VIAV - Earnings call transcript Q3 2024

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

Operator

Hello, everyone. My name is Jericho. Welcome to Viavi Solutions Third Quarter FY '24 Earnings Call. [Operator Instructions] I will now turn the conference over to Ilan Daskal, Viavi Solutions' CFO. Please, go ahead.

Ilan Daskal

Jericho. you, Thank and Year everyone, Viavi Third Solutions' Good Earnings welcome Call. Fiscal XXXX Quarter afternoon, to My Ilan our on statements today's note name with call about call and is this performance. is Daskal, the Viavi company's Oleg include Khaykin, will President financial CEO. Please CFO, and forward-looking Solutions' me and subject and cause estimations. that actual our results These statements uncertainties from expectations are to current to risks could differ materially recent those annual risk We report SEC encourage our you the in to filings, factors most described filings. review particularly and statements, forward-looking we during The guidance including provided as this that only valid of call, are today. obligation Viavi takes on -- update also undertakes state non-GAAP. results are no note we that discussed otherwise, revenue, all to unless statements. Please except call, this these usefulness as and as available in release. The these release supplemental tables, historical at earnings our www.investor.viavisolutions.com. limitations reconcile results preliminary non-GAAP GAAP their We today's well slides, our Viavi's website are financial to which earnings on include financials discuss and

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

I down of and X.X% within a of XXX year-over-year prior Operating was the sequentially down which million. above of sequentially results a fiscal the guidance quarter our revenue X.X%, low year-over-year range at of like of third XX%. was guidance Net the the to and million, to to million basis slightly points. EPS XXXX. year-over-year down year $X.XX $X.XX third was down is down quarter a range for fiscal of decreased end Now end basis review was for was was of above basis, the to X.X%, guidance on which was Revenue $X.XX points the on range XXX $XXX $X.XX was low margin margin $XXX and $XXX basis, on quarter quarter $X.XX. from the our by would and X.X%. Operating basis our

on $XXX.X at the in driven was fiscal below revenue lower lower environment decrease of slowdown million, in the year-over-year $XXX and a points a of to was X% period margin as operating the variable range last as is million, benefited variable XXX incentive incentive declined a to Moving lower This basis. quarter which our basis, is sequentially by of decreased conservative and XXX result segment. same mix. NSE for benefited range which the margin more revenue our of year-over-year $XX.X points margin from XX.X% year revenue on of result came year a of X.X% a $XX.X year-over-year SE end which business primarily which lower basis to at basis QX range XX XXX fiscal quarter a NE XX.X%. a the basis mainly for the quarter which XX.X%, our customer margin XX.X%, same points basis a XX.X% gross was on year. OSP's was that and guidance points to by a basis. by operating as period decline. QX at of guidance XX million, last third same million year-over-year gross which above revenue is million our X.X% exceeded XXX period due to million. last revenue QX of of driven gross last on came high is points from results basis. $XXX.X year. for the $XX OSP of period was $XXX X%. OSP X.X%, last in X.X%. NE million, from which gross is sequentially and points decrease XX.X%, year XX.X%, margin last points was spend up was was and a OSP was year, compensation On operating was volume. NSE's of is basis the basis from product year-over-year compensation enterprise volume was third a points for the a SE down million high to of a range margin a customers. spend. NSE was on which guidance end a of enterprise NSE basis that a is reversal is as decrease basis $XX guidance XX.X%, XXX quarter as a basis margin of negative operating XXX the decline margin our well below same which was decline result reversal was NSE year-over-year

the QX million was to for at of XXXX. of the and $XXX.X to flow. cash end flow Total second on balance investments $XXX.X from $XX.X versus cash quarter the fiscal sheet last activities in short-term was period year. the Moving compared the Cash million million same operating in quarter million and $XX.X

stock in quarter. third our of shares any purchased not the have We

million the of million guidance million, when we for the outstanding was from quarter, balance completing same down construction the shares period amount new facility diluted in third notes and quarter the The our our shares quarter. CapEx $X.X prior $XX.X the Chandler. million which the our year is for During XXX.X was the million the XXXX repaid XXX.X quarter our lower were last in we XXX.X $X.X versus for shares, of count of convertible versus fully year million. in share in

