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Cisco (CSCO) Q4 Earnings Top Estimates, Revenues Fall Y/Y
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Cisco Systems (CSCO - Free Report) reported fourth-quarter fiscal 2024 non-GAAP earnings of 87 cents per share, which beat the Zacks Consensus Estimate by 2.35%. The bottom line fell 23.7% year over year.
Revenues decreased 10.3% year over year to $13.64 billion but beat the consensus mark by 0.9%. Product revenues (72.3% of total revenues) decreased 15.4% on a year-over-year basis to $9.86 billion.
Splunk contributed $960 million of total revenues in the reported quarter.
Networking revenues declined 28% year over year to $6.80 billion.
Security revenues were $1.79 billion, up 81% year over year. Collaboration revenues were unchanged at $1.02 billion. Observability revenues increased 41% to $248 million.
Service revenues (27.7% of total revenues) increased 6.5% year over year to $3.78 billion.
Region-wise, America’s revenues decreased 11% year over year to $8.07 billion and missed the consensus mark by 0.7%.
EMEA revenues declined 11% year over year to $3.51 billion but beat the consensus mark by 5.08%.
APJC revenues decreased 6% year over year to $2.06 billion and missed the consensus mark by 1.79%
Annualized recurring revenues came in at $29.6 billion, up 22% year over year. Product ARR surged 44% year over year.
Non-GAAP gross margin expanded 200 basis points (bps) from the year-ago quarter’s level to 67.9%.
On a non-GAAP basis, the product gross margin expanded 160 bps to 67%. Service gross margin increased 280 bps to 70.3%.
Non-GAAP operating expenses were $4.83 billion, up 3.9% year over year. As a percentage of revenues, operating expenses increased 480 bps year over year to 35.4%.
Non-GAAP operating margin contracted 280 bps year over year to 32.5%.
Balance Sheet and Cash Flow
As of Jul 27, 2024, Cisco’s cash & cash equivalents and investments balance were $17.9 billion compared with $18.8 billion as of Apr 27, 2024.
Total debt (short-term plus long-term), as of Jul 27, 2024, was $30.96 billion, lower than $32 billion as of Apr 27, 2024.
Cash flow from operating activities was $3.7 billion, lower than $4 billion reported in the previous quarter.
The remaining performance obligations (“RPO”) at the end of the fiscal fourth quarter were $41 billion, up 18%, with 51% of this amount to be recognized as revenues over the next 12 months. Product RPO increased 27% year over year, while service RPO increased 10%.
In the reported quarter, Cisco returned $3.6 billion through share repurchases and dividends. It bought approximately 43 million shares for $2 billion. The share repurchase program has $5.2 billion remaining under authorization.
Guidance
For first-quarter fiscal 2025, revenues are expected to be between $13.65 billion and $13.85 billion. The Zacks Consensus Estimate for revenues is pegged at $13.57 billion, indicating a 7.5% year-over-year decline.
Non-GAAP gross margin is anticipated between 67% and 68% for the quarter.
Non-GAAP operating margin is expected between 32% and 33% for the quarter.
Non-GAAP earnings are anticipated between 86 cents and 88 cents per share. The Zacks Consensus Estimate is currently pegged at 84 cents per share, suggesting a 24.3% year-over-year decline.
For fiscal 2025, revenues are expected between $55 billion and $56.2 billion. Non-GAAP earnings are anticipated between $3.52 and $3.58 per share.
The consensus mark for fiscal 2025 earnings and revenues is pegged at $3.54 per share and $55.33 billion, respectively.
Zacks Rank & Other Stocks to Consider
Cisco currently carries a Zacks Rank #2 (Buy).
CSCO shares have declined 10.1% year to date against the Zacks Computer & Technology sector’s growth of 18%.
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Cisco (CSCO) Q4 Earnings Top Estimates, Revenues Fall Y/Y
Cisco Systems (CSCO - Free Report) reported fourth-quarter fiscal 2024 non-GAAP earnings of 87 cents per share, which beat the Zacks Consensus Estimate by 2.35%. The bottom line fell 23.7% year over year.
