CALIX, INC(CALX)Q3 2024 法說會逐字稿

Greetings, and welcome to the Calix Third Quarter 2024 Earnings Conference Call. At this time, all participants will be in listen-only mode. A question-and-answer session will follow a brief prepared remarks. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Nancy Fazioli, Vice President of Investor Relations. Please go ahead.

Thank you, Rob, and good morning, everyone. Thank you for joining our third quarter 2024 earnings call. Today on the call, we have President and CEO, Michael Weening; and Chief Financial Officer, Cory Sindelar. As a reminder, yesterday, after the market closed, Calix issued a news release, which was furnished on a Form 8-K, along with our stockholder letter and was also posted on the Investor Relations section of the Calix. Today's conference call will be available for webcast replay in the Investor Relations section of our website. Before I turn the call over to Michael for his opening remarks, I want to remind everyone that on this call, we will refer to forward-looking statements including all statements the company will make about its financial and operating performance, growth strategy and market outlook, and the actual results may differ materially from those contemplated by these forward-looking statements.

Factors that could cause actual results and trends to differ materially are set forth in the third quarter 2024 letter to stockholders and in the annual and quarterly reports filed with the SEC. Calix assumes no obligation to update any forward-looking statements, which speak only as of their respective dates. Also in this conference call, we will discuss both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in the third quarter 2024 letter to stockholders. Unless otherwise stated, all financial information referenced in this call will be non-GAAP. With that, Michael, please go ahead.

Thank you, Nancy. I'm back from Connections, our annual Innovation and Customer Success Conference, where we set another record for attendance. On stage, we had innovative broadband experience leaders such as Tom McGuire from Bright Speed, Brad Moline from Allo and Scott Hendricks from Tom Bebe share how they are winning by partnering with Calix to deliver a comprehensive business model across consumer, business, MDU and the communities they serve to benefit their shareholders and members. The replay of their motivational business leadership stories along with those of other broadband experience providers from Connections is now available on calix.com. As I stated at Connections, the industry is at a crossroads. A broadband provider must decide if they will remain a speed-based network operator or embrace differentiation through broadband experience. For the last 13 years, we have been building our appliance-based platform, cloud and managed services model to enable broadband experience providers to take advantage of this once-in-a-generation opportunity.

Our mission remains aligned to helping our customers win through the disruption ahead as they leverage our platform to simplify operations and their go-to-market innovate with new experiences that differentiate their offerings and grow for their investors, members and the communities they serve. The strength of our mission, strategy and execution is evident in our results in the third quarter. Cory, over to you to cover those results.

Thank you, Michael. We are pleased by the disciplined execution in the third quarter. We delivered revenue of $201 million, which represents 1.4% sequential growth. This is within the guidance range we provided in July. As expected, buying patterns for appliances are beginning to normalize, so still modest in the near term. Once again, we achieved a record non-GAAP gross margin of 55.4% in the third quarter. Remaining performance obligations or RPOs grew to $296 million at the end of the third quarter. This is an increase of $29 million or 11% sequentially and an increase of $76 million or 35% year-over-year. Our current RPOs were $110 million, up 7% sequentially and up 29% year-over-year. We expect RPOs will continue to grow as our customers add subscribers and correspondingly expand the use of Calix's platform, cloud and managed services. We added 13 new customers in the third quarter - all existing service providers and, therefore, examples of landing new footprint.

On the expansion front, there were five customers that started their first cloud Calix Cloud deployment and 23 customers who developed and deployed a managed service for the first time. These are all examples of broadband experience providers partnering with Calix to win in their markets. Non-GAAP operating expenses were $105 million, up $1 million from the prior quarter related primarily to marketing expenses. Considering our guidance for the fourth quarter, we are on track to keep 2024 operating expense investment in line with 2023. Our balance sheet metrics remain pristine. Cash and investments were a record of $288 million at the end of the third quarter, representing a sequential increase of $26 million, of which half was from free cash flow. DSO remained an industry best at 39 days. Inventory turns were 3.2, up from 2.8 last quarter related to an increase in shipments and a reduction in component inventory on hand.

