Casa Systems, Inc. (Nasdaq: CASA), a leading provider of
cloud-native software and physical broadband technology solutions
for wireless, cable, and fixed networks, today announced that the
Company’s President and Chief Executive Officer will be retiring,
and reported its financial results for the fourth quarter and year
ended December 31, 2022.
The Company announced that Jerry Guo will be
retiring as CEO and President effective March 17, 2023. He will
remain as an active member of the Casa Systems’ Board of Directors.
Mr. Guo founded the Company in 2003 and has been instrumental in
directing the Company’s technology vision, global operations, and
growth. The Board has retained an executive search firm to identify
Mr. Guo’s successor. Edward Durkin, the Company’s CFO, will serve
as Interim CEO until the Company’s new CEO is hired, with advisory
assistance to be received from Jerry, and with functional support
across all other disciplines from the Casa senior management
team.
“On behalf of the Board, the management team, and
employees, I would like to thank Jerry for his leadership and
dedicated years of service to Casa Systems since founding the
Company 20 years ago in 2003,” said Bruce Evans, Chairman of the
Board. “Jerry has worked tirelessly to build Casa Systems into a
leading global provider of cloud-native and broadband technology
solutions while constructing the solid foundation that will support
Casa Systems multi-year transformation. As Jerry departs from his
daily operational and executive duties, we look forward to Jerry's
continued leadership as an active member of our Board, and wish him
much happiness in his retirement. We are also pleased to announce
the appointment of Scott Bruckner to the newly expanded Board of
Directors. Scott previously served as Casa Systems Chief Financial
Officer, has a deep understanding of the Company’s business,
strategy, major customers and ecosystem partners, and also brings a
wealth of domain experience and expertise to the expanded Casa
Board.
Mr. Evans continued, “As we move forward, we will
be focused on delivering consistent, annual top line revenue
growth, with improved gross and net margins. We believe 2023 will
be an important first year of this new era for Casa Systems as we
continue to deliver our innovative solutions to market, focus
deeply on the needs of our global customers, prioritize a return to
growth and profitability, and address our Term Loan B debt facility
before its contractual maturity in late December 2023.”
“It is with a heavy heart that I will be saying
goodbye to daily interactions with my colleagues at Casa Systems,
my comrades-in-arms, in good times and tough times. It has been a
privilege to have worked with my co-founders and co-workers over
the last 20 years. I want to thank my tremendously talented
colleagues for their dedication, ingenuity, and perseverance. I
have strong confidence that the market-leading Casa technologies
and solutions related to cloud-native software and innovative
hardware which we have built will help transform the telecom
industry like we have envisioned. I am excited about the future of
Casa Systems, and look forward to assisting the Company in this
important next chapter of Casa’s transformation,” said Mr. Guo.
With respect to fourth quarter and 2022 financial
results, the Company announced the following:
Fourth Quarter 2022 Financial &
Operational Highlights
- Revenue of $84.4 million
- GAAP net income of $1.2 million
- Non-GAAP net income of $5.3 million
- GAAP net income per fully diluted share of $0.01
- Non-GAAP net income per fully diluted share of $0.05
- Net Adjusted EBITDA of $5.2 million
- Cash, cash equivalents and restricted cash of $129.4 million at
quarter end
Fiscal Year 2022 Financial &
Operational Highlights
- Revenue of $286.5 million
- GAAP net loss of $(79.2) million
- Operating cash burn for the year of $(8.6) million
- Non-GAAP net loss of $(65.1) million
- GAAP net loss per fully diluted share of $(0.86)
- Non-GAAP net loss per fully diluted share of $(0.71)
- Adjusted EBITDA of $(41.8) million
- 2022 results include charge to cost of revenue of $12.8 million
for a customer warranty settlement as previously disclosed in Q3
2022
- Net Adjusted EBITDA of $(29.0) million
Mr. Durkin commented, “Casa ended 2022 with strong
Q4 revenue results and a return to GAAP net income and positive Net
Adjusted EBITDA results. I am pleased that Casa exceeded the high
end of our preliminary revenue guidance provided in late January
2023, which results were primarily driven by a strong quarter for
Cable revenues as we closed significant expansion deals with major
cable MSO's in Europe and APAC. We also experienced continued
improvement in the supply chain for our fixed wireless and fiber
extension products during Q4."
