- GAAP and Non-GAAP net revenue of $206.5 million, down $25.6 million or (11.0)% year-over-year
- GAAP operating margin of 3.2%, down 80 bps year-over-year
- Non-GAAP operating margin of 13.0%, relatively flat year-over-year
- GAAP EPS from continuing operations of $0.21, up 0.20 or 2,000.0% year-over-year
- Non-GAAP EPS from continuing operations of $0.10, down $0.01 or (9.1)% year-over-year
Milpitas, California, January 31, 2017 — VIAVI (NASDAQ: VIAV) today reported results for its second fiscal quarter ended December 31, 2016. Amounts presented below are on a continuing operations basis unless otherwise noted.
GAAP net revenue was $206.5 million, with net income of $49.2 million, or $0.21 per share. Prior quarter GAAP net revenue was $210.8 million, with net income of $78.0 million or $0.33 per share. GAAP net revenue for the second quarter of fiscal 2016 was $232.1 million, with net income of $1.0 million, or $0.01 per share.
Non-GAAP net revenue was $206.5 million, with net income of $23.6 million, or $0.10 per share. Prior quarter non-GAAP net revenue was $210.8 million, with net income of $21.7 million, or $0.09 per share. Non-GAAP net revenue for the second quarter of fiscal 2016 was $232.1 million, with net income of $25.0 million, or $0.11 per share.
“We are pleased with our fiscal 2Q results as we exceeded our EPS guidance range and delivered non-GAAP EPS at $0.10,” said Oleg Khaykin, VIAVI’s President and Chief Executive Officer. “This was driven by good execution in NSE and OSP as both business segments exceeded the high end of the non-GAAP operating margin guidance.”
Khaykin added, “We are executing to the plan laid out during our September 2016 Analyst Day. We are strengthening our NE core instruments business and scaling down to a more focused SE business. Our recently announced restructuring plan puts us on course to achieve our stated medium-term financial model. OSP revenue is expected to recover in second half fiscal 2017 with opportunities to leverage our optical coatings technologies into new markets in fiscal year 2018.”
The tables below (in millions, except percentage data) provide comparisons of quarterly result to prior periods, including sequential quarterly and year-over-year changes. A reconciliation between GAAP and non-GAAP measures is contained in this release under the section titled “Use of Non-GAAP (Adjusted) Financial Measures.”
Second Quarter Ended December 31, 2016
Adj. Gross margin
Adj. Operating margin
GAAP and Non-GAAP Net Revenue by Segment
% of Net
Optical Security and Performance Products
- Americas, Asia-Pacific and EMEA customers represented 48.7%, 22.1% and 29.2%, respectively, of total net revenue for the quarter ended December 31, 2016.
- As of December 31, 2016, the Company held $1,014.9 million in total cash and investments, which also includes marketable equity investments. As of December 31, 2016 the Company also had $650 million aggregate principal amount of 0.625% Senior Convertible Notes with a net carrying value of $598.3 million classified as Long-term debt.
- During the second quarter ended December 31, 2016 the Company sold 1.7 million shares of the 11.7 million shares of Lumentum common stock retained as part of the spin-off of Lumentum. The Company generated net proceeds from these sales of $68.6 million and had 1.7 million shares remaining valued at $64.3 million at December 31, 2016.
- During the fiscal quarter ended December 31, 2016, the Company generated $18.6 million of cash from operations.
- The Company adjusted its current and historical Condensed Consolidated Statements of Operations, Condensed Consolidated Balance Sheets and reportable segment information to reflect the spin-off of the Lumentum business (formerly the Company’s communications and commercial optical products business segment and WaveReady product line) on August 1, 2015. The Lumentum business’ adjusted results are reflected as discontinued operations for the periods reported in the Company’s GAAP Condensed Consolidated Statement of Operations and reportable segment information.
Business Outlook for the Fiscal Third Quarter of Fiscal 2017
For the third quarter of fiscal 2017 ending April 1, 2017, the Company expects non-GAAP net revenue to be between $188 million to $204 million and non-GAAP earnings per share to be $0.06 to $0.08. With respect to our expectations above, the Company has not reconciled non-GAAP net income per share to GAAP net income (loss) per share in this press release because it is unable to provide a meaningful or accurate estimate of certain reconciling items described in the “Use of Non-GAAP (Adjusted) Financial Measures” section below and the information is not available without unreasonable effort as a result of the inherent difficulty of forecasting the timing and/or amounts of certain items, including restructuring and related charges and gain on sale of investments. In addition, the Company believes such reconciliations would imply a degree of precision that would be confusing or misleading to investors.
The Company will discuss these results and other related matters at 1:30 p.m. Pacific Time on January 31, 2017 in a live webcast, which will also be archived for replay on the Company’s website at www.viavisolutions.com/investors. The Company will post supplementary slides outlining the Company’s latest financial results on www.viavisolutions.com/investors under the “Quarterly Results” section concurrently with this earnings press release. This press release is being furnished as a Current Report on Form 8-K with the Securities and Exchange Commission, and will be available at www.sec.gov.
About VIAVI Solutions
VIAVI (NASDAQ: VIAV) is a global provider of network test, monitoring and assurance solutions to communications service providers, enterprises and their ecosystems, supported by a worldwide channel community including VIAVI Velocity Solution Partners. We deliver end-to-end visibility across physical, virtual and hybrid networks, enabling customers to optimize connectivity, quality of experience and profitability. VIAVI is also a leader in high performance thin film optical coatings, providing light management solutions to anti-counterfeiting, consumer electronics, automotive, defense and instrumentation markets. Learn more about VIAVI at www.viavisolutions.com. Follow us on VIAVI Perspectives, LinkedIn, Twitter, YouTube and Facebook.
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements include any anticipation or guidance as to future financial performance, including future revenue, gross margin, operating expense, operating margin, profitability targets, cash flow and other financial metrics, as well as the impact and duration of certain trends and market position and conditions. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected. In particular, the Company’s ability to predict future financial performance continues to be difficult due to, among other things: (a) continuing general limited visibility across many of our product lines; (b) quarter-over-quarter product mix fluctuations, which can materially impact profitability measures due to the broad gross margin ranges across our portfolio; (c) consolidations in our customer base; (d) customer purchasing delays as they assess or transition to new technologies and/or new architectures, which limit near-term demand visibility, and could negatively impact potential revenue; (e) continued decline of average selling prices across our businesses; (f) notable seasonality and a significant level of in-quarter book-and-ship business; (g) various product and manufacturing transfers, site consolidations, product discontinuances and the restructuring and workforce reduction plan announced in January 2017 that have caused and may cause short-term disruptions; (h) the ability of our suppliers and contract manufacturers to meet production and delivery requirements to our forecasted demand; and (i) inherent uncertainty related to global markets and the effect of such markets on demand for our products. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected. For more information on these risks, please refer to the “Risk Factors” section included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 2, 2016 filed with the Securities and Exchange Commission. The forward-looking statements contained in this press release are made as of the date thereof and the Company assumes no obligation to update such statements.