Rami Rahim
Chief Executive Officer at Juniper Networks
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 teen year-over-year growth when adjusted to account for extended lead time.
On an unadjusted basis, orders grew by more than 50% year-over-year for a third consecutive quarter and our ending backlog had 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 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 action 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 operation and improve the end-user experience while experience 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 solution gives us important strategic control point did not only create new recurring revenue opportunities, but also differentiate and pull through other Juniper product creating a multiplier effect that will benefit growth in the years to come.
Our experienced-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 LAN, AI-driven enterprise and cloud-ready data center solution 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 enabled 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've also made meaningful investments in our channel, increasing the total number of Juniper channel partners by more than 30% in 2019. This investment not only resulted in record channel sale 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 organizatons 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 while, 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 offering 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 timeframe which saw towable software and related services revenue grew 41% year-over-year and orders increased by more than a 100% year-over-year.
Our annualized recurring revenue which solely consists of truly software subscriptions and related services increased 32% year-over-year due to strong demand for Mist and certain security subscription. We are encouraged by the progress we're making in our efforts to capture more software revenue which we view as critical to not will be accelerating growth but also improving customer stickiness and margin. Our strategy is well aligned against a backdrop of healthy end market 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 portion to the network.
While I am encouraged by the market dynamics we're seeing, I strongly believe the products we are delivering, the customer engagement we've developed and 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'm very optimistic regarding our future prospects despite the supply chain challenges we are 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 tailwind for our business once the supply chain improves and backlog return to more normal level.
While we would expect gross orders to decline in 2022 as lead times stabilize, we start seeing fewer early orders, we expect adjusted orders to grow for the year. Now I would like to provide some additional insight into the quarter and address some of the key developments we're seeing from a customer solutions perspective. Starting with our automated WAN solution, 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 zero and one 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 zero, day one and day two 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.