Summary of Viavi Solutions Q4 2026 Earnings Call

1Key Financial Results and Metrics

Net Revenue: $443.1 million, exceeding guidance of $427-$437 million, up 8.9% sequentially and 52.5% year-over-year.

Operating Margin: 24%, above guidance of 22.2%-23.2%, and up 280 basis points sequentially and 960 basis points year-over-year.

Earnings Per Share (EPS): $0.34, surpassing guidance of $0.29-$0.31, up $0.07 sequentially and $0.21 year-over-year.

NSE Revenue: $353.9 million, above guidance of $340-$348 million, up 69.2% year-over-year.

OSP Revenue: $89.2 million, at the high end of guidance ($87-$89 million), up 9.6% year-over-year.

Full Year Revenue: $1.518 billion, a 40% increase year-over-year.

Cash and Short-term Investments: $656.7 million, up from $508 million in Q3 2026.

Operating Cash Flow: $66.7 million, significantly higher than $23.8 million in the same period last year.

2Strategic Updates and Business Highlights

Strong demand in the data center ecosystem and aerospace and defense sectors drove significant revenue growth.

The acquisition of Spirent product lines contributed $145 million to full-year revenue and enhanced product offerings.

Launched the industry's first validation solution for Ultra Ethernet Transport, targeting AI and high-performance computing workloads.

Ongoing diversification strategy into data center and aerospace markets is expected to continue driving growth.

3Forward Guidance and Outlook

Q1 FY2027 Revenue Guidance: Expected between $450 million and $460 million, with NSE revenue projected at $360-$368 million and OSP revenue at $90-$92 million.

Operating Margin Guidance: Anticipated at 27.1%, benefiting from a tariff refund but offset by increased variable costs due to an extra week in the quarter.

EPS Guidance: Expected between $0.40 and $0.42, including a net benefit from tariff refunds.

4Bad News, Challenges, or Points of Concern

Service Provider Business: Continues to show anemic demand, although stable, which may impact overall growth.

Seasonal Weakness: Historically, Q1 is a softer quarter for NSE, raising concerns about potential revenue fluctuations.

Competitive Pressures: Ongoing challenges in semiconductor pricing could impact margins if costs cannot be passed on to customers.

5Notable Q&A Insights

Data Center Growth: Oleg Khaykin indicated that data center revenue now constitutes about 50% of NSE revenue, with strong growth expected to continue.

1.6T Adoption: The transition to 1.6T technology is ramping quickly, but 800G remains a significant driver. A peak in demand for 1.6T products is expected in 2027.

Spirent Performance: Spirent is expected to see a 10% revenue increase in the upcoming quarter, with integration synergies already realized.

CPO and OCS Developments: Co-packaged optics (CPO) revenues are anticipated to begin accelerating, with OCS revenues expected to grow significantly in the coming quarters. Overall, Viavi Solutions reported a strong Q4 2026 performance with robust growth across key segments, although challenges in the service provider market and seasonal fluctuations remain points of concern. The company is optimistic about future growth driven by strategic initiatives and market demand.