CALIX, INC

Results of Operations

Comparison of the Three and Six Months Ended June 27, 2026 and June 28, 2025

Revenue

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

Our revenue increased by $51.4 million and $111.2 million during the three and six months ended June 27, 2026, respectively, compared to the corresponding periods in 2025. The increase in appliance revenue was primarily 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 was primarily 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.

United States revenue was $277.7 million and $543.1 million during the three and six months ended June 27, 2026, respectively, or 95% of our revenue for both periods, compared to $219.0 million and $430.2 million, or 91% and 93% of our revenue, respectively, for the corresponding periods in 2025. International revenue was $15.6 million and $30.3 million during the three and six months ended June 27, 2026, or 5% of our revenue for both periods, as compared to $22.8 million and $31.9 million, or 9% and 7% of our revenue, respectively, for the corresponding periods in 2025. Our primary focus has been, and in the near term is expected 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. However, with the introduction of our third-generation platform, we plan to increase our attention on international markets.

One customer accounted for 12% of our revenue for the three months ended June 27, 2026. No customer accounted for more than 10% of our revenue for the six months ended June 27, 2026 or the three and six months ended June 28, 2025.

Gross Profit and Gross Margin

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

Gross profit increased to $160.1 million and $319.4 million for the three and six months ended June 27, 2026 from $136.3 million and $259.0 million for the corresponding periods in 2025. This increase was mainly due to the corresponding increase in revenue. Our gross margin decreased by 170 basis points for the three months ended June 27, 2026 compared to the corresponding period in 2025, primarily related to increased component memory costs. Our gross margin decreased by 30 basis points for the six months ended June 27, 2026 compared to the corresponding period in 2025, primarily related to a decline in our software and service gross margin, which declined by 550 basis points due to the transition from our second-generation platform to our third-generation platform where we operated in a dual cloud environment to successfully support customer migrations during a portion of the respective periods.

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 27, 2026 decreased by $1.3 million compared with the corresponding period in 2025 primarily due to a decrease in stock-based compensation expense of $5.4 million. This decrease was partially offset by increases in personnel expenses of $1.6 million, mostly related to increased headcount, marketing expenses of $1.4 million, outside services of $0.5 million and software expenses of $0.4 million.

Sales and marketing expenses for the six months ended June 27, 2026 increased by $4.1 million compared with the corresponding period in 2025 primarily due to increases in personnel expenses of $6.2 million, mostly related to incentive compensation and increased headcount, marketing expenses of $1.2 million, outside services of $1.0 million and software expenses of $0.7 million. This increase was partially offset by a decrease in stock-based compensation expense of $5.2 million.

For the three and six months ended June 27, 2026, sales and marketing expenses as a percentage of revenue decreased to 21% from 26% and 22% from 26%, respectively, mainly 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 June 27, 2026 increased by $7.0 million as compared with the corresponding period in 2025 mainly due to increases in personnel expenses of $4.3 million mostly related to increased headcount, allocated shared services expenses of $1.0 million, outside services of $0.7 million, depreciation and amortization of $0.7 million and facilities expenses of $0.6 million. This increase was partially offset by a decrease in stock-based compensation expense of $0.6 million.

Research and development expenses for the six months ended June 27, 2026 increased by $17.6 million as compared with the corresponding period in 2025 mainly due to increases in personnel expenses of $9.4 million mostly related to increased headcount, outside services of $4.4 million, allocated shared services expenses of $1.5 million, depreciation and amortization of $1.5 million and facilities expenses of $0.6 million.

For the three and six months ended June 27, 2026, research and development expenses as a percentage of gross profit decreased to 33% from 34% and 34% from 35%, respectively, primarily due to the increase in revenue and gross margin and we expect our investments in research and development to increase in absolute dollars 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 June 27, 2026 decreased by $3.3 million as compared with the corresponding period in 2025 mainly due to decreases in stock-based compensation expense of $2.7 million and allocated shared services expenses of $1.5 million. This decrease was partially offset by an increase in depreciation and amortization of $0.8 million.

General and administrative expenses for the six months ended June 27, 2026 decreased by $1.6 million as compared with the corresponding period in 2025 mainly due to decreases in stock-based compensation expense of $3.0 million and allocated shared services expenses of $2.2 million. These decreases were partially offset by increases in depreciation and amortization of $1.8 million, personnel expenses of $0.6 million, facilities expenses of $0.4 million and software expenses of $0.3 million.

For the three and six months ended June 27, 2026, general and administrative expenses as a percentage of revenue decreased to 8% from 11% and 9% from 12%, respectively, mainly 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 Income (Expense), net

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

For the three and six months ended June 27, 2026, interest and other income (expense), net decreased by $1.3 million and $1.9 million, respectively, as compared with the corresponding periods in 2025 primarily due to a lower balance of marketable securities. We repurchased 5.0 million shares of common stock for $240.2 million using proceeds from the sale of marketable securities during the first half of 2026.

Income Taxes

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

For the three and six months ended June 27, 2026, our income tax expense was $6.5 million and $10.5 million, respectively, for an effective tax rate of 27.5% and 27.1%, respectively, 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 and six months ended June 27, 2026 is lower than the corresponding period in 2025 primarily due higher pre-tax earnings with a relatively similar level of non-deductible expenses, compared to break-even pre-tax results in the corresponding period in 2025.

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.