Welcome to the Q3 2022 Harmonic Earnings Conference Call. My name is Jonathan, and I will be your operator for today's call. At this time, all participants are in listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during that time, please press star one one on your telephone. Please note that this conference is being recorded. Now I'd like to turn the call over to David Hanover, Investor Relations. David, you may begin. Thank you, operator. Hello, everyone, and thank you for joining us today for Harmonic's Q3 of 2022 financial results conference call. With me today are Patrick Harshman, President and Chief Executive Officer, and Sanjay Kalra, 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 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 Harmonic filed 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. 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. Now I'll turn the call over to our CEO, Patrick Harshman. Patrick. Well, thanks, David, and welcome everyone to our Q3 call. In the Q3 of 2022, Harmonic again delivered excellent business results. Revenue was up 23% year-over-year. New bookings were up 50%. EPS was $0.13. Adjusted EBITDA margin was 13.5%. Both business segments were again solidly profitable and had book-to-bill greater than one. The cable access segment, which we have recently renamed Broadband, continues to deliver strong top-line growth with revenue up 60% year-over-year. Video segment revenue transformation continues, with SaaS revenue up 64% year-over-year. Mid-September, we updated you on key market trends, our strategy, and our enhanced three-year financial model. Our Q3 results released today further highlight the key points from that presentation and support our confidence in our growth plan. We see robust demand for multi-gigabit broadband and live streaming video. Our associated products and services are winning in the marketplace, and our focused business execution remains resilient despite macro-economic headwinds. Taking a closer look now at our broadband segment. We delivered strong financial results and further solidified our technology leadership and growth opportunity outlook. Segment revenue was $91.9 million, up 13% sequentially and 60% year-over-year. Segment gross margin rebounded to 45% and adjusted segment EBITDA margin was 18.4%, demonstrating consistently improving leverage as the business scales. New orders were also strong, contributing to near record backlog and deferred revenue. This sustained growth reflects both a robust broadband market and our strong execution. At quarter end, consumer modems served grew to 10.9 million, up 179% year-over-year. Still less than 20% of our existing customers DOCSIS footprint. We had several new customers during the quarter, bringing the number of customers actively deploying our solution to 85, up 25% year-over-year. We secured an important DOCSIS DAA win with an international tier one. We're also making excellent progress with several tier ones who have not yet selected us. Aiding us in winning over these new accounts are two increasingly compelling technology advantages. First, there's growing industry consensus that the particular variant of DAA we pioneered with Comcast and other early customers that is virtualized CMTS paired with Remote PHY nodes, is the most architecturally advantageous and market proven solution, and consequently, the best way to go. Obviously, this growing consensus is good news for us, considering the huge technology and deployment expertise lead we have in virtualized CMTS or Remote PHY. Our second unique advantage, which is increasingly resonating with prospective customers, is the way our fiber to the home PON solution is seamlessly converged and integrated in both software and hardware with our DAA DOCSIS solution. As competition from fiber-based service providers continues to intensify, a multi-pronged solution that incorporates fiber on-demand capability is becoming a must-have for our customers. Emphasizing this point, another highlight of the quarter was a significant new fiber win with an existing tier one international cable customer, punctuated by an initial multimillion-dollar purchase order. Complementing our fiber solution, we've also been investing heavily in new DOCSIS 4.0 capability and believe that here again, we are the industry technology leader, which puts us in an excellent position to benefit as demand for DOCSIS 4.0 commences in late 2023 and 2024. Putting it all together, our unique combination of DOCSIS 3.1 DAA, DOCSIS 4.0 DAA, and 10G fiber, all managed through common cloud-native core software and analytics, is simply the right solution at the right time, provided only by our company. Those of you who had the opportunity to visit the cable industry's premier technology conference in September in Philadelphia saw all of this on display. The tremendous feedback we received from both existing and prospective customers. We left the event feeling even more upbeat about the outlook for our business over the next several years. Referring back to our mid-September Analyst Day, we laid out an aggressive three-year growth plan that calls for over $800 million of revenue and 28% EBITDA margin in 2025. As we head into the final quarter of 2022 and begin looking ahead to 2023, we remain confident in our ability to deliver on this target and excited about the impact we're having on the global broadband market. Turning now to our video segment. Here also, we delivered another quarter of solid financial and strategic execution. Q3 segment revenue was $63.8 million, down 7.1% year-over-year, as expected, due to the previously discussed movement of a few larger appliances orders into the H1 