Viavi Solutions Q3 2025 Earnings Call Transcript

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Provided by Quartr
May 1, 2025

There are 10 speakers on the call.

Operator

Good afternoon. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Viavi Solutions Fiscal Third Quarter twenty twenty five Earnings Call. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise.

Operator

After the speakers' remarks, there will be a question and answer session. At this time, I would like to turn the conference over to Vipudi Nair, Head of Investor Relations. Please go ahead.

Speaker 1

Thank you, Audra. Good afternoon, everyone, and welcome to Viavi Solutions fiscal third quarter twenty twenty five earnings call. My name is Vigouti Nayar, Head of Investor Relations for Viavi Solutions. And with me on the call today is Oleg Heikkin, our President and CEO and Ilan Daskal, our CFO. Please note this call will include forward looking statements about the company's financial performance.

Speaker 1

These statements are subject to risks and uncertainties that could cause actual results to differ materially from our current expectations and estimation. We encourage you to review our most recent annual report and SEC filings, particularly the risk factors described in those filings. The forward looking statements, including tariff impact and guidance that we provide during this call, are valid only as of today. Viavi undertakes no obligation to update these statements. Please also note that unless we state otherwise, all results discussed on this call, except revenue, are non GAAP.

Speaker 1

We reconcile these non GAAP results to our preliminary GAAP financials and discuss their usefulness and limitation in today's earnings release. The release as well as our supplemental earnings slides, which include historical financial tables, are available on Viavi's website at www.investor.viavisolutions.com. Finally, we are recording today's call and will make the recording available on our website by 04:30 p. M. Pacific Time this evening.

Speaker 1

Now I would like to turn the call over to Ilan. Ilan?

Speaker 2

Thank you, Vibhuti. Good afternoon, everyone. Now I would like to review the results of the third quarter of fiscal year twenty twenty five. Net revenue for the quarter was $284,800,000 which is above the midpoint of our guidance range of $276,000,000 to $288,000,000 Revenue was up 5.2% sequentially and on a year over year basis was up 15.8. Operating margin for the third fiscal quarter was 16.7%, above the high end of our guidance range of 13% to 15%.

Speaker 2

Operating margin increased 1.8% from the prior quarter and on a year over year basis was up 7.4. EPS at $0.15 was also above the high end of our guidance range of $0.10 to $0.13 and was up $02 sequentially. On a year over year basis, EPS was up $09 Moving on to our Q3 results by business segment. NSE revenue for the third fiscal quarter came in at $208,200,000 which is slightly above the midpoint of our guidance range of $2.00 $2,000,000 to $212,000,000 On a year over year basis, NSE revenue was up 22.6%. NE revenue for the quarter was $188,000,000 which is an increase of 23.9% year over year as a result of strong demand by NEMS for our fiber led and production products.

Speaker 2

The year over year NE revenue increase included the Inertia led revenue, which was in line with our expectations. SE revenue was $20,200,000 which is an increase of 11.6% from the same period last year and is in line with our expectations. NSE gross margin for the quarter was 63.1%, which is 1.7% higher on a year over year basis. NE gross margin was 63.4%, which is an increase of 190 basis points from the same period last year, mainly driven by higher volume and favorable product mix. SE gross margin was 59.9%, which is a decrease of 90 basis points from the same period last year as a result of product mix.

Speaker 2

NSE's operating margin for the quarter was 10.4% versus a 1.8% loss in the same quarter last year. NSE operating margin is significantly above our guidance range of 6% to 8%, driven by higher gross margin fall through as well as $4,000,000 government R and D grant in Europe. OSP revenue for the third fiscal quarter came in at $76,600,000 which is just above the high end of our guidance range of $74,000,000 to $76,000,000 On a year over year basis, OSP revenue was up 0.5%. OSP gross margin was 51.6%, up 150 basis points from the same period last year and was primarily driven by higher volume and favorable product mix. OSP's operating margin was 33.9%, which is at the high end of our guidance range of 32% to 34% and is 40 basis points lower on a year over year basis.

