Juniper (JNPR) Earnings In Line, Revenues Top; Shares Gain - Analyst Blog
Shares of networking solutions provider Juniper Networks Inc. JNPR gained more than 6% in yesterday’s after-hours trading session following the better-than-expected first-quarter 2015 results. The company’s quarterly revenues beat the Zacks Consensus Estimate, while adjusted earnings (excluding one-time items but including stock-based compensation) came in line with the same.
Juniper’s adjusted earnings per share of 22 cents matched the Zacks Consensus Estimate but increased 15.8% from the year-ago quarter figure of 19 cents. However, on a GAAP basis, earnings came in at 19 cents as against 22 cents in the year-ago quarter.
Juniper Networks Inc. - Earnings Surprise | FindTheCompany
Revenues
Juniper’s revenues of $1.067 billion surpassed the Zacks Consensus Estimate of $1.044 billion and came ahead of its guidance range of $1.020 to $1.060 billion. The company reveled that the better-than-expected top line was mainly driven by better demand from its Cloud, Cable and European Service Providers. However, on a year-over-year basis, total revenue was down 8.8% from the year-ago quarter.
Product revenues (72% of first-quarter revenues) were down 12.8% year over year. However, services revenues increased 3.1% on a year-over-year basis and contributed the remaining 28%.
Juniper’s revenues from Routing products came in at $504.8 million, down 8.2% year over year. Also, revenues from Switching products declined 13.3% from the year-ago quarter to $166.5 million. Moreover, Security products revenues decreased 30.1% year over year to $92.8 million.
Geographically, revenues from the Americas and Asia Pacific were down 13.6% and 9.5%, respectively, on a year-over-year basis. However, revenues from EMEA grew 2.7% year over year to $303.8 million.
Operating Results
Juniper’s gross margin came in at 62.1% versus 61.5% in the year-ago period, primarily due to a favorable product and geography mix. Moreover, adjusted operating margin improved from 11.4% to 13.9% year over year due to stringent cost controls and improved gross margin.
The company reported adjusted net income (including stock-based compensation but excluding amortization, restructuring, goodwill impairment, acquisition-related and other expenses on a proportionate tax basis) of $96.5 million, which decreased from $86.4 million reported a year ago.
Balance Sheet
Juniper exited the first quarter with total cash, cash equivalents and investments of $2.21 billion compared with $1.97 billion at the end of previous quarter. Long-term debt was $1.65 billion.
During the quarter, the company generated cash flow of $219.3 million from operating activities compared with $124.6 million generated in first-quarter 2014. Moreover, the company paid dividend of $40.8 million and repurchased stocks worth $402.4 million in the first quarter. Additionally, Juniper declared a quarterly cash dividend of 10 cents per share, payable on Jun 23, 2015.
Guidance
Juniper foresees healthy demand for networking and remains optimistic about its innovative product and service pipeline. However, it expects tough revenue environment during the first half of 2015.
Juniper expects second-quarter revenues in the range of $1.090 to $1.120 billion. The Zacks Consensus Estimate is pegged at $1.089 billion. Non-GAAP gross margin is expected around 64% (+/- 0.5%).
The company expects non-GAAP operating expenses to be $475 million (+/- $5 million), whereas non-GAAP operating margin will likely be 21%. Non-GAAP earnings per share are expected to range within 38 to 42 cents (mid-point 40 cents), higher than the Zacks Consensus Estimate of 28 cents at the mid-point.
Our Take
Juniper posted better-than-expected first-quarter 2015 results and issued optimistic guidance for the second quarter. Moreover, the company foresees healthy demand for networking and remains optimistic about its innovative product and service pipeline.
We remain encouraged by the company’s product launches, cost reduction initiatives and improving execution. Juniper’s expansion into the software defined network segment should strengthen its position in the networking space.
However, charges related to the company’s restructuring initiatives are expected to impact near-term profitability. Competition from Cisco CSCO and F5 Networks FFIV as well as delays in large projects remain the overhangs.
Currently, Juniper carries a Zacks Rank #3 (Hold).
A better-ranked technology stock is Cirrus Logic Inc. CRUS sporting a Zacks Rank #1 (Strong Buy).
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