CALX - Earnings call transcript Q1 2020

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Operator

Greetings, and welcome to the Calix’s First Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Tom Dinges, Director of Investor Relations. sir. you, Thank

begin. You may

Tom Dinges

Russo; operator joining and Today Thank you, CEO, morning, the Officer, Chief Cory Sindelar. good first quarter for Carl and our President Call. we you well XXXX as call, Financial Thank have everyone. as earnings on conference

available a after the the on be of section the call Investor section of the As website. in market, letter This our will as released reminder, website. as audio in stockholders well yesterday Calix Investor conference the to of an close replay we for X-K filing Relations Relations Calix

could Before remind which differ and and actual that our forward-looking to statements, materially Calix call, include the any contemplated this from SEC. our in are obligation we only statements. operating our we results to forth statements, in filed we and with annual market we set XXXX stockholders, outlook, Factors those statements and continue, update trends cause strategy respective about assumes make of which want dates. you that materially actual no their to by growth may all forward-looking reports as results these quarterly future to and quarter refer forward-looking differ to financial first and speak in performance, letter

conference call, this measures. is in on our included reference both this GAAP stockholders. of measures non-GAAP otherwise and will call, stated discuss on we will non-GAAP Reconciliation letter Also to non-GAAP financial GAAP measures. we Unless financial to

Carl. let With Carl? over the me that, to turn call

Carl Russo

most those around been who Tom. COVID-XX have goes our of to Thank affected especially, all heart succumbed who have On to at Calix, world, those well. behalf you, by and everyone the out

than sooner. the future due than connect we Thus, ever likely pandemic, our uncertain us, believe and ever. most mission vital while success has everything to While certain is to this become is uncertainty around times more are all these everyone and our of more

to company leading want thoughts with onset share times. pandemic are turbulent opportunity, at the these I this before I of the were my through you we However, this discuss what how and

largest mind ensuring As the and safe. our the leader in went of immediately Calix, employees to shareholder were my

moved we that had reported only person employees happy and have I virtual am illness to stance So, an has say fully earlier we among March. one to in our all that recovered.

ensure wanted had I Second, maneuver. to that to we room

across So, all worse. if plans our fronts tighten created expenses to we operating even saw and tightened the economy we further getting

eased so positive to execute the goal did. wanted from we this was we A balance ensure and strong, all challenging could execute and times. I that sound by Third, was that sheet outperforming With that operations us behind could and us, through these quarter. our in generating flow we execute cash

with flawlessly. as and was now. recognized This Even earnings to move have Forbes top work remote recent as range. building our surprise our one quarter in results us that virtual range all the virtual a and were deliver a at to companies best to that first at per stance of set been performed are no of you team being Starting by a worker. remote This up article the in if during, an share was the for which all culture we some years Glassdoor guidance

the grow. to While supply visibility to constraints into our remain in future continues due demand COVID-XX outbreak Asia,

communication of strong space just and our our pulled visibility forces this to all is through that have the are been due in guidance platform quarter. diversification increased represented offerings, and our Secular for forward. sweeping second the is This customer penetration accelerating

behaviors future. As XX were opportunity. that has seize years this take significant to to a acceleration our intend to required in of actions pandemic society the representative are We of five that

the have and continue will to believe services opportunity at our as for the to accelerate customers, we exists we and the time. this critical platforms also right help right transformation We them

for With call open questions. let’s the Jessie? that,

Operator

Thank you.

Thank will session. Instructions] question-and-answer [Operator the be now conducting We you.

the from Notter Please comes George question first line with your of Our Jefferies. question. proceed with

George Notter

Hi as said, start I wanted about environment. understanding getting strong by uncertain in, guys. kind of you much, congratulations guess what of I and adoption results an Cloud on Thanks the talking there. kind rates Calix you’re in to very

the been new I corollary on strategy think are changing Cloud your what curious of XX a type guess wondering what wondering then how with you just in this that, time? of mentioned customers GigaSpire the over buying that’s And I’m then quarter, new products. and platform those acceptance also CPE rate as portion is terms and to I Calix about you’re EXOS customers. taking I’m

Carl Russo

George, and getting early. up for thanks good morning,

So, as Cloud and have GigaSpire been new customers, we’ve new virtually now. percentage for the as And you that past a high might being quite platform imagine, XXX% said, very, some are in said with a time very our customers new customers.

