Harmonic (HLIT) 2026 年第三季法說會：營收大增 64%，上調全年財測指引

重點摘要

• Harmonic 2026 財年第三季營收年增 64% 至 1.488 億美元，高於公司原本指引的 1.25 億至 1.35 億美元區間。
• Non-GAAP 營業利益達 3,300 萬美元，每股盈餘 (EPS) 為 0.23 美元。毛利率為 52.1%，其中包含低於 300 萬美元的未回收記憶體淨成本。
• 其餘市場 (Rest-of-Market) 營收年增 101%、季增 39%，占總營收比重達到創紀錄的 46%，同時也占該季新簽訂單 (bookings) 的 60% 以上。
• 在手訂單與遞延營收年增 58% 至 5.34 億美元，其中預計有 72% 將在 12 個月內轉化為營收。
• 管理層將 2026 財年全年營收指引上調至 5.45 億至 5.55 億美元，每股盈餘 (EPS) 指引上調至 0.80 至 0.84 美元。這是 2026 財年第三度調升全年展望。
• Harmonic 在 7 個國家新增了 9 家客戶，其中包括 3 家區域性 Tier 1 運營商，同時推進其連接性 (connectivity)、智慧化 (intelligence) 與邊緣 AI 計算的成長戰略。

關鍵財務數據

第三季有 4 家客戶各自貢獻營收超過 10%。Harmonic 前兩大客戶合計占總營收的 54%；管理層說明兩者貢獻比率分別為 37% 與 16%。

業務與營運表現

Harmonic 部署的 cOS 架構已覆蓋 167 家客戶，服務近 5,300 萬台 CPE 設備。Unified DOCSIS 4.0 已實現量產出貨，同時 Pearl-1XL 光纖產品與 Oyster+ 產能也在持續爬坡。

該公司在 7 個國家新增了 9 家客戶。新獲取的客戶包括採用 DOCSIS 與光纖方案的 Liberty Latin America、進行 Unified DOCSIS 4.0 升級的 TDC，以及比利時的一家 Tier 1 運營商。Harmonic 還新增了日本的 Baycom 和委內瑞拉的光纖運營商 Fibex。

Harmonic 收購了一款中立於供應商的光纖管理與配置平台，並將其重命名為 cOS Loop。管理層指出，該平台在其現有的巴西客戶群中表現良好，並正吸引北美和歐洲客戶的興趣。

在智慧化業務方面，Harmonic 開始進行新的 SensAI 部署以及現有雲端客戶的遷移。Beacon 已在 25 家運營商上線，高於上一季的約 20 家。該公司還推出了與 Comcast 合作開發的 Recon，以提供即時光纖監測與故障定位。

管理層繼續圍繞三大成長引擎制定戰略，預計到 2030 年潛在市場總額 (TAM) 將超過 70 億美元。其中連接性業務約占 54 億美元的市場機會。Harmonic 計劃於 2027 年推出其 50G 光纖解決方案，並預計智慧化業務在未來三年內將占總營收的 10% 左右。

管理層業績指引

以第四季指引中點計算，管理層預計營收將年增約 49%。第四季營業利益指引包含約 150 萬美元的滯留成本。

全年營業利益指引包含約 760 萬美元的滯留成本，低於先前預估的 1,000 萬美元。管理層預計到 2027 財年第二季末，原始 1,000 萬美元滯留成本中至少將消除 30%。2026 財年預期的 Non-GAAP 稅率維持在 23%。

風險與關注事項

• 管理層表示，採取較謹慎的指引制定方式反映了與中東局勢、零組件供應及價格相關的不確定性。
• 第四季指引包含約 300 萬美元增加的記憶體成本，預計不會轉嫁給客戶。
• Harmonic 預計記憶體供應與成本的挑戰環境將持續到 2027 年。同時，關鍵晶片、PCB 及其他零組件的成本也在上升。
• 隨著公司確保供應，存貨與營運資金需求正在上升。第三季存貨增加 2,830 萬美元，而應收帳款週轉天數 (DSO) 從第二季的 61 天上升至 71 天。
• 儘管其餘市場的營收與新簽訂單正在擴大，但客戶集中度仍居高不下。

