Financial Data and Key Metrics Changes - Net revenue for Q1 2026 was $299.1 million, exceeding guidance of $290 million to $298 million, representing a 3% sequential increase and a 25.6% year-over-year increase [4] - Operating margin for Q1 was 15.7%, above guidance of 14.6% to 15.4%, and increased by 130 basis points sequentially and 570 basis points year-over-year [4] - EPS for the quarter was $0.15, above guidance of $0.13 to $0.14, and increased by $0.02 sequentially and $0.09 year-over-year [4] Business Segment Data and Key Metrics Changes - NSC revenue was $216 million, above guidance of $208 million to $214 million, with a year-over-year increase of 35.5% driven by strong demand from the data center ecosystem and the acquisition of Inertia Labs [5] - OSB revenue was $83.1 million, in line with guidance of $82 million to $84 million, and up 5.5% year-over-year, primarily due to strength in anti-counterfeiting products [6] Market Data and Key Metrics Changes - Total cash and short-term investments at the end of Q1 were $549.1 million, compared to $429 million in the previous quarter [7] - Cash flow from operating activities for the quarter was $31 million, up from $13.5 million in the same period last year [7] Company Strategy and Development Direction - The company expects continued strong demand in NSC driven by the data center ecosystem and aerospace and defense customers, with a focus on integrating the recently acquired Spirent Communications product lines [9][10] - The company plans to report NSC as one business segment going forward, leveraging complementary product portfolios [10] Management's Comments on Operating Environment and Future Outlook - Management noted strong momentum from Q4 2025, with expectations for continued growth in NSC driven by data center demand and aerospace and defense [11][12] - The service providers' business was stable, with gradual recovery in fiber offset by soft demand for wireless products [13] Other Important Information - The company successfully refinanced $250 million in convertible notes and repurchased approximately 2.7 million shares for about $30 million [7] - The acquisition of Spirent Communications is expected to add about $200 million in annual revenue run rate, higher than the previous estimate of $188 million [8][44] Q&A Session Summary Question: Update on revenue mix between core telecom service provider and new products - Management indicated a shift in revenue mix to approximately 45% service provider, 40% data center ecosystem, and 15% aerospace and defense, with data center revenue approaching service provider levels [18][19] Question: Growth breakdown in core NSC business - Management noted strong demand from data center and aerospace and defense sectors, with traditional field instruments seeing increased demand from hyperscalers [20][22] Question: Operating margin guidance for NSC - Management expects operating margins to improve with Spirent's contribution, projecting around $165 million in quarterly revenue from Spirent [24][25] Question: Impact of wireless business recovery on earnings - Management acknowledged that recovery in the wireless segment could significantly enhance earnings, with potential for EPS to approach $1 if trends continue positively [27][28] Question: Margin profile of Spirent Communications business - Management stated that Spirent has a higher gross margin than the average NSC and is expected to be accretive post-integration [51][52]

Financial Data and Key Metrics Changes - Net revenue for Q3 2025 was $284.8 million, exceeding the guidance range of $276 million to $288 million, representing a sequential increase of 5.2% and a year-over-year increase of 15.8% [6][7] - Operating margin for the quarter was 16.7%, above the guidance range of 13% to 15%, and increased by 1.8% sequentially and 7.4% year-over-year [6][7] - EPS was $0.15, above the guidance range of $0.10 to $0.13, and increased by $0.02 sequentially and $0.09 year-over-year [7] Business Segment Data and Key Metrics Changes - NSE revenue was $208.2 million, slightly above the guidance range of $200 million to $212 million, with a year-over-year increase of 22.6% [7][8] - NE revenue was $188 million, up 23.9% year-over-year, driven by strong demand for fiber lab and production products [7][8] - SE revenue was $20.2 million, an increase of 11.6% year-over-year, aligning with expectations [8] - NSE gross margin was 63.1%, up 1.7% year-over-year, while NE gross margin was 63.4%, an increase of 190 basis points [8] - OSP revenue was $76.6 million, slightly above the guidance range, with a year-over-year increase of 0.5% [9] Market Data and Key Metrics Changes - The demand for fiber monitoring systems is being driven by service providers and hyperscale data center operators, indicating a strong recovery in the market [16] - The aerospace and defense segment is expected to be a multiyear growth driver, particularly due to the acquisition of Inertia Labs [16][45] - Wireless business demand is recovering, particularly for 5G field instruments, although infrastructure test products continue to show weakness [16] Company Strategy and Development Direction - The company is focusing on M&A, with plans to acquire Spirent's high-speed Ethernet and network security business lines, financing this with additional debt while maintaining financial discipline [12] - The company expects to realign its supply chain to mitigate tariff impacts within six months [29] - The strategy includes passing on tariff costs to customers, which is being accepted without significant pushback [34][37] Management's Comments on Operating Environment and Future Outlook - Management expressed a cautious outlook for Q4 due to potential delays in customer orders related to tariffs, although no orders have been canceled [22][25] - The company anticipates that the overall demand will remain flat relative to Q3, with specific segments like NSE taking a more prudent outlook [13][18] - Management noted that the demand for wireless field instruments is a leading indicator for the resumption of 5G network build-out [16] Other Important Information - Total cash and short-term investments at the end of Q3 were $400.2 million, down from $512.8 million in the previous quarter, primarily due to the Inertia Labs acquisition [11] - CapEx for the quarter was $6.8 million, compared to $3.2 million in the same period last year [12] Q&A Session Summary Question: Concerns about tariff impacts on revenue - Management noted that while there are concerns about delays in approved POs, no orders have been canceled, and customers are accepting tariff increases [22][23][25] Question: Revenue sourced from regions with high tariffs - Approximately 15% of revenue is subject to tariffs, with 3% directly impacted by current tariffs, but the company is working to mitigate this through supply chain adjustments [28][29] Question: Technology domains for future growth - The data center ecosystem is expected to drive strong growth, particularly in fiber lab and production, along with aerospace and defense segments [44][46] Question: OSP business outlook - The OSP business is expected to remain stable, with strength in anti-counterfeiting products offsetting seasonal weaknesses [53][54] Question: Service provider spending trends - Management believes there is a healthy demand from service providers, with a gradual return to normal spending patterns [60][62]