Calix Inc (CALX) 2022 Q2 法說會逐字稿

Greetings, and welcome to the Calix Second Quarter 2022 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Jim Fanucchi of Darrow Associates. Sir, please go ahead.

Thank you, operator, and good morning, everyone. Thank you for joining our second quarter 2022 earnings call. Today on the call, we have Calix's Chairman and CEO, Carl Russo; Chief Financial Officer, Cory Sindelar; and President and Chief Operating Officer, Michael Weening. As a reminder, yesterday, after the market closed, Calix distributed its letter to stockholders in a news release, and 8-K filing and posted in the Investor Relations section of the Calix website. This conference call will be available for webcast replay in the Investor Relations section of the Calix website.

Before I turn the call over to Carl for his brief opening remarks, I want to remind you that on this call, we will refer to forward-looking statements, which include all statements the company will make about its future financial and operating performance, growth strategy and market outlook, and actual results may differ materially from those contemplated by these forward-looking statements. Factors that could cause actual results and trends to differ materially are set forth in the second quarter 2022 letter to stockholders and in their annual and quarterly reports filed with the SEC.

Calix assumes no obligation to update any forward-looking statements, which speak only as of their respective dates. Also in this conference call, we will discuss both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in the second quarter 2022 letter to stockholders. Unless otherwise stated, all numbers referenced in this call will be non-GAAP measures.

With that, I will now turn the call over to Carl. Carl?

Thank you, Jim. Robust demand continued in our second quarter, which resulted in a 9% sequential increase in revenue. More than 80% of our bookings came from our All Platform software, associated systems and services. This is up from 70% just last quarter. The sequential growth was driven by BSPs that are providing broadband-as-a-service rather than just a dumb pipe, and we expect this trend to continue.

A 77% year-over-year increase in revenue performance obligations was further evidenced that our BSP customers are winning in their markets and growing their subscriber share. Furthermore, we see evidence that our most aggressive BSP customers are using the recent economic slowdown as an opportunity to gain share by delivering an exceptional subscriber experience to those who have never received one.

On the supply front, the Calix team again outperformed, which helped us achieve better-than-expected results in the quarter. Furthermore, it raises our visibility, allowing us to forecast year-over-year revenue growth of roughly 25% for the third quarter. While we expect the supply chain challenges to continue for the foreseeable future, our confidence is growing that we can exceed our revenue growth model, shared at our 2022 Investor Day held in February.

Our operational and financial performance in this uncertain market has been exceptional. We are profitable. Our balance sheet is strong. We consistently generate cash, and we expect this trend to continue. Based on our expected performance, we are confident. We will create significant shareholder value over the long-term. However, in the near-term, the market downturn has presented us with an opportunity to purchase our own shares. To that end, our Board of Directors has authorized a 1-year repurchase plan, allowing us to invest up to $100 million in our common stock on an opportunistic basis.

In closing, the enormous secular opportunity we are capitalizing on grows every day, and the Calix team is committed to executing with excellence to help our customers simplify their businesses, excite their subscribers and grow their value.

With that, let's open the call for questions. Darryl?

(Operator Instructions) Our first questions come from the line of George Notter with Jefferies.

Congratulations on all the traction in the business, both on the hardware side and the software side. I guess, I wanted to ask about the progress with AXOS and EXOS. Obviously, those are attached to hardware sales, but lots and lots of growth here. I know you guys have been working to move EXOS from a perpetual software license model to a subscription model. I think that transition started about a year ago. Could you kind of walk us through like where you are in that transition? I'd love to know what the mix of new wins would look like in terms of subscription versus perpetual software license? And I think on the AXOS side, you're also looking at making that transition. Can you talk about where you are in terms of progress there? And then maybe tie in some of the revenue growth rates you're seeing on AXOS and EXOS. I think, you said 129% in year-on-year on EXOS and 73% in AXOS, kind of walk through that transition.

