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Juniper (JNPR) Q3 Earnings Beat Estimates, Revenues Fall Y/Y
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Juniper Networks, Inc. (JNPR - Free Report) reported modest third-quarter 2023 results, with the bottom and top line surpassing the respective Zacks Consensus Estimate. The company recorded lower revenues year over year, owing to a sales drop in Cloud Ready Data Center and Automated WAN solutions. However, strong sales in the Enterprise vertical and AI-Driven Enterprise solutions partially cushioned the top line. Declining logistics costs and solid demand for software and related services were tailwinds.
Net Income
Net income, on a GAAP basis, was $76.1 million or 24 cents per share, down from $121.5 million or 37 cents per share in the prior-year quarter. The downside was primarily induced by year-over-year net sales decline and higher operating expenses.
Non-GAAP net income stood at $193.9 million or 60 cents per share compared with $190.8 million or 58 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 5 cents.
Juniper Networks, Inc. Price, Consensus and EPS Surprise
Juniper registered revenues of $1,397.8 million, down from $1,414.6 million in the year-ago quarter primarily due to weakness in Cloud and Service Provider verticals. However, growth in the Enterprise vertical supported the top line during the quarter. The top line beat the Zacks Consensus Estimate of $1,392 million.
Product revenues totaled $898.1 million compared with $967.5 million in the prior-year quarter and fell short of our revenue estimate of $965.6 million. Net sales from Service were $499.7 million, up from $447.1 million in the year-ago quarter. The 12% year-over-year growth was driven by higher hardware support contracts and strong demand for SaaS. Net sales surpassed our revenue estimate of $425.2 million.
By vertical, revenues from the Cloud business declined to $269.6 million from $375.3 million in the prior-year quarter. The top line fell short of our estimate of $321.2 million. Soft demand for Cloud Ready Data Centers and Automated WAN solutions impeded the revenue growth in this segment. However, positive trends in Hardware Maintenance and professional services partially offset this trend.
Given the worldwide macro uncertainty, clients are cautiously evaluating budgets and project deployment timelines. Along with this constrained approach, many clients are in the process of utilizing prior purchases. These factors affected the net sales from the Cloud vertical.
Service Provider contributed $418.8 million in revenues, down 20% year over year and surpassed our estimate of $416 million. The decline in Automated WAN solutions and Cloud Ready Data Centers impacted the net sales from this segment.
Revenues from Enterprise recorded solid growth of 37% year over year to $709.4 million. The upside was driven by improvement in all customer solutions. Net sales beat our revenue estimate of $653.6 million. Management’s portfolio-differentiation strategy is enabling the Enterprise business to successfully navigate through a challenging macroeconomic environment. Juniper Apstra solutions is witnessing healthy client engagement and the Apstra new logos reported 80% year-over-year growth in the third quarter.
By customer solution, Automated WAN solutions’ revenues aggregated at $436.1 million, down 18% year over year. Net sales from AI-Driven Enterprise were $382.5 million, up 43% year over year. Cloud-Ready data centers contributed $170 million in revenues, down 26% year over year. Hardware Maintenance and Professional services generated $409.2 million in net sales, up from $386 million reported in the year-ago quarter.
By region, revenues from the Americas declined to $836.5 million from $895.8 million a year ago. Net sales from EMEA (Europe, Middle East and Africa) rose to $345.4 million from $320.4 million in the prior-year quarter. The improvement in the EMEA region was driven by strong sales in the Enterprise vertical. In the Asia-Pacific, revenues increased 9% year over year to $215.9 million, backed by improvement in the Enterprise and Service Provider verticals.
Other Details
Non-GAAP gross margin improved to 59.5% compared with 57.2% in the year-ago quarter. Easing of supply chain and other related costs, favorable software revenue mix and productivity improvement initiatives resulted in a year-over-year improvement.
Operating expenses, on a non-GAAP basis, rose to $588 million from $567 million, owing to increasing headcount-related expenses. Non-GAAP operating margin was 17.5%, marginally up from the year-ago quarter’s tally of 17.2%.
Cash Flow & Liquidity
In the third quarter of 2023, Juniper generated $329.2 million of cash from operating activities compared with $51.8 million in the year-earlier quarter.
As of Sep 30, 2023, the company had $1,243.5 million in cash and cash equivalents, with $1,588.5 million of long-term debt.
