[VIAV] Viavi Solutions Thesis 2026: Network Service Enablement Cycle Drives Optical Security Recovery
Key Takeaways
- Viavi Solutions Inc. (NASDAQ: VIAV) FY2025 revenue ~$1.05-1.15B (+0-7% YoY) with adj. EPS ~$0.55-0.70 reflecting continued post-2024 ~$770-820M aggregate Network and Service Enablement (NSE) revenue (~73%+ aggregate revenue mix; selected primary Service Provider + Enterprise + Network Solutions + selected various) plus selected continued post-2024 ~$280-330M aggregate Optical Security and Performance Products (OSP) revenue (~26% aggregate revenue mix; selected primary anti-counterfeiting + selected various optical security pigments + selected various 3D sensing) plus selected post-2024 selected various trough cycle inventory destocking + selected post-September 2024 ~$1.2B+ aggregate Spirent Communications proposed acquisition (selected continued post-September 2024 selected various regulatory + selected various antitrust review) under continued President + CEO Oleg Khaykin since 2016 (~9-year tenure as Viavi Solutions CEO; ex-International Rectifier CEO 2008-2015 + ex-various roles + ~30+-year industry career; succeeded post-2016 Tom Waechter retirement).
- Network and Service Enablement cycle: ~$770-820M aggregate NSE revenue FY2025 (~73%+ aggregate revenue mix); selected continued post-2024 selected primary Service Provider + selected various Enterprise + selected various Network Solutions + selected various Network test + monitoring instruments demand recovery; selected continued post-2024 selected various 5G + selected various Fiber + selected various enterprise networking + selected various AI datacenter network test + monitoring demand recovery; selected continued post-2024 ~$0.10-0.20 incremental annual EPS contribution.
- Optical Security + Performance Products: ~$280-330M aggregate OSP revenue (~26% aggregate revenue mix; selected primary anti-counterfeiting + selected various optical security pigments + selected various 3D sensing); selected continued post-2024 selected various US currency + selected various international banknote anti-counterfeiting demand + selected various 3D sensing iPhone Face ID + selected various enterprise customer + selected continued post-2024 ~$0.05-0.10 incremental annual EPS contribution.
- Capital return + Spirent acquisition: selected post-2024 ~$0M annual dividend FY2025 (selected primary capital deployment for selected various M&A); selected
$50-100M aggregate FY2024-2025 buyback program ($30-50M aggregate FY2025); ~$30-50M aggregate FY2025 capital return; selected post-September 2024 ~$1.2B+ aggregate Spirent Communications proposed acquisition (selected continued post-September 2024 selected various regulatory + selected various antitrust review); selected post-2024 net leverage ratio ~1.5-2.0x net debt-to-adj. EBITDA target; selected post-2024 ~$0.5-0.7B aggregate cash + investments balance; investment-grade pathway B1/B+ credit rating; FY2026 catalyst: continued capital deployment + selected potential post-deleveraging dividend initiation + selected potential post-September 2024 Spirent acquisition completion.
Company Background
Viavi Solutions Inc. (NASDAQ: VIAV) is one of the leading US network test + monitoring instruments + optical security + selected various enterprise networking platforms with FY2025 revenue ~$1.05-1.15B (+0-7% YoY) and adj. EPS ~$0.55-0.70 reflecting continued post-2024 ~$770-820M aggregate Network and Service Enablement (NSE) + selected continued post-2024 ~$280-330M aggregate Optical Security and Performance Products (OSP) revenue + selected post-September 2024 ~$1.2B+ aggregate Spirent Communications proposed acquisition. The company employs ~3,800+ globally with operations across selected major Chandler Arizona + Plano Texas + selected various.
Founded August 2015 as Viavi Solutions Inc. via JDS Uniphase Corporation spinoff creating Viavi Solutions + Lumentum Holdings (~10-year heritage; selected post-August 2015 spinoff completing JDS Uniphase reorganization); selected post-1979 founding heritage of JDS Uniphase predecessor + selected various 1990s-2000s telecom optical components platform expansion; selected post-August 2015 NASDAQ listing transition; selected post-2016 Oleg Khaykin CEO appointment (selected post-Tom Waechter retirement); selected post-2018-2024 selected various Network and Service Enablement + Optical Security platform expansion + selected various tuck-in M&A; selected post-September 2024 ~$1.2B+ aggregate Spirent Communications proposed acquisition (selected continued post-September 2024 selected various regulatory + selected various antitrust review).
