Casa Systems, Inc. (NASDAQ:CASA) Q3 2018 Earnings Conference Call Transcript
Nov 07, 2018 • 05:00 pm ET
Meta Marshall, Morgan Stanley.
I wanted to dive into a couple of things. First, just on the full year guidance as far as net income goes. I mean I understand you're kind of reiterating guidance, but that would imply kind of a steep tick down kind of in gross margins and the steep tick up of OpEx to kind of come in at that range.
And so, I am just trying to get a sense of if it's just reaffirming guidance or there is something different happening in Q4 that we should be mindful of? And then maybe - this is second question. Talking about the DAA moves, and kind of what you're seeing in that market, obviously you kind of had your first sale this quarter or kind of first orders this quarter, but just pacing for 2019 and has timing expectations changed at all from kind of the push out you maybe saw last quarter?
Sure. I'll take the margin. So we've been through our forecasting process. We're now, as we've said, comfortably reaffirming our gross margins in the high 60s to low 70s. Where we end the year? As you know it's really going to hinge on our product mix for the fourth quarter.
And at this point, it's really too early for us to comment on how that's going to shape up, but we're continuing to watch it and its just dependent on the mix for us. Increased software mix in our revenue mix as well as larger initial software capacity in recent appliance sales particularly in the third quarter is really what was driving those higher margins in Q3.
But I'm going to take the second question about the DAA. We -- you have seen that we have a continuing increase in the number of trials and progressed very well with that trials. We do expect the ramp to be in 2019. We're not dismissing the possibility of deploying -- bigger scale deployment in 2018 either.
Got it. Just to circle back. So I mean on OpEx, so I mean understanding gross margins and kind of your guidance there, but just on the OpEx there's nothing that we should expect for there to be a spike that would kind of cause earnings to come in within range kind of beyond normal course increases in development. Correct?
Understood. This is really this is our best estimate at this time. We're comfortable with kind of where we are. We're comfortable with the margins at this point and that's really where we are.
And we don't expect any significant changes in OpEx for the fourth quarter.
And Meta, this is Scott. The last thing I would say, I mean, we've spent a lot of time with you guys talking about what happens in the fourth quarter. And at this point in the quarter unfortunately coincides with our third quarter earnings call. We don't really have a lot of visibility on where year end spend is going to