Calix Falls Short in Q1 Guidance as Telecommunication Network Customers Reevaluate Spending Strategies

Calix's first-quarter guidance fell significantly below Wall Street estimates, attributed to customers delaying network equipment spending amid preparations to apply for U.S. government broadband funding aimed at expanding high-speed internet access and addressing the digital divide.

Calix Inc (NYSE: CALX) experienced a 22% decline in after-hours trading after the release of the report.

In Q1, the company forecasts adjusted EPS between $0.17 to $0.23 on revenue of $225M to $231M, falling below analyst expectations of $0.38 and $267.5M.

The company anticipates a slowdown in appliance shipments due to telecom service providers pausing broadband appliance purchases to assess spending plans and consider applying for government stimulus dollars, including the U.S. Broadband Equity, Access, and Deployment Program.

The $42 billion BEAD program targets funding broadband infrastructure and adoption initiatives to boost high-speed internet use, focusing on areas with limited or no internet access.

Due to the reassessment of capital expenditures by some major customers in early 2024, revenue guidance for the first quarter is set between $225 million and $231 million, considering the current context.

Despite Q4 results surpassing estimates, the weaker guidance overshadowed the positive performance. Q4 adjusted EPS stood at $0.43 on revenue of $264.7M, exceeding the expected $0.36 on revenue of $264.4M.