PETALUMA, Calif., May 09, 2017 (GLOBE NEWSWIRE) -- Calix, Inc. (NYSE:CALX) today announced unaudited financial results for the first quarter ended April 1, 2017. Revenue for the first quarter of 2017 was $117.5 million, an increase of 19.5% compared to $98.4 million for the first quarter of 2016.

“Revenues in the first quarter were above our expectations as activity accelerated in our turnkey network improvement projects and this led to overall revenue growth of nearly 20% year-over-year,” said Carl Russo, Calix, Inc. President and CEO. “We continued our strategic investments to drive the transformation to Software Defined Access led by our AXOS platform and Calix Cloud,” added Russo.

The GAAP net loss for the first quarter of 2017 was $33.3 million, or $(0.67) per basic and fully diluted share, compared to a GAAP net loss of $10.7 million, or $(0.22) per basic and fully diluted share, for the first quarter of 2016.

The company’s non-GAAP net loss for the first quarter of 2017 was $28.3 million, or $(0.57) per fully diluted share, compared to a non-GAAP net loss of $4.4 million, or $(0.09) per fully diluted share, for the first quarter of 2016. A reconciliation of our first quarter 2017 operating results from GAAP to non-GAAP is provided in this release.

Outlook

Calix is providing forward-looking estimates for Q2 2017 and full year 2017 results as follows:

Q2 2017

Revenue $122.0 - $126.0 million, representing growth of 13.6% - 17.3% year-over-year
Non-GAAP Gross Margin 40.5% - 43.5%
Non-GAAP Operating Expense $59.0 - $61.0 million
Non-GAAP Net Loss Per Share ($0.19) - ($0.12)

Full year 2017

The company is reiterating its prior guidance for full year 2017 projecting revenue growth of 10% or more relative to 2016 and projecting to achieve a lower net loss on a non-GAAP basis for the full year compared to 2016.

The company estimates that GAAP EPS will be approximately $0.09 lower for Q2 2017 and approximately $0.40 lower for full year 2017 due to the inclusion of stock-based compensation, amortization of intangibles and restructuring charges. A reconciliation of the GAAP to non-GAAP outlook is provided in this release.

Recast of Revenue and Cost of Revenue by Class

In the first quarter of fiscal 2017, the company’s revenue from services represents more than 10% of its total revenue, hence, the revenue derived from services along with its associated cost of revenue are presented separately in the statements of operations. Revenue and cost of revenue for the prior year comparable period are recast to conform with the current period presentation. In addition, the company is providing supplemental information regarding the recast of historical revenue and cost of revenue for the four quarters and full year of fiscal years 2015 and 2016, as if reported or presented separately by revenue class, in the Investor Relations section of the Calix website at http://investor-relations.calix.com and in an exhibit to the Form 8-K being filed today in connection with this release.

Restructuring Plan

In March 2017, the Company adopted a restructuring plan that seeks to realign the Company’s business to increase its focus towards its investments in innovative Software Defined Access systems and software, while reducing its cost structure in the traditional systems business. The Company began to take action under this plan beginning in March 2017 and recognized approximately $0.7 million of restructuring charges for the three months ended April 1, 2017 consisting primarily of severance and other one-time termination benefits. Throughout the remainder of 2017, the Company intends to take further actions under this plan and expects to incur total pretax charges of up to $6.8 million for the full year related to this plan. These actions are anticipated to result in annualized cost savings approximately equal to the total charges incurred. The Company expects to see cost reduction benefits as a result of these charges starting in fiscal 2018.

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 first quarter 2017 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) pioneered Software Defined Access and cloud solutions focused on access networks and the subscriber. Its portfolio of access systems and solutions combines AXOS, the revolutionary platform for access, with Calix Cloud, innovative cloud solutions for network data analytics and subscriber experience assurance. Together, they enable communications service providers to transform their businesses and be the winning service providers of tomorrow. For more information, visit the Calix website at www.calix.com.

