Earnings call transcript Q2 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Viavi Solutions Fiscal Second Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Instructions] [Operator

like Investor conference Relations. now Hebbar, to turn of Head Please to would over the Sagar I go ahead.

Sagar Hebbar

Welcome call. Sagar Regina. year Relations you, to second Solutions. Solutions Thank quarter with XXXX Viavi earnings Head My Hebbar, is name of Investor Viavi fiscal

valid Derksen, could forward-looking statements on from Henk our those that estimations. particularly We statements and to this statements, and actual company's you only the performance. recent call These about encourage subject differ CEO, today's are we The this to filings, materially filings. most uncertainties annual as note, current me expectations guidance Oleg Khaykin, the of SEC in Please and review during Joining and including results our to today. call described are risks President cause forward-looking risk are factors provide and CFO. will report call include financial

statements. state limitations are our financial available note reconcile GAAP slides, obligation earnings undertakes earnings also to our and discuss that update financials revenue release The release. historical except today's Please supplemental which results preliminary on and we tables, these their unless Viavi's non-GAAP. at non-GAAP website www.investor.viavisolutions.com. include all results usefulness Viavi to in are these no plus We otherwise,

will Finally, X:XX and are this we recording available our today's website. make by evening recording the call p.m. on Pacific Time

turn like call to over to now the I would Henk.

Henk Derksen

expectations, spending. range result to year-over-year mainly X.X% at Thank you, $XXX Fiscal our million, in a lowered came service million. XXXX above guidance Sagar. revenue $XXX.X as our and QX anticipated exceeded $XXX million QX headwinds Fiscal of slightly in of provider down

basis the $X.XX basis operations range quarter, was of of cash from versus share and was margin was as current although exceeded guidance $XXX.X the per at our and prior $XX.X points year. and last prior the from range down the million EPS profit count quarter year first prior from compared year-to-date, continue operations we $X.XX the quarter XX.X% of per The during points flow of Viavi's during the the guidance the strong in improve year prior share quality $X.XX from Cash continues from down XX.X% to XXX.X XX.X% half. to from results XX.X%, to in to year, above decreased to at XX.X% balance XXX share. operating flow And sheet. $XX.X million million, million prior million $XX.X million year shares be $XX.X from last the XXX

QX lower $XXX NSE. results segment, was slightly NSE spent impacted our XX.X% with year-over-year, million. $XXX of of million at million revenue to and moving to business by our declined starting ahead reported range quarterly by Now service guidance provider $XXX.X

NSE. declined on service patterns SE provider progressed, within X.X% decreased million prior as year-over-year, year. $XX.X Although year quarter stabilized million the revenue compared driven $XXX.X spending. demand revenue the from by XX.X% of lower and levels last to NE weakness in at

primarily year-over-year. of NE decreased at profit due last at exceeded from in at margin SE profit XX basis NSE mix. X.X%, X.X% profit operating points margin to our XX.X% XXX profit margin down gross at basis year, albeit primarily guidance points due basis XXX -- product X.X% range year, to from the XX.X% XX XX.X%, points points decreased profit to gross NSE, gross gross Within year-over-year. NSE margin margin prior basis decreased decline volume.

Now turning OSP. to

at XX% decreased our year at prior Operating the from down up from new our was year guidance Gross a XX.X% within result ago. mainly facility. the of to X.X% million year-over-year. end our $XX.X Second XXX $XX near range range points XX margin high margin guidance of start-up Arizona XX% a costs to in basis profit was XX.X% Revenue $XX profit quarter points basis million revenue was at million. of of

strategic approved On its the reduction current to The company's needs XXXX, restructuring with workforce X% improve better and expects and February charges opportunities. approximately the workforce company align connection plan. be business in the a operational the it anticipates million incur to the X, plan company of growth of affected efficiencies with end fiscal plan this be company and XXXX. will $XX complete and approximately global estimates to of substantially by The workforce

deployment The to Now $XXX.X million turning down our sheet. result $XX.X million, short-term of total acquisitions cash as of stock investments and repurchases. the balance capital ending was a towards balance both sequentially and

of increase As the mentioned $XX.X collections. for million, increase million a operating result solid quarter was earlier, was The cash an €XX year-over-year. flow of

addition, to invested the production prior to quarter expenditures Arizona of complete new facility. our quarter, due primarily in in million build-out capital In during compared the $XX.X we $XX.X million the

