JNPR - Earnings call transcript Q2 2019

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Operator

Greetings. Welcome to the Juniper Networks Second 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.

the of to Investor turn Lubert, host, now President Vice Relations. will conference your over Jess I Mr. Lubert, you may begin.

Jess Lubert

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

Ken Rami Executive today Rahim, me Financial Officer. are Officer; Joining and Miller, Chief Chief

statements contains with uncertainties XX-K, current and expectations. on call X-K discussed recent furnished results actual CFO press might are Today’s release SEC other These based to in risks most statements are subject our today, filed and the and forward-looking certain our our risks and These differ materially. Commentary our in filings.

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

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

take one to remarks, yourself questions. we limit our Following follow-up. will prepared Please and question one

I will With over now Rami. call that, hand the to

Rami Rahim

you. in with expected. a the improvement largely June basis. vertical, a $X,XXX in our as quarter on year-over-year seasonal midpoint guidance We line for quarter. sequential Good growth sequential normal verticals experienced all and came and million technologies of trends stabilized had revenue of in Total The June we afternoon, across notable which Thank towards were the everyone. with cloud our

rate of the in in offset tax earnings forecast, came the Non-GAAP above increase a the a strong midpoint from recent and period. China higher our $X.XX cost per share more impact of as the $X.XX tariffs controls non-GAAP than in

the and which not of revenue momentum several XXXX the year-over-year but confidence our is played a areas sequential through out of also year, remainder to expected we seeing December are healthy quarter. business, to of in deliver growth ability during The return providing growth in revenue our the only largely as first-half we

experienced quarter the of the highlights of area driving improved within deployments, rate. the wide a through June been had business and to the at trends previously items some walk acceleration proceeding We of I’d to of our you like cloud confidence year. an some some our Now rest the slower due for of which quarter, the during

cloud to a While basis good feel the during and us. business likely is of lumpy now we to remain and PTX our outlook is largely is the down go-forward sequentially current especially behind transition quarter, the this on MX maybe September that business, healthy momentum about

we customers our to continue segments. in position and We believe wide their requirements capacity cloud are to our holding grow area networks with the our footprints in

While few cloud trends much cases the the for XXX-gig present cycle next focused wide leveraging years, over data in market, Switching particularly interconnect center we hyperscale new the should area us spine-and-leaf and on in the opportunities growth to capture are very segments. use spending

the footprint this optimized On merchant and our we needed but Junos to shipping targeting. API we programmability, begun last modularity cloud of also offers only superior win version believe a open first product, that point, XXX-gig silicon-based and introduced not capable we support have are custom

years for modest We plan new win next, to ability this use the products XXX-gig we tailwind or to and hyperscale material of business through cases, we our our to in further introduce to come. capable even course additional strengthen of will year believe a success present and level the

trends business. are the in very enterprise healthy see We to continuing

backlog with year-over-year and and on sequential declined XX% enterprise increased is year-over-year, double-digit a function X% to revenue sequential enterprise sequentially our growth both largely timing While were QX across all a able year-over-year and a and our as technologies, basis. this of we bookings year-over-year, build

is will grow being have in the fueled enterprise confident we This confidence the win product market offering, are data campus strength win this the market. we and positioned which differentiated We remain and the the center believe strategy to to by in of vertical our believe year. right and and for

data offer a customers a in move cloud accelerate value the to for combination looking multi-cloud to In and center, multi-vendor play now are compelling we years to switches private our Multi-cloud These QFX believe from single-vendor proposition the Enterprise market of beginning trends environments in the Contrail to the state. out and should come.

a Magic our second leader for The resonating is Data row Quadrant year Gartner Center Juniper a center in data and strategy for value named in market its in a the Networking. of as

confident are well-positioned very the and market. also we are that We branch in enterprise campus

one Wi-Fi only switching, can players of portfolio are security routing, a Systems, acquisition we of Mist that and full two offer industry the SD-WAN now enterprise With of solution.

and We enterprise strong field industry engagement that differentiated as The is X are our capabilities we over the acquisition next for several with AI benefit proceeding to believe early to years. truly for transitions the are providing well Mist optimism acquisition. Wi-Fi wins well-positioned our and

campus management a maintaining that investing XX,XXX cloud a force also comprehensive a be we brings maintain security dedicated established I to we AI, differentiated monetized these with SD-WAN further we customers, and that capabilities, and many than can where are to and established channel, highlight want branch believe solutions portfolio new Mist. enterprise more addition which and large enterprise sales like In of

years differentiate enable in the us these to us attributes peers from should our to and gain come. share We believe

are software success driven June more offerings. was and see of the combination to This off-box quarter. during which on-box our for business, accounted grew XX% year-over-year of a by XX% strength in We revenue continuing than and

to models in traction time, sales While our be believe more continue gain become market. the subscription-based a we may our of pricing success pervasive not over linear, as especially and software as increase percentage will

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

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

and deployments. business a expected challenge. not provider and our our pressures the seeing our remains of to service While remain model surprise, we’re project strong the believe business tied relationships service We provider timing weakness is customers

to Despite based experience these provider year, the second-half challenges, our sequential during trends the service known of pipeline our of current we better do on business expect opportunity.

