Casa Systems, Inc. (CASA) Q1 2020 Earnings Call Transcript

Casa Systems, Inc. (CASA -9.09%)
Q1 2020 Earnings Call
Apr 30, 2020, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Greetings. Welcome to the Casa Systems first-quarter 2020 earnings call. [Operator instructions] Please note, this conference is being recorded. At this time, I'll turn the conference over to Monica Gould, investor relations for Casa Systems.

Ms. Gould, you may begin.Monica GouldThank you, operator, and good afternoon, everyone. Casa released results for the first quarter of 2020 ended March 31, 2020, this afternoon, after the market close. 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 is 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 we discuss our Q1 results. We know that this is a difficult time for everybody. So I would like to begin by expressing our gratitude for you joining the call and on behalf of Casa Systems, I want to extend our sincere wishes for you and your families to stay safe and healthy. In Q1 of 2020, we started to see results from executing on our strategy of growing our revenue by expanding our customer base and footprint in our cable business and by expanding our addressable market to new business segments like wireless.

Let me now turn to the details of the quarter. Total first-quarter revenue was $83.6 million, of which approximately $43 million or 51% came from our cable business. $22.4 million or 27% came from wireless and $18.2 million or 22% came from our fixed telco business. From the revenue composition, you can tell that our business has become more diversified with only around half of our revenue coming from cable.

We also saw good progress in all of our newer product areas, including DAA solutions, 4G and 5G wireless Packet Cores, radio access networks and fixed wireless access. Another highlight I would like to point out too is reduced customer concentration. During the first quarter, we had two 10%-or-greater customers. One of which was a Tier 1 wireless service provider.

The other was the converged wireline and wireless broadband service provider. Together, these two customers accounted for 35% of our revenue versus 49% in the same period last year and 53% in the fourth quarter of 2019. Turning now to our product areas. Revenue from cable, both products and services in the first quarter was $43 million, a 23% increase over the same period in 2019.

Excluding services, first quarter cable product revenue was up 33% over Q1 of 2019. As I noted earlier, the growth in cable sales in Q1 is due to expanded customer base and footprint. Customer purchases during the quarter included a significant increase in hardware shipments, both sequentially and year over year, including integrated CCAP chassis and DAA nodes. I'm also happy to report that we have converted two virtual CCAP core trials to purchase orders, beating competition with the technical advantages in our virtual CCAP core.

Wireless revenue for the first quarter was $22.4 million with contributions from radio, fixed wireless access and wireless software. During the quarter, we continued to make progress on recognizing revenue from our backlog with a sizable shipment of our strand radios to a Tier 1 North American mobile network operator. While we make progress in sales and revenue recognition of wireless products, we are expanding our customer trial efforts in both consumer 4G and 5G wireless networks as well as in 4G and 5G solutions for enterprise networks and the industry verticals. These solutions rely on a combination of our products, including 4G and 5G Packet Cores, mobile edge computing, indoor small cells and machine-to-machine gateways.

We had hoped to preview these solutions at Mobile World Congress in Barcelona this year. But with the event canceled, we have shifted to a virtual booth that we will soon be launching to showcase these and other solutions for wireless networks. The virtual booth will be made available on our website. Finally, at the end of the first quarter, our wireless backlog stood around $26 million, and included our 4G and 5G indoor and outdoor radios, fixed wireless access devices and our cloud-native 4G and 5G Packet Core products.

In fixed telco, revenue for the fourth quarter was around 22% of sales, driven largely by sales of our fiber to the distribution point products. At the same time, we continue to expand our customer trial effort in our virtual BNG router and multiservice router products. Next, I would like to comment on the impact that COVID-19 is having on our business, and then discuss our operations as we work to meet increasing demand for our products. First, on our business.

To the latter part of the quarter, as broadband subscribers across the globe began to work and study from home, our customers, cable, wireless and fixed telco service providers experienced a sudden dramatic increase in upstream and in downstream traffic on their networks. We noticed this shift, in particular during March, for all access technologies. North American cable companies, for example, reported seeing a greater than 30% increase in bandwidth consumption in March alone. Wireline network traffic increased by a range of 17% to 37%, with a median increase of 25%.