分析師問答集錦

管理層表示，衛星寬頻競爭主要仍集中在偏遠地區，並未改變客戶的投資優先順序。然而，這正在強化運營商對網路品質、客戶體驗和營運成本的重視。

在毛利率方面，管理層表示第三季和第四季反映了高企的市場記憶體價格。提前採購確保了供應無虞，並降低了早期價格上漲的影響，但記憶體及其他零組件成本在 2027 年可能持續居高不下。Harmonic 計劃在適當時機調漲客戶售價，以減輕零組件成本上漲的影響。

該公司計劃繼續提前數個季度採購記憶體，以支持日益增長的需求，特別是在其持續擴大的其餘市場客戶群中。

法說會完整逐字稿

完整財報電話會議逐字稿

管理層陳述

Operator

Welcome to the Third Quarter 2026 Harmonic Earnings Conference Call. My name is Heidi, and I will be the operator for today's call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to Scott Eckstein, Investor Relations. Scott, you may begin.

Scott Eckstein

Thank you, operator. Hello, everyone, and thank you for joining us today for Harmonic's Third Quarter 2026 Financial Results Conference Call. With me today are Nimrod Ben-Natan, President and CEO; and Walter Jankovic, Chief Financial Officer.

Before we begin, I'd like to point out that in addition to the audio portion of the webcast, we've also provided slides for this webcast, which you may view by going to our webcast on our Investor Relations website.

Now turning to Slide 2. 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 Harmonic files with the SEC, including our most recent 10-Q and 10-K 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 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-Natan. Nimrod?

Nimrod Ben-Natan

Thanks, Scott, and welcome, everyone, to our third quarter 2026 earnings call. This is our first call since our September Investor Day, where we laid out a strategy built on 3 growth engines: connectivity, intelligence and edge AI compute. AI is produced in data centers, but it is experienced over broadband. As it moves into homes, businesses and billions of connected devices, the network has to deliver more capacity, lower latency and higher reliability. AI agents already generate a large and fast-growing share of Internet traffic.

What's new this quarter is that the largest AI platforms began launching always-on personal assistants that work around the clock interacting with us and with the connected devices in our homes. That means more sessions, more upstream traffic and tighter latency demands on home broadband. At the same time, broadband remains hypercompetitive. Operators are fighting for every subscriber, so they need to deliver the best customer experience while keeping operating costs in check. That is the role of intelligence and SensAI, which I will cover shortly. Whether operators need more capacity or an enhanced quality of experience and more efficient operations, they are turning to the virtualized distributed architecture we pioneered and the intelligence we've built on it.

Now let's discuss third quarter. It was another quarter of strong execution and a breakout one. Revenue grew 64% year-over-year to $148.8 million, well above the high end of our guidance. Rest-of-Market revenue more than doubled year-over-year to reach a record 46% of total revenue. That's the trend we highlighted at Investor Day, and it puts us on track for Rest-of-Market to become the majority of our business. Rest-of-Market also represented over 60% of our bookings in the quarter.

Reflecting this performance and a more favorable environment, we are once again raising our full year 2026 outlook. We're also continuing to expand our customer base. In the third quarter, we added 9 new customers across 7 countries, spanning DOCSIS and fiber and including telco operators. Three of them are regional Tier 1 operators. Liberty Latin America, which serves more than 20 countries and territories across Latin America and the Caribbean, selected us for DOCSIS and fiber. TDC, Denmark's largest telecommunication and digital infrastructure company, selected our platform for a unified DOCSIS 4.0 upgrade. And we also signed a Tier 1 operator in Belgium.

We also added Baycom, a major regional cable and broadband operator serving Japan's Osaka metropolitan area; and Fibex, a fiber broadband operator expanding high-speed connectivity across Venezuela. We continue to lead in DOCSIS and to extend that leadership position. Our deployed cOS footprint now includes 167 customers serving almost 53 million CPE devices and unified DOCSIS 4.0 is now shipping in volume with a growing number of operators. COS is also helping operators compete for multi-dwelling units, one of the most competitive segments in broadband.

