hlit-20230130
false000085131000008513102023-01-302023-01-30

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 8-K

 CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): January 30, 2023
  
HARMONIC INC.
(Exact name of Registrant as specified in its charter)
 
 
Delaware000-2582677-0201147
(State or other jurisdiction of
incorporation)
Commission
File Number
(IRS Employer
Identification No.)
2590 Orchard Parkway
San Jose, CA 95131
(Address of principal executive offices, including zip code)

(408542-2500
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareHLITNASDAQ Global Select Market
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐



Item 2.02.Results of Operations and Financial Condition.

On January 30, 2023, Harmonic Inc. (the “Company”) issued a press release regarding its preliminary unaudited financial results for the quarter and year ended December 31, 2022. In the press release, Harmonic also announced that it would be holding a conference call on January 30, 2023 to discuss its financial results for the quarter and year ended December 31, 2022. A copy of the press release is furnished as Exhibit 99.1 hereto, and the information in Exhibit 99.1 is incorporated herein by reference.
The information in this Item 2.02 of this Current Report on Form 8-K and Exhibit 99.1 attached hereto is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, and this Item 2.02 of this Current Report on Form 8-K and Exhibit 99.1 furnished herewith shall not be incorporated by reference into any filing by Harmonic under the Securities Act of 1933, as amended (the “Securities Act”), or under the Exchange Act.



Item 9.01.Financial Statements and Exhibits.
(d)Exhibits.
Exhibit
Number
  Description
99.1  
104Cover Page Interactive Data File (embedded within the Inline XBRL document)




SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
Date: January 30, 2023  HARMONIC INC.
By:/s/ Sanjay Kalra
   Sanjay Kalra
   Chief Financial Officer



Document

Exhibit 99.1
https://cdn.kscope.io/7996af5f720c0ea5074295dec6e0956e-logopra07a.jpg
https://cdn.kscope.io/7996af5f720c0ea5074295dec6e0956e-pressreleasea29a.jpg
FOR IMMEDIATE RELEASE
Harmonic Announces Fourth Quarter and Fiscal 2022 Results
Record quarterly total revenue of $164.3 million
Broadband revenue up 38% and Video SaaS revenue up 51% year over year
SAN JOSE, California, January 30, 2023 - Harmonic Inc. (NASDAQ: HLIT) today announced its unaudited results for the fourth quarter and fiscal year ended December 31, 2022.
“Harmonic delivered a strong finish to the year, including record quarterly revenue, and solid gross margins and operating profit in both our Broadband and Video segments,” said Patrick Harshman, president and chief executive officer of Harmonic. “Top-line growth for the quarter was led by Broadband segment revenue growth of 38% and a 51% increase in Video SaaS revenue. As we enter 2023, demand and competitive differentiation remains strong for both our Broadband and Video SaaS solutions, reflected in our substantial backlog and deferred revenue.”
Q4 Financial and Business Highlights
Financial
Revenue: $164.3 million, up 5.5% year over year
Broadband segment revenue: $96.0 million, up 37.7% year over year
Video segment revenue: $68.3 million, down 20.7% year over year
Gross margin: GAAP 52.1% and non-GAAP 52.7%, compared to GAAP 50.0% and non-GAAP 50.5% in the year ago period
Broadband segment gross margin: 47.6% compared to 40.3% in the year ago period
Video segment gross margin: 59.9% compared to 58.8% in the year ago period
Operating income: GAAP income $16.5 million and non-GAAP income $23.7 million, compared to GAAP income $15.1 million and non-GAAP income $20.6 million in the year ago period
Net income: GAAP net income $6.1 million and non-GAAP net income of $19.9 million, compared to GAAP net income $19.9 million and non-GAAP net income $17.6 million in the year ago period
Adjusted EBITDA: $26.6 million income compared to $23.8 million income in the year ago period
EPS: GAAP net income per share of $0.05 and non-GAAP net income per share of $0.17, compared to GAAP net income per share of $0.18 and non-GAAP net income per share of $0.16 in the year ago period
Cash: $89.6 million, down $43.8 million year over year
Business
CableOS® solution commercially deployed with 91 customers, up 24.7% year over year
CableOS deployments scaled to 15.2 million served cable modems, up 218% year over year
Tier 1 live sports streaming SaaS expansion and new wins drove 51.3% Video SaaS revenue growth year over year

