JNPR - Earnings call transcript Q3 2019

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Operator

Greetings and welcome to the Juniper Networks Third 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] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Jess Lubert, Vice President of Investor Relations. ahead. go Please

Jess Lubert

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

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

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

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

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

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

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

Rami Rahim

Thank revenue results you. of due Good afternoon expected September to below service business. weaker $X.XXX trends our was of quarter. midpoint guidance provider than mixed slightly the during our billion within everyone. We reported Total

incremental controls share $X.XX than which forecast than within sales, $X.XX of Challenges cloud tariffs. more impact earnings than expected grew China better our of as and above in per cost and offset year-over-year. margins more healthy came the strong both midpoint Non-GAAP, our enterprise this offset vertical of from gross non-GAAP the

The over to now our recent and during growth experienced a this expectations Service enterprise of we change will that continue December While is lower few from past the the to track quarters last Provider we the are belief anticipated. our a moderate prior trends quarter. we weakness year-over-year remain on expecting versus previously on our momentum reflects we based order than levels the experienced that to deliver quarter, we return growth level likely

our with offset believe are the cloud dynamic more executing we seeing improved a We well momentum we're dynamics than will in customers. believe these We environment.

business, prospects in each growth of We few to continue the transitions our to we material believe which investing are are undergo of years. long-term the next of markets, over and our many core expected to technology in win

present strategy, share the X likely opportunities go-to-market to have capitalize motions opportunities believe WiFi the are Typically, the gig and years. and we to play-out right transitions enterprise gain to next several and we on over XG, XXX products, multicloud, that needed

growth our has we $XXX $X sustainable quarter. in buyback Given intend conviction into prospects a to the position we bringing market ASR million return our to that starting are modest should drive year, and belief authorization next to a our enter innovations us billion, to by board our this and increased

quarter. of particularly during I'd September of improved are our Products key experienced consecutive a of this to trends area within core of like we from within into Starting grew our continue verticals. year-over-year provide see some our which the each some past developments wide customers’ momentum within we address our second Now, quarter the and September as business some X% the the quarter insight network, with seeing to positive, Switching quarter, cloud we

this to and area that wide us. grow largely requirements their encouraged Order to network now transition this is cloud the ability success our are grow the MX are believe business within trends and by again quarter. year-over-year optimistic our positioned continue healthy segment remained to once December behind we during we We're to in customers’ capacity regarding we seeing PTX with the are

switching to very have much capture the focused limited spending next cycle maintained we While should we cloud wide us where area share. leveraging XXX-gig historically present growth few opportunities, years, hyperscale opportunities the trends for over on are

switching systems, XXX-gig share silicon, point, introduce next last started cycle, this plan additional quarters. win solutions and deliver the the capabilities hyperscale during and few we've software over the to to On and to needed

labs solutions of even started success business years material our tailwind have the or could these present into remain level secure our introduce to for customers’ we and optimistic regarding our modest to a to in We ability come. wins

provider service XX% the our due our are vertical, experienced weaker challenges Within ongoing trends to we this with expected carrier business customers than facing. quarter September of declining during year-over-year many

to RAN we number carrier a out did build-outs. projects as shifted customers our While the have are relationships networks remain of some of and quarter others are harder, resources push spectrum capital licenses expected choosing see and of run these their many constrained, strong, to

our success some products the of Service of to the of Telco platform, access Cloud service more modest our of deployment, do growth XXXX. quarter present cards expect declines availability new of The in sequential and during in experience Despite future line our Contrail the expect the challenges, XG December periods. these to MX year-over-year provider business from to headwind see vertical less we we Provider reasons qualification and are move a our

While during a we healthy very with the of year. was weakening in the believe saw spending sales leading year of period enterprise in customer and toward X% environment. the We for this we the the is with due transformation actions took deceleration associated that we to growing expectations effects earlier reported the us year-over-year, macro revenue remainder to this the lingering our end in related QX business orders enterprise deceleration moderate

longer-term we business seeing this business. dynamics, enterprise are some and optimism Despite that pockets of strengths these prospects our providing for are within

and switching QFX quarter-over-quarter First, growth year-over-year a experienced both basis. on business our

grew year-over-year grow leading this in believe software moving business datacenter are position driven market and as management resonating and within capabilities us to QFX well improved forward. fabric market. Contrail as the industry We should by orders datacenter EVPN-VXLAN XX% the demand cloud our enterprise

we by the pleased to momentum opportunity the and market. to the AI Second, seeing with I'm are broader Enterprise Mist bring

