PART I [ITEM 1. Business](index=4&type=section&id=ITEM%201.%20Business) Juniper Networks provides high-performance networking products and services to Cloud, Service Provider, and Enterprise customers globally, expanding its AI-driven software business - Juniper Networks provides **high-performance network products and services** across routing, switching, Wi-Fi, network security, and SDN technologies to customers in Cloud, Service Provider, and Enterprise verticals globally[615](index=615&type=chunk) - The company is actively expanding its **software business**, focusing on cloud-managed, AI-enabled enterprise networking operations, supported by acquisitions like Mist Systems (**2019**), **128** Technology (**2020**), and Netrounds (**2020**)[617](index=617&type=chunk)[642](index=642&type=chunk)[643](index=643&type=chunk) - Key strategic priorities include seizing the cloud transition, differentiating through innovation in networking, security, and software orchestration, and leveraging automation and AI for operational simplicity[619](index=619&type=chunk) - As of **December 31, 2020**, Juniper Networks employed **9,950 full-time employees** globally, with significant investments in R&D (**4,044 employees**) and sales & marketing (**2,880 employees**)[698](index=698&type=chunk)[665](index=665&type=chunk)[668](index=668&type=chunk) Product Backlog (2019-2020) | Metric | 2020 (Millions) | 2019 (Millions) | | :--------------- | :-------------- | :-------------- | | Total Product Backlog | $419.6 | $341.1 | [Overview](index=5&type=section&id=Overview) [Strategy](index=6&type=section&id=Strategy) [Customer Verticals](index=7&type=section&id=Customer%20Verticals) [Products, Services, and Technology](index=9&type=section&id=Products%2C%20Services%2C%20and%20Technology) [Research and Development](index=15&type=section&id=Research%20and%20Development) [Sales and Marketing](index=15&type=section&id=Sales%20and%20Marketing) [Manufacturing and Operations](index=16&type=section&id=Manufacturing%20and%20Operations) [Backlog](index=17&type=section&id=Backlog) [Seasonality](index=17&type=section&id=Seasonality) [Competition](index=17&type=section&id=Competition) [Material Government Regulations](index=18&type=section&id=Material%20Government%20Regulations) [Intellectual Property](index=19&type=section&id=Intellectual%20Property) [Human Capital Resources](index=20&type=section&id=Human%20Capital%20Resources) [Information about our Executive Officers](index=21&type=section&id=Information%20about%20our%20Executive%20Officers) [Available Information](index=22&type=section&id=Available%20Information) [Item 1A. Risk Factors](index=21&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from COVID-19, market fluctuations, competition, and legal/regulatory challenges - The COVID-19 pandemic has negatively impacted operations, causing supply constraints, component shortages, extended lead-times, and increased logistics costs, which affected revenue recognition and gross margins in fiscal **2020**[718](index=718&type=chunk)[719](index=719&type=chunk)[720](index=720&type=chunk) - Quarterly results are highly unpredictable due to factors like customer ordering patterns, product/service mix, market conditions, competition, and seasonal fluctuations[721](index=721&type=chunk)[722](index=722&type=chunk) - Gross margins and operating margins are expected to vary due to customer/product/geographic mix shifts, price competition, currency fluctuations, increased costs (materials, labor, logistics), and tariffs[724](index=724&type=chunk) - The company faces significant competition from larger, more integrated companies (e.g., Cisco, Nokia, Huawei) with broader portfolios and resources, as well as specialized security vendors[726](index=726&type=chunk)[777](index=777&type=chunk)[778](index=778&type=chunk) - Risks related to technology and business operations include failure to anticipate technological shifts, product interoperability issues, reliance on licensed third-party technology, difficulties enforcing proprietary rights, and dependence on single/limited source suppliers and contract manufacturers[739](index=739&type=chunk)[742](index=742&type=chunk)[743](index=743&type=chunk)[744](index=744&type=chunk)[747](index=747&type=chunk) - Legal and regulatory risks encompass lawsuits (employment, patent infringement, FCPA), non-standard contract terms with large customers, industry-specific regulations (e.g., security product certifications, conflict minerals, environmental laws), global trade restrictions (export controls, sanctions, tariffs), and evolving data privacy laws (GDPR, CCPA, CPRA)[765](index=765&type=chunk)[768](index=768&type=chunk)[770](index=770&type=chunk)[772](index=772&type=chunk)[776](index=776&type=chunk)[783](index=783&type=chunk)[786](index=786&type=chunk) - Financial risks include potential impairment of goodwill (**$3,669.6 million as of Dec 31, 2020**) and purchased intangible assets (**$266.7 million**), changes in effective tax rates, risks from international operations (economic, political, currency fluctuations), and risks associated with outstanding indebtedness and investments[789](index=789&type=chunk)[790](index=790&type=chunk)[794](index=794&type=chunk)[798](index=798&type=chunk)[802](index=802&type=chunk) [ITEM 1B. Unresolved Staff Comments](index=35&type=section&id=ITEM%201B.%20Unresolved%20Staff%20Comments) There are no unresolved written comments from the SEC staff regarding the company's periodic reports [ITEM 2. Properties](index=35&type=section&id=ITEM%202.