We named Casa Systems as a “struggling company” in our recent red shirts in the danger zone piece. That’s hardly a surprise with recent losses on the books, and a new debt agreement signed.
Naturally after that story, Casa’s new CEO, Michael Glickman, reached out and wanted to talk to us about how the company intends to turn around the business in 2024.
Casa hired Glickman in August 2023. (Previously he was president at PacketFabric and held executive positions at Cisco.) He told us his goal is to "get to EBITDA profitability and cash-flow positive on a sustained basis as quickly as we possibly can in ‘24."
Big question: How?
The big question though is: "How?"
Being Silverlinings, we didn't hold back from asking.
Glickman said that part of the transformation will involve the company growing and diversifying its customer base.
Currently, the average person can easily see that Casa is very focused on Verizon. Glickman told us they are an "anchor" customer, but they aren't the company's only customer.
“It’s great to have Verizon as an anchor customer, and they’ve been very supportive,” he noted. “We did have an announcement [recently] with YTL in Malaysia, who are using our [cloud-native 5G] software across their entire core.”
“Our task in ‘24 is not only to continue to get more customers utilizing our platform but also to help us to get some press around that,” the CEO stated. “You’ll see tier 1s and tier 2s.
Glickman has previously talked to Silverlinings about the “more than 10 customers” Casa already has on its books and his cloud ambitions. “I’ve been pushing some of our good customers hard to get some press,” Glickman told us.
Cloud-native ambitions
The company kicked off 2024 by hiring Google Executive Santanu Dasgupta as its CTO. Formerly focused on telco network modernization at Google, Dasgupta's goal is move Casa into the cloud-native space, according to the company announcement about his appointment.
Glickman echoed that news during our call. “You’ll see us really start to focus the portfolio around our virtualized software assets,” Glickman he said. “I really feel like the industry is starting to adopt these virtualized technologies.”
He said that wireless carriers have already started to shift to a virtualized, cloud-native core while telcos are starting to move in that direction, with cable players in the rear.
When it comes to potential customers for Casa this year, Dell'Oro Group analyst Jeff Heynen, who deals with broadband access for the firm, told us via email that he anticipates that, "if you are...considering cable, then you can count Claro and Vodafone as customers likely to grow their purchases with Casa this year."
Despite the company's wireless ambitions, Heynen's colleague at Dell'Oro, Dave Bolan said he doesn't see much happening on the wireless side for Casa yet. "Beyond Verizon using Casa Systems for [multi-access edge computing], I am not aware of any other customers," Bolan told us in an email.
Among competitive vendors, Glickman told us, “There are very few that have made the investment we have on a cloud-native set of virtualized functions.”
Bolan however said he saw plenty of competitors in their space. "Their competitors would be the big four — Ericsson, Huawei, Nokia and ZTE — other vendors such as Cisco, Mavenir, NEC and Samsung, and numerous other 5G Core vendors targeting enterprises," he told us.
Nonetheless, Glickman is expecting a better year. He is particularly keen on reducing Casa’s debt burden as soon as possible.
About that debt...
According to Stock Analysis, the "company has $47.93 million in cash and $185.34 million in debt, giving a net cash position of -$137.42 million or -$1.39 per share."
“My aim is to take that off the company’s shoulders...the reason being is that having that debt with the interest rates that will continue to go up as we get to 2027, which is when we’re now committed to paying the bulk of that off, is not a good place to be,” Glickman said.
“I want to take those dollars and reinvest them in the business, that’s high on my list, and we have made significant progress,” he concluded but didn't offer any more detail.
Casa's current stock price (NASDAQ: CASA) of around 38 cents still means that the company is currently in NASDAQ danger zone.
The NASDAQ rules state that if a company trades for 30 consecutive business days below the $1.00 minimum closing bid price requirement, it will send a notice to the company that gives it 180 calendar days to get the stock back in compliance.
Casa started trading at below one dollar on August 8, 2023. It has not topped $1 since and appears to be on an extended downward spiral.
Watch this space as we continue to cover the company and its planned turnaround.