Financial Data and Key Metrics Changes - Revenue for the second quarter of 2025 was $242 million, representing a 10% sequential growth [14] - Record remaining performance obligations (RPOs) grew 2% sequentially to $347 million and increased 30% year over year [14] - Current RPOs were $134 million, up 5% sequentially and up 30% year over year [14] - Non-GAAP gross margin reached a record 56.8%, a 60 basis point sequential increase [15] - Free cash flow was $36 million, marking the ninth consecutive quarter of generating eight-digit free cash flow [16] - Days sales outstanding (DSO) was a record 24 days, down six days sequentially [17] Business Line Data and Key Metrics Changes - The company added 18 new broadband service provider (BSP) customers, primarily through competitive takeaways [16] - The strength in gross margin was attributed to customer mix and the success of VSP customers in winning new subscribers [15] Market Data and Key Metrics Changes - The demand environment was described as very strong and broad-based during the second quarter [14] - The company anticipates continued sequential growth in the third quarter of 2025, with revenue guidance between $243 million and $249 million [18] Company Strategy and Development Direction - The company is transitioning from a network system company to a platform company, focusing on broadband experience providers [20] - The introduction of AgenTeq AI is expected to enhance operational efficiency and customer experience, allowing for faster deployment of value-added services [20][39] - The third generation platform aims to eliminate geographic constraints and enable private cloud solutions for large customers [90] Management's Comments on Operating Environment and Future Outlook - Management emphasized the significant impact of AI on the broadband industry, predicting a transformation in how broadband providers operate [20][99] - The company is positioned to leverage its platform and investments to drive growth and enhance customer success [20][102] - Management expressed confidence in achieving double-digit growth in 2026, supported by improved visibility and demand [82] Other Important Information - The company has invested over $2 billion into its platform over the past 15 years [9] - The third generation platform is in preproduction, with a launch expected in the second half of 2025 [10] Q&A Session Summary Question: Clarification on normalized numbers and growth for smaller customers - Management indicated that the growth for smaller customers on an organic basis was mid-single digits [27] Question: Impact of AI on OpEx and ARPU - Management acknowledged that investments in AI may require a slight increase in OpEx but emphasized that the transformation would enhance customer monetization opportunities [32] Question: Update on supply situation and capacity in Mexico - Management reported a stable manufacturing environment and indicated that capacity expansion would take 9 to 18 months [52] Question: Confidence in the BEAD program's impact on closing the digital divide - Management expressed cautious optimism about the program but noted it is not included in current forecasts [66] Question: Elements of AgenTeq AI benefiting end subscribers - Management highlighted that the first iteration of the AI platform would enhance customer-facing capabilities, including performance analysis and troubleshooting [75] Question: Expectations for double-digit growth in 2026 - Management confirmed the expectation for double-digit growth in 2026, supported by the ongoing rollout of the third generation platform [82]

Group 1: Earnings Performance - Calix reported quarterly earnings of $0.33 per share, exceeding the Zacks Consensus Estimate of $0.20 per share, and up from $0.09 per share a year ago [1] - The earnings surprise for this quarter was +65.00%, following a previous surprise of +46.15% in the last quarter [2] - Over the last four quarters, Calix has surpassed consensus EPS estimates three times [2] Group 2: Revenue Performance - The company posted revenues of $241.88 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 8.02%, compared to $198.14 million in the same quarter last year [3] - Calix has also topped consensus revenue estimates three times over the last four quarters [3] Group 3: Stock Performance and Outlook - Calix shares have increased approximately 53.9% since the beginning of the year, significantly outperforming the S&P 500's gain of 7.1% [4] - The current consensus EPS estimate for the upcoming quarter is $0.23 on revenues of $226.85 million, and for the current fiscal year, it is $0.86 on revenues of $901.91 million [8] - The Zacks Industry Rank for Internet - Software is in the top 32% of over 250 Zacks industries, indicating a favorable outlook for the sector [9]

