VIAV - Earnings call 2 2024 | Viavi Solutions Inc.

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

Operator

Hello, everyone. My name is Rob. Welcome to Viavi Solutions Second Quarter Fiscal Year 2024 Earnings Call. [Operator Instructions] I will now turn the conference over to Ilan Daskal, Viavi Solutions' CFO. Please go ahead.

Ilan Daskal

operator. you, Thank and year everyone, Viavi second Solutions' Good earnings welcome call. fiscal XXXX quarter afternoon, to My Ilan name is Daskal, Viavi CFO. Solutions' CEO. me with our on call and is And Oleg today's President Khaykin, statements note about Please will call include the financial performance. this company's forward-looking and These that actual from current could materially estimations. uncertainties expectations statements differ to and to cause subject our are risks results provide in encourage during guidance particularly the filings, you and report SEC including valid are to We call, statements, factors this review those described only annual that today. forward-looking our we most recent of filings.The risk as obligation note revenue, no results are state undertakes discussed to unless all Viavi update these also otherwise, except non-GAAP. that, statements.Please on call, this we our slides, on Viavi's reconcile financial available as release.The recording on and our GAAP available release financials usefulness which tables, by and as are www.investor.viavisolutions.com.Finally, p.m. today's recording at We today's to make discuss supplemental our include, call earnings non-GAAP will X:XX well these historical earnings preliminary are we and results website their limitations website in the this Time the to XXXX. review year fiscal would evening.Now, like of of quarter second the results I Pacific Net our $XXX.X $XXX range was million, to revenue million guidance million. $XXX of the midpoint the for quarter above was of which a up XX.X%. XX.X% second year-over-year Revenue and range for to X.X% high guidance of exceeded was X.X% sequentially end margin was the fiscal down XX.X%.Operating by and basis was on the quarter of our on and basis QX was of basis on sequentially of was basis XX results end increased and to range was business XXX points from a our the $X.XX.Moving down basis segment. margin year-over-year $X.XX up year-over-year by and at Operating the guidance down quarter $X.XX prior points.EPS a to our high exceeded $X.XX $X.XX on million the in the $XXX million, for to fiscal is $XXX million. guidance our at revenue above $XXX.X range came of second NSE midpoint of which quarter was ] $XXX.X revenue [ weaker On XX.X% quarter basis, due a is XX.X% for service spend million, by providers.NE a NEMs spend to lower was and revenue [ the year-over-year by decline. primarily year-over-year CapEx down which ] period year-over-year last was is basis. revenue and SE a $XX.X margin quarter million XXX was gross which lower year.NSE from the basis on points for same the grew X.X% XX.X% NE a and due basis combination and period primarily is to same which XXX of was gross decrease the lower from year was product points a last margin volume. XX.X%, mix of SE year-over-year gross an basis sequentially of margin operating is year and same and from basis. from last XX.X%, X.X%, points increase which of was margin basis basis XXX is higher which an of a points XXX XXX increase a period on points margin product benefited the mix.NSE's was decrease guidance $XX.X NSE the was points down on to margin was was product basis due which of operating which revenue period which same a XX a last came high the guidance $XX above of a midpoint unfavorable year and to end operating of range XX.X%, the of $XX XX.X%, our and primarily our million, million and points at million points decrease margin in on basis the was year-over-year basis. increased is quarter sequentially lower gross fiscal at X%.OSP volume is range from was to lower basis.OSP XXX XX and margin for year-over-year mix.OSP was X.X% of second X% basis XX.X% to OSP flow. range cash operating balance of the guidance to exceeded end margin our the and high of on sheet XX.X%.Moving same million at investments year. short-term compared in $XXX.X and last cash of $XXX.X the period end the Total million QX to was balance of in purchased convertible of XXXX activities million. any in versus year.We shares was March from for the the our have not same the our amount million $XX.X the to operating second quarter Cash retire of in we notes stock period flow as the last million plan quarter $XX.X outstanding $XX.X the for were XXX shares our of last we the count versus lower year share million, down our in same construction shares period million million shares, our $X.X which million million when to in $XX.X Chandler.Moving completing quarter guidance. quarter.CapEx on the the and is new XXX.X quarter was from facility versus second XXX.X diluted in was for guidance quarter for the fully the The prior

