Viavi Solutions (VIAV) Q2 2025 earnings summary

Executive summary

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

• Non-GAAP net income was $29.4M, up 24.1% year-over-year; GAAP net income was $9.1M, down 15%.

• Non-GAAP operating margin improved to 14.9%, up 170 bps year-over-year; GAAP operating margin was 8.2%, down 60 bps.

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

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

Financial highlights

• NE revenue: $179.0M, up 15.1% year-over-year; SE revenue: $20.9M, down 13.3%; OSP revenue: $70.9M, down 5.3%.

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

• Operating cash flow was $44.7M; free cash flow was $36.5M; cash and short-term investments totaled $512.8M at quarter end.

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

• CapEx was $8.2M in Q2 2025.

Outlook and guidance

• Q3 2025 revenue expected at $276M–$288M; non-GAAP EPS guidance of $0.10–$0.13; operating margin ~14% ±100 bps.

• NSC/NSE Q3 revenue guided at ~$207M ±$5M; OSP at ~$75M ±$1M; Inertial Labs to contribute high single-digit millions.

• Management anticipates continued recovery in service provider, data center, aerospace, and defense sectors.

• Tax expense expected at ~$9M; share count to be ~226.1M.