Part I [Item 1. Business](index=5&type=section&id=Item%201.%20Business) Viavi Solutions Inc. provides network testing, monitoring, and optical technologies through its NSE and OSP segments, focusing on core leadership and growth - Effective March 30, 2025, the company realigned its reporting structure, combining NE and SE segments into a single **Network and Service Enablement (NSE) segment**[16](index=16&type=chunk) - The corporate strategy focuses on defending leadership in core segments, investing in secular growth trends like fiber and wireless, and extending technologies into adjacent markets such as aerospace and defense[18](index=18&type=chunk) - As of June 28, 2025, the company employed approximately **3,600 people** across 31 countries[68](index=68&type=chunk) [Business Segments](index=6&type=section&id=Business%20Segments) The company operates two segments: Network and Service Enablement (NSE) for network solutions and Optical Security and Performance Products (OSP) for optical technologies - The NSE segment provides solutions for lab, production, network management, and AIOps, serving major customers including AT&T, Cisco, and Verizon[21](index=21&type=chunk)[22](index=22&type=chunk)[27](index=27&type=chunk) - The OSP segment's technologies include **Optical Variable Pigment (OVP®)** for anti-counterfeiting on banknotes in over **100 countries** and optical filters for 3D sensing[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) - A key strategic alliance for the OSP segment is with **SICPA Holding SA Company** for global marketing and sales of OVP and OVMP products for banknote anti-counterfeiting[40](index=40&type=chunk) [Research and Development](index=9&type=section&id=Research%20and%20Development) Viavi invests substantially in R&D for new products and technologies, securing a **$21.7 million** grant for ORAN testing - In fiscal 2024, the company received approval for a grant of approximately **$21.7 million** over three years from the Public Wireless Supply Chain Innovation Fund to support Open Radio Access Network (ORAN) automated testing[54](index=54&type=chunk) [Seasonality](index=10&type=section&id=Seasonality) The company's business experiences seasonality, with NSE revenue peaking in Q2/Q4 and OSP revenue highest in Q1/Q2 due to market cycles - NSE revenue is typically highest in **Q2 and Q4** and weakest in **Q3**, influenced by customer calendar year spending and budget cycles[66](index=66&type=chunk) - OSP revenue is seasonally higher in **Q1 and Q2** due to smartphone market exposure, with demand declining in Q3 and Q4[67](index=67&type=chunk) [Human Capital Management](index=11&type=section&id=Human%20Capital%20Management) Viavi manages human capital for **3,600 employees** across 31 countries, focusing on culture, talent, and rewards, with a best-in-class safety record - The company's safety program achieved a best-in-class **Total Recordable Injury Rate (TRIR) of 0.08 injuries per 100 full-time workers** per year[80](index=80&type=chunk) [Item 1A. Risk Factors](index=13&type=section&id=Item%201A.%20Risk%20Factors) The company faces diverse risks including geopolitical, technological, customer concentration, operational, cybersecurity, regulatory, environmental, and financial leverage - Global risks, including geopolitical tensions in Ukraine, the Middle East, and U.S.-China relations, could cause market instability, supply chain pressure, and increased costs[83](index=83&type=chunk) - Reliance on a limited number of customers, including a strategic alliance with **SICPA** for OVP and OVMP products, creates vulnerability to order reductions or loss of key relationships[93](index=93&type=chunk)[94](index=94&type=chunk) - Risks associated with the **Inertial Labs acquisition** and proposed **Spirent acquisition** include failure to realize anticipated benefits and integration challenges[97](index=97&type=chunk)[98](index=98&type=chunk) - Outstanding debt, including **Senior Convertible Notes due 2026** and **Senior Notes due 2029**, increases leverage, potentially limiting operational flexibility and future financing access[128](index=128&type=chunk)[130](index=130&type=chunk) [Item 1B. Unresolved Staff Comments](index=28&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - None[146](index=146&type=chunk) [Item 1C. Cybersecurity](index=28&type=section&id=Item%201C.%20Cybersecurity) Viavi maintains a comprehensive cybersecurity risk management strategy, overseen by the Audit Committee, with no material security breaches in the last three fiscal years - The company's cybersecurity approach utilizes **NIST and ISO frameworks** and includes an Incident Response Plan[148](index=148&type=chunk)[149](index=149&type=chunk) - Cybersecurity oversight is delegated to the **Audit Committee**, which formed a Cybersecurity Steering Committee including independent directors and key management[153](index=153&type=chunk) - The company has not experienced any material information security breach incidents in the **last three fiscal years**, with immaterial related expenses[151](index=151&type=chunk) [Item 2. Properties](index=29&type=section&id=Item%202.%20Properties) This item is not applicable [Item 3. Legal Proceedings](index=29&type=section&id=Item%203.