Cisco Systems (CSCO) has completed the second quarter of fiscal 2024 with a mixed bag of results, topping earnings estimates while witnessing a year-over-year decline in revenues. Let’s dive into the finer details to understand the nitty-gritty of their performance.
Q2 Earnings: Highlights and Lowlights
Cisco reported second-quarter fiscal 2024 non-GAAP earnings of 87 cents per share, surpassing the Zacks Consensus Estimate by 8.62%. However, the bottom line fell 1.1% year over year. Revenues decreased by 6% year over year to $12.79 billion but managed to beat the consensus mark by 2.59%. Product revenues witnessed a slump of 9.1% with networking revenues taking a nosedive by 12% to $7.08 billion. On the bright side, security revenues saw a 3% increase, while collaboration and observability revenues experienced upticks of 3% and 16% respectively.
The Quarter in Detail: Breaking Down the Figures
Region-wise, America’s revenues declined by 4%, EMEA revenues witnessed a 7% dip, and APJC revenues took a substantial hit with a 12% decrease year over year. On an annualized basis, recurring revenues indicated a positive trend, marking a 6% increase year over year. The company’s non-GAAP gross margin expanded by 280 basis points to 66.7%, displaying a healthy financial position on certain fronts.
The Financial Landscape: Cash Flow and Debt Dynamics
As of January 27, 2024, Cisco’s cash & cash equivalents and investments balance stood at $25.67 billion, reflecting a rise from the previous quarter. However, total debt has also increased, reaching $11.61 billion compared to $7.65 billion previously. The company’s cash flow from operating activities took a hit, dropping to $0.8 billion from $2.4 billion in the previous quarter. Despite this, Cisco made significant strides in returning value to shareholders, with $2.8 billion allocated for share repurchases and dividends. The announcement of a 3% increase in the quarterly dividend to 40 cents per share further underscores its commitment to shareholders.
Guidance: Looking Ahead
Looking ahead, Cisco forecasts a revenue range between $12.1 billion and $12.3 billion for the third quarter of fiscal 2024. However, this falls below the Zacks Consensus Estimate of $13.05 billion. Additionally, the company expects non-GAAP earnings per share in the range of 84 to 86 cents, below the consensus estimate of 91 cents per share.
Market Response and Outlook
Despite the challenges, Cisco remains a pivotal player in the tech industry. The stock has endured a 0.5% decline year to date, which underperforms compared to the broader Computer & Technology sector. Competitors like Dell Technologies, Itron, and CrowdStrike have shown promise, with each holding favorable rankings. Dell, in particular, is set to announce its fourth-quarter fiscal 2024 results on February 29, which may warrant attention from market participants.
The road ahead for Cisco will undoubtedly present challenges, but the company’s historical resilience suggests that it is a force to be reckoned with. Investors will undoubtedly be watching closely as the technology giant navigates the increasingly complex landscape of the digital age.
Last but not least, we cannot stress enough that the author’s words are that—an author’s. They are not an official statement from Nasdaq, Inc.
