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Viavi Beats Q3 Earnings Estimates on Healthy Revenue Growth
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Viavi Solutions Inc. (VIAV - Free Report) reported solid third-quarter fiscal 2025 results, with both the top and bottom lines surpassing the Zacks Consensus Estimate. The company reported an increase in revenues backed by healthy growth in the Network Enablement (NE) and Service Enablement (SE) segments. 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 $19.5 million or 9 cents per share against a net loss of $24.6 million or a loss of 11 cents per share in the year-ago quarter. The significant improvement in GAAP earnings was primarily due to top-line growth.
Non-GAAP net income improved to $33.9 million or 15 cents per share from $13.2 million or 6 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 $284.8 million, up 15.8% year over year. The healthy demand in the NE and SE segments cushioned the top line. Revenues beat the Zacks Consensus Estimate of $282 million.
Net sales in the NE segment were $188 million, up from $151.7 million in the year-ago quarter. The 23.9% growth was primarily driven by the strong demand from service providers and network equipment manufacturers for fiber lab and production products.
Revenues from the SE segment were $20.2 million, up 11.6% year over year, owing to healthy demand trends.
Optical Security and Performance Products (OSP) revenues increased marginally to $76.6 million from $76.2 million, primarily due to strength in anti-counterfeiting products.
Net sales from America contributed $108.1 million to revenues, up from $88.3 million reported a year ago. Revenues from Asia-Pacific were $100.7 million, up 12.3% from the year-earlier quarter’s tally of $89.7 million. Revenues from EMEA increased to $76 million from $68 million a year ago.
Other Details
In the third quarter of fiscal 2025, the non-GAAP gross margin was 60%, up 210 basis points (bps) from the prior-year quarter. Non-GAAP gross margin in the NE segment was 63.4%, up 190 bps led by higher volume and product mix. SE segment’s gross margin decreased to 59.9% from 60.8% in the prior-year quarter due to unfavorable product mix. OSP segment’s gross margin increased to 51.6% from 50.1%. The year-over-year improvement was primarily driven by lower volume and product mix.
Total non-GAAP operating margin increased 740 bps year over year to 16.7%. Operating margin in the Network and Service Enablement (NSE) business increased 1,220 bps to 10.4%, driven by a higher gross margin fall through and a $4 million government R&D grant in Europe. OSP segment’s operating margin decreased to 33.9% from 34.3% in the prior-year quarter.
Cash Flow & Liquidity
During the March quarter, Viavi generated $7.8 million of cash from operating activities, a significant decrease from $19.5 million in the year-ago period. As of March 29, 2025, the company had $374.2 million in cash and cash equivalents and $396.1 million of long-term debt.
Outlook
For the fourth quarter of fiscal 2025, management expects revenues in the range of $278-$290 million. Non-GAAP earnings per share are expected to be between 10 cents and 13 cents.
For the NSE business, revenues are projected to be between $203 and $213 million, with a non-GAAP operating margin of 4-6%. Revenues for the OSP segment are anticipated to be in the band of $75-$77 million, with a non-GAAP operating margin of 36-38%.
Arista Networks Inc. (ANET - Free Report) is scheduled to release first-quarter 2025 earnings on May 6. The Zacks Consensus Estimate for earnings is pegged at 59 cents per share, suggesting a growth of 18% from the year-ago reported figure.
Arista has a long-term earnings growth expectation of 14.4%. Arista delivered an average earnings surprise of 12.9% in the last four reported quarters.
Akamai Technologies, Inc. (AKAM - Free Report) is slated to release first-quarter 2025 earnings on May 8. The Zacks Consensus Estimate for earnings is pegged at $1.58 per share, indicating a decline of 3.7% from the year-ago reported figure.
Akamai has a long-term earnings growth expectation of 6.1%. Akamai delivered an average earnings surprise of 3.4% in the last four reported quarters.
Pinterest, Inc. (PINS - Free Report) is set to release first-quarter 2025 earnings on May 8. The Zacks Consensus Estimate for earnings is pegged at 25 cents per share, implying a growth of 25% from the year-ago reported figure.
Pinterest has a long-term earnings growth expectation of 31.7%. Pinterest delivered an average earnings surprise of 13.2% in the last four reported quarters.
