Track market-moving stories before they get noisy

Key Takeaways VIAV's Q4 revenue rose 52.5% to $443.1M, while adjusted EPS jumped 161.5% to 34 cents.AI data centers now account for roughly half of NSE revenues, with robust growth expected to continue.VIAV guides Q1 revenue to $450M-$460M and non-GAAP EPS to 40-42 cents, both up sequentially. Viavi Solutions Inc. (VIAV - Free Report) wrapped up fiscal 2026 on a strong note, backed by robust demand across the artificial intelligence (AI) data-center ecosystem, aerospace and defense markets and contributions from the acquired Spirent businesses. The company also witnessed substantial margin expansion, highlighting improving operating leverage.

Fiscal fourth-quarter revenues surged 52.5% year over year to $443.1 million and surpassed the Zacks Consensus Estimate of $433 million. Adjusted earnings jumped 161.5% year over year to 34 cents per share, beating the consensus estimate of 30 cents by 13.3%. VIAV surpassed the consensus mark for earnings and revenues in each of the past four quarters.

Management expects the momentum to extend into fiscal 2027. Let us delve a little deeper into the factors that make VIAV an attractive investment proposition following its solid fiscal fourth-quarter performance.

AI Data Center Momentum Remains a Key CatalystViavi's expanding exposure to AI and hyperscale data centers is emerging as one of its most important growth drivers. Network and Service Enablement (NSE) revenues soared 69.2% year over year to $353.9 million in the fiscal fourth quarter, supported by demand for lab, production and field-testing products, aerospace and defense solutions and the acquired Spirent portfolio.

The data-center ecosystem now accounts for roughly half of NSE revenues, reflecting the rapid transformation of VIAV's revenue mix away from its historical dependence on telecom service-provider spending. Management expects robust data-center growth to continue over the next several quarters.

The company has also expanded its AI-networking portfolio through products such as the Ultra Ethernet Transport validation platform and the CyberFlood CF1000 400G security and application-performance testing platform. These solutions enable Viavi to benefit as hyperscalers, cloud operators and networking vendors deploy increasingly complex, high-bandwidth AI infrastructure.

Spirent Integration Strengthens VIAV's Growth ProfileThe acquisition of selected Spirent Communications businesses has significantly expanded Viavi's addressable market and technological capabilities. It has strengthened the company's position in high-speed Ethernet testing, network security, channel emulation and enterprise network validation while creating cross-selling opportunities across its existing customer base.

Spirent's contribution should increase in the near term. Management expects the acquired business to grow roughly 10% sequentially in the September quarter, while December is typically its strongest quarter because of favorable seasonality.

The combination of Viavi's optical and network-testing capabilities with Spirent's Ethernet, cybersecurity and network-validation assets provides a broader platform for addressing the increasingly sophisticated testing requirements associated with AI clusters, cloud networks and next-generation communications infrastructure.

Aerospace & Defense Provides Another Growth EngineViavi's diversification beyond traditional telecom customers is another positive. The aerospace and defense business delivered another quarter of strong year-over-year growth, driven particularly by healthy demand for positioning, navigation and timing (PNT) products.

Management expects PNT to remain a multi-year growth driver for its aerospace and defense operations. This market provides VIAV with exposure to government and defense modernization spending and reduces dependence on more cyclical carrier capital expenditures. The combination of AI data centers and aerospace and defense has materially changed the company's growth profile, providing greater diversification and improving revenue visibility.

Price PerformanceViavi has surged 244.1% in the past year compared with the industry’s growth of 189.1%. It has outperformed peers like Knowles Corporation (KN - Free Report) and Airgain, Inc. (AIRG - Free Report) . While Airgain has gained 25.3%, Knowles soared 59% over this period.

One-Year VIAV Stock Price Performance

Image Source: Zacks Investment Research

Upbeat Q1 Outlook Signals Sustained MomentumManagement's first-quarter fiscal 2027 outlook reinforces the bullish growth narrative. VIAV expects revenues between $450 million and $460 million, above the $443.1 million recorded in the fiscal fourth quarter. Non-GAAP earnings are projected between 40 cents and 42 cents per share, representing another healthy sequential increase from 34 cents in the June quarter.

Management has also become more optimistic about Viavi's longer-term revenue trajectory. Given the current pace of growth, the company believes it could reach quarterly revenues of more than $500 million sometime during calendar 2027, earlier than its previous expectation of achieving that level near the end of fiscal 2028.

Moving ForwardViavi entered fiscal 2027 with considerable momentum. Strong AI data-center spending and the expanding Spirent portfolio should support continued growth in the NSE segment. At the same time, healthy aerospace and defense demand provides another secular growth avenue.

The upbeat first-quarter outlook adds further visibility to the growth story. Investors seeking exposure to the rapidly expanding AI networking and high-speed optical testing ecosystem may consider betting on VIAV for further upside.

Viavi currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Key Takeaways Viavi Solutions delivered 40% fiscal 2026 revenue growth and a 112.8% rise in non-GAAP EPS.NSE revenue surged 52.3%, driven by data center demand, aerospace and defense, and Spirent products.Weak wireless demand, variable cash flow and share dilution temper the bullish case despite strong growth.
Shares of Viavi Solutions Inc. (VIAV - Free Report) have declined 18.2% in the past three months despite a sharp improvement in the company's operating performance. Fiscal 2026 revenues rose 40% year over year to $1.5 billion, while non-GAAP earnings per share increased 112.8% to $1.00. Fourth-quarter revenue climbed 52.5% to $443.1 million, and earnings rose 161.5% to 34 cents per share.

The disconnect raises a key question for investors: Can accelerating demand and expanding margins support VIAV after its pullback, or will concerns about wireless testing, cash generation and share dilution continue to weigh on the shares?