And wireless network operators reported growth in wireless data traffic of just under 10%, while wireless voice traffic increased by as much as 24%. Because we supply network infrastructure equipment and customer-premise equipment to enable ultra-broadband services across all access technologies, these trends began to drive strong demand for our products toward the end of the quarter with our existing customers in cable, wireless and fixed telco. As a result, we ended the first quarter with an order backlog of $90.5 million, which will be drawn down throughout the year. Second, on our operations, as a responsible company, the health and the safety of our employees are most important.

Since mid-March, most of our R&D employees are working from home. As a supplier to the communications service industry, we are deemed the business that provides essential services and as a result, have been able to keep our operations up and running. Globally, all the company's manufacturing facilities are currently fully operational as are those of our contract manufacturers. For our access devices products, with some of our contract manufacturing and supply efforts in China, we did see a very short period of disruption.

But as we are now operating normally, we do not currently expect to see material negative impact from this on our results for the year. As we noted on our last earnings call, we have inventory on hand for our infrastructure products and are generally able to meet this increased demand. However, we continue to work with our supply chain, which remains open as well as with our contract manufacturers to ensure that inventory is not depleted and to augment the manufacture of products where demand has been particularly high. Finally, we are in a strong position from a liquidity standpoint.

During the quarter, our cash balance increased by $21 million or almost 19%. In addition to our good receivables and the inventory balances, we have sufficient cash on the balance sheet to operate the business for an extended period of time, based on our current operating structure. Scott will discuss this in more detail in his remarks later on this call. I would like to end my remarks by noting that we remain in a strong position to help our customers during this time of accelerated need.

As we have learned from previous times of crisis and uncertainty, being connected moves high up on the list of people's spending priorities, and communications becomes a vital service. As a result, from where we sit today, we remain comfortable with the guidance we outlined on our last earnings call. We previously noted our caution around cable MSO spending during the first half of the year. This has obviously changed, given the abrupt shift in the demand environment.

We continue to believe that mobile operators will continue to roll out 5G networks this year and increase capacity to 4G networks at the same time. We still expect wireless to be a material component of our 2020 revenue. 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 first-quarter 2020 financial results. And then given the unique environment that we find ourselves in, I would also like to discuss our outlook for the remainder of the year. For the first quarter of 2020, as Jerry noted, total revenue was $83.6 million, which compares to $35.5 million in the first quarter of 2019 and $112.9 million in the fourth quarter of 2019.

Revenue from the acquired NetComm business during the first quarter was approximately $30 million. Given that we are seeing high demand for NetComm's products, NetComm remains fully on track to meet our full-year expectation. Excluding the contribution from NetComm, our first-quarter revenue increased 51% year over year. Total product revenue was $73.8 million in the first quarter, of which $53.9 million or 73% was from hardware and $19.8 million or 27% was from software.

This compares to $26.7 million of total product revenue in the first quarter of last year with $13.4 million or 50% from hardware and $13.3 million or 50% from software. In terms of total revenue, hardware sales during the first quarter accounted for 64% compared to 38% in the prior-year quarter. The increase in hardware revenue, which is similar to what we saw in the fourth quarter, is accounted for by three primary factors: First, the inclusion of NetComm in our results, revenue from which is all hardware related; second, increased radio shipments from our wireless backlog, as Jerry noted; and third, increased chassis shipments, up 33% year over year and 56% sequentially and DAA node shipments in our cable segment. As Jerry mentioned, from an end market perspective, our business continued to be more diversified as we made further progress in the wireless and fixed telecom markets.

During Q1, approximately 51% of our revenue or $43 million came from cable, which was up 23% from a very weak Q1 a year ago. Another 27% or $22.4 million came from wireless and 22% or $18.2 million was from fixed telecom. By comparison, nearly 100% of our revenue in the prior-year quarter was from cable. Our consolidated GAAP gross margin for the first quarter of 2020 was 51% compared to 69% in the first quarter of 2019.

The year-over-year decrease in our gross margin was primarily driven by the higher mix of hardware revenue, including our wireless radio products during the quarter. The acquisition of NetComm, which has lower gross margins, as we stated previously, and beginning in the latter part of the quarter, an increase in airfreight costs related to COVID-19. Turning to expenses. Total GAAP operating expenses in the first quarter of 2020 were $46.2 million compared to $38.6 million in the first quarter of 2019, and $49.5 million in Q4.

