Calix - Earnings Call - Q2 2021
July 27, 2021
Transcript
Speaker 0
Greetings, ladies and gentlemen, and welcome to the Calix Second Quarter twenty twenty one Earnings Conference Call. It is now my pleasure to introduce your host, Mr. Tom Dinges, Director of Investor Relations. Thank you, sir. Please go ahead.
Speaker 1
Thank you, Donna, and good morning, everyone. Thank you for joining our second quarter twenty twenty one earnings call. Today on the call, we have Chairman and CEO, Carl Wootzon Chief Financial Officer, Corey Sindelar and President and Chief Operating Officer, Michael Winnie. As a reminder, yesterday after the close of market, we released our letter to stockholders and an eight ks filing as well as on the Investor Relations section of the website. This conference call will be available for audio replay in the Investor Relations section of the Calix website.
Before I turn the call over to Karl for his brief opening remarks, I want to remind you that in this call, we refer to forward looking statements, which include all statements we make about our future financial and operating performance, growth strategy and market outlook, and 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 our second quarter twenty twenty one letter to stockholders and in our 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 on this conference call, we will discuss both GAAP and non GAAP financial measures. A reconciliation of GAAP to non GAAP measures is included in our letter to stockholders.
Unless otherwise stated on this call, we will reference non GAAP measures. And with that, let me turn the call over to Carl.
Speaker 2
Carl? Thanks, Tom. The second quarter saw the Calix team achieve a number of milestones on our march to an all platform world. On a wave of continued strong demand, for the first time, our all platform offerings, software and the associated systems and services were greater than 50% of our bookings. We expect this trend to continue.
For the third quarter in a row, we did not have a 10% customer, and we do not expect to have one in the current quarter. This speaks directly to the breadth of our customer base and the predictability of our all platform model. At the same time, we brought our V six and V7 products to end of sale. These two systems were the founding systems of Calix, and this marks another milestone in our continued pursuit of our all platform future. With these milestones behind us, the Board of Directors has added the chairmanship to my CEO role.
I will continue my focus on our long term strategy, and I am confident that our executive team led by Michael Weeny, our President and Chief Operating Officer, will continue to execute our strategy with excellence. While supply remains a challenge and will remain a challenge well into next year, organic demand for our solutions remains robust. Every day, we are excited to help our customers simplify their businesses, excite their subscribers and grow their value. With that, let us open the call for questions. Donna?
Speaker 0
Thank you. The floor is now open for questions. Our first question is coming from George Notter of Jefferies. Please go ahead.
Speaker 3
Congratulations on the strong results. I guess I wanted to ask about gross margins. If I remember going back three months ago, you mentioned that you had a shipment of low margin product that got pushed from Q1 into Q2. I guess I'm wondering if that had some impact on the gross margin result this quarter. And then also, would imagine your component costs are higher also given the supply constraints around the industry.
Speaker 2
And any sense you can
Speaker 3
give us for how that might have impacted gross margins also would be great.
Speaker 1
Yes George. You have that right if you remember correctly,
Speaker 4
that that shipping pushed from Q1 into Q2 and it had some impact on our margins. And you're also correct that the, component in seasonal prices and higher freight loss contributed to, the sequential decline in margin from Q one to Q two.
Speaker 3
Got it. Any chance you guys could quantify that? Is it, like a point of margin, two points of margin, half a point? Anything you could steer us to would be great.
Speaker 2
Yeah, I think, Corey, in the past, you've said it's not insignificant, but we haven't tried to bracket it. I think in the past, Corey has said that it's more than a point, less than some higher number. It's a significant number, George and that's I think the best way we do.
Speaker 3
Got it. Okay. That's great. And then, I guess I also wanted to ask about the CenturyLink, I guess now called Lumen. Your larger customers were that segment was- was down quite a bit year on year.
Obviously CenturyLink it sounds like is going through a strategic process of some of their assets but- any perspective on you know what's going on there and- in any chance that account could improve going forward let's say they do make some strategic decisions- maybe get some cash proceeds from the strategic decisions could they reinvest in areas of the business that you guys are exposed to.
