Slide 1: Third Quarter 2020 Earnings Conference Call
THIRD QUARTER 2020 EARNINGS CONFERENCE CALL Patrick Harshman, President & CEO Sanjay Kalra, CFO October 26, 2020 ©2020 Harmonic Inc.©2020 All rights Harmonic reserved Inc. worldwide. All rights reserved worldwide. 1
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS During the course of this presentation, we will provide projections and other forward-looking statements regarding future events or the future financial performance of Harmonic, including expectations concerning our business strategy for 2020 and beyond, and our Q4 and ful
Slide 3: Q3 2020 Highlights
Q3 2020 HIGHLIGHTS Financial Cable Access Video Results exceeded Strong growth, extended Solid customer demand expectations market leadership and revenue rebound Strong Execution and Market Momentum ©2020 Harmonic Inc. All rights reserved worldwide. 3
Slide 4: Cable Access Segment Update
CABLE ACCESS SEGMENT UPDATE STRONG Q3 GROWTH* • Revenue $40.3 million, operating margin 14.6% • Commercially deployed with 38 operators, up 100% year over year** • 2.1 million cable modems served, up 122% year over year EXTENDING ADDRESSED MARKET AND COMPETITIVE ADVANTAGE • New customer wins span th
Slide 5: Video Segment Update
VIDEO SEGMENT UPDATE SOLID Q3 FINANCIAL* PERFORMANCE AND OUTLOOK • Revenue $54.6 million, up 15% sequentially • Gross margin 54.6% • Q4 revenue guidance $80 - $85 million – Return to strong operating profit GROWTH INITIATIVES LEADING H2 RECOVERY • Streaming business steadily expanding – Nine new clo
Slide 6: Financial Results and Outlook
FINANCIAL RESULTS AND OUTLOOK Sanjay Kalra, CFO ©2020 Harmonic Inc. All rights reserved worldwide. 6 ©2020 Harmonic Inc. All rights reserved worldwide.
Slide 7: Q3 2020 Revenue & Gross Margin Highlights
Q3 2020 REVENUE & GROSS MARGIN HIGHLIGHTS* Financial Metric Q3 Q2 Q3 Q3/Q2 Q3 Y/Y ($ Millions) 2020 2020 2019** Change Change** Total Net Revenue $94.9 $74.0 $78.2** 28.2% 21.3% Cable Access Revenue $40.3 $26.5 $18.2** 51.7% 121.5% Video Revenue $54.6 $47.5 $60.0 15.1% (9.0)% Gross Margin % 52.2% 51
Slide 8: Q3 2020 Financial Highlights
Q3 2020 FINANCIAL HIGHLIGHTS* Financial Metric Q3 Q2 Q3 Q3/Q2 Q3 Y/Y $ Millions (except EPS) 2020 2020 2019** Change Change** Operating Expenses $45.3 $43.3 $47.7 4.8% (4.9)% Operating Income (Loss) $4.2 $(5.1) $(7.6)** $9.3 $11.8 Cable Access Operating Income (Loss) $5.9 $(0.9) $(5.9)** $6.8 $11.8
Slide 9: Q3 2020 Balance Sheet & Cash Flow Highlights
Q3 2020 BALANCE SHEET & CASH FLOW HIGHLIGHTS Financial Metric Q3 Q2 Q3 ($ Millions) 2020 2020 2019 Cash $70.8 $77.7 $66.7 Cash Provided by (Used in) Operations $(3.3) $11.9 $5.8 Accounts Receivable $81.4 $74.8 $100.9 DSO 77 91 78 Inventories $36.8 $32.1 $29.0 Inventory Days 73 81 68 Backlog and Defe
Slide 10: Full Year 2020 Financial Guidance
FULL YEAR 2020 FINANCIAL GUIDANCE* Midpoint Financial Metric Prior Guidance Updated Guidance Difference Total Revenue ($M) $349.5 - $381.5 $367.5 - $377.5 $7.0 Video Segment ($M) $229.0 - $246.0 $236.5 - $241.5 $1.5 Cable Access Segment ($M) $120.5 - $135.5 $131.0 - $136.0 $5.5 Gross Margin 50.0% -
Slide 11: Q4 2020 Financial Guidance
Q4 2020 FINANCIAL GUIDANCE* Midpoint Financial Metric Prior Guidance Updated Guidance Difference Total Revenue ($M) $122.0 - $142.0 $120.0 - $130.0 $(7.0) Video Segment ($M) $87.0 - $97.0 $80.0 - $85.0 $(9.5) Cable Access Segment ($M) $35.0 - $45.0 $40.0 - $45.0 $2.5 Gross Margin 50.0% - 53.0% 50.5%
Slide 12: 2020 Execution Priorities
2020 EXECUTION PRIORITIES Cable Access Video 1. Scale Tier-1 CableOS deployments 1. Scale live streaming deployments ———————————————————— ——————————————————— 2. Secure additional CableOS design wins 2. Expand addressed market via Cloud & 5G ———————————————————— ——————————————————— 3. Launch new FTTH
Slide 13: Q&A
Q&A ©2020 Harmonic Inc. All rights reserved worldwide. 13 ©2020 Harmonic Inc. All rights reserved worldwide.