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, our opportunities with existing and prospective customers, our estimates and planned cost savings related to our restructuring plan and our future financial performance (including our outlook for Q2 2017 and full year 2017). Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from expectations, including but not limited to fluctuations in our financial and operating results, the capital spending decisions of our customers, changes in regulations and/or government sponsored programs, competition, our ability to achieve market acceptance of new products and solutions, our ability to grow our customer base, fluctuations in costs associated with our products and services, as well as the risks and uncertainties described in our annual reports on 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.

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), non-GAAP cost of revenue, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expense, non-GAAP operating income (loss), non-GAAP loss before provision of income taxes 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, amortization of acquisition-related intangible assets, and non-recurring restructuring charges and 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 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
    April 1, March 26,
    2017 2016
Revenue:   
 Systems $91,605  $91,680 
 Services 25,913  6,695 
  Total revenue 117,518  98,375 
Cost of revenue:    
 Systems (1) 57,373  47,693 
 Services (1) 25,768  5,200 
  Total cost of revenue 83,141  52,893 
Gross profit 34,377  45,482 
Operating expenses:    
 Research and development (1) 33,808  22,773 
 Sales and marketing (1) 22,429  19,062 
 General and administrative (1) 10,257  12,684 
 Amortization of intangible assets —  1,701 
 Restructuring charges 699  — 
  Total operating expenses 67,193  56,220 
Loss from operations (32,816) (10,738)
Interest and other income (expense), net:    
 Interest income 88  211 
 Interest expense (44) (164)
 Other income (expense), net 120  83 
  Total interest and other income (expense), net 164  130 
Loss before provision for income taxes (32,652) (10,608)
Provision for income taxes 673  121 
Net loss $(33,325) $(10,729)
Net loss per common share:    
  Basic and diluted $(0.67) $(0.22)
Weighted average number of shares used to compute    
 net loss per common share:    
  Basic and diluted 49,525  48,591 
       
(1)Includes stock-based compensation as follows:    
 Cost of revenue:    
  Systems $116  $90 
  Services 56  37 
 Research and development 1,326  1,047 
 Sales and marketing 1,111  822 
 General and administrative 931  725 
    $3,540  $2,721 


 
Calix, Inc.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)
     
  April 1, December 31,
  2017 2016
ASSETS    
Current assets:    
Cash and cash equivalents $26,318  $50,359 
Marketable securities 25,215  27,748 
Accounts receivable, net 64,188  51,336 
Inventory 46,538  44,545 
Deferred cost of revenue 40,454  34,763 
Prepaid expenses and other current assets 11,911  10,571 
 Total current assets 214,624  219,322 
Property and equipment, net 18,144  17,984 
Goodwill 116,175  116,175 
Intangible assets, net —  813 
Other assets 816  1,181 
 Total assets $349,759  $355,475 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:    
Accounts payable $24,520  $23,827 
Accrued liabilities 77,015  69,715 
Deferred revenue 44,416  27,854 
Total current liabilities 145,951  121,396 
Long-term portion of deferred revenue 20,876  20,237 
Other long-term liabilities 775  878 
Total liabilities 167,602  142,511 
Stockholders’ equity:    
Common stock 1,374  1,368 
Additional paid-in capital 839,018  836,563 
Accumulated other comprehensive loss (599) (656)
Accumulated deficit (617,650) (584,325)
Treasury stock (39,986) (39,986)
Total stockholders’ equity 182,157  212,964 
Total liabilities and stockholders’ equity $349,759  $355,475 


