Item 1. Financial Statements
ITEM 1. Financial Statements
CALIX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
June 28,
2025 December 31,
2024
(Unaudited) (See Note 1)
ASSETS
Current assets:
Cash and cash equivalents $ 76,538 $ 43,162
Marketable securities 222,430 253,929
Accounts receivable, net 63,076 79,321
Inventory 110,522 102,727
Prepaid expenses and other current assets 89,748 105,596
Total current assets 562,314 584,735
Property and equipment, net 32,415 31,153
Right-of-use operating leases 4,736 6,216
Deferred tax assets 178,817 177,601
Goodwill 116,175 116,175
Other assets 26,949 23,387
$ 921,406 $ 939,267
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 23,746 $ 20,226
Accrued liabilities 74,122 84,167
Deferred revenue 25,774 26,750
Total current liabilities 123,642 131,143
Long-term portion of deferred revenue 20,111 20,883
Operating leases 2,953 3,720
Other long-term liabilities 2,028 2,581
Total liabilities 148,734 158,327
Commitments and contingencies (See Note 6)
Stockholders’ equity:
Preferred stock, $ 0.025 par value; 5,000 shares authorized; no shares issued and outstanding as of June 28, 2025 and December 31, 2024
— —
Common stock, $ 0.025 par value; 100,000 shares authorized; 65,294 shares issued and outstanding as of June 28, 2025, and 66,434 shares issued and outstanding as of December 31, 2024
1,633 1,661
Additional paid-in capital 1,166,266 1,170,017
Accumulated other comprehensive loss ( 115 ) ( 612 )
Accumulated deficit ( 395,112 ) ( 390,126 )
Total stockholders’ equity 772,672 780,940
$ 921,406 $ 939,267
See accompanying notes to condensed consolidated financial statements.
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CALIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 28,
2025 June 29,
2024 June 28,
2025 June 29,
2024
Revenue $ 241,882 $ 198,139 $ 462,124 $ 424,449
Cost of revenue 105,587 90,536 203,121 194,269
Gross profit 136,295 107,603 259,003 230,180
Operating expenses:
Sales and marketing 63,653 52,238 121,712 106,135
Research and development 45,787 44,123 89,767 88,545
General and administrative 26,464 22,598 53,214 48,888
Total operating expenses 135,904 118,959 264,693 243,568
Operating income (loss) 391 ( 11,356 ) ( 5,690 ) ( 13,388 )
Interest income and other income (expense), net:
Interest income, net 2,959 2,960 6,246 5,595
Other income (expense), net 77 ( 286 ) ( 119 ) ( 421 )
Total interest income and other income (expense), net 3,036 2,674 6,127 5,174
Income (loss) before income taxes 3,427 ( 8,682 ) 437 ( 8,214 )
Income taxes (benefit) 3,626 ( 724 ) 5,423 ( 359 )
Net loss $ ( 199 ) $ ( 7,958 ) $ ( 4,986 ) $ ( 7,855 )
Net loss per common share:
Basic $ ( 0.00 ) $ ( 0.12 ) $ ( 0.08 ) $ ( 0.12 )
Diluted $ ( 0.00 ) $ ( 0.12 ) $ ( 0.08 ) $ ( 0.12 )
Weighted-average number of shares used to compute
net loss per common share:
Basic 64,525 65,678 65,321 65,509
Diluted 64,525 65,678 65,321 65,509
Net loss $ ( 199 ) $ ( 7,958 ) $ ( 4,986 ) $ ( 7,855 )
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on available-for-sale marketable securities, net 41 5 213 ( 206 )
Foreign currency translation adjustments, net 189 5 284 ( 108 )
Total other comprehensive income (loss), net of tax 230 10 497 ( 314 )
Comprehensive income (loss) $ 31 $ ( 7,948 ) $ ( 4,489 ) $ ( 8,169 )
See accompanying notes to condensed consolidated financial statements.
