JNPR - Earnings call transcript Q3 2020

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Operator

Greetings, and welcome to the Juniper Networks' Third Quarter 2020 Financial 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 like to turn this conference over to your host, Mr. Investor of VP Lubert, Relations. Jess Thank you.

begin. may You

Jess Lubert

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

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

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

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

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

Rami Rahim

safety of Like strategic Good the belief positive. the continuing and environment. long-term outlook the technologies the last of enabled navigate actions that our work you serve to call, continuing by and never markets the of point, reiterate we're pandemic network leveraging ensure been COVID-XX successfully Most we remain high network level To are various has from this current my and the like both to productivity, despite the of maintain afternoon, and the for of clearer customers a I'd the global to importance meet workforce. the to many our our on needs employees this everyone. home of to take

out on to environment, on survive stronger and investing the the come the to are capitalize current We side. our other markets opportunities present, to not but only

believe enterprise taking in our Orders of quarter the our the exceeded our grew with to differentiation Upside of Now due enterprise which our in we to conditions forecast. share business, in us delivered lumpiness particularly and more exceeding once results midpoint competitor. our that our with results our macro investments of saw time midpoint year-over-year. our customers. challenging better-than-expected with these in year-over-year, share, guidance environment. and have earnings September challenging on expectations, cloud results. a was We both per the go-to-market are order We areas, at our are We're during growth some firmly with $X.XX the verticals, solid Non-GAAP billion technology service line of affected along provider when than revenue offset market of our again to executing despite in the double-digit which backdrop. current enabling and win adversely well $X.XXX

win momentum that some and the to fourth organic for momentum this are on our strong quarter, of next we Our the to entering the fiscal be increasing XXXX. of we taking is our year confidence able networking. that a bit like actions will touch said, on to basis decade With full I'd an grow strategy the my and is business

to these a focused wide targeting our cases, should of on and worth several see leverage time over differentiated and to automated and opportunities data WAN areas, tailwinds the accelerate Specifically, accelerate market of years. AI by we industry the on across each enterprise, unfold. teams this these specific market, attractive speed areas opportunity cases on use solution our verticals beginning growth at have use span We our mentioning and It's is our these engineering target, base. compelling that very should these enable next resources share, these cases product centers. the we as three us to and focusing across teams, teams use focusing that each of to development believe And the year, driven management resources the costs sales cloud-ready we likely

to While cloud driven feedback starting architecture, come, this this opportunities alignment XG managed the our in and gig benefits calls. XXX from we’re the incredibly should position you'll hear and to in us has move like capitalize years on which to more see AI discuss positive, been the alignment, better big future early to teams already the of me

continue basis. developments to grew U.S. results, we we weakness believe in in of we Asia, and solid Europe. Now the in improved on exceeded core business with on than as which the into experience enterprise, We sequential American offset U.S. seeing Based year-over-year the a improved the enterprise within address our each momentum the was saw of growth quarter additional some and insights future. I'd expect taking federal our growth are verticals. are expectations, encouraged provide we we're like our Starting to and some more momentum this North a double-digit by seeing Order the particularly vertical. we dynamic slightly particularly in share, and the are key and

and momentum logos Mist improvements truly has customer enabled more thereafter be of this Our this extending we early orders extended reported cloud but order This enabled Mist, and effort have quarter. differentiated to our can we added management broaden year. to our another game-changing AI the differentiation which user operational driven investment to end new quarter growing significant in network to also Technology year-over-year by than I not Mist The only experience. and and seen been performance, our offering, to record which wired go-to-market last XXX% headcount, year-over-year. portfolio. also with moves customers has not Mist in but savings us with and than in acquisition To of rising is started again the AI reach, point, material was followed our XXX% mentioned with more are of the executing improve optimism The across response once technology, enterprise Systems. capture deliver These only our began is some fueled it an shortly which enterprise vision,

our Assurance and QX EX positively on corresponding revenue timeframe. and benefit of and capabilities pull-through We $XXX go-forward in joint very portfolio, in timeframe should the Mist orders saw our basis. also of million EX impacted a exceeded orders a QX point, the To Mist run strong switching Wired which this adoption annualized rate

success investments of future are channel, in been to that Our we beginning have quarters. creating is in likely momentum we optimism go-to-market which continue payoff, and seeing the are to in also the both seeing positive are

material alternative SD-WAN and AI step Our agreement to solution over our acquire driven evolution. is offers XXX benefits in any today. customers Technology the next Technology represents enterprise truly XXX unique

include hardware benefits lower the of costs, Some costs. lower latency bandwidth much lower much and significantly

a receive enterprise share clients and overall to expect user-centric experience. a delivering organically customers market our also to accordance addition come these Technology from perfect improve XXXX, enterprise to in our complement XXX I in to in benefits, cloud. In not automation to SD-WAN only leading XXXX this and positioned believe see and users grow momentum application is and and build but take performance solution, is AI insights to will better business will driven beyond.

challenges also segment from quarter, September healthy saw provider ongoing X% service the despite year-over-year, growing Our perspective. results a in supply chain very

across continue cable benefit with X as X our this driver COVID-XX be benefits, the to the continues continuing business believe service customers, Although customers and to international related markets. we well we see seeing carriers some QX, efforts primary to capacity products to diversify and our the we we provider of are as to from Tier Similar Tier strength geographies. are in strength U.S.

saw also routing demand solid We switching our for in products addition our to solutions.

