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May 2016 calix investor presentation

This presentation includes forward-looking statements about Calix's products, growth drivers, and financial condition and results. Any forward-looking statements are subject to risks and uncertainties that could cause actual results to differ. Examples of forward-looking statements include statements about new product and feature development, anticipated growth and growth drivers, future financial performance, and market adoption of Calix's products. Calix's actual results may differ materially from projected results.

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May 2016 1
This presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements relate to future events and expectations and involve known and unknown risks and uncertainties. Examples of forward-looking statements include, but are not limited to, statements about our development of new products and product features; our anticipated growth and growth drivers; our future financial condition and results of operations; our future business, operational and financial performance; and the success and/or market adoption of our products and solutions. We have based these forward-looking statements on our current expectations, assumptions and projections. Our actual results or actions may differ materially from those projected in forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and factors that could cause results to differ materially as described in our filings with the Securities and Exchange Commission, including our annual report on Form 10-K and quarterly reports on Form 10-Q. Except as may be required by law, Calix, Inc. undertakes no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise. 2
3 1. 2. 3. 4. Calix at a Glance Value Shift from Hardware to Software The Access Market Opportunity Financials Update 5. Appendix
Calix at a Glance 4
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.fastand NG-PON2 products • Expanded GigaCenter platform Serving over 1,200 customers in more than 70 countries 5 22% 66% 12% Customer Mix - 2015 Tier 1 Tier 2/3 International
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
Value Shift from Hardware to Software 7
The World’s Most Advanced Operating System for Access Networks 8
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
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
The Access Market Opportunity 11
12
Source: Infonetics, Morgan Stanley Research, UBS Research, Barclays Research, Company estimates 13
14 • 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 • Universal Service Fund transitioned to Connect America Fund to accelerate broadband penetration Source: FCC Broadband in America (January 2015)
Source: Morgan Stanley Research, Barclays Research, Nielsen Global Digital Landscape Report March 2015, Nielsen Total Audience 4Q14 Report, Comscore 15
DOCSIS 3.0 24 Bonded Gigabit GPON DOCSIS 3.1 (initial) 10000 Gigabit FTTH 10G PON XGS/NG-PON2 … 10G XGS/NG-PON2 16
Lower Operating Costs Source: RVA LLC: North American FTTH Accelerates, (Q4 2014), RVA LLC North America FTTH Progress and Impact 2015 (June 2015), Google Fiber Kansas City, Bernstein Proprietary Census. Survey conducted by Haynes and Company (May 2014) Estimated Operating Expense Savings High Customer Take Rates 17
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 100% Aerial/0% MDU 100% Aerial/20% MDU 50% Aerial/0% MDU 50% Aerial/50% MDU Non-Electronics/Sub Electronics/Sub Source: Suburban FTTP Network Scenarios, Telecom & Networking Equipment, The FTTP Renaissance, Implications for Vendors – Jefferies Group LLC May 6, 2015 Electronics represent ~15-25% of the total capex cost per unit served in a fiber deployment after initial build costs 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 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 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 $128 per home 21
22
23
Financials 24
($ in millions, except per share amounts) Actual Guidance Revenues $98.4 $95.0-$99.0 Non-GAAP gross margin 48.1% 47%-48% Non-GAAP operating expenses $51.7* $52.0-$53.0** Non-GAAP EPS – excluding Occam litigation ($0.02) ($0.10) – ($0.06) Non-GAAP EPS – including Occam litigation ($0.09) ($0.15) – ($0.11) Cash flow from operations $5.3 Negative 25 * Included approximately $3.4M of Occam litigation-related expenses ** Included approximately $2.6M of Occam litigation-related expenses Please refer to the reconciliation of GAAP to non-GAAP financial measures on the Investor Relations section of our website