Juniper real, for in small, driver through momentum and the XXXX. convinced it am become remain a associated I numbers the are we Mist is the increasingly should that While seeing and material pull enables

in doubled points of of XX% EX proof this this closed deal customer SRX customer the To Mist has and are past we or an two opportunity. mentioning quarter, we just momentum worth XXX new base It's than also which more XX% proof-of-concepts grown point, the included seeing. year-over-year; over Mist since secured we

we surface the WiFi just customer monetize our and and new and scratched the are to further of Mist X industry wired believe to further existing enterprise. driven come. and should potential logos and Mist refresh base to WiFi tailwind and have were The win to capture present we investing in address X We wireless the enabling the transitions us we already AI architecture to differentiator unable opportunities previously year is as

healthy market. Third, our the SD-WAN traction capabilities are starting see in to

the is we networking in resonating share our fast market, portfolio. likely large WiFi believe offer but with to to innings, cloud remains and be gain opportunity through our growing management, security, in to our a very of also ability should this presents and only it broader many pull early customers not While capabilities and helps us position that campus another what catalyst is

I think and is business strength in strength it's growing XX% the portfolio. business that of important the at to September this security continuing year-over-year high-end highlight our our with quarter, mid-range to see driven by

expect networking focuses customer seeing security across our sustain we are which momentum growth business use cases. our QX, experienced strategy do and by not we're to on secured of we our several encouraged with bundling the level in the success networking While security the we of platforms

revenue security well of solution believe and increasingly part We as We're in of for a are approximately trend. during we are our September quarter. to this to capitalize accounted looking consume networking and XX% also grew think see to software year-over-year business, positioned continuing which success customers on XX% the

licenses, off-box subscriptions While than XXX% software and more revenue much driven than software increased off-box our security by Contrail, orders year-over-year Mist. to subscriptions increased software of and our today XXX% on-box due year-over-year is more

pervasive we the pricing of momentum and sales seeing, we're as continue believe Based subscription will software increase become percentage a over gain on traction in models based time our market. the to especially a more

identifying turn over of a by sales incentives approach, place to could more be putting this sales are where right under productivity leadership and Jewell like carrying that set it into we reinvested upon improved touch the encourage with teams. I additional goal of savings motion transformation drive which the to Ken, The to of Marcus behaviors I'd sales is areas into these year. data-oriented into the initiatives quota best Before were leveraging efforts our sales earlier potential to

I firmly a on position grow also us will advantage of only to to believe delivering basis, take take these we innovations across our sustainable are but to actions not the share. portfolio

an we encountered for see organizational not earlier magnitude, is which to of period turnover of something this a of it elevated time, year. uncommon an with level However, change this is short

positions as ramping newer we liked and of While our to was our as exiting we been would versus sellers we able largely open are fill of in June solid progress us now our hiring the and have this process quarter the to early many year-to-date, productivity. behind have not disruption goals have quickly made

are combination December impacted macro enterprise The a which our next and return market we're right the believe bringing innovations products growth are caused more slightly conservative with This of I the term, caution Longer of has trajectory to and the a organization making to revenue quarter. the of to should some enterprise investments for slightly deliver us disruption related ones us to along expect emergence the in orders. position has we go-to-market outlook year. with our the along modest

support to creating our and and work essential shareholders in customers, dedication, our Juniper. want to thank is I which their like thanks I and to confidence for value would for our stakeholders. for continued extend especially partners their hard employees my to

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

Ken Miller

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

X% gross of management. billion, quarter Our than of was the guidance. Strong X.X below strength of mix our inventory of deal revenue mixed driven were slightly points by margin sequentially with increase guidance higher third and midpoint but range. non-GAAP an total of favorable midpoint XX.X% improved the $X.XXX This was our results

$X.XX, strength margin well the share management our of the Gross above range. drove as per earnings guidance operating of $X.XX midpoint as expense non-GAAP prudent

increased revenue in we our this vertical. are to year-over-year at return growth with basis, on pleased a Looking by Cloud and vertical the X%

Enterprise weakness X% revenue bookings towards in While some of did increased see we end year-over-year, the quarter. the

weaker Enterprise increased a increased XX% Service Service than Finally, X%. year-over-year, sequential down Provider was basis, was On Cloud X% and expected. XX%; which Provider declined

increased Routing XX% X%, perspective, Switching while technology Security decreased a year-over-year. XX% increased From

to XX% grow, continued revenue approximately increasing of year-over-year and XX% total Software revenue. was

increased flat Our services and X% year-over-year was business sequentially.

for were operating and sequentially. Product flat the XX X% due the year-over-year Provider top customers to the our $XXX was delivery Cloud, timing of quarter, were contractual six commitments. Non-GAAP were Enterprise. of X% down reviewing expenses up three one million, year-over-year an revenue was Service and In deferred

flow cash total partially balance cash solid sheet, quarter. million offset the quarter equivalents from third $X.X investments of payments tax increase related of higher due and to our $XXX end operations the sequential We lower cash at lower suppliers billion. by The the payments was to Looking cash, payments, for compensation. primarily variable at to was and generated

