CALX - Earnings call transcript Q3 2020

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Operator

Greetings. Welcome to the Calix Third Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded. now Investor conference Relations. I'll Dinges, to time, of Director this turn over the Tom At Please ahead. go

Tom Dinges

Thank you, Today Operating and operator Russo joining for we joining us and President Officer, and good morning, third have Executive Cory XXXX Michael everyone. Chief quarter today Financial Weening. earnings Sindelar. CEO, is Chief call. and on Officer, call, our the Carl Thank Also you President Vice

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

materially letter in call we of the that stockholders both Reconciliation Carl. to with and Calix the discuss me in will With all to quarterly statements measures measures. could only actual our and operating otherwise and in differ outlook, filed quarter this non-GAAP reports call, Before may annual set from we forward-looking we statements assumes performance, to market update forth to non-GAAP letter we let no future stated forward-looking over continue, non-GAAP we financial our included is statements, by this of which respective growth results forward-looking that these GAAP SEC. differ call, our dates. want will Carl? reference financial are include and about this we obligation to their stockholders you to to our GAAP any unless measures. make actual on and results trends XXXX call, cause and to Factors materially strategy turn as speak contemplated which refer that remind in Also third on those statements. and

Carl Russo

you, Thank Tom.

sooner future it last we the said Calix, for and As is so quarter, continues.

communications through industry, secular These subscriber strong demand additional needs. while accelerated of view resulting the two The pandemic expansion also from immediate the drive our moving combined third quarter meet disruption quarter. has the creating the effects the that reinforced to capacity in bookings to

remain, high significantly While our the us of in component guidance. enabled the results above to our team lead-time outperformed end deliver quarter, supply chain challenges which

continuing also The Calix our a platform of to All-time broadband once million. initially quarter all marked that be in the All-time between delivered record the business clearly income systems Calix fourth while all-time now quarter of getting strong $XXX for representing enhanced, as achieved, to They are guidance growing and are software and million with reiterate attracting at a record effects host third lowest Building as started building corporate the subscriber days wireless this current our they cost. and the Calix experience open an balance new in our systems component gross are record system are history. of in and their Clearly, milestone showed access to quarter, certain this new future continuing we quarterly demand in margins then provider as the services the early at call Rob. let coming as is and the it subscriber of so quarter that, all-time provider strong service providers ConneXions and just were quarter a us XX and trends margins quarterly services gross on of the our us to vision the revenue been questions. CSPs virtual class model excited on our throughout business we business in building are XX.X%. platforms. or customers net And these quarter in provider superior quarterly our we kept up infrastructure. of and fourth conference challenges transformation, would better built motivated we week. for is a per record is These annual all of this share. added still service service models of $X.XX foundation of $XX providers There and the capital strongest supply challenging from What them of a unified XX.X% into new financial we mode With was new history. step top our full business through similarly has base aggressive access along deliver types with the model and growing new a journey. do a

Operator

session. with Jefferies. a now is your of you. question question. with proceed from Thank question-and-answer conducting the We'll line Please [Operator first Our Instructions] Notter be George

George Notter

I Hi congratulations by results. wanted and out effect. to the pull on guys. asking much Thank maybe start you about strong the forward very

think, effect the that might forward certainly and pulling mentioned real be? that how press I you future work driving obviously home Any periods. is release for sense in demand strong much from some from demand your trying doesn't in guidance. forward the dynamic it see effect be expect understand you I XXXX? to QX pull I'm certainly also, guess, that there? to just And in something seem to would Is maybe

Carl Russo

make to say I did heard sure last the it part, wasn't is guidance the in guidance? QX you QX want I in or the George,

George Notter

looks guidance also Well, strong extremely mean in, guess... I the QX I

Carl Russo

Okay.

George Notter

out point, demand. what in that wondering, satisfy guess at here implication an looks some future I air that is the of kind as you the guess pocket dynamic I there's that like?

