PR Newswire | May 3, 2021 04:06PM EDT

05/03 15:05 CDT

Harmonic Announces First Quarter 2021 ResultsCable Access revenue up 72% year over yearVideo revenue up 29% year over year SAN JOSE, Calif., May 3, 2021

SAN JOSE, Calif., May 3, 2021 /PRNewswire/ -- Harmonic Inc. (NASDAQ: HLIT) today announced its unaudited results for the first quarter of 2021.

"Harmonic delivered another quarter of solid results, including better than expected revenues and earnings driven by strong customer demand in both of our business segments," said Patrick Harshman, president and chief executive officer of Harmonic. "We saw strong bookings during the first quarter and as a result, we again ended the quarter with near-record backlog and deferred revenue. This solid financial footing, combined with the continued differentiated technology leadership of our video streaming and CableOS(r) solutions, positions us well for continued success."

Q1Financial and Business Highlights

Financial

* Revenue: $111.6 million, up 42.3% year over year * Cable Access segment revenue: $41.3 million, up 72% year over year * Video segment revenue: $70.3 million, up 29% year over year

* Gross margin: GAAP 49.4% and non-GAAP 50.4%, compared to GAAP 46.8% and non-GAAP 48.9% in the year ago period * Cable Access segment gross margin: 42.2% compared to 43.3% in the year ago period * Video segment gross margin: 55.1% compared to 51.3% in the year ago period

* Operating income (loss): GAAP loss $3.8 million and non-GAAP income $5.1 million, compared to GAAP loss $18.0 million and non-GAAP loss $9.5 million in the year ago period * Adjusted EBITDA: $9.1 million income compared to $7.0 million loss in the year ago period * Net income (loss): GAAP net loss $6.1 million and non-GAAP net income of $4.5 million, compared to GAAP net loss $22.0 million and non-GAAP net loss $9.8 million in the year ago period * EPS: GAAP net loss per share of $0.06 and non-GAAP net income per share of $0.04, compared to GAAP net loss per share of $0.23 and non-GAAP net loss per share of $0.10 in the year ago period * Cash: $100.8 million, up $29.1 million year over year

Business

* CableOS solution commercially deployed with 53 customers, up 96% year over year * CableOS deployments scaled to 3.0 million served cable modems, up 127% year over year * 7 new VOS(r) streaming SaaS customers added during the quarter, total up 72% year over year

Select Financial Information

GAAP Non-GAAP

Key Financial ResultsQ1 2021 Q4 2020 Q1 2020 Q1 2021 Q4 2020 Q1 2020

(in millions, except per share data)

Net revenue $111.6 $131.5$78.4 $111.6$131.5$78.4

Net income (loss) $(6.1) $13.5 $(22.0)$4.5 $20.0 $(9.8)

Diluted EPS $(0.06)$0.13 $(0.23)$0.04 $0.20 $(0.10)



Other Financial Information Q1 2021 Q4 2020 Q1 2020

(in millions)

Adjusted EBITDA for the quarter $9.1 $26.4 $(7.0)

Bookings for the quarter $96.3 $206.4$76.3

Backlog and deferred revenue as of quarter end $274.3$290.5$207.9

Cash and cash equivalents as of quarter end $100.8$98.6 $71.7

Explanations regarding our use of non-GAAP financial measures and related definitions, and reconciliations of our GAAP and non-GAAP measures, are provided in the sections below entitled "Use of Non-GAAP Financial Measures" and "GAAP to Non-GAAP Reconciliations".

Financial Guidance

Q2 GAAP Financial Guidance

Low High

(Unaudited, in millions, Video Cable Adjustments ^(2)Total Video Cable Adjustments ^(2)Total except percentages) Access Access

Net revenue $57.0 $45.0 $ - $102.0 $62.0 $50.0 $ - $112.0

Gross margin % 54.0 %42.0 %(0.5) % 48.2 %56.0 %44.0 %(0.4) % 50.2 %

Operating expenses $34.0 $18.0 $ 4.5 $56.5 $35.0 $19.0 $ 4.5 $58.5

Operating income (loss) $(3.2) $0.9 $ (5.0) $(7.3) $(0.3) $3.0 $ (5.0) $(2.3)

Tax expense ^(1) $(0.7) $(0.7)

EPS ^(1) $(0.11) $(0.06)

Shares ^(1) 101.2 101.2

Cash^ (1) $90.0 $100.0

(1) The guidance is provided at the total company level and not by segment.

