JNPR - Earnings call transcript Q1 2020

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Operator

Greetings and welcome to the Juniper Networks First Quarter 2020 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. It is now my pleasure to introduce your host, Jess Lubert, Vice President, Investor Relations. you. Thank

begin. may You

Jess Lubert

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

today Rami me Chief Joining 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-Q, in current filings. filed discussed recent

Our speak undertakes as today no of obligation 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

Good us afternoon, everyone. And difficult times. joining these during thank you for

but only the despite helping meantime, player. are believe fight Before navigate our results, impacting market we stronger support are current make help and challenges of I business crisis, needs In we of all to emerge our innovation by an partners Covid-XX of positioned the and more introduced recent tirelessly meet regarding the top Juniper worked also that the connectivity like the this I to Foundation not in offering Covid-XX. field I to to to priority by the during comment well comments us to needs those emphasis remain do. giving through our is pandemic back is difficult all team against way free our safety up like the wireless time. to which Juniper the working Covid-XX on customer support part the customers and deliver a of I of community the the integral live. which remain to pop secured and few hospitals work and we employees, proud be couldn't which new kit I'd has and

on provider of to of non-GAAP was due now recognize Revenue in chain end $X.XX $XXX below low our reported our supply revenue to and And Covid-XX and QX QX business. lead respectively to guidance. customer which results. revenue ability both million the impacted challenges, for quarter, negatively the related EPS our slightly our the particularly service and time We within affected

However, product healthy year-over-year. demand actual XX% growing with orders remained QX

for securing We our growth the challenges experienced QX order customers our of believe EPS have would supply, QX high revenue we across and mid range. if not non-GAAP guidance between vertical, all end and been

chain, QX backlog his strong detail in prepared entering starting Ken remarks. within will improvements on to which are with our during see We and greater supply touch

which momentum healthy given Cloud seeing any also are businesses, Provider We account and in quarter. for of Service typically approximately XX% our in sales

businesses We around the straining current these resilience are could surge likely is recent within the believe in that many to benefit from environment the networks traffic even world. and prove

pressure, just financially for strong Juniper debt. liquid to full that I'd this macro has $X.X commentary and securities cash $X.X emphasize been primary near-term and in the the a quarter highly billion has forecasts induced prior year. as and billion the of increased for is our withdrawal While result the behind more like of remains our into pipeline in with enterprise to factored as than range Covid-XX June softened our driver compared

We facility. an untapped million also $XXX credit maintain

environment eventually support weather and share us that and but stronger flow not we business cash to our debt out helped also action crisis the position take in until gain customers We XXXX generate positive improve. have free XXXX. to and maturing only no should to believe come these expect We attributes as us opportunistic a current

Cloud, business to I'd grew seeing are a consecutive core and better quarter March quarter year-over-year XX% within Starting insight year-over-year some of during each quarter. the as with increased fourth for expected the provide address our experienced Now of a vertical. key some like we developments we and into than the results

our We wide switching for continue to area healthy although double-digit see to our clouds hyperscale strength momentum improved continued Cloud Based business account Tier-X results particularly products Order of we trends saw also remained saw within as some customers we network our our year-over-year. still routing momentum our across recent business on QX in cloud customers. XXXX. our expect and with modestly order, grow and multiple growth

skilled and franchises each use to our positioned at we benefit well be cases capacity We of from the in own. customers maintain durable should and hyper strong growth

cases to continue use remain win net hyperscale gig XXX during new to cycle. optimistic We regarding the potential our

the opportunities we are targeting. working gain we customer are believe through systems process in to the qualifications We the of software needed and delivered have share and silicon within

While light of of we scaling XXX do slow cause some Covid-XX may testing less architectures. network to more which are ready focus new to timeline risk gig in meet current on the footprint and deployment requirement, customers on our anticipate to customers' challenges, we existing, and some

QX, and experienced While anticipate high our heavily mentioned. line original business single by most not challenges, these I declined related would impacted period. to service performed business our Provider for have Service decline with a Covid-XX Business year-over-year supply our expectations If for in chain mid as we previously XX% this the year-over-year during digit challenges was provider

Importantly, our increase the year-over-year QX increased orders first since representing service provider XXXX. in year-over-year X%

our is over within seeing we believe benefits across orders attributable last efforts few believe the are of provider our related most provider we modest years. service to and we the service we business, products Covid-XX diversification While some customers strength experience

starting we tier-X US well our and markets. improved customers to carriers point, several are Cable of momentum as as international this see with To in tier-X

our are diversify customer throughout to the adoption benefit customers in our increase well-positioned addition base our routing We remainder with believe the this security We and also breadth platforms. we offering business and carrier of offering our continuing our service year. seeing of switching should to increased the our traditional and remain that provider efforts of

their we in service to conversation, ability service of our customers believe continue provider that quarters, While is in on may we customer to acknowledge future provider a face see recent mid-single digit that spend likely continuing and decline some to our business impact business our momentum are XXXX. to based challenges

enterprise offering business headwinds offsetting experienced and both enterprise X% environment. became Covid-XX to more apparent and the order gain Our of results in in the ability than experienced believe quarter. enterprise our sales challenged impacts in double-digit even to strengthened earlier demand during QX. portfolio growth where We of share our datacenter speak QX We and US EMEA some more strength Campus in the APAC growth and growth our with

our our has the quarter, macro While of been related some momentum QX the that by Covid-XX of we strong clouding towards impacted during orders were and remainder enterprise year. end period are our into the and the the dynamics March visibility pipeline lost

enterprise business to likely the following believe related sequentially during our than facing, the come now the for headwind previously and gain the We we expected regarding is year. reason. decline are Covid-XX for June enterprise quarter weaker Despite we to ability our share confidence we in remain

networking costs. piece the believe We customers for to strong of are which of last see to Xst makes experience simple improves continue we these and environment. center likely under and customers attributes strategy. April in Mist we the are resonate our year any Mist and its acquired AI operational with user enterprise with momentum First, reduces

seeing business are We our in this continued momentum.

