HLIT - Earnings call transcript Q4 2021

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Operator

Welcome to the Q4 2021 Harmonic Earnings Conference Call. My name is Valerie, and I'll be your operator for today's call. At this time all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions]. conference recorded. this that note is being Please I Hanover, Investor turn the to David call over Relations. will now David, you may begin.

David Hanover

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

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

Now turning to Slide X.

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

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

Patrick Harshman

over year segment quarter with a And future over XX% Access of XX% strategic wins, as results. Harmonic revenue secure revenue EPS segments $X.XX. while new everyone, $XXX.X XX% was continue thanks, Revenue backlog our Well, Cable was in excellent Video and call. record both of and XXXX year-over-year. Full invest was book-to-bill resulting David, fourth and CableOS to as our strong $XXX generation to grew grew XX.X% revenue quarter and operating Fourth positive in quarter a deploying customers also of another grew Cash Access Cable capped and welcome, X.X%, million. the record the number up deferred financial was strategic income. million, strong. year-over-year. delivering

growth. Video multiyear the adjusted revenue June our despite continuing Our of and foundation deploying segment margin position, remain strong and technology, of chain impact and market We're backlog strategic plans momentum, demonstrate growth revenue cash pandemic record actively solutions, in with that financial and execution results for delivered headwinds. and industry-leading XX.X%. our we you customers strong market shared a streaming our latest These days track, solutions, supply truly solid firmly and our with year-over-year extending great entering new XXXX XX.X% and on deferred outlook XXXX investor XXXX EBITDA of

EBITDA and Broadband and year. our further company's year-over-year. CableOS CableOS, was of our and closely market a win to broadband significantly Segment was power million, true very margin deploying supply it XX% announced to was X.X impacted market year America. is adjusted chain were which leader North end, headwinds, the our next-generation modem $XX.X up we X.X%, this ongoing selection Cable up Harmonic a now million, leadership technology segment, In line position providers grew both our By good service top and quarter looking another very XX% ago served broadband and XX% margins. services. to So December, Access from XX strong despite high-profile a up expands multi-gigabit gross more year-over-year. revenue in and Rogers Rogers' validates quarter

the pipeline were already to as demand Rogers, of very deploying of and working of supply customers from bookings. that customers a ahead, customers Looking early still such fourth into still platform. Existing are customers scaling XXXX deployment our newer secure convert well who existing seeking CableOS, strong to cable our have quarter who the to in share up we strong stages drove are lion's

the Fiber-to-the-Home our strong the and with and customers service of QX applications have newer the no new rural we're application new remote who began encouraged existing a wins, these customers, cable customers during new new demand shipping part progress for wins solution, software of CableOS new growing particularly are cable by However, Fiber-to-the-Home seeing the cable our We're telco XX-gig spanning also a story. and quarter Supporting switch was we quarter. infrastructure. customers

is accounts solution with We Fiber-to-the-Home powerful unique. competitive good a integrated this X DOCSIS couple for qualifying continue plus solution our to we're Tier hybrid of fiber-to-the-home operators. Validating value cable Fiber-to-the-Home our proposition, cable a see multiplier and both within making as progress

We significantly also expanding see fiber-to-the-home as market. our a addressed means of

burdened for end-to-end Overall, Our because the it broadening a strong still DAA and for course, environment continue for to both high supply remain XXXX, and more wins our market of confident That market means developing highlight ability with this our top software modules. by operator expansion line finally solution anticipated and our is which previously targets. our in deliver nodes to also said, XXXX fiber-to-the-home noncable we're is investments hardware in And demand we than demonstrates and continue growth to Despite share continue that go-to-market recent opportunity and our income to XXXX. current exceptionally see we constrained outlook costs. important challenges, for multiyear on our leadership continuing that chain these challenges, grow. supply and

DAA financial technology see broadband expand continue to and attractive greater track exceed native addressable or for be strong of technology, cable leverage will and fiber-to-the-home and into our our achieved that we progress and broadband $X #X XXXX our in access current and pipeline billion path in meet Specifically, adjacent applications. to marketplace than objectives. cloud both to growth market of sales to we're us and cable a opportunities demonstrate The on

now quarter, Europe's to segment. SaaS full year-over-year. and sequentially stronger-than-anticipated also, $XX.X streaming. year-over-year. demand points gross Video turning quarter solid strong and driven and Streaming or XX.X%, Segment and was was year was push perpetual our a million capping sales, license segment XXX up achievements. strategic Fourth strategic up financial into million, XX% adjusted revenues Now EBITDA delivered There with we Full broadcast revenue basis $XX.X segment year-over-year. encompassing for the progress XX.X% XX.X% Video flat margin by application traditional our revenue were was year XX.X%, both excellent and year,