(2) See "Use of Non-GAAP Financial Measures" and "GAAP to Non-GAAPReconciliations" below.

2021 GAAP Financial Guidance

Low High

(Unaudited, in millions, Video Cable Adjustments ^(2) Total Video Cable Adjustments ^(2) Total except percentages) Access GAAP Access GAAP

Net revenue $260.0 $175.0 $ - $435.0 $280.0 $200.0 $ - $480.0

Gross margin % 55.0 %44.0 %(0.6) % 50.0 %57.0 %45.0 %(0.5) % 51.5 %

Operating expenses $138.0 $71.0 $ 22.5 $231.5 $143.0 $75.0 $ 22.5 $240.5

Operating income (loss) $5.0 $6.0 $ (25.0) $(14.0) $16.6 $15.0 $ (25.0) $6.6

Tax expense ^(1) $(2.9) $(2.9)

EPS ^(1) $(0.27) $(0.06)

Shares ^(1) 101.4 101.4

Cash^ (1) $110.0 $120.0

(1) The guidance is provided at the total company level and not by segment.

(2) See "Use of Non-GAAP Financial Measures" and "GAAP to Non-GAAPReconciliations" below.

Q2 2021 Non-GAAP Financial Guidance ^(2)

Low High

(Unaudited, in Cable Cable millions, except Video Access Total Video Access Total percentages)

Net revenue $57.0 $45.0 $102.0 $62.0 $50.0 $112.0

Gross margin % 54.0 %42.0 %48.7 %56.0 %44.0 %50.6 %

Operating expenses $34.0 $18.0 $52.0 $35.0 $19.0 $54.0

Operating income (loss)$(3.2) $0.9 $(2.3) $(0.3) $3.0 $2.7

Adjusted EBITDA $(1.3) $2.1 $0.8 $1.6 $4.2 $5.8

Tax rate ^(1) 10.0 % 10.0 %

EPS ^(1) $(0.03) $0.01

Shares ^(1) 101.2 104.2

Cash^ (1) $90.0 $100.0

(1) The guidance is provided at the total company level and not by segment.

(2) See "Use of Non-GAAP Financial Measures" and "GAAP to Non-GAAPReconciliations" below.

2021 Non-GAAP Financial Guidance ^(2)

Low High

(Unaudited, in Cable Cable millions, except Video Access Total Video Access Total percentages)

Net revenue $260.0 $175.0 $435.0 $280.0 $200.0 $480.0

Gross margin % 55.0 %44.0 %50.6 %57.0 %45.0 %52.0 %

Operating expenses$138.0 $71.0 $209.0 $143.0 $75.0 $218.0

Operating income $5.0 $6.0 $11.0 $16.6 $15.0 $31.6

Adjusted EBITDA $13.5 $11.6 $25.1 $25.1 $20.6 $45.7

Tax rate ^(1) 10.0 % 10.0 %

EPS ^(1) $0.06 $0.24

Shares ^(1) 104.7 104.7

Cash^ (1) $110.0 $120.0

(1) The guidance is provided at the total company level and not by segment.

(2) See "Use of Non-GAAP Financial Measures" and "GAAP to Non-GAAPReconciliations" 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 Monday, May 3, 2021. The live webcast will be available on the Harmonic Investor Relations website at http://investor.harmonicinc.com. An audio version of the webcast will be available by calling +1.574.990.1032 or +1.800.240.9147 (conference ID 8667518). A replay will be available after 5:00 p.m. PT on the same web site or by calling +1.404.537.3406 or +1.855.859.2056 (conference ID 8667518).

About Harmonic Inc.

