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spk00: anyone to require operator assistance during the conference, please press star zero on your telephone keypad. It is now my pleasure to introduce your host, Mr. Tom Dinges, Director of Investor Relations. Thank you, sir. Please go ahead.
spk02: Thank you, Donna, and good morning, everyone. Thank you for joining our second quarter of 2021 earnings call. Today on the call, we have Chairman and CEO Carl Ruzzo, Chief Financial Officer Corey Sindelar, and President and Chief Operating Officer Michael Winnie. As a reminder, yesterday after the close of market, we released our letter to stockholders and AK 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 I turn the call over to Carl for his brief opening remarks, I 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 second quarter 2021 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 conference call, we will discuss both GAAP and non-GAAP financial measures. A 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. And with that, let me turn the call over to Carl. Carl? Thanks, Tom. The second quarter saw the Calix team achieve a number of milestones on our march to an all-platform world. On a wave of continued strong demand, for the first time, our all-platform offerings, software, and the associated systems and services, were greater than 50% of our bookings. We expect this trend to continue. For the third quarter in a row, we did not have a 10% customer, and we do not expect to have one in the current quarter. This speaks directly to the breadth of our customer base and the predictability of our all-platform model. At the same time, we brought our V6 and C7 products to end of sale. These two systems were the founding systems of Calix, and this marks another milestone in our continued pursuit of our all-platform future. With these milestones behind us, the Board of Directors has added the chairmanship to my CEO role. I will continue my focus on our long-term strategy, and I am confident that our executive team led by Michael Weaney, our President and Chief Operating Officer, will continue to execute our strategy with excellence. While supply remains a challenge and will remain a challenge well into next year, organic demand for our solutions remains robust. Every day, we are excited to help our customers simplify their businesses, excite their subscribers, and grow their value. With that, let us open the call for questions. Donna?
spk00: Thank you. The floor is now open for questions. If you would like to ask a question, please press star 1 on your telephone keypad at this time. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Once again, that is star 1 to register a question at this time. Our first question is coming from George Nodder of Jefferies. Please go ahead.
spk03: Hi, guys. Thanks very much, and congratulations on the strong results. I guess I wanted to ask about gross margins. If I remember going back three months ago, you mentioned that you had a shipment of low-margin product that got pushed from Q1 into Q2. I guess I'm wondering if that had some impact on the gross margin result this quarter. And then also, I would imagine your component costs are higher also given the supply constraints around the industry and Any sense you can give us for how that might have impacted gross margins also would be great.
spk02: Yes, George, you have that right. You remember correctly that that should have been pushed from Q1 into Q2, and it had some impact on our margins. And you're also correct that the component increase in prices and higher freight loss contributed to the sequential decline in margin from Q1 to Q2.
spk03: Got it. Any chance you guys could quantify that? Is it a point margin, two points of margin, half a point? Anything you could steer us to would be great.
spk02: I think, Corey, in the past, you've said it's not insignificant, but we haven't tried to bracket it. I think in the past, Corey has said that it's more than a point, less than some higher number. It's a significant number, George, and that's, I think, the best we would do.
spk03: Got it. Okay. That's great. And then I guess I also wanted to ask about CenturyLink, I guess now called Lumen. Your larger customers, that segment was down quite a bit year on year. Obviously, CenturyLink, it sounds like, is going through a strategic process with some of their assets. But any perspective on what's going on there and any chance that account could improve going forward? Let's say they do make some strategic decisions. maybe get some cash proceeds from those strategic decisions? Could they reinvest in areas of the business that you guys are exposed to?
spk02: Yeah, George, I think that's the correct observation. As you know, over the last few quarters, they've been pretty tight on CapEx, as I think they've been going through their strategic valuations. If you'll notice in the announcement around the Latin American assets, they spoke directly to likely use of proceeds into CapEx and investments. But we think it's going to continue like this for a while as they continue that focus on where they want to go strategically. So our business continues to move along. If you look across the industry, you'll see that, you know, their capex was down across a number of spaces. And I think there is a chance it will improve, but it may improve, you know, through Lumen. it may improve through the spot off assets, whatever they may be. So stay tuned.
spk03: Okay. I'll pass it on. Thanks very much, guys. George, thank you.
spk00: Thank you. Our next question is coming from Paul Silverstein of Chowan. Please go ahead.
spk04: Thanks, guys. The 43 new customers in the quarter, that's a big step up from your historical past. I think you did 24 in the preceding quarter and the 20s in the teens before that. Is this the new norm? Was there something specific about this quarter? And then I've got a couple of follow-ups.
