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CI

CALIX, INC (CALX)·Q2 2025 Earnings Summary

Executive Summary

  • Calix delivered a strong Q2 2025: revenue $241.9m (+10% q/q, +22% y/y), non-GAAP gross margin 56.8% (+60bps q/q), and non-GAAP EPS $0.33; non-GAAP net income rose to $22.2m, and free cash flow hit a record $35.6m .
  • Results beat both company guidance (revenue $221–$227m; EPS $0.18–$0.24) and Wall Street consensus (revenue $224.0m*, EPS $0.21*) with broad-based demand and strong appliance deployments; management cited accelerating platform and managed services adoption as the driver behind margin expansion and cash generation .
  • Q3 2025 guidance calls for continued sequential growth and margin expansion: revenue $243–$249m, non-GAAP gross margin 56–58%, non-GAAP OpEx $112–$114m, and non-GAAP EPS $0.31–$0.37; full-year non-GAAP tax rate raised to 23–25% (from 21–23%) .
  • Narrative catalyst: management unveiled a third-generation, agentic AI-enabled platform (pre-production in Q2) and CommandIQ 3.0, positioning BXPs to accelerate subscriber growth, ARPU, and operating efficiency—potentially a medium-term re-rating driver as recurring platform, cloud, and managed services scale .

What Went Well and What Went Wrong

What Went Well

  • Sequential growth and beats: revenue +10% q/q to $241.9m, non-GAAP EPS $0.33, both above guidance and consensus; non-GAAP gross margin rose to a record 56.8% (+60bps q/q) on subscriber wins and platform adoption .
  • Cash and balance sheet strength: record free cash flow $35.6m and cash/investments $299.0m after repurchasing ~1.0m shares ($33.6m), with DSO at a record 24 days and inventory turns 3.4 .
  • Strategic progress: pre-production launch of third-gen agentic AI platform with goals of sovereign data centers, private cloud for large customers, and agentic AI scaling customer success; “We are poised to enable an industry-wide transformation…” (Michael Weening) .

What Went Wrong

  • GAAP profitability remains constrained: GAAP net loss of $0.2m (EPS ~$0.00) due to stock-based compensation ($25.6m) despite improved operating metrics .
  • Operating expenses still above target model as % of revenue: non-GAAP OpEx $111.1m (46% of revenue) with sales & marketing at 22% of revenue and G&A at 8% (above target ranges) .
  • Customer mix headwinds and lumpiness: small customers still account for 72% of revenue, with reclassification effects and variability in large/medium cohorts; international revenue rose to 9% driven by a European customer—adding mix volatility .

Financial Results

MetricQ4 2024Q1 2025Q2 2025Q2 2025 Consensus
Revenue ($USD Millions)$206.1 $220.2 $241.9 $224.0*
GAAP Gross Margin %55.0% 55.7% 56.3% —
Non-GAAP Gross Margin %55.5% 56.2% 56.8% —
GAAP Diluted EPS ($)($0.27) ($0.07) ($0.00) —
Non-GAAP Diluted EPS ($)$0.08 $0.19 $0.33 $0.21*
Note: Consensus values retrieved from S&P Global.*

Segment growth trends (product lines):

Segment GrowthQ4 2024Q1 2025Q2 2025
Unlimited Subscriber (QoQ / YoY)+9% / -11% +15% / +27% +16% / +59%
Intelligent Access (QoQ / YoY)+12% / -35% -6% / -32% +11% / +5%

Customer and geographic mix:

Mix (% of Revenue)Q4 2024Q1 2025Q2 2025
Large + Medium29% 21% 28%
Small71% 79% 72%
U.S.90% 96% 91%
International10% 4% 9%

Key KPIs:

KPIQ4 2024Q1 2025Q2 2025
Remaining Performance Obligations ($USD Millions)$325.8 $340.4 $346.6
Current RPO ($USD Millions)$120.7 $128.4 $134.3
DSO (days)36 30 24
Inventory Turns (x)3.1 3.6 3.4
Cash & Investments ($USD Millions)$297.1 $282.3 $299.0
Non-GAAP Free Cash Flow ($USD Millions)$10.214 $12.902 $35.646
Non-GAAP OpEx ($USD Millions)$110.862 $109.824 $111.055
Non-GAAP Net Income ($USD Millions)$5.230 $13.131 $22.244

