Despite the raging COVID-19 pandemic that has infected the cable and video infrastructure market, Vecima Networks is feeling pretty healthy and hearty right now.
Six weeks after closing a deal to acquire the bulk of Nokia's cable access product portfolio (including key DOCSIS distributed access architecture (DAA) technologies that Nokia bought from a startup called Gainspeed four years ago), Vecima reported strong financial numbers Thursday for its fiscal fourth quarter and full fiscal year, which both ended June 30. The company also offered a promising outlook for fiscal 2021 as it moves ahead with customer orders, service trials and rollouts of its expanded portfolio of cable and video access gear.
Based in Victoria, British Columbia, Vecima reported that its revenues rose to C$26.1 million ($19.6 million) in the fourth quarter, up nearly 21% from C$20.7 million ($15.5 million) in the year-ago period. At the same time, the company narrowed its quarterly loss to C$1.0 million ($749,000), a marked improvement from its quarterly loss of $3.0 million ($2,2 million) a year earlier.
For the full year, the Canadian company posted revenues of C96.4 million ($72.2 million), up 13% from fiscal 2019 and its best year since 2016. Net income rebounded from a loss of C$3.5 million ($2.6 million) last year to a gain of C$1.8 million ($1.3 million) this year.
On the earnings call with analysts this afternoon, Vecima executives credited the financial gains to several factors, including customer and product pickups from the Nokia deal and increased sales of their homegrown DAA and IP video and VoD infrastructure products to cable and video providers. They see further gains coming in the new fiscal year as both DAA and IP video technologies pick up steam throughout the world.
"This is a once-in-a-lifetime technology transition," declared Vecima President & CEO Sumit Kumar, noting that fiscal 2020 was "a truly pivotal year" for his company. Without specifying exact targets, he and CFO Dale Booth indicated that they're looking for somewhere around 20% growth again in fiscal 2021.
The Nokia DAA, EPON and DOCSIS Provisioning over EPON (DPoE) products, which Vecima acquired for an undisclosed price, will certainly fuel a good part of that growth. With that deal, Vecima, which already had a product set for remote PHY under the "Entra" brand, now boasts a full portfolio of DOCSIS DAA products covering both remote PHY and remote MAC/PHY options while also adding EPON and DPoE products to the mix.
The Nokia deal also brought more than a dozen new customers to the Vecima fold. Without specifying the number of additional customers, Vecima officials noted that they now have "engagements for access network technologies with 41 operators, including 27 operators that are either in lab trial, field trial or live deployment phases across the globe." That's a bit more than double the 19 "operator engagements" they had underway with their Entra DAA product line before the Nokia deal.
"We think of it as adding jet fuel to a surging market," said Kumar, referring to the Nokia portfolio purchase.
Indeed, the Entra portfolio, which consists of a remote PHY node, video controller and related gear, also demonstrated robust organic growth. Entra product sales rose to C$2.1 million ($1.3 million) for the quarter and C$5.3 million ($4.0 million) for the year, up from C$0.6 million ($0.4 million) and C$1.2 million ($0.9 million), respectively, as an undisclosed major cable operators began deploying the equipment throughout its footprint and other MSO orders started streaming in.
Vecima also saw strong growth from its content delivery and storage (CDS) unit, which produces QAM and IPTV gear for cable and video providers. With the pay-TV industry also undergoing a generational shift to IP-delivered services, the vendor saw CDS revenues rise 14% to C$14.3 million ($10.7 million) for the quarter and 32% to C$55.2 million ($41.3 million) for the year as sales of its MediaScaleX and other IPTV solutions surged.
Further, Vecima said it secured its largest CDS segment order yet with an undisclosed Tier 1 operator in the Asia-Pacific region, setting the stage for more gains in the new fiscal year. The company also boasted sales gains on the commercial video end as another major MSO customer, also not disclosed, expanded its video platform for the hospitality market.
In trading on the Toronto Stock Exchange, Vecima's shares closed at C$13.46 ($10.07) this afternoon, up nearly 7% on the day.
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— Alan Breznick, Cable/Video Practice Leader, Light Reading