Viavi Q2 Earnings Beat Estimates on Solid Revenue Growth

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]