JUNIPER NETWORKS INVESTOR RELATIONS. September, Juniper Networks

Transcription

1 JUNIPER NETWORKS INVESTOR RELATIONS September, 2018

2 Forward Looking Statements Statements in this presentation concerning the market landscape and Juniper Networks' business outlook; economic and market outlook; future financial and operating results; the expected impact of architectural transitions and timing of deployments with large customers; execution of our capital return program; expectations with respect to market trends; our future strategy; strength of certain customer segments; ability to expand business opportunities, including in hyperscale-switching and 5G buildouts; expectations with respect to growth; introduction of future products; focus on cost improvements; the strength of our solution portfolio and strategy; our ability to improve profitability and make necessary investments; and overall future prospects are forward-looking statements within the meaning of the Private Securities Litigation Reform Act that involve a number of uncertainties and risks. Actual results or events could differ materially from those anticipated in those forward-looking statements as a result of several factors, including: general economic and political conditions globally or regionally; business and economic conditions in the networking industry; changes in overall technology spending by our customers; the network capacity requirements of our customers and, in particular, cloud and communication service providers; contractual terms that may result in the deferral of revenue; the timing of orders and their fulfillment; manufacturing and supply chain constraints, changes or disruptions; availability of product components; delays in scheduled product availability; adoption of regulations or standards affecting Juniper Networks products, services or the networking industry; the impact of potential import tariffs; and other factors listed in Juniper Networks most recent report on Form 10-Q and 10-K filed with the Securities and Exchange Commission. All statements made in this presentation are made only as of the date of this presentation. Juniper Networks undertakes no obligation to update the information in this presentation in the event facts or circumstances subsequently change. Use of Non-GAAP Financial Measures This presentation references non-gaap financial measures, including (without limitation) those related to diluted earnings per share. For important commentary on why Juniper Networks considers non-gaap information a useful view of the company s financial results and for reconciliations of these measures to GAAP financial measures, please refer to the Investor Relations section of our website at With respect to future financial guidance provided on a non-gaap basis, we exclude estimates for amortization of intangible assets, share-based compensation expenses, acquisition-related charges, restructuring benefits or charges, impairment charges, litigation settlement benefits or charges and resolution charges, supplier component remediation charges and recoveries, gain or loss on equity investments, retroactive impact of certain tax settlements, significant effects of tax legislation and judicial or administrative interpretation of tax regulations, including the impact of income tax reform, nonrecurring income tax adjustments, valuation allowance on deferred tax assets, and the income tax effect of non-gaap exclusions, and do not include the impact of any future acquisitions, divestitures, or joint ventures that may occur in the period. Juniper is unable to provide a reconciliation of non- GAAP guidance measures to corresponding GAAP measures on a forward-looking basis without unreasonable effort due to the overall high variability and low visibility of most of the foregoing items that have been excluded. The items that are being excluded are difficult to predict and a reconciliation could result in disclosure that would be imprecise or potentially misleading. Material changes to any one of these items could have a significant effect on our guidance and future GAAP results. 2

3 THE INDUSTRY IS CHANGING-- FAST Move to Cloud 4.8 clouds used to run applications, on average Digitization 163 ZB of data created WW by 2025 Mobile-first Architectures will Dominate 60x is how much faster 5G is estimated to be over 4G IoT Bringing Opportunities and Issues 75B connected devices by 2025 A.I. has Emerged 72% of business leaders termed A.I. as a business advantage Fighting Cybercrime and Losing $8T will be spent on cybercrime in Source: Rightscale, IDC, Verizon/Ericsson tests, IHS Markit, PwC, Juniper Research 3

4 JUNIPER IS LEADING MARKET TRANSFORMATION Hardware defined Perimeter Manual enforcement Configuration driven Closed ecosystem Software/cloud defined Pervasive Automated Business driven Open framework 4

