Calix Posts Record Revenue as Memory Costs Squeeze Margins
Revenue reached $293.3 million, topping the company’s guidance range by $0.3 million.
Broadband platform provider Calix (CALX) posted record second-quarter revenue as U.S. demand lifted sales 21% from a year earlier, though rising memory costs weighed on profitability.
The quarter extended Calix’s growth trajectory while sharpening the trade-off between expansion and margins. Revenue rose 5% sequentially, and the company now expects full-year growth at the higher end of its 15%-to-20% range.
U.S. revenue increased 27% from a year earlier and remained 95% of the total. International revenue rose 7% sequentially but declined 32% year over year, leaving the company increasingly concentrated in its home market.
Software and service revenue climbed 7% sequentially to a record $50.5 million, outpacing the companywide growth rate. Appliance revenue reached a record $242.8 million and rose 23% from a year earlier, making hardware the larger contributor to the annual increase.
That mix came with pressure on profitability. GAAP gross margin fell 230 basis points sequentially to 54.6%, primarily because higher memory-component costs were only partly recovered through surcharges. Appliance gross margin dropped 460 basis points to 52.8%, as demand from AI data centers raised component costs. Software and service margin recovered 870 basis points to 63.0% following completion of the platform migration.
Lower operating expenses cushioned the margin decline. GAAP operating expenses fell $8.3 million sequentially to $138.3 million, and operating income rose to $21.8 million from $0.4 million a year earlier. Net income reached $17.1 million, compared with a $0.2 million loss a year earlier.
Calix expects third-quarter revenue of $301 million to $307 million, implying about 4% sequential growth at the midpoint. Its non-GAAP gross-margin forecast of 50.5% to 53.5% points to a further 280-basis-point decline at the midpoint as memory costs rise. Higher monthly surcharges on new orders are intended to recover those costs, while third-quarter backlog retains second-quarter surcharge rates.
Calix generated $11.9 million of free cash flow and repurchased 1.6 million shares for $69.4 million during the quarter. Cash and investments fell $49.0 million to $194.3 million, leaving $94.1 million under the repurchase authorization as the company absorbed higher working-capital demands and component costs.