SAN JOSE, Calif., April 29, 2019 /PRNewswire/ -- Harmonic Inc.
(NASDAQ: HLIT) today announced its unaudited results for the first
quarter of 2019.
"During the first quarter, our Cable business performed as
anticipated, while increased customer interest in video SaaS caused
a headwind for our Video business," said Patrick Harshman, president and chief executive
officer of Harmonic. "Operational execution was solid as gross
margins, operating expenses and cash generation all exceeded our
expectations. Looking ahead, we continue to anticipate a strong
Cable business ramp in the second half of the year as our largest
customers begin volume rollouts of CableOS. In addition, our
growing pipeline of Video SaaS activity points to continued
transformation to a more valuable Video business."
Q1 Financial and Business Highlights
- Revenue: GAAP $80.1 million, down
11.1% year over year; non-GAAP $80.1
million, down 11.2% year over year.
- SaaS and service revenue: 34.6% of total revenue, compared to
29% in the year ago period.
- SaaS and service gross margin: GAAP 59.6% and non-GAAP 61.3%,
an increase of 690 and 500 basis points, respectively, year over
year.
- Gross margin: GAAP 52.2%, compared to 52.4% in the year ago
period; non-GAAP 54.5%, compared to 55.3% in the year ago
period.
- Operating expenses: GAAP $50.3
million, compared to $56.5
million in the year ago period; non-GAAP $47.5 million, compared to $49.4 million in the year ago period.
- Video segment operating income: $2.0
million, seventh consecutive quarter of positive segment
operating income.
- Ended Q1 with cash of $69.9
million, up $3.9 million
quarter over quarter.
- CableOS deployments continued to scale, over 670,000 served
cable modems, up 24% quarter over quarter.
- CableOS global design win momentum continued with 32
deployments and trials underway, up 10% quarter over quarter.
- Video SaaS customer base increased from 19 to 25 customers, up
32% quarter over quarter.
- Over 6.5 million consumers served by Video SaaS, up 70% year
over year.
Select Financial Information
|
|
GAAP
|
|
Non-GAAP
|
Key Financial
Results
|
|
Q1 2019
|
|
Q4 2018
|
|
Q1 2018
|
|
Q1 2019
|
|
Q4 2018
|
|
Q1 2018
|
|
|
(in millions,
except per share data)
|
Net
revenue
|
|
$
|
80.1
|
|
|
$
|
113.7
|
|
|
$
|
90.1
|
|
|
$
|
80.1
|
|
|
$
|
113.6
|
|
|
$
|
90.2
|
|
Net income
(loss)
|
|
$
|
(11.3)
|
|
|
$
|
3.3
|
|
|
$
|
(13.7)
|
|
|
$
|
(4.8)
|
|
|
$
|
9.7
|
|
|
$
|
(1.1)
|
|
Diluted
EPS
|
|
$
|
(0.13)
|
|
|
$
|
0.04
|
|
|
$
|
(0.16)
|
|
|
$
|
(0.05)
|
|
|
$
|
0.11
|
|
|
$
|
(0.01)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Financial
Information
|
Q1 2019
|
|
Q4 2018
|
|
Q1 2018
|
|
(in
millions)
|
Recurring
revenue*
|
$
|
27.7
|
|
|
$
|
30.5
|
|
|
$
|
26.1
|
|
Recurring revenue as
% of total revenue
|
34.6
|
%
|
|
26.8
|
%
|
|
29.0
|
%
|
Bookings for the
quarter
|
$
|
81.0
|
|
|
$
|
92.8
|
|
|
$
|
102.6
|
|
Backlog and deferred
revenue as of quarter end
|
$
|
187.2
|
|
|
$
|
186.4
|
|
|
$
|
224.4
|
|
Cash as of quarter
end
|
$
|
69.9
|
|
|
$
|
66.0
|
|
|
$
|
52.0
|
|
|
* Recurring revenue
consists of revenue for the period from our appliance-based support
and maintenance plans and revenue from usage of our cloud-based
subscription plan offerings, which are generally renewed on an
annual basis.