1


Select Financial Information
GAAPNon-GAAP
Key Financial ResultsQ4 2022Q3 2022Q4 2021Q4 2022Q3 2022Q4 2021
(in millions, except per share data)
Net revenue$164.3 $155.7 $155.8 $164.3 $155.7 $155.8 
Net income$6.1 $8.7 $19.9 $19.9 $14.9 $17.6 
EPS$0.05 $0.08 $0.18 $0.17 $0.13 $0.16 
Other Financial InformationQ4 2022Q3 2022Q4 2021
(in millions)
Adjusted EBITDA for the quarter$26.6 $21.2 $23.8 
Bookings for the quarter$130.2 $171.1 $267.3 
Backlog and deferred revenue as of quarter end$457.1 $490.1 $441.0 
Cash and cash equivalents as of quarter end$89.6 $105.3 $133.4 
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
 Q1 2023 GAAP Financial Guidance (1)
LowHigh
(Unaudited, in millions, except percentages and per share data)VideoBroadband
Adjustments (2)
Total
GAAP
VideoBroadband
Adjustments (2)
Total
GAAP
Net revenue$55 $97 $— $152 $60 $102 $— $162 
Gross margin %58.0 %45.0 %(0.7)%49.0 %59.0 %46.0 %(0.7)%50.1 %
Gross profit$32 $44 $(1)$75 $35 $47 $(1)$81 
Operating expenses$35 $29 $$72 $36 $30 $$74 
Operating income (loss)$(3)$15 $(9)$$(1)$17 $(9)$
Tax rate (3)
21.0 %21.0 %
EPS (3)
$0.01 $0.04 
Shares (3)
117.9117.9
Cash (3)
$75 $85 
(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.
2


 2023 GAAP Financial Guidance (1)
LowHigh
(Unaudited, in millions, except percentages and per share data)VideoBroadband
Adjustments (2)
Total GAAPVideoBroadband
Adjustments (2)
Total GAAP
Net revenue$250 $445 $— $695 $270 $465 $— $735 
Gross margin %58.5 %45.0 %(0.3)%49.5 %60.5 %46.0 %(0.3)%51.0 %
Gross profit$146 $200 $(3)$343 $163 $214 $(3)$374 
Operating expenses$140 $120 $27 $287 $144 $123 $27 $294 
Operating income$$80 $(30)$56 $19 $91 $(30)$80 
Tax rate (3)
21.0 %21.0 %
EPS (3)
$0.37 $0.53 
Shares (3)
118.3118.3
Cash (3)
$90 $100 

(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.
Q1 2023 Non-GAAP Financial Guidance (1)
LowHigh
(Unaudited, in millions, except percentages and per share data)VideoBroadbandTotal VideoBroadbandTotal
Net revenue$55 $97 $152 $60 $102 $162 
Gross margin %58.0 %45.0 %49.7 %59.0 %46.0 %50.8 %
Gross profit$32 $44 $76 $35 $47 $82 
Operating expenses$35 $29 $64 $36 $30 $66 
Adjusted EBITDA$(2)$16 $14 $$18 $19 
Tax rate (2)
20.0 %20.0 %
EPS (2)
$0.07 $0.10 
Shares (2)
117.9117.9
Cash (2)
$75 $85 
(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)
LowHigh
(Unaudited, in millions, except percentages and per share data)VideoBroadbandTotal VideoBroadbandTotal
Net revenue$250 $445 $695 $270 $465 $735 
Gross margin %58.5 %45.0 %49.8 %60.5 %46.0 %51.3 %
Gross profit$146 $200 $346 $163 $214 $377 
Operating expenses$140 $120 $260 $144 $123 $267 
Adjusted EBITDA$12 $86 $98 $25 $97 $122 
Tax rate (2)
20.0 %20.0 %
EPS (2)
$0.56 $0.72 
Shares (2)
118.3118.3
Cash (2)
$90 $100 

(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.
3


Conference Call Information
Harmonic will host a conference call to discuss its financial results at 2:00 p.m. PT (5:00 p.m. ET) on Monday, January 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/BIfc8a08fcfdfe403780548e7dd1215515. 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.
4