through New quarter March in a Mist annualized XXX% rate million exceeded more bookings logos Mist than $XXX and year-over-year basis. run the a an standalone on

three on the that just expectation, to continuing future we ES portfolio to cloud seeing believe exceed the is it QX should in scratched capability XXX offering year our last broader and the To customers. QX impact the are and secure Fortune have our offering to portfolio. a This to the EX us for we of now security additional in XX Mist have this surface AI Mist strong and pull likely enterprise and throughout we over opportunities assurance mystify enabled year, capabilities for joint EX launched management increment brings has demand in through switching Juniper wired period. and We plan Mist create potential While elements of with account portfolio. of to Mist point, and which is wins

our continuing Second, with during share Fabric is industry-leading orders market in Management from positioned are We switching win portfolios offerings quarters. likely believe the through datacenter our portfolio while pull future and to we Wired with growing March our both and gain to revenues from the to synergy and quarter. enterprise Mist in Assurance EVPN Contrail believe VXLAN benefit ES our capabilities

improve our Third, our we innovation, should and I account enterprise capitalize investments market have to organization full ramp us productivity. as in the particularly the go-to-market the reps made conditions on to XX-months believe in position our last over

enterprise recent in prove to government work should and and exposure normalizes. mix continuing security be in likely which account, segment. sector our to recover are that and see to industry to headwind our enterprise mid mention to momentum favor our fourth, I'd to resilient we high like environment And when positioned the large-sized well our are to given more software

in due service our customers. strong gain portfolio, cloud with traction to our Our security and particularly QX revenue increased XX% for high-end provider which year-over-year to demand continues

networking consume the of customers embedded looking switching and believe solution networking secured We part positioned momentum which think we we several well and of elements of strategy and We trend. encouraged by as the routing security on seeing increasingly on to a remain our key success this are of to focuses security are solution. the capitalize are

and than XX% in grew QX. software for accounted year-over-year X% Our more revenue business of

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

work over stakeholders. momentum subscription-based for continue the in become for customers, support essential shareholders time I market. more as Juniper. our partners to percentage to and gain traction our our and thanks we and want thank and for on to would employees I hard increase the extend value like in which of to is pervasive my revenue we're confidence Based software; will the to especially continued models our especially believe pricing their seeing, creating dedication their

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

Ken Miller

our challenges Thank financial the first overview end light pandemic, the of supply then some of good everyone. on start and afternoon, our our I'll you, of Covid-XX an And Rami. due with pandemic. by in results position quarter chain to discussing color outlook provide inclusive

XXXX to the range We slightly flat $X.XX. $XXX the provided below were we supply ended impact the quarter in mid range pandemic constraints, non-GAAP Both pandemic. estimate million guidance related our that of and due end between per supply share the EPS earnings constraints of low year-over-year. of been were revenue January. would of related the and the the have Without end Covid-XX we high revenue in at results first Non-GAAP to

I'd address briefly like in supply the dynamics some chain. to of our

have China, the global chain our a manufacturing with supply located partners primary United Mexico States. footprint and We Malaysia, in Taiwan,

countries with Our component suppliers many more are distributed suppliers even world. throughout the geographically from

we the of component quarter, resulted suppliers our particularly These were times and also were the to as in manufacturing ultimately in constraints During customers revenue experienced manufacturing both extended Malaysia, for supply to caused due parts our facing component capacity shortages quarter. as us and lead to well as short the China challenges guidance our constrained challenges. fall

While the manufacturing dynamic, to capacity. we have very situation our remains improvements

our of under However, quarter work throughout restricted challenged as operating are we several component second of suppliers the remain expect condition. will they most

we QX forecast. continued supply chain challenges into our As current have a factored result,

brought a While challenges. robust and the the we pandemic has supply industry unprecedented have chain, Covid-XX flexible

been have pandemic. our tirelessly needs teams during chain supply to Our the working customer meet

challenges have solutions plan multi-sourcing, government we and partners including while working executing on logistics prioritizing pre-ordering of agencies customers, and partner risk with components, suppliers. our transforming network that strong are and We local our the ensure understand safety the all a mitigation to been critical employees,

and these and the needs a are best do we will believe safety outcomes so. satisfying As continue for result efforts, to of we we mitigation possible customer delivering

exceeding to line with and quarter impacted XX% results, back first in top quarter Turning supply orders the year-over-year expectations. our results, demand our constraints growing the negatively we bottom while strong saw

the all strength order verticals growing with broad-based was geographies and all Additionally, year-over-year.

