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VIAVI SOLUTIONS INC. (VIAV)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 delivered at the high end of guidance: revenue $290.5M (+15.3% y/y), GAAP EPS $0.04, non-GAAP EPS $0.13; non-GAAP operating margin 14.4% and adjusted EBITDA $51.3M. Strength was broad across NSE and OSP, with NSE at $209.1M and OSP at $81.4M .
  • Against S&P Global consensus, VIAVI posted a beat on revenue ($290.5M vs $285.2M*) and EPS ($0.13 vs $0.115*), following a Q3 beat as well ($284.8M vs $281.8M*, $0.15 vs $0.118*). EBITDA comparisons are not directly like-for-like due to definitions (company reports adjusted EBITDA) *.
  • Q1 FY2026 guidance: revenue $290–$298M and non-GAAP EPS $0.13–$0.14; management expects sequential growth, driven by data center ecosystem and aerospace & defense, with OSP seasonally stronger in 3D sensing .
  • Key narrative catalyst: accelerating demand across the data center ecosystem (400G/800G and leadership in 1.6T test), and resilient aerospace & defense PNT momentum; tariffs were largely mitigated and embedded in pricing, reducing earlier concerns .

What Went Well and What Went Wrong

What Went Well

  • Data center ecosystem momentum across fiber lab/production (800G, 400G; second-gen 1.6T test launched), with broad demand from semis, module makers, equipment vendors, and hyperscalers; “demand is just crazy…we feel very good about our performance” .
  • OSP executed strongly: Q4 revenue $81.4M (+16.6% y/y), gross margin 54.7% and operating margin 39.4% (above guidance), driven by anti-counterfeiting and favorable mix .
  • Tariffs largely mitigated and embedded into pricing; management quantified ~$1.5M overall impact and indicated supply chain realignment to minimize future exposure .

What Went Wrong

  • Sequential margin compression: non-GAAP operating margin fell from 16.7% in Q3 to 14.4% in Q4, with NSE operating margin impacted by year-end variable comp and higher R&D .
  • Wireless infrastructure test remains sluggish with recovery pushed out; management expects medium-term weakness despite healthier demand for field instruments .
  • GAAP gross margin dipped y/y (56.3% vs 57.8%) due to mix and amortization; company flagged ongoing visibility limits and product mix volatility across portfolio .

Financial Results

MetricQ2 2025Q3 2025Q4 2025
Revenue ($USD Millions)$270.8 $284.8 $290.5
GAAP Diluted EPS ($)$0.04 $0.09 $0.04
Non-GAAP EPS ($)$0.13 $0.15 $0.13
GAAP Gross Margin (%)59.4% 56.4% 56.3%
GAAP Operating Margin (%)8.2% 3.0% 5.3%
Segment Revenue ($USD Millions)Q2 2025Q3 2025Q4 2025
Network & Service Enablement (NSE)$199.9 $208.2 $209.1
Optical Security & Performance Products (OSP)$70.9 $76.6 $81.4
Total$270.8 $284.8 $290.5
KPIsQ2 2025Q3 2025Q4 2025
Adjusted EBITDA ($USD Millions)$50.1 $57.0 $51.3
Cash from Operations ($USD Millions)$44.7 $7.8 $23.8
Cash & ST Investments + Restricted ($USD Millions)$512.8 $400.2 $429.0
Results vs S&P Global ConsensusQ3 2025 EstimateQ3 2025 ActualQ4 2025 EstimateQ4 2025 Actual
Revenue ($USD Millions)281.8*284.8 285.2*290.5
Primary EPS ($)0.118*0.15 0.115*0.13

