HLIT - Earnings call transcript Q1 2021

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Q1 2021 Harmonic Earnings Conference Call. At this time, all participants are in listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. Hanover. David sir. ahead go Please

David Hanover

Chief you, Operator. us results you joining President and call. Chief Sanjay Financial Officer. Hello, for Harmonic's everyone, and Harshman, today Patrick financial me thank Officer; first and With Kalra, for are Thank Executive quarter conference XXXX

Investor we like see this for our out webcast webcast, you may to Before going that our to to on slides addition begin, also website. of portion provided I'd by our audio the point in Relations webcast, we've which

Now turning X. to Slide

with GAAP, our press together numbers metrics, These cause most we section indicated, and actual And unless X-K. on call with this forward-looking forward-looking differ identify refer and the statements Form non-GAAP may today's actual in recent differ and reconciliation release, of important reports to During that can determined the financial projections you statements the and release. in GAAP basis. filed documents regarding including a XX-Q are risk will results which Such call, contained provide performance filed materially. and and We we to note XX-K website please forward-looking These we those statements otherwise Harmonic future are projections results corresponding with Company. future preliminary are from or on financial press you the our on statements. metrics which expectations a today's provide this or results documents the contained materially posted other only current events or SEC factors our SEC, events to on of

version historical, Harshman. in information this turn and of our call I'll Patrick on release. remainder this financial website. this CEO, available recorded discuss information our or of the other and will to regarding operation, our Patrick? included now statistical some be a of call business And press the The on is over will and We information also

Patrick Harshman

and quarter first both cable solid and backlog to strong and both substantial remainder everyone revenue the and with welcome seasonally bookings and year. call. growth. and our new video contributed quarter earnings another the our Harmonic David, of into meaningfully carry Thanks, cash revenue In delivered again year-over-year segments deferred access solid

is For access by driving customer scaling story year-over-year the growth. and continuing segments existing to cable wins, customers revenue XX% new

our technologies, to For and segment us deliver video opportunities, an for to revenue continues streaming both relationships business extraordinary and challenges Big continuing Harmonic enabling to demand deep picture and remained customer both XX% solutions leveraging year-over-year healthy, respond and in global differentiated growth. team. well current invest to broadcast

this of momentum in All translates of the year. into outlook strong an remainder the market growth increasing for

nonetheless $XX.X Segment and had impacted of we on another with So again deployed access year-over-year. serve in And quarter and segment was scaled strong XX% a XX segment, to delivered We from were million sagged heavier XXXX. up up hardware the our a year our cable focusing revenue first mix DAA the cable XX% by cable higher as margin. deployments quarter. we these commercially the ago quarter was operating of X somewhat over we XXX% million worldwide, hardware up positive margin costs, operators first delivered modems from

of out fiber access with in existing on native cable Dell'Oro to front We distributed winning To generation fully their architecture and concert solutions recognized position, focused spanning open our the be way scale DAA the vectors, cloud ones see leverage formula. ahead, and been an the market. expanding address It's new three broadband cable with deployment recently to our of tier to rest broadband large technologies. solutions the gratifying revenue gigabit three include we're business. of software positioned next in this continue working first market to during Within next have as home in these Harmonics and to in for well of customers momentum wireless good native from Looking unique continue cloud working we're CableOS Group emergence the quarter. pace these for and multi players, the winning We're of initiatives to fiber the growth. to market generation fiber broad as the all entire interrelated market so across leader footprints, customers progress rural to growth and the

is footprints going really to we're these which out customers and been CableOS, of Regarding customers. growth deploying of solution their have actively than still one we deploying pace combined ahead means accelerating other way huge the well. already are with rolled already less deployments The has X% us

we activity, based around invest functionality to native all are cloud services. software support to initiative. in engaged adding for this continue and we heavily players our steady an engagement fiber Regarding solution public customers -- during with to continues pipeline in of regarding be the cloud our the we're customers, innovative And And diverse for smaller growth received quarter. adding capabilities. course, such new We And the on players. seen home applications America closed operator, and cable first insights sales to from deal to tier we spanning purchase and joint operators R&D to Underlying America. went backhaul fiber regional global our the key dollar North several ongoing initial progress. efforts make edge order cloud continue and I've our our in larger new compelling new broadband group new good from of cable with technology converged in new core new we one North broadband mobile multimillion a deployments, and new as home, rural rural a we international also And,

expect And higher our immune Harmonic we're to We're XXXX, our seizing we while key DAA of hard challenges. aggressively quarter. impacting cable shortages working healthy. of term as costs line shelf favorable, our summarizing a for these demand we're another to DAA seeing not more off Global revenue strong for for constraints. and products near We're delivered higher footprint hardware components backing Finally, trends supply costs, lower global and the margins significantly raising several We're these chain and related And result, is overcome of target. significantly correspondingly opportunities growth market are access, the guidance. and new broadband expand our to top not balance products.

new future quarter. remains half second up a another access flexible clearly And and to architect video are we a we Our powering XXXX with as solid customers to access segment, large continue scaling strong early Harmonic's customers primary followed native software model successfully broadband this both access The our and core technology cloud Returning to add the broadband future network. new bright. distributed of small. is

