Q2 2026 Harmonic Inc Earnings Call Transcript
Key Points
- Harmonic Inc (HLIT) reported Q2 2026 broadband revenue of $133.5 million, a 54% year-over-year increase, exceeding the high end of guidance.
- Rest of market revenue grew 44% year-over-year to nearly $50 million, with record fiber bookings and a book-to-bill ratio well over 1.5, indicating strong demand diversification.
- The company completed the sale of its video business, becoming a pure-play broadband company with a strengthened balance sheet, including $231.9 million in cash.
- Backlog and deferred revenue reached a record $587.6 million, up 71% year-over-year, providing strong visibility and supporting a raised full-year 2026 revenue guidance to $505-$525 million.
- The intelligence platform (Beacon, Ampli) is gaining traction with about 20 live customers and 10 operators using newer offerings, showing early value like a 30% reduction in subscriber calls.
- The converged cOS platform supports multiple architectures (DOCSIS 3.1 Plus, DOCSIS 4.0, fiber), enabling operators to evolve networks flexibly, as demonstrated by Bluepeak's seamless transition to fiber.
- Customer satisfaction is high, with a Net Promoter Score (NPS) of 87 in Q2, reflecting strong customer relationships and product quality.
- Gross margin guidance for Q3 2026 is expected to be 51%-52%, down from Q2's 53%, due to elevated memory costs that are not fully passed on to customers.
- The company faces ongoing supply chain risks, including memory price increases and secondary component supply dynamics, which could impact future margins.
- Operating expenses increased in Q2 due to higher incentive-based accruals tied to improved financial performance, potentially affecting near-term profitability.
- Free cash flow was negative $7 million in Q2, primarily due to increased memory inventory purchases to secure supply, which may continue to pressure cash flow in the near term.
- The company expects DSO to trend back to the low 70s from 61, indicating potential slower cash collection due to customer mix.
- Revenue concentration remains a concern, with two customers accounting for 63% of total revenue in Q2, though rest of market is growing.
- The company anticipates approximately $10 million in stranded costs from the video business sale in 2026, with only 30% expected to be eliminated within a year.
Welcome to the second-quarter 2026 Harmonic earnings conference call. My name is Lisa, and I will be your operator for today's call. (Operator Instructions)
I would now like to turn the call over to David Hanover, Investor Relations. David, you may begin.
Thank you, operator. Hello, everyone. And thank you for joining us today for Harmonic's second-quarter 2026 financial results conference call.
With me today are Nimrod Ben-Natan, President and CEO and Walter Jankovic, Chief Financial Officer.
Before we begin, I'd like to point out that in addition to the audio portion of the webcast, we have also provided slides for this webcast, which we may view by going to our webcast on our Investor Relations website.
Now turning to slide 2. During this call, we will provide projections and other forward-looking statements regarding future events or future financial performance of the company.
Such statements are only current expectations and actual events or results may
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