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CALIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, unaudited)
Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ Equity
Shares Amount
Balance as of March 29, 2025 65,695 $ 1,643 $ 1,160,781 $ ( 345 ) $ ( 394,913 ) $ 767,166
Stock-based compensation — — 25,766 — — 25,766
Issuance of common stock under equity incentive plans, net of forfeitures 608 15 13,336 — — 13,351
Repurchases of common stock including excise tax ( 1,009 ) ( 25 ) ( 33,617 ) — — ( 33,642 )
Net loss — — — — ( 199 ) ( 199 )
Other comprehensive income — — — 230 — 230
Balance as of June 28, 2025 65,294 $ 1,633 $ 1,166,266 $ ( 115 ) $ ( 395,112 ) $ 772,672
Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders’ Equity
Shares Amount
Balance as of March 30, 2024 65,525 $ 1,638 $ 1,102,314 $ ( 983 ) $ ( 360,276 ) $ 742,693
Stock-based compensation — — 15,458 — — 15,458
Issuance of common stock under equity incentive plans, net of forfeitures 275 7 4,014 — — 4,021
Net loss — — — — ( 7,958 ) ( 7,958 )
Other comprehensive income — — — 10 — 10
Balance as of June 29, 2024 65,800 $ 1,645 $ 1,121,786 $ ( 973 ) $ ( 368,234 ) $ 754,224
Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ Equity
Shares Amount
Balance as of December 31, 2024 66,434 $ 1,661 $ 1,170,017 $ ( 612 ) $ ( 390,126 ) $ 780,940
Stock-based compensation — — 45,869 — — 45,869
Issuance of common stock under equity incentive plans, net of forfeitures 1,025 26 24,171 — — 24,197
Repurchases of common stock including excise tax ( 2,165 ) ( 54 ) ( 73,791 ) — — ( 73,845 )
Net loss — — — — ( 4,986 ) ( 4,986 )
Other comprehensive income — — — 497 — 497
Balance as of June 28, 2025 65,294 $ 1,633 $ 1,166,266 $ ( 115 ) $ ( 395,112 ) $ 772,672
Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders’ Equity
Shares Amount
Balance as of December 31, 2023 65,052 $ 1,627 $ 1,078,393 $ ( 659 ) $ ( 360,379 ) $ 718,982
Stock-based compensation — — 32,315 — — 32,315
Issuance of common stock under equity incentive plans, net of forfeitures 862 21 14,813 — — 14,834
Repurchases of common stock ( 114 ) ( 3 ) ( 3,735 ) — — ( 3,738 )
Net loss — — — — ( 7,855 ) ( 7,855 )
Other comprehensive loss — — — ( 314 ) — ( 314 )
Balance as of June 29, 2024 65,800 $ 1,645 $ 1,121,786 $ ( 973 ) $ ( 368,234 ) $ 754,224
See accompanying notes to condensed consolidated financial statements.
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CALIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
Six Months Ended
June 28,
2025 June 29,
2024
Operating activities:
Net loss $ ( 4,986 ) $ ( 7,855 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Stock-based compensation 45,357 32,315
Depreciation and amortization 8,613 9,988
Deferred income taxes ( 1,285 ) ( 5,284 )
Net accretion of available-for-sale securities ( 2,137 ) ( 2,716 )
Changes in operating assets and liabilities:
Accounts receivable, net 16,245 43,962
Inventory ( 7,795 ) 19,500
Prepaid expenses and other assets 13,752 6,420
Accounts payable 2,284 ( 23,424 )
Accrued liabilities ( 10,387 ) ( 26,787 )
Deferred revenue ( 1,748 ) ( 7,300 )
Other long-term liabilities ( 1,320 ) ( 1,781 )
Net cash provided by operating activities 56,593 37,038
Investing activities
Purchases of property and equipment ( 8,045 ) ( 9,661 )
Purchases of marketable securities ( 95,116 ) ( 148,897 )
Sales of marketable securities 11,362 48,734
Maturities of marketable securities 117,679 82,805
Net cash provided by (used in) investing activities 25,880 ( 27,019 )
Financing activities:
Proceeds from common stock issuances related to employee benefit plans 24,197 14,834
Repurchases of common stock ( 73,531 ) ( 3,738 )
Net cash provided by (used in) financing activities ( 49,334 ) 11,096
Effect of exchange rate changes on cash and cash equivalents 237 ( 38 )
Net increase in cash and cash equivalents 33,376 21,077
Cash and cash equivalents at beginning of period 43,162 63,409
Cash and cash equivalents at end of period $ 76,538 $ 84,486
See accompanying notes to condensed consolidated financial statements.
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CALIX, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Company and Basis of Presentation
Company
Calix, Inc. (together with its subsidiaries, “Calix” or the “Company”) was incorporated in August 1999 and is a Delaware corporation. The Company develops, markets and sells an appliance-based platform, cloud and managed services that focus on the subscriber-facing network, the portion of the network that governs available bandwidth and determines the range and quality of services that can be offered to subscribers. These platform, cloud and managed services enable broadband experience providers (“BXPs”) of all sizes to innovate and transform their businesses. The Company’s BXP customers are empowered to utilize real-time data and insights from the Calix platform to simplify their businesses and deliver experiences that excite their subscribers. These insights enable BXPs to grow their businesses through increased subscriber acquisition, loyalty and revenue, thereby increasing the value of their businesses and contributions to their communities.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements, including the accounts of Calix, Inc. and its wholly-owned subsidiaries, have been prepared in accordance with the requirements of the U.S. Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. generally accepted accounting principles (“GAAP”) can be condensed or omitted. In the opinion of management, the financial statements include all normal and recurring adjustments that are considered necessary for the fair presentation of the Company’s financial position and operating results. All intercompany balances and transactions have been eliminated in consolidation. The Condensed Consolidated Balance Sheet as of December 31, 2024 has been derived from the audited financial statements at that date.
