Okay, I'll move up. Greetings from Asbury Park. We are waiting for Samik in case anybody's listening in. Are you on the web yet? We are on the web. While we're waiting for Samik, happy to answer any questions or I can give you a brief update as to how things are going. Who would like a brief update? They're going well. Thank you for asking. Any other questions that anyone wants? All kidding aside, the company is obviously riding a wave of disruption, and post-COVID, you can see the numbers chewing back up. The execution is back to sequential growth and sequential gross margin expansion. We're seeing good discussions with post-crossing the chasm medium and large customers. That is very exciting. It's why you get the opportunity to chat with me instead of Michael Weening, who's our CEO, because he's actually with customers, which is where, to the extent that you're shareholders, where we all want him to be in helping push this disruption that little bit faster. I think that would be the major part. Hold on a moment. Our host is trotting in. Keep going, Claire. Here's Johnny. It's always a pleasure. No, Sam, actually, I was just, by the way, it is always a pleasure. Good to see you. Okay, Samik is here. Did you want to finish what you said? Trust me, the audience is bored with me already. Good. Only if they're smart. Okay, so let's start with, you know, I do want to take the opportunity to sort of ask you to still, if you promise to keep it to five minutes, talk about. Have we spoken before? Talk about Calix. When we think about the traditional broadband equipment landscape, how do you envision Calix disrupting it? Maybe if you can just give us a quick outline of that for anyone sort of as a new investor listening in, I think that's useful. Promise, keep it to five minutes. I'll keep it to less than five minutes. Ignore Samik's question and take it in the following fashion. Focus less on what we are doing, focus more on what our customers are doing. If you look at what we refer to as the broadband experience providers, they are the ones that are gaining subscriber share. When you hear larger public companies saying they're losing broadband subscribers, they're losing them to broadband experience providers, or they're churning the low price, I just want a cheap service to fixed wireless or something else. The majority of folks are moving towards the internet experience that they want, which is a properly priced, outstanding experience where they give net promoter scores of 50, 60, 70, 80. They have virtually no churn, and they're very prone as subscribers to take on new offerings from the service provider. Now, tying that back to Samik's question, we are the ones that are helping those broadband experience providers bring that model to the subscribers with our technology, our platform, cloud, and managed services. We have appliances that run those. The other most important part of what we do is we have a direct customer success team that works with our customers to meet their goals and achieve those numbers. That was a minute and 30. Thank you. Thanks. Maybe talk about that overall spending from your customers in light of the current macro where rates are higher, uncertainty is higher. Where do you see their focus being? Are there ways they can optimize sort of dipping into Calix's portfolio while at the same time exercising some level of discipline or, I would say, some level of caution given the macro backdrop? Actually, the higher the rates, the better for us. The reason is when you're building network infrastructure, the cash-heavy part of it is actually building the fiber, the routes, the network, et cetera. What people are finding is, you know, when interest rates were zero and they could go off and build infrastructure for basically no carrying cost, then the take rates on the network didn't matter as much. They could build the fiber network and they could get 18% of the homes passed or 20% of the homes passed. I dare say all of you have heard of the term homes passed. If you think about that, that's a construction term. It's not a service provider's term. As you start to bring the interest rates up, the first thing any investor or private equity sponsor says is, why are we building more network at 18% take rates? How about if we get more subscribers on our network? If you go back to what I just said about the subscriber experience, that's the way you win subscribers is with that whole platform approach. It has actually accelerated the disruption and Michael's ability to go and engage with a lot of those CEOs that were former build a pipe, sell it for a price. They're now looking at their model asymptoting at these low take rates and they're getting their heads stove in by their sponsors to go figure out how to get more subscribers on the network and actually stop building new network. Historically, the business has been lumpy in terms of how customers have pulled sort of demand or how your revenue trends have been from your customers, including some of the last couple of quarters as well. We have seen some level of lumpiness within the customer cohorts, not exactly at the top line level. What has driven the business to be lumpy? Like when customers are spending on a more sustainable basis, what