Viavi Solutions' Q2 2025: Navigating Contradictions in Fiber Monitoring Demand, OSP Stability, and 3D Sensing Growth

These are the key contradictions discussed in Viavi Solutions' latest 2025Q2 earnings call, specifically including: Fiber Monitoring Demand, OSP Business Run Rate, Hyperscalers' Deployment of Fiber Monitoring Tools, Recovery Timeline for NSE, and Demand for 3D Sensing:



Revenue and Earnings Growth:
- Viavi Solutions reported revenue of $270.8 million for the fiscal second quarter of 2025, surpassing the high end of their guidance range and up 13.7% sequentially and 6.4% year-over-year.
- The growth was driven by strong order pace from service providers and NEMs for field instruments and a recovery across many product segments.

Operational Margin Improvement:
- The company's operating margin for the second fiscal quarter was 14.9%, significantly above the high end of their guidance range and increased by 490 basis points from the prior quarter.
- This improvement was primarily due to higher gross margin fall-through in the Network & Service Enablement (NSE) segment, resulting from increased demand and higher product mix.

Segment Performance - Network & Service Enablement (NSE):
- NSE revenue for the quarter was $199.9 million, exceeding the high end of the guidance range by 11.3% year-over-year.
- This growth was driven by strong order pace from service providers and NEMs for field instruments and a recovery in various product segments, with fiber field and lab instruments contributing significantly.

Diversification and Strategic Acquisitions:
- The company's strategy to diversify into aerospace and defense segments has shown strong growth, with the recent acquisition of Inertial Labs further bolstering their position in positioning, navigation, and timing (PNT) solutions.
- This diversification is aimed at reducing reliance on volatile telecom service providers and expanding into high-growth markets like alternative navigation and autonomous vehicles.