SOURCE: Calix, Inc.

Calix, Inc.

November 01, 2016 16:01 ET

Calix Reports Third Quarter 2016 Financial Results

PETALUMA, CA--(Marketwired - November 01, 2016) - Calix, Inc. (NYSE: CALX) today announced unaudited financial results for the third quarter ended September 24, 2016. Revenue for the third quarter of 2016 was $121.2 million, an increase of 7.9% compared to $112.3 million for the third quarter of 2015.

"Demand for Software Defined Access (SDA) and Calix AXOS systems, software, and services drove our better than expected 8% year-on-year third quarter revenue growth and produced earnings at the upper end of expectations," said Carl Russo, Calix, Inc. President and CEO. "We continue to see strong interest from new and existing customers both for our established and our recently introduced products, including our AXOS E-Series systems and Compass cloud services," added Russo.

The company's non-GAAP net income for the third quarter of 2016 was $6.1 million, or $0.12 per fully diluted share, compared to a non-GAAP net income of $8.3 million, or $0.16 per fully diluted share, for the third quarter of 2015. A reconciliation of GAAP and non-GAAP results is included as part of this release.

"Our 8% year-on-year revenue growth for the first nine months of 2016 marks Calix's strongest growth for the past three years. Profitability for the third quarter reflected the strong revenue growth offset by investments necessary to support our growth initiatives as well as our on-going turnkey network improvement projects, which we expect to continue over the near-term," said William Atkins, Calix, Inc. Executive Vice President and CFO.

The GAAP net income for the third quarter of 2016 was $0.6 million, or $0.01 per basic and fully diluted share, compared to a GAAP net income of $0.9 million, or $0.02 per basic and fully diluted share, for the third quarter of 2015. A reconciliation of our third quarter 2016 operating results from non-GAAP to GAAP is provided below.

 
Calix, Inc.
(Unaudited, in thousands, except per share data)
Three Months Ended September 24, 2016
                
                     
    Non-GAAP   Stock-Based Compensation   Amortization of Intangible Assets   Acquisition-Related Costs   GAAP
Revenue  $ 121,187    $ -    $ -    $ -    $ 121,187  
Cost of revenue   66,656     174     813     -     67,643  
Gross profit   54,531     (174 )   (813 )   -     53,544  
Gross margin   45.0 %   (0.1 )%   (0.7 )%   - %   44.2 %
Operating expenses   48,306     4,503     -     -     52,809  
Operating income (loss)   6,225     (4,677 )   (813 )   -     735  
Interest and other income (expense), net   110     -     -     -     110  
Income (loss) before provision for income taxes   6,335     (4,677 )   (813 )   -     845  
Provision for income taxes   209     -     -     -     209  
Net income (loss)  $ 6,126    $ (4,677 )  $ (813 )  $ -    $ 636  
Weighted average diluted shares used to compute net income (loss) per common share   49,309     49,309     49,309     49,309     49,309  
Net income (loss) per diluted share  $ 0.12    $ (0.09 )  $ (0.02 )  $ -    $ 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 2016 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 (SDA) and is a global leader in platform innovations for Access Networks. Its portfolio of access systems and services combines AXOS, the revolutionary platform for access, with Compass cloud, an innovative SDA-based framework 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.

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, amortization of acquisition-related intangible assets, and non-recurring 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.

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. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from expectations, including but not limited to the risks described in our 2015 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.

 
Calix, Inc.
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share data)
           
                
      Three Months Ended  Nine Months Ended
      September 24,  September 26,  September 24,  September 26,
      2016  2015  2016  2015
Revenue  $ 121,187    $ 112,297    $ 326,987    $ 302,464  
Cost of revenue:                
   Products and services (1)   66,830     57,096     174,665     152,308  
   Amortization of intangible assets   813     2,088     3,290     6,264  
    Total cost of revenue   67,643     59,184     177,955     158,572  
Gross profit   53,544     53,113     149,032     143,892  
Operating expenses:                
   Research and development (1)   28,119     22,120     75,925     66,885  
   Sales and marketing (1)   20,575     18,424     58,850     57,398  
   General and administrative (1)   8,615     9,140     32,940     28,728  
   Amortization of intangible assets   -     2,552     1,701     7,656  
   Litigation settlement gain   (4,500 )   -     (4,500 )   -  
    Total operating expenses   52,809     52,236     164,916     160,667  
Income (loss) from operations   735     877     (15,884 )   (16,775 )
Interest and other income (expense), net:                
   Interest income   184     297     611     1,014  
   Interest expense   (155 )   (263 )   (489 )   (921 )
   Other income (expense), net   81     196     297     273  
    Total interest and other income (expense), net   110     230     419     366  
Income (loss) before provision for income taxes   845     1,107     (15,465 )   (16,409 )
Provision for income taxes   209     185     454     378  
Net income (loss)  $ 636    $ 922    $ (15,919 )  $ (16,787 )
Net income (loss) per common share:                
   Basic  $ 0.01    $ 0.02    $ (0.33 )  $ (0.32 )
   Diluted  $ 0.01    $ 0.02    $ (0.33 )  $ (0.32 )
Weighted average number of shares used to compute net income (loss) per common share:                
   Basic   48,773     51,756     48,578     51,814  
   Diluted   49,309     52,016     48,578     51,814  
                    