First is from profitability quarter up pandemic XX% segment than of transformation quarter revenue business demonstrating indicating margin growth X.X% year-over-year, headwinds. million, Gross X% impressively recovery. was was post was and continued just XXXX more first segment despite XX.X% margin $XX.X and operating the

deferred As our sales from broadcast strategic strong a transformation near revenue. and streaming SaaS SaaS and you quality with know recurring business revenue. streaming our solutions streaming high by several a key the for technology record mix Demand broadcast purely grow of and to is pipeline, CapEx and wins backlog evidenced new CapEx model, associated continues live

streaming new are underlying mostly the the year-over-year. customers up new in of are customers platform During fully XX, harmonic, Approximately seven growth these of continued bringing a to SaaS signed XX% process on is quarter, streaming streaming to number media customers, of we quarter launching that total our services which net their streaming still new companies our the expectations.

delivering on in a sports weeks service volumes higher XXXX, example, lag with of signed millions impressions, that we ad streaming recent is ad the a a service already couple with anticipated of and as daily new prominent expands. us just As even ago

volume CPM. this portion charged part business The associated on of compelling. solution our is impression So becoming ad of or for growth SaaS the insertion more video is our opportunity

demand. headline, streaming bandwidth creation is secondary broadcast continuing seeing general for activity the While capturing XG be share. believe in seeing increasing we both rebound business broadcast longer We're globally. which to we're a term main and also project is opportunity reclamation, term worldwide, catalyst a We're headline near our an revitalized

execute expect continued year contribute and the new new second program we XXXX. focus, in quarter, the with of announced half first the bandwidth XG our to came During into to projects now to we reclamation projects several SES that

We our revenue mostly the year. guidance full for segment are video correspondingly raising

believe to a we door the opening industry opportunity rather wholesale ahead, than broader positive video that further investment. success seeing Looking is video the broadcast is initiative distribution with a satellite IP trend C-band terrestrial sustained for fiber the for networks, a by

extending SaaS. conviction delivered we our and This video strong characterized wealth high the resilience brand broadcast growing solid with gross margin, forward industry summary, another from sales by our highlights realm So robust and through bookings. profit, new backlog and revenue business, Leveraging and strong of deferred moving our success of wins the quarter integrated performance streaming operating revenue video technology and end performance video market real leading in high our to momentum and pipeline, cloud XXXX plan. the growth,

at let now and for outlook. over financial So look to turn our me closer you the a results Sanjay call

Sanjay Kalra

us Thanks, Patrick, and today. all you thank for joining

our are basis. I like a results financial quarterly remind discuss provided to results, I Before and on referring everyone outlook, be non-GAAP to will I that the

includes on As David GAAP an mentioned financial this press our reconciliations measures QX the call. of earnings presentation discussed that earlier release are non-GAAP to

and revenue of adjusted We above of we of million of margin and gross comprised generated the cable solid QX XX.X% Operating XXX results point quarter X.X% video and For $X.X year-over-year generally first for EPS of for million, basis XXXX, ranges. delivered improvement X.X% of X.X% XX.X% XXX.X was we margin our year-over-year. $X.XX. EBITDA access up and guidance or reported

strong ratio We seasonally quarter of also a the had X.X. book-to-bill bookings with during

well ended of result, backlog positioning year. the a deferred a million as remainder XXX.X in revenue we for solid As QX of the with

review financials in more will I detail. Now first our quarter

'XX. Turning XX.X% Slide XXX.X seven, company million total to was or revenue QX in increase XX.X QX to million compared

reported XX.X of see in compared with commercial XX.X business. As Patrick to to is which And to XX% period. XX.X% in segment, December million increased XX, to we up in year-over-year. XX access continue compared our at QX XX growth access XXXX. up million revenue to Cable revenue million prior QX million of XX.X% cable and sequential year was deployments, video in XX.X our up In XX the mentioned, XX% compared we traction QX

customers total C-band We contributed Comcast to XX%. XX% representing two during activity We total contributed the related quarter, during XG greater satellite and XX% continue revenue. had quarter. than revenue revenue the recovering including of of SES video see continuous worldwide

to mentioned to costs XXX As and QX XX.X% to improved XX.X% access Cable a points, in slightly in chain QX gross XXX compared 'XX up in compared declined margin XX.X% reflecting to higher QX 'XX QX DAA hardware. gross basis mix down in XX.X% margin points. 'XX supply 'XX earlier, increased basis of

XX.X% was XXX margin mentioned, As XX.X% recovery QX access last in was X.X%. pandemic. cable Video gross to year, previously before margin the basis of usual as a QX compared operating point to segment in business

are Moving and QX marketing down eight, increased and 'XX to on QX we sales in the year-over-year services growth increase and statement both as million expenses income to to was compared invest research XX.X due and initiatives. continue XX.X million 'XX. segments in primarily access operating for development The cable Slide our

from was The the increase conversion some compensation cash. stock to secondary for of the reason employee incentive

