管理層發言
Greetings, everyone, and welcome to the Calix Fourth Quarter 2025 Earnings Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Nancy Fazioli, Vice President of Investor Relations. Nancy, please go ahead.
Thank you, Daryl, and good morning, everyone. Thank you for joining our fourth quarter 2025 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 in the Investor Relations section of the Calix website. 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 future financial and operating performance, growth strategy, and market outlook, and that 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 fourth quarter 2025 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 fourth quarter 2025 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, and good morning. We closed 2025 with the best performance in the company's history, expanding our strong foundation that we have invested 15 years building with team members, customers, and partners. Record revenue. Our sixth quarter of consecutive revenue growth while guiding higher in first quarter. Record gross margin. Our eighth quarter of consecutive margin improvement, expanding RPOs driven by excitement around our third-generation platform and continued operational discipline yielding our 11th consecutive quarter of 8-figure free cash flow and ending the year with record cash. These results underscore the strength of our platform model as we contribute to the success of our broadband experience provider customers. We also launched the third generation of our Calix platform in December with more than 300 customers already migrated as of today, and we are working to complete all customer migrations by the end of the first quarter. This marks a significant milestone for Calix and our customers as Calix's agent workforce integrates into everything that we do, while our partnership with Google Cloud allows our platform to be deployed to any customer in the world, whether Calix hosted or as a private instance for a large customer. Last, we continued to improve the culture that supports the success of our customers every single day. As evidenced by our 44 culture and 20 innovation awards, adding 16 awards in the fourth quarter alone. Our team is particularly proud of these awards as success starts with people. The Q4 results, our strong culture and the successful launch of the third generation of our platform that adds capacity and capability for existing customers through agent workforce cloud. The opportunity in the MDU market with SmartLife and the ability to address new global markets and large customers with private clouds as our team entering 2026 very confident in our ability to continue our track record of enabling customers to simplify operations in go-to-market, innovate across residential, business, MDU and municipal segments, which enables them to grow for their members, investors, and the communities they serve at a faster and faster pace. As we exit 2025, it also marks the end of the early adopter phase of market disruption and with demand visibility at an all-time high, our entrance into a sustained growth phase for 2026 and beyond. Cory, over to you to walk through the specifics of our Q4 performance.
Thank you, Michael. In the fourth quarter of 2025, Calix achieved record revenue of $272 million, reflecting a sequential increase of 3% and a significant 32% growth year-over-year. This concluded a milestone year as we exceeded $1 billion in annual revenue, which represents a 20% growth compared to 2024. Our results were fueled by strong demand for our platform among broadband experience provider customers, who are utilizing our appliance-based platform, cloud, and managed services to attract new subscribers, reduce churn, improve NPS scores, and ARPU, and expand their reach. Adding 25 new customers this quarter illustrates the widespread adoption of our solutions. Our remaining performance obligation reached a record $385 million, increasing by 9% sequentially and 18% year-over-year. Current remaining performance obligations were also a record at $152 million, showing an 8% sequential rise and a 26% increase from the same time last year. These solid metrics highlight the visibility we have into the ongoing strength of our business model as more BXP customers adopt our platform, cloud, and managed services, add new offerings, and gain new subscribers. The growing interest in Agent Workforce Cloud signals that the disruption led by BXP is past the early stages, entering a sustained growth phase. To this end, we have adjusted our publicly available financial metrics to better reflect the growth and value of our model. We have separated our clients' revenue and gross margin from our recurring software and services revenue and gross margin. At the same time, we stopped providing metrics like platform adoption and customer size that served as indicators of our progress during the early adopter phase. The combination of our customers’ ongoing subscriber growth using our platform and the success of appliance deployments led to another record non-GAAP gross margin of 58%, marking our eighth consecutive quarter of margin improvement. This continued expansion is mainly due to the uptake of our platform by new broadband service providers and the success of our BXP customers. While gross margin may fluctuate quarterly based on customer and product mix and memory costs, we remain confident in our ability to enhance gross margin as our platform, cloud, and