Calix’s platform strategy gained steam in Q4 2022, as the vendor added 26 new broadband service provider customers quarter and increased adoption of its managed services offerings by 38% year on year.
The company has long been working to create a portfolio of cloud and software products, leading with its Intelligent Access Edge platform. Over time, it has added additional edge options as well as Calix Cloud and a growing suite of managed services. As of the end of Q4, there were 950 operators using one or both of Calix’s Revenue Edge and Intelligent Access Edge products, a figure up from 789 in Q4 2021. Its cloud portfolio wasn’t far behind, growing adoption from 747 operators to 844.
Managed services, however, still has some catching up to do, with just 293 service providers taking one or more of its offerings at the end of the quarter. Executives said on an earnings call the plan is to rapidly reel more in with a “land and expand” strategy. That is, they plan to “land” operators with their edge offerings, help them with digital transformation using the cloud and then “expand” into managed services.
Calix executives said the strategy is already resonating for one key reason: operators are realizing that faster speeds alone won’t cut it in an increasingly competitive broadband landscape.
“The legacy provider is faced with the growing reality that speed as the go-to-market strategy will not succeed in the long-term as most consumers simply do not understand broadband speed,” CEO Michael Weening stated. “In markets with more than one provider, a speed only strategy will result in the commoditization of their product, which always starts a price eroding battle with no path to revenue or subscriber gains.”
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Revenue of $245 million was up 39% year on year, though net income fell by $8 million to $11.9 million due primarily to the impact of increased income taxes.
Sales in the U.S. accounted for 91% of revenue. By company size, small customers accounted for 78% of revenue, medium businesses 15% and large customers 7%.
For the current quarter, Calix said it expects revenue to fall between $242 million and $248 million, which would represent a year-on-year increase of 32% at the midpoint. The company noted it is continuing to battle a difficult supply chain environment, which is muting the impact of strong demand for its products.