Speaker 2
George. I think that's the correct observation. As you know, over the last couple of few quarters, they've been pretty tight on CapEx as I think they've been going through their strategic valuations. If you'll notice in the announcement around the Latin American assets, they spoke directly to, likely use the proceeds into CapEx and investments. But we think it's going to continue like this for a while as they continue that focus on where they want to go strategically.
So our business continues to move along. If you look across the industry, you'll see that their CapEx was down across a number of spaces. And I think there is a chance it will improve, but it may improve through Lumen. It may improve through the spun off assets, whatever they may be. So stay tuned.
Okay. I'll pass it on. Thanks very much, guys. George, thank you.
Speaker 0
Thank you. Our next question is coming from Paul Silverstein of Cowen. Please go ahead.
Speaker 5
Thanks, guys. The 43 new customers in the quarter, that's a big step up from your historical past. I think you did 24 the preceding quarter, and the 20 is in the teens before that. Is this the new norm? Was there something specific about this quarter?
And I've got a couple of thoughts.
Speaker 2
I I don't know if it's the new norm. I would merely characterize it as, you know, that we've been investing to get up to our model, and a significant portion of that has been in sales and marketing. And so I would say stay tuned, but I think you're gonna see an increasing aggression on the part of the sales and marketing organization. Michael, do have any other words you want to add to that?
Speaker 1
I would just say that the different size customers, from small to medium size and exactly what you said, Carl, is that the investments that we're making in the sales marketing organization are paying off, along with the platforms being very mature. I had a customer say to me the other day, that we're the only WiFi six platform that's carrier class and mature in the marketplace, and that's why they went with us, and it's paying off dividends because we were the first in the market. And now that we have all of our new platforms for me to place in our new solutions, they're
Speaker 4
very excited about the future, which
Speaker 1
is leading a new customer acquisition.
Speaker 5
Alright. Then your mid sized customers, remember the number, they were up again very strong. I think it's, what, six or 80% growth this quarter on top of the 130% growth from the previous quarter. Is that indicative of something that's it's early as some of us assemble that level but are they back to growth mode. For the preschool period of time what's going on there any new ones that you offer.
Speaker 2
Yeah so I think it we have to be careful about midsize customers because it's easy to remember the past and think of midsize customers as the tier twos. And if you remember, we set midsize customers at those greater than 250,000 subscribers less than 2,500,000. So it is indicative of something in the future, but it's not necessarily that the tier twos are rekindling. It's that our value proposition, as you heard Michael alluded to, in small and medium customers, it's starting to work its way up the stack of customer size.
Speaker 5
Got it. One last question, if I may. On the non U. S. I know you've had your hands full with U.
S. Demand, and so you haven't, correct me if I'm wrong, been been deploying a significant amount of incremental investment in terms of OpEx and set time resources into non US and if the non US was up strong once again this quarter. Any incremental insight you could offer that. To read to the future.
Speaker 2
Yeah I So same story from my perspective, and I'll let Michael add some color. We are being very much focused on North America. But globally, you know, this whole drive towards work from anywhere, broadband, etcetera, is a wave that's moving through the marketplace. But Michael, maybe you to ask some color.
Speaker 1
Yeah. On the international side, we're very being very pragmatic on how we expand. And a lot of the growth that we're seeing is actually from existing customers who are making incremental investments in their networks and the markets that they cover, and we're getting the benefit of it as we have a long history with them. They chose us as a strategic partner, and I think that's a key differentiator is that the companies who are with us in the international markets are the ones who actually understand the value of our platforms, how they simplify their operations and excite their subscribers, and they're betting on us long term. That's and they can they,
Speaker 2
you know, get more capital, they they partner with us.
Speaker 5
Alright. I'll pass it on. Thanks, guys.
Speaker 2
Thanks, Paul.
Speaker 0
Thank you. Our next question is coming from Chris Howe of Barrington Research. Please go ahead.
Speaker 6
Good morning, everyone, and congrats on the quarter.
Speaker 2
Good morning, Chris, and welcome to the to the party as it were.
