UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from_________ to_________ Commission file number: 001-34501 JUNIPER NETWORKS, INC. (Exact name of registrant as specified in its charter) Delaware 77-0422528 (Stat ...

Juniper Networks, Inc. (NYSE:JNPR) Q1 2023 Results Conference Call April 25, 2023 5:00 PM ET Company Participants Jess Lubert - VP, IR Rami Rahim - CEO Ken Miller - CFO Conference Call Participants Amit Daryanani - Evercore Tim Long - Barclays Paul Silverstein - TD Cowen David Vogt - UBS Samik Chatterjee - JP Morgan Aaron Rakers - Wells Fargo George Notter - Jeffries Meta Marshall - Morgan Stanley Mike Ng - Goldman Sachs James Fish - Piper Sandler Operator Greetings. Welcome to the Juniper Networks Q1 2023 ...

Financial Performance and Revenue Recognition - The company expects its gross margins and operating margins to vary over time due to factors such as customer mix shifts and increased price competition [131]. - A significant portion of the company's revenues is derived from a limited number of customers, increasing risks related to their financial condition and purchasing behavior [133]. - The company recognizes a significant portion of its revenue at the end of each quarter, which can lead to unpredictable revenue recognition [146]. - The ability to recognize revenue is contingent on the timing of product orders and deliveries, which can vary significantly [146]. - Non-standard contract terms with large customers may adversely affect revenue recognition and increase operational costs due to their greater purchasing power [176]. Supply Chain and Operational Risks - The ongoing COVID-19 pandemic has led to supply constraints and increased logistics costs, negatively impacting revenue recognition and gross margins [138]. - The company has experienced extended lead times and increased costs due to component shortages, affecting its ability to convert backlog into revenue [138]. - The ongoing global semiconductor shortage has caused increased prices and extended lead times, significantly disrupting production schedules [157]. - The company has experienced supply constraints due to manufacturing capacity limitations and component shortages, negatively impacting revenue recognition and customer lead times [28]. - The ongoing COVID-19 pandemic has resulted in increased logistics costs and extended shipping times, further complicating supply chain management [28]. - The company must effectively manage its supply chain to avoid disruptions that could adversely affect sales and earnings [159]. - The development of alternative sources for components is challenging and costly, particularly in light of geopolitical tensions affecting supply chains [28]. Market and Economic Conditions - Economic instability and geopolitical tensions, including the conflict between Russia and Ukraine, have put pressure on demand for the company's products [135]. - Fluctuating economic conditions make it difficult to predict revenues and gross margins, potentially leading to price concessions in certain markets [135]. - The company continues to monitor the impact of the COVID-19 pandemic on its operations, with uncertainty regarding future developments [139]. Competition and Market Position - The company faces competition from well-established firms with greater resources, which could impact market share and pricing strategies [134]. - The company is dependent on maintaining relationships with value-added resellers and distributors, as loss of sales to these partners could materially reduce revenues [167]. - The company anticipates fluctuations in sales of professional services and SaaS contracts based on customer satisfaction and spending levels [147]. Regulatory and Compliance Risks - The company is subject to evolving data protection laws, such as the EU's GDPR, which imposes stringent requirements and potential penalties for noncompliance [192]. - The SEC mandates the company to report on the presence of "conflict minerals" in its supply chain, which could lead to increased compliance costs and affect customer relationships [178]. - The company may incur significant costs related to compliance with cybersecurity regulations and standards set by the U.S. government, affecting product development and operational planning [189]. - The company faces increased costs and operational impacts due to compliance with environmental laws and regulations, which may require reengineering products to meet new standards [179]. Financial and Debt Management - As of December 31, 2022, the company's goodwill was $3,734.4 million, and purchased intangible assets were $160.5 million, with potential impairment charges affecting future earnings [194]. - As of December 31, 2022, the company had $1,700.0 million in outstanding senior notes and a $500.0 million unsecured revolving credit facility [201]. - The company faces risks associated with its outstanding indebtedness, including the ability to generate sufficient cash flow to service its debt obligations [202]. - The company has substantial investments in various securities, which are subject to credit, liquidity, and market risks that could adversely affect its financial condition [205]. Cybersecurity and IT Risks - The company is facing significant risks from cyberattacks, which could compromise proprietary information and disrupt operations, potentially leading to reputational and financial harm [163]. - The reliance on third-party vendors for IT services poses risks, as any disruptions in their systems could adversely affect the company's ability to deliver products and services [169]. Human Resources and Talent Management - The competition for skilled personnel in technology and engineering fields is significant, potentially leading to increased compensation expenses and challenges in product development [170]. Legal and Litigation Risks - The company has been subject to litigation, including a settlement involving a payment of $11.8 million related to the U.S. Foreign Corrupt Practices Act, which could impact financial condition and operations [173]. - The exclusive forum provisions in the company's bylaws may limit stockholders' ability to bring claims in favorable judicial forums, potentially increasing costs associated with legal disputes [207]. International Operations and Compliance - The company derives a substantial portion of its revenues from international operations and plans to continue expanding in international markets [198]. - Local laws and customs in foreign countries may conflict with U.S. regulations, posing compliance risks that could materially affect the company's operations [200].

Juniper Networks, Inc. (NYSE:JNPR) Q4 2022 Earnings Conference Call January 31, 2023 5:00 PM ET Company Participants Jess Lubert - Vice President, Investor Relations Rami Rahim - Chief Executive Officer Ken Miller - Chief Financial Officer Conference Call Participants Tim Long - Barclays Alex Henderson - Needham George Notter - Jefferies Samik Chatterjee - JPMorgan Sami Badri - Credit Suisse Simon Leopold - Raymond James David Vogt - UBS Amit Daryanani - Evercore Tal Liani - Bank of America James Fish - Pip ...

