Viavi Solutions Inc.

Good afternoon. My name is Hillary, and I'll be your conference operator today. At this time, I would like to welcome everyone to the VIAVI Solutions Fiscal Third 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, please type star 1 on your telephone keypad to raise your hand. At this time, I would like to turn the conference over to Vibhuti Nair, Head of Investor Relations. Please go ahead.

Thank you, Hilary. Good afternoon, everyone, and welcome to VIAVI Solutions Fiscal Third Quarter 2026 Earnings Call. My name is Vibhuti Nair, Head of Investor Relations for VIAVI Solutions. And with me on today's call is Oleg Hykin, our President and CEO, and Ilan Daska, 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 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 end markets and 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 today's call, except revenue, are non-GAAP. We reconciled these non-GAAP results to our preliminary GAAP financials and discussed 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. With that, I would like to now turn the call over to Ilan.

Thank you, everybody. Good afternoon, everyone. Now I would like to review the results of the third quarter of fiscal year 2026. Net revenue for the quarter was $406.8 million, which is above the high end of our guidance range of $386.4 million. Revenue was up 10.2% sequentially and on a year-over-year basis was up 42.8%. Operating margin for the third fiscal quarter was 21%, above the high end of our guidance range, of 19.2 and 20.2%. Operating margin increased 170 basis points from the prior quarter and on a year-over-year basis was up 430 basis points. EPS at 27 cents was also above the high end of our guidance range of 22 to 24 cents and was up 5 cents sequentially. On a year-over-year basis, EPS was up 12 cents. Moving on to our Q3 results by business segment. NSE revenue for the third fiscal quarter came in at $321.5 million, which is above the high end of our guidance range of $304 and $316 million. Revenue from Spire and product lines was $54.2 million, which was in line with our expectations and included few opportunities that were pushed out from the prior quarter. On a year-over-year basis, NSE revenue was up 54.4%, primarily driven by the acquisition of Spirant product lines. We also saw strong demand for our lab and production and field products, driven by the data center ecosystem, as well as for our aerospace and defense products. NSC gross margin for the quarter was 65.3%, which is 220 basis points higher on a year-over-year basis, and was primarily driven by higher volume and favorable product mix. NSC's operating margin for the quarter was 17.2%, an increase of 680 basis points on a year-over-year basis. NSC's operating margin was also above the high end of our guidance range of 15% to 16% as a result of a higher fall through. OSP revenue for the third fiscal quarter came in at $85.3 million, also above our guidance range of $82 to $84 million. On a year-over-year basis, OSP revenue was up 11.4%, primarily driven by strong demand for 3D sensing and anti-counterfeiting and other products. OSP gross margin was 50.3%, down 130 basis points on a year-over-year basis, and it was mainly due to unfavorable product mix. OSP's operating margin was 35.3%, an increase of 140 basis points on a year-over-year basis. OSP's operating margin was in line with our guidance range of 34.8% to 35.8%. Moving on to the balance sheet and cash flow. Total cash and short-term investments at the end of Q3 were $508 million, compared to $772.1 million in the second quarter of fiscal 2026. Cash flow from operating activities for the quarter was a use of $26.3 million versus $7.8 million that we generated in the same period last year. The cash flow was mainly impacted by the earn-out payments to inertial levs, timing of working capital, and employee variable costs. CapEx for the quarter was $5.9 million versus $6.8 million in the same period last year. During the quarter, we successfully paid $49 million in cash for the remaining principal of the convertible notes due in March 2026, and we issued about 1.8 million shares for the conversion premium above par. We also prepaid during the quarter $150 million of the term loan B. We currently have $450 million remaining for that loan. The prepayment is in line with our capital allocation priorities. 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 249.5 million shares, up from 226.9 million shares in the prior year, and versus 245 million shares in our guidance for the third fiscal quarter. Moving on to our guidance for the fourth quarter of fiscal 2026. We expect the fourth fiscal quarter revenue for VIAVI to be up sequentially driven by continued strength in many of our end markets across NSC and OSP. For NSC, we expect quarter-over-quarter revenue to be higher as a result of continued strong demand for our level production and field products, driven by the data center ecosystem, as well as for our aerospace and defense products. For OSP, we expect quarter-over-quarter revenue to be higher driven by strength across all of the product lines. For the fourth fiscal quarter of 2026, we expect VIAVI revenue in the range of $427 and $437 million. We expect NSE revenue between $340 and $348 million. OSP revenue is expected to be in the range of $87 and $89 million. Operating margin for VIAVI is expected to be 22.7% plus or minus 50 basis points. NSC operating margin is expected to be 18.7% plus or minus 50 basis points. OSP operating margin is expected to be 38.4% plus or minus 40 basis points. And EPS is expected to be between 29 cents and 31 cents. Our tax expenses for the fourth quarter is expected to be about $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 million, and the share count is expected to be around 256 million shares. With that, I will turn the call over to Oleg. Oleg?