HLIT
$6.46
Harmonic
($.35)
(5.14%)
Earnings Details
3rd Quarter September 2020
Monday, October 26, 2020 4:03:00 PM
Tweet Share Watch
Summary

Harmonic Beats

Harmonic (HLIT) reported 3rd Quarter September 2020 earnings of $0.02 per share on revenue of $94.9 million. The consensus estimate was a loss of $0.05 per share on revenue of $82.5 million. The Earnings Whisper number was for a loss of $0.01 per share. Revenue fell 18.0% compared to the same quarter a year ago.

The company Harmonic, Inc. HLIT said it expects fourth quarter non-GAAP earnings of $0.10 to $0.18 per share on revenue of $120.0 million to $130.0 million. The current consensus earnings estimate is $0.17 per share on revenue of $130.24 million for the quarter ending December 31, 2020.

Harmonic Inc designs, manufactures and sells video products and system solutions that enable service providers to efficiently deliver the next generation of broadcast and on-demand services.

Results
Reported Earnings
$0.02
Earnings Whisper
($0.01)
Consensus Estimate
($0.05)
Reported Revenue
$94.9 Mil
Revenue Estimate
$82.5 Mil
Growth
Earnings Growth
Revenue Growth
Guidance
Power Rating
Grade
Earnings Release

Harmonic Announces Third Quarter 2020 Results

SAN JOSE, Calif., Oct. 26, 2020 /PRNewswire/ -- Harmonic Inc. (NASDAQ: HLIT) today announced its unaudited results for the third quarter of 2020.

"Harmonic's third quarter results were driven by strong performance in both our Cable Access and Video segments," said Patrick Harshman, president and chief executive officer of Harmonic. "Our Cable Access segment delivered solid sequential revenue growth and operating margin. Complementing this, Video segment revenue rebounded strongly quarter over quarter, reflecting increased customer activity. We continue to execute well on our strategic priorities, and we expect this strong business momentum will continue through the balance of the year."

Q3 Financial and Business Highlights

Financial

  • Revenue: $94.9 million, down 18.0% year over year.
  • SaaS and service revenue: $31.6 million, down 3.1% year over year.
  • Gross margin: GAAP 51.6% and non-GAAP 52.2%, compared to GAAP 65.3% and non-GAAP 67.0% in the year ago period.
  • Cable Access segment revenue: $40.3 million, down 27.7% year over year.
  • Video segment revenue: $54.6 million, down 9% year over year.
  • Cable Access segment gross margin: 48.9% compared to 77.1% in the year ago period.
  • Video segment gross margin: 54.6%, compared to 57.7% in the year ago period.
  • Adjusted EBITDA: $7.2 million compared to $32.0 million in the year ago period.
  • Operating income (loss): GAAP loss $1.6 million and non-GAAP income $4.2 million, compared to GAAP income $22.5 million and non-GAAP income $29.9 million in the year ago period.
  • EPS: GAAP net loss per share $0.06 cents and non-GAAP net income per share $0.03 cents, compared to GAAP net income per share $0.12 cents and non-GAAP net income per share $0.25 cents in the year ago period.
  • Cash: $70.8 million, up $4.1 million year over year.

Business

  • CableOS solution commercially deployed with 38 customers as of October 14, 2020 (the date of Cable-Tec Expo 2020, a leading industry conference), up 100% compared to the third quarter of the prior year.
  • CableOS deployments scaled to 2.1 million served cable modems, up 122% year over year.
  • Over 48,000 live-streaming channels deployed globally, up 15% year over year.
  • Received first multi-million-dollar order for the new 5G bandwidth reclamation solution.

Select Financial Information



GAAP


Non-GAAP

Key Financial Results


Q3 2020


Q2 2020


Q3 2019


Q3 2020


Q2 2020


Q3 2019



(in millions, except per share data)

Net revenue


$

94.9



$

74.0



$

115.7



$

94.9



$

74.0



$

115.7


Net income (loss)


$

(5.4)



$

(15.4)



$

11.7



$

2.6



$

(5.9)



$

24.6


Diluted EPS


$

(0.06)



$

(0.16)



$

0.12



$

0.03



$

(0.06)



$

0.25















Other Financial Information

Q3 2020


Q2 2020


Q3 2019


(in millions)

Adjusted EBITDA for the quarter

$

7.2



$

(2.8)



