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Casa Systems, Inc. (NASDAQ:CASA)
Q4 2019 Earnings Call
Feb 20, 2020, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Greetings, and welcome to the Casa Systems fourth-quarter and full-year 2019 financial results conference call. Please note this conference is being recorded. I will now turn the conference over to your host, Monica Gould, investor relations for Casa Systems. Ms.

Gould, you may begin.

Monica Gould -- Investor Relations

Thank you, operator, and good afternoon, everyone. Casa released results for the fourth-quarter and full-year 2019 ended December 31, 2019 this afternoon after the market closed. If you did not receive a copy of our earnings press release, you may obtain it from the Investor Relations section of our website at investors.casa-systems.com. With me on today's call are Jerry Guo, chief executive officer; and Scott Bruckner, interim chief financial officer and senior vice president.

This call is being webcast and will be archived on the Investor Relations section of our website. Before I turn the call over to Jerry, I'd like to note that today's discussion will contain forward-looking statements based on the business environment as we currently see it and, as such, does include certain risks and uncertainties. Please refer to our press release and our SEC filings for more information on the specific risk factors that could cause our actual results to differ materially from the projections described in today's discussion. Any forward-looking statements that we make on this call or in the earnings release are based upon information that we believe as of today, and we undertake no obligation to update these statements as a result of new information or future events.

In addition to U.S. GAAP reporting, we report certain financial measures that do not conform to generally accepted accounting principles. During the call, we may use non-GAAP measures if we believe it useful to investors or we believe it will help investors better understand our performance or business trends. And with that, I'd like to turn the call over to Jerry.

Jerry Guo -- Chief Executive Officer

Good afternoon, everyone, and thanks for joining us today. As you may have already seen in our earnings press release, I am pleased to report that our results for the fourth-quarter and the full-year 2019 came in above our revised guidance range. We are encouraged by the volume positive developments. First, total fourth-quarter revenue was $112.9 million versus $67.8 million in Q4 of 2018.

Q4 revenue, excluding contributions from our NetComm acquisition, was $71.7 million, a 5.7% year-over-year organic growth. Second, in our cable segment, we saw higher revenue for the fourth quarter than we initially anticipated. During our third-quarter earnings call, we noted that timing for closing certain larger orders was more protracted than what we have seen previously. As a result, a handful of larger deals that were very close to closing slipped out of the third quarter.

As we had hoped, some of these orders materialized in the fourth quarter. Fourth-quarter cable revenue was $54.5 million, a sequential growth of 27% and from the third quarter. While this is lower than what we have historically seen in the fourth quarter from our MSO customers and lower compared to Q4 of last year, we are encouraged by the sequential increase in revenue, which indicates that our MSO customers have a continuing need to invest to meet the growth in downstream and upstream capacity demand they are seeing from their subscribers. Third, in wireless, we saw increased revenue recognition from our wireless backlog following a delay that was related to additional features we added to a product from one of our larger orders.

Wireless revenue for the quarter was $36.9 million, including $20 million from NetComm fixed wireless access products. Full-year wireless revenue was $60 million, including $36.4 million from NetComm. Scott Bruckner will discuss these results in greater detail in his remarks later on during this call. Before that, I would like to highlight a few points about our business during the fourth quarter and then briefly comment on our outlook for the fiscal-year 2020.

During the fourth quarter, our overall business contributed to become more diversified as a result of our acquisition of NetComm and continued progress in wireless and fixed telco. In terms of revenue during the quarter, approximately 48% of revenue came from our cable business compared to 52% in the third quarter; 33% of revenue came from our wireless business, up from 26% in the third quarter; and 19% of revenue came from our fixed telco segment. In terms of customers, during the fourth quarter, we had four 10% or greater customers, including one Tier 1 North American mobile network operator. Together, these customers accounted for 53% of our revenue versus 76% for our 10% or greater customers during the same period in 2018.

