Casa Systems, Inc. (Nasdaq: CASA), a leading provider of converged
broadband infrastructure technology solutions for mobile, cable and
fixed networks, today announced certain preliminary results for the
fourth quarter and fiscal year 2018 ended December 31, 2018.
“Our fourth quarter results were impacted by lower than expected
spending in hardware by certain MSO customers as they begin to
transition from Integrated CCAP to Distributed Access Architecture
(DAA). As a result, we saw higher than anticipated
software-based capacity sales during the quarter and lower than
expected hardware volumes. To a lesser extent we also
experienced wireless product certification delays, which has
affected the timing of our wireless revenue recognition,” said
Jerry Guo, Casa’s President and CEO. “While we are disappointed
with our financial performance during the fourth quarter with lower
than anticipated revenue, we do expect to be within guidance on
gross margin, non-GAAP net income and non-GAAP diluted net income
per share. Additionally, during the fourth quarter we saw
several positive developments in our business. Software sales
were quite healthy and, as a result, margins remained strong.
We closed and shipped a major deal in DAA representing material
revenue during the quarter. And we closed several wireless deals,
including with a new and important Tier 1 operator, thereby
continuing to expand our wireless customer footprint. As
network transformation continues and service provider investments
in 5G and DAA begin to ramp, we remain confident in the strategic
direction of the company. We believe that Casa’s converged
solutions for broadband networks position Casa to benefit from
these material technology inflection points.”
Fourth Quarter 2018 Preliminary Financial
Highlights
- Revenue between $63 million and $69 million
- Gross Margin in a range of 70% to 73%
- Adjusted EBITDA between $17.5 million and $21.5 million
- GAAP net income between $9.5 million and $13.5 million and
Non-GAAP net income between $11.5 million and $15.5 million
- GAAP diluted net income per share between $0.11 and $0.15 and
Non-GAAP diluted net income per share between $0.13 and $0.17
Full Year 2018 Preliminary Financial
Highlights
- Revenue between $292 million and $298 million, compared to the
prior outlook of $330 million and $350 million
- Gross Margin in a range of 70% to 73%, compared to the prior
outlook of high 60s % to low 70s %
- Adjusted EBITDA between $94 million and $98 million
- GAAP net income between $67.5 million and $71.5 million
- Non-GAAP net income between $76 million and $80 million,
compared to the prior outlook of $76 million and $83 million
- GAAP diluted net income per share between $0.73 and $0.78
- Non-GAAP diluted net income per share between $0.82 and $0.87,
compared to the prior outlook of $0.80 and $0.88
These preliminary, unaudited financial estimates are based on
information available to management as of the date of this press
release, remain subject to the completion of normal quarter-end
accounting procedures and adjustments, and are subject to
change. Casa’s independent registered public accounting firm
has not completed its review of our results for the quarter ended
December 31, 2018 or completed its audit of our results for the
year ended December 31, 2018. We undertake no obligation to
update the information in this press release in the event facts or
circumstances change after the date of this press release.
Casa Systems plans to release its financial results for the
fourth quarter and full year 2018 on Thursday, February 21, 2019
after the close of the U.S. financial markets.