Harmonic (NASDAQ: HLIT), the worldwide leader in virtualized cable access and video delivery solutions, enables media companies and service providers to deliver ultra-high-quality video streaming and broadcast services to consumers globally. The Company revolutionized cable access networking via the industry's first virtualized cable access solution, enabling cable operators to more flexibly deploy gigabit internet service to consumers' homes and mobile devices. Whether simplifying OTT video delivery via innovative cloud and software platforms, or powering the delivery of gigabit internet cable services, Harmonic is changing the way media companies and service providers monetize live and on-demand content on every screen. 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: net revenue, gross margins, operating expenses, operating income (loss), Adjusted EBITDA, tax expense and tax rate, EPS and cash. 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: the market and technology trends underlying our Video and Cable Access businesses will not continue to develop in their current direction or pace; 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 potential impact of the Covid-19 pandemic on our operations or the operations of our supply chain or our customers; the impact of general economic conditions on our sales and operations; 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, telco, broadcast and media industries; customer concentration and consolidation; 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; exchange rate fluctuations of the currencies in which we conduct business; risks associated with our CableOS and VOS product solutions; dependence on various video and broadband industry trends; inventory management; the lack of timely availability or the impact of increases in the prices of parts or raw materials necessary to produce our products; 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; and the effect on our business of natural disasters. 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, 2020, our most recent Quarterly Report 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

The Company reports its financial results in accordance with accounting principles generally accepted in the United States ("GAAP" or referred to herein as "reported"). However, management believes that certain non-GAAP financial measures provide management and other users with additional meaningful financial information that should be considered when assessing our ongoing performance. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business, establish operating budgets, set internal measurement targets and make operating decisions.

These non-GAAP measures are not in accordance with, or an alternative for, measures prepared in accordance with generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. The Company believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Harmonic's results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Harmonic's results of operations in conjunction with the corresponding GAAP measures.

The Company believes that the presentation of non-GAAP measures when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and its historical and projected results of operations. Non-GAAP financial measures should be viewed in addition to, and not as an alternative to, the Company's reported results prepared in accordance with GAAP.

The non-GAAP measures presented here are: segment revenue, gross profit, operating expenses, income (loss) from operations, non-operating expenses and net income (loss) (including those amounts as a percentage of revenue), Adjusted EBITDA 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 non-GAAP adjustments described below have historically been excluded from our GAAP financial measures.

Our non-GAAP financial measures reflect adjustments based on the following items, as well as the related income tax effects:

Stock-based compensation - Although stock-based compensation is a key incentive offered to our employees, we continue to evaluate our business performance excluding stock-based compensation expenses. We believe that management is limited in its ability to project the impact stock-based compensation would have on our operating results. In addition, for comparability purposes, we believe it is useful to provide a non-GAAP financial measure that excludes stock-based compensation in order to better understand the long-term performance of our core business and to facilitate the comparison of our results to the results of our peer companies.

Amortization of intangibles - A portion of the purchase price of our acquisitions is generally allocated to intangible assets, and is subject to amortization. However, Harmonic does not acquire businesses on a predictable cycle. Additionally, the amount of an acquisition's purchase price allocated to intangible assets and the term of its related amortization can vary significantly and is unique to each acquisition. Therefore, we believe that the presentation of non-GAAP financial measures that adjust for the amortization of intangible assets provides investors and others with a consistent basis for comparison across accounting periods.

Restructuring and related charges -Harmonic from time to time incurs restructuring charges which primarily consist of employee severance, one-time termination benefits related to the reduction of its workforce, lease exit costs, and other costs. These charges are associated with material business shifts. We exclude these items because we do not believe they are reflective of our ongoing long-term business and operating results.

Loss on convertible debt extinguishment- In the fourth quarter of fiscal 2020, we recorded a loss of $0.5 million from the conversion and settlement of the remaining $8.1 million of our convertible notes due in December 2020. We have excluded this loss from our non-GAAP financial measures because we do not believe the loss is reflective of our ongoing long-term business and operating results.

Non-cash interest expense and other expenses related to convertible notes and other debt - We record the accretion of the debt discount related to the equity component and amortization of issuance costs as non-cash interest expense. We believe that excluding these costs provides meaningful supplemental information regarding operational performance and liquidity, along with enhancing investors' ability to view the Company's results from management's perspective. In addition, we believe excluding these costs from the non-GAAP measures facilitates comparisons to our historical operating results and comparisons to peer company operating results.

