Viavi Solutions Q4 2026 Earnings Report

Viavi Solutions EPS Results

• Actual EPS: $0.34
• Consensus EPS: $0.30
• Beat/Miss: Beat by +$0.04
• One Year Ago EPS: $0.13

Viavi Solutions Revenue Results

• Actual Revenue: $443.10 million
• Expected Revenue: $432.62 million
• Beat/Miss: Beat by +$10.48 million
• YoY Revenue Growth: +52.50%

Viavi Solutions Announcement Details

• Quarter: Q4 2026
• Date: 8/5/2026
• Time: After Market Closes
• Conference Call Date: Wednesday, August 5, 2026
• Conference Call Time: 4:30PM ET

Viavi Solutions (NASDAQ:VIAV) is a provider of network test, monitoring and assurance solutions for communications service providers, cable operators, enterprises and government agencies. The company offers an extensive portfolio of fiber optic and copper cable test and measurement instruments, wireless network testing equipment and network performance monitoring software. Its products are designed to support the deployment, maintenance and optimization of high-speed broadband, 5G wireless, data center and enterprise networks.

Viavi’s product offerings are organized into two primary segments: Network & Service Enablement and Optical Security & Performance. The Network & Service Enablement segment delivers hardware and software tools for service activation, network troubleshooting and performance assurance across wireless, fiber and cloud infrastructures. The Optical Security & Performance segment provides solutions for anti-counterfeiting, product authentication, spectral analysis and advanced optical component testing used in manufacturing and field environments.

The company traces its heritage to the optical and photonics businesses of JDS Uniphase, and it became an independent public company through a spin-off transaction completed in August 2015. Since that time, Viavi has expanded its global footprint with facilities and sales offices in North America, Europe, Asia and Latin America, supporting a diverse customer base that includes network operators, equipment manufacturers and government laboratories.

Headquartered in Chandler, Arizona, Viavi Solutions is led by President and Chief Executive Officer Oleg Khaykin. Under his leadership, the company has continued to invest in research and development to address emerging challenges in network performance, security and next-generation communications technologies.

Viavi Solutions Q4 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Record fourth-quarter performance: Revenue reached $443.1 million, up 52.5% year over year and above guidance, while operating margin expanded to 24% and EPS rose to $0.34. Fiscal 2026 revenue grew 40% to $1.518 billion.
• Positive Sentiment: Strong data-center and aerospace demand is driving growth. NSE revenue increased 69.2% year over year, with data-center-related business now representing roughly 50% of NSE revenue and growing more than twofold excluding Spirent; management expects robust demand for several more quarters.
• Positive Sentiment: Fiscal Q1 2027 guidance calls for further sequential growth. Revenue is expected at $450 million-$460 million, with operating margin of approximately 27.1% and EPS of $0.40-$0.42, aided by an approximately $11 million tariff refund and continued strength in NSE and 3D sensing.
• Positive Sentiment: Management said Spirent integration is complete and ahead of schedule, with restructuring savings being realized and revenue expected to grow about 10% sequentially from June to September. CPO and optical circuit switching opportunities are progressing, with CPO revenue beginning to ramp in coming quarters.
• Negative Sentiment: Wireless demand remains anemic, though stable, and the company issued 12.78 million shares in a follow-on offering, increasing the diluted share count to 261 million in Q4 and approximately 268 million expected in Q1.

Presentation

[Operator]

Good afternoon. My name is Kendra, and I will be your conference operator today. At this time, I would like to welcome everyone to Viavi Solutions' fiscal fourth quarter and fiscal 2026 earnings call. At this time, I would like to turn the conference over to Vibhuti Nayar, Head of Investor Relations. Please go ahead.

[Vibhuti Nayar, Head of Investor Relations at Viavi Solutions]

Thank you, Kendra. Good afternoon, everyone, and welcome to Viavi Solutions' fourth quarter and fiscal 2026 earnings call. My name is Vibhuti Nayar, Head of Investor Relations for Viavi Solutions. With me on today's call is Oleg Khaykin, our President and CEO, and Ilan Daskal, our CFO. Please note, this call will include forward-looking statements about the company's financial performance. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our current expectations and estimations. 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 the guidance that we provide during this call and our expectations regarding the end markets and acquired business, are valid only as of today. Viavi undertakes no obligation to update these statements.

