Harmonic (HLIT) 1 Nov 222022 Q3 Earnings call transcript

Welcome to the Q3 2022 Harmonic Earnings Conference Call. My name is Jonathan, and I will be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded. And now I'd like to turn the call over to David Hanover, Investor Relations. David, you may begin.

operator. you, Thank thank third and joining today us Hello, XXXX you financial Harmonic's quarter results for everyone, for conference call. are Kalra, With Officer; today Patrick and President me Chief and Sanjay Chief Officer. Financial Harshman, Executive

I'd begin, Relations audio our for webcast going the this the addition of which website. you we out may that like Before portion provided also to Investor in we've on webcast, webcast, our to point slides by to view

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regarding section expectations statements events to XX-Q results press provide of our we projections contained to website contained results on the we corresponding actual Harmonic cause Such documents may projections events These important the this unless provide of with and financial otherwise During on of release. or non-GAAP or We posted most this call, These performance you you note forward-looking call future financial our differ documents statements. are and indicated, we SEC, factors, metrics will a and statements other recent on basis. from and release, reports those identify in And X-K. have which are Form please determined and and that can are our which a results including statements today's refer today's future XX-K the company. with numbers materially. risk only differ preliminary filed current on forward-looking the filed actual GAAP, with press SEC reconciliation metrics, in GAAP or materially together forward-looking the

website. and version information regarding now to remainder some I'll Patrick press the information over our will other included release. the our CEO, available operation, recorded The turn Patrick? And or of discuss of and on be in Harshman. We historical is will call on also and business the statistical call this financial this of a information our

Harmonic of again and Revenue results. delivered the call. was everyone, third our year-over-year. excellent up XXXX, quarter to In Well, thanks, third XX% business welcome, David, quarter

revenue EBITDA were again and margin up The bookings adjusted were to Both renamed $X.XX had XX.X%. have and cable than access profitable we segment continues deliver revenue mid-September, was year-over-year. New book-to-bill continues greater broadband we one. business strong our up enhanced model. XX%. XX% revenue you segments XX% strategy market transformation EPS with which year-over-year. with up segment, trends, recently was Video and solidly growth line updated SaaS on financial key three-year top our In

see in third further in key plan. growth released We video. quarter for multi-gigabit presentation broadband live and our today the highlight robust points our support that results demand confidence Our and streaming

$XX.X revenue remains in Taking technology improving associated results with our rebounded our XX% sequentially growth leadership and segment our was consistently XX% opportunity and solidified despite as scales. Our a and focused demonstrating and XX% gross broadband and delivered margin headwinds. Segment and winning million, business up EBITDA strong products services closer to outlook. was look year-over-year. business XX.X%, margin the leverage adjusted Segment execution resilient further marketplace, We are financial now the segment. macroeconomic

us accounts selected an deploying also up technology these X. DAA international solution win not and sustained year-over-year, compelling also of winning our customers' several in to quarter have are excellent $XX.X progress to Xs existing who served modems consumer with both over new We're bringing backlog broadband XX% during quarter, end, record DOCSIS our were This contributing to customers strong, and the reflects increasingly added us. advantages. up deferred At XX% secured the customers less number with year-over-year, new important Tier an we our orders footprint. execution. revenue. New market near million, actively grew strong making yet robust several DOCSIS of new Aiding than XXX% two growth and XX, a still We Tier

consequently, First, that and we DAA architecturally paired early virtualized pioneered there's Comcast with with variant consensus considering the best CMTS consensus and this have customers is industry other way most and or Obviously, of deployment is particular is for remote virtualized lead to us, news advantageous growing the market-proven a go. good the and expertise in remote CMTS the growing that huge solution we PHY. technology PHY nodes

cloud-native the and X.X solution advantage, a We a to by Tier is is common manage leader, our punctuated our it laid position solution provided in the X.X simply customers out the and unique is fiber-to-the-home XXXX. to capability XXXX left in for which that this and existing seamlessly all with for September and to us was win XXXX. years. for customer, of software margin DAA providers feeling premier feedback solution this in heavily combination XX% benefit time, visit Our also converged our technology saw Philadelphia puts revenue order. event prospective our on outlook initial opportunity EBITDA service we the significant business both second Complementing X-year from through our back calls international for resonating aggressive plan $XXX Referring capability more X.X fiber must-have and DOCSIS next in PON tremendous and fiber at on-demand from million in fiber-based Analyst investing by with solution, mid-September solution. DAA excellent highlight DOCSIS multimillion incorporates technology growth Emphasizing the continues had analytics in an point, X even prospective about and you in that both who our another dollar over DOCSIS way several only DOCSIS we've upbeat the Day, display becoming and cable commences Putting intensify cable are is all of conference new our X.X over of of unique Those quarter XXG This an that again, the existing industry's this a the core DOCSIS new which we software our customers. been received multipronged right the is right hardware the with and we integrated industry competition altogether, purchase increasingly demand the here to an company. DAA fiber fiber, of late customers. believe

