Harmonic Announces Third Quarter 2016 Results
SAN JOSE, CA -- (Marketwired) -- 11/09/16 -- Harmonic Inc. (NASDAQ: HLIT), the worldwide leader in video delivery infrastructure, announced today its unaudited results for the third quarter of 2016.
GAAP net revenue for the third quarter of 2016 was $101.4 million, compared with $109.6 million for the second quarter of 2016 and $83.3 million for the third quarter of 2015.
Non-GAAP net revenue for the third quarter of 2016 was $101.7 million, compared with $110.4 million for the second quarter of 2016 and $83.3 million for the third quarter of 2015.
Bookings for the third quarter of 2016 were $97.3 million, compared with $117.3 million for the second quarter of 2016 and $74.6 million for the third quarter of 2015.
GAAP net loss for the third quarter of 2016 was $(16.0) million, or $(0.21) per diluted share, compared with a GAAP net loss for the second quarter of 2016 of $(20.7) million, or $(0.27) per diluted share, and a GAAP net loss of $(4.8) million, or $(0.05) per diluted share, for the third quarter of 2015.
Non-GAAP net loss for the third quarter of 2016 was $(1.1) million, or $(0.01) per diluted share, compared with non-GAAP net loss for the second quarter of 2016 of $(0.2) million, or $0.00 per diluted share, and non-GAAP net loss of $(0.2) million, or $0.00 per diluted share, for the third quarter of 2015. See "Use of Non-GAAP Financial Measures" and "GAAP to Non-GAAP Reconciliations" below.
Total cash, cash equivalents and short-term investments were $52.7 million at the end of the third quarter of 2016, down $12.6 million from $65.3 million at the end of the prior quarter, primarily due to timing of receipts from our customers and payments of restructuring and integration charges. In the third quarter of 2016, the Company used approximately 4.6 million of cash from operations.
"Our third quarter results reflect our ongoing business transformations, as Cable Edge segment revenue declined in advance of the pending release of our new CableOS products," said Patrick Harshman, President and CEO of Harmonic. "Although our outlook for fourth quarter Cable Edge spending is therefore cautious, our recently executed warrant agreement with Comcast and our first CableOS revenue shipments bolster our confidence in our CableOS growth strategy. Turning to our Video segment, our transformational VOS™ offering drove a stronger-than-forecasted mix of software- and services-related orders, impacting third quarter revenue recognition while maintaining near-record backlog and deferred revenue. We are encouraged by the competitive momentum of our transformational initiatives, and remain focused on revenue growth, improving profitability and enhancing shareholder value."
Third Quarter 2016 Highlights
- Soft legacy cable edge demand and a stronger mix of video software and services orders impacted revenue.
- Near record backlog and deferred revenue of $181.1 million.
- Launched CableOS, the industry's first software-based CMTS core.
- Executed Comcast warrant agreement validating our investment strategy in CableOS.
- Exceeding annualized cost savings targets from the combination of Harmonic and TVN. We now expect to realize annualized cost savings in a range of $24-25 million by the end of calendar year 2016, up from our initial target of $20-$22 million.
- Several key trials underway on our recently announced VOS Cloud and VOS 360 software-as-a-service offerings with new cloud partners and tier 1 media and pay TV companies.
Business Outlook
Fourth Quarter 2016 GAAP Financial Guidance
For the fourth quarter of 2016, Harmonic anticipates:
- Net revenue to be $105.8 million to $110.8 million, which includes Video revenue of $96.8 million to $99.8 million and Cable Edge revenue of $9.0 million to $11.0 million
- Gross margin to be 48.0% to 49.0%
- Operating expense to be $64.5 million to $66.5 million
- Operating loss to be $(13.5) million to $(11.5) million
- EPS to be $(0.20) to $(0.18)
- Share count for EPS calculation to be approximately 79.0 million shares of Harmonic common stock
- Cash and short-term investments at quarter-end to be $60.0 million to $65.0 million
Fourth Quarter 2016 Non-GAAP Financial Guidance
For the fourth quarter of 2016, Harmonic anticipates:
- Net revenue to be $106.0 million to $111.0 million, which includes Video revenue of $97.0 million to $100.0 million and Cable Edge revenue of $9.0 million to $11.0 million
- Gross margin to be 53.0% to 54.0%
- Operating expense to be $50.0 million to $52.0 million
- Operating income to be $6.0 million to $8.0 million
- EPS to be $0.05 to $0.07
- Tax rate to be approximately 15%
- Share count for EPS calculation to be approximately 79.0 million shares of Harmonic common stock
- Cash and short-term investments at quarter-end to be $60.0 million to $65.0 million
See "Use of Non-GAAP Financial Measures" and "GAAP to Non-GAAP Reconciliations" below.
Conference Call Information
Harmonic will host a conference call to discuss its financial results at 2:00 p.m. Pacific (5:00 p.m. Eastern) on Wednesday, November 9, 2016. A listen-only broadcast of the conference call can be accessed either from the Company's website at www.harmonicinc.com or by calling +1.574.990.1032 or +1.800.240.9147 (passcode 8557770). The replay will be available after 4:30 p.m. Pacific at the same website address or by calling +1.404.537.3406 or +1.855.859.2056 (passcode 8557770).