%20Properties) Juniper Networks' headquarters is in Sunnyvale, California, with owned buildings and leased facilities globally, deemed adequate - Corporate headquarters in Sunnyvale, California, includes **0.7 million square feet** of owned buildings on **80 acres**[806](index=806&type=chunk) - Leases approximately **1.7 million square feet** worldwide, with **36%** in North America, expiring through **May 2031**[806](index=806&type=chunk) [ITEM 3. Legal Proceedings](index=36&type=section&id=ITEM%203.%20Legal%20Proceedings) Legal proceedings information is incorporated by reference from Note 15, Commitments and Contingencies - Legal proceedings information is **incorporated by reference** from Note **15**, Commitments and Contingencies[808](index=808&type=chunk) [ITEM 4. Mine Safety Disclosures](index=36&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Juniper Networks PART II [ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=37&type=section&id=ITEM%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Juniper Networks' common stock trades on NYSE, with details on stockholders, cash dividends, and stock repurchase activities - Common stock (JNPR) is **traded on the New York Stock Exchange (NYSE)**[810](index=810&type=chunk) - As of **February 10, 2021**, there were **599 stockholders of record**[811](index=811&type=chunk) Cash Dividends Paid (2020) | Year | Dividends per Share | Total Amount (Millions) | | :--- | :------------------ | :---------------------- | | 2020 | $0.80 | $264.1 | - A quarterly cash dividend of **$0.20 per share** was declared in **January 2021**, payable **March 22, 2021**[812](index=812&type=chunk) Stock Repurchase Activity (2020) | Period | Total Shares Purchased (Millions) | Average Price Paid per Share | Amount (Millions) | | :------------------------- | :-------------------------------- | :--------------------------- | :---------------- | | December 1 - December 31, 2020 | 3.4 | $21.83 | $1,325.0 (remaining) | | Total 2020 | 16.1 | $23.36 | $375.0 | - As of **December 31, 2020**, **$1.3 billion remained authorized** under the **$3.0 billion** stock repurchase program[884](index=884&type=chunk) [ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=ITEM%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes Juniper Networks' financial performance for 2020 vs 2019, covering key metrics, COVID-19 impact, policies, and liquidity Key Financial Results (2020 vs. 2019) | Metric | 2020 (Millions) | 2019 (Millions) | Change (Millions) | % Change | | :------------------------- | :-------------- | :-------------- | :---------------- | :------- | | Net revenues | $4,445.1 | $4,445.4 | $(0.3) | — % | | Gross margin | $2,573.7 | $2,616.8 | $(43.1) | (2)% | | Percentage of net revenues | 57.9 % | 58.9 % | | | | Operating income | $353.1 | $442.2 | $(89.1) | (20)% | | Percentage of net revenues | 7.9 % | 9.9 % | | | | Net income | $257.8 | $345.0 | $(87.2) | (25)% | | Percentage of net revenues | 5.8 % | 7.8 % | | | | Basic EPS | $0.78 | $1.01 | $(0.23) | (23)% | | Diluted EPS | $0.77 | $0.99 | $(0.22) | (22)% | | Operating cash flows | $612.0 | $528.9 | $83.1 | 16 % | | Stock repurchase activity | $375.0 | $550.0 | $(175.0) | (32)% | | Cash dividends per share | $0.80 | $0.76 | $0.04 | 5 % | | DSO | 71 | 66 | 5 | 8 % | | Deferred revenue | $1,285.8 | $1,223.4 | $62.4 | 5 % | - **Net revenues were flat year-over-year in 2020**, with growth in Enterprise (driven by Switching) and Cloud (driven by Routing) offset by a decline in Service Provider (partially due to COVID-19 supply constraints) Service net revenues increased due to strong support contract renewals[823](index=823&type=chunk)[848](index=848&type=chunk)[850](index=850&type=chunk) - **Gross margin decreased to 57.9%** (from **58.9% in 2019**) primarily due to increased logistics and supply chain costs related to COVID-19, customer and product mix shifts, and higher intangible asset amortization from the Mist acquisition[824](index=824&type=chunk)[852](index=852&type=chunk)[853](index=853&type=chunk) - **Operating income decreased by 20%** due to lower gross margins, higher restructuring charges (**$68.0 million in 2020 vs. $35.3 million in 2019**), and increased personnel-related costs, partially offset by reduced travel expenses[823](index=823&type=chunk)[824](index=824&type=chunk)[857](index=857&type=chunk)[860](index=860&type=chunk) - **Net cash provided by operations increased by 16% to $612.0 million**, driven by higher invoicing and improved customer collections, despite increased payments to suppliers and for employee compensation[823](index=823&type=chunk)[877](index=877&type=chunk) - The company incurred a **$55.0 million loss on extinguishment of debt in 2020** due to early repayment of senior notes, compared to **$15.3 million in 2019**[863](index=863&type=chunk) - The **effective tax rate decreased significantly to 2.8% in 2020** (from **16.7% in 2019**) due to a **$63.7 million** benefit from unrecognized tax benefits and a **$20.1 million** charge for cost sharing related to share-based compensation[869](index=869&type=chunk) [Executive Overview](index=43&type=section&id=Executive%20Overview) [Critical Accounting Policies and Estimates](index=46&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) [Recent Accounting Pronouncements](index=49&type=section&id=Recent%20Accounting%20Pronouncements) [Results of Operations](index=50&type=section&id=Results%20of%20Operations) [Liquidity and Capital Resources](index=55&type=section&id=Liquidity%20and%20Capital%20Resources) [ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk](index=54&type=section&id=ITEM%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details Juniper Networks' market risk exposure, primarily interest rate and foreign currency, and its hedging strategies - The company's investment portfolio is diversified across various