Greetings, and welcome to the Calix first quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the brief prepared remarks. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. Today on the call, we have Calix Chairman and CEO, Carl Russo; Chief Financial Officer, Cory Sindelar; and President and Chief Operating Officer, Michael Weening. As a reminder, yesterday after the close of market, Calix released its letter to stockholders in an 8-K filing, as well as on the Investor Relations section of the Calix website. This conference call will be available for audio replay in the Investor Relations section of the Calix website.
During this call, Calix will refer to forward-looking statements, which include all statements the company will make about its future financial and operating performance, growth strategy and market outlook, and 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 first quarter 2022 letter to stockholders in their 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 on this conference call, Calix will discuss both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in the first quarter 2022 letter to stockholders. Unless otherwise stated, all numbers referenced on this call will be non-GAAP measures.
With that, let me turn the call over to Calix Chairman and CEO, Carl Russo. Carl?
Thank you, Laura. Robust demand for our all-platform offerings continued in the first quarter as the Calix team again executed with excellence. This combination delivered a breakthrough in our business model, a 5% sequential increase in revenue from the fourth quarter of 2021. We have put the seasonality associated with traditional systems businesses in our rearview mirror, and we are confident we will deliver sequential quarterly revenue growth from now on. This is the last significant piece of our evolution to delivering increased predictability resulting from our continued shift to our all-platform model. This shift continues to build as over 70% of our bookings in the quarter came from our software platforms and associated systems and services. This is up from 50% just three quarters ago. Our platforms enable BSPs to offer broadband as an exceptional service rather than just a dumb pipe.
This makes our BSPs essential to their subscribers and thus very resistant to macroeconomic factors. Furthermore, it ensures demand for Calix platforms will remain robust. However, supply remains the key challenge and will continue to be for the foreseeable future. That said, we are making progress, and our 14% year-over-year revenue growth in the first quarter has given us enough confidence to raise our 2022 full year guidance from 5%-10% growth to 10%-15% growth. This is in line with the long-term guidance we gave at our Investor Day at the end of February. In essence, we are now pulling forward our entire guidance model into 2022, except for gross margin, which we believe will remain around 50% in 2022 and then grow from there.
We have made modest and targeted pricing adjustments, which will roll into the revenue line over time. While these will not change our gross margin guidance for 2022, they do reinforce our confidence in returning to our 100-200 basis points of gross margin improvement in 2023 and beyond. In closing, the enormous secular opportunity we are capitalizing on grows every day, and the Calix team is committed to executing with excellence to help our customers simplify their businesses, excite their subscribers, and grow their value. With that, let's open the call for questions. Operator?
Our first question comes from the line of Paul Silverstein with Cowen. You may proceed with your question.
Good morning. Thanks. Not something I normally ask about, but Cory, what's the tax rate issue, and is this just going to impact this year, or is that going to be the new norm going forward, this 26%-28% you referenced in the letter, as opposed to the low 20s you had previously referenced and that everybody else is paying?
Good morning, Paul. This issue relates to a set of new rules that were created with the Tax Cuts and Jobs Act of 2017. They include a set of rules called BEAT, Base Erosion and Anti-Abuse Tax. This tax was intended to prevent U.S. companies from avoiding domestic tax liability by shifting profits out of the U.S. Because of our growth rate, we now fall under these rules. Most large companies pay enough U.S. federal income tax that BEAT is not triggered. However, given that we're using our NOLs, we have a BEAT tax obligation. This BEAT tax is based on our planned annual foreign expense reimbursement and does not fluctuate with our profitability. The expectation is we will be in a BEAT paying situation until our NOLs run out, and so we will be paying this tax for a couple of years.
I would advise that the 26%-28% rate will be with us for one or two years, three years.
Through and including at least 2024, maybe 2025?
Not 25. 2022, 2023 and 2024, potentially 2024.
You'll go back to the rate everybody else is paying when you consume the NOLs?
Correct.
All right. That's actually all I have. Thank you.
Our next question comes from the line of Michael Genovese with Rosenblatt Securities. You may proceed with your question.
Thanks a lot. My first question, can you just give us the remaining performance obligation number? Also, you know, I think of that number as primarily reflecting the three-year contracts for the cloud sales, but I think there's probably some other stuff in there. Could you just help us think, you know, how much of it is cloud and how much of it is other stuff?
