Harmonic Inc. Q1 2023 Earnings Call
Yeah.
Okay.
Okay.
Welcome to the Q1 2023 harmonic earnings Conference call. My name is Lucy and I will be your operator for today's call.
At this time all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session.
To ask a question during the session you will need to press star one one on your telephone please.
Please note that this conference call is being recorded.
I will now turn the call over to Scott Eckstein.
The relations Scott you may begin.
Thank you operator.
Hello, everyone and thank you for joining us today for harmonics first quarter 2023 financial results Conference call with me today are Patrick Harshman, President and Chief Executive Officer, Jeremy Rosenberg interim 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 Investor Relations website.
Okay.
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 the documents harmonic files with the SEC, including our <unk>.
Most recent 10-Q and 10-K reports.
Forward looking statements section of today's preliminary results press release.
These documents identify important risk factors, which could 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 to GAAP are contained in today's press release, which we posted on our website and filed with the SEC on form 8-K.
We will also discuss historical financial and statistical information regarding our business and operation. 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 on our website.
And now I'll turn.
Turning the call over to our CEO Patrick Harshman Patrick.
Thanks, Scott and welcome everyone to our first quarter call in the first quarter harmonic delivered another period of excellent results.
Revenue was $157 $6 million EPS was 12 cents.
And adjusted EBITDA margin was 14%.
<unk> segment revenue grew 23% year over year.
Geoscience revenue was up 72% for the same period.
And both segments had book to Bill greater than one.
Strong demand for our products and services was further evidenced by strategic multiyear contracts signed for both cable and.
Video sounds during the quarter.
These new contracts overall demand trends.
The success, we're seeing gives us continued confidence in our ability to deliver on our full year 2023, and previously stated multiyear growth objectives.
Taking a closer look first at our broadband segments. It was another excellent quarter characterized by strong financial growth promising market development and expanding technology leadership.
Segment revenue was $104 million or 23% year over year.
Adjusted segment EBITDA margin was 21, 5% demonstrating consistently improving operating leverage.
The customer wins brought the total number of broadband operators deploying our solution to 94 of 22% year over year.
The quarter end, our cable once deployments expanded to serve $18 4 million cable modems worldwide still only approximately 10% of the global cable modal footprint.
Looking ahead, we see expanding opportunity associated with both the remaining 90% of its global cable footprint for distributed DOCSIS three one and follow on investment waves associated with DOCSIS four <unk> fiber to the home.
Network expenditures.
Breaking this down a little further for 2023 growth expectations remain centered around our existing customers will continue to reaffirm and execute the advanced DOCSIS three one and distributed access deployment plans across their networks.
Looking a little further ahead engagements with prospective new accounts are increasingly encouraging aided by the visible success of our current customers and accelerating industry recognition of our unique market leading benefits of our solution.
Notably during the quarter, we announced our partnership with charter.
Excited to contribute to their new network evolution footprint expansion and operational efficiency initiatives.
We're also excited about the progress we continue to make with our new DOCSIS tornado and fiber solutions important contributors towards multiyear growth plan.
In the DOCSIS Ford Auto area, our technology is out in front.
Actively supporting our customers with advanced demonstrations and trials.
In February our unique cloud native BB&T and remote PON solution continues to gain traction with both new and existing customers.
Orders and sales pipeline are growing in line with our 2025 fiber growth target.
I'll conclude this broadband update by reminding you of our overall 2025 financial targets.
Over $825 million revenue.
Over 28% EBITDA margin.
The combination of our existing customers have already begun multiyear deployment programs new customers, we expect to begin scaling in 2024.
And our increasingly strong competitive position across both cable and fiber all give us high confidence in delivering on these 2025 targets and building an even stronger broadband business, we will drive profitable growth for years to come.
Turning now to our video segments here also we delivered a solid quarter.
First quarter segment revenue was $57 $2 million.
Although the top line was down gross margin was 64% up 160 basis points year over year, reflecting a continued shift to software reduced low margin server sales and especially continued SaaS transformation and growth.
SaaS revenue was up over 72% year over year exceeding 20% of total segment revenue for the first time.
The strong <unk> sales growth was primarily driven by existing media accounts expanding their live sports content rights and consumer reach.
Resulting in growing consumption of our services.
