Calix Reports Second Quarter 2013 Financial Results

20% Growth in Year-Over-Year Revenues

Marketwired

PETALUMA, CA--(Marketwired - Jul 30, 2013) - Calix, Inc. (NYSE: CALX) today announced unaudited financial results for the second quarter ended June 29, 2013. Revenue for the second quarter of 2013 was $94.4 million, an increase of 20% compared to $78.9 million for the second quarter of 2012.

"Our year-over-year revenue growth in Q2 and better-than-anticipated bottom line results reflect our solid execution and progress in expanding our reach into both our domestic and international markets," said Carl Russo, president and CEO of Calix. "Our Unified Access portfolio continues to resonate with communication service providers as they map out their network strategies."

Non-GAAP net income for the second quarter of 2013 was $4.8 million, or $0.10 per fully diluted share. Non-GAAP net income was $1.9 million, or $0.04 per fully diluted share, for the second quarter of 2012. A reconciliation of GAAP and non-GAAP results is included as part of this release.

GAAP net loss for the second quarter of 2013 was $5.2 million, or $(0.10) 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 second quarter of 2012. A reconciliation of our second quarter 2013 operating results from non-GAAP to GAAP is provided below:

                         
    Three Months Ended June 29, 2013  
    Non-GAAP     Stock-Based Compensation     Amortization of Intangible Assets     GAAP  
Revenue   $ 94,439     $ -     $ -     $ 94,439  
Cost of revenue     49,469       377       2,088       51,934  
Gross profit     44,970       (377 )     (2,088 )     42,505  
Gross margin     47.6 %     -0.4 %     -2.2 %     45.0 %
Operating expenses     39,900       4,898       2,552       47,350  
Operating income (loss)     5,070       (5,275 )     (4,640 )     (4,845 )
Interest and other income (expense), net     (84 )     -       -       (84 )
Income (loss) before provision for income taxes     4,986       (5,275 )     (4,640 )     (4,929 )
Provision for income taxes     224       -       -       224  
Net income (loss)   $ 4,762     $ (5,275 )   $ (4,640 )   $ (5,153 )
                                 
Weighted average basic and diluted shares used to compute GAAP net loss per common share                             49,153  
                                 
Weighted average diluted shares used to compute non-GAAP net income (loss) per common share     50,073       50,073       50,073          
                                 
GAAP net loss per common share                           $ (0.10 )
                                 
Non-GAAP net income (loss) per diluted share   $ 0.10     $ (0.11 )   $ (0.09 )        
                                 

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 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 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 29,     June 30,     June 29,     June 30,  
    2013     2012     2013     2012  
Revenue   $ 94,439     $ 78,928     $ 184,987     $ 157,493  
Cost of revenue:                                
  Products and services(1)     49,846       43,619       97,191       87,090  
  Amortization of intangible assets     2,088       2,088       4,176       3,363  
    Total cost of revenue     51,934       45,707       101,367       90,453  
Gross profit     42,505       33,221       83,620       67,040  
Operating expenses:                                
  Research and development(1)     20,035       16,473       40,206       33,439  
  Sales and marketing(1)     17,079       14,897       32,880       29,787  
  General and administrative(1)     7,684       6,129       15,815       12,909  
  Amortization of intangible assets     2,552       2,552       5,104       5,104  
    Total operating expenses     47,350       40,051       94,005       81,239  
Loss from operations     (4,845 )     (6,830 )     (10,385 )     (14,199 )
Interest and other income (expense), net:                                
  Interest income     1       4       2       11  
  Interest expense     (42 )     (57 )     (70 )     (99 )
  Other income (expense), net     (43 )     (67 )     (322 )     (89 )
Loss before provision for income taxes     (4,929 )     (6,950 )     (10,775 )     (14,376 )
Provision for income taxes     224       141       581       236  
Net loss   $ (5,153 )   $ (7,091 )   $ (11,356 )   $ (14,612 )
Net loss per common share:                                
  Basic and diluted   $ (0.10 )   $ (0.15 )   $ (0.23 )   $ (0.30 )
Weighted average number of shares used to compute net loss per common share:                                
  Basic and diluted     49,153       47,972       49,034       47,911  
                                 
(1) Includes stock-based compensation as follows:                                
                                 
  Cost of revenue   $ 377     $ 381     $ 728     $ 744  
  Research and development     1,300       1,091       2,486       2,112  
  Sales and marketing     1,464       1,338       2,743       2,577  
  General and administrative     2,134       1,529       4,037       3,221  
    $ 5,275     $ 4,339     $ 9,994     $ 8,654  
                                 
                                 
                                 
