Viavi Solutions Inc. (VIAV) DCF Valuation & Fundamental Primer
Viavi Solutions Inc. (VIAV) currently trades at $17.82 with an enterprise value of $683.4M. Our proprietary institutional model rates Viavi Solutions Inc. at 63/100 (Grade: B · Mixed Fundamental Profile). The current market price prices in an implied 5-year revenue CAGR of 45.6% vs. historical growth of -2.5% (Aggressive Growth Expectations Priced In).
Institutional fundamental teardown of Viavi Solutions Inc. (VIAV) covering SEC 10-K/10-Q cash flow conversion, SBC dilution friction, and Reverse-DCF valuation hurdles.
Viavi Solutions Inc. (VIAV) 3-Scenario DCF Valuation Range
Stress-test VIAV's 5-year growth, target FCF margin, WACC, terminal methodology, and SBC/dilution friction in real time.
Split between 5-Year Explicit Cash Flows and Discounted Terminal Value
2D Institutional Valuation Sensitivity Heatmap
Implied share price & upside/downside spread across 25 valuation states (Current Price: $17.82).
| WACC \ Terminal | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $4.80 -73% | $5.14 -71% | $5.54 -69% | $6.00 -66% | $6.57 -63% |
| 9.3% | $4.24 -76% | $4.51 -75% | $4.82 -73% | $5.17 -71% | $5.59 -69% |
| 10.0% | $3.78 -79% | $3.99 -78% | $4.24 -76% | $4.52 -75% | $4.84 -73% |
| 10.8% | $3.39 -81% | $3.57 -80% | $3.77 -79% | $3.99 -78% | $4.24 -76% |
| 11.5% | $3.06 -83% | $3.21 -82% | $3.37 -81% | $3.55 -80% | $3.76 -79% |
Institutional Software Quality Scorecard (63/100 · Grade B)
Viable recurring software business but carries notable dilution, lower margins, or higher leverage.
Solid cash generation with minor working capital absorption
Minimal dilution friction; management compensation aligned with shareholders
Sub-par gross margins; higher cost of delivery or hardware/services mix
Moderate leverage or cash burn; monitor liquidity runway
Core Investment Strengths & Moats
- Low dilution friction: SBC is only 4.9% of revenue
Key Operational & Dilution Risks
- Lower software gross margins (56.8%), indicating higher hosting or service delivery drag
Reverse-DCF Solver: What Growth is Priced Into VIAV?
The current share price demands 45.6% 5-year CAGR (45.0% net of SBC & dilution)—a +48.1% acceleration over historical run-rate (-2.5%). Any growth slowdown risks valuation multiple contraction.
Headline Reverse-DCF ignores Stock-Based Compensation (4.9% of revenue) and annual share dilution (0.6%/yr). Accounting for both requires 45.0% 5-year revenue CAGR to justify $17.82/sh on a true per-share economic cash flow basis.
Viavi Solutions Inc. (VIAV) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $1.08B | $1.08B | $1.06B | $1.03B | $1.01B | $980.7M | $956.4M |
| Gross Profit | $616.3M | $616.3M | $601.0M | $586.1M | $571.6M | $557.4M | $543.6M |
| Operating Income (EBIT) | $70.9M | $70.9M | $69.2M | $67.4M | $65.8M | $64.1M | $62.5M |
| Stock-Based Compensation (SBC) | $53.1M | $53.1M | $51.8M | $50.5M | $49.3M | $48.1M | $46.9M |
| Unlevered Free Cash Flow (FCF) | $62.0M | $62.0M | $60.5M | $59.0M | $57.5M | $56.1M | $54.7M |
| SBC-Adjusted True Cash Flow | $8.9M | $8.9M | $8.7M | $8.5M | $8.2M | $8.0M | $7.8M |
Software & Cloud Services Peer Comparables & Rule of 40 Regression
Rule of 40 vs. EV / Revenue Multiple Regression
OLS Fit: EV/Rev = 0.5 + 0.23 × (Rule of 40) · R² = 49%Stocks below the gold regression line trade at a discount relative to their Rule of 40 compounding efficiency.