Revenues decreased 10.3% year over year to $13.64 billion but beat the consensus mark by 0.9%. Product revenues (72.3% of total revenues) decreased 15.4% on a year-over-year basis to $9.86 billion.
Splunk contributed $960 million of total revenues in the reported quarter.
Networking revenues declined 28% year over year to $6.80 billion.
Security revenues were $1.79 billion, up 81% year over year. Collaboration revenues were unchanged at $1.02 billion. Observability revenues increased 41% to $248 million.
Service revenues (27.7% of total revenues) increased 6.5% year over year to $3.78 billion.
Cisco Systems, Inc. Price
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Quarter in Detail
Region-wise, America’s revenues decreased 11% year over year to $8.07 billion and missed the consensus mark by 0.7%.
EMEA revenues declined 11% year over year to $3.51 billion but beat the consensus mark by 5.08%.
APJC revenues decreased 6% year over year to $2.06 billion and missed the consensus mark by 1.79%
Annualized recurring revenues came in at $29.6 billion, up 22% year over year. Product ARR surged 44% year over year.
Non-GAAP gross margin expanded 200 basis points (bps) from the year-ago quarter’s level to 67.9%.
On a non-GAAP basis, the product gross margin expanded 160 bps to 67%. Service gross margin increased 280 bps to 70.3%.
Non-GAAP operating expenses were $4.83 billion, up 3.9% year over year. As a percentage of revenues, operating expenses increased 480 bps year over year to 35.4%.
Non-GAAP operating margin contracted 280 bps year over year to 32.5%.
Balance Sheet and Cash Flow
As of Jul 27, 2024, Cisco’s cash & cash equivalents and investments balance were $17.9 billion compared with $18.8 billion as of Apr 27, 2024.
Total debt (short-term plus long-term), as of Jul 27, 2024, was $30.96 billion, lower than $32 billion as of Apr 27, 2024.
Cash flow from operating activities was $3.7 billion, lower than $4 billion reported in the previous quarter.
The remaining performance obligations (“RPO”) at the end of the fiscal fourth quarter were $41 billion, up 18%, with 51% of this amount to be recognized as revenues over the next 12 months. Product RPO increased 27% year over year, while service RPO increased 10%.
In the reported quarter, Cisco returned $3.6 billion through share repurchases and dividends. It bought approximately 43 million shares for $2 billion. The share repurchase program has $5.2 billion remaining under authorization.
Guidance
For first-quarter fiscal 2025, revenues are expected to be between $13.65 billion and $13.85 billion. The Zacks Consensus Estimate for revenues is pegged at $13.57 billion, indicating a 7.5% year-over-year decline.
Non-GAAP gross margin is anticipated between 67% and 68% for the quarter.
Non-GAAP operating margin is expected between 32% and 33% for the quarter.
Non-GAAP earnings are anticipated between 86 cents and 88 cents per share. The Zacks Consensus Estimate is currently pegged at 84 cents per share, suggesting a 24.3% year-over-year decline.
For fiscal 2025, revenues are expected between $55 billion and $56.2 billion. Non-GAAP earnings are anticipated between $3.52 and $3.58 per share.
The consensus mark for fiscal 2025 earnings and revenues is pegged at $3.54 per share and $55.33 billion, respectively.
Zacks Rank & Other Stocks to Consider
Cisco currently carries a Zacks Rank #2 (Buy).
CSCO shares have declined 10.1% year to date against the Zacks Computer & Technology sector’s growth of 18%.
Bilibili (BILI - Free Report) , Applied Materials (AMAT - Free Report) and NetApp (NTAP - Free Report) are some other top-ranked stocks that investors can consider in the broader sector. Each of the three stocks carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Bilibili shares have increased 7.8% year to date. BILI is set to report second-quarter 2024 results on Aug 22.
Applied Materials shares have surged 24.4% year to date. AMAT is scheduled to release third-quarter fiscal 2024 results on Aug 15.
NetApp shares have jumped 44.2% year to date. NTAP is scheduled to release first-quarter fiscal 2025 results on Aug 28.