|
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
|
|
Q2
2019
|
|
2019
|
|
Low
|
|
High
|
|
Low
|
|
High
|
|
|
(in millions,
except percentages and per share data)
|
Net
Revenue
|
|
$
|
80.0
|
|
|
$
|
90.0
|
|
|
$
|
385.0
|
|
|
$
|
430.0
|
|
Video
|
|
$
|
70.0
|
|
|
$
|
75.0
|
|
|
$
|
285.0
|
|
|
$
|
300.0
|
|
Cable Access
|
|
$
|
10.0
|
|
|
$
|
15.0
|
|
|
$
|
100.0
|
|
|
$
|
130.0
|
|
Gross Margin
%
|
|
50.5
|
%
|
|
51.5
|
%
|
|
48.2
|
%
|
|
51.8
|
%
|
Operating
Expenses
|
|
$
|
54.5
|
|
|
$
|
55.5
|
|
|
$
|
210.5
|
|
|
$
|
220.5
|
|
Operating Income
(Loss)
|
|
$
|
(15.1)
|
|
|
$
|
(8.1)
|
|
|
$
|
(34.9)
|
|
|
$
|
12.2
|
|
Tax
Expense
|
|
$
|
(0.7)
|
|
|
$
|
(0.7)
|
|
|
$
|
(2.3)
|
|
|
$
|
(2.3)
|
|
EPS
|
|
$
|
(0.21)
|
|
|
$
|
(0.14)
|
|
|
$
|
(0.56)
|
|
|
$
|
(0.04)
|
|
Shares
|
|
88.9
|
|
|
88.9
|
|
|
89.3
|
|
|
89.3
|
|
Cash
|
|
$
|
60.0
|
|
|
$
|
70.0
|
|
|
$
|
65.0
|
|
|
$
|
85.0
|
|
Non-GAAP Financial
Guidance
|
|
Q2
2019
|
|
2019
|
|
Low
|
|
High
|
|
Low
|
|
High
|
|
|
(in millions,
except percentages and per share data)
|
Net
Revenue
|
|
$
|
80.0
|
|
|
$
|
90.0
|
|
|
$
|
385.0
|
|
|
$
|
430.0
|
|
Video
|
|
$
|
70.0
|
|
|
$
|
75.0
|
|
|
$
|
285.0
|
|
|
$
|
300.0
|
|
Cable Access
|
|
$
|
10.0
|
|
|
$
|
15.0
|
|
|
$
|
100.0
|
|
|
$
|
130.0
|
|
Gross Margin
%
|
|
52.5
|
%
|
|
53.5
|
%
|
|
50.0
|
%
|
|
53.5
|
%
|
Operating
Expenses
|
|
$
|
51.0
|
|
|
$
|
52.0
|
|
|
$
|
195.0
|
|
|
$
|
205.0
|
|
Operating Income
(Loss)
|
|
$
|
(10.0)
|
|
|
$
|
(3.0)
|
|
|
$
|
(12.5)
|
|
|
$
|
34.6
|
|
Tax Rate
|
|
12
|
%
|
|
12
|
%
|
|
12
|
%
|
|
12
|
%
|
EPS
|
|
$
|
(0.11)
|
|
|
$
|
(0.05)
|
|
|
$
|
(0.19)
|
|
|
$
|
0.27
|
|
Shares
|
|
88.9
|
|
|
88.9
|
|
|
89.3
|
|
|
91.0
|
|
Cash
|
|
$
|
60.0
|
|
|
$
|
70.0
|
|
|
$
|
65.0
|
|
|
$
|
85.0
|
|
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. PT (5:00 p.m. ET)
on Monday, April 29, 2019. 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
(passcode 2177037). A replay will be available after 4:30 p.m. PT on the same web site or by calling
+1.404.537.3406 or +1.855.859.2056 (passcode 2177037).
About Harmonic Inc.
Harmonic (NASDAQ: HLIT), the worldwide leader in video delivery
technology and services, enables media companies and service
providers to deliver ultra-high-quality broadcast and OTT video
services to consumers globally. The Company has also 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-as-a-service (SaaS) technologies, or
powering the delivery of gigabit internet cable services, Harmonic
is changing the way media companies and service providers monetize
live and VOD 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: GAAP net revenue,
GAAP gross margins, GAAP operating expenses, GAAP operating income
(loss), GAAP tax expense, GAAP EPS, non-GAAP revenue, non-GAAP
gross margins, non-GAAP operating expenses, non-GAAP operating
income (loss), non-GAAP tax rate, non-GAAP 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 trends toward more high-definition, on-demand
and anytime, anywhere video will not continue to develop at its
current 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
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; the impact of
general economic conditions on our sales and operations; 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,
2018, 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), 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:
Cable Access inventory charge - Harmonic
from time to time incurs inventory
impairment charges associated with material business shifts, such
as the repositioning of our Cable Access segment. We exclude these
items, because we do not believe they are reflective of our ongoing
long-term business and operating results.
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.
Non-cash interest expense related to convertible notes -
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. Vesting of the warrant shares is subject to Comcast
achieving certain milestones and purchase volume commitments, and
therefore the accounting guidance requires that the value of the
warrant be recorded as a reduction in the Company's net revenues.
Until the first quarter of fiscal 2019, changes in fair value of
the warrant shares were being marked to market until final vesting,
and any adjustment as such was being recorded in revenue. The
change in fair value together with vested warrant shares were
amortized to revenue using a ratio of revenue recognized from the
customer in the period compared to total revenue expected from the
customer. In the first quarter of fiscal 2019, due to the adoption
of new accounting guidance (ASU No. 2018-07), the fair value of
unvested warrant shares is no longer required to be marked to
market. As a result, the charge to revenue for warrant shares no
longer includes the change in fair value of the warrant shares.