fiscal million worth of During shares announced shares repurchase September, for under million our $XX.X share stock X.X XXX.X remaining of common the in the we QX, million repurchased for balance leaving program of repurchase. authorized

new a for you repurchase As in program we recall, million. that $XXX to common the announced may up Board stock authorized September,

we Jackson addition, In Labs fiscal QX the XXXX. closed of in successfully acquisition

and total and to service Viavi, leadership of The US protecting in transaction and consideration to The contingent approximately go-to-market to be key targets three-year revenue cash certain of leverage assets. in resilient million over us our infrastructure cash, allows operational in up provides consideration model on a million transaction based NOLs. achieved and existing federal of supporting comprised position This utilizes providers and purchase period. a and PNT, $XXX $XX.X a the their government achievement

to guidance. our on Now

basis or the XXXX million, fiscal third Operating EPS to minus per $X.XX of and $X.XX $XXX range be $XX minus quarter to We million. profit expect to the XX be XX.X%, share. expected approximately or margin in is points, plus revenue to be plus

million, XX profit NSE with minus margin approximately $X expect at minus plus to plus revenue We X.X% or million, points. operating or $XXX be basis

or minus is margins profit versus basis be minus OSP XX.X% $XX plus €X points. with to million, million, expected of approximately XXX operating

rate tax XX% XX% and to expected jurisdictional Our is of result a mix. between be as

XXX a on based price of current net expense to is reflect approximately expenses million $X.X be shares count to stock Share income, levels. other expect million. We around expected

With that, the over call to I will turn Oleg.

Oleg Khaykin

in better-than-expected Henk. performance helped second NSE quarter in by Fiscal demand above driven you, range. spend. our XXXX service stabilization by and Thank providers' came of guidance

Our OSP range. within in business came year-over-year the guidance and grew

Starting on year-over-year with NSE. and sequential basis. a NSE declined

quarter, pullback service the see During we general started providers' and continued last December in of spend OpEx that CapEx of September. weeks continuation to a the two during

In did meaningful not also we addition, see flush. year-end budget any

deployment. wireless wireless instruments, primarily by driven business to was NE, products weaker offset fiber in outlook. responding by providers our our demand reduced infrastructure This the XG labs, and by lab was Decline field driven X demand in by Tier and for service partially wireless stronger C-band

for service recently the Labs Jackson product, PNT resilient PNT it the acquired momentum and by PNT for a to In they as I'm with resilient becomes as pleased adapt assets. the addition, traction increasingly providers protect and infrastructure resilient we technology saw to their government must-have market strong strategic technology

the many That the end persist recovery. of encouraged to the to near-term as of demand their we said, OpEx with our back stabilization quarter, in pare current at spend service expect market face are early signs softness customers to starting we see are of continuing conditions. are weakening Looking CapEx and and provider

network in and CapEx for demand at to expect and our rebalance start providers up fiber fiber and expected C-band build-outs and service our to field instruments XG This resume We their XXXX, expansion. demand products field OpEx by their the mid-calendar recovery [ph]. is and plans picking retrench drive

several our start operators and major their is drive also for the we cable addition, In to networks expect field instruments. upgrading expected which XXXX, to during demand cable

Our our segment with XX.X% expectations. grew SE business sequentially, line in

remainder for steady to revenue the remain SE the levels at expect of current XXXX. We fiscal

well Now XD turning driven performed as OSP. as by in sensing year-over-year, anti-counterfeiting products and to line our increased with in OSP both expectations. X.X% growth

Looking OSP quarter, moderating about as ahead, driven demand be of by million weaker customers per pulled to XXXX $XX expect back product fiscal major with fiscal quarterly on we some our of second core end to half anti-counterfeiting revenue stimulus. weaker

to growth align for implementing growth investment plan customer expected and Viavi demand fiscal year-on-year end half we're OSP areas for demand. redeploy recover. with businesses sensing environment, limited profitability XD lower as our accelerated In a position order strategic restructuring expenses driven to in intended and weaker to lower weaker near-term of demand to for operating the expect second markets NSE XXXX, near-term revenue and also of our the demand customer products in end by view We

this partners and chain like Viavi my for I'd thank conclusion, supply express team support. for and in environment my customers, their to challenging managing shareholders In our employees, to appreciation

I will the call turn now over to Sagar.

