VIAV - Earnings call transcript Q1 2025

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Operator

Hello, everyone. My name is Tamika, and welcome to Viavi Solutions Fiscal First Quarter 2025 Earnings Call. [Operator Instructions]

I will now turn the conference over to Vibhuti Nayar, Viavi Solutions, Head of Investor Relations. Please go ahead.

Vibhuti Nayar

Tamika. you, Thank everyone. Good afternoon, Viavi Solutions XXXX to First Fiscal Call. Earnings Welcome Quarter of Vibhuti for is name Investor Nayar, My Head Relations Viavi Solutions. With Oleg Khaykin, Ilan call today and the and CFO. Daskal, me CEO; our our on President is

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

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

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

turn I would now call With that, Ilan. like the to to Ilan? over

Ilan Daskal

Thank everyone. Good you, afternoon, Vibhuti.

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

is our on was is as driven down spend business SE instruments. customers. first segment. revenue of slower XX.X% providers the mainly the came our declined low by basis, which in the million, a X.X%. by X.X% year-over-year mainly period same NSE quarter and fiscal conservative million, of a by last revenue revenue from year, NE results decline $XXX.X continued result for for million NSE for to at was $XX.X field driven Moving $XXX was around spend and a $XXX was the to of conservative revenue enterprise NEMs. $XXX.X providers service year-over-year guidance by This quarter million. QX which order pace from service end million On range by

margin XX.X%, decrease NSE which is gross SE lower XX.X%, from decrease period revenue. XXX points as mix. product of year-over-year the basis same gross of gross was year basis and a quarter on of volume XX.X%, basis same result XXX is points lower period lower to last due points for a was which year margin the last margin NE is XXX a was basis. from a the which

our lower to basis. XXX was was point below basis guidance operating a due range revenue NSE NSE's and margin gross X.X%, is margin the on margin quarter operating for which year-over-year decline fall-through. negative a

On up and XX.X%, all strength high was revenue gross for above year-over-year at $XX.X first our year OSP across driven as last by of the million, a of X.X%, fiscal was to result year-over-year was million came basis, our to million, period which XD margin OSP revenue quarter basis from margin higher primarily and $XX the basis was guidance high anticounterfeiting of products. end range a of OSP an in $XX sensing. up the was XXX driven XXX is driven XX%. points increase on OSP's XX% the range by of a margin guidance end XX.X%, points of primarily margin exceeded same operating the which volume. basis gross operating fall-through. by higher

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

shares year and prior for the the fiscal million guidance million from purchased $XX.X million diluted X was in shares, year. XXX about million. for for quarter. During in XXX.X versus was The quarter, shares the fully the million first quarter of in shares our versus for stock count we CapEx share the our million XXX.X same last the quarter $X.X million period $X.X down

guidance. our Moving on to

trend seeing seasonality expect a second are recovery and of and quarter. normalization we NSE, For signs of fiscal stronger

OSP, driven For anticounterfeiting expect weaker second demand products. a fiscal we mainly in softer quarter, seasonally by

products the demand inventories. work near-term softer for as the on their the anticounterfeiting to down expect be customers side We end

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

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

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

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

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

Oleg Khaykin

Thank Ilan. you,

midpoint was During our the at our stronger The end of the offsetting our quarter, range. demand. in range came at with partially September OSP lower NSE of guidance the revenue guidance demand weaker EPS

of end we We stabilization. second signs of NSE's marks fiscal On continue believe of half are showing the will markets positive and 'XX. expect it recovery of side, NSE the into seeing beginning traditional the many the it

detail at let's products. each basis, half notwithstanding, quarter with NSE QX look demand seeing signs we QX year-over-year revenue are wireless around 'XX. by field a in Lower The and in which Now our businesses, fiscal of softer September fiscal instruments NSE. in starting positive beginning second recovery and order driven demand declined the of continuing on stabilization, into imply more of for

on cable of order stabilization providers. into 'XX. momentum the quarter leading and continuing North and improved segments. are At instruments field decline was A lower time, the individual fiscal demand there and by starting to signs in bit second more half color of from American service A the product demand recovery in the driven December same

seeing anticipated. earlier stabilization which expect business also recovering than we're and addition, half to in wireless start is it in previously the our In fiscal 'XX, of second