In Washington State, Lightcurve used cOS and our compact Oyster node to deliver 8x1 gigabit per second service over existing in-building coax, giving MDU residents fiber-like speeds without a costly fiber overbuild while keeping the option to add fiber later. And earlier this month, Cablenet, the second largest fixed network operator in Cyprus, announced it is modernizing its access network on cOS, consolidating data centers and hub sites to lower operating costs while improving the subscriber experience. Fiber momentum continued as well. Pearl-1XL introduced earlier this year is now shipping in volume, and we booked another strong quarter for it in the quarter. Oyster+ is ramping too, giving operators a compact power-protected way to extend fiber without a street cabinet.

We also acquired a vendor-agnostic fiber management and provisioning platform this quarter and rebranded it cOS Loop. Loop is performing well with its established customer base in Brazil, and we are seeing strong interest from Harmonic customers in North America and Europe. Intelligence was also a big part of our quarter. In September, we launched SensAI, an open intelligence fabric that works across any network and any vendor, turning data from every system into decisions operators can act on. SensAI came to market after extended trials with operators, and customers' feedback has been very strong.

We are now in the next stage. New wins and the migration of our existing cloud customers onto SensAI have already begun. At SCTE TechExpo, we demonstrated SensAI running live on a production network, finding issues inside the home and out in the plant on DOCSIS and fiber regardless of vendor. And it is already delivering value. At one operator, SensAI pinpointed in about 10 minutes a field issue the team had chased for 10 days, then caught another fault further down the same line.

Our installed intelligence base also grew with Beacon now live at 25 operators, up from about 20 last quarter. And now the cOS Loop is part of Harmonic, we have integrated its data into SensAI and launched proof of concept with a handful of Loop customers. We also launched Recon developed with Comcast, which brings fiber monitoring technology proven in Comcast network to cable and fiber operators alike. It gives operators real-time visibility across their fiber, spotting degradation and fiber cuts before customers notice and pinpointing where to fix them. And because it integrates with SensAI, small issues are stopped before they become outages.

Let me now turn to Slide 5 and give you our first quarterly update on the 3 growth engines we outlined at our Investor Day, which together represent a total addressable market opportunity of more than $7 billion by 2030. We will report on each of them every quarter. Connectivity is our core market, representing roughly $5.4 billion of that opportunity. Our strategy is to address it on one cOS platform, extend our leadership in DOCSIS, continue taking our fiber portfolio beyond cable into telco and get ahead of the move to 50 gig. For telcos, our OLT portfolio, including hardened remote OLTs and our open ONT approach provide the interoperability and supply choice they want. And with cOS Loop, our fiber offering is now end-to-end and works across multi-vendor networks.

Our differentiated 50-gig solution received very positive feedback at recent industry events and is on track for introduction in 2027, positioning us for the next wave of fiber investment. Intelligence is our newest growth market and the timing could not be better. In a hypercompetitive environment, operators win and keep subscribers on reliability and experience, and they have to do it without adding cost. That is exactly what SensAI is built for. And with Recon and cOS Loop feeding it, our intelligence portfolio now spans DOCSIS and fiber from inside the home to the broader network.

Our strategy is to turn our installed base into a natural on-ramp for SensAI revenue. Starting this quarter and running through 2027, we are migrating all of our premium cloud customers onto SensAI, so when they choose to expand into its full capabilities, there is nothing new to deploy. With an expanding SensAI pipeline, we remain on the path we outlined at the Investor Day. We expect Intelligence to reach about 10% of revenue over the next 3 years, adding a new and growing recurring revenue stream for Harmonic.

Edge AI compute is our third growth engine, and it represents potential upside to our long-term model. As operators modernize with cOS, they free up space and power and facilities that sit milliseconds from their subscribers and businesses. This quarter, our largest customers highlighted where Edge AI compute is heading. One begun live streaming for more than 200 Edge compute sites inside its network and another announced commercial Edge AI partnerships on compute it can activate across more than 1,000 facilities. Our opportunity is to bring this capability to the broader market using cOS as the orchestration layer, and we are in development with key customers and partners.

That concludes my opening remarks. With that, I will turn the call over to Walter to walk through our financials in more detail.

Walter Jankovic

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 Scott mentioned earlier, our Q3 press release and earnings presentation include reconciliations of our non-GAAP to GAAP financial measures, both of these are available on our website.

