VIAVI SOLUTIONS (VIAV)·Q2 2026 Earnings Summary

VIAVI Crushes EPS Estimates as Data Center Boom Drives 36% Revenue Surge

January 28, 2026 · by Fintool AI Agent

VIAVI Solutions delivered a standout Q2 FY2026, beating both revenue and EPS estimates as the data center infrastructure buildout and recent acquisitions continue to fuel growth. Revenue surged 36.4% year-over-year to $369.3M while Non-GAAP EPS of $0.22 crushed consensus by 17% . The stock jumped ~7% including after-hours trading, hitting a new 52-week high.

Did VIAVI Beat Earnings?

Yes — VIAVI beat on both metrics and came in at the high end of guidance.

*Values retrieved from S&P Global

The beat was driven by stronger-than-expected performance in the Network & Service Enablement (NSE) segment, which saw revenue at the high end of guidance on continued data center ecosystem strength .

How Did the Stock React?

VIAVI stock surged on the results:

• Regular session: Up 2.3% to $21.03
• After-hours: Up another 3.9% to $21.84
• 52-week high: $21.52 (hit today) vs 52-week low of $8.10
• Total move: ~7% from prior close

The stock has more than doubled from its 52-week lows as the data center AI infrastructure buildout has become a significant tailwind for VIAVI's test and measurement business.

What Did Management Guide?

Q3 FY2026 Guidance implies continued momentum:

The midpoint of Q3 guidance ($393M revenue, $0.23 EPS) suggests VIAVI expects the growth trajectory to continue into the spring quarter.

What Changed From Last Quarter?

Key shifts from Q1 to Q2 FY2026:

1. NSE Revenue Acceleration: NSE segment jumped from $216M to $291.5M (+35% QoQ), reflecting full quarter contribution from the Spirent acquisition and continued data center strength

2. Operating Margin Expansion: Non-GAAP operating margin expanded 360 bps sequentially to 19.3%, demonstrating operating leverage

3. Business Mix Flip: Data center ecosystem is now ~45% of NSE (up from ~40%), making it the largest end market ahead of service providers at ~40%

4. Visibility Extension: Order visibility improved from 1-1.5 quarters to ~3 quarters on hyperscaler multi-year engagements

5. Restructuring Announced: New restructuring plan impacting ~5% of global workforce, expected to generate ~$30M in annual cost savings

6. Debt Reduction: Prepaid $100M of Term Loan B and exchanged ~$100M of convertible notes for equity

Segment Performance

Network & Service Enablement (NSE) — 78.9% of Revenue

Key drivers: Acquisitions of Inertial Labs and Spirent product lines, plus strong demand for lab/production and field products from the data center ecosystem .

Optical Security & Performance Products (OSP) — 21.1% of Revenue

Key drivers: Strength in anti-counterfeiting and other products, offsetting typical Q2 seasonality .

Restructuring and Cost Actions

On January 23, 2026, VIAVI announced a restructuring plan to improve operational efficiencies :

This plan combines integration synergies from the Spirent acquisition with broader operational efficiencies.

Balance Sheet & Capital Allocation

VIAVI took meaningful steps to strengthen its balance sheet this quarter :

Capital allocation priorities this quarter:

• Exchanged ~$103.5M of 2026 convertible notes for 7.9M shares at $17.88/share
• Prepaid $100M of Term Loan B (post quarter-end, January 5)
• No share repurchases as debt management was prioritized

What Did Management Say?

"The second quarter of fiscal 2026 came in at the high end of our guidance, driven by strong growth in many of our end markets... We expect the data center ecosystem revenue momentum to continue through the calendar 2026."

— Oleg Khaykin, President and CEO

"The fiber networks are generally crap, and they need to be significantly improved. And we are seeing a lot of pressure from the hyperscalers on service providers to improve the performance."

— Oleg Khaykin, on data center fiber monitoring opportunity

Q&A Highlights

Business Mix Shift — Data Center Now #1

Management disclosed a meaningful mix evolution in NSE :

This represents a structural shift — VIAVI is now ~60% exposed to data center and A&D vs. only ~40% service provider/telecom .

Field Instruments Transformation

A year ago, data center represented single-digit percent of field instruments revenue. Now it's approximately one-third of field instrument revenue :

"If I looked at a year ago, you might have been single digits data center for our traditional field instruments. I think we are now looking at about a third of our revenue in the field instruments coming from data center."

Extended Visibility from Hyperscalers

Management highlighted a significant improvement in demand visibility :

Technology Cycle Acceleration

The product refresh cycle is compressing dramatically :

Emerging technologies driving incremental demand: Hollow Core Fiber and Multi-Core Fiber for next-gen data center interconnects .

Aerospace & Defense: Drones Everywhere

PNT (Position, Navigation, Timing) growth is being driven by autonomous systems across all domains :

• Air: Drones, surveillance systems
• Ground: Robotic vehicles, autonomous machinery
• Sea: Undersea and seaborne drones

Additionally, data centers are emerging as a new timing market — as speeds increase to 1.6T and beyond, precise timing for synchronization becomes critical .

June Quarter (Q4 FY26) Outlook

Management expects sequential growth to continue into Q4 FY2026 :

"With a continued strength in data center and aerospace and defense, you're actually gonna have a tailwind also on the service provider. Our expectation that the June quarter is gonna be stronger than the March quarter."

Geographic Mix

Americas and EMEA showed the strongest growth, likely driven by data center buildouts in those regions.

Forward Catalysts

1. Q3 FY2026 Earnings (expected late April/early May 2026)
2. Spirent Integration Progress — $16M of the $30M cost savings tied to synergies
3. Data Center Infrastructure Cycle — AI-driven demand for test equipment
4. Remaining 2026 Convertible Note Maturity — $49M due March 2026
5. Restructuring Completion — Full savings run-rate by end of 2026

Key Risks

• Integration Execution: Spirent product lines integration still in progress
• Customer Concentration: Significant exposure to data center hyperscalers
• Debt Load: $1.3B total debt despite recent paydowns
• Macro Sensitivity: Telecom capex cycles and enterprise IT spending
• Geopolitical: China exposure and tariff uncertainty noted in forward-looking statements

Bottom Line

VIAVI delivered a strong beat-and-raise quarter as the data center AI infrastructure buildout continues to drive demand for test and measurement equipment. The 17% EPS beat and 7% stock move reflect both operational execution and structural tailwinds. Three key takeaways:

1. Structural mix shift: Data center + aerospace/defense is now ~60% of NSE revenue, reducing telecom cyclicality
2. Visibility improvement: Order visibility extended from 1.5 to 3 quarters on hyperscaler commitments
3. Technology cycle tailwind: 2-year node transitions (vs. 6 years historically) mean more frequent product refreshes

With Q3 guidance implying continued sequential growth, Q4 expected stronger still, and management confident in calendar 2026 momentum, the bull case remains intact.

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Related Links:

• VIAVI Company Page
• Q2 FY2026 Earnings Transcript
• Q1 FY2026 Earnings