Casa Revenue Growth Stalls as Operators Mull Virtualization

Network vendor lowers guidance as clients mull their DAA future
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Casa Systems cut its revenue guidance by $50 million for the rest of the year this week, explaining that its cable operator clients are putting off longterm investments on network expansion as they mull their big moves to virtualized architectures.

Speaking to investors during Casa’s second quarter earnings report, company president and CEO Jerry Guo said customers are making only short-term investments on network capacity expansion, eschewing high-capacity purchases of Converged Cable Access Platform hardware as they mull their strategy on next-generation Distribute Access Architecture (DAA).

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“Over the last few weeks, it has become clear to us that we are witnessing a pattern shift in procurement in the cable market,” Guo told investors, according to a transcript provided by Seeking Alpha. “While our customers weigh the timing for their large-scale rollout of the next network architecture, they are choosing to only procure capacity in a short-term basis. And they're not making very long-term upgrades of the chassis-based products in some cases.

“We do see DAA delayed industry wide in terms of large scale deployment,” Guo added. “And given that a lot of operators are contemplating DAA, they are slowing down their spending in their current capacity expansion.”

Guo said believes larger scale DAA deployment will begin in 2019.

Of course, none of this is helping Casa’s bottom line in the short term. The company’s stock is down around 23% since its Tuesday earnings report, during which it cut full-year revenue guidance to as low as $330 million.

Casa reported second quarter revenue of $68.7 million, up 3.1% from the year-ago quarter, but down 23% from the first quarter of this year.

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