Juniper's second quarter net revenues reached $1.17 billion, an increase of 8% year-over-year and up 9% sequentially, but concerns about the supply chain remain. The pandemic's impact on manufacturing and availability of hardware components such as silicon chips continues to ripple throughout the telecom industry.
Juniper's stock fell 4.3% since the earnings announcement last night "after posting second-quarter results that beat expectations but disappointed observers with in-line guidance amid some apparent pressure on the supply chain," according to Seeking Alpha.
On the financial call with analysts, Rami Rahim, CEO of Juniper, acknowledged an "extremely tight supply environment" but remained optimistic for Juniper's projected growth in the second half of 2021.
Ken Miller, CFO for Juniper, echoed Rahim's sentiment, stating that "supply constraints are tighter now than they were in the first half … material is getting tighter."
"While the demand environment is strong, we, like others in our industry, are managing through significant supply chain challenges," said Rahim. In response to limited supply, customers – especially those in the cloud and service provider verticals – have increasingly been placing orders early, he added.
Juniper's cloud vertical reached $320.6 million in revenue, up 12% year-over-year, and its service provider vertical came in at $443.7 million in revenue for Q2, an increase of 2% year-over-year. In addition, the enterprise vertical hit a revenue of $408 million, up 12% since last year at this time.
However, Juniper's automated WAN solutions declined 3% year-over-year. Juniper's security revenue, which includes security products and services, reached $172 million, up 11% year-over-year.
Regarding the increase in advanced orders from customers in the cloud and service provider verticals, Rahim said: "Importantly, even excluding these accelerations, orders are estimated to have experienced mid-teens growth in the period with healthy momentum across verticals and customer solutions. Based on this trend, we now expect to grow our business approximately 6% in 2021 on a full year basis, despite the challenging supply chain backdrop. I'm excited by the momentum we're seeing."
Rahim was also positive about growth in the Mist AI segment: "Mist Solutions revenue – which includes wireless, it includes wired, it includes software – grew at nearly 2X year-over-year. If you think about Mist all up in terms of annualized order run rate, we are now over $400 million. So it's a pretty significant component of the total Juniper business."
In addition, Rahim was positive about growth for Juniper's 400G services, which he said is gaining momentum across large tier-1 hyperscale customers. However, in the Q&A portion of the call, he explained that 400G purchases by tier-1 service providers "aren't really contributing to revenue in a very meaningful way yet, but I expect that to change in the second half of the year."
Rahim also briefly commented on Juniper's integration efforts since its acquisition of 128 Technology: "we continue to make progress with 128 technology, which we are integrating with our SRX secure branch gateways under a common cloud and AI umbrella."
Juniper's generated quarterly earnings of $0.43 per share, exceeding the Zacks Consensus Estimate of $0.39 per share, and up from $0.35 per share in the year-ago quarter, according to Yahoo Finance.
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— Kelsey Kusterer Ziser, Senior Editor, Light Reading