Q4 2013
FINANCIAL RESULTS CONFERENCE CALL

THURSDAY, JANUARY 23, 2014
2:00 P.M. PACIFIC TIME

1

Copyright © 2014 Juniper ...
Forward Looking Statements
Information, statements and projections contained in these presentation slides and related conf...
FINANCIAL REVIEW

ROBYN DENHOLM
CHIEF FINANCIAL AND OPERATIONS OFFICER

3

Copyright © 2014 Juniper Networks, Inc.
Q4 2013 RESULTS: RECORD REVENUE AND
EARNINGS GROWTH
Financial Overview

Revenue and Non-GAAP Diluted EPS Trend
12% Y/Y

$1...
FY 2013 RESULTS: EXPANDED OPERATING MARGIN
AND EPS
Financial Overview

Revenue and Non-GAAP Diluted EPS Trend
$5,000

9% Y...
Q4 2013 REVENUE MIX
GEOGRAPHY

MARKET

SEGMENT

APAC
$230

SSD

18%
5% Q/Q
18% Y/Y

Americas
$685
54%
4% Q/Q
13% Y/Y

$260...
FY 2013 REVENUE GROWTH REFLECTS
DIVERSITY IN CUSTOMER BASE
GEOGRAPHY

MARKET

SEGMENT

APAC
$799

SSD

17%
-2% Y/Y

Americ...
FINANCIAL RESULTS
Non-GAAP Except Revenue
Q4’13
Revenue

Q3’13

Q4’12

Q/Q Change

Y/Y Change

$1,273.6M

$1,185.6M

$1,14...
Q4 2013 CASH FLOW AND BALANCE SHEET
METRICS

Net cash, cash equivalents and investments of $3.1B
Cash Position
Net cash fl...
HISTORICAL SOURCES/USES OF CAPITAL
2008-2013
Demonstrated ability and commitment to generate strong cash flows,
enabling i...
Q1 2014 OUTLOOK*
3 Months Ending March 31, 2014
Non-GAAP (Except for Revenue and Share Count)

Revenue
Gross Margin

64.0%...
APPENDIX
12

Copyright © 2014 Juniper Networks, Inc.
SEGMENT OPERATING RESULTS
Three Months Ended
Q4'13

Q3'13

Q4'12

Product revenue

$802.0

$741.9

$659.5

Service revenue...
SEGMENT OPERATING RESULTS
Three Months Ended
(in millions, except per share amounts and percentages)

Q4'13

Q3'13

Q4'12
...
GAAP TO NON-GAAP RECONCILIATIONS
Three Months Ended
(in millions, except per share amounts and percentages)

Q4'13

Q3'13
...
GAAP TO NON-GAAP RECONCILIATIONS
Three Months Ended

(in millions, except per share amounts and percentages)

Q4'13

Q3'13...
GAAP TO NON-GAAP RECONCILIATIONS
Three Months Ended
(in millions, except per share amounts and percentages)

Q4'13

Q3'13
...
GAAP TO NON-GAAP RECONCILIATIONS
Three Months Ended

Q4'13

Q3'13

Q4'12

$48.2

$61.4

$51.7

(6.5)

(7.5)

(6.4)

—

—

...
GAAP TO NON-GAAP RECONCILIATIONS
Three Months Ended
(in millions, except per share amounts and percentages)

Q4'13

Q3'13
...
GAAP TO NON-GAAP RECONCILIATIONS
Three Months Ended
(in millions, except per share amounts and percentages)

Q4'13

GAAP n...
THANK YOU

21

Copyright © 2014 Juniper Networks, Inc.
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Q4 2013 jnpr financial results slides 1 23 14

