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JUNIPER NETWORKS INC (JNPR)·Q2 2024 Earnings Summary

Executive Summary

  • Q2 2024 revenue of $1.19B declined 17% year over year but rose 4% sequentially; Juniper missed Wall Street consensus on both revenue ($1.25B est.) and non-GAAP EPS ($0.44 est.) with actuals of $1.19B and $0.31 respectively; shares fell ~1.3% after-hours on the miss. Bolded: Revenue and EPS missed consensus .
  • Orders improved sharply: double-digit sequential and year-over-year growth overall, with cloud orders up triple-digits year over year as customers invest to support AI initiatives; Enterprise demand exceeded expectations (Mist-led Campus & Branch and enterprise data center) .
  • Non-GAAP operating margin was 10.9% (down from 16.9% YoY; up from 10.6% QoQ); GAAP EPS returned to profit at $0.10 vs $0.00 in Q1; gross margin expanded YoY to 57.9% (down QoQ) .
  • No 2024 guidance provided due to pending HPE acquisition; dividend maintained at $0.22 and buybacks suspended under merger agreement. The HPE deal remains expected to close in late 2024 or early 2025, serving as a key stock narrative anchor .

What Went Well and What Went Wrong

What Went Well

  • Cloud demand inflected: “orders growing double-digits sequentially and year-over-year,” with “particularly robust orders from our cloud customers…investing to support AI initiatives” .
  • Enterprise strength: “better than expected enterprise demand due to continued momentum in our Mist-led Campus & Branch business and strong demand for our Enterprise data center offerings” .
  • Gross margin improved YoY to 57.9% from 56.9% despite lower revenue, reflecting mix and cost discipline; GAAP EPS returned to profit ($0.10) from Q1’s loss .

What Went Wrong

  • Top-line contraction: revenue down 17% YoY; product revenue down 29% YoY; Service Provider vertical down YoY; Enterprise also declined YoY despite order momentum .
  • Consensus miss: Non-GAAP EPS $0.31 vs $0.44 est. (-$0.13); revenue $1.19B vs $1.25B est. (-$59M); Reuters cited continued weak cloud equipment spending and macro uncertainty (higher borrowing costs) .
  • Working capital pressure: cash from operations was -$8.9M vs $343.0M in Q2’23 and $325.0M in Q1’24; DSO rose to 66 days (vs 57 days in Q2’23) .

Financial Results

Revenue, EPS, Margins vs prior periods and estimates

MetricQ2 2023Q1 2024Q2 2024
Revenue ($USD Billions)$1.430 $1.149 $1.190
GAAP Diluted EPS ($USD)$0.07 $0.00 $0.10
Non-GAAP Diluted EPS ($USD)$0.58 $0.29 $0.31
GAAP Operating Margin %9.9% -1.2% 3.8%
Non-GAAP Operating Margin %16.9% 10.6% 10.9%
Gross Margin %56.9% 59.3% 57.9%

Estimate comparison (Q2 2024)

MetricConsensusActualSurprise
Revenue ($USD Billions)$1.25 $1.19 -$0.06B (Miss)
Non-GAAP EPS ($USD)$0.44 $0.31 -$0.13 (Miss)

Note: S&P Global consensus retrieval was unavailable via our estimates tool due to a mapping issue; consensus proxies are sourced from Reuters and MarketBeat with full URLs above.

Segment breakdown (Customer Solutions)

Customer Solution ($USD Millions)Q2 2023Q1 2024Q2 2024
Wide Area Networking$474.6 $350.4 $340.8
Data Center$200.3 $163.1 $168.7
Campus and Branch$371.1 $240.5 $279.9
Hardware Maintenance & Professional Services$384.1 $394.9 $400.2
Total$1,430.1 $1,148.9 $1,189.6

Vertical breakdown

Vertical ($USD Millions)Q2 2023Q1 2024Q2 2024
Cloud$311.0 $250.0 $267.9
Service Provider$473.6 $381.9 $367.1
Enterprise$645.5 $517.0 $554.6
Total$1,430.1 $1,148.9 $1,189.6

KPIs

KPIQ2 2023Q1 2024Q2 2024
DSO (days)57 64 66
Cash from Operations ($USD Millions, quarterly)$343.0 $325.0 -$8.9
Cash, Cash Equivalents & Investments ($USD Millions)$1,296.4 $1,534.9 $1,430.3

Non-GAAP adjustments context (Q2 2024)

Key exclusions included share-based compensation ($61.3M), amortization of intangibles ($10.7M), restructuring ($1.6M), merger-related charges tied to HPE ($9.1M), and tax effects; these reconciliations bridge GAAP operating margin of 3.8% to non-GAAP 10.9% and GAAP diluted EPS $0.10 to non-GAAP $0.31 .

Guidance Changes

Juniper did not provide 2024 guidance during Q2 due to the pending HPE transaction. Capital return actions and other items are summarized below.

