Harmonic (HLIT) 3 Feb 202019 Q4 Earnings call transcript

Welcome to the Q4 2019 Harmonic Earnings Conference Call. My name is Dwayne and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded.

to call like Noutsios, to now Relations. Investor would turn over the Nicole I begin. may you Nicole,

Thank everyone, quarter operator. today Kalra, us XXXX you, our Hello, conference are today today, for earnings CEO; for joining Patrick joining CFO. Harshman, Harmonic's and With fourth call. and our year and full me thank Sanjay you

webcast, see Before I'd like also addition going portion audio the webcast, webcast we IR to we've in on can begin, website. of slides provided which to our this with to by point out you the the that

Now, turning to slide two.

to provide including the During files this Company. XX-K you documents of call, and XX-Q and statements and release. may actual Harmonic statements we future our expectations of in recent current preliminary differ SEC will regarding or future the financial the events only performance forward-looking today's reports section We projections events with most or forward-looking press materially. results refer are statements Such other results

corresponding These please documents And differ provide this our statements. are press on are which Form forward-looking basis. items determined filed metrics actual GAAP SEC the posted identify and the to with which These otherwise projections or financial contained on call cause factors from on reconciliation indicated, on those materially we important that X-K. in unless numbers we’ve risk contained note together a a release, you results with to and today's non-GAAP GAAP in our can website

the But remainder financial, on will this of on information our and a information call some business version also release. be website. this discuss regarding the of historical, in included recorded operations, We other and our the available information statistical will or of is and press

call And over CEO, Harshman. turn now, the Patrick? to Patrick I’ll our

our call. to quarter Well, everyone fourth and welcome thanks Nicole,

$X.XX margin; profit. our Harmonic X.X% Access businesses and a both our of XX.X% million, gross non-GAAP The Cable was strong meaningfully financially up $XXX.X quarter, pivotal and year-over-year; A operation strategically. to both another headlines: EPS capping and as that successful XXXX financial Video revenue delivered contributed

Our strategic equally are compelling. headlines

of the leapfrogged the solution CableOS competition course the virtualized position. Over into year, industry-leading our the

streaming capabilities milestones. scale While achieved significant video our live new

result, a and at of the broadband dynamics video. positive of positioned foundation XXXX with the we're with As heading access momentum and a uniquely core technology intersection business transformed market into gigabit streaming

another was quarter, Highlighting look revenue up momentum, dollar closer continuing Revenue new X a during was Cable of Tier from Taking little our initial year-over-year. million, multimillion was one as X began Tier orders new and XX% segment, design strong margin operators. market received up $XX year had Full million, $XXX.X meaningfully. Access year-over-year, associated XX% purchase contribute international and strong the to we two secured we our where at over wins operating a X.X% customers international quarter.

new with expect begin these deployments We XXXX. to first the operators in half of commercial

distributed become access To cable CableOS by these commercially X are associated to served and the DAA cable we’re architectures, quarter end of of served grew number growing the Approximately had one through modems million. deploying. actively live deployed the over been globally architecture operators XX of fastest the matured and fourth modems quarter, now has as cable

that benefits end-customer with satisfaction, benefits, significantly, customers other creating beginning compelling and DAA hard are reliability CMTSs, several a positive deployments to deliver are growing financial service our and versus our improved starting Most centralized virtualized, share of by to word-of-mouth both direct beyond tailwind. measured consumer compelling now data operators, traditional

cover deployments early to so small Looking of customers’ ahead, these understand it’s far that our portion a footprints. only important

That's million approximately for currently collectively modems launched the capable serve them. we today. Specifically, approximately serve the part XX of commercially modems million X network, cable operators in times CableOS XX XX plus who’ve their

growth twofold. our opportunity So, is

and XX CableOS design wins moving of wave from new we're first this across securing entire ensuring approximately on in the XX with be their on market. operators global of second, modems; delighted focus towards working million customers leveraging and to additional we're First, order the deployed remainder footprint address continue to

these has continued While been design R&D early new focus technology over we've leadership year, extend invest the and aggressively past primary wins to customers and our our securing also in position. launching

addressable CableOS support players both announced capabilities, recently extend managed Our to other lead orchestration expand fiber-to-the-home, expansion our new combined in time native market, cloud and real to or new and relative analytics opportunity. to our and the services,

cable big largely invented opportunity is only forward. And going that and with lead access a our In mentioned, service virtualized picture for an Group we're to the XXXX. approximately and that growth category it's that yet continues and $X.X these market going towards remains estimates, XX% an factored very we’re opportunities, opportunity, Harmonic. by fiber-to-the-home forecast distributed market The rate favorable addressable approximately new is I market Harmonic get into growth edge market well-positioned billion Dell'Oro to not compounded the This just size leading larger. managed today to