  1. 1. Q4 2013 FINANCIAL RESULTS CONFERENCE CALL THURSDAY, JANUARY 23, 2014 2:00 P.M. PACIFIC TIME 1 Copyright © 2014 Juniper Networks, Inc.
  2. 2. Forward Looking Statements Information, statements and projections contained in these presentation slides and related conference call concerning Juniper Networks' business outlook, economic and market outlook, future financial and operating results, and overall future prospects are forward looking statements 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 certain factors, including: general economic and political conditions globally or regionally; business and economic conditions in the networking industry; changes in overall technology spending and spending by communication service providers and major customers; the network capacity requirements of communication service providers; contractual terms that may result in the deferral of revenue; increases in and the effect of competition; the timing of orders and their fulfillment; manufacturing and supply chain constraints; ability to establish and maintain relationships with distributors, resellers and other partners; variations in the expected mix of products sold; changes in customer mix; changes in geography mix; customer and industry analyst perceptions of Juniper Networks and its technology, products and future prospects; delays in scheduled product availability; market acceptance of Juniper Networks products and services; rapid technological and market change; adoption of regulations or standards affecting Juniper Networks products, services or the networking industry; the ability to successfully acquire, integrate and manage businesses and technologies; product defects, returns or vulnerabilities; the ability to recruit and retain key personnel; significant effects of tax legislation and judicial or administrative interpretation of tax regulations; currency fluctuations; litigation settlements and resolutions; the potential impact of activities related to the execution of the Juniper Networks Integrated Operating Plans; and other factors listed in Juniper Networks’ most recent report on Form 10-Q filed with the Securities and Exchange Commission. All information, statements and projections contained in these slides and related conference call speak only as of the date of this presentation. Juniper Networks undertakes no obligation to update the information contained in these slides and related conference call in the event facts or circumstances subsequently change. Use of Non-GAAP Financial Measures These presentation slides contain references to certain non-GAAP financial measures. For detailed reconciliation between the non-GAAP financial results presented in these slides and corresponding GAAP measures, please refer to the appendix at the end of this slide deck. In addition, for important commentary on why Juniper Networks considers non-GAAP information a useful view of the company’s financial results, please see the press release furnished with our Form 8-K filed today with the SEC. With respect to future financial guidance provided on a non-GAAP basis, we have excluded estimates for amortization of intangible assets, share-based and judgment compensation expenses, acquisition related charges, restructuring charges, impairment charges, litigation settlements and resolutions, gain or loss on equity investments, non-recurring income tax adjustments, valuation allowance on deferred tax assets, and income tax effect of non-GAAP exclusions. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis due to the high variability and low visibility with respect to the charges which are excluded from these non-GAAP measures. 2 Copyright © 2014 Juniper Networks, Inc.
  3. 3. FINANCIAL REVIEW ROBYN DENHOLM CHIEF FINANCIAL AND OPERATIONS OFFICER 3 Copyright © 2014 Juniper Networks, Inc.
