Harmonic Announces Second Quarter 2021 Results

  • Oops!
    Something went wrong.
    Please try again later.
·8 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

Cable Access revenue up 89% year over year

Video revenue up 34% year over year

Record backlog and deferred revenue, up 65% year over year

SAN JOSE, Calif., Aug. 2, 2021 /PRNewswire/ -- Harmonic Inc. (NASDAQ: HLIT) today announced its unaudited results for the second quarter of 2021.

Harmonic logo (PRNewsfoto/Harmonic Inc.)
Harmonic logo (PRNewsfoto/Harmonic Inc.)

"Harmonic delivered another strong quarter, with revenues and earnings buoyed by robust demand in both our Video and Cable Access segments", said Patrick Harshman, president and chief executive officer of Harmonic. "Our book-to-bill ratio was 1.6, enabling us to exit the quarter with record backlog and deferred revenue. This momentum positions us well for the balance of the year and into 2022, as we continue to execute on our strategic growth initiatives."

Q2 Financial and Business Highlights

Financial

  • Revenue: $113.4 million, up 53% year over year

  • Gross margin: GAAP 53.3% and non-GAAP 53.9%, compared to GAAP 51.0% and non-GAAP 51.6% in the year ago period

  • Operating income (loss): GAAP income $2.1 million and non-GAAP income $6.6 million, compared to GAAP loss $9.6 and non-GAAP loss $5.1 million in the year ago period

  • Adjusted EBITDA: $9.5 million income compared to $2.8 million loss in the year ago period

  • Net income (loss): GAAP net loss $2.0 million and non-GAAP net income of $4.8 million, compared to GAAP net loss $15.4 million and non-GAAP net loss $5.9 million in the year ago period

  • EPS: GAAP net loss per share of $0.02 and non-GAAP net income per share of $0.05, compared to GAAP net loss per share of $0.16 and non-GAAP net loss per share of $0.06 in the year ago period

  • Cash: $115.2 million, up $37.5 million year over year

Business

  • CableOS® solution commercially deployed with 62 customers, up 114% year over year

  • CableOS deployments scaled to 3.3 million served cable modems, up 94% year over year

  • VOS® streaming SaaS customer base increased to 102, up 55% year over year; SaaS revenue increased 68% year over year

Select Financial Information



GAAP


Non-GAAP

Key Financial Results


Q2 2021


Q1 2021


Q2 2020


Q2 2021


Q1 2021


Q2 2020



(in millions, except per share data)

Net revenue


$

113.4



$

111.6



$

74.0



$

113.4



$

111.6



$

74.0


Net income (loss)


$

(2.0)



$

(6.1)



$

(15.4)



$

4.8



$

4.5



$

(5.9)


Diluted EPS


$

(0.02)



$

(0.06)



$

(0.16)



$

0.05



$

0.04



$

(0.06)











Other Financial Information

Q2 2021


Q1 2021


Q2 2020


(in millions)

Adjusted EBITDA for the quarter

$

9.5



$

9.1



$

(2.8)


Bookings for the quarter

$

186.9



$

96.3



$

77.0


Backlog and deferred revenue as of quarter end

$

347.2



$

274.3



$

210.2


Cash and cash equivalents as of quarter end

$

115.2



$

100.8



$

77.7


Explanations regarding our use of non-GAAP financial measures and related definitions, and reconciliations of our GAAP and non-GAAP measures, are provided in the sections below entitled "Use of Non-GAAP Financial Measures" and "GAAP to Non-GAAP Reconciliations".

Financial Guidance


Q3 2021 GAAP Financial Guidance (1)


Low


High

(Unaudited, in millions, except percentages)

Video


Cable
Access


Adjustments (2)


Total

GAAP


Video


Cable
Access


Adjustments (2)


Total

GAAP

Net revenue

$

62.0



$

50.0



$



$

112.0



$

67.0



$

55.0



$



$

122.0


Gross margin %

55.0

%


41.5% (3)


(0.5)

%


49.4

%


58.0

%


43.5% (3)


(0.5)

%


50.1

%

Operating expenses

$

35.0



$

18.5



$

5.6



$

59.1



$

36.0



$

19.0



$

5.6



$

60.6


Operating income (loss)

$

(0.9)



$

3.3



$

(6.2)



$

(3.8)



$

2.9



$

3.8



$

(6.2)



$

0.5


Tax expense (4)







$

(0.8)









$

(0.8)


EPS (4)







$

(0.07)









$

(0.03)


Shares (4)







102.0









102.0


Cash (4)







$

115.0









$

125.0



(1) Components may not sum to total due to rounding.

