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Harmonic Announces Third Quarter 2022 Results

Total revenue up 23% year over year to new September quarter record

Broadband(1) revenue up 60% and Video SaaS revenue up 64% year over year

SAN JOSE, Calif., Oct. 31, 2022 /PRNewswire/ -- Harmonic Inc. (NASDAQ: HLIT) today announced its unaudited results for the third quarter of 2022.

"The third quarter marks another period of strong financial performance for Harmonic, with 23% year over year revenue growth and solid operating profit," said Patrick Harshman, president and chief executive officer of Harmonic. "This was driven by a 60% rise in Broadband segment revenue and 64% Video SaaS revenue growth. Quarterly bookings grew 50% demonstrating our continued strong business momentum and confidence in our three year strategic growth plan."  

Q3 Financial and Business Highlights

Financial

  • Revenue: $155.7 million, up 23% year over year
    • Broadband segment revenue: $91.9 million, up 60% year over year
    • Video segment revenue: $63.8 million, down 7% year over year
  • Gross margin: GAAP 50.5% and non-GAAP 50.9%, compared to GAAP 52.4% and non-GAAP 52.8% in the year ago period
    • Broadband segment gross margin: 45.0% compared to 42.0% in the year ago period
    • Video segment gross margin: 59.3% compared to 61.9% in the year ago period
  • Operating income: GAAP income $11.4 million and non-GAAP income $18.2 million, compared to GAAP income $5.4 million and non-GAAP income $11.8 million in the year ago period
  • Net income: GAAP net income $8.7 million and non-GAAP net income of $14.9 million, compared to GAAP net income $1.5 million and non-GAAP net income $9.5 million in the year ago period
  • Adjusted EBITDA: $21.2 million income compared to $14.8 million income in the year ago period
  • EPS: GAAP net income per share of $0.08 and non-GAAP net income per share of $0.13, compared to GAAP net income per share of $0.01 and non-GAAP net income per share of $0.09 in the year ago period
  • Cash: $105.3 million, down $23.2 million year over year

Business

  • CableOS® solution commercially deployed with 85 customers, up 25% year over year
  • CableOS deployments scaled to 10.9 million served cable modems, up 179% year over year
  • Tier 1 live sports streaming SaaS expansions and new wins drove 63.9% Video SaaS revenue growth year over year

(1) During the third quarter of fiscal 2022, the Company's Cable Access segment was renamed the Broadband segment to reflect a broader strategic view of the category. There has been no change to the composition of the segment; therefore, no prior periods were restated.

Select Financial Information



GAAP


Non-GAAP

Key Financial Results


Q3 2022


Q2 2022


Q3 2021


Q3 2022


Q2 2022


Q3 2021



(Unaudited, in millions, except per share data)

Net revenue


$         155.7


$         157.4


$         126.3


$         155.7


$         157.4


$         126.3

Net income


$             8.7


$           14.8


$             1.5


$           14.9


$           17.6


$             9.5

EPS


$           0.08


$           0.14


$           0.01


$           0.13


$           0.16


$           0.09










Other Financial Information

Q3 2022


Q2 2022


Q3 2021


(Unaudited, in millions)

Adjusted EBITDA for the quarter

$           21.2


$           24.3


$           14.8

Bookings for the quarter

$         171.1


$         140.9


$         114.3

Backlog and deferred revenue as of quarter end

$         490.1


$         477.8


$         333.3

Cash and cash equivalents as of quarter end

$         105.3


$         121.8


$         128.4

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 


 Q4 2022 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

$        61


$        90


$         —


$      151


$        70


$        95


$         —


$      165

Gross margin %

58.6 %


46.4 %


(0.2) %


51.1 %


59.6 %


47.4 %


(0.2) %


52.4 %

Gross profit

$        36


$        42


$         —


$        78


$        42


$        45


$         —


$        87

Operating expenses

$        35


$        26


$           5


$        66


$        36


$        27


$           5


$        68

Operating income

$          1


$        16


$         (6)


$        11


$          6


$        18


$         (6)


$        18

Tax rate (3)







25.0 %








25.0 %

EPS (3)







$     0.06








$     0.11

Shares (3)







113.5








113.5

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.

