Good afternoon. Welcome to Needham's 19th Annual Technology and Media Conference. I'm Ryan Koontz. I cover the comm tech sector here at Needham, which includes cloud communications and broadband networking. We're really pleased to have Calix with me today, who delivers a broadband platform and managed services that are enabling their customers to improve life one community at a time. Really happy to have with us today Chairperson Carl Russo, and Head of IR, Jim Fanucchi. Welcome, guys. How are you?
Great!
Great.
It's been a good conference.
Excellent. Glad to hear that. A lot of satisfied customers. So, if you're watching on-
I can't, I can't speak for that. I enjoyed it.
If you're watching on the conference platform, feel free to submit questions via the link, and we'll try to get to those toward the end. But we'll start with some planned Q&A with myself and the team. Well, I'm gonna assume most of you are familiar with the recent results from Calix. We don't need to recount those. You're familiar with what Calix is doing in the market. Let's start with something more interesting. You know, we're really seeing the industry go through all kinds of turmoil, ups and downs. Feels like more turmoil than I've seen in the 30 years I've been in the business in the last 3 years, but it's quite a whipsaw. So, you know, if you're...
Carl, I mean, I guess the simple question is, if you're an investor, you know, what is the pitch to invest in Calix? You know, what is driving your business today? Talk about your appliance play, your software play, how you monetize that, and where are you in the evolution to truly becoming a, you know, a software play on appliances?
Well, I mean, I guess I would back up and say that... And you got a lot of things in there, so we may, we may spend the rest of the time on this one, which is fine, so let's do that.
Yeah.
I would back up, actually, and encourage investors to look at investing in Calix the same way our customers invest in Calix.
Mm-hmm.
That may come as an odd statement because our customers don't buy shares in Calix. But actually, when you look at the service provider space and what we do, everything that we do with our customers has very long life cycles, 5, 7, 10, 12, 15 years, and Ryan, you have a history in this space, so you understand what I'm saying. When you're making that kind of a decision-
Yes, they don't come around often.
... It's not purchasing.
Those decisions don't come around often.
And it's not a purchasing decision on their part, because they're not only making that decision one time, they're gonna be living with it for a long time. The equipment is not static. The software is evolving, the features are evolving, and so they're relying upon their choice to not only be there, get it installed, make sure it's working, but to keep them on the leading edge of the marketplace for the duration of that product deployment.
Sure.
And so they look at those decisions as investment decisions, and they're making decisions around a whole number of factors. By the way, you could say first and first, let's just start at the balance sheet. Are these guys... You know, if I talk to Cory, are these guys gonna be here? Do they have the staying power? Those are the financial things. Those are actually the easy things to look at. The harder things are actually what you actually highlighted, which are around the platform, cloud, and managed services. Because ultimately, what we're helping our customers deliver is the lowest cost per bit per mile infrastructure, with the highest potential for revenue, lowest customer churn, highest Net Promoter scores.
So it's a very, very different investment decision on the part of our customers, and if you understand the way they look at us, then you'll understand the long-term return on investment that ultimately investment in Calix will yield. So let's, maybe we should start there and go off in whatever direction you wanna go off in. But that's why I would say, invest in us. It's not a short-term investment. There are certainly trades you can make around the stock price as it relates to the intrinsic value of the company, but I think if, if you're gonna trade in the stock, you sort of have to do the work to understand the long-term value, so you understand how to trade around it.
Yeah. And it's not, you know, it's not altogether different from the way networks were designed in the past. I'd say it's... But it is more about software optionality, right? So in the old days, you upgraded hardware with cards, and you bought a platform from a supplier, and you were married to that guy for a long time. And, obviously, you know, Calix is really changing the marketplace, leading the marketplace, and shifting your innovation into the software domain. And it's the same model, it's just moving from hardware to software-
Well-
-so.
Well, let's take that analogy for a moment because it's a great-
Yeah
... point. You know, we all used to call our chassis a platform.
Right.
They're not.
Yep.
They're a chassis.
Yep.
The reason you know that is every time you change it, it takes you three years to change it.
Yeah.
