Viavi Solutions Inc. (NASDAQ:VIAV) Q4 2019 Earnings Conference Call - Final Transcript

Aug 15, 2019 • 04:30 pm ET


Viavi Solutions Inc. (NASDAQ:VIAV) Q4 2019 Earnings Conference Call - Final Transcript


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Good afternoon, my name is Julianne, and I will be your conference operator today. At this time, I would like to welcome everyone to the Viavi Solutions Fiscal Fourth Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you.

Bill Ong, Head of Investor Relations, you may begin your conference.

Bill Ong

Thank you, Julianne. Welcome to Viavi Solutions' fourth quarter fiscal year 2019 earnings call. My name is Bill Ong, Head of Investor Relations. Joining me on today's call are Oleg Khaykin, President and CEO and Amar Maletira, 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 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 guidance provided 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 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 plus our supplemental earnings slide, which include historical financial tables are available on Viavi's website.

Finally, we are recording today's call and we'll make the recording available by 4.30 p.m. Pacific Time this evening on our website.

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

Amar Maletira

Thank you, Bill. Viavi's revenue at $289.7 million grew 11.1% year-on-year and exceeded our revenue guidance range. NSE revenue at $221.4 million was above the midpoint of revenue guidance, driven by revenue upside in fiber and wireless products. OSP revenue at $68.3 million, exceeded the guidance range due to upside from a core OSP as well as our 3D sensing products.

Viavi's operating margin at 17.6% exceeded the high end of our guidance and was up 460 basis points year-on-year. EPS at $0.17 exceeded the guidance range and increased $0.05 or 41.7% from a year ago.

Now, moving to our reported Q4 results by business segment, starting with NSE. NSE revenue at $221.4 million grew 6.7% year-on-year. Within NSE, NE revenue at $197.3 million grew 10.2% from a year ago levels, driven by strong performance in both fiber and wireless test products across field and lab market segments.

SE revenue at $24.1 million declined 15.4% from a year ago levels driven primarily from the expected runoff of our mature assurance products and from a decline in data center products due to weaker demand from our data center customers.

NSE gross margins at 65.7% increased 370 basis points year-on-year, primarily due to higher overhead cost absorption from higher revenue volumes as well as gross margin improvements in our growth products within SE. NSEs operating margins at 13.4% increased 420 basis points from a