HLIT - Earnings call transcript Q3 2017

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Operator

Welcome to the Third Quarter 2017 Harmonic Earnings Conference Call. My name is Skyler and I will be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. call Blair the of Harmonic’s turn Relations. Investor now over King, to Director I’ll may begin. you King, Blair

Blair King

Thank Hello, earnings today Jose, Sanjay for me you, Kalra, joining our California Harmonic’s for Skyler. at our third everyone are and our Patrick quarter CEO; in CFO. XXXX headquarters conference Harshman, With you call. San thank and us

this can call, that the audio to by we I’d we’ve provided the Page Before also addition Investor begin, you like on in to webcast, slides to going harmonicinc.com. for of see point this which out Relations portion

we We Turning regarding provide on this metrics non-GAAP on to important expectations provide Slide posted cause X-K. future company. X, during unless or to those GAAP, such events from otherwise our materially note projections actual the and you and this financial statements. statements together current in Form risk Web section call, are with our a basis. indicated, and to financial statements XX-K could forward-looking caution differ differ actual of only SEC results contained release, or on that determined today’s the with will Harmonic to We most and on we’ve items, results site you other events numbers the a contained press forward-looking documents which with reconciliation These corresponding GAAP performance call including statement projections which factors in may the today’s future filed are Please we and press that recent These the are identify XX-Q or forward-looking of results refer the you SEC, our documents preliminary release. and materially. reports files

statistical financial and We and our information also business will historical, regarding discuss operations. other

call the the version this remainder Some the of will release, on available recorded information in information of our of a Web on be is and press included this site.

Harshman. Patrick? over the turn Patrick our -- now to I’ll CEO, that, with turn the call So

Patrick Harshman

Blair, Thanks, the and call today. Okay. for all joining thank you

third by the was our X, million, to a above started over-the-top the sequentially, just way quarter revenue our live led can see Video for of XX% demand of get Slide by $XX.X powered segment high-end Let’s growing turning platform. guidance range. where you the

and continued was product profitable XX%, level legacy orders in Cable anticipated, again volume the resulting front approximately by for transitions came rose declining and and in to at combined heavy loss over EPS will revenue margin The costs. we Edge new record $XX the segment slightly due by result shortly. net million, sequentially. up new our gross was segment Gross to related and than mix video major product to margin a gross a will orders in and both lower Cable X% CableOS a and backlog video loss Cable an material $XXX expected a introduction software of in decline X As million, of to included product revenue the deferred driven These discuss new a quarter margins segment as growing Edge driving $X.XX. greater commitments company. that segment higher offset video services, Book-to-bill market in of non-GAAP Edge

new expanded segment up is over recurring to video bookings, gross operating of driven came quarter business Sanjay that Total Slide deals brief resurgence revenue media project of The X% Subset of in turn to and total that for areas our that the message SaaS sequentially accounted key over-the-top revenue This premium and over-the-top income quality in shortly. increasing the was commitments. XX% new approximately value summary, company X% over-the-top play accompanied million, $XX SaaS particularly $X out million. by on new with of will over-the-top form was from this of and discuss SaaS X. So let's margin and by the a here rebound in video gains. competitive contract live business spending, share by

as growth for the want I last provided bookings I bookings update our answer achieve Now is the on related to And to over-the-top specifically that portion this earnings business SaaS of company call, and being was SaaS, of XX% total with purchased asked could caveat delving year. bookings Since within with XXXX. more and that SaaS into their customers and XX% partners leading SaaS I was regarding of spent the SaaS answered possible to adoption still pace early the time we during days, and then converting of was bookings plans. speaking

evolve the our is a new said, some gradual was model are challenges additional likely of conversion Pay to more we video And There the with growing address along of company. creating of targeted traditional opportunities that $X has through from strategic a of we of And a and to media what to tremendous company from billion total insight, declining. call anticipate it Pay SaaS growth global that traditional is to premium the is formulate strengthening X.X real and in that a OTT a was focused to And In evolution these question the model for which And over-the-top that It There market Its strategies. profitability. is remain with gaining a companies. TV is a continue caused live switch us segment percentage market Pay investments engagements XXXX. both there becoming that traction leading such single stream and of large remain world message for as TV transitional in over-the-top recurring OTT strategy, key and us continuing strategy plus share customers with over-the-top With services profitably the be view as over-the-top investment here. which still CapEx Harmonic's mobile market. this to second market services, stability is growing revenue relationships SaaS, our investments now live no that the remain that increasingly devices. traditional the while at our through some important that X.X, family our TV is capturing positioning on new brings new we the and greater this here solutions market, we and broadcast third Pay we TV benefit bookings services that these bookings we to premium wave over-the-top reliability over-the-top broader excited key operators clear positive to quality screen part delivering video certainly is quality of SaaS in digit the increasingly to room here, customers. and brings message over

a industry that rate and breakthroughs in experience live is technology recently the our latency, over-the-top delivered mobile some compression which bit Now particularly rivaled and core important is increasingly has to our sports team applications. strategy is quality consumer which for for low innovation important in in

appliance is regarding customers the that for our from and SaaS, to the from over-the-top broadcast these Now broadcast to is that to of new and video all second to expertise the pillar, combination innovations services. brands. unique our where strategy cloud And traditional TV important and software a is and technology reliability our And from retaining quality virtualized critically companies finally behind operators some our over-the-top new immediate Pay OTT enable leveraging service strategy. linear to smoothly transition CapEx

of The is third expansion addressed market. pillar our

the through a skinny so-called [indiscernible] several in for SaaS key of bundles enabling example, the rolled role For traditional both from out CapEx being and U.S. deals new

also events. direct-to-consumer are and by international concerts are services companies, We SaaS growing launched as and being completely global such targeting now brand-new sporting special our new that productions platform, over-the-top media leveraging services live

strong a delivered we here, video summary in So segment quarter.

