Calix (CALX) 26 Apr 222022 Q1 Earnings call transcript

Company Profile

Participants

Carl Russo	Chief Executive Officer
Cory Sindelar	Chief Financial Officer
Michael Weening	President and Chief Operating Officer
Paul Silverstein	Cowen
Michael Genovese	Rosenberg Securities
George Notter	Jeffries
Christian Schwab	Craig-Hallum
Chris Howe	Barrington Research
Tim Savageau	Northland Capital
Fahad Najam	Loop Capital
Ryan Koontz	Needham

Call transcript

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Operator

Greetings, and welcome to the Calix First Quarter 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. Today on the call, we have Calix’s Chairman and CEO, Carl Russo; Chief Financial Officer, Cory Sindelar; and President and Chief Operating Officer, Michael Weening.

As a reminder, yesterday, after the close of the market, Calix released its letter to stockholders in an 8-K filing as well as on the Investor Relations section of the Calix website. This conference call will be available for audio replay in the Investor Relations section of the Calix website.

and will company forward-looking future will operating growth Calix all which financial call performance, the statements make strategy this refer statements, to include and During outlook. market about its statements. may results those these materially And actual differ contemplated from by forward-looking could their trends differ Factors SEC. reports with annual set and cause materially letter XXXX results first the the quarterly in quarter actual to are and that to forth stockholders in filed of their assumes which as Calix obligation speak any to dates. statements, forward-looking respective no update only Also a to discuss the financial is on to Calix GAAP both will in letter this conference reconciliation call, stockholders. and non-GAAP first included non-GAAP measures quarter XXXX GAAP of measures on Unless call non-GAAP will otherwise be all stated, will reference this measures. numbers and Russo. that, CEO, Carl With turn Calix’s me let it over Chairman to Carl?

Carl Russo

Robust our platform This Thank X% model, first again, demand in the Calix all in as excellence. sequential executed quarter in with from for breakthrough continued business our quarter a the offerings the fourth team revenue of a XXXX. increase delivered you, combination Laura.

from from from came up as our shift our three is software put significant over systems to have resulting our now continued and services. in rear traditional confident all systems just are build we sequential associated the our This of the quarter shift platforms This will with predictability continues our quarters deliver and mirror, XX% is last bookings This revenue we growth view to on. to quarterly platform delivering model. the of businesses and XX%, from our increased piece evolution ago. in associated seasonality We

essential their resistant than just as broadband makes subscribers offer and factors. exceptional platforms robust. a our it to remain to demand Furthermore, macroeconomic rather This very BSPs ensures for will service enable platforms Our thus dumb pipe. to Calix BSPs an

the are us XX% XX% confidence first will revenue our key to has and given XXXX This model of we will full-year gross our progress That foreseeable the February. growth. future. line gave we XXXX XXXX, X% forward at we to guidance and margin, entire the except enough at in with to essence, said quarter there. is guidance which remains year-over-year are in for remain to around in to long supply However, our the now our growth for the into Day Investor guidance making pulling from be we in end continue challenge grow In XX% term raise then XX% from XX% believe

have pricing into will and made revenue targeted which adjustments, roll time. over the modest We line

change to they our to is first our confidence guidance simplify margin With let’s do excite basis excellence team of XXXX in XXXX, call their Silverstein in executing Our the committed comes open Instructions] And Cowen. of Paul to their value. gross subscribers opportunity the businesses, capitalizing XXX points basis with their growth Calix customers our are we While margin for that every secular help these line gross Operator? day. from with [Operator question. for In on and closing, question the grow points not the improvement enormous beyond. reinforce returning will our and XXX to

proceed with may You your question.

