8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported)             July 25, 2019

Juniper Networks, Inc.

(Exact name of registrant as specified in its charter)

Delaware	001-34501	770422528
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

1133 Innovation Way, Sunnyvale, California	94089
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code             (408) 745-2000

Not Applicable

Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.00001 per share	JNPR	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Item 2.02 Results of Operations and Financial Condition.

On July 25, 2019, Juniper Networks, Inc. (“we”, “our” or the “Company”) issued a press release in which we announced preliminary financial results for the quarter ended June 30, 2019. The Company also posted on the Investor Relations section of its website (www.juniper.net) prepared remarks with respect to the quarter ended June 30, 2019. Copies of the press release and prepared remarks by the Company are furnished as Exhibits 99.1 and 99.2, respectively, to this report. Information on our website is not, and will not be deemed, a part of this report or incorporated into any other filings the Company makes with the Securities and Exchange Commission.

The information furnished pursuant to this Item 2.02, including Exhibits 99.1 and 99.2, shall not be deemed as “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description
99.1	Press release issued by Juniper Networks, Inc. on July 25, 2019
99.2	Prepared remarks by Juniper Networks, Inc. dated as of July 25, 2019

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Juniper Networks, Inc.
July 25, 2019	By:	/s/ Brian M. Martin
		Name:	Brian M. Martin
		Title:	Senior Vice President and General Counsel

EX-99.1

Exhibit 99.1

Investor Relations:

Jess Lubert

Juniper Networks

(408) 936-3734

jlubert@juniper.net

Media Relations:

Leslie Moore

Juniper Networks

(408) 936-5767

llmoore@juniper.net

JUNIPER NETWORKS REPORTS PRELIMINARY SECOND QUARTER 2019 FINANCIAL RESULTS

SUNNYVALE, Calif., July 25, 2019 - Juniper Networks (NYSE: JNPR), a leader in secure, AI-driven networks, today reported preliminary financial results for the three months ended June 30, 2019 and provided its outlook for the three months ending September 30, 2019.

Second Quarter 2019 Financial Performance

Net revenues were $1,102.5 million, a decrease of 8% year-over-year, and an increase of 10% sequentially.

GAAP operating margin was 7.5%, a decrease from 13.3% in the second quarter of 2018, and an increase from 4.3% in the first quarter of 2019.

Non-GAAP operating margin was 15.8%, a decrease from 18.5% in the second quarter of 2018, and an increase from 11.2% in the first quarter of 2019.

GAAP net income was $46.2 million, a decrease of 60% year-over-year, and an increase of 49% sequentially, resulting in diluted earnings per share of $0.13.

Non-GAAP net income was $139.5 million, a decrease of 18% year-over-year, and an increase of 50% sequentially, resulting in non-GAAP diluted earnings per share of $0.40.

“We experienced encouraging trends during the June quarter, as we saw sequential revenue growth across industry verticals and technologies,” said Rami Rahim, chief executive officer, Juniper Networks. “We are making progress with our sales transformation efforts which, along with our strong pipeline of opportunities, is providing confidence in our ability to not only deliver sequential revenue growth through the remainder of the year, but also a return to year-over-year growth during the December quarter.”

“We executed well during the June quarter, achieving our revenue guidance and exceeding the midpoint of our non-GAAP earnings per share outlook, despite incremental China tariffs and a higher non-GAAP tax rate,” said Ken Miller, chief financial officer, Juniper Networks. “We have made substantial progress mitigating the impact of the incremental China tariffs and will continue to further optimize our supply chain. These factors, along with sequential second half revenue growth; and strong cost management should enable us to deliver improved profitability in the back half of 2019.”

Page 1 of 11

Balance Sheet and Other Financial Results

Total cash, cash equivalents, and investments as of June 30, 2019 were $2,875.0 million, compared to $3,530.5 million as of June 30, 2018, and $3,502.7 million as of March 31, 2019.

Net cash flows provided by operations for the second quarter of 2019 was $88.8 million, compared to $170.3 million in the second quarter of 2018, and $159.4 million in the first quarter of 2019.

Days sales outstanding in accounts receivable was 54 days in the second quarter of 2019, compared to 52 days in the second quarter of 2018, and 58 days in the first quarter of 2019.

Capital expenditures were $27.3 million, and depreciation and amortization expense were $56.4 million during the second quarter of 2019.

Juniper’s Board of Directors has declared a quarterly cash dividend of $0.19 per share to be paid on September 25, 2019 to shareholders of record as of the close of business on September 4, 2019.

Outlook

These metrics are provided on a non-GAAP basis, except for revenue and share count. Non-GAAP earnings per share is on a fully diluted basis. The outlook assumes that the exchange rate of the U.S. dollar to other currencies will remain relatively stable at current levels.

Our second-half revenue outlook reiterates the commentary we stated previously, which reflects our expectations on above normal seasonal trends and a return to year-over-year growth in the fourth quarter due to our current pipeline of opportunities as well as the expected positive impact from our go-to-market transformation activities.

We remain confident in the long-term financial model we outlined at our Investor Day in November last year.

Full-year non-GAAP gross margin is expected to continue to be pressured by China tariffs, despite our ongoing mitigation efforts. The increase in tariffs from 10% to 25% is expected to have a 30-50 basis point impact on full-year non-GAAP gross margin.

We plan to manage our operating expenses prudently; however, we continue to expect non-GAAP operating expenses on a full-year basis to be flat to slightly up versus 2018, inclusive of Mist Systems. In the second quarter of 2019, we adopted a full-year projected tax rate in our computation of the non-GAAP income tax provision to provide better consistency across reporting periods.

For the remainder of 2019, we expect a non-GAAP tax rate of approximately 19.5%.

Due to the increased China tariffs and a higher non-GAAP tax rate, we now expect our full-year non-GAAP earnings per share to be at the low-end of the previously stated range of $1.75 +/- $0.05.

Our guidance for the quarter ending September 30, 2019 is as follows:

• Revenue will be approximately $1,145 million, plus or minus $30 million.

• Non-GAAP gross margin will be approximately 60.0%, plus or minus 1%.

• Non-GAAP operating expenses will be approximately $488 million, plus or minus $5 million.

• Non-GAAP operating margin will be approximately 17.5% at the midpoint of revenue guidance.

• Non-GAAP net income per share will be approximately $0.46, plus or minus $0.03. This assumes a share count of approximately 348 million.

