Q1 2024 Earnings Summary
- Harmonic is maintaining its full-year broadband revenue guidance of $460 million to $500 million, expecting revenue to increase 24% year-over-year, supported by diversification and strong demand from both major and smaller customers.
- The company secured a seven-figure purchase order for its new fiber-to-the-home products from an existing Tier 1 international customer, validating its innovative approach and signaling potential growth in the fiber market.
- Harmonic's DOCSIS 4.0 compatible products position the company well for future growth as customers upgrade their networks. There is increased urgency among operators to modernize their networks, benefiting Harmonic's solutions like boosted DOCSIS 3.1, which provides fiber-like speeds.
- Shifts in big customers have impacted revenue, and although the company maintains its revenue guidance, the mix is different than 90 days ago, indicating potential instability or dependence on large customers.
- Dependence on the evolution and availability of DOCSIS 4.0 amplifiers, which are still in development and field trials, may affect Harmonic's growth trajectory if delays occur in amplifier deployment.
- New product offerings like Beacon are expected to generate small revenue starting late this year, suggesting they may not significantly contribute to revenue in the near term.
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Broadband Revenue Ramp and Pipeline
Q: What supports the significant second-half broadband revenue ramp?
A: The company expects higher broadband revenue in the second half due to increased demand from its largest customers and growing traction with other customers. They are seeing momentum with additional customers ramping up DOCSIS deployments and gaining traction in fiber-to-the-home opportunities. The team is focused on building the customer base beyond the two largest customers. ( , ) -
Dependence on DOCSIS 4.0 Amplifiers
Q: How reliant is Harmonic on the availability of DOCSIS 4.0 amplifiers?
A: Harmonic's deployments are forward-looking, with operators preferring equipment that is DOCSIS 4.0 upgradable. Industry reports indicate progress on Full Duplex amplifiers, with plans for field trials this year and deployments in 2025. The company bases its assumptions on these developments. ( ) -
Video Segment Weakness and Outlook
Q: What factors contribute to the lower full-year outlook for video?
A: While the strategic review caused some customers to pause decisions, impacting revenues marginally, the more significant headwinds are ongoing challenges in the appliance business, leading to a softer outlook for full-year video revenues. ( ) -
Diversifying Beyond Top Two Customers
Q: How does Harmonic plan to grow business with customers beyond the top two?
A: The company is making diversification a priority, focusing on expanding DOCSIS deployments and fiber-to-the-home offerings with other customers. There is increased urgency among operators to upgrade networks due to competition and bandwidth demand, presenting opportunities with operators yet to migrate to next-generation architectures. ( ) -
7-Figure Fiber-to-the-Home Deal
Q: Can you provide more details on the seven-figure fiber-to-the-home deal?
A: An existing Tier 1 international customer adopted Harmonic's new generation fiber product. Shipments are starting in the early second half, contributing to second-half revenues. This deal signifies adoption of their next-generation architecture. ( , ) -
In-Stream Advertising Opportunity
Q: What is the potential of the in-stream advertising market?
A: There's significant growth potential in personalized in-stream advertising during live programming, a new area combining technology with ad inventory and matching. This is generating excitement and incremental opportunities for Harmonic, with expectations of substantial progress in the coming quarters and next year. ( ) -
Beacon Service Revenue Potential
Q: How material could Beacon be as a revenue contributor?
A: Beacon is a recurring service that scales with the number of nodes or subscribers. Customer field trials are underway, with small revenue expected to start late this year. Beacon is relevant to all customers, including Tier 1s, not just smaller ones. ( , ) -
DOCSIS 4.0 Supply Chain Readiness
Q: Is the supply chain ready for DOCSIS 4.0 customer needs?
A: The supply chain is not an issue and is ramping according to customer phasing. Deployments are on track based on predictions, and the company feels prepared to meet customer demand. ( )
Research analysts covering HARMONIC.