reminder, infrastructure market. decline in a June elements: maximizing we and in the in As strategic streaming leading laid last revenue our plan Video out growing the from business taking multiyear plan. The but position a market year, X core video has broadcast profit Video and slowly large a

highlight Our plan. this XXXX strong of both execution elements of results

profitably On left, demonstrates lot the revenue of of of market this broadcast has capable side business. we're broadcast share the business, life still a growing taking of global that and higher-than-anticipated a the

saw quarter, itself of XXXX, corresponding broadcast the X,XXX broadcast VOSXXX of SaaS new into appliance new continue streaming a events On platforms. repeat grow launched to highlighted expect our third our streaming have demand to good opportunity we By SaaS on a month growth investments with fully business, growing profitably quarter side business. call, as And sporting leverage on see we wins per services delivering sustainable XXXX we market over come SaaS. number we we And to year-end, number don't X the transform fourth continue years Although trajectory. of in we saw several -- during to and new in on our drilling surge the accounts sale to of growing streaming our growing several the Tier we for translated our and companies. a design were live media the

big seeing adoption with and scale time X leagues solution usage Games, we're with U.S. time Tier high upcoming volume Olympic target of with major content service and like Associated profile shine. associated advertising our sports enable events that international and to and quality and growing requirements the big growing customers, by really

which into platform we targets to strong again grow we we on streaming streaming increasingly ahead, Consequently, providers, with high-value least streaming particularly continue in for revenue live video the summary at SaaS, on will our to you an for in differentiated business. by track to $XXX XX% our X/X of transformation expect Video market-leading to and financial track XXXX, service sports. delivered and we million we multiyear growth owners and And ongoing as SaaS content firmly Day. attain translate Looking over June believe XXXX, streaming segment, of we investments In strategic XXXX. streaming create revenue XXXX achieve ourselves, out our expect laid remain and Investor our be we we performance for remain to an exceptionally for set valuable over

a to for results So now you, over our closer look financial and at Sanjay, outlook. the

Sanjay Kalra

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

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

QX our reconciliations discussed are Both our of this presentation website. David financial on are available of As measures release includes and earnings on that earlier, to these press GAAP mentioned call. non-GAAP

businesses, or pandemic above These our we the results results, the by of quarter For of and landscape. near our chain perform caused XXXX, demonstrate ranges. with even which supply continues well, to the fourth the strength of delivered solid the guidance top challenges

we in enter we everything incredibly are teams our As XXXX. the new proud of accomplished year,

to our positioned business We foundation build in have continued this long-term excited and success, upon are for XXXX.

with annual of We on through Before solid of along our review run I million, Slide briefly detail, $XXX.X some revenue gross in record financials reported margin highlights X. I'll quarterly more EPS. the and and

which business We record for revenue, deferred well record strong sustained us ratio book-to-bill momentum backlog XXXX. saw positioning to contributed a with and also

$XXX.X XXXX. revenue full Cable million, year-over-year. up year Annual our million, compared For Video was up revenue the million, Access XX.X% and XXXX, was in XX.X% to XX% $XXX.X was segment year-over-year; total up $XXX.X

new and the our from revenue Now revenue we flat demand, and bandwidth reported customers Video fourth year-over-year, reclamation approximately and XX.X% This QX quarter robust strong ramp-up segment, SaaS let's wins. reflecting XG both XX.X% $XX.X continuing In broadcast our sequentially, continued existing million, of of growth. performance review streaming sequentially up reflects and revenue solid projects customer year-over-year.

grew ended Comcast XX revenues year-over-year XXX% SaaS subset quarter, of XXX XX.X% quarter, Intelsat year-over-year total QX fourth XX% during to new had the customers of of existing streaming the growth. revenue. new revenue total customers. saw SaaS 'XX our churn customers from activation due of grew representing added revenues and total XX% we XX% SaaS We quarter. contributed of deployments. X a X total small and contributed greater customers increasing than revenue customers, and the XX.X% and usage with In During We

declined mix. QX As margins earlier, points our 'XX to becoming to XX.X% an due is compared Cable revenues total part in shown XX.X% of company overall This gross revenue in XXX by increasing segment to 'XX. basis QX

For reflects XX% 'XX in depress reflecting was XX.X% XX.X% compared and Access margins year the QX 'XX. within Cable full sequential in a 'XX in over relative ago product revenues the QX. in an gross XX.X% sequential gross related The year improved with decrease as the expectations improvement category 'XX QX was chain chain to XX.X% while XX.X% in compared high our consistent compared at in Extraordinary XXXX, due Cable to to SaaS mix, a appliance costs QX margins to our with annual QX to primarily software margin prior for in Video XXXX. mix business. decline, segment expanding supply period. segment the costs an was QX pandemic XX% to and grew 'XX year, supply XXXX to in continued

