Juniper Networks reported better than expected Q2 financial results with revenue and EPS of $1,086M and $0.35 both exceeding the mid-point of the guidance range. Revenue was down 1% YOY, primarily due to ongoing supply constraints related to the COVID-19 pandemic, and up 9% sequentially. GAAP net income was $61.2 million, an increase of 32% year-over-year, and an increase of 200% sequentially, resulting in diluted earnings per share of $0.18.
"We experienced solid demand during the June quarter, as our combination of technological differentiation and go- to-market execution drove a second consecutive quarter of positive order growth,” said Juniper’s CEO, Rami Rahim. “While the global macro environment remains uncertain, the strategic importance of the global network has never been clearer and we remain confident regarding the long-term outlook for our business. We delivered better than expected results during the June quarter, with both revenue and non-GAAP earnings per share exceeding the mid-point of our guidance,” said Juniper’s CFO, Ken Miller. “We are entering Q3 with healthy backlog and are optimistic regarding our ability to navigate COVID-19 related supply chain challenges and deliver improved profitability during the upcoming quarter."
Some highlights:
- Orders grew 6% year over year (YOY) and exceeding expectations.
- Juniper secured 400G wins in every geography and vertical it serves,.
- In cloud, revenue increased 9% on a sequential basis, growing modestly for the fifth consecutive quarter, despite being flat YOY. Juniper’s largest cloud customer in Q2 was different as compared to Q1. Juniper expects modest growth for the cloud business in 2020, with some seasonality during Q3.
- The Enterprise business increased 1% in revenue on a sequential basis, exceeding initial expectations in Q2, but had a slight 2% decline YOY. Juniper continues to see strong momentum with Mist, driving confidence in its ability to gain enterprise share and return to growth once the pandemic subsides. Software revenue declined in Q2 and accounted for less than 10% of sales, though software orders grew 7% YOY due to a combination of strong Mist and Security subscriptions.
- The service provider business modestly declined YOY during Q2, as it was most impacted by COVID-19-related supply chain challenges. However, it experienced a second consecutive quarter of positive growth with a 16% increase in revenue. Much of the service provider order strength is attributable to diversification efforts across customers and products over the last few years. Based on current trends and conversations, the service provider business is likely to see a modest decline in 2020.
- Mist, which is the centerpiece of the company’s AI strategy, reported another record quarter with orders rising more than 170% on a YOY basis and new logos increasing by more than 100% YOY. Mist has now secured 4 Fortune 10 accounts and saw a material increase in demand generation from the channel, reflecting the true differentiation of the product.