(2) See "Use of Non-GAAP Financial Measures" and "GAAP to Non-GAAP Reconciliations" below.

(3) Low-end gross margin relates to high-end of revenue, and high-end gross margin relates to low-end of revenue.

(4) The guidance is provided at the total company level and not by segment.


Q4 2021 GAAP Financial Guidance (1)


Low


High

(Unaudited, in millions, except percentages)

Video


Cable
Access


Adjustments (2)


Total

GAAP


Video


Cable
Access


Adjustments (2)


Total

GAAP

Net revenue

$

82.0



$

50.0



$



$

133.0



$

87.0



$

60.0



$



$

148.0


Gross margin %

54.0

%


45% (3)


(0.6)

%


50.2

%


56.0

%


47% (3)


(0.5)

%


51.0

%

Operating expenses

$

35.0



$

20.0



$

4.7



$

59.7



$

36.0



$

21.0



$

4.7



$

61.7


Operating income (loss)

$

8.9



$

3.6



$

(5.4)



$

7.1



$

12.9



$

6.3



$

(5.4)



$

13.8


Tax expense (4)







$

(0.8)









$

(0.8)


EPS (4)







$

0.03









$

0.09


Shares (4)







106.6









106.6


Cash (4)







$

125.0









$

145.0



(1) Components may not sum to total due to rounding.

(2) See "Use of Non-GAAP Financial Measures" and "GAAP to Non-GAAP Reconciliations" below.

(3) Low-end gross margin relates to high-end of revenue, and high-end gross margin relates to low-end of revenue.

(4) The guidance is provided at the total company level and not by segment.


2021 GAAP Financial Guidance (1)


Low


High

(Unaudited, in millions, except percentages)

Video


Cable
Access


Adjustments (2)


Total
GAAP


Video


Cable
Access


Adjustments (2)


Total GAAP

Net revenue

$

278.0



$

192.0



$



$

470.0



$

288.0



$

207.0



$



$

495.0


Gross margin %

55.5

%


44% (3)


(0.6)

%


50.6

%


57.0

%


45% (3)


(0.6)

%


51.0

%

Operating expenses

$

141.0



$

73.2



$

22.0



$

236.2



$

143.0



$

74.7



$

22.0



$

239.7


Operating income (loss)

$

13.3



$

13.2



$

(24.9)



$

1.6



$

21.1



$

16.4



$

(24.9)



$

12.6


Tax expense (4)







$

(3.7)









$

(3.7)


EPS (4)







$

(0.12)









$

(0.01)


Shares (4)







101.4









101.4


Cash (4)







$

125.0









$

145.0



(1) Components may not sum to total due to rounding

(2) See "Use of Non-GAAP Financial Measures" and "GAAP to Non-GAAP Reconciliations" below.

(3) Low-end gross margin relates to high-end of revenue, and high-end gross margin relates to low-end of revenue.

(4) The guidance is provided at the total company level and not by segment.


Q3 2021 Non-GAAP Financial Guidance (1)


Low


High

(Unaudited, in millions, except percentages)

Video


Cable Access


Total


Video


Cable Access


Total

Net revenue

$

62.0



$

50.0



$

112.0



$

67.0



$

55.0



$

122.0


Gross margin %

55.0

%


41.5% (2)


49.9

%


58.0

%


43.5% (2)


50.6

%

Operating expenses

$

35.0



$

18.5



$

53.5



$

36.0



$

19.0



$

55.0


Operating income (loss)

$

(0.9)



$

3.3



$

2.4



$

2.9



$

3.8



$

6.7


Adjusted EBITDA

$

1.1



$

4.7



$

5.8



$

4.9



$

5.2



$

10.1


Tax rate (3)





10.0

%






10.0

%

EPS (3)





$

0.01







$

0.05


Shares (3)





105.8







105.8


Cash (3)





$

115.0







$

125.0



(1) See "Use of Non-GAAP Financial Measures" and "GAAP to Non-GAAP Reconciliations" below. Components may not sum to total due to rounding.

(2) Low-end gross margin relates to high-end of revenue, and high-end gross margin relates to low-end of revenue.

