Release Details

Calix Reports Second Quarter 2016 Financial Results

August 2, 2016
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PETALUMA, CA -- (Marketwired) -- 08/02/16 -- Calix, Inc. (NYSE: CALX) today announced unaudited financial results for the second quarter ended June 25, 2016. Revenue for the second quarter of 2016 was $107.4 million, an increase of 8.4% compared to $99.1 million for the second quarter of 2015.

"The second quarter was marked by solid demand with revenues near the upper end of our guidance range and increasing by more than 8% compared to the year ago quarter," said Carl Russo, Calix, Inc. President and CEO. "The year is off to a strong start, with 2016 first-half revenues also increasing by more than 8% compared to the same period of 2015. We continue to see increasing interest from existing and potential new customers in all geographies spanning our entire platform, software and systems portfolio. Recent highlights include selection of Calix AXOS NG-PON2 systems for lab trials with Verizon and Windstream's planned deployment of Calix AXOS G.fast nodes and GigaFamily solutions," added Russo.

The company's non-GAAP net loss for the second quarter of 2016 was $2.0 million, or $(0.04) per fully diluted share, compared to a non-GAAP net income of $3.3 million, or $0.06 per fully diluted share, for the second quarter of 2015. A reconciliation of GAAP and non-GAAP results is included as part of this release.

"Our reported loss per share was slightly better than guidance. Favorable customer and product mix offset higher litigation expenses and costs associated with the accelerated ramp of a turnkey network improvement project for an important customer," said William Atkins, Calix, Inc. Executive Vice President and CFO.

The GAAP net loss for the second quarter of 2016 was $5.8 million, or $(0.12) per basic and fully diluted share, compared to a GAAP net loss of $5.8 million, or $(0.11) per basic and fully diluted share, for the second quarter of 2015. A reconciliation of our second quarter 2016 operating results from non-GAAP to GAAP is provided below.

 
Calix, Inc.
(Unaudited, in thousands, except per share data)
Three Months Ended June 25, 2016
                     
    Non-GAAP   Stock-Based Compensation   Amortization of Intangible Assets   Acquisition-Related Costs   GAAP
Revenue   $ 107,425     $ -     $ -     $ -     $ 107,425  
Cost of revenue     56,422       183       814       -       57,419  
Gross profit     51,003       (183)       (814)       -       50,006  
Gross margin     47.5%       (0.2)%       (0.8)%       - %     46.5%  
Operating expenses     53,026       2,785       -       76       55,887  
Operating loss     (2,023) )     (2,968)       (814)       (76)       (5,881)  
Interest and other income (expense), net     179       -       -       -       179  
Loss before provision for income taxes     (1,844)       (2,968)       (814)       (76)       (5,702 )
Provision for income taxes     124       -       -       -       124  
Net loss   $ (1,968)     $ (2,968)     $ (814)     $ (76)     $ (5,826)  
Weighted average number of shares used to compute net loss per common share:                                        
  Basic and diluted     48,371       48,371       48,371       48,371       48,371  
Net loss per common share:                                        
  Basic and diluted   $ (0.04)     $ (0.06)     $ (0.02)     $ -     $ (0.12)  
                                         

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 2016 financial results. A live audio webcast and replay of the call will be available in the Investor Relations section of the Calix website 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, Inc. (NYSE: CALX) is a global leader in access innovation. Its Unified Access portfolio of broadband communications access software, systems, and services enables communications service providers worldwide to transform their 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 (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 primarily exclude certain non-cash charges for stock-based compensation and amortization of acquisition-related intangible assets, and non-recurring acquisition-related costs, which the Company believes are not indicative of its core operating results. Acquisition-related costs include legal fees and associated expenses incurred under a pre-existing contract between Occam and its retained advisor in connection with the Occam acquisition. 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.

Forward-Looking Statements

Statements made in this press release and the earnings call referencing the press release that are not statements of historical fact are forward-looking statements. Forward-looking statements are subject to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to, but are not limited to, statements about potential customer or market opportunities. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from expectations, including but not limited to the risks described in our 2015 Form 10-K and our quarterly reports on Form 10-Q, each as filed with the SEC and available at www.sec.gov, particularly in the sections titled "Risk Factors." Forward-looking statements speak only as of the date the statements are made and are based on information available to us at the time those statements are made and/or management's good faith belief as of that time with respect to future events. We assume no obligation to update forward-looking statements to reflect actual performance or results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. Accordingly, investors should not place undue reliance on any forward-looking statements.

 
Calix, Inc.
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share data)
                 
    Three Months Ended   Six Months Ended
    June 25,   June 27,   June 25,   June 27,
    2016   2015   2016   2015
Revenue   $ 107,425     $ 99,129     $ 205,800     $ 190,167  
Cost of revenue:                                
  Products and services (1)     56,605       48,752       107,835       95,212  
  Amortization of intangible assets     814       2,088       2,477       4,176  
    Total cost of revenue     57,419       50,840       110,312       99,388  
Gross profit     50,006       48,289       95,488       90,779  
Operating expenses:                                
  Research and development (1)     25,033       22,851       47,806       44,765  
  Sales and marketing (1)     19,213       19,215       38,275       38,974  
  General and administrative (1)     11,641       9,436       24,325       19,588  
  Amortization of intangible assets     -       2,552       1,701       5,104  
    Total operating expenses     55,887       54,054       112,107       108,431  
Loss from operations     (5,881)       (5,765)       (16,619)       (17,652)  
Interest and other income (expense), net:                                
  Interest income     216       338       427       717  
  Interest expense     (170)       (279)       (334)       (658)  
  Other income (expense), net     133       29       216       77  
    Total interest and other income (expense), net     179       88       309       136  
Loss before provision for income taxes     (5,702)       (5,677)       (16,310)       (17,516)  
Provision for income taxes     124       102       245       193  
Net loss   $ (5,826)     $ (5,779)     $ (16,555)     $ (17,709)  
Net loss per common share:                                
  Basic and diluted   $ (0.12)     $ (0.11)     $ (0.34)     $ (0.34)  
Weighted average number of shares used to compute net loss per common share:                                
  Basic and diluted     48,371       51,950       48,478       51,843  
                                 
