Press Release

Harmonic Announces Second Quarter 2023 Results

July 31, 2023

Broadband revenue up 20% and Video SaaS revenue up 58% year over year

SAN JOSE, Calif., July 31, 2023 /PRNewswire/ -- Harmonic Inc. (NASDAQ: HLIT) today announced its unaudited results for the second quarter of 2023.

"While we achieved double digit year over year Broadband and Video SaaS revenue growth and strong gross margins for the second quarter, we experienced hardware sales delays across our business segments resulting in total revenue that was below our expectations," said Patrick Harshman, president and chief executive officer of Harmonic. "Despite these short-term headwinds, we have the largest backlog in our Company's history and our operating model continued to deliver solid profitability. The strength of our market position was reinforced by several new customer wins which further supports our multi-year growth plan."

Q2 Financial and Business Highlights

Financial

  • Revenue: $156.0 million, down 1% year over year
    • Broadband segment revenue: $97.1 million, up 20% year over year
    • Video segment revenue: $58.9 million, compared to $76.2 million in the prior year period
  • Gross margin: GAAP 54.5% and non-GAAP 54.7%, compared to GAAP 52.3% and non-GAAP 52.8% in the year ago period
    • Broadband segment gross margin: 50.5% compared to 43.0% in the year ago period
    • Video segment gross margin: 61.7% compared to 63.2% in the year ago period
  • Operating income: GAAP income $10.0 million and non-GAAP income $18.2 million, compared to GAAP income $15.1 million and non-GAAP income $21.4 million in the year ago period
  • Net income: GAAP net income $1.6 million and non-GAAP net income of $14.0 million, compared to GAAP net income $14.8 million and non-GAAP net income $17.6 million in the year ago period
  • Adjusted EBITDA: $21.1 million income compared to $24.3 million income in the year ago period
  • EPS: GAAP net income per share of $0.01 and non-GAAP net income per share of $0.12, compared to GAAP net income per share of $0.14 and non-GAAP net income per share of $0.16 in the year ago period
  • Cash: $71.0 million, down $50.8 million year over year

Business

  • CableOS® solution commercially deployed with 98 customers, serving 21.0 million cable modems, and initial orders received from two new Tier 1 customers
  • Recognized for the first time as the "cable broadband equipment" market share leader, by the most recent Dell'Oro Group1 report
  • Signed a follow-on multi-year software contract with an existing Tier 1 customer
  • Live sports streaming SaaS expansions and new wins drove 58.3% Video SaaS revenue growth year over year

1 Dell'Oro Group 1Q23 Broadband Access and Home Networking Quarterly Reports


Select Financial Information



GAAP


Non-GAAP

Key Financial Results


Q2 2023


Q1 2023


Q2 2022


Q2 2023


Q1 2023


Q2 2022



(Unaudited, in millions, except per share data)

Net revenue


$         156.0


$         157.6


$         157.4


$         156.0


$         157.6


$         157.4

Net income


$             1.6


$             5.1


$           14.8


$           14.0


$           14.3


$           17.6

EPS


$           0.01


$           0.04


$           0.14


$           0.12


$           0.12


$           0.16










Other Financial Information

Q2 2023


Q1 2023


Q2 2022


(Unaudited, in millions)

Adjusted EBITDA for the quarter

$           21.1


$           21.4


$           24.3

Bookings for the quarter

$         194.7


$         325.5


$         140.9

Backlog and deferred revenue as of quarter end

$         663.8


$         623.5


$         477.8

Cash and cash equivalents as of quarter end

$           71.0


$           90.9


$         121.8

 

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 2023 GAAP Financial Guidance (1)


Low


High

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

Video


Broadband


Adjustments (2)


Total

GAAP


Video


Broadband


Adjustments (2)


Total

GAAP

Net revenue

$        55


$        70


$         —


$      125


$        60


$        80


$         —


$      140

Gross margin %

59.5 %


42.5 %


(0.6) %


49.4 %


60.5 %


43.5 %


(0.5) %


50.3 %

Gross profit

$        33


$        30


$         (1)


$        62


$        36


$        35


$         (1)


$        70

Operating expenses

$        35


$        30


$           8


$        73


$        36


$        31


$           8


$        75

Operating loss

$        (2)


$        —


$         (9)


$      (11)


$        —


$          4


$         (9)


$        (5)

Tax rate (3)







67 %








67 %

EPS (3)







$   (0.04)








$   (0.02)

Shares (3)







112.0








112.0

Cash (3)







$        80








$        90



(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.