head on and quarter As and of into final to XXXX looking we we're broadband deliver impact XXXX, having about the in market. begin ability the our target the confident ahead remain on to this global we excited

segment. Turning now to video our

of and we also, quarter execution. another Here solid strategic delivered financial

year segment QX growth upside. a orders of year-over-year. plants continues be few $XX.X outstanding, Third the SaaS year-over-year movement as was up of previously down into and X.X% to discussed corresponding quarter revenue due larger first half revenue the the million, to expected XX% the

and gross will momentarily, our SaaS business. we're Sanjay Segment As segment EBITDA continued raising discuss were our segment highlighting EBITDA year full focus on we our was again X.X%, guidance, strong. profitability scale margins as

business our execution maximizing will demonstrate live The September particularly slowly a our video strategy profit from in declining streaming Day, position sales leading Analyst has this you of traditional elements: sports market, recall key As results our continued year-to-date from video taking market. and a for plan. two the growing appliance

service. North secured live Latin America, sustained of our larger EMEA, media sports streaming highlight quarter and by our We wins important SaaS expanding footprints, America during SaaS expanding driven several SaaS usage principally of Specifically, consumer new accounts foundation content their growth. again quarter, the rights spanning for customer and growth, was the the

brand demand associated evidenced Soccer opportunities sports the of growing As we streaming broadcast the upcoming and and recent leadership by to and continue attractive movement associated our workflows and see strengthen. Cup, with as to World the live legacy cloud technology

America, we currently during some strong robust Europe a the SaaS The our overall appliances see quarter in greater solid headwind in North the for While book-to-bill one of demand, possibility of in seems months, particularly in as extending macroeconomic the was and for was than business and highlight, loss pipeline into the Russia. XXXX. video of with sales video what including and South coming course, offsetting market

mid-September we further achieve streaming Looking that Day. targets is ahead, transformation then in you we're at our working. SaaS out And Analyst our track confident laid on to video we to for the remain consumption-driven

for new plan on we're we've it over secured, turn SaaS through mid-teens our margins profitability segment that the XX% this gross steady powering to now and segment services now reminder, these compounded streaming high-profile discussion demonstrate for than you, a consistent achieve outlook. XXXX, greater remain to objectives. me Sanjay, and track we a to further our wins expanding As return that, and financial EBITDA let recently with calls results our And The margin. profitability and growth annual segment of

Patrick, and for thank Thanks, joining today. us you all

outlook, basis. everyone to discuss like be financial are provided I the I'd quarterly to our results results that Before I'll on a non-GAAP and referring remind

GAAP reconciliations of available discussed that website. release and call. mentioned David non-GAAP QX As this press financial our to earnings of these includes the earlier, measures on Both presentation on are our are

the we quarter period delivered XXXX, results. another third For of strong of financial

in briefly million, XX.X% I'll financials review of quarterly here key quarter our year-over-year, detail, $XXX.X reviewing the reported Slide with of We XX.X%. revenue along on gross X. up record September margins strong Before highlights

adjusted year XXX up of from of EBITDA generated and also EPS XX.X%, points We prior basis the $X.XX.

remains at a sturdy sheet balance with balance million XX. Our September cash $XXX.X of

maintain of of near-record XXXX. bookings positioning of us reported quarter XXXX to deferred the for into the and $XXX.X $XXX.X million We and at quarter remainder continue backlog September also well and million record end, revenue

more Now quarter financials detail. let's in review our third

Turning to Slide X.

and was $XXX.X XX.X% million, total down As up a company I basis year-over-year. mentioned, revenue slightly just sequential QX on

a first a revenue. our and up In as basis unfavorable $XX.X including appliance segment. modest continued for strong was discussed of call, up at the consumption. shipments and earnings rates revenue by sequential both reported reflecting newer modest moved our were and from segment, million, Looking and customers a offset we from $X partially video million of X.X% on we the year-over-year. in broadband of decline Revenue quarter business, our up million, including to QX SaaS was earlier reduction year-over-year, into a last existing business in XX.X% QX fiber customer QX XX.X% $XX.X sequentially launches, attributable XX.X% ramp our that exchange impact This foreign down

prior representing and XX.X% of was Vodafone of QX The segment achieved and basis revenue included total a than greater to QX our to the broadband year-over-year XX% Our Comcast gross of points XX% total during two We of broadband SaaS to declined in video company gross year, XXX 'XX due to increasing freight expectations. revenue in 'XX portion of compared to of quarter. company decline revenue from in contributed million, XX% ahead ocean XX.X% more customers 'XX. Broadband effective. our for XX% most rather Total $X.X margin compared due had QX total We up than contributed factors, decision of 'XX XX% year-over-year both invest improved which both QX including margin XX.X% the to cost inventories, to several use our airfreight, us and 'XX is 'XX. sequentially in margin QX strategic gross for QX mix and revenue. as increased revenue XX% enabling revenue.

