Harmonic Q2 Earnings Call Highlights

Key Points

• Broadband growth exceeded expectations: Second-quarter broadband revenue rose 54% year over year to $133.5 million, prompting Harmonic to raise its full-year outlook to $505 million–$525 million. The company completed the sale of its video business to MediaKind and is now focused solely on broadband.
• Bookings and backlog strengthened: Quarterly bookings reached $144 million, with approximately 60% from rest-of-market customers, while backlog and deferred revenue increased 71% to a record $587.6 million. Growth is being supported by DOCSIS 4.0, fiber deployments and expanding adoption among smaller and regional operators.
• Profitability and cash investments remain key considerations: Second-quarter non-GAAP operating profit was $31.3 million and EPS was $0.21, but free cash flow was negative $7 million due mainly to higher memory inventory purchases. Harmonic also expects about $10 million in full-year stranded costs related to the video-business sale while continuing share repurchases and broadband investments.

Harmonic NASDAQ: HLIT reported second-quarter 2026 broadband revenue of $133.5 million, up 54% from a year earlier and above its prior guidance range of $115 million to $125 million, as deployment activity expanded among customers outside of its two largest accounts.

The company also raised its full-year broadband revenue outlook to $505 million to $525 million, from a prior range of $475 million to $495 million. Harmonic completed the sale of its video business to MediaKind on June 16, leaving the company as a pure-play broadband provider with a single reportable segment.

Revenue, Bookings and Backlog Rise

Chief Executive Officer Nimrod Ben-Natan said the quarter reflected continued demand across the company’s “rest of market” customer base, accelerating fiber deployments and early adoption of its network intelligence products.

Rest-of-market revenue, which Harmonic defines as revenue not derived from its two largest customers by subscriber count, increased 44% year over year to nearly $50 million and represented 37% of total quarterly revenue. For the first six months ended July 3, rest-of-market revenue exceeded $100 million, approximately 60% above the prior-year period.

Quarterly bookings reached $144 million, with rest-of-market customers contributing about 60% of bookings. Harmonic reported a total book-to-bill ratio of 1.1, while rest-of-market book-to-bill was above 1.5. Backlog and deferred revenue rose 71% year over year to a record $587.6 million, with 73% expected to convert into revenue within the next 12 months.

Chief Financial Officer Walter Jankovic said two customers each represented more than 10% of second-quarter revenue, and together accounted for 63% of total revenue. Still, he said the company’s rest-of-market revenue base is becoming increasingly diversified across a wider set of customers.

Focus on Flexible DOCSIS and Fiber Deployments

Ben-Natan said operators are using Harmonic’s cOS platform to support multiple network architectures, including DOCSIS 3.1+, DOCSIS 4.0, centralized and distributed deployments, and fiber. He said this flexibility allows operators to pursue higher upstream capacity through a range of approaches without having to settle on a single network topology in advance.

During the question-and-answer session, Ben-Natan said demand from smaller and regional operators has advanced beyond laboratory trials and is now moving into ramping deployments. He said customers are adopting a mix of DOCSIS 4.0, extended DOCSIS 3.1 and fiber strategies, though they are at different stages of rollout.

Harmonic said its deployed cOS footprint reached 161 customers serving 48.2 million customer-premises equipment devices. The company cited Bluepeak as an example of an operator using the same underlying platform for DOCSIS expansion and fiber overbuilds in different service areas.

Fiber activity included record rest-of-market fiber bookings in the second quarter, according to the company. Harmonic said its SeaStar MDU optical node went live at DNA Finland, while Inter Venezuela is building a nationwide XGS-PON network on Harmonic’s platform for mobile backhaul. The company also received its first multimillion-dollar order for its PAL One XL and Oyster products.

On DOCSIS 4.0, Harmonic said cable modems from six suppliers across two chipset vendors reached an initial CableLabs interoperability milestone in June. The company said it is shipping unified DOCSIS 4.0 nodes in volume and added a new European DOCSIS 4.0 customer during the quarter.

Intelligence Products Gain Early Adoption

Harmonic said its Beacon network intelligence product is live with about 20 customers, while newer offerings in its broader intelligence platform are operating with approximately 10 operators. The company said early deployments have reduced subscriber calls to service providers by more than 30%.

Amply, a product intended to provide real-time visibility into amplifier networks, is in beta with several operators and is operating with amplifiers from two vendors. Ben-Natan said the intelligence business is expected to become material to Harmonic’s recurring-revenue category over time, though he said it will take time to build.

The company reported a customer net promoter score of 87 during the second quarter.

Margins, Cash and Updated Outlook

Second-quarter non-GAAP gross margin was 53%, while non-GAAP operating profit totaled $31.3 million and non-GAAP earnings per share were $0.21. The operating-profit result included $2.3 million in stranded costs related to the video business sale.

Harmonic received $137.9 million in proceeds at closing from the MediaKind transaction, subject to final post-closing adjustments. Cash and cash equivalents totaled $231.9 million at quarter-end. Free cash flow was negative $7 million, primarily due to higher memory inventory as the company took early delivery to secure supply for anticipated growth.

Jankovic said Harmonic has procured the memory it needs for full-year 2026 and has included approximately $3 million per quarter in second-half guidance for higher memory costs not expected to be passed through to customers. Full-year guidance includes about $10 million of stranded costs, with roughly 30% of those costs expected to be eliminated within one year of the video sale closing.

• Third-quarter broadband revenue: $125 million to $135 million
• Third-quarter gross margin: 51% to 52%
• Third-quarter operating profit: $23 million to $28 million
• Third-quarter EPS: $0.15 to $0.19
• Full-year broadband revenue: $505 million to $525 million
• Full-year operating profit: $99 million to $111 million
• Full-year EPS: $0.67 to $0.75

Harmonic said it expects to continue investing in broadband growth, including inventory and memory purchases, while also pursuing share repurchases and potential strategic acquisitions. The company has repurchased $122 million of shares under its $200 million authorization, though it made no repurchases during the second quarter.

About Harmonic (NASDAQ:HLIT)

Harmonic Inc NASDAQ: HLIT is a leading provider of video delivery infrastructure that enables service providers, broadcasters and content owners to capture, process and distribute high‐quality video across broadcast, cable, satellite and IP networks. The company's portfolio spans real‐time video compression solutions, including encoders and transcoders, as well as storage and server products designed for live production, playout and streaming on any device.

Harmonic's product lines include cable edge QAM modules and set‐top video processing platforms for traditional pay‐TV operators, alongside cloud‐native software for over‐the‐top (OTT) delivery, origin servers and content delivery network (CDN) services.

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