HLIT

Strategic Transformation: • Completed the sale of the video business in June 2026, finalizing Harmonic's transformation to a pure-play broadband company. • The company's Converge COS platform supports all current and future broadband access architectures (DOCSIS 3.1+, DOCSIS 4.0, distributed, centralized, fiber), allowing operators to evolve their networks without locked-in, regrettable capital spend.

Market Momentum and Customer Traction: • Upstream broadband traffic is growing more than 3x faster than downstream traffic for the third consecutive year, driven by AI and always-connected devices, creating strong demand for upstream capacity expansion solutions that Harmonic's platform supports. • The deployed Converge COS footprint now serves 161 customers and 48.2 million CPE devices, with a repeated pattern of operators expanding use cases from DOCSIS to fiber overlay over time using the same platform. • Q2 2026 set a record for rest-of-market fiber bookings. New fiber products (Pearl One XL, Oyster Plus) secured their first multi-million dollar order, offering high port density and built-in power protection for outdoor deployments that reduces installation costs and space requirements. • The DOCSIS 4.0 ecosystem passed a key CableLabs interoperability milestone with multi-vendor modems, and Harmonic is shipping unified DOCSIS 4.0 nodes in volume to customers globally, adding a new European DOCSIS 4.0 customer in the quarter.

Intelligence Product Portfolio: • The Beacon network intelligence solution is now live with ~20 customers, and the broader intelligence platform is operational with ~10 operators. Early deployments have reduced subscriber service calls by more than 30%. • Ampli, the real-time visibility product for multi-vendor amplifier plants, is currently in beta testing. Industry forecasts project nearly 10 million smart amplifiers will be deployed in the current upgrade cycle, creating a large data opportunity for Harmonic's intelligence layer.

Financial and Operational Health: • Customer net promoter score (NPS) reached 87 in Q2 2026. After the video business sale, cash and cash equivalents totaled $231.9 million at quarter end, paired with an $85 million undrawn credit facility for strong liquidity. • Capital allocation priorities remain: invest in organic growth, return capital to shareholders, and pursue strategic M&A. The $200 million share repurchase program has completed $122 million in repurchases to date, with no repurchases in Q2. • An Investor Day is scheduled for September 15, 2026 to share long-term strategy, updated market opportunity sizing, and details on the intelligence business opportunity.

• Full year 2026 broadband revenue guidance was raised to $505 - $525 million, up from the prior range of $475 - $495 million, representing a 6.2% increase at the midpoint of the range. • Full year 2026 non-GAAP EPS guidance was raised to 67 - 75 cents, up approximately 14.5% from the midpoint of the prior guidance range. Full year gross margin guidance is 51 - 52%, an improvement from prior guidance due to favorable customer mix and supply chain risk mitigation. Full year operating profit is expected to be $99 - $111 million, and includes $10 million in stranded costs from the video business sale. • Q3 2026 guidance calls for broadband revenue of $125 - $135 million, gross margins of 51 - 52%, operating profit of $23 - $28 million, and EPS of 15 - 19 cents. Q3 operating profit includes $2.3 million in stranded video business costs. • The expected full year 2026 non-GAAP tax rate was reduced to 23% from the prior 24.5%, reflecting an updated profitability outlook. • Approximately 30% of stranded costs from the video business sale are expected to be temporary and eliminated within one year of closing. $3 million per quarter in second half 2026 guidance already accounts for incremental unrecovered memory costs that will not be passed to customers.

Following the completed sale of the video business on June 16, 2026, Harmonic operates as a pure-play broadband company with only one reportable segment: broadband. Total broadband revenue for Q2 2026 was $133.5 million, representing a 54% year-over-year increase. Rest of market (all revenue outside the company's two largest customers) revenue grew 44% year-over-year to nearly $50 million, accounting for 37% of total Q2 broadband revenue. In Q2 2026, the two largest customers each contributed over 10% of total revenue, together accounting for 63% of total broadband revenue. Total Q2 bookings reached $144 million, with rest of market representing approximately 60% of total bookings. End-of-quarter backlog and deferred revenue hit a record $587.6 million, up 71% year-over-year, with 73% expected to convert to revenue within 12 months. Q2 non-GAAP gross margin was 53%, non-GAAP operating profit was $31.3 million, and non-GAAP EPS was 21 cents.

• Management notes that actual results may differ materially from forward-looking projections due to identified risk factors, including geopolitical instability (specifically the ongoing situation in the Middle East). • Component (particularly memory) supply dynamics and pricing volatility present ongoing uncertainty, though management has taken steps to mitigate this risk by front-loading memory purchases to secure supply for 2026 and 2027. • Legacy broadband platforms operated by global customers are increasing security and maintenance liabilities for operators, though this dynamic works to Harmonic's advantage as customers seek platform modernization.

Q: Are we seeing an inflection in rest-of-market demand where smaller regional MSOs are starting full network upgrades, or are most still in trial phases? What percentage of the rest of market has started ramping deployments?

A: Rest-of-market deployments are well past lab trials and are now ramping across the board, across all use cases including DOCSIS 3.1+, DOCSIS 4.0, and fiber, outside of the company's top two customers. While the percentage of active ramping customers is not broken out exactly, it is growing quarter over quarter, with new customers moving through testing phases to full deployment after initial wins. Rest-of-market revenue is well diversified across a broad base of smaller customers.

Q: When will the intelligence platform business become a material contributor to recurring revenue, and can Harmonic maintain its current growth trajectory after pulling forward growth this year?

A: The intelligence platform will become a material, sticky addition to Harmonic's current recurring revenue base over time, with more details to be shared at the upcoming Investor Day. Management has already fully procured required memory for full year 2026, front-running supply issues to secure access, and has built $3 million per quarter into guidance for incremental memory cost impacts. Gross margin guidance was raised even after accounting for these costs, showing successful risk mitigation.

Q: What is the geographic mix of rest-of-market traction, and have you overcome past complexity issues to enable smaller operators to deploy virtual CCAP and DAA solutions? How are third-party hardware cost pressures impacting deployments?

A: While the majority of rest-of-market business remains in North America, a growing share of new opportunities and revenue comes from Europe, Latin America, and Asia. Harmonic has simplified deployment and operation of its platform over time, so customers do not need to manage underlying complex architecture, and operational complexity is no longer a headwind to growth. While third-party server and switch prices have risen, this business is immaterial to overall Harmonic results, and no material supply or deployment delays have resulted from cost increases.

Q: What is the outlook for fiber deployment, and how does the BEAD program factor into Harmonic's 2026 guidance?

A: Most cable operators are focusing fiber on high-priority use cases like MDUs rather than full overbuilds of existing coax networks, but Harmonic's converged platform supports seamless incremental fiber overbuilds when operators choose that path. Harmonic's fiber products also serve the broader non-cable fiber market, with new differentiated designs gaining early customer traction. BEAD program revenue is a modest part of 2026 guidance, and product and supply chain are ready to ship BEAD orders as they come in, with no unexpected delays to date.