holdings, types, and maturities (e.g., asset-backed securities, corporate debt, government securities) to preserve principal, maintain liquidity, and maximize yield, while minimizing interest rate risk[896](index=896&type=chunk) - Juniper uses interest rate swaps to convert fixed-rate notes to floating rates, hedging against interest rate risk As of **December 31, 2020**, the **notional amount of these swaps was $300.0 million**, with a **fair value asset of $20.3 million**[899](index=899&type=chunk) - In **2020**, the company entered into interest rate locks for **$650.0 million** to hedge future debt issuance, **recorded as a $30.7 million asset** in fair value as of **December 31, 2020**[900](index=900&type=chunk) - Foreign currency forward contracts are used to hedge forecasted foreign currency transactions and mitigate variability in gains/losses from re-measurement of foreign-denominated assets/liabilities These derivatives are designated as cash flow hedges[901](index=901&type=chunk)[902](index=902&type=chunk) - A **hypothetical 10% movement in foreign currency exchange rates** would **change the U.S. dollar value** of cash, cash equivalents, and investments by **$33.4 million (1.4%) as of December 31, 2020**[903](index=903&type=chunk) - Investments in privately-held companies, totaling **$201.9 million as of December 31, 2020**, are **subject to equity price risk** due to their early development stages and potential for market non-materialization[904](index=904&type=chunk) [ITEM 8. Financial Statements and Supplementary Data](index=56&type=section&id=ITEM%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Juniper Networks' audited consolidated financial statements for 2018-2020, including balance sheets, income statements, cash flows, and notes - The consolidated financial statements for **2020**, **2019**, and **2018** are presented in conformity with U.S GAAP and have been audited by Ernst & Young LLP, who expressed an **unqualified opinion**[909](index=909&type=chunk)[912](index=912&type=chunk) - Management concluded that **internal control over financial reporting was effective as of December 31, 2020**, excluding recent acquisitions (**128 Technology** and Netrounds) which were **immaterial to total assets and net revenues**[935](index=935&type=chunk) Consolidated Statements of Operations (Selected Data, in millions) | Metric | 2020 | 2019 | 2018 | | :----------------- | :-------- | :-------- | :-------- | | Total net revenues | $4,445.1 | $4,445.4 | $4,647.5 | | Gross margin | $2,573.7 | $2,616.8 | $2,741.2 | | Operating income | $353.1 | $442.2 | $572.2 | | Net income | $257.8 | $345.0 | $566.9 | Consolidated Balance Sheets (Selected Data, in millions) | Asset/Liability | Dec 31, 2020 | Dec 31, 2019 | | :------------------------------ | :----------- | :----------- | | Cash and cash equivalents | $1,361.9 | $1,215.8 | | Total current assets | $3,271.2 | $3,209.8 | | Goodwill | $3,669.6 | $3,337.1 | | Total assets | $9,378.3 | $8,837.7 | | Total current liabilities | $2,161.1 | $1,543.9 | | Long-term debt | $1,705.8 | $1,683.9 | | Total liabilities | $4,834.8 | $4,227.1 | | Total stockholders' equity | $4,543.5 | $4,610.6 | Consolidated Statements of Cash Flows (Selected Data, in millions) | Activity | 2020 | 2019 | 2018 | | :----------------------------- | :-------- | :---------- | :-------- | | Net cash from operating activities | $612.0 | $528.9 | $861.1 |\ | Net cash used in investing activities | $(288.9) | $(528.2) | $564.8 |\ | Net cash used in financing activities | $(222.4) | $(1,228.8) | $(968.6) | [Reports of Independent Registered Public Accounting Firm](index=57&type=section&id=Reports%20of%20Independent%20Registered%20Public%20Accounting%20Firm) [Report of Independent Registered Public Accounting Firm (Internal Control)](index=59&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm%20%28Internal%20Control%29) [Management's Report on Internal Control Over Financial Reporting](index=61&type=section&id=Management%27s%20Report%20on%20Internal%20Control%20Over%20Financial%20Reporting) [Consolidated Statements of Operations](index=62&type=section&id=Consolidated%20Statements%20of%20Operations) [Consolidated Statements of Comprehensive Income](index=63&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) [Consolidated Balance Sheets](index=64&type=section&id=Consolidated%20Balance%20Sheets) [Consolidated Statements of Cash Flows](index=65&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) [Consolidated Statements of Changes in Stockholders' Equity](index=66&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) [Notes to Consolidated Financial Statements](index=67&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [Note 1. Description of Business, Basis of Presentation and Significant Accounting Policies](index=67&type=section&id=Note%201.%20Description%20of%20Business%2C%20Basis%20of%20Presentation%20and%20Significant%20Accounting%20Policies) [Note 2. Business Combinations](index=76&type=section&id=Note%202.%20Business%20Combinations) [Note 3. Cash Equivalents and Investments](index=78&type=section&id=Note%203.%20Cash%20Equivalents%20and%20Investments) [Note 4. Fair Value Measurements](index=81&type=section&id=Note%204.%20Fair%20Value%20Measurements) [Note 5. Derivative Instruments](index=83&type=section&id=Note%205.%20Derivative%20Instruments) [Note 6. Goodwill and Purchased Intangible Assets](index=85&type=section&id=Note%206.%20Goodwill%20and%20Purchased%20Intangible%20Assets) [Note 7. Other Financial Information](index=86&type=section&id=Note%207.%20Other%20Financial%20Information) [Note 8. Restructuring Charges](index=89&type=section&id=Note%208.%20Restructuring%20Charges) [Note 9. Debt and Financing](index=90&type=section&id=Note%209.