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) October 24, 2017

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))

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 October 24, 2017, Juniper Networks, Inc. (“we”, “our” or the “Company”) issued a press release in which we announced preliminary financial results for the quarter ended September 30, 2017. The Company also posted on the Investor Relations section of its website (www.juniper.net) prepared remarks with respect to the quarter ended September 30, 2017. 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 October 24, 2017
99.2	Prepared remarks by Juniper Networks, Inc. dated as of October 24, 2017

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.
October 24, 2017	By:	/s/ Brian M. Martin
		Name: Brian M. Martin Title: Senior Vice President and General Counsel

EX-99.1

Exhibit 99.1

Investor Relations:

Kathleen Nemeth

Juniper Networks

(408) 936-8687

kbnemeth@juniper.net

Media Relations:

Leslie Moore

Juniper Networks

(408) 936-5767

llmoore@juniper.net

JUNIPER NETWORKS REPORTS PRELIMINARY THIRD QUARTER 2017 FINANCIAL RESULTS

SUNNYVALE, Calif., October 24, 2017 - Juniper Networks (NYSE: JNPR), an industry leader in automated, scalable and secure networks, today reported preliminary financial results for the three months ended September 30, 2017 and provided its outlook for the three months ending December 31, 2017.

Q3 2017 Financial Performance

Net revenues were $1,257.8 million, a decrease of 2% year-over-year and 4% sequentially.

GAAP operating margin was 19.4%, a decrease from 19.5% in the third quarter of 2016, and a decrease from 19.7% in the second quarter of 2017.

Non-GAAP operating margin was 23.5%, a decrease from 24.4% in the third quarter of 2016, and a decrease from 24.2% in the second quarter of 2017.

GAAP net income was $174.4 million, an increase of 1% year-over-year and a decrease of 3% sequentially, resulting in diluted earnings per share of $0.46.

Non-GAAP net income was $211.1 million, a decrease of 5% year-over-year and 4% sequentially, resulting in diluted earnings per share of $0.55.

The reconciliation between GAAP and non-GAAP results of operations is provided in a table immediately following the Preliminary Net Revenues by Geographic Region table below.

“While we are disappointed in our third quarter revenue results which were impacted by timing of switching deployments, we have made significant progress on executing on our cloud strategy,” said Rami Rahim, chief executive officer, Juniper Networks. “We believe our deliberate and intentional strategy of focusing on cloud-oriented architectures and solutions has resulted in a strong footprint and a compelling product pipeline. We are excited about the opportunity we have in front of us.”

“Despite lower than anticipated revenue growth impacting third quarter results, we have still been able to manage costs effectively,” said Ken Miller, chief financial officer, Juniper Networks. “We continue to remain committed to delivering shareholder value through our innovative products and services, operational excellence, and capital returns.”

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Balance Sheet and Other Financial Results

Total cash, cash equivalents, and investments as of September 30, 2017 were $4,199 million, compared to $3,480 million as of September 30, 2016, and $4,215 million as of June 30, 2017.

Net cash flows provided by operations for the third quarter of 2017 was $202 million, compared to $245 million in the third quarter of 2016, and $299 million in the second quarter of 2017.

Days sales outstanding in accounts receivable, or “DSO,” was 52 days in the third quarter of 2017, compared to 53 days in the third quarter of 2016, and 52 days in the second quarter of 2017.

Capital expenditures were $33 million and depreciation and amortization expense was $56 million during the third quarter of 2017.

Juniper’s Board of Directors has declared a quarterly cash dividend of $0.10 per share to be paid on December 22, 2017 to shareholders of record as of the close of business on December 1, 2017.

During the third quarter of 2017, the Company repurchased $140 million of shares and paid $38 million in dividends. In 2017, the Company is committed to returning approximately 50% of annual free cash flow to its shareholders, inclusive of share repurchases and dividends, and expects to be opportunistic with its share repurchases. Free cash flow is calculated as net cash provided by operating activities less capital expenditures.

Outlook

These metrics are provided on a non-GAAP basis, except for revenue and share count. 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.

The Q4 revenue outlook reflects continued large deployment timing delays as Juniper expects its large customers to continue their architectural transition.

The Company expects gross margins for the quarter to remain at current levels.

Juniper will continue to manage operating expenses prudently and increase operational efficiencies. The Company initiated a realignment of its workforce in Q4, as it continues to prioritize its investments in the most critical areas of its business.

Juniper remains committed to its long-term financial principles of driving revenue growth, earnings expansion, and an optimized capital structure.

Juniper’s guidance for the quarter ending December 31, 2017 is as follows:

• Revenues will be approximately $1,230 million, plus or minus $30 million.

• Non-GAAP gross margin will be approximately 62.0%, plus or minus 0.5%.

• Non-GAAP operating expenses will be approximately $485 million, plus or minus $5 million.

• Non-GAAP operating margin will be approximately 22.6% at the midpoint of revenue guidance.

• Non-GAAP tax rate will be approximately 26.5%.

• Non-GAAP net income per share will be approximately $0.52, plus or minus $0.03. This assumes a share count of approximately 380 million.