The second significant highlight of the quarter with several new SaaS contracts with major media players that will begin to contribute recurring SaaS revenue in the coming periods.
Among these were greater than $10 billion expansion with an existing sports streaming customer.
And $20 million contract with a historically appliance based broadcaster who's flipping the majority of their traditional operations to our science.
Associated with the April industry event in Las Vegas, We recently made several announcements that highlight our growing leadership and success and live sports streaming and dynamic service monetization.
On the customer front, we announced a very exciting relationships with Madison Square Garden.
<unk> interactive.
Broadcast.
And the technology and services front, we announced significant new SaaS technology advancements and ecosystem partnerships for dynamic ad insertion.
Fast channel creation.
Recapping our video business strategy, we're focused on taking a leading position in the growing streaming SaaS market, particularly for live sports and maximizing profit from the traditional video appliance market.
So the financial focus on recurring revenue gross profit and EBITDA.
Our first quarter results, both financial and strategic.
<unk>, we continue to make excellent progress towards these objectives.
In fact, we're increasing our internal streaming SaaS forecast for 2023.
We remain highly confident in the 2025 business transformation SaaS revenue growth and composite EBIT targets. We previously shared with you.
With that ill now turn it over to Jeremy for further discussion of our financial results and our outlook.
Thanks, Patrick and thank you all for joining us today.
Before discussing our quarterly results as well as our outlook, we remind everyone that the financial results being referred to are provided on a non-GAAP basis.
Scott mentioned earlier, our Q1 press release and earnings presentation includes reconciliations of the non-GAAP financial measures to GAAP, but are discussed on this call. Both of these are available on our website.
We delivered another quarter of strong financial results highlighted by record first quarter revenue and solid operating profit we ended the quarter with a solid balance sheet as well as record backlog and deferred revenue positioning us well for continued growth in 2023 and enter 2024.
Before reviewing our Q1 2023 financials in more detail, let's briefly review the key highlights here on slide seven.
For the quarter, we reported record revenue of $157 6 million with EPS of <unk> 12 cents record.
Record bookings of $325 5 million and record backlog and deferred revenue of $623 5 million now lets review, our first quarter financials in detail.
Turning to slide eight again total Q1 revenue was $157 6 million up six 9% on a year over year basis.
Looking first at our broadband segment Q1 revenue was $104 million up four 5% sequentially and 23% year over year, reflecting continued current customer ramp up and newer customer launches, including modest fiber revenue generated during the quarter.
In our video segment, we reported Q1 revenue of $57 3 million down 16, 1% sequentially and 13% year over year.
Our video revenue included SaaS revenue of $11 6 million up 72% from the prior year, which was ahead of our expectations.
Had one customer representing greater than 10% of total revenue during the quarter with Comcast representing 47% of total revenue, which was similar to last quarter.
Total company gross margin was 53, 9% for Q1, 'twenty three up 120 basis points sequentially, and 660 basis points year over year, reflecting increased gross margins in both of our business segments.
Broadband gross margin was 51% for Q1, 'twenty, three up 250 basis points sequentially, and 1210 basis points year over year.
This improvement was due mainly to a very favorable product and services mix and to a lesser extent, our strategic inventory investments to enable sea freight versus airfreight.
Video segment gross margin was 64% in Q1, 'twenty three up 50 basis points sequentially and 160 basis points year over year. This was primarily due to sats continuing to scale.
Moving down the income statement on slide nine.
Q1, 'twenty three operating expenses were $66 2 million up five 2% sequentially and 13, 4% year over year.
The increases were primarily due to increased research and development to support the growth of our broadband business and the ongoing strategic transition of the video segment two sacks.
Adjusted EBITDA for Q1, 'twenty three was 21 4 million or 13, 6% of revenue up 48, 3% versus Q1 'twenty two comprised of $21 6 million from broadband representing 21, 5% of segment revenue.
And a loss.
Point 2 million from video.
This all translated into Q1, 'twenty three EPS of <unk> 12 per share compared to <unk> 17 per share in Q4, 'twenty two eight per share for Q1 'twenty two.
We ended the first quarter of 2023 with a calculated diluted weighted average share count of $117.8 million compared to $117 3 million in Q4 dollars 22.
<unk> $110 6 million in Q1 'twenty two.
The year over year increase was primarily due to the issuance of shares for settlement of the premiums for convertible debt conversions upon maturity in December 'twenty two and.