Sure, Mike. The number for Q1, you will see it posted in our 10-Q file, end of day today. It's $138 million for the quarter, at the end of the quarter. It is the majority cloud. Also included in cloud, you have the attending suites. There's also support contracts and extended warranty in there. There is no hardware included in those numbers. Those are all non-cancellable contracts.
Right. It's my understanding that the operating systems licenses are one year, so they're not in the RPOs. Is that right?
That is correct.
Right.
The operating software is recognized as a signed contract and is not included. It's been delivered once the contract's signed, so you won't find that in the RPO.
Yeah. I just wanted to confirm my numbers here are right. I mean, that looks like it's about up about 82% year-over-year. That's-
That is correct.
Okay, great. Cory, can you also, you know, Cory and/or Carl, talk about the, you know, the decision. I mean, it looks to me like you're a little bit above. I mean, it's certainly at the high end, if not above the OpEx target model just for 2Q. I know you're gonna be at the model for the full year. Can you talk about the decision to, you know, hire that many people right now and what's behind that?
What's behind it is what's in front of us, which is an enormous opportunity that we intend to fully take advantage of. As we get better and better at growing the team, we have the ability, as we grow revenue to invest fulsomely in our model. Very clearly, you should take that as a very strong indicator of what I said at the start of my comment, which is we have robust bookings, and we see the opportunity in front of us to be unrelenting. We intend to take advantage of it and not leave any of this opportunity lying fallow in the field.
Great. Carl, last question for you. I guess, you know, in the world, in the financial community, there's a debate about what exactly is going on at the macro and, you know, what's gonna happen with the consumer. Then, you know, your customer subscribers are households and, you know, fit under the definition of consumer. You know, there's basically a debate about how resilient broadband will be, and I'd, you know, love to get your view on that.
Yeah, great question, Mike. Obviously, in reading your note, you sort of picked up on some of it. You know, one of the things that everybody I think has concluded is that broadband is becoming a necessity. I think you hear that all the time. There's sort of an assumption with that therefore dollars will be spent by subscribers and consumers and businesses on broadband. That is true. What we are focused on, however, is helping our customers deploy broadband as a service with all sorts of things that excite their subscribers. Why is that important? Because broadband sold as a dumb pipe is a commodity.
While it's a necessity, if a competitor comes along with a lower price or a higher speed, you're gonna lose that subscriber. When you're doing what we're doing and helping our customers build what they're building, we are actually ending up helping our customers have very high net promoter scores, very low churn rates, and they're building a very, very different model, which is actually sort of recession-proof. They don't have competitive issues. If our customers are recession-proof, then actually we're recession-proof. Maybe, you know, let me ask Michael here in a moment to give you an example of a customer success story or two around this. I want to go on the supply side for a moment as well.
I think not only is our demand recession-proof, but on the supply side, if there's a recession, I think it actually frees up, in the broad sense, shipping and silicon, and might actually benefit us, I'm sad to say, with a recession. I actually think we turn out to be better in a recession. Michael, do you have one or two customer success stories you can just share to help everybody understand this different model that we're helping our BSPs build?
Sure. On the networking side, we had a significant customer success story in that we had Blue Ridge Cable, who has over 250,000 subscribers. A cable company who in the past has remained on DOCSIS, and ultimately cable companies have been unchallenged over the last 10 years versus DSLs and other. They've decided that actually they're going to overlay their entire existing cable network, rebuild it with fiber, as they see the significant opportunity ahead in the transition of the consumer. To amplify what Carl stated, the recession-proof of a broadband network, first is that it's not a dumb pipe. They're a full service provider. For example, they're looking to us to do things like going well beyond the fiber that they provide today and expanding out with services like ProtectIQ, which is our malware and security deployments.
We had companies like Canadian Fiber who are now stopping over 100 threats a month per home. They're also looking to us to expand out their offerings around very sticky services, like the announcement that we made this quarter with Arlo, where we started out with web cameras, and we're now going to enable even the smallest broadband service provider to build out a full home security solution with Arlo, install it into your home, and then ensure that if someone else comes in and offers a lower pipe or a lower price, it doesn't matter because you've now got all these great services, including securing your home from a web camera, doorbells, locks, all those types of things with your service provider who you trust on a daily basis, which means you're never changing.