spk02: I don't know if it's the new norm. I would merely characterize it as you know that we've been investing to get up to our model, and a significant portion of that has been in sales and marketing. And so I would say stay tuned, but I think you're going to see an increasing aggression on the part of the sales and marketing organization. Michael, do you have any words you want to add to that? I would just say that the different size customers, from small to medium size, and exactly what you said, Carl, is that the investments that we're making in the sales and marketing organization are paying off. along with the platforms being very mature. I had a customer say to me the other day that we're the only Wi-Fi 6 platform that's carrier class and mature in the marketplace, and that's why they went with us. And it's paying off dividends because we were the first in the market, and now that we have all of our new platforms coming into place and our new solutions, we're very excited about the future, which is leading to new customer acquisitions.
spk04: All right. Then your midsize customers, if I remember the number, they were up again very strong. I think it's, what, 6 or 80% growth this quarter on top of the 130% growth from the previous quarter. Is that indicative of something that's clearly a stimulus ensemble at that level? But are they back to growth mode for an appreciable period of time? And what's going on there? Any insights you could offer?
spk02: Yeah, so I think we have to be careful about mid-sized customers because it's easy to remember the past and think of mid-sized customers as the tier twos. And if you remember, we set mid-sized customers at those greater than 250,000 subscribers, less than 2.5 million. So it is indicative of something in the future, but it's not necessarily that the tier twos are rekindling. In fact, our value proposition, as you heard Michael allude to, in small and medium customers, is starting to work its way up the stack of customer size.
spk04: Got it. One last question by May. On the non-U.S., I know you've had your hands full with U.S. demand, and so you have been, correct me if I'm wrong, been deploying a significant amount of incremental investment in terms of optics and set-time resources into non-U.S., and if the non-U.S. is up strong once again this quarter, any incremental insight you could offer them to read to the future?
spk02: Yeah, so same story from my perspective, and I'll let Michael add some color. We are being very much focused on North America, but globally, you know, this whole drive towards we're from anywhere, broadband, et cetera, is a wave that's moving through the marketplace, but Michael, maybe you want to add some color. Yeah, on the international side, we're being very pragmatic on how we expand. And a lot of the growth that we're seeing is actually from existing customers who are making incremental investments in their networks and the markets that they cover. And we're getting the benefit of it as we have a long history with them. They chose us as a strategic partner. And I think that's a key differentiator, is that the companies who are with us in the international markets are the ones who actually understand the value of our platforms, how they simplify their operations and excite their subscribers, and they're betting on us long term. And as they get more capital, they partner with us.
spk04: All right.
spk02: I'll pass it on.
spk04: Thanks, guys.
spk02: Thanks, Paul.
spk00: Thank you. Our next question is coming from Chris Howe of Barrington Research. Please go ahead.
spk02: Good morning, everyone, and congrats on the quarter. Good morning, Chris, and welcome to the party, as it were. Yes, the party indeed.
spk04: A few questions here, but leading off, just tying together some thoughts with some of the previous questions. The 43 new customers in the quarter and in the shareholder letter, you had a brief highlight related to favorable regional mix.
spk02: The success you had in adding new customers, should we think of that as being tied to how you targeted your potential customer base on a geographic basis? It's tied to the same model that we've been pursuing. which is, you know, we have a direct model that we're continuing to invest in. And so, you know, look, there's more smaller customers than there are medium customers. There's more medium customers than there are larger customers. And so on a numbers basis, you're going to see the most of them in the smaller customers. Michael, do you want to add anything to that? Yeah. The other part is that if you look at the maturity of our cloud platforms, what we are unique in the market with is the fact that we can actually enter a customer on many different vectors. So if you go back to the history of Calix 15 years ago, we would have primarily partnered with a customer as an access vendor. We're now able to go and transform a call center, We're able to transform their marketing like nobody else in this marketplace through behavioral analytics and insights. We're able to help them build out a virtual storefront in the home with Wi-Fi 6. And therefore, that gives us access to competitive accounts that we never had before. And we're entering in a different vector and allowing us to win those customers.
spk04: That's great. Thank you for the color. And just digging into total operating expenses, We came in better than expected. Can you put this leverage into context for the current quarter and kind of at what point you saw the potential leverage start to realize itself and how perhaps we should think about that on an ongoing basis? I know we're moving towards the target financial model on a percentage basis that you highlighted in the letter. But perhaps you can go into some of the leverage opportunities or what we could potentially see as revenue perhaps overgrows your total expense loan.