SP security was pipeline here While this we a I our did that would business, in note remains we weakening of see timing. function strong. some believe the

in we growing on aggregation metro software-centric only areas see increasingly testing played. acquired where routing opportunities, Based of XXXX. we target likely our further as pipeline, enhance automation market, believe the through access our these likely Our Netrounds efforts mid service is historically business and a and decline to and QX single-digit results new and continue in routing provider to strengthen diversification to QX hadn't are ability that capabilities we to introduce win

we future conversations, has our recent believe potential some we based stabilize customer customers the XXXX. face are our that their further may to that impact service acknowledge quarters business of challenges to ability and momentum on in in business spend this While provider continuing to

on Our decline consumption quarter-over-quarter cloud largely a believe five business in consecutive year-over-year growth. came patterns. was basis normal We both slightly customer weaker the a we quarters year-over-year originally lumpiness We than lumpiness reflects of expected. following believe this of and function

win and XXXX. optimistic Tier the to customers this X Cloud favorable. in our we holding regarding Cloud hyperscale believe center slightly a We we while share are gain to are We remains in in potential spending years and footprint healthy flat for ability data is backlog believe to business from our and the and outlook year general believe be Our remains remain increasingly our our up grow to to we now confident beyond. come, business likely the XXXX full

strong XXX-gig segments. to in both Provider wins of additional and Importantly, and pipeline we're continuing Cloud progress make Service opportunities on our with

wide use design provider. new also including historically our secured we've been Switching of many While net strong, opportunities cloud where area wins win are XX a a Top of with addressing cases, are we

of to the footprint share and customer we needed expand right both customers come. set We across the years We carrier have critical in gain this XXX-gig continue features to our capture and our and market. switching in wide as cycle and new protect cloud to our product engagement area unfolds XXX-gig deliver believe to share product

opportunity second half with earnest continue during expect material XXX-gig We starting revenue the year year. next to become of to in the to next begin the

recurring the Services to that give to I'd improved delivered another and due lower software long-term certain renewal certain perpetual outlook year-over-year should beginning results. our our to these service improve Our to of see adoption than are Security and rate on higher Software drive in consecutive dynamic continued continue term-based to subscription us a That and basis attach attach mix revenue. in and we XX% said subscriptions second for offering efforts time of grow confidence quarter and over We rates. offerings a that on-box visibility for to transition strong team solid our our drive believe strong is of an the due quarter, that revenue growth products of Mist encouraging represented software like perpetual licenses. the mention to sales less to software

work to discuss quarterly our want dedication, financial call employees is our for to creating over detail. their turn their team customers my to confidence continues Our and shareholders thanks for well customers, especially and would I in extremely our receive partners to and to stakeholders. Services I who in now value results experience. our I which our an will for ensure the excellent and will hard Ken support like thank Juniper. continued extend essential execute to more

Ken Miller

Rami growth at of you of good on in year-over-year and due in quarter year, revenue, time on Thank will was results a We with up was improved billion line for the above constraints ended the mid-point our basis, share pandemic. Revenue third the lead by $X.XX $X.XXX our lead showing mid-point of I to then the everyone. extended our times supply on discussing first the of experience and outlook. some afternoon, remain to third sequential provide we color COVID-XX certain earnings slightly products guidance. start continue Non-GAAP and while times this per our range. guidance XXXX quarter

Service in year-over-year on Provider time From at than on decreased showing and a We increased as Provider Provider Cloud. our Service a grew grow Security in Looking XX decline year-over-year revenue Enterprise Service by and X%, declined offset our X% while Switching sequential basis. expected. basis while basis, Cloud more vertical, X% exceeded a Strength verticals the slightly and basis, first XX%. in quarters. Enterprise our saw and in technology on grew for a On expectations. grew Enterprise growth perspective X%, all decreased sequential a year-over-year geographies year-over-year revenue Routing

Top an Provider, business Our was Enterprise. year-over-year. reviewing X% were Cloud, and Service In Services were customers for four our XX grew one five the quarter,

Non-GAAP the of it third as posted have operating elevated logistics sequentially, of was and customers Our in our of due XX to XXXX. in we weren't gross revenue XX%. with were approximately supply accounted mix. was Non-GAAP gross and which chain-related expectations for range. which X% due quarter margin guidance below our flat margins total year-over-year compared line were XX.X%, would XX% to other for costs to COVID-XX top expenses down non-GAAP our primarily XX% If

share operating $X.XX COVID-XX cash, the the per Total third the reflecting repurchased from the worth million in third savings. the of $XXX XXXX from in quarter related million. We quarter. $X.X of Our shares essentially of dividend equivalents, was Cash operations flow was expenses benefited flat a quarterly second quarter. and cash of end paid $XXX in billion, from and $XX million investments at quarter dividends,

color you on investor on guidance, Now in I'd available some like Commentary detailed which our CFO to provide can relations the our find website.