And the issuance of shares to employees for vested restricted stock units ESP purchases and performance based compensation.
Turning now to the order book, we reported record bookings up $325 5 million.
The book to Bill ratio was two one for the first quarter for.
For Q4 22 in Q1 'twenty two our book to Bill ratios were 0.8 and 1.4, respectively.
Q1 bookings include particularly strong multiyear SaaS bookings and new cable OS commitments.
Over time as supply chain conditions improve we expect this ratio to normalize and approach the historical benchmark up modestly greater than one.
Turning to the balance sheet on slide 10.
We ended Q1, 'twenty three with cash of $90 9 million compared to $89 6 million at the end of Q4 'twenty two.
The net $1 3 million sequential increase was due to a variety of factors, including improved DSO.
We generated $6 3 million in cash from operations net of investing 10 $5 million and inventory increased.
Inventory has by design enabled us to meet strong demand for our products and to proactively manage our supply chain.
Enhanced product availability and provide us with flexibility to use a higher proportion of ocean freight over airfreight, resulting in improved gross margin.
As noted earlier these investments helped drive the gross margin expansion, we reported for the quarter we.
We also used $2 $3 million of cash in the purchase of fixed assets.
Turning to days sales outstanding at the end of Q1 'twenty three DSO was 58 compared to 59, the previous quarter and 71 in the prior year period.
Days inventory on hand was 163 days at the end of Q1 'twenty three.
Up 16, 4% compared to the end of Q4, 'twenty, two and up over 71, 6% compared to the end of Q1 'twenty two.
Increase reflects our continued proactive investment in inventory as we prepare for growth during the rest of 'twenty three and into 2024.
Regarding capital allocation, our top priority remains driving our future growth.
As such we will continue to strategically invest and building inventory to meet the strong demand that we're seeing we.
We continue to enjoy considerable success by employing this strategy.
Yep.
If the supply chain situation improved substantially as we have stated previously we do have the flexibility to manage our working capital differently and generate additional cash by maintaining somewhat lower inventory levels.
At the same time, our capital allocation strategy also takes into account our ability to return capital to our shareholders through stock repurchases.
Again, as we stated previously the timing and amount of any repurchases will depend on a variety of factors, including the price of harmonics common stock market conditions corporate needs and regulatory requirements.
At the end of Q1 total backlog and deferred revenue was $623 5 million.
This record backlog and deferred revenue reflects strong demand from our large broadband customers and growing video SaaS commitments.
The majority of our backlog and deferred revenue has customer request dates for shipments of products and providing services within the next 12 months.
Please note.
We are now guiding to majority within 12 months, rather than our historical 80% guide.
This change also reflects the timing of some commitments up greater than 12 months with scheduling and process.
In summary, operating cash flow was solid in Q1 'twenty three.
Taking into consideration our stated capital allocation strategy, whereby we invested our free cash into inventory to meet the persistent demand, we're seeing from our customers and to support our continued growth and managing Craig.
Let's now review our revised non-GAAP guidance for 2023, beginning on slide 11.
For total company for the full year 2023, we expect revenue in the range of $705 million to $740 million up $8 million at the midpoint from prior guidance.
Gross margin in the range of 59% to 51, 9% an increase versus prior guidance.
Operating expenses to range from $262 million to $271 million, a slight increase versus prior guidance.
Adjusted EBITDA to range from 108 million to $125 million up $7 million at the midpoint from our previous guidance.
An effective tax rate of 20% up from 13% last year as we exhausted our Nols in the past year.
Right.
Weighted average diluted share count of approximately $118 1 million. Please note that the convertible debt related dilution included in our share count uses the Q1 average stock price of $13 79.
EPS to range from 63 to 74 per share subject to the just mentioned dilution calculation.
<unk> at the mid point from previous guidance and cash at the end of 2023 is expected to come in between 125 and $135 million.
For total company for the second quarter of 2023 on Slide 12, we expect revenue in the range of $161 million to $171 million.
Gross margin in the range of 51, 8% to 52, 9% operating expenses to range from $66 million to $68 million.
Adjusted EBITDA to range from $20 million to $25 million and effective tax rate of 20% a weighted average diluted share count of approximately $117 8 million.
EPS to range from 11 to 15 and catch to range from 90 million to $100 million.