Thanks, George, for the question. The transition is pretty simple with our Revenue EDGE offerings. Almost all of the AXOS today is in a subscription form. With our AXOS offerings, it is still a licensed operating system. So it's literally a 100% on one and 0% on the other to answer to your question directly. As for progress, there's a number of examples. But let's just say that obviously, AXOS is tied to network investments. What you're seeing more and more investments going into the network, and fiber, and XGS-PON. And obviously, on the Revenue EDGE side, you know that we're focused on what's going on with our customers and their success.

Michael, maybe you've got an example or 2, you want to share on the Revenue EDGE side, as example.

Yes, I'm actually going to tie the 2 together. BSP is that, we reached a tipping point where we're finding the broadband service providers, who are looking at the different technologies, are now looking to Calix for a complete end-to-end, because of the fact that we tie the 2 together, we tied a network to the FAN. So for example, Brightspeed looking to us to elevate and speed their business by looking Calix for an end-to-end solution, which covers everything to do on the network, to what they're doing on the prem and then tying it together with Support Cloud, Operations Cloud and everything we're doing for Marketing Cloud. So that's really the big pivot point for us, and that's why you're seeing that growth because they're seeing the value like never before.

Got it. And then I guess I'd also ask about progress on the cloud module. You mentioned Operations Cloud and Marketing Cloud. I saw the RPOs jumped up about $25 million sequentially. It looks like really good progress in selling the cloud modules. Maybe it's coming from selling longer-term contracts. But can you just give us a sense for why that number seems to be inflecting in terms of the sequential improvement?

Michael, why don't you take that?

Again, this comes down to as we reached the tipping point, where the promise of what we're doing in the cloud has always been at their platforms. And those platforms allow us to integrate incremental solutions, which makes it even more attractive. You start by buying the cloud to do one function, for example, support or operations or marketing. And then when you look at the Calix for it, how do I expand my broadband business, through a wide range of ecosystem partners to ensure that I have the most robust operational and go-to-market solutions.

This quarter, we added Bark. And if you haven't looked at a Bark, Bark is a social media listening platform for parents, which has had an incredible impact on millions of children in North America with regards to cyberbullying and a bunch of other elements to protect them. And then the second one, we added on Marketing Cloud was our fifth social platform, which is Constant Contact that gives us a smaller medium service provider the ability to really integrate and engage with their customer on a day-to-day basis. So I'd say that what we love in the cloud is that we pivoted this next stage of ecosystem.

Our next questions come from the line of Ryan Koontz with Needham & Company.

Nice quarter, and great to see the visibility, driving the raise in the year for Q3 anyway. Can you walk us through puts and takes on the gross margin front here? Are we mostly dealing with past price increases now? Are you seeing any relief on logistics and expedites? And can you comment on the kind of trend on de-commits, which sounds like that's improving?

Ryan, let me just shape it and then I'm going to hand it over to Cory. The shift in the model, as we spoke, going from 70% to 80% of bookings, which is obviously a leading indicator. The transformation of the business continues unrelentingly. Having said that, on the other side of it, the supply chain continues to be just a war every day. So Cory, maybe you want to answer the puts and takes on the supply side. Thanks, Ryan.

Yes. Ryan, I would characterize it when you're going through a lot of pain just start to rule from the pain, makes you feel like things are better. So generally, across the board, you have a general sense that things are getting better, but we're still on a troughing phase. You got to remember, in order to avoid supply hiccups, everybody needs to perform in your supply chain. It only takes one. So the good news in the last 90 days, we haven't had any significant surprises, so that's a plus. But we are still seeing de-commits. We are obviously still have extended lead times. Those haven't contracted any. We're being notified of upcoming price increases at the first of the year. So that's a trend that's continuing.

On the logistics piece, we are seeing improvements, both on air and ocean. So that's improved over the last 91 days. So that's a little bit of a bright spot. But all in all, we're still a long way from solving those large problems that were identified earlier in the year where they relate to redesign of some of our products. That takes a while for it to complete. So we're still working our way through it, albeit it feels better. There's still a lot of work to do.

So let me ask you just to give, Ryan, a little more color. First quarter to second quarter numbers of de-commits did it change or...

They're fewer. So it's improved from the de-commits, but they are still de-committing.