September demand and slightly high-speed driven down. and notwithstanding, to significant lab our for was recently production expect demand of Fiber see fiscal launched this by the in 'XX, quarter products. Ethernet growth X.X-terabit we and XXX-gig high for remainder business fiber

mission-critical continued by business avionics growth in and products, its communication, mil/aero including robust growth, PNT. year-on-year driven Our

down was spend. customer driven year-on-year, SE enterprise Lastly, by lower primarily

in across NSE, ahead recovery fiscal of a all continued 'XX. the for seasonally second with QX Looking momentum product stronger half we expect gradual segments

to turning Now OSP.

end guidance Overall, by the demand higher OSP our OSP XD basis, first the on products. higher exceeded for quarter, During sensing anticounterfeiting results of fiscal grew year-over-year driven range. and a

we OSP, for driven a fiscal expect second For seasonally demand mainly by anticounterfeiting quarter, weaker softer products.

near-term work demand the expect down be softer the to the end We products their for inventories. customers anticounterfeiting on side as

last QX X rebound continued we the notwithstanding, QX beginning advanced gradual our and to expect invest technologies Viavi summary, years, to maintain of has Despite recovery. In over be environment to leadership. the in the industry products challenging

for X quarter. mind, major the milestones Viavi to team I With achieving September during that like in recognize would the

milestone the launch first for which The open provide VALOR Chandler, RAN of the Lab will test-as-a-service is in Arizona, ecosystem.

high-speed industry's of AI release testing computing and segments. well X.X for the achievements first wireless, X Ethernet in second is high-performance leadership milestone market center second for Viavi terabits These position the workloads. data per The

shareholders would customers like our to support. I their Lastly, continued thank and for

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

Operator

question first with the Instructions] [Operator Ruben from of line Your is Stifel. Roy

Ruben Roy

for -- fairly drill momentum. the could the about the detail had Were thanks further end talk quarter. and some of then and you quarter up sort that did of any bit if quarter? linear? the just segments Or the bookings follow-ups. I through little Oleg, through on going a towards linearity into And the quick Wondering pick X

Oleg Khaykin

as got in within major much I start Sure. orders then And little NSE even second the as a service mean, they evident have I quarter. at and we linearity that's backlog did the much but some is we would orders taking what the in pushed was But only Well, to we from pretty largely providers. there engagement semiconductor come a that service would say expected, bit we indicated some have into but in several fiscal is and very providers was also not a that prefer start QX QX, quarter, expected out. revenue and quarter, NEMs also from a vendors and QX bigger of looking further product

quarter I not of have X.X buying so. 'XX. seen talking ago about actually very what fiber about And to their about years number a mean would what dynamics upcoming out number into saw operators, saw that change and events. of they're call fiber became and their AT&T X Frontier, Mexican a where last, seen all are really the other was they're in I'd this, aggressive big which they we And I the a this calendar you during Then deployment signaling market, between we we've is assets, they years vocal all, investing, standoff of not dumped each went Verizon for or say, all first interesting I fiber the very what, emerge. reentered very of spending.

went actually of networks upgrade becoming it accelerate players a fiber, to upper And their that, to actually lot plans as at the least the more their of providers competitive. make it's aggressive spurs cable course, or telecom in of of all and things which are With of truly behavior to like lot a operators. of all pivot among and sudden, a discussion that, order lot on in big action the everything and from marked talk placements no the auction -- a a

XG operators a densification came out of talking it about test field network. hibernation. And is interesting and which -- indication a actually deploying deployment equipment starting wireless usually sudden and equipment them good starting of also accelerating And of orders, guess the I placing the also pours. it equipment and rains, field is what all expanding very when was

demand that So NEMs to in we be initially fiscal probably the respect, the -- year, expect we of wireless stronger the the in second the anticipated. follow-up from than we believe half

it on If you now going half year positive middle we of I of next more second and of calendar thought a a to it's next be may fiscal remember, will which think think year. wireless kind of be first recovery, is last quarter, bit are calendar we half, for more the

you And markets. So thing hopefully, and mirrored same perspective. we're gives other way, the a the by seeing in more that geographic now EMEA bit being

So the I of lot upgrades a think maybe spurred that September catalysts maintenance. the released was the being in and into the network rate one cut interest critical of money

