JNPR - Earnings call transcript Q4 2018

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Operator

Greetings and welcome to the Juniper Networks Fourth Quarter and Fiscal Year 2018 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jess Lubert. you. Thank

begin. may You

Jess Lubert

Good call. welcome operator. quarter our XXXX conference afternoon you, to and fourth Thank

X-K today Rami contains me statements Chief based Joining are our These other are and press Financial Ken Officer; Commentary CFO release on materially. and Officer. discussed filed and our our risks our in Miller, today, actual subject filings. and to results may Today's most uncertainties, in SEC expectations. and furnished are differ call current recent certain risks the with XX-Q, statements Rahim, forward-looking These Chief Executive

Our and any forward-looking obligations statements forward-looking speak undertakes update only as of to Juniper today, statements. no

Our Investor on consider in non-GAAP discussion information the Relations Reconciliation section of results. information a of why we useful under non-GAAP Company's included today Commentary is will view financial our results financial Reports. today's on can be the release. found website, press include Financial

and XXX, X, are a QX 'XX guidance provided 'XX January on forward-looking adopted ASC results under XXXX, retrospective we basis. fiscal and modified Our on which

prepared our to one questions. With Please up. follow now will remarks, I take to will one and the that, call question Rami. hand limit over yourself we Following

Rami Rahim

EPS of due in rate. margins, expected weaker than results Thank end as of everyone. afternoon, and experienced the of strength forecast than and cost gross a came trends with customers. our $X.XX the by continued lower Non-GAAP service above offset of healthy and the cloud slightly We to quarter revenue business our another you, quarter. midpoint more tax control provider December of enterprise Total X,XXX mix was below good was guidance million during low our our in

business to half in our we we disappointed business some second are we the upcoming should back success QX expect sales, of the areas to year-over-year of XXXX. at seeing point the through and growth drive by during year several help that While are continue our

We momentum. are particularly encouraged by the

broad to quarter-over-quarter grew in due XX% and geographies. product enterprise and business year-over-year based seeing our strength which are XX% across We

platforms and to Contrail enterprise vertical, in Multicloud investment over business MXXXXXX the healthy new and remain go-to-market our as see such coming our the and in making the remain the we quarters interest continue growth a XXXX. engine, Given Enterprise this enterprise optimistic in are with for will breadth trend strength we Juniper strong driver customer along in

security, also it's XX% years. think quarter the first several I year-over-year mentioning quarter quarterly the for in surpassed we which in and over in success a XXX seeing time are worth and million XX% revenue grew

and broad-based wide Our new product market drive the a variety strength of across continued customers. to in resonate

and see saw to recently on high-end greater continuing which software Based business in will X volume firewall Our we seeing, year-over-year in XXXX. million. the remain confident that deals high we're card introduced grew our line which helped business XX% security drive XXXX. rising and momentum than accounted This We're our XXX% increasing fourth grow particularly by strong the revenue offerings of driven full demand, with XXX% off-box a success more from family for more than on a in quarter. during a more year-over-year of quarter strength XX% and combination of basis Contrail the than the revenues on-box our total year for than was

models percentage within to new software provider cloud products we expect monetize offerings the value not introduce will the new we designed experience next the quarters. revenue of we linear, to do weakness continue few success better as to of especially believe as increase be verticals. to service our time, software our Conversely, continue we over and a and While business over our

hyperscale Our run have customers several their few cloud has as business harder. to last networks challenged remained quarters over our the continued of

we growth have in guided wins us. is growth cases we our believe transition new behind is network The what on customers, the historically November, our and will hearing this used of footprint portion from cloud to MX holding growth support Based for played at are now Day. the confident port than we that cloud our hyperscale largely continued While where expected. PTX drive and driving pace customer's our we the we're Analyst we be slower is needed to of

gig laser focused take this us are and the view the on these opportunities year. We capturing starting point present opportunities as for later that an inflection XXX to transition will share

secure a these Our in presence today. cloud the level current center data used relationships are cases ability our customer in roadmap and high confidence the particularly net relatively we driving product in strong of low new where have to

capitalize create opportunities of share. quo take needed to disrupt technological We transitions the that actions the in they drive these in cloud. industry to intend disruptions consolidation these XXXX. more believe and win point quarters, impact we the and and pressures provider remain XG that are during we least second regarding on while opportunities strategy of we confident necessary business believe service product near to We MX to position business believe the we our spending to a at While our change some play should us the transitions of positioned XG in growth drive to the products in Contrail of We telco the and for are carrier returning remain year-over-year well service changes major partnership believe to and will our model to our cloud Ericsson. market at to results term, Solutions are provider We as with deployment may critical status impact in each later the on optimistic will create likely to may half partnerships and continue year. transformation, capitalize with verticals these these some role taking few better and a refresh deliver significant

Some as of are these taking actions we are follows.