 


 2022 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

$      267


$      345


$         —


$      612


$      276


$      350


$         —


$      626

Gross margin %

60.1 %


43.2 %


(0.3) %


50.3 %


60.3 %


43.6 %


(0.4) %


50.6 %

Gross profit

$      161


$      149


$         (2)


$      308


$      167


$      152


$         (2)


$      317

Operating expenses

$      142


$      100


$         25


$      267


$      143


$      101


$         25


$      269

Operating income

$        18


$        49


$       (28)


$        39


$        24


$        52


$       (28)


$        48

Tax rate (3)







25.0 %








25.0 %

EPS (3)







$    0.26








$     0.31

Shares (3)







111.2








111.2

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.

 


Q4 2022 Non-GAAP Financial Guidance (1)


Low


High

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

Video


Broadband


Total


Video


Broadband


Total

Net revenue

$               61


$               90


$             151


$               70


$               95


$             165

Gross margin %

58.6 %


46.4 %


51.3 %


59.6 %


47.4 %


52.6 %

Gross profit

$               36


$               42


$               78


$               42


$               45


$               87

Operating expenses

$               35


$               26


$               61


$               36


$               27


$               63

Adjusted EBITDA

$                 2


$               17


$               19


$                 7


$               20


$               27

Tax rate (2)





13.0 %






13.0 %

EPS (2)





$            0.12






$            0.18

Shares (2)





113.5






113.5

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.

 


 2022 Non-GAAP Financial Guidance (1)


Low


High

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

Video


Broadband


Total


Video


Broadband


Total

Net revenue

$             267


$             345


$             612


$             276


$             350


$             626

Gross margin %

60.1 %


43.2 %


50.6 %


60.3 %


43.6 %


51.0 %

Gross profit

$             161


$             149


$             310


$             167


$             152


$             319

Operating expenses

$             142


$             100


$             242


$             143


$             101


$             244

Adjusted EBITDA

$               24


$               55


$               79


$               29


$               58


$               87

Tax rate (2)





13.0 %






13.0 %

EPS (2)





$            0.49






$            0.55

Shares (2)





111.2






111.2

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.

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 31, 2022. The live webcast will be available on the Harmonic Investor Relations website at http://investor.harmonicinc.com. To participate via telephone, please register in advance using this link, https://register.vevent.com/register/BIcb6f0c646052472a9304345609e1cfce. 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 potential impact of the Covid-19 pandemic on our operations or the operations of our supply chain or our customers; the impact of general economic conditions on our sales and operations; the mix of products and services sold in various geographies and the effect it has on gross margins; delays or decreases in capital spending in the cable, satellite, telco, broadcast and media industries; customer concentration and consolidation; our ability to develop new and enhanced products in a timely manner and market acceptance of our new or existing products; losses of one or more key customers; risks associated with our international operations; exchange rate fluctuations of the currencies in which we conduct business; risks associated with our CableOS and VOS product solutions; dependence on various video and broadband industry trends; inventory management; the lack of timely availability or the impact of increases in the prices of parts or raw materials necessary to produce our products; the effect of competition, on both revenue and gross margins; difficulties associated with rapid technological changes in our markets; risks associated with unpredictable sales cycles; our dependence on contract manufacturers and sole or limited source suppliers; and the effect on our business of natural disasters. The forward-looking statements contained in this press release are also subject to other risks and uncertainties, including those more fully described in Harmonic's filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K for the year ended December 31, 2021, our most recent Quarterly Report on Form 10-Q and our Current Reports on Form 8-K. The forward-looking statements in this press release are based on information available to the Company as of the date hereof, and Harmonic disclaims any obligation to update any forward-looking statements.