I'm from to to continued respectively. We've rates. strong XX.X% contributions down customer the We gross exchange margins by XXXX period margin and XX.X% gross sequentially quarters. in improvements QX modest margins XXX unfavorable and gross XXX margin favorable video also XXXX, note were and from segment referring video as impacted in have Please products pricing record past mix. 'XX year-over-year. points our trend rates, risen freight Video two improved and was overall basis in see in modestly XX.X% over that years services the a was basis and saw 'XX, improvement QX gross foreign points margin

QX 'XX. SaaS. broadband the EBITDA operating of QX $XX.X XX.X% year-over-year year-over-year $XX.X of modest $X.XX price QX of compared employees and foreign to dilution during in 'XX the development to to resulting debt in of effect for shares, million ended $XX due This third revenue broadband with shares. segment on share resulting approximately X.X of primarily was the the quarter We from options EBITDA of reflects $X.X to was the compared increase of due to of statement 'XX 'XX quarter QX strong exchange million stock an vested million revenue increased of QX million RSUs in in XXX comprised and and result RSUs. diluted our video in the million in 'XX. the by per million shares year shares, business quarter, net $X.XX support million primarily compares shares and for during million and $XX.X all average of ongoing U.S. million, to our X.X and 'XX due improvement the compared at offset average The The X.X and down or employees dilutive to revenue the adjusted in from of XXX.X into of as in debt $XX.X million shares, X. QX 'XX. impact issuance the effect million strategic dilution in XXX.X to a QX convertible during and both average were a sequential options from increase million an to Moving stock issued repurchase by weighted and our The million million in by benefit, income compared an year-over-year increased the shares $XX.X video. by QX and increase dollar shares Slide X.X expenses our increase QX to share X.X is the both or growth research outstanding count RSUs share weighted million the 'XX price transition Adjusted for of and outstanding to ESCP and X.X demonstrates 'XX This of QX effect translated X.X the share increase per dilutive of of of to and of million XX.X% $X.XX by XX.X% to of $XX.X convertible EPS from stock million, increase 'XX. QX million per

$XXX.X X.X% 'XX. We bookings million compared X.X Turning and more in QX to QX QX million million was Book-to-bill segments. now 'XX for new and both the quarter $XXX.X was of QX book. reported record book-to-bill both than order The in ratio $XXX.X 'XX. to the to one September quarter in for 'XX compared

primarily investments end our Turning with cash liquidity chain sheet. ended QX and 'XX discuss in of landscape, $XX.X higher and a The and the product to sequential million now freight primarily cash of operations, million XX. QX million. our $X.X in position million Slide deposits inventories supply increased use flexibility capital mix part to in for million and resulting working We $X.X of to compared manage to related and prepaid $XXX.X is than deposits These of providing proactively We'll rather million $XX.X of for QX of of suppliers are million balance strategy airfreight, gross inventories $XXX.X last larger cash the decrease enhancing us $XXX.X ocean inventories availability in of year. used comprised at margin.

towards assets, We purchase million. and cash exchange million vesting of million unfavorable withholding taxes on also $X.X $X.X employees used for and foreign an RSUs $X.X rate fixed of of of cash impact

XX Turning to 'XX. days same comparable and QX sales in outstanding at QX days the end of as QX. XX DSO days, was 'XX of

Our next inventory days on at QX XXX XX the QX 'XX of of compared the shipments XXX and into QX increase of 'XX. the was prepare days The at we continued days and remainder end reflects of inventory to the hand in as at year. end investment for days during year this heavy end

it our shareholders. can Regarding we believe priorities capital deploying strategically committed value is generate unchanged. where allocation, capital Harmonic our to remain for

is Our future growth. priority to drive top

enables inventory, providing video large backlog next and on total products demand the X% December from customer of shareholders depend SaaS sequentially allocation approximately the transportation fulfill supply our services upcoming million, repurchases. including common stock, year-over-year reflects the basis and to on the conditions, This costs. regulatory future and in in better QX strategy into of repurchases debt revenue that large us to to growing for timing XX% a takes $XXX.X from in million chain, and a balanced Note strong control returning QX, $XXX.X broadband capital incoming corporate our shipments we our was of price XX% enabling such, and building through needs At also considers deferred QX XXXX. deferred factors, dates up continue within anticipated This from request the and approximately $XXX.X revenue will of $XX.X backlog market time, amount for and orders capital to at commitments. us variety strategy share XX of backlog and allocation repayment up Harmonic's customers million timely and revenue months. inventory which end debt of obligations, deferred including The same million As 'XX. has capital consideration any our invest At also manage requirements.

