News

Cisco Systems CSCO reported third-quarter fiscal 2024 non-GAAP earnings of 88 cents per share, which beat the Zacks Consensus Estimate by 6.02%. The bottom line fell 12% year over year.

Revenues decreased 12.8% year over year to $12.70 billion but beat the consensus mark by 1.71%. Product revenues (71% of total revenues) decreased 18.6% on a year-over-year basis to $9.02 billion.

Splunk contributed $413 million of total revenues in the reported quarter. Networking revenues declined 27% year over year to $6.52 billion. Security revenues were $1.30 billion, up 36% year over year. Collaboration revenues were unchanged at $987 million. Observability revenues increased 27% to $211 million.

Service revenues (29% of total revenues) inched up 5.7% year over year to $3.68 billion.

Cisco Systems, Inc. Price, Consensus and EPS Surprise

Subscription revenues were $6.9 billion and accounted for 54% of total revenues.

Quarter in Detail

Region-wise, America’s revenues decreased 15% year over year to $7.37 billion and missed the consensus mark by 0.7%.

EMEA revenues declined 9% year over year to $3.46 billion but beat the consensus mark by 5.08%.

APJC revenues decreased 12% year over year to $1.87 billion and missed the consensus mark by 1.79%

Annualized recurring revenues came in at $29.2 billion, up 22% year over year. Product ARR surged 44% year over year.

Non-GAAP gross margin expanded 310 basis points (bps) from the year-ago quarter’s level to 68.3%.

On a non-GAAP basis, the product gross margin expanded 240 bps to 66.9%. Service gross margin increased 430 bps to 71.6%.

Non-GAAP operating expenses were $4.32 billion, down 5.1% year over year. As a percentage of revenues, operating expenses increased 280 bps year over year to 34%.

Non-GAAP operating margin expanded 30 bps year over year to 34.2%.

Balance Sheet and Cash Flow

As of Apr 27, 2024, Cisco’s cash & cash equivalents and investments balance were $18.8 billion compared with $25.67 billion as of Jan 27, 2024.

Total debt (short-term plus long-term) as of Apr 27, 2024, was $32 billion, higher than $11.61 billion as of Jan 27, 2024.

Cash flow from operating activities was $4 billion, higher than the $0.8 billion reported in the previous quarter.

The remaining performance obligations (“RPO”) at the end of the fiscal third quarter were $38.8 billion, up 21%, with 52% of this amount to be recognized as revenues over the next 12 months. Product RPO increased 29% year over year, while service RPO increased 14%.

In the reported quarter, Cisco returned $2.9 billion through share repurchases and dividends. It bought approximately 26 million shares for $1.3 billion. The share repurchase program has $7.2 billion remaining under authorization.

Guidance

For fourth-quarter fiscal 2024, revenues are expected to be between $13.4 billion and $13.6 billion. The Zacks Consensus Estimate for revenues is pegged at $13.11 billion, indicating 13.78% year-over-year growth.

Non-GAAP gross margin is anticipated between 66.5% and 67.5% for the quarter.

Non-GAAP operating margin is expected between 31.5% and 32.5% for the quarter.

Non-GAAP earnings are anticipated between 84 cents and 86 cents per share. The Zacks Consensus Estimate is currently pegged at 86 cents per share, suggesting a 24.56% year-over-year decline.

For fiscal 2024, revenues are expected between $53.6 billion and $53.8 billion. Non-GAAP earnings are anticipated between $3.69 and $3.71 per share.

The consensus mark for fiscal 2024 earnings and revenues are pegged at $3.67 per share and $53.06 billion, respectively.

Zacks Rank & Stocks to Consider

Cisco currently carries a Zacks Rank #4 (Sell).

CSCO shares have declined 1.7% year to date, underperforming the Zacks Computer & Technology sector’s growth of 15.8%.

Bilibili BILI, Salesforce CRM and Intuit INTU are some better-ranked stocks that investors can consider in the broader sector. Each of the three stocks carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Bilibili shares have gained 30.2% year to date. BILI is set to report its first-quarter 2024 results on May 23.

Salesforce shares have gained 9.1% year to date. CRM is set to report its first-quarter fiscal 2025 results on May 29.

Intuit shares have jumped 4.9% year to date. INTU is set to report its third-quarter fiscal 2024 results on Mar 23.

Only $1 to See All Zacks' Buys and Sells

We're not kidding.

Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.

Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 228 positions with double- and triple-digit gains in 2023 alone.

See Stocks Now >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

To read this article on Zacks.com click here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.