Harmonic Inc. · NASDAQ:HLIT
Harmonic — Investor Presentation (August 2016)
29 slides from Harmonic's investor presentation, August 2016
Slide 1: Management Presentation
Management Presentation Hal Covert, CFO Blair King, Investor Relations August, 2016 ©2016 Harmonic Inc. 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 and the financial performance of Harmonic, including expectations concerning our business strategy for 2016 and 2017, and our Q3 2016 financial
Slide 3: Who We Are
Who We Are The Worldwide Leader in video delivery infrastructure Enabling amazing video experiences ©2016 Harmonic Inc. All rights reserved worldwide. 3
Slide 4: Harmonic-at-a-Glance
Harmonic-at-a-Glance $415M 1,400 Global 1,700 $97M Leading 2016 Est. 10 Major R&D Content & Revenue Employees Sites Spend Service Worldwide Providers ©2016 Harmonic Inc. All rights reserved worldwide. 4
Slide 5: Technology Leadership
Technology Leadership Multiscreen Content Production Primary & Service & Playout Distribution Delivery Cable Edge Video Delivery Infrastructure ©2016 Harmonic Inc. All rights reserved worldwide. 5
Slide 6: Global Relationships
Global Relationships MULTISCREEN TELCO BROADCAST & MEDIA CABLE SATELLITE ©2016 Harmonic Inc. All rights reserved worldwide. 6
Slide 7: Harmonic Business Lines
Harmonic Business Lines Video Cable Edge • $1.5B 2018 target market • $2.5B 2018 target market • TTM Revenue: $305M • TTM Revenue: $61M Strategy: Strategy: • Recent significant acquisition of TVN • Launch disruptive software-based • Ongoing transformation from CCAP platform: industry-leading hardwar
Slide 8: Harmonic's Video Business
Harmonic’s Video Business ©2016 Harmonic Inc. All rights reserved worldwide. 8
Slide 9: State of the Video Market
State of the Video Market Legacy Changing Global Monetization Content Distribution Consumer Screen Time Shifting & Explosion Models Being Behaviors Increasing Increasing Challenged Strong Demand Changing Traditional Models ©2016 Harmonic Inc. All rights reserved worldwide. 9
Slide 10: Video Demand Drivers
Video Demand Drivers Software, Virtualization IP HEVC UHD and Cloud 2016 and beyond ©2016 Harmonic Inc. All rights reserved worldwide. 10
Slide 11: Created a Global Video Powerhouse
Created a Global Video Powerhouse Industry-leading Unparalleled Service Customer TCO* Innovation § Rated #1 in Video § >5,000 leading content § Acquisition Costs: Quality and service provider 10 – 30% lower with § >600 expert video customers integrated solutions engineers globally § >500 sales, serv
Slide 12: Harmonic's Cable Business
Harmonic’s Cable Business ©2016 Harmonic Inc. All rights reserved worldwide. 12
Slide 13: Cable Edge Market Outlook
Cable Edge Market Outlook • Competition (Fiber, G.fast) and new technology (DAA, FDX) to drive accelerated access upgrade • Overall CAPEX growth • Clear trend towards distributed architectures ©2016 Harmonic Inc. All rights reserved worldwide. 13
Slide 14: Financial Overview
Financial Overview ©2016 Harmonic Inc. All rights reserved worldwide. 14
Slide 15: Revenue Trends