5 LARGE AND GROWING OPPORTUNITY SWITCHING ~$27B 3% CAGR JNPR: ~4% share ~$48B TAM SECURITY ~$8B 4% CAGR JNPR: ~4% share ROUTING ~$13B 3% CAGR JNPR: ~16% share LARGE OPPORTUNITY* TO TAKE SHARE CLOUD Own the MX>PTX transition Break into Hyper-scale datacenter switching SERVICE PROVIDER Telco Cloud enablement 5G/Metro buildouts ENTERPRISE Datacenter & secure and automated multicloud Security momentum STRONG APPROACH TO CUSTOMER VERTICALS SECURITY +16% Y/Y CLOUD +4% Q/Q ENTERPRISE +9% Y/Y SOFTWARE REVENUE +28% Y/Y STRONG Q MOMENTUM *Source: Dell Oro Group, IHS Markit, Juniper analysis - TAM is 2018E; CAGR is

6 FOCUSED ON DRIVING TRANSITION TO CLOUD 6

7 POSITIONED TO WIN IN 2018 AND BEYOND CORE/EDGE METRO CLOUD/DC SECURITY CLOUD ENABLED ENTERPRISE SDWAN Strong, Competitive platforms MX, PTX, QFX, EX, ACX, NFX, SRX families Rich Overlay and Underlay Software Capabilities Junos with Quality, Contrail Orchestration, Appformix Analytics 7

8 THE JUNIPER ADVANTAGE JUNOS Experience A single uniform experience across routing, switching and security Feature continuity during hardware updates Fuse multiple disparate network elements into a single, logical unit Slice multiple concurrent network functions on a single network element for improved operational efficiency Programmability Seamless integration with a wide range of opensource automation frameworks A simple extension toolkit for control, management, and data plane programmability Easy integration with third party automation frameworks for high degree network customization Hardware accelerate real-time telemetry support Health monitoring correlation for expedited root cause analysis Model-driven OpenConfig telemetry for big data analysis Decoupled software and hardware architectures X86 standardized for simple application integration with virtualization technologies like KVM and containers Supports third-party VM, container, or native Linux binary Analytics 100% Pass Rating by Ivan Pepelnjak Disaggregation 8

9 THE JUNIPER ADVANTAGE SERVICE PROVIDER ROUTING Performance That Scales with New Services Delivery Platform Versatility Supporting Multiple Use Cases Across Networking Software Disaggregation that promotes the Freedom to Innovate Engineering World-Class Economics and Investment Protection Infinite Programmability that Anticipates Future Innovations Award-Winning Juniper Service and Support MX204 MX10003* MX240 - MX960* MX2K MX2020* MX10008 MX10016 NEBS LEVEL3 NEBS LEVEL 3 NEBS LEVEL 3 NEBS DC NEBS DC Trio Silicon 4 th Generation Penta Silicon 5 th Generation 2.4T* 144 x 10GbE 24 x 100 GbE 16.5T* 660 x 10GbE 165 x 100 GbE 40T* 960 x 10GbE 400 x 100 GbE 19.2T 768 x 10GbE 192 x 100GbE 38.4T 768 x 10GbE 384 x100gbe *The performance number are represented by the model with the asterisks 9

10 THE JUNIPER ADVANTAGE CLOUD ROUTING IP Performance That Stifles Growing Traffic Deluge Engineering World-Class Cost Per Bit Economics for 400GbE and beyond Never be compromised by Visibility, Reliability, Availability or Security Award-Winning Juniper Service and Support PTX1000 PTX PTX10003* PTX3000- PTX5000* PTX10008 PTX10016 NEBS LEVEL3 NEBS LEVEL 3 NEBS LEVEL 3 NEBS DC NEBS DC Express Plus Silicon 2.88T 288 x 10GbE 24 x 100 GbE 16T* 165 x 100 GbE 36 x 400GbE 24T* 1536 x 10GbE 240 x 100 GbE 24T 1152 x 10GbE 240 x 100GbE 48T 2304 x 10GbE 480 x 100GbE *The performance number are represented by the model with the asterisks 10