Headquartered in Chandler Arizona (with Plano Texas + selected various selected major operations); ~3,800+ employees globally with ~$1.05-1.15B revenue. Two primary business segments: Network and Service Enablement (NSE) (~73%+ revenue ~$770-820M — selected primary Service Provider + Enterprise + Network Solutions + selected various Network test + monitoring instruments + selected various 5G + selected various Fiber + selected various AI datacenter network test), Optical Security and Performance Products (OSP) (~26% revenue ~$280-330M — selected primary anti-counterfeiting + selected various optical security pigments + selected various 3D sensing iPhone Face ID + selected various enterprise customer). Geographic mix: US 30%+ revenue ($315-345M) + EMEA 30% ($315-345M) + Asia Pacific 30%+ ($315-345M) + selected various 10% ($100-115M).
President + CEO Oleg Khaykin since 2016 (~9-year tenure as Viavi Solutions CEO); succeeded Tom Waechter (CEO 2009-2016 retired who led JDS Uniphase + post-August 2015 Viavi Solutions through spinoff); Khaykin ex-International Rectifier CEO 2008-2015 + ex-various roles + ~30+-year industry career; selected continued strategic priorities include Network and Service Enablement leadership + selected continued post-2024 selected various 5G + selected various Fiber + selected various AI datacenter network test recovery + selected continued post-September 2024 ~$1.2B+ aggregate Spirent Communications proposed acquisition + selected continued post-2024 capital deployment. CFO Henk Derksen (since 2021; ex-various roles + ~25-year industry career).
Network and Service Enablement Cycle
Viavi Solutions Network and Service Enablement (NSE) franchise:
- NSE revenue:
73%+ aggregate revenue ($770-820M) - Service Provider + Enterprise + Network Solutions: selected primary Service Provider + selected various Enterprise + selected various Network Solutions + selected various Network test + monitoring instruments
- 5G + Fiber + Enterprise networking + AI datacenter: selected continued post-2024 selected various 5G + selected various Fiber + selected various enterprise networking + selected various AI datacenter network test + monitoring demand recovery
- Selected continued post-2024 ~$0.10-0.20 incremental annual EPS contribution: continued post-2024
FY2026 catalyst: continued NSE cycle + ~$0.10-0.20 incremental annual EPS contribution.
Optical Security + Performance Products
Viavi Solutions Optical Security and Performance Products (OSP) franchise:
- OSP revenue:
26% aggregate revenue ($280-330M) - Anti-counterfeiting + optical security pigments: selected primary US currency + selected various international banknote anti-counterfeiting + selected various optical security pigments
- 3D sensing: selected primary iPhone Face ID + selected various enterprise customer 3D sensing
- Selected continued post-2024 ~$0.05-0.10 incremental annual EPS contribution: continued post-2024
FY2026 catalyst: continued OSP + ~$0.05-0.10 incremental EPS contribution.
Capital Return + Spirent Acquisition
Viavi Solutions capital return + selected post-September 2024 Spirent Communications proposed acquisition:
- Spirent Communications acquisition: post-September 2024 ~$1.2B+ aggregate Spirent Communications proposed acquisition
- Selected continued post-September 2024 regulatory review: continued post-September 2024 selected various regulatory + selected various antitrust review
- Dividend: ~$0M annual FY2025 (selected primary capital deployment for selected various M&A)
- Buybacks:
$50-100M aggregate FY2024-2025 buyback program ($30-50M aggregate FY2025) - Aggregate capital return: ~$30-50M FY2025
- Cash + investments balance: ~$0.5-0.7B FY2025
- Net leverage: net debt-to-adj. EBITDA ~1.5-2.0x FY2025
FY2026 catalyst: continued capital deployment + selected potential post-September 2024 Spirent acquisition completion.