Turning to slide 13.
For the full year 2023 based on our progress to date and the latest customer information, we expect broadband to achieve revenue between $450 million to $470 million, which is $5 million above prior guidance at the midpoint.
Gross margins between 46% to 47%, a 100 basis point improvement over previous guidance, given our expectations for software hardware mix.
Operating expenses between $123 million to $128 million up slightly from our previous guidance based on supporting increased customer activity.
Adjusted EBITDA between $90 million to $99 million.
For our broadband segment in Q2, we expect revenue in the range of $101 million to $106 million gross margin in the range of 47% to 48%.
Operating expenses in the range of $31 million to $32 million and adjusted EBITDA to range from $18 million to $20 million.
Now on slide 14.
Let's review our full year 2023 video segment guidance, we expect revenue in the range of $255 million to $270 million up to $5 million at the mid point from previous guidance.
Gross margins in the range of 59, 5% to 65%.
Operating expenses in the range of $139 million to $143 million down slightly and adjusted EBITDA in the range of $18 million to $26 million.
For our video segment in Q2, we expect revenue in the range of $60 million to $65 million gross margin in the range of 60% to 61% opt.
Operating expenses in the range of 35% to $36 million and adjusted EBITDA to range from 2 million to $5 million.
In summary, during the first quarter.
We continue to execute our strategic plan and drive strong growth in our broadband segment, while advancing the plant transformation of our video segment.
We ended the first quarter with record backlog and deferred revenue we.
We believe this and the strong demand we continue to see from both new and existing customers positions us well for the rest of 2023 and into 2024 as we continue to execute on our long term business plan.
Thank you everyone for your attention today and now let's turn back to Patrick for final remarks, before we open up the call for questions.
Well, thank you Jeremy.
In summary, we delivered another very strong quarter characterized by excellent financial results significant new contracts and important new customer relationships in both the broadband and video sides of the house.
Our technology, our customer relationships and our team will continue to lead the markets we serve.
We see great opportunity ahead.
We remain determined and confident in taking full advantage of these opportunities in 2023, 24 325 and beyond.
Thank you for your continued support.
And with that let's now open up the call for questions.
Okay.
As a reminder to ask a question you will need to press star one one on your telephone again Thats Star one one on your telephone to ask a question.
These standby, while we compile the Q&A roster.
Yes.
Our first question comes from the line of Simon Leopold of Raymond James Your question. Please.
Great. Thanks for taking the question.
So in March you announced the Charter award, which we've all been keeping our fingers crossed waiting for but.
What struck me was it specifically talked about the virtual see MTS products and does not discuss other products such as the DAA nodes.
Given that the revenue forecast sort of assuming.
Your your intent is to sell them DAA nodes as well and not simply the cable are worth.
Head end solutions, but if we could get a little bit more color on the composition of that project and the timing I'd appreciate it.
Well.
It's a little awkward assignment hits.
We can't go there and talk in any specificity about to any particular customer's plans.
The.
The communication that we agreed in that you saw with charter was intended to really speak to the partnership around the broad portfolio with the capabilities that harmonic brings to bear.
<unk>.
Certainly our Virtualized core is central to our solution and hence the specific mention of that.
And any engagement that we're involved in worldwide.
We see strong interest and opportunity around both the centralized core software.
As well as the hardware elements of the solution.
So without implying anything too specific about charter just kind of it's axiomatic that we would we would pursue.
Hardware related business with charter just like we would within the other customer.
And then.
And then just as a follow up the forecast for that.
Broadband segment suggest a pretty heavy backend load through the year given that the first half of the year is just a little over $200 million and even your low end is $450 million for the full year.
How should we think about that is it a very backend loaded sort of <unk> or is that the third quarter.
Sort of a somewhere between the <unk> guide how do we think about it given sort of trying to figure out where that revenue is coming from and the timing. Thank you.
Yeah.
Look.
Every one of our customers is actually still scaling.
So the.
The overall theme is continued growth.
<unk> short of saying it's linear.
But we expect Q3 to be up and we expect Q4 to be up on top of that and Thats based on the.
The aggregate continuing deployment plans of our global customer base.
Thank you very much.
Thank you.
Thank you.
Our next question.
Comes from the line of Ryan Koontz of Needham <unk> Company. Your question. Please Ryan.