About Harmonic Inc.
Harmonic (NASDAQ: HLIT) is the worldwide leader in video delivery infrastructure for emerging television and video services. Harmonic enables customers to produce, deliver, and monetize amazing video experiences, with unequalled business agility and operational efficiency, by providing market-leading innovation, high-quality service, and compelling total-cost-of-ownership. More information is available at www.harmonicinc.com.
Legal Notice Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements related to our expectations regarding: GAAP net revenue, GAAP gross margins, GAAP operating expenses, GAAP operating income (loss), GAAP EPS, non-GAAP revenue, non-GAAP gross margins, non-GAAP operating expenses, non-GAAP operating income (loss), non-GAAP EPS, and tax rate for the fourth quarter of 2016, as well as cash and short-term investments at the end of the fourth quarter of 2016. Our expectations regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include, in no particular order, the following: unexpected delays, difficulties and/or costs relating to integrating TVN with Harmonic; anticipated business opportunities and operational efficiencies for the combined company do not fully materialize; the trends toward more high-definition, on-demand and anytime, anywhere video will not continue to develop at its current pace or will expire; a strong U.S. dollar may have a negative impact on our business in certain international markets; the possibility that our products will not generate sales that are commensurate with our expectations or that our cost of revenue or operating expenses may exceed our expectations; the mix of products and services sold in various geographies and the effect it has on gross margins; delays or decreases in capital spending in the cable, satellite and telco and broadcast and media industries; customer concentration and consolidation; the impact of general economic conditions on our sales and operations; our ability to develop new and enhanced products in a timely manner and market acceptance of our new or existing products; losses of one or more key customers; risks associated with our international operations, including in Ukraine; risks associated with our CableOS and VOS™ product initiatives; dependence on market acceptance of various types of broadband services, on the adoption of new broadband technologies and on broadband industry trends; inventory management; the lack of timely availability of parts or raw materials necessary to produce our products; the impact of fluctuations in the prices of raw materials and oil; the effect of competition, on both revenue and gross margins; difficulties associated with rapid technological changes in our markets; risks associated with unpredictable sales cycles; our dependence on contract manufacturers and sole or limited source suppliers; the effect on our business of natural disasters; and risks associated with our outstanding convertible notes. The forward-looking statements contained in this press release are also subject to other risks and uncertainties, including those more fully described in Harmonic's filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K for the year ended December 31, 2015, our recent Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K. The forward-looking statements in this press release are based on information available to the Company as of the date hereof, and Harmonic disclaims any obligation to update any forward-looking statements.
Use of Non-GAAP Financial Measures
In establishing operating budgets, managing its business performance, and setting internal measurement targets, we exclude a number of items required by GAAP. Management believes that these accounting charges and credits, most of which are non-cash or non-recurring in nature, are not useful in managing its operations and business. Historically, the Company has also publicly presented these supplemental non-GAAP measures in order to assist the investment community to see the Company "through the eyes of management," and thereby enhance understanding of its operating performance. The non-GAAP measures presented here are: revenue, gross profit, operating expenses, income (loss) from operations, total non-operating income (expense), net and net income (loss), and net income (loss) per diluted share. The presentation of non-GAAP information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP, and is not necessarily comparable to non-GAAP results published by other companies. A reconciliation of the historical non-GAAP financial measures discussed in this press release to the most directly comparable historical GAAP financial measures is included with the financial statements provided with this press release. The types of non-GAAP adjustments described below have historically been excluded from our GAAP financial measures: acquisition accounting impacts to TVN deferred revenue and TVN inventory valuation; TVN acquisition-and integration-related costs; Cable Edge inventory charge in connection with certain product lines; restructuring and related charges; and non-cash items, such as impairment of long-term investment, stock-based compensation expense, amortization of intangibles and non-cash interest expenses related to convertible debt and adjustments that normalize the tax rate.
