SUNNYVALE, Calif. -- Juniper Networks (NYSE: JNPR), a leader in secure, AI-driven networks, today reported preliminary financial results for the three months ended September 30, 2023 and provided its outlook for the three months ending December 31, 2023.

Third Quarter 2023 Financial Performance

Net revenues were $1,397.8 million, a decrease of 1% year-over-year and a decrease of 2% sequentially.

GAAP operating margin was 6.3%, a decrease from 10.6% in the third quarter of 2022, and a decrease from 9.9% in the second quarter of 2023.

Non-GAAP operating margin was 17.5%, an increase from 17.2% in the third quarter of 2022, and an increase from 16.9% in the second quarter of 2023.

GAAP net income was $76.1 million, a decrease of 37% year-over-year, and an increase of 212% sequentially, resulting in diluted net income per share of $0.24.

Non-GAAP net income was $193.9 million, an increase of 2% year-over-year, and an increase of 3% sequentially, resulting in non-GAAP diluted net income per share of $0.60.

The reconciliation between GAAP and non-GAAP financial measures is provided in a table immediately following the Preliminary Net Revenues by Geographic Region table below.

“We delivered better than expected Q3 results due to another record quarter in our enterprise business, which represented more than 50% of total company revenue for the first time in the company’s history,” said Juniper’s CEO, Rami Rahim. “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.”

“We delivered another quarter of improved profitability in Q3, as non-GAAP gross and operating margin both exceeded the mid-point of our guidance, which enabled us to achieve non-GAAP EPS above the high-end of our outlook,” said Juniper’s CFO, Ken Miller. “We remain committed to delivering greater than 100 basis points of non-GAAP operating margin expansion in 2023 and see the potential to deliver further improvement in 2024.”

Balance Sheet and Other Financial Results

Total cash, cash equivalents, and investments as of September 30, 2023 were $1,418.0 million, compared to $1,254.9 million as of September 30, 2022, and $1,296.4 million as of June 30, 2023.

Cash flows provided by operations for the third quarter of 2023 were $329.2 million, compared to $51.8 million in the third quarter of 2022, and $343.0 million in the second quarter of 2023.

Days sales outstanding in accounts receivable was 60 days in the third quarter of 2023, compared to 65 days in the third quarter of 2022, and 57 days in the second quarter of 2023.

Capital expenditures were $40.8 million, and depreciation and amortization expense was $48.3 million during the third quarter of 2023.

Outlook

These metrics are provided on a non-GAAP basis, except for revenue and share count. Non-GAAP earnings per share is on a fully diluted basis. The outlook assumes that the exchange rate of the U.S. dollar to other currencies will remain relatively stable at current levels.

The macro-economic environment is expected to remain challenged, which has been factored into our outlook. For the fourth quarter of 2023, we expect to see a sequential growth in bookings and the rate of year-over-year decline to further moderate. We continue to see healthy Enterprise momentum and expect orders to grow both in Q4 and on a full-year basis. However, we expect demand from Cloud and Service Provider customers to remain constrained as they continue to digest previously placed orders.

Non-GAAP gross margin is expected to modestly increase in Q4 2023 due to expected lower supply chain costs.

We will continue to manage non-GAAP operating expenses prudently and expect a sequential decline.

With our fourth quarter guidance, total 2023 revenue is expected to grow approximately 5 to 6 percent on a full year basis and non-GAAP operating margin will expand by more than 100 basis points. Additionally, non-GAAP earnings per share are expected to grow double-digits in 2023, meeting our previously stated guidance for revenue and profitability.

Q4 2023

Our guidance for the quarter ending December 31, 2023 is as follows:

• Revenue will be approximately $1,400 million, plus or minus $50 million.
• Non-GAAP gross margin will be approximately 60.0%, plus or minus 1.0%.
• Non-GAAP operating expenses will be approximately $580 million, plus or minus $5 million.
• Non-GAAP operating margin will be approximately 18.6% at the mid-point of revenue guidance.
• Non-GAAP tax rate will be approximately 19.0%.
• Non-GAAP net income per share will be approximately $0.63, plus or minus $0.05. This assumes a share count of approximately 323 million shares.

For more detailed insight on guidance, please refer to the CFO Commentary that can be found on the Investor Relations section of our website at http://investor.juniper.net.

Capital Return

Our Board of Directors has declared a cash dividend of $0.22 per share to be paid on December 22, 2023 to stockholders of record as of the close of business on December 1, 2023. We remain committed to paying our dividend and remain opportunistic with respect to share buybacks.