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All forward-looking non-GAAP measures exclude estimates for amortization of intangible assets, share-based compensation expenses, acquisition-related charges, restructuring charges, impairment charges, litigation settlement and resolution charges, supplier component remediation charges and recoveries, gain or loss on equity investments, retroactive impact of certain tax settlements, 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 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.

Third Quarter 2017 Financial Commentary Available Online

A CFO Commentary reviewing the Company’s third quarter 2017 financial results, as well as fourth quarter 2017 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, October 24, 2017, 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 dial-in 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 (NYSE: JNPR) challenges the status quo with products, solutions and services that transform the economics of networking. Our team co-innovates with our customers and partners to deliver automated, scalable and secure networks with agility, performance and value. Additional information can be found at Juniper Networks (www.juniper.net) or connect with Juniper on Twitter and Facebook.

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.

Safe Harbor

Statements in this release concerning Juniper Networks’ business outlook, economic and market outlook, including pricing pressure and product mix; our future financial and operating results; expectations with respect to our market trends, including with cloud providers; the expected benefits of our strategic focus on cloud-oriented architectures and solutions; the timing of switching deployment delays and the transition of routing architectures; execution and

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optimization of our capital structure and capital return program; our revenue growth and diversification; our future strategy; the strength of our product portfolio; our ability to expand business opportunities; our gross margin expectations; our cost management and operating expense discipline; 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 and spending by communication service providers and major customers, including Cloud providers; the network capacity requirements of our customers and, in particular, cloud and communication service providers; contractual terms that may result in the deferral of revenue; increases in and the effect of competition; the timing of orders and their fulfillment; manufacturing and supply chain constraints, changes or disruptions; availability of key product components; ability to establish and maintain relationships with distributors, resellers and other partners; variations in the expected mix of products sold; changes in customer mix; changes in geography mix; customer and industry analyst perceptions of Juniper Networks and its technology, products and future prospects; delays in scheduled product availability; market acceptance of Juniper Networks products and services; rapid technological and market change; adoption of regulations or standards affecting Juniper Networks products, services or the networking industry; the ability to successfully acquire, integrate and manage businesses and technologies; product defects, returns or vulnerabilities; the ability to recruit and retain key personnel; significant effects of tax legislation and judicial or administrative interpretation of tax regulations; currency fluctuations; litigation settlements and resolutions; the potential impact of activities related to the execution of capital return, restructurings and product rationalization; and other factors listed in Juniper Networks’ most recent report on Form 10-Q filed with the Securities and Exchange Commission. 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.

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Juniper Networks, Inc.

Preliminary Condensed Consolidated Statements of Operations

(in millions, except per share amounts)

(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Net revenues:
Product	$	869.7		$	928.2		$	2,615.8		$	2,543.3
Service		388.1			357.1			1,171.9			1,061.2
Total net revenues		1,257.8			1,285.3			3,787.7			3,604.5
Cost of revenues:
Product		336.0			349.6			1,026.4			955.8
Service		149.4			136.2			440.4			401.9
Total cost of revenues		485.4			485.8			1,466.8			1,357.7
Gross margin		772.4			799.5			2,320.9			2,246.8
Operating expenses:
Research and development		236.4			251.8			752.8			750.7
Sales and marketing		232.5			242.9			716.6			718.4
General and administrative		57.4			54.0			163.5			172.0
Restructuring charges		2.0			0.8			29.4			3.2
Total operating expenses		528.3			549.5			1,662.3			1,644.3
Operating income		244.1			250.0			658.6			602.5
Other expense, net		(5.1	)		(13.4	)		(33.8	)		(47.2	)
Income before income taxes		239.0			236.6			624.8			555.3
Income tax provision		64.6			64.2			161.8			151.5
Net income	$	174.4		$	172.4		$	463.0		$	403.8
Net income per share:
Basic	$	0.46		$	0.45		$	1.22		$	1.06
Diluted	$	0.46		$	0.45		$	1.20		$	1.04
Shares used in computing net income per share:
Basic		378.3			381.0			380.0			382.3
Diluted		382.7			384.5			386.5			387.9
Cash dividends declared per common stock	$	0.10		$	0.10		$	0.30		$	0.30

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Juniper Networks, Inc.

Preliminary Net Revenues by Product and Service

(in millions)

(unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Routing	$	585.8	$	620.2	$	1,679.9	$	1,699.0
Switching		212.6		222.5		730.2		607.2
Security		71.3		85.5		205.7		237.1
Total product		869.7		928.2		2,615.8		2,543.3
Total service		388.1		357.1		1,171.9		1,061.2
Total	$	1,257.8	$	1,285.3	$	3,787.7	$	3,604.5

Juniper Networks, Inc.

Preliminary Net Revenues by Vertical

(in millions)

(unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Cloud	$	344.9	$	359.4	$	1,056.1	$	911.5
Telecom/Cable		576.9		599.4		1,707.8		1,688.5
Strategic Enterprise		336.0		326.5		1,023.8		1,004.5
Total	$	1,257.8	$	1,285.3	$	3,787.7	$	3,604.5

Juniper Networks, Inc.

Preliminary Net Revenues by Geographic Region

(in millions)

(unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Americas	$	729.2	$	745.0	$	2,241.6	$	2,093.2
Europe, Middle East, and Africa		298.6		338.0		871.3		923.5
Asia Pacific		230.0		202.3		674.8		587.8
Total	$	1,257.8	$	1,285.3	$	3,787.7	$	3,604.5

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Juniper Networks, Inc.