Speaker 2

Moving on to the balance sheet and cash flow. Total cash and short term investments at the end of Q3 were $400,200,000 compared to 512,800,000 in the second quarter of fiscal twenty twenty five. The lower cash and investments balance at the end of this quarter is mainly attributed to the payment of the Inertia Labs acquisition. Cash flow from operating activities for the quarter was 7,800,000 versus $19,500,000 in the same period last year. The lower operating cash flow this quarter was mainly related to acquisition of Inertia Labs.

Speaker 2

During the quarter, we did not purchase any shares of our stock as we prioritized our capital allocation towards M and A with the agreement to acquire Spirent's high speed Ethernet and network security business lines. Although we plan to finance this transaction with additional debt, we will continue our financial discipline and intend to target less than four times gross leverage and well below three times net leverage over the long term. The fully diluted share count for the quarter was 226,900,000.0 shares, up from 224,600,000.0 shares in the prior year and versus 226,100,000.0 shares in our guidance for the third fiscal quarter. CapEx for the quarter was $6,800,000 versus $3,200,000 in the same period last year. Moving on to our fourth quarter guidance.

Speaker 2

We continue to assess the potential impact of global tariffs on the overall demand and timing of orders. Overall, we expect fiscal fourth quarter revenue to remain about flat relative to the strong third quarter revenue. For NSE, we are taking a more prudent outlook in view of tariff related timing of customer orders. For OSB, we expect strength in anti counterfeiting business, offsetting some seasonal weakness in three d sensing demand. For the fourth fiscal quarter of twenty twenty five, we expect revenue in the range of $278,000,000 and $290,000,000 Operating margin is expected to be 13.5% plus or minus 1% and EPS to be between $0.10 and $0.13 We expect NFC revenue to be approximately $2.00 $8,000,000 plus or minus $5,000,000 with an operating margin of 5% plus or minus 1%.

Speaker 2

OSP revenue is expected to be approximately $76,000,000 plus or minus $1,000,000 with an operating margin of 37% plus or minus 1%. Our tax expenses for the fourth quarter are expected to be about $8,000,000 plus or minus $500,000 as a result of jurisdictional mix. We expect other income and expenses to reflect a net expense of approximately $5,000,000 and the share count is expected to be around 2 and 20 7 point 4 million shares. Our guidance includes a tariff impact of about $3,000,000 on orders that already booked. This is expected to be dilutive to our gross margin and negatively impact our EPS by approximately $01 With that, I will turn the call over to Oleg.

Speaker 2

Oleg?

Speaker 3

Thank you, Ilan. The March was unseasonably strong, continuing a strong recovery and growth momentum that we saw in fiscal Q2. The quarterly revenue came in above the midpoint of the guidance with EPS above the high end of the guidance. Higher volume and richer revenue mix were the primary drivers for stronger EPS. Looking in more details at each of our businesses, starting with NSE.

Speaker 3

NSE revenue in fiscal q three grew 23% year over year driven by recovery and growth across many of our product segments. Field instruments business segment continued to see gradual recovery driven by the demand for fee fiber field instruments and fiber monitoring systems. Service providers and hyperscale data center operators drove the demand as they build out and upgrade their network. We are particularly encouraged to see the embrace and adoption of fiber monitoring by hyperscalers. We expect this trend to continue through calendar twenty five.

Speaker 3

Fiber lab and production saw another strong quarter driven by 800 gig and 1.6 terabit data center ecosystem, which includes semis, optical modules, systems, and hyperscalers. We expect 800 gig and 1.6 terabit optical infrastructure and emerging technologies such as co packaged optics to continue driving strong demand for the rest of calendar twenty five. Our aerospace and defense business segment continued its strong growth momentum. We expect the position navigation and timing business strengthened by the acquisition of Inertia Labs to be a strong multiyear growth driver for our aerospace and defense business segment. The Wireless business segment saw the same dynamics as in fiscal Q2, a stronger demand for five gs field instruments offset by continued weakness in the infrastructure test products.