We have excluded the effect of warrant amortization in our
non-GAAP financial measures. Management believes it is useful to
exclude the charge for the warrant shares in order to better
understand the effects of these items on our total revenues and
gross margin, as well as on Cable Access segment revenue.
Loss on impairment of long-term investments - We exclude
the effect of any other-than-temporary impairment of a cost method
investment in calculating our non-GAAP financial measures. We
exclude these items because we do not believe they are reflective
of our ongoing long-term business and operating results.
Gain (loss) on equity investments - We exclude the
change in fair value and gain (loss) from sale of our equity
investments in calculating our non-GAAP financial measures. We
exclude these items because we do not believe they are reflective
of our ongoing long-term business and operating results.
Avid litigation settlement and associated legal fees - In
the third quarter of fiscal 2017, we settled the patent litigation
with Avid Technology, Inc. by entering into a settlement and patent
portfolio cross-license agreement with Avid. Under the agreement,
we agreed to pay Avid a one-time non-recurring amount of
$6 million in installments.
$2.5 million was paid upfront in
October 2017 and $1.5 million and $2.0
million will be paid in 2019 and 2020, respectively. Also,
the Avid litigation costs of approximately $1.4 million and $0.7
million in the third and fourth fiscal quarter of 2017,
respectively, were significantly higher compared to prior
periods. We excluded these expenses from our non-GAAP results
because we do not believe they are reflective of our ongoing
long-term business and operating results.
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.
Harmonic
Inc.
|
Preliminary
Condensed Consolidated Balance Sheets
|
(Unaudited, in
thousands, except per share data)
|
|
|
March 29,
2019
|
|
December 31,
2018
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and
cash equivalents
|
$
|
69,916
|
|
|
$
|
65,989
|
|
Accounts
receivable, net
|
58,930
|
|
|
81,795
|
|
Inventories
|
29,325
|
|
|
25,638
|
|
Prepaid
expenses and other current assets
|
22,900
|
|
|
23,280
|
|
Total current
assets
|
181,071
|
|
|
196,702
|
|
Property and
equipment, net
|
20,976
|
|
|
22,321
|
|
Operating lease
right-of-use assets
|
21,616
|
|
|
—
|
|
Goodwill
|
239,848
|
|
|
240,618
|
|
Intangibles,
net
|
10,704
|
|
|
12,817
|
|
Other long-term
assets
|
39,962
|
|
|
38,377
|
|
Total
assets
|
$
|
514,177
|
|
|
$
|
510,835
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Other
debts and capital lease obligations, current
|
$
|
7,124
|
|
|
$
|
7,175
|
|
Accounts
payable
|
25,436
|
|
|
33,778
|
|
Income
taxes payable
|
884
|
|
|
1,099
|
|
Deferred
revenue
|
47,422
|
|
|
41,592
|
|
Accrued
and other current liabilities
|
53,238
|
|
|
52,761
|
|
Total current
liabilities
|
134,104
|
|
|
136,405
|
|
Convertible notes,
long-term
|
116,413
|
|
|
114,808
|
|
Other debts and
capital lease obligations, long-term
|
12,402
|
|
|
12,684
|
|
Income taxes payable,
long-term
|
466
|
|
|
460
|
|
Other non-current
liabilities
|
30,231
|
|
|
18,228
|
|
Total
liabilities
|
293,616
|
|
|
282,585
|
|
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; 88,784 and
87,057 shares issued and outstanding at March 29, 2019 and
December 31, 2018, respectively
|
89
|
|
|
87
|
|
Additional paid-in capital
|
2,300,259
|
|
|
2,296,795
|
|
Accumulated deficit
|
(2,077,322)
|
|
|
(2,067,416)
|
|
Accumulated other comprehensive loss
|
(2,465)
|
|
|
(1,216)
|
|
Total stockholders'
equity
|
220,561
|
|
|
228,250
|
|
Total liabilities and
stockholders' equity
|
$
|
514,177
|
|
|
$
|
510,835
|
|
Harmonic
Inc.
