Casa Systems (CASSQ) 9 May 232023 Q1 Earnings call transcript

Hello, and welcome to the Casa Systems First Quarter 2023 Earnings Call and Webcast. [Operator Instructions] A question-and-answer session will follow the formal presentation.

As a reminder, this conference is being recorded.

It's now my pleasure to turn the call over to your host, Dennis Daly, Investor Relations. Please go ahead.

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

be press receive Investor Financial the section Officer on our This our today's of archived investors.casa-systems.com. CEO. of If call it at Relations a call website and webcast me did may obtain website. Interim Relations not our you and Investor is Chief earnings section With release, our is you from Durkin, will copy the being on Ed of

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

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

helpful investors our investors non-GAAP understand may believe call, to the we trends. it be or useful use we if to business performance or During believe is it will measures to better

Ed? the turn to over like Ed. I'd to that, with And call

business our future to mid-March, cover our call We organization, new has first deals results X-K afternoon, pleased for releases made. the three quarter ourselves market-leading reporting I'm solutions and joining issued I'll to financial streamlining Dennis, in market, and good in our Thank and you, changes afternoon, considerable more detail closing filed great us made XXXX Since the executing on fourth improve on plan XXXX Systems entire profitability, by including Casa on momentarily. which sales you our progress our in positioning with have today. results, we team delivering Thank and an quarter at this press everyone.

financial before speak the the TSA pleased one quarter, in when our all the with I as TSA, But agreement, releases majority our to XXXX, will today, to group, B our debt completed, extend as loan also support detailed lender execution X-K formally strategic we performance the in other that very our December filed announced our I'm well. press of we in on term say which of maturity to this today of transaction matter

the aggressively their that of TSA is to large from cash the this When the XXXX, and significant our gives for finalized, XXXX plan a the announced plan of the us value date our growth Casa, the operating our delever. and to financing which TSA completed December a we'll significantly efforts maturity to facility of enhance on previously extended our and time by executing flexibility significantly by with have confidence shareholder December continue business. milestone and further This believe majority and the to capital efficient our resiliency for in plan demonstrates support we is of lenders

focused cable parties we I'm our As we involved product went just competitive on pleased there on. of with of differentiation a segments particularly and capitalize to ability feedback, business. process offerings looking the market you cloud imagine, in aspects one the on and at our our can very like the all comprehensive the through, third are core are

with access across portfolio customer all strong market cloud are demand cable Our no market-leading segments. product complete, product with major gaps and for portfolios and

and JPMorgan Casa finally like whole finally teams would agreement their term getting TSA to at considerable would all I efforts hard holders allow And to us steadfast B done. for to this their thank the our TSA important announce for I in today. to like support and and this Sidley thank team Austin talented work loan the debt

announce new we our release press issued CCAP wins to validation as And other we CCAP we've years. some of hope few which this was RPD untruths and This very great the core afternoon like we by close our in Colombia. node with customer heavily past fact-challenged The was win of for the circulated node and and invested weeks and virtual XXXX, of core offerings, deal, few but RPD virtual CCAP virtual being competitors, with then dealt we a near delayed which customer thought other some the was would capabilities originally over Claro a node QX RPD future. in

cable has that Access DA MSOs already was This industry, string news a Distributed our as nodes flexible FPGA-based a the smooth, that with to enables Remote Tier node, in node North we announced XXXX great cost-effective South distributed X in innovative Access momentum month America. good when solution XXXX industry and cable had X.X for environments. successfully of the provides only benchmarks This builds the up PHY we last Distributed flexibility our cloud foundation native deployed DOCSIS performance future DA and with transition set operators

opportunity. to leading which in deployment System, this U+ with South improve, mid-April, U coverage working Gateway its U+, to service multiple solutions, LG is and growing will for engagements with continuing a that capitalize LG network our our simplify and Security and deploy Casa. therefore, like easily operators of region, Korean Gateway Switching to we B many service gears, be first Casa more expect the G eNode network, quality operator, to and work market partner, mobile we and in their enable LG also announced E-Tech on We're

good go-forward strategy software MEC well. it's and security of and an XG with Turning now and a remain of in delivery solutions. offering Verizon. our our validation position Verizon's partnership our and leadership track achieved important all date. to milestones edge mobile on and We gateway XG in have our strategic our core solution And cloud-native core to validation solution as confidence is compute