of the year and the corresponding Q2 upside. SaaS revenue growth continues to be outstanding, up 64% year-over-year. As Sanjay will discuss momentarily, segment gross margins were again strong. Segment EBITDA was 6.8%, and we're raising our full-year segment EBITDA guidance, highlighting our continued focus on profitability as we scale our SaaS business. As you will recall from our September Analyst Day, our video business strategy has two key elements, taking a leading position in the growing streaming SaaS market, particularly for live sports, and maximizing profit from a slowly declining traditional video appliance market. The year-to-date results demonstrate our continued execution of this plan. Specifically, the highlight of the quarter was again streaming SaaS growth, driven principally by larger media accounts expanding their consumer footprints, live sports content rights, and usage of our service. We secured several important new SaaS customer wins during the quarter, spanning North America, Latin America, and EMEA, expanding our foundation for sustained SaaS growth. As evidenced by recent demands associated with the upcoming Soccer World Cup, we continue to see live sports streaming and the movement of legacy broadcast workflows to the cloud as attractive and growing opportunities, and our associated brand and technology leadership strengthened. While SaaS was the highlight, overall demand, including for video appliances, was strong during the quarter, with book-to-bill greater than one and a solid sales pipeline extending into 2023. The market seems particularly robust in North and South America, offsetting what we currently see as some possibility of macroeconomic headwind for video in Europe in the coming months. Of course, the loss of our business in Russia. Looking further ahead, we remain confident that our transformation in video to consumption-driven streaming SaaS is working, and that we're on track to achieve the targets we laid out for you on our mid-September Analyst Day. As a reminder, this plan calls for greater than 45% compounded annual SaaS growth through 2025, consistent profitability, and a return to mid-teen EBITDA segment margin. The new wins we've recently secured, the high-profile streaming services we're now powering, and our expanding segment gross margins and steady segment profitability demonstrate that we remain on track to achieve these objectives. With that, let me now turn it over to you, Sanjay, for further discussion of our financial results and our outlook. Thanks, Patrick, and thank you all for joining us today. Before I discuss our quarterly results and outlook, I'd like to remind everyone that the financial results I'll be referring to are provided on a non-GAAP basis. As David mentioned earlier, our Q3 press release and earnings presentation includes reconciliations of the non-GAAP financial measures to GAAP that are discussed on this call. Both of these are available on our website. For the Q3 of 2022, we delivered another period of strong financial results. Before reviewing our quarterly financials in detail, I'll briefly review the key highlights here on slide seven. We reported September quarter record revenue of $155.7 million, up 23.3% year-over-year, along with strong gross margins of 50.9%. We generated adjusted EBITDA of 13.6%, up 187 basis points from the prior year, and EPS of $0.13. Our balance sheet remains sturdy with a cash balance of $105.3 million at September 30. We reported September quarter record bookings of $171.1 million and continued to maintain near record backlog and deferred revenue of $490.1 million at the quarter end, positioning us well for the remainder of 2022 and into 2023. Now let's review our Q3 financials in more detail. Turning to slide eight. As I just mentioned, total company Q3 revenue was $155.7 million, slightly down on a sequential basis and up 23.3% year-over-year. Looking first at our broadband business segment. Revenue for the quarter was $91.9 million, up 13.2% on a sequential basis from Q2 and up 59.6% year-over-year, reflecting both the continued ramp of existing customers and newer customer launches, including modest fiber revenue. In our video segment, we reported Q3 revenue of $63.8 million, down 16.3% sequentially and 7.1% year-over-year. This decline was attributable to a reduction in our appliance business, including a modest impact from unfavorable foreign exchange rates and a $3 million of shipments that were moved up earlier into Q2, as we discussed on our last earnings call. Offset partially by strong SaaS consumption. Our video revenue included SaaS revenue of $8.9 million, up 63.9% from the prior year, ahead of our expectations. We had two customers representing greater than 10% of total revenue during the quarter. Comcast contributed 38% and Vodafone contributed 11% of total revenue. Total company gross margin for Q3 2022 declined 190 basis points to 50.9%, compared to 52.8% in both Q2 2022 and Q3 2021. The year-over-year decline was due to increased mix of broadband segment revenue as a portion of total company revenue. We achieved broadband gross margin of 45% for Q3 2022, compared to 43% in Q2 2022 and 42% in Q3 2021. Broadband gross margin improved both sequentially and year-over-year due to several factors, including our strategic decision to invest in increasing our inventories, enabling us to use more ocean freight rather than air freight, which is most cost-effective. We also saw modest contributions in margins from improvements in freight rates, improved customer pricing, and favorable products and services mix. Video segment gross margin was 59.3% in Q3 2022, down 390 basis points sequentially, and 260 basis points