I website. detailed our would CFO guidance, provide our which to some color on in commentary you the could on find available like

shows to outlook a midpoint. at revenue return Our modest growth year-over-year the

it our sales uncertainty. force transformation expected challenges customers. continued lower Provider our we to in in largest the in our due impacts confident and However, Service relationships than and some serve, business with macroeconomic remain is our customers, previously lingering We our as position markets of from

recent Our expected fourth increase tariffs, which offset reflects the guidance margin in gross non-GAAP is the China in by revenue. quarter partially XXXX increase

engineering, margin. gross We optimizing our management service continue efforts and solution to specific These software value sales. our and efforts supply improve increased chain undertake pricing and include business, to

full-year expected a to approximately we corporate tax India's continue expect in reduction XX% expect and achieve low-end the to the anticipated costs the outlook, the $X.XX rate. due than quarter revenue to for earnings prudently, the range rate Despite lower of in our of non-GAAP We $X.XX still to tax manage fourth XXXX.

board mentioned, current billion. billion share an directors authorization, $X which additional of approved to repurchase As authorization our brings has our $X.X Rami of

of in $XXX addition, we fourth intend XXXX. quarter In million to program for repurchase accelerated the enter share an into

We opportunistic returns. capital on future be expect to

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

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

Operator

with conducting [Operator session. first question-and-answer Thank your line this be question. from comes we'll Your of you. Jeff proceed question with a the Kvaal Nomura Please time, At Instructions] Instinet.

Jeff Kvaal

the look in some mean What What with how in milestones are of does that color I adding more deliver gentlemen. would and I software terms them? the Rami some deep bit about hyperscale next some of and silicon if for that the to commentary quarter timing into you, testing. would your spend for little process love Thank we guess, time starting a you over so? to or are can you

Rami Rahim

Thanks question, Jeff. for the

transition the So team, space amazing It the the the is space. that with essentially QX of context a honestly now from engineering PTX. a the very in due footprint to first, efforts where is here, position we're net it as a a position pretty in little bit in impactful to of what leaves provider part I'm retained of the unique and is no in in product timeframe. a routing team, in in terms sales we the Juniper MX The pleased cloud share of results our really have

opportunity, will use the us Now us the more interconnect gig. particular new center cloud and focus in gig and customers, data the on And expand that and to also opportunity our the grow will net with XXX to data switching to footprint, allows requirements eventually cases. allows of capacity around provider be in it initially center XXX

the technology purposefully cloud a for that been designed operating Junos the system we've market into provider From the new released very already has space. standpoint,

the it modularity, all of our of we the capabilities, and cloud need programmability, telemetry So, Linux-native capabilities, has aspects know the want. what providers the

We that system operating also silicon more and first be there both and merchant to on very based have that come. custom offerings systems silicon run will our

the different So, of be will with on over capacities quarters. that working roadmap systems couple different a of delivered we're next

of very it's engagement terms strong. the our customers, In with

are flight right We initial that have in already proof-of-concepts the now.

to not are very well more I confused that the it's competitive share. lucrative, that opportunities think because our space the than fact are to be fair We a we positioned but are about going gain

share includes and own to optics small the half would the in terms remind I be currently us gig Juniper’s XXX the space gig I year, give wise, is initial that starting for that's XXX of it third-party optics, of underway. And next XXX expect quite this silicon-photonics a year. And also be both will in you time in XXX take that optics. the meaningful Time second gig deployments even next will very tailwinds just that the through much our but availability project gig of that

Jeff Kvaal

Ken, fourth about then, of think growth how to that a we talked And perhaps does growth in you next Super. the quarter starting compare course over year? How the Okay. and modest clarification, about should year. that Thank modest you. the the

Ken Miller

Yes, Jeff. thanks

a while for do about about we some long-term remain are additional caution XXXX, to be, conservative important that out to flat-to-low, with in would growth in markets it's prospects, your models, and we'll time we provide more uncertainties macroeconomic uncertainties. XXXX, to some think I single-digit be you this detail later So be the but surge looking and a growth I some we we the of really at there about and that that opportunistic on to given serve. Therefore, in our see way good think XXXX we are going growth weakness note would seeing point

Operator

Please comes Deutsche with question from Bank. next proceed with Brian question. Your the Yun your of line

Brian Yun

Hi, thanks for my question. taking

on what you of you I Juniper-specific due to mentioned, force could the enterprise are kind seeing detailed expand issue broader weakening also you're enterprise you if a sales Is this was a environment? outlook. transformation market initiatives seeing you wondering enterprise or So there.

