Calix, Inc

Greetings and welcome to the Calix first quarter 2022 earnings conference call. At this time, all participants are in a listen only mode. A question and answer session will follow the brief prepared remarks. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. Today on the call, we have Calix Chairman and CEO Carl Russo, Chief Financial Officer Corey Sindelar, and President and Chief Operating Officer Michael Weaning. As a reminder, yesterday after the close of market, Calix released its letter to stockholders in an 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. During this call, Calix will refer to forward-looking statements, which include all statements the company will make about its 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 such reports in the first quarter 2022 letter to stockholders in their 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, Calix will discuss both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in the first quarter 2022 letter to stockholders. Unless otherwise stated, all numbers referenced on this call will be non-GAAP measures. With that, let me turn the call over to Calix Chairman and CEO, Carl Russo. Carl?

Thank you, Laura. Robust demand for our all-platform offerings continued in the first quarter as the Calix team again executed with excellence. This combination delivered a breakthrough in our business model, a 5% sequential increase in revenue from the fourth quarter of 2021. We have put the seasonality associated with traditional systems businesses in our rearview mirror, and we are confident we will deliver sequential quarterly revenue growth from now on. This is the last significant piece of our evolution to delivering increased predictability resulting from our continued shift to our all-platform model. This shift continues to build as over 70% of our bookings in the quarter came from our software platforms and associated systems and services. This is up from 50% just three quarters ago. Our platforms enable BSPs to offer broadband as an exceptional service rather than just a dumb pipe. This makes our BSPs essential to their subscribers and thus very resistant to macroeconomic factors. Furthermore, it ensures demand for CalExport platforms will remain robust. However, supply remains the key challenge and will continue to be for the foreseeable future. That said, We are making progress and our 14% year over year revenue growth in the first quarter has given us enough confidence to raise our 2022 full year guidance from five to 10% growth to 10 to 15% growth. This is in line with the long-term guidance we gave at our investor day at the end of February. In essence, We are now pulling forward our entire guidance model into 2022, except for gross margin, which we believe will remain around 50% in 2022 and then grow from there. We have made modest and targeted pricing adjustments, which will roll into the revenue line over time. While these will not change our gross margin guidance for 2022, they do reinforce our confidence in returning to our 100 to 200 basis points of gross margin improvement in 2023 and beyond. In closing, the enormous secular opportunity we are capitalizing on grows every day, and the Calix team is committed to executing with excellence to help our customers simplify their businesses, excite their subscribers, and grow their value. Let's open the call for questions. Operator?

At this time, we'll be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation film will indicate your line is in the question queue. You may press star 2 to remove your question from the queue. For participants using speaker equipment, it may be necessary for you to pick up your handset before pressing the star keys. One moment while we poll for questions. Our first question comes from the line of Paul Silverstein with Cowan. You may proceed with your question.