Helpful. If I could just do a quick follow-up on the flow of subsidies, it sounds like we're seeing some nice RF allocations from the states. How do you see ARPA playing into some of the smaller rural operators versus the Tier 1s that are some of the headlines out there?

Yes. As we've spoken about before, ARPA funds have started to flow through in the states, it's a state-by-state thing, and we're definitely seeing an impact from that. I don't know that I would say that it's material, but we're seeing it. Michael, any additional comments?

I would just say, ARPA remains the same quarter-on-quarter for us. That's all upside. And that's -- the government funding is slow to flow, and we really see it in '23 versus right now. So we're seeing bits and drives they actually yet to come.

Our next questions come from the line of Paul Silverstein with Cowen.

Guys, can you hear me?

We can.

A couple of questions. One, your response regarding ARPA just now, that also petard off that you're seeing some funds, but it's a trickle and that should increase 2023 and any visibility to a degree of increase? Michael, do you want to take that?

We don't have visibility into the degree of increase, but we have a significant direct sales organization that's very actively involved with all of our customers. So as it arrives, we're involved with them, both from the submitting phase through planning for those funds when they show up. So not at this point. But as I stated before, the growth that you're currently seeing right now is organic growth from us taking market share and growing our business with the 34 new BSPs that we had this quarter, and that's all upside into '23.

And Cory, returning to your response regarding supply chain, what was the degree of the quantification of the impact on revenue and on gross margin?

So on revenue, Paul, I would say, it's nil. Remember, we are supplying our customers to their subscriber demand. So we don't believe it has an impact on revenue per se. On the margin side, it's consistent with prior quarters. It's at the gross level, somewhere between 400 and 700 basis points from pre-pandemic levels. But as we said before, it's important to realize that a lot of those price increases are not going to actually be revamped, can be reversed. So it's kind of a moot point. That's not going to be the new normal. We're not going to revert back to that full level. And so that gives you kind of just a sense of where it is relative to the aggregate headwinds.

Cory, just to be clear, you think your gross margin, but for logistics, freight, semis, ICs, et cetera, would have been somewhere between 54% to 57%?

Correct.

And how much of that is freight, logistics that I assume you do expect to recover?

We can't hear that. Say that again, Paul?

How much of the impact has been freight and logistics as opposed to increased costs on semis and ICs?

That varies from quarter-to-quarter. And so we don't -- I mean, again, to Cory's point, we don't know what's going to stay baked in. And so we don't know what's going to get recovered. As it normalizes, I think it's best that we do it almost retrospectively because I think you're going to see a lot of vendors in the supply chain attempt to hold on the price increases for as long as they can, and they're going to yield balance and do other things to do so.

Have your price increases starts to impact yet? Or that's still ahead?

Yes, Paul, they've started. But remember, we said when we raised prices, it was on new orders. And so consequently, well, it's just small, but you'll see more of it as we progress through time. So greater impact on 4. Certainly, as you move into 2023. Now I'll remind you, part of that price increase was to ensure that we maintain that 50% gross margin for the current year, right? So we obviously have visibility into some of the PPVs that are coming, and it's also measured. So the price increase should not be thought as a margin recovery piece. The margin recovery piece in 2023 is really due to continued product mix as we continue to sell more software and more platforms, and that's where we'll get to the 100 to 200 basis points of the margin improvement next year.

And an assumption that the supply chain is no longer getting materially worse.

Right.

Cory, have you -- now on top of the supply chain impact that you and everybody else have been experiencing over the last year plus. You've now got -- it sounds like inflation is starting to hit over and above supply chain. I'm hearing other companies cite a 10% type increases in labor costs on average with a very depending on region. But is that what you're starting to see?

No. No, we're not seeing that level of wage inflation.

Are you seeing some degree of inflation in that? Or is that already baked in?

Are you talking about on the margin line or on the OpEx line?

Well, I guess it would be largely on the OpEx line, but I suspect it would also be, to some extent, it would also, should appear in COGS?

Well, so on the COGS side, I think the answer is, it's minimal as far as in the OpEx environment and how we're competing for talent, maybe, Michael, you want to spend a moment and give some color on that?