For the full year, 10% or greater customers accounted for only 27% of revenue versus 64% for fiscal-year 2018. Turning now to our product areas. In cable, we believe that the improvement we saw during the fourth quarter was related to our customers' needs to meet demand for capacity prior to any large-scale DAA and virtual core deployments. As in previous quarters, we do see some revenue from new cable products, including our DAA solutions.

However, cable revenue for the period continued to be overwhelmingly from integrated CCAP hardware and software capacity upgrades. Moving to wireless, as I noted earlier, during the fourth quarter, we made material progress on recognizing revenue from our backlog. At the end of the fourth quarter, our wireless backlog stood at around $22 million and included our 4G and 5G outdoor radios, indoor small cells, fixed wireless access devices and our virtual EPC and 5G core products. I am pleased to report that during Q1, we're continuing to make progress on building this backlog, which now includes a sizable 5G fixed wireless access order from a Tier 1 North American service provider.

The number of our wireless customers today stands at 16 service providers globally, including three customers from our NetComm acquisition. In fixed telco, which includes our optical virtual BNG and fiber to the distribution point products, revenue for the fourth quarter was just under 20% of sales. We are starting our 2020 fiscal year with a fixed telco backlog of over $24 million, mostly driven by our sales of fiber to the distribution point for us. As networks continue to virtualize and converge at the core and at the edge, we anticipate that demand for our fixed telco products, in general, and our virtual BNG router, in particular, will increase this year.

I would like now to update you on our trial activity. On our last call, I noted that we were supporting 87 trials with 52 unique customers during the third quarter. This included 20 in wireless, eight in fixed telco and 59 in cable. During the fourth quarter, we supported 80 trials with 52 unique customers.

Of the 80 trials in Q4, 20 are in wireless, nine in fixed telco and 51 in cable, of which more than 75% are in new cable products including our DAA and the virtual CCAP solutions. During the quarter, the most notable order conversion was for the large 5G fixed wireless access solution that, as I mentioned earlier, was placed by a Tier 1 North American service provider. Additionally, we booked an order for our virtual BNG solution from a service provider in APAC. Turning now to our outlook for 2020, we are already seeing good traction in the first quarter and starting the year with a total backlog of approximately $80 million, including approximately $25 million of deferred revenue.

We see this as a promising start to the year with opportunities for the full range of products we offer but particularly for products in our wireless portfolio. We think that 2020 will be key for 5G network rollouts. As a result, we expect wireless to be a material component of our revenue during the year. I would note, however, that wireless revenue will most likely be concentrated in the second half of the year.

In the cable market, we continue to be cautious about MSO spend, particularly during the first half of the year, which we believe will be characterized by cable customers continuing to add capacity with purchases of additional hardware and software licenses for existing integrated CCAP chassis. With respect to new cable architectures, an important catalyst to watch for later this year will be the impact of potentially increased competition from 5G mobile and fixed wireless access rollouts and the increased growth in subscriber demand for bandwidth, particularly for upstream channels. As in our fixed telco segment, as I mentioned earlier, network virtualization and core and edge convergence create material opportunities for our virtual BNG and multiservice router products. With that said, we expect our 2020 full-year revenue will range from $340 million to $360 million.

While we are already seeing good momentum in Q1, our guidance reflects our initially cautious view on cable and our expectation of wireless as our key growth driver for the year, both for our organic products and those from our acquired NetComm business. We think that the second half of the year will be particularly active for wireless as 5G networks continue to be rolled out. Before moving on to our financial results, I would like to provide you some detail on changes we have made to our finance team following Maurizio Nicolelli's departure. As we announced, Scott Bruckner has been appointed interim CFO by the board.

We are very grateful to Scott for agreeing to step into this role while we search for a permanent replacement. In the meantime, I think Scott will do a great job given his expertise in our industry and our company and his extensive experience in corporate finance after more than two decades of experience as an investment banker. Supporting Scott, Matt Slepian, our corporate controller with over 30 years of accounting and finance experience, will serve as principal accounting officer. I'm confident that our financial management is in very good hands.

With that, I will ask Scott to comment on our financial results in more detail.