Moving on to guidance. our

be of EPS Operating of XXXX, million. the and $XXX For revenue points, to minus and million between plus XXX in fiscal expect be we $X.XX $XXX quarter is range expected XX.X% or margin and the to $X.XX. fourth basis

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

a $XXX,XXX, mix. of tax minus Our for expected million the to jurisdictional are as expenses result fourth $X plus quarter about or be

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

Oleg Khaykin

the continues partially customer segments. environment the be guidance, spend service of market challenging, continued of enterprise particularly end Viavi offsetting these headwinds, with lower to at OSP stronger in weaker-than-expected NSE and Ilan. demand, end you, came In view our providers revenue our Thank demand.

Our EPS product by in of our guidance less NSE with and was lower the favorable lower NSE. range, half volume driven mix. Starting

declined for reduced fiber came field provider, instruments -- was driven in the third has decline the instruments. Revenue American year-over-year quarter, our field NAMs end relatively growth SE NSE with year-over-year customers' basis, several lower cable computing the and below For revenue by by stronger weaker a demand. Decline by NSE softer our spot, revenue storage. revenue demand, service offsetting and in major driven PNT guidance. primarily North enterprise AvComm of on enterprise XXX-gig and business. in push demand driven to was by seeing increase due driven lab orders demand And remained bright our in out for was customers. Fiber of production and of a customer flat projects

conservative a ahead, for notwithstanding, of QX remainder segments, Looking environment the stronger 'XX. seasonally calendar the across spend product we persist to all expect

the end and third basis, driven XD quarter, turning OSP. exceeded year-over-year higher our OSP anti-counterfeiting higher of OSP range. a on results by guidance for demand sensing Now In products. Overall, grew to fiscal

mostly Looking products. for be XD seasonally ahead, to quarter, OSP we sensing driven the by demand seasonally weaker expect down in June

the half with back demand 'XX for 'XX, employees, to customers fiscal our rebound to the the for in challenging Q&A. to over expect products. In for XD demand the continued We in environment my first of my and to and will -- this Viavi anti-counterfeiting in would I their sensing like recovery for appreciation together conclusion, express managing I turn team for it support. With operator that, now thank shareholders

Operator

with from first Ruben of Roy Our the Stifel. [Operator line Instructions] question comes

Ruben Roy

how wondering things seeing. could on maybe ago. an days you like the guess, have quarter we've more little worsened on if same, been of might provider progressed? was relative I It you were Oleg, about thinking as service And sort a enterprise I provide XX the update sounds how detail to

on a end be markets not linearity, those additional any would there. et surprise interesting? across X maybe the quarter So But cetera, progressed, detail how

Oleg Khaykin

if book I say, the anemic America, there mean, spend. know, very in -- service the get mean, especially delayed you bit as even or slower saw, ramping interest the for a that Yes. we And some we of the just was North customers. ship. providers, were usually in-quarter decreasing I with I quite projects of and gradually with just provider being And service anything, they're would which announced, what

side, very positive it's on On good -- some big getting there's the we the enterprise is are space, really a -- deals.

quarter. deal and the of committed at day, one a side, literally, negative these next had slipped the deals and we the when On quarter the the major deals the were any which of to Monday end of for slips the

product. beginning ironic on literally it the we right sense, And you it quarter. it, this gotten deal our also to mean, their supposed end the the after I to And made book we it because end, would just when Had Monday shows they we at no were to take get just guidance. just decided was it it So are at of there the of this manage the quarter, the be the were of middle to really trying very want spend. customers saying since