The results of the Company’s operations can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be the same as those for the full year or any future periods. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
The Company’s fiscal year begins on January 1 st and ends on December 31 st . Quarterly periods are based on a 4-4-5 calendar with the first quarter ending on the Saturday closest to March 31 st . As a result, the Company had one less day in the six months ended June 28, 2025 than for the six months ended June 29, 2024. The preparation of financial statements in conformity with GAAP for interim financial reporting requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
2. Significant Accounting Policies
The Company’s significant accounting policies are disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024. The Company’s significant accounting policies did not change during the six months ended June 28, 2025.
Newly Adopted Accounting Standard
The Company did not adopt any new accounting standards during the six months ended June 28, 2025 that were significant to the Company.
Recent Accounting Pronouncements Not Yet Adopted
There have been no additional accounting pronouncements or changes in accounting pronouncements during the six months ended June 28, 2025 as compared with the recent accounting pronouncements described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, that are significant or expected to be significant to the Company.
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3. Cash, Cash Equivalents and Marketable Securities
The Company has invested its excess cash primarily in money market funds and highly liquid marketable securities such as U.S. treasury securities, corporate debt instruments, commercial paper and U.S. government securities. The Company considers all investments with maturities of three months or less when purchased to be cash equivalents. Marketable securities represent highly liquid U.S. treasury securities, corporate debt instruments, commercial paper and U.S. government securities with maturities greater than 90 days at date of purchase. Cash equivalents are stated at amounts that approximate fair value based on quoted market prices. Marketable securities are recorded at their fair values.
Marketable securities with maturities greater than one year are classified as current because management considers all marketable securities to be available for current operations.
The Company’s investments have been classified and accounted for as available-for-sale. Such investments are recorded at fair value and unrealized holding gains and losses are reported as a separate component of accumulated other comprehensive loss in stockholders’ equity until realized. Realized gains and losses on sales of marketable securities, if any, are determined on the specific identification method and are reclassified from accumulated other comprehensive loss to results of operations as other expense, net. Realized gains and losses were not significant for the three and six months ended June 28, 2025 and June 29, 2024.
Cash, cash equivalents and marketable securities consisted of the following (in thousands):
June 28,
2025 December 31,
2024
Cash and cash equivalents:
Cash $ 32,747 $ 20,664
Money market funds 23,457 4,890
Commercial paper 18,344 10,058
U.S. government securities 1,990 7,550
Total cash and cash equivalents 76,538 43,162
Marketable securities:
Corporate debt securities 123,467 123,701
U.S. government securities 57,673 66,582
Commercial paper 23,543 22,715
U.S. government agency securities 13,890 24,411
Certificates of deposit 3,857 16,520
Total marketable securities 222,430 253,929
$ 298,968 $ 297,091
The carrying amounts of the Company’s money market funds approximate their fair values due to their nature, duration and short maturities. The amortized cost and fair value of marketable securities were as follows (in thousands):
As of June 28, 2025 Amortized Cost Unrealized Gains (Losses), net Fair Value
Corporate debt securities $ 123,099 $ 368 $ 123,467
U.S. government securities 59,514 149 59,663
Commercial paper 41,899 ( 12 ) 41,887
U.S. government agency securities 13,868 22 13,890
Certificates of deposit 3,853 4 3,857
$ 242,233 $ 531 $ 242,764
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As of December 31, 2024 Amortized Cost Unrealized Gains, net Fair Value
Corporate debt securities $ 123,519 $ 182 $ 123,701
U.S. government securities 74,118 14 74,132
Commercial paper 32,766 7 32,773
U.S. government agency securities 24,380 31 24,411
Certificates of deposit 16,505 15 16,520
$ 271,288 $ 249 $ 271,537
4. Fair Value Measurements
The Company measures its cash equivalents and marketable securities at fair value on a recurring basis. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The Company utilizes the following three-tier value hierarchy, which prioritizes the inputs used in measuring fair value:
Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 – Observable inputs other than quoted prices included in Level 1 for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-driven valuations in which all significant inputs and significant value drivers are observable in active markets.
Level 3 – Unobservable inputs to the valuation derived from fair valuation techniques in which one or more significant inputs or significant value drivers are unobservable. The fair value hierarchy also requires the Company to maximize the use of observable inputs, when available, and to minimize the use of unobservable inputs when determining inputs and determining fair value.
