Press Release

Harmonic Announces Third Quarter 2023 Results

October 30, 2023

Video SaaS revenue up 42% year over year

SAN JOSE, Calif., Oct. 30, 2023 /PRNewswire/ -- Harmonic Inc. (NASDAQ: HLIT) today announced its unaudited results for the third quarter of 2023.

"Today we reported third quarter results that were within our guidance range, despite the challenging macro-economic and carrier spending environment," said Patrick Harshman, president and chief executive officer of Harmonic. "Based on our strong backlog, our customers' multi-year growth plans, and the increasingly differentiated competitive position of our technologies and services, we remain confident in our mid- and long-term growth prospects."

Q3 Financial and Business Highlights

Financial

  • Revenue: $127.2 million, compared to $155.7 million in the prior year period
    • Broadband segment revenue: $75.8 million, compared to $91.9 million in the prior year period
    • Video segment revenue: $51.4 million, compared to $63.8 million in the prior year period
  • Gross margin: GAAP 48.5% and non-GAAP 49.5%, compared to GAAP 50.5% and non-GAAP 50.9% in the prior year period
    • Broadband segment non-GAAP gross margin: 44.5% compared to 45.0% in the prior year period
    • Video segment non-GAAP gross margin: 56.9% compared to 59.3% in the prior year period
  • Operating income (loss): GAAP loss $8.6 million and non-GAAP income $0.1 million, compared to GAAP income $11.4 million and non-GAAP income $18.2 million in the prior year period
  • Net income (loss): GAAP net loss $6.5 million and non-GAAP net income of $0.0 million, compared to GAAP net income $8.7 million and non-GAAP net income $14.9 million in the prior year period
  • Non-GAAP adjusted EBITDA: $3.5 million income compared to $21.2 million income in the prior year period
  • Net income (loss) per share: GAAP net loss per share of $0.06 and non-GAAP net income per share of $0.00, compared to GAAP net income per share of $0.08 and non-GAAP net income per share of $0.13 in the prior year period
  • Cash: $75.6 million, down $29.7 million year over year

Business

  • cOS™ solution (formerly CableOS®) commercially deployed with 104 customers, serving 23.5 million cable modems
  • cOS™ leadership extended to DOCSIS 4.0 through ground-breaking unification of full duplex, extended spectrum and 10G fiber and world-first DOCSIS 4.0 customer rollout
  • Recently launched Pier optical line terminal (OLT) shelf expands addressable fiber to the home market
  • Live sports streaming SaaS expansions and new wins drove 42% Video SaaS revenue growth year over year

Video Business Review

After careful consideration of the growth opportunities in both our Broadband business and Video SaaS business, and our capital allocation priorities over the next several years, we have initiated a formal strategic review process for our Video business. Together with financial and legal advisors, we are assessing a range of alternatives for the Video business to better position Harmonic for long-term shareholder value creation. As part of this process, we have received indications of interest in our Video business from a number of parties over the past several months. Since the strategic review may cause some disruption to the business, we are conservatively guiding our Video business for Q4 2023.

Please note that no timetable has been established for the completion of the review, and the review may not result in any transaction. We do not intend to disclose further developments with respect to the review process unless and until our board of directors approves a specific transaction or otherwise concludes its review.

Select Financial Information



GAAP


Non-GAAP

Key Financial Results


Q3 2023


Q2 2023


Q3 2022


Q3 2023


Q2 2023


Q3 2022



(Unaudited, in millions, except per share data)

Net revenue


$         127.2


$         156.0


$         155.7


*


*


*

Net income (loss)


$           (6.5)


$             1.6


$             8.7


$              —


$           14.0


$           14.9

Net income (loss) per share


$         (0.06)


$           0.01


$           0.08


$           0.00


$           0.12


$           0.13










Other Financial Information

Q3 2023


Q2 2023


Q3 2022


(Unaudited, in millions)

Adjusted EBITDA for the quarter (1)

$             3.5


$           21.1


$           21.2

Bookings for the quarter

$           96.3


$         194.7


$         171.1

Backlog and deferred revenue as of quarter end

$         627.2


$         663.8


$         490.1

Cash and cash equivalents as of quarter end

$           75.6


$           71.0


$         105.3


(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 


 Q4 2023 GAAP Financial Guidance (1)

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

Low


High

Video


Broadband


Total GAAP


Video


Broadband


Total GAAP

Net revenue

$                  45


$                105


$             150


$                  55


$                120


$             175

Gross margin %





48.0 %






49.3 %

Gross profit





$               72






$               86

Operating expenses





$               70






$               73

Operating income





$                 2






$               13

Tax rate





113 %






113 %

Net income (loss) per share





$               —






$          (0.02)

