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Juniper's (JNPR) Q1 Earnings Top Estimates on Solid Revenues

Juniper Networks, Inc. JNPR reported impressive first-quarter 2023 results, with the bottom and the top line beating the respective Zacks Consensus Estimate. Despite market uncertainties, the company witnessed a healthy revenue growth year over year. The upside can be attributed to significant growth in AI-Driven Enterprise solutions, Service Provider and Enterprise verticals. Easing of supply chain and elevated logistic and component costs also cushioned the top line to some extent.

Net Income

On a GAAP basis, net income in the first quarter rose to $85.4 million or 26 cents per share from $55.7 million or 17 cents per share in the prior-year quarter. The 53% year-over-year improvement, despite higher operating expenses, was primarily propelled by top-line expansion.

Non-GAAP net income was $156.6 million or 48 cents per share compared with respective figures of $101.6 million or 31 cents per share in the prior-year period. The bottom line beat the Zacks Consensus Estimate by 5 cents.

Juniper Networks, Inc. Price, Consensus and EPS Surprise

 

Juniper Networks, Inc. price-consensus-eps-surprise-chart | Juniper Networks, Inc. Quote

 

Revenues

Quarterly revenues stood at $1,371.8 million, up from $1,168.2 million. Solid growth in Enterprise and Service Provider vertical boosted the top line. However, declining net sales in Cloud vertical partially reversed this positive trend. The top line beat the Zacks Consensus Estimate of $1,345 million.

Product revenues were $912.6 million compared with $744.3 million reported in the prior-year quarter. Service revenues totaled $459.2 million, up 8% year over year owing to high sales of SaaS and software subscriptions.

By vertical, Cloud revenues declined to $264.9 million from $307 million in the year-ago quarter. Many customers rescheduled the project timeline, which affected Cloud revenues in the quarter. Net sales from Service Provider climbed to $549.9 million from $428 million reported in the prior-year period. Improvement in Automated WAN Solutions and AI-Driven Enterprise supported the year-over-year gain from this vertical. Revenues from Enterprise were $557 million, up 29% year over year owing to net sales growth in all customer solutions. Rising demand for Juniper’s cloud-native AI-driven architecture supported the top line.

By customer solution, Automated WAN solutions revenues amounted to $474.5 million, up 21% year over year. Net sales from AI-Driven Enterprise were $317 million, up 48% year over year. Revenues from Cloud-Ready data centers stood at $193.6 million, up 3% year over year.

By region, revenues from Americas rose to $798.5 million from $655 million in the year-ago quarter. Revenues from Europe, the Middle East and Africa (EMEA) increased to $369.9 million from $333.9 million in the prior-year quarter. In the Asia Pacific, net sales were up 13% year over year to $203.4 million. The improvement in Service Provider and Enterprise verticals propelled net sales growth in all the regions. However, a decline in Cloud partially hindered this trend.

Other Details

Gross profit totaled at $771.2 million compared with $649.4 million in the year-ago quarter. Non-GAAP gross margin were 57.8%, higher than midpoint of the guided range owing to net sales growth, favorable customer mix and an improvement in logistics and supply chain costs. Non-GAAP operating margin increased to 14.8% from 11.8% reported in the year-ago quarter. Non-GAAP operating expenses rose 10% year over year, primarily due to headcount related costs.

Cash Flow & Liquidity

In first-quarter 2023, Juniper generated $191.5 million of cash from operating activities compared with $193.1 million in the prior-year period.

As of Mar 31, 2023, the company had $923.5 million in cash and cash equivalents with $1,616.7 million of long-term debt.

Outlook

Despite some improvement, Juniper is still experiencing supply chain challenges and elevated logistics and component costs. The company is planning to work closely with suppliers to minimize the effects of these disruptions. Against the backdrop of macroeconomic challenges, management expects these issues will continue to affect a portion of JNPR’s portfolio through 2023.

For the second quarter, the company approximates revenues of $1,410 million (+/- $50 million). Non-GAAP gross margin is estimated at 58% (+/- 1%). Management expects non-GAAP operating expenses to be $590 million (+/- $5 million). It anticipates the non-GAAP operating margin to be 16.2% at the mid-point of the revenue guidance. The non-GAAP tax rate is approximated at 19%. Assuming a share count of close to 328 million, non-GAAP net income is anticipated to be 54 cents per share (plus or minus 5 cents).

For 2023, management expects sequential revenue growth with normal seasonal patterns. It expects to deliver 9% revenue growth for the full year. Non-GAAP gross margin is approximated at 58% in 2023.

Zacks Rank & Other Stocks to Consider

Juniper currently carries a Zacks Rank #2 (Buy).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Arista Networks, Inc. ANET, carrying a Zacks Rank #2, delivered an earnings surprise of 14.17%, on average, in the trailing four quarters. Earnings estimates for ANET for the current year stand at $5.83 per share. Arista provides cloud networking solutions for data centers and cloud computing environments. The company offers 10/25/40/50/100 Gigabit Ethernet switches and routers optimized for next-generation data center networks.

It continues to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. It is well-poised for growth in data-driven cloud networking business with proactive platforms and predictive operations. Arista has introduced network observability software, DANZ Monitoring Fabric (DMF), on its switching platforms for enterprise-wide traffic visibility and contextual insights.

Meta Platforms Inc. META, sporting a Zacks Rank #1, delivered an earnings surprise of 8.56%, on average, in the trailing four quarters. Meta Platforms is the world’s largest social media platform. The company’s portfolio offering evolved from a single Facebook app to multiple apps like photo and video sharing app Instagram and WhatsApp messaging app owing to acquisitions.

Meta is considered to have pioneered the concept of social networking, which is why it enjoys a first mover’s advantage in this market. However, as developed regions mature, Meta has taken measures to drive penetration in emerging markets of South East Asia, Latin America and Africa.

Splunk Inc. SPLK, sporting a Zacks Rank #1, delivered an earnings surprise of 131.1%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 83.78%. Splunk provides software solutions that enable enterprises to gain real-time operational intelligence by harnessing the value of their data. The company's offerings enable users to investigate, monitor, analyze and act on machine data and big data, irrespective of format or source and help in operational decision-making.

Its software has a broad range of applications, including security analytics, business analytics and IT operations. Splunk is benefiting from healthy customer engagement, evident from the consistently high net retention and competitive win rates alongside solid momentum with large orders overall.

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