Earnings call transcript Q4 2023

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Operator

Hello, everyone. My name is David. Welcome to the Viavi Solutions Fourth Quarter and Full Fiscal Year 2023 Earnings Call. [Operator Instructions]. I'll now turn the conference over to Henk Derksen, Viavi Solutions CFO. begin. Please

Henk Derksen

on and Call. Solutions Derksen, CEO. My CFO. joining David, Year Quarter Viavi to Oleg Also Earnings is XXXX name me welcome you, President Fourth Viavi Fiscal Solutions Khaykin, Thank our call and today's is Henk

note most annual report and statements, our factors obligation during only that filings, described include statements you we no update could forward-looking undertakes valid from results this differ to company's guidance call SEC cause about subject to The as our these risk will statements materially recent Viavi and review encourage particularly performance. actual of call, to These are are this in the estimations. current risks those including that the today. Please forward-looking financial and We expectations uncertainties provide filings. to statements.

usefulness Please tables, results all and non-GAAP to state on which our also preliminary reconcile financial supplemental include earnings earnings plus except Viavi's slides, our available revenue their limitations we that financials these note www.investor.viavisolutions.com. non-GAAP. We release. The at results and historical otherwise, GAAP website release are in today's unless are discuss

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

with our quarterly Let's start financial results.

$X.XX the XX of came $XX.X year-over-year quarter high the points of The EPS prior current million XX.X%, prior to end the from leverage up revenue count XXX.X profit during sequentially a X.X% margin down at versus of QX in high above by ended range from $X.XX year. by of operations decreased up guidance was from year share basis. and $X.XX $XXX on end the in on ahead basis lower of period. to high at in million slightly $X.XX X.X% year million and XX% Operating end $XX.X result for million, $XXX down the our million prior Fiscal XX.X%, increased shares fourth $X.XX, near to of XXX.X range year-over-year. was prior quarter, down the our of $XXX.X of from of the million, sequentially guidance the quarter flow revenues. million guidance range the and Cash XX.X% the

a and Viavi. during revenues experienced from a digested from million, came XX.X%, as of record for year-over-year fiscal X.X% The revenue in was overall in providers, down challenging in declined billion XXXX also million. XXXX, or $XXX.X semiconductor from in of an million XXXX, full Viavi's to to XXXX NSE banks Fiscal $X.X year year $XXX.X $X.X XX.X% spend. XX.X% year $XXX.X profit service equipment decreased year inventory full slowdown full manufacturer central margin levels at revenues XXXX revenues, network in contraction, fiscal billion $XXX.X in at OSP operating because Mainly XX.X% in XXXX. of fiscal lower XX.X%. down builds COVID, from million down reducing result XXXX

XXXX X.X% to in our the profit Within costs of margins operating facility Chandler. profit in XXXX, OSP includes from reduced XXXX. also to X% segment, margins XX.X% segment, in our new impact XX.X% to operating in XXXX our NSE Within XX.X% related from in which declined start-up

as in in free decreased $XX XXXX. from at year fiscal million free XX.X% XXXX. $X.XX Full in EPS from million cash fiscal compared cash XXXX $XXX.X generated continued for flow million flow or of levels full headwinds, $X.XX to we EPS the and record year XXXX to $X.XX operations flow solid, $XXX.X cash Despite in be

strategy on continued $XX.X program share acquisitions. $XX.X capital repurchase retiring While comparable our balance sheet our further improving and our allocation and notes remaining million convertible we to the notes XXXX the and exchanging million XXXX by towards deployed partly execute towards terms,

million shares. XXX.X the during million count share a at reduced EPS to XXX.X year from

approximately annual that an combination in better us on As is fiscal expenses, in and million of of into revenue this result as to the below originally we expense of net expected of from reduction outlook to a that million. an expected a result recovers. will $XX more announced $XX our of in savings operating force allow nonrecurring in capital commitment the of with accumulated financial meaningful of operating a Finalization savings anticipated leverage basis. $XX non-recurring this of expense Reduced million plan levels a short-term year expense program original change February $XX X% XXXX, and is restructuring labor early structure, with improved operating than million benefit of in