Scott Bruckner -- Interim Chief Financial Officer and Senior Vice President

Thank you, Jerry, and good afternoon, everyone. I will start by reviewing our full-year 2019 financial results, and then I'll turn to our fourth-quarter results before providing detail on our guidance for 2020. For the full-year 2019, we achieved revenue of $282.3 million, a decrease of approximately 5% compared to 2018. Revenue from the acquired NetComm business was $75.8 million during 2019.

And as a reminder, we closed our NetComm acquisition on July 1 of last year, so there are only six months of NetComm revenue in our 2019 full-year results. Excluding revenue from the acquired NetComm business, revenue decreased 30.5% year over year. Total product revenue was $241.6 million in 2019, of which $164.7 million or 68% was from hardware and $76.9 million or 32% was from software. This compares to $257 million of total product revenue in 2018 with $133.4 million or 52% from hardware and $123.6 million or 48% from software.

A higher percentage of hardware revenue in 2019 was due to the inclusion of revenue from NetComm, which was 100% hardware, as well as increased wireless revenue in the fourth quarter from Casa, which consisted predominantly of our radio products. Total service revenue for the year was $40.7 million in 2019 versus $40.1 million in 2018. Breaking down our revenue by product for the full-year 2019. $182.9 million or 65% of total revenue came from cable.

$59.9 million or 21% of total revenue, including $36.4 million from NetComm, came from wireless. And $39.5 million or 14% of total revenue came from fixed telecom. This compares to full-year 2018 when almost 100% of our revenue was from cable. GAAP gross margin for the full-year 2019 was 57.6%, compared to 73.4% in 2018, and this was largely due to the higher percentage of hardware sales in 2019.

Hardware revenue included our wireless radio products, fixed wireless access products and chassis and line cards and cable. Total GAAP operating expenses for the full-year 2019 were $171.7 million or 61% of revenue, compared to $139 million or 47% of revenue in 2018. The year-over-year increase in GAAP operating expenses was primarily related to increased headcount from our acquisition of NetComm, also included acquisition-related costs and stock-based compensation expenses. On a GAAP basis, we booked a net loss for the full year of $48.2 million, but this was primarily due to a valuation allowance that we recorded against our U.S.

deferred tax asset balance of $35.2 million. Although we were in a thtree-year cumulative net profit position as of December 31, 2019, and while we do expect to be profitable for the full year of 2020, we also expect to be in a three-year cumulative tax loss position this year. So as a result, based on accounting guidance, we felt it appropriate to book a tax valuation allowance. Adjusted EBITDA for the full-year 2019 was $24 million, compared to $98.1 million in 2018.

Non-GAAP net income for the full-year 2019 was $2.6 million or $0.04 per diluted share, compared to $81.5 million or $0.88 per diluted share for the full-year 2018. Now turning to our fourth-quarter results. Total revenue in the fourth quarter of 2019 was $112.9 million, which compares to $67.8 million in the fourth quarter of 2018 and $81.8 million in the third quarter of 2019. Revenue from the acquired NetComm business was $41.2 million during the fourth quarter, and as Jerry mentioned, excluding revenue from the acquired NetComm business, revenue increased 5.7% year over year.

Total product revenue was $101.4 million in the fourth quarter, of which $75.2 million or 74% was from hardware and $26.2 million or 26% was from software. This compares to $57.4 million of total product revenue in the fourth quarter of last year with $24.6 million or 43% from hardware and $32.8 million or 57% from software. Hardware sales during the fourth quarter accounted for 67% of total revenue, compared to 36% in the prior-year quarter. And again, the increase in hardware revenue during the fourth quarter was primarily driven by the acquisition of the NetComm business, as well as increased wireless revenue for core Casa during the quarter that consisted mostly of our radio products.

