Cuộc họp báo cáo kết quả kinh doanh quý 2 năm tài chính 2026 của Harmonic (HLIT): Doanh thu tăng 54%, nâng dự báo

Điểm tin chính

• Doanh thu băng thông rộng trong Quý 2/2026 của Harmonic tăng 54% so với cùng kỳ năm ngoái lên 133,5 triệu USD, vượt khoảng dự báo 115 triệu USD đến 125 triệu USD của công ty.
• Doanh thu từ phần còn lại của thị trường tăng 44% lên gần 50 triệu USD. Nhóm khách hàng này đóng góp khoảng 60% lượng đơn đặt hàng trong quý, với tỷ lệ book-to-bill cao hơn nhiều so với mức 1,5.
• Tổng giá trị đơn đặt hàng đạt 144 triệu USD. Đơn đặt hàng tồn đọng và doanh thu hoãn lại tăng 71% so với cùng kỳ năm ngoái lên mức kỷ lục 587,6 triệu USD, trong đó 73% dự kiến sẽ chuyển thành doanh thu trong vòng 12 tháng.
• Ban lãnh đạo đã nâng dự báo doanh thu băng thông rộng cả năm 2026 lên 505 triệu – 525 triệu USD từ mức 475 triệu – 495 triệu USD. Dự báo EPS tăng lên mức 0,67 – 0,75 USD.
• Harmonic đã hoàn tất việc bán mảng kinh doanh video cho MediaKind với giá 137,9 triệu USD khi hoàn tất giao dịch, biến công ty thành nhà cung cấp dịch vụ băng thông rộng thuần túy.
• Hoạt động triển khai cáp quang và các sản phẩm giải pháp thông minh tiếp tục mở rộng. Quy mô cOS đạt 161 khách hàng và 48,2 triệu thiết bị CPE, trong khi Beacon đã đi vào hoạt động với khoảng 20 khách hàng.

Dữ liệu tài chính quan trọng

Trừ khi có quy định khác, các chỉ số tài chính được thảo luận trong cuộc họp đều được trình bày trên cơ sở non-GAAP.

Hai khách hàng, mỗi bên đóng góp hơn 10% doanh thu hàng quý và cùng nhau chiếm 63% tổng doanh thu. Lợi nhuận hoạt động Quý 2 bao gồm 2,3 triệu USD chi phí tồn đọng liên quan đến việc bán mảng kinh doanh video.

Kết quả kinh doanh và hoạt động

Harmonic cho biết nhu cầu từ phần còn lại của thị trường đã phát triển vượt khỏi giai đoạn thử nghiệm trong phòng thí nghiệm để tiến tới tăng cường triển khai trên DOCSIS 3.1+, DOCSIS 4.0 và cáp quang. Doanh thu từ nhóm này đạt hơn 100 triệu USD trong 6 tháng kết thúc vào ngày 3 tháng 7, cao hơn khoảng 60% so với nửa đầu năm ngoái.

Nền tảng cOS của công ty hỗ trợ các kiến trúc DOCSIS phân tán và tập trung cùng với cáp quang. Ban lãnh đạo cho biết sự linh hoạt này là yếu tố then chốt giúp khách hàng tiếp nhận, vì các nhà mạng có thể thay đổi chiến lược mạng mà không cần thay thế nền tảng cốt lõi.

Đơn đặt hàng cáp quang từ nhóm khách hàng còn lại của thị trường đạt mức kỷ lục theo quý. Nút quang Star MDU của Harmonic đã đi vào hoạt động tại DNA Finland, trong khi Inter Venezuela đang sử dụng nền tảng này để xây dựng dịch vụ XGS-PON trên toàn quốc cho mạng truyền dẫn di động (mobile backhaul). Công ty cũng nhận được đơn đặt hàng trị giá hàng triệu USD đầu tiên cho Pearl One XL và Oyster Plus.

Đối với DOCSIS 4.0, Harmonic cho biết đang giao các nút hợp nhất quy mô lớn cho nhiều khách hàng và đã có thêm một khách hàng Châu Âu mới trong quý. Ban lãnh đạo cũng nhấn mạnh mốc quan trọng về khả năng tương thích bao gồm các modem cáp từ 6 nhà cung cấp và 2 nhà sản xuất chip.