Speaker 3

We believe that the demand for wireless field instruments is a leading indicator for the resumption of five gs network build out leading to gradual recovery for the overall wireless segment. And lastly, the SE business segment results were in line with our expectations. Looking ahead, we expect q four to be roughly flat to fiscal q three. Normally, would expect a seasonally stronger q four, but feel it's prudent to take a more conservative outlook due to recently imposed US tariffs. Specifically, on the revenue side, there's a risk that some of the previously approved POs and upcoming orders may get delayed or reduced in volume as customers reapprove POs to include tariffs or decide to take a wait and see approach.

Speaker 3

And on the gross margin side, we expect to absorb approximately $3,000,000 in tariffs from the previously committed orders and reciprocal tariffs on imported US materials. Overall, we currently expect the tariffs to have a low single digit impact on our operating margins. Given our global footprint, we are in the position to realign our supply chain to further reduce the tariffs impact as they stand today within six months. Now turning to OSP. During the fiscal third quarter, OSP increased marginally on a year over year basis as a result of strength in anti counterfeiting and other products.

Speaker 3

We expect fiscal Q4 to be roughly flat quarter on quarter and up year on year characterized by seasonally weaker three d sensing offset by strength in anti counterfeiting and other businesses. As communicated previously, we are starting to see a demand supply equilibrium emerge in anti counterfeiting business. In conclusion, I would like to thank the VIAVI team for their continued dedication and strong performance and our customers and shareholders for their continued support. With that, I will now turn it back to the operator for Q and A.

Operator

Thank you. We will now begin the question and answer We'll take your first question from Ruben Roy at Stifel.

Speaker 4

Thank you. Hey, Oleg. Maybe we'll start with the tariffs discussion. And if you could maybe drill down a little bit into the revenue side of the equation. So you mentioned that you have some concerns that some approved POs may get delayed.

Speaker 4

Are you actually seeing delays today, any push outs, etcetera, or is this just more of a conservative, you know, take near term?

Speaker 3

Well, you know, I tell you, on the first draft of our notes, I had canceled. I've removed canceled because, actually, nobody has canceled the order. So that's one thing. Furthermore, we're seeing actually people accepting the increases and just adding it to their order. So that's a positive.

Speaker 3

So but I feel, you know, clearly, we're now, what, third four weeks into the quarter since the the big changes. And, you know, I'm starting to feel a bit better. But, you know, clearly, there is a number of POs that had to go back to be reapproved with the adders to compensate for the tariffs. And at this time, we are seeing some of them coming back. And so far, nobody has canceled.

Speaker 3

Nobody has reduced the size of the order, and they're accepting the tariff increases. And but, you know, I think it's probably prudent to be conservative because, you know, the people who are responding the earliest are usually the ones who really need the product. And there's always a group of customers who said, you know what? If I can always wait another month, maybe things will change again. And as we've seen in the first week, the tariffs fluctuated all over the place.

Speaker 3

And, I mean, some I mean, we basically stopped all shipments into US, and we kinda took the POs, and we held on to them to see until things stabilize. So I think, you know, there's still it's no longer as volatile as it was in the first two weeks, but I think it's probably prudent to be a bit more conservative. And, you know, I do think there's gonna be some set of customers who will delay placing orders, and that may just result in the revenue, slipping into the fiscal first quarter of next year. So that's why we are being a bit cautious on the, revenue guidance for this quarter.

Speaker 4

Okay. Thank you. As a follow-up, in terms of some

Speaker 2

of the some

Speaker 4

of your equipment that's shipped into The U. S, is there a way to think about how much of that revenue is sourced from China or other areas that we might have to worry about high tariffs? You mentioned you you could you could potentially move in six months. You know, I'm just trying to figure out, you know, what the, you know, impact is. You know, how much are we talking about here?

