VIAVI Solutions Inc.

VIAVI Solutions Inc. makes test, measurement and optical technologies. Network and Service Enablement supplies equipment for communications networks, data centers and aerospace and defense applications. Optical Security and Performance Products serves markets including anti-counterfeiting and 3D sensing. The shares trade on Nasdaq under VIAV.

The fiscal year ends on the Saturday closest to June 30. Fiscal 2027 has 53 weeks and ends July 3, 2027. Its first quarter ended October 3, 2026, with 14 weeks compared with 13 weeks in the prior-year quarter.

First-quarter results

Total revenue rose 56.9%, including $52.7 million from the acquired Spirent testing businesses and the extra week. Network and Service Enablement revenue was $376.1 million versus $216.0 million, while Optical Security and Performance Products revenue was $93.2 million versus $83.1 million.

Higher volume, product mix and a $10.2 million tariff-refund benefit lifted gross margin. VIAVI received $11.2 million in refund cash including related interest. Management estimates tariff refunds offset by extra-week variable costs added about 1.1 percentage points to adjusted operating margin and $0.02 to adjusted earnings per share.

Adjusted results remove stock compensation and related payroll taxes, acquired intangible amortization, changes in contingent acquisition payments and other specified items. The current 29.0% adjusted operating margin compares with a recast 16.3% a year earlier. Prior adjusted figures use the current payroll-tax definition.

Expectations and recent history

August's first-quarter targets were revenue of $450 million to $460 million and adjusted earnings of $0.40 to $0.42 a share. Actual results exceeded both upper limits. The preceding fourth quarter had produced $443.1 million of revenue, $0.34 of adjusted earnings per share and $66.7 million of operating cash flow.

For fiscal 2027's second quarter ending January 2, management initially expects $505 million to $515 million of revenue and $0.50 to $0.52 of adjusted earnings per share. Network and Service Enablement is expected to grow sequentially, while Optical Security and Performance Products has a lower revenue range.

Fiscal 2026 revenue was $1.518 billion. Reported diluted loss per share was $0.13, versus $1.00 of adjusted earnings per share, and annual operating cash flow was $113.9 million.

Acquisitions broadening the business

On October 16, 2025, VIAVI completed the purchase of Spirent's high-speed Ethernet, network security and channel emulation testing businesses from Keysight. Cash consideration at closing was $399.3 million, subject to final working-capital adjustments. The businesses sit in Network and Service Enablement.

Inertial Labs, acquired in January 2025, added positioning, navigation and timing technology for aerospace, defense and industrial applications. Consideration included $134.4 million of cash at closing. The potential additional $175 million includes revenue-based consideration and employee retention payments.

Direct Optical Research Company closed July 9, 2026, adding fiber-connector inspection and interferometer technology. Initial consideration had a fair value of $18.2 million, including $11.9 million of cash, a $2.1 million holdback and contingent payments valued at $4.2 million.

Cash, financing and shareholder returns

At October 3, cash and cash equivalents were $526.7 million, down from $647.8 million at June 27. Short-term investments were $2.1 million and current restricted cash was $6.5 million. The earnings release's $535.3 million combined balance includes all three categories.

First-quarter operating cash of $104.7 million less $12 million of capital spending left $92.7 million of company-defined free cash flow. Share repurchases used $150 million, and withholding taxes on employee awards used a separate $59.8 million. The Direct Optical Research Company purchase used $11.9 million of closing cash.

The November 1 authorization permits up to $500 million of additional share repurchases, alongside $18.4 million remaining under the earlier plan. The amount actually purchased will depend on management's decisions.

Debt principal was $650 million, with a $642.5 million carrying value after issuance costs. The $400 million senior notes mature October 1, 2029, and the $250 million convertible notes mature March 1, 2031. The convertibles are classified as current because holders can convert during October through December 2026 after the share-price condition was met.

The $600 million term loan used around the Spirent acquisition was fully prepaid during fiscal 2026. Available revolving borrowing capacity was $182.3 million, with no drawings at October 3. The fair value of contingent acquisition-payment liabilities was a separate $93 million.