Use of Non-GAAP Financial Measures

The Company reports its financial results in accordance with accounting principles generally accepted in the United States ("GAAP" or referred to herein as "reported"). However, management believes that certain non-GAAP financial measures provide management and other users with additional meaningful financial information that should be considered when assessing our ongoing performance. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business, establish operating budgets, set internal measurement targets and make operating decisions.

These non-GAAP measures are not in accordance with, or an alternative for, measures prepared in accordance with generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. The Company believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Harmonic's results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Harmonic's results of operations in conjunction with the corresponding GAAP measures.

The Company believes that the presentation of non-GAAP measures, when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and its historical and projected results of operations. Non-GAAP financial measures should be viewed in addition to, and not as an alternative to, the Company's reported results prepared in accordance with GAAP.

The non-GAAP measures presented here are: Gross profit, operating expenses, income (loss) from operations, non-operating expenses and net income (loss) (including those amounts as a percentage of revenue), Adjusted EBITDA and net income (loss) per diluted share. The presentation of non-GAAP information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP, and is not necessarily comparable to non-GAAP results published by other companies. A reconciliation of the historical non-GAAP financial measures discussed in this press release to the most directly comparable historical GAAP financial measures is included with the financial statements provided with this press release. The non-GAAP adjustments described below have historically been excluded from our GAAP financial measures.

Our non-GAAP financial measures reflect adjustments based on the following items, as well as the related income tax effects:

Stock-based compensation - Although stock-based compensation is a key incentive offered to our employees, we continue to evaluate our business performance excluding stock-based compensation expenses. We believe that management is limited in its ability to project the impact stock-based compensation would have on our operating results. In addition, for comparability purposes, we believe it is useful to provide a non-GAAP financial measure that excludes stock-based compensation in order to better understand the long-term performance of our core business and to facilitate the comparison of our results to the results of our peer companies. 

Amortization of intangibles - A portion of the purchase price of our acquisitions is generally allocated to intangible assets, and is subject to amortization. However, Harmonic does not acquire businesses on a predictable cycle. Additionally, the amount of an acquisition's purchase price allocated to intangible assets and the term of its related amortization can vary significantly and is unique to each acquisition. Therefore, we believe that the presentation of non-GAAP financial measures that adjust for the amortization of intangible assets provides investors and others with a consistent basis for comparison across accounting periods. 

Restructuring and related charges - Harmonic from time to time incurs restructuring charges which primarily consist of employee severance, one-time termination benefits related to the reduction of its workforce, lease exit costs, and other costs.  These charges are associated with material business shifts. We exclude these items because we do not believe they are reflective of our ongoing long-term business and operating results. 

Non-cash interest expense and other expenses related to convertible notes and other debt - We record the  amortization of issuance costs as non-cash interest expense. We believe that excluding these costs provides meaningful supplemental information regarding operational performance and liquidity, along with enhancing investors' ability to view the Company's results from management's perspective. In addition, we believe excluding these costs from the non-GAAP measures facilitates comparisons to our historical operating results and comparisons to peer company operating results. 

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

Discrete tax items and tax effect of non-GAAP adjustments - The income tax effect of non-GAAP adjustments relates to the tax effect of the adjustments that we incorporate into non-GAAP financial measures in order to provide a more meaningful measure of non-GAAP net income.

Depreciation - Depreciation expense, along with interest, tax and stock-based compensation expense, restructuring charges and amortization of intangible assets, is excluded from Adjusted EBITDA because we do not believe depreciation and the other items relate to the ordinary course of our business or are reflective of our underlying business performance.

 

Harmonic Inc.

