Hi, good morning. I'm Samik Chatterjee. I cover hardware at J.P. Morgan. With me for the next session, I have the pleasure of hosting Juniper, and from Juniper we have Kevin Hutchins, who's the SVP of Strategy and Corporate Development. Kevin, thanks for coming to the conference. Jess, thank you as well. Kevin, as we were discussing, we start off with a few common questions for all companies. I think the first one that we've generally ask from most companies is, as you look through the remainder of the year, where do you see the biggest macro risk to your business? Yeah. First, thanks for having us, as always. It's a great event, and we really appreciate being here. I should also, just say up front that we may be making forward-looking statements. You know, please look at our website for all of our disclosures and so forth. In terms of, you know, the macro risk, you know, I guess when we think about our business, we think about it in three segments. We think about the enterprise segment, the cloud segment, and the service provider segment. If you look at the, you know, the cloud segment for us in particular, it's less about macro, it's more about, inventory digestion, as a, kind of a theme. If you think about service provider, it seems like it's very sort of oriented around projects that are proceeding at the moment independently of any sort of outlook with regards to macro. Our enterprise business, you know, is an area where up to this point, you know, we've seen a lot of continuing strength, although we are starting to see, you know, more elongation of the decision-making process, but we're still seeing, you know, projects move forward. I'd say if we're starting to think about, you know, further macro degradation from here, if that is a real risk, then, you know, where we'd potentially see the, you know, the concern arise would be more into our enterprise opportunities than the other two segments. I guess it really depends on what the magnitude of the impact is relative to macro. Okay. Maybe just to follow up on that, because one question I've been asking other companies is: How much of a slowdown is a inventory issue versus a real demand slowdown? As you indicated on the cloud aspect, cloud side, you see it as more as an inventory issue. What does it take for service providers then, as a vertical, to start like, being more independent on the macro than right now? Are they looking a bit more independent? Their sort of CapEx plans haven't really changed. What, in your experience from previous cycles, have they really sort of when have they started tweaking their plans in responding to the macro? I think, when you think about what's going on within the service provider segment, obviously, you know, macro is an important factor, but there's also other secular drivers that they're responding to. One is the demand for high-speed broadband. Right. In many of the geographies where the service providers operate, there's greater levels of competition for that high-speed broadband business, right? You have, you know, either private equity-funded players that are getting involved in building out, you know, broadband capabilities, or you have, you know, cable providers and telcos getting involved and competing with each other for broadband. There's just a greater level of competition that they have to be responding to. Another big secular driver is obviously 5G. We've gone through a period of elevated CapEx, where customers are, you know, investing in buying spectrum, investing in building out, you know, their radio upgrades, and now they actually have to have networks that are able to support that elevated traffic growth, right? you know, one of the opportunities that we're investing in is, you know, what we call the metro network build-out, right? This is the access and aggregation networks that go out to the radios that need greater levels of capacity in order to carry that additional traffic that comes from, you know, the 5G opportunity. The third is, you know, at least in some geographies, is, you know, they're also mandated to remove Huawei from their networks, and they're looking to, you know, to have those projects actually go forward as well. While there is a macro sort of, you know, factor here, which will determine, you know, which projects sort of stay above the line, which go below the line, by and large, the secular drivers are pretty important in driving, you know, prioritization of CapEx towards these projects for the service providers. At the moment, we're really not seeing them rethink that, or at least not, you know, beyond where we are today. Got it. On the cloud, customers, I did want to push back and sort of play maybe devil's advocate to the extent where one of the things we've seen certain companies highlight is here these customers are buying with the expectation that their revenues keep growing at 40%, and now their revenue growths are coming in maybe closer to 20% or less. When you think about sort of laying out that strategy for how your cloud business tracks in the long run, are you sort of assuming that their high growth rates continue, or are you starting to sort of say, "Okay, these growth rates are not sustainable, they need to be at a lower level," so even once the inventory gets digested. Natural growth in investment is going to be much lower than what it used to be. Yeah. It's a good question. You