$

32.0


Bookings for the quarter

$

100.7



$

77.0



$

126.5


Backlog and deferred revenue as of quarter end

$

216.2



$

210.2



$

192.5


Cash and cash equivalents as of quarter end

$

70.8



$

77.7



$

66.7


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

GAAP Financial Guidance


Q4 2020


2020


Low


High


Low


High




(in millions, except percentages and per share data)

Net Revenue


$

120.0



$

130.0



$

367.5



$

377.5



Video


$

80.0



$

85.0



$

236.5



$

241.5



Cable Access


$

40.0



$

45.0



$

131.0



$

136.0


Gross Margin %


50.0

%


54.0

%


50.0

%


51.0

%

Operating Expenses


$

53.0



$

55.0



$

205.5



$

207.5


Operating Income (Loss)


$

6.5



$

15.0



$

(22.0)



$

(15.0)


Tax Expense


$

(0.3)



$

(0.3)



$

(3.4)



$

(3.4)


EPS


$

0.03



$

0.11



$

(0.40)



$

(0.33)


Shares


98.8



98.8



97.0



97.0


Cash


$

80.0



$

90.0



$

80.0



$

90.0


 

Non-GAAP Financial Guidance


Q4 2020


2020


Low


High


Low


High




(in millions, except percentages and per share data)

Net Revenue


$

120.0



$

130.0



$

367.5



$

377.5



Video


$

80.0



$

85.0



$

236.5



$

241.5



Cable Access


$

40.0



$

45.0



$

131.0



$

136.0


Gross Margin %


50.5

%


54.5

%


51.0

%


52.0

%

Operating Expenses


$

48.0



$

50.0



$

184.5



$

186.5


Operating Income


$

12.5



$

21.0



$

3.0



$

10.0


Adjusted EBITDA


$

15.5



$

24.0



$

13.5



$

20.5


Tax rate


10

%


10

%


10

%


10

%

EPS


$

0.10



$

0.18



$

(0.03)



$

0.04


Shares


98.8



98.8



97.0



98.2


Cash


$

80.0



$

90.0



$

80.0



$

90.0


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

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, October 26, 2020. 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 2445329). 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 2445329).

About Harmonic Inc.

Harmonic (NASDAQ: HLIT), the worldwide leader in video delivery technology and services, enables media companies and service providers to deliver ultra-high-quality broadcast and OTT video services to consumers globally. The Company has also 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-as-a-service (SaaS) technologies, or powering the delivery of gigabit internet cable services, Harmonic is changing the way media companies and service providers monetize live and VOD 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: GAAP net revenue, GAAP gross margins, GAAP operating expenses, GAAP operating income (loss), GAAP tax expense, GAAP EPS, non-GAAP revenue, non-GAAP gross margins, non-GAAP operating expenses, non-GAAP operating income (loss), Adjusted EBITDA, non-GAAP tax rate and non-GAAP 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 market acceptance of various types of broadband services, on the adoption of new broadband technologies and on broadband industry trends; inventory management; the lack of timely availability of parts or raw materials necessary to produce our products; the impact of increases in the prices of raw materials and oil; 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, 2019, 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: revenue, 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:

Cable Access inventory charge - Harmonic from time to time incurs inventory impairment charges associated with material business shifts, such as the repositioning of our Cable Access segment. We exclude these items, because we do not believe they are reflective of our ongoing long-term business and operating results.

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 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. In the third quarter of fiscal 2019, we recorded a debt extinguishment loss of $5.7 million resulting from refinancing a portion of our convertible notes due in 2020. We have excluded these losses from our non-GAAP financial measures because we do not believe the losses are 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.

Accounting impact related to warrant amortization - We issued a warrant to a customer, Comcast Corporation, in September 2016 pursuant to which Comcast may purchase up to 7.8 million shares of Harmonic common stock. In July 2019, in connection with Comcast's election of enterprise license pricing for the Company's CableOS software, all warrant shares were fully vested as of July 1, 2019. As a result of Comcast's election of enterprise license pricing, we no longer excluded the effect of warrant amortization in our non-GAAP financial measures beginning with the third quarter of fiscal 2019.

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.

Harmonic Inc.