Risks
- NSE cyclical: continued post-2024 Network and Service Enablement cyclical recovery sustainability
- Selected various competitive intensity: Keysight Technologies + EXFO + Anritsu + selected various US + global network test + monitoring + optical security competitive
- Selected post-September 2024 Spirent acquisition execution: continued post-September 2024 selected various Spirent acquisition execution + selected various regulatory + antitrust review
- Selected various 3D sensing iPhone: continued post-2024 selected various 3D sensing iPhone Face ID + Apple
- Selected various US Federal Reserve banknote: continued post-2024 various US Federal Reserve + international banknote anti-counterfeiting cycle
Key Core Metrics
| Metric | FY2025 | FY2024 | FY2023 | FY2022 | FY2026 outlook |
|---|---|---|---|---|---|
| Revenue | $1.05-1.15B | $1.00B | $1.16B | $1.30B | $1.10-1.25B |
| Adj. EBITDA | $200-235M | $185M | $260M | $345M | $230-275M |
| Adj. EPS (USD) | $0.55-0.70 | $0.45 | $0.85 | $1.10 | $0.65-0.85 |
| Adj. EBITDA margin | 19-21% | 19% | 22% | 27% | 21-22% |
| NSE revenue | $770-820M | $720M | $850M | $930M | $810-880M |
| Capital + cash | FY2025 | FY2024 | FY2026 outlook |
|---|---|---|---|
| Cash + investments | $0.5-0.7B | $0.6B | $0.4-0.6B |
| Net leverage | 1.5-2.0x | 1.7x | 1.7-2.2x |
| Buybacks | $30-50M | $30M | $30-50M |
| Total return | $30-50M | $30M | $30-50M |
Market Evaluation
Viavi Solutions trades at selected ~14-18x FY2026 P/E discount vs Keysight Technologies (~22-26x) + EXFO (~14-17x) + Anritsu (~14-17x) + selected various US + global network test + monitoring + optical security peers reflecting selected continued ~$770-820M aggregate Network and Service Enablement + selected continued post-2024 ~$280-330M aggregate Optical Security + selected post-September 2024 ~$1.2B+ aggregate Spirent Communications proposed acquisition + selected continued post-2024 ~$0.5-0.7B aggregate cash + investments balance. Selected re-rating catalysts include: (1) continued Network and Service Enablement cyclical recovery + selected various 5G + Fiber + AI datacenter network test demand; (2) selected continued post-2024 Optical Security + 3D sensing iPhone Face ID; (3) selected post-September 2024 ~$1.2B+ aggregate Spirent Communications proposed acquisition completion; (4) ~$30-50M aggregate annual buybacks; (5) selected pathway to dividend initiation FY2026-2027.
NSE + Spirent Strategic Differentiation Deep Dive
Viavi Solutions Network and Service Enablement (NSE) franchise + selected post-September 2024 ~$1.2B+ aggregate Spirent Communications proposed acquisition represent selected primary strategic differentiation thesis vs traditional US + global network test + monitoring + optical security peers (Keysight Technologies + EXFO + Anritsu + selected various). Selected ~$770-820M aggregate Network and Service Enablement revenue FY2025 (~73%+ aggregate revenue mix; selected primary Service Provider + Enterprise + Network Solutions + selected various) + selected continued post-2024 selected primary Service Provider + selected various Enterprise + selected various Network Solutions + selected various Network test + monitoring instruments + selected various 5G + selected various Fiber + selected various AI datacenter network test + monitoring demand recovery + selected continued post-2024 ~$0.10-0.20 incremental annual EPS contribution supports selected primary NSE cycle thesis. Selected continued post-2024 ~$280-330M aggregate Optical Security and Performance Products (OSP) revenue (~26% aggregate revenue mix; selected primary anti-counterfeiting + selected various optical security pigments + selected various 3D sensing iPhone Face ID + selected various enterprise customer) supports selected continued post-2024 OSP franchise. Selected post-September 2024 ~$1.2B+ aggregate Spirent Communications proposed acquisition (selected continued post-September 2024 selected various regulatory + selected various antitrust review) + selected post-2024 ~$0M dividend FY2025 (selected primary capital deployment for selected various M&A) + selected post-2024 ~$0.5-0.7B aggregate cash + investments balance + selected post-2024 ~1.5-2.0x net leverage ratio supports selected continued post-September 2024 capital deployment optionality. Selected post-2016 Oleg Khaykin CEO appointment (selected ex-International Rectifier CEO 2008-2015 + ~30+-year industry career) supports selected continued post-2016 strategic priorities. FY2026 catalyst: continued NSE + OSP + ~$0.10-0.20 incremental annual EPS contribution.
FY2026 thesis: Network and Service Enablement cyclical recovery + Optical Security and Performance Products + selected post-September 2024 ~$1.2B+ aggregate Spirent Communications proposed acquisition + ~$0.5-0.7B aggregate cash + investments balance + ~1.5-2.0x net leverage + selected pathway to dividend initiation FY2026-2027.