The year-over-year increase in total operating expenses was primarily due to the inclusion of operating expenses from NetComm. But on a sequential basis, operating expenses were down by around 7%, largely driven by decreased personnel costs from the headcount rebalancing we undertook late last year, as I announced on our last earnings call, and later in the quarter, a reduction in SG&A from lower travel and trade show expenses due to COVID-19. Headcount at March 31, 2020, totaled 968 employees compared to 997 employees as of December 31, 2019. The reduction in headcount was related to additional elimination of overlapping functions following our acquisition of NetComm and further rebalancing of R&D and sales resources during Q1 to address the higher growth we anticipate in our wireless and fixed telecom markets during 2020 and beyond.

Our adjusted EBITDA in the first quarter of 2020 was $3.7 million compared to negative $7.7 million in the first quarter of 2019. While on a GAAP basis, we did have an operating loss of approximately $3.5 million. GAAP net income for the quarter was positive at $1.2 million or on a fully diluted basis, $0.01 per share. This compares to a GAAP net loss of $15.3 million or negative $0.18 per diluted share in the prior-year quarter.

The positive GAAP net income and fully diluted EPS in Q1 of this year were primarily from a tax benefit of $9.3 million that we booked during the quarter related to NOL carrybacks permitted by the CARES Act stimulus package. Our non-GAAP net income and fully diluted EPS would have been positive this quarter, except for an adjustment that we made for the full amount of the tax benefit we recorded that I just described. We made this adjustment because the tax benefit primarily came from releasing some of the valuation allowance that we recorded against our U.S. deferred tax asset balance and then was added back to our non-GAAP net income last quarter.

As a result, for a non-GAAP reconciliation this quarter, we subtracted from non-GAAP net income, the amount of the tax benefit. Think of it as a valuation allowance giveback, if you will, to our deferred tax asset balance in order to achieve the tax benefit from NOL carrybacks. This amounted to a $9.3 million non-GAAP expense that caused our non-GAAP net income and fully diluted net income per share to be negative. Non-GAAP net loss for the first quarter of 2020 was $5.3 million, inclusive of the negative $9.3 million adjustment.

This compares to a non-GAAP net loss of $11.6 million in the first quarter of 2019. Non-GAAP net loss per fully diluted share was $0.07 for the first quarter of 2020, again, including the negative $0.11 per fully diluted share adjustment. This compares to non-GAAP diluted net loss per share of $0.14 in the first quarter of 2019. Turning now to liquidity.

As Jerry mentioned, we do remain in a very strong position. Free cash flow for the quarter was $25.7 million compared to negative $15.7 million in the first quarter of 2019. We ended the first quarter with cash and cash equivalents of $134.8 million which is up from $113.6 million on December 31, and total debt of $292.7 million, which does not mature until the end of 2023. As of March 31, inventory declined to $81 million from $93.6 million at year-end 2019, while receivables declined to $55.5 million from approximately $93.7 million at year-end 2019, and this was due to strong collections during the quarter.

In the current environment, while we have offered extended payment terms for certain customers, the aging of our receivables remains very good with less than 1% at greater than 90 days. During the quarter, we did repurchase just over 1.2 million shares for approximately $3 million under our share repurchase program. With respect to our plans for the remainder of our buyback program, as we've done in the past, we will continue to review current business developments to determine the best use of our capital. I would now like to comment on our outlook for the year.

As Jerry noted in his remarks, the COVID-19 pandemic has increased the need for our customers to invest in communications infrastructure in order to address materially increased traffic on their networks. This has created strong demand for our products, as was evident in our quarter end backlog of almost $91 million. With that said, we are currently reiterating the guidance we issued on our last earnings call. And to summarize, we continue to expect total revenue to be between $340 million and $360 million.