11 THE JUNIPER ADVANTAGE CLOUD CLASS SWITCHING Robust Portfolio Choice of Chipsets In DC Merchant Silicon QFX 5K Juniper Q5 QFX 10K EX Series campus and branch switching QFX Series data center switching Centralized Management and Control Support for Diverse Architectures Juniper Sky Enterprise for cloud-based management Contrail Enterprise Multicloud for simplified multicloud orchestration and analytics 11

12 THE JUNIPER ADVANTAGE - UNIFIED SECURITY EVERYWHERE Threat Intelligence Advanced Threat Defense Detection Detection Users, Apps, Devices, Sites Dynamic policy actions Unifies the entire network and ecosystem Consistant defense across diverse environments Multicloud Network Devices Workloads Consistent enforcement Automated Adaptive Simplified Visibility & Management Security posture Automated adaptive policy Centralized visibility and management Leverages the scale and agility of cloud Open and interoperable APIs Network Access Endpoint 12

13 See the Report JUNIPER NETWORKS NAMED A LEADER BY GARTNER Magic Quadrant for Data Center Networking We believe Juniper is recognized for: Having a deep portfolio of hardware and software solutions Leading with automated, open and standardsbased approaches Juniper is confident in the execution and strategy that we believe is being recognized by various analysts. -Rami Rahim, CEO, Juniper Networks Gartner, Inc., Magic Quadrant for Data Center Networking, Andrew Lerner, Joe Skorupa. 11 July This graphic was published by Gartner, Inc. as part of a larger research document and should be evaluated in the context of the entire document. The Gartner document is available upon request from Juniper Networks. Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner's research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. 13

14 A LEADER IN THE FORRESTER WAVE Hardware Platforms for Software-Defined Networking, Q Read the Report "Overlay technology can go only so far. Ultimately, SDN must manipulate the network s physical infrastructure, especially because many of today s enterprise data center servers remain on bare metal and are therefore unable to use SDN overlays like VMware s NSX as the only SDN approach to data centers." Customers that want to automate the entire network with a consistent OS, from the data center to the business edge, should look to Juniper Networks. The Forrester Wave : Hardware Platforms For Software-Defined Networking, Q The Forrester Wave TM is copyrighted by Forrester Research, Inc. Forrester and Forrester Wave are trademarks of Forrester Research, Inc. The Forrester Wave is a graphical representation of Forrester's call on a market and is plotted using a detailed spreadsheet with exposed scores, weightings, and comments. Forrester does not endorse any vendor, product, or service depicted in the Forrester Wave. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. 14

15 VOTED #1 IN SERVICE PROVIDER ROUTING & SWITCHING PRODUCT RELIABILITY SERVICE & SUPPORT Top Ranked Vendor SECURITY PRICE TO PERFORMANCE TECHNOLOGY INNOVATION Source: IHS Markit 2017 n= 20 service providers, worldwide sample, representing 33% of worldwide CapEx 15

16 STRONG PARTNERSHIPS Latest Partner News Strategic Alliance Partners Complete end-to-end solution to accelerate 5G transformation New global partnership agreement for wired and wireless Simplified and more secure path to multicloud Technology Alliance Partners 16

17 MULTIPLE NEW PRODUCTS COMING ACROSS MARKETS WAN Services New MX Series 5G Universal Routing platform Universal Chassis and line cards upgrade Leverages new Penta Silicon IP Transport New 3-RU PTX10003 Packet Transport Router 400G capable system for wide area use cases Data Center New QFX10003 Data Center Switch New QFX5220 Data Center Switch 400G capable Data Center systems Orchestration Software New Contrail Enterprise MultiCloud software Single pane of glass management for multi-cloud multi-vendor environments Security High-end SRX 5000 firewall enhancement Significant performance gain vs current platforms Migration offer for current customers 17

