Harmonic’s Earnings Call: Growth Amid Challenges

Harmonic ((HLIT)) has held its Q1 earnings call. Read on for the main highlights of the call.

Harmonic’s recent earnings call painted a picture of robust financial performance, marked by strong revenue and EBITDA growth, alongside significant share repurchases. The company celebrated achievements in customer diversification and record fiber bookings. However, the call also highlighted concerns over potential tariff impacts, broadband deployment delays, and uncertainties in full-year guidance, which tempered the otherwise positive sentiment.

Strong Revenue and EBITDA Growth

Harmonic reported impressive financial results, with a 9% year-over-year increase in revenue, reaching $133.1 million. The company’s adjusted EBITDA stood at $21 million, both figures surpassing market expectations and underscoring the company’s operational efficiency.

Significant Share Repurchases

In a move to return value to its shareholders, Harmonic executed share repurchases totaling $36 million. This strategic decision contributed to a healthy cash balance of $149 million by the end of the quarter, reflecting the company’s strong financial position.

Broadband Segment Growth

The broadband segment demonstrated solid growth, with revenue climbing to $84.9 million, a 7.6% increase from the previous year. The segment’s gross margin also expanded to 55.5%, highlighting the company’s ability to optimize its broadband operations.

Video Segment Performance

Harmonic’s video segment saw a revenue increase of 11.8% year-over-year, reaching $48.3 million. This growth was supported by successful appliance refresh deals and cost optimization strategies, resulting in a gross margin of 66.4%.

Record Fiber Bookings

The company achieved a record quarter for fiber bookings, securing three new pure fiber wins and eight expansion projects. This milestone underscores Harmonic’s competitive edge in the fiber market and its ability to capture new opportunities.

Successful Customer Diversification

Harmonic expanded its customer base by adding seven new logos, including a top-five North American MSO and a Tier 1 Latin American operator. This diversification strategy is expected to bolster the company’s market presence and revenue streams.

Tariff Impact Concerns

The earnings call raised concerns about potential tariff impacts on the broadband segment, with an estimated $3 million impact on Q2 margins. This uncertainty poses a risk to the company’s financial performance in the near term.

Broadband Deployment Delays

Harmonic anticipates a below-trend revenue year for broadband in 2025 due to the timing of Unified 4.0 and its effects on customer deployments. This delay could impact the company’s growth trajectory in the short term.

Uncertain Full-Year Guidance

Due to ongoing tariff uncertainties, Harmonic refrained from providing updated annual guidance, highlighting a lack of visibility for the second half of 2025. This uncertainty may weigh on investor confidence moving forward.

Book-to-Bill Ratio Below Historical Average

The company’s book-to-bill ratio was reported at 0.9 times, falling below the historical benchmark of greater than 1 time. This indicates potential challenges in order booking that could affect future revenue streams.

Forward-Looking Guidance

Despite the current uncertainties, Harmonic remains optimistic about its long-term growth strategy. The company anticipates resumed revenue growth in 2026, driven by its strong backlog and deferred revenue of $485 million. This forward-looking confidence suggests a positive outlook beyond the immediate challenges.

In summary, Harmonic’s earnings call revealed a company performing well financially, with strong revenue and EBITDA growth, substantial share repurchases, and successful customer diversification. However, concerns about tariffs, broadband deployment delays, and uncertain guidance pose challenges. Despite these hurdles, Harmonic’s long-term growth strategy remains intact, with expectations of renewed growth in 2026.