Calix(US:CALX)2025-07-22 13:32Financial Data and Key Metrics Changes - The company reported revenue of $242 million for the second quarter, representing a 10% sequential growth [17] - Record remaining performance obligations (RPOs) grew 2% sequentially to $347 million and increased 30% year over year [17] - Non-GAAP gross margin reached a record 56.8%, a 60 basis point sequential increase [18] - Free cash flow was $36 million, marking the ninth consecutive quarter of generating eight-digit free cash flow [18] - Days sales outstanding (DSO) was a record 24 days, down six days sequentially [19] Business Line Data and Key Metrics Changes - The company added 18 new broadband service provider (BSP) customers, primarily through competitive takeaways [18] - The strength in RPOs indicates robust demand for the platform, cloud, and managed services model [17] Market Data and Key Metrics Changes - The company noted a broad-based demand environment during the second quarter, allowing for continued sequential growth [20] - The impact of tariffs on operations has been minimal so far, with the company prepared to mitigate any future changes [19] Company Strategy and Development Direction - The company is transitioning from a network system company to a platform company, focusing on broadband experience providers [22] - The introduction of AgenTeq AI is expected to enhance operational efficiency and customer experience, allowing for faster deployment of value-added services [10][12] - The third generation platform aims to eliminate geographic constraints and expand into new markets, including private cloud offerings for large customers [13][98] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing transformation of the broadband industry, emphasizing the importance of customer experience over traditional speed metrics [6][7] - The company anticipates continued revenue growth in the third quarter, with guidance between $243 million and $249 million [20] - Management highlighted the significant impact of AI on the industry, predicting it will be a transformative force [10][108] Other Important Information - The company has invested over $2 billion into its platform over the past 15 years, enabling it to support a diverse range of broadband providers [11] - The third generation platform is set to launch in the second half of 2025, with the first component, a mobile application, debuting in August [12][41] Q&A Session Summary Question: Clarification on normalized numbers and smaller customer growth - Management indicated that the growth for smaller customers on an organic basis was mid-single digits [29] Question: Impact of AI investment on OpEx and ARPU - Management acknowledged that while OpEx is constrained, there may be a need for increased investment due to the rapid pace of AI development [31][36] Question: Update on supply situation and capacity in Mexico - Management confirmed a stable manufacturing environment and ongoing plans to expand capacity over the next 9 to 18 months [55] Question: Confidence in the BEAD program's impact on closing the digital divide - Management stated that while the program is still in flux, it is not included in current numbers, but they are prepared to capitalize on it when it materializes [69][72] Question: Elements of AgenTeq AI benefiting end subscribers - The first iteration of AgenTeq AI will enhance customer-facing capabilities, including performance analysis and troubleshooting [77][79] Question: Expectations for double-digit growth in 2026 - Management confirmed expectations for double-digit growth in 2026, supported by improved visibility and results [88] Question: Details on new large customer win - Management confirmed a net new large customer that became a cloud-only customer, indicating strong future potential [118]