Calix’s platform strategy gained traction in Q4 2022 as the vendor recruited 26 new broadband service provider clients and saw a 38% year-over-year growth in the use of its managed services.
The business has been working for a while to develop a portfolio of software and cloud-based products, with its Intelligent Access Edge platform serving as the foundation. It has gradually expanded its offering of managed services, Calix Cloud, and edge alternatives. The number of operators adopting one or both of Calix’s Revenue Edge and Intelligent Access Edge products increased to 950 at the end of Q4 from 789 in Q4 2021. The adoption of its cloud portfolio, which went from 747 operators to 844, wasn’t far behind.
However, managed services still need to catch 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.”
Although the $245 million in revenue represented a 39% year-over-year growth, net income dropped by $8 million to $11.9 million, mostly as a result of higher income taxes.
91% of income came from sales in the US. Small clients made up 78% of sales, medium clients 15%, and large clients 7%, according to firm size.
According to Calix, it anticipates sales for the current quarter to range between $242 million and $248 million, which, at the midpoint, would represent a year-over-year rise of 32%. The company stated that despite the high demand for its products, the impact is being muted by a challenging supply chain environment.