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What changed in CALIX, INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of CALIX, INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+284 added−235 removedSource: 10-K (2026-02-20) vs 10-K (2025-02-21)

Top changes in CALIX, INC's 2025 10-K

284 paragraphs added · 235 removed · 200 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThese opportunities open new markets and relationships with the public sector to reduce reliance on and augment 5G LTE fixed wireless access. • SmartBiz™ managed services that address the business networking and productivity needs of small business owners with an all-in-one solution that increases staff productivity, secures critical business systems and enhances customer loyalty. 5 Table of Contents • SmartMDU™ managed services provide purpose-built, flexible connectivity solutions for multi-family properties of any type, enabling service providers and property owners to exceed resident expectations with a simple, secure, personalized and efficient managed Wi-Fi solution. • ManagedBiz™ is a cloud-managed network security and connectivity solution tailored for large businesses with complex information technology use cases, featuring a security and routing appliance, multi-layer network security and seamless management via the Calix Broadband Platform.
Biggest changeThese opportunities open new markets and relationships with the public sector to reduce reliance on and augment 5G mobile networks. ◦ SmartBiz™ managed services address the networking and productivity needs of small business owners with an all-in-one solution that increases staff productivity, secures critical business systems and enhances customer loyalty. ◦ SmartMDU™ managed services provide purpose-built, flexible connectivity solutions for multi-family properties of any type, enabling service providers and property owners to exceed resident expectations with a simple, secure, personalized and efficient managed Wi-Fi solution.
Our platform enables us to expand our total addressable opportunity and recurring revenue streams by allowing us to address the needs of not only traditional wireline-focused service providers, but also emerging service providers. As such, we intend to continue to engage emerging providers that are creating entirely new customer segments, including fiber overbuilders, utilities and municipalities.
Our platform enables us to expand our total addressable opportunity and recurring revenue streams by allowing us to address the needs of not only traditional wireline-focused service providers, but also emerging service providers. As such, we intend to continue to engage emerging providers that are creating entirely new customer segments, including fiber overbuilders, utilities, municipalities and MSPs.
Pursuing strategic relationships – We will continue to pursue strategic technology and distribution relationships that help us align with our customers’ strategic priorities. We continue to invest to provide technical synergy across the ecosystems that support our customers’ most critical business processes through our partner program.
Pursue strategic relationships – We will continue to pursue strategic technology and distribution relationships that help us align with our customers’ strategic priorities. We continue to invest to provide technical synergy across the ecosystems that support our customers’ most critical business processes through our partner program.
We will also continue to pursue service provider segments where there is an opportunity to grow our current share, such as cable MSOs, large traditional wireline-focused service providers and international markets. Extending portfolio of Calix services – Our Success team supports our customers as they define their transformation strategies, build new skills, implement new technologies and deploy new subscriber services.
We will also continue to pursue service provider segments where there is an opportunity to grow our current share, such as cable MSOs, large traditional wireline-focused service providers and international markets. Extend portfolio of Calix services – Our Success team supports our customers as they define their transformation strategies, build new skills, implement new technologies and deploy new subscriber services.
Trade names, trademarks and service marks of other companies appearing in this Annual Report on Form 10-K are the property of the respective holders. The Securities and Exchange Commission, or SEC, maintains a website at www.sec.gov that contains reports, proxy statements and other information regarding issuers that file electronically with the SEC.
Trade names, trademarks and service marks of other companies appearing in this Annual Report on Form 10-K are the property of the respective holders. The Securities and Exchange Commission (“SEC”) maintains a website at www.sec.gov that contains reports, proxy statements and other information regarding issuers that file electronically with the SEC.
Our platform is built to enable BEPs to quickly and easily deploy a growing portfolio of SmartLife™ managed services to connect entire communities. Embracing this strategy enables BEPs to establish themselves as essential technology innovators that are enabling their communities to grow and thrive.
Our platform is built to enable CXPs to quickly and easily deploy a growing portfolio of SmartLife managed services to connect entire communities. Embracing this strategy enables CXPs to establish themselves as essential technology innovators that are enabling their communities to grow and thrive.
BEPs, who embrace our platform, understand this competitive threat and that their brand’s central position in the home, the business and the town is their most valuable strategic asset. As such, they must protect and expand continually.
CXPs, who embrace our platform, understand this competitive threat and that their brand’s central position in the home, the business and the town is their most valuable strategic asset. As such, they must protect and expand continually.
Our direct model is complemented with selective programs for our channel partners, who have established local market expertise and have demonstrated the ability to generate new market opportunities and support sales of cutting-edge technologies for BEPs.
Our direct model is complemented with selective programs for our channel partners, who have established local market expertise and have demonstrated the ability to generate new market opportunities and support sales of cutting-edge technologies for CXPs.
Vendors with which we may compete include: ADTRAN Holdings, Inc.; Ciena Corporation; CommScope Holding Company, Inc.; eero/Ring (Amazon companies); Harmonic Inc.; Huawei Technologies Co., Ltd.; Google Nest (a Google company); Nokia Corporation; Plume Design, Inc. and Ubiquiti Inc. In various geographic or vertical markets, there are also several smaller companies with which we may compete.
Vendors with which we may compete include: ADTRAN Holdings, Inc.; Ciena Corporation; CommScope Holding Company, Inc.; eero/Ring (Amazon companies); Harmonic Inc.; Huawei Technologies Co., Ltd.; Nokia Corporation; Plume Design, Inc. and Ubiquiti Inc. In various geographic or vertical markets, there are also several smaller companies with which we may compete.
At the same time, we offer our Calix Success Services along with a growing portfolio of award-winning market activation resources that provide BEPs with best practices and programs to strengthen and grow their brands with their subscribers, thereby increasing subscriber loyalty and opportunities to grow their subscriber bases.
At the same time, we offer Calix Success Services along with a growing portfolio of award-winning market activation resources that provide CXPs with best practices and programs to strengthen and grow their brands with their subscribers, thereby increasing subscriber loyalty and opportunities to grow their subscriber bases.
In recent years, as our revenue from our large customers decreased, we have experienced less year-end volatility due to capital budgetary spending or freezing. This, combined with an increase in recurring revenue, has resulted in smaller seasonal fluctuations, and we expect this trend to continue. 7 Table of Contents Competition The communications software and systems equipment markets are highly competitive.
In recent years, as our revenue from our large customers decreased, we have experienced less year-end volatility due to capital budgetary spending or freezing. This, combined with an increase in recurring revenue, has resulted in smaller seasonal fluctuations, and we expect this trend to continue. Competition The communications software and systems equipment markets are highly competitive.
As we deploy new solutions, we are building the expertise of our team by adding specialized resources in areas such as marketing, cloud and network operations.
As we deploy new solutions, we are building the expertise of our team by adding specialized resources in areas such as marketing, customer support, cloud and network operations.
Federal government has approved programs, totaling more than $60 billion, to fund broadband and connectivity expansion across the rural parts of the U.S.
The U.S. Federal government has approved programs, totaling more than $40 billion, to fund broadband and connectivity expansion across the rural parts of the U.S.
No customer represented more than 10% of revenue in 2024, 2023 or 2022. Sales to customers outside the U.S. represented 8% of our revenue in 2024 and 9% of our revenue in 2023 and 2022. Our sales outside the U.S. have been and are currently predominantly to customers in the Americas and Europe.
No customer represented more than 10% of revenue in 2025, 2024 or 2023. Sales to customers outside the U.S. represented 7% of our revenue in 2025, 8% of our revenue in 2024 and 9% of our revenue in 2023. Our sales outside the U.S. have been and are currently predominantly to customers in the Americas and Europe.
As a result, many of Calix’s BEP customers have experienced improved customer satisfaction scores, minimal churn and significant revenue growth. To expand our reach in the market, we will continue to pursue strategic technology and distribution relationships that align with BEPs’ strategic priorities.
As a result, many of Calix’s CXP customers have experienced improved customer satisfaction scores, minimal churn and significant revenue growth. To expand our reach in the market, we will continue to pursue strategic technology and distribution relationships that align with CXPs’ strategic priorities.
Small service providers consist primarily of over 1,000 predominantly local independent operating companies, or IOCs, typically focused on a single community or a cluster of communities. They include a growing number of municipalities, cable MSOs, electric cooperatives, fiber overbuilders, tribal entities and WISPs. These entities range in size from a few subscribers to 250,000 broadband subscribers.
Small service providers consist primarily of over 1,000 predominantly local IOCs that are typically focused on a single community or a cluster of communities. They include a growing number of municipalities, cable MSOs, electric cooperatives, fiber overbuilders, tribal entities and WISPs. These entities range in size from a few subscribers to 250,000 broadband subscribers.
Engaging directly with BEP customers – We continue to invest in our direct sales capabilities so that we can engage deeply with our customers to help them understand the differentiable value that our platform provides.
Engage directly with CXP customers – We continue to invest in our direct sales capabilities so that we can engage deeply with our customers to help them understand the differentiable value that our platform provides.
Calix has a dedicated team of funding specialists, assisting customers and prospects with the most up-to-date information on broadband funding opportunities as they are introduced and personalized strategies to maximize their grants to support their growth. 6 Table of Contents We classify service providers into large, medium and small based on the number of broadband subscribers they serve.
Calix has a dedicated team of funding specialists, assisting customers and prospects with the most up-to-date information on broadband funding opportunities as they are introduced and personalized strategies to maximize their grants to support their growth. We refer to service providers as large, medium and small based on the number of broadband subscribers they serve.
By leveraging residential and small business Wi-Fi systems combined with strategically deployed outdoor Wi-Fi access points, BEPs can serve subscribers, schools, municipalities, organizations, planned communities, parks, marinas and more.
By leveraging residential and small business Wi-Fi appliances combined with strategically deployed outdoor Wi-Fi access points, CXPs can serve subscribers, schools, municipalities, organizations, planned communities, parks, marinas and more.
For the past four years, we have averaged adding over 90 new customers per year purchasing directly or through our partners. Our diverse and growing customer footprint is a critical source of our future growth as we expand our portfolio and sell additional components of our platform and managed services to both new and existing customers.
For the past five years, we have averaged landing 80 new customers per year purchasing directly or through our partners. Our diverse and growing customer footprint is a critical source of our future growth as we expand our portfolio and sell additional components of our platform and managed services to both new and existing customers.
As of December 31, 2024, we held 114 U.S. patents and 50 pending U.S. and international patent applications. U.S. patents generally have a term of twenty years from filing. The remaining terms on our individual patents vary from less than a year to seventeen years.
As of December 31, 2025, we held 98 U.S. patents and 90 pending U.S. and international patent applications. U.S. patents generally have a term of twenty years from filing. The remaining terms on our individual patents vary from less than a year to seventeen years.
The BEPs’ teams can utilize insights from Calix Cloud to offer new and innovative services to those subscribers who have the propensity to buy, thereby growing revenue as they deliver a connected experience at significantly lower operating costs. This also enables them to build their brand and value proposition around innovation and subscriber experience.
The CXPs’ teams can utilize AI-driven insights from Calix Cloud to rapidly scale new innovative services for those subscribers who have the propensity to buy, thereby growing revenue as they deliver a connected experience at significantly lower operating costs. This also enables them to build their brand and value proposition around innovation and subscriber experience.
Strategy Overview Our strategy is to position Calix as the key partner providing a broadband delivery platform (cloud, software and systems) and managed services to enable and facilitate the transformation of BEP networks and the residential, community and business network experience in order to innovate for all of their subscribers.
Strategy Overview Our strategy is to position Calix as the key partner providing a broadband delivery platform (agentic AI, cloud, software and appliances) and managed services to enable and facilitate the transformation of service provider networks and the residential, community and business network experience in order to innovate for all of their subscribers.
The SmartLife™ managed services are built on the Calix platform and fully integrated with our GigaSpire ® and GigaPro ® family of Wi-Fi systems to be ready for deployment as a complete subscriber experience solution for a BEP’s residential subscribers, business subscribers and community networks.
The SmartLife managed services are built on the Calix One platform and fully integrated with our Experience Edge GigaSpire ® and GigaPro ® family of Wi-Fi appliances to be ready for deployment as a complete market-ready subscriber experience solution for a CXP’s residential subscribers, business subscribers and community networks.
Most BEPs will require transformation of their business and operations to become an essential provider of data-driven, high-value managed services to their subscribers. The principal elements of our strategy are: Starting with the data – The principal way we gather, analyze and deliver actionable insights for BEPs is via Calix Cloud.
Most service providers will require transformation of their business and operations to become an essential provider of data-driven, high-value managed services to their subscribers. The principal elements of our strategy are: Start with the data – The principal way we gather, analyze and deliver actionable insights for CXPs is via the Calix Agent Workforce and Cloud.
Expanding customer footprint across our total addressable opportunity – Our total addressable opportunity includes service providers of any type and size, including local and competitive exchange carriers, cable multiple system operators, or cable MSOs, wireless internet service providers, or WISPs, fiber overbuilders such as municipalities, electric cooperatives, tribal communities, multiple dwelling units and hospitality providers.
Expand our customer footprint across our total addressable opportunity – Our total addressable opportunity includes service providers of any type and size, including managed service providers (“MSPs”), local and competitive exchange carriers, cable multiple system operators (“MSOs”), wireless internet service providers (“WISPs”), fiber overbuilders such as municipalities, electric cooperatives, tribal communities, multiple dwelling units (“MDU”) and hospitality providers.
Our platform simplifies BEPs’ businesses by delivering intelligence and automation across the entire subscriber facing network – from the data center edge to 4 Table of Contents the subscriber’s devices. Our strategy is to continually augment and extend our platform with features and services directly or through partners to allow our BEP customers to deliver cutting-edge services to their subscribers.
Our platform simplifies CXPs’ businesses by delivering intelligence and automation across the entire subscriber facing network – from the data center edge to the subscriber’s connected devices. Our strategy is to continually augment and extend our platform with AI agents, features and services directly or through partners to allow our CXP customers to deliver cutting-edge services to their subscribers.
Our Intelligent Access network solution and Unlimited Subscriber solution are designed to allow BEPs to simplify their businesses and reduce operating costs, while launching innovative new services in a matter of days and weeks instead of months and years.
Our Access Edge network solution and Experience Edge premises solution are designed to allow CXPs to simplify their businesses and reduce operating costs, while launching innovative new services in a matter of days and weeks instead of months and years.
Calix customers are evolving their go-to-market strategies to go beyond marketing broadband speed by delivering valuable managed services built on top of their Wi-Fi offerings. This unique portfolio gives them more opportunities to provide differentiated services to their subscribers and grow their revenue. Our access network solutions redefine the access edge of the network by simplifying its architecture and operations.