So, capitalize lead progress customer and and summarizing our in both beyond. early execution. Tier wins additional market and go sales focused solid with for service XXXX success momentum new we're groundbreaking and deployments, the we initial We're And CableOS great on XXXX Xdesign financial We're well-positioned. R&D update, opportunity. teams innovation stories, in made determined the to to after to operational investing

So, to segment. turning Video our now

strategic showing ongoing progress. our real also, transformation Here is

our both transforming streaming growth private broadcast trend over-the-top the deployments, of public from QX business either appliance by sales. software COTS with on market-leading steadily on cloud. or business or a offsetting the past quarters, new software of stagnant several software-as-a-service Continuing provide customers, was as traditional we and over-the-top Video characterized running streaming market-leading, Our broadcast-centric appliance business, technology a as running where is to solid

fundamentals underlines strong of million, the operating XX%, Specifically, XX%, and up revenue service continued in from transition. was associated and successful business. video margin ongoing gross XX% $XX.X our investments was Segment transformation, Video our the a third that segment quarter, new streaming profit record despite was our highlighting software

our added up is XX, which end-customers, and During customer XX% streaming XX to XXX% SaaS total quarter, yet of sequentially quarter our we strongest the additions. new year-over-year, bringing SaaS live new

XX% million, a for our to up Associated profitable over annual platform. foundation recurring of year-over-year, revenue streaming expansion live grew $XX solid just continuing

our CableOS, video our bring is by new platform innovation with new complemented drive customers pipeline. streaming As compelling to onto

new increases live live streaming addressed reliably this to about be is our solution, scaling unsolved platform. delivery optimization delivery of live and differentiates continue further market targeted excited and live streaming quality. our optimization particularly personalizing problem exceptional which We for with streaming significant capability our video, Adding sporting streaming events industry

we of a To provide a deeper customers, glimpse want streaming couple show we're seeing solid key growth differentiators. to into why of

growth robustness we of XXXX, utilization X exceeding delivered important platforms throughout steady streaming highlighting from traffic fourth is of solution, cloud petabyte day platform, the our per which the our of during of customers’ and services. critically quarter-over-quarter for First, our fast-growing scalability quarter, live saw streaming our

strategies many ability of our is to multi-cloud increasingly customers. the leverage valuable to Second,

unique market. our AWS deployment Microsoft integration so, Platform Cloud And and Azure, and Harmonic in Google with partnerships the are differentiating

XXXX, the of critically multiple over which streaming delivered of we of course quality service Third, platforms, performance line. again to nines is ensuring which reliability, over over cloud any consumer bottom to of in market-leading experience, six and is best our important knowledge provider’s the

growth excellence work to reignite business. steady business live have and still of us streaming do targeting, the our our we're the our scale position for to platform acquisition well we growing while in to customer video operating So, growing cloud-based reputation

our a and wins Cable leveraging around business native business world. considering breakout services, deployments the and summary, of So, in powerful design and Access cloud year segments several both and transformation, Video XXXX new was technologies strategic

profitable our and of trajectory market XXXX impact, we business the forward and redefining We’re looking the in of address. beyond. and growth value-creation We're to further market

the I'll now financial call you over discussion Sanjay our for turn of and results to outlook. further

you call this joining afternoon. thank and Patrick, for Thanks, our all

basis. quarterly provided to you remind our with I that results share to you outlook, financial a like referring results I on are I'd and Before the be would non-GAAP

quarter we just results heard above guidance of delivered you from financial of fourth Patrick and XXXX, range. end strong the EPS our the for high revenue with As

$XXX.X quarter, of million We our EPS million ratio and at was margin of with capital cash $XX.X and in resulting gross X.XX. Revenue this book-to-bill ending XX.X%, $X.XX. improved working was

are a financial entering foundation. solid We XXXX with

Turning in to QX million QX QX growth. ‘XX. in million and nine. year-over-year XX.X% X.X% compared was to $XXX.X and in QX and $XXX.X resulting growth XX% was in million, in QX compared slide quarter-over-quarter $XXX.X margin to revenue X.X% QX Gross ‘XX, in ‘XX XX.X%

had revenue year, $XXX.X total guidance three XX%, range, revenue XX%. down XX% full Video compared XX% quarter, but the above revenue was and declined contributed Vodafone contributed total and million XXXX, Charter of We million, Comcast high-end than revenue revenue. during the greater For grew Cable XX% of to as XX% contributed $X.X our the customers our

period. year-ago in to compared segment. XX.X% QX QX Looking in was in shipments up. XX.X% in QX, more the hardware Access million in picked was million compared Access our closely QX, Revenue XX.X% and at and Cable DAA million gross margin $XX.X $XX.X $XX Cable ‘XX, as to