While we continue to expect our full-year gross margin to be in the range of 50% and 60%, given increased airfreight costs and a higher mix of hardware revenue that we may see throughout the remainder of the year, we believe the gross margin could be at the lower end of this range for full-year 2020. We do not anticipate that this will have a negative impact on items lower down on the income statement as we could see some benefit from lower operating expenses as a result of COVID-19 related cost reductions in certain SG&A items, like travel, marketing, trade shows and also from Australian dollar FX gains. So we still expect adjusted EBITDA to be in the range of $33 million and $43 million. Non-GAAP diluted EPS to be in the range of $0 to $0.12, and a loss on GAAP EPS in the range of negative $0.04 to negative $0.16.

Before turning the call back to the operator to start the Q&A session, I would like to echo Jerry's words of appreciation and express our deep gratitude to our staff, suppliers and manufacturers around the world, who have continued to work under unprecedented conditions to help us meet increased demand from customers for our products. Thank you. Operator, back to you.

Questions & Answers:

Operator

Thank you. [Operator instructions] Our first question is from the line of Meta Marshal with Morgan Stanley. Please proceed with your question.

Erik Lapinski -- Morgan Stanley -- Analyst

Hi, team. Eric on for Meta here. Maybe just starting off with some of the strength you saw in wireless, knowing the core is particularly good. Can you help us to better understand how much of that was installed in the quarter versus maybe revenue that you're waiting for acceptance of and then maybe continuing on that, where you kind of expect the run rate could be for the wireless business in 2020?

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

OK. So it's Scott here. Let me answer that question. The revenue that you saw booked during the quarter was all from stuff that was installed and obviously past acceptance.

In the backlog, that's where you're going to see things that are waiting acceptance, where they are POs, you'll find that, that is evenly distributed across all of our products. So I think if you assume that one-third in wireless, one-third in cable and one-third in fix, you'll be pretty spot on, on the demand that we saw across the board during the quarter.

Erik Lapinski -- Morgan Stanley -- Analyst

Got it. That's helpful. And then maybe just similarly on cable. We're seeing that you'll likely expect some capacity add in the Q2 to maybe accommodate traffic.

But how do you see that playing out during the year? Would that kind of potentially lead to maybe more front-half loaded revenue as you kind of look ahead to Q3 and Q4?

Jerry Guo -- Chief Executive Officer

Well, this is a very difficult question to forecast what the second half is going to look like. We do see that there is going to be continued demand in bandwidth across the types of service providers, whether they're cable or wireless or fixed telco. Reduced demand is not going to all of a sudden go, stop. But now we cannot accurately forecast that's going at very high, elevated level, we don't know that yet.

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

And I think I may, I may add a couple of things. Like if you think about the way we think about where our growth will come from in revenue this year, there's business as usual capacity upgrades. And we don't exclude the possibility that we could continue to see those as normal throughout the year. Second, there are new customers and additional footprint with existing customers, which we saw in Q1, as Jerry noted.

In fact, most of the year-over-year growth in cable for the quarter came from that. And we don't exclude the possibility, we could see some of that this year as certain of our competitors focus less on the cable space. There's the COVID-19 bump. And as Jerry talked about, we started to see that demand in the latter part of the quarter.

And then the question is whether that continues throughout the year. And then there's new technology, the efforts and our focus on that paid off with two virtual CCAP POs, and we're hoping to see more of that throughout the year. But again, I agree with Jerry, on that point, highly uncertain.

Erik Lapinski -- Morgan Stanley -- Analyst

Understood. Thank you very much.

Operator

Thank you. Your next question comes from the line of Samik Chatterjee with JP Morgan. Please proceed with your question.

Bharat Daryani -- J.P. Morgan -- Analyst

Yes. Hey, guys. Thanks for taking my question. This is actually Bharat on for Samik.

So the first question I had was on the virtual CCAP purchase orders that you highlighted. I mean can you give us a sense of any revenue range shipping from those orders? And when can we start to see those deployments materializing? It is more back half loaded this year or more into next year? Thanks.

Jerry Guo -- Chief Executive Officer

We booked the deals, and some of them are already deployed. We expect revenue recognition in the next quarter or two.

Bharat Daryani -- J.P. Morgan -- Analyst

OK. Thanks for that. And then second question on just the cash. I mean you had a nice free cash flow in the quarter.

So just wanted to understand what are the levers there? And near term, do you see more working capital benefit for you guys and that cash can contribute positively going from there? Thanks.

