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Juniper Networks Exceeds Q4 Expectations

January 29, 2021

Juniper Networks reported preliminary financial results for the three months and fiscal year ended December 31, 2020 and provided its outlook for the three months ending March 31, 2021.

Fourth Quarter 2020 Financial Performance

Net revenues were $1,222.6 million, an increase of 1% year-over-year, and an increase of 7% sequentially.

GAAP operating margin was 8.0%, a decrease from 14.8% in the fourth quarter of 2019, and a decrease from 11.0% in the third quarter of 2020.

Non-GAAP operating margin was 19.3%, a decrease from 20.4% in the fourth quarter of 2019, and an increase from 17.1% in the third quarter of 2020.

GAAP net income was $30.8 million, a decrease of 82% year-over-year, and a decrease of 79% sequentially, resulting in diluted earnings per share of $0.09.

Non-GAAP net income was $181.8 million, a decrease of 9% year-over-year, and an increase of 26% sequentially, resulting in non-GAAP diluted earnings per share of $0.55.

The firm's earnings per share of $0.55 beat the consensus estimate of $0.53. Juniper's revenue of $1,223,000,000 topped the $1,190,000,000 expectation.

Full-Year 2020 Financial Performance

Net revenues were $4,445.1 million, flat year-over-year.

GAAP operating margin was 7.9%, a decrease from 9.9% in fiscal year 2019.

Non-GAAP operating margin was 15.5%, a decrease from 16.7% in fiscal year 2019.

GAAP net income was $257.8 million, a decrease of 25% year-over-year, resulting in diluted earnings per share of $0.77, a decrease of 22% year-over-year. The change in GAAP net income was primarily due to lower interest income, higher operating expenses and lower gross margin, partially offset by a lower tax rate.

Non-GAAP net income was $519.7 million, a decrease of 13% year-over-year, resulting in diluted earnings per share of $1.55, a decrease of 10% year-over-year.

The reconciliation between GAAP and non-GAAP results of operations is provided in a table immediately following the Preliminary Net Revenues by Geographic Region table below.

“We experienced better than expected Q4 demand and ended 2020 on a high note by delivering a second consecutive quarter of year-over-year revenue growth,” said Juniper’s CEO, Rami Rahim. “Despite the various challenges presented by the pandemic, we achieved many of the objectives we laid out earlier in the year, which included growing our enterprise business for a fourth consecutive year, growing our cloud business for a second consecutive year and stabilizing our service provider business. We believe these outcomes are a direct result of the strategic actions we have taken, which should position us for sustainable full-year revenue growth starting this year.”

“We executed well in the December quarter and were able to exceed our revenue and non-GAAP EPS targets,” said Juniper’s CFO, Ken Miller. “We are entering the new year with strong backlog and healthy momentum across each of our core industry verticals. We believe the investments we have made in 2020 to strengthen our technology portfolio and go-to-market organization will not only position us to deliver long-term growth, but also improved profitability over time.”

Balance Sheet and Other Financial Results

Total cash, cash equivalents, and investments as of December 31, 2020 were $2,430.6 million, compared to $2,543.6 million as of December 31, 2019, and $2,561.2 million as of September 30, 2020.

Net cash flows provided by operations for the fourth quarter of 2020 was $125.8 million, compared to $95.7 million in the fourth quarter of 2019, and $116.4 million in the third quarter of 2020.

Days sales outstanding in accounts receivable was 71 days in the fourth quarter of 2020, compared to 66 days in the fourth quarter of 2019, and 60 days in the third quarter of 2020.

Capital expenditures were $32.5 million, and depreciation and amortization expense was $52.1 million during the fourth quarter of 2020.

Juniper Networks Gives First Quarter 2021 Outlook

At the mid-point of guidance, expected revenue is up 6% year-over-year which we anticipate will include less than $10 million of revenue from the recent acquisitions of Apstra, 128 Technology and Netrounds.

We expect non-GAAP gross margin to experience normal seasonal patterns in the first quarter. Excluding the anticipated impact of increased COVID-related costs, non-GAAP gross margin would be approximately flat versus Q1 2020.

We expect first quarter non-GAAP operating expense to increase sequentially, primarily due to the inclusion of approximately $20 million of operating expenses related to recent acquisitions.

Our first quarter non-GAAP EPS guidance includes the dilutive impact of the recent acquisitions.

Our Board of Directors has declared a quarterly cash dividend of $0.20 per share to be paid on March 22, 2021 to stockholders of record as of the close of business on March 1, 2021.

Our guidance for the quarter ending March 31, 2021 is as follows:

Revenue will be approximately $1,055 million, plus or minus $50 million.

Non-GAAP gross margin will be approximately 59.0%, plus or minus 1%.

Non-GAAP operating expenses will be approximately $510 million, plus or minus $5 million.

Non-GAAP operating margin will be approximately 10.6% at the mid-point of revenue guidance.

Non-GAAP tax rate will be approximately 19.5%.

Non-GAAP other income and expense will be an expense of approximately $12 million.

Non-GAAP net income per share will be approximately $0.25, plus or minus $0.05. This assumes a share count of approximately 333 million.

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