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Viavi's (VIAV) Q4 Earnings Beat Estimates, Revenues Fall Y/Y
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Viavi Solutions Inc. (VIAV - Free Report) reported relatively healthy fourth-quarter fiscal 2023 results, with both the top line and the bottom line surpassing the respective Zacks Consensus Estimate. However, sluggish demand trends in all verticals, a constrained spending environment owing to macroeconomic challenges and inventory adjustments led to lower revenues year over year.
Net Income
On a GAAP basis, Viavi incurred a net loss of $0.1 million or break-even earnings per share against a net income of $16.5 million or 7 cents per share in the year-ago quarter. Top-line contraction led to a year-over-year decline in the bottom line.
Excluding non-recurring items, non-GAAP net income was $22.7 million or 10 cents per share, down from $55.8 million or 24 cents per share in the year-earlier quarter. The bottom line beat the Zacks Consensus Estimate by 2 cents.
In fiscal 2023, the company reported a net income of $25.5 million or 11 cents per share compared with $15.5 million or 7 cents per share in fiscal 2022. Viavi registered a non-GAAP net income of $124.7 million or 55 cents per share in fiscal 2023 compared with $225.3 million or 95 cents per share in fiscal 2022.
Viavi Solutions Inc. Price, Consensus and EPS Surprise
Total revenues were $263.6 million compared with $335.3 million in the year-ago quarter. Soft demand trends in the smartphone market and 3D sensing products impacted revenue growth. However, robust demand from avionics customers supported the top line in the June quarter. The top line outperformed the Zacks Consensus Estimate of $252 million.
In fiscal 2023, the company generated $1,106.1 million in net sales compared with $1,292.4 million in fiscal 2022.
Net sales from Network Enablement (NE) stood at $173.3 million, down from $222.2 million in the year-ago quarter. Weak demand trends, owing to a constrained spending environment, led to a 22% year-over-year decline during the quarter. However, gradual recovery in lab and production test equipment from wireless and fiber NEMs and semiconductor companies cushioned the top line in this segment. Revenues from the Service Enablement (SE) segment totaled $24.6 million up 2.5% year over year owing to railway acquisition.
Optical Security and Performance Products (OSP) revenues reported a decline of 26.3% year over year to $65.7 million. Weak demand for smartphones impacted the demand for 3D sensing products. Despite some improvement, demand for anti-counterfeiting products was negatively affected by macroeconomic headwinds and inventory adjustments stemming from reduced fiscal spending by the government.
Net sales from America contributed $108.3 million to revenues, down from $129.7 million from the year-ago quarter. Revenues from Asia-Pacific stood at $85.3 million, down 34.3% year over year. Revenues from EMEA were $70 million, down from $75.7 million in the year-ago quarter.
Other Details
In the fiscal fourth quarter, the non-GAAP gross margin was 58.2%, down from 62.5% from the prior-year quarter. Non-GAAP gross margin in the NE segment was 61.5%, down 270 basis points year over year due to lower volume and product mix. SE segment gross margin fell to 66.3% from 71.3% due to unfavorable product mix.
Non-GAAP operating margin declined to 11.7% from 21.3% reported in the prior-year quarter. Operating margin in the NSE business stood at 5.8% compared wth 15.1% in the year-earlier quarter. SP segment’s operating margin declined to 29.5% from 38.6% recorded in the year-ago quarter.
Cash Flow & Liquidity
In fiscal 2023, Viavi generated $114.1 million of cash from operating activities compared with $178.1 million in fiscal 2022. As of Jun 30, 2023, the company had $506.5 million in cash and cash equivalents with $629.5 million of long-term debt compared with the respective figures of $559.9 million and $616.5 million in the year-ago quarter.
Outlook
For the first quarter of fiscal 2024, management estimates revenues in the range of $240-$260 million. Non-GAAP operating margin is expected within the range of 12.7-14.2%, with non-GAAP EPS in the range of 9 to 11 cents.
For the Network and Service Enablement segment, revenues are projected between $167-183 million with a non-GAAP operating margin of 3-5%. Revenues for the OSP segment are estimated in the band of $73-$77 million, with non-GAAP operating margin in the range of 35-36%.
It provides services and solutions to government segments and public safety programs, along with large enterprises and wireless infrastructure service providers. It develops and services both analog and digital two-way radio, voice and data communications products and systems for private networks, wireless broadband systems and end-to-end enterprise mobility solutions to a wide range of enterprise markets.
Workday Inc. (WDAY - Free Report) , sporting a Zacks Rank #1, delivered an earnings surprise of 13.05%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 18.02%.
Workday is a provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system that makes it easier for organizations to provide analytical insights and decision support.
Meta Platforms Inc. (META - Free Report) , carrying a Zacks Rank #2, delivered an earnings surprise of 18.99%, on average, in the trailing four quarters. Meta is the world’s largest social media platform. The company’s portfolio offering evolved from a single Facebook app to multiple apps like the photo and video-sharing app, Instagram, and the WhatsApp messaging app, owing to acquisitions.
Meta is considered to have pioneered the concept of social networking, which is why it enjoys a first-mover advantage in this market. As developed regions mature, Meta undertakes measures to drive penetration in emerging markets of South East Asia, Latin America and Africa.
