Calix, Inc. ($CALX)

Good morning. Thanks, everyone, for coming. We really appreciate you joining us here on Investor Day 2026 at this incredible time in our company and also in the industry. So that was the video that we showed at Connections back in October when we were actually on this path to where do we go from a company and how do we actually transform our customers' business. And that's what we're going to talk about today because now it's real and it was accomplished in the end of March. So for today, what we're going to walk through is a number of things. First, we're going to walk through our mission in the future. Where is Calix going to go and what's the opportunity at? Then we're going to go through that opportunity and identify what do we see as the advantage for our company? What's the platform innovation that we can deliver to the industry. And then John is going to come up and he's going to talk about how do we accelerate customer success. Because as we said to our investors day in, day out, our success is predicated on the success of our customers. When they add a subscriber, we win, when they reduce churn, we win. And it's all about how do we invest to help them do that at a faster pace. Then we're going to go to a customer panel. We're very fortunate to have 4 incredible customers who partner with us on how we innovate and how we change markets. They're going to be sitting up here, and we're going to walk through the different elements of how they run their businesses and how we're partnering to drive their success. We'll then have Cory come up and do the financial model, and we'll close with a leadership Q&A where you'll have the opportunity to ask us questions. And so that's the agenda for today. So let's start, the mission and our future. On March '26, something big happened with our company. It's something we've been working towards for 2.5 years, which is the launch of Calix 3.0, which is our next platform. And I, 2 weeks from now, will actually finished my 10th year at Calix. And we've been on this journey and nothing worthwhile is easy. And the journey started back prior to 2017. I joined in 2016, and we started out with a recognition that the company that we were is not the company we needed to be. This is founded with our Chairman, and he talked about this, how do we transition ourselves to our only company. If you go back to where we started, it was a networking company that had a single Wi-Fi product. We have kind of a cloud, but not really, but that was Calix 2.0. And we envision a very different view where we could actually transition ourselves into a platform company. And in 2019, we made that switch. It was hard for us. It was a huge transition in people. And in fact, we always talked about this, is that we always thought that the transition from a people point of view inside Calix would be relatively small. Maybe 20% of the [indiscernible]. And actually, it was the exact opposite. We found that over that period transition not only from a product point of view, from a culture point of view, we actually changed out 80% of our people, and that launched in 2019. And that was the start of a very different company. You can see it in our financial performance. You see it from a revenue point of view, where from 2019 to 2025, the year that we just ended, we landed at -- went from $400 million up to $1 billion. You also see it in the margin profile. The 34 points when in 2017, I actually go back to 2016, 2015, it was even lower. And so that margin profile has gone up significantly, and that's the power of the platform. How do we drive at scale, a highly profitable business that customers love partnering with to drive great outcomes? And those great outcomes were evidenced by the end of the 2025 year $1 billion in revenue, great margin profile, incredible cash but also significant innovation. Today, we're going to talk about how do we innovate with our customers to help them be more successful over time. And that innovation cycle, the chart up there, we're going to go through that in depth. And in March '26, we were talking about this at the end of last year. We talked about it at connections with the 3,000 attendees who were there is when 2.5 years of work came to culmination and our elastomers left Calix 2.0 and we're added to the platform. And so I'm proud to say we put this in the investor letter. We talked about this very briefly last night is that all of our customers are now on our AI native Calix platform. This represents a massive opportunity for us. Obviously, when you talk to Cory, he's going to say the most important thing to him is we're not running to clouds. We're not taking the cost affiliate with those. Thank goodness, we can close [indiscernible] but for our customers, this represents an opportunity where artificial intelligence really comes for, and they're going to be able to join the benefits of that capability at a faster and faster pace, which we'll walk through today. And look, this represents the next start the next period for Calix. And we entered this period from a position of strength on many levels. First and foremost, innovation velocity. We are an innovator in our industry, an industry that is plagued with speed and lack of innovation, where that we're coming into it and [indiscernible] how we do business and so you can see this in the way that we've been recognized. Over the last 12 months, we've achieved 72 different awards regards to how our culture, how our team members, our products are changing the way we do business, and we'll show you some of those examples. We've invested $2 billion up until this point to get to it. This is not something where you grab out of technology. We hope it works. This is actually a long journey that we've been on for 15 years, like I said, $2 billion invested to get to this point, go slow to go if you look at the launch of Calix 3.0 Agentic platform, it was 2.5 years of hard work. And I will tell you throughout that process, and we're going to talk about innovation velocity, our customers are saying, what's the payoff? Why are you moving me over? How does it impact of my business? We knew and you cannot walk away from the fact that artificial intelligence is going to change everything in every industry. And so we saw that back in November '23, and we started that investment. So at this point in time, we can send up here on stage with you and say, we have an AI native platform. We can walk you through all the steps [indiscernible] and we're ready to go and take advantage of it. And the last part is we kicked off a strategic relationship with Google. I have stated this openly, and I will say this in multiple times, and I'll actually talk about on some slides, the greatest threat to our service provider customer is Amazon. We were on Amazon Cloud, and we made the decision to actually move off because, frankly, they're the enemy. They're the enemy of our customer. And so we moved over to Google, who's an incredible partner. They have a great footprint around the world, and they enable us to completely change our business model, one where we're no longer a [indiscernible] company, but go into any market in the world, but also we can actually do private instances that allow our customers, if they're a large customer to host everything internally. And we'll talk about that expansion. The second component from [indiscernible] is everything that we're doing with customers. You hear that when they come up on stage. One of the things we're most proud of is the fact our customers have a deep trust of us. We actually have a 94% renewal rate. We have over [indiscernible] for customers on this next-generation platform but more importantly, if you've been reading about artificial intelligence, what is the most important part of it? It's not an agent. It's actually the insights that you get from [indiscernible]. If you don't understand how a business works, you can't effectively apply AI business to transform it and drive rate outcomes. Last year, we did over $0.5 billion workflows. We run the customers' business every single day. We understand how they run their field service, how they run their marketing, how they run their call centers, and we take those insights, and we are uniquely positioned with this new platform to help our customers understand where will artificial intelligence have a really profound impact on their business on a go forward. And so that 0.5 billion workflows are critical to allowing us to go fast in this next day. Third, talent. We're very proud of our team. And I firmly believe myself that as we go into this genetic era, we need to stop with the value of AI is only how many people I can cut and say, how do I power my team members and really focus on human-centric AI. How do we empower the team members to do significantly more with less. And I'm going to show you some examples of that today. But how do I actually get that talent to think about how do we use AI. We can go on and be dispassionate about the business and say I'm going to cut this many heads. Or what I can do is say, Help me understand what you do every single day. Help me understand those workflows and how do we reimagine work and go to a different level. How can one people do the job of 10 and expand the business and grow revenue? And so for us, 98% of our employees are adopting AI in one shape or form. In fact, they wrote an article with fast company, which I actually talked about, we ran over 700 packs through the year with our team members to actually explain and explore how we use AI. And John will be coming up our COO, and I'll walk you through how our IT organization is working and partnering with our employees to identify how do we reimagine work. On top of that, over the last couple of weeks, we had announced with Fortune. There were top 100 company to work. We really do believe in this next stage, we want to continue to attract great talent. As we optimize our business, which we'll continue to do, we want to be the company where people want to work. And this award, amongst the other -- the 48 other cultural awards [indiscernible] last year are important to us and help us build a great team to do great things. And last, Cory is going to talk about this at the very end, our financial performance through what I would call very tumultuous times over the last 5 years, goal of pandemic and all the other things that are going on, we continue to execute through it. The margin expansion, the free cash flow and the way that we return value to investors in the form of share buybacks is something that we do methodically and execute every single day, and Cory will talk about that at length. So we enter this next stage of our company in a position where we can invest. We have a great team, and we have great partnerships with customers to do wonderful things. And I cannot talk enough about how important is the relationship we have with customers. We entered this period with a deep trusting relationship with around how they view success. What are the things that they need us to do to change industries, change the way they go to market and help them build their business. And in fact, we believe in this so passionately and we see the opportunity to move faster than we changed our mission statement. We evolved our mission statement. And the mission statement is now this, enable customers to transform operations. We moved it from Simplify. Why? Because Simplify doesn't capture what's going to happen in AI. The future of AI is not I take an existing workflow and I just pop in a couple of agents and I simplify things. That's not the future. The future of artificial intelligence is, here's the outcome and to achieve an outcome, I have 2 choices. I can do what I said, I can simplify it and drop some agents in and eliminate some head count and make it simpler or I can take that outcome and completely reimagine how I work. And in fact, I'm going to show you a couple of advertising examples that we did, which allow you to understand just how transformative this is from the scale point of view. And so we're not in this next stage going to be simplifying. We're going to help them transform how they operate sales, marketing, call center, all those different component parts through the power of AI. The second part is accelerate experiences. We've been delivering experiences since we launched the second-generation platform back in 2019. But now the big impact is how do we accelerate that at a rapid pace. Not only from an innovation point of view, with [indiscernible], our Chief Product Officer, is going to talk about, but also how do we accelerate the adoption of those experiences, which John is going to talk about because at this point in time, we only have an attach rate of about 45%. How do we get that to 100%? And Scott, from Tom Big's going to be up here, one of our customers, and he's going to explain why hasn't he done our marketing product. Well, he didn't have the capacity and capability in his market to hire someone to do that. With artificial intelligence, we now have the capability to take a junior person and turn them into an expert marketer and transform and accelerate their delivery experiences to differentiate in their market. And so you can see the outcomes. We put these up at connections every single year. We have an incredible list of what our platform does versus competition to enable the success with customers. You see 90% market share for Berlin, 73% ARPU growth, 60% reduction of OpEx. This is what we do. But this next stage is going to be a completely different scale with regards to what we can do for our customers. And I'm really proud to say that these 4 customers will be up on stage to actually give us an insight into how they see the next generation of where we're going. An example would be allow who deployed 23,000, now 23,000 students in Lincoln, Nebraska have SmartTown have the ability to get free WiFi as they roam around town every single day regardless of economic scenario. That's one example. But then the other part is, at the same time with Brad and his team, we did 14 proof of concepts around artificial intelligence in partnership with them in the last 4 months. So how do we really accelerate their outcomes? We'll have Lumos up here, Tombigbee, and Bluestream Fiber, who's a leader in smart MDU, who has been with us over the last year, building that product out and telling us, here's the legacy vendors and what they provide in an MDU scenario Here's my business differentiation and how I need you to change my business model and drive great outcomes. And so they'll be up on stage with me. And look, this comes at a critical time for customers. Competition is ramping up. It's getting faster and faster. So we know what's happening with regards to satellites. Starlinks launching, they're adding more capacity. They're throwing capacity everywhere. Amazon just bought Globe SAR, $11 billion investment because they were falling behind. And so they know they want to get satellite capacity. And really here is a happy Amazon customer. I am, right? If you don't have your hand up, you're just lying, right? So I'm a happy Amazon customer. Every day, every couple of days, there's Amazon boxes at my house. They have a great NPS. They're convenient, easy to use, and they have a direct consumer relationship. Amazon Aero is a relationship with the customer and all that's going to happen is that for everyone who resold Euro in the past, is a quick switch of the wand in the back when Amazon comes and says, here's prime broadband. And how do you stop that? We see that as a huge opportunity with us with our customers as that competitive pressure ramps up for them to get it that if they don't have the best experiences in their market, they're at risk because they can just be swapped. And so this experience opportunity is one that we've been pontificating about for 5, 6, 7 years, maybe a decade and now is the opportunity because the competition continues to ramp up and that we believe that for Calix as we're the leaders in this market with regards to experience. For those who haven't gone on the bandwidth, they better get going faster. And so -- and that's going to be John's mission to make sure that happens. The second part of that is commoditization continues to be rampant. Everyone uses this fancy word called Convergence. Let's be really clear. You know what convergence is, Convergence is a bundle. I was at [indiscernible] mobility. I understand what a bundle is, right? It's nothing fancy. It's just broadband with mobile at a cheaper price. That's commoditization. They don't want to use commoditization, but that's what it is. So again, if you're not differentiating in your market with regards to experience, the customer has a real struggle. This is what we do really great. And we'll talk about how we expand that out in a moment. And then last, look, artificial intelligence, anyone who doesn't believe this is going to change human kind is missing out. It's going to change every facet of life. It's going to change manufacturing, it's going to change every industry, and it's absolutely 100% going to change our industry. I gave the example of Tombigbee Fiber. So Scott told me, I talked to him just before Christmas and said, he said the biggest reason why I haven't used Engagement Cloud to deal with my customers is because that don't have the capacity and capability, the people in my market who can do that. And I can't hire that person because they're going to be in a big city and how do I bring them and what can I afford them? That's why I haven't gone forward. And so transformation and marketing is a great example where everything is going to change, and customers need to be thinking about not only -- I'm not going to be running campaigns in a linear approach anymore. I actually have to think about how do I 10x 30x, 100x, how do I run 1,000 campaigns with one person a week? Everything is going to change and artificial intelligence is going to make that scale. And I have a simple example to share with you. So if you've been following our company, you know the [indiscernible] videos that we do. And we've been doing these [indiscernible] videos for 5 years. And the concept was we would do the video content with our decision council partners and [indiscernible] we put the content out. And then what we give it is we provide that to them and then they can put their brand on it, and they can use that as a marketing campaign against our products, right? To build a Jerry D campaign was generally a 2- or 3-day shoot, and I remember the very first time I went to it, it was tractor trailers. It was people building out, like there was like 50 people there and our cost over 3 days was $1 million to do 3 videos, a huge cost. And that's excluded like there's all the preproduction time. There's -- and you've got all the union workers, all those kind of things, right? A huge impact. What I'm going to show you is artificial intelligence that was done for allo in a couple of days for $20,000. Shoot the video. [Presentation]

