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Factors that Impacted Juniper Networks’ Revenues in 4Q17

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Mar. 22 2018, Updated 11:15 a.m. ET

Weakness in Routing and Cloud segments

Juniper Networks (JNPR) saw a revenue decline of 11.0% in 4Q17, which was driven by weakness in its Routing and Cloud verticals. This weakness was driven by the shift to scale-out architecture from scale-up among Juniper Networks’ Cloud customers. This trend is likely to impact its revenues in 1Q18 as well.

During Juniper Networks’ 4Q17 earnings call, its CEO, Rami Rahim, stated, “This shift is impacting our financial results by creating near-term revenue headwind as new architectures take time to roll out and ramp and margin pressures as we look to disrupt our own business with new lean core technologies that deliver both material efficiencies for our customers and price performance advantages versus competitive platforms.”

Juniper stated that it isn’t concerned by this short-term headwind experienced among hyperscalers, as the company has built a substantial footprint with several large cloud providers over the last few years.

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Juniper Networks banking on innovative products to drive revenues

Juniper Networks (JNPR) is optimistic about its portfolio of automated, cost-efficient, and scalable networks to gain traction among existing and potential customers. Juniper Networks’ demand for PTX products has been solid in 2017 and has surpassed its MX port shipments in its Cloud vertical.

Its Cloud customers continue to see rapid growth in network traffic with Juniper Networks aiding these firms in making significant progress in architectural transition.

While these headwinds could impact its revenues in 1Q18, Juniper Networks expects to achieve sequential sales growth in 2018 with year-over-year growth possible in 4Q18. These estimates are supported by Juniper Networks’ deal pipeline and acquiring new accounts across business verticals.

In 4Q17, Juniper Networks gained relevance among the Tier 1 telco and cable customers and built momentum with its Strategic Enterprise accounts.

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