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.
CONTACTS:
Sanjay KalraDavid Hanover
Chief Financial OfficerInvestor Relations
Harmonic Inc.Harmonic Inc.
+1.408.490.6031+1.212.896.1220

 

5


Harmonic Inc.
Preliminary Condensed Consolidated Balance Sheets
(Unaudited, in thousands, except per share data)
 December 31, 2022December 31, 2021
ASSETS
Current assets:
   Cash and cash equivalents$89,586 $133,431 
   Accounts receivable, net108,427 88,529 
   Inventories120,949 71,195 
   Prepaid expenses and other current assets28,730 29,972 
Total current assets347,692 323,127 
Property and equipment, net39,814 42,721 
Operating lease right-of-use assets25,469 30,968 
Other non-current assets59,304 56,657 
Goodwill237,739 240,213 
Total assets$710,018 $693,686 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Convertible debt, current$113,981 $36,824 
Other debts, current4,756 4,992 
Accounts payable67,455 64,429 
Deferred revenue62,383 57,226 
Operating lease liabilities, current6,773 7,346 
Other current liabilities66,724 53,644 
Total current liabilities322,072 224,461 
Convertible debt, non-current— 98,941 
Other debts, non-current11,161 12,989 
Operating lease liabilities, non-current24,110 29,120 
Other non-current liabilities28,169 31,379 
Total liabilities$385,512 $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; 109,871 and 102,959 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively
110 103 
Additional paid-in capital2,380,651 2,387,039 
Accumulated deficit(2,046,569)(2,087,957)
Accumulated other comprehensive loss(9,686)(3,272)
Total stockholders’ equity324,506 295,913 
Total liabilities and stockholders’ equity$710,018 $693,686 

6


Harmonic Inc.
Preliminary Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share data)
 Three Months EndedYear Ended
 December 31, 2022December 31, 2021December 31, 2022December 31, 2021
Revenue:
Appliance and integration$122,513 $119,340 $473,806 $369,767 
SaaS and service41,821 36,464 151,151 137,382 
Total net revenue164,334 155,804 624,957 507,149 
Cost of revenue:
Appliance and integration65,372 65,135 259,027 195,445 
SaaS and service13,265 12,731 50,046 51,962 
Total cost of revenue78,637 77,866 309,073 247,407 
Total gross profit85,697 77,938 315,884 259,742 
Operating expenses:
Research and development31,088 27,368 120,307 102,231 
Selling, general and administrative36,927 35,357 146,717 138,085 
Amortization of intangibles— — — 507 
Restructuring and related charges1,205 67 3,341 110 
Total operating expenses69,220 62,792 270,365 240,933 
Income from operations16,477 15,146 45,519 18,809 
Interest expense, net(929)(2,706)(5,040)(10,625)
Other income (expense), net(212)28 4,006 687 
Income before income taxes15,336 12,468 44,485 8,871 
Provision for (benefit from) income taxes9,205 (7,389)16,303 (4,383)
Net income$6,131 $19,857 $28,182 $13,254 
Net income per share:
Basic$0.06 $0.19 $0.27 $0.13 
Diluted$0.05 $0.18 $0.25 $0.12 
Weighted average shares outstanding:
Basic106,988 102,768 105,080 101,484 
Diluted117,301 110,474 112,378 106,171 

7


Harmonic Inc.
Preliminary Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
 Year Ended
 December 31, 2022December 31, 2021
Cash flows from operating activities:
Net income $28,182 $13,254 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation12,260 12,546 
Amortization of intangibles— 507 
Stock-based compensation25,212 24,056 
Amortization of convertible debt discount1,171 6,308 
Amortization of warrant1,734 1,741 
Foreign currency remeasurement(2,685)(5,126)
Deferred income taxes5,043 (6,197)
Provision for expected credit losses and returns1,954 4,142 
Provision for excess and obsolete inventories5,988 3,460 
Gains on sale of investment in equity securities(4,370)— 
Other adjustments513 181 
Changes in operating assets and liabilities:
Accounts receivable(23,136)(26,722)
Inventories(54,431)(39,338)
Other assets(8,551)(3,096)
Accounts payable5,837 42,303 
Deferred revenues2,610 15,014 
Other liabilities8,145 (2,016)
Net cash provided by operating activities5,476 41,017 
Cash flows from investing activities:
Proceeds from sale of investment7,962 — 
Purchases of property and equipment(9,250)(12,975)
Net cash used in investing activities(1,288)(12,975)
Cash flows from financing activities:
Payment of convertible debt(37,707)— 
Proceeds from other debts3,499 3,861 
Repayment of other debts(4,583)(6,169)
Repurchase of common stock(5,133)— 
Proceeds from common stock issued to employees7,092 12,311 
Taxes paid related to net share settlement of equity awards(6,301)(2,064)
Net cash provided by (used in) financing activities(43,133)7,939 
Effect of exchange rate changes on cash and cash equivalents (4,900)(1,195)
Net increase (decrease) in cash and cash equivalents (43,845)34,786 
Cash and cash equivalents at beginning of period133,431 98,645 
Cash and cash equivalents at end of period$89,586 $133,431 

