may 2016 calix investor presentation

May 2016

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This presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements relate to future events and expectations and involve known and unknown risks and uncertainties. Examples of forward-looking statements include, but are not limited to, statements about our development of new products and product features; our anticipated growth and growth drivers; our future financial condition and results of operations; our future business, operational and financial performance; and the success and/or market adoption of our products and solutions. We have based these forward-looking statements on our current expectations, assumptions and projections. Our actual results or actions may differ materially from those projected in forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and factors that could cause results to differ materially as described in our filings with the Securities and Exchange Commission, including our annual report on Form 10-K and quarterly reports on Form 10-Q. Except as may be required by law, Calix, Inc. undertakes no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise.

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3

1.

2.

3.

4.

Calix at a Glance

Value Shift from Hardware to Software

The Access Market Opportunity

Financials Update

5. Appendix

Calix at a Glance

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2010 2011 2012 2014 2015

• IPO on NYSE • Occam acquisition

• EMEA and Australia expansion

• Ericsson fiber access products acquisition

• Ericsson global reseller agreement

• Launched Open Link Cable

• Introduced GigaCenter

• Introduced AXOS platform

• Launched G.fast and NG-PON2 products

• Expanded GigaCenter platform

Serving over 1,200 customers in more than 70 countries

5

22%

66%

12%

Customer Mix - 2015

Tier 1 Tier 2/3 International

http://www.frontier.com/

http://www.frontier.com/

Data Center Outside Plant

Broadband Aggregation Optimization

Success-based Pay-as-you-grow Architecture

Subscriber Edge

Technology & Service

Optimization

E3-48C

716EE7-2

E7-20

E5-48

E5-216F

GigaFamily

6

E3-8G

Value Shift from Hardware to Software

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The World’s Most Advanced Operating System for Access Networks

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FAST. Time to Revenue

Speed of New Features. Individual software components are containerized which simplifies adds /deletes /changes and eliminates the need to constantly re-test the entire OS, thus maximizing reuse, while leveraging industry standards and open source software

Speed of New Products. The unique hardware and software abstraction layers (HAL / SAL) preserve software independence from the underlying hardware and allow rapid development for any new access technology

ALWAYS ON. Resilient

Eliminates maintenance windows through the live upgrade functionality

Minimizes downtime using self-diagnosis, self-healing and process auto-restart

Provides unprecedented visibility into application performance via monitoring and streaming data off the systems to feed third-party or open source monitoring tools

SIMPLE. Operational ease and flexibility

Plugs into any open standard orchestration and management solution because it supports dynamic “state” manipulation through standard, open interfaces

Portable across the network with common, stable field deployed components

Rapid delivery of new services, superior customer experience and unparalleled reliability

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Controlled environment

Short lifecycle / Easy to replace

Partially to fully exposed environments

Long lifecycle / Difficult to replace

Data Center Access NetworkData Center Access Networkvs.

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The Access Market Opportunity

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Source: Infonetics, Morgan Stanley Research, UBS Research, Barclays Research, Company estimates

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• 10 percent of all Americans (34 million people) lack access to 25 Mbps/3 Mbps service

• Wide disparity between urban and rural subscribers

• 4 percent of urban Americans lack access to 25Mbps/3Mbps service

• 39 percent of rural Americans lack access to 25 Mbps/3 Mbps service

• US broadband access ranked 16th out of 34 countries

• Universal Service Fund transitioned to Connect America Fund to accelerate broadband penetration

Source: FCC Broadband in America (January 2015)

Source: Morgan Stanley Research, Barclays Research, Nielsen Global Digital Landscape Report March 2015, Nielsen Total Audience 4Q14 Report, Comscore

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DOCSIS 3.024 Bonded

Gigabit GPON DOCSIS 3.1 (initial)

10000

Gigabit FTTH

10G PONXGS/NG-PON2

…

10G XGS/NG-PON2

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Lower Operating Costs

Source: RVA LLC: North American FTTH Accelerates, (Q4 2014), RVA LLC North America FTTH Progress and Impact 2015 (June 2015), Google Fiber Kansas City, Bernstein Proprietary Census. Survey conducted by Haynes and Company (May 2014)

Estimated Operating Expense Savings

High Customer Take Rates

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0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

100% Aerial/0% MDU

100% Aerial/20% MDU

50% Aerial/0% MDU

50% Aerial/50% MDU

Non-Electronics/Sub Electronics/Sub

Source: Suburban FTTP Network Scenarios, Telecom & Networking Equipment, The FTTP Renaissance, Implications for Vendors – Jefferies Group LLC May 6, 2015

