Calix (NYSE:CALX) released first-quarter financial results and hosted an earnings call on Tuesday. Read the complete transcript below.
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Summary
Calix reported record revenue of $280 million in Q1 2026, with strong demand and a 3% sequential increase.
The company completed migrating all customers to its third-generation platform on Google Cloud, enhancing capabilities and market reach.
Future revenue guidance for Q2 2026 is set between $287 million and $293 million, with an annual growth expectation of 15% to 20%.
Non-GAAP gross margin was 57.2%, with a slight sequential decline due to dual cloud costs, but a year-over-year increase of 100 basis points.
Calix repurchased 3.3 million shares for $171 million and announced an additional $100 million for share buybacks.
The company anticipates reaccelerating RPOs in the second half of 2026 due to the Calixone platform’s momentum.
Calix is hosting its first Investor Day in four years to outline strategy, innovation, and long-term growth prospects.
Management expressed confidence in handling memory component cost challenges through surcharges and strategic purchasing.
Full Transcript
OPERATOR
Oh my God. Greetings everyone and welcome to the Calix First Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen only mode. A Q&A session will follow the brief prepared remarks. If anyone should require operator assistance during the conference, please press Star-0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Nancy Fazioli, Vice President of Investor Relations. Nancy, please go ahead.
Nancy Fazioli (Vice President of Investor Relations)
Thank you Alicia and good afternoon everyone. Thank you for joining our first quarter 2026 earnings call today. On the call we have President and CEO Michael Weaning and Chief Financial Officer Corey Sindelar. As a reminder, today after the market closed, Calix issued news releases which were furnished on a Form 8K along with our stockholder letter and were also posted on the Investor Relations SECtion of the Calix website. Today’s conference call will be available for webcast replay in the Investor Relations SECtion of our website. Before I turn the call over to Michael for his opening remarks, I want to remind everyone that on this call we will refer to forward-looking statements including all statements the company will make about its future financial and operating performance, growth strategy and market outlook and that actual results may differ materially from those contemplated by these forward looking statements. Factors that could cause actual results and trends to differ materially are set forth in the first quarter 2026 letter to stockholders and in the annual and quarterly reports filed with the SEC. Calix assumes no obligation to update any forward looking statements which speak only as of their respective dates. Also in this conference call we will discuss both GAAP and non GAAP financial measures. A reconciliation of GAAP to non GAAP measures is included in the first quarter 2026 letter to stockholders. Unless otherwise stated, all financial information referenced in this call will be non-GAAP. With that Michael, please go ahead.
Michael Weaning (President and CEO)
Thank you Nancy. It was another incredible execution quarter for the Calix team. Record revenue with strong demand continuing into 2026 with customers. At the end of March we completed the migration of all existing customers to the third generation of the Calix platform, launching on Google Cloud, thereby enabling the expansion of our capabilities and the markets that we target. As important, those customers who expand their partnerships with Calix on CalixOne begin to see the benefits rapidly as agent workforce and our AI native platform comes to life. The impact of AI will now start contributing to our customers success by helping them transform their operations, allowing their teams to add capacity and capability with AI and accelerate experiences that they need to differentiate in the markets. They serve, thereby enabling their teams to compete and win. Today’s call is focused on the quarter and our 2026 outlook. Tomorrow at Investor Day, we’ll go deeper on how Calixone expands the opportunity of our model with proof directly from customers who will attend the event and are ready to share. With that, I’ll turn it over to Corey to walk through the results and guidance and then we’ll take your questions.