Discrete tax items and tax effect of non-GAAP adjustments -The income tax effect of non-GAAP adjustments relates to the tax effect of the adjustments that we incorporate into non-GAAP financial measures in order to provide a more meaningful measure of non-GAAP net income.

Depreciation- Depreciation expense, along with interest, tax and stock-based compensation expense, restructuring charges and amortization of intangible assets, is excluded from Adjusted EBITDA because we do not believe depreciation and the other items relate to the ordinary course of our business or are reflective of our underlying business performance.

Harmonic Inc.

Preliminary Condensed Consolidated Balance Sheets

(Unaudited, in thousands, except per share data)

April 2, December 31, 2020 2021

ASSETS

Current assets:

Cash and cash equivalents $ 100,777 $ 98,645

Accounts receivable, net 85,704 66,227

Inventories 35,539 35,031

Prepaid expenses and other current assets 38,647 38,132

Total current assets 260,667 238,035

Property and equipment, net 43,136 43,141

Operating lease right-of-use assets 25,751 27,556

Other non-current assets 38,308 39,117

Goodwill 241,847 243,674

Total assets $ 609,709 $ 591,523

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Convertible notes, current $ 36,143 $ -

Other debts, current 5,405 11,771

Accounts payable 36,148 23,543

Deferred revenue 63,851 54,294

Operating lease liabilities, current 7,032 7,354

Other current liabilities 43,986 50,333

Total current liabilities 192,565 147,295

Convertible notes, non-current 94,884 129,507

Other debts, non-current 15,415 10,086

Operating lease liabilities, non-current 24,548 26,071

Other non-current liabilities 20,963 20,262

Total liabilities $ 348,375 $ 333,221

Convertible notes 1,564 -

Stockholders' equity:

Preferred stock, $0.001 par value, 5,000shares authorized; no shares issued or - -outstanding

Common stock, $0.001 par value, 150,000 sharesauthorized; 100,993 and 98,204 shares issued 101 98and outstanding at April 2, 2021 andDecember 31, 2020, respectively

Additional paid-in capital 2,365,129 2,353,559

Accumulated deficit (2,107,335) (2,101,211)

Accumulated other comprehensive income 1,875 5,856

Total stockholders' equity 259,770 258,302

Total liabilities and stockholders' equity $ 609,709 $ 591,523

Harmonic Inc.

Preliminary Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except per share data)

Three months ended

April 2, 2021 March 27, 2020

Revenue:

Appliance and integration $ 79,976 $ 47,752

SaaS and service 31,600 30,665

Total net revenue 111,576 78,417

Cost of revenue:

Appliance and integration 42,619 26,287

SaaS and service 13,812 15,392

Total cost of revenue 56,431 41,679

Total gross profit 55,145 36,738

Operating expenses:

Research and development 23,528 22,123

Selling, general and administrative 34,911 31,218

Amortization of intangibles 507 770

Restructuring and related charges 43 676

Total operating expenses 58,989 54,787

Loss from operations (3,844) (18,049)

Interest expense, net (2,603) (2,903)

Other income (expense), net 1,019 (273)

Loss before income taxes (5,428) (21,225)

Provision for income taxes 696 729

Net loss $ (6,124) $ (21,954)

Net loss per share:

Basic and diluted $ (0.06) $ (0.23)

Shares used in per share calculations:

Basic and diluted 99,868 95,575

Harmonic Inc.

Preliminary Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)

Three months ended

April 2, March 27, 2021 2020

Cash flows from operating activities:

Net loss $ (6,124) $ (21,954)

Adjustments to reconcile net loss to net cash provided by (used in) operatingactivities:

Depreciation 3,057 2,843

Amortization of intangibles 507 1,655

Stock-based compensation 8,398 6,259

Amortization of convertible debt discount 1,532 1,835

Amortization of warrant 429 434

Foreign currency adjustments (2,609) (2,066)

Deferred income taxes 432 653

Provision for doubtful accounts and returns 1,089 331

Provision for excess and obsolete inventories 644 234

Other adjustments 143 121

Changes in operating assets and liabilities:

Accounts receivable (20,758) (5,068)

Inventories (1,119) (6,281)

Other assets (1,019) 10,579

Accounts payable 13,527 (242)

Deferred revenues 11,285 12,477

Other liabilities (7,736) (12,851)

Net cash provided by (used in) operating activities 1,678 (11,041)

Cash flows from investing activities:

Purchases of property and equipment (3,645) (11,224)

Net cash used in investing activities (3,645) (11,224)

Cash flows from financing activities:

Payment of convertible debt issuance costs - (35)

Repayment of other debts (108) (406)

Proceeds from common stock issued to employees 5,685 3,000

Payment of tax withholding obligations related to net share settlements of (913) (829)restricted stock units

Net cash provided by financing activities 4,664 1,730

Effect of exchange rate changes on cash and cash equivalents (565) (811)

Net increase (decrease) in cash and cash equivalents 2,132 (21,346)

Cash and cash equivalents at beginning of period 98,645 93,058

Cash and cash equivalents at end of period $ 100,777 $ 71,712

Harmonic Inc.

Preliminary GAAP Revenue Information

(Unaudited, in thousands, except percentages)

Three months ended

April 2, 2021 December 31, 2020 March 27, 2020

Geography

Americas $ 75,062 68 % $ 84,916 65 % $ 37,650 48 %

EMEA 27,607 24 % 34,825 26 % 27,816 35 %

APAC 8,907 8 % 11,787 9 % 12,951 17 %

Total $ 111,576 100 % $ 131,528 100 % $ 78,417 100 %

Market

Service Provider $ 53,660 48 % $ 66,673 51 % $ 43,759 56 %

Broadcast and Media 57,916 52 % 64,855 49 % 34,658 44 %

Total $ 111,576 100 % $ 131,528 100 % $ 78,417 100 %

Harmonic Inc.

Preliminary Segment Information

(Unaudited, in thousands, except percentages)

Three months ended April 2, 2021

Total Cable Segment Consolidated Video Access Measures Adjustments ^(1) GAAP Measures (non-GAAP)

Net revenue $ 70,331 $ 41,245 $ 111,576 $ - $ 111,576

Gross profit 38,774 17,408 56,182 (1,037) 55,145

Gross margin % 55.1 % 42.2 % 50.4 % 49.4 %

Operating income (loss) 3,772 1,296 5,068 (8,912) (3,844)

Operating margin % 5.4 % 3.1 % 4.5 % (3.4) %

Three months ended December 31, 2020

Total Cable Segment Consolidated Video Access Measures Adjustments ^(1) GAAP Measures (non-GAAP)

Net revenue $ 86,044 $ 45,484 $ 131,528 $ - $ 131,528

Gross profit 48,336 24,437 72,773 (1,211) 71,562

Gross margin % 56.2 % 53.7 % 55.3 % 54.4 %

Operating income (loss) 13,529 9,918 23,447 (6,672) 16,775

Operating margin % 15.7 % 21.8 % 17.8 % 12.8 %

Three months ended March 27, 2020

Total Cable Segment Consolidated Video Access Measures Adjustments ^(1) GAAP Measures (non-GAAP)

Net revenue $ 54,372 $ 24,045 $ 78,417 $ - $ 78,417

Gross profit 27,907 10,414 38,321 (1,583) 36,738

Gross margin % 51.3 % 43.3 % 48.9 % 46.8 %

Operating loss (6,267) (3,265) (9,532) (8,517) (18,049)

Operating margin % (11.5) % (13.6) % (12.2) % (23.0) %

(1) See "Use of Non-GAAP Financial Measures" above and "GAAP to Non-GAAPReconciliations" below.

Harmonic Inc.