our the partnership capitalize playing XG XG new customers start we provider our orchestration With strength this and telco begin our with on service to the Contrail believe platform of cloud Ericsson, cards, year. well-positioned are and later out we could initiative, to of our availability MX which line

I think it’s worth highlighting that new products. begun we have shift important several to

should and platforms take through service cloud time will markets. these While our to they customer qualifications, work position provider, our across competitive enterprise strengthen

Contrail incumbency line our to requirements, Some new capitalize cards platforms Multi-cloud software provider ability breaks routing include of designed XG capitalize new to a and opportunities. capabilities enhanced switches the customer multi-vendor, XXX-gig of the these branch ability on and penetrate enhance on PTX down to campus and and capacity with make service and enhance barriers our simplicity reality that cost, moving state multi-cloud to MX enterprise to SD-WAN QFX that reduced new Enterprise upgrades, a capabilities increased

cycle, next SD-WAN, XG, benefit believe upgrade multi-cloud be well-positioned years. few each XXX-gig the enterprise X Wi-Fi initiatives, multi-year we over large to We represent and the where opportunities, should

our to Importantly, of in improved have making already I’m transformation. with made very sales to note benefits form confidence that I we we’re would like enhanced productivity starting of are driving pleased forecasts. with level changes sales the and the yield The pipeline the in our progress

quota-carrying the now the process are to headwinds more of adding field. in We sales

contributing we should at few While these a the in productivity ramp do it the quarters tailwind additional and is to productivity, the start second-half them likely achieve through coverage year, least that full further reps expect during a to to new take with of XXXX. present

during during revenue our dynamics, in for customers, their which return ability to extend especially growth these and support is the second-half December sequential the hard continued our to value employees our would to to deliver in my partners our remain their revenue I Juniper. I stakeholders. year growth work for and thanks I and like a thank year-over-year essential creating and quarter. shareholders confidence for want on confidence of the Based to to dedication,

I will results the call now to more quarterly detail. in who discuss Ken, will financial over our turn

Ken Miller

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

increase XX% an and of million revenue in sequentially quarter line of our with Second $X,XXX guidance. was

expected, we across revenue saw and all sequential all technologies. As growth verticals

Service vertical, a XX%, Security From X% and increased XX% increased at Switching XX%, Cloud our XX% sequentially. and increased X% increased sequentially. Routing revenue by perspective, Looking increased Provider technology increased Enterprise

Provider XX%, a Cloud basis, flat declined was Service On and year-over-year Enterprise X%. declined

digits Although double enterprise increased year-over-year, versus our year. last revenue bookings decreased

Rami As and pleased with are our success momentum mentioned, vertical. enterprise we in the

grow contracts. Our posting to rates to of services sequentially business continue strong support X% of and and year-over-year renewals due growth attach X%

was a was year-over-year highlight of revenue. total revenue and greater than growing Software XX%

revenue in the accounted the than five were our four second was Provider cloud We more quarter. had XX Service quarter, reviewing that Enterprise. In our and customers were of XX% total top for one one customer from for an vertical the Cloud,

to operating expenses below the operating non-GAAP margin guidance, down gross midpoint tariffs of headcount-related slightly to Overall, improving expense cost our due increase Non-GAAP China in XX% lower from the X% was management. XX.X%, and and to primarily year-over-year sequentially XX%. due X% were

$X.XX, services in a share Mist down above Systems was partially of Non-GAAP $X.XX outsourcing midpoint IBM, our of IT Headcount the was the to was slightly hires by primarily per sequentially, acquisition a additional which as organization. offset earnings result our guidance. of and go-to-market

associated the recent Total end due acquisition the was sequential Looking the The share accelerated repurchase Mist $X.X and cash billion. and quarter at our the balance cash, equivalents to ASR. at sheet. or second our decline were investments of primarily Systems of outflows with program cash

timing reasons stronger supplier We collections to sequential where and generated decline quarter. from million primary working lower the for $XX cash the flow net income, second The for capital operations of cash payments. related despite of

stronger second-half to the see generation XXXX. We expect cash in of

in As program, million part we into return million ongoing entered our $XX a and ASR. of $XXX paid capital dividends

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

our the opportunities, well at the expectation of the quarter, revenue the to November to our previously, model year. return and financial seasonal outlook transformation Day as in normal outlined go-to-market for second-half expected like a stated I we we to reflects our impact reiterate growth pipeline above current confidence in our Investor last Our in reiterates long-term due fourth as from activities. which our trends positive commentary

of margin be been from able margin. our tariffs have efforts, non-GAAP to the to in China the we’ve basis majority XX% full-year impact I’m non-GAAP mitigation XX of increase to team potential China the of expected is tariffs. to these a gross expected is on point XX% Full-year as to impact proud pressured tariffs. to continue vast mitigate Despite XX ongoing gross by

operating to plan our manage We expenses prudently.

However, to be basis to inclusive a operating non-GAAP of expect versus to acquisition Systems. XXXX, of the we slightly flat full-year Mist expenses continue on up

adopted provision the non-GAAP across XXXX, better of computation in we periods. the full-year tax quarter In consistency second income tax provide our a rate of projected to reporting

rate tax approximately non-GAAP the a XX.X%. of For XXXX, of remainder we expect

tariffs expect to China we our Due non-GAAP stated tax at range the earnings full-year of previously $X.XX per minus now rate, share higher the be increased non-GAAP and per of plus $X.XX. the or low-end to a share

closing, thank their In would I like our commitment continued dedication to for and Juniper’s success. to team

Now open questions. I’d to for the like call

Operator

this [Operator session. first Silverstein, we be Instructions] Cowen. proceed question-and-answer from time, with comes your a Paul conducting Our Please At will question question.