Rami Rahim

question, Yes, thanks the for Brian.

business should have total Real equal really pretty that, say in the factors in performance quarter, started pleased impact. in with yes, in geos. terms quarter-to-quarter in technologies of orders of are the and see did revenue some weakening space a of couple business near QX the space. QX I they're to timeframe, much we really we in we're our the there We helped and the mention federal impacted Enterprise the both enterprise the roughly of performance that First, that great end across and saw year-over-year in the growth and strengths all that particular

remarks, the quite as of some that there in have is transition. sellers lot productive mentioned that the And as First my around time. we fact really I sales prepared seat for the new in a not quite that issue are is as been sellers have

in fully that I able to open be the itself that been haven't as we to few impacted the that would there as the We beneficial course, have separate that do of like. and been of part transition to in wrecks I time. That as resolved orders. we quickly And the that, of fact, a have expect business timing fill over created it to addition next that some overall macroeconomic over But quarters. believe factors to the

around I'd into So, on we really hard timeframe longer what The productive the that's rebuilding of say And shorter really that somewhat good can We're QX behind issue next about focus were possible year. part, we competing saw sales getting some it that one sellers is going news out what as transformation. are that moved some and into opportunities new out the control, this very of we it at to took really close, as us is in our orthogonal point a is and that's getting to our around really through the a control. for which and possible. is as the and

Brian Yun

of optimization for maybe software talk chain way Great. initiatives. right imagine supply it? And near-term. And whereas immediate you Thanks to that about think which Can beyond, Rami. opportunities? one increasing that outlined you. or I'd Ken, could that'd term, be more Is improvement margin longer the Thank versus about could longer-term those ones are that's management you opportunities on various if the more sales helpful. XXXX be gross you you, margins, the quantify pricing any and that more

Ken Miller

over job focus and to on that’s chain what's for a been mitigating and do longer to a supply obviously design the as value was us quarters, engineering impacting think been last term. tariffs far all several think of pretty way we've have the date, regards. good kind those big done pricing, management, I the Value right as Yes, about it

say However, we've years, few I on right. a working it would that for been

next the products very of pay introduce as on year and those So, and off long-term. are we and really new cost that this of products we year will into focused over beyond, the some

this attributes to in ago. engineering we are or all to a are So, value because two in the of products that at a year work started where starting time, coming benefit market we us point some cycle are

Operator

Your your of proceed James. Leopold line Simon Please next from with question with question. Raymond comes

Simon Leopold

seeing products Great. switching, question. enterprise in with strength the in I offer wanted on Thanks. triangulate could and disclosures security see to specifically coincident the your Thanks taking in if lot you we business, verticals, strength of for and maybe strength vertical. a the

I can we if see so specifically And what's with nuanced, going want associate click since if to on much enterprise double with many it's enterprise of cloud. And topic. could think I folks a on and switching with get understanding probably think more security I that historically, better customers you

Rami Rahim

Happy to, Simon.

right. think somewhat look technology the areas, big enterprise There’s roughly switching tied you're momentum you element of both I at take if is these Juniper. strength broad-based. So of a and security But to that's a at actually

developing So the In in provider artifacts in and particular, technology we of the we're all also in saw cases strength cloud I hyperscale use addressing. we think that we're space. saw the but we and much, Security, cloud it's I verticals across of up switching, an think saw the strength solutions enterprise, really the in very provider and that all strength

data interesting that enterprises So hyperscale their building the centers. XXX example, own gig. That's very switching very to also to take it's It's are for space. interesting large really private around out

mainly world-class really with are I'm It goes out for, that performance pleased well technologies own have make saying, that building enterprise performance. the without data our And protocol up centers. EVPN-VXLAN in like really are is where again, of cloud XXX their that large gig suited was attacks enterprises the there we year-over-year. required, on that a areas features broad across We security. implemented base in again, and stopping it strength switches SPs, also of XX% combination There, efficacy saw providers and

ongoing kind mobile service from right would some have of performance expect infrastructure, where basis. cloud benefiting the users, this security this data, on an enterprise, we is providers are not we space. security in are now that large securing unique So that strengths in providers, I

forward. I benefit as trajectory all compare easy you have in security nonetheless, much an But think I our of across compare little do bit the from confidence we verticals QX. QX a and the more difficult, going gets look in into of

Simon Leopold

optics your that Great. the calendar but silicon-based you turn half quick XXXX, expected products second they that in volume that second be ramp to be of the that the availability photonics And is to of am on in around that track And one would going this of production of the earlier question in I an are half be part your follow-up, year, did mean XXXX. would comment calendar am indicate the expectation understanding you your you're I correctly? and available interpreting

Rami Rahim

us year in XXX specific to to silicon-photonics of do is there. milestones We now. to year right – gig beginning can end by We're certainly based we sort not the with really will introduce ready introduce The of to talk And optics the the catch our plan is and thing get I volume that about and gig believe important next the wave. of that. the most that XXX

you point, just to more where we this are. a bit on color At give

We the proved have it in a lab out confidence we because technology environment. in

of volume. at but and specialized strategic scale. that, to manufacturing going houses with that And do making in in out have taking it differentiated, in there this technology that and work in think really fab we still have terms it's available are I to partnerships to de-risk it we like be signed order

of next in that there's work ship dates is say year. most get order would I risk behind ahead to lot us the us, to but a the of still of important

in growth think So if gig when the summary, I at spot we right really of – sweet it year. XXX next should deliver in the be

