Viavi Solutions Inc.

Viavi reported Q4 FY2026 revenue of $443.1 million, up 8.9% sequentially and 52.5% year over year. Q4 EPS was $0.34, above guidance of $0.29 to $0.31 and up $0.07 sequentially and $0.21 year over year. Q4 operating margin was 24%, up 280 basis points sequentially and 960 basis points year over year; NSE gross margin was 64.1% and OSP gross margin was 55.2%. Full-year FY2026 revenue was $1.518 billion, up 40% year over year, full-year EPS was $1 versus $0.47, and full-year operating margin was 20.6%. For Q1 FY2027, management guided revenue of $450 million to $460 million, NSE revenue of $360 million to $368 million, OSP revenue of $90 million to $92 million, operating margin of 27.1% plus or minus 40 basis points, and EPS of $0.40 to $0.42. Guidance includes about a 100-basis-point tariff refund benefit, offset by an extra week of variable costs, and management said the quarter also includes about $11 million of tariff refund benefit in July 2026. Cash and short-term investments ended Q4 at $656.7 million, up from $508 million in Q3. Cash flow from operations was $66.7 million, capex was $11.1 million, and the company issued approximately 12.78 million shares at $45 for $575 million gross proceeds, using the proceeds to pay off the remaining Term Loan B balance.

Oleg Khaykin said FY2026 ended strongly, with outperformance driven by the data center ecosystem and aerospace and defense. He emphasized that data center demand remains very strong, 1.6T is ramping quickly, and the company expects continued robust growth in that segment for the next several quarters. He also highlighted that the Spirent acquisition is performing well, the Ultra Ethernet Transport launch extends leadership, and the diversification strategy into data center and A&D is now a key growth driver.

Ilan Daskal focused on the quarter’s financial beat and the margin expansion, noting that operating margin of 24% was above guidance and that EPS benefited by about $0.02 from lower interest expense and the tariff refund. He detailed a stronger balance sheet, with cash and short-term investments rising to $656.7 million after the $575 million follow-on offering used to repay the remaining Term Loan B. He also said the company repurchased about 2.7 million shares for about $30 million in FY2026, and that nearly $170 million remains authorized under the buyback program.

Analysts pressed on the scale and timing of data center and 1.6T demand, and management said data center is now about 50% of NSE revenue, with 1.6T ramping quickly but still coexisting with 800G and 400G. Questions on the extra week in Q1 brought a clear answer that the week adds little revenue but raises variable costs, with management saying it should not materially change the quarter-to-quarter revenue pattern. On Spirent, management said seasonality remains intact, integration is done, savings are being realized, and the business is performing well with expected sequential improvement into September and December.