Harmonic Inc.

Welcome to the second quarter 2024 Harmonic Earnings Conference Call. My name is Amy and I will be your operator for today's call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please note that this conference is being recorded. I will now turn the call over to David Hanover, Investor Relations. David, you may begin.

Thank you, Operator. Hello, everyone, and thank you for joining us today for Harmonic's second quarter of 2024 Financial Results Conference Call. With me today are Nimrod Ben-Natan, President and CEO, and Walter Jankovic, CFO. Before we begin, I'd like to point out that in addition to the audio portion of the webcast, we've also provided slides for this webcast, which you may view by going to our webcast on our investor relations website. Now turning to slide two. During this call, we will provide projections and other forward-looking statements regarding future events or future financial performance of the company. Such statements are only current expectations and actual events or results made different materially. We refer you to documents harmonized filed with the SEC, including our most recent 10Q and 10K reports and the forward-looking statements section of today's preliminary results press release. These documents identify important risk factors which can cause actual results to differ materially from those contained in our projections or forward-looking statements. And please note that unless otherwise indicated, the financial metrics we provide you on this call are determined on a non-GAAP basis. These metrics, together with corresponding GAAP numbers and a reconciliation of GAAP, are contained in today's press release, which we have posted on our website and filed with the SEC on Form 8-K. We will also discuss historical, financial, and other statistical information regarding our business and operations. And some of this information is included in the press release. The remainder of the information will be available on a recorded version of this call or on our website. And now I'll turn the call over to our CEO, Nimrod Ben-Matan. Nimrod?

Thanks, David, and welcome everyone to our second quarter earnings quarter. Now turning to slide three. Today we reported second quarter results that were at the high end of our guidance in both our broadband and video segments. These results demonstrate the solid execution of our operating plans. Before I go into the highlights of each business, I would like to make a few opening remarks. Our year-to-date results, full-year 2024 projections, and continued market momentum give us confidence that our broadened strategy remains on track for strong multi-year growth. During our June Analyst Day, we outlined our long-term growth plans and today I'm going to provide updates on our progress. Profitability is improving in our video business as our right-sizing actions have taken hold, and we are focused on a growing pipeline of new Tier 1 SaaS and larger-scale appliance opportunities. Many of us watched the exciting opening ceremony of the Olympics through streaming on Peacock, And it is events like these that highlight our video SaaS capability to provide pristine quality at scale with the highest reliability. In a few minutes, I will provide a status update on the actions we have taken and the opportunities ahead of us. Finally, with our progress to date, we are reaffirming our full year 2024 revenue guidance in both broadband and video, and Walter will provide more details. Now turning to slide four, specifically to our broadband business, Harmonic had another solid quarter of execution on our key programs. We reported segment revenue of $92.9 million compared to $97.1 million in the prior year, and up 17% sequentially, which was at the high end of our expectations. The number of global customers deploying our COS solutions reached 118, up 20% year over year, corresponding with over 30 million DOCSIS cable modems now served worldwide. This represents approximately 18% of the global market. We are witnessing intensified competition among broadband service providers, prompting them to invest in their networks to deliver higher speeds, achieve greater reliability, enhance customer satisfaction, and reduce operating costs. These market dynamics perfectly align with the unique capabilities and value offered by our COS platform, driving the business momentum we are experiencing. During the second quarter, we shipped a record number of DOCSIS 4.0 outdoor nodes and expect this trend to continue throughout the second half of the year. These DOCSIS 4.0 nodes, along with our COS platform, enable our customers to deliver symmetric multi-gig services over existing HFC networks. To experience our innovative technology firsthand and witness the excitement of new customers, we invite you to see our demonstration of unified DOCSIS 4.0 at the upcoming SCTE conference in September. This significant market-leading development offers full optionality on both DOCSIS 4.0 flavors developed in collaboration with our silicon and operator partners. We're also assisting our existing customers and new prospects with testing and trialing the boosted extended capabilities of DOCSIS 3.1, which enabled them to achieve fiber speeds over their existing networks. We expect more customers to adopt this approach as the new class of DOCSIS 3.1 and 4.0 modems become available later this year. While we are focused on expanding and scaling deployments with our largest existing customers, further diversifying our customer base remains a key priority. Demonstrating our progress, today we announced that Telecentro, a leading telecommunication operator in Latin America, has selected our COS broadband platform to modernize its broadband network. Telecentro is a key player in driving broadband innovation in Latin America, and represents another tier one customer win for Harmonix. Additionally, we're pleased with the progress we've made in growing our pipeline and securing bookings from customers looking to modernize their cable networks to enable greater reliability and higher upstream and downstream speeds. Another topic I would like to discuss is fiber, which is a major part of our long-term growth strategy. We continue to gain traction in fiber to the home with recent orders and wins. Last week, we announced that PowerGold Utilities has selected our COS platform to upgrade their network to 10G XGS while supporting existing ONUs. This is an important win in a new market that leverages our peer, a high-density, low-power OLT shelf that began shipping in the second quarter. We also announced a new product called PEL, which uses the same foundational technology as Peer and is the market's highest density remote OLT. We have initial orders for Pell from key international accounts, and it has successfully passed customer testing and will begin production shipments in the third quarter. Pell enhances our COS portfolio, enabling operators to deploy in any network topology with any ONU while leveraging a single virtualized broadband core platform. In summary, our broadband business continues to grow and expand revenue. This is largely due to Harmonix's unique market position, differentiated technology advantages, strong customer relationships, favorable industry dynamics, and a rich array of new products and services that give us confidence in our multi-year growth outlook. We executed the first half of 24 in line with our plan and are confident in our ability to carry this momentum forward through the rest of 24 and beyond. Now turning to slide number five, moving now to our video segment. Total segment revenue for second quarter was $45.8 million compared to $58.9 million a year ago. Sequentially, segment revenue was up 6% and exceeded the high end of our guidance as we started to see the business stabilize. This included the SAS revenue of $14 million, which was up 3.2% year over year. In Q2, we saw improving margins as we advanced towards positive EBITDA. This was due to the mix of business and our right-sizing actions. Our priorities going forward are to continue executing on our business streamlining initiatives to drive to profitability. We are currently ahead of schedule as seen in our second quarter results. While we have seen modest growth in SaaS today, we are now seeing more momentum with positive industry trends and an active and growing pipeline of new tier one customers, primarily driven by live sports. We are excited about the market activity around new live sports agreements, as well as the new delivery of 4K immersive formats, which provides much higher bit rates and new level of viewing experiences, which our SaaS platform is perfectly designed for. The new in-stream targeted ad monetization solution we presented at NAB a few months ago is gaining greater industry interest as it enables new ad placement opportunities for advertisers. While we focus on releasing the service by the end of the year, we are working closely with the advertisement functions of our customers to integrate these new capabilities. On the appliance side of the business, we are seeing a refresh cycle of play-out and compression systems, which are driving increased pipeline and bookings with Tier 1 customers. During the quarter, We booked a major refresh project with one of our largest international customers. Finally, I want to highlight the recent enhancement of our board of directors with the addition of three new members. Our new directors bring a wealth of knowledge, expertise, and experience from the broadband and telecom industries. Their insights and guidance will be invaluable as we execute our strategic initiatives. In conclusion, Harmonic delivered another robust quarter with revenue at the high end of our guidance range, while profitability in both businesses exceeded our expectations. These results demonstrated strong execution in both our broadband and video business, as well as favorable market dynamics that continue to drive demand for our products and services. With that, Now over to you, Walter, for a deeper discussion of our financial results and outlook.