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Juniper Networks Reports Preliminary Fourth Quarter and Full Year 2008 Financial Results

Q4 Financial Highlights

  • Revenue: $923.5 million, up 14% from Q4'07
  • Operating Margin: 20.6% (GAAP); 24.5% (non-GAAP)
  • Net Income: $132.5 million (GAAP); $169.0 million (non-GAAP)
  • EPS: $0.25 (diluted, GAAP); $0.32 (diluted, non-GAAP), up 19% from Q4'07

2008 Financial Highlights

  • Revenue: $3.57 billion, up 26% from 2007
  • Operating Margin: 19.5% (GAAP); 24.2% (non-GAAP)
  • Net Income: $511.7 million (GAAP); $650.8 million (non-GAAP)
  • EPS: $0.93 (diluted, GAAP); $1.18 (diluted, non-GAAP), up 36% from 2007

Preliminary Fourth Quarter and Full Year 2008 Financial Results

SUNNYVALE, Calif., January 29, 2009 - Juniper Networks, Inc. (NASDAQ: JNPR) today reported preliminary financial results for the three months and twelve months ended December 31, 2008, that included record level annual revenue and improved year-over-year profitability.

Net revenue for the fourth quarter of 2008 increased 14% on a year-over-year basis to $923.5 million. For the twelve months ended December 31, 2008, Juniper's revenue increased 26% on a year-over-year basis to $3.57 billion.

Juniper posted GAAP net income of $132.5 million, or $0.25 per diluted share, and non-GAAP net income of $169.0 million, or $0.32 per diluted share for the fourth quarter of 2008. The non-GAAP EPS figure represents an increase of 19% from the $0.27 per diluted share reported for the fourth quarter of 2007. For the twelve months ended December 31, 2008, GAAP net income was $511.7 million, or $0.93 per diluted share, and non-GAAP net income was $650.8 million, or $1.18 per diluted share. The non-GAAP EPS figure represents an increase of 36% from the $0.87 per diluted share for the twelve months ended December 31, 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.

"2008 was a year of record revenue for Juniper with year-over-year revenue growing 26 percent and non-GAAP diluted earnings per share growing 36 percent. We strengthened our product portfolio, captured market share, and improved operating efficiency and execution," stated Kevin Johnson, chief executive officer of Juniper Networks.

"Even in this tough economy, we managed to grow year-over-year quarterly revenue by 14% and non-GAAP diluted earnings per share by 19%. We continue to play offense and grow market share while at the same time taking action to responsibly manage our cost structure. The long-term growth fundamentals of high performance networking remain strong and by strengthening our product portfolio and focusing on the customer, Juniper is positioned for accelerated growth once market conditions improve."

Juniper's operating margin for the fourth quarter of 2008 increased to 20.6% on a GAAP basis from 18.2% in the same quarter a year ago. Non-GAAP operating margin for the fourth quarter of 2008 increased to 24.5% from 23.5% in the fourth quarter of 2007. For the fiscal year 2008, Juniper's operating margin increased to 19.5% on a GAAP basis from 14.4% for the prior fiscal year. Non-GAAP operating margin for the fiscal year 2008, increased to 24.2% from 21.3% in the fiscal year 2007. The improvement was achieved through continued cost discipline and improved operating efficiency.

Juniper generated net cash from operations for the fourth quarter of 2008 of $215.1 million, compared to cash provided by operations of $244.4 million for the same quarter of 2007. For the twelve months ended December 31, 2008, Juniper generated net cash from operations of $875.2 million, compared to $786.5 million for the same period in 2007.

Capital expenditures as well as depreciation and amortization expense during the fourth quarter of 2008 were $42.9 million and $37.8 million, respectively. Capital expenditures as well as depreciation and amortization expense during 2008 were $164.6 million and $172.5 million, respectively.

"Juniper's results are a testament to our continued focus on both the technology investments that drive the competiveness of our products and on our operational execution," stated Robyn Denholm, chief financial officer of Juniper Networks.

"Supported by a healthy balance sheet with no debt and cash and cash equivalents of $2.0 billion, our objective is to emerge from this challenging economic environment both stronger and more efficient. We will get there by aggressively driving the core elements of our operational improvement plan and investing in key technology initiatives," concluded Denholm.

