Harmonic sees 'fiber islands' surface among cable ops
Harmonic CEO Patrick Harshman said the supplier is seeing deployments of targeted fiber-to-the-premises (FTTP) networks among various cable operators in greenfields, as well as in certain brownfield areas where hybrid fiber/coax (HFC) networks already exist.
That activity is picking up as Harmonic seeks out fiber-focused deployments of CableOS, its virtualized cable modem termination system (vCMTS).
Though the bulk of CableOS deployments are on HFC networks, Harmonic has adapted the platform to support FTTP as well.
"Our product slots in really well in those kinds of applications where we see fiber being used surgically in so-called 'fiber islands,' another term being used in the industry to overlay existing cable infrastructure with pockets of fiber," Harshman said Monday on Harmonic's Q1 2022 earnings call.
Harmonic has deployments and trials of CableOS on FTTP networks underway, but has said little in terms of which operators are actually using it.
Harshman said early deployments and trials tend to involve cable operators targeting FTTP to new-build areas and to businesses or to high-end customers in markets where there's a competitive fiber provider.
Harmonic is also seeing traction with a couple of "smaller, pure fiber-to-the-home players," he added.
Comcast, Harmonic's marquee customer for CableOS, has been upfront about its plans to support both DOCSIS 4.0 and FTTP on a virtualized and distributed access network (DAA) that will eventually be deployed nationwide.
The idea is to use the same vCMTS platform to feed a remote OLT (optical line terminal) for targeted FTTP deployments for commercial customers, multiple-dwelling units (MDUs) and even certain residential power users, Elad Nafshi, Comcast's executive VP and chief network officer, said in March at the Light Reading-hosted Cable Next-Gen Technologies & Strategies conference.
CableOS commitments reach 77 operators worldwide
From a broader standpoint, Harmonic continues to broaden the reach of CableOS. It ended Q1 2022 with 6.1 million cable modems served on CableOS, up about 100% year-over-year. Harshman estimates that the Harmonic's current CableOS deployment represents about 10% of a potential footprint of 60 million modems.
Harmonic has CableOS wins with nine Tier 1 providers, with four to five having already reached the actively deployment phase. Overall, Harmonic has CableOS commitments with 77 operators worldwide, with Rogers Communications, Vodafone and GCI, an Alaska-based operator that's part of Liberty Broadband, among recently announced wins.
"Clearly, there's a lot of runway left," Harshman said. He suggested that, based on anticipated deployment activity, Harmonic could expect to add 4.5 million more modems to the CableOS pool through the rest of 2022.
Record revenues beat analyst estimates
Harmonic posted record Q1 revenues of $147.4 million, up 32.1% year-over-year, beating a Wall Street consensus estimate of $141.3 million. Cable access was a big driver, as category revenues surged 98%, to $81.6 million, handily beating the $71 million expected by the analysts at Raymond James.
Video revenues dipped 6.4%, to $65.8 million, as new software-as-a-service (SaaS) business progressed amid slowing sales in Harmonic's legacy video business.
Harmonic said it will take a hit of about $6 million amid a halt in sales to Russia. The company also expects to absorb some additional expenses associated with personnel in Ukraine that represent a subset of Harmonic's global R&D team.
Harmonic's backlog and deferred revenue in the quarter also notched a record – $494.3 million, up 81.3% versus the year-ago period – driven by demand from larger cable operators and video SaaS customers.
Harmonic CFO Sanjay Kalra said more than 80% of the backlog and deferred revenue is for shipments for products and services to be provided within the next 12 months. Harmonic's backlog figure does not include contractual business for CableOS.
Given some additional visibility into supply chain constraints, Harmonic raised guidance for full-year 2022 – from a range of $570 million-$596 million (and earnings per share of 26 cents to 40 cents), to $585 million-$625 million (and EPS of 34 cents to 45 cents).
"Our ability to raise guidance is more to do with our view of expanding supply chain capacity than increased [customer] demand," Harshman said.
Harshman said Harmonic isn't seeing a huge impact from pandemic-driven lockdowns in China, as the supplier has no manufacturing or R&D in China and only limited exposure to component sourcing there.
Harmonic shares were up 8.72% (75 cents) to $9.35 each in after-hours trading Monday.
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— Jeff Baumgartner, Senior Editor, Light Reading