Safe Harbor StatementThis press release
contains forward-looking statements within the meaning of The
Private Securities Litigation Reform Act of 1995. All statements
other than statements of historical fact contained in this press
release, including statements regarding the projected results of
operations of Casa Systems, Inc. (“Casa” or the
“Company”), including financial targets, business strategy, and
plans and objectives for future operations, are forward-looking
statements. The words “anticipate”, “believe”, “continue”, “could”,
“estimate”, “expect”, “intend”, “may”, “plan”, “potential”,
“predict”, “project”, “target”, “should”, “would”, and similar
expressions are intended to identify forward-looking statements,
although not all forward-looking statements contain these
identifying words. We have based these forward-looking statements
on our estimates and assumptions of our financial results and our
current expectations and projections about future events and
financial trends that we believe may affect our financial
condition, results of operations, business strategy, short-term and
long-term business operations and objectives and financial needs as
of the date of this press release. A number of important risk
factors could cause actual results to differ materially from the
results described, implied or projected in these forward-looking
statements. These factors include, without limitation: (1)
revenue and/or expense adjustments identified in the course of the
audit of our results for the year ended December 31, 2018 and the
related review of our results for the quarter ended December 31,
2018; (2) any failure by us to successfully anticipate
technological shifts, market needs and opportunities, and develop
new products and product enhancements that meet those technological
shifts, needs and opportunities; (3) the concentration of a
substantial portion of our revenue in our CCAP solutions and in
certain customers; (4) fluctuations in our revenue due to timing of
large orders and seasonality; (5) the length and lack of
predictability of our sales cycle; (6) any difficulties we may face
in expanding our platform into the wireless market; and (7) other
factors discussed in the “Risk Factors” section of our public
reports filed with the SEC, including our most recent
Quarterly Report on Form 10-Q, which is on file with
the SEC and available in the investor relations section
of our website at http://investors.casa-systems.com and
on the SEC’s website at www.sec.gov. In addition, we
operate in a very competitive and rapidly changing environment. New
risks emerge from time to time. It is not possible for our
management to predict all risks, nor can we assess the impact of
all factors on our business or the extent to which any factor, or
combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements
that we may make. In light of these risks, uncertainties and
assumptions, the forward-looking events and circumstances discussed
in this press release are inherently uncertain and may not occur,
and actual results could differ materially and adversely from those
anticipated or implied in the forward-looking statements.
Accordingly, you should not rely upon forward-looking statements as
predictions of future events. We disclaim any obligation to update
publicly or revise any forward-looking statements for any reason
after the date of this press release. Any reference to our website
address in this press release is intended to be an inactive textual
reference only and not an active hyperlink.
Non-GAAP Financial MeasuresWe are presenting
forward-looking estimates of three non-GAAP financial measures in
this press release: adjusted EBITDA, non-GAAP net income, and
non-GAAP diluted net income per share. These non-GAAP financial
measures are not based on any standardized methodology prescribed
by GAAP and are not necessarily comparable to similarly titled
measures presented by other companies.
Adjusted EBITDA. We define adjusted
EBITDA as our net income, excluding the impact of stock-based
compensation expense; the follow-on public offering expenses; other
income (expense), net; depreciation and amortization expense; and
our provision for (benefit from) income taxes. We have presented
adjusted EBITDA because it is a key measure used by our management
and board of directors to understand and evaluate our operating
performance, to establish budgets and to develop operational goals
for managing our business. In particular, we believe that excluding
the impact of these expenses in calculating adjusted EBITDA can
provide a useful measure for period-to-period comparisons of our
core operating performance.
Non-GAAP net income and non-GAAP diluted net income per
share. We define non-GAAP net income as net income as
reported in our condensed consolidated statements of operations,
excluding the impact of stock-based compensation expense, which is
a non-cash charge, the follow-on public offering expenses, which is
a one-time non-recurring charge, and the tax effect on these
excluded items. The tax effect of the excluded items is calculated
using our effective income tax rate for the period, excluding the
discrete tax benefits generated from the exercise of non-qualified
stock options and the disqualifying disposition of incentive stock
options. We believe that excluding these discrete tax benefits from
our effective income tax rate results in more useful disclosure to
investors and others regarding income tax effects of the excluded
items as these amounts may vary from period to period independent
of the operating performance of our business. We define non-GAAP
diluted net income per share as diluted net income per share
attributable to common stockholders reported in our condensed
consolidated statements of operations, excluding the impact of
cumulative dividends on convertible preferred stock, which are no
longer applicable following the conversion to common stock of all
of our outstanding preferred stock in December 2017 in
connection with our initial public offering, excluding the impact
of dividends declared on convertible preferred stock, as we do not
intend to declare any dividends for the foreseeable future, and
excluding the impact of items that we exclude in calculating
non-GAAP net income. For periods in which convertible preferred
stock was excluded from GAAP diluted net income per share
attributable to common stockholders, we calculate non-GAAP diluted
net income per share using a non-GAAP weighted-average share count
in which the impact of dilutive convertible preferred stock are
added to the GAAP weighted-average share count. We have presented
non-GAAP net income and non-GAAP diluted net income per share
because they are key measures used by our management and board of
directors to understand and evaluate our operating performance, to
establish budgets and to develop operational goals for managing our
business. The presentation of non-GAAP net income and non-GAAP
diluted net income per share also allows our management and board
of directors to make additional comparisons of our results of
operations to other companies in our industry.
