CASA - Earnings call transcript Q3 2021

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Operator

Hello, and welcome to the Casa Systems Third Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. A 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 turn the call over to Jackie Marcus, Investor Relations. ahead. go Please

Jackie Marcus

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

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

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

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

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

Jerry Guo

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

start solid year. know, our very fiscal you we had a to As

cannot now say and what and During the I impact any the about third profitability. record we the delivered growth successfully supply are half, managed we issues avoid widespread Unfortunately, quarter. very from to material first same chain

by deliveries As chain that lines across our To seeing delayed approximately some to million. industry, add impacted supply worsening amounted across were estimate results we issues. quarter are we impact $XX our our product the revenue the in from third quarter color,

global towards facing now the order we shortage times up year. QX, certain during components a With continuing over are for lead

lower revenue Finally, chain meant profit. also from supply year-over-year lower delays gross

to was in Our quarter. lower delays each products few order the QX QX. also revenue percentage of a expect software from gross This higher margin profit as of than because in customer we recognize normally resulted revenue hardware we that see

only this While and that expect and challenges we to fourth XXXX. supply logistic for are year into anticipate quarter the least of them temporary, continue likely we at do

are you earnings on did we our that would I out, the provide is in they laid later will revised on saw previous call. in bear remarks guidance revise reality. worse. Unfortunately, as our supply guidance we As our release, updating assumptions mind current mention and chain just our fluid. We very his our in if this assumptions please supply that situation this chain But reflect have. to got press calls Scott disruptions

results trajectory. So is to our information quarterly want reiterate have that guidance I the diminished we today. in said blips Having growth long-term on our expected best revised that this, our short-term no based in way

products, particularly continue in we wireless. growing demand to fact, In see our for

fully backlog materially and mobile deployment continue the our to across very and we RDOF, networks. expect from products of private large a We have to our benefit XG

this our about all details more our growth expectations of provide will and Investor Day. We November during about

with rural did Bell’s broadband customers solution. in a to the bring will and solution devices disaggregated underserved communities. open Sub-X software towns Bell communities the several Vodafone in that core believe an Access hardware only agreement We small Canada vendors. our wireless see Wireless shows constraints QX, Home packaged to XG exclusive packet in a will as access tested a While architecture XG tough successfully industry-wide and a a announced by supply name that multi-vendor successes the industry chain to being to for fixed can service. and BNG and BNG product Casa's rural and the the deliver provided this made combo Virtual Fixed by Mediacom we disrupt provide few. This multiple logistics innovative significant in high-speed Wireless first devices separate to our And new Internet areas. a router We work reliable Virtual with Internet the quarter,

[separately] As in services. me new revenue to reflects which let launching to features such, and in new supply deploy it customers turn time With chain came at helps results, said, and again, Total our market quarter to for their that revenue significant million, scale the headwind. $XXX comparable the our enhance the over over of XXXX, of EBITDA period a three quarters a up XX.X% was decline $X.X first X% year-over-year. million. million year-to-date and XXXX. year-to-date was EBITDA million in however, EBITDA a $XX.X On of basis, up X.X% in was Adjusted $XX.X

and continuous our Wireless areas, Access supply our total with the XG, that’s it in represents quarter. our growth in starting in to wireless. million, product Core success XG $XX.X revenue chain up XX% from up Despite came was and sequentially, revenue XX% revenue Packet XX% QX devices. on headwinds, Moving wireless Wireless year-over-year of Fixed

$XXX.X the remained and Our million. stood end of quarter wireless at large backlog the at

like Hat, we in cloud the as with of well to adoption. customer Google, Intel, earlier, as successes recognition continue terms progress and solutions, mentioned addition cloud-native terms to In our make XG I Amazon by in industry Red both product leaders of

the just network as continue mitigate to In will mobile of by seen wider we network operator impact functions North chosen and name supply mobile couple. major fact, to region, chain the software a hardware American And our to network cloud gain a a cloud-native have we finally, XG our core operator products APAC have a mode traction, in disruptions.

