Viavi sees $0.50-$0.52 EPS and highlights semiconductor test as a $100M-plus opportunity

• CEO Oleg Khaykin said the quarter “coming in above the high end of our guidance” puts fiscal 2027 “off to a good start,” citing demand across data center and aerospace and defense (President, CEO & Director Oleg Khaykin).
• Khaykin said Viavi “expanded our TAM to include the semiconductor packaging and test,” adding, “The September quarter marked a major milestone as we commenced the initial shipments into that segment,” and “we expect the semiconductor packaging and test segment to become a major new growth area for Viavi” (President, CEO & Director Khaykin).
• Khaykin highlighted aerospace and defense momentum and said, “Our T/Rx system was recently selected by the U.S. Army's Threat Systems Management Office… This is potentially a sizable growth opportunity for Viavi over the next several years” (President, CEO & Director Khaykin).
• Khaykin called out mixed service provider trends: “Wireless products remains the only lowlight… due to the anemic spend environment,” while adding, “we remain optimistic about the medium-term prospects… as AI RAN and 6G development start to ramp up” (President, CEO & Director Khaykin).
• CFO Ilan Daskal reported Q1 net revenue of $469.3 million and said operating margin was 29%, noting it “included a net benefit of about 110 basis points from tariff refund of approximately $11 million” (Executive VP & CFO Ilan Daskal).
• Daskal said Viavi purchased about $150 million of stock in Q1 and added, “our Board of Directors has authorized a new buyback plan of $500 million” (Executive VP & CFO Daskal).

Outlook

• Daskal guided Q2 revenue to $505 million-$515 million and EPS to $0.50-$0.52, and said, “We expect quarter-over-quarter growth to continue throughout the rest of the fiscal year, driven by tailwinds in our end markets” (Executive VP & CFO Daskal).
• Daskal guided Q2 segment direction as “NSE revenue… to be up” and “OSP… to be lower, in line with seasonality,” with company operating margin expected to be 29.3% plus or minus 30 basis points (Executive VP & CFO Daskal).
• Relative to the prior quarter’s setup, management no longer emphasized the “additional 1 week” dynamic that affected Q1, shifting the focus to sustained sequential growth through the fiscal year (Executive VP & CFO Daskal; prior-quarter context from Q4 FY2026 transcript).

Financial results

• Daskal said Q1 EPS was $0.47, adding it “includes a net benefit of about $0.02 from tariff refunds and from the additional 1 week of variable expenses” (Executive VP & CFO Daskal).
• Daskal reported NSE revenue of $376.1 million (including $52.7 million from Spirent product lines) and OSP revenue of $93.2 million, and attributed NSE’s year-over-year growth to “continued strong demand for our lab and production and field products, driven by the data center as well as the acquisition of Spirent product lines,” plus “strong demand for our aerospace and defense products” (Executive VP & CFO Daskal).
• Daskal said cash flow from operating activities was $104.7 million and ended Q1 with total cash and short-term investments of $535.3 million (Executive VP & CFO Daskal).

Q&A

• Ruben Roy, Stifel: asked what drives the Q2 NSE step-up; President, CEO & Director Khaykin said, “probably about… 40% coming from data center growth… about 1/3… from aerospace and defense and the rest is a service provider.”
• Ruben Roy, Stifel: asked about the new semiconductor test opportunity and whether it is in the sequential-growth view; President, CEO & Director Khaykin said the OSAT market “could be a sizable segment in a couple of years… north of $100 million for Viavi.”
• Ryan Koontz, Needham: asked about 1.6T module cycle timing; President, CEO & Director Khaykin said, “it's still very early innings,” and “The 1.6 peak will be probably sometime in the second half of next year.”
• Michael Genovese, Rosenblatt: asked whether CPO/NPO revenue started; President, CEO & Director Khaykin said initial activity was “a single million dollar shipment” in September, “accelerating in the December quarter,” and “predominantly supporting CPO.”
• Michael Genovese, Rosenblatt: pressed on incremental margins; President, CEO & Director Khaykin said a conservative view is “in the low to mid-50s,” while Executive VP & CFO Daskal pointed to OpEx timing and said March typically has “a little bit uptick on the operating expense.”
• Andrew Spinola, UBS: asked if Spirent synergies are still flowing; Executive VP & CFO Daskal replied, “This is all scaling the business,” adding Spirent integration “was already completed at least 2, 3 quarters ago.”
• Timothy Savageaux, Northland: asked about mapping customer CPO revenue to Viavi content; President, CEO & Director Khaykin said for an annual $2 billion customer run rate, Viavi content would be “maybe approaching like between $50 million and $100 million,” adding, “Think of it as yes, up to 5% of your revenue.”

Sentiment analysis

• Analysts’ tone was slightly positive and opportunity-focused, with repeated probing on CPO/NPO/OCS timing and operating leverage; one exchange flagged market skepticism: “there's still credit concerns rattling people… general worries about data centers” (Michael Genovese, Rosenblatt).
• Management tone was positive and assertive on demand durability; Khaykin said, “I don't see any slowdown,” and argued the company is “not a one-trick pony… fairly well diversified” (President, CEO & Director Khaykin).
• Versus the prior quarter, the discussion shifted from reaching a $500 million quarterly revenue milestone sooner to reaching a “$2 billion revenue run rate… ahead of our prior expectations,” with more emphasis on semiconductor packaging/test and connector manufacturing expansion (President, CEO & Director Khaykin).

Quarter-over-quarter comparison

• The current call introduced a clearer multi-driver growth framework (“4 major drivers”) and explicitly tied growth to new served markets like “semiconductor assembly and test” and “fiber manufacturing,” which were less developed in the prior-quarter narrative (President, CEO & Director Khaykin).
• Capital allocation messaging shifted from Q4’s follow-on offering and debt paydown to accelerated buybacks: Q1 included $150 million repurchased and “a new buyback plan of $500 million” (Executive VP & CFO Daskal; Q4 FY2026 transcript context).
• Analysts maintained continuity in their focus areas (data center optical cycles, CPO/OCS timing, margins), but the current quarter’s Q&A contained more explicit sizing of semiconductor test revenue potential (“north of $100 million”) and content assumptions (“up to 5%”) (President, CEO & Director Khaykin).

Risks and concerns

• Management reiterated dependencies on “sustained capital spending… by data center ecosystem, service providers and aerospace and defense customers,” plus execution risks such as “develop and deliver new products on time” and “adequate component availability” (Head of Investor Relations Vibhuti Nayar).
• Khaykin identified “wireless” as the weak area due to an “anemic spend environment,” positioning recovery around “AI RAN and 6G development” (President, CEO & Director Khaykin).

Final takeaway

Management framed Q1 as an above-guidance start to fiscal 2027 and guided to continued sequential growth, led by NSE strength in data center and aerospace and defense while OSP seasonality weighs Q2. Executives emphasized expanding the data center-related test footprint into semiconductor packaging and test—described as “north of $100 million”—and highlighted a new $500 million buyback authorization alongside an argument that end-market diversification, not just AI data centers, underpins the growth outlook.

Read the full Earnings Call Transcript

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