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    CALX
    Earnings call· Jun 2026(Q2 FY26)

    CALIX, INC CALX

    Jul 21, 2026 Source

    Executive summary

    Calix Q2 FY26 — AI-Native Platform Drives Record RPOs and Software Revenue

    Calix delivered a strong Q2 FY26, driven by the first full quarter of its AI-native platform, Calix One, which led to record RPOs and software revenue. The company is focused on leveraging AI for both customer value and internal operating efficiency, navigating memory cost headwinds with a gross-profit-neutral surcharge program. Management expressed confidence in continued demand and software growth acceleration, with a clear path to higher software margins.

    Highlights

    5

    • Record revenue of $293 million, representing 21% year-over-year growth and exceeding guidance.

    • Record software and service revenue of $50 million, up 16% year-over-year and 7% sequentially.

    • Record Remaining Performance Obligations (RPOs) of $386 million, an 11% increase year-over-year.

    • Non-GAAP software and service gross margin improved 810 basis points sequentially.

    • Tripled the number of customers signed up for Agent Workforce Cloud, including late majority adopters.

    Concerns

    2

    • Non-GAAP appliance gross margin decreased 460 basis points sequentially and 170 basis points year-over-year to 52.9% due to higher memory costs.

    • Memory surcharges are expected to be gross profit neutral over the long run but will remain a headwind to gross margin.

    Guidance & targets

    8
    CategoryTargetConfidence
    Revenue
    $301 million to $307 million
    high materiality
    High
    Annual Revenue Growth
    higher end of the 15% to 20% growth range
    high materiality
    High
    Non-GAAP Gross Margin
    52%
    high materiality
    High
    Non-GAAP Operating Expense
    $124.5 million
    medium materiality
    High
    Software and Service Gross Margin
    new record
    high materiality
    High
    Appliance Gross Margin
    bottom
    high materiality
    High
    Revenue Growth
    15%
    high materiality
    High
    Operating Expense Growth
    lower rate than revenue growth
    medium materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Software and Service
    Achieved record revenue and strong sequential and year-over-year growth, driven by agentic workflows on Calix One. Significant gross margin improvement due to single cloud infrastructure and platform-driven demand.
    Record RPOs: $386 millionCurrent RPOs: $162 millionAgent Workforce Cloud sign-ups: Tripled
    		$50 million16%7%810 bps sequential improvement in non-GAAP gross margin
    Appliances
    Achieved record revenue. Non-GAAP gross margin decreased sequentially by 460 bps and year-over-year by 170 bps due to higher memory costs, partially offset by memory surcharges.
    		$243 million23%4%52.9% non-GAAP gross margin

    Operational metrics

    8
    Non-GAAP Net Income
    $31 million
    Q2 FY26

    Above guidance range.

    Non-GAAP EPS
    $0.47
    Q2 FY26

    Per diluted share, above guidance range.

    Cash and investments balance
    $194 million
    Q2 FY26

    Balance after deploying $69 million for share repurchases.

    Shares Repurchased
    1.6 million
    Q2 FY26

    Part of capital deployment.

    DSO
    42
    Q2 FY26

    Days Sales Outstanding.

    Inventory Turns
    2.7
    Q2 FY26

    Reflecting deliberate investments in inventory to secure supply.

    Non-GAAP Operating Expenses
    $122 milliondown from 45% in prior quarter
    Q2 FY26

    Reflecting leverage in growth model and early productivity gains from human-centric AI investments.

    Memory Cost Impact on EPS
    $0.05lost $0.05 in Q3, picked up $0.05 in Q2
    Q3 FY26

    Impact of not changing surcharges on backlog, making it EPS-neutral for the year.

    Industry KPIs

    8
    MetricValueDetails
    Capital return$69 millionUSD
    Backlog order book$386 million (Total RPOs); $162 million (Current RPOs)USD
    Orders backlog qualityRecord RPOs
    Product orders order growth$386 million (Total RPOs)USD
    Segment growth margin targetsNew record%
    Ai cloud infrastructure ordersTripledcontracts
    Recurring software service revenue$50 millionUSD
    Revenue mix by product customer typeSoftware and service: $50 million; Appliance: $243 millionUSD

    Orderbook & backlog

    2
    Total RPOs$386 millionQ2 FY26

    up 3% sequentially and 11% year-over-year

    Record RPOs, customers moved faster than anticipated.

    Current RPOs$162 millionQ2 FY26

    up 3% sequentially and 21% year-over-year

    Strong momentum exiting the second quarter.

