Viavi Solutions Inc.

Ladies and gentlemen, good afternoon. My name is Abby and I will be your conference operator today. At this time, I would like to welcome everyone to the BLV Solutions fiscal second quarter 2026 earnings call. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one a second time. Thank you. And at this time, I would like to turn the conference over to Vibhuti Nair, Head of Investor Relations. Please go ahead.

Thank you, Abby. Good afternoon, everyone, and welcome to VIB Solutions' fiscal second quarter 2026 earnings call. My name is Vibhuti Nair, Head of Investor Relations for VIB Solutions. With me on today's call, is Oleg Hykin, our President and CEO, and Ilan Daskal, 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 estimation. 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 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. Finally, we are recording today's call, and we'll make the recording available on our website by 4.30 p.m. Pacific time this evening. Now, I would like to turn the call over to Ilan. Ilan.

Thank you, Vibhuti. Good afternoon, everyone. Now I would like to review the results of the second quarter of fiscal year 2026. Net revenue for the quarter was $369.3 million, which is at the high end of our guidance range of $360 and $370 million. Revenue was up 23.5% sequentially and on a year-over-year basis was up 36.4%. Operating margin for the second fiscal quarter was 19.3%, above the high end of our guidance range of 17.3% to 18.5%. Operating margin increased 360 basis points from the prior quarter and on a year-over-year basis was up 440 basis points. EPS at 22 cents was also above the high end of our guidance range of 18 to 20 cents and was up 7 cents sequentially. On a year-over-year basis, EPS was up 9 cents. Moving on to our Q2 results by business segment. NSE revenue for the second fiscal quarter came in at $291.5 million, which is at the high end of our guidance range of $283 to $293 million. Revenue from Spirant was $43 million, which was slightly below our expectation of $45 to $55 million due to timing of certain opportunities. On a year-over-year basis, NSE revenue was up 45.8% as a result of the acquisitions of Inertia Labs and Spirant product clients. We also saw strong demand for lab and production and field products driven by the data center ecosystem. NSC gross margin for the quarter was 64.7%, which is 10 basis points lower on a year-over-year basis. NSC's operating margin for the quarter was 15.6%, compared to 8.7% during the same quarter last year. NSC operating margin was above the high end of our guidance range of 12.9% to 14.3%, primarily driven by higher fall through. OSP revenue for the second fiscal quarter came in at $77.8 million, slightly above our guidance range, sorry, guidance of about $77 million, and was up 9.7% 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 50.8%, up 20 basis points from the same period last year. OSP's operating margin was 33.4%, an increase of 100 basis points on a year-over-year basis. OSP operating margin came in slightly below our guidance range of 33.5% to 34.5% due to slightly higher variable costs. Moving on to the balance sheet and cash flow. Total cash and short-term investments at the end of Q2 were $772.1 million compared to $549.1 million in the first quarter of fiscal 2026. Cash flow from operating activities for the quarter was $42.5 million versus $44.7 million in the same period last year, mainly due to timing of working capital. CapEx for the quarter was $5.6 million versus $8.2 million in the same period last year. During the quarter, we successfully exchanged principal amount of about $100 million, 1.6 to 5% convertible notes due in March of 2026 for 7.9 million shares of IAVI's common shares, at the price per share of $17.88. We have remaining principal amount of about $50 million on these notes, which will be paid in cash. The associated premium on these convertible notes will be settled in shares. Additionally, we prepaid in January of 2026 $100 million of the $600 million term loan fee. This is in line with our continued financial discipline. During the quarter, we did not purchase any shares of our stock as we prioritized our capital allocation towards debt management. The fully diluted share count for the quarter was 233.4 million shares, up from 224.8 million shares in the prior year, and versus 228.7 million shares in our guidance for the second fiscal quarter. Last week, we approved a restructuring and workforce reduction plan to improve operational efficiencies and better align workforce and resources with our current business needs and strategic priorities. We expect approximately 5% of our global workforce to be impacted and estimate to incur approximately $32 million of restructuring charges in connection with this plan. Upon completion of this initiative, we expect annual savings of about $30 million, which will mainly benefit our operating expenses. We intend to reinvest a portion of these savings with higher growth areas of our business. We expect to recognize majority of these charges by the end of June of 2026, with a plan to be substantially completed by the end of December of 2026. The savings of about $30 million include previously communicated $16 million of synergies from the acquisition of Spirance product lines. Moving on to our guidance for the third quarter of fiscal 2026. We expect the third fiscal quarter revenue for VRV to be up sequentially as a result of continued strength in many of our end markets. For NSC, we expect quarter-over-quarter revenue to be higher as a result of continued strong demand for leaven production and field products, which is driven by the data center ecosystem, as well as aerospace and defense customers. Our guidance for the third quarter also includes full 13 weeks of SPIRE and product lines versus 10 weeks in the prior quarter. For OSP, we expect quarter-over-quarter revenue to be higher in line with seasonality of higher demand for anti-counterfeiting and other products. For the third fiscal quarter of 2026, we expect VIAVI revenue in the range of $386 and $400 million. We expect total NSE revenue between $304 and $316 million. OSP revenue is expected to be in the range of $82 and $84 million. Operating margin for VAV is expected to be 19.7% plus or minus 50 basis points. NSC operating margin is expected to be 15.5% plus or minus 50 basis points. OSP operating margin is expected to be 35.3% plus or minus 50 basis points. EPS is expected to be between $0.22 and $0.24. Our tax expense for the third quarter is expected to be around $9 million, plus or minus $500,000, as a result of jurisdictional mix. Our acquisition of Spiron product lines, as well as Inertia Labs, has resulted in greater profits in the U.S., which allows us to benefit from our NOLs. As a result, we now expect our tax rate to be in the mid-teens on a go-forward basis. We expect other income and expense to reflect a net expense of approximately $12.5 million, and the share count is expected to be around 245 million shares. During the third quarter, we expect to pay earn-out liability for Inertia Labs of about $75 million as a result of their strong performance in calendar 2025. With that, I will turn the call over to Oleg. Oleg?