Preliminary Condensed Consolidated Balance Sheets

(Unaudited, in thousands, except per share data)



September 30, 2022


December 31, 2021

ASSETS




Current assets:




   Cash and cash equivalents

$                        105,280


$                        133,431

   Accounts receivable, net

105,581


88,529

   Inventories

99,024


71,195

   Prepaid expenses and other current assets

26,798


29,972

Total current assets

336,683


323,127

Property and equipment, net

40,431


42,721

Operating lease right-of-use assets

25,258


30,968

Other non-current assets

61,625


56,657

Goodwill

233,874


240,213

Total assets

$                        697,871


$                        693,686





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Convertible debt, current

$                          37,657


$                          36,824

Other debts, current

4,401


4,992

Accounts payable

60,892


64,429

Deferred revenue

58,023


57,226

Operating lease liabilities, current

6,591


7,346

Other current liabilities

54,378


53,644

Total current liabilities

221,942


224,461

Convertible debt, non-current

113,761


98,941

Other debts, non-current

10,095


12,989

Operating lease liabilities, non-current

24,132


29,120

Other non-current liabilities

27,320


31,379

Total liabilities

397,250


396,890





Convertible debt


883

Stockholders' equity:




Preferred stock, $0.001 par value, 5,000 shares authorized; no shares issued or outstanding


Common stock, $0.001 par value, 150,000 shares authorized; 105,421 and 102,959 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

105


103

Additional paid-in capital

2,375,529


2,387,039

Accumulated deficit

(2,052,700)


(2,087,957)

Accumulated other comprehensive loss

(22,313)


(3,272)

Total stockholders' equity

300,621


295,913

Total liabilities and stockholders' equity

$                        697,871


$                        693,686

 

Harmonic Inc.

Preliminary Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except per share data)



Three Months Ended


Nine Months Ended


September 30, 2022


October 1, 2021


September 30, 2022


October 1, 2021

Revenue:








Appliance and integration

$                116,441


$                  91,853


$                351,293


$                250,427

SaaS and service

39,297


34,468


109,330


100,918

Total net revenue

155,738


126,321


460,623


351,345

Cost of revenue:








Appliance and integration

64,932


47,326


193,655


130,310

SaaS and service

12,202


12,841


36,781


39,231

Total cost of revenue

77,134


60,167


230,436


169,541

Total gross profit

78,604


66,154


230,187


181,804

Operating expenses:








Research and development

30,466


26,552


89,219


74,863

Selling, general and administrative

36,379


34,231


109,790


102,728

Amortization of intangibles




507

Restructuring and related charges

335



2,136


43

Total operating expenses

67,180


60,783


201,145


178,141

Income from operations

11,424


5,371


29,042


3,663

Interest expense, net

(1,284)


(2,686)


(4,111)


(7,919)

Other income (expense), net

(118)


(213)


4,218


659

Income (loss) before income taxes

10,022


2,472


29,149


(3,597)

Provision for income taxes

1,282


942


7,098


3,006

Net income (loss)

$                    8,740


$                    1,530


$                  22,051


$                  (6,603)









Net income (loss) per share:








Basic

$                      0.08


$                      0.01


$                      0.21


$                    (0.07)

Diluted

$                      0.08


$                      0.01


$                      0.20


$                    (0.07)

Weighted average shares outstanding:








Basic

105,228


102,099


104,617


101,057

Diluted

113,185


106,421


110,911


101,057

 

Harmonic Inc.

Preliminary Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)



Nine Months Ended


September 30, 2022


October 1, 2021

Cash flows from operating activities:




Net income (loss)

$                  22,051


$                  (6,603)

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




Depreciation

9,225


9,395

Amortization of intangibles


507

Stock-based compensation

19,621


18,863

Amortization of convertible debt discount

897


4,685

Amortization of warrant

1,298


1,302

Foreign currency remeasurement

(3,312)


(3,435)

Deferred income taxes

1,798


1,268

Provision for expected credit losses and returns

1,835


3,049

Provision for excess and obsolete inventories

4,521


1,849

Gains on sale of investment in equity securities

(4,370)


Other adjustments

419


215

Changes in operating assets and liabilities:




Accounts receivable

(22,115)


(12,470)

Inventories

(34,952)


(18,783)

Other assets

(10,371)


2,614

Accounts payable

1,305


10,144

Deferred revenues

(955)


9,978

Other liabilities

(770)


11,078

Net cash provided by (used in) operating activities

(13,875)


33,656

Cash flows from investing activities:




Proceeds from sale of investment

7,962


Purchases of property and equipment

(7,389)


(10,570)

Net cash provided by (used) in investing activities

573


(10,570)

Cash flows from financing activities:




Repurchase of common stock

(5,133)


Proceeds from other debts

3,499


3,861

Repayment of other debts

(4,480)


(6,070)

Proceeds from common stock issued to employees

6,129


11,401

Taxes paid related to net share settlement of equity awards

(5,014)


(1,619)

Net cash provided by (used in) financing activities

(4,999)


7,573

Effect of exchange rate changes on cash and cash equivalents

(9,850)


(870)

Net increase (decrease) in cash and cash equivalents

(28,151)


29,789

Cash and cash equivalents at beginning of period

133,431


98,645

Cash and cash equivalents at end of period

$                105,280


$                128,434

 

Harmonic Inc.

Preliminary GAAP Revenue Information

(Unaudited, in thousands, except percentages)



Three Months Ended


September 30, 2022


July 1, 2022


October 1, 2021

Geography









Americas

$         106,467

68 %


$         117,607

75 %


$           86,215

68 %

EMEA

38,444

25 %


29,699

19 %


30,283

24 %

APAC

10,827

7 %


10,140

6 %


9,823

8 %

Total

$         155,738

100 %


$         157,446

100 %


$         126,321

100 %










Market









Service Provider

$         106,974

69 %


$           98,551

63 %


$           70,157

56 %

Broadcast and Media

48,764

31 %


58,895

37 %


56,164

44 %

Total

$         155,738

100 %


$         157,446

100 %


$         126,321

100 %

 


Nine Months Ended


September 30, 2022


October 1, 2021

Geography






Americas

$         327,231

71 %


$         232,802

66 %

EMEA

103,845

23 %


86,331

25 %

APAC

29,547

6 %


32,212

9 %

Total

$         460,623

100 %


$         351,345

100 %







Market






Service Provider

$         298,046

65 %


$         192,746

55 %

Broadcast and Media

162,577

35 %


158,599

45 %

Total

$         460,623

100 %


$         351,345

100 %

 


Harmonic Inc.

Preliminary Segment Information

(Unaudited, in thousands, except percentages)



Three Months Ended September 30, 2022


Video


Broadband


Total Segment
Measures

(non-GAAP)


Adjustments (1)


Consolidated
GAAP
Measures

Net revenue

$        63,824


$        91,914


$      155,738


$                  —


$      155,738

Gross profit

37,859


41,343


79,202


(598)


78,604

Gross margin %

59.3 %


45.0 %


50.9 %




50.5 %

Adjusted EBITDA(2)

4,318


16,871


21,189


(12,449)


8,740

Adjusted EBITDA  margin %

6.8 %


18.4 %


13.6 %




5.6 %












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 %












Three Months Ended October 1, 2021


Video


Broadband


Total Segment
Measures

(non-GAAP)


Adjustments (1)


Consolidated
GAAP
Measures

Net revenue

$        68,729


$        57,592


$      126,321


$                  —


$      126,321

Gross profit

42,534


24,165


66,699


(545)


66,154

Gross margin %

61.9 %


42.0 %


52.8 %




52.4 %

Adjusted EBITDA(2)

9,731


5,094


14,825


(13,295)


1,530

Adjusted EBITDA  margin %

14.2 %


8.8 %


11.7 %




1.2 %














Nine Months Ended September 30, 2022


Video


Broadband


Total Segment Measures

(non-GAAP)


Adjustments (1)


Consolidated
GAAP
Measures

Net revenue

$      205,881


$      254,742


$      460,623


$                  —


$      460,623

Gross profit

124,679


107,290


231,969


(1,782)


230,187

Gross margin %

60.6 %


42.1 %


50.4 %




50.0 %

Adjusted EBITDA(2)

21,868


38,116


59,984


(37,933)


22,051

Adjusted EBITDA margin %

10.6 %


15.0 %


13.0 %




4.8 %












Nine Months Ended October 1, 2021


Video


Broadband


Total Segment
Measures

(non-GAAP)


