CASA - Earnings call transcript Q2 2021

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Operator

Greetings and welcome to the Casa Systems Q2 2021 Earnings Call. At this time, all participants are in 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. Jackie. you, Thank

begin. You may

Jackie Marcus

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

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

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

conform reporting, GAAP Generally U.S. to certain Principles. measures do addition report to In financial that Accepted Accounting we not

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

Jerry Guo

for you I pleased quarter Good for our a Systems. quarter as report second us results. discuss another to that am growth was Casa joining afternoon, today QX we Thank everyone.

strong with and wireless of momentum wireless of products, advances XXX% now at highlights, revenue in in million, are a the top half Here stands and that in our makes quarter products. year-over-year, our numerous increase growth which XX% over This total some new line our for our consecutive our XX% of revenue $XXX backlog, growth offerings show year-over-year continued over year-over-year revenue product of from the wireless all strategic our comprising growth our customer four quarters demand with fixed growing products. products telco wireless XX%

the customer orders virtual are for in and Here orders XX products. purchase and for purchase for for an XX a wireless in quarter our our virtual increase fixed widest the and nine new and CCAP, XX the numbers and previous our from fiber expansion orders purchase quarter. new product radios the XX cores, DAA to router wireless count

the comment I our Before on I performance, to like second review supply would chain situation. quarter ongoing

business on software our know, both products. relies sales of you and hardware As

While our hardware for shortages seeing software products remain our component products. unaffected, we are

During year, were impact shortages the the take minimize business. first to half the our on measures that these we able of of

two for this our see can You results the in strong quarters.

QX, the has continued since to end of situation worsen. However, the

out seeing are first being and further times component we result, delivery lead increasingly schedules into a As pushed extended of XXXX. order half the

demand year today continuing to business, we growth. are to from we the that's as our that remain of demonstrates our to guidance contribution backlog on our believe software driving large As I meet given track our full benefit of strong and

XX, at be That's up our results if XX% turn issue revenue came note let's we said, reviewed performance, $XX.X would the to June EBITDA supply profitably. our performance. half I To was XX% have revenue and up quarter and the Total look XXX% performance initial half $XX.X our QX at of year-over-year. fiscal QX like first year-over-year. adversely XX% over XX% continues delivered in was that of XX% guidance. of This we perspective, revenue as that this for was delivered the that's our ahead year-over-year $XX.X of million. chain numbers expectations the we is XXXX chain transitory, could XXXX. up put of fiscal situation these XXXX we as half With our impacted. And to deteriorate, million first million if up adjusted while adjusted supply However, the EBITDA in first to

wave And the Amazon quarter. a product. quarter. cloud significant product on continued wireless using our of a revenue by core platform, I power solution. Red technology. and over was network now wireless We been to multi-access industry OpenShift, access product. cloud in with as deploying device, a industry-leading AI proud core say services performances, but few, wireless along relied with meaningful core XG with Optus in first Intel to fixed and our quarter cloud wave and naming over our enterprises networks saw Red now millimeter Europe's we the deployment user network wireless each a our of Cloud native Turning Casa's in deployment the millimeter service multiple industry core connection. world security, great for gigabits starting and broadband now These end fixed core fixed are Truly addition XG announcing of fourth we deploy private and personalized to Kubernetes fixed world as unveiled and access wireless the receive that that second, native wireless of record record recognition year, these progress native using XG XG XG year the set world end a single application differentiated that to private noted XG speeds wireless. Orange per reaching up cloud we and in This working our leading roll is XXX% second with XG Aura featured providers the our Australia has Not five to access to name of Google web XG I'm business for our demonstrates Casa's customer and records peak including for To XG XG areas wireless higher only On and of that our That and last its differentiated out, Hat, a strong on XG and the devices have year levels converged fixed wireless our partner Casa Hat a performance. our allow customization several after on

Okay.

revenue but $XX.X fixed on up year-over--year, This telco, is XX% Moving down telco to was X% it's around sequentially. fixed million.