Electronics represent ~15-25% of the total capex cost per unit served in a fiber deployment after initial build costs

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• Calix is a leader in G.fast technology as the first company in the world to publicly demonstrate a true gigabit experience via bonded G.fast over copper at Broadband World Forum 2015 with speeds up to with 1.5 Gb/s at 250m

• G.fast solutions are ideally suited for short loops < 500 m and speeds from 150Mb/s to >1 Gb/s

• Per U.S. Census data there are over 34 million multi-tenant housing units in the U.S. (per 2013 ACS) with an estimated more than 50% of these units built before 1980

• Aged residential and commercial units are characterized by difficulties in riser access and restricted building access

• G.fast provides fiber-like broadband speeds when fiber is not available

MDU

Riser

GPON/GE

G.fast

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CAPEX $25K

CAPEX $8K

OPEX $1K

OPEX $32K

Central

Office

Generic

Home

20

Mbps

MDU

1:32

split

BPON

ONTs

+ 1 GPON system

+ 32 GPON ONTs

+ 2 CO techs (day)

+ 32 techs in field

(simultaneously)

GPON

ONTs

GPON

OLTs

BPON

OLTs

Total cash spend = $66K -- or $2,063 per home

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CAPEX $4K

OPEX $120

Home

MDU

1:32

split

BPON

OLTs

GPON

OLTs

BPON

OLTs

+ 1 GPON line card

+ 1 GPON OIM

- 1 BPON trade-in

+ 1 CO tech (2 hrs)

+ 0 techs in field

(no truck roll)

80 Mbps

to 1Gbps

GPON

ONTs

Auto-

detect

PO

ONTs

Central

Office

GPON

OLTs

Total cash spend = $4.12K -- or $128 per home

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Financials

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($ in millions, except per share amounts) Actual Guidance

Revenues $98.4 $95.0-$99.0

Non-GAAP gross margin 48.1% 47%-48%

Non-GAAP operating expenses $51.7* $52.0-$53.0**

Non-GAAP EPS – excluding Occam litigation ($0.02) ($0.10) – ($0.06)

Non-GAAP EPS – including Occam litigation ($0.09) ($0.15) – ($0.11)

Cash flow from operations $5.3 Negative

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* Included approximately $3.4M of Occam litigation-related expenses** Included approximately $2.6M of Occam litigation-related expenses

Please refer to the reconciliation of GAAP to non-GAAP financial measures on the Investor Relations section of our website

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$75.0

$80.0

$85.0

$90.0

$95.0

$100.0

$105.0

$110.0

$115.0

1Q

14

2Q

14

3Q

14

4Q

14

1Q

15

2Q

15

3Q

15

4Q

15

1Q

16

RE

VE

NU

ES

IN $

M

($0.15)

($0.10)

($0.05)

$0.00

$0.05

$0.10

$0.15

$0.20

1Q

14

2Q

14

3Q

14

4Q

14

1Q

15

2Q

15

3Q

15

4Q

15

1Q

16

NO

N-G

AA

P E

PS

Revenues +8% y/y

2 > 10% customers

Growth across customers, platforms and geographies

Gross margins of 48.1%

Favorable product and customer mix, offset by full quarter contribution from turnkey network improvement program

Revenues within guidance

Growth across customers, platforms and geographies

EPS above guidance

Better performance on gross margin and operating expenses contained

$0.5M

$20.5M

$40.5M

$60.5M

$80.5M

$100.5M

$120.5M

1Q

14

2Q

14

3Q

14

4Q

14

1Q

15

2Q

15

3Q

15

4Q

15

1Q

16

Domestic Revenues International Revenues

45.9%

47.7%

44.8%

48.1%

49.2%

51.0%

49.3%

46.5%

48.1%

1Q

14

2Q

14

3Q

14

4Q

14

1Q

15

2Q

15

3Q

15

4Q

15

1Q

16

Gross Margin (%)


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$75.5M$79.3M

$88.1M

$112.0M

$97.8M$99.5M$93.9M

$73.6M

$64.3M

$0.0M

$20.0M

$40.0M

$60.0M

$80.0M

$100.0M

$120.0M

1Q

14

2Q

14

3Q

14

4Q

14

1Q

15

2Q

15

3Q

15

4Q

15

1Q

16

Cash of $64.3M

Operating cash flow generation of $3.2M

No debt and untapped $50M line of credit expiring September 2018

Buyback activity complete

Program completed. Repurchased 5.3M shares at an average cost of $7.50 per share 0.4 1.0 2.1 1.8

