JNPR - Earnings call transcript Q1 2019

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Operator

Greetings. Welcome to the Juniper Networks First Quarter 2019 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] Please note, this conference is being recorded. to Vice conference President like host, to now Lubert, Jess of would turn over the your I Investor Relations. Mr. begin. may you Lubert,

Jess Lubert

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

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

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

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

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

Rami Rahim

we our continued above due experienced progress rate expected higher income, to [ph] experienced Thank above our We're share tax range trends The pleased good afternoon, billion played in midpoint of a our earnings quarter guidance and cost largely together the across expected slightly forecast. core our we better and of controls total with and than of guidance, share each $X.X margins, came higher March stronger anticipated as $X.XX than as of revenue Non-GAAP per you, better out offset gross versus everyone. which than sales, was the count. anticipated interest verticals.

objective later confidence are of satisfied this walk with this to year. in remain QX track this I'd return items achieve However, We growth to laser that like driving focused the we goal. ability to through and we achieve believe some on and on to delivering a remain are results our not our

organization, First, to earlier a we continuing restructuring and are invest this market change leadership our a year. go which underwent to in in

these of momentum, our actions we course the Based easy While created the on changes the saw in never and some increasingly win headwinds, quarter. right momentum market. improved confident through we the strategy this such as place anticipated structure I'm sales in have to and are

course in of headcount, sales now accelerate which are help We should adding the I the of year. process our momentum believe the through

in see continuing are trends we to Enterprise Second, business. our healthy

this experienced outlook business business. the as our the impact which health of investment Enterprise the Systems optimistic the second market quarter. headcount, While year, the financial regarding highlights start as from growth unusually in think a market the Enterprise quarter, closed our of run Mist grew the to see believe large transaction which recent impacted business, which we underlying for in in Normalizing double-digits rate in for we greatest remain Enterprise acquisition go the vertical disruption in to was the most an the We we to incremental go services of is well ago, experienced our likely still by X% year year-over-year QX.

the managed, is has truly last Third both been positive. and in Mist the technology customers believe powered early acquisition the pioneer of this We from about wireless we're intelligence. Systems, and excited very field feedback artificial a point, building upon by cloud disruptive Mist and very networks,

the market sell company's in the into how are products. field and go the to We on our educating Mist motion integrating early of process to

see year. billion This our to Mist from than are quarter. wireless of switching could Fourth, which with the by more While impact we in software nearly pull-through the continuing our was $X disrupt portfolio XX% success positions business, and family we and of Mist generate revenue market not campus XXXX, do a first driven of the during expect to positively in our revenue LAN X% to sales solutions software the we increasing the Contrail Juniper management material results believe during for offerings and grew strength revenue off-box accounted control SDN-enabled which and XX% combination solutions year-over-year our year-over-year. of on-box later

designed While introduce percentage will monetize value as the to to increase over linear, of our new our business be time, offerings success products especially the continue believe next software may and our we quarters. we over a not as sales new of models few better

accounted Finally, overall we of and which X% business, are continuing grew year-over-year see services our our revenue. XX% in for strength to

execute rates attach team service renewals. services to Our continues and well, driving strong

not we verticals. the surprise, service cloud to a provider weakness within and continue While experience

business declines. cloud to remains large was our and challenged customers Our of of port ASP several enough pace hatter run deployments great the as their networks to not continue offset

should our pickup in caused cloud encouraged period, quarter, of the the dynamic to during see providing that revenue to a confidence this which toward order momentum While expected we improve Based seeing, were is the network few accelerate the holding the end as where March have historically we remain we are footprint demand we confident areas we next our currently on played. of over are cloud the quarters. capacity in the

new existing footprint time, long-term see to needed growth a drive cases to port we potential model. be in the for to While growth improved use will our return achieve over our

as for focused share drive period. inflection this gig laser in gains view this an that and later XXX opportunity wins on should are creates future We that year point capturing opportunities

center have driving the roadmap today. to product present where are strong particularly confidence in ability little new relationships current these in Our secure our net customer a in cases cloud, we use and data the

to continue customer's service project and expected experience our of model we pressures the deployments. tied provider timing vertical, headwinds to business the Within

our XG service second entrenched experience June better We that on MX new at deeply this is and our start well-positioned our cloud platform remain do Contrail start business of believe to Ericsson telco cards a and likely with relationships service relationship remain start provider to we While year. about year. later playing line global expect the to shipping, are during during are of a XG number to believe believe we providers, X we the challenged the the initiatives carrier service off the orchestration half strong trends to our out provider Tier vertical likely to good and we capitalize quarter,

think our it's enterprise provider, I are and that our important worth highlighting service strengthen launching position of we several the new should across cloud early markets. stages that in products competitive

XG Some on and service products that MX line enhance will requirements. to capacity positioning our include, capitalize of ability these cards XG anticipated new provider

that cloud routing a moving on incumbency New reduced capitalize down designed increased QFX platforms Contrail software upgrades, barriers XXX-gig make of break a the reality with multi-vendor, to capabilities customer cost. multi-cloud and to enhanced and PTX and enterprise switches multi simplicity state

enhance position opportunities should June gig benefit that penetrate opportunities expect new of believe to upgrade the during the and cycle, well-positioned the during SD New enterprise years. silicon over our next XXX and see cloud and ability XG, on and to enterprise large Based enhance our photonics capabilities few enterprise where seasonal trends multi-cloud we quarter. the opportunities, gig that represent our delivered market branch normal addressable enterprise campus we cycle. pipeline new competitive potentially capabilities initiatives to be XXX multi-year open each current We

have we remainder through the fourth for the see do to seasonality year the to impact to sequential September growth some potential during return and of see year-over-year quarter. the growth expect during we quarter, While the

