Good afternoon, ladies and gentlemen, and welcome to the Juniper Networks Q4 2021 FY 2021 Financial Results Conference Call. At this time, all participants have been placed on a listen-only mode. And we'll open the floor for your questions and comments after the presentation. It’s now my pleasure to turn the floor over to your host, Jess Lubert. Sir, the floor is yours.

Thank you, operator. Good afternoon, and welcome to our fourth quarter 2021 conference call. Joining me today are Rami Rahim, Chief Executive Officer; and Ken Miller, Chief Financial Officer. Today's call contains certain forward-looking statements based on our current expectations. These statements are subject to risks and uncertainties, and actual results might differ materially. These risks are discussed in our most recent 10-Q, the press release and CFO commentary furnished with our 8-K filed today and in our other SEC filings. Our forward-looking statements speak only as of today, and Juniper undertakes no obligation to update any forward-looking statements. Our discussion today will include non-GAAP financial results. Reconciliation information can be found in the Investor Relations section of our website under Financial Reports. Commentary on why we consider non-GAAP information a useful view of the Company's financial results is included in today's press release. Following our prepared remarks, we will take questions. We ask that you please limit yourself to 1 question so that as many people as possible who would like to ask a question have a chance. With that, I will now turn the call over to Rami.

Good afternoon, everyone, and thank you for joining us on today's call to discuss our Q4 and full year 2021 results. I hope you and your families are well, and my thoughts go out to all those who continue to be affected by the global pandemic. We delivered strong results during the fourth quarter, with revenue and non-GAAP earnings per share both exceeding the midpoint of our guidance, despite continued challenges from a supply chain perspective. Demand remained strong and exceeded our expectations with orders seeing high teens year-over-year growth when adjusted to account for extended lead times. On an unadjusted basis, orders grew by more than 50% year-over-year for a third consecutive quarter, and our ending backlog increased to a record level of more than $1.8 billion. Order momentum was strong across all verticals, all customer solutions and all geographies with each of these categories experiencing strong double-digit order growth year-over-year. Our Q4 results capped a very strong 2021, which saw us grow our Enterprise business for a fifth consecutive year, grow our Cloud business for a third consecutive year and return our Service Provider business to growth. Not to be overlooked, we also expanded our non-GAAP operating margin year-over-year, despite absorbing material increases in both supply chain and acquisition-related costs. Our teams are executing extremely well, and we are entering the new year with strong momentum. This momentum is being driven by our strategic actions, and there are four pillars that give me confidence as we look forward to 2022. First, our commitment to experience first networking and delivering technologies that simplify customer operations and improve the end user experience. While our experienced first journey started with Mist and then 128 Technology in our AI-Driven Enterprise portfolio, we subsequently extended this vision to the data center with the Apstra acquisition and the service provider market with our Paragon Automation suite. These software-centric solutions give us important strategic control point that not only create new recurring revenue opportunities, but also differentiate and pull through other Juniper products, creating a multiplier effect that will benefit growth in the years to come. Our experience-first vision is a key point of differentiation for our product that we believe is resonating across customers and providing confidence in our future prospects. Second, we are highly focused and aligned to three major use cases, Automated WAN, AI-Driven Enterprise and Cloud-Ready Data Center solutions, and we are enabling security to be seamlessly embedded within all of them. Each of these use cases is likely to see attractive market tailwinds over the next several years, focusing our company from a product management to engineering to go-to-market on a handful of meaningful and growing opportunities, enabled us to accelerate our growth in 2021. This focus also enables us to continue to deliver the technical differentiation and new innovations to capitalize on the big market inflection that we see unfolding in 2022 and beyond. Third, our go-to-market transformation is yielding meaningful results. This started with a change in sales leadership back in early 2019, which was followed by a meaningful increase in quota-carrying sales reps during 2020 and incremental sales development and enablement capabilities in 2021. We have also made meaningful investments in our channel, increasing the total number of Juniper channel partners by more than 30% since 2019. This investment not only resulted in record channel sales this past quarter, but also more than 100% increase in year-over-year deal registration, which reflects robust demand generated solely by channel. These investments in our sales and channel organizations have enabled us to accelerate our growth and should position us to do so again in the upcoming year. To be clear, we view our go-to-market organization as a competitive advantage where we will continue to invest to capture share. Finally, we continue to transition our business to a more software-centric model. This includes transforming more of our perpetual offerings to term-based licenses, introducing more ratable subscription offerings and training our sales organization to better monetize the value of our software stack. While these efforts remain in the early innings, we experienced encouraging momentum in the Q4 time frame, which saw total software and related services revenue grow 41% year-over-year and orders increased by more than 100% year-over-year. Our annualized recurring revenue, which solely consists of truly ratable software subscriptions and related services increased 32% year-over-year due to strong demand for Mist and certain security subscriptions. We are encouraged by the progress we're making in our efforts to capture more software revenue, which we view as critical to not only accelerating growth, but also improving customer stickiness and margin. Our strategy is well- aligned against a backdrop of healthy end markets that should position us for growth over the next few years. This growth is being driven by the strategic importance of the network, which is only likely to increase in the coming years as enterprise, digital transformation and clarification initiatives accelerate Cloud and Service Provider 400-gig upgrade, build momentum and Service Provider 5G investments expand beyond the radio access layer to the Metro, Edge and Core portions of the network. While I'm encouraged by the market dynamics we're seeing, I strongly believe the products we are delivering, the customer engagement we've developed and the investments we've made in our go-to-market organization will position us to gain share and deliver sustainable growth in the years to come, regardless of end market conditions. As you can tell, I am very optimistic regarding our future projects, despite the supply chain challenges we're continuing to navigate. I believe these challenges are likely to prove transitory, and the strong order momentum we're seeing and the backlog we have developed sets us up extremely well to deliver solid growth and improved profitability in 2022 and beyond. Based on our recent order momentum, current backlog levels and our assumptions regarding supply, we currently expect to deliver 7% to 9% sales growth and at least a point of operating margin expansion in 2022. Our expectations for 2022 assume current