During Calix’s third quarter earnings report, president and CEO Michael Weening said the industry is at a crossroads and broadband providers must choose a path forward.
“They will either remain network operators who sell speed and suffer the fate of commodity mobile operators who faced declining revenue and margins,” said Weening, “or they will cross the chasm by becoming broadband experience providers. By leveraging our unique end-to-end broadband platform and partnering with our team, they become a comprehensive experience provider, winning consumer, business, MDU, and the communities they serve.”
Weening said Calix’s mission remains to help customers leverage its platform to simplify their operations and go-to-market strategies while differentiating their offerings.
“The strength of our mission, strategy, and execution is evident in our results in the third quarter,” he said.
Normalized buying patterns
Calix CFO Cory Sindelar reported that the company delivered revenues of $201 million in the quarter, a sequential growth of 1.4%. He also noted that buying patterns for appliances are beginning to normalize, and the company’s remaining performance obligations (RPOs) increased by $76 million in the quarter, a 35% year-over-year increase, ending the quarter with a total of $296 million.
“We expect RPOs will continue to grow as our customers add subscribers and correspondingly expand the use of Calix platform, cloud, and managed services,” said Sindelar.
Sindelar said that lead times have been stable, and customers want to keep their inventory at higher levels than before the pandemic.
“They’ve got their inventory at appropriate levels, albeit at a higher level than it was pre-pandemic. And we’re starting to see that momentum continue to build from here,” he said. “So, we think the order normalization process is kind of a long headwind as we move forward. We’re in the new normal.”
Sindelar reported that Calix added 13 new customers—all existing service providers—in the third quarter. He also reported that, during the quarter, five customers started their first Calix Cloud deployment, and 23 customers deployed a managed service for the first time.
“These are all examples of broadband experience providers partnering with Calix to win in their markets,” added Sindelar.
Calix’s cash and investments were $288 million at the end of the third quarter, a sequential increase of $26 million, and inventory deposits decreased by $3 million, bringing the total to $67 million.
The BEAD rollout
Sindelar reported that Calix’s fourth quarter revenue outlook is between $201 million and $207 million, and said that the company still sees BEAD as a future growth lever.
“We believe this will be a multiyear lens-shaped rollout,” he said. “There has certainly been a positive momentum with the BEAD program heading into the end of 2024, with all but one state now having been approved by the NTIA. Recall that actual funds have yet to be awarded, and although we expect a few states like Louisiana, Nevada, and West Virginia to be early movers, we believe that the vast majority are nine to 12 months away from making their awards.”
Because of the anticipated funding structure, Calix expects to see initial bookings in the first quarter of 2025, with shipments going out later in the year and continuing to build over a five-to-ten-year period.
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Hayden Beeson
Hayden Beeson is a writer and editor with over seven years of experience in a variety of industries. Prior to joining Lightwave and Broadband Technology Report, he was the associate editor of Architectural SSL and LEDs Magazine.