Calix Reports Q3 Revenue of $302 Million, Raises Q4 Outlook

Calix (NYSE: CALX ) reported third-quarter financial results on Tuesday. The transcript from the company's third-quarter earnings call has been provided below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

View the webcast at Summary Calix reported record revenue of $302 million for Q3 2026, a 3% sequential increase and a 14% year-over-year growth, with software and services revenue reaching $52 million, up 19% year-over-year. The company launched new AI initiatives, including the Calix Communications Language Model and Calix Gems, enhancing their AI capabilities and platform offerings for broadband providers and expanding into new markets like managed service providers and hospitality. Calix provided Q4 2026 guidance with expected revenue between $311 million and $317 million and a non-GAAP EPS of $0.41 to $0.49, anticipating a 19% year-over-year growth by year-end.

The company demonstrated operational discipline with a non-GAAP gross margin of 53.5% and continued investment in AI, while maintaining a strong balance sheet with $155 million in cash and investments, and increased stock repurchase authorization by $100 million. Management expressed confidence in future growth driven by AI adoption, emphasizing operational leverage, and productivity gains, while acknowledging challenges from volatile memory costs impacting appliance margins. Full Transcript OPERATOR Greetings everyone and welcome to the Calix third quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode.

A question-and-answer session will follow the brief prepared remarks. If anyone should require operator assistance during the conference, please press Star-0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Nancy Fazioli, Vice President of Investor Relations.

Nancy, please go ahead. Nancy Fazioli (Vice President of Investor Relations) Thank you, Sam, and good morning, everyone. Thank you for joining our third quarter 2026 earnings call today. On the call we have our President and CEO Michael Weening and Chief Financial Officer Corey Sindelar.

As a reminder, yesterday after the market closed, Calix issued a news release which was furnished on a Form 8-K, along with our stockholder letter, which was also posted in the Investor Relations section of the Calix website. Today's conference call will be available for webcast replay in the Investor Relations section of our website.

Before I turn the call over to Michael for his opening remarks, I want to remind everyone that on this call we will refer to forward-looking statements, including all statements the company will make about its future financial and operating performance, growth strategy, and market outlook, and that actual results may differ materially from those contemplated by these forward-looking statements. Factors that could cause actual results and trends to differ materially are set forth in the third quarter 2026 letter to stockholders and in the annual and quarterly reports filed with the SEC.

Calix assumes no obligation to update any forward-looking statements, which speak only as of their respective dates. Also in this conference call we will discuss both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in the third quarter 2026 letter to stockholders. Unless otherwise stated, all financial information referenced in this call will be non-GAAP.

With that, Michael, please go ahead. Michael Weening (President and CEO) Thanks, Nancy. We have just returned from Calix Connections, where thousands of customers and partners joined us to discuss the path forward and the reality that there is no version of the future where AI is optional, a future we intend to lead for our customers and the markets we serve. With Calix One deployed since March, we deliver the trust and security that our customers require to be successful within the new AI reality, allowing us all to move from experimentation to execution safely in these uncertain times.

We believe that predictability is highly valued by our customers and their subscribers, our team members, partners, and investors. For our customers, we provide predictability of cost through our leadership with open-weight models, the platform, and the evolution to specialized models that will land on all devices over time, and return on investment as we operate billions of workflows annually, giving us unmatched insight into which agents and workflows will yield the greatest returns for our customers.

Predictability for customers extends into predictability for investors as evidenced by the records that we broke in the third quarter, and the end-of-year forecast that will see revenue at the midpoint hitting 19% year-on-year growth while OPEX leverage begins. At Connections two weeks ago, the new CEO of Allo clearly stated the value of our platform pre-AI. He had come from a multi-vendor broadband provider to Allo, who has partnered exclusively with Calix. The Calix platform at Allo yields 40% lower truck rolls, 60-point higher Net Promoter Score, and is supported by 25 IT people versus 400.

That is the power of our platform before AI. With Calix agent workforce, which is rolling out at a rapid pace, those results will expand as we automate functions and workflows, yielding new subscribers, revenue growth, reduced churn, and even higher profits for broadband providers, while our platform expands to managed service providers for apartment buildings and multi-dwelling units, and then on to hospitality.

Last week we released the next step in our AI strategy, the Calix Communications Language Model, or CLM, and Calix Gems, which are designed to bring communication-specific intelligence to the right place across the platform from the cloud to the network to the subscriber premise. This architecture will enable us to deliver increasingly specialized capabilities for platform customers while enabling large service providers to partner with Calix by consuming our AI component capabilities into their unique environments.