(3) The guidance is provided at the total company level and not by segment.


Q4 2021 Non-GAAP Financial Guidance (1)


Low


High

(Unaudited, in millions, except percentages)

Video


Cable Access


Total


Video


Cable Access


Total

Net revenue

$

82.0



$

50.0



$

133.0



$

87.0



$

60.0



$

148.0


Gross margin %

54.0

%


45% (2)


50.8

%


56.0

%


47% (2)


51.5

%

Operating expenses

$

35.0



$

20.0



$

55.0



$

36.0



$

21.0



$

57.0


Operating income (loss)

$

8.9



$

3.6



$

12.5



$

12.9



$

6.3



$

19.2


Adjusted EBITDA

$

11.0



$

4.9



$

15.9



$

15.0



$

7.6



$

22.6


Tax rate (3)





10.0

%






10.0

%

EPS (3)





$

0.09







$

0.15


Shares (3)





106.6







106.6


Cash (3)





$

125.0







$

145.0



(1) See "Use of Non-GAAP Financial Measures" and "GAAP to Non-GAAP Reconciliations" below. Components may not sum to total due to rounding.

(2) Low-end gross margin relates to high-end of revenue, and high-end gross margin relates to low-end of revenue.

(3) The guidance is provided at the total company level and not by segment.


2021 Non-GAAP Financial Guidance (1)


Low


High

(Unaudited, in millions, except percentages)

Video


Cable Access


Total


Video


Cable Access


Total

Net revenue

$

278.0



$

192.0



$

470.0



$

288.0



$

207.0



$

495.0


Gross margin %

55.5

%


44% (2)


51.2

%


57.0

%


45% (2)


51.6

%

Operating expenses

$

141.0



$

73.2



$

...

214.2



$

143.0



$

74.7



$

217.7


Operating income (loss)

$

13.3



$

13.2



$

26.5



$

21.1



$

16.4



$

37.5


Adjusted EBITDA

$

21.7



$

18.7



$

40.4



$

29.5



$

21.9



$

51.4


Tax rate (3)





10.0

%






10.0

%

EPS (3)





$

0.19







$

0.29


Shares (3)





104.9







104.9


Cash (3)





$

125.0







$

145.0



(1) See "Use of Non-GAAP Financial Measures" and "GAAP to Non-GAAP Reconciliations" below. Components may not sum to total due to rounding.

(2) Low-end gross margin relates to high-end of revenue, and high-end gross margin relates to low-end of revenue.

(3) The guidance is provided at the total company level and not by segment.

Conference Call Information

Harmonic will host a conference call to discuss its financial results at 2:00 p.m. Pacific (5:00 p.m. Eastern) on Monday, August 2, 2021. The live webcast will be available on the Harmonic Investor Relations website at http://investor.harmonicinc.com. An audio version of the webcast will be available by calling +1.574.990.1032 or +1.800.240.9147 (conference ID 6698805). A replay will be available after 5:00 p.m. PT on the same web site or by calling +1.404.537.3406 or +1.855.859.2056 (conference ID 6698805).

About Harmonic Inc.

Harmonic (NASDAQ: HLIT), the worldwide leader in virtualized cable access and video delivery solutions, enables media companies and service providers to deliver ultra-high-quality video streaming and broadcast services to consumers globally. The Company revolutionized cable access networking via the industry's first virtualized cable access solution, enabling cable operators to more flexibly deploy gigabit internet service to consumers' homes and mobile devices. Whether simplifying OTT video delivery via innovative cloud and software platforms, or powering the delivery of gigabit internet cable services, Harmonic is changing the way media companies and service providers monetize live and on-demand content on every screen. More information is available at www.harmonicinc.com.

