HLIT
$5.58
Harmonic
($.40)
(6.69%)
Earnings Details
3rd Quarter September 2018
Monday, October 29, 2018 4:05:00 PM
Tweet Share Watch
Summary

Harmonic Guides In-line

Harmonic (HLIT) reported a 3rd Quarter September 2018 loss of $0.02 per share on revenue of $100.6 million. The consensus estimate was a loss of $0.05 per share on revenue of $99.0 million. Revenue grew 9.3% on a year-over-year basis.

The company said it expects fourth quarter non-GAAP earnings of $0.01 to $0.07 per share on revenue of $104.7 million to $117.0 million. The current consensus earnings estimate is $0.04 per share on revenue of $111.3 million for the quarter ending December 31, 2018.

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
-
Consensus Estimate
($0.05)
Reported Revenue
$100.6 Mil
Revenue Estimate
$99.0 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Harmonic Announces Third Quarter 2018 Results

SAN JOSE, Calif., Oct. 29, 2018 /PRNewswire/ -- Harmonic Inc. (NASDAQ: HLIT) today announced its unaudited results for the third quarter of 2018.

Harmonic logo (PRNewsfoto/Harmonic Inc.)

"Continued execution of our CableOS and Video strategies drove double-digit growth of non-GAAP revenue and operating profit year over year," said Patrick Harshman, president and chief executive officer of Harmonic. "Shipments of CableOS nodes for new distributed access architectures were up 174% sequentially, underscoring positive momentum in our Cable Access segment. Video segment gross margin of 57.2% and operating margin of 7.2% highlight our ongoing profitable transformation to software and SaaS."

Q3 Financial and Business Highlights

  • GAAP revenue $100.6 million, up 9% year over year; non-GAAP revenue $101.4 million, up 11% year over year.
  • Cable Access segment revenue: GAAP $27.3 million, up 138% year over year; non-GAAP $28.1 million, up 153% year over year.
  • Video segment operating margin: 7.2%, fifth consecutive quarter of positive segment operating income.
  • Operating income: GAAP loss $3.7 million and non-GAAP income $5.7 million, compared to GAAP loss $14.2 million and non-GAAP income $1.3 million in the year ago period.
  • EPS: GAAP net loss per share 9 cents and non-GAAP net income per share 4 cents, compared to GAAP net loss per share 19 cents and non-GAAP net loss per share 1 cent in the year ago period.
  • Ended the quarter with $61.7 million in cash and cash equivalents, compared to $54.1 million in the prior quarter.
  • CableOS deployments continued to scale, surpassing 480,000 served cable modems, up 20% quarter over quarter.
  • CableOS global design wins and execution continues with 25 deployments and trials underway, up 25% quarter over quarter.
  • Over 35,000 OTT channels deployed globally, up 4% quarter over quarter, powered in part by new Video SaaS wins.

Select Financial Information



GAAP


Non-GAAP

Key Financial Results


Q3 2018


Q2 2018


Q3 2017


Q3 2018


Q2 2018


Q3 2017



(in millions, except per share data)

Net revenue


$

100.6



$

99.2



$

92.0



$

101.4



$

99.4



$

91.6


Net income (loss)


$

(7.8)



$

(2.9)



$

(15.6)



$

3.4



$

4.6



$

(0.5)


Diluted EPS


$

(0.09)



$

(0.03)



$

(0.19)



$

0.04



$

0.05



$

(0.01)















Other Financial Information

Q3 2018


Q2 2018


Q3 2017


(in millions)

Bookings for the quarter

$

79.5



$

107.9



$

96.0


Backlog and deferred revenue as of quarter end

$

207.6



$

230.4



$

200.9


Cash as of quarter end

$

61.7



$

54.1



$

50.0


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 2018


2018


Low


High


Low


High



(in millions, except percentages and per share data)

Net Revenue


$

104.7



$

117.7



$

394.5



$

407.5


          Video


$

80.0



$

83.0



$

304.0



$

307.0


          Cable Access


$

24.7



$

34.7



$

90.5



$

100.5


Gross Margin %


48.0

%


48.5

%


50.0

%


50.5

%

Operating Expenses


$

52.5



$

53.5



$

213.7



$

214.7


Operating Income (Loss)


