Q2 2024 Harmonic Inc Earnings Call

Welcome to the second quarter 2024 Harmonic Earnings Conference Call. My name is Amy and I will be your operator for today's call.

Unknown Executive: Jamie, 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.

Operator: 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.

Speaker Change: At this time, all participants are in a listen-only mode.

Unknown Executive: To ask a question during the session, you'll need to press star 1-1 on your telephone. You'll then hear an automated message; advise your hand is raised. To withdraw your question, please press star 1-1 again.

Speaker Change: 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.

Unknown Executive: Please note that this conference is being recorded.

Speaker Change: To withdraw your question, please press star one one 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.

David Hanover: I will now turn the call over to David Hanover, Investor Relations.

David Hanover: Thank you, Operator. Hello, everyone, and thank you for joining us today for Harmonic's second quarter 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 Industrial Relations website. Now turning to slide two.

Unknown Executive: David, you may begin.

Nimrod Ben: 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 Notter, President and CEO, and Walter Jankovic, CFO.

David Hanover: Thank you, Operator. Hello, everyone, and thank you for joining us today for Harmonic's second quarter of 2024 Financial Results Conference Call.

Speaker Change: With me today are Nimrod Ben Natan, President and CEO , and Walter Jankovic, CFO .

Nimrod Ben: What 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 slide 2. During this call, we will provide projections in other following 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 harmonic file with the SEC, including our most recent TENQ and TENK reports, and the following list of statements section of today's preliminary results press release.

Speaker Change: 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.

David Hanover: 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 Full Enlistment Statements section of today's preliminary results press release. These documents identify important risk factors that can cause actual results to differ materially from those contained in our projections or forward-looking statements.

Speaker Change: 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.

Speaker Change: Such statements are only current expectations and actual events or results may differ materially. We refer you to documents harmonically filed at the SEC, including our most recent 10Q and 10K reports and the Foreign Lucky Statements section of today's preliminary results press release.

Nimrod Ben: 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.

Speaker Change: These documents identify important risk factors which can cause actual results to differ materially from those contained in our projections or forward-looking statements.

David Hanover: 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 8K. 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 Lattan. Okay.

Speaker Change: And please note that unless otherwise indicated, the financial metrics we provide you on this call are determined on a non-GAAP basis.

Nimrod Ben: These metrics, together with 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 A.K. 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.

Speaker Change: 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 8K.

Speaker Change: 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.

Nimrod Ben: The remainder of the information will be available on a recorded version of this call or on our website.

Nimrod Ben: And now I'll turn the call over to our CEO, Nimrod Ben Natan.

Speaker Change: The remainder of the information will be available on a recorded version of this call or on our website.

Nimrod Ben: Nimrod? Thanks, David, and welcome everyone to our second quarter earnings score. Now turning to slide 3. 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.

Speaker Change: And now I'll turn the call over to our CEO , Nimrod Ben Lattan. Nimrod?

Nimrod Ben: Thanks, David, and welcome, everyone, to our second quarter earnings call. 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 plan. Before I go into the highlights of each business, I would like to make a few opening remarks.

Nimrod Ben-Natan: Thanks, David, and welcome, everyone, to our second quarter earnings score.

Nimrod Ben-Natan: 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.

Nimrod Ben: Before I go into the highlights of each business, I would like to make a few opening remarks. Our year-to-date results, fully year 2024 projections, and continued market momentum give us confidence that our broadband strategy remains on track for strong multi-year growth. During our June analysis 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 one, SaaS, and larger scale appliance opportunities. Many of us watch 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.

Speaker Change: These results demonstrate the solid execution of our operating plans.

Nimrod Ben: Our year-to-date results, full-year 2024 projections, and continued market momentum give us confidence that our broadband 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 poll. 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.

Speaker Change: Before I go...

Speaker Change: Into the highlights of each business, I would like to make a few opening remarks.

Speaker Change: Our year-to-date results, full-year 2024 projections, and continued market momentum give us confidence that our broadband strategy remains on track for strong multi-year growth.

Speaker Change: During our June Analyst Day, we outlined our long-term growth plans and today I'm going to provide updates on our progress.

Speaker Change: 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 one SaaS and larger scale appliance opportunities.

Speaker Change: Many of us watched the exciting opening ceremony of the Olympics through streaming on Peacock.

Speaker Change: 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.

Nimrod Ben: In a few minutes, I will provide a status update on the actions we have taken and the opportunities ahead of. Finally, with our poorest 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 the netters 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 doses cable modems now served worldwide.

Nimrod Ben: In a few minutes, I will provide a status update on the actions we have taken and the opportunities ahead of us. [inaudible] Based on our polls to date, we are reaffirming our full year 2024 revenue guidance for both broadband and video, and Walter will provide more details. Now, turning to slide four.

Speaker Change: Finally, with our polis to date, we are reaffirming our full year 2024 revenue guidance in both broadband and video, and Walter will provide more details.

Nimrod Ben: 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 to over 30 million DOCSIS cable modems now served worldwide. This represents approximately 18% of the global market.

Walter F. Jankovic: Now turning to slide four.

Walter F. Jankovic: specifically to our broadband business, Harmonic had another solid quarter of execution on our key programs.

Walter F. Jankovic: 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.

Walter F. Jankovic: 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.

Nimrod Ben: 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, and hence 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 40 outdoor nodes and expect this trend to continue throughout the second half of the year. These DOCSIS 40 nodes, along with our COS platform, enable our customers to deliver symmetric multi-gear services over existing HFC networks.

Nimrod Ben: 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 we expect this trend to continue throughout the second half of the year.

Walter F. Jankovic: 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.

Walter F. Jankovic: These market dynamics perfectly align with the unique capabilities and value offered by our COS platform, driving the business momentum we are experiencing.

Walter F. Jankovic: 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.

Nimrod Ben: 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.

Walter F. Jankovic: These DOCSIS 4.0 nodes, along with our COS platform, enable our customers to deliver symmetric multi-gig services over existing HFC networks.

Nimrod Ben: To experience our innovative technology firsthand and witness the excitement of new customers, we invite you to see our demonstration of unified DOCSIS 40 at the upcoming SCTE Conference in September. This significant market leading development offers full optionality on both DOCSIS 40 flavors, developed in collaboration with our silicone 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.

Walter F. Jankovic: to experience our innovative technology first-hand and witness the excitement of new customers.

Walter F. Jankovic: We invite you to see our demonstration of Unified DOCSIS 4.0 at the upcoming SCTE conference in September .

Nimrod Ben: 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 enables them to achieve fiber speeds over their existing network. 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.

Walter F. Jankovic: This significant market-leading development offers full optionality on both DOCSIS 4.0 flavors developed in collaboration with our silicon and operator partners.

Walter F. Jankovic: We're also assisting our existing customers and new prospects with testing and trialing the boosted extended capabilities of DOCSIS 3.1, which enable them to achieve fiber speeds over their existing networks.

Walter F. Jankovic: 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.

Nimrod Ben: 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 Harmonic. 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.

Nimrod Ben: 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 1 customer win for Harmonic.

Walter F. Jankovic: While we are focused on expanding and scaling deployments with our largest existing customers, further diversifying our customer base remains a key priority.

Walter F. Jankovic: demonstrating our progress.

Speaker Change: Today we announce 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 1 customer win for Harmonic.

Nimrod Ben: 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.

Speaker Change: 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.

Nimrod Ben: Feeds.

Nimrod Ben: Another topic I would like to discuss is fiber, which is a major part of our long-term growth strategy. We continue to gain attraction in fiber to the home with recent orders and wins. Last week, we announced that powerful utilities has selected our COS platform to upgrade their network to 10GXGS while supporting existing ONUs. This is an important win in a new market that leverages our peer, a high-density low-power O&T shield that began shipping in the second quarter. We also announced a new product called PEL, which uses the same foundational technology as PIR and is the market's highest density remote O&T.

Speaker Change: Another topic I would like to discuss is fiber, which is a major part of our long-term growth strategy. We continue to gain...

Speaker Change: Attraction in Fiber to the Home with Recent Odors and Wins.

Speaker Change: Last week, we announced that PowerWorld Utilities has selected our COS platform to upgrade their network to 10G XGS while supporting existing ONUs.

Nimrod Ben: 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 PEL from key international accounts, and it has successfully passed customer testing and will begin production shipments in the third quarter.

Speaker Change: 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.

Speaker Change: 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.

Nimrod Ben: We have initial orders for PEL from key international accounts, and it has successfully passed customer testing and will begin production shipments in the third quarter. PEL enhances our COS portfolio, enabling operators to deploy in any network topology with any O&U while leveraging a single virtualized broadband core platform. In summary, our broadband business continues to grow and expand revenue. This is largely due to Harmonic'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 inline with our plan and our confidence in our ability to carry this momentum forward through the rest of 24 and the end.

Speaker Change: 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.

Nimrod Ben: Pell enhances our COS portfolio, enabling operators to deploy in any network topology with any ONU, while leveraging a single virtual as broadband core platform. In summary, our broadband business continues to grow and expand revenue. This is largely due to Harmonic'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 outcomes. 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.

Speaker Change: Pell enhances our COS portfolio, enabling operators to deploy in any network topology with any O&U, while leveraging a single virtualized broadband core platform.

Speaker Change: In summary, our broadband business continues to grow and expand revenue. This is largely due to Harmonic's unique market position, differentiated technology advantages, strong customer relationships.

Speaker Change: favorable industry dynamics, and a rich array of new products and services that give us confidence in our multi-year growth outlook.

Speaker Change: 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.

Nimrod Ben: Now turning to slide number five, moving now to our video segment. Total segment revenue for second quarter was 45.8 million dollars compared to 58.9 million dollars 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 last revenue of 14 million dollars, which was up 3.2% year over year. In Q2, we saw improving margins as we advanced towards positive EBDA. 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.

Nimrod Ben: Now, turning to slide number five, moving now to our video segment, total segment revenue for the second quarter was forty-five point eight million dollars compared to fifty-eight point nine million dollars a year ago. Sequentially, segment revenue was up six percent and exceeded the high end of our guidance as we started to see the business stabilize. This included 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 action.

Speaker Change: Now turning to slide number five, moving...

Speaker Change: Now to our video segment. Total segment revenue for second quarter was $45.8 million.

Speaker Change: compared to 58.9 million dollars a year ago. Sequentially, segment revenue was up 6% and exceeded the high-end

Speaker Change: of our guidance as we started to see the business stabilize. This included SAS revenue of $14 million, which was up 3.2% year over year.

Speaker Change: 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.

Nimrod Ben: 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 to date, we are now seeing more momentum with positive industry trends and an active and growing pipeline of new Tier 1 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 provide much higher bit rates and new levels of viewing experiences, which our SaaS platform is perfectly designed for.

Speaker Change: 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.

Nimrod Ben: 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 beat rates and a 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.

Speaker Change: While we have seen modest growth in SaaS to date, 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.

Speaker Change: We are excited about the market activity around new live sports agreements.

Speaker Change: as well as the new delivery of 4K immersive formats, which provides much higher bit rates and new level of viewing experiences, which our SAS platform is perfectly designed for.

Nimrod Ben: 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 advertising functions of our customers to integrate this new capability. On the appliance side of the business, we are seeing a refresh cycle of playout and compression systems, which are driving increased pipeline and bookings with tier one customers. During the quarter, we booked a major refresh project with one of our largest international customers.

Speaker Change: 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.

Nimrod Ben: users. 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 one customers. During the quarter, we booked a major refresh project with one of our largest international customers.