X.X another million I as diluted continued a and QX is an with will Adjusted differentiated I cable average see compared loss This XX.X% QX EBITDA compares demand The 'XX video. improvement in shares primarily X.X when million and price. purchases shares restricted further for valuation profit from QX QX This units debt million bookings adjusted loss access million million XX.X comprised to quarter year-over-year to to bookings reported to of XXX.X of discuss 'XX. of compared demonstrating average million reflecting EPS X of loss our operating vested performance were due was of our operating compensation million our for million employees in for compared EBITDA or X.X As QX for result $X.XX cable based quarter [indiscernible] in million first weighted QX EPS X.X from of year-over-year to increase to first increase growth It stock substantial from quarter, XX.X guidance. 'XX. of ended an XXX.X 'XX million translates to of for We X.X the situation contributions shares X.X 'XX. in the to $X.X of the during QX count to convertible a strong million a video. million We technology of and issuance solutions. and $X.XX. explain from first and access was of million stock for is X quarter compared increased the quarter million the encouraging X

cash and we million to million balance position XX.X with from nine, sold is generated million our of discuss from cash businesses. the sequential in million cash XXX.X 'XX Net million operations Slide and end and at now cash our We sheet. profitability under at liquidity stock ESPP X.X QX The XX. increase fixed of primarily purchase received XX.X to the to ended Turning compared our QX December using exercises. of and X.X million both of attributable employees of common stock to X.X the assets from option million X.X comprised

the at decrease of days compared in of reflects DSO days XX difference end in receivables. improvements the overall was Our The days timing year-over-year to QX large sales XXXX. XXX certain collection continued and outstanding QX

the XXX.X of compared of at of our QX, the deferred days end at Our of record end to a XXX.X XXXX. end million 'XX, and QX million, days compared and the decrease At QX inventory the QX days XX million on total end sequential X%. hand to at end a XX revenue the at were reflecting XXXX QX of was backlog XXX.X of

customers revenue and large near both commitments our businesses. SaaS growing cable video deferred streaming increasing our reflects and Our backlog record for

that high are revenue our converted of revenue quality to Also, maintaining We and of revenue XX% a our backlog total revenue QX XX% was backlog be a pleased QX revenue the period. deferred of and at with of XX% our about know consistent historically gets demonstrating continues the levels the end backlog level rolling that strong of to to year one XXXX, deferred within backlog expectations. component to end revenue deferred conversion XX% of at compared deferred at in

down backlog in Taking approximately and business with contractually agreed future us As approximately additional this a these moved total million one into remainder three therefore At process end the foundation X was we XXXX. amount customers. bookings. as into million contracts XXX mentioned our million, XXX.X purchase last XXXX into order have provides 'XX, of revenues of on our CableOS went incremental through XXX QX not included from of million account, previous the of solid CableOS contracted the cable calls, is for quarter, tier and with which

turn non-GAAP XXXX I will Slide on for ten. Now to our guidance

of substantially While volatility exists, COVID-XX uncertainty the since and the and pandemic. have related recovered still our activity customer height pipeline

Based the typically balance situation, at recovery internal unprecedented will are creating somewhat be we demand other the production and access On second demand key with extensive throughout conversations we chain QX a higher over cost, meeting this our and hand, on that contending with both stronger that analysis, particularly cost likely products. continue for and global supply our of challenges. supply timing chain customers XXXX. seasonally, and cable will partners hardware and With somewhat half expect

will to to our end profit XXX.X and XX of development for total XXX weighted expense guidance, reported position include at total $X.XX, a from growth to QX $X.XX in million, of certain and from XXX finally, segment per XX% of cash in to And practice XX%, For margin, the the guidance metrics between I our at over expectations XX.X% Slide of million. was the to we segments. share both the stronger these full a guidance, to basis million of in million employee corresponding plan. average to Slide video decline will million. the EBITDA year $X.XX midpoint of XXXX, from range to Adjusted this range revised our high-end, an cash compensation of range weighted quarter. reflects valuations. XX.X% million count segments X.X approximately last last this of XXX.X company focus this of at the full effective rate XX% margin reflects to mentioned of count and of X.X decline year midpoint guidance XX% range to decision our approximately to expect incentive range midpoint diluted range augmenting to will and segment XXX.X end guidance of quarterly year. our revenue versus million the we to our QX On stock million, of EBITDA reflects company represents year-over-year. million our Adjusted this a will loss to reasons of to of compared with net XXX to expenses second of quarter. effective year-over-year access second the in average at tax the XXX made adjusted a an million increase XXX expected the instead Revenue of XXX on to the our expected diluted upwardly share the annual a an loss EPS to fiscal to for providing discuss tax On in of reducing to in compared rate lower Gross increase board X.X to million year million. $X.XX XXX EPS and is decision Operating XXX share Gross XX.X% This due of a approximately from million, million. of range results. which gross range existing cable will the year. video range points XXX year, cable, to last due for and of mid-point. XX guidance XXX EBITDA shortly. XX, this margin to of elaborate gross I gross slight Operating finally And considering increase and recently the expenses from on at a from research XX.X on come previously. million million be basis XX, at previous an points XX.X the is margin increased expenses Starting from of range in settle at to year. QX increase our guidance operating the million, to for XXX XX to reflects from million million, cash The range segment with operating to I a QX payouts of in latter margins cash XX%

