Casa Systems, Inc. (NASDAQ: CASA) today announced certain preliminary results for the fourth quarter and fiscal year 2018 ended December 31, 2018.

“Our fourth quarter results were impacted by lower than expected spending in hardware by certain MSO customers as they begin to transition from Integrated CCAP to Distributed Access Architecture (DAA). As a result, we saw higher than anticipated software-based capacity sales during the quarter and lower than expected hardware volumes. To a lesser extent we also experienced wireless product certification delays, which has affected the timing of our wireless revenue recognition,” said Jerry Guo, Casa’s President and CEO. “While we are disappointed with our financial performance during the fourth quarter with lower than anticipated revenue, we do expect to be within guidance on gross margin, non-GAAP net income and non-GAAP diluted net income per share. Additionally, during the fourth quarter we saw several positive developments in our business. Software sales were quite healthy and, as a result, margins remained strong. We closed and shipped a major deal in DAA representing material revenue during the quarter. And we closed several wireless deals, including with a new and important Tier 1 operator, thereby continuing to expand our wireless customer footprint. As network transformation continues and service provider investments in 5G and DAA begin to ramp, we remain confident in the strategic direction of the company. We believe that Casa’s converged solutions for broadband networks position Casa to benefit from these material technology inflection points.”

Fourth Quarter 2018 Preliminary Financial Highlights

• Revenue between $63 million and $69 million
• Gross Margin in a range of 70% to 73%
• Adjusted EBITDA between $17.5 million and $21.5 million
• GAAP net income between $9.5 million and $13.5 million and Non-GAAP net income between $11.5 million and $15.5 million
• GAAP diluted net income per share between $0.11 and $0.15 and Non-GAAP diluted net income per share between $0.13 and $0.17

Full Year 2018 Preliminary Financial Highlights

• Revenue between $292 million and $298 million, compared to the prior outlook of $330 million and $350 million
• Gross Margin in a range of 70% to 73%, compared to the prior outlook of high 60s % to low 70s %
• Adjusted EBITDA between $94 million and $98 million
• GAAP net income between $67.5 million and $71.5 million
• Non-GAAP net income between $76 million and $80 million, compared to the prior outlook of $76 million and $83 million
• GAAP diluted net income per share between $0.73 and $0.78
• Non-GAAP diluted net income per share between $0.82 and $0.87, compared to the prior outlook of $0.80 and $0.88

These preliminary, unaudited financial estimates are based on information available to management as of the date of this press release, remain subject to the completion of normal quarter-end accounting procedures and adjustments, and are subject to change. Casa’s independent registered public accounting firm has not completed its review of our results for the quarter ended December 31, 2018 or completed its audit of our results for the year ended December 31, 2018. We undertake no obligation to update the information in this press release in the event facts or circumstances change after the date of this press release.

Casa Systems plans to release its financial results for the fourth quarter and full year 2018 on Thursday, February 21, 2019 after the close of the U.S. financial markets.

CASA SYSTEMS, INC.RECONCILIATION OF SELECTED GAAP AND NON-GAAP PRELIMINARY FINANCIAL MEASURES(unaudited) (in thousands, except per share amounts)