Juniper Networks, Inc. Net Income surged on 85.1% while Revenue decreased on 7.6%
01/29/2019 • About Juniper Networks, Inc. (
$JNPR) • By InTwits
Juniper Networks, Inc. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is quite volatile: 16.8% in 2018, 21.4% in 2017, 22.0% in 2016, 22.4% in 2015, -5.0% in 2014
- Juniper Networks, Inc. spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for 2014-2018 is 4.4%. Average EBITDA Margin for the same period was 15.8%. In 2018 SBC/Revenue was even higher: 4.7%
- Juniper Networks, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.8%. At the same time it's a lot of higher than industry average of 5.2%.
- CAPEX is quite volatile: $53m in FY2018, $39m in FY2017, $63m in FY2016, $60m in FY2015, $23m in FY2014
- The company has business model with low profitability: ROIC is 8.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue decreased on 7.6%. Annual revenue decline showed slowdown in 18Q4 - revenue decreased on 4.7%. During the last 5 years Revenue growth topped in 2015 at 5.0% and was decelerating since that time. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 4.5 pp from 21.4% to 16.8% in 2018. During 2014-2018 EBITDA Margin topped in 2015 at 22.4% and was declining since that time.
Gross Margin decreased on 2.1 pp from 61.1% to 59.0% in 2018. During the last 5 years Gross Margin topped in 2015 at 63.4% and was declining since that time. SG&A as a % of Revenue increased slightly on 1.5 pp from 23.4% to 24.9% in 2018. During the last 5 years SG&A as a % of Revenue bottomed in 2017 at 23.4%. Stock Based Compensation (SBC) as a % of Revenue increased slightly on 0.94 pp from 3.7% to 4.7% in 2018.
Net Income margin increased on 6.1 pp from 6.1% to 12.2% in 2018.
Investments (CAPEX, working capital and M&A)
In 2018 Juniper Networks, Inc. had CAPEX/Revenue of 3.2%. Juniper Networks, Inc.'s CAPEX/Revenue decreased slightly on 1.2 pp from 4.3% in 2015 to 3.2% in 2018. It's average level of CAPEX/Revenue for the last three years was 3.5%.
Accounts receivable as a % of Revenue decreased slightly on 0.71 pp from 16.9% to 16.2% in 2018. Accounts payable as a % of Revenue showed almost no change in 2018.
Juniper Networks, Inc. has spent
$59m on M&A in 2018 which accounts for 1.3% of revenue.
Return on investment
The company operates at low ROIC (8.3%) and ROE (11.9%). ROIC decreased on 3.9 pp from 12.2% to 8.3% in 2018. ROE increased on 5.6 pp from 6.4% to 11.9% in 2018. During the last 5 years ROIC topped in 2015 at 14.3% and was declining since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is -0.4x and Debt / EBITDA is 2.7x. Debt showed almost no change in 2018 while cash surged on 24.0%.
Juniper Networks, Inc. has good short term financial stability: Interest coverage ratio (ICR) is 5.5x. Juniper Networks, Inc. has no short term refinancing risk: cash is higher than short term debt (711.3%).
Average interest expence paid by the company was 4.8% in 2018.
Valuation and dividends
Juniper Networks, Inc.'s trades at EV/EBITDA 11.0x and P/E 15.9x.
The company paid 43.9% of Net Income as dividends in 2018. Dividends grew on average at 23.7% per annum in the last 5 years).
Management team
Rami Rahim is a Juniper Networks, Inc.'s CEO. Rami Rahim is a founder and has spent 4 years with the company. CEO total compensation was
$9,984,326 in 2018 which included
$1,000,000 salary and
$787,500 annual bonus. The company's CFO Kenneth Miller "Ken" has spent 3 years with the company.
The company has 1.1% shares owned by insiders. Insider ownership didn't change in 2018.
At the end of financial year the company had 9,283 employees. The number of employees decreased slightly on 1.0%. Average revenue per employee in 2018 was
$500,646 and it decreased on 6.6%.