know, if you think about our cloud business, you know, let me maybe divide it between, you know, we obviously lead in many, especially in the hyperscalers in the wide area networking use case. As you look at what we call the cloud majors, the longer tail of, you know, infrastructure platform and software as a service companies, there we have more participation in both the data center and the security use cases as well. When you think about that wide area use case, the biggest driver typically of what customers are doing in terms of their investments in the wide area is traffic growth. You know, while, you know, their businesses are, you know, maybe going through a period of moderation in terms of, you know, what they're seeing on their customer side, traffic growth has continued to grow kind of in the, you know, 40%-50% range per year, sort of doubling every 18-24 months in the wide area for many of the large cloud providers. You know, if you do go back and you look at some of the, you know, the analysts that cover the market, you know, they've been tracking, you know, how much capacity has grown, you know, during the last couple of years while we've had extended lead times and, you know, supply chain challenges. You know, capacity grew faster over the last couple of years than it did traffic growth. one, it directly underpins that, you know, challenge of they have to sort of now take that additional capacity, and they need to grow into it. The second is, though, because the traffic growth remains pretty robust, then they're gonna have to continue to invest in their networks. That's what sort of gives us confidence that once we get through that rationalization of capacity and traffic growth, they grow into the capacity that they have, then we'll get back to, you know, the refresh cycles, with the next big one coming being the 800G refresh for those providers. The second big opportunity, you know, I think really is that, you know... I'd actually kind of highlight two additional opportunities, especially as you look at, you know, the broad cloud market is obviously the AI opportunity. This is an area where even though they may be, you know, looking to moderate some of their, you know, data center spending in traditional use cases, there's a lot of discussion now about increasing their level of investment in AI-driven use cases. I think, you know, they're gonna be sort of the front edge of that opportunity. I think that's a long-term secular demand driver, and it's an inflection that creates a new opportunity to shift share. The last I would just say is, you know, as you kind of go out to the cloud majors, obviously security and automation continue to be highly relevant to them. Again, while I do think, you know, there's obviously some adjustments from their demand side of the equation, I think from a networking side, you know, in selling to them, there are continued good secular demand drivers that we expect to be there over a longer period of time. Got it. Got it. I know you touched upon AI as a sort of tailwind. That obviously helps you with traffic growth on the WAN side. Maybe sort of dig into that a bit more. Do you then see AI as an insertion opportunity for maybe in-intersecting that hyperscaler or large cloud market with 800G? How are you thinking about maybe participating in that and having more leverage to it than just the WAN layer on the traffic growth? Yeah. I think, the point you're making about participating from a WAN perspective is important, so I don't wanna let that point go. I mean, you know, AI is going to drive greater levels of traffic overall, especially, you know, both in terms of more adoption from customers using those services in the cloud as well as for, you know, inter data center traffic amongst the cloud providers themselves. It's an opportunity for us. We're definitely gonna try to exploit that. With regards to, you know, the AI, you know, cluster opportunity, you know, this is a pretty large inflection, and one of the things that we've sort of built as a pillar of our strategy overall has been focusing on, you know, mission-critical networking use cases. If you look at the theme that underpins what we talk about in terms of Experience-First Networking, it's really about mission-critical network use cases. Building clusters that can actually run, you know, large training applications, large AI clusters, is a mission-critical network application. It is a pretty, you know, significant inflection that we do think will create opportunities for competing for those new, you know, deployments. It does play to some of the areas that we have technology strength in already. you know, in terms of what we've developed in our, you know, our platforms that leverage our custom silicon, what we've developed in terms of our software stack, in Junos, as well as our ability to build, you know, these high-performance networks, we do think that it's a, you know, a meaningful opportunity. The one thing I will say though is I think it's gonna take time to develop. I think we're still kind of in the early innings, so, you know, it's gonna have to get to a place where there's more opportunities and it's maturing before we'll start to see it meaningfully contribute, but we do think it'll be an opportunity. Okay. Last question on this front on the AI topic for now. You mentioned the WAN opportunity, and 800G being sort of a