$

(3.2)



$

4.2



$

(15.6)



$

(8.2)


Tax Expense


$

(0.5)



$

(0.5)



$

(3.3)



$

(3.3)


EPS


$

(0.08)



$

0.01



$

(0.36)



$

(0.28)


Shares


86.8



89.2



85.7



85.7


Cash


$

55.0



$

65.0



$

55.0



$

65.0


 

Non-GAAP Financial Guidance


Q4 2018


2018


Low


High


Low


High



(in millions, except percentages and per share data)

Net Revenue


$

105.0



$

118.0



$

396.0



$

409.0


          Video


$

80.0



$

83.0



$

304.0



$

307.0


          Cable Access


$

25.0



$

35.0



$

92.0



$

102.0


Gross Margin %


49.0

%


50.0

%


52.5

%


53.0

%

Operating Expenses


$

49.0



$

50.0



$

192.5



$

193.5


Operating Income


$

2.2



$

9.6



$

15.1



$

22.5


Tax Rate


16

%


16

%


16

%


16

%

EPS


$

0.01



$

0.07



$

0.09



$

0.16


Shares


89.2



89.2



86.9



86.9


Cash


$

55.0



$

65.0



$

55.0



$

65.0



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. PT (5:00 p.m. ET) on Monday, October 29, 2018. A listen-only broadcast of the conference call can be accessed either from the Company's website at www.harmonicinc.com or by calling 1.574.990.1032 or +1.800.240.9147 (passcode 7595808). A replay will be available after 4:30 p.m. PT on the same web site or by calling +1.404.537.3406 or +1.855.859.2056 (passcode 7595808).

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 loss, GAAP tax expense, GAAP EPS, non-GAAP revenue, non-GAAP gross margins, non-GAAP operating expenses, non-GAAP operating income (loss), non-GAAP tax rate, non-GAAP EPS, share count 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 trends toward more high-definition, on-demand and anytime, anywhere video will not continue to develop at its current pace or will expire; 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 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; the impact of general economic conditions on our sales and operations; 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, 2017, 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, net income (loss) (including those amounts as a percentage of revenue) 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 are 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.

TVN acquisition- and integration-related costs - As a result of the Company's acquisition of Thomson Video Networks (TVN) in February 2016, the Company incurred acquisition- and integration-related expenses, including legal, accounting and other professional services as well as integration-related costs that are not expected to generate future benefits once the integration is fully consummated. We exclude these transaction and integration expenses because we believe these expenses have no direct correlation to the operation of our business, and because we believe that the non-GAAP financial measures excluding these costs provide meaningful supplemental information regarding our operational performance and liquidity. In addition, excluding these costs from the non-GAAP measures facilitates comparisons to our historical operating results and comparisons to peer company operating results.

Deferred revenue fair value adjustment - We define non-GAAP net revenues as net revenues excluding the impact of purchase accounting. In connection with our acquisitions, the acquired deferred revenue balances were required to be written down due to purchase accounting in accordance with GAAP. The impact on revenues related to purchase accounting as a result of these transactions, limits the comparability of revenues between periods. We do not expect revenues generated from new contracts to be similarly impacted by purchase accounting adjustments. Accordingly, we believe presenting non-GAAP net revenues to exclude the impact of purchase accounting adjustments aids in the comparability between periods and in assessing our overall operating performance.

Non-cash interest expense related to convertible notes - 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. Vesting of the warrant shares is subject to Comcast achieving certain milestones and purchase volume commitments, and therefore the accounting guidance requires that the value of the warrant be recorded as a reduction in the Company's net revenues. Until final vesting, changes in the fair value of the warrant share will be marked to market and any adjustment as such will also be recorded in revenue. The change in fair value together with vested warrant shares are amortized to revenue using a ratio of revenue recognized from the customer in the period compared to total revenue expected from the customer. We have excluded the effect of warrant amortization in our non-GAAP financial measures. Management believes it is useful to exclude the charge for the fair value of the warrant shares in order to better understand the effects of these items on our total revenues and gross margin, as well as on Cable Access segment revenue.