Image Source: Zacks Investment Research

VIAV's 3-Month Decline Tests the Growth StoryViavi's fiscal 2026 results provide a strong fundamental backdrop despite the recent decline. Fourth-quarter revenues, non-GAAP operating margin and earnings exceeded the high end of management's guidance. Non-GAAP operating margin reached 24%, up 960 basis points year over year, while earnings of 34 cents per share were 13.3% above the Zacks Consensus Estimate.

The improvement extended through the full year. Fiscal 2026 non-GAAP operating income increased 101.6% to $312.9 million, while the non-GAAP operating margin expanded to 20.6% from 14.3% a year earlier. Higher revenue and favorable product mix drove the improvement.

VIAV's recent price performance also needs context. The stock is down 18.2% over the past three months but has gained 290.8% over the past year. Over the same three-month period, the Zacks sub-industry has declined 13.9%, while the Zacks Computer and Technology sector gained 2.6%.

Viavi Solutions Still Benefits From AI InfrastructureData center and AI infrastructure demand remain important growth drivers for Viavi. The company said fiscal 2026 growth was driven mainly by demand for lab, production and field products tied to the data center ecosystem, along with aerospace and defense products. Acquisitions of certain Spirent product lines and Inertial Labs also contributed to growth.

The Network and Service Enablement (NSE) segment has become the company's main growth engine. NSE revenues increased 52.3% in fiscal 2026 to $1.18 billion and accounted for 77.9% of total revenue. Fourth-quarter NSE revenue jumped 69.2% year over year to $353.9 million, driven by demand for lab, production and field products, aerospace and defense products and acquired Spirent product lines.

Viavi is also expanding its testing portfolio for AI infrastructure. Recent product launches include an Ultra Ethernet Transport validation platform and the CyberFlood CF1000, a 400G security and application performance testing platform designed for AI data center infrastructures. These offerings broaden the company's exposure to high-speed networking and AI-related testing requirements.

VIAV's Earnings Momentum Supports the Bull CaseThe pace of NSE growth is central to the bullish case. Fourth-quarter NSE revenues of $353.9 million exceeded the company's $340-$348 million guidance range. NSE gross margin increased 190 basis points year over year to 64.1%, while operating margin reached 20%.

Management expects the momentum to continue into fiscal 2027. Viavi expects first-quarter revenues of $450-$460 million and non-GAAP EPS of 40-42 cents. The company also expects OSP revenue of $90-$92 million and operating margin of 43.2% for the quarter.

The Zacks Consensus Estimate projects fiscal 2027 revenues of $1.874 billion and EPS of $1.22 compared with $1.518 billion and $1, respectively, in fiscal 2026.

Among industry peers, Knowles Corporation (KN - Free Report) carries an Outperform recommendation, while ADTRAN Holdings, Inc. (ADTN - Free Report) has an Underperform recommendation, providing additional context for investors evaluating VIAV's position within the Communication - Components industry.

Viavi Solutions Faces Wireless and Cash Flow RisksThe growth story has several offsets. Management has indicated that wireless test demand remains weak, with no near-term recovery expected. Fiscal fourth-quarter growth was driven primarily by data center, aerospace and defense demand, leaving the traditional wireless market with limited visibility.

Cash generation also warrants attention. Viavi generated $113.9 million in operating cash flow and $82.8 million in free cash flow in fiscal 2026. Fourth-quarter operating cash flow improved to $66.7 million from negative $26.3 million in the prior quarter, but the sharp sequential swing highlights the sensitivity of cash conversion to working capital and other cash requirements.

Capital allocation creates another trade-off. Viavi raised $575 million through a follow-on equity offering in fiscal fourth-quarter 2026 and issued approximately 12.78 million shares at $45 per share. The company used $450 million of the proceeds to repay Term Loan B. While the debt reduction strengthens the balance sheet, the larger share base spreads future earnings across more shares. Basic shares used in fourth-quarter EPS calculations rose 7.2% year over year, while diluted shares increased 15%.

OSP profitability is another variable to monitor. OSP revenue increased 9% in fiscal 2026, but its gross margin declined to 52.2% from 53.2% a year earlier, indicating that product mix can affect profitability even when revenue is growing.

VIAV's Rank Signals Caution Despite GrowthVIAV currently carries a Zacks Rank #3 (Hold) and a Neutral long-term Zacks Recommendation. Its Zacks Style Scores are a Value Score of D, Growth Score of D, Momentum Score of D and VGM Score of F.

The Zacks Rank is designed to reflect trends in earnings estimate revisions over a one- to three-month horizon, while Zacks Style Scores serve as complementary indicators covering value, growth and momentum characteristics. The VGM Score combines the three individual Style Scores.

For a Zacks Rank #3 stock, the Style Score hierarchy still matters. The Style Score framework favors higher grades, with A and B scores offering the most favorable profile. VIAV's D scores and F VGM Score therefore temper the bullish fundamental case. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

VIAV's three-month decline does not by itself establish a buying opportunity. Fiscal 2026 results show accelerating revenue, strong NSE growth and expanding margins, while fiscal 2027 guidance points to further earnings growth. However, weak wireless demand, variable cash generation, share dilution and the stock's Zacks Rank #3 argue for a measured view as investors weigh the improving fundamentals against the risks.

Key Takeaways Viavi Solutions' Q4 revenues jumped 52.5% as AI, data centers, aerospace and defense drove demand.VIAV expects fiscal Q1 2027 revenues of $450-$460 million and non-GAAP EPS of 40-42 cents.Margins expanded sharply, while new AI testing platforms broaden Viavi's network validation capabilities. Viavi Solutions Inc. (VIAV - Free Report) is benefiting from rising AI infrastructure investment as demand for data center networking, testing and cybersecurity solutions drives growth. Fourth-quarter fiscal 2026 revenues rose 52.5% year over year to $443.1 million, while non-GAAP EPS reached 34 cents. Data center demand, aerospace and defense activity and contributions from acquired Spirent product lines supported the results.