Corey Sindelar (Chief Financial Officer)
Corey, over to you. Thank you, Michael in the first quarter of 2026, Calix delivered yet another quarter of record revenue of $280 million, marking a sequential increase of 3% driven by continued strong demand for our platform. This quarter we welcomed 14 new customers, reinforcing our ongoing efforts to grow our customer base while supporting their expansion within the local communities they serve. Remaining performance obligations were $376 million, down 2% sequentially and up 11% year over year. The sequential decline related to a robust fourth quarter comparison and our focus on completing the migration of customers to the new third generation platform. Current RPOs in the first quarter were a record $157 million, representing a 3% sequential increase and a 22% rise from the same period last year. We anticipate that RPOs will reaccelerate in the second half of 2026 as we gain momentum with CalixOne, underscoring the strength of our business model as customers focused on delivering exceptional experiences, adopt our platform, add incremental offerings and win new subscribers. Non GAAP gross margin was 57.2%, down 80 basis points sequentially due to investment in our dual cloud environments as we migrated customers to our third generation platform. Compared to last year, non GAAP gross margin increased 100 basis points. Our balance sheet remains strong. DSO at the end of the first quarter was 36 days. Inventory turns remain steady at 3, reflecting continued inventory investments to address robust demand and building supply continuity and we generated free cash flow in the quarter of $7 million. We also invested $171 million to buy back 3.3 million shares of our common stock at an average price of $51.34. Furthermore, the board today authorized another $100 million to be added to this program. This investment speaks to our belief in the tremendous opportunity ahead and our commitment to creating lasting value for our stockholders. We finished the quarter with a strong cash and investment balance of $243 million. Turning to guidance, our revenue guidance for the second quarter of 2026 is between 287 and $293 million, representing a 4% increase at the midpoint over the prior quarter. This reflects continued robust demand trends and a modest benefit from recapturing a portion of the higher memory cost via a memory surcharge. For the year, we expect revenue to grow between 15 and 20%. With demand supply disconnect so large related to memory components, there will inevitably be some companies that will come up short. Our first priority is to ensure that we have adequate supply such that our customers can continue to add subscribers and and take market share. Our advanced purchasing had allowed us to avoid higher memory component costs during the first quarter. However, that advanced supply has run its course and we now face market prices. We are partnering with our customers to share in the higher memory costs by initiating a surcharge, albeit it is a partial cost recovery and without adding gross profit is one way we can help our customers in this unfortunate memory supply environment. Our gross margin guidance for the second quarter of 2026 is between 24 and a quarter and 20 sorry, 54 and a quarter and 57 and a quarter percent reflecting the effects of higher memory component costs, the impact from surcharges and the customer and product mix. The decline in appliance gross margin is expected to be offset by improvement in software and service gross margin as the dual cloud costs abate and we optimize the current cloud environment for the year, we expect our non GAAP gross margin to decline between 50 and 150 basis points for non-GAAP operating expenses. We forecast $128 million at the midpoint in the second quarter of 2026, which is a sequential increase of $1 million. This increase is mainly driven by our efforts to expedite AI functionality and enhancements to the Calix one platform. Importantly, we continue to expect to return to our target financial model for operating expenses by the end of 2026, improving our operating leverage and profitability. Tomorrow morning we are excited to host our first Investor Day in four years at the New York Stock Exchange. The event will look will provide a look into our strategy and innovation roadmap and the long term prospects that drive our confidence for the future. In addition, we will outline our key targets for growth, profitability and cash flow, giving investors benchmarks to track our progress and understand how we are positioning Calix for sustained success in the coming years. Nancy, let’s open the call for questions.
OPERATOR
Operator, we’re ready for questions. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press Star-1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star-2 if you would like to remove your question from the queue. For participants with speaker equipment, it may be necessary to pick up your handset for before pressing the star keys. One moment please, while we poll for questions. Thank you. Our first question comes from the line of Samik Chatterjee with JP Morgan. Please proceed.
Samik Chatterjee (Equity Analyst at JP Morgan)
Hi, thanks for taking my questions. I have a couple maybe if I can just start with you, Corey, on the gross margin guide here, just to fully understand the drivers. Once you put the surcharges through, are you expecting a recovery in the back half of the year in relation to gross margins on the appliances as some of these surcharges flow through on your revenue line? And then if memory does continue to sort of go higher, memory costs continue to go higher. What’s the plan here? Because you’re not passing through the margin on the cost increase. So what prevents more downside on the margin percentage as you go through the year if memory costs continue to increase? And I have a follow up. Thank you.
