SAN JOSE, Calif., Feb. 1, 2021  /PRNewswire/ — Harmonic Inc. (NASDAQ: HLIT) today announced its unaudited results for the fourth quarter and fiscal year ended December 31, 2020.

“Harmonic’s fourth quarter results reflect the competitive advantages and complementary strengths of our Cable Access and Video segments,” said Patrick Harshman, president and chief executive officer of Harmonic. “Both segments delivered sequential and year over year growth in revenues and operating margins. Record quarterly bookings, and record backlog and deferred revenue, demonstrate strong business momentum as we enter 2021.”

Q4 Financial and Business Highlights

Financial

  • Revenue: $131.5 million, up 7.7% year over year
  • Cable Access segment revenue: $45.5 million, up 5.8% year over year
  • Video segment revenue: $86.0 million, up 8.7% year over year
  • Gross margin: GAAP 54.4% and non-GAAP 55.3%, compared to GAAP 50.5% and non-GAAP 52.3% in the year ago period
    • Cable Access segment gross margin: 53.7% compared to 38.3% in the year ago period
    • Video segment gross margin: 56.2%, compared to 60.0% in the year ago period
  • Operating income: GAAP income $16.8 million and non-GAAP income $23.4 million, compared to GAAP income $6.7 million and non-GAAP income $14.8 million in the year ago period
  • Adjusted EBITDA: $26.4 million compared to $17.6 million in the year ago period
  • Net income: GAAP net income $13.5 million and non-GAAP net income $20.0 million, compared to GAAP net income $5.6 million and non-GAAP net income $12.1 million
  • EPS: GAAP net income per share of $0.13 and non-GAAP net income per share of $0.20, compared to GAAP net income per share of $0.06 and non-GAAP net income per share of $0.12 in the year ago period
  • Cash: $98.6 million, up $5.5 million year over year
  • Business

    • CableOS® solution commercially deployed with 44 customers, up 91% year over year
    • CableOS deployments scaled to 2.6 million served cable modems, up 149% year over year
    • 17 new VOS® streaming SaaS customers added during the quarter
    • Over 50,000 live-streaming channels deployed globally, up 15% year over year

     

    Select Financial Information

    GAAP

    Non-GAAP

    Key Financial Results

    Q4 2020

    Q3 2020

    Q4 2019

    Q4 2020

    Q3 2020

    Q4 2019

    (in millions, except per share data)

    Net revenue

    $

    131.5

    $

    94.9

    $

    122.2

    $

    131.5

    $

    94.9

    $

    122.2

    Net income (loss)

    $

    13.5

    $

    (5.4)

    $

    5.6

    $

    20.0

    $

    2.6

    $

    12.1

    Diluted EPS

    $

    0.13

    $

    (0.06)

    $

    0.06

    $

    0.20

    $

    0.03

    $

    0.12

    Other Financial Information

    Q4 2020

    Q3 2020

    Q4 2019

    (in millions)

    Adjusted EBITDA for the quarter

    $

    26.4

    $

    7.2

    $

    17.6

    Bookings for the quarter

    $

    206.4

    $

    100.7

    $

    140.1

    Backlog and deferred revenue as of quarter end

    $

    290.5

    $

    216.2

    $

    210.2

    Cash and cash equivalents as of quarter end

    $

    98.6

    $

    70.8

    $

    93.1

    Explanations regarding our use of non-GAAP financial measures and related definitions, and reconciliations of our GAAP and non-GAAP measures, are provided in the sections below entitled “Use of Non-GAAP Financial Measures” and “GAAP to Non-GAAP Reconciliations”.

    Financial Guidance

    GAAP Financial Guidance

    Q1 2021

    2021

    Low

    High

    Low

    High

    (in millions, except percentages and per share data)

    Net revenue

    $

    97.0

    $

    107.0

    $

    430.0

    $

    465.0

    Video

    $

    61.0

    $

    66.0

    $

    260.0

    $

    275.0

    Cable Access

    $

    36.0

    $

    41.0

    $

    170.0

    $

    190.0

    Gross margin %

    51.0

    %

    53.0

    %

    51.0

    %

    54.0

    %

    Operating expenses

    $

    58.0

    $

    60.0

    $

    231.5

    $

    238.5

    Operating income (loss)

    $

    (9.0)

    $

    (4.0)

    $

    (12.5)

    $

    12.5

    Tax expense

    $

    (0.7)

    $

    0.7

    $

    (2.7)

    $

    (2.7)

    EPS

    $

    (0.12)

    $

    (0.07)

    $

    (0.26)

    $

    (0.02)

    Shares

    99.7

    99.7

    101.0

    101.0

    Cash

    $

    85.0

    $

    95.0

    $

    110.0

    $

    130.0

     

    Non-GAAP Financial Guidance

    Q1 2021

    2021

    Low

    High

    Low

    High

    (in millions, except percentages and per share data)

    Net revenue

    $

    97.0

    $

    107.0

    $

    430.0

    $

    465.0

    Video

    $

    61.0

    $

    66.0

    $

    260.0

    $

    275.0

    Cable Access

    $

    36.0

    $

    41.0

    $

    170.0

    $

    190.0

    Gross margin %

    51.5

    %

    53.5

    %

    51.5

    %

    54.5

    %

    Operating expenses

    $

    49.0

    $

    51.0

    $

    206.0

    $

    213.0

    Operating income

    $

    1.0

    $

    6.0

    $

    15.5

    $

    40.5

    Adjusted EBITDA

    $

    4.0

    $

    9.0

    $

    27.5

    $

    53.0

    Tax rate

    10

    %

    10

    %

    10

    %

    10

    %

    EPS

    $

    0.00

    $

    0.04

    $

    0.09

    $

    0.31

    Shares

    102.5

    102.5

    103.7

    103.7

    Cash

    $

    85.0

    $

    95.0

    $

    110.0

    $

    130.0

    See “Use of Non-GAAP Financial Measures” and “GAAP to Non-GAAP Reconciliations” below.