Calix, Inc.  
Reconciliation of GAAP to Non-GAAP Results  
(Unaudited, in thousands, except per share data)  
                         
    Three Months Ended     Six Months Ended  
    June 29,     June 30,     June 29,     June 30,  
    2013     2012     2013     2012  
                                 
GAAP net loss   $ (5,153 )   $ (7,091 )   $ (11,356 )   $ (14,612 )
Adjustments to reconcile GAAP net loss to non-GAAP net income:                                
Stock-based compensation     5,275       4,339       9,994       8,654  
Amortization of intangible assets     4,640       4,640       9,280       8,467  
Non-GAAP net income   $ 4,762     $ 1,888     $ 7,918     $ 2,509  
                                 
Non-GAAP net income per common share                                
  Basic   $ 0.10     $ 0.04     $ 0.16     $ 0.05  
  Diluted   $ 0.10     $ 0.04     $ 0.16     $ 0.05  
                                 
Weighted average shares used to compute non-GAAP net income per common share - Basic     49,153       47,972       49,034       47,911  
                                 
Weighted average shares used to compute non-GAAP net income per common share - Diluted (1)     50,073       48,113       49,751       48,076  
                                 
(1) Includes the dilutive effect of outstanding stock options, restricted stock units, and ESPP.
 
 
 
 Calix, Inc.  
Condensed Consolidated Balance Sheets  
(Unaudited, in thousands)  
             
    June 29,     December 31,  
    2013     2012  
             
ASSETS            
Current assets:                
  Cash and cash equivalents   $ 69,379     $ 46,995  
  Accounts receivable, net     62,726       59,519  
  Inventory     37,402       43,282  
  Deferred cost of revenue     29,068       21,077  
  Prepaid expenses and other current assets     8,126       5,677  
    Total current assets     206,701       176,550  
                 
Property and equipment, net     18,547       21,083  
Goodwill     116,175       116,175  
Intangible assets, net     53,021       62,301  
Other assets     1,591       1,788  
    Total assets   $ 396,035     $ 377,897  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current liabilities:                
  Accounts payable   $ 16,714     $ 16,804  
  Accrued liabilities     36,664       36,176  
  Deferred revenue     53,763       39,315  
    Total current liabilities     107,141       92,295  
Long-term portion of deferred revenue     17,335       15,782  
Other long-term liabilities     1,394       745  
    Total liabilities     125,870       108,822  
                 
Stockholders' equity:                
  Common stock     1,238       1,222  
  Additional paid-in capital     772,650       760,232  
  Accumulated other comprehensive income     144       132  
  Accumulated deficit     (503,867 )     (492,511 )
    Total stockholders' equity     270,165       269,075  
    Total liabilities and stockholders' equity   $ 396,035     $ 377,897  
                     
                     
                     
 Calix, Inc.  
Condensed Consolidated Statements of Cash Flows  
(Unaudited, in thousands)  
             
    Six Months Ended  
    June 29,     June 30,  
    2013     2012  
Operating activities:                
  Net loss   $ (11,356 )   $ (14,612 )
  Adjustments to reconcile net loss to net cash provided by operating activities:                
    Depreciation and amortization     5,363       4,129  
    Loss on retirement of property and equipment     560       84  
    Amortization of intangible assets     9,280       8,467  
    Stock-based compensation     9,994       8,654  
    Changes in operating assets and liabilities:                
      Restricted cash     -       754  
      Accounts receivable, net     (3,207 )     (8,656 )
      Inventory     5,880       11,409  
      Deferred cost of revenue     (7,991 )     (4,398 )
      Prepaid expenses and other assets     (2,009 )     134  
      Accounts payable     (90 )     5,997  
      Accrued liabilities     464       (2,508 )
      Deferred revenue     16,001       9,167  
      Other long-term liabilities     311       (514 )
        Net cash provided by operating activities     23,200       18,107  
                 
Investing activities:                
  Purchase of property and equipment     (3,265 )     (6,296 )
        Net cash used in investing activities     (3,265 )     (6,296 )
                 
Financing activities:                
  Proceeds from exercise of stock options     288       139  
  Proceeds from employee stock purchase plan     2,464       2,222  
  Taxes withheld upon vesting of restricted stock units     (312 )     (54 )
        Net cash provided by financing activities     2,440       2,307  
                 
Effect of exchange rate changes on cash and cash equivalents     9       29  
Net increase in cash and cash equivalents     22,384       14,147  
Cash and cash equivalents at beginning of period     46,995       38,938  
Cash and cash equivalents at end of period   $ 69,379     $ 53,085  
                 
                 
Contact:
Investor Inquiries:
David H. Allen
408-474-0080
David.Allen@Calix.com
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