driver as well that you're looking forward to. What does this opportunity do in terms of sort of the product generation moves from one generation to the next? What was the typical cycle going from 100 Gig to 400 Gig on the WAN layer? Does it now mean implicitly that you have to sort of do a lot more accelerated R&D to move to the next generation quickly? Is that what you're seeing from the hyperscalers in terms of demand on the WAN side? I don't think it seems to be accelerating, the refresh cycles, you know, at this point. I think there's our view is we have a lot of the necessary elements in our portfolio today to support where the customers want to go with this opportunity, as well as what we've already integrated into our roadmap. There may be some additional platforms that we have to include to our portfolio to really complete the use cases, but I think by and large, you know, we're already sort of aligned to the, you know, from a roadmap point of view, where the market needs to go. Okay. Okay, got it. Let me get to a different topic, which is the portfolio transformation at Juniper that we've seen over the last three, four years, at least from the outside, it's been more evident over the last three, four years. How much of it has been organic, related to acquisitions? I mean, the acquisitions we've seen, Mist, Apstra, 128 Technology. Maybe just outline for us how much of the momentum that we're seeing now is an organic sort of portfolio transformation versus the addition of these new sort of acquisitions making an impact. Yeah. I think it's really a combination. As I said, you know, strategically, we have focused on building a solution for customers that help them enable mission-critical applications. You know, if you think about the way that we've approached that, you know, we have three different main business areas or use cases that we go after. It's the, you know, the wide area networks, the, you know, the data center/hybrid cloud, what we call our AI-Driven Enterprise business or the client-to-cloud connectivity, wired, wireless, WAN, as well as integrated security. Those are kind of the three areas that we've really focused on. You can think of mission-critical networks as first, you know, you have to have a very strong underlay solution, right? Underlay network, meaning the platforms, the ability to handle large scale, high throughput, like 800 Gig, for example, like having a strong roadmap for 400 Gig, 800 Gig. You have to have the ability to handle, you know, like different types of use cases within each one of those areas that I described at that level. Silicon, what we've done in Junos, our routing stack have all been incredibly important there. It's the ability to not only think of it at the device level, but at the network level as well. That's where, you know, looking at how do you deploy those devices into a network in an automated way? How do you automate the management, the lifecycle management of the network? How do you assess when there's a problem in the network? Because mission-critical means it can't go down, right? Or you don't want it to go down, or you want it, if it does go down, to bring it up very quickly. That's where we've really focused some of our acquisitions on adding those, control point, key differentiated software elements that allow us to both automate the lifecycle management as well as, in a very differentiated way, leverage AI. You know, one of the analysts in the market has actually talked about that Juniper wrote the playbook on AI and networking, using AI through something like Marvis to then be able to assess where there's issues in the network that are meaningful to the use case that's running on the network. It's not just randomly looking at the performance of the network, but actually looking at what is business impactful, and then be able to either take action automatically or to recommend those actions to the operator so that they can, you know, run that fix. It really is a mix of organic and inorganic because, you know, our organic investments in our silicon, in Junos, in the platforms, has been important to this, you know, sort of direction that we're taking. These, these additions, very targeted additions that we've made through acquisitions, has also been meaningful in terms of adding these key elements of automation, control point, and AI that we're now leveraging as well to complete these use cases for our customers. Good. You mentioned AI that you're leveraging across your products. Obviously, a lot of that came from Mist. Maybe just to dig into Mist a bit, where are you in terms of sort of rolling out the Mist-ified portfolio, as you call it, overall? How much more there is to go that needs to be done? Maybe talk about the subscription strategy there, because obviously a lot of recent investor focus is on how much sort of visibility can you have in terms of revenue through subscription. Yeah. How is that playing out? Yeah. We have now completed through the integration with Mist now. Mist is a platform, this is our cloud management platform, which we also think is highly differentiated in terms of its ability to scale for enterprise class use cases. Now is covering what we call full end-to-end, full stack client to cloud connectivity. From wireless access through the wired aggregation network, inclusive of SD-WAN, you know, that was an acquisition we did as well of 