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

Yes. So as we noted on the last call, we were forecasting that we would be free cash flow positive for the remainder of this year, largely given the amount of revenue that's in our guidance and where we see our opex for the year. So we do expect a degree of operating leverage given the revenue we're forecasting. In the quarter, as you dig through the numbers, I think you'll see that a lot of the cash came from conversion of receivables into cash and also a decrease in the inventory.

So some cash tied up in inventory that began to ship both in wireless and on the chassis side. Those were the two big contributors for the quarter.

Bharat Daryani -- J.P. Morgan -- Analyst

Thank you. Thank you for taking questions.

Operator

Your next question is from the line of Scott Fessler with Stifel. Please proceed with your question.

Scott Fessler -- Stifel Financial Corp. -- Analyst

Hey, guys. You touched on this a bit already, but I just wanted to go back to it. In cable, are you seeing customers just look to upgrade their existing network infrastructure? Or are customers still looking to move ahead with next-gen products like DAA and virtual?

Jerry Guo -- Chief Executive Officer

Well, we actually have seen both. And basically, our cable business really stands on two legs, one is that we have a really nice deployed customer base and footprint. That continues to generate revenue for us. When people add bandwidth in a hurry, that's the quickest way.

We continue to see customers doing quite a bit of that. At the same time, we are shipping DAA solutions, including virtual CCAP cores.

Scott Fessler -- Stifel Financial Corp. -- Analyst

Got you. So I guess, just to rephrase, so are you suggesting that current customers are just trying to do upgrades within their footprint, but new customers looking to come on are evaluating the next-gen products?

Jerry Guo -- Chief Executive Officer

No, I wasn't suggesting that. The existing customers could be evaluating both. But given the time pressure, the easiest, the fastest and the lowest cost way is, for them, to continue to add what they have deployed. And we see a lot of that at this point.

Scott Fessler -- Stifel Financial Corp. -- Analyst

Got it. OK. Thank you.

Operator

Thank you. [Operator instructions] The next question is coming from the line of Rich Valera with Needham & Company.

Nate Hitchcock -- Needham and Company -- Analyst

Good afternoon. This is Nate on for Rich. So just to return to the virtual CCAP purchase orders. So I was curious, the sequential improvement of virtual CCAP demand.

I was wondering if that was more circumstantial based on COVID and potential restrictions from on-site rollouts? Or if there's a result of the ongoing trials that you had? And then the follow-up would be how the ongoing trials are currently trending. I know it's, I believe, 35 to 40 ongoing trials last quarter. And I was wondering if there's progress seen there as well or more on the conversion front. Thank you.

Jerry Guo -- Chief Executive Officer

Well, the conversion was based on ongoing trials. Virtual CCAP doesn't work on its own. You actually have to add remote fine nodes in the field. There's a lot more on-site work to actually deploy a virtual CCAP than just expanding the existing bandwidth with, deploying the integrated CCAP.

So there's a lot more on-site work. So to convert that, they actually have to be doing trials for a while to achieve it.

Nate Hitchcock -- Needham and Company -- Analyst

Great. Thank you. I think you answered the question. So then on the prior call, you talked about protracted deal time for some large orders that slipped from the third quarter to fourth quarter.

And then also, the majority of those have been closed in the fourth quarter, but I was wondering if this trend has been consistent sequentially or if CASA has made progress with this and how this has been impacted due to the increased demand from COVID?

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

Yes. Sure. So yes, all that revenue has been recognized in the fourth quarter. And as we mentioned on our last call, we expected to see the remainder of it recognized in the first quarter.

That happened. I wouldn't necessarily characterize that trend as us making progress because when you are deploying a new product, you're often working in on an acceptance criteria. You are often working with the customer to do some fine tuning. So there are a lot of variables that come in to play that affect the timing.

The products that we deployed, that were affected, were not only brand-new to the customer, but novel pieces of technology. And so they did require additional time to be integrated into networks. But we have not seen that in the first quarter, just given the nature of the demand.

Nate Hitchcock -- Needham and Company -- Analyst

OK. Thank you for taking the questions.