Those elements are the reason why they're transitioning and the successes that they're seeing. The last success I'll add is that at the same time, there's significant broadband funding going into this market, as you're well aware. One of the areas that we're very focused on with Calix Support Cloud, which is the largest deployed Support Cloud in North America by far. We've actually built full custom testing into it so that to meet those government obligations, all of them can actually simply, without any additional integration, do the testing and provide feedback to the government to ensure that they're meeting their obligations with the broadband funding that you're getting. We're now exceeding 20 million tests a month. No one in the marketplace is even close to what we're doing.
In fact, we're replacing competitors on a very rapid pace because their solutions are failing. You add all those things together, we make it very simple for them to meet their performance obligations to the government and at the same time delight their subscribers.
Thanks, Michael. Good stuff.
You're welcome.
Laura?
Our next question comes from the line of George Notter with Jefferies. You may proceed with your question.
Hi, guys. Thanks very much. Maybe just kind of continuing on the Calix Cloud discussion. Can you guys give us a sense for how you're doing in terms of subscriber or customer adoption on Operations Cloud and then maybe some of the revenue suites, ProtectIQ, ExperienceIQ? What are you seeing there in terms of adoption rate?
Early days on Operations Cloud, as you know, but I guess the way I would gauge it is, you know, where interest goes, bookings soon to follow, and it is ramping quickly, but obviously off of a zero base. I would tell you, we are robustly certain that Operations Cloud will be every bit the winner that Support Cloud has been as it grows rapidly through our customers. On the, you know, on the revenue edge side and the suites, Michael, maybe you have an anecdote, but I'll just give you the overarching, you're seeing that in the 82% year-over-year growth in RPOs. Michael, do you have an example you might want to just anecdotally add from a customer on that?
Well, I'll state that if you look through our press releases from Q1, we actually press released at 90% growth in the suites, specifically around ProtectIQ. I've already identified that Canadian Fiber is now stopping 100 threats per month in their home. There's other companies in that press release, like Centranet, who's seen a 94% adoption of ProtectIQ. We're seeing this ongoing massive ramp on the suite side as the service providers are educated by our customer success team on how to be successful and change the lives of their subscriber. What's very interesting is that as we engage with cooperatives and other not-for-profits who make up a large percentage of our base, they are really embracing this because they see it as their obligation to improve the lives of their members.
They see one of the best things you can do is help with security because everybody
With everything going on, you can never have enough security. I'll just add one point on what Carl said about Operations Cloud. Operations Cloud is our fastest ramping cloud ever. It is also probably one of our most important because it solidifies in the marketplace that Calix platforms are unique. Nobody is doing what we're doing in that no one is tying the subscriber platform to the Access network and that outdoor network. Operations Cloud is that glue between the two that allows those service providers to automate their entire operational process in a way that was never done before. Big companies can do that through massive teams of custom coders. We're doing it by operationalizing and automating all those workflows through Operations Cloud, so even the smallest service provider can be as efficient as Verizon.
Verizon has gone on the record over and over again saying that they will reduce their OpEx by 80% a year with our platforms. When you add the subscriber network on top of that, it's a massive, operational saving for our customers, which is why it's ramping faster than any other cloud before.
Got it. Thank you.
Our next question come-
Laura?
Our next question comes from the line of Christian Schwab with Craig-Hallum. You may proceed with your question.
Hey, congratulations on a good quarter and improved revenue outlook. I guess my only question is it relates to gross margins. It sounds like, and just make sure I heard it correctly, that you guys are raising prices modestly on certain products or certain platform products or platform offerings to, you know, help offset the significant component logistics costs that kind of impacted us this quarter. However, that improvement won't be seen until 2023, and that's when we kind of return to 100-200 basis points of gross margin improvement for a couple of years. Did I hear that correctly?
Yeah, I wanna. Well, sort of. Let me see if I can make sure I'm being clear. The first thing is we're bringing our model forward except for gross margin. At the same time, I also made the comment that we have made targeted specific pricing adjustments, and they're across different products in different places. Not just platforms, it could be legacy, et cetera. With that in mind, we did not go make anything retroactive. These are prices going forward on new quotes in business, not on backlog or something of that nature. You have to recognize that given lead times and other things, these will roll through bookings and then into revenue. It's just gonna take time.
They are not the reason we believe that we will return to 100-200 basis points of margin growth in 2023. They just, at one level, make us more confident that we will achieve that. We think our own work going on, plus the platform acceleration, which obviously is software, it's not subject to hardware costs, is gonna continue to drive our gross margin model. In this year, as we said at the Investor Day, 50 points is where we believe we're going to be, give or take. Going into 2023, we think we will get back to our 100-200 basis point improvement. Does that help, Christian?