supply chain challenges persist and that we are unable to work down backlog during the year, potentially creating longer-term tailwinds for our business once the supply chain improves and backlog returns to more normal levels. While we would expect gross orders to decline in 2022 as lead times stabilize and we start seeing fewer early orders, we expect adjusted orders to grow for the year. Now, I'd like to provide some additional insights into the quarter and address some of the key developments we're seeing from a customer solutions perspective. Starting with our Automated WAN Solutions, which saw strong momentum from both a revenue and order perspective, particularly with our Cloud and Service Provider customers. We saw healthy demand across both our MX and PTX product families and strong adoption of our newer products, as well as our Paragon Automation portfolio. Our 400-gig solutions are performing well, and we now have more than 200 wide area wins that should present building tailwinds from a revenue perspective in the years to come. We are continuing to invest in our Automated WAN portfolio, and just recently announced next-gen custom silicon families for our MX and PTX platform that will offer industry-leading throughput, power efficiency and logical scale, all while maintaining investment protection. We are also continuing to invest in our ACX Metro portfolio, where we continue to see strong early interest that should further build as we complete the portfolio later this year. These investments are resonating with our Service Provider and Cloud customers, who appreciate that no single silicon family is optimized for all use cases and prefer to purchase systems with silicon that is purpose built for the job at hand. We are playing to win across all areas of automated LAN solutions and making the investments needed to capitalize on our customers' Core, Edge and Metro requirements that we believe present opportunities for growth over the next several years. Our AI-Driven Enterprise revenue significantly outpaced the market, growing 29% year-over-year in Q4 and 27% on a full year basis. It has been especially exciting to see our Mist solution go from a cool technology to a leader in the 2021 Gartner Magic Quadrant for wired and wireless access, with top scores in both vision and ability to execute, buoyed by several unique architectural differences, including leading AIOps and a modern microservices cloud, we continue to see record numbers in our wired and wireless access business. For example, our wireless revenue more than doubled year-over-year in Q4, and the winning continues as we recently closed a multimillion dollar win with a major multinational bank based on simplified operations via AIOps and location services that leverage our patented virtual BLE technology. We're also seeing strong Mist pull-through of our EX switching portfolio, which experienced record orders and units sold in the fourth quarter. Our Mistified revenue of wireless LAN, wired access, Marvis Virtual Network Assistant and associated EX pull-through more than doubled in Q4 as compared to last year and our annualized order run rate surpassed $600 million in the quarter. On a full-year basis, our Mistified revenue was approximately $300 million in 2021 and nearly doubled year-over-year. Our AI-driven SD-WAN solution, which combines the unique Session Smart Routing technology acquired by 128 Technology, with the automation and inside of Mist AI is following in the same footsteps. We saw triple-digit year-over-year revenue and order growth in Q4, with key wins in various sectors like retail and banking and strong traction within the federal government. One new customer deployed 300 sites the week before Christmas, highlighting the ease and scale of the Juniper SD-WAN solution driven by Mist AI. With new product enhancements announced this month, including day 0 and 1 operation via the Mist Cloud, new SSR hardware platform and bundled security capabilities, we expect demand to further build in future quarters. Of special note are the full stack, multimillion dollar opportunities we continue to win and deploy where companies are turning to Juniper for a combination of their wired access, wireless access and WAN Edge needs. Based on our recent order momentum, third-party validation and the technical superiority of our AI-Driven Enterprise portfolio, I remain highly confident regarding the outlook for our AI-Driven Enterprise business during the upcoming year. While our Cloud-Ready Data Center revenue declined in Q4 due solely to the timing of shipments related to supply chain challenges, we experienced another quarter of encouraging order trend, driven by broad-based strength across verticals and geographies. We continue to see strong momentum with new logos, and we secured a record number of deals greater than $1 million. 400-gig momentum remains strong. We now have more than 60 400-gig data center wins that include cloud majors, large enterprise and service provider accounts. Key to our continued growth in the data center is Apstra, the industry's leading intent-based networking solution that provides users with a superior experience versus our competitors across day 0, day 1 and day 2 operation. Apstra remains the only open-fabric management platform on the market, which is not only creating software-only management opportunities, but also driving full stack data center win. We're investing in sales enablement and the tools needed to accelerate our Apstra-driven success during the upcoming year. Customer interest in our Cloud-Ready Data Center portfolio is high, and we continue to be optimistic about the growth prospects for this business in the upcoming year. Our security revenue was essentially flat in Q4, but orders saw double-digit year-over-year growth. We remain confident in our connected security strategy, and believe the convergence of networking and security provides us with a competitive advantage in the portions of the market where we are currently focused. We believe our technical strength in both security and networking will continue to provide tailwinds in future quarters and should enable us to grow our security business during the current year. I'd like to mention that our services team delivered another impressive quarter, and our services business continues to grow year-over-year due to record renewals and strong attach rate. Our customer satisfaction scores once again set new all-time highs, and our service margins came in better than expected due to higher revenue and lower costs. On a full year basis, our service margins achieved a new all-time record of 65.8%, up 170 basis points as compared to the prior year. Our services organization continues to execute extremely well and is focused on driving incremental efficiencies through automation and cloud-delivered insights to not only create new revenue opportunities, but also benefit margin and customer experience. Before I conclude, I’d like to state that our mission at Juniper is to power connections and empower change. Now, more than ever, we are committed to ensuring networking is a force for good in this world, that includes building global resilience to combat climate risk throughout our business and supply chain and enabling solutions for a low-carbon future. We continue to make, monitor and report our environmental, social and governance progress through our annual corporate social responsibility report and CDP responses. Today, we are responding to the need for urgent and bold action. We are committing our global facility to be carbon neutral by 2025. You can follow our progress on our new climate web page, juniper.net/climate. I would like to extend my thanks to our customers, partners and shareholders for their continued support and confidence in Juniper. I especially want to thank our employees for their hard work and dedication, which is essential to creating value for our stakeholders. I will now turn the call over to Ken, who will discuss our quarterly financial results in more detail.

