Harmonic Inc. (HLIT)
Q1 2010 Earnings Call Transcript
May 6, 2010 5:00 pm ET
Patrick Harshman – President and CEO
Robin Dickson – CFO
Suresh Vasudevan – President and CEO of Omneon Inc.
Mark Sue – RBC Capital Markets
Greg Mesniaeff – Needham & Company
Amir Rozwadowski – Barclays Capital
Simon Leopold – Morgan Keegan
Larry Harris – CL King
Shubho Ghosh – Thomas Weisel Partners
Blair King – Avondale Partners
Previous Statements by HLIT
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Good afternoon. My name is Rebecca, and I will be your conference operator today. At this time, I would like to welcome everyone to the Harmonic first quarter 2010 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be a question-and-answer session. (Operator instructions)
Thank you. Mr. Patrick Harshman, President and CEO, you may begin your conference.
Well, thank you very much and good afternoon everyone. I'm Patrick Harshman, President and CEO of Harmonic. With me here in our headquarters in Sunnyvale, California, are Robin Dickson, our Chief Financial Officer; Suresh Vasudevan, the CEO of Omneon; and Michael Newman, our Investor Relations spokesman. Thank you all for joining us.
Today we are very pleased to announce both a strong first quarter and our agreement to acquire Omneon, a privately held Silicon Valley company, who is the market leader in providing solutions for the production, management and distribution of digital media with a blue-chip customer base that includes leading digital media companies around the globe.
Focusing first on our core business, Harmonic is executing well. Our bookings were a first-quarter record, up 60% from the first quarter of 2009, and over 30% from the first quarter of 2008. And we also saw strong gross margins and positive progress on a range of our strategic initiatives. We have found continuing indications of a healthier customer spending environment, and we are very encouraged by the positive customer response to our latest innovations in our core video processing, cable, Edge and access product areas.
In the newer multiscreen area, we recently announced that both Swisscom and NBC have adopted our solutions to power their new Internet and mobile services, and demonstrating good forward progress in this important growth area. Similarly, announced customer wins in Brazil, China, Cyprus, Romania, the Middle East and elsewhere offering clear evidence that our expanding our geographic and customer footprint continues to succeed.
It is a great time to be driving innovative video technology and applications, and we're entering the second quarter with strong market momentum worldwide. For these reasons and more, we believe it is also a great time for us to be joining forces with Omneon. Omneon is a complimentary market leader with great technology, great people and a superb customer base. The combination will enable us to further accelerate our strategy of video technology leadership, global sales and service expansion, customer base expansion, and strong revenue growth.
We will discuss the strategic rationale and benefits of this combination further, but first I will turn the call over to Robin to discuss the key results of our first quarter. Robin.
Thank you, Patrick, and good afternoon everyone. Before we start, let me remind you that during this call we may be making projections or other forward-looking statements regarding future events or the future financial performance of the company. We must caution you that such statements are only predictions and that actual events or results may differ materially.
We refer you to documents that Harmonic files with the SEC, including our most recent 10-K and 10-Q reports. These documents identify important risk factors that could cause actual results to differ materially from those contained in projections or forward looking statements. Please note that on this call we will provide you with financial metrics determined on a non-GAAP or pro forma basis. These items together with the corresponding GAAP numbers and the reconciliation to GAAP are contained in today's earnings press release, which we have posted on our website and filed with the SEC on a Form 8-K.
On this call, and in our press release today regarding our definitive agreement to acquire Omneon, we discuss a number of uncertainties and assumptions regarding Omneon and the proposed combination. This press release has also been posted on our website, and will be filed in due course with the SEC on Form 8-K.
We will also discuss historical, financial and other statistical information regarding our business and operations. Some of this information is included in the press release and the remainder of the information will be available in a recorded version of this call on our website.
Today we announced the results for the quarter ended April 2, 2010. For the first quarter of 2010, we saw strong year-over-year increases in both quarterly revenue and bookings. We reported net sales of $84.8 million, up 25% from the first quarter of 2009. Bookings in the first quarter of 2010 were $91 million, up 60% from the same period in 2009.
We saw continuing improvement in the customer spending environment across many geographies, and we were especially pleased with our $91 million bookings in the first quarter, which is a very encouraging start to the year. As you would note too that our total shipments also exceeded $90 million in Q1, although because of delays in revenue recognition on a few video processing projects, our reported revenues came in at just under $85 million. Of that revenue, international sales represented 50%, consistent with the mix we have seen in recent periods.