SOURCE: Calix, Inc.

Calix, Inc.

October 29, 2013 16:02 ET

Calix Achieves Record Revenues in Third Quarter 2013

PETALUMA, CA--(Marketwired - Oct 29, 2013) - Calix, Inc. (NYSE: CALX) today announced unaudited financial results for the third quarter ended September 28, 2013. Revenue for the third quarter of 2013 was a record $103.6 million, an increase of 27% compared to $81.3 million for the third quarter of 2012.

"Our strong Q3 results reflect our solid execution in the quarter," said Carl Russo, president and CEO of Calix. "Our year-to-date progress reflects the increasing value Calix customers place on transforming their access networks."

Non-GAAP net income for the third quarter of 2013 was $10.2 million, or $0.20 per fully diluted share. Non-GAAP net income was $1.8 million, or $0.04 per fully diluted share, for the third quarter of 2012. A reconciliation of GAAP and non-GAAP results is included as part of this release.

GAAP net income for the third quarter of 2013 was $0.5 million, or $0.01 per basic and diluted share, compared to a GAAP net loss of $7.1 million, or $(0.15) per basic and diluted share for the third quarter of 2012. A reconciliation of our third quarter 2013 operating results from non-GAAP to GAAP is provided below:

   
Calix, Inc.  
(Unaudited, in thousands, except per share data)  
Three Months Ended September 28, 2013  
                         
    Non-GAAP     Stock-Based Compensation     Amortization of Intangible Assets     GAAP  
Revenue   $ 103,628     $ --     $ --     $ 103,628  
Cost of revenue     53,770       362       2,089       56,221  
Gross profit     49,858       (362 )     (2,089 )     47,407  
Gross margin     48.1 %     -0.3 %     -2.0 %     45.7 %
Operating expenses     40,258       4,609       2,552       47,419  
Operating income (loss)     9,600       (4,971 )     (4,641 )     (12 )
Interest and other income (expense), net     (18 )     --       --       (18 )
Income (loss) before benefit from income taxes     9,582       (4,971 )     (4,641 )     (30 )
Benefit from income taxes     (574 )     --       --       (574 )
Net income (loss)   $ 10,156     $ (4,971 )   $ (4,641 )   $ 544  
Weighted average shares used to computenet income (loss) per common share:                                
                             
  Basic     49,694       49,694       49,694       49,694  
  Diluted     51,142       51,142       51,142       51,142  
Net income (loss) per common share:                                
  Basic   $ 0.20     $ (0.10 )   $ (0.09 )   $ 0.01  
  Diluted   $ 0.20     $ (0.10 )   $ (0.09 )   $ 0.01  
                                   
                                   

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 third quarter 2013 financial results. A live audio webcast and replay of the call will be available in the Investor Relations section of the Calix web site 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 (NYSE: CALX) is a global leader in access innovation. Its Unified Access portfolio of broadband communications access systems and software enables communications service providers worldwide to transform their copper- and fiber-based 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 and non-GAAP basic and diluted income 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, 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 diluted weighted average shares used to compute both GAAP and non-GAAP net income per share include the dilutive effect of outstanding stock options, restricted stock units, performance restricted stock units, and ESPP, which have been calculated under the treasury stock method. 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   Nine Months Ended  
    September 28,
2013
 
  September 29,
2012
 
  September 28,
2013
 
  September 29,
2012
 
 
Revenue $ 103,628   $ 81,301   $ 288,615   $ 238,794  
Cost of revenue:                        
  Products and services (1)   54,132     45,707     151,323     132,797  
  Amortization of intangible assets   2,089     2,088     6,265     5,451  
    Total cost of revenue   56,221     47,795     157,588     138,248  
Gross profit   47,407     33,506     131,027     100,546  
Operating expenses:                        
  Research and development (1)   19,777     16,165     59,983     49,604  
  Sales and marketing (1)   16,612     15,093     49,492     44,880  
  General and administrative (1)   8,478     6,773     24,293     19,682  
  Amortization of intangible assets   2,552     2,552     7,656     7,656  
    Total operating expenses   47,419     40,583     141,424     121,822  
Loss from operations   (12 )   (7,077 )   (10,397 )   (21,276 )
Interest and other income (expense), net:                        
  Interest income   2     3     4     14  
  Interest expense   (24 )   (41 )   (94 )   (140 )
  Other income (expense), net   4     19     (318 )   (70 )
Loss before provision for (benefit from) income taxes   (30 )   (7,096 )   (10,805 )   (21,472 )
Provision for (benefit from) income taxes   (574 )   44     7     280  
Net income (loss) $ 544   $ (7,140 ) $ (10,812 ) $ (21,752 )
Net income (loss) per common share:                        
  Basic $ 0.01   $ (0.15 ) $ (0.22 ) $ (0.45 )
  Diluted $ 0.01   $ (0.15 ) $ (0.22 ) $ (0.45 )
Weighted average shares used to compute net income (loss) per common share:    
   
   
   
   
   
   
   