Page 2 of 11

All forward-looking non-GAAP measures exclude estimates for amortization of intangible assets, share-based compensation expenses, acquisition-related charges, restructuring benefits or charges, impairment charges, strategic partnership-related charges, legal reserve and settlement charges or benefits, supplier component remediation charges and recoveries, gain or loss on equity investments, retroactive impact of certain tax settlements, significant effects of tax legislation and judicial or administrative interpretation of tax regulations, including the impact of income tax reform, non-recurring income tax adjustments, valuation allowance on deferred tax assets, and the income tax effect of non-GAAP exclusions, and do not include the impact of further changes to previously announced tariffs and the impact of any future acquisitions, divestitures, or joint ventures that may occur in the period. Juniper is unable to provide a reconciliation of non-GAAP guidance measures to corresponding U.S. generally accepted accounting principles or GAAP measures on a forward-looking basis without unreasonable effort due to the overall high variability and low visibility of most of the foregoing items that have been excluded. For example, share-based compensation expense is impacted by the Company’s future hiring needs, the type and volume of equity awards necessary for such future hiring, and the price at which the Company’s stock will trade in those future periods. Amortization of intangible assets is significantly impacted by the timing and size of any future acquisitions. The items that are being excluded are difficult to predict and a reconciliation could result in disclosure that would be imprecise or potentially misleading. Material changes to any one of these items could have a significant effect on our guidance and future GAAP results. Certain exclusions, such as amortization of intangible assets and share-based compensation expenses, are generally incurred each quarter, but the amounts have historically and may continue to vary significantly from quarter to quarter.

Second Quarter 2019 Financial Commentary Available Online

A CFO Commentary reviewing the Company’s second quarter 2019 financial results, as well as second quarter 2019 financial outlook will be furnished to the SEC on Form 8-K and published on the Company’s website at http://investor.juniper.net. Analysts and investors are encouraged to review this commentary prior to participating in the conference call webcast.

Conference Call Webcast

Juniper Networks will host a conference call webcast today, July 25, 2019, at 2:00 pm PT, to be broadcast live over the Internet at http://investor.juniper.net. To participate via telephone in the US, the toll-free number is 1-877-407-8033. Outside the US, dial +1-201-689-8033. Please call 10 minutes prior to the scheduled conference call time. The webcast replay will be archived on the Juniper Networks website.

About Juniper Networks

Juniper Networks challenges the inherent complexity that comes with networking in the multicloud era. We do this with products, solutions and services that transform the way people connect, work and live. We simplify the process of transitioning to a secure and automated multicloud environment to enable secure, AI-driven networks that connect the world. Additional information can be found at Juniper Networks (www.juniper.net).

Investors and others should note that the Company announces material financial and operational information to its investors using its Investor Relations website, press releases, SEC filings and public conference calls and webcasts. The Company also intends to use the Twitter account @JuniperNetworks and the Company’s blogs as a means of disclosing information about the Company and for complying with its disclosure obligations under Regulation FD. The social media channels that the Company intends to use as a means of disclosing information described above may be updated from time to time as listed on the Company’s Investor Relations website.

Juniper Networks, the Juniper Networks logo, Juniper, and Junos are registered trademarks of Juniper Networks, Inc. and/or its affiliates in the United States and other countries. Other names may be trademarks of their respective owners.

Page 3 of 11

Safe Harbor

Statements in this release concerning Juniper Networks’ business outlook, economic and market outlook, including currency exchange rates; our future financial and operating results; our expectations regarding our sales execution and investments in our go-to-market organization; the strength of our solution portfolio and strategy; our ability to deliver on our long-term financial model; our ability to expand business opportunities, improve profitability and make necessary investments; our expectations around obtaining revenue and margin growth (including above normal seasonal trends and sequential revenue growth throughout the year and a return to year-over-year growth later in the year); the impact of tariffs; our future financial and operating results, including our financial guidance; and our overall future prospects are forward-looking statements within the meaning of the Private Securities Litigation Reform Act that involve a number of uncertainties and risks. Actual results or events could differ materially from those anticipated in those forward-looking statements as a result of several factors, including: general economic and political conditions globally or regionally; business and economic conditions in the networking industry; changes in overall technology spending by our customers, including Cloud providers and Service Providers; the network capacity requirements of our customers and, in particular, Cloud and telecommunication service providers; contractual terms that may result in the deferral of revenue; the timing of orders and their fulfillment; manufacturing and supply chain costs, constraints, changes or disruptions; availability and pricing of key product components; delays in scheduled product availability; adoption of regulations or standards affecting Juniper Networks products, services or the networking industry; product defects, returns or vulnerabilities; significant effects of tax legislation and judicial or administrative interpretation of tax regulations, including the Tax Cuts and Jobs Act, and judicial or administrative interpretation of tax regulations; legal settlements and resolutions; the potential impact of activities related to the execution of capital return, restructurings and product rationalization; the impact of import tariffs, depending on their scope and how they are implemented; and other factors listed in Juniper Networks’ most recent report on Form 10-Q or 10-K filed with the Securities and Exchange Commission. Note that our estimates as to tax rate on our business are based on current tax law, including current interpretations of the Tax Cuts and Jobs Act, and could be materially affected by changing interpretations of the Act, as well as additional legislation and guidance around the Act. All statements made in this press release are made only as of the date set forth at the beginning of this release. Juniper Networks undertakes no obligation to update the information made in this release in the event facts or circumstances subsequently change after the date of this press release.

Use of Non-GAAP Financial Information

Juniper Networks believes that the presentation of non-GAAP financial information provides important supplemental information to management and investors regarding financial and business trends relating to the company’s financial condition and results of operations. For further information regarding why Juniper Networks believes that these non-GAAP measures provide useful information to investors, the specific manner in which management uses these measures, and some of the limitations associated with the use of these measures, please refer to the “Discussion of Non-GAAP Financial Measures” section of this press release. The following tables and reconciliations can also be found on our Investor Relations website at http://investor.juniper.net.

Page 4 of 11

Juniper Networks, Inc.

Preliminary Condensed Consolidated Statements of Operations

(in millions, except per share amounts)

(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Net revenues:
Product	$	713.9		$	824.9		$	1,332.6		$	1,535.7
Service		388.6			379.2			771.6			751.0
Total net revenues		1,102.5			1,204.1			2,104.2			2,286.7
Cost of revenues:
Product		314.3			336.6			584.3			643.0
Service		151.4			166.6			300.8			324.4
Total cost of revenues		465.7			503.2			885.1			967.4
Gross margin		636.8			700.9			1,219.1			1,319.3
Operating expenses:
Research and development		244.0			248.8			471.6			518.2
Sales and marketing		229.0			238.3			457.5			477.7
General and administrative		60.0			54.2			128.2			110.2
Restructuring charges (benefits)		21.4			(0.2	)		36.7			(2.1	)
Total operating expenses		554.4			541.1			1,094.0			1,104.0
Operating income		82.4			159.8			125.1			215.3
Other expense, net		(4.6	)		(8.9	)		(2.8	)		(23.0	)
Income before income taxes		77.8			150.9			122.3			192.3
Income tax provision		31.6			34.4			45.0			41.4
Net income	$	46.2		$	116.5		$	77.3		$	150.9
Net income per share:
Basic	$	0.13		$	0.33		$	0.22		$	0.43
Diluted	$	0.13		$	0.33		$	0.22		$	0.42
Shares used in computing net income per share:
Basic		346.3			349.0			347.2			352.2
Diluted		349.1			351.3			351.7			356.8

Page 5 of 11

Juniper Networks, Inc.

