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Calix Forward-Looking Statements and Guidance Presentation
- 2. This presentation includes forward-looking statements that are based upon management's current expectations and are inherently uncertain. Forward-looking statements are based upon information available to us as of the date of this release, and we assume no obligation to revise or update any such forward-looking statement to reflect any event or circumstance after the date of this release, except as required by law. Actual results and the timing of events could differ materially from current expectations based on risks and uncertainties affecting Calix’s business. The reader is cautioned not to rely on the forward-looking statements contained in this press release. Additional information on potential factors that could affect Calix's results and other risks and uncertainties are detailed in its Annual Report on Form 10-K for the fiscal year 2015, filed with the SEC and available at www.sec.gov. 2
- 3. This presentation includes forward-looking statements that are based upon management's current expectations and are inherently uncertain. Forward-looking statements are based upon information available to us as of the date of this release, and we assume no obligation to revise or update any such forward-looking statement to reflect any event or circumstance after the date of this release, except as required by law. Actual results and the timing of events could differ materially from current expectations based on risks and uncertainties affecting Calix’s business. The reader is cautioned not to rely on the forward-looking statements contained in this press release. Additional information on potential factors that could affect Calix's results and other risks and uncertainties are detailed in its Annual Report on Form 10-K for the fiscal year 2015, filed with the SEC and available at www.sec.gov. 2
- 4. This presentation includes forward-looking statements that are based upon management's current expectations and are inherently uncertain. Forward-looking statements are based upon information available to us as of the date of this release, and we assume no obligation to revise or update any such forward-looking statement to reflect any event or circumstance after the date of this release, except as required by law. Actual results and the timing of events could differ materially from current expectations based on risks and uncertainties affecting Calix’s business. The reader is cautioned not to rely on the forward-looking statements contained in this press release. Additional information on potential factors that could affect Calix's results and other risks and uncertainties are detailed in its Annual Report on Form 10-K for the fiscal year 2015, filed with the SEC and available at www.sec.gov. 2
- 5. 2010 2011 2012 2014 2015 • IPO on NYSE • Occam acquisition • EMEA and Australia expansion • Ericsson fiber access products acquisition • Ericsson global reseller agreement • Launched Open Link Cable • Introduced GigaCenter • Introduced AXOS platform • Launched G.fast and NG-PON2 products • Expanded GigaCenter platform Serving over 1,200 customers in more than 70 countries 5
- 6. Data Center Outside Plant Broadband Aggregation Optimization Success-based Pay- as-you-grow Architecture Subscriber Edge Technology & Service Optimization E3-48C 716E E7-2 E7-20 E5-48 E5-216F GigaFamily 6 E3-8G
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- 8. The World’s Most Advanced Operating System for Access Networks 8
- 9. FAST. Time to Revenue Speed of New Features. Individual software components are containerized which simplifies adds /deletes /changes and eliminates the need to constantly re-test the entire OS, thus maximizing reuse, while leveraging industry standards and open source software Speed of New Products. The unique hardware and software abstraction layers (HAL / SAL) preserve software independence from the underlying hardware and allow rapid development for any new access technology ALWAYS ON. Resilient Eliminates maintenance windows through the live upgrade functionality Minimizes downtime using self-diagnosis, self-healing and process auto-restart Provides unprecedented visibility into application performance via monitoring and streaming data off the systems to feed third-party or open source monitoring tools SIMPLE. Operational ease and flexibility Plugs into any open standard orchestration and management solution because it supports dynamic “state” manipulation through standard, open interfaces Portable across the network with common, stable field deployed components Rapid delivery of new services, superior customer experience and unparalleled reliability 9
- 10. Controlled environment Short lifecycle / Easy to replace Partially to fully exposed environments Long lifecycle / Difficult to replace Data Center Access NetworkData Center Access Networkvs. 10
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- 12. Source: Infonetics, Morgan Stanley Research, UBS Research, Barclays Research, Company estimates 12