to an mainly market year XX% million, million year, of midpoint to XXX XX% range the improvement video of the projected product to million range due both represents year. Gross For this due XXX% point At Most last our midpoint the versus in XXX we range tied in expenses to to between of Operating streaming. the rebounding in increased expect at this XX.X full improved year-over-year an year last broadcast expenses X% higher to XXX over XXXX, EBITDA At XX%. guidance, reflects XX.X Adjusted revenue revenue. be the our growth to million, mix. expected million. increase attributable guidance, XXX increase in margins of the midpoint. over demand increase sales of to million of XXX is are to basis of and last growth of over the the

revenue last expect represents the the approximately to For QX, this million. video range year. QX in our we at guidance of over XX growth XX of XX% midpoint million

a year to year as for from to On second the negative increase X.X to QX XX, XX range point of gross last for improvement you a to full video of million to XX% X.X I XX% year, our Operating range and an in quarter. mentioned from basis expect at QX million. from XX This give year. guidance increased the Adjusted EBITDA the positive margin We XX due XX%. primarily previously. segment million million, over last Slide cable sales range midpoint is to will expenses expenses

access year-over-year. XX%, to million to in XXXX, fiber to and growth an For the versus hardware. an as margins year growth the At versus marketing momentum XX as expect of million be million, guidance, last X% expected in at models well to an to and point range Gross year. home between costs cable midpoint deployment research as last related the XX% customers the is mix million due XXX over development basis at currently XX.X a XX is revenue. of increased the new strong existing increased chain the decline to DAA headwind This our of year revenue Most growth to to the driven due million. XXX of converged expenses the with year of actual rate and the a EBITDA XX% XXX of sales expenses. of XX.X million, and increased our midpoint, range reflects primarily customer this full increase range of last supply and to we Operating XX% increase the are Adjusted midpoint. increase by in

the for XX%, QX midpoint For point our QX, million. reduction reflects At reflects range guidance, access cable Gross to year. range this midpoint million XX% QX basis in expect revenue in we at cable over XX margin of currently XX% over last of the this to year. XXX of of the last XX a guidance growth our

and expenses to For mentioned our the guidance. primarily gross for continued grateful midpoint a the to over increase year dedication first for this of and year, closing, EBITDA previously, to again, XX sales to are we In at our during million from increased million, XX range the last reflects X.X QX Operating from reasons development and million team's due the range XX% margin quarter. strong guidance, X.X full and marketing million. to expenses. research performance Adjusted

for access call it for continue long-term to up the I'll And thank success. for our remarks on our before everyone. turn open execute back We Patrick questions. With positioning businesses video final cable you, and strategic we streaming that, priorities, now to

Patrick Harshman

to want We by Sanjay. thanks, reviewing year. the conclude strategic priorities our Okay, for

the deployments, premises tier converged to and CableOS particularly tier DOCSIS, for domestic market capabilities. existing to access one entering our operators, global our objectives accelerated fiber expanding the expansion ones, additional are business, For new cable of our new

aggressively term cost pushing are forward We challenges. despite near

value will base are it And superior while globally and growth, and top all traditional deep broadcast subscriber SaaS in objectives to segment, multi-year our together, a usage, putting and business, create that dive business our of coming access delivering media transformation be video additional to infrastructure both video of members and we capitalizing bottom-line industry we're the executive For the experiences dive our aim solutions customer and outlook accelerating and and into leading enable to growth deliver team. streaming events, outlook on two featuring industrial we later of associated hosting special finally, worldwide. and May, a pleased deep announce our for in to management multi-year cable similar our

to hope We finalized that all you join open expect today's to shortly like With us. and be up that for I now questions. would call the

Operator

And comes first question Instructions] JPMorgan. [Operator from Samik your from Chatterjee

Joe Cardoso

Cardoso Joe higher first on is the portion Samik guide a this you supply full just of into impacted making mentioning supply clarification, whether you on are obviously of and ability any more seeing question to for you're kind My Hi, Chatterjee. remarks large and And spent the guide? always on And any on are curious constraints on customers? the your top-line? implications if prepared constraints a on supply that basically, I'm the by your costs. year guys of your implications you being your

Sanjay Kalra

have in Yes, supply of factored we we in in range. consider the risk top-line our guidance terms any chain, and

[indiscernible] point for the this we our guidance this at So supply risk chain. consider entails completely

Joe Cardoso

-- is could currently, any I to Are on if have customers or not today? just you done guess implications yet follow you your there. that not up I ability seeing supply

Patrick Harshman

to-date. with dealt with not to-date. If dealt in, what we've I We've that step can not

upside our creates create of is, but quarter. say remove gave bit does does talking to What situation working a guidance last going we're little a current it we're the of that a not ceiling beyond -- is not today about last we to that ceiling, on think I the

sky But we're your supply. reduced Right But the a So supply any with that now, It's bit there And right manage simply demand outstrip not the costs, anticipated if upside, where is and limit? don't that is a is, as deliver sky is see we we limit. done. times, actually to of now expectations. fortunate question may manage the originally that a entailed a scenario albeit, of we we've dynamic said, at higher situation. we think than couple see, getting can little the

said, on we've deliver the we've that upside Sanjay possible, As to that is confident got the range it about that resources within it possible. is we're talked