Legal Notice Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements related to our expectations regarding: net revenue, gross margins, operating expenses, operating income (loss), Adjusted EBITDA, tax expense and tax rate, EPS and cash. Our expectations regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include, in no particular order, the following: the market and technology trends underlying our Video and Cable Access businesses will not continue to develop in their current direction or pace; the possibility that our products will not generate sales that are commensurate with our expectations or that our cost of revenue or operating expenses may exceed our expectations; the potential impact of the Covid-19 pandemic on our operations or the operations of our supply chain or our customers; the impact of general economic conditions on our sales and operations; the mix of products and services sold in various geographies and the effect it has on gross margins; delays or decreases in capital spending in the cable, satellite, telco, broadcast and media industries; customer concentration and consolidation; our ability to develop new and enhanced products in a timely manner and market acceptance of our new or existing products; losses of one or more key customers; risks associated with our international operations; exchange rate fluctuations of the currencies in which we conduct business; risks associated with our CableOS and VOS product solutions; dependence on various video and broadband industry trends; inventory management; the lack of timely availability or the impact of increases in the prices of parts or raw materials necessary to produce our products; the effect of competition, on both revenue and gross margins; difficulties associated with rapid technological changes in our markets; risks associated with unpredictable sales cycles; our dependence on contract manufacturers and sole or limited source suppliers; and the effect on our business of natural disasters. The forward-looking statements contained in this press release are also subject to other risks and uncertainties, including those more fully described in Harmonic's filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K for the year ended December 31, 2020, our most recent Quarterly Report on Form 10-Q and our Current Reports on Form 8-K. The forward-looking statements in this press release are based on information available to the Company as of the date hereof, and Harmonic disclaims any obligation to update any forward-looking statements.

Use of Non-GAAP Financial Measures

The Company reports its financial results in accordance with accounting principles generally accepted in the United States ("GAAP" or referred to herein as "reported"). However, management believes that certain non-GAAP financial measures provide management and other users with additional meaningful financial information that should be considered when assessing our ongoing performance. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business, establish operating budgets, set internal measurement targets and make operating decisions.

These non-GAAP measures are not in accordance with, or an alternative for, measures prepared in accordance with generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. The Company believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Harmonic's results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Harmonic's results of operations in conjunction with the corresponding GAAP measures.

The Company believes that the presentation of non-GAAP measures when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and its historical and projected results of operations. Non-GAAP financial measures should be viewed in addition to, and not as an alternative to, the Company's reported results prepared in accordance with GAAP.

The non-GAAP measures presented here are: segment revenue, gross profit, operating expenses, income (loss) from operations, non-operating expenses and net income (loss) (including those amounts as a percentage of revenue), Adjusted EBITDA and net income (loss) per diluted share. The presentation of non-GAAP information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP, and is not necessarily comparable to non-GAAP results published by other companies. A reconciliation of the historical non-GAAP financial measures discussed in this press release to the most directly comparable historical GAAP financial measures is included with the financial statements provided with this press release. The non-GAAP adjustments described below have historically been excluded from our GAAP financial measures.

Our non-GAAP financial measures reflect adjustments based on the following items, as well as the related income tax effects:

Stock-based compensation - Although stock-based compensation is a key incentive offered to our employees, we continue to evaluate our business performance excluding stock-based compensation expenses. We believe that management is limited in its ability to project the impact stock-based compensation would have on our operating results. In addition, for comparability purposes, we believe it is useful to provide a non-GAAP financial measure that excludes stock-based compensation in order to better understand the long-term performance of our core business and to facilitate the comparison of our results to the results of our peer companies.

Amortization of intangibles - A portion of the purchase price of our acquisitions is generally allocated to intangible assets, and is subject to amortization. However, Harmonic does not acquire businesses on a predictable cycle. Additionally, the amount of an acquisition's purchase price allocated to intangible assets and the term of its related amortization can vary significantly and is unique to each acquisition. Therefore, we believe that the presentation of non-GAAP financial measures that adjust for the amortization of intangible assets provides investors and others with a consistent basis for comparison across accounting periods.

Restructuring and related charges - Harmonic from time to time incurs restructuring charges which primarily consist of employee severance, one-time termination benefits related to the reduction of its workforce, lease exit costs, and other costs. These charges are associated with material business shifts. We exclude these items because we do not believe they are reflective of our ongoing long-term business and operating results.

Loss on convertible debt extinguishment - In the second quarter of fiscal 2020, we recorded a debt extinguishment loss of $0.8 million resulting from the exchange of $37.7 million in aggregate principal amount of our convertible notes due in 2020 for $37.7 million in aggregate principal amount of convertible notes due in 2022. We have excluded this loss from our non-GAAP financial measures because we do not believe the loss is reflective of our ongoing long-term business and operating results.