As strong, our anticipated, year-over-year solution. reflecting growth growing success was CableOS of

Revenue we only quarter, related XXXX. Comcast $XX.X at the to $XXX the license software margin one agreement, and third CableOS declined in because million million recorded sequentially closed during gross revenue of time July software

resulting $XX.X segment, In the we period, compared year-over-year. of decrease in million year-ago to XX.X% growth $XX our in QX, million XX.X% quarter-over-quarter Video the revenue and million and reported of $XX.X

QX segment On compared record ‘XX. in QX, the QX, was gross Video to XX.X% hand, XX% in in XX.X% margin a other and

segment transition continued to Taken together, these software results and the point Video SaaS. to profitable

appliance-based traditional and through base our SaaS with Through continues expanded services cloud-based our revenue solutions grow recurring margins. support expanding for offerings, to

in and million XX.X% million of compared XX.X% $XX.X in QX, in QX XX.X% and revenue, the and was up million and recurring QX to QX revenue $XX.X revenue $XX.X services SaaS fourth services ‘XX. ‘XX ‘XX. SaaS quarter, in from was total During in our QX,

XX.X% gross this our growth in million in both, ‘XX, annually usage creation QX which pipeline ’XX, increased 'XX strategy. in and year-over-year, ‘XX our ‘XX. increased XX% XX% our SaaS and SaaS ‘XX customers by our ‘XX, increase SaaS key total QX XX margin and for recurring base, and The our to The base. revenue end in was margins an continues expansion of and long-term from to XX.X% is million SaaS in quarter-over-quarter XX.X% reflects increasing in Continuing value XXX% to in QX subscription XX $X.X Supporting ‘XX. end SaaS a growing ‘XX at QX were the services customer grow. summer QX component at the of QX QX QX $XX.X ARR to drive of offerings video of objective, and compared ARR

strong the $XX.X look maintained slide on QX quarter. at expenses were rest $XX.X to and QX the you income XX, respectively. and compared in of million our statement $XX.X million we expense 'XX control 'XX million, during As operating QX

revenue, video in profitability The good healthy in resulted combination quarter. control solid gross the expense of cable strong profit and

from our was operating from income segment. our operating QX, of operating in QX to active Our operating compares This and and grow of million QX Video million comprised 'XX. million XX.X XX.X an $X.X in $XX.X $XX.X of QX million cable million segment, income profit income XX.X million,

of This into compared income QX solid EPS $X.XX, EPS QX translated in and $X.XX, EPS 'XX. QX $X.XX of to of

convertible count X a as shares million during the portion dilution of of of in of substantial diluted increase price, ended debt, million employee-related XX.X compared associated X.X reflects Regarding quarter. in X.X of QX and brands warrants the employee and effect the shares shares reduction money which year share warrants The a stock of million of calculation. the million million shares employee-related million third million with diluted convertible million of The behind and is annual a and share RSU million X.X effect reduction offset combined exercises, all option for increase of XX.X shares with debt. net XX Comcast shares and shares X.X RSU X.X X.X result exercise brands, in an recent the from million, count stock a X.X of 'XX. marginal refinanced by was all We option EPS sequential million to for increase Comcast or purchases,

of note for calculation Please stock of trading our QX, $X.X and $X.X method approximately share note, QX our $X.X convertible use And and diluted for QX, warrant treasury we per calculations. average per considers price a XXXX. for for share

the we with QX, in during with convertible favorable original with a XXXX X% terms of due carry conversion compared approximately During the conversion notes of the notes The new carry X% for $X.XX $X.XX. price coupon refinanced price coupon XXXX a the which of Company. rate XX% to notes all of

refinancing method, cash immediately origin and by XX% the off the expense XXXX, interest off million XX%. we original will notes of dilution in end the pay are principal to reduce by and in our potential by as XX%. paid of XXXX. $XX X% expense of plan effectively of cash annual reduce Whilst at potential September an We the if-converted remaining the the annual notes the in December result interest remaining dilution a Using by refinancing,

QX was quarter the benefit our dilution savings first refinancing. from of recent full

bookings million in ratio X.X QX, ‘XX, at reduced in resulting bill compared to QX and compared we QX QX. to shares were $XXX.X million As million a $XX.X in million to QX. strong $XXX.X in QX X.XX of in book

healthy Our created momentum were book we annual positive $XXX.X the also ratio underlying full-year at was bookings market million to and in bill X.X, XXXX.