Outlook
For the fourth quarter, management expects macroeconomic headwinds to persist and customer demand in the Cloud and Service Provider verticals to remain constrained. However, solid traction in the Enterprise vertical is expected to continue in the upcoming quarter.
For the fourth quarter, Juniper estimates revenues of $1,400 million (+/- $50 million). The non-GAAP gross margin is approximated at 60% (+/- 1%). Lower supply chain cost is expected to boost the gross margin in the upcoming quarter. Juniper expects non-GAAP operating expenses to be $580 million (+/- $5 million). It anticipates the non-GAAP operating margin to be 18.6% at the midpoint of the revenue guidance.
For 2024, management expects demand across all verticals to grow despite the persistence of global macroeconomic uncertainties. However, the pace of recovery in the Cloud and Service Provider segment remains uncertain at this time. The company remains committed to its long-term financial target of achieving sustainable revenue growth, profitability and improved operating margin.
Zacks Rank & Stocks to Consider
Juniper currently carries a Zacks Rank #4 (Sell)
Here are some better-ranked stocks that investors may consider.
Model N Inc (MODN - Free Report) , sporting a Zacks Rank #1 (Strong Buy) at present, delivered an earnings surprise of 21.26%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 45.83%. You can see the complete list of today’s Zacks #1 Rank stocks here.
It provides revenue management solutions for life sciences and technology companies, including applications for configure, price, quote, rebates management and regulatory compliance.
NVIDIA Corporation (NVDA - Free Report) , currently sporting a Zacks Rank #1, delivered an earnings surprise of 9.79%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 29.19%.
NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit or GPU. Over the years, the company’s focus has evolved from PC graphics to artificial intelligence-based solutions that now support high-performance computing, gaming and virtual reality platforms.
Arista Networks, Inc. (ANET - Free Report) , presently carrying a Zacks Rank #2 (Buy), is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has delivered an earnings surprise of 12.8%, on average, in the trailing four quarters.
It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed data center segment. Arista is increasingly gaining market traction in 200 and 400-gig high-performance switching products and is well-positioned for healthy growth in the data-driven cloud networking business with proactive platforms and predictive operations.
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Juniper (JNPR) Q3 Earnings Beat Estimates, Revenues Fall Y/Y
Juniper Networks, Inc. (JNPR - Free Report) reported modest third-quarter 2023 results, with the bottom and top line surpassing the respective Zacks Consensus Estimate. The company recorded lower revenues year over year, owing to a sales drop in Cloud Ready Data Center and Automated WAN solutions. However, strong sales in the Enterprise vertical and AI-Driven Enterprise solutions partially cushioned the top line. Declining logistics costs and solid demand for software and related services were tailwinds.
Net Income
Net income, on a GAAP basis, was $76.1 million or 24 cents per share, down from $121.5 million or 37 cents per share in the prior-year quarter. The downside was primarily induced by year-over-year net sales decline and higher operating expenses.
Non-GAAP net income stood at $193.9 million or 60 cents per share compared with $190.8 million or 58 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 5 cents.
Juniper Networks, Inc. Price, Consensus and EPS Surprise
Juniper Networks, Inc. price-consensus-eps-surprise-chart | Juniper Networks, Inc. Quote
Revenues
Juniper registered revenues of $1,397.8 million, down from $1,414.6 million in the year-ago quarter primarily due to weakness in Cloud and Service Provider verticals. However, growth in the Enterprise vertical supported the top line during the quarter. The top line beat the Zacks Consensus Estimate of $1,392 million.
Product revenues totaled $898.1 million compared with $967.5 million in the prior-year quarter and fell short of our revenue estimate of $965.6 million. Net sales from Service were $499.7 million, up from $447.1 million in the year-ago quarter. The 12% year-over-year growth was driven by higher hardware support contracts and strong demand for SaaS. Net sales surpassed our revenue estimate of $425.2 million.
By vertical, revenues from the Cloud business declined to $269.6 million from $375.3 million in the prior-year quarter. The top line fell short of our estimate of $321.2 million. Soft demand for Cloud Ready Data Centers and Automated WAN solutions impeded the revenue growth in this segment. However, positive trends in Hardware Maintenance and professional services partially offset this trend.
Given the worldwide macro uncertainty, clients are cautiously evaluating budgets and project deployment timelines. Along with this constrained approach, many clients are in the process of utilizing prior purchases. These factors affected the net sales from the Cloud vertical.