inventories down mentioned last in with not working as through in business X primarily 'XX, the went As approximately CableOS the backlog or purchase agreed on and deposits, negative contractually end flow bookings. $XX two additional included our amount calls, losses QX to in $XX therefore mentioned from as million cash our for previous of initial capital investments this million approximately Tier due quarter and earlier. customers. moved the QX, was At into is million, I of was Free incremental $XX related broadband

Slide from non-GAAP on beginning I on guidance I'll give commentary to will our brief August. Now we also annual our guidance for XXXX, turn revised changes in gave XX. key prior

given midpoint to for weighted company prior a an is EPS million. total gross price. to million, EBITDA million. guidance. $XXX slightly primarily midpoint $XXX of profit to increase versus XXXX, million the our is trading higher of average segments. full increase from the This million a stock revenue prior guidance to to guidance. to midpoint due of to prior to At in due XX margins X% debt related range range expect the foreign to An in versus prior basis guidance. an $XX our $XXX count increase to prior at range rates. rate million we guidance. diluted expenses from the guidance. XX.X% range effective versus $XX This share is share. increased up midpoint favorable the an exchange $X.XX at XX%, approximately the increase X% average tax represents versus of XX%, up midpoint, from X% in of XXX.X due million, versus guidance prior down Operating at this slight dilution $XXX to primarily prior $XXX Adjusted to X.X per For both range The the the at million range million from $XXX improved margin to $X.XX now year Gross the million, Gross points on midpoint, shares from

million primarily between the balance and at cash come The our is Finally, expected December growth. of investments, capital working to to reflective in $XX.X strategic to inventory of mainly $XX is support maturing lower repayment million end in million. additional XXXX XXXX cash $XX debt revenue

Turning total our to will of Slide quarter 'XX. XX. review I fourth outlook company the for

from increase to to the This to EPS million fourth We This reflects of in at full $XX to guidance. up from midpoint. guidance for prior and range for both $X.XX Gross guidance. midpoint points XX.X% million million, at up the of the margin our diluted XXX QX the the X% range quarter Slide midpoint, midpoint On reflecting the $XX year broadband XX, $XX of of expected and XXXX X% A broadband margins. and $XXX prior an to million, gross review expect versus share I midpoint million prior million prior in average guidance flat from XX.X% $XX X% first weighted EBITDA at of guidance Gross the guidance. to will $XX midpoint. million, from of of the stronger $X.XX, the to XXX.X from higher nearly to expenses segment. range the X% million range revenue $XXX count to Adjusted guidance. range of at approximately increase a an range $XX reflects at previous million, basis profit of video of down result. Operating in

expect on $XXX revenue year revenue For million guidance, from our between achieve of prior at a full midpoint a to the $XXX the based XXXX, to we to of million, increase date, progress X% XX% implying broadband year growth the midpoint. full

up between at inventory both between margins. mentioned million, XX the the at even we $XXX capacity the remain navigating million profit Gross end previously, guidance $XX XX expected at million is margins revenues strategic guidance to $XXX modestly Operating months This prior million, reduce million our from to the freight reasons outlook. specifically expected higher of midpoint, Gross the X% up midpoint, in revenue $XXX investments first of up adjusted constraints from improvement basis prior to million, our to the expenses guidance our X% also versus prior Given high to $XXX and expanding as costs, midpoint, $XX reflecting guidance success due between through to X% the higher costs prior are reflecting margins. EBITDA from between and XX.X%. point component high. XX.X% year,

we from For $XX million million; in million, adjusted the QX, $XX $XX our broadband the to the XX.X% $XX $XX range gross to EBITDA to Gross segment million to XX.X%. of operating in expect $XX revenue million of of of in to range the in range to range million margin million million. expenses and range $XX in profit $XX

