NEW YORK, July 20, 2026, 19:04 EDT — U.S. cash markets shut down for the day.
- Calix NYSE:CALX dropped 12.7% to $33.50 during extended after-hours trading. The stock finished regular hours down 2.0% at $38.35.
- Adjusted earnings came in at $0.47 per share, surpassing the predicted $0.40. Revenue was $293.3 million, ahead of expectations.
- Calix projects an adjusted gross-margin midpoint of 52.0% for the third quarter, representing a sequential decrease of 280 basis points.
Calix stock dropped significantly on Monday as a strong alert over margins eclipsed its highest-ever quarterly revenue. Shares stood at $33.50 at 5:58 p.m. EDT.
The broadband platform company forecasts an adjusted gross margin for the third quarter in the range of 50.5% to 53.5%. The midpoint of this outlook is 280 basis points lower than its second-quarter result.
The drop alters the earnings outlook. An early estimate indicates revenue increasing by 3.6%, as adjusted gross profit in dollars slips around 1.7%.
| Metric | Q2 2026 actual | Q3 2026 midpoint | Sequential change |
|---|---|---|---|
| Revenue | $293.3 million | $304.0 million | +3.6% |
| Adjusted gross margin | 54.8% | 52.0% | -280 bps |
| Approximate adjusted gross profit | $160.7 million | $158.1 million | -1.7% |
| Adjusted EPS | $0.47 | $0.41 | -12.8% |
Gross-profit figures are early estimates based on company-reported results and median guidance targets.
Second-quarter results surpassed expectations on Wall Street. Adjusted earnings came in at 47 cents, compared to the projected average of 40 cents. Revenue exceeded the forecast of $289.9 million by around 1.2%.
Calix’s reliance on appliance sales is driving the pressure. Appliances accounted for $242.8 million, making up 82.8% of revenue for the quarter.
Adjusted appliance margin fell by 460 basis points sequentially to 52.9% due to memory costs. Management attributed the rise in component prices to increased demand from artificial-intelligence data centres.
Software and service revenue climbed to an all-time high of $50.5 million, up 16% from the same period last year, and accounted for 17.2% of total sales.
The adjusted margin for that unit rose by 810 basis points from the previous quarter, climbing to 63.8%. Calix anticipates another record software-and-services margin in the third quarter.
Contracted demand was solid. Remaining performance obligations increased by 11% to $386.4 million, and current obligations were up 21%.
Chief Executive Michael Weening and CFO Cory Sindelar described the surcharges as a protective measure. “Our memory surcharge programs are designed to recover costs—not add profit,” they stated. SEC
New orders will face higher surcharge rates, which will reset each month. Lower second-quarter rates remain in effect for the existing third-quarter backlog, postponing cost recovery.
Calix reduced adjusted operating expenses to 42% of revenue, down from 45%. The company produced $11.9 million in free cash flow and bought back $69.4 million in shares.
Cash and investments declined by $49.0 million quarter-over-quarter to $194.3 million. The company still had $94.1 million available under its buyback authorization.
Calix anticipates full-year revenue will approach the high end of its 15% to 20% growth range. The company’s third-quarter revenue forecast of $301 million to $307 million indicates that demand is holding steady.
The stock showed limited movement leading up to results, falling 1.8% across five sessions ending Monday, prior to the after-hours drop.
The next potential market mover is set for Tuesday, when management is scheduled to conduct its earnings call at 8:30 a.m. EDT.
Potential risks involve additional memory price increases, pushback against monthly fees, and reliance on a limited customer base. A single client accounted for 12% of revenue in the second quarter.
Calix maintains its target of 15% yearly growth and a long-term operating margin of 20%. Investors now seek confirmation that the operating margin can rebound in line with sales growth.