Sagar Hebbar

you, Thank Oleg.

participating Morgan This will Stanley's quarter, at on X. March TMT Francisco we San be in conference

San in also attending the Barcelona MWC Diego. OFC in will We and be

We Regina, follow-up. one to let session. limit one question begin discussion the the ask everyone Q&A us and to

Operator

first Our ahead. of instructions] go Susquehanna. Hosseini the Please Mehdi line from with comes [Operator question

Mehdi Hosseini

for taking my Thanks Yes. question.

to flat year? quarter in fiscal should of just down in described the Just then meaningful into I term, expect trend into and of the pickup near of for OSP a kind fiscal a next terms you and quarterly more the year what last NSE

Oleg Khaykin

seasonally, one would not think say, So March seasonality is I pronounced. because weaker quarters. constrained was even in as of years, last the I the two though And of quarter supply, our

around, returning. are seasonality this we time seeing I think

So, fourth think, start I would actually quarter, pickup. we our I expect typically, seeing

OSP. as the the to it a So would I'd outlook, stronger, to I of outside to it expect expect also I little too fourth it's coming than September, goes be our for bit third out quarter far but in quarter. And especially stronger say, would be

Mehdi Hosseini

as but see the the as so next play that couple the we evolving providers – your mix benefits And could are a the actually I'm into you sure the to of compares not Okay. if quarters, service from relevant. favorite base, more easier, then pickup, specific do OSP, become are NSE how have especially compares as to lower cautious the look

would As about year? I color into fiscal next appreciated. be OSP think Any

Henk Derksen

just if Well, addressing and your question. see I'm let me start

to Anti-Counterfeiting demand right, got XD smartphones effectively, it so Anti-Counterfeiting major strong is fundamentally sensing. are sensing strong, we When if demand. both then think XD OSP, for there segments. and when and two the about There's So And two strong, is very of running right? you there's think ways, a

as this run are see quarter, to right? rate. about XD Anti-Counterfeiting You're in closer a quarterly and what demand run like running them $XX When million, rate. we lower you're the weak both is quarterly $XX sensing of million

either in strong other of one you're about them range. is the When weak, one million is $XX and

major we fiscal XD economies So there's a for number a sensing, there's both the next seeing headwinds the also of in we're back outlook lower quarters, the stimulus. And are smartphones. for on over pulling think two demand --

So it longer bit already inventories them through the to may of product take they have. little work a

also think end. lower that's going we on to be the So

we see So quarter, are demand. March we more clearly, clear

be So are of high to saying we in million. $XX, like like $XX neighborhood a

if we be to half comes a in in for back the quarter little stronger, QX, But range I may for saying $XX it Anti-Counterfeiting the comes or OSP. are per first be caution abundance think stronger better. smartphone of million

question. So your if I'm not sure I answered

Mehdi Hosseini

you. Thank queue. the into back go I’ll helpful. That's

Henk Derksen

Okay.

Oleg Khaykin

Thank you.

Operator

comes Your the question Henderson go ahead. Needham. of Alex next Please from line with

Alex Henderson

Thanks.

a just the to of So IP going be clarification clear, completed June quarter. is by the couple be to

You've benefits in will your whether I will that else what talked of -- indication be about think line. be, any to it results and use investing might benefit but didn't will be? it actually the to the size the bottom of you what's What's see show the the of whether cost, or intended something through

cost give could So sense going be and do the and reduction, scale benefits to you some you're what with us it? might of what

Henk Derksen

Sure. Sure.

we'll little our operating So business, notably. will majority business, most expenditures, in a and OSP targeting impacted. X% in workforce The the bit the be will of be NSE focused be

X% So OpEx, of of workforce. about the X million

the quarter see a benefit we'll September a call the basis. which in So that million impact XX on annualized full of

Alex Henderson

going OSP business And second. back the then a for Okay. to

number the March we're the you we're about of quarter, some $XX the XD million looking quarter assume you that And just sense million, $XX what -- talking of give million think the you're that was when worth the about December counterfeiting I could and So at $XX talking in sensing. us

Oleg Khaykin

That’s correct

Alex Henderson

$XX coming the terms of the to in range million both $XX million like Is correct? June it and it's that -- In sounds quarters. down March into

Oleg Khaykin

about That's XD to million sensing XX and for XX for core XX another exactly products. right. million so then million or It's or anti-counterfeit

Alex Henderson

what of more December the could just you forward contribute steal in in contributed it us some give I Labs, one the can If quarter, might what it sense Jackson quarters?

Oleg Khaykin

billion A X.X to of couple in revenues billion in and dollars rounded maybe EPS.