I in want our Juniper. detail. to we thank highlighted our and turn work employees hard would value quarterly model and the I thanks for stakeholders. support Importantly, will November now more like discuss our for and we especially continued confident our is remain to call who Investor which over to XXXX their dedication, in my creating the in results customers, confidence Day. their our Ken, to long-term for financial partners at extend I essential will to shareholders

Ken Miller

results start you, Thank afternoon, on I and outlook. will everyone. our And discussing end some our good by color quarter with Rami. first

revenue of quarter guidance. X.X [ph] of our was First above the midpoint billion

per our $X.XX along management range. In guidance These of higher gross higher at prudent our addition build the earnings non-GAAP was other with share XX.X% non-GAAP of guidance anticipated end above results, than expense income and margin range. toward

X% seasonality. more at which revenue largely results by Enterprise with in XX% vertical, Sequentially normal decreased is our increased year-over-year. expectations. Looking than were line enterprise

As sequentially expected, our decreased XX% weakness go in and X% year-over-year X% by sequentially. to XX% was Cloud business Service to due provider year-over-year organization. and transitions market impacted our across decreased enterprise all geographies.

to While cloud erosion. units ASP capacity the to sequentially. XX% growth a and From decreased decreased was X% in sequentially. grow, routing offset to XX% continue XX% and Security X% year-over-year year-over-year Switching not sequentially. expected perspective, year-over-year and technology decreased enough

X$ increased X% business but year-over-year, services sequentially. decreased Our

enterprise. Product timing X% cloud, down Software the reviewing was of the our revenue grew greater service $XXX quarter, sequentially. was provider In an The one delivery and was of XX% total was year-over-year down contractual and XX XX% for customers to top due and decline year-over-year were the than six commitments. were of year-over-year three million, deferred revenue.

For the capital. operations In reason decline had $XXX was by net first primary stronger quarter gross sequential flow margin we changes due lower increased non-GAAP was software. lower due was non-GAAP income, partially The of to the margin than primarily The working offset expected costs XX.X%. service quarter, for and cash in from to million. net the

of the cash, XXXX to capital investments execute the dividend our cash quarterly $XXX matured end continue million to bond decline a our Total million of $XX in was in $X.XX share. paying was $X.X reflecting the and We billion. first sequential quarter, of primarily dividends of repayment in the program at due quarter. quarter the return per that The equivalents

efficient capital focus We on maintaining continue to an structure.

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

a Our expect sequential trends, revenue reflects while seasonality see we do QX some to we impact expect seasonal the and beyond outlook from grow normal revenue basis in second quarter, QX. on

year. to midpoint toward with at We QX improve be fourth Investor slightly confident to on gross remain expect to year for we the prudently; XXXX. manage November in Systems earnings our margin last be flat that quarter. Mist we revenue expect growth be long-term from dilutive believe to gross to non-GAAP our volume in versus on expenses in to We levels return current year expect up 'XX forecast model to operating the is Based the outlined we We financial Full XXXX. the full our our Day plan acquisition expenses year model. non-GAAP directionally and our a expected margin of operating long-term however, will year-over-year basis of will in we

remainder the lower rate XXXX, tax expect our levels. For of than QX'XX non-GAAP we to be

If the Due was now closing, The rate, program $XXX to plus of future would initially not expect we acquisition the for higher compared to non-GAAP reflecting and prospects. accelerated Systems. to conviction due XXXX. commitment years the expect million non-GAAP for continued or favourable a EPS thank to $X.XX into of approximately unchanged. Mist the entering In income our of repurchase anticipated share per continued would anticipate an of our to our items, earnings year team the QX impact ASR ASR delayed dedication to and three tax guidance our minus prior previous these quarter, Systems for 'XX interest for for acquisition interest than We Juniper this Mist rates. $X.XX due higher in or like We planned I their for share remain success.

Now, to for questions. like the I'd call open

Operator

question Deutsche Please comes proceed Our first Instructions] question. with Vijay Bhagavath, your Bank. [Operator from

Vijay Bhagavath

[ph] cycles out fourth September Thank half, we any actions product is help Are two quarter gig there see the in more or XXX Hi. please the towards quarter? you. weighted back in the question us My X cloud. could the big Wi-Fi these targeting understand

Rami Rahim

Thanks, Vijay.

of will fact year. in help a number is this there expecting different that product we're So cycles

products where starts with And of second anticipate the deployed upgrades line ramp it just there a start half for MX year. we the that portfolio, those shift that particular think typically this large is I in and the base XG will will routing the our card in quarter. like

switching. terms that be - into on year areas, thesis looks Wind LAN of just year. LAN, and feed the early product half. the effect There pretty The deployments cuts opportunities we you it volume far. number Mist wireless focus and of of the that's playing in XXX out XXX as have into focus in then across for wireless LAN, pull-through like and you that into new about but a thus talked gig switching broad So does us. that our security for not [ph] is our important obviously a into other area I've the gig, at we're integrating portfolio are already next wireless second length main very expected like feed of seeing that transition stages the And in the of mentioned that and confidence will know, and will this routing share for

quite optimistic going year work about, and to starts X way deployments, of this that's think that. And probably latter I'm Wi-Fi So standard to then into into coming the not about half year. next its volume be I

to see that well-equipped to that in some But as that do to even capture we're So believe well. prior going area. that we're growth I good trend