year- over- year. Q3 2022 was modestly impacted by unfavorable foreign exchange rates. Please note that the periods I am referring to were record video gross margin quarters. We've continued to see a strong overall gross margin improvement trend over the past two years as our video gross margins have risen from 54.5% and 58.7% in 2020 and 2021 respectively. Moving down the income statement on slide nine. Q3 2022 operating expenses were $61 million, net of modest foreign exchange benefit as a result of strong US dollar during the Q3, compared to $61.7 million in Q2 2022 and $54.9 million in Q3 2021. The year-over-year increase was primarily due to increased research and development to support the growth of our broadband business and the ongoing strategic transition of the video segment to SaaS. Adjusted EBITDA for Q3 2022 was 13.6% of revenue at $21.2 million, comprised of $16.9 million from broadband and $4.3 million from video. This compares to an adjusted EBITDA of $24.3 million or 15.4% of revenue in Q2 2022 and demonstrates year-over-year improvement compared to $14.8 million or 11.7% of revenue in Q3 2021. This all translated into Q3 EPS of $0.13 per share, compared to $0.16 per share in Q2 2022 and $0.09 per share for Q3 2021. We ended the quarter with diluted weighted average share count of 113.2 million, compared to 109 million in Q2 2022 and 106.4 million in Q3 2021. The sequential increase is primarily due to the increase in convertible debt dilution of 2.9 million shares and the dilutive effect of outstanding RSUs and options by 0.7 million shares, both resulting from an increase in our average stock price during the quarter. Increased by the issuance of 0.6 million shares to employees for vested RSUs. The year-over-year increase reflects the dilution of our convertible debt by 2.9 million shares and dilutive effect of outstanding RSUs and options by 0.7 million shares, both resulting from an increase in our average stock price during the year. Three point seven million shares due to the weighted effect of stock issued to employees and ESP shares, offset by the impact of repurchase of approximately 0.6 million shares. Turning now to the order book. We reported new September quarter record bookings of $171.1 million, compared to $140.9 million in Q2 2022, and $114.3 million for Q3 2021. The book-to-bill ratio was 1.1 in the quarter, compared to 0.9 in both Q2 2022 and Q3 2021. Book-to-bill was more than one for both segments. Turning to slide 10, we'll now discuss our liquidity position and balance sheet. We ended Q3 with cash of $105.3 million, compared to $121.8 million at the end of Q2 2022, and $128.4 million in Q3 last year. The $16.5 million sequential cash decrease is primarily comprised of $8.2 million cash used in operations, primarily in inventories of $16.4 million and prepaid deposits for suppliers of inventories of $7.4 million. These working capital investments for inventories and related deposits are part of our larger strategy to proactively manage the supply chain landscape, enhancing product availability and providing us flexibility to use a higher mix of ocean freight rather than air freight, resulting in increased gross margin. We also used $1.9 million of cash in purchase of fixed assets, $1.9 million of cash towards taxes for employees withholding on RSU vesting, and an unfavorable foreign exchange rate impact of $4.3 million. Turning to days sales outstanding at the end of Q3. DSO was 61 days, same as of Q2 2022, and comparable 54 days in Q3 2021. Our days inventory on hand was 116 days at the end of Q3, compared to 100 days at the end of Q2 2022, and 78 days at the end of Q3 2021. The increase reflects continued investment in inventory as we prepare for heavy shipments during the remainder of this year and into next year. Regarding capital allocation, our priorities remain unchanged. Harmonic is committed to strategically deploying capital where we believe it can generate value for our shareholders. Our top priority is to drive future growth. As such, we continue to invest in building inventory, which enables us to better manage the supply chain, enabling us to fulfill incoming orders on a timely basis and control inventory transportation costs. At the same time, our capital allocation strategy also considers returning capital to shareholders through share repurchases. The timing and amount of any repurchases will depend on a variety of factors, including the price of Harmonic's common stock, market conditions, corporate needs, and regulatory requirements. This balanced capital allocation strategy also takes into consideration anticipated future debt obligations, including our upcoming debt repayment for $37.7 million in December 2022. At the end of Q3, total backlog and deferred revenue was $490.1 million, up approximately 3% sequentially from $477.8 million at Q2, and up 47% year- over- year from $333.3 million at Q3 2021. This large backlog and deferred revenue reflects strong demand from our large broadband customers and growing video SaaS commitments. Note that approximately 80% of our backlog and deferred revenue has customer request dates for shipments of products and providing services within the next 12 months. As mentioned on previous calls, not included in our backlog is additional contractually agreed CableOS business with two of our initial tier one broadband customers. At the end of Q3, this incremental amount was approximately $60 million, down from $96 million last quarter, as approximately $36 million went through the purchase of RSUs, and therefore moved into bookings. Free cash flow was negative in Q3 2022, primarily due to the investments in working capital for inventories and