Thanks for the question.
Nice work on the gross margin Theyre, moving up and great bookings number obviously I wanted to ask.
Sure.
Respond so much quantitatively, but can you help us understand the software contribution there.
In terms of the quarter.
Bookings I assume with the shift in long term deferred there's a stronger software contribution there as well.
Maybe shed some light on that would be helpful. Thank you.
Yeah, Hi, Ryan Chairman here, Thanks for the question and.
And.
And in our.
Results, we absolutely did get a.
Strong software mix.
<unk>.
And our.
And that and that did push the margins up and Thats.
As you well appreciate sometimes the timing on how those things happen.
We've.
We've really taken a systems approach too.
How we sell as you know as between <unk>.
Software and hardware, so we're not breaking out software and hardware.
In the backlog.
Sure sure Okay.
And then maybe if you could reflect on.
Non Comcast revenue you've had just a tremendous run there.
How should investors think about the scale of the non Comcast revenue forward here.
Do you think we'll start to see some meaningful growth there as we go through the year.
Okay.
And the short answer is yes.
Comcast is the largest cable operator.
And the planet and they are also furthest ahead, so it's not surprising to see them upfront, but in aggregate. The rest of the market is much larger and our competitive position with the rest of the market is growing increasingly strong so overtime.
While we.
We're excited about the work we still have ahead of us with Comcast.
Just the math of the rest of the market says that the rest of the market will increasingly be a larger larger coarser portion of the business that we're seeing I believe.
That's fair. Thanks, Thanks, so much and congrats again on the charter deal.
Thank you Brian .
Thank you.
Our next question comes from the line of.
Steven Franco Roes.
Rosenblatt.
Please go ahead Steven.
Hi, good afternoon. Thanks.
Keeping with the theme from the last couple of questions going back to the last call. I think there were some color you guys gave around the fact that there were three or four tier ones that were very early in their deployment pace you would anticipate.
Stated that they would be scaling up between now and between now and the end of the year is that still the case or did any of those customers plans get pushed out.
It's still the case as there is no material change in terms of.
The expectation so the forecast that we had.
For a bunch of them.
Okay.
Yeah.
And you mentioned an interesting case in the video business, although legacy appliance customer.
Switching to broadband maybe.
Switching to.
And to your cloud based offerings and SaaS, maybe walk us through the economics of that kind of a transition and do you think this is something that will become fairly commonplace in your customer base over the next couple of years.
I'll start with the end of the question I mean, the short answer is yes.
I think that the.
From both a technology perspective, and from an economics or business model perspective, I think that the broadcast market is has been kind of very much on the learning curve understanding.
Harnessed cloud.
There is no question that it is.
It's not really a question of if but when.
<unk>.
The economics.
Both from a cost perspective as well as from a.
Okay.
The flexibility and innovation perspective from a personalization perspective.
Overwhelming advantages that.
That are I think increasingly understood by the market Steve So.
If you go back to the analyst day that we didn't September we've talked about streaming sports is perhaps the largest opportunity, but we also highlighted and conversion of traditional broadcast infrastructure is another significant sales opportunity and it's it's great to see the first from.
From our perspective, the first major Domino there too to fall if you will.
<unk>.
In that regard.
Great and then.
Lastly, maybe an update on the CFO search.
The headline is it's going well, yes, Jeremy has a big smile. Yeah. So there were fortunate we are having discussions with a number of really excellent candidates and.
Hi.
I can't give you specific dates, but we're making good progress and I think that will have a <unk>.
A world class CFO on board.
In the not too distant future.
Great. Thank you.
Alright, thank you.
Thank you.
Our next question comes from the line of Tim Long of Barclays. Your question. Please Tim.
Thank you two if I could.
First on the on the video side, Patrick can you talk a little bit more.
About kind of the SaaS wins, you guys are getting as you mentioned.
Live sports a few times, but can you talk a little bit about the complexion of those wins.
Rod base. They are are these kind of competitive wins or is it folks maybe we're looking at do it themselves or just any color you can give us there and then you also mentioned fiber to the home going well. According to plan can you just give us an update there on how your customers are looking at.
That portfolio and how you see the ramp going thank you.
Okay. Thanks.
Both good questions Tim.
<unk> front.