Carl Russo

Okay.

make to I want sure I Sorry, understood.

a it's it comfortable the and reflected Platform part All both. in our are see is, for that sense can that we you mix and company of our OpEx. more QX accelerating we're still on the guidance Part We is it our is demand into demand continuing of a is this just of and that it part new forward. of level model see So of pull getting

last As OpEx, to our forward. you going the were the may run and over spoke of that of quarter to much was under this remember, a we pull how before, fact because we concerns quarter,

won't growth air there of that that. now comfortable after comfortable new more be is a that negative and here getting demand we're a So pocket level there more

me let ask the question. frontier there if see another to that So for and stop shapes you

George Notter

on new a about there is seeing what you but a something certainly, I a I into else customers, that, book follow-up demand. at I imagine your business mean, Yes, just is the kind indeed conversations this that's it the reinforce of you're makes that, great. would And that of order in that play new that confident customers level we're that or new level. as is with guess, idea your

Carl Russo

is So a the platform part visibility rotating in standpoint changes from an more of outcropping is spoken quarters. a is, more and number what model a dimensions. of One product we've this obviously the of many to for of answer obviously to

as you the off are. The CenturyLink second deliberate you is have quarter. look I it you've largest some it's tell customer in piece the XX% also the would service our And as diversification. at was quarter XX% more as customers is customer just [ph] we quarter that call of a seen now of pursuit aggressive continuation base It's of a we the forward, the providers not out revenue. the of base. in know, again that that just this our established, QX, -- merely will outcropping I likely you, in where of this of diversification

and of It into selling the believe engine it's a what we if those best the to industry. so, gives think I direct together that lot customers are frankly things put in you all of thinking. be how And us then, with combine visibility

George Notter

great. Very thank much. it, good, very Got you

Carl Russo

thanks. George,

Operator

question questions. next Silverstein of with Our line proceed with is the your from Paul Cowen. Please

Paul Silverstein

step customers, or plus are respect smaller I off to the X,XXX and couple less. you platforms. base you're in revenue of up then or that subscribers trust, XXX,XXX those a the that tied that. first from of huge customers with the primary customer of your with was growth Carl, I've bulk are got those that software-based confirm customers questions base. There to in the Can doing a

Carl Russo

yes. is The answer

Paul Silverstein

All you those revenue. letter was in for response have of the -- terms quarter, it said the of -- step-up year-over-year George up that XX% in trust right, I same what prior. same that is you from customers the the think in [indiscernible] of customer XX% what base the it's huge terms in that response I shareholder

customer XX-plus that quarter You not to had from but this strong growth prior base? percent

Carl Russo

diversity see you the We're medium there micro size well. as you'll but occur, notice numbers. going in continue if parse I that really to want to mean, the was the to also growth

is space the base So, beginning we're those as and think, the the customers customers, typically in smaller medium growing small discussed and but slowly to are subscribers, as are growing clearly, we customer growing themselves we're in with sized not disruption. progression, their customers smaller this multi-decade well. I they keeping disruptions designs But only see we've that a first is past, as happens said, large, and we've seeing up in mind, surely to

Paul Silverstein

guess that asked And into every base question throw All that strength I'll much quite a has -- level? at you you're next but now, customer and ask quarter, now I we're that continuing quarter, one small I a from is the not month there the I new customer trust right. no that month the which we're this away, seeing

Carl Russo

we Yes are. we Yes, are.

Paul Silverstein

All right.

Carl Russo

for that's gave And the guidance we QX. that

Paul Silverstein

I'll back All queue right, later, I on. into Thank may it the pass come on. but you. I'll pass it

Carl Russo

Thanks, Paul.

Operator

question proceed Our & you. question. of from with the Please Valera next Rich your Instructions] comes Needham Company. Thank with [Operator line

Rich Valera

Good morning. you. Thank

of shed think sort can you Carl, from COVID, learning more Let the a that? you're strong me product it on guys of I out of your light you that to sort is seeing platform much to of platform particularly provide Any How better could add area. results. the the dynamics you momentum non-pull color forward I business. in guess just the due that part acceleration platform, new maybe my with, congratulations product on by on strength broadening you're the seeing hoping, and the offerings and little was in imposed natural sell you

Carl Russo

is of the clearly part mean I it very Coronavirus. Sure. by driven

so was pull behaviors to to those for of where As at two years -- subscribers other we an was think the the a is looking of affect their with are thought because of transformation sense when forward seen delivering but occur and providers trying month, the the the then gives service And way see at they side. remotely. only that two forward, in you article of Azure working effect they looking back we some they not also was that have that there talked pipes, I they all obviously subscribers, folks that it services magnitude Azure, there data. Microsoft order pull about I too acceleration it the deal on would a discussed, digital of are

piece the on phone. Michael is platforms a what do I'll ramp Weening The there continued is is, maybe general is of and our just second here

having Michael he are is. think, on? I currently he is where outage a you power

Michael Weening

I am.

