CASA - Earnings call transcript Q3 2020

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Operator

Greetings, and welcome to the Casa Systems Third Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator or technical assistance during the conference, please press star 0 on your telephone keypad.

As a reminder, this conference is being recorded. pleasure your my Jackie now is to host, introduce Marcus. It Jackie. you, Thank

may You begin.

Jackie Marcus

and CASA XX, afternoon, for you, good Thank operator, everyone. after market quarter XXXX, afternoon the of Systems ended this September XXXX, the closed. third results released

Financial copy With receive may from call This Chief will Jerry me Officer. Relations on did Investor earnings our of Executive it our Scott Guo, a of today's you the being release, of Officer; our Bruckner, is If website webcast the archived section be not you Investor obtain at Chief section and call Relations investor.casasystems.com. website. are and on

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

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

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

Jerry Guo

you us joining quarter our discuss third thank as results. everyone, afternoon, today we and Good for

the highlights operational, We a North telco shipments. Europe to delivered into the wins our from our and third is in The fixed QX. fixed strategic and products momentum APAC. number third very with America, This competitors. We in line wireless of during the sequentially. financial, The performance revenue telco our million, our our our of indicates year-over-year accelerated and our drivers our to business, our which in majority exceptional double-digit share growth top carriers both that came now grew growth increased. for are that I'm segment This of presented visibility and quarter. wireless several wireless backlog, quarter us. had net again quarter Demand products. growth, pleased revenue technology over good of evident in for validating $XXX have major We

this important our business an gratifying So challenging point that revenue we What's globally. year environment are full inflection turning us guidance. raising a is represents point for particularly for during comes CASA. This

and We They have and the during doubt, The deepest a Systems demonstrated best-in-class, people without inspiring. for truly are, my Casa these work hard commitment times of was to unprecedented they this. gratitude. thank have they

performance. Now on the to

base. We customer our we During profitability. QX, improved grew our line. We position, top we cash our diversified grew and

$XXX.X growth our in continued quarter year-over-year, business by increase and increase that a driven million, Third revenue were sequentially. significant fixed This total a a robust marked improvement and wireless. telco was XX% XX% in

telco direction accounting taking business, strategic the consistent, revenue. This delivering As of our now our $XX.X of the and was which for we XX% fixed steady of expected, cable company. bulk million have represents revenue.Wireless in and been validates

primarily our that we one biggest the is road at primarily as misconception Amazon are business. some, transition. With the is look current is say about like saying challenges we our held ahead, we anymore. seen as of is revenue dispel books. a So, that accurate of cable, to cable mix, That to had about the characterization a commonly only not nature To CASA in is supplier simply about

to milestone, add for new achieve QX the and we wireless product our this strengthens we of new revenue As beyond. products. and customers in foundation growing continue This fixed further telco

Turning areas. core, quarter year-over-year, XX% and XX% small products. in third Wireless cell was revenue the of core, sequentially. CPE, mix QX fueled increase product wireless small XG-XG for $XX.X to our radios. and a was a revenue by Wireless increase a million, cell acquired and cloud-native organic fixed

enterprise networks, XG the in premise of which additional added during device, millimeter continued focus We deploying and are first part project Asia. a lay XG access core in private cells, Tier Additionally, X operator wireless fixed large-scale mobile North customer wins America. foundation we a operators the unveiled access high-power wireless the wave trials. the new quarter, to are our for with revenue. and North enterprise And customer small XG in we cloud-native for We in on and now XG-XG our America

that we across growth player will we customer QX, a a saw wins America. new with and Casa XG.In QX, All portfolio, fixed key $XX.X saw year-over-year of fixed a product representing North as point proof XX%, million, also growth Europe and significant sequential In also of be XX%. in telco this revenue Tier serves in of progress X telco our further of

been in of products. of is This we have resolved. times continue to This What quarters, to two products. COVID-XX shift business the address shipment transformed, of year our we gone Revenue delays quarters over last wireless have which QX. for of QX, To the and our cable. $XX.X been related drive sense X growth revenue. sales been to demand cases revenue On supply just the you steady. past a give push for limited clear percentage have our chain, backlog short-term all to In lead pivotal telco seen fixed was has our the a our are now from some into from some our XX%, almost degree as could of Turning continue relatively Cable ago component little to a our to a of over has XXX%, cable million. business.

