Abstract

Viavi Solutions is scheduled to report fiscal third-quarter 2026 results on April 29, 2026 Post Market; ahead of the release, forecasts point to a revenue run-rate near 393.83 million US dollars and adjusted EPS around 0.23 US dollars, with our review focusing on margin trajectory, segment mix, and recent institutional sentiment.

Market Forecast

For the fiscal third quarter of 2026, forecasts indicate revenue of 393.83 million US dollars, implying 39.59% year-over-year growth, with adjusted EPS estimated at 0.23 US dollars, up 94.74% year over year; EBIT is projected at 77.33 million US dollars, a 94.44% year-over-year increase. A forward gross margin or net margin guide is not available from the forecast summary; therefore, our base case assumes gross margin trends near the recent level and EBIT leverage consistent with the forecasted step-up.

Within the portfolio, Network and Service Enablement remains the core revenue engine, supported by a brisk project pipeline and normalization of delivery schedules into service provider and enterprise test programs. Optical Security and Performance Products is the most promising growth area by incremental margin potential; last quarter it contributed 77.80 million US dollars, and while year-over-year growth by segment was not disclosed in the summary dataset, institutional commentary highlights momentum tied to optical and data‑center‑adjacent demand themes that could carry into the current quarter.

Last Quarter Review

In fiscal second-quarter 2026, Viavi Solutions delivered 369.30 million US dollars of revenue (up 36.37% year over year), a 60.41% gross profit margin, a GAAP net loss attributable to the parent company of 48.10 million US dollars, a net profit margin of -13.02%, and adjusted EPS of 0.22 US dollars (up 69.23% year over year). A key operating highlight was EBIT of 71.40 million US dollars, an increase of 76.73% year over year, reflecting operating expense control and volume-driven fixed‑cost absorption. By business line, Network and Service Enablement generated 291.50 million US dollars (approximately 78.93% of total) and Optical Security and Performance Products contributed 77.80 million US dollars (approximately 21.07% of total), with the overall company revenue growth of 36.37% year over year underscoring broad-based recovery momentum.

Current Quarter Outlook

Network and Service Enablement: execution, mix, and margin carry

Network and Service Enablement (NSE) is the company’s largest contributor and the central variable for fiscal third-quarter outcomes, given its 78.93% contribution to last quarter’s sales. The core debate this quarter revolves around how much of last quarter’s sequential step-up can be sustained as large customer programs move from qualification into production support and as shipping patterns normalize after earlier supply tightness. If revenue trends toward the 393.83 million US dollars forecast and segment mix holds near recent proportions, NSE would again anchor topline delivery while allowing gross profit dollars to scale, with a base case of gross profit near the prior-quarter run-rate percentage (~60.41% applied to the consolidated forecast implies roughly 238.00 million US dollars in gross profit). The EBIT estimate of 77.33 million US dollars implicitly embeds continued operating expense discipline; that in turn requires NSE to stay efficient on fulfillment and inventory turns so that volume-to-margin conversion persists. Pricing remains a watch item: the business has historically balanced solution value and competitive intensity by emphasizing software and feature-rich platforms, and sustaining this mix can help stabilize gross margins despite broader hardware price pressures. From a bookings standpoint, investors will focus on book-to-bill and the visibility of near-term project backlogs; any commentary pointing to high-visibility orders across carrier lab validation, field test, and enterprise deployments would support confidence in the forecasted year-over-year growth.

Optical Security and Performance Products: incremental growth and quality of contribution

Optical Security and Performance Products (OSP) contributed 77.80 million US dollars last quarter and, while smaller than NSE, it is the most promising unit for incremental margin because of product mix and manufacturing leverage. Recent institutional commentary referenced optimism tied to optical and data center demand, suggesting that orders aligned to high-value optical components and security features could translate into healthy unit volumes and favorable mix. In the current quarter, the key signals for OSP are the breadth of program ramps and the cadence of recurring orders; when orders cluster around higher-value SKUs, the segment can show positive mix effects that incrementally lift consolidated gross margin. On the operating line, higher throughput can help dilute fixed manufacturing overhead, turning revenue growth into proportionally larger EBIT contribution than the segment’s revenue weight might imply. While the summary data does not provide a segment-specific year-over-year growth rate, institutional views point to a constructive setup that, if realized, can help the company’s consolidated EBIT track the 94.44% year-over-year growth implied by the forecast and underpin the 94.74% year-over-year step-up in adjusted EPS.

Key stock-price drivers this quarter: delivery vs. forecast, margin stability, and opex leverage

For equity holders, the near-term share reaction often hinges on revenue delivery versus expectations, gross margin stability, and expense containment translating into earnings leverage. With revenue forecast at 393.83 million US dollars, even modest variance can materially affect implied EPS given the high incremental margins on scaled volume; using the prior-quarter gross margin level as a proxy, a gross profit outcome close to 238.00 million US dollars would be consistent with the 77.33 million US dollars EBIT estimate if operating expenses remain in line with recent levels. Investors will parse management’s commentary on cost frameworks and the pace of execution on prior internal initiatives, because the significant year-over-year increases embedded in EBIT and adjusted EPS forecasts presuppose sustained opex discipline. Another focal area is the conversion of backlog to shipments and the timing of large customer milestones; when milestones cluster late in the quarter, revenue recognition concentration can introduce volatility, so color on shipment phasing is important for interpreting the run rate into the fiscal fourth quarter. Lastly, the update cadence around order intake is likely to inform the multi-quarter visibility of growth; data points indicating resilient demand into both mature and newer product lines would support confidence that the current-quarter growth is not a one-off but part of a steadier trend.

Analyst Opinions

Across the January 1, 2026 to April 22, 2026 window, the opinions collected are predominantly bullish, with a 100% bullish share among the rating actions reviewed and no bearish calls identified in the same period. One institutionally visible stance came from B. Riley on January 26, 2026, which maintained a Buy rating while raising its price target to 22 US dollars, followed by a further increase to 26 US dollars on January 29, 2026, alongside commentary emphasizing improving earnings momentum after the fiscal second-quarter beat. The thrust of the bullish case is that consolidated revenue growth in the high‑30% range year over year, combined with disciplined operating expenses, is converting to EBIT that nearly doubles year over year and to an adjusted EPS trajectory near 0.23 US dollars for the current quarter. Those views implicitly lean on two premises that investors will scrutinize: first, that gross margin resilience around the recent 60% level is achievable given the current mix of solutions shipped; and second, that operating expense containment can hold as revenue scales, preserving EBIT flow-through. On balance, the bullish majority expects NSE volume stability, OSP mix tailwinds, and prudent cost control to support both the revenue forecast of 393.83 million US dollars and the projected 94.74% year-over-year increase in adjusted EPS, making upside relative to consensus more plausible if execution remains consistent.