Speaker Change: 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.

Speaker Change: On the appliance side.

Speaker Change: of the business, we are seeing a refresh cycle of play out and compression systems, which are driving increased pipeline and bookings with tier one customers.

Speaker Change: During the quarter, we booked a major refresh project with one of our largest international customers.

Nimrod Ben: 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 demonstrate a 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.

Nimrod Ben: 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 industry. Their insights and guidance will be invaluable as we execute our strategic initiative. 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.

Speaker Change: 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.

Speaker Change: Their insights and guidance will be invaluable as we execute our strategic initiatives.

Speaker Change: 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.

Nimrod Ben: These results demonstrate 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, I now turn to you, Walter, for a deeper discussion of our financial results and outcomes.

Speaker Change: These results demonstrate a 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.

Walter Jankovic: With that, now over to you, Walter, for a deeper discussion of our financial results and outlook.

Speaker Change: With that, now over to you, Walter, for a deeper discussion of our financial results and outlook.

Walter F. Jankovic: Thanks, Nimrod, and thank you all for joining us today. Before I discuss our quarterly results as well as our outlook, I'd like to remind everyone that the financial results I'll be referring to are provided on a non-GAAP basis. As David mentioned earlier, our Q2 press release and earnings presentation include reconciliations of the non-GAAP financial measures to GAAP that are discussed on this call. Both of these are available on our website.

Walter Jankovic: Thanks, Nimrod, and thank you all for joining us today. Before I discuss our quarterly results as well as our outlook, I'd like to remind everyone that the financial results I'll be referring to are provided on a non-GAAP basis. As David mentioned earlier, our Q2 press release and earnings presentation includes reconciliation of the non-GAAP financial measures to GAAP that are discussed on this call. Both of these are available on our website. Our second quarter results included revenue that was at the high end of our guidance and profitability in both businesses, which exceeded our expectations. At the operations level, we exceeded the midpoint of broadband revenue guidance and exceeded the high end of revenue guidance and video.

Walter F. Jankovic: Thanks Nimrod and thank you all for joining us today. Before I discuss our quarterly results as well as our outlook, I'd like to remind everyone that the financial results I'll be referring to are provided on a non-GAAP basis.

Speaker Change: As David mentioned earlier, our Q2 press release and earnings presentation includes reconciliations of the non-GAAP financial measures to GAAP that are discussed on this call. Both of these are available on our website.

Walter F. Jankovic: Our second quarter results included revenue that was at the high end of our guidance and profitability in both businesses, which exceeded our expectations at the operations level. We exceeded the midpoint of broadband revenue guidance and exceeded the high end of revenue guidance and video terms of profitability. Our overall second quarter non-gap adjusted EBITDA and EPS beat the high end of our guidance range. I'll call out some of our second quarter highlights here on slide seven.

Walter F. Jankovic: Our second quarter results included revenue that was at the high end of our guidance and profitability in both businesses, which exceeded our expectations.

Speaker Change: At the operations level, we exceeded the midpoint of broadband revenue guidance and exceeded the high end of revenue guidance and video. In terms of profitability, our overall second quarter non-gap adjusted EBITDA and EPS beat the high end of our guidance range.

Walter Jankovic: Turns the profitability are overall second quarter, non-GAAP adjusted EBITDA and EPS beat the high end of our guidance range. I'll call out some of our second quarter highlights here on slide seven. For the quarter, we reported total revenue of 138.7 million, which rose 14% quarter over quarter, EPS of 8 cents, bookings of 72.4 million, and a book to bill of 0.5. At quarter end, our backlog and deferred revenue was 613.1 million, leaving us in a solid position while giving us greater visibility for the balance of the year.

Walter F. Jankovic: For the quarter, we reported total revenue of $138.7 million, which rose 14% quarter over quarter, EPS of $0.08, bookings of $72.4 million, and a book-to-bill of $0.5. At quarter end, our backlog and deferred revenue was $613.1 million, leaving us in a solid position while giving us greater visibility for the balance of the year. I would also like to note that in Q2, we recorded a gap net loss of $12.5 million, or negative $0.11 EPS, which included restructuring costs of $11.5 million and $9 million in lease-related asset impairments and other charges.

Walter F. Jankovic: I'll call out some of our second quarter highlights here on slide seven.

Walter F. Jankovic: For the quarter, we reported total revenue of $138.7 million, which rose 14% quarter over quarter, EPS of $0.08,

Walter F. Jankovic: Bookings of $72.4 million and a book-to-bill of $0.5 million. At quarter end, our backlog and deferred revenue was $613.1 million, leaving us in a solid position while giving us greater visibility for the balance of the year.

Walter Jankovic: I would also like to note that in Q2, we recorded a gap net loss of 12.5 million or negative 11 cents EPS, which included restructuring costs of 11.5 million and 9 million in lease-related asset impairments and other charges. The restructuring costs are part of the plan announced during our prior quarter earnings call to reduce head count and streamline our cost structure in the video business. The 9 million in lease-related asset impairments and other charges reflect a reduction of our least office spaces. We optimize our footprint and cost structure.

Walter F. Jankovic: I would also like to note that in Q2 we recorded a gap net loss of $12.5 million or negative $0.11 CPS, which included restructuring costs of $11.5 million and $9 million in lease-related asset impairments and other charges.

Walter F. Jankovic: The restructuring costs are part of the plan announced during our prior quarter earnings call to reduce headcount and streamline our cost structure in the video business. The $9 million in lease-related asset impairments and other charges reflect a reduction in our leased office space as we optimize our footprint and cost structure.

Walter F. Jankovic: The restructuring costs are part of the plan announced during our prior quarter earnings call to reduce headcount and streamline our cost structure in the video business.

Walter F. Jankovic: The $9 million in lease-related asset impairments and other charges reflect a reduction of our leased office space as we optimize our footprint and cost structure.

Walter Jankovic: lecture. Before we review our second quarter of financials in more detail and provide detailed two, three, and four year 2024 guidance, I want to mention some important points about our guidance. Regarding broadband, we're reaffirming our prior FY24 revenue guidance range of 460 to 500 million. As we do each quarter, we closely evaluate the latest customer information, forecasting commitments just prior to the earnings call. So this updated guidance is based on our year-to-date results as well as our latest available information. At the midpoint of our FY24 broadband guidance, we expect revenue to increase 24% year-over-year. Due to the expected mix of business and op-ex savings, we have raised our FY24 broadband EBITDA forecast.

Walter F. Jankovic: Before we review our second quarter financials in more detail and provide detailed Q3 and full year 2024 guidance, I want to mention some important points about our guidance. Regarding broadband, we're reaffirming our prior FY24 revenue guidance range of $460 to $500 million. As we do each quarter, we closely evaluate the latest customer information, forecasts, and commitments just prior to the earnings call. Therefore, this updated guidance is based on our year-to-date results as well as our latest available information.

Walter F. Jankovic: Before we review our second quarter financials in more detail and provide detailed Q3 and full year 2024 guidance, I want to mention some important points about our guidance.

Walter F. Jankovic: Regarding broadband, we're reaffirming our prior FY 24 revenue guidance range of $460 to $500 million.

Walter F. Jankovic: As we do each quarter, we closely evaluate the latest customer information, forecasts, and commitments just prior to the earnings call, so this updated guidance is based on our year-to-date results as well as our latest available information.

Walter F. Jankovic: At the midpoint of our FY24 broadband guidance, we expect revenue to increase 24% year over year. Due to the expected mix of business and OPEX savings, we have raised our FY24 broadband EBITDA forecast. Based on expected momentum in the second half of the year, which we've already started to see, we continue to anticipate 2025 broadband revenue growth will accelerate on a year-over-year basis. We continue to be well positioned with our strong backlog, customer wins, and technology leadership to drive the expected growth we discussed during our recent analyst day.

Walter F. Jankovic: At the midpoint of our FY24 broadband guidance, we expect revenue to increase 24% year-over-year. Due to the expected mix of business and OPEX savings, we have raised our FY24 broadband EBITDA forecast.

Walter Jankovic: Based on expected momentum in the second half of the year, which we've already started to see, we continue to anticipate 2025 broadband revenue growth will accelerate on a year-over-year basis. We continue to be well positioned with our strong backlog, customer wins, and technology leadership to drive the expected growth we discussed during our recent Analyst Day. With regards to video, we have largely completed executing on the restructuring plans that we previously communicated and are holding our FY24 revenue in EBITDA guidance. Turning to slide 8, total Q2 revenue was 138.7 million compared to 156 million last year.

Walter F. Jankovic: Based on expected momentum in the second half of the year, which we've already started to see, we continue to anticipate 2025 broadband revenue growth will accelerate on a year-over-year basis.

Walter F. Jankovic: We continue to be well positioned with our strong backlog, customer wins, and technology leadership to drive the expected growth we discussed during our recent analyst day.

Walter F. Jankovic: With regard to video, we have largely completed executing on the restructuring plans that we previously communicated and are holding our FY24 revenue in EBITDA guidance. Turning to slide 8, total Q2 revenue was $138.7 million compared to $156 million last year. This was at the higher end of the guidance range we provided on our last earnings call. Looking more closely at broadband, Q2 revenue was $92.9 million, a decrease of 4% year-over-year and consistent with our guidance.

Walter F. Jankovic: With regards to video, we have largely completed executing on the restructuring plans that we previously communicated and are holding our FY24 revenue in EBITDA guidance.

Speaker Change: Turning to slide 8, total Q2 revenue was $138.7 million compared to $156 million last year. This was at the higher end of the guidance range we provided on our last earnings call.

Walter Jankovic: This was at the higher end of the guidance range we provided on our last earnings call. Looking more closely at broadband, Q2 revenue was 92.9 million, a decrease of 4% year-over-year, in consistent with our guidance. In video, Q2 revenue was 45.8 million, which was above our guidance range. Video revenue included SaaS revenue of 14 million, up 3% year-over-year and representing 30.6% of segment revenue for the quarter. Video SaaS revenue growth continues to be driven by live sports streaming, SaaS expansions, and new customer wins. In the second quarter, we have one customer representing greater than 10% of total revenue, with Comcast representing 48% of total revenue.

Speaker Change: Looking more closely at broadband, Q2 revenue was $92.9 million.

Walter F. Jankovic: In video, Q2 revenue was $45.8 million, which was above our guidance range. Video revenue included SAS revenue of $14 million, up 3% year-over-year and representing 30.6% of segment revenue for the quarter. Video SaaS revenue growth continues to be driven by live sports streaming, SaaS expansions, and new customer wins.

Speaker Change: A decrease of 4% year-over-year inconsistent with our guidance.

Speaker Change: In video, Q2 revenue was $45.8 million, which was above our guidance range. Video revenue included SAS revenue of $14 million, up 3% year-over-year, and representing 30.6% of segment revenue for the quarter.

Speaker Change: Video SaaS revenue growth continues to be driven by live sports streaming, SaaS expansions, and new customer wins.

Walter F. Jankovic: In the second quarter, we had one customer representing greater than 10% of total revenue, with Comcast representing 48% of total revenue. Total company gross margin was 53.1% for Q2-24, which is above the high end of our guidance range and reflecting better than expected video segment gross margin. Broadband gross margin was 47.6% for Q2-24, up 10 basis points sequentially and down 290 basis points year over year due to product mix. Video gross margin was 64.4% in Q2-24, up 270 basis points year over year and 280 basis points sequentially, mainly due to higher SAS and SLA mix coupled with cost reduction.

Speaker Change: In the second quarter, we had one customer representing greater than 10% of total revenue, with Comcast representing 48% of total revenue.

