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CI

CALIX, INC (CALX)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $206.1M, up 2.6% q/q and down 22% y/y; non-GAAP gross margin reached a record 55.5%, with non-GAAP EPS of $0.08 at the high end of guidance and RPOs up 10% q/q to $325.8M .
  • Mix shifted to premises systems and to medium/large customers (29% of revenue vs 17% in Q3), creating near-term margin headwinds despite recurring platform/cloud/managed services strength; US was 90% of revenue, international rose to 10% on stronger Europe shipments .
  • Q1 2025 guidance: revenue $204M–$210M, non-GAAP gross margin 54.5%–56.5%, non-GAAP OpEx $105.5M–$107.5M, non-GAAP EPS $0.10–$0.16; full-year non-GAAP tax rate seen at 22%–24% .
  • Wall Street consensus via S&P Global was unavailable due to data access limits; comparisons to estimates cannot be provided (S&P Global data unavailable).

What Went Well and What Went Wrong

What Went Well

  • Record non-GAAP gross margin of 55.5% driven by platform/cloud/managed-services mix; seventh consecutive quarter of double-digit free cash flow ($10.2M) and cash/investments rose to a record $297.1M .
  • RPOs increased 34% y/y to $325.8M; 18 new customers, 21 new platform adoptions, 15 new Calix Cloud deployments, and 32 first-time managed service deployments broadened recurring revenue base .
  • Management emphasized durable strategy and BEP transition momentum: “We’re in the early stages of this once-in-a-generation opportunity…expand the footprint, monetize on top of it” (Michael Weening) .

What Went Wrong

  • GAAP net loss widened to $(17.9)M versus $(6.6)M y/y, primarily due to higher stock-based compensation; non-GAAP net income fell to $5.2M q/q due to ConneXions-related expenses and higher incentives .
  • Appliance revenue declined y/y; intelligent access down 35% y/y and unlimited subscriber down 11% y/y amid capital allocation challenges and BEAD-related indecision .
  • Non-GAAP OpEx rose to $110.9M in Q4 (seasonal conference spend), above target model ranges for S&M/R&D/G&A as revenue remains below model levels .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$198.1 $200.9 $206.1
GAAP Gross Margin %54.3% 54.8% 55.0%
Non-GAAP Gross Margin %55.1% 55.4% 55.5%
GAAP OpEx ($USD Millions)$119.0 $120.9 $132.1
Non-GAAP OpEx ($USD Millions)$104.2 $105.3 $110.9
GAAP EPS (Diluted, $)$(0.12) $(0.06) $(0.27)
Non-GAAP EPS (Diluted, $)$0.09 $0.13 $0.08
Non-GAAP Net Income ($USD Millions)$6.1 $8.9 $5.2
RPO ($USD Millions)$266.9 $295.7 $325.8
Non-GAAP Free Cash Flow ($USD Millions)$16.4 $12.8 $10.2
Cash & Investments ($USD Millions)$261.2 $287.6 $297.1

Segment and mix trends

ItemQ2 2024Q3 2024Q4 2024
Unlimited Subscriber / Revenue EDGE q/q−7% +9% +9%
Unlimited Subscriber / Revenue EDGE y/y−12% +3% −11%
Intelligent Access q/q−28% −10% +12%
Intelligent Access y/y−32% −49% −35%
Large+Medium as % of revenue~18% (Small 82%) ~17% (Small 83%) 29%
US revenue share92% 93% 90%
International revenue share8% 7% 10%

Operating KPIs

KPIQ2 2024Q3 2024Q4 2024
DSO (Days)38 39 36
Inventory Turns (Total)2.8 3.2 3.1
Finished Goods Turns3.7 4.3 4.1
DPO (Days)10 27 21
Cash Conversion Cycle (Days)158 127 133

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($M)Q4 2024$201–$207 Actual $206.1 Met high end of range
Non-GAAP Gross Margin (%)Q4 202454.5–56.5 Actual 55.5 In range
Non-GAAP OpEx ($M)Q4 2024$109–$111 Actual $110.9 In range
Non-GAAP EPS ($)Q4 2024$0.04–$0.10 Actual $0.08 In range
Revenue ($M)Q1 2025—$204–$210 New
Non-GAAP Gross Margin (%)Q1 2025—54.5–56.5 (midpoint flat q/q) New
Non-GAAP OpEx ($M)Q1 2025—$105.5–$107.5 New
Non-GAAP EPS ($)Q1 2025—$0.10–$0.16 New
Non-GAAP Effective Tax Rate (%)FY 2025—22–24 New