Calix customers are evolving their go-to-market strategies to go beyond marketing broadband speed by delivering valuable managed services built on top of their Wi-Fi offerings. This unique portfolio gives them more opportunities to provide differentiated services to their subscribers and grow their revenue.
Our talent strategy focuses on our culture and core values, our talent programs and the overall well-being and safety of our talent. Corporate Information Our principal executive offices are located at: 2777 Orchard Parkway, San Jose, California 95134, and our telephone number is (408) 514-3000. Our website address is: www.calix.com.
Our talent strategy focuses on our culture and core values, our talent programs and the overall well-being and safety of our talent. 8 Table of Contents Corporate Information Our principal executive offices are located at: 3155 Olsen Drive, Suite 450, San Jose, California 95117, and our telephone number is (408) 514-3000. Our website address is: www.calix.com.
Human Capital We employed 1,820 employees globally as of December 31, 2024 with 1,013 employees located in the U.S. and 807 outside of the U.S., primarily in Canada, China and India.
Human Capital We employed 1,921 employees globally as of December 31, 2025 with 1,046 employees located in the U.S. and 875 outside of the U.S., primarily in Canada, China and India.
Our service provider customers include: ALLO Communications, LLC; Connect Holding II LLC (dba Brightspeed); CityFibre Holdings Limited; Conexon Connect, LLC; Cox Communications, Inc.; Highline; Hunter Communications; ICS Advanced Technologies; Jade Communications, LLC; New Visions Communications, Inc.; Rally Networks; South Central Telephone Association, Inc.; Tombigbee Electric Power Association and Tombigbee Fiber, LLC and Verizon Communications Inc. The U.S.
Our service provider customers include: ALLO Communications, LLC; Connect Holding II LLC (dba Brightspeed); CityFibre Holdings Limited; Conexon Connect, LLC; Cox Communications, Inc.; Gridiron Fiber Corp. (dba Lumos, a T-Mobile Fiber company); Hunter Communications; ICS Advanced Technologies; Jade Communications, LLC; Rally Networks; South Central Telephone Association, Inc.; Tombigbee Electric Power Association and Tombigbee Fiber, LLC and Verizon Communications Inc.
Our role-based cloud enables BEP teams, such as marketing, operations or customer support, to leverage real-time behavioral analytics to anticipate the subscriber’s needs, whether they are in the home, roaming across the town or managing a small business.
Our role-based cloud enables CXP teams, such as marketing, operations or customer support, to leverage our Calix Agent Workforce to anticipate and automate tasks to address the subscriber’s needs, whether they are in the home, roaming across the town or managing a small business.
With the increase in both private and public funding of broadband access, we anticipate at least two fiber-to-the-home providers vying for subscribers in every market.
We believe our platform offers a competitive edge to CXPs at a critical time of increasing competition. With the increase in both private and public funding of broadband access, we anticipate at least two fiber-to-the-home providers vying for subscribers in every market.
Finally, to support these managed services, we offer market activation resources and customer support programs through our Success organization to enable BEP teams to quickly deploy, manage and monetize each service that they provide to subscribers. These resources include marketing content that can be easily customized with on-line tools, training programs and success services.
Finally, to support these managed services, we offer market activation resources and customer support programs through our Customer Success organization to enable CXP teams to quickly deploy, manage and monetize each service that they provide to subscribers.
By adding new solutions to our platform ecosystem, we significantly enhance the value that our platform delivers to our customers. In addition, we are continuing to expand our relationships with organizations that help our customers plan and execute in-market. Examples of these partners are Conexon, LLC, ePlus Technology, Inc., BroadEngagement (Refindable LLC business) and GOCare™ (NuTEQ Solutions, LLC business).
By adding new solutions to our platform ecosystem, we significantly enhance the value that our platform delivers to our customers. In addition, we are continuing to expand our relationships with organizations that help our customers plan and execute in-market.
Relationships with and reliance on these third parties allow us to improve new product introduction time, conserve working capital, reduce product costs and minimize delivery lead times while maintaining product quality and scaling quickly to handle increased order volume. We continue to qualify and utilize additional vendors for various portions of the supply chain as needed.
We integrate our supply-chain management and new product introduction activities with those outsourced to third parties. Relationships with and reliance on these third parties allow us to improve new product introduction time, conserve working capital, reduce product costs and minimize delivery lead times while maintaining product quality and scaling quickly to handle increased order volume.
Our role-based Calix Cloud enables critical functions within a BEP’s business, such as marketing, operations and support, to leverage real-time data to continually understand and optimize the experience for their subscribers. Building and evolving our platform – Our product strategy centers on our strategic platform.
Our role-based Agents and Cloud enable critical functions within a CXP’s business, such as marketing, 4 Table of Contents operations and support, to leverage real-time data to continually understand, optimize and automate the experience for their subscribers. Build and evolve our platform – Our product strategy centers on our AI enabled strategic platform.
Our research and development team is composed of engineers with expertise in software and cloud platforms, optics, wireless technologies and systems engineering. Our research and development team is responsible for designing, developing and enhancing our platform, cloud and managed services, performing product and quality assurance testing and ensuring the compatibility of our products with third-party hardware and software products.
Our research and development team is responsible for designing, developing and enhancing our platform, cloud and managed services, performing product and quality assurance testing and ensuring the compatibility of our products with third-party hardware and software products. Increasingly, our engineers are focused on enhancements to our cloud and software platform components.
Our platform’s access network component is implemented in our E-Series family of modular, non-blocking systems, enabling BEPs to meet a wide variety of deployment scenarios. our customers can consolidate multiple access network elements into a single system using specialized software modules that add functionality and remove complexity, thereby reducing the total cost of ownership and the time to market for new services.
Our customers can consolidate multiple access network elements into a single system using specialized software modules that add functionality and remove complexity, thereby reducing the total cost of ownership and the time to market for new services.
The global supply chain organization oversees these third parties to source and procure materials, manufacture and deliver products. This organization includes order management, planning, sourcing, logistics, test and manufacturing engineers, and new product introduction personnel. We integrate our supply chain management and new product introduction activities with those outsourced to third parties.
Manufacturing and Supply Chain We rely on CMs, ODMs and third-party logistics partners for the supply and distribution of our products. The global supply-chain organization oversees these third parties to source and procure materials, manufacture and deliver products. This organization includes order management, planning, sourcing, logistics, testing and manufacturing engineers and new product introduction teams.
ITEM 1. Business Company Overview Calix was founded in 1999. We develop, market and sell our appliance-based platform, cloud and managed services that enable service providers of all types and sizes to innovate and transform their businesses.
ITEM 1. Business Company Overview Calix was founded in 1999. We develop, market and sell platform, cloud and managed services, which are powered by agentic AI, that enable communication service providers (“CSPs”) of all types and sizes to innovate and transform their businesses to focus on delivering outstanding subscriber experiences and become CXPs.
We currently have approximately 1,600 active service provider customers, purchasing directly and through partners, to deploy passive optical, Active Ethernet or point-to-point Ethernet access networks or subscriber premise systems.
Our customers span all sizes of broadband subscriber count from a few subscribers to more than eleven million. We currently have approximately 1,600 active service provider customers, purchasing directly and through partners, to deploy passive optical, Active Ethernet or point-to-point Ethernet access networks or subscriber premise appliances.
These insights enable BEPs to anticipate and target new revenue-generating services and applications through our mobile application, CommandIQ ® for residents and CommandWorx ™ for businesses. Our Calix Cloud enables simple integrations with other market-leading workflow solutions for marketing (including Facebook, Mailchimp, Constant Contact and HubSpot), support ticketing solutions and operations support systems and business support systems.
Calix Cloud enables simple integrations with other market-leading workflow solutions for marketing (including Facebook, Mailchimp, Constant Contact and HubSpot), support ticketing solutions, operations support systems and business support systems.
Increasingly, our engineers are focused on enhancements to our cloud and software platform components. Our teams of engineers currently remain concentrated in San Jose and Petaluma, California; Nanjing, China; Bangalore, India; Minneapolis, Minnesota and Richardson, Texas.
Our teams of engineers currently remain concentrated in San Jose and Petaluma, California; Nanjing, China; Bangalore, India; Minneapolis, Minnesota and Richardson, Texas. We also outsource a portion of our software and cloud development to domestic and international third parties and depend on these partners to meet our development plans.
We offer a range of training, professional and success services to assist BEPs in every domain of network management from strategy to deployment and management. These offerings are sold independently and offer unique entry points for new customers, who are partnering with Calix to transform their businesses.
These offerings are sold independently and offer unique entry points for new customers, who are partnering with Calix to transform their businesses.
This partnership enables BEPs to grow their brand through increased subscriber acquisition, loyalty and revenue while reducing their operating costs. This is our mission: to enable BEPs of all sizes to simplify, innovate and grow. We believe our platform offers a competitive edge to BEPs at a critical time of increasing competition.
This focus on subscriber experience allows CXPs to expand their brand through increased subscriber acquisition, loyalty and revenue while reducing their operating costs. This is our mission: to transform service providers of all types and sizes into CXPs and enable them to simplify, innovate and grow.
Customers We market and sell our platform (cloud, software and systems) and managed services to service providers of all types and sizes. To date, we have focused primarily on service providers in the North American market. Our customers span all sizes of broadband subscriber count from a few subscribers to more than eleven million.
These resources include marketing content that can be easily customized with on-line tools, training programs and success services. 6 Table of Contents Customers We market and sell our platform (agentic AI, cloud, software and appliances) and managed services to service providers of all types and sizes. To date, we have focused primarily on service providers in the North American market.
Supply chain management includes adherence to our supplier code of conduct, transparent tracking of sustainability goals and the importance of using different suppliers. We track our enterprise greenhouse gas emissions and report them via our website. Seasonality Fluctuations in our revenue occur due to many factors, including the varying budget cycles and seasonal buying patterns of our customers.
We continue to qualify and utilize additional vendors for various portions of the supply chain as needed. 7 Table of Contents Seasonality Fluctuations in our revenue occur due to many factors, including the varying budget cycles and seasonal buying patterns of our customers.
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For our customers to successfully become Broadband Experience Providers, or BEPs, of the future, they require actionable data for critical business functions such as network operations, customer engagement and service. However, this data is often trapped in disparate systems or departmental silos.
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The platform combines the Calix Agent Workforce™ with intelligent appliances, software, cloud and fully integrated SmartLife™ managed services to enable simplified business models that acquire, retain and grow subscribers and revenue. Calix Customer Success guides service providers through every stage of their transformation journey with expertise across technology, business and market insights.
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Our platform, which includes Calix Cloud, Intelligent Access, and Unlimited Subscriber, gathers, analyzes and applies machine learning to deliver real-time insights seamlessly to each key business function.
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Our partner community extends innovation so customers can grow their businesses across markets at scale.
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Our customers utilize these data and insights to simplify network operations, customer engagement and service and innovate for their consumer, business and municipal subscribers with a growing portfolio of SmartLife managed service experiences that grow their businesses and the communities they serve.
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With deep broadband expertise and an end-to-end approach from the datacenters’ access edge to every residential, business and municipal subscriber location, Calix enables any service provider to simplify operations, engagement, and service; innovate for their subscribers; and grow value for members, investors, and the communities they serve.
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Product Overview Our product strategy centers on increasing the market adoption of two fundamental components: 1.
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Examples of these partners are Conexon, LLC, ePlus Technology, Inc., BroadEngagement (Refindable LLC business), Google LLC and GOCare™ (NuTEQ Solutions, LLC business).
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Our Calix Platform, which consists of: • Calix Cloud ® , which comes in three role-base editions: Calix Engagement Cloud, Calix Operations Cloud and Calix Service Cloud. • Calix Intelligent Access™ our network solution for automated, intelligent next generation networks. • Calix Unlimited Subscriber™ our premises solution for subscriber managed services. 2.
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Product Overview Our product strategy centers on increasing the market adoption of our Calix One Platform, which consists of: • Calix Cloud ® , which comes in three role-based SaaS applications: Calix Engagement Cloud, Calix Operations Cloud and Calix Service Cloud. • Calix Agent Workforce consists of four agent families: ◦ Service Agents share best practices and contextual insights to Customer Service Representatives (“CSRs”) to solve problems faster and on the first call. ◦ Subscriber Agents extend the reach of CSRs and Service Agents directly to subscribers through CommandIQ, providing personalized self-service experience optimization, upsell offers and real-time outage information. ◦ Operations Agents assist network operations teams around the clock and are dedicated to uncovering and resolving issues to eliminate and reduce service outages and improve subscriber experiences. ◦ Marketing Agents continuously scan and analyze market and competitor data to automate subscriber segmentation and create targeted, effective campaigns that amplify the effectiveness of marketing teams. • Calix Access Edge™ is our access network and subscriber service management solution for automated, intelligent next generation networks. 5 Table of Contents • Calix Experience Edge™ is our premises Wi-Fi and service delivery solution for subscriber managed services. • Calix SmartLife managed service offerings, which consist of: ◦ SmartHome™ managed services and applications to enhance, operate and secure the connected experience of subscribers in their home, including managed Wi-Fi, advanced content control, network security, connected cameras and social media monitoring for kids. ◦ SmartTown ® managed services reimagine community Wi-Fi as a secure and managed experience across a CXP’s footprint by making their town a SmartTown.
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Our SmartLife™ managed service offerings, which consist of: • SmartHome™ managed services and applications to enhance, operate and secure the connected experience of subscribers in their home, including managed Wi-Fi, advanced content control, network security, connected cameras, social media monitoring for kids and device protection programs. • SmartTown ® managed services that reimagine community Wi-Fi as a ubiquitous, secure and managed experience across a BEP’s footprint by making their town a SmartTown.
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Powered by Calix Agent Workforce, these insights enable CXPs to anticipate, target and automate new revenue-generating services and applications through our smart phone applications: CommandIQ ® for residents, CommandWorx™ for businesses, PropertyWorx™ for multi-dwelling unit property owners and Field Service App for CXP installers and field technicians.
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We also outsource a portion of our software and cloud development to domestic and international third parties and depend on these partners to meet our development plans. Manufacturing and Supply Chain We rely on CMs, ODMs and third-party logistics partners for the supply and distribution of our products.
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Our Access Edge network solutions redefine the access edge of the network by simplifying its architecture and operations and reducing energy consumption. Our platform’s access network component is provided by our E-Series family of modular, non-blocking systems, enabling CXPs to meet a wide variety of deployment scenarios.