Paul Silverstein

you is forward Not this this the low-XXs opposed letter Good everybody is impact to as just Cory, referenced And you else to going Thanks. rate tax be the morning. referenced issue. year that this paying? I norm going about, what’s the new in normally ask is previously the something or to going had but XX and that XX, to

Cory Sindelar

now Anti-Abuse of tax prevent Base set relates to Act of issue Tax. we these to And U.S. by Erosion rules BEAT, from triggered. include was That out tax growth that tax. not created domestic This enough because is income companies shifting profits the rate, the a large of companies rules. this BEAT under morning, new with avoiding and rules of fall Federal were U.S. Most XXXX Jobs Tax set Cuts pay liability U.S. Good Paul, and a our called intended

our we that have BEAT NOLs, we’re tax obligation. a However, using given

tax expense fluctuate reimbursement foreign based BEAT is does profitability. our on planned our this with So annual not and

So the will expectation until situation in we out. run a BEAT is, paying our be NOLs

And will so years. for be we tax of this paying a couple

rate XX% advise So, I us that years. years, would one for with the three XX% to will two or be

Paul Silverstein

including XXXX, at maybe least through and XXXX? So

Cory Sindelar

Not XXXX.

XXXX XXXX, XXXX. potentially XXXX, So and

Paul Silverstein

point to back else’s when And it the rate, the will consume you paying – you’ll go everybody NOLs?

Cory Sindelar

Correct.

Paul Silverstein

That’s have. you. Thank actually I right. all All

Operator

Our next question Michael from comes the Securities. line Genovese Rosenberg with of

with proceed may your You question.

Michael Genovese

you think of can there’s three first performance in think primarily then cloud question, number reflecting as remaining obligation the lot. the year number probably a for and Thanks I contracts stuff that there. other just give some sales, us I My but also, the

you other it is just much could how think, and us of So stuff? is it cloud how help of much

Carl Russo

you at of quarter, Mike the sure. end $XXX quarter. it XX-Q day-to-day. is QX those cloud, There end the are also warranty Sure, support cloud, the the non-cancelable contracts. for will all is numbers. number our million and there. four in majority Those It filed included you extended posted hardware of contracts the no also there’s the attending suites, in It’s have included on see in

Michael Genovese

year. that understanding systems then operating the And licenses one Right. if my are

Is that the So RPOs. right? they’re not in

Carl Russo

signed. included, recognized is it’s not That The the delivered as software sign is contract they once is contract correct. and been operating

So all find the RPO. in you don’t that

Michael Genovese

above the for confirm me talk is you’re certainly know mean, can many to target I high at the year-over-year. the OpEx what’s for to at just hire talk like it’s the mean, that now, XQ, a little up Cory, mean, I and people looks Yes. model, And looks end, going XX% or you bit that? be the can about I you decision. just if the about I Great. but to year, above. to And that you’re full not decision right about behind Cory that model I like my – it’s want here then also, That’s okay. numbers it Carl way. about just and

Cory Sindelar

front opportunity is, an advantage enormous us, of take is which in we What’s behind what’s to intend that fully of. it

have And revenue better better our ability so team we get to the the in as we invest growing model. fulsomely as grow we and at

take And clearly is the you I we us so should we robust a comment, of that bookings, of in unrelenting. indicator what as of had start be and which at see said very very front strong to opportunity my the

in So, and to field. this it, opportunity, advantage we lying of intend of leave take the not any fallow

Michael Genovese

and, Great. are of and community households, the the And with debate last exactly customer about in question the going the macro financial consumer? consumer. you, going to under in subscribers is there’s I definition Carl happen guess, set the your world, on what’s Then in a what for

basically there’s And that. to get resilient I’d how your debate a So, about broadband on be. view will love

Carl Russo

your sort of note, of on Great question, obviously Mike, reading it. picked some and you up in

the of everybody I a things think necessity. is becoming One has that is concluded that broadband

and hear on an with of it’s that you and important? on, think is dollars things time, dumb helping we’re of they’re assumption and a are pipe we a When all however, broadband. what or true. deploy excite subscribers that is that, that subscriber. therefore a What That a Because customers helping there’s by while that customers will a as speed, sold all sorts sort I service a And be lower with as building. spent with is businesses focused commodity. is consumers going the Why that and broadband you’re along competitor doing doing broadband our to higher price what comes you’re necessity, build subscribers. if a lose their our

maybe, of rates. low customers actually don’t net We our churn sort as ask very a are And promoter our side different here scores, competitive moment proof, customer very customers go to is the give the very, high an are recession actually moment actually example to two very this. They in then success ending And I let model, are you proof. recession proof. on have we recession up supply of or building for have a well. story a issues. want Michael helping around they’re if me which And

out side, up demand broad recession, it and in the proof, there’s to might not a and say sad shipping only you customer I’m helping the but we’re success is actually have with our you one two can help recession, everybody think that sense, to recession benefit think I turn our think us. if different a on share frees or better BSPs So, stories, in but a But recession. to just actually actually understand model I supply be silicon this Michael, if we build? I a how