|
Preliminary
Condensed Consolidated Statements of Operations
|
(Unaudited, in
thousands, except per share data)
|
|
|
Three months
ended
|
|
March 29,
2019
|
|
March 30,
2018
|
Revenue:
|
|
|
|
Appliance and
integration
|
$
|
52,365
|
|
|
$
|
63,986
|
|
SaaS and
service
|
27,741
|
|
|
26,141
|
|
Total net
revenue
|
80,106
|
|
|
90,127
|
|
Cost of
revenue:
|
|
|
|
Appliance and
integration
|
27,054
|
|
|
30,576
|
|
SaaS and
service
|
11,203
|
|
|
12,368
|
|
Total cost of
revenue
|
38,257
|
|
|
42,944
|
|
Gross
profit
|
41,849
|
|
|
47,183
|
|
Operating
expenses:
|
|
|
|
Research
and development
|
21,401
|
|
|
23,457
|
|
Selling,
general and administrative
|
28,011
|
|
|
31,163
|
|
Amortization of intangibles
|
788
|
|
|
804
|
|
Restructuring and related charges
|
57
|
|
|
1,086
|
|
Total operating
expenses
|
50,257
|
|
|
56,510
|
|
Loss from
operations
|
(8,408)
|
|
|
(9,327)
|
|
Interest expense,
net
|
(2,906)
|
|
|
(2,757)
|
|
Other expense,
net
|
(311)
|
|
|
(532)
|
|
Loss before income
taxes
|
(11,625)
|
|
|
(12,616)
|
|
Provision for
(benefit from) income taxes
|
(319)
|
|
|
1,078
|
|
Net loss
|
$
|
(11,306)
|
|
|
$
|
(13,694)
|
|
Net loss per
share:
|
|
|
|
Basic
and diluted
|
$
|
(0.13)
|
|
|
$
|
(0.16)
|
|
Shares used in per
share calculation:
|
|
|
|
Basic
and diluted
|
88,165
|
|
|
83,912
|
|
Harmonic
Inc.
|
Preliminary
Condensed Consolidated Statements of Cash Flows
|
(Unaudited, in
thousands)
|
|
|
Three months
ended
|
|
March 29,
2019
|
|
March 30,
2018
|
Cash flows from
operating activities:
|
|
|
|
Net loss
|
$
|
(11,306)
|
|
|
$
|
(13,694)
|
|
Adjustments to
reconcile net loss to net cash provided by operating
activities:
|
|
|
|
Amortization of intangibles
|
2,083
|
|
|
2,099
|
|
Depreciation
|
2,846
|
|
|
3,456
|
|
Stock-based compensation
|
2,113
|
|
|
5,757
|
|
Amortization of discount on convertible debt
|
1,605
|
|
|
1,453
|
|
Amortization of non-cash warrant
|
25
|
|
|
111
|
|
Restructuring, asset impairment and
loss on retirement of fixed assets
|
103
|
|
|
40
|
|
Deferred
income taxes
|
(538)
|
|
|
—
|
|
Foreign
currency adjustments
|
(638)
|
|
|
835
|
|
Provision for excess and obsolete inventories
|
254
|
|
|
458
|
|
Allowance for doubtful accounts, returns and discounts
|
417
|
|
|
1,122
|
|
Other
non-cash adjustments, net
|
287
|
|
|
132
|
|
Changes
in operating assets and liabilities, net of effects of
acquisition:
|
|
|
|
Accounts
receivable
|
22,351
|
|
|
(5,925)
|
|
Inventories
|
(4,157)
|
|
|
424
|
|
Prepaid expenses and
other assets
|
1,417
|
|
|
(6,511)
|
|
Accounts
payable
|
(8,177)
|
|
|
(5,710)
|
|
Deferred
revenue
|
4,750
|
|
|
10,009
|
|
Income taxes
payable
|
(192)
|
|
|
253
|
|
Accrued and other
liabilities
|
(9,027)
|
|
|
(933)
|
|
Net cash provided by
(used in) operating activities
|
4,216
|
|
|
(6,624)
|
|
Cash flows from
investing activities:
|
|
|
|
Purchases of property and equipment
|
(1,674)
|
|
|
(1,775)
|
|
Net cash used in
investing activities
|
(1,674)
|
|
|
(1,775)
|
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from
other debts and capital leases
|
160
|
|
|
—
|
|
Repayment of
other debts and capital leases
|
(97)
|
|
|
(448)
|
|
Proceeds
from common stock issued to employees
|
2,012
|
|
|
2,347
|
|
Payment
of tax withholding obligations related to net share settlements of
restricted stock units
|
(657)
|
|
|
—
|
|
Net cash provided by
financing activities
|
1,418
|
|
|
1,899
|
|
Effect of exchange
rate changes on cash, cash equivalents and restricted
cash
|
(33)
|
|
|
73
|
|
Net increase
(decrease) in cash, cash equivalents and restricted cash
|
3,927
|
|
|
(6,427)
|
|
Cash, cash
equivalents and restricted cash at beginning of period
|
65,989
|
|
|
58,757
|
|
Cash, cash
equivalents and restricted cash at end of period
|
$
|
69,916
|
|
|
$
|
52,330
|
|
|
|
|
|
Reconciliation of
cash, cash equivalents, and restricted cash to the condensed
consolidated balance sheets
|
|
|
|
Cash and cash
equivalents
|
$
|
69,916
|
|
|
$
|
52,045
|
|
Restricted cash
included in prepaid expenses and other current assets
|
—
|
|
|
285
|
|
Total cash, cash equivalents and restricted cash
|
$
|
69,916
|
|
|
$
|
52,330
|
|
The accompanying notes are an integral part of
these condensed consolidated financial statements.