Walter Jankovic: Total company gross margin was 53.1% for Q2 24, which was above the high end of our guidance range and reflecting better than expected video segment gross margin. Broadband Gross Margin was 47.6% for Q2 24, up 10 basis points sequentially and down 290 basis points year-over-year due to product mix. Video Gross Margin was 64.4% in Q2 24, up 270 basis points year-over-year and 280 basis points sequentially, mainly due to higher SaaS and SLA mix coupled with cost reductions. Moving down the income statement on slide 9, Q2 24 operating expenses were 61.5 million, down 8.5% year-over-year. Adjusted EBITDA for Q2 24 was 16.1 million, also above our guidance range, comprised of 16.3 million from broadband and negative 0.3 million from video.

Speaker Change: Total company gross margin was 53.1% for Q2-24, which is above the high end of our guidance range and reflecting better than expected video segment gross margin.

Speaker Change: Broadband gross margin was 47.6% for Q2-24, up 10 basis points sequentially, and down 290 basis points year-over-year due to product mix.

Speaker Change: Video gross margin was 64.4% in Q2-24, up 270 basis points year-over-year and 280 basis points sequentially, mainly due to higher SAS and SLA mix, coupled with cost reductions.

Walter F. Jankovic: Moving down the income statement on slide nine, Q2-24 operating expenses were $61.5 million, down 8.5% year over year. Adjusted EBITDA for Q224 was $16.1 million, also above our guidance range comprised of $16.3 million from broadband and negative $0.3 million from video. This all translated into Q2'24 EPS of $0.08 per share compared with $0.00 in Q1'24 and $0.12 per share for Q2'23. One housekeeping item I want to mention is that for Q2-24 and full year 24, we have adjusted our non-GAAP tax rate to 21% versus the previous 19% rate. This is to reflect the updated U.S. versus foreign income mix.

Speaker Change: Moving down the income statement on slide 9.

Speaker Change: Q2-24 operating expenses were $61.5 million, down 8.5% year-over-year.

Speaker Change: Adjusted EBITDA for Q2-24 was $16.1 million, also above our guidance range comprised of $16.3 million from broadband and negative $0.3 million from video.

Walter Jankovic: This all translated into Q224 EPS of 8 cents per share, compared with 0 cents in Q124 and 12 cents per share for Q223. One housekeeping item I want to mention is that for Q224 and full year 24, we have adjusted our non-GAAP tax rate to 21% versus the previous 19% rate. This is to reflect the updated US versus foreign income mix. We ended the second quarter of 2024 with a calculated diluted weighted average share count of 116.7 million compared to 118.1 million in Q124 and 119.3 million in Q223. The sequential decrease is primarily due to share buyback activity.

Speaker Change: This all translated into Q2-24 EPS of $0.08 per share, compared with $0.00 in Q1-24 and $0.12 per share for Q2-23.

Speaker Change: One housekeeping item I want to mention is that for Q2-24 and full year 24, we have adjusted our non-GAAP tax rate to 21% versus the previous 19% rate. This is to reflect the updated U.S. versus foreign income mix.

Walter F. Jankovic: We ended the second quarter of 2024 with a calculated diluted weighted average share count of $116.7 million, compared to $118.1 million in Q1'24 and $119.3 million in Q2'23. The sequential decrease is primarily due to share buyback activity. Turning to the order book, Q2 bookings were $72.4 million. As I mentioned earlier, the book-to-bill ratio for the quarter was 0.5 compared to 1.2 in both Q1-24 and Q2-23. The second quarter's 0.5 book-to-bill ratio is due to decreasing order lead times in our broadband business.

Speaker Change: We ended the second quarter of 2024 with a calculated diluted weighted average share count of $116.7 million compared to $118.1 million in Q1'24 and $119.3 million in Q2'23.

Walter Jankovic: Turning to the order book, Q2 bookings were 72.4 million. As I mentioned earlier, the book-to-bill ratio for the quarter was 0.5 compared to 1.2 in both Q1 24 and Q2 23. The second quarter's 0.5 book-to-bill ratio is due to decreasing order lead times in our broadband business. This is because we've been working with our larger customers to secure supply based on committed forecast, resulting in customer orders with shorter lead times. For example, in July, we received orders for product that will be shipped out in the second half of this year. Of note, these orders in July far exceeded our broadband order bookings for all of Q2.

Speaker Change: The sequential decrease is primarily due to share buyback activity.

Speaker Change: Turning to the order book, Q2 bookings were $72.4 million. As I mentioned earlier, the book-to-bill ratio for the quarter was 0.5 compared to 1.2 in both Q1-24 and Q2-23.

Speaker Change: The second quarter's 0.5 book-to-bill ratio is due to decreasing order lead times in our broadband business.

Walter F. Jankovic: This is because we've been working with our larger customers to secure supply based on committed forecasts, resulting in customer orders with shorter lead times. For example, in July, we received orders for product that will be shipped out in the second half of this year. Of note, these orders in July far exceeded our broadband order bookings for all of Q2.

Speaker Change: This is because we've been working with our larger customers to secure supply based on committed forecasts resulting in customer orders with shorter lead times.

Speaker Change: For example, in July , we received orders for product that will be shipped out in the second half of this year. Of note, these orders in July far exceeded our broadband order bookings for all of Q2.

Walter Jankovic: As we stated previously, over time, we expect our book-to-bill ratio to normalize and approach the historical benchmark of greater than 1.

Walter F. Jankovic: As we stated previously, over time, we expect our book to bill ratio to normalize and approach the historical benchmark of greater than one. Turning to the balance sheet on slide 10, we ended Q2-24 with cash and cash equivalents of $45.9 million. This amount excludes restricted cash of $2.9 million.

Speaker Change: As we stated previously, over time, we expect our book-to-bill ratio to normalize and approach the historical benchmark of greater than one.

Walter Jankovic: Turning to the balance sheet on flight 10, we ended Q224 with cash and cash equivalence of 45.9 million. This amount excludes restricted cash of 2.9 million. The quarter over quarter change in cash was mainly attributable to negative cash from operations of 22.2 million as a result of a significant reduction in accounts payable based on timing of material receipts this quarter compared to prior quarters, increasing accounts receivable related to our higher revenues in Q2, and 3.5 million in cash restructuring costs in the quarter. In Q2, we used 8.4 million of cash for share repurchases, which I'll discuss in more detail shortly.

Speaker Change: Turning to the balance sheet on slide 10, we ended Q2-24 with cash and cash equivalents of $45.9 million. This amount excludes restricted cash of $2.9 million.

Walter F. Jankovic: The quarter-over-quarter change in cash was mainly attributable to negative cash from operations of $22.2 million as a result of a significant reduction in accounts payable based on the timing of material receipts this quarter compared to prior quarters, increasing accounts receivable related to our higher revenues in Q2, and $3.5 million in cash restructuring costs in the quarter. In Q2, we used $8.4 million of cash for share repurchases, which I'll discuss in more detail shortly. The free cash flow during the quarter was negative $24.1 million.

Speaker Change: The quarter-over-quarter change in cash was mainly attributable to negative cash from operations of $22.2 million as a result of a significant reduction in accounts payable based on timing of material receipts this quarter compared to prior quarters.

Speaker Change: Increasing accounts receivable related to our higher revenues in Q2, and $3.5 million in cash restructuring costs in the quarter.

Speaker Change: In Q2, we used $8.4 million of cash for share repurchases, which I'll discuss in more detail shortly. The free cash flow during the quarter was negative $24.1 million.

Walter Jankovic: The free cash flow during the quarter was negative $24.1 million. We expect our cash balance to increase in Q3 and Q4 based on the projected collections and timing of material receipts. Turning to accounts receivables and day sales outstanding at the end of Q224, DSO with 78 compared to 78 in Q124 and 69 in the prior period. The prior period prior year period was lower due to a large customer taking an early pay discount. Days inventory on hand was 116 days at the end of Q224 compared to 134 at the end of Q124 and 145 at the end of Q223.

Walter F. Jankovic: We expect our cash balance to increase in Q3 and Q4 based on the projected collections and timing of material received. Turning to accounts receivables and day sales outstanding, at the end of Q2-24, DSO was 78 compared to 78 in Q1-24 and 69 in the prior period. The prior year period was lower due to a large customer taking an early pay discount. Days inventory on hand was 116 days at the end of Q2-24 compared to 134 at the end of Q1-24 and 145 at the end of Q2-23. Inventory decreased $2.5 million in the quarter as we continue to shorten days of inventory between receipt and customer shipments.

Speaker Change: We expect our cash balance to increase in Q3 and Q4 based on the projected collections and timing of material receipts.

Speaker Change: Turning to accounts receivables and day sales outstanding, at the end of Q2-24, DSO was 78 compared to 78 in Q1-24 and 69 in the prior period. The prior year period was lower due to a large customer taking an early pay discount.

Speaker Change: Days inventory on hand was 116 days at the end of Q2-24 compared to 134 at the end of Q1-24 and 145 at the end of Q2-23.

Walter Jankovic: Inventory decreased 2.5 million in the quarter as we continue to shorten days of inventory between receipt and customer ships. In terms of capital allocation, when appropriate, we will strategically invest in building inventory, as we've done in the past, to meet strong demand.

Speaker Change: Inventory decreased $2.5 million in the quarter as we continue to shorten days of inventory between receipt and customer shipment.

Walter F. Jankovic: In terms of capital allocation, when appropriate, we will strategically invest in building inventory as we've done in the past to meet strong demand. Regarding liquidity, in December 2023, we closed a five-year, $160 million credit facility that included $120 million revolving credit line and a $40 million delayed draw term loan. Subsequent to the end of the first quarter on April 18th, we redeemed in full the $115.5 million in convertible notes outstanding, repaying the principal in cash by using our credit facility, and the value over par was settled with approximately $4.6 million in shares.

Speaker Change: In terms of capital allocation, when appropriate, we will strategically invest in building inventory, as we've done in the past, to meet strong demand.

Walter Jankovic: Regarding liquidity in December 2023, we closed a five-year 160 million credit facility that included a 120 million revolving credit line and a 40 million delayed draw term loan. Subsequent to the end of the first quarter on April 18th, we redeemed entirely the 115.5 million in convertible notes upstanding, repaying the principle in cash by using our credit facility, and the value overpar was settled with approximately 4.6 million in shares. As of today, we have drawn down a 115 million on this credit facility. And as I mentioned earlier, during 2224, we bought back 8.4 million, or approximately 750,000 shares, at an average price of $11.14 under our repurchase program.

Speaker Change: Regarding liquidity, in December 2023, we closed a five-year, $160 million credit facility that included a $120 million revolving credit line and a $40 million delayed draw term loan.

Speaker Change: Subsequent to the end of the first quarter, on April 18th, we redeemed entirely the $115.5 million in convertible notes outstanding, repaying the principal in cash by using our credit facility, and the value over par was settled with approximately $4.6 million in shares.

Walter F. Jankovic: As of today, we have drawn down $115 million on this credit facility. And as I mentioned earlier, during Q2-24, we bought back 8.4 million, or approximately 750,000 shares, at an average price of $11.14 under our repurchase program. To date, we have repurchased $35 million of the $100 million approved under our repurchase program. As we've said previously, the timing and amount of any stock repurchases will depend on a variety of factors, including the price of Harmonic's common stock, market conditions, corporate needs, and regulatory requirements.

Speaker Change: As of today, we have drawn down $115 million on this credit facility.