[Vibhuti Nayar, Head of Investor Relations at Viavi Solutions]

Please also note that unless we state otherwise, all results discussed on this call, except revenue, are non-GAAP. We reconcile these non-GAAP results to our preliminary GAAP financials and discuss their usefulness and limitations 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. We are recording today's call, and we will make the recording available on our website by 4:30 P.M. Pacific Time this evening. Now, I would like to turn the call over to Ilan. Ilan?

[Ilan Daskal, CFO at Viavi Solutions]

Thank you, Vibhuti. Good afternoon, everyone. Now, I would like to review the results of the fourth quarter of fiscal year 2026. Net revenue for the quarter was $443.1 million, which is above the high end of our guidance range of $427 million-$437 million. Revenue was up 8.9% sequentially, and on a year-over-year basis was up 52.5%. Operating margin for the fourth fiscal quarter was 24%, above the high end of our guidance range of 22.2%-23.2%. Operating margin increased 280 basis points from the prior quarter, and on a year-over-year basis was up 960 basis points. During the quarter, we received $1.5 million tariffs refund, which slightly benefited operating margin. Also during the quarter, we completed a follow-on offering and issued approximately 12.78 million shares at a share price of $45 for a total gross amount of $575 million.

[Ilan Daskal, CFO at Viavi Solutions]

The proceeds were used to pay off the remaining balance of the Term Loan B, and the excess amount is included in the cash balance at the end of the quarter. EPS at $0.34 was above the high end of our guidance range of $0.29 and $0.31 and was up $0.07 sequentially. On a year-over-year basis, EPS was up $0.21. The lower interest expenses in the quarter, as well as the tariffs refund in the quarter, contributed about $0.02 to the EPS. Moving on to our Q4 results by business segment. NSE revenue for the fourth fiscal quarter came in at $353.9 million, which is above the high end of our guidance range of $340 million-$348 million. Revenue from Spirent product lines was $47.7 million.

[Ilan Daskal, CFO at Viavi Solutions]

On a year-over-year basis, NSE revenue was up 69.2% as a result of continued strong demand for our lab production and field products driven by the data center ecosystem, as well as the acquisition of Spirent product lines. We also saw strong demand for our aerospace and defense products. NSE gross margin for the quarter was 64.1%, which is 190 basis points higher on a year-over-year basis, and was mainly driven by higher volume and favorable product mix. NSE's operating margin for the quarter was 20% versus 4.6% during the same quarter last year. NSE operating margin was above our guidance range of 18.2%-19.2%, mainly as a result of higher fall-through. OSP revenue for the fourth fiscal quarter came in at $89.2 million, which is at the high end of our guidance range of $87 million-$89 million.

[Ilan Daskal, CFO at Viavi Solutions]

On a year-over-year basis, OSP revenue was up 9.6%, driven by strength in 3D sensing and anti-counterfeiting and other products. OSP gross margin was 55.2%, up 50 basis points on a year-over-year basis, primarily driven by higher volume and favorable product mix. OSP's operating margin was 40%, which is above our guidance range of 38%-38.8% as a result of higher fall-through. OSP operating margin increased 40 basis points on a year-over-year basis. Moving on to the full year results of fiscal year 2026. For the full fiscal year, revenue was $1.518 billion, which is up 40% on a year-over-year basis. Spirent product lines that were acquired in the second quarter of fiscal 2026 contributed $145 million to the full fiscal year revenue.

[Ilan Daskal, CFO at Viavi Solutions]

The revenue growth was mainly driven by lab production and field products, primarily from the data center ecosystem, as well as demand for our aerospace and defense products, and also included the contribution from the acquisitions of Spirent product lines and Inertial Labs. For OSP, we saw year-over-year growth across all of its product lines. Full year operating margin for Viavi was 20.6%, up 630 basis points from fiscal year 2025, and was a result of higher fall-through driven by higher revenue and favorable product mix. Full year EPS was $1 versus $0.47 in the prior year. Moving on to the balance sheet and cash flow. Total cash and short-term investments at the end of Q4 were $656.7 million compared to $508 million in the third fiscal quarter of 2026.

