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Juniper (JNPR) Q1 Earnings Miss Estimates, Revenues Beat

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Juniper Networks, Inc. (JNPR - Free Report) reported mixed first-quarter 2022 results, wherein the bottom line missed the Zacks Consensus Estimate, but the top line beat the same.

Net Income

On a GAAP basis, net income in the quarter improved to $55.7 million or 17 cents per share from a net loss of $31.1 million or a loss of 10 cents per share in the prior-year quarter. The improvement was led by higher operating income and zero loss on extinguishment of debt which was $60.6 million in the first quarter of 2021.

Non-GAAP net income was $101.6 million or 31 cents per share compared with $98.5 million or 30 cents per share in the year-ago quarter. The bottom line missed the Zacks Consensus Estimate by a penny.

Juniper Networks, Inc. Price, Consensus and EPS Surprise Juniper Networks, Inc. Price, Consensus and EPS Surprise

Juniper Networks, Inc. price-consensus-eps-surprise-chart | Juniper Networks, Inc. Quote

Revenues

Despite ongoing supply chain challenges, Juniper’s quarterly revenues increased to $1,168.2 million from $1,074.4 million in the prior-year quarter, driven by robust demand reflecting strong execution across its product management, engineering and go-to-market organizations. The company witnessed double-digit order growth across all customer verticals and solutions. The top line beat the consensus estimate of $1,163 million.

Product revenues (contributing 63.7% to total revenues) grew 10.7% year over year to $744.3 million, reflecting healthy demand across the MX and PTX product families with the adoption of newer products and the automation software portfolio. Service revenues (contributing 36.3% to total revenues) increased 3.1% to $423.9 million, led by renewals and service attach rates.

By vertical, revenues in Cloud increased to $307 million from $270.7 million. This reflects the adoption of the 400-gig capable platform driven by the strength of the Junos Evolved operating system, differentiated silicon capabilities and deep engagement with important customers. These factors not only enable Juniper to maintain its core franchises but also secure a new footprint, including a large new hyperscale WAN deployment that should act as a tailwind for its business over the next few years.

Revenues in Service Provider decreased to $428 million from $438.2 million in the year-ago quarter. Revenues in Enterprise improved to $433.2 million from $365.5 million.

By region, revenues improved to $333.9 million from $311.1 million in the year-ago quarter in Europe, the Middle East and Africa. Revenues in the Americas increased to $655 million from $583 million. In the Asia Pacific, revenues were down 0.6% to $179.3 million.

Other Details

Gross profit was $649.4 million compared with $615.6 million in the year-ago quarter. Total operating expenses increased to $590.9 million from $587.8 million due to higher sales and marketing expenses. Operating income was $58.5 million compared with $27.8 million a year ago. Non-GAAP operating income was $137.4 million, up from $130.1 million, with respective margins of 11.8% and 12.1%.

Cash Flow & Liquidity

During first-quarter 2022, Juniper generated $193.1 million of cash from operating activities compared with $179.8 million in the year-ago quarter. As of Mar 31, 2022, the company had $1,013.3 million in cash and cash equivalents with $1,648.4 million of long-term debt.

Outlook

Due to the worldwide shortage of semiconductors, Juniper is experiencing supply headwinds resulting in extended lead times and higher logistics and component costs. These are expected to continue for the remainder of the year.

For the second quarter, the company expects revenues of $1,255 million (+/- $50 million). Non-GAAP gross margin is estimated to be 58% (+/- 1%). Non-GAAP operating expenses are expected to be $535 million (+/- $5 million). It anticipates non-GAAP operating margin to be about 15.4% at the mid-point of the revenue guidance. Non-GAAP net income is expected to be 45 cents per share (+/- 5 cents), assuming a share count of nearly 330 million. Non-GAAP tax rate is likely to be around 20%.

Zacks Rank & Stocks to Consider

Juniper currently has a Zacks Rank #4 (Sell).

Gogo Inc. (GOGO - Free Report) is a better-ranked stock in the broader Zacks Computer and Technology sector, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. The Zacks Consensus Estimate for its current-year earnings has been revised upward by 25% over the past 60 days.

Gogo delivered a trailing four-quarter earnings surprise of 65%, on average. It has rallied 71.9% in the past year.

Nokia (NOK - Free Report) , carrying a Zacks Rank #2 (Buy), is another solid pick for investors. The consensus estimate for current-year earnings has been revised upward by 5% over the past 60 days.

Nokia pulled off a trailing four-quarter earnings surprise of 205.2%, on average. It has moved up 21.2% in the past year.

Sierra Wireless, Inc. (SWIR - Free Report) carries a Zacks Rank #2. The consensus mark for current-year earnings has been revised upward by 237.5% over the past 60 days.

Sierra Wireless pulled off a trailing four-quarter earnings surprise of 58%, on average. The stock has returned 6.1% in the past year.