- 13. 13 • 10 percent of all Americans (34 million people) lack access to 25 Mbps/3 Mbps service • Wide disparity between urban and rural subscribers • 4 percent of urban Americans lack access to 25Mbps/3Mbps service • 39 percent of rural Americans lack access to 25 Mbps/3 Mbps service • US broadband access ranked 16th out of 34 countries Source: FCC Broadband in America (January 2015)
- 14. Source: Morgan Stanley Research, Barclays Research, Nielsen Global Digital Landscape Report March 2015, Nielsen Total Audience 4Q14 Report, Comscore 14
- 15. DOCSIS 3.0 24 Bonded Gigabit GPON DOCSIS 3.1 (initial) 10000 Gigabit FTTH 10G PON XGS/NG-PON2 … 10G XGS/NG-PON2 15
- 16. 3 1. 2. 3. 4. Calix at a Glance Value Shift from Hardware to Software The Access Market Opportunity Financials Update 5. Appendix
- 17. 3 1. 2. 3. 4. Calix at a Glance Value Shift from Hardware to Software The Access Market Opportunity Financials Update 5. Appendix
- 18. • Calix is a leader in G.fast technology as the first company in the world to publicly demonstrate a true gigabit experience via bonded G.fast over copper at Broadband World Forum 2015 with speeds up to with 1.5 Gb/s at 250m • G.fast solutions are ideally suited for short loops < 500 m and speeds from 150Mb/s to >1 Gb/s • Per U.S. Census data there are over 34 million multi-tenant housing units in the U.S. (per 2013 ACS) with an estimated more than 50% of these units built before 1980 • Aged residential and commercial units are characterized by difficulties in riser access and restricted building access • G.fast provides fiber-like broadband speeds when fiber is not available MDU Riser GPON/GE G.fast 18
- 19. CAPEX $25K CAPEX $8K OPEX $1K OPEX $32K Central Office Generic Home 20 Mbps MDU 1:32 split BPON ONTs + 1 GPON system + 32 GPON ONTs + 2 CO techs (day) + 32 techs in field (simultaneously) GPON ONTs GPON OLTs BPON OLTs Total cash spend = $66K -- or $2,063 per home 19
- 20. CAPEX $4K OPEX $120 Home MDU 1:32 split BPON OLTs GPON OLTs BPON OLTs + 1 GPON line card + 1 GPON OIM - 1 BPON trade-in + 1 CO tech (2 hrs) + 0 techs in field (no truck roll) 80 Mbps to 1Gbps GPON ONTs Auto- detect PO ONTs Central Office GPON OLTs Total cash spend = $4.12K -- or $128 per home 20
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- 24. ($ in millions, except per share amounts) Actual Guidance Revenues $105.0 $102.0-$106.0 Non-GAAP gross margin 46.5% 47%-48% Non-GAAP operating expenses $50.6* $51.5-$52.5 Non-GAAP EPS ($0.03) ($0.07) – ($0.03) Cash flow from operations ($4.1) Neutral 24 *Includes approximately $0.8M of litigation-related expenses
- 25. Revenues of $105.0M, -6% q/q, -6% y/y Results at the upper end of $102-$106M guidance Eighth consecutive quarter at or above revenue guidance range Non-GAAP Gross margins decrease to 46.5%, -1.6% y/y Higher mix of international revenues Full-year 2015 gross margins of 49.0% Non-GAAP EPS loss of ($0.03) At the high-end of guidance range of ($0.07) – ($0.03) due to lower operating expenses Eighth consecutive quarter at or above Non-GAAP EPS guidance range Stock repurchase activity accelerated Repurchased 2.1M shares at an average cost of $7.67 per share $12.8M remains on $40M stock repurchase authorization Launched the era of Software Defined Access with the introduction of AXOS Other major product announcements included Accelerated fiber migration with the launch of the Node-Based E3-8G Demonstrated bonded G.fast at speeds in excess of 1 gigabit per second Breakthrough VDSL2 system level vectoring solutions on the E7-2 modular access system 25
- 26. 26 Full-year 2015 revenues +2% y/y Strength across multiple customers, products and geographies 2011-15 CAGR of 4.2% as customer & country count increase as well as market share gains at key existing accounts Product platforms poised to contribute to future growth Full-year 2015 gross margins increase on mix and platform leverage Full-year gross margins of 49.0%, +230bps y/y and +530bps since 2011 Favorable product mix as well as improved operating efficiency Unified Access architecture platform drives improved cost leverage
- 27. Eighth consecutive quarter of reported revenues in- line or better than guidance Visibility remains challenged amid uneven customer spending environment New product offerings as well as improved customer value proposition driving revenues Non-GAAP EPS at or above guidance for eighth consecutive quarter Continued shift to software-centric platform and product- specific momentum drives annual improvement in gross profits Some timing shifts in operating expenses added to improved near-term earnings 27
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- 29. Revenues $95-$99M Gross margin 47.0-48.0% Operating expenses $52.0-$53.0M* Non-GAAP EPS ($0.15) – ($0.11) Cash flow from operations Negative 29 *Includes approximately $2.6M of litigation-related expenses
