HARMONIC INC. Q4 FY2025 earnings call

• Harmonic delivered a strong fourth quarter with accelerating momentum in broadband business. - Pending sale of Video business to MediaKind to push growth strategy forward and transform into pure-play broadband leader. - Diversification and expansion of customer base with Rest-of-World revenue growing and representing a larger portion of broadband revenue. - Fiber business scaling rapidly with new product innovations and collaborations. - Unified DOCSIS 4.0 strategy maturing with scale commercial deployments. - Introduction of new intelligence-driven operational solutions to help operators reduce churn and lower costs. - World-class Net Promoter Score of 82 underscoring trust in the platform.

Broadband revenue for the quarter was $98.2 million, representing 9% sequential growth and above the high end of guidance. Record quarterly bookings of $346.9 million drove a 3.5 book-to-bill ratio. Backlog and deferred revenue at year-end were $573.8 million, up 73% year-over-year. Rest-of-World revenue grew 33% year-over-year in the fourth quarter, representing 41% of total broadband revenue. The Video business, classified as discontinued operations, exceeded expectations in the fourth quarter. Fiber business scaled rapidly with strong revenue growth in the fourth quarter and full year. Unified DOCSIS 4.0 strategy gained traction with node shipments ramping.

For Q1 2026, broadband expected revenue between $100 million to $105 million, gross margins 54% to 55%, operating profit $18 million to $20 million, EPS $0.11 to $0.12. For full year 2026, broadband expected revenue between $440 million to $480 million, gross margins 51% to 53%, operating profit $74 million to $99 million, EPS $0.46 to $0.63. Guidance takes into account factors like memory chip pricing and supply dynamics, and includes stranded costs and tariff impacts.

Q: Simon Leopold asked about customer mix for 2026 and margin outlook related to software.

A: Walter Jankovic said Rest-of-World growth will continue but quarter-to-quarter varies with larger customers, and software mix is a tailwind for margins.

Q: Ryan Koontz asked about bookings composition and margin outlook.

A: Walter Jankovic said bookings were strong in Rest-of-World with mix of larger customers and rest of market, and software mix is a tailwind.

Q: Taran Katta asked about memory cost and pricing actions.

A: Walter Jankovic said $6 million net impact from memory pricing with pricing actions on memory-intense products.

Q: Steven Frankel asked about bookings contribution from ROW and key customers, memory BOM percentage, and SaaS/service revenue.

A: Walter Jankovic said bookings were mix of larger customers and ROW, memory BOM lower than some products, and SaaS/service revenue had large majority in SLA contracts with growing component.