%20Debt%20and%20Financing) [Note 10. Equity](index=92&type=section&id=Note%2010.%20Equity) [Note 11. Employee Benefit Plans](index=94&type=section&id=Note%2011.%20Employee%20Benefit%20Plans) [Note 12. Segments](index=99&type=section&id=Note%2012.%20Segments) [Note 13. Income Taxes](index=101&type=section&id=Note%2013.%20Income%20Taxes) [Note 14. Net Income per Share](index=105&type=section&id=Note%2014.%20Net%20Income%20per%20Share) [Note 15. Commitments and Contingencies](index=106&type=section&id=Note%2015.%20Commitments%20and%20Contingencies) [Note 16. Selected Quarterly Financial Data (Unaudited)](index=109&type=section&id=Note%2016.%20Selected%20Quarterly%20Financial%20Data%20%28Unaudited%29) [Note 17. Subsequent Events](index=110&type=section&id=Note%2017.%20Subsequent%20Events) [ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=111&type=section&id=ITEM%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There have been no changes in or disagreements with accountants on accounting and financial disclosure matters [ITEM 9A. Controls and Procedures](index=111&type=section&id=ITEM%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of December 31, 2020, with no material internal control changes - Disclosure controls and procedures were **deemed effective as of December 31, 2020**, following evaluation by management, including the principal executive and financial officers[1194](index=1194&type=chunk) - **No material changes in internal control over financial reporting occurred in Q4 2020**, with remote work due to COVID-19 **not significantly impacting effectiveness** due to adaptable control design[1195](index=1195&type=chunk) PART III [ITEM 10. Directors, Executive Officers and Corporate Governance](index=112&type=section&id=ITEM%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, corporate governance, and Section 16(a) compliance is incorporated by reference from the Proxy Statement - Information on directors, executive officers, corporate governance, and Section **16(a)** compliance is **incorporated by reference** from the **2021** Proxy Statement[1197](index=1197&type=chunk) [ITEM 11. Executive Compensation](index=112&type=section&id=ITEM%2011.%20Executive%20Compensation) Executive compensation details, including director compensation and committee reports, are incorporated by reference from the Proxy Statement - Executive compensation details, including director compensation and compensation committee reports, are **incorporated by reference** from the Proxy Statement[1199](index=1199&type=chunk) [ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=112&type=section&id=ITEM%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership information for beneficial owners and management, plus equity compensation plan details, is incorporated by reference from the Proxy Statement - Security ownership information for beneficial owners and management, along with equity compensation plan details, is **incorporated by reference** from the Proxy Statement[1200](index=1200&type=chunk) [ITEM 13. Certain Relationships and Related Transactions, and Director Independence](index=112&type=section&id=ITEM%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Details on certain relationships, related transactions, and director independence are incorporated by reference from the Proxy Statement - Details on certain relationships, related transactions, and director independence are **incorporated by reference** from the Proxy Statement[1201](index=1201&type=chunk) [ITEM 14. Principal Accounting Fees and Services](index=112&type=section&id=ITEM%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information on principal accounting fees, services, and audit committee pre-approval policies is incorporated by reference from the Proxy Statement - Information on principal accounting fees and services and audit committee pre-approval policies is **incorporated by reference** from the Proxy Statement[1202](index=1202&type=chunk) PART IV [ITEM 15. Exhibits and Financial Statement Schedules](index=113&type=section&id=ITEM%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists consolidated financial statements, schedules, and exhibits, including Schedule II for Valuation and Qualifying Accounts - The report includes consolidated financial statements and financial statement schedules, specifically **Schedule II - Valuation and Qualifying Accounts**[1203](index=1203&type=chunk)[1204](index=1204&type=chunk) Allowance for Doubtful Accounts (in millions) | Year | Balance at Beginning of Year | Charged to Expenses | Write-offs, Net of Recoveries | Balance at End of Year | | :--- | :--------------------------- | :------------------ | :---------------------------- | :--------------------- | | 2020 | $5.5 | $4.4 | — | $9.9 | | 2019 | $4.9 | $1.7 | $(1.1) | $5.5 | | 2018 | $5.7 | $(0.8) | — | $4.9 | Sales Return Reserve (in millions) | Year | Balance at Beginning of Year | Charged as a Reduction in Revenues | Used | Balance at End of Year | | :--- | :--------------------------- | :--------------------------------- | :----- | :--------------------- | | 2020 | $24.8 | $60.7 | $(57.1) | $28.4 | | 2019 | $32.7 | $59.5 | $(67.4) | $24.8 | | 2018 | $44.5 | $70.7 | $(82.5) | $32.7 | [ITEM 16. Form 10-K Summary](index=115&type=section&id=ITEM%2016.%20Form%2010-K%20Summary) This item indicates that a Form 10-K Summary is not applicable SIGNATURES This section contains the required signatures for the Annual Report on Form 10-K from key executives and the Board of Directors - The report is **signed by key executives including the Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer, along with the Board of Directors**, on **February 12, 2021**[1209](index=1209&type=chunk)[1212](index=1212&type=chunk)