Non-GAAP adjustments: Gross margin excludes ~0.4% stock-based comp and ~0.1% amortization; OpEx and EPS exclude SBC and amortization with tax effects .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)Q2 2025$221–$227 Actual $241.9 Beat vs guidance (raised performance)
Non-GAAP Gross Margin %Q2 202555.25–57.25 Actual 56.8 Beat midpoint
Non-GAAP OpEx ($USD Millions)Q2 2025$109–$111 Actual $111.1 In-line high end
Non-GAAP EPS ($)Q2 2025$0.18–$0.24 Actual $0.33 Beat
Revenue ($USD Millions)Q3 2025—$243–$249 New; implies +2% q/q at midpoint
Non-GAAP Gross Margin %Q3 2025—56.0–58.0 New; slight increase q/q at midpoint
Non-GAAP OpEx ($USD Millions)Q3 2025—$112–$114 New; modest increase vs Q2
Non-GAAP EPS ($)Q3 2025—$0.31–$0.37 New; aligns with seq. growth
Non-GAAP Effective Tax Rate (%)FY 202521–23 23–25 Raised

Earnings Call Themes & Trends

TopicQ4 2024 (prev)Q1 2025 (prev)Q2 2025 (current)Trend
Agentic AI platform and CommandIQPlatform-driven margin expansion; BEP transformation focus Record GM; education of BSPs; BEP vs “dumb box” narrative Third-gen platform in pre-production; sovereign data, private clouds, agentic AI; CommandIQ 3.0 launch cadence Accelerating
Demand and customer mixLarge/medium resumed ordering; small 71% share Large customer pull-forward; small 79% share; sequential growth outlook Broad-based demand; medium 16%, large+medium 28%; international 9% Broadening mix
Supply chain/tariffsU.S. manufacturing capacity; tariffs minimal in Q4 Diversified supply; pass-through tariff costs; no margin on tariffs Stable environment; building Mexico capacity; limited tariff impact to date Stable
BEAD programNot in numbers; longer arrival, bigger rollout Rules finalization expected by end of May; still excluded from forecast State rebids; still excluded; “will take longer but be bigger” Deferred tailwind
RPO growth and recurring revenueRPO up 34% y/y; recurring adoption growing RPO up 39% y/y; current RPO +6% q/q RPO up 30% y/y; current RPO +5% q/q; lumpy renewal mechanics explained Strong, lumpy
International expansion and sovereigntyIntl 10%; EU shipments —Ability to set up sovereign instances; stronger presence target in Europe/Middle East Expanding

Management Commentary

  • “We are poised to enable an industry-wide transformation… Platform-based agentic AI will enable network operators to become experience providers that dominate the markets they serve.” — Michael Weening (Prepared remarks) .
  • “We saw a very strong and broad-based demand environment… record non-GAAP gross margin of 56.8%… record free cash flow of $36 million.” — Cory Sindelar (Prepared remarks) .
  • “Third generation platform… sovereign local data centers, private cloud for large customers, and agentic AI to scale customer success.” — Stockholder letter .
  • “Revenue outlook [Q3] $243–$249 million… non-GAAP gross margin [mid] slight increase… OpEx restrained, declining as % of revenue.” — Cory Sindelar (Guidance) .

Q&A Highlights

  • Customer cohort reclassification and organic small-customer growth: impact “mid-single-digits” on sequential small cohort; demand remains broad-based .
  • OpEx discipline vs AI investment: R&D held to 29% of gross profit; pacing AI investments to leverage existing platform architecture .
  • RPO mechanics: incremental subscriber growth above minimums drops straight to revenue; RPO increases occur upon renewal or renegotiation—explains lumpiness .
  • Supply chain: stable; multi-location capacity build (e.g., Mexico) continues; limited tariff impact; pass-through policy reiterated .
  • BEAD: state-level rebids; program excluded from forecasts; expected to take longer but be larger when it arrives .
  • Large customer “cloud-only” win: net new very large customer adding Calix Cloud; indicative of platform adoption beyond hardware .
  • Gross margin drivers: continued platform/cloud adoption and favorable customer mix .