Preliminary Net Revenues by Product and Service

(in millions)

(unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Routing	$	416.9	$	490.6	$	791.6	$	898.7
Switching		215.6		254.8		392.0		484.8
Security		81.4		79.5		149.0		152.2
Total Product		713.9		824.9		1,332.6		1,535.7
Total Service		388.6		379.2		771.6		751.0
Total	$	1,102.5	$	1,204.1	$	2,104.2	$	2,286.7

Juniper Networks, Inc.

Preliminary Net Revenues by Vertical^(*)

(in millions)

(unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Cloud	$	285.0	$	284.4	$	508.2	$	555.3
Service Provider		447.2		524.9		882.8		1,005.0
Enterprise		370.3		394.8		713.2		726.4
Total	$	1,102.5	$	1,204.1	$	2,104.2	$	2,286.7

^(*)  Certain prior-period amounts have been reclassified to conform to the current-period classifications.

Juniper Networks, Inc.

Preliminary Net Revenues by Geographic Region

(in millions)

(unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Americas	$	648.8	$	675.7	$	1,192.4	$	1,263.3
Europe, Middle East, and Africa		291.9		308.9		578.1		616.9
Asia Pacific		161.8		219.5		333.7		406.5
Total	$	1,102.5	$	1,204.1	$	2,104.2	$	2,286.7

Page 6 of 11

Juniper Networks, Inc.

Preliminary Reconciliations between GAAP and non-GAAP Financial Measures

(in millions, except percentages and per share amounts)

(unaudited)

		Three Months Ended
		June 30, 2019			March 31, 2019			June 30, 2018
GAAP operating income		$	82.4		$	42.7		$	159.8
GAAP operating margin			7.5	%		4.3	%		13.3	%
Share-based compensation expense	C		55.7			33.9			56.6
Share-based payroll tax expense	C		0.7			4.7			0.6
Amortization of purchased intangible assets	A		9.9			4.9			4.3
Restructuring charges (benefits)	B		21.4			15.3			(0.2	)
Acquisition-related charges	A		4.3			10.2			—
Strategic partnership-related charges	B		—			0.8			1.2
Non-GAAP operating income		$	174.4		$	112.5		$	222.3
Non-GAAP operating margin			15.8	%		11.2	%		18.5	%
GAAP net income		$	46.2		$	31.1		$	116.5
Share-based compensation expense	C		55.7			33.9			56.6
Share-based payroll tax expense	C		0.7			4.7			0.6
Amortization of purchased intangible assets	A		9.9			4.9			4.3
Restructuring charges (benefits)	B		21.4			15.3			(0.2	)
Acquisition-related charges	A		4.3			10.2			—
Strategic partnership-related charges	B		—			0.8			1.2
Loss on equity investments	B		3.5			1.1			—
Income tax effect of non-GAAP exclusions	B		(2.2	)		(9.3	)		(8.8	)
Non-GAAP net income		$	139.5		$	92.7		$	170.2
GAAP diluted net income per share		$	0.13		$	0.09		$	0.33
Non-GAAP diluted net income per share	D	$	0.40		$	0.26		$	0.48
Shares used in computing diluted net income per share			349.1			352.7			351.3

Page 7 of 11

Discussion of Non-GAAP Financial Measures

This press release, including the tables above, includes the following non-GAAP financial measures derived from our Preliminary Consolidated Statements of Operations: operating income; operating margin; net income; and diluted net income per share. These measures are not presented in accordance with, nor are they a substitute for GAAP. In addition, these measures may be different from non-GAAP measures used by other companies, limiting their usefulness for comparison purposes. The non-GAAP financial measures used in the table above should not be considered in isolation from measures of financial performance prepared in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. In particular, certain of the adjustments to our GAAP financial measures reflect the exclusion of items that are recurring and will be reflected in our financial results for the foreseeable future.

We utilize a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of our business, in making operating decisions, forecasting and planning for future periods, and determining payments under compensation programs. We consider the use of the non-GAAP measures presented above to be helpful in assessing the performance of the continuing operation of our business. By continuing operation, we mean the ongoing revenue and expenses of the business, excluding certain items that render comparisons with prior periods or analysis of on-going operating trends more difficult, such as expenses not directly related to the actual cash costs of development, sale, delivery or support of our products and services, or expenses that are reflected in periods unrelated to when the actual amounts were incurred or paid. Consistent with this approach, we believe that disclosing non-GAAP financial measures to the readers of our financial statements provides such readers with useful supplemental data that, while not a substitute for financial measures prepared in accordance with GAAP, allows for greater transparency in the review of our financial and operational performance. In addition, we have historically reported non-GAAP results to the investment community and believe that continuing to provide non-GAAP measures provides investors with a tool for comparing results over time. In assessing the overall health of our business for the periods covered by the table above and, in particular, in evaluating the financial line items presented in the table above, we have excluded items in the following three general categories, each of which are described below: Acquisition-Related Charges, Other Items, and Share-Based Compensation Related Items. We also provide additional detail below regarding the shares used to calculate our non-GAAP net income per share. Notes identified for line items in the table above correspond to the appropriate note description below. With respect to the items excluded from our forward-looking non-GAAP measures and reconciliation of such measures, please see the “Outlook” section above.

Note A: Acquisition-Related Charges. We exclude certain expense items resulting from acquisitions including amortization of purchased intangible assets associated with our acquisitions. The amortization of purchased intangible assets associated with our acquisitions results in our recording expenses in our GAAP financial statements that were already expensed by the acquired company before the acquisition and for which we have not expended cash. Moreover, had we internally developed the products acquired, the amortization of intangible assets, and the expenses of uncompleted research and development would have been expensed in prior periods. Accordingly, we analyze the performance of our operations in each period without regard to such expenses. In addition, acquisitions result in non-continuing operating expenses, which would not otherwise have been incurred by us in the normal course of our business operations. We believe that providing non-GAAP information for acquisition-related expense items in addition to the corresponding GAAP information allows the users of our financial statements to better review and understand the historic and current results of our continuing operations, and also facilitates comparisons to less acquisitive peer companies.

Note B: Other Items. We exclude certain other items that are the result of either unique, infrequent or unplanned events, including the following, when applicable: (i) restructuring charges or benefits; (ii) strategic partnership-related charges (iii) legal reserve and settlement charges or benefits; (iv) gain or loss on equity investments; (v) significant effects of tax legislation and judicial or administrative interpretation of tax regulations, including the impact of income tax reform; (vi) recognition of previously unrecognized tax benefits that are non-recurring in nature; (vii) the income tax effect on our financial statements of excluding items related to our non-GAAP financial measures. It is difficult to estimate the amount or timing of these items in advance. Although these events are reflected in our GAAP financial statements, these transactions may limit the comparability of our on-going operations with prior and future periods. Restructuring benefits or charges result from events that arise from unforeseen circumstances, which often occur outside of the ordinary course

