Strategic Execution and Platform Evolution

• Achieved record revenue driven by robust customer demand and the successful migration of all existing customers to the third-generation Calix One platform on Google Cloud.

• Transitioned to an AI-native architecture designed to help service providers transform operations and add capacity through agentic workforce capabilities.

• Performance attribution for the quarter's growth is primarily linked to organic demand for platform products rather than pricing actions or one-time benefits.

• Strategic positioning is shifting toward a 'blue ocean' of incremental total addressable market (TAM) as the company moves past legacy hardware cycles into experience-based software solutions.

• Management attributes the sequential gross margin decline to the temporary operational burden of maintaining dual cloud environments during the final phase of customer migration.

• The company continues to win market share by focusing on subscriber experience and operational automation rather than competing solely on hardware specifications.

2026 Outlook and Strategic Assumptions

• Raised full-year 2026 revenue growth guidance to 15%-20%, up from the previous 10%-15% range, reflecting stronger demand and partial recovery of memory costs.

• Anticipate RPO reacceleration in the second half of 2026 as momentum builds for the Calix One platform and customers adopt incremental service offerings.

• Expect to return to the target financial model for operating expenses by the end of 2026, improving overall operating leverage and profitability.

• Guidance for the second half of 2026 includes tens of millions of dollars in projected revenue from the BEAD program as state-level funding begins to flow.

• Gross margin for the full year is expected to decline 50 to 150 basis points, primarily due to the mathematical headwind of passing through memory surcharges at zero profit.

Supply Chain Dynamics and Capital Allocation

• Initiated a memory surcharge starting in May to partially recover higher component costs; management noted this adds revenue without gross profit, creating a margin percentage headwind.

• Authorized an additional $100 million for share repurchases following the $171 million invested in the first quarter, signaling confidence in long-term value.

• The dual cloud environment costs, which impacted Q1 margins by approximately $3 million to $4 million, have been eliminated as of the end of the quarter.

• Management addressed new FCC regulations on foreign-made routers, stating existing shipments are not at risk and conditional approvals for new products are progressing quickly.