PR Newswire | Nov 1, 2021 04:06PM EDT

11/01 15:05 CDT

Harmonic Announces Third Quarter 2021 ResultsTotal revenue up 33%, Cable Access revenue up 43%, Video revenue up 26% year over year SAN JOSE, Calif., Nov. 1, 2021

SAN JOSE, Calif., Nov. 1, 2021 /PRNewswire/ -- Harmonic Inc. (NASDAQ: HLIT) today announced its unaudited results for the third quarter of 2021.

"Harmonic delivered another strong quarter, with total revenue up 33% year over year and solid operating profit, driven by continued execution of our strategic growth initiatives," said Patrick Harshman, president and chief executive officer of Harmonic. "Strong market momentum in both segments, solid backlog and deferred revenue and an increasingly robust cash position provide a strong foundation for continued growth through the balance of this year and into 2022."

Q3Financial and Business Highlights

Financial

* Revenue: $126.3 million, up 33% year over year * Cable Access segment revenue: $57.6 million, up 43% year over year * Video segment revenue: $68.7 million, up 26% year over year

* Gross margin: GAAP 52.4% and non-GAAP 52.8%, compared to GAAP 51.6% and non-GAAP 52.2% in the year ago period * Cable Access segment gross margin: 42.0% compared to 48.9% in the year ago period * Video segment gross margin: 61.9% compared to 54.6% in the year ago period

* Operating income (loss): GAAP income $5.4 million and non-GAAP income $11.8 million, compared to GAAP loss $1.6 and non-GAAP income $4.2 million in the year ago period * Adjusted EBITDA: $14.8 million income compared to $7.2 million income in the year ago period * Net income (loss): GAAP net income $1.5 million and non-GAAP net income of $9.5 million, compared to GAAP net loss $5.4 million and non-GAAP net income $2.6 million in the year ago period * EPS: GAAP net income per share of $0.01 and non-GAAP net income per share of $0.09, compared to GAAP net loss per share of $0.06 and non-GAAP net income per share of $0.03 in the year ago period * Cash: $128.4 million, up $57.6 million year over year

Business

* CableOS(r) solution commercially deployed with 68 customers, up 79% year over year * CableOS deployments scaled to 3.9 million served cable modems, up 77% year over year * VOS(r) streaming SaaS customer base up 36% year over year; SaaS revenue increased 69% year over year

Select Financial Information

GAAP Non-GAAP

Key Financial ResultsQ3 2021 Q2 2021 Q3 2020 Q3 2021 Q2 2021 Q3 2020

(in millions, except per share data)

Net revenue $126.3$113.4 $94.9 $126.3$113.4$94.9

Net income (loss) $1.5 $(2.0) $(5.4) $9.5 $4.8 $2.6

Diluted EPS $0.01 $(0.02)$(0.06)$0.09 $0.05 $0.03



Other Financial Information Q3 2021 Q2 2021 Q3 2020

(in millions)

Adjusted EBITDA for the quarter $14.8 $9.5 $7.2

Bookings for the quarter $114.3$186.9$100.7

Backlog and deferred revenue as of quarter end $333.3$347.2$216.2

Cash and cash equivalents as of quarter end $128.4$115.2$70.8

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

Q4 2021 GAAP Financial Guidance ^(1)

Low High

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

Net revenue $82.0 $65.0 $- $147.0 $87.0 $70.0 $- $157.0

Gross margin % 54.5 %40.0 %(0.5) % 47.3 %55.5 %41.0 %(0.4) % 48.6 %

Operating income (loss) $7.2 $6.0 $(5.9) $7.3 $10.3 $7.7 $(5.9) $12.1

Tax expense ^(3) $(1.1) $(1.1)

EPS ^(3) $0.03 $0.07

Shares ^(3) 106.9 106.9

Cash^ (3) $125.0 $135.0

(1) Components may not sum to total due to rounding.

