Viavi Solutions Inc. VIAV reported solid second-quarter fiscal 2022 (ended Jan 1, 2022) results driven by strength in its business model and diligent execution of operational plans. Both the bottom line and the top line beat the Zacks Consensus Estimate and increased year over year.
Bottom Line
On a GAAP basis, net income in the quarter was $34.6 million or 14 cents per share compared with $27.3 million or 12 cents per share in the year-ago quarter. The year-over-year growth was primarily due to higher revenues and lower income tax provision.
Non-GAAP net income was $59.3 million or 24 cents per share compared with $52.1 million or 23 cents per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 5 cents.
Viavi Solutions Inc. Price, Consensus and EPS Surprise 
Viavi Solutions Inc. price-consensus-eps-surprise-chart | Viavi Solutions Inc. Quote
Revenues
Quarterly total revenues grew 5% year over year, despite supply chain challenges, to $314.8 million. The top line surpassed the consensus estimate of $304 million. The results reflect end-market strength in fiber, wireless and cable products in NSE (Network and Service Enablement) and demand for anti-counterfeiting and 3D sensing products in OSP (Optical Security and Performance Products). Viavi expects the strong momentum in NSE to carry well into the second half of fiscal 2022.
Segment-wise, revenues from NE were up 18.5% from the year-ago quarter to $214.4 million, driven by an increase in fiber, wireless and cable products. SE revenues grew 15.5% to $29.8 million, led by growth in assurance and data center products. OSP revenues decreased 24.2% year over year to $70.6 million due to lower sales from anti-counterfeiting products. Non-GAAP gross margin from NE and SE was up 180 basis points (bps) and 360 bps, respectively, to 64.4% and 71.8%, while that from OSP was down 650 bps to 56.2%
Region-wise, Viavi generated 39.9% of total revenues from the Americas, 28.9% from the Asia Pacific and 31.2% from EMEA (Europe, the Middle East, and Africa).
Cash Flow & Liquidity
During the fiscal second quarter, Viavi generated $22.2 million of cash from operating activities. As of Jan 1, 2022, the company had $732.1 million in cash and cash equivalents with $755.8 million of long-term debt.
Q3 Guidance
For the third quarter of fiscal 2022 (ending Apr 2, 2022), Viavi expects revenues in the range of $301-$315 million. Non-GAAP earnings are estimated in the band of 20-22 cents per share.
Zacks Rank & Other Stocks to Consider
Viavi currently has a Zacks Rank #2 (Buy).
Clearfield, Inc. CLFD, sporting a Zacks Rank #1 (Strong Buy) is a solid pick for investors. You can see the complete list of today’s Zacks #1 Rank stocks here.
Clearfield delivered an earnings surprise of 50.7%, on average, in the trailing four quarters. Earnings estimates for the current year for the stock have moved up 102.7% since February 2021. Over the past year, Clearfield has gained a solid 85.8%.
Vocera Communications, Inc. VCRA sports a Zacks Rank #1. It has a long-term earnings growth expectation of 18% and delivered a stellar earnings surprise of 109.6%, on average, in the trailing four quarters.
Over the past year, Vocera has gained 81.7%. It offers an all-inclusive digital platform for hands-free communication via secure text messaging, alert and alarm management. Leveraging a patent-protected, enterprise-class server software, Vocera provides an advanced clinical rules engine that simultaneously unifies data from multiple sources, prioritizes notifications and sends messages to the right care team members. This, in turn, augments clinical workflow by enabling the interoperability of the solution with a significant number of clinical and operational systems used in hospitals today.
Datto Holding Corp. MSP carries a Zacks Rank #2. It has a long-term earnings growth expectation of 6.1%.
Earnings estimates for the current year for the stock have moved up 20.8% since February 2021, while that for the next year is up 13.2%. MSP delivered an earnings surprise of 34.6%, on average, in the trailing four quarters.
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