    Conference Call Information

    Harmonic will host a conference call to discuss its financial results at 2:00 p.m. Pacific (5:00 p.m. Eastern) on Monday, February 1, 2021. The live webcast will be available on the Harmonic Investor Relations website at http://investor.harmonicinc.com. An audio version of the webcast will be available by calling +1.574.990.1032 or +1.800.240.9147 (conference ID 1694224). A replay will be available after 5:00 p.m. PT on the same web site or by calling +1.404.537.3406 or +1.855.859.2056 (conference ID 1694224).

    About Harmonic Inc.

    Harmonic (NASDAQ: HLIT), the worldwide leader in visualized cable access and video delivery solutions, enables media companies and service providers to deliver ultra-high-quality video streaming and broadcast services to consumers globally. The Company revolutionized cable access networking via the industry’s first virtualized cable access solution, enabling cable operators to more flexibly deploy gigabit internet service to consumers’ homes and mobile devices. Whether simplifying OTT video delivery via innovative cloud and software platforms, or powering the delivery of gigabit internet cable services, Harmonic is changing the way media companies and service providers monetize live and on-demand content on every screen. More information is available at www.harmonicinc.com.

    Legal Notice Regarding Forward-Looking Statements

    This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements related to our expectations regarding: net revenue, gross margins, operating expenses, operating income (loss), Adjusted EBITDA, tax expense and tax rate, EPS, and cash. Our expectations regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include, in no particular order, the following: the market and technology trends underlying our Video and Cable Access businesses will not continue to develop in their current direction or pace; the possibility that our products will not generate sales that are commensurate with our expectations or that our cost of revenue or operating expenses may exceed our expectations; the potential impact of the Covid-19 pandemic on our operations or the operations of our supply chain or our customers; the impact of general economic conditions on our sales and operations; the mix of products and services sold in various geographies and the effect it has on gross margins; delays or decreases in capital spending in the cable, satellite, telco, broadcast and media industries; customer concentration and consolidation; our ability to develop new and enhanced products in a timely manner and market acceptance of our new or existing products; losses of one or more key customers; risks associated with our international operations; exchange rate fluctuations of the currencies in which we conduct business; risks associated with our CableOS and VOS product solutions; dependence on market acceptance of various types of broadband services, on the adoption of new broadband technologies and on broadband industry trends; inventory management; the lack of timely availability of parts or raw materials necessary to produce our products; the impact of increases in the prices of raw materials and oil; the effect of competition, on both revenue and gross margins; difficulties associated with rapid technological changes in our markets; risks associated with unpredictable sales cycles; our dependence on contract manufacturers and sole or limited source suppliers; and the effect on our business of natural disasters. The forward-looking statements contained in this press release are also subject to other risks and uncertainties, including those more fully described in Harmonic’s filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K for the year ended December 31, 2019, our most recent Quarterly Report on Form 10-Q and our Current Reports on Form 8-K. The forward-looking statements in this press release are based on information available to the Company as of the date hereof, and Harmonic disclaims any obligation to update any forward-looking statements.

    Use of Non-GAAP Financial Measures

    The Company reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP” or referred to herein as “reported”). However, management believes that certain non-GAAP financial measures provide management and other users with additional meaningful financial information that should be considered when assessing our ongoing performance. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business, establish operating budgets, set internal measurement targets and make operating decisions.

    These non-GAAP measures are not in accordance with, or an alternative for, measures prepared in accordance with generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. The Company believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Harmonic’s results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Harmonic’s results of operations in conjunction with the corresponding GAAP measures.

    The Company believes that the presentation of non-GAAP measures when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and its historical and projected results of operations. Non-GAAP financial measures should be viewed in addition to, and not as an alternative to, the Company’s reported results prepared in accordance with GAAP.

    The non-GAAP measures presented here are: revenue, segment revenue, gross profit, operating expenses, income (loss) from operations, non-operating expenses and net income (loss) (including those amounts as a percentage of revenue), Adjusted EBITDA, and net income (loss) per diluted share. The presentation of non-GAAP information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP, and is not necessarily comparable to non-GAAP results published by other companies. A reconciliation of the historical non-GAAP financial measures discussed in this press release to the most directly comparable historical GAAP financial measures is included with the financial statements provided with this press release. The non-GAAP adjustments described below have historically been excluded from our GAAP financial measures.

