Calix (NYSE:CALX), in its third-quarter 2023 earnings call, reported a record revenue of $263.8 million, marking its 10th consecutive quarter of sequential revenue growth. The company expanded its gross margin for the fifth consecutive quarter, reaching 53.8%. Calix also highlighted the impact of the pandemic-induced supply chain crisis on its inventory levels and the rebranding of its cloud products. The company is optimistic about its growth trajectory, expecting a strong fourth quarter and anticipating the growth of recurring purchase orders.
Key takeaways from the call include:
- Calix reported its 10th consecutive quarter of sequential revenue growth with record revenue of $263.8 million.
- The company expanded its gross margin for the fifth consecutive quarter, reaching 53.8%.
- Calix is managing the pandemic-induced supply chain crisis effectively, with lead times for product deliveries currently between 12 and 14 weeks.
- The company rebranded its cloud products as Engagement Cloud and Service Cloud, emphasizing the importance of customer engagement.
- Calix is optimistic about its growth trajectory, expecting a strong fourth quarter and anticipating the growth of their recurring purchase orders.
The company acknowledged the shift in customer base from small to mid-sized customers, focusing on growing margins and driving cash flow rather than chasing revenue. Calix also highlighted the success of its managed services, particularly SmartBiz and SmartMVU, which address gaps in the market for small businesses.
The rebranding of its cloud products was driven by customer feedback and the need to convey a broader scope of services. The company emphasized the importance of customer engagement and highlighted the capabilities of its Engagement Cloud in managing customer interactions throughout their lifecycle.
In terms of financial guidance, the company anticipates 1% to 4% sequential quarterly growth in 2024, with expectations of lower growth until government funding resumes. Calix reaffirmed its long-term target model of 100 to 200 basis points gross margin growth for 2024.
During the call, Michael Weening, President and CEO of Calix, discussed the success of their managed services, specifically SmartBiz and SmartMVU. These services have been well-received by customers and fill a gap in the market for small businesses. Weening also mentioned the company's long-term guidance of 10% to 15% growth and improving gross margins.
The company reiterated its long-term guidance of 10% to 15% growth, with expectations towards the lower end of that range in 2024. Calix is also helping customers understand decisions regarding government programs like A-CAM or BEED funding. The company anticipates an inflection point in late 2024 or early 2025 due to the large amount of expected funding.
In conclusion, Calix is optimistic about its future growth, expecting a strong fourth quarter and anticipating the growth of their recurring purchase orders. The company is well-positioned to benefit from the expected influx of stimulus dollars into the market.
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