Preliminary Condensed Consolidated Balance Sheets

(Unaudited, in thousands, except per share data)



September 25, 2020


December 31, 2019

ASSETS




Current assets:




   Cash and cash equivalents

$

70,817



$

93,058


   Accounts receivable, net

81,353



88,500


   Inventories, net

36,802



29,042


   Prepaid expenses and other current assets

25,071



40,762


Total current assets

214,043



251,362


Property and equipment, net

41,915



22,928


Operating lease right-of-use assets

24,531



27,491


Goodwill

241,425



239,780


Intangibles, net

1,256



4,461


Other long-term assets

36,252



41,305


Total assets

$

559,422



$

587,327






LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




   Other debts and finance lease obligations, current

$

11,402



$

6,713


   Accounts payable

31,555



40,933


   Income taxes payable

826



1,226


   Deferred revenue

42,729



37,117


   Accrued and other current liabilities

51,286



62,535


   Convertible notes, short-term

7,972



43,375


Total current liabilities

145,770



191,899


Convertible notes, long-term

128,018



88,629


Other debts and finance lease obligations, long-term

9,707



10,511


Income taxes payable, long-term

185



178


Other non-current liabilities

41,204



41,254


Total liabilities

$

324,884



$

332,471






Convertible notes

81



2,410


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; 97,732 and 91,875 shares issued and outstanding at September 25, 2020 and December 31, 2019, respectively

98



92


   Additional paid-in capital

2,348,638



2,327,359


   Accumulated deficit

(2,114,676)



(2,071,940)


   Accumulated other comprehensive income (loss)

397



(3,065)


Total stockholders' equity

234,457



252,446


Total liabilities and stockholders' equity

$

559,422



$

587,327


 

Harmonic Inc.

Preliminary Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except per share data)



Three months ended


Nine months ended


September 25,
2020


September 27,
2019


September 25,
2020


September 27,
2019

Revenue:








     Appliance and integration

$

63,251



$

83,082



$

153,227



$

189,864


     SaaS and service

31,641



32,643



94,076



90,832


Total net revenue

94,892



115,725



247,303



280,696


Cost of revenue:








     Appliance and integration

32,082



26,812



81,153



83,178


     SaaS and service

13,886



13,373



42,715



36,201


Total cost of revenue

45,968



40,185



123,868



119,379


Total gross profit

48,924



75,540



123,435



161,317


Operating expenses:








   Research and development

20,206



20,197



61,827



62,911


   Selling, general and administrative

28,773



31,148



86,996



88,478


   Amortization of intangibles

752



785



2,264



2,357


   Restructuring and related charges

814



861



1,572



1,194


Total operating expenses

50,545



52,991



152,659



154,940


Income (loss) from operations

(1,621)



22,549



(29,224)



6,377


Interest expense, net

(2,807)



(3,000)



(8,772)



(8,862)


Loss on debt extinguishment



(5,695)



(834)



(5,695)


Other expense, net

(167)



(1,594)



(813)



(2,333)


Income (loss) before income taxes

(4,595)



12,260



(39,643)



(10,513)


Provision for income taxes

786



603



3,093



981


Net income (loss)

$

(5,381)



$

11,657



$

(42,736)



$

(11,494)










Net income (loss) per share:








   Basic

$

(0.06)



$

0.13



$

(0.44)



$

(0.13)


   Diluted

$

(0.06)



$

0.12



$

(0.44)



$

(0.13)


Shares used in per share calculations:








   Basic

97,563



89,964



96,623



89,030


   Diluted

97,563



97,596



96,623



89,030


 

Harmonic Inc.

Preliminary Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)



Nine months ended


September 25,
2020


September 27,
2019

Cash flows from operating activities:




Net loss

$

(42,736)



$

(11,494)


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




   Amortization of intangibles

3,214



6,242


   Depreciation

8,683



8,480


   Stock-based compensation

13,737



8,719


   Amortization of discount on convertible and other debt

5,451



4,960


   Amortization of non-cash warrant

1,307



13,137


   Loss on debt extinguishment

834



5,695


   Deferred income taxes, net

1,527



75


   Foreign currency adjustments

2,537



(1,719)


   Provision for excess and obsolete inventories

1,390



704


   Provision for doubtful accounts, returns and discounts

1,966



988


   Other non cash adjustments, net

177



1,235


Changes in operating assets and liabilities




      Accounts receivable

5,436



(20,521)


      Inventories

(9,301)



(4,170)


      Prepaid expenses and other assets

23,685



(5,703)


      Accounts payable

(11,047)