Yeah. That's perfect. Just remind us, what do you think is the mix becomes over time, you know, what is peak gross margin potential for Calix?
Don't know, because as we continue to layer into the model, and you've heard some of the things Michael spoke to, as you go up the platform and provide more and more value for our BSP subscribers, those products typically have higher and higher margins. We know we will go above 60%. We don't know where it will go from there. It also depends on, from an abstraction standpoint, we are able to deliver software without hardware. Depends on how the market shapes. If in the future the market has stable white box solutions where the customer can buy hardware from one place and deploy our software on top of it, that also changes the model. I have no answer for you as far as where it peaks.
We just know we wanna get back to our 100-200 basis points and keep going, and we can certainly get above 60 points of gross margin as a corporate average.
Great. No other questions. Thanks, guys.
Thanks, Christian.
Our next question comes from the line of Chris Howe with Barrington Research. You may proceed with your question.
Good morning, Carl. Good morning, Cory. Just leading off here, on the topic of bookings. You mentioned 70% of total bookings. As we think more about this number, you obviously have many different points of adoption, within the customer, whether it's your Support Cloud or other avenues that Michael highlighted.
Mm-hmm.
Can you go into a little bit greater detail? There should be a little bit of organic acceleration of adoption, as this matures further down the line, as well as work that's being done by your sales force.
Are you asking me does the 70% as a percentage of mix continue to grow, or what's underlying the-
Yeah.
Subsequent growth?
It's more just kind of getting behind the 70%. What portion of it is just the natural evolution of opportunities within your subscriber base?
Okay.
Just based on the maturation of the different points of adoption that you can offer to subscribers and to the BS Ps.
Right. There's a continuous drumbeat of land and expand of our platforms that the only change that we're experiencing is that it's accelerating. Separate from that, in our mix, as you may remember, Chris, our legacy systems, we stopped developing quite a while ago. As such, as new technologies came along, we did not put them into our legacy system. As an example, our legacy systems, you can do GPON on. By the way, our platform systems, our AXOS systems, you can do GPON on. XGS-PON, which is 10 gig PON, was not developed into our legacy systems. It's only in our systems that run our platforms. As customers naturally want to move to 10 gig PON, that actually is a reason to come over to the platforms. The same is true with Wi-Fi Six versus Wi-Fi Five.
Those two things are going to cause that notion of switchover in our bookings from our legacy systems to our new systems. Now, on top of all of that, there's constant growth in our platforms, et cetera. You know, if I can, Michael, can you speak to maybe your experiences and just this whole platform business and what it looks like and how it grows from here?
Sure. Carl mentioned, I would say, two elements from a hardware point of view that might get a customer saying, "Hey, I'd like to change my mind and start thinking about, is this a pivot point for me?" Those open up the conversation, which allows us to then really dive into how do we transform that customer's business. Because of the fact that we've actually built out unique platforms for the subscriber side and on the network side that provide different capabilities for our customers, it allows us to completely change the conversation from how do you radically transform how you operate your OpEx, which is a simplicity statement, and how do you radically change your go-to-market, which is the excite statement, changing your relationship with your subscriber.
With those platforms, we then get into the conversation with the customer around the fastest capabilities. Every single quarter, we have another release where we provide a level of capabilities and new processes and products that has never been seen in our industry before, and then integrate all of those into go-to-markets that again, have never been seen in our industry before because of the fact that it comes pre-integrated out of the box. We go do everything from the behavioral analytics, the campaign creation, and then how do you launch it to drive an upsell. All those things come together to change that conversation. When the customer is ready to have it, we're ready to explain to them how they can change their business.
in behind it, you have the sales organization, but I would also say our very mature customer success organization also follows in behind and says, "We're not just going to give you this new technology, these new go-to-markets, these new solutions, and leave you alone." No, our customer success organization is going to lean in, give you best practices, help you train your call center, help you train your marketing organization, help you train your operations organization, and then take those best practices and ensure that you get the most value out of what you've invested in as a BSP.
All of those elements come together to position us uniquely and speed our growth at a pace that's never been seen before, whether you are an existing customer who is expanding with us or, as we've identified in our shareholder letter, the 33 new customers who have decided to select Calix as the platform for their future.
Thanks, Michael.
