Shulou(Shulou.com)11/24 Report--

According to the news on the morning of May 18, Beijing time, Cisco today released the company's third-quarter results for fiscal 2023.

According to the report, Cisco's third-quarter net revenue was $14.6 billion, up 14% from $12.8 billion a year earlier, and net profit was $3.2 billion, up 6% from $3 billion a year earlier. Cisco's adjusted net profit for the third quarter was $4.1 billion, up 13% from $3.6 billion a year earlier.

Cisco's third-quarter revenue and adjusted earnings per share exceeded Wall Street analysts' expectations, as did its outlook for the fourth quarter of fiscal 2023 and the full year of fiscal 2023. But at the same time, Cisco said its orders fell 23%, causing its shares to fall more than 4% in after-hours trading, according to the Barron Weekly website.

Financial report for the third quarter of fiscal year 2023:

Net profit: in the quarter ended April 29, 2023, Cisco's net profit was $3.2 billion, up 6% from $3 billion a year earlier. Under GAAP, Cisco's diluted earnings per share in the third quarter were $0.78, up 7% from a year earlier. In the third quarter of fiscal 2022, Cisco's diluted earnings per share were $0.73.

Excluding one-time expenses (not in accordance with GAAP), Cisco's adjusted net income for the third quarter was $4.1 billion, up 13% from $3.6 billion a year earlier, and adjusted earnings per share was $1.00. up 15% from 87 cents in the same period last year, which exceeded analysts' expectations. On average, 19 analysts had expected Cisco's third-quarter earnings per share to reach $0.97, according to data provided by Yahoo Finance.

Revenue: Cisco's third-quarter net revenue was $14.6 billion, up 14% from $12.8 billion a year earlier, which also beat analysts' expectations. On average, 17 analysts had expected Cisco's third-quarter revenue to reach $14.39 billion, according to Yahoo Finance.

By business category, sales of Cisco products (including routers and switches) were $11.092 billion in the third quarter of fiscal 2023, up 17% from $9.448 billion in the same period last year, and services sales were $3.479 billion, up 3% from $3.387 billion in the same period last year.

In the product business, Cisco's revenue from security and Agile Networks in the third quarter was $7.55 billion, up 29% compared with the same period last year; revenue from Internet for the Future business was $1.392 billion, up 5% from the same period last year; revenue from cooperative business was $985 million, down 13% from the same period last year Revenue from the end-to-end security business was $958 million, up 2% from the same period last year; revenue from optimized application experience was $204 million, up 12% from the same period last year; and revenue from other products was $3 million, an increase of 19% over the same period last year.

Geographically, Cisco's revenue from the Americas in the third quarter was $8.634 billion, up 13% from the same period last year; revenue from the EMEA (Europe, Middle East and Africa) region was $3.806 billion, up 16% from the same period last year; and revenue from the APJC (Asia Pacific, Japan and Greater China region) was $2.131 billion, up 11% from the same period last year.

Gross profit margin: Cisco's total fiscal third quarter gross margin, product gross margin and service gross margin were 63.4%, 62.7% and 65.4%, respectively, compared with 63.3%, 61.8% and 67.3% in the same period last year.

Excluding some one-time items (not in accordance with US GAAP), Cisco's total fiscal third quarter gross margin, product gross margin and service gross margin were 65.2%, 64.5% and 67.3%, respectively, compared with 65.3%, 64.1% and 68.9% in the same period last year.

By region, Cisco's gross profit margin in the US, Europe, Middle East, and Africa was 64.2%, 66.6%, and 68.4%, respectively.

Operating expenses and operating profit: Cisco's operating expenses in the third quarter were $5.3 billion, up 17% from a year earlier and accounting for 36.3% of total revenue. Of this total, R & D expenditure was $1.962 billion, compared with $1.708 billion in the same period last year; sales and marketing expenditure was $2.526 billion, compared with $2.209 billion in the same period last year; general and administrative expenses were $541 million, compared with $517 million in the same period last year; amortization expenditure on acquired intangible assets was $7000, compared with $7700 in the same period last year. Restructuring and other expenses were $87 million, compared with no such expenditure in the same period last year.

Excluding some one-time items (not in accordance with GAAP), Cisco's adjusted operating expenses for the third quarter were $4.6 billion, an increase of 16% over the same period last year, and accounted for 31.3% of total revenue.