%20Legal%20Proceedings) Information on legal proceedings is incorporated by reference from Note 18, 'Commitments and Contingencies,' in the financial statements - Information for this section is located in **Note 18** of the financial statements[160](index=160&type=chunk) [Item 4. Mine Safety Disclosures](index=29&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=30&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq under VIAV, with **1,392 holders**, no cash dividends, and **$198.4 million** authorized for repurchases - The company has not paid cash dividends on its common stock and does not anticipate paying them in the foreseeable future[163](index=163&type=chunk) - No shares were repurchased in Q4 FY2025, leaving **$198.4 million** authorized under the September 2022 stock repurchase plan[164](index=164&type=chunk) [Item 6. [Reserved]](index=31&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In fiscal 2025, Viavi's net revenue grew **8.4% to $1.08 billion**, with improved operating margins and **$89.8 million** in operating cash flow, driven by strategic acquisitions Fiscal 2025 Financial Highlights (Year-over-Year) | Metric | Fiscal 2025 | Change vs. FY2024 | % Change | | :--- | :--- | :--- | :--- | | Net Revenue | $1.08 billion | +$83.9 million | +8.4% | | GAAP Operating Margin | 5.3% | +320 bps | N/A | | Non-GAAP Operating Margin | 14.2% | +270 bps | N/A | | GAAP Diluted EPS | $0.15 | +$0.27 | +225.0% | | Non-GAAP Diluted EPS | $0.47 | +$0.14 | +42.4% | - The company agreed to acquire **Spirent Communications plc's** high-speed ethernet, network security, and channel emulation testing businesses for **$425 million**, expected to close by September 2025[177](index=177&type=chunk) - In fiscal 2025, the company generated **$89.8 million** in operating cash flow, used **$121.7 million** for the **Inertial Labs acquisition**, and repurchased **$16.4 million** of common stock[182](index=182&type=chunk) [Results of Operations](index=36&type=section&id=Results%20of%20Operations) Fiscal 2025 net revenue increased **8.4% to $1,084.3 million**, driven by NSE growth, with gross margin slightly down and income from operations significantly up to **$57.5 million** Consolidated Statement of Operations Summary (FY2025 vs. FY2024) | Metric (in millions) | 2025 | 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Net Revenue** | **$1,084.3** | **$1,000.4** | **$83.9** | **8.4%** | | Gross Profit | $621.1 | $575.9 | $45.2 | 7.8% | | *Gross Margin* | *57.3%* | *57.6%* | *-0.3 p.p.* | *N/A* | | R&D Expense | $208.7 | $201.9 | $6.8 | 3.4% | | SG&A Expense | $349.4 | $333.3 | $16.1 | 4.8% | | Restructuring Charges | $0.7 | $13.6 | ($12.9) | (94.9)% | | **Income from Operations** | **$57.5** | **$20.8** | **$36.7** | **176.4%** | - Net revenue growth was primarily driven by the data center ecosystem and aerospace and defense products, including a **$25.2 million contribution** from the **Inertial Labs acquisition**, partially offset by declines in wireless and cable spending[199](index=199&type=chunk) [Operating Segment Information](index=42&type=section&id=Operating%20Segment%20Information) In fiscal 2025, NSE revenue grew **10.6% to $776.6 million** with expanded margin, while OSP revenue increased **3.1% to $307.7 million** with slight margin improvement Segment Performance (FY2025 vs. FY2024) | Segment | Metric (in millions) | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | :--- | | **NSE** | Net Revenue | $776.6 | $702.0 | 10.6% | | | Operating Income | $41.6 | $8.0 | 420.0% | | | *Operating Margin* | *5.4%* | *1.1%* | *+4.3 p.p.* | | **OSP** | Net Revenue | $307.7 | $298.4 | 3.1% | | | Operating Income | $112.3 | $107.0 | 5.0% | | | *Operating Margin* | *36.5%* | *35.9%* | *+0.6 p.p.* | - NSE revenue growth was driven by higher volume in Lab and Production and Aerospace and Defense, including a **$25.2 million contribution** from the **Inertial Labs acquisition**[228](index=228&type=chunk) - OSP revenue growth was primarily driven by higher Anti-Counterfeiting and Other revenues, partially offset by a decrease in 3D sensing revenue[230](index=230&type=chunk) [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 28, 2025, cash decreased by **$49.7 million to $432.1 million**, with **$89.8 million** from operations, **$128.4 million** used in investing, and **$23.6 million** in financing Cash Flow Summary (Fiscal Year 2025) | Cash Flow Activity | Amount (in millions) | | :--- | :--- | | Net cash provided by operating activities | $89.8 | | Net cash used in investing activities | ($128.4) | | Net cash used in financing activities | ($23.6) | | **Net decrease in cash** | **($49.7)** | - The company secured commitments for a **$600 million 7-year Term Loan B facility** to fund the pending **Spirent acquisition** and for general corporate purposes, closing concurrently with the acquisition[239](index=239&type=chunk) Material Contractual Obligations as of June 28, 2025 | Obligation Type | Total (in millions) | Due in < 1 year | Due in 1-3 years | Due in 3-5 years | Due > 5 years | | :--- | :--- | :--- | :--- | :--- | :--- | | Debt (Principal & Interest) | $722.6 | $269.7 | $30.4 | $422.5 | $0 | | Purchase obligations | $160.7 | $141.7 | $18.5 | $0.4 | $0.1 | | Operating lease obligations | $41.2 | $10.6 | $16.6 | $6.0 | $8.0 | | **Total** | **$1,008.9** | **$432.9** | **$85.8** | **$447.8** | **$42.4** | [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from