Calix Reports Fourth Quarter 2010 Financial Results
PETALUMA, Calif.--(BUSINESS WIRE)-- Calix, Inc. (NYSE:CALX) today announced unaudited financial results for the fourth quarter ended December 31, 2010. Revenue for the fourth quarter of 2010 was $91.7 million, an increase of 21.5% compared to $75.5 million for the third quarter of 2010, and an increase of 3.8% compared to $88.4 million for the fourth quarter of 2009.
"We are pleased with our strong performance in the fourth quarter, having achieved revenues and margins that were the highest in company history," said Calix president and CEO Carl Russo. "Our business continued to accelerate throughout Q4, with a growing number of new customer wins, Broadband Stimulus vendor selections, as well as wide adoption of our new platforms."
Non-GAAP net income for the fourth quarter of 2010 was $10.7 million, or $0.26 per fully diluted share, an increase of 83.8% compared to non-GAAP net income of $5.8 million, or $0.15 per fully diluted share, for the third quarter of 2010, and an increase of 54.5% compared to non-GAAP net income of $6.9 million, or $0.21 per fully diluted share, in the fourth quarter of 2009. Non-GAAP net income excludes non-cash items of stock-based compensation and amortization of acquisition-related intangible assets, non-cash and non-recurring changes in the fair market value of preferred stock warrants and preferred stock dividends, and non-recurring acquisition-related costs.
GAAP net loss for the fourth quarter of 2010 was $0.7 million, or $(0.02) per basic and diluted share, compared to a GAAP net loss of $5.4 million, or $(0.14) per basic and diluted share for the third quarter of 2010, and compared to a GAAP net income of $2.1 million, or $0.09 per basic and diluted share reported for the fourth quarter of 2009 assuming the conversion of preferred stock into common stock as of the beginning of the fourth quarter of 2009. A reconciliation of GAAP and non-GAAP results is included as part of this release.
Non-GAAP Results
Q4 2010 Q3 2010 Vs. Q3 2010 Q4 2009 Vs. Q4 2009
Revenue $91.7 $75.5 +21.5% $88.4 million +3.8%
million million
Net Income $10.7 $5.8 million +83.8% $6.9 million +54.5%
million
Diluted
Income per $0.26 $0.15 +80.0% $0.21 +23.8%
Share(1)(2)
GAAP Results
Q4 2010 Q3 2010 Vs. Q3 2010 Q4 2009 Vs. Q4 2009
Revenue $91.7 $75.5 +21.5% $88.4 million + 3.8%
million million
Net Income $(0.7) $(5.4) +86.2% $2.1 million -134.5%
(Loss) million million
Income
(Loss) per $(0.02) $(0.14) +85.7% $0.53 -103.8%
Basic Share
Income
(Loss) per $(0.02) $(0.14) +85.7% $0.50 -104.0%
Diluted
Share(3)
Pro Forma
Income
(Loss) per $(0.02) $(0.14) +85.7% $0.09 -122.2%
Basic and
Diluted
Share(1)(3)
Includes outstanding common shares and common shares resulting from the
(1) assumed conversion of preferred shares as if conversion occurred at the
beginning of the fourth quarter of 2009.
(2) Includes the dilutive effect of outstanding stock options, warrants and
restricted stock units.
(3) Includes the dilutive effect of outstanding stock options and warrants
for the fourth quarter of 2009.
Conference Call
In conjunction with this announcement, Calix will host a conference call at 1:30 p.m. PST (4:30 p.m. EST) today to discuss its fourth quarter 2010 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: (800) 561-2813 (U.S.) or (617) 614-3529 (outside the
U.S.)
-- Passcode: 55658958
Replay call access information:
-- Replay call dial-in: (888) 286-8010 (U.S.) or (617) 801-6888 (outside
the U.S.)
-- Passcode: 95656553
The conference call and webcast will include forward looking information.
About Calix
Calix is a leading North American provider of broadband communications access systems and software for fiber- and copper- based network architectures that enable communications service providers to connect to their residential and business subscribers. Calix enables communications service providers to provide a wide range of revenue-generating services, from basic voice and data to advanced broadband services, over legacy and next-generation access networks. The Calix Unified Access Portfolio helps these companies to transform their legacy and mixed protocol access networks to fiber and Ethernet. Calix has shipped over eight million ports of its Unified Access Infrastructure portfolio to more than 600 North American and international customers, whose networks serve over 40 million subscriber lines in total. For more information, visit the Calix website at www.calix.com.
Use of Non-GAAP Financial Information
The Company uses certain non-GAAP financial measures in this press release to supplement its consolidated financial statements, which are presented in accordance with GAAP. These non-GAAP measures include non-GAAP net income (loss) and non-GAAP basic and diluted income (loss) per share. These non-GAAP measures are provided to enhance the reader's understanding of the Company's operating performance as they exclude certain non-cash charges and non-recurring acquisition related costs 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 these results. A reconciliation of the non-GAAP results to the most directly comparable GAAP results is provided in the financial schedules portion of 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.