eventually drives that underlying sort of 90-day period to be quite lumpy from them? So lumpy, you mean in the cohorts of small, medium, and large? Yes. There's all different schedules and pieces and what's going on. Look, we're happy to have lumpiness in those cohorts because it literally depends on who's doing what, when, and where. What we'd prefer to not have is lumpiness at the top line. Clearly, if you go back two years to 18 months ago, we went through that at the back end of the COVID pandemic. That was atypical, but the whole COVID pandemic was atypical. If you actually go back to, here's a graphic to do, go back and look at first quarter of 2019 through to today, because the first quarter of 2019 is when our old model of Calix 1.0, we were founded as a communications box company. The platform company started to really run and we started moving everything into the platform company. If you go from Q1 of 2019 to today, what you'll actually see is a 16% smoothed out continuous annual growth rate. More importantly, I shouldn't say more importantly, but as importantly, gross margins in that same period of time expanded by 175 basis points every year. Now, during the pandemic, revenue went up a little faster, but if you remember back here, the margins actually went down because of the increased costs during COVID. We had some vendors that charged a little bit more and we'll leave it at that and our costs went up. Margins actually crested at 53, went down to 50. They're now at [562]. Revenues kept going up, then they crested and now we're back into sequential growth. It's not going to take that very long for us to get past that revenue high watermark, but it took a pandemic to really upset the model. As far as movement underneath that top line, not worried about it and it's not unusual. Okay. I mean, where I was going with that question is there is some lumpiness in the individual customer cohorts. You manage it relatively well on the top line, barring sort of the digestion that everyone went through in the industry. How do you get comfort around a sustained investment cycle from your customers when you see that level of quarterly volatility in their demand patterns? What we focus on is, here's an analogy for us, and we do not think of our customers as distribution partners. We think of our customers as broadband experience providers, but what we are focused on is actually their deployment rates. We have perfect information on deployment rates. What we focus on is in essence the sell-through to the subscribers. When are they deploying? As long as we have that and that is marching up and to the right, then everything else is just buffers in between. The only thing that will change that is if one of them makes a strategic decision to stop, because otherwise we know their deployment rates and we are actually working with them on raising those deployment rates. We had a couple of customers 18 months ago that did a strategic review on everything and stopped it. At the same time, we were taking our lead times from 52 weeks down to 12 and everything went rrrrrrrrrrrr. It was literally the needle across the record. It can happen, but we have so much data, direct relationships with all of our customers. We have a pretty good view into what is going on, but our strategic view is only as good as their strategic visibility. It can happen, but we should have a window into it. Got it. Okay. Moving on to the areas of strength where you've seen your small business customers do really well, including some of them moving into medium sizes as well. When we look at the overall broadband landscape, like I don't know to the extent that you can quantify it, what is the magnitude of share gains that you see from these small, medium customers? What level of visibility do you get in terms of the share gain path that they're on that continues to tell you that those itself will continue to outperform the underlying market, take share from the tier ones? We look at deployment rates of individual customers. You can look at that versus their total subscriber count and are they growing their subscriber count? We know it literally to the individual unit. Not all, but most of the broadband experience providers are growing their share of subscribers, then they are growing the services that they put on those subscribers because as they bring new subscribers on, they like the experience, their promoter scores go up, they are more willing to trust the service providers and grow. The challenge that investors have is most of these customers are private. They are smaller. Brightspeed is private, but they are a little more public with what they are doing. If you go look at all of that, there is a negative template, which is there are larger companies out there that are losing subscribers. It used to be the wireline providers six or seven years ago, five years ago, and the cable folks were saying, "Hey, we're taking internet share." Now they're losing share. To where? To most of these folks. Maybe on the flip side, you did see certain large customers pull forward revenue in the quarter. How are you interpreting that in relation to, is it a pull forward of their deployment or is it a pull forward of inventory just to get ahead of tariff-related price