fiscal X.X% million, as in of minus with third XXXX, XX.X%, expect quarter be be tax and a we approximately million, to be approximately is around the plus minus to XXX margin XXX million. minus and the or the jurisdictional For $XXX of between million, million be million of $X.XX.We points expected result and range quarter revenue $XXX to an is plus EPS revenue NSE with $X points.Our expect be to an of plus or or expected basis margin mix. XX.X% or plus points. $X minus for OSP are Operating $X.XX expected of basis third operating $XXX or million, margin $X basis operating $XX minus revenue plus expenses to XXX

count shares.With We million XXX.X the expect to net And will Oleg? is other share income of around and reflect expenses that, to million. be approximately the to expense call turn over expected $X Oleg. a I

Oleg Khaykin

guidance, Thank revenue you, came the second first slightly call SE in provider Ilan, end offset we above and product service was XXXX the The near with stronger by fiscal with EPS lower Viavi. of the above margin XXX-gig to high weakness fiber Mil/Aero in stronger and expect spend. of mix products. our continued term, for midpoint your driven in Starting and richer demand came stronger and helped welcome than NSE. earnings by in the XXX-gig OpEx. guidance, above areas quarter In the revenue to demand expected. our The help

guidance the midpoint came revenue fiscal range. second The NSE of our above quarter in

in to year-over-year Although SE to slowdown ahead, spend.Looking XXX-gig products production by continued by driven production, in we well, defense a by March for bright to spend.Now of expect spend products telecom of build-outs for SE saw slight and for the storage. declined higher sensing.Looking of driven results This the providers, growth products. service demand our offsetting the exception to was notable OSP offset and a to anti-counterfeiting OSP. OSP or and weakness number products.And expect be defense continued in 'XX, for a service compensating major at we the XD service partially has in down by guidance growth stronger spots.Fiber in positioning, basis, basis, range.In decline our slightly resulting demand provider there in strong demand robust PNT, computing products, anti-counterfeiting Aerospace demand service provider fiber a continued strong on and soft, recover turning the driven end perform speed to the weakness the lower near-term operators. demand. year-over-year on with sensing XX seasonal was expect be calendar avionics came in continue demand, a Overall, year-over-year Fiber XX we to North a provider driven primarily timing NSE American by cable quarter, decline aerospace products the in OSP XD offsetting the despite and XG ahead recovery quarter and continued the and revenue December declined the from new and with navigation growth strong decline by

in and my and this XXX-gig leadership outside the customers XXXX.That a the faster technology against easier providers, and my gen accelerate the products development driven NTIA critical need half the and driven past support.With was like Viavi Open warfare.In as demand seeing test Viavi's ramp to lab for is operator now spend the versus and upcoming production O-RAN.Our I'd spoofing empower XX an million are grant to to shareholders back service and in Q&A. the new the such of recovery by and and by RAN.Recently, create $XX.X components. turn and for middle a X the I next appreciation employees, demand to the into Open their our write managing cable downturn. it aerospace diversify and awarded protect RAN spend award and technology out for to service challenging and infrastructure year aerospace technologies it advanced defense strong and team calendar cyber to and of second express to XG, that, production growth our in reflects XG will to seeing providers avionics XX said, assets jamming, telecom environment makes This We cycle to conclusion, Viavi defense in strategy or years expect thank by the

Operator

Instructions] the Michael your from of Genovese question first line [Operator comes from And Rosenblatt.

Michael Genovese

the [ 'XX with sounds It All I provider market, question year. better sure on to got getting cable to just weak right. service of there I understand be ] make the -- just end of at saying is -- all calendar expects comments first the like heard the you're

ago? hear out? that stuff did did First right?And the the gotten was I carrier in that X pushed Has of X last changed consistent with months expectations your Or secondly, stuff, telecom the months? more all,