Really it's all of the above as I reflect on our perhaps our top 10 SaaS customers they really come from all.
All of US in categories. We've previously spoken about I would say in general they are all competitive with either our traditional competitors or as you say within house.
One of our top three customers. For example is the first time that gone outside they do their own.
Stuff.
<unk>, which is a somewhat easier technical problem, but they turned to us for the large sports.
Other recent wins were very much competitive situations with other peer companies competitive companies like us who are providing.
A more turnkey cloud based SaaS offerings.
And as we touched on a couple of moments ago.
From another dimension the customers also span.
Media companies that are new to us maybe.
New brands out there all the way to traditional brands that you and I know for the last 30 years that are.
Sure.
Alright.
<unk> their approach.
Their philosophy on infrastructure and moving from a traditional appliances too.
So it's.
It's really all of the above and.
We previously described as a fragmented market I'm impressed with the way our team is increasingly a sales and marketing is getting after it kind of covering the market from all different dimensions to to get engaged with us.
Period.
The kinds of opportunities.
Okay.
On the on the fiber side.
I think fiber is becoming increasingly relevant for all participants in the market.
Homebase for US is really the cable operators and they're.
There is increasing competitive pressure in certain markets from fiber based competitors and having a fiber offering as part of the Arsenal, particularly on what we call brownfield is as it seems increasingly important to the cusp.
<unk> strategic plans and our solution seems to be a perfect fit for for that kind of application will be really layer on top of the <unk>.
<unk> cloud native core.
And the already distributed multi gigabit.
Access point or question called milk.
Okay.
Okay, great. Thank you.
Alright, thank you.
Thank you again to ask a question. Please press star one one on your telephone at this time again Thats Star one one on your telephone to ask a question at this time.
Our next question comes from the line of Tim Zalviso Northland Capital markets. Your question. Please Tim.
Thanks, and good afternoon and congrats on the.
A crazy bookings number.
<unk>.
And I'll ask you about that in a moment, but I wanted to touch on I think this may be kind of a new metric you've given us here.
About your cable modems served representing 10% of the global footprints.
Is that.
Is that 10% of cable broadband subscribers globally, and I guess historically, you've talked about the footprint of your wins, which you added two substantially I mean, I assume that's up to 130 million ounce or something like that in terms of homes passed but that's a different metric than the subscriber metrics.
You gave us so.
I think in both cases it suggests you're still pretty early on whether it's 10% of the subscriber footprint or what looks to me to be 14% of your win homes passed but how should we look at either or both of those metrics.
Kind of assessing where you are in the cycle and I want to follow up on that.
Tim I'm going to pick this one up thanks, so much.
Great question always.
So if you go back to our Investor Day, I think we did.
Talk about.
The size of the Tam maybe not so much on the quarterly calls.
And.
When we look out.
Outside of China, it's about $190 million.
<unk>.
For high speed data for our architecture.
So.
So that that is a tam reference for us.
And to your question about how far along.
I think as Patrick laid out.
We're at about the 10% Mark for.
DOCSIS three one.
And as we laid out.
<unk>.
September .
You have a DOCSIS four always.
That is.
Coming up and then you also have a fiber wave and then multiple speeds.
Fiber from them so.
So we see ourselves still is very very early exciting days here.
And.
Look forward to your follow up question.
Well, specifically with your largest customer they had talked about basically being at a 20%.
Kind of.
Fleet with the upgrade of the footprint by year end and moving over 30%.
By the end of the year this year, which still.
It seems like a long way to go but.
Does that represent is that similar to the cadence that you've seen.
Say last year does that represent an acceleration or.
It seems with those type of metrics.
Charter is trying to do this a lot faster I guess, we'll see about that but.
Yes.
Like you've still got a ways to go with with Comcast in particular, even though they've been going for a while any color on that front would be.
I appreciate it.
Look I mean.
Hi.
I think we're fortunate we're all fortunate that Comcast has been pretty open that recent industry conferences et cetera, and talking about their progress and their plants.
I think we don't really have anything more to add.
Through that.
But their plans I think really have laid out that they've talked about publicly it laid out there.
Theyre multiyear ambitions and both their their continuing commitment to what theyre doing and indeed to the fact that there.
They still have a ways to go.
So we're just fortunate to be along.
Working with them as a partner and we've been at it for several years as you know with them and indeed, we see a.