(2,839)


      Deferred revenues

6,066



8,002


      Income taxes payable

(384)



(114)


      Accrued and other liabilities

(14,961)



(10,536)


Net cash provided by (used in) operating activities

(2,419)



1,141


Cash flows from investing activities:




   Purchases of property and equipment

(26,176)



(4,973)


Net cash used in investing activities

(26,176)



(4,973)


Cash flows from financing activities:




   Proceeds from convertible debt



115,500


   Payments of convertible debt

(25)



(109,603)


   Payment of convertible debt issuance costs

(672)



(3,465)


   Proceeds from other debts and finance leases

9,398



4,684


   Repayment of other debts and finance leases

(6,342)



(6,387)


   Proceeds from common stock issued to employees

5,227



5,573


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

(1,384)



(1,278)


Net cash provided by financing activities

6,202



5,024


Effect of exchange rate changes on cash and cash equivalents

152



(486)


Net increase (decrease) in cash and cash equivalents

(22,241)



706


Cash and cash equivalents at beginning of the year

93,058



65,989


Cash and cash equivalents at end of the year

$

70,817



$

66,695


 

Harmonic Inc.

Preliminary Revenue Information

(Unaudited, in thousands, except percentages)



Three months ended


September 25, 2020


June 26, 2020


September 27, 2019


GAAP

Adjustment(1)

Non-GAAP


GAAP

Adjustment(1)

Non-GAAP


GAAP

Adjustment(1)

Non-GAAP

Geography















Americas

$

54,521


$


$

54,521


58%


$

42,307


$


$

42,307


58%


$

78,699


$


$

78,699


68%

EMEA

29,771



29,771


31%


24,714



24,714


33%


24,322



24,322


21%

APAC

10,600



10,600


11%


6,973



6,973


9%


12,704



12,704


11%

Total

$

94,892


$


$

94,892


100%


$

73,994


$


$

73,994


100%


$

115,725


$


$

115,725


100%
















Market















Service Provider

$

59,083


$


$

59,083


62%


$

42,169


$


$

42,169


57%


$

77,886


$


$

77,886


67%

Broadcast and Media

35,809



35,809


38%


31,825



31,825


43%


37,839



37,839


33%

Total

$

94,892


$


$

94,892


100%


$

73,994


$


$

73,994


100%


$

115,725


$


$

115,725


100%

 


Nine months ended


September 25, 2020


September 27, 2019


GAAP

Adjustments(1)

Non-GAAP


GAAP

Adjustments(1)

Non-GAAP

Geography










Americas

$

134,478


$


$

134,478


55%


$

155,324


$

48


$

155,372


54%

EMEA

82,301



82,301


33%


77,603



77,603


28%

APAC

30,524



30,524


12%


47,769



47,769


18%

Total

$

247,303


$


$

247,303


100%


$

280,696


$

48


$

280,744


100%











Market










Service Provider

$

145,011


$


$

145,011


59%


$

165,536


$

48


$

165,584


59%

Broadcast and Media

102,292



102,292


41%


115,160



115,160


41%

Total

$

247,303


$


$

247,303


100%


$

280,696


$

48


$

280,744


100%


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

 

 Harmonic Inc.

Preliminary Segment Information

(Unaudited, in thousands, except percentages)



Three months ended September 25, 2020


Video


Cable Access


Total Segment
Measures

(non-GAAP)


Adjustments (1)


Consolidated GAAP
Measures

Net revenue

$

54,641



$

40,251



$

94,892



$



$

94,892


Gross profit

29,825



19,682



49,507



(583)



48,924


Gross margin%

54.6

%


48.9

%


52.2

%




51.6

%

Operating income (loss)

(1,699)



5,876



4,177



(5,798)



(1,621)


Operating margin%

(3.1)

%


14.6

%


4.4

%




(1.7)

%












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)

%












Three months ended September 27, 2019


Video


Cable Access


Total Segment
Measures

(non-GAAP)


Adjustments (1)


Consolidated GAAP
Measures

Net revenue

$

60,055



$

55,670



$

115,725



$



$

115,725


Gross profit

34,646



42,925



77,571



(2,031)



75,540


Gross margin%

57.7

%


77.1

%


67.0

%




65.3

%

Operating income (loss)

(1,696)



31,611



29,915



(7,366)



22,549


Operating margin%

(2.8)

