Calix Revenue Hits Record $301.7 Million, But Memory Costs Cut Gross Margin To 53.5%
Net income fell to $10.2 million from $15.7 million a year earlier, while Calix guided fourth-quarter revenue to $311 million to $317 million.
Calix, which sells cloud software, network equipment and managed services to broadband providers, posted record third-quarter revenue of $301.7 million, up 3% from the prior quarter and 14% from a year earlier, in a stockholder letter released Monday. A jump in memory-chip costs pulled margins down, and net income slid to $10.2 million from $15.7 million a year ago.
Memory costs bite appliance margin
Appliance revenue, which covers Access Edge and Experience Edge equipment and related optics, reached a record $249.8 million, up 13% from a year earlier. Appliance gross margin fell to 50.7% on an adjusted basis, down 550 basis points (5.5 percentage points) from the year-ago quarter, which the company tied to an industry-wide rise in memory costs driven by demand from AI data centers.
Adjusted gross margin was 53.5%, down from 57.7% a year earlier and at the top of the company's guidance range of 50.5% to 53.5%. Calix said it has asked customers to accept memory surcharges meant to recover costs only, so the extra memory expense should over time be neutral to gross profit while still weighing on gross margin.
GAAP, or standard-accounting, net income was $0.16 per diluted share. Adjusted earnings were $0.44 per share, near the high end of the $0.37 to $0.45 guidance. Stock-based compensation was $21.0 million, against $16.7 million in the prior quarter.
Software and service keeps growing
Software and service revenue rose 19% from a year earlier to a record $51.9 million, with adjusted gross margin on that line at a record 67.2%. Calix said contracts signed on its Calix One AI platform in the quarter more than doubled from the prior quarter. Remaining performance obligations, contracted revenue yet to be recognized, hit a record $395.7 million, up 12% from a year earlier.
One customer accounted for 11% of revenue, and Calix added 14 new service provider customers in the quarter.
Buybacks drain cash, outlook rises
Calix spent $50.0 million repurchasing 1.4 million shares in the quarter, bringing the year's repurchases to 6.3 million shares for $290.2 million. The board added $100 million to the authorization in October, leaving $144 million. Cash and investments ended the quarter at $154.8 million, down $39.5 million from the prior quarter.
For the fourth quarter, Calix guided revenue of $311 million to $317 million and adjusted earnings of $0.41 to $0.49 per share. The midpoint implies full-year 2026 revenue growth of about 19%, at the higher end of the 15% to 20% range it set at the start of the year.
CEO Michael Weening and CFO Cory Sindelar will discuss the results on a conference call Tuesday, November 3, at 8:30 a.m. ET.
Sources
- 8-K Filing — CALIX, INC (CALX) — SEC EDGAR
- Exhibit ex991pressrelease26q3.htm — CALIX, INC 8-K exhibit — SEC EDGAR
- Exhibit ex992stockholderletter26q3.htm — CALIX, INC 8-K exhibit — SEC EDGAR
- Calix Releases Third Quarter 2026 Financial Results — businesswire.com