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

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

2021 GAAP Financial Guidance ^(1)

Low High

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

Net revenue $285.0 $214.0 $ - $499.0 $290.0 $219.0 $ - $509.0

Gross margin % 57.3 %42.6 %(0.6) % 50.4 %57.7 %42.9 %(0.5) % 50.8 %

Operating income (loss) $20.4 $16.2 $ (25.7) $10.9 $23.5 $17.9 $ (25.7) $15.7

Tax expense ^(3) $(4.2) $(4.2)

EPS ^(3) $(0.04) $0.01

Shares ^(3) 101.5 105.1

Cash^ (3) $125.0 $135.0

(1) Components may not sum to total due to rounding

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

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

Q4 2021 Non-GAAP Financial Guidance ^(1)

Low High

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

Net revenue $82.0 $65.0 $147.0 $87.0 $70.0 $157.0

Gross margin % 54.5 %40.0 %47.8 %55.5 %41.0 %49.0 %

Adjusted EBITDA $9.6 $7.4 $17.0 $12.7 $9.1 $21.8

Tax rate ^(2) 10.0 % 10.0 %

EPS ^(2) $0.10 $0.14

Shares ^(2) 106.9 106.9

Cash^ (2) $125.0 $135.0

(1) See "Use of Non-GAAP Financial Measures" and "GAAP to Non-GAAPReconciliations" below. Components may not sum to total due to rounding.

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

2021 Non-GAAP Financial Guidance ^(1)

Low High

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

Net revenue $285.0 $ 214.0 $499.0 $290.0 $ 219.0 $509.0

Gross margin % 57.3 %42.6 % 51.0 %57.7 %42.9 % 51.3 %

Adjusted EBITDA $28.9 $ 21.6 $50.5 $32.0 $ 23.3 $55.3

Tax rate ^(2) 10.0 % 10.0 %

EPS ^(2) $0.28 $0.32

Shares ^(2) 105.1 105.1

Cash^ (2) $125.0 $135.0

(1) See "Use of Non-GAAP Financial Measures" and "GAAP to Non-GAAPReconciliations" below. Components may not sum to total due to rounding.

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

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, November 1, 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 7917716). 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 7917716).

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 second quarter of fiscal 2020, we recorded a debt extinguishment loss of $0.8 million resulting from the exchange of $37.7 million in aggregate principal amount of our convertible notes due in 2020 for $37.7 million in aggregate principal amount of convertible notes due in 2022. 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)



October 1, 2021December 31, 2020

ASSETS

Current assets:

Cash and cash equivalents $ 128,434 $98,645

Accounts receivable, net 75,442 66,227

Inventories 51,856 35,031

Prepaid expenses and other current assets 35,443 38,132

Total current assets 291,175 238,035

Property and equipment, net 43,848 43,141

Operating lease right-of-use assets 29,216 27,556

Other non-current assets 38,325 39,117

Goodwill 241,302 243,674

Total assets $ 643,866 $591,523



LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Convertible debt, current $ 36,592 $-

Other debts, current 5,028 11,771

Accounts payable 32,352 23,543

Deferred revenue 58,106 54,294

Operating lease liabilities, current 6,698 7,354

Other current liabilities 64,963 50,333

Total current liabilities 203,739 147,295

Convertible debt, non-current 97,563 129,507

Other debts, non-current 13,538 10,086

Operating lease liabilities, non-current 28,049 26,071

Other non-current liabilities 26,181 20,262

Total liabilities $ 369,070 $333,221



Convertible debt 1,115 -

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; 102,549 and 98,204 shares issued and outstanding at October 1, 2021 and December 31, 2020, 103 98 respectively

Additional paid-in capital 2,381,177 2,353,559

Accumulated deficit (2,107,814) (2,101,211)

Accumulated other comprehensive income 215 5,856

Total stockholders' equity 273,681 258,302

Total liabilities and stockholders' equity $ 643,866 $591,523

Harmonic Inc.

