Viavi Solutions (VIAV) Q2 2025 earnings summary

Executive summary

• Fiscal Q2 2025 revenue reached $270.8 million, up 6.4% year-over-year and 13.7% sequentially, exceeding guidance, driven by recovery in service provider and enterprise markets.

• Non-GAAP operating margin was 14.9%, up 170 basis points year-over-year; GAAP operating margin was 8.2%, down 60 basis points.

• Non-GAAP EPS was $0.13, up 18.2% year-over-year and above guidance; GAAP EPS was $0.04, down 20%.

• Acquisition of Inertial Labs completed, expanding positioning and navigation capabilities.

• OSP segment impacted by weaker 3D sensing demand and inventory adjustments, partially offset by anti-counterfeiting and industrial products.

Financial highlights

• Non-GAAP gross margin was 61.1%, up 110 basis points year-over-year; GAAP gross margin was 59.4%, up 120 basis points.

• Operating cash flow was $44.7 million, more than double year-over-year; free cash flow was $36.5 million.

• Cash, short-term investments, and restricted cash totaled $512.8 million at quarter end.

• Long-term debt stood at $639.3 million as of December 28, 2024.

• Non-GAAP net income was $29.4 million, up 24.1% year-over-year.

Outlook and guidance

• Q3 2025 revenue expected between $276 million and $288 million; non-GAAP EPS guidance of $0.10–$0.13.

• Non-GAAP operating margin forecast at 14.0% ±100 basis points.

• NSE segment revenue guidance: ~$207 million, including Inertial Labs contribution; OSP segment: ~$75 million.

• Management expects continued stabilization and gradual recovery in end markets through the second half of FY2025.

• Anticipates growth in data center, aerospace, and defense sectors.