hlit-20230929

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________________________

Form 10-Q

_____________________________________________________

(Mark One)


☒			Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended September 29, 2023


☐			Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File No. 000-25826

_____________________________________________________

HARMONIC INC.

(Exact name of registrant as specified in its charter)

_____________________________________________________


Delaware			77-0201147
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)

2590 Orchard Parkway

San Jose, CA 95131

(408) 542-2500

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

____________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, $0.001 par value

HLIT

NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated Filer	☒

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

Table of Contents

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the registrant’s Common Stock, $0.001 par value, outstanding on October 30, 2023 was 112,189,931.

Table of Contents

TABLE OF CONTENTS


PART I

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)			3
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			18
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			26
ITEM 4. CONTROLS AND PROCEDURES			27

PART II

ITEM 1. LEGAL PROCEEDINGS			28
ITEM 1A. RISK FACTORS			29
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			49


ITEM 5. OTHER INFORMATION			49
ITEM 6. EXHIBITS			50

SIGNATURES			51

Table of Contents

PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

HARMONIC INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except per share data)


	September 29, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	75,622	$	89,586
Short-term investments	6,305		—
Accounts receivable, net	110,345		108,427
Inventories	103,748		120,949
Prepaid expenses and other current assets	33,117		26,337
Total current assets	329,137		345,299
Property and equipment, net	36,960		39,814
Operating lease right-of-use assets	21,604		25,469
Goodwill	237,161		237,739
Other non-current assets	48,949		61,697
Total assets	$	673,811	$	710,018
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Convertible debt, current	$	114,654	$	113,981
Other debts, current	4,820		4,756
Accounts payable	47,123		67,455
Deferred revenue	56,325		62,383
Operating lease liabilities, current	6,511		6,773
Other current liabilities	45,786		66,724
Total current liabilities	275,219		322,072

Other debts, non-current	9,992		11,161
Operating lease liabilities, non-current	20,019		24,110
Other non-current liabilities	27,781		28,169
Total liabilities	333,011		385,512
Commitments and contingencies (Note 11)

Stockholders’ equity:
Preferred stock, $0.001 par value, 5,000 shares authorized; no shares issued or outstanding	—		—
Common stock, $0.001 par value, 150,000 shares authorized; 112,171 and 109,871 shares issued and outstanding at September 29, 2023 and December 31, 2022, respectively	112		110
Additional paid-in capital	2,399,282		2,380,651
Accumulated deficit	(2,046,416)		(2,046,569)
Accumulated other comprehensive loss	(12,178)		(9,686)
Total stockholders’ equity	340,800		324,506
Total liabilities and stockholders’ equity	$	673,811	$	710,018

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

HARMONIC INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share data)


	Three Months Ended				Nine Months Ended
	September 29, 2023		September 30, 2022		September 29, 2023		September 30, 2022
Revenue:
Appliance and integration	$	84,760	$	116,441	$	310,681	$	351,293
SaaS and service	42,443		39,297		130,134		109,330
Total net revenue	127,203		155,738		440,815		460,623
Cost of revenue:
Appliance and integration	48,992		64,932		166,177		193,655
SaaS and service	16,527		12,202		43,960		36,781
Total cost of revenue	65,519		77,134		210,137		230,436
Total gross profit	61,684		78,604		230,678		230,187
Operating expenses:
Research and development	30,316		30,466		96,030		89,219
Selling, general and administrative	39,245		36,379		121,300		109,790
Restructuring and related charges	726		335		809		2,136
Total operating expenses	70,287		67,180		218,139		201,145
Income (loss) from operations	(8,603)		11,424		12,539		29,042
Interest expense, net	(619)		(1,284)		(2,125)		(4,111)

Other income (expense), net	343		(118)		(86)		4,218
Income (loss) before income taxes	(8,879)		10,022		10,328		29,149
Provision for (benefit from) income taxes	(2,384)		1,282		10,175		7,098
Net income (loss)	$	(6,495)	$	8,740	$	153	$	22,051

Net income (loss) per share:
Basic	$	(0.06)	$	0.08	$	—	$	0.21
Diluted	$	(0.06)	$	0.08	$	—	$	0.20
Weighted average shares outstanding:
Basic	112,031		105,228		111,431		104,617
Diluted	112,031		113,185		117,910		110,911

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

HARMONIC INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited, in thousands)


	Three Months Ended				Nine Months Ended
	September 29, 2023		September 30, 2022		September 29, 2023		September 30, 2022
Net income (loss)	$	(6,495)	$	8,740	$	153	$	22,051
Change in foreign currency translation adjustments	(5,052)		(8,840)		(2,426)		(18,150)
Other comprehensive loss before tax	(5,052)		(8,840)		(2,426)		(18,150)
Provision for income taxes	163		523		66		891
Other comprehensive loss, net of tax	(5,215)		(9,363)		(2,492)		(19,041)
Total comprehensive income (loss)	$	(11,710)	$	(623)	$	(2,339)	$	3,010

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

HARMONIC INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited, in thousands)

Three Months Ended September 29, 2023

SEC Form 10-Q filed by Harmonic Inc.