Harmonic (NasdaqGS:HLIT) Q4 2025 Earnings call February 19, 2026 05:00 PM ET Company ParticipantsDavid Hanover - Investor Relations OfficerNimrod Ben-Natan - President and CEOTaran Katta - Equity Research AssociateWalter Jankovic - CFOConference Call ParticipantsRyan Koontz - Managing Director and Equity Research AnalystSimon Leopold - Managing Director and Senior Equity AnalystSteven Frankel - Director of Research and Senior Research AnalystOperatorWelcome to the fourth quarter and full year 2025 Harmonic ...

Financial Data and Key Metrics Changes - The total company revenue for Q4 2025 was $157.3 million, with EPS at $0.14 and adjusted EBITDA at $23.8 million, all exceeding Q4 guidance [20] - For continuing operations, Q4 Broadband revenue was $98.2 million, above the guidance range of $85 million to $95 million, with adjusted EBITDA of $12.1 million and EPS of $0.06 [21] - The total company net revenue for the fiscal year 2025 was $570.8 million, with a gross margin of 55.8%, adjusted EBITDA of $83.8 million, and EPS of $0.47 [22] Business Line Data and Key Metrics Changes - Broadband revenue for Q4 was $98.2 million, reflecting a 9% sequential growth and record quarterly bookings of $346.9 million, resulting in a 3.5 book-to-bill ratio [5][20] - The Video business, now classified as discontinued operations, exceeded expectations in Q4 in terms of revenue and profitability, with a planned sale to MediaKind for approximately $145 million [7] - Rest of World revenue grew 33% year-over-year in Q4, now representing 41% of total Broadband revenue, indicating a significant shift in revenue mix [8][21] Market Data and Key Metrics Changes - The cable serviceable addressable market is projected to grow from approximately $510 million in 2025 to over $1.1 billion by 2030, driven by increased data consumption and network modernization [15] - The addressable market for fiber exceeds $2.6 billion, with Harmonic's share growing, indicating substantial opportunities in this segment [16] Company Strategy and Development Direction - The company is transitioning to a pure-play broadband leader, focusing on expanding market leadership in DOCSIS and fiber, increasing customer diversification, and driving software and cloud differentiation [17][18] - The sale of the Video business is expected to simplify operations and enhance the balance sheet, allowing for investments in organic growth and strategic M&A [18][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth trajectory, citing strong bookings and backlog growth as indicators of future revenue resilience [34] - The transition to DOCSIS 4.0 is seen as a significant opportunity, with expectations for accelerated growth as deployments ramp up [34] Other Important Information - The company ended the year with $124.1 million in cash and cash equivalents, demonstrating strong liquidity to support capital allocation priorities [23][26] - Free cash flow for the fourth quarter was $9.6 million, with a total of $97 million for the full year, reflecting strong profitability [24] Q&A Session Summary Question: Customer mix for full year 2026 - Management indicated that while Rest of World customers showed significant growth, the percentage of revenue from these customers may fluctuate based on larger customer spending [39] Question: Impact of memory pricing on gross margins - Management confirmed a net impact of approximately $6 million from memory pricing, with committed orders in place for 2026 [41][42] Question: Bookings composition in Q4 - Bookings were strong across both larger customers and Rest of World, with multi-year contracts contributing to the backlog [61] Question: SaaS and service revenue breakdown - The majority of the $58 million in 2025 SaaS and service revenue came from SLA contracts, with a focus on growing intelligence tools for customers [77][80]