Harmonic
Inc.
|
Preliminary
Revenue Information
|
(Unaudited, in
thousands, except percentages)
|
|
|
Three months
ended
|
|
March 29,
2019
|
|
December 31,
2018
|
|
March 30,
2018
|
|
GAAP
|
Adjustments(1)
|
Non-GAAP
|
|
GAAP
|
Adjustments(1)
|
Non-GAAP
|
|
GAAP
|
Adjustments(1)
|
Non-GAAP
|
Geography
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
$
|
34,188
|
|
$
|
25
|
|
$
|
34,213
|
|
43%
|
|
$
|
63,007
|
|
$
|
(7)
|
|
$
|
63,000
|
|
55%
|
|
$
|
48,856
|
|
$
|
111
|
|
$
|
48,967
|
|
54%
|
EMEA
|
28,078
|
|
—
|
|
28,078
|
|
35%
|
|
25,880
|
|
—
|
|
25,880
|
|
23%
|
|
23,202
|
|
—
|
|
23,202
|
|
26%
|
APAC
|
17,840
|
|
—
|
|
17,840
|
|
22%
|
|
24,768
|
|
—
|
|
24,768
|
|
22%
|
|
18,069
|
|
—
|
|
18,069
|
|
20%
|
Total
|
$
|
80,106
|
|
$
|
25
|
|
$
|
80,131
|
|
100%
|
|
$
|
113,655
|
|
$
|
(7)
|
|
$
|
113,648
|
|
100%
|
|
$
|
90,127
|
|
$
|
111
|
|
$
|
90,238
|
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
Provider
|
$
|
44,212
|
|
$
|
25
|
|
$
|
44,237
|
|
55%
|
|
$
|
80,325
|
|
$
|
(7)
|
|
$
|
80,318
|
|
71%
|
|
$
|
52,217
|
|
$
|
111
|
|
$
|
52,328
|
|
58%
|
Broadcast and
Media
|
35,894
|
|
—
|
|
35,894
|
|
45%
|
|
33,330
|
|
—
|
|
33,330
|
|
29%
|
|
37,910
|
|
—
|
|
37,910
|
|
42%
|
Total
|
$
|
80,106
|
|
$
|
25
|
|
$
|
80,131
|
|
100%
|
|
$
|
113,655
|
|
$
|
(7)
|
|
$
|
113,648
|
|
100%
|
|
$
|
90,127
|
|
$
|
111
|
|
$
|
90,238
|
|
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
March 29, 2019
|
|
Video
|
|
Cable
Access
|
|
Total Segment
Measures (non-GAAP)
|
|
Adjustments
(1)
|
|
Consolidated
GAAP
Measures
|
Net
revenue
|
$
|
67,176
|
|
|
$
|
12,955
|
|
|
$
|
80,131
|
|
|
$
|
(25)
|
|
*
|
$
|
80,106
|
|
Gross
profit
|
38,602
|
|
|
5,093
|
|
|
43,695
|
|
|
(1,846)
|
|
|
41,849
|
|
Gross
margin%
|
57.5
|
%
|
|
39.3
|
%
|
|
54.5
|
%
|
|
|
|
52.2
|
%
|
Operating income
(loss)
|
1,968
|
|
|
(5,797)
|
|
|
(3,829)
|
|
|
(4,579)
|
|
|
(8,408)
|
|
Operating
margin%
|
2.9
|
%
|
|
(44.7)
|
%
|
|
(4.8)
|
%
|
|
|
|
(10.5)
|
%
|
|
Three months ended
December 31, 2018
|
|
Video
|
|
Cable
Access
|
|
Total
Segment
Measures (non-GAAP)
|
|
Adjustments
(1)
|
|
Consolidated
GAAP
Measures
|
Net
revenue
|
$
|
89,528
|
|
|
$
|
24,120
|
|
|
$
|
113,648
|
|
|
$
|
7
|
|
*
|
$
|
113,655
|
|
Gross
profit
|
51,449
|
|
|
10,509
|
|
|
61,958
|
|
|
(1,637)
|
|
|
60,321
|
|
Gross
margin%
|
57.5
|
%
|
|
43.6
|
%
|
|
54.5
|
%
|
|
|
|
53.1
|
%
|
Operating
income
|
12,678
|
|
|
—
|
|
|
12,678
|
|
|
(5,353)
|
|
|
7,325
|
|
Operating
margin%
|
14.2
|
%
|
|
—
|
%
|
|
11.2
|
%
|
|
|
|
6.4
|
%
|
|
Three months ended
March 30, 2018
|
|
Video
|
|
Cable
Access
|
|
Total Segment
Measures (non-GAAP)
|
|
Adjustments
(1)
|
|
Consolidated
GAAP
Measures
|
Net
revenue
|
$
|
71,748
|
|
|
$
|
18,490
|
|
|
$
|
90,238
|
|
|
$
|
(111)
|
|
*
|
$
|
90,127
|
|
Gross
profit
|
41,226
|
|
|
8,640
|
|
|
49,866
|
|
|
(2,683)
|
|
|
47,183
|
|
Gross
margin%
|
57.5
|
%
|
|
46.7
|
%
|
|
55.3
|
%
|
|
|
|
52.4
|
%
|
Operating income
(loss)
|
1,995
|
|
|
(1,513)
|
|
|
482
|
|
|
(9,809)
|
|
|
(9,327)
|
|
Operating
margin%
|
2.8
|
%
|
|
(8.2)
|
%
|
|
0.5
|
%
|
|
|
|
(10.3)
|
%
|
|
(1) See "Use of
Non-GAAP Financial Measures" above and "GAAP to Non-GAAP
Reconciliations" below.
