Yahoo Finance Cisco (CSCO) Q3 Earnings Top Estimates, Revenues Down Y/Y
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
Cisco Systems, Inc. price-consensus-eps-surprise-chart | Cisco Systems, Inc. Quote
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.
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