Paul Silverstein

I much you for how said, that got discern the take improvement from quick get appreciate And question? know crack to can question, then to to due questions. Two quick response guys. that One, a follow-up. and stance you and But is improved is taking I’ve of how I competitive much an macro a it’s execution? hard

Rami Rahim

Okay. for Hey, Paul, thanks question. the

the cloud is product from fact the for in very we’ve much about improvement PTX. the that been now on talking we that through big MX are based year a to think transition now I

and, in at we’ll a at seeing, now we is in happen deployments result that, of space blended the part much in hyperscale the as based have see a pricing normalized particular, the that the the of vertical within pace And business routing been level. vertical. a more on that recovery which As in

that business, taking with enterprise In of, switching in And, data a campus we’re Systems. well the now wireless now advantage the in believe be space portfolio very the combination both the I in of best the the solution and space, have and the we product also branch. robust that I performance in branch as of particular, enterprise, certainly strong a but wired LAN to year-over-year center, believe combination spans where sequential strong strong bookings what and the really portfolio with the campus as the which spending that Mist and in the

So that. we’re from certainly benefiting

more the provider of a the In in terms market same environment. dynamics, of service space, some it’s of but the really challenging it’s

certainly there over XG sometime, that some catalysts it help. We expect but can the remain to there long-term challenging around are for

Paul Silverstein

have Rami, markets? they’re especially the it’s on think lot while when not The albeit year, in. And what at uniform been your you’ve volumes CapEx transition in first, product in was been relates on us U.S. the in then, cloud ago, and as is now, or geos, and that changed talk to when the changing major they commenting demand, pretty on the strength that some about particular it enterprise, the cloud, – your PTX crosscurrents. the there given responses – cloud. since across a the do and on were you come look enterprise, last the on What other or is obviously, then MX that portfolio? it What’s you of haven’t trends a the

Rami Rahim

Yes.

that we’re a essentially some customers the reacceleration some So what have cloud the benefited of in seeing deployments our among of of is now cloud on the – we largest routing space, we’re the primarily that next from. years the recovery I well. space, continued because fact very expect a in over doing are see routing of their that, the businesses going few cloud to

cases, and in cloud to to for get to And it to footprint spine-and-leaf. the focused space very even net in interconnect we’re order better in and as vertical, their the to support center use need invest to on they’re In their going in infrastructure. network data new businesses, order switching performance continue especially

strong And In different range of really many enterprise, environment spans larger believe our right, technology but spending I in that. particular, us mid Europe the which are I we strength robust really that in the especially beyond banks I remains fairly the enterprise U.S. and in the and government, here market, Again, do we’re and verticals. the obviously in advantage great And government space the products the financials enterprise market think the roadmap internationally, we and there strong. taking the and U.S., were think in saw have the for of

Ken Miller

Yes.

any transition cloud period, I is and the based that see agree I our said, some lumpiness Just deployments. to has PTX the stabilized. XX-day space, quarter-to-quarter given to just that would us largely revenue, add going on behind customer say the in vertical on cloud That largely you’re

but result. slightly to down off would I or decline very do I QX do I the largely QX stable fact, sequential first-half, in second-half In think this the expect be think is be in QX line of will largely positive to expected.

Paul Silverstein

lot. Thanks a

Operator

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

Simon Leopold

switch maybe Thank you. could you more if I to thoughts little on down wanted bit drill your a see on opportunity. the XXX-gig Ethernet

as given there think about the might it the into availability limited like is I opportunity relates going beginning sounds to the switches. market It timing, that the be without optics. the some of confusion optics

understand help trajectory maybe the then about there? And could you got us If to how a follow-up. I’ve think

Rami Rahim

Simon. question, the for thanks Yes,

you So right. are

as XXX-gig the as are well optics, XXX-gig XXX-gig I supporting before think, products for opportunity of the capable XXX-gig these market availability configurations, both fact, of denser starts of capable because actually, product the many in primarily XXX-gig.

prepared silicon-based we by merchant even and set platform, custom are both support platform have our in essentially new Those configurations. XXX-gig, As dense now my XXX-gig of being a of but customers for platforms, we I first a denser which footprint. competing net our mentioned silicon-based and are tested remarks,

will year. have And The of first-half that in revenue then until an the light become of we couple economic we ramps that’s in available. silicon next to software space to support superior order providing propositions of won’t XXX-gig see own happen terms mind roadmap contribution enables over next day will happening believe that meaningful in XXX-gig in terms that masters XXX-gig to the become of expect that which the in of systems value to really I middle of in optics, and start quarters. our optics keep our types photonics the us destiny have do of investment

Simon Leopold

Yes.

not timeline so availability just had put that of you focusing product. your follow-up appreciate So talked progress a energy you an Juniper? my actually update the you an the I’d last for that update about efforts, is, into give XXX, and on XXX-gig could photonics of quarter, – given XXX-gig from us silicon on was optics could if