Harmonic Inc.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands, except per share data)
September 30, December 31,
2016 2015
-------------- --------------
ASSETS
Current assets:
Cash and cash equivalents $ 44,741 $ 126,190
Short-term investments 7,931 26,604
Accounts receivable, net 99,078 69,515
Inventories 35,828 38,819
Prepaid expenses and other current assets 38,519 25,003
-------------- --------------
Total current assets 226,097 286,131
Property and equipment, net 35,145 27,012
Goodwill 239,880 197,781
Intangibles, net 33,121 4,097
Other long-term assets 31,218 9,936
-------------- --------------
Total assets $ 565,461 $ 524,957
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Other debts and capital lease obligations,
current $ 6,825 $ -
Accounts payable 31,407 19,364
Income taxes payable 545 307
Deferred revenue 54,319 33,856
Accrued liabilities 50,369 31,354
-------------- --------------
Total current liabilities 143,465 84,881
Convertible debt, long-term 101,964 98,295
Other debts and capital lease obligations,
long-term 15,949 -
Income taxes payable, long-term 2,863 3,886
Deferred tax liabilities, long-term 2,163 -
Other non-current liabilities 17,604 9,727
-------------- --------------
Total liabilities 284,008 196,789
-------------- --------------
Stockholders' equity:
Preferred stock, $0.001 par value, 5,000
shares authorized; no shares issued or
outstanding - -
Common stock, $0.001 par value, 150,000
shares authorized; 78,311 and 76,015 shares
issued and outstanding at September 30,
2016 and December 31, 2015, respectively 78 76
Additional paid-in capital 2,249,857 2,236,418
Accumulated deficit (1,965,779) (1,903,908)
Accumulated other comprehensive loss (2,703) (4,418)
-------------- --------------
Total stockholders' equity 281,453 328,168
-------------- --------------
Total liabilities and stockholders' equity $ 565,461 $ 524,957
============== ==============
Harmonic Inc.
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share amounts)
Three months ended Nine months ended
------------------------- -------------------------
September September
30, October 2, 30, October 2,
2016 2015 2016(1) 2015
------------ ------------ ------------ ------------
Net revenue $ 101,406 $ 83,305 $ 292,809 $ 290,424
Cost of revenue 50,043 37,074 149,752 134,780
------------ ------------ ------------ ------------
Gross profit 51,363 46,231 143,057 155,644
Operating expenses:
Research and
development 24,202 21,679 74,272 65,824
Selling, general and
administrative 36,112 28,966 105,498 91,443
Amortization of
intangibles 3,009 1,446 9,606 4,338
Restructuring and asset
impairment charges (27) 397 4,488 626
------------ ------------ ------------ ------------
Total operating
expenses 63,296 52,488 193,864 162,231
Loss from operations (11,933) (6,257) (50,807) (6,587)
Interest (expense)
income, net (2,734) 30 (7,806) 102
Other (expense) income,
net (328) 148 (5) (299)
Loss on impairment of
long-term investment (1,259) - (2,735) (2,505)
------------ ------------ ------------ ------------
Loss before income taxes (16,254) (6,079) (61,353) (9,289)
(Benefit from) provision
for income taxes (242) (1,268) 518 (827)
------------ ------------ ------------ ------------
Net loss $ (16,012) $ (4,811) $ (61,871) $ (8,462)
============ ============ ============ ============
Net loss per share:
Basic and diluted $ (0.21) $ (0.05) $ (0.80) $ (0.10)
============ ============ ============ ============
Shares used in per share
calculation:
Basic and diluted 78,092 87,991 77,475 88,359
============ ============ ============ ============
(1) On February 29, 2016, Harmonic closed the acquisition of TVN and as a result, our 2016 results for the nine months ended September 30, 2016 include TVN results beginning on February 29, 2016.
Harmonic Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
Nine months ended
-----------------------------
September 30, October 2,
2016 2015
-------------- --------------
Cash flows from operating activities:
Net loss $ (61,871) $ (8,462)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Amortization of intangibles 12,711 4,971
Depreciation 13,198 10,143
Stock-based compensation 8,542 11,845
Amortization of discount on convertible debt 3,669 -
Restructuring, asset impairment and loss on
retirement of fixed assets 1,476 354
Loss on impairment of long-term investment 2,735 2,505
Provision for excess and obsolete
inventories 6,246 1,234
Allowance for doubtful accounts, returns and
discounts 1,222 576
Other non-cash adjustments, net 251 -
Changes in assets and liabilities, net of
effects of acquisition:
Accounts receivable (12,869) 9,440
Inventories 2,225 (7,936)
Prepaid expenses and other assets (5,938) (13,817)
Accounts payable 2,505 1,772
Deferred revenue 20,038 5,237
Income taxes payable (827) (1,372)
Accrued and other liabilities (6,230) (7,926)
-------------- --------------
Net cash (used in) provided by operating
activities (12,917) 8,564
-------------- --------------
Cash flows from investing activities:
Acquisition of business, net of cash
acquired (75,669) -
Purchases of investments - (20,714)
Proceeds from sales and maturities of
investments 18,692 26,534
Purchases of property and equipment (11,423) (10,393)
Purchases of long-term investments - (85)
Restricted cash - (1,091)
-------------- --------------
Net cash used in investing activities (68,400) (5,749)
-------------- --------------
Cash flows from financing activities:
Payment of convertible debt issuance costs (582) -
Proceeds from other debts and capital leases 5,968 -
Repayment of other debts and capital leases (8,038) -
Payments for repurchase of common stock - (20,007)
Proceeds from common stock issued to
employees 3,736 9,255
Payment of tax withholding obligations
related to net share settlements of
restricted stock units (1,313) (3,288)
-------------- --------------
Net cash used in financing activities (229) (14,040)
-------------- --------------
Effect of exchange rate changes on cash and
cash equivalents 97 (236)
-------------- --------------
Net decrease in cash and cash equivalents (81,449) (11,461)
Cash and cash equivalents at beginning of
period 126,190 73,032
-------------- --------------
Cash and cash equivalents at end of period $ 44,741 $ 61,571
============== ==============
Harmonic Inc.