That combination of a differentiated platform, expanding segments with the ongoing expansion of MDU agentic workflows, AI agents, and the addition of specialized learning models, coupled with a customer success organization that is leveraging AI to enable customers to adopt at scale, gives us great confidence in the opportunity ahead and our ability to lead. Our third quarter results demonstrate that customers are responding. This is the payoff from the investments we have made and the partnerships we have built with our customers. We went slow to build the platform correctly.

Now we move fast with our customers to compete, win, and expand. Corey, over to you to walk through the details of the strong quarter. Corey Sindelar (Chief Financial Officer) Thank you, Michael. We delivered record revenue of $302 million, up 3% sequentially and up 14% year over year.

A key highlight was record software and services revenue of $52 million, up 3% sequentially and 19% year over year, as our customers continue to win new subscribers and take market share. Calix One contracts signed in the third quarter more than doubled from the prior quarter, with RPO reaching a record $396 million, up 2% sequentially and 12% year over year. One important note: in connection with our customer supply assurance program introduced early in the third quarter, we began receiving non-cancellable appliance orders, which are added to RPO.

To avoid distortion of this key metric, we elected a practical expedient to eliminate the value of RPO for contracts with a duration of one year or less, thereby eliminating hardware from RPO. As part of that elimination, the value of software and services contracts with a duration of one year or less, totaling $6 million, was also excluded. These software and services contracts were included in prior periods. Without giving effect to this change, RPO attributed to software and services would have grown sequentially by 4% and year over year by 13%.

Non-GAAP gross margin was 53.5%. Non-GAAP software and services gross margin reached a record 67.2%, increasing 340 basis points sequentially, driven by subscriber growth and continued optimization of our third-generation platform. As our customers continue to focus on subscriber experience and take share, our software and services revenue will continue to increase, expanding our software and services gross margins. Non-GAAP appliance gross margin was 50.7%, which represents a sequential decline of 220 basis points, primarily due to higher memory component costs.

We also continue to demonstrate operating discipline and early productivity gains from our human-centric AI investment. Third quarter non-GAAP operating expenses were $124 million, representing 41% of revenue and down from 42% of revenue last quarter. Our balance sheet remains strong. We ended the quarter with $155 million in cash and investments after deploying $50 million to repurchase 1.4 million shares.

DSO was 38 days, and inventory turns were 2.8, reflecting improved collections and deliberate inventory investments to support customer demand and product availability. After quarter end, we increased our stock repurchase authorization by $100 million, adding to the $44 million that remained at the end of the quarter. Turning to guidance for the fourth quarter of 2026, we expect revenue to be between $311 million and $317 million. This outlook reflects the ongoing broad-based deployment data and order visibility across our customer base.

Our fourth quarter non-GAAP gross margin guidance is 52.25% to 54.75%. The range reflects component cost expectations as well as customer and product mix. As noted last quarter, we chose to include surcharges on new orders. As such, we expect to recover a greater percentage of higher memory costs in the fourth quarter as we work our way to gross profit neutrality.

Our fourth quarter non-GAAP operating expense guidance is $129.5 to $131.5 million. The range reflects fourth quarter investments in our annual Connections Customer Innovation Conference and five additional days in the quarter, partially offset by continued productivity gains. Setting aside the fourth quarter bump we see every year due to Connections, we expect operating leverage will continue as OPEX as a percentage of revenue continues to drift downward to 40% and below as we continue to deploy human-centric AI internally. Our guidance for non-GAAP EPS is $0.41 to $0.49.

At the midpoint of guidance for the fourth quarter, our 2026 non-GAAP EPS is $1.76, which would represent an annual EPS growth of 30% compared to revenue growth of 19%. Michael, back to you. Michael Weening (President and CEO) Thanks, Corey. We have built the industry's leading AI-native platform.

Now we go fast with our customers, amplifying their teams and ours to compete, win, and expand at a rapid pace. Nancy, let's open the call for questions. Nancy Fazioli (Vice President of Investor Relations) Thank you, operator. We're ready for questions.

OPERATOR Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press Star-1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

You may press Star-2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question is from Ryan Kuntz with Needham & Company.

Please proceed with your question. Ryan Kuntz (Analyst) Great, thanks. Good morning. I'm going to ask about RPO and specifically software bookings there.