 


 2023 GAAP Financial Guidance (1)


Low


High

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

Video


Broadband


Adjustments (2)


Total
GAAP


Video


Broadband


Adjustments (2)


Total
GAAP

Net revenue

$      235


$      385


$         —


$      620


$      250


$      410


$         —


$      660

Gross margin %

60.0 %


47.0 %


(0.4) %


51.5 %


61.0 %


48.0 %


(0.4) %


52.5 %

Gross profit

$      141


$      181


$         (3)


$      319


$      153


$      197


$         (3)


$      347

Operating expenses

$      140


$      122


$         29


$      291


$      143


$      125


$         29


$      297

Operating income

$          1


$        59


$       (31)


$        29


$        10


$        72


$       (31)


$        51

Tax rate (3)







67 %








67 %

EPS (3)







$     0.08








$     0.13

Shares (3)







119.2








119.2

Cash (3)







$        80








$        95



(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 2023 Non-GAAP Financial Guidance (1)


Low


High

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

Video


Broadband


Total


Video


Broadband


Total

Net revenue

$               55


$               70


$             125


$               60


$               80


$             140

Gross margin %

59.5 %


42.5 %


50.0 %


60.5 %


43.5 %


50.8 %

Gross profit

$               33


$               30


$               63


$               36


$               35


$               71

Operating expenses

$               35


$               30


$               65


$               36


$               31


$               67

Adjusted EBITDA

$               (1)


$                 1


$               —


$                 2


$                 6


$                 8

Tax rate (2)





20 %






20 %

EPS (2)





$          (0.02)






$            0.02

Shares (2)





112.0






119.8

Cash (2)





$               80






$               90



(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.

 


 2023 Non-GAAP Financial Guidance (1)


Low


High

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

Video


Broadband


Total


Video


Broadband


Total

Net revenue

$             235


$             385


$             620


$             250


$             410


$             660

Gross margin %

60.0 %


47.0 %


51.9 %


61.0 %


48.0 %


52.9 %

Gross profit

$             141


$             181


$             322


$             153


$             197


$             350

Operating expenses

$             140


$             122


$             262


$             143


$             125


$             268

Adjusted EBITDA

$                 6


$               65


$               71


$               15


$               78


$               93

Tax rate (2)





20 %






20 %

EPS (2)





$            0.38






$            0.52

Shares (2)





119.2






119.2

Cash (2)





$               80






$               95



(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, July 31, 2023. 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/BI455acac6063542fb837fd89bddfb1d84. 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, 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 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 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, 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) (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. 

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 per share data) 



June 30, 2023


December 31, 2022

ASSETS




Current assets:




   Cash and cash equivalents

$                      71,031


$                      89,586

   Accounts receivable, net

119,203


108,427

   Inventories

113,587


120,949

   Prepaid expenses and other current assets

27,695


26,337

Total current assets

331,516


345,299

Property and equipment, net

37,626


39,814

Operating lease right-of-use assets

23,138


25,469

Goodwill

238,709


237,739

Other non-current assets

59,363


61,697

Total assets

$                    690,352


$                    710,018





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Convertible debt, current

$                    114,428


$                    113,981

Other debts, current

4,851


4,756

Accounts payable

37,108


67,455

Deferred revenue

66,218


62,383

Operating lease liabilities, current

6,624


6,773

Other current liabilities

58,460


66,724

Total current liabilities

287,689


322,072

Other debts, non-current

10,539


11,161

Operating lease liabilities, non-current

21,557


24,110

Other non-current liabilities

27,766


28,169

Total liabilities

347,551


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; 111,584 and 109,871 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

112


110

Additional paid-in capital

2,389,573


2,380,651

Accumulated deficit

(2,039,921)


(2,046,569)

Accumulated other comprehensive loss

(6,963)


(9,686)

Total stockholders' equity

342,801


324,506

Total liabilities and stockholders' equity

$                    690,352


$                    710,018

 

Harmonic Inc.