Preliminary Reconciliations between GAAP and non-GAAP Financial Measures

(in millions, except percentages and per share amounts)

(unaudited)

		Three Months Ended
		September 30, 2017			June 30, 2017			September 30, 2016
GAAP operating income		$	244.1		$	258.2		$	250.0
GAAP operating margin			19.4	%		19.7	%		19.5	%
Share-based compensation expense	C		45.0			44.1			55.6
Share-based payroll tax expense	C		0.3			1.7			0.2
Amortization of purchased intangible assets	A		4.1			4.2			4.8
Restructuring charges	B		2.0			8.0			0.8
Acquisition-related charges	A		1.4			—			2.8
Supplier component remediation recovery	B		(1.0	)		—			—
Non-GAAP operating income		$	295.9		$	316.2		$	314.2
Non-GAAP operating margin			23.5	%		24.2	%		24.4	%
GAAP net income		$	174.4		$	179.8		$	172.4
Share-based compensation expense	C		45.0			44.1			55.6
Share-based payroll tax expense	C		0.3			1.7			0.2
Amortization of purchased intangible assets	A		4.1			4.2			4.8
Restructuring charges	B		2.0			8.0			0.8
Acquisition-related charges	A		1.4			—			2.8
Supplier component remediation recovery	B		(1.0	)		—			—
(Gain) loss on equity investments	B		(3.6	)		—			0.3
Income tax effect of non-GAAP exclusions	B		(11.5	)		(17.3	)		(14.9	)
Non-GAAP net income		$	211.1		$	220.5		$	222.0
GAAP diluted net income per share		$	0.46		$	0.47		$	0.45
Non-GAAP diluted net income per share	D	$	0.55		$	0.57		$	0.58
Shares used in computing diluted net income per share			382.7			385.6			384.5

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Discussion of Non-GAAP Financial Measures

This press release, including the tables above, includes the following non-GAAP financial measures derived from our Preliminary Condensed 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 or unplanned events, including the following, when applicable: (i) restructuring charges; (ii) gain or loss on equity investments; (iii) supplier component remediation charges and recoveries; and (iv) 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 unique transactions may limit the comparability of our on-going operations with prior and future periods. Restructuring charges result from events that arise from unforeseen circumstances, which often occur outside of the ordinary course 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. Whether we realize gains or losses on equity investments is based primarily on the performance and market

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value of those independent companies. Accordingly, we believe that these gains and losses do not reflect the underlying performance of our continuing operations. Additionally, supplier component remediation charges and recoveries are directly related to an event that is distinct and does not reflect normal business operations. 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.

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Juniper Networks, Inc.

Preliminary Condensed Consolidated Balance Sheets

(in millions)

(unaudited)

	September 30, 2017		December 31, 2016
ASSETS
Current assets:
Cash and cash equivalents	$	2,363.7	$	1,833.2
Short-term investments		922.0		752.3
Accounts receivable, net of allowances		724.3		1,054.1
Prepaid expenses and other current assets		268.8		332.3
Total current assets		4,278.8		3,971.9
Property and equipment, net		1,007.5		1,063.8
Long-term investments		913.6		1,071.8
Restricted cash and investments		64.9		99.9
Purchased intangible assets, net		133.0		130.2
Goodwill		3,096.2		3,081.7
Other long-term assets		245.8		237.2
Total assets	$	9,739.8	$	9,656.5
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	205.4	$	221.0
Accrued compensation		166.2		233.6
Deferred revenue		977.4		1,032.0
Other accrued liabilities		223.1		249.3
Total current liabilities		1,572.1		1,735.9
Long-term debt		2,135.7		2,133.7
Long-term deferred revenue		485.5		449.1
Long-term income taxes payable		224.0		209.2
Other long-term liabilities		155.7		166.1
Total liabilities		4,573.0		4,694.0
Total stockholders’ equity		5,166.8		4,962.5
Total liabilities and stockholders’ equity	$	9,739.8	$	9,656.5

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Juniper Networks, Inc.

Preliminary Condensed Consolidated Statements of Cash Flows

(in millions)

(unaudited)