I'm pleased to report that we had a breakout third quarter with revenue increasing 64% year-over-year to $148.8 million, which far exceeded the high end of our guidance. This included over 100% growth in Rest-of-Market. In addition, we closed the quarter with backlog and deferred revenue of $534 million, up 58% year-over-year. Notably, over 60% of bookings in the quarter came from Rest-of-Market. Given these results and a strengthening demand environment, we are once again raising our full year guidance with revenue now expected to be between $545 million and $555 million, up from our prior range of $505 million to $525 million. I'll provide a more detailed breakout of our guidance shortly.

Let's move to Slide 7, where we have the financial highlights for the quarter. Revenue was $148.8 million, well above our guidance range of $125 million to $135 million. Gross margin for the quarter was 52.1%, just above the high end of our guidance range, inclusive of net unrecovered memory costs of less than $3 million. Operating expenses were $44.5 million, above our guidance range, mainly due to performance-based incentive accruals tied to our improved full year 2026 financial performance forecast and earn-outs associated with our Q3 tuck-in acquisition of a vendor-agnostic fiber management and provisioning platform.

OpEx also reflects the completion of a multiyear custom development project in Q2. The engineers on this program were previously charged to cost of revenue and are now in R&D assigned to other products, which adds approximately $2 million per quarter to operating expenses starting in Q3.

Moving to the bottom line. EPS was $0.23, well above our guidance range of $0.15 to $0.19; and operating profit was $33 million, exceeding our guidance of $23 million to $28 million. These results include $1.5 million in stranded costs related to the Video business sale, net of TSAs. The revenue upside was broad-based and included a number of Rest-of-Market customers ramping their deployments during the quarter as well as a seasonal increase in our outside plant services business.

In Q3, 4 customers each accounted for more than 10% of revenue. Our top 2 customers represented 54% of total revenue combined. Our Q3 Rest-of-Market revenue showed very strong year-over-year growth of 101% and sequential growth of 39% and represented 46% of total revenue, highlighting our expanding customer diversification. As a reminder, Rest-of-Market revenue describes all revenue that is not from our 2 largest customers as measured by subscriber count.

Turning to Slide 8, you can see our balance sheet and cash flow highlights. Our sequential cash change was largely due to a $75 million repayment of borrowings under our revolving credit facility during the quarter, leaving $160 million available under this facility at October 2. Additionally, we had negative free cash flow of $5.1 million for the quarter, which was due in part to a continued increase in inventory, including memory as we took delivery to secure supply for growth and an increase in receivables. DSO at the end of Q3 was 71 compared to 61 in Q2 '26 and 61 in Q3 '25. As we've stated on past calls, we expected DSO to trend back to the low 70s based on our customer mix and timing of revenue.

Inventory increased $28.3 million in the quarter, and our days inventory on hand increased to 120 days from 95 days last quarter. This too was expected as we support growth and secure supply. Our overall book-to-bill was 0.7 in Q3 with rest of market book-to-bill around 1.0. Q3 has traditionally been a lower bookings quarter for the business. As we have said before, we expect book-to-bill to fluctuate from quarter-to-quarter, but over time to return to our historical benchmark of greater than 1, reflecting the growth in our business.

At the end of Q3, backlog and deferred revenue was $534 million, up 58% year-over-year and down from $587.6 million in Q2 on seasonally lower bookings, of which 72% is expected to convert to revenue within the next 12 months. This gives us increased visibility for the remainder of 2026 and into '27. As shown on Slide 9, we continue to believe we have ample liquidity to support our capital allocation priorities with $143 million in cash and $160 million undrawn credit facility. We repaid $75 million under our revolving credit facility in the quarter to reduce interest costs, while keeping the full $160 million available to us. This total available liquidity gives us the financial flexibility to execute our capital allocation plan. Our capital allocation priorities remain unchanged: invest in organic growth and diversification, return capital to our shareholders and pursue strategic M&A to accelerate our growth strategy and diversify our business.