Rami Rahim

certainly. Yes,

around a We were So in way We strategy to you’re a photonics XXX-gig explained, silicon as our right. described change using learn. effort. primarily

As you’re going us, innovation there always you of of learned is area new for sort and of know, this whenever territory. to lessons new are a be charting

to focus We into year, for the the our perfectly about within have that I what with diverted customers already XXX-gig ramp XXX-gig the be learned XXX-gig we effort first-half our of XXX-gig remain introduce to and which opportunity effort. in been ability market on the our timed we’ve optics The applied to the XXX-gig. believe will networks. be in optimistic lessons the next have

I new that this we have I that obviously the area still with profile of value – but risk, innovation passing our lessons optics we’ve is mitigated have cloud the every customers, and do power to But a our very think because and There superior that is superior that more some will we’ll again, that month proposition, all more have meaningful economic especially for mitigating we’re believe is risk. learned, of us. customers. a

the of to quite this point, I’m at ability So deliver optimistic on our roadmap.

Operator

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

Jeffrey Kvaal

I into footprint moment? you you’ve well. going dial going for the cloud these won XXX-gig it a overlap now, that items, bit seems are are cloud or that of love very into trials these to like would XXX-gig you is in primarily though more. actually little you shipping Thank It Are as much. and some some suggesting sounds shipments

Rami Rahim

of We now. right primarily XXX-gig in trial the the cycle are phase

the new market some stack our is with from software but engage customers time the seen very is So our cases, is happening. and that those to the our this entire looking which sure make in limited labs, Junos that we’re encouraging. we’ve and we the with tied I say testing type that new systems, sort cases, tucked from that customers production it’s now in early feedback and software early of into cloud-oriented the across And in very good. actually innovation some capabilities days, still are of our and some have introduced to we’ve It’s in

that that lot have still a seen that products of us. But the of got able some the from feedback getting what testing sometime, based take new a for to from has customers, We good we’re to which we’re we’ve net footprint, always be early the ahead competitive the shape the standpoint, our roadmap in think in on doing, we’re strategy. I been execution been

Ken Miller

and to impact the clarify, with XXX-gig. in very just Yes, QX cloud results had little

getting more We trials, are typical we of vertical, cloud really pairs into testing in have starting from we revenue the labs, the ship QX to But et [ph] revenue was cetera. that not into getting posted XXX-gig-related. our

Jeffrey Kvaal

before be That makes How it long be would do these items think with about Okay. shipments Ken. Thank will of of talk make actually some us? production into testing to then sense, it you out you actual you. able that

Rami Rahim

that first-half I ourselves, right to what the get so absolutely of to shipments real volume XXX-gig now do based mentioned, largely next of going on that. in optics, at now quarters. happening shape and I happen which be think, focused essentially And we’re And we I the that’s that as we’re the activities crack footprints. a good can over new on net is proving of is next the in couple awards think the are availability are will year. The

Operator

Our comes John with UBS. Please Roy, from your next proceed question question.

John Roy

you little are color us be in order? the It’d you could really in back-half Rami, more things you you. if very the wonder you of rank us, I back-half. number obviously you about good, are what optimistic the the confidence on a could if happening maybe give of helpful? give thank giving see Great,

Rami Rahim

Certainly, John.

I think number are factors. of So there a

into will is enterprise, to momentum momentum the I especially vertical. will that back-half the exiting I are First that contribute the good build customers, in our timing the do we of of and where visibility our the service see that is happening in space, just in that to the backlog, build-outs think solid the provider second-half. think, we in among projects have year, where if the you first-half contribute certainly some some performance

we time The that investments they a year, in the that difficult around effort productive. now or by quota-carrying reps significant net I I sort contribute undertaken to sales and And of will the believe new fairly organization next is the in transformation to all meaningfully is do time up. sales And the investing that become making we behind transformation, work timeframe us. where now it momentum QX have our think hard the have been really we to of into will take get and certainly, somewhat

innovation add cycle. will the I also

new So we’ve of announced introduced a of number market. into products and, number fact, in the a products

the now that the and for payoff So XG, start triple around the And enterprise, will contribute customer They’re the software to are the think new those multi-cloud those to MX example, of in increasingly Mist, start near connectivity net being trials. efforts second-half cards line capacity platforms, in of will year. I our performance year. second-half of tested. that the

thing will improve really sales ability a ours which rigor, is last been function just more this a I about and We’ve focus forecasting forecasting of real our The emphasis has predictability. as to on effort. added transformation of mention

I is the year. confidence think, have we in all the so together, factors of contributing to what’s second-half these of And the

John Roy

areas? you us It’s the about But holding share other other final the could of quarter’s any very you would your you And at seeing any you’re cloud. were the question, think. in footprint least Obviously, color think helpful. Are other in on share changes you or your back-half, talking Great. in changes? expect any share, one gains give I possible share you the

Rami Rahim

strength. networks have to any goal so where maintain has where that been that we we in which line that were that makes PTX believe from areas line the it after, right. net to have displaced proactively the that of achieved is to been embarking the you’re taking have that the believe customers strategy product footprint. Well, MX of sense we we don’t our on do We from the product We

happen I trial, the goes provided is just in share will think that that now. And to XXX-gig shift for testing I opportunity I cycle. then The the proof-of-concept words the that right And back sort the result commentary next happening standpoint revenue just deployments around over the next shift start in that share the believe ultimately, in middle will quarters. and to of of next couple a first-half will year. the happen potential of from the

Operator

Our from next Yun, Bank. your proceed question. comes Deutsche Please question Brian with

Brian Yun

Hey, guys. particularly I XXX-gig and question the just your a relates as to had it well, as optics on go-to-market.