related deposits, as I mentioned earlier. Now I'll turn to our revised non-GAAP guidance for 2022, beginning on slide 11. I will also give brief commentary on key changes from our prior annual guidance we gave in August. For the total company for full year 2022, we now expect revenue in the range of $612 million-626 million. The midpoint is a slight increase from our prior guidance. Gross margin in the range of 50.6%-51%, up 75 basis points at the midpoint versus prior guidance due to improved gross margins in both segments. Gross profit to range from $310 million-319 million, up 2% at the midpoint versus prior guidance. Operating expenses to range from $242 million-244 million, down slightly versus our prior guidance at the midpoint, primarily due to favorable foreign exchange rates. Adjusted EBITDA to range from $79 million-87 million. This represents an 8% increase at the midpoint versus prior guidance. An effective tax rate of 13%. A weighted average diluted share count of approximately 111.2 million, an increase of 1.6 million shares from prior guidance. This is primarily due to increased debt-related dilution, given the higher average stock trading price. EPS to range from $0.49 to $0.55 per share. At the midpoint, this is an 8% increase versus prior guidance. Finally, cash at the end of 2022 is expected to come in between $80-$90 million. The lower cash balance is primarily reflective of $37.7 million debt repayment maturing in December and additional strategic working capital investments, mainly inventory, to support our 2023 revenue growth. Turning to slide 12, I will review our total company outlook for the Q4 of 2022. We expect revenue in the range of $151-$165 million, down 1% from the midpoint of previous guidance. This guidance reflects a stronger Q3 result. Gross margin in the range of 51.3%-52.6%. At the midpoint, an increase of 180 basis points versus prior guidance. This reflects higher expected broadband and video gross margins. Gross profit in the range of $78 million-$87 million, reflecting an increase of 3% from prior guidance at the midpoint. Operating expenses to range from $61 million-$66 million, nearly flat at the midpoint of prior guidance. Adjusted EBITDA to range from $19 million-$27 million, up 7% at the midpoint. A weighted average diluted share count of approximately 113.5 million. EPS to range from $0.12-$0.18, up 7% at the midpoint of prior guidance. On slide 13, I will first review guidance for both the full year and Q4 of 2022 for our Broadband segment. For the full year 2022, based on our progress to date, we expect Broadband to achieve revenue between $345 million-$350 million. A 2% increase from the midpoint of prior guidance, implying a full-year revenue growth of 59% at the midpoint. Given our success navigating capacity constraints through the first 10 months of the year, we are modestly expanding the high end of our outlook. Gross margins between 43.2%-43.6%. This 60 basis point improvement from prior guidance is due to the reasons mentioned previously, specifically our strategic investments in inventory to reduce freight costs, even as component costs remain high. Gross profit between $149 million-$152 million, up 3% from prior guidance at the midpoint, reflecting both higher expected revenues and margins. Operating expenses between $100 million-$101 million, up 4% versus prior guidance at the midpoint. Adjusted EBITDA $55 million-$58 million, up 4% from the prior guidance at midpoint, also reflecting higher expected revenue and margins. For our broadband segment in Q4, we expect revenue in the range of $90 million-$95 million. Gross margin in the range of 46.4%-47.4%. Gross profit in the range of $42 million-$45 million. Operating expenses in the range of $26 million-$27 million. Adjusted EBITDA to range from $17 million-$20 million. Moving to slide 14, we will review full year and Q4 2022 video segment guidance. Currently, we expect revenue in the range of $267-$276 million, a 2% decrease from the midpoint at prior guidance. Full year 2022 SaaS growth is now expected to exceed our annual SaaS growth expectations of 50%. Gross margins in the range of 60.1%-60.3%, a 130 basis point improvement versus prior guidance at the midpoint due to improved product mix, partially offset by a continued modest foreign exchange headwind. Gross profit in the range of $161-$167 million, a slight improvement from prior guidance at the midpoint, primarily due to stronger than expected Q3 margins. Operating expenses in the range of $142-$143 million, 2.7% better than prior guidance at the midpoint, primarily due to reduced hiring and improved foreign exchange benefit. Adjusted EBITDA in the range of $24-$29 million, an 18% improvement from prior guidance at the midpoint. For our video segment in Q4, we expect revenue in the range of $61-$70 million. The broader range for Q4 reflects increased uncertainty in general appliance demand and timing of booked deals. Gross margin in the range of 58.6%-59.6%, reflecting a 330 basis point improvement from prior guidance due to improved product mix. Gross profit in the range of $36-$42 million, a slight decrease from prior guidance at midpoint. Operating expenses in the range of $35-$36 million, better than prior guidance at midpoint due to the factors mentioned previously. Adjusted EBITDA to range from $2-$7 million, an improvement from prior guidance. In summary, during the Q3, we continued to execute and drive strong momentum in our broadband segment while advancing our strategic transformation in our video segment, which led us to raise our full year adjusted EBITDA guidance for both segments. As a result, we ended the Q3 with near record balances for backlog and