and So, leave customers Intelligent Access on. product for I’ll EDGE them that AXOS at are percentage. Many systems. for very sets we just work of it our are both Many a high

have cases, dealing cloud in in providers certain go The in not the overtime, to having an in many of Calix customers, service second I and down is or instantaneous cultural continue social virtual, you know, they’re our remote, might with function add this up. our wanted to as that sort piece But allowed specifically, to drilled ramp offerings other distancing. you continued imagine one enabled and shifts amplify to to premises that our see from also where with environment, we’ve item that Cloud that you’re

So, increase interest of we’ve because an cloud, seen actually in in the pandemic. the

George Notter

it. Got

get I kind interesting. may all portion from your follow somehow that’d mean, at I because I’m could of from experiment that guess that, what wondering also be that incremental business some Great. sort you But on here had work there’s be forced as of kind QX. I benefit of home, there’s there. if with guys on guess from this really what up Okay. and follow guidance natural the we’ve quarter, obviously, getting a is And work this embedded And home picked a this, then you incremental activity. assume of I to in for you’re of

Carl Russo

to way, really the ask, then it soon forward it’s question is is forward. Or in in pull pull it a pull correct a it’s the is the forward but to believe a a obviously, and genuine is, forward by behaviors slack? too of behaviors So, tell. pull demand? genuine of that is question it a And we because So, demand,

QX. And and demand what did strong so we’ve we strong think that because materially be strong I a your affect pickup obviously, from in are I we did, It for obviously, however, more QX. backlog question in given seeing business. indicate standpoint and think a not a We have revenue has QX, would definitely guidance

over see providers. and quarters So, this how it for for on both started showing service of is QX. for an interesting clearly all up their it works. the booking And again, side But in sure, behavior subscribers the the we’ll shift

George Notter

Got it.

that Okay. of new some speed QX, if customers you wondering filter Is see how I did upgrading And incremental mean, your increasingly, you’re I’m it business kind tiers? your business. into manifest how more I that tiers does and how winning incremental customers, itself? in subscribers? Is guess, – business that from you got to higher it speed looking for lower

Carl Russo

yes. and Yes

sudden, was enough. It trying many of issues of for they the wasn’t that imagine, that immediate home into antenna. you a might was to all people one ran families had a fast at that single necessarily not the As more compete infrastructure broadband

the you so pull And the have upgrade form that trying of see into also in visibility to and premises the premises.

be taking I because providers of share to tier on see with sort that to a they that customers, we pandemic high during this offerings take our remote that it. website, Calix run their But can of upgrade to you and saw. without you what rate the our the a guidance and we advantage Cloud that virtually very more folks that of an of to sophisticated And anecdote of help? some simpler allow for on to you them Does customers could on even a Support made would give we tier. was actually more One than help free service had were would

George Notter

pass Thanks guys. does. that very along. Yes, it I’ll much,

Carl Russo

thank George, you.

Operator

you. Thank

Our your proceed line question the Please with with Craig-Hallum. Schwab from next of comes Christian question.

Christian Schwab

came the of rest Can customer. of about at notable CenturyLink Any these there the great a strength from the throughout be to clarity Can of be year? levels? congratulations thoughts it as levels? Hey, talk your Carl, these would start on kind guys. a you sustainable great. Can year. grow back business type

Carl Russo

thanks. Christian,

simply year, As saying of they reasonable out pardon in of And some like your that – we would me. the answer remaining letter, question by I of a per vendor for the XX% marker called year revenue. were the feels the

Christian Schwab

type any backlog us a talked metrics the Is then of Got my can it. you So, you quarter exiting being that can what Yes. into about, we backlog or next guys historically strong. strong there put Thank And you quantification see? some versus context? you. give question,

Carl Russo

going in you’re quantifying it get back go it’s demand. earlier, we’re And we to uptick or Suffice start for to to definitely, word We this. better we at say that’s and moved Yes. to from do. going an the me things. Obviously, and not so out book-to-bill like things way saw that to and other solid question strong, George’s the we best angry

