Cisco Stock: Earnings Estimates Top as Product Orders Improve

Cisco Systems (cisco) announced fiscal third-quarter earnings and revenues that were down from the previous year but exceeded consensus estimates as product orders improved from the previous year. The company provided an early peek at fiscal 2025 revenue and earnings guidance for Cisco stock.




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The computer networking giant announced its financial results after the market closed on Wednesday. Initial results included recently acquired Splunk for the first time. The deal closed on March 18. Splunk added $413 million in fiscal third-quarter revenue.

CSCO Stock: Q3 Earnings Top Views

“Revenue, gross margin and EPS in the third quarter were at or above the high end of our guidance range, including and excluding Splunk, resulting in sustained operating leverage,” CFO Scott Herren said in the earnings release. “Customers are consuming equipment shipped over the past few quarters in line with our expectations and we are seeing demand stabilize as a result.”

Cisco’s earnings fell 12% from a year earlier to 88 cents on an adjusted basis. Revenue fell 13% to $12.7 billion. Analysts estimate Cisco will earn 83 cents on revenue of $12.53 billion, according to FactSet.

Financial product orders for the third quarter increased 4% versus a 12% decline in the previous quarter.

On the stock market today, Cisco stock initially rose after the earnings release, then fell. CSCO stock closed down 2.7% to 48.33.

CSCO Stock: Fiscal 2025 Revenue Forecast

For the July quarter of fiscal 2024, Cisco expects earnings of 85 cents at the midpoint of guidance versus analyst consensus estimates of 86 cents. Cisco said it expects sales of $13.5 billion at the midpoint of its forecast. Analysts expected sales to decline 13% to $13.25 billion.

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For Splunk, management expects July revenue to range from $950 million to $1 billion, below estimates of $1.065 billion in sales.

Meanwhile, for fiscal 2025, “management set early expectations for revenue growth in the low to mid-single digits, noting that non-GAAP operating income margin for the full year should be roughly the same 32% level it guided for the quarter.” Fourth, William Blair analyst Sebastian Nagy said in a report.

At Bank of America, analyst Tal Liani said: “Management implicitly expects Cisco’s core revenue excluding Splunk to recover to 5% growth next year.” Liani expects a boost in fiscal 2025 from Cisco’s security business.

Investor Day June 4th

At UBS, analyst David Vogt lowered his fiscal 2025 earnings forecast based on management comments.

“From an EPS perspective, our 2025 fiscal estimate declines 6.5% to $3.50 from $3.74 as Cisco integrates Splunk and invests in operating expenses to drive its go-to-market engine. Additionally, as we expected, the financing cost related to Splunk “It’s also a headwind.”

Cisco is hosting an investor day on June 4. Long-term financial goals will likely be discussed at the event.

While Cisco has increased its software and services revenue, it still gets more than two-thirds of revenue from computer networking equipment, especially switches and routers. While the enterprise market has weakened, Cisco’s telecommunications customers are also spending less.

Cisco Stock: Splunk Deal

Heading into Cisco’s earnings report, the company has a poor relative strength rating of 24 out of a best possible 99, according to IBD Stock Screener.

CSCO shares fell 2% in 2024, ahead of its fiscal third-quarter earnings report.

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Meanwhile, Cisco acquired software maker Splunk for $28 billion in cash. With its roots in data analytics software, Splunk has expanded into cybersecurity.

Follow Reinhart Krause on Twitter @reinhardtk_tech For updates on artificial intelligence, cybersecurity, and cloud computing.

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