[Ilan Daskal, CFO at Viavi Solutions]

Cash flow from operating activities for the quarter was $66.7 million versus $23.8 million in the same period last year and was driven by higher net income and timing of working capital. CapEx for the quarter was $11.1 million versus $5.5 million in the same period last year. CapEx for the full fiscal year was $31.1 million versus $27.8 million in the prior year. During the fourth quarter, we did not purchase any shares of our stock as we prioritized debt management. During the full fiscal year 2026, we purchased approximately 2.7 million shares of our stock for about $30 million. This repurchase was in conjunction with the exchange of our convertible notes that we completed during the first fiscal quarter 2026. We have almost $170 million remaining under our current authorized share repurchase program.

[Ilan Daskal, CFO at Viavi Solutions]

The fully diluted share count for the quarter was 261 million shares, up from 227 million shares in the prior year and versus 256.1 million shares in our guidance for the fourth fiscal quarter. Moving on to our guidance for the first quarter of fiscal year 2027. Viavi typically operates on a 13-week fiscal quarter. This requires us to add one week to the first fiscal quarter every five or six years. We are adding one week to the first quarter of fiscal year 2027, hence it will include some elevated variable costs. In addition, we received approximately $11 million tariffs refund in July 2026 that will primarily benefit our Q1 cost of goods sold. We expect the first fiscal quarter revenue for Viavi to be up sequentially, driven by continued strength in many of our end markets.

[Ilan Daskal, CFO at Viavi Solutions]

For NSE, we expect first fiscal quarter revenue to be up relative to the prior quarter, which reflects a seasonally strong quarter across many of our end markets. For OSP, we also expect the quarter-over-quarter revenue to be higher, driven by stronger demand for 3D sensing products. For the first fiscal quarter 2027, we expect Viavi revenue in the range of $450 million and $460 million. We expect NSE revenue between $360 million and $368 million. OSP revenue is expected to be in the range of $90 million and $92 million. Operating margin for Viavi is expected to be 27.1% ± 40 basis points. The operating margin includes a net benefit of about 100 basis points from the tariffs refund, which will be offset by the additional one week of variable costs, and it will primarily benefit NSE's operating margins.

[Ilan Daskal, CFO at Viavi Solutions]

NSE operating margin is expected to be 23.1% ± 50 basis points. OSP operating margin is expected to be 43.2% ± 20 basis points, and EPS is expected to be between $0.40 and $0.42. This includes a net benefit of about $0.02 from tariff refunds and from the additional one week of variable expenses that I mentioned earlier. Our tax expenses for the first quarter are expected to be around $12 million ± $500,000 as a result of jurisdictional mix. We expect other income and expenses to reflect a net expense of approximately $2.5 million, and the share count is expected to be around 268 million shares. With that, I will turn the call over to Oleg. Oleg?

[Oleg Khaykin, President and CEO at Viavi Solutions]

Thank you, Ilan. Fiscal 2026 ended on a strong note with Viavi's financial performance in the fourth quarter exceeding expectations. The year-over-year performance was driven by strong growth in many of our end markets. NSE revenue in fiscal Q4 grew approximately 70% year-over-year, primarily driven by continued strong demand from the data center ecosystem and aerospace and defense customers. More specifically, the data center ecosystem, which includes high-performance semis, optical modules, NEMs, and hyperscalers, drove strong demand for lab and production and field instruments in support of data center build-out, maintenance, and monitoring. The recently acquired Spirent high-speed Ethernet product lines are performing well and have also contributed to our growth this quarter. We have recently extended our leadership in this segment with the launch of the industry's first validation solution for Ultra Ethernet transport, which is purpose-built to support large-scale AI and high-performance computing workloads.

[Oleg Khaykin, President and CEO at Viavi Solutions]

The data center ecosystem customer demand for our products remains very strong. We expect continued robust growth in this segment for the next several quarters. Our aerospace and defense business also saw another quarter of strong year-over-year growth, driven by strong demand for our positioning, navigation, and timing products. We expect PNT to be a multi-year growth driver for our A&D business. The service providers business, which includes field instruments, wireless, and service enablement products, was up, driven by stronger seasonal demand. The highlights included increased demand for our fiber monitoring solutions in support of fiber build-outs and for our cable instruments in support of DAA cable architecture migration. Conversely, our wireless products continue to see the same anemic, although stable, customer demand. That said, we remain optimistic regarding the longer-term demand for our wireless products. Now turning to OSP.