The following tables sets forth the Company’s financial assets measured at fair value on a recurring basis based on the three-tier fair value hierarchy (in thousands):
As of June 28, 2025 Level 1 Level 2 Total
Money market funds $ 23,457 $ — $ 23,457
U.S. government securities 59,663 — 59,663
Corporate debt securities — 123,467 123,467
Commercial paper — 41,887 41,887
U.S. government agency securities — 13,890 13,890
Certificates of deposit — 3,857 3,857
$ 83,120 $ 183,101 $ 266,221
As of December 31, 2024 Level 1 Level 2 Total
Money market funds $ 4,890 $ — $ 4,890
U.S. government securities 74,132 — 74,132
Corporate debt securities — 123,701 123,701
Commercial paper — 32,773 32,773
U.S. government agency securities — 24,411 24,411
Certificates of deposit — 16,520 16,520
$ 79,022 $ 197,405 $ 276,427
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5. Balance Sheet Details
Accounts receivable, net consisted of the following (in thousands):
June 28,
2025 December 31,
2024
Accounts receivable $ 63,381 $ 79,632
Allowance for doubtful accounts ( 305 ) ( 311 )
$ 63,076 $ 79,321
Inventory consisted of the following (in thousands):
June 28,
2025 December 31,
2024
Components $ 6,171 $ 21,735
Finished goods 104,351 80,992
$ 110,522 $ 102,727
Prepaid expenses and other current assets consisted of the following (in thousands):
June 28,
2025 December 31,
2024
Supplier deposits $ 43,480 $ 62,620
Prepaid expenses and other current assets 46,268 42,976
$ 89,748 $ 105,596
Property and equipment, net consisted of the following (in thousands):
June 28,
2025 December 31,
2024
Test equipment $ 61,939 $ 57,595
Computer equipment 13,677 14,561
Software 11,049 11,146
Leasehold improvements 2,665 2,173
Furniture and fixtures 1,278 1,268
Total 90,608 86,743
Accumulated depreciation and amortization ( 58,193 ) ( 55,590 )
$ 32,415 $ 31,153
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Accrued liabilities consisted of the following (in thousands):
June 28,
2025 December 31,
2024
Compensation and related benefits $ 32,808 $ 36,004
Component inventory held by suppliers 7,768 8,855
Professional and consulting fees 5,148 5,385
Taxes payable 4,178 5,048
Current portion of warranty 3,346 5,288
Customer advances or rebates 3,320 4,882
Operating leases 3,017 4,303
Insurance 1,773 2,019
Freight 1,663 1,640
Product returns 1,657 2,428
Travel and event expenses 1,654 518
Operations 1,014 1,735
Other 6,776 6,062
$ 74,122 $ 84,167
Changes in the Company’s accrued warranty liability were as follows (in thousands):
Three Months Ended Six Months Ended
June 28,
2025 June 29,
2024 June 28,
2025 June 29,
2024
Balance at beginning of period $ 6,073 $ 7,655 $ 7,287 $ 8,029
Accruals for product warranty
( 908 ) 392 ( 1,203 ) 731
Cost of warranty claims
( 272 ) ( 676 ) ( 1,191 ) ( 1,389 )
Balance at end of period $ 4,893 $ 7,371 $ 4,893 $ 7,371
6. Commitments and Contingencies
Lease Commitments
The Company leases office space under non-cancelable operating leases. Certain of the Company’s operating leases contain renewal options and rent acceleration clauses. Future minimum payments under the non-cancelable operating leases consisted of the following as of June 28, 2025 (in thousands):
Period Future Minimum Lease Payments
Remainder of 2025 $ 2,222
2026 1,725
2027 1,259
2028 709
2029 and thereafter 340
Total future minimum lease payments 6,255
Less imputed interest ( 285 )
$ 5,970
As of June 28, 2025, the operating lease liability consisted of the following (in thousands):
Accrued liabilities - current portion of operating leases $ 3,017
Operating leases 2,953
$ 5,970
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The Company leases its headquarters office space in San Jose, California under a lease agreement that expires in December 2025. The future minimum lease payments under the lease are $ 1.3 million and are included in the table above. In December 2024, the Company entered into a new headquarters office lease agreement for 23,000 square feet in San Jose, California. The lease is expected to commence in August 2025 for a term of 90 months. The future minimum lease payments of $ 8.9 million are not included in the table above.
The weighted average discount rate for the Company’s operating leases as of June 28, 2025 was 4.4 %. The weighted average remaining lease term as of June 28, 2025 was 2.5 years.
For the three and six months ended June 28, 2025, rent expense was $ 1.1 million and $ 2.2 million, respectively. For the three and six months ended June 29, 2024, rent expense was $ 1.2 million and $ 2.3 million, respectively. Cash paid within operating cash flows for operating leases was $ 2.3 million and $ 2.2 million for the six months ended June 28, 2025 and June 29, 2024, respectively.
Purchase Commitments
The Company’s contract manufacturers (“CMs”) and original design manufacturers (“ODMs”) place orders for component inventory based upon the Company’s build forecasts and pursuant to stated component lead times to ensure adequate component supply. The components are used by the CMs and ODMs to build the products included in the build forecasts. The Company generally does not take ownership of the components held by CMs and ODMs. The Company places purchase orders with its CMs and ODMs in order to fulfill its monthly finished product inventory requirements. The Company incurs a liability when the CMs and ODMs convert the component inventory to a finished product and takes ownership of the finished goods inventory.
