Core Viewpoint - Viavi Solutions Inc. reported strong second-quarter fiscal 2025 results, with adjusted earnings and revenues exceeding Zacks Consensus Estimates [1] Financial Performance - Net income on a GAAP basis was $9.1 million or 4 cents per share, down from $10.7 million or 5 cents per share in the prior year, primarily due to high operating expenses and income tax provisions [3] - Non-GAAP net income was $29.4 million or 13 cents per share, an increase from $23.7 million or 11 cents per share in the previous year, surpassing the Zacks Consensus Estimate by 3 cents [4] - Quarterly revenues reached $270.8 million, a 6.4% increase from $254.5 million in the year-ago quarter, beating the Zacks Consensus Estimate of $260 million [5] Segment Performance - The Network Enablement (NE) segment reported net sales of $179 million, up from $155.5 million in the prior year, reflecting a 15.1% growth driven by strong demand from service providers and network equipment manufacturers [5] - Revenues from the Service Enablement (SE) segment were $20.9 million, down 13.3% year over year due to conservative spending by enterprise customers [6] - Optical Security and Performance Products (OSP) revenues declined to $70.9 million from $74.9 million in the previous year, primarily due to weaker demand for 3D sensing products [6] Geographic Performance - Revenues from the Americas contributed $116.1 million, up from $103.1 million in the prior year [7] - Revenues from Asia-Pacific were $93.6 million, a 17.7% increase from $79.5 million in the previous year [7] - Revenues from EMEA decreased to $61.1 million from $71.9 million in the prior year [7] Margins and Operating Performance - Non-GAAP gross margin was 61.1%, up 110 basis points year over year [8] - GAAP gross margin in the NE segment was 64.5%, an increase of 200 basis points year over year [8] - Non-GAAP operating margin increased 170 basis points year over year to 14.9% [9] Cash Flow and Liquidity - The company generated $44.7 million in cash from operating activities, significantly up from $20.4 million in the year-ago period [10] - As of December 28, 2024, the company had $488 million in cash and cash equivalents and $639.3 million in long-term debt [11] Outlook - For the third quarter of fiscal 2025, management expects revenues between $276 million and $288 million, with non-GAAP operating margin projected at 13%-15% and non-GAAP earnings per share between 10 and 13 cents [12] - Revenues for the NSE business are projected to be between $202 million and $212 million, with a non-GAAP operating margin of 6-8% [12] - Revenues for the OSP segment are anticipated to be in the range of $74 million to $76 million, with a non-GAAP operating margin of 32-34% [12]

Financial Performance Highlights - Revenue reached $270.8 million, marking a 6.4% year-over-year increase[6, 15] - Non-GAAP operating income was $40.4 million, a 19.9% increase year-over-year[6, 15] - Non-GAAP EPS stood at $0.13, reflecting an 18.2% year-over-year growth[6, 15] - The company generated $44.7 million in operating cash flow[6, 18] Segment Performance - Network Enablement (NE) revenue was $179.0 million, up 15.1% year-over-year, with a gross margin of 64.5%[8, 14] - Service Enablement (SE) revenue was $20.9 million, a decrease of 13.3% year-over-year, with a gross margin of 67.5%[8, 14] - Optical Security and Performance Products (OSP) revenue was $70.9 million, down 5.3% year-over-year, with a gross margin of 50.6%[9, 14] Q3 2025 Business Outlook - The company projects revenue between $276 million and $288 million[10] - Non-GAAP operating margin is expected to be around 14.0%, plus or minus 100 bps[10] - Non-GAAP EPS is forecasted to be between $0.10 and $0.13[10]

