Press Release

Harmonic Announces Fourth Quarter and Fiscal 2023 Results

January 29, 2024

Record quarterly total revenue of $167.1 million, up 31% quarter over quarter

Broadband revenue up 20% and Video SaaS revenue up 26% year over year

SAN JOSE, Calif., Jan. 29, 2024 /PRNewswire/ -- Harmonic Inc. (NASDAQ: HLIT) today announced its unaudited results for the fourth quarter and fiscal year ended December 31, 2023.

"Harmonic finished 2023 with another quarter of solid performance, including record total company and Broadband revenue, driven by strong demand for our market-leading technology solutions," said Patrick Harshman, president and chief executive officer of Harmonic. "Our robust backlog at year-end reflects continued demand from our large Broadband customers and growing Video SaaS commitments, positioning us well for this year and beyond."

Q4 Financial and Business Highlights

Financial

  • Revenue: $167.1 million, compared to $164.3 million in the prior year period
    • Broadband segment revenue: $115.2 million, compared to $96.0 million in the prior year period
    • Video segment revenue: $51.9 million, compared to $68.3 million in the prior year period
  • Gross margin: GAAP 49.0% and non-GAAP 49.3%, compared to GAAP 52.1% and non-GAAP 52.7% in the prior year period
    • Broadband segment non-GAAP gross margin: 42.4% compared to 47.6% in the prior year period
    • Video segment non-GAAP gross margin: 64.6% compared to 59.9% in the prior year period
  • Operating income: GAAP income $9.6 million and non-GAAP income $18.9 million, compared to GAAP income $16.5 million and non-GAAP income $23.7 million in the prior year period
  • Net income: GAAP net income $83.8 million and non-GAAP net income of $14.7 million, compared to GAAP net income $6.1 million and non-GAAP net income $19.9 million in the prior year period
  • Non-GAAP adjusted EBITDA: $21.7 million income compared to $26.6 million income in the prior year period
  • Net income per share: GAAP net income per share of $0.72 and non-GAAP net income per share of $0.13, compared to GAAP net income per share of $0.05 and non-GAAP net income per share of $0.17 in the prior year period
  • Cash: $84.3 million, compared to $89.6 million in the prior year period

Business

  • Commercially deployed our cOS™ solution with 108 customers, serving 26.3 million cable modems
  • Initiated volume shipments to another Tier-1, enhancing broadband customer diversification
  • Pioneering the market with the first volume shipments of DOCSIS 4.0
  • Recently demonstrated SaaS leadership in live sports streaming with largest ever live streaming event in the U.S.

Video Business Review Update

In our Q3 2023 earnings press release we announced that we had initiated a formal strategic review process for our Video business to better position Harmonic for long-term shareholder value creation. As noted in that press release, we received indications of interest in our Video business from a number of parties. To date, that interest has not yet translated into a definitive agreement with any party. We are continuing the strategic review process, and no specific timetable has been established for the completion of the review. We do not intend to disclose further details with respect to the review process unless and until our board of directors approves a specific transaction or otherwise concludes its review. Since the strategic review may cause some disruption to the business, we are conservatively guiding our Video business for 2024.

Select Financial Information



GAAP


Non-GAAP

Key Financial Results


Q4 2023


Q3 2023


Q4 2022


Q4 2023


Q3 2023


Q4 2022



(Unaudited, in millions, except per share data)

Net revenue


$         167.1


$         127.2


$         164.3


*


*


*

Net income (loss)


$           83.8


$           (6.5)


$             6.1


$           14.7


$              —


$           19.9

Net income (loss) per share


$           0.72


$         (0.06)


$           0.05


$           0.13


$           0.00


$           0.17










Other Financial Information

Q4 2023


Q3 2023


Q4 2022


(Unaudited, in millions)

Adjusted EBITDA for the quarter (1)

$           21.7


$             3.5


$           26.6

Bookings for the quarter

$         196.5


$           96.3


$         130.2

Backlog and deferred revenue as of quarter end

$         653.2


$         627.2


$         457.1

Cash and cash equivalents as of quarter end

$           84.3


$           75.6


$           89.6


(1) Adjusted EBITDA is a Non-GAAP financial measure. Refer to "Preliminary Adjusted EBITDA Reconciliation" below for a reconciliation to net income (loss), the most comparable GAAP measure.