fixed the demand Finally, our I'd year-to-date large performance that wireless track we revenue to his macroeconomic for raising detail of you guidance for our are our base. of fourth our as to high like our guidance our In are our increased long-term to exceed customer we the outperforming Due believe environment. a the will in update expanded optimistic spite provide full outlook and end with telco predictable are Based our moment. and results visibility on profitable we remarks well range. our a year to ability about million drive $XXX as more fiscal and revenue products, million. challenging $XXX on to summary, am quarter we expectations in I Scott to backlog, on more the XXXX. from in enhanced growth

our is ask would detail. done, we discuss to Scott there to on like more goals. performance While are in our that, well I achieving more to work way be to With financial these

Scott Bruckner

you, everyone. Thank Good Jerry. afternoon,

Casa, backlog. cash profit, of both sheet, telco we've told operating Jerry that As coming strong in and third significant revenue sequential with most mentioned, mix of would this line, fixed non-GAAP was top and GAAP quarter. EBITDA, wireless products, in revenue saw very significant been results the what sequentially, in now which increased we our progress, business increase wireless I drove perhaps and our our deliver. saw exceptionally dollars, It had I'm XX% as you our we gross on seeking, EPS we from our tangible growth and year-over-year the for higher an the and was profit increased and shift leverage in And quarter pleased a is that year-over-year sign balance operating the we higher another and our quarter

Turning sequentially. our XX% That's came quarter the and XX% to at third for $XXX.X Revenue now million. year-over-year quarter results. up in

growth, the hard is back been working range of to. this terms exactly In we've to get that very

To going is the Jerry of by our digits. XX% Looking a of at wireless sequentially. was million, in sequentially. year-over-year our while $XX.X And revenue. was and business emphasize XX% segments, growth was and at million, quarter cable for up is XX.X% This telco down driven up year-over-year of the that and up in or the point XX% Fixed making, came revenue revenue XX% cable this at $XX.X of double revenue, for XX.X% was product or XX.X% million, our revenue or percentage came $XX.X overall by revenue. quarter

in for was While to to margin for gross of our quarter from GAAP the R&D is while an primarily million million, to quarter for increased and allowing second of higher expenses were quarterly year-over-year be quarter third our increase in quarter the $XX.X expenses what's relative at in profit due growth operating also to financial commission XXXX, quarter in $XX driving XXXX. Adjusted million. down our to XX.X%, the second a the in relative non-GAAP investment year-over-year, expense us the leverage. that's of the of fueling XXX%. million. $XX.X $XX $XX.X X% and That's third Sequentially, XXXX. resources was in up operating over $XX expenses up million. XX% and GAAP decline that's the Non-GAAP I quarter GAAP third X% in gross our further our OpEx in growth XG. and to and Total sales increase on XXXX quarter to to quarter This the increased significant million, also EBITDA slight came in is OpEx the of up third the The was from quarter X% expect continue XX%, average an from a P&L profitability reduce relative sequentially. and operating range XX% decrease from our

non-GAAP million loss fully the the a profit Provision part $X.X to million, expect came the or in diluted net compares million figures was income second $X.X fully the a from XXXX.Non-GAAP year significant per in of million, that a income able the share diluted Additionally, XXXX, a quarter which million, is share GAAP income fully net diluted of quarter of sequential being net of improvement loss of million, was net of $X and million third for second basis, and for $XX loss Act. $X.X tax take net representing an significant in based $X.X per third benefit share before be $X.X or in a of a $X.XX to the $X.XX profit approximately the relative $X.X we on and well. as in a and in fully negative on XXXX. non-GAAP that's increases we we GAAP of share, $X.XX this million negative quarter delivered and per of tax tax operating $X.X third anticipate $X.X to of per income full million quarter CARES and or to adjustments for XXXX, $X.XX quarter or the diluted of million at both net

