PR Newswire | Jan 31, 2022 04:06PM EST

01/31 15:05 CST

Harmonic Announces Fourth Quarter and Fiscal 2021 ResultsRecord quarterly revenue, up 18%, and backlog and deferred revenue, up 52%, year over year SAN JOSE, Calif., Jan. 31, 2022

SAN JOSE, Calif., Jan. 31, 2022 /PRNewswire/ -- Harmonic Inc. (NASDAQ: HLIT) today announced its unaudited results for the fourth quarter and fiscal year ended December 31, 2021.

"Harmonic ended 2021 with exceptional quarterly results, including record revenue and bookings", said Patrick Harshman, president and chief executive officer of Harmonic. "Our results reflect continuing strong sales growth in our Cable Access segment and solid operating profit in our transforming Video segment. We exited the year with record backlog and deferred revenue and expanding customer relationships, providing Harmonic with a strong foundation for sustained momentum as we enter 2022 and continue to execute on our video streaming and broadband cable access growth strategies."

Q4Financial and Business Highlights

Financial

* Revenue: $155.8 million, up 18% year over year * Cable Access segment revenue: $69.7 million, up 53% year over year * Video segment revenue: $86.1 million, flat year over year

* Gross margin: GAAP 50.0% and non-GAAP 50.5%, compared to GAAP 54.4% and non-GAAP 55.3% in the year ago period * Cable Access segment gross margin: 40.3% compared to 53.7% in the year ago period * Video segment gross margin: 58.8% compared to 56.2% in the year ago period

* Operating income: GAAP income $15.1 million and non-GAAP income $20.6 million, compared to GAAP income $16.8 million and non-GAAP income $23.4 million in the year ago period * Adjusted EBITDA: $23.8 million compared to $26.4 million in the year ago period * Net income: GAAP net income $19.9 million and non-GAAP net income of $17.6 million, compared to GAAP net income $13.5 million and non-GAAP net income $20.0 million in the year ago period * EPS: GAAP net income per share of $0.18 and non-GAAP net income per share of $0.16, compared to GAAP net income per share of $0.13 and non-GAAP net income per share of $0.20 in the year ago period * Cash: $133.4 million, up $34.8 million year over year

Business

* CableOS(r) solution commercially deployed with 73 customers, up 66% year over year * CableOS deployments scaled to 4.8 million served cable modems, up 82% year over year * VOS(r) streaming revenue up 56.5% year over year; streaming SaaS revenue up 133% year over year

Select Financial Information

GAAP Non-GAAP

Key Financial ResultsQ4 2021 Q3 2021 Q4 2020 Q4 2021 Q3 2021 Q4 2020

(in millions, except per share data)

Net revenue $ 155.8 $ 126.3 $ 131.5 $ 155.8 $ 126.3 $ 131.5

Net income $ 19.9$ 1.5$ 13.5$ 17.6$ 9.5$ 20.0

Diluted EPS $ 0.18$ 0.01 $ 0.13$ 0.16$ 0.09 $ 0.20



Other Financial Information Q4 2021 Q3 2021 Q4 2020

(in millions)

Adjusted EBITDA for the quarter $ 23.8$ 14.8 $ 26.4

Bookings for the quarter $ 267.3 $ 114.3 $ 206.4

Backlog and deferred revenue as of quarter end $ 441.0 $ 333.3 $ 290.5

Cash and cash equivalents as of quarter end $ 133.4 $ 128.4 $ 98.6

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

Q1 2022 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 $ 64.0 $ 70.0 $ - $ 134.0 $ 69.0 $ 80.0 $ - $ 149.0

Gross margin % 56.0 % 36.0 % (0.9) % 44.7 % 57.0 % 38.0 % (0.8) % 46.0 %

Gross profit $ 35.8 $ 25.2 $ (1.1) $ 59.9 $ 39.3 $ 30.4 $ (1.1) $ 68.6

Operating expenses $ 37.0 $ 22.0 $ 8.6 $ 67.6 $ 38.0 $ 23.0 $ 8.6 $ 69.6

Operating income (loss) $ (1.2)$ 3.2$ (9.7) $ (7.7)$ 1.3$ 7.4$ (9.7) $ (1.0)

Tax expense ^(3) $ (1.8) $ (1.8)

EPS ^(3) $ (0.10) $ (0.04)

Shares ^(3) 104.6 104.6

Cash^ (3) $ 110.0 $ 120.0

(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.