Revenue Information
(Unaudited, in thousands, except percentages)
Three months ended
-------------------------------------------------
September 30, 2016
-------------------------------------------------
Adjustment
GAAP (1) Non-GAAP
------------- ---------- ------------------------
Product
Video Products $ 63,288 $ - $ 63,288 62%
Cable Edge 6,997 - 6,997 7%
Services and Support 31,121 325 31,446 31%
------------- ---------- ------------------------
Total $ 101,406 $ 325 $ 101,731 100%
============= ========== ==============
Geography
Americas $ 47,856 $ 166 $ 48,022 47%
EMEA 32,405 106 32,511 32%
APAC 21,145 53 21,198 21%
------------- ---------- ------------------------
Total $ 101,406 $ 325 $ 101,731 100%
============= ========== ==============
Market
Service Provider $ 53,459 $ 97 $ 53,556 53%
Broadcast and Media 47,947 228 48,175 47%
------------- ---------- ------------------------
Total $ 101,406 $ 325 $ 101,731 100%
============= ========== ==============
Three months ended
-------------------------------------------------------
July 1, 2016 October 2, 2015
------------------------------------ ----------------
Adjustment GAAP and Non-
GAAP (1) Non-GAAP GAAP(2)
-------- ---------- ---------------- ----------------
Product
Video Products $ 61,660 $ 205 $ 61,865 56% $ 48,629 59%
Cable Edge 15,751 - 15,751 14% 8,616 10%
Services and Support 32,160 575 32,735 30% 26,060 31%
-------- ---------- ---------------- -------- -------
Total $109,571 $ 780 $110,351 100% $ 83,305 100%
======== ========== ======== ========
Geography
Americas $ 57,680 $ 143 $ 57,823 52% $ 44,926 54%
EMEA 33,456 467 33,923 31% 19,269 23%
APAC 18,435 170 18,605 17% 19,110 23%
-------- ---------- ---------------- -------- -------
Total $109,571 $ 780 $110,351 100% $ 83,305 100%
======== ========== ======== ========
Market
Service Provider $ 65,733 $ 329 $ 66,062 60% $ 46,451 56%
Broadcast and Media 43,838 451 44,289 40% 36,854 44%
-------- ---------- ---------------- -------- -------
Total $109,571 $ 780 $110,351 100% $ 83,305 100%
======== ========== ======== ========
Nine months ended
-------------------------------------------------
October 2,
September 30, 2016 2015
---------------------------------- --------------
Adjustment GAAP and Non-
GAAP (1) Non-GAAP GAAP(2)
-------- ---------- -------------- --------------
Product
Video Products $169,162 $ 560 $169,722 58% $153,439 53%
Cable Edge 36,180 - 36,180 12% 61,726 21%
Services and Support 87,467 1,168 88,635 30% 75,259 26%
-------- ---------- -------------- --------------
Total $292,809 $ 1,728 $294,537 100% $290,424 100%
======== ========== ======== ========
Geography
Americas $154,513 $ 390 $154,903 53% $165,786 57%
EMEA 85,716 974 86,690 29% 71,302 25%
APAC 52,580 364 52,944 18% 53,336 18%
-------- ---------- -------------- --------------
Total $292,809 $ 1,728 $294,537 100% $290,424 100%
======== ========== ======== ========
Market
Service Provider $170,462 $ 575 $171,037 58% $178,466 61%
Broadcast and Media 122,347 1,153 123,500 42% 111,958 39%
-------- ---------- -------------- --------------
Total $292,809 $ 1,728 $294,537 100% $290,424 100%
======== ========== ======== ========
(1) Non-GAAP revenue for the three months ended September 30, 2016 and July 1, 2016 and for the nine months ended September 30, 2016 include $0.3 million, $0.8 million and $1.7 million adjustments relating to TVN deferred revenue as a result of acquisition accounting, respectively.
(2) There is no revenue adjustment for the three months and nine months ended October 2, 2015.
Harmonic Inc.
Segment Revenue and Operating Income (Loss)
(Unaudited, in thousands)
Three months ended
-------------------------------------------------------------
September 30, 2016 July 1, 2016
----------------------------------- -------------------------
Adjustments Non- Adjustments
GAAP (1) GAAP GAAP (1)
----------------------------------- -------------------------
Net revenue:
Video $ 91,353 $ 325 $ 91,678 $ 90,588 $ 780
Cable Edge 10,053 - 10,053 18,983 -
----------------------------------- -------------------------
Total
consolidated
net revenue $101,406 $ 325 $ 101,731 $109,571 $ 780
=================================== =========================
Operating
income
(loss):
Video $ 4,886 $ 325 $ 5,211 $ 518 $ 780
Cable Edge (4,767) - (4,767) (498) -
----------------------------------- -------------------------
Total segment
operating
income (loss) 119 325 444 20 780
Unallocated
corporate
expenses (4,983) 4,983 - (9,831) 9,831
Stock-based
compensation (2,680) 2,680 - (2,768) 2,768
Amortization
of
intangibles (4,389) 4,389 - (5,539) 5,539
----------------------------------- -------------------------
Income (loss)
from
operations (11,933) 12,377 444 (18,118) 18,918
Non-operating
(expense)
income, net (4,321) 2,609 (1,712) (2,319) 1,233
----------------------------------- -------------------------
Income (loss)
before income
taxes $(16,254) $ 14,986 $ (1,268) $(20,437) $ 20,151
=================================== =========================
Harmonic Inc.
