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Juniper Networks shares are losing ground after the infrastructure hardware provider provided disappointing financial guidance, with weaker-than-expected demand from cloud computing customers.
While Juniper thinks it is a long-term beneficiary of the artificial intelligence software trend, it will take some time for that opportunity to develop. The shift appears to be hurting the company in the short run.
For the second quarter, Juniper (ticker: JNPR) posted revenue of $1.43 billion, up 13% from a year ago and slightly above the Wall Street consensus of $1.42 billion. Adjusted profits of 58 cents a share likewise were three cents above the Street consensus view of 55 cents.
““We delivered better than expected results during the June quarter as our teams continued to execute well and we benefited from improved supply,” CEO Rami Rahim said in a statement. “We were particularly encouraged by the momentum we experienced in our enterprise business, which not only had a record quarter, but also represented both our largest and fastest growing vertical for a third consecutive quarter.”
But management’s financial forecasts proved disappointing. For the third quarter, Juniper sees revenue of $1.385 billion, which would be down about 2% from the year earlier period, falling short of the Street consensus of $1.48 billion. The company projects non-GAAP profits for the quarter of 54 cents, while the consensus call was for 62 cents.
Analysts at Needham, Citi, Raymond James, and others all trimmed their financial forecasts and stock-price targets following the Thursday report.
In prepared remarks, CFO Kenneth Miller said orders were weaker than expected in the second quarter. He said he expects continued weakness in bookings in the third quarter, mostly from cloud customers, but to a lesser extent from telecom service providers.
“We believe the softness in bookings is largely attributable to customer digestion of previously placed orders and certain projects being pushed to future periods,” Miller said. “We expect the macroeconomic environment to remain challenged, which may continue to impact customer spending. These factors are negatively impacting our revenue expectations.”
The company reduced its forecast of full-year revenue growth to between 5% and 6%, from 9%.
On a conference call with analysts, Rahim said that the focus by cloud providers right now is on building their AI offerings, which he says “might be a bit of a negative” for Juniper for now, although he adds that it will help in the longer term.
“To the extent that AI is a new killer app that’s going to be offered by cloud providers…it’s going to result in an increase of traffic…in areas…where we have a significant footprint,” he says.
Juniper’s disappointing results are weighing on shares of other network equipment providers with significant cloud exposure. Particularly hard hit is Arista Networks (ANET), which gets almost half of its business from Microsoft (MSFT) and Meta Platforms (META).
Arista shares, which had already been under pressure this week from concerns that Microsoft and Meta spent less than expected on capital equipment in the June quarter, are down 6% on Friday. That increased the stock’s four-day loss to 13%. Cisco Systems (CSCO) shares were down 2%.
Write to Eric J. Savitz at eric.savitz@barrons.com
Juniper Networks Inc. offered a weak forecast for the third quarter that came in below market estimates, sending its stock down more than 7% in extended trading today.
The company said lower spending by cloud computing clients in a weak economy is to blame for “continued weakness in bookings.”
Earlier, Juniper had reported solid second-quarter results, with earnings before certain costs such as stock compensation of 58 cents per share, beating the market’s forecast of 54 cents per share. Revenue for the quarter increased 13% to $1.43 billion, just ahead of Wall Street’s target of $1.42 billion. All told, Juniper posted a net profit of $24.4 million, down from a profit of $113.4 million one year earlier.
“We delivered better than expected results during the June quarter as our teams continued to execute well and we benefited from improved supply,” said Juniper Chief Executive Rami Rahim (pictured).
However, the CEO conceded on a conference call with analysts that cloud service providers have been reducing their orders for network infrastructure gear such as routers and switches. Of course, that translates into lower sales for Juniper.
“We are currently facing some near-term order weakness from our cloud and to a lesser degree our service provider customers,” Rahim said on the call.
Juniper is a major supplier of computer networking hardware such as routers and Ethernet switches. It’s one of the main rivals to Cisco Systems Inc., and, like that company, also has a sizable business selling network management software for enterprises.