8


Harmonic Inc.
Preliminary GAAP Revenue Information
(Unaudited, in thousands, except percentages)
Three Months Ended
December 31, 2022September 30, 2022December 31, 2021
Geography
Americas$125,638 76 %$106,467 68 %$102,929 66 %
EMEA29,250 18 %38,444 25 %40,096 26 %
APAC9,446 %10,827 %12,779 %
Total$164,334 100 %$155,738 100 %$155,804 100 %
Market
Service Provider$110,092 67 %$106,974 69 %$87,263 56 %
Broadcast and Media54,242 33 %48,764 31 %68,541 44 %
Total$164,334 100 %$155,738 100 %$155,804 100 %
Twelve Months Ended
December 31, 2022December 31, 2021
Geography
Americas$452,869 73 %$335,731 66 %
EMEA133,095 21 %126,427 25 %
APAC38,993 %44,991 %
Total$624,957 100 %$507,149 100 %
Market
Service Provider$408,138 65 %$280,009 55 %
Broadcast and Media216,819 35 %227,140 45 %
Total$624,957 100 %$507,149 100 %


9


Harmonic Inc.
Preliminary Segment Information
(Unaudited, in thousands, except percentages)
Three Months Ended December 31, 2022
VideoBroadbandTotal Segment Measures
(non-GAAP)
Adjustments (1)
Consolidated GAAP Measures
Net revenue$68,308 $96,026 $164,334 $— $164,334 
Gross profit40,939 45,741 86,680 (983)85,697 
Gross margin %59.9 %47.6 %52.7 %52.1 %
Adjusted EBITDA(2)
6,350 20,205 26,555 (20,424)6,131 
Adjusted EBITDA margin %9.3 %21.0 %16.2 %3.7 %
Three Months Ended September 30, 2022
VideoBroadbandTotal Segment Measures
(non-GAAP)
Adjustments (1)
Consolidated GAAP Measures
Net revenue$63,824 $91,914 $155,738 $— $155,738 
Gross profit37,859 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 December 31, 2021
VideoBroadbandTotal Segment Measures
(non-GAAP)
Adjustments (1)
Consolidated GAAP Measures
Net revenue$86,092 $69,712 $155,804 $— $155,804 
Gross profit50,589 28,080 78,669 (731)77,938 
Gross margin %58.8 %40.3 %50.5 %50.0 %
Adjusted EBITDA(2)
17,105 6,707 23,812 (3,955)19,857 
Adjusted EBITDA margin %19.9 %9.6 %15.3 %12.7 %
Twelve Months Ended December 31, 2022
VideoBroadbandTotal Segment Measures
(non-GAAP)
Adjustments (1)
Consolidated GAAP Measures
Net revenue$274,189 $350,768 $624,957 $— $624,957 
Gross profit165,618 153,031 318,649 (2,765)315,884 
Gross margin %60.4 %43.6 %51.0 %50.5 %
Adjusted EBITDA(2)
28,218 58,321 86,539 (58,357)28,182 
Adjusted EBITDA margin %10.3 %16.6 %13.8 %4.5 %
Twelve Months Ended December 31, 2021
VideoBroadbandTotal Segment Measures
(non-GAAP)
Adjustments (1)
Consolidated GAAP Measures
Net revenue$288,507 $218,642 $507,149 $— $507,149 
Gross profit169,468 93,191 262,659 (2,917)259,742 
Gross margin %58.7 %42.6 %51.8 %51.2 %
Adjusted EBITDA(2)
36,348 20,944 57,292 (44,038)13,254 
Adjusted EBITDA margin %12.6 %9.6 %11.3 %2.6 %
(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.
10


