Calix 8K Reports Second Quarter 2014 Financial Results | CALX 29 Jul 14

Exhibit 99.1

Calix Reports Second Quarter 2014 Financial Results

PETALUMA, CA – July 29, 2014 – Calix, Inc. (NYSE: CALX) today announced unaudited financial results for the second quarter ended June 28, 2014. Revenue for the second quarter of 2014 was $98.0 million, an increase of 3.8% compared to $94.4 million for the second quarter of 2013.

"We continue to make solid progress expanding our domestic and international customer footprint and achieved our highest level of sales for a second fiscal quarter,” said Carl Russo, Calix president and CEO. “Service providers of all types are pursuing device-enabled subscribers who are increasingly accessing cloud-based content and applications. Calix Unified Access solutions are architected to be flexible, feature-rich and cost-effective in order to meet the demanding requirements of our service provider customers and their subscribers.”

The company’s non-GAAP net income for the second quarter of 2014 was $5.1 million, or $0.10 per fully diluted share, compared to a non-GAAP net income of $4.8 million, or $0.10 per fully diluted share, for the second quarter of 2013. A reconciliation of GAAP and non-GAAP results is included as part of this release.

The GAAP net loss for the second quarter of 2014 was $4.0 million, or $(0.08) per basic and diluted share, compared to a GAAP net loss of $5.2 million, or $(0.10) per basic and diluted share, for the second quarter of 2013. A reconciliation of our second quarter 2014 operating results from non-GAAP to GAAP is provided below:



Calix, Inc.
(Unaudited, in thousands, except per share data)
Three Months Ended June 28, 2014

	Non-GAAP			Stock-Based Compensation			Amortization of Intangible Assets			GAAP
Revenue	$	98,005		$	—		$	—		$	98,005
Cost of revenue	51,221			354			2,088			53,663
Gross profit	46,784			(354		)	(2,088		)	44,342
Gross margin	47.7		%	—			—			45.2		%
Operating expenses	41,630			4,050			2,552			48,232
Operating income (loss)	5,154			(4,404		)	(4,640		)	(3,890		)
Interest and other income (expense), net	42			—			—			42
Income (loss) before taxes	5,196			(4,404		)	(4,640		)	(3,848		)
Provision for income taxes	103			—			—			103
Net income (loss)	$	5,093		$	(4,404	)	$	(4,640	)	$	(3,951	)
Weighted average diluted shares used to compute
non-GAAP net income (loss) per common share	50,961			50,961			50,961
Non-GAAP net income (loss) per diluted share	$	0.10		$	(0.09	)	$	(0.09	)
Weighted average basic and diluted shares used to
compute GAAP net loss per common share										50,573
GAAP net loss per share										$	(0.08	)



Calix Press Release		Page 2

Conference Call

In conjunction with this announcement, Calix will host a conference call at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) today to discuss its second quarter 2014 financial results. A live audio webcast and replay of the call will be available in the Investor Relations section of the Calix web site at http://investor-relations.calix.com/.

Live call access information: Dial-in number: (877) 407-4019 (U.S.) or (201) 689-8337 (outside the U.S.)

The conference call and webcast will include forward-looking information.

About Calix

Calix (NYSE: CALX) is a global leader in access innovation. Its Unified Access portfolio of broadband communications access systems and software enables communications service providers worldwide to transform their copper- and fiber-based networks and become the broadband provider of choice to their subscribers. For more information, visit the Calix website at www.calix.com.

Use of Non-GAAP Financial Information

The Company uses certain non-GAAP financial measures in this press release to supplement its consolidated financial statements, which are presented in accordance with GAAP. These non-GAAP measures include non-GAAP net income (loss) and non-GAAP basic and diluted income (loss) per share. These non-GAAP measures are provided to enhance the reader's understanding of the Company's operating performance as they primarily exclude certain non-cash charges for stock-based compensation and amortization of acquisition-related intangible assets, and non-recurring acquisition-related and other expenses, which the Company believes are not indicative of its core operating results. Management believes that the non-GAAP measures used in this press release provide investors with important perspectives into the Company's ongoing business performance and management uses these non-GAAP measures to evaluate financial results and to establish operational goals. The presentation of these non-GAAP measures is not meant to be a substitute for results presented in accordance with GAAP, but rather should be evaluated in conjunction with those GAAP results. A reconciliation of the non-GAAP results to the most directly comparable GAAP results is provided in this press release. The non-GAAP financial measures used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.



Calix Press Release		Page 3



Calix, Inc.
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share data)

			Three Months Ended						Six Months Ended
			June 28,			June 29,			June 28,			June 29,
			2014			2013			2014			2013
Revenue			$	98,005		$	94,439		$	183,825		$	184,987
Cost of revenue:
	Products and services ⁽¹⁾		51,575			49,846			98,381			97,191
	Amortization of intangible assets		2,088			2,088			4,176			4,176
		Total cost of revenue	53,663			51,934			102,557			101,367
Gross profit			44,342			42,505			81,268			83,620
Operating expenses:
	Research and development ⁽¹⁾		19,544			20,035			39,174			40,206
	Sales and marketing ⁽¹⁾		18,455			17,079			35,845			32,880
	General and administrative ⁽¹⁾		7,681			7,684			14,932			15,815
	Amortization of intangible assets		2,552			2,552			5,104			5,104
		Total operating expenses	48,232			47,350			95,055			94,005
Loss from operations			(3,890		)	(4,845		)	(13,787		)	(10,385		)
Interest and other income (expense), net:
	Interest income		30			1			34			2
	Interest expense		(58		)	(42		)	(115		)	(70		)
	Other income (expense), net		70			(43		)	103			(322		)
Loss before provision for income taxes			(3,848		)	(4,929		)	(13,765		)	(10,775		)
Provision for income taxes			103			224			213			581
Net loss			$	(3,951	)	$	(5,153	)	$	(13,978	)	$	(11,356	)
Net loss per common share:
	Basic and diluted		$	(0.08	)	$	(0.10	)	$	(0.28	)	$	(0.23	)
Weighted average number of shares used to compute
	net loss per common share:
	Basic and diluted		50,573			49,153			50,425			49,034


