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Harmonic (HLIT) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Information Technology· Aug 12, 2026

Source: earnings call transcript

Executive summary

Harmonic Inc. Q2 FY26 — Strong Broadband Growth and Raised Full-Year Outlook

Harmonic delivered a strong Q2 FY26, driven by robust broadband demand, particularly in the rest of market segment, and accelerating fiber deployments. The company completed the sale of its Video business, becoming a pure-play broadband provider, and raised its full-year revenue and EPS guidance, reflecting increased visibility and strategic momentum. The converged cOS platform continues to enable operators to modernize networks across DOCSIS and fiber architectures.

Highlights

5

  • Q2 revenue grew 54% year-over-year to $133.5 million, exceeding guidance.

  • Rest of market revenue grew 44% year-over-year to nearly $50 million.

  • Bookings reached $144 million, with rest of market representing approximately 60% of total.

  • Backlog and deferred revenue hit a record $588 million, up 71% year-over-year.

  • Full-year 2026 Broadband revenue outlook raised to $505 million-$525 million, up $30 million from prior midpoint.

Concerns

3

  • Negative free cash flow of $7 million for the quarter, primarily due to increased memory inventory.

  • Stranded costs of $2.3 million in Q2 and $10 million for full year 2026 related to the Video business sale.

  • Memory costs impact of approximately $3 million per quarter built into second half guidance.

Guidance & targets

CategoryTargetConfidence
Broadband revenue
$125 million and $135 million
high materiality
High
Gross margins
51% and 52%
medium materiality
High
Operating profit
$23 million and $28 million
medium materiality
High
Non-GAAP EPS
$0.15 and $0.19
high materiality
High
Broadband revenue
$505 million and $525 million
high materiality
High
Gross margins
51% and 52%
medium materiality
High
Operating profit
$99 million and $111 million
medium materiality
High
Non-GAAP EPS
$0.67 and $0.75
high materiality
High
Non-GAAP tax rate
23%
low materiality
High
Memory costs impact
$3 million per quarter
medium materiality
High
Stranded costs elimination
30% eliminated
medium materiality
High

Orderbook & backlog

Backlog and deferred revenue $587.6 million Q2 FY26 end

up 71% year-over-year

73% expected to convert to revenue within the next 12 months

Bookings $144 million Q2 FY26

Led by rest of market, which represented approximately 60% of total bookings

Product announcements

ProductTypeDetails
SeaStar MDU optical nodemilestone
Pearl-1XL and Oyster+launch

Deals & partnerships

MediaKind Sale of Video business $137.9 million

Completed the sale of the Video business to MediaKind, marking the completion of Harmonic's transformation to a pure-play broadband company.

Risks & headwinds

Negative free cash flow due to inventory build Q2 FY26

-$7 million in Q2 FY26

Mitigation:Increase in memory inventory was a strategic decision to secure supply for growth.

Stranded costs from Video business sale Q2 FY26 and FY26

$2.3 million in Q2 FY26; $10 million for full year 2026

Mitigation:Approximately 30% of these costs are temporary and expected to be eliminated within 1 year of the Video sale closing.

Elevated memory costs Q2 FY26 and H2 FY26

Net unrecovered memory cost impact well below $1 million in Q2; $3 million per quarter built into H2 FY26 guidance

Mitigation:Team has secured memory supply for the rest of 2026 and into 2027; full year gross margin guidance was raised due to mitigation efforts.

External factors

Not quantified

Mitigation:Company is taking a measured approach to guidance due to the situation in the Middle East and component supply dynamics/pricing.

What to watch in Q3 FY26

Rest of market revenue growth

next quarter
Current 44% YoY in Q2 FY26
Target Continued strong growth

Why it matters

Indicates continued customer diversification and adoption beyond top 2 accounts, crucial for overall growth.

Rest of market revenue grew 44% year-over-year to nearly $50 million.

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Q&A highlights

Are smaller regional MSOs following the upgrade playbook, and are these actual deployments or just lab trials?

These are ramping deployments across the board, well past lab trials, covering DOCSIS 3.1 Plus, DOCSIS 4.0, and fiber use cases for a growing list of customers outside the top two.

“This is way past the lab trials. This is ramping deployments across the board.”

asked by Victor Chiu · answered by Nimrod Ben-Natan

2 min read 6 chapters

Detailed narrative

Strategic Imperatives & cOS Platform

Harmonic's cOS platform is a key differentiator, supporting all access architectures including DOCSIS 3.1 Plus, DOCSIS 4.0, distributed, centralized, and fiber. This flexibility allows operators to evolve their networks without regrettable spend, addressing changing traffic patterns like the 3x faster growth in upstream traffic. The platform enables operators to modernize across current and future architectures, positioning Harmonic uniquely in the market.

Rest of Market Momentum & Customer Diversification

The company saw continued strong momentum in the 'rest of market' segment, with revenue growing 44% year-over-year to nearly $50 million in Q2, and surpassing $100 million in the first half of the year. This growth is driven by an expanding base of 161 customers serving 48.2 million CPE devices, demonstrating successful customer diversification beyond the two largest accounts.

Deployments are ramping up across various use cases, including DOCSIS 3.1 Plus, DOCSIS 4.0, and fiber.

Fiber Expansion & New Products

Q2 marked a record for rest of market fiber bookings, with deployments accelerating globally. The SeaStar MDU optical node went live at DNA Finland, enabling multi-gigabit service in apartment buildings. Inter Venezuela is building a nationwide XGS-PON service for mobile backhaul using Harmonic's platform.

New products like Pearl-1XL and Oyster+, offering high port density and extended power outage protection, have already secured multi-million dollar orders, expanding market reach beyond traditional residential broadband.

DOCSIS 4.0 Ecosystem Progress

The DOCSIS 4.0 ecosystem achieved a significant milestone with cable modems from six suppliers and two chipset vendors clearing the first CableLabs interoperability hurdle. Harmonic is actively shipping unified DOCSIS 4.0 nodes in volume to a broad range of customers and secured a new DOCSIS 4.0 customer in Europe during the quarter.

This progress enables operators to deliver fiber-like upstream speeds over existing infrastructure, meeting the demands of AI-era applications.

Intelligence Layer Adoption & Impact

Adoption of Harmonic's intelligence layer continues to build, with Beacon live at approximately 20 customers and broader offerings running with about 10 operators. Early deployments show significant value, including a more than 30% reduction in subscriber calls to service providers.

The Amply beta program, extending real-time visibility into the amplifier plant, is running with multiple vendors, aligning with Dell'Oro's projection of 10 million smart amplifiers in the current upgrade cycle, indicating a substantial market opportunity.

Video Business Divestiture & Capital Allocation

Harmonic completed the sale of its Video business to MediaKind on June 16, 2026, for $137.9 million, transforming the company into a pure-play broadband provider. This transaction significantly strengthened the balance sheet, bringing cash and cash equivalents to $231.9 million.

Capital allocation priorities remain organic growth, shareholder returns (with $122 million already repurchased under a $200 million program), and strategic M&A to further enhance growth and diversification.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.