As Jerry mentioned, from an end market perspective, our business became more diversified in Q4 as we continue to make progress in the wireless and fixed telecom markets. During Q4, approximately 48% of our revenue or $54.5 million came from cable, 33% or $36.9 million came from wireless and 19% or $21.5 million was from fixed telecom, up materially from Q4 when we had no revenue from fixed telecom. Our Q4 2019 wireless revenue included approximately $20 million from NetComm and $17 million from core Casa of products. Our consolidated GAAP gross margin for the fourth quarter of 2019 was 52.7%, compared to 73.2% in the fourth quarter of 2018.

The year-on-year decrease in our gross margin was primarily driven by the higher mix of hardware revenue during the quarter, including revenue from our wireless radio products and the acquisition of NetComm, which has lower gross margins. If we exclude NetComm, core Casa of gross margins were 66.6% during the fourth quarter of 2019. Turning to expenses, total GAAP operating expenses in the fourth quarter of 2019 were $49.5 million, compared to $32.8 million in the fourth quarter of 2018. The increase in total operating expenses was primarily due to the inclusion of operating expenses from NetComm from July 1, 2019.

Head count at December 31, 2019, totaled 997 employees, compared to 1,066 employees as of September 30, 2019. The reduction in head count was related to eliminating overlapping functions following our acquisition of NetComm, some voluntary attrition as a result of the acquisition and a rebalancing of R&D and sales resources during Q4 to address the higher growth that we anticipate in our wireless and fixed telecom markets during 2020. Our adjusted EBITDA in the fourth quarter of 2019 was $18.2 million, compared to $21.6 million in the fourth quarter of 2018. We recorded a tax expense for full year of $23.8 million, which includes the tax valuation allowance we recorded in Q4 of $35.2 million.

Non-GAAP net income for the fourth quarter of 2019 was $13.1 million, compared to non-GAAP net income of $17.3 million in the fourth quarter of 2018. Non-GAAP diluted net income per share was $0.15 for the fourth quarter of 2019, compared to non-GAAP diluted net income per share of $0.20 in the fourth quarter of 2018. Free cash flow for the quarter was negative $7.8 million, compared to a positive $2.7 million in the fourth quarter of 2018. We ended the fourth quarter with cash and cash equivalents of $114.7 million and total debt of $293.2 million.

As of December 31, receivables were approximately $94 million, a good portion of which we expect to collect during Q1. The aging of receivables also remains very good with less than 2% at greater than 90 days. During the quarter, we repurchased 495,000 shares for $1.8 million under our share repurchase program. And as we've done in the past, we will continue to review current business developments to determine the best use of our capital for the coming year.

We also made very good progress on our integration of NetComm this year. To date, on an annualized basis, we have achieved $6.4 million of cost synergies and continue to be on track to recognize total annualized cost savings of around $7 million this year. We also continue to expect accretion of approximately $0.07 and $0.08 per share on a non-GAAP basis in 2020. Speaking of 2020, I would now like to turn to our guidance.

For the full year of 2020, as Jerry already mentioned, we expect total revenue to be between $340 million and $360 million. We expect our full-year gross margin to be in the range of 50% and 60%, which includes our lower-margin access device products from NetComm and a higher mix of hardware revenue that we anticipate achieving in our wireless business. Adjusted EBITDA is expected to be in the range of $33 million and $43 million. We anticipate non-GAAP diluted EPS to be in the range of $0.00 and $0.12.

On a GAAP basis, we expect a loss per share in the range of $0.04 and $0.16. Stock-based compensation is expected to be approximately $10 million in 2020. Overall, 2019 was a transition year for the company with cable still in a digestion phase, the completion and integration of our NetComm acquisition and the increasing contribution from our wireless and fixed telecom products. Looking ahead, we anticipate that momentum in wireless will continue, and for all the reasons that Jerry noted, we expect to see significant business opportunities in wireless for 2020.

In terms of our revenue cadence for the year, we believe that we are likely to see a return to our normal pattern with roughly 35% to 40% of revenue achieved in the first half and the remainder in the second half of the year. And we also anticipate that, as we've seen in the past, our first-quarter revenue will be higher than revenues in the second quarter. With that, I will now turn the call back to the operator to start the Q&A session.