Operator

comes question proceed Morgan. from question. line Please Samik with your with Chatterjee of next JP Your

Samik Chatterjee

and the are from strength start other Mist same customers with question. that you wanted we just off to. with I around kind are Mist we’re a thanks talking primarily seeing Hi, of few got for question, I taking hearing to on that had the Systems and comments my you

particularly kind in you for of what, about see Mist, you're the Because other Mist. separate pull of will have it. some when specialist quarter strength about portfolio switching thinking with you're products, to of seeing last campus think want spoke you through you the the mentioned, team a how Just I

So pull other to of drive more integration do products your more Mist? motion more need towards you with of able those kind or be go-to-market to

Rami Rahim

Yes. the Thanks for question, Samik.

interest I is excited proof XX% high points, our level customers So competing in close positioning since Mist has mentioned very our technology, from the sales own now that importantly very for transaction. and the with Mist by both teams are the the about of from and the customer base grown

is there through that opportunity and we've right behind thesis acquisition the that of additional significant was pull You're to made. that the a Juniper products synergy part

in we for what far net that portion we are significant in the customers both switching and particular new fact of in thus security, opportunity or a winning. And is There attached are of seeing many switching.

end in offers is Juniper. our who honestly to analytics framework people as in bigger portfolio experience. we the other wireless primarily that missing can are job the that portfolio the that LAN and a many filling simplify include user products enhanced of of of picture, What cloud gap look and enterprise the it which think operator and portfolio network Mist So – want at and a Mist to is expand do AI management now

roadmap we as we're And EX. be will we're our speak. from on which of that level first and very high a customers doing of from interest executing seeing that The

Samik Chatterjee

about of follow details mentioned you talked just center do – I solution bit feel be custom trialing data you you've the with? gave to and as which those the that you have? already. solution as the wanted I preferred you gig you will for it. want switching silicon do of the as to What opportunities do the XXX up And understand, well with of the on rate both just quite that quickly as that silicone-based you're merchant well hyperscalers go products solution. on you how about to Got think a differentiation one positioning

Rami Rahim

addressing those that the we clarify I should appreciate I products case. question. the see don't use same Yes,

So silicon merchant we of certain have chosen use the in parts to network.

a solutions hyperscale a service of cloud the center the a deployments that provider layer custom data network. example, data level The we're For offering first layers top space. area in within and access access rack as wide the or deployment spine service address cloud interconnect, provider the within more or center, – space of well in provider a aggregation the of as WAN

question So very around I feel very good. much To complimentary. they're differentiation, your

be that couple I I in think goods are programmability, offering now the And software into price on the would industry. evolved year. silicon gives honestly, the that's of performance with most we customers with introduced advantage top to terms it capabilities the new our that the next that give our think necessary silicon-photonics gravy we once out an and the capability that market the have is now modern the modularity, both need. software the our in in that system operating Junos It that customers telemetry

Samik Chatterjee

Great. Thank you.

Operator

Tim line Your your question. Barclays. question the with Long Please next from comes proceed of with

Tim Long

Thank you.

the I bit start and and a cycle Just obviously, obviously of could the be as HP here, the it competition, talk first, to whole to but kind you there. time, seems a product back about little Arista better well wanted Mist could to seems area has follow-up could, if do job to a portfolio good of to part you a a to is is Rami, off be a Cisco just as reinvesting trying if WiFi go campus

you're alone several to see a here Service seeing it to seeing your SP then the you. the broadly, Thank you vertical? mean markets? there maybe reverse more second I that this XG business the over on talk is view, And the something the not else Does is little that or have be seen just across that this turn what we've quarters there. side, around can to bit the about one Providers trend In what is competitively next take weakness. So you're it going

Rami Rahim

Okay.

For Tim. the questions,

Mist, So out I competitive compared first of that is to differentiation think any the level with offerings now truly that right Mist have are unique there. we

not years, competitive we the that than in think that the less have advantage I measured that. is

of And a have that I and now start part are achieve technology as much you Mist view of Juniper the That capabilities truly the believe offers, in AI they closer having order of management cloud-native to do scratch. to family. the kind from

You to today. build Mist team to are we do And beginning. now true that that benefiting solution started from the that's – from years ago the Mist and have do to management something started a cloud-native

net So I more market new that and about wins in points proof the opportunities, is of differentiation, but the importantly feel very new terms there. confidence the confident in absolutely of accounts

it one technology other As products, would wired our and EX most the be extend portfolio campus portfolio. across we that take switching obvious

we lift think that area. additional get will in I

the the business On seeing space, Provider that we're not challenges now new. are right Service

