CALIX, INC Q3 FY2024 earnings call

Michael Weening mentioned he returned from Connections, Calix's annual Innovation and Customer Success Conference, which set a record for attendance. Cory Sindelar noted the disciplined execution in the third quarter, revenue within guidance, buying patterns for appliances normalizing, record non-GAAP gross margin, RPO growth, operating expenses, and strong balance sheet metrics. Regarding BEAD, most states have been approved by the NTIA, with initial bookings expected in Q1 2025 and shipments later in the year.

Cory Sindelar mentioned that Calix delivered revenue of $201 million in the third quarter, representing 1.4% sequential growth, within the guidance range provided in July. The non-GAAP gross margin was a record 55.4%. Remaining performance obligations (RPOs) grew to $296 million at the end of the third quarter, an increase of $29 million or 11% sequentially and $76 million or 35% year-over-year. Current RPOs were $110 million, up 7% sequentially and 29% year-over-year. The company added 13 new customers in the third quarter, with 5 starting their first cloud Calix Cloud deployment and 23 customers developing a managed service for the first time.

For the fourth quarter of 2024, revenue outlook is between $201 million and $207 million, representing 1.5% sequential growth. The BEAD program has all but one state approved by the NTIA, with initial bookings expected in Q1 2025 and shipments later in 2025. The vast majority of states are 9 to 12 months away from making awards.

Q: Scott Searle from ROTH Capital Partners asked about the trough in June and pipeline.

A: Michael Weening said they declared June as the trough and are comfortable with it, with RPOs as a forward indicator.

Q: Joseph Cardoso from JPMorgan asked about BEAD timing and larger deals.

A: Michael Weening and Cory Sindelar discussed BEAD timing aligning with expectations and larger deals due to customers embracing the platform and seeing success.

Q: Michael Genovese from Rosenblatt Securities asked about political risk with BEAD and lead times.

A: Michael Weening said no political risk, and Cory Sindelar discussed lead times being at post-pandemic new normal.

Q: Christian Schwab from Craig Hallum asked about sequential growth post-2025 and appliance lead times.

A: Michael Weening and Cory Sindelar talked about sequential growth expectations and appliance lead times in new normal.

Q: Tim Savageaux from Northland Capital Markets asked about customer segments and Verizon.

A: Michael Weening and Cory Sindelar discussed customer segment movement and Verizon as a good customer.

Q: Ryan Koontz from Needham & Company asked about ARPU contribution and customer success.

A: Cory Sindelar and Michael Weening discussed ARPU contribution from new customers and expansions, and customer success go-to-market motion.