    Our non-GAAP financial measures reflect adjustments based on the following items, as well as the related income tax effects:

    Stock-based compensation – Although stock-based compensation is a key incentive offered to our employees, we continue to evaluate our business performance excluding stock-based compensation expenses. We believe that management is limited in its ability to project the impact stock-based compensation would have on our operating results. In addition, for comparability purposes, we believe it is useful to provide a non-GAAP financial measure that excludes stock-based compensation in order to better understand the long-term performance of our core business and to facilitate the comparison of our results to the results of our peer companies. 

    Amortization of intangibles – A portion of the purchase price of our acquisitions is generally allocated to intangible assets, and is subject to amortization. However, Harmonic does not acquire businesses on a predictable cycle. Additionally, the amount of an acquisition’s purchase price allocated to intangible assets and the term of its related amortization can vary significantly and is unique to each acquisition. Therefore, we believe that the presentation of non-GAAP financial measures that adjust for the amortization of intangible assets provides investors and others with a consistent basis for comparison across accounting periods. 

    Restructuring and related charges – Harmonic from time to time incurs restructuring charges which primarily consist of employee severance, one-time termination benefits related to the reduction of its workforce, lease exit costs, and other costs.  These charges are associated with material business shifts. We exclude these items because we do not believe they are reflective of our ongoing long-term business and operating results. 

    Loss on convertible debt extinguishment/conversion – In the fourth quarter of fiscal 2020, we recorded a loss of $0.5 million resulting from the conversion and settlement of the remaining $8.1 million of our convertible notes due in December 2020. In the second quarter of fiscal 2020, we recorded a debt extinguishment loss of $0.8 million resulting from the exchange of $37.7 million in aggregate principal amount of our convertible notes due in 2020 for $37.7 million in aggregate principal amount of convertible notes due in 2022. In the third quarter of fiscal 2019, we recorded a debt extinguishment loss of $5.7 million resulting from refinancing a portion of our convertible notes due in 2020. We have excluded these losses from our non-GAAP financial measures because we do not believe the losses are reflective of our ongoing long-term business and operating results.

    Non-cash interest expense and other expenses related to convertible notes and other debt – We record the accretion of the debt discount related to the equity component and amortization of issuance costs as non-cash interest expense. We believe that excluding these costs provides meaningful supplemental information regarding operational performance and liquidity, along with enhancing investors’ ability to view the Company’s results from management’s perspective. In addition, we believe excluding these costs from the non-GAAP measures facilitates comparisons to our historical operating results and comparisons to peer company operating results. 

    Accounting impact related to warrant amortization – We issued a warrant to a customer, Comcast Corporation, in September 2016 pursuant to which Comcast may purchase up to 7.8 million shares of Harmonic common stock. In July 2019, in connection with Comcast’s election of enterprise license pricing for the Company’s CableOS software, all warrant shares were fully vested as of July 1, 2019. As a result of Comcast’s election of enterprise license pricing, we no longer excluded the effect of warrant amortization in our non-GAAP financial measures beginning with the third quarter of fiscal 2019.

    Discrete tax items and tax effect of non-GAAP adjustments – The income tax effect of non-GAAP adjustments relates to the tax effect of the adjustments that we incorporate into non-GAAP financial measures in order to provide a more meaningful measure of non-GAAP net income.

    Depreciation – Depreciation expense, along with interest, tax and stock-based compensation expense, restructuring charges and  amortization of intangible assets, is excluded from Adjusted EBITDA because we do not believe depreciation and the other items relate to the ordinary course of our business or are reflective of our underlying business performance.

    Harmonic Inc.
    Preliminary Consolidated Balance Sheets
    (Unaudited, in thousands, except per share data)

    December 31, 2020

    December 31, 2019

    ASSETS

    Current assets:

       Cash and cash equivalents

    $

    98,645

    $

    93,058

       Accounts receivable, net

    66,227

    88,500

       Inventories

    35,031

    29,042

       Prepaid expenses and other current assets

    38,132

    40,762

    Total current assets

    238,035

    251,362

    Property and equipment, net

    43,141

    22,928

    Operating lease right-of-use assets

    27,556

    27,491

    Other long-term assets

    38,609

    41,305

    Intangibles, net

    508

    4,461

    Goodwill

    243,674

    239,780

    Total assets

    $

    591,523

    $

    587,327

    LIABILITIES AND STOCKHOLDERS’ EQUITY

    Current liabilities:

    Accounts payable

    $

    23,543

    $

    40,933

    Accrued other current liabilities

    57,687

    63,761

    Deferred revenue

    54,294

    37,117

    Convertible notes, short-term

    43,375

    Other debts and finance lease obligations, current

    11,771

    6,713

    Total current liabilities

    147,295

    191,899

    Convertible notes, long-term

    129,507

    88,629

    Other debts and finance lease obligations, long-term

    10,086

    10,511

    Other non-current liabilities

    46,333

    41,432

    Total liabilities

    333,221

    332,471

    Convertible notes

    2,410

    Stockholders’ equity:

       Preferred stock, $0.001 par value, 5,000 shares authorized; no shares issued or outstanding

       Common stock, $0.001 par value, 150,000 shares authorized; 98,204 and 91,875 shares
    issued and outstanding at December 31, 2020 and 2019, respectively

    98

    92

       Additional paid-in capital

    2,353,559

    2,327,359

       Accumulated deficit

    (2,101,211)

