Calix, Inc

Greetings. Welcome to the Calix third quarter 2020 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. Please note this conference is being recorded. At this time, I'll now turn the conference over to Tom Dingus, Director of Investor Relations. Please go ahead.

Thank you, Operator, and good morning, everyone. Thank you for joining our third quarter 2020 earnings call. Today on the call, we have President and CEO Carl Russo and Chief Financial Officer Corey Sindelar. Also joining us today is Executive Vice President and Chief Operating Officer Michael Weaning. As a reminder, yesterday, after the close of market, we released our letter to stockholders in an 8K filing, as well as on the investor relations section of the Calix website. This conference call will be available for audio replay in the investor relations section of the Calix website. Before we continue, we want to remind you that in this call, we refer to forward-looking statements, which include all statements we make about our future financial and operating performance, growth strategy and market outlook, and actual results may differ materially from those contemplated by these forward-looking statements. Factors that could cause actual results and trends to differ materially are set forth in our third quarter 2020 letter to stockholders, and in our annual and quarterly reports filed with the SEC. Calix assumes no obligation to update any forward-looking statements, which speak only as of their respective dates. Also on this call, we will discuss both GAAP and non-GAAP financial measures. Reconciliation of GAAP to non-GAAP measures is included in our letter to stockholders. Unless otherwise stated on this call, we will reference non-GAAP measures. With that, let me turn the call over to Carl. Carl?

Thank you, Tom. As we said last quarter, for Calix, the future is sooner, and so it continues. The third quarter reinforced our view that the pandemic has accelerated the secular disruption moving through the communications industry, while also creating additional demand resulting from the expansion of capacity to meet immediate subscriber needs. These two effects combined to drive strong bookings in the quarter. While component lead time challenges remain, our supply chain team outperformed in the quarter, which enabled us to deliver results significantly above the high end of our guidance. The third quarter also marked a milestone in our history. Building Calix initially as a broadband access system provider to wire services, and then building the new Calix as an all-platform provider of software systems and services to CSPs of all types has been a challenging journey. What kept us motivated throughout was our vision of a new and better service provider business model built on these platforms. And we were certain that once achieved, the Calix business model would be similarly enhanced. While it is still early days in this transformation, the effects of our new business clearly showed through this quarter as we delivered all-time record quarterly revenue of $151 million, all-time record quarterly corporate gross margins of 51.5 percent, all-time record quarterly systems gross margins of 52.6 percent, and all-time record net income of $25 million or 40 cents per share. Clearly, our future is now. To reiterate, we are just getting started as the trends are continuing in the current quarter with our strong guidance for the fourth quarter representing a balance between strong demand and continuing component supply challenges. and we step up into the fourth quarter from the strongest financial foundation in our history. There is a growing class of service providers building new business models on top of a unified access infrastructure. These service providers deliver superior subscriber experience and do so at the lowest cost. They are aggressive and growing their subscriber base, and they are attracting capital. And we are excited to host them along with 21 new customers added in the quarter at our annual Connections Conference in full virtual mode this coming week. With that, let us open the call for questions. Rob?