26 $75.0 $80.0 $85.0 $90.0 $95.0 $100.0 $105.0 $110.0 $115.0 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 REVENUESIN$M ($0.15) ($0.10) ($0.05) $0.00 $0.05 $0.10 $0.15 $0.20 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 NON-GAAPEPS Revenues +8% y/y  2 > 10% customers  Growth across customers, platforms and geographies Gross margins of 48.1%  Favorable product and customer mix, offset by full quarter contribution from turnkey network improvement program Revenues within guidance  Growth across customers, platforms and geographies EPS above guidance  Better performance on gross margin and operating expenses contained $0.5M $20.5M $40.5M $60.5M $80.5M $100.5M $120.5M 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Domestic Revenues International Revenues 45.9% 47.7% 44.8% 48.1% 49.2% 51.0% 49.3% 46.5% 48.1% 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Gross Margin (%) Please refer to the reconciliation of GAAP to non-GAAP financial measures on the Investor Relations section of our website
27 $75.5M $79.3M $88.1M $112.0M $97.8M$99.5M $93.9M $73.6M $64.3M $0.0M $20.0M $40.0M $60.0M $80.0M $100.0M $120.0M 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Cash of $64.3M  Operating cash flow generation of $3.2M  No debt and untapped $50M line of credit expiring September 2018 Buyback activity complete  Program completed. Repurchased 5.3M shares at an average cost of $7.50 per share 0.4 1.0 2.1 1.8 5.3 $3.4 $7.7 $16.1 $12.8 $40.0 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Total Buyback Shares (M) Repurchased $M Repurchased Operating cash flow rebounds  Improved cash cycle  Strong collection culture Cash conversion cycle improvement  Inventory velocity improves by 10 days  Linearity and key focus on working capital -$5.2M $4.7M $15.1M -$2.5M -$11.9M $5.0M $5.1M -$4.5M $5.3M -$15.0M -$10.0M -$5.0M $0.0M $5.0M $10.0M $15.0M $20.0M 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 132 Days 115 Days 101 Days 91 Days 113 Days 108 Days 90 Days 104 Days107 Days 0 Days 20 Days 40 Days 60 Days 80 Days 100 Days 120 Days 140 Days 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Please refer to the reconciliation of GAAP to non-GAAP financial measures on the Investor Relations section of our website
Revenues $104-$108M Gross margin 46.0-47.0% Operating expenses– excluding litigation $49.6-$50.6M* Operating expenses $52.0-$53.0M* Non-GAAP EPS– excluding litigation ($0.04) – $0.00* Non-GAAP EPS ($0.09) – ($0.05)* Cash flow from operations Negative 28 *Does not take into account $4.5M (or $0.09) litigation settlement proceeds likely to be realized in Q2 or Q3 2016 Please refer to the reconciliation of GAAP to non-GAAP financial measures on the Investor Relations section of our website
Predictable, profitable long-term growth Reaccelerated top-line growth rate Increased leverage from Operating Expense investments Accelerated rate of change across industry Demand drivers remain intact 29
Q&A 30
Appendix 31
PARTNERSSALESENGINEERING LEVERAGE  Solve a hard problem once  Reuse successful components  Leverage silicon innovation  Can integrate Open Source value CUSTOMERS 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
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
Source: AT&T Vision Alignment Challenge Technology Survey,AT&T Domain 2.0 Vision White Paper,November 13, 2013 34
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
“…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
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.fast AXOS 37
“Total Internet subscribers grew by more than 19,000 from a year ago, as we ended the quarter with over 290,000 subscribers. Fioptics Internet subscriber additions totaled nearly 11,000 for the quarter, which is a 15% increase compared to the first quarter of 2015, with Internet penetration rates exceeding 35%. Fioptics Internet ARPU totaled $47, up 12% compared to a year ago.” May 5, 2016 "In the consumer [wireline] business, FiOS remains the driver of revenue growth, and now represents around 81 percent of consumer revenue. In the first quarter, consumer revenue grew 28 percent," Verizon CFO Fran Shammo said during the company's earnings conference call with investors. “…fully 60 percent of new customer FiOS sales opt for 100 Mbps speeds and above.” April 21, 2016 “We are expanding and upgrading our broadband network to establish a strong foundation for sustaining growth. We will grow consumer revenue in 2016 as we benefit from employment of 50, 75 and 100 Meg premier speeds which were rolled out during the fourth quarter 2015 to approximately 1 million locations…. We also launched one gig Internet services in four market areas including Nebraska, Kentucky, Texas and in several areas surrounding Charlotte, North America North Carolina -- from our broadband infrastructure.” May 5, 2016 “We've got the rapidly expanding GPON markets. We've gone up again, and we're now at 1.5 million homes and businesses we're here passing the grid out. We've got -- with the exclusion of the last couple hundred thousand, I know we were at 21% penetration at the end of March. We just started over the last year with that GPON work….So that along with MDU and MTU focus we have now, we have fiber to a number of MDUs MTU that are going to help drive revenue.” May 4, 2016 38