2022 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 $ 275.0 $ 295.0 $ - $ 570.0 $ 289.0 $ 307.0 $ - $ 596.0

Gross margin % 56.5 % 41.0 % (0.5) % 48.0 % 58.3 % 43.6 % (0.4) % 50.3 %

Gross profit $ 155.4 $ 121.0 $ (2.6) $ 273.8 $ 168.5 $ 133.9 $ (2.6) $ 299.8

Operating expenses $ 146.0 $ 92.0$ 28.3 $ 266.3 $ 150.0 $ 96.0$ 28.3 $ 274.3

Operating income $ 9.4$ 29.0$ (30.9) $ 7.5$ 18.5$ 37.9$ (30.9) $ 25.5

Tax expense ^(3) $ (7.4) $ (7.4)

EPS ^(3) $ (0.34) $ (0.17)

Shares ^(3) 106.0 106.0

Cash^ (3) $ 100.0 $ 110.0

(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.

Q1 2022 Non-GAAP Financial Guidance ^(1)

Low High

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

Net revenue $ 64.0 $ 70.0 $ 134.0 $ 69.0 $ 80.0 $ 149.0

Gross margin % 56.0 % 36.0 % 45.6 % 57.0 % 38.0 % 46.8 %

Gross profit $ 35.8 $ 25.2 $ 61.0 $ 39.3 $ 30.4 $ 69.7

Operating expenses $ 37.0 $ 22.0 $ 59.0 $ 38.0 $ 23.0 $ 61.0

Adjusted EBITDA $ 0.3$ 4.3$ 4.6$ 2.8$ 8.5$ 11.3

Tax rate ^(2) 13.0 % 13.0 %

EPS ^(2) $ 0.01 $ 0.06

Shares ^(2) 111.7 111.7

Cash^ (2) $ 110.0 $ 120.0

(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.

2022 Non-GAAP Financial Guidance ^(1)

Low High

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

Net revenue $ 275.0 $ 295.0 $ 570.0 $ 289.0 $ 307.0 $ 596.0

Gross margin % 56.5 % 41.0 % 48.5 % 58.3 % 43.6 % 50.7 %

Gross profit $ 155.4 $ 121.0 $ 276.4 $ 168.5 $ 133.9 $ 302.4

Operating expenses $ 146.0 $ 92.0$ 238.0 $ 150.0 $ 96.0$ 246.0

Adjusted EBITDA $ 15.0$ 33.9$ 48.9$ 24.1$ 42.8$ 66.9

Tax rate ^(2) 13.0 % 13.0 %

EPS ^(2) $ 0.26 $ 0.40

Shares ^(2) 112.6 112.6

Cash^ (2) $ 100.0 $ 110.0

(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, January 31, 2022. 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 4465157). 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 4465157).

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 resulting from the conversion and settlement of the remaining $8.1 million of our convertible notes due in December 2020. 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 these losses from our non-GAAP financial measures because we do not believe the losses are 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)



December 31, 2021 December 31, 2020

ASSETS

Current assets:

Cash and cash equivalents $ 133,431 $ 98,645

Accounts receivable, net 88,529 66,227

Inventories 71,195 35,031

Prepaid expenses and other current assets 29,972 38,132

Total current assets 323,127 238,035

Property and equipment, net 42,721 43,141

Operating lease right-of-use assets 30,968 27,556

Other non-current assets 56,657 39,117

Goodwill 240,213 243,674

Total assets $ 693,686 $ 591,523



LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Convertible debt, current $ 36,824$ -