steps quarter, the to timing to of of end $XX.X receivables this the to has of that very receivables a our our the our $XXX.X the to disruptions to Shifting debt of our to million to XXXX, immune we increased drew in greater QX. mortgage term And turn our now deadlines. sheet loan our balance by and increased And certain the will to have impact than aging a me mitigate during balance better $XX.X which discuss attractive, balance office B chain. ship to of X% a less during our of the X.X% sequentially, increased of volume any in during of Accounts our million of we order mature we inventory expect most due with cash Look, $XXX.X in in COVID includes orders spite managed and brought, try QX, until this million, and ended to at down days. remained the with We supply year-to-date. by executing good on was take profile. up $X.X the Let continue quarter on portion the increase, quarter increased XX than quarter, our receivable Andover and as facility. backlog, we quarter. and That's that was reminder, which doesn't are a revolver briefly related liquidity and Total than in million Total but customers. refinancing delivery not to we million. the the XX% bridge

outlook. our to now Turning

We revenue range. full of year-to-date with at are of entering year end the fourth achieving toward high revenue XX% the the guidance our quarter way

momentum and product is During at the new acceptances backlog year, and and backlog during our orders, this as XG stronger revenues products. and mentioned, both Wireless increase the of expected, in increasing saw net with at a than end backlog, previous XX% includes our That's QX, Jerry and from our we $XXX fixed new telco stood the of activity growth deliveries, sequential million. quarter. our significant this in our

possible that are full a on we range. the year uncertainty with it, exceed track of absolutely COVID-XX guidance brings to our end second believe While of wave high we

of up, are a revenue, substantial So, The to be net million, diluted be updates line; gross at as $XX $X per but full or revenue, in or range $X.XX $XXX million million $X.XX per million diluted Jerry already the range, million, likely $X.XX dollars Gross profit share. income margin, updating share; net as year GAAP million. that between for hardware we mentioned, a comprising we fully non-GAAP tax be between and of follows: between our full expected and million; and gross $XX and $XXX benefit to in book we low revenue end guidance portion $XX and $XX $X.XX to will as our expect EPS year, margin income $X to fully both with to just expectation very higher quarter. the adjusted with well are I as based profitability our the fourth of our that revenues EBITDA, outlined higher on million expect substantial between

of really in performance proud we're our year-to-date. So, conclusion,

said quarter we our to This we execute ability demonstrates deliver. what on would

want manufacturers Before echo to the exceptional to difficult call worldwide suppliers, in to back Jerry's want our I and who and operator, to kind turning do I words, the do express work our these gratitude to continue times. staff,

the Q&A. ready we're that, with So start to Operator?

Operator

Stanley. from And our Morgan Metam with comes question Instructions]. first Marshall [Operator

Karan Juvekar

Meta, Karan for the Juvekar thanks is on question. for This

is XXXX? So I growth, in when to any fixed ask completion it risk just comes wireless want there quickly, project-based to

Jerry Guo

We don't believe so.

We control. acceptance, have with under multiple product been new customers working well on believe we it's

Karan Juvekar

I thank just one could you, if Got more. it, ask and

And On mostly the you software? the that where seeing growth, you look at the pipeline, or is a like composed wireless business, of small could cells you're give what sense of? as

Jerry Guo

products -- we so the in that segment. we know wireless Yeah, you yes, have do multiple

core, packet growth wireless categories. and see cell fixed and We devices, have small the XG-XG access all do small cell radio. We core, in

to able not at are them actually We segment this point.

