Harmonic Announces Third Quarter 2020 Results
SAN JOSE, Calif., Oct. 26, 2020 /PRNewswire/ -- Harmonic Inc. (NASDAQ: HLIT) today announced its unaudited results for the third quarter of 2020.
"Harmonic's third quarter results were driven by strong performance in both our Cable Access and Video segments," said Patrick Harshman, president and chief executive officer of Harmonic. "Our Cable Access segment delivered solid sequential revenue growth and operating margin. Complementing this, Video segment revenue rebounded strongly quarter over quarter, reflecting increased customer activity. We continue to execute well on our strategic priorities, and we expect this strong business momentum will continue through the balance of the year."
Q3 Financial and Business Highlights
Financial
-- Revenue: $94.9 million, down 18.0% year over year.
-- SaaS and service revenue: $31.6 million, down 3.1% year over year.
-- Gross margin: GAAP 51.6% and non-GAAP 52.2%, compared to GAAP 65.3% and
non-GAAP 67.0% in the year ago period.
-- Cable Access segment revenue: $40.3 million, down 27.7% year over year.
-- Video segment revenue: $54.6 million, down 9% year over year.
-- Cable Access segment gross margin: 48.9% compared to 77.1% in the year
ago period.
-- Video segment gross margin: 54.6%, compared to 57.7% in the year ago
period.
-- Adjusted EBITDA: $7.2 million compared to $32.0 million in the year ago
period.
-- Operating income (loss): GAAP loss $1.6 million and non-GAAP income $4.2
million, compared to GAAP income $22.5 million and non-GAAP income $29.9
million in the year ago period.
-- EPS: GAAP net loss per share $0.06 cents and non-GAAP net income per
share $0.03 cents, compared to GAAP net income per share $0.12 cents and
non-GAAP net income per share $0.25 cents in the year ago period.
-- Cash: $70.8 million, up $4.1 million year over year.
Business
-- CableOS solution commercially deployed with 38 customers as of October
14, 2020 (the date of Cable-Tec Expo 2020, a leading industry
conference), up 100% compared to the third quarter of the prior year.
-- CableOS deployments scaled to 2.1 million served cable modems, up 122%
year over year.
-- Over 48,000 live-streaming channels deployed globally, up 15% year over
year.
-- Received first multi-million-dollar order for the new 5G bandwidth
reclamation solution.
Select Financial Information
GAAP
Non-GAAP
Key Financial Results Q3 2020 Q2 2020 Q3 2019 Q3 2020 Q2 2020 Q3 2019
(in millions, except per share data)
Net revenue $
94.9 $
74.0 $
115.7 $
94.9 $
74.0 $
115.7
Net income (loss) $
(5.4) $
(15.4) $
11.7 $
2.6 $
(5.9) $
24.6
Diluted EPS $
(0.06) $
(0.16) $
0.12 $
0.03 $
(0.06) $
0.25
Other Financial Information Q3 2020 Q2 2020 Q3 2019
(in millions)
Adjusted EBITDA for the quarter $
7.2 $
(2.8) $
32.0
Bookings for the quarter $
100.7 $
77.0 $
126.5
Backlog and deferred revenue as of quarter end $
216.2 $
210.2 $
192.5
Cash and cash equivalents as of quarter end $
70.8 $
77.7 $
66.7
---
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
Q4 2020 2020
Low High Low High
(in millions, except percentages and per share data)
Net Revenue $
120.0 $
130.0 $
367.5 $
377.5
Video $
80.0 $
85.0 $
236.5 $
241.5
Cable Access $
40.0 $
45.0 $
131.0 $
136.0
Gross Margin % 50.0 54.0 50.0 51.0
% % % %
Operating Expenses $
53.0 $
55.0 $
205.5 $
207.5
Operating Income (Loss) $
6.5 $
15.0 $
(22.0) $
(15.0)
Tax Expense $
(0.3) $
(0.3) $
(3.4) $
(3.4)
EPS $
0.03 $
0.11 $
(0.40) $
(0.33)
Shares 98.8 98.8 97.0 97.0
Cash $
80.0 $
90.0 $
80.0 $
90.0
---
Non-GAAP Financial Guidance
Q4 2020 2020
Low High Low High
(in millions, except percentages and per share data)
Net Revenue $
120.0 $
130.0 $
367.5 $
377.5
Video $
80.0 $
85.0 $
236.5 $
241.5
Cable Access $
40.0 $
45.0 $
131.0 $
136.0
Gross Margin % 50.5 54.5 51.0 52.0
% % % %
Operating Expenses $
48.0 $
50.0 $
184.5 $
186.5
Operating Income $
12.5 $
21.0 $
3.0 $
10.0
Adjusted EBITDA $
15.5 $
24.0 $
13.5 $
20.5
Tax rate 10
% 10 10
% 10
% %
EPS $
0.10 $
0.18 $
(0.03) $
0.04
Shares 98.8 98.8 97.0 98.2
Cash $
80.0 $
90.0 $
80.0 $
90.0
---
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. Pacific (5:00 p.m. Eastern) on Monday, October 26, 2020. 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 (conference ID 2445329). A replay will be available after 5:00 p.m. PT on the same web site or by calling +1.404.537.3406 or +1.855.859.2056 (conference ID 2445329).