Thank you, Rami, and good afternoon, everyone. I will start by discussing our fourth quarter results and then cover the fiscal year 2021 and end with some color on our outlook. We ended the fourth quarter of 2021 at $1,300 million of revenue and non-GAAP earnings per share of $0.56, both above the midpoint of guidance. Revenue grew 6% year-over-year and 9%, sequentially, exceeding our expectations despite the challenging supply chain environment. These strong results were driven by solid execution by our global team. During the fourth quarter, we continued to see significant order growth across all verticals, geographies and customer solutions. Gross orders saw a third consecutive quarter of greater than 50% year-over-year growth. Some of this order strength was attributable to ongoing industry supply chain challenges, causing certain customers to place orders early in an effort to secure supply when needed. Even after adjusting for these early orders, total part orders are estimated to have grown in the high teens year-over-year. Due to the strength in orders and the continued constraints related to component supply, we ended the year with record backlog of more than $1.8 billion. Looking at our revenue by vertical. On a year-over-year basis, Cloud grew 19%, Service Provider grew 8% and Enterprise decreased 3%. While Enterprise revenue declined year-over-year due to the timing of shipments, Enterprise orders posted strong double-digit year-over-year growth and exceeded our expectations. Turning to customer solutions. On a year-over-year basis, AI-Driven Enterprise grew 29%, Automated WAN Solutions grew 8% and Cloud-Ready Data Center revenue declined 9%. This decline was entirely due to timing of shipments as Cloud-Ready Data Center orders experienced strong double-digit order growth year-over-year. Total software and related services revenue was $242 million, an increase of 41% versus the fourth quarter of last year. Annual recurring revenue, or ARR, grew 32% year-over-year, and we exited the year with $206 million in ARR. This strength reflects our efforts to transform to a more software-centric business. Total Security revenue was $162 million, flat year-over-year due to the timing of shipments, but product orders posted strong growth year-over-year. In reviewing our top 10 customers for the quarter, four were Cloud, five were Service Provider and one was an Enterprise. Our top 10 customers accounted for 33% of total revenue as compared to 30% in the fourth quarter last year. Non-GAAP gross margin was 59.5% in the fourth quarter, which was above our guidance midpoint, primarily driven by a favorable product and software mix. If not for elevated COVID-19-related costs, we anticipate that we would have posted non-GAAP gross margin of approximately 61.7%. Non-GAAP operating expenses increased 8% year-over-year and 4%, sequentially. The higher-than-anticipated costs were due to a onetime $5 million expense related to the postponement of our sales kickoff event as a result of the recent surge of COVID-19 cases. We exited the quarter with total cash, cash equivalents and investments of $1.7 billion. Cash flow from operations was $116 million for the quarter. We paid $64 million in dividends, reflecting a quarterly dividend of $0.20 per share. We also repurchased $148 million worth of shares in the quarter. Moving on to full year results. Total revenue for 2021 was $4,735 million, which was up 7% versus 2020. Despite the pandemic and supply chain constraints, we saw growth across all of our verticals, customer solutions and geographies. Our Cloud business grew 14%, while Service Provider and Enterprise both grew 4% compared to last year. From a customer solution perspective, AI-Driven Enterprise increased 27%, Cloud-Ready Data Center grew 7% and Automated WAN Solutions grew 3% on a full year basis. The top line strength we experienced across verticals and customer solutions is driven by the technology investments we have made, as well as our focus on transforming our go-to-market organization. Total software and related services revenue was $761 million, an increase of 42% year-over-year, exceeding our expectations. Total Security revenue was $657 million, which grew 8% year-over-year. Security Product revenue was up 14% year-over-year. In reviewing our top 10 customers for the year, 5 were Cloud, 4 were Service Provider and 1 was an Enterprise. Our top 10 customers accounted for 31% of our total 2021 revenue as compared to 30% in 2020. Non-GAAP gross margin expanded by 50 basis points versus last year, primarily driven by service gross margin expansion. If not for elevated COVID-19-related supply costs, we estimate we would have posted non-GAAP gross margin of approximately 61% in 2021. 