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Cisco's Q2 Earnings Beat Estimates, Revenues Up Y/Y, Shares Rise
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Cisco Systems (CSCO - Free Report) reported second-quarter fiscal 2025 non-GAAP earnings of 94 cents per share, beating the Zacks Consensus Estimate by 3.3%. The figure increased 8% year over year.
Cisco shares were up 6.06% in pre-market trading. In the trailing 12 months, CSCO shares have gained 24.4%, outperforming the Zacks Computer Networking industry’s 23.4% and the Zacks Computer & Technology sector’s 22% return.
CSCO’s Top Line Rides on Strong Security Revenues
Revenues from Networking in the second quarter of fiscal 2025 were $6.85 billion, down 3% on a year-over-year basis.
Security revenues were $2.11 billion, up 117% year over year. Collaboration revenues were $996 million, up 1% year over year. Observability revenues were $277 million and grew 47% year over year.
Total Product revenues in the second quarter of fiscal 2025 were $10.11 billion, comprising 73.1% of Cisco’s total revenues. On a year-over-year basis, product revenues increased 11%.
Service Revenues were $3.76 billion, comprising 26.9% of Cisco’s total revenues. On a year-over-year basis, service revenues increased 5.6%.
Annualized Recurring Revenues (ARR) for the quarter were $30.1 billion, increasing 22% on a year-over-year basis, with product ARR growth of 41%.
Region-wise, Americas’ revenues increased 9% year over year to $8.20 billion. EMEA (Europe, Middle East and Africa) revenues jumped 11% year over year to $3.86 billion. APJC (Asia Pacific Japan China) revenues climbed 8% year over year to $1.93 billion.
CSCO’s Operating Expenses Expand Y/Y
Non-GAAP gross margin was 68.7%, which expanded 200 basis points (bps) year over year.
On a non-GAAP basis, the product gross margin increased 240 bps on a year-over-year basis to 49.5%. Service gross margin decreased 40 bps to 19.2%.
In the second-quarter fiscal 2025, Cisco reported total non-GAAP operating expenses of $4.75 billion, up 10.1% year over year. As a percentage of revenues, the figure increased 20 bps to 34%.
Consequently, CSCO reported a non-GAAP operating income of $4.86 billion up 15.3% year over year. Operating margin expanded 180 bps to 34.7%.
CSCO’s Balance Sheet Details
As of Dec. 31, 2024, cash and cash equivalents and investments totaled $16.9 billion, which decreased from $18.67 billion as of Oct. 26, 2024.
Total debt stood at $31.03 billion as of Dec. 31, 2024, up from $31.99 billion at the end of the prior quarter.
The remaining performance obligations (RPO) at the end of the second quarter of fiscal 2025 were $41.3 billion, up 16%, with 51% of the amount to be recognized as revenues over the following 12 months.
In the second quarter of fiscal 2025, CSCO returned $2.8 billion to stockholders through share buybacks and dividends. It repurchased approximately 21 million shares of common stock.
Cisco increased its quarterly dividend by 3% to 41 cents and increased share repurchase by $15 billion.
CSCO Offers Positive Guidance
For the third-quarter fiscal 2025, Cisco expects non-GAAP earnings between 90 cents per share and 92 cents per share.
Revenues are expected to be in the range of $13.9 billion and $14.1 billion.
Non-GAAP gross margins are expected to be between 67% and 69%. Non-GAAP operating margin is anticipated to be between 33% and 34%.
For fiscal 2025, Cisco expects non-GAAP earnings between $3.68 per share and $3.74 per share.
Revenues are expected to be in the range of $56 billion and $56.5 billion.
Arista Networks is scheduled to report its fourth-quarter 2024 results on Feb. 18. Twilio is set to report fourth-quarter 2024 results on Feb. 13, while Five9 is scheduled to report its fourth-quarter 2024 results on Feb. 20.
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Cisco's Q2 Earnings Beat Estimates, Revenues Up Y/Y, Shares Rise
Cisco Systems (CSCO - Free Report) reported second-quarter fiscal 2025 non-GAAP earnings of 94 cents per share, beating the Zacks Consensus Estimate by 3.3%. The figure increased 8% year over year.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Revenues of $14 billion surpassed the Zacks Consensus Estimate by 0.9%. The top line increased 9.4% year over year.