Speaker 6
Yes. A party indeed. A few questions here. But leading off, tying together some thoughts with some of the previous questions. The 43 new customers in the quarter and in the shareholder letter, you had a brief highlight related to favorable regional mix.
The success you had in adding new customers, should we think of that as being tied to how you targeted your potential customer base on geographic basis?
Speaker 2
It's it's tied to the same model that we've been pursuing, which is, you know, we have a direct model that we're continuing to invest in. And so, you know, look, there's more smaller customers than there are medium customers. There's more medium customers than there are larger customers. And so on a numbers basis, you're gonna see the most of them in the smaller customers. Michael, do you want anything to that?
Speaker 1
Yeah. The other part is that is that as you look at the maturity of our cloud platforms, what we are unique in the market, with is the fact that we can actually enter a customer on many different vectors. So where if you go back to the history of Calix fifteen years ago, we would have primarily partnered with a customer as an access vendor. We're now able to go and transform their call center. We're able to transform their marketing like nobody else in this marketplace through behavioral analytics, insights.
We're able to help them build out, a virtual storefront in the home with WiFi six, and therefore, that gives us, access to competitive accounts that we never had before, and we're entering in a different vector and allowing us to win those customers.
Speaker 6
That's great. Thank you for the color. And, just digging into total operating expenses, you came in better than expected. Can you put this leverage into context for the current quarter and kind of at what point you saw the potential leverage start to realize itself and how perhaps we should think about that on an ongoing basis? I know we're moving towards the target financial model on a percentage basis that you highlighted in the letter.
But perhaps you can go into some of the leverage opportunities or what we could potentially see as revenue perhaps overgrows your total expense line?
Speaker 2
So let me let me shape my answer to your question in a return on investment manner. Because obviously, we expect to make disciplined investments in OpEx that yield returns, and we are very focused on growth. That being said, the leverage is, in our view, in a return on investment by driving the growth of the business, and opening up new margin expansion opportunities. It is not in leverage at the bottom line from having OpEx be below our models or do want to add some color for Chris to that? And where we're heading?
Sure.
Speaker 4
The the under performance on OpEx was largely due to not meeting our hiring goals in the quarter. So we did have a, you know, roughly a little more than 5% to the workforce in the quarter, but but fell short of what we expected. But over the near term, we intend to get to model. And so those OpEx investments will continue to increase.
Speaker 2
Yeah. And so the way I would refer to it, Chris, just read your perspective is we are planning for success. But we're not gonna lower the bar, for folks coming in to meet a headcount goal. We're going to go get the very best talent we can, and we think our culture supports them.
Speaker 6
Okay. Great. I guess that speaks to one of the recent press releases surrounding the high quality of talent that you're attracting to Calix, not lowering the bar for that. My last question is just quickly. It was asked about the lower margin items that got pushed forward from q one.
As we look at kind of the end of q two, anything there that we should make note of
Speaker 7
as it relates to q three?
Speaker 4
Sure we we are seeing a little bit more of a purchase price variances and spot market by the Arkansas affecting margins. We factor that obviously in the guidance that we provided. But we are moving into the tougher part of our fourth quarter. Remember back when in our first quarter call, we talked about the push out in lead times. Lead times leading a gap in the fourth quarter.
And so as we approach the fourth quarter, it's obviously becoming increasingly more difficult to meet the demand. And so that it has been suing costs of increased air, increased component prices. So we're gonna go through the most challenging supply of art that we've faced in the last eighteen months in the next couple of quarters.
Speaker 6
Okay. Great. Thanks for taking my questions.
Speaker 2
Thanks, Greg, and welcome aboard.
Speaker 0
Thank you. Our next question is coming from Michael Jovies of Westpark Capital. Please go ahead.
Speaker 8
Great. Thanks very much. So with the upside versus where the street numbers were in 2Q and 3Q, do you have any update to the full year outlook?
Speaker 2
Mike, we do, and I'll let Corey cover that with you. Corey, go ahead.