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Company financial guidanceFY 2024No guidance provided (Q1) No guidance provided (Q2) Maintained: No guidance
Dividend per shareQ3 2024 payable 9/23/24$0.22 $0.22 (payable 9/23/24; record 9/2/24) Maintained
Share repurchasesFY 2024Suspended per merger agreement Suspended per merger agreement Maintained
Transaction timing (HPE)Close timingLate 2024 / early 2025 Late 2024 / early 2025 reiterated Maintained

Earnings Call Themes & Trends

Note: Juniper did not host an earnings conference call for Q2 2024; management provided a CFO commentary instead .

TopicPrevious Mentions (Q4 2023 and Q1 2024)Current Period (Q2 2024)Trend
AI/technology initiativesEmphasis on AI-Native platform; enterprise orders positive; Ops4AI and AI data center positioning escalated into July press releases Cloud orders up triple-digits YoY; enterprise demand strong (Mist-led Campus & Branch; enterprise data center). Ops4AI lab and validated designs announced mid-July Improving demand tied to AI investments
Demand digestion/macroCustomers impacted by macro headwinds and digestion of prior orders; sequential revenue down in Q1 Better-than-expected demand; overall double-digit order growth; still YoY revenue down; Reuters cites higher borrowing costs affecting cloud capex Mixed: orders up, revenue still normalizing
Product performanceWAN, Data Center, Campus & Branch pressured YoY in Q1; service revenues resilient WAN down YoY; Campus & Branch recovered QoQ; service revenue up YoY; verticals: Service Provider down YoY, Cloud/Enterprise off YoY but Cloud improved QoQ Gradual recovery QoQ; YoY headwinds persist
Regional trendsAmericas/EMEA/APAC down YoY in Q1 All regions down YoY; Americas improved QoQ; EMEA/APAC down QoQ QoQ stabilization in Americas
Regulatory/legal (HPE)Deal announced; guidance suspended; buybacks paused Timing reiterated; guidance still suspended; dividend maintained; buybacks paused Unchanged; deal remains central narrative
R&D and cost disciplineNon-GAAP operating margin improvements in 2023; focused on profitability Non-GAAP opex lower QoQ; margin up QoQ; GM YoY up 100 bps Disciplined opex; margin stabilization

Management Commentary

  • CEO Rami Rahim: “We experienced better than expected demand during the June quarter, with orders growing double-digits sequentially and year-over-year…robust orders from our cloud customers…investing to support AI initiatives…better than expected enterprise demand due to continued momentum in our Mist-led Campus & Branch business and strong demand for our Enterprise data center offerings” .
  • CFO Ken Miller: “Our Q2 financial results were largely in-line with our expectations at the beginning of the quarter…we remain optimistic regarding our long-term financial prospects” .
  • Q1 perspective: “starting to see a recovery in demand from our cloud customers and…another quarter of double-digit order growth in our Mist-led business” .
  • Q4 2023: “record revenue results in 2023…enterprise business…delivered double-digit revenue growth…achieved record non-GAAP EPS…through healthy revenue growth, improved non-GAAP gross margin and disciplined cost management” .

Q&A Highlights

No earnings call was held for Q2 2024; Juniper provided a detailed CFO commentary in lieu of a live Q&A. Key clarifications include:

  • Orders: double-digit growth sequentially and YoY; cloud orders triple-digits YoY as inventory digestion abates .
  • Margin drivers: YoY gross margin expansion; non-GAAP tax rate effects primarily from geographic mix; sequential GAAP EPS improvement on lower opex and higher revenue .
  • Outlook posture: no guidance during pendency of HPE transaction; dividend maintained; repurchases suspended .

Estimates Context

  • Q2 2024 results were below Street consensus: Revenue $1.19B vs $1.25B; non-GAAP EPS $0.31 vs $0.44; Reuters attributed pressure to weak cloud spending and macro uncertainty (higher borrowing costs) .
  • S&P Global consensus data could not be retrieved via our tool due to a CIQ mapping issue; consensus proxies are sourced from Reuters/MarketBeat above.

Key Takeaways for Investors

  • Near-term: Consensus miss on revenue and EPS likely caps the stock absent deal-driven catalysts; watch for continued order momentum translating to revenue in H2 as cloud digestion fades .
  • Demand signals: Cloud orders up triple-digits YoY and enterprise demand better-than-expected suggest a building AI-related backlog; watch conversion rates and lead times .
  • Mix/margins: Non-GAAP operating margin stabilized QoQ; YoY GM up 100 bps—sustaining mix and cost improvements could support EPS recovery as volumes normalize .
  • Cash flow and working capital: Q2 operating cash flow negative and DSO higher; monitor working capital discipline in subsequent quarters .
  • HPE transaction: Guidance suspended; dividend maintained; deal expected late 2024/early 2025. The merger remains the primary stock narrative and potential re-rating catalyst .
  • Product/vertical traction: Campus & Branch and enterprise data center show resilience; Service Provider remains soft YoY—track recovery pace in SP bookings .
  • Strategic positioning: Ops4AI lab and validated AI data center designs reinforce Juniper’s Ethernet-first AI networking thesis, potentially driving medium-term share gains in AI infrastructure .