managed services expand. Regarding memory costs, we will remain proactive and, similar to our approach during COVID, we will collaborate closely with our customers to ensure a steady supply and manage any cost increases from higher memory pricing. Our balance sheet is strong. Days Sales Outstanding at the end of the fourth quarter was an industry-leading 35 days, and inventory turns were 3, reflecting our investments made to meet robust demand. We generated record free cash flow of $40 million for the quarter, maintaining positive quarterly free cash flow for over five years with 11 consecutive quarters of eight-figure amounts. We concluded the year with a record cash and investments total of $388 million, up $48 million sequentially and $91 million year-over-year. This healthy cash position demonstrates our consistent profitability and disciplined operational management. In the fourth quarter, we spent $17 million to buy back 300,000 shares of our common stock. As previously discussed, we have a disciplined capital allocation process and remain committed to being a strategic buyer of our own stock. As visibility improves, our internal valuation models have increased, as shown by our fourfold rise in share buybacks from the third quarter to the fourth quarter. Additionally, our Board of Directors has approved a $125 million increase in our stock repurchase program. Given the strong demand landscape and the pace at which our customers are adopting our model, we anticipate continuing sequential revenue growth, including in the first quarter, which typically experiences slower growth due to seasonal factors. Our revenue guidance for the first quarter of 2026 is projected to be between $275 million and $281 million, which is a 2% increase at the midpoint compared to the previous quarter. This forecast reflects our confidence in a multiyear growth opportunity ahead, as more service providers recognize the importance of transforming into a broadband experience provider. Concerning the progress on BEAD, we now have a clearer understanding of the size and timing of this program. The potential opportunity for Calix is between $1 billion and $1.5 billion. We have already started receiving orders from BEAD recipients and expect appliance deliveries to ramp up later this year and significantly contribute to growth next year and onwards. Strategically, the BEAD awards highlight the differences between fiber-to-the-premise technology and low earth orbit satellites. A substantial majority of funds, around 85%, is allocated to fiber-based deployments, while only 5% is directed toward low earth orbit satellites. This dynamic reflects the basic physics of the situation. Fiber offers the highest bit rate capacity, has a long life cycle, and the lowest operating costs, making it financially sensible to implement fiber to premises solutions. For locations that are more remote, alternative technologies like fixed wireless or low earth orbit satellites can be effective. Therefore, any competition that exists is primarily between fixed wireless and satellite, rather than fiber and other options. For the first quarter of 2026, we expect non-GAAP gross margin to remain robust, though we anticipate some short-term impacts due to customer mix and overlapping cloud costs as we shift to our third-generation platform. I’d like to point out that while we make this investment in running dual cloud, the transition to the third-generation platform is on schedule and progressing well. As for non-GAAP operating expenses, we foresee a sequential increase in the first quarter of 2026, mainly driven by accelerating the development of AI capabilities across our platform and cloud-managed services. Importantly, we plan to return to our target financial model for operating expenses by the end of 2026, setting us up for sustainable long-term profitability and growth. As we head into 2026, we have strong visibility and confidence regarding our growth trajectory. We’re excited to host our Investor Day at the New York Stock Exchange on February 24, where we will elaborate on our strategy and long-term growth prospects. We look forward to seeing everyone there.
Thanks, Cory. At a time when the pace of change is accelerating at a rate that has never been seen before, we entered 2026 ready to make that pace of change our advantage and, in turn, an advantage for our customers. We have successfully launched agent workforce, and demand visibility is at an all-time high. We have executed with operational rigor to ensure that we have the financial strength to continue to invest and grow by winning new customers and helping our existing customers differentiate and dominate in the markets they serve. Last, our team culture is ready for the opportunity that we have invested and worked so hard towards our better, better, never best cultural mantra will ensure that our internal teams make the most of AI to improve how we operate, while our platform delivers incredible results for our customers. The next step in Calix's journey is here. I'm excited to lead the team as we speed our ability to transform the broadband industry and enable the success of our customers and partners. I would like to close by thanking our team, customers, partners, and shareholders whose passion, grit, and trust have brought us to this exciting next stage in the Calix journey. Nancy, let's open the call for questions.
Daryl?
分析師問答
Our first questions come from Samik Chatterjee with JPMorgan.