Mr. Durkin continued, “Looking forward, 2023 will
be a critical year for Casa Systems as we continue to bring our
innovative solutions to market while focusing on a return to
growth, profitability and cash-and-capital efficient operating
results. Our recent success at Mobile World Congress highlighted
the positive momentum in our innovative cloud-native 5G Core and
MEC solutions, where several of our key partners made announcements
regarding their work with Casa. Our truly cloud-native 5G Core and
MEC solutions are recognized by many customers, prospects and
partners as very efficient and highly scalable solutions which are
optimized for next-generation cloud computing requirements,
providing us great confidence that we will be able to achieve our
future Cloud growth goals in 2023 and beyond. In addition, we were
also awarded a large VCCAP deal late in Q4 2022 with a major
European cable MSO with delivery to occur later in 2023, and new
business with a US-based CSP for one of our new access device
solutions, with product shipments related to this new access device
award planned to occur in the second half of 2023 as well.
Mr. Durkin added, “Given this recent sales success
and the improved visibility we have into our business as a result
of our strong backlog entering 2023, our balance sheet deferred
revenue and our strong sales pipeline starting the year, we are
re-establishing annual revenue and Net Adjusted EBITDA guidance.
For 2023 we expect Casa to return to growth and profitability. We
believe revenues for the year will be somewhat back-end weighted
due to several factors, including the timing of backlog shipments,
supply chain considerations, anticipated timing of the closing of
deals in our sales pipeline, revenue recognition related to
deferred revenue on the balance sheet, as well as the shipment of
our 4G/5G enterprise small cell radios in the second half of 2023,
pursuant to closed supply contracts now in place.”
“Finally, I am pleased to report we have engaged
J.P. Morgan to lead Casa’s efforts to extend our debt maturity
profile prior to the contractual maturity of our Term Loan B
facility which now matures in December 2023,” concluded Mr.
Durkin.
Customer Dispute Successful
Resolution
As previously disclosed, on July 21, 2022, Casa
Systems received written notification from a significant customer
of one of its international subsidiaries, of alleged costs incurred
and expected to be incurred by that customer with respect to an
ongoing warranty matter relating to field replacements of failed
units for one particular product. The failure was attributable to
an unauthorized part substitution in 2019 by a supplier to the
subsidiary. This customer was seeking up to $56.0 million in
recovery of past and estimated future costs. As disclosed on
January 31, 2023, this matter was satisfactorily and amicably
resolved in Q4, and there was no material change to the warranty
settlement charge of $12.9 million that was recorded in Q3 within
cost of revenue. The first of four annual equal cash payments
related to this settlement was made in December 2022 as provided in
the settlement agreement.
Term Loan B Refinancing
Casa Systems has retained J.P. Morgan Chase Bank,
N.A. (“J.P. Morgan”) to assist the Company in analyzing and
evaluating potential alternatives for our Term Loan B facility
maturity.
2023 Financial Outlook and Current
Guidance
For the fiscal year 2023, the Company currently
expects:
- Revenue between $300 million and $325 million
- Positive Net Adjusted EBITDA for the year
Recent Verbal Notification from Major
Cable Customer
Casa Systems was recently notified by a major
North American cable customer that the Company will not currently
be receiving orders from this large customer related to their cable
broadband infrastructure upgrade project, which the Company had
anticipated receiving in the second half of 2023. This recent
development has been reflected in the foregoing 2023 financial
guidance provided by the Company.
No Exposure To Silicon Valley Bank (“SVB”)
Failure
The Company has no cash exposure to the recent
Silicon Valley Bank failure, as the Company had no cash deposits
with SVB. The Company uses Bank of America for the vast majority of
its banking requirements, including cash management.