spk02: So let me shape my answer to your question in a return on investment manner. Because obviously we expect to make disciplined investments in OPEX that yield returns. And we are very focused on growth. That being said, the leverage is, in our view, in a return on investment by driving the growth of the business and opening up new margin expansion opportunities. It is not in leverage at the bottom line from having OpEx be below our model. So, Cora, do you want to add some color for Chris to that? Sure. The underconformance on OpEx was largely due to not meeting our hiring goals in the quarter. So we did add roughly a little more than 5% to the workforce in the quarter, but fell short of what we expected. But over the near term, we intend to get to model And so those OPEX investments will continue to increase. Yeah, and so the way I would refer to it, Chris, just from your perspective is we are planning for success, but we're not going to lower the bar for folks coming in to meet a headcount goal. We're going to go get the very best talent we can, and we think our culture supports that.
spk04: Okay, great. I guess that speaks to one of the recent press releases surrounding the
spk02: high quality of talent that you're attracting to Calix, uh, not lowering the bar for that.
spk04: Um, my last question is just quickly, uh, it was asked about, um, the lower margin items that got pushed forward from Q1 as we look at kind of the end of Q2, uh, anything there that we should make note of as it relates to Q3?
spk02: Uh, sure. We, we, uh, I'm seeing a little bit more of purchase price variances. Spot market buys are going to start affecting margins. We factored that, obviously, in the guidance that we provided. But we are moving into the tougher part of our fourth quarter. Remember back in our first quarter call, we talked about the push out in lead times, lead times leading a gap in the fourth quarter. And so as we approach the fourth quarter, it's obviously becoming increasingly more difficult to meet the demand. And so that it has been suing costs of increased air, increased component prices. So we're going to go through the most challenging supply part that we've faced in the last 18 months in the next couple of quarters.
spk04: Okay, great. Thanks for taking my questions.
spk02: Thanks, Grace, and welcome aboard.
spk00: Thank you. Our next question is coming from Michael Genovese of West Park Capital. Please go ahead.
spk02: Great. Thanks very much. So with the upside versus where the street numbers were in 2Q and 3Q, do you have any update to the full year outlook? Mike, we do, and I'll let Corey cover that with you. Corey, go ahead. Yeah, you know, last quarter we said we thought we could grow it up, you know, about 15% for the year with the improvement over performance in the second quarter and outlook for Q3. At this point, we think we can grow it 20% or more for the year. So for the year, what does that make it? I mean, we're talking 660 for the year. Okay. Does that help, Mike? I don't know. Yeah, yes, absolutely. Thanks. Okay, so just, you know, can you just quickly talk about, I just think it's important, when you talk about the legacy products, I didn't, I guess, quite realize you have so many legacy products, because, I mean, they're all fiber, but what's really the difference between the legacy stuff that's changing out and the all-access? If you could give us some comment there, that'd be helpful. Well, we do have, you know, we're a 21-year-old company. The company was founded on the C7. We acquired a company called Occam, which has its founding product called the B6. And you may notice from my introductory remarks that we actually achieved end of sale in June on both of those systems. After those systems came to market in 2007, we built the E-Series product family, which may ring a bell because the E-Series continues to this day. But the initial E-Series was built on an operating system called ESA, and those were copper and fiber systems. We also then built the Giga Center family, which was our first generation of premises systems. And all of those are in what we refer to now as our traditional or legacy E-Series. systems, they had broad deployment. E-Series was a phenomenally successful system. And so we have many, many customers that have built networks with E-Series and have premises systems on Gigacenter that are still robustly ordered. When we brought our platforms to market, AXOS and EXOS, which have become the Intelligent Access Edge and the Revenue Edge, along with our Clouds, That is our all-platform business going forward. The AXOS and EXOS operating systems, even though they are abstracted from the hardware, still have hardware resources underneath them. We continued with the E-Series for the access side, and we have now brought the GigAspire family to market for EXOS. So we are slowly but surely growing our all-platform systems, but customers that have networks built on E-Series or the Gigacenter premises, if they choose to continue to order those systems. I, for one, am perfectly happy to take the order. And as they see the opportunity to deploy our platforms, they'll move to them. Michael, do you want to add some comment?
spk00: Yeah.