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), Adjusted EBITDA, non-GAAP tax rate and 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 market and technology trends underlying our Video and Cable Access businesses will not continue to develop in their current direction or 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 potential impact of the Covid-19 pandemic on our operations or the operations of our supply chain or our customers; the impact of general economic conditions on our sales and operations; 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; 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, 2019, 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), Adjusted EBITDA 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.
Loss on debt extinguishment - In the second quarter of fiscal 2020, we recorded a debt extinguishment loss of $0.8 million resulting from the exchange of $37.7 million in aggregate principal amount of our convertible notes due in 2020 for $37.7 million in aggregate principal amount of convertible notes due in 2022. In the third quarter of fiscal 2019, we recorded a debt extinguishment loss of $5.7 million resulting from refinancing a portion of our convertible notes due in 2020. We have excluded these losses from our non-GAAP financial measures because we do not believe the losses are reflective of our ongoing long-term business and operating results.
Non-cash interest expense and other expenses related to convertible notes and other debt - 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. In July 2019, in connection with Comcast's election of enterprise license pricing for the Company's CableOS software, all warrant shares were fully vested as of July 1, 2019. As a result of Comcast's election of enterprise license pricing, we no longer excluded the effect of warrant amortization in our non-GAAP financial measures beginning with the third quarter of fiscal 2019.
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)
September 25, 2020 December 31, 2019
---
ASSETS
Current assets:
Cash and cash equivalents $
70,817 $
93,058
Accounts receivable, net 81,353 88,500
Inventories, net 36,802 29,042
Prepaid expenses and other
current assets 25,071 40,762
Total current assets 214,043 251,362
Property and equipment, net 41,915 22,928
Operating lease right-of-use
assets 24,531 27,491
Goodwill 241,425 239,780
Intangibles, net 1,256 4,461
Other long-term assets 36,252 41,305
Total assets $
559,422 $
587,327
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Other debts and finance lease
obligations, current $
11,402 $
6,713
Accounts payable 31,555 40,933
Income taxes payable 826 1,226
Deferred revenue 42,729 37,117
Accrued and other current
liabilities 51,286 62,535
Convertible notes, short-term 7,972 43,375
Total current liabilities 145,770 191,899
Convertible notes, long-term 128,018 88,629
Other debts and finance lease
obligations, long-term 9,707 10,511
Income taxes payable, long-
term 185 178
Other non-current liabilities 41,204 41,254
Total liabilities $
324,884 $
332,471
Convertible notes 81 2,410
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; 97,732 and 91,875
shares issued and outstanding
at September 25, 2020 and
December 31, 2019,
respectively 98 92
Additional paid-in capital 2,348,638 2,327,359
Accumulated deficit (2,114,676) (2,071,940)
Accumulated other
comprehensive income (loss) 397 (3,065)
Total stockholders' equity 234,457 252,446
Total liabilities and
stockholders' equity $
559,422 $
587,327
Harmonic Inc.