Conference Call Information
Casa Systems is hosting a conference call for
analysts and investors to discuss its financial results for the
fourth quarter and year ended December 31, 2022, and its business
outlook at 5:00 p.m. Eastern Time today, March 14, 2023. The
conference call can be heard via webcast in the investor relations
section its website at http://investors.casa-systems.com, or by
dialing 1-877-407-4019 in the United States or 1-201-689-8337 from
international locations with Conference ID 13735450. Shortly after
the conclusion of the conference call, a replay of the audio
webcast will be available in the investor relations section of Casa
Systems’ website for 90 days after the event.
Safe Harbor Statement
This 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 and
financial position of Casa Systems, Inc. (“Casa Systems” or "Casa"
or the “Company” or “we”), 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”, “are
optimistic”, “plan”, “potential”, “predict”, “project”, “target”,
“should”, “will”, “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) our ability to fulfill our
customers’ orders due to supply chain delays, access to key
commodities or technologies or events that impact our manufacturers
or their suppliers, including the lingering effects of the COVID-19
pandemic; (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 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; (7) any failure to maintain the synergies
we have realized from our acquisition of NetComm; (8) increases or
decreases in our expenses caused by fluctuations in foreign
currency exchange rates and interest rates; (9) our ability to
effectively transition our chief executive officer role and (10)
other factors discussed in the “Risk Factors” section of our public
reports filed with the Securities and Exchange Commission (the
“SEC”), including our most recent Quarterly Report on Form 10-Q and
our most recent Annual Report on Form 10-K, which are 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 Measures
To supplement our financial results presented in
accordance with Generally Accepted Accounting Principles ("GAAP"),
we are presenting the following non-GAAP financial measures in this
press release and the related earnings conference call: non-GAAP
net income, non-GAAP diluted net income per share, adjusted EBITDA,
net adjusted EBITDA and free cash flow. 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.
Non-GAAP net income and non-GAAP diluted
net income per share. We define non-GAAP net income as net
(loss) income as reported in our condensed consolidated statements
of operations, excluding the impact of stock-based compensation
expense and amortization of acquired intangible assets, which are
non-cash charges; adjustments to the tax provision for the CARES
Act; and the tax effect on these excluded items. We believe that
excluding amortization expense of acquired intangible assets
results in more useful disclosure to investors and others as it is
a significant non-cash charge related to an event that is generally
infrequent based on our historical activities. We further note that
while amortization of acquired intangible assets is excluded from
the measures, the revenue of the acquired company is reflected in
the measures and the acquired assets contribute to revenue
generation. The tax effect of the excluded items was calculated
based on specific calculations of each item’s effect on the tax
provision. 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
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 (loss) income
per share reported in our condensed consolidated statements of
operations, excluding the impact of items that we exclude in
calculating non-GAAP net income. 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.
Adjusted EBITDA. We define
adjusted EBITDA as our net (loss) income, excluding the impact of
stock-based compensation expense; other income (expense), net;
depreciation and amortization expense; and our (benefit from)
provision for 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, by excluding the impact
of these expenses, adjusted EBITDA can provide a useful measure for
period-to-period comparisons of our core operating performance.
Net Adjusted EBITDA. We define
net adjusted EBITDA as our net (loss) income, excluding the impact
of items that we exclude in calculating adjusted EBITDA; and our
warranty settlement provision, as warranty provisions of this
significance have not and are not expected to impact our results on
a recurring basis. Management and the board of directors believe
that, by excluding the impact of this expense, net adjusted EBITDA
can provide a useful measure for period-to-period comparisons of
our core operating performance.
Free cash flow. We define free
cash flow as net cash provided by operating activities minus
capital expenditures. We believe free cash flow to be a liquidity
measure that provides useful information to management and
investors about the amount of cash generated by our business that,
after purchases of property, equipment and software licenses, can
be used for strategic opportunities, including investing in our
business, making strategic acquisitions and strengthening our
balance sheet.
We use these non-GAAP financial measures to
evaluate our operating performance and trends and to make planning
decisions. We believe that each of these non-GAAP financial
measures helps identify underlying trends in our business that
could otherwise be masked by the effect of the expenses that we
exclude in the calculations of each non-GAAP financial measure.
Accordingly, we believe that these financial measures provide
useful information to investors and others in understanding and
evaluating our operating results and enhance the overall
understanding of our past performance and future prospects.
