After a couple of gloomy quarters, Juniper reported a sunny third quarter that had the company’s stock trading up 7.5 percent after-hours, at $25.50.
It’s indicative of the company’s conscious effort to build a business among cloud providers, branching out from its traditional telco market, CEO Rami Rahim said on today’s conference call with analysts.
That doesn’t mean the company is completely back to normal. Analysts will likely continue to question gross margins, which fell to 62.2 percent in the third quarter, compared with 63.9 percent a year ago, and the company is forecasting 63 percent for the foreseeable future.
But the company’s revenues grew 3 percent year-over-year, an improvement over the previous quarter’s flat performance.
And Juniper is forecasting fourth-quarter revenues of $1.32 billion to $1.38 billion, which would represent growth between zero and 4.5 percent. That’s good considering analysts had predicted a flat fourth quarter for the company, as RBC Capital analyst Mitch Steves writes in a note issued this afternoon.
Juniper is banking on continued growth from cloud providers. They represent about 19 percent of revenues, and that figure should grow to 24 percent by 2019, CFO Ken Miller said on the call.
He also noted that weakness in enterprise sales, a byproduct of a weak economy, is “starting to subside.”
Reversal of Fortune
The third-quarter results reversed what had been a gloomy trend for the company.
The third quarter, though, saw revenues climb 3 percent to $1.29 billion, from $1.25 billion the previous year.
Net income was $172 million, or 45 cents per share, compared with $197.7 million, or 51 cents per share, a year ago.
Non-GAAP earnings per share were 58 cents, beating the analysts’ expectation of 52 cents as reported by Thomson Financial.
Security remains a question mark. Security revenues were down 29 percent year-over-year. Juniper attributed the decline to practically everybody: enterprise, telecom, and cloud providers all contributed to the year-over-year difference, officials said.
Rahim admitted that security remains “in transition.” But he pointed out that the company showed signs of life earlier this month at its Nxtwork 2016 event, launching the Junos Space Policy Enforcer and two new firewalls that he said are “optimized for hybrid cloud environments.”
In terms of other specific products, the QFX line of data center switches grew 50 percent in revenues year-over-year (Juniper did not specify the actual size of QFX revenues). Rahim specifically name-checked members of the QFX 10000 family, high-end data center spine switches that launched in 2015.
“We’re now participating in RFQs and RFPs that we never had access to,” Rahim said. But he also noted that the QFX’s popularity extends beyond just cloud providers, into Juniper’s telecom customers and large enterprises.
Revenues for Juniper’s older EX line of switches declined both year-over-year and sequentially, officials noted, again not giving specific numbers.
Routing remains Juniper’s bread-and-butter. Router revenues in the third quarter were $620 million, or 48 percent of the total.