Juniper Networks, Inc. (NASDAQ: JNPR) today reported financial results for the three months ended June 30, 2008, that included strong revenue and profit growth and improved operating profit margins.
Net revenues for the second quarter of 2008 rose 32 percent on a year-over-year basis to $879.0 million. The Company posted GAAP net income of $120.4 million, or $0.22 per diluted share, and non-GAAP net income of $156.6 million, or $0.28 per diluted share. The non-GAAP EPS figure represents an increase of 40 percent from the $0.20 per diluted share reported for the second 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.
"We're very pleased with the solid results we have delivered for the first half of 2008," stated Scott Kriens, chairman and chief executive officer, Juniper Networks, Inc. "This is a testament to the strength of our product cycles, the power of our portfolio strategy and the expanded opportunities made possible by the early success of the EX-series, which together serve to underscore our improved outlook for the second half of the year."
Juniper's operating margin for the second quarter of 2008 rose to 18.3% on a GAAP basis from 13.0% in the same quarter a year ago. Non-GAAP operating margin for the second quarter of 2008 rose to 23.6% from 20.4% in the second quarter of 2007. The improvement was driven by reduced operating expense as a percentage of net revenues due to the Company's efforts to manage expenses and improve efficiency as well as revenue growth in the Company's infrastructure products, particularly in the Company's T and M series products.
The improved operating margins helped Juniper generate net cash from operations for the second quarter of 2008 of $200.5 million, compared to cash provided by operations of $199.3 million for the same quarter of 2007.
Capital expenditures as well as depreciation and amortization expense during the second quarter of 2008 were $47.4 million and $40.4 million, respectively.
"I'm pleased with the results for the June quarter, which featured both revenue momentum and increasing operating leverage," stated Robyn Denholm, chief financial officer of Juniper Networks. "We are generating more profitable revenue growth and are also driving greater operating efficiency by building expense discipline into our ongoing business model. We are making good progress toward our performance targets."
Q2 Highlights
High-Performance Network Infrastructure
Focused on delivering the fast, reliable and secure network infrastructure customers need to scale their business and reduce operating costs, Juniper continued to achieve milestones that serve to advance the economics and fundamentals of high-performance networking. Most recently, July 7th marked the 10th anniversary of on-time, consecutive, quarterly releases of Juniper's single source operating system, JUNOS® software. JUNOS serves as the foundation of Juniper's single architecture, single operating system, single release train strategy driving user demand for Juniper's end-to-end infrastructure offerings, including the recently released EX3200 and 4200 Ethernet switches, which shipped to more than 100 customers around the world in the quarter. The quarter marked the further expansion of Juniper's Open IP Development Programs with IBM, NEC, Kasenna and Polycom announcing their participation and NTT Advanced Technology announcing its adoption of the Juniper Partner Solution Development Platform to build specialized applications on top of the JUNOS network operating system.
Fueling High-Performance Businesses
In the service provider market, Juniper saw continued interest and demand across the portfolio, from the core to the edge of the network. For the T-series, Hanaro Telecom of Korea deployed the T640 for IPTV and Multiplay services; Virgin Media affirmed their ability to scale their existing 10G network; and T1600 customer shipments included NTT Communications in Japan and ONO in Spain. The MX-series continued to gain momentum, with more than 250 customers in 43 countries around the world deploying the MX-series since its introduction. Customers in the quarter included: Abovenet, Bell Canada, the Internet Initiative Japan (IIJ), Qwest, XO Communications and Yahoo!. Juniper also realized success with the MX- and E-series product combination, announcing Orcon's deployment of the MX960 and E120 and C-series Controllers, TelstraClear's deployment of the E320 and C-series Controllers and WorldxChange's deployment of the E320 for the quality delivery of advanced voice-over-IP and high-value Internet services. Juniper also announced several strategic Cable provider customers, including Comcast, Cox Communications, TeleCable and Cablecom.
In the enterprise market, Juniper continued to see expanding interest in its infrastructure and success as a strategic partner with its high-performance business customers. Commerce Bank, N.A. is a subsidiary of Commerce Bancshares, Inc., a $17 billion regional bank holding company based in Missouri. For more than 140 years, Commerce Bank has been meeting the needs of individuals and businesses with a diversified line of financial services, including business and personal banking, wealth management and estate planning and investments through its subsidiary and affiliated companies. Commerce Bank currently operates in approximately 360 locations in Missouri, Kansas, Illinois, Oklahoma and Colorado. Commerce has selected Juniper high-performance network infrastructure as the foundation of a company-wide network upgrade to their core switching, aggregation and branch office routing infrastructure. In the initial phase, Commerce Bank will deploy MX960 Ethernet services routers, M10i edge routers and J-series services routers at all branch office locations. The bank also plans to deploy the EX-series Ethernet switches into new branch bank locations as it continues its expansion forward. Key considerations driving this success were the scale, performance, reliability and security of Juniper's high-performance network infrastructure running on a single network operating system, JUNOS.
The University of Exeter, one of the U.K.'s leading research universities, has deployed a comprehensive Juniper network infrastructure solution as a foundational element of its campus-wide infrastructure upgrade to provide fast, reliable and secure access, for their more than 14,000 students, to a host of converged applications that include bandwidth intensive, quality-dependent video and audio conferencing. The University has successfully deployed Juniper Networks EX-series Ethernet switches in tandem with the MX-series Ethernet Services Routers, Integrated Security Gateways and Secure Access SSL VPN infrastructure as it strives to sustain its leading-edge research capabilities and pursue its strategic goal to move from 13th in the UK to Top-10. Key considerations in the University's decision included the power of JUNOS software, the Virtual Chassis Technology capabilities of the EX4200 and the ease of integration with other technologies across their IT infrastructure.
In addition, Hastings District Council, the administrative authority for the Hastings region on the east coast of New Zealand, has deployed Juniper high-performance network infrastructure to further its efforts to be known as the place "where business and lifestyle come together". Hastings District Council selected a mix of EX3200 and 4200 Ethernet switches that enabled an easy migration toward a mixed Layer 2 / Layer 3 environment to support a host of applications including IP Telephony across their fiber-based metro area network. Hastings also selected Juniper Networks SSG and Unified Access Control security solutions to provide consistent, enterprise-wide security for the applications and services running across the network. A key consideration in the Council's decision was JUNOS Software with its single source code, single release train and; modular architecture for highly available, scalable and evolutionary software.
Juniper also saw an ongoing adoption and integration into managed end-to-end third party enterprise solutions. HP announced that it has standardized on the Juniper Networks M- and J-series edge and services routers as integral elements of their Halo Collaboration Studio, a fully managed telepresence collaboration solution supported with the Halo Video Exchange Network.
The webcast replay of the Q208 earnings conference call will be archived on the Juniper Networks website until September 12, 2008.
About Juniper Networks, Inc.
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.