Our non-GAAP financial measures are not prepared
in accordance with GAAP and should not be considered in isolation
of, or as an alternative to, measures prepared in accordance with
GAAP. There are a number of limitations related to the use of these
non-GAAP financial measures rather than the most directly
comparable financial measures calculated and presented in
accordance with GAAP. Some of these limitations are:
- each of non-GAAP net income, non-GAAP diluted net income per
share, adjusted EBITDA and net adjusted EBITDA exclude stock-based
compensation expense and amortization of acquired intangible assets
because they have recently been, and will continue to be for the
foreseeable future, a significant recurring non-cash expense for
our business;
- adjusted EBITDA and net adjusted EBITDA exclude depreciation
and amortization expense, and although this is a non-cash expense,
the assets being depreciated and amortized may have to be replaced
in the future;
- adjusted EBITDA and net adjusted EBITDA do not reflect the cash
requirements necessary to service interest on our debt or the cash
received from our interest-bearing financial assets, both of which
impact the cash available to us;
- adjusted EBITDA and net adjusted EBITDA do not reflect foreign
currency transaction gains and losses, which are reflected in other
income (expense), net;
- adjusted EBITDA and net adjusted EBITDA do not reflect income
tax payments that reduce cash available to us;
- net adjusted EBITDA does not reflect the estimated warranty
settlement provision which is expected to reduce cash available to
us;
- free cash flow may not represent our residual cash flow
available for discretionary expenditures, since we may have other
non-discretionary expenditures that are not deducted from this
measure;
- free cash flow may not represent the total increase or decrease
in cash and cash equivalents for any given period because it
excludes cash provided by or used for other investing and financing
activities; and
- other companies, including companies in our industry, may not
use or report non-GAAP net income, non-GAAP diluted net income per
share, adjusted EBITDA, net adjusted EBITDA or free cash flow, or
may calculate such non-GAAP financial measures in a different
manner than we do, or may use other non-GAAP financial measures to
evaluate their performance, all of which could reduce the
usefulness of these non-GAAP financial measures as comparative
measures.
For the reconciliations of these non-GAAP
financial measures to the most directly comparable GAAP financial
measures, please see the section of the accompanying tables titled,
“Reconciliation of Selected GAAP and Non-GAAP Financial Measures.”
We are not able to provide a reconciliation of non-GAAP Net
Adjusted EBITDA guidance for future periods to net income (loss),
the comparable GAAP measure, because certain items that are
excluded from non-GAAP Net Adjusted EBITDA cannot be reasonably
predicted or are not in our control.
About Casa Systems, Inc.
Casa Systems, Inc. (Nasdaq: CASA) delivers the
core-to-customer building blocks to speed 5G transformation with
future-proof solutions and cutting-edge bandwidth for all access
types. In today’s increasingly personalized world, Casa Systems
creates disruptive architectures built specifically to meet the
needs of service provider networks. Our suite of open, cloud-native
network solutions unlocks new ways for service providers to build
networks without boundaries and maximize revenue-generating
capabilities. Commercially deployed in more than 70 countries, Casa
Systems serves over 475 Tier 1 and regional communications service
providers worldwide. For more information, visit
http://www.casa-systems.com.