Preliminary Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except per share data)



Three Months Ended


Six Months Ended


June 30, 2023


July 1, 2022


June 30, 2023


July 1, 2022

Revenue:








Appliance and integration

$                    111,127


$                    121,868


$                225,921


$                234,852

SaaS and service

44,836


35,578


87,691


70,033

Total net revenue

155,963


157,446


313,612


304,885

Cost of revenue:








Appliance and integration

57,437


62,341


117,185


128,723

SaaS and service

13,586


12,704


27,433


24,579

Total cost of revenue

71,023


75,045


144,618


153,302

Total gross profit

84,940


82,401


168,994


151,583

Operating expenses:








Research and development

32,205


29,920


65,714


58,753

Selling, general and administrative

42,773


36,768


82,055


73,411

Restructuring and related charges


631


83


1,801

Total operating expenses

74,978


67,319


147,852


133,965

Income from operations

9,962


15,082


21,142


17,618

Interest expense, net

(800)


(1,394)


(1,506)


(2,827)

Other income (expense), net

(136)


4,274


(429)


4,336

Income before income taxes

9,026


17,962


19,207


19,127

Provision for income taxes

7,471


3,122


12,559


5,816

Net income

$                        1,555


$                      14,840


$                    6,648


$                  13,311









Net income per share:








Basic

$                          0.01


$                          0.14


$                      0.06


$                      0.13

Diluted

$                          0.01


$                          0.14


$                      0.06


$                      0.12

Weighted average shares outstanding:








Basic

111,462


104,630


111,130


104,312

Diluted

119,255


108,984


118,508


109,774

 

Harmonic Inc.

Preliminary Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)



Six Months Ended


June 30, 2023


July 1, 2022

Cash flows from operating activities:




Net income

$                        6,648


$                      13,311

Adjustments to reconcile net income to net cash used in operating activities:




Depreciation

6,089


6,128

Stock-based compensation

13,483


13,161

Amortization of convertible debt discount

447


596

Amortization of warrant

870


863

Foreign currency remeasurement

991


(1,680)

Deferred income taxes, net

1,321


1,401

Provision for expected credit losses and returns

1,121


1,648

Provision for excess and obsolete inventories

3,383


3,805

Gain on sale of investment in equity securities


(4,370)

Other adjustments

(25)


338

Changes in operating assets and liabilities:




Accounts receivable

(11,513)


(21,386)

Inventories

6,894


(15,429)

Other assets

2,060


(1,367)

Accounts payable

(30,527)


(23,355)

Deferred revenues

1,223


16,393

Other liabilities

(12,717)


4,287

Net cash used in operating activities

(10,252)


(5,656)

Cash flows from investing activities:




Proceeds from sale of investment


7,962

Purchases of property and equipment

(3,833)


(5,504)

Net cash provided by (used in) investing activities

(3,833)


2,458

Cash flows from financing activities:




Repurchase of common stock


(5,013)

Proceeds from other debts

3,829


3,499

Repayment of other debts

(4,721)


(4,393)

Proceeds from common stock issued to employees

3,084


6,130

Taxes paid related to net share settlement of equity awards

(7,643)


(3,083)

Net cash used in financing activities

(5,451)


(2,860)

Effect of exchange rate changes on cash and cash equivalents

981


(5,554)

Net decrease in cash and cash equivalents

(18,555)


(11,612)

Cash and cash equivalents at beginning of period

89,586


133,431

Cash and cash equivalents at end of period

$                      71,031


$                    121,819

 

Harmonic Inc.