(1)  Includes stock-based compensation as follows:                
   Cost of revenue  $ 174    $ 163    $ 484    $ 549  
   Research and development   1,573     964     3,719     3,659  
   Sales and marketing   1,661     688     3,323     3,769  
   General and administrative   1,269     775     2,840     2,616  
      $ 4,677    $ 2,590    $ 10,366    $ 10,593  
                   
 
Calix, Inc.
Reconciliation of GAAP to Non-GAAP Results
(Unaudited, in thousands, except per share data)
         
             
   Three Months Ended  Nine Months Ended
   September 24,  September 26,  September 24,  September 26,
   2016  2015  2016  2015
GAAP net income (loss)  $ 636  $ 922  $ (15,919 )   $ (16,787 ) 
Adjustments to reconcile GAAP net income (loss) to non-GAAP net income (loss):                
 Stock-based compensation   4,677   2,590   10,366      10,593   
 Amortization of intangible assets   813   4,640   4,991      13,920   
  Acquisition-related costs   -   106   351      348   
Non-GAAP net income (loss)  $ 6,126  $ 8,258  $ (211 )   $ 8,074   
Non-GAAP net income (loss) per common share:                
 Basic  $ 0.13  $ 0.16  $ -     $ 0.16   
 Diluted  $ 0.12  $ 0.16  $ -     $ 0.15   
Weighted average number of shares used to compute non-GAAP net income (loss) per common share:                
 Basic   48,773   51,756   48,578      51,814   
 Diluted (1)   49,309   52,016   48,578      52,344   
(1) Includes the dilutive effect of outstanding stock options, restricted stock units and ESPP.
 
 
Calix, Inc.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)
       
   September 24,  December 31,
   2016  2015
ASSETS        
Current assets:        
 Cash and cash equivalents  $ 31,764    $ 23,626  
 Marketable securities   29,554     49,964  
 Accounts receivable, net   57,256     47,155  
 Inventory   40,190     47,667  
 Deferred cost of revenue   14,718     4,918  
 Prepaid expenses and other current assets   15,700     9,470  
  Total current assets   189,182     182,800  
 Property and equipment, net   16,017     17,149  
 Goodwill   116,175     116,175  
 Intangible assets, net   1,627     6,618  
 Other assets   937     1,144  
  Total assets  $ 323,938    $ 323,886  
LIABILITIES AND STOCKHOLDERS' EQUITY        
Current liabilities:        
 Accounts payable  $ 19,340    $ 19,603  
 Accrued liabilities   49,019     35,512  
 Deferred revenue   16,226     12,124  
  Total current liabilities   84,585     67,239  
 Long-term portion of deferred revenue   19,850     19,569  
 Other long-term liabilities   979     1,293  
  Total liabilities   105,414     88,101  
Stockholders' equity:        
 Common stock   1,353     1,326  
 Additional paid-in capital   830,225     818,754  
 Accumulated other comprehensive loss   (226 )   (195 )
 Accumulated deficit   (572,842 )   (556,923 )
 Treasury stock   (39,986 )   (27,177 )
  Total stockholders' equity   218,524     235,785  
  Total liabilities and stockholders' equity  $ 323,938    $ 323,886  
         
 
Calix, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
       
   Nine Months Ended
   September 24,  September 26,
   2016  2015
Operating activities:        
 Net loss  $ (15,919 )  $ (16,787 )
 Adjustments to reconcile net loss to net cash provided by (used in) operating activities:        
  Depreciation and amortization   6,282     7,602  
  Loss on retirement of property and equipment   -     14  
  Amortization of intangible assets   4,991     13,920  
  Amortization of premiums relating to available-for-sale securities   337     743  
  Stock-based compensation   10,366     10,593  
  Changes in operating assets and liabilities:        
   Restricted cash   -     295  
   Accounts receivable, net   (10,104 )   (17,443 )
   Inventory   7,477     2,983  
   Deferred cost of revenue   (9,800 )   2,082  
   Prepaid expenses and other assets   (6,058 )   4,181  
   Accounts payable   (356 )   (6,841 )
   Accrued liabilities   13,974     (1,055 )
   Deferred revenue   4,383     (1,312 )
   Other long-term liabilities   (313 )   (167 )
    Net cash provided by (used in) operating activities   5,260     (1,192 )
Investing activities:        
 Purchases of property and equipment   (5,364 )   (5,943 )
 Purchases of marketable securities   -     (46,750 )
 Maturities of marketable securities   20,170     51,265  
  Net cash provided by (used in) investing activities   14,806     (1,428 )
Financing activities:        
 Proceeds from exercise of stock options   14     625  
 Proceeds from employee stock purchase plan   2,905     2,865  
 Payments for repurchases of common stock   (12,809 )   (11,124 )
 Taxes paid for awards vested under equity incentive plans   (1,787 )   (2,093 )
    Net cash used in financing activities   (11,677 )   (9,727 )
Effect of exchange rate changes on cash and cash equivalents   (251 )   (288 )
Net increase (decrease) in cash and cash equivalents   8,138     (12,635 )
Cash and cash equivalents at beginning of period   23,626     48,829  
Cash and cash equivalents at end of period  $ 31,764    $ 36,194  
         

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