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Juniper (JNPR) Q2 Earnings Beat Estimates, Top Line Surges Y/Y
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Juniper Networks, Inc. (JNPR - Free Report) reported solid second-quarter 2023 results, with the bottom and top lines beating the respective Zacks Consensus Estimate.
The company reported a top-line expansion year over year, driven by the solid momentum in AI-Driven Enterprise solutions and healthy demand trends in Enterprise vertical. An improvement in logistic and supply-chain costs supported the top line. However, declining trends in Cloud vertical and macroeconomic headwinds partially impeded revenue growth.
Net Income
Quarterly net income, on a GAAP basis, declined to $24.4 million or 7 cents per share from $113.4 million or 35 cents per share in the prior-year quarter. Despite a top-line improvement, higher costs of revenues and operating expenses led to a decline in the net income.
Non-GAAP net income was $189 million or 58 cents per share compared with the respective figures of $136.4 million or 42 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 3 cents.
Juniper Networks, Inc. Price, Consensus and EPS Surprise
Total revenues were $1,430.1 million, up from $1269.6 million reported in the year-ago quarter. The top line beat the Zacks Consensus Estimate of $1,419 million. Solid growth in the Enterprise vertical and growing adoption of AI-Driven Enterprise solutions boosted the top line. However, declining trends in Cloud vertical partially reversed this trend.
Product revenues stood at $963.2 million compared with $839.8 million reported in the prior-year quarter. The top line surpassed our revenue estimate of $917.1 million. Net sales from Service were $466.9 million, up from $429.8 million in the year-ago quarter backed by the healthy demand for SaaS and software subscriptions. Net sales fell short of our revenue estimate of $497 million.
By vertical, Cloud revenues declined to $311 million from $331 million in the prior-year quarter. The top line fell short of our revenue estimate of $332.7 million. Weakness in Cloud Ready Data Center and Automated WAN solutions induced the decline in this vertical. However, the declining trend was partially reversed by strength in AI-Driven Enterprise and Hardware Maintenance and professional services.
Net sales from Service Provider marginally improved to $473.6 million from $470 million reported in the prior-year period. Revenues fell short of our revenue estimate of $555 million. A decline in Hardware Maintenance and Professional services impacted sales growth in this segment. However, a moderate improvement in all customer solutions led to 1% year-over-year growth.
Revenues from Enterprise registered a sharp 38% year-over-year increase to $645.5 million from $467.8 million. Net sales surpassed our revenue estimate of $526.3 million. Growth in all customer solutions boosted net sales from this segment.
By customer solution, Automated WAN solutions’ revenues amounted to $474.6 million, up 3% year over year. Net sales from AI-Driven Enterprise were $371.1 million, up 63% year over year. Revenues from Cloud-Ready data centers remained relatively flat year over year at $200.3 million. Hardware Maintenance and Professional services contributed $384.1 million to revenues, up from $378.5 million reported in the year-ago quarter.
By region, revenues from the Americas increased by 13% year over year to $848.6 million. Net sales from the EMEA (Europe, Middle East and Africa) rose to $354.6 million from $337.2 million in the prior-year quarter. The improvement in the EMEA and the Americas was driven by sequential growth in Enterprise and Cloud verticals.
In the Asia-Pacific, revenues were up 23% year over year to $226.9 million with improvement in all verticals.
Other Details
The non-GAAP gross margin was 58.3% compared with 56.2% in the year-ago quarter. Higher net sales, declining logistics and supply-chain costs, combined with a favorable software mix and pricing actions, led to the year-over-year improvement.
Non-GAAP operating expenses were $592 million, up from $537 million reported in the prior-year quarter. The increase is primarily due to higher headcount expenses. The non-GAAP operating margin rose to 16.9% compared with 13.9% in the year-earlier quarter.
Cash Flow & Liquidity
In the second quarter of 2023, Juniper generated $343 million of cash from operating activities compared with $266.9 million in the prior-year period.
As of Jun 30, 2023, the company had $1,089.4 million in cash and cash equivalents, with $1,602.6 million of long-term debt.
Outlook
For the third quarter, Juniper expects that soft demand trends are likely to impact sales in the Cloud and Service provider verticals. Macroeconomic uncertainty is likely to affect consumer spending.
For the third quarter, management estimates revenues of $1,385 million (+/- $50 million). The non-GAAP gross margin is approximated at 58.5% (+/- 1%). Juniper expects non-GAAP operating expenses to be $585 million (+/- $5 million). It anticipates the non-GAAP operating margin to be 16.3% at the midpoint of the revenue guidance.