X.X 'XX These development, and million is compared increase down due of $XX.X $XX.X EBITDA and revenue The in million in Cable our our of $XX.X of million our of 'XX. We the compared of QX million were shares, and weighted weighted share share $X.X reflects XX.X% Slide sequential issues activities price of record stock and XX.X% to to from 'XX QX X. business. 'XX. a and compared primarily growth effect stock and QX to from and million $XXX.X to Moving million QX debt million bookings $X.XX to million is both by Access X.X shares convertible effect our in revenue of adjusted average and resulting were at in dilutive stock issued by dilution per and to increase of our dilution $XXX.X million shares, QX with ESPP research due million, and drive 'XX for by XX.X% income Access in of all $XX.X sales increase of $XXX.X of statement outstanding comprised the sending effect options Adjusted shares 'XX. $X.XX This on due of and and to debt EBITDA $XX.X The $XX X.X revenue million the primarily of marketing and QX million compared diluted stock QX and quarter QX Video. convertible Cable the increased to per EPS XXX.X million was issued price in in effect translated to the $XX.X employees. from in an the million due to year-over-year weighted million million in and in at compares million of RSUs million shares to QX QX 'XX. share for million average 'XX QX X.X XXX.X operating shares QX X.X increase the at shares and 'XX QX shares count $X.XX our 'XX. expenses The ESPP both year-over-year 'XX X.X from an the during options QX million resulting a 'XX an in XXX.X to average quarter in ended to and quarter increase employees. dilutive

demonstrating We and of our new pleased for another are robust report strong solutions quarter demand to bookings services. innovative continued

ordering by extraordinary ahead X.X customers and X.X strong year video into this X.X 'XX partly and supply in for to in book-to-bill Our increased X.X was 'XX, in QX ratio X.X due The partly supply landscape. The and to book-to-bill ratio well was in Cable book-to-bill driven CableOS to ratio bookings, a due secure full accelerating Cable. Access lead 'XX. XXXX chain for XXXX deployments 'XX by QX primarily QX times record QX is

cash cash Slide compared to We last sheet. ended Turning We'll million million with year. $XX.X now and the fixed million $X segment $X.X $X.X generated primarily balance comprised our of Access profits, at 'XX QX both million sequential QX of attributable million $XXX.X of million increase used to net operating discuss and The XX. from cash liquidity to in Cable of end position is assets. of Video $XXX.X of operations, and purchase

healthy to end end in of sales was 'XX QX days all XX the very and days QX XXXX, collection outstanding days at the XX days compared QX metrics. Our at of XX reflecting

our 'XX year-over-year and from and Our compared revenue was end backlog backlog million of the in days increasing backlog at QX inventory at deferred was at at QX, reflecting demand and customers on we of QX the QX volume to days inventory video on at prepare from growing we sequentially up continued from XX.X% XX% anticipation inventory the million, the a at 'XX, days XX of XX X-year revenue and representing to converted up into hand $XXX.X record and end million deferred 'XX continuing end $XXX.X revenue of that the shipments. QX This of $XXX 'XX. cable gets SaaS as streaming Where end to challenges. XX chain At of possible, for levels revenue quarter the historically, reflects QX and the heavy XX.X% days Note a increasing stock about within of growth end supply total continue commitments. at higher-than-normal deferred XXXX large rolling QX our period. XX%

went 'XX, with these approximately moved amount finish will future you bookings. our million, initial a agreed $XX Slide Cable At long-term With with to process million I and As therefore, customers. progress us $XXX CableOS X contracted Starting approximately million, this of and calls, Access the QX continues $XXX X for models included investor now solid from Tier for we into XXXX, in share end into of order of beyond. of account, million was the of on which segments, not incremental very revenues XXXX. Access in have contractually which XXXX contracts is mentioned on purchase backlog strong base events towards and Taking highlights additional June last our CableOS approximately during a shared our our provide Video Cable quarter previous XX. with business down through and $XXX we our total to with cable

target We our in In are making -- target, solid sorry. growth towards progress and goals. XXXX top multiyear our profit rate line growth revenue well XXXX, of excess was growth

margins sales. XXXX continuing and remain higher-than-expected to supply and extraordinary market reflects despite growth growth outlook margin mix, in chain XXXX faster-than-anticipated supply further revenue costs hardware due gross dollars product of the to is environment. gross Consequently, share track. Our DAA strong were both chain This part in roughly due on current lower although

these XXXX. to these and We hardware we in we continue trends that, said when outlined improve Having software industry-wide normalizing volume, our continue expect last in June. rates to growth issues, for margins remain confident with

approximately excluding gross supply XXXX or margins XXXX improve our would in our margins EBITDA in progress expect goal. adjusted have further line the XX%, expect been to anticipated we improve exceed costs, we Hence, fact, with XXXX. to to remain this and in and meet XXXX chain in In

improved Video the revenue XXXX growth to and significantly, grew SaaS in XX. substantially XX% revenues was remains XXXX million respect goal outstanding streaming our XXXX revenue revenues to was to is segment by XXXX strategically already SaaS XXXX. approaching an and with goals. target on on growth over targets. our year $XXX our stronger revenue and As for XXXX. compared Both by anticipated than driven Streaming important achieve and XXXX Slide gross XXXX Broadcast margins growth

margins. EBITDA adjusted at Looking

XXXX an overall transformation a is plan we picture with anticipate trajectory our XXXX, in fully line XXXX the the slight to in achieve While target. step from exceptional back

provide that also to debt. on picture background, update an big want I Now our convertible with