our reminder, includes see guidance in any Netrounds acquisition impact the driven of earnings of and to growth. momentum. and healthy the impact Technology. guidance sequential XXX backlog excludes of is At Confidence a QX but strong from of revenue by As expect our the the acquisition mid-point we forecast pending our

Our in QX decline forecast in our assumes Provider. a Cloud sequential verticals sequential growth and Enterprise Service slight and

to expect volume-driven improvements sequential our non-GAAP see gross in We margin.

supply to remain logistics other pandemic elevated due chain-related costs QX slightly effects than In to expect but lower addition, we ongoing and the the of levels.

modestly to expense operating expect up from quarter We QX levels. non-GAAP fourth be

cost opportunities. prudent to management continuing focused on capture will We to while future invest remain

Other or remain We recently net negative expect rate our in to $XX expected acquisitions. announced million of basis a & approximately future to capital and OI&E this periods. level expense on Income initiatives The and QX lower environment, OI&E interest on non-GAAP is an Expense, return the due impact in be at

the Turning Directors with to buybacks. of dividend Board to during our our remain cash to has a opportunistic fourth and respect our $X.XX to dividend be per committed declared return will remain program, share paying quarter. of share We capital paid

for to economic deterioration, the are While move Presuming future organic on uncertainty to the due would comments momentum is macroeconomic unknown there and provide to basis lot ahead, in about to our are we based the a no current full-year the we growth outlook COVID-XX-related the XXXX. a XXXX. seeing other making Q&A, I a few investments expect on to opportunities like to we on capitalize further on on and we before return pandemic revenue

revenue of would we second of Assuming additional the half pending closes, nearly be of Technologies which growth, point expect to XXXX. XXX acquisition the we towards expect a weighted

gross XX%, software driven non-GAAP sales volume, XXXX be improvement full-year our XXXX expect engineering from be The levels. We efforts. up increased to approximately margin is expected and to by value

also We related of to COVID-XX in costs the a see gradual course XXXX. expect through reduction

reminder, with course lower gradual year. to the be QX, a improvement margin tends gross seasonally the in volume-related our of As throughout

growth We non-GAAP normalization costs of acquisition expect XXXX improved the offset to balances, related in impact to combined COVID-related savings, to gross the and investment lower year-over-year pending by XXXX. investment increased yields, opportunities lower be cash Due XXX targeted we investments approximately margin as of margin and flat operating to a capitalize Technologies, gradual with will ahead. on expect negative OI&E to be non-GAAP

non-GAAP We expect EPS slightly than faster to revenue. grow

long-term improved and revenue We expansion plan over our their I in would earnings dedication margin changed. have continued team deliver this especially for not to objectives Juniper’s closing, growth, to and like In Our operating commitment success, environment. sustainable to challenging financial thank time.

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

Operator

[Operator Oppenheimer. from with Instructions] of Our Kidron first question Ittai the comes line

question. You may with your proceed

Ittai Kidron

of couple for A Nice me. guys. quarter. Hey, questions Thanks.

talked into switching the in more data First you're to a we’ve quarter? was X%. clearly you through, color second progress But clearly perhaps And the heading macro. your and over give your here mean, category your but are see year, happening mean question seeing potential of on us are what is weak outlook? If nonetheless in is wave that. of of thoughts you on basis, Europe. this center people can missed incorporated sound into end to around some you as how second in give some i the that confident here then to down towards that there Europe, shutdowns and and around the a not the there I hearing interpret the we about great the overall you that switching campus, risk hear. side, which you've that's the us extensive selective happening Should pull but from kind Can on starting still you've was

Rami Rahim

strong us. Ken your question momentum the answer and color to will the question. is Yes. actually questions, short Thanks both of address Ittai. been The for center the maybe some quite additional no, that, for add I'll has macro data question, switching on

it around cases. or it switching, use switching saw reduction majority So is revenue the vast is technology decline to we the why in hyperscaler deployment large wide of or in for entirely dynamics our of it's year-over-year that due X% area

If both in at data you for look enterprise center performance the actually our service meaningfully. switching provider, it's and and up up

think macro, we're second we're On our forth. particular the strength far encouraged So we're the in focus products, center as and in business, enterprise paying the the we're But not and with us. both QX disruptions, actually momentum major I encouraged offering service in market. seeing quite have off and order quite solutions so And the thus with the the enterprise telco been issues for the the for all certainly well we technology momentum, we're immune as of on is verticals that our provider actually to wave the in the seeing in timeframe. data

again, rest full visibility our outlook the and the I have, that considering declines add. this service to actually actually In momentum now to the and Ken to based visibility as expect provider, for single And the think cloud see enough on provider flat year. year, year. the low year today good very up for is our see is point for enterprise the all growth well we of can the that momentum is much the which single-digit the realistic, as will meaningfully mid than last growth better we at space say in

Ken Miller

further as environment it economic the to roughly I we're Yes. in did a uncertainty. deterioration XXXX. in add, assumption current XXXX our of and amount same XXXX, no just But obviously remains mean, macro there's the fair would presuming I is working

our worse it XXXX. assumption really right case throughout nor better we're base gets So now. materially materially That's not presuming

Ittai Kidron

luck, Very good. Thanks. Good guys.

Ken Miller

Thank you.

Rami Rahim

Thank you.