Source: Company reports Latest Quarter Wireline revenues +1% y/y Fioptics revenues +34% y/y Latest Quarter Wireline revenues -2% y/y Fios revenues +8% y/y 39 $3,125 $3,200 $3,308 $3,352 $3,438 $3,439 $3,534 $3,521 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Fios Rev ($M) 30.0% 32.0% 34.0% 36.0% 38.0% 40.0% 42.0% 44.0% 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Fios Internet Penetration Fios Video Penetration $709 $712 $727 $738 $758 $763 $773 $774 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Consumer Strategic Rev ($M) 0% 10% 20% 30% 40% 50% 60% 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Fioptics availability $34 $37 $40 $42 $45 $49 $55 $58 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Fioptics Rev ($M) 0 100 200 300 400 6,000 6,020 6,040 6,060 6,080 6,100 6,120 6,140 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Broadband Subscribers ('000s) - LHS Prism Subscribers ('000s) - RHS
“Broadband access has become a necessity in our everyday lives. In the past few years, broadband has brought sweeping changes in the ways Americans communicate, gather information, conduct commerce, and entertain themselves.” STATEMENT OF FCC CHAIRMAN TOM WHEELER “Broadband is not just a technology, it’s a platform for opportunity.” STATEMENT OF COMMISSIONER JESSICA ROSENWORCEL Source: 2015 BROADBAND PROGRESSREPORT AND NOTICE OF INQUIRY ON IMMEDIATE ACTION TO ACCELERATE DEPLOYMENT, FCC, January 9 2015 40
Source: Telecom & Networking Equipment, The FTTP Renaissance, Implications for Vendors – Jefferies Group LLC May 6, 2015 41
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 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.
 Additional information available at http://investor-relations.calix.com/ • Stock Information • Financial Information • Events & Presentations • Corporate Governance • Investor Resources 44
45

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May 2016 calix investor presentation

  • 1.
  • 2.
    This presentation includesforward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements relate to future events and expectations and involve known and unknown risks and uncertainties. Examples of forward-looking statements include, but are not limited to, statements about our development of new products and product features; our anticipated growth and growth drivers; our future financial condition and results of operations; our future business, operational and financial performance; and the success and/or market adoption of our products and solutions. We have based these forward-looking statements on our current expectations, assumptions and projections. Our actual results or actions may differ materially from those projected in forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and factors that could cause results to differ materially as described in our filings with the Securities and Exchange Commission, including our annual report on Form 10-K and quarterly reports on Form 10-Q. Except as may be required by law, Calix, Inc. undertakes no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise. 2
  • 3.
    3 1. 2. 3. 4. Calix at aGlance Value Shift from Hardware to Software The Access Market Opportunity Financials Update 5. Appendix
  • 4.
    Calix at aGlance 4
  • 5.
    2010 2011 20122014 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.fastand NG-PON2 products • Expanded GigaCenter platform Serving over 1,200 customers in more than 70 countries 5 22% 66% 12% Customer Mix - 2015 Tier 1 Tier 2/3 International
  • 6.
    Data Center OutsidePlant 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
  • 7.
    Value Shift fromHardware to Software 7
  • 8.
    The World’s MostAdvanced Operating System for Access Networks 8
  • 9.
    FAST. Time toRevenue  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
  • 11.
    The Access MarketOpportunity 11
  • 12.
  • 13.
    Source: Infonetics, MorganStanley Research, UBS Research, Barclays Research, Company estimates 13
  • 14.
    14 • 10 percentof 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 • Universal Service Fund transitioned to Connect America Fund to accelerate broadband penetration Source: FCC Broadband in America (January 2015)
  • 15.
    Source: Morgan StanleyResearch, Barclays Research, Nielsen Global Digital Landscape Report March 2015, Nielsen Total Audience 4Q14 Report, Comscore 15
  • 16.
    DOCSIS 3.0 24 Bonded GigabitGPON DOCSIS 3.1 (initial) 10000 Gigabit FTTH 10G PON XGS/NG-PON2 … 10G XGS/NG-PON2 16
  • 17.