This is Joe Cardoso on for Samik Chatterjee. Maybe for the first one, I think last quarter, you talked about a revenue growth outlook for '26, tracking to the low end of the 10% to 15% range ex-BEAD. One, curious if that range is still fair to think about for modeling assumptions here? And then second, just in regards to the better visibility now that you have around the BEAD program, any update on how you're thinking about the contribution for 2026? And how we should think about that layering into the financials here as we progress through 2026 and into '27 and then I have a follow-up.
Yes. I think with our high visibility and understanding where BEAD is coming in, I think we'll be somewhere in that range of 10% to 15%. I don't think we'll be at the low end.
And we're confident. Demand visibility is high. And the other part is for an update, that's one of the things we intend on walking through, right, Cory, at the Investor Day at length because a lot of our investors are asking questions with regards to how we achieve those growth rates. So we're very confident.
Got it. I appreciate the color there. And then maybe just a follow-up in a similar vein, I think you've been referencing new market expansion, including the international opportunities. Any updated thoughts there? Like as we think about the new markets and Calix going out there and trying to cultivate these opportunities, like how should we think about that as part of the 2026 growth story? And I think last quarter, too, you referenced that, that's not necessarily in the numbers, but how tangible is that in terms of contribution for 2026? Or should we think about this being longer in the tooth as you try to like kind of do the block and tackling in terms of opening up these opportunities for Calix? Just curious big picture there, like how we should think about that coming into the Calix story.
It's a great question. During last quarter's call, we were preparing for the launch of our platform, which was critical for us. We needed to get the platform out to understand how we might expand into new markets. The actual transition of moving our customers over was essential, and we started that process in December. As I mentioned, we already have over 300 customers transitioned, and we expect to bring another 100 on board next week. By the end of the quarter, our aim is to have our entire existing customer base on the new platform. This is the first major milestone we've achieved, and we're confident in the transition's trajectory. This progress gives us confidence about expanding into international markets and targeting larger clients with dedicated private clouds for 2026. As for the revenue projections for 2026, we haven't included those figures in our numbers yet. When pursuing large customers or entering new markets, substantial investment and groundwork are necessary. I also wanted to share that I've announced I will be keynoting at Mobile World Congress in Barcelona in March. This marks our first appearance at this major communications event, which typically sees around 140,000 attendees. My experience at this event, having attended it ten times during my time at Microsoft, has shown me the importance of connecting with other industry leaders. Our discussions about our advances in artificial intelligence, made possible by our platform, have drawn significant interest. We will be featured in the architects of AI section, alongside prominent figures like the CEO of Qualcomm, representing the forefront of AI development. As we move forward into 2026, even though we haven’t factored that potential revenue into our current numbers, we're poised to gain considerable recognition for our innovative approaches, which set us apart from our competition. Lastly, the true value of artificial intelligence is still unfolding. Reflecting on my experience at Wharton, I recall discussions with their AI and data science leader, who emphasized that the real benefit of AI comes from its ability to drive business outcomes, rather than just the AI technologies themselves. Our platform aims to enhance agent workforce capabilities and deliver value to our customers, which is key to unlocking significant potential for both our current and future clients by the end of the quarter.
Our next questions come from the line of Ryan Koontz with the Needham & Company.
Mike, could you elaborate on your success in attracting Tier 1 clients? Can you share your entry points into this market and highlight the most promising opportunities with the new platform?
