Juniper Networks posted Q3 net revenues of $1,179.8 million, a decrease of 6.0% year-over-year, and a decrease of 2.0% sequentially. GAAP operating margin was 13.6%, a decrease from 18.4% in the third quarter of 2017, and an increase from 13.3% in the second quarter of 2018. Non-GAAP operating margin was 20.0%, a decrease from 23.5% in the third quarter of 2017, and an increase from 18.5% in the second quarter of 2018.
GAAP net income was $223.8 million, an increase of 35.0% year-over-year and an increase of 92.0% sequentially, resulting in diluted earnings per share of $0.64. Non-GAAP net income was $191.0 million, a decrease of 10.0% year-over-year and an increase of 12.0% sequentially, resulting in diluted earnings per share of $0.54.
"We reported better than expected Q3 results, as continued enterprise strength and better than expected service provider results more than offset weakness in the cloud," said Rami Rahim, chief executive officer, Juniper Networks. "While our Q4 outlook is being impacted by the pace of deployments at several cloud customers, we believe this is a temporary headwind and remain confident that we have the right products and strategy in place to grow the business in 2019."
"We delivered better than expected non-GAAP earnings during Q3, as gross margin exceeded the high-end of our forecast and operating expenses came in at the low-end of our outlook. We also completed our $750 million accelerated share repurchase in the period," said Ken Miller, chief financial officer, Juniper Networks. "While we believe we are making the investments needed to win in the market, we remain focused on capturing additional efficiencies and creating shareholder value."
Regarding its outlook, Juniper cited the slower pace of expected deployments by cloud customers for a likely year-over-year decline in revenues for Q4. The company has not seen any impact from Chinese tariffs but said customer buying behavior could be affected and gross margin could be slightly impacted.
Some highlights:
Product
- Routing product revenue: $496 million, down 15% year-over-year and up 1% sequentially, driven by Enterprise and Service Provider, partially offset by a decrease in Cloud. The MX product family declined year-over-year but grew sequentially. The PTX product family declined both year-over-year and sequentially.
- Switching product revenue: $221 million, up 4% year-over-year and down 13% sequentially. While the EX product family grew year-over-year, the QFX product family slightly declined year-over-year due to the timing of deployments.
- Security product revenue: $77 million, up 8% year-over-year and down 3% sequentially due to Enterprise, partially offset by an increase in Service Provider.
- Service revenue: $385 million, down 1% year-over-year and up 2% sequentially.
Vertical
- Cloud: $250 million, down 28% year-over-year and down 11% sequentially, due to lower routing and switching sales.
- Service Provider: $544 million, down 6% year-over-year and up 4% sequentially.
- Enterprise: $386 million, up 15% year-over-year and down 4% sequentially.