QX with at starting to improved exceeded came moving $XXX albeit million, million, revenue revenue our NSE XX.X% of year-over-year. $XXX million year. at to of declined segment, revenue $XX.X reported Now expectations XX.X% our NSE. results in $XXX.X SE million last by and down from increased NE XX% $XXX.X X.X% year-over-year. sequentially business million

our profit margins to due from range was by profit to decreased combination of gross the XX.X% XXX basis year, due Within at mix. product mix. at guidance points X%. year-over-year. last XX.X% primarily SE decreased on in leverage unfavorable primarily the XXX near year, NSE's margin operating profit X.X% gross volume margins XXX X% points high end profit NSE, basis gross lower product of at basis NSE points XX.X% at prior from to with decreased margin NE

on million turning of million midpoint revenue million and year-over-year. to year-over-year, quarter up XX.X% guidance a slightly profit Gross $XX lower at lower margin of of down our decreased $XX.X expected, of revenue. ended slightly ahead to XX.X% OSP. X.X% than Fourth $XX range result at leverage the Now mainly

profit the XX% came normalize range as The margin profit we returns, behind that operating gross revenue and margins in Chandler of declined to the X.X% expect to Now the below and XX.X% levels. to us guidance historical XX% year-over-year. costs slightly are start-up of

year. The to turning of was the ending $XX.X sheet. to cash total short-term investments down Now $XXX.X our balance compared and balance the million, million prior

million a interest payment repaid $XX.X the fourth total that on of with convertible upcoming as are the pay a during end remaining company million. balance the the $XX.X of million of $X.X convertible principal we quarter, well semi-annual we XXXX the sheet of fourth During cash balance the on At the to XXXX million $XX.X are outstanding with value down for quarters. planning XXXX, the notes as quarter notes left an

balance at Our improved maturities sheet of convertible our debt is lower strong. We fixed exposure, our long-term result, cost. as the reducing a debt, by adding and quality extended notes a rate

$XX.X flow was for As mentioned the year-over-year. increase $X.X earlier, an quarter of cash million prior quarter $XX.X million, decrease of the and million a from operating

to in during prior the quarter. $XX.X we invested addition, expenditures capital year in $X.X In million million quarter the compared

addition On mentioned as common year repurchased shares current we in common cash fiscal million full flow and QX, retiring for million to common generation repurchase our program. X stock fiscal $XX notes, convertible share a the basis, shareholders. During to for under before, of free of in of million X.X we total million $XX.X stock of XXX% a XXXX and over repurchased returned shares

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

million fiscal As of of $XXX the program. we available under this beginning XXXX, have

guidance. our to on Now

XX.X%, Operating $X.XX points and to improvement $XXX in XXXX revenue is first million to plus XX and We basis anticipated be $X.XX. margins EPS or $XXX of an the of range be points, profit quarter minus basis fiscal be XXX expect between sequentially; to expected million. to the to

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

OSP expected XX revenue profit minus $X minus be approximately million, or operating $XX is plus with or points. basis margin to XX.X%, an plus million, of

around be million a to expected $X the is expense tax Our quarter, first XX% jurisdictional for of mix. or result

a reflect $X to shares. approximately expenses million. is and be expected net income XXX other million to expense share expect count The We of around

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

Oleg Khaykin

Thank you, Henk.

stabilization gradual and overall business saw service to segment. funds recovery. network Despite quarter, initial spend, signs optimization, which up fourth fiscal Viavi's the service provider in and providers benefits for XXXX free maintenance have of During we some NSE begun slowdown