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Sustainability We operate with a “sustainable by design” approach, integrating sustainability practices and goals into our business. Product planning incorporates consideration for improvements in energy efficiency, product durability and recyclability. Our human capital management emphasizes employee engagement and talent development.
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Our Access Edge network solutions are also some of the most energy efficient in the industry versus traditional access networks thanks to double-density PON innovations that reduce rack space, cooling requirements and overall power consumption. We offer a range of training, professional and success services to assist CXPs in every domain of network management from strategy to deployment and management.
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Our research and development team is composed of engineers with expertise in software and cloud platforms, agentic AI, optics, wireless technologies and systems engineering.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

77 edited+57 added−10 removed198 unchanged
Biggest changeNew or increased tariffs and other changes in U.S. trade policy, including new sanctions, could trigger retaliatory actions by affected countries. In addition, inflation in the U.S. has affected businesses across many industries, including ours, by increasing the costs of labor, employee healthcare, components and freight and shipping, which may further constrain our customers’ or prospective customers’ budgets.
Biggest changeThe imposition of additional tariffs or other trade barriers by countries other than the U.S., including China and other Asian countries, will increase our costs in these markets, and to the extent these increased costs result in increased prices for our customers, we expect the demand for products in these markets to decrease as some of our customers seek alternative sources, making it more difficult for us to sell our products in these markets. 20 Table of Contents In addition, inflation in the U.S. has affected businesses across many industries, including ours, by increasing the costs of labor, employee healthcare, components and freight and shipping, which may further constrain our customers’ or prospective customers’ budgets.
Particular risks associated with management of our global supply chain operations include the following: • Manufacturing constraints, shortages and other disruptions. We do not have internal manufacturing capabilities and rely solely on a small number of CMs and ODMs to manufacture and supply our products.
Particular risks associated with management of our global supply-chain operations include the following: • Manufacturing constraints, shortages and other disruptions. We do not have internal manufacturing capabilities and we rely solely on a small number of CMs and ODMs to manufacture and supply our products.
We may not be able to secure or maintain necessary technology licenses from these third parties on commercially reasonable terms or at all. Third parties may also choose to not renew licenses with us, demand unreasonable license fees or cease to offer technologies that we require.
We may not be able to secure or maintain necessary technology licenses from these third parties on commercially reasonable terms or at all. Third parties may also choose not to renew licenses with us, demand unreasonable license fees or cease to offer technologies that we require.
We are dependent upon sole-source or limited-source suppliers for some key product components such as chipsets and certain of our application-specific integrated circuit processors and resistor components, including certain components sourced solely through suppliers located in China and other Asian countries.
We are dependent upon sole-source or limited-source suppliers for some key product components such as chipsets, certain of our application-specific integrated circuit processors and memory and resistor components, including certain components sourced solely through suppliers located in China and other Asian countries.
For example, the California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act (collectively, the CCPA) requires covered businesses that process the personal information of California residents to, among other things: (i) provide certain disclosures to California residents regarding the business’s collection, use and disclosure of their personal information; (ii) receive and respond to requests from California residents to access, delete and correct their personal information or to opt out of certain disclosures of their personal information; and (iii) enter into specific contractual provisions with service providers that process California resident personal information on the business’s behalf.
For example, the California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act (collectively, the “CCPA”) requires covered businesses that process the personal information of California residents to, among other things: (i) provide certain disclosures to California residents regarding the business’s collection, use and disclosure of their personal information; (ii) receive and respond to requests from California residents to access, delete and correct their personal information or to opt out of certain disclosures of their personal information; and (iii) enter into specific contractual provisions with service providers that process California resident personal information on the business’s behalf.
Our ability to compete successfully depends on a number of factors, including our ability to successfully develop new products and solutions that anticipate BEP and market requirements and changes in technology and industry standards; BEP acceptance and adoption of our products and solutions; our ability to differentiate our products from our competitors’ offerings based on performance, features, cost-effectiveness or other factors; our product capabilities to meet customer network requirements and preferences; and our success in marketing and selling our products and platform solutions.
Our ability to compete successfully depends on a number of factors, including our ability to successfully develop new products and solutions that anticipate CXP and market requirements and changes in technology and industry standards; CXP acceptance and adoption of our products and solutions; our ability to differentiate our products from our competitors’ offerings based on performance, features, cost-effectiveness or other factors; our product capabilities to meet customer network requirements and preferences; and our success in marketing and selling our products and platform solutions.
For example, in the U.S., certain states have adopted privacy and security laws and regulations which govern the privacy, processing and protection of personal information. Such laws and regulations will be subject to interpretation by various courts and other governmental authorities, thus creating potentially complex compliance issues for us and our future customers and strategic partners.
For example, in the U.S., certain states have adopted or modified privacy and security laws and regulations which govern the privacy, processing and protection of personal information. Such laws and regulations will be subject to interpretation by various courts and other governmental authorities, thus creating potentially complex compliance issues for us and our future customers and strategic partners.
If we experience disruptions with our enterprise resource planning system, we may not be able to effectively transact business or produce financial statements, which would adversely affect our business, results of operations and cash flows. We operate our Oracle enterprise resource planning, or ERP, system on Oracle’s cloud platform and our software billing application on Salesforce.com.
If we experience disruptions with our enterprise resource planning system, we may not be able to effectively transact business or produce financial statements, which would adversely affect our business, results of operations and cash flows. We operate our Oracle enterprise resource planning (“ERP”) system on Oracle’s cloud platform and our software billing application on Salesforce.com.
As a consequence, our results for a particular period may be difficult to predict, and our prior results are not necessarily indicative of results in future periods. Government-sponsored programs and U.S. federal government shutdowns could impact the timing and buying patterns of BEPs, which may cause fluctuations in our operating results.
As a consequence, our results for a particular period may be difficult to predict, and our prior results are not necessarily indicative of results in future periods. Government-sponsored programs and U.S. federal government shutdowns could impact the timing and buying patterns of CXPs, which may cause fluctuations in our operating results.
If we are unable to increase our sales to new and existing BEPs, our operating results, financial condition, cash flows and long-term growth may be negatively impacted. Our strategy includes investing in regional sales teams and select channel partners to sell to smaller regional broadband service providers.
If we are unable to increase our sales to new and existing CXPs, our operating results, financial condition, cash flows and long-term growth may be negatively impacted. Our strategy includes investing in regional sales teams and select channel partners to sell to smaller regional broadband service providers.
BEPs typically undertake a significant evaluation process, which frequently involves not only our platform and managed services, but also those of our competitors and results in a lengthy sales cycle. Sales cycles for larger customers are relatively longer and require considerably more time and expense.
CXPs typically undertake a significant evaluation process, which frequently involves not only our platform and managed services, but also those of our competitors and results in a lengthy sales cycle. Sales cycles for larger customers are relatively longer and require considerably more time and expense.
Further, security incidents could subject us to obligations under privacy and data security laws and regulations around the world (including to notify governmental authorities, regulatory bodies and/or affected individuals), lead to liability given the increasing development of such strict laws and regulations, increase the risk of litigation and governmental or regulatory 11 Table of Contents investigation, require us to notify our customers or other counterparties in relation to such incidents, damage our reputation and adversely affect our business, financial condition, operating results and cash flows.
Further, security incidents could subject us to obligations under privacy and data security laws and regulations around the world (including to notify governmental authorities, regulatory bodies and/or affected individuals), lead to liability given the increasing development of such strict laws and regulations, increase the risk of litigation and governmental or regulatory investigation, require us to notify our customers or other counterparties in relation to such incidents, damage our reputation and adversely affect our business, financial condition, operating results and cash flows.
Patent infringement claims may be asserted by patent assertion entities and non-practicing entities, or NPEs, that do not conduct business as an operating company and hold and own patents only for the purpose of aggressively pursuing royalties through infringement assertions or patent infringement litigation.
Patent infringement claims may be asserted by patent assertion entities and non-practicing entities (“NPEs”) that do not conduct business as an operating company and hold and own patents only for the purpose of aggressively pursuing royalties through infringement assertions or patent infringement litigation.
If we cannot increase sales of our new platform and services, keep pace with rapid technological developments to meet customer needs and compete with evolving standards or if the technologies we choose to invest in fail to meet customer needs or are not adopted by customers in the timeframes that we expect, our financial condition and results of operations would be adversely affected.
If we cannot increase sales of our new platform and services, keep pace with rapid technological developments to meet customer 21 Table of Contents needs and compete with evolving standards or if the technologies we choose to invest in fail to meet customer needs or are not adopted by customers in the timeframes that we expect, our financial condition and results of operations would be adversely affected.
Furthermore, the Federal Trade Commission, or FTC, and many state Attorneys General continue to enforce federal and state consumer protection laws against companies for online collection, use, dissemination and security practices that appear to be unfair or deceptive.
Furthermore, the Federal Trade Commission (“FTC”) and many state Attorneys General continue to enforce federal and state consumer protection laws against companies for online collection, use, dissemination and security practices that appear to be unfair or deceptive.
Such royalty or licensing agreements, if required, may not be available to us on acceptable terms, if at all. Furthermore, we may additionally be financially responsible for claims made against our customers, including costs of litigation and damages awarded, under indemnity obligations which could further negatively impact our results of operations.
Such royalty or licensing agreements, if required, may not be available to us on acceptable terms, if at all. Furthermore, we may additionally 16 Table of Contents be financially responsible for claims made against our customers, including costs of litigation and damages awarded, under indemnity obligations which could further negatively impact our results of operations.
We are also subject to certain anti-takeover provisions under Delaware law, which prohibits a corporation, in general, from engaging in a business combination with any 21 Table of Contents holder of 15% or more of its capital stock unless the holder has held the stock for three years or, among other things, the Board of Directors has approved the transaction.
We are also subject to certain anti-takeover provisions under Delaware law, which prohibits a corporation, in general, from engaging in a business combination with any holder of 15% or more of its capital stock unless the holder has held the stock for three years or, among other things, the Board of Directors has approved the transaction.
If we fail to accurately plan our inventory levels, which becomes more challenging as component lead times increase, we may have to increase write offs for excess or obsolete inventory, or accrue additional liabilities for component inventory held by our suppliers, both of which could have a material adverse effect on our financial condition and results of operations.
If we fail to accurately plan our inventory levels, which becomes more challenging as component lead times increase, we may have to increase write offs for excess or obsolete inventory, or 15 Table of Contents accrue additional liabilities for component inventory held by our suppliers, both of which could have a material adverse effect on our financial condition and results of operations.
Macroeconomic and Industry Risks Our business depends upon the capital spending patterns and decisions of BEPs, and any decrease or delay in capital spending by BEPs due to the timing and availability of capital and other causes would reduce our revenue and harm our business.
Macroeconomic and Industry Risks Our business depends upon the capital spending patterns and decisions of CXPs, and any decrease or delay in capital spending by CXPs due to the timing and availability of capital and other causes would reduce our revenue and harm our business.
Our dependence solely on third-party manufacturers makes us vulnerable to possible supply and capacity constraints and reduces our 9 Table of Contents control over manufacturing disruptions due to component availability, extended lead times delivery schedules, quality, manufacturing yields and increased costs. Some of these risks occur from time to time in our business.
Our dependence solely on third-party manufacturers makes us vulnerable to possible supply and capacity constraints and reduces our control over manufacturing disruptions due to component availability, extended lead times delivery schedules, quality, manufacturing yields and increased costs. Some of these risks occur from time to time in our business.
Capital spending is cyclical in our industry, sporadic among individual BEPs and can change on short notice, which gives us little visibility into changes in spending behavior in any particular quarter.
Capital spending is cyclical in our industry, sporadic among individual CXPs and can change on short notice, which gives us little visibility into changes in spending behavior in any particular quarter.
A number of factors contribute to this risk, including our ability to adequately assess a customer’s creditworthiness and financial condition, changes 13 Table of Contents in a customer’s financial condition and/or liquidity, our ability to timely collect our accounts receivable from customers, disagreements with customers on invoiced balances and economic downturns or other unanticipated events impacting a customer’s ability to pay.
A number of factors contribute to this risk, including our ability to adequately assess a customer’s creditworthiness and financial condition, changes in a customer’s financial condition and/or liquidity, our ability to timely collect our accounts receivable from customers, disagreements with customers on invoiced balances and economic downturns or other unanticipated events impacting a customer’s ability to pay.
In addition, on an ongoing basis, we expect to reposition our product and service offerings and introduce new offerings as we encounter rapidly changing BEP requirements and increasing competitive pressures.
In addition, on an ongoing basis, we expect to reposition our product and service offerings and introduce new offerings as we encounter rapidly changing CXP requirements and increasing competitive pressures.
For example, we may be forced to forego product features or platform offerings, including features and offerings we believe are critical to our strategy, accept substitute technology of lower quality or performance standards or incur higher costs, or the time- 15 Table of Contents to-market of our products or product features could be delayed.
For example, we may be forced to forego product features or platform offerings, including features and offerings we believe are critical to our strategy, accept substitute technology of lower quality or performance standards or incur higher costs, or the time-to-market of our products or product features could be delayed.
In light of the complex and evolving nature of EU, EU Member State and UK privacy and security laws, there can be no assurances that we will be successful in our efforts to comply with such laws; violations of such laws could result in regulatory investigations, fines, orders to cease/change our use of technologies and/or our processing activities, enforcement notices and assessment notices (for a compulsory audit), as well as lead to civil claims including class actions, and reputational damage.
In light of the complex and evolving nature of EU, EU Member State and UK data and security laws, there can be no assurances that we will be successful in our efforts to comply with such laws; violations of such laws could result in regulatory 23 Table of Contents investigations, fines, orders to cease/change our use of technologies and/or our processing activities, enforcement notices and assessment notices (for a compulsory audit), as well as lead to civil claims including class actions and reputational damage.
Consequently, our orders may not be given adequate priority if such manufacturers have to allocate limited capacity among competing customers. This could delay supplies of product to us or limit our ability to ramp product volumes within desired timeframes.
Consequently, our orders may not be given adequate priority if such manufacturers have to allocate limited capacity among competing customers. This could delay supplies of product to 12 Table of Contents us or limit our ability to ramp product volumes within desired timeframes.
Furthermore, if we are unable to generate sufficient cash flows to support our operational needs, we may need to cease our common stock repurchase program or seek additional sources of liquidity, including borrowings, to support our working capital needs, even if we believe we have generated sufficient cash flows to support our operational needs.
Furthermore, if we are unable to generate sufficient cash flows to support our operational needs, we may need to cease our common stock repurchase program 25 Table of Contents or seek additional sources of liquidity, including borrowings, to support our working capital needs, even if we believe we have generated sufficient cash flows to support our operational needs.