That was done with $20,000 using artificial intelligence and win in days. This is a simple example of how profound of a shift we face. Every job is going to change. And as I said, we can think about simplification, how do I optimize the workflow or I can think of, here's the outcome, how do I completely change it. In that scenario, we're also looking at technologies where An individual can run 4,000 banner ads direct out a single person where they used to actually only be able to do a small fraction of that on a monthly basis. And they can do that in a day. There's a profound shift coming in all industries, and we're going to be at the forefront of it. And so as I think of this and go into 2026, there's really 3 discussion points. So the first is what's the Calix advantage? Where do we sit currently and how going to make the most of this opportunity for you as investors and for our customers? The second is our platform innovation, how do we actually speed up the innovation that has a lot to do with the new platform that we put out. And then third, core to our business is how do we make customers? If they do not succeed, we do not get paid. It's that simple. If they lose a subscriber, we lose revenue. If they win a subscriber, we make money. It is customer-based success, which is our revenue and so how do we accelerate that at a rapid pace and that was what John is going to come up and how he transforms his business both as a customer success organization, but then also do we, Calix transform ourselves internally in everything that we do. So let's start out with the Calix Advantage. First, I firmly believe that success starts with people. I believe in human center which is how do we empower really great leaders to understand what the business opportunity to leverage these capabilities so we can change our business and grow at a rapid rate at a lower cost. And so I'm proud to say we have an incredible team in place, and that team leads an organization who, as I mentioned before, has transformed themselves into an award-winning culture. So if you go back to 2019, our glass doors were 3 out of 5. We were not attracting talent. We weren't getting the best and the brightest. We weren't having people from big companies like Meta and places like that coming to Calix now they are. And the reason why is because we really embrace empowering incredible people to identify what to do with these technologies and how to take our business to the next level. We've kicked off with a strong year [indiscernible]. We're really proud of the fact that Fortune recognizes us [indiscernible] one of the top 100 places to work against some of the big companies in the world. And we believe that, that ongoing investment in culture is going to be critical to us because not only are we going to help our customers transform their business, which there'll be a lot of resistant change. But inside our company, we will change as a company significantly and John is going to talk about that. The second advantage that we have is how we innovate. All of our innovation is done with customers. We work really closely with them. We have understanding into how they run their business, and we've been doing that for 15-plus years. We've invested over $2 billion in the platform and we have those 0.5 billion workflows where we can actually parse out everything that they do. And in this next phase, what's going to be critical is that we think the right investments in the right places to drive the biggest outcomes. We process at this point, over a petabyte of data every single day. And that comes from our customers trusting that we will help them understand that data so they can run a better business. So that massive investment from an R&D point of view has gotten us to this point. But the other part is that, that R&D investment is going to pivot significantly. If you look at our innovation cycle over the last few years. These are the number of futures that we released every single year since 2017. So prior to being a proper platform company, 77 features, 180 features. We were a hardware integrated company that didn't have a platform. Then we released [indiscernible] what you see a massive acceleration of the rate of innovation up until a peak in 2024, where we build from 406, almost 1,000 features coming out. And so what happened in '24? Well, in November of 2023 is what we decided as a company that Shane came into myself, and then he and I went to the Board and we sat down and we said artificial intelligence is real. It's finally at a place from a security and privacy point of view, where we can leverage it safely with our customers and this is going to completely change every industry, and we need to start investing aggressively now because if we don't, we'll be behind. So in November 2023, [indiscernible] a massive project to actually start building out the third generation of our platform. And Shane will walk you through the levels of the platform, but that kickup are embedding AI into everything that we do, becoming an AI-native platform. And what happened? Well, as we progress through 2024, we got those projects out from a features point of view. But in 2025, we slowly pivoted our entire organization into one thing, get that platform out. About 80% of our resources through 2025 went towards getting the next generation of the platform out which meant you saw feature velocity drop pretty significantly. And what's really great is out. It was hard nothing worthwhile is easy. It was really, really hard. But if you want to invest for the long term and change the way your business runs for customers, you have to think about this way before. The companies who haven't done this, they're already way behind. And there -- if you haven't been watching the pace and the acceleration and the speed of change that AI is embedding into every industry, if you haven't made those expense, you're going to follow behind incredibly fast. We are very fortunate that the product team identified this opportunity back in November and the threat. And we went hard and now we're out. We can use any LLM. We have knowledge, we have all these capabilities ready to go. And so it was out last customer was ported on March '26. And for us, with that AI native platform, we are now going to see as a return to massive acceleration of our broader business. And so in the past, we led the market. We had the market as we opened up new capabilities. We've led the market from awards point of view to go back to when we were a pre-platform company, again, 2 awards in the entire year. It's pretty sad. I know we were really happy with when we [indiscernible], right? So this year to date, we're already 5. We won 18 awards last year. People in the industry are recognizing us for the innovator that we are. This is nothing. What we're going to do in this next phase with AI is going to transform how we innovate. We have the trust with customers, but the pace of innovation is going to be mind boggling. And we see that from all the news that comes out every single day, and we're going to be at the forefront to take advantage of it. And so what is that platform? I'm not going to dig into that. Shane is going to come up and he's going to walk you through what the Calix [indiscernible] platform is. But at its core, is a platform that takes customers and their teams. So everything you do in sales, marketing, network operations, field service, call center, and it aligns them to the markets that they serve on a single platform. It allows them to serve consumer small business, MDU. And as I'll show you in the TAM expansion, new markets, including hospitality and other areas with no incremental complexity. It just works. And so that's how we bring it all together to help our customers do for things: grow revenue, add subscribers, reduce churn and in the end, deliver the best NPS. And that's one of the things that we're constantly proud of. People are shocked when we hear from customers who are going to sit up there. Tombigbee is going to sit up here and they can say, I have an NPS of 92 for the last 4 years. [indiscernible] Al can talk about the fact that they're NPS in the mid-70s, and they've had that for years. That's why they have 65% market share in a lot of the markets that they serve. NPS drives revenue. And so for us, the platform has allowed us to expand revenue. Have we just stayed in North American regionals? It wouldn't be at the revenue level that we're at. More importantly, we won't have the opportunity that we have in the future. So if you look at the revenue growth, it correlates to us releasing products. We launched Smart Home. We won Verizon, which was the launch of our next-generation platform with regards to networks. Back in 2019, you see revenue accelerating with the expansion of SmartTown, which is our role and the small business. And as we start on Calix 3.0, you're going to see a massive expansion of the potential TAM for our company and where we invest to us to go after new markets. First of all, it starts out with agent work for everything we're doing with AI, but there's a massive expansion or an MDU, hospitality, events and all these other markets. And for us, they're adjacent markets, they don't require -- they require an expansion of our product, not a complete rerate of our products using the resources of our customers. And then on top of that, we have the ability to go after global service providers using Google Cloud as a partner. And so as we think about the expansion of TAM, it's a huge opportunity ahead for us. If you look back to where we started out, it's kind of like a is was the TAM in North America, right? And as we take the next step, global Tier 1s, it's a software-only play. So that's the TAM approaching $10 billion. And then just in North America, the multi-dwelling unit apartment buildings, just that alone is a $10 billion TAM [indiscernible] North America. That includes hospitality, that excludes events, that excludes all the other areas. There represents a significant opportunity for us to disrupt these markets and grow at a rapid place. And so with that, then pivot over to Shane sitting at the back and walking up here faster. So Shane, our Chief Product Officer, Shane Eleniak, who's going to walk through our platform and innovation and how we make that real for customers.

