Viavi : Q321 Earnings Announcement

VIAVI ANNOUNCES THIRD QUARTER FISCAL 2021 RESULTS

Third Quarter

• Net revenue of $303.4 million, up $47.2 million or 18.4% year-over-year
• GAAP operating margin of 11.8%, up 820 bps year-over-year
• Non-GAAPoperating margin of 20.2%, up 540 bps year-over-year
• GAAP EPS of $0.05, up $0.19 or 135.7% year-over-year
• Non-GAAPEPS of $0.18, up $0.04 or 28.6% year-over-year

Scottsdale, Arizona, May 4, 2021 - VIAVI (NASDAQ: VIAV) today reported results for its third fiscal quarter ended April 3, 2021.

Thirdquarter of fiscal 2021 net revenue was $303.4 million. GAAP net income was $11.8 million, or $0.05 per share. Non- GAAP net income was $42.3 million, or $0.18 per share.

Secondquarter of fiscal 2021 net revenue was $299.9 million. GAAP net income was $21.9 million or $0.09 per share. Non-GAAP net income was $52.1 million, or $0.23 per share.

Thirdquarter of fiscal 2020 net revenue was $256.2 million. GAAP net loss was $(32.8) million, or $(0.14) per share. Non- GAAP net income was $32.0 million, or $0.14 per share.

"Fiscal Q3 2021 posted record revenue and non-GAAP profitability for a March quarter, typically a seasonally weak quarter period. VIAVI exceeded the high end of the guidance range with the revenue at $303.4 million and non-GAAP operating margin at 20.2%. Non-GAAP EPS at $0.18 reached the high end of the range," said Oleg Khaykin, VIAVI's President and Chief Executive Officer. NSE revenue continued to see strong recovery momentum and exceeding our expectations, up 12.9% from a year ago levels led by strength in Fiber, Cable, and Wireless. OSP revenue came in-line with our guidance, up 33.2% year-on-year due to strong demand in both Anti-Counterfeiting and 3D Sensing."

Khaykin added, "For Q4, we expect NSE revenue to continue to strengthen, driven by strong demand for Field Instruments and Lab Equipment. OSP revenue is expected to be significantly up year-on-year, but sequentially down from a very strong fiscal Q3, driven by lower Anti-Counterfeiting and seasonally weaker 3D Sensing demand."

Financial Overview:

The tables below (in millions, except percentage, and per share data) provide comparisons of quarterly results to prior periods, including sequential quarterly and year-over-year changes. A full reconciliation between the GAAP and non-GAAP measures included in the tables is contained in this release under the section titled "Use of Non-GAAP (Adjusted) Financial Measures."

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Third Quarter Ended April 3, 2021

										GAAP Results
		Q3			Q2			Q3	Change
		FY 2021			FY 2021			FY 2020	Q/Q	Y/Y
Net revenue	$	303.4			$	299.9			$	256.2			1.2	%			18.4	%
Gross margin		60.0 %			60.1 %			57.3 %		(10) bps	270 bps
Operating margin		11.8	%			14.1	%			3.6	%		(230) bps			820 bps
Income from operations		35.9				42.3				9.1			(15.1)%			294.5 %
Net income per share		0.05				0.09				(0.14)			(44.4)	%			135.7	%
								Non-GAAP Results
		Q3			Q2			Q3	Change
		FY 2021			FY 2021			FY 2020	Q/Q	Y/Y
Non-GAAP gross margin		63.1	%			63.1	%			61.2	%		- bps			190 bps
Non-GAAP operating margin		20.2 %			22.3 %			14.8 %		(210) bps	540 bps
Non-GAAP income from operations		61.4				66.8				38.0			(8.1)	%			61.6	%
Non-GAAP net earnings per share		0.18				0.23				0.14			(21.7)%			28.6 %

									Net Revenue by Segment
		Q3			% of Net			Q2				Q3	Change
		FY 2021			revenue			FY 2021				FY 2020	Q/Q	Y/Y
Network Enablement	$	190.9			62.9	%		$	180.9			$	163.9		5.5	%			16.5	%
Service Enablement		20.3	6.7 %			25.8				23.1		(21.3)%			(12.1)%
Optical Security and Performance Products		92.2			30.4	%			93.2				69.2		(1.1)	%			33.2	%
Total	$	303.4	100.0 %	$	299.9	$	256.2		1.2 %			18.4 %