VIAV's Q4 Results Confirm Strong AI ExposureNetwork and Service Enablement (NSE) revenues increased 69.2% year over year to $353.9 million. Growth was driven by demand for products serving the data center ecosystem, aerospace and defense demand and contributions from Spirent product lines. Management continues to cite AI infrastructure, high-performance computing, optical networking and hyperscale data centers as key demand drivers.

Viavi Solutions Guides for Another Strong QuarterViavi expects first-quarter fiscal 2027 revenues of $450-$460 million and non-GAAP EPS of 40-42 cents. NSE revenue is projected at $360-$368 million, while OSP revenue is expected at $90-$92 million.

The Zacks Consensus Estimate calls for fiscal 2027 revenues of $1.874 billion, up 23.5% from fiscal 2026, with EPS expected to rise to $1.22 from $1.

VIAV's Margins Expand on Scale and MixFourth-quarter non-GAAP operating margin increased to 24.0% from 14.4% a year earlier, a 960-basis-point expansion. NSE operating margin reached 20.0%, up 1,540 basis points year over year.

Management expects consolidated non-GAAP operating margin of 27.1% in first-quarter fiscal 2027, including a 100-basis-point benefit from tariff refunds.

Viavi Solutions Adds New AI Testing CapabilitiesViavi launched its Ultra Ethernet Transport validation platform in June 2026 to support next-generation AI networks. In May, it introduced the CyberFlood CF1000, a 400G security and application performance testing platform designed for AI data center infrastructure.

The launches expand Viavi's capabilities in AI network validation, encrypted traffic testing and cybersecurity while complementing the acquired Spirent portfolio. Their contribution will depend on customer adoption and execution.

VIAV's Rank Supports a Balanced Event ViewVIAV carries a Zacks Rank #3 (Hold), with a Value Score of D, Growth Score of D, Momentum Score of D and VGM Score of F. The Zacks Style Scores complement the Zacks Rank by evaluating value, growth and momentum characteristics.

Viavi's AI exposure and margin expansion support the growth case, although its Zacks Rank #3 and weak Style Scores warrant caution. Within the same industry, Knowles Corporation (KN - Free Report) has an Outperform recommendation, while ADTRAN Holdings, Inc. (ADTN - Free Report) carries an Underperform recommendation, offering some context on the differing outlooks across peers.

Viavi's AI exposure and margin expansion support the growth case, but the Zacks Rank #3 and weak Style Scores provide a cautionary counterweight to the strong quarterly results. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

, /PRNewswire/ -- VIAVI (NASDAQ: VIAV) today reported results for its fiscal fourth quarter and fiscal year ended June 27, 2026 with the following highlights.

Fourth Quarter

Net revenue of $443.1 million, up $152.6 million or 52.5% year-over-year GAAP operating margin of 13.8%, up 850 bps year-over-year Non-GAAP operating margin of 24.0%, up 960 bps year-over-year GAAP net income of $32.7 million, up $24.7 million or 308.8% year-over-year Non-GAAP net income of $89.1 million, up $59.4 million or 200.0% year-over-year GAAP diluted earnings per share (EPS) of $0.13, up $0.09 or 225.0% year-over-year Non-GAAP diluted EPS of $0.34, up $0.21 or 161.5% year-over-year   Fiscal Year 2026

Net revenue of $1.5 billion, up $434.0 million or 40.0% year-over-year GAAP operating margin of 6.9%, up 160 bps year-over-year Non-GAAP operating margin of 20.6%, up 630 bps year-over-year GAAP net loss of $30.4 million, down $65.2 million or 187.4% year-over-year Non-GAAP net income of $243.8 million, up 137.1 or 128.5% year-over-year GAAP diluted EPS of $(0.13), down $0.28 or 186.7% year-over-year Non-GAAP diluted EPS of $1.00, up $0.53 or 112.8% year-over-year "VIAVI's fourth quarter and fiscal year 2026 financial performance has exceeded our expectations, driven by strong growth in many of our end markets. Our diversification strategy into datacenter ecosystem and aerospace and defense end markets has been a key growth driver for us during FY26, and we expect this strategy to continue driving our growth for the next several quarters," said Oleg Khaykin, VIAVI's President and Chief Executive Officer.

Financial Overview:

The tables below (in millions, except percentage and per share data) provide comparisons of quarterly results to prior periods, including sequential quarterly and year-over-year changes. A full reconciliation between the GAAP and non-GAAP measures included in the tables is contained in this release under the section titled "Use of Non-GAAP (Adjusted) Financial Measures."

