0001406666-26-000019
SEC filingRevenue grew 27% YoY driven by appliance sales; gross margin expanded 120 bps, but software margin contracted due to platform transition.
Revenue for the three months ended March 28, 2026 was $280.0 million, a 27% increase from $220.2 million in the same period last year. The growth was primarily driven by a 30% surge in appliance revenue to $232.8 million, as new and existing customers adopted Calix's platform and managed services. Software and service revenue grew 16% to $47.1 million, reflecting subscriber additions by CSPs. Gross profit rose 30% to $159.3 million, and gross margin expanded 120 basis points to 56.9%, benefiting from a 340 bps improvement in appliance margin to 57.4%. However, software and service gross margin declined sharply by 920 bps to 54.3% due to the transition from the second-generation to third-generation platform, which required operating in a dual cloud environment.
Net income swung to $11.2 million from a net loss of $4.8 million in the prior year, largely due to higher revenue and improved margins. Operating expenses grew, with sales and marketing up 9% to $63.5 million, R&D up 24% to $54.6 million, and G&A up 6% to $28.4 million. R&D spending increased as a percentage of gross profit to 34%, driven by investments in AI functionality. Interest and other expense net decreased 19% to $2.5 million, reflecting a lower marketable securities balance after stock repurchases. The effective tax rate was 26.4%, up from negative 60.1% in the prior year due to higher pre-tax earnings.
Appliance revenue accounted for 83% of total revenue, up from 82% in the prior year, and drove the overall growth. The segment's gross margin improved significantly, indicating strong product mix and pricing power. In contrast, the software and services segment saw a sharp margin contraction, which management attributed to the dual cloud environment during the platform transition. This headwind is expected to be temporary as customer migrations to the new platform are completed. International revenue grew to 5% of total revenue from 4%, with a focus on expanding in international markets with the third-generation platform.
Management highlighted continued investment in R&D to accelerate AI capabilities, which will likely pressure short-term margins. Sales and marketing expenses are expected to increase in absolute dollars but decline as a percentage of revenue as the company scales. The company maintains a strong liquidity position with $243.3 million in cash and marketable securities, and a $100 million increase to the stock repurchase program was authorized in April 2026. No specific numerical guidance was provided, but management remains focused on driving adoption of the platform and managed services, particularly among CSPs transitioning to CXPs.
As of March 28, 2026, Calix holds $54.6M in cash and cash equivalents and $188.7M in marketable securities, totaling $243.3M in liquid assets. The company has no debt. Shareholders' equity stands at $738.0M, down from $859.2M at year-end 2025 due to share repurchases. Inventory increased to $154.6M, reflecting higher finished goods. Deferred revenue (current plus long-term) is $50.5M, while remaining performance obligations (RPO) total $376.3M, indicating strong future revenue visibility.
Calix reports $311.5M in outstanding purchase commitments with third-party manufacturers and other vendors as of March 28, 2026, down slightly from $317.8M at year-end 2025. Additionally, operating lease obligations total $17.3M in future minimum payments, with $14.7M recognized as a lease liability. There are no significant litigation contingencies.
During Q1 2026, Calix repurchased 3.3M shares for $170.9M at an average price of $51.34 per share. The remaining buyback authorization was $63.4M at quarter-end, and in April 2026, the Board added $100.0M, bringing total authorization to $163.4M. No dividends were declared. The company has no debt. Capital expenditures are not separately disclosed in the Notes but can be inferred from the cash flow statement; however, per instructions, only Notes-explicit figures are used.
Calix operates as a single reporting segment. Revenue for Q1 2026 was $279.984M, a 27.1% increase year-over-year. Geographically, the United States contributed $265.345M (94.8%), Europe $6.7M, Americas ex-U.S. $6.3M, and rest of world $1.7M. The CODM uses revenue, gross margin, and operating loss to assess performance, with stock-based compensation adjusted out for internal reporting.