• Americas, Asia-Pacific and EMEA customers represented 33.6%, 33.7% and 32.7%, respectively, of total net revenue for the quarter ended April 3, 2021.
• As of April 3, 2021, the Company held $678.1 million in total cash, short-term restricted cash and short-term investments.
• As of April 3, 2021, the Company had $460.0 million aggregate principal amount of 1.00% Senior Convertible Notes and $225.0 million aggregate principal amount of 1.75% Senior Convertible Notes with a total net carrying value of $618.1 million classified as long-term debt.
• During the fiscal quarter ended April 3, 2021, the Company generated $48.1 million of cash from operations.

Business Outlook for the Fourth Quarter of Fiscal 2021

For the fourth quarter of fiscal 2021 ending July 3, 2021, the Company expects net revenue to be between $290 million to $310 million and non-GAAP earnings per share to be between $0.18 and $0.20.

With respect to our expectations above, the Company has not reconciled non-GAAP net income per share to GAAP net income (loss) per share in this press release because it is unable to provide a meaningful or accurate estimate of certain reconciling items described in the "Use of Non-GAAP (Adjusted) Financial Measures" section below and the information is not available without unreasonable effort as a result of the inherent difficulty of forecasting the timing and/or amounts of certain items, including certain charges related to restructuring, acquisition, integration and related charges. In addition, the Company believes such reconciliations would imply a degree of precision that may be confusing or misleading to investors.

Conference Call

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The Company will discuss these results and other related matters at 1:30 p.m. Pacific Time on May 4, 2021 in a live webcast, which will also be archived for replay on the Company's website at https://investor.viavisolutions.com. The Company will post supplementary slides outlining the Company's latest financial results on https://investor.viavisolutions.com 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.

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About VIAVI Solutions

VIAVI (NASDAQ: VIAV) is a global provider of network test, monitoring and assurance solutions for communications service providers, enterprises, network equipment manufacturers, government and avionics. We help these customers harness the power of instruments, automation, intelligence and virtualization to Command the network. VIAVI is also a leader in light management solutions for 3D sensing, anti-counterfeiting, consumer electronics, industrial, automotive and defense applications. Learn more about VIAVI at www.viavisolutions.com. 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 expectation, anticipation or guidance as to future financial performance, including future revenue, gross margin, operating expense, operating margin, profitability targets, cash flow and other financial metrics, as well as the impact and duration of certain trends and market position and 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;

1. consolidations in our customer base; (d) unforeseen changes in the demand for current and new products, technologies, services, delays or unforeseen events in the roll-out of new industry platforms such as 5G or evolving technology such as 3D sensing and customer purchasing delays as they assess or transition to such new technologies and/or architectures, all of 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-quarterbook-and-ship business; (g) various product and manufacturing transfers, site consolidations, product discontinuances and the restructuring and workforce reduction plans, including the plan announced during the first quarter of fiscal 2019 that may cause short-term disruptions; (h) challenges integrating the businesses the Company has acquired and realizing all of the expected benefits and savings; (i) the ability of our suppliers and contract manufacturers to meet production and delivery requirements to our forecasted demand; (j) potential disruptions or delays to our manufacturing and operations due to natural disasters such as the recent wildfires in Northern California and related blackouts and power outages in the region; (k) the uncertain and ongoing impact to our supply chain of tariffs, sanctions and other trade measures imposed by domestic and foreign governments and the possibility of escalation of "trade wars" and retaliatory measures between nations; (l) the impact of infectious disease outbreaks, epidemics, and pandemics including the ongoing effects of the COVID-19 global pandemic on our financial results, revenues, customer demand, business operations and manufacturing and on the business operations of our customers, contract manufacturers and suppliers; and

1. inherent uncertainty related to global markets, including recessions and tightening liquidity and the effect of such markets on demand for our products. 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, 2020 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.

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Contact Information

Investors:

Bill Ong

408-404-4512

[e-mail]

Press:

Amit Malhotra [e-mail]

The following financial tables are presented in accordance with GAAP, unless otherwise specified.

-SELECTED PRELIMINARY FINANCIAL DATA -

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