Juniper Networks, Inc. (NYSE:JNPR) Q4 2020 Earnings Conference Call January 28, 2021 5:00 PM ET Company Participants Jess Lubert – Investor Relations Rami Rahim – Chief Executive Officer Ken Miller – Chief Financial Officer Conference Call Participants Simon Leopold – Raymond James Paul Silverstein – Cowen Tim Long – Barclays Samik Chatterjee – JP Morgan Rod Hall – Goldman Sachs Jeff Kvaal – Wolfe Research Sami Badri – Credit Suisse David Vaughn – UBS Alex Henderson – Needham Ryan Koontz – Rosenblatt Securi ...

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Juniper Networks' unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2020, including statements of operations, balance sheets, cash flows, and detailed accounting notes [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Total net revenues for Q3 2020 slightly increased to $1,138.2 million, with net income significantly rising to $145.4 million, while nine-month net revenues remained flat with increased net income Key Financial Metrics (Unaudited) | Financial Metric | Three Months Ended Sep 30, 2020 (Millions USD) | Three Months Ended Sep 30, 2019 (Millions USD) | Nine Months Ended Sep 30, 2020 (Millions USD) | Nine Months Ended Sep 30, 2019 (Millions USD) | | :--- | :--- | :--- | :--- | :--- | | **Total net revenues** | **$1,138.2** | **$1,133.1** | **$3,222.5** | **$3,237.3** | | Product Revenue | $733.7 | $743.2 | $2,034.8 | $2,075.8 | | Service Revenue | $404.5 | $389.9 | $1,187.7 | $1,161.5 | | **Gross margin** | **$657.8** | **$678.4** | **$1,856.7** | **$1,897.5** | | **Operating income** | **$125.1** | **$138.5** | **$255.0** | **$263.6** | | **Net income** | **$145.4** | **$99.3** | **$227.0** | **$176.6** | | **Diluted EPS** | **$0.43** | **$0.29** | **$0.68** | **$0.50** | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased slightly to $8,694.7 million as of September 30, 2020, with total liabilities also decreasing, while cash and cash equivalents increased Condensed Consolidated Balance Sheets (Unaudited) | Balance Sheet Item | Sep 30, 2020 (Unaudited, Millions USD) | Dec 31, 2019 (Millions USD) | | :--- | :--- | :--- | | **Total current assets** | **$3,038.5** | **$3,209.8** | | Cash and cash equivalents | $1,341.5 | $1,215.8 | | Goodwill | $3,337.1 | $3,337.1 | | **Total assets** | **$8,694.7** | **$8,837.7** | | **Total current liabilities** | **$1,501.6** | **$1,543.9** | | Long-term debt | $1,714.1 | $1,683.9 | | **Total liabilities** | **$4,133.9** | **$4,227.1** | | **Total stockholders' equity** | **$4,560.8** | **$4,610.6** | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities increased to $486.2 million for the nine months ended September 30, 2020, with a significant shift to cash provided by investing activities and reduced cash used in financing activities Condensed Consolidated Statements of Cash Flows (Unaudited) | Cash Flow Activity (Nine Months Ended Sep 30) | 2020 (Millions USD) | 2019 (Millions USD) | | :--- | :--- | :--- | | **Net cash provided by operating activities** | **$486.2** | **$433.2** | | **Net cash provided by (used in) investing activities** | **$86.0** | **($704.1)** | | **Net cash used in financing activities** | **($444.4)** | **($965.3)** | | Repurchase of common stock | ($305.7) | ($354.9) | | Payment of dividends | ($198.0) | ($196.4) | | **Net increase (decrease) in cash** | **$125.3** | **($1,239.8)** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section details accounting policies and financial results, covering investments, debt, equity transactions, segment revenues, income taxes, and subsequent events like acquisitions - The company adopted new accounting standards for Fair Value Measurement (Topic 820), Goodwill Impairment (Topic 350), and Credit Losses on Financial Instruments (Topic 326) on January 1, 2020, with **no material impact** on the financial statements[28](index=28&type=chunk)[29](index=29&type=chunk)[31](index=31&type=chunk) - Total debt as of September 30, 2020, was **$1,714.1 million**, consisting of various senior notes with maturities ranging from 2024 to 2041, and the company also has an undrawn **$500.0 million** unsecured revolving credit facility expiring in April 2024[83](index=83&type=chunk)[86](index=86&type=chunk) - Subsequent to the quarter end, the company announced an agreement to acquire 128 Technology for approximately **$450.0 million** and completed the acquisition of Netrounds for approximately **$35.0 million**, with a quarterly dividend of **$0.20 per share** also declared[126](index=126&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk) Revenue by Segment (Q3 2020) | Revenue by Segment (Q3 2020) | Net Revenues (Millions USD) | YoY Change (%) | | :--- | :--- | :--- | | **Product** | **$733.7** | **-1%** | | Routing | $432.0 | +6% | | Switching | $229.0 | -5% | | Security | $72.7 | -23% | | **Service** | **$404.5** | **+4%** | | **Total** | **$1,138.2** | **~0%** | Revenue by Vertical (Q3 2020) | Revenue by Vertical (Q3 2020) | Net Revenues (Millions USD) | YoY Change (%) | | :--- | :--- | :--- | | Cloud | $253.1 | -7% | | Service Provider | $475.1 | +5% | | Enterprise | $410.0 | ~0% | | **Total** | **$1,138.2** | **~0%** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes Q3 and nine-month 2020 financial performance, covering business environment, COVID-19 impacts, revenue, gross margin, operating expenses, liquidity, and capital return strategies [Business and Market Environment](index=33&type=section&id=Business%20and%20Market%20Environment) Juniper focuses on high-performance networking for Cloud, Service Provider, and Enterprise, accelerating AI-driven