Loss on impairment of long-term investments - We exclude the effect of any other-than-temporary impairment of our long-term 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.

Gain (loss) on equity investments - We exclude the change in fair value and gain (loss) from 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.

Avid litigation settlement and associated legal fees - In the third quarter of fiscal 2017, we settled the patent litigation with Avid Technology, Inc. by entering into a settlement and patent portfolio cross-license agreement with Avid. Under the agreement, we agreed to pay Avid a one-time non-recurring amount of $6 million in installments. $2.5 million was paid upfront in October 2017 and $1.5 million and $2.0 million will be paid in 2019 and 2020, respectively. Also, the Avid litigation costs of approximately $1.4 million and $0.7 million in the third and fourth fiscal quarter of 2017, respectively, were significantly higher compared to prior periods. We excluded these expenses from our non-GAAP results 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.

Harmonic Inc.

Preliminary Condensed Consolidated Balance Sheets

(Unaudited, in thousands, except per share data)




September 28, 2018


December 31, 2017

ASSETS




Current assets:




   Cash and cash equivalents

$

61,654



$

57,024


   Accounts receivable, net

77,986



69,844


   Inventories

23,333



25,976


   Prepaid expenses and other current assets

24,226



18,931


Total current assets

187,199



171,775


Property and equipment, net

24,151



29,265


Goodwill

241,512



242,827


Intangibles, net

14,938



21,279


Other long-term assets

38,624



42,913


Total assets

$

506,424



$

508,059


LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




   Other debts and capital lease obligations, current

$

7,677



$

7,610


   Accounts payable

29,354



33,112


   Income taxes payable

830



233


   Deferred revenue

48,679



52,429


   Accrued and other current liabilities

50,734



48,705


Total current liabilities

137,274



142,089


Convertible notes, long-term

113,230



108,748


Other debts and capital lease obligations, long-term

13,155



15,336


Income taxes payable, long-term

747



917


Other non-current liabilities

18,989



22,626


Total liabilities

283,395



289,716


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; 86,687 and 82,554 shares issued and outstanding at September 28, 2018 and December 31, 2017, respectively

87



83


   Additional paid-in capital

2,293,174



2,272,690


   Accumulated deficit

(2,070,746)



(2,057,812)


   Accumulated other comprehensive income

514



3,382


Total stockholders' equity

223,029



218,343


Total liabilities and stockholders' equity

$

506,424



$

508,059


 

Harmonic Inc.

Preliminary Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except per share data)




Three months ended


Nine months ended


September 28,
2018


September 29,
2017


September 28,
2018


September 29,
2017

Revenue:








Product

$

62,803



$

58,161



$

178,776



$

158,657


Service

37,813



33,853



111,127



98,615


Total net revenue

100,616



92,014



289,903



257,272


Cost of revenue:








Product

33,224



27,736



91,084



85,843


Service

17,290



17,253



49,931



50,181


Total cost of revenue

50,514



44,989



141,015



136,024


   Gross profit

50,102



47,025



148,888



121,248


Operating expenses:








   Research and development

22,251



21,289



67,250



73,226


   Selling, general and administrative

29,723



37,121



88,874



104,377


   Amortization of intangibles

792



793



2,396



2,347


   Restructuring and related charges

987



2,028



2,704



4,084


      Total operating expenses

53,753



61,231



161,224



184,034


Loss from operations

(3,651)



(14,206)



(12,336)



(62,786)


Interest expense, net

(2,872)



(2,794)



(8,492)



(8,064)


Other expense, net

(365)



(498)



(698)



(1,828)


Loss before income taxes

(6,888)



(17,498)



(21,526)



(72,678)


Provision for (benefit from) income taxes

870



(1,915)



2,839



(1,568)


Net loss

$

(7,758)



$

(15,583)



$

(24,365)



$

(71,110)


Net loss per share:








   Basic and diluted

$

(0.09)



$

(0.19)



$

(0.29)



$

(0.88)


Shares used in per share calculation:








   Basic and diluted

86,321



81,445



85,188



80,618


 

Harmonic Inc.