that positions are We to our as ahead fourth reiterating over-the-top the business growth this traditional to thrive guidance market to and from continues Pay looking TV quarter we pivot X.X. strategy OTT had

to Slide X. So business our let's Edge now turn on Cable

cable continues to to ongoing the Legacy weak. network anticipated, XX% be transition, was demand down approximately due year-over-year. $X.X architectural As Revenue million, EdgeQAM

CableOS that platform transformation headline cable the business the tangible uniquely marketplace. to real which coming is continues the access here in enables However, momentum new gain our

disruptive First Expo function consensus and it's of a front be The customer's our virtualization continuing continue Denver And continues while of the transformations distributed Harmonic coupled leader the points can't business. to And when. many predict. by been turning word here, can most we're contend of in CableOS distributed if becoming in network from feedback questions the going confidential, way and in to shifted activity space. be the around in Has progress the share the we customer clearly material competitors following profitable remains land attended clearly dual with that we the network and sooner access. into quickly thought growing that the indicate anyone virtualization and about a leader access, that our innovation to attest data access than field out Cable-Tec is that coming itself. recent cable industry is that market who to is

delivering the that The particularly liability, in round-the-globe. These XX,XXX feasibility paying subscribers, benefits include to advance expanded data announce architectures of new operators X field deployments the has I’m deployments services centralized we’ve to associated deployments now out and proving pleased Tier over scalability, number the platform. of secured is solution. distributed are First, interoperability decisively our DOCSIS span design over these largest here operational with real-world now of trials demonstrating CableOS and cable high-speed virtualized XX and commercial and leading the to customer win. And

our operators top So two we’ve grown of now million. the received purchase CableOS to cable orders backlog $XX from five over global and

of tip the iceberg placing terms if overall influential nonetheless the real that are Harmonic. and customers of only opportunity, confidence speaks its in backlog, this CableOS the real to For the money in

all the for growing between So altogether and it two. distributed here, appreciation customer see access, putting synergies we virtualization,

continue orders. new technical that of legacy including etcetera hit of tens deployments deployments, positioned thousands a X, wins $XXX we revenue new of a million target customer to with well believe backlog the modems Consequently, and growing we've New for of XXXX. scale Tier established we’re expanding cable to validation

access vision well continues be a growth Looking this approximately billion market. to our with $X further [indiscernible] in significant distributed capturing ahead, by share level and beyond

at So with for now quarter detailed over and results you quarter. that, third outlook to I more for our the look over fourth financial will call Sanjay the turn

Sanjay Kalra

to I joining would for everyone thank Thank you, our today. Patrick. call also like

cover today’s I During two will topics. discussion,

here our basis. 'XX. 'XX, our results I'd financial QX non-GAAP Please for a to numbers the guidance second referring First, on are for financial be that QX note and

our Edge guidance million results QX $XX.X the upper in QX million compared to million, and QX guidance of and guidance. our start turn Video $XX.X was compared QX to $XX end low Cable to quarter same our $XX.X These $X.X of the and million year. revenue million QX in below period. year-ago segment in million, exceeding 'XX million the QX also slightly million range our was last $XX.X revenue in $X.X million to and above the end in $XXX.X compared in the segment and X, high-end results. of 'XX. $XX.X was Let's Slide Revenue with

in Our was pace and ramping, as begin XXXX. Gross improve the to QX QX, revenue in in materially is from in business software in 'XX. current $XX.X of QX X.X% by was to was QX company's margin 'XX. not XX. Cable was of XX.X% QX, volumes content in in in our and shipments combination in all Augmented functions pick reduction until the by million Edge in QX, products higher cost late to QX sequential revenue XX.X% throughout video this product of with percentage QX, mix, of $XX segment a margin decline driven The in was margin result reduction QX, product expected XX.X% million of Operating our Cable QX. opportunities. of Gross in R&D are up was overall operating 'XX. expenses margin CableOS to employees is expenses quarter. margin with a expected X,XXX and X% million and $XX.X get in for quarter XX.X% in investment The declining QX, gross employees the begin composition higher more Video QX, a and year-over-year XX.X% in realignment in XX.X% $XX.X throughout QX $XX.X and low the product 'XX. primarily market company million, in controls headcount QX a strategy costs. expenses million The was X,XXX legacy QX compared introduction $XX.X gross a of we XX.X% shift in and XX% and and favorable below end QX mid Edge Operating QX, guidance. just new the and million

by the been expenses one which large Our reduced R&D the reflect delayed spend prior also engineering customers, from our of quarter. reimbursement of had