deferred revenue. We believe this momentum positions us well for the balance of 2022 and into 2023 as we continue to execute on our long-term business plan. Thank you everyone for your attention today. Now I'll turn it back to Patrick for final remarks before we open up the call for questions. All right. Thanks, Sanjay. Just before concluding the call, let's review the strategic and execution priorities that have been guiding us this year. For our broadband business, we remain focused on enabling our existing customers to successfully ramp, accelerate deployment and compete. We're also focused on breaking into the tier one operators that we have not yet secured, and vitally important, leveraging our fiber solution to expand our address market and create additive revenue growth and value. For video segment, we're driving rapid expansion of our streaming SaaS brand and customer base. We're further extending our streaming SaaS technology and service differentiation, particularly for live sports. We're leveraging the traditional broadcast appliance business to profitably enable these transformations. In each of these areas, our year-to-date results have been excellent, and we're well positioned to finish 2022 strong and enter 2023 with great market momentum. We're truly excited about the future of our business, and we greatly appreciate your continued support. With that, we'd like to now open up the call for a few questions. Certainly. Ladies and gentlemen, once again, if you have a question at this time, please press star one one on your telephone. One moment for our first question. Our first question comes from the line of Ryan Koontz from Needham. Your question please. Next question please. Thanks for the opportunity to ask here. About your tier one fiber trials, I know you announced 2 last quarter, and is this a third one this quarter? How are these kind of scheduled out to ship over the coming quarters? I'll take that, Ryan. First, it's what we've announced here are not trials, but they are at the back end of trials. They're actually purchase order commitments representing planned deployments of a couple of different scales, I would say. Yes, what we're announcing today is a third significant win. Last quarter, we talked about several, actually a couple of different customers who have selected us and with more of a focus on the domestic market. We're excited that during the Q3, we secured our first significant commitment from a tier one international customer. That's fantastic. Just to maybe stepping back in the big picture here, as we think about cable operators spending, moving away from monolithic legacy systems to next gen distributed and virtualized, like, where do you feel like we are in that transition? Are we maybe 25% of the way shift to next gen? And at what point do you anticipate we might get to see the market, you know, surpass 50%? Thank you. Well, I think it's an excellent question. There's two ways to answer it. I mean, one way is, you know, what percentage of the operators have kind of embraced and have begun deploying next gen. For that, in roughly round numbers, we think something close to maybe a third of the operators. Not in terms of aggregate number, but if we look in terms of, you know, subscriber base. There's a nice chart about this back in our analyst day deck that we did in September. It's kind of. It really captures our view of what's happening in the market. We're kind of at the crossing the chasm point. Operators controlling about 1/3 of the global cable operators today, we think have begun to deploy next-gen architecture. As I mentioned in my prepared remarks, we think that they're kind of something in the order of a little less than 20% into it. There's the other 2/3 of this cable subscribers in the market. Those operators have yet to really commence next-gen work. That being said, our pipeline tells a story as well as the feedback at the recent industry event tells a story of really the chasm beginning to be crossed now. We see a lot of activity around that kind of main market, if you will, getting ready, we think getting much closer to making decisions and moving forward. Sure. That's super helpful. Let me park there. Did that answer the question? Yeah, you did. Just one more quick clarification. Of this third of operators that have shifted, are they still spending much on legacy or have they largely wound that down and are kind of in a pause and ramp mode now? Yeah, it's hard to generalize. There is definitely still spending on legacy. Mm-hmm. You know, I mean, what's the best way to think about it? You know, think about an operator that is maybe operating in two or three cities. Even if they're going as fast as they can on next gen, they may still have an immediate kind of hole to plug in the part of the network being served by legacy equipment. I'm sure you can imagine that. We think that for sure there is some spending on legacy going on, even under the umbrella of those who have embraced the next generation stuff. We think that spend is, in general, kind of being minimized and is on a, you know, as needed, as absolutely needed basis. Great. That's super. I'll lock you back in the queue. Thanks, Pat. All right. Thank you. Thank you. One moment for our next question. Our next question comes to the line of Simon Leopold from Raymond James. Your question, please. Great. Thanks for taking the question. A couple, if I might. The first one is, you did host the analyst meeting back in September and provided us with some targets for 2025. And I guess I'm just sort of wondering, in 2021, you had given us a target of $830 million for 2024. I guess I just want to put that in perspective. Should we still