Preliminary Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)




Nine months ended


September 28,
2018


September 29,
2017

Cash flows from operating activities:




Net loss

$

(24,365)



$

(71,110)


Adjustments to reconcile net loss to net cash provided by operating activities:




   Amortization of intangibles

6,281



6,232


   Depreciation

9,910



11,045


   Stock-based compensation

14,202



11,107


   Amortization of discount on convertible debt

4,482



4,060


   Amortization of non-cash warrant

1,185



38


   Restructuring, asset impairment and loss on retirement of fixed assets

1,105



565


   Deferred income taxes

1,056




   Foreign currency adjustments

(1,034)



1,795


   Provision for excess and obsolete inventories

1,259



5,578


   Allowance for doubtful accounts, returns and discounts

1,357



4,309


   Other non-cash adjustments, net

286



298


   Changes in operating assets and liabilities, net of effects of acquisition:




      Accounts receivable

(9,585)



11,367


      Inventories

997



6,188


      Prepaid expenses and other assets

2,507



6,702


      Accounts payable

(4,032)



2,129


      Deferred revenue

1,783



(1,098)


      Income taxes payable

461



(2,122)


      Accrued and other liabilities

(2,188)



(3,053)


Net cash provided by (used in) operating activities

5,667



(5,970)


Cash flows from investing activities:




   Proceeds from maturities of investments



3,106


   Proceeds from sale of investments

104



3,792


   Purchases of property and equipment

(4,703)



(9,075)


Net cash used in investing activities

(4,599)



(2,177)


Cash flows from financing activities:




  Proceeds from other debts and capital leases

5,066



6,344


  Repayment of other debts and capital leases

(6,568)



(7,008)


   Proceeds from common stock issued to employees

4,299



4,697


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

(166)



(2,757)


Net cash provided by financing activities

2,631



1,276


Effect of exchange rate changes on cash, cash equivalents and restricted cash

(580)



1,471


Net increase (decrease) in cash, cash equivalents and restricted cash

3,119



(5,400)


Cash, cash equivalents and restricted cash at beginning of period

58,757



57,420


Cash, cash equivalents and restricted cash at end of period

$

61,876



$

52,020






Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets




Cash and cash equivalents

$

61,654



$

50,039


Restricted cash included in prepaid expenses and other current assets

222



803


Restricted cash included in other long-term assets



1,178


    Total cash, cash equivalents and restricted cash

$

61,876



$

52,020



The accompanying notes are an integral part of these condensed consolidated financial statements.

 

Harmonic Inc.

Preliminary Revenue Information

(Unaudited, in thousands, except percentages)




Three months ended


September 28, 2018


June 29, 2018


September 29, 2017


GAAP

Adjustments(1)

Non-GAAP


GAAP

Adjustments(1)

Non-GAAP


GAAP

Adjustments(1)

Non-GAAP

Product















Video Products

$

45,781


$


$

45,781


45%


$

50,441


$


$

50,441


51%


$

54,175


$


$

54,175


59%

Cable Access

17,022


518


17,540


17%


10,159


117


10,276


10%


3,986


$

(163)


3,823


4%

Services and Support

37,813


272


38,085


38%


38,560


167


38,727


39%


33,853


(215)


33,638


37%

Total

$

100,616


$

790


$

101,406


100%


$

99,160


$

284


$

99,444


100%


$

92,014


$

(378)


$

91,636


100%
















Geography















Americas

$

54,119


$

790


$

54,909


54%


$

52,918


$

284


$

53,202


53%


$

48,656


$

(378)


$

48,278


53%

EMEA

26,316



26,316


26%


31,676



31,676


32%


27,528



27,528


30%

APAC

20,181



20,181


20%


14,566



14,566


15%


15,830



15,830


17%

Total

$

100,616


$

790


$

101,406


100%


$

99,160


$

284


$

99,444


100%


$

92,014


$

(378)


$

91,636


100%
















Market















Service Provider

$

66,737


$

790


$

67,527


67%


$

54,142


$

284


$

54,426


55%


$

50,410


$

(378)