Yes. The majority of the people that we're hiring, and we had another record quarter for hiring people across the company, it comes down to speaking to them about, first of all, what's the purpose of the company, they really, really want to hear that story. And so it's exciting for them. The second part of it is, making sure that everything that we do as a culture is represented properly. And -- we're fortunate that in this quarter, we won several other awards, Fortune for the first time recognized us with workplace awards for Bay Area and for the Best Place to Work for Millennials.

And then we won 4 additional works from comparable, which we're super proud of because of the fact that those are based upon the interviews and the feedback from our employees, and we won for career growth, which is incredibly important for someone who is looking for a change, diversity, women and our leadership team. And so all of those come into play much more than compensation, compensation to the parts, sure, but it's actually about am I going somewhere with the purpose, and that's something that our new employees are really gravitating towards.

So Michael, did you just say that inflation is not meaningful yet for the company in terms of labor?

Yes. It's not.

One last question, I'll apologize to others in the queue, but one last quick question. I appreciate that. It sounds like you got your hands full with demand in the U.S. and you need to focus your investments on addressing that U.S. demand. I assume that's what -- that you haven't yet put meaningful investment into outside of the U.S., in U.K., in Europe, et cetera. But what's going on with respect to your non-U.S. revenue? I see that it dipped. I think you attribute it to 2 specific customers. But can you give us any more insight?

Your premise is correct. And so our focus is on North America. The team in international has been focused on our platform business going forward. But it is not an area where we are pouring resources into it. So it's still very opportunistic, and it will move around accordingly quarter-on-quarter.

And Carl, you don't have -- given the level of demand in the U.S., you don't have a view yet as to when you will have the resources to invest more overseas.

Not at this time, keep in mind that as we stated last quarter, we did take our first cloud offering into the U.K. So that is the only news to report same as 91 days ago.

And regarding CityFibre specifically, the announcement the other day that they selected you and Nokia for 10G XGS-PON upgrade starting in April 2023. Any incremental insight you could offer on that? Obviously, that's a big plan deployment.

Well, yes, I mean, I think from their start, they've always wanted to be a new vendor. They just for years never got around to it. And I think they're finally getting around to it. But Michael, if I got that right?

Yes.

There you go. That's the shortest answer I've gotten for Michael since we've worked together.

(Operator Instructions) Our next questions come from the line of Christian Schwab with Craig-Hallum.

I'll also give my congrats on great execution. I just have one question that hasn't been asked. The 2 large customers that you highlighted that kind of drove the large customer base. I know from a percentage of revenue the same, but up 14%. Are those your historical large customers? And the follow-up on that, is there anything new or dynamic that's going on that's creating that demand? Or is that just the CapEx cycle of those companies?

Yes. It's literally quarter-to-quarter noise, and I don't mean that in the deleterious sense. It's just that the -- in any given quarter, depending upon timing. As you look forward, Christian, Michael spoke earlier about price fee that will be something that will become a part of this as we look into 2023, but they have as yet not closed, there's spin-off.

Our next question is come from the line of Tim Savageaux with Northland Capital Markets.

Congrats on the good results. And maybe that's where I'll start, Carl. If we can update a couple of topics that were discussed last quarter and get your current views and the results speak to this to some degree, but I guess the overall topic is Calix's performance relative to a weakening macro environment. It doesn't really seem like to be having an impact yet. And I think you had some comments on that last quarter. And secondly, and I don't know that we're seeing this right now, but the potential benefits of -- from a supply and availability and maybe even pricing standpoint, a weakening demand in places like consumer and auto tech in terms of its impact on a more favorable supply environment, in the communications technology world, is that demand remains strong? Are you starting to see anything along those lines, kind of seeing that corning a little bit this morning with display versus optical comm? But I'd be interested in your comments or updated comments on both topics. I have a follow-up.

Okay. First of all, Tim, I'm going to take them in reverse order, and I'm going to ask Cory and Michael to add color. But before I do, I do want to offer congratulations to our operator, Darryl, who I believe is a rare amongst the group in pronouncing your last name correctly this time. I thought that was...

It's impressive. That was impressive. But as a -- I did end up on the Independent Bank call to start here this morning first thing, I don't know if that has anybody else, but...

