Juniper Networks ( NYSE: JNPR ) shares dropped over 5% pre-market on Wednesday as supply chain issues overshadowed the company's Q2 results and raised revenue outlook for the year.
The networking products company generated adjusted EPS of $0.42 (a decrease of $0.01 year-over-year) that missed Street's estimates of $0.44. Earnings were also below the mid-point of the company's own outlook range mainly due to lower than expected gross margin. Non-GAAP operating margin of 13.9%, fell from 15.8% in the second quarter of 2021.
Net revenues, meanwhile, grew 8.5% Y/Y to $1.27B and exceeded Street's estimates. Looking at revenue by vertical, all verticals grew sequentially and on a year-over-year basis, with enterprise up 15% Y/Y, service provider +6% Y/Y and cloud business +3% Y/Y.
Citing increased order momentum, a strong backlog and improved supply, Juniper ( JNPR ) lifted its revenue outlook for the year, expecting growth of ~10%, up from its previous guidance of 7% to 9%. Backlog is likely to remain at elevated levels through the remainder of 2022.
However, in its CFO commentary, the company said that it expects some pressure to profit and margins over the next several quarters and that "extended lead times and elevated costs will likely persist for at least the remainder of the year."
Commenting on the same, Jefferies analyst George Notter noted that, "Juniper is the latest supply chain victim and components remain a limiting factor. EPS shortfall stems from weaker-than-expected gross margins, due to the supply chain environment."
Barclays also states that, "Higher supply chain costs and supplier de-commits continue to weigh on bottom line despite better revenue forecasts."
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Juniper Networks stock slides on Q2 earnings miss, sees margins pressure ahead