Financial Performance - In Q2 2025, Calix reported revenue of $241.9 million, a 10% increase sequentially and a 22% increase year-over-year[15]. - Remaining performance obligations (RPOs) rose to $347 million, reflecting a 30% year-over-year increase and a 2% quarter-over-quarter increase[3][20]. - Gross margin reached a record 56.3%, up 60 basis points sequentially and 200 basis points year-over-year[29]. - Free cash flow for the quarter was $36 million, marking the ninth consecutive quarter of eight-figure free cash flow[4]. - U.S. revenue accounted for 91% of total revenue, with a 20% increase compared to the same quarter last year[16]. - International revenue increased by 152% sequentially and 48% year-over-year, now representing 9% of total revenue[16]. - Non-GAAP net income was $22.2 million, an increase of $9.1 million from the prior quarter and $16.1 million from the same quarter last year[33]. - For the six months ended June 28, 2025, revenue was $462.1 million, up from $424.4 million in the same period of 2024, indicating a year-over-year growth[63]. - The net loss for the three months ended June 28, 2025, was $199,000, compared to a net loss of $7.96 million in the same period of 2024[63]. - The company reported a net loss of $4,986 thousand for the six months ended June 28, 2025, an improvement from a net loss of $7,855 thousand in the same period of 2024[67]. Cash and Investments - Cash and investments at the end of Q2 2025 totaled $299 million, a sequential increase of $16.7 million[38]. - Net cash provided by operating activities for the six months ended June 28, 2025, was $56,593 thousand, up 52.9% from $37,038 thousand in the same period of 2024[67]. - Cash and cash equivalents at the end of the period increased to $76,538 thousand in June 2025 from $43,162 thousand at the beginning of the period, marking a net increase of 77.1%[67]. Guidance and Projections - Revenue guidance for Q3 2025 is projected between $243 million and $249 million, reflecting a 2% increase at the midpoint from the prior quarter[42]. - Non-GAAP gross margin guidance for Q3 2025 is expected to be 57.0% at the midpoint, indicating a slight increase from the previous quarter[43]. - Non-GAAP operating expense guidance for Q3 2025 is set at $113 million at the midpoint, representing a modest sequential increase[44]. - The expected non-GAAP effective tax rate for 2025 is projected to be between 23% and 25%[45]. - The company expects a non-GAAP gross margin of 56.0% - 58.0% for the three months ending September 27, 2025[76]. - Operating expenses are projected to be between $112,000 thousand and $114,000 thousand for the same period, down from $132,000 thousand - $134,000 thousand on a GAAP basis[76]. - The company plans to issue guidance for net income per diluted common share of $0.31 - $0.37 for the upcoming quarter[76]. Operational Highlights - The company has transformed from a systems to a platform company, leveraging investments in artificial intelligence to drive innovation and growth[46]. - The company aims to expand into new markets, including MDU and new geographies, while enhancing internal operations[47]. - Strong demand for the company's appliances, platform, cloud, and managed services supports confidence in sequential revenue growth[49]. - The company continues to add new subscribers and help existing ones adopt additional services, enhancing operational efficiency and revenue growth[54]. - Days sales outstanding (DSO) improved to a record low of 24 days, down from 30 days in the prior quarter[4][36]. Stock-Based Compensation - Stock-based compensation for the three months ended June 28, 2025, was $25,613 thousand, compared to $15,458 thousand in June 2024, reflecting a year-over-year increase of 65.8%[73].