Speaker 3

Also, I think I I I I said, you know, if we if I look at it, you know, clearly, you just looking trailing twelve months, it's roughly 15% of our revenue is subject to tariffs overall. Right? It is coming into The US. Clearly, China, given the magnitude of the tariffs, is the most pronounced thing. And we said that today, roughly three percent of the revenue is the tariff impact, and we can reduce it significantly within the next, say, six months or more like three to six months because we can just reroute and move the our production to we even within the same contract manufacturers by different country of origin.

Speaker 3

So but, you know, it takes we're already working on it. We're already moving things around. So I think within six months, the tariff impact will be fairly de minimis.

Speaker 4

Just one final one then.

Speaker 3

The case scares don't change. Pardon me? Right.

Speaker 4

That's a big if. Yeah. I had a a quick follow-up for, Elon, I guess, the cost side of the equation. So the $3,000,000 on the, higher costs, a lot of, folks have been talking about passing through costs. I would just like to how you're thinking about that.

Speaker 4

Is this should we think about the increased cost, I guess, as a longer term headwind on margins to what you're

Speaker 3

Let me me take it, turn yeah. I'll take it. So we made a conscious effort. All the POs that we accepted and committed to, we're gonna eat the tax. And that's about $3,000,000 as we mentioned.

Speaker 3

Everything else that POs came in but haven't been confirmed and everything is incoming, is getting universal, tariff matter, and it's a nonnegotiable. And so far, we have not seen any issue, with people not accepting it. So I think, you know, there were some people who tried to play the game and said, hey. You know, I'm not gonna pay tariff. I said, well, it's kinda like if you buy a product on Amazon and you refuse to pay the tax, you don't get the product.

Speaker 3

So I think, what we see in the industry is universally all our peers and everybody's passing it on. And I think, you know, probably the call even the biggest customers are saying it is what it is. It's it is the new normal. And, I think today, are identifying tariffs. Obviously, as things stabilize and go on, it'll just become part of the price.

Speaker 2

Yes, Ruben. Okay.

Speaker 3

Got it.

Speaker 2

The $3,000,000 are embedded in our guidance. Right? And that's the one set kind of headwind. But as Oleg mentioned, you know, prospectively, the goal is to pass it through to the customers and and to offset the cost. Yeah.

Speaker 3

And here, we just basically did not wanna argue. On committed appeals, we did not wanna go back and uncommitted. So that's just a we decided to take a high road on that one.

Speaker 2

Yep. Makes sense. Thank you, guys. Thank you.

Operator

We'll move next to Ryan Kuntz at Needham and Company.

Speaker 5

Great. Thanks for the question. Oleg, any particular technology domains you'd call out as you look forward? Obviously, you talked about the third quarter strength across fiber and wireless and optical. As you look forward over the next couple of quarters, changes in behavior you're hearing from the different customer segments?

Speaker 5

And then and then secondarily, the follow-up, how's your, exposure looking across data center and AI? And and can you comment on on that opportunity? Thanks.

Speaker 3

So I would say it's a great question. So increasingly, when I say fiber lab in production, that's pretty much think of it today as a code word for data center. Because the days when fiber core and telecom drove that business are over today, disproportional. I mean, today, I'd say majority of it goes to fund the the data center, and the new nodes are being pushed by the data center. It's your leading semis.

Speaker 3

It's your leading fiber optic module manufacturers, leading NAMS, and the the top data centers. I mean, that's pretty much the whole ecosystem that's driving it. The March was a very strong growth quarter on quarter for that business. We've shipped into a number of projects. This quarter, you know, we expect somewhat a bit of a pull back, but it's still gonna be stronger than December.