Are you pleased with where you're at there in your recovery from the cloud transition? Any trends within the mix of RPO you'd point out, and what sort of year-over-year booking rate you think you can get to next year on software RPO? Michael Weening (President and CEO) Yeah, I'll talk to the trends and then Corey can talk about one specific nuance in our view. And so from whether we're pleased, yeah, I'm wildly pleased because what that showed was customers in Q3 actually started to commit to our AI, where we're going from an AI point of view, even though our first, you know, our first workflows just started to roll out in August, which is the, you know, the beginning.

But as they start to see what's possible, a huge percentage of them just jumped in, as you saw by the doubling of the contracts, because they agree with where we're going and, frankly, what it validated is that we're going to be the easy button for AI. Everybody in every market needs to figure out what their AI strategy is. And if you're the one who can provide that in a trusted and secure way, but also give them predictability of cost, which, as we know with tokens and all those things, is an issue, we've resolved that. But more importantly, give them a roadmap that shows where they can get predictability of return on investment, which is very hard to acquire.

And we can actually give that to them really clearly, saying, here's the stack ranking of the workflows, we're implementing them in this order and, based upon everything and how you run your broadband business, this is the ROI on it. So those were the early adopters, but I believe in the previous call I had a customer who, you know, and I'll reiterate this, who basically stated, you know, they've never bought into our longer-term vision with regards to what we're doing on the smart side of stuff. So they, you know, no matter how much I tried to sell them on smart home and smart business and where we're going, he never bought in.

But they signed up in third quarter, and the reason why is for five years. And the reason why is because they know they need artificial intelligence. It was time for them to get on the experience bandwagon. And doing AI and experience at the same time was highly valuable.

You know, and then having just come out of Connections where we had almost 3,000 people there, the momentum was incredible. If you haven't had the opportunity to watch that event, that's the best event we've ever done. And we, I could stand up there with confidence in front of all those customers and say, we have nailed it. We absolutely, 100%, if you sign up with us for the future with AI, we will give you everything you dreamed.

And I can commit to that because, as I said on stage, our Chief Product Officer who, you know, congrats to him, he just won CTO of the Year here in the Valley, which is a pretty huge accomplishment. And the reason why he won that is because he could stand up in front of our board in the last board meeting and say we will deliver more innovation on our platform in 2027 than we have in all of 26 and all of 25 combined. And more importantly, he will do that at flat to down from a budget point of view, showing a massive jump in productivity. So do I feel good about this?

Hell yeah, for sure. Corey, why don't you talk about the numeric nuance? Corey Sindelar (Chief Financial Officer) Yeah, Ryan, as I said in my prepared remarks, we wanted to avoid a distortion created by including RPOs in that metric and keep it a pure software and services number. And so with that we elected a practical expedient to eliminate contracts of a year or less.

And so, yeah, you need to add back $6 million to have a comparable number to prior period. Ryan Kuntz (Analyst) So what would RPOs be in the percentage spend then? Corey Sindelar (Chief Financial Officer) 4% quarter on quarter and 13% year on year, which is pretty good. Ryan Kuntz (Analyst) Great.

That's great, guys. And Michael, I totally agree with you on the certainty around costs and the ease of adoption. It's very, very compelling. It's exciting.

Michael Weening (President and CEO) Yeah, we're the easy button, right? You know, all you have to do is sign up and what happens is these workflows and agents just start popping out. You know, and at Connections I demonstrated in my, when I was on stage, just how trusted and secure this can be because I gave the example of there was one of the employees of our customers did something funny. He tried to break one of our agents and this was like you would use Microsoft Copilot or something like that.

He basically pounded on our agent inside Service Cloud and tried to get it to answer how many calories are in a McDouble, which I didn't know what a McDouble was — I'm an Egg McMuffin guy — but it's basically a two-patty cheeseburger and it has 400 calories in it, Lord knows a lot of fat. And, you know, it took him 51 tries before he could break it.

So we also leave them with the certainty that from a data privacy and security point of view that we're going to be able to, you know, protect them because that, you know, you think about the data that they have, that's really important, especially in the, you know, look what happened from a cyber hacking this week where, you know, 6 billion got stolen off of a crypto exchange. Right. So the attacks are increasing from, you know, and pretty much guaranteed that came from Korea. So these are these crypto attacks from these nasty nations continue.

So we give them that security, we make them really secure, and then we can demonstrate, hey, by the way, if you implement this, we're going to help you get 30 or 40% product. Ryan Kuntz (Analyst) That's great, guys. And maybe just a quick follow-up. Could you maybe characterize where you are in terms of some of your tier-one engagements, what kind of conversations you're having there, what kind of the nature of the business opportunities looks like, and maybe give a little color on some that are larger?

Michael Weening (President and CEO) Yeah.