Mức độ tiếp nhận danh mục giải pháp thông minh của Harmonic tiếp tục tăng lên. Beacon đã đi vào hoạt động với khoảng 20 khách hàng, trong khi các giải pháp thông minh mới hơn đang vận hành với khoảng 10 nhà mạng. Theo ban lãnh đạo, các đợt triển khai ban đầu đã giảm hơn 30% số cuộc gọi từ thuê bao đến các nhà cung cấp dịch vụ. Chỉ số đo lường mức độ hài lòng của khách hàng (NPS) của Harmonic đạt 87.

Dự báo của ban lãnh đạo

Khoảng doanh thu cả năm đã tăng so với triển vọng 475 triệu – 495 triệu USD trước đó. Ban lãnh đạo cũng nâng mức trung bình của dự báo EPS thêm khoảng 0,09 USD, tương đương 14,5%.

Triển vọng nửa cuối năm bao gồm chi phí bộ nhớ tăng khoảng 3 triệu USD mỗi quý mà Harmonic dự kiến không chuyển sang cho khách hàng chịu. Dự báo lợi nhuận hoạt động băng thông rộng cả năm bao gồm khoảng 10 triệu USD chi phí tồn đọng, trong đó ban lãnh đạo dự kiến khoảng 30% sẽ được cắt giảm trong vòng một năm sau khi hoàn tất việc bán mảng video.

Harmonic đã giảm thuế suất non-GAAP dự kiến cả năm xuống 23% từ mức 24,5%. Ban lãnh đạo cho biết dự báo vẫn được duy trì ở mức thận trọng do tình hình ở Trung Đông cũng như điều kiện giá cả và nguồn cung linh kiện.

Rủi ro và các điểm cần theo dõi

• Giá bộ nhớ dự kiến sẽ gây áp lực lên biên lợi nhuận gộp nửa cuối năm, mặc dù Harmonic cho biết họ đã thu mua đủ toàn bộ lượng bộ nhớ cần thiết cho năm 2026 và đảm bảo nguồn cung kéo dài sang năm 2027.
• Mức độ tập trung khách hàng vẫn ở mức cao, trong đó hai khách hàng chiếm tới 63% doanh thu Quý 2.
• Nhu cầu hàng tồn kho và vốn lưu động đang tăng lên do công ty nhận hàng linh kiện sớm để hỗ trợ tăng trưởng và đảm bảo nguồn cung.
• Harmonic dự kiến có khoảng 10 triệu USD chi phí tồn đọng trong lợi nhuận hoạt động băng thông rộng cả năm sau khi bán mảng kinh doanh video.
• Ban lãnh đạo xác định tình hình Trung Đông cùng với nguồn cung và giá linh kiện là những yếu tố không chắc chắn từ bên ngoài ảnh hưởng đến phương pháp lập dự báo của mình.

Tóm tắt phần Hỏi & Đáp với chuyên gia phân tích

Ban lãnh đạo cho biết sự tăng trưởng từ phần còn lại của thị trường phản ánh việc triển khai sản xuất thực tế thay vì thử nghiệm trong phòng thí nghiệm. Các khách hàng đang ở những giai đoạn khác nhau, nhưng cơ cấu triển khai đang mở rộng và doanh thu được đa dạng hóa qua nhiều nhà mạng.

Bắc Mỹ vẫn là thị trường lớn nhất, nhưng Harmonic ghi nhận sự đóng góp ngày càng tăng từ Châu Âu, Mỹ Latinh và Châu Á. Ban lãnh đạo cho biết độ phức tạp của nền tảng hiện không hạn chế việc triển khai vì khách hàng có thể vận hành nền tảng cOS ảo hóa như một thiết bị tích hợp mà không cần quản lý kiến trúc Kubernetes và microservices bên dưới.

Nền tảng giải pháp thông minh dự kiến sẽ đóng góp đáng kể vào doanh thu thường xuyên và tạo ra mối quan hệ dịch vụ gắn kết, mặc dù ban lãnh đạo không đưa ra thời điểm hoặc mục tiêu doanh thu cụ thể.