Fiscal Fourth Quarter Ended June 27, 2026

GAAP Results

Q4

Q3

Q4

Change

FY 2026

FY 2026

FY 2025

Q/Q

Y/Y

Net revenue

$     443.1

$     406.8

$     290.5

8.9 %

52.5 %

Gross margin

59.1 %

57.5 %

56.3 %

160 bps

280 bps

Operating margin

13.8 %

6.1 %

5.3 %

770 bps

850 bps

Income from operations

$       61.3

$       24.8

$       15.3

147.2 %

300.7 %

Net income per share

0.13

0.03

0.04

333.3 %

225.0 %

Non-GAAP Results

Q4

Q3

Q4

Change

FY 2026

FY 2026

FY 2025

Q/Q

Y/Y

Gross margin

62.3 %

62.2 %

60.1 %

10 bps

220 bps

Operating margin

24.0 %

21.2 %

14.4 %

280 bps

960 bps

Income from operations

$     106.4

$       86.4

$       41.9

23.1 %

153.9 %

Earnings per share

0.34

0.27

0.13

25.9 %

161.5 %

Net Revenue by Segment

Q4

Q3

Q4

Change

FY 2026

FY 2026

FY 2025

Q/Q

Y/Y

Network and Service Enablement

$        353.9

$        321.5

$        209.1

10.1 %

69.2 %

Optical Security and Performance Products

89.2

85.3

81.4

4.6 %

9.6 %

Total

$        443.1

$        406.8

$        290.5

8.9 %

52.5 %

Fiscal Year Ended June 27, 2026

GAAP Results

FY 2026

FY 2025

Change Y/Y

Net revenue

$               1,518.3

$               1,084.3

40.0 %

Gross margin

57.7 %

57.3 %

40 bps

Operating margin

6.9 %

5.3 %

160 bps

Income from operations

$                 105.1

$                   57.5

82.8 %

Net (loss) income per share

(0.13)

0.15

(186.7) %

Non-GAAP Results

FY 2026

FY 2025

Change Y/Y

Gross margin

61.7 %

60.1 %

160 bps

Operating margin

20.6 %

14.3 %

630 bps

Income from operations

$                 312.9

$                 155.2

101.6 %

Earnings per share

1.00

0.47

112.8 %

Net Revenue by Segment

FY 2026

FY 2025

Change Y/Y

Network and Service Enablement

$                  1,182.9

$                    776.6

52.3 %

Optical Security and Performance Products

335.4

307.7

9.0 %

Total

$                  1,518.3

$                  1,084.3

40.0 %

Americas, Asia-Pacific and EMEA customers represented 45.0%, 30.9% and 24.1%, respectively, of total net revenue for the fiscal year ended June 27, 2026. As of June 27, 2026, the Company held $656.7 million in total cash, short-term investments and short-term restricted cash. As of June 27, 2026, the Company had $250.0 million aggregate principal amount of 0.625% Senior Convertible Notes and $400.0 million aggregate principal amount of 3.75% Senior Notes with a total net carrying value of $641.9 million. During the fiscal quarter and fiscal year ended June 27, 2026, the Company generated $66.7 million and $113.9 million, respectively, of cash flows from operations. Business Outlook for the First Quarter of Fiscal 2027

For the first quarter of fiscal 2027 ending October 3, 2026, the Company expects net revenue to be between $450 million to $460 million and non-GAAP EPS to be between $0.40 to $0.42.

With respect to our expectations above, the Company has not reconciled GAAP net income (loss) per share to non-GAAP EPS in this press release because it is unable to provide a meaningful or accurate estimate of certain reconciling items described in the "Use of Non-GAAP (Adjusted) Financial Measures" section below and the information is not available without unreasonable effort as a result of the inherent difficulty of forecasting the timing and/or amounts of certain items, including certain charges related to restructuring, acquisition, integration and related charges. For the same reasons, the Company is unable to address the probable significance of the unavailable information, which could have a potentially unpredictable and potentially significant impact on our future GAAP financial results. In addition, the Company believes such reconciliations would imply a degree of precision that may be confusing or misleading to investors.

Conference Call

The Company will discuss these results and other related matters at 1:30 p.m. Pacific Time on August 5, 2026 in a live webcast, which will also be archived for replay on the Company's website at https://investor.viavisolutions.com. The Company will post supplementary slides outlining the Company's latest financial results on https://investor.viavisolutions.com under the "Quarterly Results" section concurrently with this earnings press release. This press release is being furnished as a Current Report on Form 8-K with the Securities and Exchange Commission, and will be available at www.sec.gov. 

About VIAVI Solutions

VIAVI (NASDAQ: VIAV) is a global leader in test and measurement and optical technologies. Our test and measurement, and resilient position, navigation and timing solutions enable and secure critical infrastructure ranging from data center ecosystems and communication networks to military, aerospace, railway and first responder communications. In addition, we develop and advance technologies used in high-volume optical applications across anti-counterfeiting, consumer electronics, aerospace, industrial and automotive end markets.

Learn more about VIAVI at www.viavisolutions.com. Follow us on VIAVI Perspectives, LinkedIn and YouTube.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements include any expectation, anticipation or guidance as to future financial performance, including future revenue, gross margin, operating expense, operating margin, profitability targets, cash flow and other financial metrics, as well as the impact and duration of certain trends and market position and conditions, including market stabilization and recovery. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected. In particular, the Company's ability to predict future financial performance continues to be difficult due to, among other things: (a) continuing general limited visibility across many of our product lines; (b) quarter-over-quarter product mix fluctuations, which can materially impact profitability measures due to the broad gross margin ranges across our portfolio; (c) consolidations in our industry and customer base; (d) competitive pressures; (e) unforeseen changes or deceleration in the demand for current and new products, technologies, services, delays or unforeseen events in the roll-out of new industry platforms or evolving technology such as 3D sensing and customer purchasing delays due to macroeconomic conditions, tightening of expenditures or as they assess or transition to such new technologies and/or architectures, all of which limit near-term demand visibility, and could negatively impact potential revenue; (f) continued decline of average selling prices across our businesses; (g) notable seasonality and a significant level of in-quarter book-and-ship business; (h) various product and manufacturing transfers, site consolidations, product discontinuances and restructuring and workforce reduction plans, including the number of employees impacted by a restructuring plan, the estimated expenses the Company will recognize, the timing of these payments and expenses, and anticipated cost savings associated with such plans; (i) challenges in execution of business strategy; (j) financial projections and expectations, including profitability of certain business units, synergies, benefits and other matters related to the acquisition of the high-speed ethernet, network security and channel emulation testing business of Spirent Communications plc; (k) challenges integrating the businesses the Company has acquired and realizing all of the expected benefits and savings; (l) supply chain and materials constraints and the ability of our suppliers and contract manufacturers to meet production and delivery requirements to our forecasted demand; (m) potential disruptions or delays to our manufacturing and operations due to climate conditions and natural disasters in the regions where we operate, such as wildfires, drought conditions and related water shortages in Arizona, as well as wildfires in Northern California and related blackouts and power outages in that region; (n) the uncertain and ongoing impact to our supply chain of geopolitical tensions, such as the ongoing conflict between Russia and Ukraine and the instability in the Middle East, evolving global trade and tariff negotiations and the uncertain tariff landscape, sanctions and other trade measures imposed by domestic and foreign governments, adverse actions and escalating tensions with foreign governments, including China, and the possibility of escalation of "trade wars," cyber-attacks, and retaliatory measures; (o) the impact of infectious disease outbreaks, epidemics, and pandemics on our financial results, revenues, customer demand, business operations and manufacturing and on the business operations of our customers, contract manufacturers and suppliers; and (p) inherent uncertainty related to global markets, including inflationary pressures, recessions, stock price and equity market volatility, tightening monetary policy and liquidity, and the effect of such markets on demand for our products. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected. For more information on the risks and uncertainties associated with the Company's business, please refer to the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" sections of the Company's filings with the Securities and Exchange Commission, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q. The forward-looking statements contained in this press release are made as of the date thereof and the Company assumes no obligation to update such statements. We have not filed our Form 10-K for the year ended June 27, 2026. As a result, all financial results described in this earnings release should be considered preliminary, and are subject to change to reflect any necessary adjustments or changes in accounting estimates, that are identified prior to the time we file the Form 10-K.

