Viavi Solutions Q3 2025: Unpacking Key Contradictions on Tariffs, Demand, and Growth Drivers

Revenue exposure to tariffs, demand recovery and pull-forward, impact of tariffs on inventory, growth drivers in aerospace and defense, 3D sensing demand and ASP trends are the key contradictions discussed in Viavi Solutions' latest 2025Q3 earnings call.



Revenue and Earnings Performance:
- VIAVI Solutions reported net revenue of $284.8 million for Q3, above the midpoint of their guidance range, marking a 5.2% sequential increase and 15.8% year-on-year growth.
- Operating margin was 16.7%, above the high-end of their guidance range, and EPS at $0.15 exceeded expectations.
- Growth was driven by strong performance across business segments, particularly NSE and NE.

NSE (Network and Service Enablement) Segment:
- NSE revenue for Q3 was $208.2 million, slightly above the midpoint of their guidance range, with a 22.6% year-over-year increase.
- The growth was driven by recovery and growth across multiple product segments, including fiber field instruments and fiber lab and production products.
- Aerospace and defense, along with the wireless segment, also contributed significantly to NSE's performance.

OSP (Optical Security and Performance) Segment:
- OSP revenue for Q3 was $76.6 million, just above the high-end of their guidance range, with a 0.5% year-over-year increase.
- Growth was primarily driven by higher volume and favorable product mix in anti-counterfeiting and other products.
- The segment's operating margin was 33.9%, at the high end of their guidance range.

Tariff Impact:
- VIAVI anticipates a $3 million tariff impact on orders, which is expected to be dilutive to gross margin and negatively impact EPS by approximately $0.01.
- The company plans to realign its supply chain to reduce tariff impacts within 6 months.
- Some customers have decided to wait and see, potentially delaying orders and impacting revenue timing.