Preliminary GAAP Revenue Information

(Unaudited, in thousands, except percentages)



Three Months Ended


June 30, 2023


March 31, 2023


July 1, 2022

Geography









Americas

$         111,407

72 %


$         115,666

73 %


$         117,607

75 %

EMEA

36,242

23 %


32,941

21 %


29,699

19 %

APAC

8,314

5 %


9,042

6 %


10,140

6 %

Total

$         155,963

100 %


$         157,649

100 %


$         157,446

100 %










Market









Service Provider

$         108,703

70 %


$         117,989

75 %


$           98,551

63 %

Broadcast and Media

47,260

30 %


39,660

25 %


58,895

37 %

Total

$         155,963

100 %


$         157,649

100 %


$         157,446

100 %























Six Months Ended





June 30, 2023


July 1, 2022

Geography









Americas




$         227,073

72 %


$         220,764

72 %

EMEA




69,183

22 %


65,401

22 %

APAC




17,356

6 %


18,720

6 %

Total




$         313,612

100 %


$         304,885

100 %










Market









Service Provider




$         226,692

72 %


$         191,072

63 %

Broadcast and Media




86,920

28 %


113,813

37 %

Total




$         313,612

100 %


$         304,885

100 %

 

Harmonic Inc.

Preliminary Segment Information

(Unaudited, in thousands, except percentages)



Three Months Ended June 30, 2023


Video


Broadband


Total Segment
Measures

(non-GAAP)


Adjustments (1)


Consolidated
GAAP
Measures

Net revenue

$        58,867


$        97,096


$      155,963


$                  —


$      155,963

Gross profit

36,303


49,076


85,379


(439)


84,940

Gross margin %

61.7 %


50.5 %


54.7 %




54.5 %

Adjusted EBITDA(2)

1,426


19,653


21,079


(19,524)


1,555

Adjusted EBITDA margin %

2.4 %


20.2 %


13.5 %




1.0 %












Three Months Ended March 31, 2023


Video


Broadband


Total Segment
Measures

(non-GAAP)


Adjustments (1)


Consolidated
GAAP
Measures

Net revenue

$        57,298


$      100,351


$      157,649


$                  —


$      157,649

Gross profit

34,614


50,290


84,904


(850)


84,054

Gross margin %

60.4 %


50.1 %


53.9 %




53.3 %

Adjusted EBITDA(2)

(162)


21,586


21,424


(16,331)


5,093

Adjusted EBITDA margin %

(0.3) %


21.5 %


13.6 %




3.2 %












Three Months Ended July 1, 2022


Video


Broadband


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 %












Six Months Ended June 30, 2023


Video


Broadband


Total Segment
Measures

(non-GAAP)


Adjustments (1)


Consolidated
GAAP
Measures

Net revenue

$      116,165


$      197,447


$      313,612


$                  —


$      313,612

Gross profit

70,917


99,366


170,283


(1,289)


168,994

Gross margin %

61.0 %


50.3 %


54.3 %




53.9 %

Adjusted EBITDA(2)

1,264


41,239


42,503


(35,855)


6,648

Adjusted EBITDA margin %

1.1 %


20.9 %


13.6 %




2.1 %












Six Months Ended July 1, 2022


Video


Broadband


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 %



(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 June 30, 2023


Revenue


Gross Profit


Total Operating Expense


Income from Operations


Total Non-operating  Expense, net


Net Income

GAAP

$      155,963


$     84,940


$     74,978


$       9,962


$          (936)


$       1,555

Stock-based compensation


439


(5,620)


6,059



6,059

Restructuring and related charges






Non-recurring advisory fees



(2,135)


2,135



2,135

Non-cash interest and other expenses related to convertible notes





223


223

Discrete tax items and tax effect of non-GAAP adjustments






3,982

Total adjustments


439


(7,755)


8,194


223


12,399

Non-GAAP

$      155,963


$     85,379


$     67,223


$     18,156


$          (713)


$     13,954

As a % of revenue (GAAP)



54.5 %


48.1 %


6.4 %


(0.6) %


1.0 %

As a % of revenue (Non-GAAP)



