Viavi Solutions(US:VIAV)2020-08-11 23:29Financial Data and Key Metrics Changes - Revenue for fiscal Q4 was $266.6 million, a sequential increase of 4.1% but a year-on-year decline of 8% [6] - Operating profit increased by 37.6% sequentially to $52.3 million, with an operating margin of 19.6%, expanding by 200 basis points [6] - EPS for the quarter was $0.18, up by 5.9% from the previous year [6] Business Segment Data and Key Metrics Changes - NSE revenue was $208.4 million, growing 11.4% sequentially but declining 5.9% year-on-year [7] - NE revenue within NSE was $108.9 million, down 8.3% year-on-year but up 10.4% sequentially [8] - SE revenue increased 19% sequentially to $27.5 million, with a year-on-year growth of 14.1% [9] - OSP revenue was $58.2 million, down 15.9% sequentially and 14.8% year-on-year [10] Market Data and Key Metrics Changes - North America was the primary contributor to sequential growth, while Asia-Pacific and Europe showed signs of recovery [26] - Latin and South America were heavily impacted by COVID-19 and economic challenges, affecting demand [26] Company Strategy and Development Direction - The company aims to capitalize on long-term growth drivers in 5G wireless, fiber, and 3D sensing technologies [19] - There is an expectation for OSP to achieve record revenue levels driven by increased demand for anti-counterfeiting products and 3D sensing [19] Management's Comments on Operating Environment and Future Outlook - Management noted that the pandemic has created a two-half tale for fiscal 2020, with the first half performing strongly and the second half impacted by COVID-19 [18] - The company anticipates a recovery in NSE revenue in calendar 2021, with OSP expected to strengthen throughout the year [19] Other Important Information - The company reported total cash and short-term investments of $544 million, with operating cash flow for the quarter at $27.2 million [12] - Share repurchases totaled approximately $0.6 million at an average cost of $10.60 per share [12] Q&A Session Summary Question: Discussion on global market performance - Management indicated that lab and production segments remain strong, while field operations faced disruptions but are stabilizing as technicians return to work [24] Question: Fixed vs. variable costs in NSE margins - The mix of variable to fixed costs is approximately 40% variable and 60% fixed, with a sequential reduction in operating expenses due to disciplined management and lower travel costs [29] Question: Long-term impact of COVID on business - Management believes that while there may be delays in field operations, the overall demand for network improvements will lead to increased spending in the future [36] Question: Financial conditions of primary customers - Despite economic challenges, customers are upgrading their high-speed data services, indicating a stable demand for the company's products [44] Question: Update on 3D sensing growth - The company expects strong demand for 3D sensing driven by new product cycles, particularly if Android manufacturers follow Apple's lead in adopting new technologies [40] Question: Guidance for NSE revenue - The company anticipates a typical seasonal decline in NSE revenue for Q1, but the sales funnel remains healthy, and conversion is taking longer due to travel restrictions [66]