Where is Viavi in the 1.6T adoption cycle, and when is demand for 1.6T products expected to peak?

While 800G is currently the biggest driver, 1.6T is ramping very quickly, especially in production. It is expected to reach parity with 800G in 2027, after which 1.6T will continue to grow. Multiple technology nodes (400G, 800G, 1.6T) will coexist, with the mix gradually shifting towards 1.6T. “I mean if I look at today in terms of share volume, 800 is still the biggest driver, but 1.6% is ramping very quickly. And that's mainly a lot of the production, things moving to production. And I would say probably, I mean, in '27, it may get to probably parity between 800 million and 1.6 and then 1.6 will continue to get bigger while 800 gig may pullback.”

Does the extra week in Q1 FY27 contribute meaningfully to revenue, or is its impact primarily on expenses?

The revenue contribution from the extra week is de minimis, as revenue shipments are non-linear and typically linked to the end of the calendar quarter. The primary impact is on elevated variable costs due to the longer operational period. “Yes. I would say revenue, if there is any, it's de minimis, it's very small. The revenue shipments are nonlinear in the quarter anyhow. And generally, revenue is linked to the customers end of the quarter. whereas our OpEx is linked to a number of weeks in the quarter for us.”

What are the expectations for long-term operating margins, considering the data center ramp and sustainable R&D investment levels?

Gross margins are expected to continue trending upwards due to the increasing mix of higher-margin NSE products. Operating expenses are scaling well, growing slower than revenue, which will drive operating margin expansion. The expectation is for mid-to-high 20% operating margins in the not-too-distant future, with improved R&D leverage from higher volumes in lab and production. “So I would say if we continue on a certain trajectory, I think high mid- to high 20 percent operating margin in a not-too-distant future is probably the expectation.”

VIAV

Viavi Solutions (VIAV) Q4 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q4 FY26)· Information Technology· Aug 5, 2026

Source: earnings call transcript

Executive summary

Viavi Solutions Q4 FY26 — Strong Data Center & A&D Demand Drives Beat, Q1 FY27 Guidance Raised

Viavi Solutions delivered a strong Q4 FY26, exceeding revenue and profitability guidance, primarily fueled by robust demand from the data center ecosystem and aerospace & defense sectors. The company's diversification strategy is driving significant growth, with Q1 FY27 guidance reflecting continued strength despite typical seasonality and some elevated costs. Management anticipates achieving the $500 million revenue quarter target earlier than previously expected.

Highlights

Net revenue of $443.1 million, above the high end of guidance.
Operating margin of 24%, above the high end of guidance.
EPS of $0.34, above the high end of guidance.
NSE revenue grew 69.2% year-over-year, driven by data center ecosystem and aerospace & defense.
OSP revenue grew 9.6% year-over-year, driven by 3D sensing and anticounterfeiting.

Concerns

Wireless products continue to see anemic demand.
Q1 FY27 includes elevated variable costs due to a 14-week fiscal quarter.

Guidance & targets

Category	Target	Timeline	Confidence
Viavi Revenue	$450 million and $460 million high materiality	Q1 · FY27	High
NSE Revenue	$360 million and $368 million medium materiality	Q1 · FY27	High
OSP Revenue	$90 million and $92 million medium materiality	Q1 · FY27	High
Viavi Operating Margin	27.1% plus or minus 40 basis points high materiality	Q1 · FY27	High
NSE Operating Margin	23.1% plus or minus 50 basis points medium materiality	Q1 · FY27	High
OSP Operating Margin	43.2%, plus or minus 20 basis points medium materiality	Q1 · FY27	High
EPS	$0.40 and $0.42 high materiality	Q1 · FY27	High
Tax Expenses	around $12 million, plus or minus $500,000 low materiality	Q1 · FY27	High
Other Income and Expenses	net expense of approximately $2.5 million low materiality	Q1 · FY27	High
Share Count	around 268 million shares low materiality	Q1 · FY27	High
Operating Margin	mid- to high 20 percent high materiality	Not-too-distant future	Medium
Revenue	$500 million high materiality	Calendar 2027	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Network and Service Enablement (NSE) Revenue was above the high end of guidance, driven by continued strong demand from the data center ecosystem and aerospace & defense customers, including contributions from Spirent product lines. Operating margin was above guidance due to higher fall-through. Gross margin: 64.1%Operating margin guidance: 18.2%-19.2%	$353.9 million	69.2%	—	20% operating margin
Optical Security and Performance Products (OSP) Revenue was at the high end of guidance, driven by strength in 3D sensing and anticounterfeiting and other products. Operating margin was above guidance as a result of higher fall-through. Gross margin: 55.2%Operating margin guidance: 38%-38.8%	$89.2 million	9.6%	—	40% operating margin

Product announcements

Product	Type	Timeline	Details
Industry's first validation solution for ultra Ethernet transport	launch	recently launched

Deals & partnerships

Spirent Acquired high-speed Ethernet product lines

The acquired Spirent high-speed Ethernet product lines are performing well. Integration was completed as of the June quarter, ahead of schedule.