[Oleg Khaykin, President and CEO at Viavi Solutions]

OSP saw strong year-over-year growth, driven by strength in 3D sensing and anti-counterfeiting and other products. Looking ahead to Q1, Historically, Q1 has been a softer quarter for NSE. However, this time around, we expect NSE revenue to be up quarter-over-quarter, driven by strong and growing demand from data center and aerospace and defense customers. We also expect OSP to be up quarter-over-quarter, driven by seasonally stronger demand for 3D sensing products. Our diversification strategy into data center ecosystem and aerospace and defense end markets has been a key growth driver for us during fiscal 2026. We expect this strategy to continue driving our growth for the next several quarters. In conclusion, I'd like to thank the Viavi team for their strong innovation and execution and thank our customers and shareholders for their continued support.

[Oleg Khaykin, President and CEO at Viavi Solutions]

With that, I will now turn it back to operator for Q&A.

[Operator]

Your first question comes from the line of Ryan Koontz with Needham & Company. Ryan, your line is open. You may go ahead.

[Ryan Koontz, Analyst at Needham & Company]

Great. Appreciate that. Oleg, maybe you can help us out a little bit in understanding this terrific quarter you had. Obviously, data center and optical, a big part there. Can you give us an idea of the scale of optical and data center within your NSE domain, and what kind of growth rate you're seeing there now for those products?

[Oleg Khaykin, President and CEO at Viavi Solutions]

Well, pretty much when we talk about data center, it's all optical, right? It's both optical on the R&D side, the lab side. It's optical for the production test. It's optical for fiber monitoring and the data center build-out. In that respect, pretty much all optical products. There's very little copper or anything, if anything at all.

[Ryan Koontz, Analyst at Needham & Company]

Right.

[Oleg Khaykin, President and CEO at Viavi Solutions]

The growth is- [crosstalk].

[Ryan Koontz, Analyst at Needham & Company]

NSE. Sorry, Oleg. You were saying?

[Oleg Khaykin, President and CEO at Viavi Solutions]

Okay, scale, in terms of revenue, you're talking about?

[Ryan Koontz, Analyst at Needham & Company]

Just rough percentage within the NSE bucket.

[Oleg Khaykin, President and CEO at Viavi Solutions]

Well, I think, as we were saying, our data center is now running at about 50% of the NSE revenue. A&D is, I would say, probably about 17%, the rest is our service provider business.

[Ryan Koontz, Analyst at Needham & Company]

Great. Maybe as a follow-up, we're on the verge of this 1.6 Tbps cycle here with some new Broadcom switches coming to market, and obviously.

[Ryan Koontz, Analyst at Needham & Company]

The optical layer will go that way in a hurry here. Where do you feel like we are in that cycle for 1.6 Tbps adoption as it relates to your business? Obviously, you've sold to the lab in the early part, and then the production, and then field, but how long does it take you, or how long do you think it will be until you see a peak in 1.6 Tbps demand for your products?

[Oleg Khaykin, President and CEO at Viavi Solutions]

If I look at today in terms of sheer volume, 800 Gbps is still the biggest driver, but 1.6 Tbps is ramping very quickly, and that's mainly a lot of the production, things moving to production. I would say probably, in 2027, it may get to probably parity between 800 Gbps and 1.6 Tbps, and then 1.6 Tbps will continue to get bigger while 800 Gbps may pull back. I think 800 Gbps will be a big driver for a long time, because a lot of the data centers are 800 Gbps. Only the new stuff is going to be 1.6 Tbps. There's a big install base that's being upgraded as well. It's still very much, but 1.6 Tbps is really what's the primary lead performance driver today.

[Ryan Koontz, Analyst at Needham & Company]

Got it. Sounds like it could be a couple of years, though, until you have a peak and maybe a shift.

