Calix Reports Second Quarter 2010 Financial Results
PETALUMA, Calif.--(BUSINESS WIRE)-- Calix, Inc. (NYSE:CALX) today announced unaudited financial results for the second quarter ended June 26, 2010. Revenue for the second quarter of 2010 was $71.7 million, an increase of 50% from revenue reported for the second quarter of 2009 of $47.8 million.
GAAP net loss for the second quarter of 2010 was $3.2 million, or pro forma $(0.09) per share, compared to a GAAP net loss of $8.8 million, or pro forma $(0.33) per share, reported for the second quarter of 2009 (assuming the conversion of preferred stock into common stock as of the beginning of the second quarter of 2009). GAAP results for the periods presented include stock-based compensation, amortization of acquisition-related intangible assets, changes in the fair market value of preferred stock warrants and preferred stock dividends. A reconciliation of GAAP and non-GAAP results is included as part of this release.
Excluding the above-mentioned non-cash items and assuming the conversion of preferred stock to common stock as of the beginning of each quarter, non-GAAP net income for the second quarter of 2010 was $5.5 million, or $0.14 per fully diluted share, as compared to non-GAAP net loss of $5.2 million, or $(0.19) per fully diluted share, in the second quarter of 2009.
GAAP Results
Q2 2010 Q2 2009 Vs. Q2 2009
Revenue $71.7 million $47.8 million + 50%
Net Loss $(3.2 million) $(8.8 million) + 64%
Loss per Share $(0.09) $(2.18) + 96%
Pro Forma Loss per Share(1) $(0.09) $(0.33) + 73%
Non-GAAP Results
Q2 2010 Q2 2009 Vs. Q2 2009
Net Income (Loss) $5.5 million $(5.2 million) + 207%
Diluted Income (Loss) per Share $0.14 $(0.19) +174%
(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 second quarter of 2009.
(2) Includes the dilutive effect of outstanding stock options, warrants and restricted stock units for the second quarter of 2010.
"Second quarter results were ahead of our expectations and represented strong growth and increased market momentum," said Calix president and CEO Carl Russo. "Communications service providers continued to leverage the increasing strength of our Unified Access portfolio to bring 'Fiber Forward' in their networks. As we look into the third quarter, we see a clear path to achieving our goals, but we will continue to manage our business closely as we monitor the macroeconomic climate."
Calix also announced today that long-time board of directors member Paul Ferris, general partner at Azure Capital Partners, has resigned effective July 20, 2010.
"As our first venture board member and an active member of our board for ten years, Paul was instrumental in guiding Calix through significant growth during a variety of market conditions," continued Russo. "We deeply appreciate the decade of service that Paul provided to the company, and wish him well as he ushers other companies to new stages of growth."
"It has been hugely gratifying to help guide a small company with a big vision to the market leadership position Calix finds itself in today," said Ferris. "Calix is well-positioned to benefit from a number of strong growth opportunities in both its existing and in new markets, and I am confident that the company has the resources in place to continue to expand its market success."
Conference Call
In conjunction with this announcement, Calix will host a conference call at 1:30 p.m. PDT (4:30 p.m. EDT) today to discuss its second 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) 688-0836 (U.S.) or (617) 614-4072 (outside the
U.S.)
-- Passcode: 25726993
Replay call access information:
-- Replay call dial-in: (888) 286-8010 (U.S.) or (617) 801-6888 (outside
the U.S.)
-- Passcode: 24737813
The conference call and webcast will include forward looking information.
About Calix
Calix, Inc. (NYSE:CALX) is a leading provider in North America of broadband communications access systems and software for copper- and fiber- 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 six million ports of its Unified Access Infrastructure portfolio to more than 500 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.
Forward-Looking Statements
This press release and its attachments contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements include the quotations from management in this press release, including the Company's beliefs about the strength of its Unified Access portfolio and its ability to bring 'Fiber Forward' in the networks of communication service providers and the Company's ability to achieve its goals, as well as any statements regarding the Company's strategic and operational plans. You are cautioned not to place undue reliance on these forward-looking statements, which are based on management's expectations, estimates and judgment and current trends and market conditions and involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. Information on potential factors that could affect Calix's results and other risks and uncertainties are detailed in its report on Form 10-Q for the fiscal quarter ended March 27, 2010, filed with the SEC on May 7, 2010, available at http://www.sec.gov and from time to time in the Company's periodic reports.