We debt, segment, XXXX cash of XXXX, light $XXX.X multiyear in made outstanding to principal mature thereby in million upon maturity, go full of year guidance non-GAAP further have detailed healthy to of will Slide first and to under XX.X tax included I'll in for XXXX I in and through beginning mature XXXX. million now September X.X million these some company. and offer effects the turn XXXX. To then amount shares of operating our with which $XXX.X XXXX $XX.X eliminating full generation the segment respect convertible expenses, In guidance clarity, XXXX Cable in guidance, December for I'm anticipated of certain income on will as to in for rate. business million versus for I shares irrevocable going expectations cash will SaaS the and R&D items model, our redeem by XXXX we exposure guidance XX. highlight of election our Video in accounting changes notes an for of review dilution treatment in million our our followed

to million to heavy $XXX expenses $XXX expect million hardware to in For progress XX.X% based demand and to to DAA in the XX% EBITDA profit as operating we gross million $XXX $XX million range the $XX from continued to we of and million, supply the million. the adjusted revenue $XXX $XX XXXX, expect the range on range range million, from full year Gross to margins $XX in of to to date, achieve million of Cable Access range remediations.

in a increasing in to pipeline million. million range margins results investments strong XXXX to we Video expenses range range we opportunities, of $XXX SaaS are expect in of range $XXX the the operating million streaming of accordingly. gross in segment gross to XX.X% of profit the With our to SaaS of $XXX $XXX $XXX million, XX.X%, the $XXX million, year revenue full For million

products. costs are fourth expense SaaS impact of supporting of the activities Our some change discontinuing of because to XXXX, certain the quarter R&D operating reflects the expenses going capitalization certain these and guidance our This of was required forward. needing broadcast R&D in appliance SaaS also

million. higher million in expenses million to to range R&D EBITDA to SaaS We margins Adjusted to $XX then gross approximately in result expect $XX higher XXXX, $X and XXXX this from thereafter. compared

million, of to for total 'XX, $XXX range gross to full For to range to million of the expect XX.X%, year XX.X% from in expenses revenue margin profit $XXX $XXX we range million. gross to $XXX million $XXX million million, $XXX company operating to in range the from

planned XX%, expenses include to $X is expectations salary of new of to from range $X.XX Our Adjusted of due approximately XXXX operating $XX wins. and full XXX.X our The results EPS NOLs range EBITDA together from end secure capitalization and effective count our with to associated impact to is a year expenses decrease million share which travels per to primarily as high to employees. a mentioned, continue in $X.XX profitable. via will XXXX. with $X.XX $XX customer increase net million diluted on additional from to which R&D The be at change low and expenses the convertible debt we in rate operating to $X.XX This additional average stock approximately weighted to and discuss reduction I to end, increases the tax I million. the XX% carried additional decrease EPS reflecting higher-than-normal share. due an change, issuance just rate an at result share SaaS the tax million, momentarily, in of of

end pay the we investment working in at December allows of for in I needed to range due million is in XXXX, growth. $XXX expected between committed come healthy net for cash approximately to which have which XXXX of of $XXX debt capital redemption is cash This principal cash million mentioned Finally, for million, continued the that convertible to earlier. $XX in

review our first for non-GAAP XX, of Now the on quarter XXXX. guidance Slide I'll

$XX $XX $X gross of million gross range to in XX%; to operating range million from $X to For in range range the million; million. to to the of the to of $XX expect $XX in million; margin XX% $XX profit in Access million our we Cable the segment expenses revenue in adjusted range $XX QX, million million; from EBITDA

range million; of $XX the million gross million; million to XX% million; QX, of $XX of in XX%; range $XX in adjusted the million For of EBITDA $XX the expenses expect margin in profit to million. of to revenue to breakeven range operating in a $X to gross our profit segment from the range in to $XX range Video we $XX