Michael Weening

Sure.

had has over existing we what past years networking entire stated, had story DSLs that to So decided in subscribers, who of over company the that significant versus on it a cable, the see significant they other. cable ultimately in fiber been the rebuild cable XX broadband side, cable companies Blue ahead in going Carl on and the recession axis have to their they’ve as has Ridge customer with a a actually the remained consumer who the success over network, they’re of unchallenged network. to amplify proof last opportunity transition we And the and XXX,XXX

not dumb full First is a provider. the a They’re pipe. service

including we example, us their and very Fiber broadband home, us now XXX to and sticky We had lower if build comes with they out to on like else to you’ve is like looking then install things smallest someone doesn’t home those or expanding camera, month cameras, to a ProtectIQ, that Canadian ensure web web looking around threats all with a these announcement matter, well to the you per Arlo, home enable solution are services your because which going into with basis, daily deployments. our locks, we’re with that it and home. services, for service a then full never which we services, where offers they’re out pipe means of security going great companies this made quarter are Arlo, started with over like provider that a malware and now in service provider even today So And the do lower from and a stopping security provide they’re out beyond types a it now doorbells, your your securing you to who also all changing. trust fiber expand the got like a price, offerings out things

significant is are, successes The well the the on largest funding the is in built North full same Cloud, this we’re time, aware. into elements with Calix they’re that they’re far, last market why the actually there’s transitioning reason and we’ve one by are the cloud those broadband support as into America add it. areas at that very focused testing So success which Support you’re going I’ll of deployed that And seeing. custom

with obligations all provide to the to to them in broadband the due that marketplace any is integration And meet exceeding that of in no what we’re to they’re meeting and tests government So their can government that testing additional to XX month, close now those the even obligations, without we’re one simply actually feedback doing. funding getting. a the million you’re ensure

on competitors replacing we’re are a very fact, because rapid In their pace failing. solutions

them those the to And obligations performance all so We you subscribers. government and delight same very things make to time, add their meet their it the simple together. for at

Carl Russo

Good stuff. Michael. Thanks,

Operator

comes Jeffries. Our next of question with from Notter George line the

proceed with questions. may your You

George Notter

the of Hi on Cloud adoption a what for continuing some terms ExperienceIQ, guys. in of you’re doing very then Thanks give sense us guys Operations Can customer you of Cloud, maybe much. are or seeing terms revenue how ProtectIQ, Maybe subscriber rate? there adoption discussion. you like on suites, kind in of just the and Calix

Carl Russo

Cloud, as on pace. zero early it booking way gauge but where would and guess off I interest of So goes is a to Operations is, know, quickly, obviously follow, but soon the you it I days ramping

Operations our the bit tell Cloud So, will we been Cloud be Support it customers. I certain has winner every would rapidly through as that are you, grows that robustly

give revenue On overarching. have and an Michael, just but you I’ll maybe suites the the side you anecdote, the edge

from in that example do year-over-year in Michael, you XX% have customer the to seeing you just RPOs, growth anecdotally might want a an You’re add that? on

Michael Weening

state press releases XX% suites. our release in QX, we that press from actually at if growth I’ll through you look Well, the

is per that in now ProtectIQ. press XX% month I’ve other around companies XXX adoption ProtectIQ. in of who’s seen that a already fibers like their There’s identified Centranet, a stopping home. threats release Canadian Specifically

percentage side, the and improve best and of of profits cooperatives are never not just one see be the can ever. as for very as Cloud of large that everybody in enough point providers Operations cloud So, with do customer interesting about we’re ramping we seeing going said are with on see I’ll that, other, also suite Carl because to really change everything is to doing this – security, What’s service of this a one they on they most Cloud up outdoor important platform their educated the probably team security. marketplace our because how because no by ongoing are things have in said what we’re massive engage you make it what the is the success the their the tying lives their Calix of with our doing members. as base, on network. on is help the and obligation network successful is It platforms on that our one solidifies can lives they is subscriber. And unique. embracing Operations that fastest to our is add in Nobody access subscriber that it one ramp