$

50,032


55%

Broadcast and Media

33,879



33,879


33%


45,018



45,018


45%


41,604



41,604


45%

Total

$

100,616


$

790


$

101,406


100%


$

99,160


$

284


$

99,444


100%


$

92,014


$

(378)


$

91,636


100%

 



Nine months ended



September 28, 2018


September 29, 2017



GAAP

Adjustments(1)

Non-GAAP


GAAP

Adjustments(1)

Non-GAAP

Product











Video Products


$

143,634


$


$

143,634


49%


$

144,419


$


$

144,419


56%

Cable Access


35,143



702


35,845


12%


14,238


28


14,266


6%

Services and Support


111,126



483


111,609


39%


98,615


121


98,736


38%

Total


$

289,903


$

1,185


$

291,088


100%


$

257,272


$

149


$

257,421


100%












Geography











Americas


$

155,893


$

1,185


$

157,078


54%


$

127,173


$

38


$

127,211


49%

EMEA


81,194




81,194


28%


77,920


111


78,031


30%

APAC


52,816




52,816


18%


52,179



52,179


21%

Total


$

289,903


$

1,185


$

291,088


100%


$

257,272


$

149


$

257,421


100%












Market











Service Provider


$

173,096


$

1,185


$

174,281


60%


$

144,858


$

38


$

144,896


56%

Broadcast and Media


116,807




116,807


40%


112,414


111


112,525


44%

Total


$

289,903


$

1,185


$

291,088


100%


$

257,272


$

149


$

257,421


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 28, 2018


Video


Cable Access


Total Segment
Measures

(non-GAAP)


Adjustments (1)


Consolidated GAAP
Measures

Net revenue

$

73,344



$

28,062



$

101,406



$

(790)


*

$

100,616


Gross profit

41,937



10,871



52,808



(2,706)



50,102


Gross margin%

57.2

%


38.7

%


52.1

%




49.8

%

Operating income (loss)

5,258



395



5,653



(9,304)



(3,651)


Operating margin%

7.2

%


1.4

%


5.6

%




(3.6)

%


Three months ended June 29, 2018


Video


Cable Access


Total Segment
Measures
(non-GAAP)


Adjustments (1)


Consolidated GAAP
Measures

Net revenue

$

79,208



$

20,236



$

99,444



$

(284)


*

$

99,160


Gross profit

43,558



10,187



53,745



(2,142)



51,603


Gross margin%

55.0

%


50.3

%


54.0

%




52.0

%

Operating income

6,239



540



6,779



(6,137)



642


Operating margin%

7.9

%


2.7

%


6.8

%




0.6

%


Three months ended September 29, 2017


Video


Cable Access


Total Segment
Measures

(non-GAAP)


Adjustments (1)


Consolidated GAAP
Measures

Net revenue

$

84,155



$

7,481



$

91,636



$

378


*

$

92,014


Gross profit

48,283



686



48,969



(1,944)



47,025


Gross margin%

57.4

%


9.2

%


53.4

%




51.1

%

Operating income (loss)

7,009



(5,735)



1,274



(15,480)



(14,206)


Operating margin%

8.3

%


(76.7)

%


1.4

%




(15.4)

%


Nine months ended September 28, 2018


Video


Cable Access


Total Segment
Measures

(non-GAAP)


Adjustments (1)


Consolidated GAAP
Measures

Net revenue

$

224,300



$

66,788



$

291,088



$

(1,185)


*

$

289,903


Gross profit

126,721



29,698



156,419



(7,531)



148,888


Gross margin%

56.5

%


44.5

%


53.7

%




51.4

%

Operating income (loss)

13,492



(578)



12,914



(25,250)



(12,336)


Operating margin%

6.0

%


(0.9)

%


4.4

%




(4.3)

%


Nine months ended September 29, 2017


Video


Cable Access


Total Segment
Measures

(non-GAAP)


Adjustments (1)


Consolidated GAAP
Measures

Net revenue

$

231,987



$

25,434



$

257,421



$

(149)


*

$

257,272


Gross profit

126,887



5,011



131,898



(10,650)



