Viavi Solutions Inc.

Good afternoon. My name is Jonathan, and I will be your conference operator today. At this time, I would like to welcome everyone to the VIAVI Solutions Fiscal First Quarter 2027's 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 press star 1 on your telephone keypad to raise your hand. If you wish to remove your question, press star 1 again. At this time, I would like to turn the call over to Vibhuti Nayar, Head of Investor Relations. Please go ahead.

Thank you, Jonathan. Good afternoon, everyone. Welcome to VIAVI Solutions Fiscal First Quarter 2027 Earnings Call. My name is Vibhuti Nayar, Head of Investor Relations for VIAVI Solutions. And with me, On today's call are Oleg Khaykin, our President and CEO, and Ilan Daskal, our CFO. Please note, this call will include forward-looking statements about the company's financial performance, outlook, and longer-term growth strategy. These rest on a number of assumptions, such as sustained capital spending, particularly by data center ecosystem, service providers and aerospace and defense customers, our ability to maintain or grain market share and develop and deliver new products on time, adequate component availability, and stable macroeconomic conditions. These assumptions are not exhaustive, and additional assumptions, risks, and uncertainties are discussed in our filings with the SEC. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our current estimations and expectations. Please review our most recent annual report on Form 10-K filed with the SEC on August 13, 2026 and our quarterly SEC filings, particularly the risk factors described in those filings for additional information regarding the assumptions, risks, and uncertainties underlying these forward-looking statements. These forward-looking statements, including the guidance that we provide during this call and our expectations regarding the end market, revenue growth, and market expansion are valid only as of today. The IAVI 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. With that, 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 first quarter of fiscal year 2027. Net revenue for the quarter was $469.3 million, which is above the high end of our guidance range of $450 to $460 million. Revenue was up 5.9% sequentially and on a year-over-year basis was up 56.9%. Operating margin for the first fiscal quarter was 29% above the high end of our guidance range of 26.7% to 27.5%. Operating margin expanded five percentage points from the prior quarter and on a year-over-year basis was 12.7 percentage points higher. Operating margin included a net benefit of about 110 basis points from tariffs refund of approximately $11 million, which was offset by the additional one week of some variable costs. EPS at 47 cents was well above our guidance range of 40 to 42 cents and was up 13 cents sequentially. On a year-over-year basis, EPS was up 32 cents. EPS includes a net benefit of about two cents from tariff refunds and from the additional one week of variable expenses. Moving on to our Q1 results by business segment. NSE revenue for the first fiscal quarter came in at $376.1 million, which is above the high end of our guidance range of $360 to $368 million. Revenue from Spirant product lines was $52.7 million. On a year-over-year basis, NSE revenue was up 74.1% as a result of continued strong demand for our lead in production and field products driven by the data center system, as well as the acquisition of Spirant product lines. We also saw strong demand for our aerospace and defense products. NSE growth margin for the quarter was 66.2%, which is 310 basis points higher on a year-over-year basis, and was mainly driven by the tariff refunds and product mix. NSE's operating margin for the quarter was 25.5% versus 8.2% during the same quarter last year. NSC operating margin was well above our guidance range of 22.6% to 23.6%, mainly as a result of higher falls through. OSP revenue for the first fiscal quarter came in at $93.2 million, which is also above the high end of our guidance range of $90 to $92 million. On a year-over-year basis, OSP revenue was up 12.2%, driven by strength in 3D sensing and anti-counterfeiting and other products. OSP gross margin was 57.1%, up 460 basis points on a year-over-year basis, primarily driven by higher volume and favorable product mix. OSP's operating margin was 43.2%, which is in line with our guidance range of 43% to 43.4%. OSP operating margin increased 600 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 $535.3 million, compared to $656.7 million in the fourth fiscal quarter of 2026. Cash flow from operating activities for the quarter was $104.7 million versus $31 million in the same period last year and was driven by higher net income and timing of working capital. Capex for the quarter was $12 million versus $8.5 million in the same period last year. During the first quarter, we purchased about 3,949,000 shares of our stock for about $150 million at an average share price of $37.98. We have about $18 million remaining under the current authorized share repurchase program, and our board of directors has authorized a new buyback plan of $500 million. Our capital allocation strategy will continue to focus on organic growth, potential M&A targets, as well as opportunistic share buybacks. The fully diluted share count for the quarter was 266.2 million shares, up from 227.9 million shares in the prior year, and versus 268 million shares in our guidance for the first fiscal quarter. Moving on to our guidance for the second quarter of fiscal year 2027. We expect the second fiscal quarter revenue for VIAVI to be up sequentially driven by continued strength in our key end markets. We expect quarter-over-quarter growth to continue throughout the rest of the fiscal year driven by tailwinds in our end markets. For NSE, we expect second fiscal quarter revenue to be up as a result of continued strong demand for lab and production and field products driven by the data center ecosystem as well as aerospace and defense customers. For OSB, we expect quarter-over-quarter revenue to be lower in line with seasonality of lower demand for 3D sensing and anti-counterfeiting and other products. For the second fiscal quarter of 2027, we expect VRV revenue in the range of $505 and $515 million. We expect NSE revenue in the second fiscal quarter of 2027 between $426 and $434 million. OSP revenue is expected to be in the range of $79 and $81 million. Operating margin for VIAVI is expected to be 29.3%, plus or minus 30 basis points. NSC operating margin is expected to be 28.1%, plus or minus 30 basis points. OSP operating margin is expected to be 35.7% plus or minus 20 basis points and EPS is expected to be between 50 cents and 52 cents. Our tax expenses for the second quarter are expected to be around $12 million plus or minus $500,000 as a result of jurisdictional mix. We expect other income and expenses to reflect a net expense of approximately $3.5 million. And the share count is expected to be around 264 million shares. With that, I will turn the call over to Oleg. Oleg?