Estimates Context

  • Q2 2025 actual vs consensus: revenue $241.9m vs $224.0m*; non-GAAP EPS $0.33 vs $0.21* — both significant beats likely to drive upward estimate revisions and positive sentiment. Values retrieved from S&P Global.*
  • Q1 2025 actual vs consensus: revenue $220.2m vs $207.0m*; non-GAAP EPS $0.19 vs $0.13* — beats support the sequential growth narrative. Values retrieved from S&P Global.*
  • Q3 2025 setup: company guidance (revenue $243–$249m; EPS $0.31–$0.37) aligns with consensus (revenue $246.2m*, EPS $0.34*), implying modest upside if demand breadth persists. Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Non-GAAP Gross Margin Annual Improvement (bps)FY 2025Within target 100–200 Higher end of 100–200 Raised
Non-GAAP Effective Tax Rate (%)FY 202521–23 23–25 Raised
Non-GAAP OpEx ($USD Millions)Q3 2025 vs Q2 2025$109–$111 (Q2) $112–$114 (Q3) Slightly raised

Earnings Call Themes & Trends (Expanded Tracking)

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
AI/technology initiativesPlatform-driven GM expansion; BEP transition Agentic AI third-gen platform; CommandIQ 3.0 rollout Accelerating
Supply chain stabilityU.S. capacity; diversified manufacturing Stable; multi-location capacity build; minimal tariff impact Stable
Tariffs/macroPass-through if needed; no margin Minimal impact year-to-date; proactive inventory buys Controlled
Product performanceUnlimited Subscriber up; Intelligent Access normalizing Both up q/q; focus on subscriber experience and appliances Improving
Regional trendsEU shipments lumpy; intl 10% Intl 9% with European customer; U.S. 91% Diversifying
Regulatory/BEADLonger arrival, bigger rollout; excluded from numbers State rebidding; still excluded Deferred
R&D executionR&D ~29% of gross profit target Continues at ~29%; supports agentic AI Consistent

Management Commentary

  • “Platform-based agentic AI will enable… a legion of Calix AI agents… to simplify, innovate, and grow to meet the financial goals of our customers.” — Michael Weening .
  • “Record RPOs… record non-GAAP gross margin… record free cash flow… even after $33m of share repurchases.” — Cory Sindelar .
  • “Our revenue guidance [Q3]… up 2% at the midpoint… OpEx investments will increase modestly until we are back into our target financial model.” — Cory Sindelar .
  • “We have invested more than 15 years and almost $2 billion into our platform… third generation went into pre-production for a second-half launch in 2025.” — Michael Weening .

Q&A Clarifications

  • CFO noted Q2 revenue “$242m” and RPO “$347m” on the call—consistent with reported $241.9m and $346.6m in the 8-K (rounding difference) .
  • Small cohort organic growth impact quantified as “mid-single digits,” emphasizing reclassification effects and broad-based demand .
  • Supply chain diversification continues with Mexico capacity build; environment “stable” with limited tariff impact .

Key Takeaways for Investors

  • Calix beat revenue and EPS vs guidance and consensus in Q2 on broad-based demand and appliance deployments; margins expanded further, supporting a positive revision cycle .
  • Q3 guidance implies continued sequential growth and slight margin improvement; raised FY tax rate and higher-end GM expansion point to operating discipline with improving scale .
  • Record free cash flow and pristine working capital metrics (DSO 24 days) create optionality for continued buybacks ($129.4m remaining authorization) and investment in AI/platform initiatives .
  • Agentic AI and CommandIQ 3.0 strengthen the recurring, high-margin platform narrative and potential TAM expansion (MDU, sovereign geographies, private cloud for large customers) .
  • RPO growth (+30% y/y) and current RPO (+5% q/q) validate recurring revenue expansion; lumpy renewals are a feature of contract structure, not demand weakness .
  • BEAD remains excluded, limiting downside if timelines slip; upside optionality exists when funds flow, with Calix positioned to benefit .
  • Short-term: momentum favors ongoing beats if appliance demand and subscriber additions persist; Medium-term: agentic AI execution and mix shift to platform/cloud should support multiple expansion and margin durability .

Source Documents and Press Releases

  • Q2 2025 8-K and Stockholder Letter, including full non-GAAP reconciliations and guidance .
  • Q2 2025 Earnings Call Transcript (full) .
  • CommandIQ 3.0 press release (Q2 context) .
  • Q1 2025 8-K and Stockholder Letter .
  • Q4 2024 8-K and Stockholder Letter .

Note on consensus: Values retrieved from S&P Global.*