Harmonic Inc.

Broadband revenue in Q2 was $133.5 million, up 54% year over year and above the prior guidance range of $115 million to $125 million. Gross margin was 53%, and EPS was $0.21, both ahead of guidance. Operating profit was $31.3 million. For full-year 2026, management raised Broadband revenue guidance to $505 million to $525 million, gross margin guidance to 51% to 52%, operating profit guidance to $99 million to $111 million, and EPS guidance to $0.67 to $0.75. For Q3 2026, guidance calls for revenue of $125 million to $135 million, gross margin of 51% to 52%, operating profit of $23 million to $28 million, and EPS of $0.15 to $0.19.

Nimrod Ben-Natan said the quarter reflected strong execution and progress on Harmonic’s shift to a pure-play broadband company after the Video sale closed in June. He emphasized that operators are increasingly choosing Harmonic’s converged cOS platform because it supports DOCSIS 3.1 Plus, DOCSIS 4.0, distributed and centralized architectures, and fiber, allowing customers to change network plans without switching platforms. His tone was upbeat and confident, especially around rest of market growth, fiber momentum, DOCSIS 4.0 adoption, and early traction in the intelligence portfolio.

Walter Jankovic highlighted that the Video sale brought in $137.9 million at closing and helped lift cash and cash equivalents to $231.9 million at quarter end, with an additional $85 million undrawn credit facility. He noted negative free cash flow of $7 million in the quarter, mainly due to increased memory inventory, and said DSO was 61 versus 62 in Q1 and 72 in Q2 last year. He said full-year guidance now reflects about $3 million per quarter of net increased memory cost in the second half, about $10 million of stranded costs for the year, and a reduced non-GAAP tax rate of 23% from 24.5%.

Analysts focused on whether the rest-of-market business is moving from trials into real deployments, and management said it is “way past the lab trials” and now seeing ramping deployments across DOCSIS 4.0, DOCSIS 3.1 Plus, and fiber. They also asked whether intelligence products could become material recurring revenue; management said yes, but that it will take time and will be sticky. On costs, management said memory and third-party hardware prices are up, but supply has been secured and they have not seen material deployment impact; BEAD is moving as planned but is a modest part of this year’s guidance.