Juniper Networks Reports Preliminary Second Quarter 2022 Financial Results

SUNNYVALE, Calif.–Juniper Networks (NYSE: JNPR), a leader in secure, AI-driven networks, today reported preliminary financial results for the three months ended June 30, 2022 and provided its outlook for the three months ending September 30, 2022.

Second Quarter 2022 Financial Performance

Net revenues were $1,269.6 million, an increase of 8% year-over-year and an increase of 9% sequentially.

GAAP operating margin was 8.5%, an increase from 7.3% in the second quarter of 2021, and an increase from 5.0% in the first quarter of 2022.

Non-GAAP operating margin was 13.9%, a decrease from 15.8% in the second quarter of 2021, and an increase from 11.8% in the first quarter of 2022.

GAAP net income was $113.4 million, an increase of 83% year-over-year, and an increase of 104% sequentially, resulting in diluted net income per share of $0.35.

Non-GAAP net income was $136.4 million, a decrease of 3% year-over-year, and an increase of 34% sequentially, resulting in non-GAAP diluted net income per share of $0.42.

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

“We exceeded our revenue forecast during the June quarter and delivered a second consecutive quarter of double-digit year-over-year product revenue growth,” said Juniper’s CEO, Rami Rahim. “Demand signals remain healthy and we are seeing attractive opportunities across our enterprise, cloud and service provider markets. Based on this momentum, the backlog we have built, and our latest expectations regarding supply, I am increasingly optimistic regarding our revenue growth prospects for the year.”

“Our teams executed well against the backdrop of an extremely challenged supply chain environment in the June quarter,” said Juniper’s CFO, Ken Miller. “We have taken actions to improve delivery of our products to customers. While some of these actions are likely to impact profitability over the next few quarters, they are enabling us to better meet customer demand, which should have positive long-term implications for our business. We remain focused on driving improved profitability and expect margins to improve in 2023.”

Balance Sheet and Other Financial Results

Total cash, cash equivalents, and investments as of June 30, 2022 were $1,285.6 million, compared to $1,815.4 million as of June 30, 2021, and $1,668.9 million as of March 31, 2022.

Cash flow used in operations for the second quarter of 2022 was $266.9 million, compared to $257.2 million of cash flow provided by operations in the second quarter of 2021, and $193.1 million of cash flow provided by operations in the first quarter of 2022.

Days sales outstanding in accounts receivable was 74 days in the second quarter of 2022, compared to 59 days in the second quarter of 2021, and 65 days in the first quarter of 2022.

Capital expenditures were $24.5 million, and depreciation and amortization expense was $53.9 million during the second quarter of 2022.

Outlook

These metrics are provided on a non-GAAP basis, except for revenue and share count. Non-GAAP earnings per share is on a fully diluted basis. The outlook assumes that the exchange rate of the U.S. dollar to other currencies will remain relatively stable at current levels.

There is a worldwide shortage of semiconductors and other components impacting many industries. Similar to others, we are experiencing ongoing supply chain challenges, which have resulted in extended lead times, as well as elevated logistics and component costs. We continue to work to resolve supply chain challenges and have increased inventory levels and purchase commitments. We are working closely with our suppliers to further enhance our resiliency and mitigate the effects of disruptions outside of our control. We believe that even with these actions, extended lead times and elevated costs will likely persist for at least the remainder of the year. While the situation is dynamic, at this point in time we believe we will have access to sufficient supplies of semiconductors and other components to meet our financial forecast.

For the third quarter, we expect to see solid revenue growth driven by the strength of our backlog, strong demand and an improved supply outlook. Our better than expected supply outlook is the result of strategic actions we have taken to improve our access to components. We will continue to prioritize delivering products to our customers as timely as possible. We are incurring higher costs to secure supply, which will negatively impact margins over the next several quarters. In addition, we expect to see a similar software mix in the third quarter as we saw in the second quarter. These factors will continue to pressure our gross margin and overall profitability.

Our guidance for the quarter ending September 30, 2022 is as follows:

• Revenue will be approximately $1,350 million, plus or minus $50 million.
• Non-GAAP gross margin will be approximately 56.5%, plus or minus 1.0%.
• Non-GAAP operating expenses will be approximately $550 million, plus or minus $5 million.
• Non-GAAP operating margin will be approximately 15.8% at the mid-point of revenue guidance.
• Non-GAAP other income and expense (OI&E) will be near Q2’22 levels.
• Non-GAAP tax rate will be approximately 19.5%.
• Non-GAAP net income per share will be approximately $0.50, plus or minus $0.05. This assumes a share count of approximately 330 million.