	Nine Months Ended September 30,
	2017			2016(*)
Cash flows from operating activities:
Net income	$	463.0		$	403.8
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation expense		151.1			162.1
Depreciation, amortization, and accretion		169.7			151.9
(Gain) loss on investments and disposal of fixed assets, net		(6.7	)		1.6
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable, net		331.9			36.6
Prepaid expenses and other assets		55.7			(22.2	)
Accounts payable		(11.5	)		52.1
Accrued compensation		(60.6	)		(77.0	)
Income taxes payable		8.8			(7.5	)
Other accrued liabilities		(34.3	)		(49.8	)
Deferred revenue		(21.2	)		124.7
Net cash provided by operating activities		1,045.9			776.3
Cash flows from investing activities:
Purchases of property and equipment		(97.6	)		(162.9	)
Purchases of available-for-sale investments		(1,298.6	)		(1,251.9	)
Proceeds from sales of available-for-sale investments		761.2			985.1
Proceeds from maturities and redemptions of available-for-sale investments		521.3			232.4
Proceeds from Pulse note receivable		75.0			—
Purchases of privately-held investments		(9.8	)		(17.1	)
Proceeds from sales of privately-held investments		1.3			9.5
Purchases of trading investments		(3.9	)		(4.3	)
Payments for business acquisitions, net of cash and cash equivalents acquired		(33.0	)		(96.7	)
Changes in restricted cash		—			(2.4	)
Net cash used in investing activities		(84.1	)		(308.3	)
Cash flows from financing activities:
Purchases and retirement of common stock		(395.5	)		(323.9	)
Proceeds from issuance of common stock		64.4			59.7
Payment of cash dividends		(113.5	)		(114.4	)
Payment of debt		—			(300.0	)
Issuance of debt, net		—			494.0
Payment of financing obligations		—			(15.5	)
Net cash used in financing activities		(444.6	)		(200.1	)
Effect of foreign currency exchange rates on cash and cash equivalents		13.3			0.2
Net increase in cash and cash equivalents		530.5			268.1
Cash and cash equivalents at beginning of period		1,833.2			1,420.9
Cash and cash equivalents at end of period	$	2,363.7		$	1,689.0

⁽*⁾  During the first quarter of fiscal 2017, the Company adopted the new accounting pronouncement on Improvements to Employee Share-Based Payment Accounting, requiring excess tax benefits to be presented as an operating activity in the consolidated statements of cash flows. The Company applied this provision on a retrospective basis. For the nine months ended September 30, 2016, the Company reclassified $5.8 million of excess tax benefits from share-based compensation to operating activities from financing activities.

Page 11 of 11

EX-99.2

Exhibit 99.2

Juniper Networks, Inc.

1133 Innovation Way

Sunnyvale, CA 94089

October 24, 2017

CFO Commentary on Third Quarter 2017 Preliminary Financial Results

Related Information

The following commentary is provided by management and should be referenced in conjunction with Juniper Networks’ third quarter 2017 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.

Q3 2017 Preliminary Financial Results

GAAP

(in millions, except per share amounts and     percentages)	Q3’17			Q2’17			Q3’16			Q/Q Change			Y/Y Change
Revenue	$	1,257.8		$	1,308.9		$	1,285.3			(4	)%		(2	)%
Product		869.7			917.2			928.2			(5	)%		(6	)%
Service		388.1			391.7			357.1			(1	)%		9	%
Gross margin %		61.4	%		61.3	%		62.2	%		0.1	pts		(0.8	)pts
Research and development		236.4			240.2			251.8			(2	)%		(6	)%
Sales and marketing		232.5			239.9			242.9			(3	)%		(4	)%
General and administrative		57.4			55.6			54.0			3	%		6	%
Restructuring charges		2.0			8.0			0.8			(75	)%		150	%
Total operating expenses	$	528.3		$	543.7		$	549.5			(3	)%		(4	)%
Operating margin %		19.4	%		19.7	%		19.5	%		(0.3	)pts		(0.1	)pts
Net income	$	174.4		$	179.8		$	172.4			(3	)%		1	%
Diluted EPS	$	0.46		$	0.47		$	0.45			(2	)%		2	%

Non-GAAP

(in millions, except per share     amounts and percentages)	Q4’17 Guidance	Q3’17			Q2’17			Q3’16			Q/Q Change			Y/Y Change
Revenue(1)	$1,230 +/– $30	$	1,257.8		$	1,308.9		$	1,285.3			(4	)%		(2	)%
Product(1)			869.7			917.2			928.2			(5	)%		(6	)%
Service(1)			388.1			391.7			357.1			(1	)%		9	%
Gross margin %	62.0% +/– 0.5%		62.0	%		62.0	%		62.9	%		—	pts		(0.9	)pts
Research and development			217.9			225.6			224.5			(3	)%		(3	)%
Sales and marketing			217.7			222.2			224.5			(2	)%		(3	)%
General and administrative			48.4			48.0			44.8			1	%		8	%
Total operating expenses	$485 +/– $5	$	484.0		$	495.8		$	493.8			(2	)%		(2	)%
Operating margin %	~22.6% at the midpoint		23.5	%		24.2	%		24.4	%		(0.7	)pts		(0.9	)pts
Net income		$	211.1		$	220.5		$	222.0			(4	)%		(5	)%
Diluted EPS	$0.52 +/– $0.03	$	0.55		$	0.57		$	0.58			(4	)%		(5	)%

⁽¹⁾ Revenue numbers are GAAP.

This CFO Commentary contains non-GAAP financial measures, and the reconciliation between GAAP and non-GAAP financial measures can be found at the end of this document. We are unable to provide a reconciliation of forward-looking non-GAAP guidance measures to corresponding GAAP measures without unreasonable effort due to the overall high variability and low visibility of most of the items that are excluded from our non-GAAP guidance measures. More information on these exclusions can be found under “Q4 2017 Outlook” below.

Q3 2017 Overview

The financial results for the September quarter were disappointing, with revenue and non-GAAP EPS falling below our expectations. From a revenue perspective, the lower than expected result was primarily due to the timing of certain large switching deployments within the Cloud vertical, related to architectural shifts.

Total revenue for the third quarter was $1,258 million down 4% sequentially and 2% year-over-year.