Your customers then bring it into their lab. By the way, you build it, you make the addition, you add some software, you test it. Oh, you broke something. You fix it, you integrate it, you test it again, and you go through these cycles. Eventually, you re-release it to your customer. The customer then puts it in their lab.
Yeah.
They test it, because guess what? You've given them stuff in the past that probably had a bug in it or two. They go through their integration cycles, then they decide, "Yes, it's ready for deployment." Then what do they do? They integrate it into their OSS/BSS stack. Five years later, the feature makes it to market.
Yeah.
That's not a platform. That's a bunch of complex systems being integrated.... What we've actually done is quite literally built a unique OS that's a platform that's separated from the hardware, that we actually iterate on every 91 days.
Mm-hmm.
Our customers get out of the integration business. So get this, when we release new features or new systems, our customers can turn them up in a matter of hours or a couple of days, and be delivering that innovation to their subscribers every 91 days.
Yeah.
The rate of innovation that our software platform delivers is otherworldly compared to what they used to do, and so now they actually can get out on the innovation front edge. And rather than them being the last to offer a new thing to their subscriber, they're the first.
Yeah.
Changes utterly their stance to their subscribers. So that's just one dimension. We still have systems underneath it, we call them appliances, 'cause that's what they are.
Yeah.
We don't have a lot of SKUs, so it's a vastly simplified model, but the platform that's been built is at the OS layer, and then everything above it is literally abstracted from everything below it.
That's pretty analogous to what's happened in the data center, and what we see happening in the cloud, really. I mean-
There is an analog, but there's a key difference, and here's the key difference: when you hear hardware abstraction in the data center.
Mm
... it's not quite as complete or as sophisticated as what AXOS and EXOS do, and here's why.
Okay.
In the data center, everything is meshed and redundant.
Right.
In the subscriber network, nothing is meshed or redundant. It's in and out. It's a point-to-point PON network.
Mm-hmm.
In the data center, when your fabric, your compute, or your storage go down, there's no impact on what's going on.
Right.
They wait until the next morning, they print out a list of things that failed, and Cory, who's the technician, goes out there with his cart and replaces the stuff. In the subscriber-facing network, if anything goes down, you have one, 10, 100, 1,000 or more subscribers out.
Right.
AXOS is actually an always-on operating system, and so it's, it's quite a bit different than the way it's instantiated in the data center, because the operating systems and the software in the data center are single binary. What we've built is actually a multi-binary OS. I won't bore you with the details, but it's a very, very different beast, and there's only one of, one of them in the world. And it's that which everything else is built on top of.
Right, and that AXOS is. It's your core software kernel, so to speak, your platform that you've built-
Correct
... your middleware. You sell it on a license basis, and maintenance on top of that, right?
Well, to your point, as an example, Verizon has built their entire One Fiber Intelligent Edge Network. It's built on AXOS. And that's how they've gone forward, and it's sole sourced. But as soon as you understand it's that OS that makes the difference-
Yeah
... it's not like you're dual sourcing boxes. You wouldn't have two operational models that are different.
Mm-hmm.
They actually literally took advantage of it and put an entirely clean sheet, brand new OSS/BSS on top of it. Here's the other piece that makes it very different: there's no orchestrator, because-
Yeah
... there's no need. So it's a very, very different model that's enabled them to literally collapse their multiple offerings onto a single consolidated network and rip-
Yeah
... operational expense out of that network. As you go forward, the percentage of the network offering that is hardware depreciation has continued to go down.
Mm.
The percentage of the network cost that is operating expense has continued to go up.
Yeah.
Where do you wanna reduce it? You wanna build a unified workflow, simple network, like AXOS enables you to do, and that's why you see the traction that we have with customers. It's a completely different operating model at the network, and we haven't even started to talk about the cloud and managed services that you can then put on top of it to go at the subscriber offerings.
Well, well, let's go there. Let's talk about from an investor perspective. I think-
Mm-hmm
... very clear from a customer perspective why you want that. And so from an investor perspective, you obviously wanna buy a successful company's stock, but, financially, what does that optionality bring the investor in terms of your ability to sell into that appliance footprint?
