Calix Reports First Quarter 2011 Financial Results

Calix, Inc. (NYSE:CALX) today announced unaudited financial results for the first quarter ended March 26, 2011. Revenue for the first quarter of 2011 was $71.5 million, an increase of 48.3% compared to $48.2 million for the first quarter of 2010.

“Q1 was a record-setting quarter for Calix, and represented a strong start to fiscal year 2011,” said Carl Russo, Calix president and CEO. “We executed well across all segments of our business, and reported results that were ahead of expectations. Our integration of Occam Networks is progressing quickly and smoothly, resulting in accelerating innovation across our Unified Access portfolio and deeper relationships with our over 900 customers.”

Non-GAAP net income for the first quarter of 2011 was $3.8 million, or $0.09 per fully diluted share, an increase of 179.2% compared to non-GAAP net loss of $4.7 million, or $(0.15) per fully diluted share, for the first quarter of 2010. A reconciliation of GAAP and non-GAAP results is included as part of this release.

GAAP net loss for the first quarter of 2011 was $22.8 million, or $(0.55) per basic and diluted share, compared to a GAAP net loss of $10.2 million, or $(0.32) per basic and diluted share for the first quarter of 2010 assuming the conversion of preferred stock into common stock as of the beginning of the first quarter of 2010. A reconciliation of our Q1 2011 operating results from non-GAAP to GAAP is provided below:
  Non-GAAP  

MergerRelated andOtherExpenses
 

Stock-BasedCompensation
 

Amortizationof IntangibleAssets
  GAAP
Revenue $ 71,470   -   -   -   $ 71,470
 
Cost of revenue   38,804     10,257       504       1,516       51,081  
Gross profit 32,666 (10,257 ) (504 ) (1,516 ) 20,389
 
Operating expense   28,890     5,951       7,613       669       43,123  
Operating income (loss) 3,776 (16,208 ) (8,117 ) (2,185 ) (22,734 )
 
Other income/(expense), net   2     -       -       -       2  
Income (loss) before taxes 3,778 (16,208 ) (8,117 ) (2,185 ) (22,732 )
Provision for income taxes   24     -       -       -       24  
Net income (loss) $ 3,754   $ (16,208 )   $ (8,117 )   $ (2,185 )   $ (22,756 )
 

Weighted average basic and diluted shares used to compute GAAP net loss per common share
  41,177  
 

Weighted average diluted shares used to compute non-GAAP net income per common share
  43,728     43,728       43,728       43,728  
 
GAAP net loss per common share $ (0.55 )
 
Non-GAAP net income per share $ 0.09   $ (0.37 )   $ (0.19 )   $ (0.05 )
 

Conference Call

In conjunction with this announcement, Calix will host a conference call at 1:30 p.m. PDT (4:30 p.m. EDT) today to discuss its first quarter 2011 financial results. A live audio webcast and replay of the call will be available in the Investor Relations section of the Calix web site at http://investor-relations.calix.com.

Live call access information:
  • Dial-in number: (866) 788-0542 (U.S.) or (857) 350-1680 (outside the U.S.)
  • Passcode: 67453797

Replay call access information:
  • Replay call dial-in: (888) 286-8010 (U.S.) or (617) 801-6888 (outside the U.S.)
  • Passcode: 92801418

The conference call and webcast will include forward looking information.

About Calix

Calix (NYSE: CALX) is a global leader in access innovation. Its Unified Access portfolio of broadband communications access systems and software enable communications service providers worldwide to be the broadband provider of choice to their subscribers. For more information, visit the Calix website at www.calix.com.