Carl Russo

you're what marketplace? seeing our folks, Maybe All with offerings to in you want going that's how the Platform in just share and

Michael Weening

the that have benefit of around sell to question really it Sure, we to partnership. better your is one ability our

are so and subscriber aggressively like that other work of large customers we're or to we long coaches what [indiscernible] looking win Google, their to very to Amazon we're great offering as who for term, dynamics. CSPs very new customer subscriber companies a become they actually there and new well. market how home, partner, is all Calix companies in sizes their win that who and business So the with attacking competitors, have words, adjust and them them transformation like they're They to experience and and doing with provide closely through -- large the partner

partner robust seeing to demand, business. to with very are customers them and their help closely we continue transform Our them

Carl Russo

Rich? thank Michael, you.

Rich Valera

and Yes, to just talk about and any wanted that thanks And there's Michael. -- that. 'XX you're more look to Carl if into willing so for see

the end I think, Street sort target of range. your multi-year at the low of had been

I a XX% to year. for next think X%

particularly point back this obviously this, be there's going We are we about 'XX say now, just comps much in wondering, anything growth willing tougher should you're how perspective? to And thinking half. about to have if the a from at

Carl Russo

low X%. Cory your will the tell Let end I've X.XXX% point, range. at you, me tell the rounded you To to of what [ph], up which

These it. face significant Let's uplifts. are

up more -- It's we the asked lifting to when growth question comment a see I point earlier think, a had until we some But of get big being to visibility. foolish, was, pocket and it. unwise my looked is air an foolish than step the X%, George don't at negative would air by anything XXXX and be X%. about other This do pocket. it I

my it X% in So is mind.

Rich Valera

yield the I'll That totally make Thanks, sense. and floor.

Carl Russo

And aboard. Rich, Thanks. welcome a hearty

Rich Valera

Appreciate you. Thank it.

Operator

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

Christian Schwab

Hey congratulations, great the guide. guys on quarter

exiting pocket 'XX. of in through put we Just mouth. question order we normal in But being a an and of a new frame but, last of XXXX to enough rate to be capacity not follow-up that X% on -- constraints. be air it have long-term to update through the to anticipate expecting time probably go XX%, George greater could and frame this take model kind that network to deployments one you where growth a now gentlemen's long-term would time. actually kind as if Carl, kind your your Should is we a at you words to just to time quarter the accelerate we're we than as said, see

Carl Russo

next it we So But few off. that at to question, set quarter one is look, the for time. and easily we years a we answer that come four any business. quarters it for XXXX take adjustment view the have make a we are going better obviously happen. beyond the adjust to set to model, would to and sure, When back for the your get us Christian in much quarters sure the anything next of is that everybody causes there could not model, but will something four If visibility, we like

Christian Schwab

a Perfect. course and few chance re-acceleration may the see over Verizon lastly, may where we may quarters, or any material opportunity likely on of that how the And can and next an that update be? begin give with us then you customer not or to more

Carl Russo

Yes.

frame great me that let So actually, question.

gave frame that answer me it CenturyLink. the Let in I on

Lumen that are we of business, their a has there doing builds. around an that As the example, noisy brand we that Verizon forward, and that's restructuring infrastructure their multi-decade is large perform and other takes have think I then of in nature a to because is are ultimately customers our going Technologies. quarter in middle a infrastructure as rollouts larger build are through puts CenturyLink and a the go customers every and fashion, going

opportunity is pretty good. one of the for a in customer them be any I think XX% to one quarter any

of any I a think, customer XX% rapidly. opportunity the diminishing for year be for entire the them to is

Christian Schwab

us -- system And Okay, that currently? know let on the you. Thank stressed great. then supply the most in you are chain components for can lastly, challenges you what the

Carl Russo

other supply Is not it executive our revenue make customers to remains are they one revenue. forecasting had complicated they, example increase business and working forward, with in executive customers what we're is, it's more could listen Silicon of The just tricky, component is which fact and silicon that Platform uncommon what when combined is for they It's have moving fine the our succeed also with other. components, an by the substrates really Michael's our do meeting All supply, The the them. demand hear this it's That go not the point the demand listen phenomenon, in put we're little and about but that's you'll hardware as that our a with not to the underneath to it, and both. Sure, valuable times. very matter quarterly makes the fact seeing and lead a on last the some you that's them It's more of talking their demand components smaller in increase and you but earnings, balancing drives constraint through, it's an silicon. focus, comments, when upstream, larger it's or demand and fact things what daily to or one supply drives offerings, the sure challenges if models. our we're building our helping more

Christian Schwab

again, guys. Great. congrats other No Thanks. questions and

Carl Russo

Christian. you, Thank

Operator

Tim the proceed Please The next with question Capital of questions. Northland Savageaux with your Markets. from line is