significant First, core to we to better strategies our have our to order our verticals. go-to-market each of made in structure align customer sales changes

in aligning experience. sales term go and market these our over core product believe closely greater across near last of vertical will customer better superior the teams accountability engine, many been to drive products and management disruption While our have may leadership and result in our we months a some changes made few more

organization flattening into go and position sales this our market field. towards product see later savings placing more to also sales us force captured will productivity the actions are to year. We these We improved reps believe sharing reallocating

While and our earlier over next left Juniper to years. capitalize market Officer Chief are Customer changes will the are two that this position on we of the unfold implemented the strategy opportunities month, better Juniper have we that our confident supportive should

expect new cost. the enterprise enhancement believe Multicloud and customers market. competitive across help to XG will ability our multicloud position improve Contrail large Second, over initiatives, cloud will products cloud platform of that gig our new anticipated quarters end and to we new of increased our to on particularly the By product that few capture include this that a service new enterprise nearly our introducing our competitors. provider, year, These to further and Enterprise refresh platform strengthen we undergone our transition simplicity carrier enhance will all MX XXX that are reduced mid data line will to the will a lines we key our on offerings several relative ability capitalize that strengthen of should in position card verge world that with will have the footprint next centric our to major

with are competitive upcoming photonics we large to further initiatives the represents enhance at topic where on more positioning, new XG opportunities deployment and introduce to that plan enterprise also upgrade Conference. We years. well-positioned and XXX will we plan each the share capability next our believe this gig OFC benefit over you silicon We the several multicloud to cycle,

actions taking and on few our more we've monetize to are better should help success over the experienced value of us build quarters. software which we Finally, recurring the capture last revenue the

benefit licenses. sell will software create of continue We sales retention. for sales the also prove only software, to next we a believe software expect hardware-based while customers in profitability more new we with increasingly we systems years. the revenue transition through level our We that should look that believe forward these efforts features visibility, but drive right beneficial our advanced will to net have systems to customer Juniper not over and place our Going and to this monetize strategies for few base recurring improve

are we factored quarter and sequential point XXXX, return growth of some beyond a to at actions March near-term half to QX year-over-year into see Juniper these to the held some outlook. changes likely growth we are was the While have present position of that during making the second headwinds our

continues business that in We cloud have period. March been are through our also weakness the anticipating the we seeing

potential the our to our see the about in and the long-term cost model overtime. Analyst margin In remain our long-term believe gross lumpy earnings forecast we to QX presented on also business growth in and structure business summary seasonal quarterly near-term difficult below shutdown the focused continue headwinds, goal and recent our due revenue of recent is our the which with trends is the on material financial our to our positioning predict business U.S. remain U.S. to Despite of as addition, historically factors see enterprise a revenue. business the Federal basis, we while prospects. the government XX% potential at recovers for optimistic to optimizing Day regarding to In government of we accounted see in improving

term the truly which are matter customers position should in We improved to see ways success. that long our in believe innovating we to business

are we turn I confidence is call and our our employees the program. work $XXX creating continued discuss in As their dividend accelerated we dedication, extend and who share increasing repurchase per share Juniper, thank expect for now by quarterly in want partners would results customers our stakeholders. for to business, million financial in for quarterly will which initiate thanks like Ken to the our of our to we my value their evidenced will confidence all hard to more to shareholders and $X.XX an and approximately of support I have I details. to especially essential over our

Ken Miller

earnings the of of I'll on range, which was deployments our end customers. than X,XXX slower was service of you, start and our the $X.XX range. outlook. provider and of revenue, high-end non-GAAP to lower with then our Thank guidance Despite pace share everyone. cover per afternoon quarter with guidance some and gross of color anticipated of Fourth due our non-GAAP XX.X% by year margin some fiscal cloud and results full primarily quarter Rami, discussing our the good fourth million below revenue

in declined the Americas weakness and sequentially year-over-year and to offset by APAC. due primarily of X% due service Looking at partially EMEA. than slightly year-over-year, and sequential enterprise better XX% The all expectations. normal vertical, our XX% strength across Service driven revenue revenue primarily increase geographies declined in and by revenues X% to weakness due above technologies. to deployments. strength XX% declined Americas, year-over-year, Sequentially, increased the provider the in was by Cloud seasonality Enterprise provider pace

our that As in mentioned, strategic we cloud holding our are we footprint. Rami customers are confident and with position our

strength However, was basis we in X% enterprise a year-over-year, enterprise. the pace partially technology in and driven of growth service On by businesses enterprise. sequential service was than strength XXX, Security From driven sequentially due service of XX%, and by by Routing by declined was ASC strength which largely year-over-year. both offset provider, and in provider deployments routing The were a and previously cloud, is expected. the saw slowly of primarily XX% partially year-over-year. the all declined partially due adoption up pace cloud. verticals. increase to declines the XX% lesser across On offset in and offset routing extent provider, to more partially was basis, down was was year-over-year enterprise. deployments proceeding by enterprise. switching an which X% a driven perspective, a by Sequentially impact sequential decline security a the offset of growth Switching to in

of year-over-year Services Without and Services year-over-year. was the business XXX. would adoption XXX, to sequentially. declined year-over-year have impact X% of The ASC Our X% due ASC decline increased X% increased the

was our a the versus top are four We deferred million, were for in quarter, decline one service our enterprise. than the XX% of XX prior pleased and five In year. which greater with $XXX was cloud, providers of were revenue offerings, QX. in software reviewing performance Product customers revenue were total