Financial Data and Key Metrics Changes - Net revenue for Q2 2025 was $270.8 million, exceeding the guidance range of $255 million to $265 million, representing a 13.7% sequential increase and a 6.4% year-over-year increase [7] - Operating margin for Q2 was 14.9%, significantly above the guidance range of 11.4% to 13.4%, and increased by 490 basis points sequentially and 170 basis points year-over-year [7][8] - EPS was $0.13, above the guidance range of $0.09 to $0.11, up $0.07 sequentially and $0.02 year-over-year [8] Business Segment Data and Key Metrics Changes - NSE revenue for Q2 was $199.9 million, at the high end of the guidance range of $184 million to $192 million, driven by strong order pace from service providers and NEMs, with an 11.3% year-over-year increase [9] - NE revenue was $179 million, up 15.1% year-over-year due to strong demand for lab and field instruments [10] - SE revenue was $20.9 million, down 13.3% year-over-year, primarily due to conservative spending from enterprise customers [10] - NSE gross margin was 64.8%, up 140 basis points year-over-year, while NE gross margin was 64.5%, up 200 basis points [11] - OSP revenue was $70.9 million, slightly below the guidance range, down 5.3% year-over-year due to weaker demand for 3D sensing products [11][12] Market Data and Key Metrics Changes - Strong demand for fiber monitoring systems from service providers and hyperscalers was noted, particularly in North America [21][30] - The aerospace and defense segment showed robust year-on-year growth, driven by mission-critical products [22] - The company expects a stronger seasonality trend across most segments in Q3, with demand for anti-counterfeiting products stabilizing [15][25] Company Strategy and Development Direction - The acquisition of Inertial Labs is aimed at strengthening the company's position in the PNT space, complementing existing technology and expanding into high-growth markets [23][65] - The company is focused on capital allocation towards M&A opportunities that align with EPS growth [39][40] - The company anticipates continued recovery momentum through fiscal 2025, particularly in the NSE segment [20][24] Management's Comments on Operating Environment and Future Outlook - Management noted signs of gradual recovery in traditional end markets and strong demand in fiber and wireless segments [19][20] - The company is optimistic about the North American market, particularly regarding the conversion of 4G to 5G spectrum [56][74] - Management highlighted the importance of addressing customer needs in the AI and private networks space, indicating potential growth drivers for the SE business unit [76][78] Other Important Information - Total cash and short-term investments at the end of Q2 was $512.8 million, up from $497.9 million in Q1 [13] - The company did not repurchase any shares during the quarter, prioritizing capital allocation towards M&A [14] Q&A Session Summary Question: Can you discuss the demand for fiber monitoring? - Management indicated that demand is driven by telcos and emerging hyperscalers who are investing in sophisticated fiber monitoring systems to ensure performance and accountability [30][31] Question: What is the visibility on 800 gig shipments? - Management expects 800 gig to be the volume driver for the year, with 1.6 terabit products entering production towards the end of the calendar year [35][36] Question: What is the appetite for further M&A? - Management confirmed that M&A remains part of the capital allocation model, with a focus on finding the right opportunities that enhance EPS growth [39][40] Question: How much of the revenue growth came from cyclical vs. secular drivers? - Management estimated that a third to half of the growth came from cyclical recovery in service provider spending, with the rest from diversification efforts [44] Question: What is the outlook for the SE business? - Management noted strong interest in AI ops but acknowledged challenges in deployment speed, indicating a potential for significant growth in the future [76][78] Question: What is the status of the 3D sensing market? - Management indicated that 3D sensing demand is typically stronger in the first half of the fiscal year, with expectations for a seasonal recovery in the second half [100][102]

Core Viewpoint - Viav Solutions reported quarterly earnings of $0.13 per share, exceeding the Zacks Consensus Estimate of $0.10 per share, and showing an increase from $0.11 per share a year ago, indicating a 30% earnings surprise [1][2] Financial Performance - The company achieved revenues of $270.8 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 4.33%, compared to $254.5 million in the same quarter last year [2] - Over the last four quarters, Viav Solutions has exceeded consensus EPS estimates two times and topped revenue estimates twice [2] Stock Performance and Outlook - Viav Solutions shares have declined approximately 2% since the beginning of the year, while the S&P 500 has gained 2.7% [3] - The company's earnings outlook is uncertain, with current consensus EPS estimates at $0.09 for the upcoming quarter and $0.38 for the current fiscal year, with revenues expected to be $254.61 million and $1.02 billion respectively [7] Industry Context - The Communication - Components industry, to which Viav Solutions belongs, is currently ranked in the top 30% of over 250 Zacks industries, suggesting a favorable industry outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [5][6]