decline increased service XX%. not vertical likely a single by provider would digits. year-over-year related revenue in the have while our to X% at service pandemic, declined XX% basis, Covid-XX to and been Looking the supply Enterprise Cloud revenue increased on the high provider constraints for mid If

decreased year-over-year was revenue the impacted From XX% which revenue security related revenue a pandemic XX% technology XX% switching year-over-year. by increased perspective, constraints Routing the supply to most increased year-over-year. Covid-XX and

increased Our services X% business year-over-year.

our to continue software grew We from was performance of total year-over-year. see approximately offerings software where solid revenue XX% revenue X% and

Non-GAAP were below expectations. Service expenses was the were an Non-GAAP range. our X%year-over-year the flat low-end Cloud, five our of gross with which In reviewing quarter, sequentially, our Enterprise. Provider, XX Top margins was were four slightly guidance and customers and in-line increased operating one were for XX.X%,

$XXX As reflecting $XXmillion XXXX. share $X.XX the open expected, of dividend operations share. cash $XXX accelerated first million. was into a worth we the quarter We paid completed in quarter in of quarterly the Also at market shares flow million fourth strong program from per entered repurchase repurchased dividends, in in of and

Total XXXX which quarter was cash, of the end of $X.X XXXX. quarter first cash equivalents, and billion the the investments flat were from fourth at

I'd like some the our you CFO which on Now available website. our color in to on find provide guidance commentary details could

We by to in with pandemic, backlog seeing While the the in to we and uncertainty uncertain quarter. factors customers. our of is Due to enterprise healthy have we uncertainty environment, segments in driven macro these we cloud range the and sequential quarter. certain revenue for the believe Covid-XX and offset expect second provider our momentum in service should Confidence are the due growth our widened increased earnings business second strong help see market. our revenue forecast

gross margin essentially be non-GAAP first to relative expect the flat to quarter. sequentially We

and sequential see the June in driven Covid-XX to strategic logistics certain be margin quarter in cost to related due other to improvements addition to volume insertion opportunities the by offset chain pandemic. expect supply during We increased

to non-GAAP to We while on quarter expect future decline expense to capture opportunities. continuing to as we operating continue prudent second management, cost sequentially focus invest

our across previously to are XXXX customer each pandemic our full extent prospects cannot regarding predict duration we announced or because withdrawing commentary financial we of gain long-term impact we Covid-XX verticals, year optimistic are and While the of specific our the results. of our share opportunity on the

to Board Directors of our Turning to a while to paying with in paid per second further We quarter. And dividend. liquidity the share we cash to respect emphasis to greater share program, place declared dividend this our opportunistic committed our environment. building buybacks, a return remain remain expect of during has uncertain capital expect on to be we $X.XX

spend outlining to move Juniper a to few the on we of Before Q&A, pandemic. Covid-XX light the like in of would I financial strength moments

current financially We degree high liquidity the ability with access with commitment and and if of meet to weather have confidence economic our our billion investments a highly Juniper company liquid, credit to high over additional needed. sources, a strong environment. cash in and $X.X is rated

currently our in cash with provider both revenue We are flows, profitable and customers generate should continue. and our will enterprise strong Further, operating favorable pressure streams offset of the we our of is market. diversity which expect the service position cloud help and

implement We in take advantage the to continuing intend to ahead. areas cost opportunities market of controls by additional to invest

expect positioned uncertain to the Our macroeconomic we protect retain we this time environment, financial our to a and sustain objective talent well we are at workforce. Despite to our believe is strength.

principles financial long-term Our remain unchanged.

strategy. expand balanced earnings and capital objective to our Our is revenue, grow over maintain time

in this success, commitment closing, In like continued would for our environment. I challenging and especially thank Juniper dedication their to to team

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

Operator

Instructions] [Operator

proceed JPMorgan. first the your comes from line with Chatterjee question, question with Please Samik of Our

SamikChatterjee

thanks can the growth Hi. revenue for I just taking a of off with couple and had growth cloud Good that the now. If for quarters question. double-digit start you afternoon

can upgrades act expecting Are WAN the side you with as straight you mentioned much on to? that briefly and you existing you've driven of new growth believe cloud is that scale I help activities that cloud current me think the how in there by any they referring customers wins And If about were tier-X logo if were helped architecture your any that to front? cloud upgrade being customers. customers line

RamiRahim

the for Samik. Yes. Thanks questions,

three the fourth in very quarter strengths where routing, year-over-year revenue. based row This seen vertical, cloud is technologies results -- growth fact obviously of we've pretty the in year-over-year sorry XX% a and all security. and was both So switching actually strength in our the in with pleased across broad areas in

as In X and revenue mostly providers, area I the focusing organization. The hyperscale and we is we've there as footprint Tier-X. net that in in that traffic QX those were cloud the Tier-X the that the been as go-to-market which and Tier-X well it's and requirements Tier-X, the because bookings and momentum as around of on some results other in that thing liked well across deployed space, new about already have breadth logos in the in resulted over networks goods our space Tier-X really

a There were to probably momentum few new the that accounts as contributed well.