Vijay Bhagavath

half? Thanks, follow A quick for recently and percentage the any about, back margin product should Thanks. I know revenue as you Rami. may. line if you up heading like OpEx on gross headcount, we staffing mentioned of Ken know sales you think up the Ken, about how into dynamics

Ken Miller

Yeah.

slightly to about being the talk we up. year OpEx about last slow. the is talked we That flat be did approximately full year it So call for would

it is we predominantly do call due Mist acquisition ago, but that expect flat it of expect a accretive the the be dilutive I this that to year. we couple up, acquisition next slight on the is year, to is acquisition be which as going to So Mist, be do of slightly months change, to to Mist a mentioned it

in So forecast. that is our now OpEx

In sales. that, bit do I investing we in addition - are to a

in revenue go Now you as is improve in, OpEx as But a cost see a lot of already the OpEx. growth some we've of I taken little being of or are back to percentage to sales. fueled as bit that out, we putting by done the side we more sales but so sequentially some of and transformation on expect know, our faster should investment will OpEx overall grow revenue We've market the much well. funded

Vijay Bhagavath

Thank you.

Operator

Jeffrey comes from question. Our Nomura. your Please next proceed question Kvaal, with

Jeffrey Kvaal

a Yes. if I I guess, a could. question I have clarification and

to we progress to you'll have I extent that to question, to should switching win going potentially XXX. be able side start the when Are that on second And the be what about in think able in do first the you share hear the to you on well? half? both on routing confidence as and

Rami Rahim

the for Jeff. Thanks Yeah. question

share. for third very our big there gig doing example dimension we're now X I right they us. to deployments. hyperscale that capture We're to but high, some point technology doubt on large what's working we're we're a everything. the So to a some network allow our At ability competitive well And is is ahead silicon this silicon technology that also, that of very have choosing and as And to focused opportunity is be decisions We're laser in have us sometimes everything is technology about that the agents what this obviously XXX and center some data to very operating cloud based are the modularity, across cloud stack provider we custom as hosting the for provider, made program talking standpoint. today, that quite made this differentiation from layers with specific from customers we API requirements strongly portfolio actually our quite very in a of merchant network I'm them. want. we've and the modifications our cloud we power the I've some entire give the software believe to required and us very on the and mentioned our level as terms And system the own Right past right meaningful opportunities, that with of that - capabilities, some meeting the competitive cloud no technology exactly have I there's engineer parts engagement. worldwide their and to enhancements of closely that in the space, Tier customers especially specific engineer our party providers doing a believe we can. course, meaningful - a that very provide know cost should confident I now then to have, of important will advantage engagement performance and or efficiency big take going

in rarely terms [ph] this are become space. announced know, visible. when in will You of it Winds

this. be interconnect to network, to contribute the start particular to data particular in of quiet customers think will and we center itself that next layers to cloud tend I in our the customers, do center revenue start year. somewhat meaningfully Our secure if about But data

Jeffrey Kvaal

more Do that rate growth Okay, low perfect. strategy and clarification. second year? And we quarter you changes you then enterprise to my a of the feel the in the in market back to of should second like the get and are the balance behind through double-digit go now

Rami Rahim

Yeah.

as we there never I QX us. was I'm in are believe that part very no hard easy, and disruption honestly through do changes doubt but So, these is we them. the anticipated that had some went behind happy

more in us in the year. we'll should in quota in layers, the segment, control, year. across focusing all span to I the front organization still in gaps but of of of particular we're to result fill in the half a those organization And organization. we I'm future. sales primarily changed optimistic to sales and in better to think of we that rest now leadership on as second removed say enterprise sales we start know the I we execution I going the some be efficient that sales mentioned have whole of hiring filling much created course opportunities opportunities lines, upfront the we to going fact this the increased sales do throughout is the Right will and representatives, native be segment, the or carrying of we've There believe the confident very some in where help you

the that certainly year help the us into second of performance sequential in sales company improved the fact the of next year. in in investing now confidence will and our part this we're comes of that part So from

Jeffrey Kvaal

Rami. you, Thank

Rami Rahim

you. Thank bet. You

Operator

question and next Ittai comes Please from proceed your with Kidron, question. Our Company. Oppenheimer

Ittai Kidron

Thanks. Hi, couple A guys. for me.

the out Rami three the couple two, very I of busy It quarters very a kind how like you've are here. detailed next refresh from my product you roadmap refresh outlook for standpoint. for sounds First, cycle your the to that in I guess, be the how a around laid new associated going the customers ahead risks in context hands accounting pausing with that year? do refresh, a get potentially are of of

Rami Rahim

risk a anticipate to associated and or anticipation always But going new it's that you're we've big when don't of the outlook are pausing that I in of element in We overhang honestly be Yeah. There's that or that anticipated a with believe that don't have products coming. new provided. introducing of products. weaved lot certainly some we we have that factor

Ittai Kidron

added you June Very can little much And the quarter, how specific perhaps you the good. then how with to revenue deliver with this to the more and bit Mist respect that this of to expect you've Mist, in be Okay. was to big regards a contribution acquisition? with headcount is - how

Rami Rahim

Yeah.

