Casa Systems cut its teeth on the cable access market, but the vendor's strategic decision to diversify and extend into the mobile/wireless and the wireline telco markets is also showing signs of maturity.
Cable still represents the core of Casa's business – about 51% of the total revenues pulled down in Q2 2020 – but the vendor is starting to gather some momentum in fixed telecom and wireless.
Casa generated $83.35 million in total revenues in Q2 2020, beating Wall Street expectations of $77.3 million. Its wireless business, aided in part by Casa's acquisition of NetComm in 2019, notched $15.51 million (versus $1.42 million a year ago), while fixed telecom snared $23.81 million, compared with almost nothing a year earlier.
Casa's wireless backlog surged to $85 million in Q2 2020 from $26 million at the end of Q1 2020, CFO Scott Bruckner said in a call with Light Reading. He attributes that rise to a blend of fixed wireless products from the NetComm deal as well as activity centered on 4G/5G packet core products and private wireless network deployments.
On the fixed telecom side, Casa is seeing action in its Gfast portfolio (which also came from NetComm), as it signed deals with two large (but unnamed) customers in North America and Europe looking to squeeze more life out of their copper networks.
Cable stability returns... but is it here to stay?
Back to its cable core, Casa is also seeing some stability in that piece of the business after operator spending fell off a cliff in the early parts of 2019.
Casa's Q2 cable revenues hit $32.79 million, off from $40.79 million a year earlier and flat from a sequential basis. But the results in the period still represented the sixth-consecutive quarter of "stable" revenues in the category, Bruckner said.
Casa has seen a pickup in CCAP (converged cable access platform) hardware sales, in the form of chassis, line cards and nodes, as cable operators tacked on capacity and implemented node splits during a pandemic that has seen peak usage of HFC networks climb, CEO Jerry Guo told Light Reading. That focus on hardware sales outstripped the momentum seen with software licenses on already-deployed CCAP products, he said.
Casa has also nabbed some business from operators that were swapping out older cable access gear from other vendors with new CCAP products from Casa.
Heading into Q3, Guo expects a more balanced mix of CCAP software and hardware sales.
At the same time, a focus on near-term capacity needs using already-deployed CCAP platforms also means there's not been a lot of volume trial and deployment activity for cable access products tied to new distributed access architectures and virtualization. However, about half of Casa's 60 or so trials underway with cable operators are focused on advanced architectures.
"Many MSOs are still thinking about the right architecture moving forward. There is no single architecture everybody is going after at this point," Guo said on Thursday's call.
Casa maintained its full-year outlook.
Can Casa execute against wireless rivals?
Simon Leopold, analyst with Raymond James, likes Casa's diversification strategy, but still questions how well the company will be able execute its mobile/wireless business against a crop of tough (and larger) competitors that includes Cisco, Ericsson, Nokia and Huawei.
Casa's "partnership with HP Enterprise helps, but is not a game changer," Leopold wrote.
He also believes Casa is not without challenges to overcome on the cable side, referencing Harmonic's recent "Cable OS" win at Vodafone and noting that Vecima, following its acquisition of Nokia's cable access business, will be in position to take share at Charter Communications, one of Casa's key customers.
- Casa Systems revenues top $83M in Q2
- Casa Systems gets a lift from cable network capacity bumps
- Cable upstream growth went 'bonkers' during early stages of pandemic – CommScope
- Casa Systems buys AT&T's fixed wireless equipment supplier for $115M
- Casa Systems seeks wireless gains amid wireline pains
— Jeff Baumgartner, Senior Editor, Light Reading