Financial Data and Key Metrics Changes - Total revenue for Q3 2022 reached $1.450 billion, exceeding guidance and setting an all-time quarterly revenue record for the company [6][28] - Non-GAAP earnings per share were $0.58, above the high end of quarterly guidance [7][28] - Non-GAAP gross margin was 57.2%, above the midpoint of guidance, primarily due to favorable product mix and higher revenue volume [31] Business Line Data and Key Metrics Changes - Total product sales grew 25% year-over-year, with double-digit growth across all customer verticals and solutions [7][30] - Automated WAN solutions increased 39% year-over-year, cloud-ready data center revenue grew 18%, and AI-driven enterprise revenue rose 16% [30] - The cloud business saw a revenue increase of 24% year-over-year, with strong growth from major cloud accounts [12][30] Market Data and Key Metrics Changes - The enterprise vertical achieved record revenue results, growing 17% year-over-year [30] - Service provider revenue rose 17% year-over-year, indicating strong demand in this segment [13][30] - The company experienced a mid-teens year-over-year decline in gross orders, primarily due to difficult comparisons from the previous year [9] Company Strategy and Development Direction - The company is focused on scaling its enterprise business and capitalizing on digital transformation initiatives [11][14] - There is a strong emphasis on leveraging AI and software automation tools to improve network operations and reduce costs [15] - The company aims to deliver sustained revenue growth, improved operating margins, and earnings expansion over time [35] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about overall demand, which is above pre-pandemic levels, despite some customers scrutinizing budgets [10][15] - The company expects approximately 12% to 13% year-over-year revenue growth in 2022 and at least 7% growth in 2023 [15][34] - Management noted that supply chain challenges are expected to persist into 2023, but improvements are anticipated [33][35] Other Important Information - Total software and related services revenue grew by 21% year-over-year, accounting for 18% of total revenue [25][31] - Annual recurring revenue (ARR) increased by 38% year-over-year, reflecting strong demand for software subscriptions [25][31] - The company has built a backlog of $2.3 billion, which is expected to normalize as supply improves [39][40] Q&A Session Summary Question: Insights on backlog and supply chain - Management indicated that backlog declined approximately $100 million to $2.3 billion, primarily due to improved supply [39] - Backlog is expected to decline further as supply improves, but it remains elevated compared to historical levels [40] Question: Customer scrutiny in service provider and cloud verticals - Demand remains healthy, with service provider and cloud segments showing positive order growth despite some scrutiny [44][46] - Management noted that early ordering patterns are normalizing, providing a clearer view of demand [45] Question: Product mix assumptions for 2023 - Management expects enterprise to be the fastest-growing vertical, followed by cloud and service provider [50] - AI-driven enterprise solutions are anticipated to lead growth, with strong performance in cloud-ready data center and automated WAN [50] Question: Impact of pricing on revenue - Pricing actions taken over the past quarters are expected to have a growing impact on revenue and gross margin [60] - Volume is driving significant growth, with product revenue growing 25% year-over-year primarily through unit sales [61] Question: Cloud demand trends - Cloud demand remains strong across both hyperscale and Tier 2 customers, with healthy engagement levels [71] - Management is optimistic about cloud infrastructure investments as cloud providers continue to perform well [74]

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis for Juniper Networks, Inc [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements of Juniper Networks, Inc. for the periods ended June 30, 2022, and December 31, 2021, including statements of operations, comprehensive income, balance sheets, cash flows, and changes in stockholders' equity, along with accompanying notes [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This statement provides a summary of the company's revenues, costs, operating expenses, and net income for the three and six months ended June 30, 2022, and 2021 Net Revenues (Three Months Ended June 30) | Metric | 2022 ($M) | 2021 ($M) | Change ($M) | Change (%) | | :-------------- | :-------- | :-------- | :---------- | :--------- | | Product | 839.8 | 759.2 | 80.6 | 10.6% | | Service | 429.8 | 413.1 | 16.7 | 4.0% | | **Total** | **1,269.6** | **1,172.3** | **97.3** | **8.3%** | Net Revenues (Six Months Ended June 30) | Metric | 2022 ($M) | 2021 ($M) | Change ($M) | Change (%) | | :-------------- | :-------- | :-------- | :---------- | :--------- | | Product | 1,584.1 | 1,431.6 | 152.5 | 10.7% | | Service | 853.7 | 815.1 | 38.6 | 4.7% | | **Total** | **2,437.8** | **2,246.7** | **191.1** | **8.5%** | Net Income and Diluted EPS (Three and Six Months Ended June 30) | Metric | Three Months 2022 ($M) | Three Months 2021 ($M) | Six Months 2022 ($M) | Six Months 2021 ($M) | | :-------- | :--------------------- | :--------------------- | :------------------- | :------------------- | | Net Income | 113.4 | 62.0 | 169.1 | 30.9 | | Diluted EPS | 0.35 | 0.19 | 0.51 | 0.09 | [Condensed Consolidated Statements of Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This statement details the components of comprehensive income, including net income and other comprehensive income (loss) items such as unrealized gains/losses on debt securities, cash flow hedges, and foreign currency translation adjustments for the three and six months ended June 30, 2022, and 2021 Comprehensive Income (Three and Six Months Ended June 30) | Metric | Three Months 2022 ($M) | Three Months 2021 ($M) | Six Months 2022 ($M) | Six Months 2021 ($M) | | :----------------- | :--------------------- | :--------------------- | :------------------- | :------------------- | | Comprehensive Income | 101.6 | 36.6 | 171.1 | 31.2 | Other Comprehensive (Loss) Income, Net (Six Months Ended June 30) | Metric | 2022 ($M) | 2021 ($M) | Change ($M) | | :------------------------------------------- | :-------- | :-------- | :---------- | | Net change on available-for-sale debt securities | (7.2) | (0.9) | (6.3) | | Net change on cash flow hedges | 23.9 | 2.7 | 21.2 | | Change in foreign currency translation adjustments | (14.7) | (1.5) | (13.2) | | **Total** | **2.0** | **0.3** | **1.7** | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's assets, liabilities, and stockholders' equity as of June 30, 2022, and December 31, 2021 Total Assets, Liabilities, and Stockholders' Equity (June 30, 2022 vs. Dec 31, 2021) | Metric | June 30, 2022 ($M) | Dec 31, 2021 ($M) | Change ($M) | Change (%) | | :----------------------- | :----------------- | :---------------- | :---------- | :--------- | | Total Assets | 8,861.0 | 8,887.0 | (26.0) | (0.3%) | | Total Liabilities | 4,612.3 | 4,570.1 | 42.2 | 0.9% | | Total Stockholders' Equity | 4,248.7 | 4,316.9 | (68.2) | (1.6%) | Key Current Assets (June 30, 2022 vs. Dec 31, 2021) | Metric | June 30, 2022 ($M) | Dec 31, 2021 ($M) | Change ($M) | Change (%) | | :---------------------------------------- | :----------------- | :---------------- | :---------- | :--------- | | Cash and cash equivalents | 721.8 | 922.5 | (200.7) | (21.8%) | | Accounts receivable, net | 1,048.4 | 994.4 | 54.0 | 5.4% | | Inventory | 394.9 | 272.6 | 122.3 | 44.9% | | Prepaid expenses and