Cisco CEO Chuck Robbins speaks at The Wall Street Journal’s Future of Everything Festival in New York on May 21, 2024.
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Cisco reported a fourth straight quarter of declining revenue even as results topped analysts’ estimates. The stock slipped 2.5% in extended trading.
Here’s how the company did in comparison with LSEG consensus:
- Earnings per share: 91 cents adjusted vs. 87 cents expected
- Revenue: $13.84 billion vs. $13.77 billion expected
Cisco’s revenue dropped 6% in the quarter ended Oct. 26, from $14.7 billion a year earlier, according to a statement. Net income fell to $2.71 billion, or 68 cents per share, from $3.64 billion, or 89 cents per share, in the same quarter a year ago.
Networking revenue plunged 23% to $6.75 billion, slightly below the $6.8 billion consensus of analysts surveyed by StreetAccount.
Security revenue doubled to $2.02 billion, topping the StreetAccount consensus of $1.93 billion. Cisco’s revenue from collaboration was $1.09 billion, a bit below the $1.04 billion consensus estimate.
Cisco CEO Chuck Robbins said on the earnings call on Wednesday that orders from large-scale clients for artificial intelligence infrastructure exceeded $300 million in the quarter. Server makers such as Dell and HPE have also focused on sales of hardware that can help clients implement generative AI.
“We have earned more design wins and remain confident that we will exceed our target of $1 billion of AI orders this fiscal year from web-scale customers,” Robbins said.
Cisco has announced hardware containing Nvidia’s graphics processing units, which are widely used for training AI models, Robbins said.
“Over time, you’ll see us support other GPUs as the market demands,” he said. “But that partnership is still going fine. It’s still early. And I think 2025 is when we’ll start to see enterprise real deployment of some of these technologies.”
For now, enterprises are updating data center infrastructure to prepare for AI and the widespread deployment of AI applications, Robbins said.
U.S. government agencies have delayed deals with Cisco, rather than scrapping them altogether. The Fiscal Responsibility Act of 2023, which became law in June of last year, has limited U.S. government spending, said Scott Herren, Cisco’s finance chief.
Herren said that with Republicans poised to control the White House and both houses of Congress, he expects “to get a budget in place relatively soon.”
During the quarter, Cisco acquired security startups DeepFactor and Robust Intelligence.
Cisco lifted its full-year guidance to $3.60 to $3.66 in adjusted earnings per share on $55.3 billion to $56.3 billion in revenue, up from a prior forecast of $3.52 to $3.58 in EPS and $55 billion to $56.2 billion in revenue. Guidance would indicate projected revenue growth of 3.3% at the middle of the range.
Analysts expected adjusted earnings for the year of $3.58 per share on $55.89 billion in revenue.
As of Wednesday’s close, Cisco’s stock was up 17% year to date, while the S&P 500 index is up around 26% over that stretch.
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