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Cisco (CSCO) Q2 Earnings Top Estimates, Revenues Rise Y/Y
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Cisco Systems (CSCO - Free Report) reported second-quarter fiscal 2023 non-GAAP earnings of 88 cents per share, which beat the Zacks Consensus Estimate by 2.33%. The bottom line increased 4.8% year over year.
Revenues increased 6.9% year over year to $13.59 billion and beat the consensus mark by 1.18%.
Quarter in Detail
Region-wise, America’s rose 9% year over year to $7.83 billion. EMEA revenues increased 5% from the year-ago quarter to $3.73 billion. APJC revenues climbed 1% year over year to $2.04 billion.
Service revenues (24.8% of total revenues) moved up 2.1% year over year to $3.44 billion.
Cisco Systems, Inc. Price, Consensus and EPS Surprise
Product revenues (74.7% of total revenues) increased 8.6% on a year-over-year basis to $10.16 billion.
Annualized recurring revenues were $23.3 billion, up 6% year over year and product ARR increased 11% year over year.
Break Down of Product Revenues
Secure, Agile Networks (66.4% of total Product revenues) revenues increased 14% year over year to $6.75 billion.
Collaboration (9.4% of Product revenues) revenues decreased 10% on a year-over-year basis to $958 million.
End-to-End Security (9.3% of Product revenues) revenues were up 7% to $943 million.
Internet for the Future (12.9% of Product revenues) revenues decreased 1% to $1.31 billion.
Optimized Application Experiences (2% of Product revenues) revenues were up 11% to $199 million.
Revenues from Other Products increased 25% to $3 million.
Operating Details
The non-GAAP gross margin contracted 160 basis points (bps) from the year-ago quarter’s level to 63.9%.
On a non-GAAP basis, the product gross margin contracted 210 bps to 62.1%. The service gross margin expanded 30 bps to 69.1%.
Non-GAAP operating expenses were $4.27 billion, up 7.8% year over year. As a percentage of revenues, operating expenses expanded 30 bps to 31.4%.
The non-GAAP operating margin contracted 180 bps year over year to 32.5%.
Balance Sheet and Cash Flow
As of Jan 28, 2023, Cisco’s cash and cash equivalents, and investments balance were $22.05 billion compared with $19.78 billion as of Oct 29, 2022.
Total debt (short-term plus long-term) as of Jan 28, 2023, was $8.89 billion compared with $8.88 billion as of Oct 29, 2022.
Cash flow from operating activities was $4.7 billion, higher than the $3.96 billion reported in the previous quarter.
Cisco paid out a quarterly dividend of 39 cents per share and returned $2.8 billion to shareholders through buybacks.
The remaining performance obligations (“RPO”) at the end of the fiscal second quarter were $31.8 billion, up 4%, with 53% of this amount to be recognized as revenues over the next 12 months. Product RPO was up 7% and service RPO was up 2%.
Guidance
For third-quarter fiscal 2023, revenues are expected to grow between 11% and 13% on a year-over-year basis.
The non-GAAP gross margin is anticipated between 63.5% and 64.5% for the quarter.
The non-GAAP operating margin is anticipated between 33% and 34% for the quarter. Non-GAAP earnings are anticipated between 96 cents and 98 cents per share.
For fiscal 2023, revenues are expected to rise 9-10.5% on a year-over-year basis. Non-GAAP earnings are anticipated between $3.73 and $3.78 per share.
Zacks Rank & Upcoming Earnings to Watch
Cisco currently carries a Zacks Rank #3 (Hold).
Cisco shares have lost 23.3% in the past year, underperforming the Zacks Computer & Technology sector’s decline of 16.4%.
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Cisco (CSCO) Q2 Earnings Top Estimates, Revenues Rise Y/Y
Cisco Systems (CSCO - Free Report) reported second-quarter fiscal 2023 non-GAAP earnings of 88 cents per share, which beat the Zacks Consensus Estimate by 2.33%. The bottom line increased 4.8% year over year.
