Calix (NYSE:CALX) reported record second-quarter 2026 revenue and highlighted early traction for its AI-native Calix One platform, with management saying customer demand for AI-driven broadband tools accelerated faster than expected during the quarter.
President and Chief Executive Officer Michael Weening described the quarter as “the beginning of Calix, the AI leader,” citing the first full quarter in which the company’s AI-native Calix One platform was live. Weening said the platform is designed to help broadband service provider customers improve operations, marketing, support and subscriber experiences, while helping them combat broadband commoditization through differentiated services.
Software Growth Returns as Calix One Gains Traction
Management said customer interest in Calix One “exploded” in the second quarter, contributing to record remaining performance obligations, or RPOs, and record software and services revenue. Weening said Calix tripled the number of customers signing up for Calix Agent Workforce Cloud during the quarter.
Weening emphasized that adoption was not limited to early adopters. He said customers signing up in the quarter spanned “the entire adoption life cycle,” including late-majority customers, which he said reflected a broader shift among broadband providers that now view AI strategy as necessary.
“Every business leader knows they must have an AI strategy or they will be at risk,” Weening said. He added that Calix’s approach is intended to give customers a secure, trusted and predictable way to adopt AI.
Sindelar said RPOs reached a record $386 million, up 3% sequentially and 11% year over year. Current RPOs were $162 million, up 3% sequentially and 21% year over year. He said Calix continues to expect RPO growth to accelerate in the second half of 2026 as additional agentic workflows are delivered and the company demonstrates the value of Calix One.
Margins Reflect Cloud Migration Benefits and Memory Cost Pressure
Calix said its completion of a platform migration and shift to a single cloud infrastructure helped improve software and services profitability. Sindelar said non-GAAP software and service gross margin improved by 810 basis points sequentially, helped by lower infrastructure costs and platform-driven demand.
Sindelar also said the company expects software and services gross margin to set a new record in the third quarter, adding during the Q&A session that Calix sees a path for that margin to have “a seven on the front of it.” He said there remains “a lot of headroom” for expanding software and services gross margin.
At the same time, appliance gross margins were pressured by higher memory costs. Appliance revenue reached a record $243 million, up 4% sequentially and 23% year over year. Non-GAAP appliance gross margin was 52.9%, down 460 basis points sequentially and 170 basis points year over year, due to higher memory costs that were partially offset by memory surcharges.
Sindelar said Calix’s surcharge program is structured to recover incremental memory costs without adding profit, making the program gross profit neutral over the long run while remaining a headwind to gross margin. He said the company expects appliance gross margin to bottom in the third quarter of 2026.
Profit, Cash Flow and Share Repurchases
Calix reported non-GAAP net income of $31 million, or $0.47 per diluted share, above its guidance range. The company generated approximately $12 million in free cash flow during the quarter.
Sindelar said Calix ended the period with $194 million in cash and investments after deploying $69 million to repurchase 1.6 million shares. Days sales outstanding were 42 days, and inventory turns were 2.7, which Sindelar said reflected deliberate investments in inventory to secure supply and meet continued strong demand.
Non-GAAP operating expenses were approximately $122 million, or 42% of revenue, compared with 45% in the prior quarter. Sindelar attributed the improvement to operating leverage, early productivity gains from Calix’s internal use of human-centric AI, lower incentive compensation and timing of certain expenses.
Guidance Points to Continued Growth
For the third quarter of 2026, Calix guided for revenue between $301 million and $307 million, representing 4% sequential growth at the midpoint. The company said the outlook reflects continued strong broad-based demand, even as customers manage their own inventories more tightly in response to higher memory costs.
For full-year 2026, Sindelar said Calix expects annual revenue growth at the higher end of the 15% to 20% range provided in the prior quarter. He also said the company expects some BEAD-related revenue to pick up in the third and fourth quarters, while acknowledging that the BEAD environment is extending in some areas.
Third-quarter non-GAAP gross margin is expected to be 52% at the midpoint, reflecting the impact of higher memory costs. Non-GAAP operating expenses are expected to be $124.5 million at the midpoint, with the sequential increase driven mainly by expense timing and higher incentive compensation, partly offset by productivity gains from AI investments.
Management Addresses AI Adoption, Competition and Demand
During the Q&A session, Weening said Calix’s decision to bundle Agent Workforce Cloud with broader cloud offerings remains the right approach because AI needs to be deployed across operations, marketing and service workflows to be effective. He said the company is focused on helping customers win more subscribers, increase revenue per subscriber and reduce churn rather than charging for every feature on an à la carte basis.
Weening said Calix is beginning to measure workflow-level returns with customers and expects customer success stories to emerge as ROI data becomes available. He said the company’s customer success organization is focused on measuring current key performance indicators, implementing workflows and tracking changes.
On competition, Weening said fiber providers using the full Calix solution can differentiate themselves by becoming dominant local broadband brands across consumer, business, multi-dwelling unit and municipal segments. Addressing satellite broadband, he said providers such as Starlink have a role in very rural areas or specialized use cases, but he argued that fiber should offer a superior experience where available.
Looking ahead, management reiterated confidence in demand drivers for 2027 and 2028. Sindelar said Calix’s previously discussed 15% growth targets for those years remain on track, supported by software re-acceleration, future BEAD activity and continued subscriber additions by customers.
About Calix (NYSE:CALX)
Calix, Inc is a provider of cloud and software platforms, systems, and services that enable broadband service providers to transform their networks and subscriber experiences. The company’s flagship Calix Cloud platform delivers real-time analytics, automation and intelligence designed to simplify network operations, improve service agility and drive revenue growth. Calix also offers a comprehensive suite of premises and access systems, including broadband access nodes, fiber-to-the-home optics and residential gateways under the GigaSpire brand.
Through its software-defined network architecture, Calix helps service providers virtualize key network functions and introduce new services with minimal capital expenditure.