Well, listen, I just -- I want to point out that it was pronounced correctly. All jocularity aside, your question about slackening of demand in the consumer side, bleeding over into availability for components that we might see in networking silicon. This is something that we're continuing to look at. As you understand lead times, to the extent that, that occurs, it will take a couple of quarters. My comment on this is I think in my chats with folks that I know in the industry, that we are seeing the early signs that will happen in the future. It is not affecting us yet. So let me just stop there. Cory, anything you want to add to that?

I think that's about right. We're seeing some evidence, not a lot at this point. So I think that's right.

But I do think -- I would almost encourage you to ask the same question in 91 days and see if we have more visibility into that. I do believe there is an opportunity for that to occur if consumer demand continues to slacken. It just takes a while for that freeing up of wafers to be redirected to silicon that we might use. Hopefully, that makes sense to you.

On the weakening macro side with our service providers, our BSPs, as you heard in my prepared comments, from our perspective, this is their opportunity to take advantage. As you know, the BSPs has acquired platforms or the hallmark is an outstanding subscriber experience with no churn. That sets them up to take share. And I'll say no more, Michael, maybe you have an example or 2 of that going on that you might want to relate from our customers.

We're seeing incredible growth from -- across the board, from our broadband service providers. We press released this quarter, OTTC had 25% year-on-year growth by deploying end-to-end with the Revenue EDGE. We announced that Chariton Valley and ALLO have gone all in on the Revenue EDGE with ProtectIQ and ExperienceIQ to strengthen their offerings and that's having a huge impact on NPS. ALLO right now has an NPS of 71. An NPS of 71 is cultish and in a love of it that's significantly higher than Apple even. And what's that doing is, it's driving significant growth. So across the board, we're seeing our customers who deploy our platforms and winning.

So their take rates in their footprint go up, and they also have cash flow to go overbuild other areas. So we're continuing to see this. And in a downturn, as you know, winners separate from losers and our BSPs are winners. And so we're very happy to be in the boat and help them win.

All right, that's a good setup for my follow-up as well, which has to do with -- well I guess, end market growth versus Calix growth. So you've seen in terms of what you're guiding to a pretty nice acceleration in growth throughout the year, I think, at a high level, kind of 15%, 20%, 25%. I guess how much of that is kind of specific to the quarter-to-quarter variations in your business? Or to what extent can you point to accelerating end market growth? I mean, I know you're taking share, but maybe you can kind of discern between those 2 factors and whether you expect that to continue in terms of accelerating growth? Or if you can maybe take a stab at an overall market growth rate right now and where you expect that to go?

Yes. We don't -- I don't think in terms of market growth rate. We're focused on subscribers and helping our BSPs succeed. But let me just take the 2 dimensions, the way I think about your question. I'm going to ask Michael to add some color. Ours is a land-and-expand model, as you've heard Michael speak to the platform model. You saw in the quarter that we added 34 new customers on top of last quarter, adding 33 new customers. So the land part is a relentless focus of what we're doing. We always want to be landing new customers. That being said, our growth is always going to be dominated by the expansion of our existing customers and working with them to succeed. Michael, maybe you've got some examples that talk to around expansion and customer success, it's all yours.

Sure. If I go back to where we were 6 years ago, we were an access company, and we were dominating in the network component. But now with everything that we're doing on the prem side, we have the ability to, again, back to my point on ecosystems, work with these BSPs not only in their ability to acquire new customers, which they're using Marketing Cloud and all of our behavioral insights to do at a highly effective level, but then also add incremental services on top of it, that will allow them to grow their revenue per subscriber. So not only, as Carl stated, are we expanding by all these new broadband service providers selecting us end-to-end because we give them the lowest operating cost and the highest opportunity for successful subscribers. But once we're in that account, we're expanding radically, and this won't stop. It is our goal on early basis to release a new service that they can monetize over and over again to constantly expand our addressable market inside the customers. So we say (inaudible).

Our next question is come from the line of Fahad Najam with Loop Capital.