progress due concentration. is This I I are well. seeing again traction in lumpiness and product reducing second and are our has is telco quarter, As also in concentration. gaining last this the then revenue mentioned that we been making to customer we fixed ranking noted

in demand we seeing expansion product. the reference, and For increased in our nine are our purchase received quarter this we orders virtual BNG the for is fixed evident the telco router fiber for and

turn with for cable we the million quarters. Well, QX, in quarter was within last the million In revenue is several cable, to this to let's a we expected, have $XX $XX.X products. steady of our with as cable advancements the million. seen nine range Finally, the $XX qualitative had

from competitors. footprint our First we taking expanded share some our of by

MSO license we of then Second, customers. capital some note an virtual and acceleration our saw in by

to this While clearly up we spending will make cable infrastructure very still gradually, positive and ramp a decisions. that believe network is CCAP DAA more operators that time halfway virtual ready are

with to detail, financials and next over would turn reiterate to gen date. pleased our the our very like I We Scott am progress progress that I call walk in did made with year meaningful Before delivered we growth. profitably through products. our We to infrastructure to I still

impacting shortages, opportunity turn For that our like as call with the do the Scott? hardware for to we an I continue to remainder the of to Scott. supply over see our to to year grow said, grapple products, us revenue. With I'd continue software important

Scott Bruckner

Thank and good you, afternoon, Jerry everyone.

quarter build to pleased Jerry's really our second with Just I'm very on results. remarks,

noted Jerry the and strong liquidity over delivered addition great operating business areas, leverage. revenue, profit a growth ended our with we are product we In sheet, the year year to quarter results. lower and balance in all enhanced achievements These EBITDA in and that

Okay.

$XX.X revenue, million quarter XX% revenue Revenue this and product in mentioned, services came these in quarter, $XX the at and including our at look detail. or across results lines, Let's of second the breaking Jerry in as this wireless second our total was fixed million for and second was XXXX. or of quarter revenue, came million including of the Cable revenue in revenue. increase significant $XX.X services at the quarter a XX.X% revenue telco XXX% $XX.X of over XX% was or in of total million down

any of million. shipments on was GAAP margin $XX.X first income gross mix. came building the schedules. at Moving in to year-over-year. gross XX.X%, XXXX, who than QX X.X% up quarter, for and from for note product the just statement, rollout in was a That's expected in customers down, wireless XX.X% the was product larger quick it second half XX% up margin We the profit component of but quarter gross impact CPE on shortages GAAP GAAP inventory mitigate driven were saw by from the their margin

the were see compared $X.X payroll as quarter benefit second of of the offset operating quarter And for quite XX.X% and the but XX.X% compares a Turning to at million. this and in favorably at quarter expenses, these higher revenue higher this same by year, represented did we costs was GAAP of relatively OpEx of expenses stock-based XXXX. over OpEx XXXX, the year $XX.X flat for year to compensation of And second tax headcount this quarter of to revenue million.

You benefit this provision from in federal may lifted XXXX benefit also Act was when ceased the saw in restrictions a the the recall first the of that unfortunately COVID we second Cares and quarter quarter. that government

in revenue GAAP quarter million results in GAAP however, revenue was million up the look the XX% the to a million million. will and $X.X $X.X on we prior between the quarterly in income of year-over-year. in that's per net quarter other and profit under $XX.X fully the expenses quarter benefit share be interest a expect was If $X tax diluted came of and at year, don't of was the as quarter, basis. EBITDA After EBITDA up million, and operating million, or loss adjusted have second likely the or year $X.X the the GAAP million a profit $X.X I we year this or XX.X% and half share. on the just quarter increased in from quarter million basis, per XXXX. fully of XXX% for non-GAAP operating $X.XX quarter the relative at the provision second negative XX% a see So or did of our $X.XX that's a for OPEX to net XX.X% of which Non- million of GAAP second of second of $XX first diluted And and from this Adjusted result, $XX $XX.X second XXXX. half XXX% the remainder for is year. was up from

Okay, and our a with at sheet. now We turn increase balance to let quarter working ended me a looking liquidity working XX% capital the position our strong in in very year-over-year we had cash, capital of payables at of $X $XXX.X million $XX.X $XX.X quarter net million, and in restricted and end, $XX.X receivables of million. of that cash million inventory million includes

