Harmonic Inc.

Welcome to the first quarter 2025 Harmonic Earnings Conference Call. My name is Lisa, and I will be your operator for today's conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To answer your question, please press star 11 again. Please be advised that today's conference is also being recorded. I would now like to turn the conference over to David Hanover, Investor Relations. David, you may begin.

Thank you, Lisa. Hello, everyone, and thank you for joining us today for Harmonix's first quarter 2025 Financial Results Conference Call. With me today are Nimrod Ben-Natan, President and CEO, and Walter Jankovic, Chief Financial Officer. Before we begin, I'd like to point out that in addition to the audio portion of the webcast, We've also provided slides for this webcast, which you may view by going to our webcast on our Industrial 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 may differ materially. We refer you to documents harmonic 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 the corresponding gap numbers and a reconciliation gap, are contained in today's press release, which we have posted on our website and filed with the SEC on Form 8K. We will also discuss historical, financial, and other statistical information regarding our business and operation, 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-Natan. Nimrod?

Thanks David and welcome everyone to our first quarter 2025 earnings score. Before we get into the specifics in each of our businesses, I would like to provide a high-level update on how we're executing on our long-term growth plans and navigating tariffs and the current macroeconomics environment. Today we delivered another strong quarter advancing our long-term growth strategy. Revenue reached 133 million dollars as we exceeded our video revenue expectations. We also generated adjusted EBITDA of $21 million, again, ahead of our previous outlook. Complementing this, strong operating cash flow lifted our cash balance to $149 million at quarter end. That's even after the $36 million we returned to shareholders through share repurchases. We closed the quarter with backlog and deferred revenue at $485 million, underscoring the durability of our business model. In 2025, we're continuing to navigate the current industry shift to unified DOCSIS 4.0. As we noted on our last earnings call, we expect 2025 will be a below-trend revenue year for broadband due to unified 4.0 timing and its effect on customer deployments. Now, potential tariff exposure has contributed to this outlook. Having said that, With our technology and market share leadership position on Unified 4.0, our progress year-to-date has been in line with our expectations. Therefore, we continue to expect resumed revenue growth in 2026 with Unified 4.0 and existing customer ramps, as recently reflected on a Deloro analyst report, which supports this future long-term growth outlook. Turning to slide number five, our broadband vision is becoming a reality. we are seeing rapid adoption of next-generation virtualized platforms across both DOCSIS and fiber networks. And I will highlight some of that focus today. Turning to slide number six, as we continue to execute on our broadband growth strategy, the revenue in this segment was $84.9 million for the quarter, representing 7.6% growth year-over-year and gross margin expanded to 55.5% reflecting a favorable product mix. We ended the quarter with 129 COS deployments in production, managing 33.9 million connected modems and approximately a quarter million remote-fi devices, a testament to the scalability and maturity of our virtualized access platform. Based on our focus to date, we expect to bring at least nine new customers, one in prior quarters, into production during the second quarter, further expanding the reach of our COS platform. Our customer diversification keeps accelerating. This quarter, we added seven new logos, Astound, and a second top five North American MSO upgrading to Unified 4.0, and a tier one Latin American operator launching a major fiber upgrade. Rest of world bookings were also strong, and we expect that momentum to continue, further expanding our global install base. Industry trends are amplifying this progress. As cable operators pursue broadened subscriber growth, they are shifting to a virtualized access platform that delivers higher speeds and reliability while lowering operating costs. Harmonix's proven deployment record, field-tested unified 4.0 capabilities, and converged access and fiber architecture help operators compete, deploy faster, and scale with confidence. Fiber is a major pillar of our broadband strategy and the momentum we are seeing here is unmistakable. We booked a record quarter lending three new pure fiber winds and completing eight expansion projects with existing customers. First, a tier one Latin American operator selected harmonic for a nationwide upgrade based on the density and performance of our remote OLT solution and our industry leading power efficiency. Second, One of our largest North American customers have expanded its deployment with our virtual BNG and remote OLT solution on the very same distributed access network it already runs for virtual CMTS and DAA, another proof point of the power of convergence on COS. And third, our open ONU strategy is proving its value in the field. Earlier this quarter, an operator seamlessly migrated from DZS to Harmonic with COS OLTs managing the legacy DZS ONUs already in subscriber homes. We expect this success story to resonate with other operators looking to replace their DZS network equipment