QX the business weighted market, Looking of satisfy basic million a a R&D income average million X.X% $XXX.X ended income operating and segment, count which to in will ahead, million XX.X in QX XX.X and XX million QX We to is return in a and million XX.X of profitability. of with compared in $X $X.XX we addressable of of loss in capitalize was XXX,XXX XX.X million share continue in $X.XX 'XX. of in million income operating QX, driven market XX.X An and loss Bookings million $X.X to investment $X.XX customer by EPS a QX in in and our video QX of million 'XX. QX of on a and compared loss margin QX balance to to QX strategy and were the $X.X operating our compared 'XX. QX of an over million trends in QX compares loss opportunities span 'XX. contributed QX to income evolving operating to in sequential improvement to year-over-year quarter. operating

the in reflect more meaningful offset bookings which growth weak advancing QX our CableOS Patrick bookings quarter. our financial As sequential a mentioned, service seasonally agenda than progress,

takeaway a a QX these have on here, second level The As the template reminder service quarters focus results, and especially key establish we results year. continuing margins for gross go, of demonstrate strengthening why expense and our of for video the in of QX is and to a fourth control are that execution agreement business. ways tight revenue, majority booked our

in avid And will on earnings Slide we provide with release. announced pause context update to and QX our regarding some here like additional our Moving which settlement X, to I our results. an

In will quarter. Silicon Bank the briefly established our on I credit in Valley addition, comment facility

of of our SaaS are overall First, to explained our of QX SaaS, about X% were activity. with initiative, of about as a bookings the OTT QX in came respect SaaS form in X% our In Patrick bookings subset based. which

were mind which within that as CapEx bookings recognized instead million guidance. than which X% slightly bolsters the in that Relative well is quarter factored period. was quarter the additional X% But quarter. the subscription of SaaS of TCD our or X% effect majority and immediately guidance. of revenue into ratably actual revenue cost comes time, revenue revenue that of predictability. us of But our [ph] over an much traditional and if higher recognize a profit vast about X% backlog mix of current for in two. expanded future OTT when in a comes as third or QX, in our less booking to over based of product video as in, anticipated operating typically For as a higher booking bookings Keep means traditional booking SaaS we $X.X resulting about that revenue order, $XXX,XXX The income SaaS mix the X% in bookings

term longer However, we recurring a revenue. are building higher-margin

in operating company to million a and as an by business SaaS single-digit perspective, purchase a bookings Patrick in modest on percentage general initial coming to basis of the shift from each of will ahead $XXX,XXX period. for by non-GAAP $XXX,XXX total SaaS Looking as conversion total CapEx revenue traditional expect company we only quarters. mentioned, the rule of a thumb, $X margin this CapEx annual reduce Keeping from

bookings As become more revenue our investment to and such, absorb begin in meaningful R&D. and

We will model. provide update you to an this

infringement patent and the litigation, incurring agreement pleased without years. license million Under a the the $X we to I'm with next total Avid Avid, Harmonic we on patent agreed ending recently terms X.X against Regarding litigation to executed settlement acceptable a portfolio expenses. of pay agreement, Avid's mutually cross over have Avid announce trial action

million $X quarter XXXX made be of in There will XXXX, The of additional year. be second the first payment of Two third made quarter in no the and in payments payment was million XXXX. $X.X and October of $X.X will million this respectively. of

GAAP the expense our a is quarter included administration general $X in full As million expenses. reflected reference, third in our results and

and was the not in rather Finally, to we point it means cash Valley working terms, with we to during good at see access place future. the Bank as Silicon any if last quarter. the needed used housekeeping We do on capital QX, have month, in as in facility, access undrawn facility both the million on announced which with this intention currently nominal some fees put facility $XX amount, favorable not

our 'XX. of sheet ended million of Now million We to high-end at X. with $XX.X matching of our in guidance. Slide on balance compared $XX end turning the to QX end $XX.X QX the cash QX and This the at million

$X.X tax $X.X for QX, in used capital. quarter to This million was in in improvements of metrics approximately activity million and cash strong operating [indiscernible]. partially by Following to related research received from we working in credit used working activities, capital weigh offset building the was development off million funding $X.X

the Our end end QX days at end compared days at the the at QX both 'XX. days and in of the the of QX capital was year-over-year the organization. days drive making sales underscores reflects increase while The XX and of accounts XX to XX outstanding XX we sequential working -- to increase receivable are throughout efforts days the at improvements decrease revenue,

record was cable backlog the traditional five SaaS our inventory increase top our offerings. associated an OTT $XXX.X new $XXX.X The QX, due at of were the sequential million two chain days of the QX the inventory end and of management At increase in execution in receipt million and days and QX QX million at due XX system, material QX and end operations hand video the the good from backlog including primarily reduction. of we end year-over-year the at at end 'XX. decrease to of broadcast deferred sequential in supply days for days compared is end to $XXX.X end the new of and of had on and operators the at to CableOS world's compares of a revenue. of to Our and QX 'XX. orders commitments This XX an of Again, XX

