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Harmonic(HLIT) - 2025 Q1 - Earnings Call Transcript
HLITHarmonic(HLIT)2025-04-29 01:56

Financial Data and Key Metrics Changes - Total company revenue increased by 9% year over year to 133.1million,withEPSrisingfrom133.1 million, with EPS rising from 0.00 to 0.11drivenbyhigherprofitability[20][24]−AdjustedEBITDAreached0.11 driven by higher profitability [20][24] - Adjusted EBITDA reached 21 million, exceeding previous expectations [6][20] - Cash balance at quarter end was 148.7million,asubstantialincreaseof148.7 million, a substantial increase of 47.3 million sequentially, despite 36.1millionreturnedtoshareholdersthroughsharerepurchases[7][20]BusinessLineDataandKeyMetricsChanges−BroadbandrevenueforQ1was36.1 million returned to shareholders through share repurchases [7][20] Business Line Data and Key Metrics Changes - Broadband revenue for Q1 was 84.9 million, with adjusted EBITDA of 15.9million,bothshowingyear−over−yeargrowth[20][21]−Videorevenuewas15.9 million, both showing year-over-year growth [20][21] - Video revenue was 48.3 million, up 11.8% year over year, with adjusted EBITDA of 5.3millionreflectingstrongrevenuemomentum[20][21]−VideoSaaSrevenuewas5.3 million reflecting strong revenue momentum [20][21] - Video SaaS revenue was 14.8 million, up 15% year over year, indicating robust growth in this segment [18][21] Market Data and Key Metrics Changes - The company closed the quarter with backlog and deferred revenue at 485.1million,indicatingadurablebusinessmodel[7][26]−Thebook−to−billratioforthequarterwas0.9,comparedto0.7inQ42024and1.2inQ12024,reflectingashiftincustomerdeploymenttiming[25][26]CompanyStrategyandDevelopmentDirection−ThecompanyisnavigatingtheshifttoUnifiedDOCSIS4.0,expectingabelow−trendrevenueyearforbroadbandin2025butanticipatingareboundin2026[7][8]−Harmonic′sstrategyincludestargetedinvestmentstodriveorganicgrowthandreturningcapitaltoshareholdersthroughstockrepurchases[21][23]−Thecompanyisexploringinorganicexpansionopportunitiesthatcomplementitscurrentcapabilities[21][24]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedconfidenceinlong−termgrowthdespiteshort−termheadwindsfromtariffuncertaintiesandthetransitiontoUnifiedDOCSIS4.0[34][50]−Thecompanyhasnotseenchangesincustomerbehaviorduetotariffs,indicatingstrongfundamentals[30][50]−Managementexpectstomitigatetariffimpactsthroughsupplychainoptimizationandcostmanagement[31][32]OtherImportantInformation−Thecompanyanticipatesatariffimpactofapproximately485.1 million, indicating a durable business model [7][26] - The book-to-bill ratio for the quarter was 0.9, compared to 0.7 in Q4 2024 and 1.2 in Q1 2024, reflecting a shift in customer deployment timing [25][26] Company Strategy and Development Direction - The company is navigating the shift to Unified DOCSIS 4.0, expecting a below-trend revenue year for broadband in 2025 but anticipating a rebound in 2026 [7][8] - Harmonic's strategy includes targeted investments to drive organic growth and returning capital to shareholders through stock repurchases [21][23] - The company is exploring inorganic expansion opportunities that complement its current capabilities [21][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in long-term growth despite short-term headwinds from tariff uncertainties and the transition to Unified DOCSIS 4.0 [34][50] - The company has not seen changes in customer behavior due to tariffs, indicating strong fundamentals [30][50] - Management expects to mitigate tariff impacts through supply chain optimization and cost management [31][32] Other Important Information - The company anticipates a tariff impact of approximately 3 million on Q2 margins, primarily related to broadband [32] - The liquidity position at quarter end included 148.7millionincashand148.7 million in cash and 82 million in undrawn credit facilities, providing ample resources to manage economic uncertainties [23] Q&A Session Summary Question: Update on unified DOCSIS delay related to amplifier piece - Management indicated that there is no change in expectations regarding the availability of unified amplifiers [37] Question: Should the company consider buying products ahead of delivery to work around tariffs? - Management is exploring options to bring in inventory sooner, given the current pause in tariffs [40] Question: When will the fiber business become a material part of revenue? - Management noted that fiber business is becoming sizable, with significant bookings and expansions [41][42] Question: Source of uncertainty in the second half guidance - The uncertainty is primarily due to macroeconomic factors and tariff fluctuations, impacting visibility for the rest of the year [46][48] Question: Options for diversifying manufacturing footprint - Management is considering options beyond Asia, including potential near-shore manufacturing in Mexico [55] Question: Changes in visibility of spending trajectory from largest MSO customers - Management has not seen any changes in customer behavior to date [57] Question: Explanation for the expected drop in broadband margins - The drop is attributed to a mix of COS licenses and anticipated tariff impacts [59] Question: Update on smart amplifier availability - Management confirmed that progress is in line with expectations regarding the availability of smart amplifiers [73]