Cisco's third-quarter operating profit was $3.9 billion, up 9% from a year earlier, with an operating interest rate of 27.1%.

Excluding some one-time items (not in accordance with GAAP), Cisco's adjusted operating profit for the third quarter was $1.9 billion, an increase of 11% over the same period last year, and the operating interest rate was 33.9%.

Cash flow, balance sheet and other financial information: Cisco's cash flow from business operations in the third quarter was $5.2 billion, up 43% from $3.7 billion in the same period last year.

Total cash and cash equivalents and investments held by Cisco at the end of the third quarter were $23.3 billion, compared with $19.3 billion at the end of fiscal year 2022.

Cisco's remaining performance obligations in the third quarter were $32.1 billion, an increase of 6% over the same period last year, of which 53% will be recognized as revenue over the next 12 months. Among them, the residual performance obligations of the product business increased by 9% compared with the same period last year, and the residual performance obligations of the service business increased by 4% compared with the same period last year.

Cisco's third-quarter deferred revenue was $24.3 billion, up 9% from a year earlier, with product deferred revenue up 11% and service deferred revenue up 7% compared with the same period last year.

Capital return program: in the third quarter of fiscal 2023, Cisco announced and paid a cash dividend of $0.39 per common share for a total expenditure of $1.6 billion. Cisco repurchased about 25 million common shares under its share repurchase program in the third quarter, at an average repurchase price of $49.45 per share, for a total expenditure of $1.3 billion. In the form of dividends and share buybacks, Cisco returned a total of $2.9 billion in cash to shareholders in the third quarter. Under the current share buyback program, Cisco can further repurchase common shares with a value of approximately $12.2 billion without maturity.

Performance outlook: performance outlook for the fourth quarter of fiscal 2023 Cisco expects revenue for the fourth quarter of fiscal 2023 to grow by 14% to 16% compared with the same period last year. Cisco previously reported net revenue of $13.1 billion in the fourth quarter of fiscal 2022, which means the company expects revenue in the fourth quarter of fiscal 2023 to range from $14.9 billion to $15.2 billion, with an average of $15.005 billion. The outlook exceeded analysts' expectations. On average, 17 analysts expect Cisco's fourth-quarter revenue to reach $14.96 billion, according to Yahoo Finance.

Cisco also expects gross margins not in accordance with GAAP to be between 64.5% and 65.5% in the fourth quarter of fiscal 2023, and operating margins that do not comply with GAAP will be between 34% and 35%. Earnings per share that do not comply with GAAP will be between $1.05 and $1.07, with an average of $1.06, also exceeding analysts' expectations. On average, 19 analysts expect Cisco's adjusted earnings per share to reach $1.04 in the fourth quarter, according to data provided by Yahoo Finance. Cisco also expects earnings per share under GAAP to range from 82 cents to 87 cents in the fourth quarter of fiscal 2023.

Cisco's performance outlook for the fourth quarter of fiscal 2023 assumes that the prepaid income tax rate will be 18% under GAAP and 19% without GAAP.

Full-year performance outlook for fiscal year 2023 for the entire fiscal year 2023, Cisco expects revenue growth of between 10% and 10.5% year-on-year. Cisco previously reported net revenue of $51.6 billion in fiscal 2022, which means the company expects net revenue of between $56.8 billion and $57 billion in fiscal 2023, a performance outlook that exceeds analysts' expectations. On average, 24 analysts expect Cisco's revenue to reach $56.55 billion in fiscal 2023, according to Yahoo Finance.

In addition, Cisco expects earnings per share under GAAP to range from $2.93 to $2.98 in fiscal 2023, and earnings per share without GAAP to between $3.80 and $3.82, which also exceeded analysts' expectations. On average, 24 analysts expect Cisco to earn $3.75 a share in fiscal 2023, according to data provided by Yahoo Finance.

Cisco's performance outlook for fiscal year 2023 assumes that the prepaid income tax rate will be 20% under GAAP and 19% if not in accordance with GAAP.

Share price reaction: on the day, Cisco shares rose 71 cents, or 1.51 percent, to $47.63 in regular Nasdaq trading. Cisco shares fell 4.58%, or 4.58%, to $45.45 in after-hours trading as of 05:47 EDT on the 17th (05:47 Beijing time on the 18th). In the past 52 weeks, the highest price for Cisco is $52.56 and the lowest price is $38.60.

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