About Harmonic

Harmonic Inc. (Harmonic) operates as a global provider of broadband access solutions that enable broadband operators to deploy high-speed internet for data, voice and video services for their customers; and versatile and high performance video delivery software, products, system solutions and services that enable the company’s customers to efficiently create, prepare, store, playout and deliver a full range of high-quality broadcast and streaming video services to consumer devices, including televisions, personal computers, laptops, tablets and smart phones. The company operates in two segments, Broadband and Video. The company’s Broadband business provides broadband access solutions and related services, including the company’s cOS software-based broadband access solution, to broadband operators globally. The company’s Video business provides video processing and production and playout solutions and services worldwide to broadband operators and satellite and telco Pay-TV service providers, which the company refers to collectively as ‘service providers,’ and to broadcast and media companies, including streaming media companies. The company’s Video business infrastructure solutions are delivered either through shipment of the company’s products, software licenses or as software-as-a-service (‘SaaS’) subscriptions. Across the company’s two business segments, the company derived approximately 74% of the company’s revenue from the Americas in 2023. The Europe, the Middle East and Africa (EMEA) and the Asia Pacific (APAC) regions accounted for 21% and 5% of the company’s 2023 revenue, respectively. The company’s revenue has been derived from worldwide sales to service providers and broadcast and media companies, and streaming media companies. Broadband Business The company’s Broadband business strategy is focused on providing the company’s customers with software-based solutions, on a centralized, distributed access or hybrid architecture, to enable and support these technology and industry trends. Video Business The company’s customers are expanding their streaming offerings with video-on-demand (VOD) programming, live events and/or linear TV bundles to reach a larger and more global audience; utilizing streaming technologies to expand monetization opportunities with personalized and targeted ad insertion; continuing to enhance and differentiate their content offerings, consolidate to achieve greater economies of scale and subscriber concentration, and acquire other companies to expand their content libraries and capabilities to develop original content; and improving the efficiency and utilization of legacy infrastructure to minimize operational and staffing needs by migrating services to public cloud SaaS or upgrading on-premise equipment with the latest generation of highly dense and functionally rich technologies. The company’s Video business strategy is focused on providing the company’s customers with software-based appliances and SaaS platforms to enable and support various trends (such as demand for streaming services, demand for targeted advertising, streaming of live events, demand for high quality video, and decline in broadcast viewing). Video Markets Broadcast and Media Companies Network broadcasters, programmers and content owners continue to invest in new and enhanced direct-to-consumer streaming platforms, as well as upgrade and improve the efficiencies of their traditional broadcast television services. These companies will utilize new technologies, including public cloud infrastructure and SaaS platforms, to expand their streaming offerings, reach wider audiences, and increase monetization opportunities through personalized advertising, and, in parallel, reduce the complexity and cost of running and operating their traditional broadcast services. Streaming Media companies of all sizes will invest heavily in streaming services for the foreseeable future, whether for linear TV, live events or a range of VOD offerings, and that these offerings will be enhanced to include personal and targeted advertisements to increase monetization potential. Many of these streaming offerings will be launched by new entrants into the space, in addition to those launched by traditional media companies who have a history and brand in broadcast television. Service Providers Wireline Operators. Cable and telco operators continue to focus on various initiatives to improve and differentiate their service offerings from competing service providers, including bundled digital video, voice and high-speed data services; expansion of streaming service offerings to include linear TV, live events and VOD; upgraded consumer-facing applications; and capacity enhancement of high-speed data services. Satellite Operators. Satellite operators around the world have established digital television services that serve tens of millions of subscribers, with the ability to provide tens of thousands of linear channels. The company expects satellite operators to increase their investments in their streaming offerings to meet rapidly changing consumption habits and, in parallel, strive to optimize their traditional broadcast operations. Products and Solutions Broadband Products and Solutions Software-Based Broadband Access Solution. As demand continues to rapidly grow for high-speed broadband services such as streaming, VOD, time-shift TV and cloud DVR, the company believe the company can help broadband operators take advantage of this opportunity with the company’s cOS software-based broadband access solution, an end-to-end solution consisting of virtualized cloud-native software elements that orchestrate and connect with a variety of Harmonic and third-party indoor and outdoor hardware devices. The company believe the company’s cOS solution delivers unprecedented scalability, agility and cost savings, and enables the company’s customers to migrate to multi-gigabit broadband capacity and the fast deployment of DOCSIS and FTTx data, video and voice services. The company believe the company’s solution resolves space and power constraints in broadband operator facilities, significantly reduces dependence on hardware upgrade cycles, and reduces total cost of ownership. The company’s cOS solution can be deployed based on a centralized, distributed access or hybrid architecture. cOS Central Cloud Services. The company’s cOS Central Cloud Services is a value-add subscription service for cOS customers that bundles three elements: (i) 24x7 technical support, (ii) a dedicated customer success team focused on customer satisfaction and retention, and (iii) a cOS Central SaaS that enhances and simplifies the deployment, monitoring, operation and maintenance of the cOS solution with advanced analytics, management and engagement tools. Video Processing and Delivery Solutions The company offer two categories of solutions - a broad range of software-based video appliances and SaaS platforms - to deliver broadcast and streaming services and capabilities in the media market. Software-based Appliances. The company’s video processing appliances, which include network management and application software and hardware products, provide the company’s customers with the ability to acquire a variety of signals from different sources and in different protocols in order to deliver a variety of real-time and stored content to their subscribers