Our growth depends upon our ability to increase sales to existing and new service providers of all types and sizes, and the execution of our strategy to increase sales to BEPs involves significant risk.
Our growth depends upon our ability to increase sales to existing and new service providers of all types and sizes, and the execution of our strategy to increase sales to CXPs involves significant risk.
In addition, new security regulations, such as the EU’s Network and Information Security 2 Directive (NIS2) and its EU Member State transpositions, and the UK’s Telecommunications (Security) Act 2021 together with its implementing regulations impose further security obligations, including on electronic communications networks and services.
In addition, security regulations such as the EU’s Network and Information Security 2 Directive (“NIS2”) and its EU Member State transpositions, and the UK’s Telecommunications (Security) Act 2021 together with its implementing regulations impose further security obligations, including on electronic communications networks and services.
The risks described below are not the only 8 Table of Contents ones we face. Additional risks not currently known to us or that we currently believe are immaterial may also significantly impair our business operations. Our business could be harmed by any of these risks.
The risks described below are not the only ones we face. Additional risks not currently known to us or that we currently believe are immaterial may also significantly impair our business operations. Our business could be harmed by any of these risks.
If we are unable to deliver products timely to our customers, we may lose customer goodwill or our 10 Table of Contents customers may choose to purchase from other vendors, all of which may have a material negative impact on our revenue and operating results.
If we are unable to deliver products timely to our customers, we may lose customer goodwill or our customers may choose to purchase from other vendors, all of which may have a material negative impact on our revenue and operating results.
BEP spending is also affected by reductions in budgets, including as a result of a general economic downturn, delays in purchasing cycles, access to or timing of government funding programs or capital markets, and seasonality and delays in capital allocation decisions.
CXP spending is also affected by reductions in budgets, including as a result of a general economic downturn, delays in purchasing cycles, access to or timing of government funding programs or capital markets, government shutdowns and seasonality and delays in capital allocation decisions.
If we are not able to adequately anticipate demand, this could interrupt our product manufacturing, increase our cost of revenue associated with expedite fees and air freight and/or result in delays or cancellation of customer orders.
If we are unable to adequately anticipate demand, this could interrupt our product manufacturing, increase our cost of revenue associated with expedite fees and air freight and/or result in delays or cancellation of customer orders.
Furthermore, we receive quarterly system updates and enhancements on the cloud platform according to Oracle’s release timeline and change management processes, which if not managed properly may disrupt our business operations and delay our ability to process transactions and produce reports necessary to conduct our business.
Furthermore, we receive 17 Table of Contents quarterly system updates and enhancements on the cloud platform according to Oracle’s release timeline and change management processes, which if not managed properly may disrupt our business operations and delay our ability to process transactions and produce reports necessary to conduct our business.
We are subject to significant accounting, legal and regulatory requirements, including requirements and rules under the Sarbanes-Oxley Act, or SOX, and the Dodd-Frank Wall Street Reform and Consumer Protection Act, or Dodd-Frank, among other rules and regulations implemented by the SEC, as well as listing requirements of the New York Stock Exchange, or NYSE.
We are subject to significant accounting, legal and regulatory requirements, including requirements and rules under the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act among other rules and regulations implemented by the SEC as well as listing requirements of the New York Stock Exchange (“NYSE”).
For example, the U.S. government passed The Infrastructure Investment Jobs Act, which charged the NTIA with establishing the BEAD Program and ensuring that BEAD-funded infrastructure projects comply with the Buy America Domestic Content Procurement Preference, or Buy America Preference, of the Build America, Buy America Act, or BABA. In accordance with BABA, the U.S.
For example, the U.S. government passed The Infrastructure Investment Jobs Act, which charged the NTIA with establishing the BEAD program and ensuring that BEAD-funded infrastructure projects comply with the Buy America Domestic Content Procurement Preference (“Buy America Preference”) of the Build America, Buy America Act (“BABA”). In accordance with BABA, the U.S.
Our industry is characterized by rapid technological advancements, and if we fail to develop new products or enhancements that meet changing BEP requirements, we could experience lower sales. Our industry is characterized by rapid technological change, changing needs of BEPs, evolving industry standards and frequent introductions of new products and platform offerings.
Our industry is characterized by rapid technological advancements, and if we fail to develop new products or enhancements that meet changing CXP requirements, we could experience lower sales. Our industry is characterized by rapid technological change, changing needs of CXPs, evolving industry standards and frequent introductions of new products and platform offerings.
Further, BEPs may pursue capital investment in network technologies other than those offered by us or may choose not to adopt our products and platform solutions in their networks. Reductions in capital expenditures by BEPs would have a material negative impact on our revenue and results of operations and slow our rate of revenue growth.
Further, CXPs may pursue capital investment in network technologies other than those offered by us or may choose not to adopt our products 19 Table of Contents and platform solutions in their networks. Reductions in capital expenditures by CXPs would have a material negative impact on our revenue and results of operations and slow our rate of revenue growth.
For example, our SmartLife TM managed services include managed Wi-Fi, network security, parental controls and an ecosystem of services from partners, including Arlo and Bark.
For example, our SmartLife managed services include AI-driven managed Wi-Fi, network security, parental controls and an ecosystem of services from partners, including Arlo and Bark.
We sell to broadband service providers and BEPs, including U.S.-based independent operating companies, or IOCs, which rely significantly upon interstate and intrastate access charges and federal and state subsidies in the form of grants and other funding, such as the Federal Communications Commission’s, or FCC’s, Rural Digital Opportunity Fund, the CARES Act Enhanced Alternative Connect America Cost Model, or the American Rescue Plan Act.
We sell to broadband service providers and CXPs, including U.S.-based IOCs, which rely significantly upon interstate and intrastate access charges and federal and state subsidies in the form of grants and other funding, such as the Federal Communications Commission’s (“FCC”), Rural Digital Opportunity Fund, the CARES Act Enhanced Alternative Connect America Cost Model, or the American Rescue Plan Act.
Demand for our products depends on the magnitude and timing of capital spending by BEPs as they construct, expand, upgrade and maintain their access networks as well as BEPs’ adoption of our platform and managed services.
Demand for our products depends on the magnitude and timing of capital spending by CXPs as they construct, expand, upgrade and maintain their access networks as well as CXPs’ adoption of our platform and managed services.
Geopolitical issues, such as the Russian invasion of Ukraine, armed conflict in the Middle East, relations between the U.S. and China, tariff and trade policy changes, and increasing potential of conflict involving countries in Asia that are critical to our supply-chain operations, such as Taiwan and China, have resulted in increasing global tensions and create uncertainty for global commerce.
Geopolitical issues such as armed conflicts, relations between the U.S. and China, tariff and trade policy changes and increasing potential of conflict involving countries in Asia that are critical to our supply-chain operations, such as Taiwan and China, have resulted in increasing global tensions and create uncertainty for global commerce.
We invest significant amounts to pursue innovative technologies that we believe will be adopted by BEPs. For example, we have invested and plan to continue to invest resources in our platform offerings.
We invest significant amounts to pursue innovative technologies that we believe will be adopted by CXPs. For example, we have invested and plan to continue to invest resources in our platform offerings and agentic AI.
A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.
A control system, no matter how well designed and operated, 26 Table of Contents can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.
The General Data Protection Regulation, or EU GDPR, adopted by the European Union, or EU, and the UK General Data Protection Regulation, or UK GDPR, adopted by the United Kingdom, or UK, (the EU GDPR and UK GDPR hereinafter referred to as the GDPR) and national data protection supplementing laws in these jurisdictions impose specific duties and requirements upon companies that are subject to their provisions and collect, process or control personal data of individuals.
The General Data Protection Regulation (“EU GDPR”) adopted by the EU, and the UK General Data Protection Regulation (“UK GDPR”) adopted by the United Kingdom (“UK”) (the EU GDPR and UK GDPR hereinafter referred to as the “GDPR”) and national data protection supplementing laws in these jurisdictions impose specific duties and requirements upon companies that are subject to their provisions and collect, process or control personal data of individuals.
Factors that impact variability of our operating results include our ability to predict our revenue and reduce and control our costs, our ability to predict product functions and features desired by our customers, the impact of global economic conditions, our ability to effectively manage our global supply chain operations, our ability to effectively manage third parties upon whom we depend to conduct our business, our customers’ spending patterns and purchasing decisions, the impact of competition, customer adoption of our products, our ability to manage our legal, contractual and regulatory obligations and liabilities and other risk factors identified in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in this “Risk Factors” section.
Factors that impact variability of our operating results include our ability to predict our revenue and reduce and control our costs, our ability to predict product functions and features desired by our customers, the impact of global economic and geopolitical events and conditions, including tariffs, trade controls, inflation, government shutdowns, market instability and economic downturns, our ability to effectively manage our global supply chain operations, our ability to effectively manage third parties upon whom we depend to conduct our business, our customers’ spending patterns and purchasing decisions, the impact of competition, customer adoption of our products, our ability to manage our legal, contractual and regulatory obligations and liabilities and other risk factors identified in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in this “Risk Factors” section.
Although we have not had a greater-than-10%-of-revenue customer in the past four years, a large portion of our sales has been, and in the future may be, to a limited number of customers.
Although we have not had a greater-than-10%-of-revenue customer since 2020, a large portion of our sales has been, and in the future may be, to a limited number of customers.
However, if subscriber demand for such services does not grow as expected or declines, or our customers are unable or unwilling to invest in our platform to deploy and market these services, demand for our products may not grow at rates as we anticipate.
However, if subscriber demand for such services does not grow as expected or declines, or our customers are unable or unwilling to invest in our platform to deploy and market these services, demand for our products may not grow at rates as we anticipate, negatively impacting our revenue and long-term growth.
Repurchases we consummate could increase the volatility of the price of our common stock and could have a negative impact on our available cash balance. We have a common stock repurchase program of which $102.9 million was available as of December 31, 2024.
Repurchases we consummate could increase the volatility of the price of our common stock and could have a negative impact on our available cash balance. We have a common stock repurchase program of which $109.3 million was available as of December 31, 2025.
We rely significantly upon patent, copyright, trademark, trade secret and other IP laws, IP registration rights and agreements with our employees, customers, partners, suppliers and other parties, to establish and maintain IP rights necessary for our business and operations. U.S.
Our success and ability to compete depend on proprietary technology. We rely significantly upon patent, copyright, trademark, trade secret and other IP laws, IP registration rights and agreements with our employees, customers, partners, suppliers and other parties, to establish and maintain IP rights necessary for our business and operations. U.S.
Our products, including our platform (cloud, software and systems) and SmartLife TM managed services, are highly technical and, when deployed, are critical to the operation of many networks.
Our products, including our platform (agentic AI, cloud, software and appliances) and SmartLife managed services, are highly technical and, when deployed, are critical to the operation of many networks.
Our sales efforts often involve educating broadband service providers about the use and benefits of our platform (cloud, software and systems) and managed services, and the desirability of transforming into a BEP.
Our sales efforts often involve educating broadband service providers about the use and benefits of our platform (agentic AI, cloud, software and appliances) and managed services, and the desirability of transforming into a CXP.
Business and Operational Risks If we do not successfully execute our business strategy to increase our sales to new and existing Broadband Experience Providers, or BEPs, our operating results, financial condition, cash flows and long-term growth may be negatively impacted.
If we do not successfully execute our business strategy to increase our sales to new and existing CXPs, our operating results, financial condition, cash flows and long-term growth may be negatively impacted.
Any significant warranty or other product obligations due to reliability or quality issues arising from defects in software, faulty components or improper manufacturing methods could negatively impact our operating results and financial position due to costs associated with fixing software or hardware defects; high service and warranty expenses; high inventory obsolescence expense; delays in collecting accounts receivable; payment of liquidated damages for performance failures; and loss of customer goodwill and future sales.
Any significant warranty or other product obligations due to reliability or quality issues arising from defects in software, faulty components or improper manufacturing methods could negatively impact our operating results and financial position due to costs associated with fixing software or hardware defects; high service and warranty expenses; high inventory obsolescence expense; delays in collecting accounts receivable; payment of liquidated damages for performance failures; and loss of customer goodwill and future sales. 18 Table of Contents Our business and operations depend on proprietary technologies, and our financial performance may suffer if we cannot protect and enforce our IP rights.
If we are subject to or affected by the CCPA, or other domestic privacy and data protection laws, any liability from failure to comply with the requirements of these laws could adversely affect our financial condition.
If we are subject to or affected by the CCPA, or other domestic privacy and data protection laws, any liability from failure to comply with the requirements of these laws could adversely affect our financial condition. 22 Table of Contents In 2024, the National Security Division of the U.S.
As a result, suppliers could stop selling to us and our manufacturers at commercially reasonable prices, or at all. Any such interruption or delay may force us and our manufacturers to seek components or materials from alternative sources, which may not be available, or result in higher prices.
Any such interruption or delay may force us and our manufacturers to seek components or materials from alternative sources, which may not be available, or result in higher prices.
The FCC and some states may change such payments and subsidies, which could reduce IOC revenue. Furthermore, many IOCs use or expect to use government-supported loan programs or grants, such as U.S. Department of Agriculture’s Rural Utility Service or the U.S.
The FCC and some states may change such payments and subsidies, which could reduce IOC revenue. Furthermore, many IOCs use or expect to use government-supported loan programs or grants, such as U.S. Department of Agriculture’s Rural Utility Service or National Telecommunications and Information Administration’s (“NTIA”) Broadband Equity, Access and Deployment (“BEAD”) program loans and grants, to finance capital spending.
Many of our customers are subject to state and federal regulation of their businesses, and adoption of regulations that affect providers of broadband Internet access services could impede the penetration of our customers into certain markets.
Our customers are subject to government regulation, and changes in current or future laws or regulations that negatively impact our customers could harm our business. 24 Table of Contents Many of our customers are subject to state and federal regulation of their businesses, and adoption of regulations that affect providers of broadband Internet access services could impede the penetration of our customers into certain markets.
We have in the past discovered, and may in the future discover, areas of our internal financial and accounting controls and procedures that need 22 Table of Contents improvement, particularly as we enhance, automate and improve functionality of our processes and internal applications.
We cannot be certain that the actions we have taken to implement internal controls over financial reporting will be sufficient. We have in the past discovered, and may in the future discover, areas of our internal financial and accounting controls and procedures that need improvement, particularly as we enhance, automate and improve functionality of our processes and internal applications.
The EU GDPR and UK GDPR regulate cross-border transfers of personal data out of the European Economic Area, or the EEA, and the UK. There is currently legal complexity and uncertainty regarding international personal data transfers, and we expect this to continue.
