Calix Reports Second Quarter 2013 Financial Results

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20% Growth in Year-Over-Year Revenues

PETALUMA, CA -- (Marketwired) -- 07/30/13 -- Calix, Inc. (NYSE: CALX) today announced unaudited financial results for the second quarter ended June 29, 2013. Revenue for the second quarter of 2013 was $94.4 million, an increase of 20% compared to $78.9 million for the second quarter of 2012.

"Our year-over-year revenue growth in Q2 and better-than-anticipated bottom line results reflect our solid execution and progress in expanding our reach into both our domestic and international markets," said Carl Russo, president and CEO of Calix. "Our Unified Access portfolio continues to resonate with communication service providers as they map out their network strategies."

Non-GAAP net income for the second quarter of 2013 was $4.8 million, or $0.10 per fully diluted share. Non-GAAP net income was $1.9 million, or $0.04 per fully diluted share, for the second quarter of 2012. A reconciliation of GAAP and non-GAAP results is included as part of this release.

GAAP net loss for the second quarter of 2013 was $5.2 million, or $(0.10) per basic and diluted share, compared to a GAAP net loss of $7.1 million, or $(0.15) per basic and diluted share for the second quarter of 2012. A reconciliation of our second quarter 2013 operating results from non-GAAP to GAAP is provided below:

Three Months Ended June 29, 2013
Non-GAAP Stock-Based Compensation Amortization of Intangible Assets GAAP
Revenue $ 94,439 $ - $ - $ 94,439
Cost of revenue 49,469 377 2,088 51,934
Gross profit 44,970 (377 ) (2,088 ) 42,505
Gross margin 47.6 % -0.4 % -2.2 % 45.0 %
Operating expenses 39,900 4,898 2,552 47,350
Operating income (loss) 5,070 (5,275 ) (4,640 ) (4,845 )
Interest and other income (expense), net (84 ) - - (84 )
Income (loss) before provision for income taxes 4,986 (5,275 ) (4,640 ) (4,929 )
Provision for income taxes 224 - - 224
Net income (loss) $ 4,762 $ (5,275 ) $ (4,640 ) $ (5,153 )
Weighted average basic and diluted shares used to compute GAAP net loss per common share 49,153
Weighted average diluted shares used to compute non-GAAP net income (loss) per common share 50,073 50,073 50,073
GAAP net loss per common share $ (0.10 )
Non-GAAP net income (loss) per diluted share $ 0.10 $ (0.11 ) $ (0.09 )

Conference Call

In conjunction with this announcement, Calix will host a conference call at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) today to discuss its second quarter 2013 financial results. A live audio webcast and replay of the call will be available in the Investor Relations section of the Calix web site at http://investor-relations.calix.com/.

