CASA - Earnings call transcript Q2 2020

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Operator

Greetings and welcome to the Casa Systems Second Quarter 2020 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder this conference is being recorded. It is now my pleasure to introduce your host, Jackie Marcus. ahead. go Please

Jackie Marcus IR

and for operator XX, everyone. Systems Casa this Thank second good quarter results closed. market the after June of released afternoon you, the afternoon XXXX XXXX, ended

will obtain copy did you earnings you Investor at our not section a investors.casa-systems.com. on it If and be are Scott of With Senior Jerry our Officer on Guo, from and Bruckner, me being Interim webcast receive press Financial website. is Chief Relations our release, and President. Vice of website Relations may Investor Officer archived This the our section call Executive today’s Chief of call

our no Any forward-looking these differ cause that as and Before discussion. I call may the on information could make release based in our we currently as or of undertake press and, uncertainties. filings as update contain Jerry, will forward-looking upon of to like turn statements certain SEC for materially Please more projections information such, this based described result or believe refer specific are does actual we new information from the factors statements see to obligation it include today’s the business to earnings risks we I’d the note on and release that as discussion to that call the our we risk to in today’s statements the today, results a on and future over environment events.

not we certain In accepted conform addition financial do to principles. measures to generally US that accounting report GAAP reporting,

performance business to the to believe investors I’d that, better believe may trends. it the investors And Jerry. if turn to or measures with our help will we we over call, During understand it Jerry? call or use non-GAAP like useful

Jerry Guo

we second discuss Good and results. as us thanks for quarter our afternoon today everyone joining

for a team our their and extend have at results, thanks take moment tremendous Systems the Before Casa I we and our belief would to in I discuss to operational to business. unwavering sincerest dedication like financial my

that I our to technology you hope are and We safe connected. unprecedented staying healthy. focused commitment times infrastructure are in remains the keep organization proud to families necessary people and to all of on say your and its I am provide

our flow. the the full customer of our driving pandemic, again first delivered we to In strategy results. in focusing turn to on from cash our revenue free second improving quarter. performance and products, quarter Let’s executing our in growth and diversify our profitability global our strong continuing This came under on revenue base once and

would expanded and wireless highlights higher million, details the driven footprint delivered like I the several products. was by Before telco performance fixed We to product from line providing outline quarter, for demand and $XX.X on QX. top an strong which at our

million QX approximately cable did offer continued As $XX.X well our represented almost which from stability during as our XX%. period of segment comparable Notably, during XXXX. that revenue we not of the came XX% in or products

million its in $XX We wireless wins from in or continue wins Cores, initiatives. Packet the routers access of and virtual had BNG and in to multiservice wins our and two our Wireless our wins revenue significant telco XX% of on our QX end QX. two wireless the devices. We the during with two wireless and quarter, segments in grew $XX.X at million, wireless make $XX.X comprised backlog to progress million up

a finally, four greater with million losing objectives. our we XX% $X.X quarter in made financial, our had million. operational are two in cash also or reducing the of In customers or revenue. We compares XX% XXXX, of which to results strategic revenue. ended short, of concentration. greater accounted and of quarter, which of $XX.X flow our only accounted operating customer customers our profit EBITDA pleased we This on as without from longer-term environment XX% we XX.X% GAAP We navigate our near-term QX margin the progress of for and the for a very XX% sight with and progress perspective free and And

to quarter was second areas. Let’s product million. Wireless revenue our for turn now the $XX.X

almost with Our and wireless we depends solutions. wireless are XG infrastructure timing XG million timing and included of we making backlog Even particularly the our XG deployments our Cores. readiness, of Packet products of $XX core small enterprise industry customers’ our and with on the sales devices, progress XG the are access pleased cores our XG fixed XG, though

in native can and For cloud automatically our Orange to dedicated slides or announced scale we degraded that first operator this this with critical and to major common self-correct. long-distance collaborated and that creating XG fall. are mission demonstrate service a example, of a we of last delivery week for launch X network customer network successfully the Tier slice deploying large a quality the service of does for wave new wireless It collaborated later demand. XG network a access application on recognize process with by customer fixed to demonstrate HPE broadband network project core will on a that service wireless a we service world’s using millimeter XG deploy We fixed multi-Gigabit

sequentially and flat products same period $XX.X Turning relatively was compared revenue services million, the a year-to-date flat to and Cable, including to XXXX. in both almost

