HLIT
$11.07
Harmonic
($.39)
(3.40%)
Earnings Details
2nd Quarter June 2022
Monday, August 01, 2022 4:05:00 PM
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Summary

Harmonic Guides In-line

Harmonic (HLIT) reported 2nd Quarter June 2022 earnings of $0.11 per share on revenue of $157.4 million. The consensus earnings estimate was $0.04 per share on revenue of $150.1 million. Revenue grew 38.8% on a year-over-year basis.

The company said it expects third quarter earnings of $0.02 to $0.05 per share on revenue of $147.0 million to $157.0 million. The current consensus earnings estimate is $0.04 per share on revenue of $151.60 million for the quarter ending September 30, 2022.

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
$0.11
Earnings Whisper
-
Consensus Estimate
$0.04
Reported Revenue
$157.4 Mil
Revenue Estimate
$150.1 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Harmonic Announces Second Quarter 2022 Results

Record total revenue up 39% year over year

Cable Access revenue up 62% and Video SaaS revenue up 69% year over year

SAN JOSE, Calif., Aug. 1, 2022 /PRNewswire/ -- Harmonic Inc. (NASDAQ: HLIT) today announced its unaudited results for the second quarter of 2022.

"Harmonic delivered another record quarter, with 39% year over year revenue growth and over 15% adjusted EBITDA margin," said Patrick Harshman, president and chief executive officer of Harmonic. "Our Cable Access business grew 62% and our Video SaaS revenue grew 69% year over year, highlighting strong demand and powerful competitive differentiation. We ended the second quarter with backlog and deferred revenue near record levels, providing good visibility as we enter the second half of 2022."  

Q2 Financial and Business Highlights

Financial

  • Revenue: $157.4 million, up 39% year over year
    • Cable Access segment revenue: $81.2 million, up 62% year over year
    • Video segment revenue: $76.2 million, up 20% year over year
  • Gross margin: GAAP 52.3% and non-GAAP 52.8%, compared to GAAP 53.3% and non-GAAP 53.9% in the year ago period
    • Cable Access segment gross margin: 43.0% compared to 47.0% in the year ago period
    • Video segment gross margin: 63.2% compared to 59.3% in the year ago period
  • Operating income: GAAP income $15.1 million and non-GAAP income $21.4 million, compared to GAAP income $2.1 million and non-GAAP income $6.6 million in the year ago period
  • Net income: GAAP net income $14.8 million and non-GAAP net income of $17.6 million, compared to GAAP net loss $2.0 million and non-GAAP net income $4.8 million in the year ago period
  • Adjusted EBITDA: $24.3 million income compared to $9.5 million income in the year ago period
  • EPS: GAAP net income per share of $0.14 and non-GAAP net income per share of $0.16, compared to GAAP net loss per share of $0.02 and non-GAAP net income per share of $0.05 in the year ago period
  • Cash: $121.8 million, up $6.6 million year over year

Business

  • CableOS® solution commercially deployed with 79 customers, up 27% year over year
  • CableOS deployments scaled to 8.5 million served cable modems, up 159% year over year
  • New Tier 1 live sports streaming SaaS wins and expansions

Select Financial Information



GAAP


Non-GAAP

Key Financial Results


Q2 2022


Q1 2022


Q2 2021


Q2 2022


Q1 2022


Q2 2021



(Unaudited, in millions, except per share data)

Net revenue


$         157.4


$         147.4


$         113.4


$         157.4


$         147.4


$         113.4

Net income (loss)


$           14.8


$           (1.5)


$           (2.0)


$           17.6


$             8.9


$             4.8

EPS


$           0.14


$         (0.01)


$         (0.02)


$           0.16


$           0.08


$           0.05










Other Financial Information

Q2 2022


Q1 2022


Q2 2021


(Unaudited, in millions)

Adjusted EBITDA for the quarter

$           24.3


$           14.5


$             9.5

Bookings for the quarter

$         140.9


$         205.5


$         186.9

Backlog and deferred revenue as of quarter end

$         477.8


$         497.3


$         347.2

Cash and cash equivalents as of quarter end

$         121.8


$         100.7


$         115.2

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 2022 GAAP Financial Guidance (1)


Low


High

(Unaudited, in millions, except percentages and per share data)