Adjustments (1)


Consolidated
GAAP
Measures

Net revenue

$      202,415


$      148,930


$      351,345


$                  —


$      351,345

Gross profit

118,879


65,111


183,990


(2,186)


181,804

Gross margin %

58.7 %


43.7 %


52.4 %




51.7 %

Adjusted EBITDA(2)

19,243


14,237


33,480


(40,083)


(6,603)

Adjusted EBITDA margin %

9.5 %


9.6 %


9.5 %




(1.9) %

 

(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 September 30, 2022


Revenue


Gross Profit


Total
Operating
Expense


Income from
Operations


Total Non-
operating
Expense, net


Net Income

GAAP

$      155,738


$     78,604


$     67,180


$     11,424


$        (1,402)


$       8,740

Stock-based compensation


607


(5,853)


6,460



6,460

Restructuring and related charges


(9)


(335)


326



326

Non-cash interest and other expenses related to convertible notes





303


303

Discrete tax items and tax effect of non-GAAP adjustments






(942)

Total adjustments


598


(6,188)


6,786


303


6,147

Non-GAAP

$      155,738


$     79,202


$    60,992


$     18,210


$        (1,099)


$     14,887

As a % of revenue (GAAP)



50.5 %


43.1 %


7.3 %


(0.9) %


5.6 %

As a % of revenue (Non-GAAP)



50.9 %


39.2 %


11.7 %


(0.7) %


9.6 %

Diluted net income per share:












GAAP











$        0.08

Non-GAAP











$        0.13

Shares used in per share calculation:












GAAP and Non-GAAP











113,185

 


Three Months Ended July 1, 2022


Revenue


Gross Profit


Total
Operating
Expense


Income from
Operations


Total Non-
operating
Expense
(Income), net


Net Income

GAAP

$      157,446


$     82,401


$     67,319


$     15,082


$         2,880


$     14,840

Stock-based compensation


557


(5,018)


5,575



5,575

Restructuring and related charges


114


(631)


745



745

Gain on sale of equity investment





(4,349)


(4,349)

Non-cash interest and other expenses related to convertible notes





299


299

Discrete tax items and tax effect of non-GAAP adjustments






492

Total adjustments


671


(5,649)


6,320


(4,050)


2,762

Non-GAAP

$      157,446


$     83,072


$    61,670


$     21,402


$        (1,170)


$     17,602

As a % of revenue (GAAP)



52.3 %


42.8 %


9.6 %


1.8 %


9.4 %

As a % of revenue (Non-GAAP)



52.8 %


39.2 %


13.6 %


(0.7) %


11.2 %

Diluted net income per share:












GAAP











$        0.14

Non-GAAP











$        0.16

Shares used in per share calculation:












GAAP and Non-GAAP











108,984

 


Three Months Ended October 1, 2021


Revenue


Gross Profit


Total
Operating
Expense


Income from
Operations


Total Non-
operating
Expense, net


Net Income

GAAP

$      126,321


$     66,154


$     60,783


$       5,371


$        (2,899)


$       1,530

Stock-based compensation


545


(5,891)


6,436



6,436

Non-cash interest and other expenses related to convertible notes





1,592


1,592

Discrete tax items and tax effect of non-GAAP adjustments






(108)

Total adjustments


545


(5,891)


6,436


1,592


7,920

Non-GAAP

$      126,321


$     66,699


$    54,892


$     11,807


$        (1,307)


$       9,450

As a % of revenue (GAAP)



52.4 %


48.1 %


4.3 %


(2.3) %


1.2 %

As a % of revenue (Non-GAAP)



52.8 %


43.5 %


9.3 %


(1.0) %


7.5 %

Diluted net income per share:












GAAP











$        0.01

Non-GAAP











$        0.09

Shares used in per share calculation:












GAAP and Non-GAAP











106,421

 


