Juniper’s operating margin in Q4 2016 was 21.5 percent, an increase from 21.2 percent in Q4 2015, and an increase from 19.5 percent in Q3 2016.
Juniper posted net income of $197.4 million, flat year-over-year, and an increase of 15 percent sequentially.
For fiscal year 2016, Juniper’s operating margin was 18 percent, compared to 18.8 percent for the prior fiscal year.
“We believe we are successfully executing on our strategy to diversify our business and capture share in the cloud and cloud-enabled segments of our market. Our innovation pipeline and product portfolio are strong and position us well as we head into 2017,” said Rami Rahim, chief executive officer at Juniper Networks.
Juniper Networks closed Q4 2016 by posting its highest revenue in company history, driven by revenue growth of 5 percent year-to-year. Growth was fueled by stronger sales of routers and switches to enterprise, telecom and cloud providers.
“Cloud providers, which primarily sell enterprise services, increasingly require similar network infrastructure as Juniper’s large telecom customers. Juniper has aggressively targeted this and other verticals, including cable, to drive new revenue and adjust to the weaker capex environment surrounding telecom-service providers. Of Juniper’s top 10 customers in the quarter, five were cloud providers,” said Patrick Filkins, analyst at TBR.
ALSO READ: Juniper Networks revenue analysis by TBR
While Juniper Networks is executing its customer diversification strategy, the company’s Security portfolio continued to lose steam, with revenue declining 30.4 percent, due to pricing hurdles. Juniper’s customers are opting for subscription-based solutions from pure-play security vendors in lieu of Juniper’s high-end SRX hardware.
TBR said the impact of distributed cloud architectures on Juniper’s core networking business cannot be overstated. The days of firmly coupled systems of on premise network and IT hardware combining to support data traffic are seeing rapid disruption by disaggregated software systems engineered to deliver the same network functionality in a more scalable and flexible format.
While cloud-hosted solutions are supplanting on-premise network hardware, Juniper’s role as a connectivity enabler will be enhanced as the connectivity demands of enterprise customers and cloud providers continue to grow. These trends are reflected in Juniper’s financial results and overall strategy, with cloud providers representing the company’s fastest growing vertical.
Instead of combatting these developments, Juniper is aligning its portfolio with some of the largest cloud providers, including AWS, where Juniper’s vMX (routers) and vSRX (security) solutions are sold in AWS’ marketplace as part of cloud packages.