Use of Non-GAAP Financial Information

The Company uses certain non-GAAP financial measures in this press release to supplement its consolidated financial statements, which are presented in accordance with GAAP. These non-GAAP measures include non-GAAP net income (loss) and non-GAAP basic and diluted income (loss) per share. These non-GAAP measures are provided to enhance the reader’s understanding of the Company’s operating performance as they primarily exclude certain non-cash charges for stock-based compensation and amortization of acquisition-related intangible assets, and non-recurring merger-related and other expenses, which the Company believes are not indicative of its core operating results. Merger-related and other expenses largely include the charge resulting from the required revaluation of Occam inventory to its estimated fair value, legal and professional expenses, and severance and integration-related expenses and inventory-related charges associated with our merger with Occam and to a lesser extent the settlement of litigation. Management believes that the non-GAAP measures used in this press release provide investors with important perspectives into the Company’s ongoing business performance and management uses these non-GAAP measures to evaluate financial results and to establish operational goals. The presentation of these non-GAAP measures is not meant to be a substitute for results presented in accordance with GAAP, but rather should be evaluated in conjunction with these results. A reconciliation of the non-GAAP results to the most directly comparable GAAP results is provided in the financial schedules portion of this press release. The non-GAAP financial measures used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.

Condensed Consolidated Statement of Operations
(in thousands)
   
Three Months Ended
March 26, March 27,
2011 2010
(unaudited)
Revenue $ 71,470 $ 48,203
Cost of revenue:
Products and services(1) 39,308 30,171
Merger-related expenses 10,257 -
Amortization of intangible assets   1,516     1,360  
Total cost of revenue   51,081     31,531  
Gross profit 20,389 16,672
 
Operating expenses:
Research and development(1) 15,039 11,847
Sales and marketing(1) 12,066 8,422
General and administrative(1) 9,308 4,748
Merger-related and other expenses(1) 6,041 -
Amortization of intangible assets   669     185  
Total operating expenses   43,123     25,202  
Loss from operations (22,734 ) (8,530 )
 
Other income (expense):
Interest income 43 74
Interest expense (46 ) (473 )
Change in fair value of preferred stock warrants - (173 )
Other income   5     11  
Loss before provision for income taxes (22,732 ) (9,091 )
Provision for income taxes   24     171  
Net loss (22,756 ) (9,262 )
Preferred stock dividends   -     900  
Net loss attributable to common stockholders $ (22,756 ) $ (10,162 )
 
Net loss per common share:
Basic and diluted $ (0.55 ) $ (2.27 )
Pro forma basic and diluted $ (0.55 )

$

(0.32

)
 
Weighted average number of shares used to compute net loss per common share:
Basic and diluted   41,177     4,474  

Pro forma basic and diluted (2)
  41,177  

 

31,865
 
 
 

(1) Includes stock-based compensation as follows:
Three Months Ended    
March 26, March 27,
2011 2010    
(unaudited)
Cost of revenue $ 504 $ 140
Research and development 1,642 570
Sales and marketing 1,298 434
General and administrative 4,583 1,663
Merger-related   90     -  
$ 8,117   $ 2,807  
 

(2) For the first quarter ended March 27, 2010, includes outstanding common shares and common shares resulting from the assumed conversion of preferred shares as if conversion occurred at the beginning of the first quarter of 2010.
 
Reconciliation of GAAP to Non-GAAP Results
(Unaudited, in thousands except per share data)
       
Three Months Ended  
March 26, March 27,
2011       2010  
 
 
GAAP net loss $ (22,756 ) $ (10,162 )

Adjustments to reconcile GAAP net loss to non-GAAP net income (loss):
Stock-based compensation 8,027 2,807
Stock-based compensation (MRE) 90 -
Amortization of intangible assets 2,185 1,545
Merger-related expenses (COGS) 10,257 -
Merger-related and other expenses (OPEX) 5,951

-
Change in fair value of preferred stock warrants - 173
Preferred stock dividends   -     900  
Non-GAAP net income (loss) $ 3,754   $ (4,737 )
 
 
Non-GAAP net income (loss) per common share
Basic $ 0.09   $ (0.15 )
 
Diluted $ 0.09   $ (0.15 )
 

Weighted average shares used to compute non-GAAP net income (loss) per common share - Basic (1)
  41,177     31,865  
 

Weighted average shares used to compute non-GAAP net income (loss) per common share - Diluted (1)(2)
  43,728     31,865  
 
 

(1) For the first quarter ended March 27, 2010, includes outstanding common shares and common shares resulting from the assumed conversion of preferred shares as if conversion occurred at the beginning of the first quarter of 2010.
 

