Juniper Q1: Sales Transformation, Product Refresh To Provide Long Term Stability

Juniper Networks (NYSE:JNPR) reported its Q1 on April 25. The company beat consensus expectations on revenue and EPS. The company’s product roadmap over the next couple of quarters, coupled with the sales transformation initiatives is likely to help Juniper achieve stability in 2019 and accelerate in 2020. However, the management admitted that the pace and timing of deployments remain a key issue for the company.

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, and see more Trefis technology company data here.

In our pre-earnings note, we mentioned, “The company’s management guided for a Q1 revenue range of $950-$1,010 million (-12.2% to -6.7% decline on a y-o-y basis). We believe management’s guidance is conservative due to the customer spending and salesforce-related issues faced in Q4. Accordingly, we expect the company to post revenue closer to the upper end of its guided range.” The company’s Q1 revenue to $1 billion gives us confidence that Juniper is likely to deliver on its promise of strength in the second half of the year.

Q1 Highlights

• Product: Total product revenue declined to $619 million (-13% y-o-y). Routing revenue declined to $375 million (-8% y-o-y) due to weakness in service provider customers, which was partially offset by strength in enterprise. Switching revenue declined to $176 million (-23% y-o-y) due to weakness in cloud customers, again partially offset by enterprise strength. Security revenue declined to $68 million (-7% y-o-y) due to weakness in cloud customers, again partially offset by enterprise strength.
• Service: Total revenue grew to $383 million (+3% y-o-y).
• Verticals: Revenues from cloud customers declined to $223 million (-18% y-o-y), with weakness stemming from routing and switching. Revenues from service provider customers declined to $436 million (-9% y-o-y), with weakness stemming from routing. Revenues from enterprise customers grew to $343 million (+3% y-o-y), with strength stemming from routing and offset by weakness in switching.

• On business seasonality: Q2 and Q4 are seasonally stronger, with Q1 and Q3 being weaker. The company’s management expects Q3 to be relatively stronger this year (+3% y-o-y), with Q1 as the bottom.
• Guidance for Q2: Management expects total revenue to be in the range of $1.07-$1.13 billion and diluted EPS to be in the range of $0.36-$0.42.
• Juniper has changed its go-to market strategy in the enterprise space and re-oriented the salesforce to better align with the company’s growth objectives and also improve the company’s forecasting rigor.

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