SOURCE: Calix, Inc.

Calix, Inc.

July 29, 2014 16:05 ET

Calix Reports Second Quarter 2014 Financial Results

PETALUMA, CA--(Marketwired - Jul 29, 2014) - Calix, Inc. (NYSE: CALX) today announced unaudited financial results for the second quarter ended June 28, 2014. Revenue for the second quarter of 2014 was $98.0 million, an increase of 3.8% compared to $94.4 million for the second quarter of 2013.

"We continue to make solid progress expanding our domestic and international customer footprint and achieved our highest level of sales for a second fiscal quarter," said Carl Russo, Calix president and CEO. "Service providers of all types are pursuing device-enabled subscribers who are increasingly accessing cloud-based content and applications. Calix Unified Access solutions are architected to be flexible, feature-rich and cost-effective in order to meet the demanding requirements of our service provider customers and their subscribers."

The company's non-GAAP net income for the second quarter of 2014 was $5.1 million, or $0.10 per fully diluted share, compared to a non-GAAP net income of $4.8 million, or $0.10 per fully diluted share, for the second quarter of 2013. A reconciliation of GAAP and non-GAAP results is included as part of this release.

The GAAP net loss for the second quarter of 2014 was $4.0 million, or $(0.08) per basic and diluted share, compared to a GAAP net loss of $5.2 million, or $(0.10) per basic and diluted share, for the second quarter of 2013. A reconciliation of our second quarter 2014 operating results from non-GAAP to GAAP is provided below:

   
Calix, Inc.  
(Unaudited, in thousands, except per share data)  
Three Months Ended June 28, 2014  
                       
  Non-GAAP     Stock-Based Compensation     Amortization of Intangible Assets     GAAP  
Revenue $ 98,005     $ --     $ --     $ 98,005  
Cost of revenue   51,221       354       2,088       53,663  
Gross profit   46,784       (354 )     (2,088 )     44,342  
Gross margin   47.7 %     --       --       45.2 %
Operating expenses   41,630       4,050       2,552       48,232  
Operating income (loss)   5,154       (4,404 )     (4,640 )     (3,890 )
Interest and other income (expense), net   42       --       --       42  
Income (loss) before taxes   5,196       (4,404 )     (4,640 )     (3,848 )
Provision for income taxes   103       --       --       103  
Net income (loss) $ 5,093     $ (4,404 )   $ (4,640 )   $ (3,951 )
Weighted average diluted shares used to compute non-GAAP net income (loss) per common share   50,961       50,961       50,961          
Non-GAAP net income (loss) per diluted share $ 0.10     $ (0.09 )   $ (0.09 )        
Weighted average basic and diluted shares used to compute GAAP net loss per common share                           50,573  
GAAP net loss per share                         $ (0.08 )
                               

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 2014 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 (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 and other expenses, 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     Six Months Ended  
  June 28,     June 29,     June 28,     June 29,  
  2014     2013     2014     2013  
Revenue $ 98,005     $ 94,439     $ 183,825     $ 184,987  
Cost of revenue:                              
  Products and services (1)   51,575       49,846       98,381       97,191  
  Amortization of intangible assets   2,088       2,088       4,176       4,176  
    Total cost of revenue   53,663       51,934       102,557       101,367  
Gross profit   44,342       42,505       81,268       83,620  
Operating expenses:                              
  Research and development (1)   19,544       20,035       39,174       40,206  
  Sales and marketing (1)   18,455       17,079       35,845       32,880  
  General and administrative (1)   7,681       7,684       14,932       15,815  
  Amortization of intangible assets   2,552       2,552       5,104       5,104  
    Total operating expenses   48,232       47,350       95,055       94,005  
Loss from operations   (3,890 )     (4,845 )     (13,787 )     (10,385 )
  Interest and other income (expense), net:                              
  Interest income   30       1       34       2  
  Interest expense   (58 )     (42 )     (115 )     (70 )
Other income (expense), net   70       (43 )     103       (322 )
Loss before provision for income taxes   (3,848 )     (4,929 )     (13,765 )     (10,775 )
Provision for income taxes   103       224       213       581  
Net loss $ (3,951 )   $ (5,153 )   $ (13,978 )   $ (11,356 )
Net loss per common share:                              
    Basic and diluted $ (0.08 )   $ (0.10 )   $ (0.28 )   $ (0.23 )
Weighted average number of shares used to compute net loss per common share:                              
    Basic and diluted   50,573       49,153       50,425       49,034  
                               
                               
(1) Includes stock-based compensation as follows:                              
    Cost of revenue $ 354     $ 377     $ 708     $ 728  
    Research and development   1,306       1,300       2,486       2,486  
    Sales and marketing   1,462       1,464       2,830       2,743  
    General and administrative   1,282       2,134       2,282       4,037  
  $ 4,404     $ 5,275     $ 8,306     $ 9,994  
                               