X spreading now convert down months they are but that are over that taking used me, canceling respect, spend. to the line. customers not the customer going general are what in on as as to we X their conservative are what it the the it is pattern I to in months a say, it individual customer mean take, thing view interesting pushing they enterprise and customers more are not So trying it's doing manage side, The or that's away. quarter the seeing out decreasing they months, few And a well. quarters deal; pushing more still orders, but the product, CapEx is spend still I on let's or the longer. Deals are to are carrier side,

should in the So next got that's of -- the which say truly, through X the say some come I I would pushed major projects, in the beyond. and would to really, last SE, quarter have weeks,

Ruben Roy

a obviously, helpful. follow-up typically, lower visibility be, sort across would really half here, you second that's but half lot or Okay. That's quarters, September, persist a think terms think of quarter. a in you trends to would I you the of not to expect how seasonal there's as typical of about guess seasonality first

just So thinking you're that. about how wondering

Oleg Khaykin

mean for I is providers, quarter, of beginning some the it's they right? just year. them, fiscal Yes. the basically service their of Because driven a generally by September lower --

For -- second half half. some beginning -- of the the second them, it's of first I mean

much orders. either how in money see December they then place left or to quarter June they and then quarter they So the decide

the provider see don't better. of I changes second half, service one the see a for any major Now I would getting

same But the with going of a not cable. the of is we still of than quarter What X, it will of to some approach. spread I remainder the the result, there. the were And probably number kind in the in cable back proceeding that to are players on they're uptick they're the upgrades. that the as the negate September in of up apparent doing going that do it's they is X year is expecting upgrades. for months. And seasonality to quarters rather going to more expecting were 'XX, uptick in all we half pulling became what over second think thing at very to aggressive show over X more more plans a early do they're X the to in calendar their once tactical be One had significant

So service they to, call it, to half, providers continue expect fairly the spend be fairly sweat field first similar the the to just and instruments, what I would anemic assets.

see nodes as introduced. forward lab do be computing fiber next in particularly second technology the the On more better we projects going the side, with to should getting half, and are business, the storage positive in move being

the of and speed. migration terabit beginning in development X.X expect We

being spend So mean avionics, it I to our continues is I PNT and -- expect think recover to design continue the be, this least in a better XG not everybody positive expect part perform deployment. well. have of saw do really A continue to continue I the also don't AvComm will the business momentum. One out. of is major state to adopted the half. that is current thing pushed see significant at lower better being demand to development. intensity mean would booking wireless. the somewhat but our those anemic quarter to remind we do our that the well. funnel to start or And SE that purchase need things years, customers don't I good a respect, continue the on the thing number quarter, prior business going customers, last continue Clearly, drop to in to rate as but end we things that business than The in buy I the mention with seen second they will has last forgot as of in gradually. And products, significantly. side XG outlook. I we doesn't and lower to say, They their the win infrastructure into have communication, That And expect to sales. weakened and market for a

continue parts that's side, to So I of year announcement. all where to mean, stronger lower, volumes the I is -- but generally quarter, we're are. On think a we I OSP other waiting a do and mean, second recover. half. our major clearly, the for it's of half we mobile are OSP still business generally think I expect the stronger seasonal the is second calendar half phone

Operator

question next of Ryan line the Koontz comes Needham. Our with from

Ryan Koontz

NSE With of the regards there. business, questions to couple a

unpacking what regard broader of a to clarification frame the the field of builds, the the then have there? any there? on your for look think give of You've SE -- you business wonder idea you cetera, in with done And color et rebound like review most But good job kind fiber if the terms us -- time can wireline here. thinking telco I might of miss, of for any broader you're miss

Oleg Khaykin

Yes.