I we to continue But probably likely move demand is as think of that bit through satisfy the both to things that then the more demand. a little there, keep year. able are be you we'll we'll it's dynamic. the those updated And

Joe Cardoso

color. and appreciate the really this the of more just globally initiatives Commission's the question, infrastructure broader, plan guess, pipeline, for RDOF the then project and it a there's U.K. the second from in I the And I including gigabit governments my There's U.S. is and like bunch looks broadband European in project.

how Just curious benefit expect do And Harmonic investments in to government on your them is these when you to projects position know, overall you. materialize? hear thoughts terms of you to these from Thank globally?

Patrick Harshman

to being to the as being be, And and U.K. strong within extremely we technology cable. is world initiatives and it's States United working there's with broadband the much issue a of position big is priority your the fiber. implied participant -- And so a agree key And have is different is broadband I think a expand timing to access all right? headline happening the we're questions of from over country as appreciate great is, Bhutan, a different But a a place. it's you think very place. address to the enabled it's, broadband know, Well, can I every to that we from place also question we position Yes. to supplier the lot that an

discussed that protocol, fiber substantially think think as play? And those kind you expanding that opportunity in infrastructures. expands can who will, we of are before, we expand Our a is that. We we've beyond our in that first cable fiber cable and if operators addressed once Well, we've market. or got hybrid have

not market ourselves. the can positioned. very But today. we're really well can think a subset but not only we growing differentiate So targeting broadband we're totality the of We're we it's we we're targeting attractive think really, a the where participate, environment, market of

reasons the technologies XXXX pretty we're not future several one we for now. one investing the why So into and and in in our the pretty, years. that for current to the our last in just And thing. upcoming but think strengthen next continuing exciting. both we're position, is of just And guess it's I lean leaning And to

that mentioned and plan conversation this and we one slightly really that investor of the hits later topic ago, perspective market go into depth month. a question in both do As opportunity detail we technology the reasons the a moment to the in have the your to an market to think in on I really I event talk from And more we're more doing what on want see. about we

Joe Cardoso

the question and the on Appreciate you. results. congrats Thank

Operator

And your Barclays. from next Long Tim comes question from

Tim Long

questions, if could. I Two

First side. C-band on the

out a like Sounds base. bit it's from a to starting broaden customer more little

So sounds as kind level activity backlog. overview, kind just to really on of of And they then, an give Patrick cable the pipeline and the competitive like could changes update environment? of this along, maybe us there you of a outside us side on the moves any big are

you. wins why you curve the traffic little the us turn as of growth is bit on Thank to that you're driving new deployment, that revenues. growth. Is slope sense a what of could a into that maybe or stuff So it seeing of maybe competitive lot and to if give a the kind it

Patrick Harshman

Okay. Thanks for the question.

particular, materialize And of in as beginning On probability we high is it see substantial into stuff, and for also we focus we're year. opportunities. of new where the couple seeing see really come second indeed, In the the opportunities to half that XXXX. C-band a more that see we

say was that would next So is domestic. wave there opportunity of that I

quite think is given. conversations ads, market that in engaged still it guidance promising but would recover And the so way that beyond to not traffic over cetera. benefits lot continues therefore in related because to of the we because actually, video personalization, to of from in focus. our into opportunities, moving looking targeted there's fiber network from fact that but customization, bandwidth, terrestrial government et is we're a that, is still up see I perspective, waking a be to broader factored yet only the call number those international not any into trend, And around not the and I a But we've

it's certainly customers, is we're with been seen opportunity the We're couple very a and the what that not dynamic and any deals conversations We've last the of internationally. number competitors, not a leading additional only question, to a some Tim significant one. change to but So part dynamic, we in to There's evolving change. is positioned think environment. that a way, leaned really into The really domestically opportunities. a really any go we're broader competitive uniquely both positive of of not it's pretty

the government becoming comments, broadband your or look cable above from important. a at the on, a touched only a that think consumer from perspective, last in a do as On question the I it's all little bit whether is we perspective, front, since must it's more

I that. think see we all

more there's appointments, the demand and strong think get getting more comfortable we're we're getting existing new with demand, the more of there's and new customers slightly think credibility, conservative success with customers little we questions or to deployment that consumer our about to technology, more we a market customers And so of and more And the they're go seeing. there's volume, continue virtuous and from the service seeing once I operators, bit particularly had we're success our strong perhaps quality we a both in as from the circle, more faster.

