Harmonic considers strategic M&A opportunities to enhance its broadband footing
Key Highlights
- Harmonic is prioritizing investments in organic growth and targeted M&A to diversify its broadband portfolio and support new FTTH customer wins.
- The company has expanded its DOCSIS 4.0 customer base and is helping cable operators modernize infrastructure with converged fiber and HFC networks.
- Q1 revenue exceeded guidance at $121.7 million, with 42% of revenue from the rest of the market, indicating successful diversification efforts.
- Record broadband backlog of $582.1 million, with 60% expected to convert into revenue within 12 months, providing strong revenue visibility.
- Harmonic aims for over 30% annual ROM growth and continues to leverage its converged platform for multiple access technologies, enhancing efficiency and customer value.
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With the sales of its video business behind it, Harmonic can further sharpen its focus on its core broadband business.
As it moves forward with its broadband plan, the company will consider organic initiatives and targeted M&A opportunities to diversify its portfolio and accommodate new customer wins in the fiber-to-the-home (FTTH) market.
“Even as we transform to a pure-play broadband company, our capital priorities remain unchanged: invest in organic growth and diversification, return capital to our shareholders, and pursue strategic M&A further to enhance growth and diversification in our broadband business,” said Nimrod Ben-Natan, CEO of Harmonic, during its first quarter earnings call. “Aligned with our first key priority, we expect to increase our inventory over the next several quarters to support our anticipated growth, including advancing memory purchases to secure supply for the remainder of the year.
He added that while it feels it has secured its cable and DOCSIS market position, the priority will focus on opportunities that he says have a “high level of synergy” with the company's focus. “It's not just about bundling products or companies,” Nimrod Ben-Natan said. “It's really about creating something that will add value to our customers and to the platform that we bring to the market.”
Diversifying customer base
Harmonic continues to diversify its customer base, a trend evident in its first-quarter results. The company reported 78% year-over-year Rest-of-Market (ROM) revenue growth, representing 42% of total revenue.
Besides the increased revenue contribution, Nimrod Ben-Natan said: “This performance demonstrates the expanding global adoption of the Harmonic platform across a broader range of industry operators.”
During the quarter, Harmonic had several new fiber wins, including international providers such as Optimum and Taiwan’s KBRO. Fiber products accounted for over 14% of total Appliance & Integration revenue in the past year.
Throughout the rest of the year, Harmonic will continue to grow ROM at 30%+ per year and expand its FTTH customer base among cable MSOs and telcos.
Walter Jankovic, CFO of Harmonic, said its ROM results “underscore our progress in expanding our customer diversification.”
Unified DOCSIS strategy
While Harmonic will continue to emphasize its traction in FTTH, the vendor continues to see opportunities for its unified DOCSIS 4.0 strategy.
During the first quarter, the company expanded its DOCSIS 4.0 customer base with new wins while advancing deployments with existing customers.
Nimrod Ben-Natan said the company is eager to help cable operators enhance upstream capacity on their HFC networks. “DOCSIS 4.0 is increasingly about more than extending the network to 1.8 gigahertz or delivering faster downstream speeds,” he said. “We are seeing operators use DOCSIS 4.0 to increase upstream capacity as they continue to densify their networks and optimize existing infrastructure.”
Another key element of its growth path is helping cable operators run DOCSIS and fiber networks simultaneously. Optimum, for example, is leveraging Harmonic’s cOS broadband platform to modernize HFC infrastructure and consolidate headend facilities by 50%.
“Optimum’s team noted that the architecture enables them to simultaneously deliver XGS-PON and DOCSIS off of the same node, allowing them to build where demand dictates rather than overbuilding to every location,” Nimrod Ben-Natan said. “This is precisely the unique value of Harmonic's converged architecture, one platform, multiple access technologies, and more capital-efficient choices for operators.”
Broadband dominates revenues
Harmonic’s bet on being a broadband-centric player was reflected early in its first-quarter results, with revenue of $121.7 million, above its guidance range of $100 million to $105 million.
The rest of the market segment was a key contributor to Harmonic’s first quarter results.
“A large part of this was from the rest of the market, which represented 42% of that total, an important indicator of our progress in broadening and diversifying our business,” said Nimrod Ben-Natan. “Bookings were also strong in the quarter, driving an 87% increase year-over-year in backlog and deferred revenue.”
Additionally, Harmonic ended the quarter with a high level of customer bookings, a large backlog, and deferred revenue. At the end of the first quarter, broadband backlog and deferred revenue reached a record $582.1 million, up 87% year-over-year. Of that figure, 60% is expected to convert into revenue within the next 12 months.
Jankovic said these factors “give us greater visibility and added confidence in our 2026 trajectory, and combined with the Unified DOCSIS 4.0 ramps, large customer deployment plans, and accelerating the rest of the market adoption will help drive strong broadband revenue growth throughout the course of this year.”
Looking at the second quarter, Harmonic has forecast revenue of between $115 million and $125 million and operating profits between $23 million and $28 million.
For the full year 2026, we expect broadband to generate revenue between $475 million and $495 million, up $25 million or 5.4% from the midpoint of our prior guidance.
“As our guidance shows, we expect strong year-over-year broadband revenue growth in Q2 2026 and a better-than-expected first half of '26,” Jankovich said.
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Sean Buckley
Sean is responsible for establishing and executing the editorial strategy of Lightwave across its website, email newsletters, events, and other information products.