Tim Savageaux

'XX the along how of results. congratulations on want going the continue your I of a And the and takes kind of of couple morning. wanted given theme to I on of kind good focus and second on strong puts Hi, growth forward, is to areas. half

this, describe wonder, dynamic up I didn't and if pretty kind you can I'll if proceeding or go then that is of their that pull some where by International, own pace, you of uptick. with but expect wonder, accelerated characterize continue. rollouts kind whether there? sharply, significant And, along ramps to you pretty First I from strength kind of maybe more forward would It terms you internationally, that in similarly bottoms saw a the of and a of [ph]

Carl Russo

the So to your rollouts. the ramps answer is and latter question, more

we Secondly, as next in progress, focused growth you as America. international and on are know, North phase is the work of a our very

I answers, give you to characterize two what the that's So we would saw.

Tim Savageaux

implicit mute you to maintain level, guess, [indiscernible]? there expect at to would seen kind revenues or elevated you kind do is that there. any you Sorry, you've issue QX as international this expect bounce your Well, in guide, continue, of I of

Carl Russo

Tim. bounce They'll continue to around,

Tim Savageaux

Great.

for that kind next The saw implicit as of forward referenced wonder, or some players, seeing currently. maybe trends group of other group you of you're also I the you're in many segment, of next to guide. there's I among where a What into that in But area, of want kind and look even quarter's emerging players, whom see activity year, on builds. some the lately, described or of time of capital terms from was bankruptcy, year? you've that it seeing part capital year, attracting been We growth forward group the and in is next you something dynamic of Is it new could that of engaged this kind for big accelerating fiber also pull are carrier lot mid-sized while, of the medium in kind real the one you attracting the been first of I focus think as with well kind has and in engine. smaller though of

Carl Russo

the a I capital restructured. do what's every forward said, recapitalized being if going and on Less coming think, to the going of lo and they're play. to were I And we're think mid-sized going to wireline think case characterize that it But dynamic behold, been. where for I hasn't in trying telcos, fiber. many I'm of pull former almost to I've the this it's longer-term in build case, that's a go year,

if private If by from Frontier, into hear you the listen being firm Ziply Windstream, the are spin-off the theme. you investment that at the consolidated, same if you look you a at from made that's look to coming equity words

then And infrastructure would help numbers as so to build business opportunity new of trying any to that it. through pretty unified entirely I we top customers those going of wary as But not that and quarter, the larger but an only be look fold build at those model on given in access they restructurings. are significant into

Tim Savageaux

Got me. And be strength the from to of growth magnitude it. conservative the is, you're And last next there sort know seeing year. short-term about it's I prudent question given of for

know incremental kick on your So indeed it might a implicit or expect making anticipation even how some for in guess, or update other I as sort that be to of to that a you any is accelerated we're this, in assumptions how sort process of 'XX? you incremental or going you of case I to be the you what any business stimulus seeing specific we're RDOF can process that of don't in off the if about have coming -- at advance And out 'XX of in process, year, starting are now activity the at next or here. for two week point see answer RDOF in you obviously, but look least

Carl Russo

Yes.

anything currently do seeing with to you're has RDOF. what of none So

obviously, into that's, and extrapolating answer George, let I be for that's the if X% me the to XXXX I to. QX that Number from we've know that obviously don't the gave the days XX $XX ago. we -- given in one. that; pretty just going a clear what with where step So guide. And we it's But million that that's guidance take you XXXX, at some clearly to number were about then in look don't you two, up

clearly that being factored into that. is some So there that's of RDOF

see our having as right some of that XXXX see but on don't she it guidance XXXX been, it's now, it's you'll All has from goes. said, to I event, but been RDOF, causes steady us that's, anything in change and of that which a

Tim Savageaux

Okay, thanks congrats. very much and

Carl Russo

Thanks, Tim.

Operator

this I you. to Tom Thank the turn time, At remarks. floor will back for Dinges closing

Tom Dinges

our conferences will the fourth about three Calix this Thank of calix.com. on Investor will section page conference Events Calix. participating to you, quarter again, and events for the future you Goodbye investor in management the for the posted joining be interest Once on you investor your in be of these And for virtual today. during on us Relations everyone and webcast XXXX. thank concludes of thank now. call. Information operator. Presentations call This

Operator

your for everyone participation. you Thank

disconnect now may at your this lines You time.

Calix (CALX) 21 Oct 202020 Q3 Earnings call transcript