$XX.X stock million move and our this will purchases, $X.X end million, of purchase of sheet compares purchase approximately million cash additions the of our $X.X This and to of $XX.X is to under assets, primarily fixed QX new comprised is QX at primarily XX. used end option due of of which of cash million QX of fixed in of to generated $XX.X We net exercises at for million QX cash position construction. activities, which headquarters now capital from ESPP from financing ‘XX. related million the $XX facility, cash is We on activities and liquidity asset generated cash balance $X million the ended to operations of for million, slide $XX.X increase with

and are lease headquarters new expires San process relocating of fixed making Our to we Jose currently leasehold to. are the headquarters and assets April in we additions facility the for improvements XXXX, in

new million CapEx in For of for was by million. have outflow expect a new $XX million signed OpEx XXXX annual $X remaining which the in $XX to of incurred facility cash XXXX. we incur will approximately and approximately lease reduce approximately be by million incurred in May, XX-year the $X million new Beginning rent our annual we will which the for facility total $X pre-depreciation and a lease,

of and end compared outstanding Our days QX XX QX days QX. XX days to at the days end at XX was in the of sales

to Our the XX XX of and the end at days of compared QX inventory at of end XX days QX ‘XX. the at on hand end was days days QX

QX, note into with backlog of this QX yet $XXX.X have over $XXX which we metric CableOS backlog our million and in was end backlog in which ‘XX. revenue revenue. begun to X of Tier associated contracted CableOS to and which the million customer including agreement that demand compares previously and have is million At not we in deferred three $XXX.X discussed, contracts, Comcast with recognize included $XXX.X QX, million, Please

Regarding software provide Comcast we of license explained last and agreement, GAAP a reminder non-GAAP the we accounting let what quarter about the treatment.

software revenue license in $XXX approximately million, of over of be the CableOS of recorded a license net vesting charge non-GAAP period warrant be million For GAAP $XX $XXX years. Comcast and of agreement, the to revenue million approximately four will total a resulting net

XXXX to our turn QX guidance. XX let's Now, slide for non-GAAP

the For operating range impacted million million million to from to to cash the to revenue EPS range end $XX range the of in to margin weighted-average QX of revenue range revenue a million, a range QX from million; effective $X.XX; lease, $XX finally, Access of million $X.X tax earlier. $X.XX $XX million; of range expect XXXX, and million, from is $XX rate expected million the in of shares; $XX and gross by million range as loss to $XX XX% new the count Video at we to of in in range operating XX%, of and expenses million XX.X to loss share of $XX discussed to the loss XX%, $X.X million to $XX from to our million, to to Cable $XX $XX

providing XX, XXXX corresponding guidance. slide full-year non-GAAP we are to Moving

range million range to EPS of $XXX million range range of Video $XXX gross income $XXX the we expenses Specifically range remaining share of year-end for count million $XXX XX%; shares from $XX $X approximately tax from XX% and to million range XX%, range and to million; to of $XXX XXX.X to of XX.X cash from year, to operating $XX Access expect rate to million, the $XXX effective million, $XX million in million margin $XX from revenue the XXXX, in in profit convertible $X.XX weighted-average to with million; $XX to to full range range Cable to additional $XXX between for revenue million, principal old million of a cash to of new the our in a million, $XXX to the improvement in shares; $X.XX; after to million debt December in operating and paying million off total leasehold with our million the approximately of headquarters.

We in grow similar sequential quarter trends on XXXX, saw first with half to a second the and the revenue to of through expect basis, XXXX. beyond growth steadily XXXX what

delivered is we both segments XXXX. The we working strong very-focused and effectively remain on Company summary, a execution. the strategy In of continued in

you. that, back And With Patrick. to thank

Sanjay. Thanks, Okay.

execution, note that of priorities highlighting our for want by On strategic to we finish XXXX.

business, X by XXXX Access additional our solutions. existing Cable we’ll For services new success wins and with fiber-to-the-home launching complementary in customer operators global securing successfully new build on design deployments, managed scaling our our and Tier

our segment, to and continue platform of growth streaming deliver Video addressed to market segment accelerate through non-traditional to profitability. For our business, our to the objectives SaaS live screaming to include customers expand our solid new are

stockholders we've all. a I transition our before innovation passion compelling you for for and support employees to to positioned our recognize serve we our and their for their future. Finally, a lot customers customers, as our business, business. for the continue and accomplished closing, collaboration and want Together, our to Thank ourselves

open that, up questions. And some the to now we'd with like for call

Thank you.

question-and-answer first Instructions] Please show from our Stifel. from Marchetti I [Operator the begin proceed. session. question John will comes We