121,248


Gross margin%

54.7

%


19.7

%


51.2

%




47.1

%

Operating loss

(7,663)



(18,810)



(26,473)



(36,313)



(62,786)


Operating margin%

(3.3)

%


(74.0)

%


(10.3)

%




(24.4)

%


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


* These non-GAAP adjustments are for warrant amortization for the respective periods and relate to our Cable Access segment. After applying these adjustments to the non-GAAP revenue for the Cable Access segment, our GAAP revenue for the Cable Access segment for the three and nine months ended September 28, 2018 was $27,272 and $65,603, respectively; the GAAP revenue for the three and nine months ended September 29, 2017 was $7,859 and $25,285, respectively; and the GAAP revenue for the three months ended June 29, 2018 was $19,952.

 

Harmonic Inc.

GAAP to Non-GAAP Reconciliations (Unaudited)

(In thousands, except percentages and per share data)




Three months ended September 28, 2018


Revenue

Gross
Profit

Total
Operating
Expense

Income
from
Operations

Total Non-
operating
Expense, net

Net
Income
(Loss)

GAAP

$

100,616


$

50,102


$

53,753


$

(3,651)


$

(3,237)


$

(7,758)


  Accounting impact related to warrant amortization

790


790



790



790


  Stock-based compensation


614


(4,819)


5,433



5,433


  Amortization of intangibles


1,295


(792)


2,087



2,087


  Restructuring and related charges


7


(987)


994



994


  Loss on equity investments





72


72


  Non-cash interest expenses related to convertible notes





1,528


1,528


  Discrete tax items and tax effect of non-GAAP adjustments






227


Total adjustments

790


2,706


(6,598)


9,304


1,600


11,131


Non-GAAP

$

101,406


$

52,808


$

47,155


$

5,653


$

(1,637)


$

3,373


As a % of revenue (GAAP)




49.8

%

53.4

%

(3.6)

%

(3.2)

%

(7.7)

%

As a % of revenue (Non-GAAP)




52.1

%

46.5

%

5.6

%

(1.6)

%

3.3

%








Diluted net income (loss) per share:







  Diluted net loss per share-GAAP






$

(0.09)


  Diluted net income per share-Non-GAAP






$

0.04


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







  GAAP






86,321


  Non-GAAP






87,770










Three months ended June 29, 2018


Revenue

Gross Profit

Total
Operating
Expense

Income
from
Operations

Total Non-
operating
Expense, net

Net
Income
(Loss)

GAAP

$

99,160


$

51,603


$

50,961


$

642


$

(2,664)


$

(2,913)


  Accounting impact related to warrant amortization

284


284



284



284


  Stock-based compensation


448


(2,564)


3,012



3,012


  Amortization of intangibles


1,295


(800)


2,095



2,095


  Restructuring and related charges


115


(631)


746



746


  Gain on equity investment





(183)


(183)


  Non-cash interest expenses related to convertible notes





1,501


1,501


  Discrete tax items and tax effect of non-GAAP adjustments






22


Total adjustments

284


2,142


(3,995)


6,137


1,318


7,477


Non-GAAP

$

99,444


$

53,745


$

46,966


$

6,779


$

(1,346)


$

4,564


As a % of revenue (GAAP)




52.0

%

51.4

%

0.6

%

(2.7)

%

(2.9)

%

As a % of revenue (Non-GAAP)




54.0

%

47.2

%

6.8

%

(1.4)

%

4.6

%








Diluted net income (loss) per share:







  Diluted net loss per share-GAAP






$

(0.03)


  Diluted net income per share-Non-GAAP






$

0.05


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







  GAAP






85,304


  Non-GAAP






85,758



Three months ended September 29, 2017


Revenue

Gross
Profit

Total
Operating
Expense

Income
(Loss)
from
Operations

Total Non-
operating
Expense, net

Net Loss

GAAP

$

92,014


$

47,025


$

61,231


$

(14,206)


$

(3,292)


$

(15,583)


  Accounting impact related to warrant amortization

(378)


(378)



(378)



(378)


  Stock-based compensation


478


(3,242)