Inventory deposits decreased by $3 million, bringing our total inventory deposits to $67 million. Coupled with operational discipline, management of working capital remains a focus to enable consistent quarterly double-digit free cash flow. Moving to guidance. For the fourth quarter of 2024, our revenue outlook is between $201 million and $207 million, which at the midpoint would represent 1.5% sequential growth. This is consistent with our expectations for the second half of 2024 as discussed in July. Buying patterns related to appliances are normalizing, albeit modestly at first. On our perspective on BEAD as a future lever of growth remains consistent with our prior comments. We believe this will be a multiyear lens-shaped rollout. There has certainly been positive momentum with the BEAD program heading into the end of 2024 with all but one state now having been approved by the NTIA. Recall that actual funds have yet to be awarded.

And though we expect a few states like Louisiana, Nevada and West Virginia to be early movers. We believe that the vast majority are 9 to 12 months away from making their awards. As such, we expect to see initial bookings in the first quarter of 2025 with shipments occurring later in the year. Our focus on executing our strategy with discipline allows us to help our customers win in the marketplace. Michael, back to you.

Thank you, Cory. As we stated at Connections, the industry is in the midst of a disruption and broadband providers are at a crossroads. They will either remain network operators who sell speed and suffer the fate of commodity mobile operators who face declining revenue and margins or cross the chasm by becoming broadband experience providers. By leveraging our unique end-to-end broadband platform and partnering with our team, they become a comprehensive experience provider winning consumer, business, MDU and the communities they serve. On stage at Connections, the CEOs of our broadband experience provider customers inspired the crowd to transform and win, and our customer success army stands ready to help these service providers transform. Our team leaves Connections inspired by our customers' willingness to partner with us to bring the most innovative ideas to life and by their impressive ongoing success. And as we know, when a Calix broadband experience provider wins, we win. I would encourage all of you to invest time watching the Calix Connections replays on Calix.com, as it provides great insight into how our customers and Calix are leading the industry. Nancy, let's open the call for questions.

Thank you, Rob, you can go ahead.

Thank you. We’ll now be conducting a question-and-answer session. And our first question today comes from the line of Scott Searle with ROTH Capital Partners. Please proceed with your questions.

Hey, good morning. Thanks for taking the questions. Nice job on hitting the September quarter straight down the fairway. Maybe, Mike, just to dive in, looking at June, it appears that it's a trough. You've been talking about it as the trough. We've got small customers up, I think, 3% sequentially in September and that doesn't reflect it sounds like some customers graduating to a larger category. You also have RPOs up 11% sequentially. So I'm wondering what else are you seeing in the pipeline? And how comfortably can you declare that June is now the trough?

I believe we mentioned during the last earnings call that June was the low point. We're confident that we've reached that stage. As we look at the sequential growth guidance we've provided, after Connections, it's evident that RPOs, which indicate our future direction, show customers are investing in our platform to succeed. We are well-positioned as companies aim to become experience providers. Throughout the quarter, I met with CEOs discussing the choice between remaining a network operator or transforming into a high-value experience provider, with Calix being the only viable solution in that scenario. This was evident in our purchase orders. Cory, do you have anything to add?

Yeah, Scott. I would say we have enough evidence that we are in that new normal as it relates to appliances. And so we'll build from here.

Great. And if I could, just to quickly follow up on BEAD. We're almost through every entity besides Texas and $3 billion being approved. It sounds like you guys are still talking about some of the early orders may be coming through in the first quarter, first half of '25. But it sounds like you might actually have some shipments in '25, which seems like it's a mild pull-forward on that front. I'm wondering if you could kind of address a little bit the timing and your expectations of being in late '25 and '26. And as part of that, how your customers are positioned? It feels like it swung back more towards your customer base being extremely well-positioned depending on the market, depending on the entity of the smaller carriers being well-positioned to win a decent amount of share going forward with BEAD. Thanks.