[Oleg Khaykin, President and CEO at Viavi Solutions]

Oh, I think we will. Look, we're still seeing a lot of 400 Gbps. It's going to be multiple nodes in parallel running, and the mix gradually shifting to 1.6 Tbps, taking the lead, followed by 800 Gbps, and 400 Gbps is going to be around for quite a while as well. They just don't go away.

[Ryan Koontz, Analyst at Needham & Company]

Thanks so much. Appreciate that.

[Oleg Khaykin, President and CEO at Viavi Solutions]

Sure.

[Operator]

Your next question from the line of Ruben Roy with Stifel. Ruben, your line is open. Please go ahead.

[Ruben Roy, Analyst at Stifel]

Hi. Thanks for taking my questions. I have a quick clarification question and then a follow-up. Ilan, I know you mentioned the 14-week quarter and the costs associated with that. Does the extra week have any meaningful revenue contribution? I'm just trying to put apples to apples together on the September guide, especially given that traditionally your service provider is seasonally weaker and just trying to understand the moving parts for the September quarter, given that you have the extra week.

[Oleg Khaykin, President and CEO at Viavi Solutions]

I would say revenue, if there is any, it's de minimis, it's very small. The revenue shipments are non-linear in the quarter anyhow, and generally, revenue is linked to the customer's end of the quarter, whereas our OpEx is linked to a number of weeks in the quarter for us. In that respect, whether you have one week more or less, it really doesn't make a difference. Most of our revenue is shipped in the last four weeks of the quarter. You're keeping up with the customer's end-quarter revenue requirements. In that respect, I don't think there is any revenue swing one way or the other with if you have one week more, one week less. It's really more linked to the calendar quarter.

[Ilan Daskal, CFO at Viavi Solutions]

Ruben, I can add also that without guiding anything in terms of the December quarter, if it was impacting or shifting, then it would impact the December quarter, but that's not the trajectory that we see for the December quarter.

[Oleg Khaykin, President and CEO at Viavi Solutions]

Yeah.

[Ruben Roy, Analyst at Stifel]

Right. There would be an extra week of incremental shipping capacity into December. Okay. That's really helpful, guys. Then, I guess for both of you, just thinking through the margin structure of the business now that the data center strategy is continuing to sort of ramp here. You're guiding 27.1% operating margin. It seems like you're getting a better view on lab production, or sorry, lab production versus field. And I'm just wondering if you could talk a little bit about how you're thinking about longer-term operating margins as some of the new programs ramp, 1.6 Tbps and otherwise. Ilan as well, the R&D fell in absolute dollars here, and with other things that you guys are working on, whether it's CPO, OCS, AI RAN, 3.2 Tbps, you name it.

[Ruben Roy, Analyst at Stifel]

What's the sustainable investment level and, I guess if you could tie that back to the operating margin view longer term, that'd be helpful. Thank you.

[Oleg Khaykin, President and CEO at Viavi Solutions]

Sure. The thing I would say, clearly, some product lines are higher, some are lower, but generally, NSE is north of 60%, right? Anywhere from, I'd say, low 60s on some of the field instruments into the high 70s on some of the lab products, right? As that becomes bigger and bigger share of revenue vis-a-vis, let's say, OSP, the gross margin will keep trending up. There's clearly some headwinds on, let's say, the semiconductor pricing. It can obviously slow down some of the growth because your cost of goods, but so far we've been just passing all those increases to our customers as part of the price adjustment. In that respect, it's going to be really a weighting average on the gross margin between NSE and OSP, as since NSE is growing much faster the gross margin will continue to creep up.

[Oleg Khaykin, President and CEO at Viavi Solutions]

When it comes to OpEx, our OpEx is scaling very well. Clearly we are putting some money into reinvestment, but relatively speaking I mean, our OpEx is growing much slower than our revenue. As a result, it all drops to the operating margin. I would say if we continue on this trajectory, I think mid to high 20% operating margins in a not too distant future is probably the expectation.

[Ilan Daskal, CFO at Viavi Solutions]

Yeah, Ruben, I will echo what Oleg just said in terms of the continued leverage that we expect in terms of the operating expenses, and specifically you ask about the R&D. It's not going to be materially higher. I mean, there is always the marginal commissions, et cetera.

[Ruben Roy, Analyst at Stifel]

Yeah.