was entire allows companies that through automating in through custom that two coders, workflows the their And doing all of it we’re massive so done operationalizing is and teams before do operational those to Cloud service process Operations between providers Operations way glue automate operation,– never a big by those Cloud. can that that, that

over So over service even XX% OpEx the will platforms. again, Verizon a they provider saying with can record on reduce it as and our by Verizon year as has their and efficient be gone the that smaller

ramping subscriber network cloud that, So, add our why for customers, it’s is when massive the faster saving before. a top it’s you on other which any than of operational

George Notter

Got you. it. Thank

Operator

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

You your question. with may proceed

Christian Schwab

question, quarter Hey, to is congratulations my good margins. a revenue gross guess improved on outlook. relates it and only I

sure impacted correctly quarter. offerings help that on significant logistic costs it prices I modestly products to products guys platform make So certain us heard the of you or like, raising just sounds are or it this certain platform that component kind offset

basis that seen years. hear a However, improvement of to until XXX XXX that’s gross margin be for points couple points won’t XXXX. Did to basis of of when And kind that return correctly? a improvement I we

Cory Sindelar

I’m me if being can I I see sure make Yes, want, well of, sort let clear.

we’re The that comment gross the our products different I is thing made we made different first except have pricing for and across forward the time, At same model in specific adjustments bringing margin. targeted they’re places. also

platforms just we be With retroactive. et that did cetera. mind, anything in not could not that legacy So make go

So these of prices forward not something quotes going nature. are new on in backlog business, that on or

level time. roll not believe going just times through we growth and And obviously make points margin the acceleration, think and other plus to hardware so of that we these you return one revenue. in They given have drive margin just then is basis that. software. are that going work achieve subject to that going the we to things, will They to XXXX. It’s platform gross into is own lead not us model. more recognize bookings will It’s will at to on cost our points We confident continue reason to basis take XXX which to our XXX

we think be XXX XXX give believe back get improvement. help take that points XXXX. into Investor where We is going So we said the going our to XX will we’re to or in at basis point we points as this year, Does Day basis Christian? to

Christian Schwab

perfect. what And Yes, do you time, as margin peak remind potential becomes just think for is then the us, over mix Calix? growth what that’s

Carl Russo

provide Don’t those more of for know, you and go things products platform and model value have continue some margins. our spoke and into the Michael to higher up and BSPs because the we you layer the to, more subscribers, as higher as heard typically

will box software depends the abstraction the It to deploy buy on able on from don’t So, where model. deliver solutions, we the can shapes, where future, if how there. standpoint, software market we and without will also of depends market it, know one place know XX. in hardware, from above we also go top an it has We from our go customer on hardware stable white the the that are changes

to average. points, keep to answer So, we points get it can basis certainly a gross where want as know and as no XXX XXX basis and margin peaks. get going, far I corporate have for back just we points you above XX We as of our

Christian Schwab

Thanks other guys. Great. questions. No

Carl Russo

Thanks Christian.

Operator

comes line Chris question next Barrington the Our Howe Research. with from of

question. may proceed with You your

Chris Howe

Good morning, Cory. morning, Carl. Good

bookings. of mentioned off you here XX% on the Just leading total topic bookings of

number, your As well a within Can little highlighted. customer, whether matures detail? you it’s obviously bit the more Michael you by of many greater that Cloud Support this different as being adoption adoption think done a about have avenues acceleration we Salesforce? or bit There of little points go into the your line, should that’s be as of this organic down further as work other

Carl Russo

what’s next does to asking me, XX% or underlying of as continue a the it’s So are grow you more? percentage

Chris Howe

kind of adoption it natural subscribers of base? portion is opportunities to of of just It’s offer just different of on the based can the Just the points more to subscriber what the you XX%, evolution that your behind maturation getting the within and BSPs?