All forward-looking statements are made as of the date of this release, and except as required by law, the Company does not intend, and undertake no duty, to update this information to reflect new information, future events or circumstances or otherwise. Although this release may remain available on the Company's website or elsewhere, its continued availability does not indicate that the Company is reaffirming or confirming any of the information contained herein.
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 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 acquisition related 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 stockholders prior to the conversion of preferred stock into common stock in connection with the Company's initial public offering.
Condensed Statement of Operations
(in thousands)
Three Months Ended Six Months Ended
June 26, June 27, June 26, June 27,
2010 2009 2010 2009
(unaudited) (unaudited)
Revenue $ 71,653 $ 47,842 $ 119,856 $ 84,988
Cost of revenue:
Products and services(1) 41,855 31,076 72,026 56,467
Amortization of existing 1,360 1,360 2,720 2,720
technologies
Total cost of revenue 43,215 32,436 74,746 59,187
Gross profit 28,438 15,406 45,110 25,801
Operating expenses:
Research and development 13,086 10,742 24,933 21,210
(1)
Sales and marketing(1) 10,184 7,988 18,606 15,197
General and 7,423 4,238 12,171 7,901
administrative(1)
Amortization of 185 185 370 370
intangible assets
Total operating expenses 30,878 23,153 56,080 44,678
Loss from operations (2,440 ) (7,747 ) (10,970 ) (18,877 )
Other income (expense):
Interest income 103 27 177 106
Interest expense (620 ) (1,079 ) (1,093 ) (2,022 )
Change in fair value of - 95 (173 ) 95
preferred stock warrants
Other income (expense) (2 ) 40 9 104
Loss before provision for (2,959 ) (8,664 ) (12,050 ) (20,594 )
income taxes
Provision for income taxes 243 138 414 268
Net loss (3,202 ) (8,802 ) (12,464 ) (20,862 )
Preferred stock dividends - - 900 652
Net loss attributable to $ (3,202 ) $ (8,802 ) $ (13,364 ) $ (21,514 )
common stockholders
Net loss per common share:
Basic and diluted $ (0.09 ) $ (2.18 ) $ (0.63 ) $ (5.34 )
Pro forma basic and $ (0.09 ) $ (0.33 ) $ (0.36 ) $ (0.80 )
diluted
Weighted average number of
shares used to compute
net loss per common
share:
Basic and diluted 37,212 4,030 21,305 4,028
Pro forma basic and 37,212 26,855 34,614 26,149
diluted(2)
(1 ) Includes stock-based Three Months Ended Six Months Ended
compensation as follows:
June 26, June 27, June 26, June 27,
2010 2009 2010 2009
(unaudited) (unaudited)
Cost of revenue $ 484 $ 168 $ 624 $ 347
Research and development 1,686 619 2,256 1,348
Sales and marketing 1,247 422 1,681 877
General and 3,764 968 5,427 1,878
administrative
$ 7,181 $ 2,177 $ 9,988 $ 4,450
(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 second quarter of 2009 and the beginning of the six month
periods ended June 26, 2010 and June 27, 2009.