be thinking about $830 as sort of a milestone midpoint to the 2025 targets? Or should we sort of think about how to extrapolate between 2023 and 2025? Just a little bit of advice on how to consider that. We don't want this, what I'm about to say to be construed as strict guidance, but we see it more or less as kind of linear growth out to 2025. That is, you know, we don't expect any significant, you know, knee in the curve. I don't know, a year and a half out. We've been growing strongly if you look back over the past two years, and we expect that growth rate as we get a little bit larger to maybe be tempered a little bit, you know, hence the aggregate growth rate that we quoted. We expect the growth to be more or less linear between now and 2025. That's very helpful. Then not to get too deep into the technology weeds if we can avoid it, but I've been hearing some suggestions that the industry is harmonizing around a Remote PHY architecture and not the MAC PHY choice. I guess two parts is, one, is that true? Two, what are the implications, if any, for Harmonic? I would say yes to the first part. There is a growing consensus which is not complete. There's still an active dialogue in the industry, but I would say there is growing consensus that, you know, in terms of overall efficacy, technical as well as just scale and, you know, proven at volume advantages. There is a kind of a convergence of opinion around the benefits of virtualized CMTS and Remote PHY. To the extent that that happens, it's very good news for Harmonic. Now, I wanna pause and say we have had an active Remote MACPHY. We, at the risk of sounding like I'm talking out of both sides of my mouth, you know, we are prepared and capable of supporting MAC PHY. That being said, when you think about just the PHY variant of the architecture, we are miles ahead of the rest of the industry in both terms of technology, understanding, know-how, deployment experience, et cetera. To the extent that the industry really converges on Remote PHY as the architecture of choice, that strengthens our leadership position in the market even further. That's very helpful. That's the kind of answer I was trying to get a good understanding of. Then just one last one. You gave a couple updates, I believe on the call about some wins in the fiber-to-the-premises architecture. Is there sort of a threshold where you would break it out in terms of dollar contributions? Or how should we be thinking about the implications and modeling for the FTTP traction? Thanks. Yeah. Well, going back to the Analyst Day, we did give you a 2025 target, and we're starting from a small base. From a multi-year perspective, I think that gives you a picture of where we think we're going over the next three years. Indeed, it's relatively small numbers. Today I think in that chart, if memory serves me correctly, Sanjay, we estimated maybe $10 million of revenue. We certainly expect order input well above that this year. This year. Simon, it remains to be seen if. Well, not if, but when we begin to break that out as it becomes a short term, a bigger part of the business. To be clear, we do anticipate it at some point breaking it out as it gets to the right scale. The 2025 target that we've given, I think gives you an idea of where we think we're headed. Great. I appreciate it. Thanks for taking the questions. Thank you. Thank you. One moment for our next question. Our next question comes from the line of Steven Frankel from Rosenblatt Securities. Your question please. Good afternoon, Patrick. Just to follow up on this theme of the industry coalescing behind remote PHY. To what extent have you seen that either accelerate orders from existing customers or maybe up the urgency among people that were in the pipeline? No change, Steve, with existing customers. I mean, frankly, existing customers were already there, and they're doing their thing. You know, for those who may be on the call who aren't as, you know, versed in all this, there's a couple of permutations on DAA. To be clear, I think everybody in the industry is focused on DAA. There's a couple of permutations that. Then there were some customers out there, I'd say, on the fence between the different permutations. I don't wanna suggest, as we discussed a moment ago, that debate or discussion is currently over. But indeed, more of those who are on the fence, I think, are leaning towards remote PHY. Steve, I don't think that. I think part of the convergence is the urgency. You know, we are seeing competition not only in the U.S., but really around the world, particularly from fiber, but also from fixed wireless broadband competitors. It's just becoming a much more competitive market for traditional cable operators. I think some of them are deciding, you know, the time to kind of evaluate different technology alternatives is over and the time to, you know, begin planning to get on with it is at hand. If you're an operator feeling some amount of urgency, I think that looking to the variant of DAA that has been most widely deployed, that's most mature, has got kind of the most miles underneath it. That's certainly advantageous. That speaks to some of the advantage that I think we're bringing to the market as well. We think that we're in a better position, frankly, above and beyond the technology itself, as a partner that can help an operator move quickly. We think we are the premier partner in the industry right now. It's all still kind of real-time. We've excited about the opportunity to help both existing and new customers really meet the challenge of their fiber and wireless-based competition, and we think we've got the tool set to do it. Okay. In the last few quarters, you've