Page 8 of 11

of continuing operations. These expenses do not accurately reflect the underlying performance of our continuing business operations for the period in which they are incurred. We also exclude certain expenses incurred for the formation of a strategic partnership, as they are directly related to an event that is distinct and does not reflect current ongoing business operations. In the case of legal reserves and settlements, these gains or losses are recorded in the period in which the matter is concluded or resolved even though the subject matter of the underlying dispute may relate to multiple or different periods. As such, we believe that these expenses do not accurately reflect the underlying performance of our continuing operations for the period in which they are incurred. Additionally, we exclude previously unrecognized tax benefits that are non-recurring in nature which are recorded in the period in which applicable statutes of limitation lapse or upon the completion of tax review cycles as the tax matter may relate to multiple or different periods. Further, the impact of certain income tax reform, including the revaluation of our deferred tax assets and liabilities are unique events that occur in periods that are generally unrelated to the level of business activity to which such tax reform or legislation applies. We believe these tax events limit the comparability with prior periods and that these expenses or benefits do not accurately reflect the underlying performance of our continuing business operations for the period in which they are incurred. We also believe providing financial information with and without the income tax effect of excluding items related to our non-GAAP financial measures provide our management and users of the financial statements with better clarity regarding the on-going performance and future liquidity of our business. Because of these factors, we assess our operating performance with these amounts both included and excluded, and by providing this information, we believe the users of our financial statements are better able to understand the financial results of what we consider our continuing operations.

Note C: Share-Based Compensation Related Items. We provide non-GAAP information relative to our expense for share-based compensation and related payroll tax. Due to the varying available valuation methodologies, subjective assumptions and the variety of award types, which affect the calculations of share-based compensation, we believe that the exclusion of share-based compensation and related payroll tax allows for more accurate comparisons of our operating results to our peer companies and is useful to investors to understand the impact of share-based compensation to our results of operations. Further, expense associated with granting share-based awards does not reflect any cash expenditures by the company as no cash is expended.

Note D: Non-GAAP Net Income Per Share Items. We provide diluted non-GAAP net income per share. The diluted non-GAAP net income per share includes additional dilution from potential issuance of common stock, except when such issuances would be anti-dilutive.

Page 9 of 11

Juniper Networks, Inc.

Preliminary Condensed Consolidated Balance Sheets

(in millions)

(unaudited)

	June 30, 2019		December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	1,381.3	$	2,489.0
Short-term investments		1,418.9		1,070.1
Accounts receivable, net of allowances		659.4		754.6
Prepaid expenses and other current assets		299.0		268.1
Total current assets		3,758.6		4,581.8
Property and equipment, net		870.0		951.7
Operating lease right-of-use assets		176.7		—
Long-term investments		74.8		199.0
Purchased intangible assets, net		205.6		118.5
Goodwill		3,338.3		3,108.8
Other long-term assets		479.3		403.5
Total assets	$	8,903.3	$	9,363.3
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	183.3	$	208.8
Accrued compensation		207.5		221.0
Deferred revenue		820.0		829.3
Short-term portion of long-term debt		299.5		349.9
Other accrued liabilities		255.9		233.5
Total current liabilities		1,766.2		1,842.5
Long-term debt		1,490.5		1,789.1
Long-term deferred revenue		381.4		384.3
Long-term income taxes payable		409.1		404.4
Long-term operating lease liabilities		167.5		—
Other long-term liabilities		97.4		119.8
Total liabilities		4,312.1		4,540.1
Total stockholders’ equity		4,591.2		4,823.2
Total liabilities and stockholders’ equity	$	8,903.3	$	9,363.3

Page 10 of 11

Juniper Networks, Inc.

Preliminary Condensed Consolidated Statements of Cash Flows

(in millions)

(unaudited)

	Six Months Ended June 30,
	2019			2018
Cash flows from operating activities:
Net income	$	77.3		$	150.9
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation expense		89.6			127.0
Depreciation, amortization, and accretion		101.7			110.9
Operating lease assets expense		18.6			—
Other		0.4			1.5
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable, net		102.3			147.5
Prepaid expenses and other assets		(52.5	)		(26.5	)
Accounts payable		(28.1	)		(28.8	)
Accrued compensation		(15.8	)		15.8
Income taxes payable		(3.8	)		(77.7	)
Other accrued liabilities		(20.1	)		(27.5	)
Deferred revenue		(21.4	)		48.3
Net cash provided by operating activities		248.2			441.4
Cash flows from investing activities:
Purchases of property and equipment		(55.2	)		(79.3	)
Purchases of available-for-sale debt securities		(1,760.0	)		(114.4	)
Proceeds from sales of available-for-sale debt securities		628.5			995.4
Proceeds from maturities and redemptions of available-for-sale debt securities		906.0			289.9
Purchases of equity securities		(9.4	)		(6.3	)
Proceeds from sales of equity securities		4.1			29.5
Subsequent payments related to acquisitions in prior years		—			(31.5	)
Payments for business acquisitions, net of cash and cash equivalents acquired		(270.9	)		—
Net cash (used in) provided by investing activities		(556.9	)		1,083.3
Cash flows from financing activities:
Repurchase and retirement of common stock		(303.8	)		(754.2	)
Proceeds from issuance of common stock		29.7			29.5
Payment of dividends		(131.7	)		(124.9	)
Change in customer financing arrangement		—			(16.3	)
Payment of debt		(350.0	)		—
Other		—			(0.5	)
Net cash used in financing activities		(755.8	)		(866.4	)
Effect of foreign currency exchange rates on cash, cash equivalents, and restricted cash		2.1			(5.4	)
Net (decrease) increase in cash, cash equivalents, and restricted cash		(1,062.4	)		652.9
Cash, cash equivalents, and restricted cash at beginning of period		2,505.8			2,059.1
Cash, cash equivalents, and restricted cash at end of period	$	1,443.4		$	2,712.0

Page 11 of 11

EX-99.2

Exhibit 99.2

Juniper Networks, Inc.

1133 Innovation Way

Sunnyvale, CA 94089

July 25, 2019

CFO Commentary on Second Quarter 2019 Preliminary Financial Results

Related Information

The following commentary is provided by management and should be referenced in conjunction with Juniper Networks’ second quarter 2019 preliminary financial results press release available on its Investor Relations website at http://investor.juniper.net. These remarks represent management’s current views of the Company’s financial and operational performance and outlook and are provided to give investors and analysts further insight into the Company’s performance in advance of the earnings call webcast.