Christian Schwab

seeing detail providers, visibility you the in of you your dynamics as small, that in of Do of seeing or strength be service product medium beyond guys gives the and platform QX? help given beyond QX letter. the discussed or kind Are you increased they and your whether changes customers, visibility, enthusiasm more you further funnel have the to large, are you

Carl Russo

you’ve get now. as of quite us We of And ways. you been in look, some number out visibility a a time different for follower

but increase the manifests is I our foremost that over four, first think is last the certainly visibility and have in continuing predictability. seen specifically, very to last quarters, over itself eight and you

to think to because I And hear and hard that it’s out, backlog perspective, careful go of too times and visibility. a we go not drives certainly that into on have obviously, different I pushing be you There so Suffice QX, diminish. say of visibility visibility that at that, visibility visibility backlog, are about at. say metrics our continues would the look the from people it I but but as up just we than when odds QX, better number a

you what would know binary. is. They don’t not take be a that as So, it case. QX careful be the That

Christian Schwab

Great.

don’t Thank I any questions. Great. understand. I you. Now, other have

Carl Russo

you. thank Christian,

Operator

comes Please Our Cowen. Silverstein next with Instructions] with question [Operator you. proceed from your Thank question. Paul

Paul Silverstein

the if though, issue saw in site ability of your big actually your anything Carl, terms in of building. has issue that March on I an the quarter that one’s was into it pent-up My in in understanding them. held you’re recognize access impairing apartment quarter. missed or to but getting revenue access of fact if And into looking resulted in been because I residence I’m June unrecognized access operators or a about one’s recognition if pretty in letter, the various that I a terms back wondering apologize either demand, site

an the is your issue recognize impact above that that constraints to fact, chain supply appear demand? and In ability over to

Carl Russo

So, a open window little saw it I’m about than ways. to one answer it different of handing The their to around bit, have subscribers. but by our it in whimsically two it, a customers it, nothing GigaSpire worked answer heard is, of if into more an we ran going most through

So, it materially affect the haven’t we seen business.

access equation it. we’re have our able have of seen of platforms positioned people about adjust we cloud sites built, missions. the of their not to that part help because it certainly actually the to achieve and anecdotes second to customers But uniquely our to adjust; we’ve be heard We that customers the some is,

it for access. the technologies the tailor-made Actually, to over not us reduce years things rolls our with are working that site customers of seen with you’ve almost we and so built having nature. And truck

So, hope you. sense I makes that to

Paul Silverstein

issue but Yes, that, it also a addresses their the operators that not response I of also many the I COVID-XX. short-staffed your workforce trust been has to to extent, meaningful assume issue. previous the find – addresses

Carl Russo

enable to The the point, your extraordinary and to their for opposite. And addresses leverage customers exact it it personnel. platforms our

still they would had only have function all they at start actually work have and move fashion, the a remote themselves power well to not tools that in a and the can work. as And to they short-staffed can so

Paul Silverstein

guess curious a for of more I’m platforms access, are I'm if the that issue. are broadband the platforms a not older that There’s Carl, deploying still majority of extent of that an not still that to was in [indiscernible] the revenue of backlog, terms operators you that will. it. I lot that puzzled of more newer more it that’s growth holding and in puzzled that site I’m that issue not won’t staff as is for labor as revenue short and revenue et goes even cetera, but back access an issues. be through it greater, good from demand

Carl Russo

Yes.

a a I different you where picture, if of because paint in think are relates see network. slightly to part the it me Let can I

might think see the on larger wanting I being get for as so; them core be network, example. it have as the vendors to visit to of customers a as not us, that us seen closer we vendors calls you issue. an sales less might core, certainly to

be is might So, thing the a an required so we occurs everybody’s what and that. part there of of of were things. we’ve is they to to core be self-installed. seen that inside the and lot asking in Remember, if question really clearly really as that obviously, been, me facilities, a issue It social core their do it install that a engineered vendor large also was not was the of one me there to have if distancing doing you’re certainly functioning

talked we it. So, just about

Paul Silverstein

for is your you, XX% what I what self-installed? your sorry I – real of about self-installed. the percentage apologize being percentage guess shipments question mean I of the are plus interruption. are

Carl Russo

Yes. hard having We’ve things focused be self-installable. on

So, it’s a large very percentage.