So if you think about what we've built from a perspective. It's a vertical platform. It starts with appliances and operating systems, the data path, delivering the actual services that subscribers consume. It's also the source though, if you think about the edge and you think about the subscriber edge, it's telemetry, it's instrumentation, it's understanding quality of experience, so understanding unmet needs, behavioral analytics. And it takes the form of a petabyte of data every day for us that we then want to look at and pull out insights traditionally with our second-generation platform and would have been insights that we'd be talking about. But we have context. We understand the workflows. We understand the actions that need to take place at the service provider from a marketing perspective, from an operations perspective, from a customer support perspective. So we've evolved from thinking about insights to thinking about knowledge, thinking about machine learning and embedding LLM, it's context. What's the action that needs to happen? What's the material event? What's the unmet need and the expansion from data to knowledge to say I not only know what's important, what's urgent, what needs to happen. I understand the workflow. Traditionally, we would have built static workflows with dynamic data. Now we're able to go to workflows. Those are outcome-orientated dynamic workflows. So if you think about the stack, it's the sources of the data, the data itself, the knowledge, it's these agentic workflows. And ultimately, what we're trying to deliver experiences to the consumer, to the small business, in the MDU, WiFi roaming, venues, events, hospitality. Those are the types of experience people want every day that differentiate, but ultimately meet the things that you and I want to do every day as a consumer, everything that a small business owner wants to do. And that's a vertical tech stack. And that's really the big change. If you think about platforms in an Agentic world, they're vertical. Traditionally, what we live through with cloud and SaaS was very much horizontal. I'm going to focus in on a horizontal and do one workflow really well. Now it's about understanding the outcomes, understanding dynamic workflows, actually having that contextual knowledge to understand what needs to happen and in what order and what sequence. So that's all platform and the hard work that we've undertaken in the last 2 years to evolve from a second-generation cloud to an agentic-orientated cloud. There's a high aspect to products, and there's a what and a win and a why aspect to products. This slide really speaks to the how. How you do things matter. The shift from systems and OS to a platform and a platform effect that you're building on top. But it also speaks to us becoming a cadenced company and doing time boxed to agile and looking at a shift left in how we did testing in automation and simulation to drive velocity of features. And that's really the key goal here was to get a platform in place with Calix 2.0 put the right how process in place to be able to drive innovation, to be able to go faster. And really, what we're seeing now is a shift back to being able to focus on features after having built our cloud. And really that previous slide was a large shift away from a traditional SaaS-based cloud to an agentic-orientated contextual knowledge, dynamic workflow orientated AI platform. And that's the work that we've done. But that says now we're able to focus products back on doing features and use cases and getting back to that velocity. There's also an element to this, though, and we'll talk about on the next slide about how you build products, the product development life cycle and how AI changes that is also an aspect of this. So we feel very comfortable that we have the right how process this is in place that we built with Calix 2.0 to be able to innovate and go at scale. But we think there's a rich opportunity to go even faster with Calix 3.0. The second part of this is working with customers. Having how going fast doesn't help if you're building the wrong things. So a big element of this that starts way at the left in time is getting the use cases right. Understanding first use case, and that tends to be our focus. We'll pick a subset of customers with a use case that we understand really well. We'll work with them as our anchors, and we'll get that one right. You didn't go through a phase, though, where you're not only hardening that use case, you're expanding it because now all of a sudden, you've got a market. So you're going away from a small group of customers to a broad market and all of our customers. So you're doing use case expansion, your hardening, but there's an ecosystem around us. In this case, this is smart MDU. You start to talk about billing gateways and different commercial models. I don't want to do a bulk. I want to do pay walls. You start talking about tenant management systems and all the hooks and handles that start to fit into a complete solution and ultimately a platform grade solution. And we do this with everything we do. We work with our customers, we work really closely with them not only to understand the change in the marketing workflow or the operations workflow or the support workflow, the subscriber need, how does that experience need to change. But what are their broader ecosystem we need to work with? Where are the hooks and handles? What else do we need to work with? What are those business systems? How do those change? What are new business systems as we get into that we need to work closely with? Ultimately, because they're delivering a set of experiences to the property management company and ultimately, the tenant, right? The other thing that's changed though is everybody is now talking about vibe coding and code generation. We have a huge opportunity and we're leveraging it. Today, we're now able to do rapid prototyping. Before what we would have done is big wire frames and sat there with slides and sat there and said, hey, what do you think about these [indiscernible] Gemini input. Now you can actually code a prototype. It's grounded in your code base. It's grounded in your data model. It's actually accurate. And I don't know about you, but I work a lot better with a [indiscernible]. When I can see it and I can see what's going on. It's really easy to give feedback going. That's good, but this would be better or you missed this or yes, but if you thought about that. So now all of a sudden, you're shifting that prototype to the left. You're getting those first, second, third and fourth use cases, solidified very quickly. You'll lose the lost in translation between product management, talking to architects and designers who are going. But I read your Epic, but is that what you meant? So now all of a sudden, we've got visual. We've got rapid prototyping, talking to code generation tools that are generating the tool. But this is a CICD pipeline. I need tested code. So how you do simulation, how you do testing, how you actually get the code that's deployable that's stable, that's of high quality is really where we're focused and we're able right now to leverage these tools in our product development life cycle. So we feel very comfortable when we say we built an engine on how to the -- how aspects in Calix 2.0 today, but the tools that we have today are significantly better than the tools that we had in 2024. So we feel really good as we shift now into the platform that we have the platform place to do this. We've got the processes in place to do this. But we also have better systems and tools than we did 2 years ago. And whether you look at kind of what's possible in the video world, what's possible in the tested code generation rapid prototype world is pretty cool where we've evolved in the last 2 years. Okay. And then if you talk about, okay, you've got a great platform. You've got a great set of processes on how you do it. You work closely with your customers on what and why and when and getting sequencing and priority right. Tell me more about how you got here with this agent workforce. So effectively, we started as we would with everything, simple use cases, POX, close customer relationships. And we started packing, hey, we've got ideas. We understand workflows, we do 500 million workflows a year. We've had 5, 6, 7 years of run time on platform with Calix 2.0 understanding how people use these workflows but when you shift to Agentics and dynamic and outcome orientated, it touches multiple personas. Everybody is involved. Marketing has a role to play, engineering, operations, support the needs of the subscriber, all of that changes. So we started testing our proof-of-concept. Q1, we released assistance. We have -- we want to help people. That was really our first agent. Q2, though, you start to get into these dynamic workflows that touch multiple people. You start getting into upsell, cross-sell, which is a marketing workflow, but operations needs to know about it. Engineering [indiscernible] customer support needs to know about it. It touches subscribers in different ways. Same thing with churn workflow, same thing with acquisitions. So you're going to see us starting to see acquisition workflows, upsell, cross-sell workflows, churn prevention workflows, loyalty workflows. Then you start getting into customer support workflows, how do I help the customer shortest time to happy customer. And then you start getting into subscriber workflows and how do I interact directly in the subscriber with the app. We start to deliver those in Q2. And then you're getting into call center workflows and network operational workflows. And those are going to be the swim lanes that you're always going to see us delivering in. We're putting the first ones in people's hands in May. We then augment with additional ones. We start moving closer into the home device anomaly. So we move from, hey, we understand the network. We understand the demark of the network, now we've moved into the home itself and into the business itself when we're trying to understand anomalies there. We start getting into critical incidents, which get into notifications, how do you interact with subscribers and tell them, hey, there's an issue. We're working on it. Here's the meantime to when we're going to resolve it, how do you continue to update them, then you start getting into optimization workflows, AI-enabled network optimizations, planning type of use cases. Upsell, cross-sell also starts to evolve from, hey, I'm doing customer support. The issue is really the person has the wrong package. They're not doing anything wrong. The network is working the way it is. They've got an unmet need. How do I upsell cross-sell at that point of contact also. So that's with the types of things that we start to deliver in our August really. Okay. With that, I'm going to turn it back over to Michael. So hopefully, I've given you a sense of -- we have a vertical perform. We understand the how. We understand what and why. We work closely with our customers. And we're at a point now where we're delivering dynamic workflows that change the way people work today. Thank you.