EPS $X.XX, QX, total to of range in is $XXX $X.XX million; progress count range $XX XXXX, XX.X% from margin to revenue range XX.X%; to average the first million in of profit in $XX business million; company $XX million; our long-term expect XXXX expenses towards for million. attaining in quarter In range gross million. $XXX.X to the position of continued ourselves For to diluted end for $XX momentum from of and the the EBITDA million approximately to to XXXX our $XXX of our expected to from adjusted in we to share summary, million; we weighted range targets. range made gross $XX At significant to operating cash million million of from $XXX $XXX range $X million to to

today. what consistent proud now, already long-term up before we We for with for we and previously. are back XXXX you, you appreciate we Patrick operating achieved, remains shared everyone. attention have the your revenue our of final with turn outlook remarks And very to call I'll open Thank and it questions. We models

Patrick Harshman

as summarizing conclude strategic much, our What a Sanjay, XXXX. we'd priorities lot Thanks Okay. to enter by very like we there.

for market and software our with Access global converged operators scaling our volume customers, our deployments new enabling For address expanding core X unique our DOCSIS and and with Cable list our objectives through of winning remain, fiber-to-the-home applications. business, growing Tier

continue of to capitalizing customers and thank of Our be greater accelerating to XXXX continue and your of our these for especially sports even list to we financial support execution. business strong, our Video extending transformations. a the our to base and for most broadcast our SaaS of was support the and and I profitably call streaming leverage to extend growth our growing and content, top-tier segment all open solutions value the for on strategic online XXXX, with of valuable for In customers questions. and to capabilities streaming traditional the the And objectives want sales requirements a customer industry-leading shareholders. our that, year you aim for up create enable

Operator

Instructions]. [Operator

Leopold comes of from Simon James. first Our Raymond question

Simon Leopold

You're right, Patrick, there's here. a lot digest to

first looking get full margin improvement implies through a trends forecast for the the the us I year. at we quarter Cable the given year. in think segment, Access lot And of So you've first and a as gross the this

a And I've got degree going down. mix So To not what think input So to for exit towards costs you paint in are better margin? Or of hardware? more software the us about in assuming then able what And level where drivers of to a could follow-up. get implied in this shifting maybe you sense is gross raise year to -- prices? a how picture terms if of much the XXXX from trajectory and gross I'm Access Cable got I'm that do you've trying you of higher segment? gets guidance by full we margin Cable that's probably

Sanjay Kalra

Simon. Thanks,

So a there are here. couple things of

entering think, at to XXs. we of a XX% all, guided you to said, QX, But with start I'll as -- the end, year, XX%. close high first for full high it's I XX.X% yes, in range

So the quarters QX. closer carryover are mainly from outer expected last a year, with QX a to yes, And slight because are of coming margins QX in last supply if chain mix and to lower. compared full That for the the the to improvement year improve they expected where little is be are the -- to the overall, year margins said, in we starting itself, year, have or high we ended get showed. Without are as said, overall, we prepared supply full XX% get I for chain. to in remarks, in we we pointed But margins supply end, That chain been it, expect be more the the I out, lower the back the that XX.X% I say. as impacted mentioned regular margins of instead Simon, impact, the would could the normal year, on my by we during progress shape. end.

the last up So our in margins go the because X%, that's scale, couple said, working but impacts year, which chain range Instead Even may of impact. XXXX. though growth. in things are with XXXX it are versus impact. impacts see the with by are chain At That supply there you we of we are supply of a X%, situation happening. That economies increases, offset which price the are XXXX, higher said, chain customers. the to supply are seeing chain of supply our in the of for same time, the the similar

same, going on So a the the but these is overall, margin there's with lot offsets.

Simon Leopold

a here. And just follow-up as then

terms of don't been a us cadence cable think number us served the of I in You've had the giving you of metrics modems steady kind passing. gave it's and

cable trying sense to is I'm not served a wondering how I'm And better think can of at that just trending the modems this given of the So be penetration for what serve. number you And should maybe that of that growing potential about longer-term quickly it's my sense is modems? rate the to that point. get

Patrick Harshman

number right, passings now is million. you're of as the we serving -- approximately Simon, The of million, neighborhood $XX it's reported X.X

of So we below are the passing. still XX%

going who new news. of are from perspective, that's -- modest there's that a there's one and good pickup new Tier a and including hand, we Xs think continue been customers, On not add our really couple gotten I in -- earnest. a have to lot,

larger think starting we're our we're So of cadence customers. pretty hit with good to some a I while

years. I things next to would addressed. already We additional It's the We of be one just healthy we're our for future. layer to growth in of we And confident on so year. this expect to won continue probably the and being from multiyear XX% more maybe then expand the think several it we've the being wouldn't driving win. foreseeable business why strong sometime that, have trust expect a of I market. than year this in the demand as we trajectory I that said, see we're business But past during past very the top business expect certainly this the reasons to this that and to strong That customers very going XX% think for do runway