As fiscal to stabilization of and we momentum in fourth revenue came guidance, higher the and fiscal expect our a recovery throughout above continue result, the slightly end our the year. quarter

segment. networks. production revenue equipment double-digit wireless companies from sequentially, in the the gradual NE NE for and recovery in year-on-year quarter. cable lows sequentially, upgrading and a but and reflecting Demand grew was by test semiconductor driven March demand primarily NSE from up saw providers percentage NEMs business declined fiber their service lab our from rebound

Op Mil/Aero and com avionics business continued customers. the from to driven by perform robust demand well,

SE business with Our year-on-year, grew in our line X.X% segment expectations.

by Now products. to stronger demand came be demand impacted turning quarter to helped chain anti-counterfeiting to challenging. better by environment the supply OSP. continues That The lower fourth demand for OSP revenue new expected, smartphones in seasonally models. for than and transition was phone sensing XD slightly the said, revenue

and orders in spread spend Early NSE in NSE was a then all demand slowdown rapid broad-based was The to year, providers XXXX and our slowdown network further The from service a challenging very Fiscal manufacturers demand slowdown the geographies. service in for across customers for semiconductor the Viavi. companies, impacting products. pattern experienced equipment fiscal providers. year by

its impacted OSP anti-counterfeiting and the governments the sensing impacted was by by for demand as by fiscal products major smartphones. back The demand year dialed for The but impacted for X started strong, headwinds. saw business stimulus, demand XD products weaker unit inventory macroeconomic fiscal was corrections

position These the continued such reduce higher in traditional our Viavi invest as with to restructuring PAT, revenue and markets, leverage technologies our as expected year, markets our in applications, and disappointing resilient combined the initiatives, strong to to result financial strong completed growth and and operating into expenses. expanding Despite new are initiated rebounds. in program

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

now With will to that, for back I Q&A. turn operator it

Operator

Hosseini take from Mehdi We'll first our Instructions]. Susquehanna. question [Operator with

Mehdi Hosseini

visibility? see to to a do the want what coming How And our your in Are the on guide reaching providers. private a cycle upgrades? minimum investment? do comment hear to you just you think the optical that have service curious you smartphone. side, compared To just reflects with what go I prior regarding year extent then where we to your point back

Oleg Khaykin

you, thank So Mehdi.

time mean they are and because let's about to they put they a providers. X hold, we OpEx. lead of one, the of canceled a a within it's of for lot cancel. way, announced So discussions that months normally items, this cannot mainly took signs But capital and CapEx. backlog a big put them it in When us multiple coming out October, effectively first of lot a remember, X-month service X out with month have claimed life there I can it

been as been network. lot So There's big all they're pretty put has backlog things still the has back, my they're March well, has and a out. supplies. as CapEx -- for pushed got much accumulating control now And are screaming been I and okay, under stepping quarter, the looking, run spend of to of people

and equipment -- network maintenance tools upgrading we are the manage to providing around the seeing and So folks more with more conversation network. and optimization their

So ask crickets. think I are was say, select some mobile say, you I'd But and X, guys There's in and cable ago, clearly upgrading their than there's And network if Like question, now, let's silence. all X -- me optimization the dynamic returning operators and actually right also seeing others. aggressive doing are very back and more it networks. are months upgrades. network are we aggressive fiber that

So will I to our continue fiscal this year. up pick momentum throughout think

rear the to I Now both fairly the coming year I prime are with of our is -- saturated. mean and to mean year. hard in for this the mean I'd now XD it's coming front we predict the -- say sensing, respect application cameras. kind I market

we're really, we more let's the year. think are volumes ago. cautious demand are on think more And And seeing to demanded the be sluggish I really that in total I outlook So by smartphone a somewhat demand. taking what than saw, more is this say, fiscal year respect, is market revenue going a that we driven

Mehdi Hosseini

Can question? ask I follow-up a

Oleg Khaykin

Sure.

