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Operating Segments and Geographic Information
12 Months Ended
Jul. 01, 2023
Segment Reporting [Abstract]  
Operating Segments and Geographic Information
Note 19. Operating Segments and Geographic Information
The Company evaluates its reportable segments in accordance with the authoritative guidance on segment reporting. The Company’s Chief Executive Officer, as the Company’s Chief Operating Decision Maker (CODM), uses operating segment financial information to evaluate segment performance and to allocate resources.
The Company’s reportable segments are:
(i) Network Enablement:
NE provides an integrated portfolio of testing solutions that access the network to perform build-out and maintenance tasks. These solutions include instruments, software and services to design, build, turn-up, certify, troubleshoot and optimize networks. The Company also offers a range of product support and professional services such as repair, calibration, software support and technical assistance for its products. NE’s avionics products provide test and measuring solutions for aviation, aerospace, government, defense, communications and public safety.
(ii) Service Enablement:
SE provides embedded systems and enterprise performance management solutions that give global CSPs, enterprises and cloud operators visibility into network, service and application data. These solutions—including instruments, microprobes and software—monitor, collect and analyze network data to reveal the actual customer experience and to identify opportunities for new revenue streams and network optimization.
(iii) Optical Security and Performance Products:
OSP leverages its core optical coating technologies and volume manufacturing capability to design, manufacture, and sell technologies for the anti-counterfeiting, consumer electronics, industrial, government and automotive markets.
Segment Reporting
The CODM manages the Company in two broad business categories: NSE and OSP. The CODM evaluates segment performance of the NSE business based on the combined segment gross and operating margins. Operating expenses associated with the NSE business are not allocated to the individual segments within NSE, as they are managed centrally at the business unit level. The CODM evaluates segment performance of the OSP business based on segment operating margin. The Company allocates corporate-level operating expenses to its segment results, except for certain non-core operating and non-operating activities as discussed below.
The Company does not allocate stock-based compensation, acquisition-related charges, amortization of intangibles, restructuring and related charges, impairment of goodwill, non-operating income and expenses, changes in fair value of contingent consideration liabilities, or other charges unrelated to core operating performance to its segments because management does not include this information in its measurement of the performance of the operating segments. These items are presented as “Other Items” in the table below. Additionally, the Company does not specifically identify and allocate all assets by operating segment.
Information on the Company’s reportable segments is as follows (in millions):
Year Ended July 1, 2023
Network and Service Enablement
 Network EnablementService EnablementNetwork and
Service
Enablement
Optical Security and Performance ProductsOther ItemsConsolidated GAAP Measures
Product revenue$583.9 $47.4 $631.3 $304.8 $— $936.1 
Service revenue113.6 56.3 169.9 0.1 — 170.0 
Net revenue$697.5 $103.7 $801.2 $304.9 $— $1,106.1 
Gross profit440.1 70.1 510.2 158.6 (30.0)638.8 
Gross margin63.1 %67.6 %63.7 %52.0 %57.8 %
Operating income61.2 111.3 (90.1)82.4 
Operating margin7.6 %36.5 %7.4 %
Year Ended July 2, 2022
Network and Service Enablement
Network EnablementService EnablementNetwork and
Service
Enablement
Optical Security and Performance ProductsOther Items Consolidated GAAP Measures
Product revenue$739.7 $53.0 $792.7 $342.8 $— $1,135.5 