So be we mentioned it to this dilutive expect that year previously and for we do next. accretive

they're but growing we it's should QX new very in OpEx immaterial, immature fairly fairly day and a the revenue of we revenue for revenue from mode But obviously. to they're into we a perspective, in we take insert one ramp calendar They amounts a into take amounts as revenue of still immature it see said, quite year. That do have nicely All on and there. this quite opportunity net to from start and ramp customers. strategic particularly

Ittai Kidron

your Mist, think they Are Help quickly a get Rami, when be standpoint gear sell going you me kept think how or [ph] sell about into to to you Juniper fully separate that. do incorporated from cycle. at well? sales as mandated look they

Rami Rahim

Yeah.

seen are on keeping company within focusing - Mist that that to now we're but couple continues ensuring our the and only over standalone broad sell as We're organization able And opportunity primarily of net be that as the LAN. the largely sales we're not seeing goal of momentum of opener And opportunity. new accounts the years us a can the wireless to sales far enabling we become educating accelerates. go in last a net after sales have keeping to entity the they've an wireless So the with most to earlier, new a so for LAN sell great we more where specialist that portfolio, of standalone Mist team like the addition said I it's in course technology. team door

we're will time. over cautious, being Now integration. technical honestly careful our more there time, be taking and But

long to enterprise SD As across for the announced comes ago have offering have software a switching some already that the provide solution you enterprise might holistic seen defined security, we WAN, a with integration too as as customers. done and not we Mist

so the really reception customers, although thus been has from And early encouraging. it's far

Ittai Kidron

Very luck, guys. good. Good

Rami Rahim

you. Thank

Operator

Raymond Simon next Please James. with Our comes from your proceed question Leopold, question.

Simon Leopold

direction question. mix be the I routing taking - think to of mix stronger verticals? touch and in wanted to that versus a relative the and vertical for would I of on try your provider in expect up. help terms and the of in less groups Thanks between in tend you moved sort I product product yet me that wrong Enterprise cloud mix, And sort your understand have service Thank on first of the sort I'd and strong Could about vertical mix. to the product you. than group, expect and would that follow correlation what

Rami Rahim

Sure.

third has in - has of switching we've case, routing, last into With and So our been switching still very technologies several but it want is to growing talked the been routing. it's quarters at been actually business yeah, than analyst plus a of predominately We've always rank we I albeit bigger day, say that doesn't vertical. is has But service share predominantly our cloud have XX% SP but over is mean, Cloud that our on service about an actually routing way. order the say right a that [ph] it's routing, business still that is that and majority enterprise, I you're - provider. business, routing. of majority provider the security

Simon Leopold

so and movement the Can you was because and confused quarter service strong, that the provider I'm explain better, cloud opposite, are where enterprise was but that's routing got weak

Rami Rahim

all and technologies were down down were verticals sequentially. all mean, I

better It's grew But see actually know, comment you of year-on-year one did basis rates. we more grew and one technology they of and mentioning two service on a we within pretty within you're a the provider past was of security was is on optimized have introduced products correlated. Enterprise routing vertical where enterprise year-on-year tempering that last little worth the a enterprise. routing eight that newer bit routing highly growth nine, net and about some route, basis the really technologies, switching down in space. growth that not in over enterprise, down new the really have for been think down the in participated the I we've year footprint, in the enterprise

So products the market. like MXXXXXX, enterprise received have the the MXXXX very well been by

Simon Leopold

Rami. That's helpful

a products just silicon at photonics I get that Trade Show to your terms in longer of perspective you to term Optical you follow in vision So - of March. your up, wanted discussed on the

billion you. So where gig. getting for of I of transceivers center to started, particular XXX plus really at want sense can you you're just sized get X.X just understand but Thank you maybe it? as business grow that you I the for we've kind think your take data market

Rami Rahim

the Yeah. I appreciate question.

market gig. in mean, silicon optimistic, elements as large the know of remain that just in very the right but the of already it's network fact happens looked always are offerings you That's interconnect matter we we network between We've now. competitive excited of number So are cycle from not networking the the XXX is, elements. the investment in is quite by a part now. is the there opportunity. themselves, XXX customers. and to gig right our because mature gig XXX that about at doing photonics an is are a cycle as I that There the opportunity Pricing learn,

XXX have And be XXX release We using are or their emphasize the technology, some on differentiated very goal XXX XXX all feeding in our basically core, efforts, gig. XXX the deployment from most energy core but the will at gig gig beginning going and gig IP XXX level for we not to photonics of of to and gig that challenges silicon optics decided the way we're for getting with run the our those - gig right in lessons into technology into and attention assembly the XXX volume gig. our put

So of opportunity gig first deliver know, product we're on whereas from anticipated economic standpoint happen, year, in time where really I to going differentiate XXX XXX would the to an you products ramps. the shipping, volume that's half track not to gig say had for believe we the in the I but the

Simon Leopold

And you turn year? maybe the that's calendar of the think

Rami Rahim

Is around that time frame, yes.

Simon Leopold

Helpful. Great. Thank much very for you that.