Oleg Khaykin

somewhat like look, the second say, is, is what in half We service from me always know quarter. providers. let to going so, Well, reality June will know the stronger don't look I be stronger. the the It's demand

more but as that, they're it still as of Beyond because as a we [indiscernible] getting as weak.But flat of I think it's I it's not pretty think are kind better. the I it's just getting not see. a coming mean, slightly the think I It's any to little I to worse, still have to dramatic liked in, would -- clearly, would seeing recovering point prefer is -- But

cable. area the is Now, stronger the that is

as in, you pushed architecture in is X spending the quarters. were being know, the there in probably we delay DAA start by And as the or were fact, year.But by of such, first half driven In expecting some technology X cable calendar the deploying coming some by vendors. readiness of ramp to and

ahead slightly absence feel which got quarters better in? mean are quarter We're believe they a in -- But really our going lot balance guiding operating a quarter it's up I The just better out. because to provider issues March big in The were slowdown. dollars orders. -- about coming. skis even feel environment seeing the quarter So they caution. to X it, March of do service that why on as address know a seeing we so expecting I be start want we or was see I coming of to I spending are is I Am I just sheet need [indiscernible] pushed recovery no. of flat going they what's That's of answer yes. in we we mean, about still don't the answer a is get mean, the slightly it think we already is were to some significantly.So before ago. I abundance the on? I'll I got when than down.It it.I that despite lot take

we there did with think AI the reduction seeing seeing drive fiber second products least pretty our enablement we're changing. But deployment, my anything things Now, at the what towards like interesting But may particularly I capital see telling pretty there half pause is avoidance.So not OpEx crystal get with on new one instrumentation, it's service will we which thing the are on last X traction dramatic architecture, good I'm things that ops, of a the is better. traction. good at -- me, is point, year think I seeing ball this Maybe a months. and

Michael Genovese

I this And you've quarters sort interesting. question, measurable lab revenues fiber or Next of X X had XXX-G there. of probably in either sounds very production think

be or us that sure be is how but what that, any question, you much on whether any the of could â€“ that give this color can now of assume I helpful. not answer that? very it I'm increasing. And future would sort would represents you So in either And

Oleg Khaykin

mean, XX have -- a network business, let's production the so see. any I SE. I would enablement Well, -- say, the and on about think our we -- I If the

production includes I'd XX is our about it about but also XX%. enablement think it's network is, XX%. So say -- I wireless,

maybe that, of that, I'd lab production computing XXX fiber products, June the I'd by really compute the ] the and and of a what's of and been the [ slowdown, is with kind all around it fiber is And high-performance lab of quarter. now recovered. bearing storage that fiber that XXX-gig kind so driving I the roughly and it's business, storage driven it's computing say mean, demand. saw of think business is XX%.And -- So bottomed was recovery and out right?So -- the weaker. we so really what half of say, right, I But

continue it's all, and of to First grow. recovery

line. the equipment. modules I ] recently data modules trying how think telecom building more because so to that, many these think also understanding same and who AI bought.I players module center coherent we're on modules still [ much data million the the game, building it's the buying using been ports are equipment the ] linked but it is equipment truly for not in on like AI spend they is now terms probably [ telecom are being same there I've of ascertain CapEx how center early to that They're the in exactly applications. use for the

Michael Genovese

forward, Yes, be relationship. it that interesting -- will sounds like to out that going that figure

can't question me the good. wait can because why Last good I'm the understand ask were seeing sorry time. quarter. help reason The revenue guidance -- I that. for to is, lower. not the you So update me just were like to the take much is guidance to question, which The for EPS revenues pretty earnings just I'm was I'd the still a But get -- an on so Ilan good.

explain could that you to me? So

Ilan Daskal

for the Thanks question.

the a it's second than from seasonality know, kind as slower So, quarter, fiscal you of perspective quarter. usually our third

the think basis, think you it, of But calendar you really some year, of have terms think the beginning you kind kind with of of of rest building you year, also when the as associated about kind that it earlier, if then, of fourth consecutive about incremental there's it's the when quarter. drives a employee seasonality, kind when related -- the up and Oleg in So is of kind OpEx. the including traditional again, nicely mentioned on the cost about of

Oleg Khaykin

Yes.

margin cost So the a it's the that accrual there's statutory first XD And you calendar OSP, of cyclicality sensing. quarter the a a year. of happens of lot in notice lower on there's [ ] because

of is a half lower year the much fiscal second utilization. The

So there that in under more absorption is respect.