Segment Revenue and Operating Income (Loss)
(Unaudited, in thousands)
Three months ended
--------------------------------------------------------------
July 1, 2016 October 2, 2015
--------------------- ----------------------------------------
Non- Adjustments Non-
GAAP GAAP (1) GAAP
--------------------- ----------------------------------------
Net revenue:
Video $ 91,368 $ 71,889 $ - $ 71,889
Cable Edge 18,983 11,416 - 11,416
--------------------- ----------------------------------------
Total
consolidated
net revenue $ 110,351 $ 83,305 $ - $ 83,305
===================== ========================================
Operating
income
(loss):
Video $ 1,298 $ 3,575 $ - $ 3,575
Cable Edge (498) (3,963) - (3,963)
--------------------- ----------------------------------------
Total segment
operating
income (loss) 800 (388) - (388)
Unallocated
corporate
expenses - (510) 510 -
Stock-based
compensation - (3,827) 3,827 -
Amortization
of
intangibles - (1,532) 1,532 -
--------------------- ----------------------------------------
Income (loss)
from
operations 800 (6,257) 5,869 (388)
Non-operating
(expense)
income, net (1,086) 178 - 178
--------------------- ----------------------------------------
Income (loss)
before income
taxes $ (286) $ (6,079) $ 5,869 $ (210)
===================== ========================================
Nine months ended
-------------------------------------
September 30, 2016
------------------------------------
Adjustments
GAAP (1) Non-GAAP
------------------------------------
Net revenue:
Video $ 246,949 $ 1,728 $ 248,677
Cable Edge 45,860 - 45,860
------------------------------------
Total consolidated net revenue $ 292,809 $ 1,728 $ 294,537
====================================
Operating income (loss):
Video $ (1,943) $ 1,917 $ (26)
Cable Edge (7,118) - (7,118)
------------------------------------
Total segment operating income (loss) (9,061) 1,917 (7,144)
Unallocated corporate expenses (20,493) 20,493 -
Stock-based compensation (8,542) 8,542 -
Amortization of intangibles (12,711) 12,711 -
------------------------------------
Income (loss) from operations (50,807) 43,663 (7,144)
Non-operating (expense) income, net (10,546) 6,505 (4,041)
------------------------------------
Income (loss) before income taxes $ (61,353) $ 50,168 $ (11,185)
====================================
Nine months ended
--------------------------------------
October 2, 2015
--------------------------------------
Adjustments
GAAP (1) Non-GAAP
--------------------------------------
Net revenue:
Video $ 219,378 $ - $ 219,378
Cable Edge 71,046 - 71,046
--------------------------------------
Total consolidated net revenue $ 290,424 $ - $ 290,424
======================================
Operating income (loss):
Video $ 8,386 $ - $ 8,386
Cable Edge 2,582 - 2,582
--------------------------------------
Total segment operating income (loss) 10,968 - 10,968
Unallocated corporate expenses (739) 739 -
Stock-based compensation (11,845) 11,845 -
Amortization of intangibles (4,971) 4,971 -
--------------------------------------
Income (loss) from operations (6,587) 17,555 10,968
Non-operating (expense) income, net (2,702) 2,505 (197)
--------------------------------------
Income (loss) before income taxes $ (9,289) $ 20,060 $ 10,771
======================================
(1) See "Use of Non-GAAP Financial Measures" and "GAAP to Non-GAAP Reconciliations" below.
Harmonic Inc.
