Viavi Solutions Inc. Reports Strong Earnings Growth

Viavi Solutions Inc ((VIAV)) has held its Q4 earnings call. Read on for the main highlights of the call.

Viavi Solutions Inc. recently held its earnings call, revealing a robust performance characterized by significant revenue and operating margin growth. The data center ecosystem and Optical Security and Performance Products (OSP) segment were key drivers of this success. Despite these achievements, challenges in the wireless business and tariff impacts were noted, though the overall sentiment was positive.

Strong Revenue Growth

Viavi Solutions reported net revenue of $290.5 million for Q4, reaching the high end of their guidance range. This marks a 2% sequential increase and a 15.3% rise year-over-year. For the full fiscal year 2025, the company achieved $1.84 billion in revenue, reflecting an 8.4% increase from the previous year.

Improved Operating Margins

The operating margin for Q4 stood at 14.4%, aligning with the high end of the guidance range and showing a 350 basis point increase year-over-year. The fiscal year 2025 operating margin was 14.2%, up 270 basis points from fiscal 2024, indicating enhanced operational efficiency.

Earnings Per Share (EPS) Growth

Earnings per share for Q4 were $0.13, at the high end of the guidance range, representing a $0.05 increase year-over-year. For the full year, EPS was $0.47, up $0.14 from the previous year, highlighting the company’s profitability.

OSP Segment Performance

The OSP segment reported Q4 revenue of $81.4 million, surpassing the high end of guidance and marking a 16.6% year-over-year increase. The gross margin for this segment was 54.7%, up 170 basis points from the prior year, underscoring its strong performance.

Data Center Ecosystem Growth

Viavi’s data center ecosystem experienced strong demand, driving growth in the Network and Service Enablement (NSE) revenue. The launch of a second-generation 1.6-terabit test solution contributed to this success, with expectations for continued strong demand into fiscal 2026.

Decreased Operating Margin Sequentially

Despite overall growth, the Q4 operating margin decreased by 230 basis points from the previous quarter, indicating some operational challenges.

Challenges in Wireless Business

The wireless segment faced difficulties, with sluggish infrastructure test demand due to business weakness at leading wireless network equipment manufacturers (NEMs). This challenge is expected to persist in the medium term.

Tariff Impacts

Newly imposed tariffs affected revenue, with an impact of approximately $1.5 million. However, the company managed to mitigate these effects to some extent.

Forward-Looking Guidance

Looking ahead, Viavi Solutions provided guidance for the first fiscal quarter of 2026, expecting revenue between $290 million and $298 million, with an operating margin of 15%, plus or minus 40 basis points. EPS is anticipated to range between $0.13 and $0.14. The NSE segment is projected to generate approximately $211 million in revenue, while the OSP segment is expected to bring in around $83 million.

In summary, Viavi Solutions Inc.’s earnings call highlighted a strong performance with impressive revenue and margin growth, driven by the data center ecosystem and OSP segment. While challenges in the wireless business and tariff impacts were acknowledged, the overall outlook remains positive, with promising guidance for the upcoming fiscal year.