However, XXX, product without the of would the deferred have impact increased revenue of X% adoption ASC year-over-year.

operations was million margin to XX.X% margin $XX For mix. strong margin year-over-year of primarily offset the In operating was and increased dividends, We service had by and revenue software cash due Non-GAAP expenses quarter a gross million. quarter, the from gross declined X% non-GAAP dividend we sequentially. $X.XX quarterly non-GAAP stronger-than-expected reflecting of in X% $XXX the flow per share. fourth paid

growing earnings year for challenging Security for year. an momentum was full posting and saw where was we and a full onto share for Moving year-over-year per declining the another year, the non-GAAP for results XX% X% of was the fiscal quarters for five sustaining Enterprise vertical with declining XXXX revenue XX% XXXX, growing The the strength consecutive year. area XX%. highlight growth

other a business. deceleration due Switching Looking declined to weakness was XX% to ongoing enterprise. in primarily and in versus our the which cloud routing partially service architectural at technologies, X%, provider declined XXXX, transitions by cloud, due in offset our the

business support X% the with contracts. remains normalized the growth The primarily business of driven ASC tax Services strength strong renewal strong in was of rates for adoption by this Our and XXX.

In an Looking X%. fiber EMEA Asia-Pac In XX the enterprise. a four our on non-GAAP operating resulting XX continue the million XX.X% service reviewing of Americas perspective, expense of X%. was grew margin declined year, or operating XXXX, cloud geographic year-over-year. at decline and and gross and declined from a non-GAAP prudent we revenue for while expense disciplined points a decline were X% management, of one top provider focus X to in Total customers was XX%

$XXX For worth had the XXXX. dividends year, XXX of From paid good shares cash we return million repurchased of million in $XXX from the in million. operations flow capital perspective, and we

total XXX% return nearly the was year $X represented and for free capital flow. cash Our billion of

Before to in which our you on website. like on to move provide color on I some guidance could would details the available find commentary CFO our we Q&A,

revenue Our with customers. cloud weakness continued outlook QX reflects our

market our addition, our In organization are enable we go transitioning to to strategy.

may lead result are short-term challenges. confident this to growth, will changes we these in long-term While

below We for factored the could lead factors in government XXXX. and early expect the quarter. believe which U.S. Federal in have we adversely first the of impact geopolitical shutdown our normal also partial business uncertainty part us seasonality These to

non-GAAP half Beyond November expected sequential point we Investor year. the we last return is the revenue the our in trends on first A year. to the a midpoint We mix grow second year confident believe remain long-term the Gross growth and volume, gross lower quarter long-term to Full impact from will is our margin of expected model of basis on China the at model our with are the toward be expected the gross second revenue long-term model. non-GAAP financial to first the quarter, and due expect basis product for better we of our year year. in in a QX the at year-over-year margin during of in improve low-end half directionally margins levels tariffs. some 'XX outlined toward Day of to

of relatively of Moving prudently reset basis manage operating on be to operating XXXX. current variable despite a to throughout seasonal the we quarter expenses, on on and expect in compensation year. our year we operating Based costs to typical fringe first our plan forecast flat full the versus increase expenses expenses the

our increase to XXXX, stockholders earnings compared of of finally, rate as $X.XX this for per $X.XX $X.XX This flat cash For expect Rami approximately XXXX, declared share dividend X%. be versus tax on approximately paid of or And to share discussed expect we non-GAAP an a quarter, Board minus to we And be non-GAAP our reflects per the earnings plus of previous to worldwide Directors quarterly record. increase of to previously, dividends. quarterly have X% to XXXX.

prospects to future we success. closing, approximately for dedication and addition, Juniper's continued program thank These of would reflect an share million. I activities plan of the and our confidence accelerated team In In commitment business. $XXX to their enter repurchase to like the our

like I the questions. open would for Now, to call

Operator

conducting Please Raymond this from At ahead. go first we is question-and-answer James. Our Instructions] a time, [Operator Leopold Simon be Thank session. you. from question will

Simon Leopold

and are you growth expect to you that pretty second half like about the of get again. sounds XXXX optimistic It

us could be are or for or the drivers opportunities or drivers of you the demand? that to Just gig the you wondering whether to thinking in you see attention if key I'm to things as understand return really growth? should What what order appreciate. help rank XG key snap Could back a we just opportunities cloud maybe paying XXX it's

Rami Rahim

I'll that. take

there factors. So, are few

point is as at PTX behind the First mentioned cloud to us. MX this vertical, we and transition largely foremost, the within

And reduced so of XXXX. impact we we the in transition product a for the strengths of while within at the the slower, areas was in impact that the cloud have have big has been deployments pace where us least

market Second, big particular but gig roadmap. for would is XXX I advance very we and of a the year going especially a from XXX product into XXXX new in standpoint put in optics very denser with the standpoint that products even are of year us from yes, across the the switching. to for the introducing we And just going routing to innovation new market. will be board, some that gig the introducing XXX are gig of of big in that the putting and Couple be to innovations have products. we're