Scott Bruckner

I I'm it's very Yes. XXX to say and that, the a of products. the that just in close I I to our from products, and pretty small all wireless radios, then that enterprise, access one would to cell core backlog, extend the private thing small probably add backlog. -- of of would good would mix also cells, our that million for fixed networks also the

Operator

question comes Stifel. next with from Scott Our Fessler

Scott Fessler

but As heavy, the carry hardware which margin more deals start other term? on XG still on to flow net in, the are likely should be better margins what effects than XG, longer hand,

Scott Bruckner

we on that. look, necessarily don't focus So

that our of evident terms I what line last product software, and mix, the quarter, focus is dollars. the hardware profit we growing our growing and In think was gross and on, top in

And the to that's As an continue gross focus. the exceptional I that be P&L. mentioned, quarter, this XX% achievement, on all grew think we and the the second in way year-over-year and our was that quarter will from where evident third and drove profitability we XX% down profit that,

Scott Fessler

sort software off very Great, is of in that of beyond the piece, going running work with the hardware it, there over that services hardware? then opportunity there installed, thanks. then on or is coming with high-margin software that for once top an And

Jerry Guo

both. on Yes,

Operator

[Operator Instructions].

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

Timothy Savageaux

couple a of Just questions.

the material depending slightly, are questions on applying you of any do the we I between segments change maybe revenue-wise, your kind side that. capacity kind given budget I seen assuming mix in from way a have range. a couple to of to what some expect there. where As flat not you're up QX? add follow-up I'm historically, of you're the your a or cable QX to -- into QX, mean, of into And flush And look we've around you in commentary about any on margins, QX? building

Jerry Guo

you. thank Tim,

point. yet at but tend looking well as not point. still final to backlog that. at you new the answer are at We on as want customers this not mix to to drawdown do year-end that this bookings traditionally, we know count the have We're our both -- able budgets, We the

Timothy Savageaux

margins. for you of margins the down to on move Okay. Well Scott, margin, guided I'll low low the year. the right of to the then end gross -- range end to the

question talk mix. my when kind so is, And hardware-heavy a about of you

this -- more also in comment focused the anything adding mix and or at fixed having adding margins segment, case, look that else, the -- does wireless capacity to think moving or is quarters that been or on do previous other a we hardware-heavy those terms in the around? of I what's address as also as telco year, maybe has remain that cable hardware issues. Is

Jerry Guo

me let actually mix. product from Yes. answer Tim, a

side, have hardware segments. side, nodes are far And chassis all also in we quarter the this in On we CCAP cell we fixed have telco the a have as in hardware for radios, all past and products And devices cable, wireless and we components. fixed and QX. in several have as do small we DAA those access DPUs the and did mixture hardware see

Timothy Savageaux

the me. in Okay, real question I the and the quarter standouts last be Obviously, real distribution down for to the on among you if drill able might in terms wonder either telco what's or copper of side a here fixed is give color fiber that us geographic high-speed customer driving kind or application little of point more versus and standpoint or a growth? from growth.

Jerry Guo

growth. driving to and probably do bandwidth it that, shipment is we general, of quarter. to the in bandwidth in driving hand, But that the the Well, it's on drive demand of is growth And COVID-XX there hard demand demand find separate those. other we some see that secular continue very this

Operator

back time. for this I'd any like remarks. to at are Thank no the questions to floor Guo closing you. Mr. There over further turn

Jerry Guo

operator. you, thank Well,

to and well of quarter. next We our earlier progress network you, advantage on shift and the us look mentioned of functions to in today. updating to we XG remarks, for Thank positioned Scott our acceleration cloud. the I are take joining everyone, As you forward

Operator

this and Ladies gentlemen, concludes conference. today's web

at You may your day. time. disconnect this great Thank and lines you a your now have participation, for

Casa Systems (CASSQ) 28 Oct 202020 Q3 Earnings call transcript