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Cisco's (CSCO) Q2 Earnings Top Estimates, Revenues Up Y/Y
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Cisco Systems (CSCO - Free Report) reported second-quarter fiscal 2022 non-GAAP earnings of 84 cents per share, which beat the Zacks Consensus Estimate by 3.7%. The bottom line increased 6% year over year.
Revenues increased 6.4% year over year to $12.72 billion. The top line was driven by strength across customer markets and revenue growth in all geographies. Revenues beat the consensus mark by 0.6%.
Quarter in Detail
Region-wise, the Americas and the APJC revenues increased 3% and 13% year over year to $7.146 billion and $2.010 billion, respectively. EMEA revenues rose 11% to $3.564 billion.
Service revenues (26.5% of total revenues) decreased 0.6% year over year to $3.37 billion, driven by growth in software and solution-support services.
Cisco Systems, Inc. Price, Consensus and EPS Surprise
Software revenues were up 6% year over year to $3.8 billion. Software subscription revenues increased 12% to $3 billion. Subscriptions contributed 80% to Cisco’s software revenues.
Annualized recurring revenues or ARR came in at $21.9 billion, up 11% year over year. Product ARR growth was 20% in the quarter under review.
Product revenues (73.5% of total revenues) increased 9.1% on a year-over-year basis to $9.35 billion.
Total product orders rose 30% on a year-over-year basis. In terms of customer segments, enterprise orders were up 37% on a year-over-year basis. Webscale orders grew more than 70% year over year.
Breakup of Product Revenues
Secure, Agile Networks (63.1% of total Product revenues) revenues increased 7% year over year to $5.898 billion.
Hybrid Work (8.4% of Product revenues) revenues declined 9% on a year-over-year basis to $1.067 billion.
End-to-End Security (9.4% of Product revenues) revenues were up 7% to $883 million.
Internet for the Future (14.4% of Product revenues) revenues surged 42% to $1.322 billion.
Optimized Application Experiences (1.9% of Product revenues) revenues were up 12% to 180 million.
Revenues from Other Products decreased 28% to $2 million.
Operating Details
Non-GAAP gross margin contracted 150 basis points (bps) from the year-ago quarter’s level to 65.5%.
On a non-GAAP basis, product gross margin contracted 230 bps to 64.3%. Service gross margin expanded 100 bps to 68.8%.
Non-GAAP operating expenses were $3.96 billion, up 1.7% year over year. As a percentage of revenues, operating expenses contracted 140 bps to 31.2%.
Non-GAAP operating margin was flat year over year at 34.3%.
Balance Sheet and Cash Flow
As of Jan 29, 2022, Cisco’s cash & cash equivalents and investments balance were $21.1 billion compared with $23.3 billion as of Oct 30, 2021.
Total debt (short-term plus long-term) as of Jan 29, 2022, was $11.47 billion compared with $9.50 billion as of Oct 30.
Cash flow from operating activities was $2.5 billion compared with $3.4 billion reported in the prior quarter.
Cisco declared a quarterly dividend of 38 cents per share, up 3%, to be paid on Apr 27, 2022, to all stockholders of record as of the close of business on Apr 6, 2022.
Cisco’s board of directors also approved a $15-billion increase to the authorization of the stock-repurchase program.
In the quarter under review, Cisco returned $6.4 billion to shareholders, including dividend payments of $1.5 billion and share repurchases worth $4.8 billion.
Remaining performance obligations at the end of the fiscal second quarter were $30.5 billion, up 8%. The metric represents total committed non-cancelable future revenues.
Guidance
For third-quarter fiscal 2022, revenues are expected to grow between 3% and 5% on a year-over-year basis.
Non-GAAP operating margin is anticipated between 32.5% and 33.5% for the quarter. Non-GAAP earnings are anticipated between 85 cents and 87 cents per share.
For fiscal 2022, revenues are expected to rise by 5.5-6.5% on a year-over-year basis. Non-GAAP earnings are anticipated between $3.41 and $3.46 per share.
Zacks Rank & Key Picks
Cisco currently carries a Zacks Rank #3 (Hold).
CSCO’s shares are up 17.3% compared with the Zacks Computer and Technology sector’s growth of 0.7% in the past year.
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Cisco's (CSCO) Q2 Earnings Top Estimates, Revenues Up Y/Y
Cisco Systems (CSCO - Free Report) reported second-quarter fiscal 2022 non-GAAP earnings of 84 cents per share, which beat the Zacks Consensus Estimate by 3.7%. The bottom line increased 6% year over year.
