Casa ramps revenues as cable, FWA demand rises

News Analysis Jeff Baumgartner, Senior Editor, Light Reading 2/1/2023

Casa Systems shares jumped more than 10% Tuesday after the company said total Q4 2022 sales surged 25% amid strength across its cable equipment, fiber and fixed wireless access (FWA) businesses.

In preliminary results, Casa said it expects Q4 sales in the range of $83 million to $84 million, driven largely by improved cable access sales and shipments of access devices.

Due to uncertainties stemming from supply chain constraints, Casa suspended its prior full-year 2022 guidance last May. However, Raymond James said Casa's preliminary Q4 sales were in-line with its estimate of $83.2 million.

(Source: Pavel Kapish/Alamy Stock Photo)

Supply chain issues hampered Casa's business through much of 2022. However, the company said conditions improved during Q4 and it now expects to realize a "substantial portion" of its 2022 backlog of more than $150 million.

"As we enter 2023, we are looking forward to improved financial results mid-year and during the second half of 2023 as we capitalize on many favorable market dynamics, including the increased Cable MSO [multiple-system operator] demand for our next generation Virtual CCAP and Remote PHY solutions, which are now successfully deployed at several large Cable MSOs," Casa President and CEO Jerry Guo said in a statement.

Cable spending perking up

Casa didn't dive into that on an MSO-by-MSO basis. But the overall uptick in Q4 signals that cable operators are starting to ramp up access network spending as they start to focus more on virtualized cable modem termination systems (vCMTSs), the distributed access architecture (DAA) and a general preparation for DOCSIS 4.0.

Dell'Oro Group's Jeff Heynen expects overall broadband network spending to rise in the coming five years and for cable spending to return to past spending levels following a slowdown over the 2019-2020 timeframe.

Charter Communications' recently announced plans to upgrade its widely deployed hybrid fiber-coaxial (HFC) networks might benefit Casa.

Raymond James analyst Simon Leopold pointed out in a research note that Casa benefits from its past work with Time Warner Cable, which merged with Charter in 2016.

"Charter intends to implement virtualization (vCCAP) in 2024, which is possibly a longer-term headwind for Casa, but perhaps it can participate in the DAA/remote PHY deployment beginning in 2024," Leopold speculated.

On the wireless side, Casa had $14 million of deferred revenue remaining from Verizon, according to Leopold. Last year, Casa signed a multi-year deal to supply 5G core network software for Verizon's public Mobile Edge Compute (MEC) offering. Tied in, Verizon has a nearly 10% stake in Casa.

Casa also got into the FWA game in 2019 via its acquisition of NetComm Wireless.

Casa is expected to release final Q4 and full-year 2022 results in early March. It will also provide annual guidance for full-year 2023 at that time.

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— Jeff Baumgartner, Senior Editor, Light Reading