other current assets | 612.6 | 451.6 | 161.0 | 35.7% | Key Current Liabilities (June 30, 2022 vs. Dec 31, 2021) | Metric | June 30, 2022 ($M) | Dec 31, 2021 ($M) | Change ($M) | Change (%) | | :-------------------- | :----------------- | :---------------- | :---------- | :--------- | | Accounts payable | 360.6 | 273.7 | 86.9 | 31.8% | | Accrued compensation | 276.1 | 336.0 | (59.9) | (17.8%) | | Deferred revenue | 940.4 | 937.9 | 2.5 | 0.3% | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement outlines the cash flows from operating, investing, and financing activities for the six months ended June 30, 2022, and 2021 Cash Flows Summary (Six Months Ended June 30) | Metric | 2022 ($M) | 2021 ($M) | Change ($M) | Change (%) | | :------------------------------------------ | :-------- | :-------- | :---------- | :--------- | | Net cash (used in) provided by operating activities | (73.8) | 437.0 | (510.8) | (116.9%) | | Net cash provided by investing activities | 217.7 | 20.6 | 197.1 | 956.8% | | Net cash used in financing activities | (332.0) | (829.6) | 497.6 | (60.0%) | | Cash, cash equivalents, and restricted cash at end of period | 740.6 | 1,009.4 | (268.8) | (26.6%) | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) This statement details the changes in stockholders' equity, including net income, other comprehensive income/loss, stock issuance, repurchases, share-based compensation, and dividends for the three and six months ended June 30, 2022, and 2021 Total Stockholders' Equity (June 30) | Year | Total Stockholders' Equity ($M) | | :--- | :------------------------------ | | 2022 | 4,248.7 | | 2021 | 4,340.9 | - Key changes in stockholders' equity for the six months ended June 30, 2022, include net income of **$169.1 million**, repurchase and retirement of common stock of **$(226.3) million**, payments of cash dividends of **$(134.8) million**, and share-based compensation expense of **$92.7 million**[28](index=28&type=chunk)[341](index=341&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the financial statements, covering accounting policies, significant events, and specific financial line items [Note 1. Basis of Presentation and Summary of Significant Accounting Policies](index=10&type=section&id=Note%201.%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) The financial statements are prepared in accordance with U.S. GAAP for interim financial information and should be read in conjunction with the annual 10-K. It outlines the company's accounting for equity method investments and notes the adoption of ASU No. 2021-08 and ASU No. 2020-04, neither of which had a material impact - The Condensed Consolidated Financial Statements are prepared in accordance with U.S. GAAP for interim financial information and are not necessarily indicative of the results for the full year[32](index=32&type=chunk)[345](index=345&type=chunk) - Investments in companies where Juniper has significant influence but not control are accounted for under the equity method, with the share of net earnings or loss recorded two months in arrears[35](index=35&type=chunk)[348](index=348&type=chunk) - The early adoption of ASU No. 2021-08 (Topic 805) on contract assets and liabilities and ASU No. 2020-04 (Topic 848) on Reference Rate Reform did not have a material impact on the Condensed Consolidated Financial Statements[36](index=36&type=chunk)[349](index=349&type=chunk)[37](index=37&type=chunk)[350](index=350&type=chunk)[351](index=351&type=chunk) [Note 2. Divestiture](index=12&type=section&id=Note%202.%20Divestiture) On April 4, 2022, Juniper divested its silicon photonics business to Synopsys, Inc., forming OpenLight Photonics, Inc. Juniper received $90.0 million cash and retained a 25% equity interest, recognizing a gain of $45.8 million. The retained equity interest is accounted for under the equity method - Juniper divested its silicon photonics business to Synopsys, Inc. on April 4, 2022, receiving **$90.0 million** in cash and retaining a **25% equity interest** in the new entity, OpenLight Photonics, Inc[41](index=41&type=chunk)[354](index=354&type=chunk) - A gain on divestiture of **$45.8 million** was recognized, with **$19.5 million** related to the remeasurement of the retained investment[42](index=42&type=chunk)[355](index=355&type=chunk) - The **25% equity interest** in OpenLight, valued at **$40.8 million**, is accounted for under the equity method[43](index=43&type=chunk)[356](index=356&type=chunk) [Note 3. Cash Equivalents and Investments](index=13&type=section&id=Note%203.%20Cash%20Equivalents%20and%20Investments) This note details the company's available-for-sale debt securities and equity investments, including their fair values and classifications. It also provides a reconciliation of cash, cash equivalents, and restricted cash Total Available-for-Sale Debt Securities (June 30, 2022) | Metric | Estimated Fair Value ($M) | | :------------------------------------ | :------------------------ | | Total available-for-sale debt securities | 726.0 | Total Equity Securities (June 30, 2022) | Metric | Amount ($M) | | :-------------------- | :---------- | | Total equity securities | 462.2 | - As of June 30, 2022, the company had **$10.9 million** in unrealized losses from **469** available-for-sale debt investments, primarily due to changes in market interest rates[48](index=48&type=chunk)[361](index=361&type=chunk) Cash, Cash Equivalents, and Restricted Cash (June 30, 2022) | Metric | Amount ($M) | | :---------------------------------------- | :---------- | | Total cash, cash equivalents, and restricted cash | 740.6 | [Note 4. Fair Value Measurements](index=16&type=section&id=Note%204.%20Fair%20Value%20Measurements) This note describes how the company measures assets and liabilities at fair value on a recurring and nonrecurring basis, categorizing them into Level 1, 2, and 3 inputs. It highlights that privately-held debt and equity securities without readily determinable fair value are classified as Level 3 Total Assets and Liabilities Measured at Fair Value (June 30, 2022) | Metric | Total ($M) | | :------------------------------------------ | :--------- | | Total assets measured at fair value | 1,097.0 | | Total liabilities measured at fair value | (106.1) | - Available-for-sale debt securities and derivative instruments are classified as **Level 2**, valued using observable market data[62](index=62&type=chunk)[375](index=375&type=chunk) - Privately-held debt and redeemable preferred stock securities, and equity investments without readily determinable fair value, are classified as **Level 3** assets due to the lack of observable inputs[63](index=63&type=chunk)[376](index=376&type=chunk)[64](index=64&type=chunk)[377](index=377&type=chunk) - No significant impairment charges were recognized for intangible assets and goodwill during the three and six months ended June 30, 2022[65](index=65&type=chunk)[378](index=378&type=chunk) [Note 5. Derivative Instruments](index=19&type=section&id=Note%205.