Harmonic Inc Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Simon Leopold - Raymond James - Analyst : Thanks for taking the question. I guess one of the things I'm trying to get my head around here is in terms of this outlook, how much is is broad market trends? And how much of your outlook specifically in the Cable Edge segment is reflective of market share shifts? How are you thinking about market share versus market trends? Thank you.

Question: Simon Leopold - Raymond James - Analyst : And then I guess the related question is then is how much of this is reflective of patterns among your your two lead customers? Is one behaving differently or are they sort of moving in sync? How should we think about those behaviors? I'm assuming one is maybe slowing to a greater extent than another, any color you could offer I'd appreciate. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 10, 2025 / 10:00PM, HLIT.OQ - Q4 2024 Harmonic Inc Earnings Call

Question: Simon Leopold - Raymond James - Analyst : Thanks for taking the questions.

Question: Ryan Koontz - Needham & Co. - Analyst : Great. Thanks for the question. With regards to maybe what's changed in your comments around ecosystem readiness, and you've mentioned before about the full-duplex amplifiers that are a real challenge for the industry. Can you kind of reflect reflect broadly on what you see happening across the broader cable industry as it relates to making these full-duplex amps work versus moving forward in an ESD model or even in DOCSIS 3.1 for now and then coming back and doing the DOCSIS for clean up later? Thanks.

Question: Ryan Koontz - Needham & Co. - Analyst : That's really helpful, Nimrod. Thank you. And maybe just in terms of your metrics, you quoted I think [1.3 million] new cable modems served, which is the lowest in a few years, but yet also reported record revenue in Broadband. Can you help us kind of true that up in terms of what's happening there? Is this -- are these hardware shipments in advance of activations or some kind of other rev recognition going on in the quarter? Thanks.

Question: Ryan Koontz - Needham & Co. - Analyst : Got it. Alright. Thank you. And your earlier comment about inventory was that similar to this too. But inventory stacking up at some customers ahead.

Question: Ryan Koontz - Needham & Co. - Analyst : Perfect. Thanks so much. Appreciate it both.

Question: Steve Frankel - Rosenblatt Securities - Analyst : Talk about a question -- about unified DOCSIS. And when do you think there will be an availability of chips to go into things like amplifiers? (multiple speakers) REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 10, 2025 / 10:00PM, HLIT.OQ - Q4 2024 Harmonic Inc Earnings Call

Question: Steve Frankel - Rosenblatt Securities - Analyst : Okay and like a couple of other previous questions, I'm trying to square up what we're fairly bullish full year spending plans by your two biggest customers with your forecast which is kind of the opposite of that. So what am I missing? Are they doing other things in their network build out that doesn't involve you? Or you're just not going to factor that build out in until you see the orders?

Question: Steve Frankel - Rosenblatt Securities - Analyst : Okay. And you could you give us any more color about these recent inventory or order reductions that you -- that you've heard about in the last month? And is there any rationale for that that you could share?

Question: Steve Frankel - Rosenblatt Securities - Analyst : All right, thank you.

Question: Tim Savageaux - Northland Capital - Analyst : Hey, good afternoon. [It's then] a couple of questions here. Looking at the increase in gross margin forecast or guidance for calendar '25, I assume that's a result of -- well, maybe a higher mix of Video overall. But within Broadband, it would appear to be a higher mix of routing versus nodes, is it? Would you confirm that it would be fair to say that substantially all the revenue declines that you're forecasting for Broadband next year are in on the node side? Looks based on -- (multiple speakers) Yeah.

Question: Tim Savageaux - Northland Capital - Analyst : If I can just dig in on that a little bit more increase mix, would it be fair to say that the routing of the license size looking about flat?

Question: Tim Savageaux - Northland Capital - Analyst : I think 25 over 24.

Question: Tim Savageaux - Northland Capital - Analyst : Yeah. All right. Well, that's interesting. And you managed mentioned kind of managing the business prudently, although it seems like you're forecasting a pretty solid increase in OpEx on the Broadband side, despite the revenue declines. I wonder if you could give us a little more color on what's driving that. Yeah. Correct, Tim. As on the Video side of the business, we instituted our cost optimization through 2024. So now we're going to get the full-year benefit of that in 2025. And you're correct in terms of the direction on the Broadband OpEx is increasing. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 10, 2025 / 10:00PM, HLIT.OQ - Q4 2024 Harmonic Inc Earnings Call And the major reason for that is that as we mentioned earlier, rest-of-world customer growth in 2025 and supporting all of those customers, basically, building up the the support structure on that OpEx. So we have Broadband OpEx moving upward in in 2025 over 2024.

Question: Tim Savageaux - Northland Capital - Analyst : Okay. Got it. And last from one from me. Walter, I think you -- if you're quite specific, but talking about Broadband, I guess on a medium-term basis, I mean, you're kind of revising the growth profile. I think you said double digits or low double digits. I mean, I know we're looking solidly over 30%, sorry, 20% before. I mean is that a function of what you're seeing this year and factoring that in, or is there something changed in the market to alter your overall sense of of growth rate?

Question: Tim Savageaux - Northland Capital - Analyst : Oh, appreciate it. Thanks very much. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 10, 2025 / 10:00PM, HLIT.OQ - Q4 2024 Harmonic Inc Earnings Call