Questions & Answers:


Operator

Thank you. Ladies and gentlemen, at this time, we will be conducting a question-and-answer session. [Operator instructions] Our first question comes from Tim Long with Barclays. Please state your question.

Tim Long -- Barclays -- Analyst

Thank you. Excuse me. Two questions if I could. Maybe just on the cable front, could you talk a little bit about the visibility there? It sounds like you're being a little conservative, but it sounds like some of the commentary from the MSOs implies, although spending might be tough, it might be a little bit more of an equipment bent this year, so if you could touch on that.

And then secondly, on the 5G side, it sounds like a nice fixed wireless win. Could you talk a little bit about what you're seeing in your business for kind of just more cellular 5G outdoor, as well as indoor, and how that looks in the pipeline into 2020?

Jerry Guo -- Chief Executive Officer

Tim, let me answer this question. This is Jerry here. As you know that the cable spending is notoriously difficult to forecast. We take a cautious approach in forecasting our 2020 revenue from the cable space.

We do see that MSOs are continuing to spend, and we are selling different types of solutions, including the traditional integrated CCAP, as well as DAA solutions. As to the second question, on the wireless side, we reported a large fixed wireless win in 5G, and we also have several deals in the traditional mobile wireless space we are working on. And that includes both the core side of the wireless, as well as the indoor and outdoor radio of the wireless products.

Scott Bruckner -- Interim Chief Financial Officer and Senior Vice President

Tim, it's Scott, If I could just add a couple of things, I mean, if I look at our backlog, so orders that we received in the fourth quarter that we were not talking about, obviously, in our last earnings call, it's actually pretty evenly distributed across what Jerry was talking about. There's a lot of fixed wireless interest this year. Our outdoor strand products and our 5G radio product is in our backlog now. They're components of core, both in the core of the network and radio cores, and that includes indoor and outdoor radio.

So I think you'll see not only in addition to an increased contribution of wireless across the full range of products for this year but a nice mix of those products across the portfolio.

Tim Long -- Barclays -- Analyst

OK. Thank you. That's helpful.

Operator

Thank you. Our next question comes from Meta Marshall with Morgan Stanley. Please state your question.

Karan Juvekar -- Morgan Stanley -- Analyst

Yes. Hi. This is Karan on for Meta. Just a quick one.

As you look to the wireless business, do you think that business has become more predictable as you've gotten more certifications, or is it still difficult to forecast? Thank you.

Jerry Guo -- Chief Executive Officer

Well, the wireless business is still at the early stage, even though we see the growth and we see it as a growth driver. And we still feel it's early stages to have really long-term visibility, but we do see that as a more -- it has a better visibility than the cable space.

Karan Juvekar -- Morgan Stanley -- Analyst

OK. And if I could just follow up, where does the gross margin leverage come from in 2020? Just a little bit more color there would be helpful. Thank you.

Scott Bruckner -- Interim Chief Financial Officer and Senior Vice President

Yes. So by gross margin leverage, I guess I would point out that the gross margin that we're forecasting is very similar to what we saw in 2019. So we still think we're going to be in a range of about 50% to 60%, and that's largely driven by hardware in the product mix for revenues. So for that gross margin to go up, we have to see more software.

Now there's a trade-off there because if we go out and we size the market, particularly in wireless, it's our view and I think the industry's view in general that the bulk of revenue, particularly in the initial rollout phase, is going to come from radios. There's a lot of deployment that has to happen through densification in 5G. But if, for some reason, we're more successful in selling our software cores, then I think you'll see that gross margin increase. But for right now, we're being fairly consistent with what we saw in the fourth quarter, what we see in our backlog, and then this is also based on our trial activity, advanced trials and conversations that we're having with our customers that make us believe that wireless, at least for us this year, will be more hardware-heavy.

And so we feel pretty comfortable with the gross margin range that we've guided for.

Karan Juvekar -- Morgan Stanley -- Analyst

OK. Thank you very much.

Operator

Our next question comes from Rich Valera with Needham & Company. Please state your question.

