarterly growth of 10%. The company has set a higher revenue guidance for the fourth quarter, showcasing its robust financial performance and market demand.
Gross Margin Improvement
The company achieved a non-GAAP gross margin of 57.7%, marking a 90 basis point increase from the previous quarter. This improvement highlights Calix’s effective cost management and operational efficiency.
New Customer Acquisitions
Calix successfully added 20 new customers this quarter, indicating strong market demand and the growing adoption of its platform. This expansion is a testament to the company’s strategic positioning and innovative offerings.
RPO Growth
The company reported a record $355 million in RPOs, representing a 2% sequential growth and a 20% year-over-year increase. Current RPOs also saw significant growth, reflecting Calix’s strong customer engagement and future revenue potential.
Free Cash Flow and Cash Reserves
Calix achieved its 10th consecutive quarter of 8-figure free cash flow, ending the quarter with record cash and investments of $340 million, an increase of $41 million sequentially. This financial stability provides a solid foundation for future investments and growth.
AI and Platform Innovation
The launch of the Calix Agent Workforce, integrating Agentic AI across its platform in partnership with Google, marks a significant step in simplifying operations and enhancing customer growth. This innovation underscores Calix’s commitment to leveraging AI for strategic advantage.
Increased Operating Expenses
Calix anticipates a sequential increase in non-GAAP operating expenses due to investments in AI and platform development. The company expects to return to its target financial model by the end of 2026, indicating a long-term strategic focus.
Lower than Expected BEAD Program Funds
The BEAD program funds have been reduced by about 50%, now estimated at $20 billion. Despite this reduction, Calix remains optimistic about its growth prospects, supported by a total of $30 billion including matching funds.
International Segment Volatility
The international segment experienced some volatility due to a single customer in Europe. Calix expects this segment to stabilize by later 2026, indicating a cautious but optimistic outlook for its international operations.
Forward-Looking Guidance
For the upcoming quarter, Calix forecasts revenue between $267 million and $273 million, representing a 2% sequential increase and a 20% growth for the fiscal year compared to 2024. The company expects a slight increase in non-GAAP gross margin in Q4, with continued investment in AI and managed services to drive growth. Expansion into international markets and large Tier 1 customers is also on the horizon, facilitated by their partnership with Google and the launch of their third-generation platform.
In summary, Calix Inc.’s earnings call highlighted a strong financial performance with record revenue and gross margin improvements. Despite challenges such as increased operating expenses and reduced BEAD funding, the company remains optimistic about its future, driven by strategic investments in AI and platform services. With a positive outlook and strategic growth plans, Calix is well-positioned for continued success in the coming quarters.