Q2 2019 Preliminary Financial Results

GAAP

(in millions, except per share amounts and percentages)	Q2’19			Q1’19			Q2’18			Q/Q Change			Y/Y Change
Revenue	$	1,102.5		$	1,001.7		$	1,204.1			10	%		(8	)%
Product		713.9			618.7			824.9			15	%		(13	)%
Service		388.6			383.0			379.2			1	%		2	%
Gross margin %		57.8	%		58.1	%		58.2	%		(0.3	)pts		(0.4	)pts
Research and development		244.0			227.6			248.8			7	%		(2	)%
Sales and marketing		229.0			228.5			238.3			—	%		(4	)%
General and administrative		60.0			68.2			54.2			(12	)%		11	%
Restructuring charges (benefits)		21.4			15.3			(0.2	)		40	%		N/	M
Total operating expenses	$	554.4		$	539.6		$	541.1			3	%		2	%
Operating margin %		7.5	%		4.3	%		13.3	%		3.2	pts		(5.8	)pts
Net income	$	46.2		$	31.1		$	116.5			49	%		(60	)%
Diluted net income per share	$	0.13		$	0.09		$	0.33			44	%		(61	)%

N/M - Not meaningful

Non-GAAP

(in millions, except per share amounts and percentages)	Q3’19 Guidance	Q2’19			Q1’19			Q2’18			Q/Q Change			Y/Y Change
Revenue	$1,145 +/- $30	$	1,102.5		$	1,001.7		$	1,204.1			10	%		(8	)%
Product			713.9			618.7			824.9			15	%		(13	)%
Service			388.6			383.0			379.2			1	%		2	%
Gross margin %	60% +/- 1.0%		59.2	%		59.3	%		59.1	%		(0.1	)pts		0.1	pts
Research and development			217.5			213.5			219.0			2	%		(1	)%
Sales and marketing			212.2			217.3			223.7			(2	)%		(5	)%
General and administrative			48.4			50.9			46.4			(5	)%		4	%
Total operating expenses	$488 +/- $5	$	478.1		$	481.7		$	489.1			(1	)%		(2	)%
Operating margin %	~17.5% at the midpoint		15.8	%		11.2	%		18.5	%		4.6	pts			(2.7)pts
Net income		$	139.5		$	92.7		$	170.2			50	%		(18	)%
Diluted net income per share	$0.46 +/- $0.03	$	0.40		$	0.26		$	0.48			54	%		(17	)%

Q2 2019 Overview

We ended the second quarter at $1,102 million in revenue, in-line with our guidance. Non-GAAP gross margin of 59.2% was slightly below the midpoint of guidance primarily due to higher tariff costs. These results, along with prudent expense management, drove non-GAAP earnings per share of $0.40, a penny above the midpoint of our forecast.

Looking at our revenue by vertical, all verticals grew sequentially, as expected. Cloud was up 28%, Enterprise grew 8% and Service Provider increased 3% sequentially. On a year-over-year basis, Service Provider declined 15% and Cloud was flat. Though Enterprise decreased 6% year-over-year, bookings increased double-digits year-over-year.

From a technology perspective, Routing decreased 15% year-over-year and increased 11% sequentially. Switching decreased 15% year-over-year and increased 22% sequentially. Security increased 2% year-over-year and 20% sequentially. Our Services business increased 2% year-over-year and 1% sequentially.

Software revenue continued to grow year-over-year and was greater than 10 percent of total revenue.

In reviewing our top 10 customers for the quarter, four were Cloud, five were Service Provider, and one was an Enterprise. In the quarter, we had one customer that accounted for greater than 10% of total revenue, from the Cloud vertical.

Product deferred revenue was $133 million, down 6% year-over-year due to the timing of the delivery of contractual commitments.

Non-GAAP operating expenses were down 2% year-over-year and 1% sequentially.

Cash flow from operations was $89 million for the quarter. We paid $66 million in dividends, reflecting a quarterly dividend of $0.19 per share.

Total cash, cash equivalents, and investments at the end of the second quarter of 2019 was $2.9 billion. The sequential decline was due primarily to cash outflows associated with the acquisition of Mist Systems and our recent accelerated share repurchase (ASR) program.

Revenue

Product & Service

• Routing product revenue: $416 million, down 15% year-over-year and up 11% sequentially. The year-over-year decrease was primarily due to Service Provider, partially offset by strength in Cloud. The sequential increase was primarily due to Cloud and to a lesser extent, Service Provider, partially offset by a decline in Enterprise. The MX product family declined year-over-year but increased sequentially. PTX grew both year-over-year and sequentially.

• Switching product revenue: $216 million, down 15% year-over-year and up 22% sequentially. The year-over-year decrease was primarily due to Enterprise, and to a lesser extent, Service Provider and Cloud. The sequential increase was primarily driven by Enterprise and Cloud. The QFX and EX product families declined year-over-year but increased sequentially.

• Security product revenue: $81 million, up 2% year-over-year and up 20% sequentially. The year-over-year increase was due to Service Provider and Cloud, partially offset by a decline in Enterprise. The sequential increase was across all verticals.

• Service revenue: $389 million, up 2% year-over-year and up 1% sequentially. The year-over-year and sequential increases were primarily driven by strong renewals and attach rates of support contracts.

Vertical

• Cloud: $285 million, flat year-over-year and up 28% sequentially. Year-over-year, Routing, Security and Services grew, partially offset by a decline in Switching. The sequential increase was primarily driven by Routing and Switching.

• Service Provider: $447 million, down 15% year-over-year and up 3% sequentially. The year-over-year decrease and sequential increase were primarily driven by Routing.

• Enterprise: $370 million, down 6% year-over-year and up 8% sequentially. The year-over-year decrease and sequential increase were primarily driven by Switching. Although revenue was down year-over-year, bookings increased double-digits.

Geography

• Americas: $648 million, down 4% year-over-year and up 19% sequentially. Year-over-year, the decrease was primarily due to Service Provider, partially offset by growth in Cloud. Sequentially, the increase was primarily driven by Cloud and Enterprise, and to a lesser extent, Service Provider.

• EMEA: $292 million, down 6% year-over-year and up 2% sequentially. Year-over-year, the decrease was primarily due to Service Provider and Cloud, partially offset by growth in Enterprise. Sequentially, the increase was due to Service Provider, partially offset by declines in Cloud and Enterprise.

• APAC: $162 million, down 26% year-over-year and 6% sequentially. The year-over-year decrease was primarily due to Service Provider and Enterprise. The sequential decrease was due to Enterprise and Service Provider, partially offset by Cloud.

Gross Margin

• GAAP gross margin: 57.8%, compared to 58.2% from the prior year and 58.1% from last quarter.

• Non-GAAP gross margin: 59.2%, compared to 59.1% from the prior year and 59.3% from last quarter.

• GAAP product gross margin: 56.0%, down 3.2 points from the prior year and down 0.4 points from last quarter.

Year-over-year, the decrease in GAAP product gross margin was primarily due to lower revenue and higher intangible amortization associated with the acquisition of Mist Systems.

The sequential decrease in GAAP product gross margin was primarily due to higher intangible amortization associated with the acquisition of Mist Systems.

• Non-GAAP product gross margin: 57.5%, down 2.4 points from the prior year and up 0.1 points from last quarter.

Non-GAAP product gross margin was up sequentially, primarily driven by higher revenue.

The year-over-year decrease in Non-GAAP product gross margin was primarily due to lower revenue and to a lesser extent, China tariffs, partially offset by growth in software.

• GAAP service gross margin: 61.0%, up 4.9 points from the prior year and flat from last quarter.

• Non-GAAP service gross margin: 62.2%, up 4.8 points from the prior year and down 0.2 points from last quarter.

Year-over-year, the increase in service gross margin, on a GAAP and non-GAAP basis, was primarily driven by lower delivery costs.

On a sequential basis non-GAAP service gross margin was essentially flat.

Operating Expenses

• GAAP operating expenses: $554 million, an increase of $13 million year-over-year, and an increase of $15 million, sequentially.