and was QX of total revenue in on telco. year-over-year, This XX% our basis. Moving sequential but XX% Fixed accounted down up to on revenue. it's a is for XX% fixed $XX million telco

we telco is lumpiness to are believe growth in with both which seeing BNG expansion product been revenue XX% the mentioned, previously I router evidence products to customer have that in and and We this product concentration, resolving. fixed that fixed area the our traction, towards gain we has is sequential due working been As telco Virtual beginning products. our fiber

new let to product our on moving that QX from wireless cable, of revenue. Before for areas revenue XX% our accounted out and fixed point me of

million, quarter Finally, let's turn the in or of revenue. revenue cable. $XX to was XX% Cable

that life down quarter. $XX customers negative was each of the most extended While impact, this been opting Remote Normalized this would a in the impact supply this they was for and relatively have chain that [indiscernible] cable. we from revenue with believe of they split In their range MACPHY. XX% we supply $XX cable stable year-over-year, majority high million to been architecture, to be of have mid note seeing chain in within deployable million while also our await spite would I for existing cable issues, demand in as continued invest our

and for customer team Scott. the exceptional the and of that to our who our over quarter environment, our in products company. customers the Scott? turn XXXX, developed continued responsible efforts expanding like revenue call base. said, Their are chain for over have With our I'd and we supply success and our the to the best-in-class to members to hard turning detailed to minimize remainder outlook worked thank for results our call the for I our review extremely impact financial want of try to to Scott Before the

Scott Bruckner

Thank you, good everyone. Jerry, and afternoon,

what by mentioned, chain supply our unfortunately disruptions now Jerry As third results impacted component are shortages. were and quarter widespread

So and dive let's driven the at is million, entirely decline third into year-over-year supply disruptions. just for in down $XX.X X% in revenue numbers. quarter the by right chain that the Revenue came was

If revenue our As the we $XX these our reduced this on Jerry with in start already product mentioned, wireless. topline million by approximately break let's across lines, down disruptions quarter.

we see revenue seeing quarter by of Third recognition XX% also success products revenue, wireless cloud-native at strong our industry $XX.X these products. to customer access and traction quarterly solutions. But and total fixed the are year-over-year was up our performance or in growing million with XG starting driven wireless continued was for XX%

cable. to Turning

impact of already Jerry our majority million XX supply out, cable hit a revenue. chain As pointed the

So in at came usual total at of than in XX% million telco total lighter XX% million fixed in revenue revenue or or revenue $XX our $XX of came the cable quarter. And revenue.

revenue Now indicates progress are believe fixed telco revenues up fixed product in are in year-over-year, telco making but lumpiness XX% revenue concentration. down customer by and we is addressing that and sequentially, we reducing this

to X% a but gross statement. let's income came that it's on Okay, is quarter the at almost million, down in the year-to-date basis. for profit year-over-year move down year-over-year, XX.X% $XX.X up GAAP

came orders quarter has pushed and XX.X% third from is see margin below resulted it we where gross Our Jerry this that in of the GAAP and margin normally couple a at and primarily software quarter, to the of return full-year. the in gross more out well quarter recognized this the do within to range remarks. a then margin software to QX his already for fourth mentioned revenue expect in in this our see expect We gross normal in and and

GAAP XX.X% loss related net was out and we decline quarter this the of income to was be year-over-year. operating net net during result statement non-GAAP basis, due had we non-GAAP but XX% third on Adjusted the GAAP a do a that's QX. Act. revenue. but that XXXX. headcount benefit a the operating a of that largely net third of of R&D a on to expect of quarter, million, $XX of Turning and our tax in the that to we interest After is fourth And quarter $X.X OpEx for a other a our million We million. quarter, this I had will quarter million quarter, by XXXX, for almost a GAAP did was the million EBITDA OpEx the expenses. million. by $X.X should of in down had This a million and $X.X an GAAP profit loss operating loss X% $XXX,XXX $XX.X start point to hitting $X.X year-to-date income was $X in of relative we impacted is up in or the have range increase to positively approximately million is additional CARES for basis, accrued I $XX and X.X% to expenses, QX EBITDA of from basis, On

in quarter at liquidity year. XX% to $XXX.X balance gross end almost position end $XX.X million so quarter, $XXX.X We driven was simply increase the in year-over-year we me million, we this and increase the is and receivables, cash, a quarter, by $XX million of decrease end net that’s of down of payables $XX million, debt was QX to million. sequential from XX% balance, on of this million quarter. $XXX a in And a and paid payables X% There in us and the cash timing gross of was million ended the in strong end receivables October, inventory due balance off orders of Let almost At of received of receivables capital. our At working and revolver increase our decline the the our we of million. a the the $XXX.X left XX.X% turn in with a $X.X in full of our the sheet. outstanding this at our had third with debt in the