Operator

Thank you. [Operator instructions] Our next question is from the line of Tim Savageaux with Northland. Please proceed with your question.

Tim Savageaux -- Northland SecuritiesInc. -- Analyst

Hi. Good afternoon and congrats on the results. And I'll apologize in advance, I'm hopping on late, so if this question is redundant or silly, please forgive me. And it's really sort of twofold.

I mean it looks like — and you kind of indicated this in your update in late March. You may have seen some upside in terms of capacity on the cable side, and some solid year-over-year growth in the cable business. And I wonder if you're looking at that as more of a pull forward or whether given the results we've seen, you think you might be able to grow in cable this year, on the one hand? And then on the other, with that mix, I would have expected gross margins to be higher. You guys probably went through the dynamics there, but that was my potentially redundant question, it's about margin mix and why we came out where we did, given what should be more capacity and less hardware.

Jerry Guo -- Chief Executive Officer

Yes. One of the actually trends we have seen in especially late Q1 and the early part of this quarter is that we do see more hardware purchases, even on the cable side. We did ship quite a bit of wireless hardware, both the radio and fixed wireless access. But even for cable, we did see quite a bit more hardware shipment.

That means that the operators cannot merely turning on more licenses to satisfy the demand. It got to the point that you have to add hardware in order to meet the demand. So all in all, we actually had more, quite a bit more hardware shipment. That explains the gross margin, yes.

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

Yes. And Tim, just to give you a couple of numbers. And then on a like-for-like basis, a year ago, first-quarter 2019, hardware comprised 38% of cost of revenue. In the first quarter of this year, sorry, 38% of Q1 '19.

In the first quarter of 2020, it was 45%. So as I noted on the call, we saw a big uptick in the number of chassis, we saw an uptick in the number of nodes as operators are building out their networks. And part of, I think, the chassis demand, in addition to what Jerry was saying that software just wasn't enough to meet the capacity is that, as Jerry noted on the call, we added new customers and new footprint. So you're starting off again with basic equipment, the integrated CCAP, and we hope that, that will then lead to software sales going forward for additional capacity.

Tim Savageaux -- Northland SecuritiesInc. -- Analyst

Well, yes. That actually speaks pretty directly to the other part of my question, which is about prospects for growth in cable, given that you've got a more chassis-intensive, hardware-intensive mix. So it seems like the likelihood that maybe this is not a pull forward, but a footprint and fill scenario. So as you look at your, I guess, $183 million or so in cable revenue last year, in leaving your guidance unchanged, have your assumptions changed, wireless versus fixed versus cable in terms of relative growth rates?

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

Not necessarily. Look, I think what we assumed and what we noted on the last call and what you've seen in the last couple of quarters is that we're kind of stabilizing for the near-term at about 50% of our revenue from cable, and then wireless and fixed being evenly split. The one change that I did note, and I don't know if you heard the remarks, was that there is a possibility that we would continue to see more hardware throughout the remainder of the year. And so in our gross margin assumption, our guidance between, of 50% to 60%, we could end up in the lower half of that guidance range.

But other than that, we're sticking to the guidance that we gave.

Tim Savageaux -- Northland SecuritiesInc. -- Analyst

Fair enough. And did you guys talk 10% customers for the quarter?

Jerry Guo -- Chief Executive Officer

We did. And we noted that customer concentration was down significantly. So this quarter, there were only two 10% or greater customers. It was not one of our usual 10% customers.

And those two customers comprised only 35% of revenue as opposed to almost half the revenue in previous quarters.

Tim Savageaux -- Northland SecuritiesInc. -- Analyst

OK. I'll take all the rest of it off line before I ask seven more questions that you've already answered. Thanks a lot.

Operator

Thank you. At this time, I'll turn the floor back to Jerry Guo, CEO, for closing remarks.

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: 40 minutes

Call participants:

Jerry Guo -- Chief Executive Officer

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

Erik Lapinski -- Morgan Stanley -- Analyst

Bharat Daryani -- J.P. Morgan -- Analyst

Scott Fessler -- Stifel Financial Corp. -- Analyst

Nate Hitchcock -- Needham and Company -- Analyst

Tim Savageaux -- Northland SecuritiesInc. -- Analyst

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