* Not applicable

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 


 Q1 2024 GAAP Financial Guidance (1)

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

Low


High

Video


Broadband


Total


Video


Broadband


Total

Net revenue

$                  40


$                  70


$             110


$                  50


$                  80


$             130

Gross margin %





50.2 %






51.6 %

Gross profit





$               55






$               68

Net loss





$              (13)






$                (5)

Tax rate





19 %






19 %

Net loss per share





$           (0.12)






$           (0.04)

Shares (2)





111.7






111.7



(1)

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

(2)

The guidance assumes estimated impact of redeeming the 2024 Convertible Notes and repurchases during 2024 under the Company's stock repurchase program. Diluted shares assumes stock price at $10.68 (Q4 2023 average price).

 


 2024 GAAP Financial Guidance (1)

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

Low


High

Video


Broadband


Total


Video


Broadband


Total

Net revenue

$                195


$                460


$             655


$                210


$                500


$             710

Gross margin %





50.2 %






52.2 %

Gross profit





$             329






$             371

Net income





$               31






$               57

Tax rate





19 %






19 %

Net income per share





$            0.27






$            0.50

Shares (2)





114.6






114.6



(1)

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

(2)

The guidance assumes estimated impact of redeeming the 2024 Convertible Notes and repurchases during 2024 under the Company's stock repurchase program. Diluted shares assumes stock price at $10.68 (Q4 2023 average price).

 


Q1 2024 Non-GAAP Financial Guidance (1)

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

Low


High

Video


Broadband


Total


Video


Broadband


Total

Gross margin %

60.0 %


46.0 %


51.1 %


61.0 %


47.0 %


52.4 %

Gross profit

$             24


$               32


$         56


$           31


$               38


$               69

Adjusted EBITDA(2)

$              (8)


$                 4


$          (4)


$            (2)


$                 8


$                 6

Tax rate





19 %






19 %

Net income (loss) per share





$     (0.06)






$            0.02

Shares (3)





111.7






115.2



(1)

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

(2)

Refer to "Adjusted EBITDA Reconciliation on Financial Guidance" below for a reconciliation to net income (loss), the most comparable GAAP measure.

(3)

The guidance assumes estimated impact of redeeming the 2024 Convertible Notes and repurchases during 2024 under the Company's stock repurchase program. Diluted shares assumes stock price at $10.68 (Q4 2023 average price).

 


 2024 Non-GAAP Financial Guidance (1)

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

Low


High

Video


Broadband


Total


Video


Broadband


Total

Gross margin %

60.0 %


46.5 %


50.5 %


62.0 %


48.5 %


52.5 %

Gross profit

$               117


$             214


$             331


$             130


$             243


$             373

Adjusted EBITDA(2)

$                  (7)


$               95


$               88


$                 2


$             119


$             121

Tax rate





19 %






19 %

Net income per share





$            0.49






$            0.72

Shares (3)





114.6






114.6



(1)

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

(2)

Refer to "Adjusted EBITDA Reconciliation on Financial Guidance" below for a reconciliation to net income, the most comparable GAAP measure.

(3)

The guidance assumes estimated impact of redeeming the 2024 Convertible Notes and repurchases during 2024 under the Company's stock repurchase program. Diluted shares assumes stock price at $10.68 (Q4 2023 average price).

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, January 29, 2024. 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/BI52aab14160c44ed3aaa1715d3e4dea8e. 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 broadband 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 broadband networking via the industry's first virtualized broadband 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, and net income (loss) per diluted share, as well as our plans for our strategic review of the Video business. 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 Broadband 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 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 cOS™ 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, 2022, 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), Adjusted EBITDA (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:

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. 

