The company reported a loss of $3.9 million, or 6 cents per share, for the quarter ended May 31, compared with earnings of $1.8 million, or 3 cents per share, a year earlier.
Revenue fell 12 percent to $59.5 million.
The company forecast a net loss of 11 cents to 7 cents per share on sales of $55 million to $60 million for the fourth-quarter.
“The uncertain macro-economic environment, European debt crisis and network operators’ delayed spending combined to reduce EXFO’s third-quarter bookings and revenues,” Chief Executive Germain Lamonde said in a statement.
The company is a also starting a $9 million cost-reduction plan, the statement added.
Shares of the company, which has a market value of $154.3 million, closed at C$5.33 on Thursday on the Toronto Stock Exchange.
Reporting by Shounak Dasgupta in Bangalore; Editing by Saumyadeb Chakrabrty