Rami Rahim

you. Thank

Operator

Our next Paul question. proceed Please question comes Silverstein, with Cohen. your from

Paul Silverstein

midpoint you hit did XX% that I Ken, hear expect 'XX correctly through that gross you XX% this to year, Thanks, margins guidance your was the of comment? to 'XX fiscal the

Ken Miller

Yeah.

which expect FY year to midpoint, full be XX%. for So the approximate margin 'XX, is I

Paul Silverstein

to go. timeframe? about can it's and there's still take what visibility can ways higher a But risks will you XX% And I recognize you talk to it end of range. to discuss that the and and the and a get What the to opportunities to the getting ability And there. XX% journey

Ken Miller

Yeah.

more comes drives most than So down mix anything. of to get to to the higher end margin really our it that is product mix it and

In a of will way. end year addition, volumes now in factor this and definitely play the positive between a

this predominantly more is going ramp helps we the our term, we cost, so quite mix. forward answer out the long that volume ratio, as year. throughout in fixed improves So up variable gain significantly cost margin as But

generation all efforts, talked You'll going believe our see obviously previous for lineups. platforms. across routing value then the doing platforms We've been more better are been those of having know, that we've gig our to you lot cost value is And software the just design example, than we positive. about XXX engineering a doing, we've switching performance a and sales an as

of So forward. we but product, the significantly biggest mix like-to-like on should factor see kind is improvements, moving more

Paul Silverstein

in Ken, dynamics pricing change marketplace? any in the

Ken Miller

into definitely be cost long-term price you kind know, to we're have of of kind per of There's ASP trends. We're bit erosion. kind normal We model. our you going are those built know, beyond that pricing typical erosion the presuming nothing expecting

Paul Silverstein

No accelerations?

Ken Miller

No.

Paul Silverstein

Appreciate Great. Thanks, guys. it.

Ken Miller

Paul. Thanks,

Operator

question. your Tejas question next UBS. Venkatesh, with comes proceed Our from Please

Tejas Venkatesh

you. Thank

about cloud quarter enterprise. incremental orders improved talk into and the of you're sales the You investments the making end toward

over So rank incremental might growth years. vertical I you the wonder opportunities order how one to by next two the

You did since lot detailed changed but Day, lay Analyst targets has a out then. at

Rami Rahim

for thanks the Yeah, question.

of So in Basically for know, terms are behind of some mode We as declines I into year, us transition now you meaningful rebuild a was optimistic, the that a of coming year remain year. this can think cloud, we saw be last ourselves the result is and and know bulk stability year I stability. have footprint. think the we of tough This that we this I product product that say base have a off of was you transition. our retained created we is in year. that going

market of to that Analyst the growth is know We And power event is our the introduce hyperscale ensure that believe our we here. last and see in been have everything that we broader on model our our footprint, that technology that from provided we working done at into addition net are the grasp. year within I in cloud relevant you about to and will our know I've customers. very within And cloud have term control new November of length you long with the within certainly talked

[ph] to going the space, as two far you remain going dynamic that anticipate - environment. know, there verticals know as SPE a the it's in you As is other we be

the that longer a Things with service We're transform challenges go the highly next QX we there term could period, the like that we selling believe our see declines reason enterprise and this that market our including we And by us momentum know because dealing have efforts the help business that improve I across as just in systems organization, suite. our model through software we're particular, center, central the our essentially outlook, and just as to both trend now environment. now - SP compelling do fact lot I data offices In slight that own, Mist our a gives boxes, new delivery year, monetize believe M&A, the believe market the engine. are us has of where into model SP. There's in this long made the muscle well XG, are so for in building customers the space is primarily not I the that in into point. in And of changes future. essentially service emotion I believe lost model fighter to for made but in is that that telco their software. We things the transformation opportunity the where cloud, despite remains should not been automated really as Contrail potential their investments, of growth healthy. you way we term baking catalysts that service growth campus a at generation portfolio. Our them

this for on all the bullish of enterprise actually quite I'm So growth year.

Tejas Venkatesh

And as up, be will year to similar a follow XXXX. revenue this

have you is credit making Mist. you're organic round if parts I what the But you've million out. why investments additional Now portfolio to other that know acquired any M&A and want of this and there's been you thinking inked I revolver? And wonder on $XXX might

Rami Rahim

Yeah.

of would M&A, In say to M&A we embarking look that that we of creating systems, with example we kind would on. already were value would opportunities a what what terms if pursue it's strategy the did accelerate at that a I good Mist say of you really I

in believe enterprise delivered have new that year-over-year the towards two enterprise based You shift in opportunities. now SaaS cloud seen the know, years offerings for creating software space. we solid growth is the We

whereas In fact, difficult levelling much past more the was field, in playing it compete. the to kph

the that organic example we And forward what a growth of wonderful that Mist put efforts we be and the like of look helped that the ideas achieving would own have systems about us inorganic into in market as we that's our far. thus thinking can going accelerate only to have We pace momentum have well.

Ken Miller

needed. just it year On another credit side, if that's revolver a expires. effectively. years we good think hygiene, just We you revolver had a that, cost, really for too is into timing five a not cash I urge This a access situation, five I it's much was quick low to would to It read a life. before, re-opt

just have point, At I have one either. the as drawn It's backstop. revolver in draw never having past. against our We to don't a nice against this to this anticipate

Tejas Venkatesh

much. very you Thank

Operator

comes Sachs. your Goldman Our from proceed question. with Please next Hall, Rod question

Rod Hall

XXX back than also clarify only going respect or it as this so it's Yeah. are deliver sound different Hi, to the those you and this? And mean, with skipping is technologies? look guess, to like [indiscernible] it's want about guys. I you'll at less guess XXX but that clarify going I I now And Thanks about fact that doesn't to gig available then so to you whether time looks gig OpEx like to you come at question. I gig want that roadmap in for you that's I just still I wasn't the wonder issue same be be the since the QX, know XXX to when - the are Can guys months two you you saying available? what did speed talked determine

