Viavi Solutions Inc. (NASDAQ:VIAV) Q2 2016 Earnings Conference Call - Final Transcript

Feb 02, 2016 • 04:30 pm ET


Viavi Solutions Inc. (NASDAQ:VIAV) Q2 2016 Earnings Conference Call - Final Transcript


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Good day, ladies and gentlemen, and welcome to the Viavi Solutions Inc. Second Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time.

[Operator Instructions]

As a reminder, today's program is being recorded. I would now like introduce your host for today's program, Mr. Bill Ong, Senior Director, Investor Relations. Please go ahead.

Bill Ong

Thank you, Jonathan. Welcome to Viavi Solutions's fiscal second quarter 2016 earnings call.

My name is Bill Ong, Senior Director of Investor Relations. Joining me on today's call are Rick Belluzzo, Chairman of the Board and Interim CEO; and Amar Maletira, CFO. Paul McNab, our Chief Marketing and Strategy Officer, will also join us for Q&A. I'm also pleased to introduce Oleg Khaykin as incoming President and CEO, who is also on the earnings call today.

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 current expectations. We encourage you to review our most recent SEC filings, particularly the risk factors described in those filings.

The forward-looking statements, including guidance 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 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 plus our supplementary slides and historical financial tables are available on our website. Finally, we are recording today's call and will make a recording available by 4:30 PM Pacific Time this evening on our website.

I would now like to turn the call over to Rick.

Rick Belluzzo

Well, thank you, Bill.

I am very pleased with our fiscal second quarter results. Our Q2 performance reflects our continued effort to build on OSP's success and improve the performance of our NSE business. In Q2 we met or exceeded the high end of all of our guidance range metrics. Both OSP and NSE continued to execute well in the first half of fiscal 2016, as we made progress in our long-term strategy to increase profitability.

In half one of FY 2016, we delivered revenue growth of 4.6% and operating income growth of 84.4% when compared to the first half of FY 2015. We also completed the spinoff of our CCOP business and WaveReady product line into Lumentum Holdings. While we are pleased with the progress, we are also committed to expanding upon these achievements in coming quarters.

Let me provide a little more detail on our second quarter. First, OSP delivered solid revenue growth, up 16.2% year-on-year, on the strength of higher demand for anti-counterfeiting products that began in fiscal Q1. We expect robust demand in the anti-counterfeiting business to continue through the rest of fiscal year 2016.

In NSE, our immediate focus has been to stabilize