Nate Hitchcock -- Needham and Company -- Analyst

Hi, thank you. This is Nate Hitchcock on for Rich. First question for Jerry. So Jerry, in the prepared remarks, you mentioned that some revenue recognized in the quarter are from distributed access.

Can you provide any color on this regarding any quarter-over-quarter improvements in the business? And then you also mentioned some additional trials within the virtual CCAP space. I was just wondering if you could provide any additional color on those trials, as well as potential expectation for initial deployments from virtual, and then maybe any color on the competitive outlook in this space. Thank you.

Jerry Guo -- Chief Executive Officer

Yes. We have seen interest across the globe for distributed products using either a chassis-based core or using a virtual CCAP core, combined with our DAA nodes. So we have trials in North America, in Europe, and in Asia Pacific. And we have converted some into revenue.

We're not disclosing specifics on the size of those yet, but we do believe that we're going to see continuing conversion from trials into revenue throughout 2020.

Nate Hitchcock -- Needham and Company -- Analyst

OK. Great. Thank you. And then just a follow-up regarding NetComm.

So I know Scott mentioned that $6.4 million in synergies recognized thus far, and I think the initial range was $7 million to $8 million within the first 12 months. But I was wondering as you've already made a reduction in head count, some realignment of sales, thus far, where are the additional efforts in terms of synergies will come, as well as if you could provide any color on cross-sell. I know that was mentioned I think in a recent conference, Jerry. Any color there would be really appreciated.

Thanks for taking the questions.

Scott Bruckner -- Interim Chief Financial Officer and Senior Vice President

Sure. So let me start on the synergy side. You have a very good memory. And in fact, we are tracking toward exactly that level.

So the $6.5 million, I think, was realized a lot more quickly than we anticipated. And most of it, as you've correctly noted, has come from head-count reductions where we saw redundant functions, and also, as Jerry mentioned, our strategy for the year, which is focusing on wireless. So we've made sure that we are adequately resourced for the large wireless opportunity that we see ahead of us. The other large synergy items will come from software integration.

That's a tougher thing to accomplish, and we've always understood that our timeline for that would be 12 months. Maybe it slips to 18 months, but that's still under way. We haven't completed it, so we haven't realized the savings from that yet. And then there's a real estate issue -- it's not an issue.

It's just an area of cost savings that we're in the process of working through right now. So we've moved personnel from that particular office, and now we're working through what we do with that office. That would comprise also a significant part of the remaining $1 million, $1.5 million.

Nate Hitchcock -- Needham and Company -- Analyst

Great. Thank you very much.

Jerry Guo -- Chief Executive Officer

Yes. As to that revenue synergy, the cross-selling, we are advanced trials on several products, both on the Casa side and the NetComm side. We expect some of that converted into revenue opportunities in this year.

Operator

Thank you. [Operator instructions] Our next question comes from Tim Savageaux with Northland Capital Markets. Please state your question.

Tim Savageaux -- Northland Capital Markets -- Analyst

Hi, good afternoon. A question on the wireless front. I guess can you say whether -- I think you mentioned you had a North American Tier 1 wireless operator as a 10% customer in the quarter in Q4. And I guess my question is, is that the same operator that you've indicated the kind of 5G fixed wireless access? Or is that another North American Tier 1?

Jerry Guo -- Chief Executive Officer

Tim, they are different, but we cannot disclose the names.

Tim Savageaux -- Northland Capital Markets -- Analyst

I didn't ask the names. That's fair enough. And maybe I can relate to that win that you've discussed back to the tech talk you recently had. Should we assume that millimeter wave 5G access that in terms of the new win you discussed?

Jerry Guo -- Chief Executive Officer

Well, we are bullish on both the millimeter wave, as well as the sub six. We believe both are going to be positive contributions to our revenue this year, as well as a very big boost to the industry.