Corey Sindelar (Chief Financial Officer)
Yeah, thank you for the question. So our plan is to recover the costs and so if there are further cost increases, we would adjust the surcharges accordingly. The effect of the surcharges by themselves put a headwind to the gross margin. I estimate that in 2026 the effect of the surcharges for from here to the end of the year represent a 200 basis point headwind because you’re adding, you know, a large amount of revenue at 0 points of margin. Go through it.
Samik Chatterjee (Equity Analyst at JP Morgan)
Okay, got it. And then maybe just on the demand side, you did mention sort of stronger demand from your customers. And I’m sort of trying to parse out. Obviously haven’t been able to do the math yet in terms of your raise in the revenue guide from earlier talking about 10 to 15% growth on the top line to now 15 to 20. And you also are outlining stronger sequential growth for 2Q than you have in the last couple of quarters. How much of that is stronger customer demand that you’re seeing in terms of orders versus the benefit from the price increase, which you’re referring to as a sort of decently large price increase that’s going to go through the revenue line as well. So just maybe help us break that down. And what you’re seeing in terms of customer orders, that’s maybe giving you a bit more confidence as well.
Corey Sindelar (Chief Financial Officer)
Thank you. Yeah, great question. The majority of the quarter over quarter increase is due to customer demand and a lesser portion is the surcharges, we are rolling out those surcharges now. They’ll take effect in May. So we’re not getting a full quarter of recovery this current quarter. But so consequently the majority of that increase in revenue is coming from increased demand and to a lesser extent, memory price increases. Okay, great. Thank you. Thanks for taking my questions.
OPERATOR
Thank you. Our next question comes from the line of Scott Sorrell with Roth Capital Marc Partners. Please proceed.
Scott Sorrell (Equity Analyst at Roth Capital Partners)
Hey, good afternoon. Thanks for taking my questions. Just wanted to dive in on the gross margins related to the dual cloud costs. It looks like it was in the 3 to 4 million range. Just want to clarify, does that go away completely by the second half? How should we think about modeling that?
Corey Sindelar (Chief Financial Officer)
And then I had a follow up. Yeah, great, great question, Scott. That’s the good news story is that we’ve got all the customers migrated onto the new cloud. And so yes, the dual cloud environment is done. So it’s, it’s done as we sit here today, it’s done. So, so the penalty that we incurred happened in the first quarter. I think you got it sized about right. So what you would expect to see on that line is for it to return back to levels that were previously at. So I would expect within the next quarter or two, we’ll be back at record levels and continuing the progress that we’ve been making on that line.
Scott Sorrell (Equity Analyst at Roth Capital Partners)
In terms of my follow ups, I’ve got a lot as it relates to the CalixOne platform, but rather than preempt tomorrow, I’ll save it for then. So maybe if I just could. Fiber availability in general, how is that impacting demand? And it’s been interesting to see some of the Starlink numbers that are filtered to the marketplace where they’ve gotten some traction in places that I really didn’t expect that they would in terms of more dense suburban environments than you would ordinarily think that they’d participate. I’m wondering, you know, what you’re seeing in terms of your customer response on that front in terms of their demand, their rollout plans. Is this pushing them to accelerate? How is that kind of factoring into the calculus in terms of the overall market demand of your core customers? Thanks.
Michael Weaning (President and CEO)
I spent a lot of time with customers. It’s Michael. And you know, while the Starlink thing is there, you generally see it in rural areas where there’s, you know, when you have a six mile run to actually join a farm. Obviously Starlink is a good example there. I don’t hear anyone saying I need to accelerate my role out of fiber to compete. But for us, frankly another competitive pressure is a good thing for Calix because if you think about which we’ll talk about tomorrow, we try to think about the experience based nature of what we’re doing and how we help our customers differentiate and transform their business to win subscribers and grow net revenue by delivering an amazing experience whether it’s in consumer, small business or multi dwelling units. Frankly that’s good for our business because that gets them listening if in the past they didn’t feel that competitive threat. So you know, it’s all good.