Speaker Change: And as I mentioned earlier, during Q2-24, we bought back 8.4 million, or approximately 750,000 shares at an average price of $11.14.

Walter Jankovic: To date, we have repurchased 35 million of the 100 million approved under our repurchase program. As we've said previously, the timing and amount of any stock repurchases will depend on a variety of factors, including the price of Harmonics, common stock, market conditions, corporate needs, and regulatory requirements. Also, as mentioned during our prior earnings call, we plan to manage prudently manage our balance sheet by maintaining overall net leverage of around two times or less and available liquidity of no less than $100 million going forward. We believe we have sufficient available liquidity to continue funding our growth plans while returning capital to our shareholders through stock repurchases.

Speaker Change: Under our repurchase program. To date, we have repurchased $35 million of the $100 million approved under our repurchase program.

Speaker Change: As we've said previously, the timing and amount of any stock repurchases will depend on a variety of factors, including the price of Harmonic's common stock, market conditions, corporate needs, and regulatory requirements.

Walter F. Jankovic: Also, as mentioned during our prior earnings call, we plan to prudently manage our balance sheet by maintaining overall net leverage of around two times or less and available liquidity of no less than $100 million going forward. We believe we have sufficient available liquidity to continue funding our growth plans while returning capital to our shareholders through stock repurchase. At the end of Q2, total backlog and deferred revenue was $613.1 million. Our strong backlog continues to demonstrate the demand we're seeing from our large broadband customers and growing video SaaS commitments.

Speaker Change: Also, as mentioned during our prior earnings call, we plan to prudently manage our balance sheet by maintaining overall net leverage of around two times or less and available liquidity of no less than $100 million going forward.

Speaker Change: We believe we have sufficient available liquidity to continue funding our growth plans while returning capital to our shareholders through stock repurchases.

Walter Jankovic: At the end of Q2, total backlog and deferred revenue was 613.1 million. Our strong backlog continues to demonstrate that demand we're seeing from our large broadband customers and growing video SaaS commitments. Around 52% of our backlog and deferred revenue has customer requests dates for shipments of products and for providing services within the next 12 months. As discussed during our last earnings call, as part of our Go Forward strategy, Harmonics video business will be centered on driving profitable growth by focusing on scalable market opportunities, streamlining its operations, and optimizing its cost structure. To line with this Go Forward strategy, as previously stated, we have been implementing a restructuring program to achieve cost savings in this business.

Speaker Change: At the end of Q2, total backlog and deferred revenue was $613.1 million. Our strong backlog continues to demonstrate the demand we're seeing from our large broadband customers and growing video SaaS commitments.

Walter F. Jankovic: Around 52% of our backlog and deferred revenue has customer request dates for shipments of products and for providing services within the next 12 months. As discussed during our last earnings call as part of our Go Forward strategy, Harmonic's video business will be centered on driving profitable growth by focusing on scalable market opportunities, streamlining its operations, and optimizing its cost structure. To align with this Go Forward strategy, as previously stated, we have been implementing a restructuring program to achieve cost savings in this business.

Speaker Change: Around 52% of our backlog and deferred revenue has customer request dates for shipments of products and for providing services within the next 12 months.

Speaker Change: As discussed during our last earnings call as part of our Go Forward strategy, Harmonic's video business will be centered on driving profitable growth by focusing on scalable market opportunities,

Walter F. Jankovic: The majority of these initiatives are now completed, and we expect the remaining actions to be completed by no later than the end of Q3 this year. We currently expect total restructuring-related severance costs to be $15.4 million for the fiscal year, of which $14.5 million has been recorded as of Q2 this year. As previously stated, we expect to achieve approximately $18 million in savings in FY24 from these and other actions, and approximately $28 million in savings on an annualized basis in FY25. We believe these actions are necessary to better align the video business with our Go Forward strategy.

Speaker Change: Streamlining its operations and optimizing its cost structure.

Speaker Change: To align with this go-forward strategy, as previously stated, we have been implementing a restructuring program to achieve cost savings in this business. The majority of these initiatives are now completed, and we expect the remaining actions to be completed by no later than the end of Q3 this year.

Walter Jankovic: The majority of these initiatives are now completed, and we expect the remaining actions to be completed by no later than the end of Q3 this year. We currently expect total restructuring related severance costs to be 15.4 million for the fiscal year, of which 14.5 million has been recorded as of Q2 year to date. As previously stated, we expect to achieve approximately 18 million in savings in FY24 from these and other actions, and approximately 28 million in savings on an annualized basis in FY25. We believe these actions are necessary to better align the video business with our Go Forward strategy.

Speaker Change: We currently expect total restructuring-related severance costs to be $15.4 million for the fiscal year, of which $14.5 million has been recorded as of Q2 year-to-date.

Speaker Change: As previously stated, we expect to achieve approximately $18 million in savings in FY24 from these and other actions, and approximately $28 million in savings on an annualized basis in FY25. We believe these actions are necessary to better align the video business with our go-forward strategy.

Walter Jankovic: With that, let's now review our non-GAAP guidance for the third quarter beginning on slide 11. We expect broadband to deliver revenue between 130 to 140 million. Gross margins between 48% to 49% due to product mix. Gross profit between 63 to 69 million and adjusted EBITDA between 34 to 39 million. For the full year, we expect revenue between 460 to 500 million. Gross margins between 47 to 49%, which reflects a more conservative margin based on the product mix that we currently expect. Gross to 126 million. For broadband, we expect to hit record levels of revenue in both Q3 and Q4 due to the expected sales momentum in the second half of the year that I mentioned earlier.

Walter F. Jankovic: With that, let's now review our non-GAAP guidance for the third quarter, beginning on slide 11. We expect broadband to deliver revenue between 130 to 140 million and gross margins between 48 to 49% due to product mix. Gross profit between $63 to $69 million and adjusted EBITDA between $34 to $39 million. For the full year, we expect revenue between $460 to $500 million and gross margins between 47 to 49%, which reflects a more conservative margin based on the product mix that we currently expect.

Speaker Change: With that, let's now review our non-GAAP guidance for the third quarter, beginning on slide 11. We expect broadband to deliver revenue between $130 million to $140 million, gross margins between 48 to 49 percent due to product mix,

Speaker Change: Gross profit between $63 to $69 million, and adjusted EBITDA between $34 to $39 million.

Speaker Change: For the full year, we expect revenue between $460 to $500 million, gross margins between 47 to 49 percent, which reflects a more conservative margin based on the product mix that we currently expect.

Walter F. Jankovic: Gross profit between $216 and $245 million and adjusted EBITDA between $102 and $126 million. For broadband, we expect to hit record levels of revenue in both Q3 and Q4 due to the expected sales momentum in the second half of the year that I mentioned earlier. For our video segment in Q3, we expect revenue in the range of $45 to $50 million, gross margin in the range of 63 to 64 percent, gross profit in the range of $28 to $32 million, and adjusted EBITDA to range from $0 million to $3 million.

Speaker Change: Gross profit between $216 to $245 million and adjusted EBITDA between $102 to $126 million.

Speaker Change: For broadband, we expect to hit record levels of revenue in both Q3 and Q4 due to the expected sales momentum in the second half of the year that I mentioned earlier.

Walter Jankovic: For our video segment in Q3, we expect revenue in the range of 45 to 50 million. Gross margin in the range of 63 to 64%, gross profit in the range of 28 to 32 million, and adjusted EBITDAB to range from 0 million to $3 million. For the full year, we expect revenue between 185 to 195 million. Gross margins between 63 to 64%, gross profit between 117 to 125 million, and adjusted EBITDAB to range from 0 to 5 million. Turning to slide 12 for the third quarter of 24, we expect total company revenue in the range of 175 to 190 million.

Speaker Change: For our video segment in Q3, we expect revenue in the range of $45 to $50 million.

Speaker Change: Gross margin in the range of 63 to 64 percent.

Speaker Change: Gross profit in the range of $28 to $32 million, and adjusted EBITDA to range from $0 million to $3 million.

Walter F. Jankovic: For the full year, we expect revenue between $185 to $195 million, gross margins between 63 to 64 percent, gross profit between $117 to $125 million, and adjusted EBITDA to range from $0 to $5 million. Turning to slide 12, for the third quarter of 24, we expect total company revenue in the range of $175 to $190 million, gross margin in the range of 51.9% to 52.9%, gross profit to range from 91 to 101 million, adjusted EBITDA to range from $34 to $42 million, a weighted average diluted share count of $117 million, And for the full year, we expect revenue between $645 to $695 million, gross margins between 51.6% to 53.2%, gross profit between $333 to $370 million, adjusted EBITDA between $102 to $131 million, a weighted average diluted share count of $117.3 million, and the EPS to range from $0.56 to $0.75.

Speaker Change: For the full year, we expect revenue between $185 to $195 million, gross margins between 63 to 64 percent, gross profit between $117 to $125 million, and adjusted EBITDA to range from $0 to $5 million.

Speaker Change: Turning to slide 12, for the third quarter of 2024, we expect total company revenue in the range of $175 to $190 million.

Walter Jankovic: Gross margin in the range of 51.9% to 52.9%; gross profit to range from 91 to 101 million. Adjusted EBITDAB to range from 34 to 42 million. A weighted average distributed chair count of 117 million and EPS to range from 19 cents to 24 cents. And for the full year, we expect revenue between 645 to 695 million. Gross margins between 51.6% to 53.2% gross profit between 333 to 370 million. Adjusted EBITDAB between 102 to 131 million. A weighted average distributed chair count of 117.3 million and EPS to range from 56 cents to 75 cents.

Speaker Change: Gross margin in the range of 51.9% to 52.9%, gross profit to range from $91 to $101 million, adjusted EBITDA to range from $34 to $35 million.

Speaker Change: to $42 million, a weighted average diluted share count of $117 million, and EPS to range from $0.19 to $0.24.

Speaker Change: And for the full year, we expect revenue between $645 to $695 million.

Speaker Change: Gross margins between 51.6 percent to 53.2 percent.

Speaker Change: Gross profit between $333 to $370 million.

Speaker Change: Adjusted EBITDA between $102 to $131 million, a weighted average diluted share count of $117.3 million, and the EPS to range from $0.56 to $0.75.

Walter Jankovic: In summary, our solid second quarter results reflect the progress we've made in executing on our FY24 plan. This included revenue at the upper end of our guidance, as well as EBITDAB and EPS that exceeded our guidance. We believe our broadband segment continues to be well positioned for future growth. In addition, with the restructuring actions we've taken and the progress that's been made, we believe our video segment will attain profitability starting in Q3.

Walter F. Jankovic: In summary, our solid second quarter results reflect the progress we've made in executing on our FY24 plan. This included revenue at the upper end of our guidance as well as EBITDA and EPS that exceeded our guidance. We believe our broadband segment continues to be well positioned for future growth. In addition, with the restructuring actions we've taken and the progress that's been made, we believe our video segment will attain profitability starting in Q3. Thank you, everyone, for your attention today. And now I'll turn it back to Nimrod for final remarks before we open up the call for questions.

Speaker Change: In summary, our solid second quarter results reflect the progress we've made in executing on our FY24 plan. This included revenue at the upper end of our guidance as well as EBITDA and EPS that exceeded our guidance.

Speaker Change: We believe our broadband segment continues to be well-positioned for future growth. In addition, with the restructuring actions we've taken and the progress that's been made, we believe our video segment will attain profitability starting in Q3.

Nimrod Ben: Thank you, everyone, for your attention today, and now I'll turn it back to Nimrod for final remarks before we open up the call for questions.