Core Insights - Calix, Inc. (NYSE: CALX) was rated a Hold in January due to solid execution and improving gross margins, but faced challenges with slower growth and uneven customer momentum [1] Company Analysis - The business is executing well, with a platform strategy taking shape and gross margins improving [1] - Growth has been slower than expected, indicating potential challenges in maintaining customer momentum [1] Analyst Background - The analyst has a background in petroleum and gas engineering and has transitioned into finance, focusing on technology, infrastructure, and internet services [1] - The analyst emphasizes the importance of strong fundamentals and long-term investment potential [1]

Industry Overview - The Internet Software and Services sector is experiencing growth due to increased IT spending on solutions that support hybrid operating environments [1] - The Internet Software industry is ranked in the top 17% of Zacks Industry Rank, indicating an expectation to outperform the market in the next three to six months [2] Company Highlights UiPath Inc. (PATH) - UiPath offers an end-to-end automation platform with a range of robotic process automation solutions [6] - The platform includes AI, ML, and NLP capabilities, enhancing decision-making and information processing [7] - Expected revenue and earnings growth rates for the current year are 8.5% and 3.8%, respectively, with a 1.9% improvement in earnings estimates over the last week [8] Five9 Inc. (FIVN) - Five9 provides intelligent cloud software for contact centers, enabling a wide range of customer service functions [11] - The platform includes AI-driven features such as virtual agents and workflow automation, benefiting from the growing adoption of AI tools [13] - Expected revenue and earnings growth rates for the current year are 9.6% and 11.7%, respectively, with a 5.7% improvement in earnings estimates over the last 60 days [14] Fastly Inc. (FSLY) - Fastly offers infrastructure software for cloud computing, security, and edge computing solutions [15] - The Fastly AI Accelerator was introduced to optimize LLM generative AI applications [15] - Expected revenue and earnings growth rates for 2025 are 8.6% and 25%, respectively, with a 10% improvement in earnings estimates over the last week [17] Calix Inc. (CALX) - Calix provides cloud and software platforms for broadband service providers [18] - The company has integrated AI into its platforms to enhance operations and service delivery [20] - Expected revenue and earnings growth rates for 2025 are 7.1% and 65.4%, respectively, with a 21.1% improvement in earnings estimates over the last 60 days [20] Confluent Inc. (CFLT) - Confluent operates a data streaming platform that allows real-time data streaming for various industries [21][22] - Expected revenue and earnings growth rates for the current year are 19% and 24.1%, respectively, with a 2.9% improvement in earnings estimates over the last 60 days [23]

Financial Data and Key Metrics Changes - The company has experienced a sequential growth rate that has exceeded previous expectations, moving beyond the anticipated low single-digit growth [16][19] - The business fundamentals are based on subscribers transitioning to broadband experience providers, which has led to increased confidence in growth [20][21] - The company has maintained a strong balance sheet and is focused on leveraging cash to build inventory while navigating tariff uncertainties [28][30] Business Line Data and Key Metrics Changes - The Platform Cloud and Managed Services business has shown consistent growth, while hardware sales have fluctuated due to pandemic-related disruptions [20][21] - The introduction of SmartMDU is expected to expand the addressable market significantly, as 30% of subscribers live in multi-dwelling units [60][61] Market Data and Key Metrics Changes - The U.S. market remains the primary focus, with 95% of revenue generated domestically, providing a safe harbor amid geopolitical uncertainties [24][25] - The company is witnessing a shift from legacy service providers to broadband experience providers, which is indicative of market disruption [68][69] Company Strategy and Development Direction - The company aims to help service providers transition to broadband experience providers, focusing on delivering superior subscriber experiences [13][14] - There is a clear strategy to separate appliance revenues from other business segments by 2026, allowing for better visibility into financial performance [56][57] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the inelastic demand for broadband services, noting that many subscribers are dissatisfied with their current providers [20][21] - The ongoing consolidation in the service provider space is seen as a sign of market disruption, with legacy players struggling to retain subscribers [68][69] Other Important Information - The company is focused on maintaining a disciplined approach to stock buybacks, evaluating market conditions and internal financial metrics [88][90] - The management team is committed to enhancing transparency regarding recurring revenue and software revenue as the competitive landscape evolves [55][56] Q&A Session Summary Question: What is the biggest upside opportunity right now? - The biggest opportunity lies in expanding into multi-dwelling units (MDUs) and transforming existing customer business models [84] Question: What's holding back larger revenues in Europe? - The primary constraint is the investment portfolio, as opportunities in the U.S. are significantly larger [86] Question: Are you still buying back stock at these levels? - The company employs a disciplined stock buyback strategy, assessing market conditions and internal financial health before making purchases [88][90]