Harmonic mô tả doanh thu liên quan đến chương trình BEAD là một phần khiêm tốn trong dự báo năm 2026. Công ty đã nhận được các đơn đặt hàng và thiết lập chuỗi cung ứng cần thiết để giao các sản phẩm liên quan.

Toàn văn Biên bản Cuộc họp Báo cáo Kết quả Kinh doanh

Toàn văn cuộc gọi công bố kết quả kinh doanh

Phần trình bày của ban lãnh đạo

Operator

Thank you. Welcome to the second quarter, 2026, Harmonic's earnings conference call. My name is Lisa and I will be your operator for today's call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To answer your question, please press star one one again.

I would now like to turn the call over to David Hanover, Investor Relations.

David Hanover

David, you may begin. Thank you, operator. Hello, everyone. And thank you for joining us today for Harmonic's second quarter, 2026 financial results conference call. With me today are Nimrod Ben-Natan, President and CEO, and Walter Jankovich, Chief Financial Officer. Before we begin, I'd like to point out that in addition to the audio portion of the webcast, we have also provided slides for this webcast, which you may view by going to our webcast on our Investor Relations website. Now turning to slide two. During this call, we will provide projections and other forward-looking statements regarding future events or future financial performance of the company. Such statements are only current expectations and actual events or results may differ materially. We refer you to documents harmonically filed with the SEC, including our most recent 10Q and 10K reports and the forward-looking statements section of today's preliminary results press release.

These documents identify important risk factors which can cause actual results to differ materially from those contained in our projected results. projections or forward-looking statements. And please note that unless otherwise indicated, the financial metrics we provide you on this call are determined on a non-GAAP basis. These metrics together with corresponding GAAP numbers and a reconciliation to GAAP are contained in today's press release, which we have posted on our website and filed with the SEC on Form 8-K. We will also discuss historical, financial, and other statistical information regarding our business and operation, and some of this information is included in the press release. The remainder of the information will be available on a recorded version of this call or on our website. And now I'll turn the call over to our CEO, Nimrod Ben-Matan.

Unknown Speaker

Thanks, David, and welcome everyone to our second quarter of 2026 earnings score. U2 was another strong quarter both financially and in terms of the progress we've made on our strategic imperatives. We saw continued strengths in rest of market demand, an accelerating pace of fiber deployments, and encouraging results from our new intelligence layer. In June, we completed the sale of our video business, marking the completion of our transformation to a pure play broadband company. With the momentum and improved visibility we achieved in the first half of the year, we are once again raising our full year 2026 broadband revenue outlook. Driving this momentum is an important theme we have been building toward for several years. Operators no longer have to settle the network architectures question before they can move forward. because our Converge COS platform supports all access architectures, DOCSIS 3.1+, DOCSIS 4.0, distributed, centralized, and fiber.

Operators are deploying COS knowing it will evolve as their priorities do. from more to an accelerated fiber overlay over time. This is more important than ever for operators, as network traffic is not just growing, it is changing shape. Open Vault's latest data show upstream traffic now growing more than three times faster than downstream. The third consecutive year, that gap has widened. AI pushes the same way. Agents and connected devices fill traffic upstream and run around the clock, not just at the evening peak, which is what legacy broadband networks were engineered around. The critical constraint is upstream capacity, and there is more than one way to relieve it. DOCSIS 4.0, a high split upgrade or fiber.

The unique strength of our platform is that it enables all of these options with the same software, at the same time. Cable One's CEO captured this well at the independent show in July, describing network topology as the biggest question broadband operators face and saying his plan is to trial DOCSIS 3.1 splits, DOCSIS 3.1+, DOCSIS 4.0, and fiber side by side. available and deployed with COS today, making this entire evaluation possible with a single platform. This flexibility matters more than ever as legacy platforms are both constrained on upstream capacity and approaching the end of their youthful life. For a growing number of global operators, those legacy systems are an increasing security and maintenance liability. As they weigh their options, COS and Harmonic are uniquely positioned as the platform and company enabling them to modernize across current and future architectures. This is the dynamic that is now driving our market momentum worldwide. Turning to our financial results highlights on slide 5, Q2 revenue grew 54% year over year to $133.5 million, above the high end of our guidance and our strongest second quarter ever.

