Viavi Solutions(US:VIAV)2025-10-30 20:13Financial Performance - Net revenue for the first quarter of fiscal 2026 was $299.1 million, an increase of $60.9 million or 25.6% year-over-year[174]. - GAAP net loss was $21.4 million, an increase of $19.6 million or 1,088.9% year-over-year, while non-GAAP net income was $33.1 million, up $20.7 million or 166.9% year-over-year[174]. - Non-GAAP diluted EPS was $0.15, an increase of $0.09 or 150.0% year-over-year, compared to GAAP diluted EPS of $(0.10), down $0.09 or 900.0% year-over-year[174]. - Total net revenue for the three months ended September 27, 2025, was $299.1 million, an increase of $60.9 million or 25.6% compared to $238.2 million for the same period in 2024[186]. - NSE segment net revenue increased by $56.6 million or 35.5% to $216.0 million, while OSP segment net revenue rose by $4.3 million or 5.5% to $83.1 million[186]. - Product revenues increased by $59.9 million or 30.3%, while service revenues increased by $1.0 million or 2.5% during the same period[187]. - Gross profit for the period was $169.0 million, reflecting a 24.2% increase from $136.1 million, with a gross margin of 56.5%[186]. Expenses and Margins - Research and Development (R&D) expenses rose by $6.6 million or 13.4%, totaling $56.0 million, which is 18.7% of net revenue[196]. - Selling, General and Administrative (SG&A) expenses increased by $30.1 million or 40.6%, amounting to $104.2 million, representing 34.8% of net revenue[198]. - Non-GAAP operating margin improved to 15.7%, up 570 bps year-over-year, while GAAP operating margin decreased to 2.5%, down 230 bps year-over-year[174]. Acquisitions and Growth - The acquisition of Inertial Labs contributed $18.7 million in net revenue during the first quarter of fiscal 2026[169]. - The company expects continued growth in the NSE segment driven by the data center ecosystem and aerospace and defense markets[171]. - The company aims to extend its technologies into adjacent markets to expand its total addressable market (TAM)[173]. Cash Flow and Financing - Cash provided by operating activities was $31.0 million, consisting of a net loss of $21.4 million adjusted for non-cash charges totaling $62.3 million[230]. - Cash used in investing activities was $8.3 million, primarily for capital expenditures of $8.5 million and the acquisition of Inertial Labs[231]. - Cash provided by financing activities was $97.7 million, primarily from proceeds of $149.1 million from the issuance of the 2031 Notes[232]. - As of September 27, 2025, the combined balance of cash and cash equivalents and restricted cash increased by $120.0 million to $552.1 million from $432.1 million as of June 28, 2025[229]. - The company repurchased and retired 2.7 million shares of common stock for $30.0 million during the three months ended September 27, 2025, with remaining authorization of $168.4 million for future repurchases[233]. Tax and Liabilities - The income tax provision for the three months ended September 27, 2025, was $19.0 million, up from $9.0 million in the same period last year, reflecting a 111.1% increase[209]. - The pension plans were under-funded by $51.2 million as of September 27, 2025, with the fair value of plan assets decreasing approximately 5.0% since June 28, 2025[238]. Market and Risk Factors - The company's market risk related to foreign exchange and interest rates has not changed materially from previous disclosures[246]. - The company's consolidated financial statements are prepared in accordance with U.S. GAAP, requiring management to make significant judgments and estimates that affect reported amounts of assets and liabilities[243]. - The fair value of contingent purchase consideration liabilities is remeasured at each reporting period, with significant judgment involved in the estimates used[244]. - A 50-basis point change in the discount rate would result in a corresponding increase or decrease in the post-retirement benefit obligation (PBO) of approximately $4.0 million based on data as of June 28, 2025[245]. - The company is analyzing ways to mitigate the impact of tariffs on operations and supply chain strategies[171].