Speaker 4
Yeah, you know, last quarter, we said we thought
Speaker 5
we could grow it up,
Speaker 4
you know, about 15% for the year, with the improvement over
Speaker 2
performance in
Speaker 4
the second quarter and outlook for Q3. At this point, we can grow it 20% or more, for the year.
Speaker 2
So for the year, what does that make it? I mean, we might as
Speaker 1
well be talking about six sixty for the year. Okay.
Speaker 2
Does that help, Mike? Don't know.
Speaker 8
Yeah. Yes. Absolutely. Thanks. Okay.
So, just got you know, can you just quickly talk about I just think it's important. When you talk about the the the legacy products, I didn't I guess, quite realize you have so many legacy products. Because, I mean, I they're they're all fiber. But what's really the difference between. The legacy stuff that's phasing out and the and the all access- if you could.
Speaker 9
Give some color there that helpful.
Speaker 2
Well we do have you know. We're a twenty one year old company. The company was founded on the C7. We acquired a company called Ockham, which has its founding product called the V six. And you may notice from my introductory remarks that we actually achieved end of sale in June on both of those systems.
After those systems came to market in 02/2007, we built the E Series product family, which may ring a bell because the E Series continues to this day. But the initial E Series was built on an operating system called ESA, and those were copper and fiber systems. We also then built the Giga Center family, which was our first generation of premises systems. And all of those are in what we refer to now as our traditional or legacy systems. They sell they get a broad deployment.
The E Series was a phenomenally successful system. And so we have many, many customers that have built networks with E Series and have premises systems on Giga Center that are still robustly ordered. When we brought our platforms to market, AXOS and EXOS, which have become the intelligent access edge and the revenue edge, along with our clouds, that is our all platform business going forward. The AXOS and EXOS operating systems, even though they are abstracted from the hardware, still have hardware resources underneath them. We continued with the E Series for the access side, and we have now brought the Gigaspire family to market for EXOS.
So we are slowly but surely growing our all platform systems. But customers that have networks built on E Series or the Giga Center premises, if they choose to continue to order those systems. I'm I for one. I'm perfectly happy to take the order. And as they see the opportunity to deploy our platforms, they'll move to them.
Michael, do want to add some color?
Speaker 1
Yeah. When I joined five years ago, Carl shared the view. He was five years into it, and we were down this path on the journey to build these platforms. And I would say the only thing I would say that's important to understand between the legacy and the new is that we've chosen a very different path than our competition. What our competition has done is actually kept their existing systems that have been there for twenty plus years.
They haven't under upgraded the fundamental underlying technology, and instead they're taking the very traditional technology path of actually putting middleware over top of it and actually building out all over top of it and and covering it up. What Carl and the leadership team did ten years ago was actually rebuild these platforms from the bottom up using industry 10 scanner technologies like NetComp Gang and all those elements, which is why our products are unique in the market. They are built from the bottom up to actually embrace the future, which is all around helping service providers understand their customer leverage data and win. And so that's the difference between the old and the new, from my perspective.
Speaker 2
I just want to point out that I'll take that compliment. Why join? Mike, keep going.
Speaker 8
Okay. Well, thank you. I mean, that was great color for that question. I'm gonna ask two more, and I'll just ask them at once even though they're on different topics. I just wanna, you know, take your temperature on gross margin expansion for the overall year, you know, the typical one to 200 basis points, you know, where you stand on that right now?
And then secondly, just how are you feeling about Congress and, you know, infrastructure related further stimulus for this industry? Thank you.
Speaker 2
Okay. So let me let me just I want to put some color on the gross margin and ask Corey to then, add to it. I wanna go back to what Corey was saying earlier about q four filling in, etcetera. And I wanna frame that with what Michael just said. We have an enormous opportunity in front of us.
It is a secular disruption, and we are very energized by helping our customers succeed. What that drives us to do is to work very hard to meet their expanding needs, which means delivering systems and not raising prices, for example, because our vendors have raised their prices. So we are all oars in the water to meet our customers' demand, which means we will pay expedite fees, do things on freight, find things on the open market for silicon. And that's the color that Corey was talking about. So, Corey, you wanna shape that To the to the direct question and I'll come back and talk about, Congress.