It's a good question. Look, like we've always said, if these programs get out of the chute, they last for significantly longer and larger than expected. And with all of the uncertainty, our customers like most don't like uncertainty, and we've worked our way through that. So as we enter into a period of certainty, to your point, there's only one state left. They now understand what the guidelines are, where there's opportunity for them and where they don't think there's opportunity. More and more of our customers are now applying. They will, as with previous stimulus programs. This is how they work through it. And so frankly, it's going exactly how we've been saying it would go for the last two and a half years since everybody has been saying, it's going to come early. And we're saying, no, it's not. And so with regards to how we see the timing of orders, we are resolute that is exactly the same way that we said it before and the quarter before the quarter before, which is, we'll see a trickle in the first half. We'll see more in the second half. As we get better insight into it and as we help our customers go forward, we'll make hay. So Cory, anything to add to that?

Yeah, so with 55 out of the 56 states and territories being approved, we expect those first orders in Q1 for BEAD. Shipments will continue to build over the course of 2025, right, all the way through 2031.

As a 5 to 10-year program.

Great, thanks so much. Nice job.

Thank you.

Our next question is from the line of Samik Chatterjee with JPMorgan. Please proceed with your question.

Hey, thanks for the question. This is actually Joe Cardoso on for Samik. Maybe just a quick follow-up to that last question and more of a clarification. So maybe just in terms of the contribution in '25 itself. I think over the past couple of quarters you talked about the 10 to 15 bogey in terms of approvals, and that being an indication of being large enough to have a contribution in '25 itself. So as we think about the 55 approvals that we have to date, like is that ahead of your expectations? Or should we think about that more in line with how you were expecting it to unfold through the year? And then basically getting into that, hey, is there a pull forward? Or isn't there a pull forward because this is more tracking in line with your expectations? And then I have a follow-up on this. Thanks.

So by the way, from an expectation point of view, we always saw in November was kind of that looming deadline where we would see the state top line, right? And they are. So we expected a bit of a hockey stick with regards to what's happened for them all to rates to get over that first step because that's what it was required to do. And so it's exactly as our expectations went. And then as for how it rolls out in 2025, I think where we are, Cory commentary on that?

Yeah. I would say that from an expectation perspective, it's in line. We just needed to see an early start, right? And clearly, with the looming election, you're seeing a lot of the states get approved and get the program rolling. So it's in line with our expectation. How steep the line is in 2025, it's hard to say, so we'll see where that is. But we certainly know that we'll start to see some orders in the first quarter, and then the shipments will ramp from that standpoint.

Got it. That's very clear, guys. I appreciate the additional color there. And then maybe just as my second question. You obviously highlighted the largest platform and cloud deal that closed in Q3. I think that makes two back-to-back, which is obviously contributing nicely to the boost in RPO over the last six months. Can you maybe just refresh that out a bit and what's driving these larger deals to close despite kind of what we would characterize as a more sluggish backdrop? And how are you thinking about that deal pipeline and whether we should think of this as more timing? Or are you guys actually seeing momentum build on this front? And thanks for the question, guys. Appreciate it.

The momentum we are experiencing is part of a broader market trend and is not specifically related to BEAD. In fact, we see BEAD as an opportunity for investors to capitalize on an increase. For the past 13 years, we have anticipated this disruption in the broadband market, where 95% of consumers will have access to fast broadband. In a landscape where fast broadband is prevalent and competition is fierce, companies that maintain a focus solely on speed may be relegated to commodity status, similar to mobile operators. We've observed mobile operators pouring substantial capital into the market while facing declining revenue and margins. This disruption has become a focal point of our discussions with CEOs, who are considering how to transform their businesses from network operators into comprehensive experience providers. This involves not just offering basic Wi-Fi but managing the entire home and effectively reaching small and medium businesses, as well as multi-dwelling units, which presents a constant challenge since each MDU is unique.