%20Derivative%20Instruments) Juniper uses derivative instruments, including foreign currency forward contracts and interest rate swaps, to manage foreign currency and interest rate risks, not for speculative purposes. The note details the notional amounts and fair values of these designated and non-designated derivatives Total Notional Amount of Derivative Instruments (June 30, 2022) | Metric | Amount ($M) | | :----------------------------------- | :---------- | | Total designated derivatives | 2,259.4 | | Non-designated derivatives | 148.4 | | **Total** | **2,407.8** | Fair Value of Derivative Instruments (June 30, 2022) | Metric | Amount ($M) | | :------------------------------------------ | :---------- | | Total derivative assets | 112.5 | | Total derivative liabilities | 106.1 | - For cash flow hedges, the Company recognized an unrealized gain of **$7.2 million** and **$35.2 million** in accumulated other comprehensive income (loss) for the effective portion of its derivative instruments for the three and six months ended June 30, 2022, respectively[76](index=76&type=chunk)[389](index=389&type=chunk) - An estimated **$25.0 million** of unrealized net loss within accumulated other comprehensive loss is expected to be reclassified into earnings within the next twelve months[77](index=77&type=chunk)[390](index=390&type=chunk) [Note 6. Other Financial Information](index=21&type=section&id=Note%206.%20Other%20Financial%20Information) This note provides details on inventory, prepaid expenses and other current assets, warranties, revenue recognition from deferred revenue, remaining performance obligations (RPO), deferred commissions, and the components of other expense, net Total Inventory (June 30, 2022 vs. Dec 31, 2021) | Metric | June 30, 2022 ($M) | Dec 31, 2021 ($M) | | :-------------- | :----------------- | :---------------- | | Total inventory | 410.3 | 284.2 | Prepaid Expenses and Other Current Assets (June 30, 2022 vs. Dec 31, 2021) | Metric | June 30, 2022 ($M) | Dec 31, 2021 ($M) | | :---------------------------------------- | :----------------- | :---------------- | | Total prepaid expenses and other current assets | 612.6 | 451.6 | Remaining Performance Obligations (RPO) (June 30, 2022) | Metric | Total ($M) | Less than 1 year ($M) | | :------ | :--------- | :-------------------- | | Total | 1,483.7 | 958.6 | Other Expense, Net (Six Months Ended June 30) | Metric | 2022 ($M) | 2021 ($M) | Change ($M) | Change (%) | | :-------------------------- | :-------- | :-------- | :---------- | :--------- | | Interest income | 5.9 | 7.5 | (1.6) | (21.3%) | | Interest expense | (25.9) | (26.3) | 0.4 | (1.5%) | | Gain (loss) on investments, net | (3.1) | 2.6 | (5.7) | (219.2%) | | Other | 2.1 | 0.3 | 1.8 | 600.0% | | **Total Other expense, net** | **(21.0)** | **(15.9)** | **(5.1)** | **32.1%** | [Note 7. Restructuring Charges](index=23&type=section&id=Note%207.%20Restructuring%20Charges) The company initiated restructuring plans in 2022 and 2021 to align with strategic changes, resulting in severance and contract termination costs. Activities are expected to be completed by the end of 2022 Restructuring Liabilities (June 30, 2022) | Metric | Amount ($M) | | :------------------------------------ | :---------- | | Total restructuring liabilities | 9.2 | - Restructuring charges for the six months ended June 30, 2022, were **$9.3 million**[97](index=97&type=chunk)[410](index=410&type=chunk) - Activities under the approved restructuring plans are expected to be completed by the end of 2022[96](index=96&type=chunk)[409](index=409&type=chunk) [Note 8. Debt](index=24&type=section&id=Note%208.%20Debt) This note summarizes the company's total debt, including Senior Notes and a revolving credit facility. As of June 30, 2022, the company had $1,700.0 million in Senior Notes and was in compliance with all debt covenants Total Debt (June 30, 2022) | Metric | Amount ($M) | | :------------------------------------ | :---------- | | Total Senior Notes | 1,700.0 | | Total Debt (net of discount and adjustments) | 1,625.8 | - The company has an unsecured revolving credit facility of up to **$500.0 million**, expiring in April 2024, with no outstanding amounts as of June 30, 2022[103](index=103&type=chunk)[416](index=416&type=chunk) - As of June 30, 2022, the Company was in compliance with all covenants in the indentures governing the Notes and the credit facility[102](index=102&type=chunk)[415](index=415&type=chunk)[103](index=103&type=chunk)[416](index=416&type=chunk) [Note 9. Equity](index=25&type=section&id=Note%209.%20Equity) This note details the company's dividend payments and stock repurchase activities. The company declared and paid quarterly cash dividends and repurchased common stock under its 2018 Stock Repurchase Program Cash Dividends Paid (Six Months Ended June 30, 2022) | Metric | Amount ($M) | | :------------------------------------ | :---------- | | Total cash dividends paid | 134.8 | | Per share | 0.42 | Stock Repurchases (Six Months Ended June 30, 2022) | Metric | Amount | | :------------------------------------ | :---------- | | Shares repurchased (millions) | 6.3 | | Aggregate purchase price ($M) | 212.2 | | Average price per share ($) | 33.38 | - Approximately **$0.7 billion** of authorized funds remained under the 2018 Stock Repurchase Program as of June 30, 2022[108](index=108&type=chunk)[421](index=421&type=chunk) - On July 26, 2022, a cash dividend of **$0.21 per share** was declared, payable on September 22, 2022[147](index=147&type=chunk)[460](index=460&type=chunk) [Note 10. Employee Benefit Plans](index=27&type=section&id=Note%2010.%20Employee%20Benefit%20Plans) This note describes the company's equity incentive plans, including stock options, RSUs, and PSAs, and the Employee Stock Purchase Plan (ESPP). It also provides details on RSU, RSA, and PSA activities and share-based compensation expense - As of June 30, 2022, **8.8 million shares** were available for future issuance under the 2015 Equity Incentive Plan and **7.4 million shares** under the ESPP[116](index=116&type=chunk)[429](index=429&type=chunk) RSU, RSA, and PSA Activities (June 30, 2022) | Metric | Amount | | :------------------------------------ | :---------- | | Number of Shares Outstanding (millions) | 19.6 | | Weighted Average Grant Date Fair Value per Share ($) | 26.01 | | Aggregate Intrinsic Value ($M) | 557.8 | Share-Based Compensation Expense by Award Type (Six Months Ended June 30) | Award Type | 2022 ($M) | 2021 ($M) | Change ($M) | Change (%) | | :------------------ | :-------- | :-------- | :---------- | :--------- | | Stock options | 3.1 | 5.2 | (2.1) | (40.4%) | | RSUs, RSAs, and PSAs | 79.4 | 94.5 | (15.1) | (16.0%) | | ESPP purchase rights | 9.9 | 8.3 | 1.6 | 19.3% | | **Total** | **92.4** | **108.0** | **(15.6)** | **(14.4%)** | [Note 11. Segments](index=29&type=section&id=Note%2011.%20Segments) Juniper Networks operates as one reportable segment, with financial performance reviewed on a consolidated basis. This note provides disaggregated net revenues by customer solution, customer vertical, and geographic region Net Revenues by Customer Solution (Six Months Ended June 30, 2022) | Customer Solution | Revenue ($M) | % of Total | | :------------------------------------- | :----------- | :--------- | | Automated WAN Solutions | 853.6 | 35.0% | | Cloud-Ready Data Center | 389.7 | 16.0% | | AI-Driven Enterprise | 441.3 | 18.1% | | Hardware Maintenance and Professional Services | 753.2 | 30.9% | | **Total** | **2,437.8** | **100%** | Net Revenues by Customer Vertical (Six Months Ended June 30, 2022) | Customer Vertical | Revenue ($M) | % of Total | | :---------------- | :----------- | :--------- | | Cloud | 638.0 | 26.2% | | Service Provider | 898.8 | 36.8% | | Enterprise | 901.0 | 37.0% | | **Total** | **2,437.8** | **100%** | Net Revenues by Geographic Region (Six Months Ended June 30, 2022) | Geographic Region | Revenue ($M) | % of Total | | :---------------- | :----------- | :--------- | | Americas | 1,403.6 | 57.6% | | EMEA | 671.1 | 27.5% | | APAC | 363.1 | 14.9% | | **Total** | **2,437.8** | **100%** | [Note 12. Income Taxes](index=30&type=section&id=Note%2012.