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Viavi Q2 Earnings Beat Estimates on Solid Revenue Growth
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Viavi Solutions Inc. (VIAV - Free Report) reported strong second-quarter fiscal 2025 results, with both adjusted earnings and revenues surpassing the respective Zacks Consensus Estimate.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
The company reported revenue growth backed by healthy growth in the Network Enablement (NE) segment. Management’s strong emphasis on various markets such as wireless & fiber, optical transport, Ethernet, broadband access, video test and storage network testing are key growth drivers. However, a constrained spending environment owing to macroeconomic challenges is worrisome.
Net Income
On a GAAP basis, net income in the quarter was $9.1 million or 4 cents per share compared with $10.7 million or 5 cents per share in the year-ago quarter. Despite top-line growth, the decline in GAAP earnings was primarily due to high operating expenses and income tax provisions during the reported quarter.
Non-GAAP net income was $29.4 million or 13 cents per share compared with $23.7 million or 11 cents per share in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate by 3 cents.
Viavi Solutions Inc. Price, Consensus and EPS Surprise
Quarterly revenues were $270.8 million, up 6.4% from $254.5 million in the year-ago quarter. The healthy demand in the NE segment cushioned the top line. Revenues beat the Zacks Consensus Estimate of $260 million.
Net sales in the NE segment were $179 million, up from $155.5 million in the year-ago quarter. The 15.1% growth was primarily driven by the strong demand from service providers and network equipment manufacturers for both lab and field instruments.
Revenues from the Service Enablement (SE) segment were $20.9 million, down 13.3% year over year, owing to the conservative spending behavior of enterprise customers.
Optical Security and Performance Products (OSP) revenues declined to $70.9 million from the year-earlier quarter’s tally of $74.9 million, primarily due to weaker demand for 3D sensing products.
Net sales from America contributed $116.1 million to revenues, up from $103.1 million reported in the year-ago quarter. Revenues from Asia-Pacific were $93.6 million, up 17.7% from the year-earlier quarter’s tally of $79.5 million. Revenues from EMEA decreased to $61.1 million from $71.9 million reported in the prior-year quarter.
Other Details
In the second quarter of fiscal 2025, the non-GAAP gross margin was 61.1%, up 110 basis points (bps) from the prior-year quarter. GAAP gross margin in the NE segment was 64.5%, up 200 bps year over year, as a result of higher volume and product mix. SE segment’s gross margin decreased to 67.5% from 68.9% in the prior-year quarter. OSP segment’s gross margin decreased to 50.6% from 52.1% in the year-ago quarter. The year-over-year decline was primarily driven by lower volume and product mix.
Non-GAAP operating margin increased 170 bps year over year to 14.9%. Operating margin in the Network and Service Enablement (NSE) business increased 510 bps year over year to 8.7%, driven by higher gross margin fall through. OSP segment’s operating margin decreased to 32.4% from 36.4% in the prior-year quarter.
Cash Flow & Liquidity
During the December quarter, Viavi generated $44.7 million of cash from operating activities, a significant increase from $20.4 million in the year-ago period. As of Dec. 28, 2024, the company had $488 million in cash and cash equivalents and $639.3 million of long-term debt.
Outlook
For the third quarter of fiscal 2025, management expects revenues in the range of $276-$288 million. Non-GAAP operating margin is expected to be in the range of 13%-15%, with non-GAAP earnings per share between 10 and 13 cents.
For the NSE business, revenues are projected to be between $202 and $212 million, with a non-GAAP operating margin of 6-8%. Revenues for the OSP segment are anticipated to be in the band of $74-$76 million, with a non-GAAP operating margin of 32-34%.
Pinterest, Inc. (PINS - Free Report) is scheduled to release fourth-quarter 2024 earnings on Feb. 6. The Zacks Consensus Estimate for earnings is pegged at 63 cents per share, indicating growth of 18.9% from the year-ago figure.
Zillow Group, Inc. (ZG - Free Report) is scheduled to release fourth-quarter earnings on Feb. 11. The Zacks Consensus Estimate for earnings is pegged at 34 cents per share, indicating growth of 50% from the year-ago figure.
Light and Wonder (LNW - Free Report) is scheduled to release fourth-quarter earnings on Feb. 25. The Zacks Consensus Estimate for earnings is pegged at $1.08 per share, indicating growth of 47.95% from the year-ago figure.
