VIAVI Q4 Earnings Call Signals Data Center Strength Into Fiscal 2027

VIAV Sees Data-Center Demand Staying Strong

President and CEO Oleg Khaykin said the data-center ecosystem now represents about 50% of Network and Service Enablement revenue, with aerospace and defense accounting for about 17%.

President and CEO Khaykin said demand remains strong across lab, production and field instruments used by semiconductor, optical-module, equipment and hyperscale customers.

President and CEO Khaykin added that the core data-center business, excluding Spirent, more than doubled year over year, with production testing growing especially quickly.

VIAVI Guides to Higher Near-Term Margins

Executive vice president and CFO Ilan Daskal guided fiscal first-quarter revenue to $450 million-$460 million and non-GAAP EPS to $0.40-$0.42.

Daskal also projected a 27.1% operating margin, plus or minus 40 basis points. An $11 million tariff refund received in July is expected to help reduce the cost of goods sold, while the extra week raises variable costs.

A Stifel analyst asked whether the 14-week quarter meaningfully boosts revenue. President and CEO Khaykin said the effect is de minimis because shipments are tied more closely to customers' quarter-end timing than to VIAVI's operating weeks.

VIAV Details the 1.6T Upgrade Cycle

A Needham analyst asked where VIAVI stands in the 1.6T adoption cycle. President and CEO Khaykin said 800G remains the largest-volume driver, but 1.6T is ramping rapidly as production activity increases.

President and CEO Khaykin said 1.6T may reach parity with 800G in fiscal 2027, while 800G and 400G should remain relevant because multiple technology generations operate in parallel.

President and CEO Khaykin also said the transition expands VIAVI's test opportunities as production capacity is added or replaced and new optical architectures enter deployment.

VIAVI Expands CPO and Optical-Switching Exposure

A Rosenblatt Securities analyst pressed management on co-packaged optics, or CPO, and optical-circuit switching, or OCS. President and CEO Khaykin said CPO development is progressing and VIAVI has purchase orders tied to the technology.

President and CEO Khaykin said some OCS revenue is already reflected in the results, with most of the next step-up expected over the next several quarters as adoption broadens beyond early customers.

President and CEO Khaykin said VIAVI is generating some CPO revenue in the current quarter and that acceleration could begin in December. He said higher test intensity is required as customers manage yield and performance.

VIAV Says Spirent Integration Is Complete

A Northland Capital Markets analyst asked about Spirent's quarterly pattern and integration progress. President and CEO Khaykin said the acquired business performed in line with expectations and should grow at least 10% sequentially in the September quarter.

Executive Vice President and CFO Daskal said Spirent's seasonality remains intact, with the second half of the calendar year stronger than the first, and added that the business is producing good margins.

President and CEO Khaykin said the integration was completed by the end of the June quarter, including go-to-market and R&D actions. He added that roadmap integration is ahead of schedule.

VIAVI Keeps Focus on Diversified End Markets

President and CEO Khaykin's closing message centered on continued diversification into data-center and aerospace-and-defense markets, which he expects to support growth over the next several quarters.

President and CEO Khaykin remained cautious on wireless, describing demand as weak but stable, while service-provider products benefited from seasonal strength in fiber monitoring and cable-architecture migration.

Management emphasized optical-test expansion, PNT demand, operating leverage and execution on the Spirent roadmap as near-term priorities.

VIAV Zacks Signals Stay Neutral to Weak

VIAV carries a Zacks Rank #3 (Hold), which represents a more neutral near-term earnings-estimate signal than the top-ranked #1 (Strong Buy) and 2 (Buy) categories. 

You can see the complete list of today’s Zacks #1 Rank stocks here.

Its Value, Growth, Momentum and VGM Score are all D. Under the Zacks Style Scores framework, lower letter grades indicate less favorable characteristics, while the strongest combinations generally pair a Zacks Rank #1 or #2 with A or B Style Scores. The Zacks Rank can change as analysts revise earnings estimates following the newly reported results.

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