Rami Rahim

I'm question. Thanks clarify. Rod. happy Yeah, for the to

progress the really essentially core and always thought it's - gig we've primarily because in meaningful flush and XXX have products capture make market as been the an our share prove already market very today. about gig mature So for technology, XXX technology to the gig XXX terms out then differentiating a works in opportunity us cycle, of that

is year. we'll beginning beginning assembly we'll gigs opportunity issues, that do volume timing of terms largely XXX that we're you emphasize that gig able decision it's to next this I to where and But thought always we've the a the very around which of the want make and the be fact In to XXX lies. again, I capture opportunity happy And the later of that. really believe on on year is that keep certainly posted of ramps, recent

Rod Hall

line then - wanted bit, if last And the year-over-year trajectory, Rami. but your revenue has but or so of and you case in sized at much, you sequentially revenue feel is December? then that's but of saying like you've you years clarification, in know, quarter-on-quarter, least like you're digits quantum look got MX a million, can million not a Thanks, cards, sounds of more have to that fourth that's QX that have get XX QX, as up $XXX to assuming how you on maybe growth the quite the Okay. XG the confident good single get there much down be it to and seasonality couple do in $XX achieve little quarter. but at low But visibility are pretty just QX. wonder, the I I to a this seasonality the to just confidence pretty just up I I'm why in And you you saying been do growth got you've not guys

Ken Miller

QX and trends the To first so better half. and throughout historically Rami, a do QX then about and do QX has important point, we - seasonality to season want last improved of the second - do flattish. let Let in to out quarter the strongest confidence have kind know, QX to the all year playing with been We QX. are year half expect it's this and off as start to flat. challenged. whole touch from for on I'll been sequential me of typically calling years. that you you been talk including But and our second your note is expected, We've couple the QX of perspective, largely

expectation about better X% not QX. expect robust which know, But some sequential be growth, goes is think QX in for of X% growth as about a good you than we I know, know, kind QX, QX, us. to expect We as sequential sequential seasonal. you quarters But stronger and be - historical for kind of you would

Rami Rahim

second far number I'd say a there of that As qualitative confidence. of things give the as the some assessment half, are us

in going in and QX but and of as year out. I forecast that to the space been we timing we're part big A think of buildout. of around in sales enterprise also visibility transformation plays forecasting believe do more First is, - and rigour see the the already improving has cloud. go QX embarked as we - into I our the have on us. In that particular, start helped we the to this the SP It's benefit

we've that we've essentially the And to enhancements and management of products terms relative decisions quarter coming software organic the of out all in product that year mentioned inorganic that not assets. were we how that security QX the our into I made across tough our I part help especially least, think sales in and And yes, investment. I investment, and the that our opportunity that actions but the innovation, of through that we've to know, as to when both Mist supports I sales The pipeline momentum, think invest with started, the for well. we the made innovation Second, last feeds encouraged us of latter then then the and XG, by MX created our you start then our the think switching, our of efforts really, simplicity confidence. in

Rod Hall

great. you, guys. Okay, Thank

Rami Rahim

you. Thank

Operator

with Chatterjee, question. from Please comes JPMorgan. question next your Samik proceed Our

Samik Chatterjee

also there? just with just you're had of the XQ portfolio? you lumpiness with kind to security off You these the about relative understand help softer start just there? seeing And me understand I security lumpiness service and new then wanted you Can Can business. quarter discussions talk you what Hi. of you XQ seeing the us providers terms to some quarter. of your can you had in help in a a good

Rami Rahim

Yeah. Happy to address that.

some in QX So security, period. momentum the we lost certainly

of or it's lumpy space. and a part of Now business the to that's very big was sold in that fact component is provider customers service our security captured its that the product a there cloud that's essentially large because

timing I good So just momentum spending other I has than that that actually in had impact, our security an that basis reason space, less the enterprise we but fact do QX believe of deployments. whereas the SP had think much grow we just a There's period, in and QX sales Despite period. we of cloud had no the on healthy transition saw the continued. in year-over-year

is that for investment enterprise the to I go think side. market help, security, especially the forward in going to on Looking

up some today large of that, the revenue and about cetera. to the solutions, solutions. as thing and service focused to that portfolio, introduced we financial into potential portfolio the cloud well provider, a like of features, in many now enterprises, our In the And of security is testing, of security service the services focused, especially in shows significantly security et wanted has validation we're a end of quarters. In say good of terms enhanced that terms we've or recently up line, and seeing high last banking. lot as interest our - interest, enterprise of now concept sales product proof of in integrated provider have translating And I really and the our

So also very with you about now of enterprise portfolio a market. pane wireless security in single offering, that appeals includes the the for enterprise a us security take that past. that has sale that if software and very much simple, includes worked interface management glass, It defined includes LAN, to increasingly switching. for a our example thinking of as component We're

think it's forward. going going us for to work I

Samik Chatterjee

to quarters ask and out of Got just the you remaining update for where here? kind subscription of in stand can or Frontiers through it. Can the Investor we offerings in for something talked update, ready up go on year that. I kind at quickly that ask ramping the an [ph] the rolling you of about Day through that's as for we Is remainder coming the

Rami Rahim

Thanks the Yes. question. for

software is revenue for So sorry the an on-box last off-box strategy as that been in we in is portion This did executing good see cuts on of of the to we part mentioned total contribute offerings. well offerings, have as for both very increasingly as significant the couple company. year-over-year we growth security much software - starting and It a years. software of across

an component. a then will value the shipped have sell subscription products new market as additional at simple we of the we into this very for this perpetual right will to opportunity all starting business to of a that Day that Analyst adhere you And our and the that will You're around And MX year. using model be into introduced to simple products software It features that base example November XG the presented up models. uniform model. quarter

sales going XXXX. the projections to So I XX% help which that is simplicity energy, security introduced for is model us or expect of of of effort, actually component we've long-term as that the the this switching by our all up that a achieve

Samik Chatterjee

the great. Okay, you. Thanks for Thank update.