%


56.8

%


25.9

%




19.5

%



Nine months ended September 25, 2020


Video


Cable Access


Total Segment
Measures

(non-GAAP)


Adjustments (1)


Consolidated GAAP
Measures

Net revenue

$

156,466



$

90,837



$

247,303



$



$

247,303


Gross profit

83,756



42,224



125,980



(2,545)



123,435


Gross margin%

53.5

%


46.5

%


50.9

%




49.9

%

Operating income (loss)

(12,203)



1,733



(10,470)



(18,754)



(29,224)


Operating margin%

(7.8)

%


1.9

%


(4.2)

%




(11.8)

%












Nine months ended September 27, 2019


Video


Cable Access


Total Segment
Measures

(non-GAAP)


Adjustments (1)


Consolidated GAAP
Measures

Net revenue

$

198,856



$

81,888



$

280,744



$

(48)


*

$

280,696


Gross profit

114,692



52,104



166,796



(5,479)



161,317


Gross margin%

57.7

%


63.6

%


59.4

%




57.5

%

Operating income

4,731



18,571



23,302



(16,925)



6,377


Operating margin%

2.4

%


22.7

%


8.3

%




2.3

%


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

* This non-GAAP adjustment is for warrant amortization and relates to our Cable Access segment. After applying this adjustment to the non-GAAP revenue for the Cable Access segment, our GAAP revenue for the Cable Access segment for the nine months ended September 27, 2019 was $81,840.

 

Harmonic Inc.

GAAP to Non-GAAP Reconciliations (Unaudited)

(in thousands, except percentages and per share data)



Three months ended September 25, 2020


Revenue

Gross Profit

Total
Operating
Expense

Income
(Loss) from
Operations

Total Non-
operating
expense, net

Net Income
(Loss)

GAAP

$

94,892


$

48,924


$

50,545


$

(1,621)


$

(2,974)


$

(5,381)


  Stock-based compensation


281


(3,649)


3,930



3,930


  Amortization of intangibles



(752)


752



752


  Restructuring and related charges


302


(814)


1,116



1,116


  Non-cash interest and other expenses related to convertible notes and other debt





1,666


1,666


  Discrete tax items and tax effect of non-GAAP adjustments






499


Total adjustments


583


(5,215)


5,798


1,666


7,963


Non-GAAP

$

94,892


$

49,507


$

45,330


$

4,177


$

(1,308)


$

2,582


As a % of revenue (GAAP)


51.6

%

53.3

%

(1.7)

%

(3.1)

%

(5.7)

%

As a % of revenue (Non-GAAP)


52.2

%

47.8

%

4.4

%

(1.4)

%

2.7

%

Diluted net income (loss) per share:







  Basic net loss per share-GAAP






$

(0.06)


  Diluted net income per share-Non-GAAP






$

0.03


Shares used to compute diluted net income (loss) per share:







  GAAP






97,563


  Non- GAAP






98,361

















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 and other debt





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:







  Diluted net loss per share-GAAP






$

(0.16)


  Diluted net loss per share-Non-GAAP






$

(0.06)


Shares used to compute diluted net loss per share:







  GAAP and Non-GAAP






96,727



Three months ended September 27, 2019


Revenue

Gross Profit

Total
Operating
Expense

Income from
Operations

Total Non-
operating
expense, net

Net Income

GAAP

$

115,725


$

75,540


$

52,991


$

22,549


$

(10,289)


$

11,657


  Stock-based compensation


405


(3,689)


4,094



4,094


  Amortization of intangibles


1,295


(785)


2,080



2,080


  Restructuring and related charges


331


(861)


1,192



1,192


  Loss on convertible debt extinguishment





5,695


5,695


  Non-cash interest and other expenses related to convertible notes and other debt





2,625


2,625


  Discrete tax items and tax effect of non-GAAP adjustments






(2,751)


Total adjustments


2,031


(5,335)


7,366


8,320


12,935


Non-GAAP

$

115,725


$

77,571


$

47,656


$

29,915


$

(1,969)


$

24,592


As a % of revenue (GAAP)


65.3

%

45.8

%

19.5

%

(8.9)

%

10.1

%

As a % of revenue (Non-GAAP)


67.0

%

41.2

%

25.9

%

(1.7)

%

21.3

%

Diluted net income per share:







  Diluted net income per share-GAAP






$

0.12


  Diluted net income per share-Non-GAAP






$

0.25


Shares used to compute diluted net income per share:







  GAAP and Non-GAAP






97,596










Nine months ended September 25, 2020


Revenue

Gross Profit

Total
Operating
Expense

Loss from
Operations

Total Non-
operating
Expense

Net Loss

GAAP

$

247,303


$

123,435


$

152,659


$

(29,224)


$

(10,419)


$

(42,736)


  Stock-based compensation


1,364


(12,373)


13,737



13,737


  Amortization of intangibles


950


(2,264)


3,214



3,214


  Restructuring and related charges


231


(1,572)


1,803



1,803


  Loss on convertible debt extinguishment





834


834


  Non-cash interest and other expenses related to convertible notes and other debt





5,451


5,451


  Discrete tax items and tax effect of non-GAAP adjustments






4,553


Total adjustments


2,545


(16,209)


18,754


6,285


29,592


Non-GAAP

$

247,303


$

125,980


$

136,450


$

(10,470)


$

(4,134)


$

(13,144)


As a % of revenue (GAAP)


49.9

%

61.7

%

(11.8)

%

(4.2)

%

(17.3)

%

As a % of revenue (Non-GAAP)


50.9

%

55.2

%

(4.2)

%

(1.7)

%

(5.3)

%








Diluted net loss per share:







  Diluted net loss per share-GAAP






$

(0.44)


  Diluted net loss per share-Non-GAAP






$

(0.14)


Shares used to compute diluted net loss per share:







  GAAP and Non-GAAP






96,623










Nine months ended September 27, 2019


Revenue

Gross Profit

Total
Operating
Expense

Income from
Operations

Total Non-
operating
Expense

Net Income
(Loss)

GAAP

$

280,696


$

161,317


$

154,940


$

6,377


$

(16,890)


$

(11,494)


   Accounting impact related to warrant amortization

48


48



48



48


  Stock-based compensation


823


(7,894)


8,717



8,717


  Amortization of intangibles


3,885


(2,357)


6,242



6,242


  Restructuring and related charges


723


(1,195)


1,918



1,918


  Loss on debt extinguishment





5,695


5,695


  Non-cash interest and other expenses related to convertible notes





5,887


5,887


  Discrete tax items and tax effect of non-GAAP adjustments






(1,179)


Total adjustments

48


5,479


(11,446)


16,925


11,582


27,328


Non-GAAP

$

280,744


$

166,796


$

143,494


$

23,302


$

(5,308)


$

15,834


As a % of revenue (GAAP)


57.5

%

55.2

%

2.3

%

(6.0)

%

(4.1)

%

As a % of revenue (Non-GAAP)


59.4

%

51.1

%

8.3

%

(1.9)

%

5.6

%








Diluted net income (loss) per share:







  Diluted net loss per share-GAAP






$

(0.13)


  Diluted net income per share-Non-GAAP






$

0.17


Shares used to compute diluted net income (loss) per share:







  GAAP






89,030


  Non-GAAP






92,579


 

Harmonic Inc.

Preliminary Adjusted EBITDA Reconciliation (Unaudited)

(In thousands)



Three months ended


September 25,
2020

June 26,
2020

September 27,
2019

Net loss - GAAP

$

(5,381)


$

(15,401)


$

11,657


Provision for income taxes

786


1,578


603


Interest expense, net

2,807


3,062


3,000


Depreciation

3,148


2,692


2,764


Amortization of intangibles

752


807


2,080


EBITDA

2,112


(7,262)


20,104






Adjustments




Stock-based compensation

3,930


3,548


4,094


Loss on convertible debt extinguishment


834


5,695


Non-cash expenses related to convertible note



927


Restructuring and related charges

1,116


84


1,192


Adjusted EBITDA

$

7,158


$

(2,796)


$

32,012


 


Nine months ended


September 25,
2020

September 27,
2019

Net loss - GAAP

$

(42,736)


$

(11,494)


Provision for income taxes

3,093


981


Interest expense, net

8,772


8,862


Depreciation

8,683


8,480


Amortization of intangibles

3,214


6,242


EBITDA

(18,974)


13,071





Adjustments



Accounting impact related to warrant amortization


48


Stock-based compensation

13,737


8,717


Loss on convertible debt extinguishment

834


5,695


Non-cash expenses related to convertible note


927


Restructuring and related charges

1,803


1,918


Adjusted EBITDA

$

(2,600)