Carl Russo

Right.

platforms of accelerating. a drumbeat mix. there’s in and our there experiencing it’s continuous Separate that that of So expand that from only change we’re land is that the our

you remember, developing technologies quite such we legacy we As new systems. not ago. a along, as our came Chris did as them put may into legacy stopped systems And while our

an It’s our AXOS platforms. our you our do into from, systems systems was XXG GPON do only not by PON legacy the but can is XGS-PON, systems, in in, way, you our systems as which So are platform our legacy can systems. that GPON developed example, run

to PON, X is move over so customers X. XXG to that want Wi-Fi platforms. with And come true the a The to there’s same actually as to naturally reason Wi-Fi versus

of going things systems. to systems our that notion switch to cause over bookings our so legacy from our in And two those new are

growth you like looks business whole speak cetera. and to experiences constant our there’s can, Michael, top your And of platforms, just it what it of maybe I here? and if you platform how Now and grows from this know that, in on can all et

Michael Weening

we’ve a point then transform up into to of I’d my mentioned, to the really customer me. and those Carl I about, we It actually Hey, hardware provide pivot side customers. us change is operational, from our change that Sure. the that the get conversation, subscriber. subscriber two say to go-to-market, for this that which radically and for would is statement, like is allows customer’s your a because from built mind the how the out that on do thinking network elements unique different dive the But for a view relationship how do capabilities us transform side a which which allows conversation point your change completely statement. saying, excite with changing how OpEx, your might radically open you of you start operate fact And your simplicity platforms business your

industry have everything drive that do the do into into of to So release So with again, those where in every then with upsell? platforms, capabilities that fact customer provide has it the we the fastest go-to-markets the have all quarter, level we then come how new and launch things before, it And to integrate in then those out and the behavioral and conversation that together seen comes of products conversation. go never We from before. analytics, change the capabilities, never we been processes single that pre-integrated another the all get around the of because box. our industry you our been seen creation, campaign an of those

you’ve business. can very says, to and lean operations these but give your best we’re what our success to the change and at and would this get organization, solutions your Know then your alone. also you new help you our their you customer how the to say then going we’re marketing train the of behind So, go-to-markets, explain leave follows going success have invested customer train most organization help BSP. you these ensure just organization help we’re a And in practices, have new that technology, to ready in, is out new value those train them take call customer and in center, you organization, also behind it, sales give best how in you not mature as you is practices you organization, to I when ready they it,

XX So for before. come customers all and our or you a existing as we’ve of been those are us seen the decided expanding pace with to who uniquely to never elements shareholder speed new Calix position who Whether identified customer together us, future. in that’s growth their have at platform is select letter, and our an the

Chris Howe

I look know Thanks, Michael. certainly XX% it’s we Michael. percentage of And about just business revenue. revenue but it’s Thanks, very one a small the That’s up. helpful. entire at quick as international follow

international The look to we the should European opportunity target financial quite quarter, should You broadly but the out your timing didn’t particular anything customer. look how as there model, at this as we versus mentioned look the we work speaking, forward? we that pay at opportunity domestic attention

Carl Russo

it’s efforts, huge with which first priority we’ve us. is said, continue what No, – our front but and of opportunity taking that’s international own we advantage in to consistent our America North the is of

So has Chris. changed not it

Chris Howe

Carl. All Okay. right. Thanks

Carl Russo

Thank you.

Operator

of Tim comes Capital. next line the Our from Savageau with question Northland

proceed may your with question. You

Tim Savageau

morning. right, good All

was that. the guess which bookings follow from margins Sorry said XX, QX this outlook. and I’m presented to increase couple I all a X% you in that is factors, results about of to on wanted the platform of XXXX. congratulations up on given gross And

the well as increases. price as dramatic pretty So

So, but your I the of estimate with may you year, the of I know can you’re guidance not supply changing share us, for impact increased. have gross issues imagine margin

price the increases given the can X, estimate So supply those you the of software would give the margins mix year? and either seen quarter, for where be dynamics an about issues, for X we’ve us gross changing that

