Juniper Networks reported Q4 2018 preliminary net revenues of $1,181.0 million, a decrease of 5% year-over-year, and flat sequentially. GAAP operating margin was 16.7% and non-GAAP operating margin was 21.1%. GAAP net income was $192.2 million, compared to a net loss of $148.1 million in the fourth quarter in 2017, and a decrease of 14% sequentially, resulting in diluted earnings per share of $0.55. The year-over-year change in GAAP net income was primarily due to a lower effective tax rate. Non-GAAP net income was $205.7 million, an increase of 3% year-over-year and an increase of 8% sequentially, resulting in non-GAAP diluted earnings per share of $0.59.
“We are disappointed by our Q4 sales, as continued weakness with several of our cloud and service provider customers more than offset solid momentum in our enterprise business,” said Rami Rahim, chief executive officer, Juniper Networks. “We are taking actions to drive improved sales execution and capitalize on the attractive end market opportunities that we expect to emerge in 2019. We remain confident in our strategy and believe we have the products needed to win in the market.”
Some highlights:
- In security, Juniper experienced 34% quarter over quarter and 18% year over year growth, and surpassed $100 million in quarterly revenue for the first time in several years. The company is confident that its security business will grow in 2019.
- Juniper’s enterprise business grew 13% quarter over quarter and 14% year over year due to broad based strength across products and geographies. Juniper is optimistic this business will continue to see healthy trends in the coming quarters and remain a growth driver for the company in 2019.
- The company’s software business grew 32% year over year and accounted for more than 10% of total revenue during Q4 ’18.
- While the company continued to experience weakness within the cloud and service provider verticals, the 400G transition will present opportunities for Juniper to take share later this year. Additionally, Juniper’s MX5G product refresh, Contrail solutions and partnership with Ericsson position the company to capitalize on carrier 5G deployments.
Regarding its Q1 revenue outlook, Juniper said it sees continued weakness with cloud customers. The outlook also factors in changes to its go-to-market organization, the partial US federal government shutdown and geopolitical uncertainty. Juniper expects to return to year-over-year growth at some point in the second half of the year.
Guidance for the quarter ending March 31, 2019 is as follows:
- Revenue will be approximately $980 million, plus or minus $30 million.
- Non-GAAP gross margin will be approximately 58.5%, plus or minus 1%.
- Non-GAAP operating expenses will be approximately $485 million, plus or minus $5 million.
- Non-GAAP operating margin will be approximately 9% at the midpoint of revenue guidance.
- Non-GAAP net income per share will be approximately $0.20, plus or minus $0.03. This assumes a share count of approximately 349 million.