Scott Sorrell (Equity Analyst at Roth Capital Partners)
Hey Mike. And just fiber availability. What are, what are customers saying? And maybe if I could sneak one other. And you, I think you talked about guidance for 15 to 20% this year. 15% is really just kind of bump it along at the level you’re at today. So what kind of visibility do you have in terms of deployments into the second half? Are you starting to feel pretty good about the lower end of that range?
Corey Sindelar (Chief Financial Officer)
Thanks. I haven’t heard anything with fiber availability of you. There’s been some talk a little bit of like scuttlebutt for bead. For bead, yeah. But we expected that as all that bead money starts flowing that there’s going to be, you know, there’s going to be some supply. Right. So Corey, any comments on that? Yeah Scott, I’m neither more bullish or more negative on beat at the moment. I would say my, my temperature is about the same. It’s progressing as we would expect. We’ve got tens of millions of dollars forecast in 2H26. Related Feed. We’re starting to see states actually start receiving their money. So things are kind of working its way out. We are not hearing that fiber shortages is causing a significant impact to the bead demand as we’re hearing it.
Scott Sorrell (Equity Analyst at Roth Capital Partners)
Great, thanks. I look forward to the analyst day tomorrow.
Mike
See you tomorrow.
OPERATOR
Thank you. Our last question comes from the line of Christian Schwab with Craig Hound Capital Group. Please proceed.
Christian Schwab (Equity Analyst at Craig-Hallum Capital Group)
Congrats on the good quarter. Just for further clarity, our previous guidance was 10 to 15% top line and near the high end and now we’ve taken it to 15 to 20%. Should we just assume that that’s the surcharges that is going on? You know there’s incrementally better visibility and continued strong demand. But demand isn’t accelerating beyond what you thought 90 days ago, is it? Or is it?
Corey Sindelar (Chief Financial Officer)
It’s yes and yes to that, Christian. So. So clearly the effect of surcharges is going to move us up into that higher part of the range. But we’re also seeing some of the best demand that we’ve, we’ve seen.
Michael Weaning (President and CEO)
Yeah. And as we’ll talk about tomorrow on investor Day. Right. You know, so for us, as everybody knows, when you’re rolling out the next stage in a platform going through that evolution, there can be unexpected challenges. You know, we had gunned pretty hard for being done in Q1 and I’m really proud to say that the team got through it. So having got through that and not facing any incremental delays, that allows Corey and I to sit on this call and be very bullish about the future for 2026. Because this is what our team has worked towards for, you know, since November of 2023. We’ve been pounding away at this for over two and a half years and now our AI native platform is got more than 1200 customers loaded. And tomorrow we’re going to talk about how fast we’re going to go and how we’re going to go skidding out into that nice big blue ocean of incremental TAM and compete aggressively to grow the company. So yes, you’re hearing me. Be very bullish as you’ll hear tomorrow during investor day.
Christian Schwab (Equity Analyst at Craig-Hallum Capital Group)
Great. And then my just quick follow up question is as it relates to beat, congrats on finally getting some of that dollars generated for the company. I think you said tens of millions in the second half of calendar 26. What is the internal plan for
Corey Sindelar (Chief Financial Officer)
what year you think will be the peak of that program and what type of, you know, annual revenue number should we be thinking about? So Christian, you know, we’ve talked about that in the past. You know, we’ve done some high level math. I think that you’ll start to see this thing ramp more significantly in 2027, probably peaks in 28. And I don’t think that I would want to kind of put a number on it, but it’s, you know, it’s potentially high. Tens of tens of tens of millions. Okay, great, go ahead. No, okay, as we said about Bead, we see that as an accelerant on top of the, the core growth model, Right?
Christian Schwab (Equity Analyst at Craig-Hallum Capital Group)
Correct. Correct. Got it. All right, no other questions. Thanks guys.
OPERATOR
Thank you. Our next question comes from the line of George Noter with Wolf Research. Please proceed.