kind of characterized your installed base in broadband as kind of going through a shakedown cruise for a bit and figuring out DAA and then accelerating deployment. Could you give us some color on kind of how you think those tier ones are today? If you had a material movement to more of those customers getting through the shakedown cruise and kind of putting their foot on the accelerator in terms of deployment now. Well, I think it's the other side of the coin of what we just discussed. We closed, as you saw, a significant new tier one international during the quarter. We're excited about that. The progress with other tier ones that haven't yet made decisions on next generation architecture, I would characterize it as very good. I think the urgency that they feel that they have fantastic broadband businesses. I think that understandably, they want to work to secure them. I think that there's been a real push to understand the architectural variance and to make decisions and begin to get on with it. I earlier referenced the crossing the chasm kind of idea. I think we're not quite to the other side of it, but I think we're substantially closer than we were when we spoke two, three months ago. As we did in our Analyst Day in September, we expect 2023 to be an important year of a number of significant decisions being made. We hope several new scale rollouts commencing. Great. Thank you. Thank you. One moment for our next question. Our next question comes from the line of Tim Savageaux from Northland Capital Markets. Your question, please. Good afternoon, congrats on the results, especially on the gross margin side, which is kind of where I wanted to start. Focusing on broadband in particular, Sanjay, you gave us a couple of drivers for the strength in Q3, but you're guiding to a further uptick in Q4 into the high 40s%. Wonder if you could talk about what's driving that. I mean, as I look at your results, it seems like you've had an uptick in kind of router or software revenue within cable access, maybe getting a few of your new tier ones off the ground here. You know, obviously, you were strong in Europe this quarter. I wonder if you can characterize that both for the quarter and the outlook in terms of, but especially the outlook, in terms of broadband gross margin. Sure, Tim. You know, as I said in the prepared remarks, the most important aspect of our gross margin improvement in Q3, and which also is the reason why Q4 guidance is up, is that we are deploying our capital mostly in investing in inventories and related deposits, as I mentioned. That's basically driving a lot of gross margin improvement. We are able to use more of an ocean freight given the flexibility we have versus the air freight. I mean, ocean freight, air freight, the costs are hugely different. They're like one is eight times of the other, approximately. That said, you know, we have also seen modest improvements in the freight rates coming down. There are some marginal price increases as well. Overall, if we look at the entire mix of all these factors, we saw that in Q3 and substantially in Q4. That's the next step further down, you know, as we invest more in inventories. To your point, more tier ones, are they increasing the ramp? Yes. That's also contributing. The mix is working in our favor as well. You know, this is exactly what we guided right at the beginning of the year, Tim. You know, our Q1 was supposed to be weakest, and we were expected to march to the highest gross margin quarter by Q4. It played out exactly as we envisioned and exactly for the same reasons. We are glad our capital deployment is working effectively to give us those benefits. Great. Thanks very much. Without addressing the elephant in the room here over the last couple of questions, I will ask about your new tier one win that you mentioned at the Analyst Day. I just wanna make sure I have this right. You know, I was looking for a footprint update in terms of your total subscriber footprint, that you deferred to this call, you know, from the 60 million. Hopefully you can provide that. Is that tier one, you know, is that relevant? Is it a virtualized CCAP, you know, DOCSIS deal, or is it a fiber deal, or is it both? I've kinda heard both here, during the call, a fiber win with an existing tier one customer internationally. Is that separate and distinct from what you talked about at the Analyst Day? Can I get that updated footprint number? I don't have an exact updated footprint number for you. We announced in the Analyst Day, and we repeated here that earlier in Q3 we secured a new DOCSIS win with a new international tier one cable operator. Indeed, that I'd say I don't know exactly off the top of my head. Let's say a couple, several million homes passed, Tim. It's, you know, that's adding on to—we said around 60. That's, you know, let's call it a 5% or so increase to the addressed footprint, and that's just in cable. Okay. Full stop. Second, distinct from that, new news on this call today is that, with a previously kind of announced, if you will, at least from a numbers point of view, international cable operator, not the one I've just mentioned, but one that we secured a business with prior to 2022. That customer has now, in addition to rolling out DOCSIS with us, has embraced our fiber to the home PON solution. They're gonna begin rolling that out as well in a converged kind of way, and they've given us a first substantial $ multi-million-dollar order for that fiber business. Got it. Thanks very much. Does that make sense? Does that clarify it, Tim? It makes perfect sense. You kind of hinted at it a couple of times, but, you know, in the past, you've talked about kind of assessing where