We expect in are half this large we partnership increased and of and and second progress status our GAAP very XXXX, from important second the quarter of partnership. our making given positive Verizon the revenues

finally, and before few QX forward in announcing into the Board on interviewing for go the And a I that We now would more role. financial and candidates I CEO note look for to active this months. this results, is the search the to remains coming like permanent ongoing,

first Let's now move the for results our to quarter. financial

revenue year our revenue in below loan which which believe as while Claro, expectations performance status, software closed million, quarter see we of cable timing came $XX.X from cloud in not due regarding to have slightly a is term B some will items large came XXXX, contract. Revenue matter timing for competitive from due we the at the a solely in our as of well loss. the timing acceptance now our uncertainty orders one including slip was type QX and any We for both down to a of delivery contributions XX% ago, and of software this

and to that within $XXX our of given We revenue be the to for million range will offerings deals of XXXX year $XXX the of half of guided recognition we the second small half, sheet. to shipments, to continue later-stage second toward in convert radio the pipeline shipments our new timing expect year, on in now XG, revenues XG the backlog million believe related and XH weighted revenue our revenue cell to balance deferred

similar we lines. have our investors performance, to are with of three clearer revenue the attributes, by by revenue easier disclosing modified product which contribution down view have a product follow. provide lines, Breaking three revenue our To are we how across offerings product

$X.X revenue, was and our MEC consists product software the $X.X core XG of million, Our was year. our XX% software, BNG security up virtual million in which which prior QX gateway the routing software and from cloud

revenue, revenue, QX $XX.X finally, from year. which products revenue down our all small XX% cable our QX business, customarily prior in enterprise prior the decline products quarter. from million associated access $XX.X includes from $XX.X consisting during the with NetComm line XXXX was which million, of our due million which down And the of largely to The our million, license lower was XG/XG software year. cable XX% was was $XX.X in cell was access products, acquisition, plus from device radio cable

future approximately billings, currently to billings million beyond deferred million remaining backlog Verizon the and in and orders, have service backlog. $XX and including our bringing scheduled $XXX to of contract We million. XXXX the now be contract $XXX built under in approximately backlog, MEC Turning product Verizon XG revenue total to XXXX

where enterprise with included numbers we business small $XX that not deferred to in as-ordered also XXXX, As the last want I is note cell of basis. a the approximately North contracts American begin will POs major these we MNO, our quarter, small million an we for in on we noted close radios I shipping cell XG/XG radios pursuant backlog annual closed get this have. of multiyear and second just contracted have half to and that mentioned revenue

in quarter our is no significant in we future. will March, believe fourth our in the we continuing chain majority are there ship XXXX, our backlog As a assuming unanticipated of improvements in and chain noted in supply to in call supply good see deterioration

at operating CEO $XX.X million the including million, $XX.X and expenses XXXX. for in $X.X Jerry's revenue. in gross charges gross in at to GAAP March of profit. nonrecurring profit Moving related in QX President came as came GAAP departure XX% to for million quarter or

revenue towards cloud, we future levels rightsize by the all opportunities. costs structure to approximately And on to quarter, geos and This lead capitalize continue help to in important XXXX, and returning of our goal our in is the difficult April XXXX adjusted and This to results and positive product XX% the while net retain could well. reduce step resources outside in would non-headcount of surgically reduce so to to our note decision cost it's and innovate and our cable across necessary to beyond. realignment headcount excellence we a annual as also first functions that made growth EBITDA Casa of and was done