CONTACT INFORMATION: IR
Contacts Dennis Daly Casa Systems 978-688-6706 ext. 6310
investorrelations@casa-systems.com
or
Mike Cummings or Jackie Marcus Alpha IR Group
617-982-0475 investorrelations@casa-systems.com
Source: Casa Systems
CASA SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited) (in thousands, except per share
amounts)
|
|
Three Months Ended December 31, |
|
|
Year Ended December 31, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Revenue |
|
$ |
84,403 |
|
|
$ |
105,099 |
|
|
$ |
286,537 |
|
|
$ |
401,325 |
|
Cost of revenue |
|
|
48,531 |
|
|
|
59,098 |
|
|
|
170,068 |
|
|
|
213,145 |
|
Warranty settlement provision |
|
|
(104 |
) |
|
|
— |
|
|
|
12,803 |
|
|
|
— |
|
Gross profit |
|
|
35,976 |
|
|
|
46,001 |
|
|
|
103,666 |
|
|
|
188,180 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
17,698 |
|
|
|
20,883 |
|
|
|
85,243 |
|
|
|
84,362 |
|
Selling, general and administrative |
|
|
20,162 |
|
|
|
21,071 |
|
|
|
86,903 |
|
|
|
85,563 |
|
Total operating expenses |
|
|
37,860 |
|
|
|
41,954 |
|
|
|
172,146 |
|
|
|
169,925 |
|
(Loss) income from operations |
|
|
(1,884 |
) |
|
|
4,047 |
|
|
|
(68,480 |
) |
|
|
18,255 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
1,182 |
|
|
|
65 |
|
|
|
2,300 |
|
|
|
362 |
|
Interest expense |
|
|
(5,350 |
) |
|
|
(3,072 |
) |
|
|
(17,620 |
) |
|
|
(14,958 |
) |
Gain on extinguishment of debt |
|
|
2,728 |
|
|
|
— |
|
|
|
2,728 |
|
|
|
— |
|
(Loss) gain on foreign currency, net |
|
|
(359 |
) |
|
|
(760 |
) |
|
|
1,730 |
|
|
|
(2,113 |
) |
Other income, net |
|
|
467 |
|
|
|
1,314 |
|
|
|
752 |
|
|
|
1,948 |
|
Total other expense, net |
|
|
(1,332 |
) |
|
|
(2,453 |
) |
|
|
(10,110 |
) |
|
|
(14,761 |
) |
(Loss) income before (benefit from) provision for income taxes |
|
|
(3,216 |
) |
|
|
1,594 |
|
|
|
(78,590 |
) |
|
|
3,494 |
|
(Benefit from) provision for income taxes |
|
|
(4,456 |
) |
|
|
67 |
|
|
|
615 |
|
|
|
287 |
|
Net income (loss) |
|
$ |
1,240 |
|
|
$ |
1,527 |
|
|
$ |
(79,205 |
) |
|
$ |
3,207 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.01 |
|
|
$ |
0.02 |
|
|
$ |
(0.86 |
) |
|
$ |
0.04 |
|
Diluted |
|
$ |
0.01 |
|
|
$ |
0.02 |
|
|
$ |
(0.86 |
) |
|
$ |
0.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used to compute net income (loss) per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
94,642 |
|
|
|
86,048 |
|
|
|
91,596 |
|
|
|
85,253 |
|
Diluted |
|
|
96,182 |
|
|
|
88,220 |
|
|
|
91,596 |
|
|
|
88,857 |
|
CASA SYSTEMS, INC.
RECONCILIATION OF SELECTED GAAP AND NON-GAAP FINANCIAL
MEASURES (unaudited) (in thousands)
|
|
Three Months Ended December 31, |
|
|
Twelve Months Ended December 31, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Reconciliation of Net Income (Loss) to Non-GAAP Net Income
(Loss): |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
1,240 |
|
|
$ |
1,527 |
|
|
$ |
(79,205 |
) |
|
$ |
3,207 |
|
Stock-based compensation |
|
|
4,103 |
|
|
|
3,574 |
|
|
|
13,281 |
|
|
|
14,819 |
|
Amortization of acquired intangible assets |
|
|
1,347 |
|
|
|
1,426 |
|
|
|
5,542 |
|
|
|
5,704 |
|
Tax benefit from release of DTA reserve |
|
|
— |
|
|
|
1,267 |
|
|
|
— |
|
|
|
(5,830 |
