Viavi Solutions Inc.

time, I would like to turn the conference over to Vibhuti Nair, Head of Investor Relations. Please go ahead.

Thank you, JL. Good afternoon, everyone, and welcome to VIAVI Solutions' fiscal first quarter of 2026 earnings call. My name is Vibhuti Nair, Head of Investor Relations for VIAVI Solutions. With me on today's call is Oleg Hykin, our President and CEO, and Ilan Baskal, our 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 reports and SEC filings, particularly the risk factors described in those filings. The forward-looking statements including the guidance that we provide during this call and our expectations regarding the acquired business are valid only as of today. VIAVI undertakes no obligation to update these statements. Please also note that unless we state otherwise, all results discussed on this call, 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, as well as our supplemental earnings slides, which include historical financial tables, are available on VIAVI's website at www.investor.viavisolutions.com. Lastly, we are recording today's call and will make the recording available on our website by 4.30 p.m. Pacific time this evening. With that, I would now like to turn the call over to Ilan.

Thank you, Pibudi. Good afternoon, everyone. Now I would like to review the results of the first quarter of fiscal year 2026. Net revenue for the quarter was $299.1 million, which is above the high end of our guidance range of $290 and $298 million. Revenue was up 3% sequentially and on a year-over-year basis was up 25.6%. Operating margin for the first fiscal quarter was 15.7% above the high end of our guidance range of 14.6% to 15.4%. Operating margin increased 130 basis points from the prior quarter and on a year-over-year basis was up 570 basis points. EPS at 15 cents was also above the high end of our guidance range of 13 to 14 cents and was up 2 cents sequentially. On a year-over-year basis, EPS was up 9 cents. Moving on to our Q1 results by business segment. NSE revenue for the first fiscal quarter came in at $216 million. which is above the high end of our guidance range of $208 to $214 million. On a year-over-year basis, NSE revenue was up 35.5% as a result of strong demand for lab and production as well as field products and was mainly driven by data center ecosystem as well as the acquisition of inertial labs. NSE gross margin for the quarter was 63% which is 210 basis points higher on a year-over-year basis and primarily driven by higher volume and favorable product mix. NSE's operating margin for the quarter was 7.5% compared to negative 4.6% during the same quarter last year. NSE operating margin was above the high end of our guidance range of 5.4% to 6.2%, primarily driven by higher fall through. OSP revenue for the first fiscal quarter came in at $83.1 million, which is in line of our guidance range of $82 to $84 million, and was up 5.5% on a year-over-year basis. The increase in revenue for the quarter was primarily a result of strength in anti-counterfeiting and other products. OSP gross margin was 52.3%, down 300 basis points from the same period last year, and was mainly due to unfavorable product needs. OSP's operating margin was 37.1%, which is below our guidance range of 38.1% to 38.5% due to product mix and higher manufacturing costs. The operating margin decreased 250 basis points on a year-over-year basis. Moving on to the balance sheet and cash flow. Total cash and short-term investments at the end of Q1 were $549.1 million compared to $429 million in the fourth quarter of fiscal 2025. Cash flow from operating activities for the quarter was $31 million versus $13.5 million in the same period last year. CapEx for the quarter was $8.5 million versus $7.3 million in the same period last year. During the quarter, we successfully refinanced our $250 million 1.625% three-year convertible notes due in March 2026 with $250 million 0.625% five and a half years convertible notes due in March 2031. As part of this transaction, existing convert holders exchanged about $100 million for the new convert, and the remaining $150 million raised will serve to pay off the balance of the March 2026 convert. This remaining $150 million is included in the cash balance of $549 million at the end of the first fiscal quarter of 2026. In conjunction with this transaction, We purchased approximately 2.7 million shares of our stock for about $30 million. We have almost $170 million remaining under our current authorized share repurchase program. The fully diluted share count for the quarter was 227.9 million shares, up from 224 million shares in the prior quarter, and versus 228.6 million shares in our guidance first fiscal quarter. Moving on to our guidance for the second quarter of fiscal 2026. In mid-October, we successfully closed the acquisition of Spirin's high-speed Ethernet, network security, and channel emulation business lines from Keysight. The acquisition of these business lines is expected to add about $200 million of annual revenue run rate which is above our prior estimate of around $188 million. We also concurrently closed the previously announced $600 million term loan fee, which was used to fund the transaction at close, as well as general corporate purposes. In addition to the acquisition of Spirons Business Lines, we expect the second fiscal quarter revenue for VRV to reflect continued strength in many of our end markets. Our guidance includes financial performance of Spirant's business line for approximately 10 weeks. For NSE, we expect continued strong demand for lab and production as well as field products driven by the data center ecosystem. For OSP, we expect quarter-over-quarter revenue to be lower in line with seasonality of lower demand for both anti-counterfeiting and 3D sensing. For the second fiscal quarter of 2026, we expect VIAVI revenue in the range of $360 and $370 million. We expect total NSE revenue between $283 and $293 million, including revenue from SPIRINT between $45 and $55 million. OSP revenue is expected to be approximately $77 million. Operating margin for VIAVI is expected to be 17.9% plus or minus 60 basis points. Total NSC operating margin is expected to be 13.6% plus or minus 70 basis points. This includes SPIRE and SCOT contribution, which is expected to be slightly accretive to existing NSC margin for this quarter. OSP operating margin is expected to be 34% plus or minus 50 basis points. EPS is expected to be between $0.18 and $0.20. VIAVI standalone EPS is expected to be about $0.18, and we estimate Spirant contribution to EPS is in the range of $0 to $0.02 after allocating prorata interest on that. Historically, Spirant's agency revenue has been stronger in the second half of the calendar year. This strength in revenue is reflected in the guidance for the fiscal second quarter. We currently plan to leverage the complementary product portfolio and capabilities and report NSC as one business segment going forward. Our tax expense for the second quarter are expected to be around $10 million, plus or minus $500,000, as a result of jurisdictional mix. We expect other income and expense to reflect a net expense of approximately $12.2 million, which increased mainly due to the interest on the TLB. And the share count is expected to be around 228.7 million shares. With that, I will turn the call over to Oleg.