Calix (CALX): Growth Returns, but Can It Last?
Getting behind the numbers of behind CALX’s rebound
Calix (CALX) offers cloud-based software platforms, hardware systems, and professional services that enable broadband service providers (BSPs)—including telcos, cable companies, municipalities, and cooperatives—to build and manage modern internet networks. Their solutions give these providers the tools to analyze subscriber data, automate marketing and operations, and offer services such as smart-home management.
The company drew our attention because, after a strong 2023, sales declined for about a year but have recently returned to growth. Even during the slowdown, the company consistently beat adjusted EPS estimates, though the outperformance was more modest. Over the last two quarters, those earnings beats have strengthened. The slowdown in 2024 was driven by several customers delaying orders while waiting to secure government funding for broadband investments. Others prioritized adding subscribers to existing networks rather than investing in new software and hardware, and high interest rates further constrained capital spending. By late 2024, more government funding had been committed, and orders began to pick up again, positioning the company for stronger results in 2025.
We are concerned that at almost 50x forward non-GAAP EPS, if the growth rate disappoints again, CALX may see its P/E contract. In addition, we see several signs in the most recent quarter that growth is not as strong as the headline numbers indicate.
Let’s take a look behind CALX’s numbers…