Our quarter the This million. GAAP the driven results QX. and for nonrecurring was by million $XX.X primarily QX was softer-than-expected revenue operating taken charge our during $X.X loss

cable now is of QX deal that mentioned, outside largest slip As did closed. the

we cost have formal expect reduce also action slipped We order to in taken to soon. that just as our announced. QX And on April structure outside acceptance XXXX the of receive software

modest QX at it the through GAAP of this to And important P&L. noncash noted was operating our high be burn million. $X.X flowing reflects is recognize and Further, our in should charges cash only very level

to $XX.X loss in million $XX.X loss QX loss for was share our QX related Finally, diluted On million loss our XXXX. EBITDA reflected non-GAAP basis, loss quarter in or $XX.X million per of or schedule net $X.XX versus a $XX.X the million P&L, release. net the of a loss adjusted as per had press a shown share our reported of $X.XX we and in

cash, our ended million. to $XXX.X the restricted Turning We sheet. of with cash cash and equivalents quarter balance

Our X/XX/XX, XXXX excludes to cash contract. an $XX loan ended of the term are long-term burn cash delevering balance We say at to use March was reflecting mentioned. our approximately reduction $XX.X which B great quarter, million cash was December debt, asset fixed issuing another as Verizon which receivables million $XXX during million to progress compared financing pleased million, in XX our approximately high-quality to QX on major purchases down our of activities, related I'm the is approximately quarter for due process plan. of modest debt, billings $X.X and with $X primarily the of that operating in just $XXX we to our million accounts as now Further, XX, million, the so down modest

XXXX are million million guidance Finally, annual EBITDA the $XXX results net revenue positive of we and our for reiterating to year. adjusted $XXX

deferred noted to As into And including based our be and deals deals, later pipeline this expect major is year. back-end visibility backlog, later-stage to on revenue XXXX large convert customers, we into we expansion which weighted. guidance earlier, our expect at revenue

customer about partnership Verizon, up, deployments profitability. wins to important we're adjusted growth the at the and for we're From excited right the and are customer recent EBITDA progress new our wrap in drive our I recent successful making developments on to So path return to Casa. to team incredibly the to net

dedication lenders I And today. Casa to Loan of focused staying December soon goals maturity the announced formally we majority the entire B resolved TSA we the thank transition. support the our customers team during our to this XX serving on long-term overhang this have of term want will time pursuant at of for the with and to

any for the now operator call will to I the line turn the questions. to over Operator? open

Our Instructions] James. a now question conducting Leopold question-and-answer [Operator We'll Simon Raymond be first from is session. coming from

is you eight kind on has new something do A so do? front the the with handful posting forma help just that segmentation of things. we segments, what quarters, that a can One see over redefined identification pro been the Is and the housekeeping you essentially could or trending be will of with of forecasting with more to to the trends? plan last

we'll Simon, that. Yes, do

you That get going an They'll interest was And do harder. getting B? your What expect the with Great. expenses easy forward a one. new little done. that for congratulations for term

Yes. Thank you.

I is the think structure in So interest rate X-K. the

be very close X.X%, As slightly rate. good market somewhere still kind so later it higher, plus should of around we [indiscernible] QX, a in it but XX%,

quarter. now? Okay. Because the sort run And recent normalized I expense what current cuts guess is of done rate were the during the

think better second, you thinking? budget? settle to really, get XQ, operating you call So are trying let's expenses XQ it, do sense OpEx of the where in What I'm a

Yes.

did we in ability It cloud segments, cable on of $XX core roughly that April was it market took about of preserved took excluding April from cloud out to annualized total, an and continuing million. said, Simon. the action. rightsizing, grow surgical and certain annualized we the RAN. including do -- savings and That to severance In we areas nature like basis, million invest and in So in the expense our are $XX our we But was event out elsewhere. charges, with and cable

in then Verizon of And an the Great. update terms on progress.

million $XXX the in project. was, the end at I a think the quarter, believe, lift last there I of

only recognized much is last forecast? into What how a expectations revenue of had are of for XXXX baked that year. Verizon You fraction project your the

Yes.

So did very only good recognize question. fraction year. We a last

revenue million them took and million and actually billed in payments from $X.X $X $XX million. We Verizon we recognized or of QX only paid -- million about $X Verizon $XX million from nonrefundable no in think got I XXXX. in XXXX

And we're itself XXXX. is Verizon of I from more waiting project going revenue So on but the the expect in just great. half and contributions QX the formal meaningful acceptance, would in second

question today from Capital next from Markets. coming Your is Northland Tim Savageaux

Can okay? me you hear

Hey, Yes. Tim.