Mehdi Hosseini

into the opinion XG equipment thinking looking There not What install right an least cable for And I provider, catalysts. tell entice this I technology if way. see that could else for don't of equipment hear with operators 'XX, at them your personally want could Just is some or upgrade plus. underground. calendar urge terms to to service happen about of me with in the fiber plenty I'm upgrade?

Oleg Khaykin

the to depend But that plenty -- in warehouse. Sure. of I don't there's plenty and think do business to turn got an and And to fiber put the operations bad circuit to we ongoing weather you our or So starting a in I put right? the time in to your on you something and putting you maintenance the into or There's Well, agree constantly need tear, by it field is driven into you do yes, you you or equipment ground. that you. have already the it network. wear exploitation, are more tend with on network production have And as work. doing be in respect, of thing. every you like equipment actually, what exploitation, turning things got But of remember, the

respect, spent gets it's of that us. What's more That's for we in on are network, good very So -- OpEx good good when of what got. for is building us. get very they somebody actually money to for are us is more more not so you between. kind in When

probably the the think take -- wish probably now to deliveries had the big think I of equipment. have they providers access So took. service -- I they equipment They now a

that's it, you've And to what's demand it's sitting warehouse. of it products. our in operation. little, But driving have Some little for you into got put by once a

element at they're you is have whether are you're to tendency operators, very than do be when in than you respond it to X biggest second more have going aggressive Mexican try the strong the more. in -- competition. a little to are takes announce a standoff. not, want of is it And to space, three-way, cheat, going strong And are. Well, we All mobile it's the a seeing is your to the And watching. Now least more that course, or other competitor proverbial there you X appropriately.

inevitably rest doing takes we're everybody all to I nothing logic fast try the So and it on a accordingly. as one better their person agree as it," respond much pull says, think one we if in off to "Hey,

I case very operators, healthier them seeing operators. many think, cable I since think as are in good Now it of the, than of they are for telecom a opportunity them,

to be fiber think speeds opportunity to the taking and wireless they're their competitive customers. network against in I on try broadband the to they have avoid still upgrade their an -- more definitely

the service So that whether thing not. biggest I they single think a the competitive or it pressure want money, is spending it's probably provider

Operator

Next, Northland we'll Capital. go with to Savageaux Tim

Timothy Savageaux

of couple A questions here.

your stabilization got NSE, seemingly to there. going Anything fair reconcile I'll fiscal conflicting on a a QX. First, and trying you of in there would QX that part or you? bit I'm year commentary I where the after for seasonality And X follow Are reconcile up your have your comments? first you throughout the year, those guess from it in about seeing with better-than-expected down guide growth what

Oleg Khaykin

customers I So you I time say, would where any the, to mean, if there years take was couple it. you out, last could COVID, of take during wanted a supply deliver products constraint,

of to December in So have whereas you nonevent March the NSE, there had almost was seasonality June for wanted somebody I think down last became and are in quarters respect, September quarters, the and you have like, the usual whenever are the it and take stronger that couple it. years, that because product, a we a

and to same range September are quarter, the was, take lower the are it of and see cadences ordering you of higher June demand order usual back the see and December I what times the within the the range. the where traditionally place quarters we delivery collapsing Now and effectively, March and, the with lead the end end generally can demand the

March than just of funnel, fluctuations. say year, it of not I lot funnel but it everything was as call, was the a and see shut not is -- in I way it's rate would all where it's looking it the So down. I'm would a a business. was of high are at this normal booking But of it, same a kind also year we and run think within, we -- Clearly, as ago, the quarter is it's the hell what healthier I following opportunity

level is recovery. conversations, the negotiation we're gradual the So of expectations that to on, going that engagements, to going it continuous leads see

when The down. driving of down. quarter And also, quarter went NSE new pressure finally by semiconductor we product a I companies, first second business service half are in element come the a introduction increase about that and lagging starting is to it providers. the spend. think providers calendar but our And after that's kind the of the element the competitive and in NEMs the lagging about quarter-on-quarter obviously It back was of the lab retrenching service was the seeing second continuous it's year,

last And I and though positive a solutions. mean new lead take the business, but our -- we revenue, think for I seeing longer even about nevertheless least, it's that opportunity feel then not our the things the respect, enablement times pretty booking momentum. service are that software good business, funnel go momentum the on the we the in to from those into And

