Juniper Networks (JNPR), an industry leader in automated, scalable and secure networks, has just reported earnings. Below we have the numbers:

tResults for the three months and twelve months ended December 31, 2017 were give and it and provided its outlook for the three months ending March 31, 2018.

Fourth Quarter 2017 Financial Performance

Net revenues were $1,239.5 million, a decrease of 11% year-over-year and 1% sequentially.

GAAP operating margin was 16.4%, a decrease from 20.7% in the fourth quarter of 2016, and a decrease from 18.4% in the third quarter of 2017.

Non-GAAP operating margin was 22.7%, a decrease from 26.5% in the fourth quarter of 2016, and a decrease from 23.5% in the third quarter of 2017.

GAAP net loss was $148.1 million, a decrease of 178% year-over-year and 189% sequentially, resulting in diluted loss per share of $0.40. GAAP net loss was primarily due to the Tax Cuts and Jobs Act, which resulted in an estimated $289.5 million of tax expense.

Non-GAAP net income was $199.4 million, a decrease of 22% year-over-year and 6% sequentially, resulting in diluted earnings per share of $0.53.

Full Year 2017 Financial Performance

Net revenues were $5,027.2 million, an increase of 1% year-over-year.

GAAP operating margin was 16.9%, a decrease from 17.8% in fiscal year 2016.

Non-GAAP operating margin was 22.8%, a decrease from 23.4% in fiscal year 2016.

GAAP net income was $306.2 million, a decrease of 48% year-over-year, resulting in diluted earnings per share of $0.80, a decrease of 48% year-over-year. The change in GAAP net income was primarily due to the Tax Cuts and Jobs Act, which resulted in an estimated $289.5 million of tax expense.

Non-GAAP net income was $809.0 million, flat year-over-year, resulting in diluted earnings per share of $2.11, an increase of 1% year-over-year.

The reconciliation between GAAP and non-GAAP results of operations is provided in a table immediately following the Preliminary Net Revenues by Geographic Region table below.

“We continue to lead the way in helping our customers build more automated, cost efficient, scalable networks,” said Rami Rahim, chief executive officer, Juniper Networks. “We believe strongly that we have the right product portfolio in place to win in this dynamic market.”

Balance Sheet and Other Financial Results

Total cash, cash equivalents, and investments as of December 31, 2017 were $4,021.0 million, compared to $3,657.3 million as of December 31, 2016, and $4,199.3 million as of September 30, 2017.

Net cash flows provided by operations for the fourth quarter of 2017 was $214.2 million, compared to $335.9 million in the fourth quarter of 2016, and $201.9 million in the third quarter of 2017.

Days sales outstanding in accounts receivable, or “DSO,” was 62 days in the fourth quarter of 2017, compared to 68 days in the fourth quarter of 2016, and 52 days in the third quarter of 2017.

Capital expenditures were $53.6 million and depreciation and amortization expense was $55.0 million during the fourth quarter of 2017.

The Company today announced an expansion of its capital return plan. Juniper’s Board of Directors has approved a new $2 billion buyback authorization, and declared a quarterly cash dividend of $0.18 per share to be paid on March 22, 2018 to shareholders of record as of the close of business on March 1, 2018. Additional details can be found in the press release issued today at http://investor.juniper.net/investor-relations/default.aspx.

Outlook

These metrics are provided on a non-GAAP basis, except for revenue and share count. Earnings per share is on a fully diluted basis. The outlook assumes that the exchange rate of the U.S. dollar to other currencies will remain relatively stable at current levels.

The first quarter revenue outlook reflects ongoing deployment delays as Juniper expects its large cloud customers to continue their architectural transition, which is expected to result in below normal seasonality. The Company remains confident in its competitive position and strong relationship with these strategic customers.

Beyond the first quarter, Juniper expects revenue to grow on a sequential basis and return to year-on-year growth by the end of the year.

The Company expects gross margins for the quarter to remain under pressure, due to lower volume and product mix, resulting from the architectural shifts discussed above. The Company expects full year margins to improve directionally from Q1’18 levels.

Juniper expects to manage operating expenses prudently and to increase operational efficiencies, both in the first quarter and throughout the year.

As a result of the Tax Cuts and Jobs Act, the Company plans to repatriate approximately $3 billion. Juniper expects the new territorial tax system to provide lower cost access to nearly all global free cash flow on an ongoing basis. The Company intends to use the repatriated cash to invest in its business, support value-enhancing M&A, and fund its return of capital to shareholders.

Juniper’s guidance for the quarter ending March 31, 2018 is as follows:

  • Revenues will be approximately $1,050 million, plus or minus $30 million.
  • Non-GAAP gross margin will be approximately 58.0%, plus or minus 1.0%.
  • Non-GAAP operating expenses will be approximately $485 million, plus or minus $5 million.
  • Non-GAAP operating margin will be approximately 12.0% at the midpoint of revenue guidance.
  • Non-GAAP tax rate will be approximately 21.0%.
  • Non-GAAP net income per share will be approximately $0.25, plus or minus $0.03. This assumes a share count of approximately 360 million.

The guidance above is provided under ASC 605. Juniper will adopt ASC 606 for Q1’18 and intends to provide a ASC 606 to 605 reconciliation when it reports Q1 results.

All forward-looking non-GAAP measures exclude estimates for amortization of intangible assets, share-based compensation expenses, acquisition-related charges, restructuring charges, impairment charges, litigation settlement and resolution charges, supplier component remediation charges and recoveries, gain or loss on equity investments, retroactive impact of certain tax settlements, significant effects of tax legislation and judicial or administrative interpretation of tax regulations, including the impact of income tax reform, non-recurring income tax adjustments, valuation allowance on deferred tax assets, and the income tax effect of non-GAAP exclusions, and do not include the impact of any future acquisitions, divestitures, or joint ventures that may occur in the period. Juniper is unable to provide a reconciliation of non-GAAP guidance measures to corresponding U.S. generally accepted accounting principles or GAAP measures on a forward-looking basis without unreasonable effort due to the overall high variability and low visibility of most of the foregoing items that have been excluded. For example, share-based compensation expense is impacted by the Company’s future hiring needs, the type and volume of equity awards necessary for such future hiring, and the price at which the Company’s stock will trade in those future periods. Amortization of intangible assets is significantly impacted by the timing and size of any future acquisitions. The items that are being excluded are difficult to predict and a reconciliation could result in disclosure that would be imprecise or potentially misleading. Material changes to any one of these items could have a significant effect on our guidance and future GAAP results. Certain exclusions, such as amortization of intangible assets and share-based compensation expenses, are generally incurred each quarter, but the amounts have historically and may continue to vary significantly from quarter to quarter.

Fourth Quarter and Fiscal Year 2017 Financial Commentary Available Online

A CFO Commentary reviewing the Company’s fourth quarter and fiscal year 2017 financial results, as well as first quarter 2018 financial outlook will be furnished to the SEC on Form 8-K and published on the Company’s website at http://investor.juniper.net. Analysts and investors are encouraged to review this commentary prior to participating in the conference call webcast.

Conference Call Webcast

Juniper Networks will host a conference call webcast today, January 30, 2018, at 2:00 pm PT, to be broadcast live over the Internet at http://investor.juniper.net. To participate via telephone in the US, the toll free dial-in number is 1-877-407-8033. Outside the US, dial +1-201-689-8033. Please call 10 minutes prior to the scheduled conference call time. The webcast replay will be archived on the Juniper Networks website.

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