Operator

question of Our Steve Colliers. next comes Frankel from

Steven Frankel

demand to we time got chain on that talked. kind your of a tremendous the confidence the incrementally just supply are there And be and you in back on cost you situation, a much through? how the risk can maybe really this hands going the able worse from being little give getting to then how need parts And last -- your on to around on of hands of and your go front meet material material demand that pass equation Is color you? nodes? issue it to that's the Or to can get you us deliver

Patrick Harshman

Well, we've given taken that today. balanced are we think fairly the but approach Steve, there we've a risks, forecast in

as reflected we've mentioned limited. -- demand As remarks, actually, than today. see outlook think you is given guidance supply and Sanjay and can in is my in demand mentioned, I supply today as the the I prepared than We we've more well there's more we given

haircut So that by taken on over year. a haircut we've and we taken is informed the past definitely the have our experience

it's an can premature So what here we're relatively of outlined confident. that. we There I'd confident to say upside but to that based our quite opportunity, work we're is any we've assume date. deliver today on

a In increases advise well. certain number compare we we saying certain things in to you the the being of year. when for just fact, for whole year. supply be we of second really price cost kicked year. was a and That the XXXX, -- wouldn't is not what high were we're said, moment the year-over-year, going half challenges with full to can struggling And you Sanjay ago, not in, A in as

mitigated et of pricing force. challenge. Now full those 'XX year somewhat cetera, bigger a things we're a it's And by perspective, in is adjustments, entering the beginning full that with some while from

want to the from we where address are in don't at We And questions them done We with continue point, we're you're a contending don't was day a the think I to situation does a we'll But it asking? anticipate materially but year, of the mouthful, second half one. end issues I'll do there. that the job. with we've us. deteriorated has it of subsiding the job, has this year. from suggest are good pause situation the tell but last we a also not. So think that me, That before good

Steven Frankel

Yes.

addressed impact was like quantify that there that my made to chain little was around, to that might color that your comments supply you what think remarks. said other be X And it potential revenue? you QX prepared One I able things some question. those you my probably on then some what you to sounded Being some more beef And up were customer on maybe deliver. comments color well, travel Maybe is go then couldn't second a question after wins? during means?

Patrick Harshman

demand QX. QX, Well, in in say, modest of impact I very would okay. Look, unfulfilled terms

demand customers can we realized, spill at But where It's orders -- losing XXXX don't that's the we see this year, place all put into it's delivery booked don't had a we means do we're we all not XXXX. as The But comment comment of it's demand. closely year-over-year see assume very perspective, the frankly, is plan point, XXXX, That to growth said, constrained, keep over perspective, business. in on of going that I away. it as going with strong a demand with probably what long-term our to guidance our see we we being being that as think relative half you second be in we that We're to as up basically being need. at Steve. being they the guidance to from And really is From mean not environment. and think we is going would can otherwise working look demand the we've it from for we a strong quite really be. XXXX the given. a strong So the

all, so job. embarrassed not We're heck at we're able let's a a about we're And to say, of do. doing what

of opportunities growing notwithstanding, view well part for and with somewhat it the as fold, we as right fold. in be us that maybe our even short-term of having we're there this customers virtue the with will stronger that the the into issues recede of meet customers bringing over success that, growing on we're of the by existing customers to the the is say will person. bringing customers that current see for out gets growing the our now and year, the into number preliminary pandemic kind business situation of good demand them maybe course Let's pandemic on the And desire

been the from requests we've may the We already us market customers. think we over actually And indeed, more meetings accelerate able share last those gains help up are that ramp getting XX to some of in-person months.

So the service pre-pandemic. guidance really, all and it means as significant market Cable share our continuing, was business, in that's step-up where is XXXX. both travel now, back to relative to But But not accelerating XXXX get budget right if anticipates a Video. on as and of not of sides the going the entertainment to both gains it our well the Access

Steven Frankel

Or characterize haven't you CableOS Tier yet? that of the has something would is material a you you Xs next? the after still And conquered number that pipeline were

Patrick Harshman

is our Yes. -- to still there's No, look, be are and going we ambition our #X. belief

there. I or Steve. happen X one virtually every one think going eventually, in with it's Tier engaged we It we're going every happen And be, way. Tier way in are in but way another to out X, by may 'XX, not another, or to the

well it but cable won't call includes well X in pipeline say and operators, Tier remaining Tier of that and growing a both of number of, of strong is list growing Tier Xs certainly fiber-to-the-home. terms a So Tier XXXX, XXXX them, let's as the as X, our every as pipeline I as it's overall, X

you strong. pipeline us go this to of that's to business. continuing so And something continues to one And the that's be in sales market. The unchanged invest that's see reasons with the why

Operator

comes from Savageaux question Markets. next of Capital Tim Northland Our

Timothy Savageaux

that maybe mean, the couple last following strong And had quarter Maybe big your both give comments the of my could in question the obviously, in did backlog the on out do direction. in this your leadership of environment of your And follow Analyst this a forward outlooks about as that? view is latest -- you kind but acquisition, competitors see declines are Congrats late versus you going customer cable at of networking -- look if I from seeing the bookings market how of in of growth. certainly year, and guess, on I that and this wonder I results. competitive kind kind kind Days us throw you towel, substantial of flat your you've competitive you year offer the up take environment? but for growth what And after there. position?