That's certainly very helpful. Thanks, Michael. Just one quick follow-up. I know it's a small percentage as we look at the entire business, but international revenue, it's about 10% of revenue. You mentioned the European customer. The timing didn't quite work out this quarter. Broadly speaking, as we look at your target financial model, how should we look at the international opportunity versus the domestic opportunity? Anything there that we should pay particular attention to as we look forward?
No, it's consistent with what we've said, which is we continue to.
Okay.
Hone our international efforts, but our first priority is North America and taking advantage of the huge opportunity that's in front of us. It has not changed, Chris.
Okay. All right. Thanks, Carl.
Thank you.
Our next question comes from the line of Tim Savageaux with Northland Capital. You may proceed with your question.
Hi, good morning. Sorry about that. Congratulations on the results and outlook. I wanted to follow up on gross margins.
Yeah.
Given a couple of factors, which is this increase in the all-platform bookings percentage to 70% from 50%. I guess you said that was Q3 of 2021, so pretty dramatic, as well as the price increases. I know you're not changing your gross margin guidance for the year, but can you share with us. You know, I imagine your estimate of the impact of supply issues may have increased. You know, given those dynamics that we've seen about the change in software mix and the price increases.
You know, X, you know, can you give us an estimate of X supply issues, you know, where would gross margins be, you know, either for the quarter or for the year?
Yeah. I mean that's a really hard question, Tim, because as you know, and we've discussed, we don't know where things end up. If this never happened, we'd be a whole heck of a lot higher as we talked about at the Investor Day. I don't even know how to give you an estimate. Let me address your question slightly differently on the looking forward. The supply is gonna continue to be a challenge. There's all sorts of indicators of, you know, there's a few things that are improving in supply. There are a few things that are getting worse in supply. Air freight is reducing. The supply environment is so choppy as we look forward, that it's hard for us to put a stake in the ground on that side.
The flip side is, as you heard Michael speak to it, the platform is compelling. As we try and put all that together along with some modest price increases that will roll through, we're comfortable with 100-200 basis points next year. This year is sort of it's gonna be a fight to keep that 50 basis points in front of it. That's the best answer I can give you.
Okay. Thanks very much.
Thanks, Tim.
Our next question comes from the line of Fahad Najam with Loop Capital. You may proceed with your question.
Good morning. I'll follow up on Tim's question. Can you kind of give us a breakdown of your gross margin headwinds, you know, component cost versus freight? I think you mentioned that freight was somewhat getting better. Can you kinda give us a sense of these two factors? Is it both like 50/50 or one is more pronounced than the other?
It varies, you know, by the day, but I think, you know, Cory has stated in the past that if you wanna sort of look at them roughly, you could split them for the time being. Cory, I don't know if you wanna add a little bit of color to that, but there's 50/50 is as good as a proxy as any. I can answer. Cory?
Yeah. I would probably weigh it to material cost rising, more so than the freight cost at this point in time, because of the PPVs that we have to pay to go source those missing components. I'd weigh it a little bit more to that side.
Got it. Appreciate it. I noticed a healthy increase in employee stock comp expense. I know you added new headcount in the quarter, but can you give us a sense on what are the inflationary pressures you guys are seeing in terms of hiring new talent? How should we be thinking about your OpEx rate going forward? Any color there?
Well, let me answer the OpEx model, and then I'll let Cory add some color. As you know, our OpEx model, as we stated at the Investor Day, is 17%-19% on sales and marketing, 30% of product gross profit in R&D, and now 8% on G&A. We moved sales and marketing up one point and G&A down one point. We will invest as fulsomely to that model as we can because we believe that model yields the best return on this opportunity that's in front of us. As for color underneath that around different inflationary points, Cory, do you wanna spend a moment on that?
Yeah. I mean, if you're looking at our OpEx investments, it continues to be largely personnel driven as we're making those investments across the organization. In the G&A side, a little bit more on systems. I would say that we've been able to hire at a robust rate, and we could plan to continue to invest fulsomely to the model, to address the large opportunity that we see in front of us. I think you should expect us to continue to be right at our OpEx model for the foreseeable future.
You know, one other piece that I would like to add, and I'm gonna ask Michael to add some color on this, is, you know, in this day and age of, you know, you read all these stories about quit rates and the great resignation. In my opinion, when you have an inflationary environment, one of the things that happens is people job hop because they can get a better offer. Obviously, one of the things that we're focused on is the consistency of our team so that we can help our customers succeed and deliver these services to the subscriber. So culture's been a big focus area. Michael, maybe you wanna add a little bit of color on the work that goes on there and what we continue to focus on.