Other debts, current 4,992 11,771

Accounts payable 64,429 23,543

Deferred revenue 57,226 54,294

Operating lease liabilities, current 7,346 7,354

Other current liabilities 53,644 50,333

Total current liabilities 224,461 147,295

Convertible debt, non-current 98,941 129,507

Other debts, non-current 12,989 10,086

Operating lease liabilities, non-current 29,120 26,071

Other non-current liabilities 31,379 20,262

Total liabilities $ 396,890 $ 333,221



Convertible debt 883 -

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; 102,959 and 98,204 shares issued and outstanding at December 31, 2021 and December 31, 2020, 103 98 respectively

Additional paid-in capital 2,387,039 2,353,559

Accumulated deficit (2,087,957) (2,101,211)

Accumulated other comprehensive income (loss) (3,272) 5,856

Total stockholders' equity 295,913 258,302

Total liabilities and stockholders' equity $ 693,686 $ 591,523

Harmonic Inc.

Preliminary Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except per share data)



Three Months Ended Year Ended

December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020

Revenue:

Appliance and integration $ 119,340 $ 98,787 $ 369,767 $ 252,014

SaaS and service 36,464 32,741 137,382 126,817

Total net revenue 155,804 131,528 507,149 378,831

Cost of revenue:

Appliance and integration 65,135 45,795 195,445 126,948

SaaS and service 12,731 14,171 51,962 56,886

Total cost of revenue 77,866 59,966 247,407 183,834

Total gross profit 77,938 71,562 259,742 194,997

Operating expenses:

Research and development 27,368 20,667 102,231 82,494

Selling, general and administrative 35,357 32,615 138,085 119,611

Amortization of intangibles - 755 507 3,019

Restructuring and related charges 67 750 110 2,322

Total operating expenses 62,792 54,787 240,933 207,446

Income (loss) from operations 15,146 16,775 18,809 (12,449)

Interest expense, net (2,706) (2,737) (10,625) (11,509)

Loss on convertible debt extinguishment - (528) - (1,362)

Other income (expense), net 28 (84) 687 (897)

Income (loss) before income taxes 12,468 13,426 8,871 (26,217)

Provision for (benefit from) income taxes(7,389) (39) (4,383) 3,054

Net income (loss) $ 19,857 $ 13,465 $ 13,254 $ (29,271)



Net income (loss) per share:

Basic $ 0.19$ 0.14$ 0.13$ (0.30)

Diluted $ 0.18$ 0.13$ 0.12$ (0.30)

Shares used in per share calculations:

Basic 102,768 97,938 101,484 96,971

Diluted 110,474 100,316 106,171 96,971

Harmonic Inc.

Preliminary Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)



Year Ended

December 31, 2021 December 31, 2020

Cash flows from operating activities:

Net income (loss) $ 13,254$ (29,271)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation 12,546 11,737

Amortization of intangibles 507 3,970

Stock-based compensation 24,056 18,040

Amortization of convertible debt discount 6,308 7,058

Amortization of warrant 1,741 1,746

Foreign currency remeasurement (5,126) 6,391

Loss on convertible debt extinguishment - 1,362

Deferred income taxes (6,197) (105)

Provision for doubtful accounts and returns 4,142 1,666

Provision for excess and obsolete inventories 3,460 1,847

Other non-cash adjustments, net 181 409

Changes in operating assets and liabilities:

Accounts receivable (26,722) 21,186

Inventories (39,338) (8,195)

Other assets (3,096) 11,556

Accounts payable 42,303 (18,173)

Deferred revenues 15,014 19,751

Other liabilities (2,016) (11,812)

Net cash provided by operating activities 41,017 39,163

Cash flows from investing activities:

Purchases of property and equipment (12,975) (32,205)