Cisco Systems, Inc. Price, Consensus and EPS Surprise
Cisco Systems, Inc. price-consensus-eps-surprise-chart | Cisco Systems, Inc. Quote
Cisco shares were up 6.06% in pre-market trading. In the trailing 12 months, CSCO shares have gained 24.4%, outperforming the Zacks Computer Networking industry’s 23.4% and the Zacks Computer & Technology sector’s 22% return.
CSCO’s Top Line Rides on Strong Security Revenues
Revenues from Networking in the second quarter of fiscal 2025 were $6.85 billion, down 3% on a year-over-year basis.
Security revenues were $2.11 billion, up 117% year over year. Collaboration revenues were $996 million, up 1% year over year. Observability revenues were $277 million and grew 47% year over year.
Total Product revenues in the second quarter of fiscal 2025 were $10.11 billion, comprising 73.1% of Cisco’s total revenues. On a year-over-year basis, product revenues increased 11%.
Service Revenues were $3.76 billion, comprising 26.9% of Cisco’s total revenues. On a year-over-year basis, service revenues increased 5.6%.
Annualized Recurring Revenues (ARR) for the quarter were $30.1 billion, increasing 22% on a year-over-year basis, with product ARR growth of 41%.
Region-wise, Americas’ revenues increased 9% year over year to $8.20 billion. EMEA (Europe, Middle East and Africa) revenues jumped 11% year over year to $3.86 billion. APJC (Asia Pacific Japan China) revenues climbed 8% year over year to $1.93 billion.
CSCO’s Operating Expenses Expand Y/Y
Non-GAAP gross margin was 68.7%, which expanded 200 basis points (bps) year over year.
On a non-GAAP basis, the product gross margin increased 240 bps on a year-over-year basis to 49.5%. Service gross margin decreased 40 bps to 19.2%.
In the second-quarter fiscal 2025, Cisco reported total non-GAAP operating expenses of $4.75 billion, up 10.1% year over year. As a percentage of revenues, the figure increased 20 bps to 34%.
Consequently, CSCO reported a non-GAAP operating income of $4.86 billion up 15.3% year over year. Operating margin expanded 180 bps to 34.7%.
CSCO’s Balance Sheet Details
As of Dec. 31, 2024, cash and cash equivalents and investments totaled $16.9 billion, which decreased from $18.67 billion as of Oct. 26, 2024.
Total debt stood at $31.03 billion as of Dec. 31, 2024, up from $31.99 billion at the end of the prior quarter.
The remaining performance obligations (RPO) at the end of the second quarter of fiscal 2025 were $41.3 billion, up 16%, with 51% of the amount to be recognized as revenues over the following 12 months.
In the second quarter of fiscal 2025, CSCO returned $2.8 billion to stockholders through share buybacks and dividends. It repurchased approximately 21 million shares of common stock.
Cisco increased its quarterly dividend by 3% to 41 cents and increased share repurchase by $15 billion.
CSCO Offers Positive Guidance
For the third-quarter fiscal 2025, Cisco expects non-GAAP earnings between 90 cents per share and 92 cents per share.
Revenues are expected to be in the range of $13.9 billion and $14.1 billion.
Non-GAAP gross margins are expected to be between 67% and 69%. Non-GAAP operating margin is anticipated to be between 33% and 34%.
For fiscal 2025, Cisco expects non-GAAP earnings between $3.68 per share and $3.74 per share.
Revenues are expected to be in the range of $56 billion and $56.5 billion.
Zacks Rank & Other Stocks to Consider
Cisco currently carries a Zacks Rank #2 (Buy).
Twilio (TWLO - Free Report) , Arista Networks (ANET - Free Report) and Five9 (FIVN - Free Report) are some other stocks worth considering in the broader sector. While TWLO sports a Zacks Rank #1 (Strong Buy), ANET and FIVN carry a Zacks Rank #2 each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Arista Networks is scheduled to report its fourth-quarter 2024 results on Feb. 18. Twilio is set to report fourth-quarter 2024 results on Feb. 13, while Five9 is scheduled to report its fourth-quarter 2024 results on Feb. 20.