foreign currency, investments, and debt, managing foreign exchange with forward contracts totaling **$60.4 million** to purchase and **$24.1 million** to sell - The company uses foreign exchange forward contracts to hedge currency risk, with notional amounts of **$60.4 million** to purchase and **$24.1 million** to sell foreign currencies as of June 28, 2025[256](index=256&type=chunk)[258](index=258&type=chunk) Fair Value of Debt as of June 28, 2025 | Debt Instrument | Carrying Value (in millions) | Fair Value (in millions) | | :--- | :--- | :--- | | 1.625% Senior Convertible Notes due 2026 | $246.2 | $252.0 | | 3.75% Senior Notes due 2029 | $396.3 | $373.6 | [Item 8. Financial Statements and Supplementary Data](index=48&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for fiscal years 2023-2025, including the auditor's report, core statements, and detailed notes [Report of Independent Registered Public Accounting Firm](index=48&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) PricewaterhouseCoopers LLP issued an unqualified opinion on financial statements and internal controls, identifying **NSE revenue recognition** and **Inertial Labs acquisition valuation** as Critical Audit Matters - The auditor, **PricewaterhouseCoopers LLP**, issued an unqualified opinion on the financial statements and internal controls[268](index=268&type=chunk) - Critical Audit Matters included **NSE segment revenue recognition** and the **valuation of contingent consideration and developed technology** from the **Inertial Labs acquisition**[275](index=275&type=chunk)[277](index=277&type=chunk)[281](index=281&type=chunk) [Consolidated Financial Statements](index=51&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show fiscal 2025 net revenue of **$1,084.3 million**, income from operations of **$57.5 million**, and total assets of **$1,993.8 million** Key Financial Statement Data (Fiscal Year 2025) | Metric (in millions) | Amount | | :--- | :--- | | **Statement of Operations** | | | Total Net Revenue | $1,084.3 | | Gross Profit | $621.1 | | Income from Operations | $57.5 | | Net Income | $34.8 | | **Balance Sheet (as of June 28, 2025)** | | | Total Assets | $1,993.8 | | Total Liabilities | $1,213.6 | | Total Stockholders' Equity | $780.2 | [Notes to Consolidated Financial Statements](index=56&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed accounting policies and financial data, including acquisitions (Note 5), debt (Note 11), and segment realignment (Note 19) - **Note 5**: On January 28, 2025, the company acquired **Inertial Labs** for approximately **$134.4 million** in cash and up to **$175.0 million** in contingent consideration, resulting in **$130.3 million** of goodwill[395](index=395&type=chunk)[396](index=396&type=chunk)[399](index=399&type=chunk) - **Note 11**: As of June 28, 2025, total debt carrying value was **$642.5 million**, comprising **$246.2 million** in short-term debt (2026 Notes) and **$396.3 million** in long-term debt (2029 Notes)[459](index=459&type=chunk) - **Note 19**: The company realigned segments into **Network and Service Enablement (NSE)** and **Optical Security and Performance Products (OSP)**, with FY2025 revenues of **$776.6 million** for NSE and **$307.7 million** for OSP[585](index=585&type=chunk)[589](index=589&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=110&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[600](index=600&type=chunk) [Item 9A. Controls and Procedures](index=110&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of **June 28, 2025**, excluding the recently acquired **Inertial Labs** - The CEO and CFO concluded that disclosure controls and procedures were effective as of **June 28, 2025**[601](index=601&type=chunk) - Management concluded that internal control over financial reporting was effective as of **June 28, 2025**, excluding the recently acquired **Inertial Labs** (2.3% of consolidated revenue, 2.1% of total assets)[602](index=602&type=chunk)[603](index=603&type=chunk) [Item 9B. Other Information](index=111&type=section&id=Item%209B.%20Other%20Information) No directors or Section 16 officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement during Q4 fiscal 2025 - No directors or Section 16 officers adopted, modified, or terminated a **Rule 10b5-1 trading plan** in the fourth fiscal quarter of 2025[607](index=607&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections](index=111&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20That%20Prevent%20Inspections) This item is not applicable Part III [Item 10. Directors, Executive Officers and Corporate Governance](index=112&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the company's 2025 Definitive Proxy Statement [Item 11. Executive Compensation](index=113&type=section&id=Item%2011.