The Company has from time to time, and subject to certain conditions, reimbursed certain suppliers for component inventory purchases when this inventory has been rendered excess or obsolete, for example due to manufacturing and engineering change orders resulting from design changes, manufacturing discontinuation of products by its suppliers, or in cases where the Company has committed inventory levels that exceed projected demand. In the event of termination of services with a manufacturing partner, the Company has purchased, and may be required to purchase in the future, certain of the remaining components inventory held by the CM or ODM as well as any outstanding orders pursuant to the contractual provisions with such CM or ODM. The estimated excess and obsolete component liabilities related to manufacturing and engineering change orders, termination of manufacturing partners and other factors are recorded against Supplier Deposits in “Prepaid expenses and other current assets” or included in “Accrued liabilities” in the accompanying Condensed Consolidated Balance Sheets, because the corresponding component parts have not been received or paid for by the Company. The Company records the related charges in “Cost of revenue” in its Condensed Consolidated Statements of Comprehensive Loss.
As of June 28, 2025 and December 31, 2024, the Company had approximately $ 184.4 million and $ 138.8 million, respectively, of outstanding purchase commitments for inventories to be delivered by its suppliers, including CMs and ODMs.
Litigation
From time to time, the Company is involved in various legal proceedings arising from the normal course of business activities. The Company is not currently a party to any legal proceeding that, if determined adversely to the Company, in management’s opinion, is currently expected to individually or in the aggregate have a material adverse effect on the Company’s business, operating results or financial condition taken as a whole.
7. Stockholders’ Equity
2019 Equity Incentive Award Plan
Employees and consultants of the Company, its subsidiaries and affiliates, as well as members of the Company’s Board of Directors, are eligible to receive awards under the Fourth Amended and Restated 2019 Equity Incentive Award Plan (the “2019 Plan”). The 2019 Plan provides for the grant of stock options, including incentive stock options and nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, other stock or cash-based awards and dividend equivalents to eligible individuals. At the Company’s 2025 annual meeting of stockholders, the stockholders approved an increase in the number of shares of common stock issuable under the 2019 Plan by 4.0 million shares. As of June 28, 2025, there were 4.1 million shares available for issuance under the 2019 Plan.
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In February 2025, stock option awards exercisable for up to an aggregate of 3.1 million shares of common stock were granted to certain members of the Company’s leadership team with a grant date exercise price of $ 39.68 per share. The actual number of shares earned is contingent upon achievement of annual corporate financial targets for bookings and non-GAAP net operating income for 2025 (collectively, the “2025 Performance Targets”) during the one-year performance period. The stock option awards will vest, subject to certification by the Compensation Committee of the Company’s Board of Directors upon the achievement of the 2025 Performance Targets, as to 25 % of the shares of common stock earned on the one year anniversary of the date of grant, and as to the remaining 75 % of the shares of common stock earned, in substantially equal quarterly installments over the subsequent 36 months, subject to the executive’s continuous service with the Company through the respective vesting dates. If the combined non-GAAP net operating income target and the bookings target are achieved below 50 % of target, 50 % of the shares would be awarded, and the balance would be forfeited. If the combined target is achieved at the minimum threshold of 50 % of target, then 75 % of the shares would be awarded, with an increasing percentage of shares awarded above the minimum thresholds up to 100 % of the granted shares for each target. Each target result is then weighted by 50 % and the combined total determines the percent of target shares. The maximum combined award is 100 %. The probability of meeting the performance conditions was assessed to be probable as of June 28, 2025, and stock-based compensation expense of $ 6.7 million was recognized for the three months ended June 28, 2025. For the six months ended June 28, 2025, stock-based compensation expense of $ 10.9 million was recognized.
During the three months ended June 28, 2025, stock option awards exercisable for up to an aggregate of 0.4 million shares of common stock were granted with a grant date weighted-average exercise price of $ 43.39 per share. During the six months ended June 28, 2025, stock option awards exercisable for up to an aggregate of 0.6 million shares of common stock were granted with a grant date weighted-average exercise price of $ 42.02 per share. These stock option awards vest 25 % on the first anniversary of the vesting commencement date and on a quarterly basis thereafter over an additional three years .
During the three months ended June 28, 2025, 0.3 million shares of common stock were issued pursuant to the exercise of stock options at a weighted-average exercise price of $ 25.15 per share. During the six months ended June 28, 2025, 0.4 million shares of common stock were issued pursuant to the exercise of stock options at a weighted-average exercise price of $ 25.98 per share. As of June 28, 2025, unrecognized stock-based compensation expense of $ 93.5 million related to stock options, net of estimated forfeitures, is expected to be recognized over a weighted-average period of 2.4 years.
During the three and six months ended June 28, 2025, 38,000 restricted stock awards, with a one-year vesting period, were granted to the Company’s Board of Directors with a grant date fair value of $ 42.65 per share. As of June 28, 2025, unrecognized stock-based compensation expense of $ 1.4 million related to restricted stock awards, net of estimated forfeitures, is expected to be recognized over a weighted-average period of 0.9 years.