Some of of refresh MX gives with selling and which those empty to us an gives to a upgrade thousands product meaningful second thousands of revenue hundreds refresh, chassis, portfolio happened of our tens of based opportunity broad opportunity this worldwide, MX slots very seeing half. quarter, start an our contribution so our the in us MXXG

that The just that I changes be sales add making. would we are third would the factor

for mentioned half those we I in I have the the do second of in are that short-term, somewhat the the changes are but my believe Company see in year. remarks, of changes are to start complete as term, I in the challenging we making conviction will that the longer prepared right So the and changes benefits

So least on second that’s factors or a stack the in how the provide that confidence us half. color give rank I would at that

Simon Leopold

of attribute customers aspect waiting new fewer weakness so any comments. current Osborne on effect? the the of the just would Rami offerings? And products of for the classic buying you there are generation to to up follow Or those Is that

Rami Rahim

difficult Simon, predict I has but it's say a that that contribution thus the to impact. not would factor, much is always to far been a how big

within service in say there take it's new focused weakness on strength of right provider that areas that's within mostly the we now. is footprints general slowing I vertical very are cloud, I the cloud what the on net to the think would deployments And the vertical. where still much we and and the have opportunity absolutely

Operator

from Our next Bhagavath Bank. Vijay from is ahead. Please go question Deutsche

Vijay Bhagavath

the names quickly. question and others. I XG recovered like and Two-part is mean, keys drumbeat on, we

the Rami? broadband? half be second be the any is inserting timeframe of Juniper's start it news on into part would then the positive second the also And would starting for half would Or timeframe itself XG when second approximately, would So, cloud portfolio question switching? when XXX gig be

Rami Rahim

address those in me order. Let

does honestly first a So share see it going it's but for I for slow represent said meaningful I That opportunity recovery to think just routing Juniper our a us. XG, business, think opportunity and to XG in not steady. be takes

challenges yes, area capture demand lot software I be the to XG our routing going be are as XG innovation persist, to service of provider are to opportunity. going meaningful to that big to business We be specific, preparing is to increasingly the a business. more you and mean going in be our with the are And vertical within routing, networking the become opportunities that mentioned and put running for ourselves our first roadmap prepared but assuming we silicon on to for promises XG we they capacity capitalize to more because

most we infrastructure starts meaningfully be as decisions customers as sell secure a transition shortly data rate some QX key more a telco encouraging. and to have followed And increases. the saw our It's more need all in cloud. us becomes report I entering I at switching third are especially in we architecture. or into as today On necessarily without really more A has into the made provider really, gig, gig XXX edge cloud contribution are to that not high impacting and that And service think to that seen with to that you build the the only I And but the opportunity be been revenue towards the be next the I'm performance in strength about happy will our vertical of scale around provider experienced of do end strategic the cloud its mobile space moves factor. timeframe. segment now decisions in year in with to services. users timeframe, the cloud the contributor engagement and routing cloud the Contrail the the opportunity security gives needed especially support a telco technology revenue is software, a by has start to security of Across meaningful XG big and our cloud to security for has but in XG technology. contributor, yet security, XXX the that virtual been out technology networks. but our into but world Secondarily globe SP is our it your XXXX telco way up XG real think we the question firewall least will the strength to in a start the going the contribute service then win Many especially space. of third at the think strategic

entire really technology and for right timing that fantastic are to going be switching our there and prepared year with think capture opportunity well that is product I across and to So line. footprint we this routing technology

Operator

Paul next from & from Our ahead. is question Cowen go Silverstein Company. Please

Paul Silverstein

connection that function of and of in demand? with slowness you made the a a there due in I Rami, in which to that any to slowness place and the it’s is, question But weakness it ask demand cloud. is competitive I degradation or part depending and clear got to due losses on think carriers

Rami Rahim

Thank one. another Yes, you, Paul.

Paul Silverstein

clarifications but previous do, then to if got that. of I questions. you quick I have And I'll let respond I Well, could,

Rami Rahim

new anticipated, longer that had than less growing actually meaningfully. are now of to but taking to with happen look passing slower I still you and the we product transition within vertical The is largely outs the growing what recognize as have the cloud is importantly behind port growth originally quarter. is us sure, factor less so every build Yes, and mentioned, and

their with healthy. So of center the based them networks, that tight just get issue matter before us that penetration increase very cloud all down that footprint our new buildup. up cloud provider a closer on consuming closer built What do in we hyperscale are and that connection and slowing capacity remained really CapEx provider the our us low. need I have to that I customers is cloud customers, particular within they that running they data based is their we is we think yes, footprint we not harder not for The opportunity into cloud on to do believe now is where here. now is our still capture the It very losing providers our the as have

that’s us job We a done and focus environment have penetrate enterprises big hyperscale and forward. a of the cloud switching for been not great the able to providers and penetrating going smaller have we yet switching