Well, so we're an appliance-based platform, cloud and managed services business, and so your question is, "Well, tell us about the platform, cloud, and managed services value.
Yeah.
It's extraordinary, and the reason it's extraordinary starts with what our customers are doing with it for their subscribers. They end up with an unparalleled subscriber experience-
Mm-hmm
... virtually no churn, hugely high NPS scores, very high take rates on the network they've built. Then they have a set of value-added service offerings, which are packaged up for them. They label them themselves. Nobody knows about Calix.
Mm-hmm.
It's not the subscriber never sees Calix, and we don't wanna be known by subscribers.
White label to your customers.
They have a set of literal high-value, high-margin offerings that they just lay on top of their network.
Yeah
... and sell to their subscribers. So they derive very high margins and incremental revenues-
Mm-hmm
... over the lowest cost per bit, per mile model with no, no churn, it's a beautiful thing. And when you can do that with your customers, they're willing to share it with you. So we're very focused on helping our customers succeed. When you hear, when you hear the term market share inside of Calix, we're not talking about stuff we do. We're talking about the subscriber share that our customers are taking.
Right.
What's their market share? That's what we focus on. There's the value, and ultimately, if you follow that through, we end up with a lot of high-margin recurring revenue that ultimately builds intrinsic value ultimately for our, our investors.
Yeah. Great. And where, where are you guys in that journey now? Where would you say you are as a company in... you know, I know telecom is a slow-moving beast. Been in it a long time.
Yeah.
Um-
Second or third inning, we're learning a lot.
Mm-hmm.
But there's so much opportunity for expansion in just our existing footprint. This disruption, you know, you said earlier you haven't seen rates of change like this in your career. You're right, and here's why. The shift from formerly horizontal models, wireline, cable, wireless, with an adjunct internet offering...
Mm-hmm
...to a consolidated, converged BSP that provides all services to their subscribers, is a disruption that's going on now. It's in its second decade, and it's still early days. If you combine that disruption, which is really... By the way, you can see it in the market, and here's how you see it. Even though most of the BSPs that are actually building these new models are private-
Mm-hmm
... you can see it in the public numbers of the service providers that report them. They're losing internet subscribers.
Yeah.
Well, all you gotta do is stop and say, "To whom?" Well, they're losing them to our customers, but they're private, so you don't see it, but you know they're going somewhere. So you're seeing that from a service provider standpoint. But here's the second piece. From a legacy systems provider standpoint, that are in those legacy service providers, the pandemic has done terrible harm to balance sheets.
Yeah.
There's been a lot of damage done to balance sheets. So, yeah, there's a ton of disruption that we have an opportunity to take our next-generation BSP model to the legacy providers now, and we have a very solid company with a very, you know, frankly, a pristine balance sheet and balance sheet metrics. Customers know that we're not going anywhere, that we're gonna be there for the long haul, that we're innovating on an every 91-day basis.
Yeah.
That they can turn these things up. So there's a huge opportunity to go across the chasm and lay a new footprint.
And so with the recent kind of slowdown in adoption and creates more focused sell-in effort from you guys to-
For sure
... continue to drive software sale?
For sure. But, look, every day we get up, job one, job one, without a doubt, is... Look, we have our board dashboards, we have our internal KPIs. We focus on the premises deployments, who's coming onto the network, and then the platform, cloud, and managed services deployments on top of that. So job one.
Mm-hmm.
Job two is, in this time, you better go land new footprint because it's there to land.
Yep.
Job three is working with our customers to make sure they're taking advantage of all funding sources. By the way, private equity, BEAD, other government sources. We can't control that, but we can certainly help them. But make sure it's clear, job one, platform, cloud, and managed service expansion. Job two, landing the footprint. Job three, let's make sure our customers are well-positioned for all funding, and that consequently, we might benefit from that as well.
Yeah. Excellent. And, Cory, how does all this translate to the income statement for you guys? You know, revenue stalled out a little bit here, but you guys are still making, I think, great progress on the gross margin line, and do you see some leverage there?
Throughout the disruption, what you've seen, including through the pandemic, is on the platform, cloud, and managed services just continuing to grow.
Yeah.
That, that hasn't stopped. It continues every single day.