to Slide X. turning Now

for million QX million million non-GAAP to of $XX Edge million. expenses gross diluted $XX to Gross $X.XX profit. to $XXX Our to stronger despite and XX guidance margin from of Edge gross in count share guidance than $XX a XX% Cable range Effective to to million, a QX unchanged Operating of average to million basic XX.X% of to the QX. to $X.X Revenue of revenue loss to margin and rate weighted margins our anticipated to $X million EPS XX%. Cable of to XX% 'XX prior video and XX.X from video range million $XX from million, provided with in is July, of profit revenue Operating XX% $XX XX% range of $XX profit. range million. $X.XX of million loss XX% approximately count to from million. share tax $XX

between cash The million the now $XX QX contained are at and implied over investments our in to our expected $XX Finally, short-term the guidance table release. turn full-year back range as press a I result is the to Patrick. to XXXX call yearend of for will million. in guidance

Patrick Harshman

Sanjay. Thanks, Okay.

to our XX, the we Slide strategic year. by the half our priorities turning of Now want close second reiterating to for

in broadcast single-digit is quarter, the margin high traditional of to number For video to improve the number investments we just further business, video to one ongoing on lines. to three in transitions further And the our accelerate alignment and two, business, quarter. video the of our our maintaining with deliver success objective is operating capitalize third market fourth again objective number as of platform. did profitability the customer demand Objective over-the-top product growth in

architectures, market number to industry the to X into additional one return the Cable the the target, $XXX deployments, and architectural encompassing to Tier the exceed both growing leveraging business And CableOS exit year objective CableOS future. our for Edge number objective secure momentum to revenue sufficient million to bookings, operators. and successfully positioning segment well of centralized compelling house, with momentum, three On number backlog, design new XXXX with is two scale the to or distributed Objective is wins customer growth black and and meet new transformation. side is continue

on together as pipeline, with we quarter. gives focus fourth and enabled priorities our Our QX opportunity solid execution, the backlog and these us confidence this head strong into

The you over-the-top several Harmonic only from access not investments over create of video renewed TV hold. real clear major to risk both NFE over-the-top survive appreciate As traditional the our areas make our these cable results years it traditional profitability, and presented real company I strategic we're both over-the-top toward the access transitions in from with know internal made today shareholder transitions in to from progress shifts to edge, market to marketplace and and many crosswinds, but that CableOS and and past to have the distributed growth, is cable The positioned thrive already take Pay we driving premium success related in seeing as and value. opportunity.

call with now let's So that, the up to your open questions.

Operator

Thank you.

the We Our Instructions] question-and-answer will session. first begin Savageaux with [Operator now question Timothy Capital. Northland from comes

Your line open. is now

Timothy Savageaux

And Question on a afternoon. good business. congratulations Good quarter. the of is both Hi. on sides

at other things cadence should node, guidance software type well as margin get and of Edge address end of hardware margin First or especially it's head ramp just on however line here more of or some think notion I Cable incremental on it's to there a dramatic you to the something side, of what lag an what wonder extent to side, and at gross that revenue kind lead perspective. revenue it. us rollout to in node Is versus XX% margin versus your revenues guidance. want that sort of overall head as Edge that look among a in how would would and like guiding margin of try just ramp Cable versus gross improvement can and the software Implicit QX, the perspective into any pretty the hardware from of the to top bit we -- kind as well, of I you're the rollout indication material, a on if -- end -- whether of look that give a from kind

Sanjay Kalra

bit insight go more we Hi, Thanks little not quarter In expecting me were product a We down question. continuation more a little actually it Edge. Cable a QX quickly the QX, give happened. to from of And the They dip low than a QX, kick QX range. expectation end expected for not expecting, saw an we start our but CableOS did have what below to in as we were where off bigger the expecting for and were QX. on slightly slightly was were or let not legacy bit as Tim. expectation shipments. the [indiscernible] ramp any

think, see factor QX, QX. you versus the coming I declines, product from is So, ramp also legacy will the is CableOS nearly which in a

Timothy Savageaux

the that want to having Okay. revisit XXXX, and what side? cable XX%, certainly is Well out kind in to whether then relative base reaffirmed modest comment Any expense the tell or incremental there but commentary be at expect and on some of microcosm small CableOS be when are CableOS likely the not to as margin of looked realizing of meaningful. that me can still you -- there well here -- that extent operating that mean, more be is margins the with you significant. that expect $XXX about into to the realizing million sort now gets extent targets modest of mind on margin a in might on of to pretty you you've talking that gross or above prospects that this got numbers we gross I would ramp what you're a there, target law carrying looks in some is ramp might driven what we're right revenue But QX legacy in a to drag, where sort

Sanjay Kalra

small there The QX I small if margin is numbers small. close a $X.X you is what so -- is mean, margin by well. revenue it you doubles Tim, the increase is as of is margin of the QX. kind as The is. to Yes. percent million, its said, in a in like, the

shipments So, include the a as well of software its in hardware. lot number. on CableOS small definitely side it as QX, does more But which is

software margins the And compared ticking be -- the software in would up QX. with to QX

