Viavi Solutions Q2 Earnings Call Highlights

Core Insights - Viavi Solutions reported strong fiscal second-quarter 2026 results, with net revenue of $369.3 million, which is at the high end of the company's guidance range, reflecting a 23.5% sequential increase and a 36.4% year-over-year growth [3][6] - The company experienced significant growth in its Network Service Enablement (NSE) segment, with revenue reaching $291.5 million, up 45.8% year-over-year, driven by acquisitions and strong demand in the data center ecosystem [5][6] - Viavi's non-GAAP operating margin improved to 19.3%, exceeding guidance and reflecting a 360 basis point increase from the prior quarter [2][6] Financial Performance - Revenue from Spirent was $43 million, slightly below expectations of $45 million to $55 million due to timing issues [1] - Non-GAAP earnings per share were $0.22, surpassing guidance of $0.18 to $0.20, and increased by $0.07 sequentially [2][6] - NSE gross margin was 64.7%, while operating margin improved to 15.6%, up from 8.7% in the same quarter last year [6] Balance Sheet and Cost Management - The company ended the quarter with $772.1 million in cash and short-term investments, an increase from $549.1 million in the previous quarter [9] - Viavi executed a restructuring plan impacting approximately 5% of its workforce, with expected annual savings of about $30 million [12] - The company exchanged about $100 million of convertible notes for shares and prepaid $100 million of its Term Loan B [10][11] Market Demand and Outlook - Demand from the data center ecosystem continues to drive growth, with management noting longer visibility in data center-related demand [13][14] - The company expects fiscal third-quarter 2026 revenue to be between $386 million and $400 million, with NSE revenue projected at $304 million to $316 million [15] - Viavi anticipates paying a $75 million earnout related to Inertial Labs in the third quarter due to strong performance [16]