So large competitive I Cisco’s know you building highlighted of sort the of with and purchase large change guys dynamics custom the But does of intent like some in the cloud the XXX-gig? engineered that of silicon. to any kind – partnerships cloud with Acacia, to

Rami Rahim

On the for us. small about Acacia technology Yes, for question thanks question, a is relatively Acacia, Brian. provider your

impact for that there the in kinds don’t I expect us Acacia. alternative than that we sources to were of anyway So products from are buying

In be cloud have everything put we And cloud From standpoint. as will is vertical, space, the that by cloud up we there is go-to-market a be we the effort a right, provider the engineering will providers that you’re service that first importantly into XXX-gig, providers. we our will XXX-gig customers and effort. but sales the consume just need cycle and believe the followed the go-to-market, from

is the that something with. that software, our way very often their our comfortable fact, are we’re the systems, developing best in optics make that In sales vertical engagement ultimately are model engineers the into the those networks. people That cloud

hold space. strengths We’re that the very of because we routing to in used the

and sales that now engineering across extending We’re the model new engagements just footprint.

Operator

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

Rod Hall

wanted Yes. And of keep provider vertical top hearing Hi, end context drivers. this I so guys, service the thanks got of service of the guys the weak guess, I you of the in being I of kind question. what quarter. the revisit second-half to just this for say, drivers, question then list the at I providers,

think last I as well. quarter that said you

this for kind you’re two terms and follow-up? what can expected had let so, quarter just you’re – thinking is and then what have you of of to And juxtapose of a you consistent us things with I kind us know And see? seeing visibility those what in

Rami Rahim

Yes. Sure, Rod.

So been service provider customers market many service of it’s are calling have out terms business in in for the more provider same vertical, now quarters. I – The that of under think, the of a we our number service model challenges. of and around purchases have part There’s distractions. that, And of our are for that also we There so priorities this spectrum anticipated as there’s forth of will consolidation. and all a result sometime. investment impact sorts business of RAN dynamics

seeing There sort the around I partnership some our do shoots play out are years and our Ericsson, catalysts around green with that some we’re backhaul, portfolio momentum making and metro of XG, with around XG cloud are the very we aligned mobile effort even telco growth. market, in the of few the that enhancements is the think around that which much next over will

that down I we’re – provider than on is, year of So I all is we’ve remainder the specific this What of the year. made basis. us, pipeline, commentary the opportunities calling of year. a if see XXXX we take a the to be look that of the That’s if year-over-year really that – for we going the will better second-half of front the the service around the still expect in be we up at out extent first-half

Rod Hall

bit Okay. Thank a days little could was down you a such maybe just made a change payable about the And you, detail why comment Ken, But quarter? into remarks. just more a know payable Rami. had I you’ve for that the I and and days big comment appreciate that. the in lot then, go question, revisit prepared modeling I jumped

Rami Rahim

Yes.

in the nothing quarter. about So it really our our just just There in has in was this invoicing the to do the side. I payable in quarter It landed It’s recover intentional that with out. the worked particular, went how in more out future cash a of door that – the – timing expense. our contract in than little quarter timing resulted we’ve a and QX. kind from to from expect way manufacturers,

Rod Hall

by at of Is it is all, event just kind random tariffs Ken, or that that… the a affected

Ken Miller

No.

Rod Hall

there? out to see relate anything happening …doesn’t that we would

Ken Miller

Yes.

Rod Hall

Okay.

Ken Miller

– impact really would then random, the call no but I really it tariffs. it I from has a

Rod Hall

Okay, that. great. appreciate I

Rami Rahim

Rod. Thanks,

Operator

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

Meta Marshall

Marshall Meta is This from Quick James. – question. for

of you stepping the an Just to tariffs, kind kind the made that on the you mitigate second-half. there had ongoing largely in back changes of impact noted would that impact, be but

an And so remaining whether whether reached? a should agreement is production is ongoing or just moved the there we through you so? trade of And impact to do would change? then, kind pass unless Is being price kind to can be model Thanks. – that following-up walk And maybe that. ability the just what a is on ability found what you as on of have

Rami Rahim

Yes. mitigation revolved really From into manufacturing a completed U.S. efforts the our have is the interest tariff, around where being an as changing primary

So have a footprint. global we

As which are you in North we manufacture parts parts We within U.S. and manufacture other of know, non-tariff America, China. of Mexico also and in we manufacture Asia,

most year exposure, been minority are China. seeing that going primarily of back, of done are production the products are we of So we’re some most before it. move of offset we – go China, you all And production we other our we move still the to majority. in not always again, vast tariff so mitigating have a if us the was that’s previously. a still U.S., were China opportunity That tariff. to there that we’ve out tariffs, And It’s, manufacturer we’ve total to able really to not – it’s resulted say, locations in said, chosen not the to as only to because able ago

a basis really XX talking I’m between a to XX% point about difference tariff. a impact that is XX XX% and That