Core Insights - VIAVI's financial performance for the second quarter ended December 28, 2024, exceeded expectations, driven by recovering demand in the Network Service Enablement (NSE) sector and diversification into new markets such as data centers and aerospace [3][4][5] Financial Overview - Net revenue reached $270.8 million, an increase of $16.3 million or 6.4% year-over-year [5][6] - GAAP operating margin was 8.2%, down 60 basis points year-over-year, while non-GAAP operating margin improved to 14.9%, up 170 basis points year-over-year [5][6] - GAAP net income was $9.1 million, a decrease of 15.0% year-over-year, whereas non-GAAP net income increased by 24.1% to $29.4 million [5][6] - GAAP diluted earnings per share (EPS) was $0.04, down 20.0% year-over-year, while non-GAAP diluted EPS rose to $0.13, an increase of 18.2% year-over-year [5][6] Segment Performance - Revenue from the Network Enablement segment was $179.0 million, up 26.4% quarter-over-quarter and 15.1% year-over-year [4][5] - Service Enablement revenue was $20.9 million, reflecting a 17.4% increase quarter-over-quarter but a 13.3% decline year-over-year [4][5] - Optical Security and Performance Products revenue was $70.9 million, down 10.0% quarter-over-quarter and 5.3% year-over-year [4][5] Business Outlook - For the third quarter of fiscal 2025, the company expects net revenue to be between $276 million and $288 million, with non-GAAP EPS projected between $0.10 and $0.13 [8][9] Acquisition Update - VIAVI completed the acquisition of Inertial Labs, Inc. on January 28, 2025, which is expected to enhance its capabilities in the aerospace and defense sectors [7]

Financial Performance - Net revenue for Q2 FY 2025 was $270.8 million, an increase of $16.3 million or 6.4% year-over-year[4] - GAAP net income was $9.1 million, a decrease of $1.6 million or 15.0% year-over-year, whereas non-GAAP net income rose to $29.4 million, an increase of $5.7 million or 24.1% year-over-year[4] - Net revenue for the three months ended December 28, 2024, was $270.8 million, up from $254.5 million for the same period last year, representing a growth of 6.3%[22] - For the six months ended December 28, 2024, net revenue was $509.0 million, compared to $502.4 million in the same period last year, showing a modest increase of 1.3%[22] Profitability Metrics - GAAP operating margin was 8.2%, down 60 basis points year-over-year, while non-GAAP operating margin improved to 14.9%, up 170 basis points year-over-year[4] - The company reported a GAAP diluted EPS of $0.04, down $0.01 or 20.0% year-over-year, while non-GAAP diluted EPS was $0.13, up $0.02 or 18.2% year-over-year[4] - Gross profit increased to $160.8 million, with a gross margin of 59.4%, compared to $148.0 million and a gross margin of 58.2% in the prior year[22] - Operating income for the three months ended December 28, 2024, was $22.2 million, reflecting an operating margin of 8.2%, compared to $22.4 million and an operating margin of 8.8% in the same period last year[22] - Non-GAAP operating income for the six months ended December 28, 2024, was $33.7 million, reflecting a non-GAAP operating margin of 6.6%[22] - Non-GAAP measures for net income for the three months ended December 28, 2024, were $29.4 million, with an EPS of $0.13, compared to $23.7 million and $0.11 for the same period in 2023[32] Cash Flow and Assets - Cash flows from operations for the quarter ended December 28, 2024, were $44.7 million[11] - As of December 28, 2024, the company held $512.8 million in total cash, short-term investments, and short-term restricted cash[11] - Total assets decreased to $1,725.1 million from $1,736.3 million, a decline of 0.9%[19] - Total current liabilities remained stable at $248.0 million, slightly up from $247.1 million[19] - Long-term debt increased to $639.3 million from $636.0 million, indicating a slight rise in leverage[19] Segment Performance - The Network Enablement segment generated $179.0 million in revenue, a 26.4% increase quarter-over-quarter[4] - Americas, Asia-Pacific, and EMEA customers represented 42.9%, 34.6%, and 22.5% of total net revenue, respectively[11] Acquisitions and Charges - The acquisition of Inertial Labs, Inc. was completed on January 28, 2025, enhancing the company's capabilities[5] - The company incurred acquisition and integration-related charges of $2.8 million for the three months ended December 28, 2024[32] Other Financial Metrics - Adjusted EBITDA for the three months ended December 28, 2024, was $50.1 million, compared to $43.0 million for the same period in 2023[37] - Stock-based compensation for the six months ended December 28, 2024, amounted to $26.4 million, compared to $23.7 million for the same period in 2023[37] - The change in fair value of contingent liability for the six months ended December 28, 2024, was $(7.4) million, compared to $(8.4) million for the same period in 2023[37] - Total related to cost of revenue and operating expenses for the three months ended December 28, 2024, was $18.2 million, representing 6.7% of revenue, compared to $11.3 million and 4.4% for the same period in 2023[32]