Video


Cable
Access


Adjustments (2)


Total

GAAP


Video


Cable
Access


Adjustments (2)


Total

GAAP

Net revenue

$        62


$        85


$         —


$      147


$        66


$        91


$         —


$      157

Gross margin %

57.0 %


43.0 %


(0.6) %


48.3 %


58.0 %


45.0 %


(0.6) %


49.9 %

Gross profit

$        35


$        37


$         (1)


$        71


$        38


$        41


$          (1)


$        78

Operating expenses

$        36


$        24


$           6


$        66


$        37


$        26


$           6


$        69

Operating income (loss)

$        (1)


$        13


$         (7)


$          5


$          1


$        15


$          (7)


$          9

Tax rate (3)







33.0 %








33.0 %

EPS (3)







$     0.02








$     0.05

Shares (3)







109.5








109.5

Cash (3)







$      110








$      120

 

(1)

Components may not sum to total due to rounding.

(2)

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

(3)

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

 


 2022 GAAP Financial Guidance (1)


Low


High

(Unaudited, in millions, except percentages and per share data)

Video


Cable
Access


Adjustments (2)


Total
GAAP


Video


Cable
Access


Adjustments (2)


Total
GAAP

Net revenue

$      272


$      335


$         —


$      607


$      282


$      345


$         —


$      627

Gross margin %

58.3 %


42.1 %


(0.5) %


48.9 %


59.5 %


43.5 %


(0.4) %


50.3 %

Gross profit

$      159


$      141


$         (3)


$      297


$      168


$      150


$          (3)


$      315

Operating expenses

$      145


$        94


$         25


$      264


$      148


$      100


$         25


$      273

Operating income

$        14


$        47


$       (28)


$        33


$        20


$        50


$        (28)


$        42

Tax rate (3)







33.0 %








33.0 %

EPS (3)







$     0.19








$     0.25

Shares (3)







109.6








109.6

Cash (3)







$        95








$      105

 

(1)

Components may not sum to total due to rounding.

(2)

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

(3)

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

 


Q3 2022 Non-GAAP Financial Guidance (1)


Low


High

(Unaudited, in millions, except percentages and per share data)

Video


Cable Access


Total


Video


Cable Access


Total

Net revenue

$               62


$               85


$             147


$               66


$               91


$             157

Gross margin %

57.0 %


43.0 %


48.9 %


58.0 %


45.0 %


50.5 %

Gross profit

$               35


$               37


$               72


$               38


$               41


$               79

Operating expenses

$               36


$               24


$               60


$               37


$               26


$               63

Adjusted EBITDA

$                 1


$               14


$               15


$                 3


$               16


$               19

Tax rate (2)





13.0 %






13.0 %

EPS (2)





$            0.08






$            0.12

Shares (2)





109.5






109.5

Cash (2)





$             110






$             120

 

(1)

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

(2)

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

 


 2022 Non-GAAP Financial Guidance (1)


Low


High

(Unaudited, in millions, except percentages and per share data)

Video


Cable Access


Total


Video


Cable Access


Total

Net revenue

$             272


$             335


$             607


$             282


$             345


$             627

Gross margin %

58.3 %


42.1 %


49.4 %


59.5 %


43.5 %


50.7 %

Gross profit

$             159


$             141


$             300


$             168


$             150


$             318

Operating expenses

$             145


$               94


$             239


$             148


$             100


$             248

Adjusted EBITDA

$               19


$               53


$               72


$               26


$               56


$               82

Tax rate (2)





13.0 %






13.0 %

EPS (2)





$            0.44






$            0.52

Shares (2)





109.6






109.6

Cash (2)





$               95






$             105

 

(1)

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

(2)

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. PT (5:00 p.m. ET) on Monday, August 1, 2022. The live webcast will be available on the Harmonic Investor Relations website at http://investor.harmonicinc.com. To participate via telephone, please register in advance using this link, https://register.vevent.com/register/BIa55199c150564ee4b8118917be1e93c9. A replay will be available after 5:00 p.m. PT on the same web site.

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, 2021, 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: 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. 

Non-cash interest expense and other expenses related to convertible notes and other debt - We record the  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. 

