Slide 1: Second Quarter 2020 Earnings Conference Call
SECOND QUARTER 2020 EARNINGS CONFERENCE CALL Patrick Harshman, President & CEO Sanjay Kalra, CFO Michael Smiley, Investor Relations August 3, 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 Q3, Q4 and
Slide 3: Q2 2020 Highlights
Q2 2020 HIGHLIGHTS Financial results Cable Access Video segment exceeded segment delivered positioned for expectations strong growth strong H2 Solid Strategic Progress Despite COVID-19 Headwinds ©2020 Harmonic Inc. All rights reserved worldwide. 3
Slide 4: Cable Access Segment Update
CABLE ACCESS SEGMENT UPDATE SOLID Q2 GROWTH • Revenue* $26.5 million, up 100% year over year • Commercially deployed with 29 operators, up 81% year over year • 1.7 million cable modems served, up 116% year over year EXPANDING MARKET LEADERSHIP • Announced deployments with Vodafone and Millicom • New
Slide 5: Video Segment Update
VIDEO SEGMENT UPDATE MIXED COVID-19 IMPACT • Revenue* $47.5 million, down 34% year over year • On-premises appliances and Asia Pacific most impacted • SaaS demand resilient and growing – 9 new and 66 total streaming SaaS customers, up 136% year over year GROWTH INITIATIVES LEADING H2 RECOVERY • New
Slide 6: Financial Results and Outlook
FINANCIAL RESULTS AND OUTLOOK Sanjay Kalra, CFO ©2020 Harmonic Inc. All rights reserved worldwide. 6 ©2020 Harmonic Inc. All rights reserved worldwide.
Slide 7: Q2 2020 Financial Highlights
Q2 2020 FINANCIAL HIGHLIGHTS* Cable Access Segment Revenue up 100% year over year Financial Metric Q2 Q1 Q2 Q2/Q1 Q2 Y/Y ($ Millions) 2020 2020 2019 Change Total Net Revenue $74.0 $78.4 $84.9 (5.6)% (12.8)% Cable Revenue $26.5 $24.0 $13.3 10.4% 100.1% Video Revenue $47.5 $54.4 $71.6 (12.7)% (33.7)%
Slide 8: Q2 2020 Financial Highlights
Q2 2020 FINANCIAL HIGHLIGHTS* Financial Metric Q2 Q1 Q2 Q2/Q1 Q2 Y/Y $ Millions (except EPS) 2020 2020 2019 Change Change Operating Expenses $43.3 $47.9 $48.3 (9.6)% (10.4)% Operating Loss $(5.1) $(9.5) $(2.8) $4.4 $(2.3) Adjusted EBITDA $(2.8) $(7.0) $(0.3) $4.2 $(2.5) EPS $(0.06) $(0.10) $(0.04) $
Slide 9: Q2 2020 Balance Sheet & Cash Flow Highlights
Q2 2020 BALANCE SHEET & CASH FLOW HIGHLIGHTS Financial Metric Q2 Q1 Q2 ($ Millions) 2020 2020 2019 Cash $77.7 $71.7 $58.1 Cash Provided by (Used in) Operations $11.9 $(11.0) $(8.8) Accounts Receivable $74.8 $93.1 $70.6 DSO 91 107 75 Inventories $32.1 $34.9 $27.7 Inventory Days 81 78 63 Backlog and D
Slide 10: Financial Guidance Highlights
FINANCIAL GUIDANCE HIGHLIGHTS* Financial Metric Q3’20 Guidance Q4’20 Guidance FY 20 Guidance Total Revenue ($M) $75 - $87 $122 - $142 $349.5 - $381.5 Video Segment ($M) $40 - $47 $87 - $97 $229 - $246 Cable Access Segment ($M) $35 - $40 $35 - $45 $120.5 - $135.5 Gross Margin 50.5% - 52.0% 50.0% - 53
Slide 11: 2020 Strategic Priorities
2020 STRATEGIC PRIORITIES Cable Access Video 1. Scale Tier-1 CableOS deployments 1. Scale streaming deployments ———————————————————— ——————————————————— 2. Secure additional CableOS design wins 2. Expand addressed market via SaaS & 5G ———————————————————— ——————————————————— 3. Launch new service &
Slide 12: Q&A
Q&A ©2020 Harmonic Inc. All rights reserved worldwide. 12 ©2020 Harmonic Inc. All rights reserved worldwide.
Slide 13: 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 14: 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. 14
Slide 15: Q1 2020 GAAP to Non-GAAP Reconciliations
Q1 2020 GAAP TO NON-GAAP RECONCILIATIONS (IN THOUSANDS, EXCEPT EPS AND PERCENTAGES) ©2020 Harmonic Inc. All rights reserved worldwide. 15
Slide 16: Q2 2019 GAAP to Non-GAAP Reconciliations
Q2 2019 GAAP TO NON-GAAP RECONCILIATIONS (IN THOUSANDS, EXCEPT EPS AND PERCENTAGES) ©2020 Harmonic Inc. All rights reserved worldwide. 16
Slide 17: YTD Q2 2020 GAAP to Non-GAAP Reconciliations
YTD Q2 2020 GAAP TO NON-GAAP RECONCILIATIONS (IN THOUSANDS, EXCEPT EPS AND PERCENTAGES) ©2020 Harmonic Inc. All rights reserved worldwide. 17
Slide 18: YTD Q2 2019 GAAP to Non-GAAP Reconciliations
YTD Q2 2019 GAAP TO NON-GAAP RECONCILIATIONS (IN THOUSANDS, EXCEPT EPS AND PERCENTAGES) ©2020 Harmonic Inc. All rights reserved worldwide. 18
Slide 19: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION (IN THOUSANDS) ©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: Q3 2020 Guidance GAAP to Non-GAAP Reconciliations
Q3 2020 GUIDANCE GAAP TO NON-GAAP RECONCILIATIONS (IN MILLIONS, EXCEPT EPS AND PERCENTAGES) ©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