Plagued by weak service provider sales, Juniper Networks posted lukewarm third-quarter 2019 revenues that fell slightly below the midpoint of its predictions.
According to CEO Rami Rahim, steady growth within Juniper’s enterprise, security, and software businesses during the quarter wasn’t enough to offset the decline in service provider revenues, which fell 17% year over year.
Despite the challenges, Rahim expressed confidence the company would return to year-over-year growth during the fourth quarter. Rahim did, however, temper expectations saying that the degree of growth would be lower than previously anticipated due to the likelihood the service provider weakness would continue.
The company’s cloud business was one sunny spot during the quarter growing 6% year over year, driven by WAN network and switch equipment sales.
“We’re encouraged by the success we are seeing within our cloud customer’s wide area network and continue to believe we are positioned to grow with their capacity requirements in this segment now that the MX and PTX transition is largely behind us,” said Rahim, according to a transcript.
In line with this trend, Rahim said the company was well positioned to capture additional market share in the hyperscale switching market, adding that Juniper will be launching additional “solutions and capabilities” in line with this goal in the coming quarters.
Rahim also lauded the company’s SD-WAN and Mist AI platforms, which, despite being relatively small, saw steady growth during the quarter. On this front, he expressed his belief that the company’s software business would continue to grow as a percentage of sales as subscription-based pricing models become more common.
Juniper’s Q3 Revenues
Juniper saw its third-quarter revenues up 3% sequentially falling slightly short of the company’s predictions.
Enterprise revenues were a highlight during the quarter up 10% sequentially and 8% since the same time last year. Meanwhile, the company’s software and security offerings continued to see strong growth increasing 13% and 22% respectively year over year.
Juniper’s switching business also saw steady growth up 9% since Q3 2018, however the company’s routing business took a hit falling 18% during the same period.
“Our revenue outlook shows a modest return to year-over-year growth at the point,” CFO Ken Miller said.
Miller said Juniper’s revenue outlook will be lower than expected due to continued business challenges associated with the company’s largest service provider customers, lingering impacts from the transition to Salesforce, and macroeconomic uncertainty.