year. up Q&A, fiscal on comment of to our I for the remainder open guidance we call the would to the like Before

then And or supply account visibility expect I on this in do we quarter, more two end would conservative fourth chain fact, get we an see improve earn forecast. the and and or guidance quarter and and chain remarks, to side taken diminished did the both in we've materially year-end of also these our as and our constraints our first financial the on to Jerry quarter only results increasingly impact into throughout our quarter while situation attempted visibility issues of in all at where supply revising this building noted XXXX, of up on updated As results issues third in as through the end. the don't year we into our chain we've our supply quarter our have temporary,

to million non-GAAP $XX million to $XX negative income, adjusted So $XX million; for $X.XX XXXX, EBITDA, $XXX $XX million; GAAP $X.XX; to million; $X.XX. we following: non-GAAP $XX GAAP income, million now expect to $X.XX revenue, million; $XXX $XX operating positive to operating million EPS, to EPS, the

Okay.

in Before our products, seeing for for prior some still Jerry to that that I our see In industry, profit to consecutive of the disruptions results echo demand strong said. very want QX. conclude, you and spite across we benefiting I from and what of we our strong are are growth quarters seven

the in and noted QX deployments and growth rural Canada. focus from in Bell particular, that to the as now our we commitment infrastructure cloud Mediacom strong on revenue booking and in are wireless Our Jerry and regarding XG

RDOF are us this quarterly a and are not our and On we believe significant and continue fruit. in detail XG but on results significant So for is may business bear will medium-term they always November be just Investor our linear, tailwinds basis, to starting growth there outline during we that annual more XX. our in to Day

over let Q&A. the Operator? that, With the for Okay. me to operator call back turn

Operator

Thank you.

today from Marshall will first now Our We a Morgan question-and-answer conducting is coming question session. be [Operator Stanley. instructions] Meta from

live. now Your line is

Karan Juvekar

Meta. Karan This for on is Hi.

that supply which more was any I that may on any to if guess just been you So the what more understanding were impact sort more which software order? color behind was be to margins impacted guess detail from – numbers I impacted that And or COGS one of would wanted order chain that helpful. software give can get QX, or have pushed the on one gross versus maybe by that

Scott Bruckner

costs, to there at along increased been Yes. COGS date, to customers. in we're And see been successful we've or sure not chain. Karan, impact that supply component working so are we've fact, extremely the things would And say, to one is from fortunately aggressively did those of that. costs if pass make on big pretty we I to freight that increased able our

to had that I are the quarter, fourth was it eight to the that's COGS, a to with impact we've what XXX% do with almost or seven consistent quarters. and with going margin the these margin orders what over that got gross pushed the less do a gross fact quarter. in software the add we past delivering fact, on if been in So fairly And sizable back range had two into in

Karan Juvekar

answered you Got ability it. pass to helpful. That's on on And pricing. my follow-up

So that. for time. thank you Appreciate the

Operator

Leopold Thank today Simon from Raymond Instructions] question next you. Our [Operator from coming James. is

is now line Your live.

Simon Leopold

Thanks gave on things. to in that Scott million million wanted to to fourth for said GAAP or OpEx. I a of believe, clarify forma $XX taking is the Couple verify us want you a I pro number? $XX metric question. the that quarter,

Scott Bruckner

Yes. That is a GAAP number.

Simon Leopold

indicated the around that in gross second basically what similar Okay, terms of we comment your in I gross be great. what margin, what And quarter That's you thought. to on in right you're is have the margin should saw expecting fourth quarter.

that. I think you said

want confirm. Just to

Scott Bruckner

that we've that to now, didn't I similar I see what say get with said fourth expect closer do the we Yes. was the gross the to have on software margin QX and at we that based orders estimate to we second for right quarter quarter. seen or to previously. What near in expect

Simon Leopold

great. Okay,

on to now So in checks what's you. going talk about past there, the want the little I wireless a opportunities for fixed bit

your business any And out may been whether are operators things or you whether terms and millimeter. observations trends using in is the opportunities role the of mid-band cares of and if spectrum figure being used, it mean opportunity? particular One not about have what may to that or I've to your the in trying the