I from into When XXXX, midpoint at at we're minute. could growth. as hoping I look X% about the Thanks are much. was range, your using projection perspective, looking we a out of a very Eric, I look you spend where

had some domestic. You've on internationally seems wins new be a to lot going obviously and There here. both

all Just growth a bit faster think can rate this of we see curious materialize. we coming little and when maybe how about through

Just longer curious maybe term? where how you as look maybe think more not ‘XX and bit a we we are this plays in only this but out, cycle little

This is Sanjay. John. question. Hey, the Thanks for

I for software look think, numbers, growing Cable what had pickup to in to onetime a of XX%. this similar if and at we relevant for $XX.X But, in separately approximately we’re terms midpoint, take market the last it's year's Video in Cable, both growing at very look at us. report as which it’s you More million license Cable piece Dell'Oro in QX. XX%, that well. Comcast midpoint actually is projects If from by we its out as at segment

I So, that as million $XX.X out have time. do one take think non-recurring to comparison we and to the as the

for a gross long-term But, midpoint, said, know a terms the and increasing ended That Video, what at it's it’s value business. right we combined on in profitable are Video we point, versus this margins at for profitability are at of decline we number on track ARR, high year. for of and range X% that similar video, and

to customers the results? trying those now international to I'm two remarks, Sanjay, additional the or year to something and actually just contributing sure I'm were make that are And in just customers, be that ones two missing referenced clear, not the are those here. they're mentioned Okay. we last

said today are The to two what announced earlier. we additional we

total five, it's So, Xs. five Tier in

So, have discussed number all Comcast number we just and we to one one -- which earlier. know, clarify, was

two with more course $XX they than more and today not five. the we but Tier than more, two have and million names, in announced announced total of Xs are $XX We million,

of contribution sense that relative ones in time? those, of these number? terms in And revenue the I are two ballpark new mean, same sort over any XX XX, to

comparable Both reasons, potential John? of It’s ones to it us. went Why is about deliver for one, after have don’t signed we The with wanted a differently. They Patrick. take answer numbers. frame short that previously to The own bit them little the talked yes. I their agreements

Sanjay some big took that different contracts These backlog, approach, orders, broad a are frame those latest two noted. discussed sitting the they the in with and and financial they, no in let's So, agreement orders processes, but qualification initial backlog not reported get are that going, headline not us big as as extensive multiyear we've today. of we qualified multimillion to placed part after dollar number, fact with they us

approach, of over different to agreement. deliver time. comparable big so, them, the it's original frame to both results And your have scale But a question, and potential no back

Raymond question James. Simon next Our comes from Leopold from

you. Thank Great.

clarification Just a upfront. quick

You Comcast. XX%, charter at at mentioned missed What customers. that was Vodafone than greater but got I three XX% one? XX%, I

is at QX. XX% Comcast for

that. Great. Thank you for

you And that? it. have feel overstating modem can by that so, XX about, at gave if on the about if we million the being we I you're X most penetration, modems, you How we disclosure think million talking modems. on current basically like talked of the but operators XX, just CableOS the about we're business think about value us like

So, sense give the sort what's opportunity? the you think can us value of about to some of

discussed and apart the opportunity, with Obviously, XX% Let's that of services we've which service The we've know, agreement scale halves. break and of a that. nominally, deliver is software it additional Comcast you value is sales, of there. the to penetration part can Comcast. into -- two the that as you do we hardware as of know And license

think, piece I the way. indeed, one in scales So, Comcast

-- the the software is per conventionally, delivered well as that both All on as of priced more others a hardware gigabit the license are say price let’s right and assignment.

actually, right. So, is rest that it, linear we think for the scalability about the of

substantial converting And so, opportunity we the rest their footprints. see of just

footprints foregone Now, a converting not conclusion. the is

CableOS. starting rest to really are. of to or these of converting we that extent We our them we they're on delivering agreements -- the we being value operational us we we like XXX% Our But, financial operators think -- to are nearly do the that don't are tell based over with XXX% see require and to them time chances to the that. that and

just the Video segment. pivoting to maybe And

a during a even Is think you've in growth it year-over-year that quarter that have metric got returning you of return way a you can revenue. it Video? about of see today trending, the terms certainly shift looks event? you some In or mix towards where point the XXXX, at of year-over-year this is Do more to XXXX the business is like growth

it Yes, is.