Nine Months Ended September 30, 2022


Revenue


Gross Profit


Total
Operating
Expense


Income from
Operations


Total Non-
operating
Income
(Expense), net


Net Income

GAAP

$      460,623


$   230,187


$   201,145


$     29,042


$            107


$     22,051

Stock-based compensation


1,691


(17,930)


19,621



19,621

Restructuring and related charges


91


(2,136)


2,227



2,227

Gain on sale of equity investment





(4,349)


(4,349)

Non-cash interest and other expenses related to convertible notes





899


899

Discrete tax items and tax effect of non-GAAP adjustments






917

Total adjustments


1,782


(20,066)


21,848


(3,450)


19,315

Non-GAAP

$      460,623


$   231,969


$   181,079


$     50,890


$        (3,343)


$     41,366

As a % of revenue (GAAP)



50.0 %


43.7 %


6.3 %


— %


4.8 %

As a % of revenue (Non-GAAP)



50.4 %


39.3 %


11.0 %


(0.7) %


9.0 %

Diluted net income per share:












GAAP











$        0.20

Non-GAAP











$        0.37

Shares used in per share calculation:












GAAP and Non-GAAP











110,911

 


Nine Months Ended October 1, 2021


Revenue


Gross Profit


Total
Operating
Expense


Income from
Operations


Total Non-
operating
Expense, net


Net Income
(Loss)

GAAP

$      351,345


$   181,804


$   178,141


$       3,663


$        (7,260)


$     (6,603)

Stock-based compensation


1,840


(17,027)


18,867



18,867

Amortization of intangibles



(507)


507



507

Restructuring and related charges


346


(43)


389



389

Non-cash interest and other expenses related to convertible notes





4,684


4,684

Discrete tax items and tax effect of non-GAAP adjustments






922

Total adjustments


2,186


(17,577)


19,763


4,684


25,369

Non-GAAP

$      351,345


$   183,990


$   160,564


$     23,426


$        (2,576)


$     18,766

As a % of revenue (GAAP)



51.7 %


50.7 %


1.0 %


(2.1) %


(1.9) %

As a % of revenue (Non-GAAP)



52.4 %


45.7 %


6.7 %


(0.7) %


5.3 %

Diluted net income (loss) per share:












GAAP











$       (0.07)

Non-GAAP











$        0.18

Shares used in per share calculation:












GAAP











101,057

Non-GAAP











104,474

 

Harmonic Inc.

Preliminary Adjusted EBITDA Reconciliation (Unaudited)

(In thousands)



Three Months Ended


September 30, 2022


July 1, 2022


October 1, 2021

Net income - GAAP

$                     8,740


$                   14,840


$                     1,530

Provision for income taxes

1,282


3,122


942

Interest expense, net

1,284


1,394


2,686

Depreciation

3,097


3,017


3,231

EBITDA

14,403


22,373


8,389







Adjustments






Stock-based compensation

6,460


5,575


6,436

Restructuring and related charges

326


745


Gain on sale of equity investment


(4,349)


Adjusted EBITDA

$                   21,189


$                   24,344


$                   14,825

 


Nine Months Ended


September 30, 2022


October 1, 2021

Net income (loss) - GAAP

$                   22,051


$                   (6,603)

Provision for income taxes

7,098


3,006

Interest expense, net

4,111


7,919

Depreciation

9,225


9,395

Amortization of intangibles


507

EBITDA

42,485


14,224





Adjustments




Stock-based compensation

19,621


18,867

Restructuring and related charges

2,227


389

Gain on sale of equity investment

(4,349)


Adjusted EBITDA

$                   59,984


$                   33,480

 

Harmonic Inc.

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

(In millions, except percentages and per share data)



Q4 2022 Financial Guidance (1)


Revenue


Gross Profit


Total Operating
Expense


Net Income

GAAP

$   151

to

$   165


$     77

to

$     87


$     66

to

$     68


$       7

to

$     13

Stock-based compensation expense



(5)


6

Restructuring and related charges




Non-cash interest and other expenses related to convertible notes




Tax effect of non-GAAP adjustments




to

1

Total adjustments