Contact Information

Investors:
Vibhuti Nayar
408-404-6305
[email protected] 

Press:
Amit Malhotra
202-341-8624
[email protected] 

The following financial tables are presented in accordance with GAAP, unless otherwise specified.

-SELECTED PRELIMINARY FINANCIAL DATA -

VIAVI SOLUTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
(unaudited)
PRELIMINARY

Three Months Ended

Years Ended

June 27, 2026

June 28, 2025

June 27, 2026

June 28, 2025

Net revenue

$          443.1

$          290.5

$        1,518.3

$        1,084.3

Cost of revenues

168.4

120.2

597.5

443.7

Amortization of acquired technologies

13.0

6.8

45.4

19.5

Gross profit

261.7

163.5

875.4

621.1

Operating expenses:

Research and development

69.8

57.2

262.7

208.7

Selling, general and administrative

124.3

89.7

469.2

349.4

Amortization of other intangibles

7.3

1.5

22.5

4.8

Restructuring and related (benefits) charges

(1.0)

(0.2)

15.9

0.7

Total operating expenses

200.4

148.2

770.3

563.6

Income from operations

61.3

15.3

105.1

57.5

Interest and other (expense) income, net

(7.4)

1.8

(41.4)

11.1

Interest expense

(10.4)

(7.5)

(47.4)

(30.0)

 Income before income taxes and equity investment earnings

43.5

9.6

16.3

38.6

Provision for income taxes

11.4

2.2

47.5

4.4

Equity investment earnings

0.6

0.6

0.8

0.6

Net income (loss)

$           32.7

$             8.0

$          (30.4)

$           34.8

Net income (loss) per share:

Basic

$           0.14

$           0.04

$          (0.13)

$           0.16

Diluted

$           0.13

$           0.04

$          (0.13)

$           0.15

Shares used in per share calculations:

Basic

239.3

223.2

229.5

222.5

Diluted

261.0

227.0

229.5

225.7

The preliminary financial statements are estimated based on our current information.

VIAVI SOLUTIONS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, unaudited)
PRELIMINARY

June 27, 2026

June 28, 2025

ASSETS

Current assets:

Cash and cash equivalents

$                647.8

$                423.6

Short-term investments

2.0

1.7

Restricted cash

6.9

3.7

Accounts receivable, net

351.3

261.0

Inventories, net

155.3

117.9

Prepayments and other current assets

93.2

77.3

Total current assets

1,256.5

885.2

Property, plant and equipment, net

224.5

231.9

Goodwill, net

700.7

595.7

Intangibles, net

377.6

131.6

Deferred income taxes

74.5

87.2

Other non-current assets

71.8

62.2

Total assets

$             2,705.6

$             1,993.8

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$                 92.2

$                 68.8

Accrued payroll and related expenses

98.4

63.6

Deferred revenue

101.9

74.1

Accrued expenses

27.3

28.7

Short-term debt

244.8

246.2

Other current liabilities

115.9

108.3

Total current liabilities

680.5

589.7

Long-term debt

397.1

396.3

Other non-current liabilities

179.5

227.6

Total liabilities

1,257.1

1,213.6

Total stockholders' equity

1,448.5

780.2

Total liabilities and stockholders' equity

$             2,705.6

$             1,993.8

The preliminary financial statements are estimated based on our current information.