2021 operating expenses increased 7% on a non-GAAP basis, primarily due to higher variable compensation and the costs associated with the acquisitions of Netrounds, 128 Technology and Apstra. Despite these increased costs, operating margin increased to 15.9%, an improvement of 40 basis points versus last year. Non-GAAP diluted earnings per share was $1.74, an increase of 12% compared to 2020. For the year, we had cash flow from operations of $690 million, an increase of $78 million compared to 2020. We repurchased $433 million worth of shares and paid $259 million in dividends for a total capital return of 117% of free cash flow to shareholders during 2021. I'm very pleased with our financial performance, both in the fourth quarter and 2021. The performance is a testament to our team's dedication and resiliency through these challenging and dynamic times. Now, I would like to provide some color on our guidance, which you could find detailed in the CFO commentary available on our Investor Relations website. We expect first quarter revenue of $1,150 million, plus or minus $50 million, which is growth of 7% year-over-year. We are still experiencing significant supply chain-related headwinds associated with rising component and elevated freight costs, which are expected to continue at least through the first half of the year. While we have taken pricing actions to offset these headwinds, we do not expect these actions to have an impact until later in the year. Therefore, we expect first quarter non-GAAP gross margin of approximately 58%, plus or minus 1%, a sequential decrease. Our non-GAAP earnings per share is expected to be approximately $0.31, plus or minus $0.05, assuming a share count of approximately 332 million. Turning to our expectations for the full year of 2022. Given the strong order momentum we are experiencing and our exiting backlog, we are updating our revenue growth expectations for 2022 from at least mid-single-digits to 7% to 9% growth. This guidance assumes the current supply chain environment remains constrained throughout the year, similar to current levels and does not further deteriorate. Beyond the first quarter, we expect revenue to grow sequentially throughout the course of the year. We expect supply chain constraints to be particularly tight during the first half and remain challenged throughout the remainder of the year. We also anticipate backlog to remain at elevated levels and largely unchanged throughout the year. While non-GAAP gross margin can be difficult to predict, we expect full year gross margin of 58% to 60%, which is a slight decline from 2021 levels. We expect gross margin for the first half of the year to be at the lower end of the range due to the elevated cost of components and logistics. I'd like to mention that we see potential for non-GAAP gross margins to trend to the high end of the range in the second half of the year as volume increases and the pricing actions we have taken flow through to the results. We remain committed to disciplined expense management and full year non-GAAP operating margin is expected to expand by at least 100 basis points versus 2021. That said, we will continue to invest to take advantage of market opportunities, and non-GAAP operating expense is expected to be up on a full year basis, consistent with the guidance we provided during our third quarter 2021 earnings announcement. Our non-GAAP tax rate on worldwide earnings is expected to be 20%, plus or minus 1%. And our non-GAAP EPS is expected to grow faster than revenue on a full year basis. Finally, I'm pleased to announce we have declared a 5% increase in our quarterly cash dividend to $0.21 per share to be paid this quarter to stockholders of record. In closing, I would like to thank our team for their continued dedication and commitment to Juniper's success, especially in this challenging environment. Now, I'd like to open the call for questions.