$XX several This spending beginning of past operators, been relatively second quarters by reduction and million following over quarter consecutive per encouraging holding the is between quarters in the steady sales cable million XXXX. cable $XX of several First, quarter. have

of fixed almost around shift in now from fourth for we cable shifted our increased represents This products, and business positive consistent a quarter our has key one business objectives. our revenue total of revenue revenue. Second, with of our diversify to XXX% consecutive the continue XX% as strategic our telco of sales to the with wireless

segment Gen meet bandwidth. for In nodes, of continued fiber the work for update downstream telco Growth nodes was what strong Third, hardware as broadband the our cable demand from and home affecting saw our X in fixed was including products and to growth demand the to quarter. in you order I of in shipments integrated how higher employees revenue business. to our upstream including $XX quarter marked was telco to by and fixed fixed XX%. QX our XX% on sales for continue by now chassis is worldwide to distribution similar both fourth of for demand we around CCAP increased million COVID-XX second point largely in QX, our representing approximately or like DAA driven would growing quarter-over-quarter our

in segment, XG which was some for and products. I to fiber fixed and As wireless, saw includes access products, our of fixed COVID the particularly believe we our XG already, device our evident noted demand is increased which point related. we broadband distribution This

us demand during enabled to Second, our remain operations the uninterrupted meet quarter. which

delivery order supply COVID-XX device products meet our chain as to we on volumes the However, increased are impact significantly, of to our for taking access measures potential schedules. minimize

their as entire leverage the pandemic. quarter. Finally, to able more customer needs meet pleased products with very in and our Scott performance dollars during of discuss with pleased the quarter COVID during been expanded increased will liquidity second to base in the due demand we the our quickly detail our profit improved across to have range I’m and gross how particularly

is strategy, in execute to our on results. evident which our continuing are We

the of ability strong the half first given half to optimistic While additional risks performance our in strong creates performance, macro for about I show second current environment our our XXXX. remain business,

expansion do achieving There these base. be will products customer predictability our and is well more work I ask profitable With well to way believe goals. that, of and I higher want greater results and we are the Finally, say long-term in are more positioned comment our results Scott ultimately growth we margin our we to advancement that for through our to to on of in development done detail. on financial

Scott Bruckner

and Jerry, you, afternoon Thank everyone. good

as flow we exceeded profit us operating will As for wireless enable a flexibility the free Jerry deliver Revenue connectivity pandemic. of result was a COVID as to our growth. we mentioned, during drove EBITDA. of demand structure second which meaningful wireless and suite product And to Jerry the cost We strong an GAAP of demand. believe backlog meet a and diverse financial expectations half profitability greater mentioned, and with profitable products delivered strong we XXXX the grew to improved we We entered delivered also a continue and this growing as for XX we generated Casa. strong cash quarter our

Okay.

million Let’s business during million second million, $XX.X was in turn of revenue our $XX.X second to first and the up compares was quarter acquired from sequentially. in the the at Total was million the results. which internal approximately $XX.X quarter quarter XX% Revenue of NetComm XXXX. above and XXXX expectation $XX.X second quarter to our

prior spending lower a saw XX% decreased was XXXX NetComm, after to in result as second quarter very this spending from of QX customers by catch-up a our revenue contribution XXXX. largely when the year our we Excluding compared the anemic year-over-year QX as of and cable quarter a

if million XX% $XX.X software this contribution for million NetComm services of revenue year-over-year $XX.X of $XX the in or million contribution quarters. which average million and and hardware $XX.X with year from provide second cable And additional of hardware exclude product total million from basis, software. or million cable total and has revenue Now was as XX% $XX.X very XX% last compares been year-to-date Jerry up we revenue of product to was range flat in excluding on To the or past million $XX total the revenue XX% quarter revenue the quarter noted second was a the in wireless. from or XX% to to around due the from $XX $XX.X was million and was of from stable regarding quarterly several detail,

XX% sales two hardware year XX% accounted In for factors. prior last in what which increase terms in total is quarter revenue similar revenue compared to of is by quarter accounted first to the for the during we quarter. The saw primary hardware

quick for cable accounted and we the volume total and X% strong for XX% to First, is XXXX revenue approximately from products XX% during of second and hardware. Cable fixed telco prior from increased respectively and from work which home, of in quarter XX% enabled as of And saw chassis the period. connectivity XX% high mentioned segment. while of the in X% a device DAA comparable all our decrease a because in to transition revenue, access of second, Jerry our which wireless we are quarter saw shipments demand which node the