Tim Savageaux -- Northland Capital Markets -- Analyst

OK. Maybe probably can't say much here, but maybe we can try and relate that new 5G award to kind of what you saw on the wireless side of Casa. Obviously, you shipped a bunch of backlog in Q4. But in terms of the size of that opportunity, would you size it similarly to kind of what you saw in 2019 on your wireless side where you were able to talk to a 10% customer on the wireless side before?

Scott Bruckner -- Interim Chief Financial Officer and Senior Vice President

Yes, Tim, it's a little bit early to talk about it. We would not have mentioned it if we didn't think it was a sizable opportunity. So without giving any specific details, when this materializes, it would be our expectation that that customer would certainly be in the top 10 list.

Tim Savageaux -- Northland Capital Markets -- Analyst

Great. I'll move on from that and follow up on just kind of the overall outlook for '20. I mean, making a few assumptions here, it looks like you're being awfully cautious on cable. I mean, you had obviously a tough year in '19.

Are you guiding down 15% to 20% from there, or is that your baseline? Or I know you've got a couple of moving pieces. We've seen peers and competitors of yours, including this morning, talking about cable network spending maybe ticking up next year, realized after 2019, being cautious is a good thing. But I'm wondering if you can kind of set our baseline expectations for your cable business next year. I imagine, at this point, with what you've guided to, you expect it to decline, if not decline materially.

Scott Bruckner -- Interim Chief Financial Officer and Senior Vice President

Well, Tim, cautious is correct. I think our outlook on cable is cautious based on what has been pretty unpredictable in that industry for the bulk of the last two years, probably about 18 months. What we know is what we've seen over the past 12 months over the past four quarters, which is that on average, the cable operators have been spending, at least with us, $40 million to $50 million a quarter. So with that in mind, we created our internal budget and our forecast for the year.

But importantly, I want to reemphasize what Jerry said, and read into this what you will, this is a very important year for wireless for us. And wireless will be our growth driver across all of our products.

Tim Savageaux -- Northland Capital Markets -- Analyst

Got it. I'll pass it on.

Operator

Thank you. Our next question comes from Scott Fessler with Stifel. Please state your question.

Scott Fessler -- Stifel Financial Corp. -- Analyst

Hey guys, thanks for taking my question. I understand that you don't guide by quarter. I just want to see if you could comment on the overall impact of coronavirus on the APAC business, if you're seeing any.

Scott Bruckner -- Interim Chief Financial Officer and Senior Vice President

So it's not just on our APAC business. I mean, I think as everybody has been saying, the coronavirus is going to have some global impact. So there are a few things to observe. We have not seen the impact yet.

And while we are preparing ourselves for disruptions that we may see from quarter to quarter, we do not, at this point, expect it to have an impact for the full year. I'd also mention something else, which I think is very important to observe because certain of our customers have been calling to ensure that we're not going to have supply issues. And in fact, they have taken comfort, as do we, in the inventory that we have built up across all of our products. So it's not just in cable and long lead components in our cable products but also in wireless and in advanced cable, so DAA and virtual and then also our fixed telco products.

So we, at this point, feel pretty comfortable that while there may be some supply disruptions, we've kind of built a moat around that for the better part of this year.

Scott Fessler -- Stifel Financial Corp. -- Analyst

Great. Thank you. I appreciate it.

Operator

Thank you. Ladies and gentlemen, there are no further questions at this time. I'll turn the call back to President and CEO Jerry Guo for closing remarks. Thank you.

Jerry Guo -- Chief Executive Officer

Thank you to everyone for joining us today. We look forward to updating you on our progress next quarter.

Operator

[Operator signoff]

Duration: 42 minutes

Call participants:

Monica Gould -- Investor Relations

Jerry Guo -- Chief Executive Officer

Scott Bruckner -- Interim Chief Financial Officer and Senior Vice President

Tim Long -- Barclays -- Analyst

Karan Juvekar -- Morgan Stanley -- Analyst

Nate Hitchcock -- Needham and Company -- Analyst

Tim Savageaux -- Northland Capital Markets -- Analyst

Scott Fessler -- Stifel Financial Corp. -- Analyst

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