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Harmonic Beats Q2 Revenue Estimates with $74M, Stock Spikes 25%

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(Image credit: harmonic)

Network and video technology vendor Harmonic has seen its previously moribund stock spike 25% since after-hours trading Monday, with the company reporting better-than-expected financials for the second quarter.

The San Jose, Calif.-based company reported Q2 revenue of $74 million, down 12.8% year over year, but up almost $4 million over equity analyst expectations. 

The pandemic hurt portions of Harmonic’s business during the quarter, such as its video segment, which was down 33.7% to $47.5 million in revenue. 

Also read: Harmonic Touts Vodafone CableOS Deployment in Germany

But virtualization software for HFC and FTTP networks continues to be a growth sector for Harmonic, which recently announced the addition of tier 1 European clients, Vodafone and Millicom. 

With Harmonic’s CableOS product leading the way, the company’s cable access segment produced a 100% year-over-year revenue spike to $26.5 million. CableOS is now deployed with 29 cable operators worldwide, up 81% over Q2 2019. Cable modems served by CableOS reached 1.7 million in the second quarter up 116% year over year and 27% sequentially. 

“Looking ahead, we expect this momentum to continue,” Patrick Harshman, president and CEO of Harmonic, told analysts during Monday’s call. 

“While the COVID situation somewhat slowed our progress onboarding additional new customers during the quarter, we nonetheless added two new cable operators actively deploying CableOS and we secured several additional new design wins with deployment scheduled to commence in the second half of the year. Among these was our first significant CableOS purchase order in Asia Pacific,” Harshman added. 

Harmonic is also predicting video-related revenues to increase to between $87 million - $97 million in Q4 2020.

Much of that optimism stems from a new business opportunity related to 5G deployment, the FCC mandated reclamation of C-band satellite spectrum for 5G. 

Also read: SES and Harmonic Team on C-Band Transition

In July, Harmonic and SES announced a new partnership that will have the two sides work together on the SES plan filed with the FCC for the C-band transition.

The C-band transition will see current C-band spectrum operators move to the upper portion of the band, opening up 280 MHz for 5G development. Harmonic and SES will collaborate on supporting the required network transformations using Harmonic’s software solutions for satellite video delivery.

This includes deploying Harmonic’s XOS advanced media processing in the headend and XOC Edge transcoding solutions in remote sites for primary distribution of video feeds.

“We estimate this to be a new several hundred million dollar global opportunity that will play out over the next couple of years,” Harshman said. He added that Harmonic expects the SES partnership to generate revenue “in the fourth quarter of this year, contributing materially to the strong video revenue rebound in our second half guidance.”