Ken Miller

capacity perspective, Yes we seeing and I ASP to pricing normal would on just to what kind add per from a of are just decline Paul, basis. an refer

big although it's PTX And know seeing. to in what's pricing normal Rami port behind us. of kind erosion to we of are is that behind up, that MX it's You are going offset mentioned headwind traditional enough growth as routing to still largely not There the is curve. the price happening still

turn a our expected and routing. the on math be to So it be to cloud real port favor growth therefore yet and will up to that has is

Paul Silverstein

then on extraordinary. very be a cloud, to product Is going that year-over-year. a of Rami up response spend intros? year. to some your is clarifications, quick things, in service in 'XX year question you're about your And Rami really response the just new to normal clear just new extent? of So Was so pricing the to your the I also products, relatively XX% softness hear statement or down light pick the on in some just you big 'XX provider

Rami Rahim

introductions. relative 'XX product terms very 'XX different picture of a new definitely to in is

sheer normal of of maybe more will picture of 'XX, is year So bit was product a a little it markets. into introducing a volume we in the very 'XX probably be the terms light, different of

into the idea mention software environment four silicon being offerings enhancements you as of different to well. well board going way routing management lines we product switching see as give substantial Just across throughout their in merchant And year. are the an our that to continue very silicon engines to and telemetry as for automation custom switching not new orchestration terms to

So a very from XXXX is year standpoint. big product a

On SP difficult market within are providers right the think I dynamics side, the just the now. service

CapEx know of sort period been flattish for you As flattish, some of time. has is

are like are are not of do doing connections Tier providers play think areas. in to X et I the in weakness to telco I service much cetera we have on we contribute and but just customer enough very offset more ran that focusing of the many we things enjoy believe on that that I telco providers worldwide. the acquisition we well maintaining the X XG content transformation very especially And future think et growth, again traditional our in and cetera out. strong areas to to of

Ken Miller

Yes, in were general pressure expecting service provider. we

that's going but a that XX% Down persist year experienced normal expect quarter, that’s to the customer on row. lumpiness have going forward, as expected we level. think nor that really do that It and though business. I we a we was not trend fluctuate quarter that’s of at just the forward not several does concentration new in quarters that what for year entered really the We quarter

Operator

go Instinet. Kvaal ahead. is from Please question from Our Nomura next Jeff

Jeff Kvaal

and clarification. a question I have a

Rami it for And rates in you some is. then said cloud bigger Analyst in of you my as the the if of course you. week quite was things facing necessarily that growth second my outlook second meant I think the through over is I what as because a about hit. March I for to require with that changed of the cloud when you wondering you November which is anticipate how you you guess target perhaps talk was eliminate or quarter what didn't the clarification the could Day us us were question shared one at big shift? help new The targeted half Could wins quarter would a us we now.

Rami Rahim

of on maybe, about Ken, address about some can start the questions me the the Let question cloud the outlook.

the about that’s the that quarters And some about then vertical itself the investment talked and So, within talked slowness the of vertical now. have the number that a where card strength. factors last quarter we within of we transition in over one product we areas linked were happening cloud

event. technology, lessens the the any cloud are that can. that in the winning order continues we footprint then I'm routing net and confident new particular footprints, which in our a If the new we long-term November slowness we persist, the picks we in achieve an to obviously are the hyperscale our net pace from that on that model think in market for I a new pace WAN of that’s that of analyst need provided Either footprints. from in net area way, up that on the will we yes, the in investing cloud they the that outlined from then areas growth investments Assuming standpoint hardware market reason a absolutely focused requirements area, routing obtaining software, engagement

Ken Miller

first I the second and a as side remarks second That full also in this we depend guidance revenue stronger the that in I $X.XX to out the on EPS to year. in the return the on commentary on expect here. point we a not does said half. to half. trend there to be from $X.XX some do year sequential Yes, growth the that expect we highlighted growth expect at I mentioned of half growth And revenue put the

on full calling not are two a what say kind but is our growth I striving are of We things the From that changed, earlier, government does the obviously as model would that. QX the depend specific federal for mentioned disruption. EPS we sales still revenue year out what's shutdown

note. into I on I option appropriate. year. I should force QX, some the visibilities now QX the visibility that that guidance and And of believe the that’s to improve based are I do for factored long-term throughout So has committed think still very is to sales model we that see believe important been

Operator

question Sachs. is Rod from from Hall go next Please Our Goldman ahead.

