Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Viavi Solutions Inc (VIAV, Financial) reported net revenue of $252 million for the fourth quarter, which was at the midpoint of their guidance range.
- Operating margin for the fourth quarter was 10.9%, above the midpoint of the guidance range.
- OSP revenue for the quarter was $69.8 million, exceeding the high end of the guidance range, driven by strength across all products.
- The company anticipates a gradual recovery in demand in the second half of fiscal 2025.
- Viavi Solutions Inc (VIAV) is seeing strong demand in its mil-aero business, which is expected to continue throughout fiscal 2025.
Negative Points
- Fourth-quarter revenue was down 4.4% year-over-year, reflecting a challenging market environment.
- Full-year revenue was $1 billion, down 9.6% year-over-year, primarily due to conservative spending by service providers and NEMs.
- NSE revenue for the quarter was at the lower end of the guidance range, with a year-over-year decline of 7.9%.
- The company initiated a restructuring plan, impacting approximately 6% of the global workforce, to improve operational efficiencies.
- Viavi Solutions Inc (VIAV) expects continued conservative spending by service providers and NEMs in the first half of fiscal 2025.
Q & A Highlights
Q: Can you provide insights on inventory levels at your customers for field and lab instruments?
A: Oleg Khaykin, President and CEO, explained that there is no significant inventory buildup. Deliveries are just-in-time, aligning with major expansion projects or technology upgrades. The revenue is largely at maintenance levels due to equipment churn, and there's interest in fiber interworking by Tier 2 operators, indicating potential demand recovery.
Q: How will the restructuring impact operating expenses, particularly R&D and sales?
A: Ilan Daskal, CFO, stated that the restructuring will reduce overall operating expenses without impacting major R&D projects. The full realization of cost savings is expected by the end of fiscal 2025, with a focus on maintaining development initiatives.
Q: Are you seeing demand from data center operators for fiber connectivity?
A: Oleg Khaykin noted that data center operators are increasingly leasing fiber and requiring high-performance standards, which benefits Viavi. The demand for fiber is growing faster than anticipated, driven by the need for high-quality performance and quick activation.
Q: What is the outlook for the broadband sector, particularly cable and fiber?
A: Oleg Khaykin mentioned that cable upgrades are ongoing but spread over multiple quarters. Competitive pressure from fiber-to-the-home initiatives by companies like AT&T could accelerate cable spending. Fixed wireless has not significantly impacted cable yet.
Q: How is the AI and data center investment affecting field test demand?
A: Oleg Khaykin highlighted that AI and data center investments are driving demand for higher-speed fiber interconnects. Data centers are leading the transition to 1.6 terabits, which is expected to boost demand for Viavi's fiber lab and production equipment.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
