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Viavi fiscal Q1 delivers 'all-time record' in OSP segmentViavi fiscal Q1 delivers 'all-time record' in OSP segment

Optical security and performance products buoyed by strong 3D sensing demand star performer, field instrument recovery anticipated as 5G rollout accelerates.

Ken Wieland

November 6, 2020

2 Min Read
Viavi fiscal Q1 delivers 'all-time record' in OSP segment

Network test and measurement specialist Viavi Solutions posted better-than-expected net revenue and adjusted profits for fiscal Q1 2021 (ended October 3).

Revenue, although down 5% year-on-year, to $284.7 million, beats analyst consensus by $8.3 million. Non-GAAP EPS, at $0.21, beats by $0.04.

Figure 1: In the crosshairs: Viavi's Q1 has tested will – with little need for antenna adjustment.  (Source: Viavi)In the crosshairs: Viavi's Q1 has tested will – with little need for antenna adjustment.
(Source: Viavi)

Surging sales for Viavi's higher-margin optical security and performance products (OSP), up 73.9% quarter-on-quarter, to $101.2 million – and up 26.5% year-on-year – was the eye-catcher.

Viavi's CEO Oleg Khaykin, speaking on the Q1 earnings conference call (as transcribed by Seeking Alpha) said OSP delivered "all-time record quarterly revenue and profitability."

The OSP upturn, explained outgoing CFO Amar Maletira, "reflected strong anti-counterfeiting and 3D sensing revenues, as well as solid aerospace and defense product demand."

Maletira added that Viavi's overall operating margin, at 21.3%, was "a record for a September quarter and presents a 370 basis points increase from a year ago levels driven by margin expansion in OSP."

Problems in the field

Q1 was not entirely unblemished, however. Network enablement (NSE) revenue, which made up 56.9% of sales, was down 18.5% year-on-year, to $162.1 million, largely because of a drop-off in demand for field instruments.

Khaykin was nonetheless bullish about NSE's prospects going forward. "We expect Q2 revenue for NSE to be up significantly, reflecting continued demand recovery in field Instruments and seasonal strength in lab and production equipment," he said.

The CEO anticipated that, despite macroeconomic uncertainty, 5G field revenue will become "more meaningful" in the second half of calendar 2021 as the buildout of the next-gen tech accelerates.

Want to know more about security? Check out our dedicated security channel here on Light Reading. The service enablement segment was stable, up 2.4% year-on-year, to $21.4 million.For the second quarter of fiscal 2021 (ended January 2) Viavi expects net revenue to be between $280 million to $300 million (versus consensus for $288 million) and non-GAAP EPS to be between $0.18 and $0.20 (above expectations of $0.17)."OSP strength is expected to continue with modest pullback in 3D sensing and anti-counterfeiting products, in line with fiscal Q2 seasonality," said Khaykin.Related posts:Viavi loses CFO to Rackspace, upgrades fiscal Q1 guidanceViavi trumpets 'first' test tools for open RAN specsTest vendors unveil 5G tools for telcos— Ken Wieland, contributing editor, special to Light Reading

About the Author(s)

Ken Wieland

contributing editor

Ken Wieland has been a telecoms journalist and editor for more than 15 years. That includes an eight-year stint as editor of Telecommunications magazine (international edition), three years as editor of Asian Communications, and nearly two years at Informa Telecoms & Media, specialising in mobile broadband. As a freelance telecoms writer Ken has written various industry reports for The Economist Group.

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