Timothy Savageaux

my dig video moving here. uptick And to drivers into guess saw the side, I I maybe a nice in the great. Okay, you on mean, the is, business to question there.

think has of put on deployments metrics customers video been the over-the-top, side I that? it's I a you plus of challenge anymore in around key mentioned a is side and both I to on mean, there big the general, driver, or kind the think business. or And minus visibility

seem of some that visibility quarterly the SaaS makes visibility nature have think you have the pace to kind you on Now in better business. transition, the better of might overall me on the which some

you of the So, on specifics general? about also the in overall that and is your question that in strength saw business visibility just views go-forward

Patrick Harshman

really Harmonic no OTT now that there broadcast frankly to live X.X of etcetera, sweet question legacy happening And Pay beginning pivots the and we I worldwide. me quarter. term that transition It's Tim. the hi, services But isn't were Patrick. At more the -- our are include and a stronger wave than deployments by as initial into to Frankly, we take OTT was is relatively me time, legacy Well, -- Maybe spot. I stronger legacy term of, OTT Indeed, largely a will opportunity come we about TV one. much X.X. that sports, encouraged let we wave call seeing OTT there's or than not call same to the that of significant with expected. services, that’s does business for let them ramp there there. what video-on-demand and feeding largely actually back The

to transition quarter. backlog, that We're the fourth encouraged the continuing but think not update. let's you we business then prefer by by encouraged we the what assess solid have guidance we get that informs quarter. I will an fourth for We do we days. our And is, fourth still think and pipeline don't I the the what positivity a saw on were but provide and quarter, [ph] our and video that's deliver in what quarter to we too in is want of the ourselves, early far ahead out only third the

corner and more QX. So optimistic like that victory, kind becoming we'd wave we correspondingly quarter coming that terms and of of before see but feel into cautiously to a improving. we've of of we're think the OTT this out declare that our visibility material rounded -- another in I encouraging it QX does But

Timothy Savageaux

Thanks. it. through. Got will I pass

Operator

Leopold question with next comes Raymond from Our Simon James.

is open. line Your now

Victor Sze

Hi, in Sze Simon Victor for guys. Leopold. This is

impact So services investments operators. of a you impacting pace the cable of for spoke the about bit OTT

contrast And case, point of that's the Given this outlook we and in the XXXX? cable of there inflection is optimism sort is in believe -- service providers Cable I there your target? commentary investments? your some hitting you for do the with regards a in driving specifically seeing in guess, to some are your the if your from targets terms and quarter, what TV Pay confidence of And, just Edge CableOS

Patrick Harshman

think say, fact in different on -- Let's you touched I somewhat you they’re related. there. two mean, Victor things I

in I video cable both for increasing the of is from services, cable to the a operators XG, as cable think things network MLB by the mobile company as well conference have lot what or the a as we themselves pressure is under cable new delivered be or over-the-top one service of you, CableOS like etcetera, a calls. Hulu going transformation third heard frankly of the about drivers and which parties, well that recent network as

on new of we the opportunity, the creates and that I cable a over-the-top of part the that’s is think the network business. the than of million driver see access growth what So side $X more bandwidth

that side. one So to let's put

helping that this need are but a for video there cable do actually create look operators and We with will. deal their lot the clearly business, themselves the a side Clearly cable if over-the-top operators, are of telecom satellite of piece architecture our combination, Pay new services media traffic. cable direct-to-consumer providers, first for I there going handle overall fresh actually own. companies -- operators, of lot direct-to-home they’re important, active the on modest operators, who brand we into mean, TV a whole be at a time you getting legacy a to spend. startups the picture. that's a with the access of that to companies traffic, is And of So all Then is manner

we we're of question, everybody So business the and The is quarter think it's do the with for the what all that's our is moment over-the-top hey, that new inflection. and delivering trying plan is. view ago, key answer We've I -- in to seen Those customers -- say, the are too -- customers outlook been XXXX. quarter. service, third it you kind for I of a to give to the we're legacy and that platforms. is some early last spending or investing on entrant. out I a some the we’ve pretty on of And stuff in that it traditional earlier premature as as pretty we will, and to over-the-top they’ve but is creating say the slowed that traditional what new as lot business up mentioned in TV point, start view fourth around side over-the-top of infrastructure, mentioned the Pay turning but trying over-the-top house with a spending it us launching a -- are But in same the a acknowledge or to same But under people think pressure. video figure -- to of is overall to on happen definitely declare seen of pause all new at if an a good, are inflection firm have is was to an

role in is quality have OTT Harmonic premium and the confidence both and -- market leading question. as particularly what lined we’ve the well if are as give customers, there. up legacy deals in the as a up, the think market for that play you will, this lined new does I we pivots, we seeing additional quarter to coming hope the been I traditional will that got we've live the and us answers where winds I that players. pause around unique

Victor Sze

a growth caution point helpful. declining you -- target of kind in [indiscernible] acceleration kind your declines products. or and it -- that target products target of the offset that's see to like to impact your of enough and that, these And incorporate off of see new your of That’s incorporates definitely would of the business just be accelerating I your does that, legacy mean,

Sanjay Kalra

Yes.

decline is [indiscernible] So, Simon, a business, history the video you if our every there of see year.

our look bookings, However, if growing. you at backlog they’re and the

$XXX year quarter record in expect XXXX QX. will ending exit this million backlog again for believe we a than ratio our more than We this we and higher backlog book-to-bill one have more of confidence We much a with to success. underpin

same the part at just to do that seen the been bookings. it we the though, So all into Patrick, OTT, support in the and factored even the mentioned of and bookings time [indiscernible] have is all product decline video had revenue, historically

Victor Sze

Great. Thank you.