Paul Silverstein

I actually residential the It’s access. that the right. CEO is not would the All bigger access. argue issue Because

premise saying sales of again, And majority access that overwhelming So, are self-installed. the the customer. you’re at

Okay. up, centrally. it there and letter, set One was one customer again, the them other XX% question can trust if you I I only in see

Carl Russo

was it. was customer There one and XX% Yes. that

as we you well. So, actually the gave percentage

Paul Silverstein

right. All

standpoint. stolen So it’s growth meaningful obviously but XX% a from not there, by yet definition, CityFibre contribution their threshold

Carl Russo

XX%. have There are material That’s of passed no correct. that other the threshold customers

Paul Silverstein

about heard it it. you. leave I Appreciate that, I’ll the at that. way Thank all Carl. Impressive,

Carl Russo

Paul, appreciate. thank you much. very

Operator

Thank you.

from Please proceed question with Tim next your with comes Capital Savageaux Our Northland Markets. question.

Tim Savageaux

morning. good Hey,

Carl Russo

Good morning, Tim.

Tim Savageaux

think of of about the your comment and I the certain the way. of notion I of being impressive success Carl on should on kind sooner. ask this was more and Analyst time the about follow last congrats the And in I to to results. commentary in Very guess back was financial I the I house environment. pull-ins, Day. that the kind the recently of to I at want and targets wanted think context your company’s shared of out kind by go

Carl Russo

You’re welcome.

Tim Savageaux

we had in meant which to et And comment. margins those think in double-digit can pull-in infer wonder kind targets, what XXXX by you I be cetera a calendar sooner of if or operating that

Carl Russo

Yes.

Tim Savageaux

Thanks.

Carl Russo

interconnected And if sooner. clarify. societies pulled a more behaviors been I’ll get virtual, forward it more in the I had cultural way. Thanks by behaviors render continued strategic that the that our pulled of those the and it has is that’s for at I spoke of think asking. that all have Day. the manifesting on of Investor so can way to we see disruptions we forward, and One theme believe our impact when two

drawing forward the strategy grand And the clearly would you so we and quarter the scheme forward. pulled our has piece. pulled from that. believe dissuade been broad therefore opportunity is That’s from first any of inference I individual

it too tying this say to I uptick or an it next, in an did uptick soon demand which in your quarter an demand, it’s we saw represents whether to demand, now in an piece is then broad that’s second but or back fact, would question. uptick address in quarter. tell in The individual if

our So, quarter, ability no strategy, which this of represents in not forward is it’s our yet. as there’s in mind to too question my to Does a that any tell pull to which. right soon that execute given strategically, help? now But clear

Tim Savageaux

on let is little. you… to as A another question, And me which move

Carl Russo

let me explicit. be

that’s the We what Investor you model Day, asking. from are not our are if changing

Tim Savageaux

well, helps more. that Okay.

Carl Russo

Sorry.

Tim Savageaux

without discernible guess impact. but I So, financial it’s positive,

Carl Russo

correct. yet,

Tim Savageaux

look – your obviously, categories, And carrier and saw category, carrier what in medium expect you’d as as your discuss you That’s all growth across strong me at fair impressive, you how of growth enough. you small, carrier we across a to to if I into, excuse wondering kind growth change into large, QX those drivers can double-digit all understand. of very are expect as the I in QX. change sort small look wonder at we guidances; contributions customers, your you QX? of strata to look that rates into that look you

Carl Russo

Yes. we’re I color, success don’t I caveat so looking I with mean, across general way. if mean, think all to continue going segments. obvious if for that guide see to we you’re the just

think to are I their our continuing customers transform smaller businesses.

bit. in customers a now are a lot pick there, would up those we’ve transformations starting different quarters. is the into, I’m But across medium smaller going I medium headwinds that we be to have picture not the three And of actually, next customers but their the the one customers and tremendous be obviously, in that our wildly paint more necessarily own segments understandable are think segment. fine, we position, a and where visibility have obviously would to our large sure but I few experienced certainly, growth those seem are through doing greater

