CALIX, INC

Results of Operations

Comparison of the Three and Six Months Ended June 28, 2025 and June 29, 2024

Revenue

The following table sets forth our revenue by customer size (dollars in thousands):

Our revenue increased by $43.7 million and $37.7 million for the three and six months ended June 28, 2025, respectively, as compared to the corresponding periods in 2024. After bottoming in the second quarter last year, we have experienced sequential quarterly revenue growth. That growth has been broad based. Specifically, during the second quarter of 2025, the large-customer segment increased $15.8 million primarily due to a North American customer that increased its capital expenditures this year relative to last year and the reclassification of a small customer to the large-customer segment after being acquired by a different large customer. The medium-customer segment increased $14.9 million primarily due to increased shipments to a European customer. The small-customer segment increased by $13.0 million as BXPs focused on adding subscribers.

For the three and six months ended June 28, 2025, United States revenue was $219.0 million and $430.2 million, or 91% and 93% of our revenue, compared to $182.7 million and $392.8 million, or 92% and 93% of our revenue for the same periods in 2024. International revenue was $22.8 million and $31.9 million, or 9% and 7% of our revenue, for the three and six months ended June 28, 2025, as compared to $15.4 million and $31.7 million, or 8% and 7% of our revenue, for the same periods in 2024. The increase in international revenue for the three and six months ended June 28, 2025, as compared to the same periods in 2024, was mainly due to higher shipments to Europe.

No customer accounted for more than 10% of the Company’s revenue for the three and six months ended June 28, 2025 and June 29, 2024.

Gross Profit and Gross Margin

The following table sets forth our gross profit and gross margin (dollars in thousands):

Gross profit increased to $136.3 million and $259.0 million for the three and six months ended June 28, 2025, from $107.6 million and $230.2 million during the corresponding periods in 2024. These increases were mainly due to the corresponding increases in revenue. Our gross margin increased by 200 and 180 basis points for the three and six months ended June 28, 2025, respectively, compared to the corresponding periods in 2024, primarily related to the continued growth in our platform, cloud and managed services being a greater percentage of our total revenue.

Operating Expenses

Sales and Marketing Expenses

The following table sets forth our sales and marketing expenses (dollars in thousands):

Sales and marketing expenses for the three months ended June 28, 2025 increased by $11.4 million compared with the corresponding period in 2024 primarily due to increases in stock-based compensation of $6.9 million and personnel expenses of $5.9 million, mostly related to incentive compensation. These increases were partially offset by a decrease in marketing expenses of $1.6 million.

Sales and marketing expenses for the six months ended June 28, 2025 increased by $15.6 million compared with the corresponding period in 2024 primarily due to increases in personnel expenses of $8.7 million, mostly related to incentive compensation, stock-based compensation of $8.5 million and travel expenses of $1.2 million. These increases were partially offset by a decrease in marketing expenses of $1.6 million.

For the three and six months ended June 28, 2025, sales and marketing expenses as a percentage of revenue was flat. We expect our investments in sales and marketing will increase slightly in absolute dollars on a year-over-year basis, but decline as a percentage of revenue, as we continue to land new customers and expand our platform, cloud and managed services.

Research and Development Expenses

The following table sets forth our research and development expenses (dollars in thousands):

Research and development expenses for the three months ended June 28, 2025 increased by $1.7 million as compared with the corresponding period in 2024 mainly due to increases in stock-based compensation of $1.5 million, depreciation and amortization of $0.5 million and outside services of $0.3 million. These increases were partially offset by a decrease in personnel expenses of $0.8 million.

Research and development expenses for the six months ended June 28, 2025 increased by $1.2 million as compared with the corresponding period in 2024 mainly due to increases in stock-based compensation of $2.1 million, depreciation and amortization of $0.9 million and prototypes and test equipment expenses of $0.9 million. These increases were partially offset by decreases in personnel expenses of $2.2 million and outside services of $0.9 million.

For the three and six months ended June 28, 2025, research and development expenses as a percentage of gross profit decreased to 34% from 41% and 35% from 38%, respectively, due to the increase in revenue and gross margin. We expect our investments in research and development to remain relatively flat in absolute dollars in the short term, and decline as a percentage of revenue and gross profit, as we continue to expand the functionality and capabilities of our platform, cloud and managed services.

General and Administrative Expenses

The following table sets forth our general and administrative expenses (dollars in thousands):

General and administrative expenses for the three months ended June 28, 2025 increased by $3.9 million as compared with the corresponding period in 2024 mainly due to increases in stock-based compensation of $1.7 million, personnel expenses of $1.2 million, mostly related to incentive compensation, and professional services expenses of $0.8 million.

General and administrative expenses for the six months ended June 28, 2025 increased by $4.3 million as compared with the corresponding period in 2024 mainly due to increases in personnel expenses of $2.8 million and stock-based compensation of $2.3 million. These increases were partially offset by a decrease in professional services expenses of $1.0 million.

For the three and six months ended June 28, 2025, general and administrative expenses as a percentage of revenue were flat compared to the same periods in 2024. We expect our general and administrative investments to be fairly constant in absolute dollars in the near term and decline as a percentage of revenue.

Interest and Other Expense, net

The following table sets forth our interest and other expense, net (dollars in thousands):

Interest and other expense, net increased by $0.4 million and $1.0 million as compared with the corresponding periods in 2024 mainly due to a larger cash and marketable securities balance.

Income Taxes

The following table sets forth our income taxes (dollars in thousands):

For the three and six ended June 28, 2025, our income tax expense was $3.6 million for an effective tax rate of 105.8%, which differed from the statutory rate of 21% primarily due to the effect of non-deductible stock-based compensation for executive officers offset by the favorable impact of U.S. federal research tax credits, excess tax benefits from stock-based compensation and the U.S. tax impact of foreign operations. The effective tax rates for the three and six months ended June 28, 2025 are higher than the corresponding periods in 2024 primarily as a result of higher pre-tax earnings with a relatively higher level of non-deductible stock-based compensation for executive officers.

Our income taxes may be subject to fluctuation during the year and in future years as new information is obtained. This may affect the assumptions used to estimate the interim income tax provision, including factors such as actual results differing from our estimates of pre-tax earnings in the various jurisdictions in which we operate, which could impact the recognition of our deferred tax assets, further benefits from stock option exercises, investments in our foreign operations, the recognition or de-recognition of tax benefits related to uncertain tax positions and changes in or the interpretation of tax laws in jurisdictions where we conduct business.