Building a brand that resonates with the community and fosters loyalty is crucial. An example is Timbigbee, which boasts a Net Promoter Score of 91 because the community, including emergency services and local institutions, views them as an integral part of the community beyond just a broadband provider. We are witnessing momentum because these service providers understand they face significant challenges if they don't adapt beyond just being a simple delivery service. The CEO of Bright Speed, Tom McGuire, recently echoed this sentiment, emphasizing the urgency of transforming their business beyond just a fiber connection. This is the momentum we are seeing. Having been here for eight years, we have been preparing for this since Karl recognized it 13 years ago, investing significantly without competition recognizing the same opportunity. If competitors were to start now, they would only begin to see results in a decade.

So, yes, we see momentum, as reflected in our RPOs, which indicate a commitment to the vision of transforming the business. I realize this is a lengthy response to a short question, but it is important to emphasize. So, Cory?

I would say when you look at the contracts that we landed in the second and third quarters. What you're seeing is our customers that have embraced the platform growing. So think of it just as a simple mathematical formula, right? So when they first join us, they're not on the platform; they're getting started, and they may have signed a contract and it represents $1 million, $2 million, $3 million in the first three years. By that time rate come back around for a renewal continuing on that same linear extrapolation, you get 4.6; you get more of a 2.5x the original contract just as they're continuing to build out. That's what we're seeing. We're just seeing those customers that have partnered with us the longest that are seeing the success, growing their subscriber base. And when they come back for the renewals, those renewals are obviously 2.5 times the original deal. So that's why you're seeing the continued growth in the RPOs as customers are seeing success with the Calix platform.

Sorry, I want to come back on this one more time. So like we talked about in the last earnings call, we had a customer who is now a customer, they were a prospect. They've been a broadband provider for 25 years. Last quarter, they made their first acquisition, anything from Calix, and it was Engagement Cloud to understand the data in their network, the experiences their subscribers were having, and where the market opportunity is. What will happen is they start with engagement cloud, then they'll look at transforming their go-to-market in small business and consumer, and they'll expand it again. You can expect that we have this nice long tail on how we do this as represented by RPOs. But as we transform, we help these customers transform. This is not easy, and that's why we have the only customer success organization worth noting in the entire industry. We've made a massive investment into it because our customers need help, and we stand right beside them as they do that. This is the business that we do. Thanks, Joe.

Very clear. Hey, great. Thanks gentlemen.

Great. Thanks a lot. Just a couple of quick clarifications first. Just on the OpEx for connections in the fourth quarter, should we think about OpEx being lower in the fourth? In the first quarter sequentially for that reason?

That's true. It will be consistent with what you've seen in prior first quarters.

Okay, Great. And then on the RPOs. I mean, over the last couple of quarters, you took last few quarters, you had the largest managed services deals in history going into the RPO. I just wonder on the pipeline there. I mean, should we expect to hear similar things happening in the future? Or was this something special over the last two quarters?

So it's always lumpy. We said that in the past, right? But there was something that happened this week that I think is worth noting. So Louisiana popped out to everyone who is applying for BEAD, and what was on the list was Amazon. Amazon is actually applying for BEAD. With regards to how do I feel about the pipeline, Amazon applying for BEAD is a validation of what I have been saying on stage every single year for the last four years that Euro and Amazon are the enemies of every broadband provider out there? If you are a Euro customer, and Euro was a great company when it was Euro. But as soon as they got bought by Amazon, they became the enemy. All those customers now come to the table because they finally realize that Amazon has actually come out of the Wolf but of the sheep's clothing has popped up. They are applying for BEAD to compete with all of our customers. So do I think with regards to another indicator that our customers are going to consider a different business model to change their markets?

That was a big one, and it should be a wake-up call for every customer out there that if we're not transitioning from a dumb network operator, actually have one go-to-market, which is speed into a full experience provider for the entire community that they're missing an opportunity. So with regards to the future of our opportunities, I think that they're going to continue to grow because all of the elements of a disruption continue to rear their head. Cory, anything to add?