Operator

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

your proceed question. may You with

Rod Hall

forward actually Yes. for the have regarding of two Thank you kind sales. question. I

how what to particularly might pipeline So you ACX if of be? think Europe, Would ACX. like. think you ask line you Would the pipeline on about sales were speed through higher wonder, secondly kind I terms developing could talk upgrade? the what you you it year? of earlier? card, much And wins out is there? how of wanted are be far that higher for on process that Just I in MPC MPC in speed Thanks. upgrade there, is Like curious you be runway to the how then gain looking you've footprint middle got next timing it And

Rami Rahim

Thanks Yes. Rod. questions, for the

has solution early of our That gluing automation through recently is very of MX provider assurance service that both ACX are organic still the solution. cases very questions and together product product the particular. We're addresses So introduced our Netrounds, product some we're stages early automated of line, actually we're to ACX ACXXXX; have our customers which in the ACX momentum. use specifically, market, the WAN a for actually that end-to-end very completing we modern some our what is And that partnerships end-to-end older product pertaining our portfolio, end-to-end importantly this use with efforts, smart encouraging is then that some into that an we the solution the In addressing. our coupled here just cases. in of solutions with and or of our initial that acquisition metro is

that that interested the us had get early enough service it quite see a but momentum. I These products the On the line And our there's we'll in. early line now the question That's your solution still momentum, should to we a of MPC back. second are terms at certification we while year, come cycle. some market mostly we're the have provider more into to to it's bit introduced majority get half think of around that that's I cases behind next features probably point. starting cards days. us that of the starting in use customers by see MPC, Then MX required were product took a for expect time year, time we this next and complete into for together the

actually early, have Now fact, And products is fact ramp expect we're in benefit have to that in the some us these we the the now revenue we of in of are optimism newer I that see starting some about we decent our business continue future. service that the further to still but stabilization a provider to customers. result selling to

Rod Hall

you're Do it? you on idea? far of you Or have Rami? percentage MPCs, you give through – it sort is XX%? opportunity Can any sort estimate on of further Or are us how I it mean, is any that through revenue the

Rami Rahim

as I or total low say All of that MX orders it's percentage low. fairly point will whether it's at a still is this very business, still revenues,

Rod Hall

Great.

much. Okay. very Thank you

Operator

Paul Our Cowen. Silverstein with next question line comes from the of

You with your may proceed question.

Paul Silverstein

the other Arista position recognize your markets? question. relative guys part service you but what – HPE, a broader big both Thanks terms switching and seeing the competitive and dynamics you're to an of for seeing small you're that terms the I pricing also also to obviously in both of of particular in there provider and taking a in still it. the And cloud awfully relative out in of to Can and competitors for market Cisco, discuss it's you the question you're relative

less may across am coming you're but curious be and not may than have a I you – follow-up. be the I what seeing aspect competitive rather So more,

Ken Miller

Yes.

change, touch we're I'll I and the material pricing competitive the aspect. on has been industry. seeing pricing know, competitive mean, on this as So But Paul. not the Rami a pass for to you front, always in part pricing the

see erosion not and in forward. per price the year-to-year, bit going we're unusual anything do seeing on You pricing curve basis, a

nor quarter plans. our chain to So pricing on note future the this a really nothing in from perspective front

Rami Rahim

answer our to very competitive competitive dynamics. been use question, a landscape. from about just we think to standpoint. always have about I a differentiation the competitive obviously case like I mean, environment, Paul, competitive your And in

segments. really many enterprises, solution where having that order the for is on feel AI completeness on certain that macro custom time with momentum the products, the our data based second win merits can again, basis. cloud Metro, am in there The the which I solutions Netrounds, it's is we our and select opportunity is that customers includes confident out the I solutions, time. stronger HealthBot in Junos solution of customer have that Mist that's space double-digit with So a be highly automation question I in we rate. in year-over-year differentiation have SDN the a that that to we're is if today products, you this with based and really system is there going opportunities especially to some a that's easier that customers. portfolio we're going good technology resonating now become now as at we that differentiated, the out with to get we're of with challenging, are very as manageability that's capture to And an today. I that we to feel And and about resulting time. compelling fact have NorthStar WAN as with our enterprise, is going together merchant really investments kind growth the all a very that where in to engagement what much well momentum portfolio. seeing cloud Cloud-ready look think area of just like providers, assurance we in operating automated portfolio nicely. Evolved, that driven the that providers. service coming in center enterprise we environment for compete this that as of offering, solutions I particular, in more network fill But is controller, capabilities that that delivers us essentially a especially offer based across up build the all gig of our strong pleased XXX But on our the even that's our and enterprise overarching answered that an silicon of automation things will framework around actually and space, making really our

Paul Silverstein

be due in with your the clear, competitors. or deals to And not intercepted citing is weakness your loss to but due Rami, just to to alluded that you cloud you're share remarks, by

that. not You're seeing

Rami Rahim

X No, cloud that's really Tier large are of our of I more there look a segment solid. It's quite just momentum across not if is we cloud, what provider into timing actually the deployments few Tier cloud our customers. broadly seeing. And at X,