Gain and losses on equity investments - We exclude the gain and losses from the sale of our equity investments in calculating our non-GAAP financial measures. We exclude these items because we do not believe they are reflective of our ongoing long-term business and 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 1, 2022


December 31, 2021

ASSETS




Current assets:




   Cash and cash equivalents

$                        121,819


$                        133,431

   Accounts receivable, net

106,351


88,529

   Inventories

82,636


71,195

   Prepaid expenses and other current assets

27,620


29,972

Total current assets

338,426


323,127

Property and equipment, net

41,604


42,721

Operating lease right-of-use assets

27,183


30,968

Other non-current assets

54,315


56,657

Goodwill

236,931


240,213

Total assets

$                        698,459


$                        693,686





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Convertible debt, current

$                          37,588


$                          36,824

Other debts, current

4,717


4,992

Accounts payable

38,515


64,429

Deferred revenue

74,599


57,226

Operating lease liabilities, current

6,950


7,346

Other current liabilities

59,615


53,644

Total current liabilities

221,984


224,461

Convertible debt, non-current

113,541


98,941

Other debts, non-current

11,060


12,989

Operating lease liabilities, non-current

25,885


29,120

Other non-current liabilities

29,153


31,379

Total liabilities

401,623


396,890





Convertible debt


883

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; 105,061 and 102,959 shares issued and outstanding at July 1, 2022 and December 31, 2021, respectively

105


103

Additional paid-in capital

2,371,001


2,387,039

Accumulated deficit

(2,061,320)


(2,087,957)

Accumulated other comprehensive loss

(12,950)


(3,272)

Total stockholders' equity

296,836


295,913

Total liabilities and stockholders' equity

$                        698,459


$                        693,686

 

Harmonic Inc.

Preliminary Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except per share data)



Three Months Ended


Six Months Ended


July 1, 2022


July 2, 2021


July 1, 2022


July 2, 2021

Revenue:








Appliance and integration

$                121,868


$                  78,598


$                234,852


$                158,574

SaaS and service

35,578


34,850


70,033


66,450

Total net revenue

157,446


113,448


304,885


225,024

Cost of revenue:








Appliance and integration

62,341


40,365


128,723


82,984

SaaS and service

12,704


12,578


24,579


26,390

Total cost of revenue

75,045


52,943


153,302


109,374

Total gross profit

82,401


60,505


151,583


115,650

Operating expenses:








Research and development

29,920


24,783


58,753


48,311

Selling, general and administrative

36,768


33,586


73,411


68,497

Amortization of intangibles




507

Restructuring and related charges

631



1,801


43

Total operating expenses

67,319


58,369


133,965


117,358

Income (loss) from operations

15,082


2,136


17,618


(1,708)

Interest expense, net

(1,394)


(2,630)


(2,827)


(5,233)

Other income (expense), net

4,274


(147)


4,336


872

Income (loss) before income taxes

17,962


(641)


19,127


(6,069)

Provision for income taxes

3,122


1,368


5,816


2,064

Net income (loss)

$                  14,840


$                  (2,009)


$                  13,311


$                  (8,133)









Net income (loss) per share:








Basic

$                      0.14


$                    (0.02)


$                      0.13


$                    (0.08)

Diluted

$                      0.14


$                    (0.02)


$                      0.12


$                    (0.08)

Weighted average shares outstanding:








Basic

104,630


101,218


104,312


100,539

Diluted

108,984


101,218


109,774


100,539

 

Harmonic Inc.

Preliminary Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)



Six Months Ended


July 1, 2022


July 2, 2021

Cash flows from operating activities:




Net income (loss)

$                  13,311


$                  (8,133)

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




Depreciation

6,128


6,164

Amortization of intangibles


507

Stock-based compensation

13,161


12,429

Amortization of convertible debt discount

596


3,093

Amortization of warrant

863


863

Foreign currency remeasurement

(1,680)


(1,897)

Deferred income taxes

1,401


981

Provision for expected credit losses and returns

1,648


2,230

Provision for excess and obsolete inventories

3,805


1,004

Gains on sale of investment in equity securities

(4,370)


Other adjustments

338


111

Changes in operating assets and liabilities:




Accounts receivable

(21,386)


(36,709)

Inventories

(15,429)


(8,825)

Other assets

(1,367)


882

Accounts payable

(23,355)


14,544

Deferred revenues

16,393


15,553

Other liabilities

4,287


15,642

Net cash provided by (used in) operating activities

(5,656)