Net cash used in investing activities (12,975) (32,205)

Cash flows from financing activities:

Payment of convertible debt - (7,999)

Payment of convertible debt issuance costs - (672)

Proceeds from other debts 3,861 9,398

Repayment of other debts and finance leases (6,169) (6,646)

Proceeds from common stock issued to employees 12,311 5,472

Payment of tax withholding obligations related to net share settlements of (2,064) (1,662) restricted stock units

Net cash provided by (used in) financing activities 7,939 (2,109)

Effect of exchange rate changes on cash and cash equivalents (1,195) 738

Net increase in cash and cash equivalents 34,786 5,587

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

Cash and cash equivalents at end of period $ 133,431 $ 98,645

Harmonic Inc.

Preliminary GAAP Revenue Information

(Unaudited, in thousands, except percentages)



Three Months Ended

December 31, 2021 October 1, 2021 December 31, 2020

Geography

Americas $ 102,92966 % $ 86,21568 % $ 84,91665 %

EMEA 40,096 26 % 30,283 24 % 34,825 26 %

APAC 12,779 8 % 9,823 8 % 11,787 9 %

Total $ 155,804100 %$ 126,321 100 %$ 131,528 100 %



Market

Service $ 56 % $ 70,15756 % $ 66,67351 % Provider 87,263

Broadcast68,541 44 % 56,164 44 % 64,855 49 % and Media

Total $ 155,804100 %$ 126,321 100 %$ 131,528 100 %

Twelve Months Ended

December 31, 2021 December 31, 2020

Geography

Americas $ 66 % $ 58 % 335,731 219,394

EMEA 126,427 25 % 117,126 31 %

APAC 44,991 9 % 42,311 11 %

Total $ 100 %$ 100 % 507,149 378,831



Market

Service Provider $ 55 % $ 56 % 280,009 211,684

Broadcast and 227,140 45 % 167,147 44 % Media

Total $ 100 %$ 100 % 507,149 378,831

Harmonic Inc.

Preliminary Segment Information

(Unaudited, in thousands, except percentages)



Three Months Ended December 31, 2021

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

Net revenue $ 86,092$ 69,712$ 155,804$ -$ 155,804

Gross profit 50,589 28,080 78,669 (731) 77,938

Gross margin % 58.8 % 40.3 % 50.5 % 50.0 %

Operating income 15,225 5,408 20,633 (5,487) 15,146

Operating margin % 17.7 % 7.8 % 13.2 % 9.7 %



Three Months Ended October 1, 2021

Total Segment Consolidated Video Cable Access Measures Adjustments ^(1) 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 7,904 3,903 11,807 (6,436) 5,371

Operating margin % 11.5 % 6.8 % 9.3 % 4.3 %



Three Months Ended December 31, 2020

Total Segment Consolidated Video Cable 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 13,529 9,918 23,447 (6,672) 16,775

Operating margin % 15.7 % 21.8 % 17.8 % 12.8 %



Twelve Months Ended December 31, 2021

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

Net revenue $ 288,507 $ 218,642 $ 507,149$ -$ 507,149

Gross profit 169,468 93,191 262,659 (2,917) 259,742

Gross margin % 58.7 % 42.6 % 51.8 % 51.2 %

Operating income 28,460 15,599 44,059 (25,250) 18,809

Operating margin % 9.9 % 7.1% 8.7 % 3.7 %



Twelve Months Ended December 31, 2020

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

Net revenue $ 242,510 $ 136,321 $ 378,831$ -$ 378,831

Gross profit 132,092 66,661 198,753 (3,756) 194,997

Gross margin % 54.5 % 48.9 % 52.5 % 51.5 %

Operating income (loss)1,326 11,651 12,977 (25,426) (12,449)