spk02: When I joined five years ago, Carl shared the view. He was five years into it and we were down this path on the journey to build these platforms. And I would say the only thing I would say that's important to understand between the legacy and the new is that we've chosen a very different path than our competition. What our competition has done is actually kept their existing systems that have been there for 20-plus years. They haven't upgraded the fundamental underlying technology, and instead they're taking the very traditional technology path of actually putting middleware over top of it and actually building out over top of it and covering it up. What Carl and the leadership team did 10 years ago was actually rebuild these platforms from the bottom up using industry 10 standard technologies like NetCom, Gang, and all those elements, which is why our products are unique in the market. They are built from the bottom up to actually embrace the future, which is all around helping service providers understand their customer, leverage data, and win. And so that's the difference between the old and the new. I just want to point out that I'll take that compliment. Mike, keep going. Thank you. That was great color for that question. I'm going to ask two more and I'll just ask them at once even though they're on different topics. I just want to take your temperature on gross margin expansion. for the overall year, you know, the typical 1 to 200 basis points, you know, where you stand on that right now? And then secondly, just how are you feeling about Congress and, you know, infrastructure-related further stimulus for this industry? Thank you. Mr. Okay, so let me just, I want to put some color on the group's margin and ask Corey to then add to it. I want to go back to what Corey was saying earlier about Q4 filling in, et cetera. And I want to frame that with what Michael just said. We have an enormous opportunity in front of us. It is a secular disruption. And we are very energized by helping our customers succeed. What that drives us to do is to work very hard to meet their expanding needs, which means delivering systems and not raising prices, for example, because our vendors have raised their prices. So we are all oars in the water to meet our customers' demand, which means we will pay expedite fees, do things on freight, find things on the open market for silicon. And that's the color that Corey was talking about. So, Corey, do you want to shape that to the direct question? And then I'll come back and talk about Congress. Sure. I think the strengthening gross margin in the first quarter and continued performance in the second It's a bit confident that we think we'll achieve margin expansion of 100 to 200 basis points year over year. So I think we're on track to do exactly that. And it's a fight. No one should take away that that's an easy thing right now. It is a fight. On Congress, look, there's lots of puts and takes, and we're all following these things. Here's the thing I would leave you with. It seems that in the vernacular... Regardless of affiliation, everyone now knows to say, we're interested in hardcore infrastructure, roads, bridges, and internet. No matter party affiliation, you hear the same phrase. So why do I say that? Because it's clear that the bid and ask on internet infrastructure has resolved itself in $65 billion. Either way, there's going to be a large amount of dollars invested in internet. When, how it shows up, We could have long discussions about I am on record as having said the following, and I'll repeat it. These programs always turn out to be larger than you think. They take longer than you think. And what I've said about Calix remains true. It is not a pull forward of boxes. It is an uplift of our entire model as we help our customers build a new business model on top of the new infrastructure they're building. Thanks again. Appreciate it. Thanks, Mike.
spk00: Thank you. Our next question is coming from Ryan Coons of Needham & Company. Please go ahead.
spk02: Good morning.
spk04: Thanks for the question. Impressive metric there with the software bookings north of 50%. Can you give us any color there on, you know, what some of the trends are? You know, fairly familiar with the products, but what's driving that? And should we think about that as the new normal or kind of a one-time event?
spk02: Thanks. So let me make sure I'm being very clear. It is our all-platform business, which is software, the associated systems. So remember, there's a hardware resource underneath both the access infrastructure and the premises and the services that go along with it. So that business, not just software, the whole business, has now made it over 50%. And obviously, once having made it over 50%, it's not going backwards. So I won't speak of it again. Ryan, prior to you joining us, I had said at some point in time we're going to go over the 50% in revenue. I thought it was meaningful to share when we had eclipsed the 50% in bookings. So that's the one tidbit, and we expect it to continue. Does that help?
spk04: It does. Thanks so much. Can you hear me okay? We can.
spk02: You go ahead.
spk04: Great. Specifically on the RDOC programs, are you seeing any action there? We've heard from some of your peers that maybe some of the engineering work is, you know, starting to be funded maybe by internal mechanisms, but, you know, folks are looking to get going, you know, late this year, early next year.