[Operator Instructions] And the first question is coming from Tim Long from Barclays.

Thank you. I did want to follow up on the orders here. Rami, if you could just talk a little bit about still over 50%, but a little down from the prior quarter. So, can you talked a little bit about what you're hearing from customers? Are they not buying out as -- ordering out as far as they were previously? And how do you see -- do you see new orders to be volatile and correct? But how do you see kind of shipments for a lot of some of these larger companies as you go forward? And then second, for the follow-up, just touch on the Service Provider business, which seems to have turned around pretty nicely this year. It seems like most are expecting a pretty solid in the next few years there as well. So, can you just touch on your outlook there and particularly as you push more into the Metro Edge? Thank you.

Yes, certainly. Thanks for the questions, Tim. So, I'll start with the first one around order momentum. And I'll just say that orders have been strong for the last year, the last three quarters over 50% year-over-year growth in orders. And they remain strong now. Our order momentum, what we're seeing in the market, the opportunity out there is very solid, very encouraging and it's true across all of our key strategic vertical market segments, Cloud, SP and Enterprise. So, I'd love to be able to say that we're going to continue to see over 50% year-over-year growth on a continuous basis forever. I mean, that's unrealistic. We have been clear that there is a certain amount of early ordering that happened over the last year. And that will eventually -- we don't know exactly when, but will eventually start to gradually decline. But that said, on an adjusted basis, our organic order, the true reflection of the health of the business will grow this year, and that's because of the strong demand environment, in addition I think to the great differentiation that we enjoy in our solutions. On the SP side of the house, I'm very pleased with the performance that we're seeing in our business. Orders grew well into double-digit territory in the Q4 time frame. Revenue grew 8% year-over-year. Orders for a full year basis was also very solid. We're exiting 2021 with record backlog in this area as well. The strength has to do with the broad-based nature of our go-to-market focus. So, it's not just Tier 1 carriers here in North America where we are actually seeing some encouraging momentum, but also Tier 2, Tier 3, cable and international accounts. 400-gig, which we've talked about a lot as an opportunity, it doesn't only apply to the cloud provider space. There are some significant opportunities out in the Service Provider space, especially in the core segment, and we are winning good amounts of those opportunities right now. And I think that will bode well for us in terms of tailwinds for revenue in the future. And last but not least, you touched on Metro. If you think about the part of the network that will benefit the most from 5G RAN deployments that are happening today, it will be the Metro, which is why we've made a strategic decision to invest in this space. And we don't yet have the complete portfolio, but we have certainly seen encouraging signs that we're on to something and something significant. And just as a data point, I'd tell you that our Metro-focused aggregation switch, which is the ACX family of products, now hit, for the first time, $100 million in bookings run rate in Q4. And that's solution, which I anticipate we will have by the end of this year. So that's a very encouraging data point that suggests that we should see some good tailwinds from the Metro opportunity later this year and especially next year.

The next question is coming from George Notter from Jefferies.

I guess, I wanted to ask about your pricing increases. I heard what you said in terms of the timing of those coming in later in the year. But can you just talk about customer receptivity? I would imagine that some of your Enterprise customers are a bit easier in terms of taking pricing, but maybe more of a negotiation on Service Provider and Cloud. Can you just kind of walk through like what you're seeing there?

Yes. Thanks, George. I think, I mean, you’re -- what you're imagining is largely playing out. I mean, we did do the pricing increases last year that we referred to. I would say customers aren't happy about price increases. I think that's an obvious statement. But they are understanding, right? And for the vast majority of the cases, we are able to implement the pricing actions as we expected to. So feel good about what we've done, feel good about the market reception overall. And it should pay off for us as that starts to go through the top line, which we anticipate more of that rolling in the second half of this year.

Got it. And then, the Service Provider and Cloud Provider pricing negotiations, so I guess, to underline this, they are taking higher pricing from you guys. Is that fair?

Yes, it is fair. I mean, we are doing it deal by deal and sometimes customer-by-customer situations, but we are seeing acceptance across the board.

And then anything you can tell us about -- if I remember correctly, you guys raised pricing initially back in Q2 of last year or maybe towards the tail end of Q2 last year. Should those pricing increases be benefiting you earlier this year?

Yes. So, we did an action in the first half of last year around June. There was a partial action, if you will. It didn't impact all of our products. The action we took in Q4 was more expansive and impacted all of our hardware products. So, we did take two actions. We are seeing some of the realization from the first action, but the second action was, I think, would be more impactful for us.

The next question is coming from Simon Leopold from Raymond James.

I want to see if maybe you could unpack the cloud vertical a little bit more in terms of maybe some color on the behaviors of what you guys have termed the cloud majors as opposed to the hyperscalers. Just give us some sense of what the contributions are like and if there are differences in their trends. And just as an easy follow-up, within the forecast of 7% to 9% sales growth, how much of that are you assuming is coming from the price increases?

Thanks for the question, Simon. Let me start on the question around the cloud, and then I'll hand it over to Ken to talk about the contribution of price increases to our revenue growth this year. So, I'm delighted with the momentum we continue to see in our cloud vertical. I think the thing that I like the most about what we're seeing in this area is the diversity of the success that we're seeing, not just within the hyperscalers and the cloud majors or between those two, within each of those categories. So in hyperscalers, we traditionally, as you all know, had a very large customer that generated a lot of the growth over the last several years. It's now really much more distributed across a number of significant hyperscale accounts. And I think that speaks to the strength of our footprint, the strength of our technology and the engagements, the solid engagement that we have with the hyperscale accounts. We have, in addition to hyperscale, been very much focused on broadening within the Tier 2 cloud provider space or what we call the cloud major space, and we've made really great progress. The good news is, much of the technology that we develop for hyperscale applies very much to cloud majors, including a lot of the 400-gig wide area networking and data center investments. But in addition to that, our automation portfolio, so the Apstra technology that makes the act of developing or deploying and running a data center very simple now actually has strong applicability to our cloud majors segment. So, it really is strength across the board, and I'm delighted to see the momentum that we have here.

Yes. And on the pricing action, we have considered that when we provided the guidance of 7% to 9% growth this year. And we haven't quantified exactly how much it is. But just to let you know, the majority -- the reason why we did the pricing action was really to offset as much of the price increases as we can. So, it's really more about protecting margin and trying to offset some of those margin headwinds. It will result in some revenue growth, obviously, and is factored into the overall guide.

The next question is coming from Tal Liani from BoA.

I have just one quick follow-up question before I ask my other question. The F5, when they reported, they said that there was a further deterioration in the last 30 days of the quarter when it comes to getting specialized networking gear like FPGAs and CPUs and others. Do you see the same deterioration in the ability to source supplies components, or do you see same environment today as it was before?