following that company's Chapter 7 bankruptcy. These wins show the Harmonix Open and Converge platform lets operators match the right access solution to every market use case, accelerating fiber rollouts with precision and confidence. Turning to Unified 4.0, we continue to gain further traction here. In Q1, we started volume shipments of Unified RPDs and are on track to introduce the Unified at a front end in the second half of the year. Since the architecture was open to the broader market, our team has been working closely with more than a dozen operators and ecosystem partners to validate the technology and craft deployment roadmaps. That engagement is already translating into wins. As mentioned earlier, Astound chose Harmonic for a network upgrade that adds advanced DOCSIS and fiber capabilities, and we also secured a second top five North American MSO that will deploy unified DOCSIS 4.0 in the second half of the year. On the innovation front, we recently demonstrated 13 gigabit per second downstream throughput on a live unified system. which is faster than today's 10 gig fiber to the home speeds. This is an industry first that showcases the bandwidth performance built into the standard. We will keep highlighting this breakthrough at industry interoperability events and directly to customers throughout the second quarter and beyond. Achievements like these underscore the maturity of the unified ecosystem and reinforce why operators continue to choose Harmonic as their partner of choice for DOCSIS 4.0. Innovation remains the foundation of our industry leading position. In this quarter, I'm pleased to highlight three major advancements. First, we placed our patented PTP-less timing solution into live commercial service. This technology lowers overall DAA costs while enhancing reliability and represents another important proof point in our continued drive for smarter and simplified broadband infrastructure. Second, Our beacon speed maximizer, a real time automated network optimization service, leveraging our COS edge compute capabilities is now live with eight customers. This service gives operators a powerful new way to ensure consistent subscribers experience and proactively manage network performance. And third, we are excited to see one of our top customers launch the nation's first ultra low latency internet service. powered by our virtual CMTS technology. This milestone enables an entirely new class of latency-sensitive applications, from cloud gaming to immersive real-time collaboration, helping broadband operators to deliver a differentiated experience with increased quality of service. To summarize, our broadband business continues to expand, adding new logos and delivering breakthrough innovation. With the world's Largest base of live virtual CMTS networks, first mover scale in Unified 4.0, and converged platform that spans both DOCSIS and fiber, Harmonic is uniquely positioned to help operators deliver faster speeds with greater reliability while lowering operating costs. Record fiber bookings, rising rest of wall demand, and robust innovation pipeline give us confidence in this business' long-term top-line growth as unified and fiber deployments scale through 2026 and beyond, while we prudently navigate near-term tariff and macro uncertainties. Now let's turn to slide number seven to discuss current market trends in our video business and to provide an update. As the video market evolves, the bar for broadcast grade quality and reliability keeps rising. Being a provider of leading video appliances, our customers still depend on harmonic appliances to keep their flagship channels flawless. And now they expect the same no-glitch experience for streaming, especially when premium sports rights can mean millions of dollars per minute. To meet these rising stakes, we are finding that customer demand spans across appliances, SaaS streaming, as well as an accelerating shift toward hybrid deployments that blends on-prem capacity with cloud elasticity. That theme of multiple and often hybrid solutions was front and center at the NAB show in Las Vegas, where we unveiled AI power advances and industry's first end-to-end play out to delivery workflow for the live at Weigel Broadcasting. Turning to slide eight, this momentum was visible in our first quarter results. Our appliance business sharpened by renewed focus and discipline execution delivered excellent margins on a higher volume of larger refresh deals and a series of competitive takeouts, including notable wins in the service provider segment. It remains sort of the profitable engine for us with strong pipeline of opportunities. Meanwhile, our SaaS streaming business posted Q1 revenue of $14.8 million and continues to build robust pipeline that supports growth in 2025 and beyond. The drivers are clear. First, expansion of live sports streaming with existing customers where we deliver some of the world's most prestigious events with unmatched reliability. Second, a pipeline of tier one operators poised to scale on our platform. And third, strong demand for AI-based monetization tools that we previewed at the NAB show and will move from proof of concept into full production next year. Taken together, the strengths of our appliance offering, the rapid expansion of SaaS streaming, our differentiated hybrid solution, and our strong operating leverage all position our video segment for sustained and profitable growth in 2025 and beyond. Now I will turn it to Walter for a deeper review of our financials and to elaborate on our expectations for and response to potential tariff impacts on our business.