Viavi Solutions Inc. reported fiscal second‑quarter 2026 results that surpassed analyst expectations, with total revenue reaching $369.3 million—an increase of 36.4 % from the $270.8 million reported in Q2 2025. Sequentially, revenue grew 23.5 % from the $319.8 million earned in Q1 2026, driven by robust demand in the Network and Service Enablement (NSE) segment and a 9.7 % year‑over‑year rise in the Optical Security and Performance Products (OSP) segment, which generated $77.8 million. The company’s earnings per share of $0.22 beat the consensus estimate of $0.19 by $0.03, a 15.8 % beat, reflecting disciplined cost management and a favorable product mix shift toward higher‑margin data‑center and aerospace/defense customers.
The NSE segment, which accounts for roughly 45 % of Viavi’s revenue, delivered $291.5 million in the quarter—up 46 % year‑over‑year—thanks to strong uptake of its data‑center networking solutions and growing aerospace and defense orders. OSP revenue, while smaller, contributed to margin expansion with a 9.7 % increase, underscoring the company’s ability to monetize its high‑performance optical products. The mix shift toward these higher‑margin segments, combined with the integration of the Inertial Labs and Spirent product lines, has accelerated the company’s move away from legacy, lower‑margin legacy services.
Operating margin dynamics illustrate the impact of the mix shift and cost controls. GAAP operating margin fell to 3.1 % from 3.7 % in the prior quarter, reflecting acquisition‑related restructuring charges and one‑time costs. In contrast, non‑GAAP operating margin expanded to 19.3 %, up 440 basis points year‑over‑year and 360 basis points sequentially, driven by higher gross margins in the NSE and OSP segments and improved operational leverage as revenue scales. The company’s restructuring plan, approved on January 23, 2026, targets a $30 million annualized cost saving and a 5 % workforce reduction, further supporting margin resilience.
Management guidance signals confidence in continued demand. Viavi projected Q3 2026 revenue of $386 million to $400 million, well above the $355 million consensus estimate, and non‑GAAP EPS of $0.22 to $0.24, matching the guidance issued for the quarter. The company’s CEO, Oleg Khaykin, emphasized that the quarter’s results were “at the high end of our guidance” and highlighted a 45 % data‑center demand surge, a 15 % rise in aerospace and defense orders, and a 46 % year‑over‑year growth in NSE revenue. He also noted that the company’s strategic focus on high‑growth, high‑margin markets is paying off, with the acquisitions of Inertial Labs and Spirent product lines contributing to both revenue and margin expansion.
The company’s debt profile remains strong, with recent convertible note exchanges and term‑loan prepayments reducing leverage and freeing cash for reinvestment in high‑growth areas. Analysts responded positively to the earnings beat and guidance, with B. Riley raising its price target to $22. The market reaction reflects confidence in Viavi’s execution, its strategic shift toward data‑center and defense markets, and the company’s disciplined cost management and margin expansion.
The restructuring plan, acquisitions, and debt management collectively position Viavi to sustain its growth trajectory, improve profitability, and deliver value to shareholders over the long term.
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