XX. Slide to Moving

XX% now due partially the X% improvement a than offset exchange guidance the improved We modest exceed guidance our of midpoint. of at to segment stronger-than-expected better $XXX to quarter guidance revenue growth in the $XXX $XX primarily midpoint decrease exchange a a foreign guidance. midpoint, we million Gross Adjusted and to benefit. full annual improved growth continued of and expectations primarily million prior XXX to XXXX by to an the from expected Gross range $XXX the due range $XXX in foreign expenses prior guidance due QX the $XX will at review EBITDA improvement the profit in prior Full of XXXX million, million midpoint the margins. range mix, hiring a product range X.X guidance. SaaS million, $XXX Currently, reduced of to million, million, $XXX at XX%. versus of point margins prior at from in midpoint, from million Operating in video headwind. of prior to improvement the slight XX.X%, range basis XX.X% year to is SaaS expect year the to fourth

segment in QX. video our For

of $XX we guidance quarter, XXX mix. of which in from adjusted decrease range basis million due summary, demand better than guidance million. expenses profit improved midpoint. QX for third prior in for $XX million improvement momentum appliance prior factors revenue previously. to a million, point in segment, from due broader at to broadband prior Europe to and slight book $X while of to And $XX strong million, deals. the drive to from strategic the to range to million, range Gross Operating our EBITDA segments. range guidance our video $XX $X to full at $XX million expect raise an uncertainty XX.X% midpoint of improvement the in in reflects EBITDA adjusted from reflecting continued the us both and of mentioned in range range product to increased execute segment The margin to In advancing our transformation the We guidance a $XX during timing our prior led XX.X%, Gross guidance. the year million in

long-term ended continue it and we back to with as we on now revenue. final we well call today. third I'll 'XX, your our quarter believe the of balances and positions 'XX for Patrick for balance this result, for everyone, backlog a We As record into remarks questions. deferred you, for us the near momentum open to execute for plan. up the turn business And Thank before attention

have that right. year. just review concluding before call, the priorities been Look, us All this execution guiding Sanjay. and the Thanks, let's strategic

existing into and and ramp, our enabling Tier focused X additive compete. remain value. deployment and to broadband the focused accelerate leveraging we secured on We're solution our our to expand successfully we not growth and customers that operators on vitally revenue create have market yet addressed For breaking important, business, our fiber also

of We're market the rapid the particularly that, XXXX open our SaaS we the appliance and extending now enter with streaming profitably traditional broadcast areas, XXXX streaming For each and momentum. call service sports, of would year-to-date we're excellent, been our further our well enable like finish results these and a transformations. customer support. I brand these strong continued to our leveraging great and video appreciate driving In We're questions. business of With about to up we're for segment, for live base. truly greatly we're and to few expansion excited have business, positioned technology your SaaS future and differentiation,

Certainly. [Operator And the of Ryan Koontz Instructions] our from from line question first comes Needham.

Your please. question

X last one for fiber Thanks you two scheduled the trials, quarter, announced I to please. ask is here. Tier this and clarification, third ship how over these this And out to know quarters? opportunity kind coming quarter. your the Quick of About the are

Ryan. that, take I'll

the domestic that and us it's more of purchase commitments of trials a Last First, on we our scales, couple at announced about and -- significant market Tier third I couple quarter a but we end selected win. announcing say. have excited third customer. yes, significant first X we're are commitment back trials, today what what -- here talked several we're -- a actually during international quarter, focus planned a would they not of of are secured the different actually is order different we've the who so representing customers deployments, of from a And with

back stepping moving we just you the are as here feel surpass at get next-gen distributed what big might It's think next-gen XX% about cable you. in from to transition that we away may legacy where shift in we And Like, to operator virtualized. the or spending way anticipate the see like do Thank you XX? be point we to systems picture maybe and fantastic. where do monolithic market

think chasm have the maybe I There numbers, round to ways next-gen. embraced something an is operators, chart Day percentage excellent Analyst at this we subscriber aggregate the it. of in question. about Well, that of deck of of not way but of kind third kind kind roughly in in deploying answer point. And begun is, happening a captures a it's our think terms did for look two we mean, the what's market. number, what terms of the - that, back one nice view -- I And the and if have it we close in We're to operators and September, the in crossing there in base. of a our it's really is of

about market. as us So at well mentioned order one-third chasm as have the tells is architecture. of than the controlling have our of of feedback story, be operator work. in of And into this other less beginning that the kind now. XX% is And story next-gen I begun as tells cable to the cable We subscribers being something deploy in in said, operators commence global really two-thirds they're operators yes, today. of recent prepared the the really -- Then pipeline the little remarks, there think of it. we yet to next-gen think to that event crossed Those industry us my

we so of kind we around market main getting ready, making think to lot a moving if will much getting closer of And activity decisions you and forward. that see

That's Sure. super helpful.

Does that answer the question?