%20Income%20Taxes) This note provides details on the income tax provision and effective tax rates, explaining the factors contributing to differences from the federal statutory rate. It also discusses the impact of the Tax Cuts and Jobs Act of 2017 on R&D expenditures and ongoing tax examinations Income Tax Provision and Effective Tax Rate (Six Months Ended June 30) | Metric | 2022 ($M) | 2021 ($M) | Change ($M) | Change (%) | | :--------------------- | :-------- | :-------- | :---------- | :--------- | | Income tax provision | 21.5 | 6.1 | 15.4 | 252.5% | | Effective tax rate | 11.3% | 16.5% | (5.2%) | (31.5%) | - The effective tax rate for the six months ended June 30, 2022, decreased primarily due to changes in the effect of one-time items, including the gain on divestiture and tax legislative benefits[135](index=135&type=chunk)[448](index=448&type=chunk)[194](index=194&type=chunk)[507](index=507&type=chunk) - The capitalization and amortization of R&D expenditures under the Tax Act (effective Jan 1, 2022) is estimated to decrease 2022 cash flow from operations by up to **$230 million**[195](index=195&type=chunk)[508](index=508&type=chunk) - As of June 30, 2022, gross unrecognized tax benefits totaled **$116.7 million**, with a greater than remote likelihood of decreasing by up to **$6.9 million** within the next twelve months[135](index=135&type=chunk)[448](index=448&type=chunk)[136](index=136&type=chunk)[449](index=449&type=chunk) [Note 13. Net Income per Share](index=31&type=section&id=Note%2013.%20Net%20Income%20per%20Share) This note presents the computation of basic and diluted net income per share for the three and six months ended June 30, 2022, and 2021 Net Income per Share (Six Months Ended June 30) | Metric | 2022 ($) | 2021 ($) | Change ($) | Change (%) | | :---------- | :------- | :------- | :--------- | :--------- | | Basic EPS | 0.53 | 0.09 | 0.44 | 488.9% | | Diluted EPS | 0.51 | 0.09 | 0.42 | 466.7% | - Weighted-average shares used to compute diluted net income per share were **329.3 million** for the six months ended June 30, 2022, compared to **331.5 million** in the prior year[141](index=141&type=chunk)[454](index=454&type=chunk) [Note 14. Commitments and Contingencies](index=32&type=section&id=Note%2014.%20Commitments%20and%20Contingencies) This note outlines the company's purchase commitments with contract manufacturers and suppliers, and discusses ongoing legal proceedings - Purchase commitments with contract manufacturers and suppliers totaled **$2,823.4 million** as of June 30, 2022, with **$2,553.4 million** payable within 12 months[144](index=144&type=chunk)[457](index=457&type=chunk) - The company is subject to various legal proceedings, but believes none are likely to have a material adverse effect on its financial position, though litigation uncertainties exist[145](index=145&type=chunk)[458](index=458&type=chunk) [Note 15. Subsequent Events](index=33&type=section&id=Note%2015.%20Subsequent%20Events) This note reports a subsequent event regarding the declaration of a cash dividend after the reporting period - On July 26, 2022, the Company announced a cash dividend of **$0.21 per share** of common stock, to be paid on September 22, 2022[147](index=147&type=chunk)[460](index=460&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, including an executive overview, business and market environment, financial results, liquidity, and critical accounting policies. It also contains forward-looking statements and discusses the impact of the COVID-19 pandemic and global component shortages [Business and Market Environment](index=34&type=section&id=Business%20and%20Market%20Environment) Juniper Networks designs and sells high-performance networking products and services globally, focusing on "experience-first networking." The company's offerings are categorized into AI-Driven Enterprise, Automated WAN Solutions, and Cloud-Ready Data Center, serving Cloud, Service Provider, and Enterprise verticals. The section also addresses the ongoing impacts of the COVID-19 pandemic and global component shortages on operations, costs, and supply chain - Juniper Networks designs, develops, and sells products and services for high-performance networks, focusing on 'experience-first networking' to build scalable, reliable, secure, and cost-effective networks[151](index=151&type=chunk)[464](index=464&type=chunk) - The company's product offerings are categorized into AI-Driven Enterprise, Automated WAN Solutions, and Cloud-Ready Data Center, with connected security products sold across all categories[151](index=151&type=chunk)[464](index=464&type=chunk)[152](index=152&type=chunk)[465](index=465&type=chunk)[154](index=154&type=chunk)[467](index=467&type=chunk) - The COVID-19 pandemic did not have a substantial net impact on consolidated operating results or liquidity in Q2 2022, but higher logistics costs due to air travel and transport restrictions persist[157](index=157&type=chunk)[470](index=470&type=chunk) - Global supply chain constraints and component shortages led to extended lead times, increased logistics costs, and impacted revenue recognition in the first half of 2022; pricing actions are being taken to mitigate rising costs[158](index=158&type=chunk)[471](index=471&type=chunk)[159](index=159&type=chunk)[472](index=472&type=chunk)[160](index=160&type=chunk)[473](index=473&type=chunk) [Financial Results and Key Performance Metrics Overview](index=37&type=section&id=Financial%20Results%20and%20Key%20Performance%20Metrics%20Overview) This overview highlights key financial results and performance metrics for the three and six months ended June 30, 2022, compared to 2021, including net revenues, gross margin, operating income, net income, EPS, operating cash flows, stock repurchase activity, dividends, DSO, and deferred revenue - Net revenues increased by **8%** for the three months and **9%** for the six months ended June 30, 2022, driven by all verticals and strong service sales[163](index=163&type=chunk)[476](index=476&type=chunk) - Gross margin as a percentage of net revenues decreased due to higher component and freight costs and unfavorable product mix, partially offset by pricing actions[163](index=163&type=chunk)[476](index=476&type=chunk) - Operating income as a percentage of net revenues increased primarily due to lower restructuring costs, partially offset by gross margin factors and higher personnel expenses[165](index=165&type=chunk)[478](index=478&type=chunk) - Net cash used in operations was **$73.8 million** for the six months ended June 30, 2022, a significant decrease from **$437.0 million** provided by operations in the prior year, primarily due to higher supplier payments, cash taxes, and lower customer collections[165](index=165&type=chunk)[478](index=478&type=chunk) - Days Sales Outstanding (DSO) increased to **74 days** (from **59 days**) due to a significant increase in product invoicing later in the quarter[166](index=166&type=chunk)[479](index=479&type=chunk) - Total deferred revenue increased to **$1,462.6 million** as of June 30, 2022, driven by an increase in deferrals of SaaS and software license subscriptions[166](index=166&type=chunk)[479](index=479&type=chunk) [Results of Operations](index=39&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the company's revenues, gross margins, operating expenses, and other income/expense items for the three and six months ended June 30, 2022, compared to the same periods in 2021 [Revenues](index=39&type=section&id=Revenues) Total net revenues increased across all customer solutions and verticals for the six months ended June 30, 2022, primarily driven by higher sales volume in Automated WAN Solutions and AI-Driven Enterprise. Software and related services revenue also saw significant growth Total Net Revenues (Six Months Ended June 30) | Metric | 2022 ($M) | 2021 ($M) | Change ($M) | Change (%) | | :---------------- | :-------- | :-------- | :---------- | :--------- | | Total net revenues | 2,437.8 | 2,246.7 | 191.1 | 9% | - Automated WAN Solutions revenue increased by **9%** to **$853.6 million** for the six months ended June 30, 2022, primarily driven by Cloud and Enterprise verticals[171](index=171&type=chunk)[484](index=484&type=chunk)[173](index=173&type=chunk)[486](index=486&type=chunk) - AI-Driven Enterprise revenue increased by **24%** to **$441.3 million** for the six months ended June 30, 2022, primarily driven by Enterprise and Service Provider verticals[171](index=171&type=chunk)[484](index=484&type=chunk)[173](index=173&type=chunk)[486](index=486&type=chunk) Software and Security Products and Services Net Revenues (Six Months Ended June 30) | Metric | 2022 ($M) | 2021 ($M) | Change ($M) | Change (%) | | :-------------------------- | :-------- | :-------- | :---------- | :--------- | | Software and Related Services | 441.5 | 315.4 | 126.1 | 40% | | Total Security | 319.6 | 334.7 | (15.1) | (5%) | [Gross Margins](index=40&type=section&id=Gross%20Margins) Product gross margin as a percentage of product revenues decreased for both the three and six months ended June 30, 2022, primarily due to increased component and freight costs and unfavorable product mix. Service gross margin, however, increased due to higher revenue and lower delivery costs Total Gross Margin (Six Months Ended June 30) | Metric | 2022 ($M) | 2021 ($M) | Change ($M) | Change (%) | | :----------------- | :-------- | :-------- | :---------- | :--------- | | Total gross margin | 1,343.5 | 1,297.5 | 46.0 | 4% | Product and Service Gross Margin as % of Revenues (Six Months Ended June 30) | Metric | 2022 (%) | 2021 (%) | | :------------------------------------ | :------- | :------- | | Product gross margin as % of product revenues | 48.8% | 53.4% | | Service gross margin as % of service revenues | 66.7% | 65.4% | - Product gross margin decreased primarily due to **$40.7 million** in incremental component costs and **$11.9 million** in incremental freight costs, driven by supply chain constraints and unfavorable product mix[181](index=181&type=chunk)[494](index=494&type=chunk) [Operating Expenses](index=41&type=section&id=Operating%20Expenses) Total operating expenses decreased slightly for the three and six months ended June 30, 2022, primarily due to lower restructuring costs, partially offset by higher headcount-related costs Total Operating Expenses (Six Months Ended June 30) | Metric | 2022 ($M) | 2021 ($M) | Change ($M) | Change (%) | | :--------------------- | :-------- | :-------- | :---------- | :--------- | | Total operating expenses | 1,177.2 | 1,184.0 | (6.8) | (1%) | - Restructuring charges decreased significantly by **77%** to **$9.3 million** for the six months ended June 30, 2022, from **$40.9 million** in the prior year[184](index=184&type=chunk)[497](index=497&type=chunk) - Sales and marketing expenses increased by **7%** to **$547.6 million** for the six months ended June 30, 2022[184](index=184&type=chunk)[497](index=497&type=chunk) [Gain on Divestiture](index=42&type=section&id=Gain%20on%20Divestiture) The company recognized a $45.8 million gain on the divestiture of its silicon photonics business during the six months ended June 30, 2022 Gain on Divestiture (Six Months Ended June 30) | Metric | 2022 ($M) | 2021 ($M) | Change ($M) | | :---------------- | :-------- | :-------- | :---------- | | Gain on divestiture | 45.8 | — | 45.8 | [Loss on Extinguishment of Debt](index=42&type=section&id=Loss%20on%20Extinguishment%20of%20Debt) The company incurred a $60.6 million loss on extinguishment of debt during the six months ended June 30, 2021, related to the early redemption of Senior Notes Loss on Extinguishment of Debt (Six Months Ended June 30) | Metric | 2022 ($M) | 2021 ($M) | Change ($M) | | :----------------------------- | :-------- | :-------- | :---------- | | Loss on extinguishment of debt | — | (60.6) | 60.6 | [Other Expense, Net](index=42&type=section&id=Other%20Expense%2C%20Net) Total other expense, net, increased for the six months ended June 30, 2022, primarily due to losses on certain equity investments and lower interest income, partially offset by foreign currency gains Total Other Expense, Net (Six Months Ended June 30) | Metric | 2022 ($M) | 2021 ($M) | Change ($M) | Change (%) | | :-------------------- | :-------- | :-------- | :---------- | :--------- | | Total other expense, net | (21.0) | (15.9) | (5.1) | 32% | - The increase in net other expense was primarily driven by a loss on investments of **$(3.1) million** in 2022 compared to a gain of **$2.6 million** in 2021, and lower interest income[190](index=190&type=chunk)[503](index=503&type=chunk)[192](index=192&type=chunk)[505](index=505&type=chunk) [Income Tax Provision](index=43&type=section&id=Income%20Tax%20Provision) The effective tax rate for the six months ended June 30, 2022, decreased primarily due to changes in the effect of one-time items. The Tax Cuts and Jobs Act of 2017's R&D capitalization requirements are expected to decrease 2022 cash flow from operations by up to $230 million Income Tax Provision and Effective Tax Rate (Six Months Ended June 30) | Metric | 2022 ($M) | 2021 ($M) | Change ($M) | Change (%) | | :--------------------- | :-------- | :-------- | :---------- | :--------- | | Income tax provision | 21.5 | 6.1 | 15.4 | 252% | | Effective tax rate | 11.3% | 16.5% | (5.2%) | (31.5%) | - The capitalization and amortization of R&D expenditures under the Tax Cuts and Jobs Act of 2017 is estimated to decrease cash flow from operations by up to **$230 million** in 2022[195](index=195&type=chunk)[508](index=508&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) Juniper believes its existing cash, investments, operating cash flow, and credit facility will be sufficient to fund operations, capital returns, and growth for the foreseeable future. The company has significant purchase commitments and anticipates substantial tax payments related to R&D capitalization - The company expects existing cash, investments, operating cash flow, and credit facility to be sufficient to fund operations, capital returns, and growth for at least the next twelve months[198](index=198&type=chunk)[511](index=511&type=chunk) - Purchase commitments with contract manufacturers and suppliers totaled **$2,823.4 million** as of June 30, 2022, with **$2,553.4 million** payable within 12 months[200](index=200&type=chunk)[513](index=513&type=chunk) - Tax payments of approximately **$112 million** were made in Q2 2022, with **$75 million** attributed to R&D capitalization requirements under the Tax Act. An additional **$155 million** in tax payments is estimated for the remainder of 2022[201](index=201&type=chunk)[514](index=514&type=chunk) - The company repurchased **$212.2 million** of common stock and paid **$134.8 million** in cash dividends during the six months ended June 30, 2022, with approximately **$0.7 billion** remaining under the stock repurchase program[202](index=202&type=chunk)[515](index=515&type=chunk) [Critical Accounting Policies and Estimates](index=38&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The company's financial statements require judgments, assumptions, and estimates in conformity with U.S. GAAP. No material changes to critical accounting policies and estimates occurred during the six months ended June 30, 2022, compared to the prior annual report - There were no material changes to the company's critical accounting policies and estimates during the six months ended June 30, 2022[167](index=167&type=chunk)[480](index=480&type=chunk) [Recent Accounting