The GDPR regulate cross-border transfers of personal data out of the European Economic Area (the “EEA”) and the UK. There is currently legal complexity and uncertainty regarding international personal data transfers, and we expect this to continue. For example, there are number of decisions and proceedings in the EU where the legality of data transfers to China is being challenged.
We face risks associated with being materially dependent upon third-party vendors; certain factors that affect our business as a result of those dependencies have and could continue to disrupt our business and adversely impact our gross margin and results of operations.
As a result, our failure to maintain high quality support and services could result in the loss of customers, which would harm our business. 11 Table of Contents We face risks associated with being materially dependent upon third-party vendors; certain factors such as component shortages that affect our business as a result of those dependencies have and could continue to disrupt our business and adversely impact our gross margin and results of operations.
Any change in export or import regulations, duties or related legislation, shift in approach to the enforcement or scope of existing regulations, or change in the countries, persons or technologies targeted by such regulations, could negatively impact our ability to sell, profitably or at all, our products to existing or potential international customers. 20 Table of Contents Regulatory and physical impacts of climate change and other natural events may affect our customers and our manufacturers, resulting in adverse effects on our operating results.
Any change in export or import regulations, duties or related legislation, shift in approach to the enforcement or scope of existing regulations, or change in the countries, persons or technologies targeted by such regulations, could negatively impact our ability to sell, profitably or at all, our products to existing or potential international customers.
Any failure of such products to meet BABA domestic content requirements would result in those products being ineligible for purchase and use by certain customers under the BEAD Program, and could result in lost sales, lost business opportunity, breach of warranty claims, and damage to our reputation and customer relationships. 16 Table of Contents Changes to the terms or administration of these programs, including uncertainty from government and administrative change, increasing focus on domestic requirements by the U.S. that may require re-assessment of compliance, potential funding limitations that impact our ability to meet program requirements or delays due to U.S. federal government shutdowns could reduce the ability of IOCs to access capital or secure funding under these programs to purchase our products and services and thus reduce our revenue opportunities.
Changes to the terms or administration of these programs, including uncertainty from government and administrative change, increasing focus on domestic requirements by the U.S. that may require re-assessment of compliance, potential funding limitations that impact our ability to meet program requirements or delays due to U.S. federal government shutdowns could reduce the ability of IOCs to access capital or secure funding under these programs to purchase our products and services and thus reduce our revenue opportunities.
If we do not successfully increase our sales through adoption of our platform, cloud and managed service offerings, our operating results, financial condition, cash flows and long-term growth may be negatively impacted. We have platform, cloud and managed service offerings that are early in their product life cycles and subject to uncertain market demand.
Business and Operational Risks If we do not successfully increase our sales through adoption of our platform, cloud and managed service offerings, our operating results, financial condition, cash flows and long-term growth may be negatively impacted.
If we overestimate our product demand, our third-party manufacturers may purchase excess components and build excess inventory, and we could be required to pay for these excess parts or products and their storage costs. For example, as of December 31, 2024, we had inventory deposits totaling $62.6 million to address excess components owned by our CMs and ODMs.
If we overestimate our product demand, our third-party manufacturers may purchase excess components and build excess inventory, and we could be required to pay for these excess parts or products and their storage costs.
We may, from time to time, adjust inventory valuations downward or end of life certain of our products in response to our assessment of our business strategy as well as consideration of demand from our customers for specific products or product lines.
From time to time, we adjust inventory valuations downward or end of life certain of our products in response to our assessment of our business strategy as well as consideration of demand from our customers for specific products or product lines. We also evaluate our supplier purchase commitments, which fluctuate based on lead-times, demand environment and perceived component availability.
Department of Commerce National Telecommunications and Information Administration’s, or NTIA’s, Broadband Equity, Access and Deployment, or BEAD, Program loans and grants, to finance capital spending. These government-supported loan programs and grants generally include conditions such as deployment criteria, domestic preference provisions and other requirements that apply to the project and selected equipment as conditions for funding.
These government-supported loan programs and grants generally include conditions such as deployment criteria, domestic preference provisions and other requirements that apply to the project and selected equipment as conditions for funding.
Further, our customers may not use our services in a manner that is compliant with applicable data privacy laws and regulations and our services may not be competitive in certain markets. We and/or our customers are also subject to evolving EU and UK privacy laws on cookies, tracking technologies, e-marketing and electronic communications.
Further, our customers may not use our services in a manner that is compliant with applicable data privacy laws and regulations and our services may not be competitive in certain markets. We may also become subject to new laws that regulate both personal and non-personal data.
Competitive pressures could result in increased pricing pressure, reduced profit margin, increased sales and marketing expenses and failure to increase, or the loss of, market share, any of which could reduce our revenue and adversely affect our financial results. 17 Table of Contents Historically, our customer base has been concentrated, and the loss of any of our key customers may adversely impact our revenue and results of operations, and any delays in payment by a key customer could negatively impact our cash flows and working capital.
Competitive pressures could result in increased pricing pressure, reduced profit margin, increased sales and marketing expenses and failure to increase, or the loss of, market share, any of which could reduce our revenue and adversely affect our financial results.
These potential physical effects may adversely affect our revenue, costs, production and delivery schedules, and cause harm to our results of operations and financial condition. Our customers are subject to government regulation, and changes in current or future laws or regulations that negatively impact our customers could harm our business.
These potential physical effects may adversely affect our revenue, costs, production and delivery schedules, and cause harm to our results of operations and financial condition.
If we invest substantial resources to expand our international operations and are unable to do so successfully and in a timely manner, our financial condition and results of operations may suffer. 12 Table of Contents We may have difficulty evolving and scaling our business and operations to meet customer and market demand, which could harm our financial results or cause us to fail to execute on our business strategies.
If we invest substantial resources to expand our international operations and are unable to do so successfully or in a timely manner, our financial condition and results of operations may suffer.
In order to grow our business, we will need to continually evolve and scale our business and operations to meet customer and market demand.
We may have difficulty evolving and scaling our business and operations to meet customer and market demand, which could harm our financial results or cause us to fail to execute on our business strategies. In order to grow our business, we will need to continually evolve and scale our business and operations to meet customer and market demand.
Being dependent upon a limited number of suppliers constrains our ability to mitigate these disruptions in our supply chain, particularly if such disruptions are prolonged. This may adversely affect our ability to obtain components and materials needed to manufacture our products at acceptable prices or at all.
This may adversely affect our ability to obtain components and materials needed to manufacture our products at acceptable prices in a timely fashion, or at all.
In addition, as part of our business operations, we collect, store, process, use and/or disclose information, including sensitive data relating to our business, our business partners and our customers, and personal information about individuals such as our employees and our customers’ subscribers, or collectively, Confidential Information.
We rely on our own and third-party hardware, software, technology infrastructure, data centers, digital networks and online sites and services for both internal and customer-facing operations that are critical to our business (collectively, “IT Systems”). 14 Table of Contents In addition, as part of our business operations, we collect, store, process, use and/or disclose information, including sensitive data relating to our business, our business partners and our customers, and personal information about individuals such as our employees and our customers’ subscribers (collectively, “Confidential Information”).
If sales expected from a specific customer for a particular quarter are not realized in that quarter or at all, we may not achieve our revenue forecasts, and our financial results would be adversely affected. 18 Table of Contents Government and Regulatory Risks Actual or perceived failure to comply with applicable data privacy and security laws, regulations and standards could impact our business, operations, and expose us to increased liability.
Such delays may result in fluctuations in our quarterly revenue. If sales expected from a specific customer for a particular quarter are not realized in that quarter or at all, we may not achieve our revenue forecasts, and our financial results would be adversely affected.
Defending a lawsuit, regardless of its merit, is costly and may divert management’s attention and adversely affect the market’s perception of us and our products.
Defending a lawsuit, regardless of its merit, is costly and may divert management’s attention and adversely affect the market’s perception of us and our products. In addition, if our business liability insurance coverage proves inadequate or future coverage is unavailable on acceptable terms or at all, our business, operating results and financial condition could be adversely impacted.
In addition, if our business liability insurance coverage proves inadequate or future coverage is unavailable on acceptable terms or at all, our business, operating results and financial condition could be adversely impacted. 14 Table of Contents If we are unable to ensure that our products interoperate properly and as required within our customers’ networks, our business will be harmed.
If we are unable to ensure that our products interoperate properly and as required within our customers’ networks, our business will be harmed.
Removed
As a result, our failure to maintain high quality support and services could result in the loss of customers, which would harm our business.
Added
Summary of Material Risks Associated With Our Business The principal risks and uncertainties affecting our business include the following: Business and Operational Risks • If we do not successfully increase our sales through adoption of our platform, cloud and managed service offerings, our operating results, financial condition, cash flows and long-term growth may be negatively impacted. • If we do not successfully execute our business strategy to increase our sales to new and existing CXPs, our operating results, financial condition, cash flows and long-term growth may be negatively impacted. • We face risks associated with being materially dependent upon third-party vendors; certain factors such as component shortages that affect our business as a result of those dependencies have and could continue to disrupt our business and adversely impact our gross margin and results of operations. • If we fail to properly develop, invest in, and manage AI Technologies used in our products and services, our business, financial condition, and results of operations could be materially adversely affected. • The imposition of new duties, tariffs, trade barriers and retaliatory countermeasures implemented by the U.S. and other governments and resulting impact on customer demand may have a material adverse effect on our business, financial condition and results of operations. • Cyberattacks or other security incidents that disrupt our or our third-party providers’ operations or compromise data, may expose us to liability, harm our reputation or otherwise adversely affect our business. • Changing market and customer requirements may adversely affect the valuation of our inventory as well as our supplier purchase commitments. • Business and operational risks associated with expanding our international operations could harm our business. • We may have difficulty evolving and scaling our business and operations to meet customer and market demand, which could harm our financial results or cause us to fail to execute on our business strategies. • Litigation and regulatory proceedings could harm our business or negatively impact our results of operations. • We have a history of fluctuations in our gross margin and operating results, which can make it difficult to predict our future performance and could cause the market price of our stock to decline. • We are exposed to customer credit risks that could adversely affect our operating results and financial condition. • If we lose any of our key personnel, or are unable to attract, train and retain qualified personnel, our ability to manage our business and continue our growth would be negatively impacted. • If we experience disruptions with our enterprise resource planning system, we may not be able to effectively transact business or produce financial statements, which would adversely affect our business, results of operations and cash flows. 9 Table of Contents Risks Related to Our Products • Our products are highly technical and may contain undetected hardware or software defects or software bugs, which could harm our reputation and adversely affect our business. • If we are unable to ensure that our products interoperate properly and as required within our customers’ networks, our business will be harmed. • Our estimates regarding warranty or product obligations are highly subjective.
Removed
For example, we have experienced disruptions in our supply of certain components that we source from suppliers in China and other Asian countries due to production disruptions, factory closures and longer lead times for components and from uncertainty around trade and tariff policies between the U.S. and China, which has caused delays in our product supply.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Committee oversees management’s implementation of our cybersecurity risk management program. The Committee receives quarterly reports from management on our cybersecurity risks. In addition, management updates the Committee, as necessary, regarding any significant cybersecurity incidents. The Committee reports to the full Board regarding its activities, including those related to cybersecurity.
Biggest changeIn 2025, the Board further delegated to the Committee oversight of AI risks. The Committee oversees management’s implementation of our AI and cybersecurity risk management program. The Committee receives quarterly reports from management on our cybersecurity risks. In addition, management updates the Committee, as necessary, regarding any significant cybersecurity incidents.
Key aspects of our cybersecurity risk management program include the following: • risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services and our broader enterprise IT environment; • a security team principally responsible for managing; (i) our cybersecurity risk assessment processes, (ii) our security controls and (iii) our response to cybersecurity incidents; • the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls and processes; • cybersecurity awareness training of our employees, incident response personnel and senior management; • a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and • a third-party risk management process for key service providers, suppliers and vendors.
Key aspects of our cybersecurity risk management program include the following: • risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services and our broader enterprise information-technology environment; • a security team principally responsible for managing; (i) our cybersecurity risk assessment processes, (ii) our security controls and (iii) our response to cybersecurity incidents; • the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls and processes; • cybersecurity awareness training of our employees, incident response personnel and senior management; • a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and • a third-party risk management process for key service providers, suppliers and vendors.
Our Chief Product Officer has significantly contributed to the Company's cybersecurity efforts through his experience in product management and development. He has been instrumental in integrating security by design and privacy by design into our products, helping to ensure that cybersecurity is a core component of our product strategy.
Our Chief Product Officer has significantly contributed to our cybersecurity efforts through his experience in product management and development. He has been instrumental in integrating security by design and privacy by design into our products, helping to ensure that cybersecurity is a core component of our product strategy.
See Item 1A “Risk Factors – Cyberattacks or other security incidents that disrupt our operations or compromise data, may expose us to liability, harm our reputation or otherwise adversely affect our business.” 23 Table of Contents Cybersecurity Governance Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the Cybersecurity Committee (the “Committee”) since its formation in 2017 oversight of business continuity, cybersecurity, privacy and other IT risks.
See Item 1A “Risk Factors – Cyberattacks or other security incidents that disrupt our operations or compromise data, may expose us to liability, harm our reputation or otherwise adversely affect our business.” Cybersecurity Governance Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the AI and Cybersecurity Committee (the “Committee”), since its formation in 2017, the oversight of business continuity, cybersecurity, privacy and other IT risks.
ITEM 1C. Cybersecurity Cybersecurity Risk Management and Strategy We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity and availability of our critical systems and information. We design and assess our program based on the National Institute of Standards and Technology Cybersecurity Framework, or NIST CSF, and the MITRE ATT&CK ® framework.
ITEM 1C. Cybersecurity Cybersecurity Risk Management and Strategy We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity and availability of our critical systems and information. We design and assess our program based on the National Institute of Standards and Technology Cybersecurity Framework (“NIST CSF”) and the MITRE ATT&CK ® framework.
Our cybersecurity management team includes our Corporate Vice President, Information Technology, who leads the operational teams responsible for enterprise security, data governance and enterprise incident response and global operations, and our Senior Vice President of Cloud and Engineering operations, who leads the operational teams responsible for product and cloud privacy and security, data governance and product security incident response.
Our cybersecurity management team also includes our Chief Information Officer, who leads the operational teams responsible for enterprise security, data governance and enterprise incident response and global operations, and our Senior Vice President of Cloud and Engineering operations, who leads the operational teams responsible for product and cloud privacy and security, data governance and product security incident response.