We're beginning to explore entry points into Tier 1 markets, which can be approached through four key strategies. The strength of our platform is our ability to engage with large customers about their current challenges. The first strategy involves connecting with their enterprise organization to understand their business needs, particularly the small business market within MDU, which poses significant opportunities. This was a core reason for developing our innovative product to support these customers, opening substantial market potential both among our current clients and in Tier 1 sectors. The second strategy focuses on networking solutions, which leverage our traditional strengths along with the insights offered by our AXOS system, originally pivotal in securing Verizon's partnership seven years ago. Our automated platform, enhanced with artificial intelligence, enables us to understand customer needs thoroughly and automate processes more effectively than competitors, delivering considerable value. For example, our collaboration with Verizon resulted in an 80% decrease in operating costs, achieved through substantial enhancements in their cloud capabilities with our AI technologies. The third strategy is about showcasing how to enhance subscriber experiences. Our existing clients demonstrate the potential for high Net Promoter Scores, indicating customer satisfaction and enabling rapid product launches. For instance, while a Tier 1 client took two years and $20 million to introduce a small business product, we could have achieved this for under $50,000 in costs and within 30 days. The real growth opportunity lies in addressing subscriber acquisition, revenue growth per subscriber, and churn reduction. We excel in these areas daily, and with our initiative to develop an Agent Army, we'll further automate these processes for faster results. Lastly, we aim to engage at a higher strategic level regarding Agentic. Our platform architecture allows us to extend our knowledge and orchestration capabilities throughout the customer's business, driving efficiencies that surpass our current offerings. These are the four strategic entry points we're pursuing with customers. I am actively involved in discussions with our sales and product teams, and we will be attending Mobile World Congress for the first time in five years to showcase our distinctive approach to Tier 1 clients, as we believe our solutions are unparalleled in the industry. I encourage everyone to attend our Investor Day, where we'll provide a detailed overview of our strategies.
That's great. We'll be there and hope to see you over in Spain, too. And Cory, just in terms of gross margins and memory costs, you've kind of mentioned partnering with customers and passing through some of these transitionary costs. Can you maybe unpack that a little bit for us about your thoughts.
So Ryan in the first quarter, we're really not having any of those costs. Remember, the advantage of our supply chain team is we got ahead of this. And so we're doing really well in that regard. So no immediate near-term impact. And it's one of those things that as we progress through the year, we'll partner with our customers to deal with what we see coming down the pipe.
Our next questions come from the line of Michael Genovese with Rosenblatt Securities.
So I wanted to talk about some of the new disclosure numbers that we have in the shareholder letter, systems and software versus appliance. I guess, to begin with, I mean, it seems like as a percentage of revenue, Software and Systems has gone down over the past year, which is somewhat surprising since we're not in a BEAD like build more footprint type of environment. So can you just help clarify the reason for that?
Sure. As we have said all along, our software is tied to subscriber growth, and that happens in a consistent and upward trajectory all of the time. Where you're going to get volatility is going to be on the appliance line, where it can grow and shrink in a given period. And so what you saw this year is obviously reacceleration of the appliances from 2024. Meanwhile, throughout that entire period of time, the software and services number continue up into the right and grows every day. It's the reason why we say our margins are going to continue to expand over time, because that's unrelenting in terms of its growth, and that's what you're seeing. Specifically, if you look at the tables or the charts related to software and services, you'll see that there was a bit of a downtick from Q2 to Q3. The one anomaly inside of the software line that can create quarter-to-quarter fluctuations is the amount of AXOS licenses. As you know, those are recognized immediately upon signing and they are not ratable. And in Q2, we had a little bit more AXOS licenses than any other period in the first quarter or third quarter. Consequently, you see that bump up.
Great. I was surprised to see how high your appliance gross margins are and how the gross margins for software and services are only slightly higher than those for appliances. This raises two questions: how are the appliance margins so high? And as you transition to cloud services and move from hosting on two clouds, where do you foresee the software margins heading over time?
Sure. If I take a look at the software margins, we're going through the transition currently. And so they are temporarily depressed due to the dual cloud cost but once we lift that yoke off, those margins will continue. Ultimately, they probably go past 70% and beyond. We ultimately don't know what the upper limit is to the software and services margin because it depends on success at Tier 1s, where the amount of that will likely be just software-only revenue with no hardware or appliances attached good to it. And so the more of that you mix in, it's hard to say where that ultimately adds and touches to, but they should clearly move beyond 70%.