enterprise networking through the Mist Systems acquisition and expanding its security portfolio - The company's strategy focuses on compelling use cases in **AI-Driven Enterprise, Automated WAN Solutions, and Cloud Ready Data Centers**[138](index=138&type=chunk) - The acquisition of **Mist Systems** in 2019 is a key part of accelerating the company's execution in **cloud-managed, AI-enabled enterprise networking operations**[135](index=135&type=chunk) [COVID-19 Pandemic Update](index=34&type=section&id=COVID-19%20Pandemic%20Update) COVID-19 continued to negatively impact Q3 2020 financial results through supply chain constraints and increased logistics costs, though manufacturing capacity improved, and the company entered Q4 with a healthy backlog - Supply constraints during the first three quarters of 2020 were due to both **constrained manufacturing capacity and component parts shortages**[140](index=140&type=chunk) - The supply chain issues resulted in **extended lead-times, increased logistics costs**, and **negatively impacted revenue recognition and gross margins**[140](index=140&type=chunk) - Despite challenges, the company entered Q4 2020 with a **healthy backlog in its Cloud and Service Provider verticals**[143](index=143&type=chunk) [Results of Operations](index=38&type=section&id=Results%20of%20Operations) Q3 2020 net revenues slightly increased, driven by Service Provider, while gross margin decreased to 57.8% due to COVID-19 logistics costs, operating expenses decreased by 1%, and the effective tax rate was -30.3% due to a tax dispute resolution - Q3 2020 **product revenue decreased** due to declines in switching and security, offset by growth in routing, while **service revenue increased** due to strong sales of support contracts and software subscriptions[158](index=158&type=chunk)[159](index=159&type=chunk) - **Product gross margin as a percentage of revenue decreased** in Q3 2020 primarily due to **increased logistics and other supply chain-related costs** from the COVID-19 pandemic and **unfavorable product mix**[163](index=163&type=chunk) - **Total operating expenses decreased** in Q3 2020, driven by **reduced travel expenses** due to COVID-19, partially offset by higher personnel-related expenses from increased headcount[168](index=168&type=chunk) - The **effective tax rate decreased significantly** in Q3 2020 due to a change in the effect of discrete items, including the **resolution of a tax dispute with India Tax Authorities** for the 2010-2012 tax years, resulting in a **release of $54.5 million in unrecognized tax benefits**[174](index=174&type=chunk)[111](index=111&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2020, total cash and investments were $2,561.2 million, with net cash from operations at $486.2 million, supporting continued capital return through $300.0 million in stock repurchases and $197.9 million in dividends - The company repurchased **14.5 million shares** for **$300.0 million** in the open market during the first nine months of 2020[185](index=185&type=chunk) - A quarterly cash dividend of **$0.20 per share** was paid, totaling **$197.9 million** for the first nine months of 2020[187](index=187&type=chunk) - As of September 30, 2020, approximately **$1.4 billion** remained authorized under the 2018 Stock Repurchase Program[185](index=185&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes in market risk exposures since December 31, 2019, referring to its Annual Report on Form 10-K for detailed disclosures - There have been **no material changes** in the company's market risk exposures since the end of the previous fiscal year (December 31, 2019)[191](index=191&type=chunk) [Item 4. Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of September 30, 2020, with no material changes to internal control over financial reporting during Q3, despite the remote work environment - The principal executive officer and principal financial officer concluded that disclosure controls and procedures were **effective** as of the end of the reporting period[193](index=193&type=chunk) - **No changes in internal control over financial reporting** occurred during Q3 2020 that have materially affected, or are reasonably likely to materially affect, internal controls[194](index=194&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to various legal proceedings in the ordinary course of business but does not anticipate any material adverse effect on its financial position - The company is subject to various legal proceedings but **does not expect them to have a material adverse effect** on its financial position[124](index=124&type=chunk)[196](index=196&type=chunk) [Item 1A. Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) This section outlines numerous risks, including the uncertain impact of COVID-19, supply chain dependencies, system security threats, and various legal, regulatory, and compliance challenges - The COVID-19 pandemic poses a **significant risk**, with uncertain duration and extent, potentially **impacting operations, supply chains, customer demand, and financial performance**[198](index=198&type=chunk)[199](index=199&type=chunk) - The company's operations **depend on contract manufacturers and single-source suppliers**, making it **vulnerable to manufacturing issues, supply-chain disruptions, and component shortages**, which have been exacerbated by the pandemic[227](index=227&type=chunk)[228](index=228&type=chunk)[230](index=230&type=chunk) - **System security risks, data protection breaches, and cyberattacks** are significant threats that could **compromise proprietary information, disrupt operations, and harm the company's reputation**[235](index=235&type=chunk) - The business