Yep.
All our software, cloud managed services are priced on a per-subscriber basis, and so as long as our customers are adding subscribers, you're adding to that product ship.
Yeah.
In the near term, we've got some choppiness associated with our appliances.
Mm-hmm.
But even there, you know, that hasn't had an impact on our gross margins. It may change the rate that it grows quarter to quarter-
Mm-hmm
... but ultimately, it's up and to the right, and, you know, guidance for the quarter was to be north of 55% this quarter.
Yeah. That's impressive. In a business that historically has not been anywhere near that, outside of your own business. So in terms of KPIs, Carl, what would you point to for investors to kind of monitor your progress?
Yeah, I mean, I was sharing with you our dashboards internally, right?
Mm-hmm. Yeah.
We don't share the dashboards internally externally.
Yeah.
But that's what we look at. To try and help investors understand what's going on without disclosing footprint numbers that competitors might wanna understand-
Mm-hmm
... there are two things that I look at every shareholder letter, which is RPOs, so the revenue performance obligations. And our RPOs are, you know, software and services. They're not hardware.
Yeah.
So I have noted with some humor that folks have started reporting RPOs with hardware, and yet, no, that's not RPOs. And then the other is-
Well, backlog
Sort of orthogonal to that are the platform cloud and managed services deployment by customers.
Right, um-
Right. And so if you look at those two, you can sort of get a sense for the progress. Look, directionally, they give you a clear indication. On an absolute number basis, you can't just sit there and go, "Okay, well, that means their recurring revenue is blank per quarter.
Yeah.
Our long-term investors typically build their own models internally.
Mm-hmm.
What they're doing is they're doing a simple algebraic equation. They're guessing at what the margins might be on the appliance side, because you've got a lot of systems companies you can sort of think about.
Right.
They're guessing, although we've given a little bit of insight into what the margins look like on the software business.
Yeah.
If you do those two margins, you can start to figure out what the revenue mix might be.
Mm-hmm.
That's what everybody's doing. And so that, that's what I would point everybody to, and we don't have any planned changes in the near term to that. So, Cory, I don't know, if you want to add to that, feel free, but that's what I would point people to.
Nothing to add, Cory?
No, no further add.
Hmm. All right, and on that, on that customer, so we look at that customer count, want to break that up a little bit.
Mm-hmm.
You know, how would you characterize that count as far as early adopters, people that are just starting to deploy a little bit of it, and customers that are, like, all in, buying it all? I mean, or is it kind of all across the board? I mean, you've got 1,000 customers there.
Yeah.
How would you spread them across the breadth of adoption? My question.
Yes. I mean, literally spread them across the breadth of adoption, and we're learning. So the adoption focus starts with not adoption of us. It's actually trying to help them get their subscribers to further down the path.
Mm-hmm.
If you work it from the subscriber and then you work backwards, you're pulling everything else through.
Mm-hmm.
So we do have some customers that are end-to-end Calix from the network to the premise, and bottom to top from the platforms through the cloud to managed services.
Yep.
And they're driving higher value for their subscribers and their communities, and they are reaping the benefits of it themselves.
Mm-hmm.
But they are still the pathfinders out in front, and it's a smaller percentage. And then you have folks all the way across that spectrum, which, by the way, is the exciting part of the business, 'cause there's just huge opportunities on those journeys to create a lot more value. But by the way, we're also learning things, because some of those customers that are back here have tried certain things, it hasn't worked, so you're swizzling this or you're working on that-
Sure
... or there's a different go-to-market, or, "You know what? Package this up separately, or help us get to this." We can go on and on and on. You know, Michael and Cory have made the mistake of allowing me access into the internal system, so I still watch everything.
Sure.
I'm just telling you, it's a huge kick to watch the rate of learning and evolution inside the company at the face of the subscriber with the customer. It's really cool.
Yeah, when you're at the bleeding edge, trying to do things in a whole new way, I'm sure you gotta, you know, fail a few times and, you know...
Yeah, but here's what's cool-
Make a counter move.
Right. But here's what's cool compared to our past. In the past, you were doing it to the customer.
Right. Yeah.