The full Board also periodically receives briefings from management on our cyber risk management program. Board members receive presentations on cybersecurity topics from our management team, internal security staff or external experts as part of the Board’s continuing education on topics that impact public companies.
The Committee reports to the full Board regarding its activities, including those related to cybersecurity. The full Board also periodically receives briefings from management on our cyber risk management program. Board members receive presentations on cybersecurity topics from our management team, internal security staff or external experts as part of the Board’s continuing education on topics that impact public companies.
Our Chief Commercial Operations Officer has played a pivotal role in enhancing the Company's cybersecurity frameworks across the enterprise through his experience in risk management and IT governance. He has overseen the implementation of data governance and data protection policies and has been instrumental in fostering a culture of cybersecurity awareness across the organization.
Our former Chief Commercial Operations Officer played a pivotal role in enhancing our cybersecurity frameworks across the enterprise through his experience in risk management and IT governance. He oversaw the implementation of data governance and data protection policies and was instrumental in fostering a culture of cybersecurity awareness across the organization. Our Chief Operating Officer has assumed these responsibilities.
Our Chief Commercial Operations Officer and Chief Product Officer are primarily responsible for assessing and managing our material risks from cybersecurity threats and supervise both our internal cybersecurity personnel and our retained external cybersecurity consultants.
Our Chief Operating Officer and Chief Product Officer are primarily responsible for assessing and managing our material risks from cybersecurity threats and supervise both our internal cybersecurity personnel and our retained external cybersecurity 27 Table of Contents consultants.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe are not currently a party to any legal proceedings that, if determined adversely to us, in our opinion, are currently expected to individually or in the aggregate have a material adverse effect on our business, operating results or financial condition taken as a whole. ITEM 4. Mine Safety Disclosures Not applicable. 24 Table of Contents PART II
Biggest changeWe are not currently a party to any legal proceedings that, if determined adversely to us, in our opinion, are currently expected to individually or in the aggregate have a material adverse effect on our business, operating results or financial condition taken as a whole. ITEM 4. Mine Safety Disclosures Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOur repurchase activity for the three months ended December 31, 2024 was as follows (in thousands, except per share amounts): Total Number of Shares Repurchased Average Price Paid Per Share Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs October 1 to October 31 — $ — — $ 109,865 November 1 to November 30 228 30.52 228 102,910 December 1 to December 31 — — — 102,910 228 228 Performance Graph The following graph shows a comparison of the cumulative total stockholder return on our common stock with the cumulative total returns of the NYSE Composite Index, Russell 2000 Index and the S&P 500 Communications Equipment Index.
Biggest changeOur repurchase activity for the three months ended December 31, 2025 was as follows (in thousands, except per share amounts): Total Number of Shares Repurchased Average Price Paid Per Share Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs October 1 to October 31 25 $ 59.99 25 $ 124,380 November 1 to November 30 223 55.60 223 112,015 December 1 to December 31 50 54.52 50 109,280 298 298 In January 2026, our Board of Directors authorized a $125.0 million increase to our common stock repurchase program.
The graph tracks the performance of a $100 investment in our common stock and in each of the indexes during the last five fiscal years ended December 31, 2024. Data for the Russell 2000 Index and S&P 500 Communications Equipment assume reinvestment of dividends.
The graph tracks the performance of a $100 investment in our common stock and in each of the indexes during the last five fiscal years ended December 31, 2025. Data for the Russell 2000 Index and S&P 500 Communications Equipment assume reinvestment of dividends.
Securities Authorized for Issuance under Equity Compensation Plans The information required by this item is incorporated by reference to our 2024 Annual Report to Stockholders, which includes our definitive Proxy Statement for our 2025 Annual Meeting of Stockholders.
Securities Authorized for Issuance under Equity Compensation Plans The information required by this item is incorporated by reference to our 2025 Annual Report to Stockholders, which includes our definitive Proxy Statement for our 2026 Annual Meeting of Stockholders.
Dividends We have never declared or paid a cash dividend on our common stock, and we do not currently intend to pay any cash dividends on our common stock in the foreseeable future. Recent Sales of Unregistered Securities None. Issuer Purchases of Equity Securities We maintain a common stock repurchase program.
Dividends We have never declared or paid a cash dividend on our common stock, and we do not currently intend to pay any cash dividends on our common stock in the foreseeable future. 28 Table of Contents Recent Sales of Unregistered Securities None. Issuer Purchases of Equity Securities We maintain a common stock repurchase program.
Number of Common Stockholders As of February 10, 2025, the approximate number of holders of our common stock was 1,160 (not including beneficial owners of stock held in street name).
Number of Common Stockholders As of February 9, 2026, the approximate number of holders of our common stock was 1,203 (not including beneficial owners of stock held in street name).
Stockholder returns over the indicated period are based on historical data and should not be considered indicative of future stockholder returns. 25 Table of Contents This performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of Calix, Inc. under the Securities Act of 1933, as amended.
This performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of Calix, Inc. under the Securities Act of 1933, as amended.
Added
Performance Graph The following graph shows a comparison of the cumulative total stockholder return on our common stock with the cumulative total returns of the NYSE Composite Index, Russell 2000 Index and the S&P 500 Communications Equipment Index.
Added
Stockholder returns over the indicated period are based on historical data and should not be considered indicative of future stockholder returns.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeItem 6. [Reserved] 26 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 26 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 33 Item 8. Financial Statements and Supplementary Data 35 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 61 Item 9A. Controls and Procedures 61 Item 9B.
Biggest changeItem 6. [Reserved] 29 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 30 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 36 Item 8. Financial Statements and Supplementary Data 38 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 65 Item 9A. Controls and Procedures 65 Item 9B.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

46 edited+16 added−17 removed29 unchanged
Biggest changeFinancing Activities In 2024, net cash provided by financing activities of $20.9 million consisted of the issuance of common stock related to our equity plans of $31.6 million partially offset by purchases of our common stock of $10.7 million. 2023 Compared to 2022 For a discussion of our liquidity and capital resources and our cash flow activities for the years ended December 31, 2023 and 2022, see Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 23, 2024.
Biggest changeInvesting Activities In 2025, net cash used in investing activities of $6.4 million consisted capital expenditures of $19.4 million, primarily consisting of purchases of test and computer equipment, partially offset by net maturities and sales of marketable securities of $13.0 million. 35 Table of Contents Financing Activities In 2025, net cash used in financing activities of $28.4 million consisted of purchases of our common stock of $93.6 million partially offset by the issuance of common stock related to our equity plans of $65.2 million. 2024 Compared to 2023 For a discussion of our liquidity and capital resources and our cash flow activities for the years ended December 31, 2024 and 2023, see Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 21, 2025.
If we are unable to generate sufficient cash flows or obtain other sources of liquidity, we will be forced to terminate our stock repurchase program, limit our development activities, reduce our investment in growth initiatives and institute cost-cutting measures, all of which may adversely impact our business and potential growth.
If we are unable to generate sufficient cash flows or obtain other sources of liquidity, we will be forced to limit or terminate our stock repurchase program, limit our development activities, reduce our investment in growth initiatives and/or institute cost-cutting measures, all of which may adversely impact our business and potential growth.
Our income taxes may be subject to fluctuation during the year and in future years as new information is obtained, which may affect the assumptions used to estimate the annual effective tax rate, 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, 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. 2023 Compared to 2022 For a comparison of our results of operations for the years ended December 31, 2023 and 2022, see Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 23, 2024.
Our income taxes may be subject to fluctuation during the year and in future years as new information is obtained, which may affect the assumptions used to estimate the annual effective tax rate, 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, 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. 2024 Compared to 2023 For a comparison of our results of operations for the years ended December 31, 2024 and 2023, see Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 21, 2025.
Revenue from sales of access and premises systems is recognized when control is transferred to the customer, which is generally when the products are shipped. Revenue from software platform licenses, which provides the customer with a right to use the software as it exists, is generally recognized upfront when the license is made available to the customer.
Revenue from sales of access and premises appliances is recognized when control is transferred to the customer, which is generally when the products are shipped. Revenue from software platform licenses, which provides the customer with a right to use the software as it exists, is generally recognized upfront when the license is made available to the customer.
We have approximately 1,600 active customers that have deployed passive optical, Active Ethernet or point-to-point Ethernet fiber access networks or our subscriber premise systems.
We have approximately 1,600 active customers that have deployed passive optical, Active Ethernet or point-to-point Ethernet fiber access networks or our subscriber premise appliances.
Contractual Obligations and Commitments Our principal commitments as of December 31, 2024 consisted of our contractual obligations under non-cancelable outstanding purchase obligations and operating lease obligations for office space.
Contractual Obligations and Commitments Our principal commitments as of December 31, 2025 consisted of our contractual obligations under non-cancelable outstanding purchase obligations and operating lease obligations for office space.
We base our estimates, assumptions and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances. To the extent there are material differences between these estimates and 27 Table of Contents actual results, our financial statements may be affected. We evaluate our estimates, assumptions and judgments on an ongoing basis.
We base our estimates, assumptions and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances. To the extent there are material differences between these estimates and actual results, our financial statements may be affected. We evaluate our estimates, assumptions and judgments on an ongoing basis.
Factors that have impacted our cost of revenue, or that we expect may impact cost of revenue in future periods, also include: changes in the mix of products delivered, customer location and regional mix, changes in the cost of our inventory, investments to support expansion of cloud and customer support offerings as well as our customer success organization, changes in product warranty, incurrence of retrofit costs, amortization of intangibles, support fees for silicon-related development work for our products, changes in trade policies, allowances for obligations to our suppliers and inventory write-downs.
Factors that have impacted our cost of revenue, or that we expect may impact cost of revenue in future periods, also include: changes in the mix of products delivered, customer location and regional mix, changes in the cost of our inventory, investments to support expansion of cloud and customer support offerings as well as our customer success organization, changes in product warranty, incurrence of retrofit costs, amortization of intangibles, allowances for obligations to our suppliers and inventory write-downs.
Revenue fluctuations result from many factors, including, but not limited to: increases or decreases in customer orders for our products and services, market, financial or other factors such as government stimulus that may delay or materially impact customer purchasing decisions, non-availability of products due to supply chain challenges, including component and labor shortages and increasing lead times as well as disruptions as a result of pandemics or natural disasters, contractual terms with customers that result in delayed revenue recognition and varying budget cycles and seasonal buying patterns of our customers.
Revenue fluctuations result from many factors, including, but not limited to: increases or decreases in customer orders for our products and services, global economic and geopolitical events and conditions, including tariffs, trade controls, inflation, economic downturns and market, financial or other factors such as government stimulus or shutdowns that may delay or materially impact customer purchasing decisions, non-availability of products due to supply chain challenges, including component and labor shortages and increasing lead times as well as disruptions as a result of pandemics or natural disasters, contractual terms with customers that result in delayed revenue recognition and varying budget cycles and seasonal buying patterns of our customers.
Our effective tax rate was lower than the federal statutory rate of 21% primarily due to research and development tax credits and provision to return adjustments, partially offset by the impact of stock-based compensation and uncertain tax positions.
Our effective tax rate was lower than the federal statutory rate of 21% primarily due to the impact of stock-based compensation, foreign operations, valuation allowance and uncertain tax positions, offset by research and development tax credits and provision to return adjustments.
As of December 31, 2024, we had cash, cash equivalents and marketable securities of $297.1 million, which consisted of deposits held at banks and major financial institutions and highly liquid marketable securities such as U.S. government securities and commercial paper. This includes $9.1 million of cash primarily held by our foreign subsidiaries.
As of December 31, 2025, we had cash, cash equivalents and marketable securities of $388.1 million, which consisted of deposits held at banks and major financial institutions and highly liquid marketable securities such as U.S. government securities and commercial paper. This includes $12.4 million of cash primarily held by our foreign subsidiaries.
We also evaluate our supplier purchase commitments and record a liability for excess and obsolete components consistent with the valuation of our excess and obsolete inventory and future production requirements.
We regularly monitor inventory on-hand and record write-downs for excess and obsolete inventory. We also evaluate our supplier purchase commitments and record a liability for excess and obsolete components consistent with the valuation of our excess and obsolete inventory and future production requirements.
The increase in net cash provided by operating activities during 2024 as compared to 2023 was due primarily to an increase in our net cash inflow resulting from changes in operating assets and liabilities of $70.7 million partially offset by a decrease in our net operating results after adjustment of non-cash charges of $58.6 million.
The increase in net cash provided by operating activities during 2025 as compared to 2024 was due primarily to an increase in our net operating results after adjustment of non-cash charges of $87.4 million partially offset by a decrease in our net cash inflow resulting from changes in operating assets and liabilities of $20.9 million.
See Note 11 “Revenue from Contracts with Customers” to the Consolidated Financial Statements included in this Annual Report on Form 10-K for more details on concentration of revenue for the years presented.
No customer accounted for more than 10% of our revenue for 2025, 2024 or 2023. See Note 11 “Revenue from Contracts with Customers” to the Consolidated Financial Statements included in this Annual Report on Form 10-K for more details on concentration of revenue for the years presented.
See Note 5 “Commitments and Contingencies” of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for further discussion regarding our outstanding purchase commitments related to our third-party manufacturers. 32 Table of Contents (2) Future minimum operating lease obligations in the table above primarily include payments for our office locations, which expire at various dates through 2033, including our new San Jose headquarters lease that will commence in August 2025.
See Note 5 “Commitments and Contingencies” of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for further discussion regarding our outstanding purchase commitments. (2) Future minimum operating lease obligations in the table above primarily include payments for our office locations, which expire at various dates through 2033.
We continue to maintain a valuation allowance of $30.6 million on certain U.S. federal and California state deferred tax assets that we believe are not more likely than not to be realized in future periods.
We continue to maintain a valuation allowance of $32.3 million on certain state deferred tax assets that we believe are not more likely than not to be realized in future periods.
These accounting principles require us to make certain estimates and judgments that can affect the reported amounts of assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenue, costs and expenses during the periods presented.
Critical Accounting Estimates Our financial statements are prepared in accordance with U.S. generally accepted accounting principles. These accounting principles require us to make certain estimates and judgments that can affect the reported amounts of assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenue, costs and expenses during the periods presented.
We are currently evaluating the impact that the updated standard will have on our financial statement disclosures. There have been no other accounting pronouncements or changes in accounting pronouncements that are significant or potentially significant to us.
The standard permits application of the guidance using a prospective, retrospective, or modified transition approach. We are currently evaluating the impact that the updated standard will have on our financial statement disclosures. There have been no other accounting pronouncements or changes in accounting pronouncements that are significant or potentially significant to us.