18 MX5G EXTENDS ROUTING LEADERSHIP Juniper Penta Silicon Powering the MX Series 5G Universal Routing Platform % More Power Efficient than Gen 4/Linecard 300% More Performance than Gen 4/Linecard 400GbE Support Infinite Programmability Built-In Encryption 18

19 AND PRESENTS A POWERFUL REFRESH OPPORTUNITY MX5G 4 th Gen 2 ½ years to $1B 3 rd Gen 3 ¼ years to $1B 2 nd Gen 4 years to $1B 1 st Gen 5 years to $1B Revenue 19

20 JUNIPER NETWORKS LEADS 400GbE TRANSITION ACROSS CLOUD/CARRIER ROUTING AND DATA CENTER SWITCHING IP Transport PTX Series: The PTX10003 provides high density 100GbE and 400GbE WAN for nextgeneration scale-out backbone, peering and data center interconnect applications supporting the industry s first packet transport router to accommodate universal multi-rate QSFP-DD interface for seamless 100GbE to 400GbE upgrades. Customer Benefits: Native link level encryption preventing unlawful intercept at 400GbE ~65% more efficiency per bit than previous generation WAN Services MX Series 5th Generation: Industry s only platform to deliver near-infinite programmability, efficient 400GbE and service versatility for next generation secure servicecreation across 5G and IoT all at unprecedented scale. Customer Benefits: Native IPSec encryption that scales for all business service types. 2.8 times more efficiency per bit than previous generation Data Center QFX series: The QFX10003 & QFX5220 data center switches with 400GbE technology enables the next-generation of IP Fabric with investment protection as customers increase the capacity of their data centers to meet emerging high-performance applications Customer Benefits: Seamless integration with Contrail Enterprise Multicloud to provide a consistent policies and operations across your entire network and manage your 400GbE hyper scale IP fabric resource as a single, cohesive infrastructure 20

21 CONTRAIL ENTERPRISE MULTICLOUD HYPERSCALE INFRASTRUCTURE FOR EVERY ENTERPRISE One platform for policy and control Contrail Enterprise Multicloud Any Cloud Any Workload Any Deployment Private clouds and public clouds Bare metal servers, public cloud instances, virtual machines, containers and physical networking devices Greenfield or brownfield, single- or multi-vendor More Open, More Complete Open alternative that leapfrogs competitors 21

22 CONTRAIL ENTERPRISE MULTICLOUD SINGLE POINT OF CONTROL FOR MULTI-VENDOR MULTI-CLOUD ENVIRONMENTS Contrail Command Contrail Command Contrail Command Contrail Command Operator Username Password Build Fabric Provide Hybrid Connectivity Build PODs Apply Netw / Sec. Policies Manage User Conn. & Policies Monitor / Troubleshoot Shifting multi location complexity into one interface. AWS VPC - 1 Kubernetes OpenShift OpenStack VMware Contrail Security GCP VPC - 2 Multicloud Architecture 22

23 SECURITY PORTFOLIO REFRESH COMPLETE IN Q Q4 16-Ongoing Security Director w/ Policy Enforcer Management, Visibility, Automation Ongoing Ongoing Q4 17 Ongoing Sky ATP ATP Appliance Application Security SSL Inspection Intrusion Prevention User Firewall UTM SIEM Advanced Threat Prevention Next Gen Services Secure Analytics Ongoing 4Gb/s (2 vcpu) 25Gb/s (16 vcpu) Q2 16 Q RU 2Tb/s Q2 16 2RU 5.5Gb/s vsrx Q3 15 1RU 5Gb/s csrx* 1RU 20Gb/s Q4 16 Q4 17 1RU 40Gb/s 1RU 80Gb/s 5RU 480Gb/s 8RU 960Gb/s SRX300 SRX500 SRX1500 SRX4100 SRX4200 SRX4600 SRX5400 SRX5600 SRX5800 Advanced Security Acceleration (SPC3) Branch Campus Private Cloud/Multicloud Data Center/Service Provider Beta* 23