|
* These non-GAAP
adjustments are primarily for warrant amortization for the
respective periods and relate to our Cable Access segment. After
applying these adjustments to the non-GAAP revenue for the Cable
Access segment, our GAAP revenue for the Cable Access segment for
the three months ended March 29, 2019 was $12,930; the GAAP revenue
for the three months ended March 30, 2018 was $18,379; and the
GAAP revenue for the three months ended December 31, 2018 was
$24,127.
|
Harmonic
Inc.
|
GAAP to Non-GAAP
Reconciliations (Unaudited)
|
(In thousands,
except percentages and per share data)
|
|
|
Three months ended
March 29, 2019
|
|
Revenue
|
Gross
Profit
|
Total
Operating
Expense
|
Loss from
Operations
|
Total Non-
operating
Expense, net
|
Net
Loss
|
GAAP
|
$
|
80,106
|
|
$
|
41,849
|
|
$
|
50,257
|
|
$
|
(8,408)
|
|
$
|
(3,217)
|
|
$
|
(11,306)
|
|
Accounting
impact related to warrant amortization
|
25
|
|
25
|
|
—
|
|
25
|
|
—
|
|
25
|
|
Stock-based
compensation
|
—
|
|
225
|
|
(1,888)
|
|
2,113
|
|
—
|
|
2,113
|
|
Amortization
of intangibles
|
—
|
|
1,295
|
|
(788)
|
|
2,083
|
|
—
|
|
2,083
|
|
Restructuring and related
charges
|
—
|
|
301
|
|
(57)
|
|
358
|
|
—
|
|
358
|
|
Non-cash
interest expenses related to convertible notes
|
—
|
|
—
|
|
—
|
|
—
|
|
1,606
|
|
1,606
|
|
Discrete tax
items and tax effect of non-GAAP adjustments
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
334
|
|
Total
adjustments
|
25
|
|
1,846
|
|
(2,733)
|
|
4,579
|
|
1,606
|
|
6,519
|
|
Non-GAAP
|
$
|
80,131
|
|
$
|
43,695
|
|
$
|
47,524
|
|
$
|
(3,829)
|
|
$
|
(1,611)
|
|
$
|
(4,787)
|
|
As a % of revenue
(GAAP)
|
|
52.2
|
%
|
62.7
|
%
|
(10.5)
|
%
|
(4.0)
|
%
|
(14.1)
|
%
|
As a % of revenue
(Non-GAAP)
|
|
54.5
|
%
|
59.3
|
%
|
(4.8)
|
%
|
(2.0)
|
%
|
(6.0)
|
%
|
|
|
|
|
|
|
|
Diluted net loss
per share:
|
|
|
|
|
|
|
Diluted net
loss per share-GAAP
|
|
|
|
|
|
$
|
(0.13)
|
|
Diluted net
loss per share-Non-GAAP
|
|
|
|
|
|
$
|
(0.05)
|
|
Shares used to
compute diluted net loss per share:
|
|
|
|
|
|
|
GAAP and
Non-GAAP
|
|
|
|
|
|
88,165
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31, 2018
|
|
Revenue
|
Gross
Profit
|
Total
Operating
Expense
|
Income
from
Operations
|
Total Non-
operating
Expense, net
|
Net
Income
|
GAAP
|
$
|
113,655
|
|
$
|
60,321
|
|
$
|
52,996
|
|
$
|
7,325
|
|
$
|
(2,747)
|
|
$
|
3,330
|
|
Accounting
impact related to warrant amortization
|
(7)
|
|
(7)
|
|
—
|
|
(7)
|
|
—
|
|
(7)
|
|
Stock-based
compensation
|
—
|
|
376
|
|
(2,711)
|
|
3,087
|
|
—
|
|
3,087
|
|
Amortization
of intangibles
|
—
|
|
1,295
|
|
(791)
|
|
2,086