) |
Tax effect of excluded items |
|
|
(1,348 |
) |
|
|
(1,249 |
) |
|
|
(4,718 |
) |
|
|
(5,119 |
) |
Non-GAAP net income (loss) |
|
$ |
5,342 |
|
|
$ |
6,545 |
|
|
$ |
(65,100 |
) |
|
$ |
12,781 |
|
Non-GAAP net income (loss) margin |
|
|
6.3 |
% |
|
|
6.2 |
% |
|
|
(22.7 |
)% |
|
|
3.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Diluted Net Income (Loss) Per
Share to Non-GAAP Diluted Net Income (Loss)
Per Share: |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income (loss) per share |
|
$ |
0.01 |
|
|
$ |
0.02 |
|
|
$ |
(0.86 |
) |
|
$ |
0.04 |
|
Non-GAAP adjustments to net income (loss) |
|
|
0.04 |
|
|
|
0.05 |
|
|
|
0.15 |
|
|
|
0.10 |
|
Non-GAAP diluted net income (loss) per share |
|
$ |
0.05 |
|
|
$ |
0.07 |
|
|
$ |
(0.71 |
) |
|
$ |
0.14 |
|
Weighted-average shares used in computing diluted net income
(loss) per share |
|
|
96,182 |
|
|
|
88,220 |
|
|
|
91,596 |
|
|
|
88,857 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Income (Loss) to
Adjusted EBITDA and Net Adjusted
EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
1,240 |
|
|
$ |
1,527 |
|
|
$ |
(79,205 |
) |
|
$ |
3,207 |
|
Stock-based compensation |
|
|
4,103 |
|
|
|
3,574 |
|
|
|
13,281 |
|
|
|
14,819 |
|
Amortization of acquired intangible assets |
|
|
1,347 |
|
|
|
1,426 |
|
|
|
5,542 |
|
|
|
5,704 |
|
Depreciation and amortization |
|
|
1,690 |
|
|
|
2,268 |
|
|
|
7,831 |
|
|
|
9,976 |
|
Other expense |
|
|
1,332 |
|
|
|
2,453 |
|
|
|
10,110 |
|
|
|
14,761 |
|
(Provision for) benefit from income taxes |
|
|
(4,456 |
) |
|
|
67 |
|
|
|
615 |
|
|
|
287 |
|
Adjusted EBITDA |
|
|
5,256 |
|
|
|
11,315 |
|
|
|
(41,826 |
) |
|
|
48,754 |
|
Warranty settlement provision |
|
|
(104 |
) |
|
|
— |
|
|
|
12,803 |
|
|
|
— |
|
Net Adjusted EBITDA |
|
$ |
5,152 |
|
|
$ |
11,315 |
|
|
$ |
(29,023 |
) |
|
$ |
48,754 |
|
Net Adjusted EBITDA margin |
|
|
6.1 |
% |
|
|
10.8 |
% |
|
|
(10.1 |
)% |
|
|
12.1 |
% |
CASA SYSTEMS, INC.
RECONCILIATION OF SELECTED GAAP AND NON-GAAP FINANCIAL
MEASURES (unaudited) (in thousands)
|
|
Three Months Ended December 31, |
|
|
Twelve Months Ended December 31, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Reconciliation of Net Cash (Used in) Provided by
Operating Activities to Free Cash
Flow: |
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by operating activities |
|
$ |
(20,297 |
) |
|
$ |
18,401 |
|
|
$ |
(8,634 |
) |
|
$ |
33,598 |
|
Purchases of property and equipment and software licenses |
|
|
(1,094 |
) |
|
|
(922 |
) |
|
|
(4,419 |
) |
|
|
(5,326 |
) |
Free cash flow |
|
$ |
(21,391 |
) |
|
$ |
17,479 |
|
|
$ |
(13,053 |
) |
|
$ |
28,272 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary of Stock-Based Compensation Expense: |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue |
|
$ |
29 |
|
|
$ |
42 |
|
|
$ |
121 |
|
|
$ |
137 |
|
Research and development |
|
|
859 |
|
|
|
694 |
|
|
|
2,972 |
|
|
|
2,665 |
|
Selling, general and administrative |
|
|
3,215 |
|
|
|
2,838 |
|
|
|
10,188 |
|
|
|
12,017 |
|
Total |
|
$ |
4,103 |
|
|
$ |
3,574 |
|
|
$ |
13,281 |
|
|
$ |
