Harmonic (HLIT, Financial), a provider of virtualized cable access and video delivery systems, saw its stock drop 13% following its Q4 earnings report. Despite a 33% year-over-year revenue increase to $222.2 million, surpassing expectations, the company issued disappointing guidance for Q1 and FY25. A new $200 million share repurchase program was also announced but had little impact on the stock price.

Key highlights include:

• Broadband segment revenue surged 48% year-over-year to $171 million, while the Video segment saw a 2% decline to $51.1 million. Both segments exceeded internal expectations.
• The cable industry is transitioning to Unified DOCSIS 4.0, which significantly boosts speeds, making cable competitive with fiber operators.
• Harmonic's 2025 guidance reflects shifts in customer deployment timing as the industry transitions to Unified DOCSIS 4.0. The company expects these trends to be short-term and anticipates above-market growth resuming in 2026.
• Despite anticipated challenges in 2025, Harmonic maintains a strong technology leadership position in Unified DOCSIS 4.0 and expects to continue generating strong cash flow.
• The broadband industry is at a critical turning point, with increasing competition from telco and fixed wireless access providers. Operators need to modernize networks with DAA and virtualized CMTS to improve reliability, enhance speeds, and lower operating costs.

Investors were taken aback by the 2025 guidance shortfall, largely due to shifts in customer deployment timing to Unified DOCSIS 4.0. Harmonic's high customer concentration, with Comcast (43% of Q4 revenues) and Charter (24%), suggests that changes in deployment timing by these customers significantly impacted HLIT's outlook. This highlights the risks of customer concentration. Despite short-term challenges, Harmonic remains optimistic about long-term growth, expecting improvement in 2026.