Juniper sees its recent win at AT&T (NYSE: T) for its Contrail SDN product set gave it confidence about the service provider market, but also validates its strategy that's getting interest from other service providers.
Speaking to investors during the third-quarter earnings call, Rami Rahim, CEO of Juniper said that "AT&T was a landmark deal for us this quarter."
Joining other large vendors like Cisco and Ericsson, Juniper is participating in a number of projects at AT&T as part of its SDN and NFV movement.
These include AT&T's Network on Demand capabilities for its Carrier Ethernet service and Managed Internet on Demand services. As a follow-on to the AT&T Switched Ethernet Services via Network on Demand, the new on-demand managed Internet service uses NFV to virtualize access routers in its core network, making it easy and quick for its customers to set up and manage their network.
Leveraging the Contrail platform, Juniper is also participating in the effort to help provide the network automation in AT&T's next-gen central offices.
Rahim said that while AT&T was an important win, the vendor is having similar discussions with other service provider customers and even at large enterprises.
"One of the wins that we are very proud of is with AT&T, but let me say that pretty much every strategic discussion that we're having with our customers around the world, especially on the service provider side, but also in some larger enterprises, are looking at transforming the way in which they manage their networks to simplify the operations of those networks and to add far greater agility in how they deliver services over those networks," Rahim said. "They are thinking about a new architectural approach and Contrail is part of that discussion."
With AT&T being a big customer win during the quarter, the vendor reported gains in its three main segments -- routing, switching and security.
Routing product revenue was $605 million, up 13 percent year-over-year but flat sequentially from the second-quarter. Juniper said the year-over-year increase was due to growth from telecom customers in EMEA, continued momentum from Cloud Providers, and strength in Enterprise across all geographies. On a sequential basis, the increase from telecom and National Government was offset by declines from cloud and cable providers.
"With respect to routing, the trends that we're seeing in routing in the second-half are largely playing out as we have been describing over the last several quarters," Rahim said. "We said that there should be some improvement in telco spending in the second-half of the year. And that's essentially happening. We did see that improvement, not only in the tier 1, but also in non-tier 1 service providers."
Rahim added that while routing booking was healthy during the quarter, "the softness was essentially the result of cloud, difficult compared relative to Q2 because of the revenue recognition to book that we had in that quarter."
It also saw year-over-year gains in switching and security product revenue. Switching product revenue rose 30 percent year-over-year to $201 million due to data center build outs from its enterprise, cloud and telecom provider customers.
Finally, Security product revenues were $120 million, up 13 percent year-over-year and 12 percent sequentially. It said the year-over-year increase was primarily due to growth in Enterprise, Cloud Providers and Telecom.
From an overall financial perspective, Juniper's third quarter 2015 revenues were $1.25 billion, up 11 percent year-over-year and 2 percent sequentially.
Juniper's operating margin for the third quarter of 2015 increased to 20.7 percent on a GAAP basis, a year-over-year increase of 5.4 points and an increase of 0.8 points sequentially.
Looking toward the fourth-quarter, Juniper has forecast revenues to be about $1.29 billion, plus or minus $20 million.
Shares of Juniper were trading at $30.86, up $1.10, or 3.70 percent, in Friday morning on the Nasdaq stock exchange.
- see the earnings release
- here's the earnings transcript (sub req.)
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