%20Executive%20Compensation) Information on executive compensation, including Compensation Discussion and Analysis, is incorporated by reference from the company's 2025 Proxy Statement [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=113&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership of beneficial owners, management, and equity compensation plans is incorporated by reference from the company's 2025 Proxy Statement [Item 13. Certain Relationships and Related Transactions and Director Independence](index=113&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%20and%20Director%20Independence) Information on related person transactions and director independence is incorporated by reference from the company's 2025 Proxy Statement [Item 14. Principal Accounting Fees and Services](index=113&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information on principal accounting fees and services is incorporated by reference from the company's 2025 Proxy Statement Part IV [Item 15. Exhibits, Financial Statement Schedules](index=114&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists financial statements, schedules, and exhibits filed as part of the Annual Report on Form 10-K, including corporate documents and certifications [Item 16. 10-K Summary](index=116&type=section&id=Item%2016.%2010-K%20Summary) The company reports no 10-K summary - None[628](index=628&type=chunk)

Core Insights - Viavi Solutions Inc. reported strong fourth-quarter fiscal 2025 results, with revenues and net income exceeding expectations, driven by growth in the Network and Service Enablement (NSE) and Optical Security and Performance Products (OSP) segments [1][4][10] - The company faces challenges due to a constrained spending environment influenced by macroeconomic factors [1] Financial Performance - GAAP net income for the quarter was $8 million or 4 cents per share, a significant improvement from a net loss of $21.7 million or 10 cents per share in the same quarter last year [2] - Non-GAAP net income rose to $29.7 million or 13 cents per share, up from $17.1 million or 8 cents per share year-over-year, surpassing the Zacks Consensus Estimate by a penny [2] - For fiscal 2025, GAAP net income was $34.8 million or 15 cents per share compared to a net loss of $25.8 million or 12 cents per share in fiscal 2024 [3] - Non-GAAP net income for fiscal 2025 was $105.4 million or 47 cents per share, an increase from $73.5 million or 33 cents per share in fiscal 2024 [3] Revenue Breakdown - Quarterly revenues reached $290.5 million, reflecting a 15.3% year-over-year increase, driven by strong demand in the NSE and OSP segments [4][10] - NSE segment revenues were $209.1 million, up from $182.2 million, marking a 14.8% growth due to demand for fiber lab and production products [5] - OSP revenues increased to $81.4 million from $69.8 million, primarily due to strength in anti-counterfeiting products [5] - Revenue contributions from different regions included $112.3 million from America, $99.4 million from Asia-Pacific, and $78.8 million from EMEA [6] Margins and Operating Performance - Non-GAAP gross margin for the quarter was 60.1%, up 50 basis points from the prior year [7] - Non-GAAP operating margin improved by 350 basis points year-over-year to 14.4%, with NSE operating margin at 4.7% and OSP operating margin at 39.4% [8][10] Cash Flow and Liquidity - Viavi generated $89.8 million in cash from operating activities, with a free cash flow of $62 million [11] - As of June 30, 2025, the company had $423.6 million in cash and cash equivalents, with long-term debt of $396.1 million [11] Outlook - For the first quarter of fiscal 2026, management expects revenues between $290 million and $298 million, with non-GAAP earnings per share projected between 13 cents and 14 cents [12]

Company Performance - Viav Solutions reported quarterly earnings of $0.13 per share, exceeding the Zacks Consensus Estimate of $0.12 per share, and up from $0.08 per share a year ago, representing an earnings surprise of +8.33% [1] - The company posted revenues of $290.5 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.93% and increasing from $252 million year-over-year [2] - Over the last four quarters, Viav Solutions has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times [2] Market Context - Viav Solutions shares have declined approximately 0.6% since the beginning of the year, while the S&P 500 has gained 7.9% [3] - The current consensus EPS estimate for the upcoming quarter is $0.13 on revenues of $279.11 million, and for the current fiscal year, it is $0.55 on revenues of $1.17 billion [7] Industry Outlook - The Communication - Components industry, to which Viav Solutions belongs, is currently ranked in the bottom 35% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Viav Solutions' stock performance [5]

Financial Data and Key Metrics Changes - Net revenue for Q4 2025 was $290.5 million, up 2% sequentially and 15.3% year over year, at the high end of guidance [6][11] - Operating margin for Q4 was 14.4%, a decrease of 230 basis points from the prior quarter but an increase of 350 basis points year over year [6][7] - EPS for Q4 was $0.13, down $0.02 sequentially but up $0.05 year over year [7][11] - Full year revenue for 2025 was $1.084 billion, up 8.4% year over year [11] Business Segment Data and Key Metrics Changes - Network and Service Enablement (NSE) revenue for Q4 was $209.1 million, up 14.8% year over year, driven by strong demand in fiber lab and production products [8][11] - NSE gross margin for Q4 was 62.2%, up 10 basis points year over year, while operating margin was 4.7%, an increase of 290 basis points year over year [8][9] - OSP revenue for Q4 was $81.4 million, up 16.6% year over year, primarily due to strength in anti-counterfeiting products [9][10] - OSP gross margin was 54.7%, up 170 basis points year over year, and