Shares





112.3






112.3

Cash





$               80






$               95



 2023 GAAP Financial Guidance (1)

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

Low


High

Video


Broadband


Total GAAP


Video


Broadband


Total GAAP

Net revenue

$                213


$                378


$             591


$                223


$                393


$             616

Gross margin %





51.2 %






51.5 %

Gross profit





$             303






$             317

Operating expenses





$             289






$             292

Operating income





$               14






$               25

Tax rate





113 %






113 %

Net loss per share





$           (0.02)






$           (0.03)

Shares





111.6






111.6

Cash





$               80






$               95



Q4 2023 Non-GAAP Financial Guidance (1)

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

Low


High

Video


Broadband


Total


Video


Broadband


Total

Gross margin %

59.0 %


44.0 %


48.5 %


60.0 %


45.0 %


49.7 %

Gross profit

$               27


$               46


$               73


$               33


$               54


$               87

Operating expenses

$               33


$               29


$               62


$               35


$               30


$               65

Adjusted EBITDA(2)

$                (5)


$               19


$               14


$                (1)


$               26


$               25

Tax rate (3)





20 %






20 %

Net income per share (3)





$            0.07






$            0.14

Shares (3)





117.1






117.1

Cash (3)





$               80






$               95


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

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

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

 


 2023 Non-GAAP Financial Guidance (1)

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

Low


High

Video


Broadband


Total


Video


Broadband


Total

Gross margin %

59.6 %


47.4 %


51.8 %


59.8 %


47.6 %


52.0 %

Gross profit

$             127


$             179


$             306


$             133


$             187


$             320

Operating expenses

$             141


$             118


$             259


$             143


$             119


$             262

Adjusted EBITDA(2)

$                (9)


$               68


$               59


$                (4)


$               75


$               71

Tax rate (3)





20 %






20 %

Net income per share (3)





$            0.30






$            0.38

Shares (3)





117.7






117.7

Cash (3)





$               80






$               95


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

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

(3) 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 30, 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/BI3094cc53b0c547deb5d7702f14fd72f8. 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, 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™ (formerly 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), 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 per share data)



September 29, 2023


December 31, 2022

ASSETS




Current assets:




   Cash and cash equivalents

$                      75,622


$                      89,586

Short-term investments

6,305


   Accounts receivable, net

110,345


108,427

   Inventories

103,748


120,949

   Prepaid expenses and other current assets

33,117


26,337

Total current assets

329,137


345,299

Property and equipment, net

36,960


39,814

Operating lease right-of-use assets

21,604


25,469

Goodwill

237,161


237,739

Other non-current assets

48,949


61,697

Total assets

$                    673,811


$                    710,018





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Convertible debt, current

$                    114,654


$                    113,981

Other debts, current

4,820


4,756

Accounts payable

47,123


67,455

Deferred revenue

56,325


62,383

Operating lease liabilities, current

6,511


6,773

Other current liabilities

45,786


66,724

Total current liabilities

275,219


322,072

Other debts, non-current

9,992


11,161

Operating lease liabilities, non-current

20,019


24,110

Other non-current liabilities

27,781


28,169

Total liabilities

333,011


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; 112,171 and 109,871
shares issued and outstanding at September 29, 2023 and December 31, 2022,
respectively

112


110

Additional paid-in capital

2,399,282


2,380,651

Accumulated deficit

(2,046,416)


(2,046,569)

Accumulated other comprehensive loss

(12,178)


(9,686)

Total stockholders' equity

340,800


324,506

Total liabilities and stockholders' equity

$                    673,811


$                    710,018

 

Harmonic Inc. 

Preliminary Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except per share data)



Three Months Ended


Nine Months Ended


September 29, 2023


September 30, 2022


September 29, 2023


September 30, 2022

Revenue:








Appliance and integration

$                      84,760


$                    116,441


$                  310,681


$                  351,293

SaaS and service

42,443


39,297


130,134


109,330

Total net revenue

127,203


155,738


440,815


460,623

Cost of revenue:








Appliance and integration

48,992


64,932


166,177


193,655

SaaS and service

16,527


12,202


43,960


36,781

Total cost of revenue

65,519


77,134


210,137


230,436

Total gross profit

61,684


78,604


230,678


230,187

Operating expenses:








Research and development

30,316


30,466


96,030


89,219

Selling, general and administrative

39,245


36,379


121,300


109,790

Restructuring and related charges

726


335


809


2,136

Total operating expenses

70,287


67,180


218,139


201,145

Income (loss) from operations

(8,603)


11,424


12,539


29,042

Interest expense, net

(619)


(1,284)


(2,125)


(4,111)

Other income (expense), net

343


(118)


(86)


4,218

Income (loss) before income taxes

(8,879)


10,022


10,328


29,149

Provision for (benefit from) income taxes

(2,384)


1,282


10,175


7,098

Net income (loss)

$                      (6,495)


$                        8,740


$                         153


$                    22,051









Net income (loss) per share:








Basic

$                        (0.06)


$                          0.08


$                           —


$                        0.21

Diluted

$                        (0.06)


$                          0.08


$                           —


$                        0.20

Weighted average shares outstanding:








Basic

112,031


105,228


111,431


104,617

Diluted

112,031


113,185


117,910


110,911

 

Harmonic Inc.

