VIAVI Solutions Inc. Files Q1 Fiscal 2025 10-Q

TL;DR

VIAVI Q1 2025 10-Q is in. Check financials.

AI Summary

VIAVI Solutions Inc. filed its 10-Q for the period ending September 28, 2024. The company reported financial results for its fiscal first quarter of 2025. Key financial data and operational details for this period are detailed within the filing.

Why It Matters

This filing provides investors and analysts with the latest financial performance and operational insights for VIAVI Solutions Inc., crucial for understanding the company's current health and future prospects.

Risk Assessment

Risk Level: low — This is a standard quarterly financial filing with no immediate red flags.

Key Numbers

• Q1 Fiscal 2025 — Fiscal Quarter (Period covered by the filing)
• September 28, 2024 — Reporting Period End Date (Specific date for financial reporting)
• November 1, 2024 — Filing Date (Date the report was submitted to the SEC)

Key Players & Entities

• VIAVI SOLUTIONS INC. (company) — Filer of the 10-Q
• 0000912093-24-000093 (filing_id) — Accession Number for the filing
• 20240928 (date) — End of the reporting period
• 20241101 (date) — Filing date
• CHANDLER, AZ (location) — Company's business and mailing address

FAQ

Key Financial Figures

• $0.001 — registered Common Stock, par value of $0.001 per share VIAV The Nasdaq Stock Marke

Filing Documents

• viav-20240928.htm (10-Q) — 1643KB
• exhibit1012003equityincent.htm (EX-10.1) — 59KB
• viavq1fy2510-q1ex311x302ceo.htm (EX-31.1) — 10KB
• viavq1fy252xex312x302cfo.htm (EX-31.2) — 11KB
• viavq1fy253xex321x906ceo.htm (EX-32.1) — 6KB
• viavq1fy254xex322x906cfo.htm (EX-32.2) — 6KB
• 0000912093-24-000093.txt ( ) — 9612KB
• viav-20240928.xsd (EX-101.SCH) — 54KB
• viav-20240928_cal.xml (EX-101.CAL) — 101KB
• viav-20240928_def.xml (EX-101.DEF) — 292KB
• viav-20240928_lab.xml (EX-101.LAB) — 763KB
• viav-20240928_pre.xml (EX-101.PRE) — 542KB
• viav-20240928_htm.xml (XML) — 1554KB

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION 2 Item 1.

Financial Statements (Unaudited)

Financial Statements (Unaudited) 2 Consolidated Statements of Operations for the Three Months Ended September 28 , 2024 and Se ptember 30 , 2023 2 Consolidated Statements of Comprehensive Loss for the Three Months Ended September 28, 2024 and September 30, 2023 3 Consolidated Balance Sheets as of Se ptember 28 , 2024 and Ju ne 29 , 20 24 4 Consolidated Statements of Cash Flows for the Three Months Ended September 28, 2024 and September 30, 2023 5 Consolidated Statements of Stockholders' Equity for the Three Months Ended September 28, 2024 and September 30, 2023 6

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 7 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 31 Item 3 . Quantitative and Qualitative Disclosure About Market Risks 45 Item 4.

Controls and Procedures

Controls and Procedures 45

- OTHER INFORMATION

PART II - OTHER INFORMATION 46 Item 1.

Legal Proceedings

Legal Proceedings 46 Item 1A.

Risk Factors

Risk Factors 47 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 62 Item 3. Defaults Upon Senior Securities 62 Item 4. Mine Safety Disclosures 62 Item 5. Other Information 62 Item 6. Exhibits 63

