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Juniper Networks, Inc. JNPR reported decent second-quarter 2020 results, with the top line surpassing the Zacks Consensus Estimate. The Sunnyvale, CA-based network products and services provider experienced solid demand during the quarter. Of the top 10 customers, six were Cloud, three were Service Provider and one was in Enterprise.
On a GAAP basis, net income in the June-end quarter increased to $61.2 million or 18 cents per share from $46.2 million or 13 cents per share in the prior-year quarter. The improvement was primarily caused by higher operating income and lower provision for income tax.
Non-GAAP net income was $116.3 million or 35 cents per share (above the mid-point of the company’s guidance range) compared with $139.5 million or 40 cents per share in the year-ago quarter. The bottom line matched the Zacks Consensus Estimate.
Juniper Networks, Inc. Price, Consensus and EPS Surprise
Juniper Networks, Inc. price-consensus-eps-surprise-chart | Juniper Networks, Inc. Quote
Quarterly total revenues amounted to $1,086.3 million (above the mid-point of the company’s guidance range) compared with $1,102.5 million reported in the year-ago quarter. The decline was due to supply constraints that resulted in extended lead times during the quarter. Nevertheless, Juniper experienced strong demand with orders growing mid-single-digits year over year. The top line beat the consensus estimate of $1,053 million.
Product revenues (comprising Routing, Switching and Security and contributing 63.7% to net revenues) in the quarter fell 3% year over year to $692.3 million. The company saw momentum within its customers’ wide area network, particularly for some of its routing products. Service revenues (contributing 36.3% to net revenues) inched up 1.4% to $394 million, driven by strong renewals and service attach rates.
By vertical, revenues in Cloud were stable year over year at $285.5 million. Order trends were healthy with good momentum at multiple hyperscale accounts as well as with Tier 2 Cloud customers. Revenues in Service Provider declined modestly to $436.2 million. This business was most affected by the coronavirus-related supply chain challenges. Revenues in Enterprise declined to $364.6 million from $370.3 million, owing to weaker-than-anticipated results from U.S. Federal business, which was impacted by COVID-19 timing dynamics.
Region-wise, revenues improved to $294.1 million from $291.9 million in the year-ago quarter in Europe, the Middle East, and Africa. Quarterly revenues in the Americas declined 6.2% year over year to $608.8 million. In Asia-Pacific, net revenues increased 13.3% to $183.4 million.
Overall, gross profit came in at $619.6 million compared with $636.8 million in the year-ago quarter. Total operating expenses fell from $554.4 million to $529.1 million in the prior-year quarter. Operating income was $90.5 million compared with $82.4 million in the year-ago quarter. Non-GAAP operating income declined to $155.2 million from $174.4 million, with a margin of 14.3% and 15.8%, respectively.
Juniper stated that its board of directors approved a dividend of 20 cents per share, payable on Sep 22 to shareholders on record as of Sep 1.
Cash Flow & Liquidity
In the first half of 2020, Juniper generated $369.8 million of net cash from operating activities compared with $248.2 million in the prior-year period. As of Jun 30, the company had $1,460.3 million in cash and cash equivalents with $1,720.1 million of long-term debt.
Juniper provided its guidance for the third quarter of 2020. It expects revenues of $1,125 million (+/- $50 million). Non-GAAP gross margin is anticipated to be 59.5% (+/- 1%). Non-GAAP operating expenses are expected to be $478 million (+/- $5 million).
The company estimates non-GAAP operating margin to be nearly 17% at the midpoint of revenue guidance. Non-GAAP net income is expected to be 43 cents per share (+/- 5 cents), assuming a share count of about 334 million.
Zacks Rank & Stocks to Consider
Juniper carries a Zacks Rank #3 (Hold), at present.
Some better-ranked stocks in the broader industry are Turtle Beach Corporation HEAR, T-Mobile US, Inc. TMUS and Ooma, Inc. OOMA. While Turtle Beach and T-Mobile sport a Zacks Rank #1 (Strong Buy), Ooma carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Turtle Beach has a trailing four-quarter earnings surprise of 46.4%, on average.
T-Mobile has a trailing four-quarter earnings surprise of 19.4%, on average.
Ooma has a trailing four-quarter earnings surprise of 228.2%, on average.
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