Now you're doing it with the customer, trying to help them yield a better subscriber experience.
Yeah.
So it's, you're sort of around on the other side of the table, and when you're a box vendor, you know, you get up every morning having recorded whatever revenue you recorded last quarter, you're starting over again, and you're on this relentless, "Let me see how I can separate my customer from their cash this quarter.
Right.
This is very different.
Yeah.
Um-
The customer is more with it.
... you're trying to help them be more successful with their subscribers and their communities. So it's a very collaborative, energizing environment. It's quite different.
Yeah. Awesome. Let's shift gears and talk about BEAD. There's been some progress, at least, on-
Oh, I'm gonna turn that over to Cory. Go ahead.
... onwards in the last few weeks, I've been happy to see. I mean, you know, I don't want to rewind everything, but we can talk about just kind of some of the latest updates here. Looks like some states got some approvals, and we're, you know, putting one foot in front of the other at least, and we don't seem to be completely stalled out.
For sure. Yeah, so, we go back to the beginning of April, that you just, you had one state-
Right
... still approved, Louisiana, and we're now up to seven states, plus the District of Columbia.
Yeah.
That cohort represents $6 billion of the $42 billion, so-
Yeah
... it's on its way, and the importance of that is by the NTIA's form itself, those states have a year to get back to them. So-
Yeah
... you've got a year, so by May of next year, $6 billion of the $42 billion will have been awarded to folks. So that just gets the ball rolling, which is what we've been saying all along-
Mm-hmm.
that this will begin in 2025, and obviously everybody's kind of looking at that pitch on the ramp.
Yeah.
I've been kind of consistent in saying, "We don't need all 52 states. That's just gonna-
Right
... you know, accelerate things and create more of a, you know, a concern around whether I can now get the supply, and can I get ahead on other people, and so forth.
Mm-hmm.
So the great news is this is all gonna be limited by labor-
Yeah
... permitting.
Definitely.
Right? So, some of these early access states that get out will probably have a more-
The market's not gonna grow 100% next year, right?
Right.
This market's not gonna grow 100% next year.
Right.
It's just, it's just not. Footprint can't grow that fast.
Oh, oh, by the way, to your point, anything that requires labor takes longer. Anything that requires labor to get in a truck and drive in the outside plant takes longer still.
Only so many months a year you can go do that, yep.
Well, but it just takes longer.
Mm-hmm.
I mean, if I'm in a data center, I can sit here and swizzle a whole bunch of racks together pretty quickly.
Bust a bunch of guys in and build it.
Right. If I'm in the outside plant, you know, there's a whole different deal. And by the way-
Right
... if you're in the outside plant in Texas... So let me help you understand, driving across Texas is not a job, it's a career. So whole different deal.
And in terms of this, on that labor point, the skills required for these guys to do their job and splice fiber and put it in the ground, I mean, there's some big companies out there that do that, like Dycom, right, and a bunch of little guys, too. Are you hearing much from your customers about their concerns about access to that labor at this point yet?
Sure, and you still hear it.
All right.
And by the way, there's a skill required. I can't do it-
Yeah
... unless you don't want it to work. And so there are clear skill-look, I mean, the state of craftspeople in the United States, that's a whole different discussion. But there's lots of room for more craftspeople, but you don't just turn that knob either. There's time, training, et cetera.
Yep.
And so, look, over time, you'll see more labor come to the fore. But it's still gonna be a market that's lens-shaped.
Mm-hmm.
It's not gonna do this. It just, there's just no way.
Yeah. So people always ask me, like: "When do you think the government subsidy spending or associated BEAD, what year do you think that peaks?" We talking, like, 2028?
You got a dart? You got a mirror?
Uh-huh.
Throw it over your shoulder and see which... Look, we've been resolute. It's gonna start first quarter of 2025.
Yeah.
The ramp, the shape of that curve, et cetera, you know, my suspicion is there won't be really a peak year, that it will probably ramp up and then stay flat for a number of years.
Yeah
... and then tail off. But again, it raises the dais upon which we function. But it, in and of itself, is not the reason you should be investing in Calix. It's that business model that matters. Are we excited about more funds coming in and building fiber deeper and getting more internet subscribers on? Of course.