Preliminary Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except per share data)



Three Months Ended Nine Months Ended

October 1, 2021September 25, 2020October 1, 2021September 25, 2020

Revenue:

Appliance and integration $91,853 $63,251 $250,427 $153,227

SaaS and service 34,468 31,641 100,918 94,076

Total net revenue 126,321 94,892 351,345 247,303

Cost of revenue:

Appliance and integration 47,326 32,082 130,310 81,153

SaaS and service 12,841 13,886 39,231 42,715

Total cost of revenue 60,167 45,968 169,541 123,868

Total gross profit 66,154 48,924 181,804 123,435

Operating expenses:

Research and development 26,552 20,206 74,863 61,827

Selling, general and administrative 34,231 28,773 102,728 86,996

Amortization of intangibles - 752 507 2,264

Restructuring and related charges - 814 43 1,572

Total operating expenses 60,783 50,545 178,141 152,659

Income (loss) from operations 5,371 (1,621) 3,663 (29,224)

Interest expense, net (2,686) (2,807) (7,919) (8,772)

Loss on convertible debt extinguishment- - - (834)

Other income (expense), net (213) (167) 659 (813)

Income (loss) before income taxes 2,472 (4,595) (3,597) (39,643)

Provision for income taxes 942 786 3,006 3,093

Net income (loss) $1,530 $(5,381) $(6,603) $(42,736)



Net income (loss) per share:

Basic $0.01 $(0.06) $(0.07) $(0.44)

Diluted $0.01 $(0.06) $(0.07) $(0.44)

Shares used in per share calculations:

Basic 102,099 97,563 101,057 96,623

Diluted 106,421 97,563 101,057 96,623

Harmonic Inc.

Preliminary Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)



Nine Months Ended

October 1, 2021September 25, 2020

Cash flows from operating activities:

Net loss $ (6,603) $ (42,736)

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

Depreciation 9,395 8,683

Amortization of intangibles 507 3,214

Stock-based compensation 18,863 13,737

Amortization of convertible debt discount 4,685 5,451

Amortization of warrant 1,302 1,307

Foreign currency remeasurement (3,435) 2,537

Loss on convertible debt extinguishment - 834

Deferred income taxes 1,268 1,527

Provision for expected credit losses and returns 3,049 1,966

Provision for excess and obsolete inventories 1,849 1,390

Other adjustments 215 177

Changes in operating assets and liabilities:

Accounts receivable (12,470) 5,436

Inventories (18,783) (9,301)

Other assets 2,614 23,685

Accounts payable 10,144 (11,047)

Deferred revenues 9,978 6,066

Other liabilities 11,078 (15,345)

Net cash provided by (used in) operating activities 33,656 (2,419)

Cash flows from investing activities:

Purchases of property and equipment (10,570) (26,176)

Net cash used in investing activities (10,570) (26,176)

Cash flows from financing activities:

Payment of convertible debt - (25)

Payment of convertible debt issuance costs - (672)

Proceeds from other debts 3,861 9,398

Repayment of other debts (6,070) (6,342)

Proceeds from common stock issued to employees 11,401 5,227

Payment of tax withholding obligations related to net share settlements of (1,619) (1,384) restricted stock units

Net cash provided by financing activities 7,573 6,202

Effect of exchange rate changes on cash and cash equivalents (870) 152

Net increase (decrease) in cash and cash equivalents 29,789 (22,241)

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

Cash and cash equivalents at end of period $ 128,434 $ 70,817

Harmonic Inc.

Preliminary GAAP Revenue Information

(Unaudited, in thousands, except percentages)



Three Months Ended

October 1, 2021 July 2, 2021 September 25, 2020

Geography

Americas $86,215 68 %$71,525 63 %$ 54,521 58 %

EMEA 30,283 24 %28,441 25 %29,771 31 %

APAC 9,823 8 %13,482 12 %10,600 11 %

Total $126,321100%$113,448100%$ 94,892 100%



Market

Service Provider $70,157 56 %$68,929 61 %$ 59,083 62 %

Broadcast and Media56,164 44 %44,519 39 %35,809 38 %

Total $126,321100%$113,448100%$ 94,892 100%

Nine Months Ended

October 1, 2021 September 25, 2020

Geography

Americas $232,80266 %$ 134,478 55 %

EMEA 86,331 25 %82,301 33 %

APAC 32,212 9 %30,524 12 %

Total $351,345100%$ 247,303 100%



Market

Service Provider $192,74655 %$ 145,011 59 %

Broadcast and Media158,599 45 %102,292 41 %

Total $351,345100%$ 247,303 100%

Harmonic Inc.