Yes. We haven't seen anything notable in the last 30 days. I would say we've seen pretty constant supply constraints for the last few quarters, right? So we have seen, I'm not going to say it's a good environment. It still remains constrained, but we haven't seen anything noticeable in the last 30 days. We expect lead times to remain extended we expect the cost obviously is definitely going out on the cost of components, et cetera. The one thing I would point out, although we comment that it's going to be remain contained for the year, particularly in the first half, we do believe we have line of sight to absolute volume increases year-over-year, right? I mean, we're guiding to a full year growth of 7% to 9% revenue growth. So, at this point in time, even with the constrained environment, and we're not getting as much supplies as we would like to get, we do believe we're getting enough to satisfy that revenue outlook.

Got it. I want to ask you about market share, specifically in routing. So, the environment is getting better. You spoke about new products in certain areas. Can you talk about, maybe break it down, your expectations, areas where you expect to gain share in routing and areas where you don't expect market share like unique market rate dynamics. And I'm referring to end markets, like Cloud, Enterprise, Service Providers, Cloud, et cetera.

Right. I want to make sure I understand the question. Are you referring to the Service Provider segment specifically and then sort of different layers or opportunities within the Service Provider space? Are you really talking about Service Provider, Cloud and Enterprise as three separate segments?

We can take it anywhere. I'm trying to take the routing market after being down -- sort of flat to down for so many years, and I understand there's going to be a cycle now. I'm trying to break it down. And I'm trying to understand what are the areas -- and you can take it anywhere you want. What are the areas where you expect growth and expect share gains, and what are the areas where you believe that the market dynamics will remain kind of the same as before?

Got it. Got it. Okay. And specifically to routing. So, in routing, whenever you're talking about routing, you should really be focusing on two market opportunities in particular, and that's Cloud and SP. There is obviously also routing that goes into the Enterprise space, but I think our key focus is on Cloud and SP. The big inflection point that's happening right now in both of these segments is around 400-gig. And that is an opportunity for us to take share in that area. But in addition to that, specific to the SP is the Metro opportunity. So, let's talk about 400-gig. I want to be very clear. I am very confident, based on order momentum, right? Not yet seen in revenue because it's still early days in terms of shipping and deployments and building out these networks, but in terms of actual order momentum, where we've seen well over 50% growth for the last three quarters, we're taking share. I am very confident we're taking share. And now add to that in the SP space, the Metro, where there is no way but up for us because it's essentially a brand-new market opportunity for us. It's the fastest-growing subsegment of the routing opportunity within the SP space because that's where most of the 5G traffic needs to flow through. That is another area where I'm very confident we will take share, especially as that portfolio comes together throughout this year.

The next question is coming from Paul Silverstein from Cowen.

Yes. To begin with, I've got a broader question with respect to share gain versus market growth. And I appreciate it's hard to delineate, if not impossible. But the strength you've been referencing across every aspect of your business, Rami, Ken, how much of that do you attribute to a confluence of very strong trends with networking in virtually all of your customer markets, albeit of a different nature? And how much of that is the fact that in a number of cases, such as with Mist for wireless LAN, as well as the pull-through impact on other products? How much of it is a function of share gain? Any insight you can offer there before I have my follow-up?

So Paul, I think you touched on the one area, the AI-Driven Enterprise and Mist within that area, where I believe our competitive differentiation has never in the history of this company been this strong. And the order growth rates have been phenomenal. Even in revenue for the Q4 time frame, we posted strong revenue results. And for the full year, we've shown strong revenue results, even in the face of very difficult supply chain challenges that we have had to overcome. There is a couple of key reasons for this. One is the strength of the technology, and we're sitting on some true underlying architectural differences in how we have built these solutions using a scale-out cloud native architecture that can scale to the largest enterprises in the world, exceptional leadership and really solid sales execution because we've invested in our sales, in our channel and our enablement team. So, again, very confident that we are taking share. And I honestly think that that share taking can accelerate as more of those orders that we posted translate to actual revenue and we start to draw down the huge backlog that we built.

Rami, on the enterprise piece, given your comments, risk of different details, but similar in terms of the strength they're seeing and then Cisco being the largest -- obviously, largest incumbent, they are not -- they have been very bullish about their business as well. As I parse on this as we look out longer term beyond 2022, well beyond 2022, there's a lot of what's going on in enterprise from a market standpoint. Does this go back to when there was an incredibly pregnant pause that lasted for years, as many enterprises were not sure, were evaluating what to do with respect to cloud. How many applications to keep on-prem? How much to move to public clouds, et cetera? And that cause a really pregnant pause in the enterprise decision-making with respect to network architecture, network deployment decisions. Are we now seeing the -- is the industry seeing -- or are you and peers seeing the reverberation that that pause is passed and now there's this multiyear investment cycle as enterprise catch up above and beyond the share gains that you've been referencing?

Yes. It's a great question. First, I'll say -- I'll sort of break it up into two time lines. Over the last couple of years, there were certainly segments or elements of the Enterprise that were actually affected. They experienced headwinds as a result of COVID. But we did a really nice job of pivoting to subsegments that, not only were not affected, but in some cases, had to invest more. So take big box retailers, college campuses, public sector. I think those subsegments experienced an increase in the need to look at networking more strategically, and we captured that opportunity with really differentiated solutions. Now, let's look forward. And as things start to normalize, albeit, of course, very gradually, I don't think that enterprises and CIOs and CTOs of those enterprises are going to be rushing towards the legacy on-prem complexity of the past. They are looking for cloud-delivered, AI-driven solutions for the enterprise. They are also looking for simple data center operations. And I think, honestly, we are best equipped to capture those inflection points. So, yes, I view that the tailwinds in the Enterprise will only increase going forward relative to what we've experienced in the last couple of years. I'm talking about the market tailwinds here.