So still – there tariff be a in is the second-half. to expect we

actual by really resulted some of location manufacturing sold in locations the has cost in the goods In cost from we efforts different of our know addition as of mitigation uptick to overall part slight the of to moving tariff, mitigation.

costs that some is there So well. as associated with

tariff is we which We seeing along are of have We’ve through, passing some there our to margin. are why gross that the increase all fairly impact some able But situations some our of doing been haven’t been that. pass cost successful been to customers. to where we

Meta Marshall

Got it.

back, away, or timing if because like margins? were a move agreement would would of the how would impact so would the kind basis consider reach XX we how production should of long kind point XX – just that you And you to there that impact of trade tomorrow, go

Rami Rahim

would the Yes, because much we I to currently agreement hover do less move of it previous would of benefit tomorrow manufacturing tariff. We back a think impact, which actual into cost China. to slight back than our I don’t think sold, is, goods but keep likely would eliminate believe we an not is – would tariff. where get of I a get the has cost we it the

eliminated. benefit So see tariff if we would the would be a

Operator

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

Samik Chatterjee

prepared with for thanks the on I mentioned to a in the question. couple of that the a upgrades, just wanted off remarks. question you’ve Hi, times Wi-Fi taking start the cycle

of customers have to think I willing we X, customers X and are you’re Wi-Fi upgrade? at And about talking around to kind X, are of you’re about know that terms cycle an independently As thinking kind kind or as a in about together, campus product But product? combined Wi-Fi should to getting cycle, customers we to Wi-Fi of it sense the the switching are as you of it upgrade Wi-Fi earlier a upcoming looking cycle. that a X

Rami Rahim

thanks the Samik. Yes, question, for

X and days, driver think segment. going but be pretty significant for Wi-Fi So still us it’s a do in the to early I branch growth is campus

now we a few customers leverage early products The first some shipping, and even are technology. starting that enterprise deployments Mist are have with high-end to that our Systems actually of Wi-Fi X

There of it’s we’ll question is your wireless sell or that buying combined, certainly they above. wired technology – those customers And in the all want. we’ll technology. around customers, and that the them cycles standalone decoupled are between whether LAN To more have

an is example. customer team to that opportunity there the LAN in or immediately, additional as customer that with wireless the point buys channel sell them attach relationships at or some whether future from or us, security, we’ve an every fact to a the either now wired with built created it into technology, the and But through IT that SD-WAN, be

of us managed some Mist a in full based is the thesis is early days cloud now had. table and complexity that valuable seeing want the AX out customers. network, kind on the point potential to really firsthand you add reality and also the just integration that more we’re we of order I proving level out, typically realize that AI So which of have to for the to more with a becoming just Mist for that standard, how it to need I’m the of brings the to our engine of Systems synergy

I It customers loving of other extended absolutely be it. well. simplifies wireless it are our be also think as that And parts not LAN that simplifies extended can network our the of a of can only and wired portfolio the – to operations deployment, experience but many ongoing

Samik Chatterjee

the strong quarter. that to If suggest been of quarter. forward growth a that I clarify you next have a had Got this pull exceptional might cloud you that decline it. some sequential But of had, you’re revenue guiding quarter they kind does could on revenues sequential this

cloud forward So did saw? just from some better that’s you want of from because come the XQ to what clarify side pull in if revenues

Rami Rahim

pull No, I forward. don’t believe this a because of

about. a a of I sort year, look think the QX we’re tends to strong seeing on throughout I’m last at deployments timing quite if a the take you moderation seeing cyclicality really just is based our concerned where anything be on of sequential not happening that a over business couple a bit bit little of of that’s of years, and a basis cloud the

now transition some We’re that see is the on and is hard us. for ebbs flows in business deployments. going points based really the of But this to Meta timing cloud behind

enjoy terms cloud now we We’re a in the in routing point very a space. unique the in footprint position of that at

we footprint, that net are on in that then and We will especially in routing course, customers our the segment. areas making continued cloud technology in investments continued that a that see recovery the our switching. on And, especially segments, a have net new focus of new big business, based recovery in

Operator

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

George Notter

lot, is in rates, thanks certainly one a you really think, wondering we talked rate. I’m first from guess, up what’s changing XX.X%, for the bump a there? about I kinds tax tax Ken, on maybe think I the a of guys. Hey, the past. I

QX. here guess, the Rami, took for then from big business really I the I’m in service routing down And a conversation that step provider inferring

business that XX% heavily yet routing and year-on-year. the centered routing, on flat business cloud really know business was We year-on-year. overall Your was down is

there is a service on from MX guess, So inferring up there the routing. customers for in Is hold I else routing? XG going Thanks. service that waiting again, I’m provider line the provider that difference cards, or something is

Rami Rahim

Yes.

are around don’t space, determined me service the on largely question a and Let the is our In routing. just tax is by the technology, it provider then, the which much routing providers, of in of start that as Ken, challenges around challenges, you focus why challenges rate. well with their jump really the business areas and investments model outside of as macro service on

we’re customers Beyond now not America, mode a for the provider traditional customers enough this in in achieve that, I right themselves, that, be are service our in to space, Tier think and do in to of North going growth in where us especially X vertical.