Rest of market revenue grew 44% year over year to to nearly $50 million. Looking at the six month end of July 3rd, this revenue surpassed $100 million, approximately 60% higher than in the first half of last year. Bookings were again strong in the quarter reaching $144 million, led by rest of market, which represented approximately 60% of total bookings in the quarter. Also, we exited the quarter with backlog and deferred revenue of $588 million. This continues. to improve our visibility and it is a key reason we are raising our full year outlook. Rest of market continued in the quarter. Momentum continued in the quarter, and behind the revenue is an expanding base of customers.

Our deployed COS footprint now includes 161 customers serving 48.2 million CPE devices. Blue Peak is a good illustration of why operators are choosing us, and it goes directly to the theme I opened with. Two years ago, they selected our distributed access platform to expand their DOCSIS network. Partway through, their strategy evolved and they began overbuilding parts of their footprint with fiber. In the words of their Vice President of Technology and Engineering, Eric Fliegel, because of the platform they had already deployed, they were able to quickly make a technology shift utilized the same housing, the same infrastructure, the same backhaul, and start deploying XGS PON very quickly. Today, they decide service area by service area, where to run DOCSIS and where to run FIBER. That is the pattern we are seeing repeatedly.

Operators start with one use case and expand over time across DOCSIS and or FIBER and increasingly add network intelligence, which I will come back to shortly. And they do it by leveraging the COS platform underneath. Fiber momentum continued to build, with Q2 setting a record rest of market fiber bookings. Deployments are ramping alongside the bookings. Star, our MDU optical node, went live at DNA Finland, the European operator behind the sizeable booking we highlighted last quarter. They are now bringing multi-gigabit service into apartment buildings that were previously uneconomic to upgrade by reusing the existing in-building network. We are also seeing fiber used in ways that extend our market beyond residential broadband.

Inter Venezuela, the largest private ISP in the country, is building a nationwide XGS phone service on our platform for mobile backhaul, using fiber as carrier infrastructure for operators preparing for 5G. The new product portfolio we previewed at FiberConnect last quarter is already converting to orders. We secured our first multimillion-dollar order for the Perl One XL and Oyster Plus, which together deliver high port density and keep service running through extended power outages. of downtime in outdoor deployments. Their outdoor design lets operators keep the street cabinet all together. to keep the street cabinet altogether, consolidating that capacity into one compact, power-protected device that deploys faster, costs less to install, and takes up far less space in the communities they serve. Together, our record fiber bookings, expanding portfolio, and converged architecture position us to keep gaining share as operators look for more flexible, reliable, and cost-effective ways to expand fiber. The DOCSIS 4.0 ecosystem took an important step forward. In June, cable modems from six suppliers across two chipset vendors cleared the first CableLabs interoperability milestone on the path to DOCSIS 4.0 certification.

With multi-vendor modem supply now coming into place, operators can move ahead. on DOCSIS 4.0 with greater confidence. We are shipping unified DOCSIS 4.0 nodes in volume across a broad range of customers as they ramp their upgrades. We also want a new DOCSIS 4.0 customer in Europe during the quarter. With DOCSIS 4.0, operators can deliver fiber-like upstream speeds over the plan they already have, which is what an AI era applications increasingly demand. Turning to our new intelligence area, we continue to see adoption buildings. Beacon is now live with approximately 20 customers. and our broader intelligence platform is expanding, with newer offerings now running with about 10 operators. Early deployments continue to show significant value, including a reduction in subscribers calls to service providers by more than 30%, as we discussed last quarter. which extends real-time visibility into the amplifier plant is now in beta with several operators running with amplifiers from two different vendors.

That matters as many operators run multi-vendor amplifier strategy for supply chain flexibility and assurance. A recent Deloro report projects that nearly 10 million of the amplifiers deployed in the industry's current upgrade cycle will be smart amplifiers. In other words, the outside plant is being instrumented by the upgrade cycle itself, generating the kind of granular real-time data our intelligence layer is built to use. That is a significant expansion of the opportunity ahead of us. outcomes and our customer first approach show up in how our customers rate us. Our customer NPS reached 87 in the second quarter. Turning to slide six, stepping back, there are four things driving the growth of Harmonic. And during the second quarter, we made significant progress on each of them.