    (2,071,940)

       Accumulated other comprehensive income (loss)

    5,856

    (3,065)

    Total stockholders’ equity

    258,302

    252,446

    Total liabilities and stockholders’ equity

    $

    591,523

    $

    587,327

     

    Harmonic Inc.
    Preliminary Consolidated Statements of Operations
    (Unaudited, in thousands, except per share data)

    Three months ended

    Year ended

    December 31,
    2020

    December 31,
    2019

    December 31,
    2020

    December 31,
    2019

    Revenue:

         Appliance and integration

    $

    98,787

    $

    85,933

    $

    252,014

    $

    275,797

         SaaS and service

    32,741

    36,245

    126,817

    127,077

    Total net revenue

    131,528

    122,178

    378,831

    402,874

    Cost of revenue:

         Appliance and integration

    45,795

    47,107

    126,948

    130,284

         SaaS and service

    14,171

    13,376

    56,886

    49,578

    Total cost of revenue

    59,966

    60,483

    183,834

    179,862

    Total gross profit

    71,562

    61,695

    194,997

    223,012

    Operating expenses:

       Research and development

    20,667

    21,703

    82,494

    84,614

       Selling, general and administrative

    32,615

    30,557

    119,611

    119,035

       Amortization of intangibles

    755

    782

    3,019

    3,139

       Restructuring and related charges

    750

    1,947

    2,322

    3,141

    Total operating expenses

    54,787

    54,989

    207,446

    209,929

    Income (loss) from operations

    16,775

    6,706

    (12,449)

    13,083

    Interest expense, net

    (2,737)

    (2,789)

    (11,509)

    (11,651)

    Loss on convertible debt extinguishment/conversion

    (528)

    (1,362)

    (5,695)

    Other expense, net

    (84)

    (897)

    (2,333)

    Income (loss) before income taxes

    13,426

    3,917

    (26,217)

    (6,596)

    Provision for (benefit from) income taxes

    (39)

    (1,653)

    3,054

    (672)

    Net income (loss)

    $

    13,465

    $

    5,570

    $

    (29,271)

    $

    (5,924)

    Net income (loss) per share:

       Basic

    $

    0.14

    $

    0.06

    $

    (0.30)

    $

    (0.07)

       Diluted

    $

    0.13

    $

    0.06

    $

    (0.30)

    $

    (0.07)

    Shares used in per share calculations:

       Basic

    97,938

    91,124

    96,971

    89,575

       Diluted

    100,316

    97,499

    96,971

    89,575

     

    Harmonic Inc.
    Preliminary Consolidated Statements of Cash Flows
    (Unaudited, in thousands)

    Year ended

    December 31,
    2020

    December 31,
    2019

    Cash flows from operating activities:

    Net loss

    $

    (29,271)

    $

    (5,924)

    Adjustments to reconcile net loss to net cash provided by operating activities:

    Depreciation

    11,737

    11,287

    Amortization of intangibles

    3,970

    8,319

       Stock-based compensation

    18,040

    12,074

       Amortization of discount on convertible and other debt

    7,058

    6,756

       Amortization of non-cash warrant

    1,746

    13,576

       Foreign currency adjustments

    6,391

    (290)

       Loss on convertible debt extinguishment/conversion

    1,362

    5,695

       Deferred income taxes, net

    (105)

    (2,076)

       Provision for doubtful accounts and returns

    1,666

    1,500

       Provision for excess and obsolete inventories

    1,847

    1,479

       Other non-cash adjustments, net

    409

    1,349

       Changes in operating assets and liabilities:

          Accounts receivable

    21,186

    (8,388)

          Inventories

    (8,195)

    (4,819)

          Prepaid expenses and other assets

    11,556

    (3,347)

          Accounts payable

    (18,173)

    5,086

          Deferred revenues

    19,751

    (3,436)

          Accrued and other liabilities

    (11,812)

    (7,546)

    Net cash provided by operating activities

    39,163

    31,295

    Cash flows from investing activities:

       Purchases of property and equipment

    (32,205)

    (10,328)

    Net cash used in investing activities

    (32,205)

    (10,328)

    Cash flows from financing activities:

       Proceeds from convertible debt

    115,500

       Payments of convertible debt

    (7,999)

    (109,603)

       Payment of convertible debt issuance costs

    (672)

    (4,277)

       Proceeds from other debts

    9,398

    4,684

       Repayment of other debts and finance leases

    (6,646)

    (6,913)

       Proceeds from common stock issued to employees

    5,472

    8,406

       Payment of tax withholding obligations related to net share settlements of restricted stock units

    (1,662)

    (1,492)

    Net cash (used in) provided by financing activities

    (2,109)

    6,305

    Effect of exchange rate changes on cash and cash equivalents

    738

    (203)

    Net increase in cash and cash equivalents

    5,587

    27,069

    Cash and cash equivalents, beginning of the year

    93,058

    65,989

    Cash and cash equivalents, end of the year

    $

    98,645

    $

    93,058

     

    Harmonic Inc.
    Preliminary Revenue Information
    (Unaudited, in thousands, except percentages)

    Three months ended

    December 31, 2020

    September 25, 2020

    December 31, 2019

    GAAP

    Adjustment(1)