Yeah, Mike, I would add that RPOs in the first quarter grew 7% sequentially in the second quarter with 9%. This quarter, it was 11% sequential growth. As Michael said, we're seeing this growth of our platform, cloud managed services are helping our customers win with the dealer lumpy.

Okay. Last question for me then on BEAD, which is obviously a popular topic. I just want to ask if you see any political risk with the upcoming election, depending on how that goes. Do you think that if there's a change in administration, the timing of BEAD could be at risk because of that? Is that something you're concerned about at all? Thank you.

No, we're not worried. And we believe that the dramatic acceleration in approvals over the last six months is in part because of the impending election. I will remind everybody that this was a bipartisan bill that everyone worked on. Whether it's a red state or a blue state, everybody gets broadband, and they're all going to stay behind it because they want votes. So no, Cory?

I agree. Do you mind?

Okay, perfect. That’s it for me. I appreciate it.

Thanks.

Our next question is from the line of Christian Schwab with Craig Hallum. Please proceed with your question.

Good morning, everyone. As we look ahead at the opportunities, we're currently experiencing sequential growth of 1% to 2% following the trough. Can you provide some insight on what we should expect for sequential growth as we approach the end of 2025 and move into 2026 and beyond? Specifically, how will this growth continue on a multiyear basis, especially with the rollout of the BEAD funds, the potential for lower interest rates, and the conclusion of elections, allowing businesses to resume their activities?

So we've guided a 1% to 5% for every single quarter, right? As I've stated openly, the longer this takes, the better for us. The looming challenge that our customers have regarding do I remain a network operator or cross the chasm and become an experience provider? That decision becomes more and more challenging as time goes by. So the interest rate being high has made everybody kind of have a coming to meet moment where they had to say, what am I going to do regarding my future because suddenly, money isn't free, and I better be driving a good market. We can exit '25 at the middle of that range. If we continue to do our jobs, which is articulate to our customers the opportunity ahead and the challenge they have if they don't change, they will buy into our vision, which will be reflected on increasing RPOs. We will gain more and will land and expand through that footprint over time. Ongoing delays in BEAD has been a boon for us. It will continue to be a boon as it shows up in the end of the second half of '25.

Christian, last quarter, we said that we saw that we would grow from the second quarter on at 1% to 5% per quarter and sequential growth. We said we would be at the low end of that range here for the next several quarters and exit '25 at the middle of that range. That’s reflective of the strong demand that we're seeing. It creates that confidence in terms of the visibility that we're starting to see, but as we look out to '25, '26, it's too early to say what that slope of the line looks like.

Great. Can you remind us if lead times for appliances are now back to the new normal post-pandemic? Are they the same as they were before the pandemic? Could you provide any details on that? And that’s my last question.

Yeah. So our lead times have been stable all year along here. But what you're kind of getting at is the amount of inventory that customers are wanting to maintain. That has been at a slightly higher level than where we were pre-pandemic. We're starting to see those customers come back and do their ordering. They've got their inventory at appropriate levels, albeit at a higher level than it was pre-pandemic. We're starting to see that momentum continue to build from here. We think the order normalization process is kind of a long headwind as we move forward. We're in the new normal.

Great, no other questions. Thank you.

Thank you.

Our next question is from the line of Tim Savageaux with Northland Capital Markets. Please proceed with your questions.

Hey, good morning. A question over in Tier 1 land where you had a strong year there with some of your top customers last year, less so this year. But as we look at what Verizon in particular is saying about plans for fiber builds, and also the planned acquisition of Frontier. I wonder what kind of implications that might have for Calix on the one hand? And so it leads me to my next question, which is as you look into your Q4 guide, do you see any significant moving parts in terms of customer segment by size and any changes that we might want to know about? Thanks.

