Executive Summary

Record results with revenue $265.4m (+10% q/q, +32% y/y) and non-GAAP diluted EPS $0.44; both beat S&P Global consensus by ~$19.2m (revenue) and $0.10 (EPS), driven by broad-based demand and competitive displacements, including “rip and replace” wins . Revenue Consensus Mean $246.2m*, EPS $0.341*.
Seventh consecutive quarter of margin expansion: GAAP gross margin 57.3% and non-GAAP 57.7% (+90 bps q/q; +230 bps y/y) on subscriber growth and continued platform adoption .
Q4 guide raised sequentially: revenue $267–$273m, non-GAAP GM 56.75%–58.75% (midpoint slightly up), non-GAAP OpEx $122–$124m (temporarily higher for ConneXions/AI), non-GAAP EPS $0.35–$0.41; non-GAAP tax rate 23%–25% for 2025–2026 .
KPIs strengthen: RPO $354.6m (+2% q/q, +20% y/y), free cash flow $26.7m, record cash & investments $339.6m; DSO 30 days, inventory turns 3.8 .
Stock narrative catalysts: accelerating agentic AI roadmap (Calix Agent Workforce) with Google Cloud, sustained footprint gains and improving BEAD outlook into 2026; management expects 2026 growth within 10–15% model, likely lower end given tough comps .

What Went Well and What Went Wrong

What Went Well

Broad-based top-line outperformance for third straight quarter: “over performance… driven by broad-based demand… and competitive expansion of our footprint,” including rip-and-replace wins .
Record profitability metrics: non-GAAP gross margin 57.7% (7th consecutive increase) on subscriber wins and mix; non-GAAP EPS $0.44 .
Durable backlog/visibility: RPO rose to $354.6m (+2% q/q, +20% y/y) with current RPO $140.8m (+5% q/q), reflecting platform/cloud/managed services adoption .

What Went Wrong

International softer sequentially: International fell to 6% of revenue (down 29% q/q) on lower shipments to a European customer; U.S. rose to 94% (+14% q/q) .
Mix volatility by customer size: medium customers fell to 11% of revenue (down 5ppt q/q) driven by Europe; small customers 76% (+4ppt q/q) .
Near-term OpEx uptick: Q4 non-GAAP OpEx guided higher ($122–$124m) for ConneXions and accelerated AI development, with return to model in 2026 .

Financial Results

Headline P&L (GAAP and non-GAAP)

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue ($m)	$220.2	$241.9	$265.4
GAAP Gross Margin (%)	55.7%	56.3%	57.3%
Non-GAAP Gross Margin (%)	56.2%	56.8%	57.7%
GAAP Diluted EPS ($)	$(0.07)	$(0.00)	$0.22
Non-GAAP Diluted EPS ($)	$0.19	$0.33	$0.44
Non-GAAP Operating Expenses ($m)	$109.8	$111.1	$114.7

Actuals vs S&P Global Consensus

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue – Actual ($m)	$220.2	$241.9	$265.4
Revenue – Consensus ($m)	$207.0*	$224.0*	$246.2*
Revenue Surprise ($m / %)	+$13.3 / +6.4%*	+$17.9 / +8.0%*	+$19.2 / +7.8%*
EPS (Non-GAAP) – Actual ($)	$0.19	$0.33	$0.44
EPS – Consensus ($)	$0.127*	$0.209*	$0.341*
EPS Surprise ($)	+$0.06*	+$0.12*	+$0.10*
# of Estimates (Rev / EPS)	6 / 6*	6 / 6*	7 / 6*

Values marked with * are retrieved from S&P Global.

Product Lines and Mix (Q3 2025)

Metric	Q3 2025
Experience Edge revenue growth (q/q, y/y)	+11% q/q; +62% y/y
Access Edge revenue growth (q/q, y/y)	+11% q/q; +30% y/y
U.S. revenue mix	94% (vs 91% in Q2; 93% y/y)
International revenue mix	6% (down 29% q/q; up 17% y/y)
Customer mix (Large / Medium / Small)	13% / 11% / 76% of revenue

KPIs and Balance Sheet

KPI	Q1 2025	Q2 2025	Q3 2025
RPO ($m)	$340.4	$346.6	$354.6
Current RPO ($m)	$128.4	$134.3	$140.8
DSO (days)	30	24	30
Inventory Turns (x)	3.6	3.4	3.8
Non-GAAP Free Cash Flow ($m)	$12.9	$35.6	$26.7
Cash & Investments ($m)	$282.3	$299.0	$339.6
New Platform Deployments (#)	2	19	16
New Calix Cloud Deployments (#)	6	22	14
New Managed Services Customers (#)	20	26	33

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($m)	Q4 2025	—	$267–$273	New sequential increase guided
Non-GAAP Gross Margin (%)	Q4 2025	—	56.75–58.75	Slight increase vs Q3; FY25 at high end of 100–200 bps improvement
Non-GAAP OpEx ($m)	Q4 2025	—	$122–$124	Higher q/q for ConneXions and accelerated AI; return to model in 2026
Non-GAAP Diluted EPS ($)	Q4 2025	—	$0.35–$0.41	Introduced
Non-GAAP Effective Tax Rate (%)	FY 2025–2026	23–25% (FY25)	23–25% (FY25–FY26)	Maintained and extended to 2026

