HARMONIC INC. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Strong Q3 results exceeded guidance, driven by progress in cOS deployments, Unified 4.0, fiber, and video appliances/SaaS streaming.
• Returned $16 million to shareholders via share repurchases, with total repurchases under the program at $66.1 million.
• Ended the quarter with backlog and deferred revenue of $495 million, indicating consistent customer demand.
• Expanded partnership with Charter to extend cOS virtualized broadband platform and deploy DOCSIS 4.0 unified RPDs.
• Fiber segment saw strong growth with Comcast deploying its fiber solution, adding one million new fiber passing per year.

Segment Performance

• Broadband Segment: Generated revenue of $90.5 million for the quarter with a gross margin of 47.3%. It has 142 cOS deployments serving over 37 million cable modems and ONUs worldwide. Key highlights include first production deployment of Unified DOCSIS 4.0 with Mediacom, collaboration with GCI and Midco, and RFP awards in Europe.
• Video Segment: Delivered $51.9 million in revenue. SaaS streaming revenue reached a record $16.1 million, up 13.6% year-over-year. The segment benefits from appliance Tier 1 refresh programs and SaaS streaming growth driven by global live sports deployments.

Guidance

• Q4 2025 Broadband: Expected revenue between $85 million to $95 million, gross margins between 48% to 50%, and adjusted EBITDA between $10 million to $16 million.
• Q4 2025 Video: Anticipated revenue in the range of $48 million to $52 million, gross margin 66% to 67%, and adjusted EBITDA $3 million to $6 million.
• Total company EPS expected to be in the range of $0.06 to $0.12. Anticipate broadband growth in 2026 due to expanding Unified 4.0 adoption, continued fiber expansion, and intelligent cloud services.

Risks

• Market uncertainties related to the adoption pace of Unified DOCSIS 4.0 and fiber deployments.
• Dependence on key customers and potential disruptions in supply chain or technology transition timelines.

Question and Answer

Q: Simon Leopold asks about top customers continuing to improve and if a second 10% customer is expected.

A: Walter Jankovic states they don't guide specific customers but expect the 10% customer to return and momentum building in 2026.

Q: Matt asks about Q4 guidance and deviation from normal seasonality.

A: Walter Jankovic says Q4 guidance reflects preparation for the DOCSIS 4.0 transition, with growth anticipated in 2026.

Q: Steven Frankel inquires about revenue pull-in in broadband and Akamai impact on video.

A: Walter Jankovic mentions a few million dollars pulled in for broadband, and Akamai onboarding contributing to video SaaS growth.

Q: Taren asks about the fiber-to-the-home opportunity with Comcast.

A: Nimrod Ben-Natan says Comcast is adding one million new homes annually, powered by Harmonic's technology.