First, the access and fiber on a single converged architecture, which is increasingly why operators select us in the first place. Second, a global base. that global customer base that keeps widening beyond our largest accounts. Third, new intelligence products and services where adoption is building across our customer base. And fourth, operating leverage which is increasingly visible in our financial performance. We are looking forward to sharing more with you at our upcoming Investor Day on September 15th, including our updated view of the market opportunity, our longer-term strategy, and growth plans. much more on the intelligence opportunity. I hope many of you will be able to join us. That concludes my opening remarks. With that, I will turn the call over to Walter to walk you through our financials in more detail.

Unknown Speaker

Thanks Nimrod and thank you all for joining us today. Before I discuss our quarterly results and outlook, I'd like to remind everyone the financial results I'll be referring to on this call are provided on a non-GAAP basis. As David mentioned earlier, our Q2 press release and earnings presentation include reconciliations of our non-GAAP to GAAP financial measures. Both of these are available on our website. As previously announced, we completed the sale of our video business to Mediakind on June 16th of this year. Proceeds from the sale were $137.9 million paid at closing, subject to final post-closing adjustments under the terms of the APA. As a result, we Harmonic now operates as a pure play broadband company with a single reportable segment, broadband.

With this context, I'm pleased to report that our strong business momentum continued into the second quarter, with broadband revenue increasing 54% year over year, including 44% growth in rest of market. In addition, we had strong quarterly bookings and once again closed the quarter with record backlog and deferred revenue. Notably, approximately 60% of bookings in the quarter came from the rest of market where book to bill was well over 1.5. Given these results and leading indicators, we are once again raising our full-year guidance, with broadband revenue now expected at $505 to $525 million, up from our prior range of $475 to $495 million. I'll provide a more detailed breakout of our guidance shortly. Let's move to slide eight, where we have the financial highlights for the quarter. Broadband revenue was $133.5 million, well above our guidance range of $115 to $125 million.

Gross margin for the quarter was 53%, consisting with our guidance, and the net unrecovered memory cost impact remained well below $1 million. Operating expenses were higher this quarter, mainly due to company incentive-based accruals tied to our improved full year 2026 financial performance forecast. And moving to the bottom line, EPS was 21 cents, again, above our guidance range of 15 to 19 cents. And operating profit was 31.3 million, exceeding our guidance of 23 to 28 million. These results include $2.3 million in stranded costs related to the video business sale. Revenue upside was broad-based and included a number of rest-of-market customers ramping their deployments during the quarter. In Q2, two customers each accounted for more than 10% of revenue, together representing 63% of total revenue.

Our Q2 rest of market revenue showed very strong year-over-year growth of 44%, representing 37% of total revenue, underscoring our progress in expansion. expanding our customer diversification. As a reminder, rest of market revenue describes all revenue that is not from our two largest customers as measured by subscriber count. Turning to slide 9, you can see our balance sheet and cash flow highlights. The closing of the video transaction gave our already healthy balance sheet a strong capital infusion, bringing cash and cash equivalents to 231.9M at quarter end. That inflow throw the sequential change in cash partially offset by negative free cash flow of 7M dollars the quarter which was primarily due to an increase in memory inventory as we took early delivery to secure supply for growth. DSO at the end of Q2 was 61 compared to 62 in Q1-26 and 72 in Q2-25. We expect DSO to trend back to the low 70s going forward based on our customer mix.

Inventory increased 15.3 million in the quarter, and our days inventory on hand increased to 95 days from 80 days last quarter. overall book to bill was 1.1 in Q2, with rest of market significantly above 1 as previously mentioned. At the end of Q2, broadband backlog and deferred revenue reached a record $587.6 million, up 71% year-over-year, of which 73% is expected to convert to revenue within the next 12 months. This gives us increased visibility for the remainder of 2026 and into 2027. As shown on slide 10, we believe we have ample liquidity to support our capital allocation priorities with $232 million in cash and an $85 million undrawn credit facility. This significant increase in cash gives us the financial flexibility to execute our capital allocation. application plan. Our capital application priorities remain unchanged. invest in organic growth and diversification, return capital to our shareholders, and pursue strategic M&A to further enhance growth and diversification in our business. In line with our first key priority, we plan to keep investing in organic growth.