3,720



3,720


  Amortization of intangibles


1,295


(793)


2,088



2,088


  Restructuring and related charges


549


(2,028)


2,577



2,577


  TVN acquisition-and integration-related costs



(117)


117



117


  Avid litigation settlement and associated legal fees



(7,356)


7,356



7,356


  Non-cash interest expenses related to convertible notes





1,384


1,384


  Discrete tax items and tax effect of non-GAAP adjustments






(1,820)


Total adjustments

$

(378)


$

1,944


$

(13,536)


$

15,480


$

1,384


$

15,044


Non-GAAP

$

91,636


$

48,969


$

47,695


$

1,274


$

(1,908)


$

(539)


As a % of revenue (GAAP)




51.1

%

66.5

%

(15.4)

%

(3.6)

%

(16.9)

%

As a % of revenue (Non-GAAP)




53.4

%

52.0

%

1.4

%

(2.1)

%

(0.6)

%








Diluted net loss per share:







  Diluted net loss per share-GAAP






$

(0.19)


  Diluted net loss per share-Non-GAAP






$

(0.01)


Shares used to compute diluted net loss per share:







  GAAP and Non-GAAP






81,445










Nine months ended September 28, 2018


Revenue

Gross
Profit

Total
Operating
Expense

Income
(Loss)
from
Operations

Total Non-
operating
Expense, net

Net
Income
(Loss)

GAAP

$

289,903


$

148,888


$

161,224


$

(12,336)


$

(9,190)


$

(24,365)


  Accounting impact related to warrant amortization

1,185


1,185



1,185



1,185


  Stock-based compensation


1,577


(12,625)


14,202



14,202


  Amortization of intangibles


3,885


(2,396)


6,281



6,281


  Restructuring and related charges


884


(2,704)


3,588



3,588


  Gain on equity investments





(111)


(111)


  Non-cash interest expenses related to convertible notes





4,483


4,483


  Avid litigation settlement and associated legal fees



6


(6)



(6)


  Discrete tax items and tax effect of non-GAAP adjustments






1,543


Total adjustments

$

1,185


$

7,531


$

(17,719)


$

25,250


$

4,372


$

31,165


Non-GAAP

$

291,088


$

156,419


$

143,505


$

12,914


$

(4,818)


$

6,800


As a % of revenue (GAAP)




51.4

%

55.6

%

(4.3)

%

(3.2)

%

(8.4)

%

As a % of revenue (Non-GAAP)




53.7

%

49.3

%

4.4

%

(1.7)

%

2.3

%








Diluted net income (loss) per share:







  Diluted net loss per share-GAAP






$

(0.29)


  Diluted net income per share-Non-GAAP






$

0.08


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







  GAAP






85,188


  Non-GAAP






85,962










Nine months ended September 29, 2017


Revenue

Gross
Profit

Total
Operating
Expense

Loss from
Operations

Total Non-
operating
Expense, net

Net Loss

GAAP

$

257,272


$

121,248


$

184,034


$

(62,786)


$

(9,892)


$

(71,110)


  Cable Edge inventory charge


3,316



3,316



3,316


  Acquisition accounting impacts related to TVN deferred revenue

111


111



111



111


  Accounting impact related to warrant amortization

38


38



38



38


  Stock-based compensation


1,623


(9,484)


11,107



11,107


  Amortization of intangibles


3,885


(2,347)


6,232



6,232


  Restructuring and related charges


1,335


(4,084)


5,419



5,419


  TVN acquisition-and integration-related costs


342


(2,392)


2,734



2,734


  Avid litigation settlement and associated legal fees



(7,356)


7,356



7,356


  Non-cash interest expenses related to convertible notes





4,060


4,060


  Discrete tax items and tax effect of non-GAAP adjustments






3,278


Total adjustments

149


10,650


(25,663)


36,313


4,060


43,651


Non-GAAP

$

257,421


$

131,898


$

158,371


$

(26,473)


$

(5,832)


$

(27,459)


As a % of revenue (GAAP)




47.1

%

71.5

%

(24.4)

%

(3.8)

%

(27.6)

%

As a % of revenue (Non-GAAP)




51.2

%

61.5

%

(10.3)

%

(2.3)

%

(10.7)

%








Diluted net loss per share:







  Diluted net loss per share-GAAP






$

(0.88)


  Diluted net loss per share-Non-GAAP






$

(0.34)


Shares used to compute diluted net loss per share:







  GAAP and Non-GAAP






80,618



 

Harmonic Inc.