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)Q4 FY2025$278–$290 $290.5 (actual) At high end
Non-GAAP EPS ($)Q4 FY2025$0.10–$0.13 $0.13 (actual) High end
Revenue ($USD Millions)Q1 FY2026n/a$290–$298 New
Non-GAAP EPS ($)Q1 FY2026n/a$0.13–$0.14 New
NSE Revenue ($USD Millions)Q1 FY2026n/a~$211 ± $3 New
NSE Operating Margin (%)Q1 FY2026n/a5.8% ± 40 bps New
OSP Revenue ($USD Millions)Q1 FY2026n/a~$83 ± $1 New
OSP Operating Margin (%)Q1 FY2026n/a38.3% ± 20 bps New
Tax Expense ($USD Millions)Q1 FY2026n/a~$8.5 ± $0.5 New
Other Income & Expense (net) ($USD Millions)Q1 FY2026n/a~$(5) New
Diluted Share Count (Millions)Q1 FY2026n/a~228.6 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 FY2025)Previous Mentions (Q3 FY2025)Current Period (Q4 FY2025)Trend
Data center ecosystem & AI (400G/800G/1.6T)Strong lab/production demand; first 1.6T shipped; expect 800G volume through calendar 2025 Unseasonably strong March; expect another strong September; customers placing longer-term orders Second-gen 1.6T launched; competitive lead; broad demand across value chain Strengthening leadership, secular growth
Tariffs & supply chainNot highlighted as impactBuilt ~$3M tariff absorption into Q4 guidance; expected low single-digit op margin impact; realign supply chain in 3–6 months Actual impact ~$1.5M and largely mitigated; pricing adders accepted; comfortable with mitigation Impact waning; mitigation effective
WirelessGreen shoots in 5G field instruments; infrastructure test weak Field instruments strong; infrastructure test anemic; recovery pushed out Infrastructure test remains sluggish medium-term; field instruments healthy Gradual recovery in field; infra lagging
Aerospace & Defense (PNT)Robust growth; Inertial Labs acquisition strengthens PNT Strong growth; multi-year driver; above $50M run-rate tracking Continued strength; major programs; healthy q/q growth Durable multi-year growth
OSP (3D sensing & anti-counterfeiting)3D sensing weaker; anti-counterfeiting stabilizing; inventory burn plan Anti-counterfeiting healthier; seasonally weaker 3D sensing in Q4; demand-supply equilibrium emerging Q4 OSP beat; margins up; ASP pressure stabilized; volume/mix drives margins Stabilized with improving mix
Seasonality & regional patternsBetter-than-seasonal Q3 expected; NA leads, EU ~1–2 quarters behind Seasonality muted by data center demand; potential EU pickup mid-year Seasonality increasingly muted; diversification offsets service provider cyclicality Less volatile trajectory

Management Commentary

  • “VIAVI had a strong finish to Fiscal 2025…stabilization in our base businesses…recovery was further accelerated by the high growth in our data center ecosystem and aerospace & defense segments.” — Oleg Khaykin, CEO .
  • “We expect the strong demand from the data center ecosystem to continue well into calendar twenty twenty six…we further extended our leadership…second generation 1.6 terabit test solution.” — Oleg Khaykin, CEO .
  • “Operating margin for the fourth fiscal quarter was 14.4% at the high end of our guidance…EPS at $0.13 was also at the high end.” — Ilan Daskal, CFO .
  • “Overall…tariff impact is around 1.5 million dollars, which we have more than mitigated…and are comfortable in our ability to continue manage the ongoing impact.” — Oleg Khaykin, CEO .

Q&A Highlights

  • Tariffs: Q3 guidance contemplated ~$3M tariff absorption; by Q4, impact was ~$1.5M and mitigated via pricing adders and supply chain realignment; customers accepted adders; mitigation expected to make impact de minimis within 3–6 months .
  • Data center competitive position: VIAVI launched second-gen 1.6T while competition is on first-gen; 800G/400G drive current volume; 1.6T locks follow-on activity across ecosystem .
  • NSE margin trajectory: As recovery continues, management targets mid-to-high teens, then into 20% longer term, with gross margin profile in low 60s .
  • Seasonality: Data center and A&D diversification increasingly offset traditional service provider seasonality; expect less quarter-to-quarter volatility .
  • OSP: Volume/mix drives margin; ASPs stabilized; diversification to new segments expected over 2–3 years .

Estimates Context

  • Q4 FY2025: Revenue $290.5M vs S&P Global consensus $285.2M*; non-GAAP EPS $0.13 vs consensus $0.115* — both beats. Q3 also beat revenue ($284.8M vs $281.8M*) and EPS ($0.15 vs $0.118*) *.
  • Q1 FY2026 guide ($290–$298M; $0.13–$0.14 EPS) is broadly aligned with consensus ($294.4M revenue*, $0.131* EPS), implying modest sequential growth and stable EPS profile *.
  • EBITDA comparisons: Company reports adjusted EBITDA ($51.3M in Q4), while SPGI’s EBITDA consensus uses different definitions; not directly comparable *.

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Q4 print was clean and at the high end of guidance; both revenue and EPS exceeded S&P consensus, supported by strong NSE and OSP execution *.
  • Secular demand from AI-driven data centers is a durable tailwind; VIAVI’s second-gen 1.6T leadership and 800G volume underpin revenue visibility into FY2026 .
  • Tariff headwinds eased faster than expected; mitigation and pricing adders reduce risk to margins and order timing vs prior quarter’s caution .
  • NSE margins dipped sequentially on mix/OpEx but management’s longer-term margin ambition (mid/high-teens to 20%) is intact as recovery broadens .
  • OSP’s high fall-through and improved mix drove y/y margin expansion; ASPs stabilized; watch 3D sensing seasonality and anti-counterfeiting normalization .
  • Near-term setup: Q1 FY2026 guide implies slight sequential growth and stable EPS; data center and A&D offset wireless infrastructure sluggishness .
  • Medium-term: Portfolio diversification (A&D PNT, data center) lowers cyclicality and could support multiple expansion as margins improve and Spirent assets integrate post-close .