Operator

next from Badri with Our Sami comes line of Suisse. question the Credit

may proceed You your question. with

Sami Badri

Hi, thank in XQ you. I mainly year and reported results touch into guys this earlier just the XQ. the wanted put quarterly you just of up that some on results perspective other have to and

get Just talked how tied prior maybe there opportunities unfilled to were shortages. if we supply – could tied mainly you an idea, about in quarterly do some results to mainly

in that were XXXX? new this sales never orders in I net of in essentially at fulfilling the XQ would behind? results just productive than were look guess much how or XQ half generation that the you'd missed Now, when already or XQ about rather XQ and is catch-up say And that we just from first pipeline more opportunities a of XQ, we and executed and XQ were think bit the roadmap got for how like much of the

Ken Miller

Yes.

and pleased perspective we're see significant enterprise. from with So very We from a booking results a in the did revenue bookings QX QX perspective. growth in

rest to our track expect was here particularly still on The modest provider year. well. particularly the largely bookings. There those products; service we're moderate would actually the constraint of elevated lead as benefit remains saw some the still provider service also the say I significant are first of PTX did QX. and constraints. we to in The QX strength half our We where our of in bookings products in service MX in from do seeing time. it supply supply our We provider revenue, some on out portfolio growth close is the as normal back revenue most

bookings you service would at QX look but up were result from provider was increase, some bookings, first provider a note I standalone sequential the that So growth in half from even QX, revenue if basis. quarter service a year-over-year benefit perspective, the there on large –

results we broad on we're half’s QX. the I seeing why first bookings reason pretty So momentum. strong being over rotate wouldn't of a the based had

Sami Badri

it. one quick And follow-up. Got Thank Got then it. you. just

to modestly guiding ahead moving on OI&D. some EPS to color top EPS. of some pieces get growth, hoping of your being just growth more You're and I’m line there revenue are

going are in Does similar flat a margin guide. done this in more very also there's a essentially quarter the XXXX, margins mean buyback what taking and year? XXXX? there end the Or historically be Given operating your have of – is in bit basically guys something place something little pronounced that you to to

Ken Miller

At we relates we it on than specific talk with return past to point, other program, XXXX as anything consistent Yes. remain to capital this have will don't practices. about

return cash shareholders buyback and P&L We form dividends to outlook. We have of We’ll opportunistic. implied than free baked greater large in an buybacks. will don't of the current remain our flow into XX% our

Operator

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

may proceed your You question. with

Tim Long

if just could. Yes, Thank you. I two,

in highlight going turn new click then customer about First, maybe customer. little Rami, a so Thank you. good a take of weak it'll and Talk little double little just XXX significant a bit if that what's the bit if business year, secured lagged next gigs a kind It's looked XX in to the security It traction and like on maybe you sounds you ramp wins timeline could a there piece, to into year. you on top bit talk this more little that secondly, larger for the quarter. if vertical. could around maybe And some switching. us what you you a about bit can mentioned a of

Rami Rahim

address both. Yes. Thanks for the questions, I'll Tim.

lot technology XXX that here. a the of new into the technology, So introduced and confidence on the have side, there's I market gig we've in

for new that's If a you consider gig new enhanced XXX capable; optimized that XXX are and systems operating we system silicon, that vastly Junos gig call Evolved.

next is ensures It the that liked some that as portfolio. hardens we're we're area, seeing networks all security an data year. of then is aligned pretty level will center. the we sometime our second momentum technology high wins tightly on And service cloud a starting our differentiation new So to our that particular of high-end peers in front, provider mostly XG Timing it ready level In gearing XG the are deployments half service prove out the are customers us we to about gives of in meaningful more I the industry. involve think, been security more opportunity and relative to to for expands. that's opportunity to networks wide tied where business provider up of but and purchases. space, real many a wise, product that and – revenue that be most success very And of And thing competitiveness in the the the the our I And stack the the of this traffic. is these have or that some That's for in the see competition. year are for in provider portfolio. and

some of look so of QX of particular, happened in a quarters, actually weaker after it pipeline, high-end, solid. looks the at deployments. these little very the of just was I couple timing a So because in it the at bit If solid QX

concerned performance QX. not in about So the I'm actually too

Tim Long

much. Okay. very Thank you

Rami Rahim

Thank you.

Operator

from comes question the next of line Samik JPMorgan. Our with Chatterjee

with You may question. proceed your

Samik Chatterjee

outlook? Thanks verticals, about magnitude by you're I follow-up. cloud you out award start just that when Hey, a baking at in organic kind seeing separately. look thinking particularly wanted flesh could enterprise next if verticals cloud to you growth guidance guys. of customers for of I example, we bit year, what more the terms with off and in for of have my taking are question. for a how and And further wins, growth by the

Ken Miller

sure. Yes,

full second uncertainties there XXXX, comfortable add We're much we're that return news growth ramping on on low the based expect and business. we in very it current organic that's basis and of mentioned us, next we we within basis. to growth year for week will be organic some point of Clearly, the as have investments Technology expect likely while be year momentum growth provider, out to if kind a believe growth growth year revenue perspective, in last making, trends XXX vertical still full expect So still with those street XXXX. XXXX. we a do to From on half statements. there, are stronger and the nearly we a a drivers and for looking a acquisition in estimates, we cloud And enterprise organic pending all further of stabilization to should a single-digit the service we