GAAP to Non-GAAP Reconciliations on Financial Guidance

(In millions, except percentages and per share data)




Q4 2018 Financial Guidance


Revenue

Gross
Profit

Total
Operating
Expense

Income
(Loss) from
Operations

Total Non-
operating
Expense,
net

Net Income
(Loss)

GAAP

$104.7 to $117.7

$50.3 to $56.7

$52.5 to $53.5

$(3.2) to $4.2

$(3.2)

$(6.9) to $0.5

  Accounting impact related to warrant amortization

0.3

0.3

0.3

0.3

  Stock-based compensation

0.3

(2.7)

3.0

3.0

  Amortization of intangibles

1.3

(0.8)

2.1

2.1

  Non-cash interest expense related to convertible notes

1.6

1.6

  Tax effect of non-GAAP adjustments

$(0.8) to 0.4

Total adjustments

0.3

1.9

(3.5)

5.4

1.6

$6.2 to $7.4

Non-GAAP

$105.0 to $118.0

$52.2 to $58.6

$49.0 to $50.0

$2.2 to $9.6

$(1.6)

$0.5 to $6.7

As a % of revenue (GAAP)


48.0% to 48.5%

44.6% to 51.1%

(3.1)% to 3.6%

(3.0)%

(6.6)% to 0.4%

As a % of revenue (Non-GAAP)


49.0% to 50.0%

41.5% to 47.6%

2.1% to 8.1%

(1.5)%

0.5% to 5.7%

Diluted net income (loss) per share:







  Diluted net loss per share-GAAP





$(0.08) to $0.01

  Diluted net income per share-Non-GAAP





$0.01 to $0.07

Shares used to compute diluted net loss per share:







  GAAP





86.8

Shares used to compute diluted net income per share:







  GAAP and Non-GAAP





89.2


2018 Financial Guidance


Revenue

Gross
Profit

Total
Operating
Expense

Income

(Loss) from
Operations

Total Non-
operating
Expense,
net

Net Income
(Loss)

GAAP

$394.5 to $407.5

$199.1 to $205.5

$213.7 to $214.7

$(15.6) to $(8.2)

$(12.3)

$(31.2) to $(23.8)

  Accounting impact related to warrant amortization

1.5

1.5

1.5

1.5

  Stock-based compensation

1.9

(15.3)

17.2

17.2

  Amortization of intangibles

5.2

(3.2)

8.4

8.4

  Restructuring and related charges

0.9

(2.7)

3.6

3.6

  Non-cash interest expense related to convertible notes

6.1

6.1

  Gain on equity investment

(0.1)

(0.1)

  Tax effect of non-GAAP adjustments

$0.7 to 1.9

Total adjustments

1.5

9.5

(21.2)

30.7

6.0

$37.4 to $38.6

Non-GAAP

$396.0 to $409.0

$208.6 to $215.0

$192.5 to $193.5

$15.1 to $22.5

$(6.3)

$7.4 to $13.6

As a % of revenue (GAAP)


50.0% to 50.5%

52.4% to 54.4%

(4.0)% to (2.0)%

(3.0)%

(7.9)% to (5.8)%

As a % of revenue (Non-GAAP)


52.5% to 53.0%

47.1% to 48.9%

3.8% to 5.5%

(1.5)%

1.9% to 3.3%

Diluted net income (loss) per share:







  Diluted net loss per share-GAAP





$(0.36) to $(0.28)

  Diluted net income per share-Non-GAAP





$0.09 to $0.16

Shares used to compute diluted net loss per share:







  GAAP





85.7

Shares used to compute diluted net income per share:







  Non-GAAP





86.9

 

 

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/harmonic-announces-third-quarter-2018-results-300739716.html

SOURCE Harmonic Inc.