VIAVI Solutions Inc. (VIAV) - 10-K Summary
Business Context and Reporting Period
Company: VIAVI Solutions Inc.
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended June 27, 2026
Business Overview: VIAVI is a global leader in test and measurement and optical technologies, operating through two segments: Network and Service Enablement (NSE) and Optical Security and Performance Products (OSP). The company serves data center ecosystems, communication networks, military, aerospace, and consumer electronics markets.
Key Financial Metrics
| Metric | Fiscal 2026 | Fiscal 2025 | Change |
|---|---|---|---|
| Net Revenue | $1,518.3 million | $1,084.3 million | +40.0% |
| GAAP Operating Income | $105.1 million | $57.5 million | +82.8% |
| GAAP Operating Margin | 6.9% | 5.3% | +160 bps |
| Non-GAAP Operating Margin | 20.6% | 14.3% | +630 bps |
| GAAP Net (Loss) Income | $(30.4) million | $34.8 million | Loss vs. Profit |
| GAAP Diluted EPS | $(0.13) | $0.15 | Down $0.28 |
| Non-GAAP Diluted EPS | $1.00 | $0.47 | +112.8% |
| Operating Cash Flow | $113.9 million | $89.8 million | +26.8% |
| Cash & Equivalents (End of Period) | $659.8 million | $432.1 million | +52.7% |
Debt & Liquidity: As of June 27, 2026, the company held $659.8 million in cash and cash equivalents. The company prepaid its entire $600.0 million Term Loan B during the fiscal year. Outstanding debt includes $400.0 million in 3.75% Senior Notes due 2029 and $250.0 million in 0.625% Senior Convertible Notes due 2031 (classified as short-term debt due to conversion triggers). Available borrowing capacity under the revolving credit facility was approximately $183.1 million.
Material Changes vs. Prior Period
- Revenue Growth: Net revenue increased 40.0% year-over-year, driven by strong demand in the data center ecosystem, aerospace and defense products, and the acquisition of Spirent Communications plc's high-speed ethernet and network security business (HSE and CE) and Inertial Labs.
- Segment Performance:
- NSE: Revenue grew 52.3% to $1,182.9 million, with operating margin expanding to 16.1% from 5.5%.
- OSP: Revenue grew 9.0% to $335.4 million, with operating margin remaining flat at 36.6%.
- GAAP Loss: Despite strong operating income, GAAP net income turned to a loss of $30.4 million (vs. $34.8 million profit in 2025) primarily due to a $56.7 million loss on debt extinguishment and a $25.0 million valuation allowance release in the prior year that did not recur.
- Acquisitions: The Spirent HSE and CE acquisition contributed $145.0 million in revenue, and Inertial Labs contributed $86.1 million.
- Restructuring: A new restructuring plan (Fiscal 2026 Plan) was announced, affecting approximately 5% of the global workforce, with estimated annualized cost savings of $30.0 million.
Guidance, Outlook, and Risks
Outlook: Management expects continued growth in traditional businesses and remains focused on strategic priorities to drive revenue and earnings growth. The company anticipates the Fiscal 2026 restructuring plan to be substantially complete by the end of calendar year 2026.
Key Risks & Contingencies:
- Tariffs & Trade: The company paid approximately $22.4 million in IEEPA tariffs. Subsequent to year-end, it received approximately $11.0 million in refunds. Ongoing global tariff environments and trade actions (particularly involving China) pose risks to costs and profitability.
- Customer Concentration: One customer in the OSP segment accounted for more than 10% of total net revenue ($174.7 million) in fiscal 2026.
- Debt Conversion: The 0.625% Senior Convertible Notes due 2031 became convertible by holders in Q4 2026 due to stock price performance, resulting in their classification as short-term debt.
- Geopolitical: Risks include conflicts in Russia/Ukraine and the Middle East, and U.S.-China tensions affecting supply chains and technology transfers.
- Cybersecurity: The company faces ongoing risks of cyber-attacks, though it reported no material breaches in the last three fiscal years.
Investor Verification Checklist
- Debt Extinguishment Impact: Verify the sustainability of GAAP profitability excluding the one-time $56.7 million loss on debt extinguishment.
- Acquisition Integration: Assess the realization of synergies and revenue contributions from the Spirent HSE/CE and Inertial Labs acquisitions.
- Convertible Note Status: Monitor the conversion activity of the 2031 Notes, which are currently classified as short-term debt, and potential dilution.
- Tariff Refunds: Confirm the timing and recognition of the $11.0 million in tariff refunds received subsequent to the fiscal year-end.
- Restructuring Execution: Track the progress of the Fiscal 2026 restructuring plan and the realization of the projected $30.0 million in annualized savings.
- Customer Concentration: Evaluate the stability of the relationship with the single OSP customer representing >10% of revenue.