Juniper Networks Reports Preliminary Fourth Quarter and Fiscal Year 2023 Financial Results
Juniper Networks (NYSE: JNPR), a leader in secure, AI-Native networks, today reported preliminary financial results for the three months and fiscal year ended December 31, 2023. Proposed Merger with H...
SUNNYVALE, Calif.: Juniper Networks (NYSE: JNPR), a leader in secure, AI-Native networks, today reported preliminary financial results for the three months and fiscal year ended December 31, 2023.
Proposed Merger with Hewlett Packard Enterprise
As announced on January 9, 2024, Hewlett Packard Enterprise (“HPE”) plans to acquire Juniper Networks in an all-cash transaction for $40.00 per share, representing an equity value of approximately $14 billion. The transaction is currently expected to close in late calendar year 2024 or early calendar year 2025, subject to receipt of regulatory approvals, approval of the transaction by Juniper Networks shareholders, and satisfaction of other customary closing conditions.
Fourth Quarter 2023 Financial Performance
Net revenues were $1,364.8 million, a decrease of 6% year-over-year, and a decrease of 2% sequentially.
GAAP operating margin was 9.2%, a decrease from 14.0% in the fourth quarter of 2022, and an increase from 6.3% in the third quarter of 2023.
Non-GAAP operating margin was 18.3%, a decrease from 19.1% in the fourth quarter of 2022, and an increase from 17.5% in the third quarter of 2023.
GAAP net income was $124.3 million, a decrease of 31% year-over-year, and an increase of 63% sequentially, resulting in diluted earnings per share of $0.38.
Non-GAAP net income was $196.9 million, a decrease of 8% year-over-year, and an increase of 2% sequentially, resulting in non-GAAP diluted earnings per share of $0.61.
Full-Year 2023 Financial Performance
Net revenues were $5,564.5 million, an increase of 5% year-over-year.
GAAP operating margin was 8.4%, a decrease from 9.8% in fiscal year 2022.
Non-GAAP operating margin was 16.9%, an increase from 15.7% in fiscal year 2022.
GAAP net income was $310.2 million, a decrease of 34% year-over-year, resulting in diluted earnings per share of $0.95, a decrease of 34% year-over-year. The year-over-year decrease was primarily due to higher operating expenses which include higher restructuring charges.
Non-GAAP net income was $736.4 million, an increase of 15% year-over-year, resulting in diluted earnings per share of $2.26, an increase of 16% year-over-year.
The reconciliation between GAAP and non-GAAP financial measures is provided in a table immediately following the Preliminary Net Revenues by Geographic Region table below.
“We delivered record revenue results in 2023 and grew our business on a year-over-year basis for a third consecutive year,” said Juniper’s CEO, Rami Rahim. “These results reflect the strength of our enterprise business, which not only delivered a second consecutive year of solid double-digit revenue growth, but also achieved positive product order growth in the fourth quarter and on a full-year basis.”
“We achieved record non-GAAP earnings per share in 2023,” said Juniper’s CFO, Ken Miller. “This was achieved through a combination of healthy revenue growth, improved non-GAAP gross margin and disciplined cost management, which enabled us to exceed our goal of delivering at least 100 basis points of non-GAAP operating margin improvement in 2023.”
Balance Sheet and Other Financial Results
Total cash, cash equivalents, and investments as of December 31, 2023 were $1,324.3 million, compared to $1,230.0 million as of December 31, 2022, and $1,418.0 million as of September 30, 2023.
Net cash flows provided by operations for the fourth quarter of 2023 was $9.1 million, compared to $119.6 million in the fourth quarter of 2022, and $329.2 million in the third quarter of 2023.
Days sales outstanding in accounts receivable was 69 days in the fourth quarter of 2023, compared to 76 days in the fourth quarter of 2022, and 60 days in the third quarter of 2023.
Capital expenditures were $35.4 million, and depreciation and amortization expense was $47.3 million during the fourth quarter of 2023.
Capital Return
Our Board of Directors has declared a cash dividend of $0.22 per share to be paid on March 22, 2024 to stockholders of record as of the close of business on March 1, 2024. We remain committed to paying our dividend; however we have agreed to suspend repurchase of our shares in accordance with the terms of the merger agreement with HPE.
Fourth Quarter and Fiscal Year 2023 Financial Commentary Available Online
A CFO Commentary reviewing Juniper Networks’ fourth quarter 2023 and fiscal year 2023 financial results will be published on Juniper Networks’ website at http://investor.juniper.net.
In light of the proposed transaction with HPE, and as is customary during the pendency of an acquisition, Juniper Networks will not be providing financial guidance in conjunction with its fourth quarter 2023 earnings release.
About Juniper Networks
Juniper Networks believes that connectivity is not the same as experiencing a great connection. Juniper's AI-Native Networking Platform is built from the ground up across the AIOps layer and our systems to fully harness the power of AI. From real-time fault isolation to proactive anomaly detection and self-driving corrective actions, it provides campus, branch, data center, and WAN operations with next-level predictability, reliability, and security. Additional information can be found at Juniper Networks (www.juniper.net) or connect with Juniper on X (formerly Twitter), LinkedIn and Facebook.