Sure.
Speaker 4
I think the strength in gross margin in in the first quarter and the continued performance in the second. Gives me the confidence that we think we'll achieve margin expansion of 100 to 200 basis points year over year. So I think we're on track to do exactly that.
Speaker 2
But it's a fight. No one should take away that that's that's an easy thing right now. It is a fight. On congress, look, there's lots of puts and takes, and we're all following these things. Here's the thing I would leave you with.
It seems that in the vernacular, regardless of affiliation, everyone now knows to say we're interested in hardcore infrastructure, roads, bridges, and Internet. No matter party affiliation, you hear the same phrase. So why do I say that? Because it's clear that the bid and ask on Internet infrastructure has resolved itself to 65,000,000. Either way, there's going to be a large amount of dollars invested in Internet.
When? How it shows up? We could have long discussions about. I am on record as having said the following, and I'll repeat it. These programs always turn out to be larger than you think.
They take longer than you think. And what I've said about Calix remains true. It is not a pull forward of boxes. It is an uplift of our entire model as we help our customers build a new business model on top of the new infrastructure they're building.
Speaker 8
Thanks again. Appreciate it.
Speaker 2
Thanks, Mike.
Speaker 0
Thank you. Our next question is coming from Ryan Coons of Needham and Company. Please go ahead.
Speaker 9
Hey, good morning. Thanks for the question. Impressive metric there with the software bookings north of 50%. Can you give us any color there on what some of the trends are? Fairly familiar with the products, but what's driving that?
And is that should we think about that as the new normal or kind of a one time event? Thanks.
Speaker 2
So let me make sure I'm being very clear. It is our all platform business, which is software, the associated systems. So remember, there's a hardware resource underneath both the access infrastructure and the premises and the services that go along with it. So that business, not just software, it's the whole business, has now, made it over 50%. And obviously, once having made it over 50%, it's not going backwards.
So I won't speak of it again. Ryan, prior to you joining us, I had said at some point in time, we're gonna go over the 50% in revenue. I thought it was meaningful to share when we had eclipsed the 50% in bookings. So that's the one tidbit, and and we we expect it to continue. Does that help?
Speaker 9
It does. Thanks so much.
Speaker 2
You start Go ahead. Can you hear me okay? We can. You go ahead.
Speaker 9
Great. Specifically on on the r off programs, are you seeing any action there? We've heard from some of your peers that maybe some of the engineering work is, you know, starting to be funded maybe by internal mechanisms. But, you know, folks are looking to get going, you know, late this year, early next year. Is that in
Speaker 2
guys are thinking? Thank you. You mean you've heard from some folks that previously, two years ago, said it was gonna happen next quarter. So all sarcastic aside, let me be let me be clear. As I said, it always takes longer.
That being said, we are clearly seeing now people planning, starting to put in some orders, but it's still early days. Michael, do you want to add some color to that?
Speaker 1
I would say that's exactly the case. The growth that you're seeing right now is based upon us taking market share. And so, while that's a great future looking opportunity for us, as Carl just stated, it takes longer and it's bigger. And so that we expect that to start flowing through in in subsequent years. But the results that you're seeing today are about our organisation actually taking market share based upon our customers' understanding.
The value of our platforms and their desire to build a new business model to fundamentally transform and win customers against their biggest threat, which is the consumer direct companies who wanna get inside the home, own that subscriber, and monetize them through incremental services, which the service provider needs to do.
Speaker 9
Helpful thank you very much- lastly any any color on the international side- obviously great- great quarter there on on revenues any. Regional color you can offer up. Thanks so much.
Speaker 2
Just continued execution. Corey, do you want to add some?
Speaker 4
Yeah. You'll see in the queue tomorrow, was pretty broad based. It came from a number of regions, strength particularly in Europe.
Speaker 2
Great. Thanks so much. I'll pass it Brian, thanks and welcome.
Speaker 0
Thank you. Our next question is coming from Christian Schwab of Craig Hallum Capital Group. Please go ahead.
