Harmonic(US:HLIT)2025-04-28 21:00Financial Data and Key Metrics Changes - Total company revenue increased by 9% year over year to $133.1 million, with EPS rising from $0.00 to $0.11 driven by higher profitability [22][28] - Adjusted EBITDA reached $21 million, exceeding previous expectations [6][22] - Cash balance at quarter end was $148.7 million, a substantial increase of $47.3 million sequentially, despite $36.1 million returned to shareholders through share repurchases [7][22] Business Line Data and Key Metrics Changes - Broadband revenue was $84.9 million, with adjusted EBITDA of $15.9 million, both showing year-over-year growth [23][28] - Video revenue was $48.3 million, up 11.8% year over year, with adjusted EBITDA of $5.3 million reflecting strong revenue momentum [24][28] - Video SaaS revenue was $14.8 million, up 15% year over year, indicating robust growth in this segment [19][24] Market Data and Key Metrics Changes - The company closed the quarter with backlog and deferred revenue at $485.1 million, with approximately 51% expected to be recognized within the next twelve months [30] - The book-to-bill ratio for the quarter was 0.9, compared to 0.7 in Q4 2024 and 1.2 in Q1 2024, indicating a shift in customer order timing [29] 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] - The focus remains on innovation and technology leadership, with significant advancements in broadband and video segments [15][38] - The company is exploring inorganic expansion opportunities while maintaining a disciplined approach to capital allocation [26][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in long-term growth despite short-term headwinds from tariffs and macroeconomic uncertainties [38] - The company is actively managing tariff impacts and exploring options to mitigate potential risks [34][35] - Management noted that customer behavior has not changed significantly due to tariffs, and the fundamentals of the business remain strong [54][62] Other Important Information - The company has a strong liquidity position with $148.7 million in cash and $82 million in undrawn credit facilities, allowing for continued capital allocation priorities [26] - The company anticipates a tariff impact of approximately $3 million on Q2 margins, primarily related to broadband [36] Q&A Session Summary Question: Update on unified DOCSIS amplifier availability - Management indicated that there has been no change in expectations regarding amplifier availability [42] Question: Should the company consider buying products ahead of delivery to mitigate tariff impacts? - Management is exploring options to bring in inventory sooner, given the current pause in tariffs [44] Question: When will the fiber business become a material part of revenue? - Management noted that fiber business is becoming sizable, with significant customer expansions [45][46] Question: What is the source of uncertainty for the second half of the year? - Uncertainty is primarily due to tariff situations and potential delays in customer orders [52][54] Question: What options are being considered for diversifying the manufacturing footprint? - Management is looking into options beyond Asia, including potential near-shore manufacturing [61] Question: Any changes in visibility regarding spending from major customers? - Management has not seen any changes in customer behavior to date [62] Question: What is causing the expected drop in broadband margins for Q2? - The drop is attributed to a mix of COS licenses and anticipated tariff impacts [63][64] Question: How is the SaaS piece performing in the video business? - SaaS revenue was down slightly quarter-over-quarter but up 15% year-over-year, with expectations for growth in 2025 [68][70] Question: Status of the smart amplifier technology collaboration? - Progress is in line with expectations, and the situation is being monitored closely [78]