It seems like most of my questions have already been answered. So let me ask you a big picture question, Carl. Telecom has historically been a very cyclical business. Your largest customers tend to invest in CapEx and then after the investment phase, they go through a prolonged period of media winter, where they're trying to maximize their return on their CapEx investments. So historically, comping your peers have said that that's true, but all the customers are upgrading at different times. So it gives them relatively smoother revenue trajectory.

But COVID-19 seems to have disrupted everything. Everybody is now forced to upgrade at the same time, seamless funds, which everybody is chasing, you're supporting everybody to update essentially at the same time. So we kind of have the super cycle and then maybe followed by a deep nuclear winter. So how are you thinking about your competitive position? I know you said about land-and-expand, and you seem to be investing a lot in the land portion of it. But how long do you sustain that land investment cycle? Assuming that there is a potential prolonged nuclear winter following this massive investment phase?

Yes. So what you just highlighted is the correct statement for 60 years of the service provider space. And the reason it's the way to think about the service provider space is because you're focusing on the service provider space being a pipe infrastructure business. And what we are doing is 2 things. Obviously, we build networks. But the services that we are so focused on and our customers' success, when you hear us say, simplify your businesses, excite your subscribers -- you excite your subscribers is all about the services player, which is an unrelenting go-forward business model that we're focused on.

From time-to-time, there will be stimulus money, there'll be CapEx. Those are things that, in essence, are investments in period. But we're focused on the ongoing success of our customers with their subscribers. And so the CapEx investment -- and you've heard me speak to this for many years now, is nice, but it's -- where we begin, not where our revenue ends. In-period CapEx is sort of the ante to the game. We're focused on the subscriber experience, our customer success growing their revenues. So actually, our whole business model, as you heard Michael earlier say organically, is about the ongoing everyday revenue success, cost reduction of our customers. Underneath that, there are CapEx investments that go on. So if it was Calix 1.0, then your question would be 100% correct. But in what we are doing today, it's almost irrelevant.

Carl, my question was really about your investment cycle. So you're investing in sales and marketing, in R&D as you're trying to land new customers. What I'm guess from you is -- if it is not entirely focused on landing new customers, then how should we be thinking about your intensity of OpEx as kind of the (inaudible).

Our investment cycle is all tied to the services. And therefore, you see our OpEx model is giving you those parameters based upon our revenue. So when we say 17% to 19% of revenue, we're going to continue to invest in that because we're constantly focused on expanding with our customers and expanding not only new customers but expanding with our existing customers. So our OpEx intensity will remain as per model, and we are in that model today. They were a little low on G&A and just tick low on R&D.

Our next question is come from the line of Chris Howe with Barrington.

Most of my questions here have been taken, but I'll perhaps kind of move through the questions that have been asked and ask it a different way. Just to affirm this statement, it seems like you're at a place or a phase given the increasing percentage of [ATT], as a percentage of bookings, the continuation of that trend, you're at 80%. We also have an environment -- a challenged environment, which is hopefully at a trough and will improve to some extent as we move through the duration of this year and into '23, although it will still remain. But it seems like with the different puts and takes in the business that you're at a point beyond fiscal '22 at which you can sustain the 100 to 200 basis points of gross margin improvement. And anything else that would indicate an improving environment could lead to moving towards the higher end of this range or we can revisit that discussion later. But is that a fair statement?

That is precisely, correctly, in a fair statement. In 2023, that is what we see.

Okay. And as we think about the 50% for the duration of this year, different -- given the different buckets within the supply chain challenges, some of which may be improving, some of which may not be improving. Is there any early indication that the first half of '23 could be a little bit better than what we expect maybe show some sequential improvement in gross margin? Or should we still think of that as perhaps being more back half weighted in nature?

Yes. So for the balance of '22, we again will reiterate that we'll be close to 50%, right? And so, I think it's where we -- that's our jumping off point for next year. I think that throughout 2023, that 100 to 200 basis point improvement for the year will start to show slightly. So I don't think it's going to be completely back-end quoted. I think there will be a slight ramp it will slightly improve throughout the year. So each quarter, each quarter, there should be improvement.

Our next question is come from the line of Michael Genovese with Rosenblatt Securities.