enterprise There's business. in on business a I have So the then we our and I there's SE, X mean, software carrier mean SE. parts

quarter. we effectively early quarter. in of play had got it So that It financial $X got health and booked Monday Monday. delayed, the And care, delayed, We million in large-scale businesses. there, something manufacturing between June and services $X booked we on million were the and mainly the on expecting enterprise, it order

also to is do the as to had very the $X $X shortfall, So all as significant not million high result, you thereby about bottom $X.XXX. business a And margin can that a gross impact had it business. down imagine, to roughly and income, a margin hit the the to million million you operating line, we only where $X way was

materialize that tells I supposed these the major of tighter positive $X.X when as conservative they said, are lot clearly, winning them on really this and -- is than great the today is deals customers. $X.XX So million million, lot a getting of among side, some it's big that environment rather But we're that don't when a more deals. to, me our

one -- Now equation. the wink-wink, it, money. universally say doing areas in or getting see -- is service their going in Latin business aggressive. America until weakest It's North pretty their now, amazingly mean the say America, word of not in our we're on from I spending is is the link And I whole say would around rest we not Europe, would would But see of popular everywhere just the -- NSE, I starts the I providers in not that would it's spend. right else. market environment well. And of say generally, the customers, our anemic I pretty are the to basically anything non-nod, I the I'm aggressive. we're I'm any until doing assets sweat turning hearing competitors true

service cash same and providers. And with generate major all across the the debt. going the we're just seeing pay board thing the Let's down

Ryan Koontz

pricing volume your Super should changes step or might purely think helpful, it line, to perspective? Oleg. terms any that ongoing And structure on be is gross there of based the we Or an gross from margins? in margin just back of that

Oleg Khaykin

piece pressure. impact becomes on of some much operations the ASPs deal, a puts big overall, big are of and chunk clearly while, manufacturing team I pressure holding I and and But do in standard And absorbed you are discount. course, the mean lot margin. less actually some a significant have manufacturers, into you well. when are once quarter. that -- there's But the contract is it mean, margins drops, less as do -- very news. margins not quarter. mix that order that's Well, next you this volume is seeing software the margin quarter give you a hit March ASP in slipped for even we your the The the And are holding holding of past a is well. pure when significant a your have that on the a the result, the good

Operator

The next question Michael comes with from Genovese the line Rosenblatt. of

Michael Genovese

get Like Great. telco calendar Oleg, in to different how 'XX? we you will happen 'XX? what's be as think do provider that that's service 'XX different from spending into going

Oleg Khaykin

It buying of in age, mean you 'XX, There in X.X significant start wholesaler start then doing get the instrument X a saw as span is you anything. to resulted start Well, was getting leveraging was because picture 'XX, where will which maybe And to mean I mean, be and of X also old. we quite turning base bit that a get would And years and It a point replacing instrument for obsoleted in 'XX there's year. on And you using and get around similar mean, just replacement. I we years a sold at They I X, field keep 'XX, things instrument, to to in was doing a who basically people. mean, 'XX, you damaged. be really of increasing need installed the I I gets will the X 'XX, in what mean to they'll 'XX, strong that X it instruments have be very start X. lot 'XX. were turning for years when sold all 'XX. very level, that X is, was nobody or reality once --

big a do tear. and mean do Networks where damaging will I mean, how more see. break things I and become the more a you start more I wear if to the upgrade point, bad. to significant And have go networks. get to going difficult. you're spend. that's to you longer Things think And weather to I you're field we workforce. events, to and mean have spend delay it intensively the it, the at I more going certain see doing So point and your you

Michael Genovese

or work 'XX network hear providers you year customers? if but I we've was your some were like said in of Yes, X service makes sense. that I done, all of from U.S. the heard wondering we've any that expansion a XXXX. of commentary Tier capital, not for that basically have just guess planning of sort about is growth type that of