Okay. Great.

at leave kind over agreement. does some working year So old this And debt I'm agreement? of with maturities the still through with the of -- you just end this the

Yes.

was to now get belief signed the term to will type join mechanisms place the are the up this end year. at if be sign remaining put be with that, get substantially that first This of in So B JPMorgan all the minimal, and there any, And will on. XX% incent of but that sign the the to majority this. is is of on have all loan to lenders phase can we in lenders to we sense of the any stuff will us very substantially today,

that remaining paydown, same accurate? of it stands 'XX, as kind you've it Is million got hope And $XX to going status. XX% to of $XX Okay. the million now, out the that 'XX convert about and to you

Tim. of on this all strategy. part again, to correct, And substantially But deal. to that's Yes, sign the again, we expect new is this

want Got to Or it. importance and mean Claro that on past? big you've I can how about that give us metrics size metrics you kind question to toss then. a customers of of any be, to in that opportunity relative A there. any could the say, customer you kind and of out guys you the significant had the

Yes.

CCAP and it a of validation So virtual Tim. was core great our node, RPD

some a our It to and doubt was challenged particularly had In that that deal of that some win uncertainty it of to gratifying terms true single-digit high size, mid- in millions. fear, in with we that land and was But win, think substantial do very we're is announcement. Claro after expand of pleased selling were there confidence announce they our us, inside well. we to and as competitors and have March

-- have given color into moving have an in lot QX, us the if visibility guide. you is your And might might reiterate up what expectations which I'm expenses the think, and on of a short revenues down, potentially there, it. be of a wonder little in pushouts give fair given, of I you where direction Got you able term. more are assuming lot QX, annual parts know But a I bit to right here you a I

Yes.

So plan, the down. up, part that is of success expenses revenue

we in for top did flow our CAD, cloud was will line sheet, our Actually, half market second to year. guidance balance going The given in and on segments: deferred very the be revenues. plan, into when I visibility year, guide a think all growth entering pipeline ultimately strong RAN. we've mid-March but we big it we cable, revenues gave across the backlog sales four high which that weighted got the have good

that cell to start closed fact half radios in that going small we're pursuant XG/XG shipping second to The our contract. the

Again, also We having with. great model expand some got inside success with largest expansion customers. our familiar sales and opportunities of our some land we're you're cohort that

I combine just And So revenue a are week this North very going all to in mean, the past customer we second revenue to a allow cable those guidance us, opinion, we million in got order that major single-digit attain high will America in candidly, that to provided. from for ship half. our factors

have bottom factors the line So all annual us that line and our guidance. it's of allow to confidence those top in combination

a cloud a software say, more question if if margins there to Tier want -- realize Verizon one add should normalized guess Verizon you is that's question X you gross what guess, range me. XX% or, the the in And is margins a revenue quarterly contribution? to normalized I recognized. for either what up look And mentioned Verizon what gross separate you with put that last contribution I in despite know probably cash. don't But or software I Great. And Okay. such should But contribution. no is, thing, quarter. gross from I that, like my

Yes.

So margin high. it in going rev are point complex, to the be be in would terms rec of very gross low From on but the GAAP revenue. a the a as a side a as of very, cloud probably XXX margin, little it's of percent the XXs margins view,

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

us believe guess few it's us, team Thank really truly were Casa No, been been to at issues first. made. months the whole and facing up today. joining working is the everyone, and tirelessly you, I has we busy a for close that to address great progress Look,

enter customer momentum noncore late double everyone potential Sandler forthcoming quarter. strong hard soon. be while lot we've to cable really We're our for access device assessing And and months we a this we progress business into the select pleased wins also and Piper on B engaged cloud, QX, on on the bringing And in As to announcement product more loan additions after releases with will offerings. work down around the line that team moving the with term we're the us away, cloud now of assist we'll continue press update divestitures to select nights today. and during TSA coming

you tuned, So your thank Casa. in Thank support and interest for please continuing and stay operator. you,

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

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