VIAVI SOLUTIONS INC.
REPORTABLE SEGMENT INFORMATION
(in millions, unaudited)
PRELIMINARY

Three Months Ended June 27, 2026

Network and
Service
Enablement

Optical Security
and Performance
Products

Other Items (1)

Consolidated
GAAP Measures

Net revenue

$     353.9

$       89.2

$           —

$     443.1

Gross profit

$     227.0

$       49.2

$        (14.5)

$     261.7

Gross margin

64.1 %

55.2 %

59.1 %

Operating income

$       70.7

$       35.7

$        (45.1)

$       61.3

Operating margin

20.0 %

40.0 %

13.8 %

Three Months Ended June 28, 2025

Network and
Service
Enablement

Optical Security
and Performance
Products

Other Items (1)

Consolidated
GAAP Measures

Net revenue

$     209.1

$       81.4

$           —

$     290.5

Gross profit

$     130.0

$       44.5

$        (11.0)

$     163.5

Gross margin

62.2 %

54.7 %

56.3 %

Operating income

$        9.7

$       32.2

$        (26.6)

$       15.3

Operating margin

4.6 %

39.6 %

5.3 %

Year Ended June 27, 2026

Network and
Service
Enablement

Optical Security
and Performance
Products

Other Items (1)

Consolidated
GAAP Measures

Net revenue

$   1,182.9

$     335.4

$           —

$   1,518.3

Gross profit

$     762.0

$     175.2

$        (61.8)

$     875.4

Gross margin

64.4 %

52.2 %

57.7 %

Operating income

$     190.0

$     122.9

$      (207.8)

$     105.1

Operating margin

16.1 %

36.6 %

6.9 %

Year Ended June 28, 2025

Network and
Service
Enablement

Optical Security
and Performance
Products

Other Items (1)

Consolidated
GAAP Measures

Net revenue

$     776.6

$     307.7

$           —

$   1,084.3

Gross profit

$     488.0

$     163.6

$        (30.5)

$     621.1

Gross margin

62.8 %

53.2 %

57.3 %

Operating income

$      42.6

$     112.6

$        (97.7)

$      57.5

Operating margin

5.5 %

36.6 %

5.3 %

(1)

See Reconciliation of GAAP Measures from Continuing Operations to Non-GAAP Measures below for details of Other Items.

The preliminary financial schedules are estimated based on our current information.

Use of Non-GAAP (Adjusted) Financial Measures

The Company provides non-GAAP operating income, non-GAAP operating margin, non-GAAP net income and non-GAAP EPS financial measures as supplemental information regarding the Company's operational performance and believes providing this additional information allows investors to see Company results through the eyes of management, to evaluate more clearly and consistently the Company's core operational performance and expenses and evaluate the efficacy of the methodology used by management to measure such performance. The Company uses the measures disclosed in this release to evaluate the Company's historical and prospective financial performance, as well as its performance relative to its competitors. Specifically, management uses these items to further its own understanding of the Company's core operating performance, which the Company believes represents its performance in the ordinary, ongoing and customary course of its operations. Accordingly, management excludes from core operating performance items such as those relating to certain purchase price accounting adjustments, amortization of acquisition related intangibles, amortization expense related to acquisition related inventory step-up, stock-based compensation, legal settlements, restructuring, changes in fair value of contingent consideration liabilities, certain investing and acquisition related expenses and other activities and income tax expenses or benefits that management believes are not reflective of such ordinary, ongoing and core operating activities. The non-GAAP adjustments are outlined below. 

Cost of revenues, costs of research and development and costs of selling, general and administrative: The Company's GAAP presentation of gross margin and operating expenses may include (i) additional depreciation and amortization from changes in estimated useful life and the write-down of certain property, plant and equipment and intangibles, (ii) charges such as severance, benefits and outplacement costs related to restructuring plans with a specific and defined term, (iii) costs for facilities not required for ongoing operations, and costs related to the relocation of certain equipment from these facilities and/or contract manufacturer facilities, (iv) stock-based compensation, including related employer payroll taxes, (v) amortization expense related to acquired intangibles, (vi) amortization expense related to acquisition related inventory step-up, (vii) changes in fair value of contingent consideration liabilities, (viii) acquisition related transaction and integration costs related to acquired entities, (ix) significant legal settlements and other contingencies and (x) other charges unrelated to our core operating performance comprised mainly of other costs and contingencies unrelated to current and future operations, including transformational initiatives such as the implementation of simplified automated processes, site consolidations, and reorganizations. The Company excludes these items in calculating non-GAAP operating margin, non-GAAP net income and non-GAAP EPS.

Non-cash interest expense and other expense: The Company excludes certain non-cash interest and other expenses, including loss on debt extinguishment, accretion of debt discount, and other non-cash activities that management believes are not reflective of such ordinary, ongoing and core operating activities, when calculating non-GAAP net income and non-GAAP EPS.

Income tax expense or benefit: The Company excludes certain non-cash tax expense or benefit items, such as (i) the utilization of net operating losses (NOLs) where valuation allowances were released, (ii) intra-period tax allocation benefit and (iii) the tax effect for amortization of non-tax deductible intangible assets, in calculating non-GAAP net income and non-GAAP EPS.

Non-GAAP financial measures are not in accordance with, preferable to, or an alternative for, generally accepted accounting principles in the United States. The GAAP measure most directly comparable to non-GAAP operating income is operating income. The GAAP measure most directly comparable to non-GAAP operating margin is operating margin. The GAAP measure most directly comparable to non-GAAP net income is net income. The GAAP measure most directly comparable to non-GAAP EPS is earnings per share.

VIAVI SOLUTIONS INC.
RECONCILIATION OF GAAP MEASURES FROM CONTINUING OPERATIONS
TO NON-GAAP MEASURES
(in millions, except per share data)
(unaudited)
PRELIMINARY

The following tables reconcile GAAP measures to non-GAAP measures:

Three Months Ended

Years Ended

June 27, 2026

June 28, 2025

June 27, 2026

June 28, 2025

Gross
Profit

Gross
Margin

Gross
Profit

Gross
Margin

Gross
Profit

Gross
Margin

Gross
Profit

Gross
Margin

GAAP measures

$   261.7

59.1 %

$   163.5

56.3 %

$   875.4

57.7 %

$   621.1

57.3 %

Stock-based compensation

1.2

0.2 %

1.2

0.4 %

4.4

0.3 %

5.7

0.5 %

Employer payroll tax on employee share-based awards

—

— %

—

— %

0.4

— %

0.2

— %

Other charges unrelated to core operating performance (1)