strong. back, Now, the that all not is offset quite coming it, last anti-counterfeiting but And it. it's some quarter, the so said, sensing of of XD was

Operator

of comes Northland from line Savageaux Capital. next Tim from Your question the

Timothy Savageaux

Oleg, provider us can your you times fiber in test? remind of service lead

Oleg Khaykin

months say, we around. get X turn it Generally, if an we within order, I'd can

a within quarter, more all less. it's So or

some switches that. and fiber scope can we have say, and like within, if you it's like for them inventory, things products turn like where quick, very if a in X whole some like Now a except things months. X we MEMS, I'd it are -- bench, products where buying you're for example, like, to a things have around Other that,

Timothy Savageaux

customer And you provider with inventories where would assess product? be to your service your

Oleg Khaykin

[ it's Zero just all in ]. I mean, time.

Timothy Savageaux

a both know, we this with And I reconcile some part Nokia you. as the have early I 'XX. these plans point been asked reason reports your consistent for here hearing guess some peers, providers, at And the I think drumbeat typically, service throughout of early I of it we're don't seen bigger bigger to that, of the you is I'm I just Corning, -- project-based could be times, might here you what indications from some wonder? lag as kind of the things, in well what's there of of lead trying lead from but because pretty And increases

Oleg Khaykin

No. I so. don't think

thinkâ€¦ I

Timothy Savageaux

the And seeing same of you things? some are

Oleg Khaykin

decide it they these them an they're building, to It's do a they guys order once to and project, quick. their within tell going us, to X months they And they get we're when lagging. because think ready tell start just they're once they may place don't -- and tell equipment. pretty before I they

Operator

Our Company. next Needham from line question & Alex comes Henderson of the from

Alex Henderson

the for give March of the you the sensing size the bit granularity XD quarter? in us XD expectations quarter and more the Could in the a little on sensing

Oleg Khaykin

half comes March September December so X/X and in, of the quarter Alex, and September annual in generally, the quarter quarter. in, sorry, in the sensing, comes in Well, December -- and the XD the X/X June comes demand and

in million So ], million $XX [ quarter. I'd around $XX quite the we're [ say ]

Alex Henderson

or what, $XX million in quarter, so? you're the so, looking at And

Oleg Khaykin

quarter? This

Alex Henderson

For quarter. the March

Oleg Khaykin

]. it's I but more $X.X than a [indiscernible] about it's million. see plus/minus [ million, -- million $XX maybe little think Yes, $XX let's -- around its

Alex Henderson

plant And fully in can you operational. It's give us an the update on now Phoenix?

correct? All improvement the of that of in the benefits point, at the business there is cost this of counterfeiting mechanics the

Oleg Khaykin

Yes.

so running -- that's are inventory. of we people you seeing where know what So now out when are

and a spot of So seeing soon you like you popping up, as unforecasted can. start ship hurry orders lot as up

these and the telling starting of deplete things inventory more of big channel. But the we're up. popping They're to types is to not in it's So see us orders. more starting itself

March quarter, were what thinking maybe we bit the even ago. demand we're a in from X months So expecting little stronger

actually sensing offset that's of So XD the decline to some helping us quarter-on-quarter.

Ilan Daskal

Generally, it still And growth have for is fully operational. additional there. we more capacity

availability So not it's of terms can of terms the not get. in that there -- in it's full utilization, yet we

Alex Henderson

not full right not Fully fully -- [ ], operational, of capacity, but course.

Oleg Khaykin

I to million. the year. let Alex, you million at quarter, XD end thinking $XX me in closer a about sensing give $XX was going Actually, is correction. this of be

Alex Henderson

back on clear. be to just products, going XXX-gig So this to split

side of talking field So how this given we're there. about double-digit talking it. quite many products equipment low, that the about go through per I is in that's process. port deployment. going sampling any It's -- of production ratio assume but into right? the ports predominantly ratio period, is a measurement the and can to I not of kind process test going a into And you're mean

So the of high that very total number that relative go very, is equipment, to the right? ratio ports across

Oleg Khaykin

tests. do So you Well, production, you it right? varies, I when lot tend mean, to a more start