As strives that annual which don't but you in happens see our from we certainly XXXX. exceed, to guidance, think that

to that important that the as But, to is product distinct customers rendered One a we've whole is some there's software. line get there, going before remember on -- notion we it think, two there's to the things here. SaaS. I conversion a of even

even So, if server from you're not license even the capital you're going enabling getting hardware or you're if you're SaaS, perpetual of or purchasing us products, often, to the from purchasing say. us, doing not our HP increasingly to or let still directly buying it Dell,

Simon, clear so, a creates that headwind on And top-line. the

it's quite that we sales, I revenue hardware the our the So, we were profit. the can up operating rough profit continued gross deliver than focus that think value -- themselves in traditional XX% past, numbers, the Very different the margin. to at doing virtually no and be hence of delivering appliances and on

everyone was -- down, of I to kind So, headwind we the creating not else margin we're on the as HP, to to record I think, you same delivering still terms we're we still work the argue impact the to challenge The over in fact any say, losing because going just or think, gross timeline, XX% you the of to goes and a top-line that, to going way, negatively have try that hardware us on really doesn't, that let in in top-line -- turn I business, be while calories. empty we're think -- the quarter, this and is software. income that operating the to delivering the value we on continue would fact Video, XX% We're sales market. we're that the fact the delivered to

process the go those still growth yes, if business. top-line think the meantime, of of point, fundamental the think, terms some in So, profit I rest focusing the through then at that in the will. empty will this segment begin -- calories, we've believe that reflect to out gross you we meaningful And to of of I flushing of gauging and business business. that got the operating profit are actually of But, more the the progress the on I

lot sense And feel me. than of point, profit some that Is forecasting maybe on dollars a at something focusing rather you’d comfortable gross it revenue? where gross makes the to

Yes. be road, that quarter of we're like we're it's kicking of announcing candid, can quite about risk we're thinking the At actively. XXXX. here To the the down sounding something the fourth

of deviation continuing thinking But, historical the XXXX, you. future So, way about are we go And as business. talked we dialogue about you've got the we will current of terms expectations. ways in we to results alternative forward with no from that into and us look describing

next Our Company. Rich comes & Valera from Needham from question

cable try your understand against terms to what's your want portfolio wins, into to delivering I existing if baked that's XXXX primarily guidance in new of or wins.

one the new existing you quite I'll the say. starting our wins. qualitatively in maybe of time in and the wins. At primarily let's can the It's same portfolio design chime We're excited about competitive momentum market to is can and initial bookings, the even it. shipments that design initial of of variability recognition lengthy revenue maybe of between win, risk be and has -- time lessons XXXX of qualification, is

be I into acknowledge, able how year. taken wins think to design we revenue new we'll So, that on take I conservative somewhat quickly a the would convert we've during would acknowledge

to that XXXX continuing think delivery. about watershed quickly design us well a revenue water positioning I'm growth multiyear going water in mistake, design wins conservative wins, extremely not, be into of additional XXXX and because we or So, for highlighting revenue. But, into make year and sign how no aggressive new confident falls up to is whether we're we're new about and that somewhat quite falls customers say more

Comcast ELA. quarter And say about Comcast, ELA? sorry, all talked the you Comcast then, the how on XXXX you of XXXX what from Can from you the Sanjay, much -- third I’m got the you in got for for ELA

But, that Well, segments. for our total XX% we’ll quarter. to we did -- that’s every $X terms year both XX.X% Comcast approximately get then, ELA, full of And get said represents we QX. the revenues, in million the the in for million did we of among announce $X

ELA. from got midpoint So, $X at the million, $XX you to take if we quarters, year, for this close two million

one it. And could. more Got if I

you any the think within You, that, the you there you PON -- sort the a have has new or of that Can show, I wins of capability been initial back this SCTE point? platform. CableOS sort at with design any gotten -- announced take-offs with at traction

wins I but good. of The call active is a we're progress couple working, yet, lead, No them strategic we're customers. design with

the which we And this into and are in trial CMTS, least characterized virtualized been the The the contribution field operators expect revenue fiber-to-the -- who initial by on our first we sharing But, lab first innings doing work, expected clear, revenue expect of and home. cable we here. expect be to in surround again has to the experience be, the don't half second around be to based we public first focusing at half early beginning year, also the been the we’re response has transition positive. quite in We're half. response to

provisioning story resonated the a strongly is the and that so, and is thing, the whole -- announcement. message a access definitely unified advantage is has services. supporting, that platform since the And access simultaneously And that both fiber

you. Thank

Please question next from ahead. go Frankel Dougherty. comes Steven Our from

their into what you slow Access, Cable these given give the start Patrick, plans into Tier in do and insight deployment could to in of visibility us Xs XXXX? you kind have the some year

mature a the getting. great The the is better more and question it's the mixed. It's engagement, visibility

visibility, got XXXX of that and quarter early really that the backbone our is, and a forecast. is for customer, really question, the significantly recognized earlier more lead in the to the already revenue, international we've domestic beginning decent pretty So, customers where fourth we've

making deployments there know, that are bit broader simple work. What go that CMTS. ecosystem. a the As the quite Steve, that a of a the is engagement things of into engagements visibility little isn't there. as just switch number we've It's a -- It's not these seen, you newer, the is