The year-over-year increase in operating expenses was primarily due to higher restructuring costs. The sequential increase was primarily due to higher share-based compensation.

GAAP operating expenses were 50.3% of revenue, up 5.4 points year-over-year and down 3.6 points quarter-over-quarter.

• Non-GAAP operating expenses: $478 million, a decrease of $11 million year-over-year, and a decrease of $4 million sequentially.

The year-over-year and sequential decrease in operating expenses was primarily driven by lower headcount related costs.

Non-GAAP operating expenses were 43.4% of revenue, up 2.8 points year-over-year and down 4.7 points quarter-over-quarter.

Operating Margin

• GAAP operating margin: 7.5%, a decrease of 5.8 points year-over-year and an increase of 3.2 points sequentially.

• Non-GAAP operating margin: 15.8%, a decrease of 2.7 points year-over-year and an increase of 4.6 points sequentially.

Tax Rate

In Q2’19, we adopted a full-year projected tax rate in our computation of the non-GAAP income tax provision to provide better consistency across the reporting periods. Please see the discussion of Non-GAAP Financial Measures for additional information and the press release furnished with our Form 8-K filed today with the SEC.

• GAAP tax rate: 40.6%, compared to 22.8% in Q2’18 and 30.0% last quarter.

The year-over-year and sequential increase in the effective tax rate was primarily due to structural changes impacting the taxation of the geographic mix of earnings and the write down of deferred tax assets from which the Company is no longer able to benefit.

• Non-GAAP tax rate: 19.5%, compared to 20.2% in Q2’18 and 19.6% last quarter.

The year-over-year and sequential decrease in the effective tax rate was primarily due to the adoption of a full-year projected non-GAAP tax rate as noted above. The rate reflects structural changes which impacted the taxation of the geographic mix of earnings.

Diluted Earnings Per Share

• GAAP diluted earnings per share: $0.13, a decrease of $0.20 year-over-year and an increase of $0.04 sequentially.

• Non-GAAP diluted earnings per share: $0.40, a decrease of $0.08 year-over-year and an increase of $0.14 sequentially.

The year-over-year decrease in GAAP EPS was primarily due to lower revenue and a higher tax rate.

The year-over-year decrease in non-GAAP EPS was primarily due to lower revenue, partially offset by lower operating expenses.

Sequentially, the increase in EPS on a GAAP and non-GAAP basis was primarily due to higher revenue.

Balance Sheet, Cash Flow, Capital Return, and Other Financial Metrics

(in millions, except days sales outstanding (“DSO”), and headcount)	Q2’19		Q1’19		Q4’18		Q3’18		Q2’18
Cash(1)	$	2,875.0	$	3,502.7	$	3,758.1	$	3,648.0	$	3,530.5
Debt		1,790.0		1,789.6		2,139.0		2,138.3		2,137.7
Net cash(2)		1,085.0		1,713.1		1,619.1		1,509.7		1,392.8
Operating cash flow		88.8		159.4		212.4		207.3		170.3
Capital expenditures		27.3		27.9		36.5		31.6		37.1
Depreciation and amortization		56.4		51.0		52.2		48.8		54.6
Share repurchases(3)		300.0		—		—		—		—
Dividends	$	65.5	$	66.2	$	62.3	$	62.1	$	62.8
Diluted shares		349.1		352.7		350.8		350.5		351.3
DSO		54		58		58		49		52
Headcount		8,995		9,068		9,283		9,311		9,341

⁽¹⁾  Includes cash, cash equivalents, and investments.

⁽²⁾ Net cash includes cash, cash equivalents, and investments, net of debt.

⁽³⁾ For Q2’19, $300.0 million represents the full amount under the accelerated share repurchase program (the “ASR”). 8.6 million shares were received initially for an aggregate price of $240.0 million.

Cash Flow

• Cash flow from operations: $89 million, down $82 million year-over-year and down $71 million sequentially.

The year-over-year decrease was primarily due to lower cash collections, partially offset by lower tax payments.

The sequential decrease was primarily due to lower cash collections and higher payments to suppliers, partially offset by lower payments related to variable compensation.

Days Sales Outstanding (DSO)

• DSO: 54 days, a 4-day decrease from the prior quarter, driven primarily by higher revenue.

Capital Return

• In the quarter, we paid a dividend of $0.19 per share for a total of $66 million.

• In the quarter, we entered into an ASR program to repurchase an aggregate of $300 million in shares. The ASR is still underway and is expected to settle no later than September 26, 2019.

Financing Activities

• Credit facility: We entered into a five-year, $500 million unsecured revolving credit facility, replacing the existing facility that was set to terminate in June 2019. The new facility has terms similar to the previous credit facility.

Demand metrics

• Total deferred revenue was $1,201 million, down $36 million year-over-year and down $30 million sequentially.

• Product deferred revenue was $133 million, down $9 million year-over-year and down $6 million quarter-over-quarter.

The year-over-year decline in product deferred revenue was due to the timing of the delivery of contractual commitments.

• Service deferred revenue was $1,068 million, down $27 million year-over-year and down $23 million sequentially.

The year-over-year and sequential decrease in service deferred revenue was primarily driven by the timing of contract renewals.

Deferred Revenue

(in millions)	June 30, 2019		March 31, 2019		June 30, 2018
Deferred product revenue, net	$	133.4	$	139.6	$	142.0
Deferred service revenue		1,068.0		1,091.3		1,095.2
Total	$	1,201.4	$	1,230.9	$	1,237.2

Headcount

• Ending headcount for Q2’19 was 8,995, a decrease of 346 employees year-over-year and 73 sequentially. The year-over-year decrease was primarily related to restructuring in Q1’19. The sequential decrease was primarily a result of outsourcing IT services to IBM, partially offset by the acquisition of Mist Systems and additional hires in our go-to-market organization.

Outlook

These metrics are provided on a non-GAAP basis, except for revenue and share count. Non-GAAP earnings per share is on a fully diluted basis. The outlook assumes that the exchange rate of the U.S. dollar to other currencies will remain relatively stable at current levels.

Our second-half revenue outlook reiterates the commentary we stated previously, which reflects our expectations of above normal seasonal trends, and a return to growth in the fourth quarter, due to our current pipeline of opportunities as well as the expected positive impact from our go-to-market transformation activities.

We remain confident in the long-term financial model we outlined at our Investor Day in November last year.

Full-year non-GAAP gross margin is expected to continue to be pressured by China tariffs. Despite our ongoing mitigation efforts, the increase in tariffs from 10% to 25% is expected to have a 30-50 basis point impact on full-year non-GAAP gross margin.

We plan to manage our operating expenses prudently; however, we continue to expect non-GAAP operating expenses on a full-year basis, to be flat to slightly up versus 2018, inclusive of the acquisition of Mist Systems.

In the second quarter of 2019, we adopted a full-year projected tax rate in our computation of the non-GAAP income tax provision to provide better consistency across reporting periods. For the remainder of 2019, we expect a non-GAAP tax rate of approximately 19.5%.

