Networking infrastructure supplier Juniper Networks Inc. beat forecasts on earnings and revenue as it benefited from higher spending by clients, sending its stock up more than 6% in the after-hours trading session today.
Juniper’s results, which were reported on a preliminary basis, provide further evidence of a recovery in cloud computing and other enterprise technology segments. With signs that the economy might be stabilizing, customers look ready to beef up investments in their most critical IT infrastructure.
The company reported earnings before certain costs such as stock compensation of 60 cents per share, coming in ahead of Wall Street’s forecast of 55 cents per share. Revenue for the quarter dropped 1% to $1.4 billion, but it was better than the $1.39 billion in sales analysts had modeled. Net income rose 2% to $193.9 million, while operating margin improved both sequentially and year-over-year to 17.5%.
Juniper is a major supplier of computer networking hardware such as routers and Ethernet switches. It’s one of the main rivals to Cisco Systems Inc., and, like that company, also has a sizable business selling network management software for enterprises.
Juniper Chief Executive Rami Rahim (pictured) said the earnings and revenue beat was driven by a record quarter in the company’s enterprise business, which accounted for more than 50% of its total sales for the first time. ““While we are continuing to experience headwinds from our cloud and service provider customers, many of which are still digesting prior purchases, our enterprise momentum remains strong and provides confidence in our future growth prospects,” he said.
The enterprise business displayed impressive growth, with revenue rising 37% to $709.4 million in the quarter. That helped offset disappointing performances elsewhere, such as with the cloud business, where sales fell 28% to $269.6 million, and the service provider unit, which saw revenue drop 20% to $418.8 million.
The company also reported free cash flow of $1.418 billion, up from $1.25 billion a year earlier. Its operating cash flow was $329.2 million, up from $51.8 million last year.
For the next quarter, Juniper said it’s expecting revenue of around $1.4 billion, plus or minus $50 million. That falls just short of Wall Street’s target of $1.41 billion, but the after-hours stock boost suggests investors are willing to forgive the cautious outlook. The company is also forecasting earnings of 63 cents per share, just ahead of the Street’s call for 62 cents per share.
During the quarter, the company announced plans to lay off 440 staff at a cost of around $59 million. The majority of those layoffs are expected to happen before the end of its fiscal 2024 first quarter. At the time, the company said the plan is necessary for it to continue prudently managing its operating expenses and improve its operating margins.
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