VIAVI ANNOUNCES FOURTH QUARTER AND YEAR END FISCAL 2021 RESULTS

Fourth Quarter

  • Net revenue of $310.9 million, up $44.3 million or 16.6% year-over-year
  • GAAP operating margin of 10.5%, down 570 bps year-over-year
  • Non-GAAPoperating margin of 20.8%, up 120 bps year-over-year
  • GAAP EPS of $(0.01), down $0.13 or 108.3% year-over-year
  • Non-GAAPEPS of $0.22, up $0.04 or 22.2% year-over-year

Fiscal 2021

  • Net revenue of $1,198.9 million, up $62.6 million or 5.5% year-over-year
  • GAAP operating margin of 11.9%, up 150 bps year-over-year
  • Non-GAAPoperating margin of 21.1%, up 250 bps year-over-year
  • GAAP EPS of $0.20, up $0.08 or 66.7% year-over-year
  • Non-GAAPEPS from continuing operations of $0.83, up $0.10 or 13.7% year-over-year

Scottsdale, Arizona, August 12, 2021 - VIAVI (NASDAQ: VIAV) today reported results for its fourth fiscal quarter ended July 3, 2021. Amounts presented below are on a continuing operations basis unless otherwise noted.

Fourthquarter of fiscal 2021 net revenue was $310.9 million. GAAP net loss was $(1.9) million, or $(0.01) per share. Non-GAAP net income was $52.8 million, or $0.22 per share.

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.

Fourthquarter of fiscal 2020 net revenue was $266.6 million. GAAP net income was $26.7 million, or $0.12 per share. Non-GAAP net income was $40.8 million, or $0.18 per share.

"VIAVI had a strong finish to fiscal year 2021 with a record $1.20 billion in revenue and non-GAAP EPS at $0.83. Fiscal Q4 posted record revenue and non-GAAP profitability for a June quarter as it exceeded the high end of the guidance range in revenue, non-GAAP operating margin and non-GAAP EPS," said Oleg Khaykin, VIAVI's President and Chief Executive Officer. "NSE's 13.5% year-on-year growth and record revenue was driven by the continued market rebound and strong demand for Fiber and Wireless products. OSP revenue was in-line with our guidance, up 27.8% from a year ago levels reflecting continued strength in Anti-Counterfeiting."

Khaykin added, "We expect fiscal year 2022 to be a strong year for VIAVI with 5G deployment and Fiber network upgrades driving NSE revenues and OSP benefiting from the continued strong demand for Anti- Counterfeiting and 3D Sensing products. Overall, we expect fiscal year 2022 to achieve higher levels of revenue and non-GAAP profitability."

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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Fourth Quarter Ended July 3, 2021

GAAP Results

Q4

Q3

Q4

Change

FY 2021

FY 2021

FY 2020

Q/Q

Y/Y

Net revenue

$

310.9

$

303.4

$

266.6

2.5

%

16.6

%

Gross margin

58.8 %

60.0 %

58.0 %

(120) bps

80 bps

Operating margin

10.5

%

11.8

%

16.2

%

(130) bps

(570) bps

Income from operations

32.7

35.9

43.3

(8.9)%

(24.5)%

Net income (loss) per share

(0.01)

0.05

0.12

(120.0)

%

(108.3)

%

Non-GAAP Results

Q4

Q3

Q4

Change

FY 2021

FY 2021

FY 2020

Q/Q

Y/Y

Non-GAAP gross margin

62.0

%

63.1

%

61.7

%

(110) bps

30 bps

Non-GAAP operating margin

20.8 %

20.2 %

19.6 %

60 bps

120 bps

Non-GAAP income from operations

64.7

61.4

52.3

5.4

%

23.7

%

Non-GAAP net income per share

0.22

0.18

0.18

22.2 %

22.2 %

Net Revenue by Segment

Q4

% of Net

Q3

Q4

Change

FY 2021

revenue

FY 2021

FY 2020

Q/Q

Y/Y

Network Enablement

$

212.7

68.4

%

$

190.9

$

180.9

11.4

%

17.6

%

Service Enablement

23.8

7.7 %

20.3

27.5

17.2 %

(13.5)%

Optical Security and Performance

74.4

23.9

%

92.2

58.2

(19.3)

