U.S. Markets close in 41 mins

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

Revenues

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%.

Biggest Tech Breakthrough in a Generation

Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.

A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 7 stocks to watch. The report is only available for a limited time.

See 7 breakthrough stocks now>>>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Juniper Networks, Inc. (JNPR) : Free Stock Analysis Report
 
InterDigital, Inc. (IDCC) : Free Stock Analysis Report
 
Comtech Telecommunications Corp. (CMTL) : Free Stock Analysis Report
 
Viasat Inc. (VSAT) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research