for viewing on a broad range of devices. The company’s appliance product families include: •Encoders. The company’s high-performance encoders compress video, audio and data channels to low bit rates while maintaining high video quality. The company’s latest software-based XOS encoders can deliver video in multiple formats, including standard, HD and Ultra HD, and in any video compression standard, including MPEG-2, MPEG-4 AVC and HEVC. This capability allows the encoders to converge workflows targeted for all forms of video delivery, whether broadcast or streaming. •Video Servers. The company’s Spectrum family of video server systems are used by broadcast and media companies to create play-to-air television channels. The company’s customers typically use these video server products to record incoming content from either live feeds or from tapes, encoding that content in real-time into standard media files that are then stored in the server’s file system until the content is needed for playback as part of a scheduled playlist. •High-density stream processing. The company offer high-density, real-time stream processing systems capable of high-performance, high-throughput video processing for mission-critical IP video delivery applications, including multiplexing, scrambling, splicing and blackout source switching. •Edge processors. The company’s family of Edge processing platforms allows service providers to acquire content delivered via satellite, IP or terrestrial networks for distribution to their subscribers. These products are used by broadcasters to decode signals backhauled from live news and sporting events in contribution applications, as well as by content owners looking to distribute their content in a controlled manner to a large base of affiliates. SaaS platforms. The company’s VOS360 SaaS platforms provide both streaming and channel origination and distribution services in a public cloud environment that is fully managed and operated by the company’s 24/7 DevOps teams. The company’s SaaS solutions enable the packaging and delivery of high-quality streaming services, including live streaming, VOD, catch-up TV, start-over TV, network-DVR and cloud-DVR services through HTTP streaming to any device, along with dynamic and personal ad insertion. In addition, the company’s VOS360 SaaS platforms enable the transformation of traditional broadcast video workflows into cloud-based workflows, resulting in more efficient and leaner operations for the company’s customers. The company continue to see an increasing number of customers seeking to leverage the inherent commercial, operational and infrastructure flexibility offered by the company’s VOS360 SaaS platforms. The company also provide an on-premise SaaS offering with the company’s VOS cloud-native software solution for customers seeking to deploy a cloud-like architecture in a private data center. Technical Support and Professional Services The company provide maintenance and support services to most of the company’s customers under service level agreements that are generally renewed on an annual basis. The company also provide consulting, implementation and integration services to the company’s customers worldwide. The company draw upon the company’s expertise in broadcast television, communications networking, compression technology and broadband access technologies to design, integrate and install complete solutions for the company’s customers, including integration with third-party products and services. The company offer a broad range of services, including SaaS-related support and deployment, program management, technical design and planning, building and site preparation, integration and equipment installation, end-to-end system testing and comprehensive training. Customers The company sells its products to a variety of cable, satellite and telco, and broadcast and media companies. The following is a representative list of the company’s significant end user and integrator/reseller customers, based, in part, on revenue during 2023. The United States: Apple Inc; Cable One Inc; Charter Communications; Comcast; Cox Communications; DirecTV; Dish Network; Heartland Video Systems; SES; and Sinclair Broadcast Group. International: America Movil; Comcast; Deutsche Telekom; Eurasiatrans B&PE; Groupe Canal; Millicom International; Normann Engineering; NYL Eletronica; Tele2 Sverige AB; and Vodafone. During 2023, Comcast accounted for 44% of the company’s net revenue. Sales and Marketing In the United States and internationally, the company sells its products through its own direct sales force, as well as through independent resellers and systems integrators. The company’s direct sales team is organized by business segment, and geographically and by major customers and markets to support customer requirements. The company’s principal sales offices outside of the United States are located in Europe and Asia, and the company has support staff in Switzerland and France to support the company’s international customers and operations. The company’s international resellers are generally responsible for importing its products and providing certain installation, technical support and other services to customers in their territory after receiving training from the company. The company’s direct sales force and resellers for each business segment are supported by highly trained technical staff, which includes application engineers who work closely with the company’s customers to develop technical proposals and design systems to optimize system performance and economic benefits for the company’s customers. The company’s technical support teams provide a customized set of services, as required, for ongoing maintenance, support-on-demand and training for the company’s customers and resellers, both in its facilities and on-site. The company’s corporate marketing organization is responsible for building awareness of the Harmonic brand in the company’s markets and driving engagement with the company’s strategies, solutions and products. The group develops all of the company’s corporate messaging and manages all customer and industry communication channels, including public relations, web and social media, events and trade shows, as well as demand generation marketing campaigns in conjunction with the company’s sales force. Manufacturing and Suppliers In 2003, the company entered into an agreement with Plexus Services Corp. (‘Plexus’) to act as the company’s primary contract manufacturer. Plexus accounts for the majority of the products the company purchases from its contract manufacturers. This agreement has automatic annual renewals, unless prior notice for nonrenewal is given, and has been automatically renewed for a term expiring in October 2024. Intellectual Property As of December 31, 2023, the company held 133 issued U.S. patents and 47 issued foreign patents and had 39 patent applications pending. The company’s issued patents are scheduled to expire between 2024 and 2041. Research and Development The company’s research and development expenses were approximately $126.3 million in 2023. The company’s internal research and development activities are conducted primarily in the United States (California, Oregon and New Jersey), France, Israel and Hong Kong. History Harmonic Inc. was incorporated in California in 1988 and reincorporated in Delaware in 1995.