A month has gone by since the last earnings report for Viav Solutions (VIAV). Shares have added about 21.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Viav Solutions due for a pullback? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent catalysts for Viavi Solutions Inc. before we dive into how investors and analysts have reacted as of late.
Viavi Q2 Earnings Beat Estimates, Revenues Rise Y/Y on Solid Demand
Viavi reported strong second-quarter fiscal 2026 results, with both top and bottom lines surpassing the Zacks Consensus Estimate.
The company posted a solid 36.4% year-over-year increase in revenues, supported by strong performance in its Network and Service Enablement (NSE) and Optical Security and Performance Products (OSP) segments. Growth was driven by sustained demand from data centers and ongoing 5G and fiber network upgrades, along with solid sales in the aerospace and defense markets.
Net Income
On a GAAP basis, Viavi incurred a net loss of $48.1 million or a loss of 21 cents per share against a net income of $9.1 million or 4 cents per share in the year-ago quarter.
Non-GAAP net income in the reported quarter was $51.5 million or 22 cents per share compared with $29.4 million or 13 cents per share in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate of 19 cents.
Revenues
Net sales increased to $369.3 million from $270.8 million in the year-ago quarter, primarily driven by data center and 5G demand. The top line beat the consensus estimate by $3 million.
In the second quarter of fiscal 2026, the NSE segment generated $291.5 million in revenues, up 45.8% year over year. The segment accounted for 78.9% of total revenues. Higher software and services revenues, customer network upgrades, and improved sales execution drove solid sales growth in this segment.
The OSP segment revenues were $77.8 million, up 9.7% year over year, backed by demand for anti-counterfeiting solutions, aerospace & defense programs, and secure optical technologies.
Net sales from the Americas totaled $170.9 million, up from $116.1 million in the year-ago quarter. Revenues from Asia-Pacific were $108.1 million, up 15.5% year over year. Revenues from EMEA increased to $90.3 million from the prior-year quarter’s tally of $61.1 million.
Other Details
Non-GAAP gross profit was $228.1 million compared with $165.4 million in the year-ago quarter. with respective margins of 61.8% and 61.1%. Non-GAAP operating expenses increased to $156.7 million from $125 million a year ago. Non-GAAP operating income was $71.4 million compared with $40.4 million in the year-ago quarter.
Cash Flow & Liquidity
As of Dec. 27, 2025, VIAV had $765.5 million in cash and cash equivalents and $1.22 billion of long-term debt. The company generated $42.5 million in net cash from operating activities in the quarter, with a free cash flow of $36.9 million.
Outlook
For the third quarter of fiscal 2026, management expects revenues in the range of $386-$400 million. Non-GAAP operating margin is expected to be 19.7% (+/- 0.5 %) with non-GAAP earnings per share between 22 cents and 24 cents.
For the NSE segment, revenues are projected to be between $304 million and $316 million, with a Non-GAAP operating margin of 15.5% (+/- 0.5 %). Revenues for the OSP segment are anticipated to be in the range of $82-$84 million, with a Non-GAAP operating margin of 35.3% (+/- 0.5 %).
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in estimates review.
The consensus estimate has shifted 50% due to these changes.
VGM Scores
At this time, Viav Solutions has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock has a score of D on the value side, putting it in the bottom 40% for value investors.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Viav Solutions has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Viavi Solutions Inc. (VIAV): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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