Reconciliation of GAAP to Non-GAAP Results
(Unaudited, in thousands except per share data)
Three Months Ended Six Months Ended
June 26, June 27, June 26, June 27,
2010 2009 2010 2009
GAAP net
loss
attributable $ (3,202 ) $ (8,802 ) $ (13,364 ) $ (21,514 )
to common
stockholders
Adjustments
to reconcile
GAAP net
loss to
non-GAAP net
loss:
Stock-based 7,181 2,177 9,988 4,450
compensation
Amortization
of 1,545 1,545 3,090 3,090
intangible
assets
Change in
fair value
of preferred - (95 ) 173 (95 )
stock
warrants
Preferred
stock - - 900 652
dividends
Non-GAAP net
income $ 5,524 $ (5,175 ) $ 787 $ (13,417 )
(loss)
Non-GAAP net
income
(loss) per
common share
Basic $ 0.15 $ (0.19 ) $ 0.02 $ (0.51 )
Diluted $ 0.14 $ (0.19 ) $ 0.02 $ (0.51 )
Weighted
average
shares used
to compute
non-GAAP net
income
(loss)
per common
share - 37,212 26,855 34,614 26,149
Basic (1)
Weighted
average
shares used
to compute
non-GAAP net
income
(loss)
per common
share - 39,413 26,855 36,409 26,149
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 second quarter ended
June 27, 2009 and the beginning of the six month periods ended June 26, 2010 and June 27,
2009.
(2) Includes the dilutive effect of oustanding stock options, warrants and restricted stock
units for the three and six months ended June 26, 2010.
Three Months Ended Six Months Ended
June 26, June 27, June 26, June 27,
2010 2009 2010 2009
GAAP gross
profit and $ 28,438 39.7 % $ 15,406 32.2 % $ 45,110 37.6 % $ 25,801 30.4 %
gross margin
Adjustments
to reconcile
GAAP gross
profit and
gross margin
to
non-GAAP
gross profit
and gross
margin:
Stock-based 484 168 624 347
compensation
Amortization
of 1,360 1,360 2,720 2,720
intangible
assets
Non-GAAP
gross profit $ 30,282 42.3 % $ 16,934 35.4 % $ 48,454 40.4 % $ 28,868 34.0 %
and gross
margin
Condensed Balance Sheets
(In thousands)
June 26, December 31,
2010 2009
ASSETS (unaudited)
Current Assets:
Cash and cash equivalents $ 24,721 $ 31,821
Marketable securities 77,166 36,228
Restricted cash - 629
Accounts receivable, net 35,540 46,992
Inventory 24,943 18,556
Deferred cost of goods sold 15,846 16,468
Prepaid and other current assets 3,584 4,018
Total current assets 181,800 154,712
Property and equipment, net 11,818 11,293
Goodwill 65,576 65,576
Intangible assets, net 3,605 6,695
Other assets 2,416 2,840
Total assets $ 265,215 $ 241,116
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND
STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 4,309 $ 14,635
Accrued liabilities 26,510 28,629
Preferred stock warrant liabilities - 195
Loans payable - 3,333
Deferred revenue 29,263 29,921
Total current liabilities 60,082 76,713
Loans payable - 16,667
Long-term portion of deferred revenue 8,572 6,556
Other long term liabilities 1,040 910
Total liabilities 69,694 100,846
Convertible preferred stock - 479,628
Stockholders' equity (deficit):
Common stock 933 102
Additional paid-in capital 600,157 52,739
Other comprehensive income (loss) (23 ) (17 )
Accumulated deficit (405,546 ) (392,182 )
Total stockholders' equity (deficit) 195,521 (339,358 )
Total liabilities, convertible preferred stock and
stockholders' equity (deficit) $ 265,215 $ 241,116
Condensed Statement of Cash Flows
(in thousands)
Six Months Ended
June 26, June 27,
2010 2009
(unaudited)
Operating activities
Net cash used in operating activities $ (200 ) $ (8,027 )
Investing activities
Acquisition of property and equipment (2,906 ) (1,559 )
Purchase of marketable securities (56,567 ) -
Sales and maturities of marketable securities 15,208 -
Net cash used in investing activities (44,265 ) (1,559 )
Financing activities
Proceeds from initial public offering of common stock, 57,293 -
net of issuance costs
Principal payments on loans (20,000 ) -
Proceeds from issuance of Series J preferred stock 47 34,258
Proceeds from exercise of stock options 25 10
Repurchase of common and preferred stock - (12 )
Net cash provided by financing activities 37,365 34,256
Net increase (decrease) in cash and cash equivalents (7,100 ) 24,670
Cash and cash equivalents at beginning of year 31,821 23,214
Cash and cash equivalents at end of year $ 24,721 $ 47,884
Source: Calix, Inc.
Released July 22, 2010