Routing grew sequentially but declined year-over-year due to the timing of Telecom / Cable deployments. Switching declined both year-over-year and sequentially, primarily due to the timing of certain large customer deployments. Security grew sequentially for the second consecutive quarter. Service revenue continued to be solid, growing 9% year-over-year.

In reviewing our top 10 customers for the quarter, five were Cloud, four were Telecom / Cable, and one was Strategic Enterprise. Of these customers, one was located outside of the U.S.

Product deferred revenue was $324 million, up $26 million or 9% both year-over-year and sequentially.

Non-GAAP operating expenses declined 2% year-over-year and sequentially, reflecting our continued disciplined focus on managing expenses through increased efficiencies and focus on operational excellence. Operating expenses were 38.5% of revenue in the third quarter.

Cash flows from operations was $202 million for the quarter bringing our year-to-date total to slightly over a billion dollars. During the quarter, we repurchased $140 million of shares and paid $38 million in dividends.

Revenue

Product & Service

• Routing product revenue: $586 million, down 6% year-over-year and up 2% sequentially. The year-over-year decrease was primarily due to Telecom / Cable. The sequential increase was driven by Telecom / Cable and Cloud, partially offset by Strategic Enterprise. Our PTX family saw a record revenue quarter, with strong year-over-year and sequential growth, while MX declined year-over-year and sequentially.

• Switching product revenue: $213 million, down 4% year-over-year and 23% sequentially. Year-over-year, Cloud and Telecom / Cable decreased, partially offset by Strategic Enterprise. Sequentially the decrease was primarily driven by the timing of certain large deployments within our Cloud vertical. Our QFX family of products continued to grow year-over-year but declined sequentially due to the timing of deployments. Our EX product family declined year-over-year and sequentially.

• Security product revenue: $71 million, down 17% year-over-year and up 4% sequentially. Year-over-year, the decrease was primarily due to Cloud. The sequential increase was driven by Telecom / Cable, partially offset by a decline in Strategic Enterprise.

• Service revenue: $388 million, up 9% year-over-year and down 1% sequentially. Year-over-year, the increase was driven by strong demand for professional services and strong renewal and attach rates of support contracts. Sequentially, the decrease was primarily due to the timing of professional services projects.

Vertical

• Cloud: $345 million, down 4% year-over-year and down 9% sequentially. Year-over-year, the decrease was due to Security and Switching, partially offset by Services. The sequential decrease was primarily due to Switching, primarily driven by timing of certain large deployments, and partially offset by an increase in Routing.

• Telecom / Cable: $577 million, down 4% year-over-year and up 3% sequentially. Year-over-year, the decrease was primarily due to Routing, partially offset by an increase in Services. Sequentially, the increase was primarily driven by Routing, partially offset by a decrease in Switching.

• Strategic Enterprise: $336 million, up 3% year-over-year and down 8% sequentially. Year-over-year, the increase was primarily driven by higher Switching. The sequential decrease was primarily driven by Routing and Switching.

Geography

• Americas: $729 million, down 2% year-over-year and down 9% sequentially. Year-over-year, the decrease was due to Telecom / Cable partially offset by Cloud. Sequentially, the decrease was primarily due to Cloud and Telecom / Cable.

• EMEA: $299 million, down 12% year-over-year and up 4% sequentially. Year-over-year, the decline was primarily due to Telecom / Cable and Cloud. Sequentially, the increase was driven by Telecom/ Cable, partially offset by a decrease in Strategic Enterprise. The year-over-year decline was primarily in Germany and Netherlands. The sequential increase was primarily due to Germany and Ireland.

• APAC: $230 million, up 14% year-over-year and up 5% sequentially. Year-over-year, the increase was driven primarily by Telecom / Cable, partially offset by Cloud. The sequential increase was driven by Telecom / Cable, partially offset by Strategic Enterprise. The year-over-year increase was primarily driven by Australia. The sequential increase was primarily driven by Japan.

Gross Margin

• GAAP gross margin: 61.4%, compared to 62.2% from the prior year and 61.3% from last quarter.

• Non-GAAP gross margin: 62.0%, compared to 62.9% from the prior year and 62.0% from last quarter.

Non-GAAP gross margin was within our guided range for the quarter. We remain focused on delivering innovation and continued improvements to our cost structure.

• GAAP product gross margin: 61.4%, down 0.9 points from the prior year and up 0.7 points from last quarter.

• Non-GAAP product gross margin: 61.8%, down 1.1 points from the prior year and up 0.6 points from last quarter.

Year-over-year, the decrease in product gross margin, on a GAAP and non-GAAP basis, was primarily due to customer mix, higher costs of certain memory components and lower revenue, partially offset by improvements in our cost structure.

The sequential increase, on a GAAP and non-GAAP basis, was primarily driven by product mix, partially offset by lower revenue.

• GAAP service gross margin: 61.5%, down 0.4 points from the prior year and down 1.0 points from last quarter.

• Non-GAAP service gross margin: 62.5%, down 0.3 points from the prior year and down 1.5 points from last quarter.

Year-over-year and sequentially, the decrease in service gross margin, on a GAAP and non-GAAP basis, was primarily due to spare parts in support of expansion of our installed base and higher delivery costs related to growth in emerging markets.

