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Juniper Reports $1.08B 1Q 2018 Revenue - Down 11% YoY

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SUNNYVALE, Calif. -- Juniper Networks today reported preliminary financial results for the three months ended March 31, 2018 and provided its outlook for the three months ending June 30, 2018.

First Quarter 2018 Financial Performance

Net revenues were $1,082.6 million, a decrease of 11% year-over-year and 13% sequentially.

GAAP operating margin was 5.1%, a decrease from 12.8% in the first quarter of 2017, and a decrease from 16.4% in the fourth quarter of 2017.

Non-GAAP operating margin was 12.3%, a decrease from 20.8% in the first quarter of 2017, and a decrease from 22.7% in the fourth quarter of 2017.

GAAP net income was $34.4 million, a decrease of 68% year-over-year, resulting in diluted net income per share of $0.10.

Non-GAAP net income was $99.5 million, a decrease of 44% year-over-year and 50% sequentially, resulting in diluted earnings per share of $0.28.

The reconciliation between GAAP and non-GAAP results of operations is provided in a table immediately following the Preliminary Net Revenues by Geographic Region table below.

"We hit the high-end of our guidance during the March quarter due to better than expected results from our cloud vertical and another quarter of growth in our enterprise business," said Rami Rahim, chief executive officer, Juniper Networks. "We are encouraged by the trends we are seeing in several areas of our business and remain confident in our expectation to deliver sequential growth through 2018 and a return to year-over-year growth by the December quarter."

"While our margins came in below historical levels during the March quarter, we met the profitability targets we set for the period, which enabled earnings to come in at the high-end of guidance," said Ken Miller, chief financial officer, Juniper Networks. "We remain focused on capturing efficiencies and expect profitability levels to improve sequentially through the course of 2018."

Balance Sheet and Other Financial Results

Total cash, cash equivalents, and investments as of March 31, 2018 were $3,448.4 million, compared to $4,043.7 million as of March 31, 2017, and $4,021.0 million as of December 31, 2017.

Net cash flows provided by operations for the first quarter of 2018 was $271.1 million, compared to $546.6 million in the first quarter of 2017, and $211.6 million in the fourth quarter of 2017.

Days sales outstanding in accounts receivable, or "DSO," was 57 days in the first quarter of 2018, compared to 49 days in the first quarter of 2017, and 62 days in the fourth quarter of 2017.

Capital expenditures were $42.2 million and depreciation and amortization expense was $55.0 million during the first quarter of 2018.

During the quarter, the company initiated a $750 million accelerated share repurchase agreement and paid a $62 million quarterly dividend, or $0.18 per share.

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.

Our Q2 revenue outlook reflects a return to normal seasonality. While customer spending patterns remain dynamic and difficult to predict, we continue to expect sequential growth through the remainder of the year, with a return to year-over year growth during the December quarter.

The company expects gross margin to improve sequentially during the June quarter due to higher volumes and improvements in our cost structure. While better volumes and cost structure efficiencies should drive further gross margin improvement during the second half of 2018, the pace of improvement could be offset by mix and other factors.

Based on our expected spending through the first half of the year, we now expect our annual operating expenditures to be approximately flat for the full year 2018 versus full year 2017.

Juniper's guidance for the quarter ending June 30, 2018 is as follows:

  • Revenues will be approximately $1,175 million, plus or minus $30 million.

  • Non-GAAP gross margin will be approximately 59.0%, plus or minus 1.0%.

  • Non-GAAP operating expenses will be approximately $490 million, plus or minus $5 million.

  • Non-GAAP operating margin will be approximately 17.5% at the midpoint of revenue guidance.

  • Non-GAAP tax rate will be approximately 21.0%.

  • Non-GAAP net income per share will be approximately $0.44, plus or minus $0.03. This assumes a share count of approximately 351 million.

Juniper Networks Inc. (NYSE: JNPR)

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