Earnings Call Themes & Trends

TopicQ2 2024 (prior)Q3 2024 (prior)Q4 2024 (current)Trend
BEAD/government stimulusOrders expected Q1’25; multi‑year lens-shaped rollout 55 of 56 entities approved; initial bookings Q1’25, shipments later in ’25 First small order (LA) received; shipments expected 2H’25; bipartisan support noted Visibility improving; execution beginning
Mix and marginsShift toward premises systems; software mix supports margins Normalizing appliance orders; record non-GAAP GM 55.4% Margin expansion at low end of annual target due to mix (premises, medium/large) Premises/large mix headwind vs margin
Customer cohorts (small/medium/large)Large/medium softer; small drove mix (82%) Small 83%; large down; classification shifts Large+medium back to 29%; normalization across cohorts Rebound in medium/large
RPO/recurring momentumRPO up 9% q/q; largest cloud deal signed RPO up 11% q/q; another record cloud deal RPO up 10% q/q; broad-based medium contracts; 32 new managed-service deployments Sustained subscription growth
International vs USIntl 8% of revenue; Europe softness Intl 7%, lower Europe; US 93% Intl 10% on Europe shipments; US 90% Europe pickup in Q4
Tax rate2024 non-GAAP ETR 20–22% —2025 non-GAAP ETR 22–24%; credits recapture running off Normalizing higher tax rate

Management Commentary

  • “Think of [lower margin guide] as us laying out significant incremental footprint that will monetize over a long period of time…expand the footprint, monetize on top of it.” — Michael Weening .
  • “RPOs grew 10% sequentially to $326M and increased 34% year over year…record non‑GAAP gross margin of 55.5%.” — Cory Sindelar .
  • “Order normalization has completed. We don’t expect anomalies associated with inventory at customer level.” — Cory Sindelar .
  • “We expect orders in Q1 and shipments will continue to build over the course of 2025.” — Cory Sindelar on BEAD .

Q&A Highlights

  • RPO drivers and breadth: Q4 strength was diversified across many medium customers rather than a single large contract; management expects momentum to continue as customers embrace BEP transformation .
  • BEAD timing and magnitude: Early orders (e.g., Louisiana) are starting; shipments to ramp 2H’25; bipartisan nature reduces political risk, and management reiterates multi‑year rollout benefiting smaller rural providers .
  • Margin headwinds and mix: Shift toward subscriber systems and higher medium/large customer revenue expected to temper margin expansion in 2025 even as recurring services grow .
  • Tax rate normalization: Effective tax rate rising due to recapture/running off prior credits; guidance set at 22%–24% for 2025 .
  • Cohort/geo mix clarity: Large/medium rebounded to 29% of revenue; international strengthened on Europe; cohort classification shifts affected visuals of “small” vs “medium” .

Estimates Context

  • Wall Street consensus via S&P Global (EPS, revenue, EBITDA, target price) was unavailable at the time of this analysis due to data access limits. As a result, explicit comparisons to consensus estimates cannot be provided (S&P Global data unavailable).
  • Company performance versus its own guidance: Q4 revenue and non-GAAP EPS landed within guidance ranges; gross margin met midpoint; OpEx matched guidance, indicating operational discipline .

Key Takeaways for Investors

  • Two consecutive quarters of sequential revenue growth (Q3 to Q4) alongside record gross margins and expanding RPOs point to strengthening recurring economics, even as near-term appliance mix weighs on margins .
  • Medium/large customer activity is re-accelerating (29% of revenue in Q4), which should support footprint expansion but may dilute gross margin mix near term; management frames this as long-term monetization set-up .
  • BEAD program is transitioning from approvals to early orders/shipments in 2025, with Calix positioning to benefit particularly via rural-focused smaller providers over a multi-year horizon .
  • Cash/investments reached $297.1M and non-GAAP FCF remained double-digit, providing flexibility to invest while holding OpEx roughly flat to slightly up in 2025 .
  • Watch Q1 2025: revenue guide implies another modest sequential increase, with flat to slightly up non-GAAP gross margin amid continued premises-system mix and growing medium/large revenue .
  • Operating discipline and working capital management (DSO 36; turns within target) support sustained FCF, a differentiator versus hardware-centric peers .
  • With S&P consensus unavailable, anchor near-term expectations on company guidance and trajectory (RPO, sequential growth, margin mix) until third-party estimates can be incorporated.

Additional Q4 2024 Press Releases

  • Calix launched SmartMDU managed service for multi-dwelling units, highlighting faster adoption and operational efficiency for property managers and service providers—an incremental lever for SmartLife portfolio monetization .