Preliminary Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share data)
Three months ended Nine months ended
September 25, September 27, September 25, September 27,
2020 2019 2020 2019
---
Revenue:
Appliance and integration $
63,251 $
83,082 $
153,227 $
189,864
SaaS and service 31,641 32,643 94,076 90,832
Total net revenue 94,892 115,725 247,303 280,696
Cost of revenue:
Appliance and integration 32,082 26,812 81,153 83,178
SaaS and service 13,886 13,373 42,715 36,201
Total cost of revenue 45,968 40,185 123,868 119,379
Total gross profit 48,924 75,540 123,435 161,317
Operating expenses:
Research and development 20,206 20,197 61,827 62,911
Selling, general and administrative 28,773 31,148 86,996 88,478
Amortization of intangibles 752 785 2,264 2,357
Restructuring and related charges 814 861 1,572 1,194
Total operating expenses 50,545 52,991 152,659 154,940
Income (loss) from operations (1,621) 22,549 (29,224) 6,377
Interest expense, net (2,807) (3,000) (8,772) (8,862)
Loss on debt extinguishment - (5,695) (834) (5,695)
Other expense, net (167) (1,594) (813) (2,333)
Income (loss) before income taxes (4,595) 12,260 (39,643) (10,513)
Provision for income taxes 786 603 3,093 981
Net income (loss) $
(5,381) $
11,657 $
(42,736) $
(11,494)
Net income (loss) per share:
Basic $
(0.06) $
0.13 $
(0.44) $
(0.13)
Diluted $
(0.06) $
0.12 $
(0.44) $
(0.13)
Shares used in per share calculations:
Basic 97,563 89,964 96,623 89,030
Diluted 97,563 97,596 96,623 89,030
Harmonic Inc.
Preliminary Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
Nine months ended
September 25, September 27,
2020 2019
---
Cash flows from operating activities:
Net loss $
(42,736) $
(11,494)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Amortization of
intangibles 3,214 6,242
Depreciation 8,683 8,480
Stock-based
compensation 13,737 8,719
Amortization of
discount on
convertible and other
debt 5,451 4,960
Amortization of non-
cash warrant 1,307 13,137
Loss on debt
extinguishment 834 5,695
Deferred income taxes,
net 1,527 75
Foreign currency
adjustments 2,537 (1,719)
Provision for excess
and obsolete
inventories 1,390 704
Provision for doubtful
accounts, returns and
discounts 1,966 988
Other non cash
adjustments, net 177 1,235
Changes in operating assets and
liabilities
Accounts receivable 5,436 (20,521)
Inventories (9,301) (4,170)
Prepaid expenses and
other assets 23,685 (5,703)
Accounts payable (11,047) (2,839)
Deferred revenues 6,066 8,002
Income taxes payable (384) (114)
Accrued and other
liabilities (14,961) (10,536)
Net cash provided by
(used in) operating
activities (2,419) 1,141
Cash flows from investing activities:
Purchases of property
and equipment (26,176) (4,973)
Net cash used in
investing activities (26,176) (4,973)
Cash flows from financing activities:
Proceeds from
convertible debt - 115,500
Payments of
convertible debt (25) (109,603)
Payment of convertible
debt issuance costs (672) (3,465)
Proceeds from other
debts and finance
leases 9,398 4,684
Repayment of other
debts and finance
leases (6,342) (6,387)
Proceeds from common
stock issued to
employees 5,227 5,573
Payment of tax
withholding
obligations related
to net share
settlements of
restricted stock
units (1,384) (1,278)
Net cash provided by
financing activities 6,202 5,024
Effect of exchange
rate changes on cash
and cash equivalents 152 (486)
Net increase
(decrease) in cash
and cash equivalents (22,241) 706
Cash and cash
equivalents at
beginning of the year 93,058 65,989
Cash and cash
equivalents at end of
the year $
70,817 $
66,695
Harmonic Inc.