Preliminary Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)



Nine Months Ended


September 29, 2023


September 30, 2022

Cash flows from operating activities:




Net income

$                           153


$                      22,051

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




Depreciation

9,178


9,225

Stock-based compensation

20,724


19,621

Amortization of convertible debt discount

673


897

Amortization of warrant

870


1,298

Foreign currency remeasurement

(814)


(3,312)

Deferred income taxes, net

2,026


1,798

Provision for expected credit losses and returns

1,790


1,835

Provision for excess and obsolete inventories

6,514


4,521

Gain on sale of investment in equity securities


(4,370)

Other adjustments

146


419

Changes in operating assets and liabilities:




Accounts receivable

(4,348)


(22,115)

Inventories

14,532


(34,952)

Other assets

6,164


(10,371)

Accounts payable

(20,606)


1,305

Deferred revenues

(8,312)


(955)

Other liabilities

(27,898)


(770)

Net cash provided by (used in) operating activities

792


(13,875)

Cash flows from investing activities:




Purchases of short-term investments

(6,305)


Proceeds from sale of investment


7,962

Purchases of property and equipment

(5,749)


(7,389)

Net cash provided by (used in) investing activities

(12,054)


573

Cash flows from financing activities:




Repurchase of common stock


(5,133)

Proceeds from other debts

3,829


3,499

Repayment of other debts

(4,721)


(4,480)

Proceeds from common stock issued to employees

6,552


6,129

Taxes paid related to net share settlement of equity awards

(8,643)


(5,014)

Net cash used in financing activities

(2,983)


(4,999)

Effect of exchange rate changes on cash and cash equivalents

281


(9,850)

Net decrease in cash and cash equivalents

(13,964)


(28,151)

Cash and cash equivalents at beginning of period

89,586


133,431

Cash and cash equivalents at end of period

$                      75,622


$                    105,280

 

Harmonic Inc.

Preliminary GAAP Revenue Information

(Unaudited, in thousands, except percentages)



Three Months Ended


September 29, 2023


June 30, 2023


September 30, 2022

Geography









Americas

$           91,221

72 %


$         111,407

72 %


$         106,467

68 %

EMEA

28,465

22 %


36,242

23 %


38,444

25 %

APAC

7,517

6 %


8,314

5 %


10,827

7 %

Total

$         127,203

100 %


$         155,963

100 %


$         155,738

100 %










Market









Service Provider

$           87,747

69 %


$         108,703

70 %


$         106,974

69 %

Broadcast and Media

39,456

31 %


47,260

30 %


48,764

31 %

Total

$         127,203

100 %


$         155,963

100 %


$         155,738

100 %























Nine Months Ended





September 29, 2023


September 30, 2022

Geography









Americas




$         318,294

72 %


$         327,231

71 %

EMEA




97,648

22 %


103,845

23 %

APAC




24,873

6 %


29,547

6 %

Total




$         440,815

100 %


$         460,623

100 %










Market









Service Provider




$         314,439

71 %


$         298,046

65 %

Broadcast and Media




126,376

29 %


162,577

35 %

Total




$         440,815

100 %


$         460,623

100 %

 

Harmonic Inc.

Preliminary Segment Information

(Unaudited, in thousands, except percentages)



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 June 30, 2023


Video



Broadband



Total Segment
Measures



Adjustments (1)


Consolidated
GAAP
Measures

Net revenue

$        58,867



$        97,096



$      155,963



$                  —


$      155,963

Gross profit

36,303

(1)


49,076

(1)


85,379

(1)


(439)


84,940

Gross margin %

61.7 %

(1)


50.5 %

(1)


54.7 %

(1)




54.5 %















Three Months Ended September 30, 2022


Video



Broadband



Total Segment
Measures



Adjustments (1)


Consolidated
GAAP
Measures

Net revenue

$        63,824



$        91,914



$      155,738



$                  —


$      155,738

Gross profit

37,859

(1)


41,343

(1)


79,202

(1)


(598)


78,604

Gross margin %

59.3 %

(1)


45.0 %

(1)


50.9 %

(1)




50.5 %















Nine Months Ended September 29, 2023


Video



Broadband



Total Segment
Measures



Adjustments (1)


Consolidated
GAAP
Measures

Net revenue

$      167,562



$      273,253



$      440,815



$                  —


$      440,815

Gross profit

100,158

(1)


133,129

(1)