GAAP to Non-GAAP Reconciliations (Unaudited)
(In thousands, except percentages and per share data)
Three months ended
--------------------------------------
September 30, 2016
--------------------------------------
Total
Gross Operating
Revenue Profit Expense
--------------------------------------
GAAP $ 101,406 $ 51,363 $ 63,296
Cable Edge inventory charge - (159) -
Acquisition accounting impact
related to TVN deferred revenue 325 325 -
Stock-based compensation in cost
of revenue - 360 -
Stock-based compensation in
research and development - - (771)
Stock-based compensation in
selling, general and
administrative - - (1,549)
Amortization of intangibles - 1,380 (3,009)
Restructuring and related charges - (1) 27
TVN acquisition-and integration-
related costs - 119 (5,051)
Loss on impairment of long-term
investment - - -
Non-cash interest expenses related
to convertible notes - - -
Discrete tax items and tax effect
of non-GAAP adjustments - - -
--------------------------------------
Non-GAAP $ 101,731 $ 53,387 $ 52,943
======================================
As a % of revenue (GAAP) 50.7% 62.4%
As a % of revenue (Non-GAAP) 52.5% 52.0%
Diluted net loss per share:
Diluted net loss per share-GAAP
Diluted net loss per share-Non-
GAAP
Shares used to compute diluted net
loss per share:
GAAP and Non-GAAP
Three months ended
--------------------------------------
July 1, 2016
--------------------------------------
Total
Gross Operating
Revenue Profit Expense
--------------------------------------
GAAP $ 109,571 $ 51,040 $ 69,158
Cable Edge inventory charge - 4,519 -
Acquisition accounting impacts
related to TVN deferred revenue 780 780 -
Stock-based compensation in cost
of revenue - 424 -
Stock-based compensation in
research and development - - (841)
Stock-based compensation in
selling, general and
administrative - - (1,503)
Amortization of intangibles - 1,307 (4,232)
Restructuring and related charges - 6 (1,903)
TVN acquisition-and integration-
related costs - 433 (2,970)
Non-cash interest expenses related
to convertible notes - - -
Discrete tax items and tax effect
of non-GAAP adjustments - - -
--------------------------------------
Non-GAAP $ 110,351 $ 58,509 $ 57,709
======================================
As a % of revenue (GAAP) 46.6% 63.1%
As a % of revenue (Non-GAAP) 53.0% 52.3%
Diluted net loss per share:
Diluted net loss per share-GAAP
Diluted net loss per share-Non-
GAAP
Shares used to compute diluted net
loss per share:
GAAP and Non-GAAP
Three months ended
--------------------------------------
October 2, 2015
--------------------------------------
Total
Gross Operating
Revenue Profit Expense
--------------------------------------
GAAP $ 83,305 $ 46,231 $ 52,488
Stock-based compensation in cost
of revenue - 433 -
Stock-based compensation in
research and development - - (1,074)
Stock-based compensation in
selling, general and
administrative - - (2,320)
Amortization of intangibles - 86 (1,446)
Restructuring and related charges - 113 (397)
Discrete tax items and tax effect
of non-GAAP adjustments - - -
--------------------------------------
Non-GAAP $ 83,305 $ 46,863 $ 47,251
======================================
As a % of revenue (GAAP) 55.5% 63.0%
As a % of revenue (Non-GAAP) 56.3% 56.7%
Diluted net income (loss) per
share:
Diluted net loss per share-GAAP
Diluted net loss per share-Non-
GAAP
Shares used to compute diluted net
loss per share:
GAAP and Non-GAAP
Nine months ended
--------------------------------------
September 30, 2016
--------------------------------------
Total
Gross Operating
Revenue Profit Expense
--------------------------------------
GAAP $ 292,809 $ 143,057 $ 193,864
Cable Edge inventory charge - 4,360 -
Acquisition accounting impacts
related to TVN deferred revenue 1,728 1,728 -
Acquisition accounting impacts
related to TVN fair value of
inventory - 189 -
Stock-based compensation in cost
of revenue - 1,011 -
Stock-based compensation in
research and development - - (2,581)
Stock-based compensation in
selling, general and
administrative - - (4,950)
Amortization of intangibles - 3,105 (9,606)
Restructuring and related charges - (24) (4,488)
TVN acquisition-and integration-
related costs - 610 (11,059)
Loss on impairment of long-term
investment - - -
Non-cash interest expenses related
to convertible notes - - -
Discrete tax items and tax effect
of non-GAAP adjustments - - -
--------------------------------------
Non-GAAP $ 294,537 $ 154,036 $ 161,180
======================================
As a % of revenue (GAAP) 48.9% 66.2%
As a % of revenue (Non-GAAP) 52.3% 54.7%
Diluted net loss per share:
Diluted net loss per share-GAAP
Diluted net loss per share-Non-
GAAP
Shares used to compute diluted net
loss per share:
GAAP and Non-GAAP
Nine months ended
--------------------------------------
October 2, 2015
--------------------------------------
Total
Gross Operating
Revenue Profit Expense
--------------------------------------
GAAP $ 290,424 $ 155,644 $ 162,231
Stock-based compensation in cost
of revenue - 1,383 -
Stock-based compensation in
research and development - - (3,249)
Stock-based compensation in
selling, general and
administrative - - (7,213)
Amortization of intangibles - 633 (4,338)
Restructuring and related charges - 113 (626)
Loss on impairment of long-term
investment - - -
Discrete tax items and tax effect
of non-GAAP adjustments - - -
--------------------------------------
Non-GAAP $ 290,424 $ 157,773 $ 146,805
======================================
As a % of revenue (GAAP) 53.6% 55.9%
As a % of revenue (Non-GAAP) 54.3% 50.5%
Diluted net loss per share:
Diluted net loss per share-GAAP
Diluted net income per share-Non-
GAAP
Shares used to compute diluted net
income (loss) per share:
GAAP
Non-GAAP
Harmonic Inc.