Carl Russo

this if question at Day. lot Yes. the a a really happened, that’s know talked a of know, hard whole don’t things I we discussed, heck exit, higher as because where Tim, be as we’d we never and mean Investor you but we’ve about

don’t I give you how even to estimate. so And an know

are environment that the for a are there’s things The The platform so challenge. put of supply question your getting is a reducing. address the forward. are improving is to worse supply. in that heard few it, me on side. There’s differently hard be looking a supply. freight things all But the Let Air that is compelling. to we is choppy continue as as you that going Michael on look the side it’s of to us a indicators There slightly ground is flip forward stake few supply speak sorts to in

And so and try sort XX through, as of next increases we some that basis along of in a fight points year points XXX all This put with to roll comfortable to be we’re is we’ll that it. a that together basis front year. XXX with price modest it’s going to keep

So give that’s I the can best answer you.

Tim Savageau

much. very Thanks Okay.

Carl Russo

Thanks, Tim.

Operator

Our line next the Loop Fahad of question from with comes Najam Capital.

proceed may question. You with your

Fahad Najam

Good morning.

follow-up gross of more the somewhat freight other? two give your headwinds? give was a on XX/XX is breakdown sense better. pronounced can than kind versus cost think kind of factors? freight I’ll mentioned getting one us both a question. that it one Can I us you Component Is of But or like So you of margin you Tim’s these

Carl Russo

can them stated by in Cory, as any past color day, little bit I but of split to if think as varies if roughly, the as XX/XX Cory? could look answer. want to them you time proxy It the to that has at you but add don’t the being. a sort I that, you I of for know a there’s Cory want good

Cory Sindelar

I go of But to those probably I the components. have PPVs then at that the to waited more time freight so so cost missing because waited this a pay side. to rising to in source Yes. that we would little more bit material point costs

Fahad Najam

then quarter, are you you give thinking stock guys about Got OpEx going hiring a pressures it. noticed can of it, head color should seeing be sense know are terms comp in count new I rate us of appreciate How inflationary healthy the what your increase expense. forward? you Any employee on in And there? in but added the I we new talent?

Carl Russo

then answer let Cory I’ll Well, and me let model the add color. some OpEx

sales you XX% XX% model, product G&A. gross on a as As in our R&D X% on at is to now know, Investor XX% we profit OpEx marketing, and Day the and stated

one So and we point. moved marketing and point one down sales at G&A

We opportunity the because that that that’s this will in invest can, yields of as model as model front return to we believe we us. on fulsomely best

As on underneath around points, Cory, for different that? want you that do moment a spend color inflationary

Cory Sindelar

would looking mean, largely at side, OpEx the been a robust invest address Yes. those the be to to say model the opportunity the investments more you’re plan we to we on I little we’re if at that to hire of and G&A we’ve personnel systems. the in bit driven our I able a us. it’s across rate continue organization. wholesomely to that could investments, front as making see to continues And large

So you model I OpEx think for to our right future. be should at expect to continue foreseeable us the

Carl Russo

about age to And would Michael my quit I’m like stories great environment, going when read to can hop help one subscriber. we’re our so the deliver we and other Obviously, and rates these and In of of day and an is inflationary have to some this of one succeed better all to that offer. piece resignation. that I the add, ask you you add color of opinion, our on is, this get one job on that these the services is the consistency customers happens a team because people that they things things can in the focused

culture’s So continue on the goes add want on. on focus Michael, what and work maybe of that been little bit there to you area. focus big to a color a we

Michael Weening

Yes.

culture is build So type from of changing that and we listen adapting. employees point focused a our view, that ensuring very we’re constantly and to a culture on of

to meant people in, and we is has we culture That to to and which grow. the is is ever our over is to better, be off. retained, of state as paid again best, bring marketplace change, new all our grow culture that and One approach and better our things to we continue over meant not philosophy is with these the culture learn especially regards

First Fortune best being culture to company And engineering of quarter, us best awards outlook, XXX, the the one at all, it Apple’s prestigious comparably we of make also last work you the around and and That invest Google’s best Bay best the very added top the then to team, us to four places this list, Fortune Area. another the look in our people XX are global world and midcap. that received happen. significantly who if

And doesn’t the right are hire glass time want understood decision those and a and really company make important matter career of every to career right new elements there isn’t no them single what is hires, I because what the new the to When make So to researching of them culture the lot because one they very to also. they decision. want growing. how spend person, all, who a a doors through level read the speak we’re we single has

So to had making our really work, great to which members hiring a our team regards our are brand great. this profound is place a on with that’s because impact

Carl Russo

Other questions, Fahad?

