Juniper Networks reports preliminary third quarter 2016 financial results
Oct 25, 2016
SUNNYVALE, CA --(Marketwired - October 25, 2016): Juniper Networks (NYSE: JNPR), an industry leader in automated, scalable and secure networks, today reported preliminary financial results for the three months ended Sept. 30, 2016 and provided its outlook for the three months ending Dec. 31, 2016.
Net revenues for the third quarter of 2016 were $1,285.3 million, an increase of 3% year-over-year and an increase of 5% sequentially.
Juniper's GAAP operating margin for the third quarter of 2016 was 19.5%, a decrease from 20.7% in the third quarter of 2015, and an increase from 16.7% in the second quarter of 2016. Non-GAAP operating margin for the third quarter of 2016 was 24.4%, a decrease from 25.5% in the third quarter of 2015, and an increase from 22.5% in the second quarter of 2016.
Juniper posted GAAP net income of $172.4 million, a decrease of 13% year-over-year and an increase of 23% sequentially. GAAP diluted earnings per share for the third quarter of 2016 was $0.45. Non-GAAP net income was $222.0 million, flat year-over-year and an increase of 16% sequentially. Non-GAAP diluted earnings per share for the third quarter of 2016 was $0.58.
The reconciliation between GAAP and non-GAAP results of operations is provided in a table immediately following the Preliminary Net Revenues by Market table below.
"I am pleased to report a solid quarter of revenue growth and operating performance. We are executing well on our strategy, with a product and innovation pipeline that has never been stronger," said Rami Rahim, chief executive officer at Juniper Networks. "One of the most important trends happening around us is the shift to the cloud, which is shaping our strategy and plays to Juniper's core competencies in building high-performance networks. I am optimistic with where we are headed as a company and our ability to continue to innovate, deliver value to our customers and expand our business opportunities."
"We delivered solid profitability and continued to generate strong cash flow from operations, with meaningful sequential improvements across key performance metrics: earnings per share, operating margin and operating income," said Ken Miller, chief financial officer at Juniper Networks. "We believe our strategy, products and ongoing investments will enable us to drive top-line growth and grow shareholder value for the long-term."
Other Financial Highlights
Total cash, cash equivalents, and investments as of Sept. 30, 2016 were $3,480 million, compared to $3,491 million as of June 30, 2016, and $3,247 million as of Sept. 30, 2015.
Juniper's net cash flow provided by operations for the third quarter of 2016 was $245 million, compared to net cash provided by operations of $354 million in the second quarter of 2016, and $293 million in the third quarter of 2015.
Days sales outstanding in accounts receivable, or "DSO," was 53 in the third quarter of 2016, compared to 55 days in the second quarter of 2016, and 42 days in the third quarter of 2015.
Capital expenditures were $46 million and depreciation and amortization expense was $52 million during the third quarter of 2016.
Juniper's Board of Directors has declared a quarterly cash dividend of $0.10 per share to be paid on Dec. 22, 2016 to shareholders of record as of the close of business on Dec. 1, 2016.
During the third quarter of 2016, the Company repurchased approximately $112 million of common stock and paid $38 million in dividends. Since the first quarter of 2014, inclusive of share repurchases and dividends, the Company has returned approximately $4.06 billion of capital to shareholders against its commitment to return a total of $4.1 billion by the end of 2016.
Juniper Networks remains focused on executing to its strategy and capitalizing on the momentum of its new products, and expects continued strength with cloud providers and enterprise customers. While the Company continues to see pricing pressure and product mix fluctuations, it remains focused on cost improvements. The Company expects gross margin to remain approximately at their Q3 levels in the near-term.
Juniper's guidance for the quarter ending Dec. 31, 2016 is as follows:
Revenues will be approximately $1,350 million, plus or minus $30 million.
Non-GAAP gross margin will be approximately 63%, plus or minus 0.5%.
Non-GAAP operating expenses will be approximately $510 million, plus or minus $5 million.
Non-GAAP operating margin will be approximately 25% at the midpoint of revenue guidance.
Non-GAAP tax rate approximately flat from the third quarter.
Non-GAAP net income per share will range between $0.59 and $0.65 on a diluted basis. This assumes a flat share count from the third quarter.
The outlook assumes that the exchange rate of the U.S. dollar to other currencies will remain relatively stable at current levels.
All forward-looking non-GAAP measures exclude estimates for amortization of intangible assets, share-based compensation expenses, acquisition-related charges, restructuring charges (benefits), impairment charges, professional services related to non-routine stockholder matters, litigation settlement and resolution charges, gain or loss on equity investments, retroactive impact of certain tax settlements, non-recurring income tax adjustments, valuation allowance on deferred tax assets, and the income tax effect of non-GAAP exclusions, and do not include the impact of any future acquisitions, divestitures, or joint ventures that may occur in the quarter. Juniper is unable to provide a reconciliation of non-GAAP guidance measures to corresponding GAAP measures on a forward-looking basis without unreasonable effort due to the overall high variability and low visibility of most of the foregoing items that have been excluded. For example, share-based compensation expense is impacted by the Company's future hiring needs, the type and volume of equity awards necessary for such future hiring, and the price at which the Company's stock will trade in those future periods. Amortization of intangible assets is significantly impacted by the timing and size of any future acquisitions. The items that are being excluded are difficult to predict and a reconciliation could result in disclosure that would be imprecise or potentially misleading. Material changes to any one of these items could have a significant effect on our guidance and future GAAP results. Certain exclusions, such as amortization of intangible assets and share-based compensation expenses, are generally incurred each quarter, but the amounts have historically and may continue to vary significantly from quarter to quarter.
Third Quarter 2016 Financial Commentary Available Online
A CFO Commentary reviewing the Company's third quarter 2016 financial results, as well as fourth quarter 2016 financial outlook will be furnished to the SEC on Form 8-K and published on the Company's website at http://investor.juniper.net. Analysts and investors are encouraged to review this commentary prior to participating in the conference call webcast.
Conference Call Webcast
Juniper Networks will host a conference call webcast today, Oct. 25, 2016, at 2:00 pm PT, to be broadcast live over the Internet at http://investor.juniper.net. To participate via telephone in the US, the toll free dial-in number is 1-877-407-8033. Outside the US, dial +1-201-689-8033. Please call 10 minutes prior to the scheduled conference call time. The webcast replay will be archived on the Juniper Networks website.