CALX — Calix, Inc.

Calix Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Revenue: Record revenue of $280 million, a 3% sequential increase, and a significant year-over-year growth.
• Remaining Performance Obligations (RPO): Total RPOs at $376 million, down 2% sequentially but up 11% year-over-year. Current RPOs reached a record $157 million, reflecting a 3% sequential increase and a 22% year-over-year rise.
• Gross Margin: Non-GAAP gross margin was 57.2%, down 80 basis points sequentially but up 100 basis points year-over-year.
• Free Cash Flow: Generated $7 million in free cash flow.
• Share Buyback: Invested $171 million to repurchase 3.3 million shares, with an additional $100 million authorized for buybacks.
• Days Sales Outstanding (DSO): 36 days, indicating efficient collection practices.
• Inventory Turns: Steady at 3, reflecting strong demand and supply continuity.

2. Strategic Updates and Business Highlights

• Successfully completed the migration of all customers to the third generation of the Calix platform, enhancing capabilities and market reach.
• Launched on Google Cloud, which is expected to improve operational efficiencies and customer experiences.
• Welcomed 14 new customers, indicating strong demand and ongoing efforts to expand the customer base.
• Emphasized the role of AI in transforming customer operations and enhancing competitive differentiation.

3. Forward Guidance and Outlook

• Q2 2026 Revenue Guidance: Expected between $287 million and $293 million, reflecting a 4% increase at the midpoint over Q1.
• 2026 Revenue Growth: Anticipated growth of 15% to 20% for the year, with expectations for RPOs to reaccelerate in the second half.
• Gross Margin Guidance: Projected between 54.25% and 57.25% for Q2, with a potential decline of 50 to 150 basis points for the year due to higher memory component costs.
• Operating Expenses: Forecasted at $128 million for Q2, with a focus on AI enhancements and returning to target financial models by year-end.

4. Bad News, Challenges, or Points of Concern

• Memory Component Costs: Facing increased memory costs, leading to a need for surcharges that could impact gross margins negatively.
• RPO Decline: The sequential decline in total RPOs may indicate potential headwinds, although year-over-year growth remains strong.
• Competitive Pressures: The emergence of competitors like Starlink is noted, but management believes this could ultimately benefit Calix by prompting customers to enhance their service offerings.
• Supply Chain Risks: Concerns about the potential impact of memory supply shortages on operations, although management is actively working to mitigate these risks.

5. Notable Q&A Insights

• Management clarified that the majority of the revenue increase is driven by customer demand rather than surcharges.
• The dual cloud costs incurred in Q1 are expected to dissipate, with a return to previous gross margin levels anticipated in the next quarters.
• There is cautious optimism regarding the BEAD program, with expectations for significant revenue contributions starting in 2027 and peaking in 2028.
• Management expressed confidence in the swift processing of FCC approvals for new products, indicating minimal impact on current operations.

Overall, Calix demonstrated strong performance in Q1 2026, with record revenues and strategic advancements, while also navigating challenges related to supply costs and competitive dynamics. The outlook remains positive, supported by robust customer demand and strategic initiatives.