  4. 4. Q4 2013 RESULTS: RECORD REVENUE AND EARNINGS GROWTH Financial Overview Revenue and Non-GAAP Diluted EPS Trend 12% Y/Y $1,274 0.43 6% Y/Y $1,200 7% Y/Y 2% Y/Y 0.33 3% Y/Y 0.28 $1,186 $1,151 $1,141 $1,100 $0.40 $1,059 $0.30 0.29 0.24 $0.20 $1,000 $900 $0.10 $800 $0.00 Q4'12 Q1'13 Revenue ($M) 4 Q2'13 EPS ($) Q3'13 Q4'13  Sixth consecutive quarter of Y/Y revenue growth  Revenue up 7% Q/Q and 12% Y/Y  Non-GAAP Operating Margin of 21.9%  Non-GAAP Diluted EPS up $0.10 Q/Q and $0.15 Y/Y Demand Metrics  Book-to-bill greater than 1  Product backlog healthy  Total deferred revenue was up $48 million dollars quarter-over-quarter Y/Y Growth Rate Copyright © 2014 Juniper Networks, Inc.
  5. 5. FY 2013 RESULTS: EXPANDED OPERATING MARGIN AND EPS Financial Overview Revenue and Non-GAAP Diluted EPS Trend $5,000 9% Y/Y $4,449 7% Y/Y (2)% Y/Y $4,669 $2.00 $4,365 $4,000 $1.50 $3,000     Revenue increased 7% Non-GAAP Operating Margin of 19.2% Non-GAAP Diluted EPS of $1.28, up $0.43 Y/Y Strong Balance Sheet exiting the year with $3.1B net cash and investments $1.28 $1.19 $1.00 $2,000 $0.85 $0.50 $1,000 $0 $0.00 2011 5 2012 Revenue ($M) 2013 EPS ($) Copyright © 2014 Juniper Networks, Inc.
  6. 6. Q4 2013 REVENUE MIX GEOGRAPHY MARKET SEGMENT APAC $230 SSD 18% 5% Q/Q 18% Y/Y Americas $685 54% 4% Q/Q 13% Y/Y $260 EMEA $359 content providers. Enterprise driven by strong performance in Financial and Federal.  EMEA: Q/Q growth driven by strong SP performance in Germany, UK and Eastern Europe Rebound in EMEA Enterprise.  APAC: Both SP & Enterprise increased. $447 35% 12% Q/Q 11% Y/Y PSD 28% 17% Q/Q 6% Y/Y  Americas: Strength in SP driven by cable and Enterprise 20% 6% Q/Q -5% Y/Y $1,014 80% 8% Q/Q 17% Y/Y  Total Routing: $618M Bookings very strong Over 20% Q/Q driven by MX and PTX.  Total Switching: $199M Service Provider $827 65% 5% Q/Q 12% Y/Y  Service Provider: Good design wins across all theatres.  Enterprise: Broad-based strength across customer verticals. Up 35% Q/Q and up 36% Y/Y driven by strong EX and QFabric sales.  Total Security: $157M Remain focused on stabilizing business and driving growth. Up 9% Q/Q and increased bookings. 6 Note: Revenue in $ Millions Copyright © 2014 Juniper Networks, Inc.
  7. 7. FY 2013 REVENUE GROWTH REFLECTS DIVERSITY IN CUSTOMER BASE GEOGRAPHY MARKET SEGMENT APAC $799 SSD 17% -2% Y/Y Americas $2,613 56% 14% Y/Y $991 EMEA $1,257 27% -1% Y/Y Enterprise 21% -9% Y/Y $1,615 PSD $3,678 79% 12% Y/Y  Americas:  Routing product revenues grew 14% Y/Y. Strength across both segments.  Switching product revenue grew 15% Y/Y.  EMEA:  Security product revenue declined 16% Y/Y. 35% 4% Y/Y Service Provider $3,054 65% 9% Y/Y  >50% of total revenue growth came from web services/content and cable customers.  Enterprise growth primarily driven by broad based strength in the US. Signs of growth in second half of 2013, with good design wins.  APAC: Good growth in China; focused on driving more broad-based growth across the region. 7 Note: Revenue in $ Millions Copyright © 2014 Juniper Networks, Inc.
  8. 8. FINANCIAL RESULTS Non-GAAP Except Revenue Q4’13 Revenue Q3’13 Q4’12 Q/Q Change Y/Y Change $1,273.6M $1,185.6M $1,140.8M 7% 12% 64.2% 64.4% 65.3% -0.2 pts -1.1 pts R&D $224.1M $227.9M $246.1M -2% -9% Sales & Marketing $264.2M $248.1M $246.5M 6% 7% $51.0M $53.6M $44.3M -5% 15% $539.3M $529.6M $536.9M 2% 0% 21.9% 19.8% 18.2% 2.1 pts 3.7 pts $215.8M $166.3M $144.6M 30% 49% $0.43 $0.33 $0.28 $0.10 $0.15 Gross Margin % G&A Total Operating Expense Operating Margin % Net Income EPS (Diluted) 8 Copyright © 2014 Juniper Networks, Inc.
  9. 9. Q4 2013 CASH FLOW AND BALANCE SHEET METRICS Net cash, cash equivalents and investments of $3.1B Cash Position Net cash flows from operations of $390M Share Repurchase DSO 41 days Product Deferred Revenue 9 $242M or 11.8M shares, average price of $20.47/share Total deferred revenue up $48 million dollars Q/Q Product deferred down $35 million Q/Q Copyright © 2014 Juniper Networks, Inc.