is account. the a footprint, net concerted Provider especially new company Service build to So very there International now effort right within in

out. what’s happening the number and routing kind of need to particular take thing quarters routing routing that’s to in that recover we to That’s order to that build of a But in in SP of of So the going space. sort internally – that’s this in bulk us. for do the

Ken Miller

front, really earnings which year, want On discrete kind last on is kind year’s are really, rate be actually Last why international going the the big This discrete items there’s attach lower things reconcile rate, couple to, one of of we would you of well. year, other rate, direction was the a as those it’s mix tax slightly. And factor year. items discrete is it our also a positively if really rate some last that to had of tax impacted say, items.

the being QX. resulted for XX.X% So that in also rate

forward to a enter rate rate of going we would next XX.X%. to, for Now non-GAAP basis the be I’m the fixed well. year, the full-year the year fixing out have as that a year And at some by of take volatility into for we’ll rest on the plan as trying next

Operator

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

Sami Badri

Thank Sure. you.

maybe side? just was security majority Because that there the and fair Regarding me a of could of give that percentage the uptick in revenue, on revenues? the more software was XX%, total bit you an of security color

Rami Rahim

software the I traditionally technology the we’re it’s security is for out of an The question, tied the software attach is has element the in it security, software. combination strongest. rate our think Thanks just security Sami. Yes. been to all of certainly of but of that’s areas, because don’t for momentum on-box there seeing

software security, AI or attached cloud. solution also into like with customers the and and Multi-cloud management data for So either networks, solution software the our It’s routing for that’s or off-box switching the Mist telco systems, combination. to for things that’s Enterprise way and that center cloud Contrail

the There real percentage increase is executing strategy a that revenue. to we’re of internally software,

very progress with the We’re we’ve pleased that made.

to I see that on this track I models the introducing think objective software the of roadmaps as and timeframe. XX% in a have, achieve roadmap revenue the around to that are the continue we those momentum. are it And total we to we the business think XXXX market of us component to allow

Sami Badri

across the to just products sure more you. said what called consume And multiple customers exactly to revenues of you XX% total or switch, switching? or But you question with or Thank has buying do approximately. are just me predominantly it. did routing I’m or customer – was Maybe and patterns if you? next spend these the approximately that on out an my give the Got major then when customer this come it or segments, idea big more

Rami Rahim

Yes.

mentioned the and are routing and our we mostly. is switching, So in areas is that this cloud a customer vertical technology

Operator

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

Jim Suva

quarter. September enterprise QX for quite you very much. Thank you the Rami, or about spoke positively

delays a it looks X% at or Looking was Thank or I why a Or quarter for the for quarter can so was and or challenge some QX? understand confidence it us quarter, push outs think results it down June September for to or outlook like your there year-over-year, about you. Was then you you segment? Enterprise the help this the positive mentioned. said quite

Rami Rahim

the Yes. Jim. Thanks for question,

That introducing good space. So market enterprise in for we number But strength the double-digit, the to We sequential going giving is the fueled real the QX also that going some forward. and fact, a in was now by stronger bookings growth vertical technologies for have believe XX% of we to different the I period vertical U.S. in government, and year-over-year the are strength we’re saw that growth be in us differentiation. in that real factors. bookings in in even had a enterprise us

I our couple last mentioned to the campus of putting and healthy where in area become over investing and we contributor a years, been performance, that pipeline. seeing starting branch. a now very in SD-WAN the is focus to is have we’re an where

We’re as well our service with a net new footprints. both leveraging enterprise channel as enterprise we’re winning a model, providers into that as accounts seeing direct

leading the the is second-half that All of confidence this we in have of to the year.

a bookings to want might for you talk revenue and between Ken, performance performance bit about little the the quarter? the difference

Ken Miller

Sure.

for on as our you So shipments Jim, Revenue, that orders. normal. our as a down Rami really actually mentioned, wanted double Linearity perspective digits. X%. bookings were into deployments That’s bookings this up the result was mentioned, there – quite was customers of the those

So anything we didn’t quarter that like a have perspective. bookings from or back-end in

therefore, the out, in that the backlog in up QX. the results have, laid went we shipments resulted and it However, way

which backlog went confidence up, QX. us focus more about enterprise Our gives

Jim Suva

That’s you much the details. greatly for appreciates. Thank so

Rami Rahim

Sure. Thanks, Jim.

Operator

question next Michael MKM Please with proceed Partners. comes your Genovese, Our from question.

Michael Genovese

in I’m company and very that to new and lot a a in a results strong I share. I’m in Thanks had released morning, product Great. of them go service reported about much. they that competes Juniper take provider. see this thinking segment. Hey, verticals just Rami, pretty through that the claiming

[indiscernible]. cloud next has a And who broader point solution you’re years in of In versus the consistently vertical, competitor week versus much a outperformed a for vendor. here then kind there’s enterprise, reporting

it some of look differentiation? you best bringing sort share sort what know next And hold? in the taking should year? really way. where where this it Juniper market, I what – some I’m to So is show the technology, gain Like bring I you is market what of But think really mean, put struggling and to sorry over leadership for Juniper I struggling, at. the where are But to I’m a vertical unique I’m just

