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Viavi (VIAV) Q1 Earnings Beat Estimates, Revenues Down Y/Y

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Viavi Solutions Inc. (VIAV - Free Report) reported decent first-quarter fiscal 2021 results (ended Oct 3, 2020), wherein the top and the bottom lines beat the respective Zacks Consensus Estimate.

Net Income

On a GAAP basis, net income in the quarter was $14.3 million or 6 cents per share compared with $6.8 million or 3 cents per share in the year-ago quarter.

Non-GAAP net income came in at $48.3 million or 21 cents per share compared with $42.9 million or 18 cents per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 4 cents, with the positive surprise being 23.5%.

Viavi Solutions Inc. Price, Consensus and EPS Surprise Viavi Solutions Inc. Price, Consensus and EPS Surprise

Viavi Solutions Inc. price-consensus-eps-surprise-chart | Viavi Solutions Inc. Quote

Revenues

Quarterly total net revenues declined 5% year over year to $284.7 million. The top line, however, surpassed the consensus estimate of $283 million.

Segment-wise, revenues from NE (Network Enablement) fell 18.5% year over year to $162.1 million, primarily due to the pandemic-related declines in Field Instruments. SE (Service Enablement) revenues grew 2.4% to $21.4 million, driven by an increase in Assurance revenues.

NSE’s (Network and Service Enablement) gross margin was 64.2%, up 20 basis points (bps) year over year. Its operating margin of 7.2% decreased 290 bps due to lower revenues. This was above the midpoint of the company’s guidance of 5.5-7.5%.

OSP (Optical Security and Performance Products) revenues grew 26.5% year over year to $101.2 million. The improvement was driven by an increase in 3D Sensing, Anti-Counterfeiting and Aerospace & Defense products.

OSP’s gross margin of 60.3% expanded 620 bps year over year owing to higher volume and favorable manufacturing cost absorption. Operating margin of 46.7% improved 870 bps on higher gross margin and good cost control.

Region wise, Viavi generated 33.5% of total net revenues from the Americas, 38% from Asia-Pacific and 28.5% from EMEA.

Other Details

Overall, non-GAAP gross profit was $178.8 million with a margin of 62.8% compared with $183.9 million with a margin of 61.3% in the year-ago quarter. Non-GAAP operating income was $60.6 million compared with $52.7 million in the prior-year quarter with respective margins of 21.3% and 17.6%.

Cash Flow & Liquidity

In the first quarter of fiscal 2021, Viavi generated $63.9 million of cash from operations, up 104.2% year over year. As of Oct 3, 2020, the company had $590.8 million in cash and cash equivalents with $606.6 million of long-term debt compared with the respective tallies of $539 million and $600.9 million at the end of the previous quarter.

Q2 Fiscal 2021 Guidance

For the second quarter of fiscal 2021 (ending Jan 2, 2021), Viavi expects revenues in the range of $280-$300 million. Non-GAAP earnings are estimated in the band of 18-20 cents per share.

Zacks Rank & Other Stocks to Consider

Viavi currently carries a Zacks Rank #2 (Buy).

Other top-ranked stocks in the broader industry include Turtle Beach Corporation (HEAR - Free Report) , Corning Incorporated (GLW - Free Report) and United States Cellular Corporation (USM - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Turtle Beach delivered a trailing four-quarter positive earnings surprise of 41%, on average.

Corning delivered a trailing four-quarter positive earnings surprise of 40.7%, on average.

U.S. Cellular delivered a trailing four-quarter positive earnings surprise of 168.1%, on average. The company’s earnings beat the Zacks Consensus Estimate in three of the last four quarters.

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