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Juniper Networks Reports Third Quarter 2008 Financial Results

  • Revenue: $947.0 million, up 29% from Q3'07;
  • Operating Margin: 21.3% (GAAP); 25.1% (non-GAAP);
  • Net Income: $148.5 million (GAAP); $175.6 million (non-GAAP)
  • EPS: $0.27 (diluted, GAAP); $0.32 (diluted, non-GAAP), up 45% from Q3'07 resulting from strategic and operational execution

Reported Q3'08 Financial Results

SUNNYVALE, Calif., October 23, 2008 - Juniper Networks, Inc. (NASDAQ: JNPR) today reported financial results for the three months ended September 30, 2008, that included solid revenues, expanding margins, and improved profitability.

Net revenues for the third quarter of 2008 rose 29% on a year-over-year basis to $947.0 million. The Company posted GAAP net income of $148.5 million, or $0.27 per diluted share, and non-GAAP net income of $175.6 million, or $0.32 per diluted share. The non-GAAP EPS figure represents an increase of 45 percent from the $0.22 per diluted share reported for the third quarter of 2007. The reconciliation between GAAP and non-GAAP results of operations is provided in a table immediately following the Net Revenues by Reportable Segment table below.

"Juniper delivered a solid quarter during a period of global economic uncertainty," stated Kevin Johnson, chief executive officer of Juniper Networks. "We continue to enhance our product portfolio, expand our reach to customers, and improve operational execution. These factors have enabled us to drive revenue growth and improve operating margins. The long-term growth potential of the high-performance networking market is strong and, even in this uncertain economic climate, we are cautiously optimistic about our near-term opportunities."

Juniper's operating margin for the third quarter of 2008 rose to 21.3% on a GAAP basis from 15.3% in the same quarter a year ago. Non-GAAP operating margin for the third quarter of 2008 rose to 25.1% from 21.1% in the third quarter of 2007. The improvement was achieved through continued cost discipline and improved operating efficiency.

The improved operating margins helped Juniper generate net cash from operations for the third quarter of 2008 of $204.6 million, compared to cash provided by operations of $191.4 million for the same quarter of 2007.

Capital expenditures as well as depreciation and amortization expense during the third quarter of 2008 were $40.9 million and $38.9 million, respectively.

"Juniper's results this quarter reflect good revenue growth paired with an operating model focused on efficiencies, smart investments and more productive sales and marketing programs," stated Robyn Denholm, chief financial officer of Juniper Networks. "We delivered strong margins, solid earnings per share, and healthy levels of cash from operations. We will continue to focus on our operational excellence initiatives," concluded Denholm.

Recent Highlights

High-Performance Network Infrastructure

Juniper continues to deliver innovative solutions to the market that advance the fundamentals and economics of high-performance networking. Juniper introduced the industry's first Dynamic Services Architecture and a new category of extensible "no compromise" networking and security products with its SRX series. This new architecture and product family are designed to deliver scalable performance and operational simplicity to help high-performance businesses tightly align rapidly changing business requirements with network technology investments to accelerate new service deployments.

In addition, Juniper introduced enhancements to existing solutions to help customers maximize their network infrastructure investments and lower their overall total cost of ownership. Juniper announced the Intelligent Service Edge - an integrated portfolio of new features for its M- and MX-series routers that will extend JUNOS® to a broad range of new applications. The enhancements will facilitate intelligent convergence at the edge, which drives network monetization by speeding deployment of new services and reducing operational costs and complexity. Juniper customers, such as Deutsche Telekom and Telecom Italia, endorsed the approach. Saverio Orlando, executive director of Network Department, Telecom Italia said, "the Intelligent Services Edge further demonstrates that the vision and strategy of Telecom Italia and Juniper are aligned. This is another step that will allow us to reduce the costs of building and scaling our network infrastructure, while concurrently enhancing service delivery and network flexibility.

Juniper also expanded its Network and Security Manager (NSM) to deliver the industry's first centralized management solution for routing, security and switching, enabling customers to consolidate and simplify the management of their network infrastructure to increase security, reduce cost and realize operational gains. Juniper also announced enhancements to its Access Control Solution, to deliver best-in-class scalability and performance, with centralized access policy management via NSM, helping customers cost-effectively achieve comprehensive network visibility with broad enforcement capabilities. In addition, Juniper announced the next generation of its best-in-class WXC application acceleration platforms to deliver a more scalable, modular and cost-effective approach to delivering fast and consistent application response across the WAN.

Juniper's Partner Solution Development Platform - or PSDP - which enables customers and partners to develop specialized applications on JUNOS, continues to gain momentum, driving innovation in the networking industry. For example, Juniper announced that Triveni Digital has joined the Open IP Solution Development Program. By integrating Triveni Digital's video experience and video signal management solutions with JUNOS, service provider customers will be able to deliver the highest quality level of video services - more reliably and with scale.

Fueling High-Performance Businesses

Customers continue to turn to Juniper as a strategic partner, leveraging Juniper's high-performance networking portfolio to accelerate revenue generation, achieve differentiation and lower total cost of ownership. In the service provider market, XO Communications, a leading nationwide provider of advanced communications services and solutions for businesses, enterprises, government, carriers and service providers, deployed MX960 Ethernet Services Routers to accelerate the speed with which it can introduce new services in response to increasing demand from enterprises and wholesale customers, while reducing operational costs.

