Viavi Solutions (VIAV) Q1 2026 earnings summary

Executive summary

• Fiscal Q1 2026 revenue reached $299.1M, up 25.6% year-over-year, exceeding guidance and driven by strong demand in data center, aerospace, and defense markets, with the Inertial Labs acquisition contributing.

• Non-GAAP operating margin was 15.7%, up 570 bps year-over-year; GAAP operating margin was 2.5%.

• Non-GAAP EPS was $0.15, up 150% year-over-year; GAAP net loss was $21.4M, mainly due to higher SG&A and a $3.8M loss on note extinguishment.

• Strong demand from the data center ecosystem and aerospace/defense drove growth, while service provider business remained stable.

• Acquisition of Spirent's high-speed ethernet, network security, and channel emulation testing business from Keysight expected to enhance data center ecosystem presence.

Financial highlights

• Total Q1 2026 revenue: $299.1M (up 25.6% YoY, up 3.0% QoQ); product revenue was $257.4M (+30.3% YoY), service revenue $41.7M (+2.5% YoY).

• Non-GAAP gross margin: 60.0% (up 90 bps YoY); GAAP gross margin: 56.5% (down 60 bps YoY).

• Non-GAAP operating margin: 15.7% (up 570 bps YoY); GAAP operating margin: 2.5% (down 230 bps YoY).

• Non-GAAP net income: $33.1M (up 166.9% YoY); GAAP net loss: $(21.4)M.

• Cash, short-term investments, and restricted cash totaled $549.1M at quarter end; operating cash flow was $31.0M.

Outlook and guidance

• Q2 2026 revenue expected between $360M and $370M; NSE/NSC segment at $283M–$293M (including $45M–$55M from Spirent), OSP at ~$77M.

• Non-GAAP operating margin expected at 17.9% (±60 bps); NSE/NSC margin at 13.6% (±70 bps); OSP margin at 34% (±50 bps).

• Non-GAAP EPS guidance: $0.18–$0.20, with Spirent contributing $0–$0.02.

• Tax expense expected at ~$10M; share count at ~228.7M.

• Management anticipates continued strong momentum in data center and aerospace & defense markets.