Preliminary Segment Information

(Unaudited, in thousands, except percentages)



Three Months Ended October 1, 2021

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

Net revenue $68,729 $57,592 $ 126,321 $ - $ 126,321

Gross profit 42,534 24,165 66,699 (545) 66,154

Gross margin % 61.9 %42.0 %52.8 % 52.4 %

Operating income (loss)7,904 3,903 11,807 (6,436) 5,371

Operating margin % 11.5 %6.8 %9.3 % 4.3 %



Three Months Ended July 2, 2021

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

Net revenue $63,355 $50,093 $ 113,448 $ - $ 113,448

Gross profit 37,571 23,538 61,109 (604) 60,505

Gross margin % 59.3 %47.0 %53.9 % 53.3 %

Operating income (loss)1,559 4,992 6,551 (4,415) 2,136

Operating margin % 2.5 %10.0 %5.8 % 1.9 %



Three Months Ended September 25, 2020

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

Net revenue $54,641 $40,251 $ 94,892 $ - $ 94,892

Gross profit 29,825 19,682 49,507 (583) 48,924

Gross margin % 54.6 %48.9 %52.2 % 51.6 %

Operating loss (1,699) 5,876 4,177 (5,798) (1,621)

Operating margin % (3.1) %14.6 %4.4 % (1.7) %



Nine Months Ended October 1, 2021

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

Net revenue $202,415 $148,930 $ 351,345 $ - $ 351,345

Gross profit 118,879 65,111 183,990 (2,186) 181,804

Gross margin % 58.7 %43.7 %52.4 % 51.7 %

Operating income (loss)13,235 10,191 23,426 (19,763) 3,663

Operating margin % 6.5 %6.8 %6.7 % 1.0 %



Nine Months Ended September 25, 2020

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

Net revenue $156,466 $90,837 $ 247,303 $ - $ 247,303

Gross profit 83,756 42,224 125,980 (2,545) 123,435

Gross margin % 53.5 %46.5 %50.9 % 49.9 %

Operating income (loss)(12,203) 1,733 (10,470) (18,754) (29,224)

Operating margin % (7.8) %1.9 %(4.2) % (11.8) %



(1) See "Use of Non-GAAP Financial Measures" above 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 October 1, 2021

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

GAAP $126,321$ 66,154 $60,783 $5,371 $(2,899) $1,530

Stock-based compensation - 545 (5,891) 6,436 - 6,436

Non-cash interest and other expenses related to convertible- - - - 1,592 1,592 notes

Discrete tax items and tax effect of non-GAAP adjustments - - - - - (108)

Total adjustments - 545 (5,891) 6,436 1,592 7,920

Non-GAAP $126,321$ 66,699 $54,892 $11,807 $(1,307) $9,450

As a % of revenue (GAAP) 52.4 % 48.1 %4.3 %(2.3) %1.2 %

As a % of revenue (Non-GAAP) 52.8 % 43.5 %9.3 %(1.0) %7.5 %

Diluted net income per share:

GAAP $0.01

Non-GAAP $0.09

Shares used in per share calculation:

GAAP and Non-GAAP 106,421

Three Months Ended July 2, 2021

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

GAAP $113,448$ 60,505 $58,369 $2,136 $(2,777) $(2,009)

Stock-based compensation - 222 (3,811) 4,033 - 4,033

Restructuring and related charges - 382 - 382 - 382

Non-cash interest and other expenses related to convertible- - - - 1,560 1,560 notes