Well, first and last, I listen to the end somehow, Carl. But nevertheless, I will also say that in the series of fireside chats here that most of the questions have been asked. So I'm just going to stick to one topic. Do you want to quantify the new guide at all? I mean you're saying above 10% to 15%, but does that mean 15% to 20% or it just means above 10% to 15%?

Yes. So first of all, Mike, let me point out that cleanup hitter is a position of honor with the base as a loader, we're bringing up the big wood. So now let's go from there. Directly to your question, I think as we sit here today, Cory would tell you that Q4 is going to look, we think, something like Q3. And so if you do the math, it puts us basically right at 20% year-over-year growth. You'll notice that inventories are down quarter-over-quarter. We feel good about what's in the pipeline, but they are down quarter-over-quarter. So the supply work continues every hour of every day. But I am quite happy that we've arrived at a place where we can start to see 20% growth year-over-year on the back of 2 years of 25% growth. Keep in mind that it's the end of July, and we're finally here. But it is the way -- it's just the nature of the supply chain. So 20% year-over-year, I think, is what Cory would say, that's what words in his mouth.

That's what I would say, Carl.

That's what Cory would say.

Got it. Makes sense. Well, so that leads right to my next question, which is, as you said, 2 years at about 25%, at year '20, your guidance on the tape going forward is 10% to 15%. And we have more RDOF, more ARPA and we have BEAT coming. So is 10% to 15% correct for beyond this year? Or I mean, how do you think about that?

So we tend to -- we have not changed our model. And we won't change our model until we have a reason to change it. And the reason to not change it today is in spite of what Cory said, which is to get your head banged against the wall long enough to somebody's stuff, it feels like everything is funny. The supply chain is in a relief from discomfort mode right now. It is not in a high-performance mode. And we need a lot more visibility on the supply chain and a lot more stability to change that model today. And if you watch what's happened during the year as the visibility improves, we will let you know. But right now, it's look out over 6 quarters and change that. I'm happy that we can stand on 10% to 15% as we sit here today.

Okay. And then maybe just one other topic then. So now have you thought about -- I'm trying to think of numbers that you may be able to give us that maybe wouldn't give away too much to your competition, but would be helpful. And I'm thinking of things like ARR or SaaS bookings, SaaS growth rates. I mean I think the revenue performance obligations are supposed to approximate that, but I'm thinking something more directly. So have you thought about things like ARR as metrics to give us?

Have we thought about it? Sure. Will we do it? No. RPOs will remain the best proxy for what we're doing, to your point, and as Cory has said, it is an incomplete metric. But as you've also heard us say directionally, it gives you the best sense for what's going on. And so I would leave you with this. Our sequential growth rate on revenue was 9%. In the quarter, our sequential growth rate on RPOs was double that. And so as you definitely look at the business, you get a sense for the rate of evolution. But beyond that, we will not go at this time.

Okay. Do you have any metrics that you want to -- that you can share? I think Michael kind of touched on this a little bit, but just about anything about total number of cloud customers or numbers of customers who take one cloud versus numbers of customers who take more than one cloud product at this point? Is there any color you can give us there?

I can, we have in conferences, they have been asked that question, and we've said that the number of customers that are deploying on cloud or more is over 800.

Okay. But no breakout between one cloud and multiple clouds?

No. But that data obviously is available in the company, and you are welcome to apply for any number of jobs that we have opened.

All right. Well, let's leave it. Let's leave it on that note then. Congratulations, keep up the good work. Thanks for putting me I guess, ninth in the order. But with such a strong rally, it's like the new clean off here, I agree.

Thank you. We have reached the end of our question-and-answer session. And now I'd like to turn the call back over to Mr. Fanucchi for closing comments.

Thank you, Darryl. Calix leadership will participate in a number of investor meetings during the third quarter. Information about these events, including dates and times for public webcast of management presentations will be posted in the Events and Presentations page of the Investor Relations section of the Calix website. Once again, thank you to everyone on this call and on the webcast for your interest in Calix for joining us today. This concludes our conference call and have a great day.

Thank you. That does conclude today's conference call. You may disconnect your lines at this time.