Timothy Savageaux

it. Got of of side. outside provider side terms either what NEM for contributing data is kind follow-up, on inside to around you current I the Viavi? seeing either know if XXX-gig this this or funnel, connectivity, center, And improving high-speed don't the are or service trends But the in

Oleg Khaykin

now center. but to XXX right on data mean XXX gig. centers. and as norm, to lot a there's But XXX interest interconnect test discussions So seeing quite -- of been think there's production, that moving a what and It's mean a mean gig we've selling not there's I sure to into early the fiber with in gig so remember, so a with the the there's for actually. the while. operators happening we it's I would I are tests, going still data much from XXX there's gig how operators. of that's XXX lab and -- an is the although very call now, various lot lot right a gig I play a now I'm in fiber testing both, of I

drawing I a is too that a And XXX little is something the out. talking far But are gig maybe is some on know, board. don't terabit about terabits.

is testing Because gig feel now, what's third for data game for without that, good and XXX And is some providers, proof-of-concept though strapped when comes shipping bypassing they more they if the lab I also network. stage. called interconnect name want the of the, the even in within those But grab mainstream, the providers, not it's providers would very while usually they today. is is gig spend it the the area But service liquidity. is money. tight this this really a entering it The idea it's been XXX call service parties, That's -- cash service business. to for with and are really their now hyperscale select around are to that directly they can can centers one right

Operator

Next, we'll to with Michael Genovese Securities. go Rosenblatt

Michael Genovese

Oleg, I want questions. to up follow Tim's on

for spoke of in clusters, with about we maybe all, XXXG inside data were think I that that wins there center you instance, First the AI design thought mid-quarter.

correctly? -- business, Or the are but I it's understanding was driver driving interesting maybe it's ahead there? ourselves mean maybe of Are future. an my we the not current understanding growth that we for So

Oleg Khaykin

the usually they lab produce But to interest to -- that. of was those I are the and we a least and using But second, that's -- modules seeing at is the systems. we in systems; respect. in produce is are both. much is this do selling that think NEM that Well, design about equipment quarter I in when talk -- this end-market production demand don't this One mean a that wins, it's for

Michael Genovese

I that question. to any the funnel because that NE one. have ago, improved And NE, is ask quarter crystallize the would and Tim's just follow other guess down that and for guide that in the heard be think from upside largely want opportunities other want my then on I question months sequentially generally X I in is the I NE I and the what business cable. to greatly is Is But I right? And just June up versus like, Okay. of reason. of seasonality not even though came X follow-up

Oleg Khaykin

the we their major purchase. clearly Yes, mean, wireless would some that's doing came pretty had but annual much say NEMs right. And cable, also I upside, I

year significant have take We various major at during several NEMs the that deliveries. parts

Michael Genovese

at if mean a what this And and I'm a guidance the just quarter Okay. got 'XX and strengthen then year first know you XXs wondering, giving there's and should was don't is. it But the year. is billion sense I cents, X-year non-GAAP that last then than below was billion time guide it $X.XX, question, a throughout unless I my the CAGRs. you're things $X.X we've in $X.X and the and But quarter then of more just give

like could So I you other? you sort this X do the of thoughts mean of in between looking those one any envision more year kind or comment, Or there. years? If

Oleg Khaykin

Yes.