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Viavi Beats Q3 Earnings Estimates on Healthy Revenue Growth
Viavi Solutions Inc. (VIAV - Free Report) reported solid third-quarter fiscal 2025 results, with both the top and bottom lines surpassing the Zacks Consensus Estimate. The company reported an increase in revenues backed by healthy growth in the Network Enablement (NE) and Service Enablement (SE) segments. 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 $19.5 million or 9 cents per share against a net loss of $24.6 million or a loss of 11 cents per share in the year-ago quarter. The significant improvement in GAAP earnings was primarily due to top-line growth.
Non-GAAP net income improved to $33.9 million or 15 cents per share from $13.2 million or 6 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 $284.8 million, up 15.8% year over year. The healthy demand in the NE and SE segments cushioned the top line. Revenues beat the Zacks Consensus Estimate of $282 million.
Net sales in the NE segment were $188 million, up from $151.7 million in the year-ago quarter. The 23.9% growth was primarily driven by the strong demand from service providers and network equipment manufacturers for fiber lab and production products.
Revenues from the SE segment were $20.2 million, up 11.6% year over year, owing to healthy demand trends.
Optical Security and Performance Products (OSP) revenues increased marginally to $76.6 million from $76.2 million, primarily due to strength in anti-counterfeiting products.
Net sales from America contributed $108.1 million to revenues, up from $88.3 million reported a year ago. Revenues from Asia-Pacific were $100.7 million, up 12.3% from the year-earlier quarter’s tally of $89.7 million. Revenues from EMEA increased to $76 million from $68 million a year ago.
Other Details
In the third quarter of fiscal 2025, the non-GAAP gross margin was 60%, up 210 basis points (bps) from the prior-year quarter. Non-GAAP gross margin in the NE segment was 63.4%, up 190 bps led by higher volume and product mix. SE segment’s gross margin decreased to 59.9% from 60.8% in the prior-year quarter due to unfavorable product mix. OSP segment’s gross margin increased to 51.6% from 50.1%. The year-over-year improvement was primarily driven by lower volume and product mix.
Total non-GAAP operating margin increased 740 bps year over year to 16.7%. Operating margin in the Network and Service Enablement (NSE) business increased 1,220 bps to 10.4%, driven by a higher gross margin fall through and a $4 million government R&D grant in Europe. OSP segment’s operating margin decreased to 33.9% from 34.3% in the prior-year quarter.
Cash Flow & Liquidity
During the March quarter, Viavi generated $7.8 million of cash from operating activities, a significant decrease from $19.5 million in the year-ago period. As of March 29, 2025, the company had $374.2 million in cash and cash equivalents and $396.1 million of long-term debt.
Outlook
For the fourth quarter of fiscal 2025, management expects revenues in the range of $278-$290 million. Non-GAAP earnings per share are expected to be between 10 cents and 13 cents.
For the NSE business, revenues are projected to be between $203 and $213 million, with a non-GAAP operating margin of 4-6%. Revenues for the OSP segment are anticipated to be in the band of $75-$77 million, with a non-GAAP operating margin of 36-38%.
Zacks Rank & Stock to Consider
Viavi currently has a Zacks Rank #3 (Hold). You can the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Releases
Arista Networks Inc. (ANET - Free Report) is scheduled to release first-quarter 2025 earnings on May 6. The Zacks Consensus Estimate for earnings is pegged at 59 cents per share, suggesting a growth of 18% from the year-ago reported figure.
Arista has a long-term earnings growth expectation of 14.4%. Arista delivered an average earnings surprise of 12.9% in the last four reported quarters.
Akamai Technologies, Inc. (AKAM - Free Report) is slated to release first-quarter 2025 earnings on May 8. The Zacks Consensus Estimate for earnings is pegged at $1.58 per share, indicating a decline of 3.7% from the year-ago reported figure.
Akamai has a long-term earnings growth expectation of 6.1%. Akamai delivered an average earnings surprise of 3.4% in the last four reported quarters.
Pinterest, Inc. (PINS - Free Report) is set to release first-quarter 2025 earnings on May 8. The Zacks Consensus Estimate for earnings is pegged at 25 cents per share, implying a growth of 25% from the year-ago reported figure.
Pinterest has a long-term earnings growth expectation of 31.7%. Pinterest delivered an average earnings surprise of 13.2% in the last four reported quarters.