Fahad Najam

recognition. Yes. question software I have one on actually more the

this services? on growth Calix understand kind new So consumer recognition contract if just the revenue us new are is [indiscernible] the how that thereby software that and that existing when that just that, recognizing and as you revenue? is How constructed recognize offering, you or end you considered are new works? adding – of understanding a adds help is a does to new contract expand a revenue new Can customers software service thereby new

Cory Sindelar

Sure, fine.

licenses, Let software me our SaaS that between operating up and break licenses clouds.

our may buy So buy number certain OSS for They basis. license of will subscribers. a customer a

license or on point and X,XXX that subscribers bring in that that there’s than that software recognize we’ll has with recognize front. associated portion to that’ll up cloud annuity platform, a X,XXX a a We’ll revenue license onto that a be more more subscribers. some related that they’ll it. they After ongoing buy maintenance say of additional time. that, licenses just Let’s Obviously, at the

On ups could buying on they’re the clouds recognized time, it annually. depending either what there are or that over is frequent again, that’s true be monthly

And which so do platform, period our increasing recognized the subscribers over true growth as onto they've more ratably the to come in and that’ll we reflected into up, an be be in rate will continue service a clouds committed.

reflect on and our adoption the you bit out we'll more, a platforms on starting as We're go their commit a curve, customers And ramping the that's Some what will three-year rate, a within networks. get numbers are to to customers of better see. further little agreement. generally the sign

Fahad Najam

the Appreciate you. Thank Great. answers. Cory. Thanks,

Cory Sindelar

Thanks Fahad.

Operator

the line question next Needham. Our with comes of Ryan Koontz from

proceed your may with You question.

Ryan Koontz

clearly you broad and Thanks copper segment mid-size customer Would from the base question. this to seems. it in strength comment, Thanks. we’re seeing on fiber for this, there, opportunity shift your Carl, on over your the a and

Carl Russo

to Yes, it's you in small, to kept growing always although you not and driving customers necessarily and mix, you and last quarters actually When customers. the becoming as small our I copper citing look over what and you're starting it, if our you're think so part fiber if and getting our growing think just you look letter, which see medium that's midsize mix, shareholder and go at medium growing and of percentage. see Last that's five the large is to what of the about it. down. happens squeezed and from small, kept large talked large a started some we disruption is growing quarter smaller in And the we've medium customers to

you So subscriber We're on now understand some went join the starting seeing over as us from that larger we're to line. disruption. Brightspeed they XXX,XXX customers additional other know, some the also see journey. announcement And our they customers made, medium to

Lumen said completed. from we disruption see want And it's start of so, larger six days, assets where It no question start will their time, come be board. we're when months and move acquisition off in on customers still of early as larger over is the But very the to this and probably Brightspeed, there's case will this to covered. to spun away

help that Ryan? does So

Ryan Koontz

Thanks. Yes, does. it

Carl Russo

Ryan? questions Other Okay.

Ryan Koontz

Covered them all.

Carl Russo

Laura, know queue. in questions other the I if there's Thanks. any don't

Operator

next Our the of Cowen. comes Silverstein from Instructions] [Operator with line Paul question

question. with your You proceed may

Paul Silverstein

I us software said this the Well, that about of in necessarily how or either terms suites. was of beat adopting you sense of is a Calix basis? progressing? adoption all quarterly new the one recognize can in to talking give of of are customers, suites? running any total and I time base, take accelerating it last it's and than the but it's have not on handful terms many but off a dozens, small customers less sense of finally present you how but in present assume in question, you I migrated the of think Obviously one breadth what's at Now, customers, in or reconsidered. I new new the customers a asked the more we're Thanks. adoption what multiple that breadth customers rate high What being, of I question is