strong end the the if I mirror then thing. our like look the fiscal right? with the like half it gets year you of you opposite same to at usually, it So now X start year-over-year, of it, in and weak. June, in the take mirror first it's image, the Because way of up So kind images recover, year, continues as you ends almost

you We we So from about $X.X beyond right. but XXXX -- scenario. -- you're operate think if to mean fiscal purely quarter. slightly year billion, But certain we above as was a X have cannot our I see

a taking year. year a let's and look conservative this of image prior we're hey, be, So the say, will say mirror demand-wise, fairly

our smaller cost are structure outstanding a share So the would much operating with lower entry and But year. of now the prior velocity a doing count. we velocity to it equal be fiscal exit

So to at even going you, see at like line, that you right? to roughly on top leverage it, you're financial the operating then overlay EPS up shows And nice level. the okay, flattish growth and a

upcoming 'XX. about fiscal thinking operationally we're how that's So

Operator

to go we'll with Henderson Needham. Next, Alex

Alexander Henderson

on A Chandler, the couple the the margins improved been Arizona benefit production operational stuff. of now feathered just OSP? fully simple of Has of out into

Oleg Khaykin

sure. Yes,

running So in is now production. Chandler

now as absorbed. all being So the start-up behind it. are all volume unabsorbed it. yields startup the optimation, expenses the and all are costs increases, And behind The it's

whatever drag behind time is us. were So of we now it's gross the clearly ahead margin getting

Alexander Henderson

fairly in June the margin is that to OSP in on side? production facility So September stable

Oleg Khaykin

yes. state, steady already It's

Alexander Henderson

Perfect.

quarter? June the Second, that done, cost-cutting moves in you've fully are the those

Henk Derksen

September They will fully June in be are the the in They partly quarter. quarter.

in see impact, September will you So the the full quarter quarter.

million $XXX of, OpEx per planning we're quarter. it, with call for the $XXX So quarter million, September levels

Alexander Henderson

obviously, some forward, the run going that's rate And it? seasonality to with

Henk Derksen

recovers, costs, but should rate. it, Absolutely, with that some variable revenue you as seasonality the as to run of and some think

Alexander Henderson

And OSP you've the baseline? talked below baseline, point a can and you'd we Or then on at characterize products we're it. counterfeiting on do Or you where how about whether have the these characterize are we're Historically, spikes we side, a at that? above baseline?

You're talking normal from absorption. because about kind But it last being it isn't baseline wasn't year therefore, above down of here? to -- it back and of we're

Oleg Khaykin

has up when I the terms of you're about over Well, -- think baseline gone right? the talking years, right? the not a So cost, talking revenue, baseline, the in you're

Alexander Henderson

but... Yes,

Oleg Khaykin

talking I'm So revenue. about

countries are are reinforced also have taken of pulling several not further they delivery we in this the -- but back, a that So below it's a think years. On all past stimulus a I hand, fact. one the X of year, baseline lot lot has A it's running ended. back, believe pulling only for of it's fiscal the the products because X they of the

to have that down all they now So burn inventory.

less. So hand, on are printing one they

operating it's the On drive be X back leverage significant time see the half, we in of have obviously And equilibrium hand, for to this -- they businesses. our other some year. by anti-counterfeiting should end demand, be probably taking a And think consumed. the will the in them second taking calendar beginning we should we of inventory recovery which that's

Alexander Henderson

do baseline quarterly But the think in counterfeiting you business what the is?

Oleg Khaykin

around of $XX billion about seeing about to kind the are $XX running million million, I end higher closer and business $XX today, million. base $XX we from think normal, the

At So long said up was we in seen kind we a end, this to $XX the base. demand say million the $XX I've higher is I'd the million. time. of now, Right get lowest

Alexander Henderson

Okay.

normal? million around baseline is the $XX So is

Oleg Khaykin

About yes. $XX million,

Alexander Henderson

we correction once you business? that back Which should in to this through get get

Oleg Khaykin

Yes. the And fixed-cost you because business. almost line can it's imagine, materials is bottom everything with the play a pretty drops pure much as this of exception to

Alexander Henderson

that -- operating it's type of what $XX margin at And million? level, at

Oleg Khaykin

-- got the to take and a we you business combination the when anti-counterfeiting. of baseline Well,

we in into of get of in firing XXs. the all we as are the what, mid, when possible into say, hiring So both I XXs? low the cylinders, shape, -- them get worst them both When are

Alexander Henderson

Right.

is range, the So the that right? the -- excluding counterfeiting, baseline the higher end XD at on of sensing, higher

Oleg Khaykin

We out. be steady don't XXs, in of break it business full should in Yes. say, you the say high you unit. state, when I run I'd for But the kind would

Alexander Henderson

more One question.

