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Juniper Q2 2019 Revenue $1.1B Down 8% Year-Over-Year but Up 10% Sequentially

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7/25/2019

SUNNYVALE, Calif. -- Juniper Networks, a leader in secure, AI-driven networks, today reported preliminary financial results for the three months ended June 30, 2019 and provided its outlook for the three months ending September 30, 2019.

Second Quarter 2019 Financial Performance

Net revenues were $1,102.5 million, a decrease of 8% year-over-year, and an increase of 10% sequentially.

GAAP operating margin was 7.5%, a decrease from 13.3% in the second quarter of 2018, and an increase from 4.3% in the first quarter of 2019.

Non-GAAP operating margin was 15.8%, a decrease from 18.5% in the second quarter of 2018, and an increase from 11.2% in the first quarter of 2019.

GAAP net income was $46.2 million, a decrease of 60% year-over-year, and an increase of 49% sequentially, resulting in diluted earnings per share of $0.13.

Non-GAAP net income was $139.5 million, a decrease of 18% year-over-year, and an increase of 50% sequentially, resulting in non-GAAP diluted earnings per share of $0.40.

"We experienced encouraging trends during the June quarter, as we saw sequential revenue growth across industry verticals and technologies," said Rami Rahim, chief executive officer, Juniper Networks. "We are making progress with our sales transformation efforts which, along with our strong pipeline of opportunities, is providing confidence in our ability to not only deliver sequential revenue growth through the remainder of the year, but also a return to year-over-year growth during the December quarter."

"We executed well during the June quarter, achieving our revenue guidance and exceeding the midpoint of our non-GAAP earnings per share outlook, despite incremental China tariffs and a higher  non-GAAP tax rate," said Ken Miller, chief financial officer, Juniper Networks. "We have made substantial progress mitigating the impact of the incremental China tariffs and will continue to further optimize our supply chain. These factors, along with sequential second half revenue growth; and strong cost management should enable us to deliver improved profitability in the back half of 2019."

Juniper's Board of Directors has declared a quarterly cash dividend of $0.19 per share to be paid on September 25, 2019 to shareholders of record as of the close of business on September 4, 2019.

Outlook

These metrics are provided on a non-GAAP basis, except for revenue and share count. Non-GAAP earnings per share is on a fully diluted basis. The outlook assumes that the exchange rate of the U.S. dollar to other currencies will remain relatively stable at current levels.

Our second-half revenue outlook reiterates the commentary we stated previously, which reflects our expectations on above normal seasonal trends and a return to year-over-year growth in the fourth quarter due to our current pipeline of opportunities as well as the expected positive impact from our go-to-market transformation activities.

We remain confident in the long-term financial model we outlined at our Investor Day in November last year.

Full-year non-GAAP gross margin is expected to continue to be pressured by China tariffs, despite our ongoing mitigation efforts. The increase in tariffs from 10% to 25% is expected to have a 30–50 basis point impact on full-year non-GAAP gross margin.

We plan to manage our operating expenses prudently; however, we continue to expect non-GAAP operating expenses on a full-year basis to be flat to slightly up versus 2018, inclusive of Mist Systems. In the second quarter of 2019, we adopted a full-year projected tax rate in our computation of the non-GAAP income tax provision to provide better consistency across reporting periods.

For the remainder of 2019, we expect a non-GAAP tax rate of approximately 19.5%.

Due to the increased China tariffs and a higher non-GAAP tax rate, we now expect our full-year non-GAAP earnings per share to be at the low-end of the previously stated range of $1.75 +/- $0.05.

Our guidance for the quarter ending September 30, 2019 is as follows:

  • Revenue will be approximately $1,145 million, plus or minus $30 million.
  • Non-GAAP gross margin will be approximately 60.0%, plus or minus 1%.
  • Non-GAAP operating expenses will be approximately $488 million, plus or minus $5 million.
  • Non-GAAP operating margin will be approximately 17.5% at the midpoint of revenue guidance.
  • Non-GAAP net income per share will be approximately $0.46, plus or minus $0.03. This assumes a share count of approximately 348 million.

Juniper Networks Inc. (NYSE: JNPR)

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