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- 32. PARTNERSPARTNERSSALESSALESENGINEERINGENGINEERING LEVERAGE Solve a hard problem once Reuse successful components Leverage silicon innovation Can integrate Open Source value CUSTOMERSCUSTOMERS VALUE Consistent Behavior Service Resiliency Workflow Simplicity Upgradability ( features + fixes) Reduce OPEX PORTFOLIO EFFECT Cross-selling and pull- through sales Sell once, train once Solution Delivery End to End Reduce Cost of Sales INTEGRATION Tighter integration Broader opportunities Round out the portfolio Solution Ecosystem versus larger vendors 32
- 33. Infrastructure Layer Protocol Framework Layer Protocol and Services Layer User Interface Layer Policy and Management Layer Hardware Abstraction Layer AXOS Merchant Silicon / New Technology Decoupled hardware and software, loosely coupled components Simplistic 3-layer model transformed to fine-grained independent software components abstracted from the physical layer Support for 3rd party components with internal and external APIs DATA PLANE CONTROL PLANE MANAGEMENT PLANE D1 D2 D3 D4 C1 C2 C3 C4 B1 B2 B3 B4 A1 A2 A3 A4 33
- 34. Source: AT&T Vision Alignment Challenge Technology Survey, AT&T Domain 2.0 Vision White Paper, November 13, 2013 34
- 35. Source: “Evaluating “The State of the State” of Virtualization, Light Reading, June 2015 NFV requires faster broadband connections, driven by shared functionality between the data center and the subscriber edge SDN demands flexible, rapidly deployable software applications in order to provide customer friendly solutions on demand The key differentiator for a systems vendor is to have an operating system that facilitates network operators’ flexible deployment of software applications across their networks as well as in customer specific situations 35
- 36. “…to capture the cost saving and revenue generating potential of SDN and NFV, communications service providers (CSPs) have to embrace new ways of achieving traditional objectives...What that requires of vendors is to design network platforms and applications that evolve so that they no longer rely on the hardware providing the reliability but instead are designed to assume the probability of hardware failures and perform failover in software instead” “A significant part of the value proposition of a more software-centric network is that it enables CSPs to respond much more rapidly to both network conditions and customer demands.” Source: Evaluating “The State of the State” of Virtualization, Hewlett-Packard, Light Reading, Heavy Reading (July 2015) 36
- 37. Expanded Revenues •New Products & Markets •Focus on NFV & SDN Opportunity Increased Gross Profit •Consistent Gross Margin Expansion •Funds R&D R&D Investment •Operating System •Access Solutions Long-Term Operating Profit Growth G.fastAXOS 37
- 38. 2010 2011 2012 2014 2015 • IPO on NYSE • Occam acquisition • EMEA and Australia expansion • Ericsson fiber access products acquisition • Ericsson global reseller agreement • Launched Open Link Cable • Introduced GigaCenter • Introduced AXOS platform • Launched G.fast and NG-PON2 products • Expanded GigaCenter platform Serving over 1,200 customers in more than 70 countries 5
- 39. 2010 2011 2012 2014 2015 • IPO on NYSE • Occam acquisition • EMEA and Australia expansion • Ericsson fiber access products acquisition • Ericsson global reseller agreement • Launched Open Link Cable • Introduced GigaCenter • Introduced AXOS platform • Launched G.fast and NG-PON2 products • Expanded GigaCenter platform Serving over 1,200 customers in more than 70 countries 5
- 40. 2010 2011 2012 2014 2015 • IPO on NYSE • Occam acquisition • EMEA and Australia expansion • Ericsson fiber access products acquisition • Ericsson global reseller agreement • Launched Open Link Cable • Introduced GigaCenter • Introduced AXOS platform • Launched G.fast and NG-PON2 products • Expanded GigaCenter platform Serving over 1,200 customers in more than 70 countries 5
- 41. Source: Telecom & Networking Equipment, The FTTP Renaissance, Implications for Vendors – Jefferies Group LLC May 6, 2015 41
- 42. 14 31 43 65 76 100 122 131 0 20 40 60 80 100 120 140 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 *Additional customer deployments from Calix customers have been secured but not yet announced. Calix Gigabit Deployments 42
- 43. 43 45% of survey respondents currently deploying fiber cover at least 50% of customers with FTTH solutions (41% in 2013) 67% of survey respondents plan to offer FTTH to at least 50% of customers by 2017 85% of survey respondents have a long-term fiber deployment strategy with 74% of survey respondents plan to offer FTTN to more than 75% of customers by 2017 25% of survey respondents have already completed fiber deployments to 100% of customers Source: NTCA 2014 Broadband/Internet Availability Survey Report, June 2015.
- 44. Additional information available at http://investor- relations.calix.com/ • Stock Information • Financial Information • Corporate Governance • Investor Resources 44
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