Yeah.
Of course. That's more subscribers that we can help build a model on top of-
Mm-hmm
... it's recurring revenue. For us, unlike Calix 1.0 or other box providers, the revenue doesn't end when you ship it, it's actually beginning.
Yeah. Right.
Right? So, cool.
OLT footprint, customer prem footprint, selling-
Then recurring revenue. That's right. By the way, so let's go back. Dycom-
Yeah.
Clearfield CommScope-
Yep
... us-
That's right
... and then recurring revenue on platform, cloud, and managed services. That's right.
That's, that's the order of the world.
That's the order of our world.
That's right. Yes, sir. And in terms of BEAD, one last question, any updates on, from the small customers on relief? Are they getting any messages from D.C. on, you know, some relief from the heavy-handed regs yet? Any updates there?
I'm not aware of any relief at this time.
Okay.
I'll give you a-
We don't know that-
Yeah, I'll give you a different update.
I was gonna say-
Yeah, sorry, Cory, go ahead. Sorry.
I was gonna say, what is clear, though, is the NTIA is specifically looking for those smaller service providers to step in to do the work.
Yeah.
We were just at a meeting of about, you know, 10 state broadband offices, hosted by Ready.net.
Yeah.
It's very clear, right? They're out there soliciting these small customers to step in and provide the work.
Mm-hmm.
So, anything we can do to help them facilitate, will that ultimately give them some relief from some of the regulations? To be determined.
Yeah.
Yeah, I mean, we're going through territory reviews right now, and I've been listening to the recordings of some of them. What's starting to happen now is that there are more states where folks are showing up, going, "Yeah, okay, we're gonna... yeah, we don't wanna let this funding go to someone who's gonna come in and compete with us. We're gonna go figure out how to compete." To Corey's point-
Mm-hmm
... it's a state-by-state program. It's not a federal government program.
Yep.
So if you have money in the state, you probably wanna have that money go to people that are based in your state, not necessarily nationwide players. It doesn't mean it won't.
Mm.
So there's a lot of reasons why it's probably going to move that direction... but stay tuned. I have not heard-
Yep.
any lessening or loosening of the requirements yet.
And Cory, this Ready.net you mentioned, this is a consulting firm or something you guys have partnered with to help operators-
Yes.
Work with the broadband office?
Yeah, so Ready.net is working with the state broadband groups-
Yep
to help them create the infrastructure for completing the challenge process and the bidding process.
Mm-hmm.
They're connected at that local level.
Yeah.
And so we are working with them, and have other areas where we will partner with them on marketing, on go-
Yeah
forward services in the future as they go to the next steps.
Yep.
The whole goal is, again, to help enable our customers to make it easier for them to get access to the funds.
Yeah.
That's correct.
I wanted to touch on a news item that's come up since your, Brent,
That I'm as handsome as you think? Was that... Never mind. Go ahead.
Okay. About just, you know, T-Mobile looking to get into fiber business. I think that was pretty-
Oh, boy! Yep.
... head-turning. And you know, the fact that they're forming this JV, they're acquiring this Lumos company. Can you tell us a little about that, about your thoughts? It's clearly a great validation in the whole market opportunity, but can you tell us any specifics about, about Calix and, and how you feel about, Lumos and that deal?
Yeah, so, we can. Lumos was formed up a few years back, bought some assets-
Yep
... put them together. Funding came from EQT Partners. They built a board of folks that understand the industry. They have a very strong leader and leadership team.
Mm-hmm.
A couple of years ago, they basically went end to end from the network to the prem with Calix and went bottom to top platform, cloud, and managed services, and they have just been knocking the cover off the ball-
Wow
... with subscriber adds, not homes passed, subscriber served-
Wow
and what they're selling to them. Look, this is an example of what we can enable, but I want to emphasize the team's got to do it. That team's been a standout on just going after it.
Your team or their team?
No, their team.
Oh, their team. Their customer team.
Obviously. Oh, yeah.
Mm-hmm.
Look, I mean, you can't push, they got to pull, and they've pulled hard. The customer success teams are there helping them, no doubt. All the marketing, which, I mean, everything we do is there.