Japan Distributor Review

In December 2008, during the course of performing routine distributor audits, Juniper became aware of facts that caused it to question the accuracy of point of sale reports of a few distributors in Japan with respect to a small number of transactions. As a result, Juniper commenced a review of its revenue from sales through distributors in Japan. Based on its review to date, Juniper has deferred an additional $3.0 million of revenue for sales through distributors in Japan. Total preliminary revenue for sales through distributors in Japan, after the $3.0 million deferral, for 2008 was approximately $53.0million and approximately $13.0 million in the quarter ended December 31, 2008. Because the review is ongoing, Juniper has not made a final determination of its revenue from distributor sales in Japan and therefore these preliminary results could change. Juniper currently expects to complete the review prior to the filing of its Annual Report on Form 10-K.

Q408 Highlights

In the fourth quarter, Juniper made several announcements to help customers speed deployment of new services and reduce operational costs and complexity. The Intelligent Services Edge (ISE), a fully integrated portfolio of new hardware and software features, leveraging JUNOS and the M- and MX-series platforms, enable customers to create new services and new revenue generation models. The Juniper Networks Data Center Infrastructure Solutions can significantly reduce network complexity and total cost of ownership by up to 52 percent in capital expenditures, up to 44 percent in power, up to 44 percent in cooling and up to 55 percent in rack space in the data center. Juniper also announced the formation of the Energy Consumption Rating (ECR) Initiative, which provides a framework for measuring the energy efficiency of network and telecom devices. Juniper Networks, Ixia, and Lawrence Berkeley National Labs collaborated to develop this vendor-neutral energy efficiency metric to give customers better methods to estimate, project and regulate energy efficiency of telecom equipment.

Juniper has done business with all of the Top 100 global Service Providers. Examples from the quarter include customers such as Singapore Telecommunications Limited (SingTel), who is using Juniper's security solutions to enable their Managed Security Services offerings, and Internet Initiative Japan, who increased network performance and lowered power consumption by deploying Juniper's Ethernet services routers. Juniper continues to gain traction with the M- and MX-series, which was enhanced by the announcement of the Intelligent Services Edge, and is deepening relationships with its service provider customers worldwide, such as Deutsche Telekom, Telenor, and Telecom Italia, with these products.

Juniper's emerging markets focus is yielding new customers, such as Divona Telecom, one of Africa's leading satellite and WiMAX telecom operators, who selected the MX-series Ethernet Services Routers to create a high-speed, service-enabling backhaul network to meet growing demand for its wireless broadband services portfolio. The deployment is designed to address Divona's requirement to increase network capacity, reduce operational costs, and accelerate the delivery of advanced fixed and mobile wireless broadband services to the operator's premium corporate customers.

Enterprise customers are increasingly leveraging Juniper's portfolio to simplify their network infrastructure and achieve the flexible and secure environment they need to support their business objectives. For example, Scottrade leverages Juniper's portfolio of high-performance routing and security solutions to ensure they are able to securely scale their networks to quickly roll out differentiated financial services to their customers. The U.S. Department of Energy (DOE) now uses Juniper MX-series routers, EX-series switches to comprise the core of ESnet, a high-bandwidth, high-availability network allowing 40 major DOE research sites and other research institutions to share and utilize large-volume data from the world's leading "big science" projects. Another example comes from the Laboratory of Neuro Imaging (LONI) at the University of California Los Angeles, who selected Juniper's MX-series routers and EX-series switches for their network upgrade to simplify operations and scale performance. They also rely on Juniper's Secure Access SSL VPN appliances to enable researchers located around the world to securely collaborate.

2008 Highlights

Leveraging the powerful JUNOS® operating system, Juniper introduced several new products and enhancements throughout the year to continue to deliver the flexibility, simplicity and scale customers require to support their ongoing success. Juniper introduced the EX-series of Ethernet switches, setting new benchmarks for high-performance network infrastructure in the enterprise, and delivering the operational simplicity, carrier-class reliability, and infrastructure consolidation and integration customers need to accelerate the deployment of business-enabling applications and services across the network. Juniper also introduced other industry-first solutions with the JCS 1200, the industry's first high-performance Control Plane Scaling Platform, and a new family of IDP solutions, which delivered industry-leading real-world throughput at 10 Gbps. The SRX dynamic services gateways also broke new ground, representing a new category of extensible networking and security products designed to help high-performance businesses tightly align rapidly changing business requirements with network technology investments to accelerate new service deployments.

Conference Call Information

Juniper Networks will host a conference call web cast today, January 29, 2009 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, in the U.S. the toll free dial-in number is 877-407-8033, outside of the U.S. dial 201-689-8033. 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 March 13, 2009.

About Juniper Networks

Juniper Networks is in the business of network innovation. From devices to data centers, from consumers to cloud providers, Juniper Networks delivers the software, silicon and systems that transform the experience and economics of networking. Additional information can be found at Juniper Networks (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.