But we accomplished it because of the fact that if you look at the $2 billion that we've invested in our platform, a big part of that is that we built two operating systems, which are fully abstracted from the silicon and give us significant flexibility with regards to components. The reason why a customer can turn up a system like Brightspeed, who has older back-office systems that are very complex from they brought those over from Lumen initially. The reason why they can actually do what no one else in the industry can do is because of our platform. Because everything is abstracted, the complexity sits inside the software, not at a hardware layer, which allows us to actually transition at a very fast pace. It also allows us to simplify our SKU count. If you go back to where Calix was when I first started 10 years ago, we had almost 4,000 SKUs, and that means that you have all of this component complexity if you can actually build out an abstracted operating system from the systems and the appliances, what you gain is massive scale with regards to buying single components and putting them across all of your systems, which means that you get higher margins. And so that is ultimately our silver bullet is that we have built truly abstracted in the network. We're the only ones who have done it. And on the other side with regards to our premises, it's the same thing. And that's why we have a low SKU count, maximize inventory, and simplify significantly.
And I'll add a couple of things to that. I mean, clearly, the appliances show the differentiated value in our model. And there's a couple of other added. We've got a very tight fit to the market requirements. That allows us to obviously reduce SKU count, but also allow us to reduce the power consumption, that's an add too on the access Side. And on the premises side, we've got some clever design that allows us to cover a number of use cases, further shrinking SKU count. When you shrink that SKU count, not only does that create benefits for Calix in terms of the amount of SKUs that we have to manufacture, right? It reduces the risk of E&O, excess and obsolete inventory, reduces the overhead. So our OCOGS could be lower. But that lower SKU count also translates to a benefit to the service provider in terms of them managing inventory, the number of SKUs that are on the trucks, the amount of their components in terms of the spares depot. So all of that simplification that we're driving through our platform translates to a differentiated value on behalf of the service provider as well. So I would add those points to what Michael said.
Our next questions come from the line of George Notter with Wolfe Research.
For the disclosures on the software side of the business, I think it's terrific. I'm just wondering, when I look at software and services together, wondering how much of that is the services piece. If I go back to like 2022, you guys used to break out services. You think back then about $10 million or $11 million per quarter was in the services line. Was it a services-only line? I assume it's still at that run rate or maybe a bit bigger given the growth in the business. So I'm just curious on what how much is software and how much is services. I've got another question as well.
Yes, George, we're not going to go into further breaking that down. But you can use that as a proxy.
Service is a small component of our business. We're a software company and a cloud company, and we're not a services company.
Okay. And then also on the software piece, I guess I'm wondering how much of that software is recurring versus perpetual. Any sense for what that might look like?
It will fluctuate from quarter to quarter, but the large majority of it is recurring.
Yes, that's something we'll discuss at the Analyst Day. We will have in-depth demonstrations to showcase various elements. The key point is that we needed to launch the platform first, which is currently in progress. Once the platform is live, it's like building a house; the foundational work is done, and we can now focus on the exciting parts such as adding agents and enhancing our capabilities. You'll notice a significant ramp-up in our capabilities, leading to increased customer value starting in Q2. For instance, I recently spoke with a customer who signed an AI contract with us shortly after Christmas. He fully committed because he trusts that we will deliver quickly. He expressed that he previously hesitated to purchase our Marketing Cloud, Engagement Cloud, due to his team's lack of capability for detailed segmentation. Now, he feels confident because we demonstrated how our agents can assist him, allowing him to target customers more effectively without requiring specialized data science skills. This has empowered him to pursue customers differently. As we conclude this quarter, you'll see our resources shift from the foundational aspects of our project to aggressively enhancing and expanding our agents. Building an agent is relatively straightforward, as it's primarily Python code. The real complexity lies in optimizing the workflow. Our three clouds—Operations Cloud, Engagement Cloud, and Service Cloud—are built on structured workflows, so we know exactly which agents to develop and how to integrate them to provide value. You will witness rapid advancements in this area starting at the end of the quarter as we complete the migration. Please join us at the Investor Day for a more detailed discussion.
You're going to see it first in the RPO number.
Our next question has come from the line of Tim Savageaux with Northland Capital Markets.
I wanted to come back to the discussion and appreciate the quantification of the opportunity here which I assume, I don't know, stretching over, what, 3 to 5 years, and they can be pretty significant on an annual basis, and you mentioned a bigger ramp into '27. And I guess my question is, as you look at that opportunity, I guess is it apparent at this point, would that be fully incremental to your current run rate business? Would it add to it? How should we think about layering in what could be, I don't know, a couple of hundred million dollars a year relative to your current run rate business? And would you expect another step function into a higher growth rate in '27, something maybe in the 20s relative to your 10% to 15% target?