Due to the increased China tariffs and a higher non-GAAP tax rate, we now expect our full-year non-GAAP earnings per share to be at the low-end of the previously stated range of $1.75 +/- $0.05.

Juniper’s Board of Directors has declared a quarterly cash dividend of $0.19 per share to be paid on September 25, 2019 to shareholders of record as of the close of business on September 4, 2019.

Our guidance for the quarter ending September 30, 2019 is as follows:

• Revenue will be approximately $1,145 million, plus or minus $30 million.

• Non-GAAP gross margin will be approximately 60.0%, plus or minus 1%.

• Non-GAAP operating expenses will be approximately $488 million, plus or minus $5 million.

• Non-GAAP operating margin will be approximately 17.5% at the midpoint of revenue guidance.

• Non-GAAP net income per share will be approximately $0.46, plus or minus $0.03. This assumes a share count of approximately 348 million.

Forward-Looking Statements

Statements in this CFO Commentary and related conference call concerning Juniper Networks’ business outlook, economic and market outlook, including currency exchange rates; our future financial and operating results; our expectations regarding our sales execution and investments in our go-to-market organization; the strength of our solution portfolio and strategy; our ability to deliver on our long-term financial model; our ability to expand business opportunities, improve profitability and make necessary investments; our expectations around obtaining revenue and margin growth (including above normal seasonal trends and sequential revenue growth throughout the year and a return to year-over-year growth later in the year); the impact of tariffs; our future financial and operating results, including our financial guidance; and our overall future prospects are forward-looking statements within the meaning of the Private Securities Litigation Reform Act that involve a number of uncertainties and risks. Actual results or events could differ materially from those anticipated in those forward-looking statements as a result of several factors, including: general economic and political conditions globally or regionally; business and economic conditions in the networking industry; changes in overall technology spending by our customers, including Cloud providers and Service Providers; the network capacity requirements of our customers and, in particular, Cloud and telecommunication service providers; contractual terms that may result in the deferral of revenue; the timing of orders and their fulfillment; manufacturing and supply chain costs, constraints, changes or disruptions; availability and pricing of key product components; delays in scheduled product availability; adoption of regulations or standards affecting Juniper Networks products, services or the networking industry; product defects, returns or vulnerabilities; significant effects of tax legislation and judicial or administrative interpretation of tax regulations, including the Tax Cuts and Jobs Act, and judicial or administrative interpretation of tax regulations; legal settlements and resolutions; the potential impact of activities related to the execution of capital return, restructurings and product rationalization; the impact of import tariffs, depending on their scope and how they are implemented; and other factors listed in Juniper Networks’ most recent report on Form 10-Q or 10-K filed with the Securities and Exchange Commission. Note that our estimates as to tax rate on our business are based on current tax law, including current interpretations of the Tax Cuts and Jobs Act, and could be materially affected by changing interpretations of the Act, as well as additional legislation and guidance around the Act. All statements made in this CFO Commentary and related conference call are made only as of the date set forth at the beginning of this document. Juniper Networks undertakes no obligation to update the information made in this document or the related conference call in the event facts or circumstances subsequently change after the date of this document.

Non-GAAP Financial Measures

This CFO Commentary contains references to the following non-GAAP financial measures: gross margin; product gross margin; service gross margin; product gross margin as a percentage of product revenue; service gross margin as a percentage of service revenue; gross margin as a percentage of revenue; research and development expense; sales and marketing expense; general and administrative expense; operating expense; operating expense as a percentage of revenue; operating income; operating margin; provision for income tax; income tax rate; net income; diluted earnings per share; diluted shares outstanding; and free cash flow. For important commentary on why Juniper Networks considers non-GAAP information a useful view of the company’s financial results, please see the press release furnished with our Form 8-K filed today with the SEC. With respect to future financial guidance provided on a non-GAAP basis, we have excluded estimates for amortization of intangible assets, share-based compensation expenses, acquisition-related charges, restructuring benefits or charges, impairment charges, strategic partnership-related charges, legal reserve and settlement charges or benefits, supplier component remediation charges and recoveries, gain or loss on equity investments, retroactive impact of certain tax settlements, significant effects of tax legislation and judicial or administrative interpretation of tax regulations, including the impact of income tax reform, non-recurring income tax adjustments, valuation allowance on deferred tax assets, and the income tax effect of non-GAAP

exclusions, and do not include the impact of further tariffs and the impact of any future acquisitions, divestitures, or joint ventures that may occur in the applicable period. These measures are not presented in accordance with, nor are they a substitute for U.S. generally accepted accounting principles, or GAAP. In addition, these measures may be different from non-GAAP measures used by other companies, limiting their usefulness for comparison purposes. The non-GAAP financial measures used in this CFO Commentary should not be considered in isolation from measures of financial performance prepared in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. In particular, many of the adjustments to our GAAP financial measures reflect the exclusion of items that are recurring and will be reflected in our financial results for the foreseeable future.

In the second quarter of 2019, we adopted a full-year projected tax rate in our computation of the non-GAAP income tax provision to provide better consistency across the annual reporting periods. In projecting our full-year non-GAAP tax rate, we utilize a full-year financial projection that excludes the impact of stock options and the amortization of acquisition-related intangible assets. The projected rate considers other factors such as changes to our current operating structure, existing tax positions in various jurisdictions, the effect of key tax legislation, significant tax matters, and the other non-GAAP financial measures noted above, to the extent they are applicable to the full-year financial projection. For fiscal year 2019, our projected non-GAAP tax rate is 19.5% after including the impact of our acquisition of Mist Systems, Inc, which did not have a significant impact to our tax rate. Our projected tax rate on non-GAAP income may be adjusted during the year to account for events or trends that we believe materially impact the projected annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of earnings and other significant events.

A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis due to the high variability and low visibility with respect to the charges which are excluded from these non-GAAP measures. For example, share-based compensation expense is impacted by the Company’s future hiring needs, and restructuring actions, the type and volume of equity awards necessary for such future hiring, and the price at which the Company’s stock will trade in those future periods. Amortization of intangible assets is significantly impacted by the timing and size of any future acquisitions. The items that are being excluded are difficult to predict and a reconciliation could result in disclosure that would be imprecise or potentially misleading. Material changes to any one of these items could have a significant effect on our guidance and future GAAP results. Certain exclusions, such as amortization of intangible assets and share-based compensation expenses, are generally incurred each quarter, but the amounts have historically and may continue to vary significantly from quarter to quarter.

Juniper Networks, Inc.

