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Harmonic Inc. (HLIT)
NASDAQ:HLIT
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Harmonic
(NASDAQ:HLIT)
66Neutral
Positive Factors
Competitive Position
The Comcast transition to D4U is seen as improving HLIT's strong competitive market position.
Financial Performance
Harmonic printed a strong Q3 and guided in-line for the full year—despite a sizable ramp in expectations for Q4.
Revenue Growth
HLIT delivered a very strong 4Q24 with revenue increasing by 33%.
Negative Factors
Customer Concentration Risk
Comcast and Charter present major customer concentration risk, with 69% of combined sales.
Demand Softness
A weaker F25 guide is driven by soft demand from its two major customers, Comcast and Charter.
Excess Inventory Concerns
There are concerns about excess inventory at Charter affecting Harmonic’s business in 2025.
Harmonic (HLIT) vs. S&P 500 (SPY)
Market Cap
$1.14B
Dividend YieldN/A
Average Volume (3M)1.34M
Price to Earnings (P/E)29.8
Beta (1Y)1.26
Revenue Growth11.65%
EPS Growth-55.58%
CountryUS
Employees1,240
SectorTechnology
Sector Strength46
IndustryHardware & Equipment
Share Statistics
EPS (TTM)0.33
Shares Outstanding117,052,890
10 Day Avg. Volume916,081
30 Day Avg. Volume1,335,012
Financial Highlights & Ratios
PEG Ratio0.01
Price to Book (P/B)N/A
Price to Sales (P/S)1.76
Price to Cash Flow (P/CF)6.10
P/FCF Ratio6.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$10.50Price Target Upside7.47% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
Harmonic Business Overview & Revenue Model
Company DescriptionHarmonic Inc., together with its subsidiaries, provide video delivery software, products, system solutions, and services worldwide. The company operates in two segments, Video and Cable Access. The Video segment sells video processing, production, and playout solutions and services to cable operators, and satellite and telecommunications Pay-TV service providers, as well as to broadcast and media, including streaming media companies. This segment's video processing appliance solutions include network management and application software, and hardware products, such as encoders, video servers, high-density stream processing systems, and edge processors. This segment also provides software-as-a-service (SaaS) solutions, which enables the packaging and delivery of streaming services, including live streaming, video-on-demand, catch-up TV, start-over TV, network-DVR, and cloud-DVR services through HTTP streaming to various device along with dynamic and personal ad insertion. The Cable Access segment offers CableOS software-based cable access solutions; and CableOS central cloud services primarily to cable operators. Its products enable customers to create, prepare, store, playout, and deliver a range of broadcast and streaming video services to consumer devices, including televisions, personal computers, laptops, tablets, and smart phones. The company also provides technical support and professional services, such as maintenance and support, consulting, implementation, program management, technical design and planning, building and site preparation, integration and equipment installation, end-to-end system testing, and training. It sells its products through its direct sales force, as well as through independent resellers and systems integrators. The company was incorporated in 1988 and is headquartered in San Jose, California.
How the Company Makes MoneyHarmonic Inc. generates revenue primarily through the sale of its video and cable access solutions to media companies, broadcasters, and service providers. In the Video segment, the company earns money by providing software-based solutions for video production and processing, which includes encoding, transcoding, and delivery. These solutions are essential for enabling high-quality video streaming and broadcast services. In the Cable Access segment, Harmonic offers next-generation cable access solutions that help service providers deliver broadband services more efficiently. This includes revenue from hardware sales, software licenses, and ongoing service and support contracts. Additionally, Harmonic benefits from strategic partnerships with industry leaders and technology innovators, which contribute to its revenue through joint ventures and collaborative projects.
