Shares of computer networking provider Juniper Networks Inc. fell in extended trading today after the company reported mixed second-quarter results, with earnings falling short of Wall Street forecasts and revenue above expectations.
The company reported earnings before certain costs such as stock-based compensation of 42 cents per share on revenue of $1.27 billion for the period, up 8% from a year ago. . Wall Street was looking for higher earnings of 44 cents a share on weaker sales of $1.26 billion. Juniper also reported net income for the quarter up 83% to $113.4 million.
Investors reacted badly to the report, with Juniper’s stock falling more than 4% after hours, after falling 1% earlier in the day.
Juniper is a supplier of computer networking hardware such as Ethernet routers and switches. It also sells networking software and also provides software tools to secure these networks.
Juniper Chief Executive Rami Rahim (pictured) said the company beat its own revenue forecast in the quarter and recorded a second straight quarter of double-digit year-over-year product revenue growth ‘other.
“Demand signals remain healthy and we see exciting opportunities in our enterprise, cloud and service provider markets,” Rahim added. “Based on this momentum, the backlog we have built and our latest supply expectations, I am increasingly optimistic about our revenue growth outlook for the year.”
Like many tech companies, Juniper’s fortunes this year have been hampered by issues with its supply chain. Three months ago, the company issued a warning that the supply chain challenges it faces will likely lead to extended delivery times, as well as high logistics and component costs.
In a conference call today, Rahim said these issues have weighed on the company’s growth. He said the availability of certain components remained “extremely challenging” during the quarter due to a significant increase in the volume of vendor churns. As a result, the company incurred higher costs to secure access to additional parts and get products to customers as quickly as possible.
“While some of these actions will impact profitability in the coming quarters, they also allow us to access more parts and better meet customer demand, which should have positive longer-term implications. for our business,” insisted Rahim.
Despite the rising costs it faces, Juniper managed to grow its operating margin to 8.5% in the quarter from 7% a year ago.
Rahim also addressed concerns about the company’s software business. He said revenue there was up 24% from a year earlier, but was still below expectations. “We believe the outlook for our software business remains strong and we are encouraged by the momentum we are seeing with our Junos Space Flex software, out-of-the-box subscription software and software-as-a-service offering, like Mist,” he added.
Looking ahead to the current quarter, Juniper said it expects earnings in the range of 45 to 55 cents per share, the midpoint of which is below Wall Street’s target of 54 cents per share. In terms of revenue, Juniper offered a forecast ranging from $1.3 billion to $1.4 billion against a Wall Street forecast of $1.29 billion.