54.7 %


43.1 %


11.6 %


(0.5) %


8.9 %

Diluted net income per share:












GAAP











$        0.01

Non-GAAP











$        0.12

Shares used in per share calculation:












GAAP and Non-GAAP











119,255

 


Three Months Ended March 31, 2023


Revenue


Gross Profit


Total Operating Expense


Income from Operations


Total Non-operating Expense, net


Net Income

GAAP

$      157,649


$     84,054


$     72,874


$     11,180


$          (999)


$       5,093

Stock-based compensation


850


(6,574)


7,424



7,424

Restructuring and related charges



(83)


83



83

Non-cash interest and other expenses related to convertible notes





223


223

Discrete tax items and tax effect of non-GAAP adjustments






1,506

Total adjustments


850


(6,657)


7,507


223


9,236

Non-GAAP

$      157,649


$     84,904


$     66,217


$     18,687


$          (776)


$     14,329

As a % of revenue (GAAP)



53.3 %


46.2 %


7.1 %


(0.6) %


3.2 %

As a % of revenue (Non-GAAP)



53.9 %


42.0 %


11.9 %


(0.5) %


9.1 %

Diluted net income per share:












GAAP











$        0.04

Non-GAAP











$        0.12

Shares used in per share calculation:












GAAP and Non-GAAP











117,758

 


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

 


Six Months Ended June 30, 2023


Revenue


Gross Profit


Total Operating Expense


Income from Operations


Total Non-operating Expense, net


Net Income

GAAP

$      313,612


$   168,994


$   147,852


$     21,142


$        (1,935)


$       6,648

Stock-based compensation


1,289


(12,194)


13,483



13,483

Restructuring and related charges



(83)


83



83

Non-recurring advisory fees



(2,135)


2,135



2,135

Non-cash interest and other expenses related to convertible notes





446


446

Discrete tax items and tax effect of non-GAAP adjustments






5,488

Total adjustments


1,289


(14,412)


15,701


446


21,635

Non-GAAP

$      313,612


$   170,283


$   133,440


$     36,843


$        (1,489)


$     28,283

As a % of revenue (GAAP)



53.9 %


47.1 %


6.7 %


(0.6) %


2.1 %

As a % of revenue (Non-GAAP)



54.3 %


42.5 %


11.7 %


(0.5) %


9.0 %

Diluted net income per share:












GAAP











$        0.06

Non-GAAP











$        0.24

Shares used in per share calculation:












GAAP and Non-GAAP











118,508

 


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

 

Harmonic Inc.

Preliminary Adjusted EBITDA Reconciliation (Unaudited)

(In thousands)



Three Months Ended


June 30, 2023


March 31, 2023


July 1, 2022

Net income - GAAP

$                     1,555


$                     5,093


$                   14,840

Provision for income taxes

7,471


5,088


3,122

Interest expense, net

800


706


1,394

Depreciation

3,059


3,030


3,017

EBITDA

12,885


13,917


22,373







Adjustments






Stock-based compensation

6,059


7,424


5,575

Restructuring and related charges


83


745

Non-recurring advisory fees

2,135



Gain on sale of equity investment



(4,349)

Adjusted EBITDA

$                   21,079


$                   21,424


$                   24,344

 




Six Months Ended




June 30, 2023


July 1, 2022

Net income - GAAP



$                     6,648


$                   13,311

Provision for income taxes



12,559


5,816

Interest expense, net



1,506


2,827

Depreciation



6,089


6,128

EBITDA



26,802


28,082







Adjustments






Stock-based compensation



13,483


13,161

Restructuring and related charges



83


1,901

Non-recurring advisory fees



2,135


Gain on sale of equity investment




(4,349)

Adjusted EBITDA



$                   42,503


$                   38,795

 

Harmonic Inc.

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

(In millions, except percentages and per share data)



Q3 2023 Financial Guidance (1)


Revenue


Gross Profit


Total Operating Expense


Net Income (Loss)

GAAP

$   125

to

$   140


$     62

to

$     70