We citing a also number yes, right, seeing some of now these. have this peer, our for been and quarters of they're you're

traffic we're dealing And doing they're Having – environment so with there think have radio the what and core addressing is flattish built means extent limited networks to I said means they're reprioritizing that that IP. to positive that, out. that That side CapEx we the SP story, needs more strength. access that budgets spectrum customers where and and a first. that and be that XG the have with carried build within they in a reality, becomes service and to provider, that which there's edge to is get invest ran now already out is investments RAN less that networks

the be It's expect do net be anytime measured will that over going thing. a from this in something time, not investments benefits not from I quarters, benefit will we will new help us believe next So, quarter SP I a catalyst that But space. this many to in that is soon.

with Contrail new by the become about in start extent telco today the thinking agility they we're networks the And over services cloud. wins, that their software are that seeing it's available got built the to to And stack efficiency days that's today virtualized. telcos really great and And how of the but reap evidenced we've early all operations benefits encouraging, can net cloud their out. XG cloud. deployments which and and get XG is to change Additionally, market premiere

have think that that had from I the – to-date. benefit we have at with we we wins

the think to business. we will I experiencing in do our the in that what year think would be a year. next order required are been So I change this than be factors these trajectory less SP headwinds SP have couple of of

Tim Long

Thank you.

Operator

question. from of comes Please with next proceed question your Rod Your line with Sachs. Hall the Goldman

Rod Hall

to, likely me guys, ask couple are say, proof-of-concept other talk thanks where questions. trial is are on wanted a any you fitting I used involved all you're gig there of Yes. there that. competitive One on I is through in. operating switches cetera, operating being us in, could well, Hey Junos? of the XXX system, is systems new the emerging, And in guess et situations your OSs it for and the interested as are environment just it suspects, just that kind or

And back structural wanted service are provider kind pressure then being and are putting XG of structural to strictly, are on And types we to and you Thanks. like decisions ports of here is the up. in that? buying? providers, it question be Like of people any seeing secondly, know it's service beaten market what or routing I, you, go architectural changes just service providers, things ahead change delayed that are a I on seeing any are

Rami Rahim

thanks we actually think so of about a and running was provider the have question Junos our for, software engagement our done other Yes, different eye for for customers. a sort stacks that on systems the I competitive heard questions on your Evolved I More with working have cloud XXX operating we've are that On gig, on not available. around And with question very number of years our and nature doubt tight software now been and of that of hardware, the happening. the I no, Rod. broadly that's

which traditional it requirements space. of, know, So these of MX really. I'm developed to we've have as like the with technology as pressing, don’t In I our no, address not and both or that, changes, you most in benefit not of me space, well structural the seeing know, scale-out confidence the gives cloud QFX. architectural any us routing PTX customers, the that effectively scale we provider to we've service stack, sort as ups, that the compete the developed right allows

from our But of I among customers. probably that, transition I the now most our a do would from up we space, the with not in another we have to out would, hyperscale I see, cloud all what reasons I said having seen scale past to would experience I've the in scale just that peers argue right that that that it we because done way said for transition reiterate architecture rapid what have the one of are in there have and this.

be that infrastructure. SP more They're cases, deliver the used much to complicated. more underlying services to they the tied networking tend I mean,

space. over longer a be that transition cloud so we it's in in I experienced time, whereas much that going And the think than happen timeframe might to

Rod Hall

Okay. Thank you.

Rami Rahim

Thanks, Rod.

Operator

with Your comes your question. from proceed Ittai of next line Oppenheimer. question Please Kidron the with

Ittai Kidron

me. Hey for couple guys,

front, provider mentioned Is seems really to talent or clicking a you're just as do there they some First on like Rami to It's of this that hiring perhaps you that may for your is no you not capacity front. repurpose can the you've issue just it Is there, fast HR way as repurpose. kind people, on availability? there. service not this maybe out of growing be an

gradually there kind aggressive Why term, or for of than rather And front, opportunities revolving buyback I more wondering expansion buy-back it more then can great guess working million? $XXX But be the the that Ken to do term. near on I'm the you on see million, you. there's like the and with only the near of just XXX be portfolio to there. seem why feels kind for not

Rami Rahim

Thank you.

So let start on the me question. hiring

out point we starting first would are see I momentum hiring. that So, to in

ago. to We have quarter just sales hundred a reps now, over compared new a

as environment it's we it's not the And that is fast in is really ramp competitive attracting as for terms recruiting and biggest and a would talent. starting, probably, the there out of what just reason So like.

I to energy quickly at as now will in starting from, benefit to process place, just our that enablement able want I But sales hiring will as our that getting effectively important favor really work being accelerate fill full reps that Juniper to a out teams productivity. very put productivity and as in professional and is that’s the time the to as with point to the open the we problem, also put think possible. And robust focus we are that have we start to available. on

direction to that that we're work we're taking do, more So, the I'm with now moving and speed but ahead. the pleased

Ken Miller

And quarter. ASR I on just last call million out would buyback front, a Yes. QX just the that that we $XXX in did closed

In in back soon. into to enter intend million, buy did and that addition $XX QX to a we purchases opportunistic we at $XXX million

plus that well of our I that. will about free dividends a But continue next. we is and And we $XXX over a million enter be year, the intent that's opportunistic, said, million right? So to this year exit that our XXX% good feel flow. to cash $XXX We are ASR. be we'll as opportunistic beyond into into announcing look our to That this

Ittai Kidron

Very good. Good luck guys.