Speaker Change: Thank you everyone for your attention today and now I'll turn it back to Nimrod for final remarks before we open up the call for questions.

Nimrod Ben: Thanks, Walter. In summary, Harmonic delivered another strong quarter, capping solid year-to-date financial and operational execution. Our company continues to be exceptionally well positioned for sustained growth and to create greater value for our shareholders. Looking forward, we're committed to implementing our 2024 and long-term growth plan. We thank you all for your continued support and look forward to speaking with you again on our next earnings call and updating you on our program. Let's now open up the call for questions. Thank you.

Nimrod Ben: Thanks, Walter. In summary, harmonic deliver the another strong quarter, capping solid year-to-date financial and operational execution. Our company continues to be exceptionally well positioned for sustained growth and to create greater value for our shareholders.

Nimrod Ben-Natan: Thanks, Walter. In summary, Harmonic delivered another strong quarter, capping solid year-to-date financial and operational execution. Our company continues to be exceptionally well-positioned for sustained growth and to create greater value for our shareholders.

Nimrod Ben: Looking forward, we're committed to implementing our 2024 and long-term growth plans. We thank you all for your continued support and look forward to speaking with you again on our next earnings call and updating you on our Pogas.

Speaker Change: Looking forward, we're committed to implementing our 2024 and long-term growth plans.

Speaker Change: We thank you all for your continued support and look forward to speaking with you again on our next earnings call and updating you on our progress.

Unknown Executive: Let's now open up the call for questions.

Operator: Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A list. Our first question comes from the line of Simon Leopold with Raymond James. Your line is open.

Unknown Executive: Thank you. As a reminder to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster.

Speaker Change: Let's now open up the call for questions.

Speaker Change: Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.

Simon Leopold: Our first question comes from the line of Simon Leopold with Raymond James; the line is open. Great, thank you for taking the question. I've got to the first one is actually regarding the the fact video business. I'd like to see if you could help us understand a little bit better. I get the structure of your terms and really what I'm getting at is I'm wondering how material the Olympics could be and more generically how we should think about that business going forward. Basically, do you get paid by how many times of answer you do? Do you get paid by events or agreement? That kind of detail would just be helpful for us to think about modeling.

Speaker Change: Our first question comes from the line of Simon Leopold with Raymond James. Your line is open.

Simon Matthew Leopold: Great, thank you for taking the question.

Simon Matthew Leopold: I've got two. The first one is actually regarding the SACS video business. I'd like to see if you could help us understand a little bit better the, I guess, structure of your terms. And really, what I'm getting at is I'm wondering how material the Olympics could be and, more generically, how we should think about that business going forward. Basically, do you get paid by how many times events are broadcast?

Simon Matthew Leopold: Great, thank you for taking the question. I've got two. The first one is actually regarding the

Simon Matthew Leopold: I'd like to see if you could help us understand a little bit better

Speaker Change: I guess structure of your terms.

Speaker Change: And really what I'm getting at is I'm wondering how material the Olympics could be, and more generically, how we should think about that business going forward. Basically, do you get paid by...

Simon Matthew Leopold: How many times events are viewed? Do you get paid by events or agreements? That kind of detail would be helpful for us to think about modeling. Thank you. Okay, Simon. It's Walter.

Speaker Change: How many times events are viewed? Do you get paid by events or agreements? That kind of detail would just be helpful for us to think about modeling. Thank you.

Walter Jankovic: Thank you.

Walter Jankovic: Okay, Simon, it's Walter.

Walter F. Jankovic: I'll take that question in terms of the commercial model of our SAS video business. So, first of all, the model generally works on minutes streamed and number of events. That's the core tenant of the model.

Walter Jankovic: I'll take that question in terms of the commercial model of our SaaS, SaaS video business. So, first of all, the model generally works on minute streamed and number of events. That's the core tenant of the model. In addition to that, if we provide the content delivery, the CDN part of it, it's going to flex based on the number of viewers. In terms of that part of the model. And when you look at the targeted ad insertion part of the model, this part of the model is based on impressions. So the number of people through the impressions metric, so very much variable in terms of that part of the business.

Walter F. Jankovic: Okay Simon, it's Walter. I'll take that question in terms of the commercial model of our SAS video business. So first of all, the model generally works on minutes streamed.

Walter F. Jankovic: In addition to that, if we provide the content delivery, the CDN part of it, it's going to flex based on the number of viewers in terms of that part of the model. And when you look at the targeted ad insertion part of the model, this part of the model is based on impressions. So, the number of people through the impressions metric is very much variable in terms of that part of the business.

Speaker Change: and number of events.

Speaker Change: That's the core tenet of the model.

Speaker Change: In addition to that, if we provide the content delivery, the CDN part of it, it's going to flex based on the number of viewers.

Speaker Change: in terms of that part of the model.

Speaker Change: And when you look at the targeted ad insertion,

Speaker Change: Part of the model.

Speaker Change: This part of the model is based on impressions.

Speaker Change: So, the number of people through the impressions metric, so very much variable in terms of that part of the business. So really, there's...

Walter Jankovic: So really, there's three key elements of the business, and it just depends what the customer has signed up to in terms of ad insertion if they're targeted ad insertion customer. If they're a stream, obviously a streaming customer is based on minute streamed, a number of events. And then if we provide the content delivery, that's based on number of viewers and flexes in that manner.

Walter F. Jankovic: So, really, there are three key elements of the business, and it just depends what the customer has signed up to in terms of ad insertion. If they're a targeted ad insertion customer, if they're, obviously, a streaming customer, it's based on minutes streamed and number of events. And then if we provide the content delivery, that's based on the number of viewers and flexes in that manner. Have I helped explain that?

Speaker Change: Three key elements of the business, and it just depends what the customer has signed up to in terms of ad insertion, if they're a targeted ad insertion customer, if they're obviously a streaming customer, it's based on minutes streamed, a number of events, and then if we provide the content delivery, that's based on number of viewers and flexes in that manner.

Walter Jankovic: If I helped explain that.

Walter F. Jankovic: Yeah, I guess just as a quick one: is the Olympics as an event material enough to move the numbers?

Walter Jankovic: Yeah, I guess just as a quick one, is the Olympics as an event material enough to move the numbers, or is it sort of just in the noise relative to the overall streaming activity? Yeah, it's going to be in material. It's not going to be material based on the commercial model.

Speaker Change: Have I helped explain that?

Speaker Change: Yeah, I guess just as a quick one, is the Olympics as an event material enough to move the numbers or is it sort of just in the noise relative to the overall streaming activity?

Walter F. Jankovic: numbers, or if it's sort of just in the noise relative to the overall screening activity. Yeah, it's going to be immaterial. It's not going to be material based on the commercial model.

Speaker Change: Yeah, it's going to be immaterial. It's not going to be material based on the commercial model.

Nimrod Ben: In the overall market, it does seem as if broadband competition is heating up, particularly with the traditional telcos expanding efforts around fixed wireless and around fiber to the home. It's not clear to us if the cable operators really have adjusted their strategies in response. And maybe David would argue that they're already investing adequately.

Unknown Speaker: In the overall market, it does seem as if

Unknown Speaker: Broadband competition is heating up, particularly with traditional telcos expanding their efforts around fixed wireless and around fiber-to-the-wire.

Speaker Change: Overall market, it does seem as if broadband competition is heating up, particularly with the traditional telcos expanding efforts around fixed wireless and around fiber to the home.

Unknown Speaker: It's not clear to us if the cable operator's real...

Unknown Speaker: have adjusted their strategies in response. And maybe they would argue that they're already invested.

Speaker Change: It's not clear to us if the cable operators really have adjusted their strategies in response.

Unknown Speaker: We're just wondering whether or not, from your perspective, you're noticing any change in the competitive environment for your customers or whether this sort of ongoing evolution. Thanks. Thank you.

Nimrod Ben: We're just wondering whether or not, from your perspective, you're noticing any change in the competitive environment for your customers, or whether this is sort of an ongoing evolution. Thank you. Well, we think that what they predicted a few years back is actually materializing in terms of the competition fiber. I don't think they predicted the fixed wireless, but they predicted that there will be competition, and the long-term plan to keep investing in the network to make it more competitive is more important than ever before. And I think what we hear from them is that what we were on for them is important.

Speaker Change: And maybe they would argue that they're already investing adequately. We're just wondering whether or not, from your perspective, you're noticing any change in the competitive

Speaker Change: environment for your customers, or whether this is sort of a an ongoing evolution. Thank you.

Unknown Speaker: Well, we think that what they predicted a few

Unknown Speaker: Well, we think that what they predicted a few years back is actually materializing in terms of competition fiber. I don't think they predicted fixed wireless, but they predicted that there would be competition and the long-term plan to keep investing in the network to make it more competitive is more important than ever before, and I think what we hear from them is that what we work on for them is important. Obviously, they have different strategies in terms of what exactly they do and how quickly they do that, but I think the urgency is high, and this is what we're hearing from them.

Speaker Change: Well, we think that what they predicted a few years back is actually materializing in terms of the competition.

Speaker Change: I don't think they predicted the fixed wireless, but they predicted

Speaker Change: that there will be competition, and the long-term plan to keep investing in the network to make it more competitive is

Speaker Change: more important than ever before. And I think what we hear from them is that what we were on.

Nimrod Ben: Obviously, they have different strategies in terms of what exactly they do and how quickly they do that. But I think the urgency is high, and this is what we're hearing from them.

Speaker Change: for them is is important. Obviously,

Speaker Change: They have different strategies in terms of what exactly they do and how quickly they do that, but I think the urgency is high, and this is what we're hearing from them.

Unknown Executive: Thank you very much. Thanks, Simon.

Speaker Change: Thank you very much.

Simon Matthew Leopold: Thanks, Simon.

Ryan Koontz: Our next question comes from Ryan Koontz; would need him and co.

Ryan Boyer Koontz: Our next question comes from Ryan Koontz with Needham & Co. Your line is open.

Ryan Koontz: Your line is open. Thanks for the question and a nice quarter.

Speaker Change: Our next question comes from Ryan Koontz with Needham & Co. Your line is open.

Ryan Boyer Koontz: Thanks for the question and a nice quarter and outlook. I want to ask you about DOCSIS 4 and, you know, how would you frame your competitive position there, Nimrod, relative to hardware? I know you guys have a leading software solution, but relative to this new hardware product, how would you frame the competitive environment there for DOCSIS 4?

Nimrod Ben: We'll ask you about the office for. And, you know, how would you frame your competitive position there, Nimrod, relative to hardware? And you guys have a leading software solution, but relative to this new hardware product, how would you frame the competitive environment there for Office for? I think with the move to unified, there is a requirement to support the two flavors of Euro, and I think we've got a unique leadership position as we have been working on the food duplex flavor of 40 for quite some time, and it's shifting and in production. And the unified is combining that along with the SDD, the extended spectrum.

Ryan Boyer Koontz: Hi, thanks for the question and a nice quarter and outlook. I want to ask you about DOCSIS 4 and

Ryan Boyer Koontz: You know, how would you frame your competitive position there, Nimrod, relative to hardware? I know you guys have a leading software solution, but relative to this new hardware product, how would you frame the competitive environment there for DOCSIS 4?

Nimrod Ben: Um, I think with the move to, um, unified. There is, requirement to support the two flavors of DOCSIS 4.0 and I think we've got a unique leadership position as we have been working on the full duplex flavor of 4.0 for quite some time and it's and it's shipping and in production and the unified is combining that along with the FDD the extended spectrum, So in short, I would say, I believe, although we never discount any competition, that we've got a significant lead.