In line with our first key priority, we plan to keep investing in organic growth. Organic opportunities exist in both our Intelligence Platform business and Fiber portfolio, including 50 gig; as well as in the new markets we outlined during our recent Investor Day. We will also continue to invest in inventory over the next several quarters, including advancing memory and other purchases to secure supply. Under our current $200 million share repurchase program, to date, we've already repurchased $142 million of our shares, including $4 million of shares during the third quarter and $16 million following the end of the third 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 our substantial cash position and available liquidity, we are well positioned to explore additional inorganic growth opportunities that would accelerate our growth and diversification strategy, including scaling our Intelligence platform. In Q3, we completed the tuck-in acquisition of a vendor-agnostic fiber management and provisioning platform company referred to now a cOS loop.

Turning to guidance on Slide 10. Here, we provide our continuing operations non-GAAP financial guidance for Q4 '26 and full year '26, which reflects our raised full year 2026 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.

Now let me walk you through the guidance. For Q4 '26, we expect to deliver revenue between $141 million and $151 million; gross margins between 51% and 52%, reflecting elevated memory costs; operating profit between $28 million and $34 million; and EPS between $0.19 and $0.23. As our guidance shows, we expect strong year-over-year revenue growth to continue in Q4 '26 at approximately 49% at the midpoint. Q4 operating profit includes approximately $1.5 million in stranded costs.

For the full year 2026, we expect revenue between $545 million and $555 million, up $35 million or 6.8% from the midpoint of our prior guidance. Gross margins between 52.1% and 52.4%, up from 51% to 52% previously guided. Operating profit between $118 million and $124 million and EPS between $0.80 and $0.84, up approximately $0.11 or 15.5% from the midpoint of our prior guidance.

This is the third time this year that we have raised our full year outlook. Compared to the full year outlook provided at the start of the year in February, our current full year outlook at the midpoint reflects a revenue increase of approximately 20% and EPS increase of [ 50% ]. This demonstrates the momentum that has been building in our business. In addition, with minimal debt and a net cash position, changes in interest rates have little impact on our earnings.

As we noted last quarter, we have built in approximately $3 million in Q4 for 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 well into 2027. We believe the current challenging supply and cost environment will persist into 2027. Beyond memory, we are beginning to see other component costs rising through 2027, and we plan to mitigate these cost pressures by passing through increases to customers where appropriate. Additionally, full year operating profit now includes approximately $7.6 million in stranded costs, down from our prior estimate of $10 million. And to reiterate what we said on prior earnings calls, we continue to believe approximately 30% or more of the original $10 million of stranded costs are temporary and will be eliminated by the end of Q2 '27. Please note that our expected non-GAAP tax rate for full year '26 remains at 23%.

In summary, in the third quarter, we delivered results that once again significantly exceeded our guidance with revenue growing 64% year-over-year. Our strong backlog and deferred revenue and secured supply give us increased visibility, enabling us to once again raise our full year '26 guidance.

Thank you for your attention. And now I'll turn it back to Nimrod for closing remarks before we open up the call for questions.

Nimrod Ben-Natan

Thanks, Walter. To close, Q3 marked another quarter of strong execution and a record-setting one. Revenue was up 64% year-over-year. Rest-of-Market was a record 46% of total revenue. We signed 9 new customers, including 3 regional Tier 1s, and we made real progress on each of our 3 growth engines. And as a result of all of this, we are once again raising our full year 2026 outlook.

Our long-term growth rests on 4 pillars: technology leadership, an expanding addressable market, a strong operating model and proven execution. This quarter, we delivered on all 4 of these, and operators keep choosing Harmonic because we let them evolve their networks from DOCSIS to fiber to intelligence and the Edge on one platform.

That concludes our prepared remarks. Walter and I are now happy to take your questions.

Operator

[Operator Instructions] We will take our first question, and your question comes from Simon Leopold from Raymond James.

分析師問答

Simon Leopold

First, just a quick clarification, if I might, and then the question. You mentioned 54% of revenue from your top 2 customers. I want to confirm that these are the same top 2 we've seen and if you might be able to give us the breakdown between those 2?

And then the question I wanted to ask about is regarding -- I would characterize as at least a perceptual threat of competition to your customers coming from satellite. I want to get your perspective on how you're hearing and what you're discussing with your customers as far as their need to upgrade and their consideration of a new dimension of not just competing against cable versus telco, but versus satellite as an alternate broadband provider.

