Juniper Networks, Inc. reports 25.3% Net Income decline in 2020 and 3.1 pp EBITDA Margin decline from 15.8% to 12.7%
01/28/2021 • About Juniper Networks, Inc. (
$JNPR) • By InTwits
Juniper Networks, Inc. reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is declining: 12.7% in FY2020 vs. 15.8% in FY2019 vs. 22.0% in FY2016
- Juniper Networks, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.0%. At the same time it's in pair with industry average of 3.7%
- CAPEX is quite volatile: $294m in FY2020, $217m in FY2019, $163m in FY2018, $113m in FY2017, $77m in FY2016
- The company has potentially unprofitable business model: ROIC is 5.3%
- It operates with high leverage: Net Debt/EBITDA is 1.6x while industry average is 0.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Juniper Networks, Inc.'s Revenue showed almost no change in FY2020. Annual revenue decline showed slowdown in FY20Q4 - revenue increased slightly on 1.2%. During the last 5 years Revenue growth bottomed in FY2018 at -7.6% and was accelerating since that time. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 3.1 pp from 15.8% to 12.7% in FY2020. EBITDA Margin declined at -2.4 pp per annum in the last 5 years.
Gross Margin decreased slightly on 0.97 pp from 58.9% to 57.9% in FY2020. Gross Margin declined at -1.1 pp per annum in FY2016-FY2020. SG&A as a % of Revenue showed almost no change in FY2020. SG&A as a % of Revenue followed a growing trend at 0.89 pp per annum in the last 5 years.
Net Income margin decreased slightly on 2.0 pp from 7.8% to 5.8% in FY2020.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 2.3% in FY2020. CAPEX/Revenue decreased slightly on 0.75 pp from 3.0% in FY2017 to 2.3% in FY2020. Average CAPEX/Revenue for the last three years was 2.6%. CAPEX as a % of Revenue declined at -0.46 pp per annum in FY2016-FY2020.
Return on investment
The company operates at low ROIC (5.3%) and ROE (5.6%). ROIC decreased slightly on 1.4 pp from 6.7% to 5.3% in FY2020. ROE decreased slightly on 1.7 pp from 7.3% to 5.6% in FY2020. ROIC followed a declining trend at -2.1 pp per annum in the last 5 years.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.6x and Debt / EBITDA is 4.1x. Net Debt / EBITDA surged on 0.7x from 1.0x to 1.6x in FY2020. Debt surged on 21.6% while cash jumped on 12.0%. During FY2016-FY2020 Net Debt/EBITDA bottomed in FY2018 at -0.4x and was growing since that time.
Juniper Networks, Inc. has no short term refinancing risk: cash is higher than short term debt (323.1%).
Valuation and dividends
Juniper Networks, Inc.'s trades at EV/EBITDA 16.8x and P/E 33.3x.
Management team
Rami Rahim is a the company's CEO. Rami Rahim has spent 6 years with the company. Kenneth B Miller "Ken" is a Juniper Networks, Inc.'s CFO. Kenneth B Miller "Ken" has spent 5 years at the company.