The next question is coming from James Fish from Piper Sandler.

Look, great quarter. I'm not going to try to pick on something, but the one part we could is data center and security a little bit with security being roughly a quarter of that data center product business. The security space hasn't been this strong in terms of the spending environment since arguably 2015. And I get orders are growing very nicely. But why is this business as well as the switching side within that data center business really not growing faster? Is it just prioritizing the other segments given higher cloud and service provider mix? And is there any way to break out what you would have grown in these segments this quarter, excluding the supply chain issues versus do we have a demand issue for Juniper security specifically?

Okay. So, I think the question, if I understood, James, is both about around data center switching and sort of more broadly security. And let me first address the easier part of your question, which is the second part. Everything would have grown if it weren't for supply chain constraints. Literally everything. Because we are currently supply chain constraint in terms of what we're able to ship and, of course, that ties to our revenue. Our data center switching business is performing very well. Throughout all of last year, we have grown orders well into double-digit territory. Our revenue grew for the full year last year as well. Our revenue declined in the Cloud-Ready Data Center in Q4, purely because of the timing of orders relative to the availability of specific parts in this somewhat crazy world we live in from a supply chain standpoint. So honestly, I don't -- I'm not concerned at all about demand or about the solutions that we have available to capture those demands and to compete with our peers in the industry. On the security side, there again, I think look at our security from two standpoints. There's sort of a more mainstream, broad-based security that attaches to our enterprise offerings. That actually grew very nicely. There is also a larger high-performance security segment, which is really characterized with these very large high-performance products, our high-end SRX product line that are just lumpy. They're going to vary from quarter-to-quarter. And you're going to -- you saw some of that in the Q4 time frame. But again, the true reflection, I think, of the health of our security business is in product orders, and that grew well into double-digit territory.

Yes. The only thing I would add on the security front is if you take the full year view in our product business, security business grew 14%. So, you are seeing this kind of an anomaly in any given 90-day period with the Q4 results. We're pretty pleased with the overall security performance throughout the course of the year.

The next question is coming from Alex Henderson from Needham.

First off, I want to compliment you on the way you've handled the duration question versus new gross orders. It's a lot clearer than most other companies are handling it. And it's obviously very nice to see that acceleration from roughly 15% adjusted growth to high teens. What I -- my question though is on the increase in the guidance for the full year. Given you have already baked in the price hikes that you did last year, there's nothing changed on that front. And given the commentary around the supply chain hasn't changed at all, so you've been -- very nice order growth, but you're still supply constrained. So, I guess, the question is what allows you to take your growth rate and revenues up from mid-singles to 7% to 9% if there's no improvement in availability? Is it a function of software, having much higher growth and a shift towards software growth being higher? Is it a function of a mix shift within what you're expecting? Is it a function of redesign? What allowed you to take the revenues up by a couple, 2%, 3% with no change in outlook for supply chain improvements?

Yes. No, thanks for the question. So, our 2022 revenue guide of 7% to 9% is absolutely constrained by supply. If we could access more supply, the guidance would likely be much higher, given the demand strength that we've seen, given the backlog that we’ve built out. So, it is a supply-constrained forecast, if you will. Now, what we said -- nothing's changed and that we still believe the supply chain is going to remain challenged. That said, our confidence in our line of sight to procuring the supply that we need for the year has changed a bit, right? So we were talking about at least mid-single digits. We just had a little more volatility in our assumptions 90 days ago. Now that we're 90 days forward, we feel better about saying 7% to 9%. So, we did raise it from at least mid-single to 7% to 9% basically on our confidence level and our ability to procure supply we need to deliver that revenue goal.

The next question is coming from Sami Badri from Credit Suisse.

Thank you. First, I just wanted to double-click on something you said earlier, Rami, and you've alluded to this twice on this conference call, which is the Metro opportunity and solution set. Can you just expand on all of this? Like, what is required? What are telcos, cables, other SPs, what are they going to need for this? What are you guys specifically looking to add to portfolio and just so we can better understand why this isn't actually in position yet and where it's really going? So that's the first piece. The second piece is on Apstra. And maybe you could just tell us -- I think you mentioned earlier that some of your cloud customers are actually using this. But maybe you could expand if this could actually be much more all encompassing for all your customers to potentially use. Could you just kind of help us understand these two things?