increased this this QX $XX wireless we year almost million over few backlog margin and quarters. mentioned, through at and XXX% million a for decrease operating acquisition was to largely XXXX. quarter As of margin the the of expenses. next primarily our in the QX year-over-year was in work expectations course expect was revenue in XX% higher year-over-year however this the the the of The profit Jerry mix to gross due by profit of to was higher backlog in Gross lower second higher gross quarter, and the to hardware by compared NetComm. from $XX.X XX% and gross XX% and our quarter we of revenue our Consolidated during driven exceeded

compared we margin flow lower expense the of costs Interim in operating and our near mix and keeping leverage achieved million expenses was in products, CFO inclusion we operating to was Casa while expenses expenses cash higher the second million operating and as QX. medium term the profit operating manage has objectives second sales the with and NetComm that R&D revenue acquired by this business. of our Total GAAP were and been increasing all growth year-over-year of higher our the $XX.X the driven XXXX $XX.X overall from focus in to million of operating increase The quarter quarter management, one opportunities. second our of free As total and on during in quarter, diverse and with $XX.X dollars my our due to aligned

XX% were in operating around COVID-XX, costs Australian expenses put Australian services March However, that reduced costs from due our into to event largely a lower operating basis, and dollar place for travel the include on sequential professional lower expenses. we by hedge

And maintain NetComm. as XXXX R&D of quarter to XXXX synergies our and that headcount our fourth our of finally, gross areas are product our acquisition from resources fourth lower of reduction expect throughout quarter XXXX. implementing Our remainder aligned the headcount with ensure operating rebalancing appropriately level this to of expenses and part sales we

the second XXXX of the $X.X was XXXX. of million to million in adjusted EBITDA quarter in second compared $X.X Our quarter

Non-GAAP million. diluted per negative million Additionally, or posted diluted compares share. GAAP on year of this income GAAP net $X.XX basis, the or a and we quarter. approximately income income $X the quarter prior $X.XX $X.X $X.XX profit to GAAP $X.X was positive $X.X share a for net for in operating million quarter million per or the on a fully an basis, of diluted per was net share negative

Turning cash and as items, XXXX. the ended million the quarter second debt liquidity now of million to cash does million, up to $XXX.X was mature the equivalents for compared with of XX. we is of flow negative $XXX.X Total from $XX.X and some was quarter not free balance and cash which XXXX the end of million, $XX.X $XXX.X million, quarter second which until December in

this and $XX half As business. of continued and to from extended year. and $XX.X to million access current the customers America the a while we In was XXXX from but from end receivable fewer very declined due strong good to the receivables increased $XX.X greater of at at the due the XX to largely in from days. at the million payment to of June device XX, with up million end in collections QX offer than our Latin million end than very our year of of XXXX order inventory remains small in $XX million X% $XX.X at Asia, to number $XX first have QX environment, declined terms volumes was million Accounts of end aging year

off for we as Okay, we strong to of now year second Jerry start are begin outlook the noted, our half turning to as XXXX. the a

the mentioned, through with robust next entering a backlog, quarters. We’re I the will which be quarter working as few we during third

into multiple broadband wireless, and for fixed service embedded that deeply confident across and new of many several initiatives Additionally, our provider global contribute will we our cable growth initiatives with the we our largest these geographies, with of remain product profitability. are to

portfolio volatility us product certain diverse from help should business. and of in more mitigate strategically procurement benefit cycles positioned our our phases Casa the Finally, customers’ has to this to our various

the and XXXX all from year we a guidance full this could we on top Having line believe strong that, stand that we end like and by seeing schedules navigating the component challenges based product in could shipping timing said and where customers. position are that have these as now, So on with impact we completion in do companies will conservative. the deployment be or an our of XG, challenges associated procurement, trial our pandemic and we’re solution

I believe our optimistic during about we strong wait a to half, quarter for said that to end call. higher repeat until however, any previous range. should what gross third margin, our do are gross the while guidance update very second or at we in of be our want I So currently not will This guidance before call. demand access device lower our likely earnings products, profit

now you. help some world conditions meet questions. the around our Operator, I like our to customers operator to Thank would the manufacturers express Before for to we’re back of to call products. turning us to want to start unprecedented work session, Jerry’s echo the increased and the who’ve I to ready appreciation and under the Q&A suppliers demand staff, from deep to words take our gratitude continued

Operator

you. Thank Instructions] [Operator

Our first Stanley. Marshall Morgan Please from ahead. comes with question go Meta

Erik Lapinski

or question. just coalescing there us start Hi if architecture maybe This architecture are Thanks is from on for team. feel MSOs update for our Erik you Can on all an around what if you’ve Meta. give Maybe and is progress different? you still to had us. that on projects distributed an with taking they’re