spk02: Is that in line with what you guys are thinking? Thank you. You mean you've heard from some folks that previously, two years ago, said it was going to happen next quarter? So all sarcasm aside, let me be clear. As I've said, it at least takes longer. That being said, we are clearly seeing now people planning, starting to put in some orders, but it's still early days. Michael, do you want to add some color to that? I would say that's exactly the case. The growth that you're seeing right now is based upon us taking market share. And so while that's a great future-looking opportunity for us, as Carl just stated, it takes longer and it's bigger. And so we expect that to start flowing through in subsequent years. But the results that you're seeing today are about our organization actually taking market share based on our customers understanding the value of our platforms and their desire to build a new business model to fundamentally transform and win customers against their biggest threat, which is the consumer direct companies who want to get inside the home, own that subscriber, and monetize them through incremental services, which the service provider needs to do.
spk04: Helpful. Thank you very much. Lastly, any color on the international side? Obviously, a great quarter there on revenues. Any regional color you can offer up? Thanks so much.
spk02: Just continued execution. Corey, do you want to add something? Yeah, you'll see it in the queue tomorrow. It was pretty broad-based. It came from a number of regions, strength particularly in Europe.
spk04: Great. Thanks so much. I'll pass it on.
spk02: Brian, thanks, and welcome.
spk00: Thank you. Our next question is coming from Christian Schwab of Craig Hallam Capital Group. Please go ahead.
spk02: Hey, congratulations on another good quarter and guide, guys. Most of my questions have been answered. Carl, I just have one quick question. When you look at small customers, you know, here domestically, the less than 250,000 subscribers, what do you think your penetration rate, you know, into that customer base currently is? And could you identify a number? of how many target customers that are left out there that, uh, are not customers at all of your, uh, all platform offering. Oh, so we are well penetrated from 20 years of working in North America as cows. Um, having said that with our all platform offerings, you've heard me say we are very early days. And so I would say to Michael, as a VP of sales once said in my very early selling career, when it comes to orders, too much is never enough. So, Michael, I don't know if you have some color on, but we are so early in this transformation process. So, Michael, maybe you want to get some color on the business transformation and how early it is. Well, I want to go back to what we talked about earlier, which was that in the past, if you were to go back 15 years ago, we would have competed with a number of vendor competitors, and our only offering would have been the access network. What we're actually seeing over and over again is, again, with multiple vectors into a customer, with the ability to win their marketing organization, to win the transformation of their call center, to completely change how they bring services to market in the home to compete with the consumer giants. And then the access side, that means we can go back to customers who we really had nothing to talk about before because they made a big access network investment and they're like, I'm not going to switch midway through and talk about all these other business transformation elements. So for us, it's an amazing opportunity, which again goes back to my previous comment, which is the growth that you're seeing is us taking market share as we enter into not only new customers, but actually places where we didn't have something to go to talk to them about before. And absolutely now we do. Okay. I appreciate that. Let me ask it a different way. Given your long history in access, what percentage of your historical access customer base over the last 15, 20 years that you've been selling to is currently buying your all-platform solution today? A large minority are buying some portion of it, but it is still a minority. Okay. All right. You know where I'm going, Carl. I'm just trying to, you know, frame a couple different ways how big the opportunity for you can be at a small penetration rate. Follow up on the earlier question about the new customer additions in the alt platform. You know, is there, you know, 500, you know, you know, existing customers that don't buy, you know, platform solutions, something like that, I guess. Yeah, so let me be clear. You've heard me say this many times. Every day I get up and go to work, I get more excited by the opportunity we have in front of us. And the reason I'm getting more excited is because I'm looking at what customers are doing with us. And I then come to the realization that we're even earlier in this opportunity than I thought. So that's one way of thinking about it. The second thing you've heard me say is that our model expands in multiple dimensions in multiple ways. And so it's not only, you know, as you heard Michael speak earlier, we can enter a customer with marketing cloud, and that might be the only thing they deploy. But as they start to do marketing cloud, then they might expand to support cloud, and they might go to the revenue edge. There's so many dimensions of expansion that even with our customer base, which is 1500 plus strong, we are still barely scratching the surface for that expansion opportunity, even though there are quite a few hundred that have deployed some aspect of what we're doing on the platforms. So the expansion, which is what you're getting at, we are, we are just getting up to bat in the first inning. Yeah, that's a, that's great color. Thank you guys. Congrats again. Thanks.
spk00: Thank you. Our next question is coming from Ken Savaro of Northland Capital Markets. Please go ahead.