128 Technology, which we think is a highly differentiated solution for SD-WAN use cases. We've now added security. You may have seen earlier this week we announced some additions to that platform strategy. We've added a network access control capability that we think is completely new and differentiated for that segment of the market. This is new TAM for us overall in terms of managing, you know, what devices can actually get onto the network and managing that security aspect. Then as well as the security looking forward from the WAN edge as well and really kind of a, you know. A foray into the SASE market. All of that now is incorporated into the Mist platform, and we're able to provide that solution end-to-end to customers. We're actually seeing a really good overall progress towards not only winning new logos with the Mist portfolio, but also being able to extend more of those customers to a full stack offering. We're really excited about the progress that we're making there, and we think we'll continue to be able to drive that. I think we talked about this in the last earnings call. I think our what we call our Mistified growth, I think we, you know, we've been providing those numbers. You know, it was 60%, you know, year-on-year growth in the last quarter. It's still very robust. That being said, as I said, you know, with the announcements earlier this week, we're not done. We have more capabilities that we can continue to add to this platform that give us more visibility. You know, one of the next areas that we're going into is in client to cloud, you know, one is to extend it to applications. One of the other announcements we made this week, when we did the Mobility Field Day, is we were showing how we can integrate directly with key applications like Zoom and Teams to be able to optimize user experience using Mist and Marvis, which again, is you know, not something that others have. As well as now to begin to take Marvis into data centers, so integrating with Apstra in the data center. For whether you're running you're using other people's applications or you're running your own applications within your own data center, how can we manage that end-to-end experience for customers? There's more we can do that we're already working on. Okay. Okay. Good. Let me just open it up and see if anyone has a question. Okay, let me continue then, maybe we can focus on the service provider business, but more on routing. What's changed there? Because, I think a few years ago, all the third party forecasts were forecasting declines, consistent declines in the routing market. Now there's a better outlook. I think earlier it was routing growth being driven by China, now it is routing is growing faster ex-China. What's really changed there? Is it all about sort of, again, goes back to the metro layer that you talked about? Or is there something more broad, broadly that's changed? If you take routing as a, you know, a technology segment, there's a couple of big drivers in terms of growth overall within that technology segment. One is cloud. You know, as I was mentioning before, you know, cloud traffic growth is kind of doubling in the WAN, you know, every 18-24 months. You know, in terms of the 400 Gig transition, which is playing out now, the 800G transition, which is coming, you know, in the next couple of years, they're a consistent investor in the WAN. You know, if you look at most of the analysts, they're saying that that market is not tracked as a unique segment, but that sort of end of the market is, you know, a consistent grower of, you know, call it in the single digits. In the service provider space, they're also now starting to upgrade their cores to 400 Gig. Actually, I think we're, you know, kind of in the early innings of the 400 Gig upgrade cycle for many of the service provider core networks. Many of the analysts now are saying that that core segment within the service provider space will continue to, again, be kind of a single digit grower over the next several years. And then as you mentioned, the metro opportunity as well. You know, with the sort of the cloud, you know, convergence of networks, so mobile and business networks and broadband networks are all converging onto common networks, as well as, you know, the sort of the 5G push, and the more of the use of the network as an on-ramp to cloud. The architectures of the service provider networks are kind of shifting to where they're getting more of their traffic into these metro networks than historically. The metro e-opportunity is actually one where we expect to see secular growth over the next several years. There is the Huawei factor as well. That's another area where we see, you know, you know, growth, again, kind of mid-single digits roughly is what the TAM is expected to grow at. You know, those are kind of the three areas where we see growth overall in routing, and where we're, you know, we're investing and positioned well to win. Okay. Maybe to dig into the metro opportunity, how do you size it up? Maybe if you can size it up ex-Huawei, and then how much comes from Huawei alone, standalone replacement as an opportunity? Oh, gosh, wow. I didn't realize I was gonna have a quiz. I don't know exactly what the Huawei component of it is. You know, in the routing market overall, like this is kind of in the single digits, $billions in terms of the TAM. The Huawei effect