HARMONIC INC. recently released its 10-Q report. Harmonic and its subsidiaries provide broadband access solutions worldwide, including cOS software-based broadband access products, hardware such as Oyster, Ripple, SeaStar, Reef, Wave, pebble, fin, pearl and pier, plus cOS central cloud services. The company also sells technical support and professional services, and it serves cable and telco operators through direct sales, resellers and systems integrators.
Item 2. Management’s Discussion and Analysis
Harmonic said its revenue is reported in two buckets: Appliance and integration and SaaS and service. Appliance and integration is the non-recurring side of the business, covering hardware, licenses and professional services, while SaaS and service reflects recurring usage fees and support revenue. The company operates in the Americas, Europe, the Middle East and Africa, and Asia-Pacific.
The company said its results remain tied to spending by cable and telco customers, with demand influenced by economic conditions, inflation, interest rates, supply chain issues, foreign currency swings, banking-sector volatility, access to financing, budget cycles, industry consolidation, tariffs and technology shifts. Harmonic also said it is focused on cOS software-based broadband technologies, which it believes support multi-gigabit broadband capacity and faster deployment of DOCSIS and FTTH services.
Harmonic completed the sale of its Video business on June 16, 2026 for $137.9 million in cash at closing, subject to final adjustment. The Video business is now reported as discontinued operations, and the current discussion covers only continuing operations unless otherwise noted.
Revenue
For the three months ended July 3, 2026, total net revenue rose to $133.5 million from $86.9 million a year earlier, an increase of $46.5 million, or 54%. For the six months ended July 3, 2026, revenue increased to $255.2 million from $171.8 million, up $83.4 million, or 49%.
- Appliance and integration revenue
- Three months: $117.0 million vs. $72.6 million, up $44.4 million or 61%
- Six months: $220.8 million vs. $144.1 million, up $76.6 million or 53%
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Harmonic said the increase was mainly from customers ramping up new deployments in the Americas, including $10.3 million of outside plant services in the six-month period.
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SaaS and service revenue
- Three months: $16.4 million vs. $14.3 million, up $2.1 million or 15%
- Six months: $34.4 million vs. $27.7 million, up $6.7 million or 24%
- The company said the increase was mainly due to higher support services.
Appliance and integration accounted for 88% of total revenue in the quarter and 87% in the six-month period. SaaS and service made up 12% and 13%, respectively.
Gross profit
Gross profit increased to $69.9 million in the quarter from $39.8 million a year earlier, up $30.1 million, or 76%. For the six months, gross profit rose to $133.5 million from $86.3 million, up $47.2 million, or 55%.
Gross margin improved to 52.4% from 45.8% in the quarter, and to 52.3% from 50.2% for the six months. Harmonic said the improvement was mainly due to a more favorable product mix tied to a higher percentage of new deployments in North America.
Operating expenses
- Research and development
- Quarter: $21.2 million vs. $18.0 million, up $3.2 million or 18%
- Six months: $42.1 million vs. $37.7 million, up $4.4 million or 12%
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The company cited higher incentive compensation and increased investment to support growth.
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Selling, general and administrative
- Quarter: $24.6 million vs. $20.5 million, up $4.1 million or 20%
- Six months: $46.9 million vs. $40.3 million, up $6.7 million or 17%
- Harmonic again pointed to higher incentive compensation and increased investment to support growth.
The company said stranded costs tied to the Video business were still running through continuing operations: R&D stranded costs: $0.2 million in the quarter and $0.6 million in the six months SG&A stranded costs: $1.9 million in the quarter and $3.5 million in the six months
Asset impairment and related charges
Asset impairment and related charges were $0.4 million in both the quarter and the six-month period, down from $1.6 million in each period a year earlier. The current-quarter charges included $0.1 million of right-of-use asset impairments and $0.3 million related to unrecoverable facility costs.
Interest, other expense and taxes
- Interest expense, net
- Quarter: $1.1 million, essentially flat year over year
- Six months: $2.2 million vs. $2.4 million, down $0.2 million
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Harmonic said the decline reflected a lower outstanding principal balance under the Revolving Facility.
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Other expense, net
- Quarter: $0.6 million vs. $1.2 million
- Six months: $0.6 million vs. $1.8 million
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The company attributed the change mainly to foreign currency fluctuations.
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Provision for income taxes
- Quarter: $4.9 million vs. a benefit of $2.2 million
- Six months: $14.6 million vs. $0.6 million
- Harmonic said the increase was driven by higher pretax income and $4.6 million of withholding taxes on a distribution from a foreign subsidiary in the six-month period.
Liquidity and capital resources
Harmonic said it expects to continue funding operations through cash generated from operations, with cash also used for working capital, research and development, and other business activities. The company said it may also consider additional capital raising, debt facilities or equity financing if needed, and it may pursue investments or acquisitions that could require more capital. As a result of these announcements, the company's shares have moved -2.62% on the market, and are now trading at a price of $13.555. Check out the company's full 10-Q submission here.