Preliminary Revenue Information
(Unaudited, in thousands, except percentages)
Three months ended
September 25, 2020
June 26, 2020
September 27, 2019
GAAP Adjustment(1) Non-GAAP GAAP Adjustment(1) Non-GAAP GAAP Adjustment(1) Non-GAAP
Geography
Americas $
54,521
$ $
54,521 58% $
42,307
$ $
42,307 58% $
78,699
$ $
78,699 68%
EMEA 29,771 29,771 31% 24,714 24,714 33% 24,322 24,322 21%
APAC 10,600 10,600 11% 6,973 6,973 9% 12,704 12,704 11%
---
Total $
94,892
$ $
94,892 100% $
73,994
$ $
73,994 100% $
115,725
$ $
115,725 100%
===
Market
Service Provider $
59,083
$ $
59,083 62% $
42,169
$ $
42,169 57% $
77,886 $
77,886 67%
$
Broadcast and Media 35,809 35,809 38% 31,825 31,825 43% 37,839 37,839 33%
---
Total $
94,892
$ $
94,892 100% $
73,994
$ $
73,994 100% $
115,725
$ $
115,725 100%
===
Nine months ended
September 25, 2020
September 27, 2019
GAAP Adjustments(1) Non-GAAP GAAP Adjustments(1) Non-GAAP
Geography
Americas $
134,478
$ $
134,478 55% $
155,324 $
48 $
155,372 54%
EMEA 82,301 82,301 33% 77,603 77,603 28%
APAC 30,524 30,524 12% 47,769 47,769 18%
Total $
247,303
$ $
247,303 100% $
280,696 $
48 $
280,744 100%
Market
Service Provider $
145,011
$ $
145,011 59% $
165,536 $
48 $
165,584 59%
Broadcast and Media 102,292 102,292 41% 115,160 115,160 41%
Total $
247,303
$ $
247,303 100% $
280,696 $
48 $
280,744 100%
(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 September 25, 2020
Video Cable Access Total Segment Adjustments
(1) Consolidated GAAP
Measures Measures
(non-GAAP)
---
Net revenue $
54,641 $
40,251 $
94,892
$ $
94,892
Gross profit 29,825 19,682 49,507 (583) 48,924
Gross margin% 54.6 48.9
%
%
%
% 52.2 51.6
Operating income (loss) (1,699) 5,876 4,177 (5,798) (1,621)
Operating margin% (3.1) 14.6
%
%
%
% 4.4 (1.7)
Three months ended June 26, 2020
Video Cable Access Total Segment Adjustments
(1) Consolidated GAAP
Measures
Measures
(non-GAAP)
---
Net revenue $
47,453 $
26,541 $
73,994
$ $
73,994
Gross profit 26,024 12,128 38,152 (379) 37,773
Gross margin% 54.8 45.7
%
%
%
% 51.6 51.0
Operating loss (4,237) (878) (5,115) (4,439) (9,554)
Operating margin% (8.9) (3.3)
%
%
%
% (6.9) (12.9)
Three months ended September 27, 2019
Video Cable Access Total Segment Adjustments
(1) Consolidated GAAP
Measures Measures
(non-GAAP)
---
Net revenue $
60,055 $
55,670 $
115,725
$ $
115,725
Gross profit 34,646 42,925 77,571 (2,031) 75,540
Gross margin% 57.7 77.1
%
%
%
% 67.0 65.3
Operating income (loss) (1,696) 31,611 29,915 (7,366) 22,549
Operating margin% (2.8) 56.8
%
%
%
% 25.9 19.5
Nine months ended September 25, 2020
Video Cable Access Total Segment Adjustments
(1) Consolidated GAAP
Measures Measures
(non-GAAP)
---
Net revenue $
156,466 $
90,837 $
247,303
$ $
247,303
Gross profit 83,756 42,224 125,980 (2,545) 123,435
Gross margin% 53.5 46.5
%
%
%
% 50.9 49.9
Operating income (loss) (12,203) 1,733 (10,470) (18,754) (29,224)
Operating margin% (7.8) 1.9 (4.2) (11.8)
%
%
%
%
Nine months ended September 27, 2019
Video Cable Access Total Segment Adjustments
(1) Consolidated GAAP
Measures Measures
(non-GAAP)
---
Net revenue $
198,856 $
81,888 $
280,744 $
(48) * $
280,696
Gross profit 114,692 52,104 166,796 (5,479) 161,317
Gross margin% 57.7 63.6
%
%
%
% 59.4 57.5
Operating income 4,731 18,571 23,302 (16,925) 6,377
Operating margin% 2.4 22.7
%
% %
% 8.3 2.3
(1) See "Use of Non-GAAP Financial
Measures" above and "GAAP to Non-
GAAP Reconciliations" below.