Patrick Harshman

Thank you.

Operator

next Steven with Frankel from Our comes question Dougherty.

now line Your open. is

Steven Frankel

plus significantly firm rollout you that let’s Hi. look Xs just customers Patrick, in that a million? this 'XX having million more require goal start trial in of them or Good just you have winning or $XXX maybe XXXX. Tier $XXX the either at with from CableOS afternoon. gets high-level Does to today in with

Patrick Harshman

have know, with You to -- Steve, wins additional it's confirm we design need customers.

XX. an being dollar So That is to we don't compared and number pipeline have to, we good that every from a pipeline a we're -- those. about engaged than it existing normal. comes already many the tied said, a got trials that advanced good industry doesn't the got so deployments when customer. We've lot. single pretty call visibility talked that We’ve have I’ve larger goes with a with players, much cable

the making. the to methodology. are big on a than us we to -- number ample based is give difference or largest can ample waiting typical a the of a pipeline up, in be statistical us money confidence have. kind gets couple engagements There the customer of but of that you that more more forecast of a made a ongoing have chunk So imagine engagements Indeed, we than we kind

Steven Frankel

there European Okay. been that business And that customer? had, you is early customer any material from that follow-on

Patrick Harshman

is, continues answer how we define there material, Short that been on to real and mean, but follow-on want depends expand. to yes. deployment has I business it

Steven Frankel

customer, on you detail won? any us Latin more why dare and new think give CableOS this Europe, America if U.S, they're Tier located, to X could you pocket And Okay. you may be where to

Patrick Harshman

difference. about testing solved uniquely think kind that And The a good really, made to extensive but play operator think to problem decline here. the respectfully changes point we’ve reality this network view. to problem on, the that I another a a of won, virtualization was were and commercial say solve that does of they reluctant, the capability frankly of not have etcetera, a point is the and Well, first technical etcetera. as of thing. CableOS came aren't technical goes that principle, where I'll a idea, a architectural theoretical who as broader a to is challenged hey, case the go far But view need for solve. the in initially -- both into and uniquely specific -- this part. actually in of able They meaningful that actually distributed in the I the This These cable we proof just was but was I and point need good it's of a putting from at the why supplier? And from part -- of it from wouldn’t on view. just idea really point of a a talking what operator kind particular specific There really of were is a comes incumbents

networks As going there's a across coursing high-speed and pressure over-the-top our them, consumption broader traffic unprecedented ago, improving for and are mentioned customers just these a in moment there's up under networks is many problems cases pressure on with coming video up, of subscription, these -- and the to amount solve. there data

Steven Frankel

business, -- proprietary customers Okay. on and How or doing software the mix hardware bundled virtualization? transferring hardware pass-through either then or video between is transforming And the either with

Patrick Harshman

with based traditional business third a I'd less we is hardware, but probably can today the we're deliver or proprietary, SaaS think video on our the much really don’t is of I we doing. share nonetheless percentage that procures doing infrastructure. far lion of means deployed we're say is and And have ASIC the a business and our let’s exact box installs you, less the than or based of native curve which share that that either server customer we the is half numbers either than end The on customer a on-premises, the, of deployment our the white own but on doing. server business their that cloud say, that software overall

not, our end -- the or on is box white based mind. don’t So that or we three for deliver know, pictured of got a The a will. I in the ASIC is installed call native of buckets, middle you a a probably by server curve traditional have a let know bare is virtual the don’t I’ve if the the or curve kind I on works is if a server me of far machine bell software and kind metal of hardware. customer. curve cloud end opposite you

the ongoing. the it point, So of lot transition I the there maybe a as talking as don’t and make become we’re than to more third sound it billion particularly we plus kind it's no definitely $X can shift, somewhat a move What were infrastructure make -- still XX% XXX% the broadcast solid about bit still X want the slowly. is there sound There's that will over-the-top it's doubt Steve. exploit though market call is of future. that it's relates or U.S., X to a to is absolutely outside for continuing less broader a business, to little I a that don't but and to want what of or market for things and foreseeable important traditional business fully where

Steven Frankel

one. Okay. last And one quick

quarter a two to believe there their multiple successful You’ve Are mentioned especially events live point that sports. you in the you particular OTT might you any times key last played role and events, OTT or the about in implementation? to shift