During the three months ended June 28, 2025, the Compensation Committee of the Company’s Board of Directors modified an executive’s stock options to accelerate vesting and extend the exercise period for outstanding grants. As a result, a charge of $ 4.9 million was recognized for the three months ended June 28, 2025.
Employee Stock Purchase Plans
The Company maintains two plans under which employees can purchase Company common stock - the Amended and Restated Employee Stock Purchase Plan (the “ESPP”) and the non-executive Stock Purchase and Matching Plan (“SPMP”). In March 2025, the Company’s Board of Directors approved amending and restating the Third Amended and Restated 2017 Nonqualified Employee Stock Purchase Plan (the “NQ ESPP”) as the SPMP, which better describes the nature of the plan whereby when a non-executive employee buys a share, the Company matches it. The Company’s Board of Directors approval included reserving 2.9 million shares of Company common stock under each of the purchase component and the matching component of the SPMP, with a corresponding decrease in shares authorized in the ESPP of 2.5 million shares. At the Company’s 2025 annual meeting of stockholders, the stockholders approved an increase to the authorized shares to the SPMP of 1.25 million shares of Common Stock under the matching component, resulting in a corresponding decrease in the shares authorized for issuance under the ESPP of 2.5 million shares. Shares will be issued from the SPMP starting with the August 8, 2025 purchase period.
The ESPP allows eligible employees to purchase shares of the Company’s common stock through payroll deductions of up to 15 % of their eligible compensation subject to certain Internal Revenue Code limitations.
The offering periods under the ESPP are two six-month offering periods from August 15 th through February 14 th and February 15 th through August 14 th of each year. The price of common stock purchased under the ESPP is 85 % of the lower of the fair market value of the common stock on the commencement date and the end date of each six-month offering period. As of June 28, 2025, there were 1.6 million shares available for issuance under the ESPP. During the six months ended June 28, 2025, 0.2 million shares were purchased under the ESPP. As of June 28, 2025, unrecognized stock-based compensation expense of $ 0.3 million related to the ESPP is expected to be recognized over a remaining service period of 0.1 years.
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The SPMP allows eligible employees to purchase shares of the Company’s common stock through payroll deductions of up to 25 % of their eligible recurring compensation. Eligible employees have the right to (a) purchase the maximum number of whole shares of common stock that can be purchased with the elected payroll deductions during each offering period for which the employee is enrolled at a purchase price equal to the closing price of the Company’s common stock on the last day of such offering period and (b) receive an equal number of shares of the Company’s common stock that are subject to a risk of forfeiture in the event the employee terminates employment within the one year period immediately following the purchase date. The SPMP provides quarterly offering periods from February 8 th through May 7 th , May 8 th through August 7 th , August 8 th through November 7 th and November 8 th through February 7 th of each year, with a maximum of 0.35 million shares allocated per purchase period for the combination of the purchase and matching components. As of June 28, 2025, there were 1.8 million shares available for issuance under the NQ ESPP. During the six months ended June 28, 2025, 0.5 million shares were purchased and issued. As of June 28, 2025, unrecognized stock-based compensation expense of $ 12.0 million related to the NQ ESPP is expected to be recognized over a remaining weighted-average service period of 0.8 years.
Stock-Based Compensation
The following table summarizes stock-based compensation expense (in thousands):
Three Months Ended Six Months Ended
June 28,
2025 June 29,
2024 June 28,
2025 June 29,
2024
Cost of revenue $ 764 $ 707 $ 1,544 $ 1,343
Sales and marketing 11,047 4,191 17,516 9,041
Research and development 5,890 4,398 10,971 8,913
General and administrative 7,912 6,162 15,326 13,018
$ 25,613 $ 15,458 $ 45,357 $ 32,315
Income tax benefit recognized $ 3,664 $ 2,114 $ 5,157 $ 5,426
Stock Repurchase Program
The Company maintains a common stock repurchase program. Under the repurchase program, repurchases can be made from time to time using a variety of methods, which may include open market purchases, privately negotiated transactions or otherwise, all in accordance with the rules of the SEC and other applicable legal requirements. The specific timing, price and size of the purchases depends on prevailing stock prices, general economic and market conditions and other considerations consistent with the Company’s capital allocation strategy. The repurchase program does not obligate the Company to acquire a particular amount of common stock, and the repurchase program may be suspended or discontinued at any time at the Company’s discretion. In April 2025, the Company’s Board of Directors authorized a $ 100.0 million increase to this program. During the three months ended June 28, 2025, the Company purchased 1.0 million shares of common stock for an aggregate purchase price of $ 33.6 million at an average price per share of $ 33.24 . During the six months ended June 28, 2025, the Company purchased 2.2 million shares of common stock for an aggregate purchase price of $ 73.5 million at an average price per share of $ 33.95 . As of June 28, 2025, the remaining authorized balance under this program was $ 129.4 million.