Preliminary Supplemental Data

(in millions, except percentages)

(unaudited)

Deferred Revenue

	As of
	June 30, 2019			December 31, 2018
Deferred product revenue:
Undelivered product commitments and other product deferrals	$	142.0		$	163.3
Deferred gross product revenue		142.0			163.3
Deferred cost of product revenue		(8.6	)		(18.9	)
Deferred product revenue, net		133.4			144.4
Deferred service revenue		1,068.0			1,069.2
Total	$	1,201.4		$	1,213.6
Reported as:
Current	$	820.0		$	829.3
Long-term		381.4			384.3
Total	$	1,201.4		$	1,213.6

Vertical Reporting: Revenue Trend

	2017		2018		Q2’18		Q3’18		Q4’18		Q1’19		Q2’19		Q/Q Change			Y/Y Change
Cloud	$	1,310.7	$	1,049.9	$	284.4	$	257.1	$	237.5	$	223.1	$	285.0	$	61.9	27.7%	$	0.6		0.2	%
Service Provider		2,319.4		2,066.7		524.9		545.3		516.4		435.6		447.2		11.6	2.7%		(77.7	)	(14.8	)%
Enterprise		1,397.1		1,530.9		394.8		377.4		427.1		343.0		370.3		27.3	8.0%		(24.5	)	(6.2	)%
Total revenue	$	5,027.2	$	4,647.5	$	1,204.1	$	1,179.8	$	1,181.0	$	1,001.7	$	1,102.5	$	100.8	10.1%	$	(101.6	)	(8.4	)%

Juniper Networks, Inc.

Preliminary Reconciliations between GAAP and non-GAAP Financial Measures

(in millions, except percentages and per share amounts)

(unaudited)

	Three Months Ended
	June 30, 2019			March 31, 2019			June 30, 2018
GAAP gross margin - Product	$	399.6		$	348.7		$	488.3
GAAP product gross margin % of product revenue		56.0	%		56.4	%		59.2	%
Share-based compensation expense		1.6			1.9			1.7
Share-based payroll tax expense		—			0.3			—
Amortization of purchased intangible assets		8.4			4.4			3.8
Acquisition-related charges		1.2			—			—
Non-GAAP gross margin - Product	$	410.8		$	355.3		$	493.8
Non-GAAP product gross margin % of product revenue		57.5	%		57.4	%		59.9	%
GAAP gross margin - Service	$	237.2		$	233.6		$	212.6
GAAP service gross margin % of service revenue		61.0	%		61.0	%		56.1	%
Share-based compensation expense		4.4			4.5			4.9
Share-based payroll tax expense		0.1			0.8			0.1
Non-GAAP gross margin - Service	$	241.7		$	238.9		$	217.6
Non-GAAP service gross margin % of service revenue		62.2	%		62.4	%		57.4	%
GAAP gross margin	$	636.8		$	582.3		$	700.9
GAAP gross margin % of revenue		57.8	%		58.1	%		58.2	%
Share-based compensation expense		6.0			6.4			6.6
Share-based payroll tax expense		0.1			1.1			0.1
Amortization of purchased intangible assets		8.4			4.4			3.8
Acquisition-related charges		1.2			—			—
Non-GAAP gross margin	$	652.5		$	594.2		$	711.4
Non-GAAP gross margin % of revenue		59.2	%		59.3	%		59.1	%
GAAP research and development expense	$	244.0		$	227.6		$	248.8
Share-based compensation expense		(26.2	)		(12.2	)		(29.6	)
Share-based payroll tax expense		(0.3	)		(1.9	)		(0.2	)
Non-GAAP research and development expense	$	217.5		$	213.5		$	219.0
GAAP sales and marketing expense	$	229.0		$	228.5		$	238.3
Share-based compensation expense		(15.1	)		(9.4	)		(14.0	)
Share-based payroll tax expense		(0.3	)		(1.4	)		(0.3	)
Amortization of purchased intangible assets		(1.4	)		(0.4	)		(0.3	)
Non-GAAP sales and marketing expense	$	212.2		$	217.3		$	223.7
GAAP general and administrative expense	$	60.0		$	68.2		$	54.2
Share-based compensation expense		(8.4	)		(5.9	)		(6.4	)
Share-based payroll tax expense		—			(0.3	)		—
Amortization of purchased intangible assets		(0.1	)		(0.1	)		(0.2	)
Acquisition-related charges		(3.1	)		(10.2	)		—
Strategic partnership-related charges		—			(0.8	)		(1.2	)
Non-GAAP general and administrative expense	$	48.4		$	50.9		$	46.4

Juniper Networks, Inc.

Preliminary Reconciliations between GAAP and non-GAAP Financial Measures

(in millions, except percentages and per share amounts)

(unaudited)

	Three Months Ended
	June 30, 2019			March 31, 2019			June 30, 2018
GAAP operating expenses	$	554.4		$	539.6		$	541.1
GAAP operating expenses % of revenue		50.3	%		53.9	%		44.9	%
Share-based compensation expense		(49.7	)		(27.5	)		(50.0	)
Share-based payroll tax expense		(0.6	)		(3.6	)		(0.5	)
Amortization of purchased intangible assets		(1.5	)		(0.5	)		(0.5	)
Restructuring (charges) benefits		(21.4	)		(15.3	)		0.2
Acquisition-related charges		(3.1	)		(10.2	)		—
Strategic partnership-related charges		—			(0.8	)		(1.2	)
Non-GAAP operating expenses	$	478.1		$	481.7		$	489.1
Non-GAAP operating expenses % of revenue		43.4	%		48.1	%		40.6	%
GAAP operating income	$	82.4		$	42.7		$	159.8
GAAP operating margin		7.5	%		4.3	%		13.3	%
Share-based compensation expense		55.7			33.9			56.6
Share-based payroll tax expense		0.7			4.7			0.6
Amortization of purchased intangible assets		9.9			4.9			4.3
Restructuring charges (benefits)		21.4			15.3			(0.2	)
Acquisition-related charges		4.3			10.2			—
Strategic partnership-related charges		—			0.8			1.2
Non-GAAP operating income	$	174.4		$	112.5		$	222.3
Non-GAAP operating margin		15.8	%		11.2	%		18.5	%
GAAP income tax provision	$	31.6		$	13.4		$	34.4
GAAP income tax rate		40.6	%		30.0	%		22.8	%
Income tax effect of non-GAAP exclusions		2.2			9.3			8.8
Non-GAAP provision for income tax	$	33.8		$	22.7		$	43.2
Non-GAAP income tax rate		19.5	%		19.6	%		20.2	%

Juniper Networks, Inc.

Preliminary Reconciliations between GAAP and non-GAAP Financial Measures

(in millions, except percentages and per share amounts)

(unaudited)

	Three Months Ended
	June 30, 2019			March 31, 2019			June 30, 2018
GAAP net income	$	46.2		$	31.1		$	116.5
Share-based compensation expense		55.7			33.9			56.6
Share-based payroll tax expense		0.7			4.7			0.6
Amortization of purchased intangible assets		9.9			4.9			4.3
Restructuring charges (benefits)		21.4			15.3			(0.2	)
Acquisition-related charges		4.3			10.2			—
Strategic partnership-related charges		—			0.8			1.2
Loss on equity investments		3.5			1.1			—
Income tax effect of non-GAAP exclusions		(2.2	)		(9.3	)		(8.8	)
Non-GAAP net income	$	139.5		$	92.7		$	170.2
GAAP diluted net income per share	$	0.13		$	0.09		$	0.33
Non-GAAP diluted net income per share	$	0.40		$	0.26		$	0.48
Shares used in computing diluted net income per share		349.1			352.7			351.3