operating margin was 39.4%, an increase of 460 basis points year over year [10] Market Data and Key Metrics Changes - The revenue growth was mainly driven by strong demand from the data center ecosystem and aerospace and defense sectors [11][21] - The company noted a decline in spending for wireless and cable products by NEMS and service providers, but growth was observed in aerospace and defense products [11][21] Company Strategy and Development Direction - The company is focusing on diversifying its revenue streams, with approximately 30% of revenue now coming from the data center ecosystem, a significant increase from previous years [50] - The acquisition of Inertia Labs is expected to contribute to growth in aerospace and defense, with the company prioritizing capital allocation towards M&A [13][21] - The company anticipates continued strong demand from the data center ecosystem and aerospace and defense customers, which is expected to mitigate traditional revenue seasonality [19][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in mitigating tariff impacts, estimating a total impact of around $1.5 million, which has been largely addressed through pricing adjustments and supply chain realignment [26] - The company expects NSE revenue to be slightly up quarter on quarter, driven by strong demand from the data center ecosystem and aerospace and defense sectors [19][21] - Management indicated that the wireless business remains mixed, with healthy demand for wireless field instruments but sluggish recovery in infrastructure testing [19][41] Other Important Information - The company successfully priced and allocated a $600 million Term Loan B to fund acquisitions and general corporate purposes [16] - The company has approximately $200 million remaining under its current authorized share repurchase program [13] Q&A Session Summary Question: Impact of tariffs on revenue - Management indicated that the tariff impact is primarily on North American sales, with a total impact of around $1.5 million, which has been mitigated [26] Question: Competitive dynamics in the data center market - Management noted strong demand for their 1.6 terabit test solutions, with significant engagement from leading semiconductor vendors and optical module developers [30][34] Question: End markets performance in NSE - Management highlighted that fiber demand is driving growth, particularly from data center operators and specialty fiber companies [40] Question: Guidance for Q1 and seasonality - Management expects Q1 to be slightly up compared to Q4, driven by strong demand from the data center ecosystem, despite traditional seasonality [44][62] Question: Size of the data center business - Management indicated that approximately 30% of NSE revenue comes from the data center ecosystem, with expectations for continued growth in this segment [50] Question: Margin expectations for NSE - Management aims to move NSE operating margins into the mid to high teens as the business recovers, with long-term goals of reaching the twenties [58]

Fiscal Year 2025 Performance - The company's revenue reached $1,084.3 million, marking a 42.4% year-over-year increase[7] - Non-GAAP operating income was $153.9 million, a 33.8% year-over-year increase[7] - The non-GAAP operating margin was 14.2%, up 270 basis points year-over-year[7] - Non-GAAP EPS was $0.47[7] Fiscal Q4 2025 Performance - Revenue was $290.5 million, a 15.3% year-over-year increase[12, 21, 26] - Non-GAAP operating income was $41.9 million, a 52.4% year-over-year increase[12, 26] - The non-GAAP operating margin was 14.4%, up 350 basis points year-over-year[12, 21, 26] - Non-GAAP EPS was $0.13, a 62.5% year-over-year increase[12, 21, 26] Segment Performance in Fiscal Q4 2025 - Network and Service Enablement (NSE) revenue was $209.1 million, a 14.8% year-over-year increase[15, 21, 22, 32] - Optical Security and Performance Products (OSP) revenue was $81.4 million, a 16.6% year-over-year increase[17, 21, 22, 32]

[Financial Performance Summary](index=1&type=section&id=Financial%20Performance%20Summary) [Q4 FY2025 Performance Highlights](index=1&type=section&id=Q4%20FY2025%20Performance%20Highlights) In the fourth quarter of fiscal year 2025, VIAVI demonstrated strong year-over-year growth, with net revenue increasing by 15.3% to $290.5 million. Profitability saw significant improvement, as GAAP net income turned positive to $8.0 million from a loss in the prior year, and non-GAAP net income grew by 73.7% to $29.7 million. Non-GAAP diluted EPS rose 62.5% to $0.13 Q4 FY2025 Key Financial Metrics (YoY) | Metric | Q4 FY2025 | Change (YoY) | | :--- | :--- | :--- | | Net Revenue | $290.5M | ▲ 15.3% | | GAAP Operating Margin | 5.3% | ▲ 760 bps | | Non-GAAP Operating Margin | 14.4% | ▲ 350 bps | | GAAP Net Income | $8.0M | ▲ 136.9% | | Non-GAAP Net Income | $29.7M | ▲ 73.7% | | GAAP Diluted EPS | $0.04 | ▲ 140.0% | | Non-GAAP Diluted EPS | $0.13 | ▲ 62.5% | [Full Year FY2025 Performance Highlights](index=1&type=section&id=Full%20Year%20FY2025%20Performance%20Highlights) For the full fiscal year 2025, VIAVI reported an 8.4% increase in net revenue to $1.08 billion. The company achieved a significant turnaround in profitability, with GAAP net income reaching $34.8 million compared to a loss in the previous year. Non-GAAP net income grew substantially by 43.4% to $105.4 million, resulting in a non-GAAP diluted EPS of $0.47, a 42.4% increase year-over-year Full Year FY2025 Key Financial Metrics (YoY) | Metric | FY 2025 | Change (YoY) | | :--- | :--- | :--- | | Net Revenue | $1.08B | ▲ 8.4% | | GAAP Operating Margin | 5.3% | ▲ 320 bps | | Non-GAAP Operating Margin | 14.2% | ▲ 270 bps | | GAAP Net Income | $34.8M | ▲ 234.9% | | Non-GAAP Net Income | $105.4M | ▲ 43.4% | | GAAP Diluted EPS | $0.15 | ▲ 225.0% | | Non-GAAP Diluted EPS | $0.47 | ▲ 42.4% | [Management Commentary](index=1&type=section&id=Management%20Commentary) CEO Oleg Khaykin highlighted a strong finish to fiscal 2025, with Q4 performance at the high end of guidance. He noted stabilization in the base businesses of service provider test & measurement and optical security pigments. Growth was accelerated by the data center ecosystem and aerospace & defense segments, with positive momentum expected to continue through calendar year 2025 - Stabilization observed in core businesses: service provider test and measurement, and optical security pigments[4](index=4&type=chunk) - Growth was accelerated by high-growth segments: data center ecosystem and aerospace & defense[4](index=4&type=chunk) - Management expects positive momentum in end markets to continue through calendar year 2025[4](index=4&type=chunk) [Detailed Financial Results](index=2&type=section&id=Detailed%20Financial%20Results) [Q4 FY2025 Financial Performance](index=2&type=section&id=Q4%20FY2025%20Financial%20Performance) In Q4 FY2025, total net revenue grew 15.3% YoY and 2.0% sequentially to $290.5 million. Both segments contributed to the YoY growth, with Network and Service Enablement up 14.8% and Optical Security and Performance Products up 16.6%. GAAP operating margin improved significantly to 5.3% from -2.3% a year ago, while non-GAAP operating margin expanded by 350 basis points to 14.4% Q4 FY2025 GAAP Results vs. Prior Periods | Metric | Q4 FY2025 | Q3 FY2025 | Q4 FY2024 | Change Q/Q | Change Y/Y | | :--- | :--- | :--- | :--- | :--- | :--- | | Net Revenue | $290.5M | $284.8M | $252.0M | ▲ 2.0% | ▲ 15.3% | | Gross Margin | 56.3% | 56.4% | 57.8% | ▼ (10) bps | ▼ (150) bps | | Operating Margin | 5.3% | 3.0% | (2.3)% | ▲ 230 bps | ▲ 760 bps | Q4 FY2025 Non-GAAP Results vs. Prior Periods | Metric | Q4 FY2025 | Q3 FY2025 | Q4 FY2024 | Change Q/Q | Change Y/Y | | :--- | :--- | :--- | :--- | :--- | :--- | | Gross Margin | 60.1% | 60.0% | 59.6% | ▲ 10 bps | ▲ 50 bps | | Operating Margin | 14.4% | 16.7% | 10.9% | ▼ (230) bps | ▲ 350 bps | | EPS | $0.13 | $0.15 | $0.08 | ▼ (13.3)% | ▲ 62.5% | [Full Year FY2025 Financial Performance](index=2&type=section&id=Full%20Year%20FY2025%20Financial%20Performance) For the full fiscal year 2025, net revenue increased by 8.4% to $1.084 billion, driven primarily by a 10.6% growth in the Network and Service Enablement segment. GAAP operating margin expanded by 320 basis points to 5.3%, and non-GAAP operating margin grew by 270 basis points to 14.2%. Geographically, revenues were led by the Americas at 39.2% of the total Full Year FY2025 GAAP & Non-GAAP Results (YoY) | Metric | FY 2025 | FY 2024 | Change Y/Y | | :--- | :--- | :--- | :--- | | **GAAP Results** | | | | | Net Revenue | $1,084.3M | $1,000.4M | ▲ 8.4% | | Operating Margin | 5.3% | 2.1% | ▲ 320 bps | | Net Income (Loss) per Share | $0.15 | ($0.12) | ▲ 225.0% | | **Non-GAAP Results** | | | | | Operating Margin | 14.2% | 11.5% | ▲ 270 bps | | EPS | $0.47 | $0.33 | ▲ 42.4% | - Revenue breakdown by region for FY2025: Americas (**39.2%**), Asia-Pacific (**35.0%**), and EMEA (**25.8%**)[8](index=8&type=chunk) [Segment Performance](index=2&type=section&id=Segment%20Performance) For FY2025, the Network and Service Enablement (NSE) segment's revenue grew 10.6% YoY to $776.6 million, with a GAAP operating margin of 5.4%. The Optical Security and Performance Products (OSP) segment's revenue grew 3.1% to $307.7 million, but it delivered a much higher GAAP operating margin of 36.5%, making it the more profitable segment Full Year FY2025 vs FY2024 Segment Performance (GAAP) | Segment | Metric | FY 2025 | FY 2024 | Change Y/Y | | :--- | :--- | :--- | :--- | :--- | | **Network and Service Enablement** | Net Revenue | $776.6M | $702.0M | ▲ 10.6% | | | Operating Margin | 5.4% | 1.1% | ▲ 430 bps | | **Optical Security and Performance** | Net Revenue | $307.7M | $298.4M | ▲ 3.1% | | | Operating Margin | 36.5% | 35.9% | ▲ 60 bps | Q4 FY2025 Segment Revenue Performance | Segment | Q4 FY2025 Revenue | Change Q/Q | Change Y/Y | | :--- | :--- | :--- | :--- | | Network and Service Enablement | $209.1M | ▲ 0.4% | ▲ 14.8% | | Optical Security and Performance | $81.4M | ▲ 6.3% | ▲ 16.6% | [Balance Sheet and Cash Flow](index=2&type=section&id=Balance%20Sheet%20and%20Cash%20Flow) As of June 28, 2025, VIAVI held $429.0 million in total cash, short-term investments, and restricted cash. Total assets increased to $1.99 billion from $1.74 billion in the prior year, primarily due to increases in Goodwill and Intangibles. The company generated $89.8 million in cash flow from operations for the full fiscal year and held a total net carrying value of debt of $642.5 million - The company held **$429.0 million** in total cash, short-term investments, and short-term restricted cash as of June 28, 2025[9](index=9&type=chunk) - Generated **$23.8 million** in cash