5.3 $3.4

$7.7

$16.1 $12.8

$40.0

Q2 2015 Q3 2015 Q4 2015 Q1 2016 TotalBuyback

Shares (M) Repurchased

$M Repurchased

Operating cash flow rebounds

Improved cash cycle

Strong collection culture

Cash conversion cycle improvement

Inventory velocity improves by 10 days

Linearity and key focus on working capital

-$5.2M

$4.7M

$15.1M

-$2.5M

-$11.9M

$5.0M$5.1M

-$4.5M

$5.3M

-$15.0M

-$10.0M

-$5.0M

$0.0M

$5.0M

$10.0M

$15.0M

$20.0M

1Q

14

2Q

14

3Q

14

4Q

14

1Q

15

2Q

15

3Q

15

4Q

15

1Q

16

132 Days

115 Days

101 Days

91 Days

113 Days108 Days

90 Days

104 Days107 Days

0 Days

20 Days

40 Days

60 Days

80 Days

100 Days

120 Days

140 Days

1Q

14

2Q

14

3Q

14

4Q

14

1Q

15

2Q

15

3Q

15

4Q

15

1Q

16


Revenues $104-$108M

Gross margin 46.0-47.0%

Operating expenses– excluding litigation $49.6-$50.6M*

Operating expenses $52.0-$53.0M*

Non-GAAP EPS– excluding litigation ($0.04) – $0.00*

Non-GAAP EPS ($0.09) – ($0.05)*

Cash flow from operations Negative

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*Does not take into account $4.5M (or $0.09) litigation settlement proceeds likely to be realized in Q2 or Q3 2016


Predictable, profitable long-term growth

Reaccelerated top-line growth rate

Increased leverage from Operating Expense investments

Accelerated rate of change across industry

Demand drivers remain intact

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Q&A

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Appendix

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PARTNERSSALESENGINEERING

LEVERAGE

Solve a hard problem once

Reuse successful components

Leverage silicon innovation

Can integrate Open Source value

CUSTOMERS

VALUE

ConsistentBehavior

Service Resiliency

Workflow Simplicity

Upgradability( features + fixes)

Reduce OPEX

PORTFOLIO EFFECT

Cross-selling and pull-through sales

Sell once, train once

Solution DeliveryEnd to End

Reduce Cost of Sales

INTEGRATION

Tighter integration

Broader opportunities

Round out the portfolio

Solution Ecosystemversus largervendors

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Infrastructure Layer

Protocol Framework Layer

Protocol and Services Layer

User Interface Layer

Policy and Management Layer

Hardware Abstraction Layer

AXOS

Merchant Silicon / New Technology

Decoupled hardware and software, loosely coupled components

Simplistic 3-layer model transformed to fine-grained independent software components abstracted from the physical layer

Support for 3rd party components with internal and external APIs

DATA PLANE

CONTROL PLANE

MANAGEMENT PLANE

D1 D2 D3 D4

C1 C2 C3 C4

B1 B2 B3 B4

A1 A2 A3 A4

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Source: AT&T Vision Alignment Challenge Technology Survey, AT&T Domain 2.0 Vision White Paper, November 13, 2013

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Source: “Evaluating “The State of the State” of Virtualization, Light Reading, June 2015

NFV requires faster broadband connections, driven by shared functionality between the data center and the subscriber edge

SDN demands flexible, rapidly deployable software applications in order to provide customer friendly solutions on demand

The key differentiator for a systems vendor is to have an operating system that facilitates network operators’ flexible deployment of software applications across their networks as well as in customer specific situations

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“…to capture the cost saving and revenue generating potential of SDN and NFV, communications service providers (CSPs) have to embrace new ways of achieving traditional objectives...What that requires of vendors is to design network platforms and applications that evolve so that they no longer rely on the hardware providing the reliability but instead are designed to assume the probability of hardware failures and perform failover in software instead”

“A significant part of the value proposition of a more software-centric network is that it enables CSPs to respond much more rapidly to both network conditions and customer demands.”