Non-cash interest expense and other expenses related to convertible notes and other debt - We record the accretion of the debt discount related to the equity component and amortization of issuance costs as non-cash interest expense. We believe that excluding these costs provides meaningful supplemental information regarding operational performance and liquidity, along with enhancing investors' ability to view the Company's results from management's perspective. In addition, we believe excluding these costs from the non-GAAP measures facilitates comparisons to our historical operating results and comparisons to peer company operating results.

Discrete tax items and tax effect of non-GAAP adjustments - The income tax effect of non-GAAP adjustments relates to the tax effect of the adjustments that we incorporate into non-GAAP financial measures in order to provide a more meaningful measure of non-GAAP net income.

Depreciation - Depreciation expense, along with interest, tax and stock-based compensation expense, restructuring charges and amortization of intangible assets, is excluded from Adjusted EBITDA because we do not believe depreciation and the other items relate to the ordinary course of our business or are reflective of our underlying business performance.

Harmonic Inc.

Preliminary Condensed Consolidated Balance Sheets

(Unaudited, in thousands, except per share data)



July 2, 2021


December 31, 2020

ASSETS




Current assets:




Cash and cash equivalents

$

115,177



$

98,645


Accounts receivable, net

100,599



66,227


Inventories

43,031



35,031


Prepaid expenses and other current assets

42,314



38,132


Total current assets

301,121



238,035


Property and equipment, net

44,374



43,141


Operating lease right-of-use assets

30,175



27,556


Other non-current assets

33,322



39,117


Goodwill

242,248



243,674


Total assets

$

651,240



$

591,523






LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Other debts, current

5,678



11,771


Accounts payable

37,625



23,543


Deferred revenue

68,392



54,294


Operating lease liabilities, current

6,847



7,354


Other current liabilities

67,829



50,333


Total current liabilities

186,371



147,295


Convertible debt, non-current

132,575



129,507


Other debts, non-current

13,954



10,086


Operating lease liabilities, non-current

29,015



26,071


Other non-current liabilities

22,001



20,262


Total liabilities

$

383,916



$

333,221






Stockholders' equity:




Preferred stock, $0.001 par value, 5,000 shares authorized; no shares issued or outstanding




Common stock, $0.001 par value, 150,000 shares authorized; 101,794 and 98,204 shares issued and outstanding at July 2, 2021 and December 31, 2020, respectively

102



98


Additional paid-in capital

2,373,851



2,353,559


Accumulated deficit

(2,109,344)



(2,101,211)


Accumulated other comprehensive income

2,715



5,856


Total stockholders' equity

267,324



258,302


Total liabilities and stockholders' equity

$

651,240



$

591,523


Harmonic Inc.

Preliminary Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except per share data)



Three Months ended


Six Months Ended


July 2, 2021


June 26, 2020


July 2, 2021


June 26, 2020

Revenue:








Appliance and integration

$

78,598



$

42,224



$

158,574



$

89,976


SaaS and service

34,850



31,770



66,450



62,435


Total net revenue

113,448



73,994



225,024



152,411


Cost of revenue:








Appliance and integration

40,365



22,784



82,984



49,071


SaaS and service

12,578



13,437



26,390



28,829


Total cost of revenue

52,943



36,221



109,374



77,900


Total gross profit

60,505



37,773



115,650



74,511


Operating expenses:








Research and development

24,783



19,498



48,311



41,621


Selling, general and administrative

33,586



27,005



68,497



58,223


Amortization of intangibles



742



507



1,512


Restructuring and related charges



82



43



758


Total operating expenses

58,369



47,327



117,358



102,114


Income (loss) from operations

2,136



(9,554)



(1,708)



(27,603)


Interest expense, net

(2,630)



(3,062)



(5,233)



(5,965)


Loss on convertible debt extinguishment



(834)





(834)


Other income (expense), net

(147)



(373)



872



(646)


Loss before income taxes

(641)



(13,823)



(6,069)



(35,048)


Provision for income taxes

1,368



1,578



2,064



2,307


Net loss

$

(2,009)



$

(15,401)



$

(8,133)



$

(37,355)










Net loss per share:








Basic and diluted

$

(0.02)



$

(0.16)



$

(0.08)



$

(0.39)


Shares used in per share calculations:








Basic and diluted

101,218



96,727



100,539



96,255


Harmonic Inc.