Jerry Guo

normal to licensed and won Sub-X, three in area. Simon, things of prices especially couple to in and like deployment in spectrum. significant the to answer relevant And question. into – domain, And have are the some bands. think deploying that's that's the the rural RDOF, millimeter of operators well area And that. that next go do that that going we deals be I the them for the do we are let license we that's And the the opportunities Sub-X, free those be the with have classify and all wave in growing U.S. forward. the deploying me is usually course. that in going CBRS, relatively One and we We new of we many so also as or years. also we and type categories. different after actually And are pay in see

Simon Leopold

be is that's the that likely spectrum as to impression. impression your favored and is mid-band millimeter, more And my opposed to CBRS

to see you it want way? that see if Just

Jerry Guo

regions across Well, nXX to for operators. see globe Sub-X. geographical a millimeter anywhere. certain nXX, wave much They're is constrained and and the widespread you pretty fairly Like a not certain it

of in So Sub-X popular. I terms where it's do applicable, see to the most be

Simon Leopold

I'm have constrained your the to the Thank you. of to of is you that of played order with what did of are And assuming sort And tightly what you pay the commitment satisfy that surprised you an I quarter? the to were were to somebody on a guess the breach cable your during understanding issue led side to supplier, backstory this better components did out business, the sort get in I'm how order trying terms limited or semiconductors. was what more, a by of inventory, supplier in of willing

Jerry Guo

Simon, normal it’s It we but you was mentioned. was schedule, was the surprise it had thing a it thought, surprise. We last the part. committed, a

Simon Leopold

it's hearing So keep decommit. about I and… that, a

Jerry Guo

new a That's word. Yes.

have hearing We lately.

Simon Leopold

I very the appreciate Thank much the you clarifications. that. Thanks for No, Okay. taking for questions.

Operator

Northland is Tim next [Operator Instructions] Our you. from Thank Savageaux question from coming Capital.

line now is Your live.

Timothy Savageaux

Hi.

but on Question are those afternoon. yet kind I the Good orders you've supply revenue on I know into also overall broader wireless Thanks. business. had about – any that wonder the comment question commentary orders if the that. backlog terms kind your is, and of wins. and don't any in of you across direction about given some of or of about maybe strong talked talked the backlog couple past. issues, growth specificity I in mentioned on further of if you've guess the rest backlog about of wireless you side, the the a Sorry

Scott Bruckner

the take backlog. question Tim, let on me

It's did wireless is. growth it the pretty that's $XXX mention what quarter, a sequentially do wireless lumpy third over both expect Jerry because year-over-year. it perspective came backlog little even and the quarter, basis. backlog think Those at bit We from saw that to growth, in in the significant sizeable. a is you $XXX, that forward? million, the on over so come a orders second And grow it's in always our going still I

Timothy Savageaux

how catch of up follow-up, cable. a And up expect you assuming business quarter across much can and to based on of like then is mix know guiding, I where wonder kind to And QX revenue Okay. you looks slightly QX. a the if give don't color in on that. bit little you're your fair us the as you software more side relative and segments look I to to expect how wise it

Scott Bruckner

Yes.

wireless consistently and also each we've our of that So quarter, flat, Cable our look, key our growth the as comes we that flat. information And at inventory it fourth the the we delivery daily schedules. said, from our expect relatively backlog. and we on updates driver, remains wireless information and based grow today that to remains is supply then we when products, do that's we did quarter. receive looked have in best Across on it from fourth

comes the that said going supply you the what's information so with guys We lot next that this quarter. generation particular, having just is of Although the this cable of and but on. to talked chain us all A for decommit, product. about at delays, end this is hitting in understand

we think chipsets, gen so that our deploy to backlog slightly our our quarter. the being equipment. fixed products fourth build and just could down pacing go up held be can them of And I building wireless wireless, next and we're orders, receiving the in are fixed we So send And to customers. out by

Timothy Savageaux

much. very Thanks Okay.

Operator

comments. I'd further you. session. to to turn end closing Thank like for reached over floor the our question-and-answer or the We management any back of

Jerry Guo

for today. Thank joining you, everyone us

November I you remind appreciate you Casa will Day Before ending call, business our November be joining and you. look XX. on Systems us to hosting everyone today Investor XX. the Thank updating want long-term and a Virtual to vision that forward on on We

Operator

today's That conclude and does teleconference webcast. you. Thank

a You may day. today. wonderful and have participation your at this We you for disconnect your time line thank

Casa Systems (CASSQ) 3 Nov 212021 Q3 Earnings call transcript