JerryGuo

cable right at me no point. architecture space, is forward. that. going MSOs everybody answer many this thinking is about the still Let moving There architecture In the single are after

traditional be for generational going the going than what change. it’s figure time take to be to So process we longer and this do architecture right the could them think to is some out

Erik Lapinski

helpful another maybe That’s can and just one. I if ask Thanks. then

Casa having As success between NetComm us just you any are the give and now and quarters if an with update can more core business, cross-selling seeing customers? those maybe you products you’re

Jerry Guo

cannot this of name Definitely, we larger point. are customers, instances we confidentiality base seeing success the seeing at but point. success I multiple a customers at much with and into are cross-selling a because this are of customer particular bit we the the quite

Scott Bruckner

premise other just we about as solve solutions. problems that And for before do products to as rather has noted our one we from to having could the here, had that. but openings that inside extended able our created or since all including enterprises. weren’t acquired us solutions key discrete than the way with products, to customers actually very of comment It’s interesting core we customer products Jerry maybe success add talking that NetComm the network Scott are if for we that It’s I out

and on with both lot the opportunities. of our networks of some that that helping large customers for I call customers on and we some are cross-selling small mentioned is last stuff private creates of think fact, in and our So a we create the working enterprises

Erik Lapinski

it. wondering ask Got margin on if of in front. seen portfolio. maybe to pressure I range just if the hardware, you’ve Thank am I helpful. I then you. from That’s end but wireless And could one at margin any more, mix understand the lower the the coming across gross

Scott Bruckner

No, or off even we’re brand very that let A early again, lot by we of are in the margin saying me about wireless new I fact, lot doing so wireless be and pressure. a start to in of mean XG, talking it’s these in is haven’t what products. with compression price portfolio.

enables it come of really on So I the it’s remarks hardware. we likely the of the environment, we very, more In in One, selling to what the things. that end fact at that are a we’ve my in fact and XX% XX% range is just that then said in low range comment two is we’ve been function of because would to see guiding But would the on say that selling other very make stages I side out be wireless build that, and also business. access hardware talked than software the did sales in device quick of happens connectivity, sales. could this we’re we more before, a about in the of that we earlier what this lot

our the out equipment and as longer-term and for stuff XG deploying separate As deploying work customers premises as cores enterprise environment then by inside networks densify deploy in customer well. a then consumer move radios, by of to their cores and their environments then some build they [ph] to

in us range. the what our couple think I that term lower wireless in access talked So the a telco on what should reflected a products should and revenue near But is services Jerry cable devices helps access even being working will to add-ons next and at guidance those in year. the higher additionally, software about are But hardware of products both long-term saw in device of end we’re the we that margin you to the within licenses noted it’s margin gross products, the see of as gross growing things. well. gross That margins dollars the there while software and deliver that and our and on of like portfolio fixed we’ve wins our higher have increase to diverse several the are we strong as we margin that profit near continue help our over term get

Erik Lapinski

really the Thank That’s quarter guys. helpful. on it. Got Congrats you.

Operator

go Chatterjee question Morgan. comes from JP Our next ahead. with Please Samik

Bharat Daryani

slowing some how This you to second the of is much to sense is activity So the in give just of is made some could highlighted. be with longer Can If more for Hi, the you term. that my just realized sense wanted a versus XXXX guys trial thanks for backlog and XG one-year question. half long-term there much a more of of to get how I us half? is of the how wireless be much a Bharat considering, that comment over seems customer second segment Samik. and you backlog I term the think talk taking on to

Scott Bruckner

then Yes, Jerry I chime some wants on in can maybe answer the that XG activities. to and of

phase products. to get of also current good both in access quickly environment comprised with a the to out noted, the customers build we XG. a function their That’s the customers, some our of trying backlog very so As are was but connectivity of our device portion very, of

those I backlog working is which that would why quarters. that, things we over get could a As result several deployed relatively of quickly, said the through the be next

of anticipate it of to we backlog, working to four XX% the the XX% through lot So three next quarters. a within

Bharat Daryani

I segment. telco If got Okay, just the fixed That’s ask it. could helpful. on

second the term I expecting I the were quarter was what the for can Thanks. does much for core walk sustainability we a us think between telco and than look the it could XX% stronger near of you understand so maybe sense half through overall year. revenue also that in is cable, and you if a fixed and benefit. full wireless the how of revenues give mix But of just the