The non-GAAP tax rate is approximated at 19%. Assuming a share count of close to 328 million, the non-GAAP net income is estimated at 54 cents per share (plus or minus 5 cents).
For 2023, the company lowered its expectation for revenue growth in the range of 5-6%, down from 9% expected earlier. It raised estimates for non-GAAP gross margin from approximately 58% to greater than 58% in 2023.
Zacks Rank & Key Picks
Juniper currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the Computer and Technology sector are as follows:
InterDigital, Inc. (IDCC - Free Report) , sporting a Zacks Rank #1 (Strong Buy), delivered an earnings surprise of 170.89%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 579.03%. You can see the complete list of today’s Zacks #1 Rank stocks here.
It is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company designs and develops a wide range of advanced technology solutions, which are used in digital cellular and wireless 3G, 4G and IEEE 802-related products and networks.
Akamai Technologies, Inc. (AKAM - Free Report) , carrying a Zacks Rank #2 (Buy) at present, delivered an earnings surprise of 4.86%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 6.06%.
It is a global provider of content delivery networks and cloud infrastructure services. The company’s solutions accelerate and improve the delivery of content over the Internet, enabling a faster response to requests for web pages, streaming of video & audio, business applications, etc. Its offerings are intended to reduce the impact of traffic congestion, bandwidth constraints and capacity limitations on customers.
Viasat, Inc. (VSAT - Free Report) , currently sporting a Zacks Rank #1, delivered an earnings surprise of 7.98% in the last reported quarter. Viasat designs, develops and markets advanced digital satellite telecommunications and other wireless networking and signal processing equipment. The company serves its high-bandwidth, high-performance communications solutions to the public, as well as military, enterprises and government enterprises.
Viasat provides broadband services named ‘Exede’ in North America. This features the world's highest capacity satellite — ViaSat-1 — satellite broadband networking systems, global mobile satellite services comprising high-speed in-flight Internet, as well as global tracking and messaging, and Wi-Fi and other hotspot support, operations and management systems.
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Juniper (JNPR) Q2 Earnings Beat Estimates, Top Line Surges Y/Y
Juniper Networks, Inc. (JNPR - Free Report) reported solid second-quarter 2023 results, with the bottom and top lines beating the respective Zacks Consensus Estimate.
The company reported a top-line expansion year over year, driven by the solid momentum in AI-Driven Enterprise solutions and healthy demand trends in Enterprise vertical. An improvement in logistic and supply-chain costs supported the top line. However, declining trends in Cloud vertical and macroeconomic headwinds partially impeded revenue growth.
Net Income
Quarterly net income, on a GAAP basis, declined to $24.4 million or 7 cents per share from $113.4 million or 35 cents per share in the prior-year quarter. Despite a top-line improvement, higher costs of revenues and operating expenses led to a decline in the net income.
Non-GAAP net income was $189 million or 58 cents per share compared with the respective figures of $136.4 million or 42 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 3 cents.
Juniper Networks, Inc. Price, Consensus and EPS Surprise
Juniper Networks, Inc. price-consensus-eps-surprise-chart | Juniper Networks, Inc. Quote
Revenues
Total revenues were $1,430.1 million, up from $1269.6 million reported in the year-ago quarter. The top line beat the Zacks Consensus Estimate of $1,419 million. Solid growth in the Enterprise vertical and growing adoption of AI-Driven Enterprise solutions boosted the top line. However, declining trends in Cloud vertical partially reversed this trend.
Product revenues stood at $963.2 million compared with $839.8 million reported in the prior-year quarter. The top line surpassed our revenue estimate of $917.1 million. Net sales from Service were $466.9 million, up from $429.8 million in the year-ago quarter backed by the healthy demand for SaaS and software subscriptions. Net sales fell short of our revenue estimate of $497 million.
By vertical, Cloud revenues declined to $311 million from $331 million in the prior-year quarter. The top line fell short of our revenue estimate of $332.7 million. Weakness in Cloud Ready Data Center and Automated WAN solutions induced the decline in this vertical. However, the declining trend was partially reversed by strength in AI-Driven Enterprise and Hardware Maintenance and professional services.
