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Juniper's (JNPR) Q2 Earnings In Line, Revenues Down Y/Y

Zacks Equity Research

Juniper Networks, Inc. JNPR reported lackluster second-quarter 2019 financial results, wherein both the top line and the bottom line decreased on a year-over-year basis.

Net Income

On a GAAP basis, net income for the June quarter decreased to $46.2 million or 13 cents per share from $116.5 million or 33 cents per share posted in the year-earlier quarter, primarily due to lower revenues and higher total operating expenses.

Non-GAAP net income was $139.5 million or 40 cents per share compared with $170.2 million or 48 cents per share reported a year ago. The bottom line matched the Zacks Consensus Estimate.

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


Quarterly total net revenues were $1,102.5 million compared with $1,204.1 million reported in the prior-year quarter. This was primarily due to weakness within the service provider and enterprise verticals. The top line lagged the consensus estimate of $1,110 million.

Product revenues (comprising Routing, Switching and Security, and accounting for 64.8% of total net revenues) for the quarter decreased 13.5% year over year to $713.9 million primarily due to lower routing and switching businesses. Service revenues (accounting for 35.2% of total net revenues) were up 2.5% to $388.6 million.

By vertical, net revenues from Cloud business remained almost flat year over year at $285 million, reflecting slower-than-expected pace of deployments. Net revenues from Service Provider unit were down 14.8% to $447.2 million, due to the weakness in Asia Pacific and Americas. Net revenues from Enterprise business declined to $370.3 million from $394.8 million due to function of timing.

Geographically, net revenues decreased to $291.9 million from $308.9 million in Europe, Middle East, and Africa. Quarterly revenues in the Americas decreased 4% year over year to $648.8 million due to soft service provider business. For Asia Pacific, net revenues decreased 26.3% to $161.8 million.

Other Details

Gross profit came in at $636.8 million compared with $700.9 million in the year-ago quarter mainly due to lower revenues. Total operating expenses increased from $541.1 million to $554.4 million. Operating income was $82.4 million compared with $159.8 million. Non-GAAP operating income decreased to $174.4 million from $222.3 million, with margin of 15.8% and 18.5%, respectively.

Cash Flow & Liquidity

During the first six months of 2019, Juniper generated $248.2 million of net cash from operations compared with $441.4 million in the prior-year period. As of Jun 30, 2019, the computer network equipment maker had $1,381.3 million in cash and equivalents with $1,490.5 million of long-term debt.

Q3 Outlook

Juniper has provided its guidance for third-quarter 2019. The company expects soft demand to continue in its service provider business. It expects non-GAAP gross margins to be pressured by China tariffs, despite its ongoing mitigation efforts. It anticipates revenues of about $1,145 million (+/- $30 million). Non-GAAP gross margin is projected to be around 60% (+/- 1%). Non-GAAP operating expenses are expected to be nearly $488 million (+/- $5 million). The company expects non-GAAP operating margin to be around 17.5% at the midpoint of revenue guidance. Non-GAAP net income is anticipated to be around 46 cents per share (+/- 3 cents), assuming a share count of almost 348 million.

Zacks Rank & Stocks to Consider

Juniper currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Comtech Telecommunications Corp. CMTL, InterDigital, Inc. IDCC and Viasat, Inc. VSAT. While Comtech sports a Zacks Rank #1 (Strong Buy), InterDigital and Viasat carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.   

Comtech surpassed earnings estimates in each of the trailing four quarters, the average positive surprise being 216.7%.

InterDigital surpassed earnings estimates thrice in the trailing four quarters, the average positive surprise being 49.3%.

Viasat surpassed earnings estimates in each of the trailing four quarters, the average positive surprise being 201.1%.

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