Yep. From a culture point of view, we're very focused on ensuring that we listen to our employees and build a type of culture that is constantly changing and adapting. One of the things that we state over and over again is our philosophy with regards to culture is better, never best, which is our culture is not meant to be retained. Our culture is meant to grow and change, especially as we bring all these new people in, we continue to learn and grow. That approach to the marketplace has paid off. First of all, Fortune 100 or Fortune added us to the top 50 midcap, and we received another four Comparably awards this quarter. Best Company Outlook, Best Engineering Team, Best Global Culture, and Best Places to Work in the Bay Area. That last one being very prestigious.
If you look at that list, the people around us are the Apples and the Googles of the world who also invest significantly to make it happen. Those elements are very important because there isn't a single new hire who doesn't spend a lot of time researching the company because they want to make the right career decision, and we want them to make the right career decision also. When I speak to new hires, they all, every single one of them, to a person, no matter what level, has read through the Glassdoor and really understood what the culture is and how we're growing. With regards to our hiring, that's had a profound impact on our brand because our team members are making this a great place to work, which is really great.
Other questions, Fahad? Yeah. I actually have one more question on the software recognition. If the end consumer adds a new service to their existing offering-
Mm-hmm.
Is that constructed as a new contract or is that and thereby you recognize new software revenue? Can you just help us understand when customers are adding on new services, how are you, Calix, recognizing that revenue? Is that considered a new contract and thereby new software revenue growth recognition? Just kind of understanding how this land and expand works?
Sure, Fahad. Let me break that up between operating licenses, operating software licenses, and our SaaS clouds. A customer will buy our OS on a license basis. They may buy for a certain number of subscribers, let's just say 1,000 subscribers. We'll recognize that license revenue upfront. Obviously, there's a portion of that that'll be related to maintenance, but has an ongoing annuity associated with it. After they bring on more than 1,000 subscribers onto the cloud or that platform, they'll buy more licenses, and we'll recognize some additional licensed software at that point in time. On the clouds, it's recognized over time. Again, there are frequent true-ups depending on what it is that they're buying, could be either monthly or annually.
As more subscribers come onto the platform, we will do a true-up that'll be reflected into an increasing growth rate in our clouds and continue to be recognized ratably over the service period in which they've committed. Some customers will go out a little bit further on the curve, commit to more, get a better rate, and generally will sign a three-year agreement. That's what you see starting to reflect in our numbers as these customers are ramping the adoption of the platforms within their networks.
Thanks, Cory. Great. Thank you. Appreciate the answers. Thanks, Fahad.
Our next question comes from the line of Ryan Koontz with Needham. You may proceed with your question.
Hi, thanks for the question. Maybe if you could comment, Carl, on this, on your strength in your midsize customer base and the opportunity there. We're clearly seeing a broad shift from copper over to fiber in this segment, it seems. Thanks.
Yeah, it's not necessarily copper and fiber that's driving it, although that's part of it. When you think midsize, so if you look at our shareholder letter, which I think is what you're citing, and you go to the small, medium and large mix, what you're starting to see in our mix, if you look over the last five quarters, is small kept growing and growing and growing in percentage. As we just talked about, a disruption always happens from small customers to large, and the medium and the large kept getting squeezed down. Last quarter, we started to see some of our smaller customers actually growing and becoming medium customers. They went over the 250,000 subscriber line. We're also seeing some other additional medium customers join us on our journey.
You know, as you know from the Brightspeed announcement that they made, we're starting now to see some larger customers understand the disruption. As we've said over time, this will start to move where larger and larger customers start to see this disruption and want to come on board. It is very early days. You know, as in the case of Brightspeed, we're probably still six months away from when their acquisition of the spun-off Lumen assets will be completed. There's no question it's coming. Does that help, Ryan?
Yeah. Yeah, it does. Thanks.
Okay. Other questions, Ryan?
Covered them all.
Thanks. Laura, I don't know if there's any other questions in the queue.
As a reminder, if you would like to ask a question, please press star one on your telephone keypad. Our next question comes on the line of Paul Silverstein with Cowen. You may proceed with your question.