[Ilan Daskal, CFO at Viavi Solutions]

The leverage kind of will continue to play in favor of the operating margin. Again, yeah, it can continue throughout the fiscal year to, as Oleg mentioned, from the mid to the high 20s.

[Oleg Khaykin, President and CEO at Viavi Solutions]

You know what's really good is, on R&D, we're actually getting a bigger operating leverage because the volumes in lab production are just so much higher than what we've been used to in field instruments. You spend the same R&D, but you get much more margin dollars within a fairly short period of time, and there is really no up and down. Before, just as you start reaching the peak of the one technology cycle, the next one starts ramping up. Then all of the technology actually flows down to some field instruments, which needs relatively little investment to incorporate it all. It's just basically better leverage of the R&D all around.

[Ruben Roy, Analyst at Stifel]

Yeah. That's what we like to hear. Thanks, guys, and congrats on the continued momentum.

[Ilan Daskal, CFO at Viavi Solutions]

Thank you.

[Oleg Khaykin, President and CEO at Viavi Solutions]

Sure. Thanks.

[Operator]

Your next question comes from the line of Andrew Spinola from UBS. Andrew, your line is open. Please go ahead.

[Andrew Spinola, Analyst at UBS]

Thank you. I wanted to ask, Oleg, you typically describe the data center business growing about 50%. I was wondering if you'd just give us an update on how it grew in the fourth quarter and what's in your Q1 guide in terms of expectations for that business.

[Oleg Khaykin, President and CEO at Viavi Solutions]

Well, it is growing very rapidly, and I think we're, in cases, in the early stages of penetration. I mean, today it's mostly high performance semis in the lab. What's growing really, really fast is the production piece of it, and it's everything from making fiber optic modules to making fiber optic cables to now getting into the CPO testing, where we're entering the traditional semiconductor test. We play the optical plane of the semiconductor test, and that's a completely new market. I don't want to give out percentages, but let's put it this way: I think that business, even if I take out Spirent, it's more than doubled for us year-over-year.

[Andrew Spinola, Analyst at UBS]

Makes sense. Just to follow up on that, I guess one of the reasons I was asking is it looks like your guide at NSE is something like 3% sequentially to the midpoint. I've been thinking about 2027 as the year where things or fiscal 2027 is where things will accelerate as 1.6 Tbps, as earlier questions mentioned, accelerates and then just looking at the supply chain and some of the numbers that are there for 2027 in terms of compute growth, et cetera. Is there anything slowing in your business that you're going to grow 3% here sequentially, or is this just the trend?

[Oleg Khaykin, President and CEO at Viavi Solutions]

I think you have to remember, September quarter generally for us was a down quarter for NSE. The mere fact it's up means the lab and production piece in aerospace and defense is more than offsetting any kind of the service provider/wireless customer, right? You got to de-average the growth, right? In terms of the 1.6 Tbps, if it's growing, great, but remember, some of that is going to be substitution against 800 Gbps. What's really going to be driving the growth is the broader and broader adoption of the technology and the volumes of production scaling, right? For example, for production, you're looking really at the capacity being in place or capacity being replaced, because that's what's ultimately driving your dollars, right?

[Oleg Khaykin, President and CEO at Viavi Solutions]

If you tell me somebody's spent this year $600 billion and next year they're going to spend $1 trillion, I should expect at least that kind of growth, right? Granted, some of it is construction and digging trenches, but there is the CapEx that is equipment. That ultimately will translate to us. In some of these cases, we're not even present, but we will be present with 1.6 Tbps so that our market actually going to expand. I think on this particular product lines, we should do better than the purely CapEx growth. There is, of course, the base business service provider that's growing 1%, 2%. You have to take the weighted average of the two to calculate the total growth.

[Andrew Spinola, Analyst at UBS]

Understood. Appreciate the color. Thank you.

[Operator]

Your next question from the line of Michael Genovese with Rosenblatt Securities. Michael, your line is open. Please go ahead.

[Michael Genovese, Analyst at Rosenblatt Securities]

Great, thanks. Oleg, can we get an update on you from the timing of what's going on with OCS and then what's going on with CPO? One OCS question, one CPO question.