Tim Savageaux

sometime XX% a budget more difficult a did number understanding of always what there very a your forward customer be the expectations their I one CenturyLink. fair regard with maybe network track other acceleration and And or number looks lot least growth at this QX. good necessarily pull capital in it your to given mean, of as wonder this out was any forwards, them both expect in I year. an it’s they’re Well, increase quarter-to-quarter pull asked QX we I And in that big year-over-year in the a maybe and your using Verizon traffic see, Okay. capital seeing of of is, Verizon to part uptick to guidepost, just given reason is correlation their it the actually in results down speaking question on I a but bit that if won’t of follow-up individual guess commentary to from like overall track, spending a that. for you reasonably for any a and of might

Carl Russo

So, our would been commentary, Verizon, an which has They assembler. it’s when we lumpy. not change is consistently, I look do things at pretty through

it’s So, surgy.

are are at of aware they investing. what looking We obviously

can good are from question trying again, to a very inside they’re coming number We answer customer. grow time would extrapolate the we best with technologically to your I continues given very that’s relationship but as doing a of any Verizon and honest. anyone what aligned have I as caution and and them be think way over Verizon quarter to I

Tim Savageaux

pass Okay, thanks. the I’ll line.

Carl Russo

Tim. Thanks,

Operator

We from the [Operator a proceed. Paul do of you. line coming Thank follow-up Thank Instructions] Please with question have you. Silverstein Cowen.

Paul Silverstein

it’s this any Obviously, an any as expect we over Carl, platforms, these point. I the in basis pursue the progression least at of XX% margin be still is margins, in margin the don’t eventually, share margin necessarily that plus any things going on model. need us see ramp. to quarter-by-quarter would Thinking linear I progression platforms there? and recognized new thoughts its platforms share quarter, one could about which it even you the benefit can the a progression. insight to you a structure new show the trust terms from with or from But

Carl Russo

The story is margin asked. progression unchanged. I’m you glad

you’ve cetera. companies with in supply environment silicon One talked chains of are move that lead Asia in about see disruption. in from various to I’m highlighted things in as times challenged constraint this seen that continue highlighted, that we the out, have is, letter been letter, not of stretched you’ll announcements sure levels but et the through supply be the the

that make to meet needs. expediting we sure customers’ our are We

on in have and so significant in show downward expedite the in effect OCOGS COGS up in charges And we QX near-term, a and well. to therefore margin in those expect there have and that as are shipment

Paul Silverstein

have those up margin Would expedite costs? gross for gone

Carl Russo

because just we to measurable range, manifest shipment they’re the themselves It until They’re exist. in they higher costs higher had spot It’s shipping they obviously would [indiscernible] and – exist. not different a certainly supply are in are they have higher, potentially going at but component and stages supply side prices, and chain. real, the material, expediting. they at And XX% been there

want just downward masks somewhat make pressure a sure that near-term I So, things. there’s that margin to on

Paul Silverstein

Okay. Thank you.

Carl Russo

Paul. Thanks,

Operator

proceed question additional an have with Northland Savageaux question. with Tim do from Capital We you. Markets. your Please Thank

Tim Savageaux

into rural the are stimulus. if fund. an increased a way Yes. of What I contribution, I need can a that, not is to in or I overall of have not update wanted get commentary or of figuring subsidies in what material might see you’re whether follow-up government topic about into but in may on impact this you or looking to Thanks. sort necessarily XXXX. seeing you wonder broadband digital opportunity there, your may the broad, demand year expect, expect mean, kind this you we more

Carl Russo

called but it’s view as underway getting a and slowly, is surely not a significant we again; XXXX out, any we But RDOF in because don’t So, it impact XXXX, we event. secular expect it’s it cyclical we investment to in customers. the insurance our on a driver. infrastructure it Frankly, it under just view that continue see certainly investments and you’re downside as going in floor to a puts the

So XXXX a right it progressing event, is accordingly. now, it’s but

Tim Savageaux

Thanks.

Carl Russo

Tim. Thanks

Operator

you. Thank

the additional our session. to have reached any back question-and-answer end of the floor for I’d to comments. We management like concluding over pass

Tom Dinges

Calix’s of during will conferences of second presentations virtual these be investor the of about the section participating in and XXXX. calix.com. events future be investor quarter Investor on will events page management posted Relations Information the two

interest for joining our and everyone in Calix, the conference you for webcast now. for and this Goodbye once again, on us to your call. thank call This thank concludes on you today.

Calix (CALX) 29 Apr 202020 Q1 Earnings call transcript