|
|
—
|
|
2,086
|
|
Restructuring
and related charges
|
—
|
|
(27)
|
|
(214)
|
|
187
|
|
—
|
|
187
|
|
Non-cash
interest expenses related to convertible notes
|
—
|
|
—
|
|
—
|
|
—
|
|
1,577
|
|
1,577
|
|
Discrete tax
items and tax effect of non-GAAP adjustments
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(593)
|
|
Total
adjustments
|
(7)
|
|
1,637
|
|
(3,716)
|
|
5,353
|
|
1,577
|
|
6,337
|
|
Non-GAAP
|
$
|
113,648
|
|
$
|
61,958
|
|
$
|
49,280
|
|
$
|
12,678
|
|
$
|
(1,170)
|
|
$
|
9,667
|
|
As a % of revenue
(GAAP)
|
|
53.1
|
%
|
46.6
|
%
|
6.4
|
%
|
(2.4)
|
%
|
2.9
|
%
|
As a % of revenue
(Non-GAAP)
|
|
54.5
|
%
|
43.4
|
%
|
11.2
|
%
|
(1.0)
|
%
|
8.5
|
%
|
|
|
|
|
|
|
|
Diluted net income
per share:
|
|
|
|
|
|
|
Diluted net
income per share-GAAP
|
|
|
|
|
|
$
|
0.04
|
|
Diluted net
income per share-Non-GAAP
|
|
|
|
|
|
$
|
0.11
|
|
Shares used to
compute diluted net income per share:
|
|
|
|
|
|
|
GAAP and
Non-GAAP
|
|
|
|
|
|
89,028
|
|
|
Three months ended
March 30, 2018
|
|
Revenue
|
Gross
Profit
|
Total
Operating
Expense
|
Income
(Loss)
from
Operations
|
Total Non-
operating
Expense, net
|
Net
Loss
|
GAAP
|
$
|
90,127
|
|
$
|
47,183
|
|
$
|
56,510
|
|
$
|
(9,327)
|
|
$
|
(3,289)
|
|
$
|
(13,694)
|
|
Accounting
impact related to warrant amortization
|
111
|
|
111
|
|
—
|
|
111
|
|
—
|
|
111
|
|
Stock-based
compensation
|
—
|
|
515
|
|
(5,242)
|
|
5,757
|
|
—
|
|
5,757
|
|
Amortization
of intangibles
|
—
|
|
1,295
|
|
(804)
|
|
2,099
|
|
—
|
|
2,099
|
|
Restructuring and related
charges
|
—
|
|
762
|
|
(1,086)
|
|
1,848
|
|
—
|
|
1,848
|
|
Avid
litigation settlement and associated legal fees
|
—
|
|
—
|
|
6
|
|
(6)
|
|
—
|
|
(6)
|
|
Non-cash
interest expenses related to convertible notes
|
—
|
|
—
|
|
—
|
|
—
|
|
1,454
|
|
1,454
|
|
Discrete tax
items and tax effect of non-GAAP adjustments
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,294
|
|
Total
adjustments
|
$
|
111
|
|
$
|
2,683
|
|
$
|
(7,126)
|
|
$
|
9,809
|
|
$
|
1,454
|
|
$
|
12,557
|
|
Non-GAAP
|
$
|
90,238
|
|
$
|
49,866
|
|
$
|
49,384
|
|
$
|
482
|
|
$
|
(1,835)
|
|
$
|
(1,137)
|
|
As a % of revenue
(GAAP)
|
|
52.4
|
%
|
62.7
|
%
|
(10.3)
|
%
|
(3.6)
|
%
|
(15.2)
|
%
|
As a % of revenue
(Non-GAAP)
|
|
55.3
|
%
|
54.7
|
%
|
0.5
|
%
|
(2.0)
|
%
|
(1.3)
|
%
|
|
|
|
|
|
|
|
Diluted net loss
per share:
|
|
|
|
|
|
|
Diluted net
loss per share-GAAP
|
|
|
|
|
|
$
|
(0.16)
|
|
Diluted net
loss per share-Non-GAAP
|
|
|
|
|
|
$
|
(0.01)
|
|
Shares used to
compute diluted net loss per share:
|
|
|
|
|
|
|
GAAP and
Non-GAAP
|
|
|
|
|
|
83,912
|
|
Harmonic
Inc.