spk01: Mr. Hey, good morning, and congratulations. Good morning, Jeff. Mr. Good morning, Carl. I just wanted to follow up on some of the market share commentary. Obviously, you guys have been a pretty established player in the market, especially on the rural side, for quite some time. So I was a little bit struck by that comment and learned to follow up with whether, and you can define your addressable market, you know, how you like, you know, I'd be focused on that kind of maybe the small carrier segment or perhaps the U S in general, if you could estimate, you know, what you think your current share of that market opportunity is and, um, and from whom are you taking market share? Do you think, and I'll follow up.
spk02: Yeah, so market share, you know, Michael used that term, market share. You have to keep in mind that in a disruption, market share is an interesting thing because what you're focused on is actually, as you heard him say, addressing new opportunities that don't exist in the way the service provider thinks about it. So if you look at it as just overall, quote, unquote, spend from service providers, we are growing the share of that spend. But it's in places that are different than the way you would traditionally think about. And so the best way I can point this to you is over time, you'll be able to look back on a basket of different vendors that are in the space. And I think you'll see a different growth rate out of Calix than others around us in the space. And that's the best way I can give you to think about it in the aggregate. So hopefully that makes sense. The second piece is when you look at the overall opportunity, TAM, SAM, all those different metrics, you've heard me say that hardware aside, we think that our customers will share between $1 and $10 per month per subscriber as we help them grow more and more successful business models. And so... who are you taking, quote unquote, share from? You've got to be careful about that term, share, because part of it is new spaces that don't exist. And so ultimately, the best way I can answer your question is I think you list the folks that you would think of, and then let's see in the rearview mirror which businesses grow at what rate, which businesses expand margins at what rate. So that's the way I would address the question.
spk01: Okay. I think I understand that. So you're kind of saying you're taking share from your, maybe your customers kind of internal marketing departments or it departments and, and sort of, sort of a non-traditional definition of the camp. Although in finding it that way, go ahead.
spk02: Hang on, Tim. So let's be clear. When you hear us say simplify their businesses, excite their subscribers and grow their value. What we're actually trying to do is actually increase the value. of our customers by helping them grow their revenues, lower their costs. And we will participate in the share of that. It's a very different way of thinking than the traditional market share statistics.
spk01: Okay. Still love a number there, but I hear what you're saying. And I wanted to follow up on just a couple of finer points on a few market segments that you touched on. One would be tier twos, where we do perhaps see some uptick in activity there as a few of those when, again, it's hard to tell in terms of how they're defined. But there does seem to be some broadly some more activity there. So I wonder if you could maybe segment again. And I think the overall theme here I'm trying to get to is market growth versus share gain. And there does seem to be a lot of market growth. So in terms of whether there's something new and interesting happening in tier two land on the one hand. And then international, I guess the comment was about existing customers. So we should think more about, you know, Canada, Mexico, Caribbean in terms of growth versus some of your new kind of old carrier engagements, UK and elsewhere in terms of what's driving that. And that's it for me.
spk02: So, you know, tier two is again, to go back to what I said earlier, the midsize customers, $250,000 to $2.5 million is a segment that's growing. But tier twos are part of that, but they are not all of that. And so what we're seeing, back to Michael's point earlier, is we are having more and more success working with customers that are larger and larger to deploy platforms and build these new business models. As for the traditional tier twos that are going through various forms of restructuring and reinvestment, You know, we think there will be an opportunity there over time, but we'll see how they align their business strategies. As for international, I think we covered that earlier on where we're seeing it, which is, to Michael's point earlier, from our existing customers, for the most part, expanding. We did add new names in the international market, to be sure, but it's frankly the result of our continued focus, as we have been, on where we're aligned with customers internationally. It's not because we are expanding internationally yet.
spk05: Okay, thanks.
spk00: Once again, ladies and gentlemen, that is star one to register a question at this time. Our next question is coming from Paul Silverstein of Cowan. Please go ahead.
spk04: Sorry, Carl. You're competing with the conference on that on broadband. I'll ask you guys offline. Thanks. Take care.
spk02: Thanks, Paul. OK, Paul. Others?
spk00: At this time, we've reached the end of our question and answer session. I'd like to turn it back over to Mr. Binges for closing comments.
spk02: Thank you, Donna. Calix leadership will participate in a number of investor conferences and VAs during the third quarter of 2021. Information about these events, including dates and times for public webcasts and management interviews, will be posted on the events and presentations page of the investor relations section of calix.com. Once again, thank you to everyone on this call and on the webcast for your interest in Calix and for joining us today. This concludes our conference call. Goodbye for now.
spk00: Ladies and gentlemen, thank you for your participation. You may disconnect your lines or log off the webcast at this time, and have a wonderful day.
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