Balaji Krishnamurthy

behalf is This Balaji of on Rod.

clearly declines. ports to little looking back the wanted the clearly, transition considering the PTX When a ago, to happening at this in were what's routing ASP moment. And we increase had year that's you PTX pretty I been PTX discussion to a think the more. go not offset large I bit a and at

So in there? have I XXXX quick confident any how are I versus may you that still you share of potential wanted to kind check happen of growth displacement a for that have And are port kind follow-up. losses then can

Rami Rahim

PTX has had is utmost us enough transition the line that So normalized for of receive confidence is well unique the pace with slower largest we the us declines PTX a well extremely the to a transition. the it's happening are and with product that what wonderful essentially our to our growth. the routing simply I just build in has than is in pricing as the it's think, And in impacting the what's the to port would extremely happening want robustness, logical year-over-year healthy. things mentioned, not that I just And product product The line, I customers. factor emphasize, is do platform for today actually get line PTX programmability. hyperscale are received And MX even outs the the by product customers industry is right that I with physical That's scale, cloud reason all again, truly a growth so cloud a product I within providers. was think PTX care been especially from buildups. more have that PTX it But cloud they which that cloud are been terms happened to actually basis of of the anticipated PGF and by All quite scale, on these about. and

Balaji Krishnamurthy

conclusion a you And that need of on change you the any gap to walk that transition go-to-market that of us then that the thinking in kind partnerships it versus the go-to-market got or could to bit need is you the otherwise? just you technological to how approach announced, and through the little you came there may

Rami Rahim

now we into we've and first that are several about we've in months made now effect. go-to-market changes been so, for have changes thinking Certainly, put the that

us in based that of in the optimistic and in about efficient. success even The really the right of we leverage continuing the much organization. support us, first to the and but of little feeling organizations, they is number layers short-term. focused I that tool should we are global changes more the the very even but additionally, utmost None or these Vegas and I vertical. the in are Las off that increased tough changes of sales now kickoff, of each quite to engage decisions, are And our I right with around and and opportunity global changes, disruptive for pay out now market general in some the resources preserving have reps just in the and sales model right our changes go-to-market conviction are cloud help and enterprise they they later decisions segments the quota-carrying There Ken the we quarter that momentum achieve and going a its organization Company for consensus in these we But momentum the unsettling where think enterprise. on in sales are investments more create organization win. people absolutely our right be which will though have even made enjoyed the key especially And ones the addressing that more And HP are people can the and accelerating is for to success overall protect I can actually of think having the while they Company the have verticals good at Jeff point and we while this are we've benefit making easy, we've are our I minimizing and go-to-market year.

Operator

UBS. is from question Tejas ahead. from next Our Please Venkatesh go

Tejas Venkatesh

demand weaker. vendors have cloud season of alluded this to being earnings couple A

have better? much as you true it's visibility how do So, into get when cloud demand might

Rami Rahim

that calling not We're now. right

CTO, And seeing I world net footprint. XXX area strength that driver we real Koley and into our opportunity DCI, towards have engagement Bikash slowdown want the a the have new that strategy strategy later this that routing routing gig yet when a wider when year. attach to we a again, has We have comes center opportunity been market that strength. look are opportunity. from have And interconnect, in real to we I essentially we the data the becomes in to and especially cloud do where move the momentum shaping emphasize, overall an product at But incredible our in

I of capture absolutely opportunity there. think in more our to that share cloud is ability the broader

Tejas Venkatesh

that will wondering follow-up, parse a the guidance how versus all of versus I'm expectations? as weaker changes? from versus any is chance in Essentially, XQ you the cloud weaker federal delta delta And much go-to-market

Ken Miller

won't order cloud will Yes, you I is give exact put, you but our I would put kind the I so numbers, think of tell first QX results. of you continuation I of of and magnitude that kind would of

deployment number as because actions cloud base QX, sequential well our service in think one. and I largely primarily is would of So be QX QX are some providers down that to

shutdown. the third U.S. I one then argue be second with would would and factor government disruption sales The force

rank are delta. we enterprise don't they obviously trying Although, third, I would to -- that million our and customer, are I XXX largest them bridge

Operator

Badri go is Suisse. next Sami ahead. Credit Our from question Please from

Sami Badri

two-part have a I question.

then going security quarter. quarter? one-off in run part forward XXX we through is, this for of as is two The clearly XXXX this? pretty on second revenue So have new higher a segment percentage you intensified expect services from in rate And hit driving exactly a the strength result million XX% Should parts XXXX. this in services to over this. Or just is the What each in the rate XQ a and 'XX? XQ revenue of to product security and

Rami Rahim

with start security Ken, the then, why the and don’t you services address me question piece. Let

I I in So like pleased is number and number sequentially quarters range And quarter? quarter to in deals and branch. service XX% of new diversity end across different What unrealistic Will We in high just fact growing about now number the think as seen broad-based that that products every mid QX timeframe say the security an that dollar the momentum used providers the can that think security. very net we I be have cloud that’s continued of of see this in point saw to to a in posted of lines I'm the million for momentum providers, momentum all demand across expectation. the and cases strong year-over-year. with we strong and XX% we've first I security the enterprises.

to but offering. have cracked think comps in some become and now security that in generally for I more you especially going the in the of portfolio, strength But of moderation difficult. the have success recipe to think some attaching So are solution more product importantly I terms as we security lumpiness overall our even speaking,

how integrate go Ken? overall that So that our center I a well cloud for know offering when to we and customers security solution, we them quite in has us. think offer to worked and data