* This non-GAAP adjustment is for
warrant amortization and relates to
our Cable Access segment. After
applying this adjustment to the non-
GAAP revenue for the Cable Access
segment, our GAAP revenue for the
Cable Access segment for the nine
months ended September 27, 2019 was
$81,840.
Harmonic Inc.
GAAP to Non-GAAP Reconciliations (Unaudited)
(in thousands, except percentages and per share data)
Three months ended September 25, 2020
Revenue Gross Profit Total Income Total Non- Net Income
Operating (Loss) from operating (Loss)
Expense Operations expense, net
---
GAAP $
94,892 $
48,924 $
50,545 $
(1,621) $
(2,974) $
(5,381)
Stock-based compensation - 281 (3,649) 3,930 3,930
Amortization of intangibles - (752) 752 752
Restructuring and related charges - 302 (814) 1,116 1,116
Non-cash interest and other expenses related to convertible notes and other debt - 1,666 1,666
Discrete tax items and tax effect of non-GAAP adjustments - 499
Total adjustments - 583 (5,215) 5,798 1,666 7,963
Non-GAAP $
94,892 $
49,507 $
45,330 $
4,177 $
(1,308) $
2,582
As a % of revenue (GAAP) 51.6 53.3 (1.7) (3.1) (5.7)
%
%
%
%
%
As a % of revenue (Non-GAAP) 52.2 47.8 4.4 (1.4) 2.7
%
%
%
%
%
Diluted net income (loss) per share:
Basic net loss per share-GAAP $
(0.06)
Diluted net income per share-Non-GAAP $
0.03
Shares used to compute diluted net income (loss) per share:
GAAP 97,563
Non- GAAP 98,361
Three months ended June 26, 2020
Revenue Gross Profit Total Loss from Total Non- Net Loss
Operating Operations operating
Expense expense, net
---
GAAP $
73,994 $
37,773 $
47,327 $
(9,554) $
(4,269) $
(15,401)
Stock-based compensation - 312 (3,236) 3,548 3,548
Amortization of intangibles - 65 (742) 807 807
Restructuring and related charges - 2 (82) 84 84
Loss on convertible debt extinguishment - 834 834
Non-cash interest and other expenses related to convertible notes and other debt - 1,950 1,950
Discrete tax items and tax effect of non-GAAP adjustments - 2,238
Total adjustments - 379 (4,060) 4,439 2,784 9,461
Non-GAAP $
73,994 $
38,152 $
43,267 $
(5,115) $
(1,485) $
(5,940)
As a % of revenue (GAAP) 51.0 64.0 (12.9) (5.8) (20.8)
%
%
%
% %
As a % of revenue (Non-GAAP) 51.6 58.5 (6.9) (2.0) (8.0)
%
%
%
%
%
Diluted net loss per share:
Diluted net loss per share-GAAP $
(0.16)
Diluted net loss per share-Non-GAAP $
(0.06)
Shares used to compute diluted net loss per share:
GAAP and Non-GAAP 96,727
Three months ended September 27, 2019
Revenue Gross Profit Total Income from Total Non- Net Income
Operating Operations operating
Expense expense, net
---
GAAP $
115,725 $
75,540 $
52,991 $
22,549 $
(10,289) $
11,657
Stock-based compensation - 405 (3,689) 4,094 4,094
Amortization of intangibles - 1,295 (785) 2,080 2,080
Restructuring and related charges - 331 (861) 1,192 1,192
Loss on convertible debt extinguishment - 5,695 5,695
Non-cash interest and other expenses related to convertible notes and other debt - 2,625 2,625
Discrete tax items and tax effect of non-GAAP adjustments - (2,751)
Total adjustments - 2,031 (5,335) 7,366 8,320 12,935
Non-GAAP $
115,725 $
77,571 $
47,656 $
29,915 $
(1,969) $
24,592
As a % of revenue (GAAP) 65.3 45.8 19.5 (8.9) 10.1
%
%
%
%
%
As a % of revenue (Non-GAAP) 67.0 41.2 25.9 (1.7) 21.3