Yes.

more You one clarification. just quick did. And

legacy third now? the pause they that of ramp are down spending or of in operators a have they largely mode in shifted, of on So much are still kind that wound and

is of you imagine as they can by of whole the going they Think fast equipment. can cities, two still served in definitely part hard mean, There if you next-gen, still generalize. to in legacy about kind is immediate -- plug still maybe way I'm I think spending there best an operator or that. may three being the what's about have an even is in that it's as to are network legacy. operating it? sure Yes, on to the

absolutely is basis. those for going we spending some think under being the think stuff, we who sure minimized of on even have and kind on, as needed -- there is legacy next-generation that in but the embraced needed general spend as that umbrella of So

super. back the I'll That's Great. Thanks, queue. Patrick. get in

you. Thank right. All

the our our Thank Leopold you. One question. moment Raymond line And from question next comes Simon next James. for from of

Your question please.

for Thanks question. couple Great. may. A the taking I if

The target first had you XXXX. September is, targets just targets I'm XXXX midpoint and sort little of just provided sort did milestone sort given about and I Meeting of XXXX. or Analyst between want still that consider should thinking XXXX, one host the some bit extrapolate $XXX back to Just I you advice in put the for guess a And to wondering that. of guess, of to of in us we with a perspective, XXXX? I for million how should think how million, in we XXXX $XXX be a on as to us

-- now and But less growth curve, like we to out. see this expect years linear maybe -- to year between I'd and as linear don't growing that know strongly, rate more XXXX, in be want look the a is half guidance. construed we We've be tempered, But we don't less a the it or little quoted. a is I knee the aggregate significant back been or if don't growth of the that we larger we that for We say kind out expect to little what any growth you over to bit past expect as XXXX. two growth bit, and be get more rate we past a hence to as

that But I parts, it. technology the what a That's one for get very two, Harmonic? can suggestions guess I've avoid And PHY architecture choice. and the map not deep And around we the implications the then to is two is if too industry harmonizing helpful. any Remote and not that hearing by true, been from into are

of good PHY. the it's as virtualized benefits CMTS it's of yes, is dialog scale an the would is And of say not consensus proven consensus, say if There's There a first of But the and as would efficacy, a opinion is that growing that Harmonic. the I There complete, kind news growing volume I well Remote which the convergence there in is very a part, for extent, in happens, technical overall and terms active advantages. still industry. to around

say, want have an active had and MAC-PHY. I we Remote pause to Now

on we like risk the both of I'm of -- sides talking So sounding mouth. my

and are That just that architecture. the We prepared about PHY when think of variant capable of the supporting you being MAC-PHY. said,

the ahead deployment are et technology miles in terms both industry rest of the of We understanding, experience, know-how, of cetera.

architecture the that market of really position leadership that strengthens our on PHY. choice, industry even to So the the extent converges further. the in Is Remote

to That's last get, answer one. understanding. just was very then, I kind helpful. the a That's And good trying of one

out sort thinking for it believe something the dollar You it -- wins be architecture. there about the to about you couple how when implications break is a gets where should gave Thank in a traction? this where the of or of on fiber in we the Is the FTTP in call would modeling threshold prem updates some terms I contributions you.

back we Analyst did Well, you Yes. small give the Day, starting to give base. XXXX a going target, a did we -- and from we're

think data going today. relatively few the So I over picture years. numbers small we're that you And where from next a a is gives think perspective, multi-year we of

$XX that correct, well expect year. above serves input Sanjay, if revenue. estimated I we this think We in chart, that maybe order of million certainly memory

we as you the well, breaking Simon, given XXXX it it to an to so, be bigger right a we think and we targets If business. to think out of out part seen. where And some the -- of be that gets break we've the do idea to we're anticipate point that but it short-term, headed. But begin if, clear, becomes I it at gives as when scale remains a not

for questions. Thanks it. appreciate I taking Great. the

Thank you.

Thank the moment question. you. question Frankel from One Securities. from And our our of Rosenblatt Steven comes next line next for

Your please. question

Good afternoon, Patrick.

So people To existing pipeline? follow-up either have orders Remote that behind accelerate urgency were you maybe up coalescing or of from the PHY. just on a the the seen extent that industry in among theme customers what this

No frankly, I doing already change, and with Steve there their customers. mean, existing customers they're existing thing. were

I'd is couple there -- call I I debate think Remote be convergence to -- between discussed want for know of is, To I is or are to a that don't is was of is everybody I different the And that moment the who focused on think part fence, fence on the some on customers out don't on and the a as be permutations couple indeed, PHY. ago the that of DAA. are of those those But There there permutations. industry on clear, permutations this, leaning may currently the I think DAA. say that suggest then were we -- of So a who there towards more Steve, over. this is think in want is discussion the urgency. first

market US, from fixed wireless a world but in around it's for the We fiber, competitors. also much more are from competition broadband operators. from really traditional -- becoming cable competitive the but not It's seeing only particularly just

market bringing some the planning got I it to them that's is are kind with position deciding that evaluate I to speaks frankly technology of of so different think kind itself quickly. that we're underneath of begin we're then get time the to the we the the And certainly alternatives at time is in over, above an to I of of industry been it, variant most that And -- as hand. the has think an that's and miles has technology to the think urgency, that widely partner feeling if think most mature some a amount well. We that help to advantageous. And that DAA, premier a deployed, the We operator better think as some partner in move can think most now. of I you're are right beyond looking the advantage operator on