Operating Expenses

• GAAP operating expenses: $528 million, a decrease of $21 million, or 4% year-over-year, and a decrease of $15 million, or 3% sequentially.

The year-over-year decrease in operating expenses was primarily due to lower share-based compensation, lower headcount related costs and lower variable compensation. The sequential decrease was primarily due to lower restructuring charges and lower headcount related costs.

GAAP operating expenses were 42.0% of revenue, down 0.8 points year-over-year and up 0.5 points quarter-over-quarter.

• Non-GAAP operating expenses: $484 million, a decrease of $10 million, or 2% year-over-year, and a decrease of $12 million or 2% sequentially.

The year-over-year decrease in operating expenses was primarily due to lower headcount related costs and lower variable compensation.

The sequential decrease in operating expenses was primarily due to lower headcount related costs and continued cost discipline.

Non-GAAP operating expenses were 38.5% of revenue, up 0.1 points year-over-year and up 0.6 points quarter-over-quarter, primarily due to lower revenue.

Operating Margin

• GAAP operating margin: 19.4%, a decrease of 0.1 points year-over-year and 0.3 points sequentially.

• Non-GAAP operating margin: 23.5%, a decrease of 0.9 points year-over-year and 0.7 points sequentially.

Tax Rate

• GAAP tax rate: 27.0%, an increase of 0.3 points compared to 26.7% last quarter.

The sequential increase in the effective tax rate, on a GAAP basis, was primarily due to a lower benefit from discrete items.

• Non-GAAP tax rate: 26.5%, a decrease of 0.8 points compared to 27.3% last quarter.

The sequential decrease in the effective tax rate, on a Non-GAAP basis, was primarily due to a change in the geographic mix of earnings.

Diluted Earnings Per Share     

• GAAP diluted earnings per share: $0.46, an increase of $0.01 year-over-year and a decrease of $0.01 sequentially.

The year-over-year increase was due to lower operating expenses, partially offset by lower revenue and lower gross margin. The sequential decrease was primarily due to lower revenue, partially offset by lower operating and other expenses.

• Non-GAAP diluted earnings per share: $0.55, a decrease of $0.03 year-over-year and a decrease of $0.02 sequentially.

The year-over-year decrease was primarily due to lower revenue and lower gross margin partially offset by lower operating expenses. The sequential decrease was primarily due to lower revenue, partially offset by lower operating and other expenses.

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

(in millions, except days sales outstanding     (“DSO”), and headcount)	Q3’17		Q2’17		Q1’17		Q4’16		Q3’16
Cash(1, 2)	$	4,199.3	$	4,214.6	$	4,043.7	$	3,657.3	$	3,480.1
Debt		2,135.7		2,135.0		2,134.4		2,133.7		2,133.1
Net cash and investments(3)		2,063.6		2,079.6		1,909.3		1,523.6		1,347.0
Operating cash flow(4)		201.9		298.7		545.3		336.4		244.8
Capital expenditures		33.3		32.2		32.1		51.8		46.0
Depreciation and amortization		56.3		54.8		54.2		53.9		52.2
Share repurchases		140.0		125.0		125.0		—		112.4
Dividends	$	37.7	$	37.8	$	38.0	$	38.1	$	38.0
Diluted shares		382.7		385.6		388.0		385.6		384.5
DSO		52		52		49		68		53
Headcount(5)		9,694		9,661		9,694		9,832		9,863

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

⁽²⁾ 16% held onshore as of the end of Q3’17.

⁽³⁾ Net cash and investments includes, cash, cash equivalents, and investments, net of debt.

⁽⁴⁾ In Q1’17, we adopted the new accounting pronouncement on Improvements to Employee Share-Based Payment Accounting, requiring excess tax benefits to be presented as an operating activity in our consolidated statements of cash flows. We applied this provision on a retrospective basis, resulting in the reclassification of certain excess tax benefits from share-based compensation to operating activities from financing activities.

⁽⁵⁾ Q2’17 and Q1’17 excludes headcount impacted by restructuring activities.

Cash Flow

• Cash flow from operations: $202 million, down $43 million year-over-year and $97 million sequentially.

The year-over-year decrease was primarily due to timing differences in working capital related to customer collections and taxes. The sequential decrease was primarily due to timing differences in working capital related to variable compensation and taxes.

Days Sales Outstanding

• DSO: 52 days, flat from the prior quarter.

Capital Return

• In the quarter, we repurchased $140 million of shares and paid a dividend of $0.10 per share for a total of $38 million.

• Diluted shares decreased by approximately 2 million shares year-over-year and approximately 3 million shares sequentially.

Demand metrics

• Total deferred revenue was $1,463 million, up $159 million year-over-year and down $38 million quarter-over-quarter.

• Product deferred revenue was $324 million, an increase of $26 million both year-over-year and quarter-over-quarter.

Headcount

• Ending headcount was 9,694 a decrease of 169 employees year-over-year and an increase of 33 employees sequentially. The year-over-year decrease was primarily related to the restructuring of headcount partially offset by an increase in Services employees and employees acquired through acquisitions.

Outlook

These metrics are provided on a non-GAAP basis, except for revenue and share count. 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.

As we have discussed in the past, elements of our addressable markets are dynamic and particularly within the Cloud vertical, change can occur rapidly.

