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Why Shares of Casa Systems Tumbled Today

By Timothy Green – Updated May 2, 2019 at 10:52AM

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Revenue and earnings fell off a cliff.

What happened

Shares of Casa Systems (CASA -2.19%) slumped on Thursday after the provider of broadband infrastructure technology solutions reported its first-quarter results. The company badly missed analyst estimates for both revenue and earnings, sending the stock down about 15% by 11:15 a.m. EDT.

So what

"The first quarter was one of our toughest quarters," remarked Casa CEO Jerry Guo. First-quarter revenue was $35.5 million, down 60% year over year and more than $20 million below the average analyst estimate. An industrywide slowdown in hardware spending, large customers redirecting capital expenditures elsewhere, and a slower transition to wireless and fixed telco revenue than expected drove revenue lower.

A man holding his head looking a declining charts.

Image source: Getty Images.

Non-GAAP earnings per share came in at a loss of $0.14, down from a profit of $0.23 in the prior-year period and $0.16 lower than analysts were expecting. Adjusted EBITDA was a loss of $7.7 million, down from a profit of $29.5 million in the prior-year period.

Now what

Casa is expecting a stronger second half, with CFO Maurizio Nicolelli pointing to a strong pipeline of opportunities. For the full year, the company expects revenue between $250 million and $300 million, and non-GAAP EPS between $0.30 and $0.40.

With miserable first-quarter results, it's not surprising to see the stock selling off.

Timothy Green has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Casa Systems, Inc. Stock Quote
Casa Systems, Inc.
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