Speaker 7
Hey, congratulations on another good quarter and guide guys. Most of my questions have been answered. Carl, I just have one quick question. When you look at small customers you know, here domestically, the less than 250,000 subscribers, what
Speaker 2
what do
Speaker 7
you think your penetration rate, you know, into that customer base currently is? And could you identify a a number of how many target customers that are left out there that are not customers at all of your all platform offering?
Speaker 2
Oh, you're not. So we are well penetrated from twenty years of working in North America as accounts. Having said that, with our all platform offerings, you've heard me say we are very early days. And so, you know, I would say to Michael, as a VP of sales once said in my very early selling career, it comes to orders, too much is never enough. So Michael, I don't know if you have some color on, but these are we are so early in this transformation process that Michael, maybe you want to get some color on the business transformation and how early
Speaker 1
it is. Well, want to go back to what we talked about earlier, which was that in the past, if you were to go back fifteen years ago, we would have competed with a number of vendor competitors and our our only offering within the access network. What we're actually seeing over and over again is again with multiple vectors into a customer with the ability to win their marketing organization, to win the transformation of their call center, to completely change how they bring services to market in the home to compete with the consumer giants. And then the access side, that means we can go back to customers who we really have nothing to talk about with before because they made a big access network investment. They're like, I'm not gonna switch midway through and talk about all these other business transformation elements.
So for us, it's an amazing opportunity, which again goes back to my previous comment, which is the growth that you're seeing is us taking market share as we enter into not only new customers, but actually places where we didn't have something to go to talk to them about the bar. And absolutely now we do.
Speaker 7
Okay. Let me I appreciate that. Let me ask it a different way. Given your long history and access, you know, what what percentage of your historical access customer base over the last fifteen, twenty years that you've been selling to is currently, buying your all all platform platform solution today.
Speaker 2
A large minority are buying some portion of it, it is still a minority.
Speaker 7
Okay. Alright. You know, you know where I'm going. I'm trying to, you know, frame a couple different ways how big the opportunity for you can be at a small penetration rate, follow-up on the earlier question about the new customer additions in the all platforms. So we could you know, is there is there, you know, 500, you know, you know, existing customers that don't buy an all platform solutions.
It's something like that, guess. Know, I don't
Speaker 8
if guys are standing.
Speaker 2
Yes. So so let me be clear. You've heard me say this many times. Every day I get up and go to work, I get more excited by the opportunity we have in front of us. And the reason I'm getting more excited is because I'm looking at what customers are doing with us.
And I then come to the realization that we're even earlier in this opportunity than I thought. So that's one way of thinking about it. The second thing you've heard me say is that our model expands in multiple dimensions in multiple ways. And so it's not only, you know, as you heard Michael speak earlier, we can enter a customer with marketing cloud, and that would might be the only thing they deploy. But as they start to do marketing cloud, then they might expand the support cloud, and they might go to the revenue edge.
There's so many dimensions of expansion that even with our customer base, which is 1,500 plus strong, we are still barely scratching the surface for that expansion opportunity even though there are quite a few 100 that have deployed some aspects of what we're doing on the platforms. So the expansion, which is what you're getting at, we are we are just getting up the bat in the first minute.
Speaker 7
Yeah. That's, that's great color. Thank you, guys. Congrats again.
Speaker 2
Thanks, Christian.
Speaker 0
Thank you. Our next question is coming from Tim Savarro of Northland Capital Markets.
Speaker 10
I just wanted to follow-up on some of the market commentary. And obviously, you guys are you have been a pretty established, you know, player in the market, especially on the rural side for for quite some time. So I was a little bit struck by that comment. And wanted to follow-up with whether and you can define your addressable market, you know, how you like, you know, I'd be focused on the kind of maybe the small carrier segment or perhaps The US in general, if you could estimate what you think your current share of that market opportunity is? And from whom are you taking market share, do you think?
And I'll follow-up.