Obviously, it's way too early to know anything about Verizon other than Verizon has been and continues to be a very good customer who is strategically aligned regarding the value we add. We are working with them across the chasm. And Cory, you had questions about Q4 and whether or not there will be an impact, I'd say that it's just lumpy.

Mike, maybe share a little bit of color on the engagement in large and medium customers that you're now seeing as they make this transition.

In terms of large to medium customers, their situation is similar to smaller customers, except that smaller customers can implement changes more quickly and easily. The discussions we have with medium and large clients reveal that they face the same challenges as everyone else. For instance, a major service provider with a mobile division might find it worrying that their mobile revenue is continually declining. Relying solely on acquiring broadband providers to boost revenue is ultimately unwise because it merely involves purchasing another commodity. What we need to do is evolve into a broadband experience provider, which requires developing a comprehensive business model. Larger companies typically have substantial financial resources, leading them to establish specialized units that lack economies of scale. They may have separate divisions for consumer, small business, medium business, and MDU operations without any crossover benefits.

We present a significant opportunity for these companies to scale their operations efficiently across a unified platform with our appliances, which can serve all segments—consumer, small business, medium business, and MDU—supporting the entire community. The potential for economies of scale and margin growth is considerable. Ultimately, their situation mirrors that of others, but change is more challenging due to the complexities of large organizations. Transforming a sizable entity requires more time and effort, much like maneuvering a large vehicle. Most critically, leaders must recognize their need to guide their businesses rather than merely manage them. We engage with leaders to assist them in transforming their operations, which will ultimately benefit us as they navigate through challenging times.

Yeah. We expect to see progress on all customer segments as we move forward through 2025.

I keep going back to my statement. We are working towards this disruption in the crisis ahead. They're finally because their businesses are struggling. They have to feel pain before. I stated this, I think in Q1 is that we had a large organization come over and they have 18 broadband providers or 19 broadband providers. They said, during the pandemic, money was free in essence. Anyone with a pulse can raise $50 million, frankly. The bar was low with regards to acquiring capital. Everybody was so busy that it was tough, if you had partners, to come up with a strategic business strategy. They were just building as fast as they could in this concept of almost passed. It's fascinating to me that there are still legacy-minded operators who use the word homes path. Homes Path means absolutely nothing. That's like I built a mall and there's all this revenue that's going to come, but I have nobody in the mall.

If you don't win subscribers and have a strategy to win subscribers, you're not going to succeed. What's happened is that now that they've gone and done a home on-path and deployed, they're all getting stuck at 20%, 22% market share. You want to get higher, like a Timbigbee, who's over 60% or an industry leader like Lumos or T-Mobile. To be an industry-leading provider making a ton of money for your investors, you have to be an experienced provider and a comprehensive business model. Regarding what segments grow in 2025, frankly, that just comes down to are the leaders smart enough and strategic enough to listen? If they are, we'll help them win. Cory said, we see strength across all of them because they are coming into crisis. The amount of people like I was at the TMT Forum, which is an investor forum for broadband. All the investors were saying the same thing. They've come to this realization that they were valuing their assets based on homes path, which doesn't mean anything.

A last comment on home path: you go and they say, hey, it cost me $700 to do a home path; $1,000 to do our homes path. You know how much it costs you to connect a home? Almost double that. It's great that you've gone and passed all these homes. You're going to have to spend another $500 to $1,000 to connect a home. More importantly, you have to spend the marketing dollars so they give a hoot and want to change. That's a long answer to a short question, but the great thing is crisis is here, and they're listening. We have a customer success army, that's massive, that's right to help them do that.

All right. Well, maybe let's stay on this for a moment. I mean, actually, Verizon did have some interesting commentary about higher market share in mobile and reduced churn where they did have a fiber footprint, which in theory maybe explains this Frontier thing as well as what T-Mobile is doing with some of the smaller carrier investments. As you look into '25, with that kind of guidance for sequential growth, should we assume that's principally small carrier-driven heading forward? Or do you see any opportunities for medium and large-term rebound?