The Company makes adjustments for the following items in analyzing its operating results as it does not consider these items to part of the Company's ongoing operating activities or meaningful in evaluating the Company's financial performance:
Stock-based Compensation
A non-cash expense incurred in accordance with SFAS 123R using the modified prospective transition method.
Amortization of Intangible Assets
A non-cash expense resulting from intangible assets acquired in the acquisition of Optical Solutions, Inc. (OSI) in February 2006. The Company is required to amortize these assets over their expected useful lives.
Change in Fair Value of Preferred Stock Warrants
A non-cash expense or benefit resulting from the revaluation of the Company's preferred stock warrant liability. Upon completion of the Company's initial public offering, the preferred warrant liability was reclassified as a component of stockholders' equity, and the Company is no longer required to revalue the warrants.
Preferred Stock Dividends
Preferred stock dividends represent Series I preferred stock dividends paid to the Company's Series I shareholders prior to the conversion of preferred stock in connection with the Company's initial public offering.
Acquisition-related Costs
Acquisition-related costs represent legal and professional services associated with our intended merger with Occam Networks Inc.
Condensed Statement of Operations
(in thousands)
Three Months Ended December 31, Years Ended December 31,
2010 2009 2010 2009
(unaudited) (unaudited)
Revenue $ 91,695 $ 88,359 $ 287,043 $ 232,947
Cost of revenue:
Products and 51,679 57,279 168,873 150,863
services(1)
Amortization of
existing 1,360 1,360 5,440 5,440
technologies
Total cost of 53,039 58,639 174,313 156,303
revenue
Gross profit 38,656 29,720 112,730 76,644
Operating expenses:
Research and 16,180 12,945 55,412 46,132
development(1)
Sales and marketing 13,107 9,795 42,121 33,486
(1)
General and 8,483 3,984 27,998 15,613
administrative(1)
Acquisition-related 1,805 - 3,942 -
costs
Amortization of 185 185 740 740
intangible assets
Total operating 39,760 26,909 130,213 95,971
expenses
Income/(loss) from (1,104 ) 2,811 (17,483 ) (19,327 )
operations
Other income
(expense):
Interest income 88 101 384 245
Interest expense (50 ) (441 ) (1,188 ) (3,867 )
Change in fair value
of preferred stock - (35 ) (173 ) 37
warrants
Other income (25 ) 6 (12 ) 119
Income/(loss) before
provision (benefit) (1,091 ) 2,442 (18,472 ) (22,793 )
for income taxes
Provision (benefit) (354 ) (403 ) 81 (352 )
for income taxes
Net income/(loss) (737 ) 2,845 (18,553 ) (22,441 )
Preferred stock - 706 900 3,747
dividends
Net income/(loss)
attributable to $ (737 ) $ 2,139 $ (19,453 ) $ (26,188 )
common stockholders
Net income/(loss)
per common share:
Basic $ (0.02 ) $ 0.53 $ (0.65 ) $ (6.48 )
Diluted $ (0.02 ) $ 0.50 $ (0.65 ) $ (6.48 )
Pro forma basic $ (0.02 ) $ 0.09 $ (0.51 ) $ (0.77 )
Pro forma diluted $ (0.02 ) $ 0.09 $ (0.51 ) $ (0.77 )
Weighted average
number of shares
used to compute net
income/(loss) per
common share:
Basic 38,144 4,072 29,778 4,040
Diluted 38,144 4,309 29,778 4,040
Pro forma basic(2) 38,144 32,057 36,232 28,991
Pro forma diluted 38,144 32,294 36,232 28,991
(2)
(1) Includes
stock-based Three Months Ended December 31, Years Ended December 31,
compensation as
follows:
2010 2009 2010 2009
(unaudited) (unaudited)
Cost of revenue $ 593 $ 166 $ 1,745 $ 682
Research and 1,952 688 5,966 2,657
development
Sales and marketing 1,521 452 4,555 1,739
General and 4,027 1,200 13,309 4,118
administrative
$ 8,093 $ 2,506 $ 25,575 $ 9,196
(2) Includes outstanding common shares and common shares resulting from the
assumed conversion of preferred shares as if conversion occurred at the
beginning of the fourth quarter of 2009 and the beginning of the twelve month
periods ended December 31, 2010 and December 31, 2009.
Reconciliation of GAAP to Non-GAAP Results
(Unaudited, in thousands except per share data)
Three Months Ended December Years Ended December 31,
31,
2010 2009 2010 2009
GAAP net loss
attributable to $ (737 ) $ 2,139 $ (19,453 ) $ (26,188 )
common stockholders
Adjustments to
reconcile GAAP net
loss to non-GAAP
net loss:
Stock-based 8,093 2,506 25,575 9,196
compensation
Amortization of 1,545 1,545 6,180 6,180
intangible assets
Acquisition-related 1,805 - 3,942 -
costs
Change in fair
value of preferred - 35 173 (37 )
stock warrants
Preferred stock - 706 900 3,747
dividends
Non-GAAP net income $ 10,706 $ 6,931 $ 17,317 $ (7,102 )
(loss)
Non-GAAP net income
(loss) per common
share
Basic $ 0.28 $ 0.22 $ 0.48 $ (0.24 )
Diluted $ 0.26 $ 0.21 $ 0.45 $ (0.24 )
Weighted average
shares used to
compute non-GAAP 38,144 32,057 36,232 28,991
net income (loss)
per common share -
Basic (1)
Weighted average
shares used to
compute non-GAAP 40,943 32,294 38,502 28,991
net income (loss)
per common share -
Diluted (1)(2)
(1) Includes outstanding common shares and common shares resulting from the assumed conversion of
preferred shares as if conversion occurred at the beginning of the fourth quarter ended December
31, 2009 and the beginning of the twelve month periods ended December 31, 2010 and December 31,
2009.