Telecom New Zealand International (TNZI), a global service provider of Internet transit, data, voice and mobile services, has upgraded the capacity and security of its international network with Juniper Networks M-series routers and Integrated Security Gateways (ISG) to enhance the responsiveness and efficiency of service delivery to new consumers.

In the enterprise market, Technicolor, the leader in video solutions for the communication, media and entertainment industries, values the ongoing efficiencies it can achieve with their Juniper solutions. The simplicity and ease of management made possible by the common operating system, JUNOS, ensures their MPLS network is able to meet the demanding requirements of all their constituents.

Ajisen (China) Holdings Limited, a leading Chinese fast food company, deployed Juniper's routing, security and switching solutions to help them reduce the cost, complexity and risk of delivering business-critical IT services to the company's mobile workforce and more than 243 retail locations across China.

Ferrum College, in Virginia, replaced its 10-year legacy infrastructure with Juniper's EX-series Switches, Secure Services Gateway and Unified Access Control, to improve network performance, improve reliability and decrease maintenance costs in line with their continued expansion.

As part of their data center improvement project, AdvancedMD Software Inc., a leading provider of Web-based practice management solutions for physician offices, management services organizations and medical billing services, was looking to improve the scalability of their switching infrastructure and maintain high service quality during a time of rapid growth. The Juniper Networks EX switches were the best fit, enabling them to get more for less - they were able to reduce the footprint of their data center and realize energy and operational savings, along with the peace of mind they have the flexibility to grow their platform as the medical industry continues to rapidly adopt the SaaS (soft-as-a-service) model.

AmazingMail.com, Inc., a leader in advanced direct mail marketing solutions, found that "deploying Juniper's EX-series switches and SSG firewalls has helped us to achieve and surpass our operational and financial objectives," said Larry Prine, lead systems administrator for AmazingMail.com, Inc. "We have increased network performance, simplified operations, and lowered our operational expenses so significantly that we had enough budget left over to purchase two of everything ensuring full redundancy of our network infrastructure. We're realizing an annualized savings of $90,000 (USD) in IT costs, we've reduced our data center footprint and we've achieved additional power consumption savings. Now we spend less on building, managing and maintaining the network, and more on strategic revenue-generating activities."

Corporate News

Juniper sponsored the launch of the Carbon Disclosure Project's sixth report, reaffirming its continued commitment to understanding and documenting its environmental impact. For the third year in a row, Juniper voluntarily collected and submitted its green house gas emissions for worldwide reporting. Juniper was recognized as an industry leader for its carbon disclosure, ranking fourth in the technology, media and telecommunications category of the Carbon Disclosure Project Report 2008 - S&P 500.

Juniper Networks will host a conference call web cast today, October 23, 2008 at 1:45 p.m. (Pacific Time), to be broadcasted live over the Internet at: https://www.juniper.net/company/investor/conferencecall.html.

To participate via telephone, the dial-in number is 877-407-0778. Please call ten minutes prior to the scheduled conference call time. The webcast replay of the conference call will be archived on the Juniper Networks website until December 12, 2008.

About Juniper Networks

Juniper Networks, Inc. is the leader in high-performance networking. Juniper offers a high-performance network infrastructure that creates a responsive and trusted environment for accelerating the deployment of services and applications over a single network. This fuels high-performance businesses. Additional information can be found at www.juniper.net.

Juniper Networks and Junos are registered trademarks of Juniper Networks, Inc. in the United States and other countries. The Juniper Networks and Junos logos are trademarks of Juniper Networks, Inc. All other trademarks, service marks, registered trademarks, or registered service marks are the property of their respective owners.

Statements in this release concerning Juniper Networks' business outlook, future financial and operating results and overall future prospects are forward-looking statements that involve a number of uncertainties and risks. Actual results could differ materially from those anticipated in those forward-looking statements as a result of certain factors, including: general economic conditions globally or regionally; business and economic conditions in the networking industry; changes in overall technology spending; the network capacity requirements of communication service providers; contractual terms that may result in the deferral of revenue; increases in and the effect of competition; the timing of orders and their fulfillment; manufacturing and supply chain constraints; ability to establish and maintain relationships with distributors and resellers; variations in the expected mix of products sold; changes in customer mix; customer and industry analyst perceptions of Juniper Networks and its technology, products and future prospects; delays in scheduled product availability; market acceptance of Juniper Networks products and services; rapid technological and market change; adoption of regulations or standards affecting Juniper Networks products, services or the networking industry; the ability to successfully acquire, integrate and manage businesses and technologies; product defects, returns or vulnerabilities; the ability to recruit and retain key personnel; currency fluctuations; litigation; and other factors listed in Juniper Networks' most recent report on Form 10-Q filed with the Securities and Exchange Commission. All statements made in this press release are made only as of the date set forth at the beginning of this release. Juniper Networks undertakes no obligation to update the information in this release in the event facts or circumstances subsequently change after the date of this press release.

Juniper Networks believes that the presentation of non-GAAP financial information provides important supplemental information to management and investors regarding financial and business trends relating to the company's financial condition and results of operations. For further information regarding why Juniper Networks believes that these non-GAAP measures provide useful information to investors, the specific manner in which management uses these measures, and some of the limitations associated with the use of these measures, please refer to the discussion below.