Ken Miller

Thank you.

Operator

from question. with comes the question line Paul your Silverstein next of with Cowen. Please Your proceed

Paul Silverstein

I appreciate you the all taking questions.

off, think for bad this you on much First too feel you? Ken I I don't said call.

a Any more a meaningful much growth MX I of margin relatively as you with to speaking visibility you've to without I were where benefit revenue have benefit think, PTX the how growth meaningful do exactly not transition. and So, meaningful, perspective, more follow-up. from better revenue can to the you is gotten before close of back, the before

Ken Miller

first Right? perspective, on year feel is also call. the year to had On would QX of about So, don't gross strong, our basis I It's QX margin full be we're going for is a a bad, about and on Paul. XX%. strong to here all, base say, but XX%. guide Yes, be we full although good a

of so be on that driver So we is to to that have over We're Volume the ways time. still go said, XX% get very XX%. high-end model of mix. a to focused to our will the product

solutions the our a the profile. big on they focused am et is pricing quarters several continue part byte, management, margin last cetera. have of and that management, sure continuing too been being as grow gross to making software per cost So, long-term for I margin

higher So to driving range the factor. but underway there of company volume is end definitely initiatives a that to a get the help lot of is

Paul Silverstein

any call, the customer spine Rami, the Provider similarities, of center or in opportunity? within other with it. in of portion And what or competitors particular leaf bailey right. and your question what the Service is would if One, opportunity in into perhaps would, part web-scale you wide stronghold base, in that your the of on terms the a terms you the are characterize you risk the insight are the can data core incremental of general challenge And of beyond U.S. two one us differences, inch relative U.S. the cloud breaking into on rod question area All here. relative comments how your more risk give of appreciate the Enterprise to breaking to the

Rami Rahim

Okay. Thanks for the questions Paul.

it's good networks. understand So, in to our first hyperscale footprint the

the wide networks. We’re very and strong core in area

at relatively footprint. in tier We tier leaf if interconnect hyperscale it but of any when two, then strong three to deployments hyperscale providers good in the are pertains spine. limited switching leaf reasonably very as cloud have center We've sort comes it little, we switching spine, data to got are in a and share they

XXX-gig, wide area the it not as opportunities where our at strong for them in to center be look data initial and is where the market. is core expect the are penetration interconnect as you data I be to the in the If in in going and center

features, The of difficult, shift it near routing share core of small any means, part And a when that as not argue area share always question sophisticated of ease XXX is of such second easier any that, in these and from they're sort layers. is in around inflection the and out an more center, I’d data point inflection one gig your no would DCI which wide in by point. shift software the I true scale but of they're different the functionality is capabilities also there deployments. is where is but the there point

and it it the is model, us specifically. make to And goods, sound the be technology, question then compete relationships U.S. was the be allow that as think second I engagement SP pertains the very to to It's want around effectively. slam the the to competitive going enterprise think we way process. no this going dunk. have to in I like easy extremely I But an So, an

and areas sales internationally or well. of felt Europe which in both is worldwide. I same deployments Pacific impact have of Asia largely the a being are as that Western are of say In as in some our economic well the SPs that on where certainly is gear transformation, the worldwide enterprise, same we transformation. at of spending, the the up as a as in the tier provider sales thing, they And towards the both U.S. outlook by are factors one which would space, terms Today then play service macro the trends parts in the challenges really in that the those same roughly strength XG are

think both anything don't cases. to So that specific I the in U.S. there's

Ken Miller

that The very be up business down. only U.S. see thing result despite QX I U.S. likely the we in said, sequentially, a a we will basis, would that We Federal to down be is go do strong on typically seasonally. That had expect In add is in QX. typically Federal QX enterprise all is, up the fact strong. worldwide

Operator

Your comes next Evercore. Please Amit question from of question. proceed your Daryanani line with with

Amit Daryanani

guys. taking me. Thanks question my for Two Yes. for

least could you in quantify guys but weakness that end how the of of softness the specific much be terms either of bookings think which Enterprise end the or I quarter. the saw towards pick you of can up missed on might the left you quarter, revenues table trajectory attributed to half do at dynamics? you change side, Juniper you then maybe up in the towards First you this, think do on that, And the

Rami Rahim

in the on QX we revenue a so there weakness, was from were which million left to table, books, $XX perspective, from Yes, the in previously is results, actually nothing QX our QX we million didn't total you on are about guidance the off, QX guide. into more the is will results, and, see commentary we right? revenue really if the So $XX why

is modest to guiding it still were slightly where from down growth, but we're So, we before.

weakness. is delta an that both, The Enterprise SP split between really and

So we're talking, softness. to million $XX range of kind of $XX million

Amit Daryanani

Got that's helpful. helpful. then really it. And That's

for service talked and is about? about to sort commentary you those digit to step-up Can single-digit trend around, low I the you kind even growth business follow-up think to XXXX do the the when what a think achieve guys providers are overall low need company that this with, if growth? service need or of do have overall there to what XXXX at down do I growth, Just single about be you you have line provider calendar flat calendar talk Can you just mid-teens, of target?

