Cisco (CSCO) Q3 2024 Earnings Report

Cisco reported fiscal third-quarter earnings and revenue that beat Wall Street estimates, even as sales fell from a year earlier. Shares rose as much as 8% in extended trading.

Here’s how the company fared compared to the LSEG consensus:

• Earnings per share: 88 cents adjusted vs. 82 cents expected
• Income: $12.7 billion vs. $12.53 billion expected

Cisco’s revenue fell about 13 percent year over year in the quarter ended April 27, according to a statement. That was the steepest decline since 2009. Net income fell 41% to $1.89 billion, or 46 cents a share, from $3.21 billion, or 78 cents a share, a year earlier.

The weaker performance was due to customers installing equipment they had received in recent quarters, according to the statement. Cisco offered similar commentary in its previous earnings report.

“We currently expect customers to complete the installation of the majority of their inventory by the end of our fiscal year in July,” Cisco CEO Chuck Robbins said on a conference call with analysts. He said he is happy that Cisco is nearing the end of the supply chain challenges it has faced for years.

Cisco’s public sector business was weaker in the US than in other regions.

“We believe that has since become clear with the subsequent signing of the latest funding from the US federal government,” Robbins said.

Networks revenue of $6.52 billion was down 27%. The category, which includes data center switches, continues to account for the majority of total revenue.

During the quarter, Cisco completed the $28 billion acquisition of security software maker Splunk. The deal reduced Cisco’s adjusted earnings per share by a penny, but provided additional revenue of $413 million.

“After the deal closed, we identified 5,000 existing Cisco customers who have the potential to become significant Splunk customers, and our sales teams are already making those connections,” Robbins said. Cisco will be able to reduce costs over time, said CFO Scott Herren.

Cisco raised its fiscal 2024 revenue guidance to a range of $53.6 billion to $53.8 billion, from $51.5 billion to $52.5 billion in February. Analysts polled by LSEG had expected $53.14 billion.

The company narrowed its forecast for full-year adjusted profit. It is now $3.69 to $3.71, compared with $3.68 to $3.74 in February. The LSEG consensus was $3.67.

Herren called for revenue growth in fiscal 2025 in the low to mid-single digits.

Prior to Wednesday’s announcement, the stock had fallen 2% in 2024, while the S&P 500 rose 11%.

Cisco said Gary Steele, who was Splunk’s CEO, is becoming president of the parent company for the go-to-market, effective immediately. Steele will continue to run Splunk, Herren said in an interview with CNBC. Jeff Sharits, Cisco’s chief customer and partner, will leave. The Sharritts’ organization will now report to Steele, along with marketing chief Carrie Palin, Herren said.

WATCH: Cisco CEO Chuck Robbins: $28 billion Splunk deal will be significant driver of financial growth