8. Revenue from Contracts with Customers
Contract Asset
Contract assets include amounts recognized as revenue prior to the Company’s contractual right to bill the customer. Amounts are billed in accordance with the agreed-upon contractual terms. Contract assets were $ 4.5 million as of June 28, 2025 as compared to $ 2.8 million as of December 31, 2024, and are included in prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets. The Company expects to bill 47 % of the June 28, 2025 balance during 2025.
Contract Liability
Deferred revenue was $ 45.9 million, $ 50.8 million and $ 47.6 million as of June 28, 2025, March 29, 2025 and December 31, 2024, respectively. The decrease in the deferred revenue balance for the three and six months ended June 28, 2025 was driven by $ 11.8 million and $ 16.4 million of revenue recognized that was included in the deferred revenue balance at the beginning of each respective period, partially offset by cash payments received or due in advance of satisfying the Company’s performance obligations.
Remaining performance obligations (“RPOs”) represent contractual commitments that have not yet been fulfilled, which include deferred revenue and amounts that will be invoiced and recognized as revenue in future periods but exclude variable consideration where the monthly invoicing is based on usage or where actual usage exceeds the minimum commitment. RPOs
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were $ 346.6 million as of June 28, 2025, and the Company expects to recognize as revenue 39 % of this amount over the next 12 months and nearly all of the remainder over the two years thereafter.
Contract Costs
The Company capitalizes certain sales commissions related primarily to multi-year subscriptions and extended warranty support for which the expected amortization period is greater than one year. As of June 28, 2025 and December 31, 2024, the unamortized balance of deferred commissions was $ 17.1 million and $ 17.9 million, respectively. For the three and six months ended June 28, 2025 the amount of amortization was $ 2.7 million and $ 5.3 million, respectively, compared to $ 2.1 million and $ 4.2 million for the three and six months ended June 29, 2024, respectively. There was no impairment loss in relation to the costs capitalized for these periods.
Concentration of Customer Risk
No customer accounted for more than 10% of the Company’s revenue for the three and six months ended June 28, 2025 and June 29, 2024.
One customer represented 10 % of the Company’s total receivables as of June 28, 2025 and another customer represented 21 % of the Company’s total receivables as of December 31, 2024.
9. Segment Information
The Company develops, markets and sells an appliance-based broadband platform, cloud and managed services. There are no segment managers who are held accountable for operations, operating results and plans for levels or components below the Company unit level. Accordingly, the Company is a single reporting segment and operating unit structure. The Company’s chief operating decision maker (“CODM”) is the Company’s Chief Executive Officer, who reviews financial information presented on a Company-wide basis, for purposes of allocating resources and evaluating financial performance. The CODM assesses the performance of the single segment and allocates resources based on revenue and measures derived from gross margin and operating loss that is reported in the Condensed Consolidated Statements of Comprehensive Loss. In addition, the CODM uses a measure derived from operating expenses in the Condensed Consolidated Statements of Comprehensive Loss to monitor budget versus actual results to determine the Company’s and management’s performance. The Company does not have intra-entity sales or transfers. The measure of the single segment assets is the consolidated assets in the Condensed Consolidated Balance Sheet. The accounting policies of the single segment are the same as described in the significant accounting policies.
Geographic Information:
A summary of revenue disaggregated by geographic region based upon the location of the customers was as follows (in thousands):
Three Months Ended Six Months Ended
June 28, 2025 June 29, 2024 June 28, 2025 June 29, 2024
United States $ 219,039 $ 182,705 $ 430,218 $ 392,795
Europe 15,565 6,712 18,094 13,572
Americas ex U.S. 5,881 7,052 11,349 14,187
Rest of world 1,397 1,670 2,463 3,895
$ 241,882 $ 198,139 $ 462,124 $ 424,449
The Company’s property and equipment, net of accumulated depreciation, were located in the following geographical areas (in thousands):
June 28,
2025 December 31, 2024
United States $ 28,965 $ 27,601
China 2,724 2,818
India 726 734
$ 32,415 $ 31,153
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Selected Financial Information:
The following table presents selected financial information with respect to the Company’s single operating segment (in thousands):
Three Months Ended Six Months Ended
June 28,
2025 June 29,
2024 June 28,
2025 June 29,
2024
Revenue $ 241,882 $ 198,139 $ 462,124 $ 424,449
Adjusted cost of revenue (1)
( 104,595 ) ( 88,873 ) ( 201,051 ) ( 191,014 )
Adjusted sales and marketing operating expenses (2)
( 52,606 ) ( 48,047 ) ( 104,196 ) ( 97,094 )
Adjusted research and development operating expenses (3)
( 39,897 ) ( 39,725 ) ( 78,796 ) ( 79,632 )
Adjusted general and administrative operating expenses (4)
( 18,552 ) ( 16,436 ) ( 37,888 ) ( 35,870 )
Other segment items (5)
( 25,841 ) ( 16,414 ) ( 45,883 ) ( 34,227 )
Interest income and other expenses, net 3,036 2,674 6,127 5,174
Income taxes ( 3,626 ) 724 ( 5,423 ) 359
Net income (loss) $ ( 199 ) $ ( 7,958 ) $ ( 4,986 ) $ ( 7,855 )
(1) GAAP cost of revenue adjusted for stock-based compensation and intangible asset amortization.