    Non-GAAP

    GAAP

    Adjustment(1)

    Non-GAAP

    GAAP

    Adjustment(1)

    Non-GAAP

    Geography

    Americas

    $

    84,916

    $

    $

    84,916

    65%

    $

    54,521

    $

    $

    54,521

    58%

    $

    68,869

    $

    $

    68,869

    56%

    EMEA

    34,825

    34,825

    26%

    29,771

    29,771

    31%

    39,874

    39,874

    33%

    APAC

    11,787

    11,787

    9%

    10,600

    10,600

    11%

    13,435

    13,435

    11%

    Total

    $

    131,528

    $

    $

    131,528

    100%

    $

    94,892

    $

    $

    94,892

    100%

    $

    122,178

    $

    $

    122,178

    100%

    Market

    Service Provider

    $

    66,673

    $

    $

    66,673

    51%

    $

    59,083

    $

    $

    59,083

    62%

    $

    83,976

    $

    $

    83,976

    69%

    Broadcast and Media

    64,855

    64,855

    49%

    35,809

    35,809

    38%

    38,202

    38,202

    31%

    Total

    $

    131,528

    $

    $

    131,528

    100%

    $

    94,892

    $

    $

    94,892

    100%

    $

    122,178

    $

    $

    122,178

    100%

     

    Twelve months ended

    December 31, 2020

    December 31, 2019

    GAAP

    Adjustment(1)

    Non-GAAP

    GAAP

    Adjustment(1)

    Non-GAAP

    Geography

    Americas

    $

    219,394

    $

    $

    219,394

    58%

    $

    224,193

    $

    48

    $

    224,241

    56%

    EMEA

    117,126

    117,126

    31%

    117,477

    117,477

    29%

    APAC

    42,311

    42,311

    11%

    61,204

    61,204

    15%

    Total

    $

    378,831

    $

    $

    378,831

    100%

    $

    402,874

    $

    48

    $

    402,922

    100%

    Market

    Service Provider

    $

    211,684

    $

    $

    211,684

    56%

    $

    249,512

    $

    48

    $

    249,560

    62%

    Broadcast and Media

    167,147

    167,147

    44%

    153,362

    153,362

    38%

    Total

    $

    378,831

    $

    $

    378,831

    100%

    $

    402,874

    $

    48

    $

    402,922

    100%

    (1) See “Use of Non-GAAP Financial Measures” above and “GAAP to Non-GAAP Reconciliations” below.

     

    Harmonic Inc.
    Preliminary Segment Information
    (Unaudited, in thousands, except percentages)

    Three months ended December 31, 2020

    Video

    Cable Access

    Total Segment
    Measures

    (non-GAAP)

    Adjustments (1)

    Consolidated GAAP
    Measures

    Net revenue

    $

    86,044

    $

    45,484

    $

    131,528

    $

    $

    131,528

    Gross profit

    48,336

    24,437

    72,773

    (1,211)

    71,562

    Gross margin%

    56.2

    %

    53.7

    %

    55.3

    %

    54.4

    %

    Operating income

    13,529

    9,918

    23,447

    (6,672)

    16,775

    Operating margin%

    15.7

    %

    21.8

    %

    17.8

    %

    12.8

    %

    Three months ended September 25, 2020

    Video

    Cable Access

    Total Segment
    Measures

    (non-GAAP)

    Adjustments (1)

    Consolidated GAAP
    Measures

    Net revenue

    $

    54,641

    $

    40,251

    $

    94,892

    $

    $

    94,892

    Gross profit

    29,825

    19,682

    49,507

    (583)

    48,924

    Gross margin%

    54.6

    %

    48.9

    %

    52.2

    %

    51.6

    %

    Operating income (loss)

    (1,699)

    5,876

    4,177

    (5,798)

    (1,621)

    Operating margin%

    (3.1)

    %

    14.6

    %

    4.4

    %

    (1.7)

    %

    Three months ended December 31, 2019

    Video

    Cable Access

    Total Segment
    Measures

    (non-GAAP)

    Adjustments (1)

    Consolidated GAAP
    Measures

    Net revenue

    $

    79,172

    $

    43,006

    $

    122,178

    $

    $

    122,178

    Gross profit

    47,463

    16,492

    63,955

    (2,260)

    61,695

    Gross margin%

    60.0

    %

    38.3

    %

    52.3

    %

    50.5

    %

    Operating income

    11,105

    3,649

    14,754

    (8,048)

    6,706

    Operating margin%

    14.0

    %

    8.5

    %

    12.1

    %

    5.5

    %

    Twelve months ended December 31, 2020

    Video

    Cable Access

    Total Segment
    Measures

    (non-GAAP)

    Adjustments (1)

    Consolidated GAAP
    Measures

    Net revenue

    $

    242,510

    $

    136,321

    $

    378,831

    $

    $

    378,831

    Gross profit

    132,092

    66,661

    198,753

    (3,756)

    194,997

    Gross margin%

    54.5

    %

    48.9

    %

    52.5

    %

    51.5

    %

    Operating income

    1,326

    11,651

    12,977

    (25,426)

    (12,449)

    Operating margin%

    0.5

    %

    8.5

    %

    3.4

    %

    (3.3)

    %

    Twelve months ended December 31, 2019

    Video

    Cable Access

    Total Segment
    Measures

    (non-GAAP)

    Adjustments (1)

    Consolidated GAAP
    Measures

    Net revenue

    $

    278,028

    $

    124,894

    $

    402,922

    $

    (48)

    *

    $

    402,874

    Gross profit

    162,156

    68,596

    230,752

    (7,740)

    223,012

    Gross margin%

    58.3

    %

    54.9

    %

    57.3

    %

    55.4

    %

    Operating income

    15,837

    22,219

    38,056

    (24,973)

    13,083

    Operating margin%

    5.7

    %

    17.8

    %

    9.4

    %

    3.2

    %

    (1) See “Use of Non-GAAP Financial Measures” above and “GAAP to Non-GAAP Reconciliations” below.