Thanks, Shane. And at the same time, he's going to transform his organization. If you didn't see on the last slide, the productivity gains as you get from rapid prototyping from an accuracy point of view and a use case point of view, but also cogen is a simple thing. It's actually how do you go from use case to test to code and product out the door that transforms the customer. So this is the road map and you're going to see this accelerate at a rapid pace. And when I was at Mobile World Congress, this is the first time we've really been there, we've got invited up to do a keynote. And so the keynote that I did was what's the AI future [indiscernible] AI architect session that we did this in and I talked through how do you rethink how we work marketing. And in this scenario, this is one we've been talking a lot to our customers about because they generally and our -- they buy our platform end-to-end. And the scenario becomes I have a subscriber agent and agents are task-based entities. They can think and reason and they can evaluate data. So they look at a subscriber. They see things that are going on. Working is optimized and then as the person moves from inside to outdoors, they move out into the backyard to do some work, they see something bad happening, which is their experience gets challenged. And so that is a WiFi degradation because they don't have coverage in the backyard. Maybe they want to go work in the Pagoda. But then at the same time, the subscriber agent can grab insights with regards to that customer, taking external data and look at, for example, they know that there's a pool in the backyard because they have a warranty for a pool pump. I actually am registered somewhere with Pentair for my pool pump and so you can do that correlation. I saw them leave the house. I saw the degradation, oh, by the way, they have a pool pump, chances are they have a pool in the backyard. This becomes important context in the marketing scenario. But this is all automated. In the past, can you imagine an individual trying to go through and sort through all the external data to say who's got a pool pump and then who has an issue. That's a huge amount of work that is unfavomable. You cannot scale that. So in this case, it's genetic work doing it at an individual level. Then it passes on an operations agent says, in this case, Brad and his organization also sell mobile phones. They sign up for an allo MVNO. So it also looks at that home and sees the devices. Well, there's 2 iPhones and those are on my MVNO. There's 2 iPhones that aren't, okay? That represents a mobile opportunity for Brad and his organization to upsell, there's 2 devices to be one there. More context. It then passes over that workflow to a service agent who does all the correlation to what's been going on in that home over the last 30 days. It's moving back and out. And so sees things like he's been working sales force and different applications without breaking privacy, we just want to know what they're doing because we want to optimize their experience and then it bundles that all up and it passes over to a marketing agent, which builds a campaign. And in this case, the campaign is contextual. It actually grab and as we showed with that video, there's no reason why you can't go create video based upon someone hanging out in the backyard at a pool doing work. Put the video. It builds that context. It puts the offer in place and then it chooses, based upon their social media preferences, where should I surface that ad. So I buy an ad from 8 to 10 p.m. on YouTube. Should I add surface it on their mobile app if they're using [indiscernible] branded by the customer. And then when they go into [indiscernible], they click to buy. Doing this type of a workflow at an individual level by subscriber is impossible unless you actually scale it with AI. Now that's how our regional customers would use it because the fact is they use all of our tools. As we migrate into different markets, Calix from an Agentic point of view becomes a different entity for those companies. We become a toolkit. So in each of those scenarios, we recognize that they have all kinds of other systems. Brad and his organization use other systems because they're a big scale company. So whether they're using Salesforce or Adobe or pick your system, what we can do is as they go through their workflow, we can then become a component part. We're in smaller customer, we're going to do it end-to-end. In a bigger customer, we're going to become a component. So in that scenario where we do cross-sell, upsell into the pool and drive the data. We may want to identify as the pool, we may not be. That might actually sit with another agent in a data science AI agent, and it's actually servicing that data. We provide the subscriber insight. It goes into a workflow and off you go. So our role changes and Shane and his organization from an architecture point of view, part of our rearchitecture was also to ensure that we can serve any size of customers. How? Because in the past, it used to be APIs, which we're great at. The new terminology for Agentic is more context protocol, MCP, which is you put a server in front of it and we share our context without moving data or A to A, which is agent to agent. So it's our agents talking to their agents as part of a workflow, which we've -- we're very good at an industry standards organization. And so for a company that has all these back-office systems, no problem, we can add value from an AI point of view with a in a very different way. It represents a significant opportunity. The other part of this Agentic workforce is that it also gives us an opportunity to help our customers rethink how they do a -- this is a transformation of your business. This is also a transformation of business in a different way and to understand how we help our customers go faster, accelerate differentiation and the experiences that they deliver into the market win more subscribers. I'd like to invite John to the stage, our COO, who's going to walk through how we accelerate their customer success. John?

Thanks, Michael. [indiscernible] So I want to share, first of all, how do we think about success, right? And at Calix, we deliberately align with our customers' life cycle around build, around launch and around optimize. What does that look like in practice? In practice, that may mean that we consult around our strategic funding. You have questions around that and maybe around setting up their Wi-Fi or their network design. It could be around subscriber activation, right, or projects driving market growth. And lastly, it's around optimized, right? What's the most important thing is this performance or accelerating growth or thinking about what is that subscriber experience. And we'll get engaged with customers in the subscriber experience that NPS scoring, we actually help our customers drive that. And why do we want to know what that MPS is not just because it's a great score, but there's opportunity in that score. How do we continue to improve the experience and change that relationship? We're relentlessly focused on 3 things with our customers. Helping them to attract new customers, retaining their existing customers; and thirdly, growing that customer base. And when our customers are successful, we're wildly successful. And this is an example in terms of this visual in terms of our ability to help our customers grow, right? Because we win when our customers win. And innovation isn't just a product focus at Calix. It's a company focus. And how did we help our customers grow their attach rate. Well, we listened to them. They came to us with challenges. And we've created a marketing acceleration program, which helps them think about their offer strategy think about persona-based offers and really change how they go [indiscernible] to really focus on that experience. And we continue to them. And they said, "Hey, we need to help in this area." And we create a workforce transformation program and that was intended to help them attract talent, retain talent grow their existing talent because they have an aging workforce that they needed help to make sure that they were ready for the future. And then they came to us 2 years ago and said, "Hey, you know what, as we get into smart business, it's a really different selling to, and we're not that experienced in that. And so we created a sales acceleration program that thinks about what does the sales structure need to be? What is the incentive compensation need to be? And how do we create a sales culture, right? And so we're doing these things, we are partnering, right, with our customers in that continuous life cycle. Now the most exciting part is around AI opportunities in front of us. And we can talk to our customers in an academic way, but that's never my style. I want to get out there and be a practitioner. And so everything that we are going to work with our customers, we've done already, right? We've activated our organization. We've done a great job of driving adoption, but not only adoption but actually building agents, right? My team, in particular, I'm pretty proud of that, has a majority of 400 that have been built out there that we're using to transform how we do certain activities. And when we did those, we found huge improvements in how [indiscernible] to go and build something for a customer, right? We really automated that and as Shane and Michael both talked about, the biggest opportunity is around that end-to-end workflow. And we're doing that internally as well as we're thinking about our 3 biggest workflows and how do we reagent those so that we can apply AI not in an episode or on a functional basis, but across the entire thing to eliminate rework, right, to automate processes today to reduce the number of handoffs, and that's fantastic. And then none of it matters if at the end of the day, that you can't actually measure and get a realization. And we've done that. We had a project going on around our supply chain, right, next-generation supply chain and we're looking at signals to build [indiscernible] interested in that, Jerry will be up here at the supply chain. He can talk to you all about how he looked at the signals, automated that and reduced the number of people that he needed to go actually run his business which was fantastic. Then we're going to now take all of these learnings and we've built them into something we're calling the AI leadership playbook. And that's from our first-hand knowledge of how are doing this? How are we governing? How are we activating pilots? How are we doing the change management to get everybody behind this? Because many employees could be threatened by this. But we think there's a huge opportunity. Why am I excited about this? Because we are working with our customers on ideation of things to do. Their biggest challenge is capacity, right, as all of us have a capacity problem. And so how do they do more with less? I'm excited about how our agents are going to fill that need so that when we come up with an idea and they want to do this, we can get them all the way there. And now there's an agent to do the work for them to go faster. With that, I'm going to turn it back to Michael for the customer Q&A.

Go ahead. Queue the video. [Presentation]

[indiscernible] Thanks for being on stage with us. All right. So let's start out with -- we've been talking to all of you about what's possible with artificial intelligence, right? So why don't we start right here, Brad, because back last year, you came to me in May and said, "Hey, my team wants to go build out a whole bunch of things. We really need to start collaborating on how we can partner together. So why don't we start out with kind of your view of what the potential is ahead and how we partner together?

Well, what's been done several times between our organizations is we really have a mutual challenge, opportunity problem, whatever you want to call it and so what I found is we were working separately. And every time we work separately, we waste money. And so what we talked about and got everybody in the room and said, here's what we're developing, here's what you're developing, Hey, we have other systems and other complexities. But what we did is we came to view. And with that, we switched to the Google Cloud. That was a huge lift for us. But now what we see going forward is not just the first 14 things that we talked but now the ability to work together at a true partnership or stakeholder level to solve problems because it can't be that the network performs better. It's -- every piece of our customers' journey has to work with colleagues, with some of our other team vendors teammates and great solutions that I can't even imagine. I hate to say it, but what our teams are working on was never imagined 2 years ago.

Right. So Brian, yourself, like you -- how do you think of it from a competitive point of view and where we're going to go as the next stage because you've gone through some big transformations in your business, too, right?

You really have. And it's been the partnership with Calix. Calix allows do this. And I'll be the first to say, we're not really the first follower. We're more of a fast follower on the AI. We leverage the work that the brand and you guys do leverage the things that you Team does. But it really helps us focus on our business outcomes. And I think what people don't fully appreciate, you talk about our NPS score of 84. 4 years ago, it was 77%, 78%, but we've grown -- I mean, we're building houses that we worked 4 years ago. We've added financial number of subscribers. We have not added new customer care agents to grow over and not have to add customer carriage just because of what we're doing and what you're doing in the background. So what I would say is we're still evolving. We're still learning. We're just kind of getting there, but it's really your focus that's allowed us to focus on business outcomes.

So your point is, is that Brad and his team was going to start doing the AI. So he partnered with us in that way. Yours was, I don't need to invent it. I just want to actually keep my head count flat and expand profitability and grow NPS and customer and then yourself, the conversation was around marketing that we had at Christmas, right?

Exactly. So we're the ones that -- with the smallest ones on stage, you may not look to be the small [indiscernible] so we're coming from a world where I have 6 CSRs and one marketing girl who just graduated on this a year ago. She's wonderful, hope she's watching. She's doing a great job. But we can't pull the data. We can't gather the things. We couldn't do any of this without you. So without...

And that's why you didn't do Engagement Cloud, you couldn't actually -- you're doing very basic marketing because of the fact you didn't have the capacity to do that.

We don't have the time. And so this is a game changer from us. So we're the opposite where some people are afraid of downsizing because of AI, I view it as upsizing. I'm going to take my [indiscernible] because of your help because of your partnership. We can do that, and we can reach people in ways we ever could. And as there was a gentleman ran for [indiscernible] running against somebody who had been an officer in the military and he said, all you [indiscernible] him. It's all your profits out for us. So I represent [indiscernible] your customers, of the 1,200 customers, you've got a lot of people who look at like me, [indiscernible] is amazing. These guys are awesome. But we're the meeting potatoes of what Calix does, and this makes us have the resources that [indiscernible] amazing. That's a game changer in roll Mississippi. .

Well is the democratization of AI, right? We are in this phase where technology is going to democratize at a pace we have never seen before where you not the big guy doesn't necessarily have access to things that you don't have access to. And that's, by the way, the same for Calix because all the LOMs out there are now readily available to us as AI becomes the biggest commodity out there. We have the opportunity to use the latest and greatest swapping in and out and bring that capability to you. Now Gavin. So your conversation with us is a bit different when we talk about what we're doing there because we built product together. So why don't you walk through kind of how we actually partnered with regards to the MDU market.

Yes. And look, our story with you all is really the last decade and almost started out with our business, a little bit different than the folks on this stage. We offer community solutions. We do long-term contracts, we work with HOAs or [indiscernible] new master planned communities. And we first started to see as you look at that product curve that was up here earlier around some of the innovation. We're able to leverage SmartTown for, you think, master planned communities, the pool, the gym, the pickleball court. All of that goes with that and really sort of have that ubiquitous as we started to really verticalize and focus on some of our different segments, MDU and you saw that TAM that's up there, we think that's a major growth engine for us as a company. And what we really try to do is step back and say, think about it these are long-term contracts or truly partnerships with these communities, what is going...