Service Provider contributed $418.8 million in revenues, down 20% year over year and surpassed our estimate of $416 million. The decline in Automated WAN solutions and Cloud Ready Data Centers impacted the net sales from this segment.
Revenues from Enterprise recorded solid growth of 37% year over year to $709.4 million. The upside was driven by improvement in all customer solutions. Net sales beat our revenue estimate of $653.6 million. Management’s portfolio-differentiation strategy is enabling the Enterprise business to successfully navigate through a challenging macroeconomic environment. Juniper Apstra solutions is witnessing healthy client engagement and the Apstra new logos reported 80% year-over-year growth in the third quarter.
By customer solution, Automated WAN solutions’ revenues aggregated at $436.1 million, down 18% year over year. Net sales from AI-Driven Enterprise were $382.5 million, up 43% year over year. Cloud-Ready data centers contributed $170 million in revenues, down 26% year over year. Hardware Maintenance and Professional services generated $409.2 million in net sales, up from $386 million reported in the year-ago quarter.
By region, revenues from the Americas declined to $836.5 million from $895.8 million a year ago. Net sales from EMEA (Europe, Middle East and Africa) rose to $345.4 million from $320.4 million in the prior-year quarter. The improvement in the EMEA region was driven by strong sales in the Enterprise vertical. In the Asia-Pacific, revenues increased 9% year over year to $215.9 million, backed by improvement in the Enterprise and Service Provider verticals.
Other Details
Non-GAAP gross margin improved to 59.5% compared with 57.2% in the year-ago quarter. Easing of supply chain and other related costs, favorable software revenue mix and productivity improvement initiatives resulted in a year-over-year improvement.
Operating expenses, on a non-GAAP basis, rose to $588 million from $567 million, owing to increasing headcount-related expenses. Non-GAAP operating margin was 17.5%, marginally up from the year-ago quarter’s tally of 17.2%.
Cash Flow & Liquidity
In the third quarter of 2023, Juniper generated $329.2 million of cash from operating activities compared with $51.8 million in the year-earlier quarter.
As of Sep 30, 2023, the company had $1,243.5 million in cash and cash equivalents, with $1,588.5 million of long-term debt.
Outlook
For the fourth quarter, management expects macroeconomic headwinds to persist and customer demand in the Cloud and Service Provider verticals to remain constrained. However, solid traction in the Enterprise vertical is expected to continue in the upcoming quarter.
For the fourth quarter, Juniper estimates revenues of $1,400 million (+/- $50 million). The non-GAAP gross margin is approximated at 60% (+/- 1%). Lower supply chain cost is expected to boost the gross margin in the upcoming quarter. Juniper expects non-GAAP operating expenses to be $580 million (+/- $5 million). It anticipates the non-GAAP operating margin to be 18.6% at the midpoint of the revenue guidance.
For 2024, management expects demand across all verticals to grow despite the persistence of global macroeconomic uncertainties. However, the pace of recovery in the Cloud and Service Provider segment remains uncertain at this time. The company remains committed to its long-term financial target of achieving sustainable revenue growth, profitability and improved operating margin.
Zacks Rank & Stocks to Consider
Juniper currently carries a Zacks Rank #4 (Sell)
Here are some better-ranked stocks that investors may consider.
Model N Inc (MODN - Free Report) , sporting a Zacks Rank #1 (Strong Buy) at present, delivered an earnings surprise of 21.26%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 45.83%. You can see the complete list of today’s Zacks #1 Rank stocks here.
It provides revenue management solutions for life sciences and technology companies, including applications for configure, price, quote, rebates management and regulatory compliance.
NVIDIA Corporation (NVDA - Free Report) , currently sporting a Zacks Rank #1, delivered an earnings surprise of 9.79%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 29.19%.
NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit or GPU. Over the years, the company’s focus has evolved from PC graphics to artificial intelligence-based solutions that now support high-performance computing, gaming and virtual reality platforms.
Arista Networks, Inc. (ANET - Free Report) , presently carrying a Zacks Rank #2 (Buy), is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has delivered an earnings surprise of 12.8%, on average, in the trailing four quarters.
It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed data center segment. Arista is increasingly gaining market traction in 200 and 400-gig high-performance switching products and is well-positioned for healthy growth in the data-driven cloud networking business with proactive platforms and predictive operations.