from operations in Q4 and **$89.8 million** for the full fiscal year 2025[15](index=15&type=chunk) Key Balance Sheet Items (June 28, 2025 vs June 29, 2024) | Item | June 28, 2025 | June 29, 2024 | | :--- | :--- | :--- | | Total Current Assets | $885.2M | $876.5M | | Total Assets | $1,993.8M | $1,736.3M | | Total Liabilities | $1,213.6M | $1,054.7M | | Total Stockholders' Equity | $780.2M | $681.6M | - Total debt had a net carrying value of **$642.5 million**, consisting of **$250 million** in 1.625% Senior Convertible Notes and **$400 million** in 3.75% Senior Notes[15](index=15&type=chunk) [Business Outlook](index=3&type=section&id=Business%20Outlook) [Q1 FY2026 Guidance](index=3&type=section&id=Q1%20FY2026%20Guidance) For the first quarter of fiscal 2026, ending September 27, 2025, VIAVI anticipates net revenue to be in the range of $290 million to $298 million. The company projects non-GAAP earnings per share to be between $0.13 and $0.14. A reconciliation to GAAP EPS was not provided due to the difficulty in forecasting certain reconciling items Q1 FY2026 Outlook | Metric | Guidance Range | | :--- | :--- | | Net Revenue | $290M - $298M | | Non-GAAP EPS | $0.13 - $0.14 | - The company has not reconciled its forward-looking non-GAAP EPS to GAAP EPS because it is unable to provide an accurate estimate of certain reconciling items without unreasonable effort[11](index=11&type=chunk) [Appendix: Financial Statements and Reconciliations](index=5&type=section&id=Appendix%3A%20Financial%20Statements%20and%20Reconciliations) [Consolidated Statements of Operations (GAAP)](index=5&type=section&id=Consolidated_Statements_of_Operations) The Consolidated Statements of Operations show a significant improvement in profitability for FY2025. Net revenue grew to $1.084 billion from $1.000 billion in the prior year. Income from operations increased to $57.5 million from $20.8 million, and the company reported a net income of $34.8 million, a reversal from a net loss of $25.8 million in FY2024 FY2025 vs FY2024 Statement of Operations Highlights (GAAP) | Metric (in millions) | Year Ended June 28, 2025 | Year Ended June 29, 2024 | | :--- | :--- | :--- | | Net Revenue | $1,084.3 | $1,000.4 | | Gross Profit | $621.1 | $575.9 | | Income from Operations | $57.5 | $20.8 | | Net Income (Loss) | $34.8 | $(25.8) | | Diluted EPS | $0.15 | $(0.12) | [Consolidated Balance Sheets (GAAP)](index=6&type=section&id=Consolidated_Balance_Sheets) The company's balance sheet as of June 28, 2025, shows total assets of $1.99 billion, an increase from $1.74 billion a year prior. This growth was driven by increases in Goodwill and Intangibles. Total liabilities also increased to $1.21 billion from $1.05 billion, while total stockholders' equity rose to $780.2 million Key Balance Sheet Data (in millions) | Account | June 28, 2025 | June 29, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $423.6 | $471.3 | | Total Assets | $1,993.8 | $1,736.3 | | Total Liabilities | $1,213.6 | $1,054.7 | | Total Stockholders' Equity | $780.2 | $681.6 | [Reconciliation of GAAP to Non-GAAP Measures](index=8&type=section&id=Reconciliation_of_GAAP_to_Non-GAAP_Measures) VIAVI provides non-GAAP metrics to offer a clearer view of its core operational performance by excluding items like stock-based compensation, amortization of intangibles, and restructuring charges. For FY2025, the largest adjustments to reconcile GAAP Net Income of $34.8 million to Non-GAAP Net Income of $105.4 million were stock-based compensation ($53.1 million), amortization of intangibles ($24.3 million), and acquisition-related charges ($22.3 million) - Management uses non-GAAP measures to evaluate core operating performance, excluding items like purchase price accounting adjustments, stock-based compensation, and restructuring charges[28](index=28&type=chunk) Key Reconciling Items from GAAP to Non-GAAP Net Income (FY2025, in millions) | Item | Adjustment Amount | | :--- | :--- | | **GAAP Net Income** | **$34.8** | | Stock-based compensation | $53.1 | | Amortization of intangibles | $24.3 | | Acquisition and integration related charges | $22.3 | | Provision for income taxes (Benefit) | $(30.5) | | **Non-GAAP Net Income** | **$105.4** | [Reconciliation to Adjusted EBITDA](index=11&type=section&id=Reconciliation_to_Adjusted_EBITDA) For the full fiscal year 2025, Adjusted EBITDA was $191.9 million, a significant increase from $153.0 million in the prior year. The reconciliation from GAAP Net Income of $34.8 million includes adding back taxes, interest, depreciation, amortization, and other non-core items such as $53.1 million in stock-based compensation Reconciliation of GAAP Net Income to Adjusted EBITDA (in millions) | Metric | Q4 FY2025 | FY 2025 | | :--- | :--- | :--- | | GAAP Net Income (Loss) | $8.0 | $34.8 | | Interest, Taxes, D&A, etc. | $17.6 | $81.6 | | EBITDA | $33.2 | $120.2 | | Stock-based compensation | $12.6 | $53.1 | | Other Adjustments | $5.5 | $18.6 | | **Adjusted EBITDA** | **$51.3** | **$191.9** |