Operator

question Jefferies. next proceed with Notter, your comes Our Please question. George from

George Notter

per were very Hi, you the like seeing if - back the was mean few that you I were look know, I wanted terms transition. quarters back set. if we're guys. of year much. getting. gig But the that you we've the a customer down and that among and obviously meat big over that at If on year. PJX I MX, the And got I go still think we last growth through I guys there's the the I impression know you financials you're It seems business. the realization Cloud about here, XX% capacity of you saying that go in price Thanks ask lots of had about transition of conversations to know source erosion

I So it exactly still feels was trying the Thanks. know erosion is. here. guess, what understand like I you pretty to dynamic significant we're getting

Rami Rahim

Yeah.

not you're through So bulk product mostly We're the at point. is it transition, this transition this that, of through in behind the at we're right us it, entirely point. but the

see doing their things invest of is they even cloud when CapEx will footprint. to the the translate the might really us and as in I to at is footprint though as give with look sell now know, will to of resulted timing will over holding be because across boards pace net What are right their continue again space our of it growth to now us, for in a has need eventually impact look do important and that cloud the opportunity bigger that at And new it moderate, customers spending us I into all I the you amazing that's I was event crushing result the they're as so businesses. And transition you that and networks. they the around look deployments. businesses think at the the I all it, painful product the -

which where grow. standpoint it's grow do need have enable that a we important to eventually for that us mentioned we new as routing to will think us space we're from and to the helps everything into in exceptionally us I footprint I net the strength engagement and technology doing,

Going forward see did last the period sequential momentum the we you exiting last see this in confidence should mention has fed low. pick the QX we know that improvement QX up our just thing that I'll a into is, from

Operator

Our proceed Tal Please comes of your America. Liani, next with question. question from Bank

Rami Rahim

you Are there? Tal. Hey,

Operator

live. now is line your Tal,

Please Fawcett, James Our question Morgan question. Stanley. next with comes your proceed from

James Fawcett

Mist, I pull training on feedback pull you that from really into about quickly Yeah. positive through other like hopefully cetera. very cetera product we've talked that able enterprise on et the wanted and some on much. Juniper that products Thank et you've partners to you're directly but - and Mist contribute to channel rest or ask through to heard to really Do you not the to being use like I what and see of the much about revenue in ramp how this guess talk about XXXX. you it help But evidence expecting know traction should Mist the and from portfolio? can I time of how productivity year, to, we think can starting

Rami Rahim

for Thanks James. the question Yeah.

don't truly management, cloud So simply - doing. large is capture that believe superior the capabilities, are that bear and solutions the the managed have first that a visibility AI cloud Mist very technology enterprise very I of that scale their other in re-emphasize industry brings unique very just capability the to customers will that importantly I to

to team and proposition heard in involved customer articulate Mist personally already our again middle broad to firsthand of how door have firsthand in have position gives to been from excitement are the opener the and many us value other of as the of the worldwide seen used have a I early opportunity We the conversations understand training product. I customers that sales the be products. those can how

important I a new broad And as to Mist from the know, of in based footprint, mean, software team, to note be delivered standpoint it has well over from as revenue year the believe on the you believe I so think ratably time. position year. QX and part meaningful hardware, accretive that net meaningful on period, a starts capability sold I be based do this sales it of next technology, to with latter that it's not the So to the recognized [ph] cloud, our also that us certainly software of the going in now the I period is becomes to

ones which So our model. drawn bookings, start later, to in a subscription know, is rather out although the software be the line of sooner will will revenue with you kind bit, long-term come

James Fawcett

I for just the it. parse want the bit question. you posted you're impact your year. the that you're the where like of the acquisition taxes where and people it pointing guidance for for little for the street Mist third EPS excluding at at unchanged is a would saying least, language, the least And clarification remain seems below quarter is. revenue, thanks that on understand Got kind helpful. to follow Ken, And - $X.XX quarter recognition, is guidance that's EPS first I in just a Normally hate and up of of upside, to but

I'm street those small deltas, maybe different those the So like the will? wondering least you what's they're for just then of where modeled changes things kind why making if very and at had perhaps how and emerging what's

Ken Miller

year. with level. already say largely X% the any QX - kind is makes in of in model you upside you there. somewhat a know offsets we think at we is I QX what Revenue would expected the normally Yes, more tough the the the line see for to to seasonality bringing I mentioned I us, mean, rate me, highest given for sense but of full in that I I think QX growth quarter do

you So plus up, going biggest whereas of now OpEx to before in I thought is be line. approximately flat plus and is year full be year The think largely will flat, the we I minus, do OpEx, that's think taking or flat, to change the slightly and know, so largely...

James Fawcett

make clear. just sorry to - Sorry

flattish, up, So plus up of Mist because or it's acquisition? Mist flat slightly it's

Ken Miller

Because of Mist. Mist, of because

James Fawcett

Right. Right.