 
Calix, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
     
  Three Months Ended
  April 1, March 26,
  2017 2016
Operating activities:    
Net loss $(33,325) $(10,729)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:    
Depreciation and amortization 2,463  1,955 
Loss on retirement of property and equipment 80  — 
Amortization of intangible assets 813  3,364 
Amortization of premiums relating to available-for-sale securities (5) 114 
Stock-based compensation 3,540  2,721 
Changes in operating assets and liabilities:    
  Accounts receivable, net (12,852) 3,351 
  Inventory (1,993) 6,540 
  Deferred cost of revenue (5,691) 810 
  Prepaid expenses and other assets (968) (576)
  Accounts payable 276  (8,459)
  Accrued liabilities 7,110  8,471 
  Deferred revenue 17,201  (2,195)
  Other long-term liabilities (103) (98)
    Net cash provided by (used in) operating activities (23,454) 5,269 
Investing activities:    
Purchases of property and equipment (2,106) (1,453)
Purchases of marketable securities (8,732) — 
Maturities of marketable securities 11,266  7,020 
    Net cash provided by investing activities 428  5,567 
Financing activities:    
Proceeds from exercise of stock options 13  14 
Payments for repurchases of common stock —  (12,809)
Taxes paid for awards vested under equity incentive plans (1,093) (251)
    Net cash used in financing activities (1,080) (13,046)
Effect of exchange rate changes on cash and cash equivalents 65  (51)
Net decrease in cash and cash equivalents (24,041) (2,261)
Cash and cash equivalents at beginning of period 50,359  23,626 
Cash and cash equivalents at end of period $26,318  $21,365 


 
Calix, Inc.
Reconciliation of GAAP to Non-GAAP Results
(Unaudited, in thousands, except per share data)
     
  Three Months Ended
  April 1, March 26,
  2017 2016
GAAP net loss $(33,325) $(10,729)
Adjustments to reconcile GAAP net loss to non-GAAP net loss:    
Stock-based compensation 3,540  2,721 
Amortization of intangible assets 813  3,364 
Restructuring charges 699  — 
Acquisition-related costs —  275 
Non-GAAP net loss $(28,273) $(4,369)
Non-GAAP net loss per common share:    
Basic and diluted $(0.57) $(0.09)
Weighted average number of shares used to compute    
non-GAAP net loss per common share:    
Basic and diluted 49,525  48,591 


 
Calix, Inc.
Reconciliation of GAAP to Non-GAAP Results
(Unaudited, in thousands, except per share data)
Three Months Ended April 1, 2017
           
  GAAP Stock-Based Compensation Amortization of Intangible Assets Restructuring Charges Non-GAAP
Revenue $117,518  $—  $—  $—  $117,518 
Cost of revenue 83,141  (172) (813) —  82,156 
Gross profit 34,377  172  813  —  35,362 
Gross margin 29.3% 0.1% 0.7% —% 30.1%
Operating expenses 67,193  (3,368) —  (699) 63,126 
Operating loss (32,816) 3,540  813  699  (27,764)
Interest and other income (expense), net 164  —  —  —  164 
Loss before provision for income taxes (32,652) 3,540  813  699  (27,600)
Provision for income taxes 673  —  —  —  673 
Net loss $(33,325) $3,540  $813  $699  $(28,273)
Weighted average diluted shares used to          
compute net loss per common share 49,525  49,525  49,525  49,525  49,525 
Net loss per diluted share $(0.67) $0.07  $0.02  $0.01  $(0.57)



 
Calix, Inc.
Reconciliation of GAAP to Non-GAAP Outlook
(Unaudited, in thousands, except per share data)
Three Months Ending July 1, 2017
         
Outlook GAAP Stock-Based Compensation Restructuring Charges Non-GAAP
Gross margin 40.5% - 43.5%  0.01%  0.00% 40.5% - 43.5%
Operating expenses $ 63,800 - $ 65,800 $  (3,100) $  (1,700) $ 59,000 - $ 61,000
Net loss per diluted share $ (0.28) - $ (0.21) $0.06  $0.03  $ (0.19) - $ (0.12)



 
Calix, Inc.
Reconciliation of GAAP to Non-GAAP Outlook
(Unaudited)
   
Outlook Twelve Months
Ending 
December 31, 2017
Estimated per common share adjustments for:  
Stock-based compensation $0.25 
Amortization of intangible assets 0.02 
Restructuring charges (1) 0.13 
Total GAAP to non-GAAP net loss per common share adjustments $0.40 

(1) In relation to the restructuring plan, for fiscal 2017 Calix currently estimates that over the course of 2017 it will recognize to its GAAP financial results an amount up to $6.8 million consisting primarily of severance and other one-time termination benefits. These charges are primarily cash-based. Calix recognized $0.7 million of these charges during the first quarter of fiscal 2017 with the remaining amount to be recognized during the rest of the fiscal year.


Investor Inquiries:

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

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