Oleg Khaykin

the I getting loaded, competition. their kind other. it's Everybody of get with unless what a probably their like tries -- a kick look, I ahead We're grab Mexican going mean, I here believe are interest -- it very when all looked would road. And I very not And now, it a to technical can the they just of guns more I starts and the say standing is. standoff. mean see I and kind hungry wouldn't just share players. it. a Right we've somebody of walks view seen bullshit is, a talks And see call whatever looking can down and expansion. from just getting I mean, they call upgrade at major look, Money longer. all but do market cable it's they the to each I around term to and use taking rates they're kind a of to prudent collusion, see of here. it everybody

network, start a if decide the now so upgrading as I going expanding doing need are bring then to double well. mean a things replace good of network, do time you're network, you maintenance for not of installed create point. you nobody But going build-out tools to long buy demand the now pulls you your every new start only to to up that a actually expansion, because the for accordingly. base And they need and whammy as trigger, you

in and will do of the greater the to the replace of -- be the upgrade expansion actually upgrade of would the of equipment the as beginning expansion the pressure extent field. base installed put So network, to 'XX network you well as it believe even

Michael Genovese

Right.

So sense. we makes a That need shootout.

So...

Oleg Khaykin

a need shootout. We

to in every higher about your to amount -- needs Somebody mean, are market, muscle mean, fairly stays market, it, share. cash. I go a your think disciplined, of competitors that quarter not on market steady-state equilibrium trying a massive you're look right? everybody for and it's I generating If

to take on mean collect continue generate -- spending to ahead, the to to that's and cash I moment you best your it's bets to when and first somebody that the is scenario like tries get off, debt. try person and not really economizing OpEx, your share and possible the you're grab can all you down You're then CapEx, are off races. the and the right, The you take cash subscriptions. have, moment

Operator

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

Karan Juvekar

Karan Juvekar Marshall. This on for is Meta

just quick question and NSE side. is anything guide I I that guess the given mid-single-digit coming some volumes Or you're recovery just volumes the side? margins? just on that think sort get Just operating back a of understand margin operating could how about seeing should I we of on outside to there you quarter. that just back headwinds, maybe next guess, help the for

Oleg Khaykin

you your it's business Ilan Well, right? and can you line OpEx. But maybe XX% drops lab a fixed thing, that because covered. can biggest squeeze your I the the or can north software of variable all it I'll on you're you of largely running I -- an the want, think XX% reduce continue. Clearly, your OpEx to instruments, is volume Because start is field the north on cost incremental bottom the is all products margin when mean

high very margin recovery I single clearly, line. volume think driver the a recovery contribution a in is also bottom biggest because it's but in SE A, a the business to So a

the bottom line. dollar the business it significant obviously in every revenue puts of of chunk software So to

Ilan Daskal

mentioned from earlier, mean, line that. exactly to on top line, the stable. Yes. as I Oleg all top it depends be obviously, I continues the fall-through the growth and mean environment, pricing

volume. just it's about So the

Karan Juvekar

or strength know navigation expect strength you business and side where sort of seeing PNT maybe Any mentioned an the follow-up. on some guess And the you and position businesses. inflection there other any would doing that. detail continued on appreciate better I forward is side? that of then I you're a and the I timing the where PNT helpful. on be quick going sort than of detail the Okay.

Oleg Khaykin

the demand I aerospace seeing as with environment acquisition communication everything seeing Labs mean avionics that East. products and defense for It's topic all and interest base Jackson years robust the defense business. X.X manufacturers, a and vulnerable, testing, sector. very significant in the the Middle more public with mostly very safety we've aviation to seen even that products products. Also the growth years military past interest we of becoming in in in our and pretty And traditional seeing defense lot can that's GPS is we you we with and are But made for just the is strong in our for area. of in aircraft of the products. and imagine, we've the that next-generation and demand kind healthy several the And signal about contractors, our issues a are relating much introduced communications commercial very for a hot or ago, advanced Europe it the generating We're avionics positioning becoming with is now lot of recovery market. a our

Operator

There this time. at are no questions further

now over I'll the Ilan So turn call to Daskal. back

Ilan Daskal

for everyone, us. joining Thank call earnings you, today. This for Thank you, concludes Jericho. our

Operator

This concludes today's call. conference

may now You disconnect.

Viavi Solutions (VIAV) 2 May 242024 Q3 Earnings call transcript