Cisco reported earnings and revenue for the fiscal third quarter that exceeded Wall Street’s expectations. Despite a drop in sales from the previous year, the company’s stock saw an 8% increase in extended trading. The earnings per share stood at 88 cents, beating the expected 82 cents, while revenue reached $12.7 billion compared to the anticipated $12.53 billion.
Cisco’s revenue declined by approximately 13% year over year in the quarter, marking the steepest drop since 2009. Net income also fell by 41% to $1.89 billion, or 46 cents per share, from $3.21 billion, or 78 cents per share, a year earlier. The revenue decline is attributed to clients setting up equipment received in previous quarters, according to the company’s statement.
CEO Chuck Robbins mentioned in a conference call with analysts that customers are expected to complete the installation of their inventory by the end of the fiscal year in July. He expressed satisfaction that Cisco is overcoming the supply chain challenges it has faced for years. Additionally, the company’s public sector business in the U.S. was weaker compared to other regions but improved with the signing of the most recent U.S. federal government funding.
Networking revenue, which includes data center switches and represents a majority of overall revenue, decreased by 27% to $6.52 billion. This decline impacted the company’s financial performance for the quarter. Cisco recently completed the acquisition of security software maker Splunk for $28 billion, contributing an additional $413 million in revenue.
Financial Guidance
Cisco revised its fiscal 2024 revenue guidance range to $53.6 billion to $53.8 billion, up from the previous range of $51.5 billion to $52.5 billion. Analysts had expected $53.14 billion. The company also adjusted its full-year earnings forecast to $3.69 to $3.71 per share. Finance chief Scott Herren anticipates low- to mid-single digits revenue growth for fiscal 2025.
Leadership Changes
Gary Steele, former CEO of Splunk, is now the president of go-to-market at Cisco. The company aims to leverage existing Cisco customers to expand Splunk’s customer base. Jeff Sharritts, the chief customer and partner officer at Cisco, will be departing from the company.
Cisco’s fiscal third quarter earnings report reflects both positive and challenging aspects of the company’s financial performance. While exceeding earnings and revenue expectations, Cisco faced a significant decline in revenue, particularly in networking revenue. The company’s strategic acquisitions and revised financial guidance demonstrate its commitment to long-term growth and innovation in the technology sector.
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