Calix Inc (NYSE:CALX) Q2 2019 Earnings Conference Call - Final Transcript

Jul 24, 2019 • 08:30 am ET


Calix Inc (NYSE:CALX) Q2 2019 Earnings Conference Call - Final Transcript


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Greetings and welcome to the Calix Second Quarter 2019 Earnings Conference Call. [Operator Instructions] It is now my pleasure to introduce your host, Tom Dinges, Director of Investor Relations. Thank you. You may begin.

Thomas J. Dinges

Thank you, operator, and good morning, everyone. Thank you for joining our Q2 2019 earnings conference call. Today on the call, we have President and CEO, Carl Russo as well as Chief Financial Officer, Cory Sindelar. As a reminder, yesterday after the close of market, we released our letter to stockholders in an 8-K filing as well as on the Investor Relations section of the Calix website. This conference call will be available for audio replay in the Investor Relations section of the Calix website.

Before we begin, we want to remind you that in this call, we refer to forward-looking statements, which include all statements we make about our future financial and operating performance, growth strategy and market outlook, and 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 our second quarter 2019 letter to stockholders and in our 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 on this call, we will discuss both GAAP and non-GAAP financial measures. Reconciliation of GAAP to non-GAAP measures is included in our letter to stockholders. Unless otherwise stated on this call, we will reference non-GAAP measures.

With that, let me turn the call over to Carl. Carl?

Carl E. Russo

Thank you, Tom. Our second quarter was a good one. Demand was strong, gross margin expansion was good and opex was disciplined. Our effort to harmonize demand and supply with our new manufacturing partners was met with considerable success., while we are not completely finished, we can now see that we will be complete in the third quarter, and there is no meaningful risk remaining. I would like to thank our customers for their patience and our employees for their continued hard work. Headwinds from our publicly traded ILEC customers will continue through the third quarter and into the fourth quarter. We are confident that these headwinds will no longer be a meaningful factor in the business entering 2020.

It is worth noting that not many years ago, this narrow category of customers represented more than three-quarters of our business. Today, that same set of customers delivers less than one-quarter of our business. The flip side of this story is the robust nature of the future Calix business model. We continue to add new customers at a rate greater than 100 per year. That is remarkable. And as the headwinds from our legacy business subside, this new business will continue to shine. As I stated on our last call, we have it right. We have the right platforms and the right services at the right time. Some brief examples from the second quarter were: adding 33