Preliminary Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)



Six Months Ended


July 2, 2021


June 26, 2020

Cash flows from operating activities:




Net loss

$

(8,133)



$

(37,355)


Adjustments to reconcile net loss to net cash provided by (used in) operating activities:




Depreciation

6,164



5,535


Amortization of intangibles

507



2,462


Stock-based compensation

12,429



9,807


Amortization of convertible debt discount

3,093



3,785


Amortization of warrant

863



868


Foreign currency remeasurement

(1,897)



(89)


Loss on convertible debt extinguishment



834


Deferred income taxes

981



1,116


Provision for expected credit losses and returns

2,230



662


Provision for excess and obsolete inventories

1,004



723


Other adjustments

111



207


Changes in operating assets and liabilities:




Accounts receivable

(36,709)



13,024


Inventories

(8,825)



(4,032)


Other assets

882



19,182


Accounts payable

14,544



(14,963)


Deferred revenues

15,553



11,241


Other liabilities

15,642



(12,117)


Net cash provided by operating activities

18,439



890


Cash flows from investing activities:




Purchases of property and equipment

(7,685)



(20,753)


Net cash used in investing activities

(7,685)



(20,753)


Cash flows from financing activities:




Payment of convertible debt



(25)


Payment of convertible debt issuance costs



(35)


Proceeds from other debts

3,772



9,398


Repayment of other debts

(5,401)



(6,342)


Proceeds from common stock issued to employees

9,068



3,000


Payment of tax withholding obligations related to net share settlements of restricted stock units

(1,194)



(1,049)


Net cash provided by financing activities

6,245



4,947


Effect of exchange rate changes on cash and cash equivalents

(467)



(398)


Net increase (decrease) in cash and cash equivalents

16,532



(15,314)


Cash and cash equivalents at beginning of period

98,645



93,058


Cash and cash equivalents at end of period

$

115,177



$

77,744


Harmonic Inc.

Preliminary GAAP Revenue Information

(Unaudited, in thousands, except percentages)



Three Months Ended


July 2, 2021


April 2, 2021


June 26, 2020

Geography









Americas

$

71,525


63

%


$

75,062


67

%


$

42,307


58

%

EMEA

28,441


25

%


27,607


25

%


24,714


33

%

APAC

13,482


12

%


8,907


8

%


6,973


9

%

Total

$

113,448


100

%


$

111,576


100

%


$

73,994


100

%










Market









Service Provider

$

68,929


61

%


$

53,660


48

%


$

42,169


57

%

Broadcast and Media

44,519


39

%


57,916


52

%


31,825


43

%

Total

$

113,448


100

%


$

111,576


100

%


$

73,994


100

%


Six Months Ended


July 2, 2021


June 26, 2020

Geography






Americas

$

146,587


65

%


$

79,957


53

%

EMEA

56,048


25

%


52,530


34

%

APAC

22,389


10

%


19,924


13

%

Total

$

225,024


100

%


$

152,411


100

%







Market






Service Provider

$

122,589


54

%


$

85,928


56

%

Broadcast and Media

102,435


46

%


66,483


44

%

Total

$

225,024


100

%


$

152,411


100

%

Harmonic Inc.

Preliminary Segment Information

(Unaudited, in thousands, except percentages)



Three Months Ended July 2, 2021


Video


Cable Access


Total Segment
Measures

(non-GAAP)


Adjustments (1)


Consolidated
GAAP Measures

Net revenue

$

63,355



$

50,093



$

113,448



$



$

113,448


Gross profit

37,571



23,538



61,109



(604)



60,505


Gross margin %

59.3

%


47.0

%


53.9

%




53.3

%

Operating income (loss)

1,559



4,992



6,551



(4,415)



2,136


Operating margin %

2.5

%


10.0

%


5.8

%




1.9

%












Three Months Ended April 2, 2021


Video


Cable Access


Total Segment
Measures

(non-GAAP)


Adjustments (1)


Consolidated
GAAP Measures

Net revenue

$

70,331



$

41,245



$

111,576



$



$

111,576


Gross profit

38,774



17,408



56,182



(1,037)



55,145


Gross margin %

55.1

%


42.2

%


50.4

%




49.4

%

Operating income (loss)

3,772



1,296



5,068



(8,912)



(3,844)


Operating margin %

5.4

%


3.1

%


4.5

%




(3.4)

%












Three Months Ended June 26, 2020


Video


Cable Access


Total Segment
Measures

(non-GAAP)


Adjustments (1)