Patrick Harshman

technology. competitors. and them some long we have a look, strong are that to the we Well, for some And have against comments continued histories lot of Tim, of and them good public mentioned that we believe you in we kind said, very of way market. installed respect, very know, front surprised being the next a of out were take That on as as give of And well, generation some some time, that the companies seriously compete you base. to

what in of are we're day out For us, marketplace. there think more confirmation and seeing we in the day

and virtualized R&D not not we a new our X over that experience access we is year be doing something I a the we're So think program. and last that's that think easily task think position the quick that platform cloud-native has that a completely or ahead, demonstrated can technology monumental leadership is

Vivado, this and in believe all front. in hopefully ultimately why, perspective, cetera. frankly, that stronger. we're And in think that's That space. There's et out a been frankly, product we'll has but happen out we sincerity, be competitive our won't overnight. But we #X think way we competitor can, never installed So of with there, from not position, lot we a

Timothy Savageaux

both given I meaningful customers really side step-up a you follow and to in mentioned of a extend you maybe of among some them. those in top the an guess, parse I the the your factors. plans, could kind back activity you as to and or to extent issues. supply house X seen And both to comments wonder going couple preordering have up, deployment I more deployment performance acceleration And did if quarter, think you or you And drivers, PON can maybe you were of chain the well bookings customer the in maybe those what broadly? including among

Patrick Harshman

start Okay. Well, that PON first. let's with piece the of

do we is solution like. within services the after DOCSIS increasingly for Well, and strong think a themselves in PON. let's is we premature unique. and AT&T solution It's accounts, hybrid to multiplier our cable business think are telecom with the let's which are, for day. converged it Verizon are every who say, I fiber-to-the-home going the it's us opportunities, selling and a specialists, compare And the, it really rural increasingly competitive and say,

that all lot heard on conference recent of we a calls. think I

infrastructure So as some for mentioned That And unique. that cable interesting think we've it in our all. operators, that really we we to no significant when the think started slick. that is said, in with being wins that's we see truly fiber going pretty fiber operators cable remarks, TAM I solution at to that, and applications prepared have a something is comes have expansion, and itself beyond

reports there, Now I It's but something as it's victory we're declare and it's a premature think continue into we'll go to to trend. on leaning we pretty encouraging more, forward.

group various of quarter terms we've customers, the in all indeed, ports. fourth in of and both X accelerating the a Sanjay at kind about, on particular, and one, just we bookings, Now Number talked backlog things. bigger on deployment of got saw places they're

flat fact, not So on in or parabolic they're by are curve, I accelerating existing wouldn't but of stepped but customers, out new anybody, it's deployment and curve. say a our of of deployment all kind up a market

part feeding So what just of growth the overall the business. is of that's

are suppliers across in very from are Now seeing difficult from to addition their And customers our that, other we not but product us, categories. in a only environment. that, supply

customers so to number get of ahead that. a out are really working And of

from orders QX and some beyond saw QX even several so look we cases, And QX. customers, that in really look into into

saw a that kind in the input fourth So it's of mix X drove we extraordinary those order that the of quarter. things

Operator

question comes Needham. of Koontz next from Ryan Our

Ryan Koontz

helpful. share of have had. question logistics QX the types questions here my impacting That's I the chain only that any more are the been of -- would most but any on costs? costs you chips? of can any be more in Are supply answered, color there terms And color And

Patrick Harshman

it's Well, you above of truth, tell all Ryan. the to the

late cost light the that after big that. higher for continuing of you're to transport. comes and -- clock, availability but lines drives quickly costs, in components kind having availability think is right, kind of the I certain example, component quarter as the And but thing, production of to airfreight -- run lower the opposed costs component around

the problem. we're component little is that but availability a really of a the it's component it's with, of the it's and -- cost above So core all dealing that

Operator

Notter George comes Jefferies. next from of Our question

George Notter

about I ask increases. pricing I to wanted guess

works higher I think both side? about on the guys mobilize video to Patrick, on earlier with talk starting are customers, you call, the that And nodes business, hardware piece think you in where how levels Access negotiate guess, increases. like of Comcast business, you go how I higher do the also, how pricing? the you on that Cable on customers of you much pricing the pricing get do Could terms mentioned you can then into just And and go large appliance can

Patrick Harshman

be of can't competitors particularly will regard. that. explicit I Well, perk Seriously, thanks unique every shouldn't about them larger up. just say is, and for the the one ears question, heard in I What is my the of all I mean every customers, George. I I too