arguably And in so, as bit conservative mentioned will how these earlier, of we're other our little a estimate all together. things come quickly

does engaged So, how certainly quickly we're say, for beyond our design And would the most precise the conservative those year. design plan And I those will the during wins new visibility for into in then is less call customers. of turn terms win revenue. the with, additional there, we're

will we get baking we're bit be there, you cautious faster. about upside not certainly is in, a and there little baking in So, it but until going it we

yet. though thing in One and the mature, at and tracking It's you something kind last decrease. we as revenue expect for to But as that and we on go is that cycles reporting curve a that, knee us will deployment just to be premature point call that's of these this little thing the say whole back a more to would becomes I bit year. sales through we

well. want way within reminder, the quarters, reminder like I’d due a a along customer to be XXXX that mix as in there quarter. give product I happen the XXXX our ramp some add, as see to We just in as and XXXX, in But, the build to mix in that just the well. as may variability it did in could

Okay.

customers? So, to again these go XXXX Xs two -- through in point at little a revenue relative in and to won back have large that those no QX, to were Tier you this forecast

second the in have modest of half revenue principally the year. we say, I'd

terms to comment did XX% your in And hardware Video? go back hardware. that QX percentage in pass-through used as be it to of of in about, where a then, pass-through of video exit revenue Kind to

it see number. blended in a margin can is which of XX%, You the gross

our over that So, move hardware. is like of some Video margin we're XX% with that sales and that, phrase. in up. with kind still gross are pass-through seeing the of I percentage associated But fact, declining

do And expect to trend you how sub-XX% it let's toward kind of range? quickly that call

you a me, I further But We're be I is, would acceleration Steve. definitely have ago, there. some asked don't it seeing truth year if tough would The know. frankly, along,

that's part the answering players of the some to in broadcast we're more the watching our get and a Particularly, -- an box some about that of we about challenge like space get still in questions traditional of revenue. asked or it appliance. So,

of so, as as And some them haven't tipped we fast anticipated.

the view think deploy how increasingly their they'll I their On provider data with is hand, this cloud broader other or strategies. of service center cloud converging technology

hardware much let's to becomes that get Maybe does it XX% business look kind software margin what SaaS? a smaller piece, of shifts and as SaaS if out plus a at business? the If a margin it go a Is different we gross gross of years way. couple

Yeah.

definitely I we’re reasonable think that's long-term towards. that's fair, and marching be path the that'll

say the is million of a million year? $XX repurchases, for the that's clear the you to position. going $XX just then, do And That's of be cash on what cash improvements. year-end And in Okay. bond function where

Yes. Correct.

the the where right, that, from away are cash in from now business flow, starting is a you consistent you mode -- But generate generate to business.

Yes. are in I year out reasons next in the main mean, cash definitely, for we pointed year. cash generated $XX million you well. And the two this cash $XX fluctuations XXXX. generate million, And expect things we as to

today at back Patrick, or of them you of do early discussion well -- Comcast interactions still What kind syndication the to as Are is operators lead. that days? follow they point let's this And pivoting level along with those Comcast the have call partners, typically having CableOS CableOS.

not operators prefer syndication who customers, called, there to a customer. mean, Video and around mention I a we COTS any so is principally as say, do have group specific Canadian know I that relationship of the with Well, Comcast. you

cable those operators. consider Now, important we American North

all might them. they us engaged and with conversations Comcast work with speculate. like or deal might So, whether so absolutely important don't syndication to I cable directly engage with in around. called operators, we're they want Whether

the I think, to and those way. other thing. created it's to in choices think Anytime be opportunity I able for more one work technology, with than good it's operators tend delivering an a to

historically operators. have those of relationships we So, all with

We have all and Video product, to historically delivered edgeQams companies. those

relationship And So, with of Comcast. got they've good a we get special relationships. course, very

that’s aspiration going -- won't that's part our a see part see of our on become And or to the for is to story forward. absolutely, list our hit Comcast to So, -- another -- one that's of there. excuse anyone me, way CableOS a be surprise

Thank you.