Harmonic Inc.
GAAP to Non-GAAP Reconciliations (Unaudited)
(in thousands, except percentages and per share data)
Three Months Ended December 31, 2022
RevenueGross ProfitTotal Operating ExpenseIncome from OperationsTotal Non-operating Expense, netNet Income
GAAP$164,334 $85,697 $69,220 $16,477 $(1,141)$6,131 
Stock-based compensation— 541 (5,050)5,591 — 5,591 
Restructuring and related charges— 442 (1,205)1,647 17 1,664 
Non-cash interest and other expenses related to convertible notes— — — — 274 274 
Discrete tax items and tax effect of non-GAAP adjustments— — — — — 6,233 
Total adjustments— 983 (6,255)7,238 291 13,762 
Non-GAAP $164,334 $86,680 $62,965 $23,715 $(850)$19,893 
As a % of revenue (GAAP)52.1 %42.1 %10.0 %(0.7)%3.7 %
As a % of revenue (Non-GAAP)52.7 %38.3 %14.4 %(0.5)%12.1 %
Diluted net income per share:
GAAP$0.05 
Non-GAAP$0.17 
Shares used in per share calculation:
GAAP and Non-GAAP117,301 
Three Months Ended September 30, 2022
RevenueGross ProfitTotal Operating ExpenseIncome from OperationsTotal Non-operating Expense, netNet 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-GAAP113,185 
11


Three Months Ended December 31, 2021
RevenueGross ProfitTotal Operating ExpenseIncome from OperationsTotal Non-operating expense, netNet Income
GAAP$155,804 $77,938 $62,792 $15,146 $(2,678)$19,857 
Stock-based compensation— 506 (4,689)5,195 — 5,195 
Restructuring and related charges— 225 (67)292 — 292 
Non-cash interest and other expenses related to convertible notes— — — — 1,621 1,621 
Discrete tax items and tax effect of non-GAAP adjustments— — — — — (9,347)
Total adjustments— 731 (4,756)5,487 1,621 (2,239)
Non-GAAP $155,804 $78,669 $58,036 $20,633 $(1,057)$17,618 
As a % of revenue (GAAP)50.0 %40.3 %9.7 %(1.7)%12.7 %
As a % of revenue (Non-GAAP)50.5 %37.2 %13.2 %(0.7)%11.3 %
Diluted net income per share:
GAAP$0.18 
Non-GAAP$0.16 
Shares used in per share calculation:
GAAP and Non-GAAP110,474 
Twelve Months Ended December 31, 2022
RevenueGross ProfitTotal Operating ExpenseIncome from OperationsTotal Non-operating expense, netNet Income
GAAP$624,957 $315,884 $270,365 $45,519 $(1,034)$28,182 
Stock-based compensation— 2,232 (22,980)25,212 — 25,212 
Restructuring and related charges— 533 (3,341)3,874 17 3,891 
Gain on sale of equity investments— — — — (4,349)(4,349)
Non-cash interest and other expenses related to convertible notes— — — — 1,173 1,173 
Discrete tax items and tax effect of non-GAAP adjustments— — — — — 7,149 
Total adjustments— 2,765 (26,321)29,086 (3,159)33,076 
Non-GAAP $624,957 $318,649 $244,044 $74,605 $(4,193)$61,258 
As a % of revenue (GAAP)50.5 %43.3 %7.3 %(0.2)%4.5 %
As a % of revenue (Non-GAAP)51.0 %39.0 %11.9 %(0.7)%9.8 %
Diluted net income per share:
GAAP$0.25 
Non-GAAP$0.55 
Shares used in per share calculation:
GAAP and Non-GAAP112,378 
12