(2) Includes the dilutive effect of outstanding stock options, warrants and restricted stock units
for the three and twelve months ended December 31, 2010.
Three Months Ended December 31, Years Ended December 31,
2010 2009 2010 2009
GAAP gross profit $ 38,656 42.2 % $ 29,720 33.6 % $ 112,730 39.3 % $ 76,644 32.9 %
and gross margin
Adjustments to
reconcile GAAP
gross profit and
gross margin to
non-GAAP gross
profit and gross
margin:
Stock-based 593 166 1,745 682
compensation
Amortization of 1,360 1,360 5,440 5,440
intangible assets
Non-GAAP gross
profit and gross $ 40,609 44.3 % $ 31,246 35.4 % $ 119,915 41.8 % $ 82,766 35.5 %
margin
Condensed Balance Sheets
(In thousands)
December 31,
2010 2009
ASSETS (unaudited)
Current Assets:
Cash and cash equivalents $ 66,304 $ 31,821
Marketable securities 32,020 36,228
Restricted cash - 629
Accounts receivable, net 43,377 46,992
Inventory 24,557 18,556
Deferred cost of goods sold 7,771 16,468
Prepaid and other current assets 3,245 4,018
Total current assets 177,274 154,712
Property and equipment, net 11,815 11,293
Goodwill 65,576 65,576
Intangible assets, net 515 6,695
Other assets 2,376 2,840
Total assets $ 257,556 $ 241,116
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND
STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 10,268 $ 14,635
Accrued liabilities 25,987 28,629
Preferred stock warrant liabilities - 195
Loans payable - 3,333
Deferred revenue 14,062 29,921
Total current liabilities 50,317 76,713
Loans payable - 16,667
Long-term portion of deferred revenue 10,985 6,556
Other long term liabilities 951 910
Total liabilities 62,253 100,846
Convertible preferred stock - 479,628
Stockholders' equity (deficit):
Common stock 968 102
Additional paid-in capital 605,939 52,739
Other comprehensive income (loss) 31 (17 )
Accumulated deficit (411,635 ) (392,182 )
Total stockholders' equity (deficit) 195,303 (339,358 )
Total liabilities, convertible preferred stock and $ 257,556 $ 241,116
stockholders' equity (deficit)
Condensed Statement of Cash Flows
(in thousands)
Years Ended December 31,
2010 2009
(unaudited)
Operating activities
Net loss (18,553 ) $ (22,441 )
Adjustments to reconcile net loss to net cash used in
operating activities:
Amortization of premiums relating to 967 -
available-for-sale securities
Depreciation and amortization 5,015 4,942
Amortization of intangible assets 6,180 6,180
Revaluation of warrant liability 173 (37 )
Stock-based compensation 25,575 9,196
Net gains on investments (37 ) -
Loss on disposal of property and equipment 77 -
Changes in operating assets and liabilities:
Change in restricted cash 629 4,227
Accounts receivable, net 3,615 (14,209 )
Inventory (6,001 ) 4,841
Deferred cost of goods sold 8,697 (2,260 )
Prepaid and other assets 1,237 (4,252 )
Accounts payable (4,367 ) (3,855 )
Accrued liabilities (2,642 ) 12,138
Deferred revenue (11,430 ) 7,664
Other long-term liabilities 41 (744 )
Net cash provided by (used in) operating activities $ 9,176 $ 1,390
Investing activities
Acquisition of property and equipment (5,614 ) (5,064 )
Purchase of marketable securities (79,190 ) (36,245 )
Sales and maturities of marketable securities 82,516 -
Net cash used in investing activities (2,288 ) (41,309 )
Financing activities
Proceeds from initial public offering of common stock, 57,311 -
net of issuance costs
Proceeds from loans - 20,000
Principal payments on loans (20,000 ) (21,000 )
Taxes payable on vesting of restricted stock units (10,004 )
Proceeds from issuance of Series J preferred stock - 49,478
Proceeds from exercise of stock options and warrants 288 60
and other
Repurchase of common and preferred stock - (12 )
Net cash provided by financing activities 27,595 48,526
Net increase in cash and cash equivalents 34,483 8,607
Cash and cash equivalents at beginning of year 31,821 23,214
Cash and cash equivalents at end of year $ 66,304 $ 31,821
Source: Calix, Inc.
Released February 3, 2011