Walter Jankovic

Simon, it's Walter. I'll take your first question. With regards to the top 2 customers, those are always the same top 2 because it's based on the highest subscriber count. And in the quarter, as we mentioned, they were 37% and 16% in terms of those 2 customers.

Nimrod Ben-Natan

And Simon, to your question about the competitive environment, it's hypercompetitive. And it is very competitive on the fixed wireless and on fiber in different geographies. I think the satellite broadband is mostly in rural areas. You definitely see that less in the urban kind of more densely populated areas. Regardless, we see our customers really focusing on making sure their network is competitive, making sure they provide the best quality of experience and they do all of that at the lowest possible cost.

It's -- they want to make sure that they don't kind of break the envelope of their operating environment. So in summary, the broadband -- the satellite broadband by itself does not change the investment or priorities that we're seeing. It is simply sharpening the focus that they have on what they need to do.

Operator

We will take our next question, and the question comes from Steven Frankel from Rosenblatt Securities.

Steven Frankel

Congratulations. Walter, you've shown some good resilience on gross margin. How would you kind of contribute that? How much of that is buying well ahead of time versus maybe pricing or product mix as we move forward, and incorporating Q4 as well as you think about that because that guidance seems a little higher than at least I was anticipating?

Walter Jankovic

Yes, Steve. So with regards to the memory cost, what you're seeing in both Q3 and Q4 is now the elevated level of cost for memory. So think of it as kind of the market price that's out there for memory. So we did front run a lot of memory, and that benefited us on the first half of the year. Now we've continued to see memory prices going up even from the levels that, let's say, we're at in the Q3, Q4 time frame. However, that increase is marginal compared to what we had seen earlier in the year when we were stockpiling memory to facilitate the supply for this year as well as well into 2027.

So the way I think about the margins right now, you see Q3 and Q4 are kind of similar in that range that we've provided previously, and in both quarters, we are anticipating in Q4, again, about a $3 million impact as a result of the -- those elevated memory costs. And as we think about next year, we'll continue seeing that kind of level of cost, if not a little bit higher than that in memory. I think one of the other things I mentioned in the prepared remarks today is that we're also seeing other component costs increasing as we go through 2027. And as I mentioned on the -- in the remarks that we expect to mitigate that by passing that on to customers as appropriate.

Steven Frankel

Okay. And could you give us an update on the fiber customer count?

Nimrod Ben-Natan

We did not break down the fiber customers out of the total that we provide every quarter. The total itself is broken down into 3 categories: cable only, cable and fiber and fiber only, but we don't break them down. Out of the 9 that we announced this quarter, there's a handful that are fiber customers and our fiber business is expanding with existing customers as well.

Operator

[Operator Instructions] We will take our next question, and the question comes from George Notter from Wolfe Research.

Taran Katta

This is Taran Katta on for George. Can you talk a little bit about what components you're seeing price increases? And then kind of on the tail end of that, to what extent do you expect to raise pricing on those? It sounds like this is more of a '27 event.

Walter Jankovic

Yes, certainly. As we are looking forward and working with the supply base, we're seeing components going up in terms of key silicon as well as items like PCBs as well as other components across the board. It's something that we're very focused on as we go through 2027. And as I mentioned, our expectation is to raise prices accordingly for the increases that we're seeing in some of these key components.

Taran Katta

Okay. Got it. And then just one last question here. To what extent do you intend to make more memory purchases? Because it sounds like you guys are going to continue pursuing that even though you have inventory into -- well into '27. What's your strategy there?

Walter Jankovic

Our strategy has been to stay way ahead of it in terms of making sure we've got supply for our customers to be able to fulfill the increasing demand that we're seeing across all of our customer base, as you've seen today, definitely increasing in terms of the Rest-of-Market revenue and customer base. So we are staying ahead of it in terms of going ahead so many quarters and picking up memory to ensure that we've got the supply. And as in the earlier question, by getting ahead of it, it's actually saved us some money as those commodities have increased in cost.

Operator

There are no further questions. I will now hand the call back to management for closing remarks.

Nimrod Ben-Natan

We appreciate your continued interest in Harmonic and look forward to updating you on our progress in the future. Thank you all for joining the call. Have a good day.

Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.