Operating margin % 0.5 % 8.5 % 3.4 % (3.3) %

(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 December 31, 2021

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

GAAP $ 155,804$ 77,938$ 62,792$ 15,146$ (2,678)$ 19,857

Stock-based compensation - 506 (4,689) 5,195 - 5,195

Restructuring and related charges - 225 (67) 292 - 292

Non-cash interest and other expenses related to convertible- - 1,621 1,621 notes

Discrete tax items and tax effect of non-GAAP adjustments - - - (9,347)

Total adjustments - 731 (4,756) 5,487 1,621 (2,239)

Non-GAAP $ 155,804$ 78,669$ 58,036$ 20,633$ (1,057)$ 17,618

As a % of revenue (GAAP) 50.0 % 40.3 % 9.7 % (1.7) % 12.7 %

As a % of revenue (Non-GAAP) 50.5 % 37.2 % 13.2 % (0.7) % 11.3 %

Diluted net income per share:

GAAP $ 0.18

Non-GAAP $ 0.16

Shares used in per share calculation:

GAAP and Non-GAAP 110,474

Three Months Ended October 1, 2021

Total Income Total Non- Revenue Gross ProfitOperating from operating Net Income Expense Operations 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 December 31, 2020

Total Income Total Non- Revenue Gross ProfitOperating from operating Net Income Expense Operations 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/conversion - - - - 528 528

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

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 in per share calculation:

GAAP and Non-GAAP 100,316

Twelve Months Ended December 31, 2021

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

GAAP $ 507,149$ 259,742 $ 240,933$ 18,809$ (9,938)$ 13,254

Stock-based compensation - 2,346 (21,716) 24,062 - 24,062

Amortization of intangibles - (507) 507 - 507

Restructuring and related charges - 571 (110) 681 - 681

Non-cash interest and other expenses related to convertible- - - - 6,305 6,305 notes

Discrete tax items and tax effect of non-GAAP adjustments - - - - - (8,425)

Total adjustments - 2,917 (22,333) 25,250 6,305 23,130

Non-GAAP $ 507,149$ 262,659 $ 218,600$ 44,059$ (3,633)$ 36,384

As a % of revenue (GAAP) 51.2 % 47.5 % 3.7 % (2.0) % 2.6 %

As a % of revenue (Non-GAAP) 51.8 % 43.1 % 8.7 % (0.7) % 7.2 %

Diluted net income per share:

GAAP $ 0.12

Non-GAAP $ 0.34

Shares used in per share calculation:

GAAP and Non-GAAP 106,171

Twelve Months Ended December 31, 2020

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

GAAP $ 378,831$ 194,997 $ 207,446$ (12,449)$ (13,768) $ (29,271)

Stock-based compensation - 1,712 (16,328) 18,040 - 18,040

Amortization of intangibles - 950 (3,020) 3,970 - 3,970

Restructuring and related charges - 1,094 (2,322) 3,416 - 3,416

Loss on convertible debt extinguishment - - - - 1,362 1,362

Non-cash interest and other expenses related to convertible notes- - - - 7,058 7,058

Discrete tax items and tax effect of non-GAAP adjustments - - - - - 2,291

Total adjustments - 3,756 (21,670) 25,426 8,420 36,137

Non-GAAP $ 378,831$ 198,753 $ 185,776$ 12,977 $ (5,348)$ 6,866

As a % of revenue (GAAP) 51.5 % 54.8 % (3.3) % (3.6) % (7.7) %

As a % of revenue (Non-GAAP) 52.5 % 49.0 % 3.4 % (1.4) % 1.8 %

Diluted net income (loss) per share:

GAAP $ (0.30)

Non-GAAP $ 0.07

Shares used in per share calculation:

GAAP 96,971

Non-GAAP 98,633

Harmonic Inc.