Discrete tax items and tax effect of non-GAAP adjustments - - - - - 836

Total adjustments - 604 (3,811) 4,415 1,560 6,811

Non-GAAP $113,448$ 61,109 $54,558 $6,551 $(1,217) $4,802

As a % of revenue (GAAP) 53.3 % 51.5 %1.9 %(2.4) %(1.8) %

As a % of revenue (Non-GAAP) 53.9 % 48.1 %5.8 %(1.1) %4.2 %

Diluted net income (loss) per share:

GAAP $(0.02)

Non-GAAP $0.05

Shares used in per share calculation:

GAAP 101,218

Non-GAAP 103,825

Three Months Ended September 25, 2020

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

GAAP $94,892 $ 48,924 $50,545 $(1,621) $(2,974) $(5,381)

Stock-based compensation - 281 (3,649) 3,930 - 3,930

Amortization of intangibles - - (752) 752 - 752

Restructuring and related charges - 302 (814) 1,116 - 1,116

Non-cash interest and other expenses related to convertible- - - - 1,666 1,666 notes

Discrete tax items and tax effect of non-GAAP adjustments - - - - - 499

Total adjustments - 583 (5,215) 5,798 1,666 7,963

Non-GAAP $94,892 $ 49,507 $45,330 $4,177 $(1,308) $2,582

As a % of revenue (GAAP) 51.6 % 53.3 %(1.7) %(3.1) %(5.7) %

As a % of revenue (Non-GAAP) 52.2 % 47.8 %4.4 %(1.4) %2.7 %

Diluted net income (loss) per share:

GAAP $(0.06)

Non-GAAP $0.03

Shares used in per share calculation:

GAAP 97,563

Non-GAAP 98,361

Nine Months Ended October 1, 2021

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

GAAP $351,345$ 181,804 $178,141 $3,663 $(7,260) $(6,603)

Stock-based compensation - 1,840 (17,027) 18,867 - 18,867

Amortization of intangibles - (507) 507 - 507

Restructuring and related charges - 346 (43) 389 - 389

Non-cash interest and other expenses related to convertible- - - - 4,684 4,684 notes

Discrete tax items and tax effect of non-GAAP adjustments - - - - - 922

Total adjustments - 2,186 (17,577) 19,763 4,684 25,369

Non-GAAP $351,345$ 183,990 $160,564 $23,426 $(2,576) $18,766

As a % of revenue (GAAP) 51.7 % 50.7 %1.0 %(2.1) %(1.9) %

As a % of revenue (Non-GAAP) 52.4 % 45.7 %6.7 %(0.7) %5.3 %

Diluted net income (loss) per share:

GAAP $(0.07)

Non-GAAP $0.18

Shares used in per share calculation:

GAAP 101,057

Non-GAAP 104,474

Nine Months Ended September 25, 2020

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

GAAP $247,303$ 123,435 $152,659 $(29,224) $(10,419) $(42,736)

Stock-based compensation - 1,364 (12,373) 13,737 - 13,737

Amortization of intangibles - 950 (2,264) 3,214 - 3,214

Restructuring and related charges - 231 (1,572) 1,803 - 1,803

Loss on convertible debt extinguishment - - - - 834 834

Non-cash interest and other expenses related to convertible- - - - 5,451 5,451 notes

Discrete tax items and tax effect of non-GAAP adjustments - - - - - 4,553

Total adjustments - 2,545 (16,209) 18,754 6,285 29,592

Non-GAAP $247,303$ 125,980 $136,450 $(10,470) $(4,134) $(13,144)

As a % of revenue (GAAP) 49.9 % 61.7 %(11.8) %(4.2) %(17.3) %

As a % of revenue (Non-GAAP) 50.9 % 55.2 %(4.2) %(1.7) %(5.3) %

Diluted net loss per share:

GAAP $(0.44)

Non-GAAP $(0.14)

Shares used in per share calculation:

GAAP and Non-GAAP 96,623

Harmonic Inc.