Risks & headwinds

Anemic demand for wireless products ongoing

anemic although stable customer demand

Mitigation:Management remains optimistic regarding longer-term demand for wireless products.

Elevated variable costs due to 14-week fiscal quarter Q1 FY27

some elevated variable costs

Mitigation:Expected to be offset by an $11 million tariffs refund, primarily benefiting Q1 cost of goods sold.

What to watch in Q1 FY27

Data Center Ecosystem Demand

next several quarters

Current very strong

Target continued robust growth

Why it matters

This is a key growth driver for NSE and overall company performance, indicating sustained market opportunity.

The data center ecosystem customer demand for our products remains very strong, and we expect continued robust growth in this segment for the next several quarters.

Find out whether VIAV delivers this. Inve re-checks your case every morning.

Q&A highlights

What percentage of NSE revenue comes from data center/optical, and what are the growth rates for those products?

The data center business, which is primarily optical, now accounts for about 50% of NSE revenue. Aerospace & Defense contributes approximately 17%, with the remainder from the service provider business. The data center business, excluding Spirent, more than doubled year-over-year.

“I mean our data center is now running at about 50% and the NSE revenue. A&D is, I would say, probably about 17%, and the rest is a service provider business.”

asked by Ryan Koontz · answered by Oleg Khaykin

2 min read 7 chapters

Detailed narrative

Q4 FY26 Performance Overview

Viavi exceeded Q4 FY26 expectations with net revenue of $443.1 million, above the high end of guidance, and an operating margin of 24%, also above guidance. Full fiscal year revenue reached $1.518 billion, marking a 40% year-over-year increase, with the full year operating margin at 20.6%, up 630 basis points from FY25. This strong performance was driven by robust demand in key end markets.

Data Center Ecosystem & AI Driving Growth

The data center ecosystem, encompassing high-performance semis, optical modules, NAMs, and hyperscalers, was a primary growth driver for the NSE segment. This demand fueled sales of lab and production and field instruments supporting data center build-out, maintenance, and monitoring. Viavi recently launched an industry-first validation solution for ultra Ethernet transport, purpose-built for large-scale AI and high-performance computing workloads, further extending its leadership in this rapidly growing segment.

Aerospace & Defense Business Strength

The Aerospace & Defense (A&D) business experienced another quarter of strong year-on-year growth, primarily driven by robust demand for its positioning, navigation, and timing (P&T) products. Management anticipates that the P&T product line will continue to be a multi-year growth driver for the A&D business, contributing significantly to future performance.

Spirent Integration & Contribution

The acquired Spirent high-speed Ethernet product lines performed well, contributing $47.7 million to NSE revenue in Q4 FY26 and $145 million to the full FY26 revenue. The integration of Spirent is complete as of the June quarter, with synergies already realized. Spirent is expected to follow its typical seasonality, with stronger performance in the second half of the calendar year.

Optical Product Cycles (800G/1.6T/CPO) Progression

While 800G remains the largest driver in terms of volume, 1.6T is ramping very quickly, particularly in production, and is projected to reach parity with 800G in 2027. The company is also seeing progress in Co-Packaged Optics (CPO), with initial revenues expected in the current quarter and acceleration anticipated in December.

CPO is driven by the need for performance and power optimization, offering significant advantages despite its complexity.

Wireless & Service Provider Business Update

The service provider business, including field instruments, wireless, and service enablement products, saw increased seasonal demand, particularly for fiber monitoring solutions and cable instruments. Conversely, wireless products continue to experience anemic but stable customer demand. Despite this, management remains optimistic about the longer-term demand prospects for its wireless offerings.

OSP Segment Performance

The OSP segment demonstrated strong year-on-year growth, primarily attributed to robust demand in 3D sensing and anticounterfeiting and other products. This positive momentum is expected to continue into Q1 FY27, driven by seasonally stronger demand for 3D sensing products, reinforcing the segment's consistent contribution to Viavi's overall performance.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.