Ruben Roy

And the half guess about ahead you like based. I understand chime think that on of but that And guess it's and think great. through could Ilan your Obviously, and to if if on AT&T sort differently fiscal it That's my about hearing of the project thinking look make as of we ORAN, But just year, recovery would maybe and of I sort sounds about say, broader follow-up. seasonality ask you I was second was modest in, any the earlier-than-expected going should sort you wireless recovery, we we're we to to I that. second side sooner-than-expected half? as the we're hit that sure than

Oleg Khaykin

are have there auto the placement, perfect be it the Well, the I we clearly, it's I some of for much because materialize believe see longer the X of never channel. with you ones, otherwise to lot inventory stronger a seasonally specialized March be lead some parts, as NSE mean, quarter. rapid is actually than as the more weeks. of may than it third in channel, as times inventory orders us, generally extent would a quarter to not, mean, in little fiscal the first in these And the for weaker indications do and XX know, we the or bit this --

rather quarter the So more them that to orders than puts December March of kind able execute quarter. the these into being in

be. an normally I it's would bit in to So say, a to there's than quarter NSE be think early the but March opportunity definitely stronger for

Ilan Daskal

macro see the the will move, interest of But I and continues Fed the would here, Ruben, to obviously, kind and environment, factor. earlier of continue, I to kind probably have how And Oleg was that of I I that mentioned dynamics. kind first kind add mean, the mean another monitor mean, we from point. be of post election we it inflection rates

continuing, generally monitor thinking about generally momentum So have the macroeconomic. but -- to are we thinking to speaking, continue we

Operator

Your is of Needham. the Koontz question from Ryan next line with

Ryan Koontz

centers sounds maybe a one. with opportunity your X.XT those number with second little to there, And surprise. builds. it there's a which as you But Europe unpack the is question Great fiber you more? cable carriers of movement and even a hear for Can alive there is coming little like wireless, -- a little here data a the as comments maybe touch us? about bit on your around well bit And is can and and AI

Oleg Khaykin

Sure.

it questions, just Ryan. as we'll take X So

freebies, there's it's right. So all no but

You more. can always ask

keep well, So never But -- America. there's as bad down would Europe. say do in EMEA was hard out be see lot we to fiber wireless to went fiber also, mean, a state-sponsored But doing never the hit And well do I see activity fiber was EMEA North fairly the as Europe. rolling because in we Europe. really in -- continues I particularly of

in ways, what of carriers look European they many follow and -- improvement it of it. like North mean kind looks kind at in America, North doing, North is America then And I

goes If up, of respect, Europe U.S. goes seen So down. Europe U.S. I'd behavior, we've goes up. that If this in down, goes say right? couple

think it's mentality. it's of herd -- of way, a I a a kind So in bit

AI On terabit, that driven by the of all centers. X.X is, course, and data

telecom X so XXX like, X and it's XXX What a activity from then transition node is to data forth. gigabit gig so we node And more An that And with centers, start I with by on of the second, would and by Up very to seeing like operators. thing. driven all interesting to until years, currently per XXX that say, X lot was it a to about, generally, X the I'd driven was terabit. all rapidly are centers. already design gig XXX and and say, transition period ramping is years. lot sampling And gigabits being to pressure X.X data of

I center joined it's chip and gig of in piggybacked course, driven while data and by vendors, by kind So vendors the would deployment, the the on vendors say, telecoms XXX% by and centers module drove it, XXX-gig then, or XXX of AI who driven X.X operators. being data terabit, system are all

equipment really -- think in So -- next respect, to by semiconductor gig mainly I leading leading the selling already which player that won't of companies, that this expect say production. And the accelerate the quarter some high-volume will is year systems, I I and into but vendors. but XXX now X.X-terabit we're the entering

Ryan Koontz

a just at are customers customers are the -- they or new taking the had, pie? always Are these slice X.XT, bigger to you've these you of

Oleg Khaykin

It's mix. a

But the of we clearly NEM. seeing are module on dozens these optic and Asia. -- all These in customers. semiconductor increasingly is vendors same what it's the are So fiber

Ryan Koontz

for that for mostly Is makers? with module just production them then, their

Oleg Khaykin

Initially, the as of we'll is, -- for first X.X year. transition next they the development. calendar late production. And I'd course, say into probably then

the towards most year. CapEx for think be with R&D initial will driven X.X maybe the end X.X production orders I calendar by the for of 'XX of

Ryan Koontz

you like? briefly what's like that environment it. fairly testing Got helpful. typically? And WiFi around -- world. that Is on It mentioned Super the still soft. that's sounds more been enterprise the And