I think you will see progress on all customer segments as we move forward through 2025.

We expect to see the business cycle become the large guys and the small guys all start out at some level.

Good morning. Thanks for the question here. Next to your top-line predictability improved, and the sizable RPO growth is really starting to look more like a software company you're becoming. So how do you think about the ARPU contribution and trajectory across your small, medium and large segments? And is there any color you can give us on that strong RPO bookings in the quarter in terms of mix of new contracts, new customers versus expansions? Thanks.

Yeah, Ryan. Consistent with what we've said in the past, the strongest drivers for growth are new subscribers being added followed by new applications, expanding to new applications and then finding that from new customers. A brand-new greenfield customer that would sign a contract with us is going to produce very little revenue upfront as you have to deploy the platform cloud and managed services and has to sit on hardware or an appliance. That just takes time. Every one of these new contracts or new subscription players in another little micro stream of revenue. It's not that you're going to get any kind of step function from any new customer. It's just going to continue to increase, and it has a slight little bend in it as you continue to layer in not only new customers being added but existing customers expanding with new applications. They are taking more subscribers away and expanding their businesses and growing with Calix.

It depends on the customer. For larger customers, the initial contract will be more substantial, while smaller customers will start with a smaller amount but can gradually increase their commitment. The important aspect is gaining momentum with each customer. I realize that doesn't directly answer your question about RPL growth, as different customers will respond in various ways.

Got it. Just a follow-up there. You've mentioned some opportunities where you enter as a new experienced provider on top of a legacy broadband transport, including wireless applications. Is that significant within RPO yet? Or is it still quite niche?

It really depends on the customer. For larger customers, the contracts tend to be bigger, while smaller customers will start with a smaller initial contract and gradually add more over time. The important thing is to build momentum with them. I understand this doesn't directly address your question regarding RPL growth from the audit, as different customers have varied approaches. Some may begin with Engagement Cloud, while others, like mentioned, often start with the network.

Got it. Maybe a quick follow-up on your comments around the customer success additions. I think you guys had a press release recently about this. Any specific kind of go-to-market motion you can highlight that is working well for you?

That's a great question. On the customer success side, what's interesting is that John Roche has been transforming the business significantly with his leadership team. We often discussed at Salesforce how our customers need help with transformation. In his keynote, John talked about how his team assists customers in scaling marketing and executing sales motions, helping them learn to sell. Some of the customers understand sales, but many haven't even implemented basic practices like quotas or variable compensation. We recently held a session that was overcrowded, indicating strong demand for sales training. My background in sales transformation at Salesforce makes it a natural fit for us to help. Matt and his success team are also assisting customers in building effective go-to-market strategies. We now have over 10,000 content pieces in our ECB content builder that enable customers to easily brand their materials. Our agency has created great content for them, allowing for quick deployment of marketing materials. By helping them enhance their broadband services, we position ourselves as a true partner. That's a great example.

That's really great. That's put a weakness for the telecom industry for decades.

Sure. Look at mobile sales. If you watch my keynote at Connections, what I walked through is how a fiber provider has got a house. There's a fiber provider, and they went from $80 down to $54. That was they had $80 per gig, and they took it down to $50 ARPU, we're selling strategy on the planet, where I should have been between $110 and $150 of ARPU. I would encourage everybody on the call to watch the keynote, and they will see the challenge because most fiber providers are some really good ones, but most couldn't sell. We're here to help.

Thank you. We've reached the end of our question-and-answer session. I'd like to turn the call back over to Nancy Fazioli for closing remarks.

Thank you, Rob. We'll participate in several investor events during the fourth quarter. Information about these events, including dates and times and publicly available webcast, will be posted on the Events and Presentations page of the Investor Relations section of calix.com. Let's again, thank you to everyone on this call and webcast for your interest in Calix and for joining us. This concludes our conference call. Have a good day.

You may now disconnect your lines at this time.