Jerry Guo

side forward do now. that Let quarters, we indicated that four that, Scott by of do fixed The well as Samik. growth see quarter future year. showing several me telco take the see in quarters is for and strong growth the the rest We continue. about also the this as quarters talked will going trend

We around XX% have and cable XX%. the roughly around fixed wireless and telco

growth and fixed and next drivers We be the a see the to cable aren’t drivers continue see to to wireless stable continues for we the short-term, that but few fixed us. in huge be the for see the quarters. us and in We see growth telcos telco wireless aren’t grow stable. to that We don’t growth

Bharat Daryani

Thank the question. you. Thank for you taking so much

Operator

Markets. comes ahead. Northland question from Please Capital Tim next Our go with Savageaux

Tim Savageaux

others. color the but sounds mentioned. notable. And before, profile product those on geographically good wireless can Jerry, bit can Scott, of to international lot for half And are, be versus backlog element I the little like pretty there looking my carriers a about characterize a Tier across you think wins a if I congrats a Hi, dozen categories. of those spread margin general, is And wins few what afternoon. software think you US given In on you results. it mentioned more questions or I And backlog could questions which that wanted in obviously characterize versus you you just increase or some ask I XG the higher this maybe increase. then, to wins various backlog X spoke XG? guess a the to

Jerry Guo

we We access significant Tim. and two as devices XG of just characterized we they a except the are significant a more but them XG mentioned few more Hi, and wins, wins have and wins are and hardware. mixture cases

others The solutions. software solutions, are pure more more software-centric

a actually as do together. in combo and well continued see progress as a XG we So XG XG

Tim Savageaux

Okay.

So of like half, it expect access commented to sounds wireless for grow you the would you’ve some your on telecom. fixed second fixed and revenues already

you look these at So at -- are I NetComm. guess as least the historical of elements

NetComm You to would second reported in you number strong like a elements sounds expect pretty for quarter. of It both half. accurate? in the that those grow the Is

Jerry Guo

the We expect these access are as because but whole as side them well fixed as to do telco we telco, to grow. wireless to expect wireless a infrastructure the fixed and grow side and devices’ both

Scott Bruckner

there shift start some devices, we’re to customer side pulled virtual going next bit little in having. remarks. the remember XX successes, a of were BNG, we a but well. I Tim, significant noted and contribute the In did the the access right XG Right routers on see now to but talk things several that will the are we infrastructure in device months in side of now, and and you’re successes a we is certain that part this and what the service wins combination multi XG in Jerry software you’re to what access that said balance. course seeing tailwinds business right, mention a sit premise from as also time heavy his we about it’s both our in both of that Jerry of in starts on seeing combination access core access. think we a what lot XX of shifting the over Over the

Jerry Guo

asked as both Tim, with X X about America, another distribution, have in North successes do as geographic well the the was operators question we APAC. Tier operators Tier and in

Tim Savageaux

me, Got I’ll pass question it, and for and the it on. last

if year. stability could You like In talk throughout expect strength mentioned the your without there, the it wonder in puts cable. continue you I customers. and takes that first you the cable contributions the about side you and to the quarter, traditional sounds from though on saw

returned, terms here, which that capacity it be them seeing about demand guess I your from what a overall have wonder offsetting talk drive can of about comments Given is may tailwind might work an theoretically concentration and to profile. but some of stable if might you in what like you from seems be I home

Jerry Guo

spend We place spend in our in short-term, that did more increase licenses. they going operators by driving the is CapEx The from it’s More sense overall as primarily think is subscriber be as and seen you field notice we in to on seen increase news us the the they of at demand and welcomed we hardware hardware subscribers. increase also they least stable. increase the we the to upstream have can cable growth. and software real for COVID-XX orders haven’t capacity actually is well footprint number bandwidth and the for future But driven have, the tell that increase the operator’s we haven’t

Tim Savageaux

Great, thanks very much.

Operator

to like to Jerry Thank you. floor would turn I for closing comments. over the

Jerry Guo

operator. you, Thank

by expanding to cash us flow. joining and and on our today. our footprint, the believe executing continue to have quarter. diverse in our product mix. progress us improving to the for a we profitability continuing diversify critical As strategy of earlier growing we on two remarks, our These everyone Scott and look We team you you elements to right our updating and focus our allow business I Thank own mentioned next revenue will free forward

Operator

teleconference. today’s concludes This

thank participation. lines time You may for and this at your disconnect your you

Casa Systems (CASSQ) 2 Aug 202020 Q2 Earnings call transcript