Harmonic(US:HLIT)2025-04-28 22:02Financial Data and Key Metrics Changes - Company revenue reached $133 million, a 9% year-over-year increase, with EPS rising from $0.00 to $0.11, driven by higher profitability in both business segments [22][6][38] - Adjusted EBITDA was $21 million, exceeding previous expectations, while operating cash flow increased cash balance to $149 million despite $36 million returned to shareholders through share repurchases [6][7][22] - Total gross margin improved to 59.4%, with broadband gross margin at 55.5% and video gross margin at 66.4%, reflecting strong revenue momentum and cost optimization efforts [28][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][22] - Video revenue increased to $48.3 million, an 11.8% rise year-over-year, with adjusted EBITDA of $5.3 million [24][22] - Video SaaS revenue was $14.8 million, up 15% year-over-year, supported by live sports streaming and AI-based monetization tools [19][24] Market Data and Key Metrics Changes - The company reported strong bookings in the broadband segment, with a total backlog and deferred revenue of $485 million, indicating robust demand [30][7] - The company added seven new broadband customers, including significant wins in both North America and Latin America [10][11] - The video market is evolving with increasing demand for hybrid solutions, blending on-premises capacity with cloud elasticity [18][17] Company Strategy and Development Direction - The company is focused on long-term growth strategies, navigating current macroeconomic challenges and tariff impacts while expecting a revenue rebound in 2026 [8][38] - The strategy includes targeted investments in organic growth, capital returns through share repurchases, and exploring inorganic expansion opportunities [25][26] - The company emphasizes innovation, with advancements in broadband technology and a strong pipeline of new customer wins [16][17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that 2025 is expected to be a below-trend revenue year for broadband due to Unified DOCSIS 4.0 timing and customer deployment effects [7][8] - The management remains confident in long-term growth despite short-term headwinds from tariffs and macroeconomic uncertainties [34][38] - The company is actively exploring options to mitigate tariff impacts and optimize supply chains [34][32] 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][29] - The company expects Q2 broadband revenue between $75 million to $85 million, with video revenue in the range of $45 million to $50 million [35][36] Q&A Session Summary Question: Update on unified DOCSIS amplifier availability - Management indicated that there are no changes to the original plan regarding amplifier availability [42] Question: Should the company consider buying products ahead of delivery to mitigate tariffs? - 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? - The uncertainty is primarily due to macroeconomic factors and tariff fluctuations, impacting visibility for the rest of the year [52][54] Question: What options are being considered for diversifying the manufacturing footprint? - Management is looking into options beyond Asia, including potential near-shoring in Mexico, pending clarity on tariff environments [61] Question: Any changes in customer behavior regarding spending? - Management has not observed 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]