Viavi Solutions Inc. (NASDAQ:VIAV) Q4 2020 Earnings Conference Call - Final Transcript

Aug 11, 2020 • 04:30 pm ET


Viavi Solutions Inc. (NASDAQ:VIAV) Q4 2020 Earnings Conference Call - Final Transcript


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Ladies and gentlemen, thank you for standing by, and welcome to the Viavi Solutions Fourth Quarter and Fiscal Year End 2020 Earnings Conference Call. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Bill Ong, Head of Investor Relations. Thank you. Please go ahead.

Bill Ong

Thank you, Mike. Welcome to Viavi Solutions fourth quarter and fiscal year end 2020 earnings call. My name is Bill Ong, Head of Investor Relations. Joining on today's call is 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 our 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 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 includes historic 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 PM Pacific time this evening on our website.

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

Amar Maletira

Thank you, Bill. Fiscal Q4 saw a seasonal growth in revenue and operating profit despite the impact to our business due to COVID-19. Revenue grew 4.1% sequentially, while operating profits increased 37.6%, driven by sequential growth in our NSE business. While fiscal Q4 revenue at $266.6 million declined 8% year-on-year, operating profit at $52.3 million grew 2.8% and operating margin at 19.6% expanded 200 basis points. EPS at $0.18 was up by $0.01 or 5.9% from a year ago.

Now moving to our reported Q4 results by business segment, starting with NSE. NSE revenue at $208.4 million grew sequentially 11.4%, while declined 5.9% year-on-year. Within NSE, NE revenue at $108.9 million declined 8.3% from a year ago due to pandemic-related declines in our field instruments products, and this was partially offset by 5G-related growth in our wireless lab products. However, sequentially, NE revenue grew 10.4%, primarily driven by growth in both wireless lab as well as our field instrument products with demand stabilizing at service providers

SE revenue increased 19% sequentially to $27.5 million, and grew 14.1% year-on-year, led by strong performance in our enterprise and data center products, combined with growth in our assurance products. NSE gross margin at 64.6% decreased 110 basis points year-on-year. Within NSE, NE gross margin at 63.7% decreased 160 basis points year-on-year primarily due to lower revenue volumes in our field instruments. However, SE gross margin at 70.5% increased 200 basis points from a year ago, largely due to higher revenue volume