|
GAAP to Non-GAAP
Reconciliations on Financial Guidance
|
(In millions,
except percentages and per share data)
|
|
|
Q2 2019 Financial
Guidance
|
|
Revenue
|
Gross
Profit
|
Total
Operating
Expense
|
Loss from
Operations
|
Total Non-
operating
Expense,
net
|
Net
Loss
|
GAAP
|
$80.0 to
$90.0
|
$40.4 to
$46.4
|
$54.5 to
$55.5
|
$(15.1) to
$(8.1)
|
$(3.3)
|
$(19.1) to
$(12.1)
|
Stock-based
compensation
|
—
|
0.3
|
(2.7)
|
3.0
|
—
|
3.0
|
Amortization
of intangibles
|
—
|
1.3
|
(0.8)
|
2.1
|
—
|
2.1
|
Non-cash
interest expense related to convertible notes
|
—
|
—
|
—
|
—
|
1.7
|
1.7
|
Tax effect of
non-GAAP adjustments
|
—
|
—
|
—
|
—
|
—
|
$1.3 to
$2.1
|
Total
adjustments
|
—
|
1.6
|
(3.5)
|
5.1
|
1.7
|
$8.1 to
$8.9
|
Non-GAAP
|
$80.0 to
$90.0
|
$42.0 to
$48.0
|
$51.0 to
$52.0
|
$(10.0) to
$(3.0)
|
$(1.6)
|
$(10.2) to
$(4.0)
|
As a % of revenue
(GAAP)
|
|
50.5% to
51.5%
|
60.6% to
69.4%
|
(18.9)% to
(9.0)%
|
(4.0)%
|
(23.9)% to
(13.5)%
|
As a % of revenue
(Non-GAAP)
|
|
52.5% to
53.5%
|
56.7% to
65.0%
|
(12.5)% to
(3.4)%
|
(2.0)%
|
(12.8)% to
(4.5)%
|
Diluted net loss
per share:
|
|
|
|
|
|
|
Diluted net
loss per share-GAAP
|
|
|
|
|
$(0.21) to
$(0.14)
|
Diluted net
loss per share-Non-GAAP
|
|
|
|
|
$(0.11) to
$(0.05)
|
Shares used to
compute diluted net loss per share:
|
|
|
|
|
|
|
GAAP and
Non-GAAP
|
|
|
|
|
88.9
|
|
2019 Financial
Guidance
|
|
Revenue
|
Gross
Profit
|
Total
Operating
Expense
|
Income
(Loss) from
Operations
|
Total Non-
operating
Expense,
net
|
Net Income
(Loss)
|
GAAP
|
$385.0 to
$430.0
|
$185.6 to
$222.7
|
$210.5 to
$220.5
|
$(34.9) to
$12.2
|
$(13.1)
|
$(50.3) to
$(3.2)
|
Stock-based
compensation
|
—
|
1.4
|
(12.3)
|
13.7
|
—
|
13.7
|
Amortization
of intangibles
|
—
|
5.2
|
(3.1)
|
8.3
|
—
|
8.3
|
Restructuring
and related charges
|
—
|
0.3
|
(0.1)
|
0.4
|
—
|
0.4
|
Non-cash
interest expense related to convertible notes
|
—
|
—
|
—
|
—
|
6.7
|
6.7
|
Tax effect of
non-GAAP adjustments
|
—
|
—
|
—
|
—
|
—
|
$(1.1) to
$4.6
|
Total
adjustments
|
—
|
6.9
|
(15.5)
|
22.4
|
6.7
|
$28.0 to
$33.7
|
Non-GAAP
|
$385.0 to
$430.0
|
$192.5 to
$229.6
|
$195.0 to
$205.0
|
$(12.5) to
$34.6
|
$(6.4)
|
$(16.6) to
$24.8
|
As a % of revenue
(GAAP)
|
|
48.2% to
51.8%
|
48.9% to
57.3%
|
(9.1)% to
2.8%
|
(3.0)%
|
(13.1)% to
(0.7)%
|
As a % of revenue
(Non-GAAP)
|
|
50.0% to
53.5%
|
45.3% to
53.2%
|
(3.2)% to
8.0%
|
(1.5)%
|
(4.3)% to
5.8%
|
Diluted net income
(loss) per share:
|
|
|
|
|
|
|
Diluted net
loss per share-GAAP
|
|
|
|
|
$(0.56) to
$(0.04)
|
Diluted net
income (loss) per share-Non-GAAP
|
|
|
|
|
$(0.19) to
$0.27
|
Shares used to
compute diluted net loss per share:
|
|
|
|
|
|
|
GAAP and
Non-GAAP
|
|
|
|
|
89.3
|
Shares used to
compute diluted net income per share:
|
|
|
|
|
|
|
Non-GAAP
|
|
|
|
|
91.0
|
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SOURCE Harmonic Inc.