%
%
%
%
%
Diluted net income per share:
Diluted net income per share-GAAP $
0.12
Diluted net income per share-Non-GAAP $
0.25
Shares used to compute diluted net income per share:
GAAP and Non-GAAP 97,596
Nine months ended September 25, 2020
Revenue Gross Profit Total Loss from Total Non- Net Loss
Operating Operations operating
Expense Expense
---
GAAP $
247,303 $
123,435 $
152,659 $
(29,224) $
(10,419) $
(42,736)
Stock-based compensation - 1,364 (12,373) 13,737 13,737
Amortization of intangibles - 950 (2,264) 3,214 3,214
Restructuring and related charges - 231 (1,572) 1,803 1,803
Loss on convertible debt extinguishment - 834 834
Non-cash interest and other expenses related to convertible notes and other debt - 5,451 5,451
Discrete tax items and tax effect of non-GAAP adjustments - 4,553
Total adjustments - 2,545 (16,209) 18,754 6,285 29,592
Non-GAAP $
247,303 $
125,980 $
136,450 $
(10,470) $
(4,134) $
(13,144)
As a % of revenue (GAAP) 49.9 61.7 (11.8) (4.2) (17.3)
%
%
%
% %
As a % of revenue (Non-GAAP) 50.9 55.2 (4.2) (1.7) (5.3)
%
%
%
%
%
Diluted net loss per share:
Diluted net loss per share-GAAP $
(0.44)
Diluted net loss per share-Non-GAAP $
(0.14)
Shares used to compute diluted net loss per share:
GAAP and Non-GAAP 96,623
Nine months ended September 27, 2019
Revenue Gross Profit Total Income from Total Non- Net Income
Operating Operations operating (Loss)
Expense Expense
---
GAAP $
280,696 $
161,317 $
154,940 $
6,377 $
(16,890) $
(11,494)
Accounting impact related to warrant amortization 48 48 48 48
Stock-based compensation - 823 (7,894) 8,717 8,717
Amortization of intangibles - 3,885 (2,357) 6,242 6,242
Restructuring and related charges - 723 (1,195) 1,918 1,918
Loss on debt extinguishment - 5,695 5,695
Non-cash interest and other expenses related to convertible notes - 5,887 5,887
Discrete tax items and tax effect of non-GAAP adjustments - (1,179)
Total adjustments 48 5,479 (11,446) 16,925 11,582 27,328
Non-GAAP $
280,744 $
166,796 $
143,494 $
23,302 $
(5,308) $
15,834
As a % of revenue (GAAP) 57.5 55.2 2.3 (6.0) (4.1)
%
%
%
%
%
As a % of revenue (Non-GAAP) 59.4 51.1 8.3 (1.9) 5.6
%
%
%
%
%
Diluted net income (loss) per share:
Diluted net loss per share-GAAP $
(0.13)
Diluted net income per share-Non-GAAP $
0.17
Shares used to compute diluted net income (loss) per share:
GAAP 89,030
Non-GAAP 92,579
Harmonic Inc.
Preliminary Adjusted EBITDA Reconciliation (Unaudited)
(In thousands)
Three months ended
September 25, June 26, September 27,
2020 2020 2019
---
Net loss - GAAP $
(5,381) $
(15,401) $
11,657
Provision for income taxes 786 1,578 603
Interest expense, net 2,807 3,062 3,000
Depreciation 3,148 2,692 2,764
Amortization of intangibles 752 807 2,080
EBITDA 2,112 (7,262) 20,104
Adjustments
Stock-based compensation 3,930 3,548 4,094
Loss on convertible debt extinguishment - 834 5,695
Non-cash expenses related to convertible note - 927
Restructuring and related charges 1,116 84 1,192
Adjusted EBITDA $
7,158 $
(2,796) $
32,012
Nine months ended
September 25, September 27,
2020 2019
Net loss -GAAP $
(42,736) $
(11,494)
Provision for income
taxes 3,093 981
Interest expense, net 8,772 8,862
Depreciation 8,683 8,480
Amortization of
intangibles 3,214 6,242