[indiscernible] to her 10-year contracts, right? Like [indiscernible] and a lot of those HOAs, you're doing like long term -- it's not a consumer who's deciding month to men, right?

No, they want to know long-term customer experience. I want to know about what I'm getting today, but what am I going to get the end of that contract and think about a 99% renewal rate. This is a long-term relationship that continues to build on it. So we work with Calix, we really focused on the SmartMDU solution, and we've now rolled this out through a number of our communities, a number of our backlog, and you saw the scores in the video, some of the early communities are 4.99 out of 5. So even every single one, it's been a 4.9 out of 5 as we deployed this. We think that differentiates and it gives us something from products that we can go out to each of these larger portfolios, property managers, asset owners and talk about this as a key differentiator for us in the market. Well, and the way that you used to do it was you would cobble together technology.

So maybe you can explain to the investor group, right, how you actually used to do it.

Yes. I mean I think that's right. About 3 years ago, we went on this journey, we called it as a company, customer experience excellence. It's about consistent scale, predictable processes, technology and talent. A lot of the similar themes you heard in today's presentation. And as we look at that, we wanted to make sure that we had product and brand standards reach the segments we're focused on. And we started to work with Michael and his team to really get Alantra around what makes the most sense and going back to the pure use cases. And what we found was a number of these Calix solutions, particularly in the MDU segment were truly differentiated vendor or wide vendor and allowed us to have a solution sell that could ultimately scale for the test of time. And so -- and in your markets, -- so as you look at it, Scott, you -- one of the ways you differentiate. We talked about how you use SmartTown, Gavin to go across and HOA, so you can cover the eventing place, you actually went to a very different level because you actually went and covered all of the football fields, the baseball fields, you really focused on because you're very community orientated around how do you use that technology to kind of cover everything, right? We started with football fields and because the ease of the platform had that in a 5-week period covered 9 schools. And then we took it from football to track to softball to all sporting events to all schools to all parks, all downtowns, all community centers, all volunteer fire departments at all part and we've hit our whole service area with Community Wi-Fi. If you sit in the stands and [indiscernible], Mississippi, a 12-person town in a football game, you have better service than the competition has in your home. Why wouldn't you switch to [indiscernible] Why wouldn't you want experience with us? And the whole Smart Home platform, we were -- Calix partners with you. We were one of the innovators of that. We were a lot what it was as well. But we were out front. We were the first few to try that. We were the first few to turn 19,000 units on 1 day. And we have a first responder network from that. It's just amazing what impact you can have in your community. And I've sat in a room with a customer from another company that was a first responder and he looked at me in the eye almost crying and says, why would I do business with anybody that wouldn't care about me like you do. I said you shouldn't. And that's the difference that we can make in our communities because we work with Calix, a company that cares about us that ultimately care about communities. And that's what makes it special.

Well, let's expand out a little bit on that. So the power of the platform is that you didn't have to go. You talked about you only have 5 CSRs and a marketing person, right? So you didn't actually have to go like what Gavin said was, in the past, you cobble together a whole bunch of technologies, you could just turn it on, right? Maybe you could expand a little bit more about how simple that was for you to differentiate in your market.

So on 2 occasions, we've done that with you with SmartTown and with [indiscernible], very easy. We turned [indiscernible] than 7 days. So if you make a decision to go down the road with one of these platforms, one of these products, to scale for the community. It's just a matter of working with your team, my team, put them together and talk within days, within weeks. It's up and running. It's seamless. It's easy. It's simple. And I'm not doing this with [indiscernible]. I'm doing this with a team that's good, hard-working American team because you've got the rocket scientists for there. We just watch the rocket go off, and it's a great show. And I appreciate folks like autopiloting that with you. I want to be like Gavin and get in your contract. He's not new here. How do you get a 10-year time -- that's a good deal. So we're going to talk after. But that the ease of that is because your people care, your people care about my community, your people care about our success because our success is your success.

Right. Well, so let's talk about how this can scale. So Brian, you got bought by somebody who wants them. So maybe you could share that. And then how do you think about scalability?

Yes. So you may have heard, we are now 50% owned by T-Mobile. It's a joint venture between T-Mobile, where we all T-fiber and EQT [indiscernible] yes, we've ramped up. We are growing it. Our builds [indiscernible] our pace and we're more than doubling our pace again on our builds and the installations are coming and have an ag service model and all that. But I would just -- I haven't even shared this story with you. So as part of the deal, the founding genesis of Lumos was [indiscernible] got sold to cash communication, Cox kept a B2B. They spun out the residential, the EQT. So we were exclusively focused as a residential business. So that exclusivity has gone and so T-Mobile sales, the resident is responsible for selling residential, the joint venture, we're responsible for selling enterprise and complex business. So we got to do one thing, right? So we got to either say, okay, we're going to go build a DIA network, dedicated Internet network? Or we can take what Calix provides us on our XGS pod. We can put some SLAs around it and sell it as an enterprise network with XGS was outsell As. So that's what we did. So we just about a month ago, launched that, it's been a huge success at a higher ARPU big contracts like Avid, we're working on those. And it was the easiest product rollout that we've ever did in my entire life because we just took what you already did in the back end we wrap some SLAs around it and now sell it enterprise.

Well, and that's the same thing that we did with Verizon. So when we did the collapse with Verizon, it was all around how do you actually bring the different networks together onto a single fiber and put MPLS and all these other capabilities that would normally be -- I'd have to go build a separate enterprise put -- I'd have 2 fibers. I have my consumer fiber, I have my now because of the software, I can do it on a single and create a new business opportunity at very high margin because there's a lot of capacity in there. Well, we'll get to capacity in a moment. So Brad, you do that all the time because your belief is that when you go into a market, you want to dominate the whole market from consumer all the way up to enterprise. So maybe you can talk about how we enable that because you've been doing that like Brian is doing now for a long time, right?

Well there's ways that you differentiate your business and one of our -- and maybe it's my fear. My fear of a competitive threat coming in and...

Healthy paranoia. I think that's why Andy from Intel always said right, the paranoid survive.

Well, sometimes it's unhealthy.

[indiscernible] you have to really out to get you.

That's right. And so what we did is said, the most expensive thing we're going to do is put in fiber. So why not make everyone that, that fiber goes by a potential customer. from grandma's house to the Corner Store, the small business, medium-sized business, State of Nebraska is our largest customer and then make the ecosystem work together. Well, when we started this, this was probably 12, 15 years ago, we didn't realize things like DIA circuits could be done by the current level of PON architecture. Oh my gosh, that collapses. But guess what? Mobile ties into our company just simply streaming. All these things and then the SmartTown, I met with an electric last week, and the CEO, and it's a pretty large electric utility said, you know more about our electric grid than we do. Can we share information? Okay. Now that's the ecosystem. And can we work together and we do have this with some of the low income developments, how can we lower these financially challenged households, electric bill. Well, by lowering their thermostat at certain times when no one is there. Well, we know no one is there. And so we're doing some things that are pretty innovative, and it's helping society and it's helping education and it's...

Just while doing good is very profitable. right? Like honestly, there's a huge opportunity. We'll get to you because I imagine you're just biting your tongue seeing you also have an electric utility. So that will get to you in a second [indiscernible]

[indiscernible] is doing good, but operating in an exceptional fashion right, is less expensive, makes the customer happy, and it's less expensive. This idea of white glove, that's offensive to me. Why don't you just take care of everybody [indiscernible]. I think people like us. I think people like me, but no one wants to talk to their utility. We're a utility. And be like the water system. It always works. You always have plenty and it's good and clean. Well, they want their communications the same way. Well, and the platform makes it very simple for you to do the things that you used to cobble together. That was one of the things you and I have partnered on a lot is that part of our product road map has been driven by build this, build this, build this, you can eliminate the complexity of incremental vendors and actually collapse everything onto a single platform, right? Small business, what we did with roaming and then where you go with MDU, right? So let's talk about capacity because in this crowd, there's a lot of people who actually think that Starlink is a competitor. And I know Amazon is a competitor. We've talked about that because they have consumer relationship, but let's talk about it. You have a ton of capacity. So why is it would that a customer would ever change? Well, if you do the experience, right, like you're talking about, they wouldn't, right?

Well, it's not binary. I have 2 subscriptions for a low orbiting satellite Well, one is in an aircraft and one is at a cabin that's down in the valley. It's the right tool for the job. My fiber isn't going to solve either of those challenges.

There's $10,000 or $100,000 you run it to that cabin.

And I'm not sure how you tether a plan but the reality is we work together. We all work together and we always have. But our industries came out of these monopolies, the cable industry, the telco industry. It's not a monopoly anymore. So if there's 10%, 15% that's solved in a better or different way cars. It's more efficient.

But at the same time, build the experience so that in you are where you have capacity, you never lose, right? Is that how you think about experience?

Absolutely. No, absolutely. And it's been a little bit different since the joint venture, but prior to the [indiscernible] we learned pretty quickly because I came from the telecom industry where nobody liked us and probably for fair reasons. So it's going in the...

[indiscernible], Brian. I just want to say that. So when we came to Lumos and we had a chance to create this new brand. Customers love our technicians, customer loves our customer care. And then -- and they just absolutely hate the cable company. So I said, okay, let's just provide a fair value. Don't -- our prices included taxes, fees and everything else, fair value, great customer service, don't chase the pricing game and just focus on customer rates and double down on customer experience, do everything we should have done at the telecom business, and it worked out great. And that's why Calix is such a great partner because that's how you believe. You guys go above and beyond on the customer experience, you're with us almost every day, what can you do different? What can we do better? And that's the type of partnership that you have to be successful.

So now let's go back to the utility side. So you also run an electric utility, a broadband business and electric utility. And so there's a huge opportunity coming down the path with regards to utilities, too because you and either run a network all by itself, or you can actually say, as utility needs to go through a massive upgrade to deal with EV, there's -- I've heard the number 1 trillion thrown out just in the United States with regards to the investments, needed to go after those markets. So how do you think about your broadband business? And then also how do you evolve your utility business to bring those together? Because your teams have been pushing us around how do you actually parse off that fiber to build out great utility experiences and all those parts, too, right? Like Brad mentioned, which then goes to a true customer experience of where you control on.

So in the utility, we saw it coming. We have no option other than move to where we have the fiber to the home, move to where we have the experience, where we can control the thermostats, where we can roll the water heaters. It's a capacity issue. It's a cost issue. There's only so much electricity. And every time you're adding all these EVs with gas going to $6, right? If every house has 2 cars and they're both EVs, that 1 transformer that powered 4 houses now you need 6 transformers, unless you manage the [indiscernible] so we need to manage the load for that. And that is a strong possibility on inability of what's coming. But load management itself is smart as well. If you look at electricity, it's grown very little in the last 50 years because you've had efficiencies.

