Cisco Systems Inc (CSCO, Financial) released its 8-K filing on August 14, 2024, reporting its fourth quarter and fiscal year results for the period ended July 27, 2024. Cisco Systems is the largest provider of networking equipment in the world and one of the largest software companies globally. Its primary businesses include networking hardware and software, cybersecurity software, collaboration products like Webex, and observability tools. The company employs 80,000 people and operates in 90 countries.
Q4 and Fiscal Year 2024 Financial Highlights
For the fourth quarter, Cisco reported revenue of $13.6 billion, a 10% decrease year-over-year, but still above the analyst estimate of $13.54 billion. GAAP net income was $2.2 billion, or $0.54 per share, surpassing the estimated earnings per share of $0.51. Non-GAAP net income was $3.5 billion, or $0.87 per share.
| Metric | Q4 FY2024 | Q4 FY2023 | Vs. Q4 FY2023 |
|---|---|---|---|
| Revenue | $13.6 billion | $15.2 billion | (10%) |
| GAAP Net Income | $2.2 billion | $4.0 billion | (45%) |
| GAAP EPS | $0.54 | $0.97 | (44%) |
| Non-GAAP Net Income | $3.5 billion | $4.7 billion | (25%) |
| Non-GAAP EPS | $0.87 | $1.14 | (24%) |
Fiscal Year 2024 Performance
For the full fiscal year, Cisco reported revenue of $53.8 billion, a 6% decrease from the previous year. GAAP net income was $10.3 billion, or $2.54 per share, while non-GAAP net income was $15.2 billion, or $3.73 per share. The acquisition of Splunk had a notable impact on the financials, contributing approximately $1.4 billion to total revenue for the year.
| Metric | FY 2024 | FY 2023 | Vs. FY 2023 |
|---|---|---|---|
| Revenue | $53.8 billion | $57.0 billion | (6%) |
| GAAP Net Income | $10.3 billion | $12.6 billion | (18%) |
| GAAP EPS | $2.54 | $3.07 | (17%) |
| Non-GAAP Net Income | $15.2 billion | $16.0 billion | (5%) |
| Non-GAAP EPS | $3.73 | $3.89 | (4%) |
Operational Metrics and Financial Health
Despite the revenue decline, Cisco's gross margins remained robust. On a GAAP basis, total gross margin was 64.4%, while non-GAAP gross margin was 67.9%. Operating expenses increased by 12% on a GAAP basis, totaling $6.2 billion, and by 4% on a non-GAAP basis, totaling $4.8 billion. The company reported a GAAP operating income of $2.6 billion and a non-GAAP operating income of $4.4 billion.
Cash flow from operating activities was $3.7 billion for Q4, a 37% decrease year-over-year. For the full fiscal year, cash flow from operating activities was $10.9 billion, down 45% from the previous year. Cisco ended the fiscal year with $17.9 billion in cash and cash equivalents and investments.
Commentary and Future Outlook
“We delivered a strong close to fiscal 2024,” said Chuck Robbins, chair and CEO of Cisco. “In our fourth quarter, we saw steady customer demand with order growth across the business as customers rely on Cisco to connect and protect all aspects of their organizations in the era of AI.”
“Revenue, gross margin and EPS in Q4 were at the high end or above our guidance range, demonstrating our operating discipline,” said Scott Herren, CFO of Cisco. “As we look to build on our performance, we remain laser focused on growth and consistent execution as we invest to win in AI, cloud and cybersecurity, while maintaining capital returns.”
Guidance for Q1 FY 2025
Cisco estimates Q1 FY 2025 revenue to be between $13.65 billion and $13.85 billion. Non-GAAP EPS is expected to range between $0.86 and $0.88, while GAAP EPS is projected to be between $0.35 and $0.42. The company also provided guidance for fiscal 2025, estimating GAAP EPS to be between $1.93 and $2.05.
Explore the complete 8-K earnings release (here) from Cisco Systems Inc for further details.
