VIAVI Announces Fiscal Second Quarter 2016 Results

• GAAP and Non-GAAP net revenue of $232.1 million, up $5.7 million or 2.5% year-over-year
• GAAP operating margin of 4.0%, up 1,340 bps year-over-year
• Non-GAAP operating margin of 13.1%, up 470 bps year-over-year
• GAAP EPS from continuing operations of $0.02, up $0.18 or 112.5% year-over-year
• Non-GAAP EPS from continuing operations of $0.11, up $0.06 or 120.0% year-over-year
• Amounts presented below are on a continuing operations basis unless otherwise noted
• $100 million common stock repurchase program

Milpitas, California, February 2, 2016 — VIAVI (NASDAQ: VIAV) today reported results for its fiscal second quarter ended January 2, 2016.

GAAP net revenue was $232.1 million, with net income of $3.3 million, or $0.02 per share. Prior quarter GAAP net revenue was $229.7 million, with net loss of $(13.6) million, or $(0.06) per share. GAAP net revenue for fiscal 2015 second quarter was $226.4 million, with net loss of $(37.7) million, or $(0.16) per share.

Non-GAAP net revenue was $232.1 million, with net income of $25.0 million, or $0.11 per share. Prior quarter non-GAAP net revenue was $229.7 million, with net income of $19.6 million, or $0.08 per share. Non-GAAP net revenue for fiscal 2015 second quarter was $226.4 million, with net income of $11.3 million, or $0.05 per share.

“VIAVI delivered another solid quarter as our performance met or exceeded the high end of our guidance range,” said Rick Belluzzo, VIAVI’s Interim President and Chief Executive Officer. “Our strategy to deliver improved profitability and revenue growth is executing to plan. Although uncertainty in the current macroeconomic environment could challenge the business, we remain focused on improving our operational infrastructure and solidifying our go-to market strategy for a transformational 2016 fiscal year.”

Belluzzo added, “I’m also pleased to announce that the Board of Directors has authorized a program to repurchase up to $100 million of the Company’s common stock through open market or private transactions between now and February 1, 2017. The timing of repurchases and the number of shares repurchased will depend upon business and financial market conditions.”

Financial Overview:

The tables below (in millions, except percentage data) provide comparisons of quarterly results to prior periods, including sequential quarterly and year-over-year changes. A reconciliation between GAAP and non-GAAP measures is contained in this release under the section titled “Use of Non-GAAP (Adjusted) Financial Measures.”

• Americas, Asia-Pacific and EMEA customers represented 52.2%, 18.2% and 29.6%, respectively, of total net revenue for the quarter.
• The Company held $926.0 million in total cash and investments, which also includes marketable equity investments, and used $(1.0) million of cash for operations during the quarter.
• The Company adjusted its current and historical Condensed Consolidated Statements of Operations, Condensed Consolidated Balance Sheets and reportable segment information to reflect the spin-off of the Lumentum business (formerly the Company’s communications and commercial optical products business segment and WaveReady product line) on August 1, 2015. The Lumentum business’ adjusted results are reflected as discontinued operations for the periods reported in the Company’s GAAP Condensed Consolidated Statement of Operations, Condensed Consolidated Balance Sheet and reportable segment information.

Business Outlook for the Fiscal Third Quarter of Fiscal 2016
For the fiscal third quarter of 2016 ending April 2, 2016, the Company expects non-GAAP net revenue to be $210 million to $226 million and non-GAAP earnings per share to be $0.07 to $0.09.

Conference Call
The Company will discuss these results and other related matters at 1:30 p.m. Pacific Time on February 2, 2016 in a live webcast, which will also be archived for replay on the Company’s website at www.viavisolutions.com/investors.  The Company will post supplementary slides outlining the Company’s latest financial results on www.viavisolutions.com/investors under the “Quarterly Results” section concurrently with this earnings press release. This press release and the supplementary slides are being furnished as a Current Report on Form 8-K with the Securities and Exchange Commission, and will be available at www.sec.gov.

About VIAVI Solutions
VIAVI (NASDAQ: VIAV) software and hardware platforms and instruments deliver end-to-end visibility across physical, virtual and hybrid networks. Precise intelligence and actionable insight from across the network ecosystem optimizes the service experience for increased customer loyalty, greater profitability and quicker transitions to next-generation technologies. VIAVI is also a leader in anti-counterfeiting solutions for currency authentication and high-value optical components and instruments for diverse government and commercial applications. Learn more at www.viavisolutions.com and follow us on VIAVI Perspectives, LinkedIn, Twitter, YouTube and Facebook.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements include any anticipation or guidance as to future financial performance, including future revenue, gross margin, operating expense, operating margin, profitability, cash flow and other financial metrics, as well as the impact and duration of certain trends and market conditions. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected. In particular, the Company’s ability to predict future financial performance continues to be difficult due to, among other things: (a) continuing general limited visibility across many of our product lines; (b) quarter-over-quarter product mix fluctuations, which can materially impact profitability measures due to the broad gross margin ranges across our portfolio; (c) consolidations in our customer base; (d) customer purchasing delays as they assess or transition to new technologies and/or new architectures, which limit near-term demand visibility, and could negatively impact potential revenue; (e) continued decline of average selling prices across our businesses; (f) notable seasonality and a significant level of in-quarter book-and-ship business; (g) various product and manufacturing transfers, site consolidations and product discontinuances that have caused and may cause short-term disruptions; (h) the ability of our suppliers and contract manufacturers to meet production and delivery requirements to our forecasted demand; and (i) inherent uncertainty related to global markets and the effect of such markets on demand for our products. Additionally, risks related to the recent separation include the ability to retain key employees, the ability to recognize anticipated cost savings, VIAVI’s ability to function successfully as a stand-alone entity, potential business disruption caused by the separation, and customer retention and financing risks. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected. For more information on these risks, please refer to the “Risk Factors” section included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 27, 2015 filed with the Securities and Exchange Commission. The forward-looking statements contained in this press release are made as of the date thereof and the Company assumes no obligation to update such statements.