Calix passed the half-billion-dollar revenue mark in 2017, reporting record fourth-quarter and annual earnings powered by the vendor's cloud and software platforms, as well as growing services revenue.
In unaudited results, Calix revenue for the quarter ended Dec. 31, 2017 reached $137.9 million, an increase of 4.6% compared with $131.8 million for the fourth quarter one year ago. For fiscal year 2017, the vendor reached revenue of 510.4 million, up 11.2% versus $458.8 million for the comparable 2016 period.
However, the non-GAAP net loss for Q4 2017 was $7.8 million, or ($0.15) per fully diluted share, compared to a non-GAAP net loss of $6.8 million, or ($0.14) per fully diluted share, for the fourth quarter of 2016. The non-GAAP net loss for fiscal year 2017 was $65.6 million, or ($1.31) per basic and fully diluted share, compared to a non-GAAP net loss of $7.0 million, or ($0.14) per diluted share for fiscal year 2016.
Last year, Calix restructured itself as part of its realignment to focus on cloud and software-defined access. The approximately $4.2 million in costs associated with that restructuring concluded in 2017, Calix said. It also wrapped up older service contracts that were devoid of much margin, said Carl Russo, president and CEO, during an earnings call on Tuesday. This frees up the company to pursue margin-richer services opportunities, he noted.
For the first quarter of this year, Calix estimates revenue of between $102 million and $108 million.
Growth occurred despite a slowdown in service providers' decision making, Russo said. Disruption -- including mergers and acquisitions, providers' demand for faster return on investment and the move away from legacy systems -- has caused some providers to postpone deployments of new software-defined access, cloud-based solutions, he said. But Calix expects those operators to advance within the next few months, certainly before the end of next quarter, Russo said. Verizon, for example, will launch its first commercial deployment of a single fiber-based access network in Tampa with Calix NG-PON2 solutions. (See Verizon, Calix Deploy Commercial NG-PON2 .)
CenturyLink was Calix' only customer that accounted for more than 10% of revenue -- representing 31% or $160 million. The purchasing slowdown associated with CenturyLink's acquisition of Level 3 should end soon, Russo said, as CenturyLink decides on its infrastructure and technology merger strategies.
"I think it puts CenturyLink in quite an interesting position to make best use of all of their assets and it's not clear to me at all that there is a preference to do one investment over the other," Russo said. "I do think they're going to get more disciplined about, if you will, which tools in the toolkit they deploy where, but we'll see, but I actually am excited by that."
Calix is signing on new customers, both in North America and around the world, said Russo. These include telco and cable operators, large and small. Since Calix expects "flattish" growth this year from current customers including CenturyLink, Windstream and Frontier, it predicts new accounts will deliver growth, wrote George Notter, telecom and networking equipment analyst at Jeffries LLC.
"Despite tough customer trends and headwinds, Calix still expects revenue growth this year. However, we think any continued revenue growth is becoming more reliant on new customers like Verizon and Cable MSOs," he wrote. "Considering existing customer headwinds and uncertain timing and ramp of new customers, we have a slightly more cautious outlook for 2018 revenue growth vis-à-vis company guidance."
Calix, however, points to competitive pressures, consumer demand and other pressures forcing operators to act or face obscelesence.
"While many communication service providers are working hard to shift their business models, let's be clear, outdated legacy models will struggle to succeed in this new world and may not even survive," said Russo. "The winning communication service providers of the future will provide a sensational subscriber experience via an infrastructure that is always on, can be enhanced at a DevOps pace and is intelligent enough to run itself; and they must have the analytics to create and market new offerings to monetize their investments in the network."
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— Alison Diana, Editor, Broadband World News. Follow us on Twitter or @alisoncdiana.
