In the latest fiscal quarter, Cisco Systems Inc. witnessed a notable uptick in its stock value during the extended trading session on Wednesday. This surge followed the company’s positive outlook and robust performance, with indications that customer demand was stabilizing.
Cisco reported a net income of $1.89 billion, or 46 cents per share, for the fiscal third quarter. This marked a decline from the $3.21 billion, or 78 cents per share, recorded in the corresponding period last year. However, on an adjusted basis, Cisco’s earnings per share stood at 88 cents, surpassing analyst predictions of 83 cents per share.
Despite a dip in revenue to $12.70 billion from $14.57 billion in the previous year, Cisco still managed to exceed analysts’ revenue expectations of $12.53 billion. The company’s product business contributed $9.02 billion in revenue, while services generated $3.68 billion, both slightly above analyst projections.
Emphasizing the robustness of Cisco’s core business, CEO Chuck Robbins underscored the company’s ability to generate strong cash flows and provide consistent capital returns. He expressed confidence that customers would complete the installation of most of their current inventory by the end of Cisco’s fiscal year in July, suggesting a positive trajectory for demand.
Echoing Robbins’ sentiment, Chief Financial Officer Scott Herren highlighted that customer consumption of equipment shipped in recent quarters aligned with expectations, resulting in the stabilization of demand. Furthermore, the addition of Splunk to Cisco’s product line is anticipated to drive further growth.
Looking ahead, Cisco forecasts revenue in the range of $13.4 billion to $13.6 billion for the current quarter, with adjusted earnings per share projected between 84 cents and 86 cents. Although this outlook slightly missed analysts’ revenue estimates, it remained within the expected range, contributing to the overall positive sentiment surrounding Cisco’s performance.
Robbins also outlined Cisco’s strategic focus on capitalizing on the multibillion-dollar AI infrastructure opportunity, expressing confidence in achieving $1 billion in AI product orders by fiscal 2025.
Despite experiencing a slight decline in its stock price earlier in the year, Cisco’s strong performance in the fiscal third quarter and optimistic outlook for future growth have instilled confidence among investors. Consequently, Cisco shares surged approximately 5% in after-hours trading, reflecting optimism about the company’s prospects in the upcoming months.