VIAVI Announces Fiscal Third 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, May 3, 2016 — VIAVI (NASDAQ: VIAV) today reported results for its fiscal third quarter ended April 2, 2016.

GAAP net revenue was $220.4 million, with net income of $27.4 million, or $0.12 per share. Prior quarter GAAP net revenue was $232.1 million, with net income of $3.3 million, or $0.02 per share. GAAP net revenue for fiscal 2015 third quarter was $212.4 million, with net loss of $(35.8) million, or $(0.16) per share.

Non-GAAP net revenue was $220.4 million, with net income of $21.6 million, or $0.09 per share. Prior quarter non-GAAP net revenue was $232.1 million, with net income of $25.0 million, or $0.11 per share. Non-GAAP net revenue for fiscal 2015 third quarter was $212.4 million, with net income of $14.9 million, or $0.06 per share.

“VIAVI delivered revenue and EPS above the midpoint of the guidance range driven by strength in our OSP segment’s anti-counterfeiting business,” said Oleg Khaykin, VIAVI’s President and Chief Executive Officer.  “Lower than expected carrier capex and enterprise spending in the March quarter adversely impacted our NSE business segment, which came in at the lower end of our expectations.”

Khaykin added, “The diversified nature of our business with two counter-cyclical segments has allowed us to execute above plan during the quarter.  Strategically, we plan to continue to grow our profitability through operational improvements and targeted revenue growth.”

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 50.7%, 18.7% and 30.6%, respectively, of total net revenue for the quarter.
• The Company held $1,005.0 million in total cash and investments, which also includes marketable equity investments, and generated $36.3 million of cash from 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 Fourth Quarter of Fiscal 2016
For the fourth quarter of fiscal 2016 ending July 2, 2016, the Company expects non-GAAP net revenue to be $212 million to $228 million and non-GAAP earnings per share to be $0.08 to $0.10.

Conference Call
The Company will discuss these results and other related matters at 1:30 p.m. Pacific Time on May 3, 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 is 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.