Calix CEO Michael Weening emphasized resilience in a dynamic environment amidst what he characterizes as a pivotal moment for the broadband industry.
“A broadband provider must decide to remain a speed-based network operator that risks commoditization or embrace differentiation through broadband experiences across residential, business, and municipal within the communities they serve,” said Weening during the company’s first quarter earnings call.
Weening reported that Calix’s experience-based broadband strategy is showing signs of success, pointing to Windstream Kinetic’s business solution SmartBiz, which was launched across 18 states. He also highlighted the company’s expansion beyond consumer and small business segments with the February release of SmartMDU, a solution for multi-dwelling units.
Steady demand trends
According to Weening, Calix faces a dynamic environment that is defined by three key forces: demand, supply, and cost.
“While dumb box providers will look at demand as a function of capital expenditure, I will reiterate that our business model is different,” said Weening. “We partner with our customers to leverage our platform to create demand by enabling their sales and marketing teams to reduce churn, grow revenue per subscriber, and attract new subscribers.”
Calix is confident that demand will continue to grow through 2025, unchanged by the dynamic environment, with Weening calling broadband demand inelastic.
“When end-consumers are uncertain, they cut out disposable income items such as taking a flight or eating at a restaurant and stay home and watch a movie,” said Weening. “If they’re a hybrid worker, they will try to travel to the office less and work at home more. In each of these scenarios, broadband becomes more important, and the broadband provider with the best experience wins.”
Strategic positioning and outlook
On the supply and cost side, CFO Cory Sindelar reported that Calix’s appliance-based platform model has allowed them to reduce active SKU count to fewer than 200, simplifying management in the dynamic environment. Sindelar also pointed out that Calix maintains a diversified global manufacturing presence and can leverage its balance sheet to make strategic inventory investments.
While he acknowledged that costs would be affected by the environment, Sindelar noted that actions will be taken to minimize an impact on customers.
Calix delivered revenues of $220 million in the first quarter, up 7% sequentially. Total RPOs grew 4% in the quarter to $340 million.
“In addition to the continued strength from our platform cloud and managed services, we had a large-sized customer pull-forward demand, which contributed to the overperformance in the quarter,” said Sindelar.
The company added 16 new broadband service providers in the quarter, with the majority being take-aways from other vendors.
Looking ahead to Q2, Calix provided revenue guidance between $221 million and $227 million. Sindelar reported that 2025 operating expenses will remain flat to slightly up relative to 2024.
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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.