Ken Miller

it I product out and over of last category. actually It perspective, continue that that rates services to we renewal we the services of And would years is was revenue our renewal and from due a call several contracts. attaching really service majority to the our is strength in sold

prior quarter revenue between we for strong all. majority correlation that hold So, and service current although really to still I and would enjoy the product is product rates not the revenue continue renewal that The sales of good we service period is relatively us. if small. add revenue it's at stream revenue

services. We pretty in And in well. have seen quarter services strong professional had professional in QX business a a our obviously as growth we

Sami Badri

win and indicators have EMEA replaced one CTA alternative And clear across Can question some the some Juniper's and and starting I XXXX equipment XQ you these seen given and this. share win other for and idea just being open of saw EMEA. you we to are us vendors that opportunities? an vendors have on in in U.S. regarding of data they rate are to seeing those Asia opportunities from by just we Huawei Asia In point industry the give stack market

Rami Rahim

technology. of Yes, concern new call I Huawei think any the benefit cycle and it's around the to sort still from too the early

and and we types on. the put technology. mean of be I our that our this still more on our that, extent to could said company merits is of point However, will it more internationally think a focus Juniper But customers capitalizing were on of safety an that the seriously having takes the and extremely the product security these opportunity and I of concerns do at present and competing to

Operator

Our Notter next Please ahead. is from question from Jefferies. go George

George Notter

shipments I guess providers. to the wanted I the into port mix of about ask cloud

and versus I routing And side On you question also want that the I I of being it's time, the customers, provider then port MX. what their but said out I'm percentage those the customers back rounding market customers PTX go look now? guess to about at businesses past, growth I coming perspective. a XX% those if from particularly of rates what you tremendous revenue about just and share among you been talked at cloud to have is heard think the in at same wondering growing

Anymore of around transiting you're you demand add ordering would there the Is where flavor their the hotter. that's point be guess could to in is I on networks just I'm running that You're an new in great talking that in Or based trends something them understand market observation about share? simply trying anecdotally? view. getting coming business?

Ken Miller

port start count I'll and Rami can the then go with on last question.

the like comp is MX behind PTX XX%, QX there of four as perspective, roughly saying, as another was XX%. from quarter So we've been largely to

to percentage products. XX%, ports So it's XX% XX% PTX not the where in to to move and end this of still QX go low again I it's do point ports slightly that MX the that's sold but going expect from to products at get zero. up high

of finally this So but part X,XXX at point mostly were delta there this maybe the X,XXX time. to we're at settled

Rami Rahim

can has displacement. within the for is areas think, Or of around. all strong part this we of we on And not that we a it very that your Are engagements is been that we're network based of the matter traditionally is us? just really capacity is into competitive displacement? just the competitive you question the George, And base really have selling what cloud information I tell have consumption of seeing the I the

capacity. are the year working might And you very see and in buildout growth routing on yet seeing compression customers that basis, are we network by and on in particular closely we that engagement, are more as the are has It's based their imagine key outpace domains their what not this and not sort but fulfilling normalized hyperscale we and on seeing it's and selling. domain. wider there just based requirements matter capacitor the in now if year-over-year that We of we're increase a by outpace with yet the pricing of port a also is our we the the

that as opening As routing we switching think net we capture domain. do especially as that plays presence out from an in areas to benefit if so the we internationally, have and I the opportunity pace well new footprints as as have accelerate don't well where yet

Operator

sorry, ahead. the Milunovich, is Our McGregor James from maybe from from on Steve behalf we me. Faucette question to accident. for of This quick Wolfe I'm ahead. go is Please here go McGregor go - from Q Ryan Ryan Ryan Please Stanley. Research. just question Morgan And next a will question mute James, by next

growth. Could show Americas? might continues be strong Going and you guys talk back the back to what's translate could or driving what maybe to to in about EMEA, region working that that the APAC that

Rami Rahim

all so factor based across as of across pleased in are areas It's cloud the switching. and are our technologies the X% and seeing It's well we cloud broad region. year-over-year. providers is in is EMEA with so routing yes, strength less Certainly, also region service we momentum a growing the as EMEA enterprise actually strength

it strong that to down sales really in think execution region. comes I

fact, broad in very we global of until the EMEA new our our for region that solutions. region leader, EMEA that Marcus the sales was a the effectively sales done do that was one Jewell, role. And to I promoted In is strength he running thing organization think in to have sale

place domain, into and selling I they EMEA connectivity talk in go by that what's the or successful enterprise to up about when these has to and across The Contrail telco have has now, that with that. multicloud think led model transformation I demonstrating to help of possible we replicate Enterprise the way itself cloud from to Multicloud for that put in our have So these solutions, need benefited in world. region be key some changes especially is proven that market the

Ryan McGregor

down XX guided one of that about but revenue in but so about guys a quarter XX And it's now. terms was then it are of quarters just in software as Last revenue, a total you for probably you level, maintain when again. would XX% two again, down, percent it's guiding saying it follow-up about been row

what just around thought So is your that? curious process

Rami Rahim

crossed I I minus we half go that that the confident And years, bit software XX% model as nature, put exactly I'm up XX% that of than but directionally not last XX visibility this think that expecting anything greater down long-term to is we the first something a in revenue so do not of several and or out material category. XX and next that approximately or the time. was quarter we quite drop of a next only for have, XXXX. a actually a will do over the think crossed percent to based Yes, by there But see quarter off X in QX for first to year. I'm repeatable modulate plus on going it's deals X total

a bit to fluctuate quarter full we on a track basis well quarter-to-quarter. on getting achieve are So, that year