    * This non-GAAP adjustment is for warrant amortization and relates to our Cable Access segment. After
    applying this adjustment to the non-GAAP revenue for the Cable Access segment, our GAAP revenue for
    the Cable Access segment for the twelve months ended December 31, 2019 was $124,846.

     

    Harmonic Inc.
    GAAP to Non-GAAP Reconciliations (Unaudited)
    (in thousands, except percentages and per share data)

    Three months ended December 31, 2020

    Revenue

    Gross Profit

    Total
    Operating
    Expense

    Income from
    Operations

    Total Non-
    operating
    Expense, net

    Net Income

    GAAP

    $

    131,528

    $

    71,562

    $

    54,787

    $

    16,775

    $

    (3,349)

    $

    13,465

      Stock-based compensation

    348

    (3,955)

    4,303

    4,303

      Amortization of intangibles

    (756)

    756

    756

      Restructuring and related charges

    863

    (750)

    1,613

    1,613

      Loss on convertible debt extinguishment/conversion

    528

    528

      Non-cash interest and other expenses related to convertible notes
        and other debt

    1,607

    1,607

      Discrete tax items and tax effect of non-GAAP adjustments

    (2,262)

    Total adjustments

    1,211

    (5,461)

    6,672

    2,135

    6,545

    Non-GAAP

    $

    131,528

    $

    72,773

    $

    49,326

    $

    23,447

    $

    (1,214)

    $

    20,010

    As a % of revenue (GAAP)

    54.4

    %

    41.7

    %

    12.8

    %

    (2.5)

    %

    10.2

    %

    As a % of revenue (Non-GAAP)

    55.3

    %

    37.5

    %

    17.8

    %

    (0.9)

    %

    15.2

    %

    Diluted net income per share:

      Diluted net income per share-GAAP

    $

    0.13

      Diluted net income per share-Non-GAAP

    $

    0.20

    Shares used to compute diluted net income per share:

      GAAP and Non-GAAP

    100,316

     

    Three months ended September 25, 2020

    Revenue

    Gross Profit

    Total
    Operating|
    Expense

    Income
    (Loss) from
    Operations

    Total Non-
    operating
    Expense, net

    Net Income
    (Loss)

    GAAP

    $

    94,892

    $

    48,924

    $

    50,545

    $

    (1,621)

    $

    (2,974)

    $

    (5,381)

      Stock-based compensation

    281

    (3,649)

    3,930

    3,930

      Amortization of intangible

    (752)

    752

    752

      Restructuring and related charges

    302

    (814)

    1,116

    1,116

      Non-cash interest expenses and other expenses related to
        convertible notes and other debt

    1,666

    1,666

      Discrete tax items and tax effect of non-GAAP adjustments

    499

    Total adjustments

    583

    (5,215)

    5,798

    1,666

    7,963

    Non-GAAP

    $

    94,892

    $

    49,507

    $

    45,330

    $

    4,177

    $

    (1,308)

    $

    2,582

    As a % of revenue (GAAP)

    51.6

    %

    53.3

    %

    (1.7)

    %

    (3.1)

    %

    (5.7)

    %

    As a % of revenue (Non-GAAP)

    52.2

    %

    47.8

    %

    4.4

    %

    (1.4)

    %

    2.7

    %

    Diluted net income (loss) per share:

      Diluted net loss per share-GAAP

    $

    (0.06)

      Diluted net income per share-Non-GAAP

    $

    0.03

    Shares used to compute diluted net income (loss) per share:

      GAAP

    97,563

      Non-GAAP

    98,361

     

    Three  months ended December 31, 2019

    Revenue

    Gross Profit

    Total
    Operating
    Expense

    Income from
    Operations

    Total Non-
    operating
    Expense, net

    Net Income

    GAAP

    $

    122,178

    $

    61,695

    $

    54,989

    $

    6,706

    $

    (2,789)

    $

    5,570

      Stock-based compensation

    297

    (3,059)

    3,356

    3,356

      Amortization of intangibles

    1,295

    (782)

    2,077

    2,077

      Restructuring and related charges

    668

    (1,947)

    2,615

    2,615

      Non-cash interest expenses and other expenses related to
        convertible notes and other debt

    1,796

    1,796

      Discrete tax items and tax effect of non-GAAP adjustments

    (3,303)

    Total adjustments

    2,260

    (5,788)

    8,048

    1,796

    6,541

    Non-GAAP

    $

    122,178

    $

    63,955

    $

    49,201

    $

    14,754

    $

    (993)