24 FINANCIALS 24

25 QUARTERLY TRENDED RESULTS Revenue ($M) $1,400 $1,350 $1,300 $1,250 $1,200 $1,150 $1,100 $1,050 $1,000 $950 $1,386 $1,309 $1,285 $1,258 $1,239 $1,221 $0.66 $1,221 $1,204 $0.57 $0.50 $0.58 $0.55 $0.46 $0.53 $1,083 $0.48 $0.28 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Non-GAAP EPS $1.00 $0.90 $0.80 $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 Revenue Non-GAAP EPS 25

26 Q2 18 REVENUE DETAIL -8% Y/Y +11% Q/Q -3% Y/Y +2% Q/Q +16% Y/Y +9% Q/Q Security 7% Switching Routing 21% 41% PRODUCT & SERVICE Service 31% -14% Y/Y +20% Q/Q 0% Y/Y 17% Q/Q 26% APAC 18% GEOGRAPHY EMEA +7% Y/Y 0% Q/Q Americas -16% Y/Y +15% Q/Q 56% -26% Y/Y +4% Q/Q +9% Y/Y +20% Q/Q Cloud 23% VERTICAL Enterprise 33% Service Provider -7% Y/Y +9% Q/Q 44% 26

27 SUMMARY OF B/S, CASH FLOW, & CAPITAL METRICS (in millions, except percentages, and DSO) Sequential Year-over-Year YTD through Q2'18 YTD-over-YTD Full-Year Balance Sheet Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 $ % $ % FY17 FY18 $ % FY16 * FY17 * Cash, Cash Equivalents and Investments 4,215 4,199 4,021 3,448 3, % (684) -16% 3,657 4,021 Short- and Long-Term Debt 2,135 2,136 2,136 2,137 2, % 3 0% 2,134 2,136 Net Cash and Investments 2,080 2,064 1,885 1,311 1, % (687) -33% 1,524 1,885 Onshore Cash and Investments % 17% 16% 9% 65% 63% -2% -3% 46% 271% 13% 9% DSO (days) (5) -9% 0 0% Cash Flow and Capital Return Operating Cash Flow (101) -37% (128) -43% (404) -48% 1,107 1,260 Free Cash Flow (96) -42% (133) -50% (419) -54% 892 1,109 Capex (5) -12% 5 15% % Dividends % 25 66% % Share Repurchases (750) -100% (125) -100% % Total Capital Return (749) -92% (100) -61% % Total Capital Return as % of FCF 52% 79% Diluted Share Count (9) -3% (34) -9% Ending Outstanding Share Count % (31) -8% * Full-year Operating Cash Flow has not been recasted to conform to the current year upon the adoption of the new accounting pronouncement requiring classification of restricted cash to be included with cash and cash equivalents when reconciling the beginning of period and end of period total amounts on the statement of cash flows. 27

28 YEARLY TRENDED RESULTS Revenue ($M) $5,450 $4,950 $4,450 $3,950 $3,450 $2,950 $2,450 $1,950 $1,450 $950 $4,858 $4,990 $5,027 $4,627 $2.09 $2.11 $2.03 $1.45 FY 14 FY 15 FY 16 FY 17 Non-GAAP EPS $2.60 $2.10 $1.60 $1.10 $0.60 $0.10 Revenue Non-GAAP EPS 28

29 STRONG CASH FLOW AND BALANCE SHEET ($M) $1,400 $1,200 $1,107 $1,260 $151 ($M) $4,450 $3,950 $3,657 $4,021 $1,000 $800 $600 $400 $200 $763 $193 $570 $900 $210 $690 $215 $892 $1,109 $3,450 $2,950 $2,450 $1,950 $1,450 $3,105 $3,192 $0 FY 14 FY 15 FY 16 FY 17 $950 FY 14 FY 15 FY 16 FY 17 Free Cash Flow Capex Cash from Ops. * Cash, cash equivalents and investments * These amounts have not been recasted to conform to the current year upon the adoption of the new accounting pronouncement requiring classification of restricted cash to be included with cash and cash equivalents when reconciling the beginning of period and end of period total amounts on the statement of cash flows. 29