For those looking to find strong Computer and Technology stocks, it is prudent to search for companies in the group that are outperforming their peers. UiPath (PATH) is a stock that can certainly grab the attention of many investors, but do its recent returns compare favorably to the sector as a whole? By taking a look at the stock's year-to-date performance in comparison to its Computer and Technology peers, we might be able to answer that question.UiPath is a member of our Computer and Technology group, w ...

Group 1 - Calix, Inc (CALX) has reached a key level of support, with its 50-day simple moving average crossing above its 200-day simple moving average, indicating a "golden cross" which may signify a potential bullish breakout [1] - A golden cross consists of three stages: a downtrend that bottoms out, a shorter moving average crossing above a longer moving average, and a subsequent upward price movement [2] - CALX has experienced a rally of 33.7% over the past four weeks, and currently holds a 3 (Hold) rating on the Zacks Rank, suggesting it could be poised for a breakout [3] Group 2 - There have been two upward revisions in earnings expectations for CALX in the current quarter, with no downward revisions, and the Zacks Consensus Estimate has also increased [3] - The combination of positive earnings estimate revisions and the technical breakout signals indicates that investors should monitor CALX for potential gains in the near future [4]

Core Viewpoint - Arista Networks experienced a significant share price increase of over 16% in one week, primarily due to a positive analyst recommendation change [1] Analyst Recommendation Change - Analyst Mike Genovese from Rosenblatt Securities upgraded Arista's recommendation from sell to hold, with a new price target of $85 per share [2] Factors Influencing the Upgrade - The upgrade is based on two main factors: - Strong performance by Arista's peer Calix, suggesting resilience during potential macroeconomic slowdowns [4] - The sell thesis on Arista is no longer valid as it has become more competitive than foreign rivals, particularly in China, benefiting from tariffs that make domestic offerings more attractive [5] Business Performance Indicators - Fieldwork indicated that Arista has secured larger-than-expected contracts with hyperscaler clients, which are crucial for its business [6] Economic Context - The tariff war is showing signs of easing, which may lessen its impact on Arista. The company operates in a growing segment where demand for efficient networking services is increasing, positioning it well even in an economic slowdown [7]

Core Insights - The strategic paper emphasizes the need to transition from outdated copper networks to advanced technologies like fiber optic, wireless, and satellite for high-speed connectivity [1][3][4] - The collaboration among Calix, Corning, and Brightspeed aims to address the digital divide and enhance broadband access, particularly in underserved rural areas [2][4][5] Industry Context - The paper is published at a time when broadband infrastructure funding is at an all-time high, largely due to the Broadband Equity, Access, and Deployment (BEAD) program, which is the largest broadband construction initiative in U.S. history [3][4] - The goal is to provide communities with access to alternative communication technologies, especially fiber broadband, to improve U.S. competitiveness [4][5] Technology Evaluation - The paper evaluates various communication technologies, including copper, fiber, wireless, low Earth orbiting satellites, and coaxial cable, highlighting the limitations of copper in meeting current and future demands [5][7] - Fiber optics are identified as superior due to their faster speeds, higher reliability, better security, and lower maintenance costs compared to copper networks [7] Company Contributions - Calix focuses on enabling broadband service providers to innovate and grow value for their communities through its platform and managed services [2][8] - Corning is recognized for its expertise in materials science and its role in developing next-generation fiber and connectivity solutions [2][10] - Brightspeed is positioned as a significant player in expanding fiber connectivity, aiming to serve over 7.3 million homes and businesses [2][11]