Key Takeaways From Juniper’s Q4 Results

by Trefis Team
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Juniper Networks (NYSE:JNPR) reported its Q4 earnings on January 29. The company’s results disappointed, with continued weakness in cloud and service provider business weighing in on revenues. While security and enterprise continue to be pillars of strength for Juniper, the deployment weakness, salesforce rejig and federal weakness have led to revenue guidance for Q1 which was ~$100 million lower than consensus estimates. In view of the sustained revenue weakness, despite operating efficiencies, we have revised our price estimate to $25 per share which is 10% lower than the current market price. Our interactive dashboard on Juniper’s Price Estimate outlines our forecasts and estimates for the company. You can modify any of the key drivers to visualize the impact of changes on its valuation.

Juniper’s Q4 revenue declined to $1.18 billion (-5% y-o-y), coming in below management’s guided range. The bulk of the decline came from a cloud revenue fall to $237.5 million (-8% y-o-y) and service provider revenue fall to $516.4 million (-15% y-o-y), which was partially offset by growth in enterprise revenues to $427.1 million (+14% y-o-y).

The company’s current expectation is for revenue growth to return in the second half of 2019, pointing to potential pains for the next couple of quarters at least. In order to achieve its target, management has embarked upon a salesforce realignment and a product refresh to aid growth, with the expectation that the tail of the PX to MTX transition will have much less of an impact on sales growth.

One of the stronger points on the cloud side was management’s commentary around the lack of any competitive displacement – the management believes that the company has not lost any footprint with the cloud providers and port growth is still encouraging. However, as cloud vendors tighten their belts, spending has been tighter impacting Juniper.

In addition to the service provider and cloud weakness, Juniper’s management also alluded to weakness from the government shutdown as a factor contributing to weaker Q1 guidance.

Do not agree with our forecast? Create your own price forecast for Juniper by changing the base inputs (blue dots) on our interactive dashboard.

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