Speaker 2
Yeah. So market share, Michael used that term market share. You have to keep in mind that in a disruption, market share is an interesting thing because what you're focused on is actually, as you heard him say, addressing new opportunities that don't exist in the way the service provider thinks about it. So if you look at it as just overall quote unquote spend from service providers, we are growing the share of that spend, but it's in places that are different than the way you would traditionally think about. And so the best way I can point this to you is over time, you'll have you'll be able to look back on a basket of different vendors that are in the space.
And I think you'll see a different growth rate out of Calix than others around us in the space. And that's the best way I can give you to think about it in the aggregate. So hopefully that makes sense. The second piece is, when you look at the overall opportunity, TAM, SAM, all those different metrics, you've heard me say that hardware aside, we think that our customers will share between $1 and $10 per month per subscriber as we help them grow more and more successful business models. And so who are you taking quote unquote share from?
You gotta be careful about that term share because part of it is the new spaces that don't exist. And so ultimately, the best way I can answer your question is, I think you go list the the the folks that you would think of, and then let's see in the rearview mirror which businesses grow at what rate, which businesses expand margins at what rate. So that's the way I would address the question.
Speaker 10
Okay. I think I understand that. So you're kind of saying you're taking share from your maybe your customers kind of internal marketing departments or IT departments and and serve sort of a nontraditional definition of the TAM. Although So in in defining it that go way ahead.
Speaker 2
Hang on, Tim. So let's be clear. When you hear us say simplify their businesses, excite their subscribers, and grow their value, what we're actually trying to do is actually increase the value of our customers by helping them grow their revenues, lower their costs, and we will participate in the share of that. It's a very different way of thinking than the traditional market share statistics.
Speaker 10
Okay. Still have a number there, but I hear what you're saying. And I wanted to follow-up on just a couple of, you know, finer points on a few market segments that you touched on. One would be tier twos where, you know, we do perhaps see some uptick in activity there as a few of those. When, again, it's hard to tell in terms of how they're defined, but there does seem to be some broadly some more activity there.
So I wonder if you could maybe segment again. And I think the overall theme here I'm trying to get to is is market growth versus share gain. And there does seem to be a lot of market growth. So in terms of whether there's something new and interesting happening in Tier two land on the one hand. And then international, I guess the comment was about existing customers.
So we should think more about Canada, Mexico, Caribbean in terms of growth versus some of your new kind of old carrier engagements, U. K. And elsewhere in terms of what's driving that? And that's it for me.
Speaker 2
So, you know, tier twos again, to go back to what I said earlier, the the midsize customers, 250,000 to 2,500,000, is the segment that's growing. But Tier 2s are part of that, but they are not all of that. And so what we're seeing, back to Michael's point earlier, is we are having more and more success working with customers that are larger and larger to deploy platforms and build these new business models. As for the traditional tier twos that are going through various forms of restructuring and and reinvestments, you know, we we think there will be an opportunity there over time, but we'll see how they align their business strategies. As for international, I think we covered that earlier on where we're seeing it, which is to Michael's point earlier, from our existing customers for the most part expanding.
We have new we did add new names in the international market to be sure, but it's frankly the result of our continued focus as we have been on where we're aligned with customers internationally. It's not because we are expanding internationally yet. Okay. Thanks.
Speaker 0
Our next question is coming from Paul Silverstein of Cowen.
Speaker 10
Sorry, Carl, you're competing with
Speaker 5
the conference. I'm not on broadband. I'll ask you guys offline. Thanks. Take care.
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Thanks, Paul. Okay, Paul. Others?
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At this time, we've reached the end of our question and answer session. I'd like to turn it turn it back over to mister Fingus for closing comments.
Speaker 1
Thank you, Donna. Calix leadership will participate in a number of investor conferences and meetings during the 2021. Information about these events, including dates and times for public webcast management interviews, will be posted on the Events and Presentations
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page of the Investor Relations section of callus.com.
Speaker 1
Once again, thank you to everyone on this call and on the webcast for your interest in Callus and for joining us today. This concludes our conference call. Goodbye for now.
Speaker 0
Ladies and gentlemen, thank you for your participation. You may disconnect your lines or log off the webcast at this time, and have
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a
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wonderful day.