Service revenue106.1 50.3 156.4 0.5 — 156.9 
Net revenue$845.8 $103.3 $949.1 $343.3 $— $1,292.4 
Gross profit543.6 71.5 615.1 193.6 (35.2)773.5 
Gross margin64.3 %69.2 %64.8 %56.4 %59.8 %
Operating income 147.8 139.0 (101.8)185.0 
Operating margin15.6 %40.5 %14.3 %
Year Ended July 3, 2021
Network and Service Enablement
 Network EnablementService EnablementNetwork and
Service
Enablement
Optical Security and Performance ProductsOther ItemsConsolidated GAAP Measures
Product revenue$650.5 $40.6 $691.1 $360.3 $— $1,051.4 
Service revenue96.1 50.7 146.8 0.7 — 147.5 
Net revenue$746.6 $91.3 $837.9 $361.0 $— $1,198.9 
Gross profit474.2 59.9 534.1 218.1 (37.8)714.4 
Gross margin63.5 %65.6 %63.7 %60.4 %59.6 %
Operating income 92.2 161.3 (111.3)142.2 
Operating margin11.0 %44.7 %11.9 %
Years Ended
 July 1, 2023July 2, 2022July 3, 2021
Corporate reconciling items impacting gross profit:
Total segment gross profit$668.8 $808.7 $752.2 
Stock-based compensation(4.8)(5.2)(4.8)
Amortization of intangibles(24.6)(30.0)(33.2)
Other (charges) benefits unrelated to core operating performance(1)
(0.6)— 0.2 
GAAP gross profit$638.8 $773.5 $714.4 
Corporate reconciling items impacting operating income:
Total segment operating income$172.5 $286.8 $253.5 
Stock-based compensation(51.2)(52.3)(48.3)
Amortization of intangibles(33.3)(39.7)(66.5)
Change in fair value of contingent liability4.5 (0.3)5.3 
Other benefits (charges) unrelated to core operating performance(1)
2.0 (9.6)(3.4)
Restructuring and related (charges) benefits(12.1)0.1 1.6 
GAAP operating income from continuing operations$82.4 $185.0 $142.2 

(1) During the years ended July 1, 2023, July 2, 2022, and July 3, 2021 other benefits (charges) unrelated to core operating performance primarily consisted of certain acquisition and integration related charges, transformational initiatives such as site consolidations, reorganization, accretion of debt discount, intangible impairment and loss on disposal of long-lived assets.
The Company operates primarily in three geographic regions: Americas, Asia-Pacific, and Europe, Middle East and Africa (EMEA). Net revenue is assigned to the geographic region and country where the Company’s product is initially shipped. For example, certain customers may request shipment of product to a contract manufacturer in one country, which may differ from the location of their end customers. The following table presents net revenue by the three geographic regions the Company operates in and net revenue from countries that exceeded 10% of the Company’s total net revenue (in millions):
 Years Ended
 July 1, 2023July 2, 2022July 3, 2021
Product RevenueService RevenueTotalProduct RevenueService RevenueTotalProduct RevenueService RevenueTotal
Americas:
United States$303.5 $59.4 $362.9 $332.5 $56.4 $388.9 $275.8 $54.2 $330.0 
Other Americas60.3 14.9 75.2 82.2 14.6 96.8 72.7 12.9 85.6 
Total Americas$363.8 $74.3 $438.1 $414.7 $71.0 $485.7 $348.5 $67.1 $415.6 
Asia-Pacific:
Greater China$203.5 $7.4 $210.9 $247.5 $8.9 $256.4 $265.8 $11.2 $277.0 
Other Asia140.2 26.4 166.6 185.2 20.1 205.3 118.5 15.0 133.5 
Total Asia-Pacific$343.7 $33.8 $377.5 $432.7 $29.0 $461.7 $384.3 $26.2 $410.5 
EMEA:$228.6 $61.9 $290.5 $288.1 $56.9 $345.0 $318.6 $54.2 $372.8 
Total net revenue$936.1 $170.0 $1,106.1 $1,135.5 $156.9 $1,292.4 $1,051.4 $147.5 $1,198.9 
SICPA Holding SA Company (SICPA), a customer of the Company’s OSP segment, generated more than 10% of VIAVI net revenue from continuing operations during fiscal 2023, 2022 and 2021 as summarized below (in millions):
Years Ended
July 1, 2023July 2, 2022July 3, 2021
SICPA - OSP customer$157.7 $178.4 $193.9 
Property, plant and equipment, net was identified based on the operations in the corresponding geographic areas (in millions):
Years Ended
July 1, 2023July 2, 2022
United States$166.9 $148.3 
Other Americas1.3 1.8 
China33.6 39.7 
Other Asia-Pacific4.0 4.5 
United Kingdom24.6 25.7 
Other EMEA12.6 8.9 
Total property, plant and equipment, net$243.0 $228.9