Speaker 3

And we expect another very strong quarter, in September. So there we have some visibility and the customers are coming in and, placing a longer term order. So we expect the I would say the data center ecosystem, which is basically means for us fiber level production, is gonna be very strong throughout the rest of this year. On the other segment is the aerospace and defense. With the acquisition of Inertia Labs and some of our earlier acquisition of Jackson Labs and our whole play in P and C, we continue to win big programs.

Speaker 3

And as those things start going into production, it's a very different business from the rest of the Abbey where we do a book ship. This one is all about design wins. And I tell you, I'm just blown away. You're looking some of the programs we are winning, where, you know, the size of the program is bigger than the temp for our test and measurement business. And that's why I think as these things start materializing and going into production, it's gonna be a very strong grower.

Speaker 3

But even this year, it's already quarter on quarter. And through the rest of the year, we expect it to have a to be posting pretty strong growth. So I would say two businesses that are gonna be really standouts and kinda driving the growth of weighted average growth is the data center business, which is fiber level production and aerospace and defense. We expect the fiber field, which is the instruments and fiber monitoring, to be the kinda steady, Eddie recovery and, you know, gradual recovery trajectory. And the wireless, I think we expect you know, clearly, we're already seeing activity in the field for field instrumentation.

Speaker 3

And we've seen, you know, obviously, that confirmed with some of the leading wireless NAMS confirming that, you know, five g construction is resuming, and we expect that to lead in the second half to recovery in our fiber in our wireless infrastructure. And the on the SC business, I think it continues to perform well. And, you know, and, you know, I think there's a lot of great opportunities for us later in the year.

Speaker 5

Great. Really helpful. Any commentary you can make about the the process and where you are, with regards to the the divestiture, from the from the Keysight acquisition?

Speaker 3

So I would always kinda just, given that Keysight is the in a driving seat on this one, it's all, depends on their they provided, update that they believe it's gonna be during their, July. So, basically, anytime between now and July is what is the stated dates are. You know, that's we just leave it at that.

Speaker 5

Great. Appreciate the thoughts. Thanks thanks so much.

Speaker 3

Yep.

Operator

We'll move next to Meta Marshall at Morgan Stanley.

Speaker 6

Hi. This is Mary on for Meta. I just wanted to go back to your comments on the OSP business. Is there anything else that you would add in terms of some of the headwinds or tailwinds on the OSP business as we think about the second half of the calendar year? Thank you.

Speaker 3

Well, I think it's, kind of premature to talk about second half of the calendar year. But, generally, it's a stronger, half for the three d sensing, and it's kind of, you know, fairly steady for the counterfeiting. But what we've seen now, the anti counterfeiting has stabilized, and we're actually seeing upside in the in the first half of the calendar year. And it just leads us to believe that a lot of the inventory has been burned off in the channel. And we were expecting actually during the March to burn off some inventory and run lower production.

Speaker 3

It didn't happen because the demand came in stronger. So we actually did both of managed to get the best of both worlds. We burned down the inventory, and we ran a higher utilization that's giving us better gross margin for that segment. So we expect the intake counterfeiting to be in a much healthier shape for the room going forward than it was in the last twelve months. And the three d sensing, I mean, you guys all see the news and, actually, it's been pretty strong.

Speaker 3

I mean, the we I would even say the q three was stronger than we thought. And generally, our June quarter is a seasonally weaker quarter, and then the stronger demand comes in in the second half of the calendar year.

Speaker 6

Great. Thank you.

Operator

We'll go next to Andrew Spanola at UBS.

Speaker 7

Hi. Thank you. I wanted to ask some follow-up. Last quarter, we saw some strength return to the NSE business as the service providers started to spend again. This quarter looked pretty strong and then the guide is for a little bit of a slowdown next quarter.