SamikChatterjee

offset Was from you XQ and supply margins just you in that? I up gross in insertion gross there the follow elaborate any margin. have? Can XQ. if on on your in opportunities And Ken, I Okay can think margin commentary are that just challenges the chain that mentioned to here you headwind strategic quickly gross with,

KenMiller

Yes.

gross have even do fairly expect QX a reason to QX. strong a perspective some immaterial. additional did cost is we that's volume flat cost margin guide have in though one from So was up. We have QX the Covid-XX relatively is I rated did actually why

So still we have of in it's of to to headwind bit points in tenths is material QX not exception. tracking should more compared that little few a going in QX, some in with super as a a QX, QX, overall line margin but we had cost but a fairly be

Operator

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

SimonLeopold

taking for the Thanks question.

market to tried vertical to see of if can be the in as And financial services, color prepared verticals you there's governments that healthy you give just Thank that generally us could uncertain exposure I a in you've the reference to the would help that, you. I and enterprises. am points that more us assuming think remarks. some your is make if wanted First, you little maybe unpack to you've enterprise one I bit got

RamiRahim

question, for Simon. Thanks the

saw our record starting well; performed a in a competitive with pleased year government in switching, performance US is environment on enterprise space. pay had what sales and the dynamic quarter and embarking the again strong. that been momentum to off. last We Mist our been over transformation we has have strength So the in there

You're absolutely right.

think like we significant more federal of government, economic unpack I have you if elements public be downturn. education, and exposure business at are to to any resilient to financial it, we market look enterprise believe going the enterprise that sector, our services

resilience of retail is like market to. less exposure less to that parts be The the going probably we just have enterprise

SimonLeopold

to financing in just expect extended environment? And on follow like you of in enterprise done DSOs we terms terms to adjustment more flexible are or customers. anything Thanks. of you've it's your payments. actions shifting up, Whether more Whether doing see terms my to out and I'd of particularly the terms whether become the the response maybe help in just should what

KenMiller

Yes.

So the those less Rami's we enterprise exposed travel, average XX% are of the hospitality, and think add on just answer, that's enterprise than core. to our the more on segments of to previous and retail which sales total

exposure the feel we we the change perspective, about enterprise to our, date. we and So levels not segments. a On in have any sub seen have of good more financing some receivable resilient cash

anticipating haven't modest we but debt, a and it. seen more to We date collectibility little outs bad some push bit of perhaps are

forward. offering as We are have aggressively term working we are with we programs do of that services more I space leasing extended that do those customers And and payment speak. on some revamped those expect our to Juniper some in see going to customers and we programs traction financing offer and

Operator

your of proceed From with Cowen. with question. Please line Silverstein Paul

PaulSilverstein

talk is where -- about the margin I appreciate margin XX- it can market the months gross just it's so? and inserting go too Ken, over operating to next it. or much

KenMiller

good second changed enterprise visibility has difficult we on XX is, side I were side from year; say the and and provider our nothing full we there the but to in where the pretty the there days P&L. service from very predict therefore ago, would half and it's particular for about Yes. feel cloud enterprise really

PaulSilverstein

sort All follow right. may, And just two clarifications, of up. if I a

you that's large the into get government. clever strategic you're I tell of it, then comment that percentage - margin putting you a how Can government using us a was revenue? So question and mention you're of Appreciate exposure about I in impacting to way And asked earlier discounting giving it. to opportunities market understandably as using, how assume your opportunities. remind insertion

KenMiller

Yes.

into And on impacting expect typically sorry strategic chassis. They'd there's are light the opportunities to mix margin of add the lower They some a pipeline over and also have have So forecast emerging the opportunities, a higher base deals as markets. card, second the are cards and are that breaking a margin. that so a we I'm in of insertion margin where have chassis, insertion couple time recoup on margin couple QX carry an lower really opportunities. they bit. unfavorable are our LAN QX deals that more in that those These of these question? we of install it's we in line part discount the heavy

PaulSilverstein

business Government federal and revenue.

KenMiller

Yes. I'm sorry.

did break largely that that not years enterprise obviously the that just gives So government government, was order local, you state government of government magnitude there. and out and of of are have federal back part some That's XX% of that unchanged. sort agencies total is XX%, a US we federal but that We the couple international percentage Federal. US other

Operator

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

IttaiKidron

really and second in to capture do second maybe quarter? second about regards the tell have to Ken, quarter second quarter trying the finish the quarter, it. patterns, make how do you you and you clearly, talk good you I can like you should we in about a there's could orders help the we through second quarter what order backlog kind of hope from Appreciate to sounds and guidance walk didn't. could just, quarter. quarter that to you $XX had the quarter? for want And linearity how of expect but in by then triangulate with very to the the It I'm I you shipped the think orders, in first me sure that me that to Thanks. your Ken, million much

KenMiller

Yes.

of our normal cetera. geography So the vertical kind actually linearity with line across across was expectations that in et in QX

expected booking, was mentioned was in we it am sorry throughout stronger really track. -- we week kind We last booking I was QX. Bookings wasn't than already linearity quarter, strength. of on saw it a but So the

expect most we that I we we QX what in able will in QX. in certain ship ship cloud We the of to we do momentum are We in backlog through, like and working carried most QX. That have supply QX still constraints said SP ship will continue. feel but weren't believe to QX, of

So we expect bookings another strong of there. quarter

Enterprise the has the uncertainty. is most probably one that

softness Clearly, have guide. in some We factored seen we our enterprise pipeline QX business. all that into our