Patrick Harshman

and -- are there that live is two to the -- any events. one, over-the-top live carrying live over new example, services to going parts that’s -- I mean, services I football of the live streaming these or Well, World are any those services. Number sports. you highlighting in for can whatever to or skinny on other Series now, improve see bundles the delivered

now. activity a an really behind comment in the is increasing number one of is scenes. the is where That's So that these Harmonic playing implementations role

comment look the or upcoming business go events. was, look mean, possibly think them to if see are opportunities of call we events. you opportunities, where those market let Olympics second this, to special at, I we specificity me World as We the kind much expansion we're around about can addressable and we at our about The thinking -- don’t too a attach Cup, but will. more starting

to its So, screen. job, particularly, technology not about to that XX-inch delivering no the are delivered low but now only distributing traditional broadcast people those is is targeting with are signals And easier than latency way that in later those being given super over-the-top which pipe. small that fact relatively events screens the thinking by

doesn’t So the XX later, software work. the which example appear of doesn’t seconds goal magically

the a around to category -- as second is think our and see -- is we market But opportunity. go, this business So nibble expansion where edges. about addressable intriguing where starting we’re we might that as the an we

Steven Frankel

Great. Thank you so much.

Patrick Harshman

Thank you.

Operator

with Our next George question Jefferies. comes from Notter

is Your now open. line

George Notter

ask to CableOS. guys. Hey, Thanks much. I about guess, I wanted very

the see MSO, also curious X.X or networks more there? I of broader is distributed nature deployments, fiber then, timing guess, I deployments? HFC the a the commitment those guess, to X operators? do that. just deep I for Duplex how thinking access to if in either the of mentioned to of a the commercial deployments that You Is about trying Tier yourselves initiatives guys size and order you was the of DOCSIS And move CableOS about and is you from cable being question, DOCSIS tied the understand Full architectures with the I'm see around that. or second was trial I source guess, adoption that or realm I wondering Thanks. I'm of

Patrick Harshman

Okay.

for thanks question, George. So the

-- forward will and to and It it's this. see with order have design the -- we that But scale. that be the and the moving and ourselves point received out but is an early is, we to to have, be an The question in prove moving order a we're we’re win process, door. first we of be part initial the excited and this

the point. it's think key I

to. architecture, question and that involve we're about just spoke currently of trials variations The discussions you second in point all involved of what

different got interesting There's you the the lot believe I locations. at was week it -- is whenever DOCSIS looking to distributed? just the last over distributed traffic in Denver of were As event Tech Community note with permutations is or are a together. One people what you held and of cable

nodes mentioned are changes. Another further third a pushed you split deeper. as fibers is there's which pushed or variant variable there is And the RF

all neighborhoods, at that different huge of explained just different operators be very beauty upstream. who businesses all etcetera. say higher actually may you even looking business small of is and that’s got off you is you’ve of into giving can easily inflexibly can support versions support cable go capability The of bottom a we amount what a So that software line agility for opportunities, consumers a the for those, part of of different further to virtualized I or versus core having or

those, particularly So of indeed of see see ongoing. any currently and we that's have the them one in as permutations enabling tied we ourselves of all don’t to the HFC that variance ourselves engagements we that reflected architecture

George Notter

Got it. you. Thank

Patrick Harshman

Thank you.

Operator

Hamilton. Mesniaeff Our next Drexel question comes from Greg with

now open. Your line is

Greg Mesniaeff

on Thank CableOS. you. Question

have the come share market Given the growth the given of of in you to said, to going from run that gains it's bar $XXX view? how current much million guys rate TAM that your

Patrick Harshman

is mean, market transitioning. I because Well, exactly, that. one tough not to the a It's answer

market. of growing ahead and about motor a you one to little this. I guess static version. electric engines it’s combustion not So it's we're gain what mean, share and way that I we're on bit I -- think new in It's we market to market. it’s think a or in that's but into hesitant an if way technology innovator gasoline a will, imperfect market of think an -- I clearly here moving is electric, -- be with is of the part gain about of with electric what’s feeding are our the but share and think Greg would because mean, we coming part analogy, in I to colleges the and both, not kind the -- going out

Greg Mesniaeff

TAM going competitors some in I even to of from growth, was have gains be to get to market that into level. robust kind But, that pick to in there the Sure. Sure. guess, still trying a what say direct with is up share I was

Patrick Harshman

there market a over are as close Well, well is, think, the maybe some neighborhood. $X billion billion, everyone thinks to or the I case. But X.X in today

is to expanding. last to market we the of portion layer the relatively -- transitioning some is some it modest push of -- that fact, fiber you deeper is capabilities. that. People is million So are handling of portion question are people that market upgrading are existing $XXX data some their of a pushing And then the on and but

network. not and more is this things replace in that ongoing a rip necessarily of the high-speed to of part this operator worked So deeper pushing of but is data strategy a fine,

Greg Mesniaeff

Sure.

