Viavi Solutions Inc.: Q3 FY2026 earnings call

What management said about Q3 FY2026, from the documents filed with the SEC on 29 April 2026: press release. Guidance figures: 2 new. The quarter’s numbers.

Read the filing

Key takeaways

• Revenue grew 42.8% year over year: Net revenue was $406.8 million, up 10.2% from $369.3 million in the prior quarter and up 42.8% from $284.8 million a year earlier. Source
• Data center and aerospace drove growth: Management said the quarter's financial performance exceeded its expectations, driven by strong growth in the data center and aerospace and defense end markets. Source
• Network and Service Enablement grew 54.4%: Network and Service Enablement revenue was $321.5 million, up from $291.5 million in the prior quarter and $208.2 million a year earlier. Source
• Non-GAAP operating margin reached 21.0%: Non-GAAP operating margin was 21.0%, up from 19.3% in the prior quarter and 16.7% a year earlier. GAAP operating margin was 6.1%. Source
• Cash position fell: Cash, short-term investments and short-term restricted cash totaled $508.0 million at March 28, 2026, down from $772.1 million at December 27, 2025. Source
• Operating cash use reflected contingent payment: Cash used in operating activities was $26.3 million, which the company said was primarily due to a portion of a contingent consideration payment classified as an operating outflow. Source
• Management expects end markets to stay strong: Management said it expects the data center and aerospace and defense end markets to remain strong drivers for the foreseeable future. Source

“VIAVI's financial performance for the third quarter has exceeded our expectations, driven by strong growth in the data center and aerospace and defense end markets.”

Oleg Khaykin, President and Chief Executive Officer

Guidance

What changed from last quarter

• New guidance: The company gave fourth quarter fiscal 2026 net revenue and non-GAAP EPS ranges, after the prior quarter's press release gave third quarter ranges. Source
• New: Shares used for diluted EPS rose to 249.5 million in the quarter from 226.9 million a year earlier, and the company's debt structure changed: 1.625% convertible notes were extinguished and Term Loan B was prepaid, with total debt carrying value at $1,080.8 million versus $1,275.1 million in the prior quarter. Source

Results and growth drivers

• Revenue grew 42.8% year over year: Net revenue was $406.8 million, up 10.2% from $369.3 million in the prior quarter and up 42.8% from $284.8 million a year earlier. Source
• Data center and aerospace drove growth: Management said the quarter's financial performance exceeded its expectations, driven by strong growth in the data center and aerospace and defense end markets. Source
• Non-GAAP net income nearly doubled: Non-GAAP net income was $67.6 million, up 99.4% year over year; GAAP net income was $6.4 million, down 67.2% year over year. Source

Segments and regions

• Network and Service Enablement grew 54.4%: Network and Service Enablement revenue was $321.5 million, up from $291.5 million in the prior quarter and $208.2 million a year earlier. Source
• Optical Security segment rose modestly: Optical Security and Performance Products revenue was $85.3 million, up 9.6% from the prior quarter and 11.4% from a year earlier. Source
• Segment operating margins diverged: Network and Service Enablement operating margin was 17.2% against 10.4% a year earlier; Optical Security and Performance Products was 35.3% against 33.9%. Source
• Regional revenue mix shifted: Americas was 44.9% of net revenue, Asia-Pacific 31.5% and EMEA 23.6%, compared with 46.3%, 29.3% and 24.4% in the prior quarter. Source

“We expect these end markets to continue to be strong drivers for the foreseeable future”

Oleg Khaykin, President and Chief Executive Officer

Costs, margins and EPS

• Non-GAAP operating margin reached 21.0%: Non-GAAP operating margin was 21.0%, up from 19.3% in the prior quarter and 16.7% a year earlier. GAAP operating margin was 6.1%. Source
• Gross margin edged up: GAAP gross margin was 57.5%, up from 57.0% in the prior quarter; non-GAAP gross margin was 62.2%, up from 61.8%. Source
• Restructuring charges rose sharply: Restructuring and related charges were $17.3 million in the quarter, against a benefit of $0.3 million a year earlier. Source
• Contingent consideration charge recurred: Change in fair value of contingent liability was a $2.6 million charge in the quarter, and $24.3 million for the nine months. Source
• Interest expense increased: Interest expense was $14.3 million, up from $7.5 million a year earlier. Losses of $3.7 million on note extinguishment and term loan prepayments were recorded in the quarter. Source
• GAAP net income was small: GAAP net income was $6.4 million, or $0.03 diluted EPS, against $0.09 a year earlier. Source

Cash, debt and balance sheet

• Cash position fell: Cash, short-term investments and short-term restricted cash totaled $508.0 million at March 28, 2026, down from $772.1 million at December 27, 2025. Source
• Operating cash use reflected contingent payment: Cash used in operating activities was $26.3 million, which the company said was primarily due to a portion of a contingent consideration payment classified as an operating outflow. Source
• Debt restructured through prepayments: The 1.625% convertible notes were extinguished and Term Loan B was prepaid. Total net carrying value of debt was $1,080.8 million, against $1,275.1 million in the prior quarter. Source
• Inventory and receivables increased: Accounts receivable rose to $320.3 million from $261.0 million at June 28, 2025, and inventories rose to $147.9 million from $117.9 million. Source

Restructuring plan progress

• Restructuring charges recorded this quarter: The company recorded $17.3 million in restructuring and related charges in the quarter. The prior quarter's release described a plan with total charges of approximately $32 million.
• Workforce reduction and savings expected: The plan was approved January 23, 2026, and affects about 5% of the global workforce. It is expected to yield about $30 million in annualized savings upon completion, with most charges recognized by end of June 2026.

Demand visibility

• Management expects end markets to stay strong: Management said it expects the data center and aerospace and defense end markets to remain strong drivers for the foreseeable future. Source
• Limited near-term visibility noted: The forward-looking statements cite continuing general limited visibility across many product lines and customer purchasing delays as limits on near-term demand visibility. Source

Coming up, as management said on 29 April 2026

• Fourth quarter results and guidance: Fourth quarter fiscal 2026 results are due after June 27, 2026, with net revenue guided to $427 million to $437 million. Source
• Restructuring plan completion: The restructuring plan is expected to be substantially completed by the end of calendar 2026, with most charges recognized by end of June 2026.

Risks management discussed

• Operational: Restructuring, integration and acquisition charges are difficult to forecast, which the company cited as the reason it did not reconcile GAAP EPS to non-GAAP guidance. Source
• Financial: Interest expense and debt extinguishment losses increased as debt was prepaid and restructured. Source

Earlier plans management reported on

• Not stated: The prior release said the majority of restructuring charges would be recognized by end of June 2026 and the plan substantially completed by end of calendar 2026.

Other quarters

• Q4 FY2026 earnings call
• Q2 FY2026 earnings call
• Q1 FY2026 earnings call
• Q4 FY2025 results

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.