GAAP to Non-GAAP Reconciliations (Unaudited)

(in thousands, except percentages and per share data)

Three months ended April 2, 2021

Gross Total Income Total Non- Net Income Revenue Profit Operating (Loss) from operating (Loss) Expense Operations expense, net

GAAP $ 111,576 $ 55,145 $ 58,989 $ (3,844) $ (1,584) $ (6,124)

Stock-based compensation - 1,073 (7,325) 8,398 - 8,398

Amortization of intangibles - - (507) 507 - 507

Restructuring and related charges - (36) (43) 7 - 7

Non-cash interest and other expenses related to convertible - - - - 1,532 1,532notes

Discrete tax items and tax effect of non-GAAP adjustments - - - - - 194

Total adjustments - 1,037 (7,875) 8,912 1,532 10,638

Non-GAAP $ 111,576 $ 56,182 $ 51,114 $ 5,068 $ (52) $ 4,514

As a % of revenue (GAAP) 49.4 % 52.9 % (3.4) % (1.4) % (5.5) %

As a % of revenue (Non-GAAP) 50.4 % 45.8 % 4.5 % - % 4.0 %

Diluted net income (loss) per share:

GAAP $ (0.06)

Non-GAAP $ 0.04

Shares used to compute diluted net income (loss) per share:

GAAP 99,868

Non-GAAP 103,190

Three months ended December 31, 2020

Gross Total Income from Total Non- Revenue Profit Operating Operations operating Net Income Expense expense, net

GAAP $ 131,528 $ 71,562 $ 54,787 $ 16,775 $ (3,349) $ 13,465

Stock-based compensation - 348 (3,955) 4,303 - 4,303

Amortization of intangibles - - (756) 756 - 756

Restructuring and related charges - 863 (750) 1,613 - 1,613

Loss on convertible debt extinguishment - - - - 528 528

Non-cash interest and other expenses related to convertible - - - - 1,607 1,607notes

Discrete tax items and tax effect of non-GAAP adjustments - - - - - (2,262)

Total adjustments - 1,211 (5,461) 6,672 2,135 6,545

Non-GAAP $ 131,528 $ 72,773 $ 49,326 $ 23,447 $ (1,214) $ 20,010

As a % of revenue (GAAP) 54.4 % 41.7 % 12.8 % (2.5) % 10.2 %

As a % of revenue (Non-GAAP) 55.3 % 37.5 % 17.8 % (0.9) % 15.2 %

Diluted net income per share:

GAAP $ 0.13

Non-GAAP $ 0.20

Shares used to compute diluted net income per share:

GAAP and Non-GAAP 100,316

Three months ended March 27, 2020

Gross Total Loss from Total Non- Revenue Profit Operating Operations operating Net Loss Expense expense, net

GAAP $ 78,417 $ 36,738 $ 54,787 $ (18,049) $ (3,176) $ (21,954)

Stock-based compensation - 771 (5,488) 6,259 - 6,259

Amortization of intangibles - 885 (770) 1,655 - 1,655

Restructuring and related charges - (73) (676) 603 - 603

Non-cash interest and other expenses related to convertible - - - - 1,835 1,835notes

Discrete tax items and tax effect of non-GAAP adjustments - - - - - 1,816

Total adjustments - 1,583 (6,934) 8,517 1,835 12,168

Non-GAAP $ 78,417 $ 38,321 $ 47,853 $ (9,532) $ (1,341) $ (9,786)

As a % of revenue (GAAP) 46.8 % 69.9 % (23.0) % (4.1) % (28.0) %

As a % of revenue (Non-GAAP) 48.9 % 61.0 % (12.2) % (1.7) % (12.5) %

Diluted net loss per share:

GAAP $ (0.23)

Non-GAAP $ (0.10)

Shares used to compute diluted net loss per share:

GAAP and Non-GAAP 95,575

Harmonic Inc.

Preliminary Adjusted EBITDA Reconciliation (Unaudited)

(In thousands)

Three months ended

April 2, December 31, March 27, 2021 2020 2020

Net income (loss) - GAAP $ (6,124) $ 13,465 $ (21,954)

Provision for (benefit from) income taxes 696 (39) 729

Interest expense, net 2,603 2,737 2,903

Depreciation 3,057 3,054 2,843

Amortization of intangibles 507 756 1,655

EBITDA 739 19,973 (13,824)

Adjustments

Stock-based compensation 8,398 4,303 6,259

Loss on convertible debt extinguishment - 528 -

Restructuring and related charges 7 1,613 603

Adjusted EBITDA $ 9,144 $ 26,417 $ (6,962)

Harmonic Inc.