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, and restructuring charges, 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.

Non-recurring advisory fees - There were non-recurring costs that we excluded from non-GAAP results relating to professional accounting, tax and legal fees associated with strategic corporate initiatives, including assessing corporate structure and organization, as we seek to optimize value for our business.

Harmonic Inc.

Preliminary Condensed Consolidated Balance Sheets

(Unaudited, in thousands, except par value)



December 31, 2023


December 31, 2022

ASSETS




Current assets:




   Cash and cash equivalents

$                      84,269


$                      89,586

   Accounts receivable, net

141,531


108,427

   Inventories

83,982


120,949

   Prepaid expenses and other current assets

20,950


26,337

Total current assets

330,732


345,299

Property and equipment, net

36,683


39,814

Operating lease right-of-use assets, net

20,817


25,469

Goodwill

239,150


237,739

Deferred income taxes

104,707


11,776

Other non-current assets

36,117


49,921

Total assets

$                    768,206


$                    710,018





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Convertible debt, current

$                    114,880


$                    113,981

Other debts, current

4,918


4,756

Accounts payable

38,562


67,455

Deferred revenue

46,217


62,383

Operating lease liabilities, current

6,793


6,773

Other current liabilities

61,024


66,724

Total current liabilities

272,394


322,072

Other debts, non-current

10,495


11,161

Operating lease liabilities, non-current

18,965


24,110

Other non-current liabilities

29,478


28,169

Total liabilities

331,332


385,512





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; 112,407 and 109,871
shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively

112


110

Additional paid-in capital

2,405,043


2,380,651

Accumulated deficit

(1,962,575)


(2,046,569)

Accumulated other comprehensive loss

(5,706)


(9,686)

Total stockholders' equity

436,874


324,506

Total liabilities and stockholders' equity

$                    768,206


$                    710,018

 

Harmonic Inc.

Preliminary Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except per share data)



Three Months Ended


Year Ended


December 31, 2023


December 31, 2022


December 31, 2023


December 31, 2022

Revenue:








Appliance and integration

$                125,197


$                122,513


$                435,878


$                473,806

SaaS and service

41,895


41,821


172,029


151,151

Total net revenue

167,092


164,334


607,907


624,957

Cost of revenue:








Appliance and integration

70,596


65,372


236,773


259,027

SaaS and service

14,629


13,265


58,589


50,046

Total cost of revenue

85,225


78,637


295,362


309,073

Total gross profit

81,867


85,697


312,545


315,884

Operating expenses:








Research and development

30,252


31,088


126,282


120,307

Selling, general and administrative

41,982


36,927


163,282


146,717

Restructuring and related charges


1,205


809


3,341

Total operating expenses

72,234


69,220


290,373


270,365

Income from operations

9,633


16,477


22,172


45,519

Interest expense, net

(571)


(929)


(2,696)


(5,040)

Other income (expense), net

(249)


(212)


(335)


4,006

Income before income taxes

8,813


15,336


19,141


44,485

Provision for (benefit from) income taxes

(75,028)


9,205


(64,853)


16,303

Net income

$                  83,841


$                    6,131


$                  83,994


$                  28,182









Net income per share:








Basic

$                      0.75


$                      0.06


$                      0.75


$                      0.27

Diluted

$                      0.72


$                      0.05


$                      0.72


$                      0.25

Weighted average shares outstanding:








Basic

112,294


106,988


111,651


105,080

Diluted

115,691


117,301


117,359


112,378

 

Harmonic Inc.