  10. 10. HISTORICAL SOURCES/USES OF CAPITAL 2008-2013 Demonstrated ability and commitment to generate strong cash flows, enabling investments in the business and capital distribution to shareholders $1.0 $5.0 ($1.4) Financing Proceeds Capital Purchases ($0.6) ($2.1) M&A Share Repurchases Cash from Operations $0.2 $4.1 gross Other $2.0 60% Offshore FY’08 Beginning Cash & Investments 40% Onshore 551.4 Shares* Cash Generated 10 FY’13 Cash & Investments Invested in the Business Capital Distribution In Billions Share Repurchases shown, net of proceeds from share issuances “Other” consists of change in investments, purchase of licensed software, excess tax benefit, and change in restricted cash *Fully diluted shares outstanding 510.3 Shares* Copyright © 2014 Juniper Networks, Inc.
  11. 11. Q1 2014 OUTLOOK* 3 Months Ending March 31, 2014 Non-GAAP (Except for Revenue and Share Count) Revenue Gross Margin 64.0%, plus or minus half a percent OPEX Flat to slightly down versus Q4’13 Operating Margin At mid-point of revenue guidance, expect 17.0% EPS Between $0.27 and $0.30 per diluted share Tax Rate Approximately 25%, assumes R&D tax credit is approved by the end of March. If not approved, tax rate may be higher by 1.5% and would impact EPS by approx. $0.01. Share Count 11 Between $1,120 million and $1,160 million Assume flat with Q4’13 *Please note that the outlook for Q1’14 does not include the potential impact of activities related to the execution of our Integrated Operating Plan Copyright © 2014 Juniper Networks, Inc.
  12. 12. APPENDIX 12 Copyright © 2014 Juniper Networks, Inc.
  13. 13. SEGMENT OPERATING RESULTS Three Months Ended Q4'13 Q3'13 Q4'12 Product revenue $802.0 $741.9 $659.5 Service revenue 211.7 197.4 206.9 $1,013.7 $939.3 $866.4 $469.3 $424.1 $365.5 (in millions, except per share amounts and percentages) Platform Systems Division Segment: Total PSD revenue Non-GAAP PSD contribution margin $ Non-GAAP PSD contribution margin % 46.3% 45.1% 42.2% Software Solutions Division Segment: Product revenue $171.5 $158.9 $187.8 Service revenue 88.4 87.4 86.6 Total SSD revenue $259.9 $246.3 $274.4 Non-GAAP SSD contribution margin $ $108.6 $95.2 $116.4 Non-GAAP SSD contribution margin % Total revenue 13 41.8% $1,273.6 38.7% $1,185.6 42.4% $1,140.8 Copyright © 2014 Juniper Networks, Inc.
  14. 14. SEGMENT OPERATING RESULTS Three Months Ended (in millions, except per share amounts and percentages) Q4'13 Q3'13 Q4'12 Non-GAAP segment contribution margin $ $577.9 $519.3 $481.9 Non-GAAP segment contribution margin % Corporate unallocated expenses Non-GAAP total segment operating margin $ Non-GAAP total segment operating margin % 45.4% 43.8% 42.2% ($299.6) ($284.9) ($274.4) $278.3 $234.4 $207.5 21.9% 19.8% 18.2% (63.9) (69.3) (57.5) Share-based payroll tax expense (0.6) (0.4) (0.1) Amortization of purchased intangible assets (9.1) (7.6) (7.2) (18.9) (12.1) (11.1) Acquisition-related charges (0.7) — (0.7) Litigation charge 10.3 — — $195.4 $145.0 $130.9 Share-based compensation expense Restructuring and other charges GAAP operating income 14 Copyright © 2014 Juniper Networks, Inc.
  15. 15. GAAP TO NON-GAAP RECONCILIATIONS Three Months Ended (in millions, except per share amounts and percentages) Q4'13 Q3'13 Q4'12 GAAP gross margin - Product $621.9 $575.3 $551.2 GAAP product gross margin % of product revenue 63.9% 63.9% 65.1% 1.2 1.4 1.1 — — — Amortization of purchased intangible assets 8.0 6.5 6.0 Restructuring and other charges 0.8 6.1 0.5 Non-GAAP gross margin – Product $631.9 $589.3 $558.8 Share-based compensation expense Share-based payroll tax expense Non-GAAP product gross margin % of product revenue GAAP gross margin – Service GAAP service gross margin % of service revenue 64.9% $181.7 65.4% $171.2 66.0% $181.8 60.5% 60.1% 62.0% Share-based compensation expense 3.9 3.4 3.8 Share-based payroll tax expense 0.1 0.1 — $185.7 $174.7 $185.6 Non-GAAP gross margin – Service Non-GAAP service gross margin % of service revenue 15 61.9% 61.3% 63.2% Copyright © 2014 Juniper Networks, Inc.
