Viavi Beats Q3 Earnings Estimates on Healthy Revenue Growth

Core Viewpoint - Viavi Solutions Inc. reported strong third-quarter fiscal 2025 results, with revenues and net income exceeding expectations, driven by growth in the Network Enablement and Service Enablement segments, although macroeconomic challenges pose concerns for future spending [1][2]. Financial Performance - Net income on a GAAP basis was $19.5 million or 9 cents per share, a significant improvement from a net loss of$24.6 million or 11 cents per share in the prior year [2]. - Non-GAAP net income rose to $33.9 million or 15 cents per share, up from$13.2 million or 6 cents per share year-over-year, surpassing the Zacks Consensus Estimate by 3 cents [2]. Revenue Breakdown - Quarterly revenues reached $284.8 million, reflecting a 15.8$282 million [3]. - The Network Enablement segment generated $188 million in net sales, a 23.9$151.7 million in the previous year, driven by strong demand from service providers and network equipment manufacturers [3]. - Service Enablement segment revenues were $20.2 million, up 11.6$76.6 million from $76.2 million, primarily due to strength in anti-counterfeiting products [4]. - Revenue contributions from different regions included$108.1 million from America, $100.7 million from Asia-Pacific, and$76 million from EMEA, showing respective increases from the previous year [5]. Margins and Operating Performance - Non-GAAP gross margin improved to 60%, up 210 basis points year-over-year, with the NE segment's gross margin at 63.4%, an increase of 190 basis points [6]. - Total non-GAAP operating margin increased by 740 basis points year-over-year to 16.7%, with the NSE business operating margin rising to 10.4% [7]. Cash Flow and Liquidity - The company generated $7.8 million in cash from operating activities during the quarter, a decrease from$19.5 million in the prior year [8]. - As of March 29, 2025, Viavi had $374.2 million in cash and cash equivalents and$396.1 million in long-term debt [8]. Outlook - For the fourth quarter of fiscal 2025, management anticipates revenues between $278 million and$290 million, with non-GAAP earnings per share expected to be between 10 cents and 13 cents [10]. - Projected revenues for the NSE business are between $203 million and$213 million, while the OSP segment is expected to generate revenues between $75 million and$77 million [10].