The following is a summary of the Viavi Solutions Inc. (VIAV) Q3 2024 Earnings Call Transcript:

Financial Performance:

• Viavi Solutions reported a net revenue of $238.2 million for Q3 2024, falling below the midpoint of the guidance range ($235M-$245M) indicating a sequential decrease of 5.5% and a year-over-year decrease of 3.9%.

• Operating margin stood at 10%, reaching the lower end of the guidance (9.9%-11.7%), and decreased from the previous quarter by 90 basis points and from the previous year by 240 basis points.

• Earnings per share (EPS) were reported at $0.06, aligning with the midpoint of projected EPS ($0.05-$0.07) and showed a sequential decline of $0.02 and a year-over-year decrease of $0.03.

Business Progress:

• Viavi is observing signs of normalization and recovery particularly in the NSE segment's order pacing, with expectations of stronger performance in Q2.

• Investments continue in advanced product development, as evidenced by the launch of the Valor Lab and the release of the industry's first 1.6 terabits per second high-speed Ethernet testing, signaling leadership in wireless, data center, and high-performing computing markets.

• Despite challenges, Viavi maintains stable financial resources, with total cash and short-term investments at the end of Q1 standing at approximately $497.9 million.

Opportunities:

• Recent launches and innovations in high-speed Ethernet products and testing services cater to the rising demands in data centers driven by AI and high-performance computing needs.

• Continued investment in the NSE and OSP segments based on visualization of market recovery and expansion particularly in anti-counterfeiting and 3D sensing areas.

Risks:

• Lower demand from service providers and enterprise customers causing revenue declines across NSE, NE, and SE segments, potentially impacting future business unless there is significant market recovery.

• The near-term demand for anticounterfeiting products expected to soften as end customers work down their inventories.

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