Harmonic Financial Statement Overview
Summary
Harmonic demonstrates solid financial health with strong revenue growth and operational efficiency. The balance sheet reflects prudent financial management, although monitoring of equity and profitability margins is advised. Cash flow improvements suggest enhanced liquidity and operational cash generation, positioning the company well for future investments.Income Statement
Harmonic has demonstrated a positive revenue growth trajectory, increasing from $607.9 million in 2023 to $678.7 million in 2024, representing an 11.7% growth rate. The gross profit margin in 2024 stands at 53.9%, indicating a strong ability to cover operating costs. However, the net profit margin decreased from 13.8% in 2023 to 5.8% in 2024, which may suggest rising expenses or other operational challenges. EBIT and EBITDA margins also show improvement, reflecting operational efficiency.72
Positive
Balance Sheet
The company maintains a healthy equity position with a debt-to-equity ratio of 0.29 in 2024, suggesting conservative leverage. Return on Equity (ROE) is 8.4%, indicating moderate returns for shareholders. The equity ratio of 58.4% reflects a stable financial structure with adequate asset backing. Despite these strengths, the decline in stockholders' equity from 2023 to 2024 warrants attention.75
Positive
Cash Flow
Free cash flow has improved significantly from negative to $52.7 million in 2024, showing robust cash generation capacity. The operating cash flow to net income ratio is 1.58, indicating efficient cash conversion. However, the free cash flow to net income ratio is 1.34, which, although positive, could be improved further for enhanced liquidity.68
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 678.72M | 607.91M | 624.96M | 507.15M | 378.83M | Gross Profit |
| 365.92M | 312.55M | 315.88M | 259.74M | 195.00M | EBIT |
| 63.14M | 22.17M | 45.52M | 18.81M | -11.02M | EBITDA |
| 77.40M | 34.09M | 61.65M | 32.54M | 999.00K | Net Income Common Stockholders |
| 39.22M | 83.99M | 28.18M | 13.25M | -29.27M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 101.46M | 84.27M | 89.59M | 133.43M | 98.64M | Total Assets |
| 796.51M | 768.21M | 710.02M | 693.69M | 591.52M | Total Debt |
| 134.68M | 156.05M | 160.78M | 190.21M | 151.36M | Net Debt |
| 33.22M | 71.78M | 71.19M | 56.78M | 52.72M | Total Liabilities |
| 331.25M | 331.33M | 385.51M | 396.89M | 333.22M | Stockholders Equity |
| 465.26M | 436.87M | 324.51M | 296.80M | 258.30M |
| Cash Flow | Free Cash Flow | |||
| 52.73M | -1.42M | -3.77M | 28.04M | 6.96M | Operating Cash Flow |
| 61.92M | 7.06M | 5.48M | 41.02M | 39.16M | Investing Cash Flow |
| -9.19M | -8.47M | -1.29M | -12.97M | -32.20M | Financing Cash Flow |
| -33.27M | -4.99M | -43.13M | 7.94M | -2.11M |
Harmonic Technical Analysis
Negative
9.77
Price Trends
10.76
Negative
11.72
Negative
12.46
Negative
Market Momentum
-0.19
Positive
36.66
Neutral
9.33
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HLIT, the sentiment is Negative. The current price of 9.77 is below the 20-day moving average (MA) of 10.29, below the 50-day MA of 10.76, and below the 200-day MA of 12.46, indicating a bearish trend. The MACD of -0.19 indicates Positive momentum. The RSI at 36.66 is Neutral, neither overbought nor oversold. The STOCH value of 9.33 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HLIT.