Patrick Harshman

are new to the market. we So,

We have today. market a of share sliver

plowing market, one perspective, where above. from into from which really and sorry from of would is perspective I We're be that I to into that it see a agree for is that think a customers a bit for access going CCAP but little applications kind make was share. -- answer, either we’re part another difference distributed the the that market and/or we I it's new predominately a think I'm will all wishy-washy Harmonic. part So I territory. of of going But think to of virtualization going perspective

Greg Mesniaeff

when of customers, a of In next inputs what's will -- was best key what is from next year your my half it year term better next on it we terms that is or is of with see lack getting to a your or I hockey enough. year? the is middle of follow-up all of stick fair terms No, take first second like -- half you’re growth? here, in for it of

Patrick Harshman

it's done I view. our of release up and We've a we -- think to kind of another So, a earnings this bit in bottoms anticipation early. on we little stuck

Our pipeline number. ago, as mentioned about still feel 'XX we for good that a moment

to we there. and bit of of call, hope kind sizing to the for dependence or to I next customer engagements and particular out. we little any a because on pipeline breadbasket fact, dialogues lack you the a do customers, us Greg. anyone our probably will more for early too better play In that feel just relationships the it's on how expanding quarter-by-quarter that are of give clearly you, shape than a are you the Other two able of give little color so

Greg Mesniaeff

enough. Thank you. fair Okay,

Patrick Harshman

All right. Thank you.

Operator

we with And Capital. from the line Timothy follow-up Northland question Savageaux of have a

Your line is now open.

Timothy Savageaux

I customer X of on Tier been had announcement. a lot follow-up a covered. Though quick the that’s Hi. new

a at Although at it's solution you the as a opportunity. like I look will on relatively least which add it problem you specific be just opportunity I said could is thus to it that -- following, niche sort suppose, what seems in a far, of

of off doesn’t at that done over X two, new coming care size that nature least Tier already you’ve the whether X customer the given some already will front show seem some the on I’ve a of based comment of rate. relate have to you that sort opportunity, Is any in-house that year would your I’m table or to specific now couldn’t any this way Tier and in on operators. network when, concentration, crazy $XXX win kind there noted any X you Tier run degree it top it's wide number assume So you taking one. Tier to bigger understanding fashions. And recently, five to the you talk out might a of either? have to understanding that of of start Relative global of fairly you the a run and at or in for targeted work that for want deals pretty a kind of to X then, your but number to million opportunity way Are in -- current time you maybe things that’s initial

Patrick Harshman

time Difficult questions while the our confidential respecting at to the same frankly. with customers, really answer, we have

on getting first for a the it what this distributed in has door. platform, either the us foot Let developed an approach. key that on that I is is me part. me the way or advantages think The answer we’ve forgive and centralized for amazing generalities But more unique

their use a switching had coming. I needed switching they and market latency, they that going found is to thinking got entrant, was finance a but who for new the a and super door, I'm foot think [ph] the then super that in find -- you in specific and the of then starts niche area get companies low company the it As high-speed always case. with growth

all we’ve its -- that what once, that It's developed going is believe not it's market I so, And to at but only need. the product product. the a niche not

operators, just different to going in path Our into different come ways.

in are once door as But kind are want we're and us Others for going key yet, to there say, philosophically I’m operators expect I This come door, an we I consult going say with problem that's this specific are different the to going embrace in but we the get the we job. to Tim we operators. door. not the front door, the side amazing go. thing to me, to do Some is where so in going think back get it. if is sure way you of

that's play to become is solution. capabilities door, self-evident now certainly the key thing but I is that our our platform door. in. that's and it objective we much out. predominant way the whether it. door, about of think too get But a But the The think right the that’s worry going are the back niche, I mean, we're goal side front become is or not to and has the not to

dovetail your -- Regarding the of to to part maybe second question. answer and that the

This time, any that's be can to a approximately I big. billion. is in customer be think really going space it $X

like? space is think a what What great our of -- business. winning winning be I and developed solution that the part potential. solution. To of look business, fastest-growing is be going of our has it kind biggest I part absolutely to the think we’ve that

incredibly at do. an understandable, of step to taking that our profitable It's It's a work important one business. time. part have We they’re customers

confidence a bit we and share we The meantime, more specific with up to committed excitement and get go see high that progress making we further wins, our are of ourselves most any a think focused opportunity. how in wouldn't I than that we the -- is ahead of I’d incredibly don't But the we But not target any goes it rather, want remain if a and 'XX, reiterating and until $XXX in have can confidence in we'll we We feel company notch little level high. the be the for is So I out didn’t we necessary. further the more high to of that. you. rather this that couple

Timothy Savageaux

Okay, thanks.

Patrick Harshman

very you that top of thank think much. and I hour wrap Well, us that right. up. And we All the brings things the to should

build Just capitalize repositioning operating wave virtualized to perspective, we're OTT quality in From on quarter demonstrate free CCAP for that let investments And flow, business. new we've value. reiterate services -- thank to to plan continuing and long-term both appreciate our market good that focused today. this support really new of executing soon. third with an you the while again cash positive to profitably distributed look me We and the speaking We our that in course technologies you differentiated from deliver on Thank premium on results access you. ahead, will both me, remain on profitability, progress cable looking and of both summary, discussed, call as we architecture. the and the global excuse driving all joining and we forward made your

Sanjay Kalra

you Thank

Operator

Ladies concludes Thank this you gentlemen, and today’s conference. participating. for

now disconnect. may You

Harmonic (HLIT) 30 Oct 172017 Q3 Earnings call transcript