Alex Henderson

you. Thank

Operator

Rosenblatt next comes Securities. Your with question the Michael ahead. Please from line go Genovese of

Michael Genovese

yet that but going XXXX it you -- good. the to it's little macro, but talked CapEx okay, Great. guys. calendar was guided the to guess better even the you more about spend like Oleg, carrier year. trying get than like it later you're bit OpEx the AT&T be I'm on and also I because Thanks. clearly a to quarter, in seems clearly, thread in and Hi, was guidance seems saying

I think wireless and good was good on on C-band the not maybe as the wireline side side.

of because and and things. help saying put the sort you about what operating we level NSE CapEx and at could of are of this just business exactly -- those a together So all OpEx higher

Henk Derksen

Sure, sure.

when March the quarter So it COVID I our we in feels think it's it's a we early earnings like of almost the like November, said, call of had hit. replay XXXX when okay,

way, reassessed First, well, of got impacted about think back we panic. and out. And usually lot some they I usually, that's going and and CapEx. there's a see, we're the what climbed by then of CapEx big we really that. comes down we But money well, kind less because could don't where down. a -- said, take care well And do step to think September by panicked let's get our in them to they And

well, the have we say, still they then business run. to And

start of much. to more something we kind We've back on So got OpEx. too doing pulled

quarter revenue second is following a which right are NAMs, the lo ignoring were we So of and so quarter reductions planning, in stating them do? major there okay, less going and reassessment in behold, we yes, when So happens. they're most a this there realignment now, now though of communicated to And -- the what that a and to number get is seen of to usually, CapEx it going even are then or denial that where quarter, lot is year, October. we've NAMs get

CapEx a turned really that's of the that plans and in you the deployed kind back the And is the us. plan. lot now OpEx because and tools equipment the and so in be Well, comes came -- coming to it in installed, then to needs come already for But so that, of need on.

to about coming So out our there need -- is didn't saying are We the start we build we thinking in services. mentioned the deliveries are what? good the we're Guess for still Verizon. equipment. This on to an is and orders. stabilization signals I networks. And field not, see come that end. seeing to let's you feeling right okay, to why mean, I'm starting with turn need world the the We AT&T demand

where with fiber better. even extend money gets announcement I to Well, the it extra they whole And of seen just now you've to mean, the a the AT&T have part BlackRock. and states go than competitiveness, players they network of to And whole that respond brings of need relative were equalize a not later even element playing. cable different whereas versus rather and performance now sooner the cable fiber.

in that good growth a minimis, going recovery cable year, kind to de was very feel I we're was spend. So, see a this and cozier. cable by last it fiber And of year. way, and the

right? And do and before I cable two going -- think X.X. more over the I in upgrade going see try up next symmetric the DOCSIS would we're the a to reallocate say, bandwidth a spectrum years, So, of network to down, what have mid-cycle to they're to is

two in years, get on about maybe to expect speeds up gigabits you up cable which to course, would we X.X, network. And XX in of the the DOCSIS

time why that's be to going there, the year fiber starting cable, in and to for of feel C-band will is the on is of field course, And have that. of in upsides that And So, the some going I XG instruments this beyond middle our kind demand deployment feel we and ongoing. now equipment we're shine.

Michael Genovese

follow-ups And in all would to Well, a I questions. that there, appreciate you the I get couple color. had then of and

it thanks So, I'm the answer. for going here. And to pass on helpful again,

Oleg Khaykin

Sure. right. We'll you. All get back to

Operator

line the Morgan Your Please with Stanley. next question from Meta of ahead. Marshall comes go

Karan Juvekar

question. for you geographic I been from European question to you changes some Juvekar times seems or Thank -- any Karan to some Marshall. want over just of for Morgan guess seen there. Stanley. from since have you trends the Any behavior customers? around And This be Meta that out? call rationalization there to or Thank maybe you there's for is caution overbuilding sort the on

Oleg Khaykin

turn I'll and start Henk. I'll over So, to it

in -- the lot volatility a the regarding of exchange the there's quarter, think been I rate. last

still slowdown same problem right? the European getting but So, driven less the mean, is fewer -- spend they they I budget, been -- the more but in equipment, there's some deployment, were

we So, we I would But doing foreign problems. to well. of of kind considered. of things of all And Europe we're all of I exchange. and actually And actually, say, lot things were us, considered, in mean, volatility see holding where for pound. EMEA structural relatively pretty there's a actually, a back well, now lot September terms in there's euro up is