Holger Mueller of Constellation Research Inc. said Juniper deserves credit for beating the market’s expectations in the quarter, noting that it did so despite showing barely any revenue growth in its wide area network and cloud-ready data center portfolios. “All of the growth came from Juniper’s AI-driven enterprise portfolio, where revenue increased more than 60%,” the analyst explained. “Meanwhile, Juniper keeps investing in research and development, hence its profit was lower than a year ago. Had it not done this, the profit would have been decent. Now, investors will be looking at Rami Rahim and team to grow the company responsibly, keeping a careful eye on costs and investments in the next quarter.”
The weakness Juniper is facing meant that executives had to temper their expectations for the third quarter. The company forecast revenue of around $1.38 billion, plus or minus $50 million. That’s some way below Wall Street’s forecast of $1.48 billion.
The lower revenue will have a direct impact on Juniper’s profitability. As a result, executives are calling for third quarter earnings of 54 cents per share, below Wall Street’s consensus estimate of 62 cents.
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TUI, one of Europe’s leading tour operator groups, has extended its tours and activities distribution through Juniper Travel Technology.
Juniper, a travel tech company offering travel booking and management solutions, will integrate TUI’s portfolio of 88,000 excursions, activities, and attraction tickets in 100 countries, making it available for its clients of 270 travel and tourism companies.
The integration with Juniper Travel will “reach new customers based on their needs through seamless integration”, said Nishank Gopalkrishnan, chief business officer of TUI Musement. It expands TUI’s business to business strategy, both with companies in TUI’s established source markets such as the United Kingdom and Germany, and also with Juniper partners in southern Europe and LATAM as new markets for TUI.
TUI Musement reported a 33% increase in sales in the group’s third-quarter financial results. In 2022, TUI sold over seven million experiences.
Juan Mateos, Juniper Travel general manager, said its clients would have “frictionless access” to TUI’s experiences, initially available as a standalone catalog. In the future, it will be part of Juniper’s packaging and call center modules.
July 13 (Reuters) - Juniper Networks (JNPR.N) forecast third-quarter revenue below market estimates on Thursday on lower spending by cloud computing clients in a turbulent economy, sending the shares of the networking equipment maker down 6% after the bell.
Cloud service providers have been cutting back on orders for infrastructure equipment such as routers and switches in a blow for companies like Juniper Networks due to an overall drop in tech spending.
"We are currently facing some near-term order weakness from our cloud and to a lesser degree our service provider customers," CEO Rami Rahim said.
Juniper, which also provides network management software for companies like AT&T, Seagate and BlackBerry, said it expects revenue of about $1.38 billion, plus or minus $50 million, in the third quarter.
Analysts on average expected revenue of $1.48 billion, according to Refinitiv data.
It forecast adjusted earnings per share of 54 cents, plus or minus 5 cents, which was below expectations of 62 cents.
In the second quarter, the company's net revenue rose to $1.43 billion, beating expectations of $1.42 billion, thanks to higher demand and increased product backlog.
On an adjusted basis, the company earned 58 cents per share, compared with estimates of 55 cents.
Reporting by Zaheer Kachwala; Editing by Pooja Desai and Arun Koyyur
Our Standards: The Thomson Reuters Trust Principles.
Juniper Networks Inc JNPR reported Q2 2023 revenue growth of 13% Y/Y to $1.43 billion, beating the consensus of $1.42 billion.
Adjusted EPS increased to $0.58 from $0.42 a year ago and beat the consensus of $0.55.
The adjusted operating margin was 16.9%, an increase from 13.9% a year ago.
Operating cash flow was $343.0 million in Q2, compared to $266.9 million a year ago.
As of June 30, 2023, total cash, cash equivalents, and investments stood at $1.30 billion.
"While we are currently facing some near-term order weakness from our Cloud and to a lesser degree our Service Provider customers, we remain confident in our ability to deliver long-term growth based on continued Enterprise momentum and our expectations for an eventual recovery in our Cloud business," said Rami Rahim, CEO.
Dividend: Juniper Networks declared a cash dividend per share of $0.22, payable on September 22, 2023, to stockholders of record as on September 1, 2023.
