Juniper Q4 revenue rises 2% to $1.14 billion sequentially with edge router growth

Juniper Networks (NYSE: JNPR) on Thursday reported that Q4 2012 revenues rose 2 percent sequentially to $1.14 billion from Q3 2012 and up 2 percent year-over-year from Q4 2011 despite soft enterprise sales.

Operating margin increased to 11.5 percent on a GAAP basis from 3.8 percent in Q3 2012, but down year-over-year from 11.9 percent. Fourth quarter GAAP net income was $96 million, or $0.19 per diluted share.

Total 2012 revenue declined on a year-over-year basis to $4.36 billion.

Here's a breakdown of the Juniper's key operating metrics:

  • Regional revenue: Driven by U.S. service provider growth, the Americas market revenues rose 8 percent sequentially and 16 percent year-over-year. However, this growth was partially offset by a decrease in the U.S. enterprise segment due to weak federal government sales. And despite a challenging economic environment, EMEA revenue rose 5 percent sequentially, but was down 15 percent year-over-year. Finally, APAC revenue declined 18 percent sequentially due to a decline in revenue from one of the company's major service provider customers in China.

  • Platform Systems Division: Juniper's Platform Systems Division revenue was $930 million, up 4 percent both sequentially and year-over-year. Driven by sales of its MX and PTX platforms, router product revenue was $514 million, up 5 percent sequentially and 7 percent year-over-year. Juniper also reported "significant growth" in sales of its MX platform to service providers and said the growth of these platforms offset the "anticipated decline in older M and E Series products." The vendor added that it is seeing continual demand from service providers for Edge routing platforms.

  • Software Systems Division: SSD revenue in Q4 2011 was $211 million, down 6 percent sequentially and 7 percent year-over-year. Due to the ongoing decline in the company's ScreenOS enterprise firewall business, total security product revenue was $170 million, down 4 percent sequentially and 8 percent year-over-year.

The vendor reported that it saw growth from its five new product lines--ACX, QFabric, PTX, T4000 and MobileNext. It expects to achieve a quarterly revenue run rate of $150 million on these new products.

Even though Juniper did introduce a number of new products throughout 2012, it also continued to see strong demand for existing products, including the SRX, from key customers like Verizon (NYSE: VZ).

"Compared to 2011, SRX grew 17 percent, EX grew 8 percent and MX grew 7 percent," said Robyn Denholm, chief financial officer and executive vice president for Juniper, during the earnings call. "Verizon accounted for over 10 percent of Juniper's total revenue, both in the fourth quarter and for the full year. Verizon continues to be a strategic customer and deploys many of our routing, switching and security products across both their wired and wireless networks."

Keeping on the innovation path, one technology area that Juniper is also looking to take advantage of throughout 2013 is software defined networking (SDN). While it remained relatively silent about the topic throughout 2012, the vendor recently laid out its six-part SDN vision.

"There's been a lot of talk, and in many cases, a lot of hype around SDN," said Kevin Johnson, CEO of Juniper.  "We were relatively quiet on the topic in 2012, but in the background, we were hard at work on our strategy and plans. We recognize this is an inflection point in the industry, and we share the view that SDN will play a transformational role in networking."

Looking towards Q1 2013, Juniper expects to see a typical seasonal decline, particularly in the enterprise market. It has forecast Q1 2013 revenues to fall in the range of $1.05 billion to $1.07 billion.

Financial analysts forecast Juniper's average revenues to be $1.07 billion.

"The macro and spending environments remain mixed with the beginning signs of increased project activity in service providers, offset somewhat by weakness in U.S. federal and other parts of the enterprise," Johnson said. "The macroenvironment in Europe remains challenging."

The company's stock was listed at $21.50 on the New York Stock Exchange in extended trading after Q4 results were posted.

For more:
- see the earnings release
- here's the earnings call transcript (sub. req.)

Special report: Wireline telecom earnings in the fourth quarter of 2012

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