Twelve Months Ended December 31, 2021
RevenueGross ProfitTotal Operating ExpenseIncome from OperationsTotal Non-operating expense, netNet Income
GAAP$507,149 $259,742 $240,933 $18,809 $(9,938)$13,254 
Stock-based compensation— 2,346 (21,716)24,062 — 24,062 
Amortization of intangibles— — (507)507 — 507 
Restructuring and related charges— 571 (110)681 — 681 
Non-cash interest and other expenses related to convertible notes— — — — 6,305 6,305 
Discrete tax items and tax effect of non-GAAP adjustments— — — — — (8,425)
Total adjustments— 2,917 (22,333)25,250 6,305 23,130 
Non-GAAP $507,149 $262,659 $218,600 $44,059 $(3,633)$36,384 
As a % of revenue (GAAP)51.2 %47.5 %3.7 %(2.0)%2.6 %
As a % of revenue (Non-GAAP)51.8 %43.1 %8.7 %(0.7)%7.2 %
Diluted net income per share:
GAAP$0.12 
Non-GAAP$0.34 
Shares used in per share calculation:
GAAP and Non-GAAP106,171 
13


Harmonic Inc.
Preliminary Adjusted EBITDA Reconciliation (Unaudited)
(In thousands)
Three Months Ended
December 31, 2022September 30, 2022December 31, 2021
Net income - GAAP$6,131 $8,740 $19,857 
Provision for income taxes9,205 1,282 (7,389)
Interest expense, net929 1,284 2,706 
Depreciation3,035 3,097 3,151 
EBITDA19,300 14,403 18,325 
Adjustments
Stock-based compensation5,591 6,460 5,195 
Restructuring and related charges1,664 326 292 
Adjusted EBITDA$26,555 $21,189 $23,812 
Twelve Months Ended
December 31, 2022December 31, 2021
Net income - GAAP$28,182 $13,254 
Provision for income taxes16,303 (4,383)
Interest expense, net5,040 10,625 
Depreciation12,260 12,546 
Amortization of intangibles— 507 
EBITDA61,785 32,549 
Adjustments
Stock-based compensation25,212 24,062 
Restructuring and related charges3,891 681 
Gain on sale of equity investment(4,349)— 
Adjusted EBITDA$86,539 $57,292 


14


Harmonic Inc.
GAAP to Non-GAAP Reconciliations on Financial Guidance (Unaudited)
(In millions, except percentages and per share data)

Q1 2023 Financial Guidance (1)
RevenueGross ProfitTotal Operating ExpenseNet Income
GAAP$152to$162$75to$81$72to$74$1to$5
Stock-based compensation expense1(8)9
Tax effect of non-GAAP adjustments(1)to(2)
Total adjustments1(8)8to7
Non-GAAP$152to$162$76to$82$64to$66$9to$12
As a % of revenue (GAAP)49.0%to50.1%47.3%to45.6%0.8%to3.0%
As a % of revenue (Non-GAAP)49.7%to50.8%42.1%to40.7%5.6%to7.6%
Diluted net income per share:
GAAP$0.01to$0.04
Non-GAAP$0.07to$0.10
Shares used in per share calculation:
GAAP and Non-GAAP117.9
(1) Components may not sum to total due to rounding.
2023 Financial Guidance (1)
RevenueGross ProfitTotal Operating ExpenseNet Income
GAAP$695to$735$343to$374$287to$294$44to$63
Stock-based compensation expense3(27)29
Non-cash interest and other expenses related to convertible notes1
Gain on sale of equity investment(3)
Tax effect of non-GAAP adjustments(5)to(5)
Total adjustments3(27)22to22
Non-GAAP$695to$735$346to$377$260to$267$66to$85
As a % of revenue (GAAP)49.5%to51.0%41.3%to40.0%6.3%to8.5%
As a % of revenue (Non-GAAP)49.8%to51.3%37.5%to36.3%9.5%to11.6%
Diluted net income per share:
GAAP$0.37to$0.53
Non-GAAP$0.56to$0.72
Shares used in per share calculation:
GAAP and Non-GAAP118.3
(1) Components may not sum to total due to rounding.

15


Harmonic Inc.
Adjusted EBITDA Reconciliation on Financial Guidance (Unaudited)(1)
(In millions)
Q1 2023 Financial Guidance2023 Financial Guidance
Net income - GAAP$1to$5$44to$63
Provision for income taxes11217
Interest expense, net1133
Depreciation331313
EBITDA$5to$10$72to$96
Adjustments
Stock-based compensation9to929to29
Gain on sale of equity investment(3)(3)
Adjusted EBITDA$14to$19$98to$122
(1) Components may not sum to total due to rounding.
16