Core Insights - VIAVI Solutions reported strong financial performance for the fiscal fourth quarter and fiscal year ended June 28, 2025, with net revenue reaching $290.5 million, a 15.3% increase year-over-year [4][6] - The company experienced stabilization in its core businesses and significant growth in the data center ecosystem and aerospace & defense segments, with expectations for continued positive momentum through calendar year 2025 [4][9] Fiscal Fourth Quarter - Net revenue for Q4 was $290.5 million, up from $252.0 million in Q4 FY 2024, representing a 15.3% increase [6][8] - GAAP operating margin improved to 5.3%, an increase of 760 basis points year-over-year, while non-GAAP operating margin was 14.4%, up 350 basis points [6][8] - GAAP net income was $8.0 million, a significant increase of 136.9% year-over-year, with diluted EPS of $0.04, up 140.0% [6][8] Fiscal Year 2025 - Total net revenue for FY 2025 was $1.08 billion, an increase of 8.4% from $1.00 billion in FY 2024 [8][6] - GAAP net income for the year was $34.8 million, up 234.9% year-over-year, with diluted EPS of $0.15, a 225.0% increase [6][8] - The company reported a non-GAAP operating margin of 14.2%, up 270 basis points year-over-year [8][6] Revenue by Segment - For FY 2025, the Network and Service Enablement segment generated $776.6 million, a 10.6% increase from FY 2024, while Optical Security and Performance Products generated $307.7 million, a 3.1% increase [8][7] - In Q4, the Network and Service Enablement segment contributed $209.1 million, and Optical Security and Performance Products contributed $81.4 million, reflecting year-over-year growth of 14.8% and 16.6%, respectively [7][6] Business Outlook - For Q1 FY 2026, the company expects net revenue to be between $290 million to $298 million and non-GAAP EPS to be between $0.13 to $0.14 [9]

Industry Overview - The Zacks Communication - Components industry is facing challenges due to raw material price volatility, high capital expenditure for infrastructure upgrades, and geopolitical conflicts, which have negatively impacted profitability [1][4][5] - The industry primarily includes companies providing telecom products and services for scalable network architecture, video solutions, and broadband access equipment [3] Current Challenges - High operating costs are driven by a shortage of chips, increased raw material prices, and technological obsolescence, which have escalated operational expenses [7] - Demand erosion is occurring as customers shift to lower-priced alternatives due to increased fees for network upgrades, compounded by trade tensions affecting business credibility [5][6] Future Prospects - Despite current challenges, companies like Corning, Viavi Solutions, and Ooma are expected to benefit from rising demand for scalable infrastructure driven by IoT, fiber densification, and 5G rollout [2][16][20] - The industry is adapting to a software-driven, data-centric approach, enhancing cloud architecture and user experience, positioning itself for growth in cloud networking [6] Performance Metrics - The Zacks Communication - Components industry has outperformed the S&P 500 and the broader Zacks Computer and Technology sector, with a 66.1% increase over the past year compared to 20% and 28.9% for the S&P 500 and sector, respectively [11] - The industry currently trades at a trailing 12-month price-to-book (P/B) ratio of 4.13X, lower than the S&P 500's 7.37X and the sector's 10.68X [14] Company Highlights - **Corning**: Experienced a 69.1% stock surge over the past year, with a long-term earnings growth expectation of 18.2% and a focus on innovative optical connectivity products [16][17] - **Viavi Solutions**: Gained 35% in the past year, with a 27.8% upward revision in current earnings estimates, benefiting from the transition to 5G networks [20][21] - **Ooma**: Achieved a 31.5% stock increase, focusing on small business customers and delivering an earnings surprise of 18% on average in the trailing four quarters [25][26]

Group 1 - Viavi Solutions Inc. will announce its fiscal fourth quarter and fiscal 2025 financial results on August 7, 2025, after market close [1] - The earnings call will take place at 1:30 p.m. PT / 4:30 p.m. ET, with a live webcast available on the VIAVI website [2] - A replay of the earnings call will be accessible from August 7, 2025, 4:30 p.m. PT to August 14, 2025, 8:59 p.m. PT [3] Group 2 - 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 introduced colocation capabilities to its VALOR Automated Lab-as-a-Service for Open RAN, responding to the growing demand for comprehensive testing from Open RAN customers [1][4] - The colocation model offers customers more flexibility and capacity, allowing for longer access periods and comprehensive testing throughout the product lifecycle [2][3] Company Developments - The VALOR facility is based in Chandler, Arizona, and is funded by the U.S. National Telecommunications and Information Administration (NTIA) Public Wireless Supply Chain Innovation Fund (PWSCIF) [1][4] - The colocation framework enhances the NTIA PWSCIF model, aiming to accelerate the development of open, secure wireless ecosystems by leveraging federal spending to attract private investment [4] Service Offerings - VALOR provides a highly automated Lab-as-a-Service suite for Open RAN interoperability, performance, and security, including a state-of-the-art RF chamber for Massive MIMO and beamforming over-the-air validation [4] - The lab utilizes VIAVI's NITRO Wireless Open RAN Test Suite and VAMOS unified framework, enabling vendors to test products without significant upfront investment, thus reducing risks and accelerating time to market [5]