Calix Posts Record Revenue as Memory Costs Press Margins

The Tip Desk · November 3, 2026 · 3 min read

Third-quarter revenue reached a record $301.7 million, up 14% from a year earlier, as non-GAAP gross margin finished at the top of the company's range.

Calix, Inc. (CALX), an AI platform company for broadband service providers, reported record third-quarter 2026 revenue of $301.7 million, up 3% from the prior quarter and 14% from a year earlier.

Non-GAAP gross margin of 53.5% finished at the top of the company’s guidance range, with memory surcharges partially offsetting higher component costs. GAAP gross margin was 53.3%. The sequential 130-basis-point decline in both measures primarily reflected higher memory component costs, which the company said were only partly offset by surcharges and a rise in software and service gross margin.

Appliance revenue, which includes Access Edge and Experience Edge appliances and related optics, was a record $249.8 million, up 3% sequentially and 13% year-over-year. Appliance gross margin was 50.6% on a GAAP basis and 50.7% non-GAAP, down 220 basis points sequentially and 550 basis points from a year earlier. The company said the declines primarily reflected an industry-wide rise in memory costs tied to AI data-center demand and that it had prioritized continuity of supply over cost.

Software and service revenue reached a record $51.9 million, up 3% sequentially and 19% year-over-year. The company said the increases related to Calix One, continued subscriber additions by customers and upsell of SmartLife managed services. Non-GAAP software and service gross margin reached a record 67.2%, up 340 basis points sequentially and 200 basis points year-over-year.

U.S. revenue was 95% of the mix, consistent with the prior quarter and up from 94% a year earlier. U.S. revenue rose 4% sequentially and 15% year-over-year. International revenue was 5% of the mix, down 11% sequentially and 14% year-over-year. One customer represented 11% of total revenue.

Remaining performance obligations reached a record $395.7 million, up 2% sequentially and 12% year-over-year after the company elected a practical expedient to exclude software and service contracts of one year or less, totaling $6.0 million, that had been included in prior periods. Without that change, RPOs would have grown 4% sequentially and 13% year-over-year. Current RPOs were $158.5 million, down 2% sequentially and up 13% year-over-year. Calix One contracts signed in the third quarter more than doubled from the previous quarter.

GAAP net income was $10.2 million, down $6.9 million sequentially and $5.4 million from a year earlier. Non-GAAP net income was $28.5 million, down $2.1 million from both the prior quarter and the year-ago quarter, primarily reflecting lower appliance gross margin from higher memory costs. GAAP net income included stock-based compensation of $21.0 million.

Non-GAAP operating expenses were $124.0 million, or 41% of revenue, down from 42% last quarter. GAAP operating expenses were $144.2 million, or 48% of revenue. The company said the non-GAAP expense ratio reflected expense discipline and initial productivity benefits from human-centric AI investments.

The company returned $50.0 million to stockholders by repurchasing 1.4 million shares in the quarter, bringing year-to-date repurchases to 6.3 million shares for $290.2 million. In October 2026 the board increased the repurchase authorization by $100 million, leaving $144 million remaining. Cash and investments ended the quarter at $154.8 million, a sequential decrease of $39.5 million. Free cash flow was $3.4 million.

Fourth-quarter 2026 revenue guidance is $311 million to $317 million, up 4% at the midpoint from the prior quarter, implying full-year 2026 revenue growth of approximately 19%, at the higher end of the 15% to 20% range set at the start of the year. Non-GAAP gross margin guidance is 52.25% to 54.75%, the same midpoint as the prior quarter, with surcharges expected to offset memory costs to a greater degree than in the prior quarter. Non-GAAP operating expense guidance is $129.5 million to $131.5 million.