Cisco Systems, Inc. (Nasdaq: CSCO) reported better-than-anticipated fiscal 2022 fourth-quarter earnings and revenues. The computer networking products provider also issued an upbeat FY 2023 earnings and revenue outlook. Following the impressive quarterly results, the stock gained 5.81%, or $2.71, to close at $49.37. Notably, in the year-to-date, Cisco’s stock price has declined 24%.
The San Jose, California-based company reported fourth-quarter revenues of $13.102 billion, almost unchanged from $13.126 billion in the similar quarter last year.
For the quarter ended July 30, 2022, Cisco posted a net income of $2.82 billion, or $0.68 per share, a decline from $3.0 billion, or $0.71 a share, in the quarter ended July 31, 2021.
Excluding share-based compensation expense, amortization of acquisition-related intangible assets, acquisition-related/divestiture costs, and Russia-Ukraine war costs, among others, Cisco recorded a Q4 2022 adjusted net income of $3.44 billion, or $0.83 per share, a decrease from adjusted net income of $3.55 billion, or $0.84 a share, in Q4 2021.
Analysts polled by Thomson Reuters had anticipated Cisco to post earnings of $0.82 per share on revenues of $12.79 billion.
Commenting on the quarterly results, Scott Herren, CFO of Cisco, said, “Total revenue exceeded our expectations in Q4, as a result of our strong execution and the numerous initiatives we have taken to reduce the impact of the global supply situation.”
Segment wise,
- Product revenues inched lower to $9.69 billion, a decline from $9.72 billion last year.
- Service revenues grew to $3.414 billion, from $3.410 billion.
Based on the nature of business,
- Secure, Agile Networks revenues fell by 1% to $6.09 billion, but surpassed the StreetAccount consensus of $5.86 billion.
- Internet for the future revenues dropped 10% y-o-y to 1.26 billion.
- End-to-End security revenues were $984 million, up 20% from last year.
- Optimized application experiences were $185 million, an increase of 8% on a y-o-y basis.
Notably, the cybersecurity solutions provider’s adjusted gross margin narrowed to 63.30% in the latest quarter, from 65.30% in the earlier quarter. Analysts had anticipated a gross margin of 64.70%.
Looking forward, Cisco anticipates 1Q23 revenues to increase in the range of 2% to 4%. The company also forecasts non-GAAP earnings to be between $0.82 and $0.84 per share. Also, GAAP earnings are expected to be in the range of $0.64 to $0.68 per share.
For fiscal 2023, Cisco projects revenue growth of between 4% and 6%. Non-GAAP earnings are anticipated to be in the range of between $3.49 and $3.56 per share. GAAP earnings are expected to be in the range of $2.77 to $2.88 per share. Analysts surveyed by Refinitiv had anticipated the company would post adjusted earnings of $3.53 per share on revenues of $52.79 billion (reflecting a y-o-y growth of 2.30%).
The quarterly earnings beat and robust FY 2023 outlook are expected to keep the stock of Cisco slightly bullish in the short term.
The historical price chart indicates that the stock of Cisco is ascending after testing the support at 45. The next resistance is anticipated near 53. Additionally, the stock is trading above its 50-day moving average while the ultimate oscillator is rising towards the bullish zone. Therefore, we anticipate the stock of Cisco to rally further in the days ahead.
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