About Casa Systems, Inc.Casa Systems, Inc.
(Nasdaq:CASA) delivers converged broadband solutions that enable
mobile, cable and fixed network service providers to meet the
growing demand for gigabit bandwidth and services. Our suite
of distributed and virtualized solutions for fixed and mobile 5G
ultra-broadband networks are engineered for performance,
flexibility and scale. Commercially deployed in over 70 countries,
Casa serves more than 450 Tier 1 and regional service providers
worldwide.
For more information, visit www.casa-systems.com
Source: Casa Systems, Inc.
IR CONTACT INFORMATIONMonica Gould 212-871-3927
investorrelations@casa-systems.com Lindsay Savarese 212-331-8417
investorrelations@casa-systems.com
CASA SYSTEMS,
INC.RECONCILIATION OF SELECTED GAAP AND NON-GAAP
PRELIMINARY FINANCIAL
MEASURES(unaudited) (in thousands,
except per share amounts)
|
|
Three Months Ended |
|
|
Year Ended |
|
|
|
December 31, 2018 |
|
|
December 31, 2018 |
|
|
|
(Projected) |
|
|
(Projected) |
|
|
|
Low end of range |
|
|
High end of range |
|
|
Low end of range |
|
|
High end of range |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Net Income to Non-GAAP Net Income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
9,451 |
|
|
$ |
13,452 |
|
|
$ |
67,541 |
|
|
$ |
71,542 |
|
Stock-based compensation |
|
|
2,352 |
|
|
|
2,352 |
|
|
|
8,894 |
|
|
|
8,894 |
|
Follow-on
public offering expenses |
|
|
— |
|
|
|
— |
|
|
|
815 |
|
|
|
815 |
|
Tax
effect of excluded items |
|
|
(259 |
) |
|
|
(259 |
) |
|
|
(1,214 |
) |
|
|
(1,214 |
) |
Non-GAAP
net income |
|
$ |
11,544 |
|
|
$ |
15,545 |
|
|
$ |
76,036 |
|
|
$ |
80,037 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Diluted Net Income Per Share Attributable
to Common Stockholders to Non-GAAP Diluted
Net Income Per Share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per
share attributable to common stockholders |
|
$ |
0.11 |
|
|
$ |
0.15 |
|
|
$ |
0.73 |
|
|
$ |
0.78 |
|
Non-GAAP
adjustments to net income |
|
|
0.02 |
|
|
|
0.02 |
|
|
|
0.09 |
|
|
|
0.09 |
|
Non-GAAP diluted net
income per share |
|
$ |
0.13 |
|
|
$ |
0.17 |
|
|
$ |
0.82 |
|
|
$ |
0.87 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Net Income to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
9,451 |
|
|
$ |
13,452 |
|
|
$ |
67,541 |
|
|
$ |
71,542 |
|
Stock-based compensation |
|
|
2,352 |
|
|
|
2,352 |
|
|
|
8,894 |
|
|
|
8,894 |
|
Follow-on
public offering expenses |
|
|
— |
|
|
|
— |
|
|
|
815 |
|
|
|
815 |
|
Depreciation and amortization |
|
|
2,422 |
|
|
|
2,422 |
|
|
|
9,459 |
|
|
|
9,459 |
|
Other
income, net |
|
|
3,292 |
|
|
|
3,292 |
|
|
|
12,742 |
|
|
|
12,742 |
|
Provision
for (benefit from) income taxes |
|
|
— |
|
|
|
— |
|
|
|
(5,406 |
) |
|
|
(5,406 |
) |
Adjusted
EBITDA |
|
$ |
17,517 |
|
|
$ |
21,518 |
|
|
$ |
94,045 |
|
|
$ |
98,046 |
|
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