This will increase our inventory over the next several quarters, including advancing memory purchases to secure supply. As discussed on prior calls, these organic broadband opportunities are in both our intelligence platform and fiber portfolio. Under our current $200 million share repurchase program, to date we have already repurchased $122 million of our outstanding shares. We did not repurchase shares during the second quarter. As we stated previously, we expect to fund ongoing repurchases through both current cash and strong free cash flow generation over the next several years, with a minimum goal of purchasing enough shares each year to offset any dilution from equity compensation awards. In addition, with the substantial cash infusion from the sale of video, we are well positioned to explore additional inorganic growth opportunities that would further diversify our business and accelerate our growth strategy. Turning to guidance on slide 11, here we provide our continuing operations non-GAAP financial guidance for Q3 26 and full year 26, which reflects our raised full year outlook.

We continue to take a measured approach to guidance for both revenue and margins. We believe this is prudent given external factors such as the situation in the Middle East and secondarily, component supply dynamics and pricing. Our full year margin guidance incorporates the current market pricing for memory. Let me walk you through our guidance. For Q3 26, we expect to deliver broadband revenue between 125 and 135 million, gross margins between 51 and 52%, reflecting the elevated memory costs, operating profit between 23 and 28 million, and EPS of between 15 and 15. and 19 cents. As our guidance shows, we expect strong year-over-year revenue growth in 2-3. Q3 operating profit includes approximately $2.3 million in stranded costs.

For the full year 2026, we expect broadband revenue between 505 and 525 million, up 30 million or 6.2% from the midpoint of our prior guidance. gross margins between 51 and 52 percent, and improvement over prior guidance based on customer mix and the mitigation of supply chain impacts. operating profit between 99 and 111 million, and EPS between 67 and 75 cents, up approximately nine cents or 14.5% from the midpoint of our prior guidance. As we noted last quarter, we have built approximately $3 million per quarter into our second half guidance for the net increased memory costs that are not expected to be passed on. Our team has done a terrific job securing memory supply for the rest of 2026 and into 2027. Additionally, full-year broadband operating profit includes approximately $10 million in stranded costs. And to reiterate what we said last quarter, we continue to believe approximately 30% of these stranded costs are temporary and will be eliminated within one year of the video sale closing. Please note that our expected non-GAAP tax rate for full year 26 has been reduced to 23% from 24.5% previously, reflecting our updated view of profitability. In summary, in the second quarter, we delivered results that once again significantly exceeded our expectations with broadband revenue growing 54% year over year.

Our record broadband backlog and deferred revenue and supply availability give us increased visibility, enabling us to raise our full year guidance. With the sale of our video business now behind us, we are well positioned, focused, and have considerable capital to further accelerate our growth in the rapidly growing broadband sector.

Unknown Speaker

Thank you. Any last remarks before we open up the call for questions? Thanks, Walter. To close, Q2 was a strong quarter across virtually every measure, our strongest second quarter ever on revenue, continued strengths in rest of market growth, a faster pace of fiber deployment, and wider adoption of our intelligence portfolio. We are raising our outlook for the second time this year as the visibility we have built supports it. Operators keep choosing Harmonic for the same reason. Harmonic lets them evolve their network without regrettable spend. We will have a great deal more to say about where that leads at the upcoming Investor Day next month. That concludes our prepared remarks. Walter and I are now happy to take your questions.

Operator

Thank you. As a reminder, if you would like to ask a question, please press Star 11 on your telephone. You will hear that automated message advising your hand is raised. To remove yourself, press Star 11 again. We also ask that you wait for your name and company to be announced before proceeding with your question. One moment while we compile the Q&A roster. Our first question will be coming from the line of Victor Chills, Raymond James.

