Juniper Networks reports preliminary third quarter 2020 financial results
Oct 27, 2020
SUNNYVALE, Calif. -- Juniper Networks (NYSE: JNPR), a leader in secure, AI-driven networks, today reported preliminary financial results for the three months ended September 30, 2020 and provided its outlook for the three months ending December 31, 2020.
Third Quarter 2020 Financial Performance
Net revenues were $1,138.2 million, up slightly year-over-year, and an increase of 5% sequentially.
GAAP operating margin was 11.0%, a decrease from 12.2% in the third quarter of 2019, and an increase from 8.3% in the second quarter of 2020.
Non-GAAP operating margin was 17.1%, a decrease from 18.3% in the third quarter of 2019, and an increase from 14.3% in the second quarter of 2020.
GAAP net income was $145.4 million, an increase of 46% year-over-year, and an increase of 138% sequentially, resulting in diluted earnings per share of $0.43.
Non-GAAP net income was $144.4 million, a decrease of 13% year-over-year, and an increase of 24% sequentially, resulting in non-GAAP diluted earnings per share of $0.43.
“ We experienced better than expected demand during the September quarter, as our teams continued to execute extremely well, despite the various challenges created by the pandemic,” said Juniper’s CEO, Rami Rahim. “I am encouraged by the business momentum we are seeing, particularly in our enterprise and service provider verticals. Given the strength of our current portfolio and the investments we have made in our go-to-market organization, I am confident not only in our Q4 outlook, but our ability to deliver organic growth in 2021.”
“We delivered better than expected Q3 sales and achieved our non-GAAP EPS forecast,” said Juniper’s CFO, Ken Miller. “We are entering Q4 with healthy backlog and making progress against COVID-19 related supply chain challenges. While we will continue to effectively manage costs and remain committed to improving profitability, we are making the needed investments to capitalize on the opportunities ahead and expect to deliver sustained growth and margin expansion over time.”
Balance Sheet and Other Financial Results
Total cash, cash equivalents, and investments as of September 30, 2020 were $2,561.2 million, compared to $2,826.7 million as of September 30, 2019, and $2,570.3 million as of June 30, 2020.
Net cash flows provided by operations for the third quarter of 2020 was $116.4 million, compared to $185.0 million in the third quarter of 2019, and $97.6 million in the second quarter of 2020.
Days sales outstanding in accounts receivable was 60 days in the third quarter of 2020, compared to 51 days in the third quarter of 2019, and 63 days in the second quarter of 2020.
Capital expenditures were $24.1 million, and depreciation and amortization expense was $49.9 million during the third quarter of 2020.
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. The Q4 guidance includes the impact of the acquisition of Netrounds but excludes any impact from the pending acquisition of 128 Technology.
At the mid-point of our Q4 guidance we expect to see sequential revenue and earnings growth. Confidence in our forecast is driven by strong backlog and healthy momentum. Our Q4 forecast assumes sequential growth in our Enterprise and Cloud verticals and a slight sequential decline in Service Provider.
We expect to see sequential volume-driven improvements in non-GAAP gross margin. In addition, we expect logistics and other supply chain-related costs due to the effects of the ongoing pandemic to remain elevated but slightly lower than Q3 levels.
We expect fourth quarter non-GAAP operating expense to be modestly up from Q3 levels. We will remain focused on prudent cost management while continuing to invest to capture future opportunities.
We expect non-GAAP Other Income & Expense, or OI&E, to be an expense of approximately $15 million on a net basis in Q4 and remain at this level in future periods. The expected negative impact in OI&E is due to the lower interest rate environment, our capital return initiatives, and recently announced acquisitions.
Our Board of Directors has declared a cash dividend of $0.20 per share to be paid on December 22, 2020 to shareholders of record as of the close of business on December 1, 2020. We remain committed to paying our dividend and will remain opportunistic with respect to share buybacks.
Our guidance for the quarter ending December 31, 2020 is as follows:
- Revenue will be approximately $1,190 million, plus or minus $50 million.
- Non-GAAP gross margin will be approximately 60%, plus or minus 1.0%.
- Non-GAAP operating expenses will be approximately $482 million, plus or minus $5 million.
- Non-GAAP operating margin will be approximately 19.5% at the mid-point of revenue guidance.
- Non-GAAP OI&E will be approximately negative $15 million.
- Non-GAAP tax rate will be approximately 19.5%.
- Non-GAAP net income per share will be approximately $0.53, plus or minus $0.05. This assumes a share count of approximately 333 million.
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