    Product announcements

    1
    ProductTypeDetails
    Calix One / Agent Workforce Cloudlaunch

    Risks & headwinds

    4
    Higher memory costsQ2 FY26, Q3 FY26

    Decreased non-GAAP appliance gross margin by 460 bps sequentially and 170 bps YoY; $0.05 EPS impact in Q3 FY26.

    Mitigation: Implemented a surcharge program designed to be gross profit neutral over the long run; adjusting surcharges monthly for new orders; goal to recover incremental memory costs without adding profit.

    Broadband commoditization

    Discussed, not quantified.

    Mitigation: Calix One platform enables service providers to offer differentiated experiences, win new subscribers, grow revenue, and improve retention.

    AI cost predictability

    Discussed, not quantified.

    Mitigation: Calix's AI-native platform architecture allows use of hardened open service models, providing predictable AI costs and ROI for customers, addressing the biggest issue gaining AI adoption.

    Customer concentrationQ2 FY26

    One customer was 12% of revenue in Q2 FY26.

    Mitigation: Expected not to be a 10% customer for the full year; considered a 'blip' in the quarter.

    What to watch in Q3 FY26

    5

    Software and Service Gross Margin

    Q3 FY26
    Current810 bps sequential improvement in Q2
    TargetNew record

    Why it matters

    This indicates the continued leverage and profitability of the AI-native platform and software offerings, crucial for the investment thesis.

    I will break the precedent and say that we expect software and service gross margin to set a new record in the third quarter.

    Q&A highlights

    7

    What drives confidence in Q3 appliance gross margin bottoming, specifically if it's due to cycling grandfathered backlog vs. surcharges or other levers?

    Confidence stems from the shrinking percentage of grandfathered backlog. New orders are now assessed with surcharges monthly, aiming for gross profit neutrality. The company modified its program to provide customers with certainty of cost and supply, not adjusting backlog prices a second time.

    “It is the fact that we have grandfather a certain portion of the backlog and as we go through the next few quarters, that backlog as a percentage of the total will shrink. And so new orders are being -- the surcharges are being assessed that kind of our current cost structure. And we're also adjusting those now on a monthly basis as opposed to a quarterly basis.”

    asked by Joseph Cardoso · answered by Cory Sindelar

    2 min read6 chapters

    Detailed Narrative

    01

    AI-Native Platform Launch and Impact

    Calix launched its AI-native platform, Calix One, in Q2 FY26, realizing value from 15 years of investment. This platform enables service providers to improve operations, marketing, support, and subscriber experiences, addressing broadband commoditization. The company saw an explosion of customer interest, tripling Agent Workforce Cloud sign-ups, including late majority adopters, signaling broad market acceptance for its secure, trusted, and predictable AI approach.

    02

    Software and Services Momentum

    Software and service revenue reached a record $50 million, growing 16% YoY, driven by agentic workflows on Calix One. This momentum is expected to accelerate in H2 2026, with software and service gross margin projected to set a new record in Q3, demonstrating significant leverage. The company sees a clear pathway to 70%+ software gross margins, with potential for even higher depending on large customer private cloud instances.

    03

    Record RPOs and Demand Environment

    Record Remaining Performance Obligations (RPOs) of $386 million (up 11% YoY) and current RPOs of $162 million (up 21% YoY) indicate strong underlying demand. Management attributes this to the immediate ROI for customers adding new subscribers and the predictable AI cost model offered by Calix One, which addresses a major industry challenge🌐 of unpredictable AI expenses.

    04

    Memory Cost Headwinds and Surcharge Program

    Appliance revenue was a record $243 million, but non-GAAP appliance gross margin declined due to higher memory costs. Calix implemented a surcharge program designed to be gross profit neutral over the long run, providing customers with certainty of cost and supply. The company expects appliance gross margin to bottom in Q3 FY26 as new orders with adjusted surcharges increase.

    05

    Human-Centric AI and Operating Leverage

    Calix is applying human-centric AI internally to gain operating leverage across its operations. Non-GAAP operating expenses were $122 million or 42% of revenue, down from 45% sequentially, reflecting early productivity gains from AI investments and lower incentive compensation. The company aims for OpEx growth at a lower rate than revenue growth in FY27-FY28 to drive continued operating leverage.

    06

    Competitive Landscape and Satellite Impact

    Management asserts that fiber remains superior to satellite (Starlink) for most of the market, especially in towns, due to capacity and experience. Calix's platform helps customers differentiate and win subscribers by offering enhanced services like outdoor WiFi and security, enabling them to become dominant local brands. Satellite providers are seen as having a niche in super-rural areas or for specific use cases like maritime.

    AI-generated summary of the company’s earnings call. Not investment advice.