Investors and others should note that Juniper Networks announces material financial and operational information to its investors using its Investor Relations website, press releases, SEC filings and public conference calls and webcasts. Juniper Networks also intends to use the X (formerly Twitter) account @JuniperNetworks and the Juniper Networks’ blogs as a means of disclosing information about Juniper Networks and for complying with its disclosure obligations under Regulation FD. The social media channels that Juniper Networks intends to use as a means of disclosing information described above may be updated from time to time as listed on Juniper Networks’ Investor Relations website.
Juniper Networks, the Juniper Networks logo, Juniper, Junos, and other trademarks are registered trademarks of Juniper Networks, Inc. and/or its affiliates in the United States and other countries. Other names may be trademarks of their respective owners.
Safe Harbor; Forward-Looking Statements
Statements in this release concerning Juniper Networks’ business, economic and market outlook, our expectations regarding our liquidity and capital return program; deal, customer and product mix; costs and supply constraints; backlog; customer demand; and our overall future prospects are forward-looking statements within the meaning of the Private Securities Litigation Reform Act that involve a number of uncertainties and risks. Actual results or events could differ materially from those anticipated in those forward-looking statements as a result of several factors, including: the completion of the proposed transaction with HPE on anticipated terms and timing or at all, including obtaining stockholder and regulatory approvals and other conditions to the completion of the transaction; the fact that if the proposed transaction is completed, Juniper stockholders will forego the opportunity to realize the potential long-term value of the successful execution of Juniper’s current strategy as an independent company, which will also be affected by the ability of HPE to integrate and implement its plans, forecasts and other expectations with respect to Juniper’s business after the completion of the proposed transaction and realize additional opportunities for growth and innovation; the occurrence of any event, change or other circumstance or condition that could give rise to the termination of the merger agreement; Juniper’s ability to implement its business strategies; potential significant transaction costs associated with the proposed transaction; the risks related to HPE’s financing of the proposed transaction; potential litigation or regulatory actions relating to the proposed transaction; the risk that disruptions from the proposed transaction will harm Juniper’s business, including current plans and operations, and risks related to diverting management’s attention from Juniper’s ongoing business operations and relationships; the ability of Juniper to retain and hire key personnel; potential adverse business uncertainty resulting from the announcement, pendency or completion of the proposed transaction, including restrictions during the pendency of the proposed transaction that may impact Juniper’s ability to pursue certain business opportunities or strategic transactions; legal, regulatory, tax and economic developments affecting Juniper’s business; the unpredictability and severity of catastrophic events, including, but not limited to, acts of terrorism, outbreak of war or hostilities or current or future pandemics or epidemics, as well as Juniper’s response to any of the aforementioned factors; general economic and political conditions globally or regionally, including the impact of a U.S. federal government shutdown or sovereign debt default and adverse changes in China-Taiwan relations and any impact due to armed conflicts (such as the continuing conflict between Russia and Ukraine, the Israel-Hamas war, and escalating tensions in the Red Sea in connection with attacks by the Houthi to disrupt shipments, as well as governmental sanctions imposed in response); rising interest rates; inflationary pressures; monetary policy shifts; recession risks; business and economic conditions in the networking industry; changes in overall technology spending by our customers; the network capacity and security requirements of our customers; contractual terms that may result in the deferral of revenue; the timing of orders and their fulfillment; continuing manufacturing and supply chain challenges and logistics costs, constraints, changes or disruptions; availability and pricing of key product components, such as semiconductors; delays in scheduled product availability; order cancellations; adoption of or changes to laws, regulations, standards or policies affecting our operations, products, services or the networking industry; product defects, returns or vulnerabilities; significant effects of tax legislation and judicial or administrative interpretation of new tax regulations, including the potential for corporate tax increases and changes to global tax laws; legal settlements and resolutions, including with respect to enforcing our proprietary rights; the potential impact of activities related to the execution of capital return, restructurings and product rationalization; the impact of import tariffs and changes thereto; currency exchange rates; and other factors listed in Juniper Networks’ most recent report on Form 10-Q or 10-K filed with the Securities and Exchange Commission. Note that our estimates as to the tax rate on our business are based on current tax law and regulations, including current interpretations thereof, and could be materially affected by changing interpretations as well as additional legislation and guidance. All statements made in this 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 made in this release in the event facts or circumstances subsequently change after the date of this release. We have not filed our Form 10-K for the year ended December 31, 2023. As a result, all financial results described in this earnings release should be considered preliminary, and are subject to change to reflect any necessary adjustments or changes in accounting estimates, that are identified prior to the time we file our Form 10-K.