[indiscernible]

[indiscernible] like that, right? So the next logical step of that is we need to manage the network, the management of the network needs to be consistent across all aspects. And it is going to be the Tesla managing the house or [indiscernible] we need to manage the network. The only way we can do that is build the fiber. Well, from my system.

And then put the software in the AI on top of it to make sure it actually really understands it.

Well, that's right. But the only way we could afford it is monetize the network by providing the service we provide. And that has opened the door, I built 2 fibers to every house, if I have a fiber fed a meter, it's there. I've built it. I serve 61% of my market, which is incredible. But I've built to 100% of that market. I can serve every customer I've got on the electric side and make a fiber connection, and now I can afford to do that. And so it will let us do that and control it and go places we never could have before that we had to go, but we couldn't find a way to get here, but for this. And so partnering with you has allowed us to do that well, has allowed that to be more than a service. Internet is commodity. We sell service. And I sell service that you and Brad, pilot, my goal of doing business is the same as [indiscernible] want to give you that customer experience that you deserve. I think you can have it in a big city, and you have that in a tiny town in Mississippi, this is what we get with you. And your team as part of our team, it's family. We work together, we pull it together and we can take the next step forward, and we can untether that plane. If you [indiscernible] one of those is [indiscernible]

But from a profitability point of view, how has it changed your profitability across -- because your investors are different. Your investors are actually your members.

Absolutely. So there's a massive profitability gain here. So my electric coop is very unprofitable. We break even. We have a very, very thin margin and not far enough. I've been in the business for 6 years now. My fiber margins or 6x what my electric margins are with half the customers. And it's allowing to add infrastructure back. We transfer $1 million a month back to the electric go up or more that's putting money back in the system that we can grow and expand and do and it will allow us to have this modern grid as time goes on that we could not do but for this business. So while I don't return the profits to my members under TV go up. I provide better service. I have better products, I have more employees and we invest in the system in ways we never could have before without this.

And so Gavin, as you look at your profitability as the business and where you see it going, how does kind of this level of automation, the elimination of complexity? How does that all kind of play into where you go and the future that you see?

Well, I think it does go back conversation we had to start out with around smart MDUs and some of the new verticals we're focused on. Classically, we've leveraged a lot of the experiential build references and HOAs and kind of associations. We're really focused now the MDU and asset owners a channel as well as new homebuilders and developers in order to really scale up to new markets. If you do it really well in this market in that market, it starts to be more and more again about just what is the value proposition how do you offer in that space. And in that motion, it's really around making sure that you have the right solutions, they scale across markets. And by doing that, you add significant more scale, more communities line, more MDUs that come online. And ultimately, that leads to a major increase in our EBITDA over time if we can maintain our fair share in margins.

So that market is one that hasn't changed for a long time. And in fact, I had an investor ask me that question saying, okay, so you're -- as you enter in the MDU market because you're early entrants into it. It's actually something that has a strong incumbency, right, and they haven't changed in a decade, right? So how do you actually see the step forward in partnership with us guiding us to how do we actually drive differentiation and spur that market on to allow you to win more?

I think it's twofold. When you go back to some of the -- just the core fundamental doing that. There is a lot of legacy solutions that have been there for a long period of time. If you're able to offer. It's no different than our road map with you as sort of every year, we sort of brought out the latest and greatest technology. It's smart MDU and similar platforms when you get to 30 of that one, too, they'll continue to iterate and we'll have more access control and the property managers can do new use cases that they could before. All of a sudden, that creates a value proposition that we're allowed to go in and speak about that as FlowStream collectively come in with a solution that makes a lot of sense.

Well, to your point, it's also a very fragmented market with a lot of different property systems [indiscernible]

[indiscernible] add also just especially with look, this is not a -- the MDU space coming back to reset some of these have been in place for decades plus as what they've leveraged. So when you come out and you say, here's the latest, there's all this AI and intelligence that we can also give to you about your residents, everything else allow you to offer a better service and a better resident experience, we think that's different.

So [indiscernible], what's next?

What's next? I'm excited for what we're going to do with what you're bringing us. So I'm going to expand that marketing base. I'm going to make my service better with my tech and we'll have better informed service crews. We're going to get to problems before they exist or before the customer knows they exist we're going to have better knowledge of our network. I think something that comes as part of that marketing discussion, I don't know that I said to you, so I'm an electric co-op. So my CSRs have never been in a business where they had something. It's hard for them when the grandmother calls and said I need fiber service. That base package is all you need. Once you may need more the grand kids may be gaming upstairs that I will be able to use this AI technology to know that they are and have a call with the grandmother. Your grandkids are going to have more fun that can gain better, they can have less latency. If we do this greater package and my CSRs probably would never make that call, and I can use your [indiscernible] either prompt it or send a customized e-mail to them. That's going to be really cool. It's a game changer. I can get a more aggressive marketing stance from less aggressive people by this product that will make it comfortable. And so when the grandmother calls back in, they will have a great conversation with her because she's asking for it rather than they're having to sell it. And then they will be the persona of explaining it. and it's symbiotic. The AI gets us to that point. So that's what's next for us, continue to grow as best we can increase that service. I'm not happy with the [indiscernible]

I'd say, yes, well, by the way, that's almost a cult. As you know that -- it's almost a cult. And so Brian what's next for you?

Yes, it's a little bit of a complicated world right now, as you might imagine. And so I'd say this really wrap it into 3 things. Number one, we have one single customer. It's a very, very big customer. It might be one of the world's largest customers based on equity market or equity value that we have to provide performance, operational performance and we have basically contracts with it. We have financial penalties if we don't deliver that. So it's really building that world-class smart intelligent network behind the scenes to ensure that we are solving problems before anybody sees it before it happens. So that's kind of number one. Number 2 is as we grow exponentially. Number 2 is we are now evolving into going to be getting more involved in the MDU space, getting more involved in the enterprise space where we are more opportunistic, that's becoming more and more of business core. And then thirdly, it's going to evolve as our new marketing agent learns the fiber sale business versus the wireless cell business different processes associated with that. I think you'll see this continue to evolve and get a lot more intelligent about how we'll go about doing it collectively. So probably the 3 pillars I would say.

And so Brad, you're actually coming out of [indiscernible] office in a couple of weeks. And we're actually going to do what we do annually, which is that the planning on how we do [indiscernible] innovation. So as you think about what's most important for you in this next step, especially with all the talk that we're -- and the partnerships that we've been doing on AI, what do you want to -- what's next for you? How do you see this evolving out?

Well, A lot of it is -- we're just crawling with AI and crawling with the partnership there. And hopefully, over the next year start walking. And then it's a run after that to torture the analogy. The real thought process is moving from efficiency, efficiency, efficiency. I don't know what efficiency means. We haven't added to -- even though we grow at 25%, 30% per year. We haven't added to our service and that. But it's making them smarter, being able to push more products through them. delighting the customer, I think the pace we're really missing is an industry that I think is maybe a bigger opportunity than all the network work and all that is what products should we be delivering to the small business or the home that allows another $10, $15 of our [indiscernible] and not in a transactional format in much like the mobile phone is developed. There's a so-hard thing on the mobile phone. And I can't tell you what it costs me. But all of a sudden, as I got older, I learned I needed to start walking more. And so I look at it once in a while. I don't know what it cost me? It doesn't. It's included -- it delights me that I have it -- and I think that's where our businesses are going is we were very focused. We were electric. We were telco, we were cable, we were mobile. It's all coming together, and I think that's where Calix's real play is over the next 2, 3 years is enabling that and allowing us to be [indiscernible]

Great. With that, let's thank them very much for their time. We really appreciate it. With that, I'm going to welcome to the stage Cory Sindelar, who's going to walk us through our financial model.