The following table sets forth our sales and marketing expenses (dollars in thousands): Years Ended December 31, 2024 vs 2023 Change 2024 2023 $ % Sales and marketing $ 217,879 $ 214,564 $ 3,315 2 % Percent of revenue 26 % 21 % Sales and marketing expenses increased by $3.3 million during 2024 compared to 2023 primarily due to increases in stock-based compensation of $3.9 million, marketing expenses of $0.8 million and travel expenses of $0.6 million.
The following table sets forth our sales and marketing expenses (dollars in thousands): Years Ended December 31, 2025 vs 2024 Change 2025 2024 $ % Sales and marketing $ 248,636 $ 217,879 $ 30,757 14 % Percent of revenue 25 % 26 % Sales and marketing expenses increased by $30.8 million during 2025 compared to 2024 primarily due to increases in personnel expenses of $20.6 million, mostly related to incentive compensation and increased headcount, stock-based compensation of $9.9 million and travel expenses of $2.3 million.
Our revenue and potential revenue growth will depend on our ability to develop, market and sell our platform and managed services to strategically aligned customers of all types such as WISPs, fiber overbuilders, cable MSOs, municipalities and electric cooperatives in the U.S. and internationally.
Our revenue and potential revenue growth will depend on, among other things, our ability to develop, market and sell our platform and managed services to strategically aligned customers of all types such as MSPs, local and competitive exchange carriers, cable MSOs, WISPs, fiber overbuilders such as municipalities, electric cooperatives, tribal communities, multiple dwelling units (“MDU”) and hospitality providers in the U.S. and internationally.
The following table presents the cash inflows and outflows by activity during 2024 and 2023 (in thousands): Years Ended December 31, 2024 2023 Net cash provided by operating activities $ 68,400 $ 56,251 Net cash used in investing activities (109,530) (6,245) Net cash provided by (used in) financing activities 20,897 (65,926) 31 Table of Contents Operating Activities Our operating activities provided cash of $68.4 million in 2024 and $56.3 million in 2023.
The following table presents the cash inflows and outflows by activity during 2025 and 2024 (in thousands): Years Ended December 31, 2025 2024 Net cash provided by operating activities $ 134,953 $ 68,400 Net cash used in investing activities (6,373) (109,530) Net cash provided by (used in) financing activities (28,434) 20,897 Operating Activities Our operating activities provided cash of $135.0 million in 2025 and $68.4 million in 2024.
This decrease was mainly due to the corresponding decrease in revenue. Gross margin increased to 54.6% during 2024 from 49.9% during 2023.
This increase was mainly due to the corresponding increase in revenue. Gross margin increased to 56.8% during 2025 from 54.6% during 2024.
Non-cash charges consisted of stock-based compensation of $70.8 million and depreciation and amortization of $19.6 million partially offset by deferred income taxes of $10.0 million and net accretion of available-for-sale securities of $5.3 million.
Non-cash charges consisted of stock-based compensation of $87.9 million, depreciation and amortization of $17.7 million and deferred income taxes of $12.9 million partially offset by net accretion of available-for-sale securities of $3.7 million.
Revenue generated in the U.S. represented 92% of revenue in 2024 and 91% in 2023. 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.
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.
We expect our investments in research and development to remain relatively flat in absolute dollars in the short term as we seek to expand the functionality and capabilities of our platform, cloud and managed services.
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 AI functionality and capabilities of our platform, cloud and managed services.
Furthermore, we maintain a common stock repurchase program of which $102.9 million was available as of December 31, 2024. Our stock repurchase program does not require us to purchase a specific number of shares and may be modified, suspended or terminated at any time.
Our stock repurchase program does not require us to purchase a specific number of shares and may be modified, suspended or terminated at any time.
The following table sets forth our research and development expenses (dollars in thousands): Years Ended December 31, 2024 vs 2023 Change 2024 2023 $ % Research and development $ 179,870 $ 177,772 $ 2,098 1 % Percent of revenue 22 % 17 % Percent of gross profit 40 % 34 % The increase in research and development expenses of $2.1 million during 2024 compared with 2023 was mainly due to increases in depreciation and amortization of $3.0 million, stock-based compensation of $2.1 million, software subscriptions of $1.9 million and personnel expenses of $1.2 million.
The following table sets forth our research and development expenses (dollars in thousands): Years Ended December 31, 2025 vs 2024 Change 2025 2024 $ % Research and development $ 190,356 $ 179,870 $ 10,486 6 % Percent of revenue 19 % 22 % Percent of gross profit 33 % 40 % The increase in research and development expenses of $10.5 million during 2025 compared with 2024 was mainly due to increases in stock-based compensation of $4.3 million, outside services of $3.7 million, depreciation and amortization of $1.9 million and prototypes and test equipment expenses of $1.7 million.
Cloud-based software subscriptions can include multi-year agreements with a fixed annual fee for a minimum committed usage level. To the extent that minimum committed usage level each year varies, we have concluded that each year represents a distinct stand-ready performance obligation and the transaction price allocated to each performance obligation is recognized as revenue ratably over each annual period.
To the extent that minimum committed usage level each year varies, we have concluded that each year represents a distinct stand-ready performance obligation and the transaction price allocated to each performance obligation is recognized as revenue ratably over each annual period. 31 Table of Contents Our contracts generally include multiple performance obligations.
As of December 31, 2024, our liability for taxes that would be payable because of repatriation of undistributed earnings of our foreign subsidiaries to the U.S. was not significant and limited to withholding taxes considering our existing net operating loss carryovers.
As of December 31, 2025, our liability for taxes that would be payable because of repatriation of undistributed earnings of our foreign subsidiaries was limited to foreign withholding taxes as the future distribution is not expected to be taxable in the U.S.
These increases were partially offset by decreases of outside services of $1.2 million and personnel expenses of $0.7 million. During 2024, sales and marketing expenses as a percentage of revenue increased to 26% from 21% due to lower revenue compared to 2023.
These increases were partially offset by a decrease in marketing expenses of $1.7 million. During 2025, sales and marketing expenses as a percentage of revenue decreased to 25% from 26% due to higher revenue compared to 2024.
The following table sets forth our general and administrative expenses (dollars in thousands): Years Ended December 31, 2024 vs 2023 Change 2024 2023 $ % General and administrative $ 98,879 $ 100,395 $ (1,516) (2) % Percent of revenue 12 % 10 % The decrease in general and administrative expenses of $1.5 million in 2024 compared to 2023 was mainly due to a decrease in legal costs due to a settlement in 2023 of $3.3 million and lower outside services expenses of $2.9 million.
The following table sets forth our general and administrative expenses (dollars in thousands): Years Ended December 31, 2025 vs 2024 Change 2025 2024 $ % General and administrative $ 108,334 $ 98,879 $ 9,455 10 % Percent of revenue 11 % 12 % The increase in general and administrative expenses of $9.5 million in 2025 compared to 2024 was mainly due to increases in personnel expenses of $6.1 million and stock-based compensation of $2.9 million.
The updated standard is effective for us beginning 28 Table of Contents with its 2025 annual reporting period. Early adoption is permitted. We are currently evaluating the impact that the updated standard will have on our financial statement disclosures.
The updated standard is effective for our annual periods beginning in 2027 and interim periods beginning in the first quarter of 2028. Early adoption is permitted. We are currently evaluating the impact that the updated standard will have on our financial statement disclosures.
Income Taxes The following table sets forth our income taxes (dollars in thousands): Years Ended December 31, 2024 vs 2023 Change 2024 2023 $ % Income taxes $ (1,899) $ 5,432 $ (7,331) (135) % Effective tax rate 6 % 16 % During 2024, our current tax expense was $8.1 million, and our deferred tax benefit was $10.0 million.
Income Tax (Benefit) The following table sets forth our income tax (benefit) (dollars in thousands): Years Ended December 31, 2025 vs 2024 Change 2025 2024 $ % Income tax (benefit) $ 16,284 $ (1,899) $ 18,183 958 % Effective tax rate 48 % 6 % 34 Table of Contents During 2025, our current tax expense was $3.4 million, and our deferred tax expense was $12.9 million.
Our effective tax rate was lower than the federal statutory rate of 21% primarily due to the impact of stock-based compensation, foreign operations, valuation allowance and uncertain tax positions, offset by research and development tax credits and provision to return adjustments. During 2023, our current tax expense was $6.1 million, and our deferred tax benefit was $0.7 million.
Our effective tax rate was higher than the federal statutory rate of 21% primarily due to the impact of non-deductible stock-based compensation offset by the favorable impact of U.S. federal research tax credits. During 2024, our current tax expense was $8.1 million, and our deferred tax benefit was $10.0 million.
Observable prices of a product or service when we sell them separately based on stratification by classes of customers and products are the best estimate of stand-alone selling prices. However, when stand-alone selling prices are not directly observable, they are estimated, and judgment is required in their determination.
For such arrangements, we allocate the contract’s transaction price to each performance obligation using the relative stand-alone selling price of each distinct good or service in the contract. Observable prices of a product or service when we sell them separately based on stratification by classes of customers and products are the best estimate of stand-alone selling prices.
We expect our investments in sales and marketing will be relatively flat in absolute dollars in the near term. Research and Development Expenses Research and development expenses include personnel costs, outside contractor and consulting services, depreciation on lab equipment, costs of prototypes and overhead allocations.
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. 33 Table of Contents Research and Development Expenses Research and development expenses include personnel costs, outside contractor and consulting services, depreciation on lab equipment, costs of prototypes and overhead allocations.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures, which requires additional disclosure of certain costs and expenses within the notes to the financial statements. The updated standard is effective for our annual periods beginning in 2027 and interim periods beginning in the first quarter of 2028. Early adoption is permitted.
Recent Accounting Pronouncements Not Yet Adopted In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures , which requires additional disclosure of certain costs and expenses within the notes to the financial statements.
Gross Profit and Gross Margin The following table sets forth our gross profit and gross margin (dollars in thousands): Years Ended December 31, 2024 vs 2023 Change 2024 2023 $ % Gross profit $ 453,594 $ 518,316 $ (64,722) (12) % Gross margin 54.6 % 49.9 % Gross profit decreased by $64.7 million to $453.6 million during 2024 from $518.3 million during 2023.
Gross Profit and Gross Margin The following table sets forth our gross profit and gross margin (dollars in thousands): Years Ended December 31, 2025 vs 2024 Change 2025 2024 $ % Gross profit: Appliance $ 458,561 $ 376,305 $ 82,256 22 % Software and service 109,755 77,289 32,466 42 % $ 568,316 $ 453,594 $ 114,722 25 % Gross margin: Appliance 55.5 % 54.2 % Software and service 62.9 % 56.3 % 56.8 % 54.6 % Gross profit increased by $114.7 million to $568.3 million during 2025 from $453.6 million during 2024.
In 2024, cash inflows from changes in operating assets and liabilities primarily consisted of decreases in accounts receivable of $46.7 million and inventory of $30.3 million, both due to lower revenue, and a decrease in prepaid expenses and other assets of $11.2 million.
In 2025, cash inflows from changes in operating assets and liabilities primarily consisted of an increase in accounts payable of $21.5 million due to increased inventory purchases, a decrease in prepaid expenses and other assets of $17.3 million due to a reduction in our inventory deposits, an increase in accrued liabilities of $11.8 million mainly due to incentive compensation related accruals and an increase in deferred revenue of $2.6 million.
This enables BEPs to grow their businesses through increased 26 Table of Contents subscriber acquisition, loyalty and revenue and to reduce their operating costs, while creating value for their members, investors and the communities they serve. We market our platform and managed services to communication service providers globally through our direct sales force as well as select resellers.
This focus on subscriber experience allows CXPs to expand their brand through increased subscriber acquisition, loyalty and revenue while reducing their operating costs. We market our platform, cloud and managed services to CSPs globally through our direct sales force as well as select resellers. Our customers range from smaller, regional service providers to some of the world’s largest service providers.
In addition, from time to time, we procure component inventory primarily as a result of manufacturing discontinuation of critical components by suppliers or a change in suppliers.
In addition, from time to time, we procure component inventory primarily due to the discontinuation of critical components by suppliers, a change in suppliers or in connection with our supply assurance plans. This component inventory is then consigned back to our suppliers to be consumed on future finished good builds.
The following table summarizes our contractual obligations as of December 31, 2024 (in thousands): Payments Due by Period Total Less Than 1 Year 1-3 Years 3-5 Years More Than 5 Years Non-cancelable purchase commitments (1) $ 248,739 $ 129,607 $ 81,709 $ 35,951 $ 1,472 Operating lease obligations (2) 17,374 4,528 5,152 3,544 4,150 $ 266,113 $ 134,135 $ 86,861 $ 39,495 $ 5,622 (1) Represents outstanding purchase commitments to be delivered by our third-party manufacturers or other vendors.
The following table summarizes our contractual obligations as of December 31, 2025 (in thousands): Payments Due by Period Total Less Than 1 Year 1-3 Years 3-5 Years More Than 5 Years Non-cancelable purchase commitments (1) $ 317,751 $ 217,460 $ 83,867 $ 16,424 $ — Operating lease obligations (2) 18,382 3,610 6,200 4,956 3,616 $ 336,133 $ 221,070 $ 90,067 $ 21,380 $ 3,616 (1) Represents outstanding purchase commitments to be delivered by our third-party manufacturers and other vendors such as enterprise software vendors.
These decreases were partially offset by increases in stock-based compensation of $2.0 million and personnel expenses of $1.6 million. During 2024, general and administrative expenses as a percentage of revenue increased to 12% from 10% due to lower revenue compared to 2023.
These increases were partially offset by decreases in facility expenses of $1.2 million. During 2025, research and development expenses as a percentage of revenue decreased to 19% from 22% due to the increase in revenue, and research and development expenses as a percentage of gross profit decreased to 33% from 40% due to the increase in gross profit.
We expect our general and administrative investments to be fairly constant in absolute dollars in the near term and potentially decline as a percentage of revenue over time in relation to anticipated longer-term increased revenue. 30 Table of Contents Interest Income and Other Expense, Net The following table sets forth our interest income and other expense, net (dollars in thousands): Years Ended December 31, 2024 vs 2023 Change 2024 2023 $ % Interest income and other expense, net $ 11,388 $ 9,172 $ 2,216 24 % Interest income and other expense, net increased by $2.2 million in 2024 compared with 2023 mainly due to a higher rate of interest earned on our cash, cash equivalents and marketable securities as well as a larger cash and marketable securities balance.