Revenues increased 6.9% year over year to $13.59 billion and beat the consensus mark by 1.18%.
Quarter in Detail
Region-wise, America’s rose 9% year over year to $7.83 billion. EMEA revenues increased 5% from the year-ago quarter to $3.73 billion. APJC revenues climbed 1% year over year to $2.04 billion.
Service revenues (24.8% of total revenues) moved up 2.1% year over year to $3.44 billion.
Cisco Systems, Inc. Price, Consensus and EPS Surprise
Cisco Systems, Inc. price-consensus-eps-surprise-chart | Cisco Systems, Inc. Quote
Product revenues (74.7% of total revenues) increased 8.6% on a year-over-year basis to $10.16 billion.
Annualized recurring revenues were $23.3 billion, up 6% year over year and product ARR increased 11% year over year.
Break Down of Product Revenues
Secure, Agile Networks (66.4% of total Product revenues) revenues increased 14% year over year to $6.75 billion.
Collaboration (9.4% of Product revenues) revenues decreased 10% on a year-over-year basis to $958 million.
End-to-End Security (9.3% of Product revenues) revenues were up 7% to $943 million.
Internet for the Future (12.9% of Product revenues) revenues decreased 1% to $1.31 billion.
Optimized Application Experiences (2% of Product revenues) revenues were up 11% to $199 million.
Revenues from Other Products increased 25% to $3 million.
Operating Details
The non-GAAP gross margin contracted 160 basis points (bps) from the year-ago quarter’s level to 63.9%.
On a non-GAAP basis, the product gross margin contracted 210 bps to 62.1%. The service gross margin expanded 30 bps to 69.1%.
Non-GAAP operating expenses were $4.27 billion, up 7.8% year over year. As a percentage of revenues, operating expenses expanded 30 bps to 31.4%.
The non-GAAP operating margin contracted 180 bps year over year to 32.5%.
Balance Sheet and Cash Flow
As of Jan 28, 2023, Cisco’s cash and cash equivalents, and investments balance were $22.05 billion compared with $19.78 billion as of Oct 29, 2022.
Total debt (short-term plus long-term) as of Jan 28, 2023, was $8.89 billion compared with $8.88 billion as of Oct 29, 2022.
Cash flow from operating activities was $4.7 billion, higher than the $3.96 billion reported in the previous quarter.
Cisco paid out a quarterly dividend of 39 cents per share and returned $2.8 billion to shareholders through buybacks.
The remaining performance obligations (“RPO”) at the end of the fiscal second quarter were $31.8 billion, up 4%, with 53% of this amount to be recognized as revenues over the next 12 months. Product RPO was up 7% and service RPO was up 2%.
Guidance
For third-quarter fiscal 2023, revenues are expected to grow between 11% and 13% on a year-over-year basis.
The non-GAAP gross margin is anticipated between 63.5% and 64.5% for the quarter.
The non-GAAP operating margin is anticipated between 33% and 34% for the quarter. Non-GAAP earnings are anticipated between 96 cents and 98 cents per share.
For fiscal 2023, revenues are expected to rise 9-10.5% on a year-over-year basis. Non-GAAP earnings are anticipated between $3.73 and $3.78 per share.
Zacks Rank & Upcoming Earnings to Watch
Cisco currently carries a Zacks Rank #3 (Hold).
Cisco shares have lost 23.3% in the past year, underperforming the Zacks Computer & Technology sector’s decline of 16.4%.
Baidu (BIDU - Free Report) , Everbridge (EVBG - Free Report) and Frontier (FYBR - Free Report) are some better-ranked stocks that investors can consider in the broader sector. Baidu currently sports a Zacks Rank #1 (Strong Buy), while Everbridge and Frontier carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Baidu shares have declined 9.1% in the past year. BIDU is set to report its fourth-quarter 2022 results on Feb 22.
Everbridge shares have declined 23.6% in the past year. EVBG is set to report its fourth-quarter 2022 results on Feb 22.
Frontier shares have gained 4.2% in the past year. FYBR is set to report its fourth-quarter 2022 results on Feb 24.