Thank you, Michael. Good morning. I appreciate you spending some time with us today. So you probably realize that this is a really big story. We are building a company with the Agentic workforce that allows us to transform the service provider industry. It's on scale of like Uber transforming cabs or Amazon transforming retail. So my job here for the next few minutes is to wrap up everything you heard and how that's going to affect our financials over the next 3 years and ultimately, what it means in terms of return to shareholders. You have seen us talk about these 4 financial objectives. We've been talking about it since we began our platform journey from 2018. As we go forward, nothing really changes with these other than we go faster and we go better. What you've just seen in terms of the prior presentations is that each one of these objectives is enhanced by what we're delivering with our Agentic platform. You've heard us talk about on the call that our visibility in term dollar business has improved and is near an all-time high. You might be wondering why we say that and what gives confidence in saying that. So let me share this with you. But this is showing a kind of a cohort analysis. It's the basis of our land and expand part of our model. Once we land a customer, they grow in time. So what you see here is going back to 2018, we added 147 customers. And you can see how that just grows over time. As you know, as Michael said, all our services are tied to subscriber, right? We monetize on a per subscriber basis. And so we are maniacally focused on helping our subscribers win. Our customers win new subscribers. That's why we've developed our customer success team led by John, and it grows over time. You can see by this chart, it's up and to the right. Sometimes it grows a little faster than others, but inevitably, it is up. And because our customers are focused on delivering experiences they are winning in their marketplaces, and they are taking subscribers every single year, every single quarter, every month and every day. Now this is where we're at today, more or less. Let's talk about what the opportunity is. This is the U.S. total addressable market. It's a fraction of where we're at today. We have an enormous opportunity in front of us. We are now beyond the elbow in a sustained growth phase. We have everything that we need to be able to go work against this. And so that's the opportunity we have. How do we get there? Well, largely the same way we have so far. First and foremost, we're going to grow our customers. Our customers are going to continue to add new subscribers. And with the power of Calix One, they'll be able to go at a faster rate. When you have the ability to market to the audience of one, there are chances of improving their success of landing new subscriber goes up. You saw that the workforce agent workforce is going to free up additional resources. Those resources you've heard the panel up here today, talk about how they can redeploy those resources to go deliver new services. Maybe it's SmartTown, maybe it's MDU, maybe it's smart business. They're going to additional roll out additional new services. And of course, we're never going to stop adding new customers to our base. And with this genetic platform, I think we're going to be able to track more at a more rapid pace than we have in the past. All of that is accelerated by Calix Agent Workforce Cloud. Let's talk about the numbers a bit. So on your left is kind of where we've been operating in terms of a target financial model. on the right is kind of where we're looking at in terms of moving forward. On the revenue line, we typically said, hey, we're going to continue to grow sequentially, and we still believe that's the case. And then we'll provide you a range. In 2016, we said we'd be at 10% to 15% yesterday. We just took it to 15% to 20% on the back of the kind of the memory surcharges. But for '27 and '28, we're going to call it right up down the line at 15% growth. It's based on all the visibility, our backlog, the reoccurring revenue, everything that we're seeing with our visibility being as high as it is. You might be asking me, well, can't you grow faster? I'd answer to you, possibly so. But this is what we're committed to delivering in this time frame, and we'll see how it goes. On the gross margin perspective, we've been using and operating under 100 to 200 basis points for some time. And over the past 3 years, we've done really well. We've exceeded that target greater than basis points in each of the last 3 years. Unfortunately, in 2026, it's a little bit of a different story. We have some short-term headwinds that we're going to be facing. I'll talk about those memory and the dual cloud costs. But as we get beyond 2026, I think we have the opportunity to continue to get back on track to deliver 100 to 200 basis points of margin expansion -- so let's talk about memory. It's probably the one that's affecting us most. When you have a demand supply disconnect as large as the one we have now, the kind of price increases that you've seen over 10x increase in cost. Somebody is going to lose out. The music is going to stop playing and somebody is not going to have a chair. Our #1 priority is to make sure that we are one of the people that have a chair. So Jerry and his team over here are world-class. You've seen us execute through COVID, one of the few companies that never missed a beat, and we went into COVID and came out of COVID stronger. We will take the same opportunity here, and we've been aggressively in the marketplace in terms of [indiscernible] memory because at the end of the day, when Brad and the rest of the team up here are winning their new subscribers, we better have units to supply them right? So for us, we don't want a top line problem. It won't be a top line problem. So now you have to deal then with the cost side of this equation. So it's unfortunate. So what we've decided to do was to go ahead and pass along those costs in kind of the best way possible, which is we will just look for cost reimbursement. I'm not going to put a margin stack on top of it, okay? And so we're doing that in the form of a surcharge. Surcharge is deliberate. We don't want to raise price. If costs go down, we'll pass that through. costs go up, we'll pass that through. So this will be persistent likely into 2027. But as I said yesterday on the call, I size that headwind for 2026 out of 200 basis points. And that's just the fact that you have 0 margin business running through your P&L, right? You're putting a whole bunch of incremental revenue at no margin on top. If we take a look at the second headwind, [indiscernible] dual cloud costs, the best new story there is, it's past tense. It's done. It's over. It was a one quarter phenomenon. And so that's probably the best thing I can say about it and it's short-lived, but yet had some headwind to us on our annual numbers. [indiscernible] looking at the operating expenses. You've heard how we're using AI internally. You can share some time over here with Jerry on how we're using AI and supply chain. We're using AI to help our customers to go faster? Well, we're also looking to do it internally. So you ought to expect us to see some improvement in terms of the way you run business should be some OpEx savings as a result of it. So as we look into 2027, we are still forward investing in some of the things that we wanted to do for AI, and there's a couple of new markets that we're going after in terms of large customers, MDU build into. But we're setting that target in 2028 that we should be able to grow OpEx at half the revenue growth rate. And we'll make some progress into that path in 2027. So it's kind of a recap. The end of 2026, we'll be back in that old financial target model. So we told you we would forward invest but that we would be back in target model by Q4 of '26. From there, we'll actually make some improvements by growing less than the revenue growth rate. And then with OpEx, '28 making some more substantial progress. Let's roll that all kind of together. Over this next planning horizon, we see our gross margins drifting back into the 60s. OpEx will drift down to 40% or below. So we can see clearly during this period of time that we can get to a 20% operating income for the company. This business is going to generate a tremendous amount of cash. So that cash is going to go to the balance sheet. So these are the metrics that we are gauging how we're going to operate our balance sheet there's reason to make no change to them. we can still run a very, very tight DSO. And by the way, we frequently do much better than the 35 to 40 days. For example, last year, we actually hit 24, which is livable Inventories, no change. Let's stay to 3 to 4, and we're running it on the higher side of inventory level for 3. And that's largely because of the current supply environment that we're in. We need to do more to be prepared to meet the demand equation and to be available for some of the memory and other components that we are buying ahead. In this battle for memory, one of the things you want to make sure you do pay our vendors, maybe pay them early. You want to be one of the best customers to your vendors as possible so that when they have that memory and they want to allocate it, they want to pay one of their favorite customers. That's Calix. So the DPO is important. So that gives you our cash conversion cycle. No real changes to it. We'll continue to operate in a very clean balance sheet. So what do we do with all that cash? I personally would love to have it all stacked up around me. I have visions in my head of either think of scar face or pinky blinders or something like that. But Carl tells me we're not a bank so I can't keep it. So at the end of the day, we have a very disciplined capital allocation process, and we've talked about that, but I might as well recap it one last time for those that may be new to the story. So we think about our cash in 3 buckets: our operating cash, our strategic cash and our rainy-day cash. And over the next 3 years, we would anticipate that we need some additional cash in that operating bucket, not only to grow the growth in the company in terms of expanding the balance sheet but to have those inventory investments. If I think about the strategic balance, we are an organic grower and have. But we've always set some money aside in our minds thinking about, hey, there may be an opportunity to go buy a technology or do some kind of tuck-in. But we have recently just continued to build onto the platform, take them to you, for example. We would rather have actually built in the platform, creating greater DVs for our customers. than to go out and buy a piece of technology. I think over the next 3 years, that trend will continue. And so our needs for the strategic cash probably go down. So that means the cash that we're generating will likely drop to the third bucket, the need a cash bucket at a faster rate and will be the fastest-growing part of the bucket. So we do a disciplined model. We come up with a long-term model. We're going through it with the Board every quarter. And as I said many times that the larger the cash balance gets the less sensitive we are to price. And so every quarter, we put a treating plant put together and the shares will be repurchased and you've seen that we've done a significant repurchase here in the first quarter, and it will continue to be that way. So for the next 3 years, I would expect us to continue to retire shares at a healthy clip. But there's another part of the story and it gets better. As we've moved from this early development part of the company and to where we're now into the early majority sustained growth, we are realigning our equity programs. So in the past, we were using performance stock options. And we had 2 employee stock purchase plans. Going forward, we are pivoting to performance stock units and collapse those 2 employee stock plans into a single plan, which creates more and more of like a stock -- employee stock or plan closely aligned to long-term shareholder value the effect of which should be fewer shares being issued. We think the combination of cash being returned in the form share repurchases should more or less offset the share being issued through the equity plans when we become dilution neutral. Obviously, in 2026, with the large purchases that we did in the first quarter will probably dilutive negative. So just recap. We are the only company that has built an genic workforce platform capable of transforming the service provider industry. The tau is enormous. We have a proven model that works. We are asset-light, and therefore, investors should expect significant cash return to them over the next 3 years. Thank you. With that, I invite the leadership team on up here.

Shane and John are going to join us. All right. Can [indiscernible] the mic, put your hand up. Glad to take questions.

So maybe a couple of questions. You've been selected the managed services opportunity. And you've talked about it since like Calix stays as well about that sort of $1 to $10 per subscriber rate you made a lot more progress on that front. So now with the visibility that you have, can you help us quantify that a bit better in terms of where you are in terms of progress there including now the PI-led opportunities that you're sort of looking at, how should we think about what's a reasonable milestone for that to get to during this sort of model period that you're discussing? And then a follow-up would be maybe Cory for you is you talked yesterday as well about bed being an [indiscernible] on the model. So when we think about the growth target that you're outlining today, which is 15%, is beat incorporated? Are you saying, oh, let's see what goes sort of how it plays out? Is that sort of what's embedded in there? Just wanted to understand because you did refer to it as [indiscernible] yesterday.

So on the first part of your question, which was around is there an opportunity to accelerate the business. John talked about [indiscernible] ore currently doing one of the issues that we always had was capacity of the customer. right? Because you heard from literally sitting in the seat, when Scott was talking about the fact that he only had this many employees. I didn't have the capability to expand out, couldn't use all the products, couldn't get them launched faster. So we think in our existing base, where John showed an attach rate of only like 40%, there's a huge opportunity for us first of all actually put the capabilities in place using Agentic to actually do the work for them. And so John's organization is going to change radically in how we support customers because -- and I've said this time and time again, this next stage for us and what we've built over the last 2.5 years is in the past, we would have to control the customer to please launch that product. Please listen to us, please change your website into an experienced-based website. The next stage for us is going to be push the button, push the button. Here's the ROI, get it done. And so we think that represents a huge opportunity to radically expand at a faster rate with the existing business. And then the second part of that is, as we look at new markets, we showed some of the TAMs. These are very logical expansions of our existing platform. We have incredible partners. Again, you heard about from Gavin on what the opportunity is in the MDU market, which is embedded legacy companies aren't investing to actually innovate. And so we come in with a very different mindset. They basically brought their technology interlace down, and we all know that things don't scale well down. We brought our technology consumer up, and we actually have an opportunity to completely transform and disrupt that business. And that's the ones like Gavin, which are the ones we partner with, why he's so interesting is because there and a challenger in that market looking to significantly grow market share. And so when you partner with them, what they do is they say, hey, I can try to be like everybody else but here's all the opportunities to completely change the business because I want to disrupt. Gavin doesn't want to go and be like everybody else because that's not how you make money. If you're like everybody else, and you're just kind of who do I pick, right, versus partner with someone like us and be first to market. That's the other part too is he wants to be first to market. And so this represents a significant expansion of TAM. You look at the MDU market, that's excluding hospitality, international what we can do in inventing. Just the [indiscernible] MDU market alone is bigger than the global Tier 1 market for us, which would only software. And as frankly as big as our incumbent market today. And what we're really good at it is going into markets that are highly decentralized. If you look at the U.S. regional market, what is the U.S. regional market. It is unlike any market in the world. It's not dominated by a single provider. It's like 3,000 companies who are highly, highly distributed. And what do we do in that market? We dominate it. So as we go into this MDU market, this is what we actually do really well. It's the exact same type of market as we're currently in regional sets going after one big company. And so we know how to do this. And what's great about the regional market and the way that not only our products are built, the partnership and trust we have with customers, but also our selling and success motion. That creates a moat around the business that we have because customers trust us, and we are going to go do the exact same thing in that market. And so it represents a significant opportunity for growth. And then the second question is over to you, Cory.

So I'll just add a little bit on it. On the monetization of $1 to $10. All our offerings have been on a price volume curve. And as we go into large customer segment, obviously, there'll be a lot volume, I would expect them to be on the lower side of that scale of 1 to 10.