SIGNATURES

SIGNATURES 64 1 Table of Contents

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements VIAVI SOLUTIONS INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data) (unaudited) Three Months Ended September 28, 2024 September 30, 2023 Revenues: Product revenue $ 197.5 $ 205.6 Service revenue 40.7 42.3 Total net revenue 238.2 247.9 Cost of revenues: Product cost of revenue 81.9 78.2 Service cost of revenue 16.9 21.8 Amortization of acquired technologies 3.3 3.5 Total cost of revenues 102.1 103.5 Gross profit 136.1 144.4 Operating expenses: Research and development 49.4 49.9 Selling, general and administrative 74.1 77.2 Amortization of other intangibles 1.1 2.1 Restructuring and related benefits — ( 0.8 ) Total operating expenses 124.6 128.4 Income from operations 11.5 16.0 Interest and other income, net 3.2 10.2 Interest expense ( 7.5 ) ( 7.8 ) Income before income taxes 7.2 18.4 Provision for income taxes 9.0 8.6 Net (loss) income $ ( 1.8 ) $ 9.8 Net (loss) income per share: Basic $ ( 0.01 ) $ 0.04 Diluted $ ( 0.01 ) $ 0.04 Shares used in per share calculations: Basic 222.0 222.0 Diluted 222.0 224.2 The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements. 2 Table of Contents VIAVI SOLUTIONS INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in millions) (unaudited) Three Months Ended September 28, 2024 September 30, 2023 Net (loss) income $ ( 1.8 ) $ 9.8 Other comprehensive income (loss): Net change in cumulative translation adjustment, net of tax 30.3 ( 20.4 ) Amortization of net actuarial losses (gains) and other pension adjustments 0.1 ( 0.1 ) Net change in accumulated other comprehensive loss 30.4 ( 20.5 ) Comprehensive income (loss) $ 28.6 $ ( 10.7 ) The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements. 3 Table of Contents VIAVI SOLUTIONS INC. CONSOLIDATED BALANCE SHEETS (in millions, except share and par value data) (una

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. Basis of Presentation The financial information for Viavi Solutions Inc. (VIAVI, also referred to as the Company, we, our and us) for the three months ended September 28, 2024 and September 30, 2023 is unaudited and includes all normal and recurring adjustments the Company's management considers necessary for a fair statement of the financial information set forth herein. The accompanying Consolidated Financial Statements are presented in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial information and rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, such information does not include all of the information and footnotes required by U.S. GAAP for annual Consolidated Financial Statements. For further information please refer to the Consolidated Financial Statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended June 29, 2024. There have been no material changes to the Company's accounting policies during the three months ended September 28, 2024 as compared to the significant accounting policies presented in "Note 1. Basis of Presentation" of the Notes to the Consolidated Financial Statements included in the Company's Annual Report for the year ended June 29, 2024 on Form 10-K, filed with the SEC on August 16, 2024. The Consolidated Balance Sheet as of June 29, 2024 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The results for the three months ended September 28, 2024 and September 30, 2023 may not be indicative of results for the fiscal year ending June 28, 2025 or any future periods. Fiscal Years The Company utilizes a 52-53 week fiscal year ending on the Saturday closest to June 30th. The Company's fiscal 2025 is a 52-we

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 2. Recently Issued Accounting Pronouncements SEC Climate Rules In March 2024, the SEC issued its final climate disclosure rules, which require the disclosure of climate-related information in annual reports and registration statements. The rules require disclosure in the audited financial statements of certain effects of severe weather events and other natural conditions above certain financial thresholds, as well as amounts related to carbon offsets and renewable energy credits or certificates, if material. On April 4, 2024, the SEC voluntarily stayed the implementation of the final rules pending the completion of judicial review of the consolidated challenges to the final rules by the Court of Appeals for the Eighth Circuit. The final rules, as originally issued, would be effective for the Company in various fiscal years, starting with its Annual Report on Form 10-K for fiscal year 2026. Disclosures pursuant to the final rules, as originally issued, would be required prospectively, with information for prior periods required only to the extent it was previously disclosed in an SEC filing. The Company is currently evaluating the impact of the final rules on its Consolidated Financial Statements and disclosures and continue to monitor the status of the related legal challenges. Accounting Standards Issued But Not Yet Adopted In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2023-09, Improvements to Income Tax Disclosures (Topic 740) , to enhance the transparency and decision usefulness of income tax disclosures through changes to the rate reconciliation and income taxes paid information. This guidance is effective for fiscal years beginning after December 15, 2024 (fiscal 2026 for the Company), with early and retrospective adoption permitted. The Company is evaluating the impact of adopting this new accounting guidance on its Consolidated Finan

