Strong double-digit growth in NSE business drove net revenue higher, but Spirent’s revenue trailed behind estimates
In sum — what to know:
Data center lift: Viavi reported upbeat fiscal second quarter results, driven by strong data center demand and modernization in aerospace and defense.
Forward projections: With demand visibility into three future quarters, the company projects even better performance in 2026.
Short-term wobble: Spirent’s revenue narrowly missed estimates, but is expected to correct in the next quarter.
Viavi reported financial results for the fiscal second quarter ending December 27, 2025. Results were at or above the high end of guidance, said the company.
For the quarter, revenue stood at $369.3 million, up 36.4% year over year. Operating margin was above the high end of guidance, with a 440 basis point year-over-year increase.
“The results were significantly up both year on year and quarter on quarter,” said CEO, Oleg Khaykin, at the earnings call.
What moved the needle most
The top selling business was unsurpringly the network and service enablement (NSE) division which offers network test, monitoring, and assurance solutions, and where Spirent and Inertia Lab’ assets now live. With a double digit revenue growth of 45% year over year, NSE pulled in $291.5 million for the quarter.
Spirent’s high-speed Ethernet (HSE) product lines made $43 million, helping push up the net revenue, but narrowly missed internal estimates ($45 million – $55 million). The company said that the revenue shoftfall was caused by “timing of certain opportunities,” and expects stronger returns in the coming quarter due to pushed-out orders.
Meanwhile, the service provider business share fell below 40% due to seasonal slowdown in service provider activity. Khaykin noted that revenue in the sector is growing slowly, but remains steady.
The reduction was offset by the crown jewels — the data center business, now approaching 45%, and aerospace and defense, at almost 15%.
Elevated demand for test equipment in data center and defense verticals that the NSE business serves remains the biggest driver of growth.
“The data center ecosystem, which includes high-performance semis, optical modules, and NAMS, drove strong demand…in support of AI data center build-out,” Khaykin said. He added that currently, “about a third of our revenue in the field instruments coming out from data center.”
With future demand visibility into up to three quarters as opposed to just a single quarter, Khaykin seems confident that data center-related orders will continue flow through this year.
“Given strong and growing customer demand, we expect the data center ecosystem revenue momentum to continue through the calendar 2026,” he said.
Additionally, Viavi benefited from an uptick in fiber deployments connecting data centers, as it caused demand for fiber field instruments to surge among hyperscalers and service providers.
The company’s positioning, navigation, and timing (PNT) products used across aerospace and defense for geolocation, timing and navigation, saw considerably high sales, driven by demand in the sector amid heavy modernization efforts and adoption of autonomous systems.
At the other end of the spectrum, demand for wireless infrastructure test equipment weakened, although Khaykin said the business is still “generally stable.”
Workforce reduction and outlook
Viavi is aiming to up its annual savings in the coming quarters with company-wide restructuring and workforce reduction. The efforts will impact roughly 5% of the staff, Khaykin said, and is expected to turn out annualized cost savings of $30 million.
As part of the initiative, the company will cut costs in slower and stagnant businesses and
repurpose them for high-growth segments, like data center and aerospace and defense.
This year, Viavi raised revenue targets for its NSE business, with aerospace and defense hot on its heels.
“For 2026, we expect Viavi revenue in the range of $386 million and $400 million. We expect total NSE revenue between $304 million and $316 million,” Khaykin said.
