Viavi Solutions(VIAV) - 2025 Q4 - Annual Results

Financial Performance Summary Q4 FY2025 Performance Highlights 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 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 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] - Growth was accelerated by high-growth segments: data center ecosystem and aerospace & defense[4] - Management expects positive momentum in end markets to continue through calendar year 2025[4] Detailed Financial Results Q4 FY2025 Financial Performance 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 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] Segment Performance 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 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] - Generated $23.8 million in cash from operations in Q4 and $89.8 million for the full fiscal year 2025[15] 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] Business Outlook Q1 FY2026 Guidance 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] Appendix: Financial Statements and Reconciliations Consolidated Statements of Operations (GAAP) 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) 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 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] 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 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 |