Q3 2023 Outlook: JNPR expects revenue of around $1.385 billion, plus or minus $50 million (vs. consensus of $1.48 billion), and adjusted EPS of about $0.54, plus or minus $0.05 (vs. consensus of $0.62).
It expects an adjusted operating margin of ~16.3% at the mid-point of revenue guidance and an adjusted gross margin of ~58.5%, plus or minus 1.0%.
In Q3, the company expects to see continued weakness in bookings, mainly cloud business, due to customer digestion of previously placed orders and some projects pushed to future dates.
JNPR expects the challenging macroeconomic environment to continue impacting customer spending and revenue negatively.
Price Action: JNPR shares traded lower by 6.26% at $27.87 on the last check Friday.
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Juniper Networks Inc. JNPR is set to revolutionize digital experiences at the University of Oxford, the world’s oldest and most prestigious educational institution. By deploying Juniper's cloud-delivered wireless access solution driven by Mist AI, Oxford University aims to provide a modern digital platform for its students, faculty, staff and guests.
With a focus on education, research and personal connectivity, Oxford University continually invests in its technology infrastructure to ensure effective communication, information sharing and collaboration among its community. The adoption of Juniper's AI-driven Wi-Fi solution will optimize the user experience across various departments, libraries, student rooms and colleges.
Juniper's cloud-delivered services, including Juniper Mist Wireless Assurance and Marvis Virtual Network Assistant, equip the university's IT staff with unparalleled insights into individual user experiences. These AI-driven operations offer automated event correlation, predictive analytics and self-driving network operations, streamlining deployment, management and troubleshooting of Wi-Fi services.
One of the key challenges faced by Oxford University was implementing world-class Wi-Fi across its historic buildings, some dating back 800 years. Juniper's Wi-Fi 6 access points, leveraging existing mounting brackets and unique location services, provide optimal coverage with minimal disruption to service. Additionally, the use of Marvis, the industry's only Virtual Network Assistant driven by Mist AI, empowers IT teams to benefit from natural language understanding, event correlation and self-driving operations for enhanced fault isolation, correction and network optimization.
Juniper is set to capitalize on the growing demand for data center virtualization, cloud computing and mobile traffic packet/optical convergence. The company offers new suites of products, such as the T4000 core router, QFX data center platform, ACX and PTX packet/optical solution, among others. With the growing use of smartphones and tablets, mobile data traffic has gone up. This has resulted in higher demand for advanced networking architecture, leading service providers to spend more on routers and switches. Juniper is expected to benefit from the higher spending pattern among carriers to upgrade their networks to support incremental growth in data traffic.
The stock has gained 12.4% over the past year against the industry’s decline of 7.2%.
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Juniper currently has a Zacks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
InterDigital, Inc. IDCC, sporting a Zacks Rank #1, delivered an earnings surprise of 170.89%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 579.03%. It has a long-term earnings growth expectation of 13.9%.
It is a pioneer in advanced mobile technologies that enables wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular and wireless 3G, 4G and IEEE 802-related products and networks.
Akamai Technologies, Inc. AKAM, carrying a Zacks Rank #2, delivered an earnings surprise of 4.9%, on average, in the trailing four quarters. It has a long-term earnings growth expectation of 10%.
Akamai is a global provider of content delivery network and cloud infrastructure services. The company’s solutions accelerate and Strengthen the delivery of content over the Internet, enabling faster response to requests for web pages, streaming of video & audio, business applications, etc. Akamai’s offerings are intended to reduce the impact of traffic congestion, bandwidth constraints and capacity limitations on customers.
Viasat Inc. VSAT, sporting a Zacks Rank #1, enjoys a leading position in the satellite and wireless communications market. Headquartered in Carlsbad, CA, it designs, develops and markets advanced digital satellite telecommunications and other wireless networking and signal processing equipment. The company serves its high-bandwidth, high-performance communications solutions to the public as well as military, enterprises and government enterprises.
Viasat is ramping up investments in the development of its revolutionary ViaSat-3 broadband communications platform, which will have nearly 10 times the bandwidth capacity of ViaSat-2. These satellites will be capable of covering one-third of the world, including all Americas.
Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.
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KATHMANDU, AUGUST 13
Juniper Networks is poised to play a significant role in Nepal's journey towards technological advancement, offering solutions that align seamlessly with the nation's burgeoning digital ambitions.
Since entering the Nepali market in 2012, Juniper has witnessed the remarkable growth achieved by WorldLink across the ISP and IT services sector. Juniper's expertise in networking technology will contribute to a more connected and streamlined future as Nepal continues its drive towards technological progress.
By spearheading networking transformation throughout the country, Juniper has played a pivotal role in delivering worldclass networking connectivity to the people of Nepal.
One of Juniper's remarkable achievements has been its collaboration with WorldLink to transition towards a high-performance 100GbE infrastructure.
This forward-looking approach ensures that Nepal's network infrastructure can effectively support the surging growth in internet connectivity and services.
Sajan Paul, managing director and country manager for India and SAARC at Juniper Networks, expressed optimism about the current state of networking technology adoption in Nepal. Paul underscored Juniper's substantial market share in the realm of internet connectivity and the deployment of cutting-edge technology within the region.
"Juniper Networks holds a substantial market share in the field of internet connectivity. Our deployment of cutting-edge, worldclass technology in Nepal mirrors global standards, ensuring seamless expansion opportunities with modest investments. The longevity of our equipment in the infrastructure landscape is a testament to its exceptional quality," stated Paul.
Rajesh Kumar. Photo: Naresh Shrestha / THT
Rajesh Kumar, technology head for enterprise and government in India and SAARC at Juniper Networks, shed light on Nepal's unique technology needs and trends within its enterprise and government sectors. He emphasised the pivotal role of digital transformation, particularly in government-to-government (G2G) and government-to-citizen (G2C) interactions.
Kumar highlighted the transformative potential of increased bandwidth, such as the shift from 10 GbE to 400 GbE, in sectors like healthcare and education. He stressed Juniper's collaborative efforts with the government to implement these technologies, aiming to enhance citizens' access to essential services through improved connectivity.
Paul offered insights into Juniper Networks' strategic priorities for India and the SAARC region and how Nepal aligns with this broader strategy.
"Juniper's strategic focus encompasses key areas, including optimising engineering processes and testing environments through various technologies. The company is also committed to achieving carbon neutrality by 2025, with technological innovations playing a crucial role in supporting sustainability efforts. Artificial Intelligence (AI) stands out as a critical priority, enhancing operational efficiency from design to ongoing management. Juniper's emphasis on 'experience-first networking' underscores the significance of superior end-user experiences, facilitated by AI and automation tools," added Paul.
"In the context of emerging technologies and infrastructure readiness, Nepal's trajectory parallels India's technology adoption, including the impending deployment of 5G networks. Juniper Networks is well-equipped to support Nepal's 5G deployment, leveraging expertise in open radio access networks (open RAN) and advanced fibre-based infrastructure. As digital transformation gains momentum globally, Nepal is poised to benefit from enhanced connectivity and bandwidth requirements, similar to trends observed in other regions."
Paul outlined Juniper's plan to assist Nepali businesses in transitioning to advanced networking technology, emphasising the company's commitment to collaboration across sectors within Nepal's digital transformation framework. He noted that Juniper's technology can be adapted across diverse infrastructure domains, including education, retail, and power.
On the role of automation and AI-driven networking in Juniper's vision for the future, Kumar explained that automation and AI are pivotal for simplifying intricate networks, expediting service delivery, and elevating user experiences.
He highlighted Juniper's active investment in AI and automation capabilities to minimise operational costs and prioritise an 'experience-first networking' approach.
"That is the journey we are embarking on in terms of automation and AI. This type of AI is indeed well-suited for Nepal as well. As Nepal progresses through its digital transformation, embracing cloud-based government initiatives, establishing data centres, and providing co-location services, these technologies will play a pivotal role in modernising their infrastructure and expediting service delivery. These advancements not only enable rapid innovation but also enhance customer experiences and efficient management," Kumar added.
A version of this article appears in the print on August 14, 2023, of The Himalayan Times.
