Cisco Systems Inc. yesterday after market close announced its first-quarter financial results for the fiscal year 2024, marking a period of significant growth and profitability.
Key Financial Highlights:
Revenue: Cisco reported a total revenue of $14.7 billion, an 8% increase year over year.
Net Income: The GAAP net income stood at $3.6 billion, a 36% increase from the previous year. Non-GAAP net income was reported at $4.5 billion, up by 28%.
Earnings Per Share (EPS): GAAP EPS was $0.89, a 37% increase, and Non-GAAP EPS was $1.11, up 29% from the previous year.Dividends: Cisco declared a quarterly dividend of $0.39 per common share.
Business Performance and Initiatives:
Software Revenue: Total software revenue rose by 13% year over year, with a notable increase in software subscription revenue.
Annualized Recurring Revenue (ARR): Total ARR reached $24.5 billion, up 5% year over year, with product ARR increasing by 10%.
Geographic Performance: Revenue growth was driven by a 14% increase in the Americas, while EMEA remained flat, and APJC saw a 3% decrease.
Product Portfolio: The revenue growth across Cisco’s product portfolio was fueled by investments in Generative AI, Cloud Security, and Full Stack Observability.
Financial Position:
Cash Flow: Operating activities generated $2.4 billion in cash flow, a decrease of 40% compared to the first quarter of fiscal 2023.
Capital Allocation: Cisco returned $2.8 billion to shareholders through share buybacks and dividends.
Future Outlook:
Q2 FY 2024 Guidance: Revenue is projected to be between $12.6 billion and $12.8 billion. GAAP EPS is estimated to be between $0.59 to $0.64, and Non-GAAP EPS between $0.82 to $0.84.
FY 2024 Guidance: Cisco anticipates revenues to be between $53.8 billion and $55.0 billion. GAAP EPS is expected to range from $2.97 to $3.08, and Non-GAAP EPS from $3.87 to $3.93.
CEO and CFO Statements:
Chuck Robbins, chair and CEO of Cisco, expressed confidence in the company’s foundational strength and future growth opportunities, fueled by AI, Security, Cloud, and Observability. Scott Herren, CFO of Cisco, highlighted the strong operating leverage and the company’s commitment to delivering increasing capital returns to shareholders.
Acquisitions:
Cisco closed acquisitions including Accedian, Working Group Two, Oort Inc., SamKnows, and Code BGP Inc., and announced its intent to acquire Splunk Inc., expected to close by the end of the third quarter of calendar year 2024.
Analysis:
Cisco’s Q1 FY 2024 results demonstrate a strong start to the fiscal year, with the highest first-quarter revenue and profitability in its history. The increase in software revenue and successful business model transformation underline Cisco’s strategic shift towards more recurring revenue streams. The company’s focus on Generative AI, Cloud Security, and Full Stack Observability indicates a commitment to staying at the forefront of technology innovation. However, the 40% decrease in operating cash flow and the regional variations in revenue growth suggest areas for strategic focus in the coming quarters. Cisco’s forward-looking statements indicate a cautiously optimistic outlook for FY 2024, balancing growth ambitions with market realities.