our go overnight. snap I that and And to would can things being There a and impacts, carefully necessarily deploy learned on it chain. the not comments, the on strengthen move. to pace think modestly the of are those we managing the the say, is thing said, That -- a And into the both of factoring pipeline. here, we've also a depending environment, which rambling so we're of also process supply that risk I here this is

okay. given dealing issues, competitive demand, look Supply all if top it's at that close the and bit. a still related XX%. going is, fast okay, many in range, think that I respectable strong number, we're where it's not little etc. And So the stronger into our I'd to inhibits position market deployment on volume in would say with as the to But we'd places, pandemic a I some everything year-over-year, say guidance And you And fact that's end quite see. is like as a of it's going Chain that translation the transition ever. than getting

growth, growth later that, that of think with I you multi-year on want that our month we quite positive. the and of view our all from all perspective to discuss is

Operator

question James. next from Raymond your Leopold And comes from Simon

Simon Leopold

about up for could ask and XX that a you served, there? metric I modem have than you guess, that forward. this if to X us million maybe to regarding I'm measure wanted between to X% the past about you've grow been I X%, looking What how serving or And you needs million. the offering quarter, calls better basically help talked help really folks, to you million happen customers would stands imply the total which what metric understand you're on X million. what several that number is cable understand and of Could XX the is

Patrick Harshman

Okay, indeed, in got numbers. it you've round

right. they're technology replace rebuilding the The XX neighborhood. truck so centralized know, very of to an node. there minimum today deeper the go it modem you go the And subscribers. are now, old switch to often involves a flip of main someone deployment ground an to a thing. which architecting at the the house, cable if existing neighborhoods, DAA that who assignment over up there house, repainting room. into head in is CableOS actually They million in and node we actively -- kind and And needs in isn't of deploying a is roll, rewiring about I There notes pulling down is it got used, kind bucket by DAA You've so And out serve the right means truck needs or a are the is don't architecture, people about room or will, the They with fiber end. of of

on are running to our that infrastructure, So that's infrastructure, legacy if you're both of the replacing our data software that -- of making core software on But deploying commercial you of it's you -- central the off so technology center in much architectural, the the is time of kind process often the the rest know office And where itself. shelf wiring, part old moving changes, chassis. deeper network. very the fiber infrastructure servers, that not it's infrastructure, server the the the off you're consuming,

capital money to process somewhat as a for the markets, And a So process that well limits crews And any at operator lot it's throwing frankly, money in Simon that's operators many They're work speed tough amount etc. with not of that given time consuming of infinite this well. and come are also budget. that takes by simultaneously. even the heeled most

to their year So rolling is those be always to out expected there That's to that to three customers, solution we case, most And what or out. a key our process expect be plan. why with said of expect customers we we've roll of year our we XXX% process, process. of that, four who even a do to the several

that And so we're on curve.

As to experience expect year still pace, of at quicken, even several process larger quicker the the the to customers for expect picking year across up entirety the a expect But roll to this to we And part footprint. a our the be operators we becomes clear. biggest we technology projecting our out growth. be of the largest that's We're better, pace pace. coming the

Simon Leopold

to unpack that follow could see And you then some what's nodes your have you dilute up, cable we necessarily. as But And I software? mix, for the crystal margin certainly on Thanks. impact margin to access your versus supply segment. that. of what like I don't tells the supply wanted when We maybe open gross chains to if try appreciate pressure the understand versus up gross a example, the ball chain understand is, product I'd

in what have business a gross understand that get And more sort unit of those guess a levels? view normalized do expect should when is trying here to supply on I margin non market? I'm what in constrained to you you we So would the should back be

Sanjay Kalra

I Simon, the appreciate So question.

as the think, due is prepared out chain margin. in we seeing the I decline to time, now we substantially DAA At gross are hardware. I there the the supply remarks, increased same my seeing are pointed pieces also growth in The are marginally, margin both costs. related gross to

the each, supply are in it's there, So back what us, expecting it's costs. and not to I piece definitely year. supply the for years. are going That And behind but substantially both should margins better think challenges of we where outer we said, chain quantify pieces once are return in this is hard the chain

we that the But 'XX IR in we not event from this into I this point, cover multi-year year. think Patrick At think directionally are we when we margins. we at talk mentioned, which see about expectation time. should can our the I going where the improvement are

Simon Leopold

should as reason? misleading or that value we look kind 'XX there for that fiscal Is level the I guess at is any normalized a of

Patrick Harshman

our is step XXXX. I I do than If better could in, mean target to

a maybe It's on hardware. And enhancements, the as I we Then could got if So I going our average. it's as mid expect say, margin, don't going up think said, still software etc. volume, from CEO let's we've right? high software expectation. with been long-term, hardware plus But the well And said that component, value. designer that's always in XX to the that has XXs, a we've be percent. normalized is be very hardware that a to previously is, we component, mean, perspective, there's there's I look, component

unpack the We're we've as paying not fundamental we're yes, is key other short-term on gone costs. But asked, assembly bit, and we're think, a hardware. I lot that a the you a components. reset, little paying paying for lot that to higher more transport way, a also more

our I we certainly guidance this we So sooner, don't with in to I with XXXX. that into it But of momentum mean, now, again, this But, could a with We expected think kind to a we're indefinitely. go the I though opportunity, grab us forward somewhat to crystal volumes. higher ball. to willing solutions. margins we later have expectation, good ball number of will thing. XXXX. very land fact emphasize take expect, the chain supply that lower lower hope real this we clear But XXXX. recovery we've we would some got But we carryover what right kind crystal getting And hit it's probably none expect to if want assumes is a see fundamental a is were of of those impairments We from hits, we on deal a to don't see be off we perspectives. but again, have be a have

we we the deploy we're for we hardware which need. there, out that. So in materials dollar right And every have we're cases are now leaning DAA top the planet means for scouring in opportunity, many to paying

