Casa Systems Announces CEO Transition and Reports Fourth Quarter and Full Year 2022 Financial Results
Via Casa Systems
Mar 15, 2023
Jerry Guo to Retire as President and CEO, Remains on Casa Board of Directors
Bruce Evans Appointed New Chairman of Expanded Board of Directors
Scott Bruckner Joins the Board of Directors
Q4 Revenue of $84.4 Million Slightly Exceeds High End of Preliminary Guidance
GAAP Net Income of $1.2 Million and Positive Net Adjusted EBITDA of $5.2 Million for Quarter
Debt Reduced by $49.2 Million to $226.0 Million during Q4
Provides Full Year Revenue and Net Adjusted EBITDA Guidance
ANDOVER, Mass. -- 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.
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