(2) Includes the dilutive effect of outstanding stock options, warrants and restricted stock units for the first quarter of 2011.
                   
 
Three Months Ended
March 26, March 27,
2011   2010
 
GAAP gross profit and gross margin $ 20,389 28.5 % $ 16,672 34.6 %

Adjustments to reconcile GAAP gross profit and gross margin to non-GAAP gross profit and gross margin:
Stock-based compensation 504 140
Amortization of intangible assets 1,516 1,360
Merger-related expenses   10,257     -  
Non-GAAP gross profit and gross margin $ 32,666   45.7 % $ 18,172   37.7 %
 

Condensed Consolidated Balance Sheets
(In thousands)
   
March 26, December 31,
2011 2010
ASSETS (unaudited)
Current Assets:
Cash and cash equivalents $ 29,547 $ 66,304
Marketable securities 8,999 32,020
Restricted cash 1,054 -
Accounts receivable, net 54,342 43,377
Inventory 49,380 24,557
Deferred cost of goods sold 9,854 7,771
Prepaid and other current assets   2,838     3,245  
Total current assets 156,014 177,274
 
Property and equipment, net 19,283 11,815
Goodwill 118,552 65,576
Intangible assets, net 95,984 515
Other assets   2,491     2,376  
Total assets $ 392,324   $ 257,556  
 

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 16,000 $ 10,268
Accrued liabilities 44,668 25,987
Deferred revenue   18,076     14,062  
Total current liabilities 78,744 50,317
 
Long-term portion of deferred revenue 11,609 10,985
Other long term liabilities   1,833     951  
Total liabilities   92,186     62,253  
 
Stockholders' equity:
Common stock 1,133 968
Additional paid-in capital 733,360 605,939
Other comprehensive income 36 31
Accumulated deficit   (434,391 )   (411,635 )
Total stockholders' equity 300,138 195,303
   
Total liabilities and stockholders' equity $ 392,324   $ 257,556  
 

Condensed Consolidated Statement of Cash Flows
(in thousands)
  Three Months Ended
March 26,   March 27,
2011 2010
(unaudited)
Operating activities
Net loss $ (22,756 ) $ (9,262 )
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of premiums relating to available-for-sale securities 108 133
Depreciation and amortization 1,617 1,183
Amortization of intangible assets 2,185 1,545
Revaluation of warrant liability - 173
Stock-based compensation 8,117 2,807
Changes in operating assets and liabilities:
Change in restricted cash - 629
Accounts receivable, net 4,177 21,814
Inventory 4,406 (7,711 )

Deferred cost of revenue
(2,083 ) 2,622
Prepaids and other assets 1,159 2,435
Accounts payable (6,068 ) (7,149 )
Accrued liabilities 8,068 179
Other long-term liabilities (8 ) 179
Deferred revenue   3,772     (4,519 )
Net cash provided by operating activities

 
2,694  

 
5,058  
 
Investing activities
Acquisition of property and equipment (1,722 ) (1,481 )
Purchase of marketable securities - (7,434 )
Sales of marketable securities - 6,708
Maturities of marketable securities 22,905 -
Acquisition of Occam Networks, net of cash assumed   (60,788 )   -  
Net cash used in investing activities   (39,605 )   (2,207 )
 
Financing activities
Proceeds from exercise of stock options and other 154 62
Proceeds from initial public offering of common stock, net of issuance costs   -     46,229  
Net cash provided by financing activities   154     46,291  
 
Net increase (decrease) in cash and cash equivalents (36,757 ) 49,142
Cash and cash equivalents at beginning of year   66,304     31,821  
Cash and cash equivalents at end of year $ 29,547   $ 80,963  
 

Copyright Business Wire 2010

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