IttaiKidron

a Very second try like put not, those good have gas now? in and think first you're spend. to timing follow get strong Rami, and had a get the in time asking for just is much more the bit little to just the clouds context our, shifting a for, of low on providers right year. given just are going of as for of service on? the everything reaction I to as that right and the to about a let's hands some just am there. up them get how to way I Is opportunities the your then the we as What half that's we you you sounds you're of seeing here saying of second clearly And the patterns traffic interesting there we're around It's half and customers what half, we plans odds

RamiRahim

hard bookings small Covid but from, saw the and took coming timeframe. saw and they there, were the the obviously when a we part in represented relatively QX at orders related Yes. was momentum of this say where question, we Ittai. performance I'd good that look the we We that a analyzed the It's numbers a

service we and had saw US. the the in and a that to space deliberate Tier-X saw good here We have the just Tier-X me Tier-X especially for X, in years we momentum SPs have few little but let the and diversify last footprint, Tier-X cable over bit accounts where In Tier a kick in in. in so to example strategy the on strength we space, And more. expand broader the not

the any momentum So video us home I of to over diversification that helped our tier elements strategy there on there of and result the exposure again, transitioning actually couple side, X, work in business to X that years the cloud tier cloud think a certain for connectivity do and like I our hard that certainly Covid conferencing SP than were us course, of increases users, offering customers helped last of has the were but business services in of cloud today. And new and as footprint position of traffic. related the a reap of the especially can think a those were in services that to be product work of from allowed scale that a we retaining where the has of that set in us result benefits deployments more

Operator

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

TalLiani

the strength demand enterprise feel the providers of or forward service I'm its source with in the question. same and with from also quarters brought understand customers Hi, on brought cloud that increased the and concern had enterprise, just deployed of for they either to trying you that on kind future plans so was because than guys. they Do either just of budgets will because shut maybe a side be down. the also And could sooner it wanted? side of the traffic, on the service there

positive of you're the in see So you is seeing any the customers order on you're driving what do the discussing. that is driving side abnormal strength behavior

RamiRahim

in of of the probably wash the said performance has a the to think a network Tal, a some analysis provided similar least I booking the especially cloud so relatively balance enterprise some a portion Ittai. But on that saw traffic Yes. particular, especially timeframe. near patterns largely as And increase it in a my for maybe is side, that our in result in but actually Like in we and of also there in was pull just question saw out average those of been were verticals. and the we sort I to some within of to the SP at overall order thanks answer in situation. from I QX push standpoint that the Covid-XX tied small is that end quarter clearly

TalLiani

in Got question We many a not it. your your market? talk about, Cisco talk the hosted on want for this position to Where white routing box it's about quarter. preparation do calls product a you December. with we Can launched in and about I change white bigger box stand routing; recently this

RamiRahim

A question well. Yes. as good

the first to procure embrace as white on to and business movement. So vendors software a were the customers if white boxes can established routing or never where actually that our they model years choose procure ago. software hardware of switching deploy we We've do. one networking box resisted they to and and separately We've offered

So we've architectural principles us it of been and from we where uptake, box decoupled from embracing we've this about customer the the many the the business conversations actually interest behind to hardware customers whether for had limited. because white has software embrace sense routing makes the it irrespective in Quite frankly, model. just invested level years do in customers over so

running simpler and it systems on the whether an are not of the that integrated stack that's think many systems that's customers our I resisting software merchants fact it. software just that running silicon-based. as option or to an silicon-based deploy we're but choose the of offering model appreciate that fact appreciate custom And We're also on

Operator

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

TimLong

the XXX I switching position insert or vertical. that any Juniper's cloud was into of hoping kind disruptions timeframe have impacts into you. gig of we've seen discuss to Do I Rami, And a of then could that market? you the you Thank kind follow-up. think the

RamiRahim

XXX are global anything we've trends we're reminder the on and but resilience a rather one that result if the gig certainly to just counting mean being them, certainly the the important going networks Juniper, one been important and of Covid-XX industry in; are of big I this the less important also one be as invested of a that world Tim. pandemic. more of how to Certainly, Yes. performance than to has

just some XXX see networks are some deployment capacity is to timing, XXX from it timing of be be there on cloud there that defocusing many around impact my an projects question today because the I providers network existing Your focused do is service fairly gig. so of the in to providers, to meet deployment that the if belief the for might those requirements minimal gig, is of will

impact opportunity the relatively and said, is good that remains ability compete small it opportunity will if to it and in large very our think, be But our about. an feel I I

TimLong

this how it's Okay. cloud you but which not kind you feel kind over a Great. side. being year. provider It impact. sustainable it's Covid follow being past where call of Seeing the service several on years, and business just And it just to into it's then about best is sounds saw to the turn pretty turning point the been like it's diversified this helped probably orders now the in like business in more business growth early for back the a of do could vertical up

RamiRahim

the are I There diversification that two in elements this business to Yes. like.

then but really tier-X also of The the diversification tier-X, first and geographically thing that offering solutions the like second around them. is sort of I diversification customers, tier-X, the segments we're is in that in and

in think seeing we exited about growth sort digit to market. is good sort And think diversity growth is in expected certainly booking, of meaningful the service We business. actually what we way the I so declines mid-single you of see double-digit sequential provider a a solid saw in full the expect recovery. I probably sold to we for switching; healthy. So service double-digit think but that year certainly security that provider QX routing, I with into there And traditional

Operator

proceed Our question the comes of with line with from question. Please your Needham. Henderson next Alex

