• Revenue: $206 million, representing 2.6% sequential quarterly growth.
• RPOs (Remaining Performance Obligations): $326 million, up 10% sequentially and 34% year over year.
• Current RPOs: $121 million, up 10% sequentially and 27% year over year.
• Non-GAAP Gross Margin: 55.5%, a record for the fourth quarter.
• New Customers: 18 new DXP customers added in the fourth quarter.
• Cash and Investments: $297 million at year-end.
• DSO (Days Sales Outstanding): 36 days.
• Inventory Turns: 3.1, over 4 excluding component inventory.
• Inventory Deposits: Decreased by $4 million to $63 million.
• Stock Repurchase: $7 million of common stock purchased during the quarter.
• First Quarter 2025 Revenue Guidance: $204 million to $210 million.
• First Quarter 2025 Non-GAAP Gross Margin Guidance: Expected to remain flat to slightly up.

• Warning! GuruFocus has detected 4 Warning Sign with CALX.

Release Date: January 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Calix Inc (NYSE:CALX) reported strong fourth-quarter revenue of $206 million, at the high end of their guidance range, representing a 2.6% sequential growth.
• The company achieved a record non-GAAP gross margin of 55.5% in the fourth quarter, driven by strong demand for their platform cloud and managed services.
• Calix Inc (NYSE:CALX) added 18 new DXP customers in the fourth quarter, with the majority being competitive takeaways, indicating successful market penetration.
• The company ended the year with a record cash and investments of $297 million, showcasing strong financial health.
• Calix Inc (NYSE:CALX) continues to see growth in their RPOs, which increased 10% sequentially and 34% year over year, reflecting strong future revenue potential.

Negative Points

• The company anticipates that gross margin improvement for 2025 will be at the lower end of their target financial model due to a mix shift towards subscriber systems.
• Calix Inc (NYSE:CALX) expects client margins to be a headwind to overall margins due to an increase in revenue from medium and large customers.
• There is uncertainty regarding the impact of government programs like BEAD, which could affect future growth and funding.
• The tax rate is expected to normalize at a higher level due to the expiration of some tax credits, potentially impacting net income.
• International growth is expected to remain consistent and not outpace domestic growth, limiting potential expansion opportunities abroad.

Q & A Highlights

Q: You had a large increase in RPO this quarter. Was this due to another large deal, and how do you see momentum continuing in 2025? A: Michael Weening, CEO: The increase was driven by a shift in mindset among customers who are embracing transformation to launch new managed services. We expect this momentum to continue as more customers adopt our platform. Cory Sindelar, CFO: The fourth quarter is typically strong as customers align contracts with their operating plans, and we expect this momentum to continue.

Q: How is Calix focusing on monetizing the installed base of fiber-served homes and businesses amid BEAD concerns? A: Michael Weening, CEO: Our business model is built on monetizing subscribers, regardless of government funding. We help service providers differentiate in a commodity market and grow RPOs through incremental services. We are crossing the chasm into early adopters, as evidenced by our RPO growth.

Q: Can you discuss the impact of international customers on your tax rate and growth expectations? A: Cory Sindelar, CFO: International growth will be consistent and not disproportionately higher than the U.S. We had some tax credits that have run off, leading to a higher normalized tax rate. The strength in international customers is expected to be steady, not significantly increasing.

Q: What is driving the significant growth in RPOs, and how should we think about growth in 2025 and beyond? A: Michael Weening, CEO: Growth is driven by customers progressing from network operators to experience providers. Our customer success organization helps them mature through this journey. The growth is not tied to one specific product but rather a strategic transformation across our customer base.

Q: How do you view the potential for growth with medium and large carriers, and what is the outlook for Verizon? A: Michael Weening, CEO: Verizon continues to invest in Calix technology at a consistent rate. We see opportunities with medium-sized carriers as they acknowledge market challenges and seek to differentiate. Our focus is on helping them transform their go-to-market strategies to win subscribers.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.