Juniper Networks (JNPR) Q4 2010 Earnings Call January 25, 2011 5:00 pm ET Executives Kevin Johnson - Chief Executive Officer, Director and Member of Stock Committee Kathleen Bela - Vice President of Investor Relations Robyn Denholm - Chief Financial Officer, Executive Vice President, Member of Concerns Committee and Member of Stock Committee Analysts Nikos Theodosopoulos - UBS Investment Bank Tal Liani - BofA Merrill Lynch Mark Sue - RBC Capital Markets, LLC Rod Hall - JP Morgan Chase & Co Jess Lubert - Wells Fargo Securities, LLC Paul Mansky - Canaccord Genuity Ehud Gelblum - Morgan Stanley Ittai Kidron - Oppenheimer & Co. Inc. Sanjiv Wadhwani - Stifel Nicolaus Simona Jankowski - Goldman Sachs Group Inc. Presentation Operator
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» Juniper Networks, Inc. Q3 2010 Earnings Call Transcript
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All statements made during this call are made only as of today. Juniper undertakes no obligation to update the information in this conference call in the event facts or circumstances subsequently change after the date of this call.In discussing the financial results today, Robyn will first present results on a GAAP basis and, for purposes of today's discussion, will also review non-GAAP results. For important commentary on why the management team considers non-GAAP information a useful view of the company's financial results, please consult our 8-K filed with the SEC today. For the detailed reconciliation between GAAP and non-GAAP results, please see today's press release. In general, non-GAAP results exclude certain non-recurring charges, amortization of purchased intangibles, other acquisition-related charges and expenses related to stock-based compensation. In today's call, Robyn will also be providing forward-looking guidance. As a reminder, guidance is provided on a non-GAAP basis, other than that with respect to revenue and share count. All guidance is forward-looking, and actual results may vary for the reasons I noted earlier. GAAP guidance measures are not available on a forward-looking basis due to the high variability and low visibility with respect to certain charges, which are excluded from the non-GAAP guidance estimates. Please note that today's call is scheduled to last for one hour, and please limit your questions to one per firm. With that, I will now turn the call over to Kevin. Kevin Johnson Thank you, Kathleen, and welcome, everyone. Juniper had a strong close to 2010 with record revenue and growing market momentum. Our Q4 results represent a record quarter for the company with year-on-year growth of 26%. On an annual basis, we delivered 23% growth, and we are positioned both strategically and operationally to continue driving our multiyear growth agenda. 2011 is an important next step as we prepare for the introduction of innovative new products that focus on the mobile Internet and cloud computing in unique and compelling ways for our customers.
Fourth quarter bookings were strong, and backlog continues to build. You'll recall that in Q3, we experienced a number of orders late in the quarter for our rapidly growing MX 3D product line, which put pressure on our supply chain and constrained our Q3 growth. The actions taken by management to improve our process in Q4 had a positive impact on shipment linearity and supply chain management. These new processes will carry forward into 2011 as we drive for continuous improvement in operational execution.With a growing number of customers and the large volume of orders this quarter, we did increase investment in spares to stock our depots and ensure that we deliver great support to our customers. This is reflected in our services gross margin numbers. We are also increasing sales and marketing head count as we enter 2011. And due to a strong quarter, we paid higher sales commissions, which is reflected in our operating expenses. Overall, it was a year of strong growth and operating margin expansion. Driving top line growth enables expansion of operating margins as stated in our long-term financial plan. It is important to note that we expanded 2010 non-GAAP operating margins by over 3.5 points over the prior year. It was also a very busy quarter strategically. Our growth agenda is focused on two significant market trends: mobile Internet and cloud computing. The three acquisitions we announced in the quarter complemented our organic R&D and strengthened our offerings in these two key areas. We completed several major R&D milestones. We shipped the first beta version of our Project Stratus data center fabric to a major customer and delivered the first beta release of code for Project Falcon. We introduced our next-generation core router, the T4000, and demonstrated its ability to deliver 100G traffic from the core to the edge in tandem with our MX 3D Universal Edge router. We launched the Junos Pulse App for the iPhone, iPad and Android platforms, which enables enterprises to adopt phone and tablet with secure remote access to their corporate networks. Read the rest of this transcript for free on seekingalpha.com