AlexHenderson

much. Thank very you

hoping expectation for you're you're bit about holding in the think in but talk your the extent clear rather you're as what second XQ because pretty first that, little on quarter to much for guide. size the not to So the so the your inability a on supply could you back the I you assumed chain quarter challenges supply exiting quarter. nut What's and was

KenMiller

Yes.

update produced is the extend created every we guide. believe our of what determined. goods. QX We're and presuming be extended They've improve and country different what QX assuming still on in supply So in counting day yet to time. in struggling currently on get factories similar over into to to been not throughout February. dynamics started a we're that's to There's rest when the extended Exactly going still when early get chain. I seem and of is significant that's Lead to obviously we actually the time improvements QX kind they're we're

So set we and we guide. flexibility the QX anticipate improve we're similar when We're our dynamics. trying to that chain, but not counting them. Again, improve we're working diligently on very supply to

AlexHenderson

March does that correctly if the to above that imply it expecting one book-to-bill hearing to I'm a was continue you're June the in that quarter? So as quarter in be

KenMiller

expect enter we say backlog healthy we we as maintain a to, as execute would I to QX.

QX. that won't comment grown we've QX but will backlog remain I as book-to-bill, on exit in strong So believe our I we specifically do

AlexHenderson

And the backlog is as routing XQ continue that continue I type just in service of shift on assume be assumptions. providers clarification of through to you're space space predominantly that's we at. looking in more in the going one to there the or the the mix that and business

KenMiller

I to Yes. adjust you. components that be It's the particular a timing do of mean predict us pretty we're honest of with the procure. lot hard to struggling going to the orders; that to

it times, I just that All also times; times this could service provider the and more lead lead moving structural be service due change it in in an situation to one and was QX. just supply did in constraints. forward. well of to ran those we we've enterprise wouldn't but very vertical extended provider the timing verticals, in cloud other the going quarter in lead that are QX, assume some not seen extension the reason; other last impact it's than again wasn't Clearly, sort it So or really

Operator

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

RodHall

Thanks to wanted the question. guide. Yes. back just Hi, guys. come the to the you're I for in making assumptions geographic

answer of by supply the I do you right, think dynamics, to you shortages. just say assume because do guess clarify. or last when you heard mean million you that mean What similar question impact in guide if so Ken, I $XX the similar dynamics? I

KenMiller

ability as to mean we a I I be book is, our product similar similar think, in to by perspective. what compared What will ratio from dynamics ship

linearity we what which total orders of think, we percentage line a I that be literally would to fulfill expect, QX our will on on basis with did So ability largely in the right. orders based in

able to ship as many we were do. As we normally as orders not

RodHall

Yes.

That about the just context drill the versus think the or couple under makes it's then for sense. Americas then it quarters, in thinking closes could Do And last the it's what in are that's the grown same that flat X%. or if what you I'm Americas? maybe of you enterprise Okay. happens year-over-year into mean geographies, within I the and wondering provider guide down you think think rate, just context? so you do about expect I you then service do the and that

KenMiller

Yes.

in all revenue grew So did because and the has only geographies we rest QX had growth of saw QX. yet built booking a backlog sequential of strength in note you'll across believe opportunity given the Americas do the strong not. I we rest world world that the

We last year into and a see geographic about growth a heavy mix in there some side, strong sequentially And cloud as strong lumpiness We to but a and objective. than the of good QX. cloud a quarter focus we have strong QX, Rod, going there. expect impact the quarters. SP that, few is what had and beyond if it's there difficult I the we business will QX more Americas up difficult do think on of the outlined. had do I we've to quite last you're revenue On quarter Americas, remain that compared rest be will expected will overall specifics to get be feel very

Operator

question. from Stanley. Marshall Please Our Morgan with next question your Meta of comes the line proceed with

MetaMarshall

bit dig the enterprise little Great. market. into I to a wanted

in kind it I You seeing to just you kind of of of initiatives. but the market, were a cost-saving turned pause that any had noted if conversation wondered that

Thanks. So focused services follow-up there you were outfitting tick whether services prevent we that? the because question on kind people noted projects will then that just services or maybe the of services SD-WAN Wi-Fi And whether sequentially QX office. professional and of be out on in professional just grow being have down of of been services second kind to down expect professional of should kind or while

RamiRahim

Yes.

relatively in me wouldn't and Ken a pause question Let me actually that weakening on for enterprise but the little the bit first a as true much talk immediate momentum both quarters about so little pass I outlook and next all softened and let datacenter space, pipeline were up actually mentioned on it strong and we as your Campus in then classify as was answer to it of side, the that's In the LAN well bit, services. a a few QX side. on the The I up the question counting over to I'll especially just as pipeline. as

a and due believe they Enterprise normal, efforts, less important Your emerge is question as pertain as be to opposed in there Covid important. and we actually going think as I uncertainty do economic in from of the or think things I result business around transformation a especially things wireless SD-WAN more will that transformation managed as the to Campus cloud Covid are those term. good solutions also transformational perturbation that initiatives, very like to the short one. I LAN when crisis enterprise to become some to LAN, for transformations moving transformation

is our and trend generic market. So that's after shapes exactly the been going wireless AI prospects good. that and part in. enterprise LAN what WAN going and we're what I LAN the that SD-WAN investing where things And wireless we delivered are we have transformation counting been driven, in strategy that's think long-term the LAN cloud have that not even market a we for We're on the We're as investing. the and actually LAN market the of the and is after after