Preliminary Adjusted EBITDA Reconciliation (Unaudited)

(In thousands)



Three Months Ended

December 31, 2021 October 1, 2021 December 31, 2020

Net income - GAAP $ 19,857$ 1,530$ 13,465

Provision for income taxes (7,389) 942 (39)

Interest expense, net 2,706 2,686 2,737

Depreciation 3,151 3,231 3,054

Amortization of intangibles - - 756

EBITDA 18,325 8,389 19,973



Adjustments

Stock-based compensation 5,195 6,436 4,303

Loss on convertible debt extinguishment- - 528

Restructuring and related charges 292 - 1,613

Adjusted EBITDA $ 23,812$ 14,825 $ 26,417

Twelve Months Ended

December 31, 2021 December 31, 2020

Net income (loss) - GAAP $ 13,254$ (29,271)

Provision for income taxes (4,383) 3,054

Interest expense, net 10,625 11,509

Depreciation 12,546 11,737

Amortization of intangibles 507 3,970

EBITDA 32,549 999



Adjustments

Stock-based compensation 24,062 18,040

Loss on convertible debt extinguishment- 1,362

Restructuring and related charges 681 3,416

Adjusted EBITDA $ 57,292$ 23,817

Q1 2022 Financial Guidance ^(1)

Revenue Gross Profit Income (Loss) Net Income (Loss) from Operations

GAAP $134.0to$149.0$59.9to$68.6$(7.7)to$(1.0)$(10.9)to$(4.2)

Stock-based compensation expense - 1.0 9.5 9.5

Restructuring and related charges - 0.1 0.2 0.2

Non-cash interest and other expenses related to convertible notes- - - 0.2

Tax effect of non-GAAP adjustments - - - $1.7 to$0.8

Total adjustments - 1.1 9.7 $11.6 to$10.7

Non-GAAP $134.0to$149.0$61.0to$69.7$2.0 to$8.7 $0.7 to$6.5

As a % of revenue (GAAP) 44.7%to46.0%(5.7)%to(0.7)%(8.1)% to(2.8)%

As a % of revenue (Non-GAAP) 45.6%to46.8%1.5% to5.8% 0.5% to4.4%

Diluted net income (loss) per share:

GAAP $(0.10)to$(0.04)

Non-GAAP $0.01 to$0.06

Shares used in per share calculation:

GAAP 104.6

Non-GAAP 111.7

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

2022 Financial Guidance ^(1)

Revenue Gross Profit Income from Net Income (Loss) Operations

GAAP $570.0to$596.0$273.8to$299.8$7.5 to$25.5$(36.0)to$(18.0)

Stock-based compensation expense - 2.2 30.2 30.2

Restructuring and related charges - 0.4 0.7 0.7

Non-cash interest and other expenses related to convertible notes- - - 30.9

Tax effect of non-GAAP adjustments - - - $3.1 to$0.7

Total adjustments - 2.6 30.9 $64.9 to$62.5

Non-GAAP $570.0to$596.0$276.4to$302.4$38.4to$56.4$28.9 to$44.5

As a % of revenue (GAAP) 48.0% to50.3% 1.3% to4.3% (6.3)% to(3.0)%

As a % of revenue (Non-GAAP) 48.5% to50.7% 6.7% to9.5% 5.1% to7.5%

Diluted net income (loss) per share:

GAAP $(0.34)to$(0.17)

Non-GAAP $0.26 to$0.40

Shares used in per share calculation:

GAAP 106.0

Non-GAAP 112.6

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

Harmonic Inc.

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

(In millions)



Q1 2022 Financial Guidance2022 Financial Guidance

Net loss - GAAP $(10.9) to$(4.2) $(36.0) to$(18.0)

Provision for income taxes 1.8 7.4

Interest expense, net 1.2 4.9

Depreciation 2.8 11.7

EBITDA $(5.1) to$1.6 $(12.0) to$6.0



Adjustments

Stock-based compensation 9.5 30.2

Loss on conversion - 30.0

Restructuring and related charges 0.2 0.7

Adjusted EBITDA $4.6 to$11.3 $48.9 to$66.9

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

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SOURCE Harmonic Inc.