                               
                               
Calix, Inc.  
Reconciliation of GAAP to Non-GAAP Results  
(Unaudited, in thousands, except per share data)  
                       
  Three Months Ended     Six Months Ended  
  June 28,     June 29,     June 28,     June 29,  
  2014     2013     2014     2013  
GAAP net loss $ (3,951 )   $ (5,153 )   $ (13,978 )   $ (11,356 )
Adjustments to reconcile GAAP net loss to non-GAAP net income:                              
Stock-based compensation   4,404       5,275       8,306       9,994  
Amortization of intangible assets   4,640       4,640       9,280       9,280  
Non-GAAP net income   5,093       4,762       3,608       7,918  
Non-GAAP net income per common share:                              
  Basic $ 0.10     $ 0.10     $ 0.07     $ 0.16  
  Diluted $ 0.10     $ 0.10     $ 0.07     $ 0.16  
Weighted average shares used to compute non-GAAP net income per common share - Basic   50,573       49,153       50,425       49,034  
Weighted average shares used to compute non-GAAP net income per common share - Diluted (1)   50,961       50,073       50,904       49,751  
                   
(1) Includes the dilutive effect of outstanding stock options, restricted stock units and ESPP.                  
                   
                   
                   
Calix, Inc.  
Condensed Consolidated Balance Sheets  
(Unaudited, in thousands)  
           
  June 28,     December 31,  
  2014     2013  
ASSETS              
Current assets:              
  Cash and cash equivalents $ 32,543     $ 82,747  
  Marketable securities   46,439       --  
  Restricted cash   295       295  
  Accounts receivable, net   47,330       43,520  
  Inventory   45,888       51,071  
  Deferred cost of revenue   15,957       21,076  
  Prepaid expenses and other current assets   5,038       5,757  
    Total current assets   193,490       204,466  
  Property and equipment, net   17,289       17,473  
  Goodwill   116,175       116,175  
  Intangible assets, net   34,460       43,740  
  Other assets   1,503       1,745  
    Total assets $ 362,917     $ 383,599  
LIABILITIES AND STOCKHOLDERS' EQUITY  
Current liabilities:              
  Accounts payable $ 12,850     $ 23,163  
  Accrued liabilities   34,689       32,075  
  Deferred revenue   26,346       34,862  
    Total current liabilities   73,885       90,100  
  Long-term portion of deferred revenue   18,640       18,431  
  Other long-term liabilities   958       1,145  
    Total liabilities   93,483       109,676  
Stockholders' equity:              
  Common stock   1,273       1,256  
  Additional paid-in capital   791,756       782,253  
  Accumulated other comprehensive income   159       190  
  Accumulated deficit   (523,754 )     (509,776 )
    Total stockholders' equity   269,434       273,923  
    Total liabilities and stockholders' equity $ 362,917     $ 383,599  
                   
                   
                   
Calix, Inc.  
Condensed Consolidated Statements of Cash Flows  
(Unaudited, in thousands)  
           
  Six Months Ended  
  June 28,     June 29,  
  2014     2013  
Operating activities:              
Net loss $ (13,978 )   $ (11,356 )
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:              
  Depreciation and amortization   4,522       5,363  
  Loss on retirement of property and equipment   --       560  
  Amortization of intangible assets   9,280       9,280  
  Amortization of premiums related to available-for-sale securities   108       --  
  Stock-based compensation   8,306       9,994  
Changes in operating assets and liabilities:              
  Accounts receivable, net   (3,809 )     (3,207 )
  Inventory   5,183       5,880  
  Deferred cost of revenue   5,119       (7,991 )
  Prepaid expenses and other assets   960       (2,009 )
  Accounts payable   (10,313 )     (90 )
  Accrued liabilities   2,601       464  
  Deferred revenue   (8,307 )     16,001  
  Other long-term liabilities   (188 )     311  
    Net cash (used in) provided by operating activities   (516 )     23,200  
Investing activities:              
  Purchase of marketable securities   (46,572 )     --  
  Purchase of property and equipment   (4,328 )     (3,265 )
    Net cash used in investing activities   (50,900 )     (3,265 )
Financing activities:              
  Proceeds from exercise of stock options   139       288  
  Proceeds from employee stock purchase plan   2,453       2,464  
  Taxes paid for awards vested under equity incentive plans   (1,377 )     (312 )
    Net cash provided by financing activities   1,215       2,440  
Effect of exchange rate changes on cash and cash equivalents   (3 )     9  
Net (decrease) increase in cash and cash equivalents   (50,204 )     22,384  
Cash and cash equivalents at beginning of period   82,747       46,995  
Cash and cash equivalents at end of period $ 32,543     $ 69,379  

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