Yep.
But they've really gone to market hard and have had tremendous success. The T-Mobile thing sort of came out of left field.
Mm-hmm.
But if you think it through, T-Mobile's a wireless provider with, you know, a technology. It's not a business model in the future. You've got to get to the subscribers-
Mm-hmm
... and they've got to find partners to do it.
Yeah.
1. 2, I think they had an opportunity with Lumos and EQT to basically acquire it, but then reconstitute it and double up on the funding. 'Cause if you follow what happened, they bought it, then they sort of put it back in a joint venture-
Yeah
... and EQT is putting more money in-
Right
... to go even, to go even faster. From a general market standpoint, it sends a very clear message as to valuation, which is, if you are building a dumb pipe for a price model, you haven't yet had a liquidity event at any multiple.
Yeah.
If you're building a subscriber-focused, community-oriented model like Lumos, you actually had a liquidity event at a very high multiple. That's gonna get people to go, "So wait a minute, what are they doing that we're not?" And we're already seeing those conversations. The other piece is, T-Mobile, to me, represents a broader scheme, which is there's gonna be more than one, like T-Mobile, folks that are gonna be interested in gaining access to subscribers but don't want to take on the burden of building the whole infrastructure.
Right.
Stay tuned for how this shapes out.
No, we should-
You don't have to think real, you don't have to think real hard about lowest cost per bit per mile, Verizon's network, and what we've done with AXOS, and what you might do as an infrastructure play. It's, it's fascinating where this might go.
Yeah.
So I guess I'll leave it at that. It's all good, but it really does reinforce the value of a subscriber experience-centric model and that value.
Yeah. We just have a few minutes left. You know, Cory, let's chat balance sheet a little bit and you guys have been real successful, building up a nice cash position and lots of liquidity. What are your thoughts on, you know, capital allocation here and you know, any thoughts around M&A?
Sure. So, we have a share repurchase plan-
Mm-hmm.
The idea is that this is programmatic. It is how we are giving cash back to shareholders, very rigorous process that we look at every 91 days with the board.
Mm-hmm.
We create a trading plan, put that in the marketplace, and just kind of let it go and operate. It's funded by free cash flow, right? So the fact that we generate free cash flow every quarter is that what allows us then to continue to have that program and to maintain it. So yes, it exists. Yes, we'll continue to use it, and it's not a temporary thing. It's something that's built into the way we're looking at our allocating capital.
Okay.
On the M&A front, when you've built the platform in this disruption, there's nothing to acquire. There's nothing out there like what we've built. So no, there's nothing like a box company that we would go acquire, right?
Mm-hmm.
We'll continue to be an organic grower.
Solid. Mm-hmm.
That said, you know, there could be a piece of technology that we would like to have in our stack that we would then go buy. But most of the time, if possible, we'll partner first.
Yeah.
Yeah. I mean, it's at the very best case, it's a software nugget that's a technology tuck-in-
Yeah
... that you might not even merit seeing in a 10-Q.
Mm-hmm. Yeah. Got it.
On the balance sheet, one last item, the balance sheet is what enables us to go through this little bit of a wintry season that everybody's experiencing.
Yep
... and hold our OpEx investments constant, so we can go take new footprint, while everyone else has got real challenges.
Yeah.
We will always covet the balance sheet, balance sheet metrics, and run a clean shop.
Yeah. Great stuff. Well, it's great to have you guys. Just in wrapping up, anything you wanna say in closing up, Carl?
I love the way you're dressed.
You're the best. Excellent, pal, buddy.
Now, very quickly, I would harken back to where you started, which is the reason you invest in us is the reason our customers do, which is over the long term. I would always encourage, frankly, long-term investors to trade around the position, depending upon how the stock runs hot or cold. But if you're thinking about investing in Calix, know that this is something that should create enormous value over the long term, continuously, and that's what we're focused on. So very much appreciate the opportunity, Ryan. Cory, any last words?
Nope. Thank you, Ryan. Appreciate the time today.
Yeah, very much.
Thanks, guys. Always a pleasure. Thanks, Ryan