CALIX, INC

Results of Operations

Comparison of the Three Months Ended March 28, 2026 and March 29, 2025

Revenue

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

Our revenue increased by $59.7 million during the three months ended March 28, 2026 compared to the corresponding period in 2025. The increase in appliance revenue was due to the adoption of our platform, cloud and managed services by new customers as we continue to take footprint from legacy box vendors and the continued robust expansion of our appliances within our existing customer base. The increase in software and service revenue is due to our CXP customers adding new subscribers. Our software is sold on a per-subscriber basis. CXPs use our platform, cloud and managed services to deliver better subscriber experiences as evidenced by best-in-class Net Promoter Scores SM, thereby allowing them to take market share.

For the three months ended March 28, 2026, United States revenue was $265.3 million, or 95% of our revenue, compared to $211.2 million, or 96% of our revenue, for the same period in 2025. International revenue was $14.6 million, or 5% of our revenue, as compared to $9.1 million, or 4% of our revenue, for the same period in 2025. Our primary focus has been, and in the near term will continue to be, the U.S. and Canada given our large, direct sales and marketing presence and the amount of government stimulus being invested into underserved and not-served areas of these countries. With the introduction of our third-generation platform, we will increase our attention on international markets.

No customer accounted for more than 10% of our revenue for the three months ended March 28, 2026 or March 29, 2025.

Gross Profit and Gross Margin

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

Gross profit increased to $159.3 million for the three months ended March 28, 2026 from $122.7 million from the corresponding period in 2025. This increase was mainly due to the corresponding increase in revenue. Our gross margin increased by 120 basis points for the three months ended March 28, 2026, compared to the corresponding period in 2025, primarily related to the continued growth in our appliance offerings. Our software and service gross margin declined by 920 basis points, which related to the transition from our second-generation platform to our third-generation platform during which time we operated in a dual cloud environment to successfully support customer migrations.

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 March 28, 2026 increased by $5.4 million compared with the corresponding period in 2025 primarily due to increases in personnel expenses of $4.7 million, mostly related to incentive compensation and increased headcount, outside services of $0.5 million and software expenses of $0.3 million.

For the three months ended March 28, 2026, sales and marketing expenses as a percentage of revenue declined compared to the year ago period due to increased revenue. We expect our investments in sales and marketing will increase 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 March 28, 2026 increased by $10.7 million as compared with the corresponding period in 2025 mainly due to increases in personnel expenses of $5.1 million, outside services of $3.7 million, stock-based compensation expense of $0.8 million, depreciation and amortization of $0.8 million and allocated shared services expenses of $0.5 million.

For the three months ended March 28, 2026, research and development expenses as a percentage of gross profit decreased to 34% from 36% due to the increase in revenue and gross margin and we expect our investments in research and development to increase in absolute dollars and as a percentage of gross profit in the short term as we accelerate the development of artificial intelligence (“AI”) 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 March 28, 2026 increased by $1.7 million as compared with the corresponding period in 2025 mainly due to increases in personnel expenses of $1.0 million, mostly related to incentive compensation and increased headcount.

For the three months ended March 28, 2026, general and administrative expenses as a percentage of revenue decreased to 10% from 12% due to the increase in revenue. We expect our general and administrative investments to increase in absolute dollars but 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):

For the three months ended March 28, 2026, interest and other expense, net was down compared with the corresponding period in 2025 due to a lower balance of marketable securities. We repurchased 3.3 million shares of common stock for $170.9 million during the first quarter of 2026.

Income Taxes

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

For the three months ended March 28, 2026, our income tax expense was $4.0 million for an effective tax rate of 26.4%, which differed from the statutory rate of 21% primarily due to state taxes, the effect of non-deductible stock-based compensation for executive officers offset by the favorable impact of U.S. federal research tax credits and excess tax benefits from stock-based compensation. The effective tax rate for the three months ended March 28, 2026 is higher than the corresponding period in 2025 primarily due to higher pre-tax earnings with a relatively lower level of non-deductible expenses.

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.