Carl Russo

but of shouldn't you we've clouds customers those or or than more I or Well, assume of now that over growing. are deployed said our sets i.e. And merely that can deploying you cloud more hundreds another where intersection, before that, platforms. anything two aspect there clouds the more is that customers customers, XXX tell you two that. are And assume would one have is of

Paul Silverstein

or whether the other Well, you offers have? how one enabled about that the Carl, of software ProtectIQ of Access, couple by it's but

Carl Russo

in and to not tens Back again, Michael's of deployed Yes. comment again, not terms but earlier think broadly ramping hundred thousands. but

Paul Silverstein

quarters roughly? many how adding you're And

Carl Russo

inside existing I'll new customers you customers. and know leave with XX expanding our of at that you we're

So likely a you're seeing many tens being quarter. in added

Paul Silverstein

unless I know the President you, of the you'd terms of… right. last, lockdowns in China. share about obviously thoughts suspect, concern this question in since us investor lot care I with to ongoing a All Any but have asked answering there's

Carl Russo

Yes, the Sure. I lockdowns. mean

a share thoughts. me Let couple

challenge. I there's big a think

to with evolved try gets As and the and something it And ring a transmissible quarantines. more virus has transmissible. into more coronavirus that's more fence

of going they're businesses – quarantining what's certain maintain where exceptions very end to said commerce an to lockdowns shift. with a this to commercial from net to you they China It's and And a challenging not so having continue you up lot to That on having going a run. for allowing they on are cast if be wider output. approach watch standpoint,

an Is effect going these think we where years goes interruptions think deal minor And situation saw So be If do it to will that can were to affect here. ago. what turn but right say, a we'll two I like we will I now? with, from it into see I major it's No. don't Sure. happen? it us? I think there'll

Paul Silverstein

Is there its this some becomes it were point and four weeks impact from now, eight weeks meaningful on from if now capital? continue, to where

Carl Russo

you it it out some Well, won't see quarter. it in won't the gap if probably create because at become lead time. some meaningful It'll meaningful, becomes

it, So now say if stay there's speaking tuned we'll would we but right I be no would effect obviously to. to does, that talk it

Paul Silverstein

question. last one got I've

I you clients but have question. asked earlier, answered some – think it raised you the

to an terms even the In going of of resiliency your back buildouts in downturn. fully economic customer spending committed or current

Carl Russo

Sure. network that's Intelligent one in systems, to that's a it's part It's call the what it. fiber platform. the Because smaller funding and systems. also build-out obviously not Edge just that Access side, on the has revenue That's the our not the we essence edge the of underneath but the business, side, government

go to but side, network actually going now be elastic then commodity that bring provider. to you opposite. factors, upon downtimes. the in Broadband-as-a-Service actually to is and it's based not subscriber, on provider compelling, see macroeconomic change terribly you're a ability differentiate utterly from a to our their the What we So pipe towards that model when And their DSPs especially is

Paul Silverstein

know RPO employee give see I'm I statements culture, them also I is current queue. turnover? on us your hoping Right. to me. changed? number. Two and Since us Has for we're what before, quick gave you the questions Michael's the know number about in could quantification nothing it you going like And last Corey, RPO there's the

Carl Russo

Yes.

is low very comparables. our and industry’s below way So very, turnover any

would leave that. it So at I

year-over-year the On number do you score, RPO comp list? RPO the and want cover the

Cory Sindelar

the XXX compares see is $XX in you'll million Current at last million RPO of quarter. that period, to year day end the that the ago $XXX

Paul Silverstein

Okay.

Carl Russo

Paul. Thanks

Paul Silverstein

all. that’s you, Thanks. Thank

Carl Russo

Laura, questions? any other

Operator

have I like We session. closing to this of Sindelar over back turn the Mr. for this end would to remarks. question-and-answer call reached

Cory Sindelar

meetings webcasts Information these will presentations the calix.com. management will again, participate Thank now. Once everyone today. Investor the posted including a be and call. second and on Relations you, of us number sections of interest Laura. during concludes dates public of for and events, quarter of call and webcast the of the leadership on This you Goodbye in Events in on investor Calix conference XXXX. your about to page Calix times for thank the joining Presentations for our for

Operator

You the participation. time. you day. your of rest lines for your Enjoy may at disconnect this Thank your

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