(2) GAAP sales and marketing operating expenses adjusted for stock-based compensation.
(3) GAAP research and development operating expenses adjusted for stock-based compensation.
(4) GAAP general and administrative operating expenses adjusted for stock-based compensation.
(5) Other segment items consisted of stock-based compensation expense and intangible asset amortization.
10. Income Taxes
The following table presents income taxes and the effective tax rates for the periods indicated (in thousands, except percentages):
Three Months Ended Six Months Ended
June 28,
2025 June 29,
2024 June 28,
2025 June 29,
2024
Income (loss) before income taxes $ 3,427 $ ( 8,682 ) $ 437 $ ( 8,214 )
Income taxes (benefit) $ 3,626 $ ( 724 ) $ 5,423 $ ( 359 )
Effective tax rate 105.8 % 8.3 % 1,241.0 % 4.4 %
The Company has historically recorded its interim period provision for income taxes by applying a forecasted annual effective tax rate to year-to-date earnings and adjusting for discrete items. However, due to the level of forecasted provision for income taxes relative to the forecasted pre-tax income used in computing the effective tax rate, the effective tax rate is highly sensitive to fluctuations in pre-tax income and does not provide a reliable estimate for income taxes in the interim period. As such, the Company has computed its provision for income taxes for the three and six months ended June 28, 2025 and June 29, 2024 using an actual year-to-date tax calculation. The Company plans to revert to applying a forecasted annual effective tax rate to year-to-date earnings and adjusting for discrete items once that method is reliably estimable.
The Company’s effective tax rate for the three and six months ended June 28, 2025 differed from the statutory federal corporate tax rate of 21% primarily due to state taxes, the effect of non-deductible stock-based compensation for executive officers offset by the favorable impact of U.S. federal research tax credits, excess tax benefits from stock-based compensation and the U.S. tax impact of foreign operations.
The Company maintained a valuation allowance of $ 30.6 million for the three and six months ended June 28, 2025, compared to $ 29.9 million for the three and six months ended June 29, 2024, on certain U.S. federal and state deferred tax assets that the Company believes are not more likely than not to be realized in future periods.
The Company considered scheduled reversals of deferred tax liabilities, historic profitability, projected future taxable income, ongoing tax planning strategies and other matters, including the period over which its deferred tax assets will be recoverable, in assessing the need for and the amount of the valuation allowance. In the event that actual results differ from these estimates, or if the Company decides to adjust these estimates in the future periods, further adjustments to its valuation allowance may be recorded, which could materially impact the Company’s financial position and net income in the period of the adjustment.
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In December 2021, the Organization for Economic Cooperation and Development enacted model rules for a new global minimum tax framework (“Pillar Two”), and certain governments in countries in which the Company operates have enacted local Pillar Two legislation, with an effective date from January 1, 2024. The Company currently does not expect Pillar Two to have a material impact on its financial statements.
On July 4, 2025, President Trump signed the One Big Beautiful Bill Act ("OBBBA"), which includes a broad range of tax reform provisions affecting businesses. The OBBA includes numerous changes to existing tax law including extending or making permanent certain business and international tax measures initially established under the 2017 Tax Cuts and Jobs Act, which were set to expire. Additionally, the OBBBA permanently eliminates the requirement to capitalize and amortize U.S.-based research and experimental expenditures over five years, making these expenditures fully deductible in the period incurred. The Company expects these provisions to result in a reduction of current income tax liabilities and a corresponding reduction to deferred tax assets. The Company will continue to analyze the OBBBA and its impact on its financial statements and will reflect any impact in the period of enactment.
11. Net Loss Per Common Share
The following table sets forth the computation of basic and diluted net loss per common share for the periods indicated (in thousands, except per share data):
Three Months Ended Six Months Ended
June 28,
2025 June 29,
2024 June 28,
2025 June 29,
2024
Numerator:
Net loss $ ( 199 ) $ ( 7,958 ) $ ( 4,986 ) $ ( 7,855 )
Denominator:
Weighted-average common shares outstanding used to compute basic net loss per share 64,525 65,678 65,321 65,509
Basic and diluted net loss per common share $ ( 0.00 ) $ ( 0.12 ) $ ( 0.08 ) $ ( 0.12 )
Potentially dilutive shares excluded, weighted average 15,086 12,300 14,369 11,863
Potentially dilutive shares have been excluded from the computation of diluted net loss per common share when their effect is antidilutive. These antidilutive shares were primarily from stock options.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.