[Oleg Khaykin, President and CEO at Viavi Solutions]

Well, there's been a lot of industry talk, like, "Oh, because the yield is going to be slower." That's all nonsense. CPO and all that thing is moving forward. Are there issues? Of course there are. The reason people are doing CPO and all this other things, it's all about performance and power. To manage yields, you just do more tests. You do more of a known good die, known good optical engine, known good substrate, and all these kind of things. Which means a lot of testing, which ultimately pretty good for us, but also at the same time, the process is being improved and things are getting better. From my perspective, it's progressing, and I have POs to show for that.

[Michael Genovese, Analyst at Rosenblatt Securities]

Just in terms of, I'm going to come back to CPO, but if we just look at OCS, are there already OCS revenues in the numbers, and what is the step-up of that expected to look like over the next couple of quarters?

[Oleg Khaykin, President and CEO at Viavi Solutions]

There is some OCS, I think majority of OCS probably will be coming in the next revenue, will be coming in the next several quarters. There is already some in sole capacity. Remember, we've been selling equipment to a big OCS vendor, hyperscaler, who makes their own stuff. Now it's becoming broader and going into the other companies introducing OCS, many other companies are looking to do more optical switching in their core. I see this demand as being very healthy.

[Michael Genovese, Analyst at Rosenblatt Securities]

I think previously you said CPO revenues begin in the fall. Is that commentary still relatively on track?

[Oleg Khaykin, President and CEO at Viavi Solutions]

Yes.

[Michael Genovese, Analyst at Rosenblatt Securities]

Great.

[Oleg Khaykin, President and CEO at Viavi Solutions]

We're already getting some this quarter, and probably in December it will start accelerating.

[Michael Genovese, Analyst at Rosenblatt Securities]

Finally from me, in the past, last quarter, you started to mention when in the future you could see a $500 million+ revenue quarter. Could you just remind us of that language, has this beaten pace here, has that increased the confidence or done any kind of update to that at all?

[Oleg Khaykin, President and CEO at Viavi Solutions]

I would say if I take my tone from before $500 million, I would say this quarter, I think the $500 million will likely come a bit sooner than what we were originally thinking, given the trajectory and the growth.

[Michael Genovese, Analyst at Rosenblatt Securities]

Could you just remind me just to make sure.

[Oleg Khaykin, President and CEO at Viavi Solutions]

Exiting fiscal 2028 we were talking about the end of next calendar year? Exiting fiscal 2028 [crosstalk]. Exiting fiscal 2028, I think we may see $500 million in the next calendar year.

[Michael Genovese, Analyst at Rosenblatt Securities]

Sorry, it was originally exiting 2028 or exiting 2027?

[Oleg Khaykin, President and CEO at Viavi Solutions]

It was exiting fiscal 2028. Fiscal 2028 [crosstalk]. It was originally we talked fiscal 2028. I think we're now, I'm looking like sometime in calendar 2027.

[Michael Genovese, Analyst at Rosenblatt Securities]

Perfect.

[Oleg Khaykin, President and CEO at Viavi Solutions]

If you look at calendar, instead of being, let's say exiting like a June quarter 2029. 2028, June quarter 2028, you're looking at sometime during calendar 2027.

[Michael Genovese, Analyst at Rosenblatt Securities]

Yep, perfect. Okay, great. Thanks so much. Appreciate it.

[Oleg Khaykin, President and CEO at Viavi Solutions]

Yep.

[Operator]

Your final question comes from the line of Tim Savageaux with Northland Capital Markets. Tim, your line is open. Please go ahead.

[Tim Savageaux, Analyst at Northland Capital Markets]

Hey, good afternoon. Congrats on the results. I had a question around Spirent. You saw a pretty decent decline there from Q3, yet were able to grow NSE pretty substantially despite that. I wonder if you can talk about what may have accelerated in the organic business to enable that in the quarter. I assume what most of Spirent is also cloud driven. If we can get an update on that. You made a comment about growth excluding Spirent. What might you expect for Spirent here in your fiscal Q1 guide?