Our Q4 revenue outlook reflects continued large deployment timing delays as we expect our large customers to continue their architectural transition. This architectural transition is related to the evolution of these customers’ networks to be more modern, cost efficient, and scalable. Despite this outlook, we remain confident in our competitive position and strong relationships with these strategic customers.

We expect gross margins for the quarter, to remain at current levels.

We expect to continue managing our operating expenses prudently and to increase operational efficiencies.

We initiated a realignment of our workforce in Q4’17, as we continue to prioritize our investments in the most critical areas of our business.

We are committed to returning approximately 50% of our free cash flow and expect to be opportunistic with our share repurchases.

Despite the disappointing full year outlook, we are confident in our strategy and remain committed to our long-term financial principles of driving revenue growth, earnings expansion, and an optimized capital structure.

Our guidance for the quarter ending December 31, 2017, is as follows:

• Revenues will be approximately $1,230 million, plus or minus $30 million.

• Non-GAAP gross margin will be approximately 62.0%, plus or minus 0.5%.

• Non-GAAP operating expenses will be approximately $485 million, plus or minus $5 million.

• Non-GAAP operating margin will be approximately 22.6% at the midpoint of revenue guidance.

• Non-GAAP tax rate will be approximately 26.5%.

• Non-GAAP net income per share will be approximately $0.52, plus or minus $0.03. This assumes a share count of approximately 380 million.

Forward-Looking Statements

Statements in this CFO Commentary and related conference call concerning Juniper Networks’ business, economic and market outlook, including pricing pressure and product mix; factors that impact our gross margin; our long-term financial model and strategy; the architectural transition of our large customers and resulting impact on the timing of deployments; our product portfolio and success of particular products and product families; our success in obtaining revenue growth; the timing of deployments by our customers; our future financial and operating results, including our financial guidance; our areas of focus and our ability to deliver on growth, operational expense discipline, and shareholder returns; improvements to our cost structure and expense reductions and management, including timing and ability to execute on our restructuring; strength of certain of our customer segments; our capital structure; our capital return program, 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 and spending by communication service providers and major customers, including Cloud 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; increases in and the effect of competition; the timing of orders and their fulfillment; manufacturing and supply chain constraints, changes or disruptions; availability of key product components; ability to establish and maintain relationships with distributors, resellers and other partners; variations in the expected mix of products sold; changes in customer mix; changes in geography mix; customer and industry analyst perceptions of Juniper Networks and its technology, products and future prospects; delays in scheduled product availability; market acceptance of Juniper Networks products and services; rapid technological and market change; adoption of regulations or standards affecting Juniper Networks products, services or the networking industry; the ability to successfully acquire, integrate and manage businesses and technologies; product defects, returns or vulnerabilities; the ability to recruit and retain key personnel; significant effects of tax legislation and judicial or administrative interpretation of tax regulations; currency fluctuations; litigation settlements and resolutions; the potential impact of activities related to the execution of capital return, restructurings and product rationalization; and other factors listed in Juniper Networks’ most recent report on Form 10-K or 10-Q filed with the Securities and Exchange Commission (”SEC”). 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.

Use of 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; and diluted earnings per share. 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 charges, impairment charges, litigation settlement and resolution charges, gain or loss on

equity investments, retroactive impact of certain tax settlements, 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 any future acquisitions, divestitures, or joint ventures that may occur in the quarter. 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.

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
	September 30, 2017			December 31, 2016
Deferred product revenue:
Undelivered product commitments and other product deferrals	$	309.3		$	302.4
Distributor inventory and other sell-through items		61.9			74.2
Deferred gross product revenue		371.2			376.6
Deferred cost of product revenue		(47.5	)		(53.7	)
Deferred product revenue, net		323.7			322.9
Deferred service revenue		1,139.2			1,158.2
Total	$	1,462.9		$	1,481.1
Reported as:
Current	$	977.4		$	1,032.0
Long-term		485.5			449.1
Total	$	1,462.9		$	1,481.1