Our Northland Markets. comes last Tim go question from ahead. from Capital Please Savageaux

comment focus Access on margin -- to want gross back about I made the I afternoon. things. the about of business you quarter. Cable Good the guess couple earlier and in Well, the

of on normalizing Comcast some the of talked of Maybe strength how link if there it demand guess relative First, I top guess, add you was normalized the piece. some dynamic that? line, unanticipated quarter? Video dynamics forecasts on And and -- element about of Sanjay, like You you element maybe Is side, reasonable on an oriented, kind node market taking of have away quarter. from the of that XX some was wonder if I quarters that results have is And strong can might away very to right? sort some margin ‘XX? that degree? QX side, this we out seem if taking -- pull we I or to before But, for should the just maybe maybe the in the that’s side. Access forward, into expected quarter of had look the multiple the software as -- you of Cable from you a in that growth revenue kind at and there strength, had previously. gross some given your remote upside saw heading in to of dynamic parsing how quarter, about the it’s two-thirds kind demand this even of hardware what in I is the and And in some

Tim. Yes,

was the came in on RevRec. in But international which customer ramping May as QX. that received our Tier We we variable So, on XXXX. we in catch-up this Actually, of started in came had since in, been X acceptance customers, QX, delivering for acceptance, of one RevRec that's which dependent of QX, had QX. of revenue

of So, was piece see than you and for it QX. catch-up, the did hence have number higher which expectations a

They year, shipments baked will among node node the be also Now our node into would that said, the on we did will and happen how shipments, go. last but quarters the in variability terms of guidance, shipment they are in the there XXXX.

of fact, more the seasonality in nodes the there's first to In become third time quarters a than in They the deployment. active aspect the second, their quarter.

for year. but hardware piece shipments no and shipments, So, which in that's the is definitely variable, entire are baked

Okay.

com a that quarter level as in run concentration down, assuming went also and that Comcast your assuming at the in to described video as hardware looking Comcast. significant mean even well. that maybe again. I of you pretty try some a the to me mean, And went quarter and software the element hardware X shipments Let there that also I I we on well. down in rate initially That's can good described to or then seems catch-up review, -- talk software I that's and Tier whether big you it obviously Comcast with license shipments don't hardware some saw you and maybe International catch know in and up from the cadence like software about you side. also opportunity the the which with the is nature,

at kind there would million node ones year? at of you $XX you've the we demand look be revenue once expect do or Xs, what looking at is Tier at frame your as of indicative kind between software what at of kind we just $XX head quarter of and of two As other that announced, -- four typical there, through least? we QX, hardware quarterly is that kind the a we’d rate, Comcast, the in and our dynamics million And, business look how you run saw characterize so you in node to agreements

you of think do I clarify. A points. further bring anything Comcast, there's say think should about more don't But, point we couple Tim. I can up we specifically a that good

in not all the the quarter other fourth to those who two -- international although First, operator, the exclusively, selected Comcast, is started of the initial and revenue, Tier primary architecture only Xs, beyond ones, not strongly contribute DAA. new

hardware deployments And So, lot will and DAA these in ago, you as just are recalled et now where's logistics, strong a provisioning, can fact, upfront, as is experience be more time. be fact, to shipments delivered alluded elements. characterized in hardware there there you the of because corresponding in from installment year cetera, software a by

hardware anticipation And amount that that to the we're some Xs perhaps focusing wave of hardware to then, by about these is a mentioning quarter-to-quarter. was another to initial on much can previously software up. Sanjay And that goes in on followed hardware. with Tier what yes, re-up our be cyclicality like so, now. mode actually bit And And DAA, expect you very the little

all hardware not still bring where there as we're time we more into quarter. getting software mature, become a Now, these And going and But, per and fold. is over think to I to more the more you're yet. get we're deployments I to think statistically customers average

And on days. early particular too fuss on that's it heavier on see or to kind of heavier doesn't hardware, much a kind software. in of still we're up down us why So, quarter revenue,

it's I you’re we're Xs I increasing the of we are a with just think where I in around during quite part there by yet. our we're end right in of getting isn't to number this think think phase XXXX -- we XXXX can But, seeing startup more moving a But, where DAA. more quarter-to-quarter. to the fast. startup highlighting that all DAA, now place belt, that or perhaps Tier under statistics But, I repeatable that be not of with as really the flywheel wins think, anticipate phase design we're

Got it. And…

it address that does to at. get what help, trying you're Does

And that. I guess order last appreciate bookings strong backlog. the I does. increase It and question on in

agreement represent been I the of know $XXX that's about has think, that in don't you've number terms consistently meant kind this about. number that kind of value outside if changed? you're that, million talking the of of talking pretty the think the I to frame of that's -- I

announced? of should result stays really, look so, number Tier mostly backlog we there, Xs it at And kind as that a you've increases the of the and as

number So, QX. since reduced has the Tim,

$XXX still it’s million. over However,

you. Okay, great. Thank

of Tim. joining Have day. Thanks, the in we We appreciate front interest thank look with a And your today. and again continuing all participation. continue us soon. talking to these all and And opportunities and on call forward you for to you execute good compelling

you, concludes today's conference. for participating. This gentlemen. you Thank Thank and ladies

may You disconnect. now