Consolidated
GAAP Measures

Net revenue

$

47,453



$

26,541



$

73,994



$



$

73,994


Gross profit

26,024



12,128



38,152



(379)



37,773


Gross margin %

54.8

%


45.7

%


51.6

%




51.0

%

Operating loss

(4,237)



(878)



(5,115)



(4,439)



(9,554)


Operating margin %

(8.9)

%


(3.3)

%


(6.9)

%




(12.9)

%


Six Months Ended July 2, 2021


Video


Cable Access


Total Segment
Measures

(non-GAAP)


Adjustments (1)


Consolidated
GAAP Measures

Net revenue

$

133,686



$

91,338



$

225,024



$



$

225,024


Gross profit

76,345



40,946



117,291



(1,641)



115,650


Gross margin %

57.1

%


44.8

%


52.1

%




51.4

%

Operating income (loss)

5,331



6,288



11,619



(13,327)



(1,708)


Operating margin %

4.0

%


6.9

%


5.2

%




(0.8)

%












Six Months Ended June 26, 2020


Video


Cable Access


Total Segment
Measures

(non-GAAP)


Adjustments (1)


Consolidated
GAAP Measures

Net revenue

$

101,825



$

50,586



$

152,411



$



$

152,411


Gross profit

53,931



22,542



76,473



(1,962)



74,511


Gross margin %

53.0

%


44.6

%


50.2

%




48.9

%

Operating income (loss)

(10,504)



(4,143)



(14,647)



(12,956)



(27,603)


Operating margin %

(10.3)

%


(8.2)

%


(9.6)

%




(18.1)

%


(1) See "Use of Non-GAAP Financial Measures" above and "GAAP to Non-GAAP Reconciliations" below.

Harmonic Inc.

GAAP to Non-GAAP Reconciliations (Unaudited)

(in thousands, except percentages and per share data)



Three Months Ended July 2, 2021


Revenue

Gross Profit

Total
Operating
Expense

Income from
Operations

Total Non-
operating
expense, net

Net Income (
Loss)

GAAP

$

113,448


$

60,505


$

58,369


$

2,136


$

(2,777)


$

(2,009)


Stock-based compensation


222


(3,811)


4,033



4,033


Amortization of intangibles







Restructuring and related charges


382



382



382


Non-cash interest and other expenses related to convertible notes





1,560


1,560


Discrete tax items and tax effect of non-GAAP adjustments






836


Total adjustments


604


(3,811)


4,415


1,560


6,811


Non-GAAP

$

113,448


$

61,109


$

54,558


$

6,551


$

(1,217)


$

4,802


As a % of revenue (GAAP)


53.3

%

51.5

%

1.9

%

(2.4)

%

(1.8)

%

As a % of revenue (Non-GAAP)


53.9

%

48.1

%

5.8

%

(1.1)

%

4.2

%

Diluted net income (loss) per share:







GAAP






$

(0.02)


Non-GAAP






$

0.05


Shares used in per share calculation:







GAAP






101,218


Non-GAAP






103,825



Three Months Ended April 2, 2021


Revenue

Gross Profit

Total
Operating
Expense

Income
(Loss) from
Operations

Total Non-
operating
expense, net

Net Income
(Loss)

GAAP

$

111,576


$

55,145


$

58,989


$

(3,844)


$

(1,584)


$

(6,124)


Stock-based compensation


1,073


(7,325)


8,398



8,398


Amortization of intangibles



(507)


507



507


Restructuring and related charges


(36)


(43)


7



7


Non-cash interest and other expenses related to convertible notes





1,532


1,532


Discrete tax items and tax effect of non-GAAP adjustments






194


Total adjustments


1,037


(7,875)


8,912


1,532


10,638


Non-GAAP

$

111,576


$

56,182


$

51,114


$

5,068


$

(52)


$

4,514


As a % of revenue (GAAP)


49.4

%

52.9

%

(3.4)

%

(1.4)

%

(5.5)

%

As a % of revenue (Non-GAAP)


50.4

%

45.8

%

4.5

%

%

4.0

%

Diluted net income (loss) per share:







GAAP






$

(0.06)


Non-GAAP






$

0.04


Shares used in per share calculation:







GAAP






99,868


Non-GAAP






103,190



Three Months Ended June 26, 2020


Revenue

Gross Profit

Total
Operating
Expense

Loss from
Operations

Total Non-
operating
expense, net

Net Loss

GAAP

$

73,994


$

37,773


$

47,327


$

(9,554)