Unknown Speaker

Hi guys, this is Victor in for Simon. Thanks for taking the question. Can you just provide some color around the demand dynamics from the rest of the market? Are we seeing an inflection here now where smaller regional MSOs are starting to follow through with the Comcast Charter Upgrade Playbook? And, you know, In addition, are these still kind of lab trials or are we seeing, you know, the first phases of their actual upgrades now? Yes.

Unknown Speaker

Victor, let me take that. So as we previously discussed, this is a growing list of customers, many of which we announced last year and early this year. This is... way past the lab trials. This is ramping deployments across the board. And as much as we talked about DOCSIS 4.0, we also see customers that are doing what's called the DOCSIS 3.1 plus, kind of the extended version of DOCSIS and Fiber. So it's really across the board, all the use cases that we have. And it's really coming, as you indicated, outside.

Unknown Speaker

of the top two customers. Great. And just a quick follow-up. What percentage of the rest of the market would you say in your estimation has kind of started ramping now and started full-on deploying for these upgrades?.

Unknown Speaker

It's a growing percentage of the rest of the market. We never broke it down. exactly and not all of them are at the same stage. Clearly some of them are further along than others. But it's certainly a growing percentage that we see out there and there is more to come. As there is a longer list of customers that are either making a decision or made a decision and are going through the different stages in the lab testing field trial before they ramp up. So what you see every quarter is a growing blend of those that are ramping up, those that are just starting, and behind the scene as we keep announcing new wins, these are kind of opportunities and customers that are coming up to speed with their rollouts.

Unknown Speaker

That's very helpful. Thank you very much. And just to add to Nimrod's comments around the rest of market, that revenue is well diversified across a broad set of customers. So to Nimrod's point, more customers are coming on board. And therefore, when you look at the makeup of that revenue, it is well diversified across many customers.

Operator

Thank you. That's very helpful. Thank you. One moment for the next question. Our next question is coming from the line of Steven Fringle of Rosenblatt Securities. You may proceed. Stephen, your line is open. Good afternoon. Thank you.

Unknown Speaker

Can we just talk in general about what's the potential for these intelligence platforms in terms of, you know, kind of raising the recurring revenue portion of your business? Is this something that could be material in two or three years, or is it going to take longer than that for...

Unknown Speaker

for this stream of revenue to build up? It will certainly be material for what we report today on recurring revenue. It will also be very sticky to the service that we provide. We think it's going to take time and we plan on sharing more details on what exactly we do there and kind of what's the the road ahead but We certainly see that as a growing in an area that will be material to our recurring revenue kind of category that we report and for the overall business.

Unknown Speaker

Okay, and you've done a great job battling rising memory costs, which seem to be really impacting. everyone, can you do you think you can keep this up throughout this year and into next year? Or do you think that you just got ahead of your growth curve this year, which bought you some cushion?.

Unknown Speaker

Steve, it's Walter. So first of all, with regards to memory, we've already procured all the memory that we need for FY26. And our team's done a good job kind of early days when this was becoming an issue to front run and get supply. And so now you're seeing in the second half, some of that supply from a cost standpoint, obviously, is reflecting closer to the market price of that product as we are. already procured it and you mentioned I mentioned during the opening remarks that we built in about $3,000,000 per quarter in terms of the impact of the memory costs. And so that's where it's increasing and that's reflected now into the memory and sorry into the gross. margin guidance that we've provided for Q3 as well as the full year. And so yes, the team's done a great job. We've mitigated certain risks and today you saw in our guidance for the full year, we actually raised our gross margin guidance.

Unknown Speaker

for that period. Great, I'll jump back in the queue, thank you.

Operator

Okay, thanks, Steve. Thank you. If you would like to ask a question, please press star 11 on your telephone. One moment for the next question. And our question is coming from the line of Ryan Coons of Needham & Company. Please go ahead.

Unknown Speaker

Great, thanks for the question. I'm going to ask a little bit about rest of market, maybe in a different angle here. ONE, ANY COLOR ON DIFFERENT GEOGRAPHIES RELATIVE TO REST OF MARKET TRACTION AND ADOPTION? AND SECONDLY, ARE THERE ANY PARTICULAR UNLOCKS THAT YOU'VE ACHIEVED TO ALLOW THEM TO OPERATIONALIZE VIRTUAL CNTS AND DAA, WHICH HAS BEEN GOING ON FOR MANY YEARS OF STRUGGLES?.