Preliminary Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)



Year Ended


December 31, 2023


December 31, 2022

Cash flows from operating activities:




Net income

$                      83,994


$                      28,182

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




Depreciation

12,255


12,260

Stock-based compensation

27,329


25,212

Amortization of convertible debt discount

899


1,171

Amortization of warrant

870


1,734

Foreign currency remeasurement

1,453


(2,685)

Deferred income taxes, net

(92,856)


4,894

Provision for expected credit losses and returns

2,778


1,954

Provision for excess and obsolete inventories

7,396


5,988

Gain on sale of investment in equity securities


(4,370)

Other adjustments

151


513

Changes in operating assets and liabilities:




Accounts receivable

(35,473)


(23,136)

Inventories

35,403


(54,431)

Other assets

25,483


(8,402)

Accounts payable

(29,358)


5,837

Deferred revenues

(20,823)


2,610

Other liabilities

(12,442)


8,145

Net cash provided by operating activities

7,059


5,476

Cash flows from investing activities:




Purchases of investments

(6,305)


Proceeds from maturities of investments

6,305


Proceeds from sale of investment


7,962

Purchases of property and equipment

(8,475)


(9,250)

Net cash used in investing activities

(8,475)


(1,288)

Cash flows from financing activities:




Payment of convertible debt


(37,707)

Payments for debt issuance costs

(1,025)


Repurchase of common stock

3,835


3,499

Proceeds from other debts

(4,865)


(4,583)

Repayment of other debts


(5,133)

Proceeds from common stock issued to employees

6,558


7,092

Taxes paid related to net share settlement of equity awards

(9,493)


(6,301)

Net cash used in financing activities

(4,990)


(43,133)

Effect of exchange rate changes on cash and cash equivalents

1,089


(4,900)

Net decrease in cash and cash equivalents

(5,317)


(43,845)

Cash and cash equivalents at beginning of period

89,586


133,431

Cash and cash equivalents at end of period

$                      84,269


$                      89,586

 

Harmonic Inc.

Preliminary GAAP Revenue Information

(Unaudited, in thousands, except percentages)



Three Months Ended


December 31, 2023


September 29, 2023


December 31, 2022

Geography









Americas

$         129,406

77 %


$           91,221

72 %


$         125,638

76 %

EMEA

30,041

18 %


28,465

22 %


29,250

18 %

APAC

7,645

5 %


7,517

6 %


9,446

6 %

Total

$         167,092

100 %


$         127,203

100 %


$         164,334

100 %










Market









Service Provider

$         128,566

77 %


$           87,747

69 %


$         110,092

67 %

Broadcast and Media

38,526

23 %


39,456

31 %


54,242

33 %

Total

$         167,092

100 %


$         127,203

100 %


$         164,334

100 %























Twelve Months Ended





December 31, 2023


December 31, 2022

Geography









Americas




$         447,700

74 %


$         452,869

73 %

EMEA




127,689

21 %


133,095

21 %

APAC




32,518

5 %


38,993

6 %

Total




$         607,907

100 %


$         624,957

100 %










Market









Service Provider




$         443,005

73 %


$         408,138

65 %

Broadcast and Media




164,902

27 %


216,819

35 %

Total




$         607,907

100 %


$         624,957

100 %

 

Harmonic Inc.

Preliminary Segment Information

(Unaudited, in thousands, except percentages)



Three Months Ended December 31, 2023


Video



Broadband



Total Segment
Measures



Adjustments (1)


Consolidated
GAAP
Measures

Net revenue

$        51,863



$      115,229



$      167,092



$                  —


$      167,092

Gross profit

33,491

(1)


48,803

(1)


82,294

(1)


(427)


81,867

Gross margin %

64.6 %

(1)


42.4 %

(1)


49.3 %

(1)




49.0 %















Three Months Ended September 29, 2023


Video



Broadband



Total Segment
Measures



Adjustments (1)


Consolidated
GAAP
Measures

Net revenue

$        51,397



$        75,806



$      127,203



$                  —


$      127,203

Gross profit

29,241

(1)


33,763

(1)


63,004

(1)


(1,320)


61,684

Gross margin %

56.9 %

(1)


44.5 %

(1)


49.5 %

(1)




48.5 %















Three Months Ended December 31, 2022


Video



Broadband



Total Segment
Measures



Adjustments (1)