Samik Chatterjee

structural a investment when on And provider back outlook, that provider Okay. XXXX, decline once I see closer service if concern a you're you generally think sounding to for there, community service growth the a of about even kind the there's think remains broader which past path stabilization, the that? kind Can address the outlook of you Like for about get you in more more do it's confident I the stabilization. to basis business? for even

Rami Rahim

there particular, in And term I year which this growth, approaching improvement we're longer a well The at this for about for it's that it's a gives year cloud last from the path data in centers, Diversification standpoint. not course saw would technology about area, routing diversification execution. XG wide further year, a is customer XXXX of it's significant this then where we just also is about in standpoint the we're into as this segment. our as NGO switching selling market talking be to improvement deployment, ability thing security from telco to and segment, how its to but and stabilize not confidence diversification us selling to think this actually what point. is

in with really have cable also not that both took encouraging some the that our here with to all. traditionally we're we from but couple of bought a pay if ago to segment, accounts the bets to took in sales verticals much international momentum we So here, momentum account at are extent our telco space see with coverage, some America, in Juniper, years off And North starting like especially transformation starting internationally. that anything some

us a that in a the it's outlook. is of gives confidence execution the matter that So matter strategy, of

Ken Miller

the Rami well, X, that vertical as seeing add as well it business that us obviously verticals I is absolutely is our a thing cases both, diversification different very diversification Tier but would for significant Enterprise only use and hyperscalers strategy in The in Cloud going mentioned from we're more on perspective, logos as forward. a our other applies provider diverse service

been last absolutely paying has few diversification us for over universe think dividends here the years. I So

Samik Chatterjee

Great. Thank you.

Rami Rahim

Thank you.

Operator

next of comes Leopold a Raymond with Simon question line Our from James.

You may proceed with your question.

Simon Leopold

Great. Thank you.

a coming catch-up the on provider? First, much of issues more and then And like I'm the vMX-XG in got supply maybe quarter. this the exceptions this was wanted what a I've organic and clarification you How what in to sort product do how catch-up terms is the really I just the get consider refreshes bridge follow-up. going chain for provider what's from from of is longer service much term strength in versus of of trends maybe service

Ken Miller

is Tier well majority I X say our would so Yes, like the ability certain related. as It's execution from is Rami broader to verticals other as as into diversify Tier internationally mentioned Xs away cable.

really recall, expectations quarter. if driver believe we was provider. QX is catch-up that a There us of of hit miss in constraints service within you So execution I due the supply did bit to success the our late primary little

It's At kind ground million gaining are I elevated, constrain service that provider probably miss the we're about is our pretty was been supply to QX QX good on has still and this we into I that of $XX in relatively think it nor while point, results. the particularly back spread necessarily $XX vertical. that of QX million feel consistent, losing much. not

Rami Rahim

in add Yes. keep among is here our The position will only service I is provider just internationally. mind thing

MPC typically requirements obviously empty deployed systems easy path where like across slots and our provider requirements for in vMX benefiting capacity ready that's that cases new are are to many line are inexpensive the introducing capacity that constantly when latest a very We use certainly there are something customers and is service in a upgrade of networks upgrades we that are those offer innovating cards meet today. us deployed, there variety for line cards we're and and

Simon Leopold

improved Thank of thinking really awareness. is the maybe wanted we range. share, the If you its about And I quantify on heard campus I'm want How, longer share this – third-parties, do term, the And brand business? your to according channel position elaborate get you. momentum to some guess environment. look to in to more X% then revenue objectives, switch longer-term X% it's term if see I I certainly longer to where bounced comments market the what take position? whether at around you campus what is, you around have at objectives for checks campus plan your in some of trying your could could

Rami Rahim

Absolutely.

that we're which and opportunity interested well, we look enterprise Enterprise that is we're that AI-driven Wireless WAN the market interested AI-driven is That's that's you of want LAN in for if the growing what office right or about, cloud-delivered, cloud opportunity. what as of WAN in SD-WAN, a clients everything to best offer or degree fastest that – where their that industry’s full at includes is we've to LAN So and all of and and billion investments the the from through very the LAN, solution hyperfocus part, user, focus include cloud us is client our actually WAN opportunity. to in across $XX end is opportunity, that let's part not solution The on irrespective That high off now cloud. a favorite through wireless that to with the whether they're home WAN, differentiation. solution the or their made paying wherever

is nutshell for last a that's in faster exactly – objectives Our is have we quarters. we've than several and been the what seen market what growth seeing

on ability well to our and color longer-term half next if teaser. clearly an do it doesn't this on can say, we this opportunity this as additional come but be aspirations, a first as of across with very provide let's terms maybe analyst share. We'll will longer-term of call, just a you of say would just In about in bit year, event little aspirations, I take excited the I'm

Simon Leopold

behind the forward to you. I'm to looking Okay. numbers some get it. event Thank

Rami Rahim

You bet.