Rami Rahim

me that number there, footprint years, but have we of Okay. Thanks routing, very a over unpack have unique cloud for strength of a position lot the we built that the in let where to a that space, in question. is try. has terms a out really the position cloud strategy There’s In the very strength of as ensure best customers unique carry amount to our remained networks what hold a we have traffic. a of very build order a is That deliberate to in technology that that to result huge Juniper.

where one, the we also market new deployment, And so, net XXX-gig timing substantial of based on footprint, path the to leverage but is vertical have continue share. we have do a grow that’s in footprint which real We forward the that ability to to to that especially with grow into opportunity cycle coming.

the In is with point enterprise. I Juniper a respectfully that disagree notion player. the would

a vendors in actually customers end-to-end in and that of has one campus in in that’s, solution and branch as our to SD-WAN the wired extends wireless, two we’re fact, fact, portfolio security with the In that provide markets. an that embedded in is the market well working only full as

and unique capabilities. focused market of we seeing by terms in it’s the And is side, The we sales an from the a standpoint fact momentum this there is as the where software a area some technology a not that we’re that have accident, differentiation from center very in function the in there’s data of hardware and the much standpoint. well, then

need In to I think people is a the market SP that dynamic space, understand. there

industry, to to going have If the really areas. of this across different us compare at number in look a others you you’re to

more in North traditionally has strength America. been our First,

happening believe build-outs that. the now of internationally the right new are betting process into to partnerships, is but we go-to-market also And by through I do more net and great which And tap on that for bigger need in mentioned footprint, earlier, some I happening as of we now.

the Secondarily, core, are backhaul mobile of space, more in that technology coming our sort I Today, it’s lies. the sort still our is there happening edge are access the that of metro. portfolio and are in build-outs believe it’s now the where in where strength internationally around mostly together.

a leverage together, strength the momentum different space. number well of strength would but of the able and relationships to with have I see across we the SP in characterize how So a we rebuilding be the have, as the as that comes we have verticals. to we’ll customers that That’s the opportunity as

Michael Genovese

answer a Well, to you. tough question. that’s a good Thank very

Rami Rahim

You bet. My pleasure.

Operator

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

Tejas Venkatesh

you. looking I an forward? and Thank your orders was data between parse performance hoping in XQ what could from and center see you campus perspective, you switching

Rami Rahim

certainly. Yes,

recovery lot a still that sort I ways we in switching between less more center the We saw the switching or in campus opportunity roughly it’s a us environment. of the split of I’d sequential and and space, ahead off to have I of a of go So, saw, data QX. think, equally tough the say space. meaningful

in we’ve the what campus and fact a because LAN. that now momentum of plugged wireless certainly We’re gap portfolio in the some was space our seeing

ability new business with hyperscalar In our deployments penetrate down opportunity I think different There’s the is XXX-gig, data that enterprise, ongoing of enterprise simplifies very it’s which reaccelerate is to center, important the multi-cloud the in solution of – things. obviously of I going think footprints comes differentiation that software a key our data center build-outs then net that portion to and focus. to getting the a the and help. couple the the and our to operations But in enterprise area in that

recently. just first solution version introduced software the that we’ve solution, that Now of

And rapid the to going mode our contribute think as based that get enhancements in back-half making We’re going I data into business. we of customer the are help portion center year, specific of to a very that it’s us we of and feedback are the of the sort getting. in on switching

Ken Miller

is that sequentially. product focused on branch, thing and is The campus to QFX which add predominantly would on line, focused which grew only the I both our and both data center our EX, is

are we really momentum across both switching seeing sets of So platforms.

Tejas Venkatesh

leadership over now appear quarters. speak EMEA Thank the some so happening you. strength you service changes made earlier could Rami, other internationally traditionally the deployments you your and have follow-up, where not outperformed of forth. specifically bigger if provider region, you’ve And few are last wonder Juniper And as the in to about I mentioned, EMEA and a that routing has companies that’s been.

the have Huawei We also dynamic.

talk So to the about region little a us and bit there? EMEA efforts your

Rami Rahim

includes accounts, X that Yes. It we The East see do still to specific the and real Europe, we’re a a EMEA in but in a player, region also Middle of a is Western relatively includes cetera, where of have region, of number operators, particular. we strength where grow Africa, Tier business. where opportunity real small emerging et a some number huge course, markets,

and In strength. new fact, of in a where that big not is had area focus traditionally of net a have lot accounts we presence

believe is has ahead a definitely of performance a us. I of also traditionally that been mentioned where can opportunities. think, we outside strong, have market the So been driver fuel that add sort the just to which EMEA of of that our Europe, emerging historically, more with we opportunities of exist I expand new into Yes, of I the just part net to of outside focus U.S. Western big

Operator

the of closing will turn reached question-and-answer I We end remarks. And call session. the back over Lubert for have now to the Jess

Jess Lubert

Thank you, operator.

call, conclude Enterprise we make we XX. to TED everyone for that August will like Before an we AI the would hosting on Talk aware be

conferences quarter. Citigroup Deutsche sell-side in Bank hosted participating Oppenheimer, be also will and this Jefferies, We by

concludes participation today’s our our regarding speaking of events forward meeting with details and be on you quarter. Additional We these in call. website. to will available That many IR the during look

Operator

conference. concludes today’s This

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

Juniper Networks (JNPR) 25 Jul 192019 Q2 Earnings call transcript