18,439

Cash flows from investing activities:




Proceeds from sale of investment

7,962


Purchases of property and equipment

(5,504)


(7,685)

Net cash provided by (used) in investing activities

2,458


(7,685)

Cash flows from financing activities:




Repurchase of common stock

(5,013)


Proceeds from other debts

3,499


3,772

Repayment of other debts

(4,393)


(5,401)

Proceeds from common stock issued to employees

6,130


9,068

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

(3,083)


(1,194)

Net cash provided by (used in) financing activities

(2,860)


6,245

Effect of exchange rate changes on cash and cash equivalents

(5,554)


(467)

Net increase (decrease) in cash and cash equivalents

(11,612)


16,532

Cash and cash equivalents at beginning of period

133,431


98,645

Cash and cash equivalents at end of period

$                121,819


$                115,177

 

Harmonic Inc.

Preliminary GAAP Revenue Information

(Unaudited, in thousands, except percentages)



Three Months Ended


July 1, 2022


April 1, 2022


July 2, 2021

Geography









Americas

$         117,607

75 %


$         103,157

70 %


$           71,525

63 %

EMEA

29,699

19 %


35,702

24 %


28,441

25 %

APAC

10,140

6 %


8,580

6 %


13,482

12 %

Total

$         157,446

100 %


$         147,439

100 %


$         113,448

100 %










Market









Service Provider

$           98,551

63 %


$           92,521

63 %


$           68,929

61 %

Broadcast and Media

58,895

37 %


54,918

37 %


44,519

39 %

Total

$         157,446

100 %


$         147,439

100 %


$         113,448

100 %

 


Six Months Ended


July 1, 2022


July 2, 2021

Geography






Americas

$         220,764

72 %


$         146,587

65 %

EMEA

65,401

22 %


56,048

25 %

APAC

18,720

6 %


22,389

10 %

Total

$         304,885

100 %


$         225,024

100 %







Market






Service Provider

$         191,072

63 %


$         122,589

54 %

Broadcast and Media

113,813

37 %


102,435

46 %

Total

$         304,885

100 %


$         225,024

100 %

 

Harmonic Inc.

Preliminary Segment Information

(Unaudited, in thousands, except percentages)



Three Months Ended July 1, 2022


Video


Cable Access


Total Segment
Measures

(non-GAAP)


Adjustments (1)


Consolidated
GAAP
Measures

Net revenue

$       76,215


$        81,231


$      157,446


$                  —


$      157,446

Gross profit

48,136


34,936


83,072


(671)


82,401

Gross margin %

63.2 %


43.0 %


52.8 %




52.3 %

Adjusted EBITDA(2)

12,749


11,595


24,344


(9,504)


14,840

Adjusted EBITDA  margin %

16.7 %


14.3 %


15.5 %




9.4 %












Three Months Ended April 1, 2022


Video


Cable Access


Total Segment
Measures

(non-GAAP)


Adjustments (1)


Consolidated
GAAP
Measures

Net revenue

$        65,842


$        81,597


$      147,439


$                  —


$      147,439

Gross profit

38,684


31,011


69,695


(513)


69,182

Gross margin %

58.8 %


38.0 %


47.3 %




46.9 %

Adjusted EBITDA(2)

4,801


9,650


14,451


(15,980)


(1,529)

Adjusted EBITDA  margin %

7.3 %


11.8 %


9.8 %




(1.0) %












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 %

Adjusted EBITDA(2)

3,399


6,112


9,511


(11,520)


(2,009)

Adjusted EBITDA  margin %

5.4 %


12.2 %


8.4 %




(1.8) %

 


Six Months Ended July 1, 2022


Video


Cable Access


Total Segment
Measures

(non-GAAP)


Adjustments (1)


Consolidated
GAAP
Measures

Net revenue

$      142,057


$      162,828


$      304,885


$                  —


$      304,885

Gross profit

86,820


65,947


152,767


(1,184)


151,583

Gross margin %

61.1 %


40.5 %


50.1 %




49.7 %

Adjusted EBITDA(2)

17,550


21,245


38,795


(25,484)


13,311

Adjusted EBITDA margin %

12.4 %


13.0 %


12.7 %




4.4 %












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 %

Adjusted EBITDA(2)

9,512


9,141


18,653


(26,786)


(8,133)

Adjusted EBITDA margin %

7.1 %


10.0 %


8.3 %




(3.6) %

 

(1)

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

(2)

Adjusted EBITDA is a Non-GAAP financial measure. Refer to "Preliminary Adjusted EBITDA Reconciliation" below for a reconciliation to the most comparable GAAP measure.

