Calix President and CEO Michael Weening pointed to the company’s business model and value to customers when discussing the company’s first quarter 2024 financial results.
"Our results in the first quarter demonstrated the continued execution and strength of our strategy. Our platform, cloud, and managed services enable our broadband customers to succeed against their competitors daily,” he said.
He also noted challenges in the company’s appliance segment, which he contributed to large customers reconsidering their CapEx strategies—a trend Weening said has continued into the second quarter.
Differing provider realities
A big priority of Calix's rural telco customers is to leverage federal and state funding.
Weening reported that Calix’s smaller broadband service providers (BSPs) will use BEAD funding to extend services to more customers.
“Earlier this month, we announced that 74% of federally funded BSPs use Calix for their Broadband speed test," he said. "This is a significant indicator of future success as any BSP receiving government stimulus must routinely report on the speed they deliver to their customers. We’ve simplified this complicated undertaking via our platform, cloud, and managed solutions. We expect that 74% figure to grow.”
Larger service providers, he said, are engaging in conversations with Calix to help them build a more valuable business by avoiding commoditization.
Calix CFO Cory Sindelar reported on the specifics of the company’s first-quarter results.
“We delivered revenue of $226.3 million, which was within the guidance range we provided in January,” he said. “Against the crosswinds prevalent in our industry, the continued growth in our platform, cloud, and managed services drove record non-GAAP gross margin of 54.9%.”
He reported that non-GAAP operating expenses were $108.4 million for the first quarter, down $1.6 million quarter over quarter. He also noted that purchase commitments fell another $29 million to $147 million during the quarter.
Future outlook
For the second quarter, Sindelar said the outlook is for revenue to be between $197 million and $203 million. This is a decline from the first quarter, which he attributed to the continued delay in purchasing decisions at some of the company’s medium and large customers.
“Looking out a bit further,” he said, “we believe the June quarter will set the bottom for revenue as revenue from a few significant customers will have diminished to a point where there is limited downside risk. We believe we will return to revenue growth when you combine the green shoots from our smaller customer base with footprint expansion.”
He added that Calix’s platform, cloud, and managed services are expected to grow, driving gross margin expansion.
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