Viavi Solutions delivered a robust start to fiscal year 2026 (QQ1) with revenue of $299.1 million, up 25.6% year over year and 3% sequentially, aided by strong demand in the Network Enablement (NSE) segment and the strategic Spirent High-Speed Ethernet product-line acquisition. EPS of $0.15 (non-GAAP basis referenced in the call) exceeded the guided range, and operating margin rose to 15.7%, above the high end of the guidance. NSE led topline growth (+35.5% YoY), driven by data center ecosystem activity, lab/production and field instruments, as well as the Inertial Labs acquisition, while OSP revenue stayed flat to up modestly in line with expectations.
The Spirent acquisition closed in mid-October 2025 and is expected to add roughly $200 million of annual revenue run rate, expanding Viavi’s data center footprint and accelerating NSE margin progression. Management guided for Q2 FY2026 revenue of $360–$370 million, with total NSE revenue of $283–$293 million (including Spirent), and OSP around $77 million. Operating margin guidance for the quarter implies continued margin leverage despite a higher base from Spirent, with expected EPS of $0.18–$0.20 (split: stand-alone ~ $0.18; Spirent contribution $0.00–$0.02).
Viavi also highlighted balance-sheet strengthening: cash and short-term investments of $549.1 million at quarter-end, $31.0 million of operating cash flow, and a $30 million share-repurchase activity during the quarter. The company refinanced $250 million of 1.625% convertible notes due 2026 into $250 million of 0.625% convertible notes due 2031, and arrangements included roughly 2.7 million shares repurchased. Management emphasized a diversified, more balanced revenue mix (roughly 45% service provider, 40% data center, 15% aerospace/defense post-Spirent) and a favorable longer-term outlook for data-center-driven growth, while noting ongoing softness in wireless end-markets.
Overall, Viavi’s QQ1 performance signals meaningful operating leverage with elevated data-center exposure, improving gross margins, and a clearer path to earnings accretion as Spirent integrates and scales. Investors should monitor data-center demand trajectory, Spirent integration progress, potential wireless/OSP mix shifts, and the pace of enterprise/test-market adoption in the AI/data center segment.