Revenue Trends (M) $450.0 $435.5 $415.0 $400.0 $377.0 $106.8 $62.5 $350.0 $85.2 $300.0 $250.0 $200.0 $328.6 $352.5 $150.0 $291.8 $100.0 $50.0 $0.0 2014 2015 2016E Video Cable Edge - Declining legacy EdgeQAM revenue in advance of transition to CCAP - 2015 decline in video revenue in advance of launch
Slide 16: Q2 2016 Financial Highlights
Q2 2016 Financial Highlights* $ Millions Q2 Q1 Q2 Q2 / Q1 Q2 Y/Y (except GM & EPS) 2016 2016 2015 Change Change Total Net Revenue $109.5 $82.5 $103.1 33% 6% - Video Revenue $90.5 $65.7 $78.2 38% 16% - Cable Edge Revenue $19.0 $16.8 $24.9 13% -24% Gross Margin % 53.5% 51.1% 53.2% 2.4% 0.3% Operating
Slide 17: Q2 2016 Balance Sheet Summary
Q2 2016 Balance Sheet Summary $ Millions Cash $65.3 Accounts Receivable $102.7 Inventories $36.6 Convertible Debt $100.7M Backlog and Deferred Revenue $190.4 Shares Outstanding, millions 78 ©2016 Harmonic Inc. All rights reserved worldwide. 17
Slide 18: Q3 2016 Financial Guidance
Q3 2016 Financial Guidance $ Millions Video Cable Edge Q3 2016 (except EPS) Non-GAAP Revenue* $93 - $96 $12 - $14 $105 - $110 Non-GAAP Gross Margin* 54.5% - 55.5% 40.0% - 41.0% 53.0% - 54.0% Non-GAAP Operating Expenses* $54 - $55 Non-GAAP Operating Income* $2 - $4 Non-GAAP EPS* $0.01 - $0.03 Non-GAA
Slide 19: 2016 Financial Guidance
2016 Financial Guidance $ Millions Video Cable Edge 2016 (except EPS) Non-GAAP Revenue* $350 - $355 $60 - $65 $410 - $420 Non-GAAP Gross Margin* 55.0% - 56.0% 40.0% - 41.0% 53.0% - 54.0% Non-GAAP Operating Expenses* $212 - $216 Non-GAAP Operating Income* $5 - $10 Non-GAAP EPS* $0.01 - $0.06 Non-GAAP
Slide 20: Q&A
Q&A ©2016 Harmonic Inc. All rights reserved worldwide. 20
Slide 21: Appendix
Appendix ©2016 Harmonic Inc. All rights reserved worldwide. 21
Slide 22: Key Quarterly Financial Metrics
Key Quarterly Financial Metrics Revenue (1) Non-GAAP Gross Margins $120 $108 $110 $108 $108 $104 $110 56.3% $103 $87 55.0% $83 $82 54.3% 53.3% 53.6% 54.1% 53.9% 53.2% 53.5% 51.0% 50.1% Non-GAAP EBIT and EBIT Margins Free Cash Flow (2) 8.9% 11% 6.2% 6.2% 5.9% 9% 5.1% $18.6 7% 3.2% 5% $15.3 2.2% 1.1%
Slide 23: Segment and Geographic Revenue Splits
Segment and Geographic Revenue Splits By Segments By Geography $120 $120 $108 $110 $108 $108 $110 (1) $108 $110 $108 $108 $110 (1) 20% $104 $103 $104 $103 18% 14% 13% 19% 21% 18% 23% 25% 13% 19% 17% 16% 19% 25% $87 $87 29% $83 $83 (1) $83 $83 (1) 19% 33% 32% 30% 31% 18% 15% 23% 24% 30% 22% 29% 25% 1
Slide 24: 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 no
Slide 25: Q1 2016 GAAP to Non-GAAP Reconciliations
Q1 2016 GAAP to Non-GAAP Reconciliations (in thousands, except EPS) ©2016 Harmonic Inc. All rights reserved worldwide. 25
Slide 26: Q2 2016 GAAP to Non-GAAP Reconciliations
Q2 2016 GAAP to Non-GAAP Reconciliations (in thousands, except EPS) ©2016 Harmonic Inc. All rights reserved worldwide. 26
Slide 27: Q3 2016 Guidance GAAP to Non-GAAP Reconciliations
Q3 2016 Guidance GAAP to Non-GAAP Reconciliations (in millions, except EPS) ©2016 Harmonic Inc. All rights reserved worldwide. 27
Slide 28: 2016 Guidance GAAP to Non-GAAP Reconciliations
2016 Guidance GAAP to Non-GAAP Reconciliations (in millions, except EPS) ©2016 Harmonic Inc. All rights reserved worldwide. 28
Slide 29: Thank You
Thank You ©2016 Harmonic Inc. All rights reserved worldwide. 29