Additional Information and Where to Find It
In connection with the proposed transaction between Juniper Networks and HPE, Juniper Networks will file with the SEC a proxy statement, the definitive version of which will be sent or provided to Juniper Networks stockholders. Juniper Networks may also file other documents with the SEC regarding the proposed transaction. This document is not a substitute for the proxy statement or any other document which Juniper Networks may file with the SEC. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND RELATED MATTERS. Investors and security holders may obtain free copies of the Proxy Statement (when it is available) and other documents that are filed or will be filed with the SEC by Juniper Networks through the website maintained by the SEC at www.sec.gov, Juniper Networks’ investor relations website at https://investor.Juniper.net or by contacting the Juniper investor relations department at the following:
Jess Lubert
Juniper Networks
(408) 936-3734
jlubert@juniper.net
Participants in the Solicitation
Juniper Networks and certain of its directors and executive officers may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction with HPE. Information regarding Juniper Networks’ directors and executive officers, including a description of their direct interests, by security holdings or otherwise, is contained in Juniper Networks’ proxy statement for its 2023 annual meeting of stockholders, which was filed with the SEC on March 29, 2023. Juniper Networks stockholders may obtain additional information regarding the direct and indirect interests of the participants in the solicitation of proxies in connection with the proposed transaction, including the interests of Juniper Networks directors and executive officers in the transaction, which may be different than those of Juniper Networks stockholders generally, by reading the Proxy Statement and any other relevant documents that are filed or will be filed with the SEC relating to the proposed transaction. You may obtain free copies of these documents using the sources indicated above.
To the extent holdings of Juniper Networks’ securities by its directors or executive officers have changed since the amounts set forth in such documents, such changes have been or will be reflected on Initial Statements of Beneficial Ownership on Form 3 or Statements of Beneficial Ownership on Form 4 filed with the SEC. Additional information regarding the identity of potential participants, and their direct or indirect interests, by security holdings or otherwise, will be included in the proxy statement relating to the proposed transaction when it is filed with the SEC.
Use of Non-GAAP Financial Information
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 Juniper Networks’ 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 of Non-GAAP Financial Measures" section of this press release. The following tables and reconciliations can also be found on our Investor Relations website at http://investor.juniper.net.
Juniper Networks, Inc. Preliminary Condensed Consolidated Statements of Operations (in millions, except per share amounts) (unaudited) | |||||||||||||||
| Three Months Ended |
| Twelve Months Ended | ||||||||||||
|
| 2023 |
|
|
| 2022 |
|
|
| 2023 |
|
|
| 2022 |
|
Net revenues: |
|
|
|
|
|
|
| ||||||||
Product | $ | 858.6 |
|
| $ | 988.3 |
|
| $ | 3,632.5 |
|
| $ | 3,539.9 |
|
Service |
| 506.2 |
|
|
| 460.5 |
|
|
| 1,932.0 |
|
|
| 1,761.3 |
|
Total net revenues |
| 1,364.8 |
|
|
| 1,448.8 |
|
|
| 5,564.5 |
|
|
| 5,301.2 |
|
Cost of revenues: |
|
|
|
|
|
|
| ||||||||
Product |
| 410.4 |
|
|
| 472.7 |
|
|
| 1,781.6 |
|
|
| 1,761.7 |
|
Service |
| 147.2 |
|
|
| 149.1 |
|
|
| 581.0 |
|
|
| 581.2 |
|
Total cost of revenues |
| 557.6 |
|
|
| 621.8 |
|
|
| 2,362.6 |
|
|
| 2,342.9 |
|
Gross margin |
| 807.2 |
|
|
| 827.0 |
|
|
| 3,201.9 |
|
|
| 2,958.3 |
|
Operating expenses: |
|
|
|
|
|
|
| ||||||||
Research and development |
| 289.1 |
|
|
| 269.2 |
|
|
| 1,144.4 |
|
|
| 1,036.1 |
|
Sales and marketing |
| 310.9 |
|
|
| 299.0 |
|
|
| 1,233.9 |
|
|
| 1,133.4 |
|
General and administrative |
| 62.0 |
|
|
| 57.4 |
|
|
| 255.5 |
|
|
| 249.5 |
|
Restructuring charges (benefits) |
| 19.5 |
|
|
| (2.1 | ) |
|
| 98.0 |
|
|
| 20.2 |
|
Total operating expenses |
| 681.5 |
|
|
| 623.5 |
|
|
| 2,731.8 |
|
|
| 2,439.2 |
|
Operating income |
| 125.7 |
|
|
| 203.5 |
|
|
| 470.1 |
|
|
| 519.1 |
|
Gain (loss) on privately-held investments, net (1) (2) |
| (5.3 | ) |
|
| 14.6 |
|
|
| (97.3 | ) |
|
| 20.4 |
|
Gain on divestiture |
| — |
|
|
| — |
|
|
| — |
|
|
| 45.8 |
|
Other expense, net (1) |
| (2.8 | ) |
|
| (13.1 | ) |
|
| (23.8 | ) |
|
| (49.0 | ) |
Income before income taxes and loss from equity method investment |
| 117.6 |
|
|
| 205.0 |
|
|
| 349.0 |
|
|
| 536.3 |
|
Income tax provision (benefit) |
| (10.4 | ) |
|
| 22.4 |
|
|
| 29.2 |
|
|
| 60.5 |
|
Loss from equity method investment, net of tax |
| 3.7 |
|
|
| 2.2 |
|
|
| 9.6 |
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