Viavi Solutions(US:VIAV)2023-08-11 00:48Financial Data and Key Metrics Changes - Fiscal Q4 revenue was $263.6 million, slightly above the guidance range of $242 million to $262 million, up 6.4% sequentially but down 21.4% year-over-year [6] - Operating profit margin was 11.7%, near the high end of the guidance range, increasing by 30 basis points from the prior quarter but decreasing 9.6% from the previous year [6] - EPS was $0.10, above the guidance range of $0.07 to $0.09, up $0.02 sequentially but down $0.14 year-over-year [6] - Full year revenues decreased from $1.3 billion in 2022 to $1.1 billion in 2023, down 14.4% [7] - Full year 2023 EPS was $0.55, a decrease of 42.1% from $0.95 in 2022 [9] Business Segment Data and Key Metrics Changes - NSE segment revenue for Q4 was $197.9 million, exceeding expectations, but down 19.6% year-over-year [12] - OSP segment revenue for Q4 was $65.7 million, slightly above guidance but down 26.3% year-over-year [14] - NSE gross profit margin was 62.1%, down 280 basis points year-over-year [13] - OSP gross profit margin was 46.6%, down 9.3% year-over-year [14] Market Data and Key Metrics Changes - NSE full year revenue was $801.2 million, down 15.6% year-over-year [7] - OSP revenue decreased from $343.3 million in 2022 to $304.9 million in 2023, down 11.2% [7] - Demand for lab and production test equipment from wireless and fiber NEMs and semiconductor companies saw gradual recovery [22] Company Strategy and Development Direction - The company is focusing on capital allocation strategies, including share repurchase programs and acquisitions [10] - Continued investment in new technologies and applications, expanding into higher growth markets [27] - The restructuring program is expected to result in net operating expense savings of $28 million annually [11] Management's Comments on Operating Environment and Future Outlook - Management noted initial signs of stabilization and gradual recovery in the service provider spend [21] - The demand environment for OSP remains challenging, but there is stronger demand for anti-counterfeiting products [24] - Management expects the first fiscal quarter 2024 revenue to be in the range of $240 million to $260 million [19] Other Important Information - The company repurchased 1 million shares for $10 million in Q4 and a total of 7.3 million shares for $83.9 million in fiscal 2023 [18] - The ending balance of cash and short-term investments was $525.6 million, down $39.3 million compared to the prior year [16] Q&A Session Summary Question: Visibility on service providers' spending - Management indicated there are signs of life and multiple discussions with service providers, with expectations of increased spending on network maintenance and optimization [29][30] Question: Catalysts for service provider upgrades - Management acknowledged that while there is plenty of existing equipment, ongoing operational needs will drive demand for upgrades [34][35] Question: Reconciliation of stabilization and Q1 guidance - Management explained that traditional seasonality is returning, with expectations of lower demand in the September and March quarters [38][40] Question: Trends in high-speed connectivity - Management noted interest in 800-gig connectivity, particularly among fiber operators, but current demand is primarily for 400-gig [44] Question: Improvement in customer conversations - Management reported broad-based improvement in conversations across various customer segments, particularly with cable and Tier 2 telecom providers [78]