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 3. Earnings Per Share The following table sets forth the computation of basic and diluted net (loss) income per share ( in millions, except per share data ): Three Months Ended September 28, 2024 September 30, 2023 Numerator: Net (loss) income $ ( 1.8 ) $ 9.8 Denominator: Weighted-average shares outstanding: Basic 222.0 222.0 Effect of dilutive securities from stock-based compensation plans — 2.2 Diluted 222.0 224.2 Net (loss) income per share: Basic $ ( 0.01 ) $ 0.04 Diluted $ ( 0.01 ) $ 0.04 The following table sets forth the weighted-average potentially dilutive securities excluded from the computation of the diluted net (loss) income per share because their effect would have been anti-dilutive ( in millions ): Three Months Ended September 28, 2024 (1) September 30, 2023 (1)(2) Restricted stock units 2.5 0.5 (1) The Company's 1.625 % Senior Convertible Notes due 2026 (2026 Notes) are not included in the table above. The par amount of convertible notes is payable in cash equal to the principal amount of the notes plus any accrued and unpaid interest and then the "in-the-money" conversion benefit feature at the conversion price above $ 13.19 per share is payable in cash, shares of the Company's common stock or a combination of both at the Company's election. Refer to "Note 11. Debt" for more details. (2) The Company's 1.00 % Senior Convertible Notes due 2024 (2024 Notes) are not included in the table above. The par amount of convertible notes is payable in cash equal to the principal amount of the notes plus any accrued and unpaid interest and then the "in-the-money" conversion benefit feature at the conversion price above $ 13.22 per share is payable in cash, shares of the Company's common stock or a combination of both at the Company's election. Refer to "Note 11. Debt" for more details. 9 Table of Contents VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 4. Accumulated Other Comprehensive Loss The Company's accumulated other comprehensive loss consists of the accumulated net unrealized gains or losses on available-for-sale investments, foreign currency translation adjustments and change in unrealized components of defined benefit obligations. For the three months ended September 28, 2024, the changes in accumulated other comprehensive loss, net of tax, by component were as follows ( in millions ): Unrealized losses on available-for sale investments Foreign currency translation adjustments Change in unrealized components of defined benefit obligations (1) Total Beginning balance as of June 29, 2024 $ ( 5.3 ) $ ( 131.4 ) $ ( 7.3 ) $ ( 144.0 ) Other comprehensive income before reclassification — 30.3 — 30.3 Amounts reclassified out of accumulated other comprehensive loss — — 0.1 0.1 Net current-period other comprehensive income — 30.3 0.1 30.4 Ending balance as of September 28, 2024 $ ( 5.3 ) $ ( 101.1 ) $ ( 7.2 ) $ ( 113.6 ) (1) The amount reclassified out of accumulated other comprehensive loss represents the amortization of actuarial loss included as a component of Cost of revenues, Research and development (R&D) and Selling, general and administrative (SG&A) in the Consolidated Statements of Operations, net of reclassification adjustments, for the three months ended September 28, 2024. There was no tax impact for the three months ended September 28, 2024. Refer to "Note 17. Employee Pension and Other Benefit Plans" for more details on the computation of net periodic cost for pension plans. 10 Table of Contents VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 5. Acquisitions Jackson Labs Technologies, LLC On October 5, 2022, the Company acquired all of the equity of Jackson Labs Technologies, LLC (Jackson Labs), a privately held company which specializes in Position, Navigation and Timing (PNT) solutions for critical infrastructure serving both military and civilian applications. The acquisition enables the Company to broaden its solutions offering into the rapidly developing PNT landscape. The total purchase consideration included approximately $ 49.9 million paid in cash at closing and additional contingent consideration of up to $ 117.0 million for which future cash payments are dependent on the achievement of certain operational and revenue targets over the course of a three-year period beginning in January 2023. The cash consideration paid at closing included escrow payments of $ 5.0 million for indemnity holdback and $ 2.0 million subject to final cash and net working capital adjustments. The acquisition has been accounted for in accordance with the authoritative guidance on business combinations; therefore, the tangible and intangible assets acquired and liabilities assumed were recorded at fair value on the acquisition date. In connection with this acquisition, the Company recorded approximately $ 48.3 million of goodwill and $ 30.6 million of developed technology and other intangibles. The acquired developed technology and other intangible assets are being amortized over their estimated useful lives ranging from one to six years . Acquisition-related costs incurred were approximately $ 0.8 million and have been recorded within SG&A expense in the Consolidated Statements of Operations in fiscal year 2023. Goodwill represents the excess of the preliminary estimated purchase consideration over the preliminary estimates of the fair value of the net tangible and intangible assets acquired and has been allocated to the Network Enablement segment. Goodwi