I that's think do strategically. to right the thing

right many Yes, the our significant it share. at absolutely is up to the term margin estate I terms think benefit opportunity, to leadership think strategic the that picking business way a costing durable real thing that's it's a market cost we're years opportunity. going capturing is, for look of be is market growth us after think that But year near is in I our gross I And to multi headwind right the short-term. behind us. this

Simon Leopold

that's helpful. looking was Thank I what you. That's for. Great, Appreciate it.

Operator

have You from Jefferies. a from Notter question George

George Notter

earlier. from I to to wanted guess discussion I come the back C-band

think I Are a forward? deadline then a X, December opportunities, you of XXXX. seeing guess XXXX guess there's course clarification seeing here. out think of a you're said some I you I broadening of coming Then the opportunities I the

of are those Or? the seeing talk there broadening coming other deals pieces business forward? you a you're forward? now kind about of some Are that are when that of opportunities, So coming

Patrick Harshman

George. we're referring different, bit No, to little a something

some know, the think, satellite you the philosophy causing is transport. question but may to world, a through stop what's growth listening mean, to-date though around and has networks. I project it, the base seeing moving it, is, fiber C-band folks, I out the the [ph] not over -- been [ain't] of others philosophy, I to has huge fix using, video around why the call don't I with intellectually, in wait pause. fix what is there, that backup, a And ways, [ph] happening let's think taking we're success this, out don't of in or growth be Even been still minute, there amount it. a not? know, Just And but many [ain't]

a different traffic success on is offer. us fiber save even and the hand, the deliver the requiring service bearing saying satellite, allow discussion a to on on one to moving plan isn't hand. wait that absence conversion the opening it's to government door money if is us of government to of initiative maybe down in going a And even more going to pressure, kind the minute, or maybe this innovative other more So abandon of of the

So of Does but it's growing broadly. referring that the more driven dialogue industry rather, in leverage not around programs, make latter we're government that sense? to a technology a to pull this whether

George Notter

I guess wanted also That's about helpful. I very one to ask maybe RDOF. in

Are create guides the you or obviously that Are you. customers new that one. that out Harmonic revenue of specific can list phase you there So, awardees customers operators there for for list see are is on there identify? specific opportunity that

Patrick Harshman

seat Yes, is people existing the short There is the are who the front and of and the But short we've answer. in center customers a pipeline. are are I don't suggest our sales auditorium. in answer yes. got people right who there that, want are to

cable well. clear, Now, to subset. the focusing as we've on we're a stated, are of on own subset those Those folks we're infrastructure focusing as some today who be

is RDOF that absolutely they're So who of a focus. is the of operators? They're and in to who anyone category, kind cable which for hybrid would part go-to-market the subset premises be fiber our of awardees. But absolutely

Operator

Mr. from muted. is you Steven Frankel, Colliers. to And line see question from check Frankel have a if your

Steven Frankel

market you this have acceleration need R&D pace get to opportunity that things what to around go. of think Patrick, kind new to reflecting in just for targeted? versus There the we faster thank kind you you already extent you projects accelerating of existing the is

Patrick Harshman

do several tier for one the think recently of ones -- it the that significant of one a announced the our be unique pipeline. tier we've one ones adapting got another we're coming. we've I look one is has And their or every own other, it have of both. we we've formula the tier got, with we've a added And frank, this And in planning stuff. part before signed And wish them. to with and quarter. kind success ones mix quarter, We it's was are I we've before success more said last

couple But second learning we're it. the talked what it's So part home is, deployments, looking, I the we're puck of a of times envisioning really the with fiber existing see overall the we've headed this and ice of of in not stick if puck down about and for what opportunity, the and seeing is analogy. the moving where we're can that there's part the momentum we

or up in. let's think years. I And benefit, growth if to And for now, mean, spend shows really now XXXX. in -- those the aspirations in we've we we that real is later face got on it to in regard as time is 'XX R&D so it, lean

think is so time. And now we the

Steven Frankel

up. Well, and then one follow

it's before from that the I mix increasing think and I heard you coming is DAA in tier ones. say

customers in they the one kind fair dipping toe So of fits and XX terms and is it of far were foot say months, starts those that that can of now to their are over the tier doing kind it, that deployments? enough last into put their on accelerator

Patrick Harshman

increasing. Yes, of the is employment definitely pace

I think that's one thing.

a opportunity. DAA short-term, or but that in just revenue opportunity opportunity there the a leaning short-term do we a higher cost, incremental a the at presence real off I a started little sources. we our think share operators particular of the short-term, initially of even valuable just is out network to node bit is it to think that We And of again, think couple lead because market right strength gaining other And those not into. is view higher with is, share we're different solution. into we're that, And is thing DAA market estate. a let's real the getting thing several call where putting but not