increases? How are you interpreting that? The pull forward is a wonderful thing as to what's going on with the customer and to the Calix business model. For those of you who have followed communications equipment companies over the last few decades, you may know that when you hear a pull forward, you immediately think, "Air pocket coming. It's not us." The reason is that particular pull forward, we have great visibility into and we can manage things around what's being shipped, et cetera. That customer is literally doing a continuous rollout and has been for the last eight years. They made an internal decision to bring over more of their subscribers on a legacy network onto their next generation network. That being said, they're a tier one and tier one's have a tendency before they go do another buildout, they like to have everything in their warehouse. In their case, they have an external warehouse that kits everything up and then ships the kits. It was great news, but it was originally planned to be a couple of months later. Got it. Okay. Taking a step back, the momentum that you have with the small, medium customers as well as the, as you said, like the large customer deciding to port more customers over to the new network, if we take a longer-term view, do you expect Calix to be more driven by new network builds versus replacing some of the incumbents in the legacy networks? Like what, particularly as we start to think about sort of implications of BEAD, what is Calix's growth driver going to be? Is it going to be more around new network builds or expansion of existing networks? Great question. How about if I take all of you and invite you to our board meeting and I'll tell you what we look at? Everybody be in favor of that? We would be. Okay. By the way, if you're in our board meetings, you get to spend more time with me. Oh, never mind. I shouldn't have brought up the downside. Our number one strategic slide, dashboard slide that we look at is GigaSpire deployment rates. GigaSpire is the Wi-Fi router premises system. When that's being deployed, it indicates that one of our customers is getting a new subscriber on the services. What follows Gigaspire are platform cloud and managed services deployments depending upon what's being sold, or maybe it'll take you some time as a subscriber and maybe you'll sign on for the managed services later. That's the number one driver of future value. The second slide we look at, guess what? Our platform cloud and managed services deployments over those GigaSpires. Now you're looking at the whole install base and saying, "How are we doing?" Those are the two biggest drivers of value. Your question was, "Where do they come from?" How much of that is a new customer versus existing customers expanding? By far, the most important thing is expansion of existing customers. By far. It's the biggest driver of the whole business. If in adding new subscribers to their existing network, adding our model to the subscribers that aren't on it yet, adding services over top of it, it's a land and expand model. You know that if you look at land and expand models, if you stop landing, that's ultimately going to be a problem. You're always trying to land new footprint, but it's basically building up your addressable market. Does that make sense? Yep. Yep. Got it. Okay. Turning for a bit to the supply side, tariffs and all these sort of changes there. Not asking you to comment on what's announced yesterday. I think Cory knows that as well. How are your customers firstly dealing with the tariff dynamics? What have you communicated to your customers and what to expect? How are you seeing your customers react to overall the tariff dynamics at this point? So far, the tariffs have been put on hold. We got a 90-day reprieve. We have communicated nothing to our customers at this point, right? I think longer term, we see an end state assuming that USMCA holds, but we see a tariff-free state, call it 18 months from now, by moving our manufacturing to Mexico. In that timeframe, we are absolutely trying to close the gap. We have our balance sheet. We had about a quarter worth of inventory. I have asked our operations team to go build as much as they can during this 90-day reprieve. Maybe they will get another four months of inventory inbound before they come into place. Maybe this reprieve will be actually extended another 90 days. We continue to narrow the window. What we do not want to do is disrupt our customers, right? We will be like the last company to pass along tariffs if we have to. If we have to, we'll do it at no margin, no markup. It will be a strict cost pass-through. We would only want to do it once, right? Eliminate the disruption. Much as what you saw during the pandemic when we had all those cost increases coming out of the supply chain crisis, we are the last vendor to do it. By the time we did it, it was kind of a no-brainer. Our customers were like, "Thank you for waiting as long as you did and glad it's not more than what you did." We will probably play the same playbook with that right now. If I may add. Please. Thank you. That was the absolute statement. That's Calix compared to [Calix]. If you go back in the pandemic, right, we went through that whole cycle. Margin, cost, revenue