(1) Includes stock-based compensation as follows:                                
  Cost of revenue   $ 183     $ 211     $ 310     $ 386  
  Research and development     1,099       1,483       2,146       2,695  
  Sales and marketing     840       1,656       1,662       3,081  
  General and administrative     846       991       1,571       1,841  
    $ 2,968     $ 4,341     $ 5,689     $ 8,003  
                                 
 
Calix, Inc.
Reconciliation of GAAP to Non-GAAP Results
(Unaudited, in thousands, except per share data)
                 
    Three Months Ended   Six Months Ended
    June 25,   June 27,   June 25,   June 27,
    2016   2015   2016   2015
GAAP net loss   $ (5,826)     $ (5,779)     $ (16,555)     $ (17,709)  
Adjustments to reconcile GAAP net loss to non-GAAP net income (loss):                                
  Stock-based compensation     2,968       4,341       5,689       8,003  
  Amortization of intangible assets     814       4,640       4,178       9,280  
  Acquisition-related costs     76       52       351       242  
Non-GAAP net income (loss)   $ (1,968)     $ 3,254     $ (6,337)     $ (184)  
Non-GAAP net income (loss) per common share:                                
  Basic   $ (0.04)     $ 0.06     $ (0.13)     $ -  
  Diluted   $ (0.04)     $ 0.06     $ (0.13)     $ -  
Weighted average number of shares used to compute non-GAAP net income (loss) per common share:                                
  Basic     48,371       51,950       48,478       51,843  
  Diluted (1)     48,371       52,455       48,478       51,843  
(1) Includes the dilutive effect of outstanding stock options, restricted stock units and ESPP.  
   
 
Calix, Inc.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)
         
    June 25,   December 31,
    2016   2015
ASSETS        
Current assets:        
  Cash and cash equivalents   $ 26,045     $ 23,626  
  Marketable securities     38,167       49,964  
  Accounts receivable, net     49,118       47,155  
  Inventory     40,761       47,667  
  Deferred cost of revenue     6,812       4,918  
  Prepaid expenses and other current assets     8,139       9,470  
    Total current assets     169,042       182,800  
  Property and equipment, net     15,648       17,149  
  Goodwill     116,175       116,175  
  Intangible assets, net     2,440       6,618  
  Other assets     1,075       1,144  
    Total assets   $ 304,380     $ 323,886  
LIABILITIES AND STOCKHOLDERS' EQUITY  
Current liabilities:                
  Accounts payable   $ 13,802     $ 19,603  
  Accrued liabilities     43,930       35,512  
  Deferred revenue     12,367       12,124  
    Total current liabilities     70,099       67,239  
  Long-term portion of deferred revenue     19,649       19,569  
  Other long-term liabilities     1,085       1,293  
    Total liabilities     90,833       88,101  
Stockholders' equity:                
  Common stock     1,351       1,326  
  Additional paid-in capital     825,790       818,754  
  Accumulated other comprehensive loss     (130)       (195)  
  Accumulated deficit     (573,478)       (556,923)  
  Treasury stock     (39,986)       (27,177)  
    Total stockholders' equity     213,547       235,785  
    Total liabilities and stockholders' equity   $ 304,380     $ 323,886  
                 
 
Calix, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
         
    Six Months Ended
    June 25,   June 27,
    2016   2015
Operating activities:        
  Net loss   $ (16,555) )   $ (17,709) )
  Adjustments to reconcile net loss to net cash provided by (used in) operating activities:                
    Depreciation and amortization     4,131       4,978  
    Loss on retirement of property and equipment     -       5  
    Amortization of intangible assets     4,178       9,280  
    Amortization of premiums relating to available-for-sale securities     233       541  
    Stock-based compensation     5,689       8,003  
    Changes in operating assets and liabilities:                
      Restricted cash     -       295  
      Accounts receivable, net     (1,963)       (11,240)  
      Inventory     6,906       6,042  
      Deferred cost of revenue     (1,894)       3,796  
      Prepaid expenses and other assets     1,394       1,065  
      Accounts payable     (5,859)       (5,091)  
      Accrued liabilities     9,012       (2,889)  
      Deferred revenue     323       (3,612)  
      Other long-term liabilities     (207)       (135)  
        Net cash provided by (used in) operating activities     5,388       (6,671)  
Investing activities:                
  Purchases of property and equipment     (3,078)       (3,618)  
  Purchases of marketable securities     -       (25,271)  
  Maturities of marketable securities     11,670       27,832  
        Net cash provided by (used in) investing activities     8,592       (1,057)  
Financing activities:                
  Proceeds from exercise of stock options     14       590  
  Proceeds from employee stock purchase plan     2,905       2,865  
  Payments for repurchases of common stock     (12,809)       (3,377)  
  Taxes paid for awards vested under equity incentive plans     (1,547)       (1,510)  
        Net cash used in financing activities     (11,437)       (1,432)  
Effect of exchange rate changes on cash and cash equivalents     (124)       3  
Net increase (decrease) in cash and cash equivalents     2,419       (9,157)  
Cash and cash equivalents at beginning of period     23,626       48,829  
Cash and cash equivalents at end of period   $ 26,045     $ 39,672  

Investor Inquiries:
Thomas J. Dinges, CFA
408-474-0080
Tom.Dinges@calix.com

Source: Calix, Inc.