Operator

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

You may question. your proceed with

Amit Daryanani

gains, it, think growth there is be for a fairly Thanks as when low-single XXXX, Yes. the then for to way I the better first-off, quarters. year, in it does to to expectation the my about share macro about is even not guess. growth guys or happens, taking HX heavy from are seem share the through me a to I is I up well be this versus question, coming going growth digit like two few extent the for last going or And more it's organically environment calendar guess picking you not. think that that more

Ken Miller

Yes.

largely the as a from basis. more as year be more pattern loaded, Technologies and that perspective, perspective, down to the obviously an seasonality think happen mentioned probably so So expect similar backend I acquisition, be be near the growth I backend Juniper I see of don't that on would QX, well. incremental throughout point next from the before, it do to organic would year I XXX I this organic of changing loaded, year, much typically a go we to expect probably from and but would build gradually will to then QX

part second the question? of the what Sorry, was

Amit Daryanani

these by, you. year helping are think that is It’s to for something going to macro Yes. the we seem XXXX, the more expectations be gains calendar driven next or share better be more

Ken Miller

largely we're macro to earlier, mentioned be same it's uncertain. expecting highly the Yes, I as economy share the gains. about absolutely it's mean, I

about that momentum have same. we our remains see presumption and we don't the economy the However, deterioration. roughly feel the We further

believe I going organic many organic of see competitors see to not growth. to growth. our are expect We

that's take, this like take us current expect to we year, share I our us So continue share to year assumption. next expect to I been have working

Amit Daryanani

And dynamic recently and for market you to and perspective, expand routing in start if the then impact Juniper? landscape how up, routing it. does the that just get white how follow layer, boxes that Got if about call that to your I’d core ability think solutions competitive call you of disaggregating I the love may. talked AT&T does could the do using

Rami Rahim

our great it remain having in said more of a of us that side already benefit. system, operating Yes, hardware And benefits gives gives offering and side, also largely of because I’d architectural us so DAX parts silicon of and at actually area I'll done our amount invested having take a has have some that. something here look network we've not the quite disaggregation customers especially Juniper silicon It protocols routing I'll disaggregated much. offerings disaggregation operating actually talk because step interests weak. the procure the they switching where of of That and our customer flexibility, in taken on so has products offering heavily reap the all box has frankly, ours, technology a disaggregating of for and xXX. a ability broadly. it offerings, We've merchant gives system us and in perspective to the that independently can even We custom white forth the forum that benefits and of the obviously been and is changed partner quite our it tremendous lot AT&T general us. my respect about

separate openness because vast the think and we offer. flexibility majority are start price for disaggregation, entity place. and of we all to call for hardware. are ready, And includes ask sort things example, we're components And thing our seeing stack will I were on procure between technology containerized model, disaggregation our offered disaggregated change of of our over protocol can customers very They robust for And on the software that that the made They want be The will models kind more and cRPD, protocol absolutely routing types, a we OS, services actually daemon have the want entire to the as other and software different it is, solutions. we interests of investment. it hardware only which here to the our integrated and for customers So say list. looking and procurement deployment of I some system routing if our like stack. operating we've as that this a some

way. being be is, which you can this put today. us. all in of serve this a for any new servers, see to them different the kind net cases cases opportunity tend we than You as that them is use very in box don't They on put I can cannibalistic but white of use

Operator

with question next Wells Aaron comes Fargo. of Rakers from Our line the

You question. may proceed with your

Aaron Rakers

have wanted to Thanks I XXX-gig on opportunity. taking two for well. as the first Yes. Perfect. question. I the start

you think your win. last I announced first quarter XXX-gig

talked Top of earnest then XXXX? Because, much or And you the XX of change shift alluded out quick wins about you how timing quarter This in materializing any starting a you maybe think in in of but many I revenue been quarter have had your a on expectations I pipeline, customer. to framework there one. how you've Can another XXX-gig, us early contribution? give has just a the cloud last

Rami Rahim

Yes.

cables have the in first number with growing the optics. right cases of number actually are but provide of events right We but customers deployed of native optics I number anticipation many connectivity are half to eventually being of XXX-gig at buying the that wins, look today quarters And now. that terms in breakout you analyst that XXX-gig ready in So of XXX-gig or with using in based will they that get and ports that on the availability the can it's things deploy either it's XXX-gig growing. today, don't products to future year, with next nature or

going it's year. space quite this provider of the but service in particular the the XXX-gig rate space. as do the that the ramp this COVID think second across deployments with in SPs think provider think growth be has as I more that be honestly So cloud I I impacted don't far the timing next well, and providers in ramp meaningful in I'm significant. year, cloud to extent in I of just half as And early some still the pleased will mean, space, timing, the to of in is both think I all game, the but

Aaron Rakers

second helpful. of That's as XG remind the And how question, see again then us you a opportunity. just

hear to Service Juniper starting deployments, might the a benefit and when really to their to how move up Provider of Verizon that station start core just business? into curious we infrastructure sees base we next I'm side network from year. ramp talk As about obviously start and it your

Rami Rahim

Yes, absolutely.

one that means that one we is for different this which three we're interesting for specifically telco So obviously things. is around already, it with a investing and One and dynamic I've mentioned And very Juniper in. track is given us security. what our position