Consolidated
GAAP
Measures

Net revenue

$        68,308



$        96,026



$      164,334



$                  —


$      164,334

Gross profit

40,939

(1)


45,741

(1)


86,680

(1)


(983)


85,697

Gross margin %

59.9 %

(1)


47.6 %

(1)


52.7 %

(1)




52.1 %















Twelve Months Ended December 31, 2023


Video



Broadband



Total Segment
Measures



Adjustments (1)


Consolidated
GAAP
Measures

Net revenue

$      219,425



$      388,482



$      607,907



$                  —


$      607,907

Gross profit

133,649

(1)


181,932

(1)


315,581

(1)


(3,036)


312,545

Gross margin %

60.9 %

(1)


46.8 %

(1)


51.9 %

(1)




51.4 %















Twelve Months Ended December 31, 2022


Video



Broadband



Total Segment
Measures



Adjustments (1)


Consolidated
GAAP
Measures

Net revenue

$      274,189



$      350,768



$      624,957



$                  —


$      624,957

Gross profit

165,618

(1)


153,031

(1)


318,649

(1)


(2,765)


315,884

Gross margin %

60.4 %

(1)


43.6 %

(1)


51.0 %

(1)




50.5 %



(1)

Segment gross margin and segment gross profit are Non-GAAP financial measures. Refer to "Use of Non-GAAP Financial Measures" above and "GAAP to Non-GAAP Reconciliations".

 

Harmonic Inc.

GAAP to Non-GAAP Reconciliations (Unaudited)

(in thousands, except percentages and per share data)



Three Months Ended December 31, 2023


Revenue


Gross Profit


Total
Operating
Expense


Income from
Operations


Total Non-operating 
Expense, net


Net Income

GAAP

$      167,092


$     81,867


$     72,234


$       9,633


$          (820)


$     83,841

Stock-based compensation


454


(6,151)


6,605



6,605

Restructuring and related charges


(27)



(27)



(27)

Non-recurring advisory fees



(2,702)


2,702



2,702

Non-cash interest and other expenses related to convertible notes





233


233

Discrete tax items and tax effect of non-GAAP adjustments






(78,693)

Total adjustments


427


(8,853)


9,280


233


(69,180)

Non-GAAP

$      167,092


$     82,294


$     63,381


$     18,913


$          (587)


$     14,661

As a % of revenue (GAAP)



49.0 %


43.2 %


5.8 %


(0.5) %


50.2 %

As a % of revenue (Non-GAAP)



49.3 %


37.9 %


11.3 %


(0.4) %


8.8 %

Diluted net income per share:












GAAP











$        0.72

Non-GAAP











$        0.13

Shares used in per share calculation:












GAAP and Non-GAAP











115,691






Three Months Ended September 29, 2023


Revenue


Gross Profit


Total
Operating
Expense


Income (Loss)
from Operations


Total Non-operating
Expense, net


Net Income
(Loss)

GAAP

$      127,203


$     61,684


$         70,287


$     (8,603)


$          (276)


$     (6,495)

Stock-based compensation


606


(6,635)


7,241



7,241

Restructuring and related charges


714


(362)


1,076



1,076

Non-recurring advisory fees



(364)


364



364

Non-cash interest and other expenses related to convertible notes





226


226

Discrete tax items and tax effect of non-GAAP adjustments






(2,390)

Total adjustments


1,320


(7,361)


8,681


226


6,517

Non-GAAP

$      127,203


$     63,004


$         62,926


$              78


$            (50)


$           22

As a % of revenue (GAAP)



48.5 %


55.3 %


(6.8) %


(0.2) %


(5.1) %

As a % of revenue (Non-GAAP)



49.5 %


49.5 %


0.1 %


— %


— %

Diluted net income (loss) per share:












GAAP











$         (0.06)

Non-GAAP











$          0.00

Shares used in per share calculation:












GAAP











112,031

Non-GAAP











116,710






Three Months Ended December 31, 2022


Revenue


Gross Profit


Total
Operating
Expense


Income from
Operations


Total Non-operating
Expense, net


Net Income

GAAP

$      164,334


$     85,697


$         69,220


$     16,477


$        (1,141)


$       6,131

Stock-based compensation


541


(5,050)


5,591



5,591

Restructuring and related charges


442


(1,205)


1,647


17


1,664

Non-cash interest and other expenses related to convertible notes





274


274

Discrete tax items and tax effect of non-GAAP adjustments






6,233

Total adjustments


983


(6,255)


7,238


291


13,762

Non-GAAP

$      164,334


$     86,680


$         62,965


$     23,715


$          (850)


$     19,893

As a % of revenue (GAAP)



52.1 %


42.1 %


10.0 %


(0.7) %


3.7 %

As a % of revenue (Non-GAAP)



52.7 %


38.3 %


14.4 %


(0.5) %


12.1 %

Diluted net income per share:












GAAP











$        0.05

Non-GAAP











$        0.17

Shares used in per share calculation:












GAAP and Non-GAAP











117,301






Twelve Months Ended December 31, 2023


Revenue


Gross Profit


Total
Operating
Expense


Income from
Operations


Total Non-operating
Expense, net


Net Income

GAAP

$      607,907


$   312,545


$       290,373


$     22,172


$        (3,031)


$     83,994

Stock-based compensation


2,349


(24,980)


27,329



27,329

Restructuring and related charges


687


(445)


1,132



1,132

Non-recurring advisory fees



(5,201)


5,201



5,201

Non-cash interest and other expenses related to convertible notes





905


905

Discrete tax items and tax effect of non-GAAP adjustments






(75,595)

Total adjustments


3,036


(30,626)


33,662


905


(41,028)

Non-GAAP

$      607,907


$   315,581


$       259,747


$     55,834


$        (2,126)


$     42,966

As a % of revenue (GAAP)



51.4 %


47.8 %


3.6 %


(0.5) %


13.8 %

As a % of revenue (Non-GAAP)



51.9 %


42.7 %


9.2 %


(0.3) %


7.1 %

Diluted net income per share:












GAAP











$        0.72

Non-GAAP











$        0.37

Shares used in per share calculation:












GAAP and Non-GAAP











117,359






Twelve Months Ended December 31, 2022


Revenue


Gross Profit


Total
Operating
Expense


Income from
Operations


Total Non-operating
Expense, net


Net Income

GAAP

$      624,957


$   315,884


$       270,365


$     45,519


$        (1,034)


$     28,182

Stock-based compensation


2,232


(22,980)


25,212



25,212

Restructuring and related charges


533


(3,341)


3,874


17


3,891

Gain on sale of equity investment





(4,349)


(4,349)

Non-cash interest and other expenses related to convertible notes





1,173


1,173

Discrete tax items and tax effect of non-GAAP adjustments






7,149

Total adjustments


2,765


(26,321)


29,086


(3,159)


33,076

Non-GAAP

$      624,957


$   318,649


$       244,044


$     74,605


$        (4,193)


$     61,258

As a % of revenue (GAAP)



50.5 %


43.3 %


7.3 %


(0.2) %


4.5 %

As a % of revenue (Non-GAAP)



51.0 %


39.0 %


11.9 %


(0.7) %


9.8 %

Diluted net income per share:












GAAP











$        0.25

Non-GAAP











$        0.55

Shares used in per share calculation:












GAAP and Non-GAAP











112,378

 

Harmonic Inc.

