Cisco reported that its fiscal third-quarter profit and sales exceeded Wall Street expectations, despite a year-over-year decline in sales. Shares rose as much as 8% in extended trading.
Here’s how the company performed compared to the LSEG consensus:
- Earnings per share: Adjusted 88 cents, forecast 82 cents
- Revenue: $12.7 billion vs. $12.53 billion expected
Cisco’s revenue for the quarter ended April 27 was down about 13% from the same period last year, the statement said. This is the biggest decline since 2009. Net income was $1.89 billion, or 46 cents per share, down 41% from $3.21 billion, or 78 cents per share, in the year-ago period.
The statement said the weak performance was due to customers setting up equipment they received in recent quarters. Cisco also provided a similar explanation in its previous financial report.
“We currently expect our customers to have installed the majority of their inventory by the end of the fiscal year in July,” Cisco CEO Chuck Robbins said on a conference call with analysts. . He said he is pleased that the supply chain challenges that Cisco has faced over the years are coming to an end.
Cisco’s public sector business was weaker in the United States than in other regions.
“With the subsequent signing of the most recent U.S. federal funding, we believe this issue has been resolved,” Robbins said.
Network revenue was $6.52 billion, a decrease of 27%. This category, which includes data center switches, continues to account for the majority of overall revenue.
During this quarter, Cisco completed It acquired security software maker Splunk for $28 billion. The transaction reduced Cisco’s adjusted earnings per share by a penny, but generated additional revenue of $413 million.
“As we close the deal, we have identified 5,000 existing Cisco customers who have the potential to become important Splunk customers, and our sales team is already making those connections,” Robbins said. . Finance Director Scott Herren said Cisco will be able to reduce costs over time.
Cisco raised its fiscal 2024 revenue guidance to a range of $51.5 billion to $52.5 billion, up from a range of $53.6 billion to $53.8 billion. During February. Analysts polled by LSEG had expected $53.14 billion.
The company has revised its full-year adjusted profit forecast downward. The price is currently between $3.69 and $3.71, compared to $3.68 and $3.74 in February. The consensus for LSEG was $3.67.
Herren called for low to mid-single digit sales growth in fiscal 2025.
Before Wednesday’s announcement, 2024 stocks were down 2%, while the S&P 500 index was up 11%.
Cisco announced that Gary Steele, formerly CEO of Splunk, will become president of go-to-market for the parent company, effective immediately. Jeff Sharitz, Cisco’s chief customer and partner officer, is retiring.
WATCH: Cisco CEO Chuck Robbins: $28 billion Splunk deal will drive significant financial growth