Casa Systems, Inc. (NASDAQ:CASA) Q3 2018 Earnings Conference Call Transcript

Nov 07, 2018 • 05:00 pm ET


Casa Systems, Inc. (NASDAQ:CASA) Q3 2018 Earnings Conference Call Transcript


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Jerry Guo

80% in 2014 and 2015 to just over 50% in 2016 and 2017 and now stands year-to-date at below 50% as our customer footprint is more firmly established. Software-based capacity expansions on the other hand have increased from 3.4% in 2014 to 40% in the first nine months of 2018. We believe that this pattern of spend in our core cable business will continue for the near term with our customers increasingly meeting growing bandwidth demand by purchasing software-based capacities for their existing CCAP appliances, while finalizing decisions on DAA deployment.

On our last call, I referred to this as the annuity portion of our business and noted that our growth going forward will mostly come from new products in cable such as DAA nodes, our Axyom CCAP core and a chassis-based CCAP core, from mobile and from our fixed telco products. This does not mean that we will not see additional hardware sales. In fact, we are seeing appliance sales for new footprint deployments and upgrades of older hardware related to DOCSIS 3.1. And we are seeing sales of our industry-leading high density linecards. We also expect to continue to take additional incremental share with the new footprint rollouts as we have done for the past two quarters with a large tier-one cable operator in Europe.

During the quarter, we continue to diversify our revenue base with the addition of seven new customers for our cable and the fixed telco businesses. Additionally, Europe was up significantly from 14% in Q3 2017 to 28% in 2018 as European customers are now accelerating DOCSIS 3.1 upgrades. Going forward, we continue to believe that we will see top-line growth in 2019 as our customers finalize decisions about the timing of deployment of new technologies in their cable, mobile and fixed broadband networks.

Near-term drivers, for this, are quite favorable in our view. First, we anticipate continued growth in bandwidth demand. Second is the shift in customer spend from CPE to infrastructure. Third, mobile operators are accelerating spend on 5G. All of these trends benefit our business. On our last call, I outlined the trials, we were in, with existing and new customers in all three of our product areas. As a reminder, during the last quarter, we were engaged in 49 active trials with 40 customers, including 22 in wireless, seven in fixed telco and 20 in cable for both our CCAP and the remote PHY products. During that third quarter, we converted two trials, one in DAA and one in fixed telco into orders and increased the overall number of trials we're supporting to 56 with 40 customers. This include 26 in wireless, seven in fixed telco and 23 in cable for DAA, integrated CCAP and virtual CCAP.

In our cable segment, we continue to expand our virtual CCAP trials. Additionally, DAA trials continue to go well and in fact, we saw our first DAA order conversions in the third quarter and several of our customers are using Casa DAA nodes