Viavi Solutions Inc. (NASDAQ: VIAV) Q4 2025 Earnings | 08/08/2025

12 days ago

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Summary of Viavi Solutions Q4 2025 Earnings Call

Date: August 8, 2025
Participants:

Bella (Conference Operator)
Vibhuti Nair (Head of Investor Relations)
Oleg Khaykin (President & CEO)
Ilan Daskal (CFO)

Key Highlights:

1. Financial Performance (Q4 2025 & Full Year 2025):

Q4 Revenue: $290.5M (high end of guidance: $278–$290M), up 2% QoQ and 15.3% YoY.
Operating Margin: 14.4% (up 350 bps YoY).
EPS: $0.13 (high end of guidance: $0.10–$0.13).
Full-Year Revenue: $1.084B (+8.4% YoY).
Cash & Short-Term Investments: $429M (up from $400.2M in Q3).

2. Segment Performance:

Network & Service Enablement (NSE):
- Revenue: $209.1M (+14.8% YoY).
- Growth Drivers: Strong demand from data center ecosystem (fiber, 1.6T test solutions) and aerospace & defense (Inertial Labs acquisition).
- Margins: Gross margin 62.2%, operating margin 4.7%.
Optical Security & Performance (OSP):
- Revenue: $81.4M (+16.6% YoY).
- Growth Drivers: Recovery in anti-counterfeiting and 3D sensing.
- Margins: Gross margin 54.7%, operating margin 39.4% (up 460 bps YoY).

3. Business Outlook & Guidance (Q1 2026):

Revenue: $290–$298M (slightly up QoQ, defying typical seasonality).
- NSE: ~$211M (driven by data center & aerospace/defense).
- OSP: ~$83M (seasonal strength in 3D sensing).
Operating Margin: 15% ±40 bps.
EPS: $0.13–$0.14.
Pending Acquisition: Spirent’s high-speed Ethernet & security businesses (expected close by September 2025).

4. Growth Drivers & Market Trends:

Data Center Ecosystem (30% of NSE revenue):
- Strong demand for 1.6T test solutions (next-gen AI/cloud infrastructure).
- Hyperscalers now adopting fiber monitoring solutions (historically used by telecom carriers).
Aerospace & Defense (20% of NSE revenue):
- Continued growth in positioning, navigation, and timing (PNT) products.
Service Providers (50% of NSE revenue):
- Gradual recovery in fiber deployments (especially in North America).
- Wireless infrastructure remains weak (delays in 5G capex).

5. Tariff Impact & Mitigation:

$1.5M revenue impact from new tariffs (U.S. & China).
Mitigated via pricing adjustments & supply chain realignment.

6. Capital Allocation:

Share Buybacks: $16.4M in FY25 (~2M shares repurchased).
M&A Focus:
- Completed Inertial Labs acquisition (boosting A&D segment).
- Upcoming $600M term loan to fund Spirent deal.
Leverage Target: 4x gross, <3x net.

Key Takeaways:

Strong Finish to FY25: Revenue and EPS at high end of guidance.
Diversification Paying Off: Growth in data center & aerospace/defense offsetting telecom softness.
FY26 Outlook:
- Data center demand expected to remain strong through 2026.
- Fiber capex recovery accelerating (led by North American carriers).
- OSP stabilizing with new anti-counterfeiting & 3D sensing opportunities.
Margins Expanding: Operating leverage improving as revenue grows.

About this video

Viavi Solutions reported strong fiscal fourth-quarter and full-year 2025 results, delivering double-digit revenue growth across its business segments alongside significant margin expansion. Q4 revenue reached $290.5 million, marking a 15.3% year-over-year increase and a 2.0% sequential rise, hitting the high end of the guidance range. Growth was driven by robust demand for fiber lab and production products within the Network and Service Enablement (NSE) segment, as well as strong performance in the Optical Security and Performance Products (OSP) segment, which includes anti-counterfeiting solutions. Profitability metrics improved substantially, with non-GAAP operating income rising 52.4% year-over-year to $41.9 million and non-GAAP operating margin expanding by 350 basis points to 14.4%. Non-GAAP earnings per share increased 62.5% year-over-year to $0.13, beating analyst estimates. The company generated $23.8 million in operating cash flow and $18.3 million in free cash flow, supporting capital expenditures of $5.5 million. For fiscal 2025, total revenue was $1.08 billion, an 8.4% increase over the prior year, with non-GAAP EPS of $0.47 representing a 42.4% increase. The NSE segment, comprising 72% of total revenue, grew 14.8% to $209.1 million, fueled by data center demand along with aerospace and defense product growth. The OSP segment posted a 16.6% increase to $81.4 million, surpassing guidance expectations due to strength in anti-counterfeiting and other products. Viavi saw broad geographic growth, with EMEA revenue up 27.5%, Americas growing 13.7%, and Asia-Pacific up 8.8%. Strategic initiatives during the quarter included the acquisition of Inertial Labs to bolster aerospace and defense offerings and progress on acquiring Spirent’s high-speed ethernet and network security business lines, supported by a $600 million Term Loan B financing. The company ended the quarter with $429 million in cash and equivalents, manageable debt levels, and a strong balance sheet. Looking ahead to Q1 fiscal 2026, Viavi anticipates revenue between $290 million and $298 million, non-GAAP operating margin of approximately 15%, and EPS between $0.13 and $0.14. The NSE and OSP segments are expected to maintain growth and strong margin profiles, supporting continued momentum in high-growth markets such as data centers and aerospace. Risks noted include macroeconomic uncertainties and a constrained spending environment, but effective management of challenges such as tariffs and shipment delays were evident in the quarter’s performance. About Inside Ticker: Inside Ticker delivers timely, in-depth financial news and earnings analysis to empower investors with actionable insights on global companies across sectors. For comprehensive video analysis and real-time updates, visit https://www.insideticker.com/. #ViaviSolutions #VIAV #Q42025 #Earnings #FinancialResults #RevenueGrowth #OperatingIncome #EPS #NonGAAP #FiberLab #DataCenter #Aerospace #OpticalSecurity #AntiCounterfeiting #NetworkEnablement #ServiceEnablement #Acquisitions #InertialLabs #Spirent #TermLoanB #CashFlow #MarketExpansion #GeographicGrowth #EMEA #Americas #AsiaPacific #GrowthStrategy #TechnologySolutions #InvestorUpdates #InsideTicker #NASDAQ

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