Slide 14: Use of Non-GAAP Financial Measures
USE OF NON-GAAP FINANCIAL MEASURES In establishing operating budgets, managing its business performance, and setting internal measurement targets, the Company excludes a number of items required by GAAP. Management believes that these accounting charges and credits, most of which are non-cash or non
Slide 15: Q3 2020 GAAP to Non-GAAP Reconciliations
Q3 2020 GAAP TO NON-GAAP RECONCILIATIONS (IN THOUSANDS, EXCEPT EPS AND PERCENTAGES) ©2020 Harmonic Inc. All rights reserved worldwide. 15
Slide 16: Q2 2020 GAAP to Non-GAAP Reconciliations
Q2 2020 GAAP TO NON-GAAP RECONCILIATIONS (IN THOUSANDS, EXCEPT EPS AND PERCENTAGES) ©2020 Harmonic Inc. All rights reserved worldwide. 16
Slide 17: Q3 2019 GAAP to Non-GAAP Reconciliations
Q3 2019 GAAP TO NON-GAAP RECONCILIATIONS (IN THOUSANDS, EXCEPT EPS AND PERCENTAGES) ©2020 Harmonic Inc. All rights reserved worldwide. 17
Slide 18: YTD Q3 2020 GAAP to Non-GAAP Reconciliations
YTD Q3 2020 GAAP TO NON-GAAP RECONCILIATIONS (IN THOUSANDS, EXCEPT EPS AND PERCENTAGES) ©2020 Harmonic Inc. All rights reserved worldwide. 18
Slide 19: YTD Q3 2019 GAAP to Non-GAAP Reconciliations
YTD Q3 2019 GAAP TO NON-GAAP RECONCILIATIONS (IN THOUSANDS, EXCEPT EPS AND PERCENTAGES) ©2020 Harmonic Inc. All rights reserved worldwide. 19
Slide 20: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION (IN THOUSANDS) ©2020 Harmonic Inc. All rights reserved worldwide. 20
Slide 21: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION (IN THOUSANDS) ©2020 Harmonic Inc. All rights reserved worldwide. 21
Slide 22: Q4 2020 Guidance GAAP to Non-GAAP Reconciliations
Q4 2020 GUIDANCE GAAP TO NON-GAAP RECONCILIATIONS (IN MILLIONS, EXCEPT EPS AND PERCENTAGES) ©2020 Harmonic Inc. All rights reserved worldwide. 22
Slide 23: 2020 Guidance GAAP to Non-GAAP Reconciliations
2020 GUIDANCE GAAP TO NON-GAAP RECONCILIATIONS (IN MILLIONS, EXCEPT EPS AND PERCENTAGES) ©2020 Harmonic Inc. All rights reserved worldwide. 23
Slide 24: Adjusted EBITDA Reconciliation on Financial Guidance
ADJUSTED EBITDA RECONCILIATION ON FINANCIAL GUIDANCE (IN MILLIONS) ©2020 Harmonic Inc. All rights reserved worldwide. 24