 

Harmonic Inc.

GAAP to Non-GAAP Reconciliations (Unaudited)

(in thousands, except percentages and per share data)



Three Months Ended July 1, 2022


Revenue


Gross Profit


Total
Operating
Expense


Income
from
Operations


Total Non-
operating
Income
(Expense), net


Net Income

GAAP

$      157,446


$     82,401


$     67,319


$     15,082


$         2,880


$     14,840

Stock-based compensation


557


(5,018)


5,575



5,575

Restructuring and related charges


114


(631)


745



745

Gain on sale of equity investment





(4,349)


(4,349)

Non-cash interest and other expenses related to convertible notes





299


299

Discrete tax items and tax effect of non-GAAP adjustments






492

Total adjustments


671


(5,649)


6,320


(4,050)


2,762

Non-GAAP

$      157,446


$     83,072


$     61,670


$     21,402


$        (1,170)


$     17,602

As a % of revenue (GAAP)



52.3 %


42.8 %


9.6 %


1.8 %


9.4 %

As a % of revenue (Non-GAAP)



52.8 %


39.2 %


13.6 %


(0.7) %


11.2 %

Diluted net income per share:












GAAP











$        0.14

Non-GAAP











$        0.16

Shares used in per share calculation:












GAAP and Non-GAAP











108,984

 


Three Months Ended April 1, 2022


Revenue


Gross Profit


Total
Operating
Expense


Income
from
Operations


Total Non-
operating
Expense, net


Net Income
(Loss)

GAAP

$      147,439


$     69,182


$     66,646


$       2,536


$        (1,371)


$      (1,529)

Stock-based compensation


527


(7,059)


7,586



7,586

Restructuring and related charges


(14)


(1,170)


1,156



1,156

Non-cash interest and other expenses related to convertible notes





297


297

Discrete tax items and tax effect of non-GAAP adjustments






1,367

Total adjustments


513


(8,229)


8,742


297


10,406

Non-GAAP

$      147,439


$     69,695


$     58,417


$     11,278


$        (1,074)


$       8,877

As a % of revenue (GAAP)



46.9 %


45.2 %


1.7 %


(0.9) %


(1.0) %

As a % of revenue (Non-GAAP)



47.3 %


39.6 %


7.6 %


(0.7) %


6.0 %

Diluted net income (loss) per share:












GAAP











$       (0.01)

Non-GAAP











$        0.08

Shares used in per share calculation:












GAAP











103,994

Non-GAAP











110,563

 


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

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

 


Six Months Ended July 1, 2022


Revenue


Gross Profit


Total
Operating
Expense


Income
from
Operations


Total Non-
operating
Income
(Expense), net


Net Income

GAAP

$      304,885


$   151,583


$   133,965


$     17,618


$         1,509


$     13,311

Stock-based compensation


1,084


(12,077)


13,161



13,161

Restructuring and related charges


100


(1,801)


1,901



1,901

Gain on sale of equity investment





(4,349)


(4,349)

Non-cash interest and other expenses related to convertible notes





596


596

Discrete tax items and tax effect of non-GAAP adjustments






1,859

Total adjustments


1,184


(13,878)


15,062


(3,753)


13,168

Non-GAAP

$      304,885


$   152,767


$   120,087


$     32,680


$        (2,244)


$     26,479

As a % of revenue (GAAP)



49.7 %


43.9 %


5.8 %


0.5 %


4.4 %

As a % of revenue (Non-GAAP)



50.1 %


39.4 %


10.7 %


(0.7) %


8.7 %

Diluted net income per share:












GAAP











$        0.12

Non-GAAP











$        0.24

Shares used in per share calculation:












GAAP and Non-GAAP











109,774

 


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

 

Harmonic Inc.