So clearly summer. of seasonal uptake the pretty they sounds back weather. it came a quarter a to the June pattern strength cold which They of very the is pull the the deploy seasonal tend and in as spend summer, like cable, around the and into result over

we into cash most deliver to cash certainly half. in As the pressure under the see think I -- going are I enormous quarter, has deliver telcos would improved they're flow. that go to that fourth mean improved back significantly AT&T promised flows much

fourth quarter by of as we're improvement that at of cable, risk critical course disappointment risk at their a bit primarily driven we a flow. back fourth quarter that cash result for are little a getting So of into here on them the seasonally over summer, pulling but of them the

Oleg Khaykin

is they the But the spend right Well, equipment mean I CapEx remember, want flow construction. about what and I that. gorilla their say XXX-pound the cash they you're believe don't on flow that cash to and in do.

they're remember, if they And they do to couldn't it, year do nonrefundable. months X going NCNR are non-cancelable, what pulling. So ago contracts, it that's of had because a they

So to have it. they go

us OpEx got initially And they hit. that's all what shut So down expenses. the

keeping significant Right about you network relatively by them giving but just they effectiveness running. maintenance, behind, the it's now, speaking, the what network think on if it's elephant's a on pimple the operational spend --

year area do capacity. a money out the same their was to pocket, to rate rather So to are what get drawing, already it of I ago, adding at though looking than the they're one hole not are think installed as they spending we from spend that not the they this which even the they but to is a have money, in pool -- more are burning it's not

that's So I to think where trying spent. the get money new primarily equipment bang But they see you're new And more right construction. do what for from. spending I we benefit on buck them them is buying and doing already

Alexander Henderson

appreciate That Okay. that good sense. differentiation. makes I

one half at the half When the I last of want Street's kind a could. I band, but Or you question, it? the like that beatable? guide, a into you X.X% of you us around X% feel do think don't if next you give Can those back Or out and to year, they're the in sitting X% of And you want and are if do the look think Just first year recovery I revenue growth, to potential you to some challenging? do attainable? $X.XX. reasonably they're tone little that easily just know

Oleg Khaykin

it back. really of to to on angle competitive know year, think recover, strong is And is well. mean cannot kind I the forever seeing do reduce is going the strong -- continue depends do in year. Mil/Aero we our -- they production business mean, to at I We the it. we their say much of to mean first getting NEMs but the the especially we as of know don't mean there I'd continue pretty calendar is half of recover. I next and business spend. R&D engineering think second semi to half a and I anti-counterfeiting I going we visibility, actually have the we are mean that part right? calendar

that is of calendar how the to do -- providers thing the in year. is the wait and So that will the I to second half only have we service see aggressive

be are conservative, to bit could thinking the then a roughly If have flattish. back you they be reasonable. are then you and they growth could projection spending to if So start money, more got -- then decide getting we

Operator

to go Meta Morgan Stanley. Marshall we'll Next, with

Meta Marshall

to SE spend Maybe on a the I business. wanted just second

customers. kind little right expectations. then a just question. more Obviously, more that adopt in And have set for past kind you customers? the are a valuation are traction for just challenged space to of the wondering, can tough more products guys likely this people's a kind just more in little maybe drive maybe revenue You with bit of that are second customer I'm in would those? I bit now, a kind been your expectations of with of has help Or environment, a those with with M&A assume reasonable. elevated they help upside number of revenue less products had that seeing can

view it kind does the you change So landscape? M&A how of

Oleg Khaykin

Sure.