Core Viewpoint - Viavi Solutions Inc. will announce its fiscal second quarter 2025 financial results on January 30, 2025, after market close [1] Financial Results Announcement - The earnings call is scheduled for 1:30 p.m. PST / 4:30 p.m. EST on the same day [2] - A live webcast and replay of the call will be available on the VIAVI website [2] Participation Details - Telephone participation can be done via a toll-free dial-in number: 1 (888) 330-2022 and a toll dial-in number: 1 (646) 960-0690 [3] - The conference ID for the call is 3072689 [3] - Replay of the call will be available from January 30, 2025, 4:30 p.m. PST to February 6, 2025, 8:59 p.m. PST [3] Company Overview - VIAVI Solutions is a global provider of network test, monitoring, and assurance solutions across various sectors including telecommunications, cloud, and military [4] - The company is also a leader in light management technologies for applications in 3D sensing, anti-counterfeiting, and consumer electronics [4]

Core Insights - VIAVI Solutions Inc. has launched the TeraVM AI RAN Scenario Generator (AI RSG), enhancing its RAN Intelligent Controller (RIC) Test platform to create a RAN digital twin that simulates real-world conditions in the lab [1][3] - The AI RSG is part of a test and optimization portfolio aimed at supporting developers bidding for the NTIA Public Wireless Supply Chain Innovation Fund (PWSCIF) focusing on Software Solutions for Industry Verticals and Integration Automation [1][4] Company Overview - VIAVI is a global provider of network test, monitoring, and assurance solutions across various sectors including telecommunications, cloud, and military [5] - The company has over 100 years of experience in testing and securing communications networks, making it a trusted partner for network data optimization using AI and machine learning [4][5] Product Features - The AI RSG can simulate up to 10,000 user equipment (UEs) and between 1,000 to 5,000 cells per reference server, with deployment options in cloud environments or dedicated servers [3] - It allows users to import real-world maps to create UE profiles, train AI and ML applications, and test app decisions in realistic network environments [6] Strategic Importance - VIAVI has been awarded PWSCIF funding through previous notices, establishing its credibility and expertise in the field [4] - The company aims to streamline 5G and Open RAN deployments with its Automated Lab-as-a-Service for Open RAN (VALOR™), enhancing decision-making with precise geolocation insights [6]

Group 1: Core Contribution to NASA's Mission - Viavi Solutions Inc. is providing a precision order sorting filter for NASA's Europa Clipper mission, specifically for the Mapping Imaging Spectrometer for Europa (MISE) [1][2] - The Europa Clipper mission, launched on October 14, 2024, aims to explore Jupiter's moon Europa and assess its potential for harboring life [2] - MISE will map the distribution of various compounds in Europa's subsurface ocean, including organics, salts, acid hydrates, and water ice phases [2] Group 2: Technical Aspects of the Filter - The precision order sorting filter integrates three key capabilities: photolithographically patterned bandpass filters, a linear variable filter (LVF), and optics in a Butcher Block configuration, enabling high-resolution spectral data capture in the infrared range from 0.8 to 5 micrometers [3] - Viavi faced several technical challenges during the filter's development, including managing precise wavelength progression and ensuring co-planarity of assembled optics [4] Group 3: Market Position and Stock Performance - The collaboration with NASA enhances Viavi's reputation in space-grade optical technology and positions the company favorably in the growing space technology market, potentially leading to incremental revenue and future deals [5] - Viavi's stock has gained 2.3% over the past year, contrasting with the industry's growth of 79% [6]

Core Insights - VIAVI Solutions Inc. has contributed a precision order sorting filter for NASA's Europa Clipper mission, specifically for the Mapping Imaging Spectrometer for Europa (MISE) [1][2] - The MISE instrument is crucial for analyzing the surface composition of Europa and assessing the habitability of its subsurface ocean by mapping organics, salts, acid hydrates, and water ice [2][4] - The filter integrates advanced technologies, including photolithographically-patterned bandpass filters and a Linear Variable Filter (LVF), addressing significant technical challenges in its development [3] Company Overview - VIAVI Solutions is a global provider of network test, monitoring, and assurance solutions across various sectors, including telecommunications, cloud, military, and aerospace [5] - The company is recognized for its leadership in light management technologies applicable to diverse industries such as consumer electronics, automotive, and government [5] Mission Details - The Europa Clipper mission was launched on October 14, 2024, and is set to orbit Jupiter starting in April 2030, conducting 49 flybys of Europa to gather detailed data [4] - Data from MISE and other instruments will provide critical insights into Europa's potential to support life [4]