Notes: No explicit guidance for OI&E, dividends, or segment-level revenue provided in Q3 materials. Management reiterated gross margin expansion framework and cost discipline .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1–Q2 2025)	Current Period (Q3 2025)	Trend
AI/Technology initiatives	Third-gen platform moved to preproduction; agentic AI to scale CX and customer success	“Launched the Calix Agent Workforce,” third-gen platform with Google Cloud “this quarter” to accelerate monetization via faster subscriber adds and service rollouts	Accelerating
Supply chain/Tariffs	Tariff costs not a major driver; operations disciplined	Tariff and tariff-related costs “not material” in Q3	Stable/Benign
Product performance	Shift toward Experience Edge; recurring model growth	Experience Edge +11% q/q, +62% y/y; Access Edge +11% q/q, +30% y/y	Broad-based strength
Regional trends	International lumpy; Europe timing effects	U.S. 94% (+300 bps q/q); International 6% (down 29% q/q) on Europe timing	U.S. mix higher; International lumpy
Regulatory/BEAD	Watching timelines; programs take time to start but persist longer	More constructive tone; first BEAD order; awards imply ~$30b incl. matches; fiber 65% of locations/85% of dollars; lens-shaped curve ramping in 2026	Improving visibility
R&D execution/OpEx	Holding OpEx roughly flat vs revenue to return to model	Q4 OpEx up near-term for ConneXions/AI; back in model by end of 2026	Invest now, revert later
Customer mix/Competition	Footprint expansion; new customers added	Broad demand across small/medium/large; displacing incumbents; no 10% customers	Diversified/upmarket wins

Management Commentary

“We… achieved record revenue in our fifth quarter of sequential growth. While guiding higher in the fourth quarter, we set another gross margin record, our seventh consecutive quarter of margin improvement.” – CEO Michael Weening .
“Over performance is driven by… broad-based demand… [and] competitive expansion of our footprint… not only cap and grow but some rip and replace as well.” – CFO Cory Sindelar .
“Calix Agent workforce… end-to-end integration of agentic AI… launching in partnership with Google Cloud this quarter.” – CEO Michael Weening .
On monetization of AI: “We will monetize… by helping [customers] acquire subs faster [and] roll out more services more quickly… [which] will increase RPOs.” – CFO Cory Sindelar .
On BEAD: “Awards… shrunk… to about $20 billion; with matching funds… ~$30 billion… Fiber is… 65% of locations and 85% of the dollars.” – CFO Cory Sindelar .

Q&A Highlights

Drivers of the beat: Broad demand plus competitive displacements, including “rip and replace.” Management emphasized diversified base (~1,200 customers) and no single customer concentration .
2026 trajectory: Expect sequential growth durability but more muted; within 10–15% model, likely lower end given the step-up in 2025; gross margin expansion to continue but at low end next year after a strong 2025 .
AI investment and OpEx: Q4 OpEx up to accelerate agent development and ConneXions; return to model by end of 2026; AI monetization prioritized via subscriber growth and multi-cloud adoption rather than pure price uplift .
BEAD outlook: More constructive within 90 days; first orders received; ramp lens-shaped from 2026; fiber dominant in awards; permitting and labor remain practical limiters to build pace .

Estimates Context

CALX beat S&P Global consensus for revenue and EPS in Q1, Q2, and Q3 2025; Q3 revenue $265.4m vs $246.2m*, EPS $0.44 vs $0.341*; estimate counts were 7 (revenue) and 6 (EPS) in Q3 . Values marked with * are retrieved from S&P Global.
Given sequential guide-up for Q4 and >high-end FY25 gross margin improvement, Street models likely need to move higher on near-term revenue/EPS and embed slightly higher gross margin run-rate, while tempering 2026 expansion assumptions to the lower end of 100–200 bps as management flagged .

Key Takeaways for Investors

Momentum intact: Fifth straight quarter of sequential revenue growth, record margins, and expanding RPO underpin durable top-line and profitability into Q4 .
Beat-and-raise quarter: CALX materially exceeded S&P consensus on both revenue and EPS and guided Q4 sequentially higher; setup supports positive estimate revisions (values with * from S&P Global).
AI as growth flywheel: Launch of the Calix Agent Workforce with Google Cloud is poised to accelerate subscriber adds, platform attach, and RPO growth across the base .
Mix tailwind to margins: Continued shift toward Experience Edge and growing platform/cloud/managed services support structurally higher gross margins (+230 bps y/y in Q3) .
Visibility improving into 2026: More constructive BEAD tone with initial orders and award data skewed to fiber; ramp expected from 2026 with permitting/labor as pacing items .
Near-term OpEx investment: Q4 OpEx temporarily elevated for ConneXions and AI acceleration; management plans to return to model by end-2026 .
Risk checks: International remains lumpy; customer-size mix can swing; however, diversified base and absence of 10% customers mitigate concentration risk .