%

27.8

%

Products

Total

$

310.9

100.0 %

$

303.4

$

266.6

2.5 %

16.6 %

Fiscal Year Ended July 3, 2021

GAAP Results

FY 2021

FY 2020

Change Y/Y

Net revenue

1,198.9

1,136.3

5.5

%

Gross margin

59.6 %

58.5 %

110 bps

Operating margin

11.9

%

10.4

%

150 bps

Income from operations

142.2

118.1

20.4 %

Net income per share

0.20

0.12

66.7

%

Non-GAAP Results

FY 2021

FY 2020

Change Y/Y

Non-GAAP gross margin

62.7

%

62.0

%

70 bps

Non-GAAP operating margin

21.1 %

18.6 %

250 bps

Non-GAAP income from operations

253.5

210.9

20.2

%

Non-GAAP net income per share

0.83

0.73

13.7 %

2

GAAP Net Revenue by Segment

FY 2021

% of Net revenue

FY 2020

Change Y/Y

Network Enablement

$

746.6

62.3

%

$

746.7

-

%

Service Enablement

91.3

7.6

%

102.7

(11.1)

%

Optical Security and Performance

361.0

30.1

%

286.9

25.8

%

Products

Total

$

1,198.9

100.0 %

$

1,136.3

5.5 %

  • Americas, Asia-Pacific and EMEA customers represented 35.4%, 33.4% and 31.2%, respectively, of total net revenue for the quarter ended July 3, 2021. Americas, Asia-Pacific and EMEA customers represented 34.7%, 34.2% and 31.1%, respectively, of total net revenue for the year ended July 3, 2021.
  • As of July 3, 2021, the Company held $703.7 million in cash and cash equivalents, investments and short-term restricted cash.
  • As of July 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 $624.0 million ($414.2 million and $209.8 million classified as short-term and long- term debt, respectively).
  • During the fiscal quarter ended July 3, 2021, the Company generated $63.0 million of cash from operations. During the fiscal year ended July 3, 2021, the Company generated $243.7 million of cash flows from operations.
  • On July 2, 2021, the Company effected a planned series of corporate actions pertaining to the Company's management of its intellectual property assets (the Internal IP Restructuring). As part of the transaction the Company incurred a one-time income tax expense charge of $19.1 million in Q4'FY21.

Business Outlook for the First Quarter of Fiscal 2022

For the first quarter of fiscal 2022 ending October 2, 2021, the Company expects net revenue to be between $303 million to $317 million and non-GAAP earnings per share to be between $0.20 and $0.22.

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

The Company will discuss these results and other related matters at 1:30 p.m. Pacific Time on August 12, 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.

3

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; (c) 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; (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 increasingly frequent seasonal wildfires in Northern California; (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 duration, severity and impact of infectious disease outbreaks, epidemics, and pandemics including the 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 the Company's response thereto; (m) inherent uncertainty related to global markets, including recessions and tightening liquidity and the effect of such markets on demand for our products; (n) execution of our capital allocation and debt management strategies; and (o) changing political conditions globally or regionally. 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 and in the Company's Quarterly Reports on Form 10-Q for the fiscal quarters ending October 3, 2020, January 2, 2021 and April 3, 2021, which were 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. We have not filed our Form 10-K for the year ended July 3, 2021. As a result, all financial results described in this earnings release should be considered preliminary, and are subject to change to reflect any necessary adjustments or changes in accounting estimates, that are identified prior to the time we file the Form 10-K.

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Contact Information

Investors:

Bill Ong

408-404-4512

bill.ong@viavisolutions.com

Press:

Amit Malhotra

202-341-8624amit.malhotra@viavisolutions.com

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

-SELECTED PRELIMINARY FINANCIAL DATA -

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Viavi Solutions Inc. published this content on 12 August 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 August 2021 20:11:31 UTC.