Chuck Robbins, CEO of Cisco, participates in a Bloomberg interview at the World Economic Forum in Davos, Switzerland, on January 17, 2024.
Stefan Wermuth | Bloomberg | Getty Images
Cisco reported fiscal third-quarter profit and revenue that beat Wall Street estimates, even as sales fell from a year earlier. The stock rose as much as 8% in extended trading.
Here’s how the company did compared to the LSEG consensus:
- Earnings per share: Adjusted 88 cents vs. 82 cents expected
- Income: $12.7 billion vs. $12.53 billion expected
Cisco’s revenue fell about 13 percent year over year in the quarter that ended April 27, according to a statement. That’s the steepest slide since 2009. Net income fell 41 percent to $1.89 billion, or 46 cents a share, from $3.21 billion, or 78 cents a share, a year earlier.
The weakening performance comes from customers installing equipment they received in recent quarters, according to the statement. Cisco offered similar comments in its previous earnings report.
“We expect customers to complete the installation of most of their inventory by the end of our fiscal year in July,” Cisco CEO Chuck Robbins said on a conference call with analysts. He said he was happy that Cisco is nearing the end of the supply chain challenges it has faced for years.
Cisco’s public sector operations were weaker in the US than in other regions.
“We believe that has since been cleared up with the subsequent signing of the most recent US federal government funding,” Robbins said.
Networking revenue, at $6.52 billion, was down 27%. The category, which includes data center switches, still accounts for the majority of total revenue.
During the quarter, Cisco completed the $28 billion acquisition of security software maker Splunk; The deal reduced Cisco’s adjusted earnings per share by a penny, but provided $413 million in additional revenue.
“By closing the deal, we identified 5,000 existing Cisco customers who have the potential to become important Splunk customers, and our sales teams are already making those connections,” Robbins said. Cisco will be able to reduce costs over time, said chief financial officer Scott Herren.
Cisco raised its fiscal 2024 revenue guidance to a range of $53.6 billion to $53.8 billion, from $51.5 billion to $52.5 billion on February. Analysts polled by LSEG had expected $53.14 billion.
The company cut its forecast for adjusted earnings for the full year. It is now $3.69 to $3.71, compared with $3.68 to $3.74 in February. LSEG’s consensus was $3.67.
Herren called for revenue growth for fiscal 2025 in the low to mid-single digits.
Before Wednesday’s announcement, shares were down 2% in 2024, while the S&P 500 rose 11%.
Cisco said Gary Steele, who was Splunk’s CEO, will become president of the go-to-market parent company, effective immediately. Jeff Sharritts, Cisco’s chief customer and partner, is leaving.
WATCH: Cisco CEO Chuck Robbins: $28 billion Splunk deal will be a major driver of economic growth