Henk Derksen

to T&M I Instruments sense. National change industry. just just or of and mean the broader guess, think you Okay. opportunities? I does I strategic makes the That wanted And around your to sort guess, a the just in I players the update thoughts any sort maybe M&A announcement, follow-up given more guess quick space. activity or opportunities, maybe industrial how M&A get of into that about on

Henk Derksen

National mean, different. industrial it's I lab mean, focused the though, on I business very and -- They're is much deployments. mean, Well, some I Instruments very in general their even model category, is generally of

And I'm kind wasn't And remember. danger test those respect. time, has not the old surprised the been longest ride and getting the that, to measurement of field he who for enough are for

that it's I model. So these attractive guys a are business very think realizing

their see always a electrical it's for, side. what -- our don't other And they I nodes model. power greener in really on but SE also because different when in electrical companies they And the business, very is are know industrial, picking business industrial

reinvest -- margins, and lot to that enamored business. in non-stop forget you and of need it to them high keep get margins have relatively to a continues by -- a are they to not to used but they money It's spending continue low this they

on a I our think test are running business our I and nice lot getting. from doing longer-term growth. think that the doing. -- bit And call eye we is they of they are mean for it's they are longest what or not measurement different is with to the sector the So getting business. the I to But see industrial what mean respect I a was our that it lab-based time,

Karan Juvekar

it. Got

pass the Okay. on next. to Thank you. helpful. That's I'll

Henk Derksen

Thank you.

Operator

[Operator Instructions] the Our next ahead. Roy will go from Stifel. with question come Ruben of Please line

Ruben Roy

Hi. that quick the around you you're question. question when September service the Mike of went of downtick had broad-based. sort linearity that provider quarter, follow-up I taking at, looking the on had you Thank a sort characterized and Genovese's for you late my into as being discussion

guess, you're surprise that I the December of that sort is guess one the bit be I customers? stabilization seeing, that a broad-based, was to or the given is this to And thought two little a quarter, which phenomena. would a question or specific Was three quarter a of in that you few

Henk Derksen

mean, think the And cuts, our quarter the December I And we down. first of I because just looking would we quarter was shut so redistribution. costs OpEx third now the quarter, headcount like quarter, our if that. there entering lot Well, CapEx September was of the during a you rebalancing at say customers impact are

I kind calendar three first smoke calendar and usually it's much and I these business quarter, And positive many CapEx they back year, would happening starting as the in and And with what send the reductions, in of are now, two, they've now is very to quarters. momentum So budgets setting signals their what the said reduced they've some service and for is are providers they're their their us taken getting spend some OpEx conversations, say, of a usual. to one. down engage now conversations of

And money, want to when the generally, get of already less have. you what most you're you spending

lot quarter, all in been And be to so invest put needs September, network. in So production, December buying release also equipment you into has of a turn into equipment deploy you start since delivered and of now and optimization instrumentation that network. to need it, you software and install to operations, say, it which requires up it equipment new to your to your

how have out timelines calendar can orders, So discussions be seen requiring deliveries now that's and I year. I push discuss much but what the and let's why will I'm the the we no saying stabilized during this that quarter, are really longer and this things

September I panic the what from different in at and very would saw is tone we a a the the of end say bit October. early of So

Ruben Roy

that is of for detail. combination field up follow-up mid quick guess of XXXX Thanks sort the talked instruments I well. Okay. up to just cable as And the view a a about, picking plus talked pick just guys When about that what then. you start you

should that us… So help

Oleg Khaykin

deal and three two ago. past the past big because in ago, the -- that's a in years about most four years, of yeah was X.X the cable DOCSIS done Well, -- already years

cable minimis. -- at of been de kind it's So was running

So X up still actually DOCSIS looking and more are it to And several the it's mere they're down. the but not one, it's have will and like and you been -- it this from during up And of going do there be trying going bring years be on major where metric -- to developed that give the probably to this is now fact calendar an moving they're forward requires to expectations because upgrade. cable upgrade not looks they X.X companies chipsets the line, yet. they're gigabit make an the year two

And many it's response the that's so aggressive fiber in and -- out there. deployment a happening to ways,

the fiber So the it's part in a the to competitive operators. pressure from response way, of

Ruben Roy

so Got you it. Thank much.

Operator

for closing remarks. the I conference any hand back will now over

Sagar Hebbar

earnings for call This everyone. Thank you, our today. you, Thank concludes Regina.

Operator

today's for all you joining Thank meeting.

may now You disconnect.

Viavi Solutions (VIAV) 2 Feb 232023 Q2 Earnings call transcript