Pronouncements](index=38&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 1 for a full description of recently adopted and not yet adopted accounting standards, including their expected impact on financial statements - For a full description of recently adopted and not yet adopted accounting standards, refer to Note 1, Basis of Presentation and Summary of Significant Accounting Policies[168](index=168&type=chunk)[481](index=481&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's exposures to market risk have not materially changed since December 31, 2021, and further disclosures can be found in the Form 10-K - The company's exposures to market risk have not changed materially since December 31, 2021[204](index=204&type=chunk)[517](index=517&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures, concluding they were effective as of June 30, 2022. No material changes in internal control over financial reporting occurred during the quarter, despite remote work arrangements due to COVID-19 - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2022[206](index=206&type=chunk)[519](index=519&type=chunk) - There were no material changes in internal control over financial reporting during the second quarter of 2022[207](index=207&type=chunk)[520](index=520&type=chunk) - The company has not experienced any significant impact to its internal controls over financial reporting despite remote work arrangements due to the COVID-19 pandemic[207](index=207&type=chunk)[520](index=520&type=chunk) [PART II - OTHER INFORMATION](index=46&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section details other information, including legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) This item incorporates by reference the information on legal proceedings from Note 14, Commitments and Contingencies, in Part I of the report - Information regarding legal proceedings is incorporated by reference from Note 14, Commitments and Contingencies[209](index=209&type=chunk)[522](index=522&type=chunk) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) This section outlines various factors that could materially and adversely affect Juniper Networks' business, financial condition, operating results, and stock price. These risks are categorized into business strategy and industry, technology and business operations, legal, regulatory and compliance, financial, and general risks [RISKS RELATED TO OUR BUSINESS STRATEGY AND INDUSTRY](index=46&type=section&id=RISKS%20RELATED%20TO%20OUR%20BUSINESS%20STRATEGY%20AND%20INDUSTRY) Risks include the uncertain impact of the COVID-19 pandemic and global component shortages on operations, supply chain, and costs. Quarterly results are unpredictable due to fluctuating demand, customer mix, economic conditions, and competition. Gross and operating margins are expected to vary due to various factors, including increased costs and pricing pressures. Dependence on a limited number of customers and the challenges of acquisitions/divestitures also pose significant risks - The COVID-19 pandemic and global component shortages continue to cause supply constraints, extended lead times, and increased logistics and component costs, negatively impacting revenue recognition and gross margins[212](index=212&type=chunk)[525](index=525&type=chunk) - Quarterly results are unpredictable and subject to substantial fluctuations due to factors such as unpredictable ordering patterns, changes in customer mix, demand shifts, economic conditions, and supply chain disruptions[214](index=214&type=chunk)[527](index=527&type=chunk)[215](index=215&type=chunk)[528](index=528&type=chunk) - Gross and operating margins are expected to vary due to customer, vertical, product, and geographic mix shifts, increased price competition, currency fluctuations, inflation, and rising material, labor, and logistics costs[217](index=217&type=chunk)[530](index=530&type=chunk) - A material portion of revenues depends on a limited number of customers, increasing risks related to their financial condition, changing business requirements, or consolidation[218](index=218&type=chunk)[531](index=531&type=chunk) - Acquisitions or divestitures of businesses could disrupt operations, harm financial condition, and dilute stockholder ownership due to integration problems, unanticipated costs, and diversion of management's attention[223](index=223&type=chunk)[536](index=536&type=chunk)[224](index=224&type=chunk)[537](index=537&type=chunk)[225](index=225&type=chunk)[538](index=538&type=chunk) [RISKS RELATED TO OUR TECHNOLOGY AND BUSINESS OPERATIONS](index=49&type=section&id=RISKS%20RELATED%20TO%20OUR%20TECHNOLOGY%20AND%20BUSINESS%20OPERATIONS) Risks in this category include the dependence on continued growth of network and IP systems, the need to anticipate technological shifts, challenges in expanding the software business, product interoperability issues, reliance on licensed third-party technology, difficulties in enforcing proprietary rights, and dependence on single-source/limited-source suppliers and contract manufacturers. System security risks, data breaches, and cyberattacks are also significant concerns, along with potential disruptions in distribution channels and the ability to retain key personnel - The company's business and revenues depend substantially on the growth of secure IP infrastructure; any reduction or suspension of spending on IP infrastructure could adversely affect financial results[232](index=232&type=chunk)[545](index=545&type=chunk) - Failure to anticipate future technological shifts, market needs, or to introduce new products and enhancements in a timely manner could lead to loss of customers and harm business[233](index=233&type=chunk)[546](index=546&type=chunk) - The strategy to expand the software business is subject to risks including development costs, customer adoption, potential erosion of revenue/gross margins, and regulatory compliance[234](index=234&type=chunk)[547](index=547&type=chunk) - Dependence on contract manufacturers and single/limited-source suppliers for key components (e.g., semiconductors) poses risks of supply shortfalls, delays, increased costs, and production disruptions, exacerbated by global shortages[242](index=242&type=chunk)[555](index=555&type=chunk)[243](index=243&type=chunk)[556](index=556&type=chunk)[244](index=244&type=chunk)[557](index=557&type=chunk)[245](index=245&type=chunk)[558](index=558&type=chunk)[247](index=247&type=chunk)[560](index=560&type=chunk)[248](index=248&type=chunk)[561](index=561&type=chunk)[249](index=249&type=chunk)[562](index=562&type=chunk) - System security risks, data protection breaches, and cyberattacks could compromise proprietary information, disrupt internal operations, and harm public perception of products, requiring significant resources for mitigation[250](index=250&type=chunk)[563](index=563&type=chunk)[251](index=251&type=chunk)[564](index=564&type=chunk)[252](index=252&type=chunk)[565](index=565&type=chunk)[253](index=253&type=chunk)[566](index=566&type=chunk)[254](index=254&type=chunk)[567](index=567&type=chunk)[255](index=255&type=chunk)[568](index=568&type=chunk) - The ability to recruit and retain key management, engineering, technical, sales, marketing, and support personnel is critical, and competition for such talent is significant, potentially impacting product development and market support[260](index=260&type=chunk)[573](index=573&type=chunk) [LEGAL, REGULATORY, AND COMPLIANCE RISKS](index=55&type=section&id=LEGAL%2C%20REGULATORY%2C%20AND%20COMPLIANCE%20RISKS) This section details legal and regulatory risks, including ongoing lawsuits and investigations, the impact of non-standard contract terms