Preliminary Adjusted EBITDA Reconciliation (Unaudited)

(In thousands)



Three Months Ended


July 1, 2022


April 1, 2022


July 2, 2021

Net income (loss) - GAAP

$                   14,840


$                    (1,529)


$                    (2,009)

Provision for income taxes

3,122


2,694


1,368

Interest expense, net

1,394


1,433


2,630

Depreciation

3,017


3,111


3,107

EBITDA

22,373


5,709


5,096







Adjustments






Stock-based compensation

5,575


7,586


4,033

Restructuring and related charges

745


1,156


382

Gain on sale of equity investment

(4,349)



Adjusted EBITDA

$                   24,344


$                   14,451


$                     9,511

 


Six Months Ended


July 1, 2022


July 2, 2021

Net income (loss) - GAAP

$                   13,311


$                    (8,133)

Provision for income taxes

5,816


2,064

Interest expense, net

2,827


5,233

Depreciation

6,128


6,164

Amortization of intangibles


507

EBITDA

28,082


5,835





Adjustments




Stock-based compensation

13,161


12,431

Restructuring and related charges

1,901


389

Gain on sale of equity investment

(4,349)


Adjusted EBITDA

$                   38,795


$                   18,655

 

Harmonic Inc.

GAAP to Non-GAAP Reconciliations on Financial Guidance (Unaudited)

(In millions, except percentages and per share data)



Q3 2022 Financial Guidance (1)


Revenue


Gross Profit


Total
Operating Expense


Net Income

GAAP

$  147

to

$ 157


$    71

to

$    78


$  66

to

$  69


$      2

to

$      5

Stock-based compensation expense


1


(6)


7

Restructuring and related charges



(1)


1

Non-cash interest and other expenses related to convertible notes




Tax effect of non-GAAP adjustments




to

1

Total adjustments


1


(6)


7

to

8

Non-GAAP

$  147

to

$  157


$    72

to

$    79


$    60

to

$    63


$      9

to

$    13

As a % of revenue (GAAP)





48.3 %

to

49.9 %


44.9 %

to

43.9 %


1.4 %

to

3.2 %

As a % of revenue (Non-GAAP)





48.9 %

to

50.5 %


40.8 %

to

40.1 %


6.1 %

to

8.3 %

Diluted net income per share:
















GAAP













$ 0.02

to

$ 0.05

Non-GAAP













$ 0.08

to

$ 0.12

Shares used in per share calculation:
















GAAP and Non-GAAP













109.5

 

(1)

Components may not sum to total due to rounding.

 


2022 Financial Guidance (1)


Revenue


Gross Profit


Total
Operating Expense


Net Income

GAAP

$        607

to

$  627


$  297

to

$  315


$  264

to

$  273


$    21

to

$    27

Stock-based compensation expense


2


(23)


25

Restructuring and related charges


1


(2)


3

Non-cash interest and other expenses related to convertible notes




1

Gain on sale of equity investment




(4)

Tax effect of non-GAAP adjustments




3

to

5

Total adjustments


3


(25)


28

to

30

Non-GAAP

$        607

to

$  627


$  300

to

$  318


$  239

to

$  248


$    49

to

$    57

As a % of revenue (GAAP)





48.9 %

to

50.3 %


43.5 %

to

43.5 %


3.5 %

to

4.3 %

As a % of revenue (Non-GAAP)





49.4 %

to

50.7 %


39.4 %

to

39.6 %


8.1 %

to

9.1 %

Diluted net income per share:
















GAAP













$ 0.19

to

$ 0.25

Non-GAAP













$ 0.44

to

$ 0.52

Shares used in per share calculation:
















GAAP and Non-GAAP













109.6

 

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

 

Harmonic Inc.

Adjusted EBITDA Reconciliation on Financial Guidance (Unaudited)(1)

(In millions)



Q3 2022 Financial
Guidance


2022 Financial
Guidance

Net income - GAAP

$         2

to

$         5


$       21

to

$       27

Provision for income taxes

1


2


10


14

Interest expense, net

1


1


5


5

Depreciation

3


3


12


12

EBITDA

$         7

to

$       11


$       48

to

$       58









Adjustments








Stock-based compensation

7


7


25


25

Restructuring and related charges

1


1


3


3

Gain on sale of equity investment



(4)


(4)

Adjusted EBITDA

$       15

to

$       19


$       72

to

$       82

 

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

 

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SOURCE Harmonic Inc.