And discussion existing unique. agreement Every so is commercial every unique. is

just the not or selling, news with established on their partner. just service of increasingly AT&T going on deliver out that's about the not help good compete sides customers what you both together think supplier, plans. a you. customers, a as They're ourselves about broadband have When but objective lower there isn't cable think our delivering price. to working about think get our And discussions to a I these are our is a I but business, just to we've competitive fiber

or just on that So conversation discussion forms -- in And now takes say fair of a success amount about or What different time we're to only being that we're yet efficiently. regard. is a in done different QX in get be would that I seeing kicked we're job what with -- the done and operators. in most having QX. agreements late kicked cases, with haven't kicking collaborative some can -- in But in in

say don't of from That's what we're I it for And target. I but beyond to, -- of improving also seeing QX. XXXX. a So gross more expect answer moving done course the margins above to over part have to as benefits and think We alluded the think, we Sanjay that surprises. forecasting we're is

think we're seeing surprises. don't customers going -- Our we're

So in cooperative that is, general, very conversation it's is a an I ongoing in think partnering mode. much

George Notter

it. Got

I other cable a I contributions or like And adds, I growing modem million trying guess year-on-year success what to forever the jump was that's had had Okay. in, on much because a gone you've guess and there? SaaS from, at rates lot business. I'm down time, $X.X drill segment then of And then to you've I growth of the terms CableOS biggest and I the in think, sequential in seen that basis. a one $X.X I same bit this the sequentially, revenue on we've on basis think, And CableOS. isn't really look and service a on million ask

perhaps guess going Comcast other I the from I'm am all-you-can-eat on here? what's moving you than that service wrong revenue the parts read? more of that path maybe the So inferring customers. in I'm of I Is guess kind and here the line. that where on of there kind are I'm Cable missing that have wondering, structure terms and right type Or of with I in pricing more is Access business coming business rather then SaaS of

Patrick Harshman

we appreciate question, not completely We appreciate Not that it's I I question. agree the quite, guess. I mean the transparent. and

the Video dominated of and is by SaaS fact, today side our In business. actually service our revenue

in know, market. of appliances dollars billions of out we may you the As have video there

that is broadcast deployed piece legacy services product. of associated decline in seeing video on of growth. fact, of as part terms things revenue, is more of you're modest. the is And in And a and a still CableOS percentage is offset with agreements SaaS business what broadcast SaaS the being that of the so decline revenue appliance business a with relatively weakness by actually support all video part heavy the support associated of Because new, CableOS still relatively of our

license versus comment question clarity, we're or Sanjay, discussed, And you in asked out, as at George, today. George, within as it's look with and we except in me software support not that's should But software guess hardware video. I'm licenses Cable, accounts the have all kind and for said, So SaaS grows of happening. that just to you we see for software Comcast, have because breaking being X I general, unique those as by -- services, continue That we top-level revenue if agreement. software where cable to proportionate different categories, of wrong, correct a grow

at the comments, greater in is mentioned market software you growing even component some segmentation strong networks. probably and cable at look growth, greater we share; being faster, If those envisioned. cases, his in of Sanjay, the our I is think, software, growing the trajectory said, absolutely That hardware the

So think after way an to there looking I going more Sanjay, what should we think little provide get is for. is additional George clarity a bit maybe about, forward, to

And projections. impacted piece look continues down good not that our the challenges in software George. I supply think So shape, cost much in of the But take the on, term, fortunately, hardware piece short cable much that that we'll know of the with please our by business very chain pulling aligned that to very are business. and

Sanjay Kalra

very to that is you And up significant streaming, from a up which for SaaS year, quarters, streaming growth most in XXX% the I'll recent just the the QX growth, that, have if is we XX%. SaaS add at primarily full seen the look SaaS for year-over-year.

SaaS which and Patrick, is is the Video, more but service to for as hardware for So the growth. Cable you said, nearly agree, the I support, linked

But dissect growth and to see forward have for as are to Video the going software our we relative targets. clarify maybe we support to well SaaS on how So long-term overall, between question. we X George's our target as for

Operator

turn time. further any will remarks. questions the I'm Harshman Patrick this over for showing no closing call to at I back

Patrick Harshman

today. had top just again you Thanks XXXX. progress and have all to appreciate the support We everyone. your fantastic support equally year. we updated opportunities, throughout the forward as of Good the we more all about much, and your hour. very the year. generally, your And have, for keeping Thank the the We're excited Well, of through that day. look we We to Okay. XXXX. momentum you appreciate good. looking exciting an We're your time We're we forward business. we about a

Sanjay Kalra

Thank all. you

Operator

Thank conference. and for all you. Ladies Thank conclude this you participating. gentlemen, today's does

Have disconnect. great may now a You day.

Harmonic (HLIT) 1 Feb 222021 Q4 Earnings call transcript