Viavi Solutions(VIAV)2025-01-31 21:15Financial Performance - Net revenue for the second quarter of fiscal 2025 was 16.3 million or 6.4% year-over-year [183]. - GAAP operating margin was 8.2%, a decrease of 60 basis points year-over-year, while non-GAAP operating margin improved to 14.9%, an increase of 170 basis points year-over-year [183]. - GAAP net income was 1.6 million or 15.0% year-over-year, whereas non-GAAP net income rose to 5.7 million or 24.1% year-over-year [183]. - GAAP diluted EPS was 0.01 or 20.0% year-over-year, while non-GAAP diluted EPS increased to 0.02 or 18.2% year-over-year [183]. - Total net revenue for the three months ended December 28, 2024, increased by 14.8 million, or 7.0%, during the three months ended December 28, 2024, primarily due to revenue increases in the NE segment [196]. - Service revenues increased by 23.5 million, or 15.1%, during the three months ended December 28, 2024, driven by higher volume in various segments [228]. - SE net revenue decreased by 4.0 million, or 5.3%, during the three months ended December 28, 2024, primarily driven by lower consumer and industrial revenue [233]. Cost and Expense Management - Research and development expenses rose by 9.5 million, or 12.7%, during the three months ended December 28, 2024, accounting for 31.1% of net revenue [192]. - Provision for income taxes increased by 0.4 million, or 5.1%, during the three months ended December 28, 2024, due to lower outstanding debt [222]. Margins and Profitability - Gross margin improved by 1.2 percentage points from 58.2% to 59.4% during the three months ended December 28, 2024, mainly attributed to the NE segment [203]. - Gross margin increased by 0.1 percentage points to 58.3% for the six months ended December 28, 2024, compared to 58.2% in the same period a year ago [204]. - OSP gross margin increased by 0.8 percentage points to 53.1% for the six months ended December 28, 2024, compared to 52.3% in the same period a year ago [235]. - NSE operating margin increased by 5.1 percentage points to 8.7% during the three months ended December 28, 2024, compared to 3.6% in the same period a year ago [232]. - OSP operating margin decreased by 4.0 percentage points to 32.4% for the three months ended December 28, 2024, down from 36.4% in the same period a year ago [235]. Strategic Outlook - The company plans to defend and consolidate leadership in core business segments and invest in secular trends to drive growth and expand Total Addressable Market (TAM) [181]. - Future expectations include continued productivity improvements in Operations, Research and Development (R&D), and Selling, General and Administrative (SG&A) [181]. - The company is focused on executing strategic priorities to drive revenue and earnings growth, capture market share, and optimize capital structure [181]. - The company anticipates ongoing industry and market risks, including uncertainties around customer procurement decisions and the adoption of 5G technology [198]. Cash Flow and Capital Management - Cash provided by operating activities was 7.3 million adjusted for non-cash charges totaling 15.8 million, primarily for capital expenditures of 21.9 million, mainly due to 8.3 million in withholding tax payments [246]. - The company repurchased 2.0 million shares of common stock for 198.4 million [247]. - As of December 28, 2024, the company had no borrowings under its 153.5 million [242]. - The company maintains a focus on capital preservation and liquidity requirements, with investments primarily in high credit quality securities [239]. Pension and Workforce - The fair value of pension plan assets decreased approximately 5.2% since June 29, 2024, resulting in an under-funding of 25.0 million [214].