Viavi Solutions Inc. (NASDAQ:VIAV) Q1 2020 Earnings Conference Call - Final Transcript
Oct 30, 2019 • 04:30 pm ET
Ladies and gentlemen, thank you for standing by. And welcome to the VIAVI Solutions First Quarter 2020 Earnings Conference Call. [Operator Instructions] After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]
I would now like to hand the conference over to your speaker today, Mr. Bill Ong, Head of Investor Relations. Thank you. Please go ahead, sir.
Thank you, Rob. Welcome to VIAVI Solutions first quarter fiscal year 2020 earnings call. My name is Bill Ong, Head of Investor Relations. Joining 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 Reports and 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 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 will 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.
Thank you, Bill. VIAVI posted a record fiscal first quarter revenue of $299.8 million, which grew 11.7% year-on-year, and exceeded our upwardly revised revenue guidance range of $282 million to $294 million set at our September 12, Analyst Day event. Both NSE and OSP revenue exceeded the guidance range driven by better performance in wireless and fiber, and 3D sensing products, respectively. VIAVI's operating margin at 17.6% expanded 130 basis points year-on-year. EPS at $0.18, increased $0.03 from a year-ago levels. Both metrics, exceeded the revised guidance midpoint of 17% and $0.16 respectively.
Now moving to our reported Q1 results by business segment, starting with NSE. NSE revenue at $219.8 million, grew 15.3% year-on-year. Within NSE, NE revenue at $198.9 million, increased 20.9% from a year-ago levels, driven by strong performance in wireless lab, cable and access, and fiber products across both field and lab. SE revenue at $20.9 million, declined 20.2% from a year-ago levels, due to the expected runoff in our mature Assurance products, as well as weak demand from both growth Assurance and Data Center products.
NSE gross margins at 64%, increased 40 basis points year-on-year. Within NSE, NE gross margins at 64.4% expanded 180 basis points year-on-year, due to higher revenue volumes and a favorable product mix. SE gross margins at 60.3% was down 950 basis points from a year ago. This was primarily driven by lower revenue in both Assurance and Data Center products. We expect