GAAP to Non-GAAP Reconciliations (Unaudited)
(In thousands, except percentages and per share data)
Three months ended
-----------------------------------------
September 30, 2016
-----------------------------------------
Total Non-
Income operating
(loss) Income
from (expense),
Operations net Net loss
-----------------------------------------
GAAP $ (11,933) $ (4,321) $ (16,012)
Cable Edge inventory charge (159) - (159)
Acquisition accounting impact
related to TVN deferred revenue 325 - 325
Stock-based compensation in cost
of revenue 360 - 360
Stock-based compensation in
research and development 771 - 771
Stock-based compensation in
selling, general and
administrative 1,549 - 1,549
Amortization of intangibles 4,389 - 4,389
Restructuring and related charges (28) - (28)
TVN acquisition-and integration-
related costs 5,170 98 5,268
Loss on impairment of long-term
investment - 1,259 1,259
Non-cash interest expenses related
to convertible notes - 1,252 1,252
Discrete tax items and tax effect
of non-GAAP adjustments - - (52)
-----------------------------------------
Non-GAAP $ 444 $ (1,712) $ (1,078)
=========================================
As a % of revenue (GAAP) (11.8)% (4.3)% (15.8)%
As a % of revenue (Non-GAAP) 0.4% (1.7)% (1.1)%
Diluted net loss per share:
Diluted net loss per share-GAAP $ (0.21)
===========
Diluted net loss per share-Non-
GAAP $ (0.01)
===========
Shares used to compute diluted net
loss per share:
GAAP and Non-GAAP 78,092
===========
Three months ended
-----------------------------------------
July 1, 2016
-----------------------------------------
Total Non-
Income operating
(loss) Income
from (expense),
Operations net Net Loss
-----------------------------------------
GAAP $ (18,118) $ (2,319) $ (20,679)
Cable Edge inventory charge 4,519 4,519
Acquisition accounting impacts
related to TVN deferred revenue 780 - 780
Stock-based compensation in cost
of revenue 424 - 424
Stock-based compensation in
research and development 841 - 841
Stock-based compensation in
selling, general and
administrative 1,503 - 1,503
Amortization of intangibles 5,539 - 5,539
Restructuring and related charges 1,909 - 1,909
TVN acquisition-and integration-
related costs 3,403 - 3,403
Non-cash interest expenses related
to convertible notes - 1,233 1,233
Discrete tax items and tax effect
of non-GAAP adjustments - - 285
-----------------------------------------
Non-GAAP $ 800 $ (1,086) $ (243)
=========================================
As a % of revenue (GAAP) (16.5)% (2.1)% (18.9)%
As a % of revenue (Non-GAAP) 0.7% (1.0)% (0.2)%
Diluted net loss per share:
Diluted net loss per share-GAAP $ (0.27)
===========
Diluted net loss per share-Non-
GAAP $ 0.00
===========
Shares used to compute diluted net
loss per share:
GAAP and Non-GAAP 77,342
===========
Three months ended
-----------------------------------------
October 2, 2015
-----------------------------------------
Total Non-
operating
Income
Loss from (expense),
Operations net Net Loss
-----------------------------------------
GAAP $ (6,257) $ 178 $ (4,811)
Stock-based compensation in cost
of revenue 433 - 433
Stock-based compensation in
research and development 1,074 - 1,074
Stock-based compensation in
selling, general and
administrative 2,320 - 2,320
Amortization of intangibles 1,532 - 1,532
Restructuring and related charges 510 - 510
Discrete tax items and tax effect
of non-GAAP adjustments - - (1,224)
-----------------------------------------
Non-GAAP $ (388) $ 178 $ (166)
=========================================
As a % of revenue (GAAP) (7.5)% 0.2% (5.8)%
As a % of revenue (Non-GAAP) (0.5)% 0.2% (0.2)%
Diluted net income (loss) per
share:
Diluted net loss per share-GAAP $ (0.05)
===========
Diluted net loss per share-Non-
GAAP $ 0.00
===========
Shares used to compute diluted net
loss per share:
GAAP and Non-GAAP 87,991
===========
Nine months ended
-----------------------------------------
September 30, 2016
-----------------------------------------
Total Non-
Income operating
(loss) Income
from (expense),
Operations net Net Loss
-----------------------------------------
GAAP $ (50,807) $ (10,546) $ (61,871)
Cable Edge inventory charge 4,360 - 4,360
Acquisition accounting impacts
related to TVN deferred revenue 1,728 - 1,728
Acquisition accounting impacts
related to TVN fair value of
inventory 189 - 189
Stock-based compensation in cost
of revenue 1,011 - 1,011
Stock-based compensation in
research and development 2,581 - 2,581
Stock-based compensation in
selling, general and
administrative 4,950 - 4,950
