Form: 8-K

Current report

August 2, 2016

Documents





Exhibit 99.1
Calix Reports Second Quarter 2016 Financial Results

PETALUMA, CA – August 2, 2016 – 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.

1
                                       
Calix Press Release
 
Page 2 


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
)

                                       
Calix Press Release
 
Page 3 


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 Press Release
 
Page 4 


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 Press Release
 
Page 5 


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 Press Release
 
Page 6 


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 Press Release
 
Page 7 


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



                                       
Calix Press Release
 
Page 8 


Investor Inquiries:

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