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Data Center Infrastructure

Juniper Down 11% Year-Over-Year in 4Q 2017 to $1.24B

Juniper Networks today reported preliminary financial results for the three months and twelve months ended December 31, 2017 and provided its outlook for the three months ending March┬ 31, 2018.

Fourth Quarter 2017 Financial Performance

Net revenues were $1,239.5 million, a decrease of 11% year-over-year and 1% sequentially.

GAAP operating margin was 16.4%, a decrease from 20.7% in the fourth quarter of 2016, and a decrease from 18.4% in the third quarter of 2017.

Non-GAAP operating margin was 22.7%, a decrease from 26.5% in the fourth quarter of 2016, and a decrease from 23.5% in the third quarter of 2017.

GAAP net loss was $148.1 million, a decrease of 178% year-over-year and 189% sequentially, resulting in diluted loss per share of $0.40. GAAP net loss was primarily due to the Tax Cuts and Jobs Act, which resulted in an estimated┬ $289.5 million of tax expense.

Non-GAAP net income was $199.4 million, a decrease of 22% year-over-year and 6% sequentially, resulting in diluted earnings per share of┬ $0.53.

Full Year 2017 Financial Performance

Net revenues were $5,027.2 million, an increase of 1% year-over-year.

GAAP operating margin was 16.9%, a decrease from 17.8% in fiscal year 2016.

Non-GAAP operating margin was 22.8%, a decrease from 23.4% in fiscal year 2016.

GAAP net income was $306.2 million, a decrease of 48% year-over-year, resulting in diluted earnings per share of $0.80, a decrease of 48% year-over-year. The change in GAAP net income was primarily due to the Tax Cuts and Jobs Act, which resulted in an estimated $289.5 million of tax expense.

Non-GAAP net income was $809.0 million, flat year-over-year, resulting in diluted earnings per share of $2.11, an increase of 1% year-over-year.

"We continue to lead the way in helping our customers build more automated, cost efficient, scalable networks," said Rami Rahim, chief executive officer, Juniper Networks. "We believe strongly that we have the right product portfolio in place to win in this dynamic market.

The Company today announced an expansion of its capital return plan. Juniper's Board of Directors has approved a new $2 billion buyback authorization, and declared a quarterly cash dividend of $0.18 per share to be paid on March 22, 2018 to shareholders of record as of the close of business on┬ March 1, 2018. Additional details can be found in the press release issued today at http://investor.juniper.net/investor-relations/default.aspx.

Outlook

These metrics are provided on a non-GAAP basis, except for revenue and share count. 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.

The first quarter revenue outlook reflects ongoing deployment delays as Juniper expects its large cloud customers to continue their architectural transition, which is expected to result in below normal seasonality. The Company remains confident in its competitive position and strong relationship with these strategic customers.

Beyond the first quarter, Juniper expects revenue to grow on a sequential basis and return to year-on-year growth by the end of the year.

The Company expects gross margins for the quarter to remain under pressure, due to lower volume and product mix, resulting from the architectural shifts discussed above. The Company expects full year margins to improve directionally from Q1'18 levels.

Juniper expects to manage operating expenses prudently and to increase operational efficiencies, both in the first quarter and throughout the year.

As a result of the Tax Cuts and Jobs Act, the Company plans to repatriate approximately $3 billion. Juniper expects the new territorial tax system to provide lower cost access to nearly all global free cash flow on an ongoing basis. The Company intends to use the repatriated cash to invest in its business, support value-enhancing M&A, and fund its return of capital to shareholders.

Juniper's guidance for the quarter ending March 31, 2018 is as follows:

  • Revenues will be approximately $1,050 million, plus or minus $30 million.
  • Non-GAAP gross margin will be approximately 58.0%, plus or minus 1.0%.
  • Non-GAAP operating expenses will be approximately $485 million, plus or minus┬ $5 million.
  • Non-GAAP operating margin will be approximately 12.0% at the midpoint of revenue guidance.
  • Non-GAAP tax rate will be approximately 21.0%.
  • Non-GAAP net income per share will be approximately┬ $0.25, plus or minus $0.03. This assumes a share count of approximately 360 million.
Juniper Networks Inc. (NYSE: JNPR)

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