Financial and operational results
FY ended 12/31/2018
Juniper Networks, Inc. ($JNPR) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 4,627 | 4,858 | 4,990 | 5,027 | 4,648 | -7.6% |
| Gross Profit | 2,858 | 3,079 | 3,104 | 3,072 | 2,741 | -10.8% |
| SG&A | 1,255 | 1,173 | 1,198 | 1,178 | 1,158 | -1.6% |
| EBITDA | -234 | 1,089 | 1,096 | 1,074 | 783 | -27.1% |
| EBIT | -420 | 912 | 890 | 848 | 572 | -32.5% |
| Interest expence | 67 | 83 | 98 | 101 | 103 | 2.0% |
| Tax | 248 | 219 | 235 | 506 | -34 | -106.8% |
| Net Income | -334 | 634 | 593 | 306 | 567 | 85.1% |
| Stock Based Compensation | 231 | 205 | 225 | 188 | 217 | 15.8% |
Balance Sheet
|
|---|
| Cash | 1,640 | 1,421 | 1,833 | 2,007 | 2,489 | 24.0% |
| Accounts Receivable | 599 | 781 | 1,054 | 852 | 755 | -11.4% |
| Accounts Payable | 235 | 159 | 221 | 218 | 209 | -4.0% |
| Short Term Debt | 0 | 300 | 0 | 0 | 350 | |
| Long Term Debt | 1,349 | 1,638 | 2,134 | 2,136 | 1,789 | -16.3% |
Cash flow
|
|---|
| Capex | 193 | 210 | 215 | 151 | 147 | -2.5% |
| Dividends | 86 | 156 | 153 | 150 | 249 | 66.0% |
| Acquisitions | 27 | 4 | 145 | 27 | 59 | 118.9% |
Ratios
|
|---|
| Revenue growth | -0.9% | 5.0% | 2.7% | 0.7% | -7.6% | |
| EBITDA growth | -130.9% | -566.0% | 0.7% | -2.1% | -27.1% | |
|
|---|
| Gross Margin | 61.8% | 63.4% | 62.2% | 61.1% | 59.0% | -2.1% |
| EBITDA Margin | -5.0% | 22.4% | 22.0% | 21.4% | 16.8% | -4.5% |
| EBIT Margin | -9.1% | 18.8% | 17.8% | 16.9% | 12.3% | -4.6% |
| SG&A, % of revenue | 27.1% | 24.1% | 24.0% | 23.4% | 24.9% | 1.5% |
| SBC, % of revenue | 5.0% | 4.2% | 4.5% | 3.7% | 4.7% | 0.9% |
| Net Income Margin | -7.2% | 13.0% | 11.9% | 6.1% | 12.2% | 6.1% |
| CAPEX, % of revenue | 4.2% | 4.3% | 4.3% | 3.0% | 3.2% | 0.2% |
|
|---|
| ROIC | -5.8% | 14.3% | 13.1% | 12.2% | 8.3% | -3.9% |
| ROE | -5.5% | 13.4% | 12.4% | 6.4% | 11.9% | 5.6% |
| Net Debt/EBITDA | | 0.5x | 0.3x | 0.1x | -0.4x | -0.6x |
| Interest expence / Average debt | 5.0% | 5.1% | 4.8% | 4.7% | 4.8% | 0.1% |
People
|
|---|
| Insider ownership | 1.1% | 1.1% | 1.1% | 1.1% | 1.1% | 0.0% |
| Employees | 8,806 | 9,058 | 9,832 | 9,381 | 9,283 | -1.0% |
| Revenue/Employee, th. $ | 525 | 536 | 508 | 536 | 501 | -6.6% |
Juniper Networks, Inc. ($JNPR) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 1,083 | 1,204 | 1,180 | 1,181 | | -11.3% | -8.0% | -6.2% | -4.7% |
| EBITDA | 111 | 215 | 208 | 248 | | -47.6% | -31.6% | -27.8% | -4.1% |
| Net Income | 34 | 117 | 224 | 192 | | -68.4% | -35.2% | 35.1% | |
Balance Sheet
|
|---|
| Cash | 2,614 | 2,690 | 2,502 | 2,489 | | 16.6% | 12.5% | 5.8% | 24.0% |
| Short Term Debt | 349 | 350 | 350 | 350 | | | | | |
| Long Term Debt | 1,788 | 1,788 | 1,789 | 1,789 | | -16.2% | -16.2% | -16.3% | -16.3% |
Ratios
|
|---|
| Gross Margin | 57.1% | 58.2% | 60.3% | 60.2% | | -4.0% | -3.1% | -1.1% | -0.4% |
| EBITDA Margin | 10.3% | 17.9% | 17.7% | 21.0% | | -7.1% | -6.2% | -5.3% | 0.1% |
| Net Income Margin | 3.2% | 9.7% | 19.0% | 16.3% | | -5.7% | -4.1% | 5.8% | 28.2% |
Peers in Communications Equipment
Below you can find Juniper Networks, Inc. benchmarking vs. other companies in Communications Equipment industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Ribbon Communications Inc. ($RBBN) | | | | 30.6% | 75.2% |
| Extreme Networks, Inc. ($EXTR) | | 6.4% | -4.4% | 13.2% | 64.4% |
| Optical Cable Corporation ($OCC) | | -11.3% | -12.2% | -0.8% | 37.0% |
| ParkerVision Inc ($PRKR) | | | 37,601.2% | -97.5% | 35.0% |
| Network-1 Technologies, Inc. ($NTIP) | | 34.6% | 292.9% | -74.7% | 34.4% |
| |
|---|
| Median (66 companies) | | -0.4% | 7.6% | 5.6% | 3.5% |
|---|
| Juniper Networks, Inc. ($JNPR) | | 5.0% | 2.7% | 0.7% | -7.6% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| F5 Networks, Inc. ($FFIV) | 82.1% | 82.7% | 83.1% | 83.1% | 83.3% |
| Radware Ltd. ($RDWR) | 82.1% | 82.4% | 81.8% | 81.3% | 82.2% |
| Radcom Ltd. ($RDCM) | 63.2% | 76.8% | 69.6% | 71.8% | 74.0% |
| Casa Systems, Inc. ($CASA) | | 70.8% | 69.1% | 73.4% | 73.4% |
| NetScout Systems, Inc. ($NTCT) | 78.7% | 79.2% | 65.6% | 70.2% | 72.4% |
| |
|---|
| Median (67 companies) | 41.4% | 41.3% | 43.7% | 41.0% | 40.5% |
|---|
| Juniper Networks, Inc. ($JNPR) | 61.8% | 63.4% | 62.2% | 61.1% | 59.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Network-1 Technologies, Inc. ($NTIP) | 35.5% | 33.7% | 50.6% | 37.8% | 42.8% |
| InterDigital, Inc. ($IDCC) | 50.8% | 58.1% | 73.6% | 67.3% | 41.9% |
| EchoStar Corporation ($SATS) | 25.7% | 39.7% | 40.3% | 38.1% | 37.4% |
| Ubiquiti Networks, Inc. ($UBNT) | 34.7% | 25.5% | 37.3% | 34.3% | 32.8% |
| Ituran Location and Control Ltd. ($ITRN) | 32.4% | 30.5% | 29.9% | 29.9% | 30.4% |
| |
|---|
| Median (65 companies) | 5.6% | 4.7% | 5.5% | 6.0% | 4.6% |
|---|
| Juniper Networks, Inc. ($JNPR) | -5.0% | 22.4% | 22.0% | 21.4% | 16.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Resonant Inc. ($RESN) | | | 132.5% | 124.8% | 245.2% |
| ViaSat, Inc. ($VSAT) | 22.8% | 26.5% | 26.7% | 33.0% | 32.1% |
| Applied Optoelectronics, Inc. ($AAOI) | 31.5% | 30.1% | 19.0% | 17.5% | 26.9% |
| EchoStar Corporation ($SATS) | 19.7% | 43.8% | 39.9% | 30.9% | 26.5% |
| Finisar Corporation ($FNSR) | 11.3% | 11.9% | 9.4% | 9.7% | 16.8% |
| |
|---|
| Median (65 companies) | 2.2% | 2.2% | 1.9% | 1.8% | 1.6% |
|---|
| Juniper Networks, Inc. ($JNPR) | 4.2% | 4.3% | 4.3% | 3.0% | 3.2% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| F5 Networks, Inc. ($FFIV) | 33.9% | 40.8% | 43.1% | 46.9% | 47.9% |
| Ubiquiti Networks, Inc. ($UBNT) | 61.4% | 31.5% | 41.5% | 38.5% | 39.1% |
| Motorola Solutions, Inc. ($MSI) | -16.1% | 18.9% | 26.4% | 39.5% | 35.3% |
| Ituran Location and Control Ltd. ($ITRN) | 50.9% | 46.8% | 50.1% | 48.5% | 35.1% |
| Casa Systems, Inc. ($CASA) | | | 43.2% | 39.7% | 21.9% |
| |
|---|
| Median (70 companies) | 2.1% | 2.0% | 2.2% | 2.1% | 0.3% |
|---|
| Juniper Networks, Inc. ($JNPR) | -5.8% | 14.3% | 13.1% | 12.2% | 8.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Extreme Networks, Inc. ($EXTR) | | | -2.2x | -1.5x | 7.1x |
| ViaSat, Inc. ($VSAT) | 3.4x | 2.5x | 3.2x | 2.5x | 5.8x |
| CommScope Holding Company, Inc. ($COMM) | 2.3x | 9.6x | 4.3x | 4.6x | 4.4x |
| Inseego Corp. ($INSG) | | | | | 3.9x |
| Finisar Corporation ($FNSR) | -0.3x | 0.2x | -0.5x | 1.6x | 3.8x |
| |
|---|
| Median (45 companies) | -0.7x | -0.8x | -0.9x | -0.8x | 0.2x |
|---|
| Juniper Networks, Inc. ($JNPR) | | 0.5x | 0.3x | 0.1x | -0.4x |