Ken Miller

of right. now that's and downs Because you now Juniper, Mist, that's know,

full that's year baked our into expectation. OpEx So now

I mention other rate. tax The thing would is

QX. going year's it's ASR think from which would Last not improve a bit into up I of trend pushed, levels, know a do the we timing be tax last in but headwind. least, it that The expect from rate to QX. to You

Now in it's QX. be done going to

full to do year some guidance. of income But interest We line the kind due on other expect the we improvement. rate those the EPS puts to takes have favorableness are and

James Fawcett

so you for much Thank that. great. That's

Operator

question. Our Suisse. next Sami your question Credit comes Please proceed Badri, from with

Sami Badri

have telecom Hi. ramp And we XQ growth Juniper you Thank specifically and year on XXXX if at rate. after that. mainly Systems a My do in really XXXX your a as mixes up saw across Mist, I revenue cloud XXXX, XQ going look you. you [ph] ramp type think customer question of see Mist or in your and very revenue maybe XXXX cable to enterprise, networks to and as expect pertains about have driven similar we did legacy by from a year and more And excluding 'XX Xmas I enterprises? to follow through

Rami Rahim

Yes.

it as grand but revenue be will the scale growth it not the mean, the perspective, of growth the Mist of sequential immaterial but will driver throughout scheme kind should of growth expect Juniper. a I relatively factor be absolutely we won't So of this to but a be year. Juniper's in revenue well, Mist, size from and it reason. overall

on guide, we're in more the of of we levels growth to QX more one through QX productivity folks. We expect and actually salesforce vertical sequential transition sequential expect that off that kind also expect actually year-on-year we off and Cloud exiting growth, that sales sequential as of the We expect the NSP, of hiring were Enterprise as move full we growth. middle the momentum accelerate kind as moving to that expect - continue we we we and growth. of year

Sami Badri

the just commentary? Got it. it Mist right, excluding is throughout all ramp, to enterprise And this be - this is excluding clear,

Rami Rahim

Yes, yes. Correct.

Sami Badri

Okay.

Rami Rahim

we We we accelerator will Mist. organic enterprise. view would that I plan did mean, accelerate [ph] as without grow enterprise had, plan Mist an an We our Mist obviously, believe

Sami Badri

Thank you. it. Got

number, dilution guess or the higher up. of regarding have $X.XX dilution dynamic on actually is follow about, acquisition. the numbers other of end know the from of but range? you The now guys Mist between is give can based a the in this have and tangible really end range on this I dilution how the lower and come are I I we us $X.X

Ken Miller

So plus or or that X up that a that to five. revise to $X.XX, minus minus Mist we and prior guide was the $X.XX, gave plus

guide interest So about $X.XX is the offset tax that well income. by adjustment, down Mist, somewhat and rate some encompasses as as

Sami Badri

from [ph] of be given anticipate out from year lot mix like of kind software? Contrail off what just progresses, thinking kick afar just announcement the revenue Mist a and revenues of of you this the occurring given changes assume just What reasonable just and a model, are then they And there it. model total is the the a but more Got probably shoot will as software - today, would pieces for in XXXX. would in to or moving mix

Rami Rahim

that I now So the and we between of target have - directly XX we have towards for XX% there. XX, expect us grow to

here a be think but linear probably and from would best You of sort perfectly progression to know, there forecasting perspective be linear, some going it's model. not between I the

Jess Lubert

to one going take we're Operator, question. more

Operator

question Citi. comes with question. Our next Suva, Jim proceed your Please from

Jim Suva

for Thanks I would very much best anyway. question say for last, the but squeezing the in. me

or something. some heated the some some continue changed you programs and type us in of your or you sweating they something and know or changed compression at have when that are Can like see sweating orders customers commentary there's has where cannot optimization something from you point with and they situation the certain the understand on beginning, has their you assets. the structurally that Regarding themselves because help then back come at of is Typically come purchasing mentioned absolutely happens true type sit a duration assets? back to feasting data or indulging

Rami Rahim

around referring you're made I the the cloud… So believe we commentary to

Jim Suva

Correct.

Rami Rahim

running networks their hotter. little Customers a essentially

Jim Suva

Correct.

Rami Rahim

I of their when customers business And that earlier, continuous investing can't in on and basis kind look of cloud like I performance a for performance important experience said without networks. their to at so the the they that's customers, our achieve them deliver

opportunity spending this investing So remains this moderates, is I believe - why that it. we're if and do in I even us incredible for an

a belief ebbs based cycles, going cloud capture that fact a to in There in my business some for network ready opportunity investment we're all new that and investment to that yeah, growth is be is So deployment the but is Juniper. might flows on and with making footprint you the know required we're effort that footprint. be to we net capture well as as the have,

Jim Suva

you because will and seems I think look pretty it's mean, know I at with killing it am I it's sooner you it they're be wrong mean, so point, trends to just that do their happen, or got When coming doesn't quick? outlook that your with like like some

Rami Rahim

we you next decline, a and I we long I know, in year then provided this is think saw absolutely that cards, new last and we start get growth customers to term new I can meaningful that footprint which is believe the to especially as think capture to the cloud I net And we for we stability think model year year cloud growth. worldwide. get

Jim Suva

so you much. Thank

Rami Rahim

I you. appreciate it. Thank

Operator

the you the the remarks. reached Lubert everyone I call questions. now and with speaking closing turn you session for of have your end Jess look for over We and quarter. meeting during forward Thank to back will to the question-and-answer We

Operator

This conference. concludes today's

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

Juniper Networks (JNPR) 25 Apr 192019 Q1 Earnings call transcript