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Could the Services Business Drive Juniper Networks’ 2017 Revenues?

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Services revenues rose 14% in 1Q17

Juniper Networks’ (JNPR) Services business generated revenues of $392 million in 1Q17, a rise of 14% YoY (year-over-year) and a fall of 2% quarter-over-quarter. 

According to Juniper’s CFO, Ken Miller, “In the quarter, we recognized previously deferred revenue of approximately $15 million related to the completion of delivery to an APAC Telecom customer. In addition to the APAC Telecom recognition, the year-over-year increase was driven by strong renewal and attach rates of support contracts.”

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Juniper Networks’ Services business revenues increased at a CAGR[1. compound annual growth rate] of 7% from $1 billion in fiscal 2011 to $1.3 billion in fiscal 2015. The company has benefited from its subscription model, which attracts repeat customers and produces recurring revenues in a weak macro environment.

Services business accounted for 32% of revenues in 1Q17

JNPR’s Network Services segment provides maintenance and support to companies in the hardware networking space. In 1Q17, the company’s Network Services sales accounted for 32.1% of the company’s total revenues. 

This trend is an increase compared to 24.0% of sales in fiscal 2011, 26.7% of sales in fiscal 2015, and 29.3% of sales at the end of fiscal 2016. In fiscal 2016, the segment’s revenue rose from $1.3 billion in fiscal 2015 to ~$1.5 billion, a rise of 13.0% YoY.

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