August 2016 1
This presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements relate to future events and expectations and involve known and unknown risks and uncertainties. Examples of forward-looking statements include, but are not limited to, statements about our development of new products and product features; our anticipated growth and growth drivers; our future financial condition and results of operations; our future business, operational and financial performance; and the success and/or market adoption of our products and solutions. We have based these forward-looking statements on our current expectations, assumptions and projections. Our actual results or actions may differ materially from those projected in forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and factors that could cause results to differ materially as described in our filings with the Securities and Exchange Commission, including our annual report on Form 10-K and quarterly reports on Form 10-Q. Except as may be required by law, Calix, Inc. undertakes no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise. 2
1. Calix at a Glance 2. Value Shift from Hardware to Software 3. The Access Market Opportunity 4. Financials Update 5. Appendix 3
Calix at a Glance 4
Serving over 1,200 customers in more than 70 countries Customer Mix - 2015 12% 22% 66% Tier 1 Tier 2/3 International 2010 2011 2012 2014 2015 IPO on NYSE Occam Ericsson fiber Launched Open Introduced AXOS • • • • • access products acquisition Link Cable platform acquisition EMEA and Introduced Launched G.fast and • • • Australia Ericsson global GigaCenter NG-PON2 products • expansion reseller agreement Expanded • GigaCenter platform 5
Data Center Outside Plant Subscriber Edge Broadband Success-based Pay- Technology & Aggregation as-you-grow Service Optimization Architecture Optimization E5-48 E3-48C GigaFamily E7-2 E7-20 716E E3-8G E5-216F 6
Value Shift from Hardware to Software 7
The World’s Most Advanced Operating System for Access Networks 8
Typical NOS Architecture Native Application enhancements require � Apps frequent base code changes No formalized programming interfaces � Services (APIs) Stacks Private/Proprietary kernel Extension � Large diverse systems with � Spaghetti opposite needs OS Stateless modules � No object model � Deep integration with ASIC/Silicon � Accelerating rate of change 9
Accelerating On-box Compass/OSS/IT rate of change Integration Off-box NETCONF / REST SNMP CLI OF Config YANG Applications Platform Performance QoS Manager Configuration Diagnostics Syslog Monitoring and Upgrade MODULES OAM Timing Layer 3 Protocols Host Services Open Flow Services Topology & Multicast Traffic Multi-Service Discovery Layer 2 Protocols Modules Protocols Management Protocols Protocols SERVICE ABSTRACTION LAYER/TRANSPARENT MOPS AXOS Pristine Infrastructure base Structured like a � HARDWARE ABSTRACTION LAYER gated disaggregated model OS Formalized programming � Merchant Silicon / New Technology interfaces (API) AXOS isolated from physical � layer 10
FAST. Time to Revenue Speed of New Features. Individual software components are containerized which simplifies adds /deletes /changes and � eliminates the need to constantly re-test the entire OS, thus maximizing reuse, while leveraging industry standards and open source software Speed of New Products. The unique hardware and software abstraction layers (HAL / SAL) preserve software � independence from the underlying hardware and allow rapid development for any new access technology ALWAYS ON. Resilient Eliminates maintenance windows through the live upgrade functionality � Minimizes downtime using self-diagnosis, self-healing and process auto-restart � Provides unprecedented visibility into application performance via monitoring and streaming data off the systems to feed � third-party or open source monitoring tools SIMPLE. Operational ease and flexibility Plugs into any open standard orchestration and management solution because it supports dynamic “state” manipulation � through standard, open interfaces Portable across the network with common, stable field deployed components � Rapid delivery of new services, superior customer experience and unparalleled reliability 1 1
vs. Access Network Access Network Data Center Data Center Controlled environment Partially to fully exposed environments Short lifecycle / Easy to replace Long lifecycle / Difficult to replace 12
The Access Market Opportunity 13
Source: Infonetics, Morgan Stanley Research, UBS Research, Barclays Research, Company estimates 14
10 percent of all Americans (34 million people) lack access to 25 • Mbps/3 Mbps service Wide disparity between urban and rural subscribers • 4 percent of urban Americans lack access to 25Mbps/3Mbps service • 39 percent of rural Americans lack access to 25 Mbps/3 Mbps service • US broadband access ranked 16 th out of 34 countries • Universal Service Fund transitioned to Connect America Fund to • accelerate broadband penetration Source: FCC Broadband in America (January 2015) 15
Source: Morgan Stanley Research, Barclays Research, Nielsen Global Digital Landscape Report March 2015, Nielsen Total Audience 4Q14 Report, Comscore 16
Transparent quality of Unified Access experience Bandwidth on 5G / Unmatched G.fast A2 demand WiFi FTTH subscriber NGPON2 experience Community G.hn DOCSIS 3.1 Wi-Fi XGS-PON Remote OLT Gigabit HotSpot 2.0 G.fast A1 experience CABLE WIRELESS FIBER COPPER Wi-Fi 4x4 XGPON-1 CCAP VDSL2 EPON DOCSIS 3.0 Unlicensed Spectrum GPON 17
10G XGS/NG-PON2 10000 … Gigabit FTTH DOCSIS 3.1 10G PON DOCSIS 3.0 Gigabit GPON (initial) XGS/NG-PON2 24 Bonded 18
Lower Operating Costs Estimated Operating Expense Savings High Customer Take Rates Source: RVA LLC: North American FTTH Accelerates, (Q4 2014), RVA LLC North America FTTH Progress and Impact 2015 (June 2015), Google Fiber Kansas City, Bernstein Proprietary Census. Survey conducted by Haynes and Company (May 2014) 19
Cincinnati Bell continues to see benefits from fiber rollout Source: Cincinnati Bell (September 2014) 20
Electronics represent ~15-25% of the total capex cost per unit served in a fiber deployment after initial build costs 50% Aerial/50% MDU 50% Aerial/0% MDU 100% Aerial/20% MDU 100% Aerial/0% MDU 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Non-Electronics/Sub Electronics/Sub Source: Suburban FTTP Network Scenarios, Telecom & Networking Equipment, The FTTP Renaissance, Implications for Vendors – Jefferies Group LLC May 6, 2015 21
Calix is a leader in G.fast technology as the first MDU • company in the world to publicly demonstrate a true gigabit experience via bonded G.fast Riser over copper at Broadband World Forum 2015 with speeds up to with 1.5 Gb/s at 250m G.fast solutions are ideally suited for short • loops < 500 m and speeds from 150Mb/s to >1 Gb/s Per U.S. Census data there are over 34 million • multi-tenant housing units in the U.S. (per 2013 ACS) with an estimated more than 50% of these units built before 1980 Aged residential and commercial units are • characterized by difficulties in riser access and restricted building access G.fast provides fiber-like broadband speeds • when fiber is not available G.fast GPON/GE 22
Financials 23
($ in millions, except per share amounts) Actual Guidance Revenues $107.4 $104.0-$108.0 Non-GAAP gross margin 47.5% 46%-47% Non-GAAP operating expenses $53.0* $52.0-$53.0** Non-GAAP EPS – excluding Occam litigation $0.02 ($0.04) – $0.00 Non-GAAP EPS – including Occam litigation ($0.04) ($0.09) – ($0.05) Cash flow from operations $0.1 Negative * Includes approximately $2.8M of Occam litigation-related expenses ** Included approximately $2.4M of Occam litigation-related expenses Please refer to the reconciliations of Non-GAAP to GAAP financial measures in the appendix and on the Investor Relations section of our website 24
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