14,819 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary of Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Product revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Wireless |
|
|
20,973 |
|
|
|
54,152 |
|
|
|
89,020 |
|
|
|
170,233 |
|
Fixed-line broadband |
|
|
15,279 |
|
|
|
14,808 |
|
|
|
57,904 |
|
|
|
66,017 |
|
Cable |
|
|
34,174 |
|
|
|
22,963 |
|
|
|
90,623 |
|
|
|
117,692 |
|
Product revenue |
|
$ |
70,426 |
|
|
$ |
91,923 |
|
|
$ |
237,547 |
|
|
$ |
353,942 |
|
Service revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Wireless |
|
|
3,372 |
|
|
|
2,122 |
|
|
|
7,735 |
|
|
|
5,538 |
|
Fixed-line broadband |
|
|
871 |
|
|
|
1,560 |
|
|
|
3,898 |
|
|
|
5,034 |
|
Cable |
|
|
9,734 |
|
|
|
9,494 |
|
|
|
37,357 |
|
|
|
36,811 |
|
Service revenue |
|
$ |
13,977 |
|
|
$ |
13,176 |
|
|
$ |
48,990 |
|
|
$ |
47,383 |
|
Total revenue |
|
$ |
84,403 |
|
|
$ |
105,099 |
|
|
$ |
286,537 |
|
|
$ |
401,325 |
|
CASA SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited) (in thousands)
|
|
December 31, |
|
|
December 31, |
|
|
|
2022 |
|
|
2021 |
|
Assets |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
126,312 |
|
|
$ |
154,703 |
|
Accounts receivable, net |
|
|
74,484 |
|
|
|
85,774 |
|
Inventory |
|
|
81,795 |
|
|
|
84,828 |
|
Prepaid expenses and other current assets |
|
|
2,836 |
|
|
|
5,746 |
|
Prepaid income taxes |
|
|
6,352 |
|
|
|
23,963 |
|
Total current assets |
|
|
291,779 |
|
|
|
355,014 |
|
Property and equipment, net |
|
|
19,518 |
|
|
|
23,508 |
|
Right-of-use assets |
|
|
5,199 |
|
|
|
— |
|
Accounts receivable, net of current portion |
|
|
— |
|
|
|
115 |
|
Deferred tax assets |
|
|
— |
|
|
|
101 |
|
Goodwill |
|
|
50,177 |
|
|
|
50,177 |
|
Intangible assets, net |
|
|
25,759 |
|
|
|
31,144 |
|
Other assets |
|
|
5,862 |
|
|
|
8,648 |
|
Total assets |
|
$ |
398,294 |
|
|
$ |
468,707 |
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
29,283 |
|
|
$ |
28,087 |
|
Accrued expenses and other current liabilities |
|
|
31,825 |
|
|
|
41,382 |
|
Accrued income taxes |
|
|
4,298 |
|
|
|
4,991 |
|
Deferred revenue |
|
|
31,305 |
|
|
|
14,473 |
|
Lease liability |
|
|
2,040 |
|
|
|
— |
|
Current portion of long-term debt, net of unamortized debt issuance
costs |
|
|
225,161 |
|
|
|
1,924 |
|
Total current liabilities |
|
|
323,912 |
|
|
|
90,857 |
|
Accrued income taxes, net of current portion |
|
|
6,640 |
|
|
|
7,732 |
|
Deferred tax liabilities |
|
|
1,490 |
|
|
|
5,293 |
|
Deferred revenue, net of current portion |
|
|
5,529 |
|
|
|
7,012 |
|
Lease liability, long-term |
|
|
3,416 |
|
|
|
— |
|
Long-term debt, net of current portion and unamortized debt
issuance costs |
|
|
— |
|
|
|
274,193 |
|
Other liabilities, net of current portion |
|
|
7,906 |
|
|
|
1,701 |
|
Total liabilities |
|
|
348,893 |
|
|
|
386,788 |
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
Common stock |
|
|
98 |
|
|
|
88 |
|
Treasury stock |
|
|
(14,837 |
) |
|
|
(13,645 |
) |
Additional paid-in capital |
|
|
244,675 |
|
|
|
193,654 |
|
Accumulated other comprehensive (loss) income |
|
|
(2,305 |
) |
|
|
878 |
|
Accumulated deficit |
|
|
(178,230 |
) |
|
|
(99,056 |
) |
Total stockholders’ equity |
|
|
49,401 |
|
|
|
81,919 |
|
Total liabilities and stockholders’ equity |