Harmonic Risk Analysis
Harmonic disclosed 36 risk factors in its most recent earnings report. Harmonic reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Harmonic Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $15.73B | 27.15 | 19.51% | ― | 3.02% | 31.36% | |
74 Outperform | $245.86B | 26.73 | 20.02% | 2.59% | -5.34% | -30.57% | |
73 Outperform | $27.23B | 13,733.33 | 0.15% | 2.09% | -5.59% | ― | |
66 Neutral | $1.14B | 29.79 | 8.69% | ― | 11.65% | -55.58% | |
58 Neutral | $21.67B | 10.60 | -18.43% | 2.42% | 4.66% | -24.45% | |
44 Neutral | $1.98B | ― | -152.77% | ― | -24.49% | -250.61% |
* Technology Sector Average
Performance Comparison
HLIT
Harmonic
9.77
-3.67
-27.31%
CSCO
Cisco Systems
61.40
13.02
26.91%
EXTR
Extreme Networks
14.68
3.14
27.21%
FFIV
F5 Networks
270.08
80.49
42.45%
ERIC
Telefonaktiebolaget LM Ericsson
7.86
2.56
48.30%
Harmonic Earnings Call Summary
Earnings Call Date: Feb 10, 2025 | % Change Since: -12.14% | Next Earnings Date: May 5, 2025
Earnings Call Sentiment Neutral
Harmonic reported strong financial results for 2024 with record revenues and strategic partnerships. However, they face significant challenges in 2025 due to industry-wide transitions to Unified DOCSIS 4.0, resulting in anticipated revenue declines and operational hurdles, although the long-term outlook remains positive.Highlights
Record-Breaking Revenue and Growth
Harmonic reported record quarterly total company revenue of $222.2 million, a 33% increase year-over-year, and achieved all-time high adjusted EBITDA and EPS, with EPS increasing by 246% to $0.45.
Strong Broadband Segment Performance
Broadband revenue reached a record $171 million with an EBITDA of $64.1 million. The segment showed strong growth, particularly in DOCSIS 4.0 and Fiber deployments.
Video Streaming SaaS Growth
Harmonic's Video Streaming SaaS segment saw a 15% year-over-year revenue increase, reaching $15.1 million in Q4 2024, buoyed by a new partnership with Akamai.
Expansion in Rest of World Market
Revenue growth in the broadband rest of world customer base exceeded 50% compared to the prior quarter, with the addition of five new customers.
New $200 Million Share Repurchase Program
Harmonic announced a three-year $200 million share repurchase program, doubling the previous program, indicating confidence in the business.
Lowlights
Anticipated Revenue Decline in 2025
Harmonic projects a decline in total company and broadband revenue for 2025 due to industry-wide transition challenges to Unified DOCSIS 4.0, with broadband revenue expected to be between $400 million to $450 million.
Inventory Provisions Related to DOCSIS 4.0 Transition
A $5 million inventory provision was taken due to the transition to DOCSIS Unified 4.0, impacting broadband gross margins.
Reduced Customer Order Forecasts
Harmonic experienced reduced order forecasts due to customers delaying deployments related to Unified DOCSIS 4.0, impacting 2025 financial expectations.
Challenges with Ecosystem Readiness
There are industry-wide challenges with the readiness of Full Duplex amplifiers, which are crucial for some DOCSIS 4.0 implementations.
Company Guidance
During the Harmonic earnings call for the fourth quarter and full year 2024, the company provided guidance that highlighted various financial metrics and strategic plans. The company reported record revenue for 2024, with Broadband revenue reaching $171 million and Video revenue at $51.1 million. The adjusted EBITDA for Broadband was $64.1 million, while Video achieved $7.8 million. Harmonic anticipates 2025 will be a below-trend year for broadband revenue due to the transition to Unified DOCSIS 4.0, but they expect a return to above-trend growth in 2026. The company announced a new $200 million three-year share repurchase program, reflecting confidence in their long-term outlook. In terms of guidance, Harmonic expects broadband revenue between $400 million to $450 million for 2025, with gross margins between 51% to 54%. For Video, the revenue is projected to be between $185 million to $195 million, with gross margins between 63% to 65%. The company remains focused on customer diversification, technology leadership, fiber growth, and cloud services to drive future growth.Harmonic Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Harmonic Approves 2025 Key Contributor Incentive Plans
Neutral
Feb 26, 2025
On February 20, 2025, Harmonic Inc.’s Compensation Committee approved the 2025 Key Contributor Incentive Plans, which include the Corporate, Broadband, and Video Plans. These plans are designed to incentivize executive officers, with bonus targets tied to non-GAAP operating profit and bookings for fiscal year 2025. Participants must exceed minimum thresholds to receive bonuses, with potential payouts up to 200% of the target bonus. The Compensation Committee retains discretion over plan amendments and bonus payouts.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.