0.3

0.1 %

0.4

0.1 %

5.5

0.3 %

0.8

0.1 %

Amortization of acquisition related inventory step-up

—

— %

2.6

0.9 %

6.1

0.4 %

4.3

0.4 %

Amortization of intangibles

13.0

2.9 %

6.8

2.4 %

45.4

3.0 %

19.5

1.8 %

Total related to Cost of Revenues

14.5

3.2 %

11.0

3.8 %

61.8

4.0 %

30.5

2.8 %

Non-GAAP measures

$   276.2

62.3 %

$   174.5

60.1 %

$   937.2

61.7 %

$   651.6

60.1 %

Three Months Ended

Years Ended

June 27, 2026

June 28, 2025

June 27, 2026

June 28, 2025

Operating Income

Operating Margin

Operating  Income

Operating Margin

Operating Income

Operating Margin

Operating Income

Operating Margin

GAAP measures

$    61.3

13.8 %

$    15.3

5.3 %

$   105.1

6.9 %

$    57.5

5.3 %

Stock-based compensation

14.2

3.2 %

12.6

4.3 %

55.4

3.6 %

53.1

4.9 %

Employer payroll tax on employee share-based awards

0.2

— %

—

— %

2.7

0.2 %

1.3

0.1 %

Change in fair value of contingent consideration

8.7

2.0 %

(3.4)

(1.2) %

33.0

2.2 %

(8.3)

(0.8) %

Acquisition and integration related charges

0.2

— %

5.6

1.9 %

12.6

0.8 %

22.3

2.1 %

Other charges unrelated to core operating performance (2)

2.5

0.6 %

1.1

0.4 %

14.2

1.0 %

1.3

0.1 %

Amortization of acquisition related inventory step-up

—

— %

2.6

0.9 %

6.1

0.4 %

4.3

0.4 %

Amortization of intangibles

20.3

4.6 %

8.3

2.9 %

67.9

4.5 %

24.3

2.2 %

Restructuring and related (benefits) charges

(1.0)

(0.2) %

(0.2)

(0.1) %

15.9

1.0 %

0.7

0.1 %

Litigation settlement

—

— %

—

— %

—

— %

(1.3)

(0.1) %

Total related to Cost of Revenues and Operating Expenses

45.1

10.2 %

26.6

9.1 %

207.8

13.7 %

97.7

9.0 %

Non-GAAP measures

$   106.4

24.0 %

$    41.9

14.4 %

$   312.9

20.6 %

$   155.2

14.3 %

Three Months Ended

Years Ended

June 27, 2026

June 28, 2025

June 27, 2026

June 28, 2025

Net
Income

Diluted
EPS

Net
Income

Diluted
EPS

Net (Loss) Income

Diluted
EPS

Net  Income

Diluted
EPS

GAAP measures

$    32.7

$    0.13

$     8.0

$    0.04

$   (30.4)

$   (0.13)

$    34.8

$    0.15

Items reconciling GAAP Net Income (Loss) and EPS to Non-GAAP Net Income and EPS:

Stock-based compensation

14.2

0.05

12.6

0.05

55.4

0.23

53.1

0.23

Employer payroll tax on employee share-based awards

0.2

—

—

2.7

0.01

1.3

0.01

Change in fair value of contingent consideration

8.7

0.03

(3.4)

(0.01)

33.0

0.14

(8.3)

(0.03)

Acquisition and integration related charges

0.2

—

5.6

0.02

12.6

0.05

22.3

0.10

Other charges unrelated to core operating performance (2)

2.5

0.01

1.1

—

14.2

0.06

1.3

0.01

Amortization of acquisition related inventory step-up

—

—

2.6

0.01

6.1

0.02

4.3

0.02

Amortization of intangibles

20.3

0.08

8.3

0.04

67.9

0.28

24.3

0.11

Restructuring and related (benefits) charges

(1.0)

—

(0.2)

—

15.9

0.07

0.7

—

   Litigation settlement

—

—

—

—

—

—

(1.3)

(0.01)

Non-cash interest expense and other expense (3)

10.4

0.04

1.2

0.01

57.0

0.23

4.7

0.02

Provision for (benefits from) income taxes 

0.9

—

(6.1)

(0.03)

9.4

0.04

(30.5)

(0.14)

   Total related to Net Income and EPS

56.4

0.21

21.7

0.09

274.2

1.13

71.9

0.32

Non-GAAP measures

$    89.1

$    0.34

$    29.7

$    0.13

$   243.8

$    1.00

$   106.7

$    0.47

Shares used in per share calculation for Non-GAAP EPS

261.0

227.0

242.9

225.7

Note: Certain totals may not add due to rounding.

(1)

Included in the three months ended and year ended June 27, 2026 are charges of $0.1 million and $3.7 million, respectively, related to the write off of property, plant and equipment and other charges unrelated to core operating performance.

(2)

Included in the three months ended June 27, 2026 are charges of $1.3 million related to the write off of property, plant and equipment, $0.1 million of accelerated depreciation and other charges unrelated to core operating performance. In addition, included in the year ended June 27, 2026 are $4.8 million of losses on disposal of long-lived assets, $2.1 million charge for restoration services for a VIAVI facility impacted by a fire, $0.4 million of accelerated depreciation and other charges unrelated to core operating performance. Included in the year ended June 27, 2025 is a gain of $0.9 million on the sale of assets previously classified as held for sale and other charges unrelated to core operating performance.

(3)

The Company incurred losses of $10.5 million and $56.7 million for the three months ended and year ended June 27, 2026, respectively, in connection with the extinguishment of certain 1.625% Senior Convertible Notes and extinguishment of the Term Loan B.

The preliminary financial schedules are estimated based on our current information.