KenMiller

first quite continues We and grew the quarter of revenue do vast on the this and of that revenue to service contracts. is the smaller complete professional and that of well. We business actually front, most a in services and business a have kind that's majority X% it and lumpy do in on bit maintenance services a of when Yes based business out we services. the is

whether a see just and or going be revenue prior it of you're PS, to to the quarter volatility to quarter. do recognition the prior quarter has services quarter-to-quarter as the really timing compared year professional private with the So compare current

kind of the in and low the remain strong business I I there. unusual are past nothing year rates the expect I what really growth the rates been forward this the basis. going in aggregate growth rest recent we've So of seeing service single-digit to expect would think

Operator

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

AmitDaryanani

Yes. my Thanks taking for question, guys. a lot

guided one supply but the headwind there? well, revenue flat. I as sequentially - I is you but I on looks to true the offsets some well leverage then for missed as me it's from you? gross margin in there are QX chain Maybe like disruptions margins June, what impacting decent first earlier, just What perhaps QX think have gross this and gross are that think in a and margins,

KenMiller

Yes.

there as we are favorable provider volume. that offsetting guiding yes, customer in we're the in that flat a I to the QX. expect do factors. going reasons our mix the nice favor So, actually be while sequentially growth Increase The things gross service to couple as in as think positives. volume that both are have Those margin would are is in a QX typically sequential is well

deals deals to LAN is the forecast guide margin gross time, over to in a we perspective. which in those And of but the emerging certain strategic expand a we've quarter. with insertion the are handful our One impacting from lower mentioned that opportunities margin of those some opportunity are second of markets negatively margin forward

everything we products some deliver we logistics related doing we chain in and very challenging everything we need machines to actually source to Covid-XX. environment. to We're addition, can there cost In to supply doing ship It's the today's to due do to that create We're can supply. expect customers. securing be

a -- of in of than those are environment. more those So been actually some costly have they normal some would actions

AmitDaryanani

I on If up helpful. follow really just That's it. Mist. Got

of a I think you're that that you over showed about a lot talked of couple there. metrics traction gaining

go to something mentioned bookings it a from Juniper's net forward. is not logo am cross Is in you mistaken. think I of about much you strengths versus with see to Mist, as I new you for bit think if how $XXX base wins the million that customer you existing

KenMiller

had I basis that and exceeded standalone a annualized quarter an now basis. and $XXX the bookings count million a have a say Yes. grew Mist a on customer XXX% year-over-year on standalone did record

pull not it of through any So products. include does other

So investing your our starts in more the enabled very is behind we're of question actually a because enterprise clouds strategy driven now where Mist, platform a more AI manage monitor much one platform Mist, good and the to focus. and

already EX timeframe our being first meaningful wired switching in a delivered product The one and the momentum. seeing QX that we're as platform happened. offering We that

which of umbrella So is while story most several component significant is in been years. be big products the think next of quarters of under the becoming LAN, in and the Mist the wireless has a the just to success attached Mist going due strength to that's I sort quarter-by-quarter. part increasingly And

Operator

comes question. of with line from Please question your Internet. Our with Jeff next proceed the Kvaal Nomura

JeffreyKvaal

question. a you, fairly is broad the gentlemen for first Thank question My one. taking

four think appreciate is compressing worth time years that worth customers changes three of or three now of I we frame. weeks into or four are your

crisis? talked bit well little enterprise this provider as might different I in what talk see there have. of do necessarily provider up service as has on that What to just saying a networks held cloud. what the some about cloud You been or the some that sustainable other And preference service be by have not wholly networks changes see you side as that, we might the

RamiRahim

the to it's company done conversations under CTOs, basis been think several will the if we well those the have I've see many customers just extreme that would the eye-opening same how CEOs, had many of And CIOs with thing. in express conditions. a in executing work-from-home Jeff I say I Juniper a last over thanks as has Well, weeks, how well question. think for I this, about

the building sense that been of is a how the to that So how been the there almost experiment in this network network as this in remotely. And this we over granted years hand been our we some one has in has last the trying well us enabled -- determine just ways this it reminder of work as the a thing do Juniper industry has to taken grand global can had like this well have and for peers for years. In is. some important few has

require and is to be And lasting as virtually to that video as that after, at is about conferences conferencing will be opposed similar question a congregating be do will I'm There after a to be belief opposed My people happen I lasting lot effect. travel. meetings through happen sure even will there to is travel in will conferences some of meetings conducted effect, going more more point. return think will places. Your offices. and we More held that

the the for good on business. mentioned for when side that's areas specifically where think of driven and just in right cetera. that that I we've I invested. to of enterprise our new around AI et you cloud the at We're are And work delivered normal transformation, our And elements favor. look obviously going These change are think I

JeffreyKvaal

up Okay. And Thanks be a on sales build. then follow Rami. would enterprise the

you quarter, that talked that was time of bit. had you've it Can I circle? it square that a little us This to ratcheted a like going we what think sounds last be you ahead help previously bit down thought. little

RamiRahim

Yes.

that investment go-to-market we've talked sales the about about talking historically? You're

JeffreyKvaal

Yes.

think yes. I

RamiRahim

Okay.