Calculation of Adjusted EBITDA by Segment (Unaudited)

(In thousands)



Three Months Ended December 31, 2023


Video


Broadband

Income (loss) from operations (1)

$                  (1,355)


$                  20,268

Depreciation

1,283


1,794

Other non-operating expenses, net

(89)


(160)

Adjusted EBITDA(2)

$                     (161)


$                  21,902

Revenue

$                 51,863


$                115,229

Adjusted EBITDA margin % (2)

(0.3) %


19.0 %






Three Months Ended September 29, 2023


Video


Broadband

Income (loss) from operations (1)

$                  (6,050)


$                    6,128

Depreciation

1,343


1,746

Other non-operating expenses, net

132


211

Adjusted EBITDA(2)

$                  (4,575)


$                    8,085

Revenue

$                 51,397


$                  75,806

Adjusted EBITDA margin % (2)

(8.9) %


10.7 %






Three Months Ended December 31, 2022


Video


Broadband

Income from operations (1)

$                    5,005


$                  18,710

Depreciation

1,431


1,604

Other non-operating expenses, net

(86)


(109)

Adjusted EBITDA(2)

$                    6,350


$                  20,205

Revenue

$                  68,308


$                  96,026

Adjusted EBITDA margin % (2)

9.3 %


21.0 %


Twelve Months Ended December 31, 2023


Video


Broadband

Income (loss) from operations (1)

$                  (8,741)


$                  64,575

Depreciation

5,400


6,855

Other non-operating expenses, net

(131)


(204)

Adjusted EBITDA(2)

$                  (3,472)


$                  71,226

Revenue

$               219,425


$                388,482

Adjusted EBITDA margin % (2)

(1.6) %


18.3 %






Twelve Months Ended December 31, 2022


Video


Broadband

Income from operations (1)

$                  22,322


$                  52,283

Depreciation

6,044


6,216

Other non-operating expenses, net

(148)


(178)

Adjusted EBITDA(2)

$                  28,218


$                  58,321

Revenue

$                274,189


$                350,768

Adjusted EBITDA margin % (2)

10.3 %


16.6 %



(1)

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

(2)

Adjusted EBITDA and Adjusted EBITDA margin are Non-GAAP financial measures. Refer below for the reconciliation of consolidated adjusted EBITDA to net income (loss), the most directly comparable GAAP measure.

 

Harmonic Inc.

Preliminary Net Income (Loss) to Consolidated Segment Adjusted EBITDA Reconciliation (Unaudited)

(In thousands)



Three Months Ended


December 31, 2023


September 29, 2023


December 31, 2022

Net income (loss) (GAAP)

$                83,841


$                (6,495)


$                  6,131

Provision for (benefit from) income taxes

(75,028)


(2,384)


9,205

Interest expense, net

571


619


929

Depreciation

3,077


3,089


3,035

EBITDA

12,461


(5,171)


19,300







Adjustments






Stock-based compensation

6,605


7,241


5,591

Restructuring and related charges

(27)


1,076


1,664

Non-recurring advisory fees

2,702


364


Total consolidated segment adjusted EBITDA (Non-GAAP)

$                21,741


$                  3,510


$                26,555

Revenue

$              167,092


$              127,203


$              164,334

Net income (loss) margin (GAAP)

50.2 %


(5.1) %


3.7 %

Consolidated segment adjusted EBITDA margin (Non-GAAP)

13.0 %


2.8 %


16.2 %

 


Twelve Months Ended


December 31, 2023


December 31, 2022

Net income (GAAP)

$                83,994


$                28,182

Provision for (benefit from) income taxes

(64,853)


16,303

Interest expense, net

2,696


5,040

Depreciation

12,255


12,260

EBITDA

34,092


61,785





Adjustments




Stock-based compensation

27,329


25,212

Restructuring and related charges

1,132


3,891

Non-recurring advisory fees

5,201


Gain on sale of equity investment


(4,349)

Total consolidated segment adjusted EBITDA (Non-GAAP)

$                67,754


$                86,539

Revenue

$              607,907


$              624,957

Net income margin (GAAP)

13.8 %


4.5 %

Consolidated segment adjusted EBITDA margin (Non-GAAP)

11.1 %


13.8 %

 

Harmonic Inc.

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

(In millions, except percentages and per share data)



Q1 2024 Financial Guidance (1)


Revenue