| Company | Ticker | Market Cap | TTM Revenue | Gross Margin | FCF Margin | Rule of 40 | SBC % Rev | EV / Rev |
|---|---|---|---|---|---|---|---|---|
| Viavi Solutions Inc. | VIAV | $3.98B | $1.08B | 56.8% | 5.7% | 3.2% | 4.9% | 3.9× |
| ServiceNow | NOW | $152.61B | $10.98B | 79.2% | 31.1% | 54.2% | 15.9% | 13.9× |
| Workday, Inc. | WDAY | $50.35B | $8.00B | 75.0% | 27.4% | 43.9% | 19.0% | 6.4× |
| Salesforce | CRM | $217.10B | $37.90B | 77.2% | 32.8% | 42.8% | 8.4% | 5.8× |
| Datadog | DDOG | $46.05B | $2.68B | 80.8% | 31.1% | 57.7% | 21.3% | 17.4× |
| Snowflake Inc. | SNOW | $71.79B | $3.63B | 66.5% | 25.2% | 57.7% | 40.8% | 20.0× |
| Hubspot | HUBS | $19.89B | $2.63B | 85.0% | 21.3% | 52.7% | 19.2% | 7.7× |
| Peer Cohort Median Benchmark (N=6) | 78.2% | 29.2% | 53.5% | 19.1% | 10.8× | |||
EV / Revenue Multiple Compression Stress Test
| Multiple Scenario | EV / Revenue | Implied Enterprise Value | Implied Equity Value | Implied Share Price | Delta vs Current |
|---|---|---|---|---|---|
| Current Multiple | 3.9× | $4.23B | $3.98B | $17.82 | 0.0% |
| -20% Multiple Compression | 3.1× | $3.38B | $3.13B | $14.03 | -20.0% |
| -35% Multiple Compression | 2.5× | $2.75B | $2.50B | $11.19 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $5.42B | $5.17B | $23.18 | +28.3% |
Frequently Asked Questions: Viavi Solutions Inc. (VIAV) Valuation
What is Viavi Solutions Inc. (VIAV)'s intrinsic DCF valuation and implied share price?
Based on audited SEC 10-K/10-Q filings and a 5-year 3-statement discounted cash flow (DCF) model, Viavi Solutions Inc. (VIAV) has a Base Case implied value of $1.95 per share (with a Bear Case of $1.00 and a Bull Case of $2.85), compared to its current price of $17.82. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is Viavi Solutions Inc. (VIAV)'s Rule of 40 score and Free Cash Flow margin?
Viavi Solutions Inc. achieves a Rule of 40 score of 3.2%, combining a -2.5% revenue growth run-rate with a 5.7% TTM free cash flow margin on $1.08B in trailing twelve-month revenue. In the Software & Cloud Services peer cohort, the median Rule of 40 benchmark is 53.5%.
What revenue growth rate is priced into VIAV stock according to Reverse-DCF analysis?
At $17.82 per share (Enterprise Value of $4.23B), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 45.6%, compared to Viavi Solutions Inc.'s historical CAGR of -2.5%. Overall market expectations are rated as "Aggressive Growth Expectations Priced In".
How does Viavi Solutions Inc. compare to Software & Cloud Services software peers?
Viavi Solutions Inc. (VIAV) earns an institutional Software Quality Score of 63/100 (Grade B — Mixed Fundamental Profile). Across its Software & Cloud Services peer group (NOW, WDAY, CRM, DDOG, SNOW), the cohort trades at a median EV/TTM Revenue multiple of 10.8× and a median gross margin of 78.2%.
How does Stock-Based Compensation (SBC) impact Viavi Solutions Inc. (VIAV)'s valuation?
Viavi Solutions Inc. recorded $53.1M in TTM stock-based compensation (4.9% of revenue). When treating SBC as a cash-equivalent compensation expense, Viavi Solutions Inc.'s SBC-adjusted free cash flow yield is 0.2%, scoring 25/25 on our Shareholder Dilution Friction pillar.