Also, CASA originally was expected to open for trading today, but, it has been pushed back until tomorrow. Clearly, demand was very tepid for its IPO. However, the weak pricing may entice value-oriented investors, looking to take advantage of the lower valuation.
CASA provides a suite of software-centric infrastructure products that allow cable service providers to deliver voice, video and data services over a single platform at multi-gigabit speeds. Additionally, it offers products for next-generation distributed and virtualized architectures in cable operator, fixed telecom and wireless networks. More specifically, its technology enables customers to cost-effectively and dynamically increase network speed, add bandwidth capacity and new services for consumers and enterprises, reduce network complexity and reduce operating and capital expenditures.
The company says it pioneered the use of a software-centric approach to leverage the programmability of FPGAs and general purpose processors for use in the cable industry. In addition, it says it was the first to provide each of the following to its customers: a solution enabling cable service providers to deliver IP voice, digital video and data over a single port; a solution enabling cable service providers to deliver multi-gigabit speeds to their subscribers; and a remote node solution to enable distributed broadband cable access at gigabit speeds.
Its Axyom software architecture allows network functions to be provided and controlled by a distinct segment of software, which can be integrated or combined together in a building block-style fashion with the segments of software responsible for each other network function. This allows CASA to offer network architectures that can be efficiently tailored to meet each customer’s specific requirements, both as they exist at the time of initial implementation and as they evolve over time.
While CASA initially focused on providing solutions for cable service providers due to its founders’ experience in the cable industry, the commonalities between fixed and wireless network architectures have allowed it to expand into the wireless market as cable service providers have increasingly sought to add wireless capabilities to their service offerings.
For the nine months ended September 30, 2017, revenue increased 7.7% year/year to $216.9 million. Of the total, about 88% was derived from product-related sales, while 12% came from service related activity. Product revenue was up 7%, due to an increase in sales of software-centric broadband products in Europe, Middle East and Africa, and an increase of $2.0 million in sales to new customers. Service revenue climbed by 13% primarily due to a $4.4 million increase in maintenance and support services revenue due to an increase in its installed base of customers through the addition of new customers and from customers renewing their maintenance and support service contracts.
Gross margin improved to 71.5% from 65.5% in the year ago period. The increase in product gross margin was primarily due to lower cost of goods sold as a result of an increase in sales of software-based capacity expansions and a decrease in sales of our hardware-based broadband products.
Taking a look at expenses, R&D is its largest cost at 19% of revenue. For the nine months ended September 30, 2017, R&D was up 18% to $43.9 million. Total operating expenses were higher by a manageable 9% to $85.2 million.
The end result is that operating income jumped by 28% to $81.8 million and operating margin expanded by a healthy 5% to 35%.