So a ports let's of you $X for, million lower number equipment. have say, of

test. with comfortable, curve, you -- start you you and -- get you decontenting experience As feel the start

you time the tester. spend So a last on

testing all building they intensive production China So these yes, per of in goes comfortable, the and testing reducing more a more module. doing are more mean use when start they extensive places factories then and generally modules.So you get lines. they predominantly other have or start, they as equipment I And into these that less the testing. sample

-- $X.XX out one project. per And module we capacity. targets.So -- CapEx I one it's in per So -- have module it case, that's kind continuously about did of gauged came we've mean, of why of moving

you're need line. a if the port, on per So about doing $X.XX investment you capacity port

you still a only I So a, mean, more. so one mean, that let's differently, to -- I $X.XX, think data invest.I and it spend it's million got so mean to it $XXX,XXX for about early out I week so units about it's to -- do capacity but you build they that other you line, probably say, X.X works tell. very point people

Alex Henderson

Yes.

haven't can this seen what in and already going products ramp AI two, that meaningful point. a both you tell, any very really we've InfiniBand NVLink contribution And from I at significant production into the So clusters. of from seen

we of that then that we primary So therefore, rates and demand looking ramping, should to and move and driver shouldn't sampling into of we second as growth percentage? sampling be the overall the think as the rate the third go AI the curve of the phase production actually up, is at opposed

Oleg Khaykin

you're significantly. circuit wouldn't I Well, what coherent actually you're [ to is optical that you packaging processor. test integrated everything dropped they remember, say, far, They the InfiniBand, alignment quite -- did when semiconductor more is were the first go ] photonic just you're that the aligning centers. just building think And use the building like, tend redeployed thing data more lasers they about where else. because, those and same putting if our telecom you it, redeployed of That when that lines That's on really the module AI equipment. doing assets to business, with with actual also

Alex Henderson

there didn't be those very absorbed. Has build obviously areas? piece constrained telecom Or -- that there large just in that any inventory out they as has back telecom of weren't been your to that that types the products? because something a There's glut a for on much second. happen Just going in inventory to is product of equipment

Oleg Khaykin

say, the no channel. in of XXXX. turned much get kind calendar off, have quarter So I I'd December mean, we of orders the inventory pretty

there anything, the is a there is be inventory a a getting tooth. wear So lot in needs tear if replacement of we and field lot long of coming in to And the a up. that know and

they They signs would I what replace, a do that know -- need think -- say, times." people I terms, "Hey, people be is don't I we're it. afford there the they respect, can be think will to -- So in the So to replacement. will already lead I massive mean, know just I seeing be if would I that need then in what actually don't second wholesale the when a we'll But like the replacement.So of a -- ] just they'll don't just more half assets. types of sweat have of have I the of do flattish beyond of these cannibalize. popping kind things up. And good more chance kind [ to They see months. swap will or X and that visibility say I that assets. XXXX But will kind the could

Operator

Your of line next question Stanley. comes Morgan from from Marshall the Meta

Meta Marshall

of you the were Oleg, more spending cable earlier kind encouraged you year. of about mentioned kind in

Just just that networks trigger given that wanted longer. to a think the their that is to you some kind said bit of the to Just comments wireless hotter, running get investment? on side, kind may are the what of that X.X? a just Alex? take sense, you then, flip of DOCSIS Is little is And

think you [ or early ]â€¦? do what wireless I the Just signs mean [ ] kind of be of should

Oleg Khaykin

So cable, look right, -- so if at I first.

June. we expecting up technology any been that and then name know in happening. core and going actually into some popping think of to development I'm the be not the were From heard, orders It names, was delay start the what there's -- some quarter a by but it's March providers. infrastructure we've to accelerating of going in we I leading

to getting terms in X quarters ready think needs I But and see X working.So being are think by actually I pushed where with we be do is that's software that cable. to cable this everything the I year. happening So of

was On your the -- part second what question? of -- your

Meta Marshall

the on Just side. wireless

Oleg Khaykin

yes. wireless, The

-- and with know and AT&T. the seen all deployments Verizon we the well, Ericsson, T-Mobile, you've all Samsung Nokia, -- wireless the So

down. has slowed that So

CapEx of deployment. on people is the So less the sales lot area of field on a the related see to spent where a And being to we development. equipment. are seeing product we -- Where is kind continue

the North XG. And of in of more now up.It's some CapEx I'd infrastructure popping decline the significant and elements America. seen is not wireless bit of in have the I generally, Europe we're in aggressiveness, muted for a -- the we think terms just seeing XG R&D So say,

that -- the is I few But for it's spots right infrastructure India well. deployment. doing wish is better I the Now now, said, think India demand bright clearly, were -- in margins of India. pretty obviously But one is