is subject to **extensive legal and regulatory risks**, including those related to **international trade** (tariffs, export controls), **data privacy** (GDPR, CCPA), and **environmental compliance**[252](index=252&type=chunk)[258](index=258&type=chunk)[266](index=266&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=63&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q3 2020, the company repurchased **4.2 million shares** for approximately **$23.81 per share** under its 2018 Stock Repurchase Program, with **$1.4 billion** remaining authorized as of September 30, 2020 Common Stock Repurchases (Q3 2020) | Period (2020) | Total Shares Purchased (Millions) | Average Price Paid per Share (USD) | | :--- | :--- | :--- | | July | 0 | N/A | | August | 2.6 | $24.50 | | September | 1.6 | $23.03 | | **Total Q3** | **4.2** | **~$23.81** | - As of September 30, 2020, approximately **$1.4 billion** remained for share repurchases under the authorized program[294](index=294&type=chunk) [Item 6. Exhibits](index=65&type=section&id=Item%206.%20Exhibits) This section lists Form 10-Q exhibits, including updated Change of Control and Severance Agreements, CEO and CFO certifications, and iXBRL-formatted financial statements - Filed exhibits include **updated forms of Change of Control and Severance Agreements** for certain officers, effective November 2, 2020[301](index=301&type=chunk) - **Certifications from the Chief Executive Officer and Chief Financial Officer** pursuant to SEC rules are included as exhibits[301](index=301&type=chunk)

Financial Data and Key Metrics Changes - Revenue for Q3 2020 was $1.138 billion, exceeding the midpoint of guidance and showing year-over-year growth for the first time this year [24][25] - Non-GAAP earnings per share were $0.43, in line with the midpoint of guidance [24] - Non-GAAP gross margins were 59.0%, slightly below expectations due to product mix and elevated logistics costs related to COVID-19 [26] Business Line Data and Key Metrics Changes - Service Provider revenue grew 5% year-over-year, marking the first year-over-year growth in 13 quarters [25][16] - Enterprise business experienced double-digit order growth year-over-year, with slight year-over-year revenue growth [12][25] - Cloud revenue declined 7% year-over-year, attributed to lumpiness following five consecutive quarters of growth [25][18] Market Data and Key Metrics Changes - Strong order growth was noted in the North American enterprise and U.S. federal verticals, offsetting weakness in Europe [12] - The service provider segment benefited from diversification across customers, products, and geographies, particularly with U.S. cable customers and Tier 2 and Tier 3 carriers internationally [16][17] - The cloud business backlog remains healthy, with favorable spending outlook from hyperscale and Tier 2 customers [18][19] Company Strategy and Development Direction - The company is focusing on AI-driven enterprise, automated WAN solutions, and cloud-ready data centers to capitalize on market opportunities [10][11] - Investments in go-to-market strategies and acquisitions, such as Mist Systems and 128 Technology, are aimed at enhancing product offerings and market share [15][10] - The company aims to return to organic revenue growth in 2021, with expectations of nearly a point of additional growth from the acquisition of 128 Technology [30][66] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to grow organically in 2021, assuming no further economic deterioration due to COVID-19 [30][66] - The company anticipates a gradual reduction in COVID-19 related costs throughout 2021, with expectations for improved gross margins driven by increased volume and software sales [31][30] - Management remains optimistic about the service provider segment's stabilization and potential for future growth through diversification strategies [68][69] Other Important Information - The company paid $66 million in dividends and repurchased $100 million worth of shares in Q3 2020 [27] - Non-GAAP operating expenses were down 2% year-over-year, benefiting from COVID-19 related savings [26][27] Q&A Session Summary Question: What is the outlook for switching and macro conditions? - Management clarified that data center switching momentum is strong, and the decline in overall switching revenue is due to large hyperscaler deployment dynamics [35] - On macro conditions, management remains encouraged by order strength across verticals despite potential second-wave shutdowns in Europe [36] Question: What is the status of the ACX pipeline and higher-speed MPC line card upgrades? - Management indicated that the ACX product has early momentum, with expectations for more significant progress in the second half of next year [41] - The MPC line card upgrade process is largely complete, with revenue ramp expected to continue [42] Question: How is pricing and competitive dynamics in the service provider and cloud markets? - Pricing remains competitive with no material changes noted, while management is confident in their competitive differentiation, particularly in the AI-driven enterprise space [46][48] Question: What is the outlook for organic growth in 2021? - Management expects low single-digit organic growth, driven by share gains rather than macro improvements [66][83] Question: How does disaggregation impact the competitive landscape? - Management views disaggregation as an opportunity rather than a threat, having already invested in disaggregated operating systems and seeing robust interest in certain components [85][86]

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 June 30, 2020 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) (State or other jurisdicti ...