Pretty bright and exciting future around the current laser technology.
And then coming waves of technology.
Great if I could just sneak one more in quickly I mean, you seem to imply in your commentary that.
As was the case last quarter your guidance for broadband for this year is.
Overwhelming I don't know what the right word is completely.
A function of your current customer base.
And that is.
As well as the backlog commentary shifting from.
80% of the majority.
I guess thats it.
Do you expect that.
The big New orders that you got on the broadband side in Q1 to ship.
Principally into 'twenty four is that fair to say.
Yes.
As we said the backlog is still majority within 12 months. It is important to remember that while there is much discussion about the supply chain improving we're still in general dealing with 12 month lead times and commitment requirement. So thats something that our customers are cognizant of and working with us on.
So indeed.
Order.
Right now it doesn't need to be more than 12 months, but it reflects in general.
<unk> 12 month view, which indeed does bring us into 2024.
I think thats. The first part of your question, Yes, 2023 predominantly.
Existing customers.
See you.
New customers really all the time kind of coming on and slowly beginning to ramp.
But with that caveat 2023, the best way to think about it as predominantly existing customers and win.
Really see material impact from the new customers in 2024.
Great. Thanks.
Alright, Thank you Tim.
Thank you.
Our next question comes from the line.
George Notter of Jefferies. Your question. Please George.
Hi, guys. Thanks, a lot I guess I wanted to.
If I go back to a conversation I think we had in the past it was about.
You know, how the sort of vendor ecosystem for optical nodes.
Yes, I had kind of taken a step back Cisco of course.
More or less exited the node market in.
It was a result, there was a period of time, there where harmonic was was getting more share than you guys anticipated and I know, it's diluting margins, but if I if I come back to the environment currently where do you think you guys are in terms of node market share do you think you guys could have a third of the market.
Half two thirds I mean, what.
Kind of share do you think is reasonable in general for the company.
Bob.
We believe.
And it's consistent with I think as the Delaware group that tracks. This so we believe that when.
But let's.
Let's focus specifically on the distributed access nodes, George which is where we <unk>. We participate we think we're in the neighborhood of about 70% of the DAA nodes that have been deployed.
To date.
Our multi year or 2025 model that we presented our analyst day envisions this percentage dropping somewhat.
But.
Perhaps closer to 50%.
And maybe the 30%.
We might have discussed with you I don't know a year or 18 months ago. So in short.
We've been pleasantly surprised by the success that we've had.
We built a great product.
It's not just that it's tied to our cloud native core.
From a power consumption from our capability from a throughput point of view from being able to house, both the DOCSIS and the fiber elements number of reasons.
Our node turns out to be extraordinarily competitive.
<unk>.
We expect it will continue to be that way, perhaps 70% market share is a bit lofty.
Hence our multiyear view that it comes down but.
We're increasingly confident that we'll be able to.
Maintain.
A very healthy market share.
Got it that's great and then as a.
A follow up.
Yes.
I know from some of the metrics here you guys have.
I think you said $18 4 million homes that are now connected to cable OS when I look at the second derivative of those numbers quarter to quarter.
It's down a chunk relative to what you put up in December I think this quarter you passed an additional connect an additional $3 2 million homes I think in December that was $4 3 million homes and so.
Should I infer from that that your cable OS revenue.
It was down sequentially or.
Should I not be kind of aligning revenue so tightly with homes connected as I think about you guys.
Yes.
There is certainly a correlation over time, but quarter to quarter a lot of different stuff happens in terms of <unk>.
Shipment deployment et cetera, and particularly in the first quarter, where some geographies are affected by weather George.
Thank.
I wouldn't read too much into a quarter to quarter fluctuation I do think that our full year guidance and then the multiyear guidance is really the best.
Is the best indicator of the overall trend that we see around the cable Lewis.
Great that helps thanks, very much guys I appreciate it.
Alright, Thank you George.
Thank you I would now like to turn the conference back over to management for closing remarks.
Alright, well. Thank you all again very much for joining us we had a great first quarter.
Second quarter is well underway the rest of the year and the following years continued to look very positive.
Excited about our business excited at what we're doing and we continue to appreciate your support and look forward to our next opportunity to update to meet with you until then have a good evening everyone.
This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
Yeah.
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Okay.
Yes.
Yes.
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