    $

    12,111

    As a % of revenue (GAAP)

    50.5

    %

    45.0

    %

    5.5

    %

    (2.3)

    %

    4.6

    %

    As a % of revenue (Non-GAAP)

    52.3

    %

    40.3

    %

    12.1

    %

    (0.8)

    %

    9.9

    %

    Diluted net income per share:

      Diluted net income per share-GAAP

    $

    0.06

      Diluted net income per share-Non-GAAP

    $

    0.12

    Shares used to compute diluted net income per share:

      GAAP and Non-GAAP

    97,499

     

    Twelve months ended December 31, 2020

    Revenue

    Gross Profit

    Total
    Operating
    Expense

    Income
    (Loss) from
    Operations

    Total Non-
    operating
    Expense, net

    Net Income
    (Loss)

    GAAP

    $

    378,831

    $

    194,997

    $

    207,446

    $

    (12,449)

    $

    (13,768)

    $

    (29,271)

      Stock-based compensation

    1,712

    (16,328)

    18,040

    18,040

      Amortization of intangibles

    950

    (3,020)

    3,970

    3,970

      Restructuring and related charges

    1,094

    (2,322)

    3,416

    3,416

      Loss on convertible debt extinguishment/conversion

    1,362

    1,362

      Non-cash interest expenses and other expenses related to
        convertible notes and other debt

    7,058

    7,058

      Discrete tax items and tax effect of non-GAAP adjustments

    2,291

    Total adjustments

    3,756

    (21,670)

    25,426

    8,420

    36,137

    Non-GAAP

    $

    378,831

    $

    198,753

    $

    185,776

    $

    12,977

    $

    (5,348)

    $

    6,866

    As a % of revenue (GAAP)

    51.5

    %

    54.8

    %

    (3.3)

    %

    (3.6)

    %

    (7.7)

    %

    As a % of revenue (Non-GAAP)

    52.5

    %

    49.0

    %

    3.4

    %

    (1.4)

    %

    1.8

    %

    Diluted net income (loss) per share:

      Diluted net loss per share-GAAP

    $

    (0.30)

      Diluted net income per share-Non-GAAP

    $

    0.07

    Shares used to compute diluted net income (loss) per share:

      GAAP

    96,971

      Non-GAAP

    98,633

     

    Twelve months ended December 31, 2019

    Revenue

    Gross Profit

    Total
    Operating
    Expense

    Income from
    Operations

    Total Non-
    operating
    Expense, net

    Net Income
    (Loss)

    GAAP

    $

    402,874

    $

    223,012

    $

    209,929

    $

    13,083

    $

    (19,679)

    $

    (5,924)

      Accounting impact related to warrant amortization

    48

    48

    48

    48

      Stock-based compensation

    1,121

    (10,953)

    12,074

    12,074

      Amortization of intangibles

    5,180

    (3,139)

    8,319

    8,319

      Restructuring and related charges

    1,391

    (3,141)

    4,532

    4,532

      Loss on convertible debt extinguishment/conversion

    5,695

    5,695

      Non-cash interest expenses and other expenses related to

        convertible notes

    7,683

    7,683

      Discrete tax items and tax effect of non-GAAP adjustments

    (4,482)

    Total adjustments

    48

    7,740

    (17,233)

    24,973

    13,378

    33,869

    Non-GAAP

    $

    402,922

    $

    230,752

    $

    192,696

    $

    38,056

    $

    (6,301)

    $

    27,945

    As a % of revenue (GAAP)

    55.4

    %

    52.1

    %

    3.2

    %

    (4.9)

    %

    (1.5)

    %

    As a % of revenue (Non-GAAP)

    57.3

    %

    47.8

    %

    9.4

    %

    (1.6)

    %

    6.9

    %

    Diluted net income (loss) per share:

      Diluted net loss per share-GAAP

    $

    (0.07)

      Diluted net income per share-Non-GAAP

    $

    0.30

    Shares used to compute diluted net income (loss) per share:

      GAAP

    89,575

      Non-GAAP

    93,830

     

    Harmonic Inc.
    Preliminary Adjusted EBITDA Reconciliation (Unaudited)
    (In thousands)

    Three months ended

    December
    31, 2020

    September
    25, 2020

    December
    31, 2019

    Net Income (Loss) – GAAP

    $

    13,465

    $

    (5,381)

    $

    5,570

    Provision for (benefit from) income taxes

    (39)

    786

    (1,653)

    Interest expense, net

    2,737

    2,807

    2,789

    Depreciation

    3,054

    3,148

    2,807

    Amortization of intangibles

    756

    752

    2,077

    EBITDA

    19,973

    2,112

    11,590

    Adjustments

    Stock-based compensation

    4,303

    3,930

    3,356

    Loss on convertible debt extinguishment/conversion

    528

    Restructuring and related charges

    1,613

    1,116

    2,615

    Adjusted EBITDA

    $

    26,417

    $

    7,158

    $

    17,561

     

    Twelve months ended

    December
    31, 2020

    December
    31, 2019

    Net Loss – GAAP

    $

    (29,271)

    $

    (5,924)

    Provision for (benefit from) income taxes

    3,054

    (672)