Juniper Networks, Inc. (NYSE:JNPR) Q2 2020 Results Earnings Conference Call July 28, 2020 5:00 PM ET Company Participants Jess Lubert - Vice President, Head of Investor Relations Rami Rahim - Chief Executive Officer Ken Miller - Executive Vice President, Chief Financial Officer Conference Call Participants Rod Hall - Goldman Sachs Tim Long - Barclays Alex Henderson - Needham Ittai Kidron - Oppenheimer George Notter - Jefferies Samik Chatterjee - JPMorgan Tal Liani - Bank of America Simon Leopold - Raymond J ...

Juniper Networks, Inc. (NYSE:JNPR) 5G Forum Summary Industry Overview - The discussion centers around the 5G telecommunications industry and Juniper Networks' role within it, particularly in the context of ongoing developments and strategic partnerships in the sector [1][3]. Core Insights and Arguments - **5G Momentum**: There is a clear indication that momentum for 5G is building, even amidst the COVID-19 pandemic, highlighting the strategic importance of network investments [4][6]. - **Spectrum Auctions**: Upcoming spectrum auctions, including the CBRS auction and mid-band auction, are seen as positive indicators for 5G deployment [5][6]. - **Government Engagement**: Increased government engagement in 5G initiatives, such as the Open RAN bill in the U.S. and similar efforts in Europe, is noted as a positive development [5][6]. - **5G Architecture**: The transition to a fully software-based architecture is emphasized, with a focus on virtualizing services and separating control and user planes, which presents significant opportunities for Juniper [8][9]. - **Capacity Expansion**: The expectation of capacity expansion in the IP Edge and core networks is projected to take effect in 2021-2022, driven by radio upgrades and densification [10][11]. - **TAM Expansion**: The transition to 5G is expected to create a significant Total Addressable Market (TAM) expansion opportunity for Juniper, particularly in areas like Metro and fiber densification [10][11][12]. - **Standalone 5G**: The shift from non-standalone to fully standalone 5G infrastructure is anticipated to drive increased demand for bandwidth and new applications [15][16]. Strategic Partnerships - **StarCraft Partnership**: Juniper's collaboration with StarCraft is aimed at enhancing edge computing capabilities and providing a cloud-agnostic solution for carriers, which is crucial for the telco cloud transition [17][19][22]. - **Ericsson Collaboration**: Juniper has a longstanding partnership with Ericsson, which has been deepened to focus on 5G, resulting in joint customer wins and a collaborative access and aggregation portfolio [26][27]. Diversification and Market Strategy - **Service Provider Focus**: Juniper is diversifying its market focus within the service provider space, aiming to expand its presence in Tier 2 and Tier 3 markets while leveraging its strengths in routing and data center solutions [28][30]. - **SD-WAN Adoption**: The company sees significant opportunities in SD-WAN adoption among telecom service providers, particularly as managed service provider-led deployments are increasing [31][34]. Additional Insights - **Automation and Security**: The transition to 5G will require more automation and enhanced security measures due to increased ingress and egress points in the network [11][36]. - **Investment Priorities**: Juniper's investment priorities remain focused on virtualizing network services, telco cloud, automation, and security, with a concerted effort to engage Tier 2 and Tier 3 service providers [36]. This summary encapsulates the key points discussed during the Juniper Networks session at the Wells Fargo 5G Forum, highlighting the company's strategic positioning and outlook in the evolving 5G landscape.

Juniper Networks, Inc. (NYSE:JNPR) Credit Suisse Technology Conference June 3, 2020 12:15 PM ET Executives Ken Miller - Chief Financial Officer Manoj Leelanivas - Executive Vice President, Chief Product Officer Analysts Tal Liani - Bank of America Merrill Lynch Tal Liani Hi. Great afternoon. Thank you very much for joining us. Now, the next speaker we are going to talk with, Ken Miller, the CFO of Juniper, which I have prepared a long list of questions. Hopefully I can cover them all. As you know, I have be ...

Juniper Networks, Inc. (NYSE:JNPR) 48th Annual Cowen and Company 2020 Virtual Technology, Media & Telecom Conference May 28, 2020 1:50 PM ET Company Participants Rami Rahim - Chief Executive Officer Jess Lubert - Head of Investor Relations Conference Call Participants Paul Silverstein - Cowen & Company Paul Silverstein Good afternoon everyone. It's Paul Silverstein, Senior Analyst, Networking and Communications Equipment at Cowen. It is my pleasure to have with us Juniper Networks' CEO, Rami Rahim; and Head ...