your group of tier ones are with regard to moving to meaningful or full deployment. I think you've, you know, now you have 10, maybe it's about half. Does that remain the case, or have you seen some progress there? That'll be it for me. We've seen that, Tim. I mean, the path we are marching on in terms of the growth, you know, this year we are approximately 60% up year-over-year. I think all that entails the ramp of our existing tier ones, and that's playing out as we planned and anticipated. Okay, thanks. Thank you. To the specific question Tim had, yes, I think that in terms of announced, well, it's 10 tier ones globally, that we have won. That is right. Now, a couple of them have also given us sales of fiber to the home. We penetrated a couple of them, not only with the DOCSIS solution, but with the fiber solution. To be clear, our objective over time is to penetrate all of them. You know, our belief is that over time, fiber will become a weapon or a tool, if you will, in the portfolio of every cable operator as they compete. While our ambitions in fiber are not limited to cable operators, certainly, within cable, and in particular with the tier ones that have already deployed our DOCSIS solution, our objective is to have them embrace our fiber solution as well. We'll talk about our progress in that dimension, as well as winning new accounts outright. Thank you. Okay. As a reminder, ladies and gentlemen, if you do have a question at this time, please press star one one on your telephone. One moment for our next question. Our next question comes in line, George Notter from Jefferies. Your question, please. Hey, this is Kyle on for George. Thanks very much for the question. I was interested that you mentioned investing in inventory makes sense given the revenue growth, but we've also heard that some areas of supply chain are getting modestly better. Can you tell us how much of this inventory investment is directly related to revenue growth, and how much might be still related to protecting yourselves for the supply chain? Or could it be the case that you're reacting to a better supply chain and that might be an offsetting factor? Just a little bit more about the moving pieces of inventory. Thanks. Sure, Kyle. The first thing I'll say is that the investment we are making in inventories is purely it is helping our gross margins purely in the sense of how we transport the inventory to us. Let me be very clear. The costs of inventories still remain high. You know, once the costs go up from our suppliers, it's very hard to see them going down. They do get baked into standard costs and costs get elevated, and they remain there. What else can we do to bring it down? That's exactly in our control. That's what we are deploying our capital to. It's primarily the freight benefit, which I mentioned. And other than that, yes, we are seeing modest improvements in the confluence of things, you know, price increases. We are also seeing a software and services mix improvement. All these are contributing to it. That said, going back to the increase in revenue question you asked, definitely this investment in inventories is giving us an opportunity to address the strong demand we have, the strong backlog we have, and to ship the products on time to the customers. Okay, great. Thanks, Sanjay Kalra. Thanks very much. Thank you. One moment for our next question. Our next question is a follow-up question from Ryan Koontz from Needham & Company. Your question, please. Hi, thanks for a quick follow-up. You mentioned, you know, European macro risk there, and obviously you had a really great quarter in Q3 here. You know, how should investors think about the risk in Europe, you know, barring, you know, an all-out spreading of the war, but just given the energy crisis, what kind of insights can you share with us about the demand picture in Europe next year? Thanks. Ryan, we're not economists. Let me say that first and foremost. To date, we haven't seen any major deterioration. Particularly on the broadband side, the competition is as intense as it is anywhere else in the world. Our current perception is that certainly the broadband part of what we do, we think is going to be relatively, you know, immune or. We're macro headwind resistant. We think we may be slightly more susceptible on the video side of our business. Slightly higher percentage of our video business happens in Europe, about 30%, Europe, Middle East, and Africa, is one consideration. Another, perhaps slightly more subject to macroeconomic headwinds, although historically, our video business as well has been somewhat resistant to, you know, more challenged consumer spending. You know, where we are is we have some uncertainty. You've seen that we've given a wider range on the video business for the Q4. That's really simply a reflection of the uncertainty that we have. Our current sales pipeline, the recent orders that we saw in Q3, none of that points to any significant challenge. We do want to highlight that we see some potential risk and, you know, there's nothing for us to do except for to continue to watch that and execute as aggressively as we can on the opportunities that we do have in front of us. Sure. That makes great sense. Thanks, Patrick. All right. Thank you, Ryan. Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to management for any further remarks. Okay. Well, thank you very much all for joining us today. We're pleased to report a solid quarter. We're excited about our momentum. We appreciate your interest and support, and we look forward to driving another strong quarter and talking. Thanks very much. Have a good evening. Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.