Well, that's why the TAM is different because of the fact that the other part too is they're also going to be running it on their own private Google instance. Therefore, we're not going to have an appliance element in there. and we won't actually have the COGS. So Shane's team is not going to be running it like we do with our current customers. It's actually going to be their Google instance with our stack and a pure software-only sale, which is why when you look at the TAM, what's so different about it is that that's 100% are pretty close to.

Yes. And on the bad side of it, the answer is some, right? So our forecast is being built on the orders that we have and the pipeline that we're driving and our customers have provided us with their initial set of builds. And so I would say that there is some beat in those numbers. It doesn't include all of it should it come to pass. And so it provides an opportunity to outperform that 15% should we get what we think we might in terms of share.

Next question. Mike?

Mike Genovese from Rosenblatt. A couple of questions. First of all, Michael, can you talk about expectations for selling software only to customers that don't buy hardware, how big that business could be. But also how does the telemetry work there if you're just taking the data from publicly available sources and not your own captive equipment, does your competitive -- how is your competitive advantage in that area? And then I'll follow up with one for Cory.

Yes. So by the way, it's the same. So for example, what we do currently is that we have millions and millions of non-Calix systems actually being managed by our system today using industry standards like TR 69 and those things. So while Shane talked about being in the data path, we're not in the data path there. We're actually using industry standards to collect the data. So that still becomes available to us. It just means that the customer can't do quite as much, right? But with the new business model, what we do is actually our operating systems can run on other systems. So we put our operating system on, let's say, you're a big customer, you say, I would like my volume SKU to be I'm going to go direct to a manufacturer right? So I go do that. But then I still put the Calix operating system on that. And so it sits on top of it, and it can be an industry standard operating system. We've openly talked about how we're going down the path of purple, which is the standard. We will be purple certified. And so they pop that on. They then have containers where they can add to services. But when that OS is there, it is also collecting the data, right? It can link into our cloud. because what people don't really understand is that they're thinking about the OS and how to grab data [indiscernible] and I have talked about this a lot, you still have to have that cloud system that sits on top of private Google instance, and it provides access to what are the operations, services, marketing, all those capabilities. And then in that customer has identified in the workflow, you're just going to consume it in a different way. For example, I am running ServiceNow, our sales force in my call center service environment at a view is Calix a genetic agent is going to be a component of that. It's going to feed data into the Salesforce or ServiceNow technology. And then what's going to happen is if I'm a call center agent and she calls in I actually am going to click through and I frame is going to pop up and you might be in -- if you choose, you can be in Service Cloud to diagnose our issue, then close it down and go to the bigger view customer. So this is something we're very good at. The other part of this is that when you look at the evolution of open systems in technology, that's what model context protocol is, which is how you don't move data, you can actually use context or agent to agent so that we can actually have what is basically an API framework for agents. So we have had a long track record of standards-based, right? We're very good at integrating into disparate environments and we see this as just the next evolution and the ability to enable those customers to do those things. So I'm assuming you had a second question, which would go to Cory.

Yes. But if I could just follow up, first, Michael. So are you expecting to win other new large customers with this?

100%? Absolutely 100%. Shane and I didn't go to Barcelona because we like Persuto,right, and cappuccinos. We were in Mobile Congress talking to big customers. This is the start. We had to get past the -- like we went to Mobile Congress to kind of say, hey, we're here. We have some big customers. We have Verizon. You heard from Lumos, what we're doing with T-Mobile. And the next stage for us is now to go after that big customer base worldwide. And so we kicked that off at Mobile Congress than now were there. That's why I was on -- did a keynote there to start having those conversations. Absolutely. What's different about us though is that we also don't have to go after a large customer in one way. And what you also heard from Brian with regards to where we are in MDU, a large customer as many facets and highly dysfunctional, right? Having been in the big companies, I know how this works. It's silos, right? What do they function? You have a consumer, you have a small business organization, you have a multi-dwelling unit organization, you have a business organization. And all those segments in there are filled with executives who actually run their businesses. So what's also unique about us is that our platform does everything. It's just about where is the entry point. And as -- if you look at my career history, I've been in leading sales transformations and transformation of companies for this is my sixth, right? When you're in a sales and marketing role, the most important thing that you want is lots of opportunities to get into a customer. If you're a one-trick pony and the only way in and they slam that door is you can't -- that one opportunity that you had is closed, that leads to a lot of disappointment. And in the end, a small pipeline against the TAM. If you can actually talk to a large customer and say and go to talk to all the different organizations about everything that we offer, what you can do is search for a beachhead. You're searching for is it and in the end those beachheads and large customers generally come from who wants to make a name for themselves, who's driven drive change versus who's on the -- who's actually just waiting for retirement. You have to go find the people who are saying, you know what, I just took over this organization. It's the same as when I got promoted at Microsoft, the people before me, and I got -- when I went to bell, some of the people before me weren't driven to drive change. They were just like, I want to keep doing the same thing. But when I took over a business when I was at Microsoft, anyone who come to me with regards to I need to change my business. I want to go and take us from 2% growth to how do we do 50% annual growth, I'm ready to listen. And so the good thing is that we just have to seek within those customers who are the ones who want to drive change and then enable them with our platform. And then what happens is once the platform gets in, you have the beachhead and everything is available now to the entire customer. They just have to turn it off because once you integrate into the back office, everything works. So for example, if I go into a large enterprise customer, a Tier 1 and we win the small business go to market, all of our capabilities in the platform are enabled for all segments of that customer. And so you're in. And then you can start saying, well, you don't have to do a 2-year OSS/BSS integration into Amdocs because it's already been done, just add it to the product catalog and you can be up and running in 90 days. And that's a huge change.

Okay. And then finally, Cory, I just want to get your confidence on the idea that the second quarter could be the bottom for gross margins and that will grow sequentially from here. And given the uncertainty about what's going to happen in the spot pricing for memory, how do you factor that into what you're thinking there?

Yes. So Mike, I don't know it is the bottom because the gross profit is going to be the same or better, but the margin might be down. Because if you think about what we're talking about, and I said, 200 basis point headwind, it's not even. We're just getting started with the memory surcharges in quarter, you're going to get a full quarter in the third quarter and fourth quarter of those memory surcharges. So how much 0 margin revenue I'm blending in will have an impact on my overall margins [indiscernible] but I can tell you the GP will improve right, does that make sense? Yes, you're going to keep seeing EPS growth, but you're not going to see -- the margin is going to wash out until we get through the memory. And I will say on the software side, though, let's just talk about that because that's a positive. With having the dual cloud cost behind us, we'll spend Q2 kind of optimizing the new GCP platform. But I would suspect by the time we get to the third quarter, we'll be setting new records in terms of software service gross margins and from there, build on it. So you're going to have that as a tailwind as we move forward.

I'm actually going to make one other point on that topic, too. So when I was up here -- I'm sorry, I just got [indiscernible] a lot too, when we talked about the velocity of product -- so you see the dip, right? The dip actually in 2025. To be really clear from a selling motion point of view in the end of Q4 and all through Q1. It actually had a dip on our selling motion, too. It was all hands on deck. It was all hands on deck for Shane's team to get it out. It was all handled on deck for John's team to support customers through that transition. It also took a lot of our selling capacity in Q1 and off the bench from actually selling because they -- for example, all our sales engineers, we're working with customers to make sure that those customers had support as they went through this transition. It was all hands on deck. So in the same way, I think that, to your point on software sales, the other part, too, as we go through Q2, Q3, we're back to regular cadence as an example being what Shane talked about with MDU, the big last release that really makes this platform grade is in May. We're 2 weeks away from that, and we go hard at that market. And so now those selling resources aren't supporting customers, which is you never want that. We never wanted selling resources supporting customers, but that's what it took to do something monstrous for our customers. So with that, we can take one last question or not. We're out of time. Scott, one last question because we're over time.

I always have multipart. But just real quick, Cory. In terms of the outlook for '27 and '28, I'm wondering what you could tell us about your assumption memory pricing, kind of what the baseline is that's going into that forecast? And then Mike, going back to the private cloud. Huge opportunity there. I wonder if you could distill a little bit what the pipeline looks like, how big, how diverse the engagements are. And these are larger complicated sales. So kind of the closure time period of when we would actually expect new customers becoming onboard. Is that '27, is that '28? How are you thinking about that? .

Yes, Scott, the underlying assumption is that memory will find a new equilibrium sometime in early '27. I don't think it goes back to where the pricing was, right? It will be at some new higher level. But I think you'll start seeing -- and you're seeing the memory guys are already putting more fab capacity to it Micron has stuff coming on in early '27. So you'll have other people that are optimizing the amount of memory that they're consuming.

We also even saw what Google just did where they saw a 10x reduction in memory. So you're going to start seeing those optimizations. And as the fab capacity increases, that represents an opportunity to.

So I think it goes to early '27 and then we'll see a new baseline.

And so with regards to -- I'll close off with this, with regards to driving market, one of the great things is that competition is increasing for our customers. It's not great for them. But the great thing is that we're partnering with them, we understand their challenges, and we understand their markets and how they are going to compete and win in their businesses. So I would say as we go after these incremental TAMs One of the important things is that it isn't where we went back to and you had one provider per market, and there wasn't a lot of competition. So you know what, as long as -- if I have a fiber and I show up, I win, those days are way behind us. There's a lot of competition. And so I would say with regards to the selling motion, the good thing is that customers see a need and you heard that from the 4 people who are up there, they're all like, I want -- Brad said, "I find white glove offensive. I want to have the best experience all the time." You heard them talk about how they dominate in their marketplaces. They talked about -- you talked about what Scott said with regards to everything that we're doing for the customer. In the past, John and his team went have spent a lot of time to try and convince customers to do these things, but with the threats and the pressure there, that represents an opportunity where people are starting to say, "You know what? I also need to do these other things, how do I build the best experiences. " And so yes, these cycles take time. Yes, there's a -- you have to build out the pipeline. But the great thing is that there's demand because of the fact that there's threats, and we're best positioned to deal with it. So -- and the pipeline grows. And with that -- yes, we'll wrap gentlemen, off you go. Thank you very much. Thanks to the leadership team.

So now got to cycle right back to the end of the slides, which actually just says thank you. So to everybody in the room to the customers who took the time huge thank you for coming and joining us on the panel and giving color on what the business model is. And to all of you as investors, thank you for investing in Calix. We really appreciate your time, and we hope you have a great day. Thank you.