Calix targets over 20% FY revenue growth and unveils Agentic AI expansion as platform adoption accelerates

Earnings Call Insights: Calix, Inc. (CALX) Q3 2025

MANAGEMENT VIEW

* Michael Weening, CEO, highlighted "record revenue in our fifth quarter of sequential growth while guiding higher in fourth quarter" and described the launch of the Calix Agent Workforce, an end-to-end integration of Agentic AI, developed in partnership with Google and set to launch this quarter. He emphasized, "the ability of our customers to dominate their markets when armed with our unique and highly differentiating platform and managed services model was on full display in our results."
* CEO Weening stated, "At Connections, we officially launched the Calix Agent Workforce, our end-to-end integration of Agentic AI into everything that we do via our third-generation platform that will launch in partnership with Google this quarter."
* CFO Cory Sindelar reported, "During the third quarter of 2025, we delivered record revenue of $265 million, reflecting sequential quarterly growth of 10%." Sindelar added, "We set another gross margin record, our seventh consecutive quarter of margin improvement," and noted free cash flow of $27 million, with cash and investments reaching $340 million at quarter-end.

OUTLOOK

* The company expects fourth quarter revenue between $267 million and $273 million, which at the midpoint would represent a 2% sequential increase in revenue and reflect revenue growth of 20% for the fiscal year as compared to 2024.
* CFO Sindelar stated, "Our non-GAAP gross margin guidance for the fourth quarter at the midpoint would represent a slight increase from the third quarter and reflects our expectations regarding customer and product mix."
* Increased OpEx is expected due to ongoing investments in Connections and accelerated AI agent development, with a return to the target financial model anticipated by the end of 2026.

FINANCIAL RESULTS

* Calix reported record revenue of $265 million for Q3 2025, representing 10% sequential quarterly growth.
* RPOs rose 2% sequentially to $355 million and were up 20% year-over-year; current RPOs grew 5% sequentially to $141 million and increased 28% year-over-year.
* Non-GAAP gross margin reached a record 57.7%, representing a 90 basis point sequential quarterly increase.
* Free cash flow was $27 million, marking the 10th consecutive quarter of 8-figure free cash flow.
* Cash and investments ended at $340 million, an increase of $41 million sequentially.

Q&A

* Joe Cardoso, JPMorgan, asked about drivers of revenue outperformance and sustainability. CFO Sindelar responded, "The overperformance is driven by a couple of things. One is just the broad-based demand that we're seeing across our customer base. But it's also a function of some of the competitive expansion of our footprint."
* Cardoso also inquired about AI-driven innovation and international growth. CEO Weening explained that 15 years and $2 billion of investment built the foundation for current AI advances, saying, "there are -- first of all, in the existing markets, there's significant growth opportunity ahead because of the fact that we're uniquely positioned."
* Scott Searle, Roth Capital, pressed on demand broadness and sustainability. CEO Weening replied, "It is broad-based demand. The strength of our business model is that while things can go up by segment and down by segment, it is actually up to 1,200 customers that allow us to actually drive demand."
* Searle asked about monetization of AI agents and recurring revenue potential. CFO Sindelar noted, "The way we think about the monetization of the AI agent is not so much a separate charge for it, but an acceleration of our business model, right? So our customers will acquire subs faster."
* George Notter, Wolfe Research, questioned direct monetization of Agentic AI. CEO Weening stated, "We are taking a direct approach on monetizing it. It's actually a matter of perspective. So there will be some elements that we charge for and then there's others that we will monetize through the -- by helping them drive gross adds."
* Ryan Koontz, Needham & Company, asked about growth limiters and risk. CEO Weening responded, "we really don't see them with regards to limiters," while CFO Sindelar added, "the practical limiters on the business as you go and build new networks, it's permitting and labor."

SENTIMENT ANALYSIS

* Analysts demonstrated a slightly positive to neutral tone, with a focus on sustainability, growth drivers, and the practical impact of AI investments. Questions frequently explored the durability of broad-based demand and the monetization strategy for Agentic AI.
* Management maintained a confident and optimistic stance, using phrases like "we are taking a direct approach on monetizing it" and "we feel very confident with regards to the broad-based demand, the running of the business, the talent that we have inside the company."
* Compared to the previous quarter, management’s confidence has grown, particularly regarding AI and international expansion, while analysts remain focused on the practical realization of these growth vectors.

QUARTER-OVER-QUARTER COMPARISON

* Guidance language shifted to reflect higher confidence in sequential revenue growth and gross margin improvement, with management targeting a 20% revenue increase for the fiscal year.
* Strategic focus has evolved from laying the groundwork for AI and platform expansion to actively launching Agentic AI capabilities and signaling the start of international expansion in partnership with Google.
* Key metrics such as revenue, RPOs, gross margin, and free cash flow all reached new records, building on momentum from Q2. Management’s tone has moved from cautiously optimistic to assertively confident.
* Analysts continued to probe the sustainability of growth and the realization of AI monetization, consistent with the previous quarter’s focus, but with increased attention to near-term execution and international opportunities.

RISKS AND CONCERNS

* Management identified permitting and labor as the main practical limiters to network expansion.
* Analyst concerns centered on the sustainability of broad-based demand, competitive displacement in medium and large customer cohorts, and the timing and impact of BEAD program revenue.
* Management addressed BEAD program uncertainty, noting, "it's still too early to determine the demand dynamics for next year other than there will be some amount versus last quarter, I thought there would be like none."

FINAL TAKEAWAY

Calix management highlights record-setting revenue, robust gross margin performance, and the successful launch of Agentic AI as the foundation for continued expansion, including into international markets. With a broad customer base driving growth, strong free cash flow generation, and increasing demand for AI-driven solutions, leadership expresses high confidence in achieving targeted revenue growth and margin expansion through 2026, while remaining attentive to operational risks such as permitting and labor constraints.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/calx/earnings/transcripts]

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