Karen
Karen on For George, just a quick question. Any updates on traction with tier 1 customers side? Nothing that we’re willing to share. Okay, got it. And then any comments on the quarter on quarter uptick in appliances, I assume. I think you guys have mentioned in
Corey Sindelar (Chief Financial Officer)
the past that DSL takeouts are mostly done, if not all out. But what drove that? Just the quarter on quarter customer demand for our products. Because of the fact that we’re better than our competitors. Yeah. And it was within our guidance that we provided. So there was no surprises in the quarter, you know, and then we added customers. Thank you so much. Added customers. And we’ll talk about that tomorrow on Investor Day where we walk through the core drivers of growth. Great to hear.
Karen
Awesome. Thank you.
OPERATOR
Thank you. Our next question comes from the line of Tim Savagewe with Northland Capital Markets. Please proceed.
Tim Savagewe (Equity Analyst at Northland Capital Markets)
Hey, good afternoon. Maybe a couple of questions first, I don’t know if you mentioned it up front, but if you can go through the bead commentary again. Was it any more granular than tens of millions in the second half? And maybe on a somewhat related note, there’s been some news out of the FCC recently about foreign made routers in the US and some exemptions there. I wonder if any of that has any implications for Calix. Thanks. Yeah, Tim, on the beat piece, all that we said is that we would start to see revenue that I’m either more bullish or less bullish. I’m even keeled through last quarter to this quarter. Things are progressing along as you would expect it to. We think that then translates into tens of millions of dollars in the back half of this year and obviously the ramp will start next year. In terms of FCC regulation, it appears to be that the timing is fairly quick, kind of measured in weeks, not months. So we would expect to be receiving our conditional approval here soon. You know, Calix has sought and received various government approvals over Calix’s 26 year history. Expect no difference here. You know, but I would also point out that FCC approval alone doesn’t really differentiate your product at all. Where Calix wins is after you deploy with automation and intelligence and subscriber experience. You know, that lowers OPEX and drives business outcomes which we’ll talk a lot
Corey Sindelar (Chief Financial Officer)
about tomorrow at Investor Day is that, you know, as Corey said, In the last 26 years we’ve done this frequently through a myriad of government programs and is a proud American company. And you know, we’re actually going to show you tomorrow what the power of it, an AI native agentic ready platform, how that’s going to help us transform our customers business and that’s going to drive outcomes. So you know, press release on FCC is kind of irrelevant.
Tim Savagewe (Equity Analyst at Northland Capital Markets)
well. Okay, but maybe just a quick follow up there. I mean is the timing of this conditional approval having any impact on the business at all or none?
Corey Sindelar (Chief Financial Officer)
Zero others have received. Absolutely none. Okay. Absolutely none. They’re actually there. The FCC is actually moving really quickly. So we anticipate no issues whatsoever. It’s a non. It’s a non. It’s a non event. We will, we will do this quickly because we’re already well down the cycle and so we won’t press release it. We’ll just. Well, all of our customers, we made aware quickly as that that resolves itself. So, Tim, to be a little bit more clear on it, any existing product that’s shipping or is not at risk, so there’s not having any impact on current shipments. It is the next release in terms of new products coming into the marketplace. And so we have a number in the pipeline and those are what we’ve applied for, conditional approval. So expect to get those approvals. It appears that the FCC is moving pretty fast, which is great. Which we’re surprised at how well how fast the process is going. It’s great. So we don’t anticipate there being any problems as a result of that, of those new rules. Got it.
Tim Savagewe (Equity Analyst at Northland Capital Markets)
Appreciate that. Color? Yep. Thanks for question. Good one.
OPERATOR
Thank you. Will we see you tomorrow? Go ahead, Alicia.
Nancy Fazioli (Vice President of Investor Relations)
Apologies, we have reached the end of our question and answer session. I would now like to turn the call back over to Nancy Fazioli for closing remarks. Thank you. Cal will participate in several investor events during the second quarter, most importantly hosting our Investor Day at the New York Stock Exchange tomorrow as referenced. Information about these events, including dates and times and publicly available webcast will be posted on the events page of the investor relations section of calix.com. Once again, thank you to everyone on this call and webcast for your interest in calcs and for joining us. This concludes our conference call. Have a good day.
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