is, excuse me, like it's mainly gonna be in the Western geographies. You can think of like North America as well as Western Europe predominantly. It does cover a pretty big swatch of the large tier ones in those geographies as well as parts of APAC. It is a pretty sizable opportunity overall, but I don't have the numbers off the top of my head in terms of the sizing there. Maybe just to follow up on that now, when you look at the competitive landscape, you're obviously going up against some of the incumbents in those parts of the network. Yeah. There's a side sort of discussion about a lot of new players trying to enter the edge router market. Yeah. Maybe let's tackle sort of what you see as the current competitive landscape and how you're thinking about sort of the competition coming from new players saying, "We can do a converged IP/Optical, and provide a low-cost solution... Yeah. into the same sort of problem. Sure. Our approach to competing in this space. We don't hold a lot of share in this metro use case today, so we're actually ourselves a challenger in this segment. The way we've approached it is very similar to what I described earlier. We look at it as a mission-critical networking problem, and that one of the things that our customers have to be able to do is think of it as it's a large distributed network. I have many, many devices over large areas of geography. When those networks, you know, run into problems, it actually creates significant operational issues for our customers. We're approaching it that we wanna differentiate not only by building, you know, great platforms, not only by leveraging the Junos stack and our routing capabilities where we are strong and we differentiate, you know, and win a lot of opportunities in the core and edge versus many of the traditional competitors, but we also wanna bring sort of the learnings that we have from running large distributed networks with Mist to how we provide the full lifecycle management as well as the ability to diagnose and remediate issues quickly. We've created a solution we call the Paragon Automation Suite. If you, if you have a chance to take a look at it looks a lot like Mist. There's a lot of learnings from Mist there. As part of that, it leverages, you know, being able to collect data directly from the network and AI to identify and diagnose problems, whether those problems are when you're first setting up the network or when you're actually running the network in full production. We think we're bringing something very differentiated to that market as compared to the traditional competitors who are more about, you know, I've got all the right boxes with all the right interfaces, and I can fit in the right depths within these different, you know, cabinets that you're deploying into. We have to support that, but that's table stakes. We think we can do something a little bit better than that, and that it'll meaningfully matter to our customers. In terms of the new entrants into the space, I think this notion of bringing optical together with with packet in the metro space is kinda an interesting trend. There's kinda two ways to look at it. One is there is a real emphasis now on pluggable optics being a big opportunity within the space. You know, standardization with things like ZR optics, and even the ability to leverage enhanced ZR solutions like ZR+, into some of those use cases, I actually think is a meaningful trend that we're gonna continue to see play out in a lot of these use cases because it really provides the ability for customers to eliminate a layer of technology, to remove sort of what was historically a proprietary technology layer, and get the benefits of, you know, lifecycle management, visibility, automation, and the use of AI to diagnose and remediate problems quickly. I'm a big believer that we're gonna see greater adoption of pluggable optics in those metric, metro use cases. There, you know, we've got some great partnerships that we've already put in place, and we're working closely with them to support our customers with ZR optics. Actually trying to integrate, you know, packet and optical in the routers themselves, beyond pluggable optics, there we're actually a little bit more skeptical. We've previously gone down that path ourselves. We learned that, you know, in going through that, you know, you really are, especially in the larger networks, you're talking to two different buying centers. They don't necessarily, you know, run their networks in exactly the same way. Do they really see a big advantage to bringing those technologies together? We're maybe a little bit more skeptical about that sort of direction. That being said, look, you know, we always take our competitors seriously and, you know, we're gonna pay close attention to what they're doing. We think we have a pretty highly differentiated solution for the market. Okay. Yeah. Any questions from the audience? Let me take this one that's come in. The question reads: As the enterprise mix grows with Mist, should we seek consolidated revenue growth accelerate? Yeah. I mean, I think, you know, one of the things that we're very proud of is again, another pillar of our strategy was that we wanted to diversify our business, both from a customer segment point of view as well as from a product point of view. You know, several years ago, we kinda started in that direction, and now