GAAP to Non-GAAP Reconciliations on Financial Guidance

(In millions, except percentages and per share data)

Q2 2021 Financial Guidance

Total Operating Income (Loss) Total Non- Revenue Gross Profit Expense from Operations operating Net Income (Loss) Expense, net

GAAP $102.0 to $112.0 $49.2 to $56.2 $56.5 to $58.5 $(7.3) to $(2.3) $(2.8) $(10.9) to $(5.9)

Stock-based compensation expense - 0.2 (4.3) 4.5 - 4.5

Amortization of intangibles - - - - - -

Restructuring and related charges - 0.3 (0.2) 0.5 - 0.5

Non-cash interest and other expenses - - - - 1.5 1.5related to convertible notes

Tax effect of non-GAAP adjustments - - - - - $0.6 to $1.1

Total adjustments - 0.5 (4.5) 5.0 1.5 $7.1 to $7.6

Non-GAAP $102.0 to $112.0 $49.7 to $56.7 $52.0 to $54.0 $(2.3) to $2.7 $(1.3) $(3.3) to $1.3

As a % of revenue (GAAP) 48.2% to 50.2% 55.4% to 52.3% (7.2%) to (2.0)% (2.8)% to (2.5)% (10.7)% to (5.2)%

As a % of revenue (Non-GAAP) 48.7% to 50.6% 51.0% to 48.2% (2.3)% to 2.4% (1.3)% to (1.2)% (3.2)% to 1.1%

Diluted net income (loss) per share:

GAAP $(0.11) to $ (0.06)

Non-GAAP $(0.03) to $0.01

Shares used to compute diluted netincome (loss) per share:

GAAP 101.2

Non-GAAP 101.2 to 104.2

2021 Financial Guidance

Total Operating Income (Loss) Total Non- Revenue Gross Profit Expense from Operations operating Net Income (Loss) Expense, net

GAAP $435.0 to $480.0 $217.5 to $247.1 $231.5 to $240.5 $(14.0) to $6.6 $(10.2) $(27.0) to $(6.4)

Stock-based compensation expense - 2.0 (21.3) 23.3 - 23.3

Amortization of intangibles - - (0.5) 0.5 - 0.5

Restructuring and related charges - 0.5 (0.7) 1.2 - 1.2

Non-cash interest and other expenses - - - - 6.3 6.3related to convertible notes

Tax effect of non-GAAP adjustments - - - - - $0.0 to $2.1

Total adjustments - 2.5 (22.5) 25.0 6.3 $31.3 to $33.4

Non-GAAP $435.0 to $480.0 $220.0 to $249.6 $209.0 to $218.0 $11.0 to $31.6 $(3.9) $6.4 to $24.9

As a % of revenue (GAAP) 50.0% to 51.5% 53.2% to 50.1% (3.2)% to 1.4% (2.3)% to (2.1)% (6.2)% to (1.3%)

As a % of revenue (Non-GAAP) 50.6% to 52.0% 48.0% to 45.4% 2.5% to 6.6% (0.9)% to (0.8)% 1.5% to 5.2%

Diluted net income (loss) per share:

GAAP $(0.27) to $ (0.06)

Non-GAAP $0.06 to $0.24

Shares used to compute diluted netincome (loss) per share:

GAAP 101.4

Non-GAAP 104.7

Harmonic Inc.

Adjusted EBITDA Reconciliation on Financial Guidance (Unaudited)

(In millions)

Q2 2021 Financial 2021 Financial Guidance Guidance

Net loss - GAAP $(10.9) to $(5.9) $(27.0) to $(6.4)

Provision for income taxes 0.7 2.9

Interest expense, net 2.5 10.2

Depreciation 3.5 14.0

Amortization of intangibles - 0.5

EBITDA $(4.2) to $0.8 $0.6 to $21.2

Adjustments

Stock-based compensation 4.5 23.3

Restructuring and related charges 0.5 1.2

Adjusted EBITDA $0.8 to $5.8 $25.1 to $45.7

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SOURCE Harmonic Inc.