$

30,376


 


Q4 2020 Financial Guidance


Revenue

Gross Profit

Total
Operating
Expense

Income from
Operations

Total Non-
operating
Expense, net

Net Income

GAAP

$120.0 to $130.0

$59.7 to $70.0

$53.0 to $55.0

$6.5 to $15.0

$(3.3)

$3.0 to $11.3

  Stock-based compensation

0.3

(3.7)

4.0

4.0

  Amortization of intangibles

(0.8)

0.8

0.8

  Restructuring and related charges

0.6

(0.5)

1.1

1.1

  Non-cash interest and other expenses related to convertible notes and other debt

1.7

1.7

 Tax effect of non-GAAP adjustments

$(1.5) to $(0.7)

Total adjustments

0.9

(5.0)

5.9

1.7

$6.1 to $6.9

Non-GAAP

$120.0 to $130.0

$60.6 to $70.9

$48.0 to $50.0

$12.5 to $21.0

$(1.6)

$9.9 to $17.4

As a % of revenue (GAAP)


50.0% to 54.0%

44.2% to 42.3%

5.5% to 11.5%

(2.5)% to (2.8)%

2.5% to 8.7%

As a % of revenue (Non-GAAP)


50.5% to 54.5%

40.0% to 38.5%

10.5% to 16.1%

(1.2)% to (1.3)%

8.3% to 13.4%

Diluted net income per share:







  Diluted net income per share-GAAP






$0.03 to $0.11

  Diluted net income per share-Non-GAAP






$0.10 to $0.18

Shares used to compute diluted net income per share:







  GAAP and Non-GAAP






98.8


2020 Financial Guidance


Revenue

Gross Profit

Total
Operating
Expense

Income (Loss)
from
Operations

Total Non-
operating
Expense, net

Net Income
(Loss)

GAAP

$367.5 to $377.5

$183.7 to $192.6

$205.5 to $207.5

$(22.0) to $(15.0)

$(13.8)

$(39.1) to $(32.2)

  Stock-based compensation

1.7

(16.1)

17.8

17.8

  Amortization of intangibles

1.0

(3.0)

4.0

4.0

  Restructuring and related charges

0.9

(2.1)

3.0

3.0

  Non-cash interest and other expenses related to convertible notes and other debt

7.2

7.2

  Loss on debt extinguishment

0.8

0.8

 Tax effect of non-GAAP adjustments

$3.1 to $3.7

Total adjustments

3.6

(21.2)

24.8

8.0

$35.9 to $36.5

Non-GAAP

$367.5 to $377.5

$187.3 to $196.2

$184.5 to $186.5

$3.0 to $10.0

$(5.8)

$(2.6) to $3.7

As a % of revenue (GAAP)


50.0% to 51.0%

56.0% to 55.0%

(6.0)% to (4.0)%

(3.7)% to (3.8)%

(10.6)% to (8.5)%

As a % of revenue (Non-GAAP)


51.0% to 52.0%

50.2% to 49.4%

0.8% to 2.6%

(1.5)% to (1.6)%

(0.7)% to 1.0%

Diluted net income (loss) per share:







  Diluted net loss per share-GAAP






$(0.40) to $(0.33)

  Diluted net income (loss) per share-Non-GAAP






$(0.03) to $0.04

Shares used to compute diluted net income (loss) per share:







  GAAP and Non-GAAP






97.0

  Non-GAAP






98.2

 

Harmonic Inc.

Adjusted EBITDA Reconciliation on Financial Guidance

(In millions)



Q4 2020 Financial
Guidance

2020 Financial
Guidance

Net income (loss) - GAAP

$3.0 to $11.3


$(39.1) to $(32.2)


Provision for income taxes

0.3


3.4


Interest expense, net

2.8


11.6


Depreciation

3.3


11.9


Amortization of intangibles

0.8


4.0


EBITDA

         $10.2 to $18.5


        $(8.2) to $(1.3)





Adjustments



Stock-based compensation

4.0


17.8


Restructuring and related charges

1.2


3.0


Loss on debt extinguishment


0.8


Adjusted EBITDA

         $15.5 to $24.0


       $13.5 to $20.5



 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/harmonic-announces-third-quarter-2020-results-301159878.html

SOURCE Harmonic Inc.