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Viavi's (VIAV) Q4 Earnings Beat Estimates, Revenues Fall Y/Y
Viavi Solutions Inc. (VIAV - Free Report) reported relatively healthy fourth-quarter fiscal 2023 results, with both the top line and the bottom line surpassing the respective Zacks Consensus Estimate. However, sluggish demand trends in all verticals, a constrained spending environment owing to macroeconomic challenges and inventory adjustments led to lower revenues year over year.
Net Income
On a GAAP basis, Viavi incurred a net loss of $0.1 million or break-even earnings per share against a net income of $16.5 million or 7 cents per share in the year-ago quarter. Top-line contraction led to a year-over-year decline in the bottom line.
Excluding non-recurring items, non-GAAP net income was $22.7 million or 10 cents per share, down from $55.8 million or 24 cents per share in the year-earlier quarter. The bottom line beat the Zacks Consensus Estimate by 2 cents.
In fiscal 2023, the company reported a net income of $25.5 million or 11 cents per share compared with $15.5 million or 7 cents per share in fiscal 2022. Viavi registered a non-GAAP net income of $124.7 million or 55 cents per share in fiscal 2023 compared with $225.3 million or 95 cents per share in fiscal 2022.
Viavi Solutions Inc. Price, Consensus and EPS Surprise
Viavi Solutions Inc. price-consensus-eps-surprise-chart | Viavi Solutions Inc. Quote
Revenues
Total revenues were $263.6 million compared with $335.3 million in the year-ago quarter. Soft demand trends in the smartphone market and 3D sensing products impacted revenue growth. However, robust demand from avionics customers supported the top line in the June quarter. The top line outperformed the Zacks Consensus Estimate of $252 million.
In fiscal 2023, the company generated $1,106.1 million in net sales compared with $1,292.4 million in fiscal 2022.
Net sales from Network Enablement (NE) stood at $173.3 million, down from $222.2 million in the year-ago quarter. Weak demand trends, owing to a constrained spending environment, led to a 22% year-over-year decline during the quarter. However, gradual recovery in lab and production test equipment from wireless and fiber NEMs and semiconductor companies cushioned the top line in this segment. Revenues from the Service Enablement (SE) segment totaled $24.6 million up 2.5% year over year owing to railway acquisition.
Optical Security and Performance Products (OSP) revenues reported a decline of 26.3% year over year to $65.7 million. Weak demand for smartphones impacted the demand for 3D sensing products. Despite some improvement, demand for anti-counterfeiting products was negatively affected by macroeconomic headwinds and inventory adjustments stemming from reduced fiscal spending by the government.
Net sales from America contributed $108.3 million to revenues, down from $129.7 million from the year-ago quarter. Revenues from Asia-Pacific stood at $85.3 million, down 34.3% year over year. Revenues from EMEA were $70 million, down from $75.7 million in the year-ago quarter.
Other Details
In the fiscal fourth quarter, the non-GAAP gross margin was 58.2%, down from 62.5% from the prior-year quarter. Non-GAAP gross margin in the NE segment was 61.5%, down 270 basis points year over year due to lower volume and product mix. SE segment gross margin fell to 66.3% from 71.3% due to unfavorable product mix.
Non-GAAP operating margin declined to 11.7% from 21.3% reported in the prior-year quarter. Operating margin in the NSE business stood at 5.8% compared wth 15.1% in the year-earlier quarter. SP segment’s operating margin declined to 29.5% from 38.6% recorded in the year-ago quarter.
Cash Flow & Liquidity
In fiscal 2023, Viavi generated $114.1 million of cash from operating activities compared with $178.1 million in fiscal 2022. As of Jun 30, 2023, the company had $506.5 million in cash and cash equivalents with $629.5 million of long-term debt compared with the respective figures of $559.9 million and $616.5 million in the year-ago quarter.
Outlook
For the first quarter of fiscal 2024, management estimates revenues in the range of $240-$260 million. Non-GAAP operating margin is expected within the range of 12.7-14.2%, with non-GAAP EPS in the range of 9 to 11 cents.
For the Network and Service Enablement segment, revenues are projected between $167-183 million with a non-GAAP operating margin of 3-5%. Revenues for the OSP segment are estimated in the band of $73-$77 million, with non-GAAP operating margin in the range of 35-36%.
Zacks Rank & Stocks to Consider
Viavi currently has a Zacks Rank #3 (Hold).
Motorola Solutions, Inc (MSI - Free Report) , carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 5.62%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 5.58%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
It provides services and solutions to government segments and public safety programs, along with large enterprises and wireless infrastructure service providers. It develops and services both analog and digital two-way radio, voice and data communications products and systems for private networks, wireless broadband systems and end-to-end enterprise mobility solutions to a wide range of enterprise markets.
Workday Inc. (WDAY - Free Report) , sporting a Zacks Rank #1, delivered an earnings surprise of 13.05%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 18.02%.
Workday is a provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system that makes it easier for organizations to provide analytical insights and decision support.
Meta Platforms Inc. (META - Free Report) , carrying a Zacks Rank #2, delivered an earnings surprise of 18.99%, on average, in the trailing four quarters. Meta is the world’s largest social media platform. The company’s portfolio offering evolved from a single Facebook app to multiple apps like the photo and video-sharing app, Instagram, and the WhatsApp messaging app, owing to acquisitions.
Meta is considered to have pioneered the concept of social networking, which is why it enjoys a first-mover advantage in this market. As developed regions mature, Meta undertakes measures to drive penetration in emerging markets of South East Asia, Latin America and Africa.