down, up. If you look at the start of the cycle and the end of the cycle and you look at near competitors to where we are now, the distance has broadened tremendously. Anytime there are uncertain times, we have an opportunity to further the gap to anyone. What Cory just said, we will use stability, make sure we're communicating clearly. There are vendors, legacy vendors in the space that have already issued tariff increases. Comparatively, if you have a long-term view, as apparently I do, it's great. It's another opportunity for us to excel. We have a supply chain team that literally was just Resilinc, which is a supply chain risk firm that has 140,000 companies under surveillance, just named us 16th out of 140,000. This is not a weakness, quite the opposite. This is a strength for a whole bunch of reasons. Okay. Great. Maybe Cory, just to quantify the supply chain move that you're trying to execute on, which is Mexico, is some of the capacity already in Mexico? Are you going from essentially zero to 100 in 18 months? How should we quantify that? Yeah, I would characterize it as we want to have the flexibility to have incremental capacity in Mexico. Not that we will move 100% of it. We, before Liberation Day came along, were already moving towards capacity in Mexico with our next generation access product. So we've secured that capacity, so that'll be the easier one. We've also secured capacity with another one of our ODMs. Over time, we've got a couple more we have to work through, but we've got one of the best teams in the industry. We will sort that out and make progress to having the ability to go there. A flexible footprint with, I mean, do you know what's going to happen? No. What matters is we have a very flexible footprint, a great team. By the way, as you've heard us say many times, we have 50 SKUs that drive all of our revenue. Calix 1.0 had 3,200 SKUs. That is what communication systems companies are confronted with. It is a very focused model that allows us to go execute to it. Cory, just to check one thing. As you think about moving the capacity to Mexico, is there an incremental difference in sort of the landed cost currently versus Mexico? Sure. Yeah. I mean, there's a reason we were in Southeast Asia. It was the lowest cost producer, right? You do get some trade-offs. For example, we will be able to build more just in time because it's in Mexico and we don't have the eight weeks of transport across the ocean. We will get a little bit back in terms of transportation costs, but net-net, it is more expensive, but not nearly as expensive if we were manufacturing 100% in the United States. Okay. Okay. Got it. Let's move back to the demand drivers. And more recently, you've talked about the shift in revenue between intelligent access and the unlimited subscriber revenue for customers. Maybe if you can just flesh that out a bit more. I mean, how to think about cycles that you see between those two product areas? Where are we today? What is the sort of current focus telling you in terms of subscriber focus? Very consistently, this has moved for a number of years now. Because early on, as we slowly but surely built our subscriber edge, most of our appliance revenue was on the network side. Small amount on the premises side. The premises side has continued to grow because ultimately, if you think about Verizon's deployment of an E9-2, which is AXOS and their network is sole sourced, that E9-2, which is 3.5 in high, 19 in wide, it's a very expensive system. It's $50,000, but it handles 5,000 endpoints. So it's $10 per endpoint. It's not where the revenue is ultimately. The revenue is actually closer to the subscriber, which makes sense. If you think that through, ultimately, the mix is going to be significantly disproportional to the premises side of the business and much less so to the network side. We're actually, on an as-book basis, approaching that, what I think is an asymptote. Not there yet, but that shift's been going on. It'll eventually stabilize. Once it stabilizes, whatever that margin mix is will stay. Okay. Okay. You have talked about the subscriber experience and the focus on that from your customers. Constantly. Maybe talk about managed services. I mean, as much as we've been discussing tariffs for the last quarter or so, haven't seen as much discussion about what managed services is doing in the last couple of quarters. Maybe if you can just give us progress report there. The managed services, if you look at our quarterly letter, the number of customers deploying managed services is actually ramping up pretty quickly. It lags the platform and the cloud because it's sort of cumulative. You need to have the platform, you need to have the cloud before you can deploy the managed services. That uptake by customers is actually increasing at a good clip, as is the deployment across subscribers. Both are making very good progress. You will see it ultimately manifest itself in the gross margin mix. Actually very well. How do you see the adoption curve there playing out in terms of are customers willing to take it and sort of roll it across their entire subscriber base at one go? Or is this cumulative in the sense that you need to do the land and expand with managed services as