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Viavi Solutions (NASDAQ:VIAV) reports bullish Q3 CY2026, provides optimistic revenue guidance for next quarter
Network testing solutions company Viavi Solutions (NASDAQ:VIAV) beat Wall Street’s revenue expectations in calendar Q3 2026 (fiscal Q1 2027), with revenue up 56.9% year on year to $469.3 million. In addition, revenue guidance for the following quarter ($510 million at the midpoint) was surprisingly strong, coming in 8.9% above analysts’ consensus estimates. Its non-GAAP profit of $0.47 per share was 15.5% above analysts’ consensus estimates.
For more on Viavi Solutions, read the full research report, available free.
Viavi Solutions (VIAV) Q3 CY2026 highlights:
- Revenue $469.3 million vs S&P analysts’ consensus estimates of $455 million (56.9% year-on-year growth, 3.1% beat)
- Adjusted EPS $0.47 vs S&P analysts’ consensus estimates of $0.41 (15.5% beat)
- Adjusted EBITDA $146.1 million vs analysts’ consensus estimates of $136.8 million (31.1% margin, 6.8% beat)
- Revenue guidance $510 million at the midpoint for Q4 CY2026, above analysts’ consensus estimates of $468.4 million
- Adjusted EPS guidance $0.51 at the midpoint for Q4 CY2026, above analysts’ consensus estimates of $0.40
- Operating margin 17.4%, up from 2.5% in the same quarter last year
- Market capitalization $7.41 billion
Revenue growth
A company’s long-term revenue performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Viavi Solutions grew its revenue at a mediocre 6.4% compounded annual growth rate, falling short of our benchmark for the industrials sector.
Long-term growth matters the most, but within industrials, a half-decade historical view may miss cycles, industry trends or a company capitalizing on catalysts such as a new contract win or a successful product line. Viavi Solutions’s annualized revenue growth of 30.6% over the last two years is above its five-year trend, suggesting its demand recently accelerated. 
This quarter, Viavi Solutions reported year-on-year revenue growth of 56.9%, and its $469.3 million of revenue beat Wall Street’s consensus estimates by 3.1%. Company management is guiding for a 38.1% year-on-year increase in revenue next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 15.2% over the next 12 months, according to S&P, a deceleration versus the last two years. Still, this projection is strong and suggests the market is forecasting success for its products and services.
Operating margin
Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products and, most importantly, keeping them relevant through research and development.
Viavi Solutions was profitable over the last five years but held back by its large cost base. Its average operating margin of 7.9% was weak for an industrials business. That outcome is surprising given its high gross margin baseline.
Looking at the trend in its profitability, Viavi Solutions’s operating margin decreased by 4.1 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Viavi Solutions’s poor performance shows that costs were rising and it couldn’t pass them on to its customers.
In Q3, Viavi Solutions generated an operating margin of 17.4%, an increase of 14.9 percentage points year on year. The increase was solid, and its operating margin rose more than its gross margin, indicating greater efficiency in expenses such as marketing, research and development and administrative overhead.
Earnings per share
Long-term changes in earnings per share, or EPS, matter for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Viavi Solutions’s EPS grew at an 8.4% compounded annual growth rate over the last five years, higher than its 6.4% annualized revenue growth. This indicates the company became more profitable on a per-share basis as it expanded.
As with revenue, EPS trends over a more recent period can provide insight into an emerging theme or development for the business.
For Viavi Solutions, its two-year annual EPS growth of 105% was higher than its five-year trend. This acceleration made it one of the faster-growing industrials companies in recent history.
In Q3, Viavi Solutions reported adjusted EPS of $0.47, up from $0.15 in the same quarter last year. That comfortably beat analysts’ consensus estimates, a positive for shareholders. Over the next 12 months, Wall Street expects Viavi Solutions’s full-year EPS to grow 28.4% from $1.30 to $1.67, according to S&P.
Key takeaways from Viavi Solutions’s Q3 results
Viavi Solutions delivered a solid quarter, with next-quarter EPS guidance well above analysts’ consensus estimates and revenue guidance also topping Wall Street’s consensus. Shares rose 2.3% to $30.23 immediately after the release.
Viavi Solutions had a good quarter, but one earnings result doesn’t necessarily make the stock a buy. The latest quarter matters, but not nearly as much as longer-term fundamentals and valuation when deciding whether to invest. Read the full research report here (it’s free).