Speaker 7

I think we were hoping that there was a real return to spending by the service providers that maybe it wasn't indicative of a head fake, and it was a return to growth that would hopefully be followed in Europe and beyond in six months, etcetera. I'm wondering first, do you think there was any sort of pull forward of demand by the service providers in either Q2, either both Q2 and Q3? Or do you think that this trend of a return to spend is is intact and and we should hope to see it continue going forward?

Speaker 3

Well, I mean, first of all, I don't think there was any pull in because that's not how they operate. And, you know, if you think about it, seasonally with service provider, March is one of the weakest quarters, and it was almost on par with the December. So the demand was actually quite healthy. Right? But then there's another one with service providers is the wireless field instrument.

Speaker 3

Well, that was, it continued to be pretty strong from December as well, so it leads us to believe that, you know, we're we're starting to see a resumption of a five g build out. So that in other respect, I would say the service provider field instrumentation and kind of demand is, very much in in in line, and I would say, it's, getting back to normal. I mean, it's not something that you're seeing big growth. I think it's a low single digits kinda quarter on quarter, but that's and it's generally, I think, the pattern. Maybe one quarter, it'll be stronger.

Speaker 3

The next quarter, maybe a little bit weaker, but its trajectory is in the right direction. And I would say, generally, we would see significant drop from December to the March. So if you kinda think about it, the March was roughly flat to December in that business. That is actually significant growth.

Speaker 2

And we also assume for next quarter kind of a more prudent approach in terms of tariffs, etcetera.

Speaker 3

We expect that probably some of that will probably push out into the September because if you don't place your orders early on and you place it later and, you know, it takes a lot long time for, if you revise your PO, it has to recirculate and collect all the signatures. By the time it gets in, you may not have enough weeks in a week in the quarter to build the product, so it probably will push out into the next quarter.

Speaker 2

Yeah. It's overall last quarter, this quarter, next quarter, it's about timing, the dynamic of timing of orders. We don't see any change in our thinking in terms of the end markets that that we operate

Speaker 4

Yep. The demand there.

Speaker 7

Got it. So so the best way to think about the fourth quarter guide is is sort of you're just assuming across the board, everyone is just gonna be a little slower, pull back a little bit. It's it's not that you're seeing weakness in one specific part of the business because of the tariffs and others are stronger. It's just a general expectation of some some pause and some slowdown in in the next quarter related to just waiting to see what's happening.

Speaker 3

Well so, I mean, it varies. So in OSP business, there is no impact because you have a long term forecast and you execute, and there is very de minimis tariff impact in that business because we have factories in different geographies that produce for those geographies. So we don't have an impact there. It's really on the NSE side. And within that, it's a service providers who take the longest to reapprove POs with adders.

Speaker 3

I mean, when you look at the 11 production data centers, I mean, the turnaround has been pretty quick. I mean, they say, yep. It is what it is. That's the tariff. We're here's the PO back.

Speaker 3

So I would say the, if any segment that's gonna push out and you may see some slippage of revenue, that would be more for the service provider segment rather than the, level production, which is semi companies, the, equipment vendors, data centers, and the, module integrators.

Speaker 7

Got it. Thank you. Thanks. Our

Operator

next question comes from Michael Genovese at Rosenblatt Securities.

Speaker 3

Great. So just back on

Speaker 8

the tariffs for a minute here. Do you have manufacturing exposure to places where tariffs there's a risk? I mean, I know people don't think tariffs are going to go up and those full rates in Southeast Asia and Taiwan would be implemented, but that's still on the table and a possibility. So, you know, I know you said they don't behave to pull things forward, but do you have any customers that are exposed more to those regions than China and would wanna pull things forward for that reason?

Speaker 3

You know, I have not seen any customers that are pulling products forward because in the end, they all have their quarterly budgets, and you gotta I have not you you they spend what they get in any any given quarter. And the only thing we've seen is, okay. They have to we have to put an error, and they just have to reapprove it. That's about it. I have not seen anybody who's saying, hey.

Speaker 3

I'll take everything now because I don't wanna it's just which you know, you think you would see it because, you know but that is not the case.