Revenues increased 6.4% year over year to $12.72 billion. The top line was driven by strength across customer markets and revenue growth in all geographies. Revenues beat the consensus mark by 0.6%.
Quarter in Detail
Region-wise, the Americas and the APJC revenues increased 3% and 13% year over year to $7.146 billion and $2.010 billion, respectively. EMEA revenues rose 11% to $3.564 billion.
Service revenues (26.5% of total revenues) decreased 0.6% year over year to $3.37 billion, driven by growth in software and solution-support services.
Cisco Systems, Inc. Price, Consensus and EPS Surprise
Cisco Systems, Inc. price-consensus-eps-surprise-chart | Cisco Systems, Inc. Quote
Software revenues were up 6% year over year to $3.8 billion. Software subscription revenues increased 12% to $3 billion. Subscriptions contributed 80% to Cisco’s software revenues.
Annualized recurring revenues or ARR came in at $21.9 billion, up 11% year over year. Product ARR growth was 20% in the quarter under review.
Product revenues (73.5% of total revenues) increased 9.1% on a year-over-year basis to $9.35 billion.
Total product orders rose 30% on a year-over-year basis. In terms of customer segments, enterprise orders were up 37% on a year-over-year basis. Webscale orders grew more than 70% year over year.
Breakup of Product Revenues
Secure, Agile Networks (63.1% of total Product revenues) revenues increased 7% year over year to $5.898 billion.
Hybrid Work (8.4% of Product revenues) revenues declined 9% on a year-over-year basis to $1.067 billion.
End-to-End Security (9.4% of Product revenues) revenues were up 7% to $883 million.
Internet for the Future (14.4% of Product revenues) revenues surged 42% to $1.322 billion.
Optimized Application Experiences (1.9% of Product revenues) revenues were up 12% to 180 million.
Revenues from Other Products decreased 28% to $2 million.
Operating Details
Non-GAAP gross margin contracted 150 basis points (bps) from the year-ago quarter’s level to 65.5%.
On a non-GAAP basis, product gross margin contracted 230 bps to 64.3%. Service gross margin expanded 100 bps to 68.8%.
Non-GAAP operating expenses were $3.96 billion, up 1.7% year over year. As a percentage of revenues, operating expenses contracted 140 bps to 31.2%.
Non-GAAP operating margin was flat year over year at 34.3%.
Balance Sheet and Cash Flow
As of Jan 29, 2022, Cisco’s cash & cash equivalents and investments balance were $21.1 billion compared with $23.3 billion as of Oct 30, 2021.
Total debt (short-term plus long-term) as of Jan 29, 2022, was $11.47 billion compared with $9.50 billion as of Oct 30.
Cash flow from operating activities was $2.5 billion compared with $3.4 billion reported in the prior quarter.
Cisco declared a quarterly dividend of 38 cents per share, up 3%, to be paid on Apr 27, 2022, to all stockholders of record as of the close of business on Apr 6, 2022.
Cisco’s board of directors also approved a $15-billion increase to the authorization of the stock-repurchase program.
In the quarter under review, Cisco returned $6.4 billion to shareholders, including dividend payments of $1.5 billion and share repurchases worth $4.8 billion.
Remaining performance obligations at the end of the fiscal second quarter were $30.5 billion, up 8%. The metric represents total committed non-cancelable future revenues.
Guidance
For third-quarter fiscal 2022, revenues are expected to grow between 3% and 5% on a year-over-year basis.
Non-GAAP operating margin is anticipated between 32.5% and 33.5% for the quarter. Non-GAAP earnings are anticipated between 85 cents and 87 cents per share.
For fiscal 2022, revenues are expected to rise by 5.5-6.5% on a year-over-year basis. Non-GAAP earnings are anticipated between $3.41 and $3.46 per share.
Zacks Rank & Key Picks
Cisco currently carries a Zacks Rank #3 (Hold).
CSCO’s shares are up 17.3% compared with the Zacks Computer and Technology sector’s growth of 0.7% in the past year.
Some better-ranked stocks in the same sector are Allied Motion Technologies , Agilent Technologies (A - Free Report) and Box (BOX - Free Report) . All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Agilent Technologies’ shares have gained 5.8% in the past year.
Agilent is scheduled to report first-quarter 2022 results on Feb 22.
Allied Motion Technologies shares have surged 20.6% in the past year.
AMOT is scheduled to report fourth-quarter 2021 results on Mar 9.
Box shares have surged 45.1% in the past year.
BOX is scheduled to report fourth-quarter 2021 results on Mar 2.