    Lower Operating Costs Source:RVA LLC: North American FTTH Accelerates, (Q4 2014), RVA LLC North America FTTH Progress and Impact 2015 (June 2015), Google Fiber Kansas City, Bernstein Proprietary Census. Survey conducted by Haynes and Company (May 2014) Estimated Operating Expense Savings High Customer Take Rates 17
  • 18.
    0% 10% 20%30% 40% 50% 60% 70% 80% 90% 100% 100% Aerial/0% MDU 100% Aerial/20% MDU 50% Aerial/0% MDU 50% Aerial/50% MDU Non-Electronics/Sub Electronics/Sub Source: Suburban FTTP Network Scenarios, Telecom & Networking Equipment, The FTTP Renaissance, Implications for Vendors – Jefferies Group LLC May 6, 2015 Electronics represent ~15-25% of the total capex cost per unit served in a fiber deployment after initial build costs 18
  • 19.
    • Calix isa 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 19
  • 20.
    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 20
  • 21.
    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 $128 per home 21
  • 22.
  • 23.
  • 24.
  • 25.
    ($ in millions,except per share amounts) Actual Guidance Revenues $98.4 $95.0-$99.0 Non-GAAP gross margin 48.1% 47%-48% Non-GAAP operating expenses $51.7* $52.0-$53.0** Non-GAAP EPS – excluding Occam litigation ($0.02) ($0.10) – ($0.06) Non-GAAP EPS – including Occam litigation ($0.09) ($0.15) – ($0.11) Cash flow from operations $5.3 Negative 25 * Included approximately $3.4M of Occam litigation-related expenses ** Included approximately $2.6M of Occam litigation-related expenses Please refer to the reconciliation of GAAP to non-GAAP financial measures on the Investor Relations section of our website
  • 26.
    26 $75.0 $80.0 $85.0 $90.0 $95.0 $100.0 $105.0 $110.0 $115.0 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 REVENUESIN$M ($0.15) ($0.10) ($0.05) $0.00 $0.05 $0.10 $0.15 $0.20 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 NON-GAAPEPS Revenues +8% y/y 2 > 10% customers  Growth across customers, platforms and geographies Gross margins of 48.1%  Favorable product and customer mix, offset by full quarter contribution from turnkey network improvement program Revenues within guidance  Growth across customers, platforms and geographies EPS above guidance  Better performance on gross margin and operating expenses contained $0.5M $20.5M $40.5M $60.5M $80.5M $100.5M $120.5M 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Domestic Revenues International Revenues 45.9% 47.7% 44.8% 48.1% 49.2% 51.0% 49.3% 46.5% 48.1% 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Gross Margin (%) Please refer to the reconciliation of GAAP to non-GAAP financial measures on the Investor Relations section of our website
  • 27.
    27 $75.5M $79.3M $88.1M $112.0M $97.8M$99.5M $93.9M $73.6M $64.3M $0.0M $20.0M $40.0M $60.0M $80.0M $100.0M $120.0M 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Cash of $64.3M Operating cash flow generation of $3.2M  No debt and untapped $50M line of credit expiring September 2018 Buyback activity complete  Program completed. Repurchased 5.3M shares at an average cost of $7.50 per share 0.4 1.0 2.1 1.8 5.3 $3.4 $7.7 $16.1 $12.8 $40.0 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Total Buyback Shares (M) Repurchased $M Repurchased Operating cash flow rebounds  Improved cash cycle  Strong collection culture Cash conversion cycle improvement  Inventory velocity improves by 10 days  Linearity and key focus on working capital -$5.2M $4.7M $15.1M -$2.5M -$11.9M $5.0M $5.1M -$4.5M $5.3M -$15.0M -$10.0M -$5.0M $0.0M $5.0M $10.0M $15.0M $20.0M 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 132 Days 115 Days 101 Days 91 Days 113 Days 108 Days 90 Days 104 Days107 Days 0 Days 20 Days 40 Days 60 Days 80 Days 100 Days 120 Days 140 Days 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Please refer to the reconciliation of GAAP to non-GAAP financial measures on the Investor Relations section of our website
  • 28.
    Revenues $104-$108M Gross margin46.0-47.0% Operating expenses– excluding litigation $49.6-$50.6M* Operating expenses $52.0-$53.0M* Non-GAAP EPS– excluding litigation ($0.04) – $0.00* Non-GAAP EPS ($0.09) – ($0.05)* Cash flow from operations Negative 28 *Does not take into account $4.5M (or $0.09) litigation settlement proceeds likely to be realized in Q2 or Q3 2016 Please refer to the reconciliation of GAAP to non-GAAP financial measures on the Investor Relations section of our website
  • 29.