Preliminary Adjusted EBITDA Reconciliation (Unaudited)

(In thousands)



Three Months Ended

October 1, July 2, September 25, 2021 2021 2020

Net income (loss) - GAAP $1,530 $(2,009) $ (5,381)

Provision for income taxes 942 1,368 786

Interest expense, net 2,686 2,630 2,807

Depreciation 3,231 3,107 3,148

Amortization of intangibles - - 752

EBITDA 8,389 5,096 2,112



Adjustments

Stock-based compensation 6,436 4,033 3,930

Restructuring and related - 382 1,116 charges

Adjusted EBITDA $14,825 $9,511 $ 7,158





Nine Months Ended

October 1, 2021September 25, 2020

Net loss - GAAP $(6,603) $(42,736)

Provision for income taxes 3,006 3,093

Interest expense, net 7,919 8,772

Depreciation 9,395 8,683

Amortization of intangibles 507 3,214

EBITDA 14,224 (18,974)



Adjustments

Stock-based compensation 18,867 13,737

Loss on convertible debt extinguishment- 834

Restructuring and related charges 389 1,803

Adjusted EBITDA $33,480 $(2,600)

Q4 2021 Financial Guidance ^(1)

Revenue Gross Profit Income from Net Income Operations

GAAP $147.0to$157.0$69.5to$76.3$7.3 to$12.1$3.0 to$7.8

Stock-based compensation expense - 0.3 5.1 5.1

Restructuring and related charges - 0.4 0.8 0.8

Non-cash interest and other expenses related to convertible notes- - - 1.6

Tax effect of non-GAAP adjustments - - - $(0.1)to$(0.5)

Total adjustments - 0.7 5.9 $7.4 to$7.0

Non-GAAP $147.0to$157.0$70.2to$77.0$13.2to$18.0$10.4 to$14.8

As a % of revenue (GAAP) 47.3%to48.6%5.0% to7.7% 2.0% to5.0%

As a % of revenue (Non-GAAP) 47.8%to49.0%9.0% to11.5%7.1% to9.4%

Diluted net income per share:

GAAP $0.03 to$0.07

Non-GAAP $0.10 to$0.14

Shares used in per share calculation:

GAAP and Non-GAAP 106.9



(1) Components may not sum to total due to rounding.

2021 Financial Guidance ^(1)

Revenue Gross Profit Income from Net Income (Loss) Operations

GAAP $498.0to$508.0$251.2to$258.0$10.9to$15.7$(3.7) to $1.1

Stock-based compensation expense - 2.2 24.0 24.0

Amortization of intangibles - - 0.5 0.5

Restructuring and related charges - 0.7 1.2 1.2

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

Tax effect of non-GAAP adjustments - - - $0.9 to $0.5

Total adjustments - 2.9 25.7 $32.9 to $32.5

Non-GAAP $498.0to$508.0$254.1to$260.9$36.6to$41.4$29.2 to $33.6

As a % of revenue (GAAP) 50.4% to50.8% 2.2% to3.1% (0.7)% to 0.2%

As a % of revenue (Non-GAAP) 51.0% to51.4% 7.3% to8.1% 5.9% to 6.6%

Diluted net income (loss) per share:

GAAP $(0.04)to $0.01

Non-GAAP $0.28 to $0.32

Shares used in per share calculation:

GAAP 101.5 to 105.1

Non-GAAP 105.1



(1) Components may not sum to total due to rounding.

Harmonic Inc.

Adjusted EBITDA Reconciliation on Financial Guidance (Unaudited)^(1)

(In millions)



Q4 2021 Financial 2021 Financial Guidance Guidance

Net income (loss) - GAAP $3.0 to$7.8 $(3.7) to$1.1

Provision for income taxes 1.1 4.2

Interest expense, net 2.6 10.5

Depreciation 4.4 13.8

Amortization of intangibles - 0.5

EBITDA $11.1 to$15.9 $25.3 to$30.1



Adjustments

Stock-based compensation 5.1 24.0

Restructuring and related charges 0.8 1.2

Adjusted EBITDA $17.0 to$21.8 $50.5 to$55.3



(1) Components may not sum to total due to rounding.

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SOURCE Harmonic Inc.