Calix Share Price Decreases 11.9% Despite Strong Q4 Earnings Growth

Calix CALX shares have lost 11.9% since the company reported its fourth-quarter 2025 results on Jan. 28. The decline can be attributed to the company’s disappointing first-quarter 2026 outlook. In the first quarter of 2026, the company expects some near-term impacts on the non-GAAP gross margin due to customer mix and overlapping cloud costs, as it moves to its third-generation platform.

However, Calix reported fourth-quarter 2025 non-GAAP earnings of 39 cents per share, which beat the Zacks Consensus Estimate by 1.75%. The company had registered non-GAAP earnings of 8 cents in the year-ago quarter.

Non-GAAP revenues of $272.4 million, which beat the consensus mark by only 0.90%, increased 3% on a sequential basis and 32% on a year-over-year basis. This growth was driven by strong demand for its platform among broadband experience provider (BXP) customers. In the fourth quarter of 2025, remaining performance obligations reached a record $385 million, up 9% quarter over quarter and 18% year over year.

Calix’s Appliance revenues, which include our Access Edge and Experience Edge appliances and related optics, were $225.8 million, which accounted for 82.9% of total revenues. The figure represents a year-over-year increase of 35.8% and 2% on a sequential basis. This growth was primarily driven by the continued adoption of Calix's platform, as well as the growing network market and on-premises appliances.

Calix, Inc Price, Consensus and EPS Surprise

 

Calix, Inc price-consensus-eps-surprise-chart | Calix, Inc Quote

Software and Services revenues were $46.6 million, which contributed 17.1% of total revenues, representing a 17.2% year-over-year increase and 7% on a sequential basis. The growth was driven by demand for platform licenses, Calix Cloud and managed services.

CALX Q4 Details

The non-GAAP gross margin expanded 250 basis points (bps) year over year to 58%. The non-GAAP appliance gross margin for the fourth quarter of 2025 was 57.4%, reflecting an increase of 120 basis points sequentially and 380 basis points year over year. 

The non-GAAP software and services gross margin for the reported quarter was 61.3%, a decline of 390 basis points sequentially and 240 basis points year over year, primarily due to dual cloud costs incurred during the transition to the third-generation platform.

Sales and marketing expenses, as a percentage of revenues, decreased 350 bps from the year-ago quarter’s level to 21.9%.

Research and development expenses, as a percentage of revenues, decreased 230 bps to 17.3%.

General and administrative expenses, as a percentage of revenues, decreased 140 bps from the year-ago quarter’s level to 7.4%.

Calix reported a non-GAAP operating margin of 11.5%, which expanded 970 bps year over year.

Balance Sheet

As of Dec. 31, 2025, cash and cash equivalents (including marketable securities) were $388.1 million compared with $339.6 million as of Sept. 27, 2025. 

In the reported quarter, the company generated a cash flow from operations of $46.046 million compared with $32.314 million in the previous quarter.

In the reported quarter, the company generated free cash flow of $40 million compared with $27 million in the previous quarter.

CALX 1Q26 Guidance

For first-quarter 2026, CALX expects non-GAAP revenues between $275 million and $281 million, suggesting 2% growth (at the midpoint) from the prior quarter's actual. The company expects non-GAAP earnings between 34 cents and 40 cents per share.

The non-GAAP gross margin for the first quarter of 2026 is expected between 56.25% and 58.25%, with a midpoint of 57.25%, indicating a decline of 75 basis points from that reported in the previous quarter, whereas non-GAAP operating expenses are expected between $127 million and $129 million, with a midpoint of $128 million, indicating a sequential increase.

Zacks Rank & Other Stocks to Consider

Calix currently sports a Zacks Rank #1 (Strong Buy).

Ciena CIEN, Microchip Technology MCHP and MKS MKSI are some other top-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector. These three stocks presently sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Ciena have gained 199.5% in the past 12-month period. CIEN is likely to report its first-quarter fiscal 2026 results on Mar. 10, 2026.

Shares of Microchip Technology have gained 43.9% in the past 12-month period. MCHP is likely to report its third-quarter fiscal 2026 results on Feb. 5, 2026.

Shares of MKS have soared 115.8% in the past 12-month period. MKSI is likely to report its fourth-quarter 2025 results on Feb. 17, 2026.

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This article originally published on Zacks Investment Research (zacks.com).

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