Abstract
Viavi Solutions will report fiscal Q2 results on January 28, 2026 Post Market, with consensus pointing to sequential improvement in revenue and profitability as management’s prior guidance implied a return to year-over-year growth; investors will watch margins, EPS, and segment momentum.
Market Forecast
Consensus for the current fiscal quarter anticipates revenue of $365.25 million, adjusted EPS of $0.19, and EBIT of $64.91 million, implying forecast year-over-year growth of 40.49% for revenue and 87.51% for adjusted EPS. Margin expectations embed continued normalization, with focus on gross margin resilience and net profit leverage; detailed gross and net margin forecasts were not published, but consensus embeds improvement alongside EPS growth.
Management’s areas of emphasis point to a healthier mix and improving demand signals across core product lines. The most promising segment is Network and Service Enablement, with revenue around $216.00 million last quarter and a strengthening demand outlook, while Optical Security and Performance Products posted $83.10 million and is expected to benefit from seasonal and customer program ramps.
Last Quarter Review
In the previous fiscal quarter, Viavi Solutions delivered revenue of $299.10 million, a gross profit margin of 58.81%, GAAP net loss attributable to the parent company of $21.40 million, a net profit margin of -7.15%, and adjusted EPS of $0.15, with revenue growing 25.57% year over year and adjusted EPS up 50.00% year over year.
Operating discipline supported margin recovery despite an unfavorable mix, and cash generation improved sequentially. Main business revenue was driven by Network and Service Enablement at $216.00 million and Optical Security and Performance Products at $83.10 million, with the former accounting for roughly 72.22% of total revenue and showing the clearer demand recovery.
Current Quarter Outlook (with major analytical insights)
Core revenue drivers in Network and Service Enablement
Network and Service Enablement remains the primary revenue engine, contributing $216.00 million of last quarter’s $299.10 million. The quarter-on-quarter setup indicates a constructive rebound in spending for service providers and labs, pointing to higher test and measurement utilization into early calendar 2026. Forecast revenue of $365.25 million for the current quarter implies that incremental demand should continue in wireline fiber deployments, 400G/800G ethernet, and lab/production test tied to cloud and AI-related data center upgrades. With last quarter’s gross margin at 58.81%, sustainability hinges on product mix and service provider spending cadence; incremental operating leverage should allow adjusted EPS to grow faster than revenue, consistent with the 87.51% forecast YoY increase. A key swing factor is the breadth of large customer orders and the timing of acceptances, which can shift a few percentage points of revenue between fiscal periods; however, given the sequential improvement from $299.10 million to the $365.25 million forecast, the market is looking for a positive inflection.
Optical Security and Performance Products: stabilization and program cadence
Optical Security and Performance Products produced $83.10 million last quarter, reflecting a reacceleration off prior trough levels. This business is sensitive to program timing in anti-counterfeiting and specialized optics, which naturally introduces quarter-to-quarter variability. The current-quarter revenue forecast assumes modest sequential uplift and a steadier order cadence as multi-year government and commercial programs sustain production schedules. Given the segment’s typically higher gross margins relative to company average, incremental revenue here can enhance blended gross margin above last quarter’s 58.81% if mix shifts favor this portfolio. Risks include elongated procurement cycles in select regions and potential pushouts of governmental orders; still, management’s earlier commentary and the consensus trajectory imply a supportive backdrop into fiscal Q2. Any upside surprise from this segment would provide operating margin tailwinds and support the forecast EBIT of $64.91 million.
What will move the stock this quarter
Execution against the projected revenue reacceleration to $365.25 million and delivery of the implied adjusted EPS of $0.19 will be the primary stock catalysts. Investors will monitor gross margin relative to the prior 58.81% and whether operating expense discipline converts top-line growth into EBIT near $64.91 million. Commentary on service provider capex budgets for calendar 2026, the cadence of hyperscale and cloud-lab orders, and visibility into Optical Security and Performance Products awards will shape the outlook for the second half of the fiscal year. The prior quarter’s GAAP net loss margin of -7.15% raises focus on restructuring and non-GAAP to GAAP reconciliation; narrowing GAAP losses or returning to GAAP profitability would likely be viewed positively. Conversely, any signs of pushouts in large orders, or a miss against the aggressive YoY growth forecasts (revenue up 40.49%, EPS up 87.51%), could pressure sentiment, given the stock’s recovery narrative depends on sustained top-line and margin expansion.
Analyst Opinions
The majority of recent institutional commentary skews constructive, emphasizing improving demand across service provider and data-center test workflows and the potential for operating leverage as revenue scales. Several analysts highlight that prior-quarter beats versus forecasts (revenue $299.10 million vs. $294.35 million estimate; adjusted EPS $0.15 vs. $0.13 estimate) increase confidence in execution into fiscal Q2. Positive views also point to EBIT reaching about $64.91 million and adjusted EPS near $0.19, with the prospect of year-over-year growth reaccelerating into the back half if networking capex budgets hold. A minority of cautious voices flag the negative GAAP net margin of -7.15% and the risk of order timing, but these are outweighed by expectations of sequential improvement and margin normalization. On balance, the constructive camp anticipates that revenue expansion in Network and Service Enablement and steadier Optical Security and Performance Products awards will support the company’s guidance and consensus targets for fiscal Q2.Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
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