30 APPENDIX: GAAP TO NON-GAAP RECONCILIATION (in millions, except per share amounts) (unaudited) Three Months Ended June 30, 2016 September 30, 2016 December 31, 2016 March 31, 2017 June 30, 2017 September 30, 2017 December 31, 2017 GAAP net (loss) income $ $ $ $ $ $ $ (148.1) $ 34.4 $ Share-based compensation expense Share-based payroll tax expense Amortization of purchased intangible assets Restructuring charges (benefits) (1.9) (0.2) Acquisition-related and other charges Strategic partnership related charges Litigation settlement charges (benefits) (0.6) - Supplier component remediation charges (recovery) (1.0) (Gain) loss on equity investments (3.3) (3.6) (7.8) - - Income tax effect of non-gaap exclusions (15.9) (14.9) (15.6) (28.3) (17.3) (16.0) (12.3) (12.9) (8.8) Estimated tax expense from income tax reform Non-GAAP net income $ $ $ $ $ $ $ $ 99.5 $ GAAP diluted net income (loss) per share $ 0.36 $ 0.45 $ 0.49 $ 0.28 $ 0.47 $ 0.43 $ (0.40) $ 0.10 $ 0.33 Non-GAAP diluted net income per share $ 0.50 $ 0.58 $ 0.66 $ 0.46 $ 0.57 $ 0.55 $ 0.53 $ 0.28 $ 0.48 Shares used in computing GAAP diluted net income (loss) per share Shares used in computing Non-GAAP diluted net income per share March 31, 2018 June 30,

31 APPENDIX: GAAP TO NON-GAAP RECONCILIATION (in millions, except per share amounts) (unaudited) Twelve Months Ended December 31, 2014 December 31, 2015 December 31, 2016 December 31, 2017 GAAP net (loss) income $ (334.3) $ $ $ Share-based compensation expense Share-based payroll tax expense Amortization of purchased intangible assets Restructuring charges (benefits) (4.1) Impairment of goodwill Acquisition-related and other charges (income) 0.8 (5.2) Professional services related to non-routine stockholder matters Strategic partnership related charges Litigation settlement (benefits) charges (206.1) Supplier component remediation charges Gain on sale of Junos Pulse (19.6) (Gain) loss on equity investments (163.0) (11.3) 3.7 (11.4) Income tax effect of non-gaap exclusions 23.4 (58.5) (61.0) (73.9) Estimated tax expense from income tax reform Non-GAAP net income $ $ $ $ GAAP diluted net (loss) income per share $ (0.73) $ 1.59 $ 1.53 $ 0.80 Non-GAAP diluted net income per share $ 1.45 $ 2.03 $ 2.09 $ 2.11 Shares used in computing GAAP diluted net (loss) income per share Shares used in computing Non-GAAP diluted net income per share

32 APPENDIX: GAAP TO NON-GAAP RECONCILIATION (in millions) (unaudited) Three Months Ended June 30, 2017 September 30, 2017 December 31, 2017 March 31, 2018 June 30, 2018 Operating Cash Flow $ 299 $ 201 $ 213 $ 271 $ 170 Capital Expenditures Free Cash Flow $ 267 $ 168 $ 159 $ 229 $ 133 * December 31, 2014 December 31, 2015 Twelve Months Ended December 31, 2016 December 31, 2017 Operating Cash Flow $ 763 $ 900 $ 1,107 $ 1,260 Capital Expenditures Free Cash Flow $ 570 $ 690 $ 892 $ 1,109 * These amounts have not been recasted to conform to the current year upon the adoption of the new accounting pronouncement requiring classification of restricted cash to be included with cash and cash equivalents when reconciling the beginning of period and end of period total amounts on the statement of cash flows. 32

33 THANK YOU Contacts: Investor Relations- Jess Lubert Industry Analyst Relations- Barbara French