well? We've seen everything from land and expand to, "I'm going to start with one and I'll sign a commitment for one, and we'll go to two." And some customers that literally say, "You know what? This is going to be our model and we are going to push it to all of our customers." It runs the gamut right now. Got it. Got it. Okay. RPO growth, that's been quite robust more recently. I mean, does that tell us sort of what the adoption of managed services is and what you're booking in terms of revenue on the back, basically for managed services? How to think about that growth trajectory? Partially, right? The largest components of RPO are going to be the managed services, the clouds, right? Those are the two largest components of that number. It is a reflection of the maturity of our customers on our platforms. If you think about it, every customer that starts is at zero. They start rolling it out. They are taking maybe legacy subscribers, getting a GigaSpire put into place, and then starting to monetize on top of it. That all just takes time. In the last year, you saw a number of our larger customers do renewals. If they started at zero and they had a three-year agreement, they are at a certain level. The next three-year agreement is about a double of that original agreement if you just think of the math on the linear curve. That is what you are seeing. You're starting to see the maturity of our customers move into those second-generation contracts as they continue to not only expand more subscribers, but then increase the technology stack that they're adopting. Within the managed services offerings that you have, when it comes to the Operations Cloud versus Marketing Cloud, can you just give us sort of what you're seeing in the background in terms of where the adoption's higher, lower, what are you seeing more customers pull at this point? Right. That's easy. We have three personas on one cloud. There is one, in essence, data lake that sits underneath one cloud, and then there are three personas: Operations, Service, and what we call Engagement. The way our customers engage with their subscribers. By far and away, the most mature and the furthest advanced from a deployment standpoint is Service Cloud. It was basically here first, and it literally is how they run their tech support. Following up behind that is Operations Cloud. Engagement Cloud is the laggard, but also coming up at a good rate. Why is it the laggard? Operations Cloud, if you think about most service providers, this is sort of what they do. It is very comfortable. Engagement, where you are marketing and you are thinking that through, is actually a little more foreign. What Engagement Cloud customers indicate is a customer that's actually further on the path of evolving from a broadband service provider to a broadband experience provider. They are doing much more full-blown engagement with their subscribers, reaching out to sell more managed services or different packages, using Engagement Cloud to, by the way, identify areas where they should build. Engagement Cloud also helps them look at subscribers that aren't on the network. It's a whole different beast. The service provider themselves has to be oriented that way. Okay. I mean, maybe just to follow up on that, are there beachhead customers that you typically look to land in each of those cloud offerings and then use that to eventually go into more new customers? Like how does, in your way of marketing these clouds? We already have those beachhead customers. Yeah, I mean, we're not lacking for customers that are able to talk to other customers, for sure. Lots of references. We bring everybody together at ConneXions every year. Most of the time on the ConneXions stage is not us talking to our customers. It's actually our customers that are talking about what they've done. Anytime you can see someone of your own ilk, it's much better. It's important to note that you don't have to have AXOS to have EXOS or to have our clouds. In terms of landing a beachhead and a new customer, we can approach them by any one of the three means. For example, you can run whatever existing network you have, and we can go target your subscriber involvement. We engage with just at the cloud layer. What we find is after wherever we engage, inevitably it expands within the account as they get more and more comfortable with the technologies that Calix is bringing to them. Okay. Let me just do a quick check if anyone in the room has a question. Any questions? Okay. Moving to BEAD. Given your closeness to the precedent, we probably know what's going to happen. What's the latest? Now, when you say precedent, you mean P-R-E-C-E-D-E-N-T? You know what I mean. What's the best thinking, the latest thinking on your front in terms of how this, when we get more certainty about the program? Yeah, a lot. Into real dollars? I think you're going to continue to see it being whipsawed around by different rumors, this, that, and the other thing. It's quite unsettled, as are the plans for ReConnect and USF and all sorts of things around the government right now. The clarity, I believe, comes when Arielle Roth, who is the NTIA administrator, comes off of maternity leave and goes for Senate approval. She's not there yet. When that happens, I