  Basic   49,694     48,353     49,255     48,059  
  Diluted   51,142     48,353     49,255     48,059  
                           
                           
(1) Includes stock-based compensation as follows:                        
  Cost of revenue $ 362   $ 345   $ 1,090   $ 1,089  
  Research and development   1,179     1,017     3,665     3,129  
  Sales and marketing   1,395     1,263     4,138     3,840  
  General and administrative   2,035     1,682     6,072     4,903  
    $ 4,971   $ 4,307   $ 14,965   $ 12,961  
   
   
   
Calix, Inc.  
Reconciliation of GAAP to Non-GAAP Results  
(Unaudited, in thousands, except per share data)  
   
     
 
Three Months Ended     Nine Months Ended  
    September 28,
2013
  September 29,
2012
    September 28,
2013
    September 29,
2012
 
GAAP net income (loss)   $ 544   $ (7,140 )   $ (10,812 )   $ (21,752 )
Adjustments to reconcile GAAP net income (loss) to non-GAAP net income:                              
Stock-based compensation     4,971     4,307       14,965       12,961  
Amortization of intangible assets     4,641     4,640       13,921       13,107  
Non-GAAP net income   $ 10,156   $ 1,807     $ 18,074     $ 4,316  
Non-GAAP net income per common share:                              
  Basic   $ 0.20   $ 0.04     $ 0.37     $ 0.09  
  Diluted   $ 0.20   $ 0.04     $ 0.36     $ 0.09  
Weighted average shares used to compute non-GAAP net income per common share:                              
                           
  Basic     49,694     48,353       49,255       48,059  
  Diluted     51,142     48,472       50,218       48,208  
   
   
   
Calix, Inc.  
Condensed Consolidated Balance Sheets  
(Unaudited, in thousands)  
             
    September 28,     December 31,  
    2013     2012  
ASSETS            
Current assets:            
  Cash and cash equivalents   $ 79,124     $ 46,995  
  Restricted cash     972       --  
  Accounts receivable, net     54,421       59,519  
  Inventory     39,376       43,282  
  Deferred cost of revenue     26,826       21,077  
  Prepaid expenses and other current assets     6,656       5,677  
    Total current assets     207,375       176,550  
Property and equipment, net     18,379       21,083  
Goodwill     116,175       116,175  
Intangible assets, net     48,380       62,301  
Other assets     1,827       1,788  
    Total assets   $ 392,136     $ 377,897  
LIABILITIES AND STOCKHOLDERS' EQUITY  
Current liabilities:                
  Accounts payable   $ 18,073     $ 16,804  
  Accrued liabilities     35,034       36,176  
  Deferred revenue     45,202       39,315  
    Total current liabilities     98,309       92,295  
Long-term portion of deferred revenue     18,197       15,782  
Other long-term liabilities     1,321       745  
    Total liabilities     117,827       108,822  
Stockholders' equity:                
  Common stock     1,244       1,222  
  Additional paid-in capital     776,209       760,232  
  Accumulated other comprehensive income     179       132  
  Accumulated deficit     (503,323 )     (492,511 )
    Total stockholders' equity     274,309       269,075  
    Total liabilities and stockholders' equity   $ 392,136     $ 377,897  
   
   
   
Calix, Inc.  
Condensed Consolidated Statements of Cash Flows  
(Unaudited, in thousands)  
             
    Nine Months Ended  
    September 28,     September 29,  
    2013     2012  
Operating activities:            
Net loss   $ (10,812 )   $ (21,752 )
Adjustments to reconcile net loss to net cash provided by operating activities:                
  Depreciation and amortization     7,767       6,351  
  Loss on retirement of property and equipment     564       262  
  Amortization of intangible assets     13,921       13,107  
  Stock-based compensation     14,965       12,961  
Changes in operating assets and liabilities:                
  Restricted cash     (972 )     754  
  Accounts receivable, net     5,098       (9,359 )
  Inventory     3,906       14,855  
  Deferred cost of revenue     (5,749 )     (9,063 )
  Prepaid expenses and other assets     (466 )     491  
  Accounts payable     1,269       2,186  
  Accrued liabilities     (1,224 )     (2,098 )
  Deferred revenue     8,302       16,755  
  Other long-term liabilities     238       (633 )
    Net cash provided by operating activities     36,807       24,817  
Investing activities:                
  Purchase of property and equipment     (5,475 )     (7,879 )
    Net cash used in investing activities     (5,475 )     (7,879 )
Financing activities:                
  Proceeds from exercise of stock options     671       158  
  Proceeds from employee stock purchase plan     2,464       2,222  
  Taxes withheld upon vesting of restricted stock units and restricted stock awards     (2,102 )     (880 )
  Payments for debt issuance costs     (301 )     --  
    Net cash provided by financing activities     732       1,500  
Effect of exchange rate changes on cash and cash equivalents     65       46  
Net increase in cash and cash equivalents     32,129       18,484  
Cash and cash equivalents at beginning of period     46,995       38,938  
Cash and cash equivalents at end of period   $ 79,124     $ 57,422  

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