On November 15, 2023, Cisco Systems Inc (CSCO, Financial) released its 8-K filing, showcasing a strong start to fiscal year 2024 with record first-quarter results. The company reported a significant year-over-year increase in both revenue and profitability, with notable growth across key product segments and geographic regions.
Financial Performance Overview
Cisco Systems Inc (CSCO, Financial) delivered a robust financial performance in the first quarter of FY 2024. The company's revenue climbed to $14.7 billion, an 8% increase compared to the first quarter of FY 2023. This growth was driven by a 9% rise in product revenue and a 4% increase in service revenue. Geographically, the Americas led with a 14% revenue increase, while the EMEA region remained flat, and the APJC region saw a slight decline of 3%.
GAAP gross margins improved significantly, with total gross margin reaching 65.2%, product gross margin at 64.5%, and service gross margin at 67.3%. This represents a substantial improvement from the 61.2% total gross margin reported in the same quarter of the previous fiscal year. Non-GAAP gross margins also saw an uptick, with total gross margin at 67.1%, product gross margin at 66.5%, and service gross margin at 69.0%.
Income Statement Highlights
GAAP operating income for Q1 FY 2024 was $4.3 billion, marking a 21% increase from the prior year, with an operating margin of 29.2%. Non-GAAP operating income grew by 24% to $5.4 billion, resulting in a non-GAAP operating margin of 36.6%. The GAAP tax provision rate was 18.1%, while the non-GAAP rate was slightly higher at 19.0%.
Net income on a GAAP basis rose to $3.6 billion, a 36% increase year-over-year, with diluted EPS growing by 37% to $0.89. Non-GAAP net income also saw a healthy increase, reaching $4.5 billion (up 28%) and EPS at $1.11 (up 29%).
Balance Sheet and Cash Flow
Cash and cash equivalents, along with investments, totaled $23.5 billion at the end of Q1 FY 2024, a decrease from $26.1 billion at the end of fiscal 2023. Cash flow from operating activities was reported at $2.4 billion, a 40% decrease from the previous year, primarily due to the timing of tax payments.
Remaining Performance Obligations (RPO) stood at $34.8 billion, up 12%, with 51% expected to be recognized as revenue over the next 12 months. Deferred revenue increased by 11% to $25.7 billion.
Capital Allocation and Dividends
Cisco Systems Inc (CSCO, Financial) continued its commitment to returning value to shareholders, allocating $2.8 billion through share buybacks and dividends in Q1 FY 2024. A quarterly dividend of $0.39 per common share was declared, totaling $1.6 billion, and approximately 23 million shares were repurchased at an average price of $54.53 per share for an aggregate purchase price of $1.3 billion.
Forward Guidance
For Q2 FY 2024, Cisco Systems Inc (CSCO, Financial) anticipates revenue between $12.6 billion and $12.8 billion, with a non-GAAP gross margin rate of 65% to 66% and a non-GAAP operating margin rate of 31.5% to 32.5%. Non-GAAP EPS is estimated to be between $0.82 and $0.84, while GAAP EPS is projected to be $0.59 to $0.64.
For the full fiscal year 2024, the company expects revenue to range from $53.8 billion to $55.0 billion, with non-GAAP EPS between $3.87 and $3.93, and GAAP EPS forecasted to be $2.97 to $3.08.
The strong financial results and optimistic guidance reflect Cisco Systems Inc (CSCO, Financial)'s confidence in its business model and growth opportunities, particularly in the areas of AI, Security, Cloud, and Observability. As the company navigates a dynamic market environment, it remains focused on delivering operating leverage and increasing capital returns to its shareholders.
Explore the complete 8-K earnings release (here) from Cisco Systems Inc for further details.