think you'll see what ultimately becomes the technology recommendations, etc. They're flying into some boundaries here. The first thing I would be remiss if I didn't say is if you go back to our earnings call in October, which was followed by everybody running around going, "BEAD's going to get canceled," which gave investors a buying opportunity. We haven't heard one word from anyone about canceling BEAD. Not one for the last 90 days. Nothing. What we have heard is, "Can we start to rejigger the technology rules?" The challenge you have is if you change the rules too much, you restart the whole process. This is one of the biggest constraints that they have got to figure out is how do we go back to the states and say, "Open up these boundaries, do something without pushing too far where service providers look at the rules and go, 'If I had known those were going to be the rules, I would have applied.'" As soon as you do that, now you are restarting the process and the whole thing is pushed out again. That is the delicate dance that is going on. What do I think happens to your answer directly? I think technology rules get relaxed. I think you see more funds available for satellite. I think you see more funds available for fixed wireless. In the end, here's the game theory question. If you're a state administrator and you have X number of unserved subscribers that you want to reach and you have enough money to reach them all with fiber, what are you going to do? Put fiber. You're going to put fiber in. If you don't have enough money, you're going to work your way back until you say, "Half of them I can reach with fiber, a quarter of them with fixed wireless, and a quarter with satellite." You're going to try and optimize. Unless you want to condemn your underserved or unserved subscribers to a technology like satellite and not give them a chance for fiber, it doesn't make sense. You're going to apply those same rules, and it depends on how many unserved subscribers they have and how much money. I would be very surprised if it's run any differently. In the end, remember, we view it as capital into the space. That's number four on our dashboards. It's not even number one in capital into the space. Number one is private equity by far. Our focus is much more on private equity sponsors working with customers and us working with them so they understand the business model. We have a team that looks at government funding for sure, but it does not drive the model. Got it. One of the things that's come up often with investors is, as you said, you expect the technology rules to be relaxed a bit more. I do. Maybe in the iteration. One of the concerns from investors has been, is there a way of specifying what allocation has to be given to satellite in the overall program or what allocation has to be given to fixed wireless in the overall program? Is there a way for the administration to specify that? Look, it's not determined. I assume the answer is yes, but you have to look at it back from the state's perspective as well. The states are lobbying heavily that, "Look, just rejigger some things and let us run the program." Is it possible? Sure. Will it come down, to your point, as a hard rule? I think as soon as you do that, you're now back to rebidding out the program. I think you're going to see recommendations and wink, wink, nod, nod. There'll be conversations behind the scenes. I would be surprised if it's going to be a hard and fast rule change unless they are willing to literally start the whole program over again. Okay. Got it. For the last one, just maybe Cory, on the long-term growth of 10%-15% and how you're thinking about the long-term drivers for margins for the revenue growth, just talk about how sustainable do you think the growth targets are given the current macro backdrop and including or excluding BEAD? How do you think about those targets? Yeah. For the moment in the guidance that we've provided, we've X'd out BEAD. Don't know when it gets started. We'll adjust kind of those estimates once we have a better sense of the lay of the land. With that being even pulled out, that doesn't constrain us to be in that 10%-15% annual growth rate. As well as our margin expansion of 100-200 basis points, we're well within that guidance, and we think that can continue for the foreseeable future. Okay. Does that change? Does the tariff landscape change at all your expectation of the gross margin expansion? It certainly possibly could. Right now, in our mind, we'll pro-forma that out, right? We see an end state of zero, assuming it stays an end state of zero. We'll pro-forma that out for whatever part of the bubble we can't get through. It's kind of how we're thinking about it. We'll see how that adjusts. Absolutely, it'll have an impact on margins to some extent. We'll do our best to stay gross profit neutral. Obviously, it's going to change the gross margin. Margin. Okay. Margin. Okay. Sorry. As long as it's gross profit neutral, the thing I focus on is cash. Big fan of cash flow. It's the meaning of life. Cool. I'll wrap it up there. Thank you for coming to the conference and thank you to the audience. Thanks for the invite. I'm glad you came in. By the way, very nice socks. You're welcome. Thank you everyone.