Thanks. Obviously, I reconsidered. Carl, I think last time I asked you this question, you had said it was in the high dozens, but the question being, what is the breadth of adoption of either one or multiple software suites? I recognize you're talking about less than a handful in total, but how many customers at present? And what's the take-up rate in terms of new customers? Not necessarily new Cowen’s customers, but new customers in the sense of customers that have finally migrated to adopting one or more suites. What is that running on a quarterly basis now? I assume it's accelerating, albeit off a small base. Can you give us any sense in terms of the breadth of adoption, both at present and how it's progressing?
Well, we've said before that, you know, there are hundreds of customers now that are deploying one or another aspect of our cloud platforms. You can assume that the intersection, i.e., of those sets where customers have deployed two or more clouds, is growing. I would merely tell you that two or more clouds is over 100 customers, but you shouldn't assume anything more than that.
Carl, how about the software enabled by Access? Whether it's ProtectIQ or one of the other couple of offers that you have.
Yeah, back to Michael's comment earlier, again, ramping and broadly deployed. Again, think in terms of hundreds, not tens, but not thousands.
You're adding how many a quarter, roughly?
Look, I'll leave you with new customers at 33, and you know that we're expanding inside of our existing customers. Likely you're seeing many tens being added in a quarter.
All right. I suspect I know the answer to this question, but I'll ask since none of us have asked you, but there's obviously a lot of investor concern about the ongoing lockdowns in China. Any thoughts you'd care to share with us in terms of the perspective?
Yeah. I mean, the lockdowns. Look, sure. Let me share a couple thoughts. I think there's a big challenge as a virus gets more transmissible to try and ring-fence it with quarantines. The coronavirus has evolved into something that's more and more transmissible, and so you end up having to cast a wider net on an outbreak. It's gonna be very challenging for China to maintain this quarantining approach and not shift. That said, if you watch what's going on from a commerce standpoint, they are having lockdowns with a lot of commercial exceptions, where they're allowing certain businesses to continue to run. Can it affect us? Sure. Is it an effect right now? No. You know, we'll see where it goes from here.
If I were to, you know, say what do I think will happen, I think there'll be, you know, these minor interruptions that we will deal with. But I don't think it's going to turn into a major situation like we saw two years ago.
Is there some point, four weeks from now, eight weeks from now, where if this were to continue, it becomes meaningful in its impact on Calix?
Yeah. Well, if it becomes meaningful, you won't see it because it probably won't become meaningful in the quarter. It'll create some gap out at some lead time. You know, stay tuned. If it does, obviously, we'll be speaking to it. Right now, there's no effect that I would say we would talk to.
All right. I've got one last question. I think you answered it earlier, but some clients have raised the question in terms of going back to the resiliency of your customer spending. Are current build-outs fully committed even in an economic downturn?
Oh, sure. Because obviously on the build-out side, you know, that's not the revenue edge side, that's not our platform. That's just, in essence, the fiber and the network systems, what we call the Intelligent Access EDGE systems. You know, it's a smaller part of the business, but it's also the one that has the government funding underneath it. So on the networking side, you're not gonna see that be terribly elastic based upon macroeconomic factors. But then when you go towards subscriber, it's actually the opposite. What we bring to our BSPs is their ability to now actually differentiate and change utterly their model from a commodity pipe provider to a broadband as a service provider. That is compelling, especially in downtimes.
All right. Two last quick ones from me. Since there's no really quantification on your and Michael's statements about culture, what is employee turnover? Has it changed? I'm hoping, Cory, you could give us also the current RPO number. I know you gave us the RPO number before, and I know we're gonna see it in the queue.
Yeah. Our turnover is very, very low, and way below any industry comparables. I would leave it at that. On the RPOs, Cory, do you wanna cover the RPO number and the year-over-year comp please?
Current RPO, Cory.
Current RPO that you'll see at the end of the day today is $138 million. That compares to $75 million in the year ago period and $125 million last quarter.
Okay.
Thanks, Paul.
All right. Thank you. That's it. Thanks.
Ladies and gentlemen.
Laura, any other questions?
We have reached the end of this question and answer session. I would like to turn this call back over to Mr. Sindelar for closing remarks.
Thank you, Laura. Calix leadership will participate in a number of investor meetings during the second quarter of 2022. Information about these events, including dates and times for public webcasts of management presentations, will be posted on the Events and Presentations page of the Investor Relations sections of calix.com. Once again, thank you to everyone on the call and on the webcast for your interest in Calix and for joining us today. This concludes our conference call. Goodbye for now.
You may disconnect your lines at this time. Thank you for your participation. Enjoy the rest of your day.