233,287

(1)


(2,609)


230,678

Gross margin %

59.8 %

(1)


48.7 %

(1)


52.9 %

(1)




52.3 %















Nine Months Ended September 30, 2022


Video



Broadband



Total Segment
Measures



Adjustments (1)


Consolidated
GAAP
Measures

Net revenue

$      205,881



$      254,742



$      460,623



$                  —


$      460,623

Gross profit

124,679

(1)


107,290

(1)


231,969

(1)


(1,782)


230,187

Gross margin %

60.6 %

(1)


42.1 %

(1)


50.4 %

(1)




50.0 %


(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 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 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 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



Nine Months Ended September 29, 2023


Revenue


Gross Profit


Total
Operating
Expense


Income from
Operations


Total Non-
operating
Expense, net


Net Income

GAAP

$      440,815


$   230,678


$   218,139


$     12,539


$        (2,211)


$         153

Stock-based compensation


1,895


(18,829)


20,724



20,724

Restructuring and related charges


714


(445)


1,159



1,159

Non-recurring advisory fees



(2,499)


2,499



2,499

Non-cash interest and other expenses related to convertible notes





672


672

Discrete tax items and tax effect of non-GAAP adjustments






3,099

Total adjustments


2,609


(21,773)


24,382


672


28,153

Non-GAAP

$      440,815


$   233,287


$   196,366


$     36,921


$        (1,539)


$     28,306

As a % of revenue (GAAP)



52.3 %


49.5 %


2.8 %


(0.5) %


— %

As a % of revenue (Non-GAAP)



52.9 %


44.5 %


8.4 %


(0.3) %


6.4 %

Diluted net income per share:












GAAP











$            —

Non-GAAP











$        0.24

Shares used in per share calculation:












GAAP and Non-GAAP











117,910



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

 

Harmonic Inc.

Calculation of Adjusted EBITDA by Segment (Unaudited)

(In thousands)



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 June 30, 2023


Video


Broadband

Income from operations (1)

$                        90


$                  18,066

Depreciation

1,388


1,671

Other non-operating expenses, net

(52)


(84)

Adjusted EBITDA(2)

1,426


19,653

Revenue

58,867


97,096

Adjusted EBITDA margin % (2)

2.4 %


20.2 %






Three Months Ended September 30, 2022


Video


Broadband

Income from operations (1)

$                    2,907


$                  15,303

Depreciation

1,467


1,630

Other non-operating expenses, net

(56)


(62)

Adjusted EBITDA(2)

4,318


16,871

Revenue

63,824


91,914

Adjusted EBITDA margin % (2)

6.8 %


18.4 %



Nine Months Ended September 29, 2023


Video


Broadband

Income (loss) from operations (1)

$                  (7,386)


$                  44,307

Depreciation

4,117


5,061

Other non-operating expenses, net

(42)


(44)

Adjusted EBITDA(2)

(3,311)


49,324

Revenue

167,562


273,253

Adjusted EBITDA margin % (2)

(2.0) %


18.1 %






Nine Months Ended September 30, 2022


Video


Broadband

Income from operations (1)

$                  17,317


$                  33,573

Depreciation

4,613


4,612

Other non-operating expenses, net

(62)


(69)

Adjusted EBITDA(2)

21,868


38,116

Revenue

205,881


254,742

Adjusted EBITDA margin % (2)

10.6 %


15.0 %


(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


September 29, 2023


June 30, 2023


September 30, 2022

Net income (loss) (GAAP)

$                (6,495)


$                  1,555


$                  8,740

Provision for (benefit from) income taxes

(2,384)


7,471


1,282

Interest expense, net

619


800


1,284

Depreciation

3,089


3,059


3,097

EBITDA

(5,171)


12,885


14,403







Adjustments






Stock-based compensation

7,241


6,059


6,460

Restructuring and related charges

1,076



326

Non-recurring advisory fees

364


2,135


Total consolidated segment adjusted EBITDA (Non-GAAP)

$                  3,510


$                21,079


$                21,189

Revenue

$              127,203


$              155,963


$              155,738

Net income (loss) margin (GAAP)

(5.1) %


1.0 %


5.6 %

Consolidated segment adjusted EBITDA margin (Non-GAAP)

2.8 %


13.5 %


13.6 %

 


Nine Months Ended


September 29, 2023


September 30, 2022

Net income (GAAP)

$                     153


$                22,051

Provision for income taxes

10,175


7,098

Interest expense, net

2,125


4,111

Depreciation

9,178


9,225

EBITDA

21,631


42,485





Adjustments




Stock-based compensation

20,724


19,621

Restructuring and related charges

1,159


2,227

Non-recurring advisory fees

2,499


Gain on sale of equity investment


(4,349)

Total consolidated segment adjusted EBITDA (Non-GAAP)