Viavi Solutions delivered a positive quarter, with the market responding favorably to strong sales growth and margin expansion. Management credited robust demand from data center and aerospace customers as the primary drivers of the company’s performance. CEO Oleg Khaykin highlighted initial shipments into the semiconductor test market and continued uptake in aerospace and defense, noting, “The data center segment drove strong demand for lab and production and field instruments in support of the scale-up, scale-out, and scale-across applications.”
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Viavi Solutions (VIAV) Q3 CY2026 highlights:
- Revenue $469.3 million vs S&P analysts’ estimates of $455 million (56.9% year-on-year growth, 3.1% beat)
- Adjusted EPS $0.47 vs S&P analysts’ estimates of $0.41 (15.5% beat)
- Adjusted EBITDA $146.1 million vs analyst estimates of $136.8 million (31.1% margin, 6.8% beat)
- Revenue guidance $510 million at the midpoint for Q4 CY2026, above analyst estimates of $468.4 million
- Adjusted EPS guidance $0.51 at the midpoint for Q4 CY2026, above analyst estimates of $0.40
- Operating margin 17.4%, up from 2.5% in the same quarter last year
- Market capitalization $6.49 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our top 5 analyst questions from Viavi Solutions’s Q3 earnings call
- Ruben Roy (Stifel): Asked about the relative contribution of data center, aerospace, and service provider segments to upcoming growth. CEO Oleg Khaykin detailed that each product line is growing, with roughly 40% of growth from data center, a third from aerospace and defense, and the remainder from service providers.
- Ryan Koontz (Needham & Company): Inquired about the maturity of the 1.6T optical module cycle and Viavi’s position. Khaykin responded that the ramp is still in early stages, with 1.6T volumes expected to peak in the second half of next year, and 800G and 1.6T modules running concurrently for some time.
- Michael Genovese (Rosenblatt): Sought clarification on the incremental margin and whether current operating margin improvement is sustainable. Khaykin and CFO Ilan Daskal explained that much of the margin expansion is due to scale and timing of expenses, with incremental margin expected to normalize in the low to mid-50% range.
- Andrew Spinola (UBS): Asked whether Viavi’s growth and R&D strategy is shifting as the company scales. Khaykin noted that larger scale and Spirent integration have improved operating margins, and that expanded product scope in semiconductor and fiber manufacturing supply chains are increasingly important to the company’s R&D focus.
- Tim Savageaux (Northland Capital Markets): Questioned whether new market opportunities in CPO/NPO and OCS could each reach $100 million in revenue. Khaykin clarified that the $100 million opportunity is specific to semiconductor test, while OCS is a lower-volume but higher-value segment, and both are expected to be substantial contributors over time.
Catalysts in upcoming quarters
In the quarters ahead, our team will be monitoring (1) the pace of adoption for Viavi’s new data center and semiconductor test products, (2) sustained margin expansion as integration with Spirent deepens and product mix evolves, and (3) progress in aerospace and defense contracts, particularly with U.S. military initiatives. Execution on the service provider refresh cycle and response to seasonal fluctuations in optical security will also be important to track.
Viavi Solutions currently trades at $26.97, down from $29.50 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).
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