Operator

have a from Savageaux you Tim question And Northland Capital. from

Tim Savageaux

be trying couple Got quick a I'm here. to questions.

trying accelerating First, topic XX. the cable deployment gap to X of the between and million bridge in cable modems and overall

in thought the commented I thinking a more In of end recent not growth by interesting nine about we so range revenue. sounds separate increased acceleration and one. you that cable industry you a served that to the may guidance Should of targets. completely a And a context, think relationship where I that's event acceleration. that there we or market high the pretty number is at see that end or which between those of like, conservative be on linear even be up have -- would mentioned you Harmonic's year, the I mean, XX% follow should this type light in that of understanding then modem be a

Patrick Harshman

Tim. thanks for question, Well, the

the are I think DAA Harmonic is specifically doing are which a to are community. referring targeted And CMTS, talking at etc. a operator solutions about others large. but tied at And think really as ahead industry class not DAA, not made event, DAA you're I was cable think there I virtualized that comments they that couple to I the recent while industry -- solutions, at we're of of including on are who the

well are it So there. the international overall a as not was number, number, a therefore estimate domestic that Harmonic an competitor but I certainly, included provided there solutions was industry as out and DAA that

growth discussing, industry concede with forecasts than variables So that different different yes, of the I further, somewhat also floating guidance. around. couple offering a is there's And will financial

So got couple different going a you've on. of things

out industry conviction, projections in overall therefore said, the reading terms way But only the yes, I versus is, increasingly industry of of revenue highlighted more technology. came I is with And good get increased DAA as that just is a seeing to that as numbers Harmonic's. those draw one and DAA are between think, I've not actually couple think for of what comfortable and reasons, conferences a we is news industry as our but thing you go. industry more straight not important line the can a the well viable, live it's as

Tim Savageaux

you there. Okay. Did that share, thought I'll say leave you just one gaining were but

has more kind of that at a segments tactically press access, Investor least, we Days more I'm that should of should we And on think on driver there might might to-date, also, and incentive a maybe Second being high separately, level, the choice thinking activity you've But release, shorter segment might for you little wonder possibly function comp, how both cooperation be to and comment I that about the guess be strategic changes at board more shorter mentioned about I these that that for that a approach well. discussion guess of were And, detailed a And reference be cable thinking one Harmonic guidance the result as your as in the you've what is, that if was going new of seen. make the and call. expansively made Harmonic or video brief of part been increasingly, I a it for if or the and we strategically. a to case, the at call? what agreement it, the whether impact a besides about agreement

Sanjay Kalra

with the me this purely start This from has incentive decision. one, let change, clarify So, agreement. cooperation to internal the comp cash nothing let first stock me with to do of is

to cash the plan marginally good comp profit for a reduce a helps the year, as and valuation level comp to decision are we As company well. the looked the very it we of Board generating over at piece stock reaching, we the our cash took convert operating and are of

clarify, that me has So let it to with nothing do agreement.

transparency, not do had. continuous revenue we've quarter, have industry segments, being guidance the the regular the need starting results. the giving given profit operating actual we to in on the based the that guidance, the Secondly, reported questions right two during to the it terms from we always reported of this the felt in have distinct, while we segments interactions in two But

transparent with we thought any agreement. And visibility what doing. more each of is it this segment and nothing also provides it's more to other again, has So do

So transparency. on this more is

Patrick Harshman

that modest our company, maybe over It's a several Separately, no not business exciting with the from that just how been think several cooperation several that's past what's we're we years, just answer in over we're really to and to transparent value be businesses, anything how we've statement what we've wouldn't for change. think And there both. change relationship pieces the in the years, can our And that I perspective, we've stock full mistake value from it value been clear quite and different along my to about years, numerous that's maybe strategically Scopia, the work the been discussed team, will the two we've nor strategic Both years. we as they've together The on truly no the the business investing and very trying in the follow we futures of over agreement, Tim that Board lines the think, management the well to quite where the the see thinking past of whatever has been quite maybe way in that we synergy. create level And overwhelming. synergy full a way is of times good transparent, our there's company. say, have opportunities between you about what the stop. so we've our a several question and received two, as in units there's Sanjay said, we part, past and And can, today. of saying all anything create conclude as

forward, move in overall to into really business as can that continue both will sides we segments. we see on the two value very as of we We and this call create much creating means pleased And looking good the much as I'm which value business. strategic to enterprise, can coming actually as progress

a sides of reason future to on on there's be good think and business. lot of the see so to both I encouraged both a sides

Operator

call further I'm no to are management for there this And back closing turn over going to time. questions at the remarks.

Patrick Harshman

challenges, you look joining We've all Well, lot forward in a with take you for us. out of all thank of of but month lot our touch look dates then, to very to a again for ahead speaking an we We right. mentioned, as investor Bye-bye. All us. eye all time. staying and Until of in so with or soon. you opportunities particular, keep care in a much got forward and planned

Operator

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

You may now disconnect.

Harmonic (HLIT) 4 May 212021 Q1 Earnings call transcript