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Juniper Reports $1.18B 3Q Revenue, Down 6%

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10/23/2018
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SUNNYVALE, Calif. -- Juniper Networks, an industry leader in automated, scalable and secure networks, today reported preliminary financial results for the three months ended September 30, 2018 and provided its outlook for the three months ending December 31, 2018.

Third Quarter 2018 Financial Performance

Net revenues were $1,179.8 million, a decrease of 6.0% year-over-year, and a decrease of 2.0% sequentially.

GAAP operating margin was 13.6%, a decrease from 18.4% in the third quarter of 2017, and an increase from 13.3% in the second quarter of 2018.

Non-GAAP operating margin was 20.0%, a decrease from 23.5% in the third quarter of 2017, and an increase from 18.5% in the second quarter of 2018.

GAAP net income was $223.8 million, an increase of 35.0% year-over-year and an increase of 92.0% sequentially, resulting in diluted earnings per share of $0.64.

Non-GAAP net income was $191.0 million, a decrease of 10.0% year-over-year and an increase of 12.0% sequentially, resulting in diluted earnings per share of $0.54.

"We reported better than expected Q3 results, as continued enterprise strength and better than expected service provider results more than offset weakness in the cloud," said Rami Rahim, chief executive officer, Juniper Networks. "While our Q4 outlook is being impacted by the pace of deployments at several cloud customers, we believe this is a temporary headwind and remain confident that we have the right products and strategy in place to grow the business in 2019."

"We delivered better than expected non-GAAP earnings during Q3, as gross margin exceeded the high-end of our forecast and operating expenses came in at the low-end of our outlook. We also completed our $750 million accelerated share repurchase in the period," said Ken Miller, chief financial officer, Juniper Networks. "While we believe we are making the investments needed to win in the market, we remain focused on capturing additional efficiencies and creating shareholder value."

Juniper's Board of Directors has declared a quarterly cash dividend of $0.18 per share to be paid on December 26, 2018 to shareholders of record as of the close of business on December 5, 2018.

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.

While we were previously expecting Q4 to return to growth on a year-over-year basis, the mid-point of our revenue guidance reflects a year-over-year decline due to the slower pace of expected deployments in Cloud.

At this time, the Chinese tariffs are not expected to have a material direct impact on our Q4'18 financial results. However, customer buying behavior could be affected and gross margin could be slightly impacted.

While we expect to see gross margin benefit from volume in Q4'18, our guidance is down sequentially due to more normalized product and geographic mix. We continue to undertake specific efforts to improve our gross margin. These efforts include value engineering, optimizing our supply chain and Service business, pricing management and increasing software and solution sales.

With higher interest rates, other income and expense is likely to be lower going forward, in-line with our Q3'18 result.

While we expect our Q4'18 non-GAAP tax rate to be approximately 18%, we believe our go-forward non-GAAP tax rate will be approximately 19% to 20%.

Our guidance for the quarter ending December 31, 2018 is as follows:

  • Revenue will be approximately $1,220.0 million, plus or minus $30.0 million.
  • Non-GAAP gross margin will be approximately 60.0%, plus or minus 1.0%.
  • Non-GAAP operating expenses will be approximately $490.0 million, plus or minus $5.0 million.
  • Non-GAAP operating margin will be approximately 20.0% at the midpoint of revenue guidance.
  • Non-GAAP tax rate will be approximately 18.0%.
  • Non-GAAP net income per share will be approximately $0.57, plus or minus $0.03. This assumes a share count of approximately 350 million.

Juniper Networks Inc. (NYSE: JNPR)

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