Operator

question comes line next from Your the Stifel. Roy Ruben of from

Ruben Roy

Oleg, I follow-ups. had questions, just a quick couple of really

think year. that that you call a still of conversations, of a I bit that? year, But a this ] the are you the meaning saying should a up I think wouldn't [ the seeing visibility bit and it those prior any service still figuring I you still talked what I talked terms having giving bit this budgets that's answers down usual? right? [ but it of So can driving of sounded September also just out quarter, about you've hope, of not some in -- out for into then any Is service provider, Is in you've their decommits But normal would ]. that little sort little seasonal turn questions. conversations? your on thinking to about June to Or little me I be last -- like sort like imagine to providers guess, and detail that other you're case. of

Oleg Khaykin

see say, normal right? the because service happening -- So generally, too mean is this churns -- makes don't may the coming there's providers, maybe I -- we mean I cable they get of September generally terms year or difference to bad now, than their jump XX% build-outs problem. in actually want -- there But it is what ] healthy and I that. doing things far actually, replacements [ gets another like year, upgrades released, are ahead. from whenever a a and big what I What networks.And -- which business. be least in is they I'd say the churns it's but ] like, stronger don't like So more, as like no I I'd drives in and September this right this [ at Things to business, time, just go see orders very and pushed, think

People capacity is keeping upgrading functions business network. and not the the people is pretty or They're running.What are well. or network. things going ongoing step doing I'm network their the just So seeing expanding maintaining extending big the yet

back just I will just of -- -- they're these mean, decide to competitive bit don't they quarter to planned, I need to kind I are every -- some launch know to networks. of of cash -- looking more extending ripcord there's providers more do telecom don't were upgrading start I just prefer guys in kind plans the a general see are projects just retire They for cable it.And approach, some get they As their if it. pull at the know that. when their know going little the service I I networks, I bank -- -- and debt.So sector, think think the as at from think I environment the we of they being more and looking

of where service want digging burning that AT&T, laying do see joy, volume is need or service providers' [indiscernible] -- start area smaller smaller on the are into to and fiber we see piece order a -- pocket Tier they equity but think amount I magnitude aggressively momentum, would a be that annualized XG X, one like funded extending I much finally a So deployment.The data centers an private of just who I in operators on their and to to it's go don't some hole fiber starting of fairly fiber these are they Telekom basis. anticipation of Verizon networks or rural or Deutsche I smaller good ongoing. somebody needing Telecom the network in cash or primarily to just is But that communities.So but coming Tier area X where British scale, fiber providers an area laying to an don't like spend it's a than -- new these -- extend kill order

Ruben Roy

might leverage? do the I to come be missed term? balance expect Ilan. sheet then to follow-up might into you this then to in need And where have for repurchase on I just have near missed Are you discussion. you the markets And a on the quick back that.

Ilan Daskal

Yes.

probably [ next about of continues the of part overall obviously, be be So retiring or -- And on ]. for [indiscernible] continues the it to more, convert we'll focused the the X, quarter are capital model, the But the strategy. right? from X our we to more allocation we'll quarters, on buyback mean, muted probably the it. be next overall X I deviating for not

Oleg Khaykin

retire cash whole a can so road. We way, down it's buyback avoiding bank In we just because synthetic decided converts. a the the dilution some to you're share

Operator

at There this are now remarks. questions for no I will some back time. closing to the over Ilan call Daskal final turn further

Ilan Daskal

Great. operator. concludes joining for you, for And call. today. thank earnings Thank today's call everyone, our This you,

Operator

This you conference participation. for your call. concludes Thank today's

You disconnect. may now

Viavi Solutions (VIAV) 1 Feb 242024 Q2 Earnings call transcript