Net sales from Service Provider marginally improved to $473.6 million from $470 million reported in the prior-year period. Revenues fell short of our revenue estimate of $555 million. A decline in Hardware Maintenance and Professional services impacted sales growth in this segment. However, a moderate improvement in all customer solutions led to 1% year-over-year growth.
Revenues from Enterprise registered a sharp 38% year-over-year increase to $645.5 million from $467.8 million. Net sales surpassed our revenue estimate of $526.3 million. Growth in all customer solutions boosted net sales from this segment.
By customer solution, Automated WAN solutions’ revenues amounted to $474.6 million, up 3% year over year. Net sales from AI-Driven Enterprise were $371.1 million, up 63% year over year. Revenues from Cloud-Ready data centers remained relatively flat year over year at $200.3 million. Hardware Maintenance and Professional services contributed $384.1 million to revenues, up from $378.5 million reported in the year-ago quarter.
By region, revenues from the Americas increased by 13% year over year to $848.6 million. Net sales from the EMEA (Europe, Middle East and Africa) rose to $354.6 million from $337.2 million in the prior-year quarter. The improvement in the EMEA and the Americas was driven by sequential growth in Enterprise and Cloud verticals.
In the Asia-Pacific, revenues were up 23% year over year to $226.9 million with improvement in all verticals.
Other Details
The non-GAAP gross margin was 58.3% compared with 56.2% in the year-ago quarter. Higher net sales, declining logistics and supply-chain costs, combined with a favorable software mix and pricing actions, led to the year-over-year improvement.
Non-GAAP operating expenses were $592 million, up from $537 million reported in the prior-year quarter. The increase is primarily due to higher headcount expenses. The non-GAAP operating margin rose to 16.9% compared with 13.9% in the year-earlier quarter.
Cash Flow & Liquidity
In the second quarter of 2023, Juniper generated $343 million of cash from operating activities compared with $266.9 million in the prior-year period.
As of Jun 30, 2023, the company had $1,089.4 million in cash and cash equivalents, with $1,602.6 million of long-term debt.
Outlook
For the third quarter, Juniper expects that soft demand trends are likely to impact sales in the Cloud and Service provider verticals. Macroeconomic uncertainty is likely to affect consumer spending.
For the third quarter, management estimates revenues of $1,385 million (+/- $50 million). The non-GAAP gross margin is approximated at 58.5% (+/- 1%). Juniper expects non-GAAP operating expenses to be $585 million (+/- $5 million). It anticipates the non-GAAP operating margin to be 16.3% at the midpoint of the revenue guidance.
The non-GAAP tax rate is approximated at 19%. Assuming a share count of close to 328 million, the non-GAAP net income is estimated at 54 cents per share (plus or minus 5 cents).
For 2023, the company lowered its expectation for revenue growth in the range of 5-6%, down from 9% expected earlier. It raised estimates for non-GAAP gross margin from approximately 58% to greater than 58% in 2023.
Zacks Rank & Key Picks
Juniper currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the Computer and Technology sector are as follows:
InterDigital, Inc. (IDCC - Free Report) , sporting a Zacks Rank #1 (Strong Buy), delivered an earnings surprise of 170.89%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 579.03%. You can see the complete list of today’s Zacks #1 Rank stocks here.
It is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company designs and develops a wide range of advanced technology solutions, which are used in digital cellular and wireless 3G, 4G and IEEE 802-related products and networks.
Akamai Technologies, Inc. (AKAM - Free Report) , carrying a Zacks Rank #2 (Buy) at present, delivered an earnings surprise of 4.86%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 6.06%.
It is a global provider of content delivery networks and cloud infrastructure services. The company’s solutions accelerate and improve the delivery of content over the Internet, enabling a faster response to requests for web pages, streaming of video & audio, business applications, etc. Its offerings are intended to reduce the impact of traffic congestion, bandwidth constraints and capacity limitations on customers.
Viasat, Inc. (VSAT - Free Report) , currently sporting a Zacks Rank #1, delivered an earnings surprise of 7.98% in the last reported quarter. Viasat designs, develops and markets advanced digital satellite telecommunications and other wireless networking and signal processing equipment. The company serves its high-bandwidth, high-performance communications solutions to the public, as well as military, enterprises and government enterprises.
Viasat provides broadband services named ‘Exede’ in North America. This features the world's highest capacity satellite — ViaSat-1 — satellite broadband networking systems, global mobile satellite services comprising high-speed in-flight Internet, as well as global tracking and messaging, and Wi-Fi and other hotspot support, operations and management systems.