⁽¹⁾	Includes stock-based compensation as follows:
	Cost of revenue		$	354		$	377		$	708		$	728
	Research and development		1,306			1,300			2,486			2,486
	Sales and marketing		1,462			1,464			2,830			2,743
	General and administrative		1,282			2,134			2,282			4,037
			$	4,404		$	5,275		$	8,306		$	9,994



Calix Press Release		Page 4



Calix, Inc.
Reconciliation of GAAP to Non-GAAP Results
(Unaudited, in thousands, except per share data)

	Three Months Ended						Six Months Ended
	June 28,			June 29,			June 28,			June 29,
	2014			2013			2014			2013
GAAP net loss	$	(3,951	)	$	(5,153	)	$	(13,978	)	$	(11,356	)
Adjustments to reconcile GAAP net loss to
non-GAAP net income:
Stock-based compensation	4,404			5,275			8,306			9,994
Amortization of intangible assets	4,640			4,640			9,280			9,280
Non-GAAP net income	5,093			4,762			3,608			7,918
Non-GAAP net income per common share:
Basic	$	0.10		$	0.10		$	0.07		$	0.16
Diluted	$	0.10		$	0.10		$	0.07		$	0.16
Weighted average shares used to compute non-GAAP
net income per common share - Basic	50,573			49,153			50,425			49,034
Weighted average shares used to compute non-GAAP
net income per common share - Diluted (1)	50,961			50,073			50,904			49,751
(1) Includes the dilutive effect of outstanding stock options, restricted stock units and ESPP.



Calix Press Release		Page 5



Calix, Inc.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)

	June 28,			December 31,
	2014			2013
ASSETS
Current assets:
Cash and cash equivalents	$	32,543		$	82,747
Marketable securities	46,439			—
Restricted cash	295			295
Accounts receivable, net	47,330			43,520
Inventory	45,888			51,071
Deferred cost of revenue	15,957			21,076
Prepaid expenses and other current assets	5,038			5,757
Total current assets	193,490			204,466
Property and equipment, net	17,289			17,473
Goodwill	116,175			116,175
Intangible assets, net	34,460			43,740
Other assets	1,503			1,745
Total assets	$	362,917		$	383,599
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	12,850		$	23,163
Accrued liabilities	34,689			32,075
Deferred revenue	26,346			34,862
Total current liabilities	73,885			90,100
Long-term portion of deferred revenue	18,640			18,431
Other long-term liabilities	958			1,145
Total liabilities	93,483			109,676
Stockholders' equity:
Common stock	1,273			1,256
Additional paid-in capital	791,756			782,253
Accumulated other comprehensive income	159			190
Accumulated deficit	(523,754		)	(509,776		)
Total stockholders' equity	269,434			273,923
Total liabilities and stockholders' equity	$	362,917		$	383,599



Calix Press Release		Page 6



Calix, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)

	Six Months Ended
	June 28,			June 29,
	2014			2013
Operating activities:
Net loss	$	(13,978	)	$	(11,356	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization	4,522			5,363
Loss on retirement of property and equipment	—			560
Amortization of intangible assets	9,280			9,280
Amortization of premiums related to available-for-sale securities	108			—
Stock-based compensation	8,306			9,994
Changes in operating assets and liabilities:
Accounts receivable, net	(3,809		)	(3,207		)
Inventory	5,183			5,880
Deferred cost of revenue	5,119			(7,991		)
Prepaid expenses and other assets	960			(2,009		)
Accounts payable	(10,313		)	(90		)
Accrued liabilities	2,601			464
Deferred revenue	(8,307		)	16,001
Other long-term liabilities	(188		)	311
Net cash (used in) provided by operating activities	(516		)	23,200
Investing activities:
Purchase of marketable securities	(46,572		)	—
Purchase of property and equipment	(4,328		)	(3,265		)
Net cash used in investing activities	(50,900		)	(3,265		)
Financing activities:
Proceeds from exercise of stock options	139			288
Proceeds from employee stock purchase plan	2,453			2,464
Taxes paid for awards vested under equity incentive plans	(1,377		)	(312		)
Net cash provided by financing activities	1,215			2,440
Effect of exchange rate changes on cash and cash equivalents	(3		)	9
Net (decrease) increase in cash and cash equivalents	(50,204		)	22,384
Cash and cash equivalents at beginning of period	82,747			46,995
Cash and cash equivalents at end of period	$	32,543		$	69,379

Investor Inquiries:

David H. Allen

408-474-0080

David.Allen@Calix.com

Calix (CALX) 8-KCalix Reports Second Quarter 2014 Financial Results