Thanks, Tim, for the question. I would say if you want to start talking about 2027, please come to the Analyst Day. That's where we might provide some color on that. As it relates to additive revenue, you got to remember that there's a limited number of resources that the industry has to go do this work. Crews are not just sitting around waiting for BEAD. They're going to go do projects. So some portion of that would come at the cost of other work being done because these crews would do locations that they would be otherwise built, and now they'll go do some BEAD. And so there's some of that. So ultimately, for this to be additive, you're going to have to increase your capacity and rates at which you're going to go deploy. But the important part is this opens up more of the premises revenue, right? As they go out and build these networks, you're going to then start hanging new subscribers off alone. And so that's the aspect that kind of adds to the acceleration of revenue, which we're more excited about in addition to the BEAD revenue alone.
Our next question has come from the line of Scott Searle with ROTH Capital Partners.
Nice to see the RPOs continue to hit record highs and continue to post good year-over-year growth numbers. Maybe to follow up on George's question, and I suspect you might be referring me to the Analyst Day, but as we start to get full commercialization across the installed base of the third gen platform and Agentic workforce and SmartLife, I'm wondering if you could talk a little bit to the time to monetization of when you're expecting to see that start to ramp? It would appear kind of given the features and functionality of the platform that we might start to see some of that contribution starting to accelerate in the second half of '26. And I wondered if you could also kind of put that in the context of historically, we've talked about going from $1 to subscriber to $10 per subscriber. Kind of how you're thinking about that? And do we start to see software and services in late '26 and '27, starting to inflect above RPO growth, particularly as RPOs, I believe, are just reflecting minimum contract revenue levels and not as we start to see incremental monthly subscriber revenues on top of that. So a bunch of things rolled into there? Basically, when do you think we start to see the monetization of the third gen platform and kind of the inflection point of when that sort of hit more critical mass?
I agree with you, Scott. In the second half of the year, we will begin to see this, and it will be evident in our RPOs. As we mentioned, we are entering a period of sustained growth due to our significant monetizable base that is already established. One challenge for later adopters has been their lack of capacity and capability to effectively deploy the technology and succeed in their markets. For instance, I referenced a customer who struggled because they lacked resources like data scientists or marketing expertise. Most service providers, regardless of their size, often engage in broad marketing strategies that are either brand-focused or centered around price and speed, without customizing offerings to meet individual needs. What we're introducing with Agent Workforce allows for detailed micro-segmentation of a customer base, enabling us to tailor communications down to individual households. By analyzing the behaviors and needs of a household, we can deliver personalized campaigns through relevant social media channels at a very low cost. Instead of spending $10 broadcasting a message to everyone, we can spend just $0.05 on targeted Instagram ads during a peak time for their demographic, ensuring our approach addresses their specific preferences. In the past, these capabilities were limited to larger companies with substantial resources, including teams of data scientists, who mainly catered to executive needs. Even large organizations struggled to perform deep market segmentation efficiently to support their sales and marketing efforts. When I led a $900 million business at a major telecommunications company, we operated 27 data warehouses and relied on a vast team of data scientists. I needed to create a dedicated $10 million data warehouse for my team just to access the data I required. Our ability to unlock data and automate processes allows businesses to focus on what truly matters: acquiring new subscribers and increasing revenue per user while minimizing churn. This is critical as we move toward the latter part of 2026 and into 2027, while also exploring new markets. At events like Mobile Congress, our discussions will center on generating revenue instead of merely cutting costs. Our expertise lies in helping companies increase their profits. In the past, we had to persuade clients to follow best practices; now we can provide data insights from thousands of customers alongside trained agents ready to execute successful strategies with just a button press. This marks a significant transformation in our industry, and we are at the leading edge of this change, ready to take action after months of preparation since November 2023.
That's very helpful. And if I could just from a follow-up. Given the third-generation platform and now that you could start to address larger customers with private clouds, you also have an evolutionary path with the hybrid architecture, no stranded assets for those customers. I'm wondering 2 things. How is that conversation and dialogue going now with the Tier 2s and the Tier 1s in terms of what you're able to offer now with the new platform? And what's the timing of when we should expect to see some incremental customer contribution and/or monetization of those Tier 1s, Tier 2s, and potentially international customers?