    Predictable, profitable long-termgrowth Reaccelerated top-line growth rate Increased leverage from Operating Expense investments Accelerated rate of change across industry Demand drivers remain intact 29
  • 30.
  • 31.
  • 32.
    PARTNERSSALESENGINEERING LEVERAGE  Solve ahard problem once  Reuse successful components  Leverage silicon innovation  Can integrate Open Source value CUSTOMERS 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 ServicesLayer 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 VisionAlignment Challenge Technology Survey,AT&T Domain 2.0 Vision White Paper,November 13, 2013 34
  • 35.
    Source: “Evaluating “TheState 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 thecost 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 •Focuson 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.fast AXOS 37
  • 38.
    “Total Internet subscribersgrew by more than 19,000 from a year ago, as we ended the quarter with over 290,000 subscribers. Fioptics Internet subscriber additions totaled nearly 11,000 for the quarter, which is a 15% increase compared to the first quarter of 2015, with Internet penetration rates exceeding 35%. Fioptics Internet ARPU totaled $47, up 12% compared to a year ago.” May 5, 2016 "In the consumer [wireline] business, FiOS remains the driver of revenue growth, and now represents around 81 percent of consumer revenue. In the first quarter, consumer revenue grew 28 percent," Verizon CFO Fran Shammo said during the company's earnings conference call with investors. “…fully 60 percent of new customer FiOS sales opt for 100 Mbps speeds and above.” April 21, 2016 “We are expanding and upgrading our broadband network to establish a strong foundation for sustaining growth. We will grow consumer revenue in 2016 as we benefit from employment of 50, 75 and 100 Meg premier speeds which were rolled out during the fourth quarter 2015 to approximately 1 million locations…. We also launched one gig Internet services in four market areas including Nebraska, Kentucky, Texas and in several areas surrounding Charlotte, North America North Carolina -- from our broadband infrastructure.” May 5, 2016 “We've got the rapidly expanding GPON markets. We've gone up again, and we're now at 1.5 million homes and businesses we're here passing the grid out. We've got -- with the exclusion of the last couple hundred thousand, I know we were at 21% penetration at the end of March. We just started over the last year with that GPON work….So that along with MDU and MTU focus we have now, we have fiber to a number of MDUs MTU that are going to help drive revenue.” May 4, 2016 38
  • 39.
    Source: Company reports LatestQuarter Wireline revenues +1% y/y Fioptics revenues +34% y/y Latest Quarter Wireline revenues -2% y/y Fios revenues +8% y/y 39 $3,125 $3,200 $3,308 $3,352 $3,438 $3,439 $3,534 $3,521 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Fios Rev ($M) 30.0% 32.0% 34.0% 36.0% 38.0% 40.0% 42.0% 44.0% 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Fios Internet Penetration Fios Video Penetration $709 $712 $727 $738 $758 $763 $773 $774 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Consumer Strategic Rev ($M) 0% 10% 20% 30% 40% 50% 60% 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Fioptics availability $34 $37 $40 $42 $45 $49 $55 $58 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Fioptics Rev ($M) 0 100 200 300 400 6,000 6,020 6,040 6,060 6,080 6,100 6,120 6,140 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Broadband Subscribers ('000s) - LHS Prism Subscribers ('000s) - RHS
  • 40.
    “Broadband access hasbecome a necessity in our everyday lives. In the past few years, broadband has brought sweeping changes in the ways Americans communicate, gather information, conduct commerce, and entertain themselves.” STATEMENT OF FCC CHAIRMAN TOM WHEELER “Broadband is not just a technology, it’s a platform for opportunity.” STATEMENT OF COMMISSIONER JESSICA ROSENWORCEL Source: 2015 BROADBAND PROGRESSREPORT AND NOTICE OF INQUIRY ON IMMEDIATE ACTION TO ACCELERATE DEPLOYMENT, FCC, January 9 2015 40
  • 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 Q22014 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 surveyrespondents 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 informationavailable at http://investor-relations.calix.com/ • Stock Information • Financial Information • Events & Presentations • Corporate Governance • Investor Resources 44
  • 45.