Q3 2024 Cisco Systems Inc Earnings Call Transcript
Key Points
- Cisco Systems Inc (CSCO) reported strong operating leverage and gross margins exceeding expectations, leading to better-than-anticipated earnings per share.
- The acquisition of Splunk significantly expands Cisco Systems Inc (CSCO)'s portfolio, adding over $4 billion in annualized recurring revenue and enhancing its position as a major software company.
- Cisco Systems Inc (CSCO) introduced Cisco Hypershield, a groundbreaking AI-powered security innovation, enhancing its security capabilities.
- Annualized recurring revenue, remaining performance obligations, and subscription revenue showed good growth, with subscriptions now accounting for more than half of total revenue.
- Cisco Systems Inc (CSCO) returned $2.9 billion to shareholders through share repurchases and dividends in Q3, with a total of $8.5 billion returned year-to-date.
- Total revenue for Q3 was $12.7 billion, down 13% year-over-year, impacted by the high base effect of previous excess backlog shipments.
- Excluding the impact of Splunk, product orders were flat year-on-year, indicating potential challenges in organic growth.
- The interest cost of financing the Splunk acquisition slightly more than offset the positive operating impact, negatively affecting non-GAAP earnings per share by $0.01.
- Networking, the largest product category, saw a 27% decline across all geographic segments, reflecting ongoing inventory adjustments by customers.
- Operating cash flow decreased by 24% to $4 billion, reflecting the challenges in the macroeconomic environment and inventory digestion.
Welcome to Cisco's Third Quarter Fiscal Year 2024 Financial Results Conference Call. At the request of Cisco, today's conference is being recorded. If you have any objections, you may disconnect.
Now I would like to introduce Sami Badri, Head of Investor Relations. Sir, you may begin.
Welcome, everyone, to Cisco's Third Quarter Fiscal Year '24 Conference Call. This is Sami Badri, Cisco's Head of Investor Relations, and I'm joined by Chuck Robbins, our Chair and CEO; and Scott Herren, our CFO; and given our recently closed acquisition of Splunk, we are also joined by Gary Steele, the former CEO of Splunk, which is now a Cisco company.
By now, you should have seen our earnings press release. A corresponding webcast with slides, including supplemental information, will be available on our website in the Investor Relations section following the call.
Income statements, full GAAP to non-GAAP reconciliation information, balance sheets, cash flow statements and other financial information
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