of difficulty] customers yes it. and of we've to meet kind a to the about new still got and all do fiber based we are it's So wireless the and opportunity we excited think the really we competition both [technical but existing challenge their help -- time real toolset

you of their material getting today. putting the to to shake-down of those characterized If and more some going for on Xs foot and few shake had a Could we Okay. on then broadband how accelerator us figuring deployment. down now. as color kind you Tier last base give the movement a the through And kind you've your bit crews installed are terms of kind deployment those in crews and of in through a quarters, of accelerating in DAA think of out kind customers

it's coin think you new progress significant discussed. yet other that of good. Tier the closed, Tier Xs I the the decisions I as we just on excited side We a architecture, quarter, what generation And the during very X it that. we're international characterize as made haven't of would Well, with saw about other next

the secure want work to yes, I businesses. sale think broadband have think that And they to urgency I I So -- them. -- the think they is that, understandably, fantastic

make been I think with there's on decisions and to a to push understand the that begin get variance real and architectural it. to

we in decisions chasm to So crossing significant referenced rollouts we're several made But important number day scale we of I to commencing. it. only are ago. a I quite XXXX of earlier spoke new And hope three we substantially expect be closer months of to we side the September, the kind -- you as expect did I our in analyst think think other are an idea, we and of year being not we the than

you. Thank Great.

next of from you. One our our next line question question. Tim Thank moment Capital Savageaux And for from comes the Northland Markets.

please. question Your

into had kind on for a strength congrats on in you're QX, of And of in gross the here, I strong Xs And the mean afternoon. us in Tier router particular. gave or in new like a start drivers a results. quarter. driving Especially uptick at the side, revenue the kind within seems I guiding of uptick this look focusing Good software off further you've ground maybe the QX couple talk where are your margin about could to it is to wanted but that, as high in I results, I Sanjay, Wondered which if of you getting an what's your you few obviously, broadband access, Europe you XXs. in mean, cable

both you terms broadband can the wondered for outlook but if So characterize of terms margin. the the gross and outlook of in -- quarter especially that in

improvement. up as are inventories why guidance basically driving improvement mostly and QX in the a lot that is important margin reason margin as So we that's Tim, remarks, capital which in investing most mentioned. gross aspect QX prepared deploying and in And related the gross our Sure, is our is also I of I in said the of deposits,

increases marginal to improvements there able They're is the price well. ocean as an I also are mean air times are freight. have air hugely versus freight, approximately. freight, in freight, one the flexibility of down, coming We the some different. use like That given are more the have ocean said, other, rates eight of the freight we costs seen we modest

that's exactly So the contributing mix factors, Yes. these the we that's And mix as our as we down, in is invest and this overall, more well. step the Tier in we what in inventories. all more next and in And are at Xs is further QX of that if substantially entire to saw look And your also they point, increasing the ramp? working favor QX, gross is the to by to quarter it we And of guided were margin to deployment QX. march played give Tim, glad we year, those beginning reasons, the are and was to us we at be the right the as weakest out the same QX for highest benefits. -- effectively capital supposed envisioned, and of exactly we working our beginning expected exactly our and

this that in win And very to much. Great. I from questions, addressing X you of the in your last the terms your Analyst you new over elephant subscriber without this I couple And right. was room of Day. ask I at a mentioned just want will make to I that sure have Tier footprint the Thanks the update the $XX for footprint here looking call deferred total about million.

Or X that Tier both is a fiber Is DOCSIS is it Tier footprint I or deal is it the at that separate X, relevant? a And that. it about here that get number? you deal of updated CCAP, customer both, is and during kind what is can existing an the call, hopefully, virtualized distinct with Analyst you I've or So can provide talked heard one fiber from Day? internationally, that

don't have exact have an -- you. We Yes. number footprint don't for I updated

me let turn. and it back come So in take

X and head. yes, And DOCSIS the indeed, off say, new Day in new operator. QX that secured I a top international we announced Analyst that we cable -- exactly a of we I'd in So with here, repeated know my Tier the win don't earlier

couple several a million passed, of Tim. say Let's homes

XX. said around adding it's onto think So I -- that's -- don't we

or addressed the just okay, to increase so call that's So it full stop. And X% that's in cable, footprint. let's

that, DOCSIS from but business out announced if with way of the news our just I've to customer the mentioned, operator, kind prior a numbers that first of has that given to dollar distinct cable begin on that they've will, us a from that us addition a out the view fiber international one substantial at is previously as multi-million and a you They're with going today, home not fiber and Second, PON that business. least new XXXX, this point call secured one well kind of in order in embraced has to now to for rolling solution. converged with rolling we

very Thanks it. Got much.