Financial and operational results
Juniper Networks, Inc. ($JNPR) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 4,990 | 5,027 | 4,648 | 4,445 | 4,445 | -0.0% |
| Gross Profit | 3,104 | 3,072 | 2,741 | 2,617 | 2,574 | -1.6% |
| SG&A | 1,198 | 1,178 | 1,158 | 1,184 | 1,194 | 0.9% |
| EBITDA | 1,096 | 1,074 | 783 | 703 | 566 | -19.5% |
| EBIT | 890 | 848 | 572 | | | |
| Interest expence | 98 | 101 | 103 | | | |
| Tax | 235 | 506 | -34 | | | |
| Net Income | 593 | 306 | 567 | 345 | 258 | -25.3% |
| Stock Based Compensation | 225 | 188 | 217 | | | |
Balance Sheet
|
|---|
| Cash | 1,833 | 2,007 | 2,489 | 1,216 | 1,362 | 12.0% |
| Accounts Receivable | 1,054 | 852 | 755 | | | |
| Accounts Payable | 221 | 218 | 209 | | | |
| Short Term Debt | 0 | 0 | 350 | 42 | 422 | 896.5% |
| Long Term Debt | 2,134 | 2,136 | 1,789 | 1,842 | 1,869 | 1.5% |
Cash flow
|
|---|
| Capex | 215 | 151 | 147 | 110 | 100 | -8.4% |
| Dividends | 153 | 150 | 249 | | | |
| Acquisitions | 145 | 27 | 59 | | | |
Ratios
|
|---|
| Revenue growth | 2.7% | 0.7% | -7.6% | -4.3% | -0.0% | |
| EBITDA growth | 0.7% | -2.1% | -27.1% | -10.2% | -19.5% | |
|
|---|
| Gross Margin | 62.2% | 61.1% | 59.0% | 58.9% | 57.9% | -1.0% |
| EBITDA Margin | 22.0% | 21.4% | 16.8% | 15.8% | 12.7% | -3.1% |
| EBIT Margin | 17.8% | 16.9% | 12.3% | | |
| SG&A, % of revenue | 24.0% | 23.4% | 24.9% | 26.6% | 26.9% | 0.2% |
| SBC, % of revenue | 4.5% | 3.7% | 4.7% | | |
| Net Income Margin | 11.9% | 6.1% | 12.2% | 7.8% | 5.8% | -2.0% |
| CAPEX, % of revenue | 4.3% | 3.0% | 3.2% | 2.5% | 2.3% | -0.2% |
|
|---|
| ROIC | 13.1% | 12.2% | 8.3% | 6.7% | 5.3% | -1.4% |
| ROE | 12.4% | 6.4% | 11.9% | 7.3% | 5.6% | -1.7% |
| Net Debt/EBITDA | 0.3x | 0.1x | -0.4x | 1.0x | 1.6x | 0.7x |
| Interest coverage ratio (ICR) | 9.1x | 8.4x | 5.5x | | |
| Interest expence / Average debt | 4.6% | 4.7% | 4.8% | | | |
People
|
|---|
| Insider ownership | 1.1% | 1.1% | 1.1% | | | |
| Employees | 9,832 | 9,381 | 9,283 | | | |
| Revenue/Employee, th. $ | 508 | 536 | 501 | | | |
Juniper Networks, Inc. ($JNPR) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 998 | 1,086 | 1,138 | 1,223 | | -0.4% | -1.5% | 0.5% | 1.2% |
| EBITDA | 93 | 143 | 177 | 153 | | 2.2% | 5.2% | -13.4% | -37.9% |
| Net Income | 20 | 61 | 145 | 31 | | -34.4% | 32.5% | 46.4% | -81.7% |
Balance Sheet
|
|---|
| Cash | 1,399 | 1,460 | 1,342 | 1,362 | | -35.1% | 5.7% | 11.3% | 12.0% |
| Short Term Debt | 0 | 0 | 0 | 422 | | -100.0% | -100.0% | -100.0% | 896.5% |
| Long Term Debt | 1,867 | 1,882 | 1,873 | 1,869 | | -5.1% | 13.5% | 1.2% | 1.5% |
Ratios
|
|---|
| Gross Margin | 58.0% | 57.0% | 57.8% | 58.6% | | -0.1% | -0.7% | -2.1% | -0.9% |
| EBITDA Margin | 9.4% | 13.1% | 15.6% | 12.5% | | 0.2% | 0.8% | -2.5% | -7.9% |
| Net Income Margin | 2.0% | 5.6% | 12.8% | 2.5% | | -1.1% | 1.4% | 4.0% | -11.4% |
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 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Resonant Inc. ($RESN) | - | 116.2% | -19.8% | 40.3% | 329.9% |
| Franklin Wireless Corp ($FKWL) | - | -18.8% | -38.1% | 21.3% | 105.9% |