invest to sellers. So carrying as more we for opportunity have us to know restructured sales you quota an in create

will they that benefits We into QX more the Covid in enterprise think year impact of ago. else. think continued than and uncertainty now that QX anything the started market see that the than to I a more I the started to extent

our We sales accordingly. will in modulate monitor and investments

And the than on small even what more opportunity the we is sense. doing So we share have a the do, The fact the makes we we that an that us differentiation and challenging in investment happens still relatively strengths invest same thing have seen; the think to products and last the in we're get market. today as and gives momentum have some more eye of that keep we to share our take that market need confidence close a ahead time going very won't we I do -- ourselves the in to what we're to at that vertical. but want of

Operator

your of Our proceed with the Citigroup. next question question Please Jim with comes Suva line from

JimSuva

Thank Hey. you fitting for in and much so as especially question. me last the

last I think so. handsome you the and anyway question saved the for smartest

it's probably I'll of I it in to if to fair weren't to the order to is have just any chime and that the now it's week question easy, of you so wants a out the ask you my can and was little liked of change we live make instead what I'm to had appreciation. or just product they a delivered. it customers When and fill do Juniper and I'll getting at in linearity there think ago your because kind when sooner bookings have to we enough bit that is assume Juniper what probably on look orders parts that couldn't at very orders historical world there their have, both the that in show would there, one two

side, on as both visibility supplier orders; I'm your about the your the customer as gentlemen so So you, thinking much. of side. well the linearity Thank

KenMiller

do I think we difference and haven't expect months the our couple situations customers linearity be linearity at QX the linearity. and I tracking to we to product. actually was as level, and our that deploy to they seen currently they backtracking believe scheduled order. forward on QX together are more working place normally normally time when a material are the sellers maybe is That a would they need where said there When highest might largely track. would to

been materially level. of enough a going I there's But really -- has Jim. So that to that going believe forward, has move to macro enough been it some do of -- be it's numbers at big the been it

RamiRahim

I add. would have to completely more agree, nothing

Operator

Our with Suisse. proceed Please question. line of the your Badri from question comes from Credit Sami final

SamiBadri

steal Jim's Well, that I means to statement. get

answers. you constraints two have turn two-part And in generation or just of looking thing that I supply the parts so I for which kind The wanted led is one real is as less given of sales kind in specific to to saw clarify some quarter. and question

where probably customers went. many alternatives they so your didn't as First, have

would and to in clock the if you perceive sales should vendor. they Mist need time an be where So of lost these go understand thing like they to very did through XXXX we the think the year opportunities do even or opportunities second being the just of sales even potential for as helpful win alternative that these the back guys is recommences and and you sales went catch-up And as sharp then rest or for market. the choose

RamiRahim

versus in customers dynamic so Sami, providers mention industry. earlier make. I providers when in the and traffic a call service particular like a decisions Okay. dynamics and did capacities understood and terms industry. scenario. is mean cloud very if in not and competitive you is industry the new in to work Juniper changing competitive your that question, this I believe type I are and of supporting home alternative periods this from in This a our of I we're the where have true traffic correctly are first Juniper a that's comfortable the operating and

have really significant the in and timeframe. wash of were the terms was continue enterprises. deployed question what can probably QX business some particular certainly out -- how broadly there of Mist in orders up There in Mist, those of. take your that enterprise those just technology environment favors performance we saw were enterprise wide than more deployed in we in space cut affected enterprise advantage time the of Mist that component that a that net-net ordered obviously around all an think And that global the providers have to On the I some footprint we and were a and and that pulled QX footprint. in very in pushed is

KenMiller

add The orders we had would I perspective, and from thing only the strong orders. is shipments

times. dealing about are We extended lead We talked that. with

guys the that weeks. time you there, we've product on two give extend seen some for data the Just product about weeks by lead depending two to and average four to is our

our need. working current at seen weeks average customers, booking if them product; we're that couple we've the we're to on the lead with Customers, looking we're to last doing months. So they the our timelines four times. we're And get the six as best for order;

being when able fill customers still are seen to not to, with Customers orders. those we're those timeline -- and we aren't that have able de-book retain aren't driving we bookings. customers the we're to working We

not shipping point, to this because continue supplies obviously, So de-booking, we're seen haven't not look behavior, else any that gear from to seeing at we but to of type we something they're our to date. constraint avoid of

Q&A of End

Operator

to for remarks. we closing time it for I'd is to have management like questions. the hand That all back

Jess Lubert

questions. Thank you your speaking everyone to with you quarter. great We for forward the and look during meeting

Operator

participation. Ladies and your gentlemen, this for you teleconference. does today's conclude Thank

You may have at a And disconnect time. lines day. this your wonderful

Jess Lubert	Vice President, Investor Relations
Rami Rahim	CEO
Ken Miller	EVP, Chief Financial Officer
Samik Chatterjee	JPMorgan
Simon Leopold	Raymond James
Paul Silverstein	Cowen
Ittai Kidron	Oppenheimer & Company
Tal Liani	Bank of America
Tim Long	Barclays
Alex Henderson	Needham
Rod Hall	Goldman Sachs
Meta Marshall	Morgan Stanley
Amit Daryanani	Evercore
Jeffrey Kvaal	Nomura Securities Co. Ltd
Jim Suva	Citigroup

Juniper Networks (JNPR) 28 Apr 202020 Q1 Earnings call transcript