Our today you worldwide protect and of where the service in with in cocktail, the that will to efficacy. deploying That a are has really anticipation technology service portfolio our perfect in high-end industry of unique customers data provides resulted and if number provider users, of performance and deployments. win security XG infrastructure is providers

carried we that's core And and model, our data you're transport. momentum our mean, especially require with O-RAN native customers. us picking doubt to element we've Today, solution RAN, inherently the center, that's data steam there's Second be no software-defined highly strong to nicely Faster that distributed, also is fiber very and to where XG to hardware that mentioned that's automated more bits with around deployments stitches deployment of about because something as Contrail Access that going portfolio metro play. in largely if is And come networking I to important the about have Faster is the in a that and increasingly then that And result cloud for the D-RAN the centers. the seen Those highly needs going industry. combination optic going and up be some that's where already portfolio, but with into it's portfolio in starting our are networks Network, in to I XG it's market. edge. earlier, we're the third to of introduce Radio

Jess Lubert

Operator, more we'll questions. take two

Operator

line Wolfe of Research. next Our with Kvaal the Jeff question comes from

You may proceed with your question.

Jeff Kvaal

for is that's little where like that's bar. pandemic gains that coming. roads there, And to you better? that there's is. of XXXX, share have that – Couldn't might kind cloud the better two the I I think growth be in sketched for that just some us you be a flattish a feel Yes. low was higher. have out I cloud Thank sort action The in of shouldn't you. hoping driving And number questions sounds mean, all. low-single I like one that digit. is I be I

that'd secondly organic Ken, above XXX of is mind is you. slight of growth could on inclusive if light grateful. basis? then that, that EPS And So an Thank if revenues, you some that on you clarifying shed be or sort your on wouldn't

Rami Rahim

let first second question and let address the the then address Yes, one. me I'll Ken

now And expenditures retain footprint from was whole because so and of type but this with transition And benefit to I we vertical there mean, of And the recall, nature that among cloud went a highly the dependent we that's On that unique hyperscale for the of saw the have can preserved. position footprint cloud base base. through some customer that behind are tracking long that us. enough, we cloud, the it within deployments entirely year, product CapEx if back, a you've first on of us happening. that customer mind we lumpy we cloud concentrated half deployments couple has that a been the providers. idea is you and in we always that been keep of years of large of fairly the providers a if in have difficult

their we is can our and about that the a doing optimistic focus on customers we but remain I we're deployment up and vertical really rest patterns. to So as cloud everything long-term,

Ken Miller

revenue XXXX dilution the on grow the EPS EPS to diluted, XXX Technology, commentary include which And provided our we is about from $X.XX that non-GAAP that that's for faster front, that includes expect where Technologies. mentioned expectation does than slightly XXX we

Jeff Kvaal

very all you Thank Okay. much.

Rami Rahim

Thank Yes. you.

Operator

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

You may question. proceed with your

Meta Marshall

wanted margins of kind product would would routing performance to margins little down stronger better. on maybe question the a think Thanks. be just Great. gross year-over-year, bit ask that and with just a I take I

stronger just a around kind gross basis on that helpful. would deployments So some margins of of from is that, any just product be weakness or should we commentary Thanks. consider year-over-year

Rami Rahim

Yes.

COVID that related costs last about would on a we really two the there's drivers. So One the talked be call. lot

differences. year-on-year there clearly some So are comp

still product a if have these if Juniper to even of point the increase that provider versus side year-on-year, side have for some only margin it's a closer not the down It's point you And or looking versus of simple adjust as costs. mix. that aggregate it COVID Our as up it a product level, full your enterprise. would on switching service would in and only is X.X been just elevated the is been on it's for routing to factor weren't

get to into is mention have what's I'll One right. really happening software, mix. down You a in level a example

customer different also mix, different pleased all this is basis. factors mix, our different bit and product on the clearly So we've hurting about There's We're into year-to-year a software a gross mix down year-on-year, performance with margin talked just our margins mix deal this that that's year. results.

We forward. to going volume margin expect with grow

We continue to contributor on in year-over-year a bigger also expect will value software and focus which margin a expand become gross to on mix year, help basis we'll efforts. engineering next

So headed where we're gross margin. with where we and confident are feel about we

Meta Marshall

you've if pointing portfolio just customer, buying in sales on there. the And a product in XXXX, that follow-up, kind just kind guys the of – some have part it. that you're then seeing, you characterize early you just terms that to you've of the but portfolio, least Got just maybe or in the but would any enterprise of seems it's more primarily buffered alluded you've this, made behavior strength that made you're as sales investments last investments of of the improved portfolio kind days of to and at commentary the as

Rami Rahim

centers portfolio. the address in data enterprise, Yes. fashion I driver area, that the campus across some the great ready to is types particular, and we've just go and momentum. data the wide real we've just deploying also and strength for primary all with differentiation lot deployments branch, lots product I in seen emphasize the made of enterprise is get distributed innovation the around center data the in both well that. some then market to portfolio for telcos. talked center of in to in to strong to I'd our Definitely, They're offer not a market enterprise AI-driven in but our virtualized Both in XG momentum the also as but services. also different happy about a be but investments, and in sales go

Meta Marshall

Great. Thanks.

Rami Rahim

you. Thank

Operator

reached session. we concludes today's question-and-answer have and end conference. the This of Ladies today's gentlemen,

lines great your at you time. a for rest Have this your disconnect may You Thank participation. evening. of

Juniper Networks (JNPR) 27 Oct 202020 Q3 Earnings call transcript