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

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

About Calix

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

Use of Non-GAAP Financial Information

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

Calix, Inc.
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share data)
Three Months Ended Six Months Ended
June 29, June 30, June 29, June 30,
2013 2012 2013 2012
Revenue $ 94,439 $ 78,928 $ 184,987 $ 157,493
Cost of revenue:
Products and services(1) 49,846 43,619 97,191 87,090
Amortization of intangible assets 2,088 2,088 4,176 3,363
Total cost of revenue 51,934 45,707 101,367 90,453
Gross profit 42,505 33,221 83,620 67,040
Operating expenses:
Research and development(1) 20,035 16,473 40,206 33,439
Sales and marketing(1) 17,079 14,897 32,880 29,787
General and administrative(1) 7,684 6,129 15,815 12,909
Amortization of intangible assets 2,552 2,552 5,104 5,104
Total operating expenses 47,350 40,051 94,005 81,239
Loss from operations (4,845 ) (6,830 ) (10,385 ) (14,199 )
Interest and other income (expense), net:
Interest income 1 4 2 11
Interest expense (42 ) (57 ) (70 ) (99 )
Other income (expense), net (43 ) (67 ) (322 ) (89 )
Loss before provision for income taxes (4,929 ) (6,950 ) (10,775 ) (14,376 )
Provision for income taxes 224 141 581 236
Net loss $ (5,153 ) $ (7,091 ) $ (11,356 ) $ (14,612 )
Net loss per common share:
Basic and diluted $ (0.10 ) $ (0.15 ) $ (0.23 ) $ (0.30 )
Weighted average number of shares used to compute net loss per common share:
Basic and diluted 49,153 47,972 49,034 47,911
(1) Includes stock-based compensation as follows:
Cost of revenue $ 377 $ 381 $ 728 $ 744
Research and development 1,300 1,091 2,486 2,112
Sales and marketing 1,464 1,338 2,743 2,577
General and administrative 2,134 1,529 4,037 3,221
$ 5,275 $ 4,339 $ 9,994 $ 8,654
Calix, Inc.
Reconciliation of GAAP to Non-GAAP Results
(Unaudited, in thousands, except per share data)
Three Months Ended Six Months Ended
June 29, June 30, June 29, June 30,
2013 2012 2013 2012
GAAP net loss $ (5,153 ) $ (7,091 ) $ (11,356 ) $ (14,612 )
Adjustments to reconcile GAAP net loss to non-GAAP net income:
Stock-based compensation 5,275 4,339 9,994 8,654
Amortization of intangible assets 4,640 4,640 9,280 8,467
Non-GAAP net income $ 4,762 $ 1,888 $ 7,918 $ 2,509
Non-GAAP net income per common share
Basic $ 0.10 $ 0.04 $ 0.16 $ 0.05
Diluted $ 0.10 $ 0.04 $ 0.16 $ 0.05
Weighted average shares used to compute non-GAAP net income per common share - Basic 49,153 47,972 49,034 47,911
Weighted average shares used to compute non-GAAP net income per common share - Diluted (1) 50,073 48,113 49,751 48,076
(1) Includes the dilutive effect of outstanding stock options, restricted stock units, and ESPP.
Calix, Inc.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)
June 29, December 31,
2013 2012
ASSETS
Current assets:
Cash and cash equivalents $ 69,379 $ 46,995
Accounts receivable, net 62,726 59,519
Inventory 37,402 43,282
Deferred cost of revenue 29,068 21,077
Prepaid expenses and other current assets 8,126 5,677
Total current assets 206,701 176,550
Property and equipment, net 18,547 21,083
Goodwill 116,175 116,175
Intangible assets, net 53,021 62,301
Other assets 1,591 1,788
Total assets $ 396,035 $ 377,897
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 16,714 $ 16,804
Accrued liabilities 36,664 36,176
Deferred revenue 53,763 39,315
Total current liabilities 107,141 92,295
Long-term portion of deferred revenue 17,335 15,782
Other long-term liabilities 1,394 745
Total liabilities 125,870 108,822
Stockholders' equity:
Common stock 1,238 1,222
Additional paid-in capital 772,650 760,232
Accumulated other comprehensive income 144 132
Accumulated deficit (503,867 ) (492,511 )
Total stockholders' equity 270,165 269,075
Total liabilities and stockholders' equity $ 396,035 $ 377,897
Calix, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
Six Months Ended
June 29, June 30,
2013 2012
Operating activities:
Net loss $ (11,356 ) $ (14,612 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 5,363 4,129
Loss on retirement of property and equipment 560 84
Amortization of intangible assets 9,280 8,467
Stock-based compensation 9,994 8,654
Changes in operating assets and liabilities:
Restricted cash - 754
Accounts receivable, net (3,207 ) (8,656 )
Inventory 5,880 11,409
Deferred cost of revenue (7,991 ) (4,398 )
Prepaid expenses and other assets (2,009 ) 134
Accounts payable (90 ) 5,997
Accrued liabilities 464 (2,508 )
Deferred revenue 16,001 9,167
Other long-term liabilities 311 (514 )
Net cash provided by operating activities 23,200 18,107
Investing activities:
Purchase of property and equipment (3,265 ) (6,296 )
Net cash used in investing activities (3,265 ) (6,296 )
Financing activities:
Proceeds from exercise of stock options 288 139
Proceeds from employee stock purchase plan 2,464 2,222
Taxes withheld upon vesting of restricted stock units (312 ) (54 )
Net cash provided by financing activities 2,440 2,307
Effect of exchange rate changes on cash and cash equivalents 9 29
Net increase in cash and cash equivalents 22,384 14,147
Cash and cash equivalents at beginning of period 46,995 38,938
Cash and cash equivalents at end of period $ 69,379 $ 53,085

Investor Inquiries:
David H. Allen
408-474-0080
David.Allen@Calix.com

Source: Calix, Inc.

Released July 30, 2013