Source: Evaluating “The State of the State” of Virtualization, Hewlett-Packard, Light Reading, Heavy Reading (July 2015)

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Expanded Revenues

•New Products & Markets

•Focus on NFV & SDN

Opportunity

Increased Gross Profit

•Consistent Gross Margin

Expansion

•Funds R&D

R&D Investment

•Operating System

•Access Solutions

Long-Term Operating

Profit Growth

G.fastAXOS

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“Total Internet subscribers grew by more than 19,000 from a year ago, as we ended the quarter with over 290,000 subscribers. Fioptics Internet subscriber additions totaled nearly 11,000 for the quarter, which is a 15% increase compared to the first quarter of 2015, with Internet penetration rates exceeding 35%. Fioptics Internet ARPU totaled $47, up 12% compared to a year ago.” May 5, 2016

"In the consumer [wireline] business, FiOS remains the driver of revenue growth, and now represents around 81 percent of consumer revenue. In the first quarter, consumer revenue grew 28 percent," Verizon CFO Fran Shammo said during the company's earnings conference call with investors. “…fully 60 percent of new customer FiOS sales opt for 100 Mbps speeds and above.” April 21, 2016

“We are expanding and upgrading our broadband network to establish a strong foundation for sustaining growth. We will grow consumer revenue in 2016 as we benefit from employment of 50, 75 and 100 Meg premier speeds which were rolled out during the fourth quarter 2015 to approximately 1 million locations…. We also launched one gig Internet services in four market areas including Nebraska, Kentucky, Texas and in several areas surrounding Charlotte, North America North Carolina -- from our broadband infrastructure.” May 5, 2016

“We've got the rapidly expanding GPON markets. We've gone up again, and we're now at 1.5 million homes and businesses we're here passing the grid out. We've got -- with the exclusion of the last couple hundred thousand, I know we were at 21% penetration at the end of March. We just started over the last year with that GPON work….So that along with MDU and MTU focus we have now, we have fiber to a number of MDUs MTU that are going to help drive revenue.” May 4, 2016

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Source: Company reports

Latest QuarterWireline revenues +1% y/yFioptics revenues +34% y/y

Latest QuarterWireline revenues -2% y/yFios revenues +8% y/y

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$3

,12

5

$3

,20

0

$3

,30

8

$3

,35

2

$3

,43

8

$3

,43

9

$3

,53

4

$3

,52

1

2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16

Fios Rev ($M)

30.0%32.0%34.0%36.0%38.0%40.0%42.0%44.0%

2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16

Fios Internet Penetration Fios Video Penetration

$7

09

$7

12

$7

27

$7

38

$7

58

$7

63

$7

73

$7

74

2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16

Consumer Strategic Rev ($M)

0%

10%

20%

30%

40%

50%

60%

2Q

14

3Q

14

4Q

14

1Q

15

2Q

15

3Q

15

4Q

15

1Q

16

Fioptics availability

$3

4

$3

7

$4

0

$4

2

$4

5

$4

9

$5

5

$5

8

2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16

Fioptics Rev ($M)

0

100

200

300

400

6,000

6,020

6,040

6,060

6,080

6,100

6,120

6,140

2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16

Broadband Subscribers ('000s) - LHS Prism Subscribers ('000s) - RHS

“Broadband access has become a necessity in our everyday lives. In the past few years, broadband has brought sweeping changes in the ways Americans communicate, gather information, conduct commerce, and entertain themselves.”

STATEMENT OF FCC CHAIRMAN TOM WHEELER

“Broadband is not just a technology, it’s a platform for opportunity.”

STATEMENT OF COMMISSIONER JESSICA ROSENWORCEL

Source: 2015 BROADBAND PROGRESS REPORT AND NOTICE OF INQUIRY ON IMMEDIATE ACTION TO ACCELERATE DEPLOYMENT, FCC, January 9 2015

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Source: Telecom & Networking Equipment, The FTTP Renaissance, Implications for Vendors – Jefferies Group LLC May 6, 2015

41

14

31

43

65

76

100

122

131

0

20

40

60

80

100

120

140

Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015

*Additional customer deployments from Calix customers have been secured but not yet announced.

Calix Gigabit Deployments

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45% of survey respondents currently deploying fiber cover at least 50% of customers with FTTH solutions (41% in 2013)

67% of survey respondents plan to offer FTTH to at least 50% of customers by 2017

85% of survey respondents have a long-term fiber deployment strategy with

74% of survey respondents plan to offer FTTN to more than 75% of customers by 2017

25% of survey respondents have already completed fiber deployments to 100% of customers

Source: NTCA 2014 Broadband/Internet Availability Survey Report, June 2015.

Additional information available at http://investor-relations.calix.com/ • Stock Information

• Financial Information

• Events & Presentations

• Corporate Governance

• Investor Resources

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