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Cisco
🇺🇸 NASDAQ:CSCO
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Apr 27, 2024

Cisco Q3 2024 Earnings Report

Cisco's Q3 2024 performance reflected revenue decrease, strong profitability, and business model transformation enhanced by Splunk acquisition.

Key Takeaways

Cisco reported Q3 2024 revenue of $12.7 billion, a 13% year-over-year decrease, but aligned with expectations. GAAP EPS was $0.46 and non-GAAP EPS was $0.88. The company's profitability remained strong with a GAAP gross margin of 65.1% and a non-GAAP gross margin of 68.3%. The acquisition of Splunk contributed $413 million in revenue and further enhanced the business model.

Revenue was $12.7 billion, a 13% decrease year-over-year, in line with expectations.

GAAP gross margin was 65.1% and non-GAAP gross margin was 68.3%, demonstrating strong profitability.

Total subscription revenue reached $6.9 billion, representing 54% of total revenue.

Total annualized recurring revenue (ARR) was $29.2 billion, including $4.2 billion from Splunk, a 22% increase year-over-year.

Total Revenue
$12.7B
Previous year: $14.6B
-12.8%
EPS
$0.88
Previous year: $1
-12.0%
Gross Margin (GAAP)
65.1%
Previous year: 63.4%
+2.7%
Gross Margin (Non-GAAP)
68.3%
Previous year: 65.2%
+4.8%
Operating Margin (GAAP)
17.2%
Previous year: 27.1%
-36.5%
Gross Profit
$8.27B
Previous year: $9.23B
-10.4%
Cash and Equivalents
$8.91B
Previous year: $8.04B
+10.8%
Free Cash Flow
$3.8B
Previous year: $4.95B
-23.2%
Total Assets
$123B
Previous year: $97.5B
+26.1%

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Cisco Revenue by Geographic Location

Forward Guidance

Cisco provided guidance for Q4 FY 2024, projecting revenue between $13.4 billion and $13.6 billion, and non-GAAP EPS between $0.84 and $0.86. The guidance includes $950 million to $1 billion in revenue from Splunk but also includes a negative impact to non-GAAP EPS of approximately ($0.03) due to interest from financing the acquisition.

Positive Outlook

  • Revenue is expected to be between $13.4 billion and $13.6 billion.
  • Non-GAAP gross margin rate is projected to be 66.5% – 67.5%.
  • Non-GAAP operating margin rate is expected to be 31.5% – 32.5%.
  • Non-GAAP EPS is projected to be $0.84 – $0.86.
  • Splunk is expected to contribute $950 million to $1 billion in revenue.

Challenges Ahead

  • Includes a negative impact to non-GAAP EPS of approximately ($0.03).
  • Interest impact from financing the acquisition more than offsets the operating benefit.
  • GAAP EPS will be $0.46 to $0.51 for the fourth quarter of fiscal 2024.
  • Assumes an effective tax provision rate of approximately 18% for GAAP and non-GAAP results.
  • Guidance does not include the effects of any future acquisitions/divestitures, asset impairments, Russia-Ukraine war costs, restructurings, (gains) and losses on investments and significant tax matters or other events, which may or may not be significant unless specifically stated.

Revenue & Expenses

Visualization of income flow from segment revenue to net income

Company Overview

Full financial data and analysis

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