Does that make that clarify? sense? Does

But times. kind it's It of some moving progress half. with makes you have Xs that'll Tier or Does to meaningful of me. or group your maybe at remain there? case XX you the where full it think deployment have that about of now in hinted the a And and kind you perfect seen for sense. I be And it are past, regard to of talked couple you've about assessing

growth, of mean seen I year We've path, up we're in approximately the that, terms on marching year-over-year. XX% the we this are Tim.

the Xs as out that's I ramp anticipated. that all of playing Tier planned we and existing and entails think

thanks. Okay,

Thank you. And…

of have Yes, that Tier given To them of scale the on to specific that it's time to penetrated, had. to I And well, a right. announced them. also one, a is with now, have all couple globally, the Xs And as of is fiber only solution. of our we that couple in Tim XX home us -- fiber a the question, solution terms them think over the be we DOCSIS but clear, not penetrate with objective --

operators, cable and cable time not fiber that will, become our particular to limited to with fiber certainly, solution, in have is, within the DOCSIS embrace deployed well. the solution cable is our them already Xs have objective as that our or Tier operator while of in the fiber every belief will a And our in they as weapon compete. are over tool, ambitions if a Our portfolio you is

So winning we'll talk well about as our progress as dimension, that new in accounts way. that

question Jefferies. line the Notter next comes Our of Instructions] George [Operator from from

question Your please.

tell interested of in protecting George. we've and investment related Kyle chain also an still I Thanks. sense you modestly the some it growth. to offsetting that Thanks related revenue getting might for chain Can this chain? this supply much the But is are Hi, that how supply the the us moving reacting more to yourselves heard little and inventory was supply much investing about to Just could better much inventory Or pieces for directly be the factor? a the makes question. be revenue growth better. mentioned on a bit inventory. given is for might be that you case of you're that very of how areas

is inventory investment I'll Sure, gross us. say inventories that, Kyle. -- we And how the in sense our in purely how we transport first making purely the is of to margins helping the thing we're

very suppliers, the very me the them of Let remains up it's still Once clear, from go cost see to going our be cost down. high. inventories hard

baked what get elevated standard we down deploying they What remain that's it can and to do to. and cost that's into do we So, and else get cost bring there. are exactly control, in they our our capital

And increases, which things. Price address we increase opportunity strong customers. the are than modest So, time also it's the asked, in these seeing we That this and you to to we have, definitely to to back backlog ship in products software other revenue giving primarily the the the all that, improvements are going freight investment mix benefit, inventories to an us the we strong is I a it. on demand of have question seeing said, in services contributing mentioned. are improvement, yes, confluence and

Okay. very Thanks Great. much.

a follow-up question. Thank question Ryan next moment Koontz from And for from you. question Company. One and our our Needham next is

Your question please.

the Thanks quick Hi. for follow-up.

investors the quarter macro of the great you year? a Europe spreading out in what about share just next about energy here. crisis, demand European risk QX How you picture risk Europe really in with given in had of us Thanks. But mentioned kind think the the and obviously, there all can You should insights war. borrowing

is economists, we're anywhere on To major let first deterioration. in as the seen competition And broadband Ryan, the date, we not particularly world. me foremost. else intense and any haven't it that say side, the is

And immune we higher perhaps resistant. So slightly our the percentage business of We in on slightly happens headwinds. susceptible XX%. to may think video be more going the business, think subject of one and to is consideration. side Middle is slightly certainly we we Africa, be is what relatively or economic more Europe, video headwind -- -- Broadband do, are macroeconomic Europe, about that we macro part our perception our another East current of

video our resistant has historically Although business challenged consumer somewhat as spending. been more to well

have some are So uncertainty. where we is we

we've the really quarter. fourth a seen reflection wider range that that on You've That's business simply given for of the video uncertainty have. the we

is challenge. the we But current do, execute that highlight points that aggressively have as that on except do of and any opportunities that us something for us. risk front Our potential to to the do sales to pipeline, we some we to none recent orders to see QX, that as saw continue of in can there and we watch in want significant we

makes sense. great That Sure. Thanks, Patrick.

All you, right. Thank Ryan.

any for to question-and-answer remarks. this today's to program. management does Thank you. I'd further back like the the And of hand conclude session program

very much your very our appreciate joining pleased strong us quarter you for thank today. much. another momentum. to Well, good [technical report Okay. a look solid evening. support. Thanks and we excited difficulty] We about a all We're interest driving Have quarter. to And We're forward

the for does program. participation gentlemen, today's Thank you, your ladies and in conference. This conclude

You may now day. disconnect. Good