With Tier 2 customers, engagement has been growing, as they typically cover a range of 5 to 20 states without a global focus. They face similar investment constraints as smaller customers, needing to decide whether to allocate funds for expanding fiber networks or building data science teams. Conversations are ongoing. For Tier 1 customers, we are already engaged with them and anticipate further discussions following our presentation at Mobile Congress in partnership with Google. We've shifted entirely to Google Cloud, which has proven to be an excellent partner. They are interested in our go-to-market strategy because we provide workloads on their cloud that assist them in offering value to their clients. Our business insights and capabilities represent a significant market shift that allows them to stand out among competitors in the cloud space. We will be showcasing our work at Mobile Congress, collaborating with Google to engage with larger customers. As for the timeline regarding revenue from large enterprise accounts, these sales cycles usually span 18 to 24 months, indicating that we will be involved in various projects throughout 2026. Educating large customers will be crucial, as they often prefer to build solutions independently and operate in silos. They typically build separate solutions for different problems. We, however, propose a new approach by presenting our fully trained Agentic library, tailored to their data, alongside our agent toolkit for developing their own agents and integrating them into their systems. Education will be essential in this transition. The latter half of 2026 will be critical, laying the groundwork for growth in 2027, alongside the favorable conditions for BEAD that were discussed during Analyst Day.
Our next questions come from the line of Christian Schwab with Craig Hallum.
Most of my questions have been answered. But just a quick follow-up on the BEAD. Given your historical strength in the smaller regional telco companies, would you assume that you would get 50% market share over a time frame in the TAM that you guys outlined for BEAD? Is 50% a good starting point, or now that you've probably gotten more color on exactly who has money that it could potentially be bigger than that?
Christian, thank you for the question. As you know, we do very well in that segment, and I suspect we'll continue to do very well as it relates to BEAD.
Let me elaborate on BEAD. BEAD serves as the infrastructure to connect homes. However, simply passing a home does not guarantee success. We have advanced technology designed to minimize operational costs and automate processes. The third generation of our platform enhances our network automation capabilities significantly. Unlike our competitors, we possess an abstracted operating system and integrated subscriber management features that are crucial for managing a headless network efficiently. Our system allows us to operate a fully automated network while drastically reducing power consumption by consolidating multiple devices into one, while also ensuring maximum reliability since the data flow is managed within the operating system rather than being distributed across various services. However, an important aspect of BEAD is that while we can establish the infrastructure, winning subscribers remains essential. We need to not only secure the network but also attract subscribers. Regardless of our market share or network success, our value proposition will strengthen, particularly for regional clients, as we equip them to gain new subscribers. Our customer success team can shift from advising customers like Cory, a service provider, on what to do to win subscribers, increase revenue per subscriber, and lower churn, to presenting actionable best practices derived from analyzing 1,200 customers’ successes and failures. Instead of merely recommending actions and hoping they are followed, we can now provide concrete strategies and demonstrate how the Agentic workflow simplifies the process. This represents the promise of Agency and highlights our ability to deliver deep business insights. While the underlying LLM technology can vary and is less important, the real value lies in the business insights we provide. We're helping customers automate their operations, removing capacity constraints, which presents a market opportunity for accelerated growth. Our primary goal is to support our customers in acquiring subscribers and increasing revenue, from which we benefit as well. Unlike others, our focus is on empowering our clients to succeed financially.
Thank you. We have reached the end of our question-and-answer session. And with that, I'd like to turn the call back over to Nancy Fazioli, for closing remarks.
Thank you, Daryl. Calix will participate in several investor events during the first quarter, most importantly, hosting our Investor Day at the New York Stock Exchange on February 24, as Cory and Michael referenced. Please register to join us. Information about these events, including dates and times and publicly available webcast will be posted on the calendar page of the Investor Relations section of calix.com. Once again, thank you to everyone on this call and webcast for your interest in Calix, for joining us. This concludes our conference call. Have a good day.