enterprise as a segment is the largest segment of business for us from a revenue point of view. I think it's roughly around 40% of our, of our revenue. Cloud's around 20, and service provider's the remainder. You know, enterprise as a, as a business for us has been a growing segment as well, largely because of the differentiation that we have, first with Mist in our AI-Driven Enterprise portfolio, but also increasingly in the data center. We do believe that, you know, our focus on enterprise, our focus on digital transformation is a large inflection that's driving the need for mission-critical networks in the enterprise. Our ability to expand that same value proposition into data center and hybrid cloud is an opportunity for us to continue to drive, you know, sustainable consolidated growth. Maybe just keeping on that enterprise topic, the large incumbent in the space is Cisco. In addition to some of their products, I think it's well-known, they're known for their go-to-market and channel presence. How are you sort of laying out the strategy to then compete against them when it comes to the channel and sort of scaling your presence with the channel partners? Yeah, it's a good question. you know, I think it starts with, again, being very focused on strategically which opportunities we are trying to solve for our customers. Start from the customer perspective of, you know, what is their need and how are we gonna solve it in a highly differentiated way. Being able to offer them solutions, and again, not just products, right? I think that's one of the key differences in our strategy is we're not just trying to come up with a new box that solves a particular use case and saying, "Oh, you know, we're differentiated." We're actually creating, you know, platforms like the Mist platform. We're creating, you know, architectural advantages like Marvis as an AI engine that is fundamentally, you know, extending across these networks, right? We're thinking end-to-end network solutions, and the ability to solve meaningful operational problems for our customers. I think starting there, working backwards to how do we get that in front of the customer? How do we build awareness? How do we get to the point where we can demonstrate the value proposition of what we're providing? How can we, you know, extend our reach through go-to-market is really the way we've approached it. You know, that's why we're putting greater emphasis on investment in our go-to-market, both in terms of extending our enterprise scale, right? Adding more reach within our go-to-market through direct selling, adding more reach through expanding our partner and MSP participation with in our go-to-market, but also a greater level of emphasis on driving more cross-selling. You know, we are putting... We are programmatically going after cross-selling, what we call full stack in AIDE, but also across our businesses, you know, data center, AIDE and WAN, so that we can bring that same, what I said, like, that differentiated value prop across those use cases to our customers. That really gives us the best positioning versus Cisco and/or all of our competitors, candidly. The reality is that, you know, in the case of going up against Cisco, I mean, they have a lot of market already. They have a lot of customer account control. It's not like it's just low-hanging fruit, and it's there for the taking. I think, you know, following this strategy has kinda set us up really well. Our logo growth has been phenomenal. We continue to see great, you know, results in terms of being able to get high-quality customers sort of adopting our strategy and our solution. It will take more time to continue to build out our scale there, but we think we're well-positioned. Okay. Last question. Your operating margins are lower than the appeal of Cisco and Arista, and sometimes that the logical conclusion is you're in three different verticals, roughly equally balanced. From a scale perspective, how do you see sort of what is the right appropriate revenue in each of these verticals, service provider, cloud and enterprise, to get the full leverage of the scale, in terms of a margin sort of flow through from them? Yeah, it's interesting. You know, I know we've talked publicly about operating leverage is a big focus for us from a strategy point of view. I think we've talked about a target of at least 100 basis points of operating margin expansion. I think in Q1, we delivered more than 200 basis points of operating margin expansion. You know, we're confident that we're going in the right direction. As you pointed out, scale matters, and the more scale we can drive, the more leverage we think we can extract, you know, from the investments we're making. In terms of the revenue level, you know, I don't know that we've necessarily calculated and said, you know, we have to be at these levels to extract full scale. We are trying to, though, maximize, you know, our investments. We're not trying to overinvest. We are actually trying to maximize our investments in each one of those areas. I think where we think there's the biggest opportunity to drive scale is not across each one of the segments, but predominantly in enterprise. That's where we think that greater reach will be important to actually maximize scale. We are up on time, so I'll close it up there. Thank you, everyone. Thank you. Thanks. Okay. Thanks for coming.