Harmonic’s Earnings Call: Fiber Success Amid Challenges

Harmonic ((HLIT)) has held its Q2 earnings call. Read on for the main highlights of the call.

Harmonic’s recent earnings call painted a picture of robust performance, particularly in the video and fiber segments, while also highlighting strategic focus areas and potential challenges. The sentiment was generally positive, with optimism about future growth, especially looking towards 2026. However, there were noted concerns regarding the broadband segment and uncertainties related to tariffs and customer capital expenditure plans.

Record Fiber Revenue

Harmonic achieved record fiber revenue in the second quarter, a milestone driven by both existing and new customer acquisitions. This success was underscored by the introduction of the SeaStar optical node and a high-profile showcase with Vodafone, marking significant advancements in their fiber offerings.

Strong Video Segment Performance

The Video segment reported $51.1 million in revenue, marking an 11.6% increase year-over-year. This growth was fueled by a record $15.4 million in SaaS streaming revenue, largely driven by live sports streaming, showcasing the segment’s strong market position and growth potential.

Successful Capital Return to Shareholders

Harmonic continued its commitment to returning capital to shareholders, repurchasing an additional $14 million of outstanding common shares. This brings the total repurchases under the current program to $50.1 million, reflecting the company’s strong financial health and shareholder value focus.

Positive Free Cash Flow

Despite facing challenges, Harmonic maintained a robust cash position of $123.9 million, representing a significant increase of $78 million compared to the same quarter last year. This positive free cash flow highlights the company’s effective financial management and operational efficiency.

Growth in Broadband ‘Rest of World’ Revenue

The Broadband ‘Rest of World’ segment showed notable growth, contributing to the diversification of Harmonic’s revenue streams. This growth underscores the company’s strategic efforts to expand its global footprint and reduce reliance on specific markets.

Broadband Segment Challenges

The broadband segment faced challenges, with revenue and adjusted EBITDA declining year-over-year due to industry headwinds. The company’s Q3 guidance reflects a cautious outlook, acknowledging these ongoing challenges.

Challenges with Tariffs

While the impact of tariffs in Q2 was less severe than anticipated, the situation remains fluid. Harmonic is mindful of potential future impacts, given the uncertain global trade environment, which could affect upcoming quarters.

Uncertainty in Customer CapEx

Uncertainty regarding customer capital expenditure, particularly from major clients like Charter, poses a risk to future revenue growth. This uncertainty requires careful monitoring as it could influence Harmonic’s financial performance in the coming quarters.

Forward-Looking Guidance

Harmonic reported a strong financial performance, surpassing its guidance in both the Broadband and Video segments with a total revenue of $138 million. The company anticipates a resumption of revenue growth in 2026, supported by the adoption of Unified DOCSIS 4.0, recent customer wins, and accelerated customer deployments. Despite minimal tariff impact this quarter, the company remains cautious due to the uncertain global trade environment.

In conclusion, Harmonic’s earnings call highlighted a strong performance in key segments, with strategic initiatives poised to drive future growth. While challenges in the broadband segment and uncertainties regarding tariffs and customer CapEx plans present potential risks, the company’s optimistic outlook for 2026 reflects confidence in its strategic direction and market opportunities.