with large customers, and various governmental regulations affecting product sales, manufacturing, and data protection. International trade restrictions, economic sanctions, and the evolving landscape of data privacy and AI regulations also pose significant compliance challenges - The company is a party to various lawsuits and investigations, including those related to commercial transactions, intellectual property, and governmental claims, which can be costly and divert management's attention[264](index=264&type=chunk)[577](index=577&type=chunk)[265](index=265&type=chunk)[578](index=578&type=chunk)[266](index=266&type=chunk)[579](index=579&type=chunk) - Non-standard contract terms with large customers, including telecommunications, cable, and cloud service providers, can adversely affect the business by impacting revenue recognition and increasing costs[267](index=267&type=chunk)[580](index=580&type=chunk) - The company is subject to various governmental regulations (e.g., country-specific certifications, environmental laws, IT system security for government contractors) that can increase costs, delay product releases, and restrict market access[268](index=268&type=chunk)[581](index=581&type=chunk)[270](index=270&type=chunk)[583](index=270&type=chunk)[271](index=271&type=chunk)[584](index=271&type=chunk)[272](index=272&type=chunk)[585](index=272&type=chunk)[273](index=273&type=chunk)[586](index=273&type=chunk)[274](index=274&type=chunk)[587](index=274&type=chunk)[275](index=275&type=chunk)[588](index=275&type=chunk) - Governmental regulations, economic sanctions (e.g., Russia-Ukraine conflict), and other legal restrictions affecting international trade and product movement can negatively impact revenues and operating results[276](index=276&type=chunk)[589](index=276&type=chunk)[277](index=277&type=chunk)[590](index=277&type=chunk)[278](index=278&type=chunk)[591](index=278&type=chunk)[280](index=280&type=chunk)[593](index=280&type=chunk) - Evolving and complex data protection and privacy laws (e.g., GDPR, U.S. state laws) require significant compliance efforts, can delay product development, and expose the company to enforcement actions and fines[281](index=281&type=chunk)[594](index=281&type=chunk)[282](index=282&type=chunk)[595](index=282&type=chunk)[284](index=284&type=chunk)[597](index=284&type=chunk) [FINANCIAL RISKS](index=58&type=section&id=FINANCIAL%20RISKS) Financial risks include potential impairment of goodwill and purchased intangible assets, volatility due to changes in effective tax rates or new tax legislation, and adverse outcomes from tax examinations. Risks associated with international operations, including economic, regulatory, and geopolitical conditions, and currency fluctuations, can also significantly impact financial results. The company's outstanding indebtedness and the upcoming elimination of LIBOR also present financial risks - The company's financial condition could suffer from impairment of goodwill (**$3,733.8 million**) or purchased intangible assets (**$196.2 million**), which are subject to annual testing[285](index=285&type=chunk)[598](index=285&type=chunk) - Changes in effective tax rates, new U.S. or international tax legislation (e.g., OECD global minimum tax), or adverse outcomes from tax examinations could adversely affect financial results[286](index=286&type=chunk)[599](index=286&type=chunk)[287](index=287&type=chunk)[600](index=287&type=chunk)[288](index=288&type=chunk)[601](index=288&type=chunk) - International operations expose the company to economic, business, regulatory, social, and political conditions in foreign countries, including trade controls, sanctions, geopolitical tensions, and currency fluctuations[289](index=289&type=chunk)[602](index=289&type=chunk)[290](index=290&type=chunk)[603](index=290&type=chunk)[291](index=291&type=chunk)[604](index=291&type=chunk) - Risks associated with outstanding indebtedness (**$1,700.0 million** in Senior Notes) include limitations from covenants and the ability to generate sufficient cash flow to service debt[293](index=293&type=chunk)[606](index=293&type=chunk)[294](index=294&type=chunk)[607](index=294&type=chunk)[295](index=295&type=chunk)[608](index=295&type=chunk) - The elimination of LIBOR after June 2023 may affect financial results as LIBOR-based borrowings and interest rate derivatives will need to be converted to a replacement rate[299](index=299&type=chunk)[612](index=299&type=chunk) [GENERAL RISK FACTORS](index=60&type=section&id=GENERAL%20RISK%20FACTORS) General risks include the need to continuously evolve financial and managerial control systems, potential weaknesses in internal controls affecting investor perception, and limitations on stockholders' ability to choose a judicial forum due to bylaws - Failure to adequately evolve financial and managerial control and reporting systems, or any weaknesses in internal controls, may adversely affect investor perception and stock price[300](index=300&type=chunk)[613](index=300&type=chunk) - The company's bylaws provide that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for substantially all disputes between the company and its stockholders, which could limit stockholders' ability to obtain a favorable judicial forum[301](index=301&type=chunk)[614](index=301&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=61&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item provides a table summarizing the company's stock repurchase activity during the three months ended June 30, 2022, under its 2018 Stock Repurchase Program Stock Repurchase Activity (Three Months Ended June 30, 2022) | Period | Total Shares Purchased (M) | Average Price Paid per Share ($) | Value Remaining Under Program ($M) | | :---------------------- | :------------------------- | :------------------------------- | :--------------------------------- | | April 1 - April 30, 2022 | 0.9 | 32.23 | 751.3 | | May 1 - May 31, 2022 | 2.2 | 32.13 | 679.5 | | June 1 - June 30, 2022 | — | — | 679.5 | | **Total** | **3.1** | | | - Approximately **$0.7 billion** of authorized funds remained under the 2018 Stock Repurchase Program as of June 30, 2022[305](index=305&type=chunk)[618](index=618&type=chunk) [Item 5. Other Information](index=62&type=section&id=Item%205.%20Other%20Information) This section states that there is no other information to report [Item 6. Exhibits](index=63&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications, bylaws, equity incentive plan, and XBRL formatted financial statements - Exhibits include certifications of the CEO and CFO, Amended and Restated Bylaws, the 2015 Equity Incentive Plan, and XBRL formatted financial statements[308](index=308&type=chunk)[621](index=621&type=chunk)[309](index=309&type=chunk)[622](index=622&type=chunk) [SIGNATURES](index=64&type=section&id=SIGNATURES) The report is duly signed on behalf of Juniper Networks, Inc. by Thomas A. Austin, Group Vice President and Chief Accounting Officer, on July 29, 2022 - The report was signed by Thomas A. Austin, Group Vice President and Chief Accounting Officer of Juniper Networks, Inc. on July 29, 2022[312](index=312&type=chunk)[625](index=625&type=chunk)

Juniper Networks Inc. (NYSE:JNPR) Q2 2022 Earnings Conference Call July 26, 2022 5:00 PM ET Company Participants Jess Lubert – Vice President of Investor Relations Rami Rahim – Chief Executive Officer Ken Miller – Chief Financial Officer Conference Call Participants Paul Silverstein – Cowen Tim Long – Barclays Amit Daryanani – Evercore Rod Hall – Goldman Sachs Alex Henderson – Needham George Notter – Jefferies David Vod – UBS Simon Leopold – Raymond James Angela Jin – JPMorgan Aaron Rakers – Wells Fargo Met ...