[Oleg Khaykin, President and CEO at Viavi Solutions]

Well, remember we actually felt Spirent did pretty well. Remember, the first half of the calendar year is about 45% of their revenue, and 55% of revenue is in the second half. In the March quarter, they had some carry over, so did. June quarter came in pretty much as we expected. A lot of it is enterprise driven. I know for example September quarter, they're going to be up around 10% in revenue, and December is usually their strongest quarter. Probably now they're up 10%. Spirent aside, really, the biggest growth was very much lab and production, followed by aerospace and defense. Lab and production, it's just ticking up double digit revenue growth, in the absolute dollars quarter-over-quarter.

[Tim Savageaux, Analyst at Northland Capital Markets]

Okay, great. Thanks. Back to co-packaged optics. You talk about the testing intensity, but do you have any metrics for us as regards how CPO looks relative to pluggables from a test perspective, and what that might mean for Viavi?

[Oleg Khaykin, President and CEO at Viavi Solutions]

Well, listen, pluggables is clearly a simpler architecture, and why would you want to do a CPO? You want to do CPO, I would say maybe without really exaggerating here, but if you have a co-packaged optics, your three nanometer silicon performs as a two nanometer silicon. You are getting almost a whole node of advantage by co-packaging the optics, right? You can take it either in performance or you can take it in the cost. You can use a three nanometer silicon and get a two nanometer performance with co-packaged optics, or have a two nanometer silicon and have a pluggable. Now, you combine these things together, you get lower power and higher performance, right? That's really why would anybody go to the length of complexity and yield and all these difficulties to implement this new technology.

[Oleg Khaykin, President and CEO at Viavi Solutions]

It's purely because it cuts down on power and/or you can get yourself more performance out of the silicon. That's really the optimization game that everybody's playing. Now, it comes at a much higher cost, but relatively speaking, if you get the same performance with the older silicon node, then it's worth it.

[Tim Savageaux, Analyst at Northland Capital Markets]

Okay, finally back to Spirent, I guess a little bit, but I wonder if we can get an update on where you are synergy-wise with that transaction and how you expect that to sort of flow through the income statement or OpEx over the next few quarters here.

[Oleg Khaykin, President and CEO at Viavi Solutions]

It's already all done and implemented and accounted for. We are done with the integration as of June quarter. We did it not just Spirent, we did it general, both Viavi and Spirent. We rationalized go-to-market and the R&D during the first two calendar quarters, and exiting June, we are all set.

[Ilan Daskal, CFO at Viavi Solutions]

Yeah, the savings from the restructuring are being realized, and also to your prior comment, Tim, actually Spirent does grow kind of a single-digit year-over-year. As Oleg mentioned earlier, the core of lab production is the main growth there. Seasonality for Spirent remains the same. The first half of the calendar year is usually weaker, and the second half of the calendar year is usually much stronger. June is traditionally a little bit weaker, but as Oleg mentioned, we see at least 10% quarter-over-quarter growth from June to September, with another probably good quarter we expect in December. I don't think that trajectory for Spirent overall changed. It performs really well with good margins, and we are very, very pleased with this.

[Oleg Khaykin, President and CEO at Viavi Solutions]

If anything, we are ahead of schedule on the roadmap integration. As I mentioned, we just released the first of the Ultra Ethernet Transport testing, which is what you'd use for AI and high-performance compute workloads simulation. It's actually been much better than I expected.

[Tim Savageaux, Analyst at Northland Capital Markets]

Okay, great. Thanks very much.

[Oleg Khaykin, President and CEO at Viavi Solutions]

All right.

[Ilan Daskal, CFO at Viavi Solutions]

Thanks, Tim.

[Operator]

There are no further questions at this time. I will now turn the call back to Vibhuti Nayar for closing remarks.

[Vibhuti Nayar, Head of Investor Relations at Viavi Solutions]

Thank you, Kendra. This concludes our earnings call for today. Thank you for joining, everyone.

Participants

Executives

• Vibhuti Nayar, Head of Investor Relations
• Ilan Daskal, CFO
• Oleg Khaykin, President and CEO

Analysts

• Ryan Koontz, Analyst at Needham & Company
• Ruben Roy, Analyst at Stifel
• Andrew Spinola, Analyst at UBS
• Michael Genovese, Analyst at Rosenblatt Securities
• Tim Savageaux, Analyst at Northland Capital Markets