|
$ |
398,294 |
|
|
$ |
468,707 |
|
CASA SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited) (in thousands)
|
|
Year Ended December 31, |
|
|
|
2022 |
|
|
2021 |
|
Operating activities: |
|
|
|
|
|
|
Net (loss) income |
|
$ |
(79,205 |
) |
|
$ |
3,207 |
|
Adjustments to reconcile net (loss) income to net cash (used in)
provided by operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
13,373 |
|
|
|
15,680 |
|
Stock-based compensation |
|
|
13,281 |
|
|
|
14,819 |
|
Deferred income taxes |
|
|
(3,702 |
) |
|
|
(931 |
) |
Change in provision for excess and obsolete inventory |
|
|
17,245 |
|
|
|
2,070 |
|
Change in provision for doubtful accounts |
|
|
519 |
|
|
|
59 |
|
Gain on disposal of assets |
|
|
275 |
|
|
|
37 |
|
Non-cash operating lease expense |
|
|
2,370 |
|
|
|
— |
|
Gain on extinguishment of debt |
|
|
(2,728 |
) |
|
|
— |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Accounts receivable |
|
|
10,522 |
|
|
|
8,186 |
|
Inventory |
|
|
(14,419 |
) |
|
|
14,101 |
|
Prepaid expenses and other assets |
|
|
5,658 |
|
|
|
(2,017 |
) |
Prepaid income taxes |
|
|
17,618 |
|
|
|
(9,884 |
) |
Accounts payable |
|
|
1,978 |
|
|
|
(12,046 |
) |
Accrued expenses and other current liabilities |
|
|
(2,677 |
) |
|
|
2,148 |
|
Operating lease liabilities |
|
|
(2,366 |
) |
|
|
— |
|
Accrued income taxes |
|
|
(1,786 |
) |
|
|
(4,240 |
) |
Deferred revenue |
|
|
15,410 |
|
|
|
2,409 |
|
Net cash (used in) provided by operating activities |
|
|
(8,634 |
) |
|
|
33,598 |
|
Investing activities: |
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(3,705 |
) |
|
|
(3,887 |
) |
Purchases of software licenses |
|
|
(714 |
) |
|
|
(1,439 |
) |
Net cash used in investing activities |
|
|
(4,419 |
) |
|
|
(5,326 |
) |
Financing activities: |
|
|
|
|
|
|
Principal repayments of debt |
|
|
(48,878 |
) |
|
|
(16,275 |
) |
Proceeds from exercise of stock options |
|
|
327 |
|
|
|
2,262 |
|
Employee taxes paid related to net share settlement of equity
awards |
|
|
(2,106 |
) |
|
|
(6,465 |
) |
Proceeds from sale of common stock, net of issuance costs |
|
|
39,370 |
|
|
|
— |
|
Payments of dividends and equitable adjustments |
|
|
(1 |
) |
|
|
(98 |
) |
Repurchases of common stock |
|
|
(1,192 |
) |
|
|
(8,819 |
) |
Net cash used in financing activities |
|
|
(12,480 |
) |
|
|
(29,395 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
|
(2,846 |
) |
|
|
466 |
|
Net decrease in cash, cash equivalents and restricted
cash |
|
|
(28,379 |
) |
|
|
(657 |
) |
Cash, cash equivalents and restricted cash at beginning of
period |
|
|
157,804 |
|
|
|
158,461 |
|
Cash, cash equivalents and restricted cash at end of period |
|
$ |
129,425 |
|
|
$ |
157,804 |
|
Supplemental disclosures of cash flow
information: |
|
|
|
|
|
|
Cash paid for interest |
|
$ |
16,134 |
|
|
$ |
16,944 |
|
Cash paid for income taxes |
|
$ |
7,911 |
|
|
$ |
10,194 |
|
Supplemental disclosures of non-cash operating,
investing and financing
activities: |
|
|
|
|
|
|
Purchases of property and equipment included in accounts
payable |
|
$ |
90 |
|
|
$ |
200 |
|
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