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Acquisition-related Contingent Consideration The following table provides a reconciliation of changes in the fair value of the Company's earn-out liabilities associated with the Company's acquisitions for the three months ended September 28, 2024 and September 30, 2023 ( in millions ): Three Months Ended September 28, 2024 September 30, 2023 Beginning period balance $ 9.5 $ 19.7 Fair value adjustment of earn-out liabilities ( 3.5 ) ( 1.4 ) Ending period balance $ 6.0 $ 18.3 Note 6. Balance Sheet and Other Details Contract Balances Gross receivables include both billed and unbilled receivables (including Contract assets). As of September 28, 2024, and June 29, 2024, the Company had total unbilled receivables of $ 14.4 million and $ 16.3 million, respectively. The Company also has short-term and long-term deferred revenues related to undelivered product and professional services, consisting of installations and consulting engagements, which are recognized as the Company's performance obligations under the contract are completed and accepted by the customer. The following table presents the activity related to deferred revenue ( in millions ): September 28, 2024 Three Months Ended Deferred revenue: Balance at beginning of period $ 91.4 Revenue deferrals for new contracts (1) 24.9 Revenue recognized during the period (2) ( 27.5 ) Balance at end of period $ 88.8 (1) Included in these amounts is the impact from foreign currency exchange rate fluctuations. (2) Revenue recognized during the period represents releases from the balance at the beginning of the period as well as releases from the current period deferrals. Remaining performance obligation estimates are subject to change and are affected by several factors, including terminations, changes in the scope of contracts, adjustments for revenue that have not materialized, and currency fluctuations. The value of the transaction price

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Accounts receivable allowances - Credit losses The following table presents the activities and balances for allowance for credit losses ( in millions ): June 29, 2024 Charged to Costs and Expenses Deductions (1) September 28, 2024 Allowance for credit losses $ 1.6 $ 0.1 $ ( 0.3 ) $ 1.4 (1) Represents the effect of currency translation adjustments and write-offs of uncollectible accounts, net of recoveries. Inventories, net The following table presents the components of inventories, net ( in millions ): September 28, 2024 June 29, 2024 Finished goods $ 45.2 $ 44.6 Work in process 12.9 15.4 Raw materials 35.1 36.5 Inventories, net $ 93.2 $ 96.5 Prepayments and other current assets The following table presents the components of prepayments and other current assets ( in millions ): September 28, 2024 June 29, 2024 Refundable income taxes $ 29.6 $ 28.5 Prepayments 17.0 18.5 Advances to contract manufacturers 4.7 5.7 Transaction tax receivables 2.1 3.3 Fair value of forward contracts 4.9 1.7 Asset held for sale — 2.5 Other current assets 11.5 10.5 Prepayments and other current assets $ 69.8 $ 70.7 Other non-current assets The following table presents the components of other non-current assets ( in millions ): September 28, 2024 June 29, 2024 Operating right-of-use (ROU) assets $ 35.4 $ 35.8 Long-term restricted cash 5.4 5.5 Long-term investment (Note 7) 3.0 — Deposits 2.5 2.4 Deferred contract cost 2.4 2.5 Debt issuance cost - Revolving Credit Facility 1.8 1.9 Other non-current assets 11.3 9.9 Other non-current assets $ 61.8 $ 58.0 13 Table of Contents VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Other cur

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