Ken Miller

is some strategy. of just this a on that, matter And additional commentary

product revenue We percentage as revenue. in have total increasing been a really of focused on software our total

We been have have offer across business our a lines customers. of all model well our and that first model received implemented a product now pricing to by

software suite seeing our well that customers the and introducing Contrail capabilities been by momentum very are are into our software received of products new products there. We markets, especially has we the

that are on much basis, time a meaningful. become more going to do software see think I long-term we So, over

I for think customers. our good that’s

I think that’s good for Juniper.

if it with we the that fluctuates, been I able think achieve. are we've thus very results even pleased far So to

Jess Lubert

for questions. we two have more time Operator,

Operator

question next from Please Piper is go Our here from Fish Jaffray. James ahead.

James Fish

the and firewall going are the saying it's to Rami guess fiber question that growth, quarter good off wanted the of on end you a as there competitive the had high about service think things, for you out Just sustainable. strong with we nature you've another should refresh targeted to come think firewall? I don't a side competitor kind base of how touch especially now with security

Rami Rahim

market the for the From with think and and us performance technological competitive with of we've high-end done Look, but prior the reasons was technology I firewall year-ago to too the Honestly refresh. always a I was than recipe seen has we've richness a solution also the us in one security for go-to-market standpoint and extremely because high-end a that we the that better a and security features that think and of took a combination why in long one of weakness come-up work do always else things been has the anybody I of to advantage. advantage and coupled saw us. little scale then think to some that it is,

spread we started as up to necessary really us. was as that work that is would for this we doing we it us As have for and we would there differentiated exactly effectively soon very that but soon as confidence determined we working knew be introduce that it's

about across a for worked solution we our cloud. have real to that We've into and now now security so customers compelling manage distributed offering our private Additionally, all to become and public purchase broad I customers of and us. securities we as for into that it's security integrated mentioned solutions earlier, offering think our as reason multi-cloud help assets

growth thing I recipe -- assume. it think in board well. think sustained XX% momentum working So do across the and the I is basis, yet. is not But a don't continued double-digit the we I cards mean found Yes, that practical to on think do a I I

James Fish

if housekeeping Contrails so terms out business software and you two the of items, can kind And is the then secondly, you in within on and did a breaking guys quantify I And quick guess, just today? then weight guys of of lift you revenue, QX Contrails started it? terms on from tariffs give how in growth, software big now

Rami Rahim

sale. We're dollars. that some not value I of is the not the Contrail around customers Yes, and total talking of and is the with promoting going say the architectures actual we've just for the been strategic the would discussion monetization so breakout primary small. time about quite but relatively Contrail, were that Contrail the as that nature

gross I QX win that's it's not any XX margin. but the itself, tariff and our I gross pool service biggest numbers. I've perspective, it numbers, will of revenue a whether had into a the basis margin revenue potentially large difficult it a do but the to growing about because we're perspective, say to So, in quantify factored QX is enterprise level higher alignment opportunities a going to of because point have a actually and a to from gross of really again, also material tariff. impact both On margin. perspective, ends a breakout by tariffs. not provider impact similar we to concerns believe change From it's

think not line. was I'm point, in on I'm QX. anything impact I top At QX. pretty tariffs expecting in of this and it much speed the similar course expecting normal

Operator

from Please is question next Samik Our from ahead. Morgan. Chatterjee JP go

Unidentified Analyst

on [indiscernible] Samik. This is for

with questions, the two one just in about tower. award was Japan win broadband So

up other drove customer's then chose were what on quick competitors follow there a And I have Juniper. And after decision curious that. to the Just considered?

Rami Rahim

so are with Yes, we that award. pleased very

was a it's with but the we we one net see in I that new of. that very of more believe that think would quarter. logos of I proud routing opportunity many are one just

we release. as press the think I that highlighted in Beyond

Unidentified Analyst

recent second just that IBM. be the whether thinking outsourcing about just there And synergies partner? from that question would on should that then be consolidating the curious agreement any my with cost I'm is we revenue

Rami Rahim

Yes.

Ken Miller

should you is efficiencies efficiencies IBM. their on actually built thing our enable organization to that primary of some will that see side years. cost over large automation and there It the you due And source they of IT to part there scale should

contract. our excited benefit about the but the over high a keep service side cost our So actually IBM high levels the customers on term are and our to opportunity we IT for get service of very levels the

Rami Rahim

Thank We over you with questions. and everyone of your for months. speaking next to you meeting the look forward couple

Operator

concludes today's This teleconference.

this for your participation. Thank time. may You at lines you disconnect your

Juniper Networks (JNPR) 29 Jan 192018 Q4 Earnings call transcript