    Interest expense, net

    11,509

    11,651

    Depreciation

    11,737

    11,287

    Amortization of intangibles

    3,970

    8,319

    EBITDA

    999

    24,661

    Adjustments

    Accounting impact related to warrant amortization

    48

    Stock-based compensation

    18,040

    12,074

    Loss on convertible debt extinguishment/conversion

    1,362

    5,695

    Non-cash expenses related to convertible notes

    927

    Restructuring and related charges

    3,416

    4,532

    Adjusted EBITDA

    $

    23,817

    $

    47,937

     

    Harmonic Inc.
    GAAP to Non-GAAP Reconciliations on Financial Guidance (Unaudited)
    (In millions, except percentages and per share data)

    Q1 2021 Financial Guidance

    Revenue

    Gross Profit

    Total
    Operating
    Expense

    Income
    (Loss) from
    Operations

    Total Non-
    operating
    Expense, net

    Net Income
    (Loss)

    GAAP

    $97.0 to $107.0

    $49.2 to $56.4

    $58.0 to $60.0

    $(9.0) to $(4.0)

    $(2.8)

    $(12.4) to $(7.2)

      Stock-based compensation

    0.6

    (8.4)

    9.0

    9.0

      Amortization of intangibles

    (0.5)

    0.5

    0.5

      Restructuring and related charges

    0.2

    (0.2)

    0.4

    0.4

      Non-cash interest and other expenses related to convertible notes and other debt

    1.8

    1.8

     Tax effect of non-GAAP adjustments

    $0.2 to $0.7

    Total adjustments

    0.8

    (9.1)

    9.9

    1.8

    $11.6 to $12.4

    Non-GAAP

    $97.0 to $107.0

    $50.0 to $57.2

    $49.0 to $51.0

    $1.0 to $6.0

    $(1.0)

    $0.0 to $4.4

    As a % of revenue (GAAP)

    51.0% to 53.0%

    59.9% to 56.2%

    (9.2)% to (3.5)%

    (2.6)% to (2.9)%

    (12.8)% to (6.7)%

    As a % of revenue (Non-GAAP)

    51.5% to 53.5%

    50.5% to 47.7%

    1.0% to 5.8%

    (1.0)% to (1.0)%

    0.0% to 4.1%

    Diluted net income (loss) per share:

      Diluted net loss per share-GAAP

    $(0.12) to $(0.07)

      Diluted net income per share-Non-GAAP

    $0.00 to $0.04

    Shares used to compute diluted net loss per share:

      GAAP

    99.7

    Shares used to compute diluted net income per share:

      Non-GAAP

    102.5

    2021 Financial Guidance

    Revenue

    Gross Profit

    Total
    Operating
    Expense

    Income
    (Loss) from
    Operations

    Total Non-
    operating
    Expense, net

    Net Income
    (Loss)

    GAAP

    $430.0 to $465.0

    $219.0 to $250.9

    $231.5 to $238.5

    $(12.5) to $12.5

    $(11.4)

    $(26.6) to $(1.7)

      Stock-based compensation expense

    1.7

    (24.2)

    25.9

    25.9

      Amortization of intangibles

    (0.5)

    0.5

    0.5

      Restructuring and related charges

    0.8

    (0.8)

    1.6

    1.6

      Non-cash interest expense related to convertible notes and other debt

    6.2

    6.2

      Tax effect of non-GAAP adjustments

    $(0.8) to $1.7

    Total adjustments

    2.5

    (25.5)

    28.0

    6.2

    $33.4 to $35.9

    Non-GAAP

    $430.0 to $465.0

    $221.5 to $253.4

    $206.0 to $213.0

    $15.5 to $40.5

    $(5.2)

    $9.3 to $31.7

    As a % of revenue (GAAP)

    51.0% to 54.0%

    53.8% to 51.3%

    (2.9)% to 2.7%

    (2.5)% to (2.7)%

    (6.2)% to (0.4)%

    As a % of revenue (Non-GAAP)

    51.5% to 54.5%

    47.9% to 45.8%

    3.6% to 8.7%

    (1.1)% to (1.2)%

    2.2% to 6.8%

    Diluted net income (loss) per share:

      Diluted net loss per share-GAAP

    $(0.26) to $(0.02)

      Diluted net income per share-Non-GAAP

    $0.09 to $0.31

    Shares used to compute diluted net loss per share:

      GAAP

    101.0

    Shares used to compute diluted net income per share:

      Non-GAAP

    103.7

     

    Harmonic Inc.
    Adjusted EBITDA Reconciliation on Financial Guidance (Unaudited)
    (In millions)

    Q1 2021 Financial
    Guidance

    2021 Financial
    Guidance

    Net Loss – GAAP

    $(12.4) to $(7.2)

    $(26.6) to $(1.7)

    Provision for income taxes

    0.7

    2.7

    Interest expense, net

    2.5

    10.2

    Depreciation

    3.4

    14.0

    Amortization of intangibles

    0.5

    0.5

    EBITDA

    $(5.3) to $(0.1)

    $0.8 to $25.7

    Adjustments

    Stock-based compensation

    9.0

    25.9

    Restructuring and related charges

    0.4

    1.6

    Adjusted EBITDA

    $4.0 to $9.0

    $27.5 to $53.0

     

     

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