Nimrod Ben-Natan: I think with the move to unified there is

Speaker Change: requirement to support the two flavors of DOCSIS 4.0. And I think we've got a unique

Speaker Change: Leadership position as we have been

Speaker Change: working on the full duplex flavor of 4.0 for quite some time and it's shipping and in production and the unified is combining that along with the FDD the extended spectrum

Nimrod Ben: So, in short, I would say I believe, although we never discount any competition, that we've got a significant lead.

Speaker Change: So, in short, I would say, I believe, although we never discount any competition, that we've got a significant lead.

Nimrod Ben: That's great. I hope you hear that.

Unknown Speaker: Great! I was hoping to hear that.

Nimrod Ben: And on your new five or wins, can you give us any. So, what sort of customers are coming from? Is it mainly North America, or global, or primarily cable? Still, I know you've talked about a couple of wins in traditional telco. And you can share there on the five or wins just a broad sense. Well, Todd was specifically as a pure telco. We talked about that that this is a new win in a was a new product in a new market. The other wins we talk about or that I mentioned. This for the other new product is an international customer that is cable, telco, and wireless.

Speaker Change: That's great. I was hoping to hear that. And on your new FiberWinds, can you give us any

Speaker Change: Feel for what sorts of customers are coming from is it mainly North America or global or Primarily cable still I know you've talked about a couple of wins in traditional telco And you can share there on the fiber winds just a broad sense

Speaker Change: Well, Palo Alto specifically is a pure telco. We talked about that, that this is a new win with a new product in a new market.

Speaker Change: The other WINS we talk about, or that I mentioned, at least for the other new product, is an international customer that is cable, telco, and wireless, so this is more of a converged, but they are cable as well.

Nimrod Ben: So, this is more of a converged, but they are cable as well.

Nimrod Ben: Well, I think that's pretty much what we announced in terms of we in so far.

Speaker Change: Well, I think that's pretty much what we announced in terms of wins so far.

Walter Jankovic: Okay, that's great, and just a clarification from Walter on the gross margin beat on video. I was my understanding I thought that the SaaS business actually had lower gross margin than the appliance business because it lacked scales. Is that no longer true that the SaaS business now margins may be better than appliance? Well, when you look at the overall appliance margin, including new product that's shipping out combined with the SLA's, and you look at where we are with SaaS as mentioned earlier, we have taken some cost reduction actions across the board in video, and some of that is enhancing our margin profile in SaaS as well.

Speaker Change: Okay, that's great.

Speaker Change: And just a clarification from Walter on the...

Speaker Change: The gross margin beat on video, it was my understanding, I thought, that the SaaS business actually had lower gross margin than the appliance business because it lacked scale. Is that no longer true, that the SaaS business now margins may be better than appliance?

Walter F. Jankovic: Well, when you look at the overall appliance margin, including, you know, new product that's shipping out combined with with the SLAs,

Speaker Change: And you look at where we are with SAS, as mentioned earlier, we have taken some cost reduction actions across the board in video, and some of that is enhancing our margin profile in SAS as well.

Walter Jankovic: And we are getting to a larger scale as demonstrated with now running at 14 million in Q2, so the margins are improving. Got it.

Speaker Change: And we are getting to a larger scale as, you know, demonstrated with now running at $14 million in Q2, so the margins are improving.

Ryan Koontz: That's all I've got. Thanks for the questions.

Unknown Executive: Okay, thanks, Ryan.

Speaker Change: Got it. That's all I've got. Thanks for the questions.

Steven Frankel: And our next question comes from a line of Steven Frankel with Rosenblatt Securities.

Nimrod Ben: And on your new fiber WINS, can you give us any feel for what sorts of customers these are coming from? Is it mainly North America or global, or primarily cable still? I know you've talked about a couple of WINS in traditional telco, and you can share there on the fiber WINS, just kind of a broad sense.

Speaker Change: Okay, thanks Ryan.

Nimrod Ben: Well, Palo Alto specifically is a pure telco. We talked about that, that this is a new win with a new product in a new market. The other WINS we talk about, or that I mentioned, at least for the other new product, is an international customer that is cable, telco, and wireless. So this is more of a converged service, but they are cable as well. And Well, I think that's pretty much what we announced in terms of wins so far.

Walter Jankovic: Your line is open. Good afternoon. Thanks for the opportunity to ask questions. I'd like to follow up on this comment of sure lead times around the broadband business and. And where do you think the lead times are, and is it materially different between a 4.0 product and your 3.1 or 3.1 enhance products at this point.

Speaker Change: And our next question comes from the line of Steven Frankel with Rosenblatt Securities. Your line is open.

Steven Bruce Frankel: Good afternoon. Thanks for the opportunity to ask questions. I'd like to follow up on this comment of shorter lead times around the broadband business.

Steven Bruce Frankel: Where do you think the lead times are and is it materially different between a 4.0 product and your 3.1 or 3.1 enhanced products at this point?

Walter Jankovic: Hey Steve, it's Walter. I'll start on that one. So specifically with regards to lead times, you know, before we had indicated, you know, got lead times out there of 50 weeks on certain products. Custom products; you're going to have longer lead times. The non-custom products, definitely we're seeing some movement downward in terms of the lead times. And then specifically with regards to the earlier remarks that I made in regards to what we're seeing with ordering patterns. I just want to make sure that's clear as well. Some of our larger customers can put their orders in and shorter lead time to us based on giving us binding forecast so we can go out there and procure.

Unknown Speaker: Okay, that's great. And just a clarification from Walter on the gross margin beat on video. It was my understanding, I thought, that the SaaS business actually had lower gross margin than the appliance business because it lacked scale. Is that no longer true, that the SaaS business now has higher margins than the appliance business?

Walter F. Jankovic: Well, when you look at the overall appliance margin, including, you know, new products that are shipping out combined with the SLAs, and you look at where we are with SAS, as mentioned earlier, we have taken some cost reduction actions across the board in video, and some of that is enhancing our margin profile in SAS as well. And we are getting to a larger scale, as demonstrated by now running at $14 million in Q2. So the margins are improving.

Unknown Speaker: Got it. That's all I've got. Thanks for the question.

Walter F. Jankovic: Hey Steve, it's Walter. I'll start on that one. So, specifically with regards to lead times, you know, before we had indicated, you know, we've got lead times out there of 50 weeks on certain products.

Speaker Change: Custom products, you're going to have longer lead time.

Speaker Change: The non-custom products, definitely we're seeing some movement downward in terms of the lead times. And then specifically with regards to the earlier remarks that I made in regards to what we're seeing with ordering patterns, I just want to make sure that's clear as well.

Steven Bruce Frankel: And our next question comes from the line of Steven Frankel with Rosenblatt Securities. Your line is open.

Steven Bruce Frankel: Good afternoon. Thanks for the opportunity to ask questions. I'd like to follow up on this comment about shorter lead times in the broadband business.

Steven Bruce Frankel: And where do you think the lead times are? And is it materially different between

Speaker Change: Some of our larger customers can put their orders in in shorter lead time to us.

Walter Jankovic: So I just want to make sure that that's clear as well in terms of one of the other fundamental differences there in terms of orders and turning around orders when we get them.

Speaker Change: Based on giving us a binding forecast so we can go out there and procure. So I just want to make sure that that that's clear as well in terms of one of the other fundamental differences there in terms of orders and turning around orders when we get them.

Walter Jankovic: And Walter, could you repeat what you said about the magnitude of the orders in July? Yeah, in July alone, we in broadband, have booked orders that far exceed what we booked in broadband for all of Q2. And those orders are for product that's going to be shipped out in the second half of this year. Perfect.

Walter F. Jankovic: And Walter, could you repeat what you said about the magnitude of the orders in July ?

Walter F. Jankovic: Hey, Steve, it's Walter. I'll start on that one first. So specifically, with regard to lead times, you know, before we had indicated, you know, we've got lead times out there of 50 weeks on certain products, custom products, you're going to have longer lead times; the non-custom products, definitely, we're seeing some movement downward in terms of lead times. And then specifically with regard to the earlier remarks that I made in regards to what we're seeing with ordering patterns, I just want to make sure that's clear as well.

Walter F. Jankovic: Yeah, in July alone, we in broadband, we have booked orders that far exceed what we booked in broadband for all of Q2, and those orders are for product that's going to be shipped out in the second half of this year.

Nimrod Ben: And then maybe Nimrod just a comment on where we are with Doxas 3 1 in hand. So you had a if I go back to CTE in September, it looked like a large group of customers that were interested in this and would finally get them going. Is that still to come, or are those products not quite ready for prime time yet, and therefore those customers haven't gotten deployed yet. So I want to clarify that everything that in fact we ever shipped from remote five point of view is extended 3 1 capable. You've got the hardware to do that. We enabled a software release earlier in the year, so that's available. Really, the wait for is availability of modems and 4 oh modem modems are subject to new modem from Max Linear and I think there is a camp of others that are so called JDA and the new class of 3 1 is coming later this year. So it's really a modem dependent issue at the moment which they are looking to test and once they feel comfortable they will move forward with that. Great, thank you so much.

Speaker Change: Perfect. And then, uh...

Nimrod Ben-Natan: Maybe Nimrod, just a comment on where we are with DOCSIS 3.1 Enhanced, you had a, if I go back to SCTE in September , it looked like a large group of customers that were interested in this and would finally get them going.

Speaker Change: Is that still to come? Are those products not quite ready for prime time yet, and therefore those customers haven't gotten deployed yet?

Speaker Change: So, I want to clarify that everything that, in fact, we ever shipped from Remote PHY point of view is...

Speaker Change: extended 3.1 capability. You've got the hardware to do that. We enabled a software release earlier in the year so that's available.

Speaker Change: Really, the...

Speaker Change: What they wait for is availability of modems.

Speaker Change: and 4.0 modems are subject to

Speaker Change: New modem from MaxLinear, and I think there is a camp of others that are so-called JDA, and the new class of 3.1 is coming later this year, so it's really a modem-dependent issue at the moment, which

Speaker Change: They are looking to test and once they feel comfortable, they will move forward with that.

Unknown Executive: I'll jump back in the queue.

George Notter: Our next question comes from a line of George Notter with Jeffries.

Speaker Change: Great, thank you so much. I'll jump back in the queue.

Walter F. Jankovic: Some of our larger customers can put their orders in on shorter lead times to us based on giving us binding forecasts so we can go out there and procure. So I just want to make sure that that's clear as well in terms of one of the other fundamental differences there in terms of orders and turning around orders when we get them. And Walter, could you repeat what you said about the magnitude of the orders in July?

George Notter: Your line is open. Hi guys, thanks very much.

Speaker Change: Our next question comes from the line of George Notter with Jeffreys. Your line is open.

Walter F. Jankovic: Yeah, in July alone, we in broadband have booked orders that far exceed what we booked in broadband for all of Q2. And those orders are for products that're going to be shipped out in the second half of this year.

Walter F. Jankovic: And then maybe Nimrod, just a comment on where we are with DOCSIS 3.1 Enhanced. You had a question about whether I would go back to SCTE in September.

Walter Jankovic: I guess I wanted to ask about the ramp in expectations over the second half of the year if I do some back amble of math here. At midpoint, you're doing 182 million in sales in September, and I think nearly 220 million sales in Q4. So, assuming I have my math correct, it's a pretty significant ramp. I heard certainly what you said about the order rates picking up, and that's great, but can you give us a little bit more insight into where that ramp comes from? I assume we're talking about your two largest customers on the broadband side of the business, but any more you can tell us that kind of reinforces your confidence in that ramp over the balance of the year.