XX.X% XX as quarters I've mentioned the cash balance days. our increase collections of with Now our X% very remained by primarily balance quarter. row, than driven AR greater up for sequentially cash less than several in a and finally, in was in the receivables the agings strong was And

Okay.

year. quarter, Let's this million look at $XXX.X million that's of the end the the at debt, and $XXX.X was debt from end at QX of down our of gross

reduction our debt second just LTM against net term from at in is now to due Gross gross The mostly loan loan was million million principal currently cash stands under EBITDA balance. at last comprised and we XX $XXX.X quarter times total leverage times B X.X million, $XX.X million X.XX from our with of debt flow is in months the payment Our net revolver. $XXX.X and of an our leverage term excess B made $X.X debt EBITDA.

I a supply Before guidance revenue opening had of We've strong a our issues and our couple quarter strong for the of mentioned, chain, to seen to us a second call want things. do we've delivered our in questions, ahead the and of initial as XXXX. half year this puts we the mention Despite XX% the full expectations first year. for already of Jerry

our as as situation, supply business. is the few in Jerry facing our minimize for in on the the order which industry focus everyone to noted it may know, on impact through be quarters, next However, chain our working you will have

As we to the with. is thing do I this and final you want this leave that

balance demonstrates orders Our been continue and needed as for we a the company inventory has leveraging sheet backlog to In the seen we've of strong for large never in we'll leverage we've our procure industry-wide very long have stronger. that lead growing spite our large disruption and our products to as been demand backlog.

said, the we'll that With turn for back to over Operator? Okay. operator Q&A. it

Operator

you. Thank

be answer and now will Thank a instructions] conducting We question session. [Operator you.

comes first with Marshall Morgan Stanley. question your Please proceed question. Our Meta from with

Unidentified Analyst

Hi, Dave Wakako for this is Marshall. on Meta

Castle make due to wondering, there a mentioned slowdown pause on and in labor seeing deployments business? you the of deployments. for to Are side room cell So macro I so are allocate Crown cable any the cell expectations was deployments small changes small in to Thanks. any

Jerry Guo

Let answer demand see to small question. that me We're continuing cells. for

improve. continue deployment term, be and we, cable as to we situation it see component were may about the could short but be basically by signs. the Of closely impacted feed course will do watching It and positive to cautious

Scott Bruckner

cell thing point. to one would very side, small I add just the to that Jerry's on amplify just quick

think could And the wireless. impacted not a slowdown in bookings potentially we be we've growth is quarterly situation, particular in the that and in what deployments in fact are that's wireless the So in growth demand. business by our in while, in we seen chain seeing the evident supply in our

deployment order, customers our plan throwing is with to the supply what just continue to grappling our everyone's side continue us. and So at customers for

Operator

you. Thank

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

Tim Savageaux

wireless talk there. Hi, so a you mentioned good it strong well, did down dynamics Couple on order Wonder me? backlog come like you the questions kind bit. side of the afternoon. looks the could Pardon if about of dynamics, as

the have some principally by and significantly and year, this up products their backing of what wireless over market estimate pretty of of radio flow? couple Ericsson XG, sort level access more higher optimistic maybe CPE also You'd those with a Nokia views cash to some last the pull-ins of and driven impact network of mentioned on growth do weeks increasing

Jerry Guo

orders. and see delivered backlog the significant -- million with that is $XX.X We quarter last in a part new wireless. the you replenished products We

backlog we categories the have and we overlap the at time due So wireless, still the necessarily very And don't small And demand. in to the cells. have strong all with the categories. same core, products, delivering the new after a of wireless we Nokia the CPE, three of their

take wouldn't positive data, and from view. I So vendor's say negative one a

Tim Savageaux

great. the good Okay, characterize Wondering CCAP follow if and I number had on cable mentioned, remote pretty up if of POs the in space. can And those. could side, virtualized you five you

in kind any You've what small of an does significant know deployments movement the order virtualized more back, the you've seen and activity? you that I half? at or rows, -- remote initial you deployments in big based say expect is of are broad and to your you five, terms relatively got the is a of how had past do that to but point, that terms compare this in in it that operator factor toward while be important would CCAP second one

Jerry Guo

I would more broad-based. it as characterize

as operators. operators, from smaller both tier POs as well one have We the

deployment architecture it course chain. ramp the Both the slow. as gradual as impacted is by of partly relatively of by still supply So is and DAA more pace well broad-based

Operator

Thank you.

proceed your Our with Simon from next question Raymond comes Please Leopold with James. question.