Ken Miller

opportunity for to have Yes, provider. I have we of think not grow are we year many talk do guidance. overall so and really service next particular prepared to about enterprise a and specific lot verticals, an across call in cloud actually out how opportunity too little we mentioned, out the But already to think at a shake Rami lessen going to it's year, decline, we next if will. it's this to early you point.

certainties perhaps cautious model think point. some continued slight you why flat to just got, given weakness. good is year macro next you of to I That's I be at to be encourage some this a I’d the caution just growth the

Rami Rahim

take we'll questions. two more Operator,

Operator

Okay.

comes question the Faucette with proceed line Morgan James from Stanley. of question. with next Please your Your

Erik Lapinski

team. Hi

space? through on given us to have the increased dry of on maybe attractive share in our success repurchases maybe today, with just for moving and You you acquisitions walk process can share on was the touch James. Maybe Erik Mist for the decision for authorization and repurchases taking question. extra the power anything Thanks forward and the versus maintaining if

Ken Miller

we is very time At opportunistic to capital when of enhancing from with I now. is north kind about Erik. future maintain maintain, to question, an in important. feel, what I to particularly our think feel QX time, ASR, good are that's we we’ll our in good to to operations. of for flow the billion, same We future going it a prospects flexibility grow it's still well M&A. it's are shareholders, do we We clearly And prudent the cash want Yes, so. post value even mean balance $X.X and return cash

as opportunity needed to remain M&A balances be, so gives very as cash from an well, our us front. to So continue that strong,

Erik Lapinski

you the one, just actions maybe and you you're And in through walk to could of mitigate some could as margins, maybe Thanks. that gross there? second sneak I tariffs a just if actions specific of kind us maintain then were doing mentioning

Ken Miller

is are Yes, footprint just, of really our produced. where well, action products the the geographic primary

have products, other and China and we in Asia well outside So America. of of as China North we have plants parts as

of it's and about, some doing supply several U.S. shifting the particularly headed to alternative that's been what the last that really So, into of quarters. plants the our we've some chain, supply over

Operator

proceed line Jefferies. Please of George with comes final question. the with your from Our question Notter

George Notter

the are same OpEx Hi. top your run I'm of $XXX you've company. views guys. declines. clipping thinking two two years a got ago. I If an back, I'm of $XXX perspective. from the cost million, the I about on even along guess line at Thanks as million look it structure a The curious still rates about year-on-year quarter, about years OpEx lot

now I'm here intensive, it So, about guess cost thoughts and or great. your is there for more an just business I something thoughts any the reductions be that would that or curious on opportunity makes Thanks. sales marketing about intensive R&D

Ken Miller

over couple I year That a cetera. we're in flat Yes, our said, optimized requires it focused fruit that's think, that been be grow Take the of quite OpEx. out, slightly done and of on the we're of been deeper. we’ll be on think costs. we've are pretty to living We've et to not the Clearly that will, you we that's this we're about low full do I so and grow cost But ability actually I year we actually if the where down. last last we control going what basis, cost headwinds don't honestly, to good second We've to pretty investment we're down point, hanging and years, committed don't us see over for would this feel slightly are. several I controls revenue, at the when going grow years OpEx. do us on.

us So, you challenged have opportunities prudent, to we not to could investing but expect want of much grow. us advantage to we OpEx, when be levels to revenue investment will forward, these is we take remain going continue in ahead of the with

Rami Rahim

our XXX technologies and careful we cloud add prudent we portfolio, really this believe company. have enterprise, or are to which the delivered to in been our we gigs, invest right us across for includes the for board, areas in, invest growth been center investing how just long-term like R&D, in have including data Mist order in whereas our would that, where I technology, I achieve silicon-photonics

reason, So are that that for I to payoff investments do us. for these going truly think

George Notter

you. Thank

Operator

reached I Ladies the for the the and session gentlemen, we of back and like call management turn to question-and-answer end closing to have would remarks.

Rami Rahim

Thank and you call. to your with everyone questions. quarter. for That We forward during look speaking concludes the today's meeting you

Operator

This concludes today's conference.

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

Juniper Networks (JNPR) 24 Oct 192019 Q3 Earnings call transcript