Oleg Khaykin

in customers, reality we've service and Well, the health enterprise most our assurance. that a a just software seeing environment, enterprise products. spending financial conservative software. least our are more much institutions-type services, mainly space at this It's care of big been is customers our is of type And for

orders. -- X All and there, takes of of or push quite we and bit it's So can drives it volatility. out, them million-plus X have is a it X actually

Operator

Genovese Michael line the from is question next Rosenblatt. Your of from

Michael Genovese

all those next cable exposure seeing your the are How Oleg, a to talk orders in and can now? at And you beyond? about you for quarter is big pickup cable?

Oleg Khaykin

sure. Mike,

clearly, vendors. I from think architectural But proceeding finally second quarter. move starting sales -- the it's September starting second level is the We upgrades. delays the to the initial some system cable mean with software in had to is I and I train some some mean So delays and due in network -- they've the their had quarter. in

I think more up now coming and later.

orders us mean, because more are cable And cable increasingly, I for of more orders. muted fiber bit the a becoming more and is

So kind they And coax hybrid base. becoming see testers customer testers. and going the to now all are copper. there's think probably one all fiber where I part But are coax cycle of of more you're fiber our our

would many seeing higher they more by going investing network. from as of fiber a your the which the expectation cable much you fiber systems deploying into is -- -- monitoring to they're a providers. of and They're their actually lot of fiber. lot of availability ensure reliability I -- the And high service investing to optical providers much performance are actually into even my They're further and like But incredibly, gives optic starting level networks. traditional higher more than look a service kind more of of things to -- what vendors, I'm more assurance

world seeing still don't we're we a call with line origin, Frontier of in of companies going in because operators. other high-performance and are cable surprised terms we'll like kind So much cable they're they wouldn't fiber be them moving And very start but year, from really within networking. if up really Zayo, the the and in -- becoming I

Michael Genovese

see service just in of said, the XD to maybe for we days U.S. because sensing. any you Great. moving kind going direction and me here. ask on market provider boring. these should about thinking Very let in the that helpful. little there? to very sensing right And echo being in want gets in XD I But update, certainly great be That it's anything What's it's attention the also

Oleg Khaykin

Sure. for doing us, -- it's I our they're it's very And a saturated mean, pretty customer. well, well. market. anchor mean -- still I but it's fairly much

So I year. in and are -- I But earlier mean we mentioned now the we grow if grow. they it seeing

and extent early And are Korea, much down. sensing. XD that adoption in market China, on actually players will midrange seeing the this talk not But models in in some high-end in happens, We premature so more Android it but into of to China, the initially particular, quite it's to become us. it's about. at for if point move a exciting And could it that time, too by

Operator

[Operator Instructions] Your of line next with is question Marshall Stanley. Meta the Morgan from

Meta Marshall

of questions. couple a Maybe

understand about just of second So is kind on SE rate just of the changes that OSP should to kind of of of on Any on business? question there shoots business? on commentary. run business? And are the the kind first kind of I some we volumes how of any or the the of enterprise about SE, changes what question, reprints we just green -- on think seeing the But think side how you're

Oleg Khaykin

Sure. Okay.

mil/aero base. would say anticounterfeiting, in base OSP, is industrial, is in business, about say, the talk the So it talk kind I we of rate, then way I piece XD terms kind about would sensing. of of And we run clearly which

So I on provided I already sensing. color think XD

our really it customer going very and lead I don't of think going I business, dynamics the that changing much for see with it's forward.

the no and year, half it's it's bit second it asymmetric it's weaker of be. to half, usually used in although a as as the first stronger fiscal in longer think the I

XX-XX, like, and XX-XX maybe more split it's say, I'd between half. So half

several term, want would think economies, million the say before the redesigns make say, inventory $X they have of near currency And a the older place number consume the some probably were there products Then maybe, be used major also and new it's things. $X is million, around a there the they of with -- that a in there some I we coupled they lower all to may sanctions markets. at that to demand. anticounterfeiting, I year. On is of bit orders. I'd have There obviously say hit

away. goes of kind that So

calendar new in say, at nodes side near do least of of the And we half think designs new the old then production. year. a anticounterfeiting be to term, conservative the inventory we I'd once products So go first on the and next the spend, cycle probably of new into the for number more through see the and

it traditional to to its rate. We more run expect rebound

a is we've it SE The On taking But saw SE, spend again good on customer I'd cities. of -- very in quarter, the longer a the it's velocity mean I a we It's say is rich, so story lot slower. and saw March September. enterprise X in one we initially it acceptances. seen get margin hand, to product.