Simon Leopold

constraints But for the your the taking in if how question. for will just looking a One about original a of mix is expectations mix in you I talked for expectations two in bit I gross and a bigger could segments. software, year, end software to second mix up terms bit supply of you part wanted the Thank the reported talk little follow-up given margin it you have one sense of of a then got tailwind is insight year your feels about the than and the is little for a like your I'm maybe should half of dimensions. see full other what you've your in chain versus see

Jerry Guo

you very gross the the impacted actually product see to margins mix. be to mix continue our our half gross much as to wireless big that's second by as margins, On the component and noted we a to

be We the hardware. the the and at We to ship both point still this certain yet. continue mix software that cannot

Simon Leopold

we constraint you chain there the primary are really about for worthy other supply wondering general, the of that's think in of highlighting or just a terms hear known, are that whether sort semiconductors, that you. lot so issue in but of feels And constraints

Jerry Guo

semiconductors. Mostly the

Simon Leopold

on then layering and business And into regarding well us point, if update thanks. thoughts stimulus opportunities art finally that give are just what an at both programs, as about how here, you your you thinking could government as other the off abroad,

Jerry Guo

continue we we quantify to quite we customers, few cannot but that program, with encouraged which programs. I Yeah, are that be still a by in government are engaged yet. that know

Simon Leopold

taking the for you Thank questions.

Jerry Guo

Welcome Simon.

Operator

comes with proceed Please with Stifel. [ph] next Our your from question John question.

UnidentifiedAnalyst

thanks Baron backlog [ph] comment. on the I question. for back to wireless for guys, This taking Hey go the to John. is wanted Jim

a customer bit that the had still of indicative on trial some or good newer sell You that guys sequentially say little are orders you really pretty ads saw that, these net more you geography maybe size customers a earlier what And kind quarter. some by additions, us along breakdown yet. where most could customer of the these just, ramped of if aren't sort Thanks. interest. you give Is

Jerry Guo

delivery backlog wireless our volume of as new ongoing production customers. products well a both -- early Yeah, orders production of phases as like consists

you numbers. saw the because So,

number customers. it's pretty of large So a

-- So of those there's a order things expect continuous we grow. the spectrum and to do

Scott Bruckner

Jerry disruptions chain really through the from significant industry. you saw quarter order about fourth the that's quarter. first if to And more of Yeah, volume the a I started size just would, quarter the the year. want that. do last from moves the I fluctuates remember, Look, of supply comment jump our to quarter would that backlog as to I we to news out add said, very when around, one point resonating

and the the rollout on to particular, could customers our lot schedules. their side a ordering product so of to ensure CPE start up that they in business products jumped And meet of

QX So we saw to from that very first QX. bump

very the expect quarter between through and we that first the year. bookings and saw the also some We nice do backlog to second quarter grow

UnidentifiedAnalyst

about your customers to, wireless geographic you in And of -- then mix could quarter? the talk your wireless sorry the

Jerry Guo

Yeah, so other regions traction it but seeing What in other regions was North global. also, well. more moving also is America we're we as see aggressively

the North America the wireless. in was for quarter So largest

Operator

any no are closing would to to There like floor time. I questions Guo you. at Thank over this comments. the turn back for further Jerry

Jerry Guo

us today. for you, joining Thank everyone

Before I to fall. later System everyone hosting that will Day end an this be the Casa call, Investor I want remind

details We the September have because turning changed very period investors in events. timing out of forward with other look the what more scheduled for our you is to busy look next the the November us from a you. our Thank progress months. event our press today event release coming to Please in quarter. We to of and for be September the appreciate on with joining sharing

Operator

This concludes today's conference.

Thank wonderful time. for Have disconnect may your evening. participation. you lines this your You at a

Casa Systems (CASSQ) 30 Jul 212021 Q2 Earnings call transcript