Vertical Reporting: Quarterly Revenue Trend

	FY 2015		FY 2016		Q3’16		Q4’16		Q1’17		Q2’17		Q3’17		Q/Q Change				Y/Y Change
Cloud	$	1,021.2	$	1,322.3	$	359.4	$	410.8	$	331.6	$	379.6	$	344.9	$	(34.7	)	(9)%	$	(14.5	)	(4)%
Telecom / Cable		2,417.1		2,324.7		599.4		636.2		568.5		562.4		576.9		14.5		3%		(22.5)		(4)%
Strategic Enterprise		1,419.5		1,343.1		326.5		338.6		320.9		366.9		336.0		(30.9)		(8)%		9.5		3%
Total revenue	$	4,857.8	$	4,990.1	$	1,285.3	$	1,385.6	$	1,221.0	$	1,308.9	$	1,257.8	$	(51.1)		(4)%	$	(27.5)		(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
	September 30, 2017			June 30, 2017			September 30, 2016
GAAP gross margin – Product	$	533.7		$	557.0		$	578.6
GAAP product gross margin % of product revenue		61.4	%		60.7	%		62.3	%
Share-based compensation expense		1.5			1.4			1.5
Amortization of purchased intangible assets		3.1			3.1			3.5
Supplier component remediation recovery		(1.0	)		—			—
Non-GAAP gross margin – Product	$	537.3		$	561.5		$	583.6
Non-GAAP product gross margin % of product revenue		61.8	%		61.2	%		62.9	%
GAAP gross margin – Service	$	238.7		$	244.9		$	220.9
GAAP service gross margin % of service revenue		61.5	%		62.5	%		61.9	%
Share-based compensation expense		3.9			5.3			3.5
Share-based payroll tax expense		—			0.3			—
Non-GAAP gross margin – Service	$	242.6		$	250.5		$	224.4
Non-GAAP service gross margin % of service revenue		62.5	%		64.0	%		62.8	%
GAAP gross margin	$	772.4		$	801.9		$	799.5
GAAP gross margin % of revenue		61.4	%		61.3	%		62.2	%
Share-based compensation expense		5.4			6.7			5.0
Share-based payroll tax expense		—			0.3			—
Amortization of purchased intangible assets		3.1			3.1			3.5
Supplier component remediation recovery		(1.0	)		—			—
Non-GAAP gross margin	$	779.9		$	812.0		$	808.0
Non-GAAP gross margin % of revenue		62.0	%		62.0	%		62.9	%
GAAP research and development expense	$	236.4		$	240.2		$	251.8
Share-based compensation expense		(18.5	)		(14.1	)		(27.2	)
Share-based payroll tax expense		—			(0.5	)		(0.1	)
Non-GAAP research and development expense	$	217.9		$	225.6		$	224.5
GAAP sales and marketing expense	$	232.5		$	239.9		$	242.9
Share-based compensation expense		(13.7	)		(16.3	)		(17.5	)
Share-based payroll tax expense		(0.2	)		(0.5	)		(0.1	)
Amortization of purchased intangible assets		(0.9	)		(0.9	)		(0.8	)
Non-GAAP sales and marketing expense	$	217.7		$	222.2		$	224.5
GAAP general and administrative expense	$	57.4		$	55.6		$	54.0
Share-based compensation expense		(7.4	)		(7.0	)		(5.9	)
Share-based payroll tax expense		(0.1	)		(0.4	)		—
Amortization of purchased intangible assets		(0.1	)		(0.2	)		(0.5	)
Acquisition-related charges		(1.4	)		—			(2.8	)
Non-GAAP general and administrative expense	$	48.4		$	48.0		$	44.8

Juniper Networks, Inc.

Preliminary Reconciliations between GAAP and non-GAAP Financial Measures

(in millions, except percentages and per share amounts)

(unaudited)

	Three Months Ended
	September 30, 2017			June 30, 2017			September 30, 2016
GAAP operating expenses	$	528.3		$	543.7		$	549.5
GAAP operating expenses % of revenue		42.0	%		41.5	%		42.8	%
Share-based compensation expense		(39.6	)		(37.4	)		(50.6	)
Share-based payroll tax expense		(0.3	)		(1.4	)		(0.2	)
Amortization of purchased intangible assets		(1.0	)		(1.1	)		(1.3	)
Restructuring charges		(2.0	)		(8.0	)		(0.8	)
Acquisition-related charges		(1.4	)		—			(2.8	)
Non-GAAP operating expenses	$	484.0		$	495.8		$	493.8
Non-GAAP operating expenses % of revenue		38.5	%		37.9	%		38.4	%
GAAP operating income	$	244.1		$	258.2		$	250.0
GAAP operating margin		19.4	%		19.7	%		19.5	%
Share-based compensation expense		45.0			44.1			55.6
Share-based payroll tax expense		0.3			1.7			0.2
Amortization of purchased intangible assets		4.1			4.2			4.8
Restructuring charges		2.0			8.0			0.8
Acquisition-related charges		1.4			—			2.8
Supplier component remediation recovery		(1.0	)		—			—
Non-GAAP operating income	$	295.9		$	316.2		$	314.2
Non-GAAP operating margin		23.5	%		24.2	%		24.4	%
GAAP income tax provision	$	64.6		$	65.4		$	64.2
GAAP income tax rate		27.0	%		26.7	%		27.1	%
Income tax effect of non-GAAP exclusions		11.5			17.3			14.9
Non-GAAP provision for income tax	$	76.1		$	82.7		$	79.1
Non-GAAP income tax rate		26.5	%		27.3	%		26.3	%
GAAP net income	$	174.4		$	179.8		$	172.4
Share-based compensation expense		45.0			44.1			55.6
Share-based payroll tax expense		0.3			1.7			0.2
Amortization of purchased intangible assets		4.1			4.2			4.8
Restructuring charges		2.0			8.0			0.8
Acquisition-related charges		1.4			—			2.8
Supplier component remediation recovery		(1.0	)		—			—
(Gain) loss on equity investments		(3.6	)		—			0.3
Income tax effect of non-GAAP exclusions		(11.5	)		(17.3	)		(14.9	)
Non-GAAP net income	$	211.1		$	220.5		$	222.0
GAAP diluted net income per share	$	0.46		$	0.47		$	0.45
Non-GAAP diluted net income per share	$	0.55		$	0.57		$	0.58
Shares used in computing diluted net income per share		382.7			385.6			384.5