George Charles Notter: Hi guys, thanks very much. I guess I wanted to ask about the ramp in expectations over the second half of the year. If I do some back the envelope math here.

Speaker Change: You know, at midpoint, you're doing $182 million in sales in September , and then I think nearly $220 million in sales in Q4.

Speaker Change: Assuming I have my math correct, it's a pretty significant ramp, and I heard certainly what you said about the order rates picking up, and that's great, but...

Speaker Change: Can you give us a little bit more insight into where that ramp comes from? I assume we're talking about you know, your two largest customers on the broadband side of the business. But any more you can tell us that kind of reinforces your confidence in that ramp over the balance of the year. Thanks.

Walter Jankovic: Thanks.

Walter Jankovic: Yeah, certainly. Hey George, Walter. So first of all, it is dependent, and it's based on the top two customers in terms of what we expect for the second half of the year, and so therefore we do expect a big contribution based on the top two. However, we also have growth in our non top two, so for the rest of the market in terms of customers in both Q3 and Q4 time frame. So, we've looked through in terms of our backlog, in terms of the commitments, in terms of all of our expectations to ensure that we could come back and reaffirm what we've told you over the last couple quarters in terms of our guidance for the full year on broadband.

Speaker Change: Yeah, certainly. Hey George, this is Walter. So first of all, it is dependent and it's

Walter F. Jankovic: Based on the top two customers in terms of what we expect for the second half of of the year

Walter F. Jankovic: And so therefore, we do expect a big contribution based on the top two. However, we also have growth.

Walter F. Jankovic: In our non-top two, so for the rest of the market in terms of

Walter F. Jankovic: customers in both Q3 and Q4 timeframes. So we've looked through in terms of our backlog, in terms of the commitments.

Walter F. Jankovic: in terms of all of our expectations.

Walter F. Jankovic: to ensure that we could come back and reaffirm what we've told you over the last couple quarters in terms of our guidance for the full year on broadband. So that's a little more color in terms of where is the growth coming from and what you should expect to see in terms of top two versus the rest of the market.

Walter Jankovic: So we've got more color in terms of where is the growth coming from and what you should expect to see in terms of top two versus the rest of the market.

Walter Jankovic: And then I think also not that long ago we talked about some excess inventory. If some of these larger customers, I assume that's worked off now or is that still part of the narrative, how do you think about it? Well, generally we've got one customer who's just starting to ramp and starting to build out of their network, and then with another large customer, we've got the transition to FDX. And as you could see from our results in Q2, that's going to plant in terms of the ramp up associated with that technology transition. So I think you think about it from those two perspectives in terms of each of those customers and what they're doing and where they are with regards to their building.

Speaker Change: Got it. And then I think also, not that long ago, we talked about some excess inventory at some of these larger customers. I assume that's worked off now, or is that still part of the narrative? How do you think about it?

Speaker Change: Well, you know, generally, you know, we've got, you know, one customer who's just starting to ramp and starting to build out of their network.

Speaker Change: And then with another large customer, we've got the transition to FDX, and as you can see from our results in Q2, that's going to plant in terms of the ramp up associated with that technology transition.

Speaker Change: So I think you think about it from those two perspectives in terms of each of those customers and what they're doing and where they are with regards to their build-out plans.

Walter Jankovic: Joe Plants. Okay, thanks very much. Appreciate it. Okay, thanks, George.

Timothy Savageaux: Our last question comes from the line of Tim Savageaux with Northland Capital Markets.

Unknown Speaker: Timothy Savageaux, Simon Leopold, Steven Frankel, Ryan Koontz, David Hanover, Alyssa Shreves

Speaker Change: Okay, thanks very much, appreciate it.

George Charles Notter: Okay, thanks, George.

Speaker Change: Our last question comes from the line of Tim Savageaux with Northland Capital Markets. Your line is open.

Timothy Savageaux: Your line is open. I get afternoon and congrats on the results and and reiterate outlook. And I guess my question was sort of a long same line, maybe try to get a little more specific in that, you know, clearly a charter came off your 10% customer list here in the quarter giving the timing of their kind of upgrade, whether it was exactly July 9th or not. It seemed like, you know, that order input's probably closely aligned with that. So, should we assume, you know, and I'll give it your other top customer in a minute, but, you know, there've been some pretty dramatic moves quarter to quarter.

Unknown Speaker: Unknown Speaker: Is that still to come? Are those products not quite ready for prime Time yet? And therefore, those customers haven't gotten deployed yet?

Timothy Paul Savageaux: Hi, good afternoon and congrats on the results and and reiterated outlook and I guess

Timothy Paul Savageaux: My question was sort of along the same line, maybe try to get a little more specific, in that clearly Charter came off your 10% customer list.

Speaker Change: here in the corner.

Speaker Change: giving the timing of their kind of upgrade whether it was exactly July 9th or not.

Speaker Change: It seems like, you know, that order input's probably closely aligned with that. So, should we assume?

Speaker Change: and I'll get your other top customer in a minute. But...

Timothy Savageaux: Should we assume what you're getting core for Q3 is the real, you've seen some charter revenue today, but the real beginning of the upgrade and earnest.

Speaker Change: You know, there have been some pretty dramatic moves quarter-to-quarter. Should we assume what you're guiding for, for Q3, is the real...

Nimrod Ben: So, I want to clarify that everything that, in fact, we ever shipped from the Remote PHY point of view is extended 3.1 capable. You've got the hardware to do that. We enabled a software release earlier in the year, so that's available.

Nimrod Ben: Really, what they wait for is the availability of modems. And 4.0 modems are subject to a new modem from MaxLinear. And I think there is a camp of others that are so-called JDA. And the new class of 3.1 is coming later this year. So it's really a modem-dependent issue at the moment, which they are looking to test. And once they feel comfortable, they will move forward.

Speaker Change: You've seen some charter revenue to date, but the real beginning of the upgrade in earnest.

Walter Jankovic: Well, I think, Tim, we can't speak specifically about any customers' ramp in any detail here. I think what we're going to see is, you know, what I mentioned to the earlier question from George in terms of top two customers contributing significantly to the second half. So I am indicating that part of it just in terms of the concentration, where is the growth coming from, and that's probably all I'm going to say about specifically about any of the customers. I think there's also this non top two customers where we're seeing traction. We mentioned today, and Nimra mentioned this in terms of another tier one win with Telecentro.

Steven Bruce Frankel: Great, thank you so much. I'll jump back in the queue.

Speaker Change: Well, I think, Tim, we can't speak specifically about any customers ramp in any detail here.

Speaker Change: I think what we're going to see is, you know, what I mentioned to the earlier question from George in terms of top two customers contributing significantly to the second half. So I am indicating that part of it just in terms of.

George Charles Notter: Our next question comes from the line of George Notter with Jeffreys. Your line is open.

Speaker Change: the concentration, where is the growth coming from, and that's probably all I'm going to say specifically about any of the customers. I think there's also the non-top two customers.

George Charles Notter: Hi guys, thanks very much. I guess I wanted to ask about the ramp in expectations over the second half of the year. If I do some back of the envelope math here, you know, at midpoint, you're doing $182 million in sales in September, and then I think nearly $220 million in sales in Q4. So, assuming I have my math correct, it's a pretty significant ramp. And I certainly heard what you said about, you know, the order rates picking up, and that's great.

Speaker Change: where we're seeing traction we mentioned today and Nimrod mentioned this in terms of another tier one win with with Telecentro. So we are gaining traction across the rest of the market. And that also factors into our second half projections.

Walter Jankovic: So we are gaining traction across the rest of the market, and that also factors into our second half projections.

Walter Jankovic: Okay, well, maybe if I could follow up on that a little bit. And well, first, Walter, did you say 50% of the backlog shipable next 12 months? So I'm going to make sure I got that number right. 52% over 50. 52. Okay, great. Sorry, you're cutting out a little bit. Yeah, we were very authentic with it. Yeah. Well, well, that's that's referring.

Speaker Change: Okay, well maybe if I could follow up on that a little bit. And well first, Walter, did you say 50% of the backlog shippable next 12 months? Just want to make sure I got that number right. 52%.

Speaker Change: Over 50.

Speaker Change: Fifty-two.

Speaker Change: Okay, great. Sorry, you're cutting out a little bit there. Yeah, we were very specific with it, yeah.

Walter Jankovic: Well, in that context, and I say this, you know, looking Q123 had a real big bump in orders, right? Coincident with your announcement in the charter relationship in a 2.07 book-to-bill. I think your backlog was up 170 million; I think your orders were up 200 million from Q4. And this kind of figures in with the lead time conversation as well. I mean, looking at what you've shipped to date doesn't seem to come close to that type of number. And you seem to be getting follow orders here, which is interesting.

George Charles Notter: But can you give us a little bit more insight into where that ramp comes from? I assume we're talking about, you know, your two largest customers on the broadband side of the business. But any more you can tell us that kind of reinforces your confidence in that ramp over the balance of the year. Thanks.

Speaker Change: Well, in that context, and I say this, you know, look, in Q123 you had a real big bump in orders.

Walter F. Jankovic: Yeah, certainly. Hey, George, Walter.

Speaker Change: Right. Coincident with your announcement of the charter relationship and a 2.07 book to bill. I think your backlog was, you know, up $170 million. I think your orders were up $200 million from Q4.

Speaker Change: And this kind of figures in with the lead time conversation as well. I mean, looking at what you've shipped to date, it doesn't seem to come close to that type of number.

Walter F. Jankovic: So, first of all, it is dependent on and is based on the top two customers in terms of what we expect for the second half of the year. And so, therefore, we do expect a big contribution from the top two. However, we also have growth in our non-top two. So, for the rest of the market in terms of customers in both the Q3 and Q4 timeframes. So, we've looked through in terms of our backlog, in terms of the commitments, in terms of all of our expectations to ensure that we could come back and reaffirm what we've told you over the last couple of quarters in terms of our guidance for the full year on broadband. So, that's a little more color in terms of where the growth is coming from and what you should expect to see in terms of the top two versus the rest of the market.

Walter Jankovic: And I guess my overall question is, how would you characterize what's in the longer-term backlog? Is that, you know, multi because you talk about churning many times in the run rate of the hardware. What's in the other 48 is as much color as you can give in terms of broadband versus video and just the type of agreements we're talking about. Thanks. Yeah, I think the way I would characterize the other 48% in terms of anything that's beyond one year. Obviously, when folks are committing to a longer term, there's a couple of factors. One factor is it's a commitment to build as part of the commercial commitment.

Walter F. Jankovic: And then also, not that long ago, we talked about some excess inventory at some of these larger customers. I assume that's worked off now, or is that still part of the narrative? How do you think about that?

Speaker Change: And you seem to be getting follow-on orders here, which is interesting, and I guess my overall question is, how would you characterize what's in the longer-term backlog?

George Charles Notter: Well, you know, generally speaking, we've got one customer who's just starting to ramp up and starting to build out their network, and then with another large customer, we've got the transition to FDX. And as you can see from our results in Q2, that's going to be important in terms of the ramp up associated with that technology transition. So I think you should think about it from those two perspectives in terms of each of those customers and what they're doing and where they are with regard to their build out.

George Charles Notter: Thanks very much. I appreciate it. Okay, thanks, George.

Timothy Paul Savageaux: Our last question comes from the line of Tim Savageaux with Northland Capital Markets. Your line is open.

Speaker Change: Is that...

Speaker Change: You know, multi, because you talk about shortening lead times and the run rate of the hardware. What's in the other 48? As much color as you can give in terms of broadband versus video and just the type of agreements we're talking about. Thanks.