Speaker 8

Okay. Okay. And then just on the on the total inventory for the company, I mean, I think it went up about 25% quarter over quarter. Was that you buying in front of the tariffs or or something else going on?

Speaker 2

No. That that is the incremental inventory from the Inertial Labs acquisition that closed January. If you back out their inventory, actually, our inventory was slightly down quarter over quarter.

Speaker 8

Okay. Perfect. And then last question for me is just an update and color on the aviation mill air business.

Speaker 3

Which business? Sorry. Military aviation. Space and defense. Yeah.

Speaker 3

What about it?

Speaker 8

Just just just a color update on on how that market is.

Speaker 3

Oh, yeah. So no. I mean, that listen. That business is do is doing very well. It's got very healthy quarter on quarter growth.

Speaker 3

I mean, there there's parts of that business that are more, like, mature with a slow growth like the the, I would say, the mission critical communication, like two way radios and avionics, they go slower. But the area that's really driving significantly higher growth is the whole P and T, positioning, navigation, and timing. And that is all about drones. It's all about anti spoofing, anti jamming of GPS, and things like that. So that's the business that is has has very strong quarter on quarter growth.

Speaker 8

Okay. Thanks very much.

Speaker 2

Thank And

Operator

next we'll go to Tim Savageaux at Northland Capital Markets.

Speaker 9

Hey, good afternoon. Two questions and really both trying to quantify a couple of things that we've been talking about here. First, in terms of the overall size of the fiber lab and production business, which is a real growth area for you guys. I think you're talking about growing into the June. If I were to put that around 20%, twenty five % of NE revenue, would I be too far off there?

Speaker 9

Any color on that would be interesting. And and then I wanna take a shot at quantifying the degree of your prudence, but why don't we follow-up with that and start with lab in production?

Speaker 3

Well, I think this one is so the June, we expect some pullback from the March because we we ship into a lot of big projects. So there was a big significant increase December or March. Then June is there some pullback, and we expect September to be another increase in the shipment. So I'd say today, 25% maybe on NSE is probably a little too much, but 20% is probably more like it. On any?

Speaker 3

On any no.

Speaker 2

NSE. NSE. NSE. NSE. Yeah.

Speaker 3

Okay. So that's on that. And what was your second part? You're talking about the push like, how much? I think probably anywhere 5 to maybe $10,000,000 is a reasonable number to take a hedge slip out.

Speaker 9

Right. Yeah. That was that was gonna be my follow-up, which is, you know, normally, you might even see high single digit sequential growth in in any on a seasonal basis.

Speaker 3

Yeah.

Speaker 9

Yeah. And so that that gets me a little bit higher, closer to maybe

Speaker 3

Well, you gotta also remember what is seasonal. I mean, seasonally, March is down. Here, we actually had a March up. Right? So Right.

Speaker 3

I mean, it's a it's a different kinda compare. You know? So if you had a typically seasonally March, the June would be exactly what you would expect it to be up. So, I mean, you know, it's, it's a it was a a seasonal. I don't know if that pattern will maintain, but, clearly, if it is, we may have to redefine what's seasonal.

Speaker 9

Understood. But, you know, we we'll settle on

Speaker 3

five to 10. That that's the data. And I think the it's really the data center is what probably broke the traditional seasonality. But even then, you look at the field instruments, they were roughly flat quarter on quarter, which is, like, in that particular space, you could consider growth.

Speaker 9

Great. Appreciate it. Thanks very much.

Speaker 3

All right.

Speaker 2

Thank you.

Operator

And there are no further questions at this time. I will turn the conference back over to Vivuti for closing remarks.

Speaker 1

Thank you, Audrey, and thank you, everyone. This concludes our earnings call for today. Have a good evening. Bye bye.

Operator

And this does conclude today's conference call. Thank you for your participation. You may now disconnect.

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