$

(4,269)


$

(15,401)


Stock-based compensation


312


(3,236)


3,548



3,548


Amortization of intangibles


65


(742)


807



807


Restructuring and related charges


2


(82)


84



84


Loss on convertible debt extinguishment





834


834


Non-cash interest and other expenses related to convertible notes





1,950


1,950


Discrete tax items and tax effect of non-GAAP adjustments






2,238


Total adjustments


379


(4,060)


4,439


2,784


9,461


Non-GAAP

$

73,994


$

38,152


$

43,267


$

(5,115)


$

(1,485)


$

(5,940)


As a % of revenue (GAAP)


51.0

%

64.0

%

(12.9)

%

(5.8)

%

(20.8)

%

As a % of revenue (Non-GAAP)


51.6

%

58.5

%

(6.9)

%

(2.0)

%

(8.0)

%

Diluted net loss per share:







GAAP






$

(0.16)


Non-GAAP






$

(0.06)


Shares used in per share calculation:







GAAP and Non-GAAP






96,727



Six Months Ended July 2, 2021


Revenue

Gross Profit

Total
Operating
Expense

Income
(Loss) from
Operations

Total Non-
operating
expense, net

Net Income
(Loss)

GAAP

$

225,024


$

115,650


$

117,358


$

(1,708)


$

(4,361)


$

(8,133)


Stock-based compensation


1,295


(11,136)


12,431



12,431


Amortization of intangibles



(507)


507



507


Restructuring and related charges


346


(43)


389



389


Non-cash interest and other expenses related to convertible notes





3,092


3,092


Discrete tax items and tax effect of non-GAAP adjustments






1,030


Total adjustments


1,641


(11,686)


13,327


3,092


17,449


Non-GAAP

$

225,024


$

117,291


$

105,672


$

11,619


$

(1,269)


$

9,316


As a % of revenue (GAAP)


51.4

%

52.2

%

(0.8)

%

(1.9)

%

(3.6)

%

As a % of revenue (Non-GAAP)


52.1

%

47.0

%

5.2

%

(0.6)

%

4.1

%

Diluted net income (loss) per share:







GAAP






$

(0.08)


Non-GAAP






$

0.09


Shares used in per share calculation:







GAAP






100,539


Non-GAAP






103,494



Six Months Ended June 26, 2020


Revenue

Gross Profit

Total
Operating
Expense

Loss from
Operations

Total Non-
operating
expense, net

Net Loss

GAAP

$

152,411


$

74,511


$

102,114


$

(27,603)


$

(7,445)


$

(37,355)


Stock-based compensation


1,083


(8,724)


9,807



9,807


Amortization of intangibles


950


(1,512)


2,462



2,462


Restructuring and related charges


(71)


(758)


687



687


Loss on convertible debt extinguishment





834


834


Non-cash interest and other expenses related to convertible notes





3,785


3,785


Discrete tax items and tax effect of non-GAAP adjustments






4,054


Total adjustments


1,962


(10,994)


12,956


4,619


21,629


Non-GAAP

$

152,411


$

76,473


$

91,120


$

(14,647)


$

(2,826)


$

(15,726)


As a % of revenue (GAAP)


48.9

%

67.0

%

(18.1)

%

(4.9)

%

(24.5)

%

As a % of revenue (Non-GAAP)


50.2

%

59.8

%

(9.6)

%

(1.9)

%

(10.3)

%

Diluted net loss per share:







GAAP






$

(0.39)


Non-GAAP






$

(0.16)


Shares used in per share calculation:







GAAP and Non-GAAP






96,255


Harmonic Inc.

Preliminary Adjusted EBITDA Reconciliation (Unaudited)

(In thousands)



Three Months Ended


July 2, 2021


April 2, 2021


June 26, 2020

Net income (loss) - GAAP

$

(2,009)



$

(6,124)



$

(15,401)


Provision for income taxes

1,368



696



1,578


Interest expense, net

2,630



2,603



3,062


Depreciation

3,107



3,057



2,692


Amortization of intangibles



507



807


EBITDA

5,096



739



(7,262)








Adjustments






Stock-based compensation

4,033



8,398



3,548


Loss on convertible debt extinguishment





834


Restructuring and related charges

382



7



84


Adjusted EBITDA

$

9,511



$

9,144