EBITDA (18,974) 13,071
Adjustments
Accounting impact
related to warrant
amortization 48
Stock-based
compensation 13,737 8,717
Loss on convertible
debt extinguishment 834 5,695
Non-cash expenses
related to
convertible note 927
Restructuring and
related charges 1,803 1,918
Adjusted EBITDA $
(2,600) $
30,376
Q4 2020 Financial Guidance
Revenue
Gross Profit
Total
Income from
Total Non-
Net Income
Operating Operations operating
Expense Expense, net
GAAP
$120.0 to $130.0
$59.7 to $70.0
$53.0 to $55.0
$6.5 to $15.0 $(3.3)
$3.0 to $11.3
Stock-based compensation 0.3 (3.7) 4.0 4.0
Amortization of intangibles (0.8) 0.8 0.8
Restructuring and related charges 0.6 (0.5) 1.1 1.1
Non-cash interest and other expenses related to convertible notes and other debt 1.7 1.7
Tax effect of non-GAAP adjustments
$(1.5) to $(0.7)
Total adjustments 0.9 (5.0) 5.9 1.7
$6.1 to $6.9
Non-GAAP
$120.0 to $130.0
$60.6 to $70.9
$48.0 to $50.0
$12.5 to $21.0 $(1.6)
$9.9 to $17.4
As a % of revenue (GAAP) 50.0% to 54.0% 44.2% to 42.3% 5.5% to 11.5% (2.5)% to (2.8)% 2.5% to 8.7%
As a % of revenue (Non-GAAP) 50.5% to 54.5% 40.0% to 38.5% 10.5% to 16.1% (1.2)% to (1.3)% 8.3% to 13.4%
Diluted net income per share:
Diluted net income per share-GAAP
$0.03 to $0.11
Diluted net income per share-Non-GAAP
$0.10 to $0.18
Shares used to compute diluted net income per share:
GAAP and Non-GAAP 98.8
2020 Financial Guidance
Revenue
Gross Profit
Total
Income (Loss)
Total Non-
Net Income
Operating from operating (Loss)
Expense Operations Expense, net
GAAP
$367.5 to $377.5
$183.7 to $192.6
$205.5 to $207.5
$(22.0) to $(15.0) $(13.8)
$(39.1) to $(32.2)
Stock-based compensation 1.7 (16.1) 17.8 17.8
Amortization of intangibles 1.0 (3.0) 4.0 4.0
Restructuring and related charges 0.9 (2.1) 3.0 3.0
Non-cash interest and other expenses related to convertible notes and other debt 7.2 7.2
Loss on debt extinguishment 0.8 0.8
Tax effect of non-GAAP adjustments
$3.1 to $3.7
Total adjustments 3.6 (21.2) 24.8 8.0
$35.9 to $36.5
Non-GAAP
$367.5 to $377.5
$187.3 to $196.2
$184.5 to $186.5
$3.0 to $10.0 $(5.8)
$(2.6) to $3.7
As a % of revenue (GAAP) 50.0% to 51.0% 56.0% to 55.0% (6.0)% to (4.0)% (3.7)% to (3.8)% (10.6)% to (8.5)%
As a % of revenue (Non-GAAP) 51.0% to 52.0% 50.2% to 49.4% 0.8% to 2.6% (1.5)% to (1.6)% (0.7)% to 1.0%
Diluted net income (loss) per share:
Diluted net loss per share-GAAP
$(0.40) to $(0.33)
Diluted net income (loss) per share-Non-GAAP
$(0.03) to $0.04
Shares used to compute diluted net income (loss) per share:
GAAP and Non-GAAP 97.0
Non-GAAP 98.2
Harmonic Inc.
Adjusted EBITDA Reconciliation on Financial Guidance
(In millions)
Q4 2020 Financial 2020 Financial
Guidance Guidance
Net income (loss) -
GAAP
$3.0 to $11.3
$(39.1) to $(32.2)
Provision for income
taxes 0.3 3.4
Interest expense, net 2.8 11.6
Depreciation 3.3 11.9
Amortization of
intangibles 0.8 4.0
EBITDA
$10.2 to $18.5
$(8.2) to $(1.3)
Adjustments
Stock-based
compensation 4.0 17.8
Restructuring and
related charges 1.2 3.0
Loss on debt
extinguishment - 0.8
Adjusted EBITDA
$15.5 to $24.0
$13.5 to $20.5
View original content to download multimedia:http://www.prnewswire.com/news-releases/harmonic-announces-third-quarter-2020-results-301159878.html
SOURCE Harmonic Inc.