Amortization of intangibles 12,711 - 12,711
Restructuring and related charges 4,464 - 4,464
TVN acquisition-and integration-
related costs 11,669 98 11,767
Loss on impairment of long-term
investment - 2,735 2,735
Non-cash interest expenses related
to convertible notes - 3,672 3,672
Discrete tax items and tax effect
of non-GAAP adjustments - - 2,197
-----------------------------------------
Non-GAAP $ (7,144) $ (4,041) $ (9,506)
=========================================
As a % of revenue (GAAP) (17.4)% (3.6)% (21.1)%
As a % of revenue (Non-GAAP) (2.4)% (1.4)% (3.2)%
Diluted net loss per share:
Diluted net loss per share-GAAP $ (0.80)
===========
Diluted net loss per share-Non-
GAAP $ (0.12)
===========
Shares used to compute diluted net
loss per share:
GAAP and Non-GAAP 77,475
===========
Nine months ended
-----------------------------------------
October 2, 2015
-----------------------------------------
Total Non-
Income operating
(loss) Income Net
from (expense), Income
Operations net (Loss)
-----------------------------------------
GAAP $ (6,587) $ (2,702) $ (8,462)
Stock-based compensation in cost
of revenue 1,383 - 1,383
Stock-based compensation in
research and development 3,249 - 3,249
Stock-based compensation in
selling, general and
administrative 7,213 - 7,213
Amortization of intangibles 4,971 - 4,971
Restructuring and related charges 739 - 739
Loss on impairment of long-term
investment - 2,505 2,505
Discrete tax items and tax effect
of non-GAAP adjustments - - (3,089)
-----------------------------------------
Non-GAAP $ 10,968 $ (197) $ 8,509
=========================================
As a % of revenue (GAAP) (2.3)% (0.9)% (2.9)%
As a % of revenue (Non-GAAP) 3.8% (0.1)% 2.9%
Diluted net loss per share:
Diluted net loss per share-GAAP $ (0.10)
===========
Diluted net income per share-Non-
GAAP $ 0.10
===========
Shares used to compute diluted net
income (loss) per share:
GAAP 88,359
===========
Non-GAAP 89,410
===========
Harmonic Inc.
GAAP to Non-GAAP Reconciliations on Business Outlook
(In millions, except percentages and per share data)
Q4 2016 Financial Guidance
--------------------------------------
Total
Gross Operating
Revenue Profit Expense
--------------------------------------
$105.8 to $51.0 to $64.5 to
GAAP $110.8 $55.0 $66.5
Acquisition accounting impact
related to TVN deferred revenue 0.2 0.2 -
Stock-based compensation expense - 0.6 (3.8)
Amortization of intangibles - 1.4 (1.0)
Restructuring and related charges
and TVN acquisition/integration
costs - 2.8 (9.8)
Non-cash interest expense related
to convertible notes - - -
Discrete tax items and tax effect
of non-GAAP adjustments - - -
--------------------------------------
0.2 5.0 (14.6)
--------------------------------------
$106.0 to $56.0 to $50.0 to
Non-GAAP $111.0 $60.0 $52.0
======================================
As a % of revenue (GAAP) 48% to 49% 60% to 61%
As a % of revenue (Non-GAAP) 53% to 54% 46% to 47%
Diluted income (loss) per share:
Diluted net loss per share-GAAP
Diluted net income per share-Non-
GAAP
Shares used to compute diluted income
(loss) per share:
GAAP and Non-GAAP
Harmonic Inc.
GAAP to Non-GAAP Reconciliations on Business Outlook
(In millions, except percentages and per share data)
Q4 2016 Financial Guidance
---------------------------------------
Total Non-
Income operating
(loss) Income Net
from (expense), Income
Operations net (loss)
---------------------------------------
$(13.5) to ($16.0) to
GAAP $(11.5) $(2.6) ($14.0)
Acquisition accounting impact
related to TVN deferred revenue 0.2 - 0.2
Stock-based compensation expense 4.4 - 4.4
Amortization of intangibles 2.4 - 2.4
Restructuring and related charges
and TVN acquisition/integration
costs 12.6 - 12.6
Non-cash interest expense related
to convertible notes - 1.3 1.3
Discrete tax items and tax effect
of non-GAAP adjustments - - (0.8)
---------------------------------------
19.6 (1.3) 20.1
---------------------------------------
Non-GAAP $6.0 to $8.0 $(1.3) $4.0 to $6.0
=======================================
(13)% to (15)% to
As a % of revenue (GAAP) (11)% (2%) (13)%
As a % of revenue (Non-GAAP) 6% to 7% (1%) 4% to 5%
Diluted income (loss) per share:
$(0.20) to
Diluted net loss per share-GAAP $(0.18)
============
Diluted net income per share-Non- $0.05 to
GAAP $0.07
============
Shares used to compute diluted income
(loss) per share:
GAAP and Non-GAAP 79.0
============
CONTACTS: Harold Covert Chief Financial Officer Harmonic Inc. +1.408.542.2500 Blair KingDirector, Investor Relations Harmonic Inc.+1.408.490.6172
Source: Harmonic Inc.