Cisco reported earnings and revenue for the fiscal third quarter that exceeded Wall Street’s expectations, despite a decline in sales compared to the previous year. The stock saw an increase of up to 8% in after-hours trading following the report. Earnings per share were 88 cents adjusted, compared to the 82 cents expected, while revenue was $12.7 billion versus the $12.53 billion anticipated.
The revenue for Cisco dropped by approximately 13% year over year in the quarter ending on April 27, the most significant decline 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, in the previous year. The decline in performance was attributed to clients completing installations of equipment received in recent quarters.
Cisco CEO Chuck Robbins mentioned that the majority of their inventory installation is expected to be completed by the end of the fiscal year in July. The company experienced challenges in its supply chain which are now being resolved. The public sector business in the U.S. was weaker compared to other regions, but this issue has since been addressed with the signing of the most recent U.S. federal government funding.
Networking revenue for Cisco reached $6.52 billion, representing a 27% decrease. The category, which includes data center switches, continues to be a significant portion of the overall revenue. Cisco completed its $28 billion acquisition of security software maker Splunk during the quarter, which had a positive impact on revenue. The deal resulted in additional revenue of $413 million, providing an opportunity for Cisco to expand its customer base and reduce costs.
For fiscal 2024, Cisco increased its revenue guidance to a range of $53.6 billion to $53.8 billion, from the initial range of $51.5 billion to $52.5 billion. The company also narrowed its full-year adjusted earnings forecast to $3.69 to $3.71, compared to the previous range of $3.68 to $3.74. Looking ahead to fiscal 2025, Cisco anticipates revenue growth in the low- to mid-single digits.
Gary Steele, the former CEO of Splunk, has been appointed as the president of go-to-market for Cisco, effective immediately. Steele will continue to lead Splunk while overseeing Cisco’s sales organization. Jeff Sharritts, Cisco’s chief customer and partner officer, will be departing the company, with his functions now reporting to Steele. These changes are part of Cisco’s strategy to drive growth and capitalize on the recent acquisitions.
