Release Date: October 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Harmonic Inc (HLIT, Financial) reported record Q3 results with total revenue and adjusted EBITDA exceeding guidance.
- The Broadband segment saw a significant revenue increase of 92% year-over-year, driven by strong customer demand and market leadership.
- The Video segment returned to profitability with a greater than 10% adjusted EBITDA margin, aided by rightsizing actions and revenue execution.
- Harmonic Inc (HLIT) secured business with 7 new customers in the Broadband segment, highlighting growing demand for modernized cable network solutions.
- The company reaffirmed its full-year Broadband 2024 revenue guidance and raised its EBITDA guidance, indicating confidence in future performance.
Negative Points
- There are short-term challenges anticipated in 2025 due to ecosystem integration requirements and new Unified RF front-end development.
- Customer deployment timing plans are being pushed out, creating a short-term Broadband revenue headwind in 2025.
- The Video segment's revenue was slightly down compared to the previous year, indicating ongoing challenges in this market.
- The company faces dependency on the availability and maturity of amplifiers for future deployments, which could impact growth.
- Customer concentration remains high, with Comcast and Charter representing a significant portion of total revenue, indicating a need for diversification.
Q & A Highlights
Q: Can you explain the upside in broadband for the September quarter? Was it primarily timing, and can you provide any color on product mix affecting margins?
A: The higher-than-expected results were due to delivery timing and our ability to ship products to customers. We reaffirmed our full-year guidance for broadband, indicating a shift rather than an increase. The product mix shifted slightly, leading to improved gross margins in Q3. - Walter Jankovic, CFO
Q: How have Tier 1 customer deployments changed, excluding Comcast? Any commentary on America's segment growth?
A: We can't mention specific customers, but there's momentum with a growing pipeline and more customers in that market segment. We won several new logos this quarter, and we expect this trend to continue into Q4 and beyond. - Nimrod Ben-Natan, CEO
Q: Could there be a stalling of growth in broadband as customers evaluate Unified DOCSIS 4.0?
A: Yes, the Unified Transition may cause some customers to delay deployment plans, creating a short-term revenue headwind in 2025. However, this is mainly a timing shift, and we expect these delays to create a positive tailwind in the future. - Walter Jankovic, CFO
Q: Could broadband revenues decline in 2025?
A: It's premature to provide specific revenue guidance for FY25. However, based on conservative modeling, we still expect FY25 total company EPS to be above FY24 guidance at the midpoint. - Walter Jankovic, CFO
Q: What are the ecosystem challenges related to the Unified transition?
A: One example is our dependency on amplifiers. We can deploy FDX nodes to a point, but at some stage, we will depend on amplifiers, which is an ecosystem dependency. - Nimrod Ben-Natan, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