Absolutely. Thanks for the really good questions, Sami. So, on the Metro opportunity, and the question specifically is what do we need? So, we have great routing technology. We have a fantastic routing stack, our Junos and Junos Evolved operating systems, are all really critical ingredients. What we need are price and form factor optimized systems to capture the end-to-end Metro opportunity because in metro, you're putting or deploying platforms and sort of the outer reaches of the Internet closer and closer to residential customers and business customers and so on. So you can think about it from a technology development standpoint, it's relatively low-hanging fruit. We have a lot of the most complex pieces. We just have to optimize it in terms of power form factor for that specific opportunity. And that's exactly what we're doing. Why didn't we do it earlier? Simply because we had priorities of investment elsewhere, and now we are making this as a bet. And we're essentially lining that bet with the emergence of the 5G opportunity. And I should also just mention that very importantly in the Metro, there is a software component, a management and day two operations components that we're becoming really good at based on the experience that we've built with Mist in the AI-Driven Enterprise, and more recently, Apstra in the data center. Okay. With -- that leads us to then the second question with Apstra. Apstra today is primarily focused. The bulk of the business and deployment that we have on the data center, not 100%. We do have some campus and other opportunities. But really, it's the data center is the primary opportunity. Apstra is the only open-management solution for the data center in the industry. It's the best from an operational experience standpoint. They wrote the book on intent-based networking, and it's the higher scale. It scales to the largest customers in the world. And that's the differentiation that's allowing us to win more and more full stack data center opportunities or just pure software opportunities. Eventually, we might look at expanding the reach of Apstra beyond the data center. But right now, quite frankly, I'm much more focused on the data center opportunity. We've got formidable competitors in this space and we want to make sure that we continue to deliver the best possible solutions for our customers.

The next question is coming from Rod Hall from Goldman Sachs.

This is Max Sanfer [ph] on for Rod. Thank for taking my question. I had a question -- more specific question on the supply constraints, and we're wondering how tight to higher-speed MX router lines supply currently is? And is it worse or better than the previous quarter? And maybe you can even comment which of the -- chips are in shorter supply.

Yes. So supply constraints are really across the board, and you are seeing ebbs and flows as we solve a particular problem, maybe another problem pops up. As it relates to MX specifically, you could see from the revenue results anyway, Q3 was actually down overall in kind of our SP business and Q4 was up. So we did ship more in Q4 than we did in, say, Q3. But that's going to vary quarter-to-quarter based on timing of orders, but more importantly, timing of supply. So I don't feel there's a unique supply constraint or situation with our MX line cards. It really is kind of across the board, across all of our products and solutions.

The next question coming from Samik Chatterjee from JP Morgan.

I just had a question on the operating margin expansion. Does -- some of the companies that we talked to indicated that there's rising compensation costs for '22 to retain employees. Is that baked into your guidance for the at least 100 basis points of expansion?

Yes. So, we have factored in our total operating cost expectations for 2022, not only for investment purposes, but also retaining employees. So yes, that is factored into our fall plans, including our expansion plans to expand operating margin.

The next question is coming from Amit Daryanani from Evercore.

This is Michael Fisher on for Amit. Thanks for taking my question. I was curious that you mentioned gross margins would have been 61.7%, I think, without COVID-related cost, so about 220 basis-point delta versus what you reported. I'm wondering, is there any way to kind of break down that 220 basis points between input cost inflation versus other factors like freight or anything else that's having an impact?

Yes. So, I'll tell you that both, freight is a big chunk of it, as well as just component costs and expedite fees. So I would categorize component costs and expedite fees is kind of the same bucket. If you look at that as a combined group versus freight, both are effectively equally impactful to that number.

The next question is coming from Meta Marshall from Morgan Stanley.

This is Erik on for Meta. I guess, just when we look at the strength in Automated WAN, if we can go back to that, was any of that driven by new web-scale customer projects you've noted, or is that mostly from existing customers? And I guess, if a new customer, would there be any project-based volatility that we should be mindful of?

Yes. It's actually a great question. I think a lot of the strength and the momentum that we've seen over the last year has actually been more driven by existing footprint, existing deployments that we have within both our service provider and our cloud customers. But having said that, we have been competing for and winning new 400-gig opportunities in both segments. And we alluded, I think, starting a couple of quarters ago, to a fairly large hyperscale cloud provider WAN, in other words, routing win. Those opportunities might have contributed to some extent to our orders and to our backlog but not yet to revenue. So, the quick summary is most of the strength and the momentum thus far has been existing footprint, but great win that will continue to give us tailwinds throughout this year and next year as those opportunities start to actually deploy.

The next question is coming from Jim Suva from Citigroup.

Thank you. Following up on that topic, I actually was going to ask directly about that. I remember a few quarters ago, Rami, you were very excited about some hyperscaler lab work and design wins and such. And I was going to ask you about the time line of that. Is it typically like a 12-month and then we start to see revenue recognition? Is it longer? Does COVID kind of play into some of those hyperscale, what I would consider new greenfield customer and relationships? I'm just trying to calibrate expectations for when we start to fold that into your revenue model. Thank you.

Yes. I think it's fair to think of this as deployment will happen throughout this year, probably more in the second half of the year. Typically, the sequence of events is there's a testing period as part of an RFP process. There is winning the opportunity and then there's a certification period where you work closely with the customer to do use case-specific testing and getting it ready for early feed trials and then ultimately into deployment. So, maybe sort of second half of this year time frame. And that's typically true of most large-scale WAN wins, whether they be in the cloud provider space or the service provider space.

Okay. I'd now like to turn the floor back to management for closing remarks.

Okay. Well, listen, I just wanted to thank everybody. I appreciate the time and the interest, as well as the confidence that you placed in our -- in myself and in my management team. I hope you can see the confidence that we have in our prospects, both in terms of our ability to deliver revenue growth as well as profitability, and not just for this year but on a sustainable basis. So, thank you. And we'll talk soon.

Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.