preventive X, our had within the So about these actually a, significantly. going R&D, reduced architecture more importantly, are very focus going and of say, is offering the feeling around to product where -- days. automation landscape. pretty around kind forward. automation, network It's a years with the in of been product that things the have your area the strong retool existing the artificial restructuring. AI which spend And invest good we I'd and, operations we the helping is intelligence, business we to Ops, X maintenance center And -- SE where we you We today

we are which -- the some confidence me heavy some opportunity. seeing is good one-off pretty We give winning would market, traction, are that this against and pretty a type in hitters very not

to going is million on, opportunity roughly pulling to away. $XX been So it. the become And million Pretty gaining of we see to -- point firing has -- And the kind declining ago. every -- pretty and have all we which SE finally much years we X do the by this same it's is flushed business, X, has all through much year, that year which overall. in feel it this now, from contributing a start finally the $XX replacing gone it's legacy to we've momentum this all direction. around of And was

exciting the we respect, success So story very to providers both we think our achieve on enterprise some tell. that and side pretty they on the coming SE in And service in years. could good feel business that has

quite there's very seeing only and are. environment, On liquidity. inactionable. I I mainly sudden, what our what still mean the But we are all we know of M&A opportunities, that transformational M&A fairly handful are a software, I sizable think And on big is interesting a interesting. they're clearly, companies, lot those a mean the SE business. of complementary software to lack of side the of all it's

respectable because offer just liquidation company you repay the a they gave seen us. were laughing for they at a they of X/X where, example got carrying. that and sold ago, I'd a walked of at a away They them ago couldn't our year one the offer, year saw we give we've debt All very just and sudden, we

that interesting technologies can up you there So the of a very basement lot as now at is actually pick tuck-ins. bargain

all what sudden, a below pick looking the And buy. this a becoming now, offering aggressively of can make your modules are purely And these opportunities. of is make. you right it's up software versus for So obviously cost seeing are we and at we

Operator

go Ruben to Roy we'll Next, Stifel. with

Ruben Roy

any characterize geographically? on Or of And also that that? again, to across your it topic of Oleg, in is of customers? how geographically, broad-based would you I just you seeing larger broad-based areas? your centered improving relegated sort is couple. sort of Is it customer specific base? had that, are conversations, sort the Or a

Oleg Khaykin

coming not Mainly I'd were are fairly they're mean I Tier kind more back, are conversations private fiber many deployers mean the with customer now a mean going Amazingly, actually doing. companies they're also X I intense say and I equity with one-off. be like telecom It's what is first conversations at cable. them there's the funded clearly, like the broad-based. of things Yes. to of conversation and they the providers. but to pull back that. like looking ones also,

road back, production quarters organizations, think they of to they I the need because deliver back on their engineering about two And and their after are to the customers. map pulling products with

we're So back. that coming seeing

more between providers, The still. is much So cable quiet the kind I'd service would the, of say and I I intensive. customers the is engineering and think, say, wireless, talk CapEx fiber

of the But think the we is got. think the do going be still what coming second probably half digesting back I year. they're already to in they wireless

Ruben Roy

quick just follow-up. Got it. And a

or then even It discussion see the But in we stuff. improvement starting of Just semiconductor companies. lab bit equipment maybe some on companies little the spend. a like still sounded clarification the from orders behind and a of to lagging you're are field

you stabilized to current again lab then down and it are stabilize has be in quarter? guess, and... I the already expecting Or So

Oleg Khaykin

and No, I had And in year. lab quarter, recovery was June. bottom the the throughout to some quarter recover I it March for the think expect it continue to

Operator

concludes call. thank That today's you and your We question-and-answer session for today's participation.

disconnect. now may You

Viavi Solutions (VIAV) 10 Aug 232023 Q4 Earnings call transcript