VIAVI SOLUTIONS INC. Q3 FY2025 earnings call

• NSE revenue grew 23% y/y with recovery/growth in product segments; aerospace and defense strong with Inertial Labs acquisition; wireless field instruments a leading indicator for 5G buildout. - OSP saw strength in anti-counterfeiting, expected flat Q4 relative to Q3 with seasonal weakness in 3D sensing offset by anti-counterfeiting strength. - Discussed tariffs impact on revenue and margins, with plan to realign supply chain to reduce impact within 6 months.

Net revenue for the quarter was $284.8 million. By business segment: NSE revenue was $208.2 million, up 22.6% y/y; NE revenue was $188 million, up 23.9% y/y; SE revenue was $20.2 million, up 11.6% y/y; OSP revenue was $76.6 million, up 0.5% y/y. NSE gross margin was 63.1%, up 1.7% y/y; NE gross margin was 63.4%, up 190 basis points; SE gross margin was 59.9%, down 90 basis points; OSP gross margin was 51.6%, up 150 basis points. NSE operating margin was 10.4% vs a 1.8% loss last year; OSP operating margin was 33.9%, at the high end of guidance.

• Fiscal Q4 revenue expected in range of $278 million to $290 million, flat to Q3. - NSE revenue expected ~$208 million, OSP ~$76 million. - Operating margin expected 13.5% ±1%, EPS between $0.10 and $0.13. - Tariffs expected to impact ~$3 million on gross margin.

• Potential delay or reduction in POs and orders due to U.S. tariffs. - Tariffs on ~15% of revenue, with plan to reduce impact within 6 months.

Q: Tariffs impact on revenue and how to reduce it?

A: Oleg mentions ~15% of revenue is subject to tariffs, plans to reduce impact within 6 months by rerouting production.

Q: Cost side of tariffs?

A: Oleg says $3 million tariffs on committed POs, passing through to customers.

Q: OSP business outlook?

A: Oleg talks about anti-counterfeiting stabilization and 3D sensing seasonality.

Q: NSE guidance and tariffs impact?

A: Oleg mentions tariffs causing some revenue to push to next quarter.

Q: Tariffs and manufacturing exposure?

A: Oleg says no pull forward of orders, inventory increase from Inertial Labs acquisition.

Q: Aviation military business?

A: Oleg talks about P&T growth in aerospace and defense.