Unknown Speaker

about that? Yes. So, on the first question, you know, clearly majority of the businesses in North America, although you have to look at Canada and Mexico separately, we've got customers in both. There are a growing number of opportunities that we've either announced or in the pipeline in both Latin America, Asia, and a sizeable number of opportunities in Europe. So when you think about rest of market, if you exclude the top two and you kind of look at the mix, there is definitely a bigger contribution coming outside of North America. your second question. Look, it took a while. Obviously, it's Kind of a distributed architecture, but I think we we did a good job over the years to simplify that and train our customers. We got great experts helping our customers with with services and you know the one thing I can say even though our has all the bells and whistles of Kubernetes and kind of a scale out microservices architectures. Our customers do not have to know all of that when they operate our platform. They really look at that as an appliance.

So I think this is clearly not kind of a headwind to our business growth at the moment from a.

Unknown Speaker

kind of a complexity of deployment point of view. Super helpful. And then maybe on the cost side, as it relates to solutions and your requirements to deliver servers and networking and other parts of the complete solution, I'M SURE YOU'RE SEEING SOME COST PRESSURES THERE. COST PRESSURES THERE. ARE YOU SEEING ANY OF THOSE BEING impediments to your customers deployments relative to just raw raw hardware costs for off-the-shelf private cloud the short answer is no but I'm going to let Walter expand on that.

Unknown Speaker

Yes, I think from anything that we provide as you know from a third party in terms of switches and servers, we mentioned it during the last quarter's call that that is one of the things that we do for some of our rest of market customers. We procure those items as well. Obviously, the prices of those items. Those have gone up and impact customers out there, but from the perspective of its materiality to our business, it's very small. And so far, we really haven't seen any impact from a supply standpoint. It's more around the price of these items.

Unknown Speaker

Terrific. Thanks, guys. And maybe if I can squeeze one more in, a question about the fiber market, how you think about that, how you're thinking about bead and any catalyst out there that you think would shift cable operators to more aggressively rehab coax.

Unknown Speaker

versus upgraded fiber from your perspective? Yes, so let me start, and then Walter will chime in on the beads, Bubba. So, we do see cable operators do fiber, but Very few are doing wholesale overbuild of themselves. They will do everything to grow fiber to address MDUs or certain applications, but some of them, and I did mention Blue Peak as an example, will do an overbuild and that's the beauty of our platform that it lets them kind of make the transition in a very seamless way. We expect over the next couple of years, Some will be more aggressive, some less about this migration. And this is clearly something that we see as a great opportunity for our business being a converged platform. We also think that our fiber portfolio is very attractive for the broader fiber. market outside of cable. I did mention the win that we had with the new Pearl XL that has this unique power protection capabilities.

This is going for the broader fiber market, not specific to cable. And it really provides a significant value for those that are doing these deployments relative to the traditional street cabinet architecture, etc. So we're excited about what we have and expecting to keep growing this business. Walter, please address the bead question.

Unknown Speaker

Certainly. So Ryan, Bede in terms of our guidance, it's a modest part of our overall revenue guidance. I think we've mentioned previously that we've received orders and are ready to ship out in terms of Bede product, in terms of having the supply chain all set up. As Nimrod pointed out, you know, we've got some very unique products for that market in terms of ruggedized OLT type of infrastructure, which is playing really well into that market. So right now, it's moving as planned. It's not a significant part of our guidance this year.

Unknown Speaker

A couple guys, really appreciate it. . Brian. I appreciate it.

Operator

Thank you. And this concludes today's Q&A session. I would now like to turn the call back to Nimrod for closing remarks. Please go ahead.

Unknown Speaker

We appreciate your continued interest in Harmonic and look forward to updating you on our focus in the near future.

Operator

Thank you all for joining the call. Have a good day. This concludes today's conference call. Thank you so much for joining. You may now disconnect.

This live transcript is auto-generated without human intervention or review.

[Call has ended.]