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Viavi Q2 Earnings Beat Estimates on Solid Revenue Growth
Viavi Solutions Inc. (VIAV - Free Report) reported strong second-quarter fiscal 2025 results, with both adjusted earnings and revenues surpassing the respective Zacks Consensus Estimate.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
The company reported revenue growth backed by healthy growth in the Network Enablement (NE) segment. Management’s strong emphasis on various markets such as wireless & fiber, optical transport, Ethernet, broadband access, video test and storage network testing are key growth drivers. However, a constrained spending environment owing to macroeconomic challenges is worrisome.
Net Income
On a GAAP basis, net income in the quarter was $9.1 million or 4 cents per share compared with $10.7 million or 5 cents per share in the year-ago quarter. Despite top-line growth, the decline in GAAP earnings was primarily due to high operating expenses and income tax provisions during the reported quarter.
Non-GAAP net income was $29.4 million or 13 cents per share compared with $23.7 million or 11 cents per share in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate by 3 cents.
Viavi Solutions Inc. Price, Consensus and EPS Surprise
Viavi Solutions Inc. price-consensus-eps-surprise-chart | Viavi Solutions Inc. Quote
Revenues
Quarterly revenues were $270.8 million, up 6.4% from $254.5 million in the year-ago quarter. The healthy demand in the NE segment cushioned the top line. Revenues beat the Zacks Consensus Estimate of $260 million.
Net sales in the NE segment were $179 million, up from $155.5 million in the year-ago quarter. The 15.1% growth was primarily driven by the strong demand from service providers and network equipment manufacturers for both lab and field instruments.
Revenues from the Service Enablement (SE) segment were $20.9 million, down 13.3% year over year, owing to the conservative spending behavior of enterprise customers.
Optical Security and Performance Products (OSP) revenues declined to $70.9 million from the year-earlier quarter’s tally of $74.9 million, primarily due to weaker demand for 3D sensing products.
Net sales from America contributed $116.1 million to revenues, up from $103.1 million reported in the year-ago quarter. Revenues from Asia-Pacific were $93.6 million, up 17.7% from the year-earlier quarter’s tally of $79.5 million. Revenues from EMEA decreased to $61.1 million from $71.9 million reported in the prior-year quarter.
Other Details
In the second quarter of fiscal 2025, the non-GAAP gross margin was 61.1%, up 110 basis points (bps) from the prior-year quarter. GAAP gross margin in the NE segment was 64.5%, up 200 bps year over year, as a result of higher volume and product mix. SE segment’s gross margin decreased to 67.5% from 68.9% in the prior-year quarter. OSP segment’s gross margin decreased to 50.6% from 52.1% in the year-ago quarter. The year-over-year decline was primarily driven by lower volume and product mix.
Non-GAAP operating margin increased 170 bps year over year to 14.9%. Operating margin in the Network and Service Enablement (NSE) business increased 510 bps year over year to 8.7%, driven by higher gross margin fall through. OSP segment’s operating margin decreased to 32.4% from 36.4% in the prior-year quarter.
Cash Flow & Liquidity
During the December quarter, Viavi generated $44.7 million of cash from operating activities, a significant increase from $20.4 million in the year-ago period. As of Dec. 28, 2024, the company had $488 million in cash and cash equivalents and $639.3 million of long-term debt.
Outlook
For the third quarter of fiscal 2025, management expects revenues in the range of $276-$288 million. Non-GAAP operating margin is expected to be in the range of 13%-15%, with non-GAAP earnings per share between 10 and 13 cents.
For the NSE business, revenues are projected to be between $202 and $212 million, with a non-GAAP operating margin of 6-8%. Revenues for the OSP segment are anticipated to be in the band of $74-$76 million, with a non-GAAP operating margin of 32-34%.
VIAV’s Zacks Rank
Viavi currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Releases
Pinterest, Inc. (PINS - Free Report) is scheduled to release fourth-quarter 2024 earnings on Feb. 6. The Zacks Consensus Estimate for earnings is pegged at 63 cents per share, indicating growth of 18.9% from the year-ago figure.
Zillow Group, Inc. (ZG - Free Report) is scheduled to release fourth-quarter earnings on Feb. 11. The Zacks Consensus Estimate for earnings is pegged at 34 cents per share, indicating growth of 50% from the year-ago figure.
Light and Wonder (LNW - Free Report) is scheduled to release fourth-quarter earnings on Feb. 25. The Zacks Consensus Estimate for earnings is pegged at $1.08 per share, indicating growth of 47.95% from the year-ago figure.