Timothy Paul Savageaux: Hi, good afternoon, and congratulations on the results and reiterated outlook. I guess my question was sort of along the same line, maybe try to get a little more specific. In that, you know, clearly a charter came off your 10% customer list, here in the corner, giving the timing of their kind of upgrade, whether it was exactly July 9th or not. It seems like, you know, that order input is probably closely aligned with that.

Speaker Change: Yeah, I think the way I would characterize the other 48% in terms of anything that's beyond

Speaker Change: One year.

Speaker Change: Obviously, when folks are committing to a longer term, there's a couple of factors. One factor is it's a commitment to build as part of the commercial commitment.

Walter Jankovic: There's also, when you think about hardware versus software. I think I've mentioned this before, is that, you know, there's certainly time around hardware. So some of that backlog is definitely on the COS license basis. And then we've got other things that are, you know, longer-term commitment. It's around SLAs and things of that nature that go out further than 12 months. So that's how I would characterize the different elements of what is in there beyond the one year. Great.

Speaker Change: There's also, when you think about hardware versus software, I think I've mentioned this before, is that, you know, there's certain lead time around hardware. So some of that backlog is definitely on the, the COS license.

Speaker Change: basis. And then we've got other things that are, you know, longer term commitments around SLAs and things of that nature that go out further than than 12 months. So that's how I would characterize the different elements of what is in there beyond the one year.

Walter Jankovic: And the last question for me, has that changed much in the last few quarters? No, not, not much at all over the last couple of quarters. If you go back to last quarter, it was close to that same level. Thanks a lot. Okay. Thanks, Tim. One moment, please.

Speaker Change: Great, and the last question from me, has that changed much in the last few quarters?

Speaker Change: Got a long time for this one.

Speaker Change: No, not, not much at all over the last couple quarters. If you go back to last quarter, it was close to that same level.

Speaker Change: Thanks a lot.

Timothy Paul Savageaux: Thanks, Tim.

Timothy Paul Savageaux: Should we assume? You know, and I'll get your other top customer in a minute, but, You know, there have been some pretty dramatic moves quarter to quarter. Should we assume that what you're guiding for, for Q3, is the real... You've seen some charter revenue to date, but the real beginning of the upgrade in earnest?

Speaker Change: Alright, one moment please.

George Notter: And we have a follow-up question from George Naughter.

George Notter: What Jeffries, your line is open. Hi. Yeah. Thanks for letting me ask a follow up. All right. So if I look at your 10% customer information, I've got Comcast at about $65 million this quarter. And you know, if I look back at some of the biggest quarters from Comcast about a year and a half ago, there was a $79 million quarter or $74 million quarter. Although I know that there was some inventory bill during those periods of time. So it kind of feels like Comcast; you know, run rate of business in terms of maybe organic installations of your equipment feels like it's around 60, 65 million dollars, you know, kind of where you're at right now.

Speaker Change: And we have a follow-up question from George Notter.

Walter F. Jankovic: Well, I think, Tim, we can't speak specifically about any customers ramping in in any detail here. I think what we're going to see is, you know, what I mentioned to the earlier question from George in terms of the top two customers contributing significantly to the second half. So I am indicating that part of it just in terms of the concentration. Where's the growth coming from?

Timothy Paul Savageaux: Okay, well, maybe I could follow up on that a little bit. And, first, Walter, did you say 50% of the backlog shippable in the next 12 months? I just want to make sure I got that number right. 52%.

Walter F. Jankovic: And, and that's probably all I'm going to say specifically about any of the customers. I think there's also this non-top two customers where we're seeing traction. We mentioned today, and Nimrod mentioned this in terms of another tier one win with Telecentro. So we are gaining traction across the rest of the market. And that also factors into our second half projections.

Speaker Change: Would Jefferies, your line is open.

George Charles Notter: Thanks for letting me ask a follow up. All right. So if I look at your 10 percent customer information, I've got Comcast at about sixty five million dollars this quarter.

Walter F. Jankovic: Okay, great. Sorry, you're cutting out a little bit.

Walter F. Jankovic: Yeah, we were very specific with it. Yeah. Well, well, that's refreshing.

Speaker Change: And, you know, if I look back at some of the biggest quarters from Comcast about a year and a half ago, there was a $79 million quarter, a $74 million quarter.

Speaker Change: Although, I know that there was some inventory bill during those periods of time, so it kind of feels like Comcast's, you know, run rate of business.

Timothy Paul Savageaux: Well, in that context, and I say this, you know, look, in Q123, you had a real big bump in Oregon. Right? Coincidentally, with your announcement of the charter relationship and a 2.07 book to bill ratio, I think your backlog was, you know, up $170 million. I think your orders were up $200 million from Q4. And this kind of figures in with the lead time conversation as well. I mean, looking at what you've shipped to date, it doesn't seem to come close to that type of number, and you seem to be getting follow-on orders here, which is interesting.

Speaker Change: In terms of maybe organic installations of your equipment, it feels like it's around

Walter Jankovic: So when I look at the ramp in expectations over the second half of the year, I guess I assume it's just heavily, heavily skewed to charter and implicitly it feels like you're saying charter is going to go and become as big or bigger than then Comcast in terms of their, they're sizing for you guys. Do I have the right kind of general view of where the revenue ramp comes from? Is that appropriate or no?

Timothy Paul Savageaux: And I guess my overall question is, how would you characterize what's in the longer-term backlog? Is that? You know, multi-year, because you talk about shortening lead times and the run rate of the hardware. What's in the other 48, as much color as you can give in terms of broadband versus video and just the type of agreements we're talking about?

Speaker Change: $60, $65 million, you know, kind of where you're at right now. So...

Speaker Change: When I look at the ramp in expectations over the second half of the year, I guess...

Walter F. Jankovic: Yeah, I

Speaker Change: I assume it's just heavily, heavily skewed to charter and...

Speaker Change: Implicitly, it feels like you're saying charter is going to go and

Speaker Change #100: become as big or bigger than Comcast in terms of their their sizing for you guys. Do I have the right kind of general view of of where the revenue ramp comes from? Is that is that appropriate or not?

Walter F. Jankovic: Yeah, I think the way I would characterize the other 48% in terms of anything that's beyond one year, obviously, when folks are committing to a longer term, there are a couple of factors. One factor is it's a commitment to build as part of the commercial commitment. There's also, when you think about hardware versus software, I think I've mentioned this before, that there's a certain lead time around hardware. So, some of that backlog is definitely on the COS license basis.

Walter Jankovic: Okay, George, without getting into it because, you know, we can't get into specifics and guiding each customer here. I think you're, you know, you're making certain assumptions around one versus the other, and, you know, I'm not going to comment are your assumptions correct or not correct. I think what you what we said previously in our prior earnings calls, we had been very explicit about the technology transition on FDX and the ramp up of that over the year. And we explain that going back to the beginning of this year and the expectation of what that's going to do to our numbers in terms of first half versus seconds.

Walter F. Jankovic: And then we've got other things that are longer-term commitments around SLAs and things of that nature that go out further than 12 months. So, that's how I would characterize the different elements of what is in there beyond the one year.

Speaker Change #101: Okay, George, without getting into, because, you know, we can't get into specifics and guiding each, each customer here. I think you're.

Timothy Paul Savageaux: And the last question from me, has that changed much in the last few quarters? Got a long time versus one minute. No, not really not much at all.

Speaker Change #102: You know, you're making certain assumptions around one versus the other and, you know, I'm not going to comment. Are your assumptions correct or not correct? I think what you, what we said previously in our prior earnings calls,

Walter F. Jankovic: No, not really not much at all over the last couple quarters. If you go back to last quarter, it was close to that same level.

Speaker Change #104: We have been very explicit about the technology transition on FDX.

Timothy Paul Savageaux: Thanks a lot.

Speaker Change #103: and the ramp-up of that over the year and we explained that going back to the beginning of this year and the expectation of what that's going to do to our numbers in terms of first half versus second half.

George Notter: We were clear about that. Without getting into specifics around any other customer or specific numbers or guidance around the customers, I think there's, you know, there's these these two customers are significant. A highlighted that earlier, and I think it's fair to say that, you know, they're both contributing. But I'm not going to give specific numbers on one versus the other. Fair enough. Thank you very much. I appreciate it. Thanks, George.

George Charles Notter: Okay, one moment, please. And we have a follow-up question from George Notter. Would Jefferies, your line is open. All right, yeah.

George Charles Notter: Hi, yeah, thanks for letting me ask a follow-up question. All right, so as I look at your 10% customer information, I've got Comcast at about $65 million this quarter. And, you know, if I look back at some of the biggest quarters from Comcast about a year and a half ago, there was a $79 million quarter, a $74 million quarter, although I know that there was some inventory bill during those periods of time.

George Charles Notter: So it kind of feels like Comcast's run rate of business, in terms of maybe organic installations of your equipment, feels like it's around $60-$65 million, you know, kind of where you're at right now. So, when I look at the ramp in expectations over the second half of the year, I guess I assume it's just heavily, heavily skewed to Charter, and implicitly, it feels like you're saying Charter is going to go and become as big or bigger than Comcast in terms of its sizing for you guys. Do I have the right kind of general view of where the revenue ramp comes from? Is that appropriate or not?

Walter F. Jankovic: Without getting into because you know, we can't get into specifics and guide each individual customer here, I think you're You know, you're making certain assumptions around one versus the other, and, you know, I'm not going to comment. Are your assumptions correct or not correct?

George Charles Notter: I think what you and I said previously in our prior earnings calls, we had been very explicit about the technology transition on FDX and the ramp-up of that over the year. And we explained that going back to the beginning of this year and the expectation of what that was going to do to our numbers in terms of first half versus second half. We were clear about that. Without getting into specifics around any other customer or specific numbers or guidance around the customers, I think there's these two customers are, are significant. I've highlighted that earlier. And I think it's fair to say that, you know, they're both contributing, but I'm not going to give specific numbers on one versus the other. Okay, fair enough.

Speaker Change #103: We were clear about that.

Speaker Change #103: without getting into specifics around any other customer or specific...

Speaker Change #103: Numbers.

Speaker Change #103: guidance around the customers. I think there's, you know, there's these these two customers are significant.

Speaker Change #103: highlighted that earlier.

Speaker Change #105: And I think it's fair to say that, you know, they're both contributing, but I'm not going to give specific numbers on one versus the other.

George Charles Notter: Okay, fair enough. Thank you very much. I appreciate it.

Unknown Executive: And I'm showing no further questions at this time.

Nimrod Ben: And I'm showing no further questions at this time. I would now like to turn the conference back to Nimrod for closing remarks.

Speaker Change #106: Okay, fair enough. Thank you very much. I appreciate it.

Nimrod Ben: I would now like to turn the conference back to Nimrod for closing remarks.

George Charles Notter: Thanks, George.

George Charles Notter: And I'm showing no further questions at this time. I would now like to turn the conference back to Nimrod for closing remarks.

Nimrod Ben: Thank you all for joining us today for the call.

Nimrod Ben: Thank you all for joining us today on the call. Have a good day.

Unknown Executive: Have a good day.

Nimrod Ben-Natan: Thank you all for joining us today for the call. Have a good day.

Unknown Executive: And this concludes today's conference call. Thank you for participating. You may now disconnect. Thank you very much.

Operator: And this concludes today's conference call. Thank you for participating. You may now disconnect.

Speaker Change #107: And this concludes today's conference call. Thank you for participating. You may now disconnect.