Interest Income and Other Expense, Net The following table sets forth our interest income and other expense, net (dollars in thousands): Years Ended December 31, 2025 vs 2024 Change 2025 2024 $ % Interest income and other expense, net $ 13,178 $ 11,388 $ 1,790 16 % Interest income and other expense, net increased by $1.8 million in 2025 compared with 2024 mainly due to a larger average cash balance offset partially by a decrease in interest rates.
Additionally, we continued to experience growth in our licenses, cloud and managed services, which became a greater percentage of our total revenue since the overall decline in revenue was related to our appliance revenue. 29 Table of Contents Operating Expenses Sales and Marketing Expenses Sales and marketing expenses consist of personnel costs, employee sales commissions, marketing programs and events, software tools and travel-related expenses.
Operating Expenses Sales and Marketing Expenses Sales and marketing expenses consist of personnel costs, employee sales commissions, marketing programs and events, software tools and travel-related expenses.
Results of Operations for Years Ended December 31, 2024 and 2023 Revenue The following table sets forth our revenue by customer size (dollars in thousands): Years Ended December 31, 2024 vs 2023 Change 2024 2023 $ % Large $ 50,776 $ 82,627 $ (31,851) (39) % Medium 123,977 166,820 (42,843) (26) % Small 656,765 790,146 (133,381) (17) % $ 831,518 $ 1,039,593 $ (208,075) (20) % Our revenue decreased by $208.1 million, or 20%, during 2024 compared with 2023.
Results of Operations for Years Ended December 31, 2025 and 2024 Revenue The following table sets forth our revenue (dollars in thousands): Years Ended December 31, 2025 vs 2024 Change 2025 2024 $ % Revenue: Appliance $ 825,649 $ 694,147 $ 131,502 19 % Software and service 174,361 137,371 36,990 27 % $ 1,000,010 $ 831,518 $ 168,492 20 % Our revenue increased by $168.5 million, or 20%, during 2025 compared with 2024.
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Overview We develop, market and sell our appliance-based platform, cloud and managed services that enable service providers of all types and sizes to innovate and transform their businesses. For our customers to successfully transform their businesses into the innovative BEPs of the future, they require actionable data for critical business functions such as network operations, customer support and marketing.
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Overview We develop, market and sell platform, cloud and managed services, which are powered by agentic AI, that enable CSPs providers of all types and sizes to innovate and transform their businesses to focus on delivering outstanding subscriber experiences and become CXPs.
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However, this data is often trapped in disparate systems or departmental silos. Our platform, which includes Calix Cloud, Revenue EDGE and Intelligent Access EDGE, gathers, analyzes and applies machine learning to deliver real-time insights seamlessly to each key business function.
Added
The platform combines the Calix Agent Workforce™ with intelligent appliances, software, cloud and fully integrated SmartLife™ managed services to enable simplified business models that acquire, retain and grow subscribers and revenue. Calix Customer Success guides service providers through every stage of their transformation journey with expertise across technology, business and market insights.
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Our customers utilize these insights to simplify network operations, marketing and customer support and innovate for their customers, business and municipal subscribers by delivering a growing portfolio of SmartLife™ managed services and experiences.
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Our partner community extends innovation so customers can grow their businesses across markets at scale.
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Our customers range from smaller, regional service providers to some of the world’s largest service providers. Customers are defined into small (less than 250,000 subscribers), medium (250,000 to 2.5 million subscribers) or large (greater than 2.5 million subscribers).
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With deep broadband expertise and an end-to-end approach from the datacenters’ access edge to every residential, business and municipal subscriber location, Calix enables any service provider to simplify operations, engagement, and service; innovate for their subscribers; and grow value for members, investors, and the communities they serve.
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In recent years, as our revenue from our large customers decreased, we have experienced less year-end volatility due to capital budgetary spending or freezing. This, combined with an increase in recurring revenue, has resulted in smaller seasonal fluctuations, and we expect this trend to continue.
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Factors that we expect may impact our cost of revenue in future periods include the 30 Table of Contents same factors in the prior quarter, changes in trade policies and the transition from DDR4 to DDR5 memory. Regarding trade policies, in April 2025, the U.S.
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Critical Accounting Policies and Estimates Our financial statements are prepared in accordance with U.S. generally accepted accounting principles.
Added
President signed an executive order increasing tariffs on imports from numerous countries, including China and other Asian countries where our sole-source or limited-source suppliers are located. Currently, the majority of our finished goods are exempt from tariffs. For imported components for domestic manufacturing and certain finished goods, these actions increased our cost of revenue.
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Our contracts generally include multiple performance obligations. For such arrangements, we allocate the contract’s transaction price to each performance obligation using the relative stand-alone selling price of each distinct good or service in the contract.
Added
We continue to evaluate the actions we may be able to take to mitigate such costs as we monitor and navigate this challenging and dynamic operating environment. Regarding the DDR4 to DDR5 transition, the reduction in manufacturing capacity of DDR4 memory has resulted in increased DDR4 memory prices and will increase the cost of our products.
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Furthermore, as a result of the global pandemic-induced supply chain challenges and supply assurance plans, we have purchased, and may continue to purchase, excess components from our suppliers and consign components back to our suppliers to be consumed on future finished good builds. We regularly monitor inventory on-hand and record write-downs for excess and obsolete inventory.
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Cloud-based software subscriptions can include multi-year agreements with a fixed annual fee for a minimum committed usage level.
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Recent Accounting Pronouncements Not Yet Adopted In December 2023, the FASB issued ASU No. 2023-09, Income Taxes, which prescribes standardized categories and disaggregation of information in the reconciliation of provision for income taxes, requires disclosure of disaggregated income taxes paid and modifies other income tax-related disclosure requirements.
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However, when stand-alone selling prices are not directly observable, they are estimated, and judgment is required in their determination.
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The decrease in revenue in the large- and medium-customer segment was primarily due to a small set of significant customers that slowed purchases while we believe they reevaluated their investment priorities.
Added
In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software , which clarifies and modernizes the accounting for internal-use software. ASU No. 2025-06 is effective for us in the first quarter of 2028, with early adoption permitted.
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The decrease in revenue in the small-customer segment was primarily due to what we believe were delayed purchasing decisions of our appliances as our customers evaluated and prepared for various government stimulus programs and customers adjusting their purchases due to our shortened lead times. Our revenue is principally derived in the U.S.
Added
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.
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The decrease in international revenue for 2024, as compared to 2023, was mainly due to lower shipments to Europe and to a lesser extent the Americas outside the U.S. No customer accounted for more than 10% of our revenue for 2024, 2023 or 2022.
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Our software is sold on a per-subscriber basis. CXPs use 32 Table of Contents 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. Our revenue is principally derived in the U.S., which represented 93% of revenue in 2025 and 92% in 2024.
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The increase in gross margin of 470 basis points, compared to the corresponding period in 2023, was primarily related to a charge of $28.7 million that we recorded in the fourth quarter of 2023 as we wrote down obsolete inventory and accrued a liability for components at suppliers primarily associated with our legacy product family that existed before our shift to an all-platform model.
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The increase in gross margin of 220 basis points, compared to the corresponding period in 2024, was primarily related to the continued adoption of our platform, cloud and managed services by new broadband service providers and our CXP customers winning new subscribers.
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Furthermore, there was a mix shift of hardware sales towards small customers, which generally have higher gross margins, from large- and medium-sized customers.
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During 2025, general and administrative expenses as a percentage of revenue decreased to 11% from 12% due to higher revenue compared to 2024. We expect our general and administrative investments to increase in absolute dollars but decline as a percentage of revenue.
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These increases were partially offset by decreases in prototypes and test equipment expenses of $3.7 million and outside services of $3.5 million as we transition projects from consultants to our own employees. During 2024, research and development expenses as a percentage of revenue increased to 22% from 17% due to lower revenue compared to 2023.
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These changes were partially offset by increases in inventory of $31.0 million and accounts receivable of $20.0 million to support increased revenue.
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These changes were partially offset by a decrease in accrued liabilities of $36.0 million, a decrease in accounts payable of $15.1 million due to the lower inventory purchases and a decrease in deferred revenue of $13.9 million due to a change in billing practices towards monthly versus annual.
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Furthermore, we have a common stock repurchase program which had $109.3 million available as of December 31, 2025. In January 2026, our Board of Directors authorized a $125.0 million increase to this program. In 2026 to date, we repurchased $148.7 million of our common stock.
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Investing Activities In 2024, net cash used in investing activities of $109.5 million consisted of net purchases of marketable securities of $91.4 million and capital expenditures of $18.1 million, primarily consisting of purchases of test and computer equipment.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

11 edited+0 added−0 removed5 unchanged
Biggest changeEconomic Exposure The direct effect of foreign currency fluctuations on our sales and expenses has not been material because our sales and expenses are primarily denominated in U.S. dollars, or USD. However, we are indirectly exposed to changes in foreign currency exchange rates to the extent of our use of foreign CMs whom we pay in USD.
Biggest changeForeign Currency Exchange Risk Our primary foreign currency exposures are described below. 36 Table of Contents Economic Exposure The direct effect of foreign currency fluctuations on our sales and expenses has not been material because our sales and expenses are primarily denominated in U.S. dollars, or USD.
Our operating expenses are incurred primarily in the U.S. and Canada (Canadian Dollar, or CAD), in China associated with our research and development operations that are maintained there, in India for our center of excellence and in the United Kingdom for our international sales and marketing activities.
Our operating expenses are incurred primarily in the U.S. and Canada (Canadian Dollar, or CAD), in China associated with our research and development operations that are maintained there, in India for our center of excellence and in the United Kingdom and Ireland for our international sales and marketing activities.
Foreign exchange rate fluctuations may also adversely impact our financial position as the assets and liabilities of our foreign operations are translated into USD in preparing our Consolidated Balance Sheets. The effect of foreign exchange rate fluctuations on our consolidated financial position for the year ended December 31, 2024 was a net translation loss of $0.1 million.
Foreign exchange rate fluctuations may also adversely impact our financial position as the assets and liabilities of our foreign operations are translated into USD in preparing our Consolidated Balance Sheets. The effect of foreign exchange rate fluctuations on our consolidated financial position for the year ended December 31, 2025 was a net translation loss of $0.1 million.
We use foreign currency forward contracts to mitigate variability in gains and losses generated from the re-measurement of certain assets denominated in foreign currencies. These foreign exchange forward contracts typically have maturities of approximately one to two months. As of December 31, 2024, we had no forward contracts outstanding.
We use foreign currency forward contracts to mitigate variability in gains and losses generated from the re-measurement of certain assets denominated in foreign currencies. These foreign exchange forward contracts typically have maturities of approximately one to two months. As of December 31, 2025, we had no forward contracts outstanding.
We are directly exposed to changes in foreign exchange rates to the extent such changes affect our expenses related to our foreign assets and liabilities with our subsidiaries in China, India and the United Kingdom, whose functional currencies are Chinese Renminbi, or RMB, Indian Rupee, or INR, and British Pounds Sterling, or GBP.
We are directly exposed to changes in foreign exchange rates to the extent such changes affect our expenses related to our foreign assets and liabilities with our subsidiaries in China, India, the United Kingdom and Ireland, whose functional currencies are Chinese Renminbi, or RMB, Indian Rupee, or INR, British Pounds Sterling, or GBP, and Euro, or EUR.
This loss is recognized as an adjustment to stockholders’ equity through “Accumulated other comprehensive income (loss).” 33 Table of Contents Transaction Exposure We have certain assets and liabilities, primarily accounts receivable and accounts payable (including inter-company transactions) that are denominated in currencies other than the relevant entity’s functional currency.
This loss is recognized as an adjustment to stockholders’ equity through “Accumulated other comprehensive income (loss).” Transaction Exposure We have certain assets and liabilities, primarily accounts receivable and accounts payable (including inter-company transactions) that are denominated in currencies other than the relevant entity’s functional currency.
As of December 31, 2024, we had cash, cash equivalents and marketable securities of $297.1 million, which was held primarily in cash, money market funds and highly liquid marketable securities such as U.S. government securities, corporate debt and commercial paper.
As of December 31, 2025, we had cash, cash equivalents and marketable securities of $388.1 million, which was held primarily in cash, money market funds and highly liquid marketable securities such as U.S. government securities, corporate debt and commercial paper.
Transaction gains and losses on these foreign currency denominated assets and liabilities are recognized each period within “Other expense, net” in our Consolidated Statements of Comprehensive Income (Loss). During the year ended December 31, 2024, the net loss we recognized related to these foreign currency denominated assets and liabilities was approximately $0.7 million. 34 Table of Contents
Transaction gains and losses on these foreign currency denominated assets and liabilities are recognized each period within “Other expense, net” in our Consolidated Statements of Comprehensive Income (Loss). During the year ended December 31, 2025, the net loss we recognized related to these foreign currency denominated assets and liabilities was approximately $0.4 million. 37 Table of Contents
The percentages of our operating expenses denominated in the following currencies for the indicated fiscal years were as follows: Years Ended December 31, 2024 2023 2022 USD 84 % 86 % 88 % RMB 6 6 6 INR 4 3 1 CAD 4 4 3 GBP 2 1 2 100 % 100 % 100 % If USD had appreciated or depreciated by 10%, relative to RMB, INR, CAD and GBP our operating expenses for 2024 would have decreased or increased by approximately $7.8 million, or approximately 2%.
The percentages of our operating expenses denominated in the following currencies for the indicated fiscal years were as follows: Years Ended December 31, 2025 2024 2023 USD 84 % 84 % 86 % RMB 6 6 6 INR 4 4 3 CAD 4 4 4 GBP 1 2 1 EUR 1 — — 100 % 100 % 100 % If USD had appreciated or depreciated by 10%, relative to RMB, INR, CAD, GBP and EUR our operating expenses for 2025 would have decreased or increased by approximately $9.0 million, or approximately 2%.
Due to the nature of these money market funds and highly liquid marketable securities, we believe that we do not have any material exposure to changes in the fair value of our cash equivalents and marketable securities because of changes in interest rates. Foreign Currency Exchange Risk Our primary foreign currency exposures are described below.
Due to the nature of these money market funds and highly liquid marketable securities, we believe that we do not have any material exposure to changes in the fair value of our cash equivalents and marketable securities because of changes in interest rates.
Increases in the local currency rates of these vendors in relation to USD could cause an increase in the price of products that we purchase.
However, we are indirectly exposed to changes in foreign currency exchange rates to the extent of our use of foreign CMs whom we pay in USD. Increases in the local currency rates of these vendors in relation to USD could cause an increase in the price of products that we purchase.

Other CALX 10-K year-over-year comparisons