VIAVI SOLUTIONS INC.
RECONCILIATION OF GAAP MEASURES FROM CONTINUING OPERATIONS
TO ADJUSTED EBITDA
(in millions, unaudited)
PRELIMINARY

Three Months Ended

Years Ended

June 27, 2026

June 28, 2025

June 27, 2026

June 28, 2025

GAAP Net income (loss)

$            32.7

$             8.0

$           (30.4)

$            34.8

Interest and other expense (income), net (1)

7.4

(1.8)

41.4

(11.1)

Interest expense

10.4

7.5

47.4

30.0

Provision for income taxes

11.4

2.2

47.5

4.4

Equity investment earnings

(0.6)

(0.6)

(0.8)

(0.6)

Depreciation

10.3

9.6

40.4

38.4

Amortization

20.3

8.3

67.9

24.3

EBITDA

91.9

33.2

213.4

120.2

Restructuring and related (benefits) charges

(1.0)

(0.2)

15.9

0.7

Stock-based compensation

14.2

12.6

55.4

53.1

Employer payroll tax on employee share-based awards

0.2

—

2.7

1.3

Change in fair value of contingent consideration

8.7

(3.4)

33.0

(8.3)

Acquisition and integration related charges

0.2

5.6

12.6

22.3

Other charges (benefits) unrelated to core operating performance (2)

2.1

1.0

13.4

(0.4)

Amortization of acquisition related inventory step-up

—

2.6

6.1

4.3

Adjusted EBITDA

$           116.3

$            51.4

$           352.5

$           193.2

Note: Certain totals may not add due to rounding.

(1)

The Company incurred losses of $10.5 million and $56.7 million for the three months and year ended June 27, 2026, respectively, in connection with the extinguishment of certain 1.625% Senior Convertible Notes and extinguishment of the Term Loan B.

(2)

Included in the three months ended June 27, 2026 are charges of $1.3 million related to the write off of property, plant and equipment, and other charges unrelated to core operating performance. In addition, included in the year ended June 27, 2026 are $4.8 million of losses on disposal of long-lived assets, $2.1 million charge for restoration services for a VIAVI facility impacted by a fire and other charges unrelated to core operating performance. Included in the year ended June 27, 2025 is a gain of $0.9 million on the sale of assets previously classified as held for sale and other charges unrelated to core operating performance.

The preliminary financial schedules are estimated based on our current information.

SOURCE VIAVI Financials

Key Takeaways VIAV lifted non-GAAP operating margin to 21% as NSE and OSP revenue posted strong year-over-year growth.VIAV expects operating margin to reach 22.7% in the fourth quarter, up from 21% in the third quarter.VIAV's earnings estimates for 2026 were unchanged, while 2027 estimates improved over the past 60 days. Viavi Solutions, Inc. (VIAV - Free Report) reported a non-GAAP operating income of $85.5 million, up from $47.7 million a year ago quarter. Non-GAAP operating margin was 21%, up from 16.7% a year ago.

The improvement in operating margin is driven by multiple factors, including strong growth in the Network and Service Enablement segment (NSE) and Optical Security and Performance Products (OSP). In the third quarter of fiscal 2026, the NSE segment generated $321.5 million in revenues, up 54.4% year over year. The segment accounted for 79% of total revenues. Acquisition of Spirent product lines and strong demand across lab, production and field products, mainly from the data center ecosystem and aerospace & defense sectors, drove solid sales growth in this segment. The OSP segment revenues were $85.3 million, up 11.4% year over year, driven by strong demand for 3D Sensing and anti-counterfeiting.

Higher revenue is allowing fixed costs to be spread across a larger sales base. This is resulting in a significant operating leverage. Every incremental dollar of NSE revenue contributes roughly 40-45 cents to operating income, reflecting a highly scalable cost structure. Increasing mix, AI infrastructure and data center business, backed by hyperscalers’ demand, investment by optical module vendors and semiconductor companies will likely drive operating margin in the coming quarters. In the fourth quarter, Viavi expects its operating margin to reach 22.7%, up from 21% in the third quarter.

Other Tech Firms With Strong Margin ExpansionSanmina Corporation (SANM - Free Report) reported a non-GAAP operating profit of $257 million in the second quarter of 2026, up from $111 million a year ago. Non-GAAP operating margin improved to 6.4% from 5.6%. The 131.5% increase year over year and an 80-basis point operating margin expansion are driven by a multitude of factors. The ZT system, which performed significantly better than expected, was one of the biggest contributors. Strong customer demand for accelerated compute systems and earlier-than-expected shipments supported Sanmina’s profitability. Sanmina’s revenues surged 102.3% year over year to $4.01 billion. Revenue growth significantly outpaced the increase in operating expenses. Disciplined cost management was also a key contributor in this regard.

HubSpot. Inc. (HUBS - Free Report) generated a non-GAAP operating income of $156.8 million, up from $100.3 million in the prior-year quarter, with margin expanding 380 basis points year over year to 17.8%. Higher revenues and operating discipline helped offset increased investments in research, AI innovation and sales initiatives. HubSpot continues to witness rising adoption among larger customers as businesses consolidate marketing, sales and service workflows on a unified AI-enabled platform. During the first quarter of 2026, deals above $60,000 in annual recurring revenues increased 37% year over year, while deals above $120,000 ARR rose 64%. HubSpot’s AI strategy is increasingly contributing to customer engagement and monetization.

VIAV’s Price Performance, Valuation and EstimatesViavi has gained 290.8% in the past year compared with the Electronics - Measuring Instruments industry’s growth of 287%.

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Going by the price/earnings ratio, the company’s shares currently trade at 32.8 forward earnings, lower than 41.94 for the industry and its mean of 37.66.

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The company’s earnings estimates for 2026 have remained unchanged and 2027 have improved over the past 60 days.

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VIAV carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.