bit on So it's a the side. softer

-- start strong into more and the I the half on interestingly-wise on development and the then and in revenue orders, are of fiscal there, networks, the say year private operators converting very On business which seeing we beyond. telecom momentum second side, what will funnel our the will in

of And you and do thereon, I -- And in deepen. the do moving would say land the of and our into interest expand quarterly really basically, we a products. as get AIOps you next terms of more and rate, customers acceptance then run and XXs more the will the in year start comfortably AIOps And of we is in from think product. lot kind driving taking higher you

starting products we are a in place will are acceptances initial breadth thereon, take products and calendar that selling be 'XX, -- geographic and the domain So expansion there of expansion. from to the

Operator

next of Your the Tim is question line from Savageaux.

Timothy Savageaux

as but you the of I a multiple be to for with again be at want to you big before year outlook, on might to don't visibility to have could congratulations of the to if and mean setting spend, on of get strong wonder extending finish characterizing carriers, in but broadly terms the there. seem this you well. some than do sustained you're especially look bounced strong around of over recovery although be it quarters. fiber up more environment, with I call in what's as a kind more that up you overall but in that what I here seem seeing most finishing visibility historically the while, carriers you Hopefully, that that positive flush, Took a year terms that particular. the and provide you syncing what off also say as budget color I

Oleg Khaykin

time. probably mean, like haven't I probably think all I a budget yes, talk, of I they sudden, a to long when spending, they that X is it's shortage can you Well, less everybody a some there's right? also said reality a there time, when now. in say components. flush. just need. demand something bit feels probably of So lead is budget would pent-up you times. There's it done anything flush need that get really I has to because I years. would for it's don't I says, there you order say of didn't always because -- a they're Well, of is even of realizing need ago, a it I that But you some what and anything mean probably So It's quickly well, months not X get want start lead XX% you some that.

the back a much aerospace These to the networks fiber things segments -- expand Viavi makes actually acceleration, lab they business, the add call positive there's it I what then of fundamental business, business are and maintenance, businesses. it military business, all base as our full this all because really what to lifts speedboats, to like me, just it's So our, quite to just the is our basically faster-growing becoming interesting. production been build-out, have does, base and should avionics them, do and it I it extent more that think -- running getting much and because

to even starting the development it the talk to is around advanced XG positive we're see customers approaching which pick positive, That's XG densification up. for least but all starting. -- is things. finally At also is And starting now topic, seeing very

in good we corner. about So pretty turning respect, that NSE feel the finally

Timothy Savageaux

have follow are lab imagine your production would times. longer. versus bigger field a want if up I could if I a pretty hear. fiber there? you, are of the you and matter talk getting Good what talk just lead Got side. lab where they reference lead of -- I is you if cranked it. logistics short that field I across kind on little to now. machines times machine it times given the and vary your on they're historically back changing and your or imagine imagine right Or to up? could But about And Is tests to business. really the lead

Oleg Khaykin

may deal gigabits. you -- mainstream there's of mean -- out is all connectors devices actually there. so is we are you can a X feel lead high can XXX The terabit, that want, of deal not very times with be comparable things more a are, And lead of Well, bleeding as imagine, for everybody. tell, There, within lead anywhere times kind demand. time in bleeding-edge And of you tell big products you. Where not I lead get that the inventory stuff And SerDes, their extensive. field or more ton the they're on now months. right? all we times semiconductor product is as to and a like to the and do edge like you X.X orders product place need X

So pretty product, some, turnaround than time. have like gig node and a X say, you below, On lead get XXX months X aggressive you a probably X say can that, on and anything quickly. I'd products leading more nanometer I'd node to

Operator

over questions. the hand are Presenters, remarks. no back further time, for call any there this I'll to closing you At

Vibhuti Nayar

a good afternoon. Thank you, Tamika. This everyone. today. concludes you, our for Thank earnings call Have

Operator

for call. you today's Thank This joining. concludes

You your may now disconnect lines.

Viavi Solutions (VIAV) 31 Oct 242025 Q1 Earnings call transcript