  16. 16. GAAP TO NON-GAAP RECONCILIATIONS Three Months Ended (in millions, except per share amounts and percentages) Q4'13 Q3'13 Q4'12 GAAP gross margin $803.6 $746.5 $733.0 GAAP gross margin % of revenue 63.1% 63.0% 64.3% Share-based compensation expense 5.1 4.8 4.9 Share-based payroll tax expense 0.1 0.1 — Amortization of purchased intangible assets 8.0 6.5 6.0 Restructuring and other charges 0.8 6.1 0.5 $817.6 $764.0 $744.4 Non-GAAP gross margin Non-GAAP gross margin % of revenue 16 64.2% 64.4% 65.3% Copyright © 2014 Juniper Networks, Inc.
  17. 17. GAAP TO NON-GAAP RECONCILIATIONS Three Months Ended (in millions, except per share amounts and percentages) Q4'13 Q3'13 Q4'12 GAAP research and development expense $258.7 $264.6 $275.1 (34.4) (36.6) (28.9) (0.2) (0.1) (0.1) Non-GAAP research and development expense $224.1 $227.9 $246.1 GAAP sales and marketing expense $283.2 $269.5 $264.7 (17.9) (20.4) (17.3) Share-based payroll tax expense (0.3) (0.2) — Amortization of purchased intangible assets (0.8) (0.8) (0.9) $264.2 $248.1 $246.5 Share-based compensation expense Share-based payroll tax expense Share-based compensation expense Non-GAAP sales and marketing expense 17 Copyright © 2014 Juniper Networks, Inc.
  18. 18. GAAP TO NON-GAAP RECONCILIATIONS Three Months Ended Q4'13 Q3'13 Q4'12 $48.2 $61.4 $51.7 (6.5) (7.5) (6.4) — — — Amortization of purchased intangible assets (0.3) (0.3) (0.3) Acquisition-related charges (0.7) — (0.7) Litigation charge 10.3 — — $51.0 $53.6 $44.3 $608.2 $601.5 $602.1 (58.8) (64.5) (52.6) Share-based payroll tax expense (0.5) (0.3) (0.1) Amortization of purchased intangible assets (1.1) (1.1) (1.2) (18.1) (6.0) (10.6) Acquisition-related charges (0.7) — (0.7) Litigation charge 10.3 — — $539.3 $529.6 $536.9 (in millions, except per share amounts and percentages) GAAP general and administrative expense Share-based compensation expense Share-based payroll tax expense Non-GAAP general and administrative expense GAAP operating expense Share-based compensation expense Restructuring and other charges Non-GAAP operating expense 18 Copyright © 2014 Juniper Networks, Inc.
  19. 19. GAAP TO NON-GAAP RECONCILIATIONS Three Months Ended (in millions, except per share amounts and percentages) Q4'13 Q3'13 Q4'12 GAAP operating income $195.4 $145.0 $130.9 GAAP operating margin 15.3% 12.2% 11.5% 63.9 69.3 57.5 Share-based payroll tax expense 0.6 0.4 0.1 Amortization of purchased intangible assets 9.1 7.6 7.2 18.9 12.1 11.1 0.7 — 0.7 (10.3) — — $278.3 $234.4 $207.5 Share-based compensation expense Restructuring and other charges Acquisition-related charges Litigation charge Non-GAAP operating income Non-GAAP operating margin GAAP income tax provision GAAP income tax rate Income tax effect of non-GAAP exclusions Non-GAAP provision for income tax Non-GAAP income tax rate 19 21.9% $33.4 19.8% $38.4 18.2% $44.2 18.0% 27.9% 16.5 18.6 8.8 $49.9 $57.0 $53.0 18.8% 25.5% 31.6% 26.8% Copyright © 2014 Juniper Networks, Inc.
  20. 20. GAAP TO NON-GAAP RECONCILIATIONS Three Months Ended (in millions, except per share amounts and percentages) Q4'13 GAAP net income $151.8 $99.1 $95.7 63.9 69.3 57.5 Share-based payroll tax expense 0.6 0.4 0.1 Amortization of purchased intangible assets 9.1 7.6 7.2 18.9 12.1 11.1 0.7 — 0.7 (10.3) — — (2.4) (3.6) (18.9) (16.5) (18.6) (8.8) $215.8 $166.3 $144.6 GAAP diluted net income per share $0.30 $0.19 $0.19 Non-GAAP diluted net income per share $0.43 $0.33 $0.28 Shares used in computing diluted net income per share 505.6 508.6 513.1 Share-based compensation expense Restructuring and other charges Acquisition-related charges Litigation charge Gain on equity investments Income tax effect of non-GAAP exclusions Non-GAAP net income 20 Q3'13 Q4'12 Copyright © 2014 Juniper Networks, Inc.
  21. 21. THANK YOU 21 Copyright © 2014 Juniper Networks, Inc.

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