| Ribbon Communications Inc. ($RBBN) | - | 30.6% | 75.2% | -2.6% | 49.8% |
| Inseego Corp. ($INSG) | - | -10.0% | -7.7% | 8.4% | 43.0% |
| Casa Systems, Inc. ($CASA) | - | 11.2% | -15.5% | -5.0% | 39.3% |
| |
|---|
| Median (35 companies) | 7.5% | 5.6% | 3.5% | 3.7% | 4.4% |
|---|
| Juniper Networks, Inc. ($JNPR) | - | 0.7% | -7.6% | -4.3% | -0.0% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| F5 Networks, Inc. ($FFIV) | 83.1% | 83.1% | 83.3% | 84.1% | 82.6% |
| Radware Ltd. ($RDWR) | 81.8% | 81.3% | 82.2% | 82.1% | 82.0% |
| Radcom Ltd. ($RDCM) | 69.6% | 71.8% | 74.0% | 70.0% | 71.4% |
| AudioCodes Ltd. ($AUDC) | 60.7% | 62.4% | 62.8% | 47.4% | 67.9% |
| Arista Networks, Inc. ($ANET) | 64.0% | 64.5% | 63.8% | 64.1% | 63.9% |
| |
|---|
| Median (33 companies) | 43.7% | 41.0% | 40.5% | 43.2% | 44.9% |
|---|
| Juniper Networks, Inc. ($JNPR) | 62.2% | 61.1% | 59.0% | 58.9% | 57.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| InterDigital, Inc. ($IDCC) | 73.6% | 67.3% | 41.9% | 37.5% | 39.5% |
| EchoStar Corporation ($SATS) | 40.3% | 38.1% | 37.4% | 36.4% | 35.0% |
| Arista Networks, Inc. ($ANET) | 23.3% | 29.8% | 14.0% | 35.7% | 33.1% |
| Motorola Solutions, Inc. ($MSI) | 22.2% | 25.5% | 22.0% | 26.7% | 25.9% |
| F5 Networks, Inc. ($FFIV) | 30.3% | 29.9% | 30.1% | 26.2% | 22.9% |
| |
|---|
| Median (32 companies) | 5.5% | 6.0% | 4.6% | 3.1% | 8.8% |
|---|
| Juniper Networks, Inc. ($JNPR) | 22.0% | 21.4% | 16.8% | 15.8% | 12.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Resonant Inc. ($RESN) | 132.5% | 124.8% | 245.2% | 109.7% | 22.3% |
| EchoStar Corporation ($SATS) | 39.9% | 30.9% | 26.5% | 22.2% | 21.7% |
| KVH Industries, Inc. ($KVHI) | 3.2% | 8.0% | 9.3% | 7.9% | 8.9% |
| Harmonic Inc. ($HLIT) | 3.7% | 3.2% | 1.7% | 2.6% | 8.5% |
| Applied Optoelectronics, Inc. ($AAOI) | 19.0% | 17.5% | 26.9% | 15.1% | 6.7% |
| |
|---|
| Median (32 companies) | 1.9% | 1.8% | 1.6% | 2.4% | 2.0% |
|---|
| Juniper Networks, Inc. ($JNPR) | 4.3% | 3.0% | 3.2% | 2.5% | 2.3% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Franklin Wireless Corp ($FKWL) | 12.2% | 4.7% | -14.9% | -13.0% | 37.5% |
| Motorola Solutions, Inc. ($MSI) | 26.4% | 39.5% | 35.3% | 34.0% | 26.4% |
| Arista Networks, Inc. ($ANET) | 25.7% | 33.9% | 14.5% | 33.3% | 23.5% |
| AudioCodes Ltd. ($AUDC) | 6.1% | 8.6% | 16.1% | -7.7% | 20.8% |
| F5 Networks, Inc. ($FFIV) | 43.1% | 46.9% | 47.9% | 34.1% | 16.5% |
| |
|---|
| Median (35 companies) | 2.2% | 2.1% | 0.3% | -1.6% | 1.9% |
|---|
| Juniper Networks, Inc. ($JNPR) | 13.1% | 12.2% | 8.3% | 6.7% | 5.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Inseego Corp. ($INSG) | - | - | 3.9x | 82.5x | 26.9x |
| CommScope Holding Company, Inc. ($COMM) | 4.3x | 4.6x | 4.4x | 27.0x | 10.5x |
| Harmonic Inc. ($HLIT) | - | - | 3.4x | 1.